PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON. Complainant, HEARING EXAMINER'S DECISION

Transcription

1 CHARLESTON CASE NO G-C CABOT CORPORATON, a publc utlty, Charleston, Kanawha County, V. Complanant, THE WELCH GAS COOPERATVE ASSOCATON, Welch, McDowell County, Defendant. HEARNG EXAMNER'S DECSON PROCEDURE On November 17, 1982, Cabot Corporaton ("Cabot"), a publc utlty, Charleston, Kanawha County, West Vrgna, fled a formal complant, duly verfed, aganst The Welch Gas Cooperatve Assocaton ("Welch Gas"), Welch, McDowell County, West Vrgna, allegng, nter " ala that () Welch Gas s, or should be held to be, a publc utlty; () Welch Gas s ndebted to Cabot for gas delvered and sold to Welch Gas; () Welch Gas refused to pay Cabot for the gas at the tarff rate n effect for those sales durng the perod n queston; and (v) Welch Gas should be requ to pay Cabot the full amount due and owng plus nterest the form of a delayed payment charge for the gas delvered to Welch Gas under Cabot' s tarff. By Commsson order entered November 18, 1982, Welch Gas was requred D W O N

2 (10) days of the servce upon t by certfed mal of a copy of the complant and a copy of the order. On December 7, 1982, Welch Gas fled ts answer to the allegatons contaned n the complant assertng as defenses to the clams by Cabot that () Welch Gas s a not a publc utlty; () the prce to be pad by Welch Gas for the gas t receved from Cabot through September 30, 1982, was governed by the prce set forth n a Gas Sales Agreement ("Agreement") dated September 30, 1982, between Cabot and Welch Gas, and not by the tarff rate approved from tme to tme by the Commsson; and () Cabot was not enttled to a delayed payment charge on the amount n dspute because the terms and condtons of the Agreement dd not provde for calculaton or mposton of a delayed payment charge on the past due amounts. Welch Gas also asserted certan counterclams aganst Cabot at the tme of flng ts answer to Cabot's complant, the prncpal counte clam beng that the prncpal amount of $76,136.30, whch was pad by Welch Gas to Cabot under protest, should be refunded to Welch Gas, wth nterest., On December 15, 1982, Cabot fled ts answer to the counterclam of Welch Gas denyng that Welch Gas was enttled to a refund of the pr amount n dspute plus nterest. By order entered January 6, 1983, the Commsson set ths matter for hearng to be held n the Commsson's Hearng Room at the Captol n the Cty of Charleston on Monday, February 14, 1983, at 9:30 a.m., EST. The Commsson's January 6, 1983, order further requred that at the hearng Welch Gas be prepared to offer evdence as to why t should not be de- clared a publc utlty and otherwse requred to operate under the jursdcton of the Commsson. n

3 ' On January 19, 1983, Welch Gas fled a moton wth the Commsson for an order prohbtng termnaton of servce. n ts moton, Welch Gas stated that t had made payment of the prncpal sum $76, of demand- ed by Cabot, reaffrmed ts counterclam seekng refund of that sum, and requested that the Commsson mmedately ssue an order prohbtng Ca from termnatng servce to Welch Gas and orderng Cabot to contnue servce to Welch Gas wthout the requrement for the postng of a depost, as had been requested by Cabot. n addton, on January 19, 1983, Welch Gas requested a contnuance of the scheduled February 14, 1983, hearng. By order dated January 27, 1983, the Hearng Examner granted the requested moton for a contnuance and entered a restranng order pro tng Cabot from termnatng gas servce to Welch Gas, condtoned on Welch Gas n good fath submttng tmely payments to Cabot for current bllngs.thecontnuedhearngdateforthematter was fxedas Aprl 1 4, 1983, at 1O:OO a.m., EST. l At the hearng held on Aprl 14, 1982, Jackson, Kelly, Holt & O'Farrell by Mchael A. Albert appeared for Cabot, Mark A. Keffer of the Legal Dvson appeared for the Publc Servce Commsson Staff and Kauffelt and Kauffelt, by James D. Kauffelt and T. D. Kauffelt appeared, for Welch Gas. At the hearng, Cabot presented the testmony of R. Melvn, McGrew, Chef Utlty Accountant for Cabot Gas Utlty, Staff presented ' the testmony of W. B. Swope, Presdent of Welch Gas, and Welch Gas also presented the testmony of Mr. Swope as well as the testmony of Messrs James R. ngole, Waness Goodson, Joe A. Marno, Edgar Hendrcks, Herman Blevns, members of Welch Gas, and Memphs Whte, an Engneerng Tech- 1 ncan wth the Commsson's Engneerng Dvson. At the concluson of ' the hearng on Aprl 14, 1983, the case was submtted for decson pendng

4 , recept of recommended orders and reply brefs from the partes. Recom- DSCUSSON OF THE EVDENCE NCLUDNG FNDNGS OF FACT For purposes of ths decson, reference to the transcrpt wll be by the ntals of the testfyng wtness followed by the pertnent page of the transcrpt n ths manner: (ABC, p. 0). Exhbts wll be referred to as marked for dentfcaton purposes and/or entered nto evdence. MRM Melvn R. McGrew WBS LW Lacy Wrght, Jr. WG Waness Goodson EH Edgar Hendrcks HB MW - Memphs Whte LST OF CTED WTNESSES W. B. Swope JR James Ray ngole JAM Joe A. Marno - Herman Blevns Much of the factual evdence n the proceedng s not dsputed. For nstance, there does not appear to be a dspute as to the amount of gas sold and delvered from Cabot to Welch Gas (MFW, p. 34; WBS, p. 152) nor does there appear to be any contenton by Welch Gas, ether n the answer fled by Welch Gas or n the testmony of ts wtnesses, that the prnc pal amount clamed by Cabot of $76, s computed ncorrectly (assum- ng for purposes of that calculaton that Cabot s enttled to the tarff 1 rate approved from tme to tme for Cabot for ts sale for resale custom- : 1 ers as opposed to the rates set forth n the Agreement). Further, both partes agree that all sales from Cabot Welch to Gas after October 1, 1982 (the termnaton date of the Agreement), were at the then approved tarff rate of Cabot for ts sale for resale customers (MRM, 52; p. WBS, p. 101) and that Cabot's bllngs, and Welch Gas' payments, for gas sold to Welch Gas from October 31, 1982, to date have been correct and are not at ssue n ths case. VRGNA OF WEST -4-

