Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Portsmouth Water and Fire District v. Rhode Island Public Utilities Commission

Supreme Court of Rhode Island

December 6, 2016

Portsmouth Water and Fire District
v.
Rhode Island Public Utilities Commission.

         Rhode Island Public Utilities Commission (4025)

          For Petitioner: Adam Ramos, Esq. Gerald J. Petros, Esq.

          For Respondent: Joseph A. Keough, Esq. Leo J. Wold, Esq. Karen O. Lyons, Esq.

          Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

          OPINION

          Francis X. Flaherty Associate Justice

         This case came before the Supreme Court for argument on November 3, 2016, pursuant to a statutory petition for a writ of certiorari filed in accordance with G.L. 1956 § 39-5-1. The petitioner, Portsmouth Water and Fire District (Portsmouth), seeks review of a Public Utilities Commission (PUC) order issued in response to this Court's remand order that required the PUC to make more specific findings of fact in a rate case involving the City of Newport's Utility Department, Water Division (Newport Water or utility). After carefully considering the record in this case, we affirm in part and vacate in part the PUC's order.

         I

         Facts and Travel

         A

         Background and Prior Litigation

         Like immiscible liquids, Portsmouth and Newport Water have not mixed well in the arena of rate filings. The origins of this case date back more than thirteen years and stem from Newport Water's November 2003 application with the PUC-designated by that body as docket No. 3578-requesting a revenue increase. The filing precipitated a dispute between Newport Water and its wholesale customers[1] concerning several issues, including $2.5 million for services that the City of Newport had provided to Newport Water that the utility claimed it owed to the city. The case was resolved through a PUC-approved settlement in which the utility was allowed to repay $2.5 million in debt that it owed to the city. Also, as part of that agreement, the utility agreed "that it will not seek to recover in rates any additional monies that it may borrow from the City of Newport up through and including June 30, 2005." Newport Water further agreed that, if it borrowed any money from the city subsequent to that date, such a "loan shall be reflected by appropriate documentation and Newport Water shall have the duty to monitor and track its costs and properly account for how the loan proceeds are applied."

         On January 29, 2007, Newport Water filed another rate application with the PUC- designated docket No. 3818-again requesting a revenue increase.[2] During that proceeding, evidence surfaced that Newport Water owed $1, 584, 171 to the city for payroll, city service charges, sewer bills, and other items.[3] On March 24, 2008, the PUC issued an order in docket No. 3818 that said in part:

"The [PUC] finds that the $1, 584, 171 should be paid back to the City. The [PUC] will not include this repayment to the City in Newport Water's revenue requirement, but if Newport Water realizes savings from efficiencies, and such funds are not required for expenses included in the revenue requirement, it may use such savings to pay down the accounts payable balance owed to the City."

         On December 9, 2008, Newport Water filed yet another application for a rate increase- docket No. 4025-and it is that filing that has spawned the litigation in this case.[4] During the litigation surrounding docket No. 4025, an issue that became contentious was whether Newport Water had violated the dictates of the above quoted language from the order in docket No. 3818. Specifically, the parties addressed the following prebriefing question that the PUC issued: "Whether the issue of repayment to the City * * * in the amount of $1, 584, 171 has been decided by [the order in docket No. 3818]. If so, can and should the [PUC] revisit this issue in the instant docket[?]"

         The PUC held an open meeting on June 25, 2009, during which it attempted to resolve the issue at hand. Portsmouth argued that Newport Water should be allowed to repay the city using only savings from efficiencies that were not required for expenses included in the revenue requirement. The PUC, however, did not agree; it ruled that Portsmouth's interpretation of the order in docket No. 3818 was incorrect. The PUC held that it "did not clearly require" savings to be created through efficiencies as a condition precedent to the utility's repayment to the city. Rather, the order merely "set forth * * * the amount which was to be repaid to the City at the time of the hearing in Docket No. 3818, but not included in Newport Water's Revenue Requirement." Additionally, the PUC determined that Newport Water had, in fact, realized "savings, " had not violated the PUC's previous order, and that "none of the disputed repayments should be disallowed."

