2024-11-25 1250 Oceanside LLC Response to PD

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Application of Hawaii Elec. Light Co., Inc.,60 Haw.625 (1979) 594 P.2d 612 Traditionally,electric utilities have used the"declining block"structure in which each classification of customers is divided into blocks of consumption so that as more units of electricity are consumed,the cost per unit decreases.HELCO's residential rate structure is not a true"declining block" structure as there is a slight rise in the tail block.However,the effect of HELCO's rate structure is the same in that the average cost per kilowatt hour declines as more kilowatt hours of electricity are consumed.11 *644 Historically, the prominent subjects in rate proceedings have concerned the revenue requirement such as allowable expenses,rate base and rate of return.The question of rate design was largely left to the discretion of utility managements as it was felt that a utility would have no purpose in unfairly allocating among its various customers.See,Cudahy and Malko,Electric Peak-Load Pricing:Madison Gas and Beyond, 1976 Wis.L.Rev. 47;Kadane,The Legality of Marginal Cost Pricing for Utility Services,5 Hofstra L.Rev.755 (1977);Note,Reform of Electricity Pricing in the United States,25 Buffalo L.Rev. 183 (1975). The dramatic increase in rate design issues was the sudden turnaround in the early part of this decade of utility price increases rather than the historical experience of declining or stable utility prices.Real prices of coal,oil and natural gas have increased; the costs of constructing generating capacity has risen sharply; and legislation and regulation to mitigate the environmental impact of large power plants have added new costs that must be met. Federal Energy Administration, Electric Utility Rate Design Proposals: Interim Report(1977). On appeal, LK alleges that the last three blocks of the declining block residential structure is unreasonably discriminatory because the price per kilowatt hour of electricity depends entirely on the level of use; that if that level is low, the customer is charged more per kilowatt hour than moderate and high volume users; and that the price discrimination works the greatest hardship on the poor.It concedes the presence **625 in the record of substantial evidence to support the customer charge and the rate for the 0-100 kilowatt hour block. It contends that the last three blocks violate the law in that a rate schedule must be "just and reasonable,and prohibit. . .unreasonable discrimination between. . .consumers."FIHRS s 269-16(b)(1975 Supp.). As we have stated earlier in this opinion, our function is not to substitute our judgment for that of the commissioners who are experts in the field of rate making,but rather to determine whether the record exhibits substantial factual differences to justify the differences among the rates per kilowatt hour charged the low,moderate and high volume *645 electricity users. It must be kept in mind that the presumption accorded a commission's order arises only upon compliance with the law and is not unassailable. See Southwestern Bell Telephone Co.v. State, 575 P.2d 624 (Ok1.1978);II/Central Kansas Power Co. v. State Corporation Commission,221 Kan. 505,561 P.2d 779(1977);Burlington Out Now v.Burlington Northern,Inc.,96 Idaho 594, 532 P.2d 936 (1975). Further, while it is true that the burden of showing the impropriety of rates established by a regulatory agency lies with the party challenging the rates, Southwestern Bell Telephone Co.v. State, supra,575 P.2d at 628; State ex rel. Utilities Commission v. Edmisten, 291 N.C. 424, 230 S.E.2d 647 (1976); Louisiana Power&Light Co. v. Louisiana Public Service Commission, supra, La., 343 So.2d at 1044; Alabama Gas Corp.v. Wallace, 293 Ala. 594, 308 So.2d 674 (1975), in this case, LK, that burden does not"require of impecunious associations or private citizens a quantum of evidence beyond their financial means to marshall."American Public Power Association v. Federal Power Commission, 173 U.S.App.D.C. 36, 41, 522 F.2d 142, 147 (1975) (concurring opinion of Judge Bazelon). The presumption of lawfulness and reasonableness of findings can be overcome by a showing that no evidence was presented to sustain the order. Legislative Utility Consumers' Council v. Public Utilities Commission, N.H., 383 A.2d 89 (1978); Kanawha Valley Transportation Co.v. Public Service Commission,W.Va.,219 S.E.2d 332(1975);State ex rel.Utilities Commission v.Edmisten,supra,291 N.C.at 428,230 S.E.2d at 650;Norfolk and Western Ry. Co.v. Commonwealth,215 Va.214,207 S.E.2d 883 (1974). It is not any discrimination that is forbidden by the law but only those which are unreasonable.If it were otherwise,there would be only one rate for all customers,for every classification is in effect a discrimination. Given this record,we cannot say that the declining block residential rate structure is unreasonable as a matter of law. We have determined,however,that there is no factual basis in the record for the present discrimination in the last three *646 blocks of the residential rate structure. HELCO's witness,Kenneth Stretch,testified that the decline in the 300-600 kilowatt hour block was justified by a higher load factor 12 of customers consuming electricity in this block.He testified before the Commission that: vuESTL AVii CD 2024 Thomson Reuters. No claim to original U.S. Government Works. 11