Case Title: MGTC, Inc. v. Public Service Com'n of Wyoming

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1987-04-03T00:00:00Z

Document:
MGTC, Inc. v. Public Service Com'n of Wyoming1987 WY 37735 P.2d 103Case Number: 86-183Decided: 04/03/1987Supreme Court of Wyoming
MGTC, 
INC., Petitioner

 
 
v.

 
 
PUBLIC 
SERVICE COMMISSION OF WYOMING, Respondent, and Northern Gas Company, 
Petrolane Wyoming Gas Service, Inc., and the Consumer Representative Staff of 
the PSC, Intervenors and Respondents

 
 
James L. 
Erkel, and Richard J. Barrett of Hathaway, Speight, Kunz, Trautwein & 
Barrett, for Petitioner; argument by Mr. Barrett.

 
 
A. G. 
McClintock, Attorney General, Steven R. Shanahan, Senior Assistant Attorney 
General, for Public Service Commission; Robert C. McHugh and T. J. Carroll, III, 
for Northern Gas Company;

 
 
Nicholas 
G. Kalokathis of Lathrop & Uchner, for Petrolane. Argument presented by Mr. 
Shanahan, Mr. Carroll and Mr. Kalokathis. 

 
 
Brown, 
C.J., and Thomas, Cardine, Urbigkit, and Macy, JJ. 

 
 
CARDINE, 
Justice.

 
 
[¶1.]     Petitioner McCulloch 
Gas Transmission Company (MGTC) seeks review of a Public Service Commission 
(Commission) order requiring MGTC to refund to its customers $ 2,192,942 in 
overcharges. The Commission's order was based on a finding that MGTC had 
erroneously calculated the surcharge component of its gas balancing account. The 
appeal reaches this court through Rule 12.09 certification from the district 
court.

 
 
[¶2.]     MGTC contends that the 
Commission exceeded its jurisdiction and engaged in illegal retroactive 
ratemaking by ordering MGTC to recalculate its surcharge adjustment and make 
refunds relating back to the inception of its gas balancing account. The 
Commission asserts that MGTC's appeal should be dismissed for failure to timely 
file a petition for review in accordance with Rule 12.04, 
W.R.A.P.

 
 
[¶3.]     We hold that MGTC's 
petition was timely filed, and we affirm the Commission's 
order.

 
 
FACTS

 
 
[¶4.]     MGTC is an intrastate 
natural gas transportation and distribution company subject to the regulatory 
jurisdiction of the Commission. The company's two largest customers are 
respondents Northern Gas Company (Northern) and Petrolane Wyoming Gas Service, 
Inc. (Petrolane). MGTC also sells gas to various farms and ranches along its 
pipeline in northeastern Wyoming.

 
 
[¶5.]     In July 1982, the 
Commission approved MGTC's application for a gas balancing account. The gas 
balancing account system is a rate adjustment mechanism which allows gas 
distributors to obtain expedited rate changes based solely on fluctuations in 
the commodity cost of gas purchased by the utility. The advantage of the system 
is that it avoids the regulatory lag which accompanies general rate proceedings 
and thereby contributes to the financial stability of utilities. The Commission 
describes the operation of the balancing account system in the following 
terms:

 
 
"The 
system accounts for both over and under-recoveries of gas costs in future gas 
commodity rate applications. The actual cost of gas experienced and the recovery 
of those costs in rates for the past gas balancing account period are compared 
with the prior estimates for that period to determine whether there should be an 
upward or downward adjustment to the current balancing account application. In 
this way a dollar for dollar recovery of gas costs is assured for the utility 
and consumers are not overcharged."

 
 
When the 
Commission approved MGTC's gas balancing account application, the method of 
making adjustments to the account became part of MGTC's tariff.1

 
 
[¶6.]     In October 1982, MGTC 
applied for and received its first gas balancing account rate increase. In June 
1983, another gas balancing account rate increase was approved. In September 
1983, MGTC filed a third application for a gas balancing account rate increase. 
While reviewing that application, the Commission became aware that MGTC may have 
been improperly computing the surcharge adjustment since the inception of its 
balancing account.

