Apartment and Office Building Association of Metropolitan Washington v. Public Service Commission of the District of Columbia and the District of Columbia, the People's Counsel of the District of Columbia, and Potomac Electric Power Company
Apartment and Office Building Association of Metropolitan Washington v. Public Service Commission of the District of Columbia and the District of Columbia, the People's Counsel of the District of Columbia, and Potomac Electric Power Company
Opinion
Several powerful storms hit the District of Columbia area between 2003 and 2012, causing significant damage to the electrical distribution system and leaving many customers without power for long periods of time. A task force created in 2013 concluded that the frequency of power outages would decrease and consumers of electricity would benefit if overhead power lines were moved underground. Office of the Mayor, Gov't of D.C.,
Mayor's Power Line Undergrounding Task Force Findings & Recommendations
at 5-6, 8-10 (Oct. 2013). The Council of the District of Columbia ("Council") decided to authorize this initiative in the Electric Company Infrastructure Improvement Financing Act of 2014 ("ECIIFA"),
This case arises from Public Service Commission ("Commission") orders which approved a plan identifying six electric feeder lines to be placed underground. The principal issue is the allocation of costs between commercial and residential customers. The Apartment and Office Building Association of Metropolitan Washington ("AOBA" or "Petitioner") asserts that the Commission failed to exercise its authority to allocate those costs, that the statute governing allocation contravenes the Home Rule Act, and that AOBA's due process rights were violated. We affirm the Commission's rulings.
I. Procedural History
Debate concerning allocation of costs between residential and commercial customers had occurred in Pepco rate cases well before the undergrounding project began. Commercial customers protested that they were being required to subsidize services for residential customers. It was estimated that the first phase of the Undergrounding Initiative would cost approximately $ 500 million, and this high price tag renewed the debates about subsidization.
Sections 34-1313.01 and 34-1313.10 of the 2014 ECIIFA contained provisions requiring the Commission to allocate costs "in accordance with" "the electric company's most recent base rate case."
In these provisions, the term "distribution service customer class cost allocations" was used but not defined, which led to confusion.
The Commission's first effort to allocate these costs,
Formal Case Nos. 1116 and 1121
, generated an appeal. AOBA challenged the Commission's cost allocation decisions and argued that the Commission had misconstrued the disputed term.
Apartment & Office Bldg. Ass'n of Metro. Washington v. Pub. Serv. Comm'n of the District of Columbia
,
In 2015, after AOBA submitted its initial brief in the previous appeal, the Council amended ECIIFA to include a definition of "distribution service customer class cost allocations."
This court emphasized that the Council's "directive [did] not leave room for the Commission in the undergrounding proceedings to independently address issues of subsidization."
The project did not go forward at that time and the Council amended ECIIFA again effective July 11, 2017, to modify a portion of the funding structure.
See
Pepco and DDOT submitted their Joint Application to the Commission on July 3, 2017, initiating Formal Case No. 1145. They updated that application in August 2017. The Commission ultimately approved the proposed plan and denied motions for reconsideration. 2 Petitioner AOBA now challenges these and related orders. Pepco, the District of Columbia, and the Office of People's Counsel ("OPC") intervened in the case before this court, supporting the Commission.
II. Standard of Review
This court has jurisdiction to hear appeals from certain orders of the Public Service Commission of the District of Columbia.
This court reviews issues of statutory interpretation
de novo
.
Myerson v. United States
,
III. Analysis
A. The Commission May Not Depart From the Allocation Structure in the Amended ECIIFA
AOBA contends that, ECIIFA notwithstanding, the Commission had discretion to address subsidization issues when allocating undergrounding costs and that it should have done so in this instance. However, the Commission recognized in Order Nos. 19167 and 19237 that the allocation of costs had been fixed in the "unequivocal statutory directive" of the amended ECIIFA. It had "no authority to alter the statutorily mandated allocation structure in the context of this proceeding"-the allocation of costs "must be in accordance with the allocation approved in Pepco's most recent base rate case." Because the proposed charges complied with the allocation structure in the amended ECIIFA, the Commission found that they were "just and reasonable."
AOBA disputes the Commission's view that it has no discretion to alter the allocation structure approved in Pepco's most recent base rate case. But this issue has already been litigated and decided. As explained above, this court ruled in the prior appeal that the statute "[did] not leave room for the Commission in the undergrounding proceedings to independently address issues of subsidization."
