Capital Improvement Bd. of Managers of Marion County (Convention Center) v. Public Service Commission

Decision Date25 April 1978
Docket NumberNo. 2-676A232,2-676A232
Citation176 Ind.App. 240,375 N.E.2d 616
PartiesCAPITAL IMPROVEMENT BOARD OF MANAGERS OF MARION COUNTY, Indiana (CONVENTION CENTER), Indianapolis-Marion County Building Authority, Klein & Kuhn Realtors, Eli Lilly and Company, Scott Paper Company, by its Division Beveridge Paper Company, Stewart-Warner Corporation, South Wind Division, and Methodist Hospital of Indiana, Inc., Appellants (Intervenors below), v. PUBLIC SERVICE COMMISSION of Indiana, Appellee, Larry J. Wallace, William B. Powers, and James M. Plaskett, as Members of the Public Service Commission of Indiana, Appellees, Frank Biddinger, Public Counselor of the State of Indiana, Appellee, Indianapolis Power & Light Company, Appellee (Petitioner below).
CourtIndiana Appellate Court

Ted B. Lewis, Richard L. Gilliom and Richard E. Aikman, Jr., of Stewart, Irwin, Gilliom, Fuller & Meyer, Indianapolis, for appellants.

Marcus E. Woods, Jerry P. Belknap, Jon D. Noland, Indianapolis, for petitioner-appellee Indianapolis Power & Light Co., Barnes, Hickam, Pantzer & Boyd, Indianapolis, of counsel.

LYBROOK, Presiding Judge.

The Indianapolis Power & Light Company (IPALCO) filed a petition with the Public Service Commission of Indiana (Commission) on June 27, 1975, for an increase in its existing steam service rates. IPALCO is a public utility engaged in the business of furnishing electric and steam services to the public and provides steam service to approximately 800 customers in the Indianapolis area, most of which are classified as industrial customers.

On August 21, 1975, the prehearing conference was held before a Deputy Commissioner in order to settle certain details of administrative procedure. IPALCO was ordered to file its prepared testimony and exhibits on or before September 4, 1975, and the Public Counselor and any authorized intervenors were ordered to file their prepared testimony and exhibits by November 17, 1975.

A petition to intervene was filed on October 10, 1975, by the following parties, all of whom were industrial and commercial users of steam: the Improvement Board of Managers of Marion County, Indiana (Convention Center); Indianapolis-Marion County Building Authority; Klein & Kuhn Realtors; Eli Lilly & Company; Scott Paper Company, by its Division, Beveridge Paper Company; and Stewart Warner Corporation, South Wind Division (Intervenors). 1 In substance, this petition alleged that the increase requested by IPALCO was unjust and unreasonable. It was further alleged that the steam service purchased by these Intervenors represented over one half of the steam service rendered by IPALCO. This petition to intervene was granted by the Commission.

Public hearings were held on December 1, 2, and 3, 1975, at which time IPALCO presented its evidence in support of the rate increase. The hearings were then continued until January 5 and 6, 1976, at which time Intervenors presented their evidence. The Commission then handed down its findings and final order on April 21, 1976, at which time it granted a rate increase to IPALCO.

The Commission in its findings recited that IPALCO was requesting a rate increase which would allow an operating income available for return of $2,236,605, and that Intervenors proposed a return of $1,858,572. The Commission then concluded that a fair income available for return would be $2,169,256. On the basis of the test year results, the Commission found that under existing rates, IPALCO's operating income available for return was $654,386, which return was totally inadequate. It therefore approved a rate increase for IPALCO and ordered IPALCO to file new rate schedules in accordance with its findings.

After a denial of their petition for rehearing by the Commission, Intervenors filed a timely Assignment of Errors 2 pursuant to IC 1971, 8-1-3-1 (Burns Code Ed.) and IC 1971, 8-1-3-2 (Burns Code Ed.). 3 Intervenors have raised sixteen issues for our review which they have consolidated in their brief into eight arguments. The eight arguments to be discussed in this opinion can be summarized as follows:

1. Did the Deputy Commissioner improperly deny Intervenors' preliminary motions?

2. Did the Deputy Commissioner improperly admit hearsay evidence as to IPALCO's separation study?

3. Does the Fuel Adjustment Clause in IPALCO's rate structure represent an unlawful delegation by the Commission of its rate-making authority?

