Opinion ID: 406396
Heading Depth: 1
Heading Rank: 3

Heading: refunds for the full requirements customers

Text: 42 In the original form submitted by Connecticut Light, R-4 included a demand ratchet for both the full and the partial requirements customers. The ALJ's initial decision disallowed the ratchet for both full and partial requirements customers and ordered refunds to be paid to both. J.A. 672. FERC, in reversing the ALJ on the application of the ratchet to the partial requirements customers, specified a method for dividing up demand costs between full and partial requirements customers, in order to ensure that only the latter were subjected to the ratchet. It did not, however, specify whether the new method of calculating demand costs for the wholesale customers was to be applied prospectively only. Opinion No. 114, J.A. 836. After Connecticut Light petitioned for clarification, FERC on rehearing decided that the new rate design should be applied prospectively only, to protect the Company against the risk of undercollection. Opinion No. 114-A, J.A. 874. 17 The municipalities contend that this decision was error and that the full requirements customers should be given refunds for the approximately two years that the Company had collected under the ratchet. We disagree. 43 Under the Federal Power Act, 16 U.S.C. § 824d(e) (1976), the Commission may order refunds of portions of rates found unjustified. Refunds are not mandatory; the Commission has discretion to decide whether a refund is warranted in light of the interests of the customer and the utility. See Belco Petroleum Corp. v. FERC, 589 F.2d 680, 686 (D.C.Cir.1978). The Commission advanced two reasons here for making the rate prospective only: that the Company might be subject to undercollections from the refund because it could not collect retroactively from other customers, and that retroactive changes in rates cannot affect customer demand. Opinion No. 114-A, J.A. 874. These reasons were offered by the Commission in an earlier case in which it refused a refund to customers that had paid under a ratchet, and this court affirmed. Commonwealth Edison Co., 19 Fed. Power Serv. 5-75 (1979), aff'd, Cities of Batavia, Naperville, Rock Falls, Winnetka, Geneva, Rochelle and St. Charles, Illinois v. FERC, 672 F.2d 64, 85 (D.C.Cir.1982). 44 As in Cities of Batavia, id., we find that the Commission exercised its discretion reasonably in deciding to apply the approved rate prospectively. Earlier stratified rate designs submitted by Connecticut Light had been disallowed by FERC, but only because of insufficient evidentiary support. Many other issues in R-4 had been settled, and the Commission was properly concerned to see that Connecticut Light did not suffer additional revenue shortfalls beyond those in the settlement agreement. J.A. 873. We therefore find that the Commission gave adequate attention to the interests of both the Company and CMEGA, and we affirm.