Friends of the Earth v. Public Service Commission

• Decision Date: 01 June 1977
• Docket Number: Nos. 75-542,75-543,s. 75-542
• Court: Wisconsin Supreme Court
• Parties: , 21 P.U.R.4th 201 FRIENDS OF THE EARTH, Respondent, v. PUBLIC SERVICE COMMISSION, Appellant, and Madison Gas & Electric Co., Respondent. CITY OF MADISON, Respondent, v. PUBLIC SERVICE COMMISSION, Appellant, and Madison Gas & Electric Co., Respondent.

Page 299

254 N.W.2d 299

78 Wis.2d 388, 21 P.U.R.4th 201

FRIENDS OF THE EARTH, Respondent, v. PUBLIC SERVICE COMMISSION, Appellant, and Madison Gas & Electric Co., Respondent.

CITY OF MADISON, Respondent, v. PUBLIC SERVICE COMMISSION, Appellant, and Madison Gas & Electric Co., Respondent.

Nos. 75-542, 75-543.

Supreme Court of Wisconsin.

June 1, 1977.

Steven Levine, Asst. Chief Counsel, Madison, for appellant; Bronson C. La Follette, Atty. Gen., and Steven M. Schur, Chief Counsel, Madison, on brief.

Robert H. Owen, Jr., Madison, for respondent, Friends of the Earth.

William A. Jansen, Deputy City Atty., for respondent, City of Madison; Henry A. Gempeler, City Atty., on brief.

John A. Hansen, Madison, for respondent, Madison Gas and Electric Co; Richard K. Nordeng and Stafford Rosenbaum, Rieser & Hansen, Madison, on brief.

ABRAHAMSON, Justice.

The city of Madison (City) and Friends of the Earth (FOE) instituted separate proceedings to review pursuant to ch. 227, Stats., an order of the Public Service Commission (PSC) authorizing the Madison Gas & Electric Company (MG&E) to increase on an interim basis the rates charged to its customers for electric and natural gas service pending the determination of permanent rates. The circuit court reversed the order and remanded the matter to the PSC on the ground that the PSC had improperly failed to include in its temporary order a condition providing for refund to customers of any excess of the temporary rates over the rates ultimately found to be just and reasonable in the PSC's final order. From this order the PSC has appealed.

FACTS

On March 5, 1975, MG&E filed an application with the PSC for authority to increase its rates for electric and natural gas service on an interim and permanent basis. MG&E requested that, following the initial public hearings in the matter, it be authorized on an interim basis to place in effect an increase in electric and gas service rates sufficient to provide the level of net earnings on equity capital most recently determined by the PSC to be just and reasonable. Several days of hearings were held in Madison in April, 1975, in which FOE, as well as Wisconsin's Environmental Decade, not a party to this appeal, participated. On June 16, 1975, the PSC issued its order granting interim rate relief in the amount of $6,861,000, to be implemented by a charge of .477 cents per kilowatt hour for electricity and a 7.33 percent surcharge on all bills for gas utility service. The order provided that both of the authorized charges "shall be and shall remain in effect only until the effective date of the Order establishing permanent rates herein." The June 16th order contained no condition or other provision for refund of amounts collected under the authorized charges if it appeared on conclusion of proceedings that the charges exceeded just and reasonable rates.

FOE, the City, and Wisconsin's Environmental Decade thereafter applied to the PSC for rehearing, which applications were denied by the PSC's order dated July 17, 1975. The basis of the PSC's denial was its position, taken in several previous cases, that applications for rehearing were inappropriate until the PSC had rendered its final order in the proceeding.

FOE and the City thereafter filed petitions for review in the circuit court, setting out numerous specifications of error, both procedural and substantive, relating to proceedings ". . . The Commission staff, in preparing an order for Commission consideration, was apparently following the past practice of the last several years in making no specific provision for refund in interim orders in major rate cases. This practice was based upon the strong presumption that under current economic circumstances of the companies involved, there is virtually no likelihood that the interim increases would have to be refunded.

