{ "id": 8525335, "name": "STATE OF NORTH CAROLINA ex rel. UTILITIES COMMISSION; CAROLINA POWER AND LIGHT COMPANY (Applicant); CHAMPION INTERNATIONAL CORPORATION; and RUFUS L. EDMISTEN, Attorney General v. THE PUBLIC STAFF-NORTH CAROLINA UTILITIES COMMISSION; and NORTH CAROLINA TEXTILE MANUFACTURERS ASSOCIATION, INC.", "name_abbreviation": "State ex rel. Utilities Commission v. Public Staff-North Carolina Utilities Commission", "decision_date": "1982-08-03", "docket_number": "No. 8110UC392", "first_page": "480", "last_page": "494", "citations": [ { "type": "official", "cite": "58 N.C. App. 480" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "76 N.C. 204", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8689489 ], "year": 1877, "opinion_index": 0, "case_paths": [ "/nc/76/0204-01" ] }, { "cite": "133 S.E. 1", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1926, "opinion_index": 0 }, { "cite": "191 N.C. 775", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8631524 ], "year": 1926, "opinion_index": 0, "case_paths": [ "/nc/191/0775-01" ] }, { "cite": "13 S.E. 2d 622", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1941, "opinion_index": 0 }, { "cite": "219 N.C. 347", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8623250 ], "year": 1941, "opinion_index": 0, "case_paths": [ "/nc/219/0347-01" ] }, { "cite": "75 S.E. 2d 884", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1953, "opinion_index": 0 }, { "cite": "237 N.C. 619", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8617001 ], "year": 1953, "opinion_index": 0, "case_paths": [ "/nc/237/0619-01" ] }, { "cite": "232 S.E. 2d 184", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1977, "pin_cites": [ { "page": "196" } ], "opinion_index": 0 }, { "cite": "291 N.C. 451", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8558677 ], "year": 1977, "pin_cites": [ { "page": "472" } ], "opinion_index": 0, "case_paths": [ "/nc/291/0451-01" ] }, { "cite": "263 S.E. 2d 559", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1980, "opinion_index": 0 }, { "cite": "299 N.C. 504", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8575321 ], "year": 1980, "opinion_index": 0, "case_paths": [ "/nc/299/0504-01" ] }, { "cite": "242 S.E. 2d 862", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1978, "opinion_index": 0 }, { "cite": "294 N.C. 598", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8574144 ], "year": 1978, "opinion_index": 0, "case_paths": [ "/nc/294/0598-01" ] }, { "cite": "273 S.E. 2d 462", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1980, "pin_cites": [ { "page": "462" } ], "opinion_index": 0 }, { "cite": "301 N.C. 531", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8569522, 8569653, 8569558, 8569688, 8569628 ], "year": 1980, "opinion_index": 0, "case_paths": [ "/nc/301/0531-01", "/nc/301/0531-04", "/nc/301/0531-02", "/nc/301/0531-05", "/nc/301/0531-03" ] }, { "cite": "269 S.E. 2d 657", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 11, "year": 1980, "pin_cites": [ { "page": "661" }, { "page": "662" }, { "page": "661" }, { "page": "662" }, { "page": "661" }, { "page": "661" }, { "page": "661" }, { "page": "662" } ], "opinion_index": 0 }, { "cite": "48 N.C. App. 453", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8551183 ], "year": 1980, "pin_cites": [ { "page": "460" } ], "opinion_index": 0, "case_paths": [ "/nc-app/48/0453-01" ] }, { "cite": "203 S.E. 2d 48", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1974, "pin_cites": [ { "page": "50" } ], "opinion_index": 0 }, { "cite": "285 N.C. 77", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8561764 ], "year": 1974, "pin_cites": [ { "page": "79-80" } ], "opinion_index": 0, "case_paths": [ "/nc/285/0077-01" ] } ], "analysis": { "cardinality": 921, "char_count": 34569, "ocr_confidence": 0.796, "pagerank": { "raw": 2.593781224336261e-07, "percentile": 0.8188730308214881 }, "sha256": "5efee10afd0b42bfdaa40cb1c4a2cc33a0ee6539505fdc27227b80a5a674ce42", "simhash": "1:7ac1018473523c24", "word_count": 5661 }, "last_updated": "2023-07-14T18:20:52.636886+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Chief Judge MORRIS and Judge VAUGHN concur." ], "parties": [ "STATE OF NORTH CAROLINA ex rel. UTILITIES COMMISSION; CAROLINA POWER AND LIGHT COMPANY (Applicant); CHAMPION INTERNATIONAL CORPORATION; and RUFUS L. EDMISTEN, Attorney General v. THE PUBLIC STAFF-NORTH CAROLINA UTILITIES COMMISSION; and NORTH CAROLINA TEXTILE MANUFACTURERS ASSOCIATION, INC." ], "opinions": [ { "text": "HEDRICK, Judge.\nWe first note that the statute out of which the proceedings before the Commission, and from which the Commission\u2019s order emanated, G.S. \u00a7 62434(e), has since been repealed by 1981 N.C. Sess. Laws Ch. 1197, \u00a7 2 (enacted 17 June 1982). The Chapter containing such repeal nowhere states the effect of the repeal on already pending G.S. \u00a7 62434(e) proceedings, but does state, \u201call rates and changes under G.S. \u00a7 62434(e) shall terminate not later than December 1, 1982.