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

R. Terry Allen at the State Treasurer's Escheats and Unclaimed Property Fund asked the AG about a specific Utilities Commission settlement, with broader implications for how to handle unclaimed utility refunds going forward.

The factual setup. The Public Staff of the NC Utilities Commission investigated complaints about Robert Cefail and Associates (RCA), a pay phone provider. The Public Staff concluded RCA had overcharged NC customers by about $310,585 on automated collect calls. RCA and the Public Staff worked out a stipulated settlement: customers with overcharges of $3.69 or greater would be refunded directly by RCA. The remaining roughly $240,000 in smaller overcharges would be paid in fifteen monthly installments of $16,000 directly to the Utilities Commission. The Commission approved the stipulation but did not enter its own order finding overcharges or directing the refund mechanism.

The legal question. Did that $240,000 (held by the Commission, with the original overcharged customers either unknown or scattered) need to be reported and delivered to the Escheats Office under NC's unclaimed property statute (Chapter 116B), or could the Commission hold or use the funds itself?

The statutory tools. Chief Deputy AG Andrew A. Vanore, Jr. and Chief Counsel John R. McArthur worked through three statutory provisions:

• N.C.G.S. § 62-302(d) says funds collected by the Commission or the Public Staff are deposited in the Utilities and Public Staff Fund. This gives the Commission broad authority to receive monies from regulated utilities.

• N.C.G.S. § 116B-15(b) says "[a]ny 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." This specifically addresses funds the Commission has ordered a utility to refund.

• N.C.G.S. § 116B-19(a) is broader: "[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."

The AG's reading.

1. The narrower provision (§ 116B-15) requires a Commission order directing the refund. Here the Commission only approved the parties' stipulation; it did not enter an order finding the amount of overcharge or directing the manner of refund. So § 116B-15 does not apply.

2. The broader provision (§ 116B-19) does apply. The Commission is a "public authority" holding money "for the owner" (the overcharged customers, even though some of them are not currently identifiable). The funds are property of those customers being held for their benefit. After five years of being held without claim, they are presumptively abandoned and must be reported and delivered to the State Treasurer.

3. The Commission retains broad authority to structure refunds (it can require direct refund only to customers above a threshold or to customers who can be reasonably located, as in this case). But those structuring decisions do not displace the escheats law's reach over the residual unclaimed amounts.

Limit on the opinion. The AG narrowed its conclusion to settlement agreements where the funds are clearly characterized as "refund money" for overcharged customers, with those customers as the unknown owners. The Commission's broader authority to seek penalties or disgorgement (as opposed to customer refunds) is not affected by the opinion. A penalty paid by a utility to the state, for example, is not "property held for the owner" in the § 116B-19 sense, because the customers are not the owners of penalty money.

Distinguishing 1985 opinion. The AG distinguished a December 2, 1985 AG opinion involving Western Carolina University and a Nantahala Power and Light refund. In that case, WCU was not a public utility and the Commission did not have authority to order the underlying refund or to receive a portion of it. The 1985 facts are sui generis and provide little guidance for typical utility-refund situations.

The opinion is structurally important for the Treasurer's Office, the Commission, and regulated utilities. It establishes that the existence of a Commission order (vs. a Commission-approved stipulation) does not determine whether unclaimed refund money escheats. The broader § 116B-19 provision sweeps in either kind of holder-and-held-for-the-owner situation.

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 has been amended multiple times since 1996, including a substantial 1999 rewrite of NC's escheats statute. The current Chapter 116B (now called the Uniform Unclaimed Property Act) renumbers many of the provisions. The five-year dormancy period and the basic framework remain, but specific section references may have changed. Anyone working on a utility-refund escheat question should pull the current Chapter 116B and consult escheats counsel.

Common questions

Q: What is escheat?
A: The legal mechanism by which unclaimed property held by a "holder" (a bank, utility, retailer, public agency) reverts to state custody after a defined dormancy period. The original owner does not lose ownership; the state holds the funds in trust and the owner can claim them at any time. The state's incentive is to put dormant funds to productive use (typically via interest earnings) rather than have them sit unclaimed.

Q: Why didn't § 116B-15 apply here?
A: Because that section explicitly requires that a utility "has been ordered to refund" the money. Here, the Public Staff and RCA worked out a stipulation, which the Commission then approved. The Commission did not enter an order directing the refund or finding the amount of overcharge. That procedural distinction matters because § 116B-15 was drafted narrowly.

Q: Then why does § 116B-19 apply?
A: Because it is the catch-all provision: any property held by a public authority for an owner becomes abandoned if not claimed in five years. The Commission was holding the $240,000 for the overcharged customers (the "owners," even if not all identifiable). That fits the § 116B-19 framing exactly.

Q: Could the Commission have avoided escheat by keeping the money in the Utilities and Public Staff Fund?
A: No. Even though § 62-302(d) says funds collected by the Commission go into the Utilities and Public Staff Fund, that statute speaks to where the money is initially deposited. It does not override the escheats statute when the deposited funds are properly characterized as refund money for identifiable (or formerly identifiable) customers. The character of the funds (as customer property held by a public agent) drives the escheat result, not the place of deposit.

Q: What if the Commission later identifies some of the customers?
A: They can pay those customers directly. The escheats statute only applies to property that remains unclaimed at the end of the dormancy period (five years). If the Commission finds a customer within that period and pays the refund, no escheat. If not found, the funds go to the Escheats Office, which then maintains a record so the customer can still claim later, indefinitely.

Q: Does this opinion bind future settlements?
A: It binds them analytically: any future stipulated settlement that channels refund funds to the Commission for the benefit of identifiable but unlocated customers should be treated the same way. If the legislature or the Commission wants a different result, the legislature can amend Chapter 116B, or the parties can structure settlements differently (for example, by requiring direct refunds from the utility, not payments to the Commission).

Background and statutory framework

NC's escheats statute is administered by the State Treasurer's Escheats and Unclaimed Property Fund. The dormancy period under most provisions is five years; after that, the holder must report and deliver the property to the State. The State publishes lists of unclaimed property and lets owners (or heirs) claim it at any time.

The Utilities Commission frequently handles refund situations. In a formal proceeding, the Commission finds an overcharge, orders the utility to refund a specific amount, and supervises the refund process. The narrower § 116B-15 applies to that scenario.

But Commission practice also includes negotiated outcomes through Public Staff investigations and settlement agreements. When the Public Staff (the consumer-advocate arm of NC utility regulation) reaches a deal with a utility, the Commission's approval of that stipulation is the procedural endpoint, not an order issued by the Commission. The 1996 opinion clarifies that this distinction matters for § 116B-15 but does not provide a path around escheat: the broader § 116B-19 still applies.

The opinion also makes clear that NC's commitment to returning overcharge money to customers (or, failing that, to the public treasury via escheat) is policy-deep. A utility cannot keep the overcharge by structuring the refund through a stipulation that avoids the narrower § 116B-15. The Commission cannot avoid escheat by treating refund funds as Commission operating revenue. The funds belong to the customers, and to the State on their behalf if the customers are not located.

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