Missouri Gas Energy v. Public Service Commission
Missouri Court of Appeals
186 S.W.3d 376 (2005)
- Written by Eric Miller, JD
Facts
Missouri Gas Energy (MGE) (plaintiff), an operating division of Southern Union Company, provided natural gas to Missouri customers. Southern Union’s capital structure included far more debt than equity, and this debt increased with the acquisition of Panhandle Eastern Pipeline Company (Panhandle). MGE did not have a capital structure of its own. MGE sought a rate increase based on a desired return on equity of 12 percent. This desired return on equity was based on a hypothetical capital structure in which equity exceeded debt. The Public Service Commission (the commission) entered an order allowing a rate increase, but the return on equity was lowered to 10.5 percent. MGE brought suit, contending that the commission’s order resulted in an unconstitutionally confiscatory and unreasonable rate of return. The circuit court held that the commission’s order was unlawful. The commission appealed. The Missouri Court of Appeals granted certiorari.
Rule of Law
Issue
Holding and Reasoning (Newton, J.)
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