Central Maine Power Co. v. Public Utilities Commission

414 A.2d 1217, 1980 Me. LEXIS 584
CourtSupreme Judicial Court of Maine
DecidedMay 30, 1980
StatusPublished
Cited by12 cases

This text of 414 A.2d 1217 (Central Maine Power Co. v. Public Utilities Commission) is published on Counsel Stack Legal Research, covering Supreme Judicial Court of Maine primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Central Maine Power Co. v. Public Utilities Commission, 414 A.2d 1217, 1980 Me. LEXIS 584 (Me. 1980).

Opinion

WERNICK, Justice.

Consolidated before us are appeals under 35 M.R.S.A. § 303 (Section 303 appeals) and a proceeding by “complaint” under 35 M.R.S.A. § 305 (Section 305 complaint) brought by Central Maine Power Company (Central Maine), Bangor HydroElectric Company (Bangor Hydro), and Maine Public Service Company (Maine Public Service) (hereinafter, collectively, “the utilities”) seeking judicial review of December 28 and 31, 1979 orders of the Public Utilities Commission (the Commission). 1

The Commission’s December 28th order required the utilities to spread out by an additional five months the period within *1220 which they could charge for rate “adjustments” arising from increases in their fuel costs for supplying electricity, the increases having been caused by the shutdown of the Maine Yankee Nuclear Generating Plant (Maine Yankee) from March 15 to June 9, 1979. The Commission’s December 31st order set out the formula by which collection would proceed during the extended period.

The utilities contend that the Commission violated due process of law, exceeded its statutory authority, and committed other errors of law not only in extending, but also by the particular manner it acted to extend, the period within which the utilities could charge for the adjustments as to their increased fuel costs.

We deny the Section 303 appeals. On the Section 305 complaint we order entry of judgment for the defendants.

1. Facts, Procedural History, and Issues.

By complaints filed on March 22, April 3, and April 9, 1979, pursuant to 35 M.R.S.A. § 291, 2 the Maine Committee for Utility Rate Reform (the “Maine Committee”) and other named individuals challenged the “justness and reasonableness” of passing through to the ratepayers adjustments reflecting the increased fuel costs the utilities sustained in supplying electricity because Maine Yankee had been shut down on March 15, 1979 for a period then undetermined but which turned out to be until June 9, 1979. The Nuclear Regulatory Commission (NRC) had ordered the shutdown pending its re-evaluation of whether a particular safety system within the Maine Yankee plant would withstand earthquakes of calculated intensities. Doubts as to the adequacy of the system were prompted by the NRC’s reconsideration of the appropriateness of various computer analyses used in designing the system’s earthquake tolerance.

The (Maine) Commission issued a Notice of Investigation on April 13,1979, announcing its intention to conduct a formal'investigation of the complaints filed by the Maine Committee and to consolidate with that investigation its own investigation of the matter. The subjects to be investigated were: (1) the reasonableness of passing on to ratepayers charges regarding the fuel adjustments occasioned by Maine Yankee’s shutdown; (2) the reasonableness of the manner in which costs associated with the shutdown should be borne by the ratepayers; and (3) the advisability of establishing temporary rates pursuant to 35 M.R.S.A. § 311.

At the time Maine Yankee was shut down the utilities’ schedules of permanent rates included a “fuel adjustment” provision, so-called, pursuant to 35 M.R.S.A. § 131, 3 and approved by the Commission. Its purpose and function may be explained, generally, as follows. Like other public utilities, electric utilities are permitted to charge, for the services they provide, a base rate the justness and reasonableness of *1221 which is assessed by reference to a “test year.” Costs of fuel are an important factor in the determination of the rates of electric utilities. Since fuel costs have a tendency to fluctuate rather than to be relatively stable, the “test year” methodology for projecting fuel costs over the indefinite future period for which a permanent rate is to be effective is likely to be an inadequate gauge of justness and reasonableness. It would therefore becoirie necessary for the Commission to conduct frequent reviews of the justness and reasonableness of the permanent rates of electric utilities in light of fuel cost fluctuations. To avoid this, the legislature, in Section 131, prescribed a methodology by which adjustments in the permanent rates of electric utilities can be achieved in a routinely regularized manner to accommodate to the fluctuating costs of the fuel used in generating and supplying electricity. The exact nature of this adjustment methodology is a key point in our decision and will be discussed more fully in the course of this opinion.

During the period of the shutdown of Maine Yankee the fuel adjustment clause in the filed rate schedules of the utilities provided that the adjustments regarding fuel costs be based on the use of a “three months rolling average” (which we shall also discuss in more detail later in the opinion). Had the Commission not taken the further actions here at issue, under the three months rolling average provision in their tariffs the utilities would have collected by the end of the summer of 1979 the entire amount of fuel adjustments reflecting the increased fuel costs arising from the shutdown of Maine Yankee. Confronting this prospect, the Commission, on April 19, 1979, scheduled a pre-hearing conference for May 4 and 5, 1979 to consider, among other matters, the Maine Committee’s request for relief (one of several made by it) that the Commission investigate the justness and reasonableness of passing through to the ratepayers any, some, or all of the fuel cost adjustments of the utilities attributable to the shutdown of Maine Yankee.

As a result of the pre-hearing conference of May 4 and 5, at which evidence was presented and argument heard on issues of preliminary relief, the Commission ruled that:

“[o]n the evidence presented to the Commission on May 4 and May 5, the Commission finds that under currently effective fuel adjustment tariffs of the three relevant utilities, ratepayers would be subject to substantial injuries to their interests in the form of significantly increased electric bills resulting from the unrestricted pass-through of fuel replacement costs due to the shutdown of the Maine Yankee Atomic Power Station.”

So finding, and purporting to act pursuant to powers conferred by 35 M.R.S.A. § 311, 4 the Commission ordered that the tariffs of the utilities be altered to provide for charging over a twelve month period, ending July 31, 1980, the adjustments as to the energy rendered unavailable to the utilities by the shutdown of Maine Yankee. The utilities did not seek judicial review of this May 5th order.

Subsequently, the Maine Committee twice moved to amend the May 5th order for enlargement of the collection period, to avoid what the Maine Committee perceived to be the strong likelihood that the ratepayers would have paid a substantial portion, if not all, of the charges for the fuel adjustments before the time of a Commission decision in its underlying investigation.

In regard to the first of the Committee’s two motions the Commission held a pre- *1222

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Bluebook (online)
414 A.2d 1217, 1980 Me. LEXIS 584, Counsel Stack Legal Research, https://law.counselstack.com/opinion/central-maine-power-co-v-public-utilities-commission-me-1980.