*1 Light Company, & Wisconsin Power Petitioner- Respondent, Corporation, Intervenor- Public Service Wisconsin Respondent, v. Respondent- Wisconsin, Public Service Commission of Appellant-Petitioner, General Motors Corpora- Company, Vulcan Materials tion, 3M Enzyme Bio-Systems, Company, Georgia- (Collec- and Penda Corporation Pacific Corporation the Wisconsin Industrial tively Energy Group WIEG), Intervenors-Appellants-Petitioners.
Supreme Court argument September No. 91-1096. Oral 1993. Decided 8, 1994. February (Also 291.) reported in 511 N.W.2d *3 respondent-appellant-petitioner For there were by Levine, briefs Steven counsel, staff and Steven M. argument by Schur, chief counsel, Madison and oral Steven M. Schur. intervenors-appellants-petitioners there
For the by Stuart, and Anita T. Gallucci Michael G. were briefs Curry Field, and oral Suhr, & Madison Boardman, argument by Stuart. Michael G. by petitioner-respondent there was a brief
For Harvey, Barbara J. counsel, staff and D. William argument by Swan, counsel, Madison and oral staff Harvey. William D. by intervenor-respondent there was a brief
For the Foley Bradley & Williams, Jr., Jackson and D. Allen W. argument Allen W. Wil- Lardner, and oral Madison liams, Jr. presented in this case
STEINMETZ, J. The issue Commission of Wisconsin is: Does Public Service (PSC commission) authority to order a util- or have the utility's ity lump penalty pay on the sum based imprudent management? past
In determined that Wisconsin (WPL utility) impru- Light Company or had Power dently administered a coal contract. The commission alleged imprudence, a result this WPL found as overcharged electricity its customers for from 1974 Accordingly, pay until 1989. the PSC ordered WPL penalties. million in $9 county court,
The Dane
circuit
the Honorable Rob-
holding
Chambeau,
order,
ert A. De
reversed the PSC's
penalty
impermissible
that the
constitutes
ratemaking.
appeals
The court of
affirmed the trial
*4
Light
court's order.
v.
Service
Wis. Power &
Public
(Ct. App.
Comm.,
553, 572,
171 Wis. 2d
WPL, Madison Gas and Electric and Wis- (WPSC) Corporation jointly consin Public Service own generating Portage, the Columbia station near Wiscon- operates facility. In sin. WPL WPL entered 20-plus-year purchase into a contract to coal for the Energy Company Columbia station from Western (WECO). Coal contract, Under the terms of the WECO adjust changes the cost of the would coal to reflect , price various indices and WECO's actual cost of min- ing. began October, 1974, Between when WECO delivering coal to the Columbia station, December, price charged 1987, the WECO WPL for coal from rose per per average ton to ton—an increase of $2.05 $10.40 percent year. 13.3 each
As WPL's coal costs increased, so did the rate WPL charged electricity. its customers for WPL set its rates using procedures during period two different question. time in From October, 1984, 1974 until utility adjustment based future on rates automatic fuel (FACs). approved formula, clauses A FAC is a rate pass PSC, that enables a on increases in without, directly utility's fuel costs to the customers going through mandatory the otherwise administra- Accordingly, place, tive review. while FACs were higher WPL's customers bore the burden of WECO's prices. coal
Beginning pursuant pas- in October, 1984, to the sage 196.20(4)(b), legislature of sec. Stats., prohibited utility companies setting electric from rates fully based on FACs. From that time on, the PSC scru- projected tinized each increase in WPL's rates under procedures involving standard administrative audits year very and test estimates. Under these two distinct setting methods —with and without FACs—the approve 15-year PSC did 14 WPL rate orders in the period at issue. *5 newly fuel hired of the commission's
In one paying suggested the was to WPL that auditors high price unreasonably the WECO for coal under an Following and an audit an internal audit both contract. accounting WPL con- firm, an outside conducted overcharged coal WPL for had that WECO cluded subsequently and 1987. WPL and WECO between concerning negotiations contract. As their entered into price negotiations, the WECO reduced of these a result per per WPL to ton and ton $8.70 of coal from $10.40 purchase agreed for an coal from WECO to continue to years. refund not, however, did ten WECO additional any overcharges. money In addi- to WPL to cover any right of the its to recover tion, WPL waived overcharges. application on Decem- with the PSC
