Boston Consol. Gas Co. v. Dep't of Pub. Utilities

• Decision Date: 10 April 1947
• Citation: 321 Mass. 259,72 N.E.2d 543
• Parties: BOSTON CONSOL. GAS CO. v. DEPARTMENT OF PUBLIC UTILITIES.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

321 Mass. 259

72 N.E.2d 543

BOSTON CONSOL. GAS CO.

v.DEPARTMENT OF PUBLIC UTILITIES.

Supreme Judicial Court of Massachusetts, Suffolk.

April 10, 1947.

Reservation and Report from Supreme Judicial Court, Suffolk County; Wilkins, Judge.

Bill in equity by the Boston Consolidated Gas Company against the Department of Public Utilities to have annulled certain rulings of the department and order of the department requiring the company to file with the department a rate schedule setting forth a fuel charge.

Department's rulings and order held erroneous.

Before FIELD, C. J., and QUA, RONAN, and SPALDING, JJ.

R. H. Holt and A. P. Schmidt, both of Boston, for plaintiff.

C. A. Barnes, Atty. Gen., and G. P. Drury, Asst. Atty. Gen., for defendant.

T. D. Lavelle and C. J. Moynihan, both of Boston, amici curiae.

QUA, Justice.

This is a bill in equity brought under G.L.(Ter.Ed.) c. 25, § 5, by a gas company, herein called the company, engaged as a public utility in the sale of gas, to have annulled certain rulings of the department of public utilities and an order of that department requiring the company to file with the department a rate schedule, to be effective August 1, 1946, setting forth a fuel charge ‘to which reference and application may be made by various other schedules' and which should expressly provide, in substance, that the fuel charge should increase the price of gas to customers of the company only as the price of gas purchased by the company under a certain contract with Eastern Gas and Fuel Associates, hereinafter called Eastern, should be correspondingly increased by the application of a similar fuel charge in that contract.

It will be necessary to state in brief outline the history of this fuel charge as it appears from the documentary evidence of proceedings before the department. On April 24, 1942, the company entered into a contract with Eastern for the purchase of gas by the company up to the amount of its daily requirements. In this contract was included a fuel charge which, as later amended at the instance of the department, provided, so far as here material, for an additional charge to the company of one mill per thousand cubic feet of gas for each two and one half cent increase in the cost of coal at Eastern's plant above $5.78 a ton. On the following day, April 25, 1942, the company filed with the department pursuant to G.L.(Ter.Ed.) c. 164, § 94, as amended by St. 1939, c. 178, § 1, schedules of rates and charges for gas to be sold and delivered to the public, including a schedule known as ‘M. D. P. U. No. 99,’ in the form of a fuel charge to consumers. This schedule provided that whenever the price for gas purchased by the company under its contract with Eastern should be ‘increased by application of the fuel charge in such contract, then the price of all gas sold to consumers * * * [should] be increased’ by an amount directly related to the increase in the price of gas under the fuel charge in the contract. On June 30, 1942, after investigation and hearing, the department, under authority of St.1903, c. 417, § 6, approved the amended contract, to become effective June 1, 1942, and to continue in force until six months after the termination of hostilities or until otherwise terminated as provided in the order. On the same day the department, under authority of G.L.(Ter.Ed.) c. 164, § 94, as amended, entered an order disallowing the company's proposed schedule ‘M. D. P. U. No. 99’ and requiring the company to file a new schedule (known as ‘M. D. P. U. No. 100’) which should set forth a fuel charge to consumers, the precise wording of which was prescribed in the order. By this wording the price of all gas sold to consumers was to ‘be increased one tenth mill ($.0001) per one hundred (100) cubic feet for each whole two and one half cents ($.025) by which the cost of coal exceeds five and 78/100ths dollars ($5.78) per gross ton,’ and the ‘cost of coal’ was to be the average cost delivered at ‘the plant of the producer from whom the company purchases the major portion of all gas sold by it,’ that is to say, at the plant of Eastern. It will be observed that, although by the fuel charge submitted by the company in its proposed schedule ‘M. D. P. U. No. 99’ the price of gas to consumers was to be increased whenever the price of gas to the company was increased by the application of the fuel charge in its contract with Eastern, the fuel charge required by the department in schedule ‘M. D. P. U. No. 100’ contained no such provision, but in lieu thereof provided in effect for an increase to consumers dealing with the company predicated simply upon an increase in the cost of coal to Eastern. Out of this difference the present controversy arises.

