Articles Posted in Utility Law

An Indiana appellate court recently affirmed a trial court’s decision to dismiss a plaintiff’s complaint for damages, attorney’s fees and an injunction for lack of jurisdiction and the plaintiff’s failure to exhaust administrative remedies prior to filing suit.

In Bridges v. Veolia Water Indianapolis, LLC, 978 N.E.2d 447 (Ind. Ct. App. 2012), Veolia turned off Bridges’ water for nonpayment. Bridges then attempted to file a class action lawsuit for breach of contract, seeking a return of her $25 reconnection fee, other unspecified damages, attorney’s fees, and an injunction. Veolia is an independent contractor that managed and operated water treatment and distribution facilities owned by the Department of Waterworks. It moved to dismiss Bridges’ complaint and argued that the trial court lacked subject matter jurisdiction over the matter because she failed to exhaust the administrative remedies available to her at the Indiana Utility Regulatory Commission (“IURC”). The trial court agreed with Veolia and dismissed the complaint for those reasons. Bridges then appealed.
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A federal appeals court recently affirmed a lower court’s dismissal of a lawsuit where the plaintiff alleged a taking under the federal and Illinois state constitutions, as well as nuisance claims, and procedural challenges to an amendment of a county ordinance in regard to a renewable energy wind project.

In Muscarello v. Winnebago County Board, the plaintiff, a landowner with multiple agriculturally-zoned tracts, filed a lawsuit against the Winnebago County Board (the “County”) on the basis of 2009 amendment to the County’s zoning ordinance that made it easier for an owner of agriculturally-zoned land to obtain permission to build a wind farm. Although no one had yet applied for a zoning clearance or building permit for a wind farm in the County and no wind farm has actually been built anywhere therein, the plaintiff worried that a wind farm on a property adjacent to hers would cause substantial damage including noise, radar and cell phone interference and stray voltage among other colorful claims. While the United States Court of Appeals for the Seventh Circuit acknowledged that some of the plaintiff’s concerns may be speculative, the injury “need be neither certain nor great to confer standing under Article III of the Constitution.”
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The Indiana Court of Appeals affirmed an order from the Indiana Utility Regulatory Commission which denied an electric utility company’s petition to seek deferred-accounting treatment for storm-operating expenses.

In Duke Energy Indiana, Inc. v. Office of Utility Consumer Counselor, 983 N.E.2d 160 (Ind. Ct. App. 2012), a southern Indiana wind storm in September 2008 and an ice storm in January 2009 caused approximately $32 million in damage to Duke Energy Indiana, Inc.’s (“Duke”) electrical system. Duke filed a petition with the Indiana Utility Regulatory Commission (IURC) which sought deferred-accounting treatment for $11.6 million. The Office of Utility Consumer Counselor (OUCC), a state agency charged with representing the interests of ratepayers, consumers, opposed Duke’s petition. It contended that Duke’s proposal constituted single-issue ratemaking and retroactive ratemaking, both of which are generally prohibited.
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The Indiana Court of Appeals recently affirmed a trial court’s refusal to set aside an agreement that was entered into by a non-for-profit utility-West Boggs Sewer District (“West Boggs”) and a group of Amish neighbors. The Court also affirmed the trial court’s decision in refusing to award attorney’s fees to West Boggs against most of the Amish parties.

