Arkansas Power & Light Co. v. Arkansas Public Service Commission
| Decision Date | 16 April 1956 |
| Docket Number | No. 5-875,5-875 |
| Parties | , 14 P.U.R.3d 38 ARKANSAS POWER AND LIGHT CO., Appellant, v. ARKANSAS PUBLIC SERVICE COMMISSION et al., Appellees. |
| Court | Arkansas Supreme Court |
House, Moses & Holmes, W. H. Holmes and E. B. Dillon, Jr., Little Rock, Richard McCulloch, Forrest City, for appellant.
John R. Thompson, Little Rock, Tom Gentry, Atty. Gen., Ben J. Harrison, Asst. Atty. Gen., Reed W. Thompson, North Little Rock, James K. Young, Russellville, Jabe Hoggard, El Dorado, O. D. Longstreth, Jr., Dave E. Witt and Joseph Brooks, Little Rock, for appellee.
P. A. Lasley, Little Rock, amicus curiae.
Proceeding under the provisions of Act 324 of the Acts of the Legislature of 1935, Sec. 73-201 et seq., Ark.Stats.1947, and an order of the Commission made June 24, 1944, appellant, Arkansas Power and Light Company, on May 27, 1954, filed its application with the Arkansas Public Service Commission asking for approval of an increase in electric rates over its present rates in order to increase appellant's revenues in the amount of $3,900,000. In its petition the power company appears to admit that its overall net earnings then amounted to a rate of return in excess of 5%. Following a long and patient hearing, resulting in the taking of more than 1500 pages of testimony, the Commission found that the company was earning----, 5.985%,--approximately 6%, all to which it was entitled, and denied the company's petition. Later (December 2, 1954) the company's petition for a rehearing was filed and also denied. Thereafter, (December 3, 1954) after filing an additional bond in the amount of $1,000,000, the company appealed to the Circuit Court of Pulaski County and that court, after a consideration of the record made before the Commission, on September 23, 1955 dismissed the company's petition for review and in all things affirmed the Commission's findings. This appeal followed.
At the outset we point out certain well-defined rules governing this court in reviewing the powers and actions of the Arkansas Public Service Commission in a utility rate case such as is presented here. The Commission must and does have broad powers and is a fact-finding body. Our Legislature has delegated and entrusted the administration of Act 324 to the Commission, and not to the courts. The primary object of the Commission is to provide that rate of return which is adjusted to appellant's needs consistent always with the interest of the public. Apart from the judicial review that may be resorted to under the Act, it is not for us to advise the Commission how to discharge its functions. When an appeal is taken to the circuit court, that court, as well as this court on appeal from the circuit court, shall not extend the review of the Commission's findings and actions 'further than to determine whether the Department [Commission] has regularly pursued its authority, including a determination of whether the order or decision under review violated any right of the complainant under the Constitution of the United States or of the State of Arkansas.' Sec. 73-233(d), Ark.Stats. The circuit court, and this court on appeal, reviews the Commission's findings on the record before the commission, and if we find any substantial evidence to support it, it is our duty to permit the Commission's order to stand if it is not arbitrary and is free from fraud. We said in the recent case of City of Ft. Smith v. Southwestern Bell Tel. Co., 220 Ark. 70, 247 S.W.2d 474, 479, 'If the Department's [Commission] order is supported by substantial evidence, free from fraud, and not arbitrary, it is the duty of the Courts to permit it to stand, even though the Courts might disagree with the wisdom of the order.'
As to the power of the Commission to regulate rates of utilities § 73-218, Ark.Stats.1947 provides: 'The Department [Commission], upon complaint, or upon its own motion, shall, upon reasonable notice and after a hearing, have the power to: (1) Find and fix just, reasonable, and sufficient rates to be thereafter observed, and enforced and demanded by any public utility.'
The Commission on November 22, 1954, after the extended hearing as indicated, made the following findings: '1. The Commission has jurisdiction under applicable statutes to determine the reasonableness of the Company's rates upon its own motion or upon application of the Company for approval of a change in rates. 2. The filing of a new rate schedule and application for approval thereof by the Company put in issue the reasonableness of the rates, and in that connection the Commission has the right to determine any and every question incidental and pertinent thereto, notwithstanding its previous orders. 3. Consistent with the law and reason, the question of whether the company's rates are reasonable depends upon the amount of the rate base and the rate of return determined in the light of present day conditions and circumstances, and not upon a formula process for determining the rate base of the Company devised in the year 1944 which obviously did not contemplate conditions and circumstances now apparent which require adjustment of such process; nor upon the fairness of a rate of return calculated under conditions and circumstances in the year 1944. 4. In determining the rate base of the Company, as well as determining the revenue and expenses of the Company for the purpose of determining whether it is earning an adequate return upon its investment, some point of time must be fixed for the purpose of submitting pertinent facts and data, and in this proceeding sound reasoning requires that this period be fixed as the year commencing April 1, 1953 and ending March 31, 1954, which is the period used by the Company in submitting its application in this proceeding. 5. In determining the electric rate base as provided for in the 1944 order, the percentage relationship between electric property and total property must be determined in order to arrive at the electric rate base, which is the portion of capital, liabilities and surplus that is invested in electric property according to the procedure specified in the 1944 order.
'All of Account 100.3, Construction Work in Progress, is included in electric property; and over the past ten years the Company's plant under construction has included substantial amounts which represented plant which, upon completion, brought in additional income or reduced expenses of operation. It is improper to use this plant under construction in the determination of the rate base unless some provision is made for the inclusion of additional revenues, or the exclusion of expenses saved, particularly where it appears that interest in capitalized by the Company during the construction period which, as of the period, ending March 31, 1954, amounted to $1,097,655.
'The better procedure is to remove from electric property that portion of plant under construction which, when completed, will be revenue producing, or will effect substantial savings in operation cost; and Appendix (i) shows the calculations as they should be made for the applicable period.
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