In re Elizabethtown Water Co.

COLEMAN, J.H., J.A.D.,

concurring in part and dissenting in part.

I agree with the majority that the Board may have engaged in retroactive ratemaking. I dissent from the majority’s determination that the retroactive ratemaking in the present case was impermissible. I agree with the contention advanced by the Public Advocate and the Attorney General that the rule against retroactive ratemaking is to be applied only when it protects the ratepayer, not the utility. When a utility discovers that an existing rate is not yielding what has been determined to be a reasonable return, “it can act as speedily as it sees fit to move for a correction of inadequate rates . . . .” In re N.J. Power & Light Co., supra, 15 N.J. at 93. By acting expeditiously, a utility can prevent an existing rate from becoming confiscatory. My conclusion is consistent with the language quoted from In re Intrastate Industrial Sand Rates, supra, 66 N.J. at 23 which indicates that past profits cannot be used to sustain confiscatory rates for the future. There has been no showing that continuation of the rate fixed by the Board’s order effective January 1, 1983 until February 1, 1985, would be confiscatory. On the other hand, unless the Board’s decision is affirmed, the ratepayers would have no recourse for paying utility bills that were unnecessarily high. I find that the Board has followed its broad regulatory function and has exercised its discretion to protect ratepayers; while at the same time, it insured that the rate of return on the utility’s equity is not confiscatory. In balancing the interest of the utility and the ratepayers, the Board exercised its “broad discretion, based on the circumstances, to fix an effective date for such increase.” In re Lambertville, supra, 79 N.J. at 457.

When the Board deferred the effective date of its order from September 24,1984 to February 1,1985 so that the $1.15 million could be recovered by ratepayers, the net effect was to continue the prior rate until February 1,1985. In so doing, the Board made the new rate prospective only. Hence, I find compelling the argument that this is not retroactive ratemaking. Even if it is, I would hold that it is not impermissible. Additionally, continuation of the prior rates does not violate N.J.S.A. 48:2-21b(1) which requires a utility to follow a rate once it has been fixed by the Board. I read this statute as requiring the utility to follow the rate from its effective date until altered by the Board. I do not interpret this statute as requiring the effective date to coincide with the date on which the Board’s order is issued.

Finally, I perceive no substantial problem related to changes occurring within the class of ratepayers between 1982 and February 1, 1985. On balance, the changes which occurred would probably be insignificant. Moreover, the Legislature did not envision any meaningful problem in the changing class of ratepayers when it provided for credits or refunds under N.J.S.A. 48:2-21.11 to 21.13.

I would therefore affirm.