New England Tel. & Tel. Co. v. Public Utilities Commission

Decision Date10 August 1976
Citation362 A.2d 741
PartiesNEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY v. PUBLIC UTILITIES COMMISSION et al.
CourtMaine Supreme Court

Pierce, Atwood, Scribner, Allen & McKusick, by Vincent L. McKusick, Everett P. Ingalls, James E. Purcell, Portland, Robert D. Bruce, Boston, Mass., for plaintiff.

Horace S. Libby, Public Utilities Commission, H. Cabanne Howard, Edward Lee Rogers, Asst. Attys. Gen., Augusta, for defendants.

Before DUFRESNE, C. J., and POMEROY, WERNICK, ARCHIBALD and DELAHANTY, JJ.

WERNICK, Justice.

On October 8, 1974, New England Telephone and Telegraph Company ('New England') filed with the Public Utilities Commission ('Commission'), in compliance with 35 M.R.S.A. § 64, 1 a revision of New England's then effective schedule of intrastate rates, tolls and charges. 2 The revision was designed to achieve an increase in New England's gross annual revenues of approximately $21,000,000 ('the $21,000,000 rates'). After a complex series of events (described in detail below), the Commission, by order dated February 13, 1976, authorized the filing of a schedule which would increase New England's revenues by $9,074,000. On February 23, 1976, New England initiated the instant proceedings for judicial review invoking (1) this Court's 'appeal' jurisdiction under 35 M.R.S.A. § 303 ('Section 303') and (2) its 'complaint in equity' jurisdiction under 35 M.R.S.A. § 305 ('Section 305').

We sustain New England's Section 303 appeal and remand the case to the Commission for further proceedings consistent with our opinion herein. We dismiss, without prejudice, New England's Section 305 complaint because our disposition of the Section 303 appeal makes it unnecessary for us to reach the issues raised by the Section 305 complaint.

I. The History of the Proceedings

In response to the above-described October 8, 1974 rate-filing, the Commission, on November 6, 1974, acting pursuant to 35 M.R.S.A. § 69, 3 suspended the entirety of the schedule proposed by New England and thus prevented its taking effect. 4 The Commission then proceeded with hearing and investigation, as authorized by said Section 69.

Cross-examination of New England's direct case 5 was originally scheduled for the week of April 14, 1975, but was later moved to May 5, 1975 to allow the Commission additional time for preparation. Hearings began on May 5, 1975, as scheduled, but were suspended because the retirement of Commissioner John G. Feehan created a vacancy in the Commission. The Commission stated that it was reluctant to process so large and important a rate case with only two Commissioners sitting.

On May 9, 1975 the then Commission Chairman, Peter A. Bradford, wrote a letter to all parties in which he indicated that the hearings were suspended 'until the Commission once again has three members.' Chairman Bradford expressed the hope that the case could be completed by July 7, the expiration of the statutory suspension period, but also suggested that 'there seems to be a substantial probability that this will be impossible.' The letter further stated:

'The Commission does not intend that the company (New England) should be financially penalized if the proceeding runs beyond July 7 and if the Commission should ultimately find a rate increase to be necessary. Therefore the parties should be considering ways in which this goal might most satisfactorily be achieved. We have previously suggested some combination of interim rates with an eventual surcharge to achieve the same effect as if our final decree had been issued on July 7. . . . (T)he eventual result in this case should be designed to achieve basically the same dollar and cents result as if the decree had been issued on July 7. The Company's (New England's) agreement to waive the July 7 deadline, if necessary, is predicated on such a result.'

On June 26, 1975, New England responded by suggesting that the rate schedule filed by it (pursuant to 35 M.R.S.A. § 64) on October 8, 1974 now be put into effect, subject to refund should the Commission eventually determine that the rates contained therein were unreasonable. The Attorney General 6 proposed continuing the then effective (June 13, 1974) rates, subject to surcharge. The Department of Defense proposed an immediate surcharge to remain effective until a final order would be issued. The Commission staff recommended an immediate $10,000,000 rate increase subject to refund or surcharge depending upon the increase, if any, to be allowed by the Commission after further proceedings in the case.

