Boston Gas Co. v. Department of Public Utilities

• Decision Date: 28 October 1982
• Citation: 387 Mass. 531,441 N.E.2d 746
• Parties: BOSTON GAS COMPANY v. DEPARTMENT OF PUBLIC UTILITIES.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 746

441 N.E.2d 746

387 Mass. 531

BOSTON GAS COMPANY v. DEPARTMENT OF PUBLIC UTILITIES.

Supreme Judicial Court of Massachusetts,

Suffolk.

Argued May 6, 1982.

Decided Oct. 28, 1982.

John M. Stevens, Jr., Boston (L. William Law, Boston, with him), for plaintiff.

Paul W. Johnson, Asst. Atty. Gen. (Thomas A. Barnico, Asst. Atty. Gen., with him), for defendant.

Before HENNESSEY, C.J., and WILKINS, NOLAN and O'CONNOR, JJ. NOLAN, Justice.

The Boston Gas Company (Company) filed a complaint in the county court on December 8, 1981, seeking declaratory and injunctive relief against the enforcement of St.1981, c. 604 (Act). The full text of c. 604 is set out below. ¹ Following a hearing, a single justice denied the Company's request for a temporary restraining order. The Department of Public Utilities (Department) filed an answer and counterclaim, and a motion to dismiss the complaint. The counterclaim seeks a declaration that the Act be given retroactive effect. At a hearing on the Department's motion to dismiss and the parties' motions for summary judgment, the single justice reserved and reported the following issues to the full court for decision.

The issues, as reported, are:

"a. Whether the Court has, and should in its discretion exercise jurisdiction over those claims by Boston Gas which this reservation and report presents for decision.

"b. Whether the claims by Boston Gas which this reservation and report presents for decision should be dismissed in accordance with M.R.Civ.P. 12(b)(6).

"c. Whether the Act violates the standing laws provision of Article 10 of the Declaration of Rights of the Massachusetts Constitution, regardless of whatever facts other than the agreed facts might support the constitutionality of the Act under any applicable standard of judicial scrutiny, because (1) the Act identifies Boston Gas, the only entity to which it applies, by name, rather than by non-identifying terms such as could cause the Act to apply, at least potentially or theoretically, to more than one entity or (2) the Act forbids only Boston Gas to collect the unrecovered cost of gas which it supplied to its customers between July 1, 1980, and June 30, 1981, after the Department previously had allowed all privately owned gas distribution companies in Massachusetts to collect such costs.

"d. Whether the Act violates Article 30 of the Declaration of Rights of the Massachusetts Constitution regardless of whatever facts other than the agreed facts might support the constitutionality of that legislative judgment.

"e. Whether the Act requires Boston Gas to refund that portion of its undercollection from 1980-81 that it recovered between September 1, 1981, and December 7, 1981."

The parties have filed a statement of agreed facts. ² The Company is one of ten privately owned gas distribution companies operating in Massachusetts. It serves customers in Boston as well as in seventy-three cities and towns near Boston. On January 10, 1981, the Lowell Gas Company and the Cape Cod Gas Company notified their respective customers that an energy emergency existed, and advised their customers to restrict their use of gas immediately. In addition, these companies asked their commercial and industrial customers, as well as gas-heated schools, to be closed on January 12 and 13, 1981. On January 13, 1981, the Boston Gas Company notified State officials that its gas supplies were critically low. On that day, the Governor declared an energy emergency (pursuant to G.L. c. 25A, § 8, inserted by St.1979, c. 796). The Governor ordered that gas-heated schools be closed Statewide on January 16, 1981, and that commercial and industrial customers lower their thermostats. On January 16, 1981, the Department initiated an investigation (D.P.U. 555) of the reasons for, or cause of, the shortage of natural gas throughout the Commonwealth supplied by all gas companies under the Department's jurisdiction during the winter of 1980-1981. At the public session opening the investigation, the chairman of the Department indicated that the purpose of the investigation was to determine the causes of the shortage, to identify the additional costs incurred by the companies in obtaining emergency supplies, and ways to prevent the recurrence of the situation. As to the causes of the shortage, the Department proposed to examine the adequacy of the planning procedures of the companies involved, policies of these companies regarding the addition of new customers, and provision for service to "interruptible" customers. ³ As to the increased costs associated with purchasing supplemental gas supplies on an emergency basis, the chairman indicated that the Department would determine the manner in which any extraordinary costs incurred as a result of the emergency would be borne, either by the customers or the shareholders of the companies involved.

