Petrolane Gas Service, Inc. v. Idaho Public Utilities Commission

• Decision Date: 07 June 1963
• Docket Number: No. 9288,9288
• Citation: 382 P.2d 777,85 Idaho 593
• Parties: PETROLANE GAS SERVICE, INC., Applicant-Appellant, v. IDAHO PUBLIC UTILITIES COMMISSION, Grantor-Respondent, and The Washington Water Power Company, Applicant-Respondent. Application of BONNER GAS COMPANY er al.
• Court: Idaho Supreme Court

Page 777

382 P.2d 777

85 Idaho 593

PETROLANE GAS SERVICE, INC., Applicant-Appellant, v. IDAHO PUBLIC UTILITIES COMMISSION, Grantor-Respondent, and The Washington Water Power Company, Applicant-Respondent Application of BONNER GAS COMPANY er al.

No. 9288.

Supreme Court of Idaho.

June 7, 1963.

Watt E. Prather of Prather & Wilson, Bonners Ferry, Robert V. Wills, Long Beach, Cal., for applicant-appellant Petrolane Gas Service, Inc.

Allan G. Shepard, Atty. Gen., and John B. Kugler, Asst. Atty. Gen., for grantor-respondent Idaho Public Utilities Commission.

Carey H. Nixon, Boise, W. J. Nixon, Bonners Ferry, Robert L. Simpson and Alan P. O'Kelly, of Paine, Lowe, Coffin, Herman & O'Kelly, Spokane, Wash., for applicant-respondent Washington Water Power Co.

SMITH, Justice.

Appellant Petrolane Gas Service, Inc., and respondent The Washington Water Power Company, are rival applicants for a certificate of convenience and necessity for distribution of natural gas in the communities of Sandpoint and Bonners Ferry, Idaho. Hereinafter appellant will be referred to as 'Petrolane,' respondent as 'Washington,' and grantor-respondent as the 'Commission.'

This cause was previously before this Court, the opinion being reported as Washington Water Power Co. v. Idaho Public Util. Comm., 84 Idaho 341, 372 P.2d 409. In accordance with such previous opinion, The Commission held an additional hearing August 15, 1962, and, on certain issues, received further evidence offered on behalf of both parties, the only issue relevant to this appeal being:

The feasibility of the Kootenai River crossing, and service to the north side of Bonners Ferry.

Thereafter, the Commission, October 3, 1962, issued its Order 6563 granting Washington a certificate of public convenience and necessity for distribution of natural gas in Sandpoint and Bonners Ferry, and canceling Certificate of Convenience and Necessity No. 245 previously issued to Petrolane. Following the issuance of Order 6563, Petrolane filed a petition for rehearing which the Commission, by its Order 6606, subsequently denied. Petrolane thereupon appealed from both orders.

This appeal, as did the previous appeal, involves the question as to which applicant, whether appellant Petrolane, or respondent Washington, is entitled to a certificate of public convenience and necessity to serve the communities of Sandpoint and Bonners Ferry.

The present appeal encompasses the facts related in the prior opinion, Washington Water Power Co. v. Idaho Public Util. Comm., supra, and additional facts developed at the hearing after the remittitur.

The determinative factual issue upon which the Commission chose the applicant Washington, over the other applicant Petrolane, was that of feasibility of service to the north side of Bonners Ferry to be in cluded in the initial installation of service to the communities of Sandpoint and Bonners Ferry.

The Commission, in its previous Order 6010, involved in the first appeal, found that service to the north side of Bonners Ferry was not initially feasible, and for that principal reason awarded a certificate of public convenience and necessity to Petrolane. Upon remittitur, and having received further evidence on this question, the Commission found that Washington's newly proposed plan, initially to include natural gas service to the north side of Bonners Ferry, is feasible. The Commission thereupon canceled the certificate of public convenience and necessity previously issued to Petrolane and issued such a certificate to Washington, for the furnishing of natural gas service to Sandpoint and Bonners Ferry, inasmuch as Washington proposed to include initial service to the north side of Bonners Ferry, whereas, appellant Petrolane did not propose to include such service initially to that area of Bonners Ferry.

While the principal question for review on this appeal is whether the evidence is sufficient to support the Commission's finding that service to the north side of Bonners Ferry is feasible, and whether the Commission regularly pursued its authority in the premises, nevertheless in our review on this appeal we shall dispose of Petrolane's various assignments of error.

