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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Matanuska Electric Ass'n. v. Chugach Electric Ass'n. (8/23/2002) sp-5611

Matanuska Electric Ass'n. v. Chugach Electric Ass'n. (8/23/2002) sp-5611

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878.


            THE SUPREME COURT OF THE STATE OF ALASKA


MATANUSKA ELECTRIC                 )
ASSOCIATION, INC., a non-profit    )    Supreme Court No. S-9839
electric membership cooperative,   )
                              )    Superior Court No.
             Appellant,                      )    3AN-98-9775 CI
                              )
     v.                       )    O P I N I O N
                              )
CHUGACH ELECTRIC                              )     [No.  5611  -
                                   August 23, 2002]
ASSOCIATION, INC., a non-profit    )
electric membership cooperative,   )
                              )
             Appellee.                  )
________________________________)


          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Peter A. Michalski, Judge.

          Appearances:  Stephen M. Ellis and Jeffrey P.
          Stark, Delaney, Wiles, Hayes, Gerety, Ellis &
          Young,   Inc.,   Anchorage,  for   Appellant.
          Donald    W.   Edwards,   Chugach    Electric
          Association,   Anchorage,   and   Andrew   F.
          Behrend, Heller Ehrman White & McAuliffe LLP,
          Anchorage, for Appellee.  Virginia A.  Rusch,
          Assistant  Attorney General,  Anchorage,  and
          Bruce  M. Botelho, Attorney General,  Juneau,
          for  Amicus  Curiae Regulatory Commission  of
          Alaska.

          Before:     Fabe,  Chief  Justice,  Matthews,
          Bryner,  and Carpeneti, Justices.  [Eastaugh,
          Justice, not participating.]

          CARPENETI, Justice.

I.   INTRODUCTION

          Retroactive  ratemaking by a utility is  prohibited  in

Alaska,  as it is in the majority of jurisdictions in the  United

States.   The  Regulatory Commission of Alaska compelled  Chugach

Electric Association to refund payments collected as a result  of

a  miscalculation in the cost of generation and transmission line

loss.   The  superior  court, concluding  that  the  commission's

ruling   constituted   retroactive   ratemaking,   reversed   the

commission's order.  We agree, and therefore affirm the  decision

of the superior court.

II.  FACTS AND PROCEEDINGS

          "To  comprehend the rule against retroactive ratemaking

[as well as the facts involved in a retroactive ratemaking case],

it  is  necessary first to understand the process for the setting

of public utility rates."1

     A.   Background

          The  provision of electric service by Chugach  Electric

Association,  Inc. (Chugach) and Matanuska Electric  Association,

Inc. (MEA) is governed by AS 42.05.  Because Chugach and MEA  are

electrical cooperatives organized under AS 10.25, they come under

the provisions of AS 42.05.

          Chugach generates electricity and sells it wholesale to

MEA.   Chugach's rates have two components: a base  rate  and  an

adjustment to that rate known as a fuel surcharge.  The base rate

reflects the fixed costs of providing electric service,  as  well

as other costs that tend to remain stable.  The fuel surcharge is

a  fluctuating  charge that operates to protect  Chugach  against

those costs associated with purchasing and generating power  that

are not as stable.

          A  utility's rates and business practices are  governed

by the tariffs it has in effect with the Regulatory Commission of

Alaska2 (commission).3  The filing or revision of a tariff  is  a

complicated  and lengthy process.4  As a means of expediting  the

procedure,  Alaska  state  law  allows  utilities  to  utilize  a

simplified  rate  filing  process.5  The simplified  rate  filing

process  allows  utilities  to modify their  base  rates  through

quarterly  or  semi-annual rate filings.6  Through this  process,

          utilities are allowed to adjust their base rates, subject to

certain  limitations,7 without filing and  litigating  full  rate

cases.