5 The followng dscusson of the evdence adduced at the hearng held on Aprl 14, 1983, wll relate prncpally to the actvtes and op- eratons of Welch Gas n renderng gas servce (as testfed to by Mr. Swope) and to the methodology employed by Cabot n the calculaton of the amount of prncpal and delayed payment charge clamed due from Welc Gas (as testfed to by Mr. McGrew). A. The Welch Gas Cooperatve Assocaton. Welch Gas was organzed as a West Vrgna corporaton 9, 1969 on May and provdes gas to approxmately 1,000 members or customers (the term llcustomer" wll be used n ths Decson) of Welch Gas through approx- mately 1,300 meters (WBS, p. 68, 98, 107; Welch Gas Ex. 1). Wth the excepton of a quantty of gas receved occasonally from a nearby well, Welch Gas' sole source of supply s the gas t purchases from Cabot (WB p. 68). Welch Gas s the sole suppler of gas n the Town of Welch. (WBS, p. 87, 88.) Anyone n the Town of Welch who wants natural gas servce must become a member of The Welch Gas Cooperatve Assocaton. (WBS, p. 68; LW, p. 13.) servce (WBS, p. 70). tal customers, but ncludes commercal However, no one has ever been rejected for Membershp n Welch Gas s not lmted to resdeh- and busness accounts, whch ncludes the Board of Educaton for gas servce provded outsde the corporatelmtsofwelch. (LW, p. 15; WBS, p. 71.) Welch Gas was' ncorporated whle Mr. Swope was mayor of the Town of Welch and was formed as an alternatve to havng the Town of Welch operate the gas system the jursdcton of the Publc Servce Commsson. (WBS, p. 82, 86.) n order to receve gas servce from Welch Gas, a prospectve custom- er must pay a membershp fee of $25 and a hookup fee of $50. (WBS, p. 69, -5-

6 70. ) The meters of most customers of Welch Gas are read sem-annually, although some of the larger customers have ther meters read, and blled, monthly. (WBS, p. 68, 69.) Customers pay an estmated monthly bll, and, at the end of each year, an overpayment or underpayment adjustment s made and computed nto that customer's estmated bll for the ensung year. (WBS, p. 69.) Welch Gas conducts annual meetngs at whch Mr. Swope gves an a report of the operatons of Welch Gas and recommends a gas rate whch he beleves wll be necessary to meet the oblgatons of Welch Gas. (WBS, p. 72.) That rate has always been approved by the vote of the membersh and by the vote of the drectors (d.), - both of whch meet annually, (WBS, p. 97, 142.) Mr. Swope serves as chef executve and chef fnancal offcer of Welch Gas (WBS, p. 97) and receves a salary of $500 per month (WBS, p. 97). Mr. Swope runs the day-to-day operatons of Welch Gas and he s the self-styled "top dog" n Welch Gas. (WBS, p. 80, 135. ) He was the mpetus for formng Welch Gas (WBS, p. 66, 82) and was responsble for negotatng the orgnal contract wth Cabot n 1969, as well as the Agreement. (WBS, p. 109, 112.) n addton, Mr. Swope recommends the gas rate for the ensung year (WBS, p. 72, 133) ; handles customer complants (WBS, p. 80, 96); deals wth uncollectbles (WBS, p. 79, 138); determnes the expendtures for Welch Gas (WBS, p. 93, 196); recommends salary levels (WBS, p. 95); calls and gves notces of the annual meetng (WBS, p. 120); has the rght under the bylaws to pass upon the assgnment of membershps (WBS, p. 139); and sgns checks. (WBS, p. 144.) The evdence presented at the hearng seems to ndcate that the customers of Welch Gas are satsfed wth the present arrangement. See ESTON fl

7 testmony of Messrs. James R. ngole (JR, p. 185); Wanless Goodson (WG, p. 188) ; Joe A. Marno (JAM, p. 192) ; all of whom are Drectors of Welch Gas. At the hearng, Welch Gas ntroduced ts Certfcate of ncorporat (Welch Gas Ex. 1) and By-Laws (Welch Gas Ex. 2) and Mr. Swope testfed regardng both documents. Although Mr. Swope ndcated that the By-Laws were the current By-Laws taken from the books and records of the Company under cross-examnaton he admtted that the By-Laws of Welch not Gas wer always adhered to n the conduct of the operatons of Welch Gas. (WBS, p. 134, 135. ) The day-to-day decsons for Welch Gas, between the annual meetngs, are made by Mr. Swope. (WBS, p. 135.) The By-Laws of Welch Gas, however, requre sem-annual meetngs (d.; - Welch Gas Ex. 2, Artcle 111, 8 a). Lkewse, the meetng of the Board of Drectors, referred to as an annual meetng (WBS, p. 97, 142, 143), s requred to be a sem-annual meetng. (Welch Gas Ex. 2, Artcle V, 9 c.) The By-Laws of Welch Gas provde for a "tap hookup" of only $25.00 (Welch Gas Ex, 2, Artcle X), and there s no menton n the By-Laws of the "membershp fee" about whch Mr. Swope testfed. (WBS, p. 69; Welch Gas Ex. 2, Artcle 11.) Welch Gas, howev- er, mposes both a "membershp fee" of $25 and a tap hookup fee $50 of (as opposed to $25), contrary to the express provsons of the By-Laws. The By-Laws of Welch Gas provde that the sem-annual meetngs of the members be held on the frst Thursday n March and the frst Thursday n September of each year and requre that notce of those meetngs be delvered ether personally or by mal to each member not less than fve days before the meetng date. (Welch Gas Ex. 2, Artcle 111, $ 5 a and d.) However, only persons attend the annual meetng (out of a total

8 membershp of approxmately 1,000) (WBS, p. 91). Meetngs occur anywhere from July to September or October. (WBS, p. 121.) The notce of the meetng s carred n a newspaper advertsement, (WBS, p. 147.) Under the By-Laws, Mr. Swope, as the Presdent of Welch Gas, has the rght to pass upon the transfer or assgnment of a membershp n Welch Gas. (Welch Gas Ex. 2, Artcle 11, $ d). Even though he has never refused the rght to assgn a membershp, he admtted he had the power to do so. (WBS, p. 140.) n addton, under the By-Laws, a customer of Welch Gas must pay a gas bll wthn ten days after the malng of state- ments. The customers' rght to natural gas termnates thrty days there- after, and, f the customer fals or refuses to pay, the By-Laws provde that the gas supply "shall be shut off untl all sums n arrears have bee pad". [(Welch Gas Ex. 2, Artcle 11, $ c.; Note that By-law provson s at odds wth the Commsson's Rule relatng to termnaton of servce to gas customers, See, Rules and Regulatons for the Government of Gas Utltes and Gas Ppelne Safety ("Gas Rules"), Rule 4.08 (General Order No Meters for the Welch Gas customers are read sem-annually. (WBS, p. 69; but see "Gas Rules" $ 3.05 (2). ) No meter testng program s conducted by Welch Gas. (WBS, p. 77; but see "Gas Rules" ) Rates for gas servce provded by Welch Gas are not cost wholly based but nclude an ncrement to produce revenues whch cover expenses related to () sellng, nstallng and servcng applances and equpment for members (WBS, p. 74, 76, 122, 123, 166), () nstallng servce lnes nto resdences and makng nordnate free extensons (WBS, p. 70, 175), and () carryng nventory for mantanng the customers' applances and equpment. (WBS, p. 130.) -8-

