Opinion
No. 7717
Decided December 2, 1977
1. Public Utilities — Judicial Review — Rate Regulations In order to prevail in regard to its contention that public utilities commission's allowance of higher costs in utility's fuel adjustment charge resulted in unreasonable and unjust increase in utility rates, plaintiffs must demonstrate by clear preponderance of evidence that such order was unjust or unreasonable. RSA 378:7, 541:13.
2. Public Utilities — Judicial Review — Rate Regulations Determination of rates to be charged by utilities is not exact science and burden placed on plaintiffs who contest orders of public utilities commission to demonstrate by clear preponderance of evidence that such order is unjust or unreasonable reflects such fact. RSA 541:13.
3. Public Utilities — Judicial Review — Rate Regulations Cornerstone for review of public utilities commission's decision is whether it was just and reasonable and since statutory formula is not provided for commission to follow, supreme court would not be warranted in rejecting formula employed by commission in determining rates unless formula plainly contravenes statutory scheme of regulation or violates law in some other respect.
4. Public Utilities — Rate Increases — Fuel Adjustment Clause Where public utilities commission authorized public utility to apply fuel adjustment rate of $1.38 per 100 kilowatt hours to retail customer billings in particular month, and such rate was based on actual costs of fuel burned to supply energy during month, and where unscheduled power outages during month required utility to switch over to oil-fired electrical generators, resulting in burning of higher cost fossil fuel, commission's order allowing higher costs to be passed on through monthly fuel adjustment rate to consumer was not clearly unjust or unreasonable. RSA 378:7, 541:13.
5. Public Utilities — Judicial Review — Rate Regulations Report of public utilities commission stating that public utility had met its burden of proving by preponderance of evidence that it was entitled to full recovery of fuel costs above base for data month indicated that commission properly placed burden of proving necessity of increase on public utility company. RSA 378:8.
Steven W. Ruback, of Concord, by brief and orally, for the Legislative Utility Consumers' Council.
Dom S. D'Ambruoso and Warren E. Waters, of Concord (Mr. Waters orally), for the Public Utilities Commission.
Sulloway, Hollis, Godfrey Soden, and Martin Gross, of Concord (Mr. Gross orally), for Public Service Company of New Hampshire.
This is an appeal under RSA 541:6 from an order of the Public Utilities Commission (hereinafter "commission") which authorized Public Service Company of New Hampshire to apply a fuel adjustment rate of $1.38 per 100 kilowatt hours to retail customer billings in the month of February 1977. The same order denied certain motions of the Legislative Utility Consumers' Council and Volunteers Organized In Community Education to reduce the fuel adjustment rate. For the reasons indicated hereinafter, we uphold the order of the commission and dismiss the appeal.
The Public Service Company of New Hampshire has a fuel adjustment clause as part of its tariff. This clause operates to recover increased costs of fossil fuels over the amount those costs were in 1971. Each month the commission holds a public hearing pursuant to RSA 378:3-a (Supp. 1976) in order to approve the fuel adjustment charge for the following month. The amount of the charge is based on the cost of fossil fuel during the month preceding the hearing. This procedure therefore allows the utility companies to recover the appropriate costs two months after they are incurred. In the present case, public hearings were held in January 1977 in order to determine the appropriate fuel adjustment rate for February 1977. Public Service Company's proposed fuel adjustment rate for February was based on actual costs of fuel burned to supply energy in the month of December 1976.
During the month of December 1976, the Public Service Company suffered unscheduled outages at its Merrimack II generating station. Merrimack II is a coal-fired generating unit which is designed to be the basic source of electricity for the utility company. It was out of service for twenty-four days in December 1976 due to equipment failures. As a result of these outages, Public Service Company had to switch over to its oil-fired electrical generators, which resulted in the burning of a higher cost fossil fuel. The commission allowed these higher costs to be passed on through the February 1977 fuel charge to the consumer. The Public Service Company concedes that the charge would have been lower if Merrimack II had been operational in December 1976.
The plaintiffs contend that the commission's allowance of these higher costs in the fuel adjustment charge resulted in an unreasonable and unjust increase in the utility rates. RSA 378:7. Specifically, plaintiffs argue that the commission should have allowed a fuel charge which would have reflected the costs of fossil fuel if the unscheduled outages had not occurred. In order to prevail, the plaintiffs must demonstrate "by a clear preponderance of the evidence . . . that such order is unjust or unreasonable." RSA 541:13.
[2, 3] Determination of rates to be charged by utilities is not an exact science, New England Tel. Tel. Co. v. State, 113 N.H. 92, 302 A.2d 814 (1973), and the burden placed on plaintiffs under RSA 541:13 reflects this fact. The cornerstone for our review of the commission's decision is whether it was just and reasonable, and "[s]ince our statutes do not provide a formula for the commission to follow we are not warranted in rejecting the one employed by it unless it plainly contravenes the statutory scheme of regulation or violates our law in some other respect." New England Tel. Tel. Co. v. State, 98 N.H. 211, 219, 97 A.2d 213, 219 (1953).
The fuel adjustment charge was the commission's response to this court's ruling that some form of allowance had to be made for inevitable increases in fuel costs. See Public Service Co. v. State, 113 N.H. 497, 311 A.2d 513 (1973). The allowance of the February 1977 fuel charge reflects these increases in fuel costs, although some of the charge reflects the burning of different and higher cost fuel. We cannot say on the evidence before us that this was clearly unjust and unreasonable, especially in light of the commission's findings that these higher costs were not the result of mismanagement.
We note that the legislature had an analogous situation under consideration in 1976. RSA 378:3-a, when originally introduced as S.B. 44, contained a third paragraph which read: "In computing the fuel adjustment charge, no public utility may include any increase in fuel cost to the utility caused by an electric power outage which required the utility to purchase electric power from another utility." This section of the bill was designed to have the stockholders of the utility absorb the higher expenses resulting from unscheduled outages, rather than having the fuel charge pass the costs through to the consumer. N.H.S. Jour. 29-37 (1976, page proof). Changes in a statute in the course of enactment must be considered with caution, but rejection of specific provisions are more persuasive. People for Environmental Progress v. Leisz, 373 F. Supp. 589 (C.D. Cal. 1974). The subsequent rejection by the legislature of this provision reinforces our determination that the commission's order was not unjust or unreasonable.
The plaintiffs also contend that the commission erred because its report indicates that evidence of mismanagement would be required before it would deny the requested rates, rather than requiring the utility company to justify the necessity for the rate increases in accordance with RSA 378:8. We believe that the plaintiffs have misunderstood the commission's report. The report specifically states: "[W]e find that the company has met its burden of proof by a preponderance of the evidence that it is entitled to a full recovery of fuel costs above base for the data month." The commission therefore properly placed the burden under RSA 378:8 on the Public Service Company.
Appeal dismissed.