Miller v. Arizona Corp. Commission
227 Ariz. 21
| Ariz. Ct. App. | 2011Background
- Arizona Public Service (APS) customers challenge 2006 REST rules and an APS surcharge adopted by the Arizona Corporation Commission (the Commission).
- The REST rules replaced the earlier Environmental Portfolio Standard and directed utilities to meet growing renewable energy targets, including distributed energy requirements.
- The Commission conducted extensive rulemaking with public workshops, comments, and intervenors; plaintiffs did not participate.
- Superior Court concluded the REST rules and surcharge were within the Commission's plenary ratemaking authority as reasonably necessary steps.
- Plaintiffs appealed on jurisdictional collateral-attack grounds; the Commission cross-appealed on merits.
- The court affirms, holding the REST rules fall within Article 15, Section 3 plenary power and that the challenged rules are reasonably connected to ratemaking.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the collateral attack is proper under the Commission’s jurisdiction. | Plaintiffs challenge jurisdiction, not merits. | The challenge is collateral; jurisdictional review governs. | Collateral attack proper; but authority upheld. |
| Whether the REST rules fall within the Commission’s plenary ratemaking power. | REST rules are beyond ratemaking or constitute managerial interference. | REST rules reasonably necessary steps in ratemaking. | REST rules within plenary authority. |
| Whether the managerial interference doctrine bars plaintiffs’ challenge. | Rules intrude on management prerogatives. | Plaintiffs lack standing; doctrine not applicable here. | Plaintiffs lack standing to invoke the doctrine. |
| Whether distributed energy and self-directed energy rules are valid under Nexus to ratemaking. | R14-2-1805 and -1809 lack nexus to ratemaking; rest controls capacities. | Rules relate to reliability, rates, and utility planning. | R14-2-1805 and R14-2-1809 properly promulgated under plenary power. |
| Whether APS surcharge approvals fall within Commission authority given REST rules. | Surcharges improperly decided without proper jurisdiction. | Surcharges fall within ratemaking powers. | APS surcharge approvals affirmed. |
Key Cases Cited
- Tucson Warehouse & Transfer Co. v. Al's Transfer, Inc., 77 Ariz. 323, 271 P.2d 477 (1954) (collateral attack governed by jurisdictional limits; powers conferred by constitution)
- Arizona Corp. Comm'n v. Pac. Greyhound Lines, 54 Ariz. 159, 94 P.2d 443 (1939) (limits and scope of Commission powers under Art. 15, §3)
- State ex rel. Dandoy v. City of Phoenix, 133 Ariz. 334, 651 P.2d 862 (App. 1982) (distinguishes jurisdictional challenges from legal errors)
- Arizona Eastern Railroad Co. v. State, 19 Ariz. 409, 171 P. 906 (1918) (distinction between general powers and permissive regulations)
- Woods v. Arizona Corp. Comm'n, 171 Ariz. 286, 830 P.2d 807 (1992) (recognizes ratemaking powers and regulatory breadth under Art. 15)
- Commercial Life Insurance Co. v. Wright, 64 Ariz. 129, 166 P.2d 943 (1946) (limits on implied powers of Commission; need for strict constitutional construction)
- Ethington v. Wright, 66 Ariz. 382, 189 P.2d 209 (1948) (recognizes Commission’s authority to take necessary steps in ratemaking)
- Phelps Dodge Corp. v. Arizona Electric Power Cooperative, Inc., 207 Ariz. 95, 83 P.3d 573 (App. 2004) (rules enabling competition can be reasonably necessary steps in ratemaking)
- U.S. West Communications, Inc. v. Ariz. Corp. Comm'n, 197 Ariz. 16, 3 P.3d 936 (App. 1999) (identify nexus of certain regulatory rules to ratemaking; some billing rules not tied to ratemaking)