American Vitrified Products Co. v. Public Service Commission

• Decision Date: 29 June 1961
• Docket Number: No. 19262,19262
• Citation: 176 N.E.2d 145
• Parties: AMERICAN VITRIFIED PRODUCTS COMPANY, California Pellet Mill Co., Harris Packing Co., Inc., Hydraulic-Press Brick Company, Mid-States Steel & Wire Co., Plastene Corporation, Sommer Metalcraft Corporation, The Hoosier Crown Corporation, Appellants. v. PUBLIC SERVICE COMMISSION of Indiana and John Van Ness, Ira Haymaker and Garland Skelton, as members of and constituting The Public Service Commission of Indiana; and the City of Crawfordsville, Indiana, Appellees.
• Court: Indiana Appellate Court

Page 145

176 N.E.2d 145

40 P.U.R.3d 164

AMERICAN VITRIFIED PRODUCTS COMPANY, California Pellet Mill Co., Harris Packing Co., Inc., Hydraulic-Press Brick Company, Mid-States Steel & Wire Co., Plastene Corporation Sommer Metalcraft Corporation, The Hoosier Crown Corporation, Appellants. v. PUBLIC SERVICE COMMISSION of Indiana and John Van Ness, Ira Haymaker and Garland Skelton, as members of and constituting The Public Service Commission of Indiana; and the City of Crawfordsville, Indiana, Appellees.

No. 19262.

Appellate Court of Indiana, In Banc.

June 29, 1961.

Rehearing Denied Sept. 7, 1961.

Henry C. Ryder, Indianapolis, for appellants, Buschmann, Krieg, DeVault & Alexander, Indianapolis, of counsel.

Walter N. Haney, City Atty., Robert F. Werner, Crawfordsville, Lafuse, Ging & Graber, Indianapolis, for appellees.

MYERS, Judge.

This is an appeal from an order of the Public Service Commission of Indiana. The City of Crawfordsville, in Montgomery County, Indiana, owned and operated an electric light and power utility. On November 12, 1957, it filed its petition with the Commission asking for approval of a revised schedule of rates and charges to be collected from the users of the utility system. A petition to intervene was granted to eight industrial customers who charged that the proposed rates and charges were unjust and unreasonable, were discriminatory, particularly as against commercial power users, under the proposed primary power rate, and that they contained vague, ambiguous and inequitable provisions.

Public hearings were held in Crawfordsville and Indianapolis. On May 2, 1958, the Commission entered an order approving the City's proposed schedule of rates and charges, which were found to be reasonable, just and non-discriminatory within the meaning of the applicable statute. Section 54-609, Burns' Ind.Stat., 1951 Replacement.

A special finding of facts in this order recited that the City owned and operated the electric utility supplying current for public, domestic and industrial users; that it desired to revise its schedule of rates and charges to make them more equitable; that the Common Council of the City had adopted an ordinance revising the schedule of rates and charges, a copy of which ordinance was attached to and made a part of the petition as an exhibit.

The pertinent parts of the special finding of facts read as follows:

'3. That after consideration of Petitioner's Exhibit No. 6, duly introduced and admitted into evidence, the Commission now finds as follows:

'(a) That the necessary expense incident to the operation of the utility, including maintenance costs, operating charges, upkeep, repairs, and depreciation incurred, amounts to $844,345.95 for the year ended December 31, 1957, and

'(b) That the utility operating income for the year 1957 at present rates, before the payment of interest and before the liquidation of bonds, amounted to $89,920.67, and

'(c) That the City of Crawfordsville has presently outstanding electric utility revenue bonds as of December 31, 1957, in the amount of $1,295,000 and that the annual retirement from January 1, 1958, to their maturity, to liquidate such bonds, is in the amount of $97,761 per annum, and

'(d) That he application of the schedule of rates and charges proposed by the City of Crawfordsville, Indiana, in this cause to the electric energy sales of the utility for the year ended December 31, 1957, would have resulted in operating revenues of $1,010,373.35, an annual increase in the amount of $77,265.72, and

'(e) That had the proposed schedule of rates been in effect during the year ended December 31, 1957, the utility income before deductions or charges for interest on the outstanding bonds would have been $166,027.40, and

'(f) That operating under the proposed schedule of rates and charges the Crawfordsville municipal electric utility would have had earning in excess of its requirements for operation of the utility, interest charges on its bonds, liquidation of its bonds, in the amount of $68,266, and that such income over and above the annual requirements for the purposes hereinabove stated is sufficient to maintain the utility property in a sound physical and financial condition to render adequate and sufficient service for a reasonable time in the future.

