Appeal from the Order of the Pennsylvania Public Utility Commission in case of Pennsylvania Public Utility Commission v. Columbia Gas of Pennsylvania, Inc., R.I.D. No. 340, adopted December 20, 1977.
W. Russel Hoerner, with him Michael W. Gang; Thomas J. Brown, Jr.; Wallace R. Barnes; Thomas E. Morgan ; and, of counsel, Morgan, Lewis & Bockius, for petitioner.
Patrick D. Ward, Assistant Counsel, with him Daniel F. Joella, Deputy Chief Counsel, and Kathleen Herzog Larkin, Chief Counsel, for respondent.
President Judge Bowman and Judges Crumlish, Jr., Wilkinson, Jr., Mencer, Rogers, Blatt and MacPhail. Judges DiSalle and Craig, did not participate. Opinion by Judge Wilkinson, Jr.
[ 42 Pa. Commw. Page 119]
In this appeal, Columbia Gas of Pennsylvania, Inc. (petitioner) seeks review of a decision by the Pennsylvania Public Utility Commission (Commission) granting petitioner just slightly more than one quarter of a requested increase in base rate operating revenues. We remand.
[ 42 Pa. Commw. Page 120]
On May 3, 1976, petitioner filed tariff supplements which would have increased its annual base rate operating revenues by an amount of $25,504,502. On August 4, 1976 the Commission suspended the supplements for a period of 9 months pending an investigation into their justness and reasonableness. The suspension was subsequently extended for an additional 3 months. The Commission, by order of May 4, 1977, permitted petitioner to file tariff supplements establishing temporary rates increasing annual revenues by $5 million. Between October, 1976 and May, 1977 10 days of hearings were held on the proposed increases; by its final order dated December 20, 1977, the Commission permitted an additional increase of $1,650,000 for a total increase in annual revenues of $6,650,000. The test year was the twelve months ended December 31, 1975.
Except for certain relatively minor adjustments, the Commission accepted the accuracy and reasonableness of the four measures of value for plant in service on December 31, 1975 submitted by petitioner.*fn1 With regard to petitioner's three measures of trended
[ 42 Pa. Commw. Page 121]
original cost the Commission stated, "[o]ur review of [petitioner's] trended original cost study and methodology employed in these proceedings indicates that it generally results in a reasonable estimate of trended original cost. Our findings in the Fair Value section of this Order will consider all the foregoing."
Despite the observation above, the Commission concluded that "the fair value of the [petitioner's] property used and useful in public service at December 31, 1975 to be $160,700,000." Based on the Commission's adjusted figures, this results in a ratio of fair value to original cost of 109.5 percent. In contrast, using as the measure of fair value petitioner's spot trended original cost figure of $295,151,546 the ratio of fair value to original cost is 202.8 percent.
We are not prepared to say that a finding of fair value which is only 109.5 percent of original cost is per se arbitrary and unreasonable. As President Judge Bowman, writing for this Court in Pennsylvania Gas and Water Co. -- Water Division v. Pennsylvania Public Utility ...