Off. of the People's Counsel for D.C. v. D.C. Public Serv. Comm'n. ( 2022 )

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DISTRICT OF COLUMBIA COURT OF APPEALS
Nos. 21-AA-0684, 21-AA-0869
OFFICE OF THE PEOPLE’S COUNSEL FOR THE DISTRICT OF COLUMBIA, PETITIONER,
v.
D.C. PUBLIC SERVICE COMMISSION, RESPONDENT,
and
POTOMAC ELECTRIC POWER COMPANY, INTERVENOR.
On Petition for Review
of a Decision of the D.C. Public Service Commission
(Formal Case No. 1156)
(Argued September 15, 2022 Decided November 10, 2022)
Scott H. Strauss, with whom Sandra Mattavous-Frye, Karen R. Sistrunk,
Laurence C. Daniels, and Amanda C. Drennen were on the brief, for petitioner.
Kimberly Lincoln-Stewart, with whom Christopher G. Lipscombe, Angela L.
Lee, Richard S. Herskovitz, Emil Hirsch, Emily Green, Frederick A. Douglas, Curtis
A. Boykin, and Nausheen Gaznabi were on the brief, for respondent.
Nicholas S. Penn, with whom Anne Bancroft, Kimberly A. Curry, Andrea H.
Harper, Dennis P. Jamouneau, Taylor W. Beckham, and Sherry F. Bellamy were on
the brief, for intervenor.
Before EASTERLY, MCLEESE, and HOWARD, Associate Judges.
2
EASTERLY, Associate Judge: The Office of the People’s Counsel for the
District of Columbia (“OPC”) brings this challenge to two orders of the D.C. Public
Service Commission (“the Commission”) in Formal Case No. 1156, in which the
Commission approved a multiyear rate plan for the Potomac Electric Power
Company (“Pepco”)’s electricity distribution services from 2020 to 2022.
Specifically, OPC argues that the Commission should not have permitted Pepco to
recover costs from its distribution customers that it incurred in conducting a remedial
investigation and feasibility study regarding possible environmental damage at or
from its facilities at 3400 Benning Road NE, Washington, D.C. (“the Benning Road
site”). OPC also contests the inclusion of two energy efficiency rebate and loan
programs targeting small businesses in Pepco’s rate plan, which would permit Pepco
to recover the costs of those programs from its customers in a future rate case.
We vacate the Commission’s orders as to both issues and remand for further
proceedings consistent with this opinion.
3
I. OPC’s Challenge to Pepco’s Recovery of Remedial Investigation Costs
A. Facts and Procedural History
Pepco’s Benning Road site is a 77-acre lot bordered by the Anacostia River
on its western side. The site contains a service center used to support its transmission
and distribution operations. The site also contains a power plant that began operating
in or around 1906, consisting of structures including a generating station, cooling
towers, and storage facilities. The generating station shut down in 2012.
In 1999, attempting to step back from its then-active energy production
business, Pepco applied to the Commission in Formal Case No. 945 for
authorization to divest its generating assets according to its proposed plan. The D.C.
Council, however, had “concerns”—the exact nature of which is not clear from the
record—about the proposed sale of two generating stations, including the one at
Benning Road, and thus it requested that the Commission hold the divestiture in
abeyance. In order to move its divestiture application forward, and after engaging
in “comprehensive negotiations,” Pepco agreed to comply with specific conditions
regarding those stations. These conditions were memorialized in Section 1.05 of the
resulting settlement agreement, hereinafter the “FCN 945 Settlement,” which
provided:
4
Nothing in this Settlement Agreement shall be construed
as requiring Pepco to include in the sale of the [generating
a]ssets, the Company’s generating stations located at
Benning Road and Buzzard Point in the District of
Columbia; provided, however, that if the Benning Road
and Buzzard Point generating stations are not included in
the sale of the [generating a]ssets, the Company shall be
thereafter barred and estopped from asserting or exercising
any legal right that it might otherwise have to recover from
customers located in the District of Columbia any stranded
costs associated with those generating stations. In
connection with any Pepco base rate proceeding in the
District of Columbia instituted after June 30, 2000, the
Benning Road and Buzzard Point generating stations shall
not be included in the cost of service for purposes of
determining the Company’s District of Columbia
jurisdictional revenue requirement.
