State ex rel. Knight v. Public Service Commission

Decision Date07 April 1978
Docket NumberNo. 14095,14095
CourtWest Virginia Supreme Court
PartiesSTATE ex rel. Thomas (Doug) KNIGHT v. The PUBLIC SERVICE COMMISSION of West Virginia and E. Dandridge McDonald, etc., et al.

Syllabus by the Court

W.Va.Code, 24-2-4 (1974) which provides a procedure by which utility rate increases may be filed with the West Virginia Public Service Commission by the public utilities of this State, and after a statutory 30 day notice period plus, at the option of the Commission, an additional 120 day suspension period, be placed automatically into operation conditioned upon a bond to guarantee a refund with interest of overcharges to consumers representing that portion of such proposed increased rates as may be ultimately disapproved by the Commission, is constitutional under the Constitution of the United States and the Constitution of the State of West Virginia from the perspective both of substantive due process and procedural due process.

W. Va. Legal Services Plan, Inc., John C. Purbaugh, Leonard B. Knee, Charleston, for relator.

Ann V. Dornblazer, Arnold O. Weiford, Legal Division, Public Service Com., Charleston, for respondents.

Richard S. Weygandt, Fairmont, Jackson, Kelly, Holt & O'Farrell, F. Paul Chambers, Michael A. Albert and W. Henry Jernigan, Jr., Charleston, for intervenor Monongahela Power Co.

Steptoe & Johnson, Willis O. Shay, Clarksburg, for The Cabot Corp., et al., amicus curiae.

Thomas N. Hann, Charleston, for W. Va. Small Public Utilities Ass'n, amicus curiae.

NEELY, Justice:

This action in prohibition challenges the constitutionality of W.Va.Code, 24-2-4 (1974) 1 which authorizes a public utility to charge rate increases before a final determination of the legitimacy of those increases by the Public Service Commission. This action arises in prohibition but we are not quite certain what it is that the relator would have us prohibit, as the statutory scheme in West Virginia permits proposed rate increases to go into effect after one hundred and fifty days absent any action by the Public Service Commission. We shall assume arguendo, however, for the purposes of this case, that if the challenged statute were unconstitutional some exercise in judicial imagination would permit us to reach the issue on prohibition. As hundreds of man-hours have been devoted to the presentation of this case by counsel, and as the issue is one of substantial public concern, we shall dispose of the case on the merits. The Court has thoroughly researched and maturely considered all of the constitutional issues raised in the proceeding, and as we find that West Virginia's statutory scheme, which permits a utility to impose rate increases under bond, is constitutional, we deny relief.

This case arises from rate increases for electric utility service proposed by Monongahela Power Company on November 30, 1976. The Public Service Commission exercised its regulatory power on December 8, 1976 by suspending the increase for the statutory maximum of one hundred and twenty days, after the initial statutory, non-discretionary thirty day notice period. The Public Service Commission failed to conclude hearings and determine the reasonableness of the increases for which Monongahela petitioned in the hundred and fifty day period, and at the end of that period the commission ordered the posting of a bond before the utility-proposed rates automatically went into effect pursuant to W.Va.Code, 24-2-4 (1974). Hearings on the reasonableness of Monongahela Power's rate increases began on December 5, 1977 and the case is still in the breast of the Public Service Commission.

The relator, Thomas Knight, contends that the imposition of the proposed higher rates before the commission's determination of the reasonableness of those rates is unconstitutional, and asks that this Court direct that W.Va.Code, 24-2-4 (1974) be applied to require the Commission to hold a hearing before the imposition of rates under bond. Mr. Knight is a resident of Lost Creek, Harrison County, West Virginia. He is married, has two minor children, and lives on a gross income of $600 per month. He is a customer of Monongahela Power Company and alleges that any increase in the amount that he is required to pay for electricity upsets the careful balance of his finances and that, even with interest, the eventual refund with interest which may later be payable to him after determination of just and reasonable rates does not alleviate the financial problems he has now because his current financial needs are urgent.

On January 30, 1975, before filing the rate increase at issue here, Monongahela moved to increase rates and charges for electrical service in the territory served by it in West Virginia by filing revised tariffs with the Commission in the approximate amount of 30.9 million dollars annually. The Commission deferred implementation of those rates pursuant to Code, 24-2-4 (1974) until June 28, 1975, and required Monongahela to post a bond to secure ratepayers their eventual refunds if the Commission found that the increases were not justified. On June 28, 1975, however, the new rates went into effect and Mr. Knight was required to pay them. Before the conclusion of this first case, Monongahela, as noted above, filed a second tariff on November 30, 1976 to increase rates which is now the subject of this law suit. This second rate increase went into effect on April 28, 1977 and is still in effect under bond.

