2017-0452, Appeal of Lakes Region Water Company, Inc.

learned that Mykytiuk had constructed an additional structure on his property. testimony given at the hearing on the merits. In March 2016, Lakes Region The following facts are taken from the Commission ’ s orders or recount

affirm. such charges unles s and until they are included in the company’s tariff.” We imposed on its customer, Robert Mykytiuk, and prohibiting it from “imposing (Commission) requiring Lakes Region to refund a second base charge it had Region), appeals an order of the New Hampshire Public Utilities Commission HICKS, J. The petitioner, Lakes Region Water Company, Inc. (Lakes

Commission. assistant attorney general, on the brief), for the New Hampshire Public Utilities Gordon J. MacDonald, attorney general (Laura E. B. Lombardi, senior

for the petitioner. Upton & Hatfield, LLP, of Portsmouth (Justin C. Richardson on the brief),

(New Hampshire Public Utilities Commission) APPEAL OF LAKES REGI ON WATER COMPANY, IN C.

No. 2017 - 0452 Public Utilit ies Commission

http://www.courts.state.nh.us/supreme. release. The direct address of the court's home page is: Opinions are available on the Internet by 9:00 a.m. on the morning of their reported by E - mail at the following address: reporter@courts.state.nh. us. corrections may be made before the opinion goes to press. Errors may be Doe Drive, Concor d, New Hampshire 03301, of any editorial errors in order that requested to notify the Reporter, Supreme Court of New Hampshire, One Charles as formal revision before publication in the New Hampshire Reports. Readers are NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as well 2

rules on rehearing; and (3) reconsider a new issue determined in its order. in failing to: (1) apply both RSA 378:1 ( p. 2 2009) and its own rules; (2) explain its amendment.” Lakes Region now appeals, argu ing that the Commission erred to impose a second charge under the terms of a properly filed tariff [Mykytiuk’s] property. . . , until such time as Lakes Region receives approval further ordered that “Lakes Region shall not impose a second base charge on charge on My k ytiuk. It ordered Lakes Region to refund those charges and Lakes Region had no basis under its current tariff to impose the second base Following the hearing, the Commission issued its order, finding that

hardship on [him].” usage on the meter. Moreover, Lakes Region did not want to cause an undue there were no health concerns and that [he] had not bypassed recording water Region “decided not to disconnect [him] in April p. 2 2016 after being satisfied that conclusion that Mykytiuk had installed a prohibited tandem service, Lakes definition about what tandem service is.” Furthermore, notwithstanding the Commission’s order, Lakes Region’s tariff contains “no specific working Rule s, Puc 606.04(h). According to her testimony, as summarized in the of consumption after the meter — prohibited by New Hampshire Administ r a t ive turn, understood to mean a connection from the service line t o a second place service to his additional structure to be a “tandem connection” — w hich she, in Lakes Region’s utility manager testified that she considered Mykytiuk’s

times he stays in the bunkhouse. rents out his primary residence by the week as a vacation rental, during which facilities, but does not contain cooking facilities.” He further testified that he residence, [and] . . . contain[s] sleeping facilities, and may contain sanitary that, according to his definition, a bunkhouse “is subordinate to a primary He testified that his additional structure i s a “garage[] with bunkhouse” and additional structure because neither was provide d for in Lakes Region’s ta riff. a separate base charge or require him to install a separate meter for the At the hearing, Myk y tiuk argued that Lakes Region could n ot charge him

matter as a formal complaint and held a hearing on the merits. req uired to have a second service connection. The Commission treated the tariff. Mykytiuk complained to the Commission, asserting that he was not “[m]inimum charge per customer per quarter” scheduled in Lak es Region’s billing Myk y tiuk for an additional “base charge,” which refers to the Lakes Region chose not to install one at that time. Rather, Lakes Region began concluding that the new stru cture required a separate service connection, Lakes Region sent an inspector to Mykytiuk’s property i n May. Despite

structure and requested to inspect the water service connection. Lakes Region sent Mykytiuk an application for new service for the additional residence’s service connection. Shortly after learning of the new c onstruction, To supply the new structure with water, Mykytiuk had tapped into his primary p. 3 3

Mykytiuk a second service charge because his tandem service “carries a rate for such service. Nevertheless, Lakes Region argues, it must charge which, according to Lakes Region, explains why its tariff does not include a rules specifi cally prohibit tandem services, N.H. Admin R., Puc 606.04(j)(2), (Quoting RSA p. 3 378:1.) Lakes Region then points out that the Commission’s service “‘ rendered in accordance with the rules adopted by the commission. ’” applies to “all water service in the franchise area,” specifically applies to water Lake s Region’s argument begins with the asser tion that its tariff, which

and in effect at the time such service is rendered. fixed for such service by the schedules on file with the commission rendered to any p erson, firm or corporation than the compensation receive a greater or lesser or different compensation for any service No public utility shall grant any free service, nor charge or

