Appeal of Richards, 90-406

CourtSupreme Court of New Hampshire
Citation134 N.H. 148,590 A.2d 586
Docket NumberNo. 90-406,90-406
Parties, 123 P.U.R.4th 512, Util. L. Rep. P 26,085 Appeal of Robert C. RICHARDS, Edward Kaufman and Martin Rochman. Appeal of CAMPAIGN FOR RATEPAYERS RIGHTS and John V. Hilberg (New Hampshire Public Utilities Commission).
Decision Date24 April 1991

Robert C. Richards, pro se.

Edward Kaufman, pro se.

Martin Rochman, pro se.

Backus, Meyer & Solomon, Manchester (Robert A. Backus, on the brief and orally), for Campaign for Ratepayers Rights and John Hilberg.

Rath, Young, Pignatelli and Oyer P.A., Concord, and Day, Berry and Howard, of Hartford, Conn., for Northeast Utilities Service Co., and Sulloway Hollis and Soden, Concord, for Public Service Co. of New Hampshire (Thomas D. Rath (orally), and Martin L. Gross on the brief).

John P. Arnold, Atty. Gen. (Harold T. Judd, Asst. Atty. Gen., on the brief and orally), for State.

John J. Lahey for Business & Industry Ass'n of N.H., and Michael W. Holmes for Office of Consumer Advocate, by brief, as amici curiae.

PER CURIAM.

In these consolidated appeals, the appellants challenge a decision of the New Hampshire Public Utilities Commission (the PUC) approving a rate plan contained in an agreement relating to the reorganization of Public Service Company of New Hampshire (PSNH) that was negotiated by Northeast Utilities Service Company (NU) and the State. This decision was issued in the PUC's docket DR 89-244 and reported in Re Northeast Utilities/Public Service Company of New Hampshire, 114 PUR4th 385 (N.H.P.U.C.1990). The appellants are as follows: Robert C. Richards, Edward Kaufman, and Martin Rochman, who are PSNH stockholders (hereinafter referred to as "the appealing stockholders"); John Hilberg, who is a PSNH ratepayer; and Campaign for Ratepayers Rights (CRR), which is a ratepayer group. The rate plan provides for average base retail rate increases of 5.5% per year for seven years, beginning January 1, 1990, and is an integral part of the agreement whereby NU would acquire PSNH, the State's largest electric utility, for $2.3 billion. Although the appealing stockholders argue that the average base retail rate increases are too low, and Hilberg and CRR argue that they are too high, both sets of appellants contend that the PUC improperly approved the rate plan without a finding that the rates that would be produced by the rate plan are "just and reasonable" in accordance with traditional ratemaking principles. For the reasons that follow, we affirm the PUC's decision and dismiss the appeals.

I. Facts and Procedural History

This is an unusual case, in that it involves a public utility that has declared bankruptcy. See Darr, Federal-State Comity in Utility Bankruptcies, 27 Am.Bus.L.J. 63, 64 (1989). PSNH filed for bankruptcy under chapter 11 of the federal Bankruptcy Code on January 28, 1988, citing as the reasons therefor: the magnitude of its investment in Seabrook Nuclear Generating Station Unit 1 (Seabrook); the delay in obtaining licensing approval from the federal Nuclear Regulatory Commission; and its inability to realize any return on its investment until Seabrook went on line, due to the New Hampshire Legislature's enactment of RSA 378:30-a, the so-called "anti-CWIP" law, which prohibits utilities from charging rates that would enable them to recover the cost of "construction work in progress." Re Northeast Utilities, supra at 391-92.

The bankruptcy court authorized the State to intervene in the proceedings, whereupon the State entered into negotiations with PSNH management and NU, among others, regarding the possible level of rates that could be charged by the reorganized company. Re Northeast Utilities, supra at 392. On November 22, 1989, the State and NU signed an agreement which provided for a merger of PSNH with NU, at an acquisition cost of $2.3 billion, and which included the 5.5% rate plan. Re Northeast Utilities, supra at 392-93.

In a one-day special session held on December 14, 1989, the legislature adopted a statute which authorized the PUC to review and implement the agreement. This legislation, RSA chapter 362-C (Supp.1990), became effective on December 18, 1989. The legislature stated that the purpose of the statute was to authorize the PUC

"to determine whether a proposed agreement relating to the reorganization of Public Service Company of New Hampshire and, upon receipt of required regulatory approvals, the acquisition of Public Service Company of New Hampshire by Northeast Utilities, would be consistent with the public good and whether the rates for electric service to be established in connection with the reorganization are just and reasonable and should be approved."

