         I N THE SUPREME ,2OUKT OF THE STATE OF M N A A
                                                 OTN

                                             1975



STATb ex r e i . THE :JION'I'AI\IA i30lJER COMPANY,

                                Petitioner,



DEPAKTMENT OF PUBLI-C SERVICE REGUTATION,
PUBLIC SERVICE COMMISSION, and M N A A
                                 OTN
CONSUMER COUNSEL, GEOFFREY 12. BRAZIER,

                                Respondents.




Counsel o f Record:

      For P e t i t i o n e r

              K e n d r i c k Smith a r g u e d , B u t t e , Montana
              R o b e r t D. C o r e t t e , J o h n J. Burke and Mark
               ' . C l a r k a p p e a r e d , B u t t e , Montana
                4



              G e o f f r e y I,. B r a z i e r a r g u e d , H e l e n a , Montana
              V i l l i a m E. 0 ' ~ e a r y r g u e d , H e l e n a , Montana
                                                  a
                uss sell L. Doty Jr. a r g u e d , H e l e n a , Montana
              ! ' a t r i c k G i l f e a t h e r a p p e a r e d , H e l e n a , Montana



                                                       S u b m i t t e d : November 14, 1975

                                                          Decided :       qF5 3 i) 7974
M r . J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion o f t h e
Court.

               This i s a p e t i t i o n f o r a w r i t of review o r o t h e r appro-
p r i a t e w r i t t o r e q u i r e t h e Montana Public S e r v i c e Commission t o
g r a n t p e t i t i o n e r ' s motion f o r a temporary approval of a n a t u r a l
gas i n c r e a s e .
               On March 12, 1975, Montana Power Company, h e r e i n a f t e r
c a l l e d p e t i t i o n e r , f i l e d w i t h t h e Montana Public S e r v i c e Commission,
h e r e i n a f t e r r e f e r r e d t o a s t h e Commission, a p e t i t i o n t o i n c r e a s e
r a t e s and charges f o r e l e c t r i c and n a t u r a l gas s e r v i c e s and t o
change c e r t a i n r e g u l a t i o n s concerning them.            Those m a t t e r s became
Docket No. 6348 of t h e Commission.
               The Commission s e t h e a r i n g on Docket No. 6348 f o r September
8 , 1975, b u t t h i s was c a n c e l l e d and d i d n o t commence u n t i l October
20,1975.        A second phase of t h e h e a r i n g s was s e t f o r January 12, 1976.
I n t h e meantime, t h e Commission scheduled " s a t e l l i t e h e a r i n g s ' '
    nine c i t i e s i n t h e s t a t e .
               To n o t be r e p e t i t i o u s and t o f u l l y understand t h e f a c t u a l
i s s u e s involved h e r e r e f e r e n c e i s made t o t h i s C o u r t ' s opinion
dated October 1 7 , 1975, e n t i t l e d Montana Consumer Counsel, Geoffrey
L. B r a z i e r v. Public S e r v i c e Commission of Montana e t a l . and The
Montana Power Co.,                       Mon t   .          ,   541 P.2d 769, 32 St.Rep.          1026.
I n t h a t c a s e t h i s Court approved t h e u s e by t h e Public S e r v i c e
Commission o f t h e s o - c a l l e d "automatic adjustment c l a u s e " a s
a p p l i e d t o t h e r a p i d l y r i s i n g c o s t s of imported Canadian gas.
               Pending a d e c i s i o n of t h e Commission Docket 6348, p e t i t i o n e r
on September 23, 1975, f i l e d a motion f o r temporary approval of
gas r a t e i n c r e a s e s s u b j e c t t o r e b a t e .   This motion i n t e r a l i a gave
these reasons f o r t h e request:
                         11 1.   The temporary r a t e i n c r e a s e r e q u e s t e d
               h e r e i n i s r e q u i r e d t o , b u t w i l l n o t completely, o f f s e t
               t h e i n c r e a s e d c o s t t o t h e Anplicant of o b t a i n i n g a
               n a t u r a l gas supply t o s e r v e i t s consumers, which c o s t
               has i n c r e a s e d d r a s t i c a l l y due t o a c t i o n s by t h e National
               Government of Canada.
                         "2. The cause f o r t h e s e h i g h e r gas c o s t s i s
               shown i n Appendix ' C ' , a t t a c h e d h e r e t o and i n c o r p o r a t e d
               h e r e i n , which c o n t a i n s t h e Orders of t h e Canadian
               Government i n c r e a s i n g t h e b o r d e r p r i c e . (These Orders
               a r e a l s o contained i n A l i c a n t ' s E x h i b i t s Nos. 3 , 4 , 5
               and 6 , 'Export LicensesYPwhich were f i l e d w i t h t h e
               Commission i n t h i s Docket on June 1 2 , 1975). These
               documents show t h a t t h e National Government of Canada
               has ordered t h a t t h e border p r i c e f o r gas exported from
               Canada s h a l l be i n c r e a s e d from $1.00 t o $1.40 per
               m i l l i o n BTU e f f e c t i v e August 1, 1975, and t o $1.60 p e r
               m i l l i o n BTU e f f e c t i v e November 1, 1975.
                         "3, Commencing on August 1, 1975, due t o t h e s e
               Orders of t h e Canadian Government, t h e A p p l i c a n t ' s
               average monthly c o s t of purchased gas and r o y a l t y i n -
               c r e a s e d approximately one m i l l i o n two hundred thousand ,
               d o l l a r s ($1,200,000). Commencing on December 1, 1975,
               t h e r e w i l l be a f u r t h e r monthly i n c r e a s e of approximately
               s i x hundred thousand d o l l a r s ($600,000), f o r a t o t a l
               i n c r e a s e of approximately one m i l l i o n e i g h t hundred thous-
               and d o l l a r s ($1,800,000) p e r month. Applicant must i m -
               mediately be allowed t o pass through t h e s e h i g h e r c o s t s
               f o r t h i s gas a c q u i r e d f o r and s u p p l i e d t o Montana gas
               consumers o r i t w i l l be unable t o c o n t i n u e making t h e s e
               necessary expenditures.
                         "4. O J u l y 24, 1975, t h e F e d e r a l Power Commission
                                n
               i s s u e d an Order i n i t s Docket No. CP74-187, a copy of
               which i s a t t a c h e d a s Appendix I D ' and i n c o r p o r a t e d h e r e i n .
               The F e d e r a l Power Commission i n t h a t Order a u t h o r i z e d t h e
               Applicant t o import n a t u r a l gas from Canada a t t h e i n -
               c r e a s e d border p r i c e s of $1.40 p e r m i l l i o n BTU, e f f e c t i v e
               August 1, 1975, and $1.60 p e r m i l l i o n BTU, e f f e c t i v e
               November 1, 1975.

