On November 20, 1984, the Louisiana Public Service Commission ordered Dixie Electric Membership Cooperative to refund
Dixie Electric filed a "Petition for Appeal and Judicial Review" of the order, in the Nineteenth Judicial District Court. After hearing additional evidence presented by Dixie, the district court, pursuant to La. R.S. 45:1194, ordered the matter remanded to the Louisiana Public Service Commission for reconsideration. Thereafter the Commission affirmed its original Order (U-16281) by ex parte Order U-16281-B. When the matter was returned a second time, the district court reversed the orders of the Commission and enjoined them from implementing and enforcing the two orders. Pursuant to La. Const. art. IV, § 21(E), the Commission has appealed the matter to this Court.
For the reasons which follow we find the refund order to be reasonable and proper and within the ratemaking authority of the Commission. The district court judgment will therefore be reversed, and Orders U-16281 and U-16281-B reinstated.
Dixie Electric Membership Cooperative,
During the 1974-1977 period when the overcharges were assessed, Dixie was recovering its purchased power costs through purchase power adjustment clauses, filed with and approved by the Louisiana Public Service Commission. These clauses provided for the flow through to customers of increases and decreases in the average monthly purchase power costs incurred by Dixie. Pursuant to these provisions, the purchase power costs had been passed on to Dixie's customers.
In June, 1980, Cajun Electric refunded $896,020.32 to Dixie, representing the overcharge of $766,842.86 and net interest payment of $129,177.46. The refund was accomplished by issuing to Dixie a credit memorandum for that amount, which reduced Dixie's purchase power bill for the month of June, 1980. Dixie did not thereupon (or at any time thereafter) reduce its
Pertinent to the issue in this case are the constitutional and statutory provisions relative to the ratemaking jurisdiction of the Louisiana Public Service Commission over electric cooperatives. Under La. Const. of 1921, art. VI, § 4,
In 1970, La.R.S. 45:121
(La. Const. 1974 Art. 4, § 21(B).
In 1978, La.R.S. 45:1163,
Thus, on October 4, 1984 the Public Service Commission, which had ceased regulating the rates charged by Dixie and other electric cooperatives in 1978 following the 1978 amendment to R.S. 45:1163, commenced again regulating the rates charged by Dixie. In the years intervening between 1978 and 1984, the Public Service Commission had not exercised regulatory control over Dixie. And it was during that lapse of regulatory control that Dixie received the disputed refund from Cajun. However, the refund was for power purchased from Cajun by Dixie (and passed on to Dixie's customers) during the years 1974 through 1977 when the Public Service Commission was exercising ratemaking jurisdiction over Dixie. And the disputed orders of the Commission were rendered in 1984 when the Commission clearly had, and was, exercising ratemaking jurisdiction over Dixie.
As was recited earlier in this opinion, the district court reversed the Public Service Commission and ruled in favor of Dixie, specifically finding that the action of the Commission in ordering Dixie to make the refund to its member customers was "arbitrary and capricious." In reaching this conclusion, the district judge emphasized that the Public Service Commission did not have ratemaking jurisdiction over Dixie in 1980, when Dixie received the refund from its wholesale supplier, Cajun Electric.
The Commission first takes the position that it had regulatory authority over Dixie in 1980 notwithstanding the 1978 amendment to La.R.S. 45:1163, and notwithstanding the Commission's having chosen not to regulate electric cooperatives between 1978 and 1984, because that jurisdiction is vested in them by the Constitution ([the Commission] "shall regulate all common carriers and public utilities" La. Const. art. IV, § 21(B); and in 1974 when the present Constitution was adopted, electric cooperatives were by statute public utilities in fact regulated by the Commission).
In response to Dixie's contention that the Commission had no ratemaking authority over Dixie in 1980, when Dixie received the refund from Cajun, the Commission argues that the refund was for overcharges made for the years 1974 through 1977 (when the Commission was regulating Dixie). And, furthermore, the 1984 order was based upon "current circumstances and conditions," i.e. those existing in 1984. Dixie's refusal to flow the refund through to its customers was a continuing one, a condition which persisted in 1984, and a condition upon which the Commission could validly base a ratemaking decision, the Commission contends. We agree.
