Opinion ID: 1538573
Heading Depth: 1
Heading Rank: 6

Heading: IV-B The Powers of the Commission

Text: It is axiomatic that the powers of the Public Utilities Commission are derived wholly from statute. Stoddard v. Public Utilities Commission, 137 Me. 320, 323, 19 A.2d 427, 428 (1941). This being so, in determining the power of the Commission to authorize a rate subject to refund or surcharge, we must look to the statutes creating the Commission and endowing it with the power to regulate the public utilities of this State. Both New England and the Commission advance arguments in support of a power in the Commission to authorize rates subject to refund or surcharge. We find their arguments unpersuasive, however, and decide that the Public Utilities Commission of the State of Maine lacks authority to attach refund or surcharge provisions to utility rate schedules. [17] One argument (made by New England) in favor of a Commission power to order refunds and surcharges relies on interpretating 35 M.R.S.A. § 294 to confer a broad authority on the Commission to attach regulations to rate schedulesregulations which, it is said, may encompass refund/surcharge provisions. [18] The first paragraph of Section 294 reads: If upon such formal public hearing the rates, tolls, charges, schedules or joint rates shall be found to be unjust, unreasonable, insufficient or unjustly discriminatory or otherwise in violation of chapters 1 to 17, the commission shall have power to fix and order substituted therefor such rate or rates, tolls, charges or schedules as shall be just or reasonable. If upon such public hearing it shall be found that any regulation, measurement, practice, act or service complained of is unjust, unreasonable, insufficient or unjustly discriminatory or otherwise in violation of any of the provisions of chapters 1 to 17 or if it is found that any service is inadequate or that any reasonable service cannot be obtained, the commission shall have power to establish and substitute therefor such other regulations, measurements, practice, service or acts, and to make such order respecting and such changes in such regulations, measurements, practice, service and acts as shall be just and reasonable. The argument now under scrutiny would read this statute to authorize the Commission to make regulations imposing conditions upon which the rates shall be collected. It is said that one such regulation has been promulgated here: i. e., the rates authorized by the July 3, 1975 order are conditioned on a refund or surcharge being collected at a later date. We reject such interpretation of Section 294. As we read the portion of the statute quoted above, two separate provisions are made. If the Commission finds the rates, tolls, charges, schedules or joint rates . . . unjust, unreasonable, insufficient or unjustly discriminatory or otherwise in violation of chapters 1 to 17, the Commission has power to fix and order substituted therefor just and reasonable rates. The power to fix new rates and to order the utility to substitute them is the only power with regard to rates granted the Commission by Section 294. The power to make regulations does not, by the clear language of Section 294, apply to rates. The second sentence of the statute authorizes the Commission to act when it finds that any regulation, measurement, practice, act or service is unjust, unreasonable, insufficient or unjustly discriminatory or otherwise in violation of any of the provisions of chapters 1 to 17 . . .. Upon making such a finding, the Commission shall have power to establish and substitute therefor a just and reasonable regulation, etc. and to make such order respecting and such changes in such regulations etc., as shall be just and reasonable. We find the language of Section 294 to be an unambiguous expression of the Legislature's desire to delegate to the Commission only the authority (1) to examine the charges and practices of public utilities; (2) to determine the justness and reasonableness of those charges and practices; and (3) in the case of a charge or practice found to be unjust or unreasonable, to fix another charge or practice, and order the utility to substitute this charge or practice for that found unjust by the Commission. It is clear to us that the Commission is authorized only to do that which the utility should have done in the first placeconform its acts to the statutory rule of reason. [19] We do not find in Section 294 any intimation that the Legislature intended to enable the Commission, in the process of fixing and ordering substituted for an unjust rate one which is just and reasonable, to attach to the rate special conditions or regulations which the utility would not have been authorized to include in the first instance. We therefore, conclude that Section 294 does not provide authority for the enactment of a rate subject to refund or surcharge. The Commission and New England join in presenting a second argument to support a power in the Commission to order refunds and surcharges in connection with rate schedules. The Commission and New England maintain that, even absent express statutory authorization for the refund/surcharge provision of the July 3 order, that provision should be upheld as a proper exercise of Commission powers necessarily implied by the statutes. In presenting this implied powers argument, New England and the Commission both rely heavily upon a dictum in City of Rockland v. Camden and Rockland Water Company, 134 Me. 95, 181 A. 818 (1935). In that case this Court stated, as a general proposition, that: The Public Utilities Commission. . . [is] an administrative body of limited, though extensive authority, having such powers as are expressly delegated to it by the Legislature, and incidental powers necessary to the full exercise of those so invested. (p. 97 of 134 Me., p. 819 of 181 A.) The Commission and New England are correct in viewing this statement as an explicit recognition by this Court that the Commission has some powers by implication beyond those expressly delineated