Citizens' Utility Bd. of Oregon v. Public Utility Com'n of Oregon

• Citation: 962 P.2d 744,154 Or.App. 702
• Decision Date: 24 June 1998
• Docket Number: 95C-12542,C-10372,95C-11300,94C-10417
• Parties: , 186 P.U.R.4th 182, Util. L. Rep. P 26,663 CITIZENS' UTILITY BOARD OF OREGON, an independent nonprofit public corporation, Appellant, Public Power Council, Intervenor-Appellant, v. PUBLIC UTILITY COMMISSION OF OREGON, Respondent. Portland General Electric Company, Intervenor-Respondent. UTILITY REFORM PROJECT, Colleen O'Neill and Lloyd K. Market, Appellants, v. OREGON PUBLIC UTILITY COMMISSION, Respondent, Portland General Electric Co., Intervenor-Respondent. CITIZENS' UTILITY BOARD OF OREGON, an independent nonprofit public corporation, Respondent-Cross-Respondent v. PUBLIC UTILITY COMMISSION OF OREGON, Cross-Appellant, Portland General Electric Co., Intervenor Defendant-Appellant-Cross-Respondent. UTILITY REFORM PROJECT and Colleen O'Neil, Respondents-Cross-Appellants, v. PUBLIC UTILITY COMMISSION OF OREGON, Appellant-Cross-Respondent, Portland General Electric Co., Intervenor Defendant-Appellant-Cross-Respondent. 94; CA A86940 (Control), A86973, A92935, A93400.
• Court: Court of Appeals of Oregon

Page 744

962 P.2d 744

154 Or.App. 702, 186 P.U.R.4th 182, Util.

L. Rep. P 26,663

CITIZENS' UTILITY BOARD OF OREGON, an independent nonprofit public corporation, Appellant, Public Power Council, Intervenor-Appellant, v. PUBLIC UTILITY COMMISSION OF OREGON, Respondent.

Portland General Electric Company, Intervenor-Respondent.

UTILITY REFORM PROJECT, Colleen O'Neill and Lloyd K. Market, Appellants, v. OREGON PUBLIC UTILITY COMMISSION, Respondent, Portland General Electric Co., Intervenor-Respondent.

CITIZENS' UTILITY BOARD OF OREGON, an independent nonprofit public corporation, Respondent-Cross-Respondent v. PUBLIC UTILITY COMMISSION OF OREGON, Cross-Appellant, Portland General Electric Co., Intervenor

Defendant-Appellant-Cross-Respondent.

UTILITY REFORM PROJECT and Colleen O'Neil, Respondents-Cross-Appellants, v. PUBLIC UTILITY COMMISSION OF OREGON, Appellant-Cross-Respondent, Portland General Electric Co., Intervenor

Defendant-Appellant-Cross-Respondent.

94C-10372, 94C-10417, 95C-11300, 95C-12542; CA A86940

(Control), A86973, A92935, A93400.

Court of Appeals of Oregon.

Argued and Submitted Oct. 3, 1997.

Decided June 24, 1998.

John W. Stephens, Portland, argued the cause for appellant Citizens' Utility Board of Oregon. With him on the briefs was Esler, Stephens & Buckley.

Shelly Richardson, Vancouver, WA, argued the cause and filed the briefs for intervenor-appellant Public Power Council.

Jas. Adams, Assistant Attorney General, argued the cause for respondent Public Utility Commission. With him on the briefs were Theodore R. Kulongoski, Attorney General, and Virginia L. Linder, Solicitor General.

John R. Faust, Jr., Portland, argued the cause for intervenor-respondent and intervenor-defendant-appellant-cross-respondent Portland General Electric Company. With him on the briefs was Schwabe, Williamson & Wyatt.

Daniel W. Meek, Portland, argued the cause and filed the briefs for appellants Utility Reform Project, Colleen O'Neil, and Lloyd K. Marbet and respondents-cross-appellants Utility Reform Project and Colleen O'Neil.

Katherine A. McDowell, Clarence M. Belnavis and Stoel Rives, LLP, Portland, filed the brief for amicus curiae PacifiCorp.

Before EDMONDS, P.J., ARMSTRONG, J., and RICHARDSON, Senior Judge.

RICHARDSON, Senior Judge.

These consolidated appeals are from circuit court judgments on review of a series of Public Utility Commission (PUC) orders that allowed Portland General Electric (PGE) to include a "rate of return" (i.e., profit) component, as well as the principal amount of its "undepreciated investment" in the retired Trojan generating facility, in its rates for the years 1995 to 2011. Two different circuit court judges, respectively, affirmed PUC's "declaratory orders," and reversed and remanded its ratemaking order. ¹ On appeal, we review PUC's orders directly, rather than reviewing the circuit court judgments per se. Pacific Northwest Bell Telephone Co. v. Katz, 121 Or.App. 48, 51, 853 P.2d 1346, rev. den. 318 Or. 25, 862 P.2d 1305 (1993). We conclude that PUC erred in each of the orders.

