STATE ex rel. JACKSON COUNTY, Missouri, and Kansas City, Missouri, Relators-Respondents, Office of Public Counsel, Intervenor-Relator, v. PUBLIC SERVICE COMMISSION of Missouri, Respondent-Appellant, Missouri Public Service Company, Intervenor-Respondent-Appellant.
No. 59171.
Supreme Court of Missouri, En Banc.
Dec. 22, 1975.
Dissenting Opinion on Denial of Rehearing Feb. 9, 1976.
Gary J. Brouillette, Kansas City, for Mo. Pub. Service Co.
Stanley P. Christopher, Deputy County Counselor, Kansas City, Jeremiah D. Finnegan, Special County Counselor, Russell D. Jacobson, Associate County Counselor, Kansas City, for Jackson County.
Carrol C. Kennett, Associate City Atty., Kansas City, for Kansas City.
William M. Barvick, Jefferson City, for Office of Public Counsel.
William W. Ely, Blue Springs (for City of Blue Springs), Arthur Doyle and David L. Smith, Kansas City (for K. C. Power & Light), Stewart W. Smith, Jr., and William E. Jaudes, St. Louis (for Union Elec.), Shook, Hardy & Bacon, Kansas City (for City of Grandview), amici curiae.
MORGAN, Judge.
On June 13, 1975, the Public Service Commission of Missouri (herein referred to as the Commission) issued its Report and Order in Case No. 18,180 authorizing the Missouri Public Service Company (herein referred to as the Company) to increase its electric rates on July 1, 1975, to provide $5,593,000. in additional annual revenues. Applications for rehearing were filed by all parties to the proceeding, which were denied without further hearing on July 8, 1975. On July 11, 1975, the city of Kansas City and the county of Jackson (herein referred to as the Consumers) filed a joint petition in the trial court for a Writ of Review pursuant to
- The report and order of respondent in its No. 18,180 is reversed for noncom-
pliance with Section 393.270, V.A.M.S. - Alternatively said report and order is reversed and the proceeding remanded to respondent for consideration and determination of relators’ application for rehearing in compliance with
Sections 386.130 and536.080, V.A.M.S. - The relief granted in the preceding paragraph two shall be effective only in the event that an appellate court should prohibit the relief granted in paragraph one.
- The writ of review or certiorari is quashed.
Pursuant to Supreme Court Rule 81.06, the trial court declared the same to be a final appealable judgment, and stayed the enforcement thereof if the Company posted bond in the amount of $5,600,000. Since appeal, briefs have been filed (including that of other utility companies as Amici Curiae), and oral arguments made by all concerned (including the “Public Counsel“).
It is necessary to relate some of the history behind the present litigation, most of which is outlined in footnote No. (1).1 Of
Based upon a thorough analysis of the updated and projected test year presented in this case, the Commission concludes that it should not entertain a request by the applicant for any further additional rate relief from its electric customers for a period of at least two years after the effective date of this Order, inasmuch as the Commission is of the opinion that a substantial portion of the applicant‘s certified area can be reasonably expected to expand and develop so as to favorably affect the Company‘s revenue growth and minimize the need for additional rate relief. Furthermore, the record requires the Commission to conclude that this anticipated growth should not require significant capital investments and generating capacity. Applicant‘s costly Sibley generating plant was constructed in anticipation of this reasonably expected growth and the Commission is of the opinion that under good management practices, applicant should not require significant additional generating capacity and the high financing costs associated therewith.
Premised thereon, the Commission provided in “Order 3” of its Report and Order (in No. 17,763) as follows:
3. That the prices, charges, rates and tariffs filed herein shall be the maximum to be charged by Missouri Public Service Company for electric service to be furnished within its territory for a period of at least two years from the effective date of this Order except in the case of sliding scales and automatic adjustments as heretofore or hereafter approved by this Commission pursuant to
§ 393.270, 13, R.S.Mo.1969 . (Emphasis added.)
It seems agreed that the parties involved did not address the “moratorium” issue during the hearing and proceedings in No. 17,763. Apparently it was supplied by the Commission on its own without the knowledge of any of the parties prior to entry thereof. In any event, there was no appeal. However, the significance thereof and its relevancy, if any, to the instant appeal will be considered in turn.
In their joint motion, the Consumers challenged the Commission Order in No. 18,180 by asserting that:
- The Commission did not have authority to “change or abrogate” the moratorium of two years previously ordered (referred to by some of the parties as a “period of repose“).