WPL filed an its retail electric rate. to increase 30, 1988, ber application, con- the commission to this Pursuant practices books, accounts, an audit of WPL's ducted grossly that WECO had and activities and discovered overcharged and that WECO had never WPL for coal Following any money extensive to WPL. refunded hearings, that WPL had acted the PSC concluded by: administering imprudently contract the WECO 2) 1) neglect- failing overcharges sooner; notice the to ing Columbia inform the other owners of the to 3) overcharges; generating and waiv- station about ing any past overcharges claim to the when renegotiating The commission the WECO contract. penalty pay substan- million, ordered WPL to a $9 tially million to million $52 less than estimated $13 findings overcharges. However, the PSC's actual it clear that the commission derived fact make penalty directly actual from the amount of overcharges. pay portion requires WPL to The order penalty customers and in the form of credits its of the lump payments to MGE and remainder as sum pass customers. on their WPSC petitioned 1989, WPL the Dane On November *6 judicial county review of the PSC's circuit court for particular, pursuant In WPL to ch. Stats. order the PSC has the the court to decide whether asked authority against penalty assess the million $9 finding utility that WPL and whether the commission's imprudently correct. The trial court reversed acted was finding penalty that the constitutes the PSC's order, ratemaking, impermissible retroactive in violation 196.37(1), disposed Because this decision sec. Stats.1 court not reach the issue of matter, the entire did alleged imprudence. court, WPL's Before the trial corporations, WPSC intervened on behalf of WPL. Six collectively referring to themselves as the Wisconsin (WIEG), Energy Group intervened on behalf Industrial of the PSC. appealed the trial court's
The PSC and WIEG
from
agree-
appeals
order. The court of
affirmed this order,
ing
trial court that the commission violated
with the
ratemaking. Wis. Power &
the rule
retroactive
Light,
WIEG offered an alternative to both courts. contended that FACs were in WIEG while place, imprudence, utility due to WPL's had charged a rate above the rate filed with the PSC. This
1 196.37(1), Stats., as follows: provides Section (1) rates; If, Lawful reasonable service. after an investi- gation chapter rates, under this and ch. the commission finds tolls, charges, joint unjust, unreasonable, schedules or rates to be unjustly discriminatory preferential insufficient or or or otherwise unlawful, or unreasonable the commission shall determine and rates, tolls, joint charges, order reasonable schedules or rates to be imposed, observed and followed the future. 196.22, doctrine, codified in see. the filed rate violated According utility when a violates WIEG, Stats.2 power has the to order the doctrine, the PSC filed utility Hence, the order does to refund excess revenue. ratemaking, a rather but not constitute authority. courts of the PSC's Both lower valid exercise rejected argument. accepted peti- This court this and WIEG. for filed tion review question concerning presents This review statutory authority of the PSC to order a validly of an collected revenue. extent refund statutory authority question agency's Thus, is a of law. agency's no an determination courts owe deference to statutory authority. concerning its own Environ Wis. Comm., 81 2d Decade v. Public Service Wis. mental (1978); North, Inc. v. 344, 351, N.W.2d GTE Comm., 559, 564, 2d Public Service 176 Wis. *7 (1993). N.W.2d 284 only legislature, a "has
As creation of PSC powers expressly or which are conferred which those necessarily implied by it the statutes under which are operates." Kimberly Corp. Service Clark v. Public Comm., 329 143 455, 461-62, 110 Wis. 2d N.W.2d (1983). expressly provision 196, Stats., in autho- No ch. money utility rizes the to order a to refund commission may utility have its customers when the acted 196.37(1) only imprudently. In fact, sec. allows 2 Stats., 196.22, provides Section as follows: public utility may charge, No Discrimination forbidden. demand, compensation any collect or receive or less for more ser- by state, performed any vice for in it within the or service therewith, specified connection than is in the for the schedules 196.19, joint rates, including of service filed under s. schedules as force, demand, may any rate, at be in or the time collect or receive specified charge toll or not schedule. any just to "determine and make and reasonable rates, charges, joint imposed, tolls, schedules or rates to be (Emphasis observed added.) followed in the future." acknowledged This court has this rule against firmly ratemaking retroactive ensconced in Kimberly-Clark Corp., Wisconsin law. See 110 Wis. 2d express implied at 468 "we conclude that there is no or grant authority... empowering of the PSC to set retro- active rates and order refunds"; Friends Earth v. Commission, Public Service 388, 412, 78 Wis. 2d (1977) "[t]o permit N.W.2d 299 the PSC to condition a previously order on refund of sums collected under permanent directly established rates would violate the ratemaking". rule retroactive
The PSC admits that the order at issue here con- ratemaking. stitutes retroactive However, the PSC argues permissible recognized that the order is as a exception general prohibition against to the such actions. very
