Court Opinion

ID: 9774786
Source: CourtListenerOpinion
Date Created: 2023-08-29 18:33:31.597385+00
Date Added: 2024-06-11T07:32:15.734694
License: Public Domain

POWERS, Justice,
dissenting.
I respectfully disagree with the majority decision. I would affirm the agency order in its entirety.
THE COMMISSION’S FINAL ORDER
Gulf States applied to the Commission for authority to alter the rates and charges reflected in its tariffs on file with the agency. Thereafter, the cause proceeded in the ordinary course of contested-case litigation under the formalities established in the Administrative Procedure Act. Act of May 4, 1993, 73d Leg., R.S., ch. 268, sec. 1, §§ 2001.141-.178, 1993 Tex.Sess.Law Serv. 587, 737-54 (West) (to be codified as Administrative Procedure Act, Tex.Gov’t CodeAnn. §§ 2001.001-.902) (APA).1 The parties continued in dispute *565through a final evidentiary hearing before the Commission’s examiner. After the close of the evidence and legal argument, the examiner prepared and served a proposal for decision as required by APA section 2001.-062. The proposal included findings of fact and conclusions of law together with the examiner’s reasons for her recommendations regarding the parties’ various contentions.
After receiving the examiner’s report, the parties entered into intensive negotiations toward an agreed settlement and compromise of the case. They kept the Commission informed as to their progress and positions on various issues. Finally, all the litigating parties save two entered into a written agreement of settlement and compromise they entitled a “Joint Recommendation,” to become effective on the Commission’s approval. The settling parties included the State of Texas, the Commission as a litigating party, Gulf States, and numerous cities that had been allowed to intervene in the contested case. The City of Somerville and the Office of Public Utility Counsel, both intervenors, objected to the agreement as a basis for the Commission’s decision.
In a final order dated March 22, 1991, modified somewhat after motions for rehearing, the Commission granted in part and denied in part Gulf States’ application as recommended by the signatory parties to the Joint Recommendation and [as] supported by the record.” In lieu of the examiner’s proposed findings of fact and conclusions of law, the Commission substituted others attached to the agency’s final order to reflect the settlement as the basis of the order, adopting only so much of the proposal for decision as was consistent with the final order.
The terms of the Commission’s final order awarded Gulf States a $30 million increase in retail-base rates and approved tariffs filed by the utility on March 7, 1991. Under the Joint Recommendation, the Commission’s approval bound Gulf States not to seek another rate increase for a two-year period, to make certain refunds to its customers, and to perform other undertakings that had been bargained for in arriving at the Joint Recommendation. In its final order, the Commission found that the $30 million increase in retail base rates resulted in rates that were “just and reasonable and in the public interest based on consideration of the merits of all issues raised in [the] proceeding.” The Commission also declared, however, that the agency was not thereby “endorsing or approving any ratemaking principle or method underlying the Joint Recommendation.” 2
*566FACT FINDING REQUIREMENTS IN AGENCY DECISIONS BASED ON AGREED SETTLEMENTS
The majority reject the various points of error in which the City of Somerville contends the Commission may not base its final decision on a settlement agreement that is less than unanimous. I concur in this and find no merit in any of the City’s other points of error. The majority sustain, however, the points of error brought by the City and the Office of Public Utility Counsel wherein they complain that the Commission’s final order violates APA sections 2001.141(b) and (d) because the findings of fact and conclusions of law that accompany the agency order are inadequate. I dissent from this part of the majority decision.

The Majority Holding and Rationale

In APA sections 2001.141(b) and (d), the legislature required that an agency’s final decision include the following: (1) “findings of fact and conclusions of law, separately stated”; and (2) “a concise and explicit statement of underlying facts” that support any findings “expressed in statutory language.” One of the purposes of this requirement is to allow a meaningful judicial review of the factual grounds of the agency decision without the court’s improper intrusion into matters reserved for agency discretion. The sole function of a fact finding, however, is the resolution of a factual dispute. It has no other function. See generally John Powers, Judicial Review of the Findings of Fact Made by Texas Administrative Agencies in Contested Cases, 16 Tex.Tech L.Rev. 475, 479-83 (1985).
