State ex rel. Dyer v. Public Service Commission, 48085

• Citation: 341 S.W.2d 795
• Decision Date: 12 December 1960
• Docket Number: No. 48085,No. 2,48085,2
• Parties: STATE of Missouri at the Relation of Nancy Corinne DYER and J. Raymond Dyer, Relators-Appellants, v. PUBLIC SERVICE COMMISSION of Missouri, Respondent, Union Electric Company, Intervenor-Respondent
• Court: United States State Supreme Court of Missouri

Page 795

341 S.W.2d 795

37 P.U.R.3d 507

STATE of Missouri at the Relation of Nancy Corinne DYER and J. Raymond Dyer, Relators-Appellants, v. PUBLIC SERVICE COMMISSION of Missouri, Respondent Union Electric Company, Intervenor-Respondent.

No. 48085.

Supreme Court of Missouri, Division No. 2.

Dec. 12, 1960.

Opinion Modified on Court's Own Motion Jan. 9, 1961.

Motion for Rehearing or to Transfer to Court en Banc Denied

Jan. 9, 1961.

J. Raymond Dyer, St. Louis, for appellants.

William H. Ferrell, John A. Woodbridge, Duane A. Patterson, St. Louis, for respondent Union Electric Co. Keefe, Schlafly, Griesedieck & Ferrell, St. Louis, of counsel.

Glenn D. Evans, Gen. Counsel, Thomas J. Downey, Asst. Gen. Counsel, Jefferson City, for respondent Public Service Commission.

EAGER, Judge.

This appeal is one from a judgment affirming orders of the Public Service Commission made in a utility rate proceeding. The only parties appealing are J. Raymond Dyer and his daughter Nancy Corinne Dyer. On September 26, 1958, Union Electric Company filed its Consolidated Schedule of Rates for Electric Service, affecting Missouri, Illinois and Iowa. We are concerned, of course, only with the Missouri rates. The Missouri Commission issued its suspension orders on two different occasions, pending full hearings. Section 393.150 RSMo 1949, V.A.M.S. ¹ Interventions were allowed on behalf of the City of St. Louis, the County of St. Louis, St. Louis Housing Authority, the cities of Brentwood and University City, League of Municipalities of St. Louis County, and a group of seventeen large industrial power users located in Missouri. In addition to these, J. Raymond Dyer and his daughter were permitted to intervene. Dyer was a residence consumer and he had his daughter owned of record 225 shares of the common stock of Union Electric. During the lengthy hearings Dyer was permitted to cross-examine witnesses and adduce evidence. The record sent up by the Commission is voluminous, both in transcribed testimony and in exhibits. The hearings lasted intermittently from December 8, 1958 to May 15, 1959. We shall refer, when possible, to persons both individual and corporate by abbreviated names. Upon the filing of the petition for review Union Electric Company was allowed to intervene, and it has filed the only respondent's brief here. We shall refer to it as Union, to the Public Service Commission as the Commission, and to the Dyers, collectively, as Dyer.

We have considerable doubt of the right of Dyer to prosecute this appeal. Union has briefed this question, insisting that the appeal should be dismissed. Our statutes on the subject are not too clear, to say the least. Section 386.390, subd. 1 provides that 'complaint may be made * * * by any corporation or person * * * by petition or complaint in writing, setting forth any act or thing * * * claimed to be in violation, of any provision of law, or of any rule or order or decision of the commission; provided, that no complaint shall be entertained by the commission, except upon its own motion, as to the reasonableness of any rates or charges of any gas, electrical, water or telephone corporation, unless the same be signed by the mayor or the president or chairman of the board of aldermen or a majority of the council, commission or other legislative body of any city, town, village or county, within which the alleged violation occurred, or not less than twenty-five consumers or purchasers, or prospective consumers or purchasers, of such gas, electricity, water or telephone service.' A somewhat similar provision appears in § 393.260. In State ex rel. Consumers Public Service Company v. Public Service Commission, Banc, 352 Mo. 905, 180 S.W.2d 40, 46 (involving a controversy between local utilities as to the control of a small territory) it was held that an 'interested' (§ 386.500) party might apply for a rehearing or for review; also that '* * * the interest necessary to authorize intervention should be the same as that required to become a complainant * * *,' presumably under § 386.390 (then § 5686, RS 1939); also, that it was never intended that every citizen might participate in any case. But it should be noted that the court was not dealing there with a rate case, which comes under the special proviso requiring complaint by a city, town, village or county or by twenty-five or more consumers. The current rules of the Commission on intervention are set out in Smith et al. v. Public Service Commission, Mo., 336 S.W.2d 491. They require, among other things, that an intervenor shall have an interest different from that of the general public. Dyer's interest here as a consumer appears to us to be no different from that of the members of the general public, but the Commission having made its rules may, we suppose, relax them. It would seem that intervention in this case could well have been denied under the terms of § 386.390 to any individual consumer or to a lesser number than twenty-five. The general consumer public was adequately represented. The Commission was, of course, proceeding more or less 'upon its own motion,' (having acted to suspend the rates) and we feel that it had some discretion as to the parties whom it should admit. It had already permitted seventeen large industrial consumers (less than twenty-five) to intervene, but we note that their interests were substantially different from those of the general public. However, the Commission has heard Mr. Dyer through a long and tiresome series of hearings, and, with some misgivings for the future, we decline to dismiss the appeal. We wish, however, to emphasize the proviso of § 386.390, quoted supra. The present appeal is a good illustration of the wisdom of the legislature in declining, generally, to permit complaints (and appeals) by individual members of the public.