Under certain narrow circumstances, Wiscon- allowing sin courts have affirmed PSC orders high enough recoup past to set future rates losses. In Wis. Environmental Decade v. Public Comm., Service (Ct. App. 1980), Wis. 2d N.W.2d 205 the commission ordered a rate increase for the Wiscon- Company, part sin Electric recovery Power to allow extraordinary losses caused a severe ice storm. appeals stating: court of affirmed the order, "We prohibition against cannot conclude, however, that the ratemaking applies recouping in the of an *8 extraordinary casualty loss." Id. at 699. The PSC's certainly order, in case, this does not fall within this "extraordinary exception narrow loss" to the rule ratemaking. suggests a within order falls that its
The PSC next exception "management imprudence" well-established recently- ratemaking, against retroactive to the rule Corp. by appeals recognized in Public Serv. court of N.W.2d Comm., 611, 457 156 Wis. 2d Public Serv. v. 1990). (Ct. App. found case, In that the commission protesting imprudently its not had acted that WPSC part of the payments reason to believe when it had tax of this As a result unconstitutional. tax code was large eligible imprudence, to receive a not WPSC was in chal- were successful when other utilities tax refund lenging of return rate The PSC set WPSC's the tax law. percent year percent the cal- below at 12.9 for the —.1 optimal its claims rate. The PSC now culated requiring million, to refund case, WPL $9 order in this adjustment allowed the minor rate than is no different Corp. Comm., 156 Wis. v. Public Serv. Serv. in Public 2d at 620. appeals
Contrary belief, the court of to the PSC's excep- imprudence" any "management rely not on did affirming in Public Serv. rate order tion in Corp. Rather, the court deter- Serv. Comm. v. Public by the commission was final rate set that the mined range The commission reasonableness." "within imprudence merely past as one factor in used WPSC's setting rate was rates; and, the final because future upheld appeals the PSC's the court of reasonable, Id. at 619-20. order. always procedure available to the has been
This "[l]ooking dissenting opinion points out, As the PSC. setting looking rates are not backward forward and easily case, from one another." In this divorced so extraordinarily high could have taken the commission passed along to consumers the for coal that WPL cost previous setting year future rates. The into account *9 years not, however, PSC did do Rather, later, this. pay the PSC decided that it should order WPL to penalty. authority This the PSC not does have the do.3
Assuming past, we have not done so the recognize "management now asks this court to this imprudence" exception against to the rule retroactive ratemaking. exception This would allow the commis- public require past sion to utilities to refund imprudently incurred costs. recognize exception. Nothing
We refuse to such an suggests implies 196, Stats., in ch. or that the PSC has authority penalties past to order refunds or for management imprudence. plain The statute is on its may only prospectively, face. The commission set rates backward-looking without recourse to remedies like penalty WPL ordered in this case. argues The commission that it should be able utility's past any review a at actions time. If the com- utility's imprudent, mission finds that the conduct was proposes the commission it have should authority utility any impru- to order the to refund dently though costs, incurred even the costs were pursuant utility's PSC-approved collected to the rates. reject proposal. proposed "manage- We this The PSC's imprudence" exception ment would "swallow" the rule ratemaking. retroactive If the PSC had this authority, utility earnings no be from would safe parties None of the argued have that the doctrine of laches apply should making here to bar the PSC from this order. While the doctrine of very prohibit laches could well the commission's actions, argument this court will not address that because the prohibition against ratemaking apply does this produce case to the same result. would ever no rate order refunds and
ordered final. become analyses apply argues to the that different
WIEG setting portion of rates. For that methods of different corresponding to WPL's reve- refund the PSC-ordered *10 discontinued, WIEG after FACs were nues acknowledges at issue constitutes that the rate order asking ratemaking joins in and the PSC "management imprudence" recognize a court to this practice. exception prohibition of this to the portion of the refund corre- However, for that place, sponding in revenues when FACs were to WPL's why explanation of the PSC an alternative WIEG offers According portion of the WIEG, to this order penalty valid. ratemaking. Rather, WIEG is not retroactive argues place, WPL violated that while FACs were authority has the to the filed rate doctrine. The PSC any resulting disgorge WPL to excess revenue order charging than the filed its customers more from WPL rate. doctrine, codified in sec.