The Commission’s final order includes the agency’s conclusions of law stated separately from its findings of ultimate fact and findings of underlying fact. These are consistent with and support a Commission decision based upon the parties’ Joint Recommendation or settlement agreement, which is the true basis of decision in the contested case.
The majority hold the findings of fact insufficient, however, because they fail to include the numerous fact findings the Commission would have been required to make if the case had not been settled. At least, that is how I understand the majority opinion.
“The Commission’s factual findings are deficient,” the majority say,
because they exclude critical underlying variables which allegedly support the Commission’s decision to grant Gulf States a $30 million [base rate] increase. This $30 million figure should be based on an intricate and complex series of underlying calculations and schedules which, when linked, comprise the analytical basis justifying a rate increase.
(Emphasis added). The references to “critical underlying variables” and “underlying calculations and schedules” can only mean, it seems to me, the large number of calculations and related findings of fact the Corn-*567mission must make in disputed cases relative to the many factors involved in fixing the utility’s “overall revenues at a level which will permit such utility a reasonable opportunity to earn a reasonable return on its invested capital used and useful in rendering service to the public over and above its reasonable and necessary operating expenses.” PURA § 39(a) (emphasis added). As an example, the majority point out that the Commission’s findings “do not include the basic rate of return that Gulf States was allowed.” A reasonable rate of return on invested capital cannot be calculated until the Commission has first made findings on the several factors required by PURA to be determined in making that calculation, as I have previously outlined. Supra note 2. “Nor do the findings adopted by the Commission detail the underlying variables used to calculate Gulf States’ retail base rate electric revenue requirement and the resulting increase in retail base rates,” state the majority. Of course, Gulf States’ revenue requirement could not be fixed, as PURA section 39(a) requires, until the Commission had determined the utility’s reasonable and necessary operating expenses as discussed previously, with attendant findings of fact in a number equal to the range of possible disputes about all the relevant factors that enter into the calculation of such expenses. Id.
In summary, it appears to me that the majority hold that APA section 2001.141(a) and (b) requires the same kind of fact findings (1) irrespective of the fact that the parties are not in dispute about the issues to which those fact findings might refer, (2) irrespective of the fact that the parties have asked the agency to render a decision based on their agreement in lieu of the facts about which they formerly disputed, and (3) irrespective of the fact that the agency finds that a decision based on their agreement is in the public interest and actually decides the case on that basis. I believe the majority holding is erroneous. It is based on a misunderstanding of the sole function of fact findings, which is to resolve disputed fact issues.
On a purely practical basis, the majority’s holding disregards our previous interpretation of the identical statutory language. In State Banking Board v. Valley National Bank, 604 S.W.2d 415, 419 (Tex.Civ.App—Austin 1980, writ ref'd n.r.e.), we construed section 16 of the repealed Texas Administrative Procedure and Texas Register Act, Tex. Rev.Civ.Stat.Ann. art. 6252-13a (currently APA section 2001.141(b)) to mean that the agency need not set out in its order fact findings that it did not actually make and did not actually rely upon in making its decision. More importantly, the majority’s holding has erected an insurmountable barrier to the agencies’ disposition of contested cases, the great bulk of which must of necessity be disposed of informally. Fact findings require evidence, evidence requires hearings, and hearings require lawyers, witnesses, argument, and agency decisions about the facts proper to be inferred from conflicting evidence. Under the majority’s holding, the expense of a contested case thus becomes about the same whether the case is settled or not. Moreover, findings as to the “variables” are subject to substantial-evidence review under the majority’s holding. The majority holding thereby negates the two major incentives by which parties are led to the negotiation table and to an accord — saving the expense and avoiding the uncertainty of continued litigation.