- The Commission erroneously failed to base the now challenged rate schedule on a test year, i. e., actual experience reference income and expenses; but, in fact, utilized a year composed of eight months actual experience and four months estimated or projected income and expense.
- The Commission denied the Consumers’ application for a rehearing in violation of
§ 386.130 , which requires, in part, that a “. . . majority of the commissioners shall constitute a quorum . . .” when the denial thereof was made by a lesser number. - The rate increase authorized by the Commission was initiated by the “file and suspend” method (
§ 393.140(11) ) and is a nullity, because a rate increase can only be considered under the “complaint” method (§§ 386.390 -393.260 ,393.270 ).
We first consider the last point (No. 4) for the reason the other three become somewhat moot if the Consumers’ contention therein is well founded.
Necessarily, some portions of the many statutes involved must be quoted.
2. If any such hearing cannot be concluded within the period of suspension, as above stated, the commission may, in its discretion, extend the time of suspension for a further period not exceeding six months. At any hearing involving a rate sought to be increased, the burden of proof to show that the increased rate or proposed increased rate is just and reasonable shall be upon the gas corporation, electrical corporation, water corporation or sewer corporation, and the commission shall give to the hearing and decision of such questions preference over all other questions pending before it and decide the same as speedily as possible. (As amended Laws 1967, p. 578, § 1.) (Emphasis added.)
As emphasized in
The last quoted section is that upon which the trial court apparently concluded that rate increases must be sought under the “complaint” method instead of under the “file and suspend” method found, generally, in
2. All matters upon which complaint may be founded may be joined in one hearing, and no motion shall be entertained against a complaint for misjoinder of causes of action or grievances or misjoinder or nonjoinder of parties; and in any review by the courts of orders or decisions of the commission the same rule shall apply with regard to the joinder of causes and parties as herein provided.
3. The commission shall not be required to dismiss any complaint because of the absence of direct damage to the complainant. Upon the filing of a complaint, the commission shall cause a copy thereof to be served upon the corporation or person complained of.
4. Service in all hearings, investigations and proceedings pending before the commission may be made upon any person upon whom summons may be served in accordance with the provisions of the code of civil procedure of this state, and may be made personally or by mailing in a sealed envelope with postage prepaid.
5. The commission shall fix the time when and the place where a hearing will be had upon the complaint and shall serve notice thereof, not less than ten days before the time set for such hearing, unless the commission shall find that the public necessity requires that such hearing be held at an earlier date. (As amended Laws 1967, p. 578, § 1.) (Emphasis added.)
Upon the complaint in writing of the mayor or the president or chairman of the board of aldermen, or a majority of the council, commission or other legislative body of any city, town, village or county within which the alleged violation occurred, or by not less than twenty-five consumers or purchasers, or prospective consumers or purchasers of such gas, electricity, water or sewer, as to the illuminating power, purity, pressure or price of gas, the efficiency of the electric incandescent lamp supply, the voltage of the current supplied for light, heat or power, or price of electricity sold and delivered in such municipality, or the purity, pressure or price of water or the adequacy, sanitation or price of sewer service, the commission shall investigate as to the cause of such complaint.
Many of the arguments made revolve around the effect of
Any corporation, person or public utility shall have the right to complain on any of the grounds upon which complaints are allowed to be filed by other parties, and the same procedure shall be adopted and followed as in other cases, except that the complaint may be heard ex parte by the commission or may be served upon any parties designated by the commission. (Emphasis added.)
