Opinion ID: 1516467
Heading Depth: 1
Heading Rank: 2

Heading: The Prudence of GMP Management

Text: VPIRG's second major contention is that Green Mountain Power might have avoided the additional purchase power and production costs if GMP management had taken prudent action to effect the piping replacements in an orderly manner by preordering the replacement materials and by the pre-development of replacement contingency plans. It was VPIRG's position that GMP's 17.9% common stock interest in Vermont Yankee provided sufficient clout to dictate Vermont Yankee policies. The VPIRG case on the prudence of GMP management was never fully presented. The Board on March 16 and April 5, 1985, issued orders limiting VPIRG's discovery on this issue, and while VPIRG did present a witness, David Schlissel, who testified that GMP should bear all the costs associated with the unscheduled outages, the Board struck this evidence in its final order. As a result, VPIRG contends, the Board erred in two ways: first, by violating due process and state laws and evidentiary rules that govern procedures in rate matters before the Board, and second, by effectively ignoring GMP's burden of proof on the issue of prudence. The heart of VPIRG's argument is that the Board violated 3 V.S.A. § 809(c) of the Administrative Procedure Act (APA) concerning contested administrative cases, which states: Opportunity shall be given all parties to respond and present evidence and argument on all issues involved. The VPIRG citation to § 809(c) leaves unanswered the critical question: What are the issues properly involved? The Board's rulings on discovery and the striking of the Schlissel testimony stem from the explicitly stated decision to postpone consideration of the prudence issue: The basis of our rulings was that the relevance of this issue was highly speculative and that its enormous complexity threatened to prevent us from completing this case within the statutorily mandated period. See 30 V.S.A. § 227. [Footnote omitted]. Our inquiry would have had to involve not only the technical question of whether the proper course of action was taken, but also whether GMP, had it chosen the course urged by VPIRG, could have effected it. (GMP is a minority shareholder in Vermont Yankee Nuclear Power Corporation, and all of the other owners approved the action that was, in fact taken.) The effect of those rulings was to remove the issue of the handling of the 1983 temporary repairs at Vermont Yankee from this case. Mr. Schlissel's testimony relates solely to this issue, and the Company's Motion to Strike is therefore granted. VPIRG's response is, in effect, that the Board is powerless to dictate that an issue raised by a duly admitted party shall not be heard. VPIRG too closely equates common law civil actions and administrative rate proceedings. In rate proceedings before the Board, the legislative mandate to complete action within seven months from the date the proceeding was instituted under 30 V.S.A. § 227(a) imposes practical limitations on the Board. Without control over its order of business, it would be difficult for any rate-setting body to perform its statutory obligations to the parties and the public. See In re New England Telephone & Telegraph Co., 135 Vt. 527, 539, 382 A.2d 826, 835 (1977) (PSB has the authority to exercise its judgment in matters of docket consolidation and updating [of test-year data]); Consumers' Counsel v. Public Utilities Commission, 56 Ohio St.2d 220, 227, 383 N.E.2d 593, 597-98 (1978); (commission has wide discretion over its order of business); see also In re Green Mountain Power Corp., supra, 142 Vt. at 380, 455 A.2d at 825 (This Court will not undertake to prescribe the many approaches to rate regulation that the Board must use.). Clearly, the power to control the order of business does not imply power in the Board to bypass substantive issues mandated by statute for consideration; however, VPIRG's contention that GMP's failure to control the actions of Vermont Yankee constituted imprudence is not such an issue. A similar claim was made by consumer appellants in Public Service Co. v. Public Utilities Commission, 653 P.2d 1117, 1121 (Colo.1982), where they argued, among other things, that the limitation on issues to be considered meant that the hearing was not granted at a meaningful time and in a meaningful manner. See Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965). Noting that the appellants had been given full opportunity to contest all aspects of the company's rates in a proceeding concluded two months earlier, and would have a similar opportunity in a proceeding filed prior to the Commission's decision in the case under appeal, the Supreme Court of Colorado held that the Commission did not err in adopting its