                IN THE SUPREME COURT OF NORTH CAROLINA

                                  No. 268A12

                            FILED 12 APRIL 2013
STATE OF NORTH CAROLINA ex rel. UTILITIES COMMISSION; DUKE
ENERGY CAROLINAS, LLC, Applicant; PUBLIC STAFF-NORTH CAROLINA
UTILITIES COMMISSION, Intervenor
           v.
ATTORNEY GENERAL ROY COOPER and THE CITY OF DURHAM, NORTH
CAROLINA, Intervenors



     On direct appeal as of right by intervenor Roy Cooper, Attorney General,

pursuant to N.C.G.S. §§ 7A-29(b) and 62-90(d) from a final order of the North

Carolina Utilities Commission issued on 27 January 2012 in Docket No. E-7,

Sub 989. Heard in the Supreme Court on 13 November 2012.


     K&L Gates LLP, by Kiran H. Mehta; Heather Shirley Smith, Deputy General
     Counsel, and Kendrick Fentress, Associate General Counsel, Duke Energy
     Carolinas, LLC; and Law Office of Robert W. Kaylor, by Robert W. Kaylor, for
     applicant-appellee Duke Energy Carolinas, LLC.

     Robert P. Gruber, Executive Director, by Antoinette R. Wike, Chief Counsel,
     and William E. Grantmyre, Staff Attorney, for intervenor-appellee Public
     Staff-North Carolina Utilities Commission.

     John F. Maddrey, Solicitor General; Phillip K. Woods, Special Deputy
     Attorney General; Margaret A. Force, Assistant Attorney General; and Kevin
     Anderson, Senior Deputy Attorney General, for intervenor-appellant Roy
     Cooper, Attorney General.

     AARP Foundation Litigation, by Julie Nepveu, pro hac vice; and M. Jason
     Williams, P.A., by M. Jason Williams, for AARP, amicus curiae.


     JACKSON, Justice.
                       STATE EX REL. UTILS. COMM’N V. ATT’Y GEN.

                                     Opinion of the Court



       In this case we consider whether the order by the North Carolina Utilities

Commission (“the Commission”) approving a 10.5% return on equity1 (“ROE”) for

Duke Energy Carolinas, LLC (“Duke”) contained sufficient findings of fact to

demonstrate that it was supported by competent, material, and substantial

evidence in view of the entire record. Because we conclude that the Commission

failed to make the necessary findings of fact to support its ROE determination, we

reverse the Commission’s order and remand this case to the Commission so that it

may enter sufficient findings of fact.


       On 1 July 2011, Duke filed an application with the Commission requesting

authority to increase its North Carolina retail electric service rates to produce

additional annual revenues of $646,057,000, an increase of approximately 15.2%

over then current revenues. The application requested that rates be established

using an ROE of 11.5%.          The Commission entered an order on 28 July 2011,

declaring this matter to be a general rate case and suspending the proposed rate

increase pending further investigation.             The Commission scheduled six public

hearings to receive public witness testimony in multiple locations throughout

Duke’s service territory. The Commission also scheduled an evidentiary hearing for


       1   ROE is the return that a utility is allowed to earn on its capital investment, which
is realized through rates collected from its customers. The ROE affects profits to the
utility’s shareholders and has a significant impact on what customers ultimately pay the
utility. The higher the ROE, the higher the resulting rates that customers will pay to the
utility. See State ex rel. Utils. Comm’n v. Carolina Util. Customers Ass’n, 323 N.C. 238, 245,
372 S.E.2d 692, 696 (1988).

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                                  Opinion of the Court



29 November 2011. The Attorney General of North Carolina and the Public Staff–

North Carolina Utilities Commission intervened in this matter as allowed by law.


       On 28 November 2011, the Public Staff and Duke filed an Agreement and

Stipulation of Settlement with the Commission that “provide[d] for a net increase of

$309,033,000” for annual revenues and an allowed “ROE of 10.5%.” The Settlement

addressed all issues between Duke and the Public Staff, but was contested by some

of the other parties, including the Attorney General.


       By the time the evidentiary hearing began on 29 November 2011, the

Commission already had heard testimony from a total of 236 public witnesses.

Many of these customers opposed the proposed rate increase and discussed the

hardship that it would impose on the average residential customer in light of

current economic conditions.    At the evidentiary hearing the Commission heard

more live testimony and also received prefiled testimony regarding the proposed

ROE.


