State ex rel. Utilities Com'n v. Eddleman, 39A86
| Decision Date | 28 July 1987 |
| Docket Number | No. 39A86,39A86 |
| Citation | 358 S.E.2d 339,320 N.C. 344 |
| Parties | STATE of North Carolina ex rel. UTILITIES COMMISSION and Duke Power Company (Applicant), v. Wells EDDLEMAN (Appellant), and Public Staff--North Carolina Utilities Commission; Lacy H. Thornburg, Attorney General; City of Durham; and Conservation Council of North Carolina (Cross- Appellants). |
| Court | North Carolina Supreme Court |
Steve C. Griffith, Jr., George W. Ferguson, Jr., Ronald L. Gibson, and Kennedy, Covington, Lobdell & Hickman by Clarence W. Walker and Myles E. Standish, Charlotte, for applicant-appellee Duke Power Co.
Wells Eddleman, pro se.
Robert Gruber, Executive Director by James D. Little, Staff Atty., and Michael L. Ball, Staff Atty., Public Staff-North Carolina Utilities Com'n, Raleigh, for the Using and Consuming Public.
Lacy H. Thornburg, Atty. Gen. by Jo Anne Sanford, Sp. Deputy Atty. Gen., Karen E. Long, Asst. Atty. Gen., and Angeline M. Maletto, Asst. Atty. Gen., Raleigh, for the Using and Consuming Public.
W.I. Thornton, Jr., City Atty., Durham, for the City of Durham.
Edelstein and Payne by M. Travis Payne, Raleigh, for Conservation Council of North Carolina.
This is an appeal from an order of the North Carolina Utilities Commission in a general rate case. Numerous questions concerning the legality of the order have been raised by appellant intervenors and will be treated seriatim.
Procedurally, the case comes to this Court as follows:
On 15 February 1985, Duke Power Company filed an application with the North Carolina Utilities Commission seeking to increase electric utility rates for North Carolina retail customers effective 17 March 1985. The rates sought would have produced approximately $339,980,000 in additional revenues for Duke Power, and would have increased the company's North Carolina retail charges by approximately 19.7 percent. Among the reasons given by Duke for the requested increase were: (1) the need to recover expenses associated with Duke's contractual obligation to purchase power from the joint owners of Catawba Nuclear Station; (2) the need to include in Duke's ratebase the company's 12.5 percent ownership in Catawba Unit 1; (3) the need for an increase in Duke's return on common equity; and (4) the need to recover increased operating expenses, including those associated with Duke's cancellation of its Perkins and Cherokee nuclear stations.
Various parties, including appellant and cross-appellants, were permitted to intervene in the proceedings. On 12 March 1985 the Commission entered an order suspending the proposed rate increase for a period of up to 270 days. The Commission then declared Duke's application to be a general rate case. Public hearings were held in five cities, and the Commission began hearing the case in chief on 9 July 1985. Duke Power subsequently reduced its requested increase to $292,763,000, primarily because of a decrease in the cost of capital and a two-month delay in commercial operation of Catawba Unit 1.
On 17 September 1985, the Utilities Commission entered an order granting Duke an overall revenue increase of 9.52 percent, or approximately $165,000,000. Intervenors Wells Eddleman, the Public Staff, the Attorney General, the City of Durham, and the Conservation Council of North Carolina appealed to this Court.
Duke Power Company began construction of its Catawba Nuclear Station in 1973, at a time when Duke's forecasts indicated that additional generating capacity was needed if the company was to meet future demand for electricity. A year later, Duke suffered a financial crisis that made it impossible for the company to go forward with its expansion program. Construction of Catawba was suspended and Duke offered some of its assets for sale.
Duke then decided to finance further construction of Catawba by selling portions of the station to various municipal power agencies and cooperatives, each of which had access to capital not available to Duke. Before these sales could be made, however, certain statutory and constitutional changes had to take place in North Carolina. The legislature responded to this need in 1975 by enacting the Joint Municipal Electric Power and Energy Act, 1975 N.C.Sess.Laws ch. 186, § 1, which authorized joint ownership by municipalities of electrical generating facilities. N.C.G.S. § 159B-11(10) (Cum.Supp.1985). Two years later the North Carolina Constitution was amended to allow the state's newly created joint municipal power agencies to own property jointly with other public and private entities, including public utilities. N.C. Const. art. V, § 10. The General Assembly shortly thereafter enacted N.C.G.S. § 159B-5.1, which authorizes municipal power agencies to enter into agreements such as the one Duke Power was proposing with respect to Catawba.
