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State ex Rel. v. Public Service Comm.

Missouri Court of Appeals, Western District
Jul 25, 2005
No. WD 63093 (Mo. Ct. App. Jul. 25, 2005)

Opinion

No. WD 63093

October 19, 2004 OPINION WITHDRAWN July 25, 2005.

Appeal from the Circuit Court of Cole County, Missouri, The Honorable Thomas J. Brown, III, Judge.

Gregory L. Musil, Overland Park, KS, Charles Brent Stewart, Columbia, MO, Attorneys for Respondents Riverside Pipeline and Mid-Kansas Partnership.

Brian T. McCartney, Jefferson City, MO, Attorney for Respondent Missouri Gas Energy.

Cliff Snodgrass, Jefferson City, MO, Attorney for Appellant PSC.

Before Ulrich, P.J., and Lowenstein and Smith, JJ.



On January 15, 1990, Western Resources, Inc. (Western) entered into two separate contracts with Mid-Kansas Partnership (MKP) and Riverside Pipeline Company, L.P. (Riverside): (1) a sales agreement with MKP; and (2) a transportation agreement with Riverside; to supply and transport natural gas to Western's distribution system serving the Kansas City, Missouri, metropolitan area. In July of 1993, Western agreed to sell its Missouri natural gas properties to Southern Union Company (Southern Union). Missouri Gas Energy (MGE), a division of Southern Union, took over operations of the distribution system on February 1, 1994. Along with the other assets and liabilities of Western, the agreements with MKP and Riverside were assigned to Southern Union as part of the sale. On February 24, 1995, MGE entered into a sales agreement with MKP and a transportation agreement with Riverside to continue supplying and transporting natural gas to the Kansas City Metropolitan system. These agreements and the two agreements which Western entered into with MKP and Riverside, and assigned to Southern Union, are referred to by the parties as the "Missouri Agreements."

Western and MGE are both public utilities regulated by the Public Service Commission (PSC). On June 25, 1996, the PSC, as part of its Actual Cost Adjustment (ACA) process, established Case No. GR-96-450 to determine whether MGE had over-recovered or under-recovered its allowable costs for obtaining natural gas from its suppliers for the ACA period of July 1, 1996 through June 30, 1997. Natural gas distribution companies, such as MGE, as part of their rates, are allowed by the PSC to recoup from their customers the reasonable costs associated with obtaining natural gas from their suppliers. State ex rel. Associated Natural Gas Co. v. Pub. Serv. Comm'n , 954 S.W.2d 520, 523 (Mo.App. 1997).

The adjustment of rates, based on the costs incurred in obtaining natural gas, is done pursuant to a two-step process. Id. In the first step, pursuant to an automatic rate adjustment clause in the PSC-approved rate schedule, a regulated company is allowed to automatically pass on to its customers the wholesale cost of gas. Id. This adjustment is known as a purchased gas adjustment (PGA), which is required to be reported annually to the PSC. In the second step, the ACA, the PSC reviews the required ACA filings of the company, including its PGA filings, to determine: (1) the actual costs that the company should be allowed to recoup; and, (2) based on that determination, whether it has over-recovered or under-recovered its allowable costs for the ACA period under review. Id. In determining what costs of a company can be recouped from its customers as reasonable, the PSC employs a "prudence" standard. Id. Hence, the PSC, as part of its ACA process, conducts a prudence review of the company's contracts with its suppliers to determine whether it was prudent for the company to enter into the contracts and based thereon, whether the costs associated with the contracts should be disallowed in whole or part.

