Opinion ID: 2280428
Heading Depth: 1
Heading Rank: 1

Heading: Recoupment Period

Text: Several matters with respect to the recoupment issue are not presently in conflict, including the amounts involved. In its order of August 27, 1980, the Board allowed recoupment in No. 4033 from July 24, 1975, the proposed effective date of the proposed rates, to April 1, 1976, effective date of the rates approved by the Board on March 24, 1976. No one questions the date used for initial recoupment. Both parties question the terminal date. The Company claims it should be September 14, 1979, the date of an economic change under 30 V.S.A. § 226(b) when a further increase absorbing it became temporarily effective, thus terminating a period which would otherwise have run until final determination. The public claims the terminal date should have been January 24, 1976, six months after the proposed effective date of the rates. In the alternative, its claim is that the period adopted by the Board is supportable as a matter of discretion. The difference in amounts involved is substantial. The Board order allowed a recoupment of $644,000. Under the Company's claim of a September 14, 1979, termination date, the allowable recoupment would be $7,165,000. These conclusions, and the methods by which they are computed, are not the subject of dispute in this appeal. Both parties concede the issues to be legal, not factual, and to revolve around interpretation of 30 V.S.A. § 226(b). That statute provides: (b) If the board orders that the changed rate shall not go into effect until final determination of the proceedings, and if, upon final disposition of the issues involved in such proceeding, the rates as finally determined are in excess of the rates in force at the time such changes are filed, then such public service company shall be permitted to amortize and recover, under the direction of the board, by means of a temporary increase over and above the rates finally determined, such sum as shall represent the difference between the net operating earnings obtained from the rates in force at the time such changes are filed and the net operating earnings which would have been obtained under the rates finally determined if applied during the period such suspension order was in effect based upon the same volume of business, or such portion of the difference as may be just and reasonable, in the judgment of the board, in view of economic changes which may have occurred since the filing. (Emphasis added). Consideration of the controlling provisions of § 226(b) must be coupled with examination of the following section, 30 V.S.A. § 227. Section 227(a) provides, in substance, that if the Board orders a proposed change not to go into effect pending final determination, it shall proceed to hear the matter as promptly as possible, and determine it within six months of the proposed effective date. If it does not do so, the company may put the proposed rates into effect under an approved repayment bond. The arguments of the parties, and the reasoning advanced by the Board, revolve around these statutory provisions. We must analyze these contentions. The public argues, in chief, that the regulatory lag very definitely involved here could have been avoided by the Company, by filing the § 227(a) bond, and that the decision to do so or not was totally within its control. It says that the period such suspension order was in effect terminated on January 24, 1976, six months after the proposed effective date of the rate schedule, relying on our holding in In re New England Telephone & Telegraph Co., 131 Vt. 310, 315, 305 A.2d 598, 601 (1973). In that case we held that where such a bond is filed, the Board has no further authority to suspend the operation of the rates. We did not hold, as the public would seem to argue, that the company is required to post a bond or forever forgo its right of recoupment. The Company has the option of filing a § 227(a) bond, but the public would in effect have us change the optional posting of a bond into a requirement that one be posted. The argument that such ruling, in this case, terminated the suspension order after six months, within the meaning of § 226(b), is ingenious but untenable. In fact, the suspension order continues unless suspended by the filing of a bond, and that did not occur in this case. Nor is such filing totally within the control of the Company, as is urged. Its amount and its sureties are subject to Board approval. And, as was conceded upon argument, the not inconsiderable expense involved in such bonding would be an item ultimately chargeable to the ratepayer. Further, the order involved in the first appeal, on March 24, 1976, purported to be final and cut off the right to implement the rates under bond. Nor are we impressed by the argument that the regulatory lag involved here occurred at the whim of the Company, with resultant great injustice to the ratepayers. The record does not support that contention. Some of the delay is undoubtedly inherent in the statutory process; some of it was avoidable. But allocation of blame is not our function, and is not possible on the record before us. We do note that subsequent to our remand, some two and one-half years elapsed before the decision here appealed from. The public's position is inconsistent, also, with the result reached in In re Village of Stowe Electric Department, 134 Vt. 559, 367 A.2d 1056 (1976), in which we affirmed a recoupment award of approximately one year. See also In re Green Mountain Power Corp., 136 Vt. 170, 174-75, 385 A.2d 1110, 1112-13 (1978). The public's alternative position is that the Board properly determined, within its discretionary powers, that final disposition of No. 4033 occurred on April 1, 1976, the effective date of its March 24, 1976, order. It also argues that this determination was correct as a matter of law, citing 30 V.S.A. §§ 3(b), 12, and 14. The cited statutes have little or no bearing on the issue we must here determine, which is when the final determination or final disposition of the issues referred to in 30 V.S.A. § 226(b) occurs. Section 3(b) simply defines when a case shall be deemed completed (the time of entry of a final order even though appeal is taken) for the purpose of establishing when a board member who retires before such completion of the case is entitled to participate in concluding and deciding that case under § 3(a). Sections 12 and 14 preclude an automatic stay of a final order by appeal and set out procedures for obtaining such a stay. None of these statutes has any particular relevance to the real question at issue here, which is the period during which the suspension of the proposed rates was in effect. That question is not answered by determining when a judgment is final for purposes of taking an appeal, nor by deciding when a retired board member may participate. The filed rates were effectively suspended, under 30 V.S.A. § 227, by an order entered soon after they were filed, and remained so suspended until the order of August 27, 1980. We concur in the position taken by the Company that, as a matter of law, rather than discretion, this is the period to which the statutory right of recoupment applies, absent intervening economic change. That intervening economic change is conceded by the Company to have occurred on September 14, 1979, with the implementation of temporary rates in Docket No. 4366 exceeding the amount of the determined deficiency. Our conclusion that final disposition of the issues here involved occurred in 1980, rather than 1976, is strengthened by the fact that the 1980 order resulted in updated revenue requirements, and significant determinations with regard to property held for future use, working capital, and rate design which were not part of the 1976 order. The 1980 date contended for is both the legal and appropriate terminus for the right of recoupment. The 1980 date is limited, however, by the intervening temporary rate increase approved September 14, 1979, which ended the period of rate deficiency under the filed rates here in question. The statutory language compels this conclusion, and the equities of the situation dictate no other result. The recoupment allowed is a large sum, but it represents only what the ratepayers would have paid had a bond been posted, with such payment deferred. We therefore hold that the recoupment period applicable to the instant case, in Docket No. 4033, is July 24, 1975, to September 14, 1979, and that reversal and remand is required for the allowance of appropriate recoupment for that period.