Court Opinion

ID: 9575688
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:15:58.137453+00
Date Added: 2024-06-11T12:49:47.110553
License: Public Domain

*305RIGGS, J.
The Public Utility Commission (PUC)1 appeals from a judgment of the circuit court reversing its Order 89-1355, which ordered Pacific Northwest Bell Telephone Company (PNB) to refund $10,056,772 to its customers. The circuit court found that the revenues to be refunded were generated from permanent, lawful rates and concluded, therefore, that the refund order constituted unlawful retroactive ratemaking. Citizens’ Utility Board (CUB) appears as an intervenor. We reverse.
Although the appeal is from a judgment of the circuit court, we review PUC’s order. ORS 756.598. We may not substitute our judgment for that of PUC on any finding of fact supported by substantial evidence. ORS 756.598. Whether or not we agree with PUC’s inferences or reasoning, we will uphold PUC’s order if it discloses a rational relationship between the facts and the legal conclusion reached. The order, however, must contain sufficient findings and conclusions to enable us to determine that the reasoning is rational and that PUC acted within its grant of power. American Can v. Lobdell, 55 Or App 451, 638 P2d 1152, rev den 293 Or 190 (1982); Publisher’s Paper Co. v. Davis, 28 Or App 189, 559 P2d 891 (1977); Pacific N.W. Bell v. Sabin, 21 Or App 200, 214, 534 P2d 984, rev den (1975).
In December, 1985, PNB filed a revised rate schedule that increased its total revenue requirement and redistributed the recovery of the total revenue among various services. The rates of some individual services were increased, some were decreased and some were not changed. In response, PUC issued Order 85-1211, granting an interim increase in PNB’s total revenue, subject to refund if PUC later determined that the increase was inappropriate. The interim rate schedule took effect on January 1, 1986.
After investigation, PUC determined that, instead of a total revenue increase, a revenue decrease should have been ordered. On March 31, 1987, PUC issued Order 87-406, ordering PNB to refund excess revenues collected under the
*306interim rate schedule2 and requiring it to reduce its total revenues by $45 million, to an amount below the 1985 authorized revenue level. PUC proposed an interim rate spread to achieve the reduction. The interim rate spread included a proposal to make Extended Area Service (EAS) optional. Optional EAS was intended to reduce revenues by $5.04 million.
During May and June, 1987, in accordance with PUC’s proposed rate spread, PNB filed compliance tariffs, including optional EAS. Although PUC accepted most of the proposed tariffs, it rejected the optional EAS proposal, because it had decided to make a more thorough study of EAS services in connection with another case on its docket, UT-53. The final decision on EAS services would be made in that case. In the meantime, because it expected to reach a final decision within a relatively short period of time, PUC allowed PNB to continue providing mandatory EAS and to operate temporarily under an interim rate schedule that was $5.04 million per year higher than the authorized revenue level.
In May, 1988, CUB petitioned PUC to take action to stop overcollections and to refund amounts already over-collected. PUC issued Order 88-1523, in which PNB was ordered to reduce basic local service rates by $5 million per year. However, PUC denied a refund, because it concluded that ORS 759.185(4)3 allows a refund only when an interim increase is involved and this situation did not involve an interim increase.
In April, 1989, PUC issued Order 89-461, by which it granted reconsideration of its decision in Order 88-1523 and ordered a refund of the overcollected revenues. It concluded *307that, although an interim increase was not involved, PNB had been unjustly enriched by the overcollections and, therefore, was not entitled to keep the excess revenues. Shortly thereafter, Order 89-461 was rescinded for procedural errors. However, PUC notified PNB that it would consider the issue on its own motion and that PNB should consider the rescinded order as a proposed order.
On October 13,1989, PUC issued Order 89-1355, in which it ordered PNB to refund the overcollected revenues. It concluded that mandatory EAS was a partial continuation of the interim rate increase and that, therefore, the over-collected revenues were subject to refund under ORS 759.185(4). PNB brought this action to vacate the order under ORS 756.580. The circuit court reversed Order 89-1355 and vacated PUC’s findings and conclusions. It made special findings that the revenues were generated from permanent rates authorized by PUC and that the EAS rates in effect were permanent rates authorized by PUC.4
The first issue is whether the refund was authorized under ORS 759.185(4). PUC contends that that statute gives it specific authority to order a refund, because the interim rate increase authorized by Order 85-1211 was partially continued when PUC rejected the proposed optional EAS rate. When a utility files a rate or schedule of rates that increases an existing rate or schedule of rates, PUC may, and in some cases must, conduct a hearing to determine its propriety and reasonableness. ORS 759.180(1). If PUC allows the proposed rate or schedule of rates to become effective on an interim basis while it conducts a hearing, ORS 759.185(4) provides, in pertinent part, that “any increased revenue collected by the telecommunications utility as a result of such rate or rate schedule becoming effective shall be received subject to being refunded.” (Emphasis supplied.)
*308PUC found:
“When the Commission rejected PNB’s optional EAS tariffs it effectively revised Order 87-406 to order a partial rate reduction rather than the full rate reduction ordered by Commissioner Davis. In so doing, it effectively continued the interim rate increase authorized [in Order 85-1211].”
We cannot substitute our judgment for that of PUC on any-finding supported by substantial evidence. ORS 756.598.
