Opinion
Court of Appeals Case No. 20A-EX-2199
09-03-2021
INDIANA OFFICE OF UTILITY CONSUMER COUNSELOR, Appellant-Statutory Representative, v. CITIZENS WASTEWATER OF WESTFIELD, LLC, JLB Development, Inc., and Indiana Utility Regulatory Commission, Appellees-Petitioners and Administrative Agency
Attorneys for Appellant: William I. Fine, Indiana Utility Consumer Counselor, Randall C. Helmen, Chief Deputy Consumer Counselor, Daniel M. Le Vay, Scott C. Franson, Deputy Consumer Counselors, Indiana Office of Utility Consumer Counselor, Indianapolis, Indiana Attorneys for Appellee Citizens Wastewater of Westfield, LLC: Steven W. Krohne, Derek R. Molter, Ice Miller LLP, Indianapolis, Indiana, Michael E. Allen, Lauren R. Toppen, Citizens Energy Group, Indianapolis, Indiana Attorneys for Appellee Indiana Utility Regulatory Commission: Beth E. Heline, General Counsel, Steve Davies, Jeremy Comeau, Assistant General Counsel, Indiana Utility Regulatory Commission, Indianapolis, Indiana, Theodore E. Rokita, Attorney General, Aaron T. Craft, Section Chief, Civil Appeals, Indianapolis, Indiana
Attorneys for Appellant: William I. Fine, Indiana Utility Consumer Counselor, Randall C. Helmen, Chief Deputy Consumer Counselor, Daniel M. Le Vay, Scott C. Franson, Deputy Consumer Counselors, Indiana Office of Utility Consumer Counselor, Indianapolis, Indiana
Attorneys for Appellee Citizens Wastewater of Westfield, LLC: Steven W. Krohne, Derek R. Molter, Ice Miller LLP, Indianapolis, Indiana, Michael E. Allen, Lauren R. Toppen, Citizens Energy Group, Indianapolis, Indiana
Attorneys for Appellee Indiana Utility Regulatory Commission: Beth E. Heline, General Counsel, Steve Davies, Jeremy Comeau, Assistant General Counsel, Indiana Utility Regulatory Commission, Indianapolis, Indiana, Theodore E. Rokita, Attorney General, Aaron T. Craft, Section Chief, Civil Appeals, Indianapolis, Indiana
Crone, Judge. Case Summary
[1] Citizens Wastewater of Westfield, LLC (Citizens), agreed to purchase most of the wastewater collection system assets of JLB Development, Inc. (JLB). Citizens and JLB filed a joint petition seeking various approvals relating to the acquisition from the Indiana Utility Regulatory Commission (the Commission). After a hearing, the Commission issued an order authorizing the acquisition over the objection of the Indiana Office of Utility Consumer Counselor (the OUCC). The OUCC appeals, arguing that because the purchase price is based on factors other than the value of JLB's tangible property, the Commission erred in concluding that the purchase price is reasonable. We affirm.
Facts and Procedural History
[2] The relevant facts are undisputed. Citizens provides wastewater utility service to more than 14,700 customers in and around Westfield. JLB provides service to six customers in Westfield, including two mobile home parks and two multi-family housing properties. In November 2019, Citizens and JLB executed an agreement for Citizens to purchase most of JLB's wastewater collection system assets for $475,000. Closing was conditioned on the Commission authorizing the inclusion of the full purchase price in the net original cost rate base.
[3] In March 2020, Citizens and JLB filed a joint petition with the Commission requesting such authorization pursuant to Indiana Code Section 8-1-30.3-5, which reads in relevant part as follows:
(a) This section applies if:
(1) a utility company acquires property from an offered utility[ ] in a transaction involving a willing buyer and a willing seller; and
(2) at least one (1) utility company described in subdivision (1) is subject to the jurisdiction of the commission under this article.
(b) Subject to subsection (c), there is a rebuttable presumption that a cost differential[ ] is reasonable.