9 Apparently, no one s overseeng or audtng the fnancal condton or expendtures of Welch Gas. For nstance, Mr. Swope, the central fgure and prncpal authorty n Welch Gas, does not know the names of the members of the audt commttee, does not know how often that commttee meets and, does not meet wth the audt commttee. (WBS, p. 93.) Welch Gas does not have audted fnancal statements and has never had an au B. Amount of Prncpal and Delayed Payment Charge n Dspute. Cabot presented at the hearng the drect testmony and exhbts of Melvn R. McGrew, who testfed concernng the calculaton of the prnc- pal and nterest n dspute. Mr. McGrew detaled and sponsored Cabot's Exhbts 1, 2 and 3. Cabot Ex. 1 s a rate hstory of Cabot's sale for resale rates to Welch Gas and sets forth the actual rate per Mcf appled by Cabot to t sales of gas to Welch Gas from the date rate the commenced to the date the rate ceased and the bass for the change n rate (g.g., purchase gas adjustment, rate case, etc.). (MRM, p ) Mr. McGrew explaned, qute smply, the basc dspute between Cabot and Welch Gas: [Tlhe amount of volume of gas as measured by Cabot has been appled by Welch at the contract [Agreement) rates, and the amount Cabot has requred as the bllng amount s based on our tarff flng, on those same mcf's. (MRM, p. 34.) The total amount sought by Cabot $93,791.25, s consstng of prnc- pal of $76, and nterest of $17, (MRM, p. 3 5). The prncpal amount of $76, was pad to Cabot, by Welch Gas, under protest on November 29, (MRM, p. 51). The total amount s slghtly less than -9-

10 the amount alleged n the complant fled by Cabot, of $76, prnc- pal and $20, nterest. (Complant at 113.) Mr. McGrew testfed that Cabot was wllng to accept the poston of Welch Gas, asserted n ts answer, that no nterest should be charged on the amount of prncpal whch was credted aganst the amount due from Welch Gas as a result of a rate case refund n PSC Case No G-42T. (MEW, p. 35.) The prncpal amount of $76, was detaled by Mr. McGrew on Cabot Ex. 2. (MRM, p. 38.) n arrvng at the prncpal amount owed, Cabot used the rates n effect (and as reflected on Cabot Ex. 1) for the consumpton durng the perods ndcated. (MRM, p. 38. ) Cabot then credted aganst the prncpal amount due from Welch Gas () any refunds to whch Welch Gas may have been enttled as a result of refunds ordered by the Commsson, () any suppler refunds (treated as thrd-party payments) and () any actual payments made by Welch Gas. (Cabot Ex. 2; MRM, p ) n addton to the prncpal amounts owed to Cabot, Cabot produced evdence support n of ts clam for a delayed payment charge of $17, Mr. McGrew ndcated that Cabot's clam for that charge was based on tarff flngs by Cabot for sales to Welch Gas begnnng wth PSC Case No and was computed based on the prme nterest rate of the Charleston Natonal Bank n effect from tme to tme. (MRM, p. 42.) A revew of Cabot's tarffs for sales for resale to Welch Gas ndcates the exstence of the followng language n that tarff durng thentre perod n queston: DELAYED PAYMENT CHARGE A delayed payment charge equal to the then prme nterest rate charged by the Charleston Natonal Bank to ts most favored customers, per annum, wll be added monthly to outstandng m CHARLESTON -10-

11 3, > t balances. Such charge shall commence thrty (30) days after a bll s rendered. - See, Revsed Orgnal Sheet No. 16 through Tenth Revson of Orgnal Sheet No. 16 to Cabot's P.S.C. W. Va. No. 1 admtted nto evdence collec- tvely as Cabot Ex. 6. Mr. McGrew detaled the calculaton of the delayed payment charge n Cabot Ex. 3 and n hs drectestmony. Essentally, Cabot determned the unpad prncpal outstandng, the number of days (after 30 days) that prncpal remaned unpad, and the prme nterest rate n effect for the specfc days n queston and then calculated the amount of nterest owng for the perod n queston. (MRM, p ) There s no delayed payment charge ncluded n the calculaton of the unpad amount upon whch the delayed payment charge n succeedng perods s calculated (no compoundng of delayed payment charges) (MEW, p. 56) and the calculaton of the delayed payment charge shown on Cabot Ex. 3 was not made by Cabot untl thrty days followng the due date of the amount n queston. (MRM, p. 56. ) Furthermore, the refund ordered by the Commsson n PSC Case No G-42T was credted by Cabot drectly aganst the Welch Gas and the amount of that refund amount owed by was elmnated n calculatng the delayed payment charge owng from Welch Gas. (MRM, p. 55, 61.) Cabot dd not, however, credt Welch Gas for any nterest on ths refund because, n Mr. McGrew's words "[tlhe rates that Cabot was bllng at were not beng j pad by Welch, and therefore, we dd not credther account for the - nterest for money they had not pad." (MRM, p. 62.) 1 - OF WEST VlRQlNlA -11-,m

