City of Chicago v. People of Cook County

• Decision Date: 13 May 1985
• Docket Number: No. 83-1544,83-2767,83-1544
• Citation: 133 Ill.App.3d 435,478 N.E.2d 1369,88 Ill.Dec. 643
• Parties: , 88 Ill.Dec. 643 CITY OF CHICAGO, South Austin Coalition Community Council, People of the State of Illinois, and United States Steel Corporation, Plaintiffs-Appellants, v. PEOPLE OF COOK COUNTY, Abbott Laboratories, et al., Building Managers Association, et al., Chicago Transit Authority, Illinois Department of Transportation, Commonwealth Edison Company, Energy System Engineers, Inc., Plaintiffs, v. ILLINOIS COMMERCE COMMISSION, Defendant-Appellee, and Commonwealth Edison Company, Intervening Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 1369

478 N.E.2d 1369

133 Ill.App.3d 435, 88 Ill.Dec. 643

CITY OF CHICAGO, South Austin Coalition Community Council,

People of the State of Illinois, and United States

Steel Corporation, Plaintiffs-Appellants, v. PEOPLE OF COOK COUNTY, Abbott Laboratories, et al., Building

Managers Association, et al., Chicago Transit Authority,

Illinois Department of Transportation, Commonwealth Edison

Company, Energy System Engineers, Inc., Plaintiffs, v. ILLINOIS COMMERCE COMMISSION, Defendant-Appellee, and Commonwealth Edison Company, Intervening Defendant-Appellee.

No. 83-1544, 83-2767.

Appellate Court of Illinois,

First District, First Division.

May 13, 1985.

James D. Montgomery, Shea, Regal & Assoc., Ltd., Neil F. Hartigan, Stefan H. Krieger, Randall D. Schmidt, Edwin F. Mandel Legal Aid Clinic, Chicago, Wayne L. Emery, Kenneth R. Pepperney, Pittsburg, Pa., Pope, Ballard, Shepard & Fowle, Ltd., Chicago (Gerald W. Shea, Ira A. Rogal, Robert N. Hutchinson, Jeff Paulson, Stephen J. Moore, Chicago), for plaintiffs-appellants.

Isham, Lincol & Beale, Neil F. Hartigan, Chicago (Richard G. Ferguson, Laurence D. Lasky, Paul M. Murphy, Karl B. Anderson, Hercules F. Bolos, E. King Poor, Chicago), for defendant-appellee.

BUCKLEY, Justice:

The present appeals arise out of interim and permanent rate increases granted to Commonwealth Edison Company (Edison) by the Illinois Commerce Commission (Commission). On January 8, 1982, Edison filed revised tariffs with the Commission reflecting an $805 million annual increase in rates charged to its customers. Edison also requested that approximately one-half of the proposed increase go into effect immediately on an interim basis pending a final decision by the Commission on the permanent increase. Following hearings on the propriety of granting the interim rate request, the Commission granted Edison interim rate relief of $324 million. See 114 Ill.App.3d 384, 70 Ill.Dec. 108, 448 N.E.2d 986. Subsequently, the Commission held hearings on the request for permanent rate relief and issued a final order granting Edison a $660.7 million permanent increase. The Commission also reviewed the interim rate increases in its final order and found they were not excessive. At various stages in the proceedings before the Commission, the following parties intervened in order to oppose Edison's requested increases: the People of the State of Illinois (People); the South Austin Coalition Community Council (SACC); the City of Chicago (City); and United States Steel Corporation (U.S. Steel). Pursuant to section 68 of the Public Utilities Act (Ill.Rev.Stat.1983, ch. 11- 2/3, par. 72), 11 parties, among them the previously mentioned intervenors before the Commission, filed separate actions in the circuit court appealing the final order of the Commission. The cases were consolidated and Edison was granted leave to intervene as a defendant. Several plaintiffs moved for stays of the Commission order or, in the alternative, for an order making continued collection of the increased rates subject to refund. The trial court denied these requests and the movants perfected interlocutory appeals to this court. Prior to the resolution of these interlocutory appeals, the trial court affirmed the Commission order on the merits. All plaintiffs appealed from this decision, with the People, SACC, the City, and U.S. Steel filing briefs with this court. The separate appeals from the final order of the trial court and the previous interlocutory appeals have been consolidated for review in the present opinion.

The numerous issues raised by plaintiffs on appeal may be broken down into four categories: (1) there are those issues contesting the utility's revenue requirements or the amount of the permanent increase; (2) there are those issues challenging the rate design which address the question of how the increase should be allocated among the different customer classes; (3) there are those contentions pertaining to the issuance and review of the Commission's interim rate order; and (4) there are those issues relating to the trial court's denial of the stay order initially raised in the interlocutory appeals. We affirm the judgment of the trial court upholding the rate increase granted by the Commission in its entirety. With respect to the interlocutory appeals, we also affirm the trial court's judgment refusing the requested stay.

