Justia Energy, Oil & Gas Law Opinion Summaries

The trial court dismissed a third amended class action complaint filed in connection with power outages during severe storms. The complaint alleged negligence, breach of contract, and violation of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1). The appellate court and Illinois Supreme Court affirmed. The electric utility's tariff precludes an award of damages; even if such claims were not barred, jurisdiction over matters relating to the utility's service and infrastructure lies with the Illinois Commerce Commission. The Consumer Fraud Act claim alleged that that the company knew or should have known that it failed to sufficiently establish policies and procedures to prevent controllable interruptions of power and to timely respond to those interruptions, in order to protect the health, safety, comfort and convenience of its customers, including those on the life support registry. The claim failed because the company is not required to prioritize those on the life support registry and does not intend that those on the registry rely on it doing so.

Appellant owned and operated the Sewell Creek Energy Facility, a "peaking" power plant that began operating in 2000. Appellees, neighbors of the power plant, filed suit in 2007 alleging that the power plant constituted a nuisance. At issue was whether appellants were entitled to summary judgment where the power plant was either a permanent nuisance or continuing nuisance that could be abated. The court found that the power plant's exhaust silencing system, which was an integral part of the gas turbines that generated power, was an enduring feature of the power plant's plan of construction and the noise emanating from the exhaust stacks resulted from the essential method of the plant's operation. Consequently, the exhaust stacks were a permanent nuisance. Thus, the court held that the Court of Appeals erred when it omitted any consideration of whether the nuisance resulted from an enduring feature of the power plant's plan of construction or an essential method of its operation and grappled only with whether the nuisance could be abated at "slight expense." The court held that appellees' action was barred under the statute of limitation for permanent nuisances because they did not file their lawsuit until almost seven years after the plant became operational, unless some new harm that was not previously observable occurred within the four years preceding the filing of their cause of action. The court also held that, to the extent the trial court found that a factual issue remained concerning whether there was an "adverse change in the nature" of the noises and vibrations coming from the plant after the start of the 2004 operating season, the denial of summary judgment was appropriate. By contrast, to the extent that the trial court found that a factual issue remained concerning whether there was an "adverse change in the... extent and amount" of the noises and vibrations after the 2004 operating season, the denial of summary judgment was inappropriate. Accordingly, the court affirmed in part and reversed in part.

The Public Utilities Commission allowed two electric power operating companies to adjust their economic-development cost-recovery riders and recover additional revenues. Industrial Energy Users-Ohio (IEU) sought a rehearing, which the commission denied. IEU appealed the order, arguing that the commission approved the rate increase without reviewing its reasonableness. The Supreme Court found the order prejudiced IEU because some of IEU's members paid higher rates as a result of the order. The Court then affirmed, holding that IEU failed to meet its burden to identify a legal problem with the order. Because the Court presumes that orders are reasonable, IEU must upset that presumption, and IEU did little more than disagree with the order, giving the Court no reason to reverse.

Five months after the Department of Public Utilities ("department") approved the request of Bay State Gas Company ("Bay State") to sell and transfer all the common stock of its subsidiary Northern Utilities, Inc. ("Northern"), Bay State filed a petition for a general increase in its natural gas distribution rates. The department denied that request while allowing Bay State a general rate increase of $19 million. Bay state appealed the department's decision asserting several points of error. The court affirmed the department's decision and held that the department expressly left open the "appropriate ratemaking treatment" to be afforded the operational cost impacts associated with the sale of Northern. Therefore, it was appropriate to address proper treatment of once-shared functions in light of Bay State's assertions during the section 96 Northern proceeding. The court rejected Bay State's other assertions and remanded to the county court where a judgment was to be entered affirming the decisions and order of the department.

Appellant, a Montana limited partnership which owned an electrical generating plant in Rosebud County, appealed the district court's order denying its motion to vacate the arbitration award ("Final Award") in its dispute with appellee, a Delaware corporation and a regulated public utility conducting business in Montana. At issue was whether the district court abused its discretion when if failed to vacate, modify, or correct the arbitration award. The court held that the district court did not abuse its discretion in denying appellant's motion where Montana's Uniform Arbitration Act, 27-5-311 MCA, did not permit a court to vacate an arbitration award in part; where Montana law was clear that a non-breaching party was still required to prove its damages; where the district court correctly noted in its order confirming the Final Award that the legal precedent on which appellant relied for its request to modify or correct the Final Award applied only to motions to vacate an award; and where the district court correctly determined that it lacked the authority to vacate the Final Award.

The Montana Department of Revenue ("Department") appealed a judgment reversing the State Tax Appeal Board's ("STAB") conclusion that the Department had applied a "commonly accepted" method to assess the value of PacificCorp's Montana properties. At issue was whether substantial evidence demonstrated common acceptance of the Department's direct capitalization method that derived earnings-to-price ratios from an industry-wide analysis. Also at issue was whether substantial evidence supported STAB's conclusion that additional obsolescence did not exist to warrant consideration of further adjustments to PacifiCorp's taxable value. The court held that substantial evidence supported the Department's use of earnings-to-price ratios in its direct capitalization approach; that additional depreciation deductions were not warranted; and that the Department did not overvalue PacifiCorp's property. The court also held that MCA 15-8-111(2)(b) did not require the Department to conduct a separate, additional obsolescence study when no evidence suggested that obsolescence existed that has not been accounted for in the taxpayer's Federal Energy Regulatory Commission ("FERC") Form 1 filing. The court further held that STAB correctly determined that the actual $9.4 billion sales price of PacifiCorp verified that the Department's $7.1 billion assessment had not overvalued PacifiCorp's properties.

The Alcoa Power Generating Company ("Alcoa") petitioned for review of two orders of the Federal Energy Regulatory Commission ("Commission") with respect to the relicensing of its Yadkin Project facilities in North Carolina. At issue was whether the petition for review was ripe in light of on-going state administrative review and stay of certification and whether the certifying agency waived its authority by not issuing a certification that was effective and complete within one year under section 401 of the Clean Water Act ("Act"), 33 U.S.C. 1341(a)(1). The court held that the petition was ripe for review where the waiver issue was fit for review and the legally cognizable hardship that Alcoa would suffer from delay sufficed to outweigh the slight judicial interest in the unlikely possibility that the court may never need to decide the waiver issue. The court also held that there was no waiver issue where the "effective" clause would not operate to delay or block the federal licensing proceeding beyond section 401's one-year period.