(c) If the acquisition:
(1) is made under IC 8-1.5-2-6.1, and to the extent the purchase price does not exceed the appraised value as determined under IC 8-1.5-2-5 ; or
(2) is not made under IC 8-1.5-2-6.1, and to the extent the purchase price does not exceed the appraised value
An offered utility is "a utility company whose property is the subject of an acquisition described in section 5(a) of this chapter." Ind. Code § 8-1-30.3-2.6.
A cost differential is
the difference between:
(1) the cost to a utility company that acquires utility property from an offered utility, including the purchase price, incidental expenses, and other costs of acquisition; minus
(2) the difference between:
(A) the cost of the utility property when originally put into service by the offered utility; minus
(B) contributions or advances in aid of construction plus applicable accrued depreciation.
Ind. Code § 8-1-30.3-1.
as determined under section 5.5 of this chapter;
the purchase price is considered reasonable for purposes of subsection (d) and any resulting cost differential is considered reasonable.
(d) Before closing on the acquisition, the utility company that acquires the utility property may petition the commission to include any cost differential as part of its rate base in future rate cases. The commission shall approve the petition if the commission finds the following:
(1) The utility property is used and useful to the offered utility in providing water service, wastewater service, or both water and wastewater service.
(2) The offered utility is too small to capture economies of scale or has failed to furnish or maintain adequate, efficient, safe, and reasonable service and facilities.[ ]
(3) The utility company will improve economies of scale or, if otherwise needed, make reasonable and prudent improvements to the offered utility's plant, the offered utility's operations, or both, so that customers of the offered utility will receive adequate, efficient, safe, and reasonable service.
(4) The acquisition of the utility property is the result of a mutual agreement made at arms length.
(5) The actual purchase price of the utility property is reasonable.
(6) The utility company and the offered utility are not affiliated and share no ownership interests.
(7) The rates charged by the utility company will not increase unreasonably in future general rate cases solely as a result of acquiring the utility property from the offered utility....
(8) The cost differential will be added to the utility company's rate base to be amortized as an addition to expense over a reasonable time with corresponding reductions in the rate base.
(e) In connection with its petition under subsection (d), the acquiring utility shall provide the following:
....
(2) Notice to the office of the utility consumer counselor.
....
(f) In a proceeding under subsection (d), the commission shall issue its final order not later than two hundred ten (210) days after the filing of the petitioner's case in chief. If the commission grants the petition, the commission's order shall authorize the acquiring utility company to make accounting entries recording the acquisition and that reflect:
(1) the full purchase price;
(2) incidental expenses; and
(3) other costs of acquisition;
as the net original cost of the utility plant in service assets being acquired, allocated in a reasonable manner among appropriate utility plant in service accounts.
Indiana Code Section 8-1-30.3-6 provides in pertinent part that "an offered utility is too small to capture economies of scale ... if the commission finds one (1) or more of the following: ... (5) The offered utility serves fewer than eight thousand (8,000) customers."
[4] Citizens, JLB, and the OUCC prefiled testimony and exhibits with the Commission. In July 2020, a hearing was held on the joint petition. In October 2020, the Commission issued an order finding that the utility property is used and useful to JLB in providing wastewater service; that JLB is too small to capture economies of scale; that Citizens will improve economies of scale; that the acquisition was the result of a mutual agreement made at arms length; that Citizens and JLB are not affiliated and share no ownership interests; that the rates charged by Citizens will not increase unreasonably as a result of the acquisition; and that the cost differential will be added to Citizens’ rate base. The OUCC does not challenge these findings on appeal.
[5] On the issue of whether the actual purchase price of the utility property is reasonable, the Commission summarized the testimony of one of Citizens’ witnesses, certified public accountant Scott Miller, as follows:
Mr. Miller opined that Joint Petitioners’ agreed-upon purchase price of $475,000 is reasonable, based on his analysis of several matters: the physical assets being acquired by [Citizens], which were analyzed to determine the reproduction cost new less depreciation ("RCNLD") value of those assets, plus estimated transaction costs that will be incurred by JLB; the fair value of the JLB system based on a calculation of discounted cash flows ("DCF") from the system over a 15-year period, assuming no terminal value; and the fair value of the JLB system based on a calculation of discounted cash flows from the system over a ten-year period, but assuming a terminal value and a 10% hurdle rate.
