Verified Application & Petition of Liberty Energy (Midstates) Corp. v. Office of Public Counsel
Verified Application & Petition of Liberty Energy (Midstates) Corp. v. Office of Public Counsel
Opinion of the Court
The Office of the Public Counsel (hereinafter, “Public Counsel’,’), appeals, from an , order entered by the Missouri Public Service Commission (hereinafter, "the PSC”), granting Liberty. Energy (Midstates) Corp. d/b/a Liberty Utilities’ (hereinafter, “Liberty”)
Background
Liberty is a natural gas provider. It is a “public utility” and a “gas corporation.” Sections 386.020(43) and 386.020(18), RSMo Supp. 2013.
In 2012, the PSC authorized Liberty’s purchase of substantially all of the assets that Atmos Energy Corporation (hereinafter, “Atmos”) used to provide natural gas and transportation services in Missouri. The PSC issued new certificates of convenience and necessity to Liberty for the service areas Atmos previously served. Further, the PSC approved Liberty’s adoption of Atmos’ ISRS tariff.
Gas corporations are permitted to recover certain infrastructure system replacement costs outside of a formal rate case though a surcharge on their customers’ bills. When a petition to modify an ISRS is filed, the PSC staff must conduct an examination of the proposed ISRS. Section 393.1015.2, RSMo Supp. 2003. The examination may scrutinize the petitioning gas corporation’s information to confirm the costs are in accordance with the ISRS code provisions and confirm the proposed charges are calculated properly. A report of the examination may be submitted to the PSC no later than sixty days after the petition was filed. Section 393.1015.2(2).
In July 2013, Liberty filed a petition with the PSC seeking an adjustment of its
During the examination of Liberty’s petition, the PSC staff inspected thirty-six of the two hundred seventy-five projects for which Liberty sought recovery. The projects investigated compromised approximately fifty-eight percent of the costs for which Liberty 'sought recovery.
The PSC staff submitted its report to the PSC on September 3, 2013. The report noted that Liberty included some growth' projects in its application, which are not eligible for recovery in an ISRS. The PSC staff removed those projects from its calculations. The PSC staff also identified other errors and omissions in Liberty’s data, including: summation errors; errors in accumulated depreciation; deferred income taxes, property taxes depreciation rates, and conversion factors; and formula errors. The report was updated on September 20, 2013, and September 26, 2013, providing amended revenue figures and customer class rates based on additional data from Liberty.
On September 9, 2013, Public Counsel filed a motion, requesting, the PSC reject Liberty’s.ISRS petition or schedule an evi-dentiary hearing. Public Counsel asserted, inter alia, Liberty was seeking to recover expenses in its ISRS application that were not authorized by section 393.1009(5). The PSC held an evidentiary hearing on September 26,2013.
At the evidentiary hearing, Liberty’s president testified that the requested ISRS rate increase included costs to cover damage to Liberty’s facilities caused by a contractor or another third party. Public Counsel argued that Liberty should not recover expenses for its infrastructure that was replaced because it was damaged accidentally or negligently- by a third party. Public Counsel maintained that Liberty’s replacement of the pipe that was damaged accidently during excavation did not satisfy the section 393.1009(5)(a) requirement that the replacement was for “existing facilities that have worn out or are in a deteriorated condition.”
The PSC approved the ISRS increase for Liberty, concluding that “damaged” infrastructure is synonymous with “deteriorated.” The' PSC found replacing the pipes that were damaged by a third party qualified as a “gas utility project” pursuant to section 393.1009(5)(a), and the projects were “extending the useful life or enhancing the integrity of the pipeline system components” pursuant to section 393.1009(5)(b). Accordingly, Liberty filed a new ISRS tariffs in compliance with the PSC’s order, and the PSC approved the tariffs.
Public Counsel filed an application for rehearing, which the PSC denied. Public Counsel appealed, and the court of appeals affirmed. This Court granted transfer pursuant to Mo. Const, art. V, sec. 10, after opinion by the court of appeals.
Discussion
Standard of Review
“This Court reviews the decision of the PSC rather than that of the circuit
Lawfulness of the PSC’s order
Public Counsel raises one point on appeal, claiming the PSC erred in approving Liberty’s ISRS surcharge because the PSC included expenses that are not authorized by statute. Public Counsel argues that Liberty’s replacement of its infrastructure that was damaged by a third party does not meet the statutory requirement of “worn out” or ih a “deteriorated condition.'” Public Counsel asserts that the PSC’s order authorizing Liberty to recover costs incurred in replacing infrastructure, regardless of whether the replacement was due to- damage caused by human conduct, is contrary to the plain language and the legislative intent of the ISRS statutes. Accordingly, Public Counsel contends, by including these costs in its ISRS application, Liberty’s request exceeded the scope of the statute.