The evidence in the record does not support PUC’s finding. Effective January 1,1986, Order 85-1211 granted an interim rate increase from the permanent rates that were in effect through the end of 1985. Order 87-406 required PNB to reduce, rather than increase, its total revenues. The reduction took the form of a rate spread that terminated the interim increase authorized by Order 85-1211 and reduced PNB’s rates below the 1985 level. The rate spread ordered in Order 87-406 showed these reductions (in millions of dollars):
1 Rollback to 1985 rates $19.24
2 Business rate restructure $ 9.61
3 Touch-Tone rate reductions $ 5.90
4 Measured usage rate reductions $ 0.40
5 Optional EAS $ 5.04
6 Service Connection Charges $ 5.32
Total $45.51
It is apparent from the rate spread that the rate reduction anticipated by allowing optional EAS was a reduction in addition to the deletion of the 1986 interim rate increase. There is no evidence that the interim rate increase authorized by Order 85-1211 had made any changes in EAS charges. In fact, the evidence provided by the rate spread table indicates that mandatory EAS was already included in the 1985 rate schedule and that the change to optional EAS was a change from the 1985 rate schedule. The only evidence is that the rate reduction in Order 87-406 included a rollback to 1985 rates, which resulted in rescission of the interim rate increase of Order 85-1211, as well as additional reductions from the 1985 rate. Rescission of a rate increase cannot be a continuation of it. Because ORS 759.185(4) only requires PNB to refund revenues collected under an interim rate schedule that increases rates, and the interim rate increase *309was rescinded by Order 87-406, the refund is not authorized by ORS 759.185(4).
 However, that is not the only authority by which PUC may order a refund. ORS 756.040 states, in pertinent part:
“(1) In addition to the powers and duties now or hereafter transferred to or vested in the commission, the commission shall represent the customers of any public utility, telecommunications utility, railroad, air carrier or motor carrier and the public generally in all controversies respecting rates, valuations, service and all matters of which the commission has jurisdiction. In respect thereof the commission shall make use of the jurisdiction and powers of the office to protect such customers, and the public generally, from unjust and unreasonable exactions and practices and to obtain for them adequate service at fair and reasonable rates.
“ (2) The commission is vested with power and jurisdiction to supervise and regulate every public utility, telecommunications utility, railroad, air carrier and motor carrier in this state, and to do all things necessary and convenient in the exercise of such power and jurisdiction.”
Utility regulation, including ratemaking, is a legislative function, and the legislature has granted broad power to PUC to perform its delegated function.5 American Can v. Lobdell, supra, 55 Or App 451; Pacific N.W. Bell v. Sabin, 21 Or App 200, 213, 534 P2d 984, rev den (1975). It is well settled that an agency has such implied powers as are necessary to enable the *310agency to carry out the powers expressly granted to it. See SAIF v. Wright, 312 Or 132, 137, 817 P2d 1317 (1991); Ochoco Const, v. DLCD, 295 Or 422, 426, 667 P2d 499 (1983); Warren v. Marion County et al, 222 Or 307, 320, 353 P2d 257 (1960). However,
“[T]he powers of a regulatory agency or agent are not * * * without limits. Like the legislature itself, a regulatory agency is bound to exercise its authority within the confines of both the state and federal constitutions. An agency’s authority may be further limited by the legislature itself; its power arises from and cannot go beyond that expressly conferred upon it.” 21 Or App at 213.
 PNB argues that, because the legislature has authorized refunds under a specific statute, ORS 759.185(4), it has limited PUC’s authority to order a refund in any other circumstance. Nothing in ORS 759.185(4) or (5) limits PUC’s power to order a refund in other circumstances, and we do not believe that the statute should be interpreted to impose such a limitation.6 To hold that PUC does not have the power to order a refund of amounts over collected under temporary rates that failed to comply with an ordered revenue reduction would be inconsistent with its regulatory role and statutory duties. Such a holding would deprive PUC of much of its power to protect customers from abusive delay tactics or, as in this case, unexpectedly long delays in implementing an ordered revenue reduction. PNB is not entitled to retain excess revenues collected under an interim rate schedule that was not in compliance with the authorized revenue level, and PUC did not err in ordering PNB to refund those revenues.
The dissent asserts that our analysis fails to give effect to every provision of the relevant statutes. Holding that PUC may order refunds under other circumstances does not render superfluous ORS 759.185(4) or (5), which require refunds under thoseparticular circumstances. Those subsections limit. PUC’s discretion in ordering a refund under those circumstances, but that does not necessarily mean that PUC *311may not order refunds in other circumstances. The entire statutory scheme must be considered. It is the dissent’s view that fails to give effect to other provisions in the statutory scheme. For example, ORS 759.200 allows PUC, in addition to powers otherwise vested in PUC, to order deferral of refunds of revenues that may arise under 10 different accounts. Although the statute does not expressly authorize refunds, the legislature must have contemplated that PUC could order refunds under circumstances other than those required under the particular circumstances in ORS 759.185(4) and (5).
 PNB’s argument that a refund would constitute retroactive ratemaking is not well taken. Retroactive rate-making occurs when past profits or losses are incorporated in setting future rates.7 This case does not concern comparing authorized revenues with actual revenues and then adjusting for unexpected profits or shortfalls. PUC is not ordering PNB to refund past profits. Rather, PUC is ordering PNB to refund amounts that were overcollected under an interim rate schedule that was not in compliance with the authorized revenue level.
Intervenor CUB’s assignments of error related to the interest portion of the refund and to the award of attorneys fees under ORS 759.900 do not merit discussion.
Reversed and remanded with instructions to reinstate PUC Order 89-1355.

