Justia Utilities Law Opinion Summaries

Several plaintiffs brought a class action lawsuit against a city, challenging the validity of recently adopted water rates. They alleged that the city’s new rates, implemented by a resolution passed in May 2023, violated Proposition 218 by including costs for public fire service, resulting in charges exceeding the actual cost of water service. Prior to filing suit, the plaintiffs submitted claims under the Government Claims Act, which were denied. The plaintiffs sought refunds, declaratory relief, equitable relief, and a writ of mandate.After the city litigated the case for more than a year, including discovery and other pretrial activities, it moved for judgment on the pleadings, arguing that plaintiffs failed to bring a reverse validation action as required by Government Code section 53759 and Code of Civil Procedure sections 860 et seq. The San Francisco County Superior Court granted the city’s motion, holding that the validation statutes applied, were both mandatory and jurisdictional, and that plaintiffs had not complied with them in two ways: their suit was time-barred and they failed to follow proper notice procedures, including service by publication.On appeal to the California Court of Appeal, First Appellate District, Division Two, plaintiffs argued that the city had waived the validation requirements by litigating the case and that their action was timely. The appellate court reviewed the matter de novo and held that the validation statutes were mandatory and jurisdictional for challenges to water rates, and plaintiffs’ failure to comply with statutory procedures—including timely filing and notice by publication—was fatal to their claims. The court rejected arguments regarding waiver, good cause, and belated publication, ultimately affirming the trial court’s order and concluding that the procedural requirements for reverse validation actions must be strictly followed. View "Toy v. City and County of S.F." on Justia Law

Several townships, individuals, and entities challenged a decision related to the construction of an electric transmission line. In early 2024, two utility companies applied to the North Dakota Public Service Commission (PSC) for a certificate of public convenience and necessity (CPCN) to build an 85-mile, high-voltage transmission line. The PSC provided public notice in various newspapers and held hearings before granting the CPCN later that year. No party appealed this order at that time. Months after the order was issued, a group of petitioners—including the townships and individuals—sought to intervene, arguing that the PSC’s order was deficient and that the wrong statutory framework had been applied.The PSC denied the petitioners’ request to intervene, stating that the decision on the CPCN was final and that deadlines to appeal or seek reconsideration had already passed. The PSC also noted that further permitting and proceedings would occur before construction, where concerns could be raised. The petitioners then appealed to the District Court of Burleigh County, South Central Judicial District. The district court dismissed as untimely the portion of the appeal challenging the CPCN order, affirmed the PSC’s denial of intervention, and concluded it lacked jurisdiction to address the validity of the CPCN order.On review, the Supreme Court of North Dakota held that the petitioners lacked standing to appeal the CPCN order because they did not participate in the original proceedings before the PSC. The Court further held that the PSC did not abuse its discretion in denying post-hoc intervention, finding that notice by publication was sufficient and that the petitioners had not shown good cause for their late intervention request. Accordingly, the Supreme Court of North Dakota affirmed the district court’s judgment. View "Wano Township v. North Dakota Public Service Comm'n" on Justia Law

A public utility company that sells electricity to Maryland customers used equipment such as conductors, substations, and transformers to transmit and distribute electricity generated outside Maryland. The transmission process involved “stepping up” and “stepping down” voltage to deliver electricity at a level suitable for customer use. The utility believed that most of its equipment used for these purposes qualified for a state sales and use tax exemption for tangible personal property used directly and predominantly in a production activity, specifically the “processing” of electricity for resale. During an audit period, the utility paid sales and use tax on some, but not all, of its relevant equipment due to an accounting irregularity. Afterward, it requested a refund for the taxes it believed were paid in error.The Comptroller denied both the refund and a related assessment challenge, concluding the exemption did not apply. On appeal, the Maryland Tax Court determined that the conductor, substation, and transformer equipment qualified for the exemption because it was used directly and predominantly for processing electricity, but found that certain support structures and other items did not qualify. The Circuit Court for Anne Arundel County affirmed the Tax Court’s exemption ruling but held that most of the refund claim was untimely under the four-year statute of limitations for tax refund claims. The Appellate Court of Maryland affirmed most of the Tax Court’s rulings and instead applied a 30-day limitations period, making the entire refund claim timely.The Supreme Court of Maryland held that the utility’s transmission and distribution equipment performed “processing” and thus a production activity, qualifying for the exemption. The Court agreed that only the conductor, substation, and transformer equipment qualified and not the support structures. The Court also held that the general four-year limitations period applied, not the 30-day period, and that the utility was entitled to interest on the refunded amounts. The judgment was affirmed in part, reversed in part, and remanded for further proceedings. View "Comptroller v. Potomac Edison" on Justia Law

