Appeal of Seacoast Anti-Pollution League , 125 N.H. 708 ( 1984 )

Per curiam.

This is an appeal from an order of the public utilities commission granting the petition of Public Service Company of New Hampshire for authority to issue securities in an amount up to $425 million. We affirm.

Part I (November 27,1984)

RSA 369:1 and 4 empower a public utility to engage in financing by issuing and selling securities with the approval of the commission. That approval must rest on a finding that the issue would be consistent with “the public good.” Id. On June 29, 1984, the company filed its petition for approval of this financing.

The financing will implement the second of a three-step financing plan devised in the spring of 1984 in response to the company’s financial problems. The commission approved the first step of that plan earlier this year by authorizing the sale of $90 million of short-term securities.

The securities to be issued under this second step will be debentures and warrants. The object of this sale is to provide funds to retire the $90 million indebtedness incurred as step one, plus $335 million in new money.

About ten percent of this money is intended for the company’s share of new construction at the Seabrook nuclear power plant. The remainder will be used for debt service on the company’s investment in that plant, for projects unrelated to Seabrook and for expenses of financing.

The anticipated third step in the plan has been given the name of Newbrook. The Newbrook financing would provide the company’s share of money needed to complete the first reactor at Seabrook. The amount of that share has been estimated at $350 million, though a preliminary prospectus issued on September 4, 1984, is said to have put the amount at $730 million. The commission has already opened a docket, DF 84-200, for consideration of the Newbrook financing, though it has not begun hearings on it.

On July 30, 1984, the commission issued a procedural order that recognized the requirement of Appeal of Roger Easton, 125 N.H. 205, 480 A.2d 88 (1984). That case held that RSA 369:1 and 4 obligate the commission to consider the economic justifiability of the object of a financing, in deciding whether the financing would be in the public good.

The company objected to this first procedural order and presented the testimony of two witnesses that there would be a defacto denial of the petition unless the commission reached a decision on this second step financing by August 31, 1984. They gave their opinions that even an approval of the request after that date would come too late for the company to raise the money in time to stave off bankruptcy.

In response to this testimony, the commission issued a second procedural order on August 2, 1984. In that order the commission stated its finding that the company’s financial situation required action on the petition to approve the second step financing before it would be possible to complete any Easton inquiry into the economic justifiability of allowing the company to participate in the completion of the first Seabrook reactor. The commission therefore deferred the Easton inquiry to the time of the anticipated hearing on the third or Newbrook step of the financing plan.

The second procedural order accordingly limited the scope of the inquiry into the public good under the present petition to a consideration of

“1) the terms, conditions and amount of the proposed financing;

2) the purpose of the proposed financing; and

3) the short term effect of successful completion of the proposed financing on the company’s capital structure.”

(Emphasis supplied.)

The commission proceeded to take evidence in addition to the testimony from the witnesses mentioned above, and on August 28 it granted the petition to approve the second step of the financing plan. The Seacoast Anti-Pollution League (SAPL) then filed an appeal on two issues and requested an emergency hearing. It appealed the refusal of the commission’s chairman to recuse himself and the limitation provided by the second procedural order on the scope of the inquiry into public good.

We ruled on these issues on September 7, 1984, in Appeal of Seacoast Anti-Pollution League, 125 N.H. 465, 482 A.2d 509 (1984). We held that the chairman should have recused himself, and for that reason we vacated both the order granting the petition and the second procedural order, in which the chairman had participated.

Since it was clear that the scope of the inquiry would be contested on remand as it had been in the first instance, we went on. to consider the merits of the second procedural order, and by a divided court we upheld it on its merits. The majority held that the Easton inquiry into the economic desirability of the company’s continuing participation in construction of the first Seabrook reactor could be deferred until the commission considered the Newbrook step of financing. The majority accepted the commission’s determination that the company’s financial position required action on the financing request before it would be possible to complete an Easton inquiry. Since only ten percent of the second step financing would go for new Seabrook construction, and since the Newbrook hearing would be devoted to a request for substantial funds to complete the first Seabrook reactor, the majority concluded that postponement of the Easton inquiry to the Newbrook step would not render that inquiry academic. Thus the majority concluded that it was not unlawful or clearly unreasonable within the meaning of RSA 541:13 to defer the Easton inquiry, and consequently upheld the merits of the second procedural order.

