Appeal from the Order of the Pennsylvania Public Utility Commission, in the case of Keystone Alliance v. Philadelphia Electric Company, No. C-78080459.
David H. Weinstein, with him, Jeanne P. Wrobleski and Marion K. Littman, Kohn, Savett, Klein & Graf, P.C., Of Counsel: Edward G. Bauer and Eugene J. Bradley, Philadelphia Electric Company, for petitioner.
Terrence J. Buda, Assistant Counsel, with him, Frank B. Wilmarth, Deputy Chief Counsel, and Daniel P. Delaney, Chief Counsel, for respondent.
Philip F. McClelland, Assistant Consumer Advocate, with him, Pamela B. Sarvey, Assistant Consumer Advocate, and David M. Barasch, Consumer Advocate, for intervenor, Office of Consumer Advocate.
David Kairys, Kairys & Rudovsky, for intervenor, Keystone Alliance, et al.
President Judge Crumlish, Jr., and Judges Craig, Doyle, Barry, Colins, Palladino and McGinley. Opinion by Judge Palladino. Judge MacPhail did not participate in the decision in this case. Dissenting Opinion by Judge Colins. President Judge Crumlish, Jr. and Judge Barry join in this opinion.
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Philadelphia Electric Company (PECO) has petitioned for review of a decision of the Pennsylvania Public
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Utility Commission (PUC) entered April 28, 1987 (C-78080459).
The present dispute focuses on expenditures PECO has charged to its ratepayers pursuant to various tariff filings in effect since November 23, 1983. The case has a long and complicated history and a recitation of that history is necessary to properly frame the issues.
In 1978, Keystone Alliance and others (Complainants)*fn1 filed a complaint with the PUC against PECO, alleging that PECO had wrongfully and illegally spent ratepayers' money on surveillance of persons and groups opposed to PECO's policies regarding nuclear power. Complainants sought, inter alia, a full investigation of PECO's surveillance activities, an order directing PECO to cease and desist from all surveillance activities, and an order directing PECO to return to ratepayers all ratepayer money spent on surveillance. PECO filed an answer and requested that the complaint be dismissed. On August 3, 1979, an Administrative Law Judge (ALJ) issued an interim decision in which the ALJ concluded that the PUC had jurisdiction over the complaint because of the allegation of inclusion of improper expenses in PECO's rate base. The ALJ also concluded that Complainants would have the burden of proving that PECO had included improper expenses in its rate base.*fn2
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Thereafter, Complainants amended their complaint to allege that PECO's surveillance activities were part of an overall promotion effort by PECO designed to gain acceptance of nuclear power, and that PECO was expending ratepayers' money to support its side of a controversial public debate. Hearings were conducted, with the evidence limited to PECO activities in which PECO had engaged in actions and/or expenditures related to nuclear generation of electricity.
On August 31, 1983, the ALJ issued a 275 page initial decision. The ALJ concluded that many of PECO's expenses constituted imprudent expenditures of ratepayers' money because the expenditures were of no direct benefit to ratepayers. For example, PECO spent large sums of ratepayer money on programs and materials for its Energy Education Advisory Council (EEAC). The EEAC provides energy materials to educational institutions, from elementary school to college, and to community groups. The ALJ agreed with Complainants that the EEAC materials were, in important respects, biased in favor of PECO's energy policy positions. The ALJ concluded that the EEAC had no existence independent of PECO and that the EEAC simply put forth PECO's policy in favor of nuclear energy. Similarly, the ALJ found that numerous organizations which received money from PECO were industry associations which pool their funds in order to pay for national public relations efforts in support of the use of nuclear energy. Thus, the ALJ concluded that PECO expenditures to the Utility Nuclear Waste Management Group (UNW MG), Life Jobs, American Nuclear Society, and Americans for Energy Independence could not properly be charged to ratepayers because those expenditures were of no direct benefit to ratepayers. The ALJ also concluded that PECO's "Speakers Bureau," within PECO's Corporate Communications Department, was designed to influence schools, civic organizations and religious institutions
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with regard to PECO policies. The ALJ found that the publications of the Speakers Bureau were stridently pro-nuclear and another aspect of PECO's massive public relations campaign on behalf of nuclear energy. The ALJ concluded that many of PECO's expenditures for Speakers Bureau activities, including the salaries of PECO employees who spent their time on such activities, were of no direct benefit to the ratepayers.
Exceptions to the ALJ's initial decision were filed, and on September 4, 1985, the PUC entered an order denying all exceptions and adopting the initial decision of the ALJ. The PUC order was not accompanied by an opinion. PECO filed, with this court, a petition for review from the PUC's 1985 order. Thereafter, the PUC entered a tentative amended order. The parties stipulated, with this court's approval,*fn3 that PECO's petition for review would be deemed taken from the PUC's forthcoming final amended order. On April 28, 1987, the PUC entered the final amended order from which PECO has appealed.
The PUC's final decision provides:
Except as they are amended by the foregoing discussion and conclusions, we affirm both the September 4, 1984 Order, which adopted the Initial Decision of ALJ Kranzel, dated August 31, 1983, and our Tentative Amended Order, issued February 19, 1986. We incorporate herein, the findings, conclusions and directives contained in the Initial Decision, to the extent that they are consistent with this Final Amended Order, THEREFORE,
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1. That all expenditures by PECO on behalf of its Energy Education Advisory Council (EEAC) programs, including program materials, payments to consultants and salaries of PECO employees engaged in EEAC-related activities, shall henceforth be classified as a contribution, with such expenditures being disallowed as an expenditure to be borne by the ratepayers.
2. That the salary, including fringe benefits, of Ms. Mollie McCormick of PECO's Law Department shall henceforth be classified entirely as lobbying and, therefore, disallowed as an expense charged to the ratepayers.
3. That all payments to Reverend Cecil D. Gallup, a consultant to the Corporate Communications Department, shall be classified entirely as lobbying, and therefore, disallowed as an expense charged to the ratepayers.
4. That the salaries, including fringe benefits of all PECO employees engaged in Speakers Bureau activities shall be reported to the PUC and a calculation shall be made in order to determine that proportion of each employee's time spent on Speakers Bureau activities, so that in future rate cases an appropriate disallowance shall be made for the amount of time spent by PECO employees which is of no direct benefit to ratepayers.
5. That expenditures by PECO on behalf of the Utility Nuclear Waste Management Group (UNMWG) shall be classified as a contribution and, therefore, shall not be chargeable to the ratepayers.
6. That expenditures by PECO on behalf of Life Jobs shall be classified as a contribution
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and, therefore, shall not be chargeable to the ratepayers.
7. That expenditures by PECO on behalf of the American Nuclear Society shall be classified as a contribution and, therefore, shall ...