Nov. 28, 2018
- Addressing whether the Public Utilities Commission erred in failing to: (1) apply RSA 378:1 and its own rules; (2) explain its rules on rehearing; and (3) determine an issue that was not noticed before the hearing.
The petitioner, Lakes Region Water Company, Inc. (Lakes Region), appealed an order of the New Hampshire Public Utilities Commission (PUC) requiring it to refund a charge and prohibiting future such charges unless and until they are included in the company’s tariff.
A customer constructed an additional structure on his property and tapped into his primary residence’s water service connection. Lakes Region inspected, concluding that it needed a separate connection. Lakes Region did not install one at that time, but began billing the customer an additional base charge (the minimum charge per customer per quarter). The customer complained to the PUC, arguing that Lakes Region could not impose a second charge, or require him to install a separate meter, because neither was provided for in Lakes Region’s tariff.
The PUC agreed that there was no basis under the current tariff for the second charge. It ordered Lakes Region to refund those charges and further ordered that it not impose the charge again until its tariff was properly amended.
On appeal, Lakes Region argued that the Commission erred in failing to: (1) apply RSA 378:1 and its own rules; (2) explain its rules on rehearing; and (3) reconsider a new issue determined in its order. While Lakes Region conceded that its tariff did not contain a provision authorizing the second charge, it maintained that it was justified by statutes and regulations. Lakes Region pointed to RSA 378:1, which requires public utilities to file and keep schedules showing rates and charges for any service; New Hampshire Administrative Rules, Puc 606.04, which states that tandem service is not permitted; and RSA 378:14, which prohibits public utilities from granting any free service, or charging a different price than that fixed by the schedules on file.
Lakes Region argued its tariff does not include a rate for tandem service because that service is prohibited. There must be a second service charge, however, because it has a greater cost than is accounted for in the tariff. Lakes Region explained that because it serves many seasonal customers, demand rises at times. Its rates, which include a high base charge and a lower metered consumption charge, are designed to recover the fixed capital costs necessary to provide service during peak demand. Allowing a second structure on the property without a base charge would result in free or discounted service in violation of RSA 378. The Court rejected Lakes Region’s argument. It held that the PUC is responsible for ensuring that utility rates are fair. A utility cannot unilaterally adjust its charges outside of its tariff.
The Court disagreed that the PUC’s rules require separate lines for separate uses or buildings. Instead, the rules refer to “customers.” The Court held that an individual connecting a second structure to his home line did not service a second customer. Because there is only one customer, Lakes Region’s tariff subjects him to only one base charge. Accordingly, the Court agreed that Lakes Region’s proper remedy would lie in a tariff amendment.
The Court held that while an order from the PUC must provide factual findings and legal reasoning to support those findings, it is not required to explain why it is not persuaded by contrary arguments. The Court also disagreed that the PUC erred by determining a new issue in its order, as Lakes Region had adequate notice of this issue in both the notice of the hearing and the PUC’s order on Lakes Region motion to deny the complaint and exclude evidence.
Justin C. Richardson, Upton & Hatfield, Portsmouth, for the petitioner. Gordon J. MacDonald, attorney general (Laura E. B. Lombardi, senior assistant attorney general), for the New Hampshire Public Utilities Commission.