       Specifically, Duke presented the testimony of Robert Hevert, President of

Concentric Energy Advisors, Inc., a company that provides financial and economic

advisory services to energy and utility clients across North America.        Hevert

initially recommended an ROE range of 11% to 11.75% and a specific ROE of 11.5%;

however, in his rebuttal testimony Hevert lowered his recommended range to

10.75% to 11.5% and decreased his recommended ROE to 11.25%. Hevert testified

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                                     Opinion of the Court



that his analysis was based upon market data and the ROE requirements of

investors. In particular, Hevert stated that he factored into his analysis the effect

of macroeconomic conditions in the capital markets. Hevert’s analysis primarily

used discounted cash flow2 (“DCF”) modeling, but also factored Duke-specific risks

into the equation to produce a final recommended range and particular ROE.

Hevert verified that when determining a reasonable ROE, he did not specifically

consider factors such as the unemployment or poverty rates in Duke’s service area,

the impact of his recommendation on the company’s fixed income customers or on

cities and counties as ratepayers, or its effect on job creation in the region. Hevert

further stated that although he reviewed “other witnesses testimony,” he did not

review any correspondence, petitions, or comments filed by customers. Hevert also

testified that he was unfamiliar with the specific statutory requirements for

establishing a fair and reasonable ROE in North Carolina and did not know

whether the Commission was required to consider the effect of economic conditions

on consumers when setting an ROE.


       The Public Staff presented the testimony of Ben Johnson, Ph.D., President of

Ben Johnson Associates, Inc., a consulting firm that specializes in public utility

regulation. Johnson recommended an ROE range of 8.68% to 9.79% and a specific


       2 DCF modeling is an econometric method for estimating ROE whereby “the proper
rate of return is determined by adding to the common stock’s current yield a rate of
increase which investors will expect to occur over time.” State ex rel. Utils. Comm’n v. Pub.
Staff-N.C. Utils. Comm’n, 322 N.C. 689, 693-94, 370 S.E.2d 567, 570 (1988).

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                                 Opinion of the Court



ROE of 9.25%.    Johnson based his ROE analysis upon two approaches.           First,

Johnson followed the comparable earnings approach, which “estimate[s] the long-

run cost of equity as being equivalent to the level of returns being earned, on

average, by firms throughout the economy” and then adjusts for risk differences

between such firms. Second, Johnson followed a market analysis approach, which

included a DCF analysis along with other econometric analyses.             Johnson’s

testimony focused on the potential effect of a rate increase on Duke’s investors and

did not include any analysis of economic conditions in Duke’s service area and their

impact on customers. Although Johnson included an overview of general economic

trends in his prefiled direct testimony, Johnson explained that his calculations did

not consider the economic impact on Duke’s customers when he determined ROE,

adding that such considerations are “beyond the scope of [his] work” and are within

the purview of other participants in the process. Johnson stated that “[t]he focus of

[his] testimony was more on how investors are dealing with economic conditions and

less so on how customers are dealing with those same economic conditions.”

Johnson elaborated that he “was not doing a specific calculation of whether, say, a

five percent rate increase is more acceptable than seven and what the impact might

be.”   Nonetheless, Johnson agreed that the impact of economic conditions on

customers is an appropriate analysis that should be undertaken by the Commission.


       The Carolina Utility Customers Association, Inc. (“CUCA”), a coalition of

industrial energy customers, presented the testimony of Kevin O’Donnell, President

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                                 Opinion of the Court



of Nova Energy Consultants, Inc., who recommended a specific ROE of 9.5%.

O’Donnell recommended an ROE range of 8.75% to 9.75% based upon a DCF

analysis and an ROE range of 8.5% to 9.5% based upon the comparable earnings

approach. O’Donnell’s testimony contained no analysis of economic conditions in

Duke’s service area and their impact on customers.


      The Commercial Group, an ad hoc group of Duke’s commercial energy

customers, presented the testimony of Steve Chriss, Senior Manager for Energy

Regulatory Analysis for Wal-Mart Stores, Inc., and Wayne Rosa, Energy and

Maintenance Manager for Food Lion, LLC. Chriss and Rosa declined to recommend

an ROE range or specific ROE, but did testify that the 11.5% ROE that Duke

initially requested exceeded both Duke’s currently authorized return and recently

authorized returns across the country which averaged 10.32%. Chriss and Rosa did

testify that rate increases directly affect retailers and their customers and that a

rate increase “is a serious concern” given current economic conditions. Chriss and

Rosa did not discuss the fairness of the proposed ROE given the impact of changing

economic conditions on customers, but requested that the Commission “consider

these impacts thoroughly and carefully in ensuring that any increase in [Duke’s]

rates is only the minimum amount necessary.”


