Armco, Inc. v. Public Utilities Commission

• Decision Date: 24 February 1982
• Docket Number: 81-511,Nos. 81-510,s. 81-510
• Citation: 69 Ohio St.2d 401,433 N.E.2d 923
• Parties: , 23 O.O.3d 361 ARMCO, INC., Appellant, v. PUBLIC UTILITIES COMMISSION of Ohio, Appellee. PRIVATELY OWNED TELEPHONE SUPPLIERS ASSOCIATION, INC., Appellant, v. PUBLIC UTILITIES COMMISSION of Ohio, Appellee.
• Court: Ohio Supreme Court

Page 401

69 Ohio St.2d 401

433 N.E.2d 923, 23 O.O.3d 361

ARMCO, INC., Appellant, v. PUBLIC UTILITIES COMMISSION of Ohio, Appellee.

PRIVATELY OWNED TELEPHONE SUPPLIERS ASSOCIATION, INC., Appellant, v. PUBLIC UTILITIES COMMISSION of Ohio, Appellee.

Nos. 81-510, 81-511.

Supreme Court of Ohio.

Feb. 24, 1982.

Steer, Strauss, White & Tobias, James J. Ryan and F. Bruce Abel, Cincinnati, for appellant Armco, Inc.

Bricker & Eckler, Sally W. Bloomfield and David V. Stivison, Columbus, for appellant Privately Owned Tel. Suppliers Ass'n, Inc.

William J. Brown, Atty. Gen., Marvin I. Resnik and David M. Neubauer, Columbus, for appellee.

Donald W. Morrison, Ronald L. Orloff and Charles S. Rawlings, Cleveland, for intervening appellee.

PER CURIAM.

"The scope of this court's review of commission orders is set forth in R.C. 4903.13, which states in pertinent part:

" 'A final order made by the public utilities commission shall be reversed, vacated, or modified by the supreme court on appeal, if, upon consideration of the record, such court is of the opinion that such order was unlawful or unreasonable.'

" 'Under the "unlawful or unreasonable" standard specified in R.C. 4903.13, this court will not reverse or modify an opinion and order of the Public Utilities Commission where the record contains sufficient probative evidence to show that the commission's determination is not manifestly against the weight of the evidence and is not so clearly unsupported by the record as to show misapprehension, mistake or willful disregard of duty,' Columbus v. Pub. Util. Comm. (1979), 58 Ohio St.2d 103, 104, 388 N.E.2d 1237. See, also, Consumers' Counsel v. Pub. Util. Comm. (1979), 58 Ohio St.2d 108, 110, 388 N.E.2d 1370; Ohio Utilities Co. v. Pub. Util. Comm. (1979), 58 Ohio St.2d 153, 164, 389 N.E.2d 483; Duff v. Pub. Util. Comm. (1978), 56 Ohio St.2d 367, 370, 384 N.E.2d 264; General Motors Corp. v. Pub. Util. Comm. (1976), 47 Ohio St.2d 58, 351 N.E.2d 183, paragraph two of the syllabus; Cleveland Electric Illuminating Co. v. Pub. Util. Comm. (1975), 42 Ohio St.2d 403, 330 N.E.2d 1, paragraph eight of the syllabus. We assess the appellants' objections with this standard of review in mind." Consumers' Counsel v. Pub. Util. Comm. (1981), 67 Ohio St.2d 153, 155-156, 423 N.E.2d 820.

I.

Appellants challenge the commission's procedural handling of the instant case in several respects. First, they contend that the commission in approving OBT's flexible rate schedule improperly invoked its authority under R.C. 4905.381 to determine and prescribe rules, regulations and practices of a telephone company upon complaint brought pursuant to R.C. 4909.26, thereby bypassing the procedural requirements applicable to rate changes imposed by R.C. 4909.17 through 4909.19. In its opinion and order the commission asserted that "it * * * ha(d) proper jurisdiction in this matter under Sections 4905.26 and 4905.381, Revised Code * * *." The commission went on to state, however, that " * * * by incorporating the record of the flexible pricing self complaint case into the record of general rate case (and even permitting the introduction of additional evidence concerning flexible pricing into the record during the rate case public hearings), the Commission believes that it has silenced all arguments as to whether it has the jurisdiction to grant Ohio Bell's request for relief." The entire record of the complaint case was properly before the commission as part of the ratemaking proceeding brought pursuant to R.C. 4909.17 through 4909.19.

We find it unnecessary to decide whether the commission misapplied R.C. 4905.381 and 4909.26 because the commission clearly had the authority under its general ratemaking power to consider the issues raised in OBT's complaint in the context of the general rate case. Thus, even if, arguendo, R.C 4905.381 and 4909.26 are inapplicable to the issues raised in the instant appeal, the commission has an independent statutory basis, namely the rate case brought pursuant to R.C. 4909.17 through 4909.19 and related statutes, upon which to entertain the questions posed by OBT's application for an increase in rates. Under these circumstances, any opinion this court might express regarding the correctness vel non of the commission's reliance on R.C. 4905.381 and 4909.26 would be purely advisory, and it is well-settled that this court does not indulge itself in advisory opinions.

