Citizens Utilities Co. v. Idaho Public Utilities Commission
| Decision Date | 17 May 1978 |
| Docket Number | No. 12562,12562 |
| Citation | 579 P.2d 110,99 Idaho 164 |
| Parties | CITIZENS UTILITIES COMPANY, Appellant, v. IDAHO PUBLIC UTILITIES COMMISSION, Respondent. Application of CITIZENS UTILITIES COMPANY for an Order Approving Revised Rates and Charges for Electric Service in the State of Idaho (two cases). |
| Court | Idaho Supreme Court |
Wayne L. Kidwell, Atty. Gen., Dan L. Poole, Deputy Atty. Gen., Boise, for respondent.
Citizens Utilities Company ("Citizens"), the appellant, provides electric and water utility services in the Wallace, Idaho area and is subject to the jurisdiction of the Idaho Public Utilities Commission ("Commission").
Citizens filed an application with the Commission on January 23, 1976 for an order approving revised schedules of rates and charges for both electric and water services. The application requested the Commission to issue an order finding the rate and charge increase just and reasonable and effective for all services rendered on or after March 1, 1976.
On February 18, 1976, the Commission entered an order pursuant to I.C. § 61-622 suspending for a period of six months, from March 1, 1976, Citizens' proposed rates for both electric and water services. On June 1, 1976 the matters were set for public hearings. The cities of Wallace and Mullan, Idaho were allowed to intervene, as On October 14, 1976 the Commission issued an order denying in full and dismissing the water application. The President of the Commission filed a "special concurrence" accompanying this order. The special concurrence stated that the result of the order was not satisfactory to anyone concerned. The concurrence stated that under I.C. § 61-622 the Commission is required to act upon rate increase applications within seven months and if the applications are not acted upon within this time the rate increases automatically go into effect. The concurrence further stated that the order denying the application issued because the Commission had not reached a conclusion concerning the fairness of the water rate increases and did not want the rates to take effect automatically. The concurrence indicated that the unsatisfactory condition could be remedied by the rehearing and refiling processes.
well as another interested party. Hearings were held on June 22-25, 1976 and on July 20, 1976. On August 16, 1976 the Commission issued an order suspending the proposed increases for an additional sixty days.
Also on October 14, 1976, the Commission issued an order regarding the electric application. The order allowed Citizens only part of the requested rate increase.
Rehearings were requested by Citizens in both cases and rehearings were held on January 11-12, 1977. On February 11, 1977, the Commission entered an order denying and dismissing both of the petitions for rehearing.
This appeal is taken by Citizens from the various orders entered by the Commission in the two cases.
This appeal is a consolidation of two cases, one involving the water application and the other involving the electric application. The portion of the appeal dealing with the water application presents only one issue, that being whether the Commission erred by denying and dismissing the application for increased water rates and, if so, what is the effect of this error. The portion of the appeal concerning the electric application is more complicated in that it involves a number of sub-issues, each of which must be decided to determine if the Commission erred by refusing to grant the full rate increase requested by Citizens.
Citizens assigns as error the Commission's decision in the electric application regarding:
(1) Citizens' rate base;
(2) Citizens' test year operating expenses; and
(3) Citizens' rate of return on investment.
We will first address Citizens' assignment of error regarding the water application.
Citizens argues that the order entered by the Commission denying and dismissing the application for increased water rates and charges was unlawful. Citizens claims that the order was arbitrary and capricious and not based on sufficient findings of fact. The Commission admits that the order did not satisfactorily dispose of Citizens' water application but denies that the order was arbitrary and capricious and thus unlawful. The Commission argues that the order was the only solution to the problem faced by the Commission. The Commission argues that since it had not reached a conclusion concerning the propriety of the proposed rate increases, a duty imposed by I.C. § 61-622, the only alternative was to issue the order denying the rate increase. The Commission contends that the order was necessary to avoid the implementation of rates which had not been found to be fair and justified by the Commission.
