Indiana Business Lawyer Blog

November 29, 2022

Indiana Utility Law – NIPSCO Industrial Group, and Office of the Utility Consumer Counselor v. Northern Indiana Public Service Company, and Indiana Utility Regulatory Commission, 22A-EX-187 (Ind. Ct. App. 2022)

by Parr Richey Frandsen Patterson Kruse LLP

On December 28, 2021, the Indiana Utility Regulatory Commission (“Commission”) approved a Transmission, Distribution and Storage System Improvement Charge (“TDSIC”) plan submitted by Northern Indiana Public Service Company (“NIPSCO”). Part of NIPSCO’s TDSIC plan included certain system deliverability projects, specifically NIPCO’s need to upgrade its Marktown substation and improve the distribution and transmission related system deliverability in the Nappanee area. The NIPSCO Industrial Group and the Office of the Utility Consumer Counselor (collectively “Appellants”) appealed the Commission’s approval of the TDSIC plan, arguing that the Commission misinterpreted the statute governing TDSIC plans – I.C. 8-1-39 – because it did not conduct a cost-benefit analysis for each individual project in the TDSIC plan.

The Indiana Court of Appeals disagreed with Appellants’ interpretation that I.C. 8-1-39 required the Commission to conduct a cost-benefit analysis on an individual project basis. In its September 29, 2022, opinion, the Court focused on the statutory language of I.C. 8-1-39-10, finding that subsection 10(1) required the Commission to include a best estimate of cost “of the eligible improvements included in the plan” rather than a best estimate of cost for each individual improvement. Second, the Court noted that subsection 10(3), requiring the Commission to determine “whether the estimated costs of the eligible improvements included in the plan are justified by incremental benefits attributable to the plan,” is satisfied when the eligible improvements collectively are justified by the proffered benefits as applied to TDSIC plan in its entirety as opposed to individually, noting that “[h]ad the General Assembly wished to require more detailed findings, it could have easily required them but did not do so.” In a similar vein, the Court concluded that Appellants’ policy arguments regarding the purposes of subsection 10(3) were “best addressed to the General Assembly, not this court.”

Jeremy Fetty is a partner in the law firm of Parr Richey Frandsen Patterson Kruse with offices in Lebanon and Indianapolis. He often advises businesses and utilities (for profit, non-profit and cooperative) on organizational, human resources, and transactional matters and drafts and reviews commercial contracts.

April 12, 2022

Indiana Utility Law – Indiana Office of Utility Consumer Counselor v. Duke Energy Ind., LLC, 21S-EX-00432 (Ind. 2022)

by Parr Richey Frandsen Patterson Kruse LLP

On March 10, 2022, the Indiana Supreme Court concluded that a utility cannot be reimbursed for a deferred asset, even if it is properly accounted for, without violating Ind. Code § 8-1-2-68 bar against retroactive ratemaking. The case involved the utility regulation commission’s approval of Duke Energy Indiana’s (“Duke”) 2019 request to increase its rates for retail consumers in order to recover about $212 million for coal-ash site closures, coal-ash site remediation, and other financing costs associated with the 2015 Environmental Protection Agency’s new rules for treating coal ash and remediating ash ponds. Duke accounted for these compliance efforts using asset retirement obligation accounting, which represents a legal obligation associated with the retirement of a tangible long-lived asset that must be settled under a newly enacted statute.

The issue before the Court was whether the utility regulation commission had the authority to approve the reimbursement sought by Duke without violating the statutory ban on retroactive ratemaking. Finding that the commission had established Duke’s rate and adjudicated depreciation rates for the cost of decommissioning its plant assets, including coal-ash costs, in its 2004 rate order, the Court concluded that the utility regulation commission exceeded its statutory authority by granting Duke’s request to re-adjudicate its coal-ash costs that were already governed by the commission’s 2004 rate order.

Jeremy Fetty is a partner in the law firm of Parr Richey Frandsen Patterson Kruse with offices in Lebanon and Indianapolis. He often advises businesses and utilities (for profit, non-profit and cooperative) on organizational, human resources, and transactional matters and drafts and reviews commercial contracts.

January 24, 2022

Clark County REMC v. Glenn Reis, et al

by Parr Richey Frandsen Patterson Kruse LLP

In a recently concluded case, Parr Richey attorneys representing Clark County REMC, a southern Indiana rural electric utility, were successful in persuading the Indiana Supreme Court to reverse earlier decisions of the trial court and Court of Appeals. The case involved four former REMC directors who claimed the REMC breached a contractual obligation to provide them with free, lifetime health insurance benefits after their board service ended. Their claim was based on a longstanding company policy that obligated the company to provide free health insurance benefits to former directors who met certain age and years of service requirements before leaving the board.