In 1978, Duke sold a 75 percent interest in Catawba Unit 2 to the North Carolina Municipal Power Agency # 1 (NCMPA), which serves some twenty cities in this state. The next year Duke sold the remaining 25 percent of Unit 2 to the Piedmont Municipal Power Agency (PMPA) in South Carolina. In 1981, Duke sold 75 percent of Catawba Unit 1 to its North Carolina and South Carolina cooperative customers. Duke retains a 25 percent interest in Unit 1. For purposes of this rate case, however, Duke is treated as if it has a 12.5 percent interest in Unit 1. 1
The various Catawba sales agreements are lengthy and complex documents, but each contains several similar provisions. First, Duke is to operate Catawba just as it would any of its own plants; all power generated by the station flows into Duke's system. Second, the agreements establish how power received from Duke by the Catawba purchasers will be priced. Third, Duke is required to "buy back" a portion of the Catawba capacity owned by the municipal power agencies and cooperatives. Finally, the agreements provide for certain reliability exchanges between the two Catawba units and between Catawba and Duke's McGuire Nuclear Station.
The rate increase at issue in this case was requested by Duke shortly before Catawba Unit 1 was declared commercially operational on 29 June 1985. Approximately 80 percent of the $340 million increase sought by Duke was attributable to Unit 1, and included both the cost of Duke's ownership interest in that unit and the cost of buybacks mandated by the Catawba sales agreements. The Utilities Commission held several weeks of hearings and found, among other things: (1) that Duke's decisions to construct and complete Catawba Unit 1 were reasonable and prudent; (2) that Duke's ownership interest in Unit 1 is used and useful in providing electric utility service to Duke's North Carolina retail ratepayers; (3) that Unit 1 does not represent excess generating capacity; (4) that each of the Catawba sales agreements entered into by Duke was reasonable and prudent; and (5) that these agreements collectively resulted in lower rates for Duke's North Carolina retail customers than would have prevailed had Duke financed Catawba itself. The $165 million rate increase unanimously approved by the Commission was approximately 48.5 percent of the amount originally requested by Duke, and approximately 56.3 percent of the company's revised request.
The Attorney General and City of Durham contend that the findings of fact included by the Utilities Commission in its ratemaking order fail to satisfy the requirements of N.C.G.S. § 62-79. This statute states, in pertinent part, that:
(a) All final orders and decisions of the Commission shall be sufficient in detail to enable the court on appeal to determine the controverted questions presented in the proceedings and shall include:
(1) Findings and conclusions and the reasons or bases therefor upon all the material issues of fact, law, or discretion presented in the record....
N.C.G.S. § 62-79(a) requires the Commission "to find all facts essential to a determination of the question at issue." State ex rel. Utilities Comm. v. Haywood Electric Membership Corp., 260 N.C. 59, 64, 131 S.E.2d 865, 868 (1963) (). The Commission, however, is not required to comment on "every single fact or item of evidence presented by the parties." State ex rel. Utilities Comm. v. Nantahala Power & Light Co., 313 N.C. 614, 745, 332 S.E.2d 397, 474 (1985), rev'd on other grounds, 476 U.S. 953, 106 S.Ct. 2349, 90 L.Ed.2d 943 (1986).
The purpose of the findings required by G.S. § 62-79(a) is to provide the reviewing court with sufficient information to allow it to determine the controverted questions presented in the proceedings.... The Commission's summary of the appellant's argument and its rejection of the same is sufficient to enable the reviewing court to ascertain the controverted questions presented in the proceeding. That is all that G.S. § 62-79 requires.
The Attorney General and City of Durham contend that twenty-three of the Commission's thirty-one findings of fact actually are "mere conclusions." For example, Finding of Fact No. 6, which appellants seem to find particularly objectionable, states that "[t]he decisions made by Duke Power Company to construct and complete Catawba Unit I were reasonable, prudent, and made in good faith."
Appellants are correct in asserting that this statement is a conclusion of law rather than a finding of fact. Findings of fact are statements of what happened in space and time. These facts, when considered together, provide the basis for concluding, as the Commission did here, whether an action or decision was reasonable or prudent.
The Commission's mislabeling of its findings and conclusions will not, however, be fatal to its order if certain procedural requirements are met. The judgments and orders of courts and administrative bodies must reflect a basic understanding of how...
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