Opinion ID: 853532
Heading Depth: 2
Heading Rank: 3

Heading: Transfer or Merger of Utility Works

Text: A public utility may not sell, assign, transfer, lease, or encumber its franchise, works, or system to any other person, partnership, limited liability company, or corporation, or contract for the operation of any part of its works or system by any other person, partnership, limited liability company, or corporation, without the approval of the Commission after hearing. Ind.Code § 8-1-2-83(a). In this section, we decide whether the Commission was required to disapprove the ProLiance agreements because transfers associated with them had not been preapproved by the Commission. The Commission rejected the Opponents' arguments that the ProLiance agreements required preapproval as a transfer of Indiana Gas's works or system to ProLiance. It construed works and system in light of Illinois-Indiana Cable Television Ass'n v. Public Service Comm'n, 427 N.E.2d 1100, 1108 (Ind.Ct. App.1981). In Illinois-Indiana Cable, the Court of Appeals determined that the Commission lacked jurisdiction under Section 83 over a public utility's lease of part of its poles to accommodate attachments by a cable television company. Id. The court construed a utility's franchise, works or system to mean an entire operational unity of a utility. Id. Applying Illinois-Indiana Cable here, the Commission found that the agreements provide for Indiana Gas to retain ownership, management and complete unilateral control of its physical [g]as delivery, distribution transportation and storage facilities. (R. at 1606.) Likewise, the Commission concluded that Indiana Gas remains the certified provider of gas to customers in its service area and has not contracted with ProLiance for the operation of any part of its franchise, works or system. (R. at 1606.) The Commission also noted that Indiana Gas will continue to develop demand forecasts, review and approve supply plans developed by ProLiance, operate gas storage fields, etc. (R. at 1606.) On appeal, the Opponents argue that the Commission erred by reading the words works and system too narrowly to include only physical facilities. They claim that Indiana Gas's assignment of existing gas supply contracts and transfer of pipeline capacity and some gas-supply and planning personnel to ProLiance constituted a transfer of a part of Indiana Gas's works or system. The statutes do not define the terms works and system. [9] For our purposes, it is important that the legislature has defined a utility as any plant or equipment in the state used for, inter alia, the transmission, delivery, or furnishing of power. Ind.Code § 8-1-2-1(g) (emphasis added). A public utility is an entity that may own, operate, manage, or control any plant or equipment  in the state for the same purposes. Ind.Code § 8-1-2-1(a)(emphasis added). In another utility statute, the legislature refers to a franchise to own, operate, manage, or control any plant or equipment of any public utility.... Ind.Code § 8-1-2-91 (emphasis added). More generally, the primary focus of public utility regulation is ensuring that the utilities provide reasonably adequate service and facilities. Ind.Code § 8-1-2-4. This service includes the product itself, the use or accommodation afforded the customers and the equipment employed by the utility in performing the service. Prior v. GTE North, Inc., 681 N.E.2d 768, 773 (Ind.Ct.App.1997), trans. denied. Where statutes address the same subject, they are in pari materia, and we harmonize them if possible. See Citizens Action Coalition v. Northern Indiana Public Serv. Co., 485 N.E.2d 610, 617 (Ind. 1985), cert. denied, 476 U.S. 1137, 106 S.Ct. 2239, 90 L.Ed.2d 687 (1986). Consequently, we agree with the Commission that Indiana Gas did not transfer ownership or control over its works or system. Indiana Gas did not transfer to ProLiance any plant or equipment for distributing gas. And although wholesale gas supply and the planning and scheduling thereof are unquestionably important to Indiana Gas, none of the matters relied upon by the Opponents constitute an indivisible part of Indiana Gas's system or works absent some closer nexus with the Utilities' customer service or distribution functions. [10] Opponents also claim that certain prohibitions in Indiana Code § 8-1-2-84 regulating mergers between two public utilities prohibited the agreements between Indiana Gas and ProLiance absent prior approval by the Commission. However, as we previously held, the Commission properly determined that ProLiance is not a public utility. Still, Opponents insist that Indiana Gas violated at least Indiana Code § 8-1-2-84(f), which applies to a single public utility and reads, No such public utility shall encumber its used and useful property or business or any part thereof without the approval of the Commission and the consent, authority, and approval of the owners of three-fourths (¾) of its voting stock. The term encumber usually means to charge, or burden with financial obligations or mortgages. Underwood v. Fairbanks, Morse & Co., 205 Ind. 316, 334, 185 N.E. 118, 124 (1933). Opponents do not argue, much less demonstrate, how these transfers were an encumbrance.