We shall attempt no review of the evidence, as such. It is long and complicated, and this appeal does not require, or merit, a full review. Such references as are necessary will be made in the opinion proper. The Commission made findings in considerable detail; these included a finding that the depreciated original cost of defendant's properties in Missouri as of the end of the test year (June 30, 1958) was $335,461,153; and that the current cost new, less estimated depreciation as of the same date, was $612,133,137. These figures were supported by voluminous evidence from Union's records and by the testimony of recognized experts. There was much testimony concerning the nature, extent and condition of Union's properties, valuations and methods of valuation, its capitalization, its working capital requirements, depreciation, the rates of return essential on utility properties upon different bases of valuation, the cost of capital both 'historical' and current, the operating revenues and financial accounts of Union, and the projected results of the specific rate proposals. There was also much evidence concerning the increased operating costs experienced since the last rate increase was approved in September 1953, and of the past, present and future necessity for expansion of facilities and for the raising of new capital. A nationally recognized construction cost index was used in part to arrive at a 'trended' current cost of the properties; this was explained and corroborated in large part by oral testimony. When the depreciated current cost new ($612,133,137) was increased by the value of materials and supplies on hand and certain other items, that figure became $616,349,088. No figure was included in that cost base for cash working capital. The Commission found that the net operating revenue on the proposed rates for the test year would have been $21,504,957 (after certain adjustments); on the original cost basis this would have afforded a return of 6.32%; on the (trended) current cost basis the return would have been 3.49%. The Commission further found that Union's existing rates 'will not permit it to earn an amount sufficient to pay operating expenses, meet its fixed charges, provide a reasonable return on its common stock, maintain its credit and attract capital.' It also found 'that the application of the proposed rate schedule will not result in undue or unreasonable preferences nor subject any customer or class of customers to any undue or unreasonable prejudice or disadvantage, and that insofar as the rates prescribed by the proposed schedule define different classes of customers, localities and services and prescribe specific rates applicable to each such class, the schedule is just and reasonable.' It found, in conclusion, that the 'fair value' of Union's electric properties in Missouri as of June 30, 1958, was $409,500,000, and that the proposed operating income would yield on that rate base a return of 5.25% which the Commission found to be reasonable. The schedule was approved with one exception with which we are not concerned here; that involved the St. Louis Housing Authority. The rates, as approved, were estimated to produce an increase of $2,968,100 in operating income.

Appellants' points, though numerous, may fairly be reduced to the following: (1) that the Commission's decision was arbitrary and unreasonable in that it fixed a rate base calculated upon the 'fair value' of Union's properties (an amount between the net original cost and the net reproduction cost), with no reasonable or logical basis therefor, and that the resulting rate of return is excessive; (2) that the approved schedule of rates discriminates against Union's domestic customers and in favor of its industrial customers; and (3), that certain expenditures computed as part of Union's operating expenses were not properly allowable. The first of these points raises (voluminously and with many citations, both in point and otherwise) the oft-repeated argument that depreciated original cost, and not reproduction cost or fair value, is the proper method of fixing a base for utility...