Citizens Action Coalition of Indiana, Inc. v. Northern Indiana Public Service Co.

OF IN CITIZENS ACTION COALITION

DIANA, INC.; Indiana; City Gary,

Bailly Alliance, Appellants,

v. INDIANA

NORTHERN PUBLIC SER COMPANY;

VICE United States Steel

Corporation; Corpora Bethlehem Steel

tion; Company; Inland Steel National Corporation,

Steel Midwest Divi Steel ; Incorporated, Unio Carbide sion n Laughlin Incorporated, &

Jones Steel Laughlin Corporation

Jones & Steel

Division, Utility Office Consumer

Counsel, Appellees.

No. 1185S470.

Supreme Court of Indiana.

Nov. 1985. II, Mullet, Julian, In-

William Michael A. dianapolis, for Citizens Action Coalition Indiana, Inc.

611 (PSCI) City Gary Law sion of Indiana Daronatsy, contrary Arthur A. of acted to Gary, City Gary, Ind. Dept., permitting for law the Northern Indiana (NIPSCO) Company Public Service to amor- Drozda, Gary, Bailly for Alli William tize Bailly the sunk costs of the cancelled ance. project through N-1 retail rates. The City Spencer, Indianapolis, Frank E. for Appeals Court of reversed the cause and Action Gary, Ind. and Citizens Coalition ordered the PSCI to vacate rate in- Ind., Inc. by Bailly grant crease occasioned N-1. We Wayne, Thompson, Robert L. Fort for question transfer to order resolve the appellants. presented and other issues raised. Eichhorn, Jr., Frederick F. William H. pertinent These are the facts to the is- Eichhorn, Webster, Eichhorn, Charles W. sue. upon NIPSCO embarked a Link, Hammond, Eichhorn & for Northern project to generating construct nuclear Indiana Public Service Co. plant designated Bailly as N-1. Because Huston, Schlegel, Fred E. Michael J. delays litigation, opposition due to to to Daniels, Indi- Mary Stanley, M. Baker & licensing provisions involving safety, and to Co., anapolis, Inland Steel for intervenors costs, escalating NIPSCO cancelled the Corp., Union and the Dalton Carbide 21, 1981, August expend- on after Foundries, Support In- Ind. in of Northern | $205, 724, ing never com- NIPSCO diana Public ServiceCo. pleted project, N-1 nor did NIP- place per- SCO it into service. The PSCI Alexander, Corp., D. Michael U.S. Steel Pa., Hartley, L. Martin Pittsburgh, Robert $190, 746, mitted to amortize 580.- Seopelitis Hartley, Scopelitis, Alki & Gar- through year & retail rates a fifteen over vin, Indianapolis, appellees. period. pertinent part for PSCI's order is set forth here: Price, Herrin, Q. L. Parvin Office of John resolve the issue to whether We as Counsel, Utility Indianapolis. Consumer amortization will be allowed affirmative- Pearson, Ind., Linley Atty. E. Gen. ly. Indiana utilities are under statu- Johnson, Gen., Deputy Atty. K. for Robert serve; "every public tory mandate Public Service Com'n of Ind. required provide reason- utility Hellmann, Goodwin, F. E. Robert Max able, adequate service and facilities" Mann, Johnson, Chaney, & Goodwin Wil- (ILC. 8-1-2-69). The record 8-1-2-4 liams, Haute, City Terre of Terre Haute in order for in this cause established that as amicus curiae. serve, utility to meet its mandate to it Deer, Jerry Belknap, P. Richard E. begin must construction of coal-fired Strain, Thornburg, In- James A. Barnes & generating years facilities 8 ad- dianapolis, American Fletcher Nat. longer of the need therefor with vance Co., Wayne Nat. Bank and Trust Fort periods powered for nuclear facilities. Bank, The Indiana Nat. Bank and Mer- law, If, comply with the order Indianapo- chants Nat. Bank & Trust Co. of gener- begin must construction of lis as amici curiae. ating projects many years in advance of power, the need for the it is the Commis-

DeBRULER, Justice. responsibility to assure that sion's doing great is not so as to petition risk in so This case comes to this Court on In 1971 when discourage the endeavor. to transfer from the Second District of the began its effort to construct Appeals. Petitioner Court of Action Coali Citizens N-1, great Inc., power nuclear held Bailly, tion Indiana et al. v. Northern power economic Inc., promise for efficient and Company et Indiana Public Service Ind.App., 472 N.E.2d 938. The years, al. supply. the course of Over advantages gen- nuclear the economic Appeals issue of Court of considered the generation forms of eration over other whether or not the Public Service Commis- ultimately the and the construction of the I.C. 8-1-2-1

