Summary
In Ohio Power Co. v. Public Utilities Commission, 54 Ohio St.2d 342, 376 N.E.2d 1337 (1978), the Public Utilities Commission ordered the refund of unreasonable fuel adjustment charges collected by Ohio Power Company. Ohio, like Florida, has statutes giving the Public Utilities Commission power to set reasonable rates for regulated utilities.
Summary of this case from Richter v. Florida Power Corp.Opinion
No. 77-862
Decided June 14, 1978.
Public Utilities Commission — Electric utilities — Fuel adjustment charges — Unreasonable, when.
Electric utilities are authorized under approved fuel adjustment clauses included in tariffs on file with the Public Utilities Commission of Ohio to pass through to their customers expenses for fuel costs fairly attributable to the service provided, and charges otherwise included are subject to reconciliation adjustment.
APPEAL from the Public Utilities Commission.
This appeal as a matter of right arises out of a proceeding before the Public Utilities Commission pursuant to R.C. 4905.301, a recently enacted statute regulating the fuel cost adjustment clauses of electric utilities, which resulted in an order against Ohio Power Company, appellant herein, directing a reconciliation adjustment or refund in an as yet unascertained but substantial amount (believed by the commission's staff to be no less than $9.5 million). The commission asserts that the company's charges during the period in question, as adjusted for fuel costs under the company's interpretation of its fuel adjustment clause contained in its applicable tariff on file with and approved by the commission, included fuel costs incurred to produce power sold to other utilities which had already been fully recovered under contracts under the jurisdiction of the Federal Power Commission.
Appellant argues that charges made in accordance with an approved tariff schedule are reasonable as a matter of law and that the commission cannot change tariff schedules retroactively.
Appellant argues further that the commission's order is void because of non-compliance with R.C. 4909.191(E) which provides:
"The public utilities commission shall, within thirty days after the conclusion of a hearing held under this section, issue an appropriate order."
In connection with its appeal, appellant asserts not only that its computation of proposed charges was in compliance with its fuel adjustment clause as approved by the commission, but also that the resulting revenues represented an under-recovery of its fuel costs incurred during the audit period by millions of dollars.
Messrs. Squire, Sanders Dempsey, Mr. Alan P. Buchmann, Mr. James H. Woodring, Mr. Clifford O. Arnebeck, Jr., Mr. Edward A. Caine and Mr. Ronald E. Prater, for appellant.
Mr. William J. Brown, attorney general, Mr. Marvin I. Resnik, Ms. Cheryl K. Hachman and Mr. Kevin F. Duffy, for appellee.
R.C. 4909.191(E) does not direct that an order issued pursuant to that section is void, voidable or subject to invalidation if tardily issued. Absent clear legislative language indicating that compliance with the statute's mandate of timeliness is a condition precedent to validity, we conclude that that requirement is not so essential that it overrides the basic purpose of the legislation which is to regulate fuel adjustment clauses in the public interest.
We reject appellant's argument that its overall under recovery of fuel costs incurred during the audit period is material to our present inquiry which concerns only the questions of whether the charges made were unlawful or unreasonable and subject to retroactive adjustment or whether charges made pursuant to an approved fuel cost adjustment clause are incontestable.
We consider that these questions must be first answered in the abstract. Fuel adjustment clauses are not and may not be permitted to become a carte-blanche authorization to an electric utility to pass through to its tariff customers expenses other than fuel costs fairly attributable to the production of the service to those customers. Although charges in billings to customers may not be made other than pursuant to a fuel adjustment clause in effect and approved by the commission, that approval must be tentative to the extent that it cannot be known in advance what charges not so attributable may be included by virtue of the utility's interpretation of the clause.
We perceive that the requirement of fairness which compels adjustment in rates to compensate utilities for escalating fuel costs also compels retrospective reconciliation to exclude charges identifiably resulting from unreasonable computations or inclusions.
Although the statutes under which these proceedings were undertaken post-date the audit period, they prescribe a method of review. The unreasonableness of the computations upon which the adjustment contemplated will be ordered preexisted these statutes and rendered the charges unlawful. Although the tentative character of that part of the charges to tariff customers which result from the utility's computation of the impact of fuel cost variations upon the cost of service was made clear by the specific language of R.C. 4909.191, this court in Cleveland v. Pub. Util. Comm. (1965), 3 Ohio St.2d 82, and Akron v. Pub. Util. Comm. (1966), 5 Ohio St.2d 237, validated such clauses because of the lack of evidence of utility abuse of customers' rights in charges made thereunder. The Public Utilities Commission found on the record in the instant cause that the charges made under the fuel adjustment clause were unreasonable, thus abusing customer rights, and ordered a refund as stated above.
The commission asserts that the basic reason for the refund order is that appellant's fuel adjustment charges to its customers included fuel costs incurred to produce power sold to other utilities which had already been fully recovered under contracts under the jurisdiction of the Federal Power Commission. The commission came to this conclusion by weighing the applicable language of the pertinent tariff ("This rate is based upon the weighted average cost of fuel consumed by Ohio Power Company and its subsidiaries at their principal generating stations") against the testimony of the auditor who, in reviewing the computation used by Ohio Power in arriving at its fuel adjustment charges to its customers, found that the fuel adjustment clause recovery from all customers subject to the jurisdiction of the commission, was increased by $11,466,223 during the audit year "* * * by including the fuel cost used to produce power for sales for resale in the fuel cost for computing the FAC [fuel adjustment clause] for sales to jurisdictional customers."
We cannot on this record conclude that it was unreasonable or unlawful for the commission to decide that appellant's computation of charges (under its interpretation of the applicable fuel adjustment charge) unreasonably included the substantial cost of the expensive fuel which had been incurred to provide service to other utilities and which had been paid for by them.
The order of the Public Utilities Commission is affirmed.
Order affirmed.
O'NEILL, C.J., HERBERT, CELEBREZZE, STEPHENSON, SWEENEY and LOCHER, JJ., concur.
STEPHENSON, J., of the Fourth Appellate District, sitting for W. BROWN, J.