State ex rel. Marco Sales, Inc. v. Public Service Com'n
| Decision Date | 04 December 1984 |
| Docket Number | No. WD,WD |
| Citation | 685 S.W.2d 216 |
| Parties | STATE ex rel. MARCO SALES, INC., and Dierberg Service Company, Inc., both Missouri corporations, Relators-Respondents, and Union Electric Company, the Trane Company, and the Office of the Public Counsel of the State of Missouri, Intervenors-Relators-Respondents, v. PUBLIC SERVICE COMMISSION of the State of Missouri, Appellant, and Laclede Gas Company, Intervenor-Appellant. 34,997. |
| Court | Missouri Court of Appeals |
Robert M. Lee and Donald L. Godiner, St. Louis, for intervenor-appellant Laclede Gas Co.
Leland B. Curtis, Clayton, for relators-respondents Marco Sales, Inc. and Dierberg Service Co., Inc.
E. Ronald Hill, Union Electric Company, St. Louis, for intervenor-relator-respondent Union Electric Co.
Thomas J. Downey, Jefferson City, for intervenor-relator-respondent The Trane Co.
Richard W. French, Asst. Public Counsel, Jefferson City, for Office of the Public Counsel of the State of Missouri.
Before PRITCHARD, P.J., and SOMERVILLE and KENNEDY, JJ.
This appeal arises from a utility rate order entered by the Public Service Commission of Missouri (hereinafter Commission). The controversial order authorized Laclede Gas Company (hereinafter Laclede) to impose, on an interim basis, a surcharge tariff on gas service customers who supplement their space heating needs with electric add-on heat pumps.
Heat pumps, devices of recent origin, are a technological adaptation of a scientific fact discovered by an English scientist, Lord Kelvin, in 1852--there is heat in cold air down to absolute zero (minus 459.69 degrees Fahrenheit). Their versatility is exemplified by their ability to both heat and cool. Simplistically stated, they can serve as central air conditioners during warm seasons and then, during cold seasons, reverse their operation and extract heat from outside air for internal heating purposes. Their use in conjunction with commercial heating systems as supplemental sources of heat accelerated with the advent of the recent energy crisis.
A potential aura of confusion arising from alignment of the parties calls for an explanation. Marco Sales, Inc., a distributor of electric add-on heat pumps in the St. Louis area, and Dierberg Service Company, Inc., one of its dealers (hereinafter collectively referred to as Marco), filed a formal complaint with the Commission charging that Laclede was in violation of § 393.130, RSMo 1978, by its unilateral promulgation of a surcharge on gas customers utilizing electric add-on heat pumps without obtaining tariff approval from the Commission. Laclede answered the complaint lodged by Marco and, in addition, filed a proposed surcharge tariff whose approval by order of the Commission is the genesis of the present appeal. Marco, The Trane Company (hereinafter Trane), and Union Electric Company (hereinafter Union Electric) were permitted to intervene in the tariff case at the Commission level. The complaint and proposed surcharge tariff were consolidated for hearing before the Commission.
The tariff order in question, paraphrased in general terms, authorized Laclede to impose a uniform monthly surcharge (approximately $15.00 per month) on each gas customer with an electric add-on heat pump during the months of November, December, January, February, March and April. After the order was handed down by the Commission, Marco filed an application for rehearing pursuant to § 386.500, RSMo 1978, which was denied by the Commission. Thereupon, Marco filed an application for review in the Circuit Court of Cole County as provided in § 386.510, RSMo 1978. The Circuit Court of Cole County granted Marco's application for review and also permitted Laclede to intervene as a respondent therein, and the Office of the Public Counsel, Trane and Union Electric to intervene as relators therein.
The Circuit Court of Cole County reversed the order of the Commission approving the surcharge tariff on Laclede's gas customers using electric add-on heat pumps and ordered Laclede to refund any and all monies collected under the interim surcharge tariff to affected customers. The order of reversal entered by the Circuit Court of Cole County was accompanied by extensive findings of fact. Those deemed most pertinent to the timely appeals of the Commission and Laclede to this court are recapitulated as follows: (1) There was no competent and substantial evidence upon the whole record to support the Commission's finding that Laclede's use of 34 degrees Fahrenheit as a "balance" or "changeover" point for the average electric add-on heat pump was reasonable; (2) There was no competent and substantial evidence upon the whole record to support the Commission's finding that Laclede would suffer a revenue deficiency by serving gas customers with electric add-on heat pumps under its current tariff; and (3) There was no competent and substantial evidence upon the whole record to support the Commission's finding that electric add-on heat pumps, due to unique and inherent operating characteristics, have an impact on Laclede's load factor different from that of other supplementary heating devices.