began to deteriorate regulatory indeci- delays resulting from other statutes in Title 8 which confer chang- federal level and the sion on the making authority the PSCI its rate the cancellation of ing economics forced power. The construction of Indiana law is This August N-1 in of 1981. Bailly, particularly province of this Court. previously has allowed Commission - - The commission its Public Service derives in of costs incurred aban- amortization authority solely from the stat- power and (Cause No. projects doned and cancelled ute, grant power and unless a and au- 12, 1979) Cause No. 86818 32079 Dec. thority in statute it must can be found the. 10, 1981). amor- The amount of the June Chicago that there is none. be concluded was not as prior proceedings in tization & E.I.R. v. Public Service Commis Co. here, principle is the great as but 592, (1943), 221 Ind. pru- the Petitioner 49 N.E.2d. same. sion et al. Wefind Bailly, presumed 341. An order is valid unless the dently began construction of cancellation, it upon its pre N-1 and that contrary clearly apparent. is Such extraordinary cost service became an if fails sumption vanishes the Commission provide to incurred in an loss statutes, effort conform "to all relevant stan to the consumers Petition- energy dards, legal principles." Illinois-Indi system. The loss occurred with the er's ana Cable Inc. v. Public Service T.V. Bailly, project The N-1 cancellation. (1981), Ind.App., 427 N.E.2d Commission by Peti- undertaking awas reasonable 1100, gov The standard of review is 1105. duty to meet its to serve. tioner by in erned statute. IC. 8-1-3-1 states § opposed by fact was pertinent portion. safety and environmental rea- some for assignment errors that the deci- "An given weight in this deci- sons cannot be sion, ruling or order of the commission locations, safety, The site environ- sion. to contrary to law shall be sufficient many liti- mental and other issues were sufficiency of the facts present both the pro- gated in the Construction Permit decision, ruling to sustain the or found ceedings, in Petitioner's favor decided order, sufficiency of the evidence so, agency jurisdiction with the to do Regulatory finding of facts the Nuclear Commission to sustain (NRC), ultimately ap- it was rendered." which and reviewed and Court of proved by the United States multiple-tier stan- provides a This statute for the Circuit and the Appeals Seventh level, of review. At the first dard Supreme United States Court. requires that the statutory Com- standard of amortization of the The allowance findings specific contain mission's decision confused Bailly, N-1 costs should not be factual determinations material on all the of a return on the with an allowance Ayres & its ultimate conclusions. L.S. not used utility plant of a which is value Light Indianapolis Power & Co. Co. v. utility's in the service. and useful 652, 814, (1976), Ind.App. 351 N.E.2d seek to earn a return Petitioner did not level, statutory At the second during Bailly, N-1 its investment on in reviewing court to requires a standard and no return period of amortization evidence quire there is substantial whether provided in this the investment will be on support the record to light of the whole amortization is order. The authorized findings of basic fact. L.S. Commission's permit Petitioner to recover 351 N.E.2d at 822. Ayres supra, & Co. put in a reasonable sunk costs forth determining whether or not the addition serve, meet the mandate to effort decision, of the Commission ruling or order unfortunately failed. findings of fact supported by specific REVIEW evidence, STANDARD OF there is another sufficient always may this Court matter in which case of the issues in this The resolution question of that is the properly inquire, and upon the definition of service depends decision, ruling approve any expense or order or for institutional whether or not the image building advertising, or charitable contrary to law. See Public Service Indianapolis City contributions, v. political contributions. 308, 131 N.E.2d 312. In 235 Ind. 76, 9, 167; 1988, p. ch. ch. [Acts § words, stay with other did the Commission 190, 4, 928; 1947, 807, 1; 1979, p. ch. § to the statu jurisdiction in its and conform P.L. § 1.] tory legal principles involved standards NIPSCO asserts that the determination of decision, producing ruling or order. operating expenses whether are allowable City See Public v. Service Commission or not is within the sound discretion of the supra, 131 N.E.2d at 313. Indianapolis, PSCI and that the PSCI's determination appeal cannot be on overturned unless there is an of that discretion. NIP- abuse contends that the amortization that, SCO concludes since the PSCI's deter- the cancelled N-1 of sunk costs of supported by mination was substantial evi- operating expense. project is an allowable dence, did not abuse its discre- PSCI City relies on Evansville v. NIPSCO tion, thus, the PSCI must be affirmed and Electric Com Southern Indiana Gas appeal. on Ind.App. 339 N.E.2d pany proposition. support 562 to this argument This contains fundamental objective with, in primary The begin utility charges Commission's flaw. To are proceedings to establish a every rate based service. I.C. 8-1-2-4 states § charges of rates and sufficient to level charge by any public utility that "The made utility operating permit the to meet its any for service rendered or to be rendered expenses plus a return on investment in directly either or connection therewith compensate will its investors.... which just." shall be reasonable and Service is Ed.): (Burns Code IC. 8-1-2-4 defined in 1.0. 8-1-2-1: § Hope Natu Federal Power Comm'n v. Definition-Short Ti- 8-1-2-1[54-105]. - 591, 605, (1944),320 U.S. ral Gas Co. tle. [289], 88 L.Ed. 333. The utili S.Ct. 281 in act in The term "service" is used this expenses, minus its exclu ty's revenues inclusive sense and its broadest and most interest, earnings sive of constitute only not the use or accommoda- includes the "return'" that is available to be or patrons tion afforded consumers or but Al utility's investors. distributed to commodity furnished any product also or types all operating costs include lowable utility other by any public or (e.g. wages, sala operating expenses appliances, plant, equipment, apparatus, fuel, maintenance) ries, plus annual employed by any facility property and charges depreciation operating any utility performing in public or other utility may any While the incur taxes. furnishing any product or or in service chooses, operating expenses it amount of purposes to the commodity and devoted is invested with broad utility other public in or making rate to disallow discretion and accommoda- engaged and to the use imprudent ex purposes any excessive or public. tion (Burns 1971, 8-1-2-48 penditures. I.C. model of statu- this definition is no Since Ed.) Code in helpful find it tory draftsmanship, we at supra, Evansville 339 N.E.2d City dissect the definition. analysis our argues Consequently, NIPSCO catego- three Upon doing, so we discover any type category that that is not or there therein: ries of "service" included se, by per prohibited unless is disallowable (1) afforded The use or accommodation 8-1-2-6(c) which states: 1.0. § patrons; or consumers determining In the amount of allowable commodity fur- (2) Any product or expenses utility, of a the com-

operating utility; or by nished may not take into consideration mission recognized that the did PSCI order (3) plant, equipment, apparatus, The facility em- appliances, property, Bailly characterize the cancelled N-1 ployed by the'utility project operating expense. as an service,

