Opinion ID: 1538573
Heading Depth: 1
Heading Rank: 2

Heading: The Statutory Framework of the Proceedings

Text: Our review of the Commission's actions must proceed in accordance with the postulate that . . . the Public Utilities Commission possesses only statutory powers. If it exceeds those powers, or, though it has jurisdiction over the subject-matter, proceeds in a manner unauthorized by the statute, or otherwise exceeds its authority, its decrees are of no validity,. . .. S. D. Warren Company v. Maine Central Railroad Company, 126 Me. 23, 25, 135 A. 526, 528 (1926). The parties agree that New England's rate filing of October 8, 1974 was made pursuant to 35 M.R.S.A. § 64. Hence, under Section 64 the rates, tolls and charges set forth in that schedule would have taken effect as the lawful rates, tolls and charges 30 days after their filing, [8] had not the Commission decided to utilize the powers granted it by 35 M.R.S.A. § 69. Thus acting, the Commission: (1) directed New England to file testimony and such other evidence as it might see fit in support of the proposed rate increase, and (2) ordered that the proposed schedule be suspended for 3 months. The Commission then proceeded to study the evidence submitted by New England. [9] This study could not be completed before February 7, 1975, the date of the expiration, by law, of the initial 3 months suspension, and which said expirationwere there no further suspensionwould permit the proposed $21,000,000 rate increase to become effective by operation of law. The Commission, therefore, acting again under 35 M. R.S.A. § 69, issued a second suspension order, continuing its suspension 5 more months, until July 7, 1975. After the Commission found it necessary to delay the cross-examination of the evidence submitted by New England beyond early May 1975 because of the retirement of Commissioner Feehan, and the Commission subsequently made its order of July 3, 1975, the posture of the proceedings became as follows: (1) New England had filed a changed schedule of rates, tolls and charges pursuant to 35 M.R.S.A. § 64; (2) the Commission had decided that these rates should be investigated, and had, before the rates became effective, issued an order, under 35 M.R.S.A. § 69, suspending their effectiveness for 3 months; (3) on February 6, 1975, the Commission had issued an order extending that suspension for the additional 5 months allowed by 35 M.R.S.A. § 69; (4) and thus the rates contained in the schedule filed by New England on October 8, 1974 remained on July 3, 1975 proposed rates within the purview of Section 69 and, as such, still under investigation by the Commission pursuant to said Section 69. All parties agree that such was the status of these proceedings immediately prior to the issuance of the July 3, 1975 order. There, however, agreement ends. New England views the framework of the proceedings from and after the Commission's July 3, 1975 order as follows. New England claims that it had consented to a suspension of the $21,000,000 rates beyond July 7, and accepted in return the Commission's promise to authorize a rate increase subject to refund or surcharge, in order that New England should finally receive the same total revenue that it would have received had a final rate order been made on July 7. The Commission, on the other hand, argues that the July 3, 1975 order, coming as it did before July 7, (1) terminated the running of the final suspension period, but (2) by fulfilling the conditions of the May 5 agreement upon which the Commission relied in suspending the hearings, allowed the investigation authorized by Section 69 to continueNew England's agreement substituting for Commission suspension as the mechanism by which the revised rates filed by New England on October 8, 1974 (under Section 64) were prevented from becoming effective, after July 7, 1975, by operation of law. Thus, whereas New England claims that, by agreement, a utility and the Commission have power to extend the suspension period prescribed by statute, the Commission by-passes this issue and asserts, instead, that despite termination (or expiration) of the suspension authorized by Section 69, the Commission may continue to conduct a Section 69 investigation so long as the utility agrees that the revised schedule of rates it filed under Section 64 shall not become effective. We reject each of these interpretations of Section 69. In New England Telephone & Telegraph Company v. Public Utilities Commission, Me., 354 A.2d 753 (1976) we undertook a comprehensive review of the history of our statutes relating to public utilities. We there noted that what is now 35 M.R.S.A. § 69 was one of several statutes enacted in 1917, four years after the creation of the Public Utilities Commission, and the enactment of Maine's basic scheme of utility regulation. We pointed out that as originally enacted in 1913, [10] the Public Utilities Act empowered the Commission to investigate utility rates and charges then in effect, and, if such were found unjust or unreasonable to fix and order substituted therefor such rate or rates, tolls, charges or schedules as shall be just or reasonable. [11] We also explained that the original (1913) statutory scheme did not interfere with a utility's ability to make changes, entirely unilaterally, in its rates, tolls and charges. Such changes became effective 10 days after notice of them was given the Commission. Should the Commission believe the filed changes of rates to be unjust or unreasonable, the Commission's only course of action would be an investigation and hearing which could culminate in a Commission order that the utility substitute for its then effective rates (i. e., the filed changed rates which would have been effective during the period of investigation) rates as fixed by the Commission. [12] Thus, as mentioned in our prior opinion, inherent in this system of utility regulation was a period of regulatory lagthe time between the effective date of the new rate filed by the utility and the effective date of the Commission-ordered substituted rate. Further, because the system allowed the utility's filed changes of rates to be effective during the investigation period, this lag could cause harm to utility customers by requiring them to pay unjust or unreasonable rates during the period of the Commission's investigation. P.L.1917, Chapter 131, which includes what is now 35 M.R.S.A. § 69, was designed to deal with this problem. Section 69 granted to the Commission two interrelated powers previously withheld from it: (1) the power to investigate a proposed change in rates before it became effective, and (2) the power to suspend the operation of proposed rate schedule [p]ending such investigation and order. Section 69 grants to the Commission power to suspend a proposed rate only for a maximum period of 8 months. Nowhere in Section 69, or in any other section of 35 M.R.S.A., is the Commission vested with authority to extend a suspension