37 Pa. Commw. 173 | Pa. Commw. Ct. | 1978
Opinion by
This is a public utility rate ease.
On November 19, 1975 the Philadelphia Electric Company (PECO) filed with the Pennsylvania Public Utility Commission Supplement Nos. 51 and 52 to its Tariff Electric—Pa. P.U.C. No. 24, and Supplement Nos. 48 and 49 to its Tariff Utility—Pa. P.U.C. No. 7
In apparent recognition that PECO urgently needed additional revenue and in order to expedite the hearings necessary to develop a record on which to base a final order, the Commission appointed a Special Examiner, Morris Mindlin, Esq., to conduct hearings and to prepare a proposed order. By about June 29, 1976, the Special Examiner had conducted 27 days of hearings and additional hearing dates had been scheduled. PECO on that date filed a petition to allow the full Supplement No. 51 rates to go into effect on July 21, 1976, the expiration date of its suspension. The Commission assigned the petition to the Special Examiner for recommendation. The Special Examiner filed a comprehensive report recommending that the prayer of PECO’s petition be granted and that PECO be permitted to file tariff supplements designed to produce additional annual revenues not to exceed $22,719,942 based upon the level of operations at August 31, 1975 and “applied through a level percentage increase of all customer billing.” The Commission by order made July 21, 1976 generally adopted the Special Examiner’s recommendation, permitting PECO to file supplements designed to produce additional annual revenues not to exceed $22,719,942, applied as the Special Examiner had recommended by a level percentage increase of all
The Special Examiner filed his final report on August 31, 1976. The bare bones of this report were findings of total allowable annual operating revenues at the level of operations at August 31, 1975 of $1,-060,588,000, allowing for a total annual increase of $86,402,000 in revenues, or 91.1% of the $94,835,000 proposed by PECO. The Special Examiner recommended and indeed strongly urged the Commission to allow the total increase of annual operating revenues to be applied as PECO had proposed.
By order adopted October 13, 1976, the Commission continued the then effective rates — that is, those created by its orders of January 20, 1976 allowing additional annual revenues of $24,300,000 and those permitted, but not as Commission made rates, by its order of July 21, 1976 in the additional amount of $22,719,942 — as temporary rates authorized by Section 310 of the Public Utility Law, Act of May 28, 1937, P.L. 1053, as amended, 66 P.S. §1150. By the same order the Commission directed PECO to defer the effectiveness of proposed Supplements Nos. 51 and 52.
On February 3, 1977, the Commission adopted its final order.
The Commission in its final order rejected the Special Examiner’s recommendation that no exemption from any of the increase of revenues allowed to be received by PECO should be given any customers in any class of customers. The Commission, as it had with respect to the first increase allowed by its January 20, 1976 order, provided that there should be no rate increase applicable to the first 500 kWh per month usage by residential customers with respect to the additional revenues allowed by its final order, in the amount of $24,980,000. Hence, as the result of the Commission’s order of January 20, 1976 and its final order PECO’s residential customers were exempted from increases with respect to the first
Despite the substantial disparity in the amount of increase applied for, $95,000,000, and the $72,000,000 allowed by the Commission’s final order, PECO has not asked for review. The United States Steel Corporation (USS), an HT class customer, and a complainant before the Commission, filed a petition for
The issues raised by the appellants relate exclusively to the Commission’s order with respect to the allocation of the increase allowed among PECO’s customers that is, to the utility’s rate structure as established by the Commission’s final order.
USS presents two questions. The first is that of whether the propriety of the allocation of the requested increases among PECO’s customers proposed by Supplements Nos. 51 and 52 as applied to USS is supported by sufficient evidence. It will be recalled that the increase in the amount of about $47,000,000 sought in Supplement No. 51 was proposed to be applied to all customers and that the increase in the amount of about $47,600,000 sought in Supplement No. 52 was proposed to be obtained by increasing rates of HT and PD customers by 6.9% and those of all other customers 3.4%. Neither the rates nor the rate structures proposed by the Supplements Nos. 51 and 52 ever went into effect without substantial change. As we have noted, the Commission by its order of January 20, 1976 allowed an increase of $24,300,000 and on July 21, 1976 allowed an additional increase of $22,719,942. The Commission exempted the first 500 kWh monthly of residential use required with respect to the January 20, 1976 increase and the balance was allocated evenly to all customers; it ordered all of the increase allowed by July 21, 1976 order to be charged evenly to all customers. Only the
The second question is raised by both USS and the 913 appellants, which it will be recalled are also HT customers. They vigorously attack the action of the
As is common with most new concepts, there are differences of view concerning the proper definition of lifeline rates. The appellants seem to use the term as denoting rates which implement a socio-economic view, held they say by a majority of the members of the Commission, that poor persons should be relieved of the cost of their utility services and that these costs should be charged to other customers better able to pay.