The Commission approved this settlement agreement pursuant to its rules and
procedures. See 15 D.C.M.R. § 130.13-.17 (2022).
Ten years later, the United States Environmental Protection Agency (“EPA”)
released a report detailing environmental toxins found on and around the Benning
Road site. The report concluded that chemical contaminants known as PCBs 1 “have
1
“PCBs” refers to polychlorinated biphenyls, a solid waste that persists in the
environment without degrading; if a person consumes fish or other organisms that
have been contaminated with PCBs from their environment, the PCBs can cause “a
variety of adverse health effects, including cancer.” Consent Decree at 2, District of
Columbia v. Potomac Elec. Power Co., No. 1:11-cv-00282-BAH (D.D.C. Aug. 17,
2011) [hereinafter “DOEE Consent Decree”], https://benningservicecenter.com/
library/documents/BenningConsentDecree.pdf; https://perma.cc/WC6U-27WW.
5
been released from the site to the Anacostia River,” tracing one release of PCBs to
“the generating station’s cooling tower basins,” which discharge into the river. It
further concluded that “[t]he only potential uncontained potential source [of PCBs]
identified on the site” was a sludge dewatering area previously used in association
with the cooling towers.
In response to the report, the District Department of Energy and Environment
(“DOEE”) 2 notified Pepco that it intended to sue the company for abatement of
hazardous conditions resulting from the Benning Road site. To settle the intended
suit, Pepco entered into a consent decree in 2011 with the DOEE, which in part
bound Pepco to conduct a remedial investigation and feasibility study (“RI/FS”) that
would inform any future remedial actions. 3 As of the time of Pepco’s application in
this case, the company’s work on the RI/FS was ongoing.
In 2018, Pepco entered into a settlement agreement to resolve its 2017 rate
application, Formal Case No. 1150, before the Commission (hereinafter the “FCN
2
At the time, the DOEE was known as the District Department of the
Environment.
3
DOEE Consent Decree at 6.
6
1150 Settlement”). OPC was also a party to the settlement. Pepco had
unsuccessfully sought to place its RI/FS costs in a “regulatory asset” in previous rate
cases, but finally secured it in this settlement. 4 In relevant part, the FCN 1150
Settlement provided:
The Parties agree that Pepco will receive regulatory asset
treatment in the total amount of $3.3 million in actual costs
incurred to conduct a remedial investigation (“RI”) at the
Benning facility. Pepco will begin to recover the $3.3
million over a 10-year amortization period, with carrying
costs based on the Company’s Commission-authorized
rate of return. This recovery relates only to the RI costs
that have already been incurred as a result of the [DOEE]
Consent Decree . . . and does not relate to, or have any
precedential effect on, the recovery of additional RI costs
incurred as a result of the [DOEE] Consent Decree. . . .
Notwithstanding the foregoing provision, the Parties agree
that all Parties retain the right to challenge in future rate
cases Pepco’s entitlement to any further recovery from
ratepayers of this $3.3 million regulatory asset.
The Commission approved this settlement pursuant to its rules and procedures. See
15 D.C.M.R. § 130 (2022).
4
As the Commission explained at oral argument, a “regulatory asset” is a
“tracking mechanism” that enables examination of which of the company’s costs
were associated with a given item—here, the Benning Road RI/FS. As OPC
explained in its reply brief, expenses recorded in a regulatory asset “are recognized
as deferrals instead of period expenses” and are “deferred for potential future rate
recovery.”