          While  the  simplified rate filing is  a  means  for  a

utility  to  have  an expedited procedure to establish  its  base

rate, a Cost of Power Adjustment Filing allows the same expedited

process  for  surcharges.   The Fuel  and  Purchased  Power  Cost

Adjustment  Factors  (fuel  surcharge filing)  is  an  adjustment

Chugach  filed with the commission to its base rate  and  is  the

focus  of  the  present  dispute.  This surcharge  is  calculated

through  a  procedure  established in a  tariff  similar  to  the

simplified  rate  filing process.  Through  this  mechanism,  the

commission  permits  utilities  such  as  Chugach  to  collect  a

surcharge designed to recover fluctuations in fuel costs relative

to  costs  in  the  base rate.8  Fuel surcharge filings  are  not

subject  to the same review as the base rate, although there  are

some similarities between the fuel surcharge filing procedure and

simplified rate filing procedure.

          This appeal involves the use of an estimated generation

and  transmission  system energy loss in Chugach's fuel surcharge

filings.   A generation and transmission line loss factor  is  an

adjustment  to  the base rate to reflect the amount  of  electric

energy  that  is  lost through its generation  and  transmission.

This  amount  varies  and cannot always be accurately  predicted.

Because of the fluctuations, it is part of the fuel surcharge and

is adjusted on a periodic basis.

          Additionally,   because  the  fuel  surcharge   is   an

estimate,  the  amount collected might fall short or  exceed  the

actual  cost  of a utility's fuel and purchased power.   After  a

given  period,  the  commission reconciles fuel  cost  recoveries

collected   through  a  fuel  surcharge.   Such  recoveries   are

collected in a balancing account and only balance "over- or under-

collections  occurring  in  the  immediately  preceding   quarter

through adjustments for the following quarter."  "The purpose  of

          these `true-up' proceedings is to determine whether the amounts

passed  through to customers were in accordance with the  [actual

surcharge]."9   Thus,  whatever variances occur  are  taken  into

account  when  calculating  the  next  quarterly  fuel  surcharge

filing.

     B.   Facts

          Chugach's  fuel  surcharge was  approved  in  1987  and

governed  Chugach's  collection  of  fuel  surcharges.   Approval

authorized Chugach to collect fuel surcharges as an adjustment to

base  rates  if certain requirements were met.  Approval  of  the

surcharge permitted adjustments to the rate on a quarterly basis.

The  amount  of  the  permissible adjustment was  the  difference

between  the  estimated fuel and purchase  power  costs  for  the

upcoming  quarter and the base amount established in the  tariff.

To support these estimates, Chugach was required to file a tariff

advice letter with the commission, no later than forty-five  days

after  the  beginning of each quarter, along with  tariff  sheets

showing  the  fuel surcharges, studies of its fuel and  purchased

power  costs,  documentation of those costs,  as  well  as  other

supporting documentation.

          The  Fuel  and Purchased Power Cost Adjustment  Factors

established  a balancing account to reconcile the fuel  surcharge

with  actual fuel costs.  Through separate accounts for wholesale

and retail customers, Chugach debited the actual monthly fuel and

purchased  power costs and credited the total of  the  base  rate

plus  the  fuel surcharge in effect for that month multiplied  by

the  number of kilowatt hours sold.  The commission was permitted

to  adjust Chugach's fuel surcharge rates individually and in its

simplified  rate  filing  each quarter, but  only  under  limited

circumstances.   The  procedures  established  by  the  Fuel  and

Purchased  Power Cost Adjustment Factors provided that  all  fuel

surcharge rates are subject to review and adjustment after  being

implemented unless "sooner authorized" by the commission.

          Chugach   sought  and  gained  the  approval   of   the

          commission before each surcharge was implemented.  At the time

the  commission's  approval is sought, the  same  information  is

submitted to Chugach's customers.  Thus, MEA received a  copy  of

Chugach's fuel surcharge documentation each time it was submitted

to  the commission.  A fuel surcharge filing can total well  over

100 pages.

