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Washington Gas Energy Services, Inc. v. District of Columbia Public Service Commission

May 3, 2007

WASHINGTON GAS ENERGY SERVICES, INC., PETITIONER,
v.
DISTRICT OF COLUMBIA PUBLIC SERVICE COMMISSION, RESPONDENT.



The opinion of the court was delivered by: Farrell, Associate Judge

Petitions for Review of Orders of the District of Columbia Public Service Commission.

Argued April 10, 2007

Before FARRELL and THOMPSON, Associate Judges, and ISCOE, Associate Judge of the Superior Court of the District of Columbia.*fn1

These petitions concern the validity of a rule adopted by the District of Columbia Public Service Commission (the PSC or the Commission) setting forth the formula by which unregulated electricity and natural gas suppliers and telecommunications providers are assessed their portion of the statutorily-required reimbursement to the District of Columbia for the annual operating budgets of the PSC and the Office of People's Counsel (the OPC). The PSC originally adopted the formula by rulemaking in the late 1990's and applied it to the existing, publicly-regulated utilities in the District. However, in a series of legislative actions beginning in the year 2000, the Council of the District of Columbia effectively deregulated the retail supply of electricity and natural gas and the provision of telecommunications service in the District.*fn2 The PSC has since, by rule, extended application of the formula to unregulated suppliers such as Washington Gas Energy Services, Inc. (WGES), the petitioner in this case.

In Washington Gas Energy Servs., Inc. v. District of Columbia Public Serv. Comm'n, 893 A.2d 981 (D.C. 2006) (hereinafter WGES I), WGES and Pepco Energy Services, Inc. (PES), disputed reimbursement charges imposed on them under the rule for the fiscal years 2003 and 2004. Although they challenged the rule both substantively (as violating the relevant statute and as arbitrary or capricious) and procedurally, this court reached only the latter challenge, holding that the PSC had adopted the rule without complying with the notice and comment provisions of the District of Columbia Administrative Procedure Act (DCAPA), D.C. Code § 2-501 et seq. (2001). See WGES I, 893 A.2d at 987-90.*fn3 Meanwhile,

[i]n January of 2005, the PSC [had] essentially started the rulemaking process anew by publishing notice in the D.C. Register that it was undertaking a rulemaking to establish a formula for assessments of electricity suppliers. 52 D.C. Reg. 584 (Jan. 21, 2005). Following the deregulation of gas suppliers in early 2005, the PSC amended its proposed rule in May of 2005 to include gas suppliers. 52 D.C. Reg. 4618 (May 13, 2005).

Id. at 984 n.1. From that rulemaking arises the instant petition for review, in which WGES (not joined this time by PES) challenges the rule - and the formula it contains - on two grounds: first, that the rulemaking again violated the DCAPA, this time because the PSC, "though it went through the required motions, has not engaged in true notice and comment rulemaking" in that it "disregarded" comments received that opposed the formula previously adopted (Br. for Pet. at 6); and second, that the formula adopted is arbitrary or capricious and in violation of the governing statute, D.C. Code § 34-912 (b). We hold that the PSC violated no duty to keep an "open mind" in considering the comments to the proposed rule, and adequately addressed those comments in writing. We further hold that the rule as adopted is neither prohibited by statute nor arbitrary or capricious.

I.

D.C. Code § 34-912 (b)(1) (2007) provides, as relevant here:

All amounts appropriated for the [PSC] and the [OPC] for each fiscal year . . . shall be repaid . . . by [the public utilities,] the natural gas suppliers, electricity suppliers and telecommunications services providers as a reimbursement fee.*fn4

In explaining how the reimbursement is to be calculated, section (b) further distinguishes between the unregulated (also variously termed by the parties "alternative" or "competitive") suppliers or providers and the regulated public utilities, including Pepco and Washington Gas Light Company:

(2) The amount of the reimbursement fee to be paid by each natural gas supplier, electricity supplier, and local [telecommunications] exchange carrier, that is not the incumbent local exchange carrier[,] . . . authorized to provide service in the District, and the formula through which such an amount shall be annually established, shall be determined by the [PSC].

(3) The amount of the reimbursement fee to be paid by each public utility . . . shall be equal to the product of the amounts appropriated, less the amount to be reimbursed by the providers subject to paragraph (2) of this subsection, multiplied by the fraction . . . represented by the revenues of such public utility derived from utility operations in the District . . . that are regulated by the [PSC] during the immediately preceding fiscal year . . . divided by the gross revenues of all public utilities from utility operations in the District . . . during such period.

Thus, while the statute prescribes a formula based on gross revenues for calculating the public utilities' portion of the total reimbursement, it leaves to the PSC to determine how an ...


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