EMBRY, Justice.
These are direct appeals by rate case intervenors from rate orders of the Alabama Public Service Commission (PSC or the Commission) dated 17 and 22 November 1982. The orders approved for Alabama Power Company (the Company), Rates RSE and CNP and special rules related to those rates.
These are unlike recent appeals of rate orders. Generally, the appellant from a rate order is the utility. Appellants in this case are consumers who took part in the PSC's hearings on the adoption of Rates RSE and CNP and now object to its orders enacting these rates. They are: (1) Charles A. Graddick as Attorney General (the Attorney General); (2) Alabama Metallurgical Corporation, et al. (Alabama Metallurgical); and Annie Bell Adair, et al., represented by Legal Services Corporation of Alabama, Inc. (Legal Services). Section 37-1-140, Code 1975 (Supp. 1982), grants the right to appeal directly to this court from orders of the PSC.
I.
Prior to consideration of the merits of this appeal, we will examine the history of this case and explain the rate formulae enacted.
PSC Docket No. 18117
On 19 March 1981, Alabama Power Company filed new retail electric rate schedules designed to provide approximately $325,000,000 in additional revenues annually. The PSC suspended the filed rates and ordered an investigation and hearings, thus creating Docket No. 18117. The appellants participated with the Company and other parties in those hearings.
At the conclusion of those proceedings the PSC issued a "zero" order, dated 16 October 1981, denying the Company any revenue increase whatsoever. The Company appealed that order on the day it was issued and, on 19 October 1981, filed an application for supersedeas with this court seeking authority to implement its filed rates under bond, subject to refund. By order dated 12 February 1982, this court granted partial supersedeas.
After this court's 12 February supersedeas order, and a new rate filing by the Company, the PSC initiated discussions among the parties to Docket No. 18117 regarding resolution of that case and the new filing by means of ratemaking concepts embodied in Rates RSE and CNP. During these discussions, which occurred 25 March through 14 April 1982, all parties participated in the development of a settlement proposal based upon Rate RSE, Rate CNP and certain related special rules, all of which have now become the subject of this appeal. Despite efforts made during these public meetings, settlement was not reached by mid-April and the PSC suspended the new rates which had been filed by the Company and scheduled further hearings.
PSC Docket No. 18416
On 9 March 1982, the Company filed with the PSC new retail electric rate schedules designed to provide approximately $129,000,000 in additional annual revenues above the rates filed in Docket No. 18117. After suspension of the filed rates, the PSC held hearings in which the Company, appellants, and other parties participated.
On 15 October 1982, the PSC issued an order which denied the Company's filed rates but retained jurisdiction. It requested that the parties withhold any appeals and directed them to resume negotiations. The PSC gave notice and conducted public hearings for that purpose beginning 3 November 1982.
Consolidation of Dockets Nos. 18117 and 18416
Upon consideration of the merits of the Company's appeal of Docket No. 18117, this court determined the PSC's "zero" rate order of 16 October 1981 to be confiscatory. On 6 November 1982, it reversed and remanded the order to the PSC with instructions to set new nonconfiscatory rates by no later than 1 December 1982. Alabama Power Co. v. Alabama Public Service Commission, 442 So.2d 767 (Ala. 1982).
After hearings, for the receipt of evidence on 11 and 12 November 1982 in the consolidated matter of both the remanded Docket No. 18117 and Docket No. 18416, the PSC issued an order setting new rates for the Company and adopting Rate RSE, Rate CNP and certain related special rules. Five days later, the Commission issued its order and opinion of 17 November 1982 with its findings and reasoning in support of its earlier ratemaking decision. After receiving new rate schedules filed by the Company pursuant to the PSC's previous order, the PSC issued an order dated 22 November 1982, approving those filed rate schedules as being in compliance with the orders of 12 and 17 November 1982. The Commission's orders of 17 and 22 November are, respectively, Appendix I and II to this opinion.
The appellants, intervenors in both dockets resolved by the PSC's rate orders of 17 and 22 November, challenge its adoption of Rate RSE, Rate CNP, and the special rules relative to those rates.