606.04(j). Finally, RSA p. 3 378:14 provides: in part, that “[n] o tandem services shall be permitted.” N.H. Admin R., Puc RSA 378:1. Next, New Hampshire Administrative Rule s, Puc 606.04 provides,

commission pursuant to RSA 541 - A. . . . be rendered in accordance with the rules adopted by the the rates, fares, charges and prices for any service rendered or to shall print and keep open to public inspection, schedules showing Every public utility shall file with the [C ommission], and

pertinent part: we set forth the relevant provisions here. First, RSA p. 3 378:1 provides, in through the interplay of several statutes a nd regulations. For ease of reference, residence.” Nevertheless, it attempts to justify Mykytiuk’s second base charge express provision authorizing a second base charge for an additional and bunkhou se. Lakes Region concedes that its tariff “does not contain an could not charge an additional base charge for the service to Mykytiuk’s garage Lakes Region first challenges the Commission’s determination that it

novo. Northern New England Tele., 165 N.H. at 271 (quotation omitted). choices considerable deference,” but review its statuto ry interpretations de Tele., 165 N.H. at 270; see RSA 5 p. 4 41:1 p. 3 3. We give the Commission’s “policy fact “are presumed prima facie lawful and reasonable.” Northern New England N.H. 267, 270 (2013); see RSA 541:13 (2007). The Commission’s findings of unreasonable.” Appeal of Northern New England Tele. Operations, LLC, 165 contrary to law or, by a clear preponderance of the evidence, is unjust or order of the [Commission] has the burden of demonstrating that the order is We first set forth our standard of review. “A party seeking to set aside an 4

Lakes Region ’s construction of them. however, that the statutes and administrative rules at issue do not support failing to apply RSA 378:1 and its own rules as outlined above. We conclude, “[t]he Commission . . . fail[ed] to a ddress the central issue in the proceeding” by while paying rates that are less than required by RSA 378:1.” It asserts that allowed [Mykytiuk] to maintain a second use in violation of Rule . . . 606.0 p. 4 4 378:14. More specifically, Lakes Region contends that “the Commission charge would result in free or discounted service in violation of law.” See RSA in Mykytiuk’s case, “allowing a second dwelling without a second customer Based upon all o f the foregoing assertions, Lakes Region concludes that,

additional fixed customer charge. to serve this additional peak demand in the absence of an additional peak demand. Lakes Region does not recover the costs addition of a summer vacation rental. . . places significant while its metered consumption is corresponding ly low.. . . The periods of peak demand. Its base per customer charge is high recover the fixed capital costs to make service available during pumps) facilities. As a result, Lakes Region’s rates are designed to pipe diameters, and larger treatment and productio n (wells and August, demand is high which requires larger storage tanks, larger during peak holiday periods such as during weekends in July and prolonged periods. During off - peak seasons, use is low. However, customers who own second homes that may be unoccup ied for Lakes and White Mountain Regions, serve [] primarily seasonal Lakes Region’s systems, being located in New Hampshire’s

importance of the fixed customer charge or base charge in its scheduled rates: Lakes Region elaborates on the foregoing concepts in expla i n ing the

Company will have to face. pocket cost today or tomorrow, [but] it will result in cost that the it adds to the peak demand. And that may not have an out - of add additional customers, which is what [Myky tiuk’s situation] is, W he n you add additional places of consumption, when you

thus, must have “facilities to meet its peak demand[].” According to Naylor: [i ts] peak demand, plus a safety factor over that, on a 365 day basis,” and, explained that Lakes Region, like all utilities, is required “to be able to provide “adding a second unit to an existing service . . . creates demand cost.” Naylor the Commission’s Gas and Water Division, Mark A. Naylor, who opined that Specifically, Lakes Region cites the hearing testimony of the Director of

r ate for actual water usage. significantly greater cost” than would be accounted for in the tariff’s m etered p. 5 5

separate service lines (and meters) ‘except in unusual situations such as Commission’s rules require that separate and distinct uses or buildings have Lakes Region, nevertheless, argues that its tariff “assumes and the

