Boston Gas Co. v. Department of Public Utilities

• Decision Date: 29 October 1975
• Parties: , 13 P.U.R.4th 147 BOSTON GAS COMPANY v. DEPARTMENT OF PUBLIC UTILITIES.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 713

336 N.E.2d 713

368 Mass. 780, 13 P.U.R.4th 147

BOSTON GAS COMPANY

v. DEPARTMENT OF PUBLIC UTILITIES.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued May 8, 1975.

Decided Oct. 29, 1975.

[368 Mass. 782] Andrew J. Newman, Boston, for Michael J. Harrington.

Stanley U. Robinson, III, pro se.

Hans F. Loeser and James K. Brown, Boston, for Boston Gas Co.

Paul K. Connolly, Sp. Asst. Atty. Gen., and Michael Eby, Asst. Atty. Gen., for Dept. of Public Utilities.

Before TAURO, C.J., and REARDON, QUIRICO, KAPLAN and WILKINS, JJ.

WILKINS, Justice.

On December 13, 1974, after an extended hearing, the Department of Public Utilities (department) entered an order concerning rate schedules of the Boston Gas Company (company). Harrington and Robinson, who were interveners before the department, have appealed from that order ¹ (see A single justice of this court consolidated the various cases for appeal to the full court and has reserved and reported them for decision. We turn first to Harrington's appeal, the consideration of which will explain his and Robinson's interest in the proceedings and will provide necessary background for an understanding of the company's appeal.

G.L. c. 25, § 5), contending that it is more favorable to the company than it should be. The company also has appealed, expressing dissatisfaction because the department rejected a portion of the rate increase reflected in the filed rate schedules.

THE HARRINGTON APPEAL

Harrington challenges the department's interpretation of an agreement concerning rates made between the company and others, including Harrington, in connection with certain proceedings before the Securities and Exchange Commission (S.E.C.). That agreement, which dealt also with subjects other than rates, was executed in August, 1973, and has been described in these proceedings as the S.E.C. agreement.

In 1964, the S.E.C. ordered the New England Electric System (NEES) to divest itself of its gas subsidiaries. Matter of New England Elec. Sys., 41 S.E.C. 888 (1964), affd. sub nom. Securities & Exch. Commn. v. New England Elec. Sys., 390 U.S. 207, 88 S.Ct. 916, 19 L.Ed.2d 1042 (1968). In 1973, the company entered into an agreement with three subsidiary gas companies of NEES to purchase all their assets and assume all their liabilities. These companies were the Lynn Gas Company, the Mystic Valley Gas Company, and the North Shore Gas Company (the North Shore companies). The area served by these three companies now is known as the company's Northern Division. As a condition of the sale, the department's approval was required, and, on March 1, 1973, the department gave approval subject to further approval by the S.E.C. NEES already had filed a request for S.E.C. approval. Harrington and others intervened in the S.E.C. proceeding. The company (and its parent company) entered into the S.E.C. agreement with the interveners in exchange for the interveners' promise not to oppose further the company's request for S.E.C. approval of the acquisition. The S.E.C. gave approval in October, 1973, and the acquisition was completed as of December 20, 1973.

The interveners before the S.E.C. were concerned that rates to consumers in the Northern Division not be affected adversely by the change--in particular, that rate differentials favoring Northern Division consumers not be eliminated. Consequently, the S.E.C. agreement, among other things, purported to restrict certain rate increases before September 1, 1977, which would reduce or eliminate rate differentials between the Northern Division and the company's existing service area, the area now known as the company's Boston Division.

On September 17, 1973, each of the North Shore companies filed schedules of proposed new rates, totaling an annual increase of approximately $2,700,000. On December 17, 1973, three days before the effective date of the acquisition, the company filed proposed new schedules involving an estimated increase of about $6,600,000 in annual revenues for its then existing service area. The department suspended the effective date of each of these rate filings for ten months pursuant to G.L. c. 164, § 94. These suspensions were extended by agreement of the company until the date of the final rate order. On January 9, 1974, on its own motion, the department merged the three Northern Division rate proceedings and the Boston Division proceeding.

