Opinion
No. 263-81
Opinion Filed February 25, 1982
1. Public Utilities — Judicial Review — Presumptions
There is a strong presumption in favor of the validity of a Public Service Board order.
2. Public Utilities — Judicial Review — Findings of Fact
Decisions on matters within the expertise of the Public Service Board are given great weight, and the Board's factual findings will not be disturbed unless clearly erroneous.
3. Public Utilities — Rates — Determination
Selecting an appropriate accounting method for the computation of expenses and a rate base is a matter within the expertise of the Public Service Board.
4. Public Utilities — Rates — Determination
In petition by cable television system to Public Service Board for rate increase, where company had subscribers in both Vermont and New Hampshire, and maintained equipment in both states, the acceptance by the Board of an allocation method of accounting proffered by the state was proper and reasonable where the state's method was supported by a witness with extensive experience in utility accounting and where the Board found that the accounting method offered by the petitioner was arbitrary and unsupported by the evidence.
5. Public Utilities — Rates — Determination
In petition by cable television system to Public Service Board for rate increase, there was no abuse of discretion where the Board used the accounting method offered by the State in allocating microwave equipment located in Springfield, Vermont, since the State's accountant indicated that further auditing and fact finding would have been needed to justify the allocations for the equipment offered by the petitioner.
6. Public Utilities — Judicial Review — Findings of Fact
Contention of cable television system in appeal from decision of Public Service Board denying rate increase, that State's data contained a $30,000 error in computing depreciation, was without basis where the record indicated that the error was revealed at a public hearing at which the hearing examiner specifically took note of the mistake and the Board's order used the corrected depreciation amount.
7. Witnesses — Expert Evidence — Qualifications
Experts may be qualified by experience and training, in addition to education.
8. Witnesses — Expert Evidence — Qualifications
In petition by cable television system to Public Service Board for rate increase, the reliance of the Board on the State's expert who was amply qualified as he held a baccalaureate degree in business and had extensive experience in utility accounting even though not a certified public accountant, was amply supported by the facts where the expert of the petitioner had limited experience in utility accounting although he was a certified public accountant.
9. Public Utilities — Rate of Return — Reasonableness
In petition for rate increase to Public Service Board by cable television system, the ten percent rate of return awarded by the Board was within the discretion of the Board, where the cable system requested a fourteen percent increase since there was ample testimony in the record that the system provided poor service to its customers and the Board relied on this evidence in finding that a ten percent rate of return would be reasonable.
10. Public Utilities — Rate of Return — Determination
Poor service may not support an increase in the rate of return in petitions sought before the Public Service Board.
11. Administrative Law — Findings — Required Findings
Under chapter governing administrative procedure, section dealing with decisions and findings did not require Public Service Board in its decision to repeat each proposed finding in petition of cable television system for rate increase, but required that the record show that the Board considered and decided each proposed finding, and the record demonstrated that the Board complied with the statutory standard. 3 V.S.A. § 812.
Appeal by cable television system from denial of rate increase by Public Service Board. Public Service Board, Hunneman and Bloomberg, members, present. Affirmed.
Parker, Lamb Ankuda, P.C., Springfield, for Petitioner.
John J. Easton, Jr., Attorney General, and William Griffin, Assistant Attorney General, Montpelier, for Respondent.
Present: Barney, C.J., Hill and Underwood, JJ., and Shangraw, C.J. (Ret.) and Daley, J. (Ret.), Specially Assigned
Young's Community Television Corporation (Young's) petitioned the Public Service Board for a $0.55 rate increase. The Board denied the petition, and Young's has appealed the Board's action to this Court. We affirm.
Young's operates a small cable television system that serves approximately 4,012 subscribers in Vermont and 2,246 subscribers in New Hampshire. The company maintains equipment in both Vermont and New Hampshire. This division is at the center of this appeal. Young's contends that the Board underestimated the company's rate base and expenses because the Board allocated too little of the company's capital outlay and operating expenses to Vermont. Young's also claims that the rate of return used by the Board in deciding this petition is improper, and that the Board's findings were inadequate.