                 as "5. t i lAtpypEl~i candtr' sinn'c)oxarhpicopye d hwhich , i s a t t a7/18/75 e r e t o
                      U
               a s Appendix
                             i
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                                        an
                                       etu
                                                    E
                                                       ,
                                                             b i t No. 1 5 , Revised
                                                             orat
                                                                    of                    ched h
                                                                       e r e i n shows t h a t under
               p r e s e n t r a t e s t h e Applicant would s u s t a i n a l o s s d u r i n g
               t h e t e s t y e a r 1975 of $13,031,968 due t o t h e maximum
               impact of i n c r e a s e d purchased gas c o s t and r o y a l t y ex-
               penses. I1
               This motion of September 23 was n o t i c d f o r h e a r i n g October
2, 1975 and was argued on t h a t d a t e .                       The Commission on October 20
postponed a d e c i s i o n u n t i l October 30.                    O October 31, 1975, t h e
                                                                      n
Commission i s s u e d i t s o r d e r g r a n t i n g only a p o r t i o n , 6 / l l t h s , of
t h e amount requested.                  The o r d e r g r a n t e d p e t i t i o n e r $ 6 , 5 1 0 , 7 9 1 a s

a temporary i n c r e a s e and denied t h e remainder, which i n e f f e c t
p e t i t i o n e r a l l e g e s p r e c l u d e s i t from r e c o v e r i n g over 5 m i l l i o n
d o l l a r s of i n c r e a s e d c o s t s a n n u a l l y ,
               P e t i t i o n e r a l l e g e s t h e d e n i a l o f i t s r e q u e s t by t h e
Commission i s :
                     I Ia . Contrary t o law i n t h a t i t g r a n t s a
               flow- through (on a temporary approval b a s i s )
               of only a p a r t of t h e i n c r e a s e d c o s t s of purchased
               gas and r o y a l t y expenses a s s e t f o r t h i n t h e
               Motion of September 23, 1975, E x h i b i t ' A ' ;

