Utah-Idaho Sugar Co. v. Intermountain Gas Co.

• Decision Date: 10 July 1979
• Docket Number: No. 12577,UTAH-IDAHO,12577
• Citation: 597 P.2d 1058,100 Idaho 368
• Court: Idaho Supreme Court
• Parties: SUGAR COMPANY (U & I, Incorporated), Complainant-Appellant, v. INTERMOUNTAIN GAS COMPANY and Idaho Public Utilities Commission, Respondents.SUGAR COMPANY, Complainant, v. INTERMOUNTAIN GAS COMPANY, Respondent.

Page 1058

597 P.2d 1058

100 Idaho 368

UTAH-IDAHO SUGAR COMPANY (U & I, Incorporated), Complainant-Appellant, v. INTERMOUNTAIN GAS COMPANY and Idaho Public Utilities Commission, Respondents.

UTAH-IDAHO SUGAR COMPANY, Complainant, v. INTERMOUNTAIN GAS COMPANY, Respondent.

No. 12577.

Supreme Court of Idaho.

July 10, 1979.

Wilford M. Burton, of McKay, Burton, McMurray & Thurman, Salt Lake City, Utah, Kent W. Foster, of Holden, Kidwell, Hahn & Crapo, Idaho Falls, for complainant-appellant.

Harold Ryan, of Ryan & Sweet, Weiser, David H. Leroy, Atty. Gen., John J. McMahon, Deputy Atty. Gen., Boise, for respondents.

BAKES, Justice.

Appellant U & I Sugar Company, Inc., brings this appeal from dismissal by the Idaho Public Utilities Commission of U & I's complaint which sought the suspension of Rate Schedule LV-1 which the Commission had approved for use by respondent Intermountain Gas Company and reimbursement of rates collected by Intermountain under Schedule LV-1. U & I asks this Court to reverse the Commission's dismissal of its complaint and to direct the Commission to order Intermountain to refund to U & I amounts collected under Schedule LV-1. U & I also contends that Intermountain's interpretation of Schedule LV-1 results in an illegal rate discrimination against U & I. Finally, U & I claims that the Commission erred in allowing Intermountain to prorate U & I's gas consumption for the billing period in which the contested schedule became effective if this Court determines that Schedule LV-1 was properly adopted and implemented. The Commission's decision to allow Intermountain to prorate U & I's gas consumption for the billing period in question is reversed and the Commission's decisions on the remaining issues are affirmed. The Commission's order is therefore reversed and the matter remanded for further proceedings.

I

Appellant U & I operated a sugar beet refining plant in Idaho Falls and was at the time the third largest user of natural gas in Idaho. U & I's largest demand for natural gas occurred following the beet harvest in September and continued until February, during which time the beets were sliced. In June and July the beet syrup was refined and natural gas demand at that time was also high. U & I's slicing operation coincided with the winter heating season and its substantial demand for natural gas at that time contributed to respondent Intermountain Gas Company's peak load which occurs in the winter months.

In October, 1973, Intermountain filed a rate increase application with the Idaho Public Utilities Commission which proposed changes both in the existing rate levels and in the rate structure itself. Among the changes proposed in the rate structure was the introduction of a two-tier tariff for use in assessing charges against large volume firm demand users like U & I who contribute to Intermountain's peak winter load. Schedule LV-1, one of several new rate schedules proposed in Intermountain's application to the Commission, contained in its monthly rate both a "demand charge" and a "commodity charge" component. As eventually implemented by Intermountain, each of these charges was assessed against large volume firm demand consumers who contracted for more than 2,000 therms of gas a day and who were unable to shift gas use to low demand times of the year or whose needs did not allow them to opt for "interruptible service" by which commercial customers would have gas service curtailed when necessary to enable Intermountain to meet the peak demands of residential gas users. Under Schedule LV-1, a large volume firm demand customer would be assessed a demand charge related to its contribution to the winter peak load for which Intermountain must possess adequate gas supplies and delivery facilities, as well as a commodity charge assessed for the gas actually used by that customer. The rationale advanced to support assessment of the demand charge component of Schedule LV-1 was that large firm demand gas consumers should be required to pay the costs of acquiring and maintaining the peak load capacity of the gas supply system necessitated by their needs. The demand charge, as implemented by Intermountain, was assessed monthly throughout the year, was not credited toward actual gas use, and was calculated upon the amount of gas a large volume user contracted to receive on a firm service basis.

