City of Norfolk v. Virginia Elec. & Power Co.
| Decision Date | 28 November 1955 |
| Docket Number | No. 4423,4423 |
| Citation | 197 Va. 505,90 S.E.2d 140 |
| Court | Virginia Supreme Court |
| Parties | , 11 P.U.R.3d 438 CITY OF NORFOLK v. VIRGINIA ELECTRIC AND POWER COMPANY. Record |
Leonard H. Davis, F. Byron Parker and Henry E. Ketner, for the appellant.
Hunton, Williams, Gay, Moore & Powell and John W. Riely, for the appellee.
This is an appeal of right by the city of Norfolk from a decision and order of the State Corporation Commission entered on October 27, 1954, authorizing Virginia Electric and Power Company to file and use on and after November 1, 1954, a Purchased Gas Adjustment provision, sometimes hereafter referred to as the escalator clause, 1 as a part of its rates, charges, rules and regulations on file with the State Corporation Commission.
For brevity the city of Norfolk will be referred to as the City; Virginia Electric and Power Company as the Company and the State Corporation Commission as the Commission.
The Company is a Virginia public service corporation engaged in the distribution of natural gas in the Hampton Roads area, in the cities of Norfolk, South Norfolk, and Newport News, and in portions of the cities of Hampton and Warwick and the counties of Norfolk and Princess Anne. The Company also provides electric service to a large portion of Virginia but this proceeding involves only its gas service.
By letter dated September 2, 1954, the Company filed with the Commission its proposed revised schedules for gas service and on September 17, 1954, the Commission suspended the effective date of the revised schedules, instituted this proceeding and ordered that notice 2 be given the public and certain designated county and city officials of a public hearing to be held on October 11, 1954. Evidence was heard on October 11, 1954, and at the request of counsel for the City the hearing was adjourned until October 25, 1954, when briefs were filed, additional evidence and argument of counsel heard, and the hearing completed.
Schedules containing provisions similar to those proposed by the Company were filed by six other natural gas distributing companies, Portsmouth Gas Company, Suffolk Gas Corporation, Virginia Gas Distribution Corporation, Roanoke Gas Company, Petersburg and Hopewell Gas Company, and Lynchburg Gas Company. All seven of these companies have the same supplier, which delivers gas directly to some and through Commonwealth Natural Gas Company to others. The seven cases were heard at the same time but on separate records, and all of the applications were unanimously approved by the Commission. No appeal was taken in six of the cases; the City is the sole appellant here.
In its final order of October 27, 1954, the Commission held that the escalator clause was 'just and reasonable and should be approved as a part of the schedule of rates, charges, rules and regulations' of the Company; ordered that the Company be 'authorized to file and use the Purchased Gas Adjustment provision as a part of its rates, charges, rules and regulations now on file with the Commission on and after November 1, 1954,' and directed that the Company 'notify the Accounting and Engineering Divisions of the Commission, from time to time, at least ten days prior to any changes in the wholesale price of natural gas purchased by it which would result in adjusting charges to its customers by reason of the operation' of the escalator clause. The unanimous opinion of the Commission was written by Commissioner Hooker, and Commissioner Catterall filed a separate memorandum opinion.
The City assigns six errors to the action of the Commission, but briefly stated they present only two main issues: (1) Was legally sufficient notice given the City of the proceedings in this case? (2) Did the Commission exceed or abuse its authority in approving the escalator clause?
On the issue of notice it appears that service of process upon all parties as required by the Commission's order was proved. The City complains, however, that neither the time nor the content of the notice complies with Code, § 56-237, which provides in part:
'No change shall be made in any schedule * * * except after thirty days' notice to the Commission, and to the public, in such manner as the Commission may require * * * provided that the Commission may, in particular cases, authorize or prescribe a less time in which changes may be made; * * *.'
In Board of Supervisors v. Commonwealth, 186 Va. 963, 45 S.E. (2d) 145, it was contended that the Commission erred in fixing date of hearing at less than thirty days from the date of filing an application for approval of the revised schedules of certain telephone rates. In holding that there was no merit in this contention we pointed out that § 4066 of Michie's Va. Code of 1942 (now Code § 56-237) provides "that the Commission may, in particular cases, authorize or prescribe a less time in which changes may be made."' 186 Va., at page 973.
Moreover, it is amply clear in the instant case that if in fact there were any defect in the notice of hearing, the City waived such defect by its appearance and participation in the proceedings. When the first hearing was convened on October 11, 1954, twenty-four days after the Commission ordered that the notice be served and published, counsel for the City moved for a continuance, stating that the hearing involved a
The Company called its Treasurer, Mr. Ratcliffe, who explained the operation of the escalator clause and presented certain statistical material requested by the staff of the Commission. After cross examination by counsel for the City and for the Commission the hearing was continued as requested by the City until October 25, 1954. On that day, which was more than thirty days after the publication of notice, the hearing was reconvened and Mr. Ratcliffe presented some additional evidence on direct examination and was again cross examined. The case was then argued and briefs filed on behalf of both parties. The record does not show that any objection was made to the sufficiency of the notice at any time during the hearing. Hence, it does not appear that the City was uninformed of the subject matter in controversy or that it was prejudiced in any way because of the alleged defects in the notice of hearing.
A clear understanding of the City's several contentions that the Commission exceeded its authority in approving the Company's proposed escalator clause, requires that the purpose and effect of that provision be explained in some detail.
The Company purchases its supply of natural gas from Commonwealth Natural Gas Corporation, hereafter referred to as Commonwealth, which in turn purchases the gas from Atlantic Seaboard Corporation and transports it to the Company's facilities in the Hampton Roads area. Both the Company and Commonwealth are Virginia public service corporations and therefore subject to the jurisdiction of the Commission. Atlantic Seaboard Corporation, on the other hand, is not subject to the jurisdiction of the Virginia Commission, but operates an interstate natural gas pipe line and is therefore a 'Natural Gas Company' subject to exclusive regulation by the Federal Power Commission under the Natural Gas Act. 15 U.S.C. § 717(a). Hence, the gas ultimately consumed in the Hampton Roads area is subject to regulation by two commissions whose statutory schemes for rate regulation differ markedly.
Under the Natural Gas Act, a natural gas company, such as Atlantic Seaboard Corporation, must keep on file with the Federal Power Commission schedules of all rates and charges for sales of gas and when a new rate schedule is filed with that commission, it may enter upon a hearing as to the lawfulness of the proposed new rates and, pending decision, may suspend the operation of the filed rates for five months. At the end of this five month period, if no final determination has been made, the filed rates go into effect. Upon final determination at an indeterminate future date, if the approved rates are lower than the filed rates, the Federal Power Commission is authorized to order the natural gas company to refund to its customers the difference between the rates actually charged and the approved lower rates. 15 U.S.C. § 717(c).
On the other hand, there is no provision in the Virginia statutes under which the Commission has the authority to condemn rates retroactively once legally established. Commonwealth v. Old Dominion Power Co., 184 Va. 6, 34 S.E. (2d) 364.
Since natural gas was first introduced into the Hampton Roads area in the spring of 1951, there have been three changes in the rates charged the Company by its supplier, each of which was occasioned by the action of the Federal Power Commission, and at the time of the hearing a fourth change was anticipated to become effective November 1, 1954. It also appears that the Company has at times received refunds as a result of changes in the rates which it had paid its supplier. The distributing company may oppose rate changes before the Federal Power Commission, but neither it nor the State Corporation Commission has any control over the rates fixed by the federal commission. Hence, the interstate supplier has an absolute monopoly with the price fixed by federal authority.
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