          Upon  submitting  its  fuel  surcharge  filing  to  the

commission, Chugach's documents are reviewed and a tariff  action

memorandum is prepared by a utility tariff analyst.  All  of  the

tariff  action memoranda in this case reflect that the  documents

were  in  fact  received,  reviewed, and  that  the  calculations

contained   in   them  were  correct.   In  each  tariff   action

memorandum, the utility tariff analyst recommended the commission

approve  Chugach's tariff advice letter submitting that quarter's

fuel surcharge.  Each tariff advice letter submitted for the 1995-

1997   period  received  commission  approval  before  it  became

effective.  Each contained that quarter's fuel surcharge rate.

          Since  the  mid-1980s, Chugach has  used  a  line  loss

factor of 5.219% in its rate filings for wholesale customers.  In

a  general  rate  case in 1987, the commission  issued  an  order

formally  approving this factor as an appropriate  reflection  of

Chugach's  transmission line losses.  This line loss  factor  was

identified in all of Chugach's simplified rate filings  and  each

of the quarterly fuel surcharge filings that the commission later

approved.

          In   November   1997  Chugach  and  MEA  discovered   a

discrepancy in the line loss factor Chugach used in its projected

fuel  surcharges.  Chugach's own documents showed the actual line

loss  experienced  by  Chugach  in  1995,  1996,  and  1997   was

substantially  lower than the 5.219% Chugach had claimed  in  its

simplified rate filings and fuel surcharge filings.  On June  25,

1999  a  utility  tariff analyst recommended  suspension  of  the

surcharge.

          When confronted with the discrepancy between its actual

line  losses  and  what it had charged for line  losses,  Chugach

acknowledged  and  rectified the error.  Chugach  then  submitted

revised  tariffs to the commission that more accurately reflected

the  line loss factor in future rates.  Chugach, however, refused

to   refund  the  overcharged  tariffs,  invoking  the   doctrine

prohibiting retroactive ratemaking.

     C.   Proceedings

          This  appeal arises from commission docket number U-96-

37.   Until December 1997 the issues in that docket were  limited

to  Chugach's base rates established through the simplified  rate

filing process.  On December 19, 1997 MEA raised the issue of the

incorrect  generation  and transmission line  loss  factor.   MEA

asked  the  commission to correct Chugach's line loss factor  and

demanded  a refund based on the difference between the  incorrect

line loss factor and the corrected one.

          In  Order  U-96-37(13)  issued on  July  1,  1998,  the

commission ordered Chugach to recalculate its fuel surcharges for

1995  using  the  actual line loss factor  for  that  year.   The

commission also ordered Chugach to refund an amount based on  the

difference between the original line loss factor and the revision

to   its  wholesale  customers.   In  making  its  decision,  the

commission  noted  that "the principles relevant  to  retroactive

ratemaking are not applicable to fuel adjustment clauses."

          Both  Chugach  and  MEA sought reconsideration  of  the

commission's order.  Chugach argued the commission overlooked the

prohibition    against    retroactive    ratemaking,     creating

"confiscatory  rates  which  result in  taking  Chugach  property

without  due  process of law."  The commission  denied  Chugach's

request  for reconsideration.  MEA's petition for reconsideration

asserted  that  the  commission's previous order  was  internally

inconsistent.  MEA noted the order only addressed the use of  the

newly calculated generation and transmission line loss factor for

1995,  failing to require a new line loss factor be utilized  for

the 1996 and 1997 portions of the refund.  The commission granted

MEA's  request and ordered refunds for the additional years using

the actual line loss factor from those particular years.

          Chugach  appealed the commission's decisions  in  U-96-

37(13) and U-96-37(18)10 to the superior court.  Both MEA and the

commission  filed  briefs in response.   On  July  27,  2000  the

superior  court  reversed  the  commission's  decision.   In  his

decision, Superior Court Judge Peter A. Michalski held  that  the

commission clearly erred "in its determination that Chugach's use

of  the tariff mandated line loss factor was `incorrect';"  Judge

Michalski also held "that going back more than one quarter in the

correction  of a Cost of Power Adjustment constitutes retroactive

rate making."

