Mountain States Legal Foundation v. Public Utilities Commission

• Decision Date: 29 January 1979
• Docket Number: No. 28151,28151
• Citation: 590 P.2d 495,197 Colo. 56
• Parties: , 28 P.U.R.4th 609 MOUNTAIN STATES LEGAL FOUNDATION, Plaintiff-Appellee, v. PUBLIC UTILITIES COMMISSION of the State of Colorado et al., Defendants-Appellants, Mountain Plains Congress of Senior Organizations, Intervenor-Appellant, Citizens Utilities Company et al., Defendants-Appellees. and COLORADO ASSOCIATION OF COMMERCE & INDUSTRY, Petitioner-Appellee, v. PUBLIC UTILITIES COMMISSION of the State of Colorado et al., Respondents-Appellants, Mountain Plains Congress of Senior Organizations, Intervenor-Appellant, Citizens Utilities Company et al., Respondents-Appellees.
• Court: Colorado Supreme Court

Page 495

590 P.2d 495

197 Colo. 56, 28 P.U.R.4th 609

MOUNTAIN STATES LEGAL FOUNDATION, Plaintiff-Appellee, v. PUBLIC UTILITIES COMMISSION of the State of Colorado et al.,

Defendants-Appellants,

Mountain Plains Congress of Senior Organizations, Intervenor-Appellant,

Citizens Utilities Company et al., Defendants-Appellees.

and

COLORADO ASSOCIATION OF COMMERCE & INDUSTRY, Petitioner-Appellee, v. PUBLIC UTILITIES COMMISSION of the State of Colorado et al.,

Respondents-Appellants,

Mountain Plains Congress of Senior Organizations, Intervenor-Appellant,

Citizens Utilities Company et al., Respondents-Appellees.

No. 28151.

Supreme Court of Colorado, En Banc.

Jan. 29, 1979.

Rehearing Denied Feb. 26, 1979.

Kea L. Bardeen, James G. Watt, Denver, for plaintiff-appellee, Mountain States Legal Foundation.

J. D. MacFarlane, Atty. Gen., David W. Robbins, Deputy Atty. Gen., Tucker K. Trautman, Asst. Atty. Gen., for defendants-appellants, Public Utilities Com'n of the State of Colo., Edwin R. Lundborg, Edythe S. Miller and Sanders G. Arnold, Com'rs.

Irvin M. Kent, Denver, for intervenor-appellant, Mountain Plains Congress of Senior Organizations.

Walker D. Miller, Greeley, Robert T. James, Colorado Springs, John J. Conway, Denver, for amicus curiae, The Colorado Rural Elec. Ass'n.

John Fleming Kelly, James L. White, Jeffrey C. Pond, B. Lynn Winmill, Holland & Hart, Denver, for petitioner-appellee, Colo. Ass'n of Commerce & Industry.

John R. Barry, Denver, for Iowa Elec. Light & Power Co.

T. N. Wright, Omaha, Neb., Thomas C. Stifler, Colorado Springs, A. R. Madigan, Omaha, Neb., for Peoples Natural Gas, Division of Northern Natural Gas Co.

Jones, Meiklejohn, Kehl & Lyons, Arthur R. Hauver, Denver, for Kansas-Nebraska Natural Gas.

Lefferdink, Lefferdink & Stoval, John J. Lefferdink, Lamar, for Eastern Colo. Utility Co.

HODGES, Chief Justice.

Plaintiffs-appellees, Mountain States Legal Foundation and Colorado Association of Commerce and Industry, commenced separate actions in the trial court challenging Public Utilities Commission (PUC) decisions which established a reduced gas rate for low-income elderly and low-income disabled persons. The trial court entered a judgment which set aside these decisions. It held that the adoption of this special reduced rate exceeded the PUC's authority under Article XXV of the Colorado Constitution and violated section 40-3-106(1), C.R.S.1973. The appellant PUC and intervenor-appellant Mountain Plains Congress of Senior Organizations urge reversal. We affirm the trial court's judgment.

On November 8, 1977, the PUC, in two decisions, ordered gas utilities under its regulatory authority to implement a discount gas rate plan for low-income elderly and low-income disabled persons. ¹ The resulting revenue loss for the discounted services would be recovered by higher rates on all other customers.

We give full recognition to the fact that many of our state's elderly live on fixed incomes which are severely strained by today's inflationary economy, as are low-income disabled persons who are often shut out of the employment market. While efforts to provide economic relief to such needy persons are laudatory, the PUC has limited authority to implement a rate structure which is designed to provide financial assistance as a social policy to a narrow group of utility customers, especially where that low rate is financed by its remaining customers.

