Opinion ID: 853532
Heading Depth: 2
Heading Rank: 4

Heading: Earlier Settlement

Text: The Commission also rejected the Opponents' argument that the ProLiance agreements should be disapproved because they violated earlier settlements that Indiana Gas made with some transportation customers and the OUCC in 1994-95. In those settlements, Indiana Gas agreed not to request sharing of revenues from its capacity releases and to reduce its gas costs with all amounts realized from capacity release. (R. at 1624.) Indiana Gas also agreed that its customers could negotiate for pre-arranged capacity releases on a long-term basis, based on Indiana Gas's determination of available capacity, and that capacity would be awarded by determining the greatest economic value among offers available for that capacity. (R. at 1624.) The Commission approved these settlements. (R. at 1618, 2772, 3098-99.) The Commission rejected the Opponents' argument that Indiana Gas breached the settlements by transferring its pipeline capacity to ProLiance or by arranging for the sharing of revenue from capacity releases through transportation credits. The Commission explained that the releases contemplated in the settlements would be based on Indiana Gas's own determination of what capacity became available after its needs were met. The Commission reasoned that ProLiance did not receive from Indiana Gas capacity available for release because ProLiance was bound to use that capacity first to meet the needs of the Utilities. Only after those needs are met will capacity become available for release within the meaning of the settlements. (R. at 1628-29.) Moreover, it pointed out that Indiana Gas receives the transportation credit in advance of the release of any capacity by ProLiance and will pass along that entire credit to reduce gas costs. (R. at 1626.) The Commission also found that Indiana Gas's release of capacity to ProLiance was consistent with the settlements long-term release provision because it occurred at maximum pipeline rates and created an unequalled economic value. (R. at 1629, 1631.) The Commission estimated that ProLiance will allow Indiana Gas to reduce its winter service cost over four years by $16 million, a figure far exceeding the $1.8 million it received from capacity releases in 1995. (R. at 1630.) These considerations led the Commission to conclude that Indiana gas did not breach the settlements. (R. at 1630.) On appeal, Opponents repeat their claim that Indiana Gas breached the settlements by transferring its capacity to an affiliate that has the potential for profiting by selling capacity releases. They also claim that, at the least, Indiana Gas breached the settlements by rendering itself unable to perform its contractual obligations, relying on Strodtman v. Integrity Builders, Inc., 668 N.E.2d 279 (Ind.Ct.App.1996), trans. denied. The Opponents' arguments have some allure. It is apparent that what the settling parties anticipated from the settlement is different from what they will now receive. On the other hand, settlements were not ordinary contracts. In proposing the settlements to the Commission, the parties cited Indiana Code §§ 8-1-2-24 8-1-2-25. Indiana Code § 8-1-2-24 allows a public utility to enter an arrangement with its customers or consumers, subject to the Commission's finding that the arrangement is reasonable, just and consistent with the purposes of Indiana Code Chapter 8-1-2. Such settlements are under the Commission's supervision and regulation. See Ind.Code § 8-1-2-24. The Commission may order rates and regulations as may be necessary to give effect to such arrangement, but the right and power to make such other and further changes in rates, charges and regulations as the Commission may ascertain and determine to be necessary and reasonable, and the right to revoke its approval and amend or rescind all orders relative thereto, is reserved and vested in the Commission, notwithstanding any such arrangement and mutual agreement. Ind.Code § 8-1-2-25. In other words, a settlement approved by the Commission loses its status as a strictly private contract and takes on a public interest gloss. Citizens Action Coalition v. PSI Energy, Inc., 664 N.E.2d 401, 406 (Ind.Ct.App. 1996). Here, the Commission found not only that the settlements were not breached, but also that the ProLiance agreements were in the public interest and that the reasonableness of the transportation credit can be explored in pending gas cost adjustment proceedings. (R. at 1651, 1653.) In light of the Commission's factual findings and the substantial deference owed to the Commission in supervising settlements and even modifying or revoking orders entered attendant thereto, we find no error.