                        "b.    Contrary t o law i n t h a t i t precludes
               recovery by a flow-through, and on a temporary
               approval b a s i s , of a l l of t h e i n c r e a s e d c o s t
               of purchased gas and r o y a l t y expenses a s s e t
               f o r t h i n t h e s a i d Motion of September 23, 1975,
               Exhibit ' A ' ;
                         1 1c . Contrary t o law i n t h a t i t d e f i e s t h e
               l e t t e r and t h e s p i r i t of t h e 1974 Rate Order
               (Order #4147, d a t e d August 30, 1974) and t h e
               d e c i s i o n of t h i s Court d a t e d October 17, 1975,
               i n Case No. 12944, e n t i t l e d B r a z i e r v. PSC and
               Montana Power, a s I n t e r v e n o r ;
                          "d.   Contrary       t o law i n t h a t i f t h e PSC
               has any d i s c r e t i o n     i n t h e m a t t e r , then t h e d i s -
               c r e t i o n o f t h e PSC     has been abused by n o t g r a n t i n g
               t h e f u l l temporary         increase;
                         "e.      Contrary t o law i n t h a t t h i s Order,
               r e g a r d l e s s of o t h e r consequences, would be an
               i l l e g a l and advance r e d u c t i o n of allowable
               expenses i n t h e main r a t e c a s e ;
                    "f.     Contrary t o law i n t h a t t h i s Order
               would d e p r i v e P e t i t i o n e r of i t s p r o p e r t y w i t h o u t
               due process of law. I t
               P e t i t i o n e r f u r t h e r a l l e g e s t h a t u n l e s s t h e motion i s
g r a n t e d i n i t s e n t i r e t y i t s f i n a n c i a l c o n d i t i o n w i l l be s e r i o u s l y
jeopardized and i t s a b i l i t y t o s e c u r e Canadian gas w i l l be en-
dangered.
               I n a s k i n g f o r e x t r a o r d i n a r y r e l i e f from t h i s Court, p e t i t i o n e r
n o t e s t h a t a review of t h e Commission's d e c i s i o n on t h e m e r i t s of
Docket 6348 w i l l t a k e u n t i l t h e s p r i n g of 1976 o r l a t e r i f a p p e a l s
a r e involved, and t h i s i s t o o l a t e t o provide t h e immediate and
n e c e s s a r y r e l i e f asked f o r .      Further, t h a t i n f a i l i n g t o grant the
p e t i t i o n e r ' s motion t h e omm mission's o r d e r i s pure c o n f i s c a t i o n ,
f o r once p e t i t i o n e r i s n o t allowed to c o l l e c t during t h e i n t e r v e n i n g
p e r i o d , i t can never c o l l e c t f o r t h a t p e r i o d and i t would s u f f e r
a d i s a s t r o u s revenue impairment and l o s s of f i n a n c i a l a b i l i t y .
               O November 7, 1975, t h i s Court i s s u e d an a l t e r n a t i v e w r i t
                n
t o show cause and s e t t h e h e a r i n g f o r November 14, 1975.                            Motions
t o quash and d i s m i s s , answers and memorandums of a u t h o r i t y were f i l e d
by a l l c o u n s e l and t h e m a t t e r was a r g u e d November 14, 1975.                            Follow-
i n g argument t h i s Court o r d e r e d t h e Commission t o f i l e w i t h t h e
Court a copy o f i t s m a t h e m a t i c a l c o m p u t a t i o n s of amounts approved
and d i s a p p r o v e d f o r i t s o r d e r of October 31, 1975.
               The i s s u e i s w h e t h e r t h e Commission o r d e r f i l e d October
31, 1975, i s c o n t r a r y t o t h e s t a t u t o r y l a w and i t s i n t e r p r e t a -
t i o n by t h i s C o u r t , and t o t a l l y d i s r e g a r d s e x i s t i n g c o n t r a c t u a l
commitments o f p e t i t i o n e r , and i s t h e r e f o r e a r b i t r a r y , u n r e a s o n a b l e
and a d e n i a l of p e t i t i o n e r ' s r i g h t o f due p r o c e s s .
              Respondent Montana Consumer Counsel a p p e a r e d i n o p p o s i t i o n
t o b o t h p e t i t i o n e r and t h e Commission, a r g u i n g t h a t s e c t i o n 70-113,
R.C.M.      1947, a s amended by C h a p t e r 115 o f t h e Laws o f 1975, i s
u n c o n s t i t u t i o n a l i n t h a t i t a u t h o r i z e s a temporary i n c r e a s e pending
a n e a r i n g ; t h a t t h e s u p p o r t i n g d a t a o f p e t i t i o n e r and s u b s e q u e n t
c o u r t o r d e r i s m i s l e a d i n g , n o t founded on f a c t and p r o v i d e s a n
i n c o m p l e t e p i c t u r e o f p e t i t i o n e r ' s s t a t i s t i c s ; and f u r t h e r whether
t h e f a i l u r e t o g r a n t a l l of t h e temporary r e q u e s t i s c o n t r a r y t o
iaw o r c o n s t i t u t e s an a b u s e o f d i s c r e t i o n .         W f i n d no m e r i t t o
                                                                              e
r e s p o n d e n t Montana Consumer C o u n s e l ' s c o n t e n t i o n s .             W e note that