Following our earlier opinion on September 7, 1984, the chairman of the commission recused himself, and the Governor and Council appointed John N. Nassikas, Esq., as a special commissioner. See RSA 363:20. The intervenor SAPL then moved to expand the scope of the proceeding beyond the limits described above and to reopen the record for further testimony. Before ruling on that motion the commissioners undertook a complete review of the record of evidence previously submitted.

On September 21, 1984, the commission issued the order that is the subject of this appeal. It unanimously decided to confine its inquiry to the limits that this court had upheld in Appeal of Seacoast Anti-Pollution League supra, and it was apparently unanimous in refusing to reopen the record. On the basis of that record, compiled before the order of August 28, 1984, a majority of the commission again granted the petition to approve the second step financing, subject to these conditions on the company’s accounting and expenditure of funds: the company must file monthly accounts of the disposition of the proceeds of the financing; the company may not contribute more to the cost of new construction at Seabrook than its share of construction computed at the level of $5 million per week, unless otherwise authorized in the anticipated order on the New-brook financing; the company may continue to service debt and allowance for funds used during Seabrook construction only until the date of the Newbrook order, but not thereafter unless specifically authorized; the company may not declare or pay preferred or common stock dividends without the commission’s specific authority. On September 26, 1984, the commission supplemented this order by approving the pricing of the securities.

The intervenors SAPL and Campaign for Ratepayers’ Rights filed motions for rehearing. The commission denied each motion, and these intervenors then brought the present appeal.

The appellants fault the commission for two asserted errors. They claim first that the commission erroneously limited its consideration of what the public good required. Specifically, they claim that the commission erred in failing to consider the effects of this financing over the long term on the company’s capital structure and on its rates to be charged to customers. They claim, second, that the commission erred in refusing to reopen the record for further testimony.

Turning first to the scope of the commission’s inquiry, the appellants argue that the commission ignored the potential effect of the exercise of the stock warrants on the ratio of debt to equity of the company’s capital structure. This argument is factually correct. There is no question that the majority of the commission considered the effects of the financing on capitalization only for the short term, that is, the effect as it may be after the sale of the financing instruments but before the exercise of the stock warrants among those instruments. The majority confined themselves to noting that the expected short-term effects will result in a capital structure close to the norm for such utilities, of 50% debt, 15% preferred and 35% common stock. See A. Priest, Principles of Public Utility Regulation 209 (1969); see also E. Nichols & F. Welch, Ruling Principles of Utility Regulation — Rate of Return 144 (Supp. A. 1964).

The appellants further argue that the commission failed to consider the likely effect of this financing on the rates that the company will ultimately charge customers. They claim that the commission violated its obligation under Petition of the New Hampshire Gas & Electric Co., 88 N.H. 50, 184 A. 602 (1936), to determine whether the capitalization is consistent with reasonable rates. Again, there is no question that the commission deferred an inquiry on rate effect to a future hearing, noting that rate support need not follow the financing. At the least, we may say that this financing will increase pressure for higher rates, and that the commission will not address that pressure until it reaches the Easton inquiry to be held in connection with the Newbrook request.

In support of the commission, the company gives one answer to each of these arguments. The appellants’ concerns about the debt-equity ratio and about the effect on rates are concerns about long-term effects of the financing. Yet Appeal of Seacoast Anti-Pollution League supra upheld the substance of the second procedural order, limiting the consideration to the short-term effects of the financing. After the second procedural order was vacated, the commission relied on Appeal of Seacoast Anti-Pollution League supra when it adopted the same limitation on the scope of its consideration this second time. Thus, the company submits, the appellants’ arguments run squarely up against Appeal of Seacoast Anti-Pollution League supra. So long as that opinion stands, the appellants must lose.

This response is well taken. In Appeal of Seacoast Anti-Pollution League supra we sustained the merits of the very limitation that the appellants now attack. We found no error in the order that confined the inquiry to the short-term effects of this second step financing on capitalization. It is true that the arguments, and opinion, in that case were couched in terms of the commission’s obligation to consider the economic alternatives to the company’s completion of the first Seabrook reactor. But that consideration of economic alternatives necessarily includes a consideration of capital structure and rates, and what the appellants now claim as error is unquestionably consistent with our decision in the former appeal.

