Watergate Improvement Assoc. v. Public Serv. Com'n

• Decision Date: 23 September 1974
• Docket Number: No. 7549.,7549.
• Citation: 326 A.2d 778
• Parties: WATERGATE IMPROVEMENT ASSOCIATES (a limited partnership), Petitioner, v. PUBLIC SERVICE COMMISSION of the District of Columbia, Respondent, Washington Gas Light Company, Intervenor.
• Court: D.C. Court of Appeals

Page 778

326 A.2d 778

WATERGATE IMPROVEMENT ASSOCIATES (a limited partnership), Petitioner, v. PUBLIC SERVICE COMMISSION of the District of Columbia, Respondent Washington Gas Light Company, Intervenor.

No. 7549.

District of Columbia Court of Appeals.

Argued December 13, 1973.

Decided September 23, 1974.

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A. Fred Freedman, Washington, D.C., for petitioner.

Linus H. Deeny, Asst. Corp. Counsel, with whom C. Francis Murphy, Corp. Counsel, and C. Belden White, II, Asst. Corp. Counsel, Washington, D.C., were on the brief, for respondent.

Paul H. Harrington, Washington, D.C., with whom Samuel S. Hollingsworth, Henry F. Krautwurst and Paul H. Ford, Washington, D.C., were on the brief, for intervenor. Kevin J. Baldwin, Washington, D.C., entered an appearance for intervenor.

Before KELLY, NEBEKER and PAIR, Associate Judges.

KELLY, Associate Judge:

On March 28, 1973 respondent Public Service Commission of the District of Columbia issued an order approving new rate schedules and regulations proposed by intervenor Washington Gas Light Company to govern steam and chilled water service to the Watergate complex,¹ to become effective April 1, 1973.² Petitioner Watergate Improvement Associates (Watergate)³ asked the Commission to reconsider its order⁴ and when the request was denied⁵ sought appellate review pursuant to D.C.Code 1973, § 43-705.

The issues raised on appeal are (1) whether the Public Service Commission (Commission) has jurisdiction over the rates charged by Washington Gas Light Company for steam and chilled water service to the Watergate complex; (2) whether Watergate received adequate notice of the proposed increases in its steam and chilled water service rates; (3) whether the Commission was bound by the terms and conditions of the original contract between Watergate's predecessor in interest and Washington Gas Light Company, and (4) whether the approved rates are just and reasonable and based on an adequate analysis of the evidence in the record. For the reasons which follow we affirm.

I

The service at issue is the supplying and transmission by Washington Gas Light Company (WGL) of steam and chilled water through a series of pipes in the Watergate buildings for the purpose of heating and cooling the buildings. The contract between WGL and Watergate, the only customer for this unique service, was agreed to in 1964. WGL, in turn, sought authorization from the Commission to provide the service. The Commission granted WGL the permission it sought, determining that the service came within its jurisdiction, and approved the initial contract rates as just and reasonable.⁶ Its order was subsequently upheld by the United States District Court for the District of Columbia, Asso. Fair Competitive Practices v. D. C. Pub. Serv. Comm., 65 P.U.R.3d 303 (D.C.1965), aff'd, Association of Fair Comp. Prac. in Air Con. v. Public Serv. Com'n, 125 U.S.App.D.C. 361, 372 F.2d 934 (1967).

On July 9, 1971, in a case captioned "In the Matter of the Application of WASHINGTON GAS LIGHT COMPANY for authority to increase existing rates, tolls, charges and schedules for gas service", WGL applied for a general increase in its retail rates sufficient to produce at least an 8.50% rate of return on its rate base.⁷ A public notice summarizing the application and inviting interested parties to respond regarding the application prior to September 16, 1971 was issued on August 17, 1971. It was captioned "IN THE MATTER OF Application of WASHINGTON GAS LIGHT COMPANY for an increase in its rate of return and for an increase in the existing rates, tolls, and charges for gas service." During the months that followed the Commission first disposed of preliminary matters and then, on January 10, 1972, issued an order delineating the matters at issue, setting the schedule of future proceedings, granting intervention to seven parties, and dividing the case in two segments: Phase I to determine operating results, revenue requirements and rate of return; Phase II to determine the appropriate rate structure.⁸ Additional motions for intervention were granted and additional procedural motions were received and granted during Phase I of the proceedings. When Phase I was completed the Commission issued its order of August 2, 1972,⁹ in which it found, among other things, that a fair and reasonable rate of return for WGL was 8.23% and to realize that rate of return required a $1,611,000 increase in WGL's District of Columbia operating revenues. WGL was directed to submit proposed rate schedules, with supporting testimony, to initiate Phase II of the proceedings.

