Fitchburg Gas & Electric Light Co. v. Department of Public Utilities
460 Mass. 800
Mass.2011Background
- Fitchburg Gas appeals a Department of Public Utilities decision ordering $4,648,075 in reimbursements for 2007-2009 gas costs.
- Department found Fitchburg failed to obtain preapproval for its risk-management plan and that several purchases were imprudent.
- Court previously reserved decision; this opinion adjudicates whether preapproval was required and analyzes prudence.
- Court concludes preapproval was not required for Fitchburg’s forward-contract-based plan, but finds one purchase (Nov. 25, 2008) imprudent.
- Remands to the department to recalculate the remedy to $198,227 plus interest and to consider any unrecovered transaction costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was preapproval required for Fitchburg’s risk-management plan? | Fitchburg argues Order allowed forward contracting without preapproval; Plan did not use derivatives. | Order allowed risk-management plans but required review if derivatives used; preapproval was mandated. | Preapproval not required; error of law by department. |
| Were Fitchburg’s purchases prudent besides the November 25, 2008 transaction? | Earlier purchases mitigated volatility; department’s strict benchmarks were unsupported by evidence. | Department findings supported imprudence due to timing and non-uniform purchases. | Summer 2007 and Feb-Aug 2008 not shown as imprudent; November 25, 2008 upheld as imprudent. |
| Is the remedy properly calculated given Fitchburg’s plan? | Remedial method should compare to prudent plan; department’s approach overstated overcharge. | Remedy calculated by first-month comparison; department’s method appropriate. | Remand to recalculate and set remedy at $198,227 plus interest; may address transaction costs on remand. |
| Should the department reconsider whether Fitchburg incurred transaction costs? | Data on costs should be reviewed; department’s record lacked challenge. | Transaction costs are complex; remand appropriate to address on updated record. | Remand to re open record to assess whether any imprudent transaction costs were incurred. |
Key Cases Cited
- Massachusetts Institute of Tech. v. Department of Pub. Utils., 425 Mass. 856 (Mass. 1997) (deference to agency expertise in rate matters; substantial evidence standard applied)
- Hingham v. Department of Telecomm. & Energy, 433 Mass. 198 (Mass. 2001) (prudence review requires evidence-based findings; not hindsight)
- Boston Gas Co. v. Department of Pub. Utils., 387 Mass. 531 (Mass. 1982) (rates must reflect prudent, not excessive, costs)
- Southern Union Co. v. Department of Pub. Utils., 458 Mass. 812 (Mass. 2011) (remand when agency decision requires further factual development)
- Arthurs v. Board of Registration in Med., 383 Mass. 299 (Mass. 1981) (agency expertise cannot substitute for record evidence)
- Costello v. Department of Pub. Utils., 391 Mass. 527 (Mass. 1984) (agency must make adequate subsidiary findings)