Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions

Touch N' Go
, the DeskTop In-and-Out Board makes your office run smoother.


You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Alaska Exchange Carriers Association, Inc. v. Regulatory Commission of Alaska (10/7/2011) sp-6605

Alaska Exchange Carriers Association, Inc. v. Regulatory Commission of Alaska (10/7/2011) sp-6605, 262 P3d 204

        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, email 


ALASKA EXCHANGE CARRIERS                          ) 
ASSOCIATION, INC.,                                )   Supreme Court No. S-13528 
                       Appellant,                 )   Superior Court No. 3AN-08-09435 CI 
        v.                                        )   O P I N I O N 
REGULATORY COMMISSION OF                          )   No. 6605 - October 7, 2011 
ALASKA, GENERAL                                   ) 
COMMUNICATIONS, INC., d/b/a                       ) 
GENERAL COMMUNICATIONS,                           ) 
CORP., d/b/a GCI, and ALASCOM,                    ) 
INC., d/b/a AT&T ALASCOM,                         ) 
                       Appellees.                 ) 

               Appeal from the Superior Court of the State of Alaska, Third 
                Judicial District, Anchorage, Jack Smith, Judge. 

               Appearances:      Robin O. Brena and Anthony S. Guerriero, 
                Brena,   Bell   &   Clarkson,   P.C.,   Anchorage,   for   Appellant. 
                Robert E. Stoller, Senior Assistant Attorney General, Stuart 
               W.  Goering,   Assistant   Attorney   General,   Anchorage,   and 
                Daniel S. Sullivan, Attorney General, Juneau, for Appellee 
                Regulatory Commission of Alaska.           James R. Jackson and 
                Martin    M.   Weinstein,    Anchorage,     for  Appellee    General 
                Communications, Inc. d/b/a GCI. Notice of non-participation 
                filed   by   Robert    A.   Royce,    Ashburn     &    Mason    P.C., 
               Anchorage,       for  Appellee     Alascom,     Inc.,  d/b/a   AT&T 

----------------------- Page 2-----------------------

              Before:    Carpeneti, Chief Justice, Fabe, Winfree, Christen, 
              and Stowers, Justices. 

              CHRISTEN, Justice.
              STOWERS, Justice, concurring in part and dissenting in part.
              WINFREE, Justice, dissenting in part.


              Six weeks after the Regulatory Commission of Alaska approved the 2007 

Access    Charge   Rates  long  distance  telephone   companies   pay   to  local  telephone 

companies, an association of local telephone companies realized that five of the rates the 

Regulatory    Commission     approved   were  based  upon   an  erroneous  spreadsheet   the 

association included in its rate filings. The association requested that the Regulatory 

Commission      correct  the  rates. The   Regulatory   Commission     corrected  the  rates 

prospectively, but concluded retrospective application was barred by this court's case 

law on retroactive ratemaking.   The superior court agreed that retrospective application 

of the adjusted rates was impermissible, and the association appealed.  We reaffirm our 
decision in Matanuska Electric Association, Inc. v. Chugach Electric Association, Inc.1 

prohibiting retroactive ratemaking in "second look" cases, but hold that the Regulatory 

Commission has the authority to implement corrections of some procedural mistakes 

starting when notice of a mistake is given.   We remand to the Regulatory Commission 

to determine the type of error that occurred in this case and whether the error should be 

corrected retrospectively. 

       1      53 P.3d 578 (Alaska 2002). 

                                            -2-                                        6605 

----------------------- Page 3-----------------------


                 The Regulatory Commission of Alaska (RCA) regulates public utilities and 
pipeline carriers throughout the state.2  The RCA "certif[ies] qualified providers of public 

utility and pipeline services and [] ensure[s] that they provide safe and adequate services 
and facilities at just and reasonable rates, terms, and conditions."3            The RCA is composed 

of   five   full-time   commissioners        serving   six-year    terms   who    are   appointed     by  the 
governor and confirmed by the state legislature.4             The RCA also has staff that "includes 

Administrative        Law      Judges,    engineers,      financial    analysts,     telecommunications 

specialists, tariff analysts, consumer protection officers, paralegals, administrative and 
support staff."5 

                 Generally, when a utility requests a change in rates or services, the RCA 

provides   notice   to   the   public   of   the   proposal   and   allows   a   period   of   30   days   for 
comments.6        Notice     may    be  provided     as  an   advertisement      in  a  local   newspaper; 

sometimes the utilities will provide information in a flyer included with bills sent to 
consumers.7     The RCA also engages in a quasi-judicial process for purposes of assessing 

rate   proposals   -   hearing   testimony   from   experts,   witnesses,   the   parties,   and   other 

        2        R E G U L A T O R Y      C O M M 'N         O F    A L A S K A ,      A B O U T     R C A , (last visited Feb. 28, 2011). 

        3        Id. 

        4        Id. 

        5        Id. 

        6        Id. 

        7        Id. 

                                                     -3-                                               6605

----------------------- Page 4-----------------------

interested   individuals.8    The   RCA   can   either   approve   or   disapprove   of   the   utility's 

proposal at the end of this process.9 

        A.      Background On Access Charges In Alaska 

                The Alaska Exchange Carriers Association (AECA) is an association of 

non-competing local telephone companies, known as local exchange carriers.  AECA is 
authorized by the legislature10 and mandated by the RCA to represent the interests of 

local   exchange   carriers   when   the   RCA      sets   the   access   charges   that   long   distance 

telephone   companies   pay   for   the   use   of   local   telephone   systems   to   complete   long 
distance   telephone   calls.11    Prior   to   the   development   of   the   access   charge   system, 

individual local exchange carriers negotiated with individual long distance telephone 

companies to establish payment agreements for the use of local telephone systems for 
long distance telephone calls.12      With the development of the access charge system, the 

RCA began regulating the rates for these services through a complex administrative 

        8       Id. 

        9       Id. 

        10      AS 42.05.850 states: 

                The commission may require the local exchange carriers to 
                form an association to assist in administering the system of 
                access charges and may require the association to file tariffs 
                and    to  engage   in  pooling    of  exchange     access   costs  and 
                revenue if necessary to achieve the purposes of AS 42.05.800 
                - 42.05.890. 

        11      Pursuant to AS 42.05.830, "the commission shall establish a system of 

access charges to be paid by long distance carriers to compensate local exchange carriers 
for the cost of originating and terminating long distance services." 

        12      See generally Alaska Exchange Carriers Ass'n, Inc. v. Regulatory Comm'n 

of Alaska, 202 P.3d 458, 459 (Alaska 2009). 