The commission was correct in relying on that recent precedent, and we have heard no persuasive reason to reconsider our earlier ruling. We reason today as we reasoned in Appeal of Seacoast Anti-Pollution League supra that the commission did not act illegally or unreasonably in the circumstances of this case when it chose to defer the Easton inquiry. Those circumstances include the small amount of the financing that will go for new construction, and the very small proportion of that amount compared to the company’s investment in Seabrook to date, of more than a billion dollars; the commission’s finding of the risk, if not the certainty, of bankruptcy if consideration of this financing were to await an Easton hearing; and the existence of a genuine opportunity for an Easton hearing in the near future in connection with the Newbrook financing.

Whether or not the commission’s decision to defer the Easton hearing was the only reasonable decision possible, at the least it was a reasonable decision. While neither the commission nor this court denies that the appellants’ concerns deserve great weight, on the record before it the commission was entitled to defer consideration of those concerns to the next hearing.

Up to this point we have referred repeatedly to the record and the conclusions that the commission was entitled to draw from it. The appellants’ second broad claim of error attacks the sufficiency of that record.

As we noted above, the commission compiled the record prior to its first decision to approve the financing, on August 28, 1984, which we later vacated. Thereafter the commission with its substituted member denied SAPL’s motion to reopen the record.

The appellants maintain that this was error, because of two developments since the close of the record. The first has been the company’s continued desire for approval of the present financing request, even though the date of the supposed de facto denial has long since passed. The second development was the company’s disclosure, in a preliminary prospectus dated September 4, 1984, of cost and other projections differing from the projections offered in support of the financing request. The appellants argue that each development required the opening of the record for further evidence, without which the present order may not be sustained.

Turning to the failed prediction of the date of de facto denial, there is no dispute that two witnesses for the company did testify that the company would need approval of the financing by August 31, 1984, or the financing would come too late. August 31 has come and gone and the company still seeks the financing. The same two witnesses gave other testimony. The appellants argue that the witnesses’ record of error about the defacto denial date puts their credibility generally in issue so as to infect all their other testimony.

The appellants assume that what they have described as an issue of credibility can be resolved only after hearing live testimony. Since the new member of the commission did not hear the witnesses, the appellants assert that the record must be opened and the witnesses recalled, so that the new member can hear them and judge their credibility for himself.

In considering this argument, it is well to remember that we are not dealing here with an eyewitness’ account of past events, but with expert witnesses’ predictions about future conditions. We are not dealing with fact-finders whose job is only to determine what happened, but with expert administrative officials whose job is also to make predictions about the future, for the purpose of deciding what it would be reasonable to do.

It is true of course that the expert witness testifying to the expert official may lie, in the sense of making a prediction he does not believe to be sound, but not every failed prediction implies a lie. The characteristic problem about such testimony is not a credibility judgment about the eyewitness’ truthfulness, but a reliability judgment about the odds that the expert’s prediction will prove to have been accurate.

This distinction supports, though it does not necessarily limit, the general rule that an administrative officer may act on a written record of testimony by witnesses whom he has not personally seen or heard. Colburn v. Personnel Commission, 118 N.H. 60, 382 A.2d 907 (1978). See Browning-Ferris Indus, v. State, 115 N.H. 190, 339 A.2d 1 (1975). See also RSA 541-A:19 (Supp. 1983). This general rule may apply even in a case where experts are in conflict, when the choice of whom to believe is “a function of logical analysis, credentials, data base, and other factors readily discernible to one who reads the record.” New England Coalition v. U.S. Nuclear, Etc., 582 F.2d 87, 100 (1st Cir. 1978). By the same reasoning, the written record may support an evaluation of an expert when some of his testimony has come into conflict with later events.

We recognize an exception to this general rule, of course, when the record does not provide a reasonable basis for evaluating the kind of testimony in question. Then, a given administrative official’s personal observation is necessary to evaluate testimony before an administrative tribunal. See Opinion of the Justices, 117 N.H. 386, 373 A.2d 644 (1977); Gamble-Skogmo, Inc. v. Federal Trade Commission, 211 F.2d 106 (8th Cir. 1954).

In this case the commission decided to follow the general rule by acting on the prior written record, even though its new member had not heard or seen the witnesses. We must uphold this decision unless it was a clearly unreasonable exercise of discretion. See RSA 541:13. Here there was a reasonable basis to trust to the record in judging the worth of the witnesses.

The commission had a record of more than four hundred pages of exhibits indicating the company’s financial condition, its problems with cash flow, and its agreements with creditors and investors. The commission could find that this evidence was a basis for deciding whether the failed prediction of the date had been egregious, and whether to accept the witnesses’ further testimony about the feasibility of financing alternatives. Hence, we conclude that there was no error in failing to reopen the record, in spite of the failed prediction.