      The Attorney General did not present any ROE evidence.




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                     STATE EX REL. UTILS. COMM’N V. ATT’Y GEN.

                                  Opinion of the Court



      On 27 January 2012, the Commission issued an order, granting a

$309,033,000 annual retail revenue increase for Duke and approving an ROE of

10.5%—the same revenue increase and ROE agreed to in the Stipulation.            In

support of these conclusions, the Commission summarized—but did not weigh—the

testimony of Hevert, Johnson, O’Donnell, and Chriss.            The Commission also

acknowledged that it was required to consider whether the ROE is reasonable and

fair to customers, stating:

             [T]he Commission is required to consider the economic
             effects of its ROE decision on a public utility’s customers
             pursuant to G.S. 62-133(b)(4). In particular, G.S. 62-
             133(b)(4) states, in pertinent part, that in fixing rates the
             Commission must fix a rate of return on the utility’s
             investment that “will enable the public utility by sound
             management to produce a fair return for its shareholders,
             considering changing economic conditions and other
             factors, including, but not limited to...to compete in the
             market for capital funds on terms that are reasonable and
             that are fair to its customers and to its existing investors.”
             One of the “terms” on which a public utility competes in
             the market for capital funds is the utility’s authorized
             ROE. Thus, the Commission must consider whether that
             term is reasonable and fair to the utility’s customers.

But the Commission cited only the following evidence regarding this factor:

             Public Staff witness Johnson testified in depth concerning
             the economic downturn, including the unemployment
             rate. In addition, the Commission received extensive
             testimony from public witnesses concerning the impact of
             current economic conditions on Duke’s customers.
             Therefore, the Commission has ample evidence to
             consider in determining whether the proposed ROE of
             10.5% is fair to Duke’s customers.

      Ultimately, the Commission concluded that the 10.5% ROE set forth in the

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                                   Opinion of the Court



Stipulation is “just and reasonable to all parties in light of all the evidence

presented.” The Commission noted that, while an ROE of 10.5% had not specifically

been recommended by any particular expert witness, it fell within the “range”

between the Public Staff’s initial position of 9.25% and Duke’s requested ROE of

11.25%. The Commission further noted that the 10.5% ROE was within the range

of ROEs recommended by the witnesses.            The Attorney General appealed the

Commission’s order to this Court as of right pursuant to subsection 7A-29(b) of the

North Carolina General Statutes.


      Subsection 62-79(a) of the North Carolina General Statutes “sets forth the

standard for Commission orders against which they will be analyzed upon appeal.”

State ex rel. Utils. Comm’n v. Carolina Util. Customers Ass’n (CUCA I), 348 N.C.

452, 461, 500 S.E.2d 693, 700 (1998). Subsection 62-79(a) provides:

               (a) All final orders and decisions of the Commission
            shall be sufficient in detail to enable the court on appeal
            to determine the controverted questions presented in the
            proceedings and shall include:
                  (1) Findings and conclusions and the reasons for
                      bases therefor upon all the material issues of fact,
                      law, or discretion presented in the record, and
                  (2) The appropriate rule, order, sanction, relief or
                      statement of denial thereof.

N.C.G.S. § 62-79(a) (2011).   “The purpose of the required detail as to findings,

conclusions and reasons as mandated by this subsection is to provide the appellate

court with sufficient information with which to determine under the scope of review

the questions at issue in the proceedings.” CUCA I, 348 N.C. at 461, 500 S.E.2d at

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                     STATE EX REL. UTILS. COMM’N V. ATT’Y GEN.

                                    Opinion of the Court



700.


