Court Opinion

ID: 4946392
Source: CourtListenerOpinion
Date Created: 2021-09-24 12:22:02.514943+00
Date Added: 2024-06-11T08:15:06.303590
License: Public Domain

NEBEKER, Associate Judge,
dissenting:
Once again it appears that the majority’s resolution of this petition of appeal sanctions the proposition that “the Commission will conclude that virtually any treatment of a utility which purports to be ‘pro-consumer’ in nature is likely to escape perceptive judicial review.” Potomac Electric Power Co. v. Public Service Comm’n, 402 A.2d 14, 27 (D.C.1979) (Harris, J., dissenting). This “hear no evil, see no evil” approach to appellate review continues to evidence an alarming lethargy. The Commission’s obligation is not merely the protection of consumer interests, but rather requires a balancing of investor and consumer interests, Potomac Electric Power Co. v. Public Service Comm’n, 380 A.2d 126, 132 (D.C.1977), and its actions must be considered in this light. The Commission is charged with the duty of insuring the prolonged economic health of the utility, one aspect of which entails the overall responsibility to insure that the utility be given the opportunity to earn a fair rate of return. Id. at 131-32. See Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 603, 64 S.Ct. 281, 288, 88 L.Ed. 333 (1944); McCardle v. Indianapolis Water Co., 272 U.S. 400, 408-09, 47 S.Ct. 144, 147-148, 71 L.Ed. 316 (1926); Bluefield Water Works & Improvement Co. v. Public Service Comm’n, *790262 U.S. 679, 690, 43 S.Ct. 675, 678, 67 L.Ed. 1176 (1923). As narrow as our jurisdictional stance may be, as a court sitting in review of a rate order allegedly unjust and unreasonable in its total effect, we must “delve into the details of the order” and “give reasoned consideration to each contested element of the rate order ‘to determine the possible presence of arbitrary action.’ ” Potomac Electric Power Co. v. Public Service Comm’n, supra, 380 A.2d at 132. This the majority failed to do.
Initially, PEPCO is faulted by the Commission and this court for failing to direct its application for interim rate relief to anything other than its experience of earnings substantially less than that which is reasonable. Specifically, PEPCO allegedly erred by not demonstrating either “a present or clearly imminent threat that the Company will be unable to continue meeting its public service obligation” or “a present or clearly imminent threat that the Company will be unable to obtain necessary capital funds to'finance the construction of necessary new or replacement plants.” In fact, the Commission was presented with evidence of both of these factors relating to the “D.C. PEPCO” operations. While there is no such entity as “D.C. PEPCO” in a concrete sense — PEPCO’s operations extending into Maryland and Virginia — for purposes of ratemaking proceedings, PEP-CO’s operations in other jurisdictions must be ignored. Capital Transit Co. v. Public Utilities Comm’n, 213 F.2d 176, 182 (D.C.Cir.1954). It is not axiomatic that because the Company as a whole is capable of obtaining necessary capital funds and meeting its public service obligations that “D.C. PEPCO” is sound. The record evidence relied upon by the majority to illustrate PEP-CO’s financial stability reflects PEPCO’s operations systemwide. The results, therefore, are skewed against the Company’s position presented in its interim request as the Company’s Maryland and Virginia operations were on sounder financial ground. A decision by the Commission based upon these figures is both arbitrary and capricious and cannot be upheld.
Secondly, the majority cavalierly characterizes PEPCO’s position as being a “make whole” request by declaring that “it is not the purpose of emergency rate relief ... simply to close the gap between a return previously authorized and actual earnings. Rather, the purpose of emergency relief is to alleviate financial problems whose correction cannot safely await a decision on the proper level of permanent rates.” This approach ignores PEPCO’s contention that, rather than attempting to secure a guaranteed rate of return, it merely seeks the opportunity to realize the authorized rate of return. The Commission was presented both with figures and testimony to the effect that even if the interim relief were granted in full immediately, PEPCO’s anticipated return would be but 7.96 percent for the year 1979. Given that the Commission authorized a 9.03 percent rate of return but days earlier, PEPCO’s interim request cannot justifiably be characterized as “make whole.”
Finally, the Commission took the position that it was inappropriate to use the previously authorized rate of return as the presumptively reasonable rate of return for the interim rate increase request. Given the posture of this case, such a position is untenable. Formal Case No. 685, a permanent rate increase case which had been pending for over a year and a half, resulted in a determination that a 9.03 percent rate of return was just and reasonable. The proposed order in Formal Case No. 685 was but a week old at the time of PEPCO’s initial interim rate request. To fail to give any weight to the result reached in Formal Case No. 685 with regard to a reasonable rate of return defies rational explanation. See Formal Case No. 610, In Re Washington Gas Light Co., Order No. 5655, at 9, July 11, 1974. The proceedings relating to interim relief requests should not so parallel permanent rate increase procedures that the harm *791befalling the utility exacerbates unnecessarily pending the outcome. This is especially true given the realities of the day— rampant inflation, regulatory lag, attrition — which affect the utility’s ability to maintain sound financial footing. Absent some reason to the contrary, the Commission should have acknowledged the newly set rate of return as a valid benchmark for the determination of a just and reasonable rate.
I respectfully dissent.