Prior to detailing the manner in which the parties construe the effect of
The brief of other utilities and the Company, attacking the judgment entered, are similar; and, because of the many cross-references to statutes therein, we quote the following therefrom:
Subsection 3 of the same statute [
§ 393.260 ] provides that the Commission shall prescribe the form and contents of the complaints, and requires that same “shall be signed by the officers, or by the customers, purchasers or subscribers making them, who must add to their signatures their places of residence, by street and number, if any.”Both
Sections 386.390(3) , set forth supra, and393.270(1) require the Commission to serve notice of a complaint upon the person or corporation complained of or affected thereby. Similar language is likewise contained inSection 386.420(1) , relating to how hearings are to be conducted before the Commission. Had the Legislature intended that gas, electric, water and sewer utilities file complaints with the Commission to initiate rate cases, there clearly would be no need for such corporation to serve itself with notice thereof. A statute should not be given a construction which would cause such an absurd result. State ex rel. Dravo Corporation v. Spradling, 515 S.W.2d 512 (Mo. 1974).The conclusion of the lower court that
Section 393.270(3) provides the exclusive means (i. e., a complaint or upon the Commission‘s own motion) for utilities to initiate rate increase proceedings ignores the fact thatSections 386.390 and393.260 make absolutely no mention of the Commission‘s entertaining a complaint by a public utility as to the reasonableness of its own rates; thus, expressio unius est exclusio alterius. Giloti v. Hamm-Singer Corporation, 396 S.W.2d 711 (Mo.1965).Section 386.400 purports to give utilities generally “the right to complain on any of the grounds upon which complaints are allowed to be filed by other parties“, but this does not include the right of a utility to file a complaint against its own rates, becauseSections 386.390 and393.260 specifically enumerate the parties qualified to file a complaint as to the reasonableness of a utility‘s rates and charges, and utilities are not among them. It is obvious from a reading ofSections 386.390 and393.260 that they speak in terms of particulars whileSection 386.400 is couched in general language. Where general terms or expressions in one part of a statute are inconsistent with more specific provisions in another part thereof, the specific provisions must govern. Terminal Railroad Association of St. Louis v. City of Brentwood [360 Mo. 777], 230 S.W.2d 768 (Mo.1950).
Section 386.400 was thus only intended to give public utilities the right to file complaints on matters other than as to the reasonableness of their rates. This is the only manner in which these two separate statutes dealing with the same subject matter can be harmonized and force given to the provisions of each. State ex rel. Chicago, Rock Island and Pacific Railroad Company v. Public Service Commission, 441 S.W.2d 742 (Mo.App.1969).
*
Missouri statutes are barren of any procedural guidance for the Commission should it ever entertain a “complaint” by a utility as to its own rates if filed under
In contrast, the Consumers argue that although there is, in fact, a file and suspend method of raising rates, it was not available under the factual setting involved herein. They contend that “. . . there are two statutory ways to increase electric rates in Missouri but such methods are not optional with the utility or the Public Service Commission“; and, the statutes cover separate situations, i. e.,
- Where there is a statute or order of the Commission fixing maximum rates—by order of the Commission, after hearing, on its own motion or upon complaint.
Section 393.270(3) . - Where there is no statute or order of the Commission fixing maximum rates—by the filing of tariff schedules, which may or may not be suspended.
Sections 393.140(11) and393.150 .
Recognition is then given to May Department Stores Co. v. Union Electric Co., 341 Mo. 299, 107 S.W.2d 41 (1937), wherein the court said: “The [Commission] has exclusive jurisdiction to establish public utility rates and may do so either by approval of rate schedules filed with it or by order after investigation or hearing.” Consumers construe that statement to mean approval of alternative methods, although it is not clear if the “hearing” referred to was in reference to one possibly held in connection with the new rate filing or was a reference to a hearing under the complaint method. In other words, it is the position of Consumers that the “file” method can also be used by utilities whose rates had been set previously by the “file” method, but not in those instances where the Commission had had an earlier hearing in which it fixed the rate by Order. That is apparently the position adopted by New York, under statutes similar in relevant aspects to those in Missouri in In Re Dry Dock, East Broadway & Battery R. Co., 254 N.Y. 305, 172 N.E. 516 (1930). See also City of New York v. Brooklyn Edison Co., Inc., 189 N.Y.S. 312 (Sup.Ct.1921). Nothing could be gained by further exploring the question through foreign precedents because the experience in Missouri now covers over sixty years and the “file” method has been accepted and consistently used throughout that time—absent the precise attack now made.
Somewhat in conclusion, we make our own observation.
From all of the arguments made, it is apparent that this court through the years has not read
The trial court erred when it reversed the Report and Order in No. 18,180 for failure of the Commission to proceed under
Prior to giving consideration to the remaining three points (Nos. 1, 2, 3) in the joint motion of the Consumers, we do mention that the trial court ruled on each in a “Memorandum Opinion & Journal Entry” which was incorporated by reference in the “Judgment Entry” heretofore set out.
Point 1: The Consumers contend that the Commission, once having declared a two-year moratorium on further rate increases as authorized by
The parties have not called to our attention, nor have we found, any case in Missouri where the question was considered. The reason perhaps is obvious, because it has been suggested that this case constitutes the first time the Commission has made such an order of repose. In any event, we find no statute specifically resolving the issue.