12 , ', DSCUSSON OF THE SSUES AND APPLCABLE LAW The prncpal dsputes n ths case center on legal ssues whch may be summarzed as follows: A) Whether Welch Gas s a publc utlty subject to the jursdcton of ths Commsson; B) f,welch Gas s a publc utlty subject to the jursdcton of ths Commsson, whether ths Commsson should exercse ts jursdcton over Welch Gas; C) Whether the Commsson's acton n assertng jurs- dcton over Cabot's sales to ts sale for resale customers (and the Commsson's subsequent orders n rate cases and purchased gas proceedngs whch changed the rates was Cabot authorzed to charge ts sale for resale customers, ncludng Welch Gas) had the effect of supersedng by operaton of law the rate set forth n the Agreement between and Cabot Welch Gas; and D) What amount, f any, s due from Welch Gas to Cabot and whether Cabot s enttled to receve a delayed payment charge on that amount. A. The Status of Welch Gas as a Publc Utlty. n ts answer to the complant fled by Cabot, Welch Gas dened the allegatons that t s a "publc utlty engaged n the busness of sellng gas to ts customers n Welch, West Vrgna." - See, Complant and Petton of Cabot, 112; Answer of Welch Gas, 112. Welch Gas alleges nstead that t s a "non-proft, tax-exempt, non-stock, cooperatve membershp corporaton that purchases gas for ts members". m CH*RLESTON

13 , ', The West Vrgna Code defnes a "publc utlty" as meanng and ncludng: ' ; fed [Alny person or persons, or assocaton of persons, however assocated, whether ncorporated or not, ncludng muncpaltes, engaged n any busness, whether heren enumerated or not, whch s, or shall hereafter be held be, to a publc servce. W. Va. Code (1980) (emphass added). Further, the term "publc servce" ncludes the "transportaton of gas by ppelne", and "supplyng gas". W. Va. Code (Supp. 1983). The test for whether or not an entty s actng a as publc utlty s whether there has been a "dedcaton or holdng out, ether express or mpled, that [the corporaton] s engaged n the busness of supplyng [ts] product or servces to the publc as a class or any part publc as dstngushed from [the servng of such of] only partcular ndvdu- als". Unted Fuel Gas Co. v. Battle, 153 W. Va. 222, 247; 167 S.E.2d 890, 905 (1969), cert. dened, 396 U.S. 116 (1969). Further, the Supreme Court has ndcated that the law looks what s beng done and not to what the utlty or person says t s dong. Wlhte v. Publc Servce Commsson, 150 W. Va. 747, 760; 149 S.E.2d 273, 281 (1966). As ndcated n the evdence dscussed above, Welch Gas s supplyng gas to approxmately 1,000 customers through 1,300 separately metered accounts. t s the sole source of supply of gas to the Town of Welch; anyone who wants gas servce n Welch, West Vrgna, and ts envrons, may (and n fact must) take servce from Welch Gas. There are no speccrtera for membershp n Welch Gas, and the testmony - of Mr. Swope ndcated that anyone who wanted to belong n order to receve gas servce could, upon payment of certan fees, belong and could receve gas servce. The Supreme Court n Wlhte v. Publc Servce Commsson, held that Wlhte-McGahee Ppelne ("Wlhte") was not a publc utlty; but Wlhte PUBLC SERVCE COMMSS10N CHARLESTON -13- rn m

14 ~, ', served only 2 customers under specal contract and dd not hold tself to serve others. Wlhte, 150 W. Va. at 765. Welch Gas clearly does hold tself out to serve others, ncludng all of the 1,000 resdental and commercal customers n the Town of Welch. Ths Commsson has developed a lst of factual crcumstances whch t revews n order to assst t n the determnaton of utlty status. For nstance, n Dr. John Patrck Lnsky v. Charles Nary, dba Greenbrer Development Company, PSC Case No. 8080, 63 ARPSCWV 661 (1975), the Comms- son, n determnng that Greenbrer Development Company ("GDC") not was a utlty n renderng servce to 25 persons, consdered a number of fac- tors. As ndcated, those factors clearly lead to the concluson that Welch Gas s a publc utlty: (1) The man busness of the GDC was land development and the operaton of a moble home park. Welch Gas exsts solely for the purpose of buyng and delverng gas to ts customers. (2) None of the water facltes of GDC were located n publc rghts of way. Although not precsely clear from the record, t appears that the facltes of Welch Gas are located n publc rghts way, of (WBS, p ) (3) The number of customers (25) served by the GDC was not substantal. The number of customers (1,000) served by Welch Gas s, by any measure, substantal. The number of customers served by Welch Gas far exceeds the number of customers served by several regulated gas utltes (e.g., ABC Gas Company, Bazzle Gas Company, Cameron Gas Company, H.A.B. Ltd., nc., Harper Heghts Gas Company, nterstate PUBLC SERVCE commlsslon -14-

15 Utltes Company, Ravenclff Fuel & Supply Company, etc.; e, 67 ARPSCWV 63) and s very close to the number of resdental customers served by several other gas utltes (Carnege Natural Gas Company, Oceana Gas Company, Shenandoah Gas Company, and Town Gas, nc.). (4) The water systems of GDC had none of the attrbutes usually assoc- ated wth a publc utlty, such as the meterng of customers and regular bllng, and had no employees or any rules regardng provd- ng the water servce. Welch Gas, on the other hand, as revealed by the evdence, meters ts customers, blls ts customers, has a full-tme employee force of approxmately 9 persons, and has rules regardng the rend- ton of gas servce set forth n ts By-Laws. " See 63 ARPSCWV at 664. n Mason County Publc Servce Dstrct, PSC Case No. 9248, 66 ARPSCWV 631 (1981), the Commsson, n refusng to grant a moton dsmss the J-2-Y-35 Water Assocaton, nc. ("J-2-Y1'), as a protestant, held that J-2-Y was a publc utlty because t furnshed an essental publc utlty; t blled for the servce n accordance wth a system of regular charges; t made repars to the system; and t held tself out serve addtonal customers. Welch Gas has these same attrbutes. to t s also nterestng to note that J-2-Y, a water assocaton servng approx- mately 300 customers, was held to be a publc utlty and to need a certfcate of convenence and necessty, even though ts By-Laws provd that any excess revenues mght be returned to ts members. J-2-Y-35 Water Assocaton, nc., PSC Case No. 9439, 66 ARPSCWV 951 (1979). The "non-proft" nature of Welch Gas s, of course, a factor to be consdered n determnng ts publc utlty status, but t s one only of CHARLESTON -15-