\u201d 1981 N.C. Sess. Laws Ch. 1197, \u00a7 3 (enacted 17 June 1982). Since the rate increase challenged in the present case pertained to a period well before December 1, 1982, and since \u201c[a] statute will not be construed to have retroactive effect unless that intent is clearly expressed or arises by necessary implication,\u201d In re Will of Mitchell, 285 N.C. 77, 79-80, 203 S.E. 2d 48, 50 (1974), we will treat G.S. \u00a7 62434(e) as the controlling statute notwithstanding its repeal as to certain fuel adjustment proceedings which are held later than the proceedings at issue in the present case.\nThe first assignments of error brought forward in the intervenor\u2019s briefs relate to the Commission\u2019s denial of a motion to have the instant fuel adjustment proceedings, which were being conducted pursuant to G.S. \u00a7 62434(e), consolidated with a CP&L general rate case already in progress and being conducted pursuant to G.S. \u00a7 62-133. Interveners argue that the Commission\u2019s Order allowing an upward adjustment, based on increased costs of fuel, in CP&L\u2019s rates was reversible error in that such adjustment was made in an expedited G.S. \u00a7 62434(e) proceeding, which provides for no inquiry into the reasonableness of the increased fuel costs upon which such adjustment is based, rather than in an available, then-pending CP&L general rate case, in which inquiries into the reasonableness of CP&L\u2019s management practices are required. Intervenors also argue that the Commission\u2019s Order allowing a G.S. \u00a7 62434(e) rate adjustment was further tainted with reversible error in that the challenged Commission Order in the instant proceeding (Docket No. E-2, Sub 402) was incorporated into the Commission\u2019s Order in the general rate case (Docket No. E-2, Sub 391), dated 15 January 1981, thereby effectively exempting CP&L\u2019s fuel costs from any inquiry into their reasonableness, even in a general rate case.\nG.S. \u00a7 62434(e) states in pertinent part:\nNotwithstanding the provisions of this Article, upon application by any public utility for permission and authority to increase its rates and charges based solely upon the increased cost of fuel used in the generation or production of electric power, the Commission shall suspend such proposed increase for a period not to exceed 90 days beyond the date of filing such application to increase rates. . . . The Commission shall promptly investigate applications filed pursuant to provisions of this subsection and shall hold a public hearing within 30 days of the date of the filing of the application to consider such application, and shall base its order upon the record adduced at the hearing, such record to include all pertinent information available to the Commission at the time of hearing. The order responsive to an application shall be issued promptly by the Commission. ... A proceeding under this subsection shall not be considered a general rate case.\nBy the clear and express language of G.S. \u00a7 62434(e), \u201cthe legislature has provided a procedure by which a public utility may apply to the Utilities Commission for authority to increase its rates and charges based solely upon the increased cost of fuel used in the generation of electric power. . . .\u201d State ex rel. Utilities Commission v. Virginia Electric and Power Co. [hereinafter referred to as \u201cVepco\u201d], 48 N.C. App. 453, 460, 269 S.E. 2d 657, 661, disc. rev. denied, 301 N.C. 531, 273 S.E. 2d 462 (1980) [emphasis in original]. The legislature enacted G.S. \u00a7 62434(e) not as a substitute for a general rate case, but to provide an expedited procedure by which the volatile and uncontrollable prices of fuels could be quickly taken into account in a utility\u2019s rates and charges. Id. \u201c|P]lant efficiency as it bears upon fuel cost is not a factor to be considered in the limited and expedited proceeding provided for by G.S. \u00a7 62434(e).\u201d Id. at 462, 269 S.E. 2d at 662. Since \u201c[t]he procedure provided [by G.S. \u00a7 62434(e)] is an expedited one \u2018and shall not be considered a general rate case,\u2019 \u201d Id. at 460, 269 S.E. 2d at 661 [footnote omitted], inquiries into the reasonableness of the fuel costs incurred (other than the reasonableness of the prices paid for such fuel) are not proper in a fuel adjustment proceeding. See Id.\nOn the other hand, review by the Utilities Commission of the reasonableness of \u201cmanagement decisions . . . in a general rate case is not only entirely appropriate but even necessaryf;]. . . the Utilities Commission . . . [must] take into account the efficiency of the company\u2019s operations in fixing its rates in a general rate case as provided in G.S. 62-133.\u201d Id. at 461-62, 269 S.E. 2d at 662 [emphasis in original]. This requirement, for general rate cases, of an inquiry into the reasonableness of incurred costs extends to fuel costs incurred by the utility. See Id. and G.S. \u00a7 62433(b)(3), requiring the Commission, in a general rate case, to ascertain the \u201cutility\u2019s reasonable operating expenses.\u201d [Emphasis added.]