Inflation and other current economic dislocations have struck the electric production industry with particular force. The cliches of the problem are nevertheless truths: if a public utility is starved for funds, its service will deteriorate; residential customers cannot pay utility bills which are beyond their meaps; and commerce and industry will not stay where costs prevent profits. Since the interests of the parties to rate cases are in irreconcilable conflict,- the Commission’s task is difficult indeed. We can agree with the appellants that rate making should not be made more difficult by the employment in the process of personal socio-economic theories or, indeed, any consideration other than of the law and the facts. of record. Decisions concerning the kind and extent of subsidy which should be afforded to needy residential customers should, it seems, be left by regulatory agencies and courts to the legislative branch of government, as indeed the Commission seems to have concluded in its Generic Study just mentioned. Certainly there is nothing in Pennsylvania law which now empowers the Commission to require one customer simply to pay another’s utility bill; and, as we have mentioned, the utility may not and could not for long be required to provide such subsidy out of its capital. This is not to say, however, that rate structures may not be rearranged from time to time in response to changes, in economic conditions — whether general changes or changes especially affecting particular classes of customers. The law presently permits reduced rates to
Section 304 of the Public Utility Law, 66 P.S. §1144 prohibits the establishment of rates either affording an unreasonable preference to one person or subjecting another to unreasonable prejudice and in addition prohibits the establishment or maintenance of unreasonable differences in rates between classes of service. The appellants say that the exemption of the first 500 kWh of monthly usage by residential customers with respect to some of the additional revenues allowed violated Section 304. They contend that the Commission’s action was contrary to the Commission’s own earlier view of its power as not including that of requiring one customer to pay for his less prosperous neighbor’s utility service. They also invoke the authority of Superior Court cases which emphasize the importance of cost of service to the fair allocation of rates among classes of customers, citing Riverton Consolidated Water Co. v. Pennsylvania Public Utility Commission, 186 Pa. Superior Ct. 1, 140 A.2d 114 (1958); City of Pittsburgh v. Pennsylvania Public Utility Commission, 182 Pa. Superior Ct. 376, 126 A.2d 777 (1956); and City of Pittsburgh v. Pennsylvania Public Utility Commission, 171 Pa. Superior Ct. 187, 90 A.2d 607 (1952).
The Commission in response to a request by its Staff for amplification of its exemption of the first
In United States Steel Corporation v. Pennsylvania Public Utility Commission, 37 Pa. Commonwealth Ct. 195, 390 A.2d 849 (1978), we had occasion to review at some length the meaning of Section 304 as applied to rate structure issues. As we there pointed out, the Superior Court cases hold that a mere difference in rates among classes of customers is not a violation of the statute, that prior rate schedules are not res judicata on the question of discrimination or reasonableness of new rates, and that the Commission is invested with a flexible limit of judgment. These being the principles, it is clear that the appellants’ charge of a violation of Section 304 has not been made out. As we have noted, the bills of residential customers with respect to their first 500 kWh per month usage were increased by about 2.8%, and the charges with respect to residential customers’ usage of more than 500 kWh of monthly usage and of all other classes
The appellants place great emphasis on a cost to serve study produced by PECO in response to a Commission directive. As PECO’s expert rate witness testified, there are many different ways of developing costs to serve data, none of which can be consid
Finally, the appellants emphasize cost to serve to the exclusion of other factors relevant to the establishment of a reasonable rate schedule. In Philadelphia Suburban Transportation Co. v. Pennsylvania Public Utility Commission, 3 Pa. Commonwealth Ct. 184, 196, 281 A.2d 179, 186 (1971), we quoted with approval the following language from a Commission opinion in another case as properly descriptive of the principles applicable to the fixing of reasonable rate schedules:
‘There is no requirement that rates for different classes of service must be either uniform or equal or that they must be equally profitable. Differences in rates between classes of customers based on such criteria as the quantity of electricity used, the nature of the use, the time 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. Rate structure, which is an essential, integral component of rate-making, is not merely a mathematical exercise applying theoretical principles. Rate structure must be based on the hard economic facts of life and a complete and thorough knowledge and understanding of all the facts and circumstances which affect rates and services; and the rates must be designed to furnish the most efficient and satisfactory service at the lowest reasonable price for the greatest number of customers, i.e., the public generally.’
