Court Opinion

ID: 6894031
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:47:38.625109+00
Date Added: 2024-06-11T16:05:55.245779
License: Public Domain

CLARK, Associate Justice
(concurring in the result).
As indicated in Judge EDGERTON’s opinion, I arrive at the same result as to the appeal of the Potomac Electric Power Company, but by a different route. I therefore concur in Judge EDGERTON’S conclusion and in his judgment on this appeal but not in his opinion for the reasons hereinafter stated which express my own view of the case.
This appeal, No. 8967, is one of two appeals from an Order of the Public Utilities Commission of the District of Columbia. The Public Utilities Commission order was issued July 22, 1944, and is designated as Order No. 2796.
Order No. 2796 directed the Potomac Electric Power Company to file new rate schedules aimed at reducing the Company’s gross operating revenues by $1,037,189 per year. In arriving at this determination the Commission made certain adjustments in the depreciation reserve and in the provisions for calculating annual depreciation.
From this order both the Potomac Electric Power Company and the United States, represented by two governmental agencies suing in their capacity as consumers, have appealed. The appeals were heard together but this Court has decided to treat them sep*526arately. Therefore this opinion deals only with Case No. 8967, the appeal of the Potomac Electric Power Company. The appeal of the United States, No. 8995, —. U.S. App.D.C. —, 158 F.2d 533, will be dealt with in a separate opinion.
The Potomac Electric Power Company urges that Order No. 2796 cannot be sustained on the basis of the sliding scale agreement, that it is void without regard to any other section of the Act and cannot be upheld under the general regulatory powers of the Commission.
Paragraph 18 of the Act1 provides that the Public Utility “With the consent of the commission” may provide a “sliding scale” of rates and dividends along the pattern commonly recognized as the Boston Sliding Scale. It is the Company’s position that this provision of the law requires an absolute mutuality. In other words, The Company contends that since it does not agree with the result reached by the Commission and since the Commission says in its order that the principle of the “sliding-scale” is to be preserved,2 the order is not binding if its terms be rejected by the Company. .
To analyze this contention we must look not only to the terms of paragraph 18, but also to the nature of the hearing notice and the hearing which resulted in this order. I believe that if we were to accept the Company’s argument as to the nature and effect of paragraph 18, it would amount to giving the Company an unwarranted right of veto over any rate order predicated on a “sliding-scale” principle. It seems to me that such a result is patently against the general policy of public utility regulation and clearly against the obvious intent of Congress in passing this provision. The provision itself includes this passage: “The commission shall ascertain, determine, and order such rates, charges, and regulations, and the duration thereof, as may be necessary to give effect to such arrangement, but the right and power to make such other and further changes in rates, charges, and regulations as the commission may ascertain and determine to be necessary and reasonable, and the right to alter or amend all orders relative thereto, is reserved and vested in the commission notwithstanding any such arrangement and mutual agreement.”
It is my view that the terms of this paragraph were designed to permit the Utility to affirmatively propose a “sliding-scale” arrangement, but it seems clear that there was no intention to divest the Public Utilities Commission of its power to also propose, if it thinks advisable, a pattern of regulation predicated on the “sliding-scale” —or to override the Company’s own plan by such further regulations, under its general powers, as the Commission deems necessary.
It would indeed be an anomaly to permit the Power Company to frustrate the regulatory body by withdrawing at will from any arrangement which it, the Company, considered valid only when mutually ac*527ceptable. I think, taking the Pepeo argument in its most favorable light, that the time for withdrawal from the “sliding-scale” arrangement has long since past so far as concerns the now challenged order. Looking to the notice of hearing we observe that it called for a complete re-examination of the components of the “sliding-scale” as it then existed and for a hearing on the advisability of continuing any sort of sliding scale plan.3 Under this notice the Company came forward for a hearing which it knew might well terminate the sliding scale arrangement. By the same token I think the hearing notice was broad enough to place the Company and any interested intervenors on notice that an evaluation proceedings might be a part of the hearing.