 
 
[¶7.]     A contested case 
hearing was held to determine whether MGTC's method of computing the surcharge 
was consistent with the provisions contained in its gas balancing account 
tariff. The Commission Consumer Representative Staff, Northern, and Petrolane 
all participated in the hearing. They contended that in calculating the 
surcharge adjustment MGTC had not followed § 2.2 of its tariff, which stated 
that the surcharge adjustment would reflect the difference between actual costs 
recovered in rates and actual costs incurred by the company. In response, MGTC 
asserted that although such language did indeed appear in the "preamble" to § 
2.2, the remainder of § 2.2 prescribed a specific formula for computing the 
surcharge adjustment and that MGTC had followed that 
formula.

 
 
[¶8.]     On February 8, 1985, 
the Commission entered an order finding that

 
 
"the 
first paragraph of Section 2.2 of MGTC's balancing account tariff correctly 
states the concept as it should be applied and the remainder of Section 2.2 
provides ambiguous direction at best. MGTC does not * * * * follow the dictates 
of the first paragraph of Section 2.2. The substantial evidence in this matter * 
* * * shows that the policy of Section 2.2 as stated in its first paragraph 
should be followed and that MGTC should submit a revised version of Section 2.2 
which unambiguously sets forth a surcharge adjustment clause * * * 
*."

 
 
The 
Commission concluded that MGTC's method did not compare actual gas costs 
recovered in rates with actual gas costs incurred, and it denied the balancing 
account rate increase.

 
 
[¶9.]     MGTC filed a petition 
for rehearing. On May 10, 1985, the Commission issued an "Order on Petition for 
Rehearing of MGTC, Inc." which essentially reaffirmed its earlier order. In 
addition, the May 10th order required MGTC to recalculate its surcharge 
adjustment from the inception of its balancing account using the method 
established in the Commission's order of February 8, 1985. After reviewing 
computations submitted by MGTC and the other parties, the Commission entered an 
order on October 29, 1985, requiring MGTC to refund $ 2,192,942 plus interest to 
its customers by reducing its rates in amount of $ .50/Mcf for a period of one 
year.

 
 
[¶10.]  MGTC filed a petition for judicial review 
of the Commission's October 29th order, contending that the Commission acted 
outside of its statutory authority and engaged in retroactive ratemaking by 
ordering the refunds. The Commission filed a motion to dismiss, asserting that 
MGTC's petition was not timely filed. The district court certified the case to 
this court.

 
 
[¶11.]  Before we reach the substantive issues 
concerning the propriety of the Commission's refund order, we must first address 
the jurisdictional issue raised by the Commission.

 
 
JURISDICTION

 
 
[¶12.]  The Commission asserts that its order of 
May 10, 1985, was a final appealable order on the issue of its authority to 
order the refund and that this appeal should be dismissed because MGTC failed to 
appeal from that order within 30 days as required by Rule 12.04, W.R.A.P. We 
disagree.

 
 
[¶13.]  The proceeding before the Commission was 
a contested case. Section 16-3-101(b)(ii), W.S. 
1977.  Section 16-3-114(a), W.S. 1977, 
states:

 
 
"Subject 
to the requirement that administrative remedies be exhausted and in the absence 
of any statutory or common-law provision precluding or limiting judicial review, 
any person aggrieved or adversely affected in fact by a final decision of an 
agency in a contested case, or by other agency action or inaction, * * * * 
is entitled to judicial review in the district court * * * *." (Emphasis 
added.)

 
 
Similarly, 
Rule 12.01, W.R.A.P., provides:

 
 
"To the 
extent that judicial review of administrative action by a district court is 
available, any person who is aggrieved or adversely affected in fact by a 
final decision of an agency in a contested case, or who is aggrieved or 
adversely affected in fact by any other agency action or inaction * * * * may 
obtain such review as provided in this rule." (Emphasis 
added.)