in the statutes. They go too far, however, in their further claim that the model for this Court to follow in construing the scope of the implied powers of the Maine Commission should be the recent decision of the District of Columbia Court of Appeals in Chesapeake & Potomac Telephone Company v. Public Service Commission, D.C., 330 A.2d 236 (1974). That case is not an appropriate guide for this Court because the philosophy and practices of utility regulation in the District of Columbia are fundamentally different from those in the State of Maine. Under District of Columbia law a utility cannot effect a change in its rates without the approval of the Public Service Commission (D.C. Commission). D.C.Code 1973 §§ 43-323, 43-401. When notice of a desired change is received by the D.C. Commission, it responds by scheduling a hearing. D.C.Code 1973 § 43-401. It appears from the Chesapeake & Potomac case that a practice has developed by which such hearings are conducted in two phases, the first to determine the utility's revenue requirement, and the second to determine an appropriate rate design to produce the required revenue. Because a utility has no right to have its rate become automatically effective, suspensions and deadlines are not a part of the District of Columbia scheme. During whatever period is required for hearings and deliberation, no matter how lengthy, the utility's prior rate remains in effect. A second significant difference appears in the General Provisions chapter of the District of Columbia public utilities statute. D.C.Code 1973, § 43-1003 specifically mandates a liberal construction of the public utilities statute, and explicitly delegates to the D.C. Commission: all additional, implied, and incidental power which may be proper and necessary to effect and carry out, perform, and execute all the said powers herein specified, mentioned, and indicated. A substantial compliance with the requirements of chapters 1-10 of this title shall be sufficient to give effect to all the rules, orders, acts, and regulations of the commission, . . .. [20] Finally, the District of Columbia statute makes no mention of refunds or surcharges. The difference between this scheme and our own is immediately obvious. The District of Columbia statute absolutely bars rate changes without D.C. Commission approval; by contrast, our statute maintains the right of a utility (as enjoyed before the onset of regulation in 1913) to effect changes in its own rates. Further, and most critically, the Maine Commission is given not an absolute authority over rate changes but rather two distinct types of limited power to respond to a utility's action to change its rates. As to utilities engaged in the transportation of freight, the Commission cannot prevent the new utility rate from taking effect. However, in the case of a rate increase it may, if it acts within 8 months of the effective date of the new schedule, find the new rate to be unjust or unreasonable, fix a just and reasonable rate, and require the carrier which has charged the unreasonable rate to refund all sums collected in excess of the rate fixed by the Commission. [21] As to all utilities not engaged in the transportation of freight, the Commission's power to protect rate payers from having to pay unjust rates during an investigatory period is limited entirely to the power to suspend for a total period of 8 months. In sum, having specifically considered the subject-matter of refunds, the Legislature decided to withhold from the Commission refund powers in relation to utilities not engaged in the transportation of freight while conferring this power as to utilities which are engaged in such transportation. In determining that the power to set a rate subject to refund or surcharge is implied by the District of Columbia statute, the District of Columbia Court of Appeals was free to decide that the possibility of refund/surcharge provisions was not considered by Congress in enacting the District of Columbia statute, but, had Congress considered the matter, it would have bestowed upon the D.C. Commission the authority to impose refund/surcharge provisions on rates. Such a conclusion is not open to us in relation to the Maine statutes. The Maine Legislature did consider refund/surcharge provisions, and it decided against authorizing the Commission to impose refunds or surcharges except in cases of rate increases by utilities engaged in the transportation of freight. Were we to hold that our Legislature intended by implication to allow the Commission to attach refund/surcharge conditions to the rates of utilities not engaged in the transportation of freight, we should be implying the existence of an authority which the expressed terms of the statute, amplified by historical perspective, directly contradict. A final point concerning this matter of implied powers is instructive. The District of Columbia statute expressly recognizes that powers not explicitly bestowed by the statute nevertheless reside in the D.C. Commission. Our statute has no such provision. The Maine Legislature has not seen fit to delegate to the Commission an amorphous range of powers not specifically set forth by a particular statutory section or sections. While, as this Court recognized in City of Rockland v. Camden & Rockland Water Company, supra, some supplementary powers are necessarily implied by any statutory scheme, it is one thing for a court to recognize that a power necessary to the carrying out of a statutory function is implied but quite another for the legislaturein which alone the power to regulate utility rates resides in the first instance expressly to bestow upon the administrative body all additional, implied, and incidental power which may be proper and necessary to effect and carry out, perform, and execute all the said powers herein specified, mentioned, and indicated. In sum, in light of the striking contrast between our statutory scheme of utility regulation and that of the District of Columbia, we conclude that, whatever the law in the District of