The trial judge was simply wrong when he concluded that the refund order was not "a ratemaking determination based on `current conditions' at that time, November 20, 1984." That money should have been refunded to Dixie's customers, in November, 1984, or at some point in June, 1980, or thereafter. Those funds, refunded to Dixie by Cajun, had earlier been collected from Dixie's customers between 1974 and 1977 on billings in accordance with rates allowed by the Louisiana Public Service Commission. The continuing failure of Dixie to refund this money to its customers (albeit money received by Dixie at a time (1980) when the Public Service Commission was not exercising ratemaking authority over Dixie) is certainly a "current condition," or existing reality which justified the Commission's regulatory orders in the exercise of its plenary ratemaking authority.
In addition to the argument that the Public Service Commission lacked authority to order the refund because it did not have ratemaking jurisdiction over Dixie in 1980, Dixie raises other impediments to the Public Service Commission's order, including that:
For the following reasons we also find none of these additional arguments meritorious.
The orders of the Public Service Commission "are entitled to great weight and are not to be overturned unless shown to be arbitrary, capricious or abusive of its authority." Second, "courts should act slowly in substituting their views for those of the expert body charged with the legislative function of ratemaking, and should not disturb the Commission's decision in the absence of a clear showing of an abuse of power." Gulf States Utilities Co. v. Louisiana Public Service Commission, 364 So.2d 1266, 1268 (La.1978). Finally, decisions of the Public Service Commission should not be disturbed unless "found to be clearly erroneous or unsupported by evidence." Related to this standard of review is the rule that orders of the commission are presumed legal and proper. Also, a controlling rule is that the burden rests on the party attacking the order. Monochem, Inc. v. Louisiana Public Service Commission, 221 So.2d 504, 510 (La.1969).
Dixie contends that it applied the Cajun refund in a manner directed by La.
Dixie argues that the money it received from Cajun is (or was) used to defray expenses (La.R.S. 12:420(A)(1)) and to pay debt service (La.R.S. 12:420(A)(2)), as a result, the money need not be refunded to its customers. But La.R.S. 12:420 is designed to control the management of cooperatives with regard to its authorized and legitimate revenues. It does not authorize violation of tariffs or over collection of funds. Nor does it affect the obligation of a regulated cooperative to comply with an otherwise legal and proper refund order.
The next argument urged by Dixie Electric is that the refund order violates La.R.S. 12:426(C)
R.S. 12:426(C)'s directory provision ("shall set rates [for cooperatives] sufficient to meet the covenants of the cooperative's mortgage and loan agreements") does not prohibit the Commission's refund order in this case.
Furthermore, Dixie did not enter into evidence any loan agreement containing a provision that the failure to maintain a 1.5 TIER was a basis for default. What they did introduce into evidence, rather, was a
The purpose of the TIER requirement of the REA is to ensure that future revenues of the debtor cooperative will be sufficient to cover its debt obligations. For example, the REA Bulletin states that rates should be set which "will produce the revenue requirements of the system." In this case the rates of Dixie Electric were sufficient to produce a 1.7 TIER in 1984. A one time refund in 1984 would for that year have reduced the TIER, essentially a reflection of the company's performance, but not confiscatorily. And that refund would not in any respect have affected the company's performance after 1984; nor would it have affected the cooperative's ability to meet future debt obligations. As the Public Service Commission's expert testified:
Finally, that very TIER requirement of the REA applies only for two of every three years. Knute P. Kurtz, an accountant and expert witness testifying for Dixie Electric, stated that the TIER is only required "in a two out of three year period." The refund order in this case would only reduce Dixie's TIER, at a maximum, for one year. Furthermore, as Mr. Frank Myers conceded, when Dixie in fact fell below the 1.5 TIER level in the successive years 1981 and 1982, the REA simply sent Dixie a letter asking for an explanation of what would be done to improve the TIER. It is our conclusion that the Commission's ordering this refund by Dixie will not place any of its mortgages or loans in jeopardy.