16 many factors whch must be consdered. " See Oman N. Arthur et a1 and Columba Gas of West Vrgna, PSC Case No G-SC, 68 APRSCWV 1682 (1980). The Commsson, n Oman N. Arthur, also dscussed the factors to be consdered n determnng whether or not a prvately-owned system s beng operated as a gas utlty whch nclude: () The extent to whch the property s devoted to servng the publc generally. n the case of Welch Gas, t s clear that, wth ts polcy of servce to all who apply, the entre system of Welch Gas s servng the publc. (2) The manner n whch requests for extenson of servce are treated. Welch Gas wllngly extends servce to new applcants and charges a modest "hook up" fee for that servce. (3) The extent of the responsbltes and nvolvements of persons served by the system n ts actual operaton. As dscussed below, Welch Gas s not a true cooperatve n the sense that decsons are made by vote of ts members. On the con- trary, as was demonstrated by the evdence at the hearng, the customers of Welch Gas have vrtually turned the entre operaton of the system over to Mr. Swope and the nne or so employees of Welch Gas. 1 (4) The general crcumstances surroundng the formaton and operaton of the system. Mr. Swope ndcated on at least two dfferent occasons durng the hearng that Welch Gas was formed solely as a vehcle for attemptng to avod the regulaton of ths Commsson. (WBS, p. 82, -/ CHARLSSTON m -16-

17 86.) The fact that ths Commsson has not seen ft to regulate Welch Gas to date does not dvest () Welch Gas of ts publc utlty status or () ths Commsson of :ts jursdcton over Welch Gas. Boggs v. Publc Servce Comm'n, 154 W. Va. 146, 174 S.E.2d 331 (1970). (5) The extent to whch, f any, the ndvdual profts, or has attempted to proft, from the operaton of the system. Admttedly, the mpetus for the formaton of Welch Gas was not to create a "proft" for ts members. t was to provde gas servce to ts members outsde the regulaton and control of the Commsson. But the proft or non-proft nature of the publc servce provded s not outcome determnatve of the publc utlty status of an 1 entt The Supreme Court, for nstance, n Wngrove v. Publc Servce Comm'n, 74 W. Va. 190, 81 S.E. 734 (1914), held that Whte Oak Fuel Company, a corporaton organzed to mne and sell coal, whch had permtted certan persons near ts operaton to receve electrcty, was a publc utlty. The Court, n assessng the almost ncdental (and "non-proft") nature of the publc servce rendered by Whte Fuel, held: - m Upon the facts and crcumstances dsclosed, t would no doubt be safely sad the company would never have nstalled ts plant for lghtng servce only and would not now operate t for that purpose alone. Nevertheless ts rendton of publc servce, ncdental and for accommodaton rather than proft, though t may be, s equally obvous. f for accommodaton, t s not gratutous. Compensaton s charged and pad, a consderable ncome derved and the busness 'The large number of non-proft water and sewer publc servce dstrcts regulated by ths Commsson s noted CHARLESTON '1

18 , l s conducted n much the same manner as f the plant were mantaned and run prmarly for publc servce. Ctzens not n any way connected wth the company apply to t for the servce, the wrng of ther buldngs and fxtures and all these demands have been compled wth except n three nstances. - d. at 192, 81 S.E. at 735. Smlarly, the fact that Welch Gas s organzed as a non-stock, non-proft corporaton does not dvest ths Commsson of ts jursdc- ton. Just as wth Whte Oak Fuel n Wngrove, Welch Gas charges for the gas, a consderable ncome s derved to the employees and management through salares and wages and to the members through accommodaton for gas servce, and the busness s conducted n much the same manner as f the plant were mantaned run and as a "for proft" publc utlty. n consderaton of the aforesad facts and appled law, the Hearng Examner s of the opnon that Welch Gas s a publc utlty renderng publc servce to customers n the Town of Welch. t s entrely possble for ths Commsson to assume jursdcton over ths complant and afford approprate remedy wthout reachng the ssue of Welch Gas' publc utlty status. The lawfulness tarff charge to Welch Gas may be determned wthout such of Cabot's a fndng. However, ths ssue was brought before the Commsson by complant. Cabot obvously must fnd ts future dealngs wth Welch to Gas henceforth best be subject to unquestoned Commsson jursdcton over Welch, or the 1 ssue of publc utlty status would not have been rased by complant., 1 The ssue havng been rased, ths Hearng Examner fnds t to have not only been n Cabot's nterest, but also n the publc nterest, that the proceedngs have addressed the publc utlty status of Welch Gas. m r n S T O N rn -18-

19 B. Should Ths Commsson Exercse ts Dscreton and Refuse to Regulate Welch Gas. Welch Gas suggested durng the hearng that ths Commsson, f even t decdes that t has jursdcton over Welch Gas as a publc utlty, should refran from exercsng that jursdcton snce n the opnon of those wtnesses appearng at the hearng Welch Gas was beng operated satsfactory fashon. The testmony at the hearng as to the satsfactory nature of the operatons of Welch to Gas date s not contested. Welch Gas s a system that was nstalled vrtually new n 1969 (WBS, p. 781, and, as Mr. Swope testfed, there has been very lttle n the way of operaton problems, to date. There are, however, a number of consderatons whch ths Commsson should consder n ts decson to assert, or not to assert, ts jursdcton over Welch Gas. Frst, several matters rased at the hearng should be of concern to ths Commsson. For an example, Welch Gas currently has a termnaton polcy whch s patently nconsstent wth the Commsson's termnaton rules and whch does not afford the protectons of the Commsson's termnaton rule as found n the Gas Rules. n addton, Welch Gas s undertakng many expenses for classcally "non-utlty" actvtes and s ncludng these costs wthn the cost of gas sold to ts customers. Ths type of actvty s nconsstent wth the prescrpton of W. Va. Code that the rates for publc utlty servce be based on cost. Ths Commsson does not permt other utltes to recover through rates the cost assocated wth non-utlty actvtes, and the proper regulaton of Welch Gas by ths Commsson would elmnate from the cost of servce of Welch Gas the expense ncdent, for nstance, to sale, the mantenance and upkeep of customers' applances, whch Mr. Swope testfed was largely responsble for a $25,000 servce department loss. (WBS, p ) m s r o N -19-

20 Second, t s apparent from the record that the members have vrtual- ly turned over unfettered control of Welch Gas to Mr. Swope. The checks and balances on the rate fxng process of Welch Gas provded for n the By-Laws of Welch Gas through regularly scheduled (and mandatory) sem-annual meetngs of the members and the board of drectors are not occurrng. There s no evdence of record to ndcate that Mr. Swope has not been entrely forthrght, honest and aggressve n hs management of Welch Gas. By the same token, however, the record reveals that those actvtes of Mr. Swope have been performed largely wthout audt, super- vson, revew or accountablty. Thrd, the Commsson s a creature of the Legslature and has been charged by statute wth the oblgaton of nvestgatng all "rates, methods and practces" of publc utltes subject to ts jursdcton. n certan cases, the Commsson has elected, ether by choce or becaus the ssue has not come before t, to permt actvty over whch t clearly has jursdcton to contnue largely unregulated. Such was the stuaton wth regard to Cabot's sales to ts sale for resale customers (ncludng Welch Gas) pror to the tme the Commsson asserted jursdcton over those sales n PSC Case No (Cabot Corporaton, PSC Case No. 9557, 67 ARPSCWV 694 (1979).) The Commsson asserted jursdcton nonetheless. - d. at 697. n so dong, the Commsson rected the monumental changes the gas ndustry occasoned by the mplementaton of the Natural Gas Polcy Act -(d. at 696; Order on Reconsderaton, 67 ARPSCWV at 698), the volatlty of gas prces, and the problems beng experenced n hgh prces and requests for dscontnuances of servce. m D -20-

