When the NC Utilities Commission holds money from a settlement with a pay-phone provider that overcharged customers, do those funds eventually have to be turned over to the State Treasurer's Escheats office if customers don't claim them?

Plain-English summary

In the early 1990s, NC pay-phone users complained that Robert Cefail and Associates (RCA) was overcharging them on automated collect calls. The Public Staff of the NC Utilities Commission (the consumer-advocacy office within the Commission) investigated and concluded RCA had overbilled NC customers about $310,585 total. The Public Staff and RCA entered a stipulation: customers with overcharges of $3.69 or more got refunded directly by RCA; smaller overcharges (totaling about $240,000) were paid to the Commission in fifteen installments through 1994. The Commission approved the stipulation without making its own formal findings or order.

The State Treasurer's Escheats Administrator asked the AG whether the $240,000 the Commission was sitting on (and similar future utility-refund situations) should be reported and delivered to Escheats after five years of being unclaimed.

The AG worked through two statutes in tandem.

§ 116B-15 (utility-refund-specific). This section says that any funds a utility has been ordered to refund are presumed abandoned if not claimed within five years after they became payable under the order. The AG concluded that § 116B-15 applies only when the Commission has issued a formal order with findings and conclusions specifying the refund amount and process. Approving a Public Staff stipulation is not the same thing. So § 116B-15 did not directly cover the RCA money.

§ 116B-19 (general public-authority property). This is the catch-all: any property not otherwise covered by Chapter 116B, held for an owner by a "court, public corporation or authority, or agent or instrumentality of the United States, this State or any other State, or by a public officer or political subdivision," is presumed abandoned after five years. The Commission is a public authority. The $240,000 was paid to it as refund money for overcharged customers, characterized in the stipulation as customer property held for their benefit. So § 116B-19 covers it.

The AG concluded the Commission must report and deliver the unclaimed RCA settlement funds to the State Treasurer's Escheats office under § 116B-19. The same analysis applies to other utility refund settlements that come to the Commission as customer property without an underlying Commission order.

The opinion also gives the Commission room to act sensibly going forward. The Commission can structure refund orders so utilities directly refund those customers it can locate (or those whose refunds exceed an administrative threshold), and only the residual unclaimed amount flows to the Commission and eventually to Escheats. The Commission's broad authority under § 62-302(d) to collect monies from regulated utilities remains intact; the AG is just clarifying that residual customer-property funds, however held, end up at Escheats.

The distinguishing 1985 opinion. The AG distinguished a December 2, 1985 AG opinion involving Western Carolina University and Nantahala Power and Light. That earlier opinion held that funds Nantahala refunded to WCU (a wholesale customer) were not subject to Escheats. The 1985 facts were different: WCU was not a public utility regulated by the Commission, so the Commission had no authority to direct WCU's onward refunds to its retail customers. The 1985 reasoning does not control the RCA situation, where the funds come directly to the Commission as customer property.

Currency note

This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Chapter 116B (Escheat and Unclaimed Property Act) has been comprehensively rewritten since 1996, primarily by the 1999 Uniform Unclaimed Property Act adoption. The specific section numbers cited in this opinion may not correspond to current law. Anyone advising on a current utility-refund Escheats question should pull current Chapter 116B and check post-1999 AG opinions and Treasurer's administrative rules.

Common questions

Q: What is "escheat"?
A: An old legal concept under which unclaimed property reverts to the sovereign (originally the king) after a period of abandonment. Modern state escheat (or "unclaimed property") laws apply to bank accounts, uncashed checks, dormant brokerage accounts, unpaid wages, gift card balances, and similar property. The State Treasurer holds the property and tries to locate the rightful owner; if not claimed, the state uses it (typically for education and other public purposes) but remains obligated to return it if a rightful claimant ever appears.

Q: Why did the AG distinguish between a Commission "order" and an approved "stipulation"?
A: The text of § 116B-15(b) requires a "final determination or order providing for the refund." A Public-Staff-RCA stipulation, approved by the Commission, is not the same as a formal Commission adjudication with findings. The AG kept § 116B-15 narrow because it operates as a specific shorter-time-bar in particular utility-refund cases. The broader § 116B-19 is the right home for refund money the Commission holds without an underlying order.