Seeking to avoid this conclusion, AOBA claims that this language from our previous opinion was simply dictum because the
issue of whether the Commission could depart from this allocation structure was not before this court at that time. That assertion is mistaken. In the prior case, AOBA asked us to remand so the Commission could determine the impact of the amended statute's definition of "distribution service customer class cost allocations." This court explained that remand was "pointless" because "the amendment unambiguously adopted what the Commission had already done in the orders under review [and] [i]t is highly implausible that the Commission would do anything on remand other than reaffirm the conclusion it had already reached."
B. The Amended ECIIFA Does Not Contravene the Home Rule Act
Petitioner argues in the alternative that if the amended ECIIFA does deprive the Commission of discretion to allocate the costs of undergrounding, the statute is "unconstitutional" because it violates the Home Rule Act. The Commission declined to address this issue, invoking "well established law that state agencies do not have the jurisdiction to review the constitutionality of statutes." AOBA did not present this argument to the Commission in connection with the previous application or to this court in the prior appeal. 4
1. The Home Rule Act
The United States Constitution confers upon Congress plenary power to legislate for the District of Columbia. U.S. Const. art. I, § 8, cl. 17 ("The Congress shall have Power ... [t]o exercise exclusive Legislation in all Cases whatsoever, over the ... Seat of the Government of the United States."). However, in 1973 Congress enacted the Home Rule Act, set forth in Title I, Chapter II of the D.C. Code, to "grant to the inhabitants of the District of Columbia powers of local self-government."
Notwithstanding this broad delegation of power, section 602 of the Home Rule Act prohibits the Council from legislating on certain subjects.
See, e.g.
,
2. The District Charter
But Congress limited the power of the Council in another important manner. Subchapter IV of the Home Rule Act, known as the District Charter, establishes the structure of governance for the District of Columbia.
See
In many ways, the Charter acts as a constitution for the District of Columbia, and AOBA uses the word "unconstitutional" in arguing that the allocation directives in the ECIIFA statute are void. The core of Petitioner's argument is that the independence of the Public Service Commission is protected by the Charter and that the amended 2017 ECIIFA is invalid because it purports to change the authority of the Commission to allocate costs. Petitioner asserts that the Council has in effect amended the Charter without submitting that question to the voters in a referendum.
3. The Commission
Congress created the Public Utilities Commission in the District of Columbia Appropriations Act of 1913, which assigned various responsibilities and functions to the Commission.
See
There shall be a Public Service Commission whose function shall be to insure that every public utility doing business within the District of Columbia is required to furnish service and facilities reasonably safe and adequate and in all respects just and reasonable. The charge made by any such public utility for any facility or services furnished, or rendered, or to be furnished or rendered, shall be reasonable, just, and nondiscriminatory. Every unjust or unreasonable or discriminating charge for such facility or service is prohibited and is hereby declared unlawful.
The enactment of Section 493 did more than simply continue the Commission in existence, however. By placing this provision in the Charter, Congress insulated Section 493 from repeal or amendment by ordinary legislation of the Council. In the Charter, Congress also designated the Commission as one of five Independent Agencies.
See
Although the brief of the District of Columbia takes an expansive view of the Council's power in the field of utility regulation, it acknowledges that, by placing Section 493 in the Charter, Congress "preclude[d] the Council, by ordinary legislation ..., from abolishing the Commission or altering its basic functions of ensuring that public utilities 'furnish service and facilities reasonably safe and adequate and in all respects just and reasonable.' " Pepco agrees that "the Council might run afoul of [§ 493] if it eliminated the PSC or vested the PSC's 'function' of regulating utilities in some other agency."
But ECIIFA did not change a single word of Section 493, so the question presented here is whether there has been a "constructive" amendment of this Charter provision. AOBA's arguments in favor of that conclusion depend in large part on a misguided view of what it means to be an "independent" agency. Congress and state legislatures routinely specify how independent agencies must go about their work. Focusing on the local scene, the three sentences of Section 493 have never been deemed sufficient to govern the complex field of utility regulation. Even a brief review of the D.C. Code demonstrates that the Commission does not work in isolation, without direction or assistance from the legislature.
The Public Utilities Act of 1913 granted the Commission its ratemaking authority.
Title 43 of the D.C. Code, entitled "public utilities," existed before Home Rule.
See generally
The question presented here is whether the Council went too far by enacting the 2015 and 2017 ECIIFA amendments. There is not much case law to guide us. Addressing different legislation affecting the Commission, the United States District Court for the District of Columbia considered what types of actions would constitute a charter amendment.