Appellants further argue that the flexible rate schedule approved by the commission is procedurally flawed in that the commission has permitted OBT to bypass the statutorily mandated procedures respecting rate changes that are contained in R.C. 4909.17 through 4909.19. It is appellant POTS' position that flexible pricing constitutes an unlawful delegation of the commission's regulatory authority to OBT in violation of R.C. 4909.17 through 4909.19 " * * * because, once tariffs which increase rates and charges are filed with the commission, they become effective without an order of the public utilities commission pursuant to R.C. 4909.18 and 4909.19. R.C. 4909.17, 4909.18 and 4909.19 do not provide a basis of authority for the 'flexible' pricing tariff; they specifically prohibit an exemption from following the rate increase application procedure." ⁴ (Emphasis sic.)

Appellant Armco adopts essentially the same line of argument, asserting that " * * * (u)nless there is elsewhere in the Code some applicable exception, the rates of any utility may be changed only (a) upon written application under R.C. 4909.18, (b) after a hearing under R.C. 4909.19 unless the change is not an increase, and (c) upon an Order of the Commission under R.C. 4909.18 and R.C. 4909.15(D) fixing and establishing the changed rates as just and reasonable rates." Failure to adhere to these statutorily mandated procedures amounts to, in Armco's words, "unlawful administration deregulation." Moreover, according to Armco, the commission's alleged circumvention of the statutory rate changing provisions renders the flexible rates approved by the commission constitutionally infirm because "(t)he customers of a Public Utility are entitled as a matter of due process of law to a hearing and the production of evidence when an increase in their utility rates is proposed."

For its part the commission contends that " * * * changes within the minimum-maximum range which has been approved by the Commission are not changes in a rate. The range itself is the rate and OBT may exercise the flexibility of that rate." Consequently, " * * * (s)ince changes within the tariff's range are not rate changes as contemplated by R.C. 4909.15, .16, .17, .18 and .19, those statutes and the arguments regarding their requirements for rate changes are inapplicable to these appeals." The commission adopts the view expressed by the Michigan Public Service Commission in Re Michigan Bell Tel. Co. (October 28, 1980), No. U-6231, at page 55, that " * * * (c)ommission approval of the proposed range is legally and factually equivalent to approval of each charge within the approved range. Therefore, putting into effect charges within the approved range, charges already approved by the Commission after notice and hearing, would not require individual applications, notices and hearings."

The commission further contends that Armco's deregulation argument and POTS' delegation of authority argument, based on the alleged violations of R.C. 4909.17 through 4909.19, "simply beg the question and are irrelevant." We acknowledge that there is an element of question begging in these arguments in that if the commission is in fact empowered to establish flexible rates, then, by necessary implication, it has neither deregulated nor delegated its authority in contravention of R.C. 4909.17 through 4909.19, by enacting the flexible rate schedule controverted herein. If, however, the commission is not so empowered, then appellants' contentions regarding the legislatively mandated procedural scheme become highly relevant. In any event, disposition of these procedural questions must necessarily turn on our disposition of the substantive question presented in this appeal. Accordingly, we now consider the question whether the commission is statutorily authorized to implement the flexible rate schedule proposed by OBT.

II.

The commission relies on R.C. 4905.31(E) as statutory authority under which it may establish flexible pricing "(e)ven if there was some (other) provision (e.g. R.C. 4909.15) to be found which prohibited flexible rates * * *." R.C. 4905.31 provides in relevant part:

"Except as provided in section 4933.29 of the Revised Code, Chapters 4901, 4903, 4905, 4907, 4909, 4921, and 4923, of the Revised Code do not prohibit a public utility from filing a schedule or entering into any reasonable arrangement with another public utility or with its customers, consumers, or employees providing for:

" * * *

"(E) Any other financial device that may be practicable or advantageous to the parties interested. * * * "

Flexible pricing is for purposes of the statute "a financial device." Although appellants strenuously contend that the approved flexible tariffs are neither practicable nor advantageous to the parties interested, we are of the opinion that the commission's resort to flexible pricing for the enumerated competitive vertical services and equipment is, in the broadest sense, practicable and advantageous. For OBT's vertical services customers the flexible pricing schedules provide a more meaningful range of competitive telecommunications options. For OBT's basic ratepayers the flexible pricing schedules offer the possibility of reduced rates if optimization does occur and the moneys generated thereby flow back to the general ratepayers pursuant to the OBT-OCC stipulation.

We would be remiss, however, if we failed to point out that R.C. 4905.31(E) constitutes an exception to the general ratemaking formula contained in R.C. 4909.15. The...