N. States Power Co. v. Pub. Serv. Comm'n

• Decision Date: 06 March 1944
• Docket Number: No. 6862.,6862.
• Citation: 13 N.W.2d 779,73 N.D. 211
• Parties: NORTHERN STATES POWER CO. v. PUBLIC SERVICE COMMISSION et al.
• Court: North Dakota Supreme Court

73 N.D. 211

13 N.W.2d 779

NORTHERN STATES POWER CO.

v.PUBLIC SERVICE COMMISSION et al.

No. 6862.

Supreme Court of North Dakota.

March 6, 1944.

Appeal from Dist Court. Cass County; Daniel B. Holt, Judge.

Proceeding by Northern States Power Company, a Minnesota corporation, against the Public Service Commission of the State of North Dakota and others by way of an appeal from a decision of the Commission ordering a reduction in rates. From a judgment for plaintiff requiring the Commission to amend its order in the respects specified, the Commission and others appeal.

Affirmed in part, and reversed in part.

Syllabus by the Court.

1. Public Service Commission may, upon notice to the public utility affected and after affording the utility an opportunity to be heard, amend its order fixing rates of return and depreciation allowable to such utility.

2. A notice to a utility stating that a hearing would be held and that evidence would be taken relative to the question of rates and to the operation, property and condition of the property of the utility was sufficient to authorize the Public Service Commission to consider an amendment to a prior order fixing rates of return and depreciation for the utility.

3. Public Service Commission must base its decisions upon evidence disclosed at a hearing and incorporated in the record.

4. Amendment of the Public Service Commission's order directing that the rate of return allowable to a utility, originally fixed at 6 percent of fair value, be reduced to 5.5 percent of fair value must be set aside where it appeared the Commission's finding rested upon evidence which was not in the record.

5. Amendment of the Public Service Commission's order directing that the rate of depreciation allowable to a utility originally fixed at 4 per cent be reduced to 3.5 percent must be set aside where there is no evidence in the record which would justify such a reduction.

6. A court has exclusive jurisdiction over moneys deposited in court pursuant to its order.

7. The Legislature of this state has adopted the fair value formula as set forth in Smyth v. Ames, 169 U.S. 466, 18 S.Ct. 418, 42 L.Ed. 819, and as modified by subsequent decisions of the Supreme Court of the United States as the formula for determining rate bases for public utilities.

8. The weight to be given to historical cost, reproduction cost and other classes of evidence in a consideration of the value of a utility's property is to be determined in the light of the facts of the case.

9. In the light of the principle that fair value must include the increase in value over original cost, the Public Service Commission may not disregard evidence of reproduction cost or refuse to give such evidence weight as one of the major factors in reaching its conclusions as to fair value.

10. Where the Public Service Commission gave equal weight to reproduction cost and historical cost in reaching its conclusions as to fair value it did give weight to reproduction cost as a major factor.

11. Upon an appeal from a decision of the Public Service Commission it is the court's duty to exercise its independent judgment on the evidence but the Commission's findings of fact are entitled to great weight.

12. The value o a utility may properly be limited to the sum upon which it can earn a fair return at rates for service which the utility concedes are proper.

13. Public Service Commission may depreciate historical cost before giving it consideration in determining fair value where the affected utility has made a practice of charging annual depreciation.

14. In an investigation of the value of the property of a public utility for the purpose of establishing a rate base, the value which must be ascertained is the reasonable value of the utility's property used or useful for the public service at the time it is being so used.

15. The allowance to a utility of interest upon its cumulative investment in construction costs during the time of the construction of new facilities, is sufficient compensation until such new facilities are used for the public service.

16. Statute providing that no order for valuation or revaluation shall be made or filed more than once in every three years does not prohibit the Public Service Commission from including in its final order in an investigation as to value, separate rate bases for the years the investigation was in progress.

17. It is general price trends and not intermediate or abnormal fluctuations in price which must be considered in the computation of reproduction cost of a utility's property.

18. The Public Service Commission has the power to originate and establish schedules of rates for public utilities.C. F. Kelsch, Asst. Atty. Gen., for defendants and appellants.

