Boone County Rural Elec. Membership Corp. v. Public Service Commission

• Citation: 159 N.E.2d 121,239 Ind. 525
• Decision Date: 05 June 1959
• Docket Number: No. 29655,29655
• Parties: , 29 P.U.R.3d 409 BOONE COUNTY RURAL ELECTRIC MEMBERSHIP CORPORATION et al., Appellants, v. PUBLIC SERVICE COMMISSION of Indiana et al., Appellees.
• Court: Supreme Court of Indiana

Page 121

159 N.E.2d 121

239 Ind. 525, 29 P.U.R.3d 409

BOONE COUNTY RURAL ELECTRIC MEMBERSHIP CORPORATION et al., Appellants, v. PUBLIC SERVICE COMMISSION of Indiana et al., Appellees.

No. 29655.

Supreme Court of Indiana.

June 5, 1959.

Paul Y. Davis, Harvey B. Hartsock, J. D. Wright, Indianapolis, Willett H. Parr, Jr., Lebanon, Claud D. Raber, Danville, for appellants. Davis, Hartsock & Wright, Indianapolis, Parr, Parr & Parr, Lebanon, of counsel.

Paul G. Jasper, Charles W. Campbell, Plainfield, Alan W. Boyd, Jerry P. Belknap, John A. Kendall, Indianapolis, for appellee, Public Service Co. of Indiana, Inc. Barnes, Hickam, Pantzer & Boyd, Indianapolis, of counsel.

Edwin K. Steers, Atty. Gen., Frank E. Spencer, Deputy Atty. Gen., for appellee, Public Service Commission and constituent members thereof.

PER CURIAM.

The action from which this appeal is taken was first commenced in the trial court to set aside an order of the Public Service Commission refusing to grant the Public Service Company of Indiana, Inc. a rate increase upon petition in 1955. After a trial, additional evidence produced therein was certified to the Commission with directions to reconsider its action in view of the additional evidence. Burns' 1951 Repl. §§ 54-436, 54-437.

The Commission accordingly by order on March 9, 1956 modified its previous order denying an increase and found the present rates of the company were 'insufficient to provide the fair return herein found, and the petitioner should, therefore, be authorized to increase its net operating income in the amount of $1,718,857.'

In arriving at the necessary figure for a fair return for future operations, it relied upon accounting figures available for December 31, 1955 level of operations along with other evidence. In the March 9 order the Commission did not fix the rate, but stated that a hearing should be held within 90 days for that purpose. On March 21, the Commission made a further 'supplemental order' declaring an emergency and reciting the necessity for immediate relief pending a final determination of the rate. By this order all rates were increased across the board by a percentage of 5.35 to raise the additional require revenue pending litigation.

We point out here that appellants, after they intervened, contended that there was no evidence to support this emergency order and that a hearing should have been held thereon. With this contention we cannot agree, since Burns' § 54-712 specifically authorizes such emergency rate action by the Commission pending litigation and there was evidence before the Commission that the 'net income is not now sufficient to provide a fair return.' (Our italics.) A utility, as a matter of law, cannot be required to submit to a 'day by day confiscation of its property.' State ex rel. Public Service Commission v. Marion Circuit Court, 1951, 230 Ind. 277, 289, 100 N.E.2d 888, 103 N.E.2d 214.

As the Supreme Court of the United States has said: 'Present confiscation is not atoned for by merely holding out the hope of a better life to come.' West Ohio Gas Co. v. Public Utilities Com., 1935, 294 U.S. 79, 83, 55 S.Ct. 324, 325, 79 L.Ed. 773; Public Service Commission v. Ind'p'ls. Railways, 1947, 225 Ind. 30, 72 N.E.2d 434.

After the across the board temporary rate increase under the order of March 21, one of the appellants (Boone County REMC) in this appeal started a separate action in another circuit court (Boone Circuit Court) challenging the rate increase under the order of March 21, which would be applicable to it on the grounds first, that it had no notice thereof, and secondly, that it had a separate special contract as a utility with the Public Service Company of Indiana, Inc. for the furnishing of electrical energy, and by reason thereof, it was placed beyong the reach of the ordered across the board rate increase.