Under the filed rate
charge
utility
rate that it
Stats., a
must
the
196.22,
the commission
files with the commission and that
higher
approves.
utility charges
If a
its customers
may
utility
refund its excess
rate, order the
to
North,
See
WIEG relies
two
from
cases
other
jurisdictions
support
argument.
this
See Public Serv.
Hampshire,
par.
(1979);
Comm. New
6 FERC
61,299
of
Niagara
York,
Mohawk Power
v.
New
of
(N.Y. 1987).
N.E.2d 287
cases,
In each
these
a util
ity's imprudence
high
unreasonably
resulted in
fuel
calculating
being
energy
costs
used in
rates based on
regulatory agency
FACs. A
then ordered the
using
refund the excess revenue collected as a
result
imprudently
Niagara
these
In
incurred costs.
Mohawk
regulatory
Power,
507 N.E.2d at
commission
*11
only
authority
utility's
had the
the
rates
review
ret
rospectively. Niagara
Power,
Mohawk
507 N.E.2d at
Hampshire
opin
291. Public Serv. Comm.
an
New
is
of
Energy Regulatory
ion and
of the
order
Federal
(FERC).
Commission
This decision was never reviewed
by
opinion
a court. Furthermore,
the
does not discuss
disposi-
the issue that this court has determined to be
oversight
tive in this case—the
of
amount
and review
regulatory agency
actually
the
could have and
did con
appears
duct. It
that FERC did not review rate orders
private complaints
FACs,
based on
but rather relied on
oversight.
Hampshire,
for
Public Serv. Comm. New
of
In the the PSC had during to oversee WPL's contract with WECO period 196.02(5), question. entire time in See sec. recognized appeals the PSC court of The Stats.4 authority Dec Environmental in Wisconsin had this Comm., 105 Wis. 2d Serv. ade, v. Public Inc. (Ct. 1981), App. it stated: where N.W.2d 865 n.1, 313 automatically operate clauses Although adjustment electric bills a retail customer's or lower to raise a mathematical application of according to the clause, determining in the before contained formula may passed fuel costs be increased whatever motion, conduct a may, its own the PSC on through, may formal hear- summary investigation and order into the matter. ings while assertion that thus, incorrect its is,
WIEG only place, could review the PSC FACs were nothing the rate that went into else and formula determination. dissenting opinion that based on claims holding today, could have the PSC either
court's penalty imposed case refund —in which or a retroactive "internally opinion inconsistent" —or this remedy any problems powerless while FAC's was apply procedure place. The dissent fails to were in language quoted appeals in the the court of outlined Id. Environmental Decade. from Wisconsin above stats., 196.02(5), provides as follows: Section (5) any commissioner INSPECT BOOKS. The commission or purpose may, any person employed by for that or the commission demand, books, accounts, inspect papers, upon records utility, any any public under oath memoranda of and examine officer, agent employee public in relation to its or Any person, of the commis- and affairs. other than one business sioners, authority produce shall his or her who makes a demand *12 inspection. make the change the did not in substance This section of statutes 1974 1989. between and approving every
Before each and rate order between place 1974 and 1984—while FACs were in —the summary investigation could have conducted a and hearings formal ordered to examine the reasonable- being passed ness of fuel the costs on If to consumers. likely the the PSC had taken time to do this, it would drastically overcharging have found that WECO was suggested WPL. The commission could then have WPL it reevaluate its contract with WECO. This procedure reducing prices same resulted in WECO coal Unfortunately, in 1987. the PSC failed act in time. approved In addition, when the commission WPL's imposed rates in the commission enhanced reporting requirements accuracy on WPL to the insure utility's of the collections under the FAC. Wisconsin (1980). Light Reports Co., Power & Wis. PSC The commission stated that it be "would remiss in authorizing adjustment this fuel clause without mak- ing provision adequate necessary for and controls over determining elements costs increment price change ultimately passed on to consumers." Id. carefully
