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KEYSTONE WATER COMPANY - WHITE DEER DISTRICT v. PENNSYLVANIA PUBLIC UTILITY COMMISSION (04/03/84)

decided: April 3, 1984.

KEYSTONE WATER COMPANY - WHITE DEER DISTRICT, PETITIONER
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT. AMERICAN HOME FOODS, INC. ET AL., PETITIONERS V. PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT



Appeals and 2768 C.D. 1982, from the Orders of the Pennsylvania Public Utility Commission in case of American Home Foods, Inc. et al. v. Keystone Water Company -- White Deer District, No. R-811676 and in case of American Home Foods, Inc. et al. v. Keystone Water Company -- White Deer District, No. R-821877.

COUNSEL

Alan L. Reed, with him Thomas P. Gadsden and Margaret B. Dardess, Morgan, Lewis & Bockius, for petitioner/intervenor, Keystone Water Company -- White Deer District.

Charles B. Zwally, with him Christopher C. Conner, Shearer, Mette & Woodside, of counsel; H. William Koch, for petitioner/intervenor, American Home Foods, Inc., Milton Manufacturing Company, International Paper Company and Gold Bond Building Products, Division of National Gypsum.

Louise A. Knight, Deputy Chief Counsel, with her John F. Povilaitis, Assistant Counsel, Albert W. Johnson, III, Deputy Chief Counsel, and Charles F. Hoffman, Chief Counsel, for respondent.

President Judge Crumlish, Jr., and Judges Rogers, Williams, Jr., Craig, MacPhail, Doyle and Barry. Opinion by Judge Rogers.

Author: Rogers

[ 81 Pa. Commw. Page 314]

On July 29, 1981, Keystone Water Company -- White Deer District (Keystone) filed with the Pennsylvania Public Utility Commission (Commission) Supplement No. 35 to its Tariff Water-Pa. P.U.C. No. 14 to become effective September 27, 1981. Supplement No. 35 proposed a $580,545 increase in Keystone's annual operating revenues based on operating results for a test year ending March 31, 1981.

The Commission entered an order on November 19, 1981 instituting an investigation of Keystone's existing and proposed water rates, rules and regulations and suspending the effective date of Supplement No. 35 until April 27, 1982. Complaints against the proposed rates were filed and consolidated with the Commission's investigation.

The parties reached an agreement on all issues except whether the dollars representing the investment in Keystone's White Deer Creek Filtration Plant should be included in its rate base and whether the annual depreciation expense attributable to the filtration plant should be allowed as a recoverable expense. Stipulations were submitted to the Administrative Law Judge providing that "the investment in the Filtration Plant is to be included in rate base and the District [Keystone] is to be permitted to recover the appropriate depreciation expense allowance on the Filtration Plant only if required by the decisions of . . . Keystone Water Co. v. Pennsylvania Public Utility Commission, 19 Pa. Commonwealth Ct. 292, 339 A.2d 873 (1975), and . . . Keystone Water Co. v. Pennsylvania Public Utility Commission, 477 Pa. 594, 385 A.2d 946 (1978), which previously considered and decided this issue." The parties also stipulated that Keystone was entitled to a $439,952 increase in its annual operating

[ 81 Pa. Commw. Page 315]

    revenues if the investment in the filtration plant was included in the depreciation expense allowed and a $202,732 increase in its annual operating revenues if the investment was not included in the rate base and the depreciation expense was not allowed.

On March 25, 1982, the Administrative Law Judge issued his recommended decision finding that the doctrine of res judicata did not bar litigation of the issue of the inclusion of the investment in the filtration plant in the rate base or the recovery of an appropriate expense allowance and concluding that Keystone was entitled to neither. The Commission entered an order on April 22, 1982 adopting the Administrative Law Judge's recommended decision and ordering that Keystone be allowed a $202,732 increase in operating revenues.

During the Commission's investigation of Supplement No. 35, Keystone filed with the Commission Tariff Water-Pa. P.U.C. No. 28 on January 28, 1982 to become effective March 29, 1982. Tariff No. 28 proposed a $819,374 increase in Keystone's annual operating revenues based on anticipated operating results of a future test year ending September 30, 1982. It was suspended by operation of law until October 29, 1982 because the Commission failed to act prior to Tariff No. 28's effective date of March 29, 1982.

On March 30, 1982, four of Keystone's customers filed a complaint and a motion to strike or dismiss Tariff No. 28 on the ground that Tariff No. 28 was untimely because it was filed during the Commission's investigation of Supplement No. 35. The Commission entered an order on June 22, 1982, denying their motion to strike or dismiss Tariff No. 28 and instituting an investigation to determine the lawfulness, justness, and reasonableness of Keystone's existing rates, rules and regulations and those proposed in Tariff No. 28.

[ 81 Pa. Commw. Page 316]

A stipulation on revenue and rate structure issues was entered into on August 17, 1982 which reserved the right of Keystone's customers to seek appellate review of the Commission's dismissal of their motion to strike or dismiss Tariff No. 28. The Administrative Law Judge issued a recommended decision on September 22, 1982 recommending a $190,000 increase in annual operating revenues. The Commission entered an order on October 5, 1982 adopting the recommended decision.

To our docket number 1166 C.D. 1982, Keystone appealed from the Commission's April 22, 1982 order concerning Supplement No. 35 and to our docket number 2638 C.D. 1982, it appealed from the Commission's October 5, 1982 order concerning Tariff No. 28. On January 18, 1983, we ordered that these appeals be consolidated. To our docket number 2768 C.D. 1982, Keystone's customers appealed from the Commission's June 22, 1982 and October 5, 1982 orders concerning Tariff No. 28. On ...


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