Potomac Elec. Power v. P.S.C. of Dist. of Col.

• Decision Date: 16 February 1983
• Docket Number: No. 79-1159.,Bo. 79-1106.,79-1159.
• Citation: 457 A.2d 776
• Parties: POTOMAC ELECTRIC POWER COMPANY, Petitioner, v. PUBLIC SERVICE COMMISSION OF the DISTRICT OF COLUMBIA, Respondent, People's Counsel of the District of Columbia and Washington Metropolitan Area Transit Authority, Intervenors.
• Court: D.C. Court of Appeals

457 A.2d 776

POTOMAC ELECTRIC POWER COMPANY, Petitioner, v. PUBLIC SERVICE COMMISSION OF the DISTRICT OF COLUMBIA, Respondent People's Counsel of the District of Columbia and Washington Metropolitan Area Transit Authority, Intervenors.

No. 79-1159.

Bo. 79-1106.

District of Columbia Court of Appeals.

Argued October 9, 1981.

Decided February 16, 1983.

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William Dana Shapiro, Gen. Counsel, Washington, D.C., with whom Edward A. Caine, William C. Gardner and Betty K. Cauley, Washington, D.C., were on the briefs, for petitioner.

Lloyd N. Moore, Gen. Counsel, Washington, D.C., with whom Judith W. Rogers, Corp. Counsel, Richard W. Barton, Deputy Corp. Counsel at time brief was filed, and Melvin J. Washington, Asst. Corp. Counsel, Washington, D.C., were on the brief, for respondent.

Elizabeth A. Noel, Asst. People's Counsel, Washington, D.C., with whom Brian Lederer, People's Counsel, Washington, D.C., was on the brief, for intervenor People's Counsel.

Onkar N. Sharma, Asst. Gen. Counsel, Washington, D.C. was on the brief for intervenor Washington Metropolitan Area Transit Authority.

Before NEWMAN, Chief Judge, and KELLY and NEBEKER, Associate Judges.

NEWMAN, Chief Judge:

The Public Service Commission of the District of Columbia (Commission) denied two applications submitted by the Potomac Electric Power Company (PEPCO) for emergency rate relief.¹ In this consolidated appeal, PEPCO raises numerous objections to these decisions. It contends that the Commission's refusal to order an emergency increase in electric rates was arbitrary and constituted an unconstitutional confiscation of property. Additionally, PEPCO claims that it was improper for the Commission to evaluate its applications in light of the Company's overall financial situation, rather than only earnings on its District of Columbia operations. Finally, PEPCO complains that it was denied procedural due process by the Commission's dismissal of its second emergency rate relief application without a hearing. PEPCO asks this court to order the Commission to authorize a temporary rate surcharge enabling it to collect the revenues it would have gained had the Commission granted the requested emergency rate relief. We find PEPCO's arguments unpersuasive and affirm the Commission's orders.

I. BACKGROUND AND PROCEDURAL HISTORY

This case involves retail electric rates in the District of Columbia between June 1979 and May 1980. In June 1979, PEPCO filed an initial application for an emergency increase in its charges for electric service within the District of Columbia. PEPCO proposed to collect this increase subject to refund pending final decision on its related application for a permanent rate increase. In May 1980, the Commission granted PEPCO a permanent rate increase pursuant to the related application, thereby alleviating PEPCO's alleged emergency. PEPCO now seeks to recapture the revenue to which it argues it was entitled for the period from August 17, 1979, when the Commission denied PEPCO's initial request for emergency rate relief, to May 31, 1980, when the permanent rate increase went into effect.²

A summary of PEPCO's recent rate history is essential for a complete understanding of the issues. In November 1975, the Commission granted PEPCO a permanent increase in retail rates of $27,657,000. Immediately thereafter in December 1975, PEPCO filed another application which, as amended, requested a permanent rate increase of $57,578,000. In December 1976, as a result of this application, PEPCO received a $29,411,000 permanent rate increase.

In July 1977, PEPCO filed another application for a permanent increase which was considered by the Commission in Formal Case 685. As amended, this application sought to increase the Company's annual gross operating revenues by approximately $44.9 million. This request was based on 1977 test year data. While this case was still pending, PEPCO filed another permanent rate increase application. This application, considered in Formal Case 715, initially sought an annual increase in retail rates of $15,464,000.

On June 14, 1979, the Commission issued a proposed order in Formal Case 685 (Order No. 6096). It recommended that PEPCO be allowed to receive a 9.03% rate of return³ through a permanent rate increase of approximately $5.8 million. A day later, the Commission allowed PEPCO to begin collecting this proposed revenue increase pending the issuance of a final order. The final order essentially adopted the proposals of Order 6096 by authorizing a permanent rate increase of $5,890,000.

