Sierra Pacific Power Co. v. Public Service Commission

OPINION By the Court, Springer, J.: This is an appeal from the district court’s affirmation of an order entered by the Public Service Commission (PSC) in rate application No. 1289. Sierra Pacific Power Company (Sierra Pacific) filed a rate increase application with the PSC on September 26, 1977, in which they requested $2,802,310. The application requested permission to raise electric rates due to increased fuel costs. The PSC held a public hearing on the application and on November 29, 1977, issued its Opinion and Order granting $1,158,410 of the $2,802,310 increase requested by Sierra Pacific. Sierra Pacific filed a complaint in the district court, as provided for in NRS 704.540. This complaint alleged that the PSC [481] had erred in granting only a portion of the amount requested in the application. Sierra Pacific alleged that the PSC exceeded its statutory authority in its interpretation of accounting procedures and that the record before the PSC did not support the PSC’s accounting treatment of certain energy sales. We believe that both the PSC and the district court were correct and therefore affirm the judgment of the district court. NRS 704.110(5) and NRS 704.185 permit public utilities to use a deferred energy accounting procedure to account for and recover increased costs incurred in the purchase of fuel or of power. The PSC promulgated General Order 21 to provide a mechanism whereby utilities could elect to use the deferred energy accounting procedure pursuant to these NRS provisions. By electing to follow accounting methods established by the PSC, a utility is enabled to recover these increased costs without having to go through the ordinary and relatively cumbersome rate increase process. Sierra Pacific used such deferred accounting to reflect changes in costs of fuels and purchased power, and filed with the PSC this rate application to recover incurred costs. The controversy involves Sierra Pacific’s sale of surplus power as “economy energy” and “interchange energy” to Pacific Gas and Electric Company (P.G. & E.) and Utah Power & Light Company (U.P. & L.) and the accounting method used to reflect the amounts received therefrom. In this case, Sierra Pacific credited the amounts they received from P.G. & E. and U.P. & L. to Account 447, which is for “sales for resale,” instead of Account 555, which is for “purchased power.” The significance of this accounting treatment is that when the receipts from the sales are credited to Account 555, the ratepayer’s liability for the increased fuel costs is immediately reduced by the amount of the sales. By crediting the receipts to Account 447, as Sierra Pacific contends they should be, the ratepayers bear the total increase in fuel costs, despite the fact that some of the energy produced from the fuel has been sold to other utilities. The PSC, in reviewing these accounting practices, concluded that their approval of Sierra Pacific’s procedure would be tantamount to approving an increase in Sierra Pacific’s earnings without the benefit of a general rate increase ápplication filed pursuant to NRS 704.100 and 704.110, contrary to General Order 21. The PSC’s order (Docket No. 1289) required that, among other things, all future gross receipts from economy energy [482] sales be credited by Sierra Pacific to Account 555. Here, as in the district court, Sierra Pacific argues that the order amended the language of the PSC’s previous general order, in violation of the Nevada Administrative Procedure Act (APA), NRS 233B, which allegedly resulted in a denial of their due process rights of notice and opportunity to be heard. This argument is without merit. The PSC’s order is harmonious with the purpose behind deferred energy accounting and results in an immediate lowering of utility rates. The opinion accompanying the order states: Turning now to Account 555 we are of the opinion that the plain language of this account together with Section 2.42 of General Order No. 21 clearly contemplates and indeed requires the recording of net settlements associated with interchange energy transactions. We interpret net settlements in this respect to be the result of netting the gross receipts between Applicant and [other power companies with whom Sierra Pacific has interconnection agreements.] The PSC’s opinion decided what amount of certain energy sales should be credited to Account 5551, and did not promulgate new regulations in violation of the APA. Contrary to Sierra Pacific’s further argument, the order of the PSC was supported by ample evidence which was introduced at the hearing. The function of this court in this instance is the same as that of the district court. We have reviewed the evidence presented to the administrative body and determined that their actions were neither arbitrary nor capricious. There was no abuse of discretion. Southwest Gas v. Pub. Serv. Comm’n, 86 Nev. 662, 474 P.2d 379 (1979); No. Las Vegas v. Pub. Serv. Comm’n, 83 Nev. 278, 429 P.2d 66 (1967). The judgment of the district court is affirmed. Gunderson, C. J., and Zenoff, Sr. J.,2 and Mowbray, J., concur. Footnotes [1] A. This account shall include the cost at point of receipt by the utility of electricity purchased for resale. It shall include, also, net settlements for exchange of electricity or power, such as economy energy, off-peak energy for on-peak energy, spinning reserve capacity, etc. In addition, the account shall include the net settlements of transactions under pooling or interconnection agreements wherein there is a balancing of debits and credits for energy, capacity, etc. Distinct purchases and sales shall not be recorded merely because debit and credit amounts are combined in the voucher settlement.