          MEA now appeals.  The commission declined to pursue  an

appeal and is no longer a party to this action.  It has, however,

filed an amicus curiae brief outlining its position.

III. STANDARD OF REVIEW

          In  an  administrative appeal where the superior  court

acts  as an intermediate appellate court, we directly review  the

agency action in question.11  "As we substitute our judgment,  it

is  our duty `to adopt the rule of law that is most persuasive in

light of precedent, reason, and policy.' "12

          Whether  the commission's decision ordering Chugach  to

refund  MEA  payments collected from fuel surcharges  constitutes

unlawful ratemaking is a question of law.  Because assessing  the

scope    of    an   agency's   authority   "involves    statutory

interpretation, or analysis of legal relationships,  about  which

courts have specialized knowledge and expertise," our independent

judgment is used.13  "However, even under the independent judgment

standard  [we  have] noted that the court should give  weight  to

what   the   agency  has  done,  especially  where   the   agency

interpretation is longstanding."14

          The  commission's  findings of fact  are  reviewed  for

clear  error  and  are only reversed if there is not  substantial

evidence to support them.15

IV.  DISCUSSION

     A.   The Rule Against Retroactive Ratemaking

          Both  MEA and Chugach agree that retroactive ratemaking

is impermissible under Alaska state law.  We concur.

          "  `A fundamental rule of ratemaking is that rates  are

exclusively  prospective in nature.' "16  One purpose  of  having

such  a  rule is a consumer's right to rely on rates set  by  the

commission.  "Some reliability, of course, is  essential  to  the

public   utility   regulatory  system.   If   commissions   could

retroactively change rates willy-nilly,[17] and ratepayers' bills

and   utility   revenues  were  continually  subject   to   large

fluctuations,  serious  questions  would  arise  concerning   the

legitimacy  of  the ratemaking process."18   Thus,  the  rule  is

critical for a utility to plan its finances.19  Other purposes for

prohibiting   retroactive  rates  include  "investor  confidence,

utility  credit  rating, and the integrity  of  service."20   And

"[r]etroactivity, even where permissible, is not favored,  except

upon the clearest mandate."21

          The question before us is whether requiring Chugach  to

refund  amounts  collected  in  excess  of  the  generation   and

transmission   line   loss   factor   constitutes   impermissible

retroactive ratemaking.

     B.   The Rule Against Retroactive Ratemaking Applies to the Fuel

          Surcharge at Issue.

          Chugach  contends  that  the rule  against  retroactive

ratemaking applies to the fuel surcharge here.  MEA, as  well  as

the  commission,  distinguish the fuel  surcharges  from  regular

commission-made  rates,  both  arguing  that,  because  of   this

distinction,   fuel  surcharges  are  not  susceptible   to   the

prohibition.

          1.   The fuel surcharge constitutes a commission-made rate.

          1.   While Chugach maintains that the fuel surcharge for the

generation  and  transmission line loss factor  is  a  rate,  MEA

claims  the  surcharge  is  distinguishable  from  a  rate.   The

          commission concurs with MEA, arguing that fuel surcharges are

distinct  from  actual  rates because "unlike  traditional  rates

which are estimates derived from historical costs and consumption

adjusted  to predict future costs and consumption, surcharges  in

Alaska  are  designed  and administered  to  cover  actual  costs

exactly."

          "The difficulty in classification [for fuel surcharges]