t h e s e arguments i n s u b s t a n c e were made t o t h i s Court i n t h e c a s e of
Nontana Consumew Counsel v. P u b l i c S e r v i c e Commission and The
Montana Power Company, s u p r a , and d e c i d e d c o n t r a r y t o r e s p o n d e n t ' s
position.          See: P r i v a t e Tele-Commun.,                I n c . v. I l l i n o i s B e l l T e l . Co.,
( I l l . 1 9 7 5 ) , 335 N.E.2d          110.        W e f u r t h e r n o t e t h a t i n a l l "pass

t h r o u g h i n c r e a s e s f ' t h i s Court h a s been c a r e f u l t o p r o t e c t t h e
i n t e r e s t s o f t h e consumers by a l l o w i n g e a c h i n c r e a s e s u b j e c t t o
r e b a t e i f i t can b e shown t h a t p e t i t i o n e r i s o b t a i n i n g more t h a n i t
is authorized.

               W now l o o k t o t h e Commission's f i n d i n g s o f f a c t , c o n c l u s i o n
                e
oE law and o r d e r t o d e t e r m i n e whether t h e y d i s r e g a r d c o n t r a c t u a l
o b l i g a t i o n s of p e t i t i o n e r and a r e t h e r e f o r e a r b i - t r a r y , u n r e a s o n a b l e
and deny p e t i t i o n e r ' s r i g h t s .
"FINDINGS        O FACT
                  F