4. Did the Commission commit error by admitting evidence from prior hearings and by violating its own prehearing order?

5. Is the finding of the Commission as to the fair value of IPALCO's steam property contrary to law?

6. Did the Commission err by refusing certain accounting adjustments advanced by Intervenors?

7. Is the finding of the Commission as to the fair rate of return allowed to IPALCO contrary to law?

8. Is the decision of the Commission to allow a roll-in of prior fuel adjustment charges to base rate contrary to law?

STANDARD OF REVIEW

The standard of review which is to be used in an appeal from a rate-making order of the Commission has been stated many times by this court. See L. S. Ayres & Company v. Indianapolis Power & Light Company (1976), Ind.App., 351 N.E.2d 814. We are not free to weigh and analyze the evidence presented, formulate our own opinion as to the proper conclusions, and then revise the Commission's order accordingly. Public Service Commission v. Indiana Telephone Corporation (1957), 237 Ind. 352, 146 N.E.2d 248. Rather, we must measure the Commission's order by use of the substantial evidence test:

"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." (Citations omitted). Boone County REMC v. Public Service Commission (1959), 239 Ind. 525, 532, 159 N.E.2d 121, 124.

The purpose of this test is to leave the function of fact-finding and rate-making with the Commission, which should have the necessary expertise and experience that is needed to accomplish the task, rather than leaving that function with an appellate court. Public Service Commission v. City of Indianapolis (1956), 235 Ind. 70, 131 N.E.2d 308.

The second step in our judicial review involves the determination of whether the order of the Commission is contrary to law. This court must review the proceedings below and the findings of the Commission to be sure that the resulting order was not the product of the consideration or the failure to consider some factor or element which improperly influenced the final determination. We must also be sure that the Commission remains within its jurisdiction and that it conforms to all relevant statutes, standards and legal principles. Public Service Commission v. City of Indianapolis, supra.

ARGUMENT I
PRELIMINARY MOTIONS

The public hearing in this matter was originally scheduled for October 20, 1975, but was continued on the Intervenors' motion until December 1, 1975, to give Intervenors additional time to prepare for the hearing. At the beginning of the hearing, the Deputy Commissioner who was to conduct the proceedings requested the filing of any preliminary motions. Intervenors had come to the hearing armed with the following battery of previously prepared motions which they filed with the Deputy Commissioner seriatim:

1. Motion for continuance.

2. Motion to appeal the denial of the motion for continuance to the full Commission, en banc, with oral argument.

3. Motion for appellate review by the full Commission, en banc, with oral argument, on all rulings of the Deputy Commissioner.

4. Motion to vacate the Deputy Commissioner's ruling on motion for continuance and appeal thereon.

5. Motion to vacate Deputy Commissioner's ruling on motion for appellate review by the full Commission.

6. Motion in limine to prevent admission of certain testimony.

7. Motion for immediate appeal of denial of motion in limine by the full Commission, en banc, with oral argument.

8. Motion to suspend the proceedings and request for transcript of proceedings in order to allow the filing of petition for a Writ of Mandate in the Indiana Supreme Court.

The Deputy Commissioner denied each of the motions directed to him. As to the motions for appellate review, the Deputy Commissioner left the hearing room after each motion and personally presented each motion to the full Commission. The Commission denied each such motion without argument. The Intervenors argue that Rule XVII(f) of the Public Service Commission allows, as a matter of right, an immediate and full appeal, with oral argument, of any ruling of the Deputy Commissioner. Rule XVII(f) reads as follows:

"Any ruling of the Presiding Commissioner, Deputy Commissioner or Examiner may be appealed to the Commission for ruling. The ruling of the Commission, when made, shall be noted in the stenographic record and, if made after the hearing is closed, the Commission will advise all parties of record of such ruling. Pending such ruling of the Commission on appeal, the proceeding may proceed on the basis of the ruling of the Presiding Commissioner, Deputy Commissioner or Examiner subject to the preservation of any rights of any party on the results of the appeal to the full Commission."

The argument is advanced by Intervenors that reversible error was committed by the Deputy Commissioner and the full Commission by their failure to grant immediate appellate review under Rule XVII(f) (as it is interpreted by the Intervenors). It is also contended that the denial of oral argument constituted a denial of due process of law. Finally, it is argued that the decision making process of the Commission was unlawful in that the full Commission,...

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