Opinion ID: 2332363
Heading Depth: 1
Heading Rank: 8

Heading: commission audit

Text: The Commission found that there was a need to tighten up New England's accounting practices for certain expenses and that New England's existing accounting practices prevented the Commission from effectively performing its ratemaking functions. In response to these concerns, the Commission's degree contained the following: We will, therefore, require an analysis and audit of the Company's accounting practices and its System of Accounts to be performed by an independent outside firm approved by us and reporting to us. We will require the Public Utilities Commission Staff be involved in preparing the specifications and in monitoring the work while it is in progress. The audit will initially be paid for by New England Telephone, but it will be permitted to be amortized in a future rate case as fairness dictates. Re New England Telephone and Telegraph, ___ P.U.R. 4th ___, ___ (Me.Pub.Util.Comm.1977) (emphasis supplied). New England objects to this aspect of the decree, claiming that it exceeds the statutory authority of the Commission. New England does not differ with the Commission over its authority to order and conduct such an audit. However, it does challenge the Commission's authority to require New England to bear the costs. We agree and sustain New England's objections. The governing principles of law are well settled. 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, 744-5 (1960). It is axiomatic that the powers of the Public Utilities Commission are derived wholly from statute. Stoddard v. Public Utilities Commission, 137 Me. 320, 323, 19 A.2d 427, 428 (1941). The Public Utilities Commission is an administrative body of limited, though extensive, authority, having such powers as are expressly delegated to it by the Legislature, and incidental powers necessary to the full exercise of those so invested. City of Rockland v. Camden & Rockland Water Co., 134 Me. 95, 97, 181 A. 818, 819 (1935). We find no express or necessary incidental statutory authority for the Commission's requirement that New England bear the cost of the audit. [40] New England presents to us and our research discloses no statute authorizing the Commission to order a utility to bear the cost of a Commission instituted investigation. The Legislature has authorized the Commission to investigate and obtain information from a public utility, 35 M.R.S.A. § 4, and to inspect the books and records of a public utility, 35 M.R.S.A. §§ 6-7. The Commission is also authorized to prescribe the method of accounting to be used by a public utility, 35 M.R.S.A. §§ 53 et seq., and to audit its accounts, 35 M.R.S.A. § 59. However, no statute authorizes the Commission to impose the costs of such investigatory activities upon the utilities it regulates. Such power must and can only come from the Legislature. Some states do statutorily authorize their utility regulatory agencies to charge the expenses of an investigation to the utilities they regulate. But no such power appears to exist without specific statutory authority. See generally 73 C.J.S. Public Utilities § 45, at 1113-4 (1951). Thus, the courts of a number of these states have overruled the imposition of various investigatory costs where such did not fall within any specific provision of the statute in question. See United Gas Pipe Line Co. v. Louisiana Public Service Commission, 279 So.2d 195 (La.1973) (expenses of special counsel employed by Commission held not to be included in statutory authorization of recovery of certain expenses of investigation); State v. City of Newark, 87 N.J.Super. 38, 207 A.2d 719 (1965), aff'd 90 N.J.Super. 68, 216 A.2d 246 (1966) (municipality held not to be included within statute authorizing imposition of charges upon Public Utilities); State v. Pacific Telephone and Telegraph Co., 27 Wash.2d 893, 181 P.2d 637 (1947) (expenses incurred upon appeal held not to be among costs of investigation recoverable under statute). It appears to be generally accepted that a utility commission may not impose the costs of its investigations upon a utility without specific statutory authorization. No such statutory authorization exists with respect to the Commission's order in this case that New England bear the costs of the audit. [41] Accordingly, we hold that the Commission has no authority to impose the cost of an audit upon New England, and, we sustain New England's objections on this issue.