{ "id": 731559, "name": "In the Matter of the Application of TIMBERON WATER COMPANY, INC. for a Water Rate Increase Pursuant to Advice Notice No. 4. Daniel J. BEHLES, as Trustee in Bankruptcy for the Timberon Water Co., Inc., Appellant, v. NEW MEXICO PUBLIC SERVICE COMMISSION, Appellee", "name_abbreviation": "Behles v. New Mexico Public Service Commission", "decision_date": "1992-08-05", "docket_number": "No. 20109", "first_page": "154", "last_page": "162", "citations": [ { "type": "official", "cite": "114 N.M. 154" }, { "type": "parallel", "cite": "836 P.2d 73" } ], "court": { "name_abbreviation": "N.M.", "id": 8835, "name": "Supreme Court of New Mexico" }, "jurisdiction": { "id": 52, "name_long": "New Mexico", "name": "N.M." }, "cites_to": [ { "cite": "104 N.M. 565", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1594932 ], "weight": 2, "year": 1986, "pin_cites": [ { "page": "569" }, { "page": "248" } ], "opinion_index": 0, "case_paths": [ "/nm/104/0565-01" ] }, { "cite": "112 N.M. 766", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 720196 ], "weight": 2, "year": 1991, "opinion_index": 0, "case_paths": [ "/nm/112/0766-01" ] }, { "cite": "112 N.M. 255", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 720190 ], "weight": 2, "pin_cites": [ { "page": "258" }, { "page": "126" } ], "opinion_index": 0, "case_paths": [ "/nm/112/0255-01" ] }, { "cite": "18 L.Ed.2d 1318", "category": "reporters:federal", "reporter": "L. Ed. 2d", "year": 1967, "opinion_index": 0 }, { "cite": "87 S.Ct. 2111", "category": "reporters:federal", "reporter": "S. Ct.", "year": 1967, "opinion_index": 0 }, { "cite": "388 U.S. 457", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6170930, 6170835 ], "year": 1967, "opinion_index": 0, "case_paths": [ "/us/388/0457-02", "/us/388/0457-01" ] }, { "cite": "78 N.M. 78", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 5327620 ], "weight": 2, "year": 1966, "pin_cites": [ { "page": "84" }, { "page": "623" } ], "opinion_index": 0, "case_paths": [ "/nm/78/0078-01" ] }, { "cite": "90 N.M. 325", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2874704 ], "weight": 2, "year": 1977, "pin_cites": [ { "page": "341" }, { "page": "604" } ], "opinion_index": 0, "case_paths": [ "/nm/90/0325-01" ] }, { "cite": "320 U.S. 591", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6143691 ], "weight": 3, "year": 1944, "pin_cites": [ { "page": "603", "parenthetical": "holding that under federal Natural Gas Act, Federal Power Commission may set just and reasonable rate by balancing interests of investors and consumers" }, { "page": "288", "parenthetical": "holding that under federal Natural Gas Act, Federal Power Commission may set just and reasonable rate by balancing interests of investors and consumers" }, { "parenthetical": "holding that under federal Natural Gas Act, Federal Power Commission may set just and reasonable rate by balancing interests of investors and consumers" } ], "opinion_index": 0, "case_paths": [ "/us/320/0591-01" ] }, { "cite": "54 N.M. 315", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1582004 ], "weight": 4, "year": 1950, "pin_cites": [ { "page": "338" }, { "page": "170-71" }, { "page": "338" }, { "page": "170-71" } ], "opinion_index": 0, "case_paths": [ "/nm/54/0315-01" ] }, { "cite": "109 N.M. 509", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1590265 ], "weight": 2, "year": 1990, "pin_cites": [ { "page": "512" }, { "page": "431" } ], "opinion_index": 0, "case_paths": [ "/nm/109/0509-01" ] }, { "cite": "11 U.S.C. \u00a7 544", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 1988, "opinion_index": 0 }, { "cite": "98 B.R. 120", "category": "reporters:specialty", "reporter": "B.R.", "case_ids": [ 6476734 ], "weight": 2, "pin_cites": [ { "page": "125" } ], "opinion_index": 0, "case_paths": [ "/br/98/0120-01" ] }, { "cite": "108 B.R. 854", "category": "reporters:specialty", "reporter": "B.R.", "case_ids": [ 6118020 ], "weight": 2, "pin_cites": [ { "page": "883" } ], "opinion_index": 0, "case_paths": [ "/br/108/0854-01" ] }, { "cite": "57 B.R. 611", "category": "reporters:specialty", "reporter": "B.R.", "case_ids": [ 6117456 ], "weight": 4, "pin_cites": [ { "page": "623" }, { "page": "624" } ], "opinion_index": 0, "case_paths": [ "/br/57/0611-01" ] }, { "cite": "923 F.2d 782", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 10545211, 6504494 ], "weight": 4, "pin_cites": [ { "page": "790" }, { "page": "791" } ], "opinion_index": 0, "case_paths": [ "/f2d/923/0782-01", "/br/123/0782-01" ] }, { "cite": "106 S.Ct. 755", "category": "reporters:federal", "reporter": "S. Ct.", "case_ids": [ 6123651, 6207359 ], "year": 