When the NC Utilities Commission collects refund money from a regulated utility through a stipulated settlement (not a formal Commission order requiring the refund), and the utility cannot find some of the overcharged customers, does that unclaimed money escheat to the State Treasurer like other unclaimed property, or does it stay with the Commission?

Plain-English summary

The North Carolina State Treasurer's Escheats Administrator asked whether money paid to the Utilities Commission under a settlement with a pay-phone provider was subject to the state's unclaimed-property reporting and delivery rules. The settlement called for direct refunds to customers whose overcharges were at least $3.69 and payment of the remaining $240,000 in overcharges to the Commission. The Attorney General's office concluded that this refund money was subject to G.S. § 116B-19 and must be reported and delivered to the State Treasurer under that provision.

The opinion distinguished two statutory routes. G.S. § 116B-15 concerned refunds a utility had been ordered to pay by the Commission. Here, the Commission approved a stipulation but issued no formal order making findings and directing the refund; the opinion said § 116B-15 did not apply. G.S. § 116B-19 covered property held for an owner by a public authority. The opinion treated these payments as money belonging to overcharged customers, including unknown or unlocated customers, and held by the Commission for their benefit.

The conclusion was expressly limited to agreements that properly characterize money coming to the Commission as customer refunds. The opinion said it did not restrict the Commission's authority to seek penalties, order refunds, or authorize disgorgement consistent with escheat requirements. It did not declare future settlements legally bound by its analysis.

Currency note

This opinion applied the North Carolina escheats statutes as they stood in 1996. Check current unclaimed-property law and the terms of a particular payment before relying on its section numbers or timing.

Common questions

Why did the opinion use § 116B-19 instead of the utility-refund provision?

The utility-refund provision, § 116B-15, required a formal Commission refund order. The Commission approved the parties' stipulation here without issuing that kind of order. The opinion applied § 116B-19 because the Commission held money characterized as customer refunds for the customers' benefit.

Would the same answer apply to a utility penalty paid to the Commission?

The opinion did not decide that. It expressly limited its conclusion to money properly characterized as refunds for overcharged customers and preserved the Commission's other powers.

Did the opinion bind the Utilities Commission in every later settlement?

No. It gave an advisory interpretation of the specified statutes and settlement. It did not announce a binding rule for every later agreement.

Citations

• N.C.G.S. § 62-302(d) (funds collected by NC Utilities Commission or Public Staff deposited in the Utilities and Public Staff Fund)
• N.C.G.S. § 116B-15(b) (utility refund funds ordered by Commission presumed abandoned after five years)
• N.C.G.S. § 116B-19(a) (catch-all: property held by public authority for owner presumed abandoned if unclaimed for five years)
• 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) (NC Court of Appeals and Supreme Court; refunds may be made contingent upon practicability)
• Letter of Lemuel Hinton to Julius Wright, Chairman of the Utilities Commission (September 22, 1989) (prior AG opinion on Commission's broad power to collect monies from regulated utilities under § 62-302(d))
• AG Opinion of December 2, 1985 (distinguishable; WCU/Nantahala Power refund situation)

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