share of Lakes Region ’ s capacity costs. its tariffed rates unilaterally in order to ensure that Mykytiuk pays his fair see RSA 378:14, Lakes Region is not empowered to adjust its charges outside prohibiting utilit ies from imposing charges that deviate from the tariffed rates, 19. By negative implication, and in accordance with statutory provisions see also Granite State Alarm, 111 N.H. at 237; Chicopee Mfg. Co., 98 N.H. at details.’” (quoting Power Comm ’n v. Pipeline Co., 31 p. 5 5 U.S. 575, 584 (1942))); revenue] level so as to eliminate discriminations and unfairness from its making is ‘the adjustment of a rate schedule conforming to [the general See Co mpany v. State, 95 N.H. 353, 364 (1949) (“[A]n important step in rate commission.”). That responsibility is discharged in the ratemaking process. so as to eliminate discriminations and unfairness has been entrusted to the complex and difficult task of distributing a rate increase among the ratepayers treatment.”); Chicopee Mfg. Co. v. Co mpany, 98 N.H. 5, 19 (1953) (“The company no class of service is discriminated against or receives preferential is the duty of the c ommission . . . to see that under the tariff proposed by the State Alarm Inc. & a. v. New England Tel. & Tel., 111 N.H. 235, 237 (1971) (“It that a utility’s rates are n ot discriminatory, preferential, or unfair. See Granite Our cases make clear that the Commission is responsible for ensuring

tariff to address [such] situations.” remedy would be, as the Commission sugges t ed, to “propose revisions to its charge would result in free or discounted service in violation of law,” then its Lakes Region contends, “allowing a second dwelling without a second customer 378:14, the second base charge billed to Mykytiuk actually violates i t. If, as the rates scheduled in its tariff. Thus, r ather than being authorized by RSA providing free or discounted service, Lakes Region charged a fee different from RSA 378:14 (emphas e s added). Here, in an ostensibl e attempt to avoid

and in effect at the time such service is render ed. fixed for such service by the schedules on file with the commission rendered to any person, firm or corporation than the compensation receive a greater or lesser or different compensation for any service No public utility shall grant any free service, nor charge or

inconsistent. construe the statute as Lakes Region urges would render it internally does not authorize the sort of self - help employed by Lakes Region here. To to the disposition of this appeal, as we hold th at, in any event, RSA 378:14 prohibited by Rule p. 6 606.04(j). The lack of such a finding, however, is immaterial service to Mykytiuk’s bunkhouse was or was not a tandem connection First, we note that the Commission made no finding as to whether the 6

unreasonable or that Lakes Region had violated any law.” We disagree. that “[t]he Commission did not find that Lakes Region’s charges were unju st or unreasonable or in violation of the law.” (Quotation omitted.) It then asserts proof was to demonstrate that the rate charged by Lakes Region was unjust [or] tariff.” (Quotation omitted.) Lakes Region argues that Mykytiuk’s “burden of to impose a second customer charge on him is not authorized under its current that Mykytiuk’s “burden of proof was only to prove that Lakes Region’s decision Lakes Region further contends that the Commission erred in determining

th inks a tariff change is in order to make it clearer.” (Citation omitted.) consumption is, and a clear definition of how service is formally requested. He what is needed is a clear definition of what a customer is and what a place of testimony on this point: “T o rectify the situation, Mr. Naylor suggested that remedy would lie in a tariff amendment. The Commission rec ounted Naylor’s Accordingly, the Commission ’s order p roperly noted that Lakes Region’s Region’s tariff, as now written, subjects him to only one base charge. second customer.” We agree. Because Mykytiuk is only one person, Lakes bunkhouse to the water line in his home, after the meter, did not service a Mykytiuk, not the physical structures on his property. Connecting his The Commission argues that “[t]he ‘customer’ in this case is Mr.

“mean[] the furnishing of water to a customer in this state by a util ity”). added); see also N.H. Admin R., Puc p. 6 602.18 (defining "[w]ater service" to supplied with water service by a utility.” N.H. Admin R., Puc 602.05 (emphasis or governmental unit or subdivision of a munici pality or of the state or nation mean “any person, firm, corporation, cooperative marketing association, utility customer per quarter.” The Commission’s regulations define “[c]ustomer” to term “customer” despite d escribing its base charge as a “[m]inimum charge per be treated synonymously.” Lakes Region’s tariff, however, does not define the Naylor “agreed with the suggestion that ‘customer’ and ‘dwelling unit’ should 606.04(g) (emphasis added). As the Commission summarized his testimony, highlights the problem Naylor noted at the hearing. N.H. Admin. R., Puc Indeed, Rule 606.04(g)’s reference to “the customer’ s property line”

flow of water to the premises”). distribution system and the service customer’ s premises which controls th e 504.02(c) (defining “[c]urb stop” to mean “the valve between the water condominium.” N.H. Admin. R., Puc p. 6 606.04(g); see N.H. Admin. R., Env - D w except in unusual situations such as service to an apartment or to a provides that “[c]urb stops shall be placed at the customer ’ s pro perty line separate service lines for separate and distinct uses or structures, but, rather, 606.04(g)). The rule Lakes Region quotes, however, does not explicitly require service to an apartment or to a condominium.’” (Quoting N.H. Admin. R., Puc p. 7 7

meter or separate service must be installed, or what is or is not a tandem ‘customer(s) ’ throughout, but there is nothing in the tariff about when a second specifically address the si tuation presen ted here . . . . The tariff refers to disputed by Lakes Region — was that “Lakes Region’s tariff does not stated proposition of law. The Commission’s essential finding of fact — not We disagree that the Commission’s decision is contrary to the above -

