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Watergate East, Inc. v. District of Columbia Public Service Com'n

July 17, 1995

WATERGATE EAST, INC., ET AL., PETITIONERS,
v.
DISTRICT OF COLUMBIA PUBLIC SERVICE COMMISSION, RESPONDENT. WASHINGTON GAS LIGHT COMPANY, INTERVENOR



Petition for Review of a Decision of the District of Columbia Public Service Commission.

Before Terry and Farrell, Associate Judges. and Tignor, Associate Judge of the Superior Court of the District of Columbia.*

The opinion of the court was delivered by: Farrell

FARRELL, Associate Judge: The Public Service Commission of the District of Columbia (the Commission) rejected petitioners' claim that intervenor Washington Gas Light Co. (WGL) had overcharged them for the cost of fuel during a 17-year period. In this court, petitioners challenge the Commission's decision on several grounds, among which is that the Commission failed to adhere to the "filed rate" doctrine. We reject this and petitioners' related contentions, and affirm.

I. Procedural History

On November 22, 1993, petitioners *fn1 filed a complaint with the Commission alleging that from 1976 through 1993, WGL overbilled them by more than $2.1 million by charging them a cost for fuel different from that set forth in WGL's contract rate for the Watergate complex (the Watergate). WGL's contract rate for the Watergate for these years was set forth in a schedule, Rate Schedule W, filed by WGL with the Commission in 1975. The complaint asserted that WGL had calculated the Watergate's fuel adjustment based upon Rate Schedule No. 3, the schedule applicable since 1976 to WGL's "interruptible" customers, rather than upon an earlier Rate Schedule I pertaining to the same class of customers, and to which Rate Schedule W referred. Petitioners alleged that WGL's billing of the Watergate for fuel based on Rate Schedule No. 3 violated the "filed rate" doctrine and D.C. Code § 43-529 (1990), *fn2 and that petitioners had not received adequate notice that WGL's rate for the Watergate might be changed. On December 3, 1993, WGL filed an answer to the complaint.

In Watergate Complex Council v. Washington Gas Light Co., Formal Case No. 932, Order No. 10419 (Pub. Serv. Comm'n April 29, 1994), the Commission issued an opinion dismissing petitioners' complaint without a hearing. It determined that once WGL, in conformance with the rate increase for interruptible customers granted in In re Washington Gas Light Co., Formal Case No. 647, Order No. 5833, 16 PUR 4th 261 (Oct. 29, 1976), had filed Rate Schedule No. 3 with the Commission, Rate Schedule I ceased to exist -- regardless of whether Rate Schedule W still referred to it. The Commission further found that, in early 1976, petitioners received adequate notice that in the proceeding culminating in Order No. 5833, WGL's rate for the Watergate might be changed. And it concluded that neither the filed rate doctrine nor D.C. Code § 43-529, its statutory counterpart, had been violated, because Rate Schedule No. 3 had superseded Rate Schedule I.

On May 31, 1994, petitioners filed with the Commission an application for reconsideration of Order No. 10419. In Watergate Complex Council v. Washington Gas Light Co., Formal Case No. 932, Order No. 10457 (Pub. Serv. Comm'n July 15, 1994), the Commission denied the application, holding that D.C. Code § 43-608 did not require the Commission to provide a formal hearing on petitioners' complaint, and reiterating that "the rates set in [Order No. 5833] were intended to apply to Watergate" and that pursuant to Order No. 5833 and WGL's filing with the Commission of Rate Schedule No. 3, "Rate Schedule No. 3 supplanted Rate Schedule I for purposes of [the purchased fuel adjustment clause of] Rate Schedule W."

Petitioners then filed the instant petition for review of Orders No. 10419 and 10457.

II. The Facts

A. WGL's service to the Watergate

WGL is a public utility with three types of customers: (1) "firm" customers, (2) "interruptible" customers, and (3) "steam and chilled water" customers. Firm customers are customers whom WGL supplies with natural gas. Interruptible customers are customers whom WGL supplies with fuel; for any given period, this fuel may be, in WGL's discretion, either natural gas or a substitute fuel (usually oil). See Office of People's Counsel v. Public Serv. Comm'n, 482 A.2d 404, 412 (D.C. 1984). Steam and chilled water customers are customers whom WGL supplies with steam and chilled water. The Watergate is WGL's only steam and chilled water customer. See Watergate Complex Council v. Washington Gas Light Co., Formal Case No. 932, Order No. 10457 at 3 n.1 (Pub. Serv. Comm'n July 15, 1994).

WGL supplies steam and chilled water to the Watergate for heating and air conditioning. To generate steam and chilled water, the plant facilities, which are located on the Watergate's premises, use natural gas as fuel. Oil is used as a substitute fuel at the Watergate whenever WGL suspends gas service to its interruptible customers. WGL's rate for the Watergate contains two main components: "demand" charges and "commodity" charges. See In re Washington Gas Light Co., Formal Case No. 922, Order No. 10307 at 199 (Pub. Serv. Comm'n Oct. 8, 1993). Demand charges cover the wages of workers who operate and maintain the plant facilities on the Watergate's premises. Commodity charges cover the cost of natural gas and, when substituted, oil.

B. WGL's contract rate for the Watergate

On July 29, 1964, WGL and the Watergate entered into a contract entitled "Agreement for Services" which set forth WGL's proposed rate for the Watergate. On March 18, 1965, the Commission approved the contract between WGL and the Watergate, subject to minor conditions. See In re Washington Gas Light Co., Formal Case No. 503, Order No. 4902, 58 PUR 3rd 1, 5, 23-24 (1965), aff'd per curiam sub nom. Association of Fair Competitive Practices in Air Conditioning, Inc. v. Public Serv. Comm'n, 125 U.S. App. D.C. 361, 372 F.2d 934 (1967). On a number of occasions from 1965 to the present, the Commission has, on application by WGL, modified WGL's rate for the Watergate. See, e.g., Watergate Improvement Ass'n v. Public Serv. Comm'n, 326 A.2d 778, 791-92 (D.C. 1974).

On March 21, 1975, WGL filed with the Commission a schedule, Rate Schedule I, setting forth WGL's rate for interruptible customers. On September 29, 1975, WGL filed with the Commission another schedule, Rate Schedule W, which set forth WGL's rate for the Watergate. The "purchased fuel adjustment" clause of Rate Schedule W revealed that WGL's commodity charges for the Watergate would be calculated partly by reference to the rate set forth in Rate Schedule I. Specifically, the commodity charge for the Watergate would increase or decrease each month along with that month's "[]cost[] for fuel input." Cost for fuel input, in turn, would be ...


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