Public Utilities Commission v. Northwest Water Corp.

• Decision Date: 17 February 1969
• Docket Number: No. 23086,23086
• Citation: 451 P.2d 266,168 Colo. 154
• Parties: PUBLIC UTILITIES COMMISSION of Colorado, and the individual members thereof, Henry E. Zarlengo, Howard S. Bjelland and Ralph C. Horton, and Shaw Hts. Home Owners Assn., and Capitol Federal Savings & Loan Assn., Plaintiffs in Error, v. NORTHWEST WATER CORPORATION, a Colorado corporation, Defendant in Error.
• Court: Colorado Supreme Court

Page 266

451 P.2d 266

168 Colo. 154

PUBLIC UTILITIES COMMISSION of Colorado, and the individual members thereof, Henry E. Zarlengo, Howard S. Bjelland and Ralph C. Horton, and Shaw Hts. Home Owners Assn., and Capitol Federal Savings & Loan Assn., Plaintiffs in Error, v. NORTHWEST WATER CORPORATION, a Colorado corporation Defendant in Error.

No. 23086.

Supreme Court of Colorado, En Banc.

Feb. 17, 1969.

Rehearing Denied March 24, 1969.

Duke W. Dunbar, Atty. Gen., Robert Lee Kessler, Asst. Atty. Gen., Denver, for plaintiff in error Public Utilities Commission

John R. Barry, Denver, for plaintiff in error Shaw Hts. Home Owners Ass'n.

George S. Fuller, Denver, for plaintiff in error Capitol Federal Savings & Loan Ass'n.

Hayutin & Hayutin, Irving J. Hayutin, Denver, for defendant in error.

KELLEY, Justice.

The plaintiffs in error are (1) the Public Utilities Commission of the State of Colorado, and the individual members thereof (the Commission); (2) Shaw Heights Home Owners Association (Shaw Heights); and (3) Capitol Federal Savings & Loan Association. The defendant in error is Northwest Water Corporation, a Colorado corporation (Northwest). Plaintiffs in error filed a joint brief.

THE PROCEDURAL FACTS

On May 10, 1965, Northwest filed an application (No. 21020) with the Commission to determine the rate base and the rate of return to which Northwest was entitled as a public utility supplying water in its certificated area, commonly known as 'Shaw Heights.'

On November 8, 1965, the Commission held a hearing, after which it took the application under advisement. On November 29, 1965, the Commission issued its order, Decision No. 66346, requiring Northwest to furnish additional information and providing for a further hearing to be held after the additional information had been furnished. Northwest's request for a rehearing on the application was denied on December 23, 1965.

Northwest declined to furnish the information and then sought review of Decision No. 66346 in the District Court in and for the City and County of Denver. This proceeding was dismissed by stipulation of the parties on June 16, 1966; the stipulation, among other provisions, required a further hearing by the Commission in which specified data was to be furnished by Northwest.

On September 29, 1966, the Commission, by Decision No. 68272, entered its order (1) fixing Northwest's rate base as of September 30, 1965, at $271,467; (2) fixing its rate of return at 5% On the rate base; and (3) permitting applicant to file rate schedules increasing its annual gross operating revenue $25,309 to enable it to earn 5% On its authorized rate base.

Northwest petitioned the Commission for a rehearing, alleging, among other things:

'That the Order of the Commission effectively deprives the Applicant not only of its normal operating charges and expenses, but also of any return on Applicant's investment, and that it therefore results in the property of the Applicant being taken and used by the public without just compensation depriving Application of its property without due process of law.'

The petition of Northwest for a rehearing was denied. Northwest again sought review in the District Court in and for the City and County of Denver. However, by order of the Chief Justice, in the interest of expediting the review, the matter was transferred to the District Court in and for Arapahoe County. The latter court, after a hearing on the record of the Commission, pursuant to C.R.S.1963, 115--6--15, entered a judgment dated June 9, 1967, which, in pertinent part, states:

'The Court finds that the order of the Commission is not just and reasonable and that its conclusions are not in accordance with the evidence. The record reflects that the staff of the Public Utilities Commission prepared a rate base based on the testimony and the exhibits admitted into evidence during the course of the Commission's hearing, but that thereafter the Commission chose to make certain adjustments, which the Court finds to be erroneous except for the adjustment as to what has been denominated as well No. 7.