                                                  -4-                                            6605

----------------------- Page 5-----------------------

process that balances the interests of AECA, long distance telephone companies, and rate 

payers.   The resulting access charge system was intended to create a more uniform, 

transparent, and efficient system   for dividing costs between local and long distance 


                The access charge rates payable by long distance carriers for access to the 

facilities of AECA's pooling local exchange carriers are determined on an annual basis 

in accordance with applicable RCA regulations.  Specifically, 3 Alaska Administrative 

Code (AAC) 48.440 (2006) provides: 

                Access charges shall be assessed for use of local exchange 
                telephone     utility  facilities  by  the  providers   of  intrastate 
                interexchange telecommunications services.  Those charges 
                must be determined, assessed, and collected, and revenues 
                from those charges must be distributed, in accordance with 
                [the   RCA's]     rules   as  set  out  in   the  Alaska    Intrastate 
                Interexchange Access Charge Manual . . . . 

                The    Manual    sets  forth  a  very  specific   and  deliberate   annual   process 

pursuant to which access charges of the pooling local exchange carriers are "determined, 

assessed, and collected," as well as the process by which the revenues from charges are 
"distributed," as mandated in 3 AAC 48.440.13             The Manual dictates that this annual 

process, beginning no later than October 1 and concluding by April 1 of the following 
year, is governed by a filing schedule which is established by RCA order.14 

                The two primary elements of AECA's pooled access charge rates are the 

collective revenue requirement and demand for AECA's pooling member local exchange 

        13      Manual,  1 ("(a) This Manual establishes the rules for access charges for 

intrastate access services provided by telephone companies on or after April 1, 2004. 
(b) Charges for such access services shall be computed, assessed, and collected, and 
revenues from such charges shall be distributed as provided in this Manual."). 

        14      Manual,  701(b) and 702(a). 

                                                 -5-                                           6605

----------------------- Page 6-----------------------

carriers.15  The revenue requirement is the total of the various costs incurred by a local 

exchange carrier during the course of a recent 12-month period to create and maintain 

the   lines   of   communication   between   long   distance   carriers   and   the   consumer.    The 

demand element is the number of minutes during the course of that same 12-month 

historic period that long distance carriers accessed the facilities of the pooling local 
exchange carriers.16     These actual historical revenue and demand elements are adjusted 

to reflect what are known as "known and measurable changes."17              Adjustments are made 

to convert the actual historical revenue requirement and demand figures into projections 
of what can reasonably be expected in the future.18 

                Interested   parties,   such   as   GCI   and   AT&T   Alascom,   are   permitted   to 

participate in the annual access charge proceedings and are thereby given the opportunity 

to   test   the   revenue   requirement   and   demand   estimates   advanced   by   AECA   and   its 

members.     New pooled access charge rates are presented to the RCA by AECA in the 

        15      Manual,  703(g) ("The pool revenue requirement . . . shall be divided by 

the pool demand units . . . to produce the related access charges per demand unit."). 

        16      Manual,  702(b).       Demand is more formally known as "access minutes" 

or "access minutes of use."       Manual,  801(a). 

        17      See e.g., Golden Valley Elec. Ass'n, Inc., RCA Docket U-81-048, Order 

No. 19. 5 APUC 152, 156 (1982) ("The formula for determining a utility's revenue 
requirement or total allowed earnings is the sum of the utility's reasonable operating 
expenses (including taxes) plus fair return on its investment or rate base (net plant-in- 
service).   Actual operating results for a one-year test period, adjusted for known and 
measurable changes, provide the analytical framework for determining a utility's revenue 
requirement. Total revenues may be computed on an average or year-end basis provided 
there is a proper matching of investment, expense and revenues . . . .  A utility is entitled 
to recover its reasonable operating expenses . . . .  Operating expenses are determined by 
normalizing a 'test year,' i.e., adjustments are made for known and measurable changes 
that have occurred since the end of the test year."). 

        18      Id. 

                                                 -6-                                            6605

----------------------- Page 7-----------------------

form of tariff advice letters, along with underlying work papers and calculations that 

provide specific information on the derivation of such rates. 

        B.     The 2007 Access Charge Proceedings 

               The 2007 Access Charge proceedings began with AECA, GCI, and AT&T 

Alascom filing a Joint Petition to Adopt the Access Charge Filing Schedule with the 

RCA.       The   Joint   Petition  was   adopted    by   the  RCA     on  September     26,   2006. 

Subsequently, AECA, GCI, and AT&T Alascom reached stipulations as to:                      (1) the 

revenue   requirements   for   AECA   and   its   members;   and   (2)   the   demand   for   access 

minutes.    These stipulations were accepted by the RCA.             The RCA also accepted a 

stipulation by AECA, GCI, and AT&T Alascom that the 2007 Access Charges would be 

effective on April 1, 2007. 

               Following the RCA's acceptance of the revenue requirement and demand 

stipulations, AECA submitted "Tariff Advice Letter No. 55-999" (TA55-999) to the 

RCA on May 2, 2007, with copies sent to GCI and AT&T Alascom.  Incorporated into 

TA55-999 was the "2007 Rate Development Workpapers" submitted by AECA, setting 

forth calculations for the 2007 Access Rate Charges.          The workpapers contain a series 

of spreadsheets apportioning total revenue requirements among members and dividing 

the overall revenue requirements into the requisite rate elements.          The RCA approved 

TA55-999 on June 21, 2007, with an effective date of April 1, 2007 pursuant to the 

parties' stipulation.  The RCA closed the proceedings on the 2007 Access Charge rates 

on June 29, 2007. 

               In mid-August 2007, approximately six weeks after the RCA had closed the 

2007 Access Charge proceedings, AECA discovered an error in the spreadsheets it had 

filed with the RCA as support for its 2007 Access Charges.  The error was the result of 

a failure to link spreadsheet cells correctly.     AECA contends that three steps in the rate 

calculation were affected. Five rates were affected by the error; some were increased and 

                                                -7-                                           6605

----------------------- Page 8-----------------------

some were decreased. The error resulted in the dial equipment minutes (DEM) subsidy19 

being improperly incorporated into the calculations.  The net result was a set of rates that 

caused $677,503.42 in underbilling for the year 2007. 

                On August 20, 2007, AECA submitted a "Supplemental Filing to Tariff 

Advice Letter No. 55-999" to the RCA.             This letter provided revised calculations and 

requested that the RCA modify certain 2007 rates accordingly.  The RCA responded by 

requiring   AECA   to   submit   its   request   as   a   new   tariff   advice   letter,   rather   than   as   a 

supplement to TA55-999. The next day, AECA submitted "Tariff Advice Letter No. 57- 

999" (TA57-999).        On October 10, 2007, the RCA issued public notice of TA57-999 

setting forth the changes AECA proposed to TA55-999 and inviting public comment. 

