Petition of Green Mountain Power Corp.

• Decision Date: 26 April 1973
• Docket Number: No. 168-72,168-72
• Citation: 305 A.2d 571,131 Vt. 284
• Parties: Petition of GREEN MOUNTAIN POWER CORPORATION re Increased Rates.
• Court: Vermont Supreme Court

Page 571

305 A.2d 571

131 Vt. 284

Petition of GREEN MOUNTAIN POWER CORPORATION re Increased Rates.

No. 168-72.

Supreme Court of Vermont.

April 26, 1973.

Paul, Frank & Collins, and Paul D. Sheehey, Burlington, for Green Mountain Power Corp

Robert A. Mello, Montpelier, for Vermont Public Service Board.

Charles R. Ross, Hinesburg, for the Public.

Ray R. Dinwiddie, Winooski, pro se.

Before SHANGRAW, C. J., and BARNEY, SMITH, KEYSER and DALEY, JJ.

DALEY, Justice.

This case was commenced on May 13, 1971, when Green Mountain Power Corporation filed a petition with the Public Service Board in which it proposed a proportionate increase in all of its retail rates, except rates for street and area lighting, effective June 12, 1971. Under the rate schedule proposed by Green Mountain, the increase would have added an estimated $2,500.000 or 17.85% annually to Green Mountain's operating revenues subject to the jurisdiction of the Board.

Before the rate schedule proposed by Green Mountain became effective, it was suspended by the Board in a temporary order pursuant to the provisions of $30 V.S.A. § 227. In its temporary order the Board further ordered an investigation into the rate change proposed by Green Mountain, and public hearings.

Green Mountain serves approximately 46,000 customers in an area roughly 25 miles wide and 90 miles long, extending across north central Vermount, and, in addition, it also serves four noncontiguous areas in southern and southeastern Vermont. It also sells and transmits power to six municipal and two cooperative systems; however, the rates applicable to those wholesale customers are not involved in this case.

The two major factors prompting Green Mountain to request an increase in rates were the increased cost of fuel, and the rising cost of money. These two factors have had an unusually large impact upon Green Mountain because of its high rate of growth and because of its large proportion of purchased power. For a five year period ending March 31, 1971, its sales have grown from 391.946 MWH in 1965 to 828,927 MWH in 1971. During the same period, Green Mountain added only a small At a pre-hearing conference held on September 3, 1971, procedures to govern the proceeding were established, and a test year of April 1, 1970, through March 31, 1971, was agreed upon. Notices of the hearings on the petition were sent and several hearings were held throughout the remainder of 1971.

amount of generating capacity, and at the time this petition was heard by the Board, it purchased 87% of its power requirements.

Upon the passing of six months from the effective date of the proposed increase in rates, the suspension of the increase ordered by the Board in its temporary order expired. On December 21, 1971, the proposed rate schedule was put into effect by Green Mountain, as permitted by 30 V.S.A. § 226, and pursuant to a bond approved by the Board subject to refund within thirty days of the Board's final determination of this case.

Proposed findings and replies thereto were filed by both the public and Green Mountain early in 1972. In response to these requests, the Board, on April 12, 1972, made its findings of fact and its order granting Green Mountain an increase in its rates. Requests for reconsideration of the Board's April 12, 1972, findings and order were then filed by Green Mountain, the public, and one Ray Dinwiddie. Further supplemental findings were then made by the Board on May 3, 1972, and on July 19, 1972.

The rate increase granted by the Board to Green Mountain provided it with annual additional retail revenues in the amount of $2,016.344. For most of the various classes of customers this meant an increase of 14.3% over the existing rates; however, large residential and commercial space heating users received an increase of 23%, and Limited Power F a 21% increase. At the time the findings were made, the percentage increase to Power Rate 14 could not be accurately stated.

The rate increase granted by the Board to Green Mountain was premised upon its finding that Green Mountain had jurisdictional operating revenues for the test year of $14,603.627, operating expenses apportionable to retail customers of $13,577,953, a jurisdictional rate base of $30,441,233, and a rate of return of 8.24%.

Although not requested by Green Mountain, the Board granted Green Mountain an automatic fuel adjustment clause. The Board also fashioned a new rate design for Green Mountain's electric heating customers which had the effect of causing them the bear a proportionately greater share of the cost of electric power than they had in the past. Finally, the Board certified the rate increase was consistent with the goals and purposes of the Economic Stabilization Program.