In Mountain States Telephone and Telegraph Co. v. Public Utilities Commission, 576 P.2d 544 (Colo.1978), we held that Article XXV of the Colorado Constitution ² gives the PUC full legislative authority to regulate public utilities. We noted in that case, however, that the legislative authority in public utility matters delegated by Article XXV to the PUC could be restricted by statute. Id. at 547. It is clear in the case before us that the PUC's authority to order preferential utility rates to effect social policy has, in fact, been restricted by the legislature's enactment of section 40-3-106(1), C.R.S.1973 ³ and section 40-3-102, C.R.S.1973. ⁴

Section 40-3-106(1), C.R.S.1973, prohibits public utilities from granting preferential rates to any person, and section 40-3-102, C.R.S.1973, requires the PUC to prevent unjust discriminatory rates. When the PUC ordered the utility companies to provide a lower rate to selected customers unrelated to the cost or type of the service provided, it violated section 40-3-106(1)'s prohibition against preferential rates. In this instance, the discount rate benefits an unquestionably deserving group, the low-income elderly and the low-income disabled. This, unfortunately, does not make the rate less preferential. To find otherwise would empower the PUC, an appointed, nonelected body, to create a special rate for any group it determined to be deserving. The legislature clearly provided against such discretionary power when it prohibited public utilities from granting "any preference." In addition, section 40-3-102, C.R.S.1973, directs the PUC to prevent unjust discriminatory rates. Establishing a discount gas rate plan which differentiates between economically needy individuals who receive the same service is unjustly discriminatory.

To conclude, although the PUC has been granted broad rate making powers by Article XXV of the Colorado Constitution, the PUC's power to effect social policy through preferential rate making is restricted by statute no matter how deserving the group benefiting from the preferential rate may be.

We affirm the judgment of the trial court.

PRINGLE and CARRIGAN, JJ., dissent.

PRINGLE, Justice, dissenting:

I respectfully dissent because I agree in principle with the views enunciated by Mr. Justice Carrigan in his dissenting opinion.

CARRIGAN, Justice, dissenting:

I respectfully dissent.

The question is whether, in adopting reduced gas rates for two classes of low-income customers the elderly and the disabled the P.U.C. has established preferential and unjustly discriminatory rates forbidden by sections 40-3-102 and 40-3-106(1). In my view the P.U.C. has acted within its constitutional and statutory authority.

The majority opinion acknowledges that the determination of utility rates is a purely legislative function which has been delegated, in the first instance, to the P.U.C. by Article XXV of the Colorado Constitution. This Court has previously stated that the P.U.C. in the area of utility ratemaking has "broadly based authority to do whatever it deems necessary or convenient to accomplish the legislative (ratemaking) functions delegated to it." Mountain States Telephone and Telegraph Co. v. Public Utilities Commission, Colo., 576 P.2d 544, 547 (1978).

Unfortunately, the majority opinion fails adequately to recognize that the P.U.C.'s legislative authority includes the power to initiate public policy in the narrow, specialized area of ratemaking, subject to the General Assembly's power to overrule any P.U.C. rate policy with which it disagrees. As I read the law, only the General Assembly, and not this Court, has authority to overrule the public policy embodied in a rate plan adopted by the P.U.C.

For example, for many years the P.U.C. has implemented a policy, created by it alone, charging lower rates for electric power to those who use larger amounts of electricity. I. e., as the amount of electricity a customer uses goes up, the cost per unit goes down. Clearly, if the General Assembly should decide that such a policy unwisely encourages overuse, or waste, of electrical energy, it could overrule the policy by specific legislation. But this Court could not overrule it by case law if we were to conclude that the policy is unwise, unjust or unreasonable. The effect of the majority opinion, when considered in the light of applicable statutes and prior case law, is to overrule the contested P.U.C. rate scheme for essentially these policy reasons. In my view the Court's action today oversteps the bounds of judicial review of P.U.C. ratemaking and invades the legislative prerogative.

The majority opinion depends entirely on characterization of the special rate classification here involved as a "preference" forbidden by section 40-3-106(1). Thus the decisive issue is whether the instant rate classification is so clearly of the type that the legislature intended to forbid when it enacted that section that it must be held to be a "preference" as a matter of law. The majority opinion cites no precedent or other authority for its holding and we have found no case law from any state dealing with the issue. Moreover the majority opinion fails to define the term "preference" for guidance of the P.U.C. in future cases. In effect the majority opinion has condemned the rate scheme here involved by saying, "We can't define a 'preference' but we know one when we see one." Such an Ad hoc determination does not provide needed rational standards as precedent for future cases.

Clearly the Colorado General Assembly could not actually have intended to outlaw the practice under review when it adopted the "preference" prohibition in 1913 (Colo.Sess.Laws 1913, ch. 127, § 18 at 473), for the P.U.C. did not create this rate plan until 1977 and it did not take effect until 1978. Obviously the 1913 General Assembly never contemplated and did not intend to prevent the P.U.C. from establishing lower gas rates for these two classes of customers, the low-income elderly and low-income handicapped.

Apparently, the purpose of section 40-3-106(1) was to prevent the public utilities' then-common practice of favoring certain customers with lower utility rates to the Competitive disadvantage of others in the Same class of customers similarly situated. Columbia Gas of N. Y., Inc. v. N. Y. State Elec. & Gas. Co., 28 N.Y.2d 117, 320 N.Y.S.2d 57, 268 N.E.2d 790 (1971); Hays v. Pennsylvania Co., 12 F. 309 (N.D.Ohio 1882).

The issue, therefore, becomes whether the statutory language so clearly forbids the P.U.C.'s...