Barasch v. Pennsylvania Public Utility Commission

568 A.2d 276, 130 Pa. Commw. 299, 1989 Pa. Commw. LEXIS 811
Commonwealth Court of Pennsylvania·Decided December 22, 1989·No. Nos. 2770, 2771, 2828 C.D. 1988·Published·Cited by 1 cases

Opinion

OPINION

BARRY, Judge.

The Office of Consumer Advocate (Consumer Advocate) has petitioned this Court to review orders of the Pennsylvania Public Utility Commission (PUC) granting general rate increases to three water utilities. The Consumer Advocate submits that the procedural treatment of these three water rate cases before the PUC constituted violations of due process as guaranteed by the U.S. Constitution and provisions of the law of this Commonwealth delegating to the PUC administrative authority to consider the general rate increases sought by utilities. We find that the procedural treatment of these cases constituted an infraction of our law. We do not pass on the question of whether there has [301]*301been a violation of the U.S. Constitution. We also do not pass on the question of whether the PUC’s potential adoption of the settlement negotiated among the parties here would inevitably result in impermissible interim ratemaking. There being no final order adopting the parties’ joint settlement proposal, we conclude that this question is not ripe for our disposition at this time.

The Consumer Advocate’s petitions in each of the three water rate cases were consolidated for argument and disposition by this Court. In addition to the water companies, the PUC, and the Consumer Advocate, we have entertained briefing, argument, and post argument submissions by the Pennsylvania Rural Water Association and Rural Sewer Utilities Group as amici curiae.

The three water companies, Elmbrook Water Company (Elmbrook), Hamilton Water Company (Hamilton) and Rivercrest Public Service Water Corporation (Rivercrest), each filed a general rate increase case with the PUC in 1988. Elmbrook sought a 7.25% increase in annual revenues, Hamilton requested a 9.7% increase, and Rivercrest made its case for a 16.3% increase. All these companies are wholly owned subsidiaries of National Utilities, Inc. of Scranton, the owner of several other water and sewer utilities throughout Pennsylvania.

The Consumer Advocate challenged these rate increases and, in the case of Rivercrest, twenty-nine formal complaints were also lodged by individual ratepayers.

The PUC granted the rate increases sought by Elmbrook and Hamilton respectively in orders issued on October 28, 1988. The PUC similarly issued an order on November 7, 1988 retroactively instituting the rate increase sought by Rivercrest effective October 8, 1988. In each of these orders the PUC indicated that its investigation and analysis of the tariff filing and supporting data as presented by the water companies resulted in a conclusion that the rates sought were not unjust or unlawful. However, in each of its opinions while the PUC acknowledged the complaints lodged against the tariff filings, it indicated that its decision [302]*302to permit the new tariffs to take effect did not include a determination as to the validity of these complaints. Consequently, the PUC stated that its examination of each of these complaints would proceed after the rate increases were in effect. Rivercrest was issued an order to show cause, and with respect to Elmbrook and Hamilton, the Consumer Advocate invoked the right to maintain a challenge to the new rates pursuant to the provisions of the PUC’s own orders in those two cases.

Subsequent consolidation of these three general rate increase cases with those of seven other National Utilities Inc. subsidiaries pending before the PUC has generated a settlement between the Consumer Advocate and the water companies. The result is an accord providing for mutually agreeable rates which was filed with a PUC administrative law judge on February 1, 1989. If adopted by the PUC, these rates would constitute the acceptable general rate increase sought by the water companies. The rates provided by the settlement agreement are lower than those ordered into effect by the PUC; the latter rates continue to be collected as of the argument of this matter before this Court.

The question now before this Court is whether the PUC adhered to the provisions of the law which enable the PUC to award general rate increases to public utilities and which dictate the manner in which such a tariff is to be considered. Specifically, 66 Pa.S. § 1308(d) gives the PUC authority to grant general rate increases and it stipulates the procedural posture in which such authority may be exercised. The statute in pertinent part reads:

(d) General rate increases.—Whenever there is filed with the commission by any public utility described in paragraph (l)(i), (ii), (vi) or (vii) of the definition of “public utility” in section 102 (relating to definitions), and such other public utility as the commission may by rule or regulation direct, any tariff stating a new rate which constitutes a general rate increase, the commission shall promptly enter into an investigation and analysis of said [303]*303tariff filing and may by order setting forth its reasons therefor, upon complaint or upon its own motion, upon reasonable notice, enter upon a hearing concerning the lawfulness of such rate, and the commission may, at any time by vote of a majority of the members of the commission serving in accordance with law, permit such tariff to become effective____

The PUC argues that its treatment of these general rate increase cases comports with the discretionary latitude afforded it in this statute. The PUC submits that the legislature, in empowering the Commission to regulate the rates charged by utilities, conferred upon the Commission such discretion that it could consider rate increase requests responsively, and so it could act with an appreciation of the varying significance these requests have for the diverse operations of our state’s numerous utilities. What is more, the Commission avers that while it must promptly enter into an investigation and analysis of general rate increase tariff filings prior to exercising its statutory authority to permit rate increases to become effective, the duty to hold hearings on formal complaints challenging the rate increases and raising reasonable grounds for investigation is nowise negated if these proceedings are after the effective date of the increase. We must disagree.

Our Supreme Court has considered the meaning of this statutory provision and we believe that inquiry pertinent to the resolution of this action. When making its inquiry, the Supreme Court was similarly faced as we are here with contentions that the PUC had abridged constitutional rights to due process. That Court decided in Joseph Horne Co. v. Pennsylvania Public Utility Commission, 506 Pa. 475, 485 A.2d 1105 (1984), that 66 Pa.S. § 1308(d) complies with both U.S. and Commonwealth traditional notions of fundamental fairness.

The instruction provided in Horne by the Supreme Court is clear. In order to dispel the likelihood of any ambiguity in the meaning of this statute, to ensure that safeguards against denial of due process exist, and to effectuate the [304]*304legislature’s intent to prohibit interim ratemaking, the Supreme Court has concluded that:

Section 1308(d) now provides that general rate filings will be suspended unless the PUC allows the rate to become effective and then only by majority vote “upon reasonable notice, [and] upon a hearing concerning the lawfulness of such rate.”

Horne, 506 Pa. at 484-485, 485 A.2d at 1110.

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Barasch v. Pennsylvania Public Utility Commission, 568 A.2d 276, 130 Pa. Commw. 299, 1989 Pa. Commw. LEXIS 811 (Pa. Ct. App. 1989).

568 A.2d 276 (Barasch v. Pennsylvania Public Utility Commission) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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