In addition to establishing Case No. GR-96-450, the PSC had previously established cases for the ACA periods of July 1, 1992 — June 30, 1993; July 1, 1993 — June 30, 1994; July 1, 1994 — June 30, 1995; and July 1, 1995 — June 30, 1995. On June 1, 1998, the Staff of the PSC (Staff), as part of the ACA review in Case No. GR-96-450, challenged the prudence of the MKP sales agreement, recommending that $4,532,449.60 of the costs associated therewith, for the ACA period under review, be disallowed. That recommended amount was later lowered to $3,490,082.81. The Staff had previously challenged the prudence of the Missouri Agreements in the other cases, recommending the disallowance of certain costs associated with the agreements for the ACA periods under review. Given their financial interest in Case No. GR-96-450, MKP and Riverside were allowed to intervene. They had a financial interest in the outcome of the prudence review in Case No. GR-96-450 inasmuch as they had agreed in their respective sales and transportation agreements with MGE that they would reimburse it for any amounts that it paid to MKP an Riverside under the agreements that were ultimately disallowed by the PSC in MGE's recovery of costs as part of the ACA process.

In May of 1996, MKP, Riverside, MGE, Western, the Staff, and the Office of Public Counsel (OPC), "along with others," entered into a "Stipulation and Agreement" (Stipulation), to "resolve certain disputes [then pending] between the parties." These disputes involved actual and potential disallowances by the PSC for the ACA periods from July 1, 1992, to June 30, 1996, concerning the Missouri Agreements. The Stipulation provided, inter alia, that pursuant to an agreed upon schedule set forth therein, MKP, Riverside, and Western would pay $3,992,500 to MGE, $2,842,500 of which was to be paid by MKP and Riverside. In accordance with the reimbursement provisions of the Missouri Agreements, these payments were intended to indemnify MGE for credits that would be due its ratepayers as a result of the PSC's disallowing costs associated with MGE's agreements with MKP and Riverside, pursuant to a prudence review of the execution of the agreements done in conjunction with its ACA process. As the Stipulation provided, MGE was "simply [a] conduit for the delivery of these funds to [its] ratepayers." In return for the payments by MKP, Riverside and Western, MKP and Riverside contend that it was agreed that the Missouri Agreements would not be subject to any further ACA prudence reviews by the PSC. The Stipulation was approved by PSC on June 11, 1996.

In order to short circuit the PSC's ACA prudence review of the MKP sales agreement in Case No. GR-96-450 and avoid any possible resulting disallowance, MKP and Riverside filed two motions to dismiss, one on July 31, 1998, alleging that the review was precluded by the Stipulation. Both motions were denied by the PSC on September 29, 1998. In response, MKP and Riverside filed applications for rehearing with the Commission. They also filed a petition for a writ of prohibition in the Cole County Circuit Court, seeking to prevent the PSC from conducting the prudence review in Case No. GR-96-450. The circuit court granted a preliminary writ, which the PSC moved to quash on the ground that it should be given the opportunity to rule in the first instance on the meaning of the Stipulation. On December 2, 1998, the circuit court sustained the PSC's motion to quash the preliminary injunction, finding that the PSC "should, in the first instance, determine it has jurisdiction of the cause after hearing evidence and argument of the parties before it." On December 22, 1998, the PSC denied MKP and Riverside's applications for rehearing without any further evidence or argument.

On January 15, 1999, MKP and Riverside, in accordance with § 386.510, filed a petition for a writ of review in the circuit court, seeking review of the PSC's order of September 29, 1998, denying its motion to dismiss or limit the proceedings. The court found that the PSC had "acted unlawfully and/or unreasonably when it failed to make any finding that the 1996 Stipulation and Agreement was ambiguous, yet interpreted the Stipulation and Agreement without hearing any testimony or otherwise receiving any evidence to determine the intent of the parties to the Stipulation and Agreement." The circuit court remanded the case to the PSC for further action in accordance with its order, "including the interpretation of the 1996 Stipulation and Agreement in accordance with the rules of construction and the need for a sufficient and appropriate evidentiary basis for resolution of any language found to be ambiguous."

All statutory references are to RSMo 2000, unless otherwise indicated.

Although the circuit court reversed the decision of the PSC and remanded the case for further proceedings to, inter alia, interpret the Stipulation and determine whether it barred the prudence review in Case No. GR-96-450, MKP and Riverside, nonetheless, filed a notice appeal to this court, in accordance with § 386.540, challenging the PSC's decision denying MKP's and Riverside's motion to dismiss or limit the proceedings. In State ex rel. Riverside Pipeline Co., L.P. v. Public Service Commission , 26 S.W.3d 396, 400 (Mo.App. 2000), this court found that the PSC's decision denying the motion to dismiss or limit was not a final decision subject to judicial review by the circuit court, in accordance with § 386.510, such that it and, consequently, this court lacked jurisdiction to review.

