Henry v. Corporation Com'n of State of Okl.
| Decision Date | 02 October 1990 |
| Docket Number | 68793 and 68795,Nos. 68776,s. 68776 |
| Citation | 825 P.2d 1262 |
| Parties | , 1990 OK 104 Robert HENRY, Attorney General of Oklahoma, Appellant, v. CORPORATION COMMISSION OF the STATE OF OKLAHOMA, and Arkansas Oklahoma Gas Corporation, Appellees. ARKANSAS OKLAHOMA GAS CORPORATION, Appellant, v. The STATE of Oklahoma and The Oklahoma Corporation Commission, Appellees. The EASTERN OKLAHOMA LEGISLATIVE DELEGATION, Senators Gene Stipe and Larry Dickerson, Representatives Don Mentzer, Ron Glenn, Chester (Dusty) Rhodes and Jim Hamilton, Appellants, v. CORPORATION COMMISSION OF the STATE OF OKLAHOMA, and Arkansas Oklahoma Gas Corporation, Appellees. |
| Court | Oklahoma Supreme Court |
Three separate appeals are brought from an order of the Oklahoma Corporation Commission which: 1) refused to vacate an earlier order allowing adjustments to the cost of gas and line loss factors of Arkansas Oklahoma Gas Corporation's rates to customers; and 2) increased the amount of refund to customers previously ordered as a result of improper charges made by Arkansas Oklahoma Gas Corporation to recover line loss. The Attorney General and the Eastern Oklahoma Legislative Delegation challenge the ruling based on alleged defects in notice as to part of the earlier ruling that allowed for adjustment of the base cost of gas and line loss. Arkansas Oklahoma Gas Corporation challenges the increase in the amount of refund ordered. All three appeals have been consolidated for disposition.
REVERSED IN PART and AFFIRMED IN PART.
Robert H. Henry, Atty. Gen., pro se and Robert A. Butkin, Asst. Atty. Gen., Oklahoma City, for appellant Atty. Gen. of Oklahoma.
Jose J. Hernandez, Oklahoma Corp. Com'n, Oklahoma City, for appellee Oklahoma Corp. Com'n.
William L. Anderson and Cody B. Waddell, Anderson & Waddell, P.C., Oklahoma City, for appellee/appellant Arkansas Oklahoma Gas Corp.
Representative Jim Hamilton, Poteau, for appellant Eastern Oklahoma Legislative Delegation.
The issues presented on appeal are 1) did AOG's customers have sufficient notice of the Commission's intent to increase AOG's base cost of gas and line loss and 2) is the Commission's order increasing the amount of refund owed AOG's customers a valid order. We hold that the Commission's notice was insufficient to adequately inform AOG's customers that an increase in line loss or base cost of gas was to be considered. We further find that the Commission's order increasing the amount of refund owed AOG's customers is valid in that AOG waived its right to challenge the order on appeal having failed to contest the staff's motion during the Commission's proceedings.
On December 26, 1985, Arkansas Oklahoma Gas Corporation (AOG), a gas utility serving certain communities and rural areas in Sequoyah, LeFlore and Haskell counties in Oklahoma, filed an application with the Oklahoma Corporation Commission seeking a general rate increase. The Corporation Commission designated this application as Public Utility Docket Cause No. 79. On April 24, 1986, the Eastern Oklahoma Legislative Delegation (EOLD), as representatives of the customers of AOG, filed a protest to the application for an increase in utility rates. In May of the same year the Attorney General of Oklahoma also filed an intervention as to the application for rate increase as representative of the public.
On April 24, 1986, the same date that EOLD entered its appearance in the general rate increase proceeding initiated by AOG, the Commission staff filed an application which was designated as Public Utility Docket Cause No. 158. In the application in Cause No. 158, the Commission staff alleged that in the course of monitoring AOG's compliance with Commission A hearing was set on the staff application in Cause No. 158 and notice was mailed to counsel for AOG and to the Attorney General. No other notice was given as to the hearing in this matter. The hearing was held on May 6, 1986. The Commission entered Order No. 297572 which directed AOG to refund to its customers an amount in excess of $400,000, the exact amount to be determined at a later time, plus interest at the rate of six percent during the course of billing over the next twelve months. The order also allowed AOG to rebase its gas costs from $1.41 per MCF to $2.05 per MCF and to increase the line loss factor in its rate base from seven and one-half percent to eleven percent effective in its May 1986 billings.
