Patton v. South Carolina Public Service Com'n, 22033

Citation312 S.E.2d 257,280 S.C. 288
Decision Date19 January 1984
Docket NumberNo. 22033,22033
CourtUnited States State Supreme Court of South Carolina
PartiesRay F. PATTON, Jr. d/b/a PPR & M Environmental Systems Company, Appellant, v. The SOUTH CAROLINA PUBLIC SERVICE COMMISSION, Respondent.

William E. Booth, III, Columbia, for appellant.

Arthur G. Fusco and C. Dukes Scott, Columbia, for respondent.

HARWELL, Justice:

In this utility rate case, appellant Ray F. Patton, Jr., appeals from a South Carolina Public Service Commission Order affirmed by the Circuit Court. We affirm and adopt so much of the court's order as is applicable to this appeal.

Appellant owns and operates a sole proprietorship, PPR & M Environmental Systems Company (PPR & M), which provides sewerage service to eight residential subdivisions, three commercial customers, and one elementary school in the upstate. On May 30, 1980, PPR & M filed an application with the respondent Public Service Commission (the Commission) seeking approval for increased rates. In its order dated August 22, 1980, the Commission approved a rate increase, but in an amount lower than that requested by appellant.

As the Circuit Court stated, "The instant appeal concerns the following matters: (1) the provisions of the Commission Order which find and conclude that an operating margin of 6.88% for the combined systems is fair and reasonable; (2) the provisions of the Commission Order which find and conclude that an expense for uncollectibles of 1% of revenue is appropriate; and (3) the provisions of the Commission Order which find and conclude that the rates approved for Linville Hills Subdivision shall not become effective until such time as the system has been upgraded to the standards set by the Department of Health and Environmental Control (DHEC), and such upgrading has been certified to and inspected by the Commission Staff.

Pursuant to S.C.Code Ann. § 1-23-380 (1982), a court may not substitute its judgment for that of the Commission as to the weight of the evidence on questions of fact. The findings of the Commission are presumptively correct and have the force and effect of law. South Carolina Electric and Gas Co. v. Public Service Commission, 275 S.C. 487, 272 S.E.2d 793 (1980). Therefore, the burden of proof is on the party challenging an order of the Commission to show that it is unsupported by substantial evidence and that the decision is clearly erroneous in view of the substantial evidence on the whole record. Cf. Lark v. Bi-Lo, Inc., 276 S.C. 130, 276 S.E.2d 304 (1981). The Public Service Commission is recognized as the "expert" designated by the legislature to make policy determinations regarding utility rates; thus, the role of a court reviewing such decisions is very limited. See, e.g., Southern Bell Tel. and Tel. Co. v. Public Service Comm., 270 S.C. 590, 244 S.E.2d 278 (1978).

The essence of the first issue raised by the Complaint is that an operating margin of 6.88% is unfair and unreasonable as it constitutes a low return to the owner of PPR & M for time invested in his utility business. In considering this issue the Court notes with particularity S.C.Code Ann. § 58-5-210 (1976), which grants to the Commission the 'power and jurisdiction to supervise and regulate the rates and service of every public utility in this State....' The record of this proceeding indicates that the Commission, in determining the just and reasonable operating margin for PPR & M, examined the relationship between the Company's expenses, revenues and investment in an historic test period as well as the quality of service provided to its customers. After due consideration of these factors, the Commission, in exercising its statutorily delegated authority, approved a schedule of rates and charges for sewerage service rendered by PPR & M that resulted in an operating margin of 6.88% for its combined operations. In so doing, the Commission discussed the decisions of Bluefield Water Works and Improving Co. v. Public Service Commission of West Virginia, 262 U.S. 679, 43 S.Ct. 675, 67 L.Ed. 1176 (1923) and Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333 (1944) which provide that the Commission does not insure through regulation that a utility will produce net revenues or profits such as are realized or anticipated in highly profitable enterprises or speculative ventures. The Commission's Order reveals that in allowing an operating margin of 6.88%, PPR & M was given the opportunity to earn $6,454 total income for return after payment of its expenses. Thus, the Commission did allow the utility an...

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