A company sought permission from the Vermont Public Utility Commission (PUC) to build and operate a solar facility. After the PUC denied this request, the company filed motions for reconsideration, arguing that the decision had been made on grounds different from the proposal for decision, and later sought to serve interrogatories on the PUC Commissioners to determine if they had read the record as required by Vermont law. The PUC denied both motions, stating it had complied with statutory requirements, that Commissioners had sufficient opportunity to review the record, and that discovery from Commissioners acting in a quasi-judicial capacity was not permitted.After these denials, the company appealed to the Vermont Supreme Court regarding the underlying certificate denial and, separately, filed a complaint in the Civil Division of the Chittenden Unit of the Superior Court under 3 V.S.A. § 809b, challenging the PUC's denial of discovery. The PUC moved to dismiss this complaint, asserting that § 809b did not cover orders denying discovery and that appeals of interlocutory PUC orders were governed by another, more specific statute. The Superior Court agreed, concluding it lacked jurisdiction, since § 809b only applies to orders compelling discovery, not those denying it, and that appeals from PUC orders must proceed directly to the Supreme Court under 30 V.S.A. § 12.The Vermont Supreme Court reviewed the Superior Court’s dismissal de novo. It held that 3 V.S.A. § 809b does not authorize challenges to agency orders denying discovery and is limited to orders compelling action. Because the PUC’s order at issue denied, rather than compelled, discovery, the Superior Court was correct to dismiss the case for lack of subject matter jurisdiction. The Supreme Court affirmed the dismissal. View "Otter Creek Solar LLC v. Public Utility Commission" on Justia Law

Columbia Gas of Ohio, Inc. applied to the Public Utilities Commission of Ohio (PUCO) in 2021 for authority to increase its distribution rates, modify its tariffs, and adjust certain accounting methods. The utility also sought approval for an alternative-rate plan and to continue demand-side management (DSM) programs for commercial and residential customers. Following an investigation and objections from various parties, a joint stipulation was reached among Columbia, the commission staff, and several intervening parties. This agreement included a rate increase, a substantial increase in the fixed monthly charge for residential customers, and the elimination of DSM programs for non-low-income customers. Several groups, including the Environmental Law & Policy Center (ELPC) and the Citizens’ Utility Board of Ohio (CUB), opposed the stipulation.PUCO conducted an evidentiary hearing and ultimately approved the stipulation with certain modifications, finding it satisfied the three-part test for reasonableness of contested stipulations: it was the result of serious bargaining, benefitted ratepayers and the public interest, and did not violate important regulatory principles or practices. ELPC and CUB separately applied for rehearing, but the commission denied these applications by operation of law after a related Supreme Court of Ohio decision clarified the process for rehearing requests.The Supreme Court of Ohio reviewed the case on appeal. The appellants argued that the commission’s approval was unsupported by evidence, particularly criticizing the fixed charge increase and elimination of DSM programs for most customers. The court held that the commission did not err in approving the increased fixed monthly charge or in eliminating the DSM programs for non-low-income customers. It found sufficient support in the record for PUCO’s decision and concluded that the commission’s actions did not violate regulatory principles or prior precedent. The Supreme Court of Ohio affirmed the commission’s orders. View "In re Application of Columbia Gas of Ohio, Inc." on Justia Law