Although this court indicated that it was reversing and remanding to the Commission for further proceedings, Riverside , 26 S.W.3d at 401, the proper course of action was to dismiss for a lack of jurisdiction in keeping with its holding that the circuit court, and, thus, this court lacked jurisdiction to review.

MKP and Riverside having been unsuccessful in their attempt to have this court interpret the Stipulation in an effort to block the prudence review in Case No. GR-96-450, the case proceeded to a five-day evidentiary hearing before the PSC in September of 2001. On March 12, 2002, the PSC issued its report and decision, in which it declared that the Stipulation was ambiguous such that it could not determine whether it barred the prudence review in Case No. GR-96-450, as contended by MKP and Riverside. However, as to the merits, it rejected the Staff's recommendation to disallow a portion of the costs associated with MGE's sales agreement with MKP for the ACA period under review, such that MKP and Riverside were not required, pursuant to their respective sales and transportation agreements with MGE, to reimburse MGE for any amounts disallowed for the ACA period of July 1, 1996, to June 30, 1997. Nonetheless, MKP and Riverside filed an application for rehearing, which was denied by the PSC. They then filed a petition for a writ of review in the Circuit Court of Cole County. The circuit court reversed, finding, inter alia, that the Stipulation "(i) barred the Staff's proposed disallowance in [Case No. GR-96-450], and (ii) precludes any further ACA prudence review of the decisions associated with the execution of the Missouri Agreements." The Commission appealed to this court.

Although the Commission appealed the decision of the circuit court, pursuant to Rule 84.05(e), MKP and Riverside are treated as the appellants in this appeal as being "aggrieved" by the decision of the Commission.

I.

In their sole point on appeal, MKP and Riverside claim that the "Commission erred in "reaching the merits of the Staff's proposed disallowance review because further prudence review of the decisions associated with the execution of the Missouri Agreements was precluded" by the Stipulation. Before addressing the merits of MKP and Riverside's claim, we first must determine, sua sponte, our jurisdiction. Stotts v. Progressive Classic Ins. Co. , 118 S.W.3d 655, 660 (Mo.App. 2003).

And, if this court lacks jurisdiction to review, we must dismiss the appeal. City of Brentwood v. Barron Holdings Int'l Ltd. , 66 S.W.3d 139, 142 (Mo.App. 2001). For the reasons stated, infra, we dismiss for a lack of jurisdiction.

In determining our jurisdiction, it is equally important to note what MKP and Riverside are not challenging on appeal, as well as what they are challenging. In that regard, we note that they are not challenging the PSC's decision rejecting the Staff's recommendation, in Case No. GR-96-450, for disallowance of a portion of MGE's costs under the MKP sales agreement for the ACA period of July 1, 1996, through June 30, 1997. This is not surprising inasmuch as from a practical standpoint MKP and Riverside were not adversely affected by that decision such that they had no incentive to appeal it. And, in any event, as we explain, infra, from a legal standpoint, they lacked standing to appeal the decision.

The right to appeal is purely statutory and does not exist, unless the law grants the right. Mesa v. Cesena , 121 S.W.3d 334, 336 (Mo.App. 2003).

The right of appeal to this court in PSC cases is found in § 386.540.1, which provides, in pertinent part:

The commission and any party, including the public counsel, who has participated in the commission proceeding which produced the order or decision may, after the entry of judgment in the circuit court in any action in review, prosecute an appeal to a court having appellate jurisdiction in this state. Such appeal shall be prosecuted as appeals from judgment of the circuit court in civil cases except as otherwise provided in this chapter.

