Petition of Public Service Elec. and Gas Co.

• Decision Date: 26 June 1997
• Citation: 304 N.J.Super. 247,699 A.2d 1224
• Parties: In the Matter of the Petition of PUBLIC SERVICE ELECTRIC AND GAS COMPANY for Approval of an Increase in Electric and Gas Rates and for Changes in the Tariffs for Electric and Gas Service. In the Matter of the Petition of PUBLIC SERVICE ELECTRIC AND GAS COMPANY TO Revise its Customer Service Pricing Schedule.
• Court: New Jersey Superior Court — Appellate Division

Page 247

304 N.J.Super. 247

699 A.2d 1224

In the Matter of the Petition of PUBLIC SERVICE ELECTRIC AND

GAS COMPANY for Approval of an Increase in

Electric and Gas Rates and for Changes

in the Tariffs for Electric

and Gas Service.

In the Matter of the Petition of PUBLIC SERVICE ELECTRIC AND

GAS COMPANY TO Revise its Customer Service Pricing Schedule.

Superior Court of New Jersey,

Appellate Division.

Argued March 24, 1997.

Decided June 26, 1997.

Peter D. Dickson, Washington, DC, for appellant The Coalition for Fair Competition (Potter and Dickson, attorneys; Mr. Dickson and R. William Potter, Princeton, on the brief).

John A. Hoffman, Woodbridge, for respondent Public Service Electric and Gas Company (Wilentz, Goldman & Spitzer, attorneys; Francis E. Delany, Jr., and Richard Fryling, Corporate Rate Counsel; Mr. Hoffman, Christine D. Petruzzell and Hesser G. McBride, Jr., on the brief).

Helene S. Wallenstein, Senior Deputy Attorney General, for New Jersey Board of Public Utilities (Peter Verniero, Attorney General, attorney; Andrea M. Silkowitz, Assistant Attorney General, of counsel; Ms. Wallenstein, on the brief).

Before Judges LANDAU, WALLACE and KIMMELMAN.

The opinion of the Court was delivered by

WALLACE, JR., J.A.D.

This is a public utility rate case. The Coalition for Fair Competition and Daniel Chinitz (Coalition) appeal from a series of orders spanning December 1992 to May 1994 by the Board of Regulatory Commissioners (Board) granting rate petitions to Public Service Electric & Gas (PSE & G). The orders disposed of two consolidated rate petitions. One rate petition sought an increase in base rates for gas and electric services. The other petition sought an increase in charges for installing gas appliance parts and performing repair services. In this appeal, the Coalition challenges (1) the propriety of the Board's decision-making technique of adopting three comprehensive settlement agreements in place of its own independent analysis and findings of fact, and (2) the sufficiency of the evidence supporting the Board's ruling on the APSO petition. We affirm.

I

On October 1, 1991, PSE & G petitioned the Board for approval to increase its charges for the delivery and installation of gas appliance replacement parts and other related services. This petition was referred to as the Appliance Parts and Service Order (APSO) petition. PSE & G sought an average increase of 13.6% per appliance part and service order from the rates that had been implemented on August 8, 1990. On November 14, 1991, PSE & G petitioned the Board for an increase in its base rates for gas and electric services (Base Rate) in the total amount of 688.7 million. The two petitions were subsequently consolidated and transmitted to the Office of Administrative Law for hearing as a contested case.

In February 1992 the Coalition moved to intervene. The Coalition identified itself as a trade association with members in the heating, cooling, and appliance service business. It alleged that it would be injured if PSE & G were permitted to raise its base rates and to provide APSO services below cost to the detriment of the Coalition members. At the hearing on its motion to intervene on May 5, 1992, the Coalition noted that it wanted to appear solely with respect to the points raised in its motion and did not contemplate that its intervention would cause undue delay.

Daniel Chinitz, owner of a plumbing supply company joined in the motion to intervene. He claimed that he would be harmed if PSE & G's requests were granted. Rate Counsel ¹ supported the Coalition's motion to intervene. The Administrative Law Judge (ALJ) granted the motion and scheduled the end of August 1992 for consideration of the APSO case.

Fifty-nine days of evidentiary hearings were conducted before the ALJ between April 27, 1992 and August 27, 1992, generating over 12,000 pages of transcript and over 900 exhibits. The Coalition participated only on the two dates scheduled for the APSO portion of the hearings, August 24 and 25.

After closing the record on August 27, 1992, the ALJ established a briefing schedule and a schedule of settlement negotiations addressed to the Base Rate issues. The Coalition did not join in those negotiations.

