State ex rel. Laclede Gas Co. v. Public Service Commission, KCD

• Citation: 535 S.W.2d 561
• Decision Date: 29 March 1976
• Docket Number: No. KCD,KCD
• Parties: STATE ex rel. LACLEDE GAS CO., Relator-Appellant, v. PUBLIC SERVICE COMMISSION of Missouri, Respondent, and AFC Industries, Incorporated, et al., Intervenors. 27958.
• Court: Missouri Court of Appeals

Page 561

535 S.W.2d 561

STATE ex rel. LACLEDE GAS CO., Relator-Appellant, v. PUBLIC SERVICE COMMISSION of Missouri, Respondent, and AFC Industries, Incorporated, et al., Intervenors.

No. KCD 27958.

Missouri Court of Appeals, Kansas City District.

March 29, 1976.

Richard L. Eckhart, St. Louis, for relator-appellant.

Leland B. Curtis, Paul W. Phillips, Jefferson City, for respondent Public Service Commission of Mo.

Robert G. Brady, Robert C. Johnson, Lawrence R. Ehrhard, St. Louis, for Industrial Intervenors.

Stanley P. Christopher, Russell D. Jacobson, Jeremiah D. Finnegan, Kansas City, for amicus curiae Jackson County, Mo.

Arthur J. Doyle, Kansas City, for amicus curiae Kansas City Power & Light Co.

L. T. McSpadden, Blytheville, Ark., for amicus curiae Arkansas-Missouri Power Co.

Jack L. Oliver, Cape Girardeau, for amicus curiae Mo. Utilities Co.

Judith P. Rea, Kansas City, for amicus curiae Mo. Public Service Co.

Stewart W. Smith, Jr., St. Louis, for amicus curiae Union Elec. Co.

J. Steve Weber, Jeffersn City, for amicus curiae Mo. Edison Co. and Mo. Power & Light Co.

Charles S. Wilcox, St. Joseph, for amicus curiae St. Joseph Light & Power Co.

Before DIXON, P.J., PRITCHARD, C.J., and WASSERSTROM, J.

WASSERSTROM, Judge.

The question here for decision is whether Laclede Gas Company should have been granted an interim rate increase by the Public Service Commission of Missouri pending determination by that Commission of whether a permanent rate increase should be allowed. This problem comes before a Missouri appellate court now for the first time.

On February 1, 1974, Laclede filed its application No. 18015 before the Commission for an increase in rates calculated to produce an additional $12,475,000 in additional revenue. This application and the proceedings thereon is referred to as the 'permanent' rate case.

On February 15, 1974, Laclede filed a second proceeding, entitled 'Application for Partial Increase after Hearing,' which was given the separate number No. 18021 and is referred to as the 'interim' rate case. This latter application sought to increase revenues by $5,440,000 during the interim period until action by the Commission in the permanent rate case. Laclede alleged that the interim increase had become necessary because it could no longer earn a fair return on the fair value of its property because of inflationary cost increases and because of a precipitous decline in revenue resulting from the national fuel conservation program. Applications were filed with the Commission by a number of public bodies and industries (including the 'Industrial Intervenors' who have appeared in this court) to intervene in the interim proceeding, which applications were all granted.

A one day hearing was held by the Commission on March 21, 1974, at which time Laclede offered testimony and statistical documents to sustain the allegations of its petition. In very brief summary, its evidence was that since 1969 when its rates had last been set by the Commission, Laclede had suffered a decline in rate of return on total invested capital and in the return on its common equity; that the costs of all types of financing had increased substantially with the result that the imbedded cost of the company's debt had increased and would increase further; that because of inflationary increase in costs there was a net decrease in operating income; that because of conservation measures there had resulted a substantial load loss in therm use per customer; that earnings per share of $2.46 in the fiscal year of 1973 had dropped to $2.14 per share by the end of the calendar year 1973, and absent rate relief was projected to fall in fiscal 1974 to approximately $1.67 to $1.70 per share; that Laclede stock had fallen in value and had been selling below book value for about a year; that interest coverage on the company bonds had fallen. However, Laclede's president admitted in his testimony that Laclede was able to arrange debt financing; that even if interim relief was not granted, Laclede would not become insolvent, be unable to serve its present customers, or be unable to pay dividends; further, that it had not been necessary for Laclede to reduce salaries or terminate any personnel; and the failure of the Commission to grant interim relief would not affect the credit rating of Laclede bonds. A staff accountant of the Commission testified that he had made a summary review of the Laclede application and exhibits and found nothing materially wrong with them as presented; no audit had been conducted by the Commission staff which had relied entirely upon the figures provided by the company.

