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PEOPLES NATURAL GAS COMPANY v. PENNSYLVANIA PUBLIC UTILITY COMMISSION (01/05/89)

decided: January 5, 1989.

THE PEOPLES NATURAL GAS COMPANY, PETITIONER
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT



Appeals from the orders of the Pennsylvania Public Utility Commission in the case of Pennsylvania Public Utility Commission and David M. Barasch, Consumer Advocate, Peoples Industrial Intervenors, Pennsylvania Natural Gas Associates, Bethlehem Steel Corporation, Peoples Industrial Coalition and The Hospital Council of Western Pennsylvania, and Equitable Gas Company v. The Peoples Natural Gas Company, No. R-850270, dated January 9, 1987, March 19, 1987 and September 17, 1987.

COUNSEL

Joseph J. Malatesta, Jr., with him, William T. Hawke, and Kevin J. McKeon, Malatesta, Hawke & McKeon, and Susan Garland George, with her, William P. Boswell, for petitioner, Peoples Natural Gas Company.

John F. Povilaitis, Deputy Chief Counsel, with him, Robert P. Haynes, Assistant Counsel and Daniel P. Delaney, Chief Counsel, for respondent.

David M. Kleppinger, with him, Richard S. Kahlbaugh, McNees, Wallace & Nurick, for intervenor, Peoples Industrial Intervenors.

Craig R. Burgraff, Assistant Consumer Advocate, with him, David M. Barasch, Consumer Advocate, for intervenor, Pennsylvania Office of Consumer Advocate.

Judges Craig, Doyle, Barry, Colins, Palladino, McGinley and Smith. Opinion by Judge Craig.

Author: Craig

[ 122 Pa. Commw. Page 447]

The Peoples Natural Gas Company (Peoples) appeals three orders of the Public Utility Commission (PUC or Commission) dated January 9, 1987, March 19, 1987, and September 17, 1987. In general, this case presents the question of whether a tariff filed by Peoples complied with an earlier rate order of the PUC with respect to allocation of the revenue burden among various customer classes.

History

This dispute began in January 1986 when Peoples filed proposed tariffs for a rate increase that was to go into effect March 31, 1986. The Commission suspended the tariffs for seven months, as allowed by 66 Pa. C.S. § 1308(d), to investigate the proposed increase. On September 10, 1986, after hearings, Administrative Law Judge Mindlin issued recommendations. After the parties

[ 122 Pa. Commw. Page 448]

    submitted exceptions and reply exceptions to the Administrative Law Judge's recommendations, the Commission issued its final rate order on October 31, 1986. That order directed Peoples to change its method of allocating certain costs among different classes of customers in order to reduce the allocation of the rate increase to residential and commercial customers.

Peoples submitted a new tariff, Supplement No. 2, on November 3, purportedly complying with the Commission's October 31 order. The Office of Consumer Advocate (OCA) filed a petition on December 1, claiming that Supplement No. 2 failed to comply with the October 31 order's directive to reduce the allocation of the rate increase to residential and commercial customers.

On January 9, 1987 the Commission issued another order that again addressed the allocation of costs to certain customer classes. Peoples responded to that order by filing Supplement No. 6, which acknowledged itself to be not in compliance with the January 9 order because Peoples planned to appeal the January 9 order and to ask the Commission for a stay. On February 9, 1987 Peoples filed in this court a petition for review of the January 9 order and on February 11 Peoples asked the Commission for a stay or supersedeas pending the appeal of the January 9 order.

On March 19 the Commission issued another order that denied the stay and stated that the Commission would assess Peoples penalties in the amount of one thousand dollars per day unless Peoples complied with the January 9 order within seven days. Peoples filed in this court an application to stay the Commission's March 19 order. On March 25 this court deferred any penalties to be assessed under the March 19 order until we could decide the case. On March 23, Peoples filed a petition for review of the March 19 order.

[ 122 Pa. Commw. Page 449]

Senior Judge Bucher of this court held a hearing on April 1 and issued a stay on April 4. The Pennsylvania Supreme Court dissolved that stay on July 6. On September 1 Peoples filed Supplement 19 to comply with the Commission's directive to reduce the allegedly excessive revenues allocated to residential and commercial users in Peoples' Supplement No. 2. The Commission accepted this filing on September 17. On October 7 Peoples filed a petition for review of the September 17 acceptance letter order and a motion to consolidate its other petitions in this court.

The Commission opposed consolidation and moved to quash or dismiss the petition for review at 2305 C.D. 1987, filed as to the September 17 acceptance letter order. We consolidated, for argument, the petitions for review and the application to quash or dismiss.

The Issues

Peoples contends that the January 9, March 19, and September 17 orders are in error because the January 9 order constituted an amendment of the Commission's order dated October 31, 1986 (with which Peoples claims to have complied by its Supplement No. 2 filed on November 3, 1986) without providing Peoples with notice and an opportunity to be heard, as required by 66 P.S. § 702(g), before amending the earlier order.

The Commission, on the other hand, asks us to dismiss Peoples' petition for review of the September 17, 1987 order, on the ground that Peoples lacks standing because it is not an aggrieved party. The Commission bases this assertion on the fact that the Commission's order in question accepted Peoples' Supplement No. 19, filed in September 1987, as in compliance with the original October 31, 1986 order and the January 9 order, and that Peoples therefore is not aggrieved by that acceptance.

[ 122 Pa. Commw. Page 450]

Thus, Peoples, the Commission, OCA and Peoples Industrial Intervenors (PII) have presented essentially three questions for review: (1) whether Peoples lacks standing to bring the appeal at 2305 C.D. 1987; (2) whether the January 9, 1987 order constituted an amendment of the October 31, 1986 order; and (3) whether the Commission's action has precluded Peoples from making a fair return on its service by dictating to Peoples a cost allocation scheme that does not allow a proper recovery of revenue.

We deny the Commission's application to quash Peoples' petition for review at 2305 C.D. 1987, and affirm the Commission's orders dated January 9, 1987, March 19, 1987, and September 17, 1987.

1. Standing

We will first address the Commission's application to quash Peoples' petition for review of the Commission's September 17 letter order that accepted Supplement No. 19. The Commission claims that Peoples lacks standing to challenge this order because the Commission's acceptance of Supplement No. 19 constitutes a Commission ruling in favor of Peoples, and that Peoples therefore is not an aggrieved party -- a necessary element of standing for the purpose of an appeal to this court. A party may not appeal a favorable ruling. Prior v. Borough of Eddystone, 30 Pa. Commonwealth Ct. 536, 374 A.2d 981 (1977), citing Pierro v. Pierro, 434 Pa. 131, 252 A.2d 652 (1969).

Although the September 17 order's approval of Peoples' Supplement No. 19 has the superficial appearance of being favorable to Peoples, we must recognize that Peoples was forced to file Supplement No. 19, with content contrary to Peoples' own view, because the Supreme Court's dissolution of the stay left Peoples with no choice but to comply. The Commission order approving

[ 122 Pa. Commw. Page 451]

    a forced filing, with which the filing party disagrees, is indeed an order having a real effect adverse to that party. This court must conclude that Peoples has standing to attack the September 17 order, as part of the three-order series which subjected Peoples to compliance results claimed by it to be unwarranted.

The Commission's application to quash will be denied.

2. Consistency of the Commission's Rate Order and Its Compliance Insistence.

Although Peoples is appealing several 1987 orders, this case turns upon interpreting the Commission's order dated October 31, 1986.*fn1 That interpretation is necessary to determine whether the January 9 order constituted an amendment of the October 31 order. If the January 9 order actually amended the substance of the October 31 order, this court would have to vacate that later order because the Commission did not provide Peoples with notice and an opportunity to be heard as required by 66 P.S. § 703(g) before the Commission issued the January order. Westinghouse Electric Corporation v. Pennsylvania Public Utility Commission, 44 Pa. Commonwealth Ct. 407, 404 A.2d 712 (1979).

The Commission's October 31 order directed Peoples to restructure its allocation of the approved rate increase among its customer classes. Specifically, the Commission told Peoples to: (1) allocate a smaller ...


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