Opinion ID: 2398514
Heading Depth: 3
Heading Rank: 4

Heading: Management Fees

Text: Both the service company and the company are subsidiaries of the American Water Works Company (American). The service company, as its name implies, provides sundry services, including management services, to the several operating utilities that are within American's corporate family. The operating utilities are charged for these services and such charges are included as a part of the operating utilities' cost of service and collected from the utilities' customers through the rates they pay. In the present case, the company proposed to collect an annual amount commensurate with the $72,691 that was charged by the service company as management fees for the test year. Citing the fact that the company's schedule of these expenses afforded    no way of determining whether Bristol and its rate payers received $72,691 of value for their money, the commission apparently chose to estimate management fees by averaging the fees paid during the 3 years prior to the test year resulting in a downward adjustment of some $13,000. The commission is entitled to the benefit of those factual determinations that may be fairly and reasonably implied from its language and its actions. United Transit Co. v. Public Util. Hearing Bd., 96 R.I. 435, 445, 192 A.2d 423, 429 (1963). In the case presently before us, we must imply from the relevant portion of the decision and order that the commission felt that, because American derived some benefit from services which were entirely paid for by the company and its rate payers, the evidentiary value of the figures presented by the company had been undermined. Absent any allegations to the contrary by the company, we must further imply that the amount deducted from the proposed account for management fees bore a direct, empirically valid relationship to the amount of benefit actually conferred upon American. From the face of the decision and order, however, it is impossible to determine whether the final figure employed by the commission represents an amount directly proportional to the benefit derived by the company from the services rendered or whether it is an average of the previous 3 years' management fees. Both methodologies are described by the commission in relation to this item but, in the final analysis, it remains unclear if one or both methods constitute the derivation of the ultimate amount used. Instead of speculating about the basis for this finding, we remand this portion of the report and order for clarification and amplification. Rhode Island Consumers' Council v. Smith, supra at 290, 302 A.2d at 769.