RSA 362-C:1, IV (Supp.1990) (emphasis supplied). To effectuate this purpose, RSA 362-C:3 (Supp.1990) authorized the PUC,

"after hearing, in one or more proceedings to be initiated and completed during the pendency of the Public Service Company of New Hampshire bankruptcy, to determine whether the implementation of the agreement would be consistent with the public good. If the commission so finds, it shall, notwithstanding any other provision of law, establish and place into effect the levels of rates ... in accordance with, and during the time periods set forth in, the agreement."

(Emphasis supplied.)

Pursuant to this statute, the PUC held hearings on the merits between April 9 and May 5, 1990, and hearings on rebuttal and supplemental testimony from May 22 to 25, 1990. Re Northeast Utilities, 114 PUR4th at 395. Hilberg is the only appellant who was a party to the proceedings before the PUC. In the meantime, the bankruptcy court confirmed NU's reorganization plan on April 20, 1990, id. at 393, subject to the PUC's approval of the rate plan. See 11 U.S.C. § 1129(a)(6) (1988) (the bankruptcy court's confirmation of a reorganization plan is subject to the approval of any rate change provided for in the plan by any governmental regulatory commission with jurisdiction over the rates of the debtor).

Appellants Richards, Kaufman, and Rochman moved separately to intervene in the proceedings before the PUC, but their motions were denied as untimely. Re Northeast Utilities, 114 PUR4th at 395. Appellant Richards thereafter filed a petition in this court, on behalf of himself and appellants Kaufman and Rochman, for a writ of prohibition to the PUC. We denied this petition without prejudice on June 18, 1990. The appealing stockholders are presently appealing the bankruptcy court's confirmation order in federal district court.

The PUC approved the rate plan in an order issued on July 20, 1990. See id. at 469-70. The order was accompanied by an extensive written decision, in which the PUC explained its analysis of the average base retail rate increases contained in the rate plan and summarized the evidence supporting its findings. It concluded that "the implementation of the Rate Plan as set forth herein is consistent with the public good ... and will result in just and reasonable rates that equitably balance the interests of ratepayers and investors." Id. at 460.

The PUC reached its decision after comparing the rate of return to the cost of capital under the rate plan. Id. at 405-08. It also compared the rates under the rate plan with rates forecast for other New England utilities, id. at 411-12, and the rates estimated, insofar as foreseeable, under traditional ratemaking principles, id. at 410-11. The PUC stated that the rates resulting from the use of traditional ratemaking methodology would probably be higher than those provided for by the rate plan, but that it was not required to calculate the precise level of rates under traditional ratemaking principles "to determine whether the Rate Plan serves the public good with just and reasonable rates over the fixed rate period." Id. at 410. Moreover, it asserted that "[d]etermination of just and reasonable rates by traditional ratemaking methodology, is precluded by the Rate [Plan's] prescribing the level of retail rates over the seven year fixed rate period." Id. at 408. The PUC nonetheless estimated the rates that would be achieved under traditional ratemaking principles, insofar as foreseeability permitted. See id. at 410.

The appealing stockholders, and Hilberg and CRR, subsequently filed motions for rehearing. The PUC denied their motions on August 17, 1990, and these appeals followed.

II. Standing and Preservation of the Issues

Before reaching the appellants' arguments, we must first address the contention shared by the State, and NU and PSNH, that the appellants lack standing to assert the claim. 59 Am.Jur.2d Parties § 30 (1987); see also State ex rel. Thomson v. State Bd. of Parole, 115 N.H. 414, 419, 342 A.2d 634, 637 (1975) (noting that the purpose of the law of standing is to protect against improper plaintiffs). After an administrative agency has denied an individual's motion for rehearing filed pursuant to RSA 541:3, in order to have standing to appeal the agency's decision to this court, he must demonstrate that his rights "may be directly affected" by the decision, see RSA 541:3 and : 6, or in other words, that he has suffered or will suffer an "injury in fact." See New Hampshire Bankers' Ass'n v. Nelson, 113 N.H. 127, 129, 302 A.2d 810, 811 (1973); see also Blanchard v. Railroad, 86 N.H. 263, 264-66, 167 A. 158, 159-60 (1933) (holding that a party to an administrative proceeding does not have standing to appeal an administrative agency's decision absent a showing of direct injury). Similarly, a party has standing to raise a constitutional issue only when his own personal rights have been or will be directly and specifically affected. 59 Am.Jur.2d Parties § 33 (1987). Thus, to have standing to appeal the PUC's decision, the appealing stockholders, and Hilberg and CRR, must demonstrate that they have been "directly affected" by it.

In addition, the appellants must show that the issues raised have been...

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