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Independent Voters v. Ill. Commerce Com.

OPINION FILED NOVEMBER 21, 1985.

INDEPENDENT VOTERS OF ILLINOIS, APPELLANT,

v.

ILLINOIS COMMERCE COMMISSION, RESPONDENT-APPELLEE (ILLINOIS BELL TELEPHONE COMPANY, INTERVENOR-APPELLEE).



Appeal from the Circuit Court of Kane County; the Hon. Paul W. Schnake, Judge, presiding.

JUSTICE REINHARD DELIVERED THE OPINION OF THE COURT:

The Independent Voters of Illinois (hereinafter IVI) appeals pursuant to section 68 of the Public Utilities Act (Ill. Rev. Stat. 1983, ch. 111 2/3, par. 72) from the order of the circuit court of Kane County affirming the Illinois Commerce Commission's order that Illinois Bell Telephone Company customers were not entitled to reparations pursuant to section 72 of the Public Utilities Act (Ill. Rev. Stat. 1983, ch. 111 2/3, par. 76) for the rates charged by Illinois Bell Telephone Company (hereinafter Illinois Bell) between August 11, 1972, and December 31, 1973.

The issues on appeal, as raised and presented by IVI, are whether, under the theory of restitution, customers of a public utility are entitled to refunds for excessive charges paid on utility rates subsequently deemed improper by the supreme court; and alternatively, whether these customers are entitled to refunds for the excessive charges collected after the date of the decision which held the rate improper.

On September 23, 1971, Illinois Bell filed proposed tariff schedules with the Illinois Commerce Commission (hereinafter Commission) pursuant to section 36 of the Public Utilities Act (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 36) in order to increase the rates of Illinois Bell's customers. After extended hearings under docket No. 56831, the Commission ordered a general rate increase for Illinois Bell effective August 11, 1972. The circuit court affirmed the Commission's order and an appeal was taken directly to the Illinois Supreme Court pursuant to Supreme Court Rule 302(b) (87 Ill.2d R. 302(b)).

On appeal in Illinois Bell Telephone Co. v. Illinois Commerce Com. (1973), 55 Ill.2d 461, 303 N.E.2d 364, the Commission's findings as to what the general rate increase of Illinois Bell should be were challenged by Illinois Bell as being too low and by IVI and other interested parties as being too high. The supreme court reversed the Commission's order on October 1, 1973. It determined that while the Commission used the proper method of calculating the general rates, it improperly allowed certain operating expenses to be considered in fixing the rates. Specifically, the court found that lobbying expenditures, charitable contributions, expenditures for dues to civic, social and athletic clubs, the annual licensing fee paid to AT & T, in amounts in excess of expenditures that would otherwise properly be made by Illinois Bell, and, any sum paid to Western Electric which would yield Western Electric a return in excess of the rate of return allowed Illinois Bell should be excluded from the Commission's calculations when fixing a rate increase. (55 Ill.2d 461, 479-85, 303 N.E.2d 364.) The court remanded the cause to the circuit court with directions to remand it to the Commission for further proceedings consistent with its opinion. (55 Ill.2d 461, 486, 303 N.E.2d 364.) The court denied a rehearing on November 25, 1973, and its mandate was issued to the circuit court on December 10, 1973. The circuit court, pursuant to the supreme court decision, remanded the cause to the Commission on February 15, 1974.

While the rate increase in docket No. 56831 was being appealed, Illinois Bell petitioned the Commission on November 21, 1972, for another general rate increase. The Commission held hearings on this petition in October 1973 under docket No. 58033. Pursuant to the earlier Illinois Bell Telephone decision, the Commission excluded the expenditures disapproved by the supreme court from the new rate increase calculations. In a lengthy order, the Commission, inter alia, determined that the rates in effect were unjust and unreasonable, and set new rates. This order, entered on December 21, 1973, replaced the rates set in docket No. 56831 and became effective January 1, 1974. IVI participated in these hearings.

On March 26, 1975, the Commission reopened docket No. 56831 pursuant to the circuit court order requiring further proceedings consistent with the supreme court decision. On June 18, 1975, Illinois Bell filed a motion to dismiss pursuant to the decision in Mandel Brothers, Inc. v. Chicago Tunnel Terminal Co. (1954), 2 Ill.2d 205, 117 N.E.2d 774, arguing that because the supreme court did not find the rates excessive, no action for reparations could be maintained. Further, it asserted that as the Commission implemented the court's order at the earliest practical time, the cause should be dismissed.

On July 28, 1975, IVI filed its response in opposition to the motion to dismiss, contending that while the Mandel Brothers decision prevents reparations from being collected from Illinois Bell for the period of time prior to the supreme court's order, Illinois Bell must still pay reparations for the improper charges leveled against its customers from December 10, 1973, until December 31, 1973.

