Justia Utilities Law Opinion Summaries

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

A public utility that provides natural gas service to approximately 450,000 customers in southwestern Ohio had long relied on propane caverns as a seasonal gas supply. After constructing a new pipeline, the utility retired the caverns and sought to recover the costs associated with their retirement—such as the remaining undepreciated value, decommissioning expenses, and the value of the remaining propane inventory—from customers through increased rates. The company had previously obtained approval to abandon the caverns and defer these costs as a regulatory asset, with the understanding that it would seek their recovery in its next base-rate case.The Public Utilities Commission of Ohio reviewed the utility’s application to increase rates. After a hearing, the commission approved an agreement allowing the company to recover the full deferred amount, amortized over ten years as an operating expense. The commission determined that these costs were recoverable under Ohio Revised Code section 4909.15(A)(4) as a cost of rendering public-utility service, and not subject to the “used and useful” standard under section 4909.15(A)(1). The commission also found that, even if the latter standard applied, the costs would still be recoverable.The Supreme Court of Ohio affirmed the commission’s order. The court held that the commission did not act unlawfully or unreasonably in permitting the utility to treat the deferred costs related to the retirement of the propane caverns as operating expenses recoverable under R.C. 4909.15(A)(4). The court further found that these costs were properly considered as current expenses necessary for the provision of utility service, distinguishing them from investment losses in facilities never placed into service. The court dismissed as moot arguments regarding alternative findings and rejected the request to make related rates subject to refund. View "In re Application of Duke Energy Ohio, Inc." on Justia Law

A utility company serving multiple Florida counties sought approval from the Florida Public Service Commission for a four-year rate plan. As part of its petition, the company requested approval for two accounting measures: the Reserve Surplus Amortization Mechanism-Adjusted Depreciation Parameters (RSAM-ADP) and the Reserve Surplus Amortization Mechanism (RSAM). The RSAM-ADP would result in a reserve surplus, which the RSAM aimed to address. Additionally, the continued use of an acquisition adjustment related to a prior corporate purchase became an issue during the proceedings.The Public Service Commission received and considered various depreciation proposals from both the utility and the Office of Public Counsel (OPC), as well as testimony regarding the appropriateness and impact of the RSAM-ADP and RSAM. The Commission approved the RSAM-ADP, recognizing it would result in a reserve surplus, and then approved the RSAM as a corrective measure. The Commission also allowed the continued amortization of the acquisition adjustment until the utility’s next rate case. OPC filed a motion for reconsideration, which was denied, and then appealed the Commission’s decisions to the Supreme Court of Florida.The Supreme Court of Florida reviewed whether the Commission’s actions were consistent with its rules, policy, and prior practice, and whether its decisions were supported by competent, substantial evidence. The Court held that the Commission’s approval of the RSAM-ADP and RSAM was not inconsistent with the applicable depreciation rule, did not violate official policy or prior practice, and was supported by substantial evidence. The Court also found that the continuation of the acquisition adjustment was neither contrary to official policy nor lacking evidentiary support. The Supreme Court of Florida affirmed the Commission’s final and clarifying orders. View "Citizens of the State of Florida v. Florida Public Service Commission" on Justia Law

A privately owned water utility company provides water services to multiple customers in Raleigh and Fayette Counties, West Virginia. Near one of its service areas is an undeveloped tract of land known as the Appalachian Heights Site. The City of Mount Hope, a municipal water provider, received funding from the legislature, county commissions, and a developer to extend water service to this Site. After Mount Hope proposed annexing the Site, the utility company filed a complaint with the Public Service Commission (PSC), seeking to prevent Mount Hope from serving the Site, claiming exclusive rights to provide water there.Initially, the PSC’s chief administrative law judge found the Site to be within the utility company’s exclusive service territory, but no cease and desist order was issued. This recommended decision became final when no exceptions were filed. After Mount Hope annexed the Site, the utility company petitioned the PSC to reopen the case, seeking an order to enforce its exclusivity. The PSC reopened the matter, remanded for further proceedings, and eventually, after Mount Hope filed exceptions to a subsequent recommended decision re-affirming the utility’s exclusivity, the PSC found the Site to be in a “gray and overlapping” service area. This meant that future developers or customers at the Site could choose either provider. The utility company’s petition for reconsideration was denied.The Supreme Court of Appeals of West Virginia reviewed whether the PSC exceeded its statutory authority by reconsidering its prior decision and whether it properly found the Site to be in a gray and overlapping service territory. The court held that the PSC had authority to revisit its prior order and that, under applicable statutes and commission tests, the PSC’s finding that the Site was in a gray and overlapping service area was supported by the evidence. The court affirmed the PSC’s order. View "Beckley Water Company v. Public Service Commission of West Virginia" on Justia Law

