Woodbury Water Co. v. Public Utilities Commission

• Decision Date: 21 February 1978
• Citation: 386 A.2d 232,174 Conn. 258
• Court: Connecticut Supreme Court
• Parties: WOODBURY WATER COMPANY v. PUBLIC UTILITIES COMMISSION. NEW MILFORD WATER COMPANY v. PUBLIC UTILITIES COMMISSION.

Page 232

386 A.2d 232

174 Conn. 258

WOODBURY WATER COMPANY v. PUBLIC UTILITIES COMMISSION.

NEW MILFORD WATER COMPANY v. PUBLIC UTILITIES COMMISSION.

Supreme Court of Connecticut.

Argued Nov. 3, 1977.

Decided Feb. 21, 1978.

A. Searle Pinney, Danbury, with whom was David F. Bennett, Danbury, for appellants (plaintiffs).

Robert S. Golden, Jr., Asst. Atty. Gen., with whom, on brief, was Carl R. Ajello, Atty. Gen., for appellee (defendant).

Before HOUSE, C. J., and LOISELLE, BOGDANSKI, LONGO and SPEZIALE, JJ. BOGDANSKI, Associate Justice.

Woodbury Water Company and New Milford Water Company each took an appeal to the Court of Common Pleas from the action of the public utilities commission in denying their applications for a rate increase filed pursuant to §§ 16-19 and 16-19e of the General Statutes. ¹ Although there was no formal consolidation of the cases, the appeals were heard together and ordered dismissed by the trial court. From the judgments rendered, the plaintiffs appealed to this court. Because the issues are identical, we will treat both cases in one opinion.

The sole assignment of error raises two issues: (1) whether the defendant commission exceeded its authority in denying the requested rate increases, and (2) whether the rates in question are confiscatory. The burden of showing that the commission acted illegally and in excess of its authority is upon the plaintiffs. Briggs Corporation v. Public Utilities Commission, 148 Conn. 678, 687, 174 A.2d 529; Greenwich v. Greenwich Water Co., 145 Conn. 526, 533, 144 A.2d 318. The court concluded that each plaintiff failed to sustain that burden "especially in view of the findings of the commission that Woodbury will receive a return (on equity) of 9.08% and New Milford a return (on equity) of 10.29%."

The plaintiffs are public service companies chartered by the General Assembly to supply water to industrial, commercial and residential customers. The defendant is a public regulatory agency. The parties have agreed that the public utilities control authority, the successor agency of the defendant, will be bound by any decision rendered in these cases.

At the outset, it is appropriate to note that pursuant to § 4-183(f) of the General Statutes ² the trial court heard no evidence but determined the cases solely on a review of the record on appeal. Only a limited finding was made by the court. Although the parties entered into a stipulation of facts, the court refused to approve or disapprove that stipulation for the reason that it amounted to nothing more than a request for a finding of facts. Maltbie, Conn.App.Proc. § 126. The court properly refused to act on the stipulation.

With respect to the Woodbury application: The record reveals that after hearing the evidence, the commission proceeded to evaluate that evidence in terms of revenues and expenses and made its finding and decision as follows: "Finding of Facts. 1. The present rates charged by the Company are less than just, reasonable and adequate to enable it to provide properly for the public convenience, necessity and welfare. 2. A rate structure which will provide the Company with additional revenues of $7,450 is approved. This increase in revenues will allow the Company a net income of $26,303. 3. The allowed net income of $26,303 will provide the Company with an adequate margin of profit and a return on equity of 9.08%. 4. The additional revenue allowed will result from rates which are not unreasonably discriminatory or more or less than just, reasonable and adequate to enable the Company to provide for the public convenience, necessity and welfare. Decision. Based on the foregoing, the amended schedule of rates as filed with the Commission is denied. Additional revenues in the approximate amount of $7,450 over the annual revenues received by the Company under its present rates are approved . . . ."

With respect to the New Milford application: After hearing the evidence, the commission evaluated that evidence in terms of revenues, meter testing programs, fire protection service, rate base, expenses, and cost of capital, and made its finding and decision as follows: "Finding of Facts. 1. The test year for this rate case application is the 12 months ended June 30, 1974. 2. The rate base for the purposes of this application is $1,132,069. 3. The Company's rate of return of 10.7% at the present rates is just, reasonable and adequate to allow the Company to fulfill its statutory duty to the public. 4. The allowed net income of $122,291 will provide the Company with an adequate margin of profit and a return on equity of 10.29%. 5. The earnings produced by the current level of rates is sufficient to enable the Company to provide properly for the public convenience, necessity and welfare. 6. In consideration of the adjustments made by the Commission as detailed above, the increase in revenues sought by the Company in the proposed amendment to the existing schedule of rates on file is denied. 7. The Company has failed to sustain its burden of proof to demonstrate its need for the increased revenues requested. Decision. Based on the foregoing, the amended schedule of rates as filed with the Commission is denied."

On an appeal of the instant cases, the trial court's function was "a review of the proceedings before the commission to determine whether the action appealed from was legal. Jaffe v. State Department of Health, 135 Conn. 339, 354, 64 A.2d 330; Kram v. Public Utilities Commission, 126 Conn. 543, 550, 12 A.2d 775." Connecticut Television, Inc. v. Public Utilities Commission, 159 Conn. 317, 329, 269 A.2d 276, 282. Specifically, the court's task was to determine on the record whether there was a logical and rational basis for the decision of the commission or whether, in the light of the evidence, the commission had acted illegally or in abuse of its discretion. Id., 328, 269 A.2d 276. "A conclusion of the commission not legally supported by the evidence would constitute an abuse of its powers. The weight and credibility of the evidence offered are, however, matters within the province of the commission." Brook Ledge, Inc. v. Public Utilities Commission, 145 Conn. 617, 619, 145 A.2d 590, 591; see Norwalk Street Ry. Co.'s Appeal, 69 Conn. 576, 37 A. 1080. The trial court is not to substitute its own judgment or discretion for that of the commission. Gulf Oil Corporation v. Board of Selectmen, 144 Conn. 61, 65, 127 A.2d 48; Conley v. Board of Education, 143 Conn. 488, 498, 123 A.2d 747.

Utilizing those basic principles and restricting itself to the evidence before the commission, the trial court in this case would have found ample evidence in the record to support the commission's conclusions and to justify the denials of the requested rate increases. In view of the evidence printed in the appendices to the commission's briefs, which fully support the commission's findings, and in view of the guidelines which the commission is required to follow as set forth in § 16-19e of the General Statutes, ³ we conclude that the trial court did not abuse its discretion in sustaining the action of the commission.

The plaintiffs further contend "that the rates in question are . . . confiscatory." The constitutional guidelines for determining whether utility rates are confiscatory were enunciated by the United States Supreme Court in the case of Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333. The court noted "that the Commission was not bound to the use of any single formula or combination of formulae in determining rates. Its rate-making function, moreover, involves the making of 'pragmatic adjustments.' . . . (Federal Power Commission v. Natural Gas Pipeline Co., 315 U.S. 575, 586, 62 S.Ct. 736, 86 L.Ed. 1037). And when the Commission's order is challenged in the courts, the question is whether that order 'viewed in its entirety' meets the requirements of the . . . (legislation). Id., p. 586, (62 S.Ct. (736) at 743,) . . . . (I)t is the result reached not the method employed which is controlling. (Citations omitted.) It is not theory but the impact of the rate order which counts. If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry . . . is at an end. The fact that the method employed to reach that result may contain infirmities is not then important. Moreover, the Commission's order...