Georgia Power Co. v. Georgia Public Service Commission
| Decision Date | 08 November 1973 |
| Docket Number | No. 28038,28038 |
| Citation | 231 Ga. 339,201 S.E.2d 423 |
| Parties | GEORGIA POWER COMPANY v. GEORGIA PUBLIC SERVICE COMMISSION et al. |
| Court | Georgia Supreme Court |
Troutman, Sanders, Lockerman & Ashmore, Carl E. Sanders, Tench C. Coxe, Norman L. Underwood, Warren O. Wheeler, Atlanta, for appellant.
Arthur K. Bolton, Atty. Gen., Robert J. Castellani, Lauren O. Buckland, Timothy J. Sweeney, Asst. Attys. Gen., Albert M. Horn, Joe M. Harris, Jr., Atlanta, Larry W. Thomason, Decatur, for appellees.
King & Spalding, Kirk M. McAlpin, John A. Pickens, Atlanta, amicus curiae.
Syllabus Opinion by the Court
This appeal involves a contest between the Georgia Power Company and the Georgia Public Service Commission relative to rates that can be charged by the public utility for electricity transmitted by it to its customers.
The Georgia Power Company, being a public utility and having a monopoly, in so far as the transmission and sale of electricity is concerned, in its service area, is subject to regulation by the Georgia Public Service Commission. However, regulation of public utilities by the commission is subject to certain limitations, notably constitutional mandates and statutory requirements enacted by the Georgia General Assembly.
The Georgia Constitution provides that the Public Service Commission shall regulate public utilities and that it is vested with such jurisdiction, powers, and duties as may be spelled out in statutes enacted by the General Assembly. However, such statutes enacted by the General Assembly must be consistent with other provisions of the Georgia and Federal Constitutions. Code Ann. § 2-2703.
In 1972 the General Assembly enacted a statute providing for a procedure for utility rate changes. Ga. L. 1972, p. 137 (Code Ann. § 93-307.1). This statute provided that a regulated utility could not make rate changes without giving the commission and the public thirty days notice of the changes to be put in effect. This statute also provided that the commission could suspend the effective date of such rate changes for a period of time not to exceed five months; and during such period of suspension, the commission could conduct hearings to determine whether the changed rates or any portion thereof should be allowed. If the commission did not make an order with respect to the changed rates by the end of the suspension period, then the changed rates became effective and the utility could begin collecting from customers on the basis of the changed rates. If the commission did issue an order with respect to the changed rates before the end of the suspension period, then only such rates as allowed by the commission's order could be charged by the utility to its customers. The statute further provided that the utility had the burden of showing, before the commission, that any increased rates or charges were just and reasonable. This statute became effective on March 8, 1972.
On June 15, 1972, the utility filed a new rate schedule with the commission which would have the effect of increasing annual operating revenues of the utility in the amount of $47.9 million. The commission suspended the implementation of the new rates until December 15, 1972, and initiated hearings to determine if the increased rates were 'just and reasonable.' After the hearings the commission issued its order on December 14, 1972, in which it prescribed rates which would produce $17.8 million rather than the utility's filed rate that would produce $47.9 million. The effect of the commission's order was to deny to the utility the right to increase rates so as to produce an additional $47.9 million of revenue, but the order allowed increased rates that would produce an additional $17.8 million of revenue for the utility.
After appropriate rehearing procedures before the commission the utility filed suit in the trial court against the commission to enjoin the enforcement of the latter's order of December 14, 1972. The utility's action in the trial court attacked the commission's order as confiscatory and violative of the due process and just and adequate compensation clauses of both the Federal and Georgia Constitutions for the reason that the rates allowed by the commission's order were insufficient to permit the company the opportunity to earn a fair return on its property dedicated to the public service.
Certain intervenors, in opposition to the utility, were allowed to intervene in the case; and after a trial, the trial judge entered findings of fact, conclusions of law, and a judgment denying the injunctive relief sought by the utility and also denying the relief sought by the intervenors. The effect of the trial court's judgment was to hold that the commission's order of December 14, 1972, was not confiscatory so as to be violative of constitutional and statutory requirements.