In reviewing orders of the Commission, Illinois courts exercise a limited statutory jurisdiction under section 68 of the Public Utilities Act. (Ill.Rev.Stat.1983, ch. 111- 2/3, par. 72.) The section provides that findings of the Commission are prima facie true and cannot be set aside on appeal unless clearly against the manifest weight of the evidence. Cases construing this statutory standard have held that decisions of the Commission are "entitled to great weight as being the judgment of a tribunal appointed by law and informed by experience" (Village of Apple River v. Illinois Commerce Com. (1960), 18 Ill.2d 518, 523, 165 N.E.2d 329); that "deference to the judgment of the Commission is especially appropriate in the area of fixing rates" (Iowa-Illinois Gas & Electric Co. v. Illinois Commerce Com. (1960), 19 Ill.2d 436, 442, 167 N.E.2d 414); that this deference is required because the fixing of rates is a legislative function delegated to the Commission, not a judicial function (Illinois Bell Telephone Co. v. Illinois Commerce Com. (1973), 55 Ill.2d 461, 469-70, 303 N.E.2d 364); and that the setting of just and reasonable rates "is necessarily a question of sound business judgment rather than one of legal formula" (Produce Terminal Corp. v. Illinois Commerce Com. (1953), 414 Ill. 582, 590, 112 N.E.2d 141). Accordingly, "the statute does not authorize a court to put itself in the place of the Commission and to determine independently the issues presented, or to substitute its judgment for that of the Commission." (414 Ill. 582, 590, 112 N.E.2d 141.) Rather, judicial review is limited to determining (1) whether the Commission stayed within the scope of its statutory authority, (2) whether the Commission made findings adequate to support its decision, (3) whether the findings have substantial evidentiary support in the record, and (4) whether constitutional rights have been infringed by the Commission's decision. (Illinois Bell Telephone Co. v. Illinois Commerce Com. (1973), 55 Ill.2d 461, 469, 303 N.E.2d 364.) It is against this backdrop that we must analyze the contentions of the various plaintiffs in the present consolidated appeals.

We will first address those issues attacking the amount of the permanent increase as unreasonable and not supported by substantial evidence. The plaintiff City raises three such accounting issues, contending: (1) there is no support in the record to justify the Commission's use of a 6% inflation rate for oil inventories; (2) the Commission's allowance of property held for future use in Edison's rate base is contrary to the manifest weight of the evidence; and (3) the Commission's failure to adopt the City's recession and weather adjustment is arbitrary and contrary to the manifest weight of the evidence. After reviewing the record, we believe the Commission's findings on these issues are supported by substantial evidence. Accordingly, we reject the City's contentions.

With respect to oil prices, the Commission found that "based on the 1982 inflation rate of approximately 6% as shown in government statistics the Commission is of the opinion that oil prices should be calculated at a 6% inflation rate beginning with April 1982." The City and staff of the Commission each presented witnesses who testified that fuel prices would not rise during 1983 and therefore no increase in fuel prices should be allotted. Edison's fuel price expert testified that a 9% increase for fuel prices was a more realistic forecast. A recognized independent forecasting firm had predicted fuel prices would rise faster than the rate of inflation for the period of 1982 to 1995. In order to resolve this dispute among the expert witnesses on the appropriate fuel escalation rates, the Commission opted for the 6% rate based on testimony from a staff witness that 6% was the appropriate inflation rate. We believe that the Commission's 6% rate for fuel costs is within the range of evidence presented and thus well within its discretion. Accordingly, we reject the City's first contention.

The City also asserts that the Commission's decision to include in rate base property held for use as a future site of the Langham coal-fired generating station was contrary to the manifest weight of the evidence. In support of its position, the City contends the Commission was required to disregard the evidentiary showing that the site will be so used and apply a rule of thumb used by the Commission in previous years to automatically exclude any and all property from rate base if it was not scheduled to be placed in service within 10 years.

"Property held for future use" refers to a utility's investment in property which is not currently being used to provide service to its customers but which will be used in the future to provide such service. The question then arises whether such property should be included in rate base, thereby allowing the utility to earn a return on property not currently being used to provide service. The Commission had previously adopted a policy where property for future use would be included in rate base if it would be in service within 10 years. The City contends that since the Langham site had a scheduled in-service date of 1996, a date more than 10 years from the issuance of the Commission's order, it should not have been included in rate base.

Initially, we note that decisions of the Commission are not res judicata. (Mississippi River Fuel Corp. v. Illinois Commerce Com. (1953), 1 Ill.2d 509, 513, 116 N.E.2d 394.) "The concept of public regulation includes of necessity the...