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EQUITABLE GAS COMPANY v. PENNSYLVANIA PUBLIC UTILITY COMMISSION (09/12/79)

decided: September 12, 1979.

EQUITABLE GAS COMPANY, PETITIONER
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT. CITY OF PITTSBURGH ET AL., INTERVENORS. UNITED STATES STEEL CORPORATION, PETITIONER V. PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT. CITY OF PITTSBURGH ET AL., INTERVENORS. JONES & LAUGHLIN STEEL CORPORATION, PETITIONER V. PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT. CITY OF PITTSBURGH ET AL., INTERVENORS



Appeals from the Order of the Pennsylvania Public Utility Commission in case of Pennsylvania Public Utility Commission v. Equitable Gas Company, R.I.D. No. 317.

COUNSEL

Charles E. Thomas, Jr., with him Augustine A. Mazzei, Jr., Patricia Armstrong, and, of counsel, Thomas & Thomas, for Equitable Gas Co.

Henry M. Wick, Jr., with him Charles J. Streiff; Wick, Vuono & Lavelle ; and, of counsel, Kenneth R. Pepperney and Maurice A. Frater, for United States Steel Corporation and Jones & Laughlin Steel Corporation.

Joseph J. Malatesta, Jr., Assistant Counsel, with him Daniel F. Joella, Assistant Counsel, and Kathleen Herzog Larkin, Chief Counsel, for Pennsylvania Public Utility Co.

Marvin A. Fein, Utilities Counsel, with him Mead J. Mulvihill, Jr., City Solicitor, for City of Pittsburgh and Mayor Richard S. Caliguiri.

President Judge Bowman and Judges Crumlish, Jr., Mencer, Blatt, DiSalle, Craig and MacPhail. Judges Wilkinson, Jr. and Rogers did not participate. Opinion by Judge MacPhail. Judge DiSalle concurs in result only.

Author: Macphail

[ 45 Pa. Commw. Page 612]

On March 31, 1976, Equitable Gas Company (Equitable) filed with the Pennsylvania Public Utility Commission (PUC) Supplements Nos. 83 and 84 to its Tariff, Gas-Pa. P.U.C. No. 18 seeking a total increase in additional annual revenues of $19,499,927 and proposing changes in existing rates.*fn1 After numerous hearings and deliberations, the PUC on June 28, 1977, adopted a final order at R.I.D. 317 which was entered September 13, 1977, disallowing $8,192,092 of Supplement No. 84, but permitting Equitable to provide additional revenue above Supplement No. 83 of $2,750,000, and imposing a rate structure substantially different from that proposed by Equitable.

The vote on the order was not unanimous. Commissioner Bloom wrote a vigorous dissent. Commissioner O'Bannon filed a concurring opinion. The record is voluminous and the detailed PUC order itself is 35 pages in length.

In No. 1981 C.D. 1977 Equitable contends that the PUC erred: (1) in its fair value finding of $233,200,000 as opposed to Equitable's claim of $296,902,807; (2) in its finding of a fair rate of return of 8.28% to 8.46% as compared with Equitable's claim of 10%; and (3) in its determination of Equitable's operating revenues, expenses and taxes. Equitable has also alleged that the PUC's disallowance of $8,192,092 of Supplement No. 84 is a confiscation of Equitable's property. We need not address that issue in this opinion because we find it necessary to remand the case to the PUC for further consideration which may result in a revision of the final order and may also thereby eliminate the charge of confiscation. In Nos.

[ 45 Pa. Commw. Page 6132008]

and 2009 C.D. 1977, United States Steel Corporation and Jones & Laughlin Steel Corporation contend that the PUC's imposition of new rate blocks and concomitant rate increases: (1) results in rates which are not supported by the record; (2) violates the Public Utility Code; (3) was unreasonable, arbitrary and discriminatory; and (4) was a capricious exercise of the PUC's statutory authority.

Equitable is engaged in the production, purchase, storage, transmission, distribution and sale of natural gas and serves customers in Pennsylvania, West Virginia and Kentucky. At the end of the test year, December 31, 1975, Equitable was serving a total of 239,855 customers of which 222,594 residential, 16,897 commercial and 364 industrial customers were located in the Pennsylvania service area.

Fair Value*fn2

Equitable maintains that the PUC erred in its determination of fair value in the instant case by disallowing Equitable's item of minimum bank balances, by using the market value of Equitable's securities as a measure of fair value and by failing to give proper weight to Equitable's trended original cost measure of value.

Equitable claims an item of $4,871,900 for minimum bank balances that it contends that it is required by its depository banks to maintain in order to obtain a loan ...


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