Mississippi Public Service Commission v. Mississippi Power Co.

• Decision Date: 05 October 1976
• Docket Number: No. 49199,49199
• Citation: 337 So.2d 936
• Court: Mississippi Supreme Court
• Parties: MISSISSIPPI PUBLIC SERVICE COMMISSION, Appellant, v. MISSISSIPPI POWER COMPANY, Appellee.

Page 936

337 So.2d 936

MISSISSIPPI PUBLIC SERVICE COMMISSION, Appellant, v. MISSISSIPPI POWER COMPANY, Appellee.

No. 49199.

Supreme Court of Mississippi.

Oct. 5, 1976.

Pickering & McKenzie, Laurel, Bennett E. Smith, Jackson, for appellant.

Watkins & Eager, Jackson, Eaton, Cottrell, Galloway & Lang, Gulfport, for appellee.

Before PATTERSON, ROBERTSON and BROOM, JJ.

PATTERSON, Presiding Justice, for the Court:

The Mississippi Power Company filed a proposed rate increase with the Mississippi Public Service Commission on February 28, 1974, to become effective April 1 of that year. Mississippi Power Company, hereinafter MPCo, estimated the rate increase would provide $8,500,000 for 1974, a 10.24% pro forma income increase over the rates of 1972. MPCo also proposed to add or 'rollin' approximately 2.25 mills in the base rate to reflect higher fuel costs necessary to the production of electrical energy. It also filed a schedule of proposed rate changes with a statement of the necessity therefor and supporting data as required by Mississippi Code Annotated section 77-3-37 (1972).

On March 11, 1974, the Mississippi Public Service Commission, hereinafter commission, suspended the proposed rate increase, whereupon MPCo filed a refunding bond so the suggested rate increase would take effect April 1, 1974. Public hearings before the commission concluded on July 30, 1974. The record consists of 86 exhibits and a transcript of 1459 pages resulting from eight days of testimony before the commission.

On August 12, 1974, the commission entered its order finding the rate increase was unjust, unreasonable and otherwise in violation of the law. It also deemed inappropriate the change in the amount of fuel cost included in the schedule of rates and charges (the base rate) for energy generated by the company. It concluded the company should reduce the proposed base rate to reflect the amount of fuel cost by which the base rate of the tariff schedule was increased on February 28, 1974, over the base rate in existence prior to that time and changed the new fuel cost adjustment clause accordingly. The commission directed a refund of the excess rates collected over approved rates together with 8% interest and determined that the rates in effect prior to April 1, 1974, were reasonable and just.

When MPCo's petition for rehearing was denied by the commission, an appeal was perfected to the Chancery Court of the First Judicial District of Hinds County.

The chancery court held:

1. That the commission's order of August 12, 1974, should be vacated because it was not supported by substantial evidence, was contrary to the manifest weight of the evidence and violated the constitutional rights of the appellant.

2. That the proposed change in rates filed with the commission on February 28, 1974, effective April 1, 1974, was just and reasonable, would yield revenues not in excess of a fair return on the reasonable value of the property of MPCo used in furnishing the service and that said rates should be approved.

The court thereupon vacated the commission's order and approved the rates proposed by MPCo.

On its appeal to this Court the commission argues that the lower court erred in holding the commission order was not supported by substantial evidence, was contrary to the manifest weight of the evidence and violated the constitutional rights of the appellee and erred in fixing and establishing rates for the appellee.

The legal principles relating to the commission's authority in establishing rates are well settled and have not been subject to substantial change. They are:

1. The burden of proof rests on the public utility to establish the reasonableness of new rates. Southern Bell T. & T. Co. v. Mississippi Pub. Serv. Com'n, 237 Miss. 157, 113 So.2d 622 (1959).

2. The commission, with its expertise, is the trier of facts and within this province it has the right to determine the weight of the evidence, the reliability of estimates and the credibility of witnesses. Capital Electric Power Ass'n v. Mississippi Power & Light Co., 216 So.2d 428 (Miss.1968); and Southern Bell T. & T. Co. v. Mississippi Pub. Serv. Com'n,237 Miss. 157, 113 So.2d 622 (1959).

3. The order of the commission is presumptively valid. Loden v. Mississippi Pub. Serv. Com'n, 279 So.2d 636 (Miss.1973).

4. The reasonableness of rates charged, or to be charged, by a public utility is not determined by definite rule or legal formula, but is a fact question requiring the exercise of sound discretion and independent judgment in each case. Southern Bell T. & T. Co. v. Mississippi Pub. Serv. Com'n, 237 Miss. 157, 113 So.2d 622 (1959).

5a. The chancery court's authority on review is limited by Mississippi Code Annotated section 77-3-67(4) (1972) to: The order shall not be set aside in whole or part except for errors of law, unless the court finds it is not supported by substantial evidence, is contrary to the manifest weight of the evidence, is in excess of statutory authority or violates constitutional rights.

5b. The authority of 5a has been construed at times as follows: The sole question presented for decision is whether or not the action of the commission was arbitrary, not supported by substantial evidence or was manifestly against the evidence. Tri-State Transit Co. of La. v. Dixie Greyhound Lines, 197 Miss. 37, 19 So.2d 441 (1944).

We review the chancery court's order with the above rules before us. We conclude, as did the lower court, that the commission's order denying the proposed rate increase was not supported by substantial evidence. The testimony of the utility's witnesses, with the exception of Dr. Langum is largely uncontradicted as the trial court found:

. . . (T)he Commission failed to give proper consideration to other factors related to the rate structure, such as the increased cost of operating expenses, the increased capital cost of the business, which includes service on the debt and dividends on the stock, the added cost of pollution control, including the power used in the operation of the pollution control equipment. The undisputed evidence shows that the coverage on debt and preferred stock has dropped to a dangerously low level, and that dividends available for common equity continue to decline, even with the 1972 rate increase. The serious question now is whether the revenue produced by such rate will enable this utility to secure additional funds for expansion of facilities needed to serve its certificated area, and at the same time enable it to maintain coverages required by law.

We therefore affirm the trial court in its finding that the order of the commission was not supported by substantial evidence because it is apparent that the commission overlooked uncontradicted and reasonable testimony of the company's witnesses in reaching its conclusion that the proposed rate increase was not supported by substantial evidence.

The next assignment of error challenges the authority of the chancery court to determine the rate increase on appeal. The legislative intention of embedding in the Public Service Commission the authority to fix and determine rates of return for public utilities has long been established (Miss.Code Ann. § 77-3-41 (1972)). Our decisions also hold that the rate making function is legislative in character and not the function of a court. in Mississippi Public Service Comm'n v. Home Telephone Co., 236 Miss. 444, 110 So.2d 618 (1959), we held:

The chancery court erred in fixing a rate of return. The function of rate making is purely legislative in character. It is not within the power of a court to fix the rates to be charged by public utilities, although a court may restrain the imposition of confiscatory rates, or, under the Public Utility Act, determine whether the rates as fixed are supported by substantial evidence or...