 Defendants Katz, Eachus and Ryles were the members of PUC at the relevant time.

 In determining the amount to he refunded, PUC concluded that “rate or schedule of rates” in ORS 759.185(4) means the net revenue impact of PNB’s interim rate schedule and not the excess earnings resulting from the increased rates of individual services. Therefore, it found that the refund should be $10,306,074 rather than $24,389,719. The amount is not at issue in this appeal.

 Statutes relating to regulation of all utilities, including telephone companies, were contained in ORS chapter 757 until July 1, 1989. Or Laws 1987, ch 447. Statutes relating to regulation of telephone companies are now contained in ORS chapter 759. The reorganization did not substantively change anything related to this case. Although most of the events in this case occurred before the change, we will refer to the statutes in chapter 759. ORS 759.185(4) is substantively identical to ORS 757.215(4).

 The court stated in its letter opinion that its decision was
“predicated upon the factual assertion of [PNB] that the tariff filed by [PNB] and approved by [PUC] was in full force and effect and thus does not permit the action attempted by [PUC] in this case. If I am in error on the accuracy of the factual situation referred to above, then this decision would be erroneous and [PUC] would be entitled to either a refund or the assessment of an interest penalty.”

 The dissent inappropriately compares and equates the general grant of authority given to the agency regulating the milk industry with that given to PUC. Unlike that agency, PUC has been granted more than the power to “supervise and regulate.” It has been granted the power to represent the customers of PNB in all controversies respecting rates, valuations, service and all other matters under its jurisdiction and, in doing so, the legislature has directed that PUC shall use its powers “to protect those customers, and the public generally, from unjust and unreasonable exactions and practices and to obtain for them adequate service at fair and reasonable rates.” ORS 756.040(1). PUC has been granted the power to investigate utilities and to make whatever orders it deems justified or required by the results of its investigations. ORS 756.515. Thus, as we have said before, PUC has been granted “the broadest authority — commensurate with that of the legislature itself — for the exercise of [its] regulatory function.” Pacific N.W. Bell v. Sabin, supra, 21 Or App at 214. Furthermore, the legislature has directed us to construe the provisions of the utility regulation laws liberally with a view toward the public welfare, efficient facilities and substantial justice. ORS 756.062(2). Of course, PUC’s exercise of its authority is limited by the boundaries of the legislature’s delegation, but the dissent fails to consider the breadth of that delegation.

 The dissent asserts that we have made an erroneous statement of law in concluding that ORS 759.185(4) and (5) should not be interpreted to impose a limitation on PUC’s power to order refunds in other circumstances. Principles of statutory construction are not rules of law, but merely guides in determining legislative intent. Gold v. Secretary of State, 106 Or App 573, 809 P2d 1334 (1991). They must be harmonized with other rules of construction.

 The United States Supreme Court has said that
“The just compensation safeguarded to .the utility by the Fourteenth Amendment is a reasonable return on the value of the property used at the time that it is being used for the public service. And rates not sufficient to yield that return are confiscatory. * * * Past losses cannot be used to enhance the value of the property or to support a claim that rates for the future are confiscatory. * * * Profits of the past cannot be used to sustain confiscatory rates for the future.” Board of Commissioners v. New York Telephone Co., 271 US 23, 31, 46 S Ct 363, 366, 70 L Ed 808 (1926).
Although no Oregon courts have addressed the issue of retroactive ratemaking, the issue was examined extensively in an Oregon Attorney General Letter of Advice (Op-6076, March 18,1987). Because this case does not involve retroactive ratemaking, we need not decide the extent of the rule’s application in Oregon.