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BLUE MOUNTAIN CONSOLIDATED WATER COMPANY v. PENNSYLVANIA PUBLIC UTILITY COMMISSION (03/06/81)

decided: March 6, 1981.

BLUE MOUNTAIN CONSOLIDATED WATER COMPANY, PETITIONER
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT



Appeal from the Order of the Pennsylvania Public Utility Commission in the case of Pennsylvania Public Utility Commission v. Blue Mountain Consolidated Water Company, No. 78100686.

COUNSEL

Vincent Butler, Morgan, Lewis & Bockius, for petitioner.

John A. Levin, Assistant Counsel, with him Steven A. McClaren, Deputy Chief Counsel, and Joseph J. Malatesta, Jr., Chief Counsel, for respondent.

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

Author: Rogers

[ 57 Pa. Commw. Page 365]

Blue Mountain Consolidated Water Company (Blue Mountain), a public utility providing water service to about 6500 customers in Northampton County, has appealed from an order of the Pennsylvania Public Utility Commission allowing it an increase in annual operating revenues of $10,675, an amount $249,187 less than that requested.

On October 27, 1978, Blue Mountain filed supplement No. 21 to Tariff Water-Pa. P.U.C. No. 9 which proposed to increase operating revenues from $905,057 to $1,164,919 exclusive of the revenues derived from the State Tax Adjustment Surcharge. By order dated January 11, 1979, the Commission offered Blue Mountain as an alternative to an investigation of the proposed rates, the option of filing a new tariff supplement designed to produce an increase in annual operating revenues of $21,342. Blue Mountain declined this offer and the Commission suspended the proposed rates and instituted an investigation to determine their reasonableness. No complaints challenging Blue Mountain's proposed increase of rates were filed by any of its customers or by the Office of Consumer Advocate.

Following a pre-hearing conference and six days of hearings, Administrative Law Judge Edward R. Casey recommended that Blue Mountain be granted an increase of annual operating revenue of $120,666. Both Blue Mountain and the Commission's Trial Staff filed exceptions to the judge's recommendations.

Based on the record created before the Administrative Law Judge, the Commission determined, as noted, that an increase in operating revenues of only $10,675

[ 57 Pa. Commw. Page 366]

    was warranted. On the way to this decision, the Commission disallowed a portion of Blue Mountain's income tax expenses, amortized certain of Blue Mountain's other expenses over longer periods than those claimed by the utility, and approved a rate of return figure less than that to which Blue Mountain's expert witness testified. Blue Mountain, by Petition for Review, challenges these aspects of the Commission's decision. In addition, Blue Mountain contends that the Commission's decision was impermissibly premised, in part, on ex parte communications by a person on a Commissioner's staff with persons on the Commission Trial Staff, including Trial Staff's principal expert witness.

Our review is limited to a determination of whether constitutional rights have been violated, an error of law committed, or whether the findings, determinations or order of the Commission are supported by substantial evidence. United States Steel Corp. v. Pennsylvania Public Utility Commission, 37 Pa. Commonwealth Ct. 195, 390 A.2d 849 (1978).

The Communications

Section 319 of the Public Utility Code, 66 Pa. C.S. ยง 319, entitled Code of Ethics, provides in pertinent part that "[a] Commissioner . . . must . . . [a]void all ex parte communications prohibited in this part." Section 334(c) defines the prohibited ex parte communications as "any off-the-record communications to or by any member of the commission, administrative law judge, or employee of the commission, regarding the merits ...


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