1986, "pin_cites": [ { "page": "761" } ], "opinion_index": 0, "case_paths": [ "/br/56/0755-01", "/us/474/0494-01" ] }, { "cite": "474 U.S. 494", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6207359 ], "weight": 2, "year": 1986, "pin_cites": [ { "page": "505" } ], "opinion_index": 0, "case_paths": [ "/us/474/0494-01" ] }, { "cite": "28 U.S.C. \u00a7 959", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 1988, "pin_cites": [ { "page": "(b)" } ], "opinion_index": 0 }, { "cite": "11 U.S.C. \u00a7 362", "category": "laws:leg_statute", "reporter": "U.S.C.", "weight": 2, "pin_cites": [ { "page": "(a)" }, { "page": "(b)(4H5)" } ], "opinion_index": 0 }, { "cite": "44 B.R. 91", "category": "reporters:specialty", "reporter": "B.R.", "case_ids": [ 6552176 ], "weight": 5, "pin_cites": [ { "page": "94" }, { "page": "92-93" }, { "page": "94" } ], "opinion_index": 0, "case_paths": [ "/br/44/0091-01" ] }, { "cite": "402 U.S. 637", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11735156 ], "weight": 3, "year": 1971, "pin_cites": [ { "page": "649" }, { "page": "1711" } ], "opinion_index": 0, "case_paths": [ "/us/402/0637-01" ] }, { "cite": "733 F.2d 267", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 577403, 6559051 ], "weight": 5, "pin_cites": [ { "page": "272" }, { "page": "273" }, { "page": "278" } ], "opinion_index": 0, "case_paths": [ "/f2d/733/0267-01", "/br/39/0267-01" ] }, { "cite": "94 N.M. 731", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1573092 ], "weight": 2, "year": 1980, "pin_cites": [ { "page": "736" }, { "page": "1121" } ], "opinion_index": 0, "case_paths": [ "/nm/94/0731-01" ] }, { "cite": "488 U.S. 299", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1495157 ], "weight": 3, "year": 1989, "pin_cites": [ { "page": "314" }, { "page": "619" } ], "opinion_index": 0, "case_paths": [ "/us/488/0299-01" ] }, { "cite": "810 F.2d 1168", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 4329924, 1635526 ], "weight": 2, "pin_cites": [ { "page": "1192" }, { "page": "1175" } ], "opinion_index": 0, "case_paths": [ "/us-app-dc/258/0189-01", "/f2d/810/1168-01" ] }, { "cite": "341 So.2d 1081", "category": "reporters:state_regional", "reporter": "So. 2d", "weight": 2, "year": 1976, "opinion_index": 0 }, { "cite": "334 So.2d 622", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 9661563 ], "pin_cites": [ { "page": "625" } ], "opinion_index": 0, "case_paths": [ "/so2d/334/0622-01" ] }, { "cite": "30 L.Ed.2d 62", "category": "reporters:federal", "reporter": "L. Ed. 2d", "year": 1971, "opinion_index": 0 }, { "cite": "92 S.Ct. 74", "category": "reporters:federal", "reporter": "S. Ct.", "year": 1971, "opinion_index": 0 }, { "cite": "404 U.S. 832", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6220960, 6220681, 6218729, 6219788, 6219214, 6220336, 6221274, 6218972, 6219485, 6220063 ], "year": 1971, "opinion_index": 0, "case_paths": [ "/us/404/0832-09", "/us/404/0832-08", "/us/404/0832-01", "/us/404/0832-05", "/us/404/0832-03", "/us/404/0832-07", "/us/404/0832-10", "/us/404/0832-02", "/us/404/0832-04", "/us/404/0832-06" ] }, { "cite": "267 N.E.2d 662", "category": "reporters:state_regional", "reporter": "N.E.2d", "pin_cites": [ { "page": "664" } ], "opinion_index": 0 }, { "cite": "92 N.M. 721", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1557180 ], "weight": 2, "year": 1979, "pin_cites": [ { "page": "722" }, { "page": "1178" } ], "opinion_index": 0, "case_paths": [ "/nm/92/0721-01" ] }, { "cite": "294 P.2d 921", "category": "reporters:state_regional", "reporter": "P.2d", "year": 1956, "opinion_index": 0 }, { "cite": "48 Wash.2d 461", "category": "reporters:state", "reporter": "Wash. 2d", "case_ids": [ 996480 ], "year": 1956, "opinion_index": 0, "case_paths": [ "/wash-2d/48/0461-01" ] }, { "cite": "86 N.M. 447", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2828509 ], "weight": 2, "year": 1974, "pin_cites": [ { "page": "449", "parenthetical": "quoting Smith v. Hollenbeck, 48 Wash.2d 461, 294 P.2d 921 (1956)" }, { "page": "376", "parenthetical": "quoting Smith v. Hollenbeck, 48 Wash.2d 461, 294 P.2d 921 (1956)" } ], "opinion_index": 0, "case_paths": [ "/nm/86/0447-01" ] }, { "cite": "101 N.M. 549", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1586333 ], "weight": 8, "year": 1984, "pin_cites": [ { "page": "553" }, { "page": "961" }, { "page": "553" }, { "page": "961" }, { "page": "553" }, { "page": "961" } ], "opinion_index": 0, "case_paths": [ "/nm/101/0549-01" ] }, { "cite": "85 N.M. 571", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2771682 ], "weight": 2, "year": 1973, "pin_cites": [ { "page": "574" }, { "page": "850" } ], "opinion_index": 