Appeal of Public Service Co. of New Hampshire

• Decision Date: 27 December 1982
• Docket Number: No. 82-366,82-366
• Citation: 454 A.2d 435,122 N.H. 1062
• Parties: , 51 P.U.R.4th 298 Appeal of PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (New Hampshire Public Utilities Commission).
• Court: New Hampshire Supreme Court

Page 435

454 A.2d 435

122 N.H. 1062, 51 P.U.R.4th 298

Appeal of PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (New Hampshire Public Utilities Commission).

No. 82-366.

Supreme Court of New Hampshire.

Dec. 27, 1982.

Sulloway, Hollis & Soden, Concord (Martin L. Gross, Concord, on brief and orally, Margaret H. Nelson and Dorothy M. Bickford, Concord, on brief), for Public Service Co. of New Hampshire.

Ferriter & Barna P.C., Boston, Mass. (Kenneth M. Barna, Boston, Mass., on brief and orally, Nicholas J. Scobbo, Jr., Robert A. Guttman, and Robert P. Rodophele, Boston, Mass., on brief), for the Joint Owners Group.

New England Legal Foundation, Boston, Mass. (Joseph O. Alviani and Marcia Drake Seeler, Boston, Mass., on brief), for the Business and Industry Ass'n of New Hampshire, as amicus curiae.

Gregory H. Smith, Atty. Gen. (Bruce E. Mohl, attorney, and F. Joseph Gentili, consumer advocate, on brief and orally), for the State and the New Hampshire Consumer Advocate.

Douglas I. Foy and Alan Wilson, Boston, Mass., for the Conservation Law Foundation of New England, Inc., as amicus curiae.

DOUGLAS, Justice.

This is an appeal pursuant to RSA 541:6 from conditions placed upon the future issuance of securities by Public Service Company of New Hampshire (PSNH) under an order of the New Hampshire Public Utilities Commission (PUC). Several matters relating to the proper role of a quasi-judicial regulatory agency are raised by the appealing parties.

On May 18, 1982, the PUC initiated Docket No. DF 82-141 on its own motion. The order recited that the docket was opened

"for the purpose of receiving any and all information on (1) the question of whether there have been bona fide responses and sustained progress by the other New England electric utilities in alleviating the PSNH financial problems stemming from ... their level of ownership in Seabrook; (2) the immediate fate of Seabrook II as to whether to delay [it] or not and if so how long; and (3) what if any conditions to impose upon future PSNH financing ...."

The PUC convened hearings on this docket on June 14, 1982. Hearings were held over the course of six days, concluding on July 2, 1982. At the initial hearing, the PUC purported to restrict the scope of the proceedings to the issue of whether there had been a "bona fide response" and "sustained progress" in reducing PSNH's ownership interest in the Seabrook project and in the Millstone 3 nuclear facility in Connecticut. Specifically, the PUC announced that its inquiry would focus upon whether other New England utilities had demonstrated a bona fide response to the options of either purchasing some of PSNH's shares of the nuclear-plant-construction projects or making other arrangements to alleviate the financial burden of the company. The PUC stated that since Docket No. DF 82-141 emanated from Docket No. DF 82-63, it would incorporate the record in the latter docket by reference. The latter docket involved an issuance of common stock by PSNH.

Following the conclusion of proceedings on Docket No. DF 82-141, the PUC on July 16, 1982, issued a report and an order. In its Order No. 15,760, the PUC mandated that the following terms and conditions be attached to all PSNH financing undertaken after the date of the report and order:

"(1) Pursuant to the provisions of RSA 369, to the extent these proceeds are used for the furtherance of work at Seabrook Station Site, these proceeds can only be used for the furtherance of work on Seabrook I and common plant associated with both units.

(2) None of the proceeds of any future securities issue either of a long or short term nature can be used in whole or in part for construction of Unit II."

These terms were imposed until one of the following conditions was met: (1) the successful divestiture by PSNH of part of its ownership interest in the Seabrook project so that it owned no more than twenty-eight percent of the plant; (2) a demonstrated effort by other utilities to alleviate PSNH's financial condition; or (3) the completion of Seabrook Unit One. The terms were the result of the PUC's decision that these conditions strengthened the financial posture of PSNH.

On July 28, 1982, PSNH filed a motion with the PUC requesting a rehearing with respect to Report and Order No. 15,760. On August 4, 1982, the PUC denied the company's motion for rehearing. PSNH subsequently filed a notice of appeal with this court and a motion requesting the suspension of PUC Order No. 15,760 pending the appeal. On August 19, 1982, we accepted the appeal and granted the motion for suspension of the order.

