Ash Grove Cement Co. v. State Corp. Com'n, 54266

• Decision Date: 10 September 1982
• Docket Number: No. 54266,54266
• Citation: 8 Kan.App.2d 128,650 P.2d 747
• Parties: ASH GROVE CEMENT CO., et al., Applicants, v. The STATE CORPORATION COMMISSION, R.C. Loux, Chairman, Jane T. Roy and Phillip R. Dick, Commissioners, and their successors in office as members of the State Corporation Commission of the State of Kansas, Respondents.
• Court: Kansas Court of Appeals

Page 747

650 P.2d 747

8 Kan.App.2d 128

ASH GROVE CEMENT CO., et al., Applicants, v. The STATE CORPORATION COMMISSION, R.C. Loux, Chairman, Jane T. Roy and Phillip R. Dick, Commissioners, and their successors in office as members of the State Corporation Commission of the State of Kansas, Respondents.

No. 54266.

Court of Appeals of Kansas.

Sept. 10, 1982.

Syllabus by the Court

1. Rules concerning the scope of review of an order of the Kansas Corporation Commission are stated and applied.

2. The Kansas Corporation Commission has discretion to weigh and accept or reject testimony.

3. The Kansas Corporation Commission must express the basic facts which persuade the Commission in arriving at its decision. Findings, however, do not have to be stated with such particularity as to amount to a summation of all the evidence.

4. The exclusion of evidence is not prejudicial where the facts sought to be established thereby are otherwise shown, and the party seeking to reverse a judgment because of excluded evidence has the burden of showing prejudice as well as error.

Robert C. Johnson, St. Louis, Mo., and Thomas M. Van Cleave, Jr., of McAnany, Van Cleave & Phillips, P.A., Prairie Village, for applicants Ash Grove Cement Co., et al.

Patrick H. Donahue of Kansas Legal Services, Inc., Topeka, for applicant Grace Judd.

Curtis M. Irby, Asst. Gen. Counsel, and Brian J. Moline, Gen. Counsel, Topeka, for respondent Kansas Corp. Com'n.

James Haines, Jr., and Ralph Foster, Wichita, for respondent Kansas Gas and Elec. Co.

Before SPENCER, P.J., and SWINEHART and MEYER, JJ.

PER CURIAM:

This case is a consolidation of two separate applications for judicial review of orders issued by the Kansas Corporation Commission (hereinafter "Commission") on December 31, 1981, and on February 18, 1982, in Commission Docket No. 128,139-U concerning an application by Kansas Gas and Electric Company (hereinafter "KG & E") to increase its charges for electric service.

In its application, filed with the Commission on May 11, 1981, KG & E proposed a $13,872,537 interim increase be made permanent and sought a further permanent increase in gross annual retail revenues of $63,711,898. Grace Judd, an elderly widow living alone on a low income, and Goldia Peterson, similarly situated, petitioned for leave to intervene, alleging they would be adversely affected by the proposed rate increase. K.A.R. 82-1-225(a)(3). The Commission issued an order on June 16, 1981, granting Judd and Peterson status as party intervenors. The Commission subsequently granted leave to intervene to certain industrial companies and hospitals, among them Ash Grove Cement Company (hereinafter "Ash Grove").

On October 6, 1981, following the Commission's procedure outlined in K.A.R. 82-1-225(c), Judd and Peterson, as party intervenors petitioned the Commission for affirmative relief. In their petition they alleged that, as applied to them and others similarly situated, KG & E's proposed rate for residential service, Code 2, would be an unjust and unreasonable classification which would produce an unjust and unreasonable rate in violation of K.S.A. 66-107. They requested the Commission order KG & E to establish a special residential rate class and rate for low-income senior citizens designed to insure that senior citizens eligible for such special rate would receive reasonably sufficient electric service, a so-called "lifeline" rate. No other intervenor petitioned for affirmative relief. Both Grace Judd and Goldia Peterson, through counsel, participated fully in the proceedings, calling eight witnesses in support of their position.

The Commission, on December 31, 1981, issued an order which granted in part and denied in part KG & E's application for rate changes. The petition by Judd and Peterson for affirmative relief was denied. Applicants Judd and Peterson, as well as the hospitals and industrial intervenors, filed applications for rehearing pursuant to K.S.A. 66-118b and K.A.R. 82-1-235. The Commission heard oral arguments and on February 18, 1982, denied the applications for rehearing.