Citizens contends that since the Commission's order was unlawful, the order must be set aside as provided by I.C. § 61-629. 1 Idaho Code § 61-307 2 provides that a utility must give both the Commission and the public thirty days notice of any increase in rates. This statute, read alone, would indicate that thirty days notice is the only requirement for a rate increase. This statute, however, must be read in conjunction with I.C. § 61-622. 3 The first sentence of I.C. § 61-622 specifies that "(n)o public utility shall raise any rate, fare, toll, rental or charge . . . under any circumstances The problem the Commission faced below and that which we face on appeal is what results when the Commission has failed to reach a conclusive decision concerning the merits of a requested increase within the seven month period provided by I.C. § 61-622. The Commission, having failed to reach a decision at the end of the seven month period, entered an order denying in full the requested rate increase.
Citizens further contends that the result of setting aside this order is the automatic implementation of the rate increase requested by Citizens in its application. The Commission agrees that the order should be set aside but argues that the matter must be returned to the Commission so the Commission will have an opportunity to reach a satisfactory conclusion concerning the merits of the requested increase. The Commission strongly contends that the setting aside of the order should not result in the automatic implementation of the requested rate increases. Since both parties agree that the order must be set aside, the only question presented for our consideration concerns the effect of setting aside this order whatsoever, except upon a showing before the commission and a finding by the commission that such increase is justified." (emphasis ours) The second sentence of I.C. § 61-622 provides the mechanism for carrying out the requirements of the first sentence, in that it provides that the Commission can "enter upon a hearing concerning the propriety" of requested rate increases and enter orders suspending for a period not exceeding seven months the time when the requested rate increase would otherwise go into effect pursuant to I.C. § 61-307.
Idaho Code § 61-622 contemplates that the Commission must decide the merits of rate increase requests within the seven month period provided and that these requested increases cannot be suspended for more than a seven month period. We hold that if the Commission fails to reach a decision concerning the propriety of the requested increase at the expiration of the seven month suspension period, the requested increase must go into effect. We point out that this would not be the result if the Commission's decision was delayed because of action by the utility.
Prior to March 21, 1975, I.C. § 61-622, in its entirety, only consisted of what is now the first sentence of the present statute. In March, 1975, I.C. § 61-622 was amended wherein the second sentence which limits the period of suspension to seven months, was added. 1975 Idaho Sess. Laws, ch. 81, p. 166. On March 31, 1976, I.C. § 61-622 was again amended. The 1976 amendment, among other things, extended the suspension period some sixty days. 1976 Idaho Sess. Laws, ch. 263, p. 887.
The Commission, in essence, is asking us to disregard the language of I.C. § 61-622 added by the 1975 and and 1976 amendments which places a limit on the time a requested increase can be suspended. We cannot disregard this language.
If the Commission fails to reach a conclusion concerning the merits of a requested increase within the seven month suspension period, the rate must go into effect. The fact that the requested rate increase must go into effect at the expiration of the seven month period, of course, does not in any way conclude the Commission's inquiry into the propriety of the rate increase or in any way limit the Commission's authority and duties. If the suspension period expires before the Commission has reached a conclusion, the utility may implement the new rates subject to subsequent modification by the Commission. Under I.C. § 61-502, the Commission is under a continuing obligation to review utility rates and charges. Grindstone Butte Mut. Canal v. Idaho Power Co., 98 Idaho 860, 574 P.2d 902 (1978); I.C. § 61-502.
ELECTRIC APPLICATION
A utility's "rate base" represents the original cost minus depreciation of all property justifiably used by the utility in providing services to its customers. Utilities are allowed to charge customers rates which will yield a certain percentage return on the utility's total investment. Thus, the larger the utility's rate base the higher the rates utilities can charge to customers.
Citizens assigns as error exclusion of items by the Commission from Citizens' rate base.
Citizens' first assignment of error concerning the Commission's determination as to the rate base relates to moneys received from the State of Idaho. Citizens was compelled by the State of Idaho to relocate one of its electric service lines that...
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