APARTMENT AND OFFICE BUILDING ASSOCIATION OF v. PUBLIC SERVICE COMMISSION OF THE DISTRICT OF COLUMBIA, 129 A.3d 925

Background

In 2014 the D.C. Council authorized Pepco and DDOT to underground electric lines under the Electric Company Infrastructure Improvement Financing Act (ECIIFA); the project is multi-year and expensive. Pepco may recover project costs via two surcharges: DDOT charges (to service District-issued bonds) and Underground Project Charges (UPCs) (to recover Pepco’s own costs).
Both surcharges must be allocated among Pepco customer classes using a volumetric surcharge tied to usage and "in accordance with the distribution service customer class cost allocations approved by the Commission in the most recent base rate case." Formal Case 1103 was the most recent base rate case.
In Formal Case 1103 the Commission allocated a large share of the approved revenue increase to residential classes but recovered much of that increase via higher fixed customer charges rather than volumetric rates. Pepco proposed, in the undergrounding proceedings, to allocate UPC/DDOT charges using the base-rate volumetric allocations but excluding customer-charge revenue. That produced a commercial-heavy allocation.
AOBA challenged Pepco’s proposed allocation before the Commission, arguing the customer-charge revenue from the base rate case must be included in the allocation and offering alternative cost studies; the Commission adopted Pepco’s approach in Formal Cases 1116 and 1121. AOBA appealed to this court.
After AOBA filed its opening brief, the D.C. Council amended ECIIFA to define "distribution service customer class cost allocations" to mean the allocation of revenue requirement to each rate class on the basis of total rate-class distribution service revenue minus customer charge revenue, and made the amendment effective as of May 3, 2014 (the statute’s original effective date).
The D.C. Court of Appeals considered (1) whether the Council’s 2015 amendment applies to the pending proceedings, (2) whether remand to the Commission is required for application of that amendment, and (3) whether the amendment or the Commission’s prior application is ambiguous or unlawful.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Council’s 2015 amendment to ECIIFA applies to these pending appeals	AOBA: amendment should not apply to orders already issued; not clearly applicable to pending proceedings; retroactivity problems	Commission: amendment was made effective as of May 3, 2014 and therefore applies to these proceedings	Held: Amendment applies; Council expressly made it effective as of the statute’s original effective date and legislative context shows intent to cover these cases
Whether remand is required so the Commission can consider the amendment	AOBA: Commission never considered the amendment; AOBA is entitled to a hearing on its impact	Commission: remand unnecessary because amendment simply codifies the approach Commission already adopted and Commission would reach same result	Held: No remand; exceptions to the Chenery rule apply—remand would be futile and result is clear
Whether amended statutory language is ambiguous as to allocation method	AOBA: ambiguous on several points (treatment of DDOT proceeds, whether subsidization adjustments allowed, what "customer charges" exclude)	Commission: definition mirrors the Commission’s existing methodology—use base-rate allocation less customer-charge revenue—and is unambiguous	Held: Statute, read as amended, unambiguously directs using base-rate distribution revenue minus customer-charge revenue; alleged ambiguities are resolved in favor of applying the amendment as the Council intended
Whether Commission’s exclusion of customer-charge revenue in allocation was permissible	AOBA: customer-charge revenue approved in the base rate case is part of the approved class cost allocations and must be included	Commission/Pepco: customer charges recover largely fixed costs and are not the basis for allocating volumetric surcharges for undergrounding; exclude customer-charge revenue	Held: Commission’s approach is consistent with the amended statutory definition and was permitted; allocation affirmed

Key Cases Cited

Potomac Elec. Power Co. v. Public Serv. Comm’n, 457 A.2d 776 (D.C. 1983) (deference to Commission in ratemaking; narrow judicial review)
SEC v. Chenery Corp., 318 U.S. 80 (1943) (agency must defend its action on the grounds it actually relied on; courts ordinarily remand for initial agency consideration)
Landgraf v. USI Film Prods., 511 U.S. 244 (1994) (standard for determining whether a statute has retroactive effect)
Le Chic Taxicab Co. v. District of Columbia Taxicab Comm’n, 614 A.2d 943 (D.C. 1992) (no remand required where remand would be futile and agency would reach same result)
Bio-Med. Applications of D.C. v. D.C. Bd. of Appeals & Review, 829 A.2d 208 (D.C. 2003) (courts need not remand where it is clear what the agency’s decision must be)
Jones v. D.C. Dept. of Emp’t Servs., 519 A.2d 704 (D.C. 1987) (courts ordinarily remand if party asks to affirm on grounds not considered by the agency)
Davis v. Moore, 772 A.2d 204 (D.C. 2001) (legislation is presumptively prospective; intent needed for retroactive application)
Tippet v. Daley, 10 A.3d 1123 (D.C. 2010) (limits on using later legislative acts to construe earlier legislation)