Court Opinion

ID: 2831843
Source: CourtListenerOpinion
Date Created: 2015-08-28 14:04:54.86695+00
Date Added: 2024-06-11T13:39:16.989388
License: Public Domain

Aug 28 2015, 8:33 am

ATTORNEY FOR APPELLANTS                              ATTORNEY FOR APPELLEE
E. Scott Treadway                                    Joshua D. Hague
EST Law, LLC                                         Krieg DeVault LLP
Indianapolis, Indiana                                Carmel, Indiana

                                         IN THE
  COURT OF APPEALS OF INDIANA

Winona Powder Coating,                               August 28, 2015
Inc., and Winona PVD                                 Court of Appeals Case No.
Coatings, LLC,                                       93A02-1503-EX-160
Appellants-Petitioners,                              Appeal from the Indiana Utility
                                                     Regulatory Commission
        v.                                           The Honorable Angela Rapp
                                                     Weber, Commissioner
Spark Energy Gas, LP,                                The Honorable Jeffery Earl,
                                                     Administrative Law Judge
Appellee-Respondent
                                                     Indiana Utility Regulatory
                                                     Commission Cause No. 44515

Vaidik, Chief Judge.

Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015              Page 1 of 12
                                           Case Summary
[1]   Following the deregulation of the natural-gas industry, choice programs

      emerged to provide Indiana customers with the opportunity to select their gas

      suppliers. In 2013, Winona Powder, an Indiana company engaged in the

      powder-coating business, and Winona PVD, an Indiana company engaged in

      the painting of automobile wheels (collectively “Winona”), entered into

      agreements to purchase natural gas from Spark Energy Gas through a choice

      program offered by Northern Indiana Public Service Company (NIPSCO).

      When Spark’s invoices were more than Winona expected, Winona filed a

      complaint with the Indiana Utility Regulatory Commission (the IURC or the

      Commission). The Commission concluded that it did not have jurisdiction

      over the case and dismissed it without prejudice.

[2]   Winona appeals. Because Spark is not a public utility, the Commission does

      not have statutory jurisdiction over the case. In addition, neither the Supplier

      Aggregation Service Agreement (SASA)—including its Code of Conduct—

      between NIPSCO and Spark, nor the Natural Gas Sales Agreement between

      Spark and Winona vest the Commission with jurisdiction. We therefore affirm

      the Commission’s dismissal of the case without prejudice.

                             Facts and Procedural History
[3]   In August 2012, pursuant to NIPSCO’s choice program, Spark and NIPSCO

      executed a SASA, which provides that it was entered into solely for the benefit

      Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015   Page 2 of 12
      of Spark and NIPSCO and “should not be deemed to vest any rights, privileges

      or interests of any kind or nature to any third party, including but not limited to

      the Customers or Customer groups that Choice Supplier establishes under this

      Agreement.” Appellant’s App. p. 161. The SASA also directs supplier Spark to

      include in its customer-supply agreement a statement advising customers of

      their right to contact the Office of the Utility Consumer Counselor (OUCC)

      with any questions, concerns, or conflicts regarding Spark or the program. In

      addition, the SASA requires Spark to list the OUCC’s toll-free number, full

      name, website address, and a statement informing the customer that the OUCC

      is the state agency with the statutory responsibility for representing consumers

      on all utility matters.

[4]   Section 13 of the SASA further sets forth the process to resolve customer

      complaints that Spark has either violated the SASA or engaged in fraudulent,

      deceptive, or abusive acts. Specifically, initial complaints from the supplier

      must start with Spark. If a resolution is not reached, NIPSCO then investigates

      the facts underlying the allegation. If it finds a violation of the SASA or

      fraudulent, deceptive, or abusive acts, NIPSCO can impose sanctions. If

      sanctions are imposed, Spark may seek relief from the Commission.

[5]   The SASA also includes a Code of Conduct, which regulates the relationship

      between Spark and its customers, including Winona, and contains two sections

      concerning customer complaints. Section 6 provides that all customer

      complaints received by NIPSCO are governed by Section 13 of the SASA.

      Section 7 governs complaints received by the Commission or the OUCC.

      Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015   Page 3 of 12
      Specifically, complaints received by the Commission and referred to NIPSCO

      are handled in accordance with the Commission’s rules, and complaints

      received by the OUCC and referred to NIPSCO are handled in accordance with

      Section 13 of the SASA.