"3.       The Applicant i s a n a t u r a l gas p u b l i c u t i l i t y
s e r v i n g customers w i t h i n t h e S t a t e of Montana.
A p p l i c a n t ' s r a t e s f o r n a t u r a l gas s e r v i c e a r e s u b j e c t
t o t h e j u r i s d i c t i o n of t h i s Commission.
"4.       Commencing on August 1, 1975, by o r d e r s of t h e
Canadian Government, t h e border p r i c e f o r gas exported
from Canada was i n c r e a s e d from $1.00 t o $1.40 p e r
m i l l i o n BTU' s.
"5.       Commencing on November 1, 1975, by o r d e r s of t h e
Canadian Government, t h e border p r i c e f o r gas exported
from Canada s h a l l b e i n c r e a s e d from $1.40 t o $1.60 p e r
m i l l i o n BTIJ' s .
"6. Applicant contends t h a t t h e t h e p r e s e n t r a t e s
A p p l i c a n t ' s p r o p e r t y would b e s u b j e c t t o c o n f i s c a t i o n
w i t h o u t due process of law.
"7. A p p l i c a n t ' s Appendix E t o t h e motion shows t h a t
under t h e p r e s e n t r a t e s , Applicant would s u s t a i n a l o s s
d u r i n g t h e t e s t y e a r 1975 of $13,031,968 due t o t h e
maximum impact of i n c r e a s e d purchased gas c o s t and r o y a l t y
expense.
"8. A p p l i c a n t ' s Appendix B t o t h e motion shows t h e u n i t
p r i c e of Canadian purchased gas a t $1.4241 p e r M F and   C
t h e u n i t p r i c e of Canadian r o y a l t y gas a t $.5553 p e r M F
                                                                        C
f o r t h e month of August, 1975.
"9. The temporary r a t e r e l i e f i n c r e a s e r e q u e s t e d by
Applicant f o r i t s r e s i d e n t i a l , n o n - r e s i d e n t i a l and o t h e r
u t i l i t y customers was $11,646,283.
"CONCLUSION O LAW
             F
"1. The Commission has a duty t o i n s u r e t h a t u t i l i t i e s
under i t s j u r i s d i c t i o n provide reasonably adequate s e r v i c e
a t j u s t and r e a s o n a b l e r a t e s t h a t a r e n o t c o n f i s c a t o r y
of t h e u t i l i t i e s ' p r o p e r t y . Montana (RCM 1947, 70-105)
"2.  The Commission may t e m p o r a r i l y approve an i n c r e a s e
pending a h e a r i n g and f i n a l d e c i s i o n , w i t h t h e a d d i t i o n a l
revenues c o l l e c t e d s u b j e c t t o r e b a t e . ( C 1947, 70-113).
                                                           RM
"3.    I n view of t h e l a r g e i n c r e a s e s i n t h e p r i c e of Canadian
purchased gas and Canadian r o y a l t y g a s , i n c r e a s e d r a t e s
f o r A p p l i c a n t ' s n a t u r a l gas d i s t r i b u t i o n s e r v i c e a r e
justified.
"4. The temporary i n c r e a s e approved h e r e i n i s a j u s t
and r e a s o n a b l e amount t o i n s u r e continued s e r v i c e t o
A p p l i c a n t ' s consumers.
"5. The r a t e r e l i e f r e q u e s t e d by Applicant should be
granted i n p a r t .
               "1. Montana Power Company s h a l l f i l e monthly r e p o r t s
               i n d i c a t i n g i t s s o u r c e s and volumes of purchased gas
               and r o y a l t y gas.
               "2. Applicant s h a l l be g r a n t e d a temporary i n c r e a s e
               f o r t h e amount of $6,510,791 f o r i t s r e s i d e n t i a l , non-
               r e s i d e n t i a l and o t h e r u t i l i t y customers. Applicant
               s h a l l f i l e w i t h i n t e n (10) days of t h i s o r d e r , a t a r i f f
               r e f l e c t i n g t h i s allowance.
              "3. This temporary i n c r e a s e s h a l l b e spread e q u a l l y t o
              A p p l i c a n t ' s r e s i d e n t i a l , n o n - r e s i d e n t i a l and o t h e r u t i l i t y