Petrolane, by its first assignment, contends that it was denied due process of law in that the Commission based its findings and Order 6563 'upon calculations, conclusions and findings made outside the record,' without notice to Petrolane or opportunity afforded it to rebut the same. Such assertion relates to the Commission's computations of Petrolane's projected rate of return, referred to in the Commission's recitals in its Order 6563, which read:

'We have made further calculations from the exhibits submitted in evidence in this proceeding and find that the rate of return that would be earned from natural gas service in Sandpoint and Bonners Ferry, not including the north side, would exceed 7 1/2 per cent in the fourth and fifth year; and with the north side included, the rate would exceed 7 per cent in the fourth and fifth years. Such rate of earnings on an average net investment base would indicate to us that under the studies made by Petrolane the combined system including service to the north side would be feasible.'

The Commission refers to the record herein to show that its computations are based upon Petrolane's own evidence submitted in these proceedings. (See the Commission's Order 6010 referred to in Washington Water Power Co. v. Idaho Public Util. Comm., supra, which summarizes each applicant's anticipated investment necessary to construct a natural gas distribution system in the communities of Sandpoint and Bonners Ferry,--Washington's estimates including initial service to the north side of Bonners Ferry, and Petrolane excluding such service; also Petrolane's Exhibit N, introduced in evidence at the additional hearing after remittitur in the matter of the first appeal, particularly Tables C and D of that exhibit relating to Petrolane's estimated costs of distribution facilities for servicing the north side of Bonners Ferry, and like data as regards the combined systems of Sandpoint and Bonners Ferry, including the north side of Bonners Ferry.) In exemplification, we shall refer to those exhibits and to Petrolane's figures and computations therein contained, projected for the fourth and fifth years of the contemplated service; and shall ascertain whether any factor dehors the record, suggested to be considered by the Commission, and whether the record considered alone without application of any such factor, will indicate any adverse effect upon Petrolane's projected 'rate of return,' thus adversely to affect the aspect of feasibility of Petrolane servicing the north side of Bonners Ferry.

Petrolane's investment, shown by its exhibits, for the combined systems, excluding the north side facilities in Bonners Ferry, and set forth in the Commission's Order 6010, projected for the fourth year of service, shows the figure of $457,685; and for the fifth year, $486,385. For the fourth year, Petrolane's estimated additional investment for servicing the north side of Bonners Ferry is shown by Exhibit N, Table C, as $55,680, and for the fifth year, $59,110. The cumulative total at the end of the fourth year is $513,365, and at the end of the fifth year, $545,495.

Axiomatically, the year end total of estimated investment for the fourth years is the same as the beginning year total for the fifth year; and when such figure is added to the fifth year end figure and the total divided by two, such results in the figure of $529,430 as Petrolane's estimate of average plant investment for the fifth year, again shown by its own figures.

Petrolane's estimated operating expense for Sandpoint and Bonners Ferry including the north side for the fifth year (Exhibit N, Table D) is $42,905. The Commission, as one basis of computation, suggests the inclusion, as operation capital, of one-eighth of such figure of operating expense, or approximately $5,363, to be added to the figure $529,430 average plant investment for the fifth year, to arrive at a figure of total estimated plant investment of $534,793.

Petrolane shows its estimated plant depreciation for the entire system, including the north side of Bonners Ferry (Exhibit N, Table D) through the fourth year as $40,117; the average for the fifth year would be one-half of the total shown for that year, or $6,618; the accumulated total of depreciation averaged for the fifth year would amount to $46,735; such figure subtracted from $534,793, average plant investment for the fifth year would leave $488,058 net average plant investment for that year.

Finally, when Petrolane's estimated average net plant investment figure of $488,058 for the fifth year is divided into its estimated net revenue of $35,868 for the fifth year, the result is 7.35% estimated net rate of return. Figured in like manner from Petrolane's exhibits for the fourth year, a net rate of return of approximately 7.32% results.

All of the figures are taken from Petrolane's exhibits with the exception of the Commission's suggestion of inclusion of one-eighth of Petrolane's operating expense for the year under consideration, to be added to the average figure of plant investment for the particular year. However, as the Commission points out, if no figure of working capital is...