Indiana Business Lawyer Blog
Alcorn County Electric Power Association (“ACE”) began supplying The Door Shop, Inc. (“Door Shop”) with electric service beginning in November 2004. In the course of setting up Door Shop’s account, ACE failed to enter the proper data into their billing system. This error resulted in Door Shop being dramatically under-billed for their electric service. From November 2004 to January 2011, the actual price Door Shop should have paid ACE for electric service was $36,081.86. However, due to the entry error in ACE’s billing system; Door Shop was only charged $10,396.28 for electric service over that period. After Ace discovered this error, it sent Door Shop a supplemental bill for the under-billed amount of $25,685.58. After the Door Shop refused to pay the under-billed amount, ACE filed suit in Mississippi Circuit Court to recover the amount due. Summary judgment was eventually granted in favor of ACE and Door Shop was ordered to pay the under-billed amount. Door Shop appealed to the State Supreme Court.
Door Shop first challenges the trial court’s grant of summary judgment on jurisdictional grounds, claiming that the Mississippi Public Service Commission (“MPSC”) has exclusive jurisdiction over this case. Under the applicable state statute, the MPSC has “exclusive original jurisdiction” over a utility’s intrastate supply of electric service. However, that same statute also states that the MPSC “shall not have jurisdiction to regulate the rates for the sales and/or distribution [of electricity].” Thus, Door Shop’s jurisdictional argument hinges on whether or not the issue presented in this case can be attributed “rates” set by ACE. Door Shop argues that the error in ACE’s billing system presents an issue of “quality of service” rather than “rates.” The Mississippi Supreme Court rejected Door Shop’s argument. The Court stated that Mississippi law defined the term “rate” broadly. Taking this broad definition into account, and considering that the error occurred in ACE’s billing system, the Court held that this case fell squarely within the purview of rates. Thus, the trial court did not err in disposing of ACE’s claim originally rather than referring it to the MPSC.
The Supreme Court then addressed whether granting ACE summary judgment was proper. In affirming the trial court’s decision, the Supreme Court emphasized that ACE’s bylaws specifically address errors in billing. The by-laws provide that, were an error in billing occurs, ACE has the right to issue a sub-bill for the unaccounted for amount owed, regardless of who caused the error or when it was discovered. Because Door Shop agreed to be bound by Ace’s bylaws in the service agreement between the two parties, ACE is entitled to recover the un-billed amount of $25,685.58 as a matter of law.
Jeremy Fetty is a partner in the law firm of Parr Richey with offices in Indianapolis and Lebanon. Mr. Fetty is current Chair of the Firm Utility and Business Section and often advises businesses and utilities (for profit, non-profit and cooperative) on regulatory, compliance, and transactional matters.
The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.