Section 386.540 further provides, in subsection 4, that an appeal from a decision of the Commission is subject to the general laws relating to the Supreme Court and the court of appeals. In that regard, § 512.020 authorizes an appeal to the appropriate appellate court by any party "aggrieved" by a judgment of the trial court. Thus, to appeal a judgment of the trial court, a party must be "aggrieved" thereby. Schroff v. Smart , 120 S.W.3d 751, 754 (Mo.App. 2003). And, if a party is not so aggrieved, this court lacks jurisdiction to consider that party's claims of error on appeal. Wright v. Rankin , 109 S.W.3d 696, 700 (Mo.App. 2003). Applying the "aggrieved" requirement of § 512.020 to Chapter 386 appeals, an aggrieved party has been determined to be any interested party against whom an order has been entered by the PSC. State v. Pub. Serv. Comm'n , 228 S.W.2d 1, 3 (Mo. 1950). Here, the PSC's order or decision denying the Staff's recommendation to disallow certain costs of MGE under the MKP sales agreement for the ACA period under review in Case No. GR-96-450 was not "against" MKP and Riverside and, therefore, they were not aggrieved thereby, such that they lacked standing to appeal that decision to this court.

The opinion refers to § 1184, RSMo 1939, which was a predecessor to § 512.020 and required the party appealing to be "aggrieved" by the judgment being appealed.

Rather than appealing the PSC's decision denying the Staff's recommended disallowance in Case No. GR-96-450, MKP and Riverside are appealing, in their terms, the PSC's "reaching the merits" of that issue because it was barred by the Stipulation. This, of course, is the exact same issue that was raised by them in their motion to dismiss or limit the proceedings, which, as noted, supra, was denied by the PSC and appealed to this court in Riverside I. And, of course, as we also noted, supra, that appeal was dismissed inasmuch as the PSC's denial of the motion was found by this Court to be an interlocutory order that was not subject to judicial review. Riverside I , 26 S.W.3d at 400. And, while MKP and Riverside have tried to re-characterize the decision of the PSC that they are appealing, that re-characterization does not change the result. The fact remains that the only final decision reached by the PSC in Case No. GR-96-450 subject to judicial review, in accordance with Chapter 386, is its decision denying the Staff's recommendation for an ACA disallowance, which MKP and Riverside did not and could not have appealed inasmuch as they were not aggrieved thereby. As such, they were left powerless to seek judicial review of any interlocutory orders of the PSC leading up to its final decision, including its order denying their motion to dismiss or limit the proceedings.

No matter how the situation is characterized or re-characterized, the fact remains that Case No. GR-96-450 resulted in a final decision by the PSC, which was not appealable by MKP and Riverside in that they were not aggrieved thereby. And, while it is certainly understandable why they would want us to review the Stipulation to determine its reach, we cannot do that without doing what we are not allowed to do — offer an advisory opinion. Robinson v. Mo. State Highway Transp. Comm'n , 24 S.W.3d 67, 81 (Mo.App. 2000).

MKP and Riverside's obvious purpose in seeking a determination of the Stipulation has nothing to do with the final result in Case No. GR-96-450, which had no adverse consequences for them. Rather, they are seeking review in an attempt to pre-empt any future prudence reviews by the PSC of the Missouri Agreements that might require them to reimburse MGE for any resulting ACA disallowances. In essence, they are seeking injunctive relief from this Court, to prohibit any future prudence reviews, without having followed the requisite procedure for such relief. Hence, such relief will not be forthcoming. And while MKP and Riverside suggest in their brief that unless we review the Stipulation and interpret its reach as to what ACA prudence reviews of the Missouri Agreements are permitted by the PSC under the Stipulation, they will be forced to re-litigate the issue year after year, we do not agree.

MKP and Riverside, as intervening parties in an established ACA case, would be free to seek injunctive relief against the PSC, based on the Stipulation, to prevent a present ACA prudence review and future such reviews of the Missouri Agreements. The issue in such a case would be whether the PSC, in light of the Stipulation, had jurisdiction to proceed, requiring the Stipulation to be interpreted. As we discuss, supra, the record does reflect that they sought such injunctive relief in the circuit court, which resulted in a preliminary writ that was later quashed.

