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 60 Haw.625 Supreme Court of Hawaii. In the Matter of the Application of HAWAII ELECTRIC LIGHT CO., INC.,for Approval of Rate Increases and Revised Rate Schedules. No.6111. April 24, 1979. Synopsis Appeal was taken from Public Utilities Commission's decision,which granted electric utility's request for 8.95%Rate of return on its rate base and for a revised residential structure, and from Commission's denials of petitions for reconsideration. The Supreme Court,Ogata,J.,held that:(1)cost of equity of such utility,which was a wholly owned subsidiary,could be determined on basis of cost of equity capital to the parent;(2)earnings studies in regard to other utilities could be considered in determining the electric utility's equity return costs; (3)Commission's determination that 8.95%Was a fair rate of return for utility was not clearly erroneous; (4) utility, which requests rate increase so as to enable it to earn a rate of return previously authorized by Commission, must show that it is still entitled to the same rate of return; (5) Commission did not sufficiently state the facts supporting its decision that utility's declining block residential rate structure was just and reasonable; (6) fact that declining block structure had been used by other facilities, qualifications of electric utility's expert witness and costs of service study did not provide a rational basis for the discrimination in the last three blocks of the declining block structure, and (7) absent any justification for the discrimination within that structure, such structure,which promoted use of electricity,was contrary to state and national public policy. Affirmed in part,and remanded in part for further proceedings. **614 Syllabus by the Court 1. *625 Under the clearly erroneous standard, the court will reverse an agency's findings if the court is left with a firm and definite conviction that a mistake has been made. 2. In order to preserve the function of administrative agencies in discharging their delegated duties and the function of an appellate court in reviewing agency determinations, an agency's findings, if supported by reliable, probative and substantial evidence,will be upheld. 3. A presumption of validity is accorded to the Commission's decisions so long as it has acted within its scope of expertise. 4. A rate of return is the percentage rate of earnings on the rate base allowed a utility after making provision for operating expenses,depreciation,taxes and other direct operating costs. 5. In setting a fair rate of return, the commission must protect the interests of the utility's investors and the interests of the utility's customers. 6. Where the utility company is a wholly-owned subsidiary,the subsidiary's cost of equity may be determined on the basis of the cost of equity capital to the parent.