Maestas v. New Mexico Public Service Commission
| Decision Date | 28 September 1973 |
| Docket Number | No. 9759,9759 |
| Citation | 514 P.2d 847,85 N.M. 571,1973 NMSC 96 |
| Parties | , 2 P.U.R.4th 520 Robert MAESTAS and Alice B. Nunn, Petitioners-Intervenors-Appellants, v. NEW MEXICO PUBLIC SERVICE COMMISSION, Respondent-Appellee, Southern Union Gas Company, Respondent-Intervenor-Appellee. |
| Court | New Mexico Supreme Court |
On June 14, 1971 Southern Union Gas Company (Company) filed an advice notice with the Public Service Commission (Commission) which gave notice to the public and to the Commission of certain revised rate schedules. The purpose of this filing was to propose that the Company's proferred rule 20 () should govern the Company's rate schedules, excepting therefrom seven special contract customers. The rule was properly filed with the Commission and its contents are as follows:
(a) The provisions of this Section 20 shall be applicable only to those rate schedules of the Company (herein called 'Affected Rate Schedules') containing substantially the following statement as one of the conditions of service thereunder: 'The rates set forth herein shall be subject to adjustment to compensate for changes in the Company's cost of purchased gas, as provided in Section 20 of the Company's rules and regulations on file with the New Mexico Public Service Commission.'
(b) Within forty-five (45) days after each March 31, June 30, September 30 and December 31, beginning with June 30, 1971, the Company shall file with the Commission a written report indicating (1) the total number of Mcf of gas, calculated on a pressure base of 14.73 pounds per square inch absolute, which were purchased by the Company during the three-month period then ended for distribution and sale to New Mexico consumers, (2) the total purchase (and) the average purchase price paid by the Company for such gas, calculated to the nearest 1/10th of a cent per Mcf (herein called 'Current Cost of Gas'). Such statement shall be accompanied by such detailed supporting data as the Commission may request from time to time.
(c) Whenever the Current Cost of Gas for any three-month period shall be greater or less than the average cost of gas to the Company during the three-month period ending March 31, 1971, namely, 19.2cents per Mcf (herein called the 'Base Cost of Gas'), then, commencing with bills rendered on the first day of the month after the date the report reflecting such Current Cost of Gas is filed with the Commission and ending with bills rendered on the last day of the third month after said date of filing, the price per Mcf specified in each step of each of the Affected Rate Schedules shall be increased or decreased, as the case may be, by an amount equal to the difference between the Current Cost of Gas and the Base Cost of Gas.
(d) In the event the Current Cost of Gas for any three-month period is affected by a change in the Company's gas purchase costs which occurs after March, 1971 and is subsequently set aside or disallowed, in whole or in part, by the action of any court or regulatory authority so as to result in the receipt of a refund by the Company, the Current Cost of Gas for the four three-month periods next following the one during which such refund was received by the Company shall be appropriately reduced to the end that the consumers served under the Affected Rate Schedules shall receive, in the aggregate, during said four three-month periods, the full benefit of so much of the refund received by the Company as related to gas sold by it under the Affected Rate Schedules.
As further background, the Company purchases its gas from several sources, including two wholly-owned subsidiaries, Southern Union Producing Company and Southern Union Gathering Company. The record reflects that these subsidiary companies provide the Company with approximately 26% of its natural gas needs.
On January 4, 1972 the Commission issued its order allowing Company rule 20 to become a part of the Company's rules and regulations, and modifying the general service rate schedules, making them subject to rule 20. Following an exhaustion of administrative procedures, intervenors Maestas and Nunn appealed to the district court which found for the Commission and affirmed its order of January 4, 1972. Intervenors then appealed to this Court from the lower court's decision.
The appellants base their appeal on two points, reading as follows:
POINT I. The order of the District Court upholding the approval by the Public Service Commission of Southern Union Gas Company's Rule 20, cost-of-gas adjustment clause, is unreasonable and unlawful given the unique vertical integration of the Southern Union corporate structure operating within New Mexico which allows the company to function in part free from regulation and in a manner inimical to the public interest.
POINT II. The Order of the District Court upholding the approval by the Public Service Commission of Southern Union Gas Company's Rule 20, cost-of-gas adjustment clause, should be reversed for lack of substantial evidence regarding the parent-subsidiary relationship between Southern Union Gas Company and its two wholly-owned subsidiaries.
To begin with, the stated purpose of the Company's proposed rule 20 is to increase or decrease its revenues from time to time as is necessary to compensate for increases or decreases in its actual average cost of purchased gas. The consumers of gas will be required to pay the increase in the cost of gas if, and only if, an increase occurs, and they will be given the benefit of a decrease in such cost if a decrease occurs. A majority of commissions have found great practical justification for approving adjustment clauses similar to these. See Foy, Cost Adjustment in Utility Rate Schedules, 13 Vand.L.Rev. 663, 668 (1960); Trigg, Escalator Clauses in Public Utility Rate Schedules, 106 U.Pa.L.Rev. 964, 996 (1958). Furthermore, the courts of several jurisdictions have not seen fit to invalidate such commission-approved clauses. See City Of El Dorado v. Arkansas Public Service Com'n., 235 Ark. 812, 362 S.W.2d 680 (1962); ...
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