Idaho Power Co. v. Idaho Public Utilities Commission

• Citation: 99 Idaho 374,582 P.2d 720
• Decision Date: 13 July 1978
• Docket Number: No. 12238,12238
• Parties: IDAHO POWER COMPANY, Appellant, v. IDAHO PUBLIC UTILITIES COMMISSION, Respondent.
• Court: Idaho Supreme Court

Page 720

582 P.2d 720

99 Idaho 374

IDAHO POWER COMPANY, Appellant, v. IDAHO PUBLIC UTILITIES COMMISSION, Respondent.

No. 12238.

Supreme Court of Idaho.

July 13, 1978.

Fred D. Decker of Parry, Robertson, Daly & Larson, Twin Falls, for appellant.

Wayne L. Kidwell, Atty. Gen., and Michael C. Dotten, Asst. Atty. Gen., for respondent Idaho Public Utilities Commission.

Jess B. Hawley, Jr., of Hawley, Troxell, Ennis & Hawley, Boise, and Francis N. Marshall and James N. Roethe, San Francisco, Cal., for respondent FMC Corp.

McFADDEN, Justice.

On May 30, 1975, appellant Idaho Power Company (hereinafter Idaho Power) applied to respondent Idaho Public Utilities Commission (hereinafter IPUC) for electrical service rate increases for its general and named special service contract customers. On July 3, 1975, Idaho Power also applied for electrical service rate increases for power supplied to Monsanto Company. Both applications were consolidated for hearings and eleven intervenors were allowed to participate in the consolidated hearings. Idaho Power sought permanent annual Idaho revenue increases of approximately $25,000,000 for a proposed 8.43 percent rate of return on the company's submitted $606,786,000 Idaho rate based for the 1975 test year. By these applications Idaho Power sought a 25.7 percent increase in its annual gross revenues.

After conducting hearings, the IPUC issued Order No. 12307 on January 14, 1976, which adjusted Idaho Power's submitted Idaho rate base to $600,714,000 and authorized the company to receive an 8.23 percent rate of return on its adjusted Idaho rate base. Idaho Power was "authorized to increase its annual revenues in the amount of $17,100,000 per annum, and to spread such rate increases among its various classes of customers . . . ." The authorized spread of increased gross revenues allocated $1,686,000 of revenue increase to sales for resale. ¹

On January 16, 1976, Idaho Power filed a petition for clarification of IPUC Order No. 12307, which the IPUC treated as a petition for rehearing. On March 19, 1976, the IPUC issued Order No. 12399 modifying IPUC Order No. 12307. These modifications, with additions underlined and deletions stricken, are as follows:

The Company Will be authorized Should be permitted to increase its annual revenues in the amount of $17,100,000 per annum, and to spread such rate increases among its various classes of customers as follows:

THAT to provide the company with a rate of return of 8.23 per cent on the previously determined rate base for Idaho of $600,714,000, its annual gross revenues Should Would have to be increased by $17,100,000.

THAT the company should be authorized to file with the Commission new rate schedules, rules and regulations, including special contract schedules, For services other than sales for resale, utilizing the allocation or spread of increased revenue as adopted and set forth in the Conclusion of this order, page 15, in those amounts necessary to generate additional annual revenues in the amount of $17,100,000 $15,414,000. The company should take appropriate steps to enable it to generate additional annual revenues from sales for resale in the amount of $1,686,000.

On April 15, 1976, Idaho Power perfected this appeal from the above orders pursuant to I.C. § 61-627. Intervenor FMC Corporation, as party respondent to the proceedings, also filed a brief.

It is helpful to note at the outset what is Not at issue in the instant proceeding. Idaho Power does not challenge the reduction of the company's submitted Idaho rate base from $606,786,000 to $600,714,000, nor does it contest receiving an 8.23 percent rate of return on its Idaho investment instead of the requested 8.43 percent rate of return. Idaho Power admits that the IPUC is vested with jurisdiction to make these adjustments and that these portions of IPUC Order Nos. 12307 and 12399 are supported by substantial and competent evidence. The parties also agree that interstate sales for resale are within the exclusive jurisdiction of the Federal Power Commission and that the IPUC lacks jurisdiction to establish rates for sales for resale.

The crux of the controversy concerns the IPUC's allocation of $1,686,000 of Idaho Power's gross revenue deficiency to electrical operations that are located in Idaho but that produce power for interstate sales for resale. Idaho Public Utilities Commission Order No. 12307 authorized an 8.23 percent rate of return on a $600,714,000 Idaho rate as the IPUC's estimate of a "fair, just and reasonable" return on Idaho Power's Idaho rate base. That order, therefore, authorized permanent annual rate increases of $17,100,000 to meet the needed 8.23 percent rate of return found to be "fair, just and reasonable." However, IPUC Orders No. 12307 and No. 12399, in effect, reduce the Idaho revenue authorization by $1,686,000, stating: "The company should take appropriate steps to enable it to generate additional annual revenues from sales for resale in the amount of $1,686,000."

