CURB petitions Kansas Supreme Court to review Atmos rate case

April 8, 2009

By the time this issue goes to press, CURB will have filed a petition for review by the Kansas Supreme Court, the first in many years.

In a memorandum opinion issued on March 6, the Kansas Court of Appeals dismissed CURB's appeal of the KCC decision on rehearing in the Atmos rate case. The dismissal was based on the court's opinion that CURB failed to exhaust its administrative remedies when it filed an appeal of the KCC decision on reconsideration without filing a second petition for reconsideration to protest the dismissal.

CURB disagrees with the court on this issue. The dismissal left CURB in the exact same position it had been in before. CURB was no more aggrieved by the KCC's order on reconsideration than it was by the first order. It was not required to file a second petition under the rules, which provide that a party does not have to keep filing successive petitions if multiple orders do not provide the requested relief.

CURB had petitioned for reconsideration because the KCC approved a settlement that failed to determine a return on equity (ROE) for Atmos, which is necessary to determine if the settlement in the case resulted in fair and equitable rates. Additionally, CURB argued that the Gas Safety and Reliability Act provides that a utility applying for a surcharge under the Act must use the return on equity determined in its most recent rate case to calculate the return on the surcharge.

Instead, the KCC approved a provision in Atmos' settlement with Staff that would allow Atmos to use the averaged ROEs of other Kansas natural gas utilities to calculate the return on the GSRS surcharge. CURB argued that the Act does not permit the KCC to approve this method of setting a return on the GSRS surcharge, and that this method violates the principle that rates should be set on the basis of facts in the record, not by reference to the ROEs of other utilities.

Although the company withdrew its GSRS application on reconsideration, the withdrawal does not negate this provision: it will be used in the future, whenever Atmos reapplies for the surcharge. The KCC reiterated its approval of the settlement provision on reconsideration, and dismissed CURB's petition as moot or unripe for decision because Atmos withdrew its GSRS application.

The Court of Appeals ruled that CURB was "aggrieved" by the KCC's dismissal, and thus should have filed another petition for reconsideration with the KCC before filing its appeal with the Court of Appeals.

CURB will argue that despite the dismissal, nothing had changed: the KCC did not determine Atmos' ROE and left the settlement provision intact. Since the order on reconsid-eration did not alter any of the decisions to which CURB objected in its first petition, CURB was no more aggrieved by the last order than the first order. It was not required to file a second petition for reconsideration.

CURB wouldn't ordinarily take a procedural argument up to the Supreme Court, but, in an unusual deviation from custom, the Court of Appeals indicated that it was "troubled" by the KCC's decision to approve the settlement provision. If CURB can convince the Supreme Court that CURB properly exhausted its administrative remedies before filing its appeal, CURB has a decent chance to prevail on the merits on remand.

The Supreme Court may, at its discretion, grant or deny review to CURB. If review is granted, the Supreme Court may take as long as it wants to decide the case. It is not subject to the 120-day deadline for decision that governs utility rate cases that are appealed to the Court of Appeals. It could be a long wait for a decision.

KCC Docket No. 08-ATMG-280-RTS; Court of Appeals Opin. No. 101, 452