Opinion ID: 1428299
Heading Depth: 3
Heading Rank: 4

Heading: Departure from Past Commission Practice

Text: {20} U S West next contends that the Commission's method of granting interim rate relief in this case constitutes an arbitrary and capricious departure from past Commission practice without proper notice and reasonable justification in the record. Mountain States Tel. & Tel. Co. v. New Mexico State Corp. Comm'n (In re Rates and Charges of Mountain States Tel. & Tel. Co.), 104 N.M. 36, 42, 715 P.2d 1332, 1338 (1986) [hereinafter Mountain States 1986 ]. While it is perhaps true that interim rate decreases are less common than interim rate increases, see Krieger, supra, at 1014, we do not agree with U S West that the reduction ordered in this case is so arbitrary and unprecedented as to deprive U S West of its constitutional right to due process, see Consumers Power Co. v. Michigan Pub. Serv. Comm'n, 226 Mich.App. 12, 572 N.W.2d 222, 230 (1997) (rejecting the argument that conditional approval of a rate adjustment constituted an arbitrary change in ratemaking methods contrary to reasonable expectations and reliance of investors). {21} Our conclusion follows from the application of the balancing test adopted in Hobbs Gas Co. v. New Mexico Pub. Serv. Comm'n, 115 N.M. 678, 682, 858 P.2d 54, 58 (1993). This test calls for consideration of the following factors: (1) whether the particular case is one of first impression, (2) whether the new rule represents an abrupt departure from well established practice or merely attempts to fill a void in an unsettled area of law, (3) the extent to which the party against whom the new rule is applied relied on the former rule, (4) the degree of the burden which a retroactive order imposes on a party, and (5) the statutory interest in applying a new rule despite the reliance of a party on the old standard. Id. (quoting Retail, Wholesale & Department Store Union v. NLRB, 466 F.2d 380, 390 (D.C.Cir.1972)). {22} The issue of interim rate relief is not one of first impression because the Court previously recognized the Commission's constitutional authority to grant such relief in Mountain States 1977, 90 N.M. at 335-36, 563 P.2d at 598-99, and U S West has not shown that the Commission has ever had a specific policy against interim rate decreases. Thus, the order at issue is not an abrupt departure from established practice but, instead, an attempt to fill a gap in the law where there is a pattern of earnings showing a likelihood that a utility will continue to grossly exceed an established, reasonable rate of return. Further, given the precedent establishing the Commission's constitutional authority to grant interim rate relief and the absence of any established policy against using that authority to order an interim reduction in rates, we cannot conclude that U S West reasonably relied to its detriment on the assumption that the Commission could not act to enforce the rate of return established in U S West's 1992 rate case through a subsequent order requiring an interim decrease in rates. {23} U S West has been afforded an opportunity to recoup losses occasioned by the interim rate reduction if that reduction is later determined to be unjustified, and we have not required the company to comply with the Commission's order while this removal action is pending. Under these circumstances, we cannot say that the burden imposed on U S West by the Commission's order is of a sufficiently high degree to outweigh the Commission's significant interest in assuring reasonable and just rates under Article XI, Section 7 of the New Mexico Constitution. For these reasons, we reject U S West's contention that the Commission's order is an unlawful departure from its past practices.