AECA provided a more detailed explanation of the error as well as the impact of the 

under-billing in response to a request for additional information from the RCA. 

                GCI responded to the request for public comment with a written argument 

that retroactive application of   the corrected rates should not be permitted under this 

court's decision inMatanuska Electric Association, Inc. v. Chugach Electric Association, 

        19      See Mark P. Trinchero & Holly Rachel Smith, Federal Preemption of State 

 Universal Service Regulations Under the Telecommunications Act of 1996, 51 FED . 
COMM . L.J. 303, 329 n.154 (1996) ("The DEM weighting subsidy, established prior to 
the [Telecommunications Act of 1996], is based on the premise that smaller telephone 
companies realize higher local switching costs per line because smaller companies are 
unable to realize economies of scale.  As a result, the DEM weighting rules allow small 
companies to recover local switching costs through interstate traffic . . . . The separations 
rules   allocate   local   switching   equipment   costs   between   the   interstate   and   intrastate 
jurisdictions based on the jurisdiction's relative number of dial equipment minutes of use 
(DEM).  Local exchange carriers with fewer than 50,000 lines are allowed to allocate an 
additional   amount   of   local   switching   costs,   determined   by   weighting   the   interstate 
minutes of use, to the interstate jurisdiction.        DEM weighting is funded by the entities 
that pay switched access charges, [long distance carriers] and their customers."). 

                                                   -8-                                            6605

----------------------- Page 9-----------------------

Inc.20  AECA submitted comments arguing to the contrary.  On November 2, 2007, the 

RCA issued an order approving the use of the corrected rates prospectively, but holding 

open     for  further   investigation    the  question    whether    the   rates  should    be  applied 

retrospectively   to   April   1,   2007.  AECA   and   GCI   both   filed   motions   for   summary 

disposition, agreeing that no genuine issue of material fact existed, but disagreeing about 

whether retrospective application of the new rate was permissible under Alaska law.  The 

RCA granted GCI's motion on May 16, 2008, concluding that: 

                We do not find . . . that the unintended error contained in 
                TA55-999   is   merely   ministerial   and   that   it   might   thereby 
                allow   the   new   rate   proposed   in   TA57-999   to   be   changed 
                retroactively.  We deny retroactive application of TA57-999 
                to April 1, 2007. To act otherwise would violate the principle 
                of retroactive ratemaking articulated by the Alaska Supreme 

AECA's Petition for Reconsideration, which GCI opposed, was denied by the RCA. 

                AECA appealed the RCA's decision to the superior court.  Following full 

briefing by the parties, oral argument was held on April 8, 2009.                The superior court 

denied   AECA's   administrative   appeal   on   April   16,   2009,   concluding   "[a]   thorough 

reading of case law and the Alaska statutes that set forth the procedures to be followed 

in establishing new, revised tariffs supports the RCA's holdings."                The superior court 

concluded that TA57-999 "may be [applied] prospective[ly] only" because "it is clear 

that the procedures involved here . . . [are] subject to the doctrine of retroactive rate- 


        20      53 P.3d 578 (Alaska 2002). 

                                                  -9-                                               6605 

----------------------- Page 10-----------------------


                 When   the   superior   court   acts   as   an   intermediate   court   of   appeal,   we 
independently scrutinize directly the merits of the administrative determination.21                    For 

questions of law where no agency expertise is involved, we apply the "substitution of 
judgment" test.22       When a matter involves agency expertise we apply a "reasonable 

basis" test, giving deference to the agency's specialized knowledge and expertise.23 


                 The   first   issue   in   this   case   is   whether   the   RCA   properly   relied   on   the 

doctrine   of   retroactive   ratemaking   when   it   decided   that   the   corrected   2007   Access 

Charge      could   only   be   applied    prospectively     following     its  November      2007    order 

approving      the   corrected    rate.  AECA       concedes    that   retroactive   ratemaking      is  not 

permitted   in   Alaska,   but   argues   that   correcting   the   error   in   its   worksheet   does   not 

constitute     "retroactive    ratemaking."      Alternatively,     AECA      argues    that   even  if   the 

doctrine   of   retroactive   ratemaking   applies,   the   corrected   rate   should   nonetheless   be 

implemented:        (1)    retrospectively     to  April   1,  2007   because     of  the  parties'   prior 

stipulations;   or   (2)   at   least   to   August   21,   2007   when   AECA   initially   requested   the 

corrected rate.     GCI argues that our precedent in Matanuska Electric Association, Inc. 

        21       Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903 

(Alaska 1987) (citing Amerada Hess Pipeline Corp. v. Alaska Pub. Utils. Comm'n , 711 
P.2d 1170, 1175 (Alaska 1986)). 

        22       Lakloey, Inc. v. Univ. of Alaska, 157 P.3d 1041, 1045 (Alaska 2007) (citing 

Handley v. State, Dep't of Revenue, 838 P.2d 1231, 1233 (Alaska 1992)). 

         23      Storrs v. State Medical Bd., 644 P.2d 547, 554-55 (Alaska 1983) (citations 


                                                   -10-                                              6605

----------------------- Page 11-----------------------

v.   Chugach      Electric    Association,     Inc.24  directly   controls    this  case    and   prohibits 

retroactive application of the corrected 2007 Access Charge.  The RCA similarly argues 

that "[i]n view of this Court's articulation of the policies underlying, and the rationale 

for,   the   prohibition   against   retroactive   ratemaking,   .   .   .   the   multiple   retroactive   rate 

adjustments sought by AECA must be precluded."                   The RCA alternatively argues that 

even if we decide that an exception to the retroactive ratemaking rule applies to this case, 

our court "should merely authorize - but not compel - [the RCA] to grant the relief 

sought by AECA," and remand the case back to the RCA to determine how it should 

exercise its discretion. 

        A.	      We   Affirm   Our   Holding   In Matanuska   Electric   Association,   Inc. v. 
                 Chugach Electric Association, Inc. 

                 In Matanuska Electric Association, Inc. v. Chugach Electric Association, 

Inc., the parties did not dispute the impermissibility of retroactive ratemaking under 
Alaska law; they disputed whether this prohibition applied to the facts of their case.25 

Chugach Electric Association (Chugach) sold wholesale electricity to Matanuska Electric 
Association   (MEA).26        The   case   dealt   with   "the   use   of   an   estimated   generation   and 

transmission system energy loss in Chugach's fuel surcharge filings."27                  In other words, 

Chugach used a "line loss" factor to adjust its base rate to reflect the amount of energy 
lost in the process of generating electricity and transmitting it across power lines.28                The 

amount of energy lost through generation and transmission varies and cannot always be 

        24       53 P.3d 578. 

