Chesapeake & Potomac Tel. Co. v. Public Serv. Com'n, 8424.

• Decision Date: 22 November 1974
• Docket Number: No. 8424.,8424.
• Citation: 330 A.2d 236
• Parties: CHESAPEAKE AND POTOMAC TELE-PHONE CO., Petitioner, v. PUBLIC SERVICE COMMISSION of the District of Columbia, Respondent, General Services Administration, Intervenor.
• Court: D.C. Court of Appeals

330 A.2d 236

CHESAPEAKE AND POTOMAC TELE-PHONE CO., Petitioner, v. PUBLIC SERVICE COMMISSION of the District of Columbia, Respondent General Services Administration, Intervenor.

No. 8424.

District of Columbia Court of Appeals.

Argued September 10, 1974.

Decided November 22, 1974.

Alfred Winchell Whittaker, Washington, D. C., with whom Howard C. Anderson, Frank M. Steadman, Jr. and John P. Barnes, Washington, D. C., were on the brief, for petitioner.

Linus H. Deeny, Asst. Corp. Counsel, Washington, D. C., with whom C. Francis Murphy, Corp. Counsel, Louis P. Robbins, Principal Asst. Corp. Counsel, and C. Belden White, II, Asst. Corp. Counsel, Washington, D. C., were on the brief, for respondent.

Marvin L. Coan, Atty., Dept. of Justice, with whom Carla A. Hills, Asst. Atty. Gen., Stanley D. Rose and John N. Hanson, Attys., Dept. of Justice, were on the brief, for intervenor.

Before KELLY, FICKLING and YEAGLEY, Associate Judges.

YEAGLEY, Associate Judge:

This petition for review challenges two orders of the Public Service Commission of the District of Columbia (hereinafter "Commission") denying the motions of the Chesapeake and Potomac Telephone Company (hereinafter "Company") for immediate interim rate relief pending the prescription of new permanent rates. The Company's motions, filed between the Phase I rate of return hearing and the Phase II rate design hearing, requested that the rate schedules which the Company intended to propose in the Phase II hearings be implemented immediately on a temporary basis with excess charges refundable if different permanent rates were adopted, or in the alternative, that a nonrefundable temporary uniform surcharge be approved. Finding that either plan proposed by the Company would be impracticable, yet recognizing the Company was entitled to some form of interim relief, the Commission fashioned its own plan based on a formula for a surcharge intended to permit the Company to earn at the 8.8% rate of return authorized in Phase I. Its order was to be effective immediately (May 10, 1974), but the actual collection of the higher rate of return for the interim period was to be postponed until after the Phase II hearing and the establishment of permanent rate schedules to which it would be added as a surcharge in proportion to the increases approved for the various classes of users and amortized over a three-year period.

The Company contends that the relief proposed by the Commission is unlawful and, being postponed, is inadequate. It argues that the rates which it is presently allowed to charge are confiscatory and that the court should reverse the Commission's order and remand the case with directions that one of the interim relief plans proposed by the Company be implemented immediately. Finding the Commission's order is not contrary to law and its relevant findings are not unreasonable, arbitrary or capricious, we affirm and therefore do not reach the other issues raised by the Company.

The original case from which these proceedings developed was instituted on April 19, 1973, when the Company filed a complaint and application for permanent rate relief with the Commission pursuant to D. C.Code 1973, §§ 43-401, 43-408, and 43-417 (Formal Case No. 595).¹ Pursuant to its established practice the Commission divided the hearings on the Company's application into two phases. In Phase I the Commission would determine the overall revenue requirements of the Company for its District operations and in Phase II it would decide upon a rate structure allocating the authorized revenue increase among the various classes of telephone users so as to provide the required annual revenue.

The Phase I hearing culminated in a proposed order released January 25, 1974, in which the Commission found that the Company was entitled to an 8.8% return on its local investment and that an $8,063,000 increase in annual gross revenue requirements would be necessary to insure that rate of return.² Twelve days later the Company filed its motion for interim rate relief, asserting that the rate schedules which it intended to propose in Phase II would undoubtedly provoke strenuous objections requiring a prolonged Phase II hearing which would postpone substantially the date the Company would begin to realize the increased earnings authorized in Phase I.

