Narragansett Elec. Co. v. Harsch

• Decision Date: 30 November 1976
• Docket Number: No. 76-252-M,76-252-M
• Citation: 367 A.2d 195,117 R.I. 940
• Parties: NARRAGANSETT ELECTRIC COMPANY v. William W. HARSCH et al. P.
• Court: Rhode Island Supreme Court

Page 195

367 A.2d 195

NARRAGANSETT ELECTRIC COMPANY v. William W. HARSCH et al.

No. 76-252-M.P.

Supreme Court of Rhode Island.

Nov. 30, 1976.

Edwards & Angell, Edward F. Hindle, Deming E. Sherman, Providence, for petitioner.

Julius C. Michaelson, Atty. Gen., R. Daniel Prentiss, Special Asst. Atty. Gen., Roberts & Willey, Ronald C. Markoff, Providence (for Rhode Island Consumers Council), for respondents.

ORDER

PER CURIAM.

This order supplements earlier orders entered in this controversy whereby on October 1, 1976, a majority of this court denied the Narragansett Electric Company's (Narragansett) motion to suspend an order of the Public Utilities Commission (PUC) that in turn had suspended the effective date of a proposed rate increase sought by the utility. Narragansett's motion to suspend accompanied an amended petition for certiorari, which was filed with this court on September 3, 1976.

Earlier, in Rhode Island Consummers' Council v. Smith, 113 R.I. 384, 322 A.2d 17 (1974), we alluded to Narragansett's family tree. There we observed that Narragansett's common stock is owned by a holding company, the New England Electric System (NEES), and NEES also owns the New England Power Company (NEPCO). It is also conceded that NEES, through its other holdings, owns several electric companies which service retail customers in many of the New England states.

An examination of Narragansett's petitions, its various motions, and supporting documents reveals that on November 28, 1975, NEPCO filed an application with the Federal Power Commission (FPC) seeking to increase the cost of the power NEPCO sells to Narragansett and other subsidiaries because of the increased purchase cost of fuel. Two days later, December 1, Narragansett filed with the PUC a schedule of proposed rate increases, which reflected the increased rates that NEPCO would charge Narragansett once NEPCO's proposal was approved by the FPC. Narragansett sought to have its so-called Purchase Power Cost Adjustment (PPCA) become effective on January 1, 1976, or whenever the FPC approved the rate sought by NEPCO. The PUC, acting pursuant to G.L.1956 (1969 Reenactment) § 39-3-13, stayed the effective date of Narragansett's proposal for a period of 6 months from and after the effective date of any approval that the FPC might give to NEPCO's request.

On December 31, 1975, the FPC issued an order which authorized NEPCO to charge an increased rate pending the federal agency's consideration of its application. The effective date of the order was suspended for a period of 2 months. In its order the FPC made it clear that there had been no showing that the proposed increases were 'just and reasonable' and called for a refund in the event that NEPCO's proposal was rejected or modified. On March 1 NEPCO started charging Narragansett the increased rates. On March 23 the PUC held a hearing, at which time Narragansett presented testimony and various exhibits. Other hearings have been held since that time, and the PUC has further stayed the effective date of Narragansett's proposed increases. One of the parties who has appeared before the PUC and vigorously contested Narragansett's claim has been the Rhode Island Consumers' Council, a legal entity created by the Legislature for the express purpose of representing the public interest in all proceedings which seek an '* * * increase of rates or costs of services or commodities where regulated by law of the general assembly.' General Laws 1956 (1969 Reenactment) § 42-42-5.

On June 29 Narragansett filed with us its original petition for certiorari and its initial motion to suspend the PUC's suspension order. We heard oral arguments on the motion, and an order denying it was entered on July 14. The hearings resumed before the PUC, and on August 31 it entered a second order further suspending the effective date for Narragansett's proposed rate increase until December 1. On September 3 Narragansett filed its amended petition for certiorari and a second motion asking us to stay the PUC's August 31 stay order. Again we convened specially to hear oral arguments, and a majority of the court voted to deny the stay. This supplemental order explicates the rationale for the denial.

Before proceeding further, it should be pointed out that § 39-5-4 specifically authorizes this court to stay the operative effect of 'any judgment or order' entered by the PUC. Similarly, our Rule 8 enables a litigant to obtain a stay in this court of a trial court's judgment pending appeal. Our Rule 8 is patterned after Federal Appellate Rule 8. In looking for the criteria to be followed in determining whether we should stay an order of the PUC, we think it appropriate that we follow the criteria that guide the federal appellate judiciary when it considers a stay under its Rule 8.

A stay will not be issued at the federal appellate level unless the party seeking the stay makes a 'strong showing' that (1) it will prevail on the merits of its appeal; (2) it will suffer irreparable harm if the stay is not granted; (3) no substantial harm will come to other interested parties; and (4) a stay will not harm the public interest. Morgan v. Kerrigan, 523 F.2d 917 (1st Cir. 1975); Beverly v. United States, 468 F.2d 732 (5th Cir. 1972); Chicago Stadium Corp v. Scallen, 530 F.2d 204 (8th Cir. 1976); Alpine Lakes Protection Soc. v. Schlapfer, 518 F.2d 1089 (9th Cir. 1975); Virginia Petroleum Job Ass'n v. Federal Power Comm'n, 104 U.S.App.D.C. 106, 259 F.2d 921 (1958). With these standards in mind, we shall turn first to the issues of the utility's showing of its probable success on appeal and the irreparable harm it has suffered.

Throughout this litigation Narragansett has claimed that since interstate transactions between it and its affiliate fall within the exclusive jurisdiction of the FPC, the PUC cannot inquire as to the reasonableness of the increased rate being charged by NEPCO. In taking this position, the local utility refers us to holdings wherein the Supreme Court has ruled that the transmission of electrical energy from one state to another and its wholesale price are matters that come within the sole power and authority of the federal government. F.P.C. v. Southern California Edison Co., 376 U.S. 205, 84 S.Ct. 644, 16 L.Ed.2d 638 (1964); Public Utilities Comm'n of Rhode Island v. Attleboro Steam & Electric Co., 273 U.S. 83, 47 S.Ct. 294, 71 L.Ed. 549 (1927).

The PUC concedes the federal right to set the wholesale price but points out that the General Assembly has charged it with the responsibility of determining the reasonableness of the retail rate being charged the Rhode Island consumer by Narragansett. The state agency directs our attention to § 39-3-30 and the language therein which authorizes the Rhode Island Division of Public Utilities (DPU) to investigate the reasonableness of any contract entered into by two affiliated utilities. If the DPU is not satisfied as to the reasonableness of the contract provisions, § 39-3-30 specifically states that the cost of the contract may not be included within the utility's rate base. The PUC claims that it has an obligation on the facts of this controversy to serve as something more than a rubber stamp for the actions taken by the FPC.

Again, if one believes the statistical data presented by Narragansett, the utility's claim of irretrievably lost revenue and a consequent downward slide in its rate of return could well be described as irreparable harm. The Consumers' Council and the PUC, however, look with a somewhat jaundiced eye at Narragansett's statistical data and the morbid picture its representatives painted at our September hearing. They point to the interrelationship of Narragansett, NEPCO and NEES and describe Narragansett's apparent multimillion dollar loss as being...