Appeal from the Order of the Pennsylvania Public Utility Commission in case of Pennsylvania Public Utility Commission v. Philadelphia Suburban Water Company, R.I.D. No. 280 et al.
Alan L. Reed, with him Thomas C. Sadler, Jr., and of counsel, Morgan, Lewis & Bockius, for petitioner.
Melville G. M. Walwyn, Assistant Counsel, with him Daniel F. Joella, Assistant Counsel, and Barnett Satinsky, Chief Counsel, for respondent.
President Judge Bowman and Judges Crumlish, Jr., Wilkinson, Jr., Mencer, Rogers, Blatt and DiSalle. Opinion by Judge Crumlish, Jr.
[ 38 Pa. Commw. Page 615]
A decision of the Pennsylvania Public Utility Commission (Commission) denying a second step water rate increase to the Philadelphia Suburban Water Company (Company/Appellant) is the subject of this appeal.
On October 1, 1975, the Company filed with the Commission Supplement Nos. 33 and 34 to its Tariff Water -- Pa. P.U.C. No. 12 requesting increases in its
[ 38 Pa. Commw. Page 616]
rates effective December 1, 1975. The effective date was subsequently voluntarily postponed to December 3, 1975. The combined proposed rate increase was intended to result in additional annual revenues of approximately $5,172,474, or an 18% increase in revenues based on the level of operations at the end of the test year, June 30, 1975. Supplement No. 33 was designed to increase revenues by 6%, or approximately $1,725,259, and intended to provide minimal interim rate relief in the event that the Commission found it necessary to suspend Supplement No. 34. Supplement No. 34 sought a 12% increase in annual revenues amounting to approximately $3,357,519.*fn1
The Commission suspended the operation of both supplements to June 3, 1976 and initiated an investigation into their justness and reasonableness. Consolidated with this investigation were 11 individual complaints filed against the rate increases. A hearing before the Commission ensued. On June 2, 1976, the Commission continued the suspension of both supplements for an additional three months, but permitted the Company to file a tariff supplement providing a 4.46% increase in annual revenues amounting to $1,275,000, or approximately 75% of the increase sought by Supplement No. 33. Upon expiration of this three-month period, the Commission entered an order establishing the Company's then existing rates as temporary rates which were to remain in effect until the Commission entered its final order, which did not occur until March 3, 1977. The final order allowed only an additional 1.54% increase to annual
[ 38 Pa. Commw. Page 617]
revenues thereby granting Supplement No. 33 in full and disallowing the approximate $3,471,000 increase proposed by Supplement No. 34. The Company then appealed to us.
The Commission must predicate the Company's rate base upon the "Fair Value" of the Company's property used and useful in public service and, in doing so, must consider the Company's original cost and trended original cost. See Keystone Water Co. v. Pennsylvania Public Utility Commission, 19 Pa. Commonwealth Ct. 292, 339 A.2d 873 (1975). See also Scranton v. Scranton Steam Heat Co., 405 Pa. 397, 176 A.2d 86 (1961). Also, its "Fair Value" determination must be supported by the ...