Opinion ID: 1254568
Heading Depth: 2
Heading Rank: 2

Heading: Evidentiary Support for Rate Set by PSC

Text: Utility next argues error in the PSC's finding an operating margin of 8.6% was reasonable, and in the resulting denial of the rate increase. We do not reach the merits of Utility's argument because we find the PSC's order insufficient for reasons similar to those discussed in Issue I. In Order Number 97-114, the PSC stated it had moved some $66,480 (representing the availability fees collected) from revenue to contributions in aid of construction, in accordance with the Court's order in Heater I. It then granted Utility $66,480 in additional annual revenue to replace the availability fee amount, approving a water rate increase of approximately 8.5% to earn this additional revenue. On the issue of the appropriate operating margin, it stated it had re-examined the evidence in light of Heater I and had determined that only minimal increases in expenses had been incurred which were not significant enough to justify a rate increase. [5] The order gave no further reasons or findings of fact upon which the determination was based. When Utility petitioned for rehearing, the PSC dismissed Utility's argument that Order Number 97-114 did not make specific findings of fact: We discern no error. In remanding the case back to the Commission, the South Carolina Supreme Court expressed the opinion that the $66,640 in availability fees should not have been treated as operating revenue, because of a lack of substantial evidence. In Order No. 97-114, we specifically granted the Company $66,480 in additional annual rate revenue to replace the availability fees that we formerly counted as regulated revenue. We also noted that this was our only change from Order No. 92-1028, wherein we fully explained our reasoning on arriving at the 8.60% operating margin. For this reason, we believe that all appropriate findings of fact are contained in Order No. 97-114, as that Order fully addressed the Supreme Court's concerns. Findings of fact supporting the operating margin reached were fully explained in the prior Order, and other than the matters discussed above, were fully laid out therein. State law requires the PSC's determination of a fair rate of return must be documented fully in its findings of fact and based exclusively on reliable, probative, and substantial evidence on the whole record. S.C.Code Ann. § 58-5-240 (Supp.1997). See also S.C.Code Ann. § 1-23-350 (1986) (requiring findings of fact, if set forth in statutory language, to be accompanied by a concise and explicit statement of the underlying facts supporting the findings); Hamm v. Southern Bell Telephone and Telegraph Co., 302 S.C. 132, 394 S.E.2d 311 (1990); Able Communications, Inc. v. South Carolina PSC, 290 S.C. 409, 351 S.E.2d 151 (1986). Neither of the 1997 orders make any findings of fact other than to find the increase in expenses minimal. Again, this type of conclusory statement, with no supporting factual documentation, makes meaningful appellate review impossible. [6] Moreover, we are troubled by the PSC's reference to Order Number 92-1028 as containing its reasoning for arriving at the appropriate operating margin. This order contained the PSC's findings from Utility's prior rate case, where a rate increase was granted on December 12, 1992. We find it inappropriate to refer to this order, which was based on evidence, and a prior test year, completely different from Utility's financial condition at the time of the current application. [7] Finally, the only other source for the missing findings of fact was an order we had already reversed on the basis of improper findings and comparisons. For these reasons, we find the PSC's order did not comply with applicable requirements, particularly those set forth in section 58-5-240, and therefore cannot stand.