A gas company is authorized to petition the PSC to establish or change an ISRS to “allow for the adjustment of the gas corporation’s rates and charges to provide for the recovery of costs for eligible infrastructure replacements.”, Section 393.1012.1. Eligible infrastructure replacements are defined as gas utility plant projects that “[d]o not increase revenues by directly connecting the infrastructure replacement to new customers;” “[a]re in service and used and useful;” “[w]ere not included in the gas corporation’s rate base in its most recent general rate case;” and “[r]eplace or extend the useful life of an existing infrastructure.... ” Section 393.1009(3). A “gas utility plant project” is further limited to include only “[mjains, valves, service lines, regulator stations, vaults, and other pipeline system components installed to comply with state or federal safety requirements as replacements for existing facilities that have worn out or are in deteriorated condition ...” Section 393.1009(5)(a).
At issue in this case is whether the damage replacement caused by human conduct is encompassed by the plain language of section 393.1009(5)(a). To determine whether this type of damage replacement is contrary to the plain language of the statute, this Court must engage in statutory interpretation. The primary rule of statutory interpretation is to effectuate legislative intent through reference to the plain and ordinary meaning of the statutory language. Bateman v. Rinehart, 391 S.W.3d 441, 446 (Mo. banc 2013). This
To determine whether damage caused by human conduct is included in a gas utility plant project, this Court must determine if the “existing facilities” were “worn out or ... in deteriorated condition.” Section 393.1009(5)(a). “Deteriorate,” as used in section 393.1009, is not defined by statute. Accordingly, the meaning is to be defined by the plain and ordinary meaning as derived from the dictionary. See Balloons Over the Rainbow, 427 S.W.3d at 825. The definition of “deteriorate” is -“to make inferior in quality or value,” “to grow worse,” and “become impaired in quality, state, or condition.” WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 616 (1993).
The PSC claims that it could take an expansive view of the definition of “deteriorate” because there is more than one dictionary definition. While one definition of “deteriorate” could be construed to mean a condition that diminishes over time, PSC avers that another definition could mean the condition was made inferi- or because it was “impaired in quality, state, or value.” By only accepting a definition of “impaired in quality, state, or value,” the PSC asserts that because the pipes were damaged by a third party, they were made inferior or became impaired in quality, state, or value. Hence, the PSC concludes that it followed the plain language of the statute. .
However, the PSC’s argument selects one of the multiple definitions of “deteriorate” and expands the meaning of that definition to reach its desired conclusion. The PSC ignores the clear language provided by the dictionary. In the dictionary definition of “deteriorate” as “impaired in quality, state, or value,” the definition further clarifies its meaning by adding the synonymous cross-reference of “degenerate” and an illustration of usage that “<idle houses WEBSTER’S THIRD at 616. Clearly, this definition indicates that deterioration is a gradual process that happens over a period of time rather than an immediate event. Had the legislature intended to include the replacement of gas utility plant projects, which were damaged by a third party’s negligence, it could have inserted différent langúage into the statute to effectuate that intent.
Accordingly, the PSC’s interpretation of the statute is incorrect because it would allow any damage to be eligible for an ISRS surcharge rather, than the statutorily limited gas utility plant project as delineated by section 393.1009(5)(a)'.. The PSC’s interpretation conflicts with the clear legislative intent as demonstrated by the plain language of the statute. The PSC erred in relying upon its presumption that any change to a gas utility plant project qualifies for an ISRS surcharge. Only infrastructure which is in' a worn out' or deteriorated condition, as stated herein, is eligible for an ISRS surcharge. Hence, the PSC’s order is not lawful because it is contrary to the plain language of the statute, which limits projects that qualify for an ISRS surcharge.
Conclusion
The PSC’s reliance upon the incomplete definition of “deteriorate” resulted in an
.In October 2013, the PSC granted Liberty's application for the name change from Liberty Energy (Midstates) Corp. d/b/a Liberty Utilities to Liberty Utilities (Midstates Natural Gas) Corp. d/b/a Liberty Utilities, effective November 1, 2013,
. All further statutory references herein are to RSMo Supp. 2013, unless' otherwise indicated,
. Like its predecessor ■ Atmos, Liberty has a specific ISRS rate for each of its three districts.
. Due to the time constraints in an ISRS request, the PSC staff only could investigate a ' limited number of projects.' '
Reference
- Full Case Name
- IN the MATTER OF the VERIFIED APPLICATION AND PETITION OF LIBERTY ENERGY (MIDSTATES) CORP. d/b/a Liberty Utilities to Change Its Infrastructure System Replacement Surcharge, Missouri Public Service Commission v. The Office of Public Counsel
- Cited By
- 20 cases
- Status
- Published