Opinion ID: 2284798
Heading Depth: 1
Heading Rank: 11

Heading: application of the president's 1978 voluntary wage and price guidelines

Text: In December, 1978, the Council on Wage and Price Stability published voluntary wage and price guidelines implementing the President's anti-inflation program. See 43 Fed.Reg. 60,772 (Dec. 28, 1978) (codified in 6 C.F.R. Pt. 705). The Council specifically indicated that the guidelines should apply to rates charged by natural gas utilities, and it urged that federal and state regulatory commissions assure compliance to the fullest extent possible. 43 Fed.Reg. at 60,777-78. [69] In the proceedings below, the Commission reviewed its proposed rate schedule in light of the applicable guidelines, and determined that the new rates were in full compliance with the program's price deceleration standard. Order 6051, at 101-04. The Company contends that it was error for the Commission to rely on the guidelines in setting the Company's rates. The gravamen of its argument is that neither the guidelines nor even the Council's congressionally-enacted organic statute can limit the Commission's duty to set rates that will enable the Company to earn a fair rate of return. The Commission and People's Counsel treat this question as a non-issue, however, because the guidelines ultimately had no effect on the rates adopted by the Commission. We agree with the Commission and People's Counsel that no case or controversy is presented by the Commission's merely having checked the new rates against the Administration's wage and price standards. The Commission's deference to the standards cannot be reviewed in a vacuum; we may consider only the overall reasonableness of the rates adopted by the Commission. See Federal Power Commission v. Hope Natural Gas Co., supra 320 U.S. at 602, 64 S.Ct. at 287. Thus, before we may assess the propriety of applying the guidelines in cases such as this one, we first must find, at a minimum, that the guidelines affected the level of rates established for the utility. Even then, it probably would be inappropriate for us to judge the validity of the guidelines as applied absent a further determination that the rates established by the Commission would deprive the utility's shareholders of a fair return on their investment. In this case, the Commission simply observed that its proposed rates passed muster under the guidelines. The guidelines played no affirmative role in the Commission's formulation of the rate schedule. WGL suffered no prejudice by virtue of the Commission's reference to the guidelines; therefore, there is no genuine issue presented for review on this point. Affirmed. PRYOR, Associate Judge, concurring: I join in the majority opinion affirming the Commission's Order. I note, however, that a divided Commission excluded certain expenses claimed by the Company in the areas of advertising, trade and civic association dues, and for community affairs programs. As I read the Order, it does not reject those items as categorically unrelated to the interests of the ratepayer; rather, the rulings rest on the narrower ground that the Company did not carry its burden of proof by merely asserting the claimed expenses. If it is true, as the dissenting Commissioner indicates, that this greater scrutiny is a departure from past practice, then the Commission shouldas it indicates in its Order take the necessary steps to clarify ... the treatment of advertising expenses in the near future. Viewing the case as a whole, it is clear that the majority and dissenting opinions, in discussing the numerous issues at length, disagree, at bottom, on the lawful and appropriate role of the Commission in approving and structuring the rates of a public utility. Putting aside the dissenter's characterizations of the majority's views, the fundamental question which we have decided is whether the Commission's Order, innovative though it may be, is within the authority entrusted to it and is not arbitrary, capricious, or unreasonable. I think the Order passes the statutory test and I therefore vote to affirm. HARRIS, Associate Judge, [] concurring in part and dissenting in part: While I concur in the result reached on many of the issues in this appealand in fact authored, but for a number of selective changes, most of those portions of the court's per curiam opinion with which I do not disagreeI believe the majority is patently wrong in sanctioning the enormously disparate rate design prescribed by the Commission in this proceeding. I also cannot concur in the majority's affirmance of the below-the-line treatment of advertising and certain other administrative expenses. Further, I am convinced that a number of the other issues on review present much closer questions than the majority's per curiam opinion would appear to acknowledge. I address each of my major areas of disagreement separately, devoting the bulk of this opinion to that area in which I find the error to be the most egregious: rate design.