The record is unclear as to how the com- actually prior mission did review each rate order This, however, 1984. is irrelevant because, as noted power above, had to review WPL's records. previous In 14 while orders —some FACs were place subject and others to standard administrative questioned price paid review—the PSC never WPL for coal. Former commissions that these issued orders jobs discharged statutory duty did their their to set just and reasonable rates for the no future. At time did pay approved by consumers more than the rate Thus, PSC. WPL did not violate filed rate doctrine. *13 only power responsibility the and not had PSC general, in but also costs rates WPL's fuel and
to audit perform regularly represented such audits. it did that utility's a the had concerns about commission When utility's approve on the rates an it would FAC, use of explicit that the the condition util- basis, with interim ity if those fuel costs to consumers would refund E.g., found to be unreasonable. Wiscon- costs were later Reports Co., 199, 205 PSC Electric Power Wis. sin (1980). practice approved in Friends This that court of However, case, this Earth, at 412-13. in 78 Wis. 2d order made that the PSC could not court it clear under unconditional rates. refund of revenue collected question in here were unconditional. The rate orders pre- attempting to do Hence, the is now commission illegal cisely Earth. what found to be Friends we of by appears to be frustrated This commission authority. precluded by It is statute from bounds its correcting it now considers be errors made what 1974 and 1989. The current the commission between previous allowing orders, PSC believes that the cost of coal under the WECO con- WPL to recover during period, wrong. tract, However, were that entire disposal the PSC had at its mechanisms authority WPL's coal costs. The commission review prac- utility's review costs and did audit the did WPL's performance regularly tices and from 1974 to 1989 and approved just WPL's rates as and reasonable. indisputably
In no case, this WPL collected more paid to from for its coal costs than it ven- consumers exactly approved This when it dors. what the question. issued each of the rate orders in The commis- part WPL these sion has now ordered to refund fuel imprudently costs because it believes WPL acted managing Having its coal contract with WECO. approved including utility's expected rates, WPL's costs, coal times, PSC cannot now claim that money. WPL must return this We hold that the PSC's impermissible order constitutes retroactive ratemak- ing. Therefore, we affirm the decision of the court of *14 appeals.
By appeals the Court.—The decision of of the court is affirmed. Wilcox,
Justice
Jon P.
took no part.
(dissenting).
SHIRLEY ABRAHAMSON,
S.
J.
The
majority today reverses the Public Service Commis-
(PSC's)
ground
sion's
order on the
that it violates the
against
ratemaking.
rule
retroactive
The test of the
majority's
soundness of the
decision is the extent to
purposes underlying utility regula-
which it serves the
against
ratemaking.
tion and the rule
retroactive
I
Accordingly,
conclude that it fails this test.
I dissent.
regulates public
The state
utilities to achieve the
protect
benefits of economies of
to
scale and
consumers
monopoly
public good.1
from
control of a
Indeed, "the
primary purpose
public utility
of the
in
laws
this state
protection
consuming public."
is the
of the
Wis. Envi
Comm.,
ronmental Decade v. Public Service
81
2dWis.
