The 1st Court of Appeal, on Friday, ordered a district court to hold a trial on a state agency’s challenge to the Louisiana Legislature taking its money to balance the state’s operating budget.

The state Public Service Commission in July 2010 had challenged the practice of shifting regulatory fee revenue to balance other parts of the state budget.

The Legislature countered, in part, that the PSC failed to show where in the state constitution it said it was wrong to transfer the money between funds.

A 19th Judicial District Court ruling agreed with the Louisiana Legislature and dismissed the case.

In a 10-page opinion, the 1st Court of Appeal, in Baton Rouge, found that Judge Hilary J. Crain, who heard the case, made a mistake and ordered that a trial be held. Eleven Circuit Court judges heard the appeal.

House Speaker Chuck Kleckley, R-Lake Charles, said Friday in a prepared statement: “Today’s ruling is currently being reviewed by my legal staff.” The Legislature adjourned late Thursday and will reconvene Monday. “There will be time to look at the information and decide how to proceed,” he said.

PSC Chairman Eric Skrmetta, of Metairie, said Friday that he hopes some agreement can be reached to avoid a trial. “But the goal is to stop the sweeping of funds and then to recover ratepayer money,” Skrmetta said.

Generally, the Legislature transfers funds the PSC collected from the customers of utilities the agency regulates, into the general fund. The money is used to pay the expenses of regulating the utility companies that answer to the five elected members of the PSC.

Basically, PSC Secretary Eve Gonzalez said Friday, customers who buy their electricity from a utility company regulated by the PSC, such as in Baton Rouge, paid into the fund. That money is then transferred into a fund that could be used by all residents of the state, including those in communities as well as cities, such as Lafayette and New Orleans, who because their utility is not PSC regulated, did not pay the fee, she said.

The fees were used to pay for regulating utilities overseen by the PSC, Gonzalez said.

“There are laws that forbid taking fees and converting them into taxes,” she said.

PSC Commissioner Foster Campbell, of Bossier Parish, said sweeping funds is a common practice in Gov. Bobby Jindal’s administration. “If the PSC wins when this comes to trial, I think Mr. Jindal is going to be in a world of trouble. He’s going to have to pay millions back to the agencies,” Campbell said.

Assistant Attorney Generals Patricia Wilton and Michael Vallan did not return a call to the state Department of Justice’s press office. Attorney General Buddy Caldwell’s spokesman Steven Hartmann said the office is reviewing the decision.