Virginia Elec. and Power Co. v. Public Service Commission of West Virginia

• Decision Date: 31 October 1978
• Docket Number: No. 14249,14249
• Citation: 248 S.E.2d 322,162 W.Va. 202
• Court: West Virginia Supreme Court
• Parties: , 28 P.U.R.4th 12 VIRGINIA ELECTRIC AND POWER CO., a corp. v. PUBLIC SERVICE COMMISSION OF WEST VIRGINIA.

Page 322

248 S.E.2d 322

162 W.Va. 202, 28 P.U.R.4th 12

VIRGINIA ELECTRIC AND POWER CO., a corp. v. PUBLIC SERVICE COMMISSION OF WEST VIRGINIA.

No. 14249.

Supreme Court of Appeals of West Virginia.

Oct. 31, 1978.

Syllabus by the Court

1. The apparent conflict between W. Va. Code, 24-2-2 (1935) which does not require a hearing before the Public Service Commission may modify a public utility's tariff and W. Va. Code, 24-2-3 (1923) which does require such hearing may be resolved by reference to W. Va. Const., Art. III, § 10 which implies such hearing as an integral part of procedural due process.

2. Parties adversely affected by an order of the Public Service Commission are entitled to a hearing because absent a hearing and a record, meaningful appellate review of the Commission's action as contemplated by W. Va. Code, 24-5-1 (1923), would be impossible.

3. W. Va. Code, 24-2-3 (1923) authorizes only prospective and not retroactive changes in a utility's rate structure; however, the Public Service Commission may modify tariff rates prospectively to offset past overcharges or undercharges by the utility to ensure an average fair rate of return neither more nor less.

Guy T. Tripp, III, Hunton & Williams, Richmond, Va., Jackson, Kelly, Holt & O'Farrell, F. Paul Chambers and Michael A. Albert, Charleston, for petitioner.

Joel B. Shifman, Charleston, for respondent.

NEELY, Justice:

This case presents two issues of law: first, whether the Public Service Commission of West Virginia must give a hearing to a public utility in this State before revising that utility's tariff; and, second, whether the Public Service Commission may revise a public utility's tariff retroactively and require the utility to make refunds to its customers based on the retroactive revision of the tariff. We hold that a hearing is mandated before any tariff revision may be made, and that revised tariffs cannot be applied retroactively.

On 26 May 1978 the Public Service Commission of West Virginia entered an order requiring appellant Virginia Electric and Power Co. to file with the commission revised tariffs effective 1 April 1978 and to make certain refunds to its customers based retroactively on such revised tariffs. This was a final order in a "Proceeding Upon Commission's Own Motion" and was entered without either notice or hearing. The commission indicated in its order that the purpose of the lower tariff and the resulting refunds was to "pass through" to the utility's customers a reduction in the utility's cost of doing business which resulted from a decrease in the State Business and Occupation Tax on domestic sales of electricity pursuant to the amendment of W.Va.Code, 11-13-2d effective 1 April 1978. ¹ On 7 June 1978, the appellant utility petitioned for reconsideration and requested the commission to rescind its order and hold hearings as required by W.Va.Code, 24-2-3 (1923) or, in the alternative, to stay the effective date of the order for a reasonable time to permit the appellant to seek review in this Court pursuant to W.Va.Code, 24-5-1 (1923). On 9 August 1978 the commission denied appellant utility's petition and the appellant brought this appeal.

Virginia Electric and Power Co. predicates its appeal upon the assertion that the commission's action constituted an unlawful taking of utility property without due process which would properly have included notice, a hearing, and detailed findings that the existing rates were unreasonable, all of which are codified in the mandate of W.Va.Code, 24-2-3 (1923). The commission, on the other hand, predicates its defense on the authority granted to it by W.Va.Code, 24-2-2 (1935), which allegedly empowers it to change rates upon its own initiative and without the need for a hearing.

This Court must concede at the outset that the two statutes cited respectively by each of the parties in support of its own position are indeed inconsistent. The pertinent part of W.Va.Code, 24-2-2 (1935) says:

The commission may change any intrastate rate, charge or toll which is unjust or unreasonable or any interstate charge with respect to matters of a purely local nature which have not been regulated by or pursuant to act of Congress and may prescribe such rate, charge or toll as would be just and reasonable, and change or prohibit any practice, device or method of service in order to prevent undue discrimination or favoritism between persons and between localities and between commodities for a like and contemporaneous service. . . .

