Winona Powder Coating, Inc., and Winona PVD Coatings, LLC v. Spark Energy Gas, LP , 2015 Ind. App. LEXIS 603 ( 2015 )

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.
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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
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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.
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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.
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[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
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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.
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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
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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;
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(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
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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.
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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
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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.
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