[6]   On December 23, 2013, Spark and Winona entered into a Natural Gas Sales

      Agreement, which provides that the price of the gas will be “First of the Month

      Natural Gas Intelligence Chicago Citygate Index plus $0.045 per therm.”

      Appellant’s App. p. 20. This agreement directs customers to contact the

      customer-service department with questions or concerns about their monthly

      bills. A representative then attempts to work out a mutually satisfactory

      resolution. However, if the dispute is not resolved to the customer’s

      satisfaction, the customer may contact the OUCC. The Natural Gas Sales

      Agreement further provides that it is governed and enforced by Texas law and

      any disputes that arise under the terms of the agreement will be decided by a

      Houston, Texas court. If the dispute cannot be resolved, the issues may be

      submitted by either party to mediation, non-binding arbitration, or court.

[7]   Spark began selling natural gas to Winona pursuant to the terms of the

      agreement and submitted invoices for payment. Winona, however, disputed

      the amount of charges contained in the invoices and refused to pay the full

      amount. Winona and Spark apparently met in an attempt to informally resolve

      the dispute, but their efforts proved unsuccessful.

      Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015   Page 4 of 12
[8]    On July 15, 2014, Winona filed a complaint against Spark with the

       Commission seeking a preliminary “determination as to the scope of [the

       Commission’s] jurisdiction in this matter and the procedures to be followed by

       Winona in pursuing its Complaint against Spark.” Id. at 13. Winona attached

       several exhibits in support of its complaint, including the sales agreement, gas

       bills sent from Spark to Winona, and information from Spark’s and NIPSCO’s

       websites. Section 9 of the terms of service attached to the sales agreement

       provides that NIPSCO will continue to deliver Winona’s gas, read its meter,

       and respond to its system concerns. According to Spark’s website, local utilities

       physically distribute and deliver the gas to the customer’s home and maintain

       the pipes to keep the system safe and operating. According to NIPSCO’S

       website, regardless of which company the customer chooses to supply its gas,

       NIPSCO still delivers it to the customer’s home or business.

[9]    Regarding the contents of the complaint, Winona claimed that Spark

       misrepresented its pricing structure to induce Winona to switch from NIPSCO

       to Spark as its natural-gas supplier and that Spark has charged Winona

       excessive fees for the gas. Winona further claimed that Spark engaged in

       deceptive conduct because the price it charged Winona for natural gas did not

       bear any reasonable relationship to the price Spark paid for the natural gas.

[10]   Winona asked the Commission to determine that it had jurisdiction over the

       matter and to declare that the Natural Gas Sales Agreement between Spark and

       Winona was void and unenforceable because of Spark’s actions. Winona also

       asked the Commission to determine that Spark misrepresented its pricing

       Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015   Page 5 of 12
       structure and capabilities to Winona and that Winona’s financial liability to

       Spark was limited to natural gas priced at rates in effect for NIPSCO for the

       time periods in question.

[11]   Two weeks later, NIPSCO filed a petition to intervene, which was granted.

       Spark responded to Winona’s complaint with a motion to dismiss wherein it

       argued that this was a “simple breach of contract and fraud case where

       [Winona sought] to invoke this Commission’s jurisdiction to avoid the

       contractual obligation to litigate such claims in Texas.” Id. at 112. Winona

       responded that Spark had omitted any reference to the choice program, the

       SASA, or the Code of Conduct. Winona also attached to its response a

       printout of frequently asked questions from Spark’s website, which explained

       that Spark “buy[s] natural gas from the people who process it, then sell[s] that

       gas to people like you. Your utility’s job includes managing pipes, lines and

       other infrastructure to get the gas safely and reliably to homes and businesses.”

       Id. at 258. The printout further explained that Spark uses its “buying power and

       expert knowledge of energy markets to purchase natural gas at very competitive

       prices, and then passes the savings on to [the customer].” Id.

[12]   At the outset, the Commission noted that because Winona’s complaint

       presented a purely legal question and the parties did not dispute the relevant

       facts, a hearing would not assist it in reaching a decision. Accordingly, the

       Commission issued an order without holding a hearing. In the order, the

       Commission found that because Spark is not a public utility, there is no

       statutory authority providing the Commission with jurisdiction over the case.

       Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015   Page 6 of 12
       The Commission also found that the SASA, including the Code of Conduct, is

       a contract between Spark and NIPSCO and does not give the Commission

       jurisdiction over this case. Last, the Commission found that the sales

       agreement between Spark and Winona did not create jurisdiction over the case

       because it refers to filing a complaint with the OUCC, which is separate from

       the Commission, and reference to one agency may not be understood to

       implicitly refer to the other.

[13]   The Commission’s order concluded as follows:

               Based on our review of the purported sources of Commission
               jurisdiction designated by Winona in its response, we conclude
               that the Commission does not have jurisdiction over the dispute
               between Winona and Spark. The SASA, Code of Conduct, and
               Sales Agreement provide the proper methods for Winona to
               resolve its dispute, which include filing a complaint with
               NIPSCO or the OUCC or submitting the dispute to mediation,
               non-binding arbitration, or court.

               Therefore, we dismiss this case without prejudice.

       Id. at 9. Winona now appeals.

                                  Discussion and Decision
[14]   The General Assembly created the Commission primarily as a fact-finding body

       with the technical expertise to administer the regulatory scheme devised by the

       legislature. N. Ind. Pub. Serv. Co. v. U.S. Steel Corp., 907 N.E.2d 1012, 1015 (Ind.

       2009). Its authority includes implicit powers necessary to effectuate the

       Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015   Page 7 of 12
       statutory regulatory scheme. U. S. Gypsum, Inc. v. Ind. Gas Co. Inc., 735 N.E.2d
790, 795 (Ind. 2000). Still, as a creation of the legislature, the Commission may

       exercise only that power conferred by statute.                 Id.

[15]   An order of the Commission is subject to appellate review to determine whether

       it is supported by specific findings of fact and by sufficient evidence, as well as

       to determine whether the order is contrary to law. Id. On matters within its

       jurisdiction, the Commission enjoys wide discretion. Id. The Commission’s

       findings and decisions will not be lightly overridden just because we might

       reach a contrary opinion on the same evidence. Id.

                                    I. Statutory Jurisdiction
[16]   Winona first contends that the Commission erred in dismissing its case without

       prejudice. Specifically, Winona argues that the Commission has statutory

       jurisdiction because Spark is a public utility.

[17]   Indiana Code section 8-1-2-87.5 provides in relevant part as follows:

               (a) For purposes of this section, “transportation of gas” means
               physical transmission, exchange, backhaul, displacement, or any
               other means of transporting gas, including gathering.

               (b) Any person, corporation, or other entity that:

                        (1) is engaged in the transportation of gas from outside
                        Indiana for direct sale or delivery to any end use consumer
                        or consumers within this state;

       Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015   Page 8 of 12
                         (2) is engaged in the transportation of gas solely within this
                         state on behalf of any end use consumer or consumers; or

                         (3) is an end use consumer engaged in the transportation
                         within this state of gas owned or acquired by such end use
                         consumer for use in this state, other than transportation on
                         the premises where the gas is consumed;

                is a public utility . . . .

[18]   The Commission’s order noted that in order to qualify as a public utility

       pursuant to the terms of this statute, the person, corporation, or other entity has

       to be engaged in the transportation of gas. Based on evidence before it,

       including evidence that NIPSCO continued to deliver Winona’s gas even

       though Winona purchased the gas from Spark, the Commission concluded that

       the evidence was:

                clear that Spark purchases natural gas from suppliers and resells
                it to Winona, but NIPSCO, not Spark, transports and delivers the
                gas to Winona. Therefore . . . Spark is not a public utility under
                Ind. Code § 8-1-2-87.5, and the statute does not provide the
                Commission jurisdiction over the subject matter of the case.

       Appellant’s App. p. 6. Mindful of its wide discretion, we find that the

       Commission’s decision is supported by sufficient evidence and is not contrary

       to law.1 See Gypsum, 735 N.E.2d at 795.

       1
        Indiana Code section 8-1-2-1 defines a public utility as an entity that “may own, operate, manage, or
       control any plant or equipment within the state [for the] production, transmission, delivery, or furnishing of

       Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015                          Page 9 of 12
                                                     II. SASA
[19]   Winona also contends that the Commission has jurisdiction over this case

       pursuant to the SASA. Our review of the evidence reveals that the SASA

       governs the relationship between Spark and NIPSCO, and by its terms does not

       vest any rights, privileges, or interests in Spark’s customers. In addition, the

       SASA sets forth the process to resolve customer complaints that Spark has

       either violated the SASA or engaged in fraudulent, deceptive, or abusive acts.

