Opinion ID: 1863469
Heading Depth: 2
Heading Rank: 2

Heading: retroactive disallowance of fuel adjustment clause charges

Text: Next, Gulf States contests the portion of Order No. U-20647 which requires it to refund $5.82 million to its Commission-jurisdictional customers. That portion of the refund represents amounts Gulf States wrongly double-charged pursuant to the NISCO transaction described above, but for the earlier time period of October 1, 1988 to March 1, 1990 that was not covered by the NISCO decision. [6] NISCO reviewed the inclusion of the double charges from the period from March 1, 1990 to the date of the NISCO decision. [7] Gulf States argues that the Commission may not, within constitutional parameters, retroactively alter the charges passed through the fuel adjustment clause pursuant to its contract with NISCO. Gulf States' argument is premised on the Commission's approval of the NISCO transaction in 1987, which approval, Gulf States claims, constitutes antecedent reasonableness review of the recovery of these costs through the fuel clause, and which thus bars subsequent modification under the well-established rule against retroactive ratemaking. See South Cent. Bell v. Louisiana Pub. Serv. Comm., 594 So.2d 357, 359 (La.1992). [8] Gulf States concedes the Commission's authority to prospectively modify its fuel clause, authority conclusively established by the NISCO decision. Gulf States also concedes that initial approval of the fuel adjustment clause mechanism, as propounded in a base rate proceeding, does not constitute approval of the costs to be passed through that fuel adjustment clause, because those costs fluctuate on a monthly basis. Gulf States even concedes the Commission's authority to disapprove retroactively costs passed through a fuel adjustment clause, under this Court's decision in Daily Advertiser et al. v. Trans-La et al., 612 So.2d 7 (La.1993) [hereinafter Daily Advertiser. ] That case held, [T]he commission's allowance of monthly cost adjustments pursuant to such clauses does not constitute rate making in the traditional sense of that term because such adjustments go into effect without an antecedent reasonableness review and thus are not `commission-made' rates. Id. at 23. Therefore, as Gulf States recognizes, under Daily Advertiser, the Commission is not prohibited by the rule against retroactive ratemaking from subsequently adjusting costs passed through a utility's fuel adjustment clause. Nevertheless, Gulf States disputes the existence of any authority on the part of the Commission to adjust costs under the instant facts and thereby retroactively modify the fuel adjustment clause, since the Commission has already approved the contract pursuant to which those costs were passed through the fuel adjustment clause. Gulf States makes this argument despite the clear impermissibility of the double-recovery of its investment in the Nelson units, as established in NISCO, and despite this Court's holding in NISCO that the Commission's 1987 approval of the NISCO transaction did not constitute approval of that double-recovery. In other words, in NISCO, this Court held that no antecedent reasonableness review, within the meaning of Daily Advertiser, took place with regard to Gulf States' passing its double-recovery through the fuel adjustment clause. In the words of the Court, GSU had to know that the commission could not expressly approve in advance the entirety of the vast and non-detailed expenditures for the project that would eventually go into the rate-making process as to GSU's customers. Reading NISCO and Daily Advertiser together leads to the inescapable conclusion that Gulf States' argument is meritless. Daily Advertiser holds that fuel clause charges may be retroactively disallowed if they are not subjected to prior reasonableness review by the Commission, and NISCO holds that no such reasonableness review took place with regard to these particular double charges. Accordingly, we affirm that portion of Order No. U-20647 that orders the refund of $5.82 million impermissibly double-charged by Gulf States to its Commission-jurisdictional customers through its fuel adjustment clause during the period of the Phase I review not covered by the NISCO decision, October, 1988 through March 1, 1990.