Mr. Miller stated that, while the RCNLD value of the system [$80,022] is less than the purchase price, the fair value of the system based on the DCF methodology is $679,110 (assuming no terminal value) and $1,066,483 (assuming a terminal value). He opined that, given the expected growth in JLB's service area, the value of JLB to any prospective purchaser cannot be derived simply based on the value of the physical assets being purchased. He testified that the value to any entity acquiring JLB would be the future income stream that can be generated as a result of the acquisition.
Appealed Order at 5.
[6] By contrast, OUCC utility analyst Shawn Dellinger opined that the valuation of an offered utility's assets is governed by Indiana Code Section 8-1-2-6, which reads in pertinent part,
(a) The commission shall value all property of every public utility actually used and useful for the convenience of the public at its fair value, giving such consideration as it deems appropriate in each case to all bases of valuation which may be presented or which the commission is authorized to consider by the following provisions of this section. As one of the elements in such valuation the commission shall give weight to the reasonable cost of bringing the property to its then state of efficiency....
(b) The lands of such public utility shall not be valued at a greater amount than the assessed value of said lands exclusive of improvements as valued for taxation. In making such valuation no account shall be taken of presumptive value resting on natural resources independent of any structures in relation thereto, the natural resource itself shall be viewed as the public's property. No account shall be taken of good will for presumptive values growing out of the operation of any utility as a going concern, all such values to rest with the municipality by reason of the special and exclusive grants given such utility enterprises. Except in a proceeding under IC 8-1-30, and except as provided in IC 8-1-30.3-5 and IC 8-1.5-2-6.1, no account shall be taken of construction costs unless such costs were actually incurred and paid as part of the cost entering into the construction of the utility. Except in a proceeding under IC 8-1-30, and except as provided
in IC 8-1-30.3-5 and IC 8-1.5-2-6.1, all public utility valuations shall be based upon tangible property, that is, such property as has value by reason of construction costs , either in materials purchased or in assembling of materials into structures by the labor or (of) workers and the services of superintendents, including engineers, legal and court costs, accounting systems and transportation costs, and also including insurance and interest charges on capital accounts during the construction period. As an element in determining value the commission may also take into account reproduction costs at current prices, less depreciation, based on the items set forth in the last sentence hereof and shall not include good will, going value, or natural resources.
(Emphases added.)
[7] According to the Commission,
Mr. Dellinger testified that a DCF model takes a stream of future cash flows and converts those numbers from the future into a value today based on a discount rate. He opined that a DCF model may be an appropriate method for determining the value of a security, a company, or a project, but it is not appropriate to be used to support a finding that the actual purchase price of the utility property is reasonable for purposes of establishing the increase to rate base under Ind. Code § 8-1-30.3-5. Mr. Dellinger stated that Ind. Code § 8-1-2-6 guides how rate base must be established and makes it clear that, except where exceptions are established by specific statutory provisions, public utility valuations must be based on tangible property. Mr. Dellinger also stated that Ind. Code § 8-1-2-6(b) provides that no account shall be taken of good will for presumptive values growing out of the operation of any utility as a going concern—however, he argued that Mr. Miller's DCF analysis bases the value of JLB's acquired assets on just such a consideration.
According to Mr. Dellinger, while not providing an assessment of what the used and useful plant may be valued for purposes of setting rate base, a DCF analysis does demonstrate whether the acquisition of another utility's assets as a going concern makes financial sense to the acquiring utility. He testified that Mr. Miller's DCF analysis indicates a significant value for [Citizens] if it proceeds with the [asset purchase agreement] at the $475,000 purchase price. However, he opined that [Citizens] does not need the ratemaking treatment it has requested.