On February 4, 1974, the company filed a motion to be allowed to put into effect $6,200,000 of the proposed permanent $9,300,000 increase in annual revenues provided in the schedules then subject to suspension. The rate increase sought on an interim basis for the Boston Division was approximately 3.7%. The interim increase requested for the Northern Division was for the full amount of the rates filed by the North Shore Companies, representing an increase of approximately 6.7%. The department called a public hearing on the company's motion for immediate rate relief. Harrington petitioned for leave to intervene 'in opposition . . . (to) the Boston Gas Company's petition for interim relief,' specifically 'with respect to the interim relief requested for the companies forming the Northern Division.' The petition alleged discrimination and violation of the S.E.C. agreement. Intervention was allowed, but, for reasons which will be considered below, the department rejected Harrington's arguments concerning the S.E.C. agreement and granted the requested interim rate relief, subject to refund, if on final determination the increased revenues were excessive.

Before reaching the issue of the effect, if any, of the S.E.C. agreement on the rates approved for the Northern Division, two procedural questions should be considered. When the department held hearings on the permanent rate schedules, following its decision on the interim rates, it gave Harrington no notice of those continued proceedings. He objects to that omission, although he does not argue explicitly that it invalidates the final decision. He does not assert that he was unaware of the continued proceedings or indicate what further he would have offered in evidence or as argument concerning the S.E.C. agreement. In fact, in the continued proceedings the department gave no further attention to the S.E.C. agreement, except to refuse to admit extrinsic evidence offered by Robinson on the meaning of that agreement. In any event, Harrington's motion to intervene was related solely to the issue of the interim rates and the S.E.C. agreement's impact on those interim rates. If he had wished to intervene more broadly, he should have so requested.

The company argues that Harrington lacks standing to appeal from the final order in this proceeding because his intervention was limited to the proceeding involving the allowance of interim rates. Appeals are permitted under G.L. c. 25, § 5, only from a final decision, order or ruling. The department's decision on interim rate relief was not final because it made the interim rates subject to revision when the final order was made. A statutory appeal could have been taken only from the final order. See Boston Gas Co. v. Department of Pub. Util., --- Mass. ---, ---, ---, ^a 329 N.E.2d 712 (1975). There is no question that the department's final order concerning permanent rates implicitly indorsed the ruling on the S.E.C. agreement which it had made at the time of its decision on the interim rates. Harrington's challenge to the department's decision concerning the S.E.C. agreement is properly here because he is an interested party aggrieved by the department's final decision. ²

We come then to the terms of the S.E.C. agreement and the question of its application, if any, to the rates approved by the department in its final order. In part I paragraph 1 (paragraph 1) of the agreement, the company agreed not to 'initiate or support any proceeding that would accomplish . . . (rate) equalization (between the two divisions) prior to September 1, 1977.' In part I paragraph 2 (paragraph 2), the company agreed further that 'if after acquisition of the North Shore Companies Boston Gas should find it necessary to initiate any rate increases for territories now served by the North Shore Companies which would go into effect prior to September 1, 1977, such rate increases shall not result in a greater percentage increase in revenues from the territories now served by the North Shore Companies than from the present Boston Gas territory.' The department concluded in its interim rate decision that it could not be bound by the S.E.C. agreement. It added that the agreement had no application to the matter before it because the S.E.C. agreement applied only to rate filings made subsequent to the acquisition of the Northern Division.

Harrington argues that the department must honor the provisions of the S.E.C. agreement as a private rate contract, unless the department finds that the contract is unreasonable. He recognizes that under G.L. c. 164, § 94, the department may enter an order 'as the public interest requires' with respect to any contract for the sale of gas, but he contends that the department has not determined that the public interest requires that the S.E.C. agreement be disregarded. Because we have concluded that the S.E.C. agreement is inapplicable to these rate increases, for the reasons stated below, we need not decide whether the S.E.C. agreement is subject to G.L. c. 164, § 94. Additionally, we need not decide what effect, if any, must be given to the S.E.C. agreement in a rate proceeding purportedly subject to its terms, even if it is not a contract referred to in § 94. ³

We agree with the department that the S.E.C. agreement does not apply to a rate increase initiated by a filing of schedules of rates prior to the date of the acquisition of the Northern Division. ⁴ Paragraph 1 is concerned with a rate proceeding to equalize rates between the two divisions. The rate schedules...