Proposed rate schedules and supporting testimony, including a new schedule for the steam and chilled water service to the Watergate complex, were submitted on August 11, 1972. It was at the point when Phase II hearings commenced; viz., September 1, 1972, that counsel for the various Watergate complex interests¹⁰ sought to intervene, complaining that they had first learned of the dimensions of the proposed increases in Watergate's rates through a letter sent them by WGL on August 25, 1972.¹¹ A 60-day continuance was also requested. Intervention was granted but the Commission denied the requested continuance and required Watergate counsel to proceed with cross-examination, adding that the parties would be permitted to file briefs on the issues raised by Watergate.

On consideration of the briefs which were later filed and of a proposed stipulation between Watergate and WGL conceding that Watergate had not been given adequate and proper notice of the proposed rate increases, the Commission issued an order rejecting the stipulation but reopening the record with respect to the steam and chilled water rates.¹² The order provided in part that

. . . in the interest of fairness to all parties and persons affected, Watergate shall be given an opportunity to cross-examine the Company on that portion of its testimony in the record relating to steam and chilled water rates and to submit testimony and exhibits solely relating to the issue of the proposed steam and chilled water rates . . . Watergate's testimony shall be subject to cross-examination by the Company, any other intervenors, and the Staff of the Commission. . . .¹³

To avoid further delay WGL requested that the Phase II proceedings, excepting those relating to Watergate, continue without interruption on condition that if the proposed Watergate increase were reduced WGL would not seek to recover the lost revenue through additional changes in its gas rates. Accepting WGL's proposal the Commission issued its Phase II order of October 26, 1972, in which it approved WGL's proposed gas rate schedules and regulations, with specified modifications, to be effective November 1, 1972.¹⁴

Proceedings respecting the proposed steam and chilled water rates were subsequently completed. After receipt of additional briefs, hearings and oral argument, the Commission issued its opinion and order approving the rate schedules and regulations proposed by WGL for the steam and chilled water service, finding them to be just, reasonable and nondiscriminatory.¹⁵ It is from this order, which the Commission declined to reconsider¹⁶ (as well as the prior underlying orders), that Watergate appeals.

II

It is necessary to note at the outset that the scope of our review of the Commission's actions is "limited to questions of law, including constitutional questions; and the findings of fact by the Commission shall be conclusive unless it shall appear that such findings of the Commission are unreasonable, arbitrary, or capricious." D.C.Code 1973, § 43-706. See, e. g., Goodman v. Public Service Commission, D.C. App., 309 A.2d 97, 100 (1973); Telephone Users Ass'n v. Public Service Com'n of D.C., D.C.App., 304 A.2d 293, 296 (1973), cert. denied, 415 U.S. 933, 934, 94 S.Ct. 1448, 1449, 39 L.Ed.2d 492 (1974); Goodman v. Public Service Com'n of District of Columbia, D.C.Cir., 497 F.2d 661 (1974); D. C. Transit System, Inc. v. Public Utilities Com'n of D. of C., 110 U.S.App.D.C. 241, 292 F.2d 734 (1961); Washington Gas Light Co. v. Baker, 88 U.S.App.D.C. 115, 118-119, 188 F.2d 11, 14-15 (1950), cert. denied, 340 U.S. 952, 71 S.Ct. 571, 95 L.Ed. 686 (1951).

The applicable principles on review are those expressed in Western Air Lines, Inc. v. Civil Aeronautics Board, 495 F.2d 145, 152 (D.C.Cir. 1974), as follows:

In reviewing the Board's action, we are bound by the Board's findings of fact if supported by substantial evidence. . . . If the findings are supported by substantial evidence, we must accept also the conclusions drawn therefrom unless they are seen to be arbitrary or capricious, or to rest on premises that are deemed contrary to ascertainable legislative intent, or are otherwise contrary to law. . . . En applying the substantial evidence test, "we are obliged to search the entire record, or those parts of it to which the parties refer us, to determine whether . . . the agency . . . could fairly and reasonably find the facts as it did.". . . A conclusion may be supported by substantial evidence even though a plausible alternative interpretation of the evidence would support a contrary view. . . .¹⁷ [Citations omitted.]

And the methodology of such review is that explained in Goodman v. Public Service Com'n of District of Columbia, supra 497 F.2d at 666:

In any analysis of whether an end result (i. e. the new rate) is not arbitrary, we are aware that since the result is but the "sum of a number of components," each component must be analyzed. Mississippi River Fuel Corp. v. FPC, 82 U.S. App.D.C. 208, 163 F.2d 433, 451 (1947). As is pointed out in the Mississippi River case, a component analysis was in fact used by Mr. Justice Douglas in the case of FPC v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333 (1944) from which the "end result" language is often drawn. Id. at 603, 64 S. Ct. 281. We must...