Rules and Regulations governing fuel adjustment clauses 1 it had discovered that AOG was recovering line loss 2 through the purchased gas adjustment clause. 3 The application alleged that this recovery was not permissible through this mechanism. 4 Because AOG had a seven and one-half percent line loss factored into its base rates under the previous Commission order establishing general rates, the recovery of actual line loss through the purchased gas adjustment clause had resulted in an overrecovery of fuel costs. The application sought an order from the Commission directing a refund to AOG's customers. Additionally, the application requested that AOG's gas costs be rebased. No mention was made that an increase in line loss was to be considered or that other appropriate relief would be considered. 5
On January 21, 1987, the Commission staff filed an application to increase the amount of refund determined in Cause No. 158. This application, however, was filed under Cause No. 79. A copy of this motion was therefore delivered to all parties having entered appearances in the general rate proceeding. As a result EOLD was given actual notice of this application and of the subsequent order setting a hearing date for the motion.
However, on January 15, 1987 EOLD had already filed a motion in Cause No. 79 challenging the proceedings as to the May 6, 1986 hearing on the grounds of lack of notice to the public. EOLD amended this motion on February 19, 1987 to more particularly challenge the lack of notice, and requested a cancelation of that part of Order No. 297572 which allowed AOG to increase its rates. The Attorney General filed a motion in support of the position of EOLD on February 23, 1987. The Attorney General challenged the order on the basis of lack of notice of the intent to consider increasing AOG's line loss factor, as well as raising questions of evidentiary support and Commission authority to take In Order No. 310988 the Corporation Commission granted the staff application to increase the refund, ordering AOG to refund an additional $126,615 plus interest to AOG's customers. The Commission denied EOLD's and the Attorney General's requests to delete the rate increase provisions of Order No. 297572.
the action of increasing AOG's rates to its consumers under this procedure.
The Attorney General, EOLD and AOG have each filed separate appeals from Commission Order No. 310988. The Attorney General challenges the adequacy of the notice received as to Cause No. 158. EOLD challenges the validity of Order 297572 because of the failure to give notice to the public which EOLD represents. AOG challenges the increase in the refund it must make to its customers. All three appeals have been consolidated for disposition. We address first the challenge brought by EOLD as to the validity of Order No. 297572 and ultimately, the correctness of Order No. 310988.
EOLD argues that the provisions of Order No. 297572 allowing a rate increase, i.e. the allowance of increased line loss factor and base gas costs, are invalid because the Commission failed to give notice to the consumers affected by the increase. This Court has held that "rate making" being a legislative power ... "judicial due process notice and hearing ... unless specifically required by statute ..." 6 are not required. While EOLD does not cite a statutory basis for its contention, it does claim that notice was required under the Oklahoma Constitution Art. IX § 18. However, these constitutional provisions provide for publication notice only in a situation where the Commission is engaged in general actions not directed at any named utility. Here the action involved a named utility and therefore that portion of Art. IX § 18 relied on by EOLD has no application. 7
EOLD also argues that the Corporation Commission Rule of Practice 8-27(b) requires that notice of the application in Cause No. 158 be given to the consuming public. Rule 8-27(b) provides:
Notice of hearing of an application for approval of any schedule, rate, charge, classification, rule or regulation which will directly or indirectly alter charges made for services performed, shall be published once each week for two (2) consecutive weeks at least fifteen (15) days prior to a hearing in a newspaper of general circulation published in each county in which are located utility customers affected thereby, unless the Commission directs otherwise.
AOG and the Commission argue that Rule 8-27(b) does not apply in this situation because Order No. 297572 resulted in a decrease in revenue to AOG. We find no merit in this argument since the rule applies to cases where there is any alteration made in the charges. Here the order clearly resulted in an alteration in charges made to the consumers of AOG's services. Moreover, the testimony of the Commission's witness at the February 24, 1987 hearing was to the effect that the increase in line loss factor and the increase in cost of gas to be recovered resulted in a rate increase to AOG. 8
Alternatively, AOG and the Commission contend that Rule 8-27(b) has been satisfied because, by failing to explicitly order that publication of notice be given, this had the effect of directing that publication need not be given. We disagree. The Commission's failure to act is no substitution for an express mandate to perform a particular duty.
In considering this challenge on appeal as to the adequacy of...
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