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State laws and regulations generally specify the time periods for which public utilities must keep records, and those periods vary for different types of records. For example, a public utility may be required to maintain records of meter tests for six or more years, while customer billing records may be subject to retention periods of only a year or two.

Similarly, these regulations may limit the time period for which a public utility may recover from its customer if the utility learns that it has provided service to the customer for which it hasn’t billed. This permitted backbill period may be as short as one year in the  case of residential customers, and perhaps longer in the case of nonresidential customers.

These time periods vary from state to state and must be confirmed in any particular case. But all of these time periods can have important consequences for customers if they suspect, or discover, that they’ve been overcharged.

For example, assume Customer Industries opened its factory in 2010, and in 2018 it learns that it has been overcharged for a particular cost component of its bill since the account was opened. Naturally, it would like to recover the whole amount of the overcharge. But it may find itself stymied because it doesn’t keep copies of its own utility bills for more than a year or so.

Assume further that the utility is required to keep customer bills for only two years. If the utility recognizes that it has overcharged Customer Industries and is willing to issue a refund, it may limit its refund to the previous two years, even though the overcharge stretches back for eight years. The utility may claim that Customer Industries can’t prove overcharges for any period prior to that. Will they win on that? A definite “maybe.” At the very least, Customer Industries will have a steep evidentiary climb in order to make its case.

The customer would also have to check applicable regulations to see if there’s a distinction between errors that appear on the face of the bill (e.g., an error in addition or multiplication), and errors that are “latent” and can only be determined by analyzing the cost components on the bill.

In either case, Customer Industries would be in a much stronger position if it had simply kept its bills, or copies of them, because then it would have an actual record of what the overcharge was.

Recall that state regulations may limit the periods for which a utility can backbill a customer. But that does not necessarily limit the period for which the customer can claim a refund from the utility — provided that it has evidence. And that evidence consists of utility bills.

Given that you can buy a scanner at any office supply store for less than $200, there’s really no excuse for not keeping copies of utility bills. They could turn out to be worth a lot more than you think.

 

 

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S Korea Nuke plant

On Tuesday, ISO New England, which operates the electric grid for certain states in that region (other than New York), issued a report that New England’s average annual real time wholesale electricity price for 2017 at $33.94 per megawatt-hour was the second-lowest price in fifteen (15) years. ISO New England stated that these low prices were driven chiefly by low prices for natural gas, the principal fuel used for generation at the margin, as well as reduced demand levels.

As earlier stated on the Sparkspread, for several years Exelon CEO Chris Crane has played the role of Peter the Hermit in the electric utility industry’s Crusade to rescue nuclear generation fleets from the infidels of the wholesale market. That is, he wants to make sure that electricity consumers make Exelon and other nuke operators whole for any losses they suffer because, contrary to their expectations, electricity prices have been hitting record lows in a number of markets, mainly due to low natural gas prices. When prices fell, Crane and his cohort lost no time in complaining about the “flawed market” for wholesale electricity.

If things had gone the other way – if electricity prices had risen to record highs instead of fallen to record lows – you can bet that Mr. Crane and his fellow nuke CEOs would be saying that electricity consumers must simply accept the results of the perfectly self-regulating free market in electricity, and if prices rise, that’s just, as they say in Brooklyn, T.S., Elliott.

 

Eminent Domain

Today, the United States Court of Appeals for the District of Columbia Circuit denied a request by environmental groups and landowners for a stay that would have delayed construction of the Mountain Valley Pipeline (MVP), a 303-mile long natural gas pipeline running from Wetzel County, West Virginia to Pittsylvania, Virginia. When built, the MVP will carry 2,000,000 dekatherms of natural gas per day to markets in the Northeast, Mid-Atlantic and Southeast regions of the U.S.

The problem, of course, was first identified by John Denver in 1971 when he described the area through which the proposed pipeline will pass as almost Heaven. Life is old on the MVP route, older than the trees that have to be cut down, but younger than the mountains that must be trenched to lay a 42-inch diameter underground pipe.

MVP is important for landowners because one of the chief reasons that line developers go to utility regulatory commissions, whether at the state or federal level, is to obtain the power of eminent domain. The developer may not be able to negotiate acquisition of all rights-of-way necessary for its project. It needs the power of the government behind it so that it can compel private landowners to grant easements over their properties, including structures. Developers also use the threat of an eminent domain proceeding as a lever in negotiating the price of easements.

Before the MVP case reached the DC Court of Appeals, it was litigated before the Federal Energy Regulatory Commission, 161 FERC P61043, which issued a certificate of public convenience and necessity for the pipeline in October 2017. Under the Natural Gas Act, once FERC issues a CPCN for a natural gas pipeline project, the holder obtains the power of eminent domain over properties necessary to complete the project. Many state public utility laws are to the same effect, though only within the particular state.

