Opinion ID: 2105618
Heading Depth: 2
Heading Rank: 2

Heading: State Utilities Regulation

Text: From 1975 to 1999, the Public Utility Regulatory Act existed to establish a comprehensive and adequate regulatory system for electric utilities to assure rates, operations, and services that are just and reasonable to the consumers and to the electric utilities. Tex. Util.Code § 31.001(a). Because electric utilities were regional and service monopolies, the PURA authorized the PUC to regulate utilities as a substitute for competitive forces. See Tex. Util.Code § 31.001(b). The PURA prohibited an electric utility from charging a rate that the PUC did not authorize, granting an unreasonable preference or advantage to persons in a particular service class, or establishing an unreasonable difference in rates between localities or service classes. Tex. Util. Code §§ 36.002, 36.003, 38.021. Moreover, the PURA prohibited an electric utility from raising rates to pass cost increases to retail customers. Tex. Util. Code § 36.201. The PUC is a legislative creation with only those powers expressly conferred and necessary to accomplish its duties. See State v. Public Util. Comm'n, 883 S.W.2d 190, 194 (Tex.1994). The PURA gave the PUC broad powers to do anything specifically designated or implied by [the PURA] that is necessary and convenient to the PUC's authority. See Tex. Util.Code § 14.001. The PURA also gave the PUC exclusive jurisdiction to regulate utility rates, operations, and services. Tex. Util.Code §§ 32.001(a), 36.001; see also Houston Lighting & Power Co. v. Auchan USA, Inc., 995 S.W.2d 668, 674 (Tex.1999); Public Util. Comm'n v. AT & T, 777 S.W.2d 363, 365 (Tex.1989). The PUC required each utility to file a tariff that listed the utility's services and rates and governed the utility's relationship with its customers. Tex. Util.Code § 32.101; 16 Tex. Admin. Code § 23.24. The PUC defined a tariff as a schedule containing all charges, rules, and regulations listed separately by type of service and customer class. 16 Tex. Admin. Code § 23.3. The PUC could reject any tariff that did not comply with the PUC's rules and regulations. 16 Tex. Admin. Code § 23.24(g). Once the PUC approved the tariff, an electric utility could not charge a fee or impose any practices, rules, or regulations different from those the tariff described. Tex. Util.Code § 36.004(a); 16 Tex. Admin. Code § 23.24(b). Furthermore, upon approval, the PUC required that every utility make its tariff publicly available and that the utility's employees assist the public in reviewing the tariffs. 16 Tex. Admin. Code § 23.24(f). To change its rates, standards, classifications, rules, or practices, a utility had to file an amended tariff with the PUC. Tex. Util.Code §§ 36.102, 38.003. The Legislature amended the PURA in 1999 to deregulate the electricity-generation market and to permit certain electricity providers to compete for customers. Senate Comm. on Elec. Util. Restructuring, Bill Analysis, Tex. S.B. 7, 76th Leg., R.S. (1999). The PURA states that the 1999 amendments may not interfere with or abrogate the rights or obligations of any party, including a retail or wholesale customer, to a contract with an investorowned electric utility.... Tex. Util.Code § 39.108. Accordingly, the 1999 amendments do not affect a utility's tariff filed under and governed by the pre 1999 regulatory scheme.
The filed-rate doctrine applies when state law creates a state agency and a statutory scheme under which the agency determines reasonable rates for the service provided. Arkansas La. Gas Co. v. Hall, 453 U.S. 571, 579, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981); Keogh v. Chicago & Northwestern Ry., 260 U.S. 156, 163, 43 S.Ct. 47, 67 L.Ed. 183 (1922); Southwestern Bell Tel. Co. v. Metro-Link Telecom, Inc., 919 S.W.2d 687, 692 (Tex.App.-Houston [14th Dist.] 1996, writ denied). The doctrine holds that a tariff filed with and approved by an administrative agency under a statutory scheme is presumed reasonable unless a litigant proves otherwise. See Western Union Tel. Co. v. Esteve Bros. & Co., 256 U.S. 566, 572, 41 S.Ct. 584, 65 L.Ed. 1094 (1921); Wegoland, Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir. 1994); Metro-Link Telecom, 919 S.W.2d at 691. Thus, under the doctrine, filed tariffs govern a utility's relationship with its customers and have the force and effect of law until suspended or set aside. See Keogh, 260 U.S. at 162-63, 43 S.Ct. 47; Carter v. AT & T Co., 365 F.2d 486, 496 (5th Cir. 1966); Metro-Link Telecom, 919 S.W.2d at 692. Additionally, under the filed-rate doctrine, regulated utilities cannot vary a tariff's terms with individual customers, discriminate in providing services, or charge rates other than those properly filed with the appropriate regulatory authority. Maislin Indus. v. Primary Steel, Inc., 497 U.S. 116, 126, 110 S.Ct. 2759, 111 L.Ed.2d 94 (1990); Arkansas La. Gas, 453 U.S. at 577, 101 S.Ct. 2925; Metro-Link Telecom, 919 S.W.2d at 692. And a utility's obligations to its customers cannot exceed its duties under a filed tariff. See Texaco Inc. v. Central Power & Light Co., 955 S.W.2d 373, 377 (Tex.App.-San Antonio 1997, pet. denied); Central Power & Light Co. v. Romero, 948 S.W.2d 764, 767 (Tex. App.-San Antonio 1996, writ denied); see also Arkansas La. Gas, 453 U.S. at 577-78, 101 S.Ct. 2925. It follows, then, that aggrieved customers cannot enforce alleged rights that contradict the tariff's provisions. Henderson v. Central Power & Light Co., 977 S.W.2d 439, 447 (Tex. App.-Corpus Christi 1998, pet. denied). Consequently, the filed-rate doctrine prohibits a customer from suing a utility in contract or tort over issues that a publiclyfiled tariff's terms govern. See AT & T v. Central Office Tel., Inc., 524 U.S. 214, 227, 118 S.Ct. 1956, 141 L.Ed.2d 222 (1998); Maislin, 497 U.S. at 126, 110 S.Ct. 2759. A regulatory agency's rate-making authority authorizes it to approve a tariff's provision limiting liability, because a limitation on liability is an inherent part of the rate the utility charges for its services. See Western Union, 256 U.S. at 571, 41 S.Ct. 584; Southwestern Sugar & Molasses Co. v. River Terminals Corp., 360 U.S. 411, 417-18, 79 S.Ct. 1210, 3 L.Ed.2d 1334 (1958). And, because regulatory agencies have this authority, we have applied the filed-rate doctrine to hold that a tariff provision that limits liability for economic damages arising from a utility's negligence is reasonable. See Auchan, 995 S.W.2d at 672-75. In Auchan, we considered several factors the PUC has applied to conclude that a tariff can reasonably limit liability for economic damages. 995 S.W.2d at 673-75; see also Tex. Pub. Util. Comm'n, Application of CP & L Co. for Approval of Tariff Amendment, Docket No. 3198, 7 Tex. P.U.C. Bull. 53, 57-61 (June 22, 1981). We determined that a tariff's limitation on liability for economic damages is reasonable because a utility: (1) must provide nondiscriminatory service to all customers within its area; (2) must maintain uniform rates and reduce costs; (3) cannot accurately estimate its exposure to damages or efficiently insure against risks; (4) cannot increase rates for all customers based on losses one specific class of customers incurs; and (5) must comply with PUC regulations. Auchan, 995 S.W.2d at 673-75.