79 Pa. Commw. 445 | Pa. Commw. Ct. | 1984
Opinion by
The Philadelphia Electric Company (PECO) has petitioned this Court for review of a June 25, 1982 order of the Pennsylvania Public Utility Commission (PUC) which required PECO to impose a surcharge on all of its residential customers using PECO’s gas for outdoor lights.
On September 28, 1981, PECO filed Supplement No. 21 to Tariff Gas-PA. PUC No. 24 seeking to increase its rates effective November 27, 1981. By an order adopted November 25, 1981 and entered December 8,1981, the PUC instituted an investigation to determine the lawfulness, justness and reasonableness of the proposed rates, thereby suspending Supplement
■Subsequently, twelve days of evidentiary hearings were held between December 22, 1981 and March 3, 1982. During this period, the PUC’-s prosecutory staff recommended that a significant annual surcharge be imposed on all of PEGO’s residential customers using outdoor gas lights. On April 29, 1982, the Administrative Law Judge presiding over the hearings issued a recommended decision which, inter alia, rejected the prosecutory staff’s recommendation of a surcharge for outdoor gas lighting. Exceptions were filed by various parties, including the prosecutory staff which specifically excepted to the rejection of the outdoor gas lighting pricing scheme. On June 25, 1982, the PUC entered an order which, inter alia, adopted the prosecutory staff’s recommended surcharge for outdoor gas lights. PECO subsequently petitioned the Court for review of the PUC’s order.
In this case, PECO argues that the questioned -surcharge is unlawfully discriminatory as it charges residential customers receiving the same service under similar circumstances different rates solely on the basis of the customers ultimate use of the gas purchased from PECO. Furthermore, PECO argues that the PUC abused its discretion in requiring PECO to adopt a pricing scheme that is too costly to administer on an equitable basis. For the reasons that follow, we believe PECO’s arguments are unpersuasive. The PUC’s order, therefore, must be affirmed.
The court shall affirm the adjudication unless it shall find that the adjudication is in violation of the constitutional rights of appellant, or is not in accordance with law,... or that any finding of fact made by the agency and necessary to support its adjudication is not supported by substantial evidence.
As we stated in Peoples Natural Gas Co. v. Pennsylvania Public Utility Commission, 47 Pa. Commonwealth Ct. 512, 533, 409 A.2d 446, 456 (1979), “. . . the establishment of a rate structure is an administrative function peculiarly within the expertise of the [PUC].” As the Supreme Court has explained, “. . . the power to fix ‘just and reasonable’ rates imports a flexibility in the exercise of a complicated regulatory function by a specialized decision-making body . . .” Pennsylvania Public Utility Commission v. Pennsylvania Gas and Water Co., 492 Pa. 326, 337, 424 A.2d 1213, 1219 (1980), cert. denied 454 U.S. 824 (1981). Thus, if the PUC’s findings are supported by substantial evidence, which has been defined as, “. . . that quantum of evidence which a reasonable mind might accept to support a conclusion,” Norfolk and Western Railway v. Pennsylvania Public Utility Commission, 489 Pa. 109, 128, 413 A.2d 1037, 1047 (1980), this Court has no choice but to affirm. As the Supreme Court has stated, “that the court might have a different opinion or judgment in regard to the action of the agency is not a sufficient ground for interference; judicial discretion may not be substituted for administrative discretion.” Blumenschein v. Pittsburgh Housing Authority, 379 Pa. 566, 573, 109 A.2d 331, 334 (1954) (emphasis in original).
PECO argues that the imposition of the surcharge unlawfully discriminates against those residential gas consumers who use outdoor gas lights, thus making the pricing scheme contrary to law. Section 1304 of the Public Utility Code provides:
*450 No public utility shall, as to rates, make or grant any unreasonable preference or advantage to any person ... or subject any person ... to any unreasonable prejudice or disadvantage. No public utility shall establish or maintain any unreasonable difference as to • rates ... as between classes of service . . . this section does not prohibit the establishment of reasonable . . . classifications of rates . . . (emphasis added).
66 Pa. C. 8. §1304. It must first be noted that not all differences in rates are discriminatory and, therefore, unlawful. Only unreasonable differences are prohibited. More importantly:
Before a rate can be declared unduly preferential and therefore unlawful, it is essential that there be not only an advantage to one, but a resulting injury to another. Such an injury may arise from collecting from one more than a reasonable rate to him in order to make up for inadequate rates charged to another, or because of a lower rate to one of two patrons who are competitors in business. There must be an advantage to one at the expense of the other.
