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Golden Nugget Atlantic City Corp. v. Atlantic City Electric Co.

Decided: December 5, 1988.

GOLDEN NUGGET ATLANTIC CITY CORPORATION, PETITIONER-APPELLANT,
v.
ATLANTIC CITY ELECTRIC COMPANY, RESPONDENT



On appeal from New Jersey Board of Public Utilities.

Antell, Havey and Brochin. The opinion of the court was delivered by Antell, P.J.A.D.

Antell

Hilton New Jersey Corporation (Hilton) and Golden Nugget Atlantic City Corporation (GNAC) petitioned the Board of Public Utilities (BPU) to require Atlantic City Electric Company (ACE) to extend its electric transmission lines to serve their new casino/hotel projects in the Atlantic City Marina area. The history of those petitions and their attending circumstances are detailed in Hilton New Jersey Corp. v. Atlantic City Elec. Co., 205 N.J. Super. 217 (App.Div.1985), in which we considered the appeals of Hilton and GNAC from BPU's determination that petitioners must pay the cost of the extensions.

The petitions had been filed under N.J.S.A. 48:2-27. This statute requires BPU to order the extension of utility service where the extension is reasonable and practicable, where it will

furnish sufficient business to justify the extension and where the financial condition of the utility reasonably warrants the expenditure involved in making and operating the extension. In our earlier opinion we found that "the reasonableness and practicability of the extension and the capacity of ACE to finance it are undisputed." Id. at 221. However, to determine whether the extension would furnish sufficient business to justify its construction and maintenance at the sole expense of ACE we remanded to BPU for further proceedings. In so doing we stated the following:

We direct that BPU apply N.J.S.A. 48:2-27 in favor of Hilton and GNAC if it reaches a fact finding that the cost of the line extension would be recovered out of revenues generated from Hilton and GNAC within what BPU determines to be a reasonable period of time. The experience of the intervening year between the order on appeal and this opinion may be drawn upon. [ Id. at 224.]

Following our remand, BPU referred the matter to the Office of Administrative Law (OAL) for a hearing. The record of that proceeding was closed May 5, 1987, and on June 15, 1987, the Administrative Law Judge (ALJ) filed her initial decision which, after some discussion, was adopted by BPU on August 4, 1987. Pursuant thereto, BPU decided that three years is a reasonable cost recovery period within the meaning of our directive. Since, for reasons to be stated, there is no prospect of revenue to the utility from use of the transmission extension to GNAC, GNAC's application for return of the $658,530, which it had paid to ACE to meet the cost of installing the extension as the work progressed, was denied. GNAC appeals.

The circumstances of the case have materially changed since our last decision. After Hilton was denied licensure by the Casino Control Commission it transferred its facilities to Trump's Castle Associates, t/a Trump's Castle Hotel and Casino, an entity which is referred to hereinafter as Hilton-Trump's Castle (H-TC). H-TC is in active operation, and, on September

12, 1986, it entered into a BPU-approved settlement stipulation with ACE. In April 1984 GNAC decided not to proceed with its plan to construct a casino on the marina site. However, it continued site preparation, including electric facility construction and bulkheading, so that if it later reversed its decision and determined to construct a casino in the future this option would remain open. It did not tell ACE of its change in plans, however, until September 13, 1984.

On this appeal GNAC challenges the BPU determination that separate transmission extensions were installed for GNAC and H-TC. It contends that only a single line was constructed to serve the entire area occupied by the two casinos, and under the reasoning of In re Bd. of Commrs., Fire Dist. No. 3, Piscataway Tp., 27 N.J. 192 (1958) and In re Tp. of Lakewood, 29 N.J. Super. 422 (App.Div.1954), rearg. den. 30 N.J. Super. 79 (App.Div.1954), the cost of the extension should be borne by ACE. It reasons that the "massive revenues" being produced by H-TC provide the necessary assurance that the cost of constructing the extension will be returned to the utility within the three years designated by BPU as a reasonable cost recovery period.

Our role as an appellate court sitting in review of administrative determinations is to determine "'whether the findings made could reasonably have been reached on sufficient credible evidence present in the record,' considering 'the proofs as a whole,' with due regard to the opportunity of the one who heard the witnesses to judge of their credibility." Close v. Kordulak Bros., 44 N.J. 589, 599 (1965) (quoting State v. Johnson, 42 N.J. 146, 162 (1964)). See also Mayflower Securities v. Bureau of Securities, 64 N.J. 85, 92-93 (1973). ...


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