Charter amendments ... refer to actions which, like state constitutional amendments, fundamentally change the nature of the system of government.... Though the Act does involve some changes concerning the structure of the Public Service Commission, these changes do not in any significant way alter the structure or manner in which the Public Service Commission operates; its basic mission remains intact.
Potomac Elec. Power Co. v. District of Columbia Gov't
,
4. The Impact of ECIIFA
With this background in mind, we turn to the legislation at issue here. In a "base rate case" the Commission identifies how much revenue Pepco requires and decides how to allocate that requirement between Pepco's customer classes, commercial and residential.
See
Although the Undergrounding Project carries a hefty price tag, AOBA asserts that "[w]hether Pepco facilities will or will not be relocated underground is not at issue in this appeal." Moreover, we are told, "[t]his appeal ... is not about the amount of the Undergrounding Charges, but about the allocation of [those charges]." But Petitioner admits that its long-range concern is more comprehensive. AOBA clarifies that its challenge to the 2017 ECIIFA is targeted at "the impact of the cost allocation provisions on the Commission's ratemaking authority." It fears that if we approve the legislation at issue here, "the elected Council, in the name of expediency, efficiency and cost-effectiveness, - or more disturbing[,] for purely political reasons - will now be able to enact legislation mandating not only cost allocations, but the establishment of specific rates to be charged for utility services." Nothing we say today is intended to endorse that result.
Nevertheless, resolving this case does not require us to explore the outer limits of the Council's authority to regulate public utilities. We focus, instead, on the immediate, practical effect of the legislative directive. By statute, and for good reason, decisions in undergrounding cases are to be expedited.
It is important to recognize that the Council has not dictated an allocation of its own design, but rather has instructed the Commission to apply the allocation that
it
adopted in the most recent base rate proceeding. Furthermore, that allocation is transitory. The Commission is free to change the allocation of those costs in subsequent base rate cases. As we noted in the previous appeal, the Commission's allocation of costs in future base rate cases "could well affect the allocation of costs in future orders issued in connection with the undergrounding project."
We reiterate that ECIIFA did not change a single word in Section 493. Nor, for the reasons explained, does it usurp the function of the Commission. We therefore hold that the cost allocation provisions of ECIIFA do not violate the Home Rule Act.
C. AOBA's Due Process Rights Were Not Violated
AOBA asserts that its due process rights were violated when the Commission denied an evidentiary hearing. As a general matter, the Commission is required to hold a hearing if there is a dispute concerning a material fact, but not if the only dispute involves issues of law or policy.
Watergate East, Inc. v. District of Columbia Public Serv. Comm'n
,
AOBA asserted before the Commission that there were three material issues: "(1) rate shock; (2) customer transfers in the true-up process; and (3) feeder selection methodology." On October 20, 2017, the Commission issued Order No. 19144 in which it denied the hearing request, holding that AOBA had not "identified any contested issues of material fact requiring an evidentiary hearing and that, in any event, all issues identified by AOBA can be resolved on the pleadings and discovery responses." The Commission addressed each of AOBA's assertions, explaining that they were not really disputes of fact but more in the nature of policy concerns. In addition, the Commission noted that these issues had already been litigated in Formal Case Nos. 1139 and 1116 . 8
AOBA also contends it was a due process violation to deny an evidentiary hearing to address a directive in which the General Services Administration ("GSA") initially told federal agencies not to pay the undergrounding charges. This turned out to be a false alarm. GSA pointed out in its amicus brief to this court that "federal agencies are paying those charges, subject to GSA's objection to the DDOT Surcharge and a reservation of rights to further contest the surcharge." Whatever the effect of that "objection" and "reservation" may be, it seems that federal agencies were paying the charges and that they continue to do so. There was no "shortfall" in collections that would have to be made up by commercial customers. Furthermore, the statute makes clear what should happen in such circumstances.
See
AOBA's argument that the Commission applied an incorrect standard in determining that there was no need for an evidentiary hearing is misguided. The Commission's decision was not a "summary dismissal," and the standards for granting summary judgment in a civil case did not apply. Indeed, the ECIIFA provides its own standard for determining whether the Commission should hold a hearing before deciding the issues on their merits.