Alpha Portland Cement Co. v. Public Service Commission, 84 Pa. Superior Ct. 255 (1925). Accord Peoples Natural Gas Co. v. Pennsylvania Public Utility Commission, 47 Pa. Commonwealth Ct. 512, 409 A.2d 446 (1979). Further, the complainant has the burden of proving that the rates in question are discriminatory. Philadelphia Suburban Transit Co. v. Pennsylvania Public Utility Commission, 3 Pa. Commonwealth Ct. 184, 281 A.2d 179 (1971), quoting Carpenter v. Pennsylvania Public Utility Commission, 141 Pa. Superior Ct. 447,15 A.2d 473 (1940). Finally,
PECO claims that a difference in rates for residential customers is discriminatory and unreasonable when it is based solely on the end use of the product where the utility’s cost of the product is identical, citing Bailey v. Fayette Gas Fuel Co., 193 Pa. 175 (1899). There, the supplier attempted to charge $.25/1000 cubic feet of gas used for heating purposes while setting the price of gas used for lighting purposes at $1.50/1000 cubic feet. The company attempted to justify the difference in rates by showing it would cost a customer much more to purchase an alternative fuel source to provide comparable light than it would for comparable heat. The court held this was an impermissible basis of discrimination. However, in United States Steel Co. v. Pennsylvania Public Utility Commission, 37 Pa. Commonwealth Ct.195, 209, 390 A.2d 849, 856 (1978), we stated, “costs of alternative fuels may be considered, along with other factors, in determining the reasonableness of a rate structure.” See Pittsburgh v. Pennsylvania Public Utility Commission, 182 Pa. Superior Ct. 376, 392-95, 126 A.2d 777, 785 (1956). We, therefore, believe that whatever support Bailey may have provided for PECO’s argument is now seriously in doubt.
In Westerhoff Brothers v. Ephrata Borough, 283 Pa. 71, 128 A. 656 (1925), the utility supplied a 220-volt current for power to customers at a rate of four cents per kilowatt hour, while also supplying a 110-volt current for lighting purposes at ten cents per kilowatt hour. The consumer, having the capability to reduce the 220-volt current to 110-volts for lighting
[w]here the cost of the product supplied is uniform, the corporation selling it cannot object to the use made of it by the consumers. If, however, some consideration for the difference in the charge can be made apparent, or if it can be .shown there is a difference in the cost of .supplying, or in keeping ready to do .so, the contrary conclusion is reached. Reasonable distinctions may be made, based on the hind of service demanded. (Emphasis added.) (Citations omitted.)
Id. at 73-74,128 A. at 657. Although the court upheld the difference in rates on the basis of differing costs in providing the service, the emphasized portion of the quoted language shows the court’s recognition that factors other than cost must be considered. As we stated in Philadelphia Suburban Transportation, 3 Pa. Commonwealth Ct. at 196-97, 281 A.2d at 186:
Differences in rates between classes of customers based on such criteria as the quantity of [the product] used, the nature of the use, the pattern of the use, or based on differences of conditions of service, or cost of service are not only permissible but often are desirable and even necessary to achieve reasonable efficiency and economy of operation. (Emphasis added.)
PECO’s argument that differences in rates when based on customer use can be justified only on a cost basis is without merit.
More importantly, to prove unreasonable discrimination, PECO must show that the outdoor gas light users are paying an unreasonably high rate thereby giving an advantage to other residential customers
Finally PECO argues that the PUC’s method of determining the amount of the surcharge is not supported by substantial evidence.- The PUC found that the surcharge should be computed by using the cost of the most expensive gas purchased by PECO. PECO argues from this finding that there is no showing by the PUC that only this most expensive gas is used for outdoor lighting. Again, however, numerous factors other than cost of service may be considered in setting rates, a decision within the expertise of the PUC. Zucker v. Pennsylvania Public Utility Commission, 43 Pa. Commonwealth Ct. 207, 401 A.2d 1377 (1979).
In summation, the PUC has, for the reasons already stated, placed outdoor gas light residential users in a special class for rate purposes. This reasonable determination, which is supported by substantial evidence, cannot be disturbed by this Court. The same holds true for the PUC’s determinations concerning the amount of the surcharge and the cost of administering the program. As PECO has failed to show any unlawful discrimination, we affirm the order of the PUC.
Order
And Now, January 10, 1984, the June 25, 1982, order of the PUC at Docket No. R-811719 is affirmed.
In the June 25, 1982 order, the PUC approved rate increases which increased PEOO’s annual operating revenues by $31,460,000, thereby disallowing $7,277,000 of increased revenues sought by BEOO. None of those findings -are disputed in this proceeding; .the only issue now presented is the propriety of the PUC’s determination concerning the outdoor gas lighting surcharge.
Act of April 28,1978, P.L. 202, 2 Pa. C. S. §704.