Mr. Dellinger testified that Joint Petitioners have not provided evidence to support a value of $475,000 for the actual public utility property being acquired. Rather, he stated, Joint Petitioners have presented two valuations of the actual utility property that are not tied to analysis of JLB as a going concern: the net original cost of the utility plant in service [$40,208] and the RCNLD study. Mr. Dellinger testified that an RCNLD study is an acceptable methodology the Commission may consider in valuing utility property for ratemaking purposes that is used and useful for providing utility service. He opined that, based on Joint Petitioners’ evidence, the Commission could find the actual purchase price of the utility property up to $80,022 is reasonable.
Mr. Dellinger recommended that the Commission find that $475,000 is not a reasonable actual purchase price of the utility property for the purposes of Ind. Code § 8-1-30.3-5 because, in his opinion, Joint Petitioners have supported a reasonable purchase price of $80,022 and a
cost differential of no more than $139,814.
Appealed Order at 7-8.
[8] Ultimately, the Commission concluded as follows:
Because the parties disagree in their interpretation of the language of several statutes relating to whether $475,000 is a reasonable price for the acquisition, we begin with a discussion of what is now known as the "Offered Utility Statute," Ind. Code ch. 8-1-30.3....
Over the past several years, the Indiana General Assembly has enacted statutes that promote the regionalization of water and wastewater utilities through encouraging the acquisition of distressed or small municipal utilities by larger utilities. In 2015, House Enrolled Act No. ("HEA") 1319 created Ind. Code ch. 8-1-30.3, known colloquially at that time as the "distressed utility statute." The statute defined "distressed utility," in part, as a public utility with not more than 3,000 customers or that was not viable absent acquisition. In 2016, the General Assembly enacted Senate Enrolled Act No. ("SEA") 257. SEA 257 changed the definition of "distressed utility" in Ind. Code ch. 8-1-30.3 to include a public utility with no more than 5,000 customers and did not require it to meet any other factors to be considered "distressed." Today, a utility being acquired is referred to as an "offered utility," as opposed to a "distressed utility." In 2020, HEA 1131 increased the number of customers that an "offered utility" may serve to 8,000 and made other amendments to the Offered Utility Statute.
....
In the Offered Utility Statute, Ind. Code §§ 8-1-30.3-5(b) and (c) address whether a purchase price and cost differential are reasonable .... Thus, Ind. Code § 8-1-30.3-5 identifies two potential "tracks" for a case like this:
1. Ind. Code § 8-1-30.3-5(b) establishes that, in all cases under the Offered Utility Statute, there is a rebuttable presumption that the cost differential is reasonable. An appraisal made pursuant to Ind. Code § 8-1-30.3-5.5 is not required for this rebuttable presumption to apply.
2. Ind. Code § 8-1-30.3-5(c) establishes that, if an appraisal that meets all the requirements of Ind. Code § 8-1-30.3-5.5 is conducted, the Commission must find that the cost differential and purchase price are reasonable. This conclusion is not rebuttable.
Satisfying subsection (c) is not a condition precedent to the rebuttable presumption established in subsection (b). If Ind. Code § 8-1-30.3-5(c) were meant to identify the only circumstances under which a purchase price and cost differential could be found to be reasonable, there would be no need for the rebuttable presumption of reasonableness established by Ind. Code § 8-1-30.3-5(b)....
Here, the proposed acquisition is not occurring pursuant to Ind. Code § 8-1.5-2-6.1, and, thus, Ind. Code § 8-1-30.3-5(c)(1) is inapplicable. Joint Petitioners did not have an appraisal meeting the requirements of Ind. Code § 8-1-30.3-5.5 performed and therefore do not have an appraisal price on which they could rely to find the purchase price reasonable under Ind. Code § 8-1-30.3-5(c)(2).
While an appraisal made pursuant to Ind. Code § 8-1-30.3-5.5 is not required under these circumstances, this case illustrates why a party might want to have an appraisal that complies with the requirements of Ind. Code § 8-1-30.3-5.5 —so that both its purchase price and cost differential are considered to be
reasonable pursuant to Ind. Code § 8-1-30.3-5(c). Because no such appraisal took place here, Joint Petitioners only have the rebuttable presumption provided by Ind. Code § 8-1-30.3-5(b) that their proposed cost differential is reasonable—a presumption that the OUCC is attempting to rebut by showing that the purchase price is too high.