The settlement negotiations resulted in three settlement agreements, referred to jointly as the "Stipulations," which purported to settle the issues involved in the Base Rate case. The first agreement was captioned the Revenue Requirement Stipulation. The parties executing this Stipulation were PSE & G, the Board Staff, Rate Counsel and one of the intervenors, Federal Executive Agencies. PSE & G had originally sought a $476.3 million increase in electric base revenues and a $145.5 million increase in gas base revenues. The signatories agreed to "an increase in electric base revenues of $235 million and an increase in gas base revenues of $35 million" and to a rate of return of 10.08% on both electric and gas. The Stipulation explained in detail how these figures were computed and expressed that the record and exhibits in evidence provided ample support for the Stipulation. Further the parties agreed that the Stipulation "represents a fair and reasonable overall disposition of this proceeding which protects and promotes the interests of the electric and gas customers and affords a reasonable level of rate relief which will enable [PSE & G] to continue to render safe, adequate and proper electric and gas service to the public." The parties also agreed that the Stipulations were intended to be a "full, final and complete resolution of the issues contained therein."

The second Stipulation was captioned the Electric Cost-of-Service/Rate Design Stipulation. This Stipulation was executed by the four signatories to the Revenue Requirement Stipulation, plus four other intervenors: New Jersey Food Council, Princeton University, New Jersey Industrial Energy Users, and Millen Industries, Inc. This Stipulation allocated the $235 million increase in electric base revenues among eleven listed "classes" of services and detailed charges for various services.

The third Stipulation was the Gas Cost-of-Service/Rate Design Stipulation. This Stipulation was signed by PSE & G, the Board Staff, Rate Counsel, and five intervenors: the Township of South Orange Village, the Township of Glen Ridge, the Montclair Cogeneration Project Associates Limited Partnership, New Jersey Industrial Energy Users, and North Atlantic Utilities. This Stipulation allocated the gas base-rate increase among four kinds of services: residential, general, large volume, and street lighting. It also detailed charges for various services.

After reviewing the history of the hearings and subsequent negotiations, the ALJ, in his initial decision dated December 14, 1992, noted that "all active parties" had submitted three Stipulations to settle all outstanding issues in the Base Rate case and that the APSO issues would be decided later. The ALJ stated:

After careful review, I FIND that the stipulations represent a fair and reasonable overall disposition of these proceedings which protects and promotes the interests of the electric and gas customers and affords a reasonable level of rate relief which will enable the Petitioner to continue to render safe, adequate and proper electric and gas service to the public, and is therefore in the public interest. The Stipulation[s] are attached hereto, and fully incorporated herein. I note that all active parties to these proceedings have executed these stipulation[s] of settlements.

The Coalition filed exceptions to the ALJ's decision. It asserted that PSE & G had sought successfully to remove the Coalition from the roster of parties during the negotiations over the Stipulations. The Coalition complained that it was denied the opportunity to engage in "horse trading," which it asserted was the essence of negotiation. It rejected the ALJ's premise that the issues of interest to them involving competition for appliance repairs could be resolved separately in the pending hearings in the APSO part of the case. It also insisted that the Stipulations in the Base Rate case had an "impact" on the APSO issues, and that, therefore, the Stipulations could not be accepted without the agreement of the Coalition. The Coalition urged the Board to conclude that there was no settlement to approve and to remand the matter to reopen the proceeding and to include the Coalition within the negotiation process.

At the Board's December 30, 1992 meeting, the Coalition began to argue in support of its exceptions. The Board's chairman interrupted and stated that the "proper place" for the Coalition's arguments was in the pending APSO proceeding. The chairman added that the Coalition could have attended but did not attend the numerous meetings at which the Stipulations were negotiated. Thereafter, the Board members voted to accept the Stipulations.

The Board issued its Summary Decision and Order the next day, concluding:

The Board FINDS these Stipulations represent a reasonable disposition of the issues in these matters which will enable the Company to continue to provide its customers with safe, adequate and proper service at just and reasonable rates, and that the Stipulations appropriately balance the interest of the utility's ratepayers and shareholders, and therefore, are in the public interest. Accordingly, the Board HEREBY ADOPTS the Initial Decision of ALJ McAfoos and the three Stipulations as its own and incorporates the Initial Decision and Stipulations into the within Order as if fully set forth herein....

The Board added that it was issuing a decision on a "summary" basis in order to implement the new rates by January 1, 1993, the date contemplated by the Stipulations and that a final decision would follow.

The Board considered the Coalition's concerns but agreed with the ALJ that those concerns could be addressed in the APSO case, concluding that:

In...