(a) performing in (b) furnishing any product in or com- TI modity and devoted argues the PSCI's charac- (a) purposes in to the which such Bailly project terization N-1 as an engaged and logs extraordinary cost of service is correct. (b) to the use and accommodation of prudently The PSCI found that NIPSCO public. began Bailly, construction of N-1 and that cancellation, upon it became an extraor- Illinois-Indiana Cable T.V. v. Public (1981), Ind.App., 427 Service Commission dinary cost of service loss incurred an 1100, 1108-1109. N.E.2d provide effort energy system. for its PSCI characterized the N-1 ratemaking process by has stat undertaking as a reasonable practice long-standing ute and included the duty NIPSCO to meet its to serve. property of that described in cat valuation (8) egory which is "used and useful" above essence, the PSCI order has un a rate The rate order to establish base. lawfully expanded the definition of service utility property base consists of em found 1.0. 8-1-2-1 as construed public ployed providing with the ser P.S.C., Illinois-Indiana Cable T.V. v. su charged vice for which rates are and consti places pra. The PSCI order an additional tutes the which the return investment charge on other consumers than that al supra, City is to be earned. Evansville lowed in I.C. 8-1-2-4. additional § Any operat 339 N.E.2d at 569. allowable charge prudent is for and reasonable at ing expense must have a connection to the tempts provide at that fail and that service rendered it can service before be recovered ratepayers. no benefit to through retail rates. See I.C. 8-1-2-4. § Service commences with and includes op This connection is established when the property. "used and useful" Without erating expense is incurred as a result of - property "used and useful" there cannot be process whereby existing the "used and 8-1-2-1, by defining service. I.C. § (8) above, property, category useful" is em service in such a manner as to render it ployed produce product the or commodi property, dependent on "used and useful" (2) above, accommodation, ty, category promoting a clear delineation bal- above, (1) payers category rate receive. responsibili- ance of investor and consumer salaries, fuel, example, wages, For mainte market, competitive In ties. investors plus charges depreciation nance annual capital employed pro- contribute which operating Ayres taxes. v. L.S. & Co. purchase product. duce a Consumers (1976), Indianapolis Light Power & price product, purchase includes a 652, 814, Ind.App. 351 N.E.2d 819. Here capital reimbursement for the contribution Bailly project N-1 an the cancelled is not compensate plus profit of the investors a expense not a operating because it was they the risk assumed. the investors for process result of this which establishes here, the rendered. requisite connection to service In the market under consideration fact, utility granted monopoly. Utilities are Bailly project N-1 could never best, regulated protect in order to consumers operating expense. an At it could monopoly artificially i.e. property "used useful" from the abuses of have become then could have incurred govern the which allowable high prices. The statutes which grant regulation of utilities and which However, expenses. such was operating power provide a authority and PSCI its case, specifically not the as the PSCI found surrogate competition. See Public Ser- Bailly N-1 was never Bell Tele- It must vice v. Indiana property. "used and useful" also phone (1955), Company 235 Ind. 130 tion of cancelled and plants abandoned N.E.2d 467. I.C. 8-1-2-1 and I.C. 8-1- § § numerous past times over seventy- 2-4 insure responsibilities utility that the years and that legislature has made no investors and consumers are commensu subsequent change in statute responsibilities rate with the of investors response. Consequently, they claim that competitive and consumers in a market. this raises a strong presumption legisla example, For if an automobile company acquiescence tive and that this Court on a capital project embarked new to build should defer to the judg administrative factory produce sports that would a new PSCI, ment of the They argue further then, car and before it produced ever that it would be unfair if this Court were to sportscar, it, cancelled com automobile disallow amortization when lenders were pany ordinarily would be unable to recover rely entitled to long on this standing prac the cost from competi its consumers in a tice of the PSCI tive market. This is the case we have here. capital NIPSCO embarked on a project to We have consistently recognized that a generating and, build a nuclear plant be long adhered to administrative interpre produced fore it ever electricity, NIPSCO dating tation legislative from the enact cancelled it. The definition of service in ment, subsequent with no change having 8-1-2-1 scope 1.C. restricts the of includ § involved, been made in the raises statute property able property per to that which a presumption acquiescence furnishes, forms and producing proper ie. strongly persuasive which is upon the ty or "used and useful" property. See also courts. State Board Tax T.V., Commis Illinois-Indiana supra Cable at sioners Corp., S. Ind. v. Carrier Consequently, 8-1-2-1, 1108-1109. 1.C. § (1977), 1385; 266 Ind. 365 N.E.2d conjunction 8-1-2-4, protects with 1.0. § having pay consumers from for service Compton (1965), Baker v. 247 Ind. received, something not they 162; would 211 N.E.2d Whirlpool Corp. v. subjected competitive to in a indus State Board Tax Commissioners try. Since N-1 never became "used Ind.App. 216, 338 N.E.2d 501. and useful" property as 1.0. 8-1-2-1 con Department Revenue, Indiana Indi of templates, the PSCI's characterization of ana Gross Income Tax Division v. Glen Bailly cancelled N-1 as an ex (1981), Ind., dale-Glenbrook Associates traordinary cost of service loss was incor 217, 429 N.E.2d. see also Constanzo v. rect and the allowing order amortization (1932), Tillinghast 341, 345, 287 U.S. 53 contrary dealing was to law. with and claim, resolving this we have been 152, 154, unable 350, S.Ct. 77 L.Ed. 353. to conceive of a situation of our own in Although interpretation placed upon required which the consumers could be statute an agency administrative replenish capital lost which had never be may binding the State not this or, come "used and useful" property incorrect, if interpretation Court words, required other to act in aid and interpretation as has been made and support of the as an insurer of the applied previous adop- a number of risk, investor's unless consumers received tions, weight, is entitled to considerable provided an interest in return which an only stability not adop- to insure the opportunity capital to earn a return on the proceedings brought pursuant tion there- supplied. years, to for a number but as evidence

TII meaning of the statute to those charged by law and most concerned curiae, with banks,1 amici argue that the PSCI has allowed amortiza its administration. See State v. Griffin Bank, 1. Merchants National American Fletcher diana National Bank. Bank, Bank, Wayne National Fort National In- 616