Every order or decision of the commission shall of its own force take effect and become operative thirty days after the service thereof, except as otherwise provided, and shall continue in force either for a period which may be designated therein or until changed or abrogated by the commission, unless such order be unauthorized by this law or any other law or be in violation of a provision of the constitution of the state or of the United States.
Outstate cases cited are not too persuasive or controlling. Trustees of Saratoga Springs v. Saratoga Gas, Electric, Light & Power Co., 191 N.Y. 123, 83 N.E. 693 (1908); Brooklyn Union Gas Co. v. Prendergast, 7 F.2d 628 (E.D.N.Y.1925); Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968); In Re Other Southwest Area Rate Case, Shell Oil Company et al. v. Federal Power Commission, 484 F.2d 469 (5th Cir. 1973); and Illinois Bell Tel. Co. v. Illinois Commerce Commission, 414 Ill. 275, 111 N.E.2d 329 (1953). One statement in the last case is of interest: “[5, 6] The construction contended for seems to be in conflict with the spirit of the act. One of its primary purposes was to set up machinery for continuous regulation as changes in conditions require. It appears to be inherent in the act itself.” The statute of Illinois is different from that of Missouri, but we think the “spirit of the act” analysis is logical and should be the standard in this state. In fact, this court said in State ex rel. Chicago, R.I. & P.RR Co. v. Public Service Commission, 312 S.W.2d 791, 796 (1958): “Its [Commission‘s] supervision of the public utilities of this state is a continuing one and its orders and directives with regard to any phase of the operation of any utility are always subject to change to meet changing conditions, as the commission, in its discretion, may deem to be in the public interest.” To rule otherwise would make
Since the very purpose of having the Commission is to have an agency with such expertise as to be sensitive to changing conditions, we rule that the trial court was in error in rejecting the Commission‘s action in that regard.
Point 2: It seems agreed that the Commission in this case used a combined “test” and “projected” year upon which to rule. The trial court did not decide this point for the reason it would be so interwoven with the question of “reasonableness” of rates as to be considered when, and if, the statutory review on the merits is made, and we refrain for the same reason.
Point 3: Was there compliance with
We outline the relevant facts in this case (and respectfully use only the last names of the Commissioners involved). On the date of the Report and Order, the Commission was comprised of four members: Pierce (Chairman), Fain, Reine and Sprague. Sprague, having assumed office after conclusion of all the hearings, did not participate in the decision. Pierce, Fain and Reine certified compliance with the statutes. Thereafter, the applications for rehearing were filed—between June 27-30, 1975. They were denied on July 8, 1975. On that date Reine was no longer a member, but there were five members: Pierce, Fain, Sprague, Jones and Mulvaney. The record reflects that Pierce, Fain and Sprague participated in the denial order. No “certification” was attached. By letter to an attorney for Consumers, Chairman Pierce stated that a ruling on an application for rehearing was not a “final decision” bringing into play the two statutes. At this time we need not explore the validity of that opinion, but we do emphasize that it is a basic and fundamental rule of law that one making a decision be aware by some means of what he is deciding.
Although the burden was on the Consumers, making the challenge, to establish noncompliance by a majority of the Commission, we do not believe it necessary to review further parts of the record to resolve that precise question. However, the facts as to Commissioner Sprague create a possible denial of due process and the actual truth of the matter should be brought forward. To accomplish the same, and hopefully to avoid further delay in this matter, the trial court is directed to modify its “order of remand” to allow Commissioner Sprague ten days to certify to it that he had complied with
Having concluded that the Commission was authorized to entertain a request by the Company for a rate increase under the “file and suspend” method detailed in
In this case, we are of the opinion the first phase of the test is decisive. Consumers’ contention of necessity is premised on the argument that they have a protected “property” interest in the present level of utility rates. We have not been cited any authority for that proposition. On the other hand, there are a number of cases to the contrary.
In Sellers v. Iowa Power and Light Company, 372 F.Supp. 1169 (S.D.Iowa 1974, with three judges participating), plaintiffs challenged the constitutionality of a temporary utility rate increase without a hearing with a due process argument. The court said, 1. c. 1172:
“Plaintiffs describe the property they claim was taken from them without procedural due process as the money required to pay the rate increases prior to the determination of their legality, thus depriving them of the use and enjoyment of the fruits of their labors or statutory grants which, but for the increases, would have been available to pay other household expenses.
We believe plaintiffs’ claim of property interest is too broadly stated to be within the protection of the Fourteenth Amendment. In our opinion plaintiffs must show they have a legal entitlement to or a vested right in the rates being charged before the proposed increase, before they can claim any property rights protected by the United States Constitution.
