OFFICES AND OFFICERS ‑- STATE ‑- UTILITIES AND TRANSPORTATION COMMISSION ‑- COSTS ‑- IMPOSITION OF COSTS OF INVESTIGATION ON REGULATED PUBLIC SERVICE COMPANIES

OFFICES AND OFFICERS ‑- STATE ‑- UTILITIES AND TRANSPORTATION COMMISSION ‑- COSTS ‑- IMPOSITION OF COSTS OF INVESTIGATION ON REGULATED PUBLIC SERVICE COMPANIES

The cost assessment provisions of RCW 80.20.020 and RCW 81.20.020 are not applicable to a tariff change matter pending before the Washington Utilities and Transportation Commission unless and until the Commission (1) enters an order of suspension and assigns a cause number and (2) gives notice to the public service company involved of its intention, based upon its determination of necessity, to investigate; only when the Commission thus determines the need for an investigation and gives such notice by appropriate order are costs to be assessed against the public service company in accordance with the other conditions of the two statutes.

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                                                                    July 19, 1979

Honorable Robert C. Bailey, Chairman
Washington Utilities and Transportation
Commission
Highways-Licenses Building
Olympia, Washington 98504                                                                                                               Cite as:  AGLO 1979 No. 26

Dear Sir:

            By letter previously acknowledged you requested the advice of this office in response to a question which we paraphrase as follows:

            When and how do the cost assessment provisions of RCW 80.20.020 and RCW 81.20.020 become applicable in a tariff change matter pending before the Washington Utilities and Transportation Commission?

            We answer the foregoing question in the manner set forth in our analysis.

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            To put this matter in perspective, we first observe that the Washington Utilities and Transportation Commission is responsible for the regulation of various public service companies pursuant to the provisions of Titles 80 and 81 RCW.1/   From time to time such companies file with the Commission proposed tariff changes which, pursuant to statute, take effect automatically unless their taking effect is suspended by order of the Commission.  Suspension is ordered by the Commission when there is reason to question the justness and reasonableness of the proposed changes.  At the time of suspension a Commission cause number is assigned to the filing and, thereafter, unless the matter is otherwise resolved, a formal hearing pursuant to the Administrative Procedures Act is held on the proposal.

            Your question, basically, is when, within the foregoing procedural context, the provisions of RCW 80.20.020 and its Title 81 RCW counterpart, RCW 81.20.020, properly come into play.  These two identical statutes read, in material part, as follows:

            "Whenever the commission in any proceeding upon its own motion or upon complaint shall deem it necessary in order to carry out the duties imposed upon it by law to investigate the books, accounts, practices and activities of, or make any valuation or appraisal of the property of any public service company, or to investigate or appraise any phase of its operations, or to render any engineering or accounting service to or in connection with any public service company, and the cost thereof to the commission exceeds in amount the ordinary regulatory fees paid by such public service company during the preceeding calendar year or estimated to be paid during the current year, whichever is more, such public service company shall pay the expenses reasonably attributable and allocable to such investigation, valuation, appraisal or services. . . ."

             [[Orig. Op. Page 3]]

            In our opinion your question is readily answerable on the basis of the express language of the statutes.  In essence, there are two distinct elements which must be present in order for the cost assessment provision of RCW 80.20.020 and RCW 81.20.020 to be applicable in a tariff change matter pending before the Utilities and Transportation Commission.  Briefly summarized, those two elements are as follows:

            (1) That there is, at the time, a "proceeding" pending before the Commission as a consequence of the filing of proposed tariff changes by a regulated public service company; and

            (2) That the Commission, in connection with such proceeding, ". . . shall deem it necessary . . ." to investigate the pertinent affairs or activities of that company in the manner and to the extent provided for in the two statutes.

            As far as the first of these two elements is concerned, it is our opinion, based upon the reasoning of the United States Supreme Court in the analogous case ofUnited Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 100 L.Ed. 373, 76 S.Ct. 373 (1955), interpreting similar language in the Federal Power Act, that the mere filing of proposed tariff changes by itself, does not establish the existence of a "proceeding."  Such a proceeding, however, most certainly does come into existence whenever, following the filing of proposed tariff changes, the Commission enters an order of suspension and assigns a cause number to the matter.  At that point, in line with what we understand to be current Commission practice, a further order of investigation may properly be entered, thereby invoking the cost assessment provisions of whichever of the two statutes is applicable in the particular case.

            Butquaere, is the issuance of such a further order statutorilyrequired at this point in every such "proceeding"?  Clearly not, as we view it.  Instead, turning to the second of the two elements above noted, such action is only called for when the Commission "shall deem it necessary."  Moreover, it is interesting to note in this regard the consistent and supportive provisions of two related statutory provisions, RCW 80.20.040 and RCW 81.20.040, which read (again identically) as follows:

            "In such action the commission's determination of the necessity of the investigation, valuation, appraisal or services shall be conclusive evidence of such necessity, and its findings  [[Orig. Op. Page 4]] and determination of facts expressed in bills rendered pursuant to RCW 80.20.020 through 80.20.060 or in any proceedings determinative of such bills shall be prima facie evidence of such facts."

            We are, of course, conversant with State v. Northwestern Electric Co., 183 Wash. 184, 49 P.2d 8 (1935), which declared an earlier version of the statutes in question, as originally enacted in 1933, to be unconstitutional as in violation of the equal protection clauses of both the federal and state constitutions.  The specific item with which the court was there concerned, i.e., the lack of guidelines as to the amount that might be charged to a public service company, was, however, subsequently rectified by an amendment.  See, § 2(a), chapter 203, Laws of 1939.  On the other hand, the law did then, and continues now, to leave the determination of necessity for investigation to the sound discretion of the Commission.  We further believe that this approach would meet any constitutional challenge, noting that similar determinations of necessity have long been standards contained in other public service laws with which the courts have had no difficulty.  For example, seeC. E. Hall & Sons v. United States[States], 88 F.Supp. 596 (D.Mass., 1950), and Kings County Lighting Co. v. Maltbie, 280 N.Y.Supp. 560, 244 App. Div. 475 (1935); and see also our own cases of Black Ball Freight v. Washington Utilities and Transportation Commission, 74 Wn.2d 871, 447 P.2d 597 (1968); and North Bend Stage Lines v. Dept. of Public Works, 162 Wash. 46, 297 Pac. 780 (1931).

            Summary:

            To summarize briefly, it is therefore our opinion that the cost assessment provisions of RCW 80.20.020 and RCW 81.20.020 are not applicable to a tariff change matter pending before the Commission unless and until the Commission (1) enters an order of suspension and assigns a cause number and (2) gives notice to the public service company involved of its intention, based upon its determination of necessity, to investigate.  Only when the Commission thus determines the need for an investigation and gives such notice by appropriate order are costs to be assessed against the public service company in accordance with the other conditions of the two statutes.