Influenced by the majority holding, moreover, the agencies will in the future tend to deny intervention to parties having less than a due-process right to appear in the contested case, for each prospective int'ervenor represents an additional risk of a party who might “torpedo a fair and reasonable settlement as to all who have the most direct and immediate interest” in the litigation. Arctic Slope Regional Corp. v. Federal Energy Regulatory Comm’n, 832 F.2d 158, 167 (D.C.Cir.1987). Intervenors often serve a useful purpose in agency litigation; we should not discourage the agencies’ exercise of discretion in favor of intervention.
Finally, I do not believe the agencies will be able to operate under the norm established in the majority’s holding, which requires that at least the “critical underlying variables” be found by the agencies and expressed in their final orders as “findings of fact.” For example, how shall an agency know what “underlying variables” the courts *568consider “critical” among all the various, interdependent fact findings that are possible. Supra note 2. How shall the agency make bona fide fact findings when the case is settled before an evidentiary hearing takes place?
What the law requires in cases like the present is, I believe, quite different. I will discuss the matter at length because it is unexamined in the Texas cases so far as I can determine.

Contested-Case Settlements and Judicial Review of Agency Decisions Based Thereon

The terms of the APA govern the Commission’s disposition of “contested eases,” a term that refers to agency proceedings “in which the legal rights, duties, or privileges of a party are to be determined by an agency after an opportunity for adjudicative hearing.” APA § 2001.003(1). Under the APA, administrative agencies are authorized to dispose of a contested case, in whole or in part, and in either of two ways — formally or informally. These two ways are fundamentally different.
Formal adjudications are more familiar to practitioners and courts because they frequently result in judicial review under sections 2001.171-.178 and 2001.901 of the APA and, in such adjudications, the agency decides the case in a manner familiar to courts and practitioners. The agency (1) receives and weighs evidence together with any matter of which it takes official notice, (2) infers from such evidence a set of underlying facts according to a preponderance of the evidence, (3) infers or not, as the case may be, a set of ultimate facts, frequently expressed in statutory language, and (4) from the ultimate facts arrives at a final decision by applying the statutory criteria. See 2 Frank E. Cooper, State Administrative Law 466 (1965).
In APA sections 2001.141-.147, the legislature imposed upon the foregoing process certain formalities intended as procedural safeguards against unfairness. These include notice to parties of any hearing, evidentiary hearings, rules of evidence, discovery of evidence, final decisions based on evidence and matters officially noticed, and motions for rehearing. APA §§ 2001.051-.052, .141(a)-(d), .081, .091-093, .145-146. One important formality or safeguard is the one in dispute in the present appeal — the requirement that the agency decision include a statement of the fact findings and conclusions of law from which the agency purportedly derived its decision according to the law and the facts, as stated in APA section 2001.141(b).
Contested-case decisions are “formal adjudications” to the extent they require and conform to the statutory formalities. Formal adjudications account for only a small fraction of total agency adjudications.
Informal adjudications are less well-known. Nevertheless they “constitute the vast bulk of administrative adjudication and are truly the lifeblood of the administrative process.” Senate Judiciary Comm., Administrative Procedure Act — Legislative History, S.Doc. No. 248, 79th Cong., 2d Sess. 35 (1945). Agency adjudications are “informal” to the extent they are decided without the formalities characteristic of formal adjudication. See Kenneth C. Davis, Administrative Law Text, Ch. 4, “Informal Action; Discretionary Justice,” 88-122 (3d ed. 1972).3
*569Mindful of the practical necessity of the agencies being authorized to decide contested cases informally, the legislature expressly authorized what might otherwise have been imputed to the APA under the rule of necessity: “Unless precluded by law, informal disposition may be made of any contested case by stipulation, agreed settlement, consent order, or default.” APA § 2001.056. Each of the four kinds of “informal disposition” refers to something different. “Stipulation” refers to an agreement between disputing parties that removes from dispute some element of the contested case. An “agreed settlement” refers to a contract between the parties that determines the contested case in its entirety on its becoming operative with the agency’s approval and adoption of the contract as a basis for the agency decision. A “consent order” refers to an agency decision that is both a contract between the parties and the agency’s action taken thereon. A “default” refers to the legal fiction that a party has, by some failure to act in the case, conceded the material allegations involved, thereby justifying an agency action based on the default. In the present appeal, we have an “agreed settlement.”