The scope of judicial review of decisions of the Commission is forged by Mo. Const. Art. V, § 18 (as amended 1976--formerly Art. V, § 22) providing that "such review shall include the determination whether the same are authorized by law, and in cases in which a hearing is required by law, whether the same are supported by competent and substantial evidence upon the whole record." This constitutional mandate establishes a minimum standard of judicial review which may be statutorily broadened so long as doing so is not in conflict with or repugnant to the federal and state constitutions. State ex rel. St. Louis Pub. Serv. Co. v. Pub. Serv. Comm'n, 365 Mo. 1032, 291 S.W.2d 95, 101-02 (1956). Judicial inquiry into the "reasonableness or lawfulness" of decisions or orders of the Commission prescribed by § 386.510, RSMo 1978, however, is nothing more than a reaffirmation of the constitutional mandate as questions of "lawfulness" turn on whether the Commission's orders or decisions are statutorily authorized and questions of "reasonableness" turn on whether there is competent and substantial evidence upon the whole record to support them. State ex rel. Ozark Elec. Coop. v. Pub. Serv. Comm'n, 527 S.W.2d 390, 392 (Mo.App.1975). In the context at hand, "substantial evidence" means evidence "which, if true," has "probative force upon the issues" and "implies and comprehends competent, not incompetent evidence." State ex rel. Rice v. Pub. Serv. Comm'n, 359 Mo. 109, 220 S.W.2d 61, 64 (banc 1949).
Cognizance is also taken of certain tangential attributes associated with judicial review of orders and decisions of the Commission: (1) The decision of the Commission, not the judgment of the Circuit Court, is the subject of appellate review--State ex rel. Pub. Water Supply Dist. No. 8 v. Pub. Serv. Comm'n, 600 S.W.2d 147, 149 (Mo.App.1980); (2) Orders and decisions of the Commission are "prima facie" lawful and reasonable "until found otherwise" when judicially challenged--s 386.270, RSMo 1978; (3) The party complaining of an order or decision of the Commission must "show by clear and satisfactory evidence" that the order or decision of the Commission "is unreasonable or unlawful" as the case may be--s 386.430, RSMo 1978; and (4) Although courts on judicial review need not defer to the Commission on questions of "lawfulness", they cannot substitute their judgment for that of the Commission where its order or decision is supported by competent and substantial evidence upon the record as a whole--State ex rel. Util. Consumers Council of Mo., Inc. v. Pub. Serv. Comm'n, 585 S.W.2d 41, 47 (Mo. banc 1979).
The Commission and Laclede stridently contend on appeal that the surcharge tariff was, in all respects, supported by competent and substantial evidence upon the whole record, but, in the unlikely event that it was not, the trial court erred in ordering Laclede to refund to affected customers all monies collected under the interim surcharge tariff from November 1, 1982, to June 2, 1983. Relators-respondents concede in their briefs on appeal that under State ex rel. Kansas City v. Pub. Serv. Comm'n, 362 Mo. 786, 244 S.W.2d 110 (1951), cited and relied upon by Laclede, the Circuit Court of Cole County exceeded its authority in ordering Laclede to refund all monies collected under the interim surcharge tariff.
Perforce, as succinctly put by Laclede in its reply brief, "[a]ll of the parties to this appeal concur that the issue to be resolved by ... [the Missouri Court of Appeals, Western District] is whether or not the Commission's Report and Order is supported by competent and substantial evidence."
From Laclede's vantage point, the surcharge tariff is purportedly justified on two grounds: (1) the comprehensive nature of its General Service Rate structure; and (2) the mean or average temperature "balance" or "changeover" point at which electric add-on pumps cease to be operational. Attention first focuses on Laclede's General Service Rate structure. According to Laclede, it has an inexpensive source of gas available to meet consumer demand when the outside temperature is above 34 degrees Fahrenheit. However, when the outside temperature falls below 34 degrees Fahrenheit increased consumer demand must be met by more expensive sources of gas. Nevertheless, Laclede's rate per unit of gas to its customers remains constant as it reflects an overall margin of return for all gas consumed by an average customer on a constant rate basis. Advancing its argument a step further, Laclede asserts that its overall margin of return between the cost of gas and the rate charged is substantially narrowed by customers whose demands for gas principally occur when the outside temperature...
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