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Indiana Court of Appeals Reaffirms IURC Has Duty to Apply Precedent

On Sept. 28, the Indiana Court of Appeals reversed a rate order issued by the Indiana Utility Regulatory Commission (IURC) in Hamilton Southeastern Utils. v. Ind. Util. Reg. Comm’n, Case No. 93A02-1612-EX-2742. Hamilton Southeastern Utilities receives operation, maintenance and engineering services from an affiliate company pursuant to an agreement on file with the IURC. In prior rate cases, the IURC had authorized recovery of the payments to the affiliate, but in the case on appeal, the IURC applied a lower-of-cost-or market standard from National Association of Regulatory Utility Commissioners (NARUC) guidelines and thereby reduced the amount recovered. The court held the commission’s failure to follow its prior precedent or explain its departure from it was reversible error. “[T]he Commission’s unexplained reliance on a heretofore unapplied standard recommended by NARUC renders its decision arbitrary. . . . [The Commission must] clearly explain[] why it had decided inconsistently with its prior orders.”

A second issue on appeal was the recovery of income taxes. Hamilton Southeastern is an S corporation and is therefore taxed like a partnership. The IURC nevertheless authorized recovery of income taxes based upon evidence of the taxes that the shareholders would pay on the income. The court affirmed, finding no error in determining that the utility could recover “the income taxes its shareholders actually paid.”

Finally, the court decisively reconfirmed a long-standing rule when it rejected a recent practice of the commission to appear as a party with full briefing rights in appeals from its orders. The court held “the Commission’s Order should speak for itself, without the need to further rationalize its decision to our court. Accordingly, the Commission is not a proper party on appeal from its own decision and should be dismissed.”



About this Author

Nicholas Kile, Barnes Thornburg Law Firm, Indianapolis, Environmental and Litigation Law Attorney

Nicholas K. Kile is a partner in Barnes & Thornburg LLP’s Indianapolis, Indiana office. He practices primarily in the Governmental Services Department. He represents utilities and local governments in all facets of utility law, including utilities that are regulated in whole or in part by the Indiana Utility Regulatory Commission and those that are not. Mr. Kile’s practice includes rates and charges, bond issuances, acquisitions, privatizations, lobbying, environmental regulation, annexation, condemnation, territorial disputes, zoning, litigation, main extension agreements, cable...

Teresa Morton Nyhart Corporate and Energy Law Attorney Barnes Thornburg Law Firm Indianapolis

Teresa Morton Nyhart is a partner in the Indianapolis office and a member of the Corporate Department. She is also co-chair of the firm's Energy, Telecommunications and Utilities Practice Group, which was the only Indiana firm ranked Tier 1 on U.S. News-Best Lawyers Best Law Firms 2017 list in Indianapolis for energy law. Her practice concentrates on the energy, telecommunications and video/cable industries. She also works with consumers in the negotiation of customer specific contracts and related matters; with developers, property owners and universities; and with woman and minority owned businesses and professionals. Prior to joining the firm, Ms. Morton Nyhart worked for more than four years in the radio broadcasting and communications industry. Drawing on this experience, Ms. Morton Nyhart works with clients regarding crisis communications, media interviews and cross-examination for hearings. In 2015, Ms. Morton Nyhart celebrates 15 years of being rated AV Preeminent from Martindale-Hubbell. She is recognized in Best Lawyers in America in the categories of Energy Law and Communications and was named 2017 Energy Law "Lawyer of the Year". She has also been recognized in Indiana Super Lawyers and in 2009 Super Lawyers Corporate Counsel Edition in the area of Energy and Natural Resources.

Parvin Price, Barnes Thornburg Law Firm, Indianapolis, Government Services attorney, Finance Department lawyer

L. Parvin Price is a partner in the Indianapolis office of Barnes & Thornburg LLP. He is member of the Government Services and Finance Department and the Energy, Telecommunications and Utilities Practice Group.

Mr. Price focuses his practice primarily on utility and energy-related matters including natural gas, electricity and water. He also assists clients in the funding of various infrastructure improvement projects. Mr. Price represents investor-owned, cooperatively owned, or municipally owned utilities, as well as industrial or wholesale...