Opinion ID: 2374299
Heading Depth: 1
Heading Rank: 4

Heading: The WMATA Rate Increase

Text: In the order on appeal the Commission changed the interclass rate design, [6] equalizing the rate of return paid by Metro under PEPCO's Rapid Transit (RT) schedule (Metro is the only customer in this class) with that paid under the General Service (GS) schedule which sets out the rates for PEPCO's other large commercial customers. WMATA objects that this decision was not supported by substantial evidence in the record. More specifically, while WMATA does not appear to deny that some increase was appropriate, it argues that the decision to equalize the rates of return paid under the RT and GS schedule is not supported by specific data showing that the costs of supplying electricity to customers in these two classes are the same. Nothing short of this evidence, WMATA contends, will satisfy the requirement of substantial record evidence to support the Commission's decision to grant the rate design alteration. We do not agree. It is our function to ensure that the rate design employed by PEPCO is reasonable, just, and nondiscriminatory. D.C.Code § 43-501 (1981). In assessing this we must assure that the Commission ... consider whether customers had paid different amounts for the same service under similar circumstances. Atlantic Telephone Co. v. Public Service Commission, 390 A.2d 439, 444 (D.C.1978). The Commission's judgment was that the service provided Metro was similar enough to the service provided to customers in the GS class as to compel the equalization of those rates of return. This decision was supported by substantial evidence. The record indicates that, while Metro's consumption of electricity is a relatively small part of PEPCO's output, it is growing rapidly, and indeed, is the fastest growing single customer load on PEPCO's system. (Record at 1080-81, 1670.) Evidence further indicates that marginal plant costs  those costs associated with increases in generating capacity that involve investment in PEPCO's physical plant  are higher than embedded costs. (Record at 1661-66.) Due to its rapid expansion, Metro is forecast to account for a large percentage of the total growth in PEPCO's generating capacity in the next decade (Record at 1089-92), and, therefore, will bear the greatest responsibility for PEPCO's increasing marginal costs. Contrary to WMATA's position, the PSC was not required to quantify the amount of PEPCO's marginal costs for which Metro was responsible and relate it to the WMATA rate increase. In Apartment House Council of Metropolitan Washington, Inc. v. Public Service Commission, 332 A.2d 53, 57 (D.C.1975), we stated that [i]t is not necessary that differences in rate of return be specifically and quantitatively supported by customer class-cost considerations. This language appears to condone differences among the rates charged to different customer classes, a proposition which is not in doubt in this jurisdiction. In fact, in Apartment House Council we allowed a rate increase which had a disproportionately larger effect on certain classes. We quoted with approval the Commission's conclusion that: [W]e ... require that the greater burden of necessary rate increases be imposed on the classes of customers and quantities of use that appear largely responsible for capacity expansion and increased unit cost investment by PEPCO. [ Apartment House Council, supra, 332 A.2d at 55 (quoting Formal Case No. 596, Order No. 5614, at 18-21, Nov. 16, 1973) (footnotes omitted).] In support of that conclusion, we noted the Supreme Court's language in Colorado Interstate Gas Co. v. Federal Power Commission, 324 U.S. 581, 589, 65 S.Ct. 829, 833, 89 L.Ed. 1206 (1945), [a]llocation of costs is not a matter for the slide-rule. It involves judgment on a myriad of facts. It has no claim to an exact science. Quoted in Apartment House Council, supra, 332 A.2d at 57. In the present case the Commission considered evidence indicating that Metro has characteristics similar to PEPCO's GS customers who account for a large proportion of PEPCO's total demand, grow at a greater rate than other classes, and pay higher rates for electricity. (Record at 1080-96, 1670-71.) Under these circumstances we cannot say that unreasonable or discriminatory rates have been levied against WMATA and we defer to the Commission's decision.