Court Opinion

ID: 6365597
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:40:27.515064+00
Date Added: 2024-06-11T15:49:49.727651
License: Public Domain

*244Concurring Opinion by
Judge Craig:
Although I concur with the order of the court here, remanding the matter for a proper adjudication by the Philadelphia Gas Commission, I cannot agree with the majority opinion approval of the cash flow method for ratemaking. Nor can I concur with what I understand to be the majority’s view as to the substantive criterion here, conformity only to the ordinance/agreement of the City of Philadelphia, dated December 29, 1972.
Even with the premise that this gas utility operation is under the home-rule powers of the City of Philadelphia, the gas utility rates cannot be said to be exempt from judicial review to ascertain and approve their reasonableness. Indeed, the majority opinion acknowledges that, after a proper adjudication has been rendered by the Philadelphia Gas Commission, the resulting rates continue to be subject to review by the court below and by this court. However, by stating that the “ordinance/agreement of December 29, 1972 therefore has statutory effect,” I read the majority opinion to indicate that the courts are limited to determining whether or not the resulting rates conform to the terms of the ordinance/agreement.
Such a criterion would offer little protection for the rate-paying citizens of Philadelphia. If the City and the Philadelphia Gas Commission can get their heads together and determine that the rates will be set at a level sufficient to provide an annual payment of $15,500,000 to the city (including a catch-up payment of $7,500,000 currently at issue), and if the courts cannot look into the reasons for setting such a figure, to determine whether it is arbitrary or reasonably well-founded, then the rate-payers may well be subjected to an arbitrary levy, amounting to a hidden revenue source for the City and not a proper charge for gas service at all.
*245Although there is certainly no evidence in the record presently before us that the City of Philadelphia has determined that annual payment amount improperly or without a reasonable basis, it is not an unusual practice for municipalities in general to use municipal utility income in lieu of tax revenues.
At the very least, the annual City payment component of the rate here should be shown to have some rational relationship to the gas service supplied to those who pay, not just mere conformity to a figure established in an ordinance.
Finally, it is difficult to conceive how the reasonableness of rates can be determined at all, except in relation to a rate base consisting of a fair value of the property employed — as distinguished from a cash flow which may not have any relationship to the service rendered.
As the Supreme Court said in Shirk v. Lancaster City, 313 Pa. 158, 169, 169 A. 557, 562 (1933):
It is only upon a fair value that the question of reasonable or oppressive rates can be determined.
Therefore, I cannot join in approving the cash flow method or the annual City payment component, absent a suitable justification of the reasonableness of the resulting rates in relation to the service rendered.