stems  not  only  from the inflationary rise in fuel  costs  that

triggered  the  problem,  but  from  the  fact  that  fuel   cost

adjustment  clauses are themselves unique animals  that  are  not

easily assimilated to classical rate-making principles."22

          Chugach  draws a distinction in the case law  regarding

fuel  surcharges  that  have been pre-approved  by  the  relevant

state's  utilities commission from those where the fuel surcharge

did  not receive such review.  In distinguishing between the two,

Chugach notes that where the fuel surcharge received approval  by

the  necessary  authority before enactment,  the  court  did  not

permit  a  retroactive  refund of any excess  rates,  finding  it

constituted retroactive ratemaking.  However, where the utility's

surcharge  did not receive review, the court was more  likely  to

find  the  rule against retroactive ratemaking did not apply,  as

the  commission  retained jurisdiction  over  the  matter.   MEA,

however,  argues that it is not whether the rates  were  reviewed

that  matters,  but  rather how much review they  received.   The

question,  therefore, is what type of review does the  commission

provide  for  fuel surcharge filings in Alaska and  whether  such

review  is  adequate  to  consider  a  fuel  surcharge  a   rate,

applicable to the prohibition against retroactive ratemaking.

               a.   Fuel surcharges in Alaska receive a documentary review.

          Chugach argues that the distinction between the instant

case  and  those  cases  supporting  the  proposition  that  fuel

surcharges  are in a different category than rates is   that  the

charges  in this case were approved by the commission.   MEA  and

the commission argue that the fuel surcharge filings utilized  by

          Chugach only received ministerial review.  Chugach's position is

the more persuasive.

          In  their  dissent from the commission's order  denying

reconsideration, Commissioners Alyce A. Hanley and James M. Posey

wrote  "[t]he  argument that [Chugach's fuel  surcharge]  filings

were only subject to a superficial review is disingenuous."   The

dissenters  note  that the filings received  "extensive  review."

However,  utility tariff analyst Dawn Bishop-Kleweno affied  that

"[u]nder   the  present  system,  it  is  simply  impossible   to

thoroughly  investigate fuel surcharges  like  rates  in  a  rate

case."

          Chugach  used  the  simplified rate filing  process  to

establish  its base rates and argues that if the same  review  is

given  to  fuel surcharge filings as to simplified rate  filings,

one  cannot  constitute  a  rate if  the  other  does  not.   The

processes are indeed similar.  Chugach submitted the same  amount

of  documentation for both its simplified rate filings as well as

its  fuel  surcharge  filings.  Much of the same  information  is

included in both processes.  Both filings are made at least forty-

five  days  before  the  rate takes effect  and  are  subject  to

investigation  and  possible suspension if the  commission  feels

they  need additional time for review.23  Simplified rate  filing

rates are deemed final once they are approved.24

               b.   The commission's review of Chugach's fuel surcharge is

                    substantial enough to constitute a rate.

          Despite  the  similarities between the simplified  rate

filing  and fuel surcharge filing review processes, MEA  and  the

commission  claim  their  differences outweigh  the  similarities

because   the  commission's  review  of  the  latter  is   purely

ministerial.  We disagree.

          It  is true that the fuel surcharge filing procedure is

not  the  same  as  the  simplified rate filing  process  in  all

respects.   While  the  simplified rate filing  applies  to  base

rates,  the fuel surcharge filing is for estimated costs such  as

          line loss factors.  Generally, there is no public notice

regarding fuel surcharge filings.  The commission also notes that

generally there is also no hearing.  Under AS 42.05.421, however,

the  commission does have the power to conduct a hearing upon its

own  motion "to determine the reasonableness and propriety of the

filing."

          The   commission  further  argues  that  the  analyst's

duties,  in  reviewing a fuel surcharge filing,  do  not  include

investigating the underlying accuracy of information such as  the

line  loss factor or meter read data, claiming the fuel surcharge

filing is primarily reviewed "to verify the prior quarter's  fuel

costs  .  .  .  unless something unusual stands out,"  and  that,

"[t]here  simply  is not enough time to investigate  a  utility's

estimates for fuel costs and [kilowatt hour] sales prior  to  the

next quarterly filing."  While this may generally be true, in the

present case MEA acknowledges that in 1987 the commission  issued

an  order  in  a contested general rate proceeding in  which  MEA

itself  was  an intervenor, expressly finding it appropriate  for

Chugach  to  use  a 5.219% line loss factor for its  transmission

losses.   Thereafter,  Chugach relied  on  this  order,  and  the

commission repeatedly approved the same figure for Chugach's line

loss  factor  for  a period of years without inquiring  into  why

there  was  no  fluctuation, something that could  be  considered

"surprisingly  unusual."   And, although  the  balancing  account

rectifies other changes in price, the account cannot rectify  the

constant use of the wrong figure when it is not due to any actual

costs, but instead human error.

