Tongren v. Pub. Util. Comm.

• Decision Date: 24 March 1999
• Docket Number: Nos. 97-740,97-1294,s. 97-740
• Citation: 85 Ohio St.3d 87,706 N.E.2d 1255
• Parties: , Util. L. Rep. P 26,689 TONGREN, Ohio Consumers' Counsel, Appellant, v. PUBLIC UTILITIES COMMISSION OF OHIO et al., Appellees. (Two Cases)
• Court: Ohio Supreme Court

Page 87

85 Ohio St.3d 87

706 N.E.2d 1255, Util. L. Rep. P 26,689

TONGREN, Ohio Consumers' Counsel, Appellant, v. PUBLIC UTILITIES COMMISSION OF OHIO et al., Appellees. (Two Cases)

Nos. 97-740, 97-1294.

Supreme Court of Ohio.

Submitted Dec. 1, 1998.

Decided March 24, 1999.

These appeals involve orders in two cases brought before the Public Utilities Commission of Ohio ("commission"). The first case, No. 96-991-GA-UNC, involved the commission's approval of the merger of West Ohio Gas Company ("West Ohio") into the East Ohio Gas Company ("East Ohio"). The second case, No. 96-219-GA-GCR, involved the commission's approval of East Ohio's gas cost recovery ("GCR") rate at a date subsequent to the merger. The Ohio Consumers' Counsel ("OCC") intervened and participated in both the merger-approval and the GCR rate cases and is the appellant in these appeals. East Ohio intervened as an appellee in both appeals. The appeals were consolidated for purposes of oral argument and submission to the court.

In its appeal of the commission's decisions in the first case, OCC complains that the commission's approval of the merger and its approval of a consolidated single GCR rate for both companies were unsupported by the record of the case. In its appeal of the second case, OCC complains that the commission's consideration of East Ohio's subsequent GCR rate was flawed, because it was based on matters decided in the first case that were unsupported by the record in that case.

The causes are before this court upon appeals as of right.

Robert S. Tongren, Ohio Consumers' Counsel, Frank P. Darr, Legal Director, Yolanda V. Vorys, Assistant Legal Director, Thomas J. O'Brien, Joseph P. Serio, Eric B. Stephens and David C. Bergman Assistant Consumers' Counsel, for appellant.

Betty D. Montgomery, Attorney General, Duane W. Luckey and Thomas W. McNamee, Assistant Attorneys General, for appellee Public Utilities Commission of Ohio.

Jones, Day, Reavis & Pogue, Helen L. Liebman, Columbus and Paul T. Ruxin, Cleveland, for intervening appellee East Ohio Gas Company.

LUNDBERG STRATTON, Justice.

The commission, as a creature of statute, has and can exercise only the authority conferred upon it by the General Assembly. Columbus S. Power Co. v. Pub. Util. Comm. (1993), 67 Ohio St.3d 535, 620 N.E.2d 835; Pike Natural Gas Co. v. Pub. Util. Comm. (1981), 68 Ohio St.2d 181, 22 O.O.3d 410, 429 N.E.2d 444; Consumers' Counsel v. Pub. Util. Comm. (1981), 67 Ohio St.2d 153, 21 O.O.3d 96, 423 N.E.2d 820; and Dayton Communications Corp. v. Pub. Util. Comm. (1980), 64 Ohio St.2d 302, 18 O.O.3d 478, 414 N.E.2d 1051.

R.C. 4903.09 states:

"In all contested cases heard by the public utilities commission, a complete record of all the proceedings shall be made, including a transcript of all testimony and of all exhibits, and the commission shall file, with the records of such cases, findings of fact and written opinions setting forth the reasons prompting the decisions arrived at, based upon said findings of fact."

This court observed in MCI Telecommunications Corp. v. Pub. Util. Comm. (1987), 32 Ohio St.3d 306, 311, 513 N.E.2d 337, 343:

"The purpose of R.C. 4903.09 (formerly G.C. 614-46a), as stated by this court in Commercial Motor Freight, Inc. v. Pub. Util. Comm. (1951), 156 Ohio St. 360, 363-364, 46 O.O. 210, 211-212, 102 N.E.2d 842, 844-845, is:

" ' * * * to enable this court to review the action of the commission without reading the voluminous records in Public Utilities Commission cases. Where the commission states the facts found upon which it bases its decision, this court can usually readily determine, as it is required to do by Section 544, General Code [now R.C. 4903.13], whether the order of the commission is "unlawful or unreasonable." A review of the essential facts so found can also be made with the help of record references supplied by opposing counsel in their briefs. The General Assembly never intended this court to perform the same functions and duties as the Public Utilities Commission but it did intend that this court should determine whether the facts found by the commission lawfully and reasonably justified the conclusions reached by the commission in its order and whether the evidence presented to the commission as found in the record supported the essential findings of fact so made by the commission.' * * *" (Emphasis sic.)