21 ' 1 These same crcumstances exst today and, f anythng, have been exacerbated by deregulaton of the gas ndustry. The Commsson should therefore assert ts jursdc.ton and undertake regulaton of Welch Gas. Ffth, by assertng jursdcton of Welch Gas n ths case the Commsson wll be provdng the proper forum for the resoluton of the dspute between Cabot and Welch Gas. f the Commsson refused to exer- cse ts proper jursdcton over Welch Gas, Cabot would stll be able to pursue ts complant aganst Welch Gas n a court of competent jursdc- ton. However, t s the opnon of the Hearng Examner that such a decson by the Commsson would be contrary to the long recognzed doctrne of prmary jursdcton. Ths doctrne has as ts underpnnng the concept that dsputes n certan regulated areas should be examned by the admnstratve agences charged wth that regulaton. Conceptually, prmary jursdcton s closely related to the doctrn / ll of exhauston of admnstratve remedes. The West Vrgna Supreme 1 11 Court, n Bank of Wheelnq v. Morrs Plan Bank & Trust Co., 155 W. Va. ll / 245, 183 S.~.2d 692 (1971), dscussed and approved that doctrne: The rule that al admnstratve remedes must be exhausted before an acton mav be nsttuted n a court was enuncated bv the Supreme Court df the Unted States n the case of Texas k Pacfc R. Co. v. Ablene Cotton Ol Co., 204 U.S. 426, 27 S.Ct L.Ed. 553, n whch the prmary ursdctonal doctrne was'adopted. The doctrne smply &provdes that when the legslature provdes for an admnstratve agency to regulate some artcular feld of endeavor, the courts are wthout jursdcton o grant relef to any ltgant complanng of any act done or omtted to have been done f such act or omtted act s wthn the rules and regulatons of the admnstratve agency nvolved untl such tme as the complanng party has exhausted such remedes before the admnstratve body. [ctng Adler v. Chcago & Southern Ar Lnes, nc., D.C., 41 F.Supp. Sellers v. State Farm Mutual Automoble nsurance, Co. D.C., F.Supp. /8; State v. Chppewa Cable Co., 48 Ws.2d 341, 180 N.W.2d The rule ot exhaustng admnstratve remedes before actons n t courts are nsttuted-s applcable, even though the admnstratve agency cannot award damages, f. the matter s wthn the jursdcton ot the agency. n any event, damages can always be -21-

22 8, ' a obtaned n the courts after the admnstratve procedures have been followed, f warranted. [ctn 73 C.J.S. Publc Admnstratve Bodes and Procedure 87;"g 3, p. 359; Thompson v. Texas Mexcan R. Co. 328 U.S. 134, 66 S.Ct. 937, 90 LEd. 1132; Adler v. Chcago h Southern Ar Lnes, nc., supra. See State v. Chppewa Cable Co., supra.] 155 W. Va. at 249; 183 S.E.2d at 694, 695 (emphass added). Cf., U.S. v. Western Pacfc Ralroad Co., 352 U.S. 59 (1956). Adjudcaton of ths dspute nvolves nterpretaton of pror Comms son rulngs and proceedngs wheren rates were approved for charge by Cabot for gas suppled to Welch Gas, as well as applcaton of other precedent n publc utlty law. Ths Commsson s best suted, through ts partcular expertse, to adjudcate ths dspute. : ; C. Whether the Commsson Approved Rate Supersedes the Rate Provded for n the Agreement. Welch Gas has taken the poston that the rates set under ts Agr ment wth Cabot could not be changed untl the expraton of that contract n September of 1982, at whch tme Welch Gas concedes the tarff rate fxed wth the Commsson became effectve. By statute, the West Vrgna Publc Servce Commsson has jurs- dcton over "all publc utltes n the state." W. Va. Code $ (Supp. 1983). Snce Welch Gas s a utlty wthn the meanng of the statute (see dscusson, supra), the Commsson has jursdcton, whch asserted n PSC Case No. 9557, over the contract wth Cabot. Welch Gas, however, contends that the contract rate, as provded for n the Agreement between Welch Gas and Cabot, cannot be changed despte the fact that the ' Commsson has asserted complete jursdcton over Cabot's sale for res contracts and has ordered Cabot to fle tarffs for such contracts wth 1 the Commsson. n r n S T O N D -22-

23 " l Prvate contracts entered nto between publc utltes must deemed to have been entered nto n contemplaton of the exercse by the state, through the Commsson, of ts rate-makng power. Preston County Lght and Power Company v. Renck, 145 W.Va. 115, 113 S.E.2d 378 (1960), Unted Fuel Gas Company v. Battle, 153 W.Va. 222, 167 S.E.2d 890 (19691, Furthermore, the fact that one of the contractng partes s not a publc utlty does not alter or dmnsh ths Commsson's rate-makng author- ty. Mll Creek Coal and Coke Co. v. Publc Servce Comm'n, 84 W.Va. 662, 100 S.E. 557 (1919); Cty of Benwood v. Publc Servce Commsson, 75, W.Va. 127, 83, S.E. 295 (1914). The fact that the Commsson had not exercsed ts jursdcton over Cabot's sale for resale contracts to pror Case No does not alter the authorty whch the Commsson has to regulate such contracts. The Welch Gas contract, as well as Cabot's othe sale for resale contracts, have, from ther ncepton, been subject to ths Commsson's rate-makng powers and, therefore, must yeld to the exercse by the Commsson of such powers not prevously exercsed. Applyng the above prncples to the case at bar, t s clear that the contract between Cabot and Welch Gas must be deemed to have been entered nto n contemplaton of the exercse by the State through the Commsson of ts paramount rate-makng authorty. Although publc 1 utltes certanly have the power to contract between themselves, such be j j contractng powers are always subject to the paramount authorty of the Commsson, and, once the Commsson has chosen to exercse such power by assertng jursdcton over Cabot's sale for resale contracts, the rates set by the prvate contracts must yeld to rates approved by and fled wth the Commsson. rn mston m -23-