\nHence, a fuel adjustment proceeding under G.S. \u00a7 62434(e) and a general rate case under G.S. \u00a7 62433 are entirely different in their functions and basic procedures. This fundamental difference between the two justifies the action of the Commission in hearing CP&L\u2019s application for a rate adjustment based solely on the increased cost of fuel in a G.S. \u00a7 62434(e) proceeding rather than in the then-pending general rate case, since such adjustments for increased fuel costs are to be made in expedited G.S. \u00a7 62434(e) proceedings.\nIntervenors, however, are concerned that if adjustments for fuel cost increases are always rendered in expedited G.S. \u00a7 62434(e) proceedings, in which the reasonableness of the increases are irrelevant, then public utilities will always be able to achieve virtually automatic rate increases based on their increased costs of fuel, even if the utilities were manifestly unreasonable in incurring such increases. Their concern is unwarranted. Rate adjustments granted pursuant to G.S. \u00a7 62434(e) are purely interim adjustments made to a base rate previously determined in a G.S. \u00a7 62-133 general rate case; the holding of general rate cases subsequent to fuel adjustment proceedings assures that a utility\u2019s fuel costs will be scrutinized for reasonableness. First, a base rate taking all considerations of reasonableness into account (including the reasonableness of fuel costs) is determined in a general rate case. In the interim between the general rate case establishing that base rate, rx, and the next general rate case establishing base rate r2, any number of rate adjustments based solely on the changing cost of fuel may be made to rx, and the effect of such adjustments is cumulative. Hence, if in the interim between rx and r2, three expedited fuel adjustment proceedings are held and have produced respective adjustments to rx of ax, a2, and a3, the adjusted rate after those three proceedings will be rx + ax + a2 + a3. This adjusted rate may include upward adjustments which are based on absolutely unreasonable fuel costs, yet until the next general rate case such adjustments are permissible. When such a general rate case is held, however, the resulting rate established therein, r2, is based on only those expenditures (including fuel expenditures) which are reasonable, Vepco, supra, and is the new base rate \u2014 rx and the adjustments thereto are superseded and of no further force. In this manner, utility rates, including that portion attributable to fuel costs, are periodically made to reflect reasonableness.\nIn the present case, the Commission properly considered the application for a fuel cost-based adjustment in a separate G.S. \u00a7 62434(e) proceeding, rather than consolidating that application with the then-pending general rate case. The application for a fuel cost-based adjustment was entitled to the expedited consideration of a G.S. \u00a7 62434(e) proceeding, and even if the adjusted rate ordered in the G.S. \u00a7 62434(e) proceeding were eventually superseded by the reasonable rate established in the then-pending general rate hearing, it would be of valid force until so superseded. Further, the intervenor appellants have shown us nothing in the record to prove that the Commission did not follow the proper procedures, as discussed supra, for a G.S. \u00a7 62434(e) adjustment.\nUnder these assignments of error pertaining to the Commission\u2019s refusal to consolidate, intervenors additionally cite as grounds for reversal of the Commission\u2019s Order in Docket No. E-2, Sub 402, the following language from the \u201cOrder Granting Partial Increase in Rates and Charges\u201d entered 15 January 1981 in the concurrent general rate case, Docket No. E-2, Sub 391:\nIn addition, the Commission has considered the matter of the appropriate fuel base to be used in the final rates approved in this case. Docket No. E-2, Sub 402, was consolidated with this docket in order to allow full consideration of this matter. The fuel cost and resulting fuel factor found to be appropriate in that docket is just and reasonable, and the Commission affirms its decision in Docket E-2, Sub 402. The rates approved in this docket should reflect the fuel charges approved in Docket No. E-2, Sub 402.\nIntervenors argue that this language shows that the Commission, in the general rate hearing numbered E-2, Sub 391, used expedited G.S. \u00a7 62434(e) methodology in setting the fuel cost portion of CP&L\u2019s general rate, rather than the full-blown G.S. \u00a7 62-133 procedures required of a general rate case. This argument, however, is not grounds for reversal of the Commission\u2019s Order challenged in the present case, which was a fuel adjustment proceeding. However erroneous the Commission\u2019s procedures may have been in Docket No. E-2, Sub 391, such alleged errors have no bearing on the appeal from the order challenged in the present case, which was entered in Docket No. E-2, Sub 402. These assignments of error are overruled.\nIntervenor North Carolina Textile Manufacturers Association (NCTMA) next assigns error to the Commission\u2019s consideration of CP&L\u2019s systemwide fuel cost per kilowatt-hour for the relevant historical test period in determining the appropriate adjustment in future rates based solely on the increased cost of fuel. The argument here presented is that the Commission was required to consider the total fuel cost per unit for only that electricity consumed by North Carolina retail customers. It is not clear to us that there is any difference between CP&L\u2019s systemwide fuel cost per unit of electricity, and its fuel cost per unit of electricity consumed by North Carolina retail customers, and assuming arguendo that the North Carolina figure may be segregated from the systemwide figures, we are aware of no requirement that the Commission perform such a segregation and rely on only the segregated North Carolina fuel cost per unit in allowing adjustments pursuant to an expedited G.S. \u00a7 62434(e) proceeding. This assignment of error is overruled.\nIntervenor NCTMA next assigns error to the Commission\u2019s inclusion, in the rate adjustment permitted CP&L, of an amount for the increased gross receipts taxes CP&L would incur on the additional revenues it receives pursuant to the upward adjustment based on increased fuel costs. NCTMA argues that such an allowance is for something other than the increased cost of fuel, that it duplicates allowances made in the subsequent general rate case, and that the allowance is improper since the amount of additional revenues, and of the gross receipts taxes thereon, have not yet even been incurred.\nG.S. \u00a7 105-116 imposes a tax of six percent on the gross receipts of electric utility companies. As will be demonstrated below, an allowance in a G.S. \u00a7 62434(e) proceeding for this gross receipts tax factor is a permissible method of effecting the purpose, as described in Vepco, supra, of G.S. \u00a7 62434(e), which is to enable utilities to receive an expedited adjustment of their rates based on the volatile and uncontrollable costs of fuel. If the Commission, in a fuel adjustment proceeding, determines that fuel costs in the relevant historical test period require an upward adjustment of some amount a for the billing period in question, then the utility\u2019s revenues per kilowatt-hour will be increased by a but then decreased by .06a, the gross receipts tax factor. Hence, without an adjustment for the gross receipts tax factor, the utility would not receive an adjustment, a, sufficient to keep up with its increased fuel costs, but would receive a net amount less than a, to wit a minus .06a. We will not construe G.S. \u00a7 62434(e) as requiring such a result, since to do so would frustrate the purposes of the statute. See State ex rel Utilities Commission v. Edmisten, 294 N.C. 598, 242 S.E. 2d 862 (1978). Rather, the gross receipts tax factor may be taken into account in an adjustment granted pursuant to G.S. \u00a7 62434(e). Further, the allowance of adjustments which take such factors into account in a fuel adjustment proceeding and in a subsequent general rate hearing does not result in a double recovery by the utility, since, as previously discussed, the rate established in the subsequent general rate proceeding supersedes and displaces the rates established previously in the fuel adjustment proceeding. Finally, the fact that the utility has not yet incurred the increased gross receipts taxes allowed for in the adjustment does not make such an adjustment improper. The adjustment is made not to recover costs and taxes previously incurred, see State ex rel. Utilities Commission v. C. F. Industries, 299 N.C. 504, 263 S.E. 2d 559 (1980), but to enable a utility to charge a current rate based on a reasonable approximation of what its costs and taxes will be in the relevant billing period. Consideration by the Commission of what CP&L\u2019s additional gross receipts tax would be in the billing period for which adjustment was sought was not improper. This assignment of error is overruled.\nIn their next assignment of error, the North Carolina Textile Manufacturers Association argues that the rate increase allowed by the Commission was tainted by reversible error in that it was based on costs incurred in a previous test period, without any compensating adjustment for abnormalities in that previous test period. The NCTMA here contends that without adjustment for such cost-increasing abnormalities in the previous test period, the experience of such test period cannot be used as a basis for an increase under G.S. \u00a7 62434(e) for the relevant future billing period. NCTMA also contends that the Commission improperly allowed a rate increase to recover past operating expenses which were incurred but not recovered in the previous test period.\n\u201cThe procedure provided [by G.S. \u00a7 62434(e)] is an expedited one \u2018and shall not be considered a general rate case,\u2019 \u201d Vepco, supra, at 460, 269 S.E. 2d at 661; it is a limited proceeding, Id., and is designed to avoid \u201cthe regulatory lag . . . incident to repeated general rate cases.\u201d State ex rel. Utilities Commission v. Edmisten, 291 N.C. 451, 472, 232 S.E. 2d 184, 196 (1977). Just as Vepco, supra, holds that a G.S. \u00a7 62434(e) proceeding should not be burdened with questions about the reasonableness of fuel costs incurred in the historical test period, so too should such proceeding be free of concerns about how representative the historical test period is with respect to the billing period for which adjustment is sought. The Commission may, in an expedited G.S. \u00a7 62434(e) proceeding, use the data from the historical test period as a basis for an increase in the future billing period without having to undergo the delay and burden of fine-tuning such data to compensate for any abnormalities during the test period. It is the full-blown general rate hearing, not the expedited and limited fuel adjustment proceeding, which serves to take account of all the minute factors which bear on the reasonableness of rates. See Id. Furthermore, NCTMA is incorrect in its contention that the challenged rate adjustment provides for any recovery of past fuel costs incurred by CP&L. The increase approved by the Commission\u2019s Order was \u201cpursuant to . . . the formula\u201d which uses past fuel costs as a guide for what the fuel costs will be in the future billing period; the relevance, in the formula, of past fuel costs is not that those past fuel costs be recovered in the future. This assignment of error is without merit.\nThe final assignment of error employed by intervenors in their attempt to demonstrate the excessiveness of the rate adjustment allowed by the Commission is that the rate adjustment improperly includes an adjustment for increased costs incurred by CP&L in its purchase of power from other utilities. For instance, the intervenor Public Staff argues that adjustments pursuant to an expedited G.S. \u00a7 62-134(e) proceeding may be made only for changes in costs incurred by CP&L \u201cfor fuel used by CP&L in its own generating plants,\u201d and not for changes in costs it incurs in its purchases of power from other utilities. The intervenors further argue that the Commission must first conduct an inquiry into the reasonableness of any past purchase by CP&L of power from another utility before the Commission may allow CP&L to adjust its future rates to correspond to any changing cost it incurred in such purchase, and that such inquiries into reasonableness may be made only in a G.S. \u00a7 62-133 general rate hearing, and may not be made in a G.S. \u00a7 62434(e) expedited proceeding.\nWe again note that G.S. \u00a7 62434(e) provides an expedited procedure by which a utility may be granted an increase in rates based solely on the increased cost of fuel used in the generation of electric power. Vepco, supra. The intervenors\u2019 assignments of error here under consideration raise the question of what upward adjustment, if any, may be made in a utility\u2019s rates in an expedited G.S. \u00a7 62434(e) proceeding when the basis for adjustment is an increase in costs incurred by the utility in its purchase of power from other utilities.\nWhen a utility makes an expenditure for power purchased from another utility, such expenditure constitutes a payment to the selling utility for various items. One such item is the selling utility\u2019s profit on the sale; another such item is the cost to the selling utility of producing the power it sold; hence, the purchasing utility\u2019s expenditure goes towards various of the selling utility\u2019s production costs for the power sold, e.g. the labor costs, maintenance costs, construction costs, and fuel costs of the selling utility. If a. power-purchasing utility\u2019s expenditures for purchased power are greater during the relevant historical test period than in the relevant preceding base period, and the increase is attributable to the increase to the selling utility, between the two periods, in its labor, maintenance, and construction costs in producing the power sold, such increase incurred by the purchasing utility will not justify an adjustment in its rates in a G.S. \u00a7 62434(e) proceeding, since G.S. \u00a7 62434(e) proceedings allow only for adjustments \u201cbased solely upon the increased cost of fuel.\u201d Id. at 460, 269 S.E. 2d at 661. Stated differently, when a purchasing utility\u2019s increased payments go towards the selling utility\u2019s non-fuel production costs, such increased payments cannot be the basis of an adjustment under G.S. \u00a7 62434(e).