The OUCC's primary objection to the purchase price in this case is that it exceeds the book value of JLB's tangible assets as defined by Ind. Code § 8-1-2-6(b), including "construction costs, either in materials purchased or in assembling of materials into structures by the labor or (of) workers and the services of superintendents, including engineers, legal and court costs, accounting systems and transportation costs, and also including insurance and interest charges on capital accounts during the construction period." The OUCC also cites another sentence of Ind. Code § 8-1-2-6(b) in objecting to the purchase price: "No account shall be taken of good will for presumptive values growing out of the operation of any utility as a going concern, all such values to rest with the municipality by reason of the special and exclusive grants given such utility enterprises." However, Ind. Code § 8-1-2-6(b) also provides, "Except in a proceeding under IC 8-1-30, and except as provided in IC 8-1-30.3-5 and IC 8-1.5-2-6.1, all public utility valuations shall be based upon tangible property[.]" Ind. Code § 8-1-2-6(b) (emphasis added). This sentence indicates the General Assembly's intent to permit the consideration of other factors such as good will and the potential for future growth.
We agree with Joint Petitioners that Ind. Code § 8-1-2-6(b) permits a public utility valuation to be based on factors other than tangible property in cases filed pursuant to Ind. Code § 8-1-30.3-5, as this case is. Such an interpretation is consistent with the plain language of the statutes at issue and is also consistent with the history and purpose of the Offered Utility Statute—to encourage regionalization and the acquisition of small and distressed utilities....
The OUCC's proposed interpretation of Ind. Code § 8-1-2-6(b) would inhibit a utility like JLB from selling its system for anything above the RCNLD value of its assets. When faced with the choice of accepting $80,022 for its utility, as proposed by the OUCC, or retaining its assets and providing additional and potentially duplicative service, the logical financial choice for JLB would be to expand its plant, depriving its customers of all of the other benefits of the acquisition that were recognized by the OUCC. Thus, we agree with Joint Petitioners that limiting the purchase price to the RCNLD value of the acquired assets, as proposed by the OUCC, would frustrate the purpose of the Offered Utility Statute and is not supported by the applicable statutes.
We next consider whether the evidence presented supports a finding that the price agreed upon by Joint Petitioners is, in fact, reasonable. Joint Petitioners presented detailed evidence describing how they arrived at the purchase price of $475,000 through arm's-length negotiations. [Joint Petitioners’ witnesses] all independently estimated the value of JLB's assets and service territory. The DCF model that Mr. Miller used to support the purchase price relies on several inputs, including projected revenues, projected expenses, discount rate, and number of years over which the present value of the income stream is calculated. The OUCC presented no objection to the factual basis for these inputs.
Based on the evidence of record, we find that the purchase price of $475,000 that was agreed upon by [Citizens] and JLB is reasonable for the purposes of Ind. Code § 8-1-30.3-5(d)(5).
Id. at 12-15 (underlining omitted).
[9] Accordingly, the Commission authorized Citizens’ acquisition of JLB's system on the terms described in the asset purchase agreement and ruled that Citizens "may record, for ratemaking purposes, as net original cost rate base of the assets being acquired, the purchase price of $475,000, its actual incidental expenses, and other costs of acquisition, allocated among utility plant in service accounts[.]" Id. at 18-19. The OUCC now appeals.
Discussion and Decision
[10] The OUCC contends that because the purchase price is based on factors other than the value of JLB's tangible property, the Commission erred in concluding that the purchase price is reasonable. "The General Assembly created the Indiana Utility Regulatory Commission primarily as a fact-finding body with the technical expertise to administer the regulatory scheme devised by the legislature." N. Ind. Pub. Serv. Co. v. U.S. Steel Corp. , 907 N.E.2d 1012, 1015 (Ind. 2009). "The Commission's assignment is to insure that public utilities provide constant, reliable, and efficient service to the citizens of Indiana." Id. "When exercising this authority, the Commission balances the public's need for adequate, efficient, and reasonable service with the public utility's need for sufficient revenue to meet the cost of furnishing service and to earn a reasonable profit." NIPSCO Indus. Grp. v. N. Ind. Pub. Serv. Co. , 100 N.E.3d 234, 238 (Ind. 2018).
