Wah Chang v. PUC

Administrative agency retains broad authority under ORS 757.230 in determining the formula for ratemaking based upon the effect of special contracts on private customers and may rely upon investigative reports and filings by agency staff in so doing.

Wah Chang appeals the Public Utility Commission’s (PUC) denial of Wah Chang’s application for the PUC to order PacifiCorp to impose the standard industrial rate for electricity. Wah Chang had a special contract with PacifiCorp for supply of electricity; two years of which would be governed by the local market index. Upon the “Western Energy Crisis” causing electricity market prices to skyrocket, Wah Chang was denied its petition for the PUCto order PacifiCorp provide service at standard industrial rates. Wah Chang sought judicial review of PUC’s denial of Wah Chang’s petition as based on unfair practices and carving out an exception to the requirements of ORS 757.230. The PUC considered Wah Chang’s case twice and both times denied the petition on the grounds that PUC must protect the utility customers and the public generally from unfair rates and, specifically under ORS 757.230, insure that reasonable rates are established for remaining customers of the utility. The PUC dismissed the petition based upon the unique status of Wah Chang in the contract; as the contractual status changes the “fair and reasonable” analysis. PacifiCorp had a contract with Wah Chang that affected Wah Chang, PacifiCorp shareholders and PacifiCorp customers. The PUC relied upon Federal Energy Commission findings to show that the rates imposed on Wah Chang, by creating a contractual relationship outside the normal customer relationship, assumed the risk of market fluctuations and that these fluctuations were reasonable. The PUC dismissed the petition as an adequate protection of the customers under the circumstances and an assumption of the risk of contracting based upon future market prices on the part of Wah Chang. Wah Chang appealed and the Court of Appeals affirmed the PUC decision, holding that the PUC's order does not apply an exception to the requirement that rates be just and reasonable for all customers, but instead develops and applies a standard by which to gauge whether, under the particular circumstances and that PUC’s decision may be made based upon investigative reports and filings by agency staff. Affirmed.