Statute of limitations bars rate hike claim

The Indiana Court of Appeals ruled the statute of limitations had expired for a member of a power cooperative to challenge its parent company’s change from state to federal regulation and upheld summary judgment for the parent company.

Wabash Valley Power Association got into debt after borrowing money for the failed Marble Hill nuclear power plant. After the Indiana Utility Regulatory Commission denied Wabash’s attempt to raise its rates to pay off its debt, Wabash moved to pay off its debt owed and move from IURC oversight to Federal Energy Regulatory Commission regulation.

Wabash moved to FERC regulation in 2004 and in 2010 Northeastern Rural Electric Membership Cooperation, a member of Wabash, complained that its rates were getting too high and that started in 2008 when Wabash changed its margins. It claimed the change from state to federal regulations was a material breach of the contract the companies had and demanded Wabash return to state regulation. Wabash filed a petition with the FERC seeking relief that Northeastern’s rate scheduled was under the jurisdiction of the FERC, which was granted.

In 2012, Northeastern moved for declaratory judgment, alleging Wabash’s submission to FERC jurisdiction was a breach of contract. After a failed move to federal court by Wabash, Northeastern moved for partial summary judgment arguing Wabash was estopped from denying it breached the contract with Northeastern when it changed regulators. The trial court granted Northeastern’s motion.

Wabash also filed for summary judgment arguing Northeastern’s claim was barred by the statute of limitations, which was four years from when the breach of contract occurred. Northeastern claimed the breach of contract occurred in 2008 when the rates increased, and Wabash maintained it occurred in 2004 when it changed regulators. The trial court agreed with Wabash and granted it summary judgment. Northeastern appealed.

In an opinion written by Judge Michael Barnes, the COA ruled the breach of contract occurred in 2004 when Wabash changed regulators from the IURC to the FERC. Northeastern was aware of the switch and did not challenge it at the time, and it was this change, and not the subsequent increase in rates, caused the breach of contract.

Northeastern also claimed Wabash could not raise the statute of limitations defense because it was equitably estopped from doing so and alleged fraudulent concealment. Northeastern claimed Wabash promised its members that the initial margins would be the same as the rate approved by the IURC. However, Barnes wrote that only the initial margins would be consistent with IURC, and that Wabash never said that the margins would never change. He said there is no evidence that Wabash misled Northeastern in this regard.

The case is Northeastern Rural Electric Membership Corporation v. Wabash Valley Power Association, Inc., 49A02-1508-PL-1312.