24 Close examnaton of the order entered by the Commsson on July 2, 1979, n Case No ndcates that the Commsson has asserted jurs- dcton over the sale for resale contracts because of ts concern for th publc nterest. Among the reasons cted the Commsson for assertng jursdcton over the prce to be pad by the utltes n queston are the followng: 1. t s our belef that Cabot has, over the years, through these specal contract sales, become so ntmately related to the publc as to make the welfare of the publc dependent on the proper conduct of Cabot n ts contracts wth the utltes n queston, 2. t s also our belef that Cabot's role n the supply and prcng of natural gas for many thousands of consumers n ths state s of a nature whch our legslature ntended the Commsson to control through ts grant of regulatory powers. 3. By assertng jursdcton, ths Commsson wll have the ablty to make Cabot justfy ts future decson as to ts contnung supply of natural gas to these utltes, and, of course, as to prce. n lght of the problems we are experencng wth other gas utltes n ths state at present, such as applcatons for abandonment of customers and hgh prces for natural gas, t appears that the Commsson s takng ts proper role n these contracts at the approprate tme. 4. Furthermore, Cabot'scontentonthattsprcng n ts contract sales s beneath rate levels mantaned by Columba and Hope does not answer the present emphass on cost-based rates, present n Commsson polcy as well as the new federal energy legslaton. 5. Fnally, t must be our major concern that Cabot contnue ts supply to the smaller gas companes as long as t s practcable. As the stuaton exsts presently, f Cabot for any reason, justfed or arbtrary, nforms one of these companes that t wll not negotate a new contract, a very serous supply stuaton wll face a porton of gas customers n ths state. By assertng jursdcton, ths Commsson wll be n a poston to seek out justfcaton f Cabot should refuse to contnue to supply and the Commsson wll make the fnal decson n ths very mportant area of gas supply. Cabot Corporaton, Case No. 9557, 67 ARPSCWV 694, 696 (1979). c -24-

25 Welch Gas has cted two U. S. Supreme Court cases n support of ts poston that t should not be requred to pay the tarff rate. n Unted Gas Ppe Lne Company v. Moble Gas Servce Corporaton, , U.S. 100 L.Ed. 373 (1956), Moble Gas Servce Corporaton, ("Moble") a dstrbutor of natural gas to domestc and ndustral users n Moble, Alabama, had entered nto a 10-year gas sale contract wth deal Cement Company. Moble, n turn, before enterng nto the contract wth deal, obtaned from Unted a 10-year contract to supply gas for resale to deal. The rate set by the Moble-Unted contract was much lower than the rate for other gas furnshed by Unted. The supply contract between Unted and Moble was fled wth and approved by the Federal Power Commsson. Se years later, durng the term of the contract, Unted fled new schedules wth the Federal Power Commsson purportng to rase the contract rate wthout Moble's consent. On appeal from the Thrd Crcut Court of Appeals, the U. S. Supreme Court held that Unted dd not have the rght under the Natural Gas Act to unlaterally change ts rate contracts. Smlarly,nFederalPowerCommssonv.SerraPacfcPower Company, 350 U.S. 348, 100 L.Ed. 388 (1956), Serra Pacfc Power Company ("Serra"), a gas dstrbuton company, entered nto a 15-year contract wth Pacfc Gas & Electrc Co., ts suppler ("PG&E"). The contract was fled wth and approved by the Federal Power Commsson. Several years later PG&E fled new schedules wth the Federal Power Commsson callng, for hgher rates. The U. S. Supreme Court ruled that PG&E dd not have the rght to unlaterally change ts contract rates and that: before any change can be made n a contract rate, the FPC must fnd, affrmatvely, that the old rate s 'unjust, unreasonable, unduly dscrmnatory or preferental.' -25-

26 - d. at 353, 100 L.Ed. at 394. The utltes n both of those cases had attempted to unlaterally change rates n contracts wth commercal customers and were not, n any sense, complyng wth orders of a regulatory authorty assertng jurs- dcton over the contracts n queston. Those two cases are clearly dstngushable from the case at bar n that the utltes n queston were attemptng to ncrease therates, not because of a fndng by the regulatory authorty that the publc nterest necesstated crease, but because of a rate n- a busness decson emanatng solely from the utlty n queston, that a rate ncrease was justfed. Ths Commsson has consdered these two U. S. Supreme Court cases n a case n whch dupont de Nemours was resstng the efforts of Columba Gas to renegotate the specal ndustral contract applcable to t. Columba Gas was, n effect, attemptng to unlaterally amend ts contra wth dupont by ncorporatng new specal contract rates nto ts tarff. The contract between Columba Gas and dupont had been executed 8, Novem 1956, for a term of twenty years. Th.e Commsson followed the holdngs of the Moble and Serra cases n reachng ts decson that W. Va. Code $ dd not gve Columba Gas the power to unlaterally abrogate, nullfy or amend the terms and condtons of a specal ndustral con- tract. Columba Gas of West Vrgna, nc., Case No. 74,37, 63 ARPSCWV 238, 243 (1975); The Commsson has recently reaffrmed ts Columba decson n Maysel Publc Servce Dstrct v. Clay Munc.pa1 Water De ment, Case No W-C, Order entered December 7, cted as authorty for ths poston the The Commsson 1969 case of Unted Fuel Gas Company v. Battle n whch the West Vrgna Supreme Court held that: -26-