       This Court previously has recognized that “[t]he decision of the Commission

will be upheld on appeal unless it is assailable on one of the statutory grounds

enumerated in [N.C.G.S. §] 62-94(b).”         Id. at 459, 500 S.E.2d at 699 (citation

omitted). Subsection 62-94(b) provides:

               (b) So far as necessary to the decision and where
             presented, the court shall decide all relevant questions of
             law, interpret constitutional and statutory provisions, and
             determine the meaning and applicability of the terms of
             any Commission action. The court may affirm or reverse
             the decision of the Commission, declare the same null and
             void, or remand the case for further proceedings; or it may
             reverse or modify the decision if the substantial rights of
             the appellants have been prejudiced because the
             Commission’s findings, inferences, conclusions or
             decisions are:
                  (1) In violation of constitutional provisions, or
                  (2) In excess of statutory authority or jurisdiction of
                      the Commission, or
                  (3) Made upon unlawful proceedings, or
                  (4) Affected by other errors of law, or
                  (5) Unsupported by competent, material and
                      substantial evidence in view of the entire record
                      as submitted, or
                  (6) Arbitrary or capricious.

N.C.G.S. § 62-94(b) (2011).       This Court has summarized its role pursuant to

subsection 62-94(b) as follows:

                   This Court’s role under section 62-94(b) is not to
             determine whether there is evidence to support a position
             the Commission did not adopt. Instead, the test upon
             appeal is whether the Commission’s findings of fact are
             supported by competent, material and substantial
             evidence in view of the entire record.       Substantial

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                                 Opinion of the Court



            evidence [is] defined as more than a scintilla or a
            permissible inference. It means such relevant evidence as
            a reasonable mind might accept as adequate to support a
            conclusion.    The Commission’s knowledge, however
            expert, cannot be considered by this Court unless the facts
            and findings thereof embraced within that knowledge are
            in the record. Failure to include all necessary findings of
            fact is an error of law and a basis for remand under
            section 62-94(b)(4) because it frustrates appellate review.

CUCA I, 348 N.C. at 460, 500 S.E.2d at 699-700 (alteration in original) (citations

and internal quotation marks omitted).


      In the case sub judice the Attorney General argues that the Commission’s

order was legally deficient because it was not supported by competent, material,

and substantial evidence, and did not include sufficient conclusions and reasoning.

Specifically, the Attorney General contends that by merely adopting the ROE

contained in the nonunanimous Stipulation, the Commission failed to undertake an

independent analysis and reach its own conclusion regarding the ROE. In addition,

the Attorney General contends that the Commission failed to consider changing

economic conditions and their impact on consumers in determining the ROE.


      “What constitutes a fair rate of return on common equity is a conclusion of

law that must be predicated on adequate factual findings.” Id. at 462, 500 S.E.2d at

701. This Court previously has set forth the procedure that the Commission must

follow when making an ROE determination:

            In finding essential, ultimate facts, the Commission must
            consider and make its determination based upon all

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                                    Opinion of the Court



                factors particularized in section 62-133, including “all
                other material facts of record” that will enable the
                Commission to determine what are reasonable and just
                rates. The Commission must then arrive at its “own
                independent conclusion” as to the fair value of the
                applicant’s investment, the rate base, and what rate of
                return on the rate base will constitute a rate that is just
                and reasonable both to the utility company and to the
                public.

Id. In reaching this conclusion, the Commission may consider partial, as well as

unanimous stipulations. “[A] stipulation entered into by less than all of the parties

as to any facts or issues in a contested case proceeding under chapter 62 should be

accorded full consideration and weighed by the Commission with all other evidence

presented by any of the parties in the proceeding.” Id. at 466, 500 S.E.2d at 703.

Specifically,

                [t]he Commission must consider the nonunanimous
                stipulation along with all the evidence presented and any
                other facts the Commission finds relevant to the fair and
                just determination of the proceeding. The Commission
                may even adopt the recommendations or provisions of the
                nonunanimous stipulation as long as the Commission sets
                forth its reasoning and makes “its own independent
                conclusion” supported by substantial evidence on the
                record that the proposal is just and reasonable to all
                parties in light of all the evidence presented.

Id. Nonetheless, “only those stipulations that are entered into by all of the parties

before the Commission may form the basis of informal disposition of a contested

proceeding under section 62-69(a), id., and such is not the case here.


       Two cases previously decided by this Court provide useful guidance on the


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application of these principles.      In CUCA I this Court concluded that “the

Commission failed to adduce ‘its own independent conclusion’ as to the appropriate

rate of return on equity.”    Id. at 467, 500 S.E.2d at 703.       In its order, the

Commission approved the same ROE that was contained in a nonunanimous

stipulation without weighing all the available testimony. Id. This Court noted

that:

             The stipulated 11.4% rate should have been considered
             and analyzed by the Commission along with all the
             evidence regarding proper rate of return, including the
             testimony of Mr. O’Donnell on behalf of CUCA that
             10.55% was the appropriate return on equity. The only
             other evidence supporting the 11.4% rate was the rebuttal
             testimony of Mr. Lurie in defense of the stipulation that
             the stipulated rate was “just and reasonable.”

