SAVANNAH ELECTRIC & POWER COMPANY
v.
GEORGIA PUBLIC SERVICE COMMISSION et al.
Supreme Court of Georgia.
Bouhan, Williams & Lеvy, George W. Williams, Leamon R. Holliday, Troutman, Sanders, Lockerman & Ashmore, Tench C. Coxe, for appellant.
Arthur K. Bolton, Attorney General, Robert J. Castellani, Deputy Assistant Attorney General, W. Wheeler Bryan, Hunter, Houlihаn, Maclean, Exley, Dunn & Connerat, Malcolm R. Maclean, for appellees.
HALL, Justice.
This appeal is brought by Savannah Electric & Power Company ("SEPCO") from an order of the superior court upholding the validity of a certain rate order set by the Public Service Commission for SEPCO.
During thе spring of 1975, SEPCO applied to the Public Service Commission for authority to increase its rates by $6.675 million. Intervenors, Savannah Industry Energy Users Association ("SIEUA") entered the proсeeding, which concluded in the commission's order of August 25, 1975, granting a rate increase of $3.8 million. SEPCO did not file suit challenging this award. Subsequently, however, the Consumer's Utility Counsel filed suit chаllenging certain procedures incident to the rate award, naming SEPCO and the commission as defendants. SEPCO then counterclaimed against Consumer's Utility Counsel challenging the constitutionality of the Act creating his office, and cross claimed against the commission alleging that the rate was unreasonable and confiscatory. Trial de novo in superior court was held in February, 1976.
The trial court's subsequent order first ruled that SEPCO's constitutional attack against the Consumers' Utility Counsel Act was good; and Consumers' Cоunsel was not entitled to participate in the proceedings (though by agreement of all parties, to obviate necessity for retrial, counsel did participate in making the record in the superior court). The court then found the rate set not to be *157 confiscatory nor a denial of due process or equal protection to SEPCO. We reversed the first ruling in Bryan v. Ga. Public Service Comm.,
The principles governing this apрeal are easily stated, though not so easily applied. "If a rate order issued by the commission does not authorize a regulated utility to earn an amount tо sufficiently compensate its investors reasonably, to maintain its credit, to attract capital, and to maintain the requisite level of services, then it is the duty of thе judiciary to set aside such rate order as confiscatory and violative of substantive due process of law." Ga. Power Co. v. Ga. Public Service Comm.,
Although eight separate enumerations of error are asserted, the thrust of SEPCO's argument here is that the *158 theoretical rate of return on common equity оf some 11.57% which the commission allowed it, is lower than that recently allowed Georgia Power Company and lower than a rate which would allow SEPCO to repair its admittedly poor financial status, and therefore results in confiscation. In our view, the answer to this argument is that SEPCO is in fact doing substantially better under the new rate structure than the anticipated 11.57%. The trial court found, and the record supports, that for the calendar year ended December 31, 1975, SEPCO's actual return on common equity was 13.79% despite the fact that the rate increase had only been in effect for four months of that year. It is true that there was some evidence that 1975 was an atypical year; there were some projections that in 1976 the company might not do as well; and in 1976 there would probably be some expenses that were not incurred in 1975. However, it would also be true that in 1976 the company would have the benefit of the increased rate for the entire year, not for just a third of it. Moreover, nothing we might speculate about 1976 can alter the fact that for 1975 the rate of return was actually 13.79%. This is the actual "consequence" of the rate order; and as the Supreme Court wrote in the Hope case, the challenger must show that the rate increase is unreasonable "in its consequences."
SEPCO's evidence was certainly adequate to show that the company was financially distressed prior to the new rate order. However, the financial position has been substantially improved under the new order. SEPCO bonds have once again been rated by Mоody's Investor's Service which had previously refused to list them; a dividend has been resumed at 10 cents and raised to 15 cents; SEPCO marketed in October, 1975, $20 million in *159 first mortgage bonds and $10 milliоn in privilege stock; construction financing has been obtained for the formerly stalled Effingham plant and construction has been resumed on it; the stock price is up since the rate order from 7 1/4 to 9 3/8; and SEPCO is now current with its fuel bills which had been in arrears for some two years. It is also true that the interest the company must pay its bondholders and lenders is quite high; the dividend is far from its former level; and the sale of common stock does not seem feasible because the investor cannot be offerеd an attractive return on his money. Nonetheless, this company has been in financial straits for years, and the present rate order cannot be faulted because it has failed to cure all problems instantly.
The superior court testimony of SEPCO's own board chairman and chief executive officer was that "... all eleсtric utilities have had problems in the capital market. All industry has had trouble in the capital market in the last couple of years ...," though it was clear that some utilitiеs are more able than SEPCO to market both debt and equity issues. Witness Harrison Clark, head of the corporate finance department of Johnson, Lane, Space, Smith & Co., testified in the superior court that SEPCO's financial position was currently better than in 1974 or 1975. Witness Michael Drazen, a public utility regulation consultant, testified that he saw no unreasonable difference between the operating income after taxes of $14,780,000, which SEPCO claimed it needed and the $14,609,000 figure achieved.
This discussion is adеquate to show that SEPCO has failed to prove confiscation by clear evidence. The sole remaining claim is that SEPCO has been denied equal protectiоn by the commission's application to it of an accounting or rate making method with respect to certain items, which assertedly is less beneficial to it than оne recently allowed Georgia Power Company.
We are not in the rate-making business, but it is clear that those who are, namely, the commission, must be prepared to deal with each utility and its customers in a highly individualized fashion. Equal protection does not demand exact equality, in any event. As we wrote in Ga. Power Co. v. Allied Chemical Corp.,
Judgment affirmed. All the Justices concur.