The ability of the companies to recover the cost of gas supplied to their customers during 1980-1981 was governed by their rate tariffs on file with the Department. G.L. c. 164, § 94. Each tariff contains a cost of gas adjustment clause (CGAC) which governs the manner in which companies may pass along to their customers increases or decreases in the price which the companies pay for gas. During the period from July 1, 1980, through June 30, 1981, the customers were not billed the full cost to the companies of the gas which they received.

Prior to December 7, 1981, the Department permitted all gas distribution companies in Massachusetts to begin to collect the unrecovered cost of gas from 1980-1981, during the twelve months beginning September 1, 1981. This permission was subject to the express condition that, if the Department were to determine in the course of its investigation into the gas shortage of January, 1981, or in any related adjudicatory proceeding, that any of the costs recovered in this manner had been imprudently incurred, the companies would be required to refund the appropriate amounts together with interest at the prime rate. The Department granted such conditional permission to the Company on August 31, 1981.

On September 1, 1981, pursuant to the permission granted by the Department, the Company commenced recovery of its undercollection from 1980-1981. Of its total undercollection of $46,516,432, the Company represents that it had billed the amount of $7,343,000, as of December 7, 1981. On December 7, 1981, c. 604 was signed and declared by the Governor to be an emergency law, effective immediately. By an order of that same date, the Department directed the Company to cease the collection of its unrecovered costs from 1980-1981. The Department further directed the Company to calculate its monthly CGAC factor so as to be consistent with c. 604 in every respect. The Company submitted a new cost of gas adjustment factor to the Department and has subsequently billed its customers in accordance with that factor. The Company has not refunded to its customers the undercollections from 1980-1981 which it collected between September 1, 1981, and December 7, 1981.

On March 16, 1982, the Company filed with the Department schedules of interim and permanent rates which, if allowed in accordance with G.L. c. 164, § 94, will increase the rates which the Company charges its customers. Through its proposed rates, the Company seeks to recover, inter alia, certain extraordinary expenses associated with the unrecovered cost of gas which it supplied to its customers in 1980-1981. The Company seeks to recover the extraordinary interest expense which it incurred in 1981 as a result of the difference between the uncollected cost of gas supplied to its customers during 1980-81, and the uncollected cost of gas which would have accrued under normal weather conditions. In addition, the Company, through its proposed rates, seeks to recover the extraordinary interest expense which it will incur in 1982 as a result of the extended delay in the Company's collection of its undercollection from 1980-1981.

1. Availability of judicial remedy. The Department has entered a final order enforcing the Act. The company's appeal of this order, therefore, is properly before us under G.L. c. 25, § 5.

2. Article 10. The Company argues that the Act violates the standing laws provision of art. 10 of the Declaration of Rights of the Massachusetts Constitution, because it singles out the Company by name for imposition of a burden imposed on none of the other gas distribution companies in Massachusetts. The first sentence of art. 10 provides: "Each individual of the society has a right to be protected by it in the enjoyment of his life, liberty and property, according to standing laws." We recently discussed this provision at length in Commissioner of Pub. Health v. Bessie M. Burke Memorial Hosp., 366 Mass. 734, 323 N.E.2d 309 (1975). In that case we said that "[t]he Legislature has power, exemplified many times, to enact special or private laws, here meaning, very roughly, legislation addressed to a particular situation, that does not establish a rule of future conduct with any substantial degree of generality, and may provide ad hoc benefits of some kind for an individual or a number of them." Id. at 740, 323 N.E.2d 309. Thus, art. 10 is not automatically offended whenever the Legislature enacts a law which applies only to an individual or a small number of individuals. Rather, art. 10 prohibits special legislation which "diminish[es] or defeat[s] an existing property interest" or does other injury to an individual. Id. at 743, 323 N.E.2d 309. The question in the case before us, then, is whether the Act diminishes or defeats an existing property interest belonging to the Company.

We first discuss § 1 of the Act. Section 1 prohibits the Company "from recovering any expenses incurred as a result of an undercollection of billing to its customers during the natural gas crisis of the winter [1980-1981] prior to the completion of the...