This brings us to a consideration of the second development that the appellants claim required a reopening of the record. It is undisputed that underwriters issued a preliminary prospectus for this financing, dated September 4, 1984. While the prospectus was not in the record and apparently was not a basis for the commission’s majority decision, both the majority and the dissenting commissioner referred to it. The prospectus is not before us, but it is said to disclose that the company will require more capital to complete the first Seabrook reactor than its present financing request indicates, that the third step in financing will call for substantially more money, that the completion date for the first reactor will probably be later than expected, and that two bulk customers plan to seek power from other sources.

However significant these changes may be, if they are accepted, they do not call for the reopening of the record of this second step financing unless they affect the commission’s determinations that speedy action is required on this request and that a genuine Easton hearing can appropriately be held in connection with Newbrook.

The changes appear to have neither effect. They have no bearing on the need for speedy decision. The company’s financial exigencies are obviously no less pressing if we assume that Seabrook’s costs will be up and demand for its power will be down.

Nor will the changed projections, if accepted, render academic the coming Easton hearing on the future of the company’s participation in Seabrook construction. To the contrary, the new projections will be highly material in assessing the relative desirability of completing or abandoning the first reactor. Indeed, our brothers in dissent do not claim that the changed projections would render a later Easton hearing an empty exercise. They argue, rather, that the prospect of such changes demands an Easton inquiry without further delay. Their dissent brings us to the nub of our disagreement. We believe that the commission had a sustainable basis in the evidence for two conclusions: that the company could not survive an Easton hearing without substantial financing and that the financing as proposed is the only financing with a reasonable chance of success. It is the acceptance or rejection of these conclusions that divide us in this appeal, as in the last one. Because we in the majority do accept those two conclusions, we hold that the appellants have not met their burden to demonstrate that the commission was acting unlawfully or unreasonably in refusing to postpone its decision on this petition, in order to reopen the record for evidence of the changed projections.

Although this discussion resolves the appeal, we would not conclude this opinion without a word about the requirement of what we have come to call the Easton inquiry. Despite the differences that divide the court in this case, we should note that the court is unanimous in its understanding of the requirement imposed by Appeal of Roger Easton, 125 N.H. 205, 480 A.2d 88 (1984). The holding in that case will require the commission to determine the relative economic desirability of allowing or disallowing the company’s continuing participation in construction of the first Seabrook reactor, before it rules on the anticipated third or Newbrook financing request.

Our opinion has referred to some of the issues that the commission must address in the course of its Easton inquiry. As an example, we remind the commission that Petition of the New Hampshire Gas & Electric Co., 88 N.H. 50, 184 A. 602 (1936) held that “the primary public interest may be found to be affected injuriously” “if it appears, upon all the evidence, that the capitalization sought is so high that the utility, because of [its] inability to earn operating costs, depreciation and other charges, will not be able to give its consumers at reasonable rates the service to which they are entitled . . . .” Id. at 57, 184 A. at 607. Therefore, in the Newbrook proceeding the commission must address the effect on the company’s future rates of this and any further investment, with findings of fact sufficient for genuine appellate review.

Whatever the commission’s findings and the ultimate Easton determination may be, they must rest on the record of a substantial inquiry. Just as the commission must give a reasonable amount of time to the Easton proceeding, so this court must do the same if an appeal is subsequently taken. Therefore, none of the parties should take the expedited consideration that the commission and this court have given to this second financing request as precedent for seeking to truncate the Easton inquiry or any review of its results.

Part II (April 12, 1985)^*

In its appeal, SAPL raised the question, with respect to public utility securities issued under an effective, unsuspended public utilities commission order pending appeal of that order, “[w]hether, in the event this Court should hold the order appealed from was unlawful, or unreasonable or unjust, the securities issued pursuant thereto would remain valid.”

Our holding in Part I would normally make it unnecessary for us to address this issue. It appears, however, that the question posed by SAPL in this case is one that is likely to arise again not only in other unrelated financing proceedings, but also with respect to financing proposals related to this one, which are presently being considered by the commission. Accordingly, in the interests of conserving judicial resources and judicial economy we will address the issue now. See Saltzman v. Town of Kingston, 124 N.H. 515, 520-21, 475 A.2d 1, 4 (1984).