See
D. Additional Matters
Two additional issues deserve only brief mention. GSA, as
amicus
, argues that the Commission's decision to incorporate records from the previous undergrounding proceedings violated due process rights. However, GSA is not a party to this appeal and AOBA did not raise this claim in its statement of issues presented or the argument section of its initial brief to this court. "[A]n amicus curiae must take the case as he finds it, with the issues made by the principal parties."
Givens v. Goldstein
,
AOBA complains that the Commission's public interest finding is not supported by substantial evidence, but it did not present this complaint to the Commission in its Applications for Reconsideration.
See
IV. Conclusion
We adhere to our previous decision that the Commission may not depart from the allocation formula prescribed in the statute. We further hold that the 2015 and 2017 amendments to the Electric Company Infrastructure Improvement Financing Act of 2014 do not violate the Home Rule Act. In addition, AOBA's due process rights were not violated. The orders of the Public Service Commission are
Affirmed.
Nearly identical allocation provisions are in the current statute as amended in July 2017.
The Commission issued the following orders in this proceeding: Order No. 19806 on September 6, 2017 (incorporating records from Formal Case Nos. 1116 and 1121 (the prior undergrounding proceeding) into the record for Formal Case No. 1145 over AOBA's objection); Order No. 19144 on October 20, 2017 (denying AOBA's request for a hearing); Order No. 19167 on November 9, 2017 (approving the proposed plan submitted by Pepco and DDOT); Order No. 19212 on December 20, 2017 (denying AOBA's first application for reconsideration); Order No. 19237 on January 18, 2018 (denying AOBA's second application for reconsideration).
"In determining whether
res judicata
applies, '[w]e consider (1) whether the claim was adjudicated finally in the first action; (2) whether the present claim is the same as the claim which was raised or which might have been raised in the prior proceeding; and (3) whether the party against whom the plea is asserted was a party or in privity with a party in the prior case.' "
Calomiris v. Calomiris
,
As demonstrated above, the language which tied allocations of costs to the previous base rate case was in the original Act, and AOBA could have presented its "constitutionality" argument to the Commission in the prior proceeding. But even if AOBA had done so, that effort would have been futile. The Commission would have reached the same conclusion that it did not have jurisdiction to review the issue.
See
District of Columbia Hous. Auth. v. District of Columbia Office of Human Rights
,
Petitioner argues that the legislative history of the Home Rule Act supports the conclusion that the Council was prohibited from enacting the amended ECIIFA. When drafting the Home Rule Act, legislators discussed the independent decision-making authority of the Commission. However, the discussions of the committee members reported in the legislative history give no clear guidance as to what types of direction from the Council related to rates and surcharges would constitute impermissible interference with the independence of the Commission.
See, e.g.
, §§ 43-201 (1973), 43-401 (1981), 34-801 (2012 Repl.) (specifying the organization of the Commission and establishing the process for appointing commissioners); §§ 43-206 (1973), 43-408 (1981), 34-806 (2012 Repl.) (permitting the Commission to hire employees and incur expenses);
In fact, the Commission approved a different base rate on August 9, 2018, a proceeding in which AOBA was a party. That case was resolved when the Commission approved a non-unanimous settlement agreement.
See
Formal Case No. 1150
, Order No. 19433,
In
Formal Case No. 1139
, the base rate case prior to this appeal, the Commission considered issues related to commercial class subsidization of residential class costs, concluded that the proposed rate adjustments were just and reasonable "for all Pepco customers in the District of Columbia," and discussed the fact that the costs of the undergrounding project had not yet had an impact on rates.
See
Order 18846,
Proffering testimony from an expert witness, Bruce Oliver, petitioner attached a detailed summary of his testimony (in question and answer form) to its request for a hearing. In both the Order denying AOBA's request for a hearing (No. 19144) and its Order approving the joint application (No. 19167), the Commission cited to and summarized this testimony, demonstrating that any material issues raised by AOBA could be resolved on the pleadings and discovery responses alone. No other witnesses were proffered by petitioner, but Pepco and DDOT proffered the testimony of several witnesses in the same manner and their testimony was referred to in Order No. 19167.
Reference
- Full Case Name
- APARTMENT AND OFFICE BUILDING ASSOCIATION OF METROPOLITAN WASHINGTON, Petitioner, v. PUBLIC SERVICE COMMISSION OF the DISTRICT OF COLUMBIA, Respondent, and the District of Columbia, the People's Counsel of the District of Columbia, and Potomac Electric Power Company, Intervenors.
- Status
- Published