Landowners should be aware that in these cases, whether they’re for oil or gas pipelines or electricity transmission lines, the integrity of their property rights will be decided not by a court, but by an administrative agency, such as FERC or a state public utilities commission. These administrative agencies may or may not give proper weight to eminent domain issues. But the question of public necessity, which is the analog of public use in typical eminent domain cases, is considered by the administrative agency in the first instance. A court reviewing the agency’s order on appeal may view the public necessity issue as one predominantly of fact, and may be disinclined to upset the agency’s findings. Likewise, if a landowner challenges the developer’s easement in a new court case, that court may decide that it does not have jurisdiction to hear the landowner’s challenge because it would mean reviewing the issuance of the CPCN. Or it may simply deem such a request a collateral attack on the agency’s order.

Recall that in Kelo v. City of New London, 545 U.S. 469 (2005), the Supreme Court essentially removed all guard rails and speed limits from the eminent domain highway. The Court interpreted the concept of public use so broadly that essentially all a local government had to do was declare a neighborhood “blighted” and then turn it over to some politically-connected developer. Some states passed laws to limit eminent domain after Kelo.

But more threatening to landowners is that, within the context of an administrative CPCN proceeding, developers will seek to separate CPCN and eminent domain issues to the greatest extent possible. For example, the developer may seek to bifurcate the case so that the public convenience and necessity of a proposed project is analyzed without reference to its effect on private landowners because the bifurcation restricts eminent domain issues to a separate proceeding. Or the developer may simply urge that the regulator dismiss any concern about eminent domain because they are not seeking that power in the instant case.

Either way, for landowners that’s a recipe for disaster. Once the developer obtains its CPCN, the issue of “public necessity” or “public use” has already been determined, and they may well find themselves effectively precluded from defending their property rights.

Today’s edition of Utility Dive discusses our pending appeal in the Illinois Zero Emission Credit Case. You may read the article here.

It’s been a busy day for the Establishment Clause of the First Amendment. The U.S. Supreme Court’s jurisprudence on separating church and state is long and, in many cases, self-contradictory and even incoherent. But despite all that fog, there are a few solid ideas that emerge.

The Washington Post reports that the U.S. Supreme Court has agreed to hear the case of a Colorado baker who refused to bake a wedding cake for a same-sex couple’s wedding reception, claiming that to do so violated his constitutional right to religious liberty. Masterpiece v. Colorado Civil Rights Commission. The actual decision is probably a year away, but it will be interesting to hear what Gorsuch has to say.

As some ancient sage said, predictions are always dangerous, especially when they involve the future. But here goes. My prediction is that the case will go against the baker.

Were I to walk into a kosher deli and order a cheeseburger, the deli owner would almost certainly not serve me because they serve only food that complies with their religious rules.

But there’s a world of difference between not serving someone because the dish they’re asking for is against your religious principles (and therefore not even on the menu), and not serving someone a dish that is on the menu because that person’s existence or nature is against your religious principles. To call that an exercise of your own “religious liberty” is Orwellian. If that’s religious liberty, then it’s a very short step for a restaurant run by neo-Nazi skinheads (assuming one existed, and, if it did, it could stay in business for more than a week) could refuse to serve anyone who doesn’t meet their definition of Aryan.

Today as well, in the Trinity Lutheran case, the U.S. Supreme Court ruled that taxpayer-funded grants for playgrounds available to nonprofits under a state program could not be denied to a school run by a church. Though the commentariat sees this as shattering the separation between church and state, I don’t. In 1971, the Court decided Lemon v. Kurtzman, which set forth a 3-point test for such statutes: there must a secular purpose behind the statute; the statute’s primary effect must be one that neither promotes nor inhibits religion; and the statute must not foster “excessive government entanglement with religion.” Trinity Lutheran involved public funds used to re-pave playgrounds with rubberized material that’s easier on the knees than asphalt or cement. Before someone sounds alarm bells about Trinity Lutheran, they should first explain why it does not fit fairly within the Lemon v Kurtzman criteria.

 

 

One might be forgiven for mistaking the Federal Energy Regulatory Commission for an Agatha Christie mystery play in which the characters disappear one-by-one. With the earlier departures of three of its five commissioners, including former Chair Norman Bay, FERC is currently down to two: Acting Chair Cheryl LaFleur and Commissioner Colette Honorable. FERC has not had a quorum since those departures became effective. Honorable’s term ends in June, and she has said that she’ll step down then. LaFleur will be the sole commissioner at that point.

The Trump administration has named three replacements so far, but as of this date none of them have been confirmed by the U.S. Senate. Given the Senate’s work schedule (raising campaign funds is more important than all that boring Article I stuff), it’s not likely that the three nominees will be confirmed by June. So FERC could be hobbled for a while yet.

Exelon CEO Chris Crane

Exelon CEO Chris Crane

Chicago, IL February 14, 2017:  Chicago energy attorneys, Patrick N. Giordano and Paul G. Neilan, announced they filed a lawsuit in the U.S. District Court Northern District of Illinois today against Anthony Star in his Official Capacity as Director of the Illinois Power Agency.  Village of Old Mill Creek, et al. v. Anthony Star was filed on Tuesday, February 14, 2017 at the U.S. District Court Northern District of Illinois.