7
In 2019, Pepco applied to the Commission for authority to establish its
distribution rates for 2020 to 2022 through a multiyear rate plan, initiating Formal
Case No. 1156. A multiyear rate plan is an alternative form of regulation that permits
the utility to avoid the traditional annual rate application process. In its application,
Pepco requested that the Commission approve recovery of a portion of its amortized
RI/FS costs that were included in the regulatory asset established in the FCN 1150
Settlement. Specifically, Pepco asked for permission to include approximately $1.9
million of its actual RI/FS costs incurred through December 31, 2017, in its
calculation of the rates it would charge its distribution customers under the plan. It
also requested similar recovery of its actual RI/FS costs incurred from January 1,
2018, through June 30, 2019, approximately totaling an additional $3 million.
The Commission received testimony and briefing from the various parties,
including argument from OPC that Section 1.05 of the FCN 945 Settlement barred
recovery of any RI/FS costs from the Benning Road site. The Commission
subsequently issued an order approving a modified version of Pepco’s multiyear rate
plan that reflected some concessions to objections raised by OPC and others, but
granted Pepco’s request to include in its rates the $1.9 million in pre-2018 RI/FS
costs. After restating the relevant language from the FCN 1150 Settlement, the
Commission noted that “[a] review of the Company’s request raises concerns about
8
the past uses of the site and how costs for the RI/FS . . . should be allocated among
generation, transmission, and distribution, and ultimately the amount that should be
recovered from District distribution customers.” But the Commission went on to
conclude that it was “persuaded by Pepco that the [RI/FS] costs were prudently
incurred and are recoverable consistent with Commission precedent.” Without
further explanation or any reference to the FCN 945 Settlement, the Commission
stated that it would permit the recovery “as the costs were approved in Formal Case
No. 1150.” It then deferred Pepco’s related request for recovery of RI/FS costs
“incurred after those approved in Formal Case No. 1150” (referring to the post-
December 31, 2017, costs), to be considered in a future rate case “once the Benning
Road environmental costs and future use of the property [are] determined.”
OPC filed a request for reconsideration of the Commission’s order,
challenging among other decisions the Commission’s approval of the RI/FS cost
recovery from distribution customers. The Commission issued a second order
declining to reconsider its initial order, but stating it would provide “clarification”
of aspects of that order. In this clarifying order, the Commission engaged for the
first time with OPC’s assertion that the FCN 945 Settlement barred recovery of the
RI/FS costs captured in the regulatory asset. It stated that it was “not persuaded by
OPC’s argument concerning the legal effect of [the FCN 945] Settlement
9
Agreement,” which “on its face . . . did not bar recovery of Pepco’s costs for future
environmental remediation, only stranded costs and future operating costs.”
Because in its view the “plain language” of the FCN 945 settlement agreement did
not bar recovery, the Commission reaffirmed that it would allow recovery “because
the costs were approved in Formal Case No. 1150.”
This petition for review followed. 5
5
OPC filed two petitions for review, now consolidated: one of the initial
order, filed after OPC requested reconsideration but before the Commission ruled
on that request, and one of the subsequently issued clarifying order. The
Commission asserts that this court lacks jurisdiction over the first petition because
the initial order was not final at the time of filing, while OPC asserts that the
Commission’s failure to grant or deny reconsideration within 30 days rendered its
order final by statute. See D.C. Code § 34-604(b). The Commission had instead
issued a series of orders “tolling” its time to act on the request.
We need not decide whether the Commission, by its own orders, had the
power to toll the 30-day deadline under D.C. Code § 34-604(b) to grant or deny
reconsideration of its initial order. Even assuming that OPC’s first petition was
technically premature when filed, we have jurisdiction over both its petition for
review of the Commission’s initial order and its petition for review of the
Commission’s clarifying order because the former was final by the time this case
was submitted for our consideration. See West v. Morris, 711 A.2d 1269, 1271 (D.C.
1998).
10
B. Analysis
The Commission did not engage with the possible effects of the FCN 945
Settlement in its initial order, instead stating merely that the “costs were approved”
already in the FCN 1150 Settlement, and it repeated this rationale in its clarifying
order. Before this court, the Commission rightly concedes that the FCN 1150
Settlement did not, as its orders indicated, guarantee full recovery of the costs
allocated to the regulatory asset approved therein and instead permitted OPC to
challenge recovery. We therefore focus our analysis here on whether the
Commission erred in concluding that the FCN 945 Settlement posed no bar to
recovery of the RI/FS costs because, by its “plain language,” the FCN 945
Settlement agreement applied only to stranded costs and “future operating costs.”