Rate RSE
Rate RSE is a mathematical formula designed by the PSC, its staff and the Company. It contemplates numerous expense items taken from the Company's uniform system of accounts in determining the kilowatt-hour charge to be applied to the customer's usage. While it is complex in application, the theory behind the rate is not difficult to understand.
"RSE" is an acronym for Rate Stabilization and Equalization. It represents a ratemaking formula designed to provide periodic revenue adjustments (increases or decreases) calculated to allow the Company to earn 15% return on its common equity capital. In this connection, rate RSE is responsive to this court's order in Alabama Power Co. v. Alabama Public Service Commission, 422 So.2d 767 (Ala. 1982), which ordered the PSC to establish rates which were not confiscatory. In that case, this court stated a 15% return on equity to be the minimum which would not result in confiscation of the Company's property. 422 So.2d at 773. We also emphasized any rate of return formula established by the PSC should be prospective, rather than retrospective, in nature. 422 So.2d at 770.
Under Rate RSE, Company revenues are adjusted in the following manner: At predetermined dates in 1983 (February 1 and October 1) and 1984 (quarterly), the Company's actual rate of return on year-end common equity is measured by the formula contained in Rate RSE using figures from the Company's records. The Company's records must be maintained in accordance with the uniform system of accounts prescribed by the PSC. If the Company's retail return on common equity is within the equity return range, no adjustment of charges is made under Rate RSE. If the return is either above or below the range, an adjustment limited to a specific percent of total revenue is made in order to move the return toward 14%, the adjusting point specified in Rate RSE.
There are several limiting factors incorporated in Rate RSE. First, if the Company's retail return on equity exceeds 15%, Rate RSE requires a downward revenue adjustment.
Second, no matter how much upward revenue adjustment is needed to reach an appropriate level of return, on equity, each adjustment is limited to a specified percentage of total revenues. This limiting factor was designed to lessen the harsh effect of utility rate increases on the consumer and encourage the Company to operate efficiently.
Third, any growth in the Company's common equity ratio in excess of 2 1/2% per year cannot be considered in the adjustment. This provision ensures the Company will not inject common equity into the enterprise capital in an effort to generate revenue increases.
Fourth, a number of expenses are excluded from the operation of Rate RSE. Advertising expenses, lobbying expenses, and charitable donations cannot be considered; neither can club dues, nor a portion of the salaries of the Company's executive officers. Thus, Rate RSE excludes from its operation, expenses of the Company which have been customarily excluded in rate proceedings, plus certain expenses which were considered in rate adjustments prior to Rate RSE.
The special rules governing Rate RSE require increased PSC monitoring of Company operations over past current levels of reporting, auditing, and inspection. These rules require the Company to provide certain reports and documents to the PSC, its staff, and the Attorney General in advance of any adjustments under Rate RSE. The rules further provide that the PSC can initiate complaint proceedings for the purposes of inquiring into the amount, accuracy or compliance with uniform system of accounts of any expenditures or entry utilized in the Rate RSE formula calculation.
Rate CNP
Rate CNP is an acronym for Certificated New Plant. It is designed to adjust monthly billings beginning with the second month after a certificated generating plant goes into commercial operation. The rate adjusts the Company's charges to prevent nosedives in the Company's earnings which would otherwise occur when such a plant is placed into commercial operation. By so doing, it allows the Company to earn a current return on the new electric generating plant.
This rate was formulated by the PSC in response to this court's holding in Alabama Power Co. v. Alabama Public Service Commission, 422 So.2d 767 (Ala. 1982), that the Commission must allow the Company a return on plant which it has specifically authorized the Company to build in order to serve retail electric customers. We held it was error for the Commission to ignore the impact on the Company's business of a certificated new plant.
II.
Regulation of utility rates is purely a function of the legislature. The courts have expressedly rejected any notion that the judicial branch has the authority or duty to set rates. Continental Telephone Co. of the South v. Alabama Public Service Commission, 427 So.2d 981, 984 (Ala. 1982). Rather, it is the role of the judiciary to ensure that the Commission, in carrying out its regulatory function, has exercised its legislative powers within constitutional limits. City of Birmingham v. Southern Bell Telephone and Telegraph Co., 234 Ala. 526, 532, 176 So. 301, 305 (1937).
