BP Products North America, Inc. v. Indiana Office of Utility Consumer Counselor

947 N.E.2d 471, 2011 Ind. App. LEXIS 714, 2011 WL 1543211
CourtIndiana Court of Appeals
DecidedApril 25, 2011
Docket93A02-0905-EX-490
StatusPublished
Cited by3 cases

This text of 947 N.E.2d 471 (BP Products North America, Inc. v. Indiana Office of Utility Consumer Counselor) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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BP Products North America, Inc. v. Indiana Office of Utility Consumer Counselor, 947 N.E.2d 471, 2011 Ind. App. LEXIS 714, 2011 WL 1543211 (Ind. Ct. App. 2011).

Opinion

OPINION

SHARPNACK, Senior Judge.

STATEMENT OF THE CASE

Appellants BP Products North America, Inc. (“BP”), and United States Steel Corporation (“U.S. Steel”) appeal from a decision made by the Indiana Utility Regulatory Commission (“the Commission”) involving Appellee Indiana Office of Utility Consumer Counselor and Appel-lee/Cross-Appellant Northern Indiana Public Service Company (“NIPSCO”). We reverse and remand in part and affirm in part.

ISSUES

The following restated issues are dispos-itive:

I. Whether the Commission erred in determining that BP was acting as a “public utility” as that term is defined under Indiana law.
II. Whether the Commission erred in holding that BP violated Indiana’s Service Area Assignments Act, a statute governing electricity suppliers. 1

FACTS AND PROCEDURAL HISTORY

BP’s petroleum refinery plant in Whiting, Indiana, is the nation’s largest inland refinery, covering approximately 1400 acres and possessing the capacity to process more than 400,000 barrels of crude oil per day. At the plant, BP refines oil into various petroleum distillates, including diesel fuel and gasoline. As part of its process of refining crude oil, BP creates its own supply of industrial-use water by drawing raw, untreated water from Lake Michigan through its intake pipe and processing the water at its on-site treatment plant. BP also generates steam and uses electricity and natural gas obtained from NIPSCO to power the significant industrial processes operating throughout the refinery. BP transmits the gas and electricity internally through its own private distribution systems within the refinery’s footprint to run its oil-refining operation.

Over the years, BP has entered into contracts with adjacent and on-site private entities whereby it provides certain services either at cost or at a slight margin. BP provides excess steam from its refining process to the adjacent U.S. Steel facility, with the steam conveyed through BP pipes directly to U.S. Steel pipes. BP provides steam and sewer service to the adjacent *474 Ineos Chemical Plant, with the steam conveyed through BP pipes directly to Ineos pipes. BP provides low pressure raw service water to the adjacent Praxair facility. BP also provides low pressure raw service water to the City of Whiting, which the City then treats and distributes to its customers. BP also provides services to Mar-sulex, a tenant located within the refinery property that performs essential services as part of BP’s manufacturing process. The services provided to Marsulex include low pressure raw service water, partially treated non-potable water, electricity, steam, process sewer treatment, and natural gas.

On June 27, 2008, BP filed a verified petition with the Commission generally describing BP’s refinery processes and its contractual relationships with Marsulex and the entities adjacent to BP’s property. BP primarily requested that the Commission find that the provision of services pursuant to private contract does not make BP a public utility. In the alternative, BP requested that if the Commission should find BP to be acting as a public utility, that the Commission decline to exercise jurisdiction over BP pursuant to Indiana Code section 8-1-2.5-5 (1995) 2 and Indiana Code sections 8-1-2-61.5(d) and 61.5(e) (2001). 3 BP further requested that if the Commission chose to exercise its jurisdiction, that the Commission issue the necessary certificates, permits, or authority needed for operation. 4

In an order issued on May 13, 2009, the Commission determined that BP “is not a public utility with respect to the transportation of natural gas service to Marsulex.” Appellants’ Joint App. p. 26. The Commission further determined that BP “is providing utility services to the public and is a public utility with respect to the provision of steam, electricity, water, and waste-water/process sewer services.... ” Appellants’ Joint App. p. 22.

The Commission found that a partial declination over BP’s sale of steam is appropriate “given the particularly unique facts and circumstances of [the] case.” Appellants’ Joint App. p. 23. The Commission found that Marsulex, Ineos, and Praxair produce products that are integral to BP’s refining process and that the steam BP sells to these entities is necessary for the creation of their own products. Accordingly, the Commission found that “the exchange of services is essential to the products BP, Ineos, Marsulex, and Praxair produce.” Id. The Commission concluded that BP’s primary business “is refining oil and not the sale of steam.” Id. Therefore, “the sale of steam is a result of contracts [with Ineos and Praxair] and a lease agreement [with Marsulex], pursuant to which BP sells the steam at cost or at a slight margin to customers located either within the [refinery’s] boundaries or contiguous to it.” Id.

The Commission further determined that it lacked statutory authority to decline to exercise jurisdiction over BP’s provision of water or wastewater/process sewer operations. Accordingly, the Commission created a “Subdocket in this Cause to es *475 tablish BP’s tariff, rates and charges or to establish a regulatory plan ... for water and wastewater/process sewer service.” Appellants’ Joint App. p. 25.

The Commission determined that it would not decline jurisdiction over BP with respect to BP’s furnishing of electricity to Marsulex, primarily because BP “does not possess an assigned service area for the provision of retail electric service pursuant to Indiana Code § 8-1-2.3 et seq., and no evidence to the contrary was offered by the parties.” Id. at 24. The Commission noted that Indiana Code section 8-1-2.8-1 (1980) provides for the creation of assigned service areas for electricity suppliers, and states, “[I]n order to promote economical, efficient, and adequate electric service to the public, the currently unincorporated areas of Indiana shall be divided into designated geographic areas within which an assigned electricity supplier has the sole right to furnish retail electric service to customers.” Id. The Commission directed BP to “enter into discussions with NIP-SCO regarding BP’s provision of electric service within NIPSCO’s assigned service territory with the intent to reach an amicable resolution.” Id. at 25.

BP and U.S. Steel initiated an appeal in this court on May 29, 2009. BP also entered into discussions with NIPSCO as directed by the Commission. In those discussions, BP learned of an earlier agreement between NIPSCO and Amoco, BP’s predecessor. A stay of the appeal and remand to the Commission were sought and granted so that BP could return to the Commission and present the agreement. In its subsequent order of June 23, 2010, the Commission noted:

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947 N.E.2d 471, 2011 Ind. App. LEXIS 714, 2011 WL 1543211, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bp-products-north-america-inc-v-indiana-office-of-utility-consumer-indctapp-2011.