For purposes of my opinion as regards the Pepeo appeal, I am prepared to say that even if the Company at this late hour has, by the terms of paragraph 18, reserved to it the right to withdraw from any plan which exists by reason of “mutual agreement”, it cannot prevail for the simple reason that the Commission’s general powers are quite sufficient as the basis of this challenged order. There is nothing in the general regulatory powers of the Commission to preclude its adopting a “sliding scale” plan. Thus if we are to consider Order No. 2796 as a departure from the mutually agreeable sliding scale” we must examine it, in terms of limitations, only from the standpoint of the general regulatory provisions of the Act.4 Paragraph 2 of the Commission’s organic statute provides: “That every public utility doing business within the District of Columbia is required to furnish service and facilities reasonably safe and adequate and in all respects just and reasonable. The charge made by any such public utility for any facility or services furnished or rendered, or to be furnished or rendered, shall be reasonable, just, and non-discriminatory. Every unjust or unreasonable or discriminatory charge for such facility or service is prohibited and is hereby declared unlawful. Every public utility is hereby required to obey the lawful orders of the commission created by this section.”
This is the fountain head of the Commission’s authority and the policy to guide its actions.5
The Company hinges its objection to supporting the order under the general powers of the Commission on the valuation requirement of the statute. It is the Company’s argument that the Commission did not value the property at the time of issuing the order.
The Company urges that the provisions of paragraphs 6-8 of the Act6 look to “cur*528rent fair value” and require a determination “in the light of current cost to reproduce, among other factors”. I cannot support the Company’s contention. As is pointed out by the Commission, paragraph 6 does not mention the words “fair value”,, “value” or “rate base”, nor does it indicate that the information collected in accordance with this paragraph shall be employed for the purpose of setting rates. Paragraph 7 does direct the Commission to “value the property of every public utility within the District of Columbia * * * at the fair value thereof at the time of said valuation.” Paragraph 8 requires notice to the utility and public hearing before final determination on the matter of valuation. However, I fail to see how, taking all three paragraphs together, there can be worked out a valid argument along the lines advanced by the Company. Pepeo would have us hold as matter of law that these provisions write into statute a rigid formula for rate determination under the standards of the holding in Smyth v. Ames, 169 U.S. 466, 18 S.Ct. 418, 42 L.Ed. 819.7 In my view there are two grounds rejecting the company’s argument that the Commission has not adhered to the statutory dictates in this matter of valuation. First, a valuation was made under the consent decree of 1924. Presumably, since no objection was raised, that valuation was considered to be proper at that time. There is nothing in the Act which would, in my opinion, preclude the carrying forward of that valuation, under an accounting pattern providing for accessions; and there is nothing in the Act to direct the Commission to make a new “valuation” whenever an amendatory regulation was promulgated under the “sliding-scale” plan. Quite apart from this consideration, we have the question of the nature and purpose of the hearing which resulted in Order No. 2796. It was not only broad enough to cover a valuation proceeding, but the Commission did in fact take valuation evidence into account. Both the Commission and the United States presented valuation data, and the Company cannot be heard to say that it did not know that it too could come forward with such evidence as it deemed pertinent in this regard. If it was not satisfied with the evidence presented to the Commission it had the burden of making out its own case. This the Company failed to do, and in my opinion the Commission was properly with*529in the requirements of the law in making such adjustments as it did and establishing the so-called “new” valuation on the basis of the best evidence before it on the date stated, December 31, 1943.
It seems to me particularly important to look to the substantive result of the Commission’s order so far as concerns Pepeo. When this is done it is clear that the Company has no legitimate complaint about the order here in issue. Its objection to the procedural techniques in reaching the order are important and valid only if it be shown that by erroneous procedure the company lost substantial rights which the law guarantees to it or that the Commission had violated the dictates of the statute and thus produced an arbitrary or capricious order. Such is not the case here. Therefore, so far as concerns the Potomac Electric Power Company the dismissal of appeal by the District Court is affirmed.
I therefore concur with Judge EDGE'R-TON in the result reached in Case 8967.