[11] The Indiana Code authorizes judicial review of Commission orders, which "must contain specific findings on all the factual determinations material to its ultimate conclusions[,]" and those findings "must be supported by substantial evidence in the record." Ind. Gas Co. v. Ind. Fin. Auth. , 999 N.E.2d 63, 66 (Ind. 2013). The OUCC does not challenge the correctness of the Commission's factual findings, but it does disagree with the Commission's interpretation of Indiana Code Sections 8-1-2-6 and 8-1-30.3-5, which presents a question of law. Anderson v. Gaudin , 42 N.E.3d 82, 85 (Ind. 2015). Ordinarily, we review an agency's legal conclusions de novo. Moriarity v. Ind. Dep't of Nat. Res. , 113 N.E.3d 614, 619 (Ind. 2019). Our supreme court has explained that although we are not bound by an agency's conclusions, an interpretation of a statute by an agency charged with the duty of enforcing it "is entitled to great weight, unless this interpretation would be inconsistent with the statute itself." Id. (quoting Chrysler Grp., LLC v. Review Bd. of Ind. Dep't of Workforce Dev. , 960 N.E.2d 118, 123 (Ind. 2012) ). "In fact, ‘if the agency's interpretation is reasonable, we stop our analysis and need not move forward with any other proposed interpretation.’ " Id. (quoting Jay Classroom Teachers Ass'n v. Jay Sch. Corp. , 55 N.E.3d 813, 816 (Ind. 2016) ).
[12] The question before us is whether it was reasonable for the Commission to conclude that Section 8-1-2-6(b) permits the valuation of a public utility to be based on factors other than tangible property in cases filed pursuant to Section 8-1-30.3-5. "The first and often the only step in resolving an issue of statutory interpretation is the language of the statute." Shell Oil Co. v. Meyer , 705 N.E.2d 962, 972 (Ind. 1998). The goal of statutory construction is to determine, give effect to, and implement the legislature's intent. 219 Kenwood Holdings, LLC v. Props. 2006, LLC , 19 N.E.3d 342, 343 (Ind. Ct. App. 2014). "The language of the statute is the best evidence of legislative intent, and all words must be given their plain and ordinary meaning." Id. We may not read into a statute that which is not the expressed intent of the legislature; thus, it is just as important to recognize what a statute does not say as it is to recognize what it does say. Davis v. Edgewater Syst. For Balanced Living, Inc. , 42 N.E.3d 524, 528 (Ind. Ct. App. 2015). "[P]aramount consideration must be given to the basic principle that two statutes that apply to the same subject matter must be construed harmoniously if possible." NOW!, Inc. v. Indiana-American Water Co. , 117 N.E.3d 647, 657 (Ind. Ct. App. 2018) (alteration in NOW! ) (quoting McCabe v. Comm'r, Ind. Dep't of Ins. , 949 N.E.2d 816, 820 (Ind. 2011) ), trans. denied (2019). "This rule takes precedence over other rules of statutory construction." Id.
[13] Sections 8-1-2-6 and 8-1-30.3-5 both apply to the same subject matter: the valuation of public utilities. Section 8-1-2-6(b) specifically states that, "except as provided in" Section 8-1-30.3-5, "all public utility valuations shall be based upon tangible property, that is, such property as has value by reason of construction costs ...." (Emphasis added.) The OUCC argues that this exception is limited to the "incidental expenses" and "other costs of acquisition" mentioned in Section 8-1-30.3-5(f), but no explicit limitation appears in that statute. The OUCC also points to Section 8-1-2-6(b) ’s prohibition against taking account of "good will for presumptive values growing out of the operation of any utility as a going concern," but applying that prohibition to Section 8-1-30.3-5 would essentially render the foregoing exception meaningless, and we assume that the legislature did not enact a useless provision. Hannis v. Deuth , 816 N.E.2d 872, 876 (Ind. Ct. App. 2004).