After the company ended that policy in 2018, the affected former directors sued. Both the trial judge and intermediate appellate court held that that the policy constituted a contractual obligation of the REMC which had been breached. But in an issue of first impression, the Indiana Supreme Court unanimously held the policy did not form an enforceable contract and, as with other policies of the company, it was subject to change or termination at the will of the board. Hence, no benefits were due after the policy’s termination.

The Parr Richey team who worked on the case included Kent Frandsen, Katie Sheets, Erin Borissov, and John Kinney. Click here to read the Court’s opinion.

June 22, 2021

Harper v. Southern Pine Electric Cooperative – Electric Cooperative Law

by Parr Richey Frandsen Patterson Kruse LLP

On February 8, 2021, the Fifth Circuit Court of Appeals affirmed the Southern District of Mississippi’s dismissal of a plaintiffs’ complaint for failure to state a claim. Harper v. So. Pine Electric Cooperative, 987 F.3d 417 (5th Cir. 2021). The complaint was brought by a member-ratepayer of the Cooperative alleging that Mississippi law requires electric cooperatives like Southern Pine to distribute expenses over and above what is needed for operating expenses, payments of principal and interest, improvements, new construction, etc., back to its members. The members claimed that Southern Pine should be required to distribute all funds over an asset-to-equity ratio of 30%. For Southern Pine, it would have required them to distribute $112.5 million of a retained $248 million in accumulated income in 2016. The Southern District of Mississippi held that “the modern version of the statute, § 77-5-235(5) applied retroactively, and, in any event, plaintiffs failed to state a claim under either version.”

The Fifth Circuit found both of the plaintiffs’ arguments lacking regarding which of two Mississippi versions of a statute applied. First, the plaintiffs could not “point to any case indicating that the Stone exception applies only in the limited circumstances for which they advocate.” The court surmised that if they accepted the plaintiffs’ contentions, both the Supreme Court of Mississippi and courts within the circuit have applied the Stone exception erroneously. Instead, the court used the Supreme Court of Mississippi’s characterization: “[E]very right or remedy created solely by the repealed or modified statute disappears or falls with the repealed or modified statute . . . save that no such repeal or modification shall be permitted to impair the obligation of a contract or to abrogate a vested right.” With no contract at issue, the court then turned to whether a vested right had been abrogated.

In Mississippi, a vested right is one that must have “become a completed, consummated right for present or future enjoyment; not contingent; unconditional; absolute.” Here, the court looked at the previous statute to determine whether it conferred a vested right to the plaintiffs or not. Importantly, the court found that the relevant question is not whether the board must return excess revenues, but “[w]ho gets to determine when the revenues become ‘not needed’ for the defined purposes such that they must ‘be returned to the members?’” Unambiguously, the statute leaves that discretion to “the board” as it “may from time to time prescribe.” Only when the board makes that determination does the statute require the funds be returned to the members, which makes the right contingent to the members and not vested.

January 25, 2021

Indiana Communications and Broadband Law – Class Action Case Against Streaming Services Returned to State Court

by Parr Richey Frandsen Patterson Kruse LLP

The District Court for the Southern District of Indiana published an order on November 18, 2020 remanding the Class Action lawsuit against Netflix, Disney, Hulu, DirectTV and Dish to Marion County Superior Court.

The city of Fishers, Indianapolis, Evansville and Valparaiso filed a class action lawsuit on behalf of all units entitled to receive franchise fees to compel the streaming services pay franchise fees governed by Indiana’s Video Service Franchises Act in Ind. Code §8-1-34-4 “VSF Act.” The VSF Act requires companies that provide video service in Indiana to apply and receive certificates of franchise authority. The companies must pay a quarterly franchise fee to certain governmental units. The units include counties, municipalities and townships under Ind. Code §8-1-34-12. The streaming services (“Defendants”) sent the case to federal court under Class Action Fairness Act under 28 USC §1332(d) and diversity jurisdiction under 28 USC §1322(a). The Cities filed a motion to send the case back to state court, arguing under comity principles, the matter is more appropriate for Indiana courts to decide.