 37 Stat. 980, D.C.Code, 1940, 43 — 317, reading: “That nothing in this section shall be taken to prohibit a public utility, with the consent of the commission, from providing a sliding scale of rates and dividends according to what is commonly known as the Boston sliding scale, or other financial device that may be practicable and advantageous to the parties interested. No such arrangement or device shall be lawful until it shall be found by the commission, after investigation, to be reasonable and just and not inconsistent with the purposes of this section. Such arrangement shall be under the supervision and regulation of the commission. The commission shall ascertain, determine, and order such rates, charges, and regulations, and the duration thereof, as may be necessary to give effect to such arrangement, but the right and p.ower to make such other and further changes in rates, charges, and regulations as the commission miay ascertain and determine to be necessary and reasonable, and the right to alter or amend all orders relative thereto, is reserved and vested in the commission notwithstanding any such arrangement and mutual agreement.”

 The Commission reached two basic conclusions in this regard:
“1. The sliding scale principle of electric rate determination is advantageous to the public and to the utility, and it should be preserved.
“2. The sliding-scale arrangement as presently constituted, in the light of existing conditions, requires substantial modification.”'

 By Order No. 2565, dated April 26, 1943, tlie Commission made it quite clear that it was going into an investigation to determine the following:
“1. Whether the sliding-scale method of electric rate regulation shall be abandoned. 2. Whether the sliding-scale method of electric rate regulation shall be continued in its present form or with modifications of the basic elements of the existing arrangement. 3. Without limiting the scope of the investigation, what modifications, if any, shall be made in the following basic elements of the present sliding-scale arrangement: (a) The rate base, (b) Rate of return, (c) Depreciation accruals, (d) Method of effecting rate reductions.”

 37 Stat. 974, D.C.Code, 1940, 43 — 101 to 43 — 1007.

 Paragraphs 38, 39, 40, and 41 provide that the Commission may, upon its “own initiative”, hold hearings, conduct investigations and establish by order “just and reasonable” rates and charges.

 37 Stat. 978, D.C.Code, 1940, 43— 305 to 43 — 307. “Par. 6. That the commission shall ascertain, as soon and as nearly as practicable, the amount of money expended in the construction and equipment of every public utility, including the amount of money expended to procure any right of way; also the amount of money it would require to secure the right of way, reconstruct any roadbed, track, depots, cars, conduits, subways, poles, wires, switchboards, exchanges, offices, works, storage plants, power plants, machinery, and any other property or instrument not included in the foregoing enumeration used in or useful to the business of such public utility, and to replace all the physical properties belonging to the public utility. It shall ascertain the outstanding stock, bonds, debentures, and indebtedness, and the amount, respectively, thereof, the date when issued, to whom issued, to whom sold, the price paid in cash, property, or labor therefor, what disposition *528was made of the proceeds, by whom the the indebtedness is held, so far as ascertainable, the amount purporting to be due thereon, the floating indebtedness of the public utility, the credits due the public utility, other property on hand belonging to it, the judicial or other sales of said public utility, its property or franchises, and the amount purporting to have been paid, and in what manner paid therefor, and the taxes paid thereon. The commission shall also ascertain in detail the gross and, net income of the public utility from all sources, the amounts paid for salaries to officers and the wages paid to its employees, and the maximum hours of continuous service required of each class. Whenever the information required by this paragraph is obtained it shall be printed in the annual report of the commission. In making such investigation the commission may avail itself of any information in possession of any department of the Government of the United States or of the Commissioners of the District of Columbia.
“Par. 7. That the commission shall value the property of every public utility within the District of Columbia actually used and useful for the convenience of the public at the fair value thereof at the time of said valuation.
“Par. 8. That before final determination of such value the commission shall, after notice of not less than thirty days to the public utility, hold a public hearing as to such valuation in the manner hereinafter provided for a hearing, which provisions, so far as applicable, shall ap.ply to such hearing. The commission shall, within ten days after such valuation is determined, serve a statement, thereof upon the public utility interested, and shall file a like statement with the District Committees in Congress.

 The Company’s argument in this regard is greatly weakened by the fact that the elements enumerated in paragraph 6 do not match up in any more than chance fashion with those which from time to time have been classed as proper elements under the Smyth v. Ames doetrine. Cf. the elements in Puget Sound Power & Light Co. v. Federal Power Commission, 78 U.S.App.D.C. 143, 137 F.2d 701; Alabama Power Co. v. Federal Power Commission, 75 U.S.App.D.C. 315, 128 F.2d 280, certiorari denied 317 U.S. 652, 63 S.Ct. 48, 87 L.Ed. 525.