Dixie also argues that Order U-16281-B amounts to an award of a money judgment in favor of their customers, and that the Public Service Commission is without authority to render a money judgment. First of all, the cases cited by Dixie Electric for this proposition address whether the Public Service Commission is the proper forum for a private litigant to institute a private action against a regulated carrier or utility. See Parker Gravel Company, Inc. v. Louisiana Public Service Commission, 182 La. 524, 162 So. 64 (La.1935); Morrison Cafeteria of Louisiana, Inc. v. Louisiana Public Service Commission, 181 La. 932,160 So. 634 (1935); Louisiana Power and Light Company v. White, 302 So.2d 358 (La.App. 4th Cir.1974); Central Louisiana Electric Co. v. Point Coupee Electric Membership Corporation, 182 So.2d 752 (La.App. 2nd Cir.1966). Those cases do not bar the Public Service Commission from promulgating a refund order of general application pursuant to its plenary ratemaking jurisdiction.
Equally without merit is Dixie Electric's argument that the refund order is barred by the one year prescriptive period found in La.R.S. 45:1198. That statute provides:
Dixie argues that because the refund by Cajun to Dixie was made in June of 1980, the one year prescriptive period began to run at the latest at that time; and thus the Public Service Commission was barred by prescription from issuing the refund order in 1984.
This one year prescription statute is inapplicable in the present situation. It only applies when a person for whose benefit an order is made petitions the Commission claiming damages premised on the utility's non-compliance with the order of the Commission. The prescriptive bar has no application to any time lapse preceding the Commission's action or order. That one year prescriptive period was not intended to deprive the Public Service Commission of the power to initiate its own investigation of a utility's operations and make appropriate regulatory orders.
Although not raised in Dixie's brief, it is appropriate to address two allegations raised in Dixie's petition for review to the Nineteenth Judicial District Court. The petition alleged:
Neither before the Public Service Commission nor before the district court did Dixie submit evidence to support either of the above allegations. We, therefore, find no need to address them. In all events these allegations alone cannot support a conclusion that the Public Service Commission's refund order was "arbitrary and capricious."
For the foregoing reasons, the judgment of the district court is reversed and the matter is remanded to the Louisiana Public Service Commission for such action as is consistent with this opinion and with the reinstated orders of the Public Service Commission, Number U-16281 dated November 20, 1984, and Number U-16281-B, dated March 4, 1985.
DISTRICT COURT JUDGMENT REVERSED; REMANDED TO THE LOUISIANA PUBLIC SERVICE COMMISSION.
FORET, J., dissents.
The term "electric public utility" as used in this Chapter means any person furnishing electric service within this state, the parish of Orleans excepted, including any electric cooperative transacting business in this state....
§ 3 to state:
In 1983 by 1983 La. Acts 636, La.R.S. 12:426 was amended once again, no doubt in order to reflect the 1978 amendment to La.R.S. 45:1163, which divested the Louisiana Public Service Commission of jurisdiction over cooperatives. See infra 8 and accompanying text. Also, section 426 was amended in 1983 to allow members of an electric cooperative to elect to come under the jurisdiction of the Louisiana Public Service Commission. That section now states in pertinent part:
1163. Power to regulate rates and service.
A. The commission shall exercise all necessary power and authority over any street railway, gas, electric light, heat, power, waterworks, or other local public utility for the purpose of fixing and regulating the rates charged or to be charged by and service furnished by such public utilities; however, no aspect of direct sales of natural gas by natural gas producers, natural gas pipeline companies, natural gas distribution companies, or any other person engaging in the direct sale of natural gas to industrial users for fuel or for utilization in any manufacturing process shall be subject to such regulation by the commission. In addition, a schedule of rates of an electric cooperative shall not require approval of the commission if the schedule previously was approved by the board of directors of the electric cooperative and by the federal government or any agency thereof, nor shall the authority of the commission extend to the service rendered by electric cooperatives except to the extent provided in R.S. 45:123 and in orders of the commission promulgated to effectuate the purposes of R.S. 45:123. (Emphasis added.)
Section 420. Refunds to members
B. Revenues for any fiscal year in excess of the amount necessary to provide for the items listed in Sub-section A shall, unless otherwise determined by a vote of the board of directors, be distributed by the cooperative to its members as patronage refunds prorated in accordance with the patronage of the cooperative by the respective members paid for during such fiscal year. Nothing herein contained shall be construed to prohibit the payment by a cooperative of all or any part of its indebtedness prior to the date when the same shall become due.