On May 2, 1974, the Commission issued an order denying the interim rate increase by a 3 to 2 vote. Laclede filed a motion for rehearing which was overruled and then filed petition for review in the circuit court of Cole County under the provisions of § 386.510. (All statutory references herein being to RSMo 1969.) While that proceeding was pending in the circuit court, the Commission on August 22, 1974, issued its order in the permanent rate case granting Laclede a rate increase in the amount of $11,350,000.

On December 30, 1974, the Circuit Court of Cole County entered its judgment affirming the decision of the Commission on the grounds that the Commission action was a proper exercise of its discretion and also on the basis that the Commission's order in the permanent rate case had rendered the interim rate proceeding moot.

Laclede thereupon filed notice of appeal to the Missouri Supreme Court, setting forth in its Notice of Appeal that the Commission's order constituted a confiscation of Laclede's property in violation of its constitutional rights. On April 14, 1975, the Supreme Court ordered the transfer of the appeal to this court 'in which jurisdiction is vested.'

I.

The Commission, the industrial intervenors and amicus curiae Jackson County all join in urging that this appeal be dismissed on the simple ground that the case has become moot. They argue that the permanent rate increase has already been granted by the Commission, that the permanent increase includes the relief sought by way of interim increase, that under the law the increase cannot be made retroactive to the interim period, February 15 to August 22, 1974, and that since no relief can be granted, it is a futile exercise for this court to retain jurisdiction. They cite in support State ex rel. Capital City Water Co. v. Public Service Commission, 298 Mo. 524, 252 S.W. 446 (banc 1923).

Nevertheless, even though relief may no longer be available to Laclede by means of this proceeding, still the question here presented is a recurring one of great public concern. This is evidenced by the considerable number of interventions before the Commission in this court and the appearances in this court as amici curiae. Among the parties so appearing as amici are seven electrical utility companies, who point out that the problem raised herein by Laclede (which is a gas utility) also extends with like force to the electric utilities of this state, as evidenced by the 'Union Electric order' issued by the Commission on March 29, 1974, in case No. 17965, denying interim relief. See also State ex rel. Gas Service Co. v. Public Service Commission, Mo.App. 536 S.W.2d 491, No. KCD27987, being decided concurrently herewith.

In its very nature, an interim rate request is merely ancillary to a permanent rate request, and in overwhelming probability the permanent rate request will have been granted before any denial of an interim increase can work its way to the point of decision by an appellate court. If the important legal propositions presented by this appeal are to be decided at the appellate level at all, it is apparent that jurisdiction for that purpose must be exercised despite the technical point of mootness. Because of these considerations, this case should be retained and decided. In re Marshall, 478 S.W.2d 1, 5 (Mo. banc 1972); O_ _ H_ _ v. French, 504 S.W.2d 269 (Mo.App.1973); Lawyers' Association of St. Louis v. City of St. Louis, 294 S.W.2d 676 (Mo.App.1956).

II.

Logical order calls for consideration next of the contention by amicus curiae Jackson County that the Commission has no power to grant interim rate increases. If this contention be sound, then it would become unnecessary to consider anything further. However, the County's argument is not well founded.

The County argues that the Commission has only those powers specifically or necessarily by implication conferred upon it by statute, that there is no statute in this state granting the Commission power to grant interim rate increases, and that in the absence of such a statutory grant there can be no such authority. In support of its argument, the County has collated a list of many states granting this power of interim relief by special statutory provision, and the County argues that if the Missouri Legislature had intended the Commission to have this power, then the Missouri Legislature would have so provided as have the legislatures of other states.

The Commission, on the other hand, argues that its power to grant interim rate relief must be inferred from the provisions of Sections 393.140(11) and 393.150. The first of those sections provides that every gas utility may file with the Commission rates to be charged and that:

'Unless the commission otherwise orders, no change shall be made in any rate or charge * * * except after thirty days' notice to the commission and publication for thirty days as required by order of the commission, which shall plainly state the changes proposed to be made in the schedule then in force and the time when the change will go into effect. The commission for good cause shown may allow changes without requiring the thirty days' notice under such conditions as it may prescribe. . . .'

Section 393.150 provides that whenever a gas corporation shall file a new rate or change with the...