The utility has appealed to this court from the adverse decision in the trial court. In our system a utility regulated by the Georgia Public Service Commission has a right to both procedural due process of law and substantive due process of law. In this case there has been adequate notice and an adequate hearing, so the procedural due process issue is not raised. However, the substantive due process issue is raised, the utility contending that the rate order entered by the commission and affirmed by the trial court does not comport with the basic constitutional protections against confiscation of its property. It is clear that the commission's rate order must accord with substantive due process of law, and it is also clear that the commission's rate order is subject to judicial review so that the courts may determine whether the decision of the commission does comport with substantive due process. If a rate order issued by the commission does not authorize a regulated utility to earn an amount to sufficiently compensate its investors reasonably, to maintain its credit, to attract capital, and to maintain the requisite level of services, then it is the duty of the judiciary to set aside such a rate order as confiscatory and violative of substantive due process of law.
The rate making process for a regulated utility, so as to produce just and reasonable rates for the utility, just and reasonable rates for present customers of the utility, just and reasonable rates for future customers of the utility, and rates that are just and reasonable in the entire public interest, is not an exact science. Yet, after a rate hearing, the commission is called upon to come forth with just such 'just and reasonable' rates. The basic question involved is this: how much in total revenue should a public utility be authorized to collect through the rates charged for its sales of service?
It is a general proposition that the total revenue requirement of a regulated utility is the sum total of its proper operating expenses, depreciation expense, taxes, and a reasonable return on the net valuation of its property that is used in the public service. The first three components of this sum total, while often causing problems in the rate making process, do not even come close to causing the problem created by the fourth component, a reasonable return on the net valuation of the utility's property used and useful in the public interest.
The crux of the utility's complaint in this case has to do with the fourth component its 'rate base' and its 'rate of return' in rate-making language. The utility has enumerated nine errors in this court allegedly committed by the trial court and, in turn, by the commission in publishing and entering its rate order of December 14, 1972. However, all nine enumerated errors may be summed up by the ninth: The trial court erred in ruling that the commission's rate order was not confiscatory.
The commission's problem and a reviewing court's problem in a rate case is that the legislature has not, and in actuality it probably could not have provided a formula by which 'just and reasonable' utility rates can be determined. In rate-making, as in the common law tradition, there is no fixed principle or yardstick to apply in determining what is 'just and reasonable.' Therefore, commissions and courts have of necessity devised principles or yardsticks, which often change and shift, to apply in reaching a conclusion as to what is a just and reasonable utility rate.
It should be fundamental that in rate-making the use of some standard or method to determine when rates are...
To continue reading
Request your trial
-
Taffet v. Southern Co.
... ... Power Company and Arthur Andersen & Co., ... Georgia Power Company, and Arthur Andersen & Co., ... to a state rate-setting commission. The appellants in these cases seek to ... income in rate applications to their state public service commissions (the PSCs) by improperly ... ...
-
Georgia Power Co. v. Georgia Public Service Com'n
...return on the net valuation of the utility's property used and useful in the public interest." Georgia Power Co. v. Ga. Public Svc. Comm., 231 Ga. 339, 341, 201 S.E.2d 423 (1973) (Indention Determining the "reasonableness of return" requires weighing the relative merits of putting the burde......
-
Monongahela Power Co. v. Public Service Commission of West Virginia
...findings by Public Service Commissions. Greyhound Lines, Inc. v. Maryo, 207 So.2d 1 (Fla.1968); Georgia Power Co. v. Georgia Public Service Commission, 231 Ga. 339, 201 S.E.2d 423 (1973); Cities Service Gas Co. v. State Corporation Commission, 201 Kan. 223, 440 P.2d 660 (1968); Mississippi ......
-
Georgia Power Co. v. Allied Chemical Corp.
...interest. St. Joseph Stock Yards Co. v. United States, 298 U.S. 38, 56 S.Ct. 720, 80 L.Ed. 1033; Georgia Power Co. v. Georgia Public Service Commission, 231 Ga. 339, 201 S.E.2d 423. On the other hand, a consumer has standing to challenge a rate schedule on the ground that the schedule discr......