                before the PSC.  1  By stipulation of the parties, the proceedings on the two petitions for review [78 Wis.2d 398] were consolidated.  The PSC and MG&E filed motions to dismiss the petitions for review on the ground that the court lacked jurisdiction because the June 16, 1975 order of the PSC, by reason of its interim nature, was not a decision within the meaning of sec. 227.15, Stats.  The circuit court issued an order to show cause bringing the motions to dismiss on for a hearing on October 13, 1975.  It appears that unreported argument on the motions was held on October 13th and that the court then inquired of counsel for the PSC why the June 16th order did not contain any escrow or refund provisions against the contingency that the interim rate relief authorized would ultimately be found improper.  The record contains a letter from Steven M. Schur, Chief Counsel to the PSC, dated October 29, 1975, responding to the court's inquiry and advising the court that the omission of such a refund provision in the order had not been deliberate, and that the matter had not been specifically presented to or considered by the PSC.  The letter continued
                

"In response to your second question, I am authorized to state that the Commission would be agreeable to the insertion of a refund provision in the interim order. We maintain our position that the Commission has the legal authority to require a refund as a condition of a final order entered in this case, regardless of whether a refund provision was included in the interim order. Nonetheless, the Commission has no objection to the modification of the interim order to expressly provide that a refund must be made if the rates established in the final order are lower than those approved for interim relief purposes, and to require the necessary accounting procedures."

On December 3, 1975, the circuit court issued its memorandum decision and order on the motions to dismiss. The court analogized an interim rate order to a temporary injunction in a judicial proceeding, and applied the rule that such an order, like a temporary injunction, should "go no further "The failure of the Interim Rate Order to provide for escrowing in whole or in part the income from the surcharges or in the alternative provision for proper accounting records from which possible rebates could be made . . . and the failure of the PSC to retain jurisdiction for the purpose of determining whether or not such interim rates were excessive, was a fatal defect in the Interim Order.

than necessary to preserve and protect existing rights pending the litigation." The court was of the view that the limitation of the PSC's power to the establishment of prospective rates meant that absent an express refund provision, "an excessive interim rate cannot be corrected by retrospective application of new rates established by the final Order of the PSC . . .." The court stated that the order of June 16th was "more final than necessary to protect MG&E" and concluded:

"The Interim Order is reversed because of that fatal defect, and the case is remanded to the Public Service Commission for further proceedings in accordance with this Decision."

Although the circuit court required of the PSC only that which it had been willing to do voluntarily, the PSC immediately appealed from the December 3d order to this court.

The issues which will be considered on this appeal are these:

1. The power of the PSC to enact interim orders;

2. The availability of judicial review of interim and final orders;

3. The power of the PSC to order refunds; and

4. The propriety of the circuit court's reversing the interim rate order and remanding the matter to the PSC.

INTERIM RATE ORDERS

The Public Service Commission may exercise only such power "as is expressly or by inference conferred upon it" by statute. Eau Claire v. Wisconsin-Minnesota Light & Power Co., 178 Wis. 207, 215, 189 N.W. 476, 480 (1922).

"The commission does not exercise the entire regulatory power of the state. It may exercise only such powers as the legislature has seen fit to confer upon it and those powers must be exercised in the manner prescribed." Wisconsin Telephone Co. v. PSC, 232 Wis. 274, 326, 287 N.W. 122, 148 (1939).

The power of the PSC, as a general matter, to issue temporary or "interim" orders, to amend existing rate orders, and to issue conditional orders appears clearly from secs. 196.39, 196.395 and 196.70, Stats.:

"196.39 Change, amendment and rescission of orders; reopening cases. The commission may at any time, on its own motion or upon motion of an interested party, and upon notice to the public utility and after opportunity to be heard, rescind, alter or amend any order fixing rates, tolls, charges or schedules, or any other order made by the commission, and may reopen any case following the issuance of an order therein, for the taking of further evidence or for any other reason. Any order rescinding, altering, amending or reopening a prior order shall have the same effect as an original order."

"196.395 Test, conditional, emergency and supplemental orders; waiver of conditions in orders. The commission may issue orders calling for a test of actual results under the requirements prescribed by such order, during which test period the commission may retain jurisdiction of the subject matter. The commission is empowered to issue conditional, temporary, emergency and supplemental orders. Where an order is issued upon certain stated conditions any party acting upon any part of such order shall be deemed to have accepted and waived all objections to the condition contained in such order."

"196.70 Temporary alteration or suspension of rates. (1) The commission may by order when deemed by it necessary to prevent injury to the business or interests of the people or any public utility "(2) Such order shall apply to one or more of the public utilities in this state or to any portion thereof as may be directed by the commission, and shall take effect at such time and remain in force for such length of time as may be prescribed by the commission."

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