'4. That from the evidence presented to the Commission, the City of Crawfordsville has transferred to its Cash Reserve Fund moneys as much as $90,000 per annum in the past several years, and that transfers of such magnitude exceed the amount that would be reasonable revenue in lieu of taxes, and that such amount tends to prejudice the sound financial condition of the utility.

'5. That from the evidence the Commission finds that transfers to the Cash Reserve Found of the utility sufficient to discharge its obligations in lieu of taxes to the City should not be more than $65,000 per annum and that annual transfers to the utility's Cash Reserve Fund not in excess of the aforementioned amount of $65,000 per annum will be sufficient for revenue in lieu of taxes for a reasonable time in the future.'

(Finding No. 6 pertains to certain modifications of the proposed rate schedule.)

'7. That the proposed schedule of rates and charges submitted herein by the Petitioner, as hereinabove modified, is non-discriminatory, reasonable and just within the meaning of Acts 1913, ch. 76 § 105, p. 167; 1933, ch. 190, § 15, p. 928; 1937, ch. 14, § 1, p. 49. (54-609 Burns Indiana Statutes, 1951 Replacement, Vol. 10, Part 2.)

'8. The Commission finds that wherein substantial changes are made in the rate structure of a particular utility, as hereinafter ordered, that the estimates of the revenue effect therefrom may very well vary either upward or downward from the actual revenues that will be realized from said new rate structure and the Commission further finds that it is in the best interest of the public and it will be so ordered that after twelve full calendar months of operation at the new schedule of rates and charges, affixed in Appendix A hereinafter, the utility shall make a complete report setting forth such information as shown in Petitioner's Exhibit No. 6, pages 13, 13A and pages 54 to 70, inclusive. That such report shall be filed in triplicate with this Commission not less than sixty (60) days after the end of the first twelve complete calendar months of operating experience under the new schedule of rates and charges and that after the filing of said report by the utility, said rates and charges, as hereinafter approved, shall be subject to the final approval of this Commission. That this Commission should retain jurisdiction of the subject-matter and of the party or parties hereto for the purpose of issuing any further order or orders, as the Commission may deem necessary.

'9. The Commission finds that the Petitioner has been lax in maintaining its utility records, which is evidenced by Petitioner's Exhibit No. 6, pages 66 and 67; that the Utility's plant accounts and the applicable depreciation reserve have not been maintained on the records of the utility in the manner, form and in accordance with generally accepted principles of accounting for electric utilities and that so long as the revenue bonds issued by this utility which are now outstanding remain unpaid, the Petitioner herein should be required to maintain its records and accounts in accordance with generally accepted principles of accounting for electric utilities.'

Based on these special findings, the Commission, on May 2, 1958, entered its order which, in general, approved the rates and charges provided for in the ordinance as modified and ordered them placed in effect at the next regular billing date after approval of the order and after a schedule had been filed with the Tariff Division of the Engineering Department of the Commission. The rates and charges as approved were declared to be 'temporary' rates until appellee had complied with the provisions and conditions set forth in Finding No. 8, and 'the Commission has entered a final order in this proceeding.' (Our emphasis.)

It was further ordered that so long as the electric utility revenue bonds of 1953, previously issued and sold by the municipality, were outstanding, the electric utility should not make transfers of cash to the Civil City of Crawfordsville in lieu of taxes in excess of $65,000 per annum.

A petition for rehearing was filed by appellants and granted. This was amended to be a 'rehearing of oral argument.' After the oral argument, the Commission, on September 25, 1958, approved its prior order of May 2, 1958, whereupon this appeal followed.

The assignment of errors specifies that the order is contrary to law; that it does not contain specific findings of fact to support the conclusions therein; that the Commission erred in overruling and sustaining certain objections to the admission of evidence, and in overruling the motion to dismiss made at the conclusion of appellee's case. (Hereafter in using the term 'appellee,' we refer only to the City of Crawfordsville. Although the Public Service Commission of Indiana and its members were named party appellees, the Commission constituted the fact-finding administrative board which entered the order from which this appeal is taken and is not a party to the order attacked by appellants. The Commission or its members could not be property joined as party appellees as they are not parties of interest within the meaning of Rule 2-6 of the Supreme Court of Indiana. Martin v. Indianapolis Water Company, Ind.App.1959, 162 N.E.2d 709).

At the outset, we are faced with the question of whether this court has jurisdiction over this appeal. This was raised by appellee on a motion to dismiss, which was overruled by this court prior to the time briefs were filed on the merits. After all briefs were filed herein and oral argument had been held before this court, the matter of jurisdiction arose again, the court divided...