It is well-known, of course, that litigating parties often come to a settlement agreement after negotiation and adjustment of their respective contentions. This is no less true in the context of agency adjudications. The agreed settlement may be reached before the contested case is formally initiated, in the midst of the case, or after the close of evidence taken in a hearing after full compli-anee with all the formal requirements that attend a formal adjudication. The settlement may be based on terms, conditions, and calculations fashioned by the parties themselves from a variety of motives; perhaps the most common motives are avoiding the expense and uncertainty associated with formal adjudications.4 Typically, the settling parties relinquish, expressly or by necessary implication, many if not all the procedural safeguards that are incidental to formal adjudications.
A reading of the APA reveals that the legislature, while it expressly authorized informal adjudications, omitted to prescribe any procedures to govern such adjudications. The omission was probably intentional, owing to the wide variety of agency proceedings to which the APA applies, any of which may result in informal disposition. In any case, the omission left such procedures to the agencies’ discretion, subject to four basic restrictions: (1) the agency must have jurisdiction of the subject matter and the parties; (2) informal adjudication in the case is not precluded by law; (3) the essential parties actually consent to the terms of the agency decision; and (4) the agency determines that a decision based on the settlement agreement is in the public interest.
Concerning the matters set out in the foregoing summary, see the following authorities: 1 Frank E. Cooper, supra at 292-934; 3 Kenneth C. Davis, Administrative Law Treatise §§ 14.9, .10, .23, .24 (3d ed. 1980); 1 Charles H. Koch, Jr., Administrative Law *570and Practice §§ 5.80-.83 (1985); Jacob A. Stein, Administrative Law § 33.05 (1991).

Discussion

In the present case, the consenting parties compromised the whole of the controversy on terms satisfactory to themselves, as these were set out in their Joint Recommendation or agreed settlement. The consenting parties included most of the intervenors, the Commission as a party, the State of Texas, and Gulf States. The City of Somerville and the Office of Public Utility Counsel objected to the settlement. Nevertheless, the Commission acting as tribunal disposed of the contested case by accepting the terms of the agreed settlement after finding them to be in the public interest and a proper and sufficient basis for the agency’s decision, holding that the resulting rates were “just and reasonable and in the public interest based on consideration of the merits of all issues raised in this proceeding.”
It is not contended that informal disposition was precluded by law, that the Commission lacked jurisdiction, or that the consent of any of the settling parties was obtained by fraud, collusion, or mistake. Instead, the City of Somerville and the Office of Public Utility Counsel contend simply that the Commission’s decision does not comply with APA section 2001.141(b) because the agency’s final order does not include the agency’s determinations, expressed as findings of fact, as to the many “variables” the agency would have decided by fact findings had the case not been settled. The majority adopt this view in their opinion and hold accordingly. I hold a contrary view.
I believe the findings of fact required by APA section 2001.141(b) must reflect the true basis of the agency decision — in this instance, a Commission decision based on the parties’ Joint Recommendation or agreed settlement — as opposed to a fictitious basis, such as would be the case if the Commission had manufactured spurious fact findings while actually basing its decision on the agreed settlement. In my view, the findings mandated by APA section 2001.141(b), when the agency decision purports to rest on an agreed settlement, might refer to such remaining disputed issues as whether the agency had subject-matter and personal jurisdiction of the consenting parties, whether informal disposition was precluded by law, whether the essential parties actually consented to the settlement, whether the disposition made of the case was in the public interest, and any other disputed issues of material fact not resolved in the agreed settlement expressly or by necessary implication.