The only authority we have found dealing directly with this issue is State ex rel. Wisconsin Electric Power Co. v. Bardwell, 71 Wis. 2d 718, 239 N.W.2d 78 (1976). In Bardwell, a power company’s financing proposal was approved by the Wisconsin Public Service Commission (PSC), the equivalent of the PUC here. Intervenors then petitioned a Wisconsin trial court for a stay or a reversal of the approval order, which were both denied. The utility then sought a declaratory judgment from the Wisconsin Supreme Court that the securities involved in the proposal would be valid when issued, regardless of the ultimate outcome of any appeal of the PSC’s authorizing order.

The Wisconsin Supreme Court accepted original jurisdiction and essentially granted the requested relief. It held that “unless a stay is granted, the securities may be issued .... Once issued, they are valid.” Id. at 728, 239 N.W.2d at 84. While the PSC’s approval of the issue might be overturned on appeal, “any appropriate judicial remedy . . . should be directed toward the use of proceeds of the bonds, rather than the validity of the bonds themselves.” Id. at 729, 239 N.W.2d at 85 (emphasis added).

The Bardwell court based its holding on the language of the Wisconsin statutes governing the issuance of securities by public service corporations. Those statutes prohibit “the issuance of securities for any purposes which are not proper corporate purposes, or in an amount greater than is reasonably necessary for such corporate purposes . . . .” Wis. Stat. § 184.03 (1) (1981-82). They also require, as a prerequisite to issuance, a PSC finding “that the financial condition, plan of operation and proposed undertakings of the corporation are such as to afford reasonable protection to purchasers of the securities to be issued . . . .” Wis. Stat. § 184.06(1) (1981-82) (emphasis added).

The court noted that under the Wisconsin statute the filing of an appeal from the order authorizing the financing would not of itself stay the issuance of the bonds. Bardwell, 71 Wis. 2d at 728, 239 N.W.2d at 84. It concluded that the clear legislative intent to protect investors could not be fulfilled unless the bonds were deemed valid when issued, and that “the public interest [i.e., that of “consumer/ ratepayers or the public at large”] is to be protected by means other than subsequent invalidation of the securities.” Id. at 727, 239 N.W.2d at 84.

The procedure by which the issuance of public utility stocks, bonds, and other securities is authorized in New Hampshire is similar to that in Wisconsin. The criteria for approval of an issue, however, have a different emphasis. In New Hampshire, the commission must find that “the proposed issue and sale of securities ... is consistent with the public good.” RSA 369:1 (emphasis added). Additionally, this court has previously stated that the protection of investors’ interests must be “secondary” to the “primary concern of the commission,” which is “the protection of the consuming public.” Petition of the New Hampshire Gas and Electric Co., 88 N.H. 50, 57, 184 A. 602, 607 (1936).

That having been said, the question remains whether protection of the public interest will ever require that bonds be invalidated if the order authorizing their issuance is overturned on appeal after the bonds have been issued. As we interpret our statutes, the legislature has already answered this question in the negative; it has instead clearly provided that the public good is to be protected by means other than post-issue invalidation.

Two statutes currently provide for the possible suspension of commission orders^RSA 541:5 provides that the commission itself may suspend an order, “upon such terms and conditions as the commission may prescribe,” pending consideration of a motion for rehearing. Under that provision, the commission, within ten days of the filing of a motion for rehearing, must grant or deny the motion, or suspend the order pending further consideration. Appeal of Concord Natural Gas Corp., 121 N.H. 685, 690-91, 433 A.2d 1291, 1295 (1981). The ten-day period is purposely short to avoid a protracted period of de facto suspension. The statute represents a legislative determination that ten days is per se a reasonable period in which the commission can determine its action on the motion for rehearing without risk of the parties changing their position. The rehearing offers the parties, both intervenors and utilities, their first and only opportunity to convince the commission that an error has been made. The commission’s initial order should not be deemed a valid authorization until the rehearing is completed.

RSA 541:18 reads, in pertinent part:

“No appeal or other proceedings taken from an order of the commission shall suspend the operation of such order; provided, that the supreme court may order a suspension of such order pending the determination of such appeal or other proceeding whenever, in the opinion of the court, justice may require such suspension . . . .”

We take this to reflect a legislative determination that any significant threat to the public interest, stemming from a commission order authorizing the issuance of securities whose propriety has been questioned, should be dealt with by means of a suspension. An unsuspended commission order becomes effective upon completion (or denial) of rehearing, unless a request for temporary suspension or stay pending appeal is properly filed with, and granted by, this court.

