Court Opinion

ID: 9528205
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:38:17.404574+00
Date Added: 2024-06-11T13:20:21.896782
License: Public Domain

ROONEY, Justice,
concurring.
While I concur with the majority opinion, I believe the matter could have been handled more properly on a procedural basis without much reference to the merits of appellant’s contentions.
It is obvious that the $581,000 expenditure upon which appellant premises its request for a rate increase does not meet the definition of a “pass on” or “pass through” item so as to trigger the automatic or expedited procedure used for rate increases in “pass on” or “pass through” circumstances. It was obvious from the inception of the case that the $581,000 expenditure was not pursuant to authorization of another regulatory agency but was to be considered as something other than an increase in the cost of the commodity subject to the jurisdiction of an agency other than appellee Public Service Commission (hereinafter referred to as PSC).
“Pass on” or “pass through” procedures have developed during the past several years because the cost to the utilities of the commodity supplied by them began to change so often pursuant to authorization, directly or indirectly, of federal regulatory agencies (thus without the jurisdiction of the PSC) that it became impractical to conduct a full rate hearing in each instance. The PSC used the automatic or expedited “pass on” or “pass through” procedures when conditions were such that only the cost of the commodity was involved, that it was subject to regulation of another agency, and that other rate factors were not involved. A full rate hearing takes considerable time and effort since the evidence must concern the gross revenues, operating expenses, rate base, rate of return, rate structure, etc., of the utility.
Section 249 of the present Rules of the PSC sets forth the conditions under which “pass on” or “pass through” procedures may be utilized:
“Section 249. Wholesale Utility Commodity Purchase Pass-on Procedure. Pursuant to W.S. 37-3-106 (1977) [1] as may be amended and the rate filing requirements of this Chapter, a utility may file an application to pass on to its utility customers in their rates, prospective cost increases in the utility’s wholesale utility commodity; and the same will be authorized, subject to public notice, opportunity for hearing, and refund, if the evidence of record shows that:
“a. The pass-on is for wholesale utility commodity cost increases not under this Commission’s jurisdiction;
“b. The pass-on will not increase the utility’s rate-of-return, and its rate-of-return is at or below that last authorized by the Commission (if the rate-of-return is in excess of that authorized the pass-on amount will be reduced accordingly);
“c. The pass-on is applied on an equal or proportionate basis to all class rates and the rate steps therein (excluding minimum charges);
*181“d. All pass-on charges are filed as a separate cumulative rate rider or surcharge which will be blended into base rates at appropriate intervals in general rate case proceedings or as otherwise ordered by the Commission; and
“e. There is provision for interest on overcollections to be made part of the refund. (Interest will include any interest received by the utility as ordered by the Federal Energy Regulatory Commission and, otherwise or in addition thereto, interest as determined by the Commission.)”
Inasmuch as the first condition for use of the “pass on” or “pass through” procedure was not present, the procedure could not be properly applied to appellant’s request. The parties may have made reference to costs authorized by another regulatory agency during their computation in arriving at the $581,000 figure, but the amount allocated from the settlement figure to this purpose was entirely arbitrary.
The president of appellant testified that:
“A. 58.1 cents per Mcf simply reflects the $581,000 purchase of Amoco’s rights to that gas. That is not based in the Natural Gas Policy Act of 1978.
“Intrastate purchases directly from producers, the maximum price is set by the Natural Gas Policy Act of ’78, as far as the actual sales price.
“The rights to gas are not in any way controlled. These were previously covered by various orders of the FPC allowing intrastate purchasers to purchase directly from producers for their own supply and make arrangement with Interstate companies for exchange and/of [sic] transportation of that gas. It is that type of purchase that was made here.
“The 58.1 cents has nothing whatsoever to do with the pricing provisions of the Natural Gas Policy Act of 1978. But if you add the appropriate provision of that or the section of that Act or the 35 cents per million Btu to arrive at the 84.7, then you are reflecting the price for the gas under the Natural Gas Policy Act for that vintage plus the acquisition of that gas or the right to purchase it at that price rather than have Amoco or any other producer use that gas for their own benefit.” (Emphasis added.)
The arbitrary nature of the $581,000 figure as it pertains to an increase in the cost of the gas is further evidenced by the three contracts, all dated June 1, 1969, which formed the basis of the lawsuit which was terminated by the settlement agreement. Appellant was not named as a party to any of them.2 The named parties were McCul-loch Oil Corporation and Pan American Petroleum Corporation. After the signatures of the parties on the Gas Exchange Agreement, the following appears: “Accepted and agreed to this 15th day of July, 1969. McCulloch Gas Transmission Company by Byron A. Williams, Vice President and General Manager.” It was signed by Mr. Williams. The same language and signature, except that the date is June 29, 1970, appears after the signature of the parties on the second amendment to the Gas Sales and Purchase Agreement dated June 1, 1970. The parties to the settlement agreement were Amoco Production Company, McCul-loch Oil Corporation, McCulloch Gas Processing Corporation and appellant. The last three are referred to throughout the agreement collectively as “McCulloch.”
Although the agreement contains the self-serving clause referred to in the majority opinion to the effect that the purchase of gas was for the benefit of appellant’s gas customers, the agreement on its face reflects that the $581,000 was to be paid by all three companies and that the considerations given and received under the agreement were by all three companies. The allocation of $581,000 of the total amount paid by all three companies to the increased cost of some of the gas involved in the settlement is arbitrary.
*182At the time the application was filed, the PSC recognized the impropriety of treating the $581,000 in a “pass on” or “pass through” procedure. The application also requested a “pass on” or “pass through” of $134,463 annualized because the Federal Energy Regulatory Commission had authorized one of appellant’s suppliers to increase the cost of gas. The initial PSC Notice and Order recognized this request as properly subject to the “pass on” or “pass through” procedure and so treated it. It did not so recognize the $581,000 “pass on” or “pass through” request. The resulting hearing on it should have been a full rate hearing.
Instead, the hearing concerned the issue as to whether the $581,000 was payment for gas already received or whether it was for gas to be received — whether or not the payment was an expense item. These matters can properly be addressed only after a full rate hearing on the basis of the complete information on the appellant’s operations. Appellant raises a question concerning denial of its constitutional rights. Without a full rate hearing, the question of confiscatory rates cannot be answered. Even if the $581,000 is determined to be other than an expense item, the change in rates may be necessary to avoid a confiscatory situation. Such cannot be determined without a full rate hearing.
In summary, I believe the $581,000 is reflected to be an arbitrary amount on the face of the settlement agreement and, therefore, is not subject for consideration under the accelerated or automatic “pass on” or “pass through” procedure. The application should have been summarily rejected on this basis; and if appellant desired further consideration, it should have presented evidence customary and usual to a full rate hearing upon which the reasonableness of its proposed rates could be gauged. In any event, for these reasons, appellant cannot complain concerning the denial of its request for a change in rates.

. Section 37-3-106, W.S.1977 mandates notice from utilities to the PSC of rate changes, authorizes investigations and hearings by the PSC relative thereto, and provides for suspensions and approval of such changes by the PSC.

. The record does not reflect whether or not copies of these contracts were filed with the PSC pursuant to § 37-3-111, W.S.1977, which requires filing by public utilities of contracts, agreements or arrangements to which they may be a party. If not filed by appellant, the reason for not doing so could be the fact that it was not a party to them.