\nA different question, however, is presented when a utility\u2019s increase in expenditures for purchased power is attributable to the increase, between the two periods, of the cost to the selling utility of fuel used in producing the power sold. In such an instance, the fuel cost incurred by the selling utility in producing the power it sold to the buying utility during the relevant test period is higher than the selling utility\u2019s fuel cost for any power sold the buying utility in the previous base period, and the selling utility has recovered its increased fuel costs by increasing that portion of the buying utility\u2019s bill which is attributable to the selling utility\u2019s fuel costs. In paying such a bill, the buying utility has incurred, albeit indirectly, an increased cost of fuel. Such an increase in a buying utility\u2019s fuel component expenditure for purchased power could therefore justify an increase in the buying utility\u2019s rates, pursuant to G.S. \u00a7 62434(e). Vepco, supra, states that G.S. \u00a7 62434(e) increases may be \u201cbased solely upon the increased cost of fuel used in the generation of electric power,\u201d Id. at 460, 269 S.E. 2d at 661, and such a basis for an increase includes the increased cost of fuel used by a selling utility in the generation of electric power, as well as the increased cost of fuel used in the generating plants of the utility applying for adjustment. The increase experienced by the selling utility is incurred by the power-purchasing utility when it pays for the purchased power, and this increase may properly be the basis of an adjustment, based solely on the cost of fuel, in the power-purchasing company\u2019s rates, pursuant to G.S. \u00a7 62434(e).\nTo the allowance of a G.S. \u00a7 62434(e) adjustment for an increase in the fuel component of purchased power, the intervenors object on the grounds that such an allowance would exempt the applicant utility\u2019s purchases of power from an examination into the reasonableness of such purchases, and that the increased costs incurred therefrom could be taken into account in an expedited G.S. \u00a7 62434(e) proceeding, which proceedings make no inquiry into the overall prudence of the utility\u2019s management practices. This argument is only partially true: the only increased component of purchased power costs which may be the basis of a G.S. \u00a7 62434(e) adjustment is the fuel cost component, and nothing else. Intervenors are correct, however, insofar as they argue that under our ruling today, adjustments may be made for increases in the fuel cost component of purchased power even if the utility was manifestly unreasonable and imprudent in incurring such increases. \u201c[P]lant efficiency as it bears upon fuel cost is not a factor to be considered in the limited and expedited proceeding provided for by G.S. \u00a7 62434(e). Vepco, supra, at 462, 269 S.E. 2d at 662. Hence, even if it could be demonstrated that a reasonably managed utility could have served its customers\u2019 needs without expending additional funds on purchased power and could have thereby avoided the increased fuel component of purchased power costs, the power-purchasing utility could still use G.S. \u00a7 62434(e) to obtain an upward adjustment for the increased fuel component.\nThat this result obtains, however, is no refutation of our holding allowing expedited G.S. \u00a7 62434(e) adjustments for the fuel component of purchased power costs. It is the language of the statute which requires an expedited adjustment for increases based on fuel costs, and this language implicitly extends to the fuel component of purchased power costs. Each item of the power production costs incurred by a utility may be either reasonable or unreasonable; with respect to most such costs, e.g. labor costs, an increase therein can never be the basis of an upward adjustment in future rates until it has been determined in a general rate hearing that the utility was reasonable in incurring such increase. With respect to fuel costs, however, increases therein may be the basis of an upward adjustment pursuant to G.S. \u00a7 62434(e), without any inquiry into whether the utility employed prudent management practices in incurring the increases (with the exception of an inquiry into the reasonableness of the prices paid for such fuel). Vepco, supra. Although even increases incurred by a utility for its fuel costs and fuel components must be subjected to scrutiny, in a general rate case, to determine whether they conform to reasonable management practices, such increases may in the interim be the basis of an expedited rate increase under G.S. \u00a7 62434(e) without a determination as to reasonableness. Vepco, supra. This expedited process is simply the way the statute works, and the language employed by the legislature indicates its intention to include increases in the fuel cost component of purchased power thereunder.\nIn the present case, the record is ambiguous as to exactly what costs of the relevant historical test period were considered by the Commission in allowing CP&L to adjust its rates upward. An exhibit introduced by CP&L and entitled \u201cNevil Exhibit B\u201d stated that \u201cTotal Cost Fuel\u201d for the relevant May 1980 through August 1980 test period was $191,757,875. That figure was relied upon in the computation of the adjustment, and the figure also appears on another exhibit introduced by CP&L and entitled \u201cNevil Exhibit C.