Pacific Northwest Bell Telephone Co. v. Eachus

• Jurisdiction: Oregon
• Court: Oregon Court of Appeals
• Writing for the Court: RIGGS
• Citation: Pacific Northwest Bell Telephone Co. v. Eachus, 898 P.2d 774, 135 Or.App. 41 (Or. App. 1995)
• Decision Date: 17 October 1995
• Parties: PACIFIC NORTHWEST BELL TELEPHONE COMPANY, dba US West Communications, Inc., Respondent, v. Ron EACHUS, Nancy Ryles and Myron B. Katz, Respondents, Citizens' Utility Board, Appellant. UTILITY REFORM PROJECT, Plaintiff, v. Oregon Public Utility Commission, Defendant. Pacific Northwest Bell Telephone Company, dba US West Communications, Inc., Respondent, v. Ron Eachus, Nancy Ryles and Myron B. Katz, Defendant, Citizens' Utility Board, Intervenor. Utility Reform Project, Appellant, v. Oregon Public Utility Commission, Respondent. 9001-0435; 9002-01260; CA A69043.

Page 774

898 P.2d 774

135 Or.App. 41

PACIFIC NORTHWEST BELL TELEