Scott J. Rubin, Asst. Consumer Advocate, Harrisburg, Pa., for petitioner.
Anthony C. Lomma, John H. Appleton, Nogi, Appleton, Weinberger & Wren, Scranton, Pennsylvania, for Factoryville Water Co. (Notice of Intervention).
Daniel Delaney, Chief Counsel, Michael C. Schnierle, Dep. Chief Counsel, Bohdan R. Pankiw, Kevin J. Moody, Asst. Counsel, Harrisburg, Pennsylvania, for Pa. Public Utility Com'n.
Crumlish, Jr., President Judge, and Craig, Doyle, Colins, Palladino, McGinley and Smith, JJ. Palladino, J., dissents.
[ 127 Pa. Commw. Page 545]
Before us for consideration are two consolidated appeals which question the right of a public utility to recover the costs of facilities not presently used and useful in order to ensure repayment of principal and interest on a loan made by the Water Facilities Loan Board (Loan Board)*fn1 pursuant to the Water Facilities Restoration Act (Water Act).*fn2 Specifically, we must decide whether our Supreme Court's decision in Barasch v. Pennsylvania Public Utility Commission, 516 Pa. 142, 532 A.2d 325 (1987), aff'd sub nom., Duquesne Light Co. v. Barasch, 488 U.S. 299, 109 S.Ct. 609, 102 L.Ed.2d 646 (1989), which bars a utility, absent express legislative authorization, from including in its rates, in any manner, the cost of property which is not used and useful in providing utility service to current ratepayers, controls this case; or, whether the provisions of Section
[ 127 Pa. Commw. Page 5467518]
of the Water Act, 32 Pa.C.S. § 7518,*fn3 provide the express legislative authorization required by Barasch.
The genesis of this case was the November 27, 1987 filing with the Public Utility Commission (Commission) of a request for a rate increase of $36,366 by Factoryville Water Company*fn4 (Factoryville). The total amount of the increase represents the annual repayment of principal and interest of a loan obtained by Factoryville from the Loan Board pursuant to the Water Act.*fn5
In response, Thomas E. Staffaroni, a Factoryville customer and one of two petitioners herein, filed a formal complaint with the Commission. He alleged therein that the requested increase should be denied because, inter alia, the facilities financed by the loan were not used and useful in providing utility service to current ratepayers. Following several hearings, an Administrative Law Judge (ALJ) issued a recommended decision on March 31, 1988, in which he found that with the exception of two fire hydrants totaling $4,000 in value, none of the facilities financed by the loan were used and useful in providing utility service, and recommended that the increased tariff be rejected.*fn6
[ 127 Pa. Commw. Page 547]
Thereafter, on April 29, 1988, the Commission entered a summary form opinion and order which rejected the ALJ's recommendation. The Commission found Factoryville's proposed rates to be just and reasonable despite the barium contamination and disagreed with the ALJ's conclusion that facilities constructed with the proceeds of a Water Act loan must be in service as a condition precedent to recovery from the ratepayers of the funds needed ...