\u201d \u201cNevil Exhibit C\u201d indicates that the figure is the sum of various component amounts expended by CP&L to achieve its total cost of fuel during the relevant test period, and the exhibit shows what those component amounts are. Amounts are listed for \u201ccoal\u201d costs, \u201coil\u201d costs, and \u201cnatural gas\u201d costs. Significantly, however, \u201cNevil Exhibit C\u201d does not contain the category \u201cFuel Cost Component of Purchased Power.\u201d Instead, the exhibit contains a category for \u201cPurchased Power,\u201d and lists $45,452,648 as the total cost thereof. This entry suggests that the Commission allowed a G.S. \u00a7 62434(e) adjustment based on an increase in all costs paid by CP&L for purchased power, rather than just its fuel component costs; as discussed above, G.S. \u00a7 62434(e) may not be used to effect adjustments based on increases in production costs of purchased power other than the fuel costs. That amount of the $45,452,648 which does not represent the fuel cost component of purchased power may not be considered in determining CP&L\u2019s fuel cost for the test period. That such amount may have been improperly considered is further suggested by language in the Commission\u2019s Order that \u201c[d]uring the four-month test period . . . , CP&L incurred increases in the cost of fuel and purchased power in the amount of approximately $62 million\u201d [emphasis added]; again, the language indicates that, with respect to purchased power costs, more than increases in just the fuel component was considered by the Commission. On the other hand, the record also contains the formula used in calculating the fuel adjustment factor, and an explanation of the variables used in such formula. This explanation breaks down the total fuel costs variable into its various components, one of which is \u201c[purchased power fuel costs such as those incurred in Unit Power and Limited Term Power purchases where the fossil and nuclear fuel costs associated with energy purchased are identifiable and are identified in the billing statement.\u201d [Emphasis added.] This language suggests that the Commission properly limited itself to consideration, with respect to purchased power, of the fuel cost component.\nBecause of the uncertainty in the record as to whether the rate adjustment allowed by the Commission was based in part on increases incurred by CP&L in purchased power costs other than fuel component costs, there is a possibility that the allowed adjustment was too high.\nThe reviewing court has power without determining and disposing of the cause to remand it to the lower court for further proceedings, where the record is not in condition for the appellate court properly to decide the questions presented with justice to all parties concerned, and it should exercise such power wherever justice calls for a remand to effect a proper decision.\n5B C.J.S. Appeal & Error \u00a7 1836, 233 (1958) [footnote omitted]; see also Ellison v. Hunsinger, 237 N.C. 619, 75 S.E. 2d 884 (1953); Trustees of Guilford College v. Guilford County, 219 N.C. 347, 13 S.E. 2d 622 (1941); Smith v. Board of County Commissioners of Bladen County, 191 N.C. 775, 133 S.E. 1 (1926); Bradley v. Jones, 76 N.C. 204 (1877); 5 Am. Jur. 2d Appeal & Error \u00a7 962 (1962). Hence, the order appealed from is vacated and the cause is remanded to the Commission for further proceedings to determine what amount, if any, of the \u201cPurchased Power\u201d figure of $45,452,648 is attributable to the fuel component cost of such \u201cpurchased power,\u201d and for the entry of a new order based on such determination.\nVacated and remanded.\nChief Judge MORRIS and Judge VAUGHN concur.", "type": "majority", "author": "HEDRICK, Judge." } ], "attorneys": [ "Hunton & Williams, by R. C. Howison, Jr., Edward S. Finley, Jr., and Edgar M. Roach, Jr.; and John T. Bode and Robert T. Bockman, for Carolina Power and Light Company, applicant ap-pellee.", "Robert F. Page and Karen E. Long, for the Public Staff, North Carolina Utilities Commission, intervenor appellant.", "Thomas R. Eller, Jr., for the North Carolina Textile Manufacturers Association, intervenor appellant." ], "corrections": "", "head_matter": "STATE OF NORTH CAROLINA ex rel. UTILITIES COMMISSION; CAROLINA POWER AND LIGHT COMPANY (Applicant); CHAMPION INTERNATIONAL CORPORATION; and RUFUS L. EDMISTEN, Attorney General v. THE PUBLIC STAFF-NORTH CAROLINA UTILITIES COMMISSION; and NORTH CAROLINA TEXTILE MANUFACTURERS ASSOCIATION, INC.\nNo. 8110UC392\n(Filed 3 August 1982)\n1. Utilities Commission \u00a7 24\u2014 fuel adjustment proceedings not consolidated with general rate case in progress \u2014 no error\nThe Utilities Commission properly considered an application for a fuel cost-based adjustment in a separate G.S. \u00a7 62-134(e) proceeding, rather than consolidating that application with the then-pending general rate case. The application for a fuel cost-based adjustment was entitled to the expedited consideration of a G.S. \u00a7 62-134(e) proceeding, and even if the adjusted rate ordered in the proceeding was eventually superseded by the reasonable rates established in the then-pending general rate hearing, it would be of valid force until so superseded. G.S. 62-133.