beyond this deadline by agreement or otherwise. The Commission has no life except as life is given by the Legislature, Auburn Water District v. Public Utilities Commission, 156 Me. 222, 226, 163 A.2d 743, 745 (1960), and the Legislature, in enacting Section 69, chose to set an absolute limit to the period of suspension. We, therefore, find unacceptable New England's interpretation of the effect of the July 3, 1975 order. The Commission's order of July 3, 1975 did not effect an extension of the period of suspension because, regardless of agreement by the utility, the law absolutely prohibits extension of a suspension beyond the maximum period stated in the statute. We also reject the argument of the Commission that the July 3 order terminated the suspension, while permit[ting] the processing of the case beyond the July 7 deadline . . . under Section 69. The two powers granted the Commission by virtue of Section 69 are interdependent. The Commission may suspend only [p]ending investigation and order. It may investigate only a  proposed change or changes . . . at any time before the effective date of such change or changes . . .. The suspension power granted by paragraph two of Section 69 allows the Commission to delay, but not to abolish, the effective date of the proposed changes. During this period of delay, the changes remain proposed and, as such, a proper subject for the investigation authorized by Section 69. At the expiration of this period, if the proposed rates are not found unjust or unreasonable and a substituted rate is not authorized in the meantime, the effective date, delayed but not abolished by the suspension, has arrived. The filed rate is no longer, then, a proposed rate; it is an effective rate, and, as an effective rate, it is beyond the further power of the Commission to investigate pursuant to Section 69. [13] We hold, then, that the Commission order of July 3, 1975 did not extend beyond the July 7, 1975 statutory deadline either the Section 69 suspension or the Section 69 investigation. The Commission is without authority to utilize either of such Section 69 powers except during a period absolutely limited to (1) the 30 days during which a Section 64 filing is prevented from becoming effective by the language of Section 64, [14] plus (2) a 3 month initial suspension, plus (3) a 5 month additional suspension. Having determined that the law precluded the July 3, 1975 order from achieving the result the parties intended in fact, we must determine what the legal effect of the July 3 order was, thereby to delineate the true structure, in contemplation of law, of the instant proceedings. It is clear from the July 3 order that the rates there authorized (the $9,500,000 rates) were intended to remain in effect only temporarily. They were to be charged pending a later order of the Commission fixing New England's revenue requirements. As we stated in New England Telephone & Telegraph Company v. Public Utilities Commission, Me., 354 A.2d 753 (1976), the Commission's only power to effect a temporary rate derives from 35 M. R.S.A. § 311. [15] We conclude, therefore, that on July 3, 1975, the Commission authorized the filing by New England of a new schedule of rates, tolls and charges, to be in effect temporarily, pending the Commission's determination of New England's revenue requirements and the establishment of a permanent rate designed to supply the needed revenue. On July 7, 1975, when the maximum period of suspension allowed by Section 69 would have expired, the result which would have followed in ordinary course would have been that since the period of suspension had expired without a finding that the proposed rates were unjust or unreasonable and without the authorization of substituted permanent rates, the $21,000,000 rates (filed under Section 64 by New England on October 8, 1974) would have become effective by operation of law. Such was not the result, here, however, because New England, having legal capability as the party filing the proposed $21,000,000 rates to waive whatever right Sections 64 and 69 conferred upon it to have its proposed rates become effective rates by operation of law, did in fact waive such right. [16] Moreover, after July 7, 1975 (if not as of July 3rd) the $21,000,000 rates lost their character as proposed rates, within the purview of Section 69, since, as clarified ante, for the purposes of Section 69 a rate cannot remain proposed for more than the maximum period of suspension. Because the $21,000,000 rates had lost their character as proposed rates under Section 69, the Commission had no further authority under Section 69 to investigate them; the Section 69 proceeding had come to its end. In light of the foregoing conclusions that (1) the rate schedule filed by New England on July 15, 1975 and approved by the Commission on July 16, 1975 (pursuant to the Commission's July 3 order) place temporary rates in effect, and (2) the Section 69 proceedings had been terminated we now proceed to determine the true nature of the proceedings, in legal contemplation, which the Commission had conducted commencing with July 21, 1975 and which produced the Commission's order of February 13, 1976. 35 M.R.S.A. § 296 states: Whenever the commission believes that any rate or charge is unjust or unreasonable, or that any service is inadequate or cannot be obtained, or that an investigation of any matter relating to any public utility should for any reason be made, it may, on its own motion, summarily investigate the same with or without notice. If after making such summary investigation the commission becomes satisfied that sufficient grounds exist to warrant a formal public hearing being ordered as to matters so investigated, it shall furnish such public utility interested a written statement giving notice of the matter under investigation. Seven days after such notice has been given, the commission may proceed to set a time and place for a formal public hearing as provided. 35 M.R.S.A. § 306 endows the Commission with further authority, stating: The commission may at any time upon notice to the public utility, and after opportunity to be heard as provided in section 293, rescind, alter or amend any order fixing any rate or rates, tolls, charges or schedules or any other order made by the commission, and certified copies of the same shall be served and take effect as provided for original orders. Finding in these two statutes ample authority for a Commission investigation of the adequacy of the temporary rates authorized by the order of July 3, 1975, we decide that (1) it was these temporary rates which the Commission was investigating from and after July 21, 1975; (2) this investigation was not a Section 69 investigation but was one being conducted as a new investigation under Section 296-Section 306; and (3) it was these temporary rates, not the $21,000,000 rates, whih constituted the subject-matter addressed by the Commission's order of February 13, 1976.