(1948), 279, 284, 537, N.E.2d. 226 Ind. 79 IV 540. We also address the issue that forms the 39, Compton v. 247 Ind. 211 Baker opinion of the dissent in the basis 162, N.E.2d Appeals. Court Whether or not the Bailly project qualifies Amici N-1 NIPSCO and cite these cases as an accommo- aspect contemplated by dation of service as to establish that the PSCI has adhered to 8-1-2-1. interpretation allowing amortization 1.C. § plants cancelled and since the abandoned The dissent claims that "accommodation" Spencer-Shively enactment of the Act in 8-1-2-1 1.0. should be defined as it is § Haute, 1918. Commercial Club v. Terre in Webster's Third New International Dic- Co., (Ind.Pub.Serv.Comm'n E Traction & (1976) tionary specialized because the 27, 1917), 817, April Cause No. P.U.R. 1917 legal meaning pa- derived from commercial D., 748, 747-748; Co., Light Owensville per practices inapposite to construction {Ind.Pub.Serv.Commin, 29, 1920), Sept. of the statute. The dissent asserts that the 5556; Cause No. Toner v. Martinsville applicable "something definition is that is Co., (Ind.Pub.Serv.Comm'n, Gas & Elec. supplied satisfy for convenience or to 27, 1923), 6959, April Cause No. P.U.R. result, need." As a the dissent found that E., 69, 71-78; Indianapolis Rail if this definition of accommodation is con- Inc., Pub.Serv.Comm'n, 7, 1958), May ways, strued in its "broadest most inclusive 23408, 882-A, (N.S.) No. Cause 100 P.U.R. (language sense" taken from 1.0. 8-1-2- § 207, (Indiana Co., 217; Michigan & Elec. 1) most of the N-1 costs are recover- (Ind.Pub.Serv.Comm'n _ September _ through able amortization from the con- 1978), 85251.) excep Cause No. With the sumers. case, tion of the last these cases establish long-adhered interpreta to administrative analysis This is flawed in several re- allowing tion of amortization of abandoned First, "service", spects. it is the term plants plants. i.e. that were "used and use term "accommodation" which is to be property ful" and then retired from serv interpreted in its "broadest and most inclu- clearly distinguishable ice.2 This is from Second, sive sense" LC. 8-1-2-1. allowing plants of cancelled amortization specific legal term accommodation has a Al- that never became "used and useful". meaning public utility in the context of plants of amortization of cancelled lowanee regulation. encourage unpro would uneconomical or law, The Railroad Ind. Acts ventures; whereas, ductive allowance for Chapter use Ind.Acts plants or retired amortization abandoned following in the the term accommodation encourages utilities to remove obsolete manner. plants property and from the ratebase. power authority hereby and is vest- treatment also consumers be This benefits [public in ser- ed the railroad commission property cause obsolete and inefficient is Indiana, and, of and it vice commission] from the ratebase. removed hereby duty, made its as hereinafter is Nevertheless, legislative the doctrine of provided, supervise freight to all railroad acquiescence estoppel is an doctrine de- tariffs, adopt passenger and to all long signed protect rely to those who on a regulations gov- necessary rules and standing interpretation. administrative - - delivery, ern car distribution and train Here, appellant cases and amici cite do service and accommodations ... [etc.] reliance support principled not basis for (Burns 55-101 Ed. IND.STATS.ANNO. light unique in cireumstances Bailly presents. N-1 cancellation 1949, 801, 8110); 1905, pages Chapter Acts case tude of the amortization in the I & M case 2. We do not believe that the I & M long-adhered Bailly comparable establish a sufficient itself to with the N-1. Also, magni- interpretation. administrative

617 58, 3, 1907, Chapter C.F., as amended Acts sense. Express American Company § 241, Emphasis added. § v. (1906), Southern Express Indiana Co. 292, 1021, Passenger 1026; 55-904. violation -In 167 Ind. 78 rules. N.E. State v. Pittsburg, C.C. & St. L. Railway Company any passenger

case on railroad shall 1893), 578, ( 700, injured car, 135 Ind. platform 35 N.E. on the of TOL. ... in printed regulations violation of the This history negatives the ar company, posted up at the time ... tificial construct attempts equate company such shall not be liable for the statutory provided "service" in the course Provided, injury: company, Said at the operations normal with unsuccessful ef time, furnished room inside passenger its provide forts to service in the distant fut cars proper accommo- sufficient ure.3 dation passengers. 55-904; 1852, IND.STATS.ANNO. 1 RS. Accommodation, in the sense used Chapter 83, 82; emphasis added. § 8-1-2-1, 1.0. is a benefit the consumer § Duty receives that running closely 55-701. as to prod trains.-Ev- related to the ery corporation shall uct or commodity start and run purchases. consumer transportation its cars for the persons Bailly project N-1 could not be an property regular times, at to be fixed accommodation because it did not confer notice, any benefit on the consumer. by public and shall furnish suffi- cient transpor- accommodation clearly apparent upon It is examination passengers tation all such prop- of the governing statutory provisions, their shall, ..., erty as offer or be offered for purposes, and legal prin- the standards and transportation place at starting, ciples guide which application, must their subject that the order of the authoriz- PSCI (Burns IND.STATS.ANNO. 55-701 Ed. ing amortization of the sunk costs of the 1949, 919); p. 1852, 83, 29; 1 Chapter R.S. § N-1 has been made without emphasis added. statutory authorization. The Public Ser- Statutes which relate thing to the same vice Commission of Indiana is therefore general subject matter pori are in ordered to vacate such order. materia and should be construed together. 180; 26 LLE. Statutes State v. Ger § J., PIV concurs. (1896), 469;

hardt Ind. 44 N.E. (1934), City Gary Starr v. 206 Ind. SHEPARD, J., in majority opin- concurs N.E. 775. The term "accommodation" concurring opinion. ion and also files in the definitional section of the Public GIVAN, C.J., opinion dissents with Service Commission Act must be read in PRENTICE, J., which concurs. pari materia with the same term in the Railroad Commission law. PRENTICE, J., dissents, opinion with A phrase appears word or which in dif- GIVAN, C.J., concurs. parts ferent given of the statute will be SHEPARD, Justice, concurring. meaning, same unless an intention to the contrary clearly appears. 26 LLE. Stat today joined While have 117; City Chicago utes Hast v. State opinion, necessary I find it that I add ex. rel. Pitzer 227 Ind. expenses believe at least some of al- N.E.2d 588. by the lowed Public Service Commission