(Quot ations, brackets, and ellipses omitted.)

for a new hearing. its findings and its order will therefore be vacated and remanded concise and explicit statement of the underlying facts supporting own conclu sions, it fails to meet its statutory obligation to make a views, without making specific factual findings in s upport of its by the contending parties and describing the parties ’ opposing structures its decision solely by summarizing evidence presented New Hampshire law is clear that when the Commission

261, 263 - 64 (1994), Lakes Region argues: use.” (Quotation omitted.) Relying upon Appeal of City of Nashua, 138 N.H. “where it is understood, if not stated, that separate charges apply for each dwellings” exc ept in “unusual” cases such as apartment s or condominium s service under RSA 3 p. 7 78:1 do not allow it to provide service to multiple Commission failed to address its argument that its “approved rates for water or did not apply under RSA 378:1.” In essence, Lakes Region asserts that the Region’s motion for rehearing because it failed to explain how it s rules applied Lakes Region next argues that the Commission erred “in denying Lakes

met his burden. deviation from its tariffed rate was a violation of law and that Myk ytiuk had omitted). Accordingly, the Commission properly ruled that Lakes Region’s Appeal of Pennichuck Water Works, 120 N.H. 562, 566 (1980) (citations

until such time as the utility applies for a change. time that they consume the services provided by the utility, at least utility have a right to rely on the rates which are in effect at the both the utility and its customers. As such, the customers of a and its customers. They have the force and effect of law and bind define the terms of the contractual relationship between a utility schedules required to be filed with the [Commission], do not simpl y [T]he vehicles by which utility rates are set, the tariffs or rate

RSA 3 p. 7 7 p. 8 8:7.” (Quoting RSA 378:7.) Our law on this issue is well settled: imposition of one on Mr. Mykytiuk is ‘in violation of [a] provision of law’ under that “[b]ecause a second base charge is not in Lakes Region’s tariff, the In denying Lakes Region’s motion for rehearing, the Commission ruled 8

it was not specifically asked to do so in Lakes Region’s motion for rehearing. them. As previously noted, the Commission made no finding on that issue and Mykytiuk’s bunkhouse is or is not a tandem connection, we decline to consider To the extent the parties’ arguments address whether t he service to

discussed in the summation by its counsel. discussed in testimony by its utility manager and Naylor, and were also or arguments as to certain “operational problems,” those problems were contention that the alleged lack of notice precluded it from prese nting evidence decided in the proceeding. We also note that notwithstanding Lakes Region’s Mykytiuk to install a separate service to his bunkhouse was an issue to be adequate notice that the issue of whether it could or could not require the terms of [Lakes Region’s] tariff.” We conclude that Lakes Region had to charge him a separate base charge and/or install a separate meter under “[t]he thrust of Mr. Mykytiuk’s complaint is that Lakes Region is not permitted motion to deny complaint and exclude evidence, the Commission noted that implemented and/or a separate meter installed.” In its order on Lakes Region’s matter will be useful in determining whether a separate base charge should be under [Rule] 600 et seq.[,] . . . [t]he Commission believes that a hearing on this “do not specifically address separate dwelling units and separate structures November 10, 2016, the Commission notified the parties that because its rules We disagree that Lakes Region lacked no tice of the issue. By letter dated

building without also disconnecting the other. structures are un occupied and the inability to disconnect service from one risk of water loss and property damage due to leaks when one or both that would arise if the Commission did not apply Rule. . . 606.04,” including did not present evidence or arguments as to significant operational problems “[b]ecause the Commission did not provide notice of this issue, Lakes Region renovations to the structures on his property. ’” Lakes Region argues that install a second meter in the future so long as he undertakes no further the event its tariff is revised, [Lak es Region] shall not require Mr. Mykytiuk to issue that was not previously noticed for the hearing when it ordered that: ‘I n that “[i] n the last sentence of [its order], the Commission determined a new reconsider a new i ssue de cide d in its order. Specifically, Lakes Region argues Finally, Lakes Region argues that the Commission erred by failing to

arguments unpersuasive. to explain why the Commission found the non - prevailing party’s contrary sufficient to support its rulings must, nevertheless, be vacated because it fails order of the Commission providing both factual findings and legal reasoning constructed unit.” Lakes R egion cites no authority for the proposition that an require Mr. Mykytiuk to pay a second base charge every month for his newly “[u]nder the terms of its present tariff, there is no basis for L akes Region to we concluded above, sufficient to support the Commission’s legal ruling that, service as prohibited by our rules under [Rule] 606.04(j).” This finding was, as p. 9 9

LYNN, C.J.