Opinion ID: 2123906
Heading Depth: 1
Heading Rank: 3

Heading: kn's cost-of-service study

Text: The Court of Appeals concluded that KN had failed to prove its case because KN's cost-of-service study was merged into the rate ordinances and that the study could not be introduced at trial because [t]he hearing in district court cannot be a review of the legislative record of the rate hearings.... The district court was in error in accepting the rate area hearing records into evidence for the limited purpose of showing what transpired at the rate area hearings. That evidence served no purpose in district court because the hearing records merged into the ordinances. KN Energy, Inc. v. Cities of Broken Bow et al., 1 NCA 2185, 2191-92 (1992). In arriving at the foregoing conclusion, the Court of Appeals relied on Williams v. County of Buffalo, 181 Neb. 233, 147 N.W.2d 776 (1967), and KN Energy, Inc. v. City of Scottsbluff, 233 Neb. 644, 447 N.W.2d 227 (1989). In Williams, we held that a statute authorizing an appeal from a municipality's annexation of land violated the separation of powers provision in Neb. Const. art. 2, § 1, because the statute delegated legislative power to the judiciary, that is, the power to evaluate reasons for an annexation. In Williams, this court said: The passage of the ordinance presumes a finding that the conditions and limitations contained in the delegating statute exist or have been complied with. The findings of the city council thereon are legislative and are in a sense merged in the ordinance upon its passage. 181 Neb. at 236, 147 N.W.2d at 780. In City of Scottsbluff, to interpret the Municipal Natural Gas Regulation Act, we relied on Williams and held that a gas utility may maintain an injunctive collateral attack to challenge the validity of rates set by ordinance. In its decision for the present case, the Court of Appeals seized on the language in Williams regarding legislative findings merged into an ordinance. The previously mentioned excerpt from Williams is dicta, because Williams merely holds that legislative power for a municipal annexation cannot be delegated to the judiciary in a review of the reasons for the annexation. Moreover, the Court of Appeals' conclusion that a district court cannot consider evidence introduced at a rate hearing conducted by the municipality is a contradiction of City of Scottsbluff, wherein we stated that a utility had the right to offer any evidence which was relevant to the issue and was not limited to the evidence received at the area rate hearings. 233 Neb. at 654, 447 N.W.2d at 234. Thus, KN may offer in the district court the same relevant evidence that was presented at the rate hearings and may offer additional evidence if necessary. In offering evidence, however, KN must comply with the Nebraska Evidence Rules. See Neb.Evid.R. 1101, Neb.Rev.Stat. § 27-1101 (Cum.Supp.1992) (applicability of Nebraska Evidence Rules). Therefore the Court of Appeals erroneously concluded that KN's cost-of-service study was inadmissible because the study was presented at the rate hearings conducted by the various municipalities.