The OUCC asserts that Section 8-1-30.3-5 "includes no stated or explicit criteria guiding the Commission as to what makes an ‘actual purchase price of the utility property’ reasonable[,]" Appellant's Br. at 19, but it cites no authority for the proposition that such criteria are required. Notwithstanding, Citizens observes that "the statute creates a ‘rebuttable presumption’ that the cost differential [which, by definition, includes the purchase price] is reasonable, and that presumption must be overcome with evidence." Citizens’ Br. at 24-25 (quoting Ind. Code § 8-1-30.3-5(b) ). Citizens further observes that "[t]he purchase price must be ‘the result of a mutual agreement made at arms length.’ " Id. at 25 (quoting Ind. Code § 8-1-30.3-5(d)(4) ). Additionally, the statute leaves the reasonableness determination to the Commission's considerable "technical expertise as a fact-finding and quasi-judicial body[.]" Id.
[14] Moreover, "[w]e presume that the legislature intended its language to be applied in a logical manner consistent with the statute's underlying policies and goals." Id. The OUCC finds no fault with the Commission's historical account of the Offered Utility Statute, and we can find no fault with the Commission's assessment that its interpretation of Sections 8-1-2-6(b) and 8-1-30.3-5 is both "consistent with the plain language of the statutes at issue" and "consistent with the history and purpose of the Offered Utility Statute—to encourage regionalization and the acquisition of small and distressed utilities." Appealed Order at 14. Citizens notes that Section 8-1-30.3-5(d)(5) ’s requirement "that the Commission find the ‘actual purchase price of the utility property is reasonable’ does not tie the definition of ‘reasonable’ to either [ Section 8-1-2-6 ] or the value of the offered utility's tangible property." Citizens’ Br. at 25. The Commission makes the same point and observes that this is "[f]or good reason: Limiting the purchase price to the book value of the tangible assets would eliminate the incentives for larger utilities to buy and for smaller utilities to sell." Commission's Br. at 29.
This observation undercuts the OUCC's emphasis on Section 8-1-30.3-5(d)(1) ’s requirement that the Commission find that the utility property is used and useful to the offered utility. As the Commission correctly observes, "Section 5(d)(1) in no way purports to define or limit what constitutes reasonable value for the utility property. Neither 5(d)(1) nor 5(d)(5) contemplates, let alone requires, the Commission to consider whether the actual purchase price is based only on tangible, used and useful utility property." Commission's Br. at 31.
As an example, the Commission posits "that the book value of an offered utility's tangible property is $500,000, but that the total value of the tangible property plus the utility's good will and potential for future growth is $2 million. Few, if any, rational sellers would part with a $2 million asset for $500,000." Commission's Br. at 27. For its part, the OUCC quotes Indiana Code Section 8-1-2-0.5, which states,
The general assembly declares that it is the continuing policy of the state, in cooperation with local governments and other concerned public and private organizations, to use all practicable means and measures, including financial and technical assistance, in a manner calculated to create and maintain conditions under which utilities plan for and invest in infrastructure necessary for operation and maintenance while protecting the affordability of utility services for present and future generations of Indiana citizens.
The OUCC asserts that this "policy reflects a balancing of goals and interests, not a view to consolidating at any cost." Appellant's Br. at 30. But the OUCC cites no authority for the proposition that the aspirational policy goals of Section 8-1-2-0.5 override the plain language of Sections 8-1-2-6 and 8-1-30.3-5.
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[15] In sum, we conclude that the Commission's interpretation of Sections 8-1-2-6 and 8-1-30.3-5 is reasonable, and therefore we stop our analysis. Moriarity , 113 N.E.3d at 619. Because the OUCC's objection to the reasonableness of the purchase price is based solely on its unsuccessful argument that only the value of JLB's tangible property could be considered, we affirm the Commission's order.
[16] Affirmed.
Bailey, J., and Pyle, J., concur.