52 Pa. Commw. 201 | Pa. Commw. Ct. | 1980
Lead Opinion
Opinion by
The Peoples Natural Gas Company (Petitioner) has appealed a final order of the Pennsylvania Public Utility Commission (Commission), disallowing approximately 10.8 million dollars of a requested 14.3 million dollar increase in revenues. We affirm.
Petitioner is a wholly owned subsidiary of the Consolidated Natural Gas Company actively engaged in various phases of the natural gas business in Pennsylvania. On January 27, 1978, Supplement No. 14 to Tariff Gas — Pa. P.U.C. No. 37 proposing additional annual revenues of $14,287,797
Although this Court has in the past struggled to evaluate the propriety of the Commission’s methods and assess the accuracy and validity of its mathematical calculations,
Where, as here, the Commission has fully detailed the methods and reasoning underlying the contested rates and evidence of record supports its conclusions, a complaining utility on appeal to this Court must demonstrate the unreasonableness or unjustness of those rates. “Unless the [Commission’s] decision does not bear a real and substantial relationship to the regulatory objects sought to be obtained by it, that
Petitioner next challenges as arbitrary and unsupported by the record certain of the Commission’s findings as to the proper rate base allowance for working capital. “Cash working capital represents the utility’s need for cash to meet current obligations arising out of the rendition of services for which revenues have not yet been received.” UGI Gorp. v. Pennsylvania Public Utility Commission, 49 Pa. Commonwealth Ct. 69, 410 A.2d 923, 929 (1980). However, a determination of a public utility’s cash working capital needs depends upon the factual situation presented by each case, Pittsburgh v. Pennsylvania Public Utility Commission, 370 Pa. 305, 88 A.2d 59 (1952), and necessarily therefore requires the exercise of sound Commission discretion as the particular facts warrant.
The first contested item is a disallowance of $400,-000 of a claimed minimum bank balance total of $2.9 million. The same issues raised here were considered and resolved against Petitioner in its most recent rate appeal before this Court making further discussion unnecessary. See Peoples Natural Gas Co. v. Pennsylvania Public Utility Commission, 47 Pa. Commonwealth Ct. 512, 409 A.2d 446 (1979).
Petitioner also challenges a $550,000 reduction in its claimed working capital to reflect the lag in interest payments to bondholders.
Petitioner finally argues that certain adjustments to claimed operating expenses and income taxes were arbitrary and not supported by substantial evidence. The first item here concerns the Commission’s treatment of substantial income tax refunds received as a result of changes in the calculation of accelerated depreciation for tax purposes. This same issue was fully considered by our Court in Peoples, supra, and nothing raised by Petitioner in argument here requires further attention.
The final issue concerns the proper amortization of rate case expenses. Because of the frequency of its rate filings, according to Petitioner one every 1.7 years, it is argued amortization of current expenses and the unamortized balance of prior case expense
Accordingly, we will enter the following
Order
And Now, June 17, 1980, the final order of the Pennsylvania Public Utility Commission at Docket No. R-78010545 adopted October 26, 1978, entered October 27, 1978 (Short Form) and entered February 2, 1979 (Long Form) is hereby affirmed.
Corrected during the proceedings to $14,412,425 the proposed supplement would have increased annual revenues by approximately 11.0% exclusive of state tax adjustment surcharge revenues.
Petitioner does not contest the validity of the Commission’s fair value rate base finding.
Characterized by Justice Nix in the cited opinion as “commit[ted] ... to a slippery slope of judicial intervention into rate making.” (Slip Op. at 14).
The administrative law judge and the Commission disallowed one-half of the requested claim for accrued interest so as to reflect the fact that bond interest payment in any one month represents only one-half of the annual interest obligation.
Petitioner also assails certain Commission adjustments to claimed working capital to reflect the impact of two earlier rate decisions of the Commission. In the first, cash working capital was reduced by $1,667,000 an amount equal to the increase in revenues, net of taxes, approved by the Commission at R.I.D. 308 and the subject of appeal in Peoples Natural Gas Co. v. Pennsylvania Public Utility Commission, 47 Pa. Commonwealth Ct. 512, 409 A.2d 446 (1979). Because of rate disallowance of $1,525,000 at R.I.D. 205, the Commission added a like amount to Petitioner’s cash working capital needs. These adjustments were apparently premised on the Commission’s view of the likely final disposition of any appeals. The propriety of these adjustments need not concern us here; since, as. previously indicated, the amount of working capital allowed Petitioner has not been shown to be unreasonable, ■ and the net effect of these two adjustments is nevertheless minimal.
Concurrence Opinion
Concurring Opinion by
I concur in the result reached in this case because after reviewing the record I am satisfied that there is sufficient evidence supporting all of the Commission’s determinations questioned in this appeal. However, I disagree with the majority’s view that Pennsylvania Public Utility Commission v. Pennsylvania Gas & Water Co., Pa. , A.2d (filed February 1, 1980) is authority for upholding the Commission’s fair rate of return determination. That case dealt solely with a different subject, the fair value of a utility’s property for rate making purposes. The language quoted in the majority’s opinion here is the closing sentence of a paragraph the rest of which discusses only the valuation of property. The opening sentence of the opinion in Pennsylvania Public Utility Commission v. Pennsylvania Gas & Water Co., supra, with which nothing later appearing is at all inconsistent, explains the scope of the decision:
These two appeals present this Court with the troublesome issue of the correct standard to be employed by the Public Utility Commission (PUC) in fulfilling its legislative mandate to*208 ‘ascertain and fix the fair value of the whole or any part of the property of any public utility. ’ President Judge Crumlish and Judge Craig join in this concurring opinion.