The records of two other dockets referred to in Docket No. DF 82-141 were filed with this court. Those other related matters are: Docket No. DR 81-87, regarding temporary and permanent rates, which was decided on January 11, 1982; and Docket No. DF 82-63, regarding a common stock issuance, in which PSNH offered evidence that a two-year delay in Unit Two would increase the cost to consumers by approximately $950,000,000 during the period 1986-2001.

We first must determine the scope of the PUC's authority to condition PSNH's future financing relative to Seabrook Two in light of the financing provisions of RSA chapter 369 and the certificate of site and facility that was granted over eight years ago to PSNH pursuant to RSA chapter 162-F.

The PUC is a creation of the legislature and as such is endowed with only the powers and authority which are expressly granted or fairly implied by statute. Petition of Boston & Maine Railroad, 82 N.H. 116, 116, 129 A. 880, 880 (1925). Consequently, the authority of the PUC to approve or disapprove the issuance and sale of stock, bonds, or notes by a utility is limited to that specifically delegated or fairly implied by the legislature and may not be derived from other generalized powers of supervision.

Pursuant to RSA 369:1, the PUC is given specific statutory authority to approve or disapprove a security issuance proposed by a public utility. The PUC's actions on such proposals are, however, limited by the terms of that statute:

"The proposed issue and sale of securities will be approved by the commission where it finds that the same is consistent with the public good. Such approval shall extend to the amount of the issue authorized and the purpose or purposes to which the securities or the proceeds thereof are to be applied, and shall be subject to such reasonable terms and conditions as the commission may find to be necessary in the public interest ...."

RSA 369:1.

The question of law in this case is a simple one: Did the PUC properly interpret and apply RSA 369:1? The State contends that the plain language of RSA 369:1 and our cases interpreting it and its predecessor statutes provide ample authority for the PUC to prevent PSNH temporarily from using any future financings for Unit Two. We disagree.

This court has long recognized as public policy that the owners of a utility do not surrender to the PUC their rights to manage their own affairs merely by devoting their private business to a public use. In Grafton County Electric Light & Power Co. v. State, 77 N.H. 539, 94 A. 193 (1915), we construed the phrase "public good" within the meaning of a public-utilities statute substantially similar to the forerunner of RSA 369:1:

"If it is reasonable that a person or a corporation have liberty to take a certain course with his or its property, it is ... for the public good. It is the essence of free government that liberty be not restricted save for sound reason. Stated conversely: it is not for the public good that public utilities be unreasonably restrained of liberty of action, or unreasonably denied the rights as corporations which are given to corporations not engaged in the public service."

77 N.H. at 540, 94 A. at 194 (emphasis added).

We recently reaffirmed the historical role between government and the free market under part two, article eighty-three of the New Hampshire Constitution when we said in a public utilities case that the PUC's role is to regulate "so that the constitutional right of free trade and private enterprise are disrupted as little as possible." Appeal of Omni Communications, Inc., 122 N.H., 451 A.2d 1289, 1291 (1982).

In the instant case, the PUC as a matter of law misinterpreted the scope of its authority to define the "public good" and abused its discretion in acting in the "public interest" by prohibiting the expenditure of capital received in a routine stock issuance on construction of Unit Two of Seabrook Station. We say this in light of the ensuing discussion of RSA chapter 162-F and our doctrine of "vested rights," because the PUC was precluded by RSA chapter 162-F from temporarily denying PSNH permission to finance construction of Unit Two.

The State argues that the legislature did not preempt the PUC's authority to regulate a public utility's financing when it enacted RSA chapter 162-F, a comprehensive scheme to address environmental and economic questions concerning whether and where power plants such as Seabrook should be built. We read the statute more broadly than the State suggests.

The bulk power supply site evaluation committee (SEC) was established to consolidate the regulation of planning, siting, and construction of bulk electric power supply facilities, RSA 162-F:1 (Supp.1981), which includes certain electric transmission lines designed to carry 100 or more kilovolts. RSA 162-F:2 I(b), (c). The SEC is composed of various agency and department heads and technicians, RSA 162-F:3, whose duties include reviewing applications, holding public hearings, and making findings of fact for and submissions to the PUC. RSA 162-F:5, :7, :8. Findings of fact by the SEC on siting, land use, and air and water quality are binding on the PUC, which issues or denies a certificate of site and facility for the proposed project after finding that certain requirements have been satisfied. RSA 162-F:8 I, II, IV. The...