Pittsburg & West Virginia Gas Co. v. Public Service Commission of W.Va.
| Decision Date | 23 February 1926 |
| Docket Number | 5627. |
| Citation | 132 S.E. 497,101 W.Va. 63 |
| Parties | PITTSBURG & WEST VIRGINIA GAS CO. v. PUBLIC SERVICE COMMISSION OF WEST VIRGINIA et al. |
| Court | West Virginia Supreme Court |
Submitted February 3, 1926.
Rehearing Denied April 24, 1926.
Syllabus by the Court.
An order of the Public Service Commission, fixing rates to be charged by a public service utility, within the constitutional and legislative power of the Commission, will not be disturbed, unless it appears that the finding of fact on which the order is based is contrary to evidence, or without evidence, or there has been a misapplication of legal principles; and, where there is a substantial conflict of evidence on any question of fact, the probative value accorded by the commission to such evidence will not be disturbed.
When a rate fixed by the commission is attacked as confiscatory, the burden of proving it to be so is upon the public utility and, unless the evidence is clear that the rate is too low to afford a reasonable return on the value of the property used and useful in the service of the public, the order fixing the rate will not be disturbed.
A case where a return of 16.72 per cent. to a gas company serving the public on a rate base, offered and accepted by the commission for the purpose of fixing rates, is held not to be confiscatory.
The Pittsburg & West Virginia Gas Company applied to the Public Service Commission of West Virginia for an increase in rates and the City of Grafton and others interposed protests. Increase was refused, and gas company brings a petition to suspend the order of the Public Service Commission. Petition dismissed.
Conley & Johnson, of Charleston, and A. W. Robertson, and B. U McClintock, both of Pittsburgh, Pa., for petitioner.
F. M. Livezey, of Huntington, for respondent Public Service Commission.
G. W. Ford, of Grafton, for respondent City of Grafton.
The Pittsburg & West Virginia Gas Company, a public utility corporation, complains of an order of the Public Service Commission refusing to complainant a raise in its rates to its industrial and domestic consumers in this state, on the ground that the rates now in effect are confiscatory.
The application for increase in rates was tiled in December of 1924. Protests were interposed by individual consumers and by the city of Grafton; evidence was taken on the part of the applicant, and the commission caused an audit and report of the books and affairs of the utility to be taken and filed. The case was submitted for decision on June 22, 1925, briefs were filed in July of that year, and the order denying increased rates was entered November 19, 1925. The rate in effect at the time of the application was 40 cents per thousand cubic feet, less 2 cents for prompt payment. The increased rates asked for are 53 cents per thousands for the first 100,000 cubic feet, 48 cents for the next 400,000 cubic feet, and 43 cents for all gas used above this amount, less 3 cents for prompt payment, and a minimum meter charge of $1 per month. The two classes of consumers are "wholesale" consumers, who are charged an average rate of 31.9 cents, and the "domestic and industrial consumers," the rate being 40 cents and 38.9 cents, respectively, to them. The bulk of the wholesale gas sales goes to the Equitable Gas Company, a subsidiary or affiliated company, at the Pennsylvania line, for 32 cents (for the year 1925, the Equitable was to pay 37 cents). The new rate was to apply to the domestic and industrial consumers in this state.
Complaint is made that the commission erroneously adopted the rate base of $14,065,421.51 as the value of the property of the utility used and useful in the public service; that the commission gave no consideration or weight to the utility's evidence to the effect that its income for the year 1925 would, in strong probability, decrease, while its costs of service to the consumer would increase, nor did the commission give any consideration or weight to its evidence of its present cost of service to its industrial and domestic consumers in West Virginia. The major emphasis is upon the point that the commission did not consider or give due weight to complainant's evidence as to the estimated net earnings for the year 1925; therefore the findings of the commission were without evidence to support them, and were in direct conflict with the uncontradicted evidence of complainant.
Was the commission in error in ascertaining $14,065,421.51 as the rate basis? A witness was introduced by the utility who testified that the reproduction cost of the utility's plant new, including going concern value and working capital, less depreciation, was $23,988,137. The utility, not desiring a revaluation of its property used and useful in the public service, which involved loss of money and time, stated by its counsel that the evidence of reproduction new value was offered as an index to show the book value was much less than the actual value. "But inasmuch as the proposed increase in rates would not produce a fair return upon the book value, therefore it was unnecessary to go farther into the real value." The evidence of reproduction value new was put in as persuasive for increased rates on the book value. Neither the applicant nor the commission then went further to ascertain the actual value, and the case proceeded upon the theory that the book value as claimed by the utility, $14,065,421.51, was the rate base for the purpose of the application. The commission accepted the book value contended for, as the rate base, and found in its order, "that the property of the petitioner has the value claimed by it for rate-making purposes, that is, $14,065,421.51, and that said valuation must be accepted as the rate base herein." The utility having presented to the commission the book value as the rate basis, and the incomplete evidence of actual value as an "index," its contention now made in this court that the rate base is not the true one under the evidence, and that the commission was in error in not ascertaining the true basis to be $23,988,137, is not well founded. If it had appeared to the commission that the utility was contending for a rate base different from the book value, evidence no doubt would have been taken upon the various items of property. Expense and delay would have followed. The utility desired to avoid such delay, and expense, and by counsel so announced.
As before stated, the main point of error relied upon is the alleged failure of the commission to consider and accept the evidence of one of the officers of the utility, to the effect that reduced net earnings for the year 1925 would be at least $1,000,000 less than the net earnings for 1924. This loss of revenue was based on estimates of decreased gas sales and increased expenses for the year 1925. The net earnings for 1924 were estimated by this witness Hurlburt to be $1,190,677. This estimate was based on 10 months' actual operation, coupled with an estimate for the remaining months. The report of Williamson, who audited the books after the expiration of the year, showed the net income (depreciation allowed) to be $1,443,643.56, a considerable difference (after adding $94,408.76 net gasoline earnings) between the actual and estimated result. The probative value of estimates is inconsequential when compared with actualities. The commission had before it a comprehensive history of the utility, its financial operations, purchases, expenses, stock transactions, dividends, and depreciations, fluctuations in production and sales and the like, together with its developed and undeveloped gas territories, all of which could be considered by it in weighing the testimony of decreased sales and increased expenses for the year 1925. These estimates were necessarily speculative.
The burden is upon the utility asking for increased rates to prove that they are just and reasonable. Gas Co. v. Public Service Commission, 121 S.E. 716, 95 W.Va. 557. It will be observed that when the case was submitted nearly one-half of the year 1925 had expired, but there was no effort then made to reduce the estimates formerly submitted, to actual results. The best evidence would have been the decrease in gas sales and increase in costs of production covering the months then expired. The commission was entitled to the best evidence available. Past experience may always be considered in resolving future probabilities. We cannot say that the commission acted without evidence; nor can we say that the estimates of decreased sales and increased expenses founded largely upon conjecture should outweigh the actual facts and figures considered by the commission.
While we do not find in the record a written statement by the commission of its reason for the entry of the order, as contemplated in ...
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