W. Va. Citizen Action Group v. Pub. Serv. Comm'n of W. Va., Monongahela Power Co.

• Citation: 233 W.Va. 327,758 S.E.2d 254
• Decision Date: 23 April 2014
• Docket Number: No. 13–1126.,13–1126.
• Court: Supreme Court of West Virginia
• Parties: WEST VIRGINIA Citizen ACTION GROUP, Petitioner v. PUBLIC SERVICE COMMISSION OF WEST VIRGINIA, Monongahela Power Company, and The Potomac Edison Company, Respondents.

233 W.Va. 327

758 S.E.2d 254

WEST VIRGINIA Citizen ACTION GROUP, Petitioner

v.PUBLIC SERVICE COMMISSION OF WEST VIRGINIA, Monongahela Power Company, and The Potomac Edison Company, Respondents.

No. 13–1126.

Supreme Court of Appeals of

West Virginia.

Submitted March 5, 2014.

Decided April 23, 2014.

Syllabus by the Court

1. “The detailed standard for our review of an order of the Public Service Commission contained in Syllabus Point 2 of Monongahela Power Co. v. Public Service Commission, 166 W.Va. 423, 276 S.E.2d 179 (1981), may be summarized as follows: (1) whether the Commission exceeded its statutory jurisdiction and powers; (2) whether there is adequate evidence to support the Commission's findings; and, (3) whether the substantive result of the Commission's order is proper.” Syl. pt. 1, Cent. W. Va. Refuse v. PSC, 190 W.Va. 416, 438 S.E.2d 596 (1993).

2. “ ‘[A]n order of the public service commission based upon its finding of facts will not be disturbed unless such finding is contrary to the evidence, or is without evidence to support it, or is arbitrary, or results from a misapplication of legal principles.’ United Fuel Gas Company v. The Public Service Commission, 143 W.Va. 33[,] [99 S.E.2d 1 (1957) ].” Syl. pt. 5, in part, Boggs v. PSC, 154 W.Va. 146, 174 S.E.2d 331 (1970).

3. “This Court will not substitute our judgment for that of the Public Service Commission on controverted evidence.” Syl. pt. 2, Chesapeake v. PSC, 171 W.Va. 494, 300 S.E.2d 607 (1982), modified on other grounds by Cent. W. Va. Refuse v. PSC, 190 W.Va. 416, 438 S.E.2d 596 (1993).

4. “Moot questions or abstract propositions, the decision of which would avail nothing in the determination of controverted rights or persons or of property, are not properly cognizable by a court.” Syl. pt. 1, State ex rel. Lilly v. Carter, 63 W.Va. 684, 60 S.E. 873 (1908).

William V. DePaulo, Esq., Charleston, WV, for Petitioner West Virginia Citizen Action Group.

Richard E. Hitt, Esq., Charleston, WV, Attorney for Respondent Public Service Commission Of West Virginia.

Carte P. Goodwin, Esq., Susan C. Wittemeier, Esq., Johnny M. Knisely, II, Esq., Goodwin & Goodwin LLP, Christopher L. Callas, Esq., John Philip Melick, Esq., Jackson Kelly PLLC, Charleston, WV, Attorneys for Respondents Monongahela Power Company and The Potomac Edison Company.

PER CURIAM:

Petitioner West Virginia Citizen Action Group appeals the October 7, 2013, order of Respondent Public Service Commission of West Virginia (“the Commission”) that approved a generation resource transaction between Respondent Monongahela Power Company (“Mon Power”) and its affiliate, Allegheny Energy Supply, LLC (“AE Supply”). In its order, the Commission approved Mon Power's acquisition of AE Supply's interest in the Harrison Power Station (“Harrison plant”), which is located in Harrison County, and Mon Power's recovery of a portion of its investment in that acquisition.

In this appeal, the petitioner contends that the Commission erred in approving a $257 million acquisition adjustment in the purchase price of the plant and allowing Mon Power, under certain conditions, to pass the $257 million acquisition adjustment along to its customers in the setting of rates. ¹ Upon consideration of the briefs and oral argument, as well as the appendices and pertinent authorities, this Court affirms the Commission's order.