0, "case_paths": [ "/nm/85/0571-01" ] } ], "analysis": { "cardinality": 1173, "char_count": 26064, "ocr_confidence": 0.769, "pagerank": { "raw": 2.146301941836089e-07, "percentile": 0.7678399397030483 }, "sha256": "9105adca41d976ba94a68e4a4939c175abe3473a782811f146cb45d3b0243f2a", "simhash": "1:a6fd2a4e2857b38e", "word_count": 4217 }, "last_updated": "2023-07-14T15:11:13.314573+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "BACA and MONTGOMERY, JJ., concur." ], "parties": [ "In the Matter of the Application of TIMBERON WATER COMPANY, INC. for a Water Rate Increase Pursuant to Advice Notice No. 4. Daniel J. BEHLES, as Trustee in Bankruptcy for the Timberon Water Co., Inc., Appellant, v. NEW MEXICO PUBLIC SERVICE COMMISSION, Appellee." ], "opinions": [ { "text": "OPINION\nFROST, Justice.\nDaniel J. Behles (Behles), as Trustee in bankruptcy for the Timberon Water Company (Timberon), appeals the final order of the New Mexico Public Service Commission (Commission) in case no. 2355, dated August 26, 1991, that denied his requested rate increase for Timberon. Behles contends 1) that the Commission\u2019s exclusion of Contributions in Aid of Construction (CIAC) was unreasonable and unlawful and unsupported by substantial evidence, 2) that federal bankruptcy law preempts the Commission\u2019s use of the CIAC doctrine, 3) that he is a bona fide purchaser under \u00a7 544 of the Bankruptcy Code, able to void the CIAC designation, 4) that the lower-than-requested rate increase amounts to a confiscation of property without due process of law, and 5) that First National Bank in Alamogordo (FNBA) would be prohibited by federal law from operating the water company if it bids its interest in Timberon at a foreclosure sale. We disagree with Behles\u2019 contentions and affirm the Commission\u2019s final order.\nI.\nNorth American Land Development (NALD) sold lots for vacation homes near Cloudcroft, New Mexico. As part of the development, NALD built a water system, which Timberon, a wholly owned subsidiary of NALD, was operating by 1971. NALD, later known as North American Development (NAD), is now succeeded in interest by Republic Financial Group (Republic).\nIn 1983, in Commission case no. 1746, the Commission granted Timberon a Certificate of Public Convenience and Necessity and authorized Timberon to charge rates for water. In the years previous to this order, Timberon had not charged its customers for water.\nIn 1986, Johnny Mobley, president of NAD and Timberon executed a promissory note in favor of FNBA for $1,750,000. FNBA secured the promissory note with a mortgage on the land, water rights, and distribution system of Timberon.\nIn 1988, FNBA filed a foreclosure action against NAD, Timberon, and Mobley in state district court on the 1986 mortgage. Subsequently, Timberon and Republic filed under Chapter 11 of the U.S. Bankruptcy Code. The foreclosure action was removed to the Bankruptcy Court. FNBA and Behles reached an agreement as to the foreclosure action, and the Bankruptcy Court approved the settlement.\nIn March of 1990, the Commission staff petitioned the Commission to investigate Timberon\u2019s quality of service and the propriety of the promissory note and mortgage. The Commission docketed the investigation as case no. 2319.\nIn September of 1990, Timberon, managed by Behles, filed a petition for a rate increase. The Commission consolidated the investigation case and the rate case into case no. 2355, the case now on appeal. Behles sought an increase in excess of 100% from $106,289 to $224,753 in revenue to allow for a profit of $51,870. In August of 1991, the Commission granted a rate increase that provided for an 11.34% rate of return, increasing revenue to $119,795 and allowing for a $2,526 profit. To determine the 11.34% rate of return, the Commission excluded $2,245,186 from the rate base as CIAC.\nII.\nBehles attacks several findings made by the Commission, all of which we will review according to the same following standard. The burden is on the party appealing, in this case Behles, to show that the Commission order is unreasonable or unlawful. NMSA 1978, \u00a7 62-11-4 (Repl.Pamp.1984); Maestas v. New Mexico Public Serv. Comm\u2019n, 85 N.M. 571, 574, 514 P.2d 847, 850 (1973). This Court\u2019s review of Commission decisions is limited to: \u201cthe question of whether the Commission acted fraudulently, arbitrarily or capriciously, whether the decision is supported by substantial evidence, and, generally, whether the actions of the Commission are within the scope of its authority.\u201d Attorney General of N.M. v. New Mexico Public Serv. Comm\u2019n, 101 N.M. 549, 553, 685 P.2d 957, 961 (1984). Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Id. For administrative agencies, arbitrary and capricious action has been defined \u201c \u2018as willful and unreasonable action, without consideration and, in disregard of facts or circumstances.\u2019 \u201d McDaniel v. New Mexico Bd. of Medical Examiners, 86 N.M. 447, 449, 525 P.2d 374, 376 (1974) (quoting Smith v. Hollenbeck, 48 Wash.2d 461, 294 P.2d 921 (1956)).\nThis Court must review the whole record and \u201cmust view the evidence in the light most favorable to the decision made by the Commission.\u201d Attorney General of N.M. v. New Mexico Public Serv. Comm\u2019n, 101 N.M. at 553, 685 P.2d at 961. In addition, we must always keep in mind that \u201cthe Commission is vested with considerable discretion in determining the justness and reasonableness of utility rates.\u201d Id. A reviewing court may not substitute its judgment for that of the Commission. Public Serv. Co. of N.M. v. New Mexico Public Serv. Comm\u2019n, 92 N.M. 721, 722, 594 P.2d 1177, 1178 (1979).\nFirst, Behles contends that the Commission\u2019s exclusion of $2,245,186 from the rate base as CIAC was arbitrary and unreasonable, and unsupported by substantial evidence. To the contrary, we find that substantial evidence supported the Commission\u2019s decision to exclude $2,245,186 from the rate base as CIAC.\nThe Commission has established a policy that CIAC, as cost-free capital to the utility, should be deducted from the rate base for rate making purposes. In re Gas Co. of N.M., 21 Pub.Util.Rep.4th (PUR) 159, 172-73 (1977); In re Public Serv. Co. of N.M., 82 Pub.Util.Rep.3d (PUR) 362, 369-70 (1970). The specific result of the application of the Commission\u2019s CIAC rule is to prohibit the allowance of depreciation on contributed property. The rationale for this policy is that depreciation is designed to permit a utility to recoup its investment in plant, but where there is no investment because the property has been contributed, there is nothing to be recovered. Other jurisdictions agree with this analysis. The Supreme Court of Illinois noted that \u201cit would be unfair to require such consumers [those that have contributed CIAC] to pay rates based upon the value of a facility for which they have themselves already paid.\u201d Du Page Utility Co. v. Illinois Commerce Comm\u2019n, 267 N.E.2d 662, 664 (Ill.) (per curiam), cert. denied, 404 U.S. 832, 92 S.Ct. 74, 30 L.Ed.2d 62 (1971). Behles concedes the wisdom in this reasoning and does not contest that its application is appropriate. Rather, he contends that the money used to build the system was not contributed at all, and that the Commission arbitrarily and unreasonably characterized the \u201ccontributions\u201d as CIAC.\nBecause the Commission had taken administrative notice of case no. 1746, the testimony from that case was available to the Commission for the ratemaking purposes of this case. Based in part on that testimony, the Commission found that the funds to build the water system were contributed. In that original ratemaking case, Mobley testified that the money to build the $3.75 million water system came from the sale of real estate lots. Furthermore, Mobley testified specifically that NALD was the source of funds for the water system, and that these funds were a contribution from NAD. He said that everything was \u201cfree and clear in the water company.\u201d Mobley also agreed that the water system \u201cdefinitely\u201d improved the value of the lots for the purpose of sale. In addition, the record showed that the customers paid for the meters and their installation. Even Behles admitted that the only source of funds for the construction of the water system was NALD.\nIn Florida Cities Water Co. v. Board of City Commissioners, 334 So.2d 622, 625 (Fla.Dist.Ct.App.), appeal dismissed, 341 So.2d 1081 (1976), under a similar set of circumstances, the court affirmed the CIAC designation reasoning that \u201ca reasonable inference may be drawn that the source of these monies [to fund the water system] came from the sale of the lots.\u201d The court adopted the view that the costs were most definitely passed on to the customers in the form of increased lot prices. Id. Consistent with such reasoning, the Commission in the instant case reasonably concluded that Timberon customers paid for the installation of the water system when they bought their lots and should not have to pay for the system again through rate payments. Likewise, the Commission could have reasonably concluded that Timberon should not be able to earn a rate of return on the lot purchaser\u2019s money.