Three Ohio electric-distribution utilities—Duke Energy Ohio, Dayton Power and Light (AES Ohio), and Ohio Power Company (AEP Ohio)—sought to recover from their retail customers the costs associated with their ownership interests in the Ohio Valley Electric Corporation (OVEC), a “legacy-generation resource” under Ohio law. Following the repeal of prior cost-recovery mechanisms, a new nonbypassable-rate mechanism called the Legacy Generation Resource (LGR) Rider was established pursuant to R.C. 4928.148, effective in 2019, to allow recovery of “prudently incurred” OVEC-related costs from 2020 onward. The Public Utilities Commission of Ohio (PUCO) ordered an audit of the companies’ LGR Riders for the year 2020, as required by statute.After the audits, PUCO conducted a hearing and approved the audit findings, except for a recommended cap on capital expenditures. PUCO found that all costs and sales flowing through the LGR Riders for the audit period were prudent and reasonable, and it declined to disallow any costs. The Ohio Environmental Council (OEC) and the Ohio Manufacturers’ Association Energy Group (OMAEG) challenged these orders, arguing that the companies had recovered imprudent or unreasonable costs, that the Commission improperly excluded certain evidence, and that it did not apply the correct legal standards.The Supreme Court of Ohio reviewed the case. It held that the PUCO did not commit reversible error in approving the cost recovery. The court determined that PUCO provided sufficient record support and explanation for its decisions and did not violate statutory requirements. While the court found PUCO’s application of a presumption of prudence to be erroneous, it concluded that this did not result in reversible error, as the record showed the companies met their burden of proof. The Supreme Court of Ohio affirmed the Commission’s orders. View "In re OVEC Generational Purchase Rider Audits Required by R.C. 4928.148" on Justia Law

A utility company, Southern California Gas (SoCalGas), entered into a 2022 franchise agreement with the City of Los Angeles, allowing it to install, maintain, and operate its natural gas system under city streets. In exchange, SoCalGas agreed to pay the City a franchise fee equal to 5.5% of its gross receipts from natural gas sales within the City. Of this, 3.5% was passed to SoCalGas customers as a surcharge, which was later approved by the California Public Utilities Commission (CPUC). The franchise agreement was adopted after extensive, arm’s-length negotiations and CPUC review.A putative class action was filed by a customer, alleging that the surcharge component of the franchise fee constituted an unlawful tax under article XIII C of the California Constitution because it was not submitted for voter approval. The plaintiff argued the fee should have been apportioned between charges for physical use of city property and charges for the general business privilege, with the latter portion requiring voter approval. The Superior Court for Los Angeles County granted summary judgment for the City, finding the franchise fee, including the surcharge, exempt from voter approval as a charge for the use of local government property under section 1, subdivision (e)(4) of article XIII C.The California Court of Appeal, Second Appellate District, affirmed the trial court’s judgment. The Court held that the franchise fee, including the portion passed through as a surcharge, was not a tax within the meaning of article XIII C, section 1, subdivision (e)(4), because it was compensation for the use of city property and not subject to voter approval. The Court further held that the fee did not need to be apportioned or shown to be reasonably related to the value of the franchise, but found that, even if such a requirement existed, the City met it through bona fide negotiations. View "Nguyen v. City of L.A." on Justia Law

In this case, a homeowner experienced property damage when sewage backed up into his residence after a sewer line was damaged during nearby excavation work. The excavation was initiated by a utility company, which hired an excavator to install a new underground electrical line following a neighbor’s complaint about electrical service. Before the excavation, the excavator notified MISS DIG Systems as required by law, which then informed local facility owners, including the township. The township responded that it did not have any facilities in the area and did not mark any sewer lines. The homeowner alleged that the township failed to comply with its duty under the MISS DIG Underground Facility Damage Prevention and Safety Act by not marking a township-owned sewer line, leading to his damages.The Oakland Circuit Court denied the township’s motion for summary disposition, concluding that governmental immunity did not shield the township from liability because the MISS DIG Act created an exception. The court also granted the homeowner leave to amend his complaint to assert a claim under the sewage disposal system event (SDSE) exception to governmental immunity, and set aside the notice issue for further briefing. The Michigan Court of Appeals affirmed the trial court’s decision.Upon review, the Michigan Supreme Court held that a governmental agency cannot be held civilly liable for monetary damages for a violation of the MISS DIG Act in circuit court, as the statute provides that the exclusive remedy is to file a complaint with the Public Service Commission. The Court also found that the trial court erred in granting the homeowner leave to amend his complaint to assert the SDSE exception before he demonstrated compliance with the statutory notice requirement. The Supreme Court reversed the decisions of the lower courts on these issues, vacated the grant of leave to amend, and remanded for further proceedings. View "Zezula v. Brown" on Justia Law

