A unanimous N.C. Supreme Court reversed today the N.C. Utilities Commission’s decision to give Duke Energy permission to raise rates by more than 7 percent as part of a plan to increase the utility’s “return on equity” by 10.5 percent.
Writing for the court, Justice Barbara Jackson notes that the Utilities Commission “failed to make the necessary findings of fact to support its ROE determination”:
Here although the 10.5% ROE contained in the nonunanimous Stipulation fell within the range of ROEs recommended by the witnesses at the evidentiary hearing, … none of the witnesses specifically recommended an ROE of 10.5% based upon their calculations. Johnson did testify that the stipulated ROE was not unreasonable; however, he also recommended a different ROE of 9.25%. In addition, … it does not appear that the Commission weighed any of the testimony presented at the evidentiary hearing. Instead, it appears that the Commission merely recited the witnesses‘ testimony before reaching an ROE conclusion in its order. Notably absent from the Commission‘s order is any discussion of why one witness‘s testimony was more credible than another‘s or which methodology was afforded the greatest weight.
Without sufficient findings of fact as to these issues, we cannot say that the Commission “ma[de] ?its own independent conclusion‘ . . . that the propos[ed] [ROE] [wa]s just and reasonable to all parties in light of all the evidence presented.” Instead, it appears that the Commission adopted wholesale, without analysis or deduction, the 10.5% stipulated ROE, as opposed to considering it as one piece of evidence to be weighed in making an otherwise independent determination.
Accordingly, the Commission‘s order must be reversed and this case remanded to the Commission so that it can make an independent determination regarding the proper ROE based upon appropriate findings of fact that balance all the available evidence. (Citations omitted.)