Gearhart v. Public Utilities Commission of Oregon

Unless a court gives direction to the contrary, an agency has discretion to act within its authority, as granted by the legislature.

Gearhart appealed a decision of the Public Utilities Commission (PUC). Portland General Electric (PGE) invested in the Trojan nuclear power plant and later closed it because it would be less expensive to ratepayers for PGE to purchase power than to continue using Trojan. PUC found that it was in the public interest to close Trojan, and allowed PGE to recover $250.7 million from ratepayers, which was the principal amount of PGE’s investment and expected profits. The trial court reviewed PUC’s order and found PGE was only allowed to recover the amount actually expended on Trojan. This class action was filed to recover damages for PGE’s overcharges, and was remanded to PUC. The PUC found that an error in the initial calculation of PGE’s investment would have allowed PGE to recover more from ratepayers, which meant that PGE’s rates were just and reasonable, and PGE was ordered to pay a $33.1 million refund to ratepayers. Gearhart challenged that decision and argued that PUC did not have authority to reevaluate the PGE’s rate structure. The Court of Appeals disagreed since the legislature granted discretion to PUC to determine reasonable utility rates. The Court held that the PUC could use its discretion to reexamine the rates since they were originally based on an illegal component and a court did not direct PUC to act differently. Affirmed.