In discussing MKP and Riverside's failed attempt to obtain permanent injunctive relief from the circuit court, it should be noted that § 386.510 would appear to prohibit such relief. Section 386.510 provides, in pertinent part:

No court in this state, except the circuit court to the extent herein specified and the supreme court or the court of appeals on appeal, shall have jurisdiction to review, reverse, correct or annul any order or decision of the commission or to suspend or delay the executing or operation thereof, or to enjoin, restrain or interfere with the commission in the performance of its official duties.

(Emphasis added.) Giving the language of § 386.510 its plain and ordinary meaning, see Heslop v. Sanderson , 123 S.W.3d 214, 222 (Mo.App. 2003) (stating that, in interpreting a statute, we are to determine the intent of the legislature, giving the language used its plain and ordinary meaning), it is clear to us that the legislature did not intend for the circuit court to have injunctive power over the PSC. Rather, it intended that the circuit court's control over it be limited to conducting the judicial review expressly set forth in § 386.510. This would be consistent with the fact that on appeal, as provided in § 386.540, we do not review the decision of the circuit court, but the decision of the PSC, State ex rel. Office of the Pub. Counsel v. Pub. Serv. Comm'n of Mo. , 938 S.W.2d 339, 341 (Mo.App. 1997), the clear import being that the only function envisioned by the legislature for the circuit court, with respect to the PSC, is one of initial judicial review, with no power to interfere with its workings, a function left exclusively to the Supreme Court and this Court.

While we are aware of cases that recognize that the circuit court has the requisite authority to enjoin the PSC, see State ex rel. AG Processing Inc. v. Thompson , 100 S.W.3d 915 (Mo.App. 2003); State ex rel. County of Jackson v. Pub. Serv. Comm'n , 14 S.W.3d 99 (Mo.App. 2000); State ex rel. Office of the Pub. Counsel v. Pub. Serv. Comm'n , 741 S.W.2d 114 (Mo.App. 1987), those cases base that jurisdiction on the fact that the PSC is an administrative agency, which generally are subject to being enjoined by the circuit court, and do not address the limiting language of § 386.510. While § 536.150 does provide for injunctive relief as to administrative agencies, the provisions of Chapter 536, governing "Administrative Procedure and Review," only come into play with respect to the workings of the PSC where there is a gap in the provisions of Chapter 386. State ex rel Noranda Aluminum, Inc. v. Pub. Serv. Comm'n , 24 S.W.3d 243, 245 (Mo.App. 2000). Here, there is no such gap. In fact, as we note, supra, § 386.510 directly speaks to the issue and is controlling.

The record reflects that rather than seeking a writ in this Court or the Missouri Supreme Court, to prohibit the PSC from conducting the prudence review in Case No. GR-96-450 and future prudence reviews as to the Missouri Agreements, MKP and Riverside chose to go forward before the PSC, while maintaining their position that such reviews were prohibited by the Stipulation. And, when ultimately the PSC rendered a final decision in Case No. GR-96-450, by which MKP and Riverside were not aggrieved, they became procedurally landlocked with respect to their attempt to navigate their ship to a favored port as to the issue of prudence reviews of the Missouri Agreements being precluded by the Stipulation such that they will have to wait until another day to address that issue. The fact that they find themselves in this position, however, is not a sufficient basis to do that which the law will not permit procedurally.

Conclusion

For the reasons stated, the appeal is dismissed for lack of jurisdiction.

Ulrich, P.J., and Lowenstein, J., concur.


Summaries of

State ex Rel. v. Public Service Comm.

Missouri Court of Appeals, Western District
Jul 25, 2005
No. WD 63093 (Mo. Ct. App. Jul. 25, 2005)
Case details for

State ex Rel. v. Public Service Comm.

Case Details

Full title:STATE OF MISSOURI ex rel. RIVERSIDE PIPELINE COMPANY, L.P., MID-KANSAS…

Court:Missouri Court of Appeals, Western District

Date published: Jul 25, 2005

Citations

No. WD 63093 (Mo. Ct. App. Jul. 25, 2005)