On July 3, 1975, four days before the expiration of the maximum statutory suspension period allowed by 35 M.R.S.A. § 69, the Commission issued a decree containing the provisions that: (1) the decree terminated the statutory suspension period which, otherwise, would have continued until July 7; (2) an effect of the decree was to

'permit the processing of the case beyond the July 7 deadline without the rates as filed by the Company going into effect by operation of law';

(3) the Commission saw

'no justification for permitting the Company to collect $21,000,000 to which it may very well not be entitled',

and rejected New England's plan for putting the $21,000,000 rates in effect subject to refund; (4) New England was authorized to file rates designed to increase gross operating revenues by $9,500,000 per annum ('the $9,500,000 rates')

'subject to refund or surcharge in order that New England receive as nearly as possible the same dollars and cents result that it would have received had . . . (the Commission's) final revenue requirement order been entered on July 7, 1975.'

Pursuant to this July 3, 1975 decree, New England, on July 15, 1975, filed with the Commission a revised schedule of rates, tolls and charges designed to increase gross annual revenues by $9,500,000, and the schedule provided that such rates were subject to refund or surcharge depending upon a further order of the Commission. By order of the same date, July 15, 1975, the Commission authorized the revised schedule filed by New England pursuant to the Commission's July 3 order to be effective as of July 16, 1975.

On July 21, 1975, after Mr. Lincoln Smith had become the third member of the Commission, the Commission proceeded with hearings and investigation concerning the determination of the just and reasonable rates to be charged by New England. Hearings concluded on September 2, 1975, and final briefs were submitted on October 6.

On December 11, 1975 New England filed with the Commission a motion to reopen the record. With the motion were copies of New England's monthly financial reports for the period May to September 1975, each report containing a summary for the year ending at the close of that month (e. g., June 1, 1974-May 31, 1975). New England was thus offering to the Commission operating data-presented in the same form as that the Commission had received as evidence during the prior hearings,-showing New England's financial situation for a period as recent as the year ending September 30, 1975. On December 31, 1975, and again on January 22, 1976, New England moved to amend this motion, adding data through October 31, 1975 and November 30, 1975, respectively. Accompanying this last motion for amendment was a request for hearing concerning the reopening of the record.

On February 13, 1976, the Commission issued another decree which was, purportedly, its 'final' decree dealing with the revised rate schedule filed, pursuant to 35 M.R.S.A § 64, by New England on October 8, 1974. This order contained findings concerning various substantive issues presented in the case-fair rate of return, appropriate rate base, deductible expenses, etc. It concluded: (1) the $21,000,000 rates proposed by the October 8, 1974 filing are unjust and unreasonable; (2) 'the revised temporary rates' of July 16, 1975 are unjust and unreasonable; (3) New England should file a new schedule of rates, tolls and charges to produce an increase in its annual gross revenues of only $9,074,000-i. e., less than the increase of $9,500,000 previously authorized in July, 1975; (4) New England should file a schedule providing for the refund to those customers who had paid the $9,500,000 rates since July 16, 1975 the amount by which those rates exceeded the $9,074,000 rates, with 9.05% annual interest to be paid thereon; (5) New England should reduce its $32.50 charge for 'service connections, moves and changes' instituted by the July 16, 1975 schedule to a maximum of $17, and those persons who had paid these higher charges should have the difference refunded, with interest at the rate of 9.05%; (6)

'(i)f these refunds should produce a deficiency in the amount collected under the interim rates, the Company (New England) may make up the difference through an across the board surcharge.'

When it subsequently initiated the instant proceedings for judicial review of this Commission order, New England, on February 23, 1976, requested in conjunction with its 'Section 305 complaint' that the Chief Justice of this Court stay the effectiveness of the Commission's order. 7 On March 12, 1976, the Chief Justice issued an order staying the February 13, 1976 order of the Commission on the condition.

'that the rates placed in effect by the Public Utilities Commission by decrees of July 1975 and which are presently in effect because of the Commission's stay of its own order of February 13, 1976, namely, those orders permitting a rate schedule designed to increase annual gross revenues of the Company by $9,500,000.00, remain in effect, subject to refund or surcharge if allowable under the law.' (emphasis supplied)

This stay has been in effect pending our determination of New England's instant Section 305 proceeding.

II. The Statutory Framework of the Proceedings

Our review of the Commission's actions must proceed in accordance with the postulate that

'. . . the Public Utilities Commission possesses only...

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