In granting the writ of prohibition against the Boone Circuit Court in the case of State ex re. Public Service Commission v. Boone Circuit Court, etc., 1956, 236 Ind. 202, 138 N.E.2d 4, 139 N.E.2d 552, we there held that the appellant, being a rate payer, was bound as any other rate payer would be by the notice provided by the statute to all rate payers, which notice the record shows was duly given in this case. We further held that the statute made no distinction in that respect between the wholesale and retail purchasers of electrical energy among rate payers; that since all such rates and charges from both wholesale and retail sales were part of the total rate structure, it thereby affected the fair return upon the rate base; that any adjustment in one rate or schedule would affect the entire rate structure. We need not here again review the authorities and reasoning by which we come to such decision, but refer to the opinion for such particulars.

At the time the decision was rendered in the State ex rel. Public Service Commission v. Boone Circuit Court etc. case the appellants had not intervened in the present case before us on appeal. The record shows that on November 14, 1956 and January 5, 1957 the appellants intervened and filed complaints and again challenged in this action the various orders of the Public Service Commission on many of the same issues we considered in the above case, and objected to the rate increase granted the Public Service Company of Indiana, Inc. After the intervention the Commission held a rate hearing on May 22, 1956, in which the intervenors (appellants) participated. Following this hearing, on December 14, 1956, the Public Service Commission, in an order, approved a general rate schedule and adjusted the across the board rate increase among the various rate payers, as high as an increase of 8.65% for residential and domestic sales; 4.8% for farm and rural sales; and the lowest of 3.76% for REMC sales. The December 14, 1956 order was subsequently modified by an order of August 23, 1957 in certain minor details.

The appellants (intervenors) separately challenge the orders of March 9 and 21, and December 14, 1956 (as modified by order of August 23, 1957) under their motion for a new trial on the grounds that the decision of the trial court is contrary to law and not sustained by the evidence.

While reference is made to the separate orders, there is, in fact, but a single final order which embodies the various modifications during the proceedings. Burns' 1951 Repl. § 54-437.

The issues here are in some respects the same as those presented in the above case of State ex re. Public Service Commission v. Boone Circuit Court, supra. The question is raised as to the notice to which the appellants are entitled, if any, other than that given under the statutes to all rate payers that a rate hearing is to be held. Appellants also stress the fact that they had special contracts for the furnishing of electrical energy to them as utilities, from the Public Service Company of Indiana, Inc. In addition, the appellants take issue with the methods used by the Commission in computing its figures in its finding as to what is a reasonable net operating return for the purpose of rate fixing. One of the contentions in that connection is the manner in which income tax liability is treated.

We start with the general principle that so long as there is any substantial evidence to support the rates as fixed by the Commission as reasonable, the judicial branch of the government will not interfere with such legislative functions. We have no power or authority to substitute our personal judgment for what we might think is fair or reasonable in lieu of the administrative judgment of the Public Service Commission. Public Service Commission of Indiana et al. v. City of Indianapolis, 1956, 235 Ind. 70, 131 N.E.2d 308.

No attack was made on the order of March 9, 1956 until January 5, 1957 when the appellant, Hendricks County REMC, filed its petition to intervene, attacking the orders of both March 9 and 21, 1956. Thereafter all appellants filed supplemental complaints challenging the order of December 14, 1956.

In a consideration of the objections to the Commission's orders of March 9 and 21, 1956 we should point out that a party asking to intervene must exercise diligence and takes the case as he finds it at the time of intervention. A party may not sit by after notice and an opportunity to oppose an action and later claim error. Here nine months elapsed before the appellants intervened to object to the prior orders of March 9 and 21, 1956. Burns' 1951 Repl. § 54-432; Burns' 1946 Repl. § 2-222; Abeele v. Ruse, 1942, 112 Ind.App. 596, 44 N.E.2d 235.

Regardless, however, of this weakness in the appellants' position we shall give consideration to the orders prior to the one of December 14, 1956.

The appellants raise no issue as to the fair value figure of the rate base, but direct their attack against the order of the Public Service Commission of March 9, 1956 on the point that when the Commission made the rate increase on the basis of the December 31, 1955 operating figure, it estimated that the gross operating revenue would be $68,003,416 for the entire year of 1956, whereas, in fact, it was $4,000,000 more (figured under the old rates) when the figures were later available at the end of the year 1956. Appellants argue from there that this increase in gross revenue was sufficient to increase the net revenue in the same proportion and therefore no additional rate increase was necessary. In other words, the appellants are urging a hindsight review as a standard for judging the actions of the Commission, although the Commission did not, at the time, have the benefit of such retrospection in its holding.

Appellants pass their judgment on the order of the Commission (March 9, 1956)--over nine months later--(January, 1956) and now urge the Commission is in error for not anticipating an increase in gross revenue. If an order is reasonable under the limited facts available at the time it is made, subsequent...