Traditionally, this court has afforded a broad scope of review in cases where the utility has alleged confiscation of its property in violation of its constitutional rights. Alabama Power Co. v. Alabama Public Service Commission, 390 So.2d 1017 (Ala. 1980). Most recently, however, even this broad scope of review has been limited by the court in Alabama Gas Corp. v. Alabama Public Service Commission, 425 So.2d 430 (Ala. 1982). In that case, this court held that a mere allegation of confiscation will no longer be sufficient and that an affirmative showing of confiscation is required to invoke this court's broad scope of review.
Furthermore, it has been the long established law in this jurisdiction that a consumer has no property right in a given level of utility rates. As stated in City of Birmingham v. Southern Bell Tel. Tel. Co., 234 Ala. 526, 176 So. 301 (1937):
"[C]ounsel for the city insists that a rate that is too high confiscates the subscriber's property . . . and that of consequence a constitutional question is as much presented on the part of the subscriber as on the part of the utility. . . . The argument is ingenious, but not sufficiently persuasive. If such a theory be accepted, then all rate-making legislation is reviewable and revisable by the courts, for to determine the matter as to the subscriber a full consideration of all the facts and circumstances in every instance would be necessary. A rate fixed by the Legislature would be as much the subject of attack by the subscriber as one fixed by the commission. Ours is a representative form of government and the legislature represents the people of the state who are subscribers to telephone service.
"It would follow, as a logical result of the theory advanced by the city, that a subscriber
who has no invested capital at stake, but only a desire for a lower rate, and dissatisfied with the schedule fixed in the law passed by his representatives in the Legislature, could appeal to the courts to have the law nullified, and a new schedule of rates established by the judicial branch of our government, and thus have the court's judgment in a purely legislative matter substituted for that of the lawmaking body. Manifestly, such a result would run counter to our present form of government. . . ." (Emphasis added.)
234 Ala. at 533, 176 So. at 306.
This has been the holding of courts in other jurisdictions as well. Georgia Power Co. v. Allied Chemical Corp., 233 Ga. 558, 212 S.E.2d 628 (1975); Norwegian Nitrogen Products v. United States, 288 U.S. 294, 53 S.Ct. 350, 77 L.Ed. 796 (1933); Sellers v. Iowa Power Light Co., 372 F. Supp. 1169 (S.D. Iowa 1974); State v. Public Service Commission, 532 S.W.2d 20 (Mo. 1975).
Accordingly, here, the court must apply a narrow scope of review. As stated in this court's prior order in this case, the inquiry under the narrow scope of review "ordinarily goes no further than to ascertain there is evidence to support the findings of the Commission." Alabama Power Co. v. Alabama Public Service Commission, 422 So.2d 767, 769 (Ala. 1982). See also Alabama Gas Corp. v. Wallace, 293 Ala. 594, 602, 308 So.2d 674, 677-78 (1975).
Commission's order, and Rates RSE and CNP as prescribed therein, come to this court with a presumption of correctness and validity. The Legislature stated the presumption as follows:
"All rates, fares, charges . . . and orders establishing rules, regulations, practices or services fixed by the commission shall be in force and shall be deemed prima facie reasonable and valid in any court wherein the reasonableness or validity thereof is properly drawn in question, and the burden shall be on the party attacking said rates or orders to show that same are invalid or unfair and unreasonable."
Section 37-1-99, Code 1975.
Further, it is established law in this jurisdiction that an administrative body's interpretation of its authorizing legislation is entitled to great weight. State v. Southern Electric Generating Co., 274 Ala. 668, 151 So.2d 216 (1963). If it is determined that the Commission acted within its authority and its order is supported by evidence and the rates are reasonable and fair, then the order of the Commission is due to be affirmed.
III.
With these principles of review in mind, we consider the merits of this appeal. There are three primary inquiries in this case: (1) Whether the PSC acted outside its statutory authority; (2) Whether the PSC denied due process to the intervenors, and (3) Whether the PSC's findings are based on the substantial weight of the evidence.
First, we will consider whether adoption of Rates RSE and CNP, rather than use of traditional ratemaking methodologies to adjust the Company's rates, is outside the PSC's statutory ratemaking powers.
