Colorado Office of Consumer Counsel v. PUC

Decision Date04 March 2002
Docket NumberNo. 00SA233.,00SA233.
Citation42 P.3d 23
PartiesThe COLORADO OFFICE OF CONSUMER COUNSEL, Petitioner-Appellant, v. The PUBLIC UTILITIES COMMISSION OF the STATE of COLORADO; and Commissioners Robert J. Hix, Vincent Majkowski, and Raymond J. Gifford, the Commissioners thereof, individually in their official capacity, Respondents-Appellees.
CourtColorado Supreme Court

Ken Salazar, Attorney General, Simon P. Lipstein, Assistant Attorney General, Denver, Colorado, Attorneys for Petitioner-Appellant.

Ken Salazar, Attorney General, Anne K. Botterud, Assistant Attorney General, Business and Licensing Section, Denver, Colorado, Attorneys for Respondents-Appellees.

Justice BENDER delivered the Opinion of the Court.

I. Introduction

In this appeal, we address whether rates charged for a prepaid telecommunications plan, the NOW Plan, offered by NOW Communications, Inc., violate Colorado's statutory rate cap for residential telephone service. The Public Utilities Commission (PUC) approved NOW's rates and granted a certificate of public convenience and necessity to NOW Communications, Inc. to provide residential basic local telephone exchange service. The district court affirmed the PUC's order.

Both the PUC and the district court held that the monthly and non-recurring charges for NOW Communication's prepaid residential basic local telephone exchange service do not violate the statutory rate cap for such service because NOW's basic service is bundled with other services. Although the PUC did not consider the issue, on appeal the district court held that the PUC implicitly determined that rates for the NOW Plan are non-discriminatory.

The Office of Consumer Counsel (OCC) directly appeals to this court the ruling of the district court pursuant to section 40-6-115(5), 11 C.R.S. (2001). We hold that residential basic local telephone exchange service is subject to the statutory rate cap of $14.74 per month as set by section 40-15-502(3)(b)(I) (2001), 11 C.R.S. (2001), even if it is combined with other products, such as here, when the final product amounts to no more than basic service.

Hence, we reverse the judgment of the district court and remand this case with directions to return it to the PUC for additional proceedings consistent with this opinion.

II. Facts and Proceedings Below

In 1998, NOW filed an advice letter and tariffs with the PUC, as required by statute, for authority to offer basic local exchange service in Colorado. Basic local exchange service consists of the minimum telephone features necessary to make local calls.

NOW's advice letter describes two prepaid basic local telephone exchange service plans it proposes to offer residential and business customers in Colorado: the NOW Plan and non-NOW Plan. Only the residential rates for the NOW Plan are pertinent to this appeal. The non-NOW Plan, which meets the statutory rate cap and is not a subject of this dispute, is residential basic local telephone exchange service for $14.74 a month with a non-recurring connection fee of $35. The NOW Plan consists of residential basic local telephone exchange service, the option to pay bills and make changes to service at payment centers, and toll restriction, which limits the customer's ability to make long-distance calls, for $36.50 per month and $45 to install. Questions regarding the legality of both monthly and one-time, or non-recurring, charges of the NOW Plan form the basis of this appeal.

The rate cap is set by section 40-15-502(3)(b)(I).1 This statute describes the general assembly's policy goals in making residential basic local telephone exchange service available to all residents of Colorado. It also states that monthly rates for such service are to remain at the levels in effect on May 24, 1995, or $14.74.

The NOW Plan is marketed to customers who are unable to obtain residential telephone service from Qwest,2 the incumbent local exchange provider in Colorado, because they have credit problems or are unemployed. In contrast to the requirements of Qwest and NOW for the non-NOW Plan, NOW Plan customers do not undergo a credit check or need to provide proof of employment.

The PUC required NOW to file an amended advice letter to remedy certain deficiencies, which are not at issue here. After NOW filed this amended advice letter, the OCC filed a protest to NOW's tariffs. At the OCC's request, the PUC suspended NOW's tariffs and held a hearing before an Administrative Law Judge (ALJ) to determine if the tariffs for the NOW Plan violate the rate cap for basic local exchange service found in section 40-15-502(3)(b)(I) and whether the rates are just, reasonable, affordable, and nondiscriminatory as required by regulation 723-38-3.2.2.7, 4 C.C.R. (2001).

The ALJ rejected NOW's arguments that the NOW Plan is not residential basic local exchange service but is bundled service that is exempt from the statutory rate cap. The ALJ issued a recommended decision that the PUC permanently suspend NOW's tariffs on the grounds that the NOW Plan tariffs violate the statutory rate cap.