Id. at 466-67, 500 S.E.2d at 703. This Court then determined that “[i]n light of the

facts that Mr. Lurie’s initial recommendation was 13.34% and that no other

evidence supported the 11.4% rate, it is clear that the Commission adopted

wholesale, without analysis or deduction, the 11.4% rate from the partial

stipulation, as opposed to considering it as one piece of evidence to be weighed in

making an otherwise independent determination.” Id. at 467, 500 S.E.2d at 703.


        In contrast, two years later this Court concluded that the Utilities

Commission “adduced its own independent conclusion as to the appropriate rate of

return on equity” and held that “this conclusion [was] fully supported by substantial

evidence in view of the entire record.” State ex rel. Utils. Comm’n v. Carolina Util.


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                                 Opinion of the Court



Customers Ass’n (CUCA II), 351 N.C. 223, 235, 524 S.E.2d 10, 19 (2000). This Court

noted that “[a] thorough review of the record . . . reveal[ed] that the Commission’s

11.4% rate of return on common equity conclusion c[ame] from the direct testimony

and exhibits of Public Staff witness Hinton.” Id. at 233, 524 S.E.2d at 17. This

Court then determined that the Commission “independently analyz[ed] the

testimony of [the applicant company’s] witness Andrews, CUCA witness O’Donnell,

and Public Staff witness Hinton before reaching its conclusion that 11.4% was the

appropriate cost of common equity.” Id. Specifically, this Court noted that “the

Commission accepted Public Staff witness Hinton’s recommendation of 11.4% based

on the credibility and objectivity of his PSNC-specific DCF analysis” “[a]fter

weighing the conflicting evidence of the expert witnesses.” Id. at 235, 524 S.E.2d at

19 (emphasis added).


      Here although the 10.5% ROE contained in the nonunanimous Stipulation

fell within the range of ROEs recommended by the witnesses at the evidentiary

hearing, in contrast to CUCA II, none of the witnesses specifically recommended an

ROE of 10.5% based upon their calculations. Johnson did testify that the stipulated

ROE “was not unreasonable”; however, he also recommended a different ROE of

9.25%. In addition, in contrast to CUCA II, it does not appear that the Commission

weighed any of the testimony presented at the evidentiary hearing. Instead, it

appears that the Commission merely recited the witnesses’ testimony before

reaching an ROE conclusion in its order. Notably absent from the Commission’s

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order is any discussion of why one witness’s testimony was more credible than

another’s or which methodology was afforded the greatest weight. See CUCA II,

351 N.C. at 233-35, 524 S.E.2d at 17-19.


      Without sufficient findings of fact as to these issues, we cannot say that the

Commission “ma[de] ‘its own independent conclusion’ . . . that the propos[ed] [ROE]

[wa]s just and reasonable to all parties in light of all the evidence presented.”

CUCA I, 348 N.C. at 466, 500 S.E.2d at 703.             Instead, it appears that “the

Commission adopted wholesale, without analysis or deduction,” the 10.5%

stipulated ROE, “as opposed to considering it as one piece of evidence to be weighed

in making an otherwise independent determination.” Id. at 467, 500 S.E.2d at 703.

Accordingly, the Commission’s order must be reversed and this case remanded to

the Commission so that it can make an independent determination regarding the

proper ROE based upon appropriate findings of fact that balance all the available

evidence.


      As guidance on remand, we further note that in making its ROE

determination the Commission failed to make findings of fact regarding the impact

of changing economic conditions on customers. “In fixing the rates to be charged by

a public utility for its service, the Commission must . . . comply with the

requirements of [Chapter 62 of the North Carolina General Statutes], more

specifically, [N.C.]G.S. [§] 62-133.” Id. at 457, 500 S.E.2d at 698 (quotation marks


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                                   Opinion of the Court



omitted). Section 62-133 states that the Commission must, inter alia:

             (4) Fix such rate of return on the cost of the property
                 ascertained pursuant to subdivision (1) of this
                 subsection as will enable the public utility by sound
                 management to produce a fair return for its
                 shareholders,      considering     changing     economic
                 conditions and other factors, including, but not limited
                 to, the inclusion of construction work in progress in the
                 utility’s property under sub-subdivision b. of
                 subdivision (1) of this subsection, as they then exist, to
                 maintain its facilities and services in accordance with
                 the reasonable requirements of its customers in the
                 territory covered by its franchise, and to compete in
                 the market for capital funds on terms that are
                 reasonable and that are fair to its customers and to its
                 existing investors.