All three appellants argue, in varying ways, that the PSC is restricted, by statute, to the use of traditional rate making methodologies, and cannot adopt fixed rate formulae such as Rates RSE and CNP. They have indicated no specific provision of the Code which precludes the PSC from the adoption of rates such as RSE and CNP. Rather, they argue the Legislature has enacted a detailed system of procedures for filing, notice, suspension, intervention, and hearings which is violated upon each operation of Rates RSE and CNP to adjust the utility's rates. They further argue the PSC has contracted away its regulatory authority by adopting these rates and making a commitment not to change the rates prior to 1984.
The regulatory and ratemaking powers delegated to the Commission by the Legislature are broad and exclusive. The Commission may utilize any "administrative consideration or device" to set rates so long as the constitutional standards embodied in the statute are satisfied. The adjustment clauses contained in Rates RSE and CNP, like the fuel adjustment clause, are rate-fixing devices adopted by the Commission pursuant to its statutory authority and duty to fix rates. §§ 37-1-31, 37-1-32, 37-1-80, Code 1975 (Supp. 1982); Alabama Power Co. v. Alabama Public Service Commission, 422 So.2d 767 (Ala. 1982); Memorandum Opinion and Order on Supersedeas, Case No. 81-48, February 12, 1982; Zeigler v. Blount Brothers Construction Co., 364 So.2d 1163 (Ala. 1978); City of Norfolk v. Virginia Electric Power Co., 197 Va. 505, 90 S.E.2d 140 (1955).
The appellants' mistaken characterization of the nature of Rates RSE and CNP has led to several erroneous conclusions regarding the operation of the rates within the traditional ratemaking structure. RSE and CNP are fixed rate formulae. Courts throughout the United States have recognized the distinction between a fixed formula and the mathematical factors or adjustments, which are the mathematical products of the operation of that formula. These courts have held that the formula is the rate as opposed to the mathematical computations under the formula.
In City of Norfolk v. Virginia Electric Power Co., 197 Va. 505, 90 S.E.2d 140, 148-49 (1955), a classic case of first impression on this point, the Supreme Court of Appeals of Virginia stated:
"The General Assembly has . . . `recognized that rate schedules consist not merely of lists of rates in dollars and cents, but that they customarily include provisions that will in various ways affect the rates charged at the time of filing or to be charged thereafter.'
"The proposed escalator clause is nothing more or less than a fixed rule under which future rates to be charged the public are determined. It is simply an addition of a mathematical formula to the filed schedules of the Company under which the rates and charges fluctuate as the wholesale cost of gas to the Company fluctuates. Hence, the resulting rates under the escalator clause are as firmly fixed as if they were stated in terms of money."
See, e.g., State ex rel. Utilities Commission v. CF Industries, Inc., 299 N.C. 504, 263 S.E.2d 559 (1980);
Application of Kauai Electric Division of Citizens Utilities Co., 60 Haw. 166, 590 P.2d 524 (1978);
State ex rel. Utilities Commission v. Edmisten, 291 N.C. 327, 230 S.E.2d 651 (1976);
City of Los Angeles v. Public Utilities Commission, 15 Cal.3d 680, 125 Cal.Rptr. 779, 542 P.2d 1371 (1975);
Consumers Organization For Fair Energy Equality, Inc. v. Department of Public Utilities, 368 Mass. 599, 335 N.E.2d 341 (1975);
Montana Consumer Counsel v. Public Service Commission, 168 Mont. 180, 541 P.2d 770 (1975);
In re Board's Investigation of Telephone Companies v. New Jersey Bell Telephone Co., 66 N.J. 476, 333 A.2d 4 (1975);
City of Chicago v. Illinois Commerce Commission, 13 Ill.2d 607, 150 N.E.2d 776 (1958);
Cherokee County Electric Coop. v. Public Utility, 618 S.W.2d 127 (Tex.Civ.App. 1981).