Contemporary legislative case-law also uses the can be affirmed on the basis of acquiescence. precise term "accommodation" in this analogy develop- specific legisla- The dissent's 3. research and California Edison are based on a expenditures example expendi- ment as an of Code tive authorization. - Cal.Public Utilities actively operations" tures "not utilized in is in- § 740. apt. involving The cases he relies on South approved by the Commission. expenses Public Ser Indiana appellee Northern As points The most (NIPSCO) correctly Company germane of these is Public Ser- vice (Ind.Public Ser- Company Indiana vice out, recognized that where has this Court of Commission, 10, 1981, Cause No. vice June interpretation has existed an administrative being 36318). of time without al- long period a In that case the Commission over $8,595,000 for out- of the stat through amendment reversed amortization of lowed to studies of the fea- services related presume that the side ute, should the courts constructing two additional nu- sibility manner in of acquiesced in the legislature has Hill at its Marble generating clear units law. interpreted has the agency the in to aid the courts presumption is said to construct This decided site. explained its Although the units. The Commission intent. understanding legislative approval as follows: interpretation placed upon the statute the binding agency is not administrative an prudence of Petitioner's decision courts, it is entitled to considera upon the challenged, perform such studies was not meaning of weight "as evidence of the ble prudence of its decision not nor was charged by law and the statute to those units, find such and we to construct concerned with its administration." most made. prudently decisions to have been 42, Ind. Compton however, Staff, Baker v. ree- Both the Public and 162. 211 N.E.2d Petitioner's shareholders ommend that required pay such costs. The evi- bar, respect to the case at With is not indicated that Petitioner dence ratemaking cases a number of has cited seeking any on its unamortized return Act in under the Public Service Commission balance, requiring in effect its sharehold- which: in note that ers to share such costs. We consistently inter- has the Commission with many commissions when faced state rates, in permit the inclusion preted it to in- projects, nuclear similar abandoned expense, the cost of operating an as FERC, amorti- cluding have allowed prudently plant cancelled [a] pro- similar to that zation of such costs changing statute Legislature by not by Petitioner. We feel posed interpretation. in this acquiesced has ac light prudence of Petitioner's Support of Petition to Appellee's Brief incurring such costs for benefit tions Transfer, However, as Justice pp. 54-55. should be ratepayers, such costs pointed writing out in for the DeBruler has manner recommended amortized in the of the cases cited NIP- majority, most by Petitioner. plants which were "used SCO involved Supra, at from ser- property and then retired useful" has also authorized The Commission "property aban- vice. To use the cases management studies aimed amortization as retired from service" doned or otherwise making utility operate more efficient- at of nuclear support for the amortization Compa- ly. Michigan Electric Indiana & is sim- supply equipment or turbines steam Commission, (Ind.Public Janu- ny Service weight much on too slender ply putting too 84588). No. Somewhat ary Cause legislature has re- a thread. Since afield, charged ratepayers it has farther including in to authorize peatedly declined studying a with expenses associated con- expenses associated with rates those part program as utility's construction progress, it is hard to work still struction Company case. Public Service a rate legislature argument accept construe, Commission, (Ind.Public Service Indiana acquiesced in the inclusion has 86818). 20, 1983, January Cause No. longer work no expenses for tion progress. approve expenses seem to These cases improve are intended from for studies which cases, though, rate There are some assump- utility on the aequi- efficiency of the argument for which the ratepay- gain for the there will be tion that support part seems to escence ers as well as for the stockholders. this with Justice Prentice in dissenting his opin- respect, they are pre- founded on the same ion, I feel the necessity writing sepa- mise as permitting the cases amortization dissenting rate opinion due impor- to the remaining of the plants basis of retired tance of this case. page On 611 of the from service. The Commission has con- majority opinion, they quote pertinent cluded that ratepayers are if better off part of the PSCI's order in this case. For utilities can retire an plant early inefficient the sake brevity it will repeated not be recapture and still their whole investment here. if company than could only recapture it majority opinion claims the order of by continuing operate investment an in- the PSCI flaw, contains a plant. efficient fundamental begin with, that "to utility charges are Even these cases only make a modest based services." The majority then argument acquiescence, quotes from Ind.Code 8-1-2-4 which § Assembly since the General only can states charge by any made public "[the acquiesce said to if it chooses not to act utility any service rendered or to issues a decision. after rendered either directly earliest of these cases is dated 1977 or in connection and has spending been money on shall just." be reasonable and therewith Bailly N-1 since the late 1960s. Neverthe page At 614 of the majority opinion, less, there presumption is a validity they quote statutory definition of ser- gives which this Court to decisions ren vice found in Ind. Code 8-1-2-1. The by dered the Commission. Public Service beginning sentence of which is: City Commission v. Indianapolis "The term 'service' is used this act in (1956), 235 Ind. 131 N.E.2d I its broadest and most inclusive sense and expenses conclude that in the nature of includes only the use or accommoda- planning, analysis, investigation tion afforded patrons consumers project, associated or with both the but de any product also or commodity furnished cancel, cision to build and the decision to should be declared to be within the Com by any public utility or other sphere mission's authority approve. plant, equipment, apparatus, appliances, presumably While this is only por a small property facility employed by any tion of the $190 million allowed public utility or other in performing any Commission, it is still a multi-million dollar furnishing product service or in any or proposition, I and would remand to the commodity and devoted purposes to the Commission for a determination of the ac public which such utility or other expenditures. extent of these tual engaged and to the use and accommoda- Unfortunately, this view has not attract» public." tion of the ed sufficient concurrence to make it an As was in City stated Evansville v. Court, order and I joined have Southern Indiana Gas Electric Com majority in its conclusions on the construc- pany 167 Ind.App. 339 N.E.2d tion of the Public Service Commission Act. 562, the Public Service Commission must Finally, I important think it is to re-em- establish permit a rate level sufficient phasize that there nothing today's operating to meet expenses action which should meaning be read as plus a return on investment which will com regards the Court the Commission's pensate its investors. practice of permitting amortization of the plants unrecovered basis of question retired from There is no but what Public being service as authority. outside its Service Commission duty also has the consuming public see that the charged GIVAN, Justice, dissenting. Chief fair rate and that those rates are not fraud- respectfully ulently carelessly I utility. dissent from inflated opinion in Although However, this case. concur in order to "render service" market, business such ing open in the and a a sound busi- on operated utility must be sector, public operating no as a in the be basis, there would ness otherwise monopoly, public is the control over business, it be a as a whether Any "service." the control of the company. the Whether operated busi- privately public utility or private public, sound busi- by company be entirely paid for be profit, must ness for reality must be ob- practices and absolutely ness is true as to This its customers. served. ex- operating capital expense every necessary in the ren- it be

