Wash. Gas Light Co. v. Public Service Com'n, 79-587.

Citation450 A.2d 1187
Decision Date10 September 1982
Docket NumberNo. 79-746.,No. 79-587.,No. 79-745.,No. 79-740.,79-587.,79-740.,79-745.,79-746.
PartiesWASHINGTON GAS LIGHT CO., Petitioner, v. PUBLIC SERVICE COMMISSION OF the DISTRICT OF COLUMBIA, Respondent, Apartment and Office Building Association of Metropolitan Washington, Inc., Columbia Realty Venture, General Services Administration, and People's Counsel, Intervenors. GENERAL SERVICES ADMINISTRATION, Petitioner, v. PUBLIC SERVICE COMMISSION OF the DISTRICT OF COLUMBIA, Respondent, Washington Gas Light Co., and People's Counsel, Intervenors. APARTMENT AND OFFICE BUILDING ASSOCIATION OF METROPOLITAN WASHINGTON, INC., and Columbia Realty Venture, Petitioners, v. PUBLIC SERVICE COMMISSION OF the DISTRICT OF COLUMBIA, Respondent, Washington Gas Light Co., and People's Counsel, Intervenors. PEOPLE'S COUNSEL, Petitioner, v. PUBLIC SERVICE COMMISSION OF the DISTRICT OF COLUMBIA, Respondent, Washington Gas Light Co., Intervenor.
CourtCourt of Appeals of Columbia District

Monte R. Edwards, Washington, D. C., with whom R. Stanley Harsh was on the briefs, for Washington Gas Light Co. Lewis Carroll, Washington, D. C., also entered an appearance for Washington Gas Light Co.

Melvin J. Washington, Asst. Corp. Counsel, Washington, D. C., with whom Judith W. Rogers, Corp. Counsel, and Richard W. Barton, Deputy Corp. Counsel, Washington, D. C., at the time the briefs were filed, were on the briefs, for respondent.

Frann G. Francis, Washington, D. C., for the Apartment and Office Building Association of Metropolitan Washington, Inc., and Columbia Realty Venture.

Sumner J. Katz, Gen. Services Administration, Washington, D. C., with whom Allie B. Latimer, Gen. Counsel, and Spence W. Perry, Asst. Gen. Counsel, General Services Administration, Washington, D. C., were on the briefs, for the General Services Administration.

Elizabeth A. Noel, Asst. People's Counsel, Washington, D. C., with whom Brian Lederer, People's Counsel, Washington, D. C., was on the briefs, for People's Counsel.

Before NEWMAN, Chief Judge, and HARRIS and PRYOR, Associate Judges.

PER CURIAM:

In these consolidated petitions of appeal, the various petitioners have raised numerous objections to a ratemaking decision of the Public Service Commission (the Commission or PSC) granting Washington Gas Company (WGL or the Company) an increase in operating revenues of $7.1 million (of which $3.9 million was included to cover added income taxes).

The proceeding commenced in July, 1977 when WGL filed with the Commission an application to increase its rates and charges for gas service within the District of Columbia. The Company originally sought to increase its annual gross operating revenues by $8.6 million, so as to produce a 9.85% overall return on investment and a return of 14.5% on common equity. That request was based upon a calendar 1976 test year. On December 1, 1977, the Company filed an amended application based on a test year ending June 30, 1977. The amended application sought a $10.9 million revenue increase in order to produce the same overall rate of return (9.85%) and the same return on equity (14.5%) as were originally requested.

On October 19, 1977, the Commission granted intervention to the Apartment and Office Building Association of Metropolitan Washington, Inc. (AOBA), Columbia Realty Venture (CRV), the General Services Administration (GSA) (representing the consumer interests of the executive agencies of the United States Government), People's Counsel1 (PC), the Staff of the PSC (Staff), and other parties not pertinent to these appeals. Following lengthy hearings, briefing, and considerable decisional delay, the Commission issued its Proposed Opinion and Order No. 6051 on February 13, 1979 (Order No. 6051). After the parties noted their exceptions to the proposed order, the Commission issued its Final Opinion and Order No. 6060 on March 16, 1979 (Order No. 6060)2. The final order, which adopted the proposed order with minor modifications, granted WGL a revenue increase of $7.1 million and authorized rates of return of 9.25% overall (on rate base) and 13.0% on common equity. The Commission also instituted a new rate design which had the effect of increasing the disparities in rates of return among WGL's various customer classes.

Timely Applications for Reconsideration of the Commission's final order were lodged with the PSC by all pertinent parties. See D.C.Code 1981, § 43-904. The Commission thereafter denied those applications in Order No. 6069, issued April 26, 1979, and Order No. 6082, issued May 11, 1979. These petitions of appeal followed.