\n2. Utilities Commission \u00a7 24\u2014 consideration of total fuel cost for electricity consumed by systemwide customers and not only North Carolina customers\nThere is no requirement that the Utilities Commission segregate the total fuel cost per unit for only that electricity consumed by North Carolina retail customers from the systemwide fuel cost per unit in determining the appropriate adjustment in future rates based solely on the increased cost of fuel pursuant to an expedited G.S. \u00a7 62434(e) proceeding.\n3. Utilities Commission \u00a7 39\u2014 consideration of additional gross receipts tax \u2014 proper\nConsideration by the Utilities Commission of the G.S. \u00a7 105-116 additional gross receipts tax in a G.S. \u00a7 62434(e) proceeding was not improper.\n4. Utilities Commission \u00a7 24\u2014 historical test period data \u2014 use in expedited proceedings proper\nThe Utilities Commission may, in an expedited G.S. \u00a7 62434(e) proceeding, use the data from the historical test period as a basis for an increase in the future billing period without having to undergo the delay and burden of fine-tuning such data to compensate for any abnormalities during the test period. It is the full-blown general rate hearing, not the expedited and limited fuel adjustment proceeding, which serves to take account of all the minute factors which bear on the reasonableness of rates.\n5. Utilities Commission \u00a7 24\u2014 fuel adjustment proceedings \u2014 purchased power cost allowed to extent of fuel cost\nIn an expedited fuel adjustment proceeding pursuant to G.S. \u00a7 62434(e), the Utilities Commission may include an adjustment for increased costs incurred by the fuel component of purchased power from other utilities. However, a purchasing utility\u2019s increased payments which go towards the selling utility\u2019s non-fuel production costs cannot be the basis of an adjustment under G.S. \u00a7 62434(e).\nAppeal by intervenors, Public Staff of the North Carolina Utilities Commission and North Carolina Textile Manufacturers Association from an order of the North Carolina Utilities Commission entered 24 October 1980. Heard in the Court of Appeals on 8 March 1982.\nThis appeal arises out of an application, by Carolina Power and Light Company (CP&L), for a Utilities Commission order approving an adjustment in the basic rates for electricity to be sold by CP&L to its customers; CP&L sought an increase in such rates \u201cfor bills rendered on and after December 1, 1980,\u201d and was applying for the rate increase, pursuant to G.S. \u00a7 62434(e), on the sole ground that it had incurred increased fuel expenses in the relevant previous historical test period of May through August 1980. Upon the intervention by the North Carolina Textile Manufacturers Association and the Public Staff of the North Carolina Utilities Commission, the Utilities Commission conducted an evidentiary hearing and thereafter entered an \u201cOrder Modifying Adjustment of Rates and Charges Pursuant to G.S. 62434(e).\u201d By such Order, the Commission found that \u201c[d]uring the four-month test period for the present application of May, June, July and August of 1980, CP&L incurred increases in the cost of fuel and purchased power in the amount of approximately $62 million, . . . [and] CP&L\u2019s fuel generating costs were $0.01932 per kilowatt-hour\u201d and the Commission thereupon allowed CP&L a .923 cent per kilowatt-hour increase in its rates, such increase being based on a formula designed to achieve an adjustment for changed fuel costs. Although it is not relevant to this appeal, the Commission ordered that the .923 cent per kilowatt-hour fuel cost adjustment be apportioned over two four-month billing periods, rather than entirely in the applied-for four-month period of December 1980 through March 1981. Hence, the Commission\u2019s order mandated CP&L, for the December 1980 through March 1981 billing months, to \u201cadjust its base retail rates by the addition of an amount equal to $.00462 per kilowatt-hour,\u201d and mandated that CP&L, \u201cfor the Billing Months of April through July 1981 . . . adjust its base retail rates by the addition of an amount equal to $.00461 per kilowatt-hour\u201d in addition to any fuel cost adjustment deemed proper after a later fuel adjustment procedure for that second four-month billing period, based on its relevant test period. From the Order of the Commission, each of the in-tervenors appealed.\nHunton & Williams, by R. C. Howison, Jr., Edward S. Finley, Jr., and Edgar M. Roach, Jr.; and John T. Bode and Robert T. Bockman, for Carolina Power and Light Company, applicant ap-pellee.\nRobert F. Page and Karen E. Long, for the Public Staff, North Carolina Utilities Commission, intervenor appellant.\nThomas R. Eller, Jr., for the North Carolina Textile Manufacturers Association, intervenor appellant." }, "file_name": "0480-01", "first_page_order": 512, "last_page_order": 526 }