We need not decide whether RSA 541:18 authorizes this court to suspend a commission order before the commission has ruled on a motion for rehearing. The statute is ambiguous on this point, but the speed with which the commission is required to act, RSA 541:5, makes it unlikely that the issue will ever arise in practice.

Appeals to this court, however, may sometimes not be resolved for many months. This fact may have serious consequences for a public utility that is relying on its ability to issue securities within a few days of receiving commission approval, as is customary practice.

As the Bardwell court pointed out, the mere possibility that securities issued pursuant to a financing order will later be invalidated acts as a de facto suspension of the order authorizing their issue, by placing the securities in an “unfavorable competitive position.” Bardwell, 71 Wis. 2d at 725, 239 N.W.2d at 83. To interpret our statutes as allowing this possibility would render meaningless the language in RSA 541:18 providing for suspension of orders in securities cases.

Whether or not a suspension is required will depend on the facts and circumstances of the particular case. SAPL correctly points out that there are limits to the commission’s authority under RSA 369:1 to impose conditions on the use of financing proceeds. We have emphasized, however, that “[t]he PUC is nevertheless still free to attach reasonable conditions to any future financings under RSA 369:1 as it properly finds to be ‘necessary in the public interest.’” Appeal of Public Serv. Co. of N.H., 122 N.H. 1062, 1072, 454 A.2d 435, 441 (1982).

We accordingly see no reason in principle why the commission cannot impose such conditions to the authorization of financing instruments or the use of financing proceeds, to be effective during the pendency of an appeal, as would be necessary and sufficient to protect both the purchasers of the securities and the ratepaying public in the event that this court ultimately determined that the financing order was unlawful. Whether the limits on the commission’s authority to impose such conditions, or the commission’s failure to impose them, will ever make suspension of a financing order pending appeal the only practicable means of protecting the rate-paying public, or whether conditions the commission may impose will make suspension unnecessary, is, under RSA 541:18, a matter left to the discretion of this court. Such a question must be answered in the context of a particular case.

The legislature specifically recognized the need to protect purchasers of securities when it enacted RSA 382-A:8-202(2)(a), which reads:

“A security other than one issued by a government or governmental agency or unit even though issued with a defect going to its validity is valid in the hands of a purchaser for value and without notice of the particular defect unless the defect involves a violation of constitutional provisions in which case the security is valid in the hands of a subsequent purchaser for value and without notice of the defect.”

The mere possibility that an order authorizing the issuance of securities may, many months later, be overturned on appeal, when neither the commission nor this court has suspended the order, or when no suspension was sought, does not amount to notice of a defect per se. A purchaser for value who has notice only of the appeal is thus protected by the statute. To hold otherwise would be to permit an appealing party to usurp the role allocated to this court by RSA 541:18; every appeal would create a “defect” that would effectively suspend the operation of an issuing order by casting doubt on the subsequent validity of the securities issued, thereby making them unmarketable or substantially reducing their market value.

We cannot agree with the dissenters that this holding will create “a number of practical problems.” As is evident from the scarcity of precedent, the question involved here does not arise often. Indeed, it is a development of recent origin in this State that parties have sought to use financing proceedings to challenge collaterally prior orders or rulings of the commission which have either not been appealed or the appeal from which has been resolved. Few proposed issues of securities encounter the degree of opposition present in this case; nor is it often so vital to the issuing utility that an issue be approved promptly. In the vast majority of cases, the utility will delay issuing the securities until after the appeal is resolved, thus avoiding all of the problems mentioned in the dissent.

We accordingly hold that securities issued pursuant to an unsuspended financing order are valid in the hands of purchasers when issued by the utility, and will not be invalidated by any reversal of the order on appeal. Our holding does not assure that the costs of securities will ultimately be recovered through rates charged to customers. When a utility has exhibited inefficiency, improvidence, economic waste, abuse of discretion, or action inimical to the public interest, the costs incurred may not be passed on to the ratepayers. See Appeal of Public Serv. Co. of N.H., supra at 1076, 454 A.2d at 443.

Affirmed.

King, C.J., and Batchelder, J., dissented.

* By supplemental order issued with its opinion in this case on November 27, 1984, the court deferred a decision on enlarging the scope of the appeal to include an issue relating to the validity of certain public utility securities in the hands of purchasers. That issue is addressed in Part II.