Kauai Elec. Division of Citizens Utilities Co., Application of

• Decision Date: 19 December 1978
• Docket Number: No. 6178,6178
• Citation: 590 P.2d 524,60 Haw. 166
• Parties: Application of KAUAI ELECTRIC DIVISION OF CITIZENS UTILITIES COMPANY for Approval of a Proposed Revision in Rates.
• Court: Hawaii Supreme Court

Page 524

590 P.2d 524

60 Haw. 166

Application of KAUAI ELECTRIC DIVISION OF CITIZENS UTILITIES

COMPANY for Approval of a Proposed Revision in Rates.

No. 6178.

Supreme Court of Hawai'i.

Dec. 19, 1978.

Syllabus by the Court

1. The Commission's authority to grant interim rate increases conditioned on a refund provision is necessarily implied from the express authority to regulate rates and supervise public utilities operating within the State.

2. A "full hearing" is one in which ample opportunity is afforded to all parties to make, by evidence and argument, a showing fairly adequate to establish the propriety or impropriety from the standpoint of justice and law, the step asked to be taken.

3. A hearing may be a full one, although evidence introduced does not enable the tribunal to dispose of issues completely or permanently, and although the tribunal is convinced, when entering the order . . . that upon further investigation, some changes in it will have to be made.

4. The Commission, when issuing interim orders must make findings of fact and conclusions of law as required by HRS § 91-12.

5. The agency must make its findings reasonably clear. The parties and the court should not be left to guess, with respect to any material question of fact, or to any group of minor matters that may have a cumulative significance, the precise finding of the agency.

6. Where the Commission's order contained no separate findings of fact nor conclusions of law other than a statement of the ultimate decision of the Commission to grant the applicant an interim increase, "based on the rate schedule designed by Gaylord H. Ching as shown on pages 47 through 54 . . . ", this is not adequate to meet the mandates of HRS § 91-12 nor to aid us in appellate review.

7. A remand is proper where an agency has made invalid, inadequate or incomplete findings.

8. HRS § 269-16 requires not only that the Commission find that the proposed rates are just and reasonable, but also, that they are "necessary."

9. Under the clearly erroneous standard, the court will reverse an agency's findings if the court is left with a definite and firm conviction that a mistake has been made.

10. The rule is that the burden is always on the applicant to prove justification for a requested increase before the Commission.

11. Once the Commission has made an order, the order carries a presumption of validity and one seeking to upset the order carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences.

12. The issue of credibility is within the primary responsibility of the state agency as fact finder, and its determinations will not be disturbed lightly.

13. We defined rate base as the present value of property, both tangible and intangible owned by the company used and useful in its utility operation which is to be fairly determined.

14. In reviewing the commission's order setting a fair rate of return, as long as the "total effect" or "end-result" of a rate order cannot be said to be unjust and unreasonable, then judicial inquiry is at an end.

15. A commission may take cognizance of inefficient management in fixing a fair rate of return.

16. Rehearings before administrative bodies are addressed to their own discretion, and only a showing of the clearest abuse of discretion could sustain an exception to that rule.

17. In the absence of other controlling circumstances, the ultimate question for determination . . . is whether it appears likely that an injustice has been done and upon rehearing a different result would probably be reached.

Arthur E. Ross, Sp. Counsel to County of Hawaii, Honolulu, for appellant, County of Kauai.

James H. Case and Robert E. Strand, Honolulu (Carlsmith, Carlsmith, Wichman & Case, Honolulu, of counsel), for applicant appellee, Kauai Elec. Division of Citizens Utilities Co.

Before RICHARDSON, C. J., and KOBAYASHI, OGATA, MENOR and KIDWELL, JJ.

KOBAYASHI, Justice.

This is an appeal by Kauai County, intervenor (appellant), from order numbers 3852, 4084, and 4083, issued by the state Public Utilities Commission (Commission) in the application of the Kauai Electric Division of Citizens Utilities Company (hereinafter referred to as applicant) ¹ for interim and permanent rate increases in electric tariff schedules for four categories of consumers: residential, general light and power, street lighting, and large power; and for substitution of an "energy rate adjustment clause" for the current fuel oil clause. Order number 3852 approved an interim rate increase, effective February 17, 1975, and order number 4084 approved a permanent rate increase effective on or after the date of the order, December 11, 1975. Order number 4083 denied motions filed by the Public Utilities Division of the State Department of Regulatory Agencies (hereinafter referred to as the PUD), and appellant to set aside submission of the case, set aside the interim rate increase and to reopen the case for further taking of evidence.

