Hamm v. Southern Bell Tel. and Tel. Co.

• Decision Date: 22 January 1990
• Docket Number: No. 23214,23214
• Citation: 394 S.E.2d 311,302 S.C. 132
• Court: South Carolina Supreme Court
• Parties: Steven W. HAMM, Consumer Advocate for the State of South Carolina, Appellant, v. SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY and the South Carolina Public Service Commission, Respondents. . Heard

Page 311

394 S.E.2d 311

302 S.C. 132

Steven W. HAMM, Consumer Advocate for the State of South Carolina, Appellant, v. SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY and the South Carolina Public Service Commission, Respondents.

No. 23214.

Supreme Court of South Carolina.

Heard Jan. 22, 1990.

Decided May 7, 1990.

Steven W. Hamm, Raymon E. Lark and Natalie J. Moore, all of S.C. Dept. of Consumer Affairs, Columbia, for appellant.

Fred A. Walters, of Southern Bell Telephone and Telegraph Co., Marsha A. Ward, of S.C. Public Service Com'n, and A. Camden Lewis, of Lewis, Babcock, Pleicones & Hawkins, of Columbia, for respondents.

TOAL, Justice:

In this appeal the Consumer Advocate contests the validity of an approved rate increase for Touch-Tone dialing telephone rates requested by Southern Bell Telephone and Telegraph Company. We reverse.

FACTS

This case involves three separate orders of the Public Service Commission (PSC). The Consumer Advocate (Advocate) participated in each of the hearings leading to the three orders.

In Order No. 87-982, the PSC mandated that all local exchange telephone companies must offer multi-jurisdictional WATS lines services, as opposed to separate intrastate and interstate WATS lines. This order also noted that local telephone companies may suffer an intrastate revenue deficiency as a result of the decision. Finally, the order directed that, if a company should suffer a loss, it should seek approval of rate increases to offset that loss, provided that such rates affect optional services only and not local basic exchange services.

Southern Bell Telephone and Telegraph Company (Southern Bell) filed for a rate increase for its Touch-Tone calling services in order to offset an alleged loss caused by Order No. 87-982. The proposed rate increase would generate $4.2 million in revenues for Southern Bell. In Order No. 88-137, the PSC approved the rate increase application in the amount of $3 million. However, the PSC failed to make a specific finding that Southern Bell had sufficiently demonstrated entitlement to a rate increase. Moreover, Southern Bell failed to introduce any of the studies or data allegedly relied upon by its experts which served to demonstrate such entitlement.

The Advocate petitioned for a rehearing and reconsideration of Order No. 88-137. One ground asserted by the Advocate for reconsideration was that "there was no underlying evidentiary support in the record" demonstrating Southern Bell's anticipated loss. (See Tr. 24). The PSC then issued Order No. 88-283, in which it attempted to more comprehensively address the issues involved in Order No. 88-137. The PSC pointed to certain testimony in support of its view that Southern Bell had sufficiently demonstrated that it would suffer a loss at least commensurate with the $3 million approved rate increase.

The Advocate next sought judicial review and a reversal of the latter two PSC orders. The Circuit Court affirmed the PSC orders and the Advocate timely appealed.

LAW/ANALYSIS

The Advocate argues, inter alia, that the Circuit Court should be reversed because the PSC erred in approving a rate increase based on speculative, unsubstantiated losses rather than proven ones. We agree.

In Order No. 88-137, the PSC notes that the Advocate presented one Mr. Buckalew as an expert who opined that Southern Bell's losses were speculative. Next, the PSC states, "[c]ompany witness Payne gave rebuttal testimony concerning allegations made by Mr. Buckalew during his testimony in the proceeding. Specifically, witness Payne's testimony addressed Mr. Buckalew's allegations concerning revenue losses ..." (Tr. 20). In its "Findings and Conclusions" in Order No. 88-137, the PSC recited simply that Southern Bell's requested rate increase should be approved. In Order No. 88-283, the PSC's order reconsidering Order No. 88-137, there is merely a repetitive finding that there was factual support in the testimony of Mr. Payne which demonstrated Southern Bell's losses.

As an initial matter, these "findings" by the PSC run afoul of our decision in Able Communications, Inc. v. South Carolina Public Service Comm'n, 290 S.C. 409, 351 S.E.2d 151 (1986). We stated in Able Communications, Inc. that "[t]he findings of an administrative body must be sufficiently detailed to enable the reviewing court to determine whether the findings are supported by the evidence and whether the law has been properly applied to those findings." 290 S.C. at 411, 351 S.E.2d at 152. We further noted there that "[w]here material facts are in dispute, the administrative body must make specific, express findings of fact." Id. Finally, we specifically held there that, "a recital of conflicting testimony followed by a general conclusion is patently insufficient to enable a reviewing court to address the issues." Id. No more than a recital of testimony and a general conclusion exist here.

The Advocate would have us go further and hold that as a general rule the PSC is without authority to adjust a rate based on proven and measurable changes to occur in the future. ¹ The Advocate takes the position that, when making a rate adjustment, the PSC must only consider historical data. We reject this argument, as we can imagine contexts in which it would be entirely inappropriate for the PSC to refuse to consider a future event when adjusting rates. ² Moreover, in Southern Bell v. The Public Service Commission 270 S.C. 590, 244 S.E.2d 278 (1978), we approved the historical test year as a basis for calculating a utility's rate base, as long as...