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Apartment and Office Building Association of Metropolitan Washington v. Public Service Commission of the District of Columbia

Court of Appeals of The District of Columbia

March 7, 2019

Apartment and Office Building Association of Metropolitan Washington, Petitioner,
v.
Public Service Commission of the District of Columbia, Respondent, and The District of Columbia, The People's Counsel of the District of Columbia, and Potomac Electric Power Company, Intervenors.

          Argued September 20, 2018

          On Petition for Review of Orders of the Public Service Commission of the District of Columbia FC-1145-17

          Excetral K. Caldwell, with whom Frann G. Francis was on the brief, for petitioner.

          Naza N. Shelley, with whom Christopher G. Lipscombe and Richard S. Herskovitz were on the brief, for respondent.

          James C. McKay, Jr., Senior Assistant Attorney General, with whom Karl A. Racine, Attorney General for the District of Columbia, Loren L. AliKhan, Solicitor General, and Stacy L. Anderson, Acting Deputy Solicitor General, were on the brief, for the District of Columbia, intervenor.

          Zachary C. Schauf, with whom Wendy E. Stark, Kim Hassan, Andrea H. Harper, Dennis P. Jamouneau, and David W. DeBruin were on the brief, for Potomac Electric Power Company, intervenor.

          Sandra Mattavous-Frye, People's Counsel, Karen R. Sistrunk, Deputy People's Counsel, and Travis R. Smith, Sr., Trial Supervisor, filed a statement in lieu of brief.

          Kristi Singleton was on the brief for amicus curiae, General Services Administration, in support of petitioner.

          Before Fisher and Thompson, Associate Judges, and Greene, Senior Judge of the Superior Court of the District of Columbia. [*]

          Fisher, Associate Judge

         Several powerful storms hit the District of Columbia area between 2003 and 2012, causing significant damage to the electrical distribution system and leaving many customers without power for long periods of time. A task force created in 2013 concluded that the frequency of power outages would decrease and consumers of electricity would benefit if overhead power lines were moved underground. Office of the Mayor, Gov't of D.C., Mayor's Power Line Undergrounding Task Force Findings & Recommendations at 5-6, 8-10 (Oct. 2013). The Council of the District of Columbia ("Council") decided to authorize this initiative in the Electric Company Infrastructure Improvement Financing Act of 2014 ("ECIIFA"), D.C. Code §§ 34-1311.01-1315.01 (2015 Supp.); see also D.C. Law 20-102 (Act 20-290) (March 3, 2014).

         This case arises from Public Service Commission ("Commission") orders which approved a plan identifying six electric feeder lines to be placed underground. The principal issue is the allocation of costs between commercial and residential customers. The Apartment and Office Building Association of Metropolitan Washington ("AOBA" or "Petitioner") asserts that the Commission failed to exercise its authority to allocate those costs, that the statute governing allocation contravenes the Home Rule Act, and that AOBA's due process rights were violated. We affirm the Commission's rulings.

         I. Procedural History

         Debate concerning allocation of costs between residential and commercial customers had occurred in Pepco rate cases well before the undergrounding project began. Commercial customers protested that they were being required to subsidize services for residential customers. It was estimated that the first phase of the Undergrounding Initiative would cost approximately $500 million, and this high price tag renewed the debates about subsidization.

         Sections 34-1313.01 and 34-1313.10 of the 2014 ECIIFA contained provisions requiring the Commission to allocate costs "in accordance with" "the electric company's most recent base rate case." D.C. Code § 34-1313.01(a)(4) (2015 Supp.) (the Commission "shall" assess charges for undergrounding "among the distribution service customer classes of the electric company in accordance with the distribution service customer class cost allocations approved by the Commission for the electric company and in effect pursuant to the most recent base rate case"); § 34-1313.10(c)(1) (2015 Supp.) (the Commission "shall" authorize the electric company to collect charges "in accordance with the distribution service customer class cost allocations approved by the Commission for the electric company and in the electric company's most recent base rate case").[1] In these provisions, the term "distribution service customer class cost allocations" was used but not defined, which led to confusion. Id.; see also D.C. Code § 34-1311.01 (2015 Supp.).