On March 18, 1977, in the prior case which had begun on January 30, 1975, the Commission decided to allow an annual rate increase of $9,037,286 and required a refund of all excess rates charged. Monongahela Power then requested a rehearing and reargument of the case from the Public Service Commission which was denied; Monongahela appealed to the West Virginia Supreme Court of Appeals, which refused to docket the appeal; and, finally Monongahela sought relief from various federal courts, none of which granted the relief. In August 1977, after thirteen months of charging rates, 71% of which were finally denied, Monongahela began paying the refund and the relator, Mr. Knight, probably with substantial justification, felt himself sorely abused. 2

The relator attempts to bring his issues within the scope of the writ of prohibition by asserting that the Commission exercises its authority to determine the rates charged consumers, and in the case before us has already entered an order setting bond as a condition precedent to the increased rates going into effect, all in the exercise of its quasi -judicial power over the rate-making process. The relator alleges that the Commission, by following a statutory scheme which violates the relator's constitutional rights, is exceeding its lawful power, and a writ of prohibition will lie to prevent this violation. We find the argument original; however, it does fly in the face of syl. pt. 2 in Randall Gas Company v. Star Glass Co., 78 W.Va. 252, 88 S.E. 840 (1916) which states:

The power of the Commission to alter rates, charges, and tolls for public service is delegated legislative power, and the procedure in the exercise thereof is also legislative in character.

While old West Virginia cases should not, in and of themselves, unduly terrorize modern litigants with contemporary problems unforeseen by our predecessors, nonetheless this particular quoted syllabus point seems to state accurately the overwhelming weight of modern-day authority as well. See, e. g., the recent case from the parent commonwealth, Commonwealth of Virginia v. Portsmouth Gas Company, 213 Va. 239, 191 S.E.2d 220 (1972) as well as the numerous authorities cited in 64 Am.Jur.2d Public Utilities § 89, 73 C.J.S. Public Utilities § 16, and 16 C.J.S. Constitutional Law § 198. While the Commission does have adjudicatory, i. e., quasi -judicial functions, rate-making is not one of them. We shall not dally with procedure, however, since if the Commission's actions were unconstitutional the question could be reached somehow.

I

The relator asserts that there is a common law right in the consumer to just and reasonable rates from a government created monopoly. For this proposition he cites Allnutt v. Inglis, 12 East, 526, 104 English Reports 206 (1810) as well as Hargrave, Collection of Tracts Relative to the Law of England, Vol. I, c. 2, (Dublin: 1787). Certainly the law of monopoly in England had a tumultuous history until the issue was tentatively settled by the statute of 21 James I c. 3 (1623) which codified an informal composition between the Sovereign and Parliament in the forty-third year of Elizabeth's reign (1601), when the Crown agreed not to issue monopoly patents in the future except for what we would call today "public purposes."

During the reign of the last Tudor, the Stuarts, and the Hanovers, when the mercantilist philosophy (as opposed to the laissez-faire philosophy) was at its height, the notion of what constituted a "public purpose" included far more subjects than the law of this Country would have embraced in the 19th Century, when our courts were grafting Adam Smith's Wealth of Nations onto the concept of "property" in the due process clauses of federal and state constitutions. Nonetheless, we should not permit the political and economic battles of the 17th and 18th Centuries, in which all monopolies were justly reviled in theory, but broadly supported in practice, to cause us to lose sight of the fact that during that same time there were legitmate monopolies, even by 19th Century American law standards, such as ferries, and that certain rules applied to them.

It appears that in order for the common law right to reasonable rates to arise, the monopoly had to come into existence pursuant to a statute, as in Allnutt, supra, or pursuant to a royal grant to perform a service or to supply a commodity, touched with a public purpose, as discussed in ...

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  • Mississippi Power Co. v. Goudy
    • United States
    • United States State Supreme Court of Mississippi
    • 10 Octubre 1984
    ...be provided before utility service is terminated, but involves constitutionality of the rate under bond statute. Knight v. PSC of West Virginia, 245 S.E.2d 144 (W.Va.1978), was decided subsequent to Eldridge and Craft. The Court upheld rates placed in effect under a similar bond statute on ......
  • State v. Hutton
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    ...the Virginia convention all of English common law was incorporated in Virginia in 1776[.]” State ex rel. Knight v. Public Serv. Comm'n, 161 W.Va. 447, 456 n. 4, 245 S.E.2d 144, 149 n. 4 (1978). Moreover, “to date the incorporation of the common law remains in force and effect in Virginia to......
  • State v. Hutton, 14-0603
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    • 16 Junio 2015
    ...16Virginia convention all of English common law was incorporated in Virginia in 1776[.]" State ex rel. Knight v. Public Serv. Comm'n, 161 W. Va. 447, 456 n.4, 245 S.E.2d 144, 149 n.4 (1978). Moreover, "to date the incorporation of the common law remains in force and effect in Virginia to th......
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    ...... State ex rel. Knight v. Public Service Commission, 161 W.Va. ......
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