The hospitals and industrial intervenors made timely application for judicial review of the orders of the Commission pursuant to K.S.A. 66-118a. Grace Judd also made application for judicial review of the orders of the Commission. (Goldia Peterson died January 12, 1982, and is not a party to this appeal.) The Court of Appeals, with agreement of the parties, ordered consolidation of the two cases. KG & E was allowed to appear as a respondent in the action.

Grace Judd challenges the reasonableness and lawfulness of the Commission's orders denying her affirmative relief; Ash Grove challenges the Commission's decision to exclude certain testimony offered in rebuttal to the "lifeline" rate proposals inherent in Grace Judd's application for affirmative relief.

The appellate scope of review of orders or decisions of the Commission is limited to a determination of whether such orders or decisions are lawful and reasonable. See, e.g., Kansas Gas & Electric Co. v. State Corporation Commission, 218 Kan. 670, Syl. p 1, 544 P.2d 1396 (1976). The court elaborated on this standard of review in Midwest Gas Users Ass'n v. Kansas Corporation Commission, 3 Kan.App.2d 376, 380-81, 595 P.2d 735, rev. denied 226 Kan. 792 (1979) (hereinafter "Midwest I"):

"A court has no power to set aside such an order unless it finds that the commission acted unlawfully or unreasonably. Jones v. Kansas Gas and Electric Co., 222 Kan. 390, 396-7, 565 P.2d 597 (1977). An order is 'lawful' if it is within the statutory authority of the commission, and if the prescribed statutory and procedural rules are followed in making the order. Central Kansas Power Co. v. State Corporation Commission, 221 Kan. 505, Syl. p 1, 561 P.2d 779 (1977). An order is generally considered 'reasonable' if it is based on substantial competent evidence. Jones v. Kansas Gas and Electric Co., 222 Kan. 390, Syl. p 2 .

"The legislature has vested the commission with wide discretion and its findings have a presumption of validity on review. Central Kansas Power Co. v. State Corporation Commission, 221 Kan. at 511 . Since discretionary authority has been delegated to the commission, not to the courts, the power of review does not give the courts authority to substitute their judgment for that of the commission. Central Kansas Power Co. v. State Corporation Commission, 206 Kan. 670, 675, 482 P.2d 1 (1971). The commission's decisions involve the difficult problems of policy, accounting, economics and other special knowledge that go into fixing utility rates. It is aided by a staff of assistants with experience as statisticians, accountants and engineers, while courts have no comparable facilities for making the necessary determinations. Southwestern Bell Tel. Co. v. State Corporation Commission, 192 Kan. 39, 48-9, 386 P.2d 515 (1963). Hence a court may not set aside an order of the commission merely on the ground that it would have arrived at a different conclusion had it been the trier of fact. It is only when the commission's determination is so wide of the mark as to be outside the realm of fair debate that the court may nullify it. Kansas-Nebraska Natural Gas Co. v. State Corporation Commission, 217 Kan. 604, 617, 538 P.2d 702 (1975); Graves Truck Line, Inc. v. State Corporation Commission, 215 Kan. 565, Syl. p 5, 527 P.2d 1065 (1974)."

Applicant Judd first argues the Commission acted unlawfully and unreasonably in denying her affirmative relief on the grounds she had not proposed specific tariffs nor proposed a cost-based study.

The Commission, in its brief and at oral argument, stated that Judd had no duty to propose specific tariffs nor was a cost-of-service study required. The Commission argues that references in the orders to specific tariffs and cost-based studies point to deficiencies in Judd's presentation when compared with evidence presented by other parties. The Commission had before it detailed data from KG & E. In comparison, Judd's witnesses largely relied on socio-economic considerations. The Commission has discretion to weigh and accept or reject testimony presented to it. Kansas-Nebraska Natural Gas Co. v. Kansas Corporation Commission, 4 Kan.App.2d 674, 676, 610 P.2d 121, rev. denied 228 Kan. 806 (1980); Midwest I, 3 Kan.App.2d at 389, 595 P.2d 735. We are convinced from our review of the orders in question that the Commission comments were directed to the weight of the evidence before it. No impermissible requirements were placed on intervenor Judd.

Judd next argues the Commission, in denying the intervenors' request for affirmative relief, failed to comply with K.S.A. 66-110, which provides in pertinent part:

"It shall be the duty of the commission, either upon complaint or upon its own initiative, to investigate all rates, joint rates, fares, tolls, charges and exactions, classifications or schedules of rates, or joint rates and rules and regulations, and if after full hearing and investigation the commission shall find that such rates, joint rates, fares, tolls, charges or exactions, classifications or schedules of rates or joint rates, or rules and regulations, are unjust, unreasonable, unjustly discriminatory or unduly...