Opinion ID: 2284798
Heading Depth: 2
Heading Rank: 4

Heading: Business and Civic Support Payments

Text: The Commission further disallowed as operating expenses for ratemaking purposes WGL's contributions to various business and civic organizations. [59] Although it recognized that all of these organizations appeared to be meritorious and deserving of the business community's support, the Commission concluded: WGL's management decision to contribute to these organizations is not the ratepayers' concern. However worthwhile these organizations may be, the ratepayers may not be required to make forced contributions to them. Since the ratepayers do not directly benefit from WGL's payments in terms of gas service, they should not bear this cost. [Order 6051, at 72.] We cannot conclude that the Commission's decision on this point was arbitrary or unreasonable. The Company's contributions to these organizations are tantamount to charitable donations. Reviewing courts have generally held that it is a proper exercise of agency discretion for a regulatory commission to exclude such donations from a utility's cost of service. See, e.g., Alabama Power Co. v. Alabama Public Service Commission, supra at 779-80; New England Telephone and Telegraph Co. v. Public Utilities Commission, supra at 55-56 (Me.); State ex rel. Utilities Commission v. Southern Bell Telephone and Telegraph Co., 24 N.C.App. 327, 335, 210 S.E.2d 543, 549 (1975), vacated on other grounds, 289 N.C. 286, 221 S.E.2d 322 (1976). Indeed, a growing number of courts have held that charitable contributions may not be recovered from the ratepayers, and have reversed utility commission orders that allowed such contributions as operating expenses. See, e.g., Alabama Power Co. v. Alabama Public Service Commission, 390 So.2d 1017, 1027 (Ala.1980); City of Cleveland v. Public Utilities Commission, supra 63 Ohio St.2d at 73-74, 406 N.E.2d at 1379-80 (and cases cited therein). Contra, New England Telephone and Telegraph Co. v. Department of Public Utilities, 360 Mass. 443, 480-84, 275 N.E.2d 493, 518-21 (1971). We note too that the Uniform System of Accounts treats charitable contributions as a below-the-line deduction from income, chargeable to the shareholders rather than the ratepayers. 18 C.F.R. Pt. 201, Account 426.1 (1980). But see note 53 supra. We accordingly find no error in the Commission's conclusion that the ratepayers may not be required to make forced contributions to business and civic organizations, Order 6051, at 72, and we therefore affirm the Commission's below-the-line treatment of these expenses.