Opinion ID: 2038160
Heading Depth: 1
Heading Rank: 1

Heading: department's authority.

Text: We first examine the nature and scope of the department's authority. Gas and electric companies are permitted to issue only such ... stock and bonds ... as the department may ... vote is reasonably necessary for the purpose for which such issue ... has been authorized. G.L.c. 164, § 14. In Fitchburg Gas & Elec. Light Co. v. Department of Pub. Utils., 394 Mass. 671, 678 (1985) ( Fitchburg I ), we reiterated our determination that the statute's purposes include the vesting in public officers [of] the right to determine the general question of the reasonable necessity of the issue; and repeated our statement that the department must inquire whether the declared purpose of the proposed issue is ... in the circumstances a reasonably necessary purpose.... `[R]easonably necessary' means reasonably necessary for the accomplishment of some purpose having to do with the obligations of the company to the public and its ability to carry out those obligations with the greatest possible efficiency.... Id., quoting Lowell Gas Light Co. v. Department of Pub. Utils., 319 Mass. 46, 52 (1946). Thus, the department's authority is not limited to a perfunctory review of the proposed financing. [8] Id. The department's authority regarding MMWEC is expressed in substantially similar terms: The corporation shall issue only such amount of bonds as the department may from time to time vote is reasonably necessary for the proposed purpose of such issue.... St. 1975, c. 775, § 17. In addition, the opinions on which we relied in construing G.L.c. 164, § 14, in Fitchburg I, were issued long before the Legislature adopted the phrasing of § 17. See Lowell Gas Light Co. v. Department of Pub. Utils., 319 Mass. 46, 52 (1946); Fall River Gas Works v. Gas & Elec. Light Comm'rs, 214 Mass. 529, 538 (1913). Moreover, the language at issue in Lowell Gas, supra at 52, and in Fitchburg I, supra at 678, is identical, and that construed in the Fall River case, supra at 532, contains language similar to that in St. 1975, c. 775, § 17. Therefore, we conclude that in selecting the phrasing for § 17 the Legislature was aware of those earlier interpretations and intended that § 17 be similarly construed. There is no indication that the Legislature intended that a less demanding standard be applied to an application from a public instrumentality than from a private corporation. Hence, we conclude that with respect to the application of MMWEC, as well as on those of the investor-owned utilities, the department's authority was that defined in Fitchburg I. With the Fitchburg I decision as background, the investor-owned utilities and MMWEC turn to arguing that the department is obligated to consider whether the risks regarding noncompletion and further increased costs are reasonably necessary to meeting their obligation to serve the public interest. They contend that under Fitchburg I the department is required to consider all factors, especially those of power need and alternative sources of supply, that bear on the public interest. In affirming substantial segments of the department's order we do not diminish the significance of our statements defining reasonably necessary. Although in Fitchburg I we referred to the obligations which companies have to the public and to their ability to meet them efficiently, we also restated that the burden of proving reasonable necessity is on the companies, noted that the department has a range of discretion, and repeated our statement that the determination whether an issue is reasonably necessary is a question for the department, not for the court. Id. at 678, 680. That language is instructive here as more fully discussed later in this opinion. The investor-owned utilities and MMWEC neither met their burden of proof on cost and completion nor persuaded the department to consider other factors no matter what it found regarding cost and completion. [9] MMWEC, focusing on the statute, argues that the denial of financing authority and the consequences of that denial are inconsistent with the letter and purpose of St. 1975, c. 775, § 17, especially because `reasonably necessary' means reasonably necessary for the accomplishment of some purpose having to do with the obligation of the Company to the public and its ability to carry out those obligations with the greatest possible efficiency, citing Lowell Gas Light Co. v. Department of Pub. Utils., supra at 52. It points to a series of binding obligations which the department approved in the past, reliance based thereon, its need to replenish funds by December 1, 1985, to meet its Joint Ownership Agreement (JOA) obligations, the alleged department practice indicating that reasonably necessary means that other resources are not available to pay for those obligations, the alleged failure by the department to consider the consequences of its action, and the provision that the act is to be liberally construed (St. 1975, c. 775, § 23),  all as requiring a decision authorizing the financing, at least subject to terms and conditions in the public interest. The department must not only determine whether the amounts sought are reasonably necessary, but must also decide whether the purposes themselves are reasonably necessary. This decision permits, indeed requires, a determination by the department as to the relative risk involved. These issues are for the department, not for the court. We emphasize that we interpret the department's decision as stating that it was unable to reach a finding that Seabrook I is reasonably necessary, rather than determining it is not necessary. We conclude, therefore, that the department neither exceeded its authority nor failed to exercise it appropriately.