Porter v. South Carolina Public Service Com'n
| Decision Date | 04 June 1998 |
| Docket Number | No. 24833,24833 |
| Parties | , 188 P.U.R.4th 366 Philip S. PORTER, Consumer Advocate for the State of South Carolina, Appellant, v. SOUTH CAROLINA PUBLIC SERVICE COMMISSION and Piedmont Natural Gas Company, Respondents. . Heard |
| Court | South Carolina Supreme Court |
Phillip S. Porter, Nancy Vaughn Coombs, and Hana Pokorna-Williamson, all of the South Carolina Department of Consumer Affairs, Columbia, for appellant.
F. David Butler, of South Carolina Public Service Commission, Columbia, for respondent South Carolina Public Service Commission.
Dwight Drake and John E. Schmidt, both of Nelson Mullins Riley & Scarborough, Columbia and Jerry W. Amos, of Amos & Jeffries, L.L.P., Greensboro, NC, for respondent Piedmont Natural Gas Company.
The Consumer Advocate appeals the circuit court order affirming the Public Service Commission's (PSC) order in this utility rate case. We reverse in part and affirm in part.
Did the circuit court err in upholding the PSC's inclusion of Demand Side Management (DSM) costs in Piedmont's expenses?
Piedmont Natural Gas Co. (Piedmont) filed a request on May 8, 1995, for an increase in rates and charges and approval of revised depreciation rates. Piedmont also sought approval of DSM expenses. Piedmont had not incurred expenses related to DSM activities during the test year upon which the application was based, however, actual expenses were incurred during July and August 1995. The expenses for this two month period were annualized to reflect an on-going level of DSM costs. The PSC order issued on November 7, 1995, granted the rate increase and included the annualized expenses. The circuit court affirmed the PSC order.
The Consumer Advocate appeals the approval of DSM expenses on the basis that Piedmont did not comply with the requirements set forth in Piedmont's Integrated Resources Plan (IRP) Order. The Consumer Advocate contends that Piedmont did not provide any cost benefit analyses of its DSM programs as required in the Stipulation Agreement, therefore it failed to satisfy the conditions for recovery of DSM costs.
The circuit court held the Advocate's conclusion is inconsistent with the clear wording of the stipulation which states: "The failure of the Company to achieve the projected level of benefits for any specific DSM program, in and of itself, does not mean that the costs relating to the program are not recoverable." The PSC stated in its order that the intent and understanding of the parties who signed the stipulation is the best evidence of the meaning of the stipulation.
The Stipulation Agreement which was agreed to by all parties except the Consumer Advocate provides that certain criteria must be met before the recovery of any DSM cost is appropriate. The three criteria for cost recovery of DSM relate to the times: 1) prior to implementation, 2) during implementation (iii) At the time that the Company seeks to recover its DSM Costs, the Company must demonstrate that the level of benefits achieved from the program is consistent with the projected benefits and that the program has achieved an appropriate level of benefits at a reasonable cost. The Company must contrast the projected cost/benefits with the actual cost/benefits achieved and justify any failure to achieve the projected benefits. The failure of the Company to achieve the projected level of benefits for any specific DSM program, in and of itself, does not mean that the costs relating to the program are not recoverable. The DSM costs and benefits which are appropriate for the consideration of DSM Programs for purposes of cost-recovery are South Carolina system related costs and benefits.
and 3) at the time recovery is sought. In particular, the stipulation requires that:
(Emphasis added.)
The PSC's January 27, 1995, order approving the stipulation agreement states that the "Commission is not approving cost allocation or cost-recovery associated with IRP at this time, but such cost allocation and cost-recovery will be addressed in the Company's next general rate proceeding." The order provides that based on the stipulation it would be appropriate to seek DSM costs at the next general rate increase, however, it does not eliminate meeting the requirements set forth in the stipulation agreement.
The stipulation agreement provides that the Company must demonstrate a cost/benefit analysis when seeking recovery of DSM costs. The Consumer Advocate's witness testified that no demonstration of cost/benefit analysis was provided. While the stipulation provides that failure to achieve the projected benefits would not mean that costs are not recoverable, Piedmont did not comply with the threshold conditions for recovery of DSM costs as set forth in the stipulation agreement. Accordingly, the circuit court's order affirming the PSC on this issue is reversed as erroneous in view of the evidence in the record. S.C.Code Ann. § 1-23-380(A)(6)(e) (Supp.1997).
Did the circuit court violate the S.C. Energy Conservation and Efficiency Act of 1992 (Energy Act) by upholding the Commission's inclusion of DSM costs in Piedmont's expenses?
The Consumer Advocate asserts the order affirming the Commission's decision to allow recovery of projected DSM expenses without examining their cost effectiveness violates the Energy Act's mandate to provide investment incentives and reward cost-effective programs. We disagree.
The Energy Act states in part:
The South Carolina Public Service Commission may adopt procedures that encourage electrical utilities and public utilities providing gas services subject to the jurisdiction of the commission to invest in cost-effective energy efficient technologies and energy conservation programs. If adopted, these procedures must: provide incentives and cost recovery for energy suppliers and distributors who invest in energy supply and end-use technologies that are cost-effective....
S.C.Code Ann. § 58-37-20 (Supp.1997). The statute cited refers specifically to procedures adopted by the Commission. The Advocate essentially asserts this section expresses an intent that cost effectiveness be a part of energy conservation programs in general. This section alone would not require a...
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