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UNITED STATES STEEL CORPORATION v. PENNSYLVANIA PUBLIC UTILITY COMMISSION (08/09/78)

decided: August 9, 1978.

UNITED STATES STEEL CORPORATION, PETITIONER
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT -- CONSUMER EDUCATION AND PROTECTIVE ASSOCIATION, CEPA, AND PHILADELPHIA ELECTRIC COMPANY, INTERVENORS. LUKENS STEEL COMPANY, ET AL., PETITIONERS V. PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT -- CONSUMER EDUCATION AND PROTECTIVE ASSOCIATION, CEPA, AND PHILADELPHIA ELECTRIC COMPANY, INTERVENORS



Appeals from the Order of the Pennsylvania Public Utility Commission in case of Pennsylvania Public Utility Commission v. Philadelphia Electric Company, R.I.D. No. 295, Complaint Nos. C.21496-21499, C.21718 and C.21722.

COUNSEL

Henry M. Wick, Jr., with him Charles J. Streiff, and, of counsel, Kenneth R. Pepperney, and Wick, Vuono & Lavelle, for petitioner, United States Steel Corporation.

Henry R. MacNicholas, with him Robert H. Griswold, and, of counsel, McNees, Wallace & Nurick, for petitioners, Lukens Steel Company, et al.

Michael P. Kerrigan, Assistant Counsel, with him Daniel F. Joella, Assistant Counsel, and Barnett Satinsky, Chief Counsel, for respondent.

Andre C. Dasent, for intervenor, Consumer Education and Protective Association.

W. Russel Horner, with him Ernest R. vonStarck; Kenneth R. Myers; Morgan, Lewis & Bockius ; and Edward G. Bauer, Jr., for intervenor, Philadelphia Electric Company.

President Judge Bowman and Judges Crumlish, Jr., Wilkinson, Jr., Mencer, Rogers, Blatt and DiSalle. Opinion by Judge Rogers.

Author: Rogers

[ 37 Pa. Commw. Page 175]

This is a public utility rate case.

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*fn1 to make increases in its rates to become effective January 18, 1976, subsequently postponed by PECO to January 21, 1976. The supplements combined proposed rates estimated to produce an increase in annual operating revenues of $94,835,000 at the level of operations at August 31, 1975, the end of the test year. This represented an increase of 9.7% over then allowed annual operating revenues in the amount of about $972,238,000. The new claimed annual operating revenues were $1,069,021,000. Supplement to No. 51 was designed to provide increased annual operating revenues of about $47,009,944, or 4.8%, based on operations for the test year ended August 31, 1975; and Supplement No. 52 was designed to provide an additional $47,595,511 of revenues, or 4.9%. PECO's filing proposed that the Supplement No. 51 rates continue in effect the rate structure approved by the Commission by order made March 25, 1975 in PECO's

[ 37 Pa. Commw. Page 176]

    immediately preceding rate case at P.U.C. docket RID 129,*fn2 applying a level increase to all customers of 4.9%.*fn3 Supplement No. 52 proposed increases of rates to customer classes HT (commercial or industrial customers receiving high-tension voltages of 13.2 kV and above), and PD (commercial and industrial customers served at primary voltage of 4 kV), by 6.9% and to all other classes of customers by 3.4% over the Supplement No. 51 level. Thereafter, many customers, large and small, filed complaints protesting the proposed increases. The Commission ordered an investigation to determine whether either of the supplements should be allowed to become effective without suspension. Hearings were held. On January 20, 1976, after oral argument, the Commission ordered the suspension of both supplements until July 21, 1976 but granted PECO the right to "file tariff supplements, with essentially the same rate structure as presently effective rates, designed to produce an increase in annual revenues not to exceed $24,300,000, provided, however, that there be no rate increase applicable to the first 500 kWh per month usage by residential customers. . . ." PECO then filed Supplement No. 57 to Tariff Electric -- Pa. P.U.C. No. 24, effective February 6, 1976 calculated to produce increased annual operating revenues of $24,290,002 or a total increase

[ 37 Pa. Commw. Page 177]

    in annual operating revenues of about 2.5% over those previously allowed (in the amount of about $972,238,000). As the Commission's order required, this Tariff resulted in no increase in rates with respect to the first 500 kWh per month usage by residential customers; rates for all residential usage in excess of 500 kWh per month and rates for all customers in all other classes of PECO's customers were increased by about 3.5% (as compared to the composite 2.5% increase) to make up the additional revenues of $24.3 million.

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

[ 37 Pa. Commw. Page 178]

    customer billings, and upon the further proviso that the supplements so filed should not be deemed Commission made rates. PECO filed its Supplement No. 62 to effect the allowance of July 21, 1976. Since the total allowed annual operating revenues, after giving effect to Supplement No. 57, were $996,528,000, Supplement No. 62 filed in response to the Commission's July 21, 1976 order for increases in the amount of about $22,720,000 represented an increase of about 2.3%. This was applied to all customers evenly.

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.*fn4 The Special Examiner noted that the Commission had in August 1976 initiated ...


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