Opinion ID: 2279962
Heading Depth: 1
Heading Rank: 2

Heading: The Phase-Out Order Under Maine Law

Text: It is clear, at least in the abstract, that the PUC has authority to disallow as an operating expense the amount attributable to the employee discount. See, e. g., New England Telephone & Telegraph Company v. P. U. C., Me., 390 A.2d 8, 56 (1978). Under the recently enacted Electric Rate Reform Act, 35 M.R.S.A. § 91 et seq., it is equally clear that, upon a finding that the discount unjustifiably inhibits energy conservation, the PUC has the authority to order submission of a proposal terminating the discount altogether. Section 93 of the Electric Rate Reform Act in pertinent part provides: The [public utilities] commission, as it determines appropriate, shall order electric public utilities to submit . . . programs for implementing energy conservation techniques . . ., either in conjunction with or independently of any rate-making proceeding pending before the commission. (emphasis added) [1] The Company asserts that its employee discount is expressly permitted under 35 M.R.S.A. § 103, which states inter alia: nor shall it be unlawful for any public utility to make special rates to its employees . . . . Section 103 has been in our statutes for decades. See R.S.1954, c. 44, § 40. By necessary implication, we think the Electric Rate Reform Act has repealed Section 103 to the extent that that Section would prohibit the PUC from ordering the phase-out of a wasteful, environmentally unsound promotional discount. See, e. g., State v. London, 156 Me. 123, 162 A.2d 150 (1960). The Company's primary argument against the PUC's order rests not on statutory but on the case law in Maine, namely, on our 1979 decision in Central Maine Power Company v. Public Utilities Commission, Me., 405 A.2d 153 (1979). There, the PUC had disallowed as an expense for ratemaking purposes the same discount presently at issue. As here, the PUC's justification rested largely on the discount's unwarranted promotional effects. Upon review of the record testimony in the 1979 Central Maine Power case, we could not find substantial evidence to support the conclusion that the discount promoted electricity consumption. Figures comparing employee with other residential customer consumption were haphazard, ill-defined, and unreliable. 405 A.2d at 176, n. 37. The issue of the discount's promotional effects was casually injected into the proceedings. Id. No full and appropriate contest of the issue was discernible from the record. Id. Noting our reluctance to interfere with the understandings reached between a utility and its employees, id. at 177, we concluded: Where, as here, the road chosen by management [in the creation of employee compensation packages] is arguably at least as economical as any alternative, and the benefit does not clearly appear to be `. . . unwarranted . . .,' management's judgment must be respected. [citations omitted] (emphasis in original). We need not, and do not, decide that the entire spectrum of matters relating to employee compensation is beyond the reach of the Commission's regulatory powers. We have clearly held to the contrary in the past. [citations omitted] We hold only that we cannot find, in this record, any substantial evidence justifying the Commission's interference with a reasonable managerial judgment. 405 A.2d at 178-79 (emphasis added). In this case, the employee discount issue was not casually injected into the record. Substantial evidence was developed to justify the Commission's conclusions that the discount promoted electricity consumption. In the 1979 case we suggested the need for data comparing usage between employee electric space heating customers and non-employee electric space heating customers. 405 A.2d at 176, n.37. That data, developed here, disclosed that employees consumed 23% more electricity than non-employees. In three related categories, general electricity usage, water heating, and space plus water heating, employees were shown to consume, respectively 25%, 14%, and 17% more electricity than others in the residential class. The Company now challenges the reliability of these figures, which it itself supplied, on the ground that there was no showing that non-employees were comparable to employees in every respect that might otherwise explain the latter's electricity consumptionfamily size, age, and annual income, for example. But the record shows that the discount was originally implemented by the Company in order to promote the usage of electricity. The PUC could reasonably infer from this that the promotional purpose remains effective. Both PURPA, supra, n.1, and the Electric Rate Reform Act reflect that it makes little sense to spend the earth's capital as though it were income. [2] A discount promoting the use of electrical energy, the generation of which depends on the expenditure of nonrenewable resources, is in this sense both uneconomical and unwarranted. Because substantial evidence supports the PUC's order, this case is plainly distinguishable from the above cited 1979 Central Maine Power decision.