Strict compliance with the terms of R.C. 4903.09 is not required. However, a commission order must provide "in sufficient detail, the facts in the record upon which the order is based, and the reasoning followed by the PUCO in reaching its conclusion." Id., 32 Ohio St.3d at 312, 513 N.E.2d at 344; Allnet Communications Serv., Inc. v. Pub. Util. Comm. (1994), 70 Ohio St.3d 202, 209, 638 N.E.2d 516, 521. This court in a number of decisions has addressed the question of what constitutes adequate factual support for commission orders. ¹ Suffice it to say, some factual support for commission determinations must exist in the record, an obligation which the commission itself has recognized in its orders. See, e.g., In re Petition of Studer & Numerous Other Subscribers of Neapolis Exchange of ALLTEL Ohio (Sept. 6, 1990), Pub. Util. Comm. No. 88-481-TP-PEX. (Entry on Rehearing.)

This court noted recently that "[a] legion of cases establish that the commission abuses its discretion if it renders an opinion on an issue without record support." Cleveland Elec. Illum. Co. v. Pub. Util. Comm. (1996), 76 Ohio St.3d 163, 166, 666 N.E.2d 1372, 1375.

The record in the first case consists of the companies' joint application for approval of the merger; comments filed by OCC and another interested party; the companies' responses to those comments; and correspondence from the companies to the commission's staff, dated December 10, 1996, which was unsworn and signed by the companies' attorney. No hearing was held and no written testimony was filed on behalf of the companies or any other interested party. The commission's staff filed no comments, testimony, or report.

As to the merger approval, per se, in its December 19, 1996 Finding and Order, the commission makes numerous references to input from its staff upon which it relied. The commission refers to "findings" of its staff. Yet there is nothing in the record containing those findings, much less the factual bases for them. The commission also refers to a number of recommendations made by its staff and indicates they were made after the staff "reviewed" certain information. In one of its findings, the commission indicates that a staff recommendation resulted from discussions between the staff and East Ohio. Yet the record is devoid of what data, information, or facts the staff reviewed or considered in support of its recommendation. It is clear from the December 19, 1996 Finding and Order that the commission accepted its staff's recommendations and adopted as its own various of its staff's findings. However, there is nothing in the record below to evince the bases for the commission's acceptance of such recommendations and adoption of such findings.

As to GCR rates, the commission's December 19, 1996 Finding and Order indicated that the companies proposed to combine their separate GCR rates as a result of the proposed merger and that cost savings would be a consequence. The findings also indicate that the combined GCR rate would result in a $.70 per Mcf ² reduction to West Ohio's customers and a $.02 per Mcf increase to East Ohio's customers caused by "the averaging affect [sic ] of the demand components contained within the two GCR rates."

With the exceptions of the GCR rate reduction finding as to West Ohio's customers and a self-evident finding as to cost savings from improved administrative efficiency resulting from combining the GCR rates into one, there is no support in the record for any of the conclusions or findings of the commission's staff set forth in the GCR findings. In its own findings, the commission states, "[s]taff finds that the proposal to combine the GCR rates of West Ohio and East Ohio, [sic ] into a single GCR rate to be reasonable." However, it is impossible to determine what record evidence was considered by the staff in determining reasonableness. Since the commission adopted the staff's determination of reasonableness as its own, it is impossible to determine what record evidence was considered by the commission other than the conclusion of its staff and the assertion of factually unsupported conclusions by the companies in their joint application for merger approval.

The controlling law with respect to the first case, No. 96-991-GA-UNC, is defined by a 1975 Ohio Supreme Court decision, Ideal Transp. Co. v. Pub. Util. Comm. (1975), 42 Ohio St.2d 195, 71 O.O.2d 183, 326 N.E.2d 861, and a 1937 United States Supreme Court decision, Ohio Bell Tel. Co. v. Pub. Util. Comm. of Ohio (1937), 301 U.S. 292, 57 S.Ct. 724, 81 L.Ed. 1093.

The law of the case in Ideal Transportation, as set forth in its syllabus, is as follows:

"1. Where an opinion and order of the Public Utilities Commission fails to state specific findings of fact, supported by the record, and fails to state the reasons upon which the conclusions in the commission's opinion and order were based, such order fails to comply with the requirements of R.C. 4903.09, and is, therefore, unlawful.

"2. The Public Utilities Commission must base its decision in each case upon the record before it."

In Ideal Transportation, the Supreme Court of Ohio reversed an order of the commission that was based on thirteen findings of fact. The court determined that only two of the findings had any bearing on the commission's decision and that neither of those two findings had support in the record.

In Ohio Bell, the United States Supreme Court reversed and remanded a decision of the Supreme Court of Ohio that had affirmed a commission order directing the refund of rates collected by the...