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ARMCO v. PENNSYLVANIA PUBLIC UTILITY COMMISSION (11/14/80)

decided: November 14, 1980.

ARMCO, INC., PETITIONER
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT. UNITED STATES STEEL CORPORATION, INTERVENOR



Appeal from the Order of the Pennsylvania Public Utility Commission in case of In Re: Petition of Duquesne Light Company for emergency rate relief, R.I.D. No. 373.

COUNSEL

F. Bruce Abel, with him Robert J. White, Steer, Strauss, White & Tobias, of counsel, John A. DiNardo, Assistant Counsel, for petitioner.

William T. Hawke, Assistant Counsel, with him Steven A. McClaren, Deputy Chief Counsel, and George M. Kashi, Chief Counsel, for respondent.

David M. Barasch, Assistant Consumer Advocate, with him Henry M. Wick, Jr., and Charles J. Streiff, for intervenor.

President Judge Crumlish and Judges Wilkinson, Jr., Mencer, Blatt, Craig, MacPhail and Williams, Jr. Judge Rogers did not participate. Opinion by Judge Craig.

Author: Craig

[ 54 Pa. Commw. Page 543]

Armco, Inc. petitions for review of the October 6, 1978 order of the Pennsylvania Public Utility Commission (PUC) allowing Duquesne Light Company (Duquesne) an increase of approximately $81.6 million in annual revenues over revenues allowed as of June 30, 1976. Armco's appeal relates solely to the manner in which the PUC allocated that increase among the several classifications of Duquesne's customers, i.e., the rate structure.

The history of this case is as follows:

In October, 1976, Duquesne filed a supplement to its then current tariff, designed to generate approximately $127.9 million in additional revenues, an increase of about 31.6%. Contemporaneously, Duquesne filed a petition for emergency rate relief of some $87.3 million. In both the supplement and the emergency petition, Duquesne proposed to spread the increased revenues evenly over all its customer classes, thus continuing the relative rate structure existing under the current tariff. Under this method, which we will refer to as the uniform method, the base rates of each customer class would increase by roughly the same percentage.

[ 54 Pa. Commw. Page 544]

On December 9, 1976, the PUC suspended Duquesne's supplement and instituted a rate investigation of the proposed increase. Simultaneously, the PUC permitted Duquesne to file an emergency tariff supplement designed to generate $60 million annually above the revenues then allowed; however, this $60 million was to be spread over the several customer classes in the following manner: 25% (or $15 million) was to be allocated within the residential class; 30% (or $18 million) within the commercial; 44% (or $26.4 million) within the industrial; and 1% (or $600,000) within other classes. These percentages correspond roughly to the proportion of Duquesne's total electrical output consumed by each customer class. We shall call this method of allocation the consumption method.

On June 28, 1977, the PUC amended its December 1976 order to require that Duquesne amend its rates to levels generating no more than $12 million annually over the rates in effect on June 30, 1976,*fn1 with the increased charges to be allocated according to the uniform method. By order of September 15, 1977, those rates were designated temporary rates pending the final outcome of the rate investigation.

On December 22, 1977, the PUC adjusted the temporary rates by allowing Duquesne to file tariffs designed to generate $50 million in revenues over those allowed as of June 30, 1976;*fn2 the uniform ...


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