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

• Decision Date: 24 March 1976
• Citation: 354 A.2d 753
• Parties: NEW ENGLAND TELEPHONE & TELEGRAPH COMPANY v. PUBLIC UTILITIES COMMISSION et al.
• Court: Maine Supreme Court

Page 753

354 A.2d 753

15 P.U.R.4th 128

NEW ENGLAND TELEPHONE & TELEGRAPH COMPANY v. PUBLIC UTILITIES COMMISSION et al.

Supreme Judicial Court of Maine.

March 24, 1976.

Pierce, Atwood, Scribner, Allen & McKusick, by Vincent L. McKusick, Everett P. Ingalls, III, Portland, for plaintiff.

Horace S. Libby, Public Utilities Commission, Thomas R. Gibbon, Augusta, Captain Robert O'Neil, Office of the Judge Advocate Gen., Dept. of the Army, Washington, D. C., for defendants.

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

WERNICK, Justice.

On October 25, 1974 New England Telephone & Telegraph Company ('New England') filed a petition for 'interim' rate relief with the Public Utilities Commission ('Commission'). On March 11, 1975 the Commission denied the petition. New England then, on April 7, 1975, initiated the instant proceedings for judicial review by invoking this Court's 'appeal' jurisdiction under 35 M.R.S.A. §§ 303 ('Section 303 appeal') and its additional 'complaint' (in equity) jurisdiction under Section 305 ('Section 305 complaint.')

We dismiss New England's 'Section 303 appeal' for mootness. We deny New England's 'Section 305 complaint' and order judgment thereon in favor of defendant Commission.

I. The Background and Framework of the Proceedings

The precursor of the instant proceedings was a proceeding in September of 1973 precipitated when New England filed with the Commission changes of its then current schedule of permanent ¹ intrastate rates, tolls and charges. The changes were calculated to increase the company's gross annual revenues by approximately $6,300,000. Acting pursuant to 35 M.R.S.A. § 69, the Commission entered an order of suspension thereby preventing New England's revised schedule from becoming effective, automatically, upon the expiration of 30 days under 35 M.R.S.A. § 64 (hereinafter 'Section 64.') After a hearing and investigation concerning the 'justness and reasonableness' of the changes of rates contained in New England's September 1973 filing, the Commission, on June 13, 1974, found said changes of permanent rates to be neither just nor reasonable. Accordingly, as authorized by 35 M.R.S.A. § 69, (hereinafter 'Section 69') the Commission ordered New England to 'substitute' a changed schedule of permanent rates under which New England would derive an increase in its gross annual revenues of $3,964,415.00 (instead of the $6,300,000 contemplated by New England's original filing). New England filed the Commission-ordered 'substituted' changed schedule of permanent rates and shortly thereafter such changed permanent rates went into effect.

On October 8, 1974 New England again filed with the Commission changes of its schedule of intrastate permanent rates designed to produce a further increase of $21,000,000 in New England's gross annual revenues. Seventeen days thereafter (on October 25) New England filed the petition for 'interim' rate relief the Commission's denial of which constitutes the subject of the instant review proceedings.

New England stated in its petition that it would need 'interim' rate relief because it had ascertained that the Commission was about to issue an order of suspension to preclude effectiveness (at the expiration of 30 days under Section 64) of the changes in its schedule of permanent rates as filed by New England on October 8, 1974. The petition asked the Commission to authorize rates which would generate an additional $6,582,987 in New England's gross annual revenues and have 'interim' effectiveness pending the Commission's decision on New England's October 8, 1974 filing. New England suggested that the 'interim' relief be accomplished by the Commission's withholding suspension of particular 'parts' of the revised schedule filed by New England on October 8, 1974 thus to allow such 'parts' to become effective automatically upon the expiration of 30 days from October 8th.

On November 6, 1974 the Commission did suspend in its entirety New England's October 8, 1974 permanent rate-change filing. On December 30, 1974 the Commission held a hearing on New England's petition for 'interim' rate relief and approximately ten weeks later (on March 11, 1975) denied the petition. Thus, for a potentially maximum period of eight months from November 6, 1974-the time allowable to the Commission upon an order of suspension (under Section 69) for investigation of the justness and reasonableness of New England's October 8, 1974 permanent rate-change filing,-New England faced the prospect of living with the June, 1974 rates.