The Fifth Circuit Court of Appeals recently recognized that the Federal Energy Regulatory Commission, under a similar statutory scheme, was free to adopt a detailed formula rate such as Rate RSE, noting that "FERC is not `bound to a single ratemaking method or formula, but is free to make pragmatic adjustments in its methods.'" Louisiana Public Service Commission v. Federal Energy Regulatory Commission, 688 F.2d 357, 360 (5th Cir. 1982). Finally, it should be remembered that the "end result" controls the judicial inquiry in this matter. As stated by the United States Supreme Court:
"We held in
Federal Power Commission v. Natural Gas Pipeline Co. [
315 U.S. 575,
62 S.Ct. 736,
86 L.Ed. 1037 (1942)],
supra, that the Commission was not bound to the use of any single formula or combination of formulae in determining rates. Its ratemaking function, moreover, involves the making of `pragmatic adjustments' . . . and when the Commission's order is challenged in the Courts, the question is whether that order `viewed in its entirety' meets the requirements of the act. . . . Under the statutory standard of `just and reasonable' it is the result reached not the method employed which is controlling. . . . It is not theory but the impact of the rate order which counts. If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end. The fact that the method employed to reach that result may contain infirmities is not then important.
Federal Power Comm'n v. Hope Natural Gas Co., 320 U.S. 591, 602 [
64 S.Ct. 281, 287-88,
88 L.Ed. 333] (1944)."
In short, Alabama's "file and suspend" statute comes into play only when a utility seeks a change in rates. Even then, notice and a hearing are not required for a filed rate to become effective. Because the formulae of Rate RSE and Rate CNP are fixed and the operation of those formulae is in nowise a change in rates, no filing is required and, thus there is nothing for the Commission to consider suspending for the purposes of investigation. As always, the Commission's statutory complaint jurisdiction (§ 37-1-83) is available to any ratepayer or the Commission itself for an investigation into the fairness or reasonableness of any utility rate, including Rates RSE or CNP.
That a fixed rate formula is statutorily authorized as a ratemaking tool in Alabama is evidenced by the fact that the PSC has utilized various adjustment clauses over a long period of time. While this is not conclusive evidence of the harmony of such a formula with the Alabama statutory scheme, a consistent construction by the PSC over a long period of time commands great respect from this court, and is entitled to great weight in determining the propriety of the procedure. State v. Southern Electric Generating Co., 274 Ala. 668, 151 So.2d 216 (1963).
The fact that § 37-1-81 (a) (formerly Title 48, § 53) was reenacted without change in the present codification of the Alabama Code lends further support to the interpretation that the statute does not prohibit the use of fixed rate formulae. "The weight to be given an administrative interpretation is increased when the Legislature, in reenacting the law fails to indicate in any way its disapproval of the settled administrative construction." State v. Southern Electric Generating Co., 274 Ala. 668, 670, 151 So.2d 216, 217 (1963).
The more serious allegation is that the PSC has avoided its regulatory responsibility by its commitments to make no change in Rates RSE and CNP and the underlying rate schedules before the end of 1984. The PSC's order provides:
"(9) It is the intent of this order to avoid the large general retail rate increase requests so characteristic of recent years, with the attendant delays and lengthy, expensive proceedings. It is therefore the commitment of the Company, by its acceptance of this rate order, to make no further general retail rate increase filings in the years 1982, 1983 and 1984, nor request any changes in the Equity Return Range to be effective prior to January 1, 1985. It is likewise the commitment of the Commission, by reason of the Company's agreement to the complete and final disposition of these two dockets and
its acceptance of the other limitations hereunder, to make no change in Rate RSE or Rate CNP nor reductions in the rate schedules to which they apply, to be effective at any time before the end of 1984. It is, however, expressly recognized that an unforeseen calamity, whether physical or economic, of the nature of
force majeure may occur. In such event, the Company and the Commission shall consult in good faith to determine whether such commitments should be modified and, failing agreement thereon, the parties may take such actions as in good conscience they deem appropriate." (Emphasis added.)
The Commission's "commitment" that it will make no change in Rates RSE and CNP before the end of 1984 is a recognition by the Commission that the rates must be given sufficient opportunity in operating to determine whether they should be extended or modified. Its commitment is based upon, and contingent upon, the Company's commitment to file no further general rate increase in 1982, 1983 and 1984. The order recognizes that Rates RSE and CNP may be modified in the light of "unforeseen calamity, physical or economic."