The PUC Staff and NOW filed exceptions to the ALJ's decision. The PUC thereafter issued an order granting the exceptions and reversing the ALJ's recommended decision. The PUC held that the rates for the NOW Plan, as bundled service, do not violate the statutory rate cap and that they are just and reasonable. It further determined that because the monthly recurring rates for the NOW Plan are not subject to the statutory rate cap, the non-recurring installation fees are likewise exempt from the rate cap. The PUC did not consider whether the rates for the NOW Plan are discriminatory. The OCC applied to the PUC for a rehearing, reargument, or reconsideration of the decision. The PUC denied the application.

On appeal, the district court affirmed the PUC's order. It agreed that the NOW Plan is bundled service, and that the statute applies only to residential basic local telephone exchange service, not to bundled service. Therefore, the district court reasoned, the rate cap is inapplicable to the monthly and non-recurring installation rates of the NOW Plan. Finally, the district court held that the PUC implicitly found that NOW's rates are non-discriminatory, and that this implicit finding of fact is supported by the record.

The OCC directly appeals the ruling of the district court to this court.

III. Analysis

The OCC presents three issues for our review:3 (1) whether the statutory rate cap found in XX-XX-XXX(3)(b)(I) applies to bundled telephone service that includes residential basic local exchange service; (2) whether the rate cap applies to non-recurring charges related to basic local exchange service; and (3) whether the PUC erroneously failed to determine if rates for the NOW Plan are discriminatory.

Despite the phrasing of the first issue on appeal, we reach only the narrow question of whether the NOW Plan is residential basic local exchange service that it is subject to the rate cap. Because of our resolution of this issue, we do not decide whether the rate cap applies to bundled service generally.

A. Standard of Review

This court's review of a PUC decision is limited "to determin[ing] whether the commission has regularly pursued its authority,. . . whether the decision of the commission is just and reasonable and whether its conclusions are in accordance with the evidence." § 40-6-115(3), 11 C.R.S. (2001); Phoenix Power Partners, L.P. v. Colo. Pub. Utils. Comm'n, 952 P.2d 359, 364 (Colo.1998). Because the PUC administers public utilities laws, PUC rulings are given respectful consideration and the PUC's findings of fact are considered final. Id. However, questions of law are to be determined de novo by the courts. Id.; § 40-6-115(3). As a consequence, we are not bound by the PUC's rulings on legal issues.

The PUC argues that the PUC has plenary authority to regulate utilities in Colorado and that the rate cap statute imposes no restrictions on the PUC's power to regulate residential basic local exchange service rates. Rate making by the PUC is a factual determination. Therefore, the PUC argues, the district court correctly held that the PUC properly pursued its authority when it ruled that the rates for the NOW Plan do not violate the rate cap.

While it is true that the legislature has delegated the power to set rates for utilities to the PUC by way of section 40-3-102, 11 C.R.S. (2001), the PUC's authority in this regard is limited by statute. City of Montrose v. Pub. Utils. Comm'n, 732 P.2d 1181, 1186 (Colo.1987) ("[T]he legislature may restrict the Commission's discretion in matters of rate making."); Pub. Utils. Comm'n v. Colo. Motorway, Inc., 165 Colo. 1, 7, 437 P.2d 44, 46 (1968) ("The Commission is a creature of statute. Both the power and scope of its authority and its procedures are necessarily controlled by the Act upon which it relies.").

The Colorado General Assembly has set forth maximum rates for basic local telephone exchange service. The question before this court is whether this statutory mandate applies to the NOW Plan. Therefore, this case presents a question of statutory interpretation, and does not implicate the PUC's rate making authority. Statutory interpretation is a question of law. As discussed above, we are not bound by the interpretation of the PUC and consider the interpretation of the rate cap statute de novo. Powell v. Colo. Pub. Utils. Comm'n, 956 P.2d 608, 613 (Colo.1998); Fogg v. Macaluso, 892 P.2d 271, 273 (Colo.1995).

B. The Colorado Telecommunications Rate Cap Statute

The task of the court in interpreting a statute is to determine and give effect to the intent of the legislature. Resolution Trust Corp. v. Heiserman, 898 P.2d 1049, 1053 (Colo.1995). If the plain language of the statute clearly expresses the legislative intent, then the court must give effect to the ordinary meaning of the statutory language. Likewise, the court should avoid interpreting a statute in a way that...

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