Opinion ID: 2279962
Heading Depth: 1
Heading Rank: 11

Heading: The Residential Customer Charge and Phase II of the Proceeding

Text: In 1978, the PUC changed the Company's residential energy charge from a declining block to a flat rate. [9] In conjunction with that change, the PUC also raised the minimum residential customer charge from $3.40 to $5.70. Re Central Maine Power Company, 26 PUR 4th 388, 425-29 (Me.P.U.C.1978). Included in the increased minimum customer charge were the Company's minimum distribution costs. [10] In 1979, the Legislature supplemented the Electric Rate Reform Act, 35 M.R.S.A. § 91 et seq., with a new provision, 35 M.R.S.A. § 96. Section 96 declares: The Public Utilities Commission, in approving any minimum customer charge in an electric utility rate proceeding subsequent to the effective date of this section [Sept. 14, 1979], shall consider whether the exclusion of any minimum distribution costs incurred by the utility from such customer charge may be reasonably expected to advance the basic findings and purposes of this chapter. If the commission so finds, it shall exclude from the customer charge any minimum distribution charges which do not advance the basic findings and purposes of this chapter. P.L.1979, c. 539 (emphasis added). The basic findings of the Electric Rate Reform Act are that improvements in rate design potentially can reduce cost of service, promote energy conservation, and encourage efficient use of existing plants. 35 M.R.S.A. § 92. Two months after the Company filed in this case under 35 M.R.S.A. § 64 for permission to increase rates, the PUC initiated an investigation, pursuant to 35 M.R.S.A. § 296, into rate design and the Company's cost of service. Docketing the former as No. 80-25 and the latter as No. 80-66, the PUC consolidated them by order of April 2, 1980. Upon consolidation, it then bifurcated the proceeding for purposes of hearing into two phases. Revenue requirement issues were heard in Phase I. The PUC's decision on those issues is presently on appeal. Issues dealing with rate design and cost of service, including the minimum distribution issue, were deferred to Phase II, which presumably began shortly after the Commission's October 31, 1980, decision in Phase I. The Maine Committee for Utility Rate Reform, an intervenor below, now claims that the PUC impermissibly ducked the clear mandate of the above-quoted Section 96 by postponing consideration of whether minimum distribution costs should be excluded from the $5.70 customer charge. Both the charge and the charge's inclusion of minimum distribution costs have been perpetuated by the order in Phase I. The Rate Reform Committee objected to postponement before the PUC handed down its Phase I decision. According to the Committee, the purported consolidation and bifurcation of what are and remain essentially two proceedings is unwarranted. Because the Company's Section 64 filing on February 1, 1980, was in fact an electric utility rate proceeding subsequent to the effective date of 35 M.R.S.A. § 96, id., the PUC had no choice but to heed Section 96's mandate immediately. Despite this Court's previous observations that rate design issues are of secondary importance to a utility's revenue needs, see e. g., Central Maine Power Company v. P.U.C., Me., 416 A.2d 1240, 1250 (1980), the legislative intent behind Section 96 was, according to the Committee, to put the minimum distribution issue on a par with revenue requirements, thereby conferring on the former a first priority status. The PUC responds with a threefold argument. First, it cites the well-established principle that, unless clearly erroneous, an agency's interpretation of a statute the agency is required to enforce is entitled to deference. E. g., Kelly v. Halperin, Me., 390 A.2d 1078 (1978). Next, it notes that the present minimum customer charge is intimately related not just to minimum distribution costs but to overall costs of service, see e. g., Central Maine Power Company v. Public Utilities Commission, Me., 405 A.2d 153, 188-189 (1979); that consideration of overall costs of service in the context of rate design is mandated both by PURPA and by Maine's Electric Rate Reform Act, of which Section 96 is a part; that deferring Section 96 issues, therefore, to a phase of the proceeding in which PURPA and the rest of the Rate Reform Act will predominate is not only appropriate but also necessary. Third, the PUC argues that the Phase I decision did not in fact approve the customer charge within the meaning of that word as used in Section 96; it merely perpetuated pro tempore the status quo until the customer charge could be reviewed in Phase II. We find it unnecessary to discuss these arguments. The reason is that after the oral argument in this case the Legislature acted to repeal the above-quoted Section 96. By P.L.1981, c. 457, enacted June 12, the $5.70 residential customer charge has been eliminated. In its place, the Company will be allowed to recover its costs of customer service, including, apparently, its minimum distribution costs, through a minimum charge incorporated into its flat rate. Chapter 457 provides in pertinent part:  35 MRSA § 96, as enacted by PL 1979, c. 539, is repealed and the following enacted in its place:  § 96. Minimum charge 1. Companies required to provide minimum charge. Any electric company serving more than 5,000 customers which has in effect for residential customers a flat rate combining energy and demand charges shall recover its customer costs through the same rate. As part of that rate, each such electric company shall provide for a minimum charge to include such an amount of kilowatt hours as the commission shall determine. Chapter 457 will become effective in early September, 1981, 90 days from date of enactment. The PUC is required by section (2) of that Chapter to order that the new minimum charge be instituted by the Company no later than 30 days after the law's effective date. Thus, by no later than early October, a separate $5.70 residential customer charge will, at least so far as the Company is concerned, be a thing of the past. Were we to decide that the PUC erred in postponing a decision on the question of whether to exclude minimum distribution costs from the $5.70 residential customer charge, the Rate Reform Committee asks that this portion of the case be remanded for expedited hearings. Specifically, we are asked to order the PUC to reach a decision within 90 days of receipt of our mandate. Little could be gained by such an order even if we were to rule in the Rate Reform Committee's favor; within 90 days of receipt of our mandate, the old law will have disappeared and the new become effective. We therefore refrain from deciding this issue.