With the exception of URP and the individuals who appear with it (collectively "URP"), the parties agree that the principal if not only issue before us in each of the appeals is whether PGE's rates may include the rate of return component, or are instead limited to the recovery of the declining principal amount of the undepreciated Trojan investment. As the parties summarize the issue, the opponents of PUC's orders take the view that PGE is entitled to recover through its rates only the return of its Trojan investment, while PUC and PGE assert that PGE may also recover a return on the investment. The parties also agree that a resolution of that issue turns on the applicability or interrelationship of two statutes. ORS 757.355 was enacted through an initiative measure in 1978 (Measure 9), and provides:

"No public utility shall, directly or indirectly, by any device, charge, demand, collect or receive from any customer rates which are derived from a rate base which includes within it any construction, building, installation or real or personal property not presently used for providing utility service to the customer."

ORS 757.140(2) was enacted by the legislature through Oregon Laws 1989, chapter 956, section 2, and provides:

"In the following cases the commission may allow in rates, directly or indirectly, amounts on the utility's books of account which the commission finds represent undepreciated investment in a utility plant, including that which has been retired from service:

"(a) When the retirement is due to ordinary wear and tear, casualties, acts of God, acts of governmental authority; or

"(b) When the commission finds that the retirement is in the public interest." ²

The parties make numerous arguments regarding the meaning and relationship of the two statutes. Generally speaking, the parties opposing PUC's orders rely mainly on ORS 757.355 and those supporting the orders place their main reliance on ORS 757.140(2). The first specific area of disagreement arises from PUC's and PGE's contention that ORS 757.355 has no application to retired facilities, but pertains instead only to plant and facilities that are in developmental stages or that are not yet being used for the provision of utility services. CUB, PPC and URP take the opposite view. PUC and PGE agree that the language of the statute and the history of measure 9 demonstrate that the target of the measure and the concern of the statutes are with rates for "construction work in progress" (CWIP), i.e., uncompleted facilities or those planned for prospective use that are not yet in use. PUC and PGE assert, inter alia, that the word "presently," in the statutory phrase "not presently used for providing utility service," is used in the sense that Webster's Third New International Dictionary 1793 (1993) defines as "after a little while," "by and by," "soon," and the like. Relying on an alternative definition in the same dictionary, CUB argues that "presently" is used in the statutes to mean "now" or other formulations synonymous with "currently."

We do not think that the word "presently" specifically or the language of ORS 757.355 generally can plausibly be read as pertaining only to utility property that is not yet in use, and we conclude that the limitations of the statute apply to property that has ceased being used for the provision of services as well as property that has never been so used. As we noted in Steele v. Employment Department, 143 Or.App. 105, 113, 923 P.2d 1252, rev. allowed 324 Or. 487, 930 P.2d 851 (1996), the fact that a particular word has various meanings, all of which are reflected in the dictionary, does not mean that all of the definitional variations

"are pertinent whenever the word is used, or that each variation is an arguably plausible description of what the word means as it is used in a particular statute. The subject and purpose of the statute, together with the statutory language that surrounds the word in question, narrow the array of definitional choices that dictionaries alone afford[.]"

In the present case, there are at least two aspects of the surrounding statutory language that are at odds with PUC's and PGE's understanding that the word "presently" and the statute relate only to CWIP and do not also apply to facilities and plant that are no longer in use. First, ORS 757.355 specifically describes the items that are "not presently used" as including "construction, building, installation or real or personal property." Under PGE's and PUC's reading, only the first word in that enumeration would have been necessary. Moreover, unlike "construction," the words that follow it in the quoted language of the statute encompass completed structures and facilities and real and personal property of all kinds. On their face, the referents of those words can and facially do include property that has ceased to be used for the provision of utility services as well as property that never was.

The second significant aspect of the statutory language is that what it proscribes, inter alia, is the inclusion in the "rate base" of the property and facilities that are not presently used. "Rate base" is a term of art in the field of public utility regulation. In Pacific Tel. & Tel. Co. v. Wallace, 158 Or. 210, 231, 75 P.2d 942 (1938), the Supreme Court explained:

"We are well satisfied that the company cannot include within its valuations property which it neither used nor was useful to the public service. Property which was not reasonably necessary to the adequate furnishing of telephone service must be excluded from the rate base[.]" (Citation omitted.)

The principal consequence of inclusion or exclusion is that "[t]he rate base represents the invested capital upon which the utility is entitled to earn a return." Pacific Tel. & Tel. Co. v. Hill, 229 Or. 437, 444, 365 P.2d 1021, 367 P.2d 790 (1961).

More recently, in PP & L v. Dept. of Rev., 308 Or. 49, 775 P.2d 303 (1989), the Supreme Court restated those two concepts in conjunction, and cited ORS 757.355 as the sole authority for either or both of them. The court said:

" 'Property not in service.' A * * * basic premise of utility regulation is that a utility should be permitted to earn a return only on property that is reasonably necessary to and actually providing utility service. See ORS 757.355. The largest type of property in the property-not-in-service category is construction work in progress (CWIP). When a utility constructs new property, such as a generating facility, that property is not included in the utility's rate base until it actually is placed in service and, even then, the regulators may not allow it in the rate base until the utility establishes that the property is reasonably necessary to provision of electrical service.

"Another significant type of property in this category is property held for future use (PHFU). This is...