 
 
The time 
period for filing a petition for review is set forth in Rule 12.04, 
W.R.A.P.:

 
 
"In a 
contested case, * * * * the petition for review shall be filed within thirty 
(30) days after written, certified notice to all parties of the final 
decision of the agency or denial of the petition for a rehearing, or, if 
a rehearing is held, within thirty (30) days after written, certified notice to 
all parties of the decision thereon * * * *." (Emphasis 
added.)

 
 
Taken 
together, these statutes and rules stand for the proposition that in a contested 
case the thirty-day period for filing a petition for review is triggered only by 
a final decision, denial of petition for rehearing, or rehearing 
decision.

 
 
[¶14.]  The Commission's May 10th "Order on 
Petition for Rehearing of MGTC, Inc." was not a final decision. A final 
administrative order is one ending the proceedings, leaving nothing further to 
be accomplished. Gealon v. Keala, 60 Hawaii 513, 591 P.2d 621, 626 (1979). 
If the agency retains the matter for further action, the order is not final. 
Id.; 73A 
C.J.S. Public Administrative Law and Procedure § 205, p. 244; 2 Am.Jur.2d Administrative Law § 585, p.413. In the 
present case, the Commission clearly retained the matter for further action 
after entering its order of May 10, 1985. The language of the May 10th order 
indicates that the Commission was unsure whether a refund would be necessary. 
The order stated:

 
 
"The 
Commission will require the parties to prepare and support detailed schedules 
consistent with this order to indicate what refund, if any, should be 
made." (Emphasis added.)

 
 
The 
order further provided:

 
 
"1. MGTC 
shall file with the Commission and serve on the parties within 30 days, gas 
balancing tariff filings and detailed schedules and workpapers, showing the 
computation of its gas balancing account consistent with the findings and 
conclusions noted hereinabove. The schedules and workpapers shall be accompanied 
by a detailed narrative description of the manner and method of making the 
required computations.

"2. All 
other parties shall file comments within 30 days thereafter. The Commission 
shall then determine whether a further hearing is 
required.

"3. MGTC 
and the parties shall also comment, within the schedule noted above, in what 
time period any refunds should be implemented."

 
 
The 
amount of the refund was not determined until the Commission's order of October 
29, 1985. Moreover, the Commission did not specifically deny MGTC's petition for 
rehearing (filed on March 11, 1985) until it entered the October 29th order. 
Prior to that time, there was no final order from which MGTC could appeal. The 
petition for review was timely filed.

 
 
THE 
REFUND

 
 
[¶15.]  In this appeal MGTC does not challenge 
the Commission's findings that an overcharge occurred, nor does it challenge the 
Commission's quantification of the amount of the overcharge. It only asserts 
that the Commission exceeded its statutory authority and engaged in retroactive 
ratemaking when it ordered the company to refund the excess charges to its 
customers.

 
 
[¶16.]  We have held that the Commission 
possesses only that authority which is expressly granted by statute or 
constitution and those implied or incidental powers necessary and proper to 
carry out its enumerated powers. Public Service 
Commission v. Formal Complaint of WWZ Company, Wyo., 641 P.2d 183, 186 (1982). In this 
case we find express statutory authority for the Commission's actions in §§ 37-2-121 and 37-1-102, 
W.S.1977.

 
 
"If upon 
hearing and investigation, any rate shall be found by the commission to be 
inadequate or unremunerative, or to be unjust, or unreasonable, or unjustly 
discriminatory, or unduly preferential or otherwise in any respect in violation 
of any provision of this act, the commission may fix and order substituted 
therefor such rate as it shall determine to be just and reasonable and in 
compliance with the provisions of this act. Such rate so ascertained, determined 
and fixed by the commission shall be charged, enforced, collected and 
observed by the public utility for the period of time fixed by the 
commission." (Emphasis added.) Section 37-2-121, 
W.S. 1977.

 
 
"The 
term 'rate,' when used in this act, shall mean and include, in the plural 
number, as well as in the singular, every individual or joint rate, 
classification, fare, toll, charge or other compensation for service rendered or 
to be rendered by any public utility, and every rule, regulation, practice, 
act, requirement or privilege in any way relating to such rate, fare, toll, 
charge or other compensation, and any schedule or tariff or part of a schedule 
or tariff thereof." (Emphasis added.) Section 
37-1-102(a), W.S.1977.