pense, whether compa- example In of the automobile the it directly or whether dering of the service majority, company if the ny by the used oper- made in the by mistakes generated be business, any survive and continue to as, business; automobile ation of the losses, including a false start on a their buildings accidents, faulty construction eventually paid project, be capital will new company is to succeed If the and so forth. If that does not by the customer. all of operate, to and to continue absolutely an unsue- occur, company the will be then paid by the custom- expenses must be these If operation. it continues cessful source of revenue. There is no other er. period, company the will be prolonged investing their bankrupt. persons If those will say that we extremely naive It is enterprise, whether capital in a business to cover rate to be increased not allow the recoup all of their private, cannot public or require the sharehold- expense will but and cannot original capital investment making In such a expense. pay ers to return on their invest- make a reasonable decision, Public Service Commission ment, company will cease to exist. their absolutely no income to be would raise Depriving stockholders utility. used parties to this It a disservice to does raising operation. is not a fund of return public generally litigation and to paid, are to be corporation If the debts of a tend to build a engage in semantics which paid by the cus- necessity be they must of some of picture that some manner false case, corpora- if the In the instant tomers. paid in corporation will be of the the debts operate, it must of is to continue tion of rates. other than the collection a manner debts must be pay its debts. Those course would If the Public Service Commission by rates. generated the income paid from figure that such a low the rate to reduce get a re- could not only stockholders has the The Public Service not all investment but that turn on their the extent the rates to authority to reduce bankruptcy paid, then the debts could paid to the return could be that little or no corpora- The creditors of would result. Neverthe- by way of dividends. investors bankrupt- victims of the become produce no tion would less, would this lack of dividend course would lose corpora- cy. The stockholders of the pay the debts revenue to the PSCI to their stock. For the value of paid debts Absolutely every cent of tion. their gross neglect of be a so act would generated paid out of revenue must be the law. duty under Service Commission rates. If the Public point to the reduce the rates would where again the order of the Pub Referring paid, then the health no dividends could Commission, set forth on as lic Service impaired. gravely utility would be of the page majority opinion, 611 of find it the Commis- duties of primary of the One law, entirely lucid entirely within to be being the neglected, sion would be in fact practice and sound business utility company. healthy of a maintenance problem approach to the realistic only goI back they presented. were example of with opinion uses an rel. ex made State to the statement embarking on a company automobile an Court Company v. Boone Circuit man- though in some Water project as capital new 586-87, N.E.2d 261 Ind. nature of from the ner that differed only difference Court utility. The it was stated of a 872 where business "[this making is rate many times that sector, operat- has stated private in the of a business judicial and not a function. fact, discretion of the commission. legislature generality grant has seen fit to establish this making rate au- is, itself, express thority Commission for the in and of grant Public Service a of broad purpose hearing balancing of evidence and discretion, without which the commission weighing many complicated and factors carry could not out its mission. It is not a which must be taken into consideration in finding body. mere ministerial or fact settling utility rates." I feel that to devi- I see five bearing sections of the statute language impinge this ate from is to authority of the commission in judicial Public Service Commission with fiat fixing electric rates. Ind.Code 8-1-2-4 is wholly unrealistic that and makes their general the broad mandate that the rates job virtually impossible. just." be and "reasonable Ind.Code 8-1-2- 8-1-2-19, Ind.Code opinion Ind.Code 8-1-2-28

I would set aside the of the Court Appeals of and would affirm the decision very and Ind.Code 8-1-2-24 specific are regard with to certain considerations that of the Public Service Commission required precluded are either entirety. or from inclu- determinations, sion in rate regard without PRENTICE, J., concurs. equity to the reasonableness or of the mat- ter. PRENTICE, Justice, dissenting. Although administrative boards do not I dissent. That hard cases make bad powers have inherent in the sense that has, me,