         On March 29, 2010, the PUC issued a report and order in docket No. 4025 that encompassed the June 25, 2009, open meeting (hereinafter report and order). Within that report and order, the PUC detailed Newport Water's "net cost savings, " relying heavily on the testimony of Ms. Julia Forgue, director of utilities for the city. Specifically, the PUC noted that Newport Water's net cost savings arose from the following: "employee turn-over and the lack of a new labor contract"; "a City policy change regarding the payment of landline telecommunications costs"; reduced use of heavy equipment "due to a lack of any large main breaks"; "a change in Dam Safety Regulations and a decision to limit raw material purchases for dam repairs and tree removals"; "management decisions * * * regarding the hiring of temporary employees"; reduced spending on conferences and training; a "reduction of inventory and office supply purchases"; and other budgeted costs that were lower than anticipated in the revenue requirement. The PUC found that all funds that had been realized through the above mentioned savings were available to Newport Water "to reduce its payables to all vendors, including the City." Additionally, the PUC also recognized that Newport Water realized savings through "the specific types of efficiencies discussed * * * in Docket No. 3818." In particular, the PUC identified Newport Water's transition to quarterly billing and its implementation of radio reads[5]as "efficiencies." The PUC held that the aforementioned efficiencies were "a means to commence the required repayment" of Newport Water's $1, 584, 171 debt owed to the city.

         Portsmouth, feeling aggrieved by the PUC's report and order of March 29, timely petitioned this Court for a writ of certiorari under § 39-5-1, which we issued on April 21, 2010. When the case was argued before this Court, Portsmouth asserted that the PUC's order in docket No. 3818 clearly prohibited Newport Water from repaying the city with funds that had been included in the revenue requirement. The gravamen of Portsmouth's argument was that Newport Water violated the PUC's repayment order because, in Portsmouth's view, it did not realize any "savings from efficiencies." Instead, Portsmouth averred that Newport Water took money from items that had been included in its revenue requirement and diverted it to the city.

         This Court addressed those issues in Portsmouth Water and Fire District v. Rhode Island Public Utilities Commission, 37 A.3d 114 (R.I. 2012) (mem.) (Portsmouth Water I). We rejected the PUC's argument that "the production of 'efficiencies' was * * * merely a means to commence the required repayment at the time of the Order without increasing rates." Id. at 117. Ultimately, it was our "opinion that the PUC did not make sufficient findings of fact to support its conclusion that Newport Water complied with the order in docket No. 3818." Id. We were troubled by the fact that the PUC "did not specifically identify the sources of [the] 'net cost savings, ' or quantify them, such that we can determine whether the utility realized $1, 584, 171 of 'savings from efficiencies' that were 'not required for expenses included in the revenue requirement.'" Id. Consequently, we vacated the PUC's order in docket No. 4025 to the extent that it failed to enforce the order in docket No. 3818, and we issued a remand order to the PUC "with directions that it make more specific findings of fact to support its conclusion that Newport Water complied with the order in docket No. 3818." Id. at 118.

         B

         The PUC's Order on Remand

         On remand, the PUC determined that further hearings were not required, [6] and it considered the matter at an open meeting on August 8, 2012. Then, on August 10, 2012, the PUC issued a written order in response to this Court's remand order (hereinafter order on remand). Using the records already available in docket No. 4025, the PUC identified areas of savings and reductions that it believed "were the types of things the Commission anticipated when referencing efficiencies." Specifically, the PUC found savings and reductions "relate[d] to items that unexpectedly came in below budgeted levels" as follows:

"(1) employee retirements; (2) absenteeism due to disability leave; (3) a reduction in overtime based on a reduction in water main breaks; (4) opt-outs for family health care; (5) reduced participation in the tuition reimbursement benefit; (6) change in City policy regarding payment for phone service; (7) reduced need for heavy equipment rental due to reduction in water main breaks, reservoir maintenance not needed because of new DEM regulations; (8) delay in sewer startup reducing the payments owed by NWD; (9) less than anticipated regulatory fees from RIDOH, anticipated service contract not required in FY 2008; (10) no self insurance needed in FY 2008; (11) no layoffs requiring no unemployment claims; and (12) other reductions ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.