         The Commission's first effort to allocate these costs, Formal Case Nos. 1116 and 1121, generated an appeal. AOBA challenged the Commission's cost allocation decisions and argued that the Commission had misconstrued the disputed term. Apartment & Office Bldg. Ass'n of Metro. Washington v. Pub. Serv. Comm'n of the District of Columbia, 129 A.3d 925, 929 (D.C. 2016).

         In 2015, after AOBA submitted its initial brief in the previous appeal, the Council amended ECIIFA to include a definition of "distribution service customer class cost allocations." Id.; see also D.C. Code § 34-1311.01(8A) (2018 Supp.). We held that the newly amended statute applied to the pending appeal. 129 A.3d at 931. In addition, we held that the amended statute required the cost allocation to "be made on the basis of the total rate class distribution service revenue approved by the Commission in the most recent base rate case, minus the customer charge revenue approved by the Commission in the most recent base rate case." Id. at 934 (citing D.C. Code § 34-1313.01(a)(4); § 34-1313.01(c)(1); § 34-1311.01(8A)). In other words, "the amended statute directs the Commission to take as a given the allocation of costs in the most recent base rate case." Id.

         This court emphasized that the Council's "directive [did] not leave room for the Commission in the undergrounding proceedings to independently address issues of subsidization." Id. We noted, however, that the Commission's allocation of costs in future base rate cases "could well affect the allocation of costs in future orders issued in connection with the undergrounding project." Id. (citing D.C. Code § 34-1313.01(a)(4)).

         The project did not go forward at that time and the Council amended ECIIFA again effective July 11, 2017, to modify a portion of the funding structure. See D.C. Code §§ 34-1311.01-1315.01 (2018 Supp.). Under the statute, the Potomac Electric Power Company ("Pepco") and the District of Columbia Department of Transportation ("DDOT") are required to jointly file every two years an application for the Commission's approval consisting of a Biennial Underground Infrastructure Improvement Projects Plan and a Financing Order. D.C. Code § 34-1313.07(a) (Oct. 2017 Supp.). The Commission "may hold in abeyance or waive the obligation to file an application for approval" upon a finding of good cause as judged by certain enumerated criteria. Id. at § 34-1313.07(d).

         Pepco and DDOT submitted their Joint Application to the Commission on July 3, 2017, initiating Formal Case No. 1145. They updated that application in August 2017. The Commission ultimately approved the proposed plan and denied motions for reconsideration.[2] Petitioner AOBA now challenges these and related orders. Pepco, the District of Columbia, and the Office of People's Counsel ("OPC") intervened in the case before this court, supporting the Commission.

         II. Standard of Review

         This court has jurisdiction to hear appeals from certain orders of the Public Service Commission of the District of Columbia. D.C. Code § 34-605 (2012 Repl.). Under D.C. Code § 34-606 (2012 Repl.), our scope of review is "limited to questions of law, including constitutional questions; and the findings of fact by the Commission shall be conclusive unless it shall appear that such findings . . . are unreasonable, arbitrary, or capricious."

          This court reviews issues of statutory interpretation de novo. Myerson v. United States, 98 A.3d 192, 197 (D.C. 2014). In reviewing the Commission's orders, we must affirm "[i]f there is 'substantial evidence to support the Commission's findings and conclusions and the Commission has given reasoned consideration to each of the pertinent factors.'" 129 A.3d at 930 (citing Potomac Elec. Power Co. v. Pub. Serv. Comm'n of D.C., 457 A.2d 776, 782 (D.C. 1983)). "Even if the court disagrees with the Commission, if the Commission has fully and clearly explained what it does and why it does it, and the agency decision is supported by substantial evidence, the court, upon a finding that the Commission order is reasonable ...


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