              customers. Said i n c r e a s e s h a l l be e f f e c t i v e f o r s e r v i c e s
              rendered on and a f t e r November 1, 1975.
              "4.       This i s a temporary o r d e r . I n t h i s r e g a r d t h e
              Commission, a s a m a t t e r of p o l i c y , w i l l c o n s i d e r tem-
              porary r e q u e s t s only i n c o n j u n c t i o n w i t h f u l l r a t e c a s e
              h e a r i n g s such a s t h a t i n p r o g r e s s i n Docket No. 6348.
                       It
                          The Commission's i n t e n t i o n i n g r a n t i n g c e r t a i n
               temporary i n c r e a s e s h e r e i n i s p r i m a r i l y t o a l l o w time
               f o r t h e thorough c o n s i d e r a t i o n of t h e e n t i r e o p e r a t i o n s
               of t h e Company w i t h o u t chancing j e o p a r d i z i n g t h o s e opera-
               t i o n s , due t o t h e Canadian gas and r o y a l t y gas i n c r e a s e s
               on e x p o r t gas.
               "5. The a d d i t i o n a l revenues r e s u l t i n g from t h i s i n t e r i m
               order w i l l be subject t o rebate plus i n t e r e s t a t t h e r a t e
               of r e t u r n g r a n t e d t h e Company i n t h e f i n a l o r d e r , i f t h e
               Commission determines a t t h e end of t h e g e n e r a l r a t e c a s e
               t h a t lower r a t e s should become e f f e c t i v e .
               "6. This temporary o r d e r s h a l l b e e f f e c t i v e only u n t i l
               t h e i n i t i a l f i n a l o r d e r i s made, i n Docket No. 6348A and
               s h a l l n o t b e i n e f f e c t d u r i n g any a p p e a l therefrom.
              W n o t e t h a t conclusion of law No. 3 admits t h e l a r g e i n &-
               e
c r e a s e s i n Canadian purchased gas and Canadian r o y a l t y g a s and such
,-
i n c r e a s e d r a t e s a r e j u s t i f i e d , y e t no f i n d i n g o r j u s t i f i c a t i o n was
made on t h e g r a n t i n g of t h e p a r t i a l amount.                   For t h i s r e a s o n t h i s
Court r e q u e s t e d and obtained t h e Commission's mathematical computa-
tions.       Accompanying t h e s e , computations was a l e t t e r t o t h e Court
from t h e chairman of t h e Commission, w h i c h ' s t a t e d : i n p e r t i n e n t p a r t :
              "The response i n c l u d e s :
                     a ) Simple c a l c u l a t i o n s i n d i c a t i n g how
              t h e $5,135,492 and $6,510,791 f i g u r e s were
              derived.
                    b) Revised E x h i b i t 2(from t h e one f i l e d w i t h
               you on Friday) w i t h a g r e a t e r e x p l a n a t i o n of t h e
               sources and methodology used i n a r r i v i n g a t t h o s e
               figures.
             c ) ellow ow' worksheet i n d i c a t i n g t h a t i f 96.8%
             of t h e gas from Aden were Royalty g a s , t h e Montana
             Power Company could c u t i t s Canadian gas p r i c e by
             $5,135,492 (or t h e amount of temporary i n c r e a s e
             n o t allowed by t h i s Commission). T h i s 'yellow' work-
             s h e e t does n o t i n c l u d e p r i c e r e d u c t i o n s which could
             a c c r u e from e i t h e r t h e e l i m i n a t i o n of i n c r e a s e d
             Montana purchased gas c o s t s o r from t h e t a x e f f e c t , I I
            Using t h i s l e t t e r and t a k i n g s p e c i f i c a l l y paragraph