On appeal, the Company raises eleven separate issues. It challenges as unlawful, unreasonable, or confiscatory the Commission's decisions regarding the rate design, rate of return, attrition, and the treatment of miscellaneous gains, losses, and operating expenses. It also contests the Commission's consideration of federal wage and price guidelines in setting the new rates. The GSA, AOBA, and CRV join the Company in challenging the rate design. People's Counsel supports the Commission on each of the issues raised by WGL, but, together with the GSA, urges that it was error for the Commission to compute WGL's revenue requirements using a tax allowance based on a 48% federal corporate tax rate, when that rate had been replaced by a 46% tax rate prior to the issuance of the Commission's decision.

We conclude that, with respect to all issues, as the decision of the Commission was not unreasonable, arbitrary, or capricious, and as the Commission adequately explained the reasons for its decision, the Commission's order must be affirmed.

I. SCOPE OF REVIEW

Our review of the Commission Order is governed in the first instance by D.C.Code 1973, § 43-706, which narrowly circumscribes the scope of our review "to questions of law, including constitutional questions; and the findings of fact by the Commission shall be conclusive unless it shall appear that such findings of the Commission are unreasonable, arbitrary, or capricious." See, e.g., Metropolitan Washington Board of Trade v. Public Service Commission, D.C.App., 432 A.2d 343, 350 (1981); Potomac Electric Power Co. v. Public Service Commission, D.C.App., 402 A.2d 14, 17 (en banc), cert. denied, 444 U.S. 926, 100 S.Ct. 265, 62 L.Ed.2d 182 (1979); People's Counsel v. Public Service Commission, D.C.App., 399 A.2d 43, 45 (1979); Washington Public Interest Organization v. Public Service Commission, D.C.App., 393 A.2d 71, 75 (1978), cert. denied, 444 U.S. 926, 100 S.Ct. 265, 62 L.Ed.2d 182 (1979). To facilitate our review, the Commission must indicate "fully and carefully the methods by which, and the purposes for which, it has chosen to act, as well as its assessment of the consequences of its orders for the character and future development of the industry." In re Permian Basin Area Rate Cases, 390 U.S. 747, 792, 88 S.Ct. 1344, 1373, 20 L.Ed.2d 312 (1968); see Metropolitan Washington Board of Trade v. Public Service Commission, supra at 351-52. We are obliged to examine the record to determine whether the Commission has acted arbitrarily, and whether each component of the Commission order is supported by substantial evidence. In re Permian Basin Area Rate Cases, supra, 390 U.S. at 792, 88 S.Ct. at 1373; People's Counsel v. Public Service Commission, supra at 45. We must further ascertain that, in striking a balance between the competing consumer and investor interests, "the Commission has given reasoned consideration to each of the pertinent factors." Id. at 45-46 (quoting In re Permian Basin Area Rate Cases, supra, 390 U.S. at 792, 88 S.Ct. at 1373).

At the same time, in recognition of the authority delegated to the Commission by Congress, and of the expertise of the commissioners in the complex and esoteric area of utility regulation, we accord great respect to the decisions of the commissioners. See Goodman v. Public Service Commission, 162 U.S.App.D.C. 74, 78-79, 497 F.2d 661, 665-66 (1974). We have stated that, "Our review of a utility commission order is the narrowest judicial review in the field of administrative law." Potomac Electric Power Co. v. Public Service Commission, supra at 17; accord, Metropolitan Washington Board of Trade v. Public Service Commission, supra at 351.

Theories of ratemaking in particular fall within the special province of the Commission. Although "[a] theory of ratemaking must be reasonable, explained, and supported, [it] is not subject to the same substantiation principle as the substantial evidence test applicable to fact-finding." Continental Air Lines, Inc. v. Civil Aeronautics Board, 179 U.S.App.D.C. 334, 342, 551 F.2d 1293, 1301 (1977). A reviewing court may not supplant valid theories employed by the Commission with those "more nearly to its liking." Metropolitan Washington Board of Trade v. Public Service Commission, supra at 352. Accord, In re Permian Basin Area Rate Cases, supra 390 U.S. at 792, 88 S.Ct. at 1373; Potomac Electric Power Co. v. Public Service Commission, supra at 18. Nor may we "reassess the weights given by a rate-making agency to different factors, absent a legislative direction as to precisely what gravity each factor bears. All that the [reviewing] court may properly do is to consider whether the agency did take into account all the relevant factors and no others." Association of American Publishers, Inc. v. Governors of the United States Postal Service, 157 U.S. App.D.C. 397, 403-04, 485 F.2d 768, 774-75 (1973).

Indeed, the Supreme Court has established that it is the "total effect" of a rate order, rather than the theory employed, that determines its validity.

Under the statutory standard of "just and reasonable" it is the result reached not the method employed which is controlling. . . . It is not theory but the impact of the rate order which counts. If the total effect of the...

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