At common law a public utility ‘like the seller of an unregulated commodity, has the right in the first instance to change its rates as it will, unless it has undertaken by contract not to do so‘. United Gas Co. v. Memphis Gas Division (1958), 358 U.S. 103, 113, 79 S.Ct. 194, 200, 3 L.Ed.2d 153; FPC v. Hunt (1964), 376 U.S. 515, 522, 84 S.Ct. 861, 11 L.Ed.2d 878; United Gas Pipe Line Co. v. Mobile Gas Service Corp. (1956), 350 U.S. 332, 343, 76 S.Ct. 373, 100 L.Ed. 373; Gas Service Co. v. FPC (1960), 108 U.S.App.D.C. 334, 282 F.2d 496, 500.
Conversely, utility customers have no vested rights in any fixed utility rates, Wright v. Central Kentucky Natural Gas Co. (1936), 297 U.S. 537, 542, 56 S.Ct. 578, 80 L.Ed. 850; Norwegian Nitrogen Products Co. v. United States (1933), 288 U.S. 294, 318, 53 S.Ct. 350, 77 L.Ed. 796; San Antonio Utilities League v. Southwestern Bell Telephone Co. (5th Cir., 1936), 86 F.2d 584, cert. den., 301 U.S. 682, 57 S.Ct. 783, 81 L.Ed. 1340; United States Light and Heat Corp. v. Niagara Falls Gas & Electric Light Co. (2nd Cir., 1931), 47 F.2d 567, 570, cert. den., 283 U.S. 864, 51 S.Ct. 656, 75 L.Ed. 1469; Lenihan v. Tri-State Telephone & Telegraph Co. (1940), 208 Minn. 172, 293 N.W. 601, cert. den., 311 U.S. 711, 61 S.Ct. 392, 85 L.Ed. 463; Wisconsin Telephone Co. v. Public Service Commission (1939), 232 Wis. 274, 287 N.W. 122, cert. den., 309 U.S. 657, 60 S.Ct. 514, 84 L.Ed. 1006.
As plaintiffs have no property interest in existing rates which is protected by the Fifth and Fourteenth Amendments, we hold that plaintiffs are not entitled to a
procedural due process hearing prior to a determination of the lawfulness of the proposed rate increase and that the Iowa statutory provision in 490A.6 which provide for interim collection of the proposed increase under bond to be refunded if found to be excessive does not violate the Due Process Clauses of the Fifth and Fourteenth Amendments.”
The rationale of most of the cases is consistent with the following statement from Ten-Ten Lincoln Place, Inc. v. Consolidated Edison Co., 190 Misc. 174, 73 N.Y.S.2d 2 (1947), to-wit: “Nor has plaintiff any vested right to utility service or to any particular rate except to the extent that the public service law grants him such right; and he is not entitled to invoke his constitutional guarantees of ‘due process’ or ‘equal protection’ under such circumstances.” (Emphasis added.) We find no provision in the statutory scheme for Missouri granting consumers such a right. Other cases consistent with our conclusion are: United States Light & Heating Corporation v. Niagara Falls Gas & Electric Co., 47 F.2d 567 (2nd Cir. 1931); City of Birmingham v. Southern Bell Telephone & Telegraph Co., 234 Ala. 526, 176 So. 301 (1937); Smith v. Southern Bell Telephone & Telegraph Co., 268 Ky. 421, 104 S.W.2d 961 (Ky.1937); State ex rel. Evansville Coachlines, Inc. v. Rawlings, 229 Ind. 552, 99 N.E.2d 597 (1951); and New Haven v. New Haven Water Co., 132 Conn. 496, 45 A.2d 831 (1946). In support of their position, Consumers cite such cases as Allen v. Coffel, 488 S.W.2d 671 (Mo.App.1972); Office of Communication of United Church of Christ v. F.C.C., 123 U.S.App.D.C. 328, 359 F.2d 994 (1966); Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950); Templeton v. A.T. & S.F. Ry. Co., 84 F.Supp. 162 (W.D.Mo. 1949), aff‘d 181 F.2d 527 (8th Cir. 1950); State ex rel. Gentry v. Curtis, 319 Mo. 316, 4 S.W.2d 467 (Mo. banc 1928); and Scott v. City of Indian Wells, 6 Cal.3d 541, 492 P.2d 1137 (Cal. banc 1972). They do deal with “property rights” but they can not be called persuasive in the area of rate-making.
