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PENNSYLVANIA POWER & LIGHT COMPANY v. PENNSYLVANIA PUBLIC UTILITY COMMISSION (10/21/86)

decided: October 21, 1986.

PENNSYLVANIA POWER & LIGHT COMPANY, PETITIONER
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT. JOYCE BUEHRLE, PETITIONER V. PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT. BERNARD KING, PETITIONER V. PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT. EASTERN PENN ENERGY ASSOCIATION, PETITIONER V. PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT



Appeals from the Order of the Pennsylvania Public Utility Commission in the case of Pennsylvania Public Utility Commission v. Pennsylvania Power & Light Company, No. R-842651 et al.

COUNSEL

Robert H. Young, with him, David B. MacGregor and Donald F. Clarke, Morgan, Lewis & Bockius, and G. D. Caliendo and Paul E. Russell, for petitioner, Pennsylvania Power & Light Company.

Otto F. Hofmann, with him, David Scholl, for petitioners, Joyce Buehrle and Bernard King.

J. Jackson Eaton, III, with him, Thomas C. Sadler, Jr., Butz, Hudders, Tallman, Stevens & Johnson, for petitioner, Eastern Penn Energy Association.

Frank B. Wilmarth, Assistant Counsel, with him, John M. Quain, Assistant Counsel, Albert W. Johnson, III, Deputy Chief Counsel, and Charles F. Hoffman, Chief Counsel, for respondent, Pennsylvania Public Utility Commission.

Daniel Clearfield, Assistant Consumer Advocate, with him, Debra M. Kriete, Assistant Consumer Advocate, and David M. Barasch, Consumer Advocate, for intervenor, Consumer Advocate.

Henry R. MacNicholas, McNees, Wallace & Nurick, for intervenor, Lehigh Valley Power Committee.

Oscar B. Brumback, for Amicus Curiae, American Society of Utility Investors.

President Judge Crumlish, Jr., and Judges Craig, MacPhail, Doyle, Barry, Colins and Palladino. Opinion by Judge Palladino. Judge Colins dissents.

Author: Palladino

[ 101 Pa. Commw. Page 372]

On July 27, 1984, Pennsylvania Power & Light Company (PP&L) filed Supplement No. 14 to Tariff Electric -- Pa. P.U.C. No. 199, which was designed to increase PP&L's rate levels to yield additional revenues of approximately $330 million per year, based upon a test year ending March 31, 1985. The Pennsylvania Public Utility Commission (Commission) suspended operation of the proposed rate increases and ordered that hearings be held regarding their lawfulness.

Thirty-four formal complaints were filed against the proposed rate increases. These complaints were consolidated by the Commission. Two pre-hearing conferences, nineteen days of evidentiary hearings, and six public comment hearings were conducted by an Administrative

[ 101 Pa. Commw. Page 373]

Law Judge (ALJ), who thereafter issued a Recommended Decision in which he found that PP&L was entitled to $236.2 million in additional revenues.

On April 26, 1985, the Commission entered an order approving rates calculated to produce additional annual revenues of only $120.8 million. In reaching its decision, the Commission imposed two "excess capacity" adjustments on PP&L's rate proposal. One adjustment disallowed all costs associated with a temporary "buy-back" by PP&L of a 10% portion of Susquehanna Steam Electric Station Unit 1 (Susquehanna 1) and Unit 2 (Susquehanna 2), which PP&L had sold to Allegheny Electric Cooperative (Cooperative). The other adjustment disallowed all return on PP&L's common equity investment in Susquehanna 2.

On May 17, 1985, PP&L filed a petition for review with this Court from the Commission's order, contending that the Commission erred by imposing the two excess capacity adjustments on the utility's rate proposal. Cross-petitions were filed by Joyce Buehrle and Bernard King, who are customers of PP&L, and by the Eastern Penn Energy Association (Association). Cross-petitioners Buehrle and King appeal from the Commission's order to the extent that it does not exclude from PP&L's rate proposal all costs associated with Susquehanna 2. The Association appeals from that part of the Commission's order which addresses rate allocation; the Association contends that the method of allocation improperly favors PP&L's residential customers at the expense of commercial and industrial customers.*fn1

Our scope of review is limited to a determination of whether constitutional rights have been violated, an error of law committed or ...


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