A licensed California fisherman sought public access to fish at the Calaveras Reservoir, which is owned by the City and County of San Francisco and managed by the San Francisco Public Utilities Commission. The reservoir, a source of drinking water for millions, is governed by a watershed management plan that currently prohibits public access and fishing. After the City determined that, subject to environmental review and regulatory approval, shoreline fishing could potentially occur without compromising water quality, it began planning for a fishing program, which included infrastructure improvements and compliance with environmental laws.Previously, in a related proceeding, the Alameda County Superior Court ordered the City to determine whether fishing could occur without affecting water purity, but it did not require the City to immediately open the reservoir or apply for a permit. The City complied by starting the environmental review and planning process. Dissatisfied with the pace, the fisherman filed a new petition for a writ of mandate, seeking to compel the City to immediately apply for an amended water supply permit and open the reservoir for fishing. The Superior Court denied the petition, finding no ministerial duty requiring the City to proceed immediately and concluding that legal requirements, including environmental review and program planning, must be satisfied first.On appeal, the Court of Appeal of the State of California, First Appellate District, Division Three, affirmed the lower court's judgment. The appellate court held that the plaintiff had not established a clear ministerial duty requiring the City to immediately apply for a permit or open the reservoir for fishing. The court found that the governing statutes and regulations allow for the exercise of discretion and require compliance with environmental and permitting processes before fishing access can be provided. The judgment was affirmed. View "Dummer v. City and County of S.F." on Justia Law

Several electric suppliers, previously licensed to operate in Connecticut, entered into a settlement agreement with the Public Utilities Regulatory Authority (PURA) in 2022. This agreement resolved an investigation into the suppliers’ regulatory compliance. Under the agreement, the suppliers agreed to withdraw from the state market, make certain payments, and provide documentation demonstrating their compliance with the state’s renewable portfolio standards (RPS) for 2022. PURA approved the agreement, and the suppliers submitted the required documentation, after which PURA confirmed their compliance and returned their security deposits.Subsequently, PURA initiated its annual uncontested proceeding to review all suppliers’ compliance with the 2022 RPS, as mandated by statute. The plaintiffs resubmitted their compliance documents. However, PURA determined the suppliers had not fully satisfied their RPS obligations due to discrepancies in load data calculations and ordered additional payments exceeding $1 million. The suppliers then sought a declaratory ruling from PURA, arguing they had fulfilled their obligations under the settlement, but PURA declined, citing the ongoing RPS proceeding. After PURA issued its final decision in the uncontested proceeding, the suppliers filed suit in the Superior Court, seeking both an administrative appeal and a declaratory judgment. The Superior Court dismissed both claims: the administrative appeal for lack of a final agency decision, and the declaratory judgment for failure to exhaust administrative remedies.The Connecticut Supreme Court affirmed the dismissal of the administrative appeal, finding that PURA’s decision in an uncontested proceeding was not a “final decision” subject to judicial review under the Uniform Administrative Procedure Act. However, the Supreme Court reversed the dismissal of the declaratory judgment claim. It held that the suppliers had exhausted their administrative remedies by seeking a declaratory ruling and participating in the RPS proceeding, and that the trial court had jurisdiction to consider their request for a declaratory judgment regarding the applicability of the relevant statutes to their circumstances. The case was remanded for further proceedings on the declaratory judgment claim. View "Vistra Corp. v. Public Utilities Regulatory Authority" on Justia Law

Two North Carolina electric utilities sought approval from the North Carolina Utilities Commission to implement performance-based regulation (PBR), an alternative to traditional ratemaking, and to increase rates through multiyear rate plans (MYRPs). The General Assembly had enacted legislation authorizing PBR in 2021, aiming to allow utilities to adjust rates over a three-year period based on projected capital investments and to incentivize carbon emissions reductions. The utilities, Duke Energy Progress and Duke Energy Carolinas, filed applications with supporting testimony and proposals, prompting intervention from stakeholders including the Attorney General, industrial customer groups, and electric membership corporations. The parties contested issues such as interclass subsidization, electric vehicle (EV) charging revenue treatment, approval of projected future capital projects, allocation of fuel and transmission costs, and the authorized return on equity (ROE) for the utilities’ shareholders.Following evidentiary hearings, the North Carolina Utilities Commission approved both utilities’ requests for modified MYRPs, allowed a 10% reduction in interclass subsidies (less than what some intervenors wanted), permitted the exclusion of estimated residential EV charging revenue from decoupling mechanisms, and authorized certain projected capital projects as “known and measurable” for rate recovery. The Commission also discontinued the “equal percentage” methodology for allocating fuel costs, approving voltage-differentiated rates instead, and adopted a stipulation shifting some transmission costs from one utility to the other to mitigate customer rate disparity. ROEs of 9.8% for Duke Energy Progress and 10.1% for Duke Energy Carolinas were set, with the latter reflecting a shift in Commission membership and risk assessment.On direct appeal, the Supreme Court of North Carolina reviewed whether the Commission’s orders violated law, misinterpreted the PBR statute, or lacked evidentiary support. The Court held that the Commission properly interpreted and applied the relevant statutes, made sufficient findings supported by competent, material, and substantial evidence, and did not abuse its discretion regarding subsidy reductions, EV revenue exclusion, capital project approval, fuel cost allocation, or ROE determinations. The Court affirmed the Commission’s orders in full. View "State ex rel. N.C. Utils. Comm'n v. Carolina Indus. Grp. for Fair Util. Rates II" on Justia Law