Opinion ID: 2237187
Heading Depth: 1
Heading Rank: 1

Heading: procedural framework

Text: In October 1985, following an audit and rate proceedings, the Commission issued a rate order allowing Edison an annual rate increase of approximately $495 million (Rate Order I). This rate increase represented what the Commission determined to be reasonable costs incurred by Edison in constructing Byron I. The Commission disallowed as unreasonable a total of $101.5 million of costs that Edison had incurred in constructing Byron I. Since Rate Order I, years of litigation have ensued among Edison, the Commission, and the intervenors. The instant appeal is the latest aspect of this ongoing litigation. Following the Commission's decision in Rate Order I, intervenors appealed that decision to the circuit court pursuant to section 68 of the Act (Ill.Rev.Stat.1983, ch. 1112/3, par. 72). On April 29, 1986, the circuit court reversed the Commission order and remanded the cause to the Commission for further proceedings. The circuit court found that the Commission had applied an incorrect standard in determining which costs were reasonable and therefore includable in the new rate base. The circuit court held that only costs which Edison affirmatively proved to have been reasonable were includable in the new rate base. The court, therefore, ordered the Commission to roll back the $495 million annual rate increase established in Rate Order I. The court also ordered Edison to establish revised rates within 30 days which were to remain in effect pending further proceedings before the Commission and were not to include any of the costs of Byron I construction. The court further ordered the Commission to exclude various costs related to Byron I from its final rate base determination on remand. Thereafter, upon emergency motion by Edison, the circuit court stayed enforcement of its judgment on May 16, 1986, pursuant to Supreme Court Rule 305(b) (134 Ill.2d 305(b)) (May 1986 stay order). However, since the stay order would enable Edison to continue to collect, throughout the appellate process, the $495 million annual rate increase which the circuit court had found to be illegal, the circuit court predicated its stay order upon the following conditions: (1) Edison was to create a separate account on its books reflecting the difference between rates collected after April 29, 1986 (the date of the circuit court's judgment reversing Rate Order I), and the rates that would have been collected without Byron I costs included in the rate base; (2) Edison was to file bimonthly reports of the status of this account with the circuit court and serve them on the parties; (3) if the circuit court's judgment should be affirmed in part and reversed in part, Edison was required to pay refunds to its historical customers (to the extent practicable); (4) the circuit court would determine the appropriate interest rate for any refund emanating from Rate Order I; and (5) the circuit court was to retain jurisdiction to enforce these conditions. In predicating its stay order on these conditions, the circuit court made provision for the refund of money collected under Rate Order I in the event that this court affirmed its April 1986 decision on the merits. Thereafter, we allowed the intervenors' petition for leave to appeal directly to this court pursuant to Supreme Court Rule 302(b) (134 Ill.2d R. 302(b)). All parties appealed the circuit court's April 1986 decision on the merits. No party, however, appealed the circuit court's May 1986 stay order. In People ex rel. Hartigan v. Illinois Commerce Comm'n (1987), 117 Ill.2d 120, 109 Ill.Dec. 797, 510 N.E.2d 865 ( Hartigan I ), this court affirmed the circuit court's reversal of the Commission's Rate Order I. The court agreed with the circuit court holding that the Commission had applied an improper standard in determining which costs of Byron I were reasonable and includable in the new rate base. The court reversed, however, as beyond its statutory authority, that part of the circuit court's holding which ordered the Commission to set certain rates within a limited amount of time and to exclude certain costs from its ultimate rate determination. We also noted that the remedy of a refund as set forth by the circuit court was allowable, leaving the question open as to which body, the Commission or the circuit court, was authorized to dictate the terms and implementation of the refund. The court then remanded the cause to the Commission for further ratemaking proceedings consistent with its decision. On remand, the Commission enlisted Arthur Young & Company (Arthur Young) to conduct a second audit of the Byron I costs and conducted exhaustive evidentiary hearings. On August 23,1989, the Commission issued a new rate order in which it determined that $291.1 million of the $2.55 billion Byron I costs were unreasonable and disallowed them from Edison's rate base. The Commission also ordered Edison to refund to its customers the money it had collected under Rate Order I during the period of May 1, 1986, through December 31, 1989. The Commission set the interest rate of the refund at 5% to be compounded annually. On September 5, 1989, the Commission issued a supplemental order which set forth the following terms for the refund: (1) the applicable interest rate is 5% compounded annually; (2) the total refund payment is $194.6 million to be paid in two installments; and (3) refunds are to be paid to current customers by crediting their current monthly bills. We will hereinafter refer to these two Commission orders on remand collectively as Rate Order II. The Commission reserved for rehearing the question of whether the refund should be based on the amount actually collected pursuant to Rate Order I or on projected revenues estimated in Rate Order I. The petition for rehearing was