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Court rules in favor of steel company in dispute

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The Indiana Supreme Court affirmed Tuesday the Indiana Utility Regulatory Commission's grant of summary judgment in favor of a steel production facility in a contract dispute involving a public utility. Before ruling on the summary judgment, the high court first had to decide which standard of review to use.

In Northern Indiana Public Service Co. v. United States Steel Corp., No. 93S02-0809-EX-489, the Northern Indiana Public Service Co. and United States Steel Corp. disagreed on the application of a price adjustment provision based on a 1999 contract. NIPSCO believed it applied to both an energy charge and demand charge; U.S. Steel believed it only applied to the energy charge. The IURC approved the original contract based on a settlement agreement and contract for electric industrial power service submitted to the agency. U.S. Steel filed a complaint seeking to enforce its interpretation of the contract in 2006 and filed for summary judgment; the commission granted the motion. The Indiana Court of Appeals reversed.

NIPSCO wanted the Supreme Court to apply a de novo standard because the case involves summary judgment and a question of law. It argued the appeal isn't the product of a regulatory settlement but a contract dispute between two private parties.

The commission approved the contract, effectively making it an order of the commission, so when ruling on the summary judgment motion, that means the IURC interpreted its own order, not a contract, wrote Chief Justice Randal T. Shephard. Approving such contracts and resolving disputes is intrinsic to the commission's regulation of utility rates, he wrote.

Agencies, such as the Indiana Utility Regulatory Commission, aren't judicial bodies, but are executive branch institutions which the General Assembly has empowered with delegated duties. Adjudication by an agency deserves a higher level of deference than a summary judgment order by a trial court falling squarely within the judicial branch, so the high court applied the established standard for judicial review of commission orders, he wrote.

Using that standard of review, the high court ruled 4-1 the IURC didn't err in interpreting the contract. The commission determined that other documents the parties executed at the same time as the contract, but didn't submit to the commission, couldn't be used to explain, expand, or vary the contract's terms because the contract wasn't ambiguous.

NIPSCO argued adjustment applies to both the energy charge and demand charge, but the commission rejected its argument, finding the utility misapplied the adjustment based on the agreed upon contract terms and rates approved by the commission. NIPSCO's argument on appeal doesn't persuade the justices that the IURC's interpretation of the contract was unreasonable. Justice Frank Sullivan dissented without an opinion, because he would have denied transfer believing the Court of Appeals' conclusion was correct.

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