SCC ruled properly on rate increase, Supreme Court holds

State law and a memorandum of understanding did not require the State Corporation Commission to give Allegheny Power a rate increase, the Supreme Court of Virginia ruled today in an unpublished order.

The Supreme Court said that Allegheny had asked the SCC to rule as a matter of law that it was entitled to the rate increase. The SCC properly found that it was not obligated to grant one, the court said in Potomac Edison Co. d/b/a Allegheny Power v. SCC, Record No. 071566.

However, the court noted, “Whether AP is entitled to a modification of the rate based upon financial distress, present circumstances, confiscation, or any other legal theory engaging the Commission’s legislative function was not before the Commission and is not before the Court.”

Amendments to Virginia Code § 56-582 in 2004 “invoke[] the Commission’s legislative discretion but do[] not compel adjustment of capped rates as a matter of law,” the court said.

The order indicates that much of Allegheny’s argument was based on its contention that it had invoked the SCC’s ratemaking authority, but the commission and the court found that the utility had not done so. while the case was on appeal, AP filed a request for a rate increase under the SCC's ratemaking authority and were awarded a lesser increase than the utility tought it was due. It has appealed that case as well.

Allegheny’s demand for the rate increase is in the context of the abandonment of the effort to provide electricity customers with the opportunity to buy power from more than one retailer. Allegheny and other utilities in the state agreed in 2000 to forego rate increases if the they were allowed to separate power generation and the retail transmission and distribution of power.

The retail competition envisioned by the legislation never developed, and the General Assembly voted to end the capped rate at the end of 2008, rather than in 2010as contemplated by earlier legislation.