       Initial complaints from the supplier must start with Spark, and if a resolution is

       not reached, NIPSCO investigates the facts underlying the allegation. The

       SASA also directs Spark to include in its customer-supply agreement a

       statement advising customers of their right to contact the OUCC with any

       concerns or conflicts regarding Spark.

[20]   Based on this evidence, the Commission concluded that the “SASA does not

       purport to create Commission jurisdiction over a dispute between Winona and

       heat, light, water, or power.” The Commission correctly pointed out that Winona did not designate any
       evidence that Spark owns, operates, manages, or controls any plant or equipment within the State for natural-
       gas utility service. Rather, the evidence reveals that Spark purchases natural gas from suppliers and sells it to
       Winona, but NIPSCO transmits, delivers, and furnishes the natural gas to the customers using its own plant
       and equipment. The Commission’s order that Spark is not a public utility under Indiana Code section 8-1-2-
       1, and that the statute does not give the Commission jurisdiction over Spark is supported by specific findings
       of fact and by sufficient evidence and is therefore not contrary to law.

       We further note that Winona is mistaken that the Commission has statutory jurisdiction over all consumer
       disputes about utility bills arising under the choice program simply because the contract for the supply of a
       utility arose under the choice program. We agree with Spark that “[s]uch a result does not fulfill the
       legislature’s intent that the Commission would [] act ‘primarily as a fact-finding body with the technical
       expertise to administer the regulatory scheme devised by the legislature.’” Appellee’s Br. p. 19 (quoting U.S.
       Steel Corp., 907 N.E.2d at 1015). The contracts between (1) NIPSCO and the supplier and (2) the supplier
       and the customer provide the remedies for such disputes.

       Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015                          Page 10 of 12
Spark.” Appellant’s App. p. 7. Rather, the SASA offers customers the option

of contacting either NIPSCO or the OUCC with specific complaints of

misconduct. Finding nothing in the SASA that gives the Commission

jurisdiction over this dispute, we conclude that the Commission’s order on this

issue is not contrary to law. See Gypsum, 735 N.E.2d at 795.

                               III. Code of Conduct
Winona further contends that the SASA’s Code of Conduct requires the

Commission to exercise jurisdiction over the dispute. However, our review of

the evidence reveals that the Code of Conduct contains two sections concerning

customer complaints. Section 6 provides that all customer complaints received

by NIPSCO are governed by Section 13 of the SASA. Section 7 governs

complaints received by the Commission or the OUCC. Specifically, complaints

received by the Commission and referred to NIPSCO are handled in

accordance with the Commission’s rules, and complaints received by the

OUCC and referred to NIPSCO are handled in accordance with Section 13 of

the SASA.

The Commission reviewed these sections and concluded that the Code of

Conduct does not give the Commission jurisdiction over Spark. Rather, the

Commission concluded in its order that the Code of Conduct requires a

Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015   Page 11 of 12
       customer to first seek resolution of a complaint through NIPSCO.2 This order

       is supported by specific findings of fact and by sufficient evidence and is

       therefore not contrary to law.

                                       IV. Sales Agreement
       Last, Winona contends that the sales agreement it executed with Spark gives

       the Commission jurisdiction over the issues. However, our review of the

       evidence reveals that the sales agreement directs customers with unresolved

       billing disputes to the OUCC, not to the IURC. The Commission pointed out

       in its order that the OUCC and the IURC are “separate state agencies with

       different charges, and reference to one may not be understood to implicitly refer

       to the other,” and concluded that the “Sales Agreement does not create

       Commission jurisdiction over Spark or the subject matter of this case.”

       Appellant’s App. p. 8. This part of the order is also supported by specific

       findings of fact and by sufficient evidence and is therefore not contrary to law.

       See Gypsum, 735 N.E.2d at 795.

[21]   Affirmed.

       Robb, J., and Pyle, J., concur.

       2
         Winona argues that it contacted NIPSCO regarding its complaint, and NIPSCO “seemingly rejected the
       idea that NIPSCO had any role in addressing the dispute between Spark and Winona[.]” Appellant’s Br. p.
       11. However, we find no evidence in the record to support this claim.

       Court of Appeals of Indiana | Opinion 93A02-1503-EX-160 | August 28, 2015                   Page 12 of 12