168 So. 3d 905
Miss.2015Background
- Blanton appeals challenge to MPC rate increases approved by the Public Service Commission under Mississippi's Base Load Act (CWIP/ mirror-CWIP).
- Base Load Act authorizes prudently-incurred preconstruction, construction, operating costs in rate base, but requires prudency findings and hearings.
- MPC proposed Kemper Project costs grow dramatically from $2.88B to over $6.17B with no prudency hearings held.
- Commission approved rate increases for 2013–2014 based on mirror-CWIP without proper prudency determinations or notice to ratepayers.
- Settlement agreement between MPC and the Commission was negotiated privately, later challenged as ex parte and improper, and notice to ratepayers was deficient.
- Court reverses the March 5, 2013 order, remands for compliance with the opinion, and requires refunds and notice for future proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CWIP under the Base Load Act is an unlawful tax | Blanton: CWIP taxes violate the Constitution | MPC/Commission: CWIP valid under Act as rate mechanism | CWIP is not a tax (and not unconstitutional on this ground) |
| Whether the Base Load Act and CWIP recovery comply with constitutional constraints | Blanton contends Act violates due process and state/federal constitutions | MPC/Commission: Act provides lawful regulatory framework | Record shows lack of prudency findings and compliance; holding depending on remand |
| Whether ratepayers received due process due to lack of notice | Blanton: notice was insufficient to ratepayers | MPC/Commission: ratepayers participated; notice adequate | Due process concerns acknowledged; remand with notice requirements mandated |
| Whether ex parte settlement negotiations invalidated the settlement and CWIP approval | Blanton: ex parte communications violated §77-2-13; settlement invalid | MPC/Commission: negotiations were on appeal or not prejudicial | Settlement invalid if prejudicial; court determines proceedings remanded where appropriate |
| Whether the Settlement Agreement and CWIP approval withstand statutory constraints | Blanton: private agreement outside statutory authority | MPC/Commission: authority exists under Base Load Act | Settlement and CWIP approval contests sustained for remand and compliance with law |
Key Cases Cited
- Pittman v. Miss. Pub. Serv. Comm’n, 520 So.2d 1355 (Miss. 1987) (limits Commission to lawful authority; no rate increases for services never delivered)
- City of Starkville v. 4-Cnty. Elec. Power Ass’n, 909 So.2d 1094 (Miss. 2005) (strong presumption of validity; constitutional questions may be decided on other grounds)
- Warner-Lambert Co. v. Potts, 909 So.2d 1092 (Miss. 2005) (preserves judicial approach to constitutional challenges where other grounds exist)
- Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1 (U.S. 1978) (due process notice requirement in public proceedings)
- Power Comm’n v. Hope Natural Gas Co., 320 U.S. 591 (1944) (abandoned fair value; end-result standard in ratemaking)
- Smyth v. Ames, 169 U.S. 466 (1889) (original basis for rate regulation principles; used-and-useful concept evolution)
- Jersey Central Power & Light Co. v. FERC, 810 F.2d 1168 (D.C. Cir. 1987) (used-and-useful principle; CWIP debate in DC Circuit trilogy)
- Albritton v. City of Winona, 178 So.2d 799 (Miss. 1938) (state may invest public funds for public purposes; not arbitrary under §258)
- Londoner v. City & County of Denver, 210 U.S. 373 (1908) (due process notice requirement in assessments)