614 A.2d 1006 (Md.App. 1992), 92, Building Owners and Managers Ass'n of Metropolitan Baltimore, Inc. v. Public Service Com'n of Maryland

Docket Nº:92, 143, 144, 145,
Citation:614 A.2d 1006, 93 Md.App. 741
Opinion Judge:[12] Wilner
Attorney:[7] Timothy F. Umbreit, argued, Baltimore (Umbreit & Resnick, on the brief), for appellant, BOMA.
Case Date:October 29, 1992
Court:Court of Special Appeals of Maryland

Page 1006

614 A.2d 1006 (Md.App. 1992)

93 Md.App. 741

Rep. P 26,274








Nos. 92, 143, 144, 145,

Court of Special Appeals of Maryland.

October 29, 1992

Page 1007

[93 Md.App. 744] Timothy F. Umbreit, argued, Baltimore (Umbreit & Resnick, on the brief), for appellant, BOMA.

John M. Glynn, argued, Baltimore (Theresa V. Czarski and Paula M. Carmody, on the brief), both as appellant and appellee, People's Counsel.

Sandra Lee Hall, argued, Baltimore (Bryan G. Moorhouse, on the brief), for appellee, Public Service Com'n.

Roger D. Redden, argued, Baltimore (Martin E. Wolf, Piper & Marbury and Harvey J. Reed, on the brief), for appellee, BG & E.

Argued before WILNER, C.J., and GARRITY and CATHELL, JJ.

Page 1008

WILNER, Chief Judge.

Before us are four appeals from a judgment of the Circuit Court for Baltimore City affirming three orders of the Public Service Commission (PSC). The PSC orders were entered in connection with an application by the Baltimore Gas and Electric Company (BG & E) for an increase in its electric rates. These appeals and the responses to them raise three basic issues: (1) whether a party to a PSC proceeding is required to ask for a rehearing before the PSC before seeking judicial review; (2) whether the two-step procedure employed by PSC in approving a new rate structure for BG & E was in compliance with State law; and (3) whether the allocation of the rate increase among [93 Md.App. 745] the various classes of BG & E customers, and in particular the "G" and "GL" classes, conforms with State and Federal law. We shall affirm the judgment of the circuit court.


On May 21, 1990, BG & E filed an application for a net increase in its electric rates of $198 million. The basis of the application was the assertion that, due to attrition 1 and other factors, the company was not earning its authorized 10.01% rate of return. It also informed the Commission that its Brandon Shores Unit 2 (BSU-2), a new coal-fired generating plant then under construction, was expected to begin commercial operation in May, 1991, and when that occurred the company would begin to incur many expenses not considered in setting its current rates. Because that unit was not then in service, however, BG & E initially proposed a two-step increase--$198 million to take effect June 20, 1990, and $52 million to take effect June 1, 1991, when BSU-2 became operational, that latter increase to be entirely offset by the savings in fuel cost attributable to BSU-2.

The PSC suspended the proposed tariff and set the matter for hearing. A number of people and organizations, [93 Md.App. 746] including People's Counsel, the Commission Staff, and an association of building owners and managers (BOMA), intervened. After extensive hearings, the Commission issued its Order No. 69054 on December 17, 1990. In that Order, the PSC approved a two-step increase in the company's electric rates in order to "reflect in rates both the costs of BSU-2, and the projected fuel cost savings, in a timely fashion." It granted an immediate increase of $76,964,000 and authorized BG & E to file an amended schedule of rates, along with a revised fuel rate, when BSU-2 entered service, expected to be about June 1, 1991. It directed BG & E to allocate both steps of the increase among its classes of customers in a manner calculated to narrow, but not extinguish, the disparity between their respective class rates of return. We shall examine both of these provisions--the two-step increase and the method of allocating the increase--in greater detail later in this Opinion.

Within 30 days after the filing of this Order, both People's Counsel and BOMA filed appeals to the circuit court. After those appeals were filed, but still within 30 days after issuance of the Order, BG & E moved for a rehearing by the PSC. Concomitantly, it moved to dismiss the appeals on the ground that, by declining to seek a rehearing themselves, People's Counsel and BOMA had failed to exhaust an available

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administrative remedy. On March 11, 1991, PSC denied BG & E's application for rehearing on the ground that, due to the pendency of the appeals, it had lost jurisdiction over the matter. In an exercise of caution, People's Counsel filed a second appeal in the event the court agreed with BG & E's position and dismissed the first appeal.

