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Cerro Copper Products v. Ill. Commerce Com.

OPINION FILED DECEMBER 1, 1980.

CERRO COPPER PRODUCTS ET AL., APPELLEES,

v.

THE ILLINOIS COMMERCE COMMISSION ET AL., APPELLANTS.



Appeal from the Appellate Court for the Fourth District; heard in that court on appeal from the Circuit Court of Jersey County, the Hon. Howard Lee White, Judge, presiding.

MR. JUSTICE WARD DELIVERED THE OPINION OF THE COURT:

Rehearing denied January 29, 1981.

The Union Electric Company (Union Electric) provides utility service to customers in a three-State area, including service to 69,000 Illinois customers residing in St. Clair, Madison, Jersey and Hancock counties. It filed a proposed schedule of rates with the Illinois Commerce Commission (Commission) which called for an increase in revenues of $14,389,000, which would have represented a 17.48% overall rate increase. The Commission conducted hearings into the necessity and reasonableness of the requested increase and in the course of the proceedings granted leave to intervene to several industrial corporations, including the Cerro Copper Products Company (Cerro Copper), which are provided service by Union Electric.

On February 8, 1978, the Commission issued an order which allowed $8,986,000 of the requested $14,389,000 revenue increase, and raised the existing level of operating income to $19,155,000. Attached to the order as Appendix A was a schedule of new rates, which Union Electric was directed to implement and which the Commission stated "will enable the Company to earn Illinois electric operating income of about $19,155,000 for a return of about 9.25% on the original cost rate base approved herein * * *. Such amount of operating income and rate of return are fair, just and reasonable * * *."

Separate petitions for rehearing filed with the Commission by Union Electric and Cerro Copper were denied. Though no new evidence was suggested in its petition, Cerro Copper's petition complained that the rates of residential consumers were being increased by only 8.83%, whereas large commercial and industrial customers serviced under rate 9 and rate 6 were being required to pay an additional 12.55% and 12.56% respectively. Cerro Copper argued that these rates did not reflect the intent underlying the Commission's order, which it claims was to apply the same percentage increase to each service classification of customers. The circuit court of Jersey County, on appeal, rejected Cerro Copper's argument and held that the order was "not against the manifest weight of the evidence" and that the approved rate increase was not a "substantial variance from the intent of the Order." The appellate court, with one judge dissenting, stated that it affirmed the Commission's order but was setting aside the rates as "inconsistent with the findings of fact contained in the body of the Commission's order." (76 Ill. App.3d 230, 233.) (It will not be necessary to consider whether the appellate court could properly "affirm" the order and also set aside the rates the Commission had set under it.) The court calculated that the increase of $8,986,000 granted by the Commission represented the overall revenue increase of 10.92% and that each service classification rate should be increased by that percentage. The court remanded to the Commission "for the setting of rates that are consistent with the findings of fact previously made. A mere matter of arithmetic." (76 Ill. App.3d 230, 233.) We granted the Commission's and Union Electric's petitions for leave to appeal. 73 Ill.2d R. 315.

Cerro Copper's argument that the Commission's rate schedule is inconsistent with parts of its order, and as a consequence illegal, is founded on several statements of opinion and comments made by the Commission in its order. On page four of the 16-page order these comments appear:

"As hereinafter stated, the Company is currently engaged in a class cost of service study which is expected to be completed during 1978. Other than the four exceptions previously discussed, [which have no relevance here,] it was suggested by the Company, and the Commission is of the opinion, that it would be appropriate to maintain existing class-revenue relationships until such time as the results of the study would be available to the Company and this Commission for a more definitive adjustment if warranted by the results of study.

The Commission is of the opinion that any increase in Illinois electric operating revenues allowed by this Order should be assigned to the various service classifications utilizing approximately the same percentage increase including customers served under Service Classifications 6 and 9, except for the four exceptions previously alluded to.

* * *

This Commission is aware, and the record in this case indicates, that the Company is currently engaged in the completion of a detailed class cost of service study which would indicate in a more definitive way the relationship of present costs to the rates applicable to various classifications of service. The cost of service study will not be available until after an Order must be entered by this Commission under the provisions of Section 36 of the Public Utilities Act. Necessarily therefore, the results of such study will not be available to this Commission and for that reason the Commission is of the opinion that it is not appropriate to make any major adjustment in the existing class-revenue relationships of the various service classifications but rather is appropriate to substantially maintain the existing relationships.

As stated, the percentage increases that Cerro Copper complains were set for commercial and industrial consumers under rates 9 and 6 were 12.55% and 12.56%, respectively, while an 8.83% increase was scheduled for residential users. Though not challenging the order itself, Cerro Copper states that the difference in the rate increases allowed by the Commission under the new rate schedule is in conflict with the cited language in the Commission's order.

Under the provisions of the Public Utilities Act (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 1 et seq.) the Commission is empowered "to ascertain the value of [a public utility's] property" (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 30). Upon its determination under the "fair value" method (Union Electric Co. v. Illinois Commerce Com. (1979), 77 Ill.2d 364) the utility is entitled to receive a "reasonable return on the value of [its] property." (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 36.) When the Commission issues an order, section 65 of the Act requires that it "make and render findings concerning the subject-matter and facts inquired into and enter its order based thereon" (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 69). The purpose of announcing findings of fact, which must be based upon evidence contained in the record (Atchison, Topeka & Santa Fe Ry. Co. v. Commerce Com. ex rel. Illinois Coal Traffic Bureau (1929), 335 Ill. 624), is to enable a court to make an intelligent review of the decision. (City of St. Charles v. Illinois Commerce Com. (1961), 21 Ill.2d 259; Brinker Trucking Co. v. Illinois Commerce Com. (1960), 19 Ill.2d 354; Illinois Bell Telephone Co. v. Illinois Commerce Com. (1979), 67 Ill. App.3d 616.) Where the Commission fails to set out findings supporting its decision, or if the findings are not based upon evidence in the record, the order is to be set aside. Wabash R.R. Co. v. Order of Ry. Conductors of America (1949), 402 Ill. 548; Rockwell Lime Co. v. Commerce Com. (1940), 373 Ill. 309.

One reason for requiring specificity in the finding of facts is that reviewing courts> are not permitted to conduct a de novo review (Village of Apple River v. Illinois Commerce Com. (1960), 18 Ill.2d 518) and are empowered only to consider whether the Commission has acted within the scope of its authority, whether any constitutional right has been infringed, and whether its findings are founded on the evidence (Killarney Water Co. v. Illinois Commerce Com. (1967), 37 Ill.2d 345; Champaign County Telephone Co. v. Illinois Commerce Com. (1967), 37 Ill.2d 312). An order of the Commission will be presumed to be valid (Village of Maywood v. Illinois Commerce Com. (1961), 23 Ill.2d 447, cert. denied (1962), 369 U.S. 851, 8 L.Ed.2d 10, 82 S.Ct. 935) and may not be set aside unless it is clearly contrary to the manifest weight of the evidence (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 72; McMann v. Illinois Commerce Com. (1967), 38 Ill.2d 126; Village of Apple River v. Illinois Commerce Com. (1960), 18 Ill.2d 518). In the area of setting utility rates courts> have generally deferred to the Commission's ...


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