The appellants’ dependence on the case of Riverton Consolidated Water Co. v. Pennsylvania Public Utility Commission, 186 Pa. Superior Ct. 1, 140 A.2d 114 (1958), is misplaced. In that, the only case which we have found in which a court directed the Commission to establish a separate rate for a group of customers, the Commission order which was overturned had imposed upon complaining customers of a water company the cost of a loss of water supply as the result of leaks in the utility’s general distribution system which was not connected with the water main which exclusively served the complaining customers. In Pittsburgh v. Pennsylvania Public Utility Commission, 178 Pa. Superior Ct. 46, 112 A.2d 826 (1955), and Pittsburgh v. Pennsylvania Public Utility Commission, 165 Pa. Superior Ct. 519, 69 A.2d 844 (1949), the Commission simply remanded rate structure issues for further action by the Commission because the court could find no evidence in the record supporting the Commission’s findings. None of these authorities provide support for the appellants’ suggestions that we order the Commission to provide them with a new, lower rate or that we return the record because the Commission’s findings are unsupported by competent evidence.
We believe that there is competent evidence supporting the Commission’s factual and administrative finding that the rate structure established by its actions in this proceeding was reasonable.
Order affirmed.
Order
And Now, this 9th day of August, 1978, the Commission’s Corrected Final Order adopted February 3, 1977 and entered April 21, 1977 is affirmed.
Supplement Nos. 48 and 49 to Tariff Utility—Pa. P.U.C. No. 7 applied only to Penn Central Transportation Company, now ConKail. PECO proposed increased rates for this service equal to those proposed for its class HT (customers supplied high tension voltage of 13.2 kV and above) and PD (customers served primary voltage of 4 kV). ConKail’s rates were increased by the final order of the P.U.C. in this case by about the same percentage as those of class HT and PD. All references to Supplement Nos. 51 and 52 include the parallel Supplement Nos. 48 and 49. ConRail did not participate in this case.
The final order in the RID 129 ease entered on March 25, 1975 allowed increased annual operating revenues in the total amount of $105,000,000 in response to an application filed January 31, 1974 for an annual increase of $136,000,000. The increase approved in RID 129 was a 12% increase in total annual operating revenues. The test year of that case was the year ended June 30, 1974.
The figure 4.9% as the proposed increase to all classes by Supplement No. 51 is that supplied by PECO in “Information Submitted Pursuant to Section IV of The Commission’s Rules and Regulation.” So also is the figure 4.8% as the amount by which Supplement No. 51 proposed rates exceeded the RID 129 allowance for annual operating revenues.
It will be recalled that PECO had proposed that the Supplement No. 51 increase of about 4.8% should be applied by a level increase of all customers’ billings by this amount and that the Supplement No. 52 increase of an additional 4.9% should be applied by increasing HT and PD customers’ rates by 6.9% and all other customers’ rates by 3.4% over the Supplement No. 51 level. We may fairly assume that the Special Examiner’s recommendation was that the increases allowed by the Commission’s orders of January 20, 1976 and July 21, 1976 totalling about $47,000,000, the approximate amount of Supplement No. 51, should be applied evenly to all customers and that the difference between that total and his recommended total allowance of $86,402,000 amounting to. about $39,400,000 should be applied at the percentages proposed by PECO in Supplement No. 52—6.9% to HT and PD and 3.4% to all other customers.
The fruits of the investigation was the report published in December 3977, called Generic Rate Structure Investigation referred to hereinafter in the text of this opinion.
The Commission entered a corrected final order on April 21, 1974. The corrected final order makes some changes in internal figures displayed in the text but effected no change in the amount of additional annual revenues allowed.
The total of residential billings on a class basis, not including a subdivision WH (water heating), were increased by about 4%.
These appellants are Lukens Steel Company, Stauffer Chemical Company, The Celotex Corporation, A. E. Staley Manufacturing Company, Scott Paper Company and Union .Carbide Corporation (Linde Division).
We are informed by the record that more than 62% of PECO’s residential customers use 500 kWh per month, or less. We are also told, however, that these customers account for only 36 percent of residential sales.