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JOSEPH HORNE COMPANY v. PENNSYLVANIA PUBLIC UTILITY COMMISSION (12/19/84)

decided: December 19, 1984.

JOSEPH HORNE COMPANY, APPELLANT,
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, DUQUESNE LIGHT COMPANY, UNITED STATES STEEL CORPORATION, CRUCIBLE INC., JONES & LAUGHLIN STEEL CORPORATION, GENERAL MOTORS CORPORATION AND THE CONSUMER ADVOCATE



No. 34 W.D. Appeal Docket 1984, Appeal from the Order of the Commonwealth Court of Pennsylvania, dated November 29, 1983 at No. 1132 Commonwealth Docket 1982 which affirmed the Order of the Pennsylvania Public Utility Commission entered April 19, 1982 at Commission Docket Number R-811470, 78 Pa. Commonwealth Ct. 566, Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson and Zappala, JJ. Larsen, J., files a concurring opinion, in which McDermott, J., joins. Nix, C.j., files a dissenting opinion. Papadakos, J., did not participate in the consideration or decision of this matter.

Author: Hutchinson

[ 506 Pa. Page 478]

OPINION OF THE COURT

Joseph Horne Company (Horne), a ratepayer of the Duquesne Light Company (Duquesne) appeals by allowance a Commonwealth Court order affirming an order of the Pennsylvania Public Utility Commission (PUC) which granted Duquesne a rate increase of $64 million. At issue is the "option order procedure" used by the PUC to grant this increase pending final action on a request for general rate increase. Horne contends that this procedure is violative of both the Public Utility Code (Code), 66 Pa.C.S. §§ 101-3315, and the due process clause of the United States Constitution. In accordance with well recognized principles of judicial restraint we do not consider the due process issue because we must hold, for the reasons which follow, that in this case the PUC allowed an interim rate increase to become effective pending action on a request for a general rate increase contrary to Section 1310(a) of the Public Utility Code. That section expressly disallows temporary rate increases in general rate proceedings. We therefore reverse the order of Commonwealth Court.

[ 506 Pa. Page 479]

The essential facts are not in dispute. On April 30, 1981, Duquesne filed with the PUC Supplement No. 49 to Tariff-Electric-Pa. PUC No. 14. This supplement, which was to become effective June 29, 1981, contained proposed changes in rates, rules and regulations calculated to produce an increase of $100,432,782 in annual revenues. That amount represented an increase of 15% in Duquesne's rates, and thus constituted a general rate increase as defined by the Code.*fn1 In support of the supplement Duquesne filed all the supporting data required by 52 Pa.Code § 53.51 et seq. Duquesne supplied counsel for Horne with a copy of the supplement and all supporting data on May 5, 1981.

On June 12, 1981, Horne, along with other commercial ratepayers, filed a formal complaint against Supplement No. 49. The PUC docketed the complaint at R-811470. Duquesne filed a timely answer. On June 29, 1981, the PUC entered a unanimous order (option order) suspending Duquesne's proposed rates until January 29, 1982,*fn2 unless by order of the PUC they were allowed into effect at an earlier date. The order also instituted an investigation into whether the proposed rates were lawful, just, and reasonable. Finally, the order stated that if Duquesne filed a new tariff supplement on 15 days notice, canceling and superseding Supplement No. 49 and containing proposed rate changes calculated to produce additional annual revenues of not more than $64,237,000, (option rate) then upon approval by the PUC the lesser increase would be allowed to become effective immediately upon such filing.*fn3 This lesser increase was also subject to the investigation instituted by

[ 506 Pa. Page 480]

    the June 29 order, and any formal complaint filed against Supplement No. 49 would, if not withdrawn, be deemed filed against the lesser tariff supplement.

On June 30, 1981, in accordance with this order, Duquesne filed Supplement No. 52 to Tariff No. 14. It proposed to increase rates by $64,192,000. Supplement No. 52 expressly cancelled and superseded Supplement No. 49, and unless itself superseded was to become effective July 15, 1981. The PUC approved Supplement No. 52 by order adopted July 17, 1981, (entered July 20, 1981). This approval was retroactive to July 15, but subject to the same investigation and possibility of refunds as Supplement No. 49.*fn4

[ 506 Pa. Page 481]

On December 1, 1981, after eleven (11) days of hearings, an administrative law judge recommended a decision finding the "option" rates set forth in Supplement No. 52 just and reasonable.*fn5 Horne filed exceptions to the recommended decision. In them it specifically challenged the option order procedure under which the supplement was filed and allowed to go into effect. By order adopted April 15, 1982, entered on April 19, the PUC dismissed Horne's exceptions and adopted the order the administrative law judge had recommended. Horne appealed*fn6 to Commonwealth Court. It affirmed.

The record shows that after a preliminary ex parte investigation of the data supporting the original filing for a $100,000,000 rate increase (Supplement No. 49) the Commission notified Duquesne of the "option" to place the lesser increase of about $64,000,000 into immediate effect. This lesser increase (Supplement No. 52) was made effective before full investigation and hearing. Thereafter, a full investigation was conducted by the PUC with an opportunity for Horne and other interested parties to file complaints and participate in the hearings. If Supplement No. 52 had not received ultimate approval, refunds would have been available. This procedure is not unlike that for the Energy Cost Rate (ECR) which we upheld against a due process challenge in Allegheny Ludlum Steel Corp. v. Pennsylvania Public Utility Commission, 501 Pa. 71, 459 A.2d 1218 (1983). The ECR provided for an automatic adjustment in rates, based on formulae devised by the PUC, in order to

[ 506 Pa. Page 482]

    reflect fuel cost increases to the utilities.*fn7 However, the use of such a procedure with respect to the so-called "option" order does not answer the key question before us, viz., were temporary rates improperly set in violation of the Public Utility Code?

The general rule governing temporary rates is set forth in § 1310(a) of the ...


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