          The  law  supports  this  approach.   "[T]he  essential

principle of the rule against retroactive ratemaking is that when

the estimates prove inaccurate and costs are higher or lower than

predicted, the previously set rates cannot be changed to  correct

for the error; the only step that the [commission] can take is to

prospectively  revise rates in an effort to set more  appropriate

ones."25  As one court stated,  "[t]ariffs are encompassed within

          the prohibition against retroactive ratemaking, particularly

when,  as in the present case, they share similarities with  rate

schedules."26   Here,  the  similarities  vastly   outweigh   any

differences between the two.  And, as the court stated  in  First

Hartford Corp. v. Central Maine Power Co.,27 "[w]hether or not the

clauses  were  `just, reasonable and otherwise  lawful',  as  the

Commission's orders recited, they functioned as rates, filed  and

approved  in advance of their inclusion in customers' charges."28

Thus,  "[t]he  time  for challenging a fuel  adjustment  rate  is

before the rate is approved by the Commission."29

          Even  if  we  were to agree with MEA and the commission

and  find  that the amount of review the commission gave  to  the

fuel  surcharge  filings  was  inadequate,  we  agree  with   the

Wisconsin  Supreme Court's reasoning in Wisconsin Power  &  Light

Co.  v.  Public  Service  Commission of Wisconsin,30  making  the

argument irrelevant.

          In   Wisconsin  Power  &  Light,  the  public   service

commission  for the state of Wisconsin determined that  Wisconsin

Power  &  Light  imprudently administered  a  contract  for  coal

causing  the  company  to overcharge customers  for  electricity.

Wisconsin Power & Light was therefore ordered to pay nine million

dollars   in  penalties,  an  amount  derived  from  the   actual

"overcharges."  The case is similar to the instant  case  as  one

party  there  contended that the penalties  were  valid,  because

Wisconsin  Power  & Light "use[d] unreasonably high  fuel  costs"

when  calculating  its  rates.31  It was  thus  argued  that  the

commission  was only responsible for reviewing the  formula,  not

the  numbers  plugged into it.32  Similarly here, the  commission

claims  analysts  are  not  responsible  for  investigating   the

numbers.  The Wisconsin court rejected this argument, as  do  we.

The  commission  had the power to review Chugach's  filings  each

time  they  were submitted.  The record shows that the amount  of

review  given  fuel  surcharge filings  is  in  dispute.   As  in

Wisconsin  Power  &  Light, however, the dispute  is  irrelevant.

          What is relevant is that the commission had full power to review

additional data concerning Chugach's line losses and to reexamine

its  own  determination  that  a  5.219%  line  loss  factor  was

appropriate;  yet  neither  the  commission  nor  MEA  questioned

Chugach's  continuing reliance on the approved line  loss  factor

until 1997.

          The commission, which purportedly reviewed the filings,

cannot  now argue that proper review did not take place.  Chugach

requested approval of its surcharges before passing them  through

to  its  customers.   The commission's duty  to  check  submitted

filings  for  accuracy is not excused; it has specific  statutory

authority  to  investigate and even suspend a utility's  proposed

filing prior to implementation.

          2.   Is the one-quarter limitation for true-ups prohibited by the

               rule against retroactive ratemaking?

          In  his  order, Judge Michalski holds that "going  back

more  than  one  quarter in the correction of  a  Cost  of  Power

Adjustment constitutes retroactive rate making."

          Whether  or  not  true-ups should  be  limited  to  one

quarter is not an issue raised in the points of appeal and is not

seriously  briefed by any party.  We deem issues  addressed  only

cursorily  in  briefs  waived by the  party.33   Where  an  issue

involves a question of law that is critical to a proper decision,

it  may  be  considered.34  However, in the  instant  case,  this

question  is  best  considered by the  commission35  and  is  not

critical  to  our  finding that any refund would  be  retroactive

ratemaking.   Accordingly, we decline to consider  the  allowable

duration of the true-up period.