Idaho Power argues that since rate increases for sales for resale cannot be made without approval of the Federal Power Commission, IPUC Orders No. 12307 and No. 12399 force Idaho to receive $1,686,000 less than is needed to provide the company with a reasonable return on its Idaho investment. The $1,686,000 reduction of Idaho Power's Idaho gross revenues by IPUC Orders No. 12307 and No. 12399 only results in an 8.09 percent rate of return for Idaho services. Thus, Idaho Power argues that: (1) the IPUC cannot consider interstate facilities and revenues in determining intrastate rates; and (2) the authorized increase of $15,414,000 is not supported by the evidence and produces a rate of return that is $1,686,000 less than needed to provide the company with what the IPUC found to be a reasonable rate of return. ² Idaho Power thus requests that the orders be set aside to allow the company to receive an 8.23 percent rate of return on its Idaho investment.

In response, the IPUC maintains that the adjusted Idaho rate base represents All Idaho Power electrical operations located in Idaho producing power for both interstate and intrastate sales. None of the evidence submitted by Idaho Power, argues the IPUC, assigned a rate base for Idaho operations producing only intrastate power for Idaho retail consumers. Similarly, it argues that costs were not assigned to Idaho located operations producing only intrastate retail power supplies. In other words, the IPUC maintains that Idaho Power's original electrical power rate increase application did not separate Interstate costs and facilities from its Intrastate services. When confronted with this evidence, the IPUC states that it computed an estimated Idaho geographic rate base (Idaho operations producing both interstate wholesale and intrastate retail power), an estimated Idaho geographic expense schedule (both interstate wholesale and intrastate retail expenses) and an estimated fair rate of return on the Idaho geographic rate base for All Idaho operations. This computation, maintains the IPUC, produces a gross revenue deficiency for All Idaho Power operations located in Idaho producing both interstate and intrastate power supplies. In order to determine a gross revenue deficiency for only those Idaho located operations that produce intrastate power, the IPUC attributed $1,686,000 of the gross revenue deficiency to interstate sales for resale. Order No. 12307 is, therefore, an estimate by the IPUC of the submitted rate base that should be attributed to interstate sales for resale by Idaho located operations. To clarify its position, the IPUC issued Order No. 12399, explaining that Idaho Power was authorized to increase Idaho retail gross revenue receipts by $15,414,000, and the $1,686,000 balance was an estimate of the revenue deficiency that should be allocated to Idaho operations producing power for interstate sales for resale. The orders did not attempt to authorize a $1,686,000 rate increase for interstate sales for resale nor attempt to force Idaho Power to receive $1,686,000 less than a fair rate of return on its Idaho intrastate investment.

The IPUC is vested with jurisdiction to regulate all rates charged by every public utility in the state for services, products or commodities. I.C. § 61-501. Whenever the IPUC finds that rates charged by a public utility for its services are unjust, the IPUC must establish just, reasonable or sufficient rates to be thereafter charged by the public utility. I.C. § 61-502. ³ Findings by the IPUC concerning public utility rate increases are conclusive on appeal if the overall effect of the rate charge established is reasonable and just. Citizens Utilities Co. v. IPUC, 579 P.2d 110 (Idaho Sup.Ct., 1978); Agricultural Products Corp. v. Utah Power & Light Co., 98 Idaho 23, 557 P.2d 617 (1976); Intermountain Gas Co. v. IPUC, 97 Idaho 113, 540 P.2d 775 (1975). The scope of the court's appellate review is limited by I.C. § 61-629:

Matters reviewable on appeal Extent of review Judgment. No new or additional evidence may be introduced in the Supreme Court, but the appeal shall be heard on the record of the commission as certified by it. The review on appeal shall not be extended further than to determine whether the commission has regularly pursued its authority, including a determination of whether the order appealed from violates any right of the appellant under the Constitution of the United States or of the State of Idaho. Upon the hearing the Supreme Court shall enter judgment, either affirming or setting aside the order of the commission. In case the order of the commission is set aside the commission, upon its own motion or upon motion of any of the parties, may alter or amend the order appealed from to meet the objections of the court . . ..

The court's general inquiry therefore is whether allocating $1,686,000 of Idaho Power's gross revenue deficiency to sales for resale resulted in a just,...