The majority reject my views on two basic grounds. The first is their perception that my views entail an unfairness to the nonset-tling parties — the City of Somerville and the Office of Public Utility Counsel in this appeal. “What about the rights of the nonset-tling parties? Do they forfeit their' rights to a contested-case hearing and a fair and just adjudication of the ease by the Commission as a result of some of the contesting parties agreeing to settle?” I am not sure what the majority intend by their reference to the “rights” of the nonsettling parties “to a contested-case hearing.” The word “rights” possibly refers to a nonsettling party’s substantive rights in liberty and property. If that is the majority’s intent, then I wholly agree that such a party must be allowed intervention in the contested case and any subsequent agency decision would have to be based on a settlement agreement to which he has consented. This would involve an issue of due process of law, and because such a person’s joinder and consent would be essential, he must join in the settlement or no agency decision based thereon would bind him in his liberty or property interests. See Railroad Comm’n v. Graford Oil Corp., 557 S.W.2d 946, 953-54 (Tex.1977). But the record does not indicate that the City of Somer-ville or the Office of Public Utility Counsel have or even claim a substantive right of that character. And the majority apparently do not refer to anyone’s constitutional rights.
Rather, in assigning “rights” to the City and to the Office of Public Utility Counsel, the majority apparently refer to the procedural “rights” of parties in contested cases disposed of formally, as these are spelled out in APA sections 2001.141-.178. I have discussed these above. These are procedural rights given by the same statute that autho*571rizes informal disposition of contested cases. As to these “rights,” I disagree that the nonsettling parties have a procedural right to all the incidents of formal adjudication when the Commission determines, as it did here, that all essential parties have settled the controversy, the public interest requires an agency decision based on that settlement, and the resulting rates are just and reasonable based on the whole record. It is an anomaly to contend that the nonsettling parties can hold the public interest hostage in such a case when they themselves have no substantive legal right, privilege, or interest that will be affected by the agency decision. See Southwestern Bell Tel. Co. v. Public Util. Comm’n, 615 S.W.2d 947, 957 (Tex.Civ.App.—Austin), writ ref'd n.r.e. per curiam, 622 S.W.2d 82 (Tex.1981).
The majority reject my views on another ground. The majority believe my views would preclude meaningful judicial review of the Commission’s decision. I disagree. It is readily evident that our different views in this regard result from an antecedent disagreement about the scope of judicial review when the contested case has been decided based on a settlement agreement. The majority reason as they do because they believe they must review the sufficiency of the evidence to support the numerous fact findings the Commission is supposed to make relative to all the “variables” involved in setting utility rates under PURA. See supra note 2. This is, of course, a necessary corollary to the majority’s holding that such fact findings are required in all instances, notwithstanding that the agency decision rests on an agreed settlement in which all material facts have been removed from dispute.
I believe, on the other hand, that the scope of judicial review corresponds with the actual basis of the agency decision — an agreed settlement, in this instance, in which all elements of the controversy were removed from dispute insofar as the settling parties were concerned, provided the Commission approved their agreement. The inquiry by a reviewing court is properly directed at whether the agency abused its discretion. This inquiry is determinable by the reviewing court in light of the record as a whole including the nonunanimous settlement agreement and any arguments by the non-settling parties directed at why the resulting order constitutes an abuse of discretion. See APA § 2001.174(2)(F); see also Mobil Oil Co. v. Federal Power Comm’n, 417 U.S. 283, 312-14, 94 S.Ct. 2328, 2347-49, 41 L.Ed.2d 72 (1974); New Orleans Pub. Serv., Inc. v. Federal Energy Regulatory Comm’n, 659 F.2d 509, 511-14 (5th Cir.1981); Pennsylvania Gas & Water Co. v. Federal Power Comm’n, 463 F.2d 1242, 1245-52 (D.C.Cir.1972).5
In the present appeal, it is not contended that the Commission abused its discretion in the sense indicated, and I cannot see that the agency did so in light of the record as a whole.