Equal Protection: It is well settled that a state may classify persons and objects for purposes of legislation, with restraints recently repeated by this court in Howe v. City of St. Louis, 512 S.W.2d 127 (banc 1974), 1. c. 132, to-wit:
“The rules for judicial review of a legislative classification which is challenged as a denial of equal protection are well settled. The equal protection clause does not forbid a State to create classes in the adoption of regulations under its police power, but it allows wide discretion, precluding only that done without any reasonable basis and therefore arbitrary, or as otherwise stated, it forbids invidious discrimination. Morey v. Doud, 354 U.S. 457, 77 S.Ct. 1344, 1 L.Ed.2d 1485 (1957); Kansas City v. Webb, 484 S.W.2d 817 (Mo.). Discrimination is arbitrary and unconstitutional if the classification rests upon a ground wholly irrelevant to the achievement of the legislative objective. Gem Stores, Inc. v. O‘Brien, 374 S.W.2d 109 (Mo. banc 1963). ‘Classification of the subjects of legislation is not prohibited by the equal protection of the law clauses of the United States and State Constitutions “if all within the same class are included and treated alike.“’ Kansas City v. Webb, supra; Burns v. Swenson, 430 F.2d 771 (8th Cir. 1970).”
There is a substantial difference between a utility and one of its consumers. Only the former would be in a position to suggest the need for new rates (
Lastly, the judgment entry quashing the writ of review should be vacated in view of our ruling on Point 4 to avoid further expense and time. If Commissioner Sprague files the certification heretofore called for, the trial court should proceed with the statutory review on the merits; if the certification is not filed and the Commission must reconsider the motions for rehearing, the present record before the trial court can be supplemented and review on the merits can be concluded.
The judgment is reversed and the cause is remanded to the trial court for further proceedings consistent with this opinion.
HOLMAN, HENLEY, FINCH and DONNELLY, JJ., concur.
BARDGETT, J., concurs in result in separate opinion filed.
SEILER, C. J., dissents.
BARDGETT, Judge (concurring in result).
I concur in the result reached by the principal opinion in this case but do so because in this case there was, in fact, knowledge on the part of the parties interested in contesting the proposed increased rates and there was a full hearing conducted with reference to those proposals. I do not agree that municipalities and consumers have no procedural due process rights with reference to utility rates. While a consumer may not have a property right to the continuation of a specific rate, he does have a right not to be charged unreasonable rates. Whether or not a proposed rate is reasonable is a matter for the Public Service Commission to decide, but, those who will have to pay the increase are, in my opinion, entitled to receive notice of the proposal and be afforded an opportunity to appear and be heard by the commission prior to the rates going into effect.
SEILER, Chief Justice (dissenting).
After consideration of the motions for rehearing and the briefs, I have concluded to withdraw my original vote of dubitante and to file this dissent.
As I understand the principal opinion, it holds that the “file and suspend” method is proper for proposed rate changes by a utility, even where the commission has previously fixed reasonable rates, basing this largely on the conclusion that this method has been used for over sixty years without objection from the general assembly.1 However, as I understand the motion for rehearing, there seems considerable doubt whether the commission itself has accepted the “file and suspend” method as a proper method to seek a rate increase where the maximum rate had been fixed by statute or
“. . . By section 49 of the law, machinery was created by which rates, which previously could be changed only by the action of the Legislature, might thereafter be changed by order of the commission as superintending agency of the state. To that agency the Legislature delegated the function of exercising the regulatory powers of the state systematically and in accordance with prescribed rules, and imposed the duty upon it of changing rates fixed by law when these rates are shown to be unjust and unreasonable. By section 29 the Legislature restricted the power of the carrier to fix its own rates in the field where previously the state had not chosen to exercise its regulatory power. Provision was made in that section intended to afford the agency of the state opportunity to interdict any change before it became effective if it appeared that the new rate was unreasonable. The two sections are intended to cover separate fields. In the field where change in rates can lawfully be effected only by affirmative action of the state, section 49 makes provisions for such action by its agency. In the field where change in rates may lawfully be effected unless the state interposes its veto, section 29 provides opportunity, before the change becomes effective, for determination whether such a veto would be reasonable. No other construction of the statute accords with either the letter or the spirit of the statute.”