ISSUES

I. Whether order number 3852 is void because:

A. The Commission has no power to issue interim orders, or if it does have such power, the power constitutes an impermissible delegation of legislative power;

B. The Commission failed to hold a "full hearing" as required by HRS § 91-9; C. It lacks specific findings of fact and conclusions of law as required by HRS § 91-12;

II. Whether order number 4084 is void because the ultimate conclusions reached by the Commission are unsupported by reliable, probative and substantial evidence;

III. Whether the energy clause is void.

IV. Whether denial of appellant's motion to reopen the proceedings denied the consumer a fair hearing.

STATEMENT OF THE CASE

In an application filed on November 9, 1973, and docketed as No. 2402 (hereinafter referred to as the November 9th application), applicant, an operating public utility engaged in the production, transmission, distribution and sale of electric energy for domestic, commercial, industrial, agricultural and governmental purposes on the Island of Kauai, State of Hawaii, submitted proposed rate schedules for approval. The proposed schedules effected an increase in base rates charged to residential, general light and power, street lighting, and large power consumers, ² and proposed a new "energy rate adjustment clause" as a replacement for the fuel oil clause. ³ The application requested approval to implement interim rate increases pending final approval of permanent increases, subject to refund to consumers.

On February 25, 1974, the applicant filed a motion requesting approval of electric tariff schedules equal to the proposed interim rates, including the energy rate adjustment clause. ⁴ The motion proposed a base amount of $0.0113834 per kilowatt hour (kwh) as the energy rate adjustment to be applied to all rates, on a monthly basis.

On March 12, 1974, the Commission, on its own initiative, issued order no. 3439 on docket no. 2402, ordering the applicant to show cause why a further reduction in the fuel oil clause should not be made. At a hearing on March 15, 1974 and April 16, 1974 the Commission heard testimony regarding applicant's proposal to substitute its energy rate adjustment clause for the fuel oil clause. The Commission also heard the testimony of Mr. LeRoy Yuen, Acting Executive Director of the PUD, as to the PUD's proposal for an alternative energy clause. ⁵ Mr. Yuen explained the PUD's proposal in this way:

What we have done is to take the Cost of fuel for power generated by the company What we are proposing is that the base price of fuel which we have calculated to be 6.93 mils be the take-off point for any increase or decrease in the rates charged to Kauai consumers. This figure is the weighted cost taken into consideration the purchased power and those powers generated from steam and diesel. (Emphasis added.) ⁶

and the purchased power that was obtained from the plantations at that time. (The "time" refers to the time of the hearing on Docket No. 1817.) We also took the estimated kilowatt hours in the Decision and Order (No. 1817) and arrived at a figure of 6.93 mils as the base price of fuel that Should have been used in the fuel oil clause. We have restated the fuel oil clause similar to what the company is proposing, however, the figures are different.

At this meeting Kauai County was given permission to intervene in the proceedings.

On March 27, 1974, the applicant filed an amended application stating that the November 9th application rate schedules were erroneously based on a fuel cost of $3.00 per barrel rather than the $4.47 per barrel. According to the applicant, the amendment did not alter the percentage increases in the base rates which were proposed in its November 9th application. The proposed energy rate adjustment clause and the tax adjustment clause also remained the same.

At a hearing on April 16, 1974 at 7:00 p. m., the Commission ordered the applicant to adopt the PUD's proposed energy clause ⁷ and denied applicant's February 25, 1974 motion for interim rates and applicant's proposed energy rate adjustment clause. ⁸ Although the record does not show that a formal written order was issued implementing the PUD's new energy clause into the applicant's rate schedules, the record reveals that the applicant was notified in writing of the Commission's decision in a letter dated May 1, 1974. ⁹ The record shows that the applicant informed the Commission by letter dated April 18, 1974, that it had implemented the proposed energy clause as ordered by the Commission.

On May 31, 1974, the Commission held a prehearing conference with the parties at which time it was agreed that the "test year" for purposes of the rate proceedings would be the 1975 calendar year.

The rate hearings on the November 9th application, as amended, began on September 17-20, 1974, and continued on October 24-25, 1974, February 12, 1975, and June...