INCOME-TAX CALCULATIONS
I dissent as well from the majority’s decision overruling the points of error urged by the Commission and Gulf States. They complain the trial court erroneously reversed the Commission’s order and directed the agency to recalculate the income-tax expense component of Gulf States’ operating expense. The parties apparently agree that the reversal rests on the ground that the hearing examiner, in her report to the Commission, expressly declined to follow the “actual taxes paid” rule established in Public Utility Commission v. Houston Lighting & Power Co., 748 S.W.2d 439, 441-42 (Tex.1987), cert. dismissed, 488 U.S. 805, 109 S.Ct. 36, 102 L.Ed.2d 16 (1988). Had the Commission adopted that view and disregarded the supreme court’s holding in Houston Lighting, in a ease in which it properly applied, then *572there would, of course, be reversible error. The trial court was bound, however, as we are, to sustain the Commission’s final order on any legal ground shown in the record. Gulf Land Co. v. Atlantic Ref. Co., 134 Tex. 59, 131 S.W.2d 73, 84 (1939). The trial court erred, in my view, by failing to affirm the Commission’s final order on that basis.
While the hearing examiner did expressly decline to follow the “actual taxes paid” rule, it is also true that the Commission itself expressly declined to adopt the examiner’s view, her proposal for decision, her reasoning, and her suggested findings of fact and conclusions of law. The Commission promulgated instead its own findings of fact and conclusions of law and made a different decision based on the parties’ settlement agreement or Joint Recommendation, adopting only so much of the examiner’s proposals as were consistent with the agency’s findings of fact, conclusions of law, and final decision. I cannot find that the $30 million retail base-rate increase results from anything apart from the reciprocal bargains set out in the parties’ settlement agreement. In other words, it does not appear that the rate increase is a product of the hearing examiner’s reasoning and recommended findings and conclusions regarding the calculations ordered in PURA section 41(c). Indeed, in ordering the rate increase based on the settlement agreement, the Commission expressly declared that it was “not endorsing or approving any ratemaking principle or method underlying the Joint Recommendation.” (Emphasis added).
The Office of Public Utility Counsel and the City of Somerville have not shown that the Commission’s final order results from an abuse of discretion or any other error listed in APA section 2001.174(2)(A)-(F). It appears to be only their assumption, not supported by the agency record, that the Commission adopted its examiner’s income-tax calculation in arriving at the $30 million retail rate-base increase the agency ordered. To the contrary, the record indicates that the Commission’s decision rests upon the parties’ agreed settlement, considered in light of the public interest and whether the settlement would produce rates that are just and reasonable, based upon the record as a whole and quite irrespective of the examiner’s rejected recommendations and reasoning.
While the case is not applicable here, I would again invite the supreme court to review the “actual taxes paid” rule established in Houston Lighting. See Public Util. Comm’n v. GTE-SW, 833 S.W.2d 153, 166 n. 11 (Tex.App.—Austin 1992, writ granted); Moss, supra note 2, at 833-36. It is a court-made rule that appears to be too broad, inflexible, and simplistic for the complex and even delicate task of ratemaking under PURA, and it appears to restrict unduly the discretion the legislature vested in the Commission to achieve just and reasonable rates (keeping in mind the competing interests of utility customers and the utilities themselves) in tandem with several other legislative objectives such as proper standards of service. See, e.g., PURA § 41(c)(3)(D) (commission may promulgate rules with respect to allowance and disallowance of any expenses for ratemaking purposes); Federal Power Comm’n v. United Gas Pipe Line Co., 386 U.S. 237, 246, 87 S.Ct. 1003, 1008, 18 L.Ed.2d 18 (1967) (when legislature “fails to provide a formula for the Commission to follow, courts are not warranted in rejecting the one which the Commission employs unless it plainly contravenes the statutory scheme of regulation.”). I note that the legislature itself declined to impose as a general rule the “actual taxes paid” requirement in cases of consolidated tax returns; indeed, that body directed the use of an imputed or hypothetical income tax when that was shown to be advantageous and the utility failed to show that it was reasonable not to consolidate returns. See PURA § 41(e)(2).