        25       Id. at 583-84. 

        26       Id. at 580. 

        27       Id. at 581. 

        28       Id. 

                                                    -11-	                                             6605

----------------------- Page 12-----------------------

accurately predicted.29        To compensate Chugach for this loss, line loss factors were 

computed in a fuel surcharge.30          But because the line loss fluctuates, the fuel surcharge 

was an estimate and it was acknowledged that "the amount collected might fall short or 
exceed the actual cost."31 

                 Starting in "the mid-1980s, Chugach [] used a line loss factor of 5.219% in 
its rate filings for wholesale customers."32          But in 1997 "Chugach and MEA discovered 

a discrepancy."33      The 5.219% loss claimed by Chugach was substantially higher than 

"the actual line loss experienced by Chugach in 1995, 1996, and 1997."34 

                 MEA argued that because Chugach submitted an inaccurate estimate of the 

line   loss   factor,   MEA   was   entitled   to   a   refund   based   on   the   difference   between   the 
inaccurate line loss factor and the accurate one.35            Chugach argued that the RCA could 

only adjust its rates prospectively - any retrospective application would violate the rule 
against retroactive ratemaking.36           The RCA agreed with MEA and entered an order 

requiring Chugach to recalculate fuel surcharges for the years 1995 through 1997 using 

actual   line   loss   factors   and   refund   the   difference   between   the   original   and   revised 

        29       Id. 

        30       Id. 

        31       Id. 

        32       Id. at 582. 

        33       Id. 

        34       Id. 

        35       Id. at 582-83, 587. 

        36       Id. at 582-83. 

                                                    -12-                                               6605

----------------------- Page 13-----------------------

surcharge.37    But the superior court reversed the administrative ruling,38 and our court 

affirmed     the superior     court's   decision.39    Setting    out   the  contours    of  the  general 

prohibition against retroactive ratemaking, our decision in Matanuska explained: 

                A fundamental rule of ratemaking is that rates are exclusively 
                prospective in nature.       One purpose of having such a rule is 
                a consumer's right to rely on rates set by [the RCA].              Some 
                reliability,    of   course,   is  essential    to  the   public    utility 
                regulatory      system.     If   commissions       could   retroactively 
                change      rates   willy-nilly,   and  ratepayers'    bills   and  utility 
                revenues      were    continually    subject    to  large   fluctuations, 
                serious questions would arise concerning the legitimacy of 
                the ratemaking process.   Thus, the rule is critical for a utility 
                to    plan   its  finances.     Other     purposes     for   prohibiting 
                retroactive   rates   include   investor   confidence,   utility   credit 
                rating, and the integrity of service.        And retroactivity, even 
                where permissible, is not favored, except upon the clearest 

MEA argued that the fuel surcharges at issue in Chugach's rate were distinguishable 

from regular RCA-made rates, and therefore were not subject to the prohibition against 
retroactive   ratemaking.41      In   addressing   this   argument,   we   considered   what   type   of 

review the RCA provided for "fuel surcharge filings in Alaska and whether such review 

is adequate to consider a fuel surcharge a rate, applicable to the prohibition against 

        37      Id. at 582. 

        38      Id. at 583. 

        39      Id. at 587. 

        40      Id. at 583 (internal quotations omitted). 

        41      Id. at 584. 

                                                   -13-                                             6605

----------------------- Page 14-----------------------

retroactive ratemaking."42  We concluded that the fuel surcharge constituted a RCA-made 

rate   subject   to  the  general   rule  against   retroactive   ratemaking     because:     (1)   fuel 

surcharges   in   Alaska   receive   a   documentary   review;   and   (2)   the   RCA's   review   of 
Chugach's fuel surcharge was substantial enough to constitute a rate.43                We deemed it 

relevant that the filings for fuel surcharges were subject to the same statutory notice and 
review requirements as the utility's base rates.44         MEA and the RCA characterized the 

RCA's review of fuel surcharge filings as "purely ministerial," but we disagreed, finding 

that it was within the RCA's power to question and investigate the validity and accuracy 
of the line loss factors Chugach submitted, not to simply accept them as presented.45 

And we concluded that requiring Chugach to repay past rates based on the inaccuracy 

of its line loss factor estimate would violate the rule against retroactive ratemaking: 

                The law supports this approach.          The 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 RCA] can take is 
                to   prospectively     revise   rates   in  an  effort   to  set  more 
                appropriate ones. . . . Thus, the time for challenging a fuel 
                adjustment      rate  is  before   the   rate  is  approved     by   the 

        42      Id. 

        43      Id. at 584-86. 

        44      Id. at 584-85.     The statutory requirements we referred to are set out in 

AS 42.05.411(a) and AS 42.05.421. 

        45      Id. at 585. 

        46      Id. at 585-86 (internal citations and quotation marks omitted; emphasis 


                                                 -14-                                            6605

----------------------- Page 15-----------------------

                The primary rationale articulated in Matanuska for prohibiting retroactive 

ratemaking   is   that   inaccurate   estimates   are   not   adequate   justification   for   imposing 

retroactively altered rates based on more accurate after-the-fact data about what the rates 

should have been.  The goals of the rule against retroactive ratemaking are to ensure that 

utilities engage in efficient and effective ratemaking to produce estimates that accurately 

represent their actual costs, and to protect parties who rely on rates approved by the 

RCA.     The rule creates an incentive for accurate estimates in the ratemaking process; 

without it, utilities would have less incentive to scrutinize estimates because they could 

alter a rate if more information became available after the fact. 

        B.	     The Rationale Supporting The Rule Against Retroactive Ratemaking 
                Outlined In Matanuska Electric Association, Inc. v. Chugach Electric 
                Association, Inc. Does Not Apply To All Mistakes. 