Illinois Bell responded that the supreme court's order did not find the rates improper and that any claim is barred by the one-year period of limitations set forth in section 72 of the Public Utilities Act (Ill. Rev. Stat. 1983, ch. 111 2/3, par. 76). IVI then filed supplementary memoranda asserting that Illinois Bell was unjustly enriched for improper rates charged from August 11, 1972, until January 1, 1974, and should be required to make restitution. IVI also asked, alternatively, that reparations be paid for improper charges from the date of the supreme court decision on October 1, 1973.

The cause was continued from time to time until the Commission entered an order on November 17, 1982, determining that the supreme court decision had been obeyed, that the changes ordered by the supreme court had been implemented, that pursuant to Mandel Brothers, no reparations should be allowed for the rates charged during the effective period of docket No. 56831, and that because the order of the supreme court was implemented in a timely manner, no reparations should be allowed for the period of time between the supreme court's order and the effective date of the new rate increase on January 1, 1974, in docket No. 58033. The cause was dismissed. On December 3, 1982, IVI filed a motion for rehearing which was denied by the Commission. On appeal, the circuit court, after considering the arguments and briefs of the parties, affirmed the Commission's order.

• 1 The issues raised in this appeal by IVI concern whether Illinois Bell's customers are entitled to refunds for the alleged excessive rates which were charged. Before we consider IVI's issues, however, we must first address an issue raised by the Commission in its brief. It asserts that IVI cannot seek a refund because it failed to file a claim for reparations within the one-year limitation required by section 72 of the Public Utilities Act (Ill. Rev. Stat. 1973, ch. 111 2/3, par. 76). It appears from the record that this argument was presented to both the Commission and the circuit court by Illinois Bell; however, Illinois Bell never requested a ruling on this issue from either the Commission or the lower court, and neither made a ruling on the issue. This failure to obtain a ruling on an issue presented to a lower court waived the issue on appeal. (Feldscher v. E & B, Inc. (1983), 95 Ill.2d 360, 365-66, 447 N.E.2d 1331; see also People v. Caballero (1984), 102 Ill.2d 23, 38, 464 N.E.2d 223.) In any event, our resolution of the issues raised by IVI makes it unnecessary to consider the asserted bar of limitations.

IVI first contends that because the supreme court decision overturned the Commission's order in docket No. 56831, Illinois Bell must refund the excessive charges it collected during the effective period of the order, August 11, 1972, until January 1, 1974, asserting that the principles of restitution under Illinois law require that Illinois Bell issue refunds to its customers. It argues that while Mandel Brothers, Inc. v. Chicago Tunnel Terminal Co. (1954), 2 Ill.2d 205, 117 N.E.2d 774, prohibits statutory reparations in this case, it does not prohibit restitution under equitable principles. Alternatively, it argues Mandel Brothers is no longer good law because the pronounced recent trend in other States is to correct errors contained in utility rates and pass on the benefits of these corrections to the utility's customers. IVI relies on a number of other State's decisions which require utilities to refund excess charges to its customers. We reject IVI's arguments.

• 2, 3 In Illinois, the common law right to recover reparations for unreasonable charges by a public utility has been superseded by section 72 of the Public Utilities Act. (Ill. Rev. Stat. 1983, ch. 111 2/3, par. 76; Mandel Brothers, Inc. v. Chicago Tunnel Terminal Co. (1954), 2 Ill.2d 205, 208, 117 N.E.2d 774.) Section 72 is the exclusive remedy provided for securing a refund. (Cummings v. Commonwealth Edison Co. (1965), 64 Ill. App.2d 320, 325, 213 N.E.2d 18.) Further, as determined in Mandel Brothers, Inc. v. Chicago Tunnel Terminal Co. (1954), 2 Ill.2d 205, 117 N.E.2d 774, public utility rates cannot be termed "excessive" for the purpose of awarding customers reparations even if those rates are later set aside upon judicial review if the rates were ordered by the Commission. (Mandel Brothers, Inc. v. Chicago Tunnel Terminal Co. (1954), 2 Ill.2d 205, 209, 117 N.E.2d 774.) This is because public utility rate setting is a legislative decision on behalf of the public. The rates are set by the Commission, not the utility, and the utility is required to follow the order. (See Central Illinois Public Service Co. v. Illinois Commerce Com. (1955), 5 Ill.2d 195, 207, 125 N.E.2d 269.) Failure to do so would subject a utility to severe penalties. (Ill. Rev. Stat. 1983, ch. 111 2/3, par. 80.) If we were to order this utility to refund rates collected pursuant to a Commission order, we would, in essence, be legislating retroactive rates, an action directly prohibited by Mandel Brothers.

Thus, we believe Mandel Brothers controls; and a request for a refund under the theory of restitution is the same as a request for reparations which is prohibited ...


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