\nIn his concurring opinion in Jersey Central Power & Light Co. v. Federal Energy Regulatory Commission, 810 F.2d 1168, 1192 (D.C.Cir.1987), Circuit Judge Starr described the proper role of a reviewing court: \u201cOur limited but vital role is to ensure that the end result of a rate order reasonably balances investor and ratepayer interests.\u201d Moreover, \u201c[t]he economic judgments required in rate proceedings are often hopelessly complex and do not admit of a single correct result.\u201d Duquesne Light Co. v. Barasch, 488 U.S. 299, 314, 109 S.Ct. 609, 619, 102 L.Ed.2d 646 (1989). In making its decision, we believe that the Commission properly balanced the investor and ratepayer interests, thereby achieving one of several possible \u201ccorrect\u201d results. For these reasons, the Commission\u2019s decision to deduct $2,245,186 from the rate base as CIAC is reasonable and is supported by substantial evidence.\nBehles also contends that the hearing examiner\u2019s decision from case no. 1746, characterizing the contributions as CIAC, was improperly and unreasonably adopted as the decision in this case on the principle of res judicata. Citing Hobbs Gas Co. v. New Mexico Public Serv. Comm\u2019n, 94 N.M. 731, 736, 616 P.2d 1116, 1121 (1980), he asserts that the application of res judicata was error, and that even if it was not error, evidence of changed circumstances should have barred its effect.\nBehles\u2019 argument is misplaced because the decision in this case was not based on the decision, but the evidence, from case no. 1746. None of the testimony used from case no. 1746 would be rendered inapplicable by changed circumstances. For example, nothing will change the fact that, as Mobley testified, the funds from the sale of the real estate were used to build the water system. For this reason, we find that the Commission\u2019s use of the record in case no. 1746 was reasonable and was not affected by changed circumstances.\nFinally, Behles contends that the operation and maintenance increase granted by the Commission should have been greater given the Commission\u2019s reason for granting the increase. The Commission based its decision on 1990 and 1991 annual reports of three New Mexico water utilities comparable to Timberon and, in so doing, increased the rate from the requested $253 per customer to $277 per customer. This action reflects neither arbitrary or unreasonable action nor a lack of substantial evidence.\nIII.\nBehles contends that federal bankruptcy law preempts the Commission\u2019s use of the CIAC doctrine. He asserts that the low rate set by the Commission due to the exclusion of CIAC does not provide sufficient revenue to support operation, maintenance, and a return on investment without a subsidy. He contends that these circumstances impair effective reorganization, thereby infringing on federal bankruptcy law.\nCongress certainly has the constitutional prerogative under its Bankruptcy power to preempt the States, even in their exercise of police power, but Congressional intent to do so will not be inferred lightly. Penn Terra Ltd. v. Department of Envtl. Resources, 733 F.2d 267, 272 (3rd Cir.1984). Preemption must be explicitly mandated by Congress, compelled due to an unavoidable conflict between the state law and the federal law, Id., or compelled because the state law is an obstacle to the full accomplishment of congressional objectives. Perez v. Campbell, 402 U.S. 637, 649, 91 S.Ct. 1704, 1711, 29 L.Ed.2d 233 (1971). \u201cThe police power of the several states embodies the main bulwark of protection by which they carry out their responsibilities to the People; its abrogation is therefore a serious matter.\u201d Penn Terra, 733 F.2d at 273. Statutes derived from the state\u2019s police power \u201cshould not be overridden by federal legislation unless they are inconsistent with explicit congressional intent.\u201d Id.\nThe Commission\u2019s authorization to set rates for utility companies is clearly set forth in the Public Utilities Act promulgated pursuant to this state\u2019s police power. NMSA 1978, \u00a7 62-3-1 (Repl.Pamp.1984); In re Jal Gas Co., 44 B.R. 91, 94 (Bankr.D.N.M.1984). We may not disturb this important police power unless its effect conflicts with specific congressional bankruptcy objectives. Behles claims that federal bankruptcy objectives regarding reorganization have been disturbed, but we believe that Congress statutorily provided for regulatory and police power proceedings knowing full well that reorganization might be affected. In other words, we believe the primary congressional objective was to continue regulatory proceedings even against debtors in reorganization.