denied, however, by operation of law when the Commission failed to act on it within the time allotted by statute. Simultaneous with the Commission's consideration and issuance of Rate Order II, the circuit court received briefs and heard arguments from the parties concerning its retained jurisdiction over the refund process and the various terms necessary to implement and administer a refund which it had outlined in its May 1986 stay order. On October 12, 1989, the circuit court entered an order entitled Jurisdictional Statement in which the court emphasized that its grant of the May 1986 stay order was expressly conditioned upon, inter alia, its retained jurisdiction to set the terms of any potential refund and to implement and administer said refund. The circuit court noted that the Commission was not statutorily authorized to refund money collected pursuant to a rate order entered by it but later set aside on appeal. Thus, the circuit court found that the refund terms of the Commission's Rate Order II were pure dicta. The court noted that no party had appealed the stay order or any of its conditions and that Edison had received a substantial benefit from the order. More importantly, however, the circuit court determined that its statutorily based review jurisdiction authorized by the Act (Ill.Rev.Stat.1983, ch. 1112/3, par. 72) terminated when it entered its April 1986 order which reversed and remanded the Commission's Rate Order I. The circuit court insisted that its May 1986 stay order and its conditions resulted from an act of discretion emanating from inherent judicial authority pursuant to Supreme Court Rule 305(b) (134 Ill.2d R. 305(b)). Therefore, the circuit court found, its refund jurisdiction survived until its stay order and conditions were accomplished. Pursuant to its jurisdictional statement, the circuit court issued a series of refund-related orders (collectively, circuit court's refund order) in which it set forth the terms and methodology of the refund. The circuit court ruled that: (1) the interest rate will be 9% compounded annually; (2) the refund will be based on the actual amount collected under the discredited Rate Order I; (3) the refund period will run from April 30, 1986, through December 31, 1989; (4) the refund will be paid to historical customers who had paid the illegal rates to the extent practicable; and (5) the refund was to begin in March 1990. The appellate court, however, later stayed the circuit court's refund order pending appeal. The refund terms set forth in the circuit court's refund order directly conflict with the Commission's refund terms set forth in Rate Order II. Thus, one of the issues this court must decide is which body is authorized to dictate the terms of and to implement any refund of money collected under Rate Order I which may be due to Edison's customers. In the interim of these proceedings, the legislature amended the Act, effective January 1, 1986, directing that Commission rate orders are to be reviewed by the appellate court rather than the circuit court. Because of this amendment, the parties appealed directly to the appellate court contesting the Commission's Rate Order II, the circuit court's refund order, and the circuit court's determination that it, rather than the Commission, retained subject matter jurisdiction over the terms and implementation of the refund from Rate Order I. On appeal, the appellate court affirmed the Commission's findings and conclusions in Rate Order II regarding the reasonable Byron I costs allowable in Edison's rate base. The appellate court, however, held that, based on the Act, the Commission had jurisdiction over the terms and implementation of the refund. (202 Ill.App.3d 917, 959-61, 149 Ill.Dec. 341, 561 N.E.2d 711 ( Hartigan II ).) Therefore, the appellate court reviewed only the Commission's Rate Order II and the refund terms set forth therein. The appellate court affirmed the portion of Rate Order II which set the interest rate at 5% to be compounded annually and its determination that payment should go to Edison's current customers. The appellate court, however, reversed that part of Rate Order II which included 1989 revenues in the instant refund. The appellate court found that, since the rates set for 1989 had previously been reversed by this court in Business & Professional People for the Public Interest v. Illinois Commerce Comm'n (1989), 136 Ill.2d 192, 144 Ill.Dec. 334, 555 N.E.2d 693 ( Business & Professional People I), the proper 1989 rates were as yet undetermined and, therefore, the appropriate refund amount for 1989 was unascertainable. Therefore, the appellate court held that the refund period at issue in the instant case runs from March 30, 1986, through December 1988. Finally, the appellate court remanded to the Commission the issue of whether the total refund amount should be based on actual dollars collected under Rate Order I or on the projected revenues estimated in Rate Order I. The appellate court further directed that if, on remand, the Commission determines that the refund should be based on actual dollars collected, it must also offset these revenues with any increase that Edison experienced in actual operating expenses. The parties have appealed the appellate court's judgment in Hartigan II to this court pursuant to Supreme Court Rule 315 (134 Ill.2d R. 315). The issues in the instant appeal concern: (1) various Commission findings in Rate Order II regarding reasonable and unreasonable delays in the operation of Byron I and the methodology employed by the Commission to quantify the costs associated with unreasonable delay; (2) whether the Commission or the circuit court has jurisdiction over the terms and implementation of the refund associated with Rate Order I; and (3) the terms and conditions of the refund associated with Rate Order I.