N.C.G.S. § 62-133(b)(4) (2011) (emphases added). “In finding essential, ultimate

facts, the Commission must consider and make its determination based upon all

factors particularized in section 62-133, including ‘all other material facts of record’

that will enable the Commission to determine what are reasonable and just rates.”

CUCA I, 348 N.C. at 462, 500 S.E.2d at 701 (emphasis added).


      The Attorney General argues that section 62-133, in conjunction with

Chapter 62 as a whole, mandates that the Commission consider the impact of

changing economic conditions on customers when determining ROE. We agree.


      “The primary rule of construction of a statute is to ascertain the intent of the

legislature and to carry out such intention to the fullest extent.” Burgess v. Your

House of Raleigh, Inc., 326 N.C. 205, 209, 388 S.E.2d 134, 137 (1990). This Court


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previously has recognized that the legislature’s “twin goals” in enacting section 62-

133 were to “assur[e] sufficient shareholder investment in utilities while

simultaneously maintaining the lowest possible cost to the using public for quality

service.” CUCA I, 348 N.C. at 458, 500 S.E.2d at 698. In addition, this Court has

stated that “[t]he primary purpose of Chapter 62 of the General Statutes is not to

guarantee to the stockholders of a public utility constant growth in the value of and

in the dividend yield from their investment, but is to assure the public of adequate

service at a reasonable charge.” State ex rel. Utils. Comm’n v. Gen. Tel. Co. of the

Se., 285 N.C. 671, 680, 208 S.E.2d 681, 687 (1974).       Moreover, this Court has

explained that “[i]n its delegation of rate-making authority to the Commission, the

legislature has established an elaborate procedural, hearing, and appeals process

that contemplates the full consideration of all evidence put forth by each of the

parties certified via the statute to have an interest in the outcome of contested

proceedings.” CUCA I, 348 N.C. at 463, 500 S.E.2d at 701 (emphasis added). “Once

such considerations are afforded to all parties in a contested case, the Commission

is required to embody its findings in an order sufficiently detailing the reasons for

its determinations on all material and controverted issues of fact, law or discretion

presented in the record.” Id. (emphasis added) (citing N.C.G.S. § 62-94(b)).


      It is undisputed that section 62-133 dictates that the Commission consider

“changing economic conditions” when making an ROE determination. See N.C.G.S.

§ 62-133(b)(4).   Although subdivision 62-133(b)(4) does not specifically reference

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“impact on customers,” subsection 62-133(a) does emphasize that fairness to

customers is a critical consideration in rate cases by including a directive that “the

Commission shall fix such rates as shall be fair both to the public utilities and to the

consumer.” Id. § 62-133(a) (2011) (emphasis added). This is consistent with this

Court’s recognition of the customer-driven focus of Chapter 62 as a whole. See Gen.

Tel. Co., 285 N.C. at 680, 208 S.E.2d at 687. This Court previously has recognized

that Chapter 62 “is a single, integrated plan.            Its several provisions must be

construed together so as to accomplish its primary purpose.” Id. at 680, 208 S.E.2d

at 687. Given the legislature’s goal of balancing customer and investor interests,

the customer-focused purpose of Chapter 62, and this Court’s recognition that the

Commission must consider all evidence presented by interested parties, which

necessarily includes customers, it is apparent that customer interests cannot be

measured only indirectly or treated as mere afterthoughts and that Chapter 62’s

ROE provisions cannot be read in isolation as only protecting public utilities and

their shareholders. Instead, it is clear that the Commission must take customer

interests into account when making an ROE determination. Therefore, we hold

that in retail electric service rate cases the Commission must make findings of fact

regarding the impact of changing economic conditions on customers when

determining the proper ROE for a public utility.


      For the foregoing reasons, we reverse the Commission’s order and remand

this case to the Commission with instructions to make an independent

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determination regarding the proper ROE based upon appropriate findings of fact

that weigh all the available evidence.


        REVERSED AND REMANDED.

        Justice BEASLEY did not participate in the consideration or decision of this

case.




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