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Past and Prologue: The Importance of Agency Precedent

By Eric L. Lipman

In an interesting published opinion issued on Tuesday of this week, a unanimous panel of the Minnesota Court of Appeals reversed and remanded a determination of the Public Utilities Commission denying certain cost recoveries to CenterPoint Energy Minnesota Gas.

CenterPoint Energy sells natural gas to customers in Minnesota on a ?pass-through basis,? and is entitled to recover a portion of its annual overhead costs upon these sales. As a result of accounting errors, the utility overstated the amount of gas that it delivered to customers in Minnesota and thereby understated its true marginal costs on the products that it did sell. Over the five year period that these accounting errors went undetected, CenterPoint asserted that it did not recover a total of $21 million in costs.

Because the applicable rule limits natural gas providers to recovery of costs on sales from the prior year, CenterPoint sought a variance from the Commission of the one-year cost recovery limitation. An equally-divided Commission denied the variance request.

Reversing that determination and remanding for further proceedings, the appellate panel held that the Commission did not ?consistently apply the principles that it articulated and applied? in two earlier requests to recover costs beyond the one-year limitations period. Further, the panel concluded, the Commission?s reasons for departing from these precedents in CenterPoint?s case were not clearly set forth in the record.

The panel?s complete analysis is accessible here.

Full post as published by Within the Scope on May 11, 2008 (boomark / email).