On April 29, 1991, BG & E filed the second step supplement and fuel cost adjustment, to take effect May 28, 1991, based on the coming into service of BSU-2. It regarded this filing, which was accompanied by its March, 1991 quarterly report and other information demanded by PSC in its December Order, as simply a compliance filing and not a new rate application. Over People's Counsel's objection, [93 Md.App. 747] the Commission regarded it that way as well. At its Administrative Meeting on May 22, the Commission, without conducting any further evidentiary hearing, found that the revised rates were in compliance with Order No. 69054 and permitted them to go into effect May 28, 1991. Those rates reflected an aggregate $124 million increase, offset in part by a $58 million decrease in the fuel rate, i.e., the cost of fuel that BG & E is allowed to pass on to its customers. People's Counsel noted an appeal (his third) from that decision.

After hearing argument, the circuit court, on December 9, 1991, disposed of all four appeals by denying BG & E's motions to dismiss the appeals of BOMA and People's Counsel and affirming the PSC decisions. We now have four appeals to this Court--three by People's Counsel and one by BOMA. The appeals by People's Counsel center on the two-step process used by the PSC and its "decision to approve, without a full opportunity for a hearing and without a sales adjustment, the approximately $124 million rate increase related to BG & E's [BSU-2] coal-fired generating plant beginning commercial service." BOMA's appeal raises the issue of the allocation of the increase among BG & E's classes of customers. As to all four appeals, BG & E presses its argument that the appellants failed to exhaust their administrative remedies by not seeking a rehearing by the PSC, as permitted by Md.Code art. 78, § 86. We shall deal with these issues in inverse order. 2

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[93 Md.App. 748] Exhaustion of Administrative Remedy

Section 86 of article 78 permits any party in interest to apply to the Commission for rehearing within 30 days after service on it of a final order. Action on an application for rehearing lies in the discretion of the Commission, and, unless the Commission orders otherwise, neither the application nor the grant of a rehearing stays the enforcement of the order sought to be reviewed. Id. Acknowledging that "there is no reported Maryland decision directly on [93 Md.App. 749] point," but relying on an Illinois case that seems to have turned on particular language in the Illinois version of the Administrative Procedure Act, BG & E urges that, unless a party takes advantage of § 86 and requests a rehearing, the party has not exhausted all available administrative remedies and is not, therefore, entitled to seek judicial review. That position is foreign to Maryland law, foreign in particular to the law governing the PSC, and foreign to the law generally throughout the country.

It seems clear that, had no earlier appeal been filed, any of the parties to the PSC proceeding could have filed an application for rehearing within 30 days after the December 17, 1990 order, and that, had any party done so, the time for noting an appeal to the circuit court would have been extended until the Commission acted upon the application. See art. 78, § 91, providing expressly that if a rehearing before the Commission is duly applied for, "proceedings for judicial review may be filed after the service of the decision of the Commission denying the hearing." See also Flying "A" Serv. Stat. v. Jordan, 17 Md.App. 477, 302 A.2d 650 (1973). That does not mean, of course, that an application for rehearing is a prerequisite for judicial review, only that, if one is filed, the time for seeking judicial review is stayed.

Complicating the matter now before us is the fact that one of the parties, BOMA, filed an order for appeal seeking judicial review before any of the other parties applied for rehearing before the Commission. That invokes the pronouncement made in Balto. Gas & Elec. v. Public Serv. Comm'n, 305 Md. 145, 157-58 n. 7, 501 A.2d 1307 (1986) that:

"The broad grant of authority in § 86(d) to rehear final orders is, we believe, impliedly limited by § 91, which authorizes the circuit court to assume jurisdiction over a final order of the Commission upon petition of an interested [93 Md.App. 750] party. Once the circuit court has assumed jurisdiction in such a case, its jurisdiction is exclusive. "

(Emphasis added.)

Because of BOMA's timely order for appeal prior to the filing of any application for rehearing, jurisdiction became vested exclusively in the circuit court, thereby foreclosing any action by the Commission on any application for rehearing subsequently filed. Under that circumstance, it is clear that, from and after BOMA's order for appeal, no available administrative remedy existed and thus subsequent timely appeals by People's Counsel were not barred.

Although the exclusive jurisdiction rule announced by the Court of Appeals applies directly to the appeal by People's Counsel, it does not address the validity of BOMA's appeal. That rests on the more general question of whether BOMA was required to apply for a rehearing before seeking judicial review.


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