Case Title: In re Quechee Water Co.

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1992-05-01T00:00:00Z

Document:
NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 91-218


 In re Tariff Filing of Quechee               Supreme Court
 Water Co. requesting a sixty
 percent increase in rates, and               On Appeal from
 revisions to its Rules and                   Public Service Board
 Regulations

                                              May Term, 1992





 Suzanne D. Rude and Leonard U. Wilson, board members

 James B. Anderson and Kimberly K. Hayden of Ryan Smith & Carbine, Ltd.,
   Rutland, for plaintiff-appellant

 Geoffrey Commons, Special Counsel, Montpelier, for defendant-appellee


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      MORSE, J.   Quechee Water Company, Inc., (QWC) appeals from an order of
 the Vermont Public Service Board granting a net rate increase of one-and-a-
 half percent instead of the sixty percent increase requested by QWC.  QWC
 claims its rate request became "effective and final" by operation of the
 default provision in 30 V.S.A. { 227(a), governing the time allowed the
 Board to rule on rate requests.  QWC also argues that it carried its burden
 of showing the reasonableness of the requested rate and that the Board
 erred in granting such a minimal increase.  We conclude that the Board acted
 timely and within its authority, and affirm.
      QWC has 500 customers in the Village of Quechee, Town of Hartford,
 Vermont.  Hartford operates and maintains the water system pursuant to an
 agreement with QWC made in 1979.  The water system serves the Quechee Lakes
 resort development as well as the town residents.  QWC pays Hartford a pro-
 portionate share of the operating and maintenance costs.
      QWC filed its rate request on July 25, 1990, asking that temporary
 rates be allowed if the permanent requested amount was not permitted to go
 into effect until the Board made a final determination.  Permanent rates
 were suspended, and temporary rates were put into effect by QWC on October
 1, 1990.  On May 1, 1991, after reviewing the recommendations of the
 Department of Public Service, the Board concluded that QWC failed to ade-
 quately substantiate the reasonableness of the following cost of-service
 items: (1) the annual $40,000 management fee paid by QWC to its affiliate,
 Quechee Lakes Corporation; and (2) the $10,000 fee allocated to QWC as its
 share of legal and professional fees incurred in connection with the
 Securities and Exchange Commission filings of QWC's parent, NECO
 Enterprises, Inc.
      QWC first argues that the rate increase should go into effect by
 default because the Board failed to rule within the statutory time frame.
 The relevant provision, 30 V.S.A. { 227(a), states:
         If the board orders that a change shall not go into
         effect until final determination of the proceedings, it
         shall proceed to hear the matter as promptly as possible
         and shall make its determination within seven months
         from the date that the change otherwise would have gone
         into effect.  If the board fails to make its determin-
         ation within such time, the changed rate schedules filed
         by the company shall become effective and final.
         (Emphasis added.)

      Central to this dispute is the proper construction of the phrase "date
 that the change otherwise would have gone into effect."  QWC claims that
 this term refers to September 8, 1990, which is forty-five days after the
 Board received its application.  This interpretation relies principally on
 30 V.S.A. { 225(a) (change in rates shall not be made "except upon forty-
 five days' notice to the board and to the Department of Public Service . . .
 .  All such changes shall be plainly indicated . . . by filing new schedules
 . . . forty-five days prior to the time the same are to take effect").
 According to QWC, forty-five days after filing is the date on which the
 seven month-period starts to run.  Thus, because the Board did not rule on
 QWC's rate application until May 1, 1991, which is more than seven months
 after that point, the rate increase went into effect by operation of law.
       QWC misinterprets in this case when the seven-month time period began.
 QWC asserts that the phrase "date that the change otherwise would have gone
 into effect" under 30 V.S.A. 227(a) must be forty-five days after filing,
 the earliest effective date under 30 V.S.A. { 225(a) ("change in rates . .
 .  are to take effect").  We disagree.  The effective date referred to in {
 225(a) does not always fall exactly forty-five days after filing.  See,
 e.g. In re Central Vermont Public Service Corp., 144 Vt. 46, 49,