Court Opinion

ID: 5114046
Source: CourtListenerOpinion
Date Created: 2021-10-02 18:25:55.196956+00
Date Added: 2024-06-11T08:21:44.837353
License: Public Domain

HART, J., dissenting. In 2005, the General Assembly, in an apparent effort to spur conservation efforts, ordered the Public Service Commission (PSC) to prepare a report for the General Assembly concerning its activities under the Energy Conservation Endorsement Act of 1977 (ECEA). 2005 Ark. Act 1939. Specifically, the General Assembly asked for “[a]ny recommendations” that the PSC “may want to offer for the General Assembly’s consideration.” Id. Without specific authority enacted by the General Assembly, the PSC created its own conservation program that offers incentives to public utilities. The crux of this appeal is whether the General Assembly, by enacting the ECEA, bestowed upon the PSC the authority to award “incentives” to utilities to replace lost sales. The ECEA specifically permits the PSC to “order that the affected public utility company be allowed to increase its rates or charges as necessary to recover any costs incurred by the public utility company.” Ark. Code Ann. § 23-3-405(a)(3) (Repl.2002). The appellees reason that luincentives could be awarded because this statute allows for recovery of “costs.” The premise is that “costs” include “incentives” that substitute for a return on investments, or even a return on foregone investments, and thus incentives are considered a “cost of service.” This rationale is unconvincing. The provision relied on by the appellees permits recovery of costs incurred. The ECEA further discusses “measures by utility companies which cause the companies to incur costs of service and investments which conserve, as well as distribute, electrical energy and existing supplies of natural gas, oil, and other fuels.” Ark.Code Ann. § 23-3-405(a)(l) (emphasis added). Thus, the ECEA speaks in terms of costs incurred, not a return on investments or a return on foregone investments. Moreover, those costs incurred must be associated with costs that conserve and distribute. Again, the ECEA does not speak in terms of a return. As admitted by the PSC during oral arguments, “incentives” cause an increase in rates. The General Assembly has enacted an entire body of statutory law on ratemaking. In that body of law, the General Assembly interposed numerous safeguards to protect the consumer, including notice, investigation, and test periods for determining the reasonableness of proposed new rate schedules. When a public utility seeks a rate increase, it must pursue that rate increase through the General Assembly’s statutes on ratemaking, with all the attendant safeguards provided in those ratemaking statutes. In obtaining a rate increase through the ECEA, the PSC has permitted public utilities to circumvent the General Assembly’s ratemaking statutes. The rationale adopted by the majority is equally unconvincing. The majority does not make the mistake of asserting that costs include a rate of return. The majority instead relies on |1sa separate provision of the Act, which provides that “[njothing in this subchapter shall be construed as limiting or cutting down the authority of the commission to order, require, promote, or engage in other energy conserving actions or measures.” Ark.Code Ann. § 23-3-405(b). While the majority correctly acknowledges that the Act “does not expressly mention the Commission’s authority to award incentives,” it nevertheless asserts that the intent behind this subsection “could not be clearer” and treats incentives as other means of promoting energy efficiency. I disagree with the majority’s assertion. This subsection does not grant additional authority to the PSC. Instead, it merely establishes that the ECEA does not reduce authority granted by other legislative acts. For instance, if the PSC sought, through its statutory ratemaking procedures, to promote conservation, the ECEA, by its own terms, would not be seen as a limitation on the PSC’s authority to pursue this course. The majority, however, treats this limitation as a separate grant of authority. The dangers associated with the majority’s interpretation are readily apparent. If this statutory provision is treated as a separate grant of authority to the PSC to award incentives, it is a grant of authority bereft of the attendant safeguards seen in the General Assembly’s ratemaking statutes or those in the ECEA concerning recovery of costs incurred. Without limitations on the grant of authority, the PSC’s authority is limited only by the consciences of the Commissioners; in awarding incentives, the PSC could quite simply act arbitrarily, unreasonably, and without notice. The Arkansas Supreme Court has held that the PSC is a creature of the General | ifiAssembly, and its power and authority is limited to that which the General Assembly confers upon it. Ark. Gas Consumers, Inc. v. Ark. Pub. Serv. Comm’n, 354 Ark. 37, 118 S.W.3d 109 (2003). Statutes pertaining to utility regulation must be strictly construed, and nothing may be taken that is not clearly expressed. Hempstead Cnty. Hunting Club, Inc. v. Ark. Pub. Serv. Comm’n, 2010 Ark. 221, 384 S.W.3d 477. Neither the PSC nor the majority has adhered to this precedent. Thus, I respectfully dissent.