I would affirm the agency order.
PER CURIAM.
The parties have filed a joint motion to dismiss. The parties’ joint motion is granted. Tex.RApp.P. 59(a).
The judgment of this Court, dated November 3, 1993, is hereby withdrawn and the judgment of the trial court is vacated and the cause dismissed in accord with the settlement agreement of the parties. The opinion *573of this Court of November 3, 1993 is not withdrawn.

. Effective September 1, 1993, the Administrative Procedure and Texas Register Act (APTRA) is nonsubstantively codified into the Government Code and renamed the Administrative Procedure Act. Act of May 4, 1993, 73rd Leg., R.S., ch. 268, §§ 47, 49, 1993 Tex.Sess.Law Serv. 587, 988-89 (West).

. The Commission must fix rates that are "just and reasonable,” not "unreasonably preferential, prejudicial, or discriminatory, but ... sufficient, equitable, and consistent in application to each class of consumers.” Public Utility Regulatory Act, Tex.Rcv.Civ.Stat.Ann. art. 1446c, § 38 (West Supp.1993) (PURA). The terms of PURA establish the basic framework for ratemaking in the Commission; these statutory terms have been refined and interpreted in various agency rules and in judicial decisions. The ultimate objective is to fix the utility’s "overall revenues at a level which will permit such utility a reasonable opportunity to earn a reasonable return on its invested capital used and useful in rendering service to the public over and above its reasonable and necessary operating expenses." PURA § 39(a) (emphasis added).
In succeeding provisions of PURA, the legislature has specified the factors applicable to the Commission’s calculation of "reasonable and necessary operating expenses," "invested capital," and "rate of return.” Before these ultimate sums may be calculated, and utility rates fixed therefrom, the Commission may have to resolve by fact findings any number of purely factual or mixed legal and factual disputes the parties may have with regard to the various factors listed in PURA sections 39(b), 41, and 4IB. In arriving at a reasonable return on invested capital, for example, the Commission may have to make fact findings relative to the following factors: ”[I]n addition to other applicable factors, [the utility’s] efforts to comply with the statewide energy plan, the efforts and achievements of such utility in the conservation of resources, the quality of the utility's services, the efficiency of the utility’s operations, and the quality of the utility's management.” PURA § 39(b). The calculation of a reasonable rate of return will also require fact findings to resolve any dispute about the cost of each component of the utility’s capital structure — debt, preferred stock, and common stock— and what is necessary to maintaining the soundness of that structure. See generally Joe S. Poff, Determination of the Allowable Rate of Return by the Texas Public Utility Commission, 57 Tex. L.Rev. 289 (1979).
In determining the utility’s "invested capital,” the legislature has specified that the Commission must calculate the figure based on the following factors: the original cost of the utility's properties "used and useful ... in providing service including construction work in progress at cost *566as recorded on the books of the utility”; and whether inclusion of construction work in progress “is necessary to the financial integrity of the utility”; whether the construction work in progress has been "inefficiently or imprudently planned or managed,” and to what extent. Each of these will of course require supporting fact findings to the extent they are disputed. PURA § 41(a).