This court has recognized that lawful rates may be prescribed for an approved period of time. T.R. Miller Mill Co. v. Louisville Nashville Railroad Co., 207 Ala. 253, 92 So. 797 (1921). Code section 37-4-22 ("Contract Rates") also recognizes that the Commission may approve a rate applicable for a prescribed period of time, the Legislature apparently seeing no "contracting away of regulatory responsibilities" as being involved in such an action.
Thus, appellants' arguments that the new rates reduce the Commission's regulatory responsibilities is without merit. Limited complaint proceedings provided for by the rates are in addition to the rights the Commission has under the statute. The monitoring procedures which have been established by the Commission indicate a greater regulatory responsibility on the part of the Commission and its staff than heretofore assumed.
This is noted in the PSC's order of 17 November 1982:
"With the exception of the commitment of the Commission to make no change in Rate RSE and Rate CNP and the underlying rate schedules before the end of 1984, as provided above in this paragraph (9), it is understood and agreed that no provision in this order nor any provision in Rate RSE, Rate CNP or the related Special Rules shall be construed:
"(a) as restricting in any manner the Commission in the exercise of its regulatory rights, powers, authority, jurisdiction and duties over Alabama Power Company as provided in Title 37, Code of Alabama (1975), as amended;
"(b) as restricting in any manner the Attorney General of the State of Alabama in the exercise of his duties and responsibilities as provided in Title 37, Code of Alabama (1975), as amended, with regard to public utilities and specifically Alabama Power Company; or
"(c) as restricting in any manner the complaint procedures as provided in Code of Alabama (1975), as amended, Sections 37-1-83,
et seq."
Thus, because the Rates RSE and CNP are the rates and have been enacted according to appropriate statutory ratemaking procedures for filing, notice, suspension, intervention, and hearings, there is no violation of statutory procedural requirements upon each adjustment under the rates. Further, the fact that the rates have been prescribed for a period of time is not a "contracting away of regulatory responsibilities." This is especially true where, as here, the PSC has actually taken upon itself additional regulatory responsibilities in enacting the rate and rules attached thereto.
We must also acknowledge that Rates RSE and CNP are the PSC's responses to this court's recent mandates. In its 12 February 1982 order in Alabama Power Co. v. Alabama Public Service Commission, supra, this court stated that "there is no legal requirement for the Commission to establish a `test year,'" even though the establishment of a test year may be a helpful device for carrying out the requirements imposed on the PSC to determine rates which are fair. It was further emphasized that the PSC was free to use any "administrative considerations or devices" to set rates so long as the constitutional standards embodied in the statute were satisfied. This court, in its 5 November 1982 order in Alabama Power Co. v. Alabama Public Service Commission, supra, held that 15% return on equity was the minimum which would not result in confiscation of the Company's property. The PSC was bound to apply our findings with regard to these cases and did so by the adoption of Rates RSE and CNP.
IV.
Next, we will consider the constitutional claims of the appellants: (1) Whether the rates and special rules are prohibited phased increases; and, (2) Whether the intervenors were afforded statutorily specified rights to due process of law.
Appellants contend the Commission's adoption of Rates RSE and CNP constitute an illegal "phasing," in violation of this court's order in Alabama Power Co. v. Alabama Public Service Commission, 390 So.2d 1017 (Ala. 1980). In that case, the Commission found a revenue deficiency for the Company of $208,000,000, but entered an order allowing remedy of this deficiency in three separate steps. This court found the Commission could not phase in a total dollar rate increase over a period of time and the Company's properties were being confiscated during the interim period. This ruling was based upon the need to protect the Company's constitutional right to obtain just compensation for the public use of its private property. Because appellants have no property rights at stake in the operation of the challenged rates, they have no standing to raise a "phasing" argument. City of Birmingham v. Southern Bell Telephone Telegraph Co., 234 Ala. 526, 176 So. 301 (1937).
Moreover, Rates RSE and CNP are not "phasing." Rate CNP is a rate designed to immediately respond to any loss of earnings resulting from placing new plants in service. That rate cannot, by any stretch of the imagination, be called a "phased" increase.