Before we engage in this analysis, we address our standard of review.
Broadly, our review of the Commission’s orders is limited. We defer to the
Commission’s “findings of fact . . . unless it shall appear that such findings are
unreasonable, arbitrary, or capricious.” Apartment & Off. Bldg. Ass’n of Metro.
Wash. v. Pub. Serv. Comm’n of D.C., 203 A.3d 772, 777 (D.C. 2019) (ellipsis
omitted) (quoting D.C. Code § 34-606). And we will affirm the Commission’s
orders “if there is substantial evidence to support [its] findings and conclusions and
11
the Commission has given reasoned consideration to each of the pertinent factors”
under the circumstances. Id. (brackets and internal quotation marks omitted). In
short, our deference is contingent on the Commission “fully and clearly explain[ing]
what it does and why it does it.” Id. (quoting Potomac Elec. Power Co. v. Pub. Serv.
Comm’n of D.C., 457 A.2d 776, 783-84 (D.C. 1983)); accord Off. of the People’s
Couns. v. Pub. Serv. Comm’n of D.C., 163 A.3d 735, 739 (D.C. 2017) (“To permit
meaningful judicial review, we require the Commission to explain its actions fully
and clearly.” (brackets omitted)).
Focusing more particularly on the FCN 945 Settlement—the basis for OPC’s
challenge to the Commission’s initial and clarifying orders—the Commission argues
that we are obligated to defer to its reading of this agreement. The Commission
relies on a decision from the United States Court of Appeals for the D.C. Circuit,
National Fuel Gas Supply Corp. v. Federal Energy Regulatory Commission, which
states that the D.C. Circuit will “give deference to an agency’s reading of a
settlement agreement even where the issue simply involves the proper construction
of language.” 811 F.2d 1563, 1569 (D.C. Cir. 1987). But this decision is not binding
12
on our court, 6 and under our case law, it is far from clear that this court defers to any
degree to the Commission’s interpretations of settlement agreements. See Grand
Hyatt Wash. v. D.C. Dep’t of Emp. Servs., 963 A.2d 142, 146-47 (D.C. 2008)
(“Settlement agreements . . . are contractual in nature and are interpreted under the
same rules as contracts[,]” meaning “the written language will govern the parties’
rights . . . .”); Dyer v. Bilaal, 983 A.2d 349, 355 (D.C. 2009) (“[W]e review de novo
a trial court’s interpretation of a settlement agreement.”); cf. D.C. Off. of Hum. Rts.
v. D.C. Dep’t of Corr., 40 A.3d 917, 923 (D.C. 2012) (noting that our standard
deference to agency interpretation is “based on the agency’s presumed expertise in
construing the statute[s] it administers” (internal quotation marks omitted)). Even
accepting for the sake of argument that deference to agency interpretation were
warranted in this context, it would only be appropriate where there was ambiguous
language and the agency’s interpretation of that language was reasonable. See
MorphoTrust USA, Inc. v. D.C. Cont. Appeals Bd., 115 A.3d 571, 583 (D.C. 2015)
(“In accordance with the Supreme Court’s decision in Chevron, U.S.A., Inc. v.
Natural Res. Def. Council, Inc., 467 U.S. 837 (1984), before we afford some
deference to an agency’s interpretation of the statute that it administers at least two
6
Although accorded respect, the decisions of the D.C. Circuit are only binding
on this court up to February 1, 1971. M.A.P. v. Ryan, 285 A.2d 310, 312 (D.C.
1971).
13
conditions must be met: (1) the statutory language in question must be ambiguous,
and (2) the agency’s interpretation must be reasonable.” (internal parallel citation
omitted)). We thus turn to the plain language of the settlement to see if we discern
ambiguity in its terms. See D.C. Metro. Police Dep’t v. Pinkard, 801 A.2d 86, 90
(D.C. 2002).
