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EQUITABLE GAS COMPANY v. PENNSYLVANIA PUBLIC UTILITY COMMISSION (01/26/88)

decided: January 26, 1988.

EQUITABLE GAS 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, et al. v. Equitable Gas Company, Nos. R-860315 and R-860315C001.

COUNSEL

Charles E. Thomas, Jr., with him, Thomas T. Niesen, Lawrence B. Nydes and Amy M. A. Klodowski, Thomas & Thomas, for petitioner.

John F. Povilaitis, Deputy Chief Counsel, with him, Alphonso Arnold, Jr., Assistant Counsel, and Daniel P. Delaney, Chief Counsel, for respondent.

Philip F. McClelland, Assistant Consumer Advocate, with him, Robert P. Haynes, III, H. Kay Dailey, Assistant Consumer Advocates, and David M. Barasch, Consumer Advocate, for intervenor, David M. Barasch, Consumer Advocate.

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

Author: Palladino

[ 113 Pa. Commw. Page 70]

Equitable Gas Company (Equitable or Company), a division of Equitable Resources, Inc., appeals from an order of the Pennsylvania Public Utility Commission (PUC or Commission) which adopted, with modification, the recommended decision of an Administrative Law Judge (ALJ) and ordered Equitable to file for tariffs or tariff supplements which reflect a gas cost rate of $2.9955 per Mcf instead of Equitable's proposed $3.5021 per Mcf rate. We affirm.

On February 28, 1986, Equitable filed with the PUC a Computation of Annual Purchased Gas Adjustment pursuant to Section 1307(f) of the Public Utility Code (Code), 66 Pa. C. S. § 1307(f) (Section 1307(f) filing). The Section 1307(f) filing proposed rate increases which reflected: (1) Equitable's projected natural gas costs for the 12-month period ending August 31, 1987; (2) a reconciliation plan for the treatment of gas costs collected during the calendar year 1985; and (3) a proposed depletion adjustment for Commission imputation of gas purchases during 1985 and 1984.*fn1

On March 18, 1986, the PUC instituted an investigation to determine the lawfulness, justness and reasonableness of Equitable's Section 1307(f) filing. Part of the PUC investigation was to determine whether, in conformance with Sections 1317 and 1318 of the Code, 66

[ 113 Pa. Commw. Page 71]

Pa. C. S. §§ 1317, 1318, Equitable's proposed gas cost rate reflected "a least cost fuel procurement policy, consistent with the utility's obligation to provide safe, adequate and reliable service to its customers."

On March 19, 1986, the Office of Consumer Advocate filed a complaint against Equitable's Section 1307(f) filing which was consolidated with the PUC investigation. Denex Petroleum Corporation and Equitable Industrial Intervenors filed petitions to intervene, which were granted. Hearings were held in April and May of 1986. On August 29, 1986, the PUC entered a final order rejecting Equitable's proposed Section 1307(f) filing and ordering Equitable to adjust its tariffs and tariff supplements to reflect a gas cost rate of $2.9955 per Mcf.

In its order, the PUC concluded that Equitable's policy of pro-rata cutbacks on supplies from separate interstate pipeline natural gas suppliers during the eight month period ending August 31, 1985*fn2 was unreasonable and inconsistent with the stated requirements of Sections 1317 and 1318 of the Code. In substitution thereof, the PUC ordered a recalculation of Equitable's total gas costs based upon imputed sales from Texas Eastern Transmission Corporation (Texas Eastern), an interstate pipeline supplier, in lieu of actual pipeline purchases from Tennessee Gas Pipeline Company (Tennessee) and Kentucky West Virginia Gas Company (Kentucky West), Equitable's wholly owned subsidiary. The PUC order also rejected Equitable's claimed depletion adjustment, thereby rejecting Equitable's argument that prior gas costs rates (from the previous Section

[ 113 Pa. Commw. Page 721307]

(f) proceeding which reflected imputed Company and locally produced gas during 1983 and 1984) must be concomitantly adjusted to reflect the costs of replacing the imputed amounts of subsequent, more expensive rates. In this appeal, Equitable challenges the PUC's conclusions with respect to these latter two elements of the Section 1307(f) filing.

Our scope of 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 are supported by substantial evidence. Pennsylvania Power and Light Commission v. Pennsylvania Public Utility Commission, 101 Pa. Commonwealth Ct. 370, 516 A.2d 426 (1986).

Six months ago, this court reviewed the PUC order addressing Equitable's 1985 Section 1307(f) filing in Equitable Gas Company v. Pennsylvania Public Utility Commission, 106 Pa. Commonwealth Ct. 240, 526 A.2d 823 (1987).*fn3 In that case, the Commission had rejected Equitable's projected supply mix for the twelve month period ending August 31, ...


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