Opinion ID: 2375412
Heading Depth: 1
Heading Rank: 2

Heading: Purchased-Gas Expense

Text: In 1977 the company received a refund from its gas supplier totaling $956,000. [6] By a previous ruling, the commission had ordered some $756,000 returned to the company's regular customers. The remaining $200,000 represents refunds on gas purchased from the company by contractual customers. These customers do not fall within the ambit of the statute, and the company is under no obligation to refund those funds directly. See Providence Gas Co. v. Burke, R.I., 380 A.2d 1334, 1336 (1977). With respect to the proposed rates at issue here, the commission chose to treat the retained $200,000 as a windfall-income item not to be included in the test-year calculations. [7] The commission did, however, order that the money be returned to the company's customers by reducing the company's operating expenses for a 3-year period at a yearly rate of $66,000. The company maintains that the commission's action was arbitrary and unlawful because, in prior rate cases, the commission did not allow utilities to recover extraordinary losses. Moreover, the company contends that prior instances of extraordinary income have not been subject to similar treatment. The short answer to the company's position is that the commission is not bound by the methodology employed in considering prior applications. See United States v. Public Utilities Commission, 393 A.2d at 1096; quoting Permian Basin Area Rate Cases, 390 U.S. 747, 776-77, 88 S.Ct. 1344, 1365, 20 L.Ed.2d 312, 342 (1968). Our concern is whether the commission's end result in each case is lawful and reasonable as gleaned from the record. Rhode Island Consumers' Council v. Smith, 111 R.I. at 280, 302 A.2d at 764. Here, the record shows that the refund in issue reduced the company's overall purchase expenses. We acknowledge that this refund involves customers who contracted for gas at a set price and would not, under the terms of their contract with the company, be entitled to a direct reduction in their purchase price. Nevertheless, the customer revenue needed to meet total purchased-gas expense is lowered by virtue of the refund. We therefore find it reasonable for the commission to attempt to reach an equitable result by reducing the company's general purchased-gas expense by the amount of the refund.