law to never been better demon- do, it implied courts in all statutes that majority strated than decision. that incidentally necessary which is to a I distinguish am unable to this case from exposition full of the intent utility companies others where have been upheld being germane should be as to the permitted fulfilling to recover their cost of Coplay law. Mfg. Cement Co. v. Public statutory obligations, except upon their Service 271 Pa. magnitude basis of the of the cost this A. 16 A.L.R. 1214. In the construction particular outery case and the resultant grant powers, general princi- a it is a misinformed, an uninformed and unfor- but ple required, of law that where the end is vociferous, tunately large segment and appropriate given, means are and that consumers. every grant power carries with it the use The issue is one of first instance in this necessary ef- and lawful means for its State, ie., who shall bear the cost of a general grant fective execution. The broad gargantuan misadventure of a com- is that the Public Service Commission shall pany good pru- occasioned faith and power have the to fix electric rates that are but, aborted, dent nevertheless endeavor to just," necessary "reasonable and and comply statutory pro- with its mandate to that, inescapable except and conclusion "reasonably adequate vide service and fa- expressly provided, the com- as otherwise majority cilities." The chosen to ra- has to mission is vested with the discretion that, law, tionalize as a matter of inasmuch determine the reasonableness such expenditures company as the of the did not True, express grant of rates. there is no produce physical facility produc- was that authority permit company an electric to (used useful), electricity they tive of and misadventure, recover the cost of the but may payers. not be recovered from the rate grant explicit neither is there an of authori- see no such constriction the law. companies recover their ty to allow such costs, agree operation as labor fuel I do with the eosts of such taxes, costs, ac- pow- losses on uncollectable Public Service Commission derives its statute; counts, profes- management salaries and authority solely er and from the that such costs agree, opinion but I do not as its seems to sional fees. Yet we know imply, grant need so detailed allowed, them is rea- are because allow them nothing just, and to disallow judgment as to leave to the sonable doing so a useless rendered cireumstances in further- confiscatory and not would and, act; although it could wasteful authorizing regu- public policy ance subsequent expended recover its costs utilities. monopolistic public lated imprudent, completion became the time have and should agencies Administrative ' expended to that its cost recover it could indis- which is every power be accorded Thus, has halfway point been if the point. granted, expressly powers to the pensable re- completed, facility should be passed, necessarily are powers that is those folly. gardless of its inci- implied as an reasonably fairly and "Allowance granted. majority has written expressly powers to the dent en- plants would of cancelled amortization Low, Administrative Am.Jur.2d American holding in Pan unproductive the ven- Typical is courage uneconomical tures; whereas, for amortization allowance v. United States Airways, Inc. World encourages plants L.Ed.2d retired abandoned or 83 S.Ct. of 371 U.S. plants prop- and obsolete utilities to remove of an the absence that to the effect this logic The of statutorily the ratebase." erty in the from grant explicitly included when Regardless of escapes me. analysis the administrative power of authorized of divesti unproductive, to its order the no bar as agency was is written off project a hope is to recover company can for the best ture. this, cost; many in and the unamortized that the doctrine opinion of the I am also of the judgment the respects, hinges clearly appli- is acquiescence legislative of profit a never make It can commission. commis- by the allowance from the cable abandonment; and if the abandon- from (7O) years, seventy period of for a sion time the prior to the ment occurs change, of generating without ratebase, repre- as placed in the are costs allowed of the nature recovery of costs the assets, the and useful of used sentative in this case. depends loss recovery of the of the extent summarily dismiss- opinion majority The in the commission discretion of upon the the that amortization contention es the the venture or not determining whether that doctrine under is allowable loss prudently con- upon, entered prudently was present- the circumstances responding that pru- and point of cancellation to the tinued are Bailly N-1 cancellation by the ed dently cancelled. nothing whatever is "unique." There - extraordinary expenses and allow To cireumstances Bailly N-1 unique about consid- those under nature of losses course the issue. Of upon the that bears would in the ratebase placed eration to be the same. is the substance vary, but details impru- and upon waste premium place a includ- is of what Except in a consideration thereby dence, profit would because base, can be no distinction in rate able in or lost funds wasted upon the realized by the occasioned costs made between no such There can be mismanagement. that facilities completed abandonment utili- however, permitting a inducement, changed because valueless have become incurred in costs along the base pass ty to par- the abandonment circumstances preserve improve or attempt prudent facilities merely planned completed or tially it to ren- requires the law service that because valueless become that have der. event, a In either changed cireumstances. prudent of a a result sustained as loss is operating ex- holds that majority interests the best attempt to serve through retail recoverable to be penses, through the payer. incurred rates, must have been rate and useful existing used employment of majority, viewpoint of the Under statute, in the find this I cannot property. ten-x dol- spent prudently utility that had analysis. my no moment it is of but facility onto bringing a new lars towards added has, been perhaps, confusion Some service put it into complete it and could line to the losses references by NIPSCO's changed notwithstanding day, one