Therefore, I believe the trial court was correct in the case before us when it declared: “The proceedings which resulted in the report and order under scrutiny were initiated by the filing by MPS of revised rate schedules. The exclusive procedures under
On the due process issues which are, in my opinion, directly involved in any rate increase case, I agree with Judge Bard-
Under the “file” method of
Under the principal opinion the commission when a tariff or increase of rates is filed might (as it legally could) do nothing and thirty days later the customers would be paying higher rates without knowing what happened to them. In fact, if the commission so decided for “good cause“, the increased rates could go into effect almost immediately, as the statute allows the commission under those circumstances to forego the thirty days notice. All this could be done without the utility making any actual showing whatever that its present rates were unreasonable, because the statute does not require the filing of anything more than whatever is contained in the tariff sheet and the tariff sheet is nothing more or less than a price list.
The principal opinion rejects the due process argument advanced by relators on the basis that there is no protected property interest in the present level of utility rates. It seems to me, however, that what the consumers are contending here is not that they have the property right in a specific fixed utility rate, but that they have a right to receive notice of any proposed rate increase and to be afforded an opportunity to be heard prior to an increase going into effect. They do not claim a right to a specific rate but they do claim the right to just and reasonable utility rates, which is what is required by the statute.
“All the more insistent is the need, when power has been bestowed so freely [referring to the broad powers with which a public service commission has invested], that the ‘inexorable safeguard’ of a fair and open hearing be
maintained in its integrity . . . The right to such a hearing is one of the ‘rudiments of fair play’ . . . assured to every litigant by the Fourteenth Amendment as a minimal requirement . . .”
If more is needed, we can properly look to the substantial investment which electric utility consumers have in their electrical appliances and systems. As pointed out in the briefs, the utility has invested approximately $1,945 worth of capital for each of its 110,000 customers and now has $1,709 worth of facilities (original cost) for each of these customers. A customer who has invested in the cost of the electrical system in his residence or business and then further invested in the cost of various electrical appliances (e. g., refrigerator, lighting fixtures, television set, range and oven, washer and dryer, radio, dishwasher, freezer, vacuum sweeper, sewing machine, furnace, air conditioner, and dehumidifier) has much more at stake on an individual and collective basis than does the company. It is common knowledge the electric companies advertise and promote such investments. The property rights of the customers in terms of their investment are many times greater than those of the utility. Who of us these days has any real choice in deciding whether or not to use electricity in his home or business? It is not realistic to say that electric consumers do not have a direct property interest in, and right to, just and reasonable electric rates. Both the Missouri statutes and their property investment give consumers sufficient entitlement to bring them under Fourteenth Amendment protection.
The principal opinion relies to some extent upon Sellers v. Iowa Power & Light Company, 372 F.Supp. 1169 (S.D.Iowa 1974), but in Iowa the statute extended to the consumer in lieu of a procedural due process safeguard, a comparable safeguard guaranteeing his right to a just and reasonable rate in the form of a right to a refund for any payments for utility services in excess of the rate finally approved by the commission. The Iowa statutes provide both for a refund bond and a hearing before rates can be charged which are not subject to refund. There is no such protection in Missouri. The Missouri commission has no power to promulgate an order requiring a pecuniary reparation or refund, Straube v. Bowling Green Gas Company, 360 Mo. 132, 227 S.W.2d 666, 668 (1950) and once the utility collects in accordance with rate schedules, the amount so collected cannot be taken away, Lightfoot v. City of Springfield, 361 Mo. 659, 236 S.W.2d 348, 354 (1951), nor under the “file” method available henceforth to the utilities is there any guarantee of an opportunity to be heard before the rates are increased.
It is true that consumers in Missouri could file a complaint after the rate had been increased under the “file” method, but then the burden of proof is on the consumer and it is impossible for the average consumer to do anything effective about making such a complaint or investigation. It would take thousands of dollars in fees and expenses for the expert testimony and services of counsel required to carry such a burden.
It seems to me that the result of the principal opinion in holding that there is no need to afford procedural due process to the consumer means that as a practical matter a consumer has no way to insist on his right to “just and reasonable” electrical rates. Under the principal opinion electric rates can be raised without any notice or hearing for consumers, without any evidence of reasonableness whatsoever, and despite the fact that such an increase in rates means that the substantial investment of the individual consumer in his electrical system and appliances is diminished without his having any alternative source of electrical service since the utility has a state protected monopoly.