                1.	     The error in Matanuska Electric Association, Inc. v. Chugach 
                        Electric Association, Inc. was an inaccurate projection. 
                In Matanuska, we extensively cited a 1991 law review article47 examining 

how various jurisdictions have applied the rule against retroactive ratemaking in different 

        47      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 (1991).      Krieger's article is widely cited in other jurisdictions as well.          See, 
e.g., Sugarmill Woods Civic Ass'n, Inc. v. Fla. Water Servs. Corp., 785 So.2d 720, 726 
(Fla. Dist. App. 2001); Pub. Advocate v. Pub. Utils. Comm'n, 718 A.2d 201, 210 (Me. 
1998) (Saufley, J., dissenting);S. Union Co. v. Dep't of Pub. Utils., 941 N.E.2d 633, 641 
(Mass. 2011); Application of Minnegasco , 565 N.W.2d 706, 712 (Minn. 1997); In re 
Comm'n Investigation Into 1997 Earnings of U S West Commc'ns, Inc., 980 P.2d 37, 43 
(N.M.   1999);  In     re  Island  Hi-Speed     Ferry,   LLC,   852    A.2d   524,   534  (R.I.   2004) 
(Flanders, J., dissenting);Pub. Util. Comm'n of Tex. v. GTE-Southwest, Inc., 901 S.W.2d 
401, 406 (Tex. 1995); Wis. Power & Light Co. v. Pub. Serv. Comm'n, 511 N.W.2d 291, 
297 (Wis. 1994) (Abrahamson, J., dissenting);PacifiCorp v. Pub. Serv. Comm'n of Wyo., 
103 P.3d 862, 875 (Wyo. 2004). 

                                                 -15-	                                           6605

----------------------- Page 16-----------------------

contexts.48    All parties to this appeal cite at length to this article; the superior court also 

relied on our previous discussion of the article in reaching its decision.  The article, The 

Ghost   of   Regulation      Past:    Current   Applications       of  the   Rule   Against   Retroactive 

Ratemaking in Public Utility Proceedings, forms the foundation of the parties' discussion 

of retroactive ratemaking and the distinction between "second look" and "procedural 

mistake" cases. 

                 AECA argues that Matanuska dealt with altering a rate after a "second 

look" at an inaccurate estimate, that this case does not concern a "second look" at a rate 

derived from an inaccurate estimate, and that this is not a case of retroactive ratemaking. 

GCI argues that in Matanuska, we "rejected the line of cases in other jurisdictions that 

create a general exception to the rule against retroactive ratemaking for fuel adjustment 

clauses,   and,   instead,   placed   Alaska   firmly   in   the   camp   of   jurisdictions   that   strictly 

adhere to the rule prohibiting retroactive ratemaking."  The superior court agreed with 

GCI,   viewing   our   holding   in  Matanuska   as   "a   strict   interpretation   of   the   doctrine" 

prohibiting retroactive ratemaking. 

                 The issue inMatanuska was specific: whether the RCA could retroactively 

replace   an   inaccurately   estimated   line   loss   factor   for   a   more   accurate   after-the-fact 
calculation that reflected Chugach's actual experience.49             The controversy in Matanuska 

is further distinguishable from the facts of this case because Chugach's erroneous line 
loss   factor   was    not   discovered   for   several   years.50   As   explained,   our   concern   in 

        48       53 P.3d at 580 n.1, 581 n.9, 583 n.18. 

        49       Id. at 581-82. 

        50       Id. at 582.    The line loss factor was introduced in the mid-1980's.  The 

estimation error impacted rates in 1995, 1996, and 1997.                 The error was discovered in 

                                                    -16-                                              6605

----------------------- Page 17-----------------------

Matanuska was the inaccurate prediction of Chugach's future line loss factor, because 

"the   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."51            Our holding in Matanuska was 

consistent with Krieger's position that "the rule [against retroactive ratemaking] requires 

that when determining each of the terms of the revenue requirement formula, when 

calculating     the   amount   of   revenue   to   be   collected   under    proposed   rates,   or   when 

allocating rates between classes or within a class, [the RCA] cannot adjust for past losses 
or    gains   to  either   the  utility,  consumers,      or   particular   classes    of  consumers."52 

Matanuska does not reflect an absolute bar against the adoption of any corrected rates 

on a retrospective basis, as GCI argues; the question presented in Matanuska was limited 

to a straightforward application of the doctrine in a case involving an incorrect projection 

of future costs. 

                Matanuska represents a "second look" case where the prohibition against 

retroactive ratemaking clearly applies.            The facts of AECA's case are different.  As 

Krieger explains, "a rigid interpretation of the rule against retroactive ratemaking would 

. . . prohibit any modification by the commission of a prior rate order that affects past 

utility gains or losses, [but] courts have allowed such changes in situations [where] the 
commission is remedying procedural mistakes."53 

                 Examples of "procedural" or clerical mistakes include those in Mike Little 

Gas   Co.   v.   Public   Service   Commission,   where   a   gas   company   applied   for   a   rate   of 

        51      Id. at 585 (quoting Detroit Edison Co. v. Mich. Pub. Serv. Comm'n, 331 

N.W.2d 159, 164 (Mich. 1982)). 

        52       Krieger, supra note 47, at 997. 

        53      Id. at 1002. 

                                                   -17-                                              6605

----------------------- Page 18-----------------------

"$3.5752 for two Mcf's of natural gas" and the agency issued an order incorrectly setting 
the rate at "$3.5752 per Mcf for the first two Mcf's."54               This error would have had a 

significant impact on the revenue collected by the utility - but the court recognized it 

was essentially a typographical error, and it was an error made by the Commission itself. 
Under these circumstances, the Commission was permitted to correct the error.55                       The 

rate correction in Mike Little was entirely consistent with the underlying reasons for the 

rule against retroactive ratemaking:  (1) the court found the parties were not justified in 
relying on the incorrect order issued just days earlier;56 (2) permitting the correction of 

the order did not encourage sloppy or inefficient estimates by the utility;57 and (3) the 

correction was not shown to implicate any of the other harms associated with retroactive 

                 Other jurisdictions have similarly recognized a category of "procedural" 

errors, at least some of which may be retroactively remedied.                 In Illinois Power Co. v. 

Illinois Commerce Commission, the Illinois Court of Appeals held: 

                 If a mere mathematical error resulted in a double reduction 
                 for the disallowed deferred charges, the mistake should be 
                 remedied.      If,  however,     the  calculation    was    designed    to 
                 account   for   errors   .   .   .   on   a   prospective   basis,   then   what 

        54       574 S.W.2d 926, 927 (Ky. App. 1978). 