The authorized increase in Formal Case 685 was significantly less than the requested rate increase of $44.9 million. Thus, in July 1979, PEPCO revised its application for new permanent rates in Formal Case 715 to request an increase in revenues of approximately $48.1 million over the revenue level authorized in Case 685. Additionally, before the final order in Case 685 was issued, PEPCO filed its initial application for emergency rate relief as part of Case 715. This application, as amended, sought an immediate $22,945,000 rate increase pending the disposition of its application for new permanent rates.

Therefore, in July 1979, shortly after the completion of Formal Case 685, PEPCO had two outstanding applications for rate relief. A primary application sought a permanent rate increase of $48,079,000 in annual revenue based on a test year ending June 1979. An emergency rate application sought the immediate authorization of $22,945,000 of that $48.1 million.

This application for emergency rate relief was the subject of a Commission hearing in July 1979, before any hearings were held in the connected permanent rate case.⁴ The Commission took testimony from PEPCO officials and heard oral argument on motions to dismiss filed by intervenors Washington Metropolitan Area Transit Authority, the General Services Administration, the Office of People's Counsel, and the Commission staff. On August 17, 1979, the Commission issued Order and Opinion 7020 granting the motions to dismiss. The Commission found that PEPCO's allegations, even if taken as proven, failed to demonstrate the extraordinary circumstances necessary to establish a prima facie case for emergency relief. After their motion for expedited reconsideration was denied, PEPCO filed a second application for emergency relief on August 27, 1979. The Commission directed PEPCO to submit "a list of factual and legal grounds relied on in the second application that were not similarly advanced" in the first application. After PEPCO responded, the Commission dismissed the second application without a hearing. PEPCO appealed each dismissal separately. The appeals were consolidated by a prior order of this court.

Thus, after the Commission's dismissals of PEPCO's emergency relief applications, PEPCO continued to operate under the rate structure established in Formal Case 685 until a permanent $35.5 million rate increase was granted in Formal Case 715. (Opinion and Order 7135, May 15, 1980). In an unpublished order denying respondent's motion to dismiss, this court has decided that the permanent rate increase granted PEPCO in Formal Case 715 does not render the present appeals moot.

II. SCOPE OF REVIEW

This court has jurisdiction to hear appeals from an order or decision of the Public Service Commission of the District of Columbia. D.C.Code 1981, § 43-905. Our scope of review is, however, "limited to questions of law, including constitutional questions, and the findings of fact by the Commission shall be conclusive unless it shall appear that such findings of the Commission are unreasonable, arbitrary or capricious." D.C.Code 1981, § 43-906. See, e.g., Metropolitan Washington Board of Trade v. Public Service Commission, D.C. App., 432 A.2d 343, 351 (1981); Potomac Electric Power Co. v. Public Service Commission, D.C.App., 402 A.2d 14, 17 (en banc), cert. denied, 444 U.S. 926, 100 S.Ct. 265, 62 L.Ed.2d 182 (1979); People's Counsel v. Public Service Commission, D.C.App., 399 A.2d 43, 45 (1979); Washington Public Interest Organization v. Public Service Commission, D.C.App., 393 A.2d 71, 75 (1978), cert. denied, 444 U.S. 926, 100 S.Ct. 265, 62 L.Ed.2d 182 (1979).

Our scope of review of public utility commission orders is the narrowest judicial review in the field of administrative law. Potomac Electric Power Co. v. Public Service Commission, supra at 17. This is because Congress vested the sole ratemaking authority in the expertise of the Public Service Commission. The Commission, not this court, has the sole responsibility for balancing consumer and investor interests in designing rate structures and approving specific charges. D.C.Code 1981, §§ 43-501, -601, -611; People's Counsel v. Public Service Commission, supra. While we must ascertain that, in striking a balance between the competing consumer and investor interests, "the Commission has given reasoned consideration to each of the pertinent factors," id. at 45-46 (quoting Permian Basin Area Rate Cases, 390 U.S. 747, 792, 88 S.Ct. 1344, 1373, 20 L.Ed.2d 312 (1968)), we must not substitute our judgment for that of the Commission. Metropolitan Washington Board of Trade v. Public Service Commission, supra at 352; accord Permian Basin Area Rate Cases, supra 390 U.S. at 792, 88 S.Ct. at 1373; Potomac Electric Power Co. v. Public Service Commission, supra at 18. Even though we might arrive at a somewhat different decision than did the Commission, if there is substantial evidence to support the Commission's findings and conclusions and the Commission has given reasoned consideration to each of the pertinent factors, we must affirm. Permian Basin Area Rate Cases, supra at 792, 88 S.Ct. at 1373; Potomac Electric Power Company v. Public Service Commission, supra at 17; Williams v. Washington Metropolitan Area Transit Commission, 134 U.S. App.D.C. 342, 362, 415 F.2d 922, 942 (1968), cert. denied, ...