The FCN 945 Settlement states that in future base rate proceedings “the
Benning Road and Buzzard Point generating stations shall not be included in the cost
of service” to be passed on to its customers. The Commission read this to mean that
“the Benning Road and Buzzard Point generating stations[’ future operating costs]
shall not be included in the cost of service.” But this provision of the settlement
agreement contains no language limiting its application as to time (i.e., costs
incurred in the past, present, or future) or as to types of costs that can be attributed
to the generating station (i.e., only operating costs). The Commission simply read
in language that is not there. At oral argument before this court, the Commission
conceded that the plain language of the FCN 945 Settlement did not support its
determination that the agreement only applied to future operating costs. The
Commission is bound by the plain language of the agreement that the parties signed
and it approved.
14
Even so, interpretive questions remain regarding the scope of the application
of the FCN 945 Settlement to the RI/FS costs at the Benning Road site. To the extent
that the Commission is asking this court to conclude in the first instance that no
RI/FS costs are actually attributable to the Benning Road generating station and
thereby to uphold its determination that Pepco could pass on these costs to its
distribution customers, we cannot do so. The exact scope of what costs may be
attributed to the generating station is a complex and fact-intensive inquiry that
cannot be answered on the record before us. For example, the basic question of how
much of the 77-acre parcel of land at Benning Road was used for the generating
station has yet to be addressed. The Commission seemed to acknowledge the
complexity of these questions when it denied for the time being recovery of RI/FS
costs incurred after the FCN 1150 Settlement and expressed “concerns about the
past uses of the site and how costs for the RI/FS . . . should be allocated among
generation, transmission, and distribution, and ultimately the amount that should be
recovered from District distribution customers.” Now that the Commission
concedes that the FCN 1150 Settlement did not guarantee full recovery of the RI/FS
costs discussed therein, see supra, the same concerns would presumably pertain.
We therefore vacate the Commission’s order as to its approval of recovery of
the Benning Road RI/FS costs and remand for the Commission to consider whether
15
the FCN 945 Settlement bars recovery of some or all of those costs. On remand, the
Commission must provide a reasoned interpretation of the scope of the agreement
based on substantial evidence and set out why under its interpretation the RI/FS costs
are or are not within the settlement’s reach.
II. OPC’s Challenge to Inclusion of Energy Efficiency Programs in Pepco’s
Rate Plan for Future Recovery
A. Facts and Procedural History
While Pepco’s application in Formal Case No. 1156 for a multiyear rate plan
including the recovery of RI/FI costs discussed above was still pending, the Covid-
19 pandemic broke out. In response, the Commission requested further testimony
from the parties to FCN 1156 reflecting the impact of the pandemic. Pepco
submitted an “enhanced” plan that featured various revisions and, in pertinent part,
proposed new energy efficiency rebate and loan (“EERL”) programs primarily
targeting its small commercial customers. Pepco asked the Commission to approve
the programs, the $5 million cost of which Pepco could later recover, along with a
return at the associated cost of capital, 7 via a regulatory asset in a future rate case.
7
Pepco’s proposed asset treatment included an additional return on the carried
balance of the assets at a rate authorized by the Commission. In other words, if
16
The Commission’s initial order approved Pepco’s proposed EERL programs,
stating that it was “persuaded [the programs] are reasonable and will provide needed
relief to customers during the Covid-19 pandemic.” In its request for reconsideration
of the initial order, OPC challenged this decision, arguing that Pepco had failed to
comply with a provision of the CleanEnergy DC Omnibus Amendment Act of 2018,
which provides:
As of October 1, 2019, the electric company . . . , after
consultation and coordination with the Department of
Energy and the Environment and the District [Sustainable
Energy Utility (“SEU”)] and its advisory board, may apply
to the Commission to offer energy efficiency and demand
reduction programs in the District that the company can
demonstrate are not substantially similar to programs
offered or in development by the SEU, unless the SEU
supports such programs.