 
 
[¶17.]  The broad language of § 37-2-121, on its face, allows the Commission to 
substitute and the public utility to collect -- for any period of time -- a just 
and reasonable rate for one found to be unjust or unreasonable. MGTC concedes 
that § 37-2-121, read literally, might grant 
authority to order refunds, but contends that the language of the statute must 
be tempered by the rule against retroactive ratemaking.

 
 
[¶18.]  The rule against retroactive ratemaking 
is a generally accepted principle of public utility law which recognizes the 
prospective nature of utility ratemaking and prohibits regulatory commissions 
from rolling back rates which have already been approved and have become final. 
Pacific Telephone and Telegraph Company v. Public 
Utilities Commission, 62 Cal. 2d 634, 44 Cal. Rptr. 1, 401 P.2d 353, 364-366 (1965); see also Mountain Fuel Supply Company v. Public Service Commission 
of Wyoming, Wyo., 662 P.2d 878 
(1983). The rule is limited to general ratemaking proceedings, 
however, and should not be invoked to prevent adjustments in rates pursuant to 
automatic rate adjustment mechanisms such as a gas balancing account. Southern California Edison Company v. Public Utilities 
Commission, 20 Cal. 3d 813, 144 Cal. Rptr. 905, 576 P.2d 945 (1978). The balancing account system, by its very 
nature, requires a retrospective analysis to identify past over- and under- 
recoveries. We hold that the rule against retroactive ratemaking does not 
prohibit the refunds ordered by the Commission.

 
 
[¶19.]  We cannot ignore the equities in this 
case. As one court has observed, "the specter of retroactive ratemaking must not 
be viewed as a talismanic inhibition against the application of principles based 
upon equity and common sense." Roberts v. 
Narragansett Electric Company, R.I., 470 A.2d 215, 217 (1984). Equity and common sense dictate that MGTC should 
not be permitted to reap the windfall of overcharges that it collected by 
misapplying the provisions of its filed tariff.

 
 
[¶20.]  The Commission's order is affirmed. 

 
 
FOOTNOTES

 
 

1A tariff is a published volume of rate 
schedules and general terms and conditions under which a product or service will 
be supplied. 3 American Gas Association, Regulation of the Gas Industry, GL-158 
(1981).

 
 
Section 2.2 of MGTC's gas balancing 
account tariff provides:

 
 
"Surcharge 
Adjustment. The Surcharge Adjustment 
is an adjustment amount to the existing tariff rate, which represents the 
difference between actual gas costs recovered in rates and actual gas 
costs incurred by the Company for a given historic time 
period.

 
 
"The Surcharge Adjustment per Mcf sold 
shall be determined by dividing the balance in the Balancing Account, defined 
below, at the end of the latest available month at the time of the computation 
being made under the provisions of this Section, by the estimated volume of Mcf 
to be sold during the six (6) months the Surcharge balance is to be 
amortized.

 
 
"Beginning as of the date this Balancing 
Account Provision becomes effective, seller shall establish and maintain a 
Balancing Account. Entries shall be made to this account each month as 
follows:

 
 
"(a) A debit entry equal to the 
difference between actual purchased gas cost and an amount for the same volume 
purchased computed at the average purchased gas cost applicable to the Currently 
Effective Rates, as set forth in each filing made before the Public Service 
Commission of Wyoming.

 
 
"(b) A credit entry equal to the volume 
of sales made during the month under the rate schedules multiplied by the 
Surcharge Adjustment reflected in the rates charged during the 
month.

 
 
"(c) If, as a result of any order of the 
Federal Energy Regulatory Commission which becomes final and no longer subject 
to judicial review, Seller receives from any of its gas suppliers cash refunds, 
including interest received, applicable to Seller's sales made under the rate 
schedules on and after the date this Balancing Account Provision becomes 
effective, Seller shall allocate the amount of such refunds to sales made under 
such rate schedules on the basis of the volumes of gas sold during the refund 
period. The allocated amount so determined shall be recorded as a credit to 
Seller's Balancing Account." (Emphasis in 
original.)