          3.   The commission's powers do not include the power to bypass

               the rule against retroactive ratemaking.

          In  this  case,  the  commission approved  each  tariff

establishing the quarterly fuel surcharge rate before  that  rate

took effect.  Chugach argues that, even if the commission had the

general  authority to change a commission-approved fuel surcharge

          rate, it could not do so in the instant case as the procedure for

revising  the  quarterly fuel surcharge rate  is  in  the  tariff

itself.36   MEA responds that the commission's actions here  were

valid  under  our  previous case law, which stated  that  it  has

"whatever  powers are expressly granted to it by the  legislature

or  conferred upon it by implication as necessarily  incident  to

the exercise of powers expressly granted."37  We need not consider

whether  or  not  the commission's order violates the  procedures

established  in the tariff, as we have already found  any  refund

here would constitute retroactive ratemaking.

          4.   The evidence does not support the conclusion that Chugach
               knew that the actual line loss factor was below 5.219%.
               
          In its brief, MEA contends that a decision in Chugach's

favor  would allow Chugach to retain the benefit of an  incorrect

line  loss factor and that Chugach knew the line loss factor  was

incorrect  for  several years and did not use this  knowledge  to

correct  the  factor.  MEA claims that when Myles  C.  Yerkes,  a

representative  of the Alaska Electric Generation &  Transmission

Cooperative, met with Chugach he was provided line loss data  for

the 1995-1997 period.  MEA then argues that "expressly set out in

those  documents, the actual . . . line loss for those years  was

not 5.219%, but rather 3.64%, 2.61%, and 2.79%."

          Chugach denies there is any evidence that it knew  that

the  line  loss factor it was using was incorrect.  Although  the

documents MEA cites do set out line loss factors below 5.219%, it

is  not  clear when these documents were generated.  Also, Yerkes

states  in  his  affidavit that Chugach assumed the  5.219%  rate

"instead of calculating the actual value."

          The  assertion that Chugach had prior knowledge of  the

overstated line loss is not supported by the evidence.

V.   CONCLUSION

          The  prohibition against retroactive ratemaking applies

to  the generation and transmission line loss factor included  in

Chugach's  fuel  surcharge  filing.   We  therefore  AFFIRM   the

decision  of  the  superior court that reversed the  commission's

          order requiring Chugach to refund its wholesale customers amounts

collected in excess of the actual line loss factor.


_______________________________
     1     Stefan  H.  Krieger,  The Ghost  of  Regulation  Past:
Current  Applications of the Rule Against Retroactive  Ratemaking
in Public Utility Proceedings, 1991 U. Ill. L. Rev. 983, 993.

     2    In 1999, the name "Regulatory Commission of Alaska" was
substituted   for   "Alaska  Public  Utilities   Commission"   in
accordance with ch. 25,  30(a), SLA 1999.

     3    AS 42.05.371.

     4    As MEA notes,

          under 3 AAC 48.220, an original and 10 copies
          of   each  utility  tariff  filing  must   be
          provided to the Commission at least  45  days
          prior   to   the  proposed  effective   date.
          Moreover,   3   AAC  48.275  sets   forth   a
          voluminous list of supporting materials  that
          must  accompany a permanent or interim tariff
          revision.    The  Commission   examines   the
          information  provided in the  course  of  its
          investigation, which can take several  months
          to complete.
          
     5    AS 42.05.381(e).

     6    3 Alaska Administrative Code 48.710(b) (2000).

     7    3 AAC 48.770.

     8     These surcharges can also be referred to as fuel  cost
adjustment clauses.  "[T]he purpose of such a clause is to permit
prompt rate adjustment to offset unusual changes in fuel costs  .
. . ."  Southern California Edison Co. v. Pub. Utils. Comm'n, 576
P.2d 945, 947 (Cal. 1978).

