Opinion ID: 1929636
Heading Depth: 1
Heading Rank: 4

Heading: market re-entry

Text: OPC contends that the Commission's decision to reduce WGL's revenue requirement by only $600,000 by reason of market re-entry was not supported by substantial evidence. The term market re-entry as used here refers to the anticipated growth in sales expected to be realized by WGL as a result of relaxation of restrictions on the Company's extension of its service to new customers. The restrictions were imposed by the Commission in 1972 due to a shortage of natural gas. As the availability of gas increased, the restrictions were eased and, in 1978, the Commission approved a plan for gradual increase in the number of WGL customers. Additional sales by WGL under the program began in approximately October, 1979, and were considered in the calculation of the Company's cost-of-service for 1979. In addition, the Commission reduced the Company's annual revenue requirement by $600,000 in consideration of prospective sales increases. WGL does not appeal the Commission's order with respect to the adjustment to the revenue requirement. OPC, however, contends that the Commission's decision is unsupported by substantial record evidence. In proceedings before the Commission, WGL contended that no revenue adjustment was necessary to account for market re-entry. At the same time the Company projected an increase in future sales which the Commission calculated would have the net effect of reducing the revenue requirement by $423,891 annually. Commission staff estimated a gross increase in Company revenues of $5,896,000 annually resulting in a net reduction to the revenue requirement of approximately $795,000 annually. OPC projected a $6,444,000 annual increase in gross revenues with a resultant reduction to revenue requirement of $927,872. The requirement of the District of Columbia Administrative Procedure Act, D.C.Code 1981, § 1-1509(e), that agency decisions be accompanied by findings of fact and supported by substantial evidence imposes upon the agency the duty to make findings of basic facts upon which the agency decision rests. Put another way, the agency must show on what it relied in reaching its decision. Citizens Association of Georgetown, Inc. v. District of Columbia Zoning Commission, D.C.App., 402 A.2d 36, 42 (1979), quoting Miller v. Commission on Human Rights, D.C.App., 339 A.2d 715, 719 (1975). Moreover, the agency decision must rationally follow from the facts. Citizens Association of Georgetown, Inc. v. District of Columbia Zoning Commission, supra at 41. In its Proposed Order, the Commission set forth findings of fact and cited to record evidence in support of its determination that the estimates of future sales provided by the parties were deficient. [9] The Commission's stated reasons for ordering a $600,000 reduction to WGL's revenue requirement were that the net effect of the sales growth forecast by WGL was too conservative; the estimates by staff and OPC might prove to be unrealistically high; an increase in sales was a virtual certainty, and the rate of growth in sales was slower than anticipated. The Commission made no express findings, however, to underpin the revenue adjustment it ultimately ordered. Thus, there is some merit in OPC's contention that the Commission's conclusion is not properly supported by its findings. We must recognize, at the same time, that implicit in its determination of a revenue requirement reduction is a PSC estimate of the amount of sales growth WGL will experience due to its re-entry into the market. The record provided the Commission with sufficient evidence on the market re-entry issue to provide an adequate basis for decision, although, necessarily, the evidence consisted in large part of estimates and projections. In view of the Commission's implicit finding as to sales growth, we decline to set aside its decision in this regard.