The public and Ray Dinwiddie have taken this appeal from the decision of the Board reported at 94 P.U.R.3d 417 (1972). Counsel for the public has secured from the Board fifty-nine questions, six of which have been briefed. Mr. Dinwiddie has briefed three questions. We shall in the course of this opinion take up the claims of the appellants which have been briefed; however, those questions not briefed are waived. Swanton Village v. Town of Highgate, 128 Vt. 401, 403, 264 A.2d 804 (1970).

FUEL ADJUSTMENT CLAUSE

The Board based its finding that a fuel adjustment clause would be appropriate here in part upon the testimony of an expert witness for the public, John W. McCabe, III. The Board found the clause to be appropriate because Green Mountain was in a period of drastically fluctuating fuel costs and uncertain fuel supply. In permitting a fuel adjustment clause, the Board also noted that while it did not generally approve automatic clauses of any kind, it had done so in the recent case of Central Vermont Public Service Corporation, reported at 94 P.U.R.3d 34 (1972). Opportunity was provided by the Board for other The public, in its motion for reconsideration, objected to the clause filed by Green Mountain and set forth its objections in considerable detail. These objections were responded to by the Board in its supplemental findings of July 19, 1972, and the clause proposed by Green Mountain was approved.

parties to comment on any such clause filed by Green Mountain, and the clause was made subject to final Board review and approval.

In general terms, the fuel adjustment clause approved by the Board for Green Mountain provides for an upward or downward adjustment of all rates corresponding to any increase or decrease in the cost of fuel from a base cost. The base cost for the purpose of computation of the fuel adjustment was taken as the costs during March, 1971, and, in the case of sources added since that date the cost was that during the first month in which the source was used. The adjustment applies to the cost of fuel for thermal electric generating equipment, whether such fuel is used by Green Mountain in its plants, or by other utilities in the generation of electricity purchased by Green Mountain, provided such fuel costs can be identified as a specific charge to Green Mountain by the supplier.

The question pertaining to the fuel adjustment clause as framed by the public and certified by the Public Service Board pursuant to V.R.A.P. 13(d) for review by this Court is:

'Whether the adoption of a fuel adjustment clause in this case is supported by substantial evidence and is just and reasonable as required by 30 V.S.A. § 218?'

At the outset we, as a reviewing Court, must establish what standard we are to apply when we view findings of fact made by the Public Service Board. The standard we previously applied, that being to accord the findings of fact the force and effect of a special master, has been amended. Cf. North v. City of Burlington Electric Light Department, 125 Vt. 240, 214 A.2d 82 (1965). The present standard is now set forth in 30 V.S.A. § 11(b) as follows: 'Upon appeal to the supreme court its (the Board's) findings of fact shall be accepted unless clearly erroneous.' This is the same standard of review which applies to findings of fact of a trial court under V.R.C.P. 52(a). Green Mountain Marble Co. v. State Highway Board, 130 Vt. 455, 457, 296 A.2d 198 (1972). As such, our standard of review varies from the substantial evidence standard applied by the federal courts when they review administrative proceedings. Compare Gainesville Utilities Department v. Florida Power Corporation, 402 U.S. 515, 91 S.Ct. 1592, 29 L.Ed.2d 74 (1972), with 4 K. Davis, Administrative Law Treatise § 29.02 at 121 (1958).

In a rate proceeding the powers and duties of the Public Service Board are set forth in 30 V.S.A. § 218, which provides in part:

'When, upon hearing, the rates, tolls, charges or schedules are found unjust, unreasonable, insufficient or unjustly discriminatory, or are found to be preferential or otherwise in violation of a provision of this chapter, the board may order and substitute therefor such rates, tolls, charges or schedules, and make such changes in any regulations, measurements, practices or acts of such company relating to its service, and may make such order as will compel the furnishing of such adequate service as shall at such hearing be found by it to be just and reasonable.'

In fulfilling this responsibility, it is the duty of the Board to first find that the present rate is unjust or unreasonable, and then it is the duty of the Board to make such changes as it finds will make the rates just and reasonable. Petition of Milton Water Corp., 125 Vt. 487, 492, 218 A.2d 710 (1966).

A review of the testimony elicited from public's witness McCabe by counsel for the In his review of what should be reflected in a fuel adjustment clause for Green Mountain, Mr. McCabe testified any such clause should be drafted so as to take into consideration both increases and decreases in the cost of fuel. He also testified such a clause should not encompass energy produced by atomic or hydro facilities now in...