     9    Krieger, supra note 1, at 1017.

     10     This  was  the  order  granting  MEA's  petition  for
reconsideration and denying Chugach's motion for reconsideration.

     11     See  Northern Alaska Envtl. Ctr. v. State,  Dep't  of
Natural Res., 2 P.3d 629, 633 (Alaska 2000).

     12    Cook Inlet Pipe Line Co. v. Alaska Pub. Utils. Comm'n,
836  P.2d  343, 348 (Alaska 1992) (citing Guin v.  Ha,  591  P.2d
1281, 1284 n.6 (Alaska 1979)).

     13     Far N. Sanitation, Inc. v. Alaska Pub. Utils. Comm'n,
825 P.2d 867,  871 n.6 (Alaska 1992).

     14     Nat'l Bank of Alaska v. State, Dep't of Revenue,  642
P.2d 811, 815 (Alaska 1982).

     15    Tlingit-Haida Reg'l Elec. Auth. v. State, 15 P.3d 754,
761 (Alaska 2001).

     16    Far N. Sanitation, 825 P.2d at 872 (quoting New England
Tel.  &  Tel.  Co.  v. Pub. Util. Comm'n, 358 A.2d  1,  20  (R.I.
1976)).

     17     "Whether  desired or not . . . .  Being or  occurring
whether desired or not."  An alteration of "will ye, nill ye,  be
you  willing,  be  you unwilling."  Webster's  II  New  Riverside
University Dictionary 1320 (1988).

     18    Krieger, supra note 1, at 1040.

     19    Far N. Sanitation, 825 P.2d at 872.

     20    Alaska Pub. Utils. Comm'n v. Municipality of Anchorage,
902 P.2d 783, 788 (Alaska 1995).

     21     In  re Cen. Vermont Pub. Serv. Corp., 473 A.2d  1155,
1161 (Vt. 1984).

     22     Maine  Pub. Serv. Co. v. Fed. Power Comm'n, 579  F.2d
659, 668 (1st Cir. 1978).

     23    AS 42.05.411(a); AS 42.05.421.

     24     3  AAC  48.730(a) provides, in part: "A cooperative's
rate  adjustment  filing under 3 AAC 48.700 -  3  AAC  48.790  is
governed by 3 AAC 48.280 and will become permanent at the end  of
the notice period described in AS 42.05.411 unless the commission
suspends the filing in accordance with AS 42.05.421."

     25     Detroit Edison Co. v. Michigan Pub. Serv. Comm'n, 331
N.W.2d 159, 164 (Mich. 1982).

     26     Kansas Gas & Elec. Co. v. State Corp. Comm'n  of  the
State  of  Kansas, 794 P.2d 1165, 1171 (Kan. App. 1990)  (holding
the  state's  commission and the utility bound  by  the  original
tariff until changed by further order of that commission).

     27    425 A.2d 174 (Me. 1981).

     28    Id. at 177.

     29    Id. at 181.

     30    511 N.W.2d 291 (Wis. 1994).

     31    Id. at 295.

     32    Id.

     33    Elsberry v. Elsberry, 967 P.2d 1004, 1006 & n.3 (Alaska
1998).

     34     Vest v. First Nat'l Bank of Fairbanks, 659 P.2d 1233,
1234 n.2 (Alaska 1983).

     35     Cole v. Ketchikan Pulp Co., 850 P.2d 642, 647 (Alaska
1993)  (remanding  issue to Workers' Compensation  Board  because
board  had  not previously considered it and because parties  had
not briefed or argued issue on appeal).

     36     Chugach  thus  argues  that  the  commission's  order
violates  four  statutes in the utility code:  AS  42.05.371,  AS
42.05.411, AS 42.05.421, and AS 42.05.431.

     37     Glacier State Tel. Co. v. Alaska Pub. Utils.  Comm'n,
724 P.2d 1187, 1190 (Alaska 1986).