Q: Could the Commission have avoided this by making the stipulation more like an order?
A: The Commission has discretion over how it structures its decisions. A formal order would invoke § 116B-15 instead of § 116B-19, but both end with the funds eventually escheating if unclaimed. The procedural distinction matters for the precise statute applied and the start date of the five-year clock, not for whether the money ultimately reaches Escheats.

Q: What about pay-phone customers who never could have been identified?
A: The opinion acknowledges that many pay-phone overcharges are tied to anonymous or hard-to-trace customers. That is exactly the situation Escheats was designed for: hold the money for a reasonable period, try to return it, and then transfer to the state as residual unclaimed property. The State Treasurer remains obligated to refund any specific claimant who later surfaces with a valid claim.

Q: Does this apply to refunds for electricity, natural gas, or telecom?
A: The opinion's reasoning is utility-agnostic: any time the Commission holds customer-refund money as a stipulation outcome (rather than a final order), § 116B-19 applies. Future utility refund settlements should be structured with this analysis in mind.

Background and statutory framework

The Public Staff is a statutorily independent consumer advocacy office within the NC Utilities Commission framework. It investigates utility practices, intervenes in rate cases, and negotiates settlements with utilities. The RCA stipulation is a routine instance of Public Staff enforcement: investigate overcharges, negotiate refunds, get Commission approval.

Chapter 116B at the time of this opinion was NC's pre-uniform-act escheat law. § 116B-15 was a utility-specific provision; § 116B-19 was the residual catch-all. The Treasurer administered the Escheats and Unclaimed Property Fund.

Citations

• N.C. Gen. Stat. § 116B-15(b) (utility refund presumption of abandonment, 5-year clock)
• N.C. Gen. Stat. § 116B-19(a) (property held by public authority for owner, 5-year clock)
• N.C. Gen. Stat. § 62-302(d) (Utilities Commission and Public Staff fund; broad collection authority)
• State ex rel. Utilities Commission v. Public Service Company, 56 N.C. App. 448, 289 S.E.2d 82 (1982), aff'd 307 N.C. 474, 299 S.E.2d 425 (1983) (Commission can condition refunds on practicability)

Source

• Landing page: https://ncdoj.gov/opinions/certain-monies-received-by-the-north-carolina-utilities-commission-under-a-settlement-agreement/

Original opinion text

December 11, 1996

Mr. R. Terry Allen, Administrator
Escheats and Unclaimed Property Fund
Department of State Treasurer
325 North Salisbury Street
Raleigh, North Carolina 27603-1388

Re: Advisory opinion; Applicability of N. C. Gen. Stat. §116B to certain monies received by the North Carolina Utilities Commission under a settlement agreement

Dear Mr. Allen:

You have asked for an opinion whether certain monies paid to the North Carolina Utilities Commission (Commission) pursuant to a stipulated settlement entered into by the Public Staff of the North Carolina Utilities Commission (Public Staff) and a local pay phone provider, Robert Cefail and Associates (RCA), should be subject to the report and delivery requirements of North Carolina escheats law. The specific question posed by your inquiry is: Whether the funds received by the Commission pursuant to the stipulation should be subject to report and delivery to the Escheats office pursuant to N. C. Gen. Stat. § 116B and whether other utility customer overcharges subject to Commission orders also should be subject to N. C. Gen. Stat. § 116B.

Analysis. The applicable law: The North Carolina Utilities Commission received funds from RCA under the settlement agreement. N. C. Gen. Stat. §62-302(d) has been previously interpreted by the Attorney General to allow the Commission broad powers to collect monies from regulated utilities. (See letter of Lemuel Hinton to Mr. Julius Wright, Chairman of the Utilities Commission dated September 22, 1989, attached hereto.) N. C. Gen. Stat. §62-302(d) states, in pertinent part, that "the funds collected pursuant to this section and all other funds collected by the Commission or the Public Staff shall be deposited in the Utilities and Public Staff fund." (Emphasis added.)

N.C. Gen. Stat. § 116B-15(b) states: "Any funds which a utility has been ordered to refund shall be presumed abandoned if they have not been claimed or paid within five years after the date they became payable in accordance with the final determination or order providing for the refund." N.C. Gen. Stat. §116B-19(a) provides, in pertinent part, that "(a)ll property, not otherwise covered by this chapter, and held for the owner by a court, public corporation or authority, or agent or instrumentality of the United States, this State or any other State, or by a public officer or political subdivision thereof, shall be presumed abandoned if it is not claimed or if an owner refuses to accept it within five years of becoming payable or distributable."