Columbia, under the Maine statutes the Commission lacks implied power to attach refund/surcharge conditions to utility rates. New England advances a third argument in support of the refund/surcharge provision, [22] that since the tariff containing this provision is in effect and has been the only effective tariff since July 16, 1975, despite a present finding that the refund/surcharge provision is unlawful, the provision must be given effect from July 16, 1975 to the date of the present decision which, for the first time, has adjudicated its illegality. Thus, the argument continues, even if the refund/surcharge provision is now determined to be unlawful it was effective from July 16, 1975 until the present time, and refunds or surcharges have accrued during this time. The essence of New England's contention is that the $9,500,000 rates which have been in effect since July 16, 1975 were in actuality not an increase of $9,500,000, but rather an increase in some larger amount not yet definitively determined on July 3, 1975, the date of the decree authorizing the rates subject to refund or surcharge. This other amount was properly in effect from July 16, 1975 until the present, the argument continues, and, therefore, refunds or surcharges must be assessed to adjust the rates and charges from July 16, 1975 to the present. While this may appear a persuasive argument at first glance, it fails to survive closer scrutiny. The argument seems to derive from 35 M.R.S.A. § 66, which states: It shall be unlawful for any public utility to charge, demand, collect or receive a greater or less compensation, . . . than is specified in such printed schedules,. . . [on file in every station and office of the utility] as may at any time be in force . . .. However, in light of the philosophy embodied in our utilities statute, it is clear that New England's attempt to find in Section 66 a requirement that refunds or surcharges now be paid must fail. The purpose of a refund/surcharge provision is to allow a regulatory body to determine after the fact that a certain rate was, when charged, too high or too low, and to adjust it by refund or surcharge. The ultimate result of such adjustment is that the rate charged during a specified period (here, July 16, 1975 to the present) will be the rate which, it is later determined, was just and reasonable during that period. Our Legislature could have enacted such a system of rate regulation, but it chose not to do so. Instead, it created a system which explicitly recognizes that an unjust or unreasonable rate may be in effect during a certain period. As originally enacted, our statute allowed a utility to put into effect, on 10 days notice, any new rate schedule it chose, whether just or unjust. As presently in effect, the statute authorizes suspension of a rate proposed by a utility. While this suspension continues, the prior rate remains in effect, whether or not such prior rate is just and reasonable. It is apparent from these provisions that Section 66 is a reflection of the Legislature's concern that some rate have legally operative effect at all times. The Legislature, however, did not mandate that the rate legally in effect shall at each moment of its effectiveness be a just and reasonable rate. Our statute tolerates regulatory lag, the Legislature having chosen to limit it in time rather than to attempt to cure it by after-the-fact adjustments through refund or surcharge. We conclude, then, that Section 66 establishes that payments made by rate payers in accordance with the rate schedule on file constitute a full discharge of their obligations. Nothing in that section, nor elsewhere in our public utilities statutes, allows or requires that a rate schedule, or any part thereof, be given an effect from and after the time that such schedule or part is found unjust, unreasonable, or unlawful. We decide, that the refund/ surcharge provision of the July 3, 1975 order was beyond the authority of the Commission and invalid. Accordingly, we refuse to give it any future effect. While, had refunds or surcharges been made and collected before the date of this decision, arguably, they might be allowed to stand as valid at the time collected (a question we do not now decide), we cannot countenance their being collected subsequent to our decision herein which adjudicates that the Commission was entirely without power to include a refund/surcharge provision in its July 3 order. Counsel for New England and the Commission agreed at oral argument, and we now agree with them, that the refund/surcharge provision is severable from the other provisions of the July 3, 1975 order. Accordingly, we sever the refund/surcharge provision from the other provisions of the July 3, 1975 order of the Commission and hold the refund/surcharge provision to be, for the purposes of its purported operativeness in any respects in the instant case, null and void and entirely without effect. In summary, (1) New England's Section 303 appeal is sustained and the February 13, 1976 order of the Commission is adjudicated to be without legal effectiveness and is vacated; (2) the case is remanded to the Commission for further proceedings in accordance with the directives contained in this opinion; (3) the refund/surcharge provision of the July 3, 1975 order is adjudicated a nullity; (4) the refund/surcharge provision, being severable, is severed and the other provisions of the schedule of rates, put into effect by New England pursuant to the Commission's July 3, 1975 order (the $9,500,000 rates), being the last lawful rates in effect, are the effective rates; and (5) by virtue of all of the foregoing, it is unnecessary that any of the issues raised by New England's Section 305 complaint be addressed and said complaint is, therefore, dismissed, without prejudice. The entry is: (1) New England's Section 303 appeal is sustained; case remanded to the Public Utilities Commission for further proceedings in conformity with this opinion. (2) New England's Section 305 complaint is dismissed, without prejudice.