Nucor Steel, a Div. of Nucor Corp. v. South Carolina Public Service Com'n, 23761

• Decision Date: 05 November 1992
• Docket Number: No. 23761,23761
• Citation: 426 S.E.2d 319,310 S.C. 539
• Court: South Carolina Supreme Court
• Parties: , Util. L. Rep. P 26,276 NUCOR STEEL, A DIVISION OF NUCOR CORPORATION, Appellant, v. SOUTH CAROLINA PUBLIC SERVICE COMMISSION, Carolina Power and Light Company, and Steven W. Hamm, Consumer Advocate for the State of South Carolina, Respondents. . Heard

Page 319

426 S.E.2d 319

310 S.C. 539, Util. L. Rep. P 26,276

NUCOR STEEL, A DIVISION OF NUCOR CORPORATION, Appellant, v. SOUTH CAROLINA PUBLIC SERVICE COMMISSION, Carolina Power and Light Company, and Steven W. Hamm, Consumer Advocate for the State of South Carolina, Respondents.

No. 23761.

Supreme Court of South Carolina.

Heard Nov. 5, 1992.

Decided Dec. 14, 1992.

Garrett A. Stone, and Julie B. Greenisen of Ritts, Brickfield & Kaufman, Washington, D.C., and Francis P. Mood of Sinkler & Boyd, P.A., Columbia, S.C., for appellant.

Steven W. Hamm, Raymond E. Lark, Jr., and Nancy Vaughn Coombs, Columbia, for respondent Consumer Advocate for State of S.C.

Marsha A. Ward, Columbia, for South Carolina Public Service Com'n.

William Frederick Austin, Columbia, and Len S. Anthony, Raleigh, N.C., for respondent Carolina Power & Light Co.

TOAL, Justice:

This utility rate case arises from a circuit court order which reviewed a semi-annual rate adjustment decision of the South Carolina Public Service Commission (PSC). We reverse in part and affirm in part.

Facts

When a nuclear power plant is operated efficiently, the associated fuel costs are significantly less than the costs for fossil fuel power generation. When a nuclear power plant is not producing at capacity, or suffers any downtime, the additional fuel costs are then computed based on the cost differential between the different fuel types. Because of the fluctuation of fuel costs and their concurrent impact on the utility rate system, S.C.Code Ann. § 58-27-865 (1991) requires the PSC to address semi-annually the recovery of the cost of fuel used by utilities in providing electricity to South Carolina customers.

In accordance with the statute, a public hearing was held on September 19, 1990, by the PSC to determine whether Carolina Power and Light (CP & L) could recover their fuel costs for the previous semi-annual period. The evidence presented at the hearing centered around a three-week training outage, experienced by CP & L's Brunswick Nuclear Units 1 and 2, from May 20, 1990 to June 13, 1990. Based on the evidence, the PSC had to determine whether the outages experienced at the Brunswick facility were a result of imprudent or unreasonable management by CP & L. The PSC ruled that, although CP & L was imprudent and responsible for the outage, certain other CP & L actions, including their overall performance record, could be used to offset some of the excess fuel costs.

In an order dated February 4, 1992, Judge Walter J. Bristow, Jr. reviewed PSC Order No. 90-961 and affirmed in part, and remanded in part. Nucor Steel (Nucor), a large South Carolina customer of CP & L, appeals from the portion of the circuit court order which affirmed the PSC. ¹

Law/Analysis

The first question presented is whether the language of S.C.Code Ann. § 58-27-865(E) authorizes the PSC to make adjustments to the recoverable fuel costs, or whether the statute merely provides a test for the prudent or reasonable behavior of management. S.C.Code Ann. § 58-27-865(E) states:

[t]he Commission shall disallow recovery of any fuel costs that it finds without just cause to be the result of failure of the utility to make every reasonable effort to minimize fuel costs or any decision of the utility resulting in unreasonable fuel costs, giving due regard to reliability of service, economical generation mix, generating experience of comparable facilities, and minimization of the total cost of providing service.

Id. [emphasis added].

This statute was interpreted in Hamm v. South Carolina Public Service Commission, 291 S.C. 119, 352 S.E.2d 476 (1987), where we held that when higher fuel costs are incurred, and there is a finding of imprudence, the utility should not be allowed to pass on the additional fuel costs to their customers. Id. In this decision, we required that the record support any PSC finding that the fuel costs were reasonably incurred. Id. In Hamm, we were not required to interpret the language contained in the last portion of the statute. Unlike the case at bar, the key issue in Hamm focused on the PSC's finding of a reasonable effort to reduce fuel costs, and did not specifically address a PSC adjustment to the recoverable fuel costs.

We have traditionally given the PSC, just as any other agency, respectful consideration in their interpretation of a statute. Where an agency is charged with the execution of a statute, the agency's interpretation should not be overruled without cogent reason. South Carolina Cable Television Association v. Southern Bell Telephone and Telegraph Company, --- S.C. ----, 417 S.E.2d 586 (1992); Dunton v. South Carolina Board of Examiners in Optometry, 291 S.C. 221, 353 S.E.2d 132 (1987). Conversely, the PSC is created by statute and its authority is limited to that granted by the legislature. Atlantic Coast Line R. Co. v. South Carolina Public Service Commission, 245 S.C. 229, 139 S.E.2d 911 (1965).

In interpreting a statute, it is imperative that the statute be accorded its clear meaning. Helfrich v. Basington Sand & Gravel Co., 268 S.C. 236, 233 S.E.2d 291 (1977). The PSC has interpreted the language of the statute, in light of our holding in Hamm, as granting them the authority to make adjustments to the recoverable fuel costs. We disagree. The clear and unambiguous meaning of the statute is that the PSC shall not pass on to the consumer any increased fuel costs associated with management's imprudence. The phrase "giving due regard" modifies the reasonableness or prudence of a utility's decision, and can not be construed so as to create discretionary factors for the PSC's use in the computation of recoverable fuel costs.

After examining the statute's plain meaning and our previous decision in Hamm, at 119, 352 S.E.2d at 476, we find that the PSC exceeded their authority in adjusting the fuel costs. The factors of reliability of service, economical generation mix, generating experience of comparable facilities, and minimization of the total cost of providing service , can only be applied to the PSC's analysis of prudent or reasonable decision making. The PSC's determination that certain fuel costs were the result of CP & L management imprudence terminates the inquiry. The result is that any adjustment to non-recoverable fuel costs, using the statutory factors for the determination of imprudence, will be outside the PSC's scope of authority as granted by the legislature. Cf. Virginia Electric and Power Co. v. Division of Consumer Counsel, 220 Va. 930, 265 S.E.2d 697 (1980) (where the Virginia Supreme Court in interpreting a similar statute upheld a disallowance of fuel costs on the basis of a finding of imprudence).

The second question presented by Nucor is whether the PSC's 50% reduction of non-recoverable fuel costs was the result of an arbitrary decision, or supported by the evidence. We need not reach this issue in light of our interpretation of the statute. Nucor's third and fourth issues, however, are extremely relevant and must be addressed.

The third issue Nucor raises is whether the PSC's reduction of non-recoverable fuel costs, which reflects a two-week credit for maintenance testing during a forced training outage, was supported by the evidence. The PSC found that this management decision was reasonable and prudent. The record is replete with testimony, of both the company experts and the PSC staff witnesses, which supports this order. In Lark v. Bi-Lo, Inc., 276 S.C. 130, 135-36, 276 S.E.2d 304, 307 (1981), we analyzed the...