(1978) (citing
344, 351,
The rule goals. designed The rule rewards the same achieve utility's efficiency protects the from consumer and utility's surcharges surprise to the losses allocable years. prior fairness, stabil Further, rule ensures regulatory agency certainty by preventing ity and approved reversing prior rates. Envi Wisconsin from Commn, 98 Wis. 2d v. Public Service ronmental Decade (1980);Narragansett Electric 682, 699, 298 N.W.2d (R.1.1980). it Burke, "Were not 177, 178 v. 415 A.2d Co. inefficiency, placed upon premium waste be so, a would policy negligence management. It is better and part encourage saving frugality thriftiness, on utility management. incentive inures eventu of a Such ally Gas v. to the consumers." Indiana benefit Utility Counselor, 1044, 1052 575 N.E.2d Consumer omitted). 1991) (citation (Ind. App. ratemaking
If the rule regulatory principle it must law, a useful be remain applied does in a manner that not understood and *15 purpose. Edison Co. undermine its Southern California (Calif. Commission, 576 945 Public Utilities P.2d v. 1978). against The traditional rule retroactive ratemaking exceptions riddled with and contradic- tory applications.2 exploring premises of Instead of
2 Regulation See Past: Cur The Ghost of Krieger, H. Stefan Applications Against Ratemaking, rent the Rule Retroactive of 1991 U. Ill. L. 983. Rev. see, eg., Inc. GTE North v. Wisconsin, exceptions
For (1993) Commn, Public Service 559, 500 176 Wis. 2d N.W.2D 284 (PSC violated); authority has order when refund filed tariffs PSC, Decade 682, 698-99, Wis.Environmental v. 98 Wis. 2d (Ct. 1980) may App. (utility recoup 211 — 12 N.W.2d extraordinary rates); from future through loss severe ice storm Commission, Friends the Earth v. Public Service 78 Wis. 2d of applicability the rule and its to this fact situation, the mechanically applies against court the rule retroactive ratemaking in this case.3 majority's homage against
The to the rule retroac- ratemaking tive in this case is First, flawed. to state majority presupposes the obvious, the engaged ratemaking was in traditional within the meaning against ratemaking the rule during (1974-84). adjustment period the automatic fuel clause adjustment
Fuel
are,
clauses
however,
"unique
easily
animals that are not
assimilated to
ratemaking principles."
classical
Maine Public Service
Co. v. Federal
Commission,
Power
403 penalty imposed a retroactive could have that the PSC improper of the administration on account or refund (and opinion adjustment is inter- thus the clause fuel inconsistent) powerless nally was or that the PSC through remedy problems of fuel costs audits identified (in purposes of for are worthless case audits which adjust- utility's compliance ensuring with the fuel clause). e.g., Daily LA, Trans See, Advertiser v. ment 1993).4 (La. 612 So.2d adjustment clause was a PSC- fuel An automatic utility that it approved assured the rate. It formula from its cus- costs dollar for dollar recover fuel would year through going test the audit and tomers without expenses process and without com- receive that other hearing applicable plying notice and with otherwise changed. requirements Wisconsin its fuel costs when Commn, 81 Service Decade v. Public Environmental (1978). In other 344, 346, n.l, 2d N.W.2d Wis. PSC-approved operation formula of the words, the price pass possible on all fuel for the made it automatically. prac- ratepayers adjustments The to its adjustment to decrease the clauses was tical effect of hearings, thereby conserving the time of of rate volume scrutiny simultaneously reducing public argu to the reasoning many respects similar in 4This Group Energy presented the Wisconsin Industrial ment (WIEG), intervened on the PSC's side. WIEG which doctrine." See argument of the the "filed rate labelled its version Intervenors-Appellants-Petitioners at 12-29. For Brief of the Service position, see GTE North Inc. v. Public support of this (PSC (1993) Commn, has Wis. 2d 500 N.W.2D 284 violated). authority refund filed tariffs to order when necessary it to resort to another doctrine to I do not believe majority's logic. demonstrate the weaknesses *17 changes. of rate Id. at 349.5 of This combination factors majority had unfortunate results. As the notes, the PSC found that between 1974 and 1987 had WP&L overcharged its customers million to million $13 $52 because of errors in the administration of its coal con- (WECO). Energy Company tract with Western Coal Many country courts around the have concluded adjustment that the use of automatic fuel clauses does ratemaking not constitute in or the traditional classi- adjustment cal sense of that Fuel term. are clauses a arriving they means of at a rate. While are thus an integral part they rates, of the are not "commission- established" rates. Because rates calculated under the adjustment go fuel clause into effect without advance approval by validly expect the PSC, the cannot charges thus collected are insulated from retroac- tive modification. Courts have therefore concluded that regulator agency's authorizing adjust- the of use fuel engaging ratemaking subject ment is not clauses in ratemaking. Equitable the rule Gas Pennsylvania Utility Co. v. Commission, Public 526 (Pa. 1987), appeal 823, A.2d 830-31 denied, Cmwlth. (Pa. 1987); Metropolitan 533 A.2d 714 Edison Co. v. 5 apparently validity This court has never ruled on the adjustment fuel clauses. Wisconsin Environmental Decade v. PSC, (1978). 344, 352, n.4, 2dWis. N.W.2d adjustment automatic by clause was eliminated legislature part 27, as budget 1983 Wis. Act bill. The law requires now a formal hearing process. 196.20(4), Section Stats. 1991-92.