Nilles, Oehlert & Nilles, of Fargo, for plaintiff and respondent.

BURKE, Judge.

This appeal concerns an order of the Public Service Commission fixing rates to be charged by the Northern States Power Company at Fargo. Upon a former appeal in this case (Northern States Power Co. v. Board of Railroad Commissioners, 71 N.D. 1, 298 N.W. 423) this court held that the Commission had erred in computing the fair value of the company's properties and ordered that the entire proceeding be returned to the Commission for further consideration in the light of the decision of that appeal. After a reconsideration the Commission issued a new order. The Company appealed from this order to the District Court of Cass County. The District Court held that the appeal was well taken and made and entered its judgment requiring the Commission to amend its new order in the following respects:

1. That it set aside that part of its order fixing the company's rate of return at 5.5 percent of fair value and fix a new rate at not less than 6 percent of fair value.

2. That it set aside its order allowing the company depreciation upon the property of the company's electric property at 3.5 percent and allow a depreciation of not less than 4 percent.

3. That it vacate and set aside its order directing the company to present proposals to the Commission for refunding excess charges which have been collected and deposited in court.

4. That it set aside its finding of fair value and treat reproduction cost depreciated as the principal factor in making a new finding of fair value.

5. That is computing fair value, the Commission should give weight to historical cost undepreciated.

6. That it include the cost of a new steam plant in the rate base applicable to the year 1938.

7. That it set aside its establishment of separate rate bases for the years ending December 31, 1938 and December 31, 1939, and make the rate base established of December 31, 1937 applicable for the three subsequent years.

8. That it make allowance for increased price levels in establishing the rate base applicable to the year 1941 and subsequent years.

9. That after fixing a just rate base and a lawful rate of return, it permit the company to originate and file a set of rate schedules which will produce the earnings to which the company is entitled by law, subject to the right of the Commission to set aside any rates so prescribed which are discriminatory or otherwise unlawful.

10. That it allow the company a return of 6 percent on the unamortized portion of the cost of the lease on the steam plant site.

The Commission has appealed from the judgment of the District Court. The questions before us upon this appeal are limited to those which arise upon a consideration of the propriety of this judgment.

We shall direct our attention first to the attack made upon the rate of return which was fixed by the Commission at 5.5 percent of fair value. This attack is two-fold. In the order from which the former appeal was taken the Commission had fixed the rate of return at 6 percent of fair value. The company did not appeal from that part of the order. It now contends, that as to those of its parts which were not challenged upon the former appeal, the order became final, and that after that appeal the Commission was without power to amend the original order except as to those matters upon which amendments had been directed by order of the court. The company also urges that a rate of return of less than 6 percent is inadequate and confiscatory.

The trial court found “The second hearing by the Commission was not a trial de novo. It was to correct errors pointed out by the Supreme Court. If that is so then the rate base fixed in that proceeding, by express order of the Supreme Court was to become effective as of the first billing subsequent to March 11, 1938, and no order fixing a rate base could be made for three years from that date.” Sec. 6, Ch. 205, S.L.1937, and Sec. 2, Ch. 203, S.L.1937.

It is true, as the trial court indicated, that this court ordered that the case be returned to the Commission for the purpose of correcting its order as to specific matters in which this court declared that the Commission had exceeded its authority. This court considered and decided the questions which were before it upon the appeal. The order was necessarily limited and it cannot be interpreted as prohibiting a reconsideration, by the Commission upon regaining jurisdiction of the case, of those parts of the original order which were not challenged upon the first appeal. The power of the Commission to amend its orders rests entirely upon statutory authority. Section 4609c32 Supp. to Compiled Laws 1925, provides:

“The commissioners may, at any time, upon notice to the public utility affected and after opportunity to be heard as provided in the case of complaints, rescind, alter or amend any decision made by it. Any order rescinding, altering or amending a prior order or decision shall, when served upon the public utility affected, have the same effect as is herein provided for original orders or decisions.”

This statute clearly gives the Commission the power to amend its orders at any time subject to the requirement that it give...