\nThe Bankruptcy Code reflects these congressional objectives. Title 11 U.S.C. \u00a7 362(a) of the 1988 Bankruptcy Code provides for the automatic stay of administrative proceedings against a debtor, but \u00a7 362(b)(4)-(5) excepts police and regulatory proceedings from the stay. The pertinent portions of the Bankruptcy Code are as follows:\n(b) The filing of a petition under section 301, 302, or 303 of this title * * * does not operate as a stay\u2014\n******\n(4) * * * of the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit\u2019s police or regulatory power;\n(5) * * * of the enforcement of a judgment, other than a money judgment, obtained in an action or proceeding by a governmental unit to enforce such governmental unit\u2019s police or regulatory power;\n11 U.S.C. \u00a7 362(b)(4H5) (1988). Thus, in \u00a7 362(b)(4)-(5), Congress expressly provided for the exercise of a state\u2019s regulatory power, such as exercised by the Commission in its ratemaking function. Furthermore, 28 U.S.C. \u00a7 959(b) (1988), which requires the trustee to \u201cmanage and operate the property in his possession * * * according to the requirements of the valid laws of the State,\u201d bolsters the view that the Bankruptcy Code was not intended to preempt state regulatory law. Midlantic Nat\u2019l Bank v. New Jersey Dep\u2019t of Envtl. Protection, 474 U.S. 494, 505, 106 S.Ct. 755, 761, 88 L.Ed.2d 859 (1986). Neither statute indicates that the stay should be reinstituted in the event that the regulatory action interferes with the debtor\u2019s property, and courts reject any such interpretation. Eddleman v. United States Dep\u2019t of Labor, 923 F.2d 782, 790 (10th Cir.1991); Penn Terra, 733 F.2d at 278.\nFor example, in Beker Industries Corp. v. Florida Land & Water Adjudicatory Commission (In re Beker Industries Corp.), 57 B.R. 611, 623 (Bankr.S.D.N.Y.1986), a Florida regulatory Commission limited the plaintiff\u2019s trucking of phosphate ore to 1.2 million tons, substantially below the 1.68 million tons that it had produced in 1985. The plaintiff debtor applied for a stay of the continuation and enforcement of this proceeding which the bankruptcy court denied. Id. at 624. Relying on \u00a7 959, the court noted that \u201cthe Code does not change the business and regulatory environment in which a debtor operates.\u201d Id. The court further noted that \u201c[a]n ongoing business is not to be given a competitive edge merely by virtue of its attempt to reorganize under Chapter 11.\u201d Id. Behles is requesting exactly that, a competitive edge. Every other utility receives rates wherein CIAC has been excluded from the rate base when appropriate. It would be unfair to allow a bankrupt utility, because of its bankruptcy, to receive a rate of return based on capital the ratepayers have contributed.\nWe agree that administrative proceedings not characterized as regulatory or police power proceedings would not be excepted from the stay under \u00a7 362, and thus would be preempted by the Bankruptcy Code. To determine whether an agency action is preempted by the Bankruptcy Code, courts often apply two tests: the \u201cpecuniary interest\u201d test and the \u201cpublic policy\u201d test. These tests distinguish between agency actions that are regulatory and thus necessary to protect the public interest under the state\u2019s police power and those agency actions that are not regulatory. Eddleman, 923 F.2d at 791. Under the \u201cpecuniary purpose\u201d test the court will enforce the stay if the proceeding attempts to protect pecuniary interests in the debt- or\u2019s property rather than implement some aspect of public policy. Id. The court will also enforce the stay under the \u201cpublic policy\u201d test if the proceeding attempts to adjudicate private rights rather than implement public policy. Id. An example of this differentiation can be seen in In re Jal, where the New Mexico Commission ordered a debtor gas company to reimburse its customers for an overpayment through lower gas rates over a set period of time. In re Jal, 44 B.R. at 92-93. The Commission asserted that it was fulfilling its \u201crate-making\u201d duty. Id. After finding that the \u201cratemaking\u201d label was not determinative, the court held that:\nRegardless of what [the Commission] calls their administrative function in this matter, courts have consistently distinguished governmental actions which attempt to obtain a pecuniary advantage from those which attempt to further the public welfare. The [Commission] is also attempting to preempt the United States Bankruptcy Code by forcing Jal Gas Company to pay a prepetition debt in a manner preferential to all of the other prepetition creditors of Jal Gas Company.