The possible fact findings required in disputes about "reasonable and necessary operating expenses” arc almost numberless in the abstract. They will, however, ordinarily fall into seven categories: (1) operations and maintenance expense incurred in furnishing normal utility plant service; (2) depreciation expense; (3) assessments and taxes other than income taxes; (4) federal income taxes on a normalized basis; (5) advertising, contributions, and donations; (6) nuclear decommissioning expense; (7) and accruals credited to reserve accounts for a self-insurance plan; excluding however any sums not actually incurred and any self-insurance plan. The calculations must exclude any sums not actually incurred and any amounts incurred contrary to the public interest or for fines, civil penalties, or lobbying expenses. If any expenses were paid to an affiliate of the utility, a special set of findings relating to those sums is necessary before "reasonable and necessary operating expenses” may be calculated. See generally Ron Moss, Ratemaking in the Public Utility Commission of Texas, 44 Baylor L.Rev. 825 (1992).
In sum, the Commission in fixing rates under PURA may have to make many hundreds of decisions to resolve factual and mixed legal and factual disputes. Each such decision will require a fact finding that declares what the Commission has decided. Must the Commission make the findings in the absence of a dispute among the essential parties? That is, indeed, the majority theory.

. The federal Administrative Procedure Act provides that an agency must "give all interested parties opportunity for ... offers of settlement,” with resort to formal hearing procedures and decisions "to the extent that the parties are unable so to determine a controversy by consent.” 5 U.S.C. § 554(c)(1), (2)(1988). In reference to this statute, it was said as follows:
[E]ven where formal hearing and decision procedures arc available to parties, the agencies and parties are authorized to undertake the informal settlement of cases in whole or in part before undertaking the more formal hearing procedure. Even courts through pretrial proceedings dispose of much of their business in that fashion. There is much more reason to do so in the administrative process, for informal procedures constitute the vast bulk of administrative adjudication and are truly the lifeblood of the Administrative process.... It should be noted that the precise nature of informal procedures is left to development by the- agencies themselves.
Senate Judiciary Comm., Administrative Procedure Act — Legislative History, S.Doc. No. 248, 79th Cong., 2d Sess. 203 (1945) (emphasis added).
Under the federal Administrative Procedure Act, it is even possible that an agency may abuse its *569discrction if it refuses to afford the parties an opportunity to adjust and settle their differences. See NLRB v. East Tex. Steel Castings Co., 211 F.2d 813, 816 (5th Cir.1954).

. A passage in the court's opinion in Pennsylvania Gas & Water Co. v. Federal Power Commission, 463 F.2d 1242 (D.C.Cir.1972), is in structure:
It is well to note at the outset that "settlement” carries a different connotation in administrative law and practice from the meaning usually ascribed to settlement of civil actions in a court.... [I]n agency proceedings settlements are frequently suggested by some, but not necessarily all, of the parties; if on examination they are found equitable by the regulatory agency, then the terms of the settlement form the substance of an order binding on all the parties, even though not all are in accord as to the result. This is in effect a "summary judgment" granted on "motion" by the litigants where there is no issue of fact.
Whether the summary action of any agency in a particular case is fair, just, equitable, and in accord with the procedure required by law is a matter for judicial review, as in the case at bar.
"The whole purpose of the informal settlement provision is to eliminate the need for often costly and lengthy formal hearings in those cases where the parties are able to reach a result of their own which the appropriate agency finds compatible with the public interest.” Id. at 1247.
Id. at 1245-47.

. In Mobil Oil Corp., the court declared the Federal Power Commission might adopt a nonunani-mous settlement agreement in fixing rates, provided the agency (1) weighed the terms of the proposed settlement in light of the entire record; (2) made an independent finding, supported by substantial evidence in the record as a whole (including the settlement agreement), that the resulting rates would be just and reasonable; and (3) approved the settlement as being in the public interest. Mobil Oil Corp., 417 U.S. at 314, 94 S.Ct. at 2348. We adopted the same requirements in City of El Paso v. Public Utility Commission, 839 S.W.2d 895, 904 (Tex.App.—Austin 1992, writ granted).