( c ) i t becomes obvious t h e Commission made a managerial d e c i s i o n
a s t o t h e "take o r payu           c o n t r a c t s of p e t i t i o n e r f o r Canadian
imported g a s from t h e Aden f i e l d and i n s o doing made an a r b i t r a r y
d e c i s i o n beyond    t h e scope of i t s powers.
             P e t i t i o n e r i n i t s E x h i b i t "D"     submitted t o t h e Commission
noted:
             "A ' t a k e o r pay' o b l i g a t i o n r e q u i r e s payment f o r a
             c e r t a i n volume of g a s whether o r n o t d e l i v e r y o f t h a t
             volune i s a c t u a l l y taken. By way of e x p l a n a t i o n o f
             t h e l i s t , t h e a n n o t a t i o n I none' means t h a t t h e c o n t r a c t
             c o n t a i n s no ' t a k e o r         v provision.      Five o f t h e 28
             c o n t r a c t s c o n t a i n no :e
                                                 ;
                                                 k
                                                 '        o r pay' p r o v i s i o n . The
             a n n o t a t i o n 1 85%' means t h e c o n t r a c t c o n t a i n s a p r o v i s i o n
             which e s t a b l i s h e d a ' t a k e o r pay' o b l i g a t i o n a t 85%
             of t h e l e v e l taken i n t h e same month i n t h e preceding y e a r
             when t h e cutback o f t h e Aden a u t h o r i z a t i o n occurred.
             The a n n o t a t i o n I 100 % ' means t h e c o n t r a c t c o n t a i n s a ' t a k e
             o r pay' o b l i g a t i o n which was u n a f f e c t e d by t h e cutback
             a t Aden.
             "The summary s h e e t shows t h a t a t o t a l of 5,844 lI1MCF p e r
             y e a r i s c u r r e n t l y being purchased and imported a t Aden.
             Of t h i s amount, 825 MMCF a r e n o t s u b j e c t t o an e x p r e s s ,
             c o n t r a c t u a l t a k e o r pay o b l i g a t i o n . However, o p e r a t i n g
             o b l i g a t i o n s preclude t h e s h u t t i n g - i n o f t h e w e l l s which
             produce gas under t h e s e f i v e c o n t r a c t s . I f t h e w e l l s
             i n q u e s t i o n were s h u t - i n , t h e pools from which they were
             producing would be d r a i n e d by production by o t h e r s , i n -
             c l u d i n g t h e ~ p p l i c a n t ' ss u b s i d i a r y , Canadian Montana Gas
             Company. I I
             Accepting t h e information c o n t a i n e d i n p e t i t i o n e r ' s E x h i b i t
"D", f o r t h e r e i s no evidence b e f o r e u s t o c o n t r a d i c t i t , and even
d i s r e g a r d i n g t h e f i v e "no take" c o n t r a c t s , t h e r e i s no way t h e
Commission         could have a r r i v e d a t i t s f i g u r e s except t o f o r c e t h e
                                                     I'
p e t i t i o n e r t o break i t s Canadian              t a k e o r pay" c o n t r a c t s , and i f
p e t i t i o n e r broke such c o n t r a c t s , i t would be l i a b l e f o r t h e c o n t r a c t e d
g a s , i t s e a r n i n g s would b e diminished, and i t s consumers deprived
of an a l r e a d y diminishing g a s supply.                    Such a c t i o n i s beyond t h e
powers of t h e Commission.
             This Court i n Cascade County Consumers Assn. v. Pub.
Ser.Commtn, 144 Mont. 169, 186, 394 P.2d 856, had t h i s t o s a y
r e g a r d i n g t h e powers of t h e r e g u l a t o r y a g e n c i e s :
              h his Court has o f t e n spoken o u t a g a i n s t t h e abuse
              o f power by s t a t e boards. I n t h e c a s e of S t a t e ex
              r e l . S t a t e Board of E q u a l i z a t i o n v. Kovich, 142
              1JIont. 201, 383 P.2d 818, we r e c e n t l y s a i d : ' T h i s
              c o u r t has uniformly h e l d t h a t t h e S t a t e ~ o a r d ' s
              actions, i f a r b i t r a r y , fraudulent, o r contrary
              t o law, a r e void and w i l l be s o d e c l a r e d by t h e
              c o u r t s . I. I 1
              This Court i s n o t unaware of t h e g r e a t r e s p o n s i b i l i t i e s
placed on t h e Public S e r v i c e Commission t o r e g u l a t e p e t i t i o n e r i n
such a manner a s t o provide an adequate g a s supply f o r p e t i t i o n e r ' s
consumers a t a r e a s o n a b l e c o s t and a t t h e same time provide an
adequate r e t u r n t o p e t i t i o n e r a s provided by law.                   During a period
of extreme i n f l a t i o n t h i s t a s k a t times seems impossible, however,
t h e Commission i n i t s a c t i o n s cannot go beyond i t s s t a t u t o r y                     or
c o n s t i t u t i o n a l powers.
              W f i n d t h e Commission i n c o n s i d e r i n g t h e f a c t s when making
               e
i t s determination and o r d e r -

              1)     disallowed "pass through1' c o s t s t o t h e e x t e n t t h a t
they may become c o n f i s c a t o r y , i n v i o l a t i o n of t h e c o n s t i t u t i o n a l
p r o h i b i t i o n a g a i n s t t a k i n g p r o p e r t y w i t h o u t due process of law, and
              2) t h a t t h i s c o n s t i t u t e s a r b i t r a r y a c t i o n and u n j u s t l y
d e n i e s p e t i t i o n e r t h e "pass through" c o s t s .
            T h e r e f o r e , we o r d e r t h a t t h e Commission o r d e r of October 31,
1975, #4220, be s e t a s i d e and t h a t p e t i t i o n e r ' s motion f o r a tem-
porary approval of a gas i n c r e a s e t o correspond w i t h t h e i n c r e a s e d
c o s t of Canadian gas and s u b j e c t t o t h e f i n a l d e c i s i o n of t h e
Commission t o r e b a t e , be g r a n t e d .
W Concur:
 e




/   Justices.