When fuel adjustment clause was eliminated legislature 1984, was granted two fuel auditor posi- tions and had devise oversight mechanisms for of fuel costs. This case arises complete because of WP&L's first audit its 1985 rate case. Commission, 437 A.2d Utility Public
Pennsylvania Edison (Pa. 1981); Southern Cmwlth. 79-80 California Commission, 576 P.2d Utilities Co. v. Public 1978). (Calif. 954-55 that a also concluded states have
Courts in other fuel cost authority investigate agency's regulatory mea- corrective to order power implies adjustments *18 According of such audits. as a result and refunds sures effective, ongoing its if the PSC is to be courts, to these the include fuel costs must investigate to authority order refunds measures and take corrective to power to order [T]he incurred." power not charges properly for in little purpose for there is must be implied refunds and the consumer charges, fuel reviewing adjustment is not author- if corrective action are ignored, interests automatically passed expenditures ized for imprudent Power v. Mohawk Niagara to the through ratepayers." 1987). (N.Y. York, 293 New 287, 507 N.E.2d P.S.C. of Power v. Delmarva Commission Public Service See also (Md. 1979);6 Co., 1147, 1153 Light & 400 A.2d Gulf Commn, 487 So.2d Service Florida Public Power Co. v. Trans-LA, v. (Fla. 612 Advertiser Daily 1986); 1036 6 complex formulas contemplate FRA clauses "As these from against calculations mathematical must be tested which month, implicitly, the conclude that designated figures each we charges in order jurisdiction over such must retain Commission reasonable to the charges made are fair and that assure by this We do not mean company.... as to the customer as well remotely the Commission is suggest even that conclusion to making, we distin engage rate but empowered to in retroactive making and the ordinary process guish between the adjusting fuel rate necessarily process verifying of and ongoing accurately increased they reflect the adjustment clauses so that (we necessary operate hope) of the fuel and decreased costs Power v. Delmarva utility plant." Public Service Commission (Md. 1979). Co., 1147, 1153 Light 400 A.2d (La. 1993); MGTC, v. So.2d Inc. Public Service Wyoming, (Wyo. Commission 735 P.2d 1987); Utility Commission, Ohio Power Co. v. Public 1978).7 (Ohio, N.E.2d 1337, 1339 adjustment operation The fuel clause in in Wiscon- during period question readily sin is not distinguishable from those at issue in these states. Had majority operation adjust- examined the of the fuel closely, might ment clause more it well have concluded ratemaking that it does not constitute in the tradi- tional sense ratemaking and that rule apply does not to refunds ordered because adjustment fuel of the clause. majority's holding only ques- relies not on the assumption engaging
tionable ratemaking was approved adjustment
when it
fuel
proposition
formulas,
clause
also
but
on the
that the
empowered only
PSC is
forward,
look
never back-
Looking
looking
ward.
forward and
backward in
setting
easily
rates are not so
divorced from one
accepted
history
part
It
another.
is well
that recent
*19
ratesetting process.
majority
As WP&L and the
past
management may
concede, the
mistakes of
be
setting
a
used
PSC as
factor in
for the
rates
coming year.
e.g.,
See,
Wisconsin Environmental Dec-
v.
Commission,
ade Public
699,
Service
98 Wis. 2d 682,
(Ct.
1980).
App.
difficulty
A rate determined
until after it has
reasonable
cannot be declared
clause
can iden-
agency
Thus a regulatory
been implemented.
retrospective
analysis.
a
overcharges only through
tify
the Public Interest
People
Business
for
Professional
Commission,
525 N.E.2d
v. Illinois Commerce
(Ill.
denied,
very purposes encourage of the rule. It does not effi- utility management. cient The interests of consumers, the intended the rule, beneficiaries of are not served today. the court forth,
For the reasons set I dissent. I am authorized to state CHIEF JUSTICE Nathan S. Heffernan this dissent. joins