Similarly, Rate RSE, because the formula contained therein is the rate, is not phasing. Unlike the situation in Alabama Power Co. v. Alabama Public Service Commission, supra, the Commission has not ordered a partial rate increase or new and different rate schedules to become effective in the future. The operation of Rate RSE to adjust revenues upward or downward cannot be equated with the "phasing" in of an increase to remedy, in steps, a revenue deficiency.
Second, appellants argue they were not afforded due process of law because of not being given an opportunity to present evidence or conduct cross-examination at the hearings on Rates RSE and CNP. A review of the transcripts makes obvious that dictates of due process have been met by the Commission in its consideration of these rates and that all parties were afforded a fair opportunity to present evidence and have the case decided on the basis of the evidence presented.
The Commission's findings, supportive of its adoption of Rates RSE and CNP, are based upon the evidence adduced at hearings in PSC Docket Nos. 18117 and 18416. These hearings spanned a period of twenty (20) months. Appellants were presented with the concept and details concerning Rates RSE and CNP at least nine months prior to the adoption of these rates.
The Commission sent notice to all parties, prior to the November 1982 hearings, that the hearing should be held to "explore a possible settlement of rates for the company . . . including, but not limited to, consideration of Rate RSE and Rate CNP, as discussed at length by these same parties beginning in March of this year." The notice further stated that the "Commission will hear any party wishing to present comments and evidence relating to these matters." Appellants all acknowledge receipt of this notice.
All appellants appeared at the November hearings and presented comments regarding Rates RSE and CNP. They cross-examined the witnesses presented by the Company. That they did not chose to present a witness to address the operation of RSE and CNP is not a denial of due process to them. We find they had sufficient notice and sufficient opportunity to present witnesses and to cross-examine any witnesses presented by the Company.
V.
Lastly, we must consider the issue whether Rates RSE and CNP are just and reasonable and are supported by proper evidence as is required by § 37-1-80, Code 1975.
We find that every material aspect of Rates RSE and CNP have foundation in the evidence of record before the Commission. The records established in Docket Nos. 18117 and 18416 prior to their consolidation contain extensive testimony and documentary evidence of the Company's inability to earn the returns on common equity allowed by the Commission's previous orders and this court's mandate.
Substantial testimony was presented at the November hearings in support of the adoption of the fixed formula rates. With regard to the operation of the rates, the Commission received the testimony of Bruce Hutchins, the Company's Assistant Treasurer and General Manager of Finance. During the Attorney General's cross-examination of Hutchins, he itemized the monetary impact on consumers of each operation of the rates. Hutchins testified as to the rates' effects on the monthly bill of an average residential customer, and the total revenue impact of these rates.
The PSC's order is further supported by the testimony of David A. McClahahan and Oscar E. Walker, the Company's cost of service and rate design witnesses. Substantial evidence presented by these men demonstrates the fairness and reasonableness of Rates RSE and CNP. Their testimony indicates that, under these rates, each of the three major classes of the Company's customers will pay rates which correlate to the Company's cost of providing service to that particular class.
Most importantly, this court's orders in two immediately previous rate case appeals by the Company confirm that the Commission's previous ratemaking methodologies were inadequate to fulfill its responsibilities to set fair rates.
Thus, in light of the evidence of record in Docket Nos. 18117 and 18416, the evidence introduced in the November hearings after the consolidation of these Dockets, and this court's previous mandates, it is plain that the Commission's adoption of Rates RSE and CNP is based on the record and is reasonable and fair to both the consumer and the Company.
VI.
We have examined Rates RSE and CNP and the special rules related thereto and find that they are legal and proper in every respect, they represent an appropriate exercise of the PSC's regulatory authority, they are in compliance with this court's mandate, and they are just and reasonable both to Alabama Power Company and to consumers represented by the Alabama Public Service Commission. We approve the Commission's orders of 17 and 22 November 1982, adopting Rates RSE and CNP and the rules related thereto. Therefore, those orders are due to be, and are hereby, affirmed.
AFFIRMED.
TORBERT, C.J., and MADDOX, FAULKNER, JONES, ALMON, SHORES and ADAMS, JJ., concur.