        55      Id. at 928. 

        56      Id. at 927. 

        57      Id. at 927-28. 

        58      Id. 

                                                   -18-                                              6605

----------------------- Page 19-----------------------

                 [Illinois Power] perceives as a ministerial error was in fact an 
                 informed policy decision and should not be disturbed.[59] 

The Indiana court of appeals reached a similar conclusion in its unpublished decision 

Indiana Office of Utility Consumer Counselor v. Duke Energy Indiana, Inc., holding that 

where an energy company, "in previously mis-stating its [construction cost] balances . . ., 

failed to comply with FERC accounting guidelines," a subsequent accounting correction 

did   not   create   "the   type   of   situation   that   should   be   controlled   by   the   rule   against 
retroactive     ratemaking."60       The    court   explained:       "We    also   fail  to  perceive    how 

permitting   Duke   to   make   this   accounting   correction   would   negatively   affect   utility 

planning, investor confidence, utility credit rating, or integrity of service [i.e., the factors 

identified by the Indiana court as underlying the purposes of the rule against retroactive 

                 An   example   of   a   mistake   that   was   considered   substantive   and   was   not 

permitted      to  be   corrected    occurred     in  General      Motors     Corp.    v.  Public    Service 
Commission.62       There, a plant producing synthetic natural gas closed two months after 

the Public Service Commission issued a new rate.63  Michigan's Attorney General, as an 

intervenor, sought to have the Commission retroactively apply a new rate based on this 
change in circumstances (the mothballing of the plant).64                The court concluded that the 

change in circumstances did not present a justifiable reason to alter the rates retroactively 

        59       626 N.E.2d 713, 724 (Ill. App. 1994). 

        60       896 N.E. 2d 936, 2008 WL 4892553 at *4 (Ind. App. 2008). 

        61       Id. 

        62       438 N.W.2d 616 (Mich. App. 1988). 

        63       Id. at 587. 

        64       Id. at 591. 

                                                    -19-                                               6605

----------------------- Page 20-----------------------

for the two months the plant was operational.65               This result is consistent with the rule 

against retroactive ratemaking because the error in General Motors was in establishing 

a rate based on a projection, ultimately proven wrong, that the plant would remain open. 

General      Motors   represents      a  "second     look"   error   where    a  change     in  anticipated 

circumstances was used as a justification for altering a rate; only in hindsight did the rate 

appear to be incorrect.        As Krieger explains, "the rule against retroactive ratemaking 

encourages efficiency because the utility   will endeavor to increase profits under the 

approved rate.      If the utility knows that it can recoup past losses retroactiv[ely] or that 

ratepayers   can   obtain   refunds   of   excess   profits,   it   will   have   little   or   no   incentive   to 
operate efficiently."66 

                 Other types of mistakes require further examination of the rationale for the 

rule against retroactive ratemaking to determine whether a particular mistake justifies 

retrospectively altering a rate.        Krieger's article provides an overview of how different 

courts treat the rule of retroactive ratemaking in different contexts and it examines the 

purpose behind the doctrine.          Krieger proposes the following outcome: 

                 [C]ommissions         and    courts   should     apply   a   presumption 
                 against retroactivity but analyze the particular circumstances 
                 of   the   case   to   determine   if   the   presumption   should   apply. 
                 They should first consider the rationality and legitimacy of 
                 the   expectations      of  the   parties   in   regard   to   previously 
                 approved   rates.      They   should   then   examine   the   potential 
                 effects of retroactive relief on economic incentives for the 
                 utility.  If it appears that reliance on the prior rates was not 
                 rational or legitimate and that a retroactive remedy would not 

        65       Id. 

        66       Krieger, supra note 47, at 1042. 

                                                    -20-                                                 6605 

----------------------- Page 21-----------------------

                 create    substantial    efficiency    disincentives,     courts   should 
                 allow such relief.[67] 

Applying this rule in the context of "procedural mistake" cases, Krieger states that "the 
proposed method generally would allow retroactive relief."68 

                 We do not decide that application of these considerations "would generally" 

allow for retroactive relief in "procedural mistake" cases; in our view, even "procedural 

mistake" cases will have to be examined individually and with caution.                      But we agree 

with Krieger that at one end of the spectrum "it is difficult to understand how a party 

could have a rational or legitimate expectation that a court would not rectify clerical 
[errors]   in   a   commission   order."69     And   we   agree   with   AECA   that   one   factor   that 

distinguishes   its   case   from   some   others      is   the   brief   period  of   time   its   error   went 

uncorrected.  But protecting the reliance interests of consumers and fostering economic 
efficiency of utilities are   primary concerns of the doctrine,70 and the parties sharply 

disagree about whether GCI and AT&T Alascom relied on the erroneous 2007 rates to 

their detriment.  As discussed below, this is a question of fact best resolved by the RCA 

using its specialized expertise. 

                 2.	     Recognizing   procedural mistakes as distinct from prohibited 
                         retroactive      ratemaking        is  consistent     with    the   policies   and 
                         purposes       underlying       our    decision     in  Matanuska         Electric 
                         Association, Inc. v. Chugach Electric Association, Inc. 

        67       Id. at 1044-45 (citations omitted).

      Id. at 1045.

        69       Id.

      Matanuska Elec. Ass'n, Inc. v. Chugach Elec. Ass'n, Inc., 53 P.3d 578, 583 

(Alaska 2002); Krieger, supra note 47, at 1038-1043. 

                                                    -21-	                                             6605

----------------------- Page 22-----------------------

                GCI     challenges     AECA's      distinction   between     "procedural"     or  clerical 

mistake cases and "second look" cases, arguing that "human error" was to blame for 

Chugach's failure to update its line loss factor to reflect actual experience, and that 

"human   error"   was   also   responsible   for   the   failure   to   link   the   spreadsheets   filed   by 

AECA.  AECA argues that GCI misunderstands the rationale underlying the rule against 

retroactive ratemaking, and that the goals of the rule are not undermined by correcting 

the rate in this case. 

                We think AECA has the better argument.  As we have explained, the error 

in this case cannot be equated to a "second look" at an inaccurate prediction of the cost 

of providing service to utility customers.  Further, rectifying the error in this case could 

return the parties to the position they agreed to when they entered into stipulations for 

the   demand      and   revenue    requirements      to  determine     the  2007    rates.   It   appears 

uncontested   that   the   corrected   rates   would   have   been   adopted   as   the   2007   rates   if 
AECA's spreadsheets had been properly linked.71 

                The parties do not dispute that because of AECA's spreadsheet error, GCI 

and its ratepayers will receive a windfall at the expense of AECA and its ratepayers. 

GCI emphasizes that it was AECA, and not the RCA, that made the procedural mistake, 

suggesting that AECA must live with the consequences of its own error.  But GCI does 

not address the potential situation where AECA's error cuts in its favor. And during oral 

argument before our court, GCI declined to answer whether it would advocate for the 

same bright-line rule if AECA's error led to AECA receiving a windfall rather than GCI. 

