Daufuskie Island v. Regulatory Staff

Petitioner Daufuskie Island Utility Company ("DIUC") appeals an order of the South Carolina Public Service Commission ("Commission") granting only thirty-nine percent of the additional revenue requested in its application. DIUC applied to the Commission for approval of a new rate schedule which would provide a 108.9% revenue increase. Due to the substantial increase in its tax liability and its inability to seek further revenue increases until July 2014, DIUC entered into an agreement with Beaufort County to pay the back taxes for years 2012, 2013, 2014, and the projected tax for 2015. Critical to this case was the ownership of an elevated water tank, well, water pump, system pipes, and other DIUC equipment located on a site which was sold at a tax sale in 2010 (“Elevated Tank Site”). Due to a clerical error, tax on the property was not paid, and DIUC did not discover the property had been sold until 2012. Although the tax deed purported to convey the property "all and singular . . . with the appurtenances," DIUC presented testimony from the Beaufort County Treasurer, Maria Walls, that the tax deed did not convey "the elevated water tank, the well, the water pump, system pipes, or other DIUC property located on the Elevated Tank[] Site." Despite providing no evidence to the contrary to support its recommendation, ORS proposed excluding the value of the utility equipment located on the property when calculating DIUC's rate base and property taxes. A hearing on the merits of DIUC's application was held in October 2015. The day before the hearing, several intervening property owner associations (POAs) filed a Settlement Agreement they had entered with ORS for the Commission's consideration. Pursuant to the Agreement, ORS and the POAs stipulated to each party's testimony and exhibits in the record, and the parties agreed to accept all of ORS's adjustments and recommendations, with the exception of the bad debt expense for which they agreed to adopt DIUC's proposal.5 At the hearing, DIUC objected to the admission of the Settlement Agreement, arguing it was irrelevant and prejudicial because it bolstered ORS's recommendations without providing any new or additional evidence to support them. Over DIUC's objection, the Commission admitted the Agreement, reasoning it was more probative than prejudicial. The South Carolina Supreme Court found the Commission erred in admitting evidence of the POA settlement; and the Commission’s findings and conclusions with respect to DIUC’s property taxes were not supported by substantial evidence. The Court remanded for a new hearing. View "Daufuskie Island v. Regulatory Staff" on Justia Law