Georgia Power Co. v. Georgia Public Service Com'n

• Decision Date: 16 July 1990
• Docket Number: Nos. A90A0494,A90A0495,s. A90A0494
• Citation: 196 Ga.App. 572,396 S.E.2d 562
• Parties: GEORGIA POWER COMPANY v. GEORGIA PUBLIC SERVICE COMMISSION et al. AMERICAN ASSOCIATION OF RETIRED PERSONS v. GEORGIA PUBLIC SERVICE COMMISSION et al.
• Court: Georgia Court of Appeals

Page 562

396 S.E.2d 562

196 Ga.App. 572

GEORGIA POWER COMPANY v. GEORGIA PUBLIC SERVICE COMMISSION et al.

AMERICAN ASSOCIATION OF RETIRED PERSONS v. GEORGIA PUBLIC SERVICE COMMISSION et al.

Nos. A90A0494, A90A0495.

Court of Appeals of Georgia.

July 16, 1990.

Rehearing Denied July 30, 1990.

Certiorari Denied Oct. 23, 1990.

Troutman, Sanders, Lockerman & Ashmore, James E. Joiner, Hugh M. Davenport, Douglas L. Miller, Kevin C. Greene, Rebecca G. McLemore, Atlanta, for appellant (No. A90A0494).

Lipshutz, Greenblatt & King, Martin L. Ellin, James V. Zito, Atlanta, for appellant (No. A90A0495).

Michael J. Bowers, Atty. Gen., Stephanie B. Manis, Deputy Atty. Gen., Victoria H. Tobin, Asst. Atty. Gen., Hicks, Maloof & Campbell, Michael S. Bradley, Atlanta, for appellees.

BEASLEY, Judge.

Pursuant to OCGA § 50-13-20, we here review a decision of the superior court made under OCGA § 50-13-19(h) and the case law construing it.

On April 2, 1987, Georgia Power Company (the Company) filed its request for a rate increase of approximately $805 million with the Public Service Commission (PSC) to recoup its share of the approximately $6.3 billion investment in Unit 1 of the Plant Vogtle nuclear generating plant. This was the largest rate request ever submitted to the commission and resulted in its longest proceedings--42 days of hearings over five months, producing over 12,000 pages of transcripts and 502 exhibits. An increase of approximately $464 million was authorized.

The appeal revolves around the rate base. The PSC denied rate recognition of $951 million of the Company's submitted costs. The superior court affirmed, and the Company disputes $896 million of the superior court's affirmance. The significance of the disallowances is that they substantially reduce the figure on which the rate increase is computed, to the Company's detriment.

The trial court in a comprehensive, detailed order described the issues, the facts which it decided were supported by evidence, the related law, and the court's rationale with respect to each issue. It is most helpful and provides the opportunity for an intelligent review, because it gives the specific foundations for its rulings. See Atlanta Transit System v. Harcourt, 94 Ga.App. 503, 95 S.E.2d 41 (1956), regarding awards of the State Board of Workers' Compensation; the same applies to any appealable order.

The American Association of Retired Persons (AARP), one of numerous intervenors in the proceedings, appeals the affirmance of the PSC's findings based in part on alleged ex parte communications and the superior court's failure to reopen the record to allow evidence of that issue.

Case No. A90A0495 (AARP)

1. The initial order of the PSC was issued October 1, 1987. AARP moved for reconsideration, but it did not include any ground based on the allegedly improper ex parte communications. On the same day, another intervenor, Consumers' Utility Counsel, filed a motion which included the allegation of ex parte communications. The motion was not adopted or joined by AARP. Both motions were denied. The PSC supplemented its original order thereafter, and appeal to the superior court ensued.

Although filing a motion for reconsideration before the agency is not a prerequisite to superior court review, "no objection to any order or decision of any agency shall be considered by the court upon petition for review unless such objection has been urged before the agency." OCGA § 50-13-19(c).

The court correctly held that AARP's failure to raise the issue before the PSC precluded the court's consideration of it. "The authorization to the superior court set forth in [OCGA § 50-13-19(g) ] to hear evidence relating to alleged irregularities in procedure before the agency that are not shown in the record is an exception to the principle that review by the superior court shall be confined to the record but is not an exception to the principle stated in [OCGA § 50-13-19(c) ] requiring objections to agency decisions or orders to be urged in the first instance before the agency." Georgia Real Estate Comm. v. Burnette, 243 Ga. 516(1), 255 S.E.2d 38 (1979). See Georgia Public Svc. Comm. v. Southern Bell, 254 Ga. 244, 247, 327 S.E.2d 726 (1985); State Bd. of Equalization v. Trailer Train Co., 253 Ga. 449, 450, 320 S.E.2d 758 (1984); North Fulton, Etc., Hosp. v. State Health, Etc., Agency, 168 Ga.App. 801, 803(1), 310 S.E.2d 764 (1983).