GCI insists that the issue of overbilling as a result of a calculation mistake "is not before, 

        71      After GCI received notice of this error, it examined the corrected worksheet 

and did not object to the prospective application of the corrected rate AECA proposed. 

                                                  -22-                                                6605 

----------------------- Page 23-----------------------

and need not be addressed by, this Court," but this hypothetical seems to be the other 

side of the same problem. 

                 3.	     The     level   of   complexity      in   correcting     the   error    is  not    a 
                         determining factor in whether the mistake is procedural. 

                 While     the   underlying     facts   of  this  case   are   undisputed,     both    sides 

characterize the error and its impact quite differently.              AECA characterizes its error as 

a "simple calculation 'mistake,' " based on the failure to link spreadsheets correctly.  But 

GCI argues that "[t]he rate changes in TA57-999 . . . required the approval of two new 

tariff   pages   and   changed   5   different   rates,"   and   that   "the   error   at   issue   occurred   in 

AECA's calculation of the revenue requirement, not in the calculation of the rates." GCI 

also argues that the RCA's determination that the error was not "merely ministerial" is 

backed   up   "by   AECA's   own   description   of   the   error,   which   explains   that   it   was   a 

computational error buried in the spreadsheets and work papers supporting the requested 


                 From the record available to our court, it is difficult to tell which party's 

characterization of the error is more accurate.  Under AECA's characterization, once the 

underlying revenue requirement and demand factors are determined (in this case through 

stipulations),   the   rest   of   the   ratemaking   process   is   fairly   mechanical,   following   the 

"noncontroversial rate calculation procedures" set forth by the Manual.                      GCI and the 

RCA paint a more complex picture; GCI describes a multi-step process leading from the 

stipulations of the pooled revenue requirement and demand to the actual access charge 

rate.  The RCA distinguishes between the stipulated pooled revenue requirements and 

the "subcomponent 'intrastate revenue requirements' that are ultimately used to develop 

the five specific . . . intrastate access charge rates which are at issue here." 

                 The approval of the rate change prospectively, without dispute about the 

material facts, indicates that the steps that follow the parties' stipulations to the revenue 

                                                    -23-	                                             6605

----------------------- Page 24-----------------------

requirement and demand calculations may be procedural.                If that is correct, AECA's 

erroneous spreadsheet may be fairly categorized as a procedural mistake even if the 

calculations that follow it are complicated.        As AECA suggested in its reply brief, no 

"disputed     issues  existed   after  the  approval   of   the  revenue  requirement,"     and   "no 

controversies between the parties remained to be determined by [the RCA]."                  Having 

reviewed the parties' arguments, it is not clear from the record available to our court that 

correcting     AECA's      spreadsheet    error  would     violate  the  underlying     reasons    for 

retroactive ratemaking rule we articulated in Matanuska Electric Association, Inc. v. 
Chugach Electric Association, Inc.72 

        C.	     The RCA Has The Authority To Determine The Type Of Mistake That 
                Occurred        In   The     Ratemaking         Process     And     Whether        To 
                Retrospectively Apply The Corrected Rate. 

                At oral argument before our court, the RCA made clear that its decision to 

deny    any   retrospective    application   of  the  corrected   2007    rates  was   based   on  its 

understanding that it lacked the authority to grant this relief.   But it is apparent that there 

are some cases in which the RCA would be obliged to correct an erroneous rate - such 

as correcting a typographical error of its own.         Because the RCA's expertise makes it 

uniquely well suited to identify the type of error at issue, the ramifications of correcting 

it, and the ways in which errors do or do not implicate the considerations we articulated 

in  Matanuska   Electric   Association,   Inc.   v.   Chugach   Electric   Association,   Inc.,   we 

remand this case to the RCA for consideration of AECA's request. On remand, the RCA 

is empowered to retrospectively apply the corrected 2007 rates if, after considering the 

        72      53 P.2d 578. 

                                                -24-	                                            6605 

----------------------- Page 25-----------------------

underlying rationale for the doctrine against retroactive ratemaking, it determines this is 
an appropriate case for making such an adjustment.73 

        D.	     "Procedural Mistakes" May Only   Be Corrected To The Date That 
                Public Notice Of The Mistake Is Provided. 

                AECA argues that even if the prohibition against retroactive ratemaking is 

implicated by the facts of this case, RCA should nonetheless have instituted the revised 

rate prior to its November 2, 2007 order.          It argues for an April 1, 2007 effective date 

based on the parties' stipulation that the 2007 rates would become effective on that date. 

Alternatively, AECA argues that the corrected rate should have been implemented as of 

August 21, 2007, when public notice was given of the spreadsheet error. 

                Having considered the parties' arguments, we hold that notice of a proposed 

rate is presumptively sufficient to overcome the reliance interest concerns raised when 
correcting a "procedural mistake."74        The rule that a corrected rate may only be corrected 

to the date of public notice provides an incentive to utilities to provide notice of errors 

as soon as possible.  Thus, if the RCA finds that correction in this case is appropriate, it 

may correct the rate starting August 21, 2007 - the date AECA gave public notice of 

the mistake - unless it is shown that other parties detrimentally relied on the approved 

rate   in   the   interval   after   notice   of   the   error   was   made   public   and   before   the   order 

approving use of the corrected rate. 

        73      See, e.g., Alaska Pub. Utils. Comm'n v. Municipality of Anchorage, 902 

P.2d 783, 788 (Alaska 1995) (including "utility planning, investor confidence, utility 
credit rating, and the integrity of service" among the "several reasons for the general rule 
against retroactive ratemaking"). 

        74      See Krieger, supra note 47, at 1046. 

                                                  -25-	                                           6605

----------------------- Page 26-----------------------


             We VACATE the order of the superior court and REMAND this case to the 

RCA for further proceedings consistent with this opinion. 

                                        -26-                                   6605

----------------------- Page 27-----------------------

STOWERS, Justice, concurring in part and dissenting in part. 

              I agree in part and disagree in part with the court's opinion.     I begin by 

noting that the court's opinion, recognizing that the Regulatory Commission of Alaska 

(RCA) has the authority to correct some procedural mistakes, does not expressly hold 

that these permissible corrections would constitute retroactive ratemaking.   I think a fair 

reading of the opinion implies that these corrections are retroactive ratemaking, and the 

court is carving out a narrow exception where it is permissible for the RCA to engage in 

retroactive rulemaking. 

