35 A.3d 925
R.I.2012Background
- National Grid Rhode Island rate filing June 1, 2009 sought $75.3m (33%) more distribution revenue; Division urged $37.82m reduction.
- Company proposed capital structure with 50.05% common equity; Division's expert recommended 47.5%.
- Company sought $2.4m in incentive pay; Division suggested discounting by 50%.
- PUC February 9, 2010 decision: equity 42.75%, disallowed 50% of variable pay; base revenue adjust to $16.2m reported, final proposed $57.7m.
- Court granted certiorari; oral argument October 2011; decision affirms in part and vacates in part, remanding for capital-structure hearings.
- Proceedings included extensive testimony, record requests, and settlement with the Division; multiple post-hearing briefs and open meetings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Capital-structure method for setting rates | National Grid—actual capital structure was reasonable or should be based on proxy; use of National Grid plc misapplied | Division/PUC—no firm, actual structure; proxy group or other methodologies used; need deference to PUC findings | Partially remanded; court vacates use of National Grid plc structure, directing hearings on current capital structure. |
| Incentive compensation expense for ratepayers | National Grid contends plan ties pay to performance and ratepayer benefits | PUC found no direct ratepayer benefit; costs should be borne by shareholders | Affirmed; 50% of incentive-compensation expense disallowed. |
Key Cases Cited
- Newport Electric Corp. v. Public Utilities Commission, 624 A.2d 1098 (R.I.1995) (deferential review; findings must be supported by evidence)
- Bristol County Water Co. v. Harsch, 386 A.2d 1103 (R.I.1978) (double-leveraging caution; record adequacy required)
- Providence Water Supply Board v. Public Utilities Commission, 708 A.2d 537 (R.I.1998) (use of evidentiary foundation in rate cases)
- Rhode Island Consumers’ Council v. Smith, 302 A.2d 757 (R.I.1973) (remand when findings are insufficient)
- Wakefield Water Co. v. Public Utilities Commission, 457 A.2d 251 (R.I.1983) (no policy-making role in reviewing commissions’ orders)
- Public Service Commission of New York v. Federal Energy Regulatory Commission, 813 F.2d 448 (D.C.Cir.1987) (use of parent company capital structure contexts)
- Commonwealth Edison Co. v. Illinois Commerce Commission, 338 Ill.Dec. 539, 924 N.E.2d 1065 (Ill.App.2009) (incentive pay nexus to ratepayers; tangible benefits required)
- Island Hi-Speed Ferry, LLC v. Rhode Island Public Utilities Commission, 746 A.2d 1240 (R.I.2000) (deference to PUC complex technical expertise)