Opinion ID: 2237187
Heading Depth: 1
Heading Rank: 12

Heading: Refund Period

Text: In its refund order, the circuit court held that the refund period began on April 29, 1986 (the date of its judgment reversing Rate Order I), and ran through December 31, 1989. Intervenors urge this court to affirm the circuit court's determination that the revenues collected in 1989 are to be included in the present refund from Rate Order I rates. Edison and the Commission, however, argue that the money collected in 1989 should not be included in the present refund. The appellate court agreed with Edison and the Commission and held that the refund period in the instant case runs from April 29, 1986, through December 31, 1988. In order to address the issue of the proper refund period, it is necessary to set forth relevant Commission ratemaking history. On January 1, 1989, rates set by the Commission in its Sixth Interim Order in the Business & Professional People I case became effective. ( Business & Professional People I, 136 Ill.2d 192, 144 Ill.Dec. 334, 555 N.E.2d 693.) This court, however, held that the Sixth Interim Order was illegal and void and remanded the Business & Professional People cause to the Commission. ( Business & Professional People I, 136 Ill.2d 192, 144 Ill.Dec. 334, 555 N.E.2d 693.) Thereafter, this court ordered Edison to comply with its refund offer contained in the Sixth Interim Order. ( Business & Professional People I, 136 Ill.2d at 247, 144 Ill.Dec. 334, 555 N.E.2d 693.) Pursuant to this court's mandate, the Commission entered an interim order providing for a refund of money collected under the Sixth Interim Order. ( Business & Professional People II, 146 Ill.2d at 193, 166 Ill.Dec. 10, 585 N.E.2d 1032 ( Business & Professional People refund order).) The Commission also entered an interim order rolling back the rates to the 1985 rates authorized in Rate Order I. Business & Professional People II, 146 Ill.2d at 193, 166 Ill.Dec. 10, 585 N.E.2d 1032 ( Business & Professional People rollback order). On remand in the Business & Professional People case, the Commission set new rates for 1989. ( Business & Professional People II, 146 Ill.2d at 191, 166 Ill.Dec. 10, 585 N.E.2d 1032 ( Business & Professional People remand order).) This court, however, has recently reversed the Commission's Business & Professional People remand order and has remanded the cause to the Commission for a second time. ( Business & Professional People II, 146 Ill.2d 175, 166 Ill.Dec. 10, 585 N.E.2d 1032.) Therefore, the proper rates for 1989 are as yet undetermined. The net effect of these proceedings that have ensued in the Business & Professional People case is that the rates set in Rate Order I were the actual rates in effect from October 1985 to March 1991, when new rates became effective. In the instant appeal, Edison and the Commission urge this court to affirm the appellate court's holding that the instant refund period runs from April 29, 1986, through December 31, 1988. They reason that the amount of money subject to refund in any given case is the difference between the illegal rates collected under an invalid rate order and the just and reasonable rates that should have been collected during that particular time. Thus, they argue, since the Commission's rate determination which was to go into effect in January 1989 has been reversed and remanded twice, the reasonable and just rates for 1989 have not yet been determined. Therefore, they contend that any refund of money collected in 1989, if in fact one exists, cannot be determined until the Commission sets the proper 1989 rates. Intervenors and the amicus, on the other hand, argue that any rate set by the Commission in the Business & Professional People case on remand can only operate prospectively and to apply these as yet undetermined rates to the 1989 period would violate the prohibition against retroactive ratemaking. These parties argue that, since Rate Order I's rates were in effect throughout 1989, the instant refund should include 1989 because any rates hereafter set in Business & Professional People cannot be applied back to 1989. Under the Act, once the Commission sets a rate, the utility may not surcharge its customers retroactively if that rate is later found to have been too low. ( Business & Professional People II, 146 Ill.2d at 243, 166 Ill.Dec. 10, 585 N.E.2d 1032.) This is so because of the prospective, legislative nature of the Commission's ratemaking function. ( Business & Professional People II, 146 Ill.2d at 243, 166 Ill.Dec. 10, 585 N.E.2d 1032.) The instant case, however, involves a judicially established refund of money collected pursuant to an invalid rate order. As Edison and the Commission properly note, a refund encompasses the difference between the money collected pursuant to the invalid rate and the money that would have been collected pursuant to a just and reasonable rate. Independent Voters, 117 Ill.2d at 105, 109 Ill.Dec. 782, 510 N.E.2d 850. Although reversed and voided on appeal by this court, the rates set in the Sixth Interim Order which were supposed to be in effect beginning in January 1989 constituted a rate increase to recoup costs incurred in constructing three new nuclear generating facilities. ( Business & Professional People II, 146 Ill.2d at 190, 166 Ill.Dec. 10, 585 N.E.2d 1032.) However, since these rates had not been properly established by the Commission, Rate Order I rates were charged to Edison's customers throughout 1989. If, on the second remand, the Commission properly sets the 1989 rates and those rates are higher than the Rate Order I rates charged in 1989, Edison cannot recover the difference from ratepayers because of the rule against retroactive ratemaking. In terms of a refund for 1989, however, the refund amount is calculated as the difference between illegal Rate Order I rates and the proper rates that should have been charged. If the Commission determines that the proper 1989 rates are higher than the Rate Order I rates charged in 1989, as it might conceivably determine due to the rate-basing of three new facilities, then a higher rate base could reduce the refund amount, if any, for the year of 1989. Conversely, if the proper 1989 rates are lower than the Rate Order I rates, the refund amount for 1989 could increase. Therefore, we reverse the circuit court's determination to include the money collected in 1989 in the instant refund and hold that the instant refund period runs from April 29, 1986 through December 31, 1988. The refund for 1989, if any, must await the Commission's determination of what the proper 1989 rates should have been. D