The Cities argued the case should move back to Marion County because the enforcement and franchise fee collection is “a commercial matter over which the Indiana legislature and Indiana Unit have traditional enjoyed wide regulatory latitude, that does not implicate any fundamental right of Defendants.” ·

October 19, 2020

Great Lakes Technology Showcase Virtual Event

by Parr Richey Frandsen Patterson Kruse LLP

Parr Richey attorney, Aleasha J. Boling, will be a presenter at the Great Lakes Technology Showcase Virtual Event on Wednesday, October 21, 2020. Aleasha’s topic will be “Collecting on customer accounts in light of the COVID-19 service disconnect moratorium.” This event is hosted by Indiana Broadband and Technology Association, Ohio Telecom Association, and Telecommunications Association of Michigan. Complete seminar details, including the full agenda, can be found at the link below:

Seminar Details

October 6, 2020

Electric Cooperative Law – Mississippi Enforces Delta Electric Power Association’s Arbitration Clause

by Parr Richey Frandsen Patterson Kruse LLP

Members of Delta Electric Power Association (“Delta”) filed a lawsuit alleging Delta was retaining excess revenues that it did not need to fund operations. Delta filed a motion to compel arbitration pursuant to an arbitration clause included in its bylaws. The trial court denied Delta’s motion to compel and held the arbitration provision was unenforceable for the following reasons:

• Plaintiffs did not agree to arbitrate the dispute;

• Bylaws contained two separate arbitration provisions: mandatory and nonmandatory;

September 14, 2020

Indiana Utility Law – 2020 Report to the 21st Century Energy Policy Development Task Force

by Parr Richey Frandsen Patterson Kruse LLP

Indiana Code §8-1-8.5-3.1(b) in 2019 ordered the Indiana Utility Regulatory Utility Commission (IURC) to conduct a study of statewide impacts of:

Transitions in the fuel sources and other resources used to generate electricity by electric utilities; and
New and emerging technologies on local grids or distribution infrastructure; on electric generation capacity, system reliability, system resilience, and cost of electric service for consumers. The IURC shall consider timelines for transitions in fuel sources and other resources and for implementation of new and emerging technologies.

August 25, 2020

Indiana Utility Law and Pipeline Safety – Indiana Utility Regulatory Commission Approves Highest Fine in State History Against NIPSCO

by Parr Richey Frandsen Patterson Kruse LLP

On August 5, 2020, the Indiana Utility Regulatory Commission (IURC) approved $1,110,000 in civil penalties for pipeline safety violations in 2018 for Northern Indiana Public Service Company, LLC (NIPSCO). NIPSCO failed to locate or mark its pipelines in the two days required by safety procedures. Mr. Boyd, the Division’s Director, claimed NIPSCO committed 230 violations in 2018.

In 2017, the IURC approved a settlement agreement that outlined the cost of each violation NIPSCO commits in 2017, 2018 and 2019 with respect to locating underground gas pipelines and facilities subject to approval. Each side recommended the Commission approved $1,110,000 in damages. The Division’s deadline to file the petition for approval of 2019 penalties is December 31, 2020.

To access the order, visit this website: https://www.in.gov/iurc/files/44970%20S2%20PSD%20NIPSCO%20Order.pdf.

August 4, 2020

Court of Appeals Concludes County’s Unwillingness to Provide Zoning Requirements Documentation was Arbitrary, Capricious & Prejudicial to Waste Transfer Applicant

by Parr Richey Frandsen Patterson Kruse LLP

On July 30, 2020, the Indiana Court of Appeals concluded that a county’s refusal to issue a document indicating that no rezoning or variance would be necessary for an applicant’s operation of a proposed waste transfer station was “arbitrary, capricious, and an abuse of discretion.” Monster Trash, Inc. v. Owen County Council, Owen County Commissioners, and Owen County Board of Zoning Appeals. In the case, Monster Trash, Inc. applied to Indiana Department of Environmental Management for a license to operate a solid waste transfer station in Owen County. As a condition of approval, applicants are required to provide a “document from a county official confirming zoning requirements are not needed for the location of the proposed facility.” Owen County’s Board of Zoning Appeals refused to provide this document to Monster Trash, Inc., thus resulting in litigation.

Owen County had an ordinance in place that prohibited waste transfer stations, which did not allow appeals for a use variance to the Owen County Board of Zoning Appeals, however, the ordinance specifically stated that waste transfer stations are not prohibited if licensed and approved by the State of Indiana. Thus, the Court of Appeals then addressed Owen County’s refusal to provide the requested document to Monster Trash. The Court concluded “zoning requirements” were not a requirement to operate this solid waste transfer station, which resulted in its conclusion that the County’s refusal to provide the document went against its own ordinance and qualified as “arbitrary, capricious, and an abuse of discretion,” pursuant to Indiana statute. Therefore, the Court determined that there was no legally justifiable reason for the County to refuse the document and its refusal prejudiced Monster Trash from obtaining a State-issued license.

James A.L. Buddenbaum is a partner of the law firm of Parr Richey Frandsen Patterson Kruse LLP with offices in Indianapolis and Lebanon, Indiana. He advises business, utility and municipal and hospital clients in the areas of corporate compliance, corporate governance, employment, real estate, commercial transactions and regulatory law as well as representing policyholders in insurance disputes. He has 30 years of experience representing rural electric and telephone cooperatives.