In order to appropriately respond to your inquiry these statutes must be construed together, giving weight to each to the extent it can be meaningfully done.

The Stipulation: The stipulation between RCA and the Public Staff arose out of pay phone users' complaints which the Public Staff received concerning overcharges on toll calls placed as automated collect calls. The Public Staff began an investigation and subsequently determined that RCA had over billed its North Carolina customers by an estimated $310,585.00. The parties then entered into a stipulation whereby those customers who had overcharges of $3.69 or greater were directly refunded by the company. The remaining overcharges, determined to be $240,000.00, have been paid directly to the Commission in fifteen installments of sixteen thousand dollars paid between September 12 and December 16, 1994.

In this matter, the Commission made no Order and provided no findings of facts and conclusions of law establishing the amount to be refunded and setting out the manner such a refund would be made; rather, the Commission approved a settlement entered into by the Public Staff and RCA. In our opinion, approving a stipulated settlement which includes a refund of overcharges to customers does not constitute an order within the meaning N. C. Gen. Stat. §116B-15. N. C. Gen. Stat. §116B-15 is only applicable where there is a formal Order of the Commission.

The Stipulation does, however, provide for the payment to the Commission of certain monies which constitute overpayment of RCA customers. As such, the funds would appear to constitute property of the overcharged customers held by a public authority within the meaning of N. C. Gen. Stat. § 116B-19. Therefore, we think that the monies paid by RCA directly to the Commission pursuant to the stipulation are subject to the provisions of N.C. Gen. Stat. §116B-19 and subject to report and delivery to the Office of the State Treasurer. It is important to note here that the Stipulation does appear to characterize the funds handed over to the Commission as customer refunds and, therefore, the property of customers, albeit unknown or unlocated, which is being held for their benefit by the Commission.

The Commission retains authority, consistent with this opinion and the State's requirements on escheat, to order the appropriate handling of such a refund. See, State ex rel. Utilities Commission v. Public Service Company, 56 N.C. App. 448, 289 S.E.2d 82 (1982) affirmed 307 N.C. 474, 299 S.E.2d 425 (1983) (refunds may be made contingent upon practicability). For example, the Commission may find it necessary to require a utility to refund directly only to those customers due refunds over a certain amount (such as in the RCA matter), or to directly refund only those customers who can be reasonably located. These actions would not extinguish (a) the refund rights of those utility customers who were not eligible under the Commission's order to receive refunds directly from the utility or (b) the related obligations to the Escheat Administrator under Chapter 116B.

This opinion is limited to those agreements, like the RCA agreement, which properly characterize the monies coming to the Commission as refund monies for customers who have been overcharged. It should not be interpreted to constrict the Commission's broad authority, consistent with the State's requirements on escheat, to seek penalties, order refunds or otherwise authorize the disgorgement of funds from regulated utilities.

We have reviewed the Attorney General's opinion of December 2, 1985, copy of which is attached, concerning utility refunds and escheats. The unique circumstances presented by that matter are distinguishable from this matter and are largely inapplicable to other utility refund issues. In the 1985 opinion, the Attorney General concluded that certain funds received by Western Carolina University (WCU) were not subject to the escheat law. The Federal Energy Regulatory Commission (FERC) issued an order requiring Nantahala Power and Light to refund to its wholesale customers, including WCU, certain monies. The University in turn submitted a plan to the Commission where it would return a portion of its refund to its own customers. Under the plan, unclaimed refunds would go to WCU rather than escheating to the State. The opinion determined that the University was not a public utility and, accordingly, was not subject to the authority of the Commission with regard to distribution of its refund to its retail customers. In other words, the Commission did not have authority to order such a refund nor did it have the authority to receive a portion of the refund as a holder for customers who have been overcharged. Therefore, the December 2, 1985 opinion provides little or no guidance as to how to treat the RCA stipulation or other similar utility refund issues.

In summary, it is our opinion that the refund monies paid to the North Carolina Utilities Commission pursuant to the settlement entered into by the Public Staff and RCA are subject to the provision of North Carolina's statutes on escheats.

Andrew A. Vanore, Jr.
Chief Deputy Attorney General

John R. McArthur
Chief Counsel