Prior to Commission approval of Schedule LV-1, U & I was billed for natural gas under a single-tier rate structure based upon a commodity charge only. The applicable rate schedule contained a minimum monthly charge for which full credit was given U & I in those months when charges for natural gas actually used exceeded the minimum charge. ¹ Under Schedule LV-1, U & I was billed each month for the demand charge Plus the commodity charge for all gas used, with no credit given toward actual gas use for the demand charge. ² Intermountain's proposal that Schedule LV-1 be approved and implemented was filed on October 3, 1973, and considered in Idaho Public Utilities Case No. U-1034-38. Notice of Intermountain's application for the rate increase was served by mail on U & I at both its Idaho Falls and Salt Lake City offices. In connection with its application Intermountain filed then-existing Schedules 24 and 32, together with proposed Schedule LV-1 which was designed to consolidate and replace Schedules 24 and 32. U & I did not intervene or participate in the public hearings conducted in Case No. U-1034-38; however, Joseph Humphris, U & I manager of purchasing, did attend the hearings in the case as an observer. Case No. U-1034-38 was concluded with the issuing of Idaho Public Utilities Commission Order No. 11507 on June 26, 1974, which approved adoption of Schedule LV-1 among others. Intermountain petitioned the Commission for a rehearing in Case No. U-1034-38. Following denial of its petition for rehearing by the Commission, Intermountain appealed Order No. 11507 to this Court, which held that the rate structures and levels approved in that order were reasonable and supported by the evidence presented to the Commission. Intermountain Gas Co. v. Idaho Public Utilities Commission, 97 Idaho 113, 127, 540 P.2d 775, 789 (1975). However, Commission Order No. 11507 was set aside by this Court on that appeal for reasons not related to the rate structures approved therein. The rate levels approved by the Commission in Order No. 11507 were subsequently re-implemented. U & I did not petition for a rehearing in Case No. U-1034-38, nor did it appeal to this Court Order No. 11507 approving adoption of Schedule LV-1.

In February, 1975, U & I initiated this action, designated Idaho Public Utilities Commission Case No. U-1034-45, by complaint alleging that the rates approved by the Commission in Case No. U-1034-38 were unreasonable and discriminatory and that Intermountain had improperly applied Schedule LV-1 in denying U & I credit toward actual gas use for the monthly demand charge levied. In September, 1975, U & I submitted an amended complaint in which it reiterated its original allegations and also asked that the rate schedules approved by the Commission in Case No. U-1034-38 be suspended because of failure of Intermountain to follow the procedural requirements for submission to the Commission of rate schedule modifications prescribed in I.C. § 61-307. ³ U & I also alleged in its complaint that Intermountain's method of prorating U & I's gas use in the month of July, 1974, when Schedule LV-1 became effective, resulted in an overcharge. U & I asserted that its summer juice operation, which allegedly accounted for substantially all of U & I's summer demand for natural gas, was concluded prior to July 23, 1974, the implementation date of Schedule LV-1. U & I contended that the proration method of billing for gas used in the July, 1974, billing period improperly caused gas actually used under the old tariffs to be billed under the new higher rate schedule and asked that the July, 1974, bill be recomputed and the alleged overcharge of $44,779.58 be refunded to U & I.

In February, 1976, Intermountain again petitioned the Commission for a general rate increase and U & I moved to intervene in that case. U & I was allowed to intervene in the second Intermountain rate case, designated Commission Case No. U-1034-57, and the complaint case, Case No. U-1034-45, was consolidated with Case No. U-1034-57. After granting Intermountain a second rate increase in Case No. U-1034-57 the Commission issued Order No. 12868 which dismissed U & I's complaint initiating Case No. U-1034-45. The Commission held that U & I was barred by I.C. § 61-612 ⁴ from challenging the reasonableness of Schedule LV-1; that U & I's claim that Intermountain's proposal of Schedule LV-1 was invalid because of the failure by Intermountain to comply with the requirements of I.C. § 61-307 was an impermissible collateral attack on a Commission order barred by I.C. § 61-625; ⁵ that Intermountain properly interpreted the provisions of Schedule LV-1 to bar U & I credit for the monthly demand charge component of Schedule LV-1 toward actual gas used; that the levy of the demand charge against large volume users such as U & I who require firm service at peak demand periods was not discriminatory; and that use of the proration method of billing for gas used in July, 1974, when Schedule LV-1 was implemented, was reasonable. The Commission denied U & I's petition for rehearing in Case No. U-1034-45 and U & I has appealed the Commission's decision to this Court.

II

We address first U & I's contention that as a result of Intermountain's improper submission of Schedule LV-1 to the Commission for consideration the Commission was without authority to approve the implementation of the schedule in Case No. U-1034-38. U & I argues that it is entitled to have Schedule LV-1 suspended and the charges collected under Schedule LV-1 which exceed those authorized by its predecessor tariffs...