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City of Lancaster v. Pennsylvania Public Utility Commission

Public utility commission erred by reducing city's requested rate case expense to match other utilities' average expenditures; absent finding that city was excessively litigious, commission should have relied on specific costs which city actually paid.

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Argued: December 4, 2001

OPINION

In this public utility case, the parties essentially litigate the question of how much litigation is excessive. The case arises from the City of Lancaster’s (City) efforts to increase the rates that it charges to provide wastewater service. An administrative law judge (ALJ) for the Pennsylvania Public Utility Commission (Commission) entered a recommended decision that significantly reduced the rate increase sought by the City, mostly on the grounds that the expenses claimed by the City were excessive. The Commission denied the City’s exceptions and adopted the ALJ’s recommended decision. The principle expense at issue is the so-called “rate case” expense, which represents the cost that the City has incurred in seeking this rate increase, and the major bulk of the rate case expense is the City’s costs of litigation. The City maintains that the Commission’s order is not supported by substantial evidence because the order was based upon an average of the rate case expenses that other utilities have incurred rather that the actual rate case expense that the City incurred.

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