\nId. at 94. Because their action was not regulatory in nature, the court found that the Commission was in violation of the automatic stay provision of \u00a7 362. Id. In effect, if the action of the Commission falls primarily within the definition of \u201cpolice or regulatory action,\u201d then preemption may not be found, for Congress has in essence pre-approved the action. In the case at hand, the Commission is not using its rate-making function as a precept to force the debtor to pay a prepetition debt. The Commission merely used the doctrine, accepted here and in numerous other jurisdictions, that excluded CIAC from the utility\u2019s rate base. The Commission did not impose a hidden judgment or liability and did not adjudicate a private right. The Commission\u2019s action falls squarely within the definition of \u201cpolice or regulatory\u201d and thus within the exception to the \u00a7 362 stay.\nBehles cites two New Hampshire Bankruptcy cases in support of his position. Neither are applicable to the circumstances present here. In one case, the court concluded that express preemption was intended by \u00a7\u00a7 1123(a)(5) and 1129 of the Bankruptcy Code regarding restructuring. Public Serv. Co. of N.H. v. State of N.H. (In re Public Serv. Co. of N.H.), 108 B.R. 854, 883 (Bankr.D.N.H.1989). The preemptive effect was that a plan of reorganization could not be disapproved by a state regulatory agency once confirmed by a court under \u00a7 1129. Id. The distinguishing factor is that neither \u00a7 1123(a)(5) nor \u00a7 1129 has been contended to be preemptive in this strictly regulatory, ratemaking case. In the other New Hampshire Bankruptcy case, the court granted a preliminary injunction under \u00a7 105 of the Bankruptcy Code to prevent an involuntary rate case. Public Serv. Co. of N.H. v. State of N.H. (In re Public Serv. Co. of N.H.), 98 B.R. 120 (Bankr.D.N.H.1989). The court was unsure whether an automatic stay would apply under \u00a7 362, and it did not explore these possibilities. Id. at 125. In any event, its analysis had nothing whatsoever to do with preemption, and so is not helpful to us in our analysis on that point.\nAfter studying the relevant case and statutory law, we believe that Congress in no way intended to preempt the ratemaking proceedings of this case, or the widely accepted CIAC doctrine used as part of the calculation of a fair rate of return. In fact, we believe that Congress specifically provided for this sort of standard ratemaking proceeding in \u00a7 362(b)(4)-(5), which excepts police and regulatory proceedings from the automatic stay. For these reasons, we reject Behles\u2019 preemption argument.\nIV.\nBehles further contends that he has stepped into the shoes of a bona fide purchaser as the trustee and that pursuant to \u00a7 544 of the Bankruptcy Code he may void the Commission\u2019s CIAC designation; thereby including the capital in Timberon\u2019s rate base. We disagree.\nThe relevant portions of \u00a7 544 read as follows:\n(a) The trustee shall have, as of the commencement of the case, and without regard to any knowledge of the trustee or of any creditor, the rights and powers of any creditor, the rights and powers of, or may avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by\u2014\n* * * * * *\n(3) a bona fide purchaser of real property * * *\n11 U.S.C. \u00a7 544 (1988). Behles does not cite any support for his novel proposition that the effect of the CIAC doctrine is \u201cvoidable,\u201d creates an \u201cobligation,\u201d or effectuates a \u201ctransfer,\u201d as defined by \u00a7 544; and furthermore, we find this characterization to be a stretch of common sense and reason. This Court will not review an issue unsupported by authority. Roselli v. Rio Communities Serv. Station, Inc., 109 N.M. 509, 512, 787 P.2d 428, 431 (1990).\nV.\nBehles also claims that the lower-than-requested rate increase amounts to a confiscation of property without due process of law.\nAs the Commission recognized in its final order, the New Mexico Public Utility Act requires that the public utility rates be just and reasonable. NMSA 1978, \u00a7 62-8-1 (Repl.Pamp.1984). This is also the test for determining the point at which a rate has become unconstitutionally confiscatory. Jersey Central, 810 F.2d at 1175. The Commission \u201cis vested with considerable discretion in determining the justness and reasonableness of utility rates.