Public Service Commission; rate making; KENTUCKY PUBLIC SERVICE COMM. V. COM. OF KENTUCKY (COA 11/7/2008)

KENTUCKY PUBLIC SERVICE COMM. V. COM. OF KENTUCKY
ADMINISTRATIVE LAW:  Public Service Commission; rate making (Accelerated Main Replacement Program)
2007-CA-001635
PUBLISHED: AFFIRMING IN PART, REVERSING IN PART
PANEL:  THOMPSON PRESIDING; NICKEL, ROSENBLUM CONCUR
FRANKLIN CIRCUIT COURT
DATE RENDERED: 11/7/2008

Reh filed 11/25/2008 Opinion by Judge Thompson; Judge Nickell and Retired Judge Rosenblum concurred. The Court affirmed in part and reversed in part a judgment of the circuit court related to the Public Service Commission’s approval of a rate schedule, known as the Accelerated Main Replacement Program
(AMRP) Rider, to recover costs associated with the replacement of aging gas mains. The Court first held that KRS 278.290(1) did not resolve the issue of whether the PSC had authority to approve the rider and that without specific statutory authority the PSC could not authorize the imposition of the surcharge for the main replacement program. The Court also held that the PSC’s interpretation of KRS 278.183 was not entitled to deference, as the agency’s governing statutes were clear and unambiguous and did not confer the authority. The Court then held that prior to the enactment of KRS 278.509 in 2005 the PSC lacked authority to approve the Rider. However, the Court then held that the intent of the legislature in enacting KRS 278.509 was to confer the authority to approve the AMRP Riders to provide for a time- and cost-effective procedure to recover costs. The Court next held that KRS 278.509 was constitutional and in compliance with Section 51 of the Kentucky Constitution. Although no other provision in the bill related to utility rates, there was no fraud or intent to deceive the public. Further, although KRS 278.509 and KRS 234.175 were unrelated, they both related to the general subject of gas delivery systems and appliances. The Court finally held that KRS 278.509 was not retroactive and therefore, the statute did not apply to the riders approved prior to its effective date although, the costs could be recovered through a general rate increase. 

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