'THEREFORE, IT IS ORDERED, ADJUDGED and DECREED that the case be remanded to the Public Utilities Commission for modification of the order of the Commission in accordance with the evidence which has been presented to it. * * *' On a motion by Northwest for clarification of the June 9, 1967, judgment, the court, on June 19, 1967, entered a supplemental judgment in which it stated:

"The Public Utilities Commission shall modify its prior

order in accordance with the evidence which has been

presented to it, as follows:

                1.  That the rate base of the Plaintiff shall be:           $483,352
                2. That the rate of return to be allowed shall be:            5%
                3.  That the lease rentals set forth in the exhibit of the
                    Staff are fair and reasonable
                4. That the gross revenues to which the Plaintiff is
                    entitled, in accordance with the evidence presented
                    and the record certified by the Commission to this
                    Court, is as follows
                    Base figure, from page 11, Column 1 of the
                      Commission's Decision #68272 (Total Operating
                      Expense)                                             $138,229.
                    Add rate of return (5.0%) shown above, on rate
                      base of $483,352.00                                  $ 24,168.
                    Add income taxes, State and Federal                    $  4,964.
                      Total gross revenues                                             $167,361
                5.  That the increase in gross revenues to which plaintiff
                    is entitled under the modified order is as follows:
                Revenues reflected on Page 10 of Decision #68272:          $ 72,305.
                Increases granted, Decisions #66803 and #68272:            $ 63,809.
                                                                           ---------
                                                                           $136,114.
                Increase in accordance with this Order of Court            $ 31,247.
                Gross revenues, as set forth in paragraph 4 above:                    $167,361.
                 "* * * that the above findings are hereby
                incorporated herein and by reference made a part of this
                  Order;
                * * *."
                

IMPOUND ORDER OF DISTRICT COURT

Following the trial court's judgment of June 19, 1967, the Commission moved the court for a stay of execution pending review by this court. The motion was denied. However, the court entered the following order:

'* * * the Court ORDERS the Northwest Water Corporation to pay into Court on the 1st of each month, there to be impounded until the final decision of the case, all sums of money which it may collect from any corporation or person in excess of the sum such corporation or person would be compelled to pay if the order or decision of the Commission had not been modified by the Court. * * *'

This order is still in effect and should remain in force until the final disposition of Application No. 21020.

The plaintiffs are here by writ of error challenging the correctness of the judgments of the District Court in and for Arapahoe County, dated June 9 and June 19, 1967. For purposes of our discussion, the two judgments will be treated as one,

unless otherwise indicated. The judgment of the district court modifies Decision No. 68272 of the Commission.

ASSIGNMENTS OF ERROR

Plaintiffs in error have preserved for our consideration the following assignments of error:

'I--The District Court has no authority to make new findings of fact and is limited to affirming or reversing the Commission decision.

'II--The Commission decision is just and reasonable and, therefore, the District Court should not have reversed portions of said decision.

'A. The reasonableness of the end result and consequences to shareholders of Northwest Water and consumers of Northwest Water is the test of the propriety of the Commission decision. The method steps by which the Commission draws its decision in a rate case are not subject to attack if the end result is just and reasonable.

'B. The adjustments made by the Commission to the proposed rate base and expense-revenue showing are just and reasonable and supported by the evidence.'

SCOPE OF JUDICIAL REVIEW

C.R.S1963, 115--6--15, prescribes the extent of the authority of the district court upon review of a decision of the Commission. In pertinent part it provides:

'(1) * * * No new or additional evidence may be introduced in the district court, but the cause shall be heard on the record of the commission as certified by it. The review shall not extend further than to determine whether the commission has regularly pursued its authority, including a determination of whether the order or decision under review violates any right of the petitioner under the constitution of the United States or of the state of Colorado, and whether the order of the commission is just and reasonable and whether its conclusions are in accordance with the evidence.

'(2) The findings and conclusions of the commission on disputed questions of fact shall be final and shall not be subject to review, Except that, in any proceeding wherein the validity of any order or decision is challenged on the ground that it violates any right of petitioner under the constitution of the United States, or the constitution of the state of Colorado, the district court shall exercise an independent judgment on the law and the facts, and the findings or conclusions of the commission material to the determination of the said constitutional question shall not be final. The commission and each party to the action or proceeding before the commission shall have the right to appear in the review proceedings. * * *' (Emphasis added.)

The issue before us is brought into sharp focus by the following statement found in the Summary of Argument of Nothwest's brief:

'II--The adjustments made by the Public Utilities Commission were neither just nor reasonable, constituted a denial of due process and resulted in the confiscation of the property of the Defendant in Error.'

It is a...