Opinion ID: 2284798
Heading Depth: 4
Heading Rank: 2

Heading: Differences in Customer Charge Among the Various Customer Classes

Text: It is unnecessary to reiterate in detail the Commission's rationale for its setting of customer charges, which are outlined in section B, supra. Inasmuch as these differences are reasonably based on legitimate cost and non-cost factors already discussed, they do not render the rates invalid. Two areas of contention merit a brief further mention, however: the charges applied to residential non-heating and non-cooling customers, and those applied to interruptible customers. One factor influencing the Commission was the tension inherent between the cost to the Company of providing service, and the value of service to WGL customers. Discussing residential non-heating and non-cooling customers, the Commission commented: Because of the very low volume of gas which this sub-class takes relative to its customer costs, a two-part rate yields an anomaly; this sub-class pays the highest unit price for service at the same time as WGL earns the least return from this service. In designating rates for the residential non-heating/non-cooling sub-class, the Commission faces a direct conflict between the principle of cost causation, on one hand, and historic rate patterns and social considerations on the other hand. [Order 6051, at 96-97 (emphasis in original).] We cannot say that the charge arrived at was based on illegitimate factors or embodies a capricious application of them. On the contrary, the record reflects a reasoned consideration and resolution of an issue as to which reasonable people can differ. It is not for us to substitute our preferences for the judgment confided by law to the Commission. While in the case of residential non-heating and non-cooling customers these cost considerations led the Commission to reduce the customer charge, id., it was drawn by other factors to approve WGL's proposed increase to a thirty cents per therm rate for interruptible customers. Id. at 99-100. These included rising fuel costs, the amount of investment fairly allocable to interruptible service customers, [21] the value of the service provided to these customers, and the closely related factor of the competitiveness of the rate charged interruptible customers for gas with the price of other forms of fuel. Order 6051, at 99-100. Utility companies operating under public franchises and having monopolistic characteristics are subject to special regulation. Public Utilities Commission v. Capital Transit Co., 94 U.S.App.D.C. 140, 145, 214 F.2d 242, 247 (1954). Although such regulation protects utility companies to a degree from ordinary market pressures, realities of the marketplace, including the company's competitive position and, in this context, the price of alternative fuels, may be considered in establishing or assessing the reasonableness of a rate structure. See United States Steel Corp. v. Pennsylvania, supra, 37 Pa. Cmwlth. at 207-09, 390 A.2d at 856. We find that the Commission acted reasonably in predicting the interruptible rate upon the above enumerated facts, and that the rate works no unfair discrimination. As it is neither unreasonable, arbitrary, nor capricious, and is supported by substantial evidence, the rate must be sustained.