On July 3, 1975 the Commission made an order in which it stated that it

'(saw) no justification for permitting . . . (New England) to collect $21,000,000 . . .'

in additional gross annual revenues but authorized New England to file a changed rate schedule to yield an increase in New England's gross annual revenues of $9,500,000. ² Such changed schedule of rates was filed by New England and went into effect on July 16, 1975.

Because of the Commission's action of July 3, 1975 New England has modified its claim before this Court. It has informed this Court that the Court's review of the correctness of the Commission denial of the petition for 'interim' rate relief is to be confined to consideration of such injury as New England claims to have suffered by being deprived of an increase in revenues during the period from March 11, 1975 to July 16, 1975-the period, now entirely in the past, between the denial of New England's petition for 'interim' rate relief and the July 16, 1975 effective date of the changed rates which would provide New England a $9,500,000 increase in its revenues.

On August 13, 1975 the Commission moved this Court to dismiss the proceedings in this Court on the ground that the relief sought by New England is beyond the power of this Court to grant under either a 'Section 303 appeal' or a 'Section 305 complaint.'

The issue precipitated by the Commission's motion to dismiss may be more sharply delineated as follows. New England, in essence, maintains that the Commission's denial of its petition for 'interim' rate relief left New England in the position of being required to charge during the period from March 11, 1975 to July 16, 1975 rates shown by New England to be unjust and unreasonable because confiscatory. Thus, says New England, this Court should now provide New England with a remedy for the loss of the increased revenues which New England claims it has shown were its constitutional entitlement during the entirely past period March 11 to July 16, 1975. The remedy New England seeks-as consistent with the prospectivity with which changes of rates are to be made effective-is that this Court order a rate surcharge to be paid by those who will be purchasing New England's services after this Court's order becomes effective and to continue operative until New England has received the amount claimed as its constitutional due for said past period.

The Commission's position is that under Maine's statutory scheme of rate regulation this Court, insofar as it has been authorized to review actions of the Commission relative to rates, lacks power to order remedial relief, i. e., relief as to a situation entirely in the past-whether by 'surcharge' on future ratepayers or otherwise-to compensate a utility for revenue losses alleged to have been unlawfully caused the utility during a period which, at the time of this Court's judicial review, is no longer continuing but has entirely terminated.

The issue thus presented requires us to examine the development of Maine's

statutory scheme of rate regulation. II. The Development of

Maine's Present System of Utility Rate Regulation

Maine's utility rate regulatory structure originated in 1913 when the Legislature created the Public Utilities Commission and gave it power to oversee the actions of 'public utilities', as defined, restraining them within the bounds of 'justness and reasonableness.'

Prior to 1913, enterprises which the 1913 statute transformed into 'public utilities' had been private businesses free to determine for themselves the type and quality of service they would provide and the rates they would charge. Consumers would accept services on the seller's terms or do without them.

The essence of the regulatory approach undertaken in 1913 was that the State's police power was exercised to impose regulatory mechanisms to ensure that a utility's facilities would be 'safe, reasonable and adequate' and its rates, tolls and charges 'just and reasonable.' For these purposes, the Public Utilities Commission was established as the regulatory agency empowered to inspect the records of 'public utilities', dictate the manner in which those records were to be kept and require the filing of certain documents with the Commission-including schedules

'showing all rates, tolls, and charges established and . . . in force at the time . . ..'

These schedules would be available for public inspection, and no changes of rates could become effective until expiration of a period of notice to the Commission.

It was a most important feature of the 1913 regulatory scheme that the utilities themselves set their originally effective rates. The Commission's power was to react in response to the effective rates as thus originally set by the utility, should it be necessary to impose changes in the interests of 'justness and reasonableness.' Thus, in 1913 the enterprises then in existence and which the 1913 Legislature transformed into 'public utilities' filed with the Commission schedules of rates they themselves had established. P.L.1913, Chapter 129, Section 19. The 1913 statute mandated that such originally effective rates not exceed those charged by the utility on January 1, 1913. ³

In addition to delineating the methodology by which a utility originally established its rates, the regulatory scheme was concerned with the mechanism for the changing, from time to time, of the...