The company duly filed schedule ‘M. D. P. U. No. 100,’ containing the fuel charge exactly as prescribed by the department. This went into effect July 1, 1942. After that date the company applied the fuel charge to the gas sold by it. Eastern, however, did not apply the fuel charge in its contract with the company to purchases of gas by the company from it; and the company, although it received the benefit of the fuel charge of schedule ‘M. D. P. U. No. 100’ in its dealings with its customers, did not pay a corresponding increase in the price of gas purchasded by it. This, as stated in the bill and admitted by the answer, was ‘because the collection and payment of the fuel charge [in the contract between Eastern and the company] was forbidden by the regulations of the Office of Price Administration of the United States under the emergency price control act of 1942.’ 56 U.S.Sts. at Large, c. 26, 50 U.S.C.A.Appendix, § 901 et seq.

On March 15, 1946, twenty or more customers of the company filed a petition with the department, which as amended alleged, among other things, that the order of the department of June 30, 1942, increasing the rates to customers by adding the fuel charge required to be filed in schedule ‘M. D. P. U. 100’ was based upon the premise that the company should be allowed to transmit to its customers increases in the price of gas purchased by the company under its contract with Eastern, and that in fact there had been no such increases. The petition prayed that the order of June 30, 1942, be revoked, and that the company be required to account for all moneys received from its customers as a fuel charge and to refund such moneys to its customers. The department on April 25, 1946, also instituted an investigation on its own motion under G.L. (Ter.Ed.) c. 164, § 93, of the price of gas sold by the company ‘so far as relates to charges made to its customers under’ the fuel charge. Both proceedings were heard together. It is to errors in rulings and orders made in connection with this hearing that the present bill in equity is addressed. In its opinion, dated July 24, 1946, the department attempted to construe its former order of June 30, 1942, wherein it had directed the company to file schedule ‘M. D. P. U. No. 100,’ in which the fuel charge was expressed to be based merely upon the price of coal to Eastern, as if it had provided that the fuel charge be based upon the price paid by the company to Eastern for gas, as had been provided in the fuel charge of the originally proposed schedule ‘M. D. P. U. No. 99.’ which the department had disallowed. In its 1946 opinion the department reviewed the proceedings hereinbefore outlined and referred to statements in the former opinion which had accompanied its 1942 order to the effect that it was not unreasonable or unjust that the proposed fuel charge in the contract between Eastern and the company ‘should in turn be transmitted through the means of an appropriate fuel charge to the customers' of the company; that ‘to that end a reasonable fuel charge should be provided in the schedules of the * * * [company] to recover a fair and equitable portion of the increment cost of coal which may be justly allocated to gas manufactured’; and that ‘it is recognized that the cost of fuels to the company manufacturing gas [Eastern] has substantially increased during the past six months due to the conditions arising from the war, and that the proposed increase in cost to the * * * [company] should properly be transmitted to the consumers of gas at the earliest possible date to preserve and maintain the service and efficiency of the * * * [company].’ The department in its 1946 opinion found and ruled that the collections made by the company from its customers as fuel charges under the allowed schedule ‘M. D. P. U. No. 100'¹ were ‘unauthorized and not in conformity with our order.’ It found that, although the fuel clause in that schedule did not explicitly refer to the fuel clause in the contract with Eastern, it was nevertheless ‘predicated upon the contract fuel clause and was intended to operate as a means of transmitting to and collecting from customers amounts that the company might have to pay to Eastern under the contract fuel clause.’ The department ruled that in the 1946 proceedings it would not consider the general subject of the propriety of the rates now charged, that subject being beyond the scope of the proceedings, and found that no evidence had been offered ‘which had the slightest tendency to show that the actual rates contained either in the contract fuel clause or the customers' fuel clause are in any way unjust or improper or ought now to be disallowed.’ Although the department disclaimed any power to decree reparation to the customers or ‘to make any order retroactively affecting the company's rates,’ it did on July 24, 1946, purportedly as a mere clarification of its order of June 30, 1942, enter an order requiring the company to file with the department, to be effective August 1, 1946, a schedule setting forth a fuel charge the express terms of which were prescribed in the order and the effect of which would be to allow the company to make a fuel charge to its customers only if...