D.C. Code § 8-1774.07(g)(4).
In its clarifying order, the Commission rejected this argument on two primary
grounds: (1) because “§ 8-1774.07(g)(4) does not contain the words ‘shall’ or
‘must’” and “does not contain any sanctions or consequences for failing to
granted recovery of the asset, Pepco would recover an additional set percentage of
the asset value from its customers on top of the base recovery. That additional profit
is referred to as the cost of capital.
17
coordinate with the SEU,” the statute was “directory” and not mandatory in nature,
and (2) “Pepco made the determination that its program did not fall within the
purview of this statute,” which the Commission deemed “reasonable” because the
“overall intent of these statutory provisions” was to apply to “long-term [energy
efficiency] programs primarily aimed at low-to-moderate-income customers,” not
the short-term commercial programs proposed. 8
This petition for review followed.
B. Analysis
Where, as here, we are confronted with questions of statutory interpretation,
we look first to the plain language of the statute and, if that language is ambiguous,
then and only then do we defer to the Commission’s interpretation if reasonable.
Pinkard, 801 A.2d at 90; MorphoTrust USA, Inc., 115 A.3d at 583. Section
8
The Commission further concluded that it saw “no basis to conclude that
Pepco violated the statute” absent a showing by OPC that the EERL program was
duplicative of an SEU initiative, because the “overall intent” of § 8-1774.07 is “to
prevent the duplication of [energy efficiency] and demand reduction programs that
the SEU may be developing.” Finally, the Commission stated it was “reasonable
and consistent with Commission precedent” for Pepco to place the costs of these
programs in a recoverable regulatory asset because the programs were “in the public
interest” and “help[] to address the District’s climate change commitments.”
18
8-1774.07(g)(4) of the D.C. Code provides that, “after consultation and coordination
with” the DOEE and the DC SEU, an energy company like Pepco “may apply to the
Commission to offer energy efficiency and demand reduction programs in the
District.” We conclude that the Commission erred in determining both that this
statute did not apply to the EERL programs included in Pepco’s multiyear rate plan
and, even if it did apply, it did not require predicate steps by Pepco before including
these programs in its application to the Commission.
We first address what programs fall within the scope of D.C. Code
§ 8-1774.07(g)(4). By its plain language, the statute applies broadly and
unambiguously to “energy efficiency and demand reduction programs in the
District.” D.C. Code § 8-1774.07(g)(4). This unquestionably describes Pepco’s
proposed programs. The Commission’s determination to the contrary appears to rely
on language in § 8-1774.07(g)(5) suggesting that the Commission must consider
whether an application will primarily benefit low- and moderate-income residential
ratepayers. 9 But this language does not qualify the scope of § 8-1774.07(g)(4).
9
D.C. Code § 8-1774.07(g)(5) provides that “[a]n application submitted by
the electric company . . . pursuant to this subsection shall meet [1] the long-term and
annual energy savings metrics, which shall primarily benefit low- and moderate-
income residential ratepayers to the extent possible, [2] quantitative performance
indicators, and [3] cost-effective standards established by the Commission.”
19
Section 8-1774.07(g)(5) discusses what factors the Commission should consider
when evaluating the merits of an application it has already received. The
consultation-with-the-DOEE-and-SEU provision in § 8-1774.07(g)(4) outlines a
step the company must take before submitting an application.
Moreover, the Commission’s interpretation of D.C. § 8-1774.07(g)(4) is at
odds with the District’s broader energy goals that underlie the statute and the
administrative structure the District has established to pursue those goals. The
Council for the District of Columbia created the SEU in the Clean and Affordable
Energy Act of 2008, D.C. Act 17-497, 55 D.C. Reg. 9225 (Oct. 22, 2008). The
SEU’s express purpose is “to develop, coordinate, and provide programs for the
purpose of promoting the sustainable use of energy in the District of Columbia.”