The Company anticipated such objections would be forthcoming because the rate schedule, which it intended to propose at the Phase II hearing as permanent rates, allocated the rate increases disproportionately among the various class of of users³ and four parties had already announced an intention to intervene.⁴ The Company further supported its application for interim rate relief by asserting that "since 1968 the Company has been unable to earn the rate of return allowed it by the Commission" and that its present earnings were confiscatory.

On April 5, 1974, the Commission issued its final Phase I order, No. 5634, approving its earlier proposed order. Simultaneously it issued Order No. 5636, under appeal here, denying the Company's motion for interim relief stating that a prima facie showing of the type required to establish an interim rate had not been made. The Company promptly filed a motion for reconsideration,⁵ reiterating its previous request and proposing, in the alternative, an unrefundable interim surcharge of 7.-76% to be uniformly applied to the presently existing rate schedule.

On May 10, 1974, the Commission denied both of the Company's proposals in Order No. 5644, the other order under appeal here. But in view of the anticipated deficiency in earnings during the extraordinary delay anticipated in Phase which would compound the regulatory lag already experienced, the Commission incorporated in its order interim relief in the form of the novel surcharge plan described supra.

The Commission adopted that novel form of interim relief in preference to authorizing the immediate implementation of the proposed new rates of the Company primarily because it felt that the rates the Company requested allocated the cost increases so disproportionately,⁶ that an additional hearing would be necessary before it could approve such a modification of rates, even on a temporary basis.

It noted that such a hearing was held before the interim rate was approved in Re Washington Gas Light Co., Formal Case No. 567, Order No. 5517 (June 26, 1972) and that, while no such hearing was held prior to approval of interim relief in Re Potomac Electric Power Co., Formal Case No. 541, Order No. 5419, 82 P.U.R.3d 209 (January 30, 1970), the Company here had not established that it was experiencing the severe emergency financial predicament which faced the Potomac Electric Power Company. Although different minds may not agree on distinctions that hinge on a difference in degree of severity, such differences are a fact of life and we will not attempt to substitute our judgment for the Commission's in this instance.

With that background we turn to a determination of the validity of the two Commission orders on appeal here. In the first order the Commission rejected the Company's proposal for the imposition of interim rates and in the latter it rejected the Company's alternate proposal for a 7.-76% surcharge but delineated its own surcharge proposal as previously described.

In considering the Company's contentions we are mindful that Congress has vested rate-making authority in the Commission and not in this court. The scope of our review is limited to determining "questions of law . . . and the findings of fact by the Commission shall be conclusive unless it shall appear that such findings of the Commission are unreasonable, arbitrary or capricious."⁷ D.C.Code 1973, § 43-706. See Watergate Improvement Associates v. Public Service Commission, D.C.App., 326 A.2d 778 (1974); Telephone Users Ass'n v. Public Service Commission, D.C.App., 304 A.2d 293 (1973), cert. denied, 415 U.S. 933, 94 S.Ct. 1448, 39 L.Ed.2d 492 (1974). If the Commission, in fashioning the interim relief authorized in Order No. 5644, exercised its rate-making power "rationally and lawfully,"⁸ we need not consider the merits of the two interim relief plans proposed by the Company.

Our primary statutory constriction is the general requirement that any rate charged by a utility be "reasonable, just and nondiscriminatory." D.C.Code 1973, §§ 43-301 and 43-401. While the relief proposed by the Company is a more conventional form of interim relief, it has no more specific statutory basis than does the plan proposed by the Commission.

The Congress was aware of the difficulty of delineating precisely what powers shall be invested in the Commission. Rather than attempting to specify all of the powers granted the Commission the Congress provided in D.C.Code 1973, § 43-1003 that

. . . where any specific power or authority is given the commission . . . the enumeration thereof shall not be held to exclude or impair any power or authority otherwise . . . conferred on said commission. The commission . . . shall have, in addition to the powers . . . specified, mentioned, and indicated all additional, implied, and incidental power which may be proper and necessary to effect and carry out, . . . all the said powers herein specified . . . .

We agree that the authority given the Commission necessarily carries with it the power by implication to establish interim rates when justified and that accordingly the Commission had the authority to issue a plan for interim rate relief.

[5, 6] The Company, while seeking approval of its proposed immediate interim rate increase, views the Commission's interim relief plan as illegal and, therefore, illusory. In its brief it finds fault with the Commission's plan primarily in that it "`runs afoul of the established rate-making principle which precludes a utility from charging a higher fare [rate] in the future in order to recoup past losses,'" citing Payne v. Washington Metropolitan...