I. FACTS

Mon Power and the Potomac Edison Company (“Potomac”), which is also a respondent in this case, are both subsidiaries of FirstEnergy Corporation (“FirstEnergy”).² AE Supply, which is not a party to this appeal, is also a FirstEnergy subsidiary. In 2012, Mon Power and Potomac filed a petition with the Commission to approve a generation resource transaction and related relief. The transaction consisted of (a) Mon Power's acquisition of the 79.46% ownership interest held by AE Supply in the Harrison plant, resulting in Mon Power becoming the sole owner of the Harrison plant; (b) AE Supply's acquisition of the 7.69% ownership interest held by Mon Power in the Pleasants Power Station resulting in AE Supply becoming the sole owner of the Pleasants Power Station; (c) approval of certain affiliated agreements; and (d) implementation of a temporary base rate surcharge to recover ongoing net capital and operating costs related to the transaction, effective as of the closing of the transaction and to remain in effect until new base rates are placed into effect. In the petition, Mon Power and Potomac identified a significant deficit in Mon Power's generating capacity available to supply electricity to its West Virginia customers. To address the deficit, Mon Power and Potomac proposed a transaction in which Mon Power would be allowed to pass along the $589 million acquisition adjustment in Mon Power's purchase of the Harrison plant to its customers in the rates that customers pay for electricity.

After Mon Power and Potomac's filing of its petition with the Commission, the Consumer Advocate Division of West Virginia; Petitioner West Virginia Citizen Action Group; the West Virginia Energy Users Group; the Utility Workers Union of America, AFL–CIO and its Local 304; the Sierra Club; the Independent Oil and Gas Association of West Virginia, Inc.; I.B.E.W. Local 2357, AFL–CIO; the West Virginia Oil and Natural Gas Association; the West Virginia Coal Association; and the West Virginia State Building and Construction Trades Council, AFL–CIO became intervenors in the case.

The parties and certain intervenors ultimately filed a joint stipulation which modified important aspects of the transaction as originally proposed by Mon Power and Potomac.³ The petitioner was the only party to oppose the joint stipulation. Significant to this case, the joint stipulation reduced the amount of the acquisition adjustment that Mon Power would be able to recoup from its customers from $589 million to $257 million. Further, Mon Power and Potomac agreed to a package of incentives designed to increase employment, lend economic development support to industry, assist low-income customers, promote energy efficiency in schools, support renewable energy, support lower rates, and expand funding for energy efficiency programs. In sum, the joint stipulation purports to be in the public interest by resolving the capacity shortage of Mon Power and Potomac, increasing the capitalization of Mon Power and Potomac, and increasing the state's tax base.

The Commission approved the transaction proposed by Mon Power and Potomac, as modified in the joint stipulation, after it addedthe following conditions on Mon Power, Potomac, AE Supply, and FirstEnergy ⁴:

(1) First Energy and Mon Power must agree through written verified statements filed in the record in this case within ten days of the date of this Order that they understand and agree that if First Energy does not make additional equity investment in Mon Power to cover the decline in equity caused by the write-off of the $332 million (pre-tax) Acquisition Adjustment, Mon Power must agree not to pay, and First Energy must agree that it will not receive, any dividends from Mon Power until the equity to total capital ratio of Mon Power returns to forty-five percent.

(2) FirstEnergy, AE Supply, Mon Power and Potomac Edison must agree through written verified statements filed in the record in this case within ten days of the date of this Order that they understand and agree to allow the initial $257 million Acquisition Adjustment to be subject to adjustment through a refund from First Energy or AE Supply if the [Federal Energy Regulatory Commission] determines that purchase price paid by Mon Power exceeds the fair market valuation of Harrison. If the FERC makes such a determination, the portion of the $257 million Acquisition Adjustment that exceeds fair market value will be returned to Mon Power by either First Energy or AE Supply, and the refund will be credited to the Acquisition Adjustment account.

(3) FirstEnergy, Mon Power, and Potomac Edison must agree through written verified statements filed in the record in this case within ten days of the date of this Order that they understand and agree that the return on, and return of, the $257 million Acquisition Adjustment will be allowed in base rates only to the extent that fifty percent of the net margins from off-system transactions from the additional Harrison capacity acquired by Mon Power will support that return. The full return requirement will be allowed each year subject to prospective adjustment based on a review of the achieved net margins from off-system sales in relation to the amount of return requirement built into the initial surcharge, and thereafter base rates. During the initial Surcharge true-up period, and thereafter when the return component on the Acquisition Adjustment is built into base rates, we will consider fifty percent of net margins on off-system sales attributable to the additional Harrison capacity as available for return on, and of, the remaining balance of the $257 million Acquisition Adjustment authorized in this case. This will not affect the [Expanded Net Energy Cost] calculations. If the monthly accumulation of return requirements previously built into the initial surcharge and thereafter base rates of [Mon Power and Potomac] between base rates exceed the allowable amount based on the achieved net margins on off-system sales, a prospective adjustment credit will be embedded in prospective base rates. If the monthly accumulation of return requirements previously built into the initial surcharge or base rate of [Mon Power and Potomac] between base rate cases is less than the allowable amount based on the achieved net margins of off-system sales, no prospective adjustment will be made to base rates. Each base rate case will reset the balance of the net return components to allowable amount on the achieved net margins of off-system sales to zero.

Mon Power, Potomac, AE Supply, and FirstEnergy accepted...