Shook Orange County lawyers take a brief look into the outcome of cases that may impact business in California and nationally. In our first episode of our podcast series In That Case, Shook attorney Tom Wynsma discusses East Texas Electric Cooperative, Inc.v. Federal Energy Regulatory Commission (U.S. Court of Appeals, D.C. Circuit) with his Orange County office colleagues. Let’s listen into the debate whether fees charged by a utility were warranted or an overcharge to customers.
East Texas Electric Cooperative, Inc.v. Federal Energy Regulatory Commission (U.S. Court of Appeals, D.C. Circuit)
Click here to learn more about Tom Wynsma. Click here to learn more about Shook's Orange County office.
Shook Orange County lawyers take a brief look into the outcome of cases that may impact business in California and nationally. In our first episode of our podcast series In That Case, Shook attorney Tom Wynsma discusses East Texas Electric Cooperative, Inc.v. Federal Energy Regulatory Commission (U.S. Court of Appeals, D.C. Circuit) with his Orange County office colleagues. Let’s listen into the debate whether fees charged by a utility were warranted or an overcharge to customers.
East Texas Electric Cooperative, Inc.v. Federal Energy Regulatory Commission (U.S. Court of Appeals, D.C. Circuit)
Click here to learn more about Tom Wynsma. Click here to learn more about Shook's Orange County office.
A Monthly Case Reporting From Shook’s Orange County Attorneys.
Narrator:
You're listening to "In That Case", a Shook podcast series exploring timely court decisions that impact the business community. Presenters are Orange County attorneys. Let's listen in as Shook lawyers summarize the decision.
Tom:
Alright. So we have 3 different cases here, going over today. First one here, we have a opinion from the DC Circuit, came out 2 weeks ago. It's an interesting case that involves a challenge to a federal administrative agency ruling on, tariffs from utility providers. So, in this case, FERC, which is the Federal Energy Regulatory Commission, has authority to regulate tariffs that are provided or that are set by you public utility providers.
Speaker 2:
And What's the standard review on that first case the first case?
Tom:
So on this one, it's similar to abuse of discretion, but what's the the court of appeal looks at is whether or not the, the administrative agency's ruling was arbitrary capricious or if there is abusive discretion or any other ruling that's not in conformity with the law. That's the way they phrase it. And in particular, in this case, the public utility provider or under the excuse me. FERC had ruled over a challenge to utilities that were set by a, provider and had denied the petitioner's, formal challenge, which, and, was petitioned to the court of appeal, which affirmed it.
Tom:
So here, the, public utility provider, what they do is annually, every year, they set a estimate of what their costs are gonna be for the next coming year, and that's due by end of October. For the next year, they they, use a formula where they plug in their costs, whether it's overhead, rent, prepaid taxes, tax credits, things of that nature. And they use that to determine what they're gonna charge their customers. Here, the utility provider did just that, and 2 of the or a group of their customers had challenged the actual cost that the utility provider had charged them. And the way that works is in the May of the following year, each utility provider is required to prepare an annual report that goes through and actually plugs in what their actual costs were for the year before, and they use that to determine whether or not there's a surplus or not.
Tom:
And if there is, they they give credit to their utility customers. If not, they charge them more for what's, what's due. In this case, the utility provider found out that after doing their calculations that there shouldn't they had no surplus. And so they're actually going to charge their utility, customers additional funds, which is why they had challenged it. And, the the process is that there's a preliminary challenge that goes directly to the utility provider.
Tom:
They look through the their calculations and determine whether or not they made a mistake. If they say no, then the the utility customer has the option to file a formal challenge with FERC, which then reviews the utility provider's decision and will either, set a hearing on it or they will, dismiss it. In this case, FERC reviewed the utility provider's calculations and determined everything was calculated correctly and dismissed the or denied the claims, the formal challenge from the utility, customers. On appeal, the court of appeal looked to see whether or not there was any FERC, if their decision was arbitrary, capricious, or in any other way, some abuse of discretion.
Tom:
The court of appeal said that FERC, had appropriately denied, the claims from the...
Speaker 2:
Is this in the DC Circuit or Court of Claims?
Tom:
DC Circuit.
Speaker 2:
DC Circuit?
Tom:
Yep. DC Circuit. So the court of appeal said that FERC had appropriately, denied the claims.
Tom:
And in particular, one of the issues was the utility customers were challenging costs from more than a year prior to the claim, and there's essentially a statute of limitations that applies to these sort of claims. You can only challenge cost for 1 year prior to the annual report that's submitted. So the court of appeal upheld FERC's decision.
Narrator:
We hope you enjoyed this episode. Each month, we will be bringing you podcasts on a variety of topics. Join us next time for in that case. The choice of a lawyer is an important decision and should not be based solely upon advertisements.