A group of electric transmission companies operating within the Midcontinent Independent System Operator (MISO) region, along with the Louisiana Public Service Commission (LPSC), challenged actions taken by the Federal Energy Regulatory Commission (FERC) regarding the rates charged to electricity customers. The dispute centered on the return-on-equity (Return) component of transmission rates, which compensates transmission owners for their investments. In 2013 and 2015, customers filed two complaints with FERC alleging that the Return was unlawfully high and violated the Federal Power Act's mandate for "just and reasonable" rates. FERC responded with a series of orders adjusting the Return and ordering limited refunds, but its methodology was challenged and ultimately vacated by the United States Court of Appeals for the District of Columbia Circuit in MISO Transmission Owners v. FERC, which remanded the matter for further proceedings.On remand, FERC issued new orders revising the Return, requiring Transmission Owners to provide refunds for the statutorily authorized 15-month period and, in light of the prior vacatur, ordering additional refunds from September 28, 2016 through October 17, 2024. FERC dismissed the second customer complaint after finding the revised Return was just and reasonable and declined to order additional refunds. Both Transmission Owners and LPSC sought rehearing, raising further objections to the refund periods and the methodology used to set the Return.The United States Court of Appeals for the District of Columbia Circuit reviewed the petitions. The court held that FERC acted within its authority in backdating refunds to align with the judicial vacatur, pursuant to FERC’s remedial powers under section 309 of the Federal Power Act. The court also found Transmission Owners lacked standing to challenge FERC’s consideration of the second complaint. LPSC’s objections to FERC’s methodology were rejected under the law-of-the-case doctrine and as lacking merit. The court denied in part and dismissed in part Transmission Owners’ petitions, and denied LPSC’s petitions for review. View "Midcontinent Independent System Operator Transmission Owners v. FERC" on Justia Law

A company that supplies propane purchased a majority interest in another company’s pipeline and storage facilities in Iowa, believing all necessary permits were in place. However, it was later discovered that the company had operated for nearly twenty-one years without obtaining state permits required under Iowa law, though it complied with all federal safety permits. The confusion stemmed from earlier permits issued under a regulatory scheme that was later preempted by federal law and replaced by a new state permitting system. The company did not realize new permits were required after the changes in the statutory framework.After the Iowa Utilities Commission discovered the lack of permits, it ordered the company to show cause and eventually imposed a $1.8 million civil penalty. This amount was based on the Commission’s calculation that each of nine permits previously needed for different segments of the pipeline and storage facilities constituted a separate “related series of violations,” each warranting the statutory maximum penalty of $200,000. The company contested this, arguing that the statutory cap should apply to the entire set of violations collectively.The Iowa District Court for Polk County affirmed the Commission’s penalty, and the Iowa Court of Appeals also affirmed, finding that each missing permit was a distinct “related series” under the statute. The company sought further review.The Supreme Court of Iowa reversed the lower courts, holding that the statutory maximum civil penalty under Iowa Code section 479B.21(1) is $200,000 for any related series of violations, and that all violations arising from the company’s failure to obtain permits after acquiring the pipeline and facilities were a single related series. The Court vacated the court of appeals’ decision, reversed the district court’s judgment, and remanded for further proceedings consistent with its interpretation. View "Enterprise Products Operating, LLC v. Iowa Utilities Commission" on Justia Law