Court Opinion

ID: 9849786
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:46:22.682629+00
Date Added: 2024-06-11T09:20:26.111742
License: Public Domain

Justice Copeland
dissenting.
In my judgment the majority opinion does not conform to the General Assembly’s intent in passing G.S. 62-134 (e). Neither do I believe that the majority opinion places a proper interpretation upon the rulings of the Utilities Commission in the instant case.
It is well known that the problem here involved stems from the 1973 world-wide energy crisis brought about by tremendous increases in the cost of fossil fuels, most particularly coal, which is used by the utilities for the generation of electricity. On 30 November 1973, Duke Power Company filed with the Commission an application for authority to adjust its retail electric rates by the addition of a coal adjustment clause to be *475rendered on monthly bills on and after 1 January 1974. On 19 December 1973, the Commission authorized the requested coal adjustment clause. The Commission’s order provided that the clause would not become effective unless and until coal costs increased above the October 1973 level and included the following language:
“1. That effective on bills rendered on and after January 19, 1974 for service rendered on and after December 19, 1973 with respect to coal burned on and after November 1,1973, the Applicant, Duke Power Company, is authorized and permitted to put into effect the coal cost adjustment clause attached to its application as Exhibit B.
“2. That Duke Power Company will report to the Commission on a monthly basis the amount of the fuel cost adjustment and the factors and computations used in its derivation.” (Emphasis supplied.)
By this order I believe the Commission authorized a two-months “lag” in the recovery of increased actual coal costs. A lag was necessary because the actual cost of fuel burned during the month electric service was provided was unknown at the time of the billing. Had the General Assembly not passed G.S. 62-134 (e) in 1975, then the “lag” would continue in effect and the utility companies would still be basing their current billing on the fossil fuel excess costs two months previous.
While it is true that Duke does not claim to be entitled to recover its unbilled revenues because its accounting practices were approved by the Commission, the company does claim and contend “that the entries resulting from such accounting practices serve as the device for measuring the amount of fuel costs Duke had a vested assurance of collecting pursuant to its approved rates.” Duke Power Company’s “right” to recover its unbilled revenues arises from the Commission’s approval of the automatic fuel adjustment clause permitting recovery on a deferred basis of these expenses.
Obviously, the Commission recognized the principle of unbilled revenues upon which the utility companies base their claim. In its first order under the new statute, G.S. 62-134 (e) the Commission stated as follows: “[A]ccrual accounting for unbilled revenues to reflect the lag in recovery of increased fuel costs should be disallowed in the future.” (Emphasis supplied.) *476It is equally clear that the Commission recognized the unbilled revenue or “lag principle” in its initial order when it provided that the order would. apply “with respect to coal burned on and after November 1, 1973 ...”
Considering the automatic fuel clause adjustment and the temporary surcharge together, it is apparent that the Commission has done nothing more than allow Duke Power Company to collect its actual fuel expenses. The Commission has merely attempted to carry out the mandate of the legislature which requires that the utility earn a fair return. The power companies have operated on the basis that these unbilled revenues were assets that would be collected in two months. The customers have not paid any more than the actual fuel cost and no benefit beyond a reasonable rate of return has accrued to shareholders.
I see nothing wrong with the order providing that the two months of unbilled revenues be spread over a period of twelve months to ease the burden on the rate payers. The amortization is a matter of convenience for the consumer.
By the passage of G.S. 62-134 (e), the General Assembly did not intend to penalize the utility companies; The Commission was justified in reaching this conclusion. The majority’s treatment of the utilities appears inequitable and does not take into consideration the position the companies were placed in over three years ago. During this period in which the costs of fossil fuel were rapidly rising, the time lag was favorable to the consuming public. In order for the utilities to produce the services which the consuming public requires, we must be equally fair with the utilities in providing revenues to meet emergencies such as the one which precipitated this controversy.
The majority opinion provides for “appropriate refund [by Duke Power Company] to its customers on account of revenues unlawfully collected from them pursuant to the surcharge.” This will be an expensive and administratively difficult operation for the utilities involved. The financial benefits to individual members of the consuming public will be quite small in comparison with the burden cast upon the utility companies.
In sum, I feel the Utilities Commission manifested its intent from the beginning that the utilities should eventually *477recover all actual fuel cost increases including the two months of excess fuel costs that are involved in this suit. I do not believe the General Assembly ever intended to deprive the companies of these revenues. I agree with Judge Britt of the Court of Appeals that the orders of 19 December 1973 and 10 October 1974 might have been clearer, but a reasonable construction of the orders leads me to conclude that “they were sufficient to accomplish that purpose.”
Chief Justice Sharp and Justice Moore join in this dissent.