Since AARP failed to present the issue to the agency, it is not necessary to address the substantive arguments presented. ¹

Case No. A90A0494 (Georgia Power Company)

A construction budget request for Plant Vogtle was originally proposed by the Company in 1971, when power demands were increasing and the need for additional sources of energy was being addressed nationwide. During this period, planning, proposing, and construction startup were occurring for many of the nuclear plants now in existence or later cancelled. The original construction budget for Plant Vogtle was $660 million. It was to be a four-unit plant with two units optional for later expansion.

The Company served as its own construction manager ² during the project, selecting as architect/engineer the Bechtel Corporation. Significant design responsibilities for the Nuclear Steam Supply System and the piping hanger system were assigned to Southern Company Services, a component of the Southern Company, the parent of Georgia Power Company, and Westinghouse. The project was to follow the "design-build" or "fast track" method; i.e., no full project design existed as the project began but was being prepared contemporaneously. ³

The cost estimate continued to escalate until 1973, when it was made even higher by the oil embargo and general economic conditions. By October 1977, the estimate was $2.7 billion and the projected start date for commercial operation of Unit 1 slipped to November 1984.

In March 1979, the Three Mile Island accident occurred, increasing regulation and oversight of such plants by the Nuclear Regulatory Commission. In October 1979, the Phase I Definitive Estimate based on site drawings and projected manhour and material costs was raised to $3.4 billion. Cost increases and schedule slips continued. By July 1985 the estimate hit $8.4 billion. Although costs rose even higher, the Company agreed in March 1986 to cap the costs in its rate request at $8.4 billion.

The Company's appeal alleges eight enumerations, five of which (1, 2, 3, 4, & 6) deal with three categories of costs disallowed by the PSC and affirmed by the court: 1) embed plate fabrication and installation and 2) batch plant operations, both of which impacted the schedule of the project (the $516 million schedule disallowance), and 3) costs attributable to the Company's imprudence in managing the productivity of its work force (the $380 million productivity disallowance).

Two enumerations (7 & 8) cite error in the court's not requiring the PSC to explain why it did not offset alleged benefits to customers resulting from the delay in completion and the decision to attempt to minimize delay at the expense of productivity.

Enumeration 5, addressed first, alleges error in the trial court's failure to hold that the admission of the expert opinion testimony of John Orr on productivity was error.

2. In July 1985, because of the overruns and schedule problems experienced at Plant Vogtle, the PSC retained the consulting firm of O'Brien-Kreitzberg & Associates (OKA) to examine the prudence of the Company's management of the project. During the two years before the rate hearings, OKA, both on site and by use of data requests from the Company, audited the project management both prospectively and retrospectively. In April 1987, OKA submitted to the PSC its written report, a draft of which had been previously submitted to the Company for its use and comment.

The report contained the credentials of the members of the panel of experts including John Orr, its principal author. The panel testified before the PSC beginning May 26, 1987. Mr. Orr was extensively cross-examined by the Company as to his qualifications to express an opinion on productivity during construction of a nuclear facility. No formal objection to his testifying as an expert was made by the Company before, during or immediately after his testimony.

At the close of the OKA panel's testimony, PSC counsel moved for the introduction into evidence of the five volumes of the OKA written report. The Company asked for and was granted time to file written objections to the introduction of these exhibits. On June 2, 1987, the Company filed its "Brief In Opposition To Admitting Certain Portions of Hearing Exhibits ... 87 through 91." It contended that "OKA is not competent to render opinion testimony on the subject of Vogtle productivity in view of its total lack of experience in evaluating productivity on nuclear power plants," and objected for the first time to the testimony of the witnesses before the PSC.

Since January 1, 1976, the Administrative Procedure Act has been applicable to proceedings of the PSC. Ga.L.1975, p. 404; OCGA § 50-13-2(1); Georgia Public Svc. Comm. v. Southern Bell, 254 Ga. 244, 245, 327 S.E.2d 726, supra. The rules of evidence applicable in civil non-jury trials generally apply. OCGA § 50-13-15(1). OCGA § 46-2-51, governing the PSC only, provides that "the commission shall not be bound by the strict technical rules of ... evidence but may exercise such discretion as will facilitate its efforts to ascertain the facts bearing upon the right and justice of the matters before it." This section dovetails with and complements OCGA § 50-13-15(1), since § 46-2-51 comports with the standards regarding non-jury civil trials. See Foster v. Continental Cas. Co., 141 Ga.App. 415, 418(6), 233 S.E.2d 492 (1977).

The qualification of a witness to testify as an expert is determined by the court in judicial proceedings or by the agency in administrative settings. ...