              My first disagreement with the court arises from my conclusion that Alaska 

Exchange Carriers Association's position in this appeal is correct:     this is not a case of 

retroactive ratemaking, but rather a case of a correction of a mathematical or clerical 

mistake; in other words, a procedural correction to a procedural mistake.      I would hold 

that, on the facts of this case and given the nature of the error and the simple way that it 

can be corrected, any such correction would be merely a mathematical, or clerical, or 

                                            -27-                                       6605

----------------------- Page 28-----------------------

procedural correction - not ratemaking.1            Under this analysis, it is unnecessary to create 

        1        See Bldg. Owners and Managers Ass'n of Metro. Detroit                    v. Mich. Pub. 

Servs. Comm'n, 383 N.W.2d 72, 80-81 (Mich. 1986), wherein the court explained: 

                plaintiffs contend that the subsequent validation of the 1970 
                 rate   order   amounted   to   a   retroactive   rate   increase   that   is 
                prohibited by law. 

                 We do not agree.        A rate was set and a subsequent hearing 
                 supplied the necessary finding of reasonableness after proper 
                 notice to the ratepayer.      The rate was not changed after the 
                 fact . . . . 

                A challenge to a rate based on a procedural flaw does not 
                 render its subsequent validation a retroactive rate. 

(Emphasis added) (citation omitted). 

                 Similarly, inIll. Power Co. v. Ill. Commerce Comm'n, 626 N.E.2d 713, 724 
(Ill. App. 1994), the court explained: 

                If a mere mathematical error resulted in a double reduction 
                for the disallowed deferred charges, the mistake should be 
                 remedied.      If,  however,     the  calculation    was    designed    to 
                 account   for   errors   .   .   .   on   a   prospective   basis,   then   what 
                 [Illinois Power] perceives as a ministerial error was in fact an 
                 informed policy decision and should not be disturbed. 

(Emphasis added). 

                 And in Ind. Office of Util. Consumer Counselor v. Duke Energy Ind., Inc., 
896 N.E.2d 936, 2008 WL 48922553 at *4-5 (Ind. App. Nov. 14, 2008), the court said: 

                 We agree with Duke that this is not the type of situation that 
                 should     be    controlled     by   the   rule   against     retroactive 
                 ratemaking.      What   occurred   in   this   case   is   that   Duke,   in 
                previously mis-stating its [construction cost] balances . . ., 
                 failed   to   comply   with   FERC   accounting   guidelines.       This 
                 resulted in an erroneous stating of the total project balances 
                 of Duke's under-construction [property].              It would appear 

                                                   -28-                                              6605

----------------------- Page 29-----------------------

any exception to the rule against retroactive ratemaking. 

                 Regardless, whether the correction is retroactive ratemaking or not, I agree 

with the court that RCA has the authority to correct mathematical, clerical, or procedural 

mistakes of the kind in this case, for the reasons given by the court's opinion. 

                 My second disagreement with the court goes to the remedy on remand. 

Given that all parties agree that the underlying assumptions and data (i.e., the numbers 

that   were   used   to   generate   the   agreed   upon   rate)   are   correct,   and   that   but   for   the 

procedural mistake made in this case the rate would have been correctly calculated, I 

would remand this case to the RCA with instructions to make the necessary correction. 

I see no reason to have RCA further consider any issue in this case; the parties have 

previously agreed to the correct figures and calculations and RCA has already approved 

those figures and calculations, both with respect to the original rate and with respect to 

the rate's prospective application.         Under these circumstances, all the court need do is 

explain that RCA, with its new authority to correct procedural errors, should correct this 



                 that if Duke had not made this accounting correction . . . the 
                 capital   balances   for   those   projects   would   continue   to     be 
                 erroneous in the future.   Duke chose instead to correctly state 
                 the total [construction costs] that should have been calculated 
                 according to FERC guidelines. . . . 

                 We also fail to perceive how permitting Duke to make this 
                 accounting       correction     would     negatively      affect   utility 
                planning,      investor     confidence,     utility   credit   rating,   or 
                 integrity of service [the factors identified by Indiana courts 
                underlying       the  purposes     of   the  rule   against   retroactive 

                                                   -29-                                              6605

----------------------- Page 30-----------------------

                 Finally, I disagree with the court's resolution of the effective date of the 

correction:   the date that public notice is given of the error.  The underlying rationale of 

this   effective   date   is   to   create   an   incentive   in   the   party   who   will   benefit   from   the 

correction to promptly identify and seek to correct mathematical, clerical, or procedural 

errors.   While this might be a laudatory policy in some cases, I see no justification for 

such a rule in this case.  As is well explained in the majority opinion, all parties and the 

RCA agreed on the assumptions and data supporting the original rate - that is to say, 

there is no dispute that the inputs and numbers used to generate the original rate are 

correct.  A procedural error was made that made the calculation of the rate incorrect.  All 

that is necessary to correct this procedural error is to use the agreed-upon numbers in the 

correct calculation.      In the absence of any showing that any party acted in a way to 

improperly or unfairly benefit from the failure to discover the calculation error, I see no 

good reason not to simply correct the calculation nunc pro tunc to the effective date of 

the original rate.    I would require the RCA to do so in this case. 

                 Hypothetically,       if  there  were    some    evidence     that  a  party   had    acted 

improperly or unfairly to obtain a benefit from a procedural calculation error, then I 

would   agree   with   Justice   Winfree's   dissent   and   hold   that   the   RCA   should   use   its 

discretion to determine an appropriate corrective date. One of the factors the RCA could 

consider is the majority's policy rationale for using the date of first public notice of the 

error - to create an incentive to promptly identify and correct procedural errors. 

                 In all other respects, I concur with the court's opinion. 

                                                    -30-                                              6605

----------------------- Page 31-----------------------

WINFREE, Justice, dissenting in part. 

                 I   agree   with   the   court in   all respects   but one.    I   would   leave   it   to   the 

discretion of the Regulatory Commission of Alaska (the RCA), after it concludes that a 

rate-making   "procedural   mistake"   was   made   when   setting   a   tariff,   to   determine   an 

appropriate      corrective    date   in  light  of   all   relevant   facts  and  circumstances      of   the 

particular case.      I see insufficient justification for establishing the mistake's   date of 

public notice as the earliest possible corrective date.   And there is no reason to foreclose 

the possibility that in a particular case the original rate approval date, or some date after 

the original rate approval date but before the mistake's date of public notice, would be 

the appropriate corrective date.          The court rightfully relies on the RCA's expertise to 

make the initial determination of whether a procedural mistake was made; I would also 

rely on the RCA's expertise to determine an appropriate corrective date.                        I therefore 

respectfully dissent on this narrow issue. 

                                                    -31-                                               6605
Case Law
Statutes, Regs & Rules

IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights