In re Island Hi-Speed Ferry, LLC
| Decision Date | 23 June 2004 |
| Docket Number | No. 2002-512-M.P., No. 2002-513-M.P. |
| Citation | 852 A.2d 524 |
| Parties | In re ISLAND HI-SPEED FERRY, LLC. |
| Court | Rhode Island Supreme Court |
Michael R. McElroy, Esq., Providence, (for Interstate), Merlyn P. O'Keefe, Esq. (for Town), Peace Dale, for Plaintiff.
Mark Jay Hagopian, Esq., Providence, (for Hi-Speed), Steven Frias, Esq. (for PUC), for Defendant.
Present: WILLIAMS, C.J., FLANDERS, GOLDBERG, and SUTTELL, JJ.
This case is before the Court on separate statutory petitions for certiorari filed by Interstate Navigation Company d/b/a The Block Island Ferry (Interstate), and the Town of New Shoreham (town) (collectively petitioners). After granting certiorari, this Court consolidated the matters for briefing and argument. The petitioners seek review of an August 20, 2002, report and order (2002 order) of the Public Utilities Commission (PUC or commission) issued in docket number 2802, in which it ruled that Island Hi-Speed Ferry, LLC (Hi-Speed) could continue operating through the 2002 season charging a previously approved rate. In re High-Speed Ferry's Request for Confidential Treatment of Compliance Report and Data Responses, docket no. 2802, (written order issued August 20, 2002). Also in the 2002 order, the PUC denied the petitioners access to a compliance report and related data responses (compliance report) Hi-Speed submitted as part of its obligation to provide information to allow the PUC to monitor the reasonableness of Hi-Speed's rates. Id. Because the 2002 operating season has passed and the PUC has since issued a new order establishing Hi-Speed's rates, In re Island Hi-Speed Form of Regulation and Review Rates, docket no. 3495, (written order issued November 25, 2003), the issues raised in this case are moot. Therefore, we affirm the 2002 order of the PUC.
I
Interstate and Hi-Speed are competing companies that provide ferry services to and from the town.1 Because Interstate has been in business since at least 1954, Hi-Speed may be viewed as the new kid on the block. In 1998, the PUC granted Hi-Speed permission to operate a high speed catamaran shuttling passengers between the town and the Port of Galilee in Narragansett. In a report and order issued on March 31, 1999 (1999 order), the PUC approved round-trip rates of $26 for adults and $12 for children2 for Hi-Speed applicable for the 1999 season — May 14 through October 11. In authorizing Hi-Speed's temporary rates, the PUC ordered Hi-Speed to file a "Cost of Service Schedule and Rate Design"3 so the PUC could revisit Hi-Speed's rates after its initial test year. The 1999 season, however, came and went without Hi-Speed beginning its operation. Nevertheless, in 2000 this Court was called upon to review Hi-Speed's 1999 rates. In re Island Hi-Speed Ferry, LLC, 746 A.2d 1240 (R.I. 2000). Despite the fact that the rates under review at that time technically applied only to the 1999 season, which had concluded, we held that the case was not moot because the "administrative gridlock" that had delayed the commencement of Hi-Speed's service was likely to recur and evade judicial review. Id. at 1243. We treated the 1999 rate approval as though it applied "for the initial season during which Hi-Speed is in operation" and ultimately ruled that the methodology used to calculate the rates was reasonable. Id. at 1243, 1246-47. Thus, when Hi-Speed finally launched its maiden voyage in mid-summer 2001, it operated under the rate approval that originally applied to the 1999 season.
On January 15, 2002, Hi-Speed filed a compliance report (report) in accordance with the PUC's 1999 order. When it submitted its report, Hi-Speed asked the PUC to treat the report as confidential4 pursuant to Rule 1.2(g) of the Public Utilities Commission Rules of Practice and Procedure.5 The petitioners objected to Hi-Speed's request for confidential treatment of the report, and Interstate requested access to it pursuant to the Access to Public Records Act (APRA), G.L.1956 chapter 2 of title 38. The town also argued that no rate had been set for Hi-Speed's 2002 operating season because the previous rate approval applied only for the 2001 season and had expired. The town further asserted that it had a right to participate in any hearings about Hi-Speed's 2002 rates.
After a public hearing, the PUC granted confidential and proprietary treatment to Hi-Speed's report on a preliminary basis. In its post-hearing brief, Hi-Speed maintained that the PUC was not required to conduct a rate case to set its 2002 tariffs. It argued that the PUC should exercise its discretion and allow the 2001 rates to remain in effect so new rates could be based on data available after the 2002 season — Hi-Speed's first full season of operation. Interstate filed a post-hearing brief, in which it argued that the approved 2001 rates could not be used by Hi-Speed in 2002 and that it would be illegal to authorize new rates without a public hearing. Also in the wake of the hearing, Interstate filed an objection to a PUC data request for information about whether Interstate planned to enter the high-speed ferry market. Interstate said the information requested "is proprietary and confidential and is protected from disclosure because to disclose it would cause substantial harm to the competitive position of Interstate."
In the 2002 order, the PUC announced that it made a final determination that the report that Hi-Speed submitted was proprietary and confidential.6 Describing the information in the report as a "roadmap" for starting a competing high-speed ferry service, the PUC specifically found that "the financial information developed in establishing [a high-speed ferry] business is proprietary and to disclose it to a potential competitor would likely cause substantial harm to [Hi-Speed]." It also noted that Interstate is the incumbent ferry carrier and, with the information contained in the report, could use its superior financial resources and name recognition to enter the high-speed ferry business and undercut Hi-Speed. In fact, based on Interstate's refusal to answer its questions about whether Interstate planned to enter the high-speed ferry business, the PUC found that "Interstate would be likely to use the information contained in [the report] in a manner that would cause substantial harm to Hi-Speed's competitive position." Accordingly, the PUC overruled the petitioners' objections to Hi-Speed's request for confidential treatment and denied Interstate's APRA request.
This Court granted certiorari to review the 2002 order in September 2002. Thereafter, on February 27, 2003, the PUC initiated a new docket to review the reasonableness of Hi-Speed's rates and charges. In November 2003, the PUC issued the 2003 order in the new docket (3495) denying Interstate's and the town's requests to intervene. Ultimately, the PUC determined that the appropriate form of rate regulation for Hi-Speed is a price floor with no revenue or profit cap, and that the appropriate charges were the amounts Hi-Speed charged in its initial season. The PUC also authorized Hi-Speed to retain any revenue collected in excess of the previously determined revenue cap.
We are of the opinion that the opening of a new docket by the PUC and reestablishing Hi-Speed's rates has rendered all issues in this case moot. "This Court has held that `a case is moot if * * * events occurring after [its] filing have deprived the litigant of a continuing stake in the controversy.'" Morey v. Wall, 849 A.2d 621, 624 (R.I.2004) (quoting Associated Builders & Contractors of Rhode Island, Inc. v. City of Providence, 754 A.2d 89, 90 (R.I.2000) (per curiam)). "The mootness doctrine ensures that the litigant's interest in the outcome continues to exist throughout the appellate process." Id. "A case that otherwise is moot may be considered if the issues involved are likely to recur in such a way as to evade review and are of great public importance." Id.
When asked at oral argument about their attempts to gain access to Hi-Speed's report, petitioners said that their ability to gain access to the report was crucial to a proper determination of Hi-Speed's rates for the 2002 season. Because the 2002 season has passed, however, any changes to the rates for that season would constitute retroactive ratemaking by the PUC. "One of the central principles of ratemaking is that rates must be prospective." Providence Gas Co. v. Burke, 475 A.2d 193, 197 (R.I. 1984). Subject to narrow exceptions, the PUC is prohibited from engaging in retroactive ratemaking. This Court has sanctioned retroactive rate increases to allow a utility to recoup extraordinary expenses incurred as a result of an unusually severe storm, Narragansett Electric Co. v. Burke, 415 A.2d 177, 179 (R.I. 1980), or an unforeseeable "supplemental tax surcharge assessed by [a] city," Providence Gas Co., 475 A.2d at 198. Here, however, no parties argue that Hi-Speed's rates should be increased retroactively to make up for extraordinary expenses similar to those incurred in ...
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