The standard of appellate review for the Board's orders is well established. "There is a strong presumption in favor of the validity of a Public Service Board order." In re Towne Hill Water Co., 139 Vt. 72, 74, 422 A.2d 927, 928 (1980) (citing Wendland v. Green Mountain Power Corp., 132 Vt. 320, 322, 318 A.2d 668, 670 (1974)). Decisions on matters within the Board's expertise are given great weight, see id., and the Board's factual findings will not be disturbed unless clearly erroneous. In re Green Mountain Power Corp., 131 Vt. 284, 303, 305 A.2d 571, 583 (1973). With this standard in mind we turn to the specific claims of error.
The appellant challenges the Board's acceptance of an allocation method proffered by the State. The State's exhibits showed that 56.16% of the appellant's plant (computed on a cost basis) was in Vermont, and 63.17% of the company's subscribers were in Vermont. The State's accountant used the 63.17% figure in allocating costs and capital attributable to both states. He used the plant figure, 56.16%, in allocating the costs of plants serving only one state. In contrast, the petitioner offered an allocation that purported to be based upon actual use. The Board found that the petitioner's method was arbitrary and unsupported by the evidence. The Board then concluded that the State's method was reasonable.
Selecting an appropriate accounting method for the computation of expenses and a rate base is a matter within the Board's expertise. See In re Burlington Electric Light Department, 135 Vt. 114, 117, 373 A.2d 514, 516-17 (1977). The State's method was supported by a witness with extensive experience in utility accounting. Given the difficulties in accurately assessing the actual use of plant by subscribers in both states, it was reasonable for the Board to adopt the State's method, which obviated these difficulties.
The appellant also argues that the Board failed to properly apply this method in two respects. First, he challenges the allocation of some microwave equipment located in Springfield, Vermont. This contention is clearly unfounded. The testimony of the State's accountant indicated that further auditing and fact finding — in short, another accounting system — would be needed to justify the allocations for this equipment offered by the petitioner. We find no abuse of the Board's discretion in using the State's technique. Second, he contends that the State's data contained a $30,000 error in computing depreciation which polluted the result. Again, the appellant has misconstrued the record. The error was revealed at a public hearing, and the hearing examiner specifically took note of the mistake. The Board's order used the corrected depreciation amount. Thus, no error appears.
The appellant also attacks the source of the accounting method. Young's contends that the Board was bound to accept the evidence of its expert, because Young's expert was a certified public accountant and the State's was not. This claim is untenable. Our precedent provides that experts may be qualified by experience and training, in addition to education. In re New England Telephone Telegraph Co., 135 Vt. 527, 536, 382 A.2d 826, 833 (1977). The State's witness was amply qualified under this standard, as he holds a baccalaureate degree in business and has extensive experience in utility accounting. Furthermore, although Young's expert was a certified public accountant, he had limited experience in utility accounting. These facts amply support the Board's reliance on the State's expert.
The appellant next contends that the ten percent rate of return allowed by the Board is inadequate. To the contrary, we find that it is supported by the record. Young's requested a fourteen percent increase. There was ample testimony in the record, however, that the appellant provided poor service to its customers. The Board relied on this evidence in finding that a ten percent rate of return would be reasonable. Poor service may not support an increase in the rate of return. E.g., Arlington Selectmen v. Arlington Water Co., 136 Vt. 495, 498, 394 A.2d 1130, 1131 (1978); In re New England Tel. Tel. Co., 115 Vt. 494, 513, 66 A.2d 135, 147 (1949). Awarding a ten percent return was within the Board's discretion due to Young's record of poor service.
Finally, Young's contends that the Board violated 3 V.S.A. § 812 in failing to rule on each of its proposed findings. This argument, however, distorts the mandate of 3 V.S.A. § 812. The Board need not repeat each proposed finding. Rather, the record must show that the Board considered and decided each proposed finding. See In re Green Mountain Power Corp., supra, 131 Vt. at 306-07, 305 A.2d at 584-85; In re Hemco, Inc., 129 Vt. 534, 537, 283 A.2d 246, 248 (1971). The record in this case demonstrates that the Board complied with the statutory standard.
Affirmed.