New York Law Review

F.W.E. Stapenhorst, Inc. v. Public Service Commission, 73 N.Y.2d 577 (1989): Enforceability of Pre-Existing Contracts Absent Clear Statutory Intent

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F.W.E. Stapenhorst, Inc. v. Public Service Commission, 73 N.Y.2d 577 (1989)

A contract executed before the enactment of a statute or regulation will not be reformed to incorporate benefits conferred by the new law unless there is a clear legislative intent to apply the law retroactively to pre-existing agreements.

Summary

F.W.E. Stapenhorst, Inc. sought to reform a 1978 contract with NYSEG for the sale of electricity to take advantage of price support programs created by Public Service Law § 66-c (1) and the Public Utility Regulatory Policies Act (PURPA). The Court of Appeals reversed the lower courts’ decisions to reform the contract, holding that the statutes were not intended to retroactively apply to contracts that were already in place. The court emphasized that Stapenhorst had entered the contract with full knowledge of the risks and benefits, and there was no basis to grant it additional benefits at the expense of NYSEG’s ratepayers. The court found no clear indication that the legislature intended such a retroactive application.

Facts

In 1978, Stapenhorst contracted with NYSEG to provide electricity for 20 years at a set price. Stapenhorst received an upfront payment of $330,000 and a 20-year local tax exemption. After the facility became operational in 1980, Stapenhorst faced financial difficulties due to underestimated costs and overestimated electricity generation. Stapenhorst then sought to increase the contract price, first through negotiation with NYSEG and then through a petition to the Public Service Commission (PSC) to incorporate a statutory minimum price enacted in 1980.

Procedural History

Stapenhorst petitioned the PSC to reform the contract, but the PSC denied the petition. Stapenhorst then commenced an Article 78 proceeding to annul the PSC’s determination. Supreme Court granted the petition, directing the contract be reformed. The Appellate Division affirmed. The Court of Appeals granted leave to appeal and reversed the lower courts’ decisions.

Issue(s)

1. Whether Public Service Law § 66-c (1) requires reformation of a contract executed before the statute’s enactment to incorporate the statute’s minimum price provisions.

2. Whether the Public Utility Regulatory Policies Act (PURPA) entitles Stapenhorst to a higher price for electricity sold to NYSEG despite the existence of a pre-existing contract.

Holding

1. No, because the statute’s plain language indicates that it applies only to contracts that the PSC

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