D.C. Code § 8-1773.01(19) (emphasis added). Indeed, the legislative history of the
SEU’s establishment reveals that the Council was motivated to create such a utility
because Pepco and the Commission’s collective efforts to coordinate energy
programs without further oversight were “not adequate” and “plainly [did] not
work.” Report on Bill No. 17-492 before the Committee on Public Services and
Consumer Affairs, Council of the District of Columbia, at 8-9, 12-13 (June 2, 2008).
And the District added the specific language in subsection (g) to “clarif[y] that any
energy efficiency or demand reduction program must be created in consultation with
20
the Department of Energy and the Environment and the Sustainable Energy Utility
and its advisory board.” Amendment No. 1 to Bill No. 22-0904, D.C. Council, at 2
(Nov. 27, 2018) (emphasis added). It would be irrational and counterproductive to
carve out short-term programs targeting small business consumers from this
administrative structure when District-wide coordination of “any” energy efficiency
program is the statute’s manifest goal.
Having determined that the proposed programs fall within the statute’s ambit,
we further conclude that the consultation-with-the-DOEE-and-SEU provision in
§ 8-1774.07(g)(4) is mandatory by its plain language. Contrary to the Commission’s
reasoning in its clarifying order, a statute need not contain the exact words “shall”
or “must” in order to be mandatory. Here, the grammatical construction of the
sentence leaves no room for Pepco to act at its discretion. To say an “electric
company . . . , after consultation and coordination with the Department of Energy
and the Environment and the District SEU and its advisory board, may apply to the
Commission” means that that electric company “may not before such consultation
apply to the Commission.” The Commission’s focus on the lack of express penalty
was also misguided; as OPC correctly pointed out, the denial of any application
submitted without the required consultation and coordination is sufficient
consequence in itself.
21
In its brief to this court, the Commission takes a new approach and appears to
argue that pursuant to its broad ratemaking authority under D.C. Code
§ 34-1504(d)(1) (“Notwithstanding any other provision of law, the Commission may
regulate the regulated services of the electric company through alternative forms of
regulation” (emphasis added)), it has the power to waive the consultation-with-the-
DOEE-and-SEU requirement. We cannot agree.
We note at the outset that, because the Commission did not articulate the
ability to grant such waivers as one of its stated grounds for granting Pepco’s request,
we cannot affirm on this basis. Walsh v. D.C. Bd. of Appeals & Rev., 826 A.2d 375,
380 (D.C. 2003) (“An administrative order can only be sustained on the grounds
relied on by the agency, and not on agency counsel’s post hoc rationalizations.”
(cleaned up)). Furthermore, taking this argument at face value would yield absurd
results. 10 Whatever the exact boundaries of the Commission’s authority under
§ 34-1504(d)(1), we need not define them in this case because §§ 8-1774.07(g)(4)
and 34-1504(d)(1) “can be harmonized and deemed to have concurrent operation,”
Stevens v. D.C. Dep’t of Health, 150 A.3d 307, 316 (D.C. 2016) (internal quotation
10
As the Commission conceded at oral argument, the Commission could not,
for example, discriminate freely in disregard of the Human Rights Act so long as it
did so while establishing an alternative form of regulation.
22
marks omitted), alleviating any need to curb one for the benefit of the other. Section
8-1774.07(g)(4) imposes a consultation requirement on Pepco prior to its application
to the Commission; once an application has been properly presented to the
Commission, the Commission retains its full regulatory authority over that
application.
Because Pepco was required by § 8-1774.07(g)(4) to consult with the DOEE
and DC SEU prior to its application but the Commission granted its application in
the absence of any evidence that Pepco complied with this prerequisite, we vacate
the Commission’s order as to its approval of Pepco’s EERL programs. 11
III. Conclusion
For the foregoing reasons, we vacate the Commission’s orders in relevant part
and remand for further proceedings consistent with this opinion.
So ordered.
11
We therefore do not reach the parties’ arguments regarding the
Commission’s substantive assessment, see supra note 8, of whether the EERL
programs would be duplicative of other SEU initiatives, or whether the programs
meet the District’s climate change goals and serve the public interest.