It should be noted that this provision of the Code does not require a hearing as a condition precedent to the commission's modification of any intrastate rate; nonetheless, W.Va.Code, 24-2-3 (1923) essentially restates the authority granted by Code, 24-2-2 (1935), but further requires a hearing before any action adverse to a utility can be taken. The pertinent part of Code, 24-2-3 (1923) provides:

And whenever the commission shall, After hearing, find any existing rates, tolls, tariffs, joint rates or schedules unjust, unreasonable, insufficient or unjustly discriminatory or otherwise in violation of any of the provisions of this chapter, the commission shall by an order fix reasonable rates, joint rates, tariffs, tolls or schedules to be followed in the future in lieu of those found to be unjust, unreasonable, insufficient or unjustly discriminatory or otherwise in violation of any provisions of law, and the said commission, in fixing the rate of any railroad company, may fix a fair, reasonable and just rate to be charged on any branch line thereof, independent of the rate charged on the main line of such railroad. (emphasis added)

The commission argues strenuously that the two statutes cited are independent of one another and, therefore, the commission has authority to alter a tariff on its own motion under W.Va.Code, 24-2-2 (1935), and that when the commission operates under Code, 24-2-2 (1935) the hearing provision incorporated in Code, 24-2-3 (1923) does not apply.

I

The Court could dip its bucket down into the well called "Canons of Statutory Construction" to select a rule which would rationalize why we choose to require a hearing in this particular situation. The same well, however, would willingly provide a contrary rule which would rationalize a contrary result. ² It would appear to the Court that candor requires a reconciliation based only on what should be proper procedure under modern concepts of administrative law. The statutes are contradictory, but if we were to find that W.Va.Code, 24-2-2 (1935) permits a tariff to be revised without hearing, then we would be further compelled to find that this statute violates well-established constitutionally mandated procedural due process requirements.

Laudable as the commission's goals may be in attempting to reduce the burden on utility consumers in this age of inflation, there is no question that a significant reduction in a utility's tariff is a taking of property which must be accompanied by some fair procedure to preclude an unlawful taking. The Business and Occupation Tax is but one element of a utility's cost and before the commission can pass through a reduction in that cost to consumers by changing the effective tariff, it must permit the utility to demonstrate that on its side overall costs have increased which would imply that a timely tariff reduction will effectively reduce the utility's rate of return below the constitutionally mandated fair rate of return.

When we look at the two statutes under consideration, we find that it was the intent of the legislature by enactment of W.Va.Code, 24-2-3 (1923) to provide a hearing before any adverse change in tariff could be effected and that W.Va.Code, 24-2-2 (1935) dealing with a more general subject, namely the general power of the commission to regulate public utilities, was inadvertently silent in this instance since the legislature would have been aware that the hearing requirement is implied by the W.Va.Const., Art. III, § 10. In this regard it must be remembered that administrative law originated in the development of constitutional perimeters which circumscribe the administrative process. ³ The fact that these original constitutional limitations were later codified by statute in such acts as the Administrative Procedure Act, 5 U.S.C. § 551 (1976) Et seq., the State Administrative Procedures Act, W.Va.Code, 29A-1-1 (1964) Et seq., or the Public Service Commission Act, W.Va.Code, 24-1-1 (1923) Et seq. in no regard implies legislative authority to diminish or nullify the constitutional strictures. Consequently, statutory attempts to nullify constitutionally mandated procedural due process requirements either by contrary provisions or silence must be unavailing.

Furthermore, we find that the commission's action in failing to grant the Virginia Electric and Power Co. a hearing before modifying its tariff is in conflict with W.Va.Code, 24-5-1 (1923), which grants judicial review to any aggrieved party from any final order of the commission. That section provides in pertinent part:

Any party feeling aggrieved by the entry of a final order by the commission, affecting him or it, may present a petition in writing to the supreme court of appeals, or to a judge thereof in vacation, within thirty days after the entry of such order, praying for the suspension of such final order. . . .

If there is no hearing in the Public Service Commission before the entry of an order such as the one under consideration, then necessarily there will be no record and, consequently, review of the commission's action will be impossible because this Court will be foreclosed from reviewing the methodology employed by the commission and the evidence supporting its decision. ⁴ If, indeed, the public utility is always permitted to argue in this Court that the commission's action may reduce its rate of return below the constitutionally mandated fair rate of return, ...