27 11 " [tlhough as a general rule publc utltes have the rght to enter nto contracts between themselves or wth others, free from the control or supervson of the state, so long as such contracts are not unconsconable or oppressve, and do not mpar the oblgaton of the utlty to dscharge ts publc dutes, the prncpal s frmly establshed that all contracts made by? utlty relatng to the publc servce must be deemed to be entered nto n contemplaton of the exercse the by state of ts regulatory power whenever the publc nterest may make t neceswhen such contracts are the subject of statutory w n, no contract for servce may be made by a publc utlty except as provded by law, although an otherwse vald contract s bndng on the partes to t untl a departure from such contract has been ordered by competent authorty. Unted Fuel Gas v. Battle, 153 W.Va. 222, , 167 S.E.2d 890, 904, cert. den., 396 U. S. 116, 90 S.Ct. 398, 24 L.Ed. 2d 309 (1969). The (11 Commsson, n Columba, went on to say that: '...there can be no retractve abrogaton of or amendment to a utlty'sspecalndustralcontractsncethecontracts bndng unless and untl a departure therefrom has been drected by a competent authorty, and second, the test ths Commsson must apply n determnng whether or not to abrogate or amend exstng vald contracts s whether such contracts are unconsconable or oppressve and mpar the oblgaton of the utlty to dscharge ts publc dutes." Columba Gas of West Vrgna, supra, at p. 244, ctng Preston County Lght and Power Company v. Renck. 145 W.Va S.E.2d 378 (1960). xxxx "...there can be no changes n a utlty's specal contract terms and condtons unless and untl the Commsson, after hearng, determnes that the contract rate or provsons are unjust, unreasonable, nsuffcent, unjustly dscrmnatory or otherwse n volaton of the controllng statutes and orders new rates, terms, condtons or provsons to be made effectve n leu of 1 those found unlawful.' Columba Gas of West Vrgna, supra, at p j Code Ths fndng was based upon the Commsson's nterpretaton W. Va. of whch provdes n part follows: as And whenever the commsson shall, after hearng, fnd any exstng rates, tolls, tarffs, jont rates or schedules unjust, unreasonable, nsuffcent or unjustly dscrmnatory or otherwse n volaton of any of the provsons of ths chapter, the commsson shall by an order fx reasonable rates, tarffs, tolls or schedules to be followed n the future n leu of those found 1-27-

28 9 to to be unjust, unreasonable, nsuffcent or unjustly dscrmnatory or otherwse n volaton of any provson of law.... The Commsson has made the fndng n the Cabot cases that the contract rates for sale to resale customers are both unreasonable and unlawful, n assertng jursdcton over the Welch Gas agreement n Case No. 9557, the Commsson set forth ts reasons, prevously dscussed heren, for assertng jursdcton and ordered Cabot to submt -tarff schedules for ts sale for resale contracts "and any supportng data requred by Commsson Rules and Regulatons for the flng of these ra and charges n any future rate cases" before the Commsson and to comply wth "all statutory requrements of W. Va. Code $ et seq." n dealng wth ts sale for resale customers. 67 ARPSCWV 694, 697 (1979). Cabot was also ordered to ncorporate ts eght sale for resale contracts nto ts present tarff sheets on fle wth the Commsson. Cabot ntally fled the contract rate as the tarff sheet for ts sales Welch Gas, pendng Cabot's calculaton of an approprate rate to reflect cost of servce n accordance wth W. Va. Code $ By order entered June 19, 1980, n consoldated Case Nos G-G, G-42T 1 and G-T, the Commsson found that Cabot's "now superseded rates l and charges under contracts wth sale for resale customers are not just 1 and reasonable, n that they do not produce suffcent annual operatng revenues to allow the respondent [Cabot] to pay ts reasonable and necessary operatng expenses and taxes, provde for deprecaton and earn a : far return on ts property used and useful n ts publc servce bus- ness. The Commsson dd, therefore, make the requste fndngs of Moble, Serra, and Columba Gas to justfy the mposton of the new gas rate. The effect of ths fndng and the subsequent approval of a new m PUBLC SERVCE COMMlSS10N OF WEST VlRQlNlA.. ESTON m -28-

29 8., e, ' a rate s to supersede, by operaton of law, the rate provsons of the Agreement. Welch Gas argues that the new rate s not bndng upon t because t was not gven formal notce of the other proceedngs before the Comms- son, nor was t a party to those proceedngs. However, examnaton of the record n these earler proceedngs wll verfy that Welch Gas was fact gven notce of each proceedng affectng ts agreement wth Cabot. Welch Gas admts the same by bref and n hs testmony at the Aprl 14, 1983, hearng, Mr. Swope admtted that he knew that the proceedngs n Case No "were comng" (WBS, p. 154). Counsel for Welch Gas agreed that Welch Gas had receved a copy of the Commsson's order n Case No. 9557, as well as a letter ndcatng that there had a been new tarff flng. (WBS, p ) Mr. Swope further testfed that he had been contacted by telephone regardng the possblty of testfyng n the Commsson proceedngs n Case No (WBS, p. 154) and that he assumed that "they would keep me advsed about t". (WBS, p. 155.) The fact that Welch Gas dd not ntervene and was not a party to those proceedngs on the result that the Cabot-Welch contract was not the subject of exten- sve dscusson n the Hearng Examner and Commsson orders aforesad cases. Welch n the Gas, however, had ts opportunty to defend the reasonableness of ts contract, and t elected not to do so. The result s a vald and lawful Commsson order whch fnds the Cabot-Welch Gas contract rates unjust and unreasonable. n the Aprl 14, 1983, hearng, Welch Gas stated by counsel, and Mr. Swope testfed, that Welch Gas had receved no formal notce of cancellaton of the Agreement. (WBS, p ) However, the ssue rased n ths case s not that of notce of cancellaton of a contract m D PUBLC SERVCE COMMlSSlON E S T O N m -29-

30 z : <.', ', ' ' under applcable prncples of contract law, but rather t s the effect of orders ssued by the Commsson abrogatng provsons of a negotated contract. Cabot dd not, nor was t requred to, formally cancel the Agreement. The Commsson ordered Cabot to "submt tarff schedules for those sales and any supportng data requred by Commsson Rules and Regulatons for the flng of these rates and charges n any future rate cases before the Commsson", and further ordered that "Cabot shall be prepared to justfy these rates and charges as just and reasonable at t tme". Case No. 9557, Cabot Corporaton, 67 ARPSCWV 694, 697 (1979). Cabot acted to comply wth these orders whch, by operaton of law, supersede the Agreement and render formal cancellaton both meanngless and unnecessary. Welch Gas has suggested that n ssung ts order n Case No. 9557, the Commsson was not cognzant of the fact that the Agreement was for term of four years and expred n September of 1982 unlke a number of the other sale for resale agreements whch were for terms of year, one renew- able annually, and that the Commsson dd not really ntend to abrogate the Agreement, but ntended, rather, for all of the sale for resale agreements to frst expre and then for Cabot to provde servce to the utltes affected at a cost-based rate. Ths poston s wthout mert 1 for a number of reasons. Frst, t cannot be assumed that the Commsson l dd not take notce of the specfc terms of the agreements n queston smply because the Agreement s for a four-year term rather than beng a year-to-year contract. The Commsson order n Case No states that 1 the Commsson s exertng jursdcton not only over the contracts wth ' the eght companes named n the order but also "over any such smlar sales to companes not named heren". Cabot Corporaton, Case No. 9557,,- lm PUBLC SERVCE COMMSS10N c ESTON,