Attorneys Giordano and Neilan represent Plaintiffs that are governmental, residential, commercial, and industrial electricity consumers located throughout the State of Illinois. Plaintiffs claim that P.A. 99-0906, executed by Governor Rauner on December 7, 2016, violates the U.S. Constitution’s Supremacy Clause, Commerce Clause, and 14th Amendment Equal Protection Clause. The underlying basis for the constitutional claims is that the prices charged by electricity generating plants are subject to federal rather than state regulation. A similar case has already been filed in federal court in New York challenging that state’s subsidy of Exelon nuclear plants by the law firm Boies, Schiller & Flexner, LLP, which is headed by preeminent attorney David Boies.

Among other things, P.A. 99-0906 is designed to subsidize Exelon Corp.’s Quad Cities and Clinton nuclear plants. This subsidy will be charged to all Illinois electricity consumers beginning June 1, 2017 regardless of what company supplies the consumer’s electricity. The lawsuit specifically asks that the U.S. District Court grant a permanent injunction blocking the charges from going into effect as scheduled on June 1, 2017. According to Mr. Giordano: “These additional charges will reverse twenty years of deregulation in Illinois which have given us perhaps the one advantage we have over neighboring states: relatively low electricity charges due to an effectively functioning competitive market.” Mr. Giordano also said: “We’re challenging the nuclear bailout provision of the legislation because the prices charged by electricity generators have already been established by the competitive wholesale electricity market subject to federal jurisdiction and cannot be increased by the State of Illinois.”

The estimated impact to all Illinois consumers will be about $3.3 billion over the ten years of the nuclear bailout. Mr. Neilan points out that: “This nuclear bailout is one of four rate increases to Illinois consumers this year, including increased delivery charges, increased renewable energy subsidies, increased energy efficiency subsidies, and these nuclear energy subsidies.” When the nuclear subsidies go into effect on June 1, 2017, Illinois residents and businesses can expect to see an average 3% increase in their electricity bills due to the nuclear subsidies alone.”

Giordano & Associates, Ltd. is Chicago’s first law firm devoted to energy issues. We provide clients with experienced counsel on regulatory, litigation, transactional, and legislative matters in the areas of electricity and natural gas. Pat Giordano can be reached at pgiordano@dereglaw.com.

The Law Offices of Paul G. Neilan, P.C. represents commercial, industrial and governmental energy users in disputes against public utilities, as well as in litigation and transactional matters with non-utility competitive energy suppliers.

FACT SHEET

  1. Village of Old Mill Creek, et al. v. Anthony Star was filed in the United States District Court for the Northern District of Illinois on February 14, 2007.
  2. The Plaintiffs are: Village of Old Mill Creek, Ferrite International Company, Got it Maid, Inc., Nafisca Zotos, Robert Dillon,Richard Owens, and Robin Hawkins, both individually and d/b/a Robin’s Nest.
  3. The Defendant is Anthony Star in his official capacity as Director of the Illinois Power Agency.
  4. This case arises from unlawful Illinois legislation that invades the exclusive jurisdiction of the Federal Energy Regulatory Commission (“FERC”) over “the sale of electric energy at wholesale in interstate commerce” pursuant to the Federal Power Act. 16 U.S.C. 824(b)(1).
  5. The unlawful legislation is contained in subsection (d-5) Zero Emission Standard of Illinois Public Act 99-0906 (“P.A. 99-0906”), which was enacted on December 7, 2016 and is available at http://www.ilga.gov/legislation/99/HB/09900HB65761v.htm.
  6. Subsection (d-5) Zero Emission Standard of P.A. 99-0906 requires the Illinois Power Agency to procure contracts for Illinois utilities Commonwealth Edison Company, which serves northern Illinois, and Ameren Illinois Company, which services central and southern Illinois, for purchases of Zero Emission Credits (“ZECs”) from nuclear-fueled generating plants.
  7. The ZEC payments will be passed through by the utilities to all Illinois consumers through automatic adjustment tariffs.
  8. A. 99-0906 is designed to provide additional revenues to the Illinois-based Quad Cities and Clinton nuclear plants.
  9. Exelon Corp. owns both the utility ComEd and Exelon Generation, which owns the Quad Cities and Clinton nuclear plants that will sell the ZECs to the utilities.
  10. Although P.A. 99-0906 has many other provisions, this case concerns only subsection (d – 5) Zero emission standard.
  11. Plaintiffs are not challenging any other provisions of P.A. 99-0906. Section 97 of P.A. 99-0906 provides that the provisions of the Act are severable under Section 1.31 of the Illinois Statute on Statutes. 5 ILCS 70/1.31.
  12. In New York, ZEC payments to Exelon nuclear plants in that state are being challenged on the same grounds set forth by Plaintiffs in Illinois. Coalition for Competitive Electricity, et al. v. Audrey Zibelman, et al. was filed in the U.S. District Court Southern District of New York on October 19, 2016.
  13. A typical residential customer using 1 mWh (1,000 kWh) per month would pay an additional $2.64 per month beginning June 1, 2017 based on the initial ZEC price established in P.A. 99-0906.
  14. A manufacturing company using 10,000 mWh per month would pay an additional $26,400 per month beginning June 1, 2017 based on the initial ZEC price established in P.A. 99-0906.