\u201d Attorney General v. New Mexico Public Serv. Comm\u2019n, 101 N.M. 549, 553, 685 P.2d 957, 961 (1984). To set a just and reasonable rate, the Commission must balance the investor\u2019s interest against the ratepayer\u2019s interest. State v. Mountain States Tel. & Tel. Co., 54 N.M. 315, 338, 224 P.2d 155, 170-71 (1950); cf. Federal Power Comm\u2019n v. Hope Natural Gas Co., 320 U.S. 591, 603, 64 S.Ct. 281, 288, 88 L.Ed. 333 (1944) (holding that under federal Natural Gas Act, Federal Power Commission may set just and reasonable rate by balancing interests of investors and consumers). There is a significant zone of reasonableness, then, between utility confiscation and ratepayer extortion. Mountain States, 54 N.M. at 338, 224 P.2d at 170-71.\nThe Commission could reasonably have found that inclusion of CIAC in the rate base would have resulted in an unfair rate. As explained in some detail in Section II, supra, the ratepayers in effect paid for the water system when the developer used a portion of the proceeds from lot sales to build the system. The ratepayers should not have to pay rates on capital that they contributed.\nFurthermore, the Commission found that the bad condition of the system reflected a misuse of the operating revenue generated in the past. In effect, Behles urges that retroactive rates be instituted to make up for this past neglect and misuse of funds. The Decision of the Hearing Examiner adopted by the Commission explains that rates are designed to generate revenue for the cost of the utility service, and are not designed to raise capital for deferred maintenance. In other words the Commission\u2019s function is to set prospective rates only. Mountain States Tel. and Tel. Co. v. New Mexico State Corp. Comm\u2019n, 90 N.M. 325, 341, 563 P.2d 588, 604 (1977).\nWe believe the Commission has set just and reasonable prospective rates falling within the zone of reasonableness which reflect the cost of service supplied by the Timberon Water Co. The Commission did not infringe upon the trustee\u2019s constitutional rights.\nVI.\nBehles contends that FNBA would be prohibited by federal law from operating the water company if it bids its interest in Timberon at a foreclosure sale. A decision on the propriety of a bid for Timberon by FNBA and its possible subsequent operation of Timberon would be an advisory opinion at this juncture. We do not give advisory opinions. Bell Tel. Lab., Inc. v. Bureau of Revenue, 78 N.M. 78, 84, 428 P.2d 617, 623 (1966), appeal dismissed, 388 U.S. 457, 87 S.Ct. 2111, 18 L.Ed.2d 1318 (1967); State v. Castrillo, 112 N.M. 255, 258, 814 P.2d 123, 126 (Ct.App.), appeal decided, 112 N.M. 766, 819 P.2d 1324 (1991).\nBased upon the views expressed herein, we affirm the final order of the Commission.\nIT IS SO ORDERED.\nBACA and MONTGOMERY, JJ., concur.\n. This rationale becomes significant when rates are based on an \"original cost\u201d valuation of the utility. In case no. 1746, the Commission ordered that in future cases involving Timberon all rate based calculations were to be based on an \"original cost\u201d valuation. NMSA 1978, \u00a7 62-6-14(A) (Repl.Pamp.1984) provides that in arriving at a valuation of the property or business of a utility that several factors shall be considered including \"the original cost thereof * * *.\u201d The Commission is not limited to any particular method of valuation in determining the rate base. New Mexico Indus. Energy Consumers v. New Mexico Public Serv. Comm\u2019n, 104 N.M. 565, 569, 725 P.2d 244, 248 (1986).", "type": "majority", "author": "FROST, Justice." } ], "attorneys": [ "Behles-Giddens, P.A., Geraldine E. Rivera, Albuquerque, for appellant.", "Lee W. Huffman, Com\u2019n Counsel, Mercedes Fernandez, Staff Counsel, Santa Fe, for appellee.", "Burroughs & Rhodes, Randolph Burroughs, Alamogordo, for Timberon Water and Sanitation Dist., Timberon Property Owners Ass\u2019n." ], "corrections": "", "head_matter": "836 P.2d 73\nIn the Matter of the Application of TIMBERON WATER COMPANY, INC. for a Water Rate Increase Pursuant to Advice Notice No. 4. Daniel J. BEHLES, as Trustee in Bankruptcy for the Timberon Water Co., Inc., Appellant, v. NEW MEXICO PUBLIC SERVICE COMMISSION, Appellee.\nNo. 20109.\nSupreme Court of New Mexico.\nAug. 5, 1992.\nBehles-Giddens, P.A., Geraldine E. Rivera, Albuquerque, for appellant.\nLee W. Huffman, Com\u2019n Counsel, Mercedes Fernandez, Staff Counsel, Santa Fe, for appellee.\nBurroughs & Rhodes, Randolph Burroughs, Alamogordo, for Timberon Water and Sanitation Dist., Timberon Property Owners Ass\u2019n." }, "file_name": "0154-01", "first_page_order": 188, "last_page_order": 196 }