This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
In the Matter of the Complaint by Myer Shark, et al.,
Regarding Xcel Energy’s Income Taxes.
Filed December 27, 2005
Minnesota Public Utilities Commission
File No. E,G-002/C-03-1871
Wood R. Foster, Jr., Mark Thieroff, Siegel, Brill, Greupner, Duffy & Foster, P.A., 100 Washington Avenue South, Suite 1300, Minneapolis, MN 55401 (for relator Myer Shark)
Mike Hatch, Attorney General, Kari Valley Zipko, Assistant Attorney General, 445 Minnesota Street, Suite 1100, St. Paul, MN 55101-2128 (for respondent Minnesota Public Utilities Commission)
Michael C. Krikava, Thomas Erik Bailey, Briggs and Morgan, P.A., 2200 IDS Center, Minneapolis, MN 55401; and
Christopher B. Clark, Assistant General Counsel, Xcel Energy Services Inc., 800 Nicollet Mall, Suite 2900, Minneapolis, MN 55402-2024 (for respondent Northern States Power Company d/b/a Xcel Energy)
Mike Hatch, Attorney General, Ronald M. Giteck, Assistant Attorney General, 445 Minnesota Street, Suite 900, St. Paul, MN 55101-2130 (for amicus curiae State of Minnesota Office of Attorney General)
Considered and decided by Shumaker, Presiding Judge; Kalitowski, Judge; and Hudson, Judge.
U N P U B L I S H E D O P I N I O N
Relator Myer Shark brings this certiorari appeal from a decision by the Minnesota Public Utilities Commission (MPUC) denying a motion for reconsideration of relator’s complaint. Shark, along with more than 50 other Northern States Power (NSP) customers, filed a complaint with the MPUC, requesting an investigation into whether NSP’s rates were unreasonable and seeking a refund. The MPUC determined that because it did not have the authority to order a refund, Shark failed to establish a reasonable ground to conduct an investigation. We affirm.
D E C I S I O N
aggrieved by a decision of the MPUC may appeal in accordance with chapter
legislature has delegated authority to regulate public utilities and to determine
the reasonableness of the rates they charge to the Minnesota Public Utilities
Commission.” Computer Tool & Eng’g, Inc. v. N. States Power Co., 453 N.W.2d
569, 572 (
be deemed arbitrary and capricious if the agency relied on factors which the legislature had not intended it to consider, if it entirely failed to consider an important aspect of the problem, if it offered an explanation for the decision that runs counter to the evidence, or if the decision is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
Trout Unlimited, Inc.
Relator sought an investigation pursuant to Minn. Stat. § 216B.17, subd. 1 (2004), asserting that NSP ratepayers were entitled to a refund because NSP was allowed a rate increase based on estimated income taxes that NSP ultimately did not pay. We conclude that the MPUC properly rejected this argument.
NSP is a subsidiary of Xcel Energy Inc. (Xcel), a registered holding company. Another of Xcel’s subsidiaries is Xcel Energy Wholesale Group Inc. (Xcel Wholesale), which previously owned a subsidiary called NRG. In 2002-03, NRG had financial difficulties and went into bankruptcy. As NSP concedes, Xcel received federal income tax benefits arising out of a worthless stock deduction on Xcel’s consolidated tax returns. Citing newspaper reports, relator contends that these tax benefits amounted to some $700 million dollars. Relator asserted that an investigation would show that NSP as well as Xcel benefited, thus making the utility rate assessed by NSP unreasonable. NSP claims that pursuant to a tax-allocation agreement approved by MPUC, the tax benefit associated with the NRG stock loss was allocated only to Xcel Wholesale, the entity that incurred the loss, and that none of the tax benefit was allocated to NSP.
After a hearing at which arguments were presented, the MPUC ruled that because the relief that relator sought—a refund—was unavailable, further investigation of relator’s complaint would serve no purpose. Consequently, the MPUC dismissed relator’s complaint and denied a subsequent motion for reconsideration. Relator contends that the MPUC acted arbitrarily and capriciously. We disagree.
The MPUC properly determined that relator’s requested
action ignores the statutory scheme under which the MPUC sets rates. “In determining the size of a rate increase
for a public utility, the Commission considers appropriate expenses, revenues,
and investment for a twelve-month period, commonly referred to as a ‘test year.’” In re Petition
of Interstate Power Co., 419 N.W.2d 803, 805 (
As the MPUC explained, using a test year to set rates in the future allows rates to be based on experience rather than conjecture, provides fiscal discipline for utilities, and assures utilities and ratepayers that rates will not be changed retroactively. The MPUC stated, “[a]lthough individual cost components that were used to develop the rates may vary (increase or decrease) after the rates are set, no adjustment (with the exception of the pass-throughs) is made outside of a rate case for increases or decreases in the individual components of rates.” While anomalies are likely to exist, sometimes they will favor the ratepayer, and sometimes they will favor the utility.
the Minnesota Supreme Court has addressed whether, under the statutory ratemaking
scheme, refunds are allowed. It
concluded that the MPUC does not have authority to order refunds. Peoples
Natural Gas Co. v.
On appeal relator argues that the
remedies available to the MPUC were not limited to the specific forms of relief
addressed in his complaint. He argues
that the legislature has specifically mandated that when the MPUC determines
through a section 216B.17 investigation that a utility’s rates are
unreasonable, it must replace those rates with reasonable ones.
discussed above, a refund is not available as a remedy. Peoples,
369 N.W.2d at 536. Rather, in the event
that the commission finds significant fact issues have not been resolved to its
satisfaction, it may order the utility to initiate a rate proceeding under
Minn. Stat. § 216B.16 or it may order a contested-case hearing. Minn. Stat. § 216B.17, subd. 8. If the commission finds the rates
unreasonable, “the commission shall determine and by order fix reasonable rates
. . . to be imposed, observed and followed in the future in lieu of those found
to be unreasonable or unlawful.”
Finally, amicus curiae Office of the Attorney General (OAG), which was not a party but participated in the proceedings before the MPUC, raises additional arguments on appeal regarding the effect of the tax-allocation agreement, entered into by Xcel and its subsidiaries, including NSP. But the role of an amicus is generally limited to addressing issues raised by the parties. See Kline v. Berg Drywall, Inc., 685 N.W.2d 12, 23 n.9 (Minn. 2004). OAG’s arguments exceed that limit. Moreover, the MPUC correctly rejected the arguments raised by OAG at the hearing, and further determined that even if OAG’s arguments had merit, the remedy sought, a refund, was not available.
We conclude that the MPUC’s decision was not arbitrary and capricious. As detailed above, the MPUC sets rates based on the premise of a test year, which necessarily involves consideration of numerous factors, some of which will inevitably vary from that which was predicted. And refunds are not an authorized way in which to address this inevitability. Further, relator and amicus failed to show that the allocation agreement changed the ratemaking process.