In Wagler v. West Boggs Sewer Dist., Inc., 980 N.E.2d 363 (Ind. Ct. App. 2012), West Boggs installed a sanitary sewer structure adjacent to parcels of property owned by a group of individual members of the Old Amish Order community (“Wagler” or “the members”). A state statute allows a utility like West Boggs to compel connection to the sewer system if it is within three hundred feet of an individual’s property line. Because the sewer system came within the statutory requirements, West Boggs sent letters to the members notifying them of the operational availability of the system and that “connection should be made by [these properties] to West Boggs’ system” on or before a certain date.
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On July 12, 2011, the Indiana Court of Appeals held that an oil refinery that sold natural gas to a third-party tenant on its property was a “public utility” within the meaning of Indiana Code section 8-1-2-87.5(b). In BP Products v. Indiana Office of Utility Consumer Counselor, 964 N.E.2d 234 (Ind. Ct. App. 2011), the court reversed a previous order from the Indiana Utility Regulatory Commission (“IURC”) which determined that BP was not a public utility with respect to its provision of natural gas to Marsulex – a tenant on BP’s property that provided materials necessary to BP’s manufacturing process. If an entity is considered a “public utility” as defined by that statute, it must obtain certifications from the IURC prior to engaging in transportation of gas.
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In a recent case, the Indiana Court of Appeals held that a utility will not be granted a full de novo review when the utility fails to actively participate in the administrative proceeding. In Utility Center, Inc. v. City of Fort Wayne, 960 N.E.2d 824, 827 (Ind. Ct. App. 2012), a utility company challenged the city’s board of public works’ (“Board”) compensation award and asserted it should be accorded the right to a jury trial for compensation determination. Both the trial court and Indiana Court of Appeals disagreed, affirming the compensation award and denying the request for jury trial. Specifically, in a condemnation proceeding, where the Board was determining the compensation owed to a property owner, the property owner had great incentive to actively participate in the Board’s determination, as a trial court’s “de novo” review of an administrative decision, as provided for under Ind. Code § 32-24-2-11(a) did not always mean a complete retrial of the issues involved. In that case, the utility failed to present any compensation value of its own, claiming “trial strategy.”
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Many co-ops use outside companies for pole testing and inspection. These companies often propose a form agreement with “standard” terms. Pricing is sometimes addressed in a separate letter with the base agreement remaining in effect for years.

Beware of standard terms proposed by some companies. For example, the contract utilized by one prominent company requires the utility to give it written notice within thirty days of any incident resulting in the breakage of a pole. Also the utility is required to retain the pole in storage for inspection by the company. Should the notice not be given or the pole not be preserved and the inspection company would later be sued on some theory, the contract requires the utility to bear the company’s defense costs and any liability that might result.
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Indiana utility lawyers took note on June 9, 2011, when the Indiana Court of Appeals issued a decision in United States Steel Corporation versus Northern Indiana Public Service Company (NIPSCO) addressing the issue of when a company becomes a public utility.¹ The dispute arose after ArcelorMittal acquired property within U.S. Steel’s large-scale northern Indiana operation and began to purchase certain utilities from U.S. Steel, namely electricity and gas.
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Hallmark of Jeffersonville, L.P. is a developer of multi-family apartment buildings. In 2006, Hallmark planned to develop three multi-family apartment buildings in the City of Jeffersonville (the “City”). Two of the three buildings were to include twenty-four units and the other one was to include thirty-two units. Hallmark inquired with the City as to the cost of the necessary permits. The City informed Hallmark, on December 28, 2006, that it owed the City a total of $120,000, or $1,500 per unit, in order to connect to the City’s sewer system (this fee is known as a “tap-in” fee). Hallmark submitted the $120,000 tap-in fee by January 5, 2007 and the City agreed to connect Hallmark’s development to the sewer system. After Hallmark’s submission of its payment, it realized that it may have paid more than what was necessary under the City’s sewer tap fee ordinance and believed that it had been overcharged.
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In November 2010, the Court of Appeals of Indiana rejected a claim that a developer voluntarily overpaid a sewer tap-in fee that was incorrectly calculated by the City of Jeffersonville.

In City of Jeffersonville v. Hallmark at Jeffersonville, the Court held that the voluntary payment doctrine did not preclude the developer from receiving a refund of approximately $105,000. In this case, Hallmark, the developer, was constructing three buildings which included a total of eighty units. In order to obtain the proper permits, Hallmark was required to pay a sewer tap-in fee under the City’s ordinance related to sewer services. Hallmark paid that fee, which was assessed by the city engineer to be $1,500 per unit, for a total of $120,000.
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