abbreviated procedure and limiting the issues to be considered. Public Service Co., supra, 653 P.2d at 1122; see also GTE Sprint Communications Corp. v. AT & T Communications, Inc., 230 Va. 295, 302, 337 S.E.2d 702, 709 (1985). In the case before us, the Board had the discretionary authority to postpone consideration of issues that vitally affected the interests of other utilities. Its decision in this regard may only be disturbed on appeal if the Board abused its discretion, and we find that it did not do so. [2] According to appellants, the discovery requests denied by the Board would have shed light on the status of Vermont Yankee's (and hence GMP's) knowledge about the IGSCC pipe cracking before the 1983 outage. Even if we assume that Vermont Yankee and GMP had such information, appellants did not offer to show that GMP was in a position to substitute its judgment for that of the Vermont Yankee board and officers. While the appellants' assumption throughout this proceeding has been that GMP is so closely identified with Vermont Yankee management that the imprudence of Vermont Yankee, once proven, could be, ipso facto, imprudence of GMP, we note that GMP is but a minority shareholder in Vermont Yankee. A case for such a derivative theory of liability is not inconceivable, but the appellants did not lay an adequate foundation for it in this case. The only attempt to forge this vital link in appellants' case was the testimony of David A. Schlissel, who was asked what he meant by the phrase the management of GMP. He responded: When I use the word management I mean the management of both the Vermont Yankee Nuclear Power Corporation and the Green Mountain Power Company. I understand that Green Mountain Power only owns a 20 percent share of Vermont Yankee. However, I do not believe that this ownership share should permit Green Mountain management to escape responsibility for the prudence of replacement power and maintenance costs incurred during the unscheduled 1983 and 1984 outages. The mere form of plant ownership does not alter management's burden to prove the prudence of any expenses, particularly, where, as here, the power from Vermont Yankee (ordinarily 92 megawatts) represents almost ½ of Green Mountain Power's average load. In this circumstance, prudent management must exercise the utmost scrutiny of all costs associated with that plant capacity. That responsibility cannot be delegated away to Vermont Yankee management. If GMP were legally responsible for the prudence of the decisions made by Vermont Yankee managementfor example, if the plant were one of GMP's production facilities and was not jointly ownedthe witness would be correct that such responsibility would be nondelegable. Again, VPIRG's theory on the prudence issue assumes GMP's control over Vermont Yankee, and no foundation for such theory was established. In sum, the Board denied appellants' discovery requests, and struck the Schlissel testimony because of the highly speculative nature of the claims involved. The outcome of appellants' discovery motions might have been very different in a common law civil action, but the Board's explanation for the difference in its order on discovery is apt: 30 V.S.A. § 227 and Rule 26(b) must, for present purposes, be read together: section 227 means that, unlike the civil courts for which the Rules of Civil Procedure were principally designed, we do not have the luxury of an indefinite time frame within which to decide cases. In imposing the seven month limit, the legislature must be deemed to have given us sufficient control over matters brought before us to enable us to complete proceedings within the time prescribed. We think this means, at a minimum, that we are not obligated to litigate issues of enormous complexity under circumstances where no probability has been demonstrated that the exploration of those issues will have any effect whatever on the outcome of the case. Finally, appellants contend that the Board order severing the prudence issue effectively relieved GMP of its burden of showing the prudence of the costs incurred by GMP resulting from the 1983 unplanned outage at Vermont Yankee. But GMP properly established a prima facie case on the issue of its prudence in purchasing replacement power during the 1983 outage. That was all GMP was compelled to do. See Latourneau v. Citizens Utilities Co., 125 Vt. 38, 41-42, 209 A.2d 307, 311 (1965). No party contested that GMP properly sought and secured replacement power at the lowest possible cost during the outage. VPIRG's argument on burden of proof amounts to a restatement of its assertion that its prudence issuethe issue of GMP's proper role in Vermont Yankee decisionmakingshould not have been severed by the Board, a matter we have already addressed. Affirmed.