Even if we were to say the consumer has only a privilege to obtain electricity at the current price, it is a most valuable privilege and “Valuable privileges . . . are also
Additionally, it seems to me that under the law laid down by the principal opinion there is a vast inequality of protection between the rights of the consumer to have rates which are not unreasonably high and the rights of the utility to have rates which are not unreasonably low. As has earlier been stated, under the “file” method the utility need give no notice and if the commission so decides the rates can go into effect immediately. If a consumer makes a complaint, however, he must set forth allegations of fact which if proven will entitle him to relief and there is an express requirement that notice be given the utility, see
“. . . Granting to a corporate owner of land the right to elect between a trial by common law jury or a freeholders’ jury but denying the same right to an individual landowner similarly situated clearly discriminates between the two types of owners without any rational basis for differentiation. It creates an artificial classification bearing no reasonable, just or proper relation to the object of the legislation . . .”
So it is, it seems to me, in the present case. There is no rational basis for creating two sets of remedies, one significantly more favorable than the other. This is particularly true in light of the clear expression of legislative intent that there be only one remedy common to all who challenge the validity of the commission‘s order.
I would affirm the judgment of the trial court and respectfully dissent from the principal opinion.
STATE of Missouri, Respondent, v. Robert James THORNTON, Appellant.
No. KCD 27179.
Missouri Court of Appeals, Kansas City District.
Dec. 31, 1975.
Notes
- August 5, 1974—Appellant filed revised tariffs and rules and regulations requesting increased rates for electric service to its Missouri customers. This was eventually designated Commission Case No. 18,180. August 15-21, 1974—Commission counsel, Acting Public Counsel, Jackson County and Kansas City filed Motions to Dismiss the August 5, 1974, tariffs filed by Appellant premised upon the two-year “moratorium.” August 21, 1974—The Commission issued its Order setting hearing and briefs to be filed in Case No. 17,763 and later changed the case designation to Case No. 18,174. August 27, 1974—A hearing was held on the four motions filed praying for the dismissal of the electric tariffs filed by Appellant on August 5, 1974, before the Commission. During the hearing, evidence was submitted to the Commission indicating circumstances which had changed in the Appellant‘s operations since the Commission‘s Order of December 14, 1973. September 3, 1974—The Commission, after having designated the electric filing of August 4, 1974, of Appellant as Case No. 18,180, issued a Suspension Order suspending until January 2, 1975, the requested effective date of the tariffs. September 3, 1974—Jackson County, Missouri, filed its Petition for Injunction, Temporary Injunction, Temporary Restraining Order and Preliminary Mandatory Injunction in the Jackson County Circuit Court presided over by the Honorable J. Donald Murphy, Circuit Judge. September 6, 1974—The Commission issued its Order in Case No. 18,174 wherein it overruled the Motions to Dismiss Appellant‘s tariffs. September 10, 1974—The Honorable J. Donald Murphy of the Circuit Court of Jackson County issued his opinion in the injunction action generally dismissing the cause filed by Jackson County, Missouri, finding, in part, after arguments and briefs had been heard and submitted, that the moratorium as applied to Appellant, under the then existing circumstances, was unconstitutional and in violation of Article I, Section 10 of the Constitution of the State of Missouri and of the Fifth and Fourteenth Amendments to the United States Constitution. Circuit Court Case No. 783,082 (Exhibit 8). September 26, 1974—Jackson County, Missouri, filed a Complaint against the Commission requesting an order of the Commission directing that the schedules of increased rates transmitted to the Commission on August 5, 1974, be stricken from the files of the Commission. This Complaint was designated as Commission Case No. 18,193. October 8, 1974—Jackson County, Missouri, filed its Motion to Dismiss the schedules of increased rates received by the Commission August 5, 1974, in Case No. 18,180. November 26, 1974—Jackson County, Missouri, filed in Case No. 18,193 its Motion for Immediate Relief waiving hearing and oral argument and requesting a determination of the matter. The Commission subsequently dismissed this complaint from which Jackson County filed a Petition for Writ of Review in the Circuit Court of Cole County, Missouri. (That Petition for Writ of Review was subsequently denied by the Circuit Court of Cole County, Missouri, on June 10, 1975, after briefs and arguments had been submitted to the Court.) Jackson County did not appeal the decision of the Circuit Court of Cole County. Cole County Circuit Court Case No. 27,539 (Division 1). December 18, 1974—The Commission issued its Order denying the Motions to Dismiss in Case No. 18,180, stating that in effect the exact issues had already been ruled upon in the case numbered 18,174 and incorporating the reasoning therefor used in Case No. 18,174 which had found that the applicant, Missouri Public Service Company, had adduced sufficient evidence to establish a prima facie showing of substantial and altered circumstances.