Opinion ID: 1771223
Heading Depth: 1
Heading Rank: 1

Heading: was the public service commission order contrary to or in excess of, its statutory authority?

Text: The Mississippi Public Service Commission is accorded its power and jurisdiction under Mississippi Code Annotated, § 77-3-5 (1972), thus having exclusive authority over retail rates for public utilities in Mississippi. State of Mississippi, ex rel Edwin Lloyd Pittman, Attorney General, et al v. Mississippi Public Service Commission, 506 So.2d 978 (Miss. 1987); Capital Electric Power Association v. Mississippi Power & Light Co., 216 So.2d 428, 430 (Miss. 1968). The Commission's authority is also derived from Mississippi Code Annotated, § 77-3-45 (Supp. 1986), which was adopted as part of the Public Utility Act of 1983, authorizing the Commission to develop reasonable rules and regulations, therefore enabling it to carry out the provisions of the Act. While broad authority and discretion has been promulgated in favor of the Commission that power is not unbridled and the rules and regulations which it has promulgated to aid in the fulfillment of its duties under the chapter must not be utilized in an arbitrary or capricious manner, It is clear under Mississippi law that an administrative agency cannot exceed the scope of authority which was granted to it by the legislature. (citations omitted). Mississippi Board of Nursing v. Belk, 481 So.2d 826, 829 (Miss. 1985). Further, the Commission's authority to interpret the statutes under which it operates may not supersede the requirements thereof, nor may it conflict with pertinent rules of law. Capital Electric Power Association v. Mississippi Power & Light Co., 240 Miss. 139, 153, 125 So.2d 739, 744 (1961). The Commission and the Company vehemently argue that no evidentiary hearing was needed or required by statute in the instant circumstance. Indeed, it seems that this question has never before presented itself before this Court and apparently, although the appellees argue otherwise, if in the interest of the ratepayers a rate increase is contested the Commission has heretofore granted a hearing. This necessarily leads to a review of the language of the statute relied upon by all parties while keeping in mind that an administrative agency cannot be vested with arbitrary and uncontrolled discretion. Howell v. State, 300 So.2d 774, 779 (Miss. 1974). Further, the Commission's rulings may not supersede the requirements of the statute. Capital Electric, supra. The Company originally maintained that its filing was for a routine rate change made pursuant to Section 77-3-37(1), therefore, not subjecting it to the listed standard filing requirements of Section 77-3-37(2). The Commission found that the rate increase was neither a routine one nor a major one [as defined in Section 77-3-37(10)]. The Commission, in its Order denying a rehearing, explains in detail why it perceives its actions appropriate for resolution of this matter, referring to the instant rate proceeding as a miscellaneous one. In so finding the Commission relied upon what it refers to as the catch all provision of Section 77-3-47, Mississippi Code Annotated (Supp. 1986), entitled Hearings by Commission. The pertinent paragraph reads: The Commission may, in addition to the hearings specifically provided for by this chapter, conduct such other hearings as may be required in the administration of the powers and duties conferred upon it by this title. The Commission cites as an example of such a proceeding those authorized by Mississippi Code Annotated, Section 77-3-41 (Supp. 1986), which provides for emergency, temporary rate changes. The second paragraph of that code section reads as follows: The commission shall have power, when deemed by it necessary to prevent injury to the business or interest of the people or any public utility of this state in case of any emergency, to permit any public utility to alter, amend or suspend temporarily any existing rates, schedules and orders relating to or affecting any public utility or part of any public utility in this state except as provided in section 77-3-42. This explanation somewhat begs the question and the attorney general's office should at least have an opportunity to cross-examine the Company prior to the implementation of such a rate increase. Further, a great deal of the rate increase is permanent, subject to a CAP, rather than temporary. Mississippi Code Annotated, Section 77-3-37(1), (2), (5), (9), and (10), (Supp. 1985), as well as the Commission's own rules, which track the statute, are relied upon in support of the attorney general's contention that proper documentation was not filed by the Company. Those sections, in pertinent part, are as follows: (1) No public utility shall make any change in any rate which has been duly established under this chapter, except as provided in this chapter. A public utility seeking a change in any rate or rates shall file with the secretary of the commission a notice of intent to change rates. Routine changes in rates and schedules that do not involve any substantial revenue adjustment may go into effect after thirty (30) days' notice to the commission or after such shorter period of notice as the commission, for good cause shown, may allow. In all other cases, the notice of intent shall contain a statement of the changes proposed to be made in the rates then in force, the new level of revenues sought, the reasons for the proposed changes and the date proposed for such changes to become effective, which date shall not be less than thirty (30) days after the date of filing. The proposed changes may be shown by filing new schedules, by plainly indicating the changes upon schedules filed and in force at the time and kept open to public inspection or by such other manner as will clearly indicate the rates to be changed and the rates proposed. All direct testimony, exhibits and other information which any utility will rely upon in support of the proposed changes shall be filed concurrently with the filing of the notice of intent. Data, documentation and exhibits shall comply with the standard requirement list established by the commission, and such other data as the commission shall request shall be supplied by such utility. (2) The Commission shall establish by rule and regulation a standard requirement list of documentation to be filed with or to be included in every notice of intent, which standard requirement list in each case shall include: ( See statute for list).       (5) The notice of intent shall state the test period adopted by the public utility in support of its proposed rate changes, which may be a twelve-month period beginning with the proposed effective date of the rates proposed in the notice. For the purpose of expediting the regulatory process, all public utilities shall keep the commission, through the public utilities staff, advised of its plans or needs for future requests for major rate changes. (9) The public utilities staff and all intervenors or protestants shall file all direct testimony, exhibits and other information which is to be relied upon regarding the proposed changes within sixty (60) days from the filing of such notice of intent. Within five (5) days after the staff, intervenors or protestants have filed direct testimony, exhibits and other information, each shall serve copies of the documentation on all parties of record and shall file a certificate of service with the commission. (10) The commission, for good cause shown, may, except in the case of major changes, allow changes in rates to take effect at the end of thirty (30) days from the date of the filing and the notice of intent, or on the effective date set out in said notice, without requiring any further proceedings, under such conditions as it may prescribe. All such changes shall be immediately indicated by such public utility upon its schedules. Major changes shall mean (a) an increase in rates which would increase the annual aggregate revenues of such public utility more than the greater of One Hundred Thousand Dollars ($100,000.00) or two percent (2%), but shall not include changes in rates allowed to go into effect by the commission or made by the public utility pursuant to an order of the commission after hearings held upon notice to the public, or (b) a change in the rate design which has a significant impact on a class or classes of ratepayers. (Emphasis Added). These filings are required by statute in all but routine rate increases not requiring substantial revenue adjustments. Therefore, this documentation should have been required by the Commission. After all the Commission itself stated that this was not a routine rate increase. Further controversy surrounds the interpretation of Mississippi Code Annotated, § 77-3-37(4) (Supp. 1986), which provides: (4) Unless the commission, upon application by a utility and for good cause shown, shall enter an order waiving one or more of the following requirements, then whenever a public utility files a notice of intent wherein an increase in the level of revenues in the amount of at least Fifteen Million Dollars ($15,000.000.00) is sought, the said standard requirement list of documentation shall include: (a) Guidelines or directives as to the public utility's presentation provided by a controlling affiliate, parent or holding company; (b) Marginal cost date; (c) Alternate rate design; (d) Conservation effectiveness; (e) A properly prepared, complete, detailed lead-lag study for the test year for the total company, Mississippi retail, other retail jurisdictions, and Federal Energy Regulatory Commission wholesale rates in support of the public utility's total working capital requirement contained therein, including all working papers in support thereof; (f) Direct testimony proposed to be offered at a hearing. (Emphasis added). The Commission understands the statute to mean a $15,000,000.00 increase in annual revenues as any other interpretation would be nonsensical since any increase, if considered over a sufficient period of time, would eventually amount to over $15,000,000.00. The Commission's logic is ill founded in that there are certainly situations in which it may implement a temporary emergency rate increase which would not amount to $15,000,000.00 annually or otherwise. The Commission does admit that proceedings under this section certainly require a public hearing (abbreviated or otherwise). It is the Commission's position that since the rate increase will be slightly under $7,000,000.00 annually a hearing was not required. It is the position of the attorney general that had the legislature meant annually, they certainly would have promulgated the statute to say that. Therefore, since the rate increase (initially to remain in effect for a period not to exceed 19 months) allows for an annual retail jurisdictional contribution to storm damage reserve of $536,175.00 for a total annual jurisdiction retail contribution of $1,286,820.00 and allows for amortization of the total expenses in loss revenues in the sum of $9,994,135.00 thereafter ordering the reduction of the increase to a level enabling the Company to recover a permanent $536,175.00 increase to its annual jurisdictional retail contribution to storm damage reserve upon which is placed a $10,928,400.00 CAP, this obviously amounts to a sum greater than $15,000,000.00. An evidentiary hearing must be granted on this matter in order to allow the representative of the State's interest to confront and cross-examine the witnesses for the Company. This conclusion is based on a review of Section 77-3-37 and the lack of authority of the Commission to create the alleged statutorily implied category of rate changes that are larger than routine but less than major. Since the statute speaks of only routine and major rate changes and since admittedly the instant rate change is not routine it is certainly questionable whether the Commission may create an implied category entitled miscellaneous.