G23 "expenses." issue as because the risk encountered is less. The This characterization is, doubt, logical inasmuch as it seeks to market for no product assured, obtain, competition loss, eliminated, has been the same hence the treatment risks are only expenses, those accorded to thus it does fit produc- attendant die that has been developed by tion efficiency commission and the determination of usage and custom. I prefer what is the character- just reasonable and fixing ization of the commission: "extraordinary long rates. So as investor confidence in cost." the integrity of system high, capital will be available at the lowest possi- rates At juncture, this it need be noted that If ble. diminished, confidence is how- capital expenses invested of operating ever, utilities will high risk, become rather are differently treated in the ratemaking risk, than investments, low and the return process. It occurs to me that extraordi- required to induce rise; investment will nary losses should be expenses treated as and if that lost, confidence is capital are treated rather than in the manner that will simply not be available. capital treated; and this accords with the position of both NIPSCO and the commis- has displayed an alarming sion. lack of comprehension in comparison the occasioned by an automobile losses Returning to the essence of the statutes manufacturer attempting to bring a new and elementary precepts law, utility we product to market and by those sustained know public that the policy to be served is in endeavoring develop to a nucle- permit to monopolistic ownership oper- and powered ar generating plant. very Two public ation because, utilities if properly pertinent differences relevant to the rea- regulated supervised, and public the will be relegation sonable of the losses will be served better by than it would gen- our given. erally preferred enterprise free system. extent, The quality and cost of the (1) service The manufacturer was under no com- to depends be rendered upon a mand to furnish a balancing product, new or anything else, investor for interests and that matter. consumer interests. NIPSCO was. The balancing by State, is affected the (2) successful, If the manufacturer through its requiring statute company would be at liberty charge the consumer to furnish "reasonably adequate service bear, whatever the market would even if and facilities" and its rates to be "reason- profits so excessive as to be obscene could just" able and and establishing the commis- thereby NIPSCO, derived. if successful regulate sion to supervise and system. would, nevertheless, be constrained to objective system obtain, is to just charges," "reasonable and as deter- public good, the maximum service at by mined the commission. the lowest cost. the primary beneficiary So of a success- A substantial any factor in business en- by ful venture the manufacturer is the terprise is the risk involved. Electric utili- Whereas, investor. primary benefi- capital ventures, ties are intensive that is clary of a successful regu- venture say that extraordinarily large sums of utility lated company is the consumer. The money required are long to be invested for utility investor continues to receive what periods time, hence the cost of that he did before: a just reasonable and re- capital greater is a far factor in the cost of turn-presumably the same rate of return production than in other industries. The on capital invested that he receiving was capital, cost of whether equity, debt or before, only with the amount of the invest- proportion varies direct per- to the risk being utility consumer, ment altered. The ceived Traditionally, cap- investors. hand, on the other would receive the bene- ital the free market is service, available to elec- improved service, fits of cheaper or tric companies at costs far less than expect investor, both. nothing To with gain, or little to to assume all of the risk such cost industry, other simply necessary, not that it does not to was or was consumer, gain, much to with probably inade- just if the facilities were reasonable nor matter none is neither assume demands, that it does quate to fulfill future inherently unrealistic. and is required by that NIPSCO was not matter opinion, all risk majority Under venture, pursue the law to enter and investor, upon the new construction falls everything it not matter that it that does gain, yet it is literal- and it has but little to prudent, and that it did was correct and company to impossible for an electric ly the rates to be re- does not matter that expending obligations without fulfill in the future not be reasonable ceived will construction neces- plans and vast sums All that matters is that the stat- just. and in the of services sary for the rendition explicit provision authoriz- ute contains no future. recovery to allow ing the commission opinion barely mentions loss. such pro- utility companies to statutory duty of that all Had the commission determined and fa- "reasonably adequate services vide the result of any portion or of the loss was cavalierly proceeds with the cilities" and capitalize speculation to imprudence or monopolies are that utilities observation had potential wholesale market and from a rec- regulation. It does not subject portion, amortization some disallowed goes hand ognize duty to serve that loss, I would vote to affirm its all of the upon and entitle- hand the limitations with decision, unless it were shown just. that are reasonable ment to rates by the not sustained determination was profit may, permit Rates do law, judg- my and in facts. That is nevertheless, under the cir- be reasonable ment, case we are under the facts of this However, that do not rates cumstances. deter- of the facts to limited to review recovery of costs for service permit the determination is mine if the commission's are confiscato- that are mandated facilities thereby sustained. ry and unlawful. responsibili- management is the Prudent plan and companies do not If electric management ty investor. Infallible of the demand, inescap- it is in advance build utopian services at production eventually production facili- able please the consumers are rates that will "used and useful" will become ties once not. useless," service will be "used and company A or non-existent. inadequate only regard do I the decision Not against ahead plan that does not and build error, as a matter gross to be in majority eventuality may not be said be law, a societal I the result believe that are providing service and facilities Capital utility companies sub- for disaster. "reasonably adequate." will, my of this case ject to the law extremely only at judgment, be available dissent, I assume that writing this On all, What have historical- high rates-if at spent in spent by NIPSCO was every dime conservative, risk regarded as low ly been comply with the prudent endeavor to highly speculative. will become securities provide electrical requirement of the law to already will of committed Capital required in the fore- energy that would invested, it cannot because course remain its franchised area. seeable future to serve in the NIPSCO the consumers escape, thus entirely cor- may this not be realize that present, be may, for the franchise area may some avoidable rect. There have been utility companies Nevertheless benefitted. degree may There have been some waste. "reasonably ad- provide continue to cannot junctures. imprudence some at infusions constant equate" services without commission, however, found to the con- has capital. At risk is the newly committed if findings, trary, are and we bound public utilities. of investor-owned survival heard supported by the evidence they are for sociali- prospects my judgment, has said by the commission. good; but industry are zation of the that it does not matter whether venture prospects adequate for services at reason- system rates under that

able are dim.

I would affirm the Service Public Com-

mission's decision.

GIVAN, C.J., concurs. JENKINS,

Anthony Appellant, Dale

v. Indiana, Appellee.

STATE of

No. 983S347.

Supreme Court of Indiana. Stephanie Smith, Todd, Walro, Hawkins

Nov. Smith, Madison, Collins appellant. & Pearson, Gen., Linley Atty. E. Lisa M. Paunicka, Gen., Deputy Atty. Indianapolis, appellee. GIVAN, Chief Justice.

Appellant jury was convicted Rape, felony, Burglary, A Class a Class felony B Battery Resulting in Serious Bodily Injury, felony. a Class C The trial imposed (80) thirty year court sentence. Appellant The facts are: entered the Madison, victim, J.0., Indiana home of the during early morning Entry hours. gained by forcing open was a screened living entering, window in the room. After appellant a steak knife from the obtained kill the kitchen and threatened to victim. Appellant compelled the victim to leave the nearby home and walk to a vacant area raped where he and stabbed her twice. appel- administering While the second blow leg. in the He then lant stabbed himself fled. appellant appeared

A later at few hours emergency hospital room Seottsburg. the wound was a He indicated with an unknown result of an altercation

Case Details

Case Name: Citizens Action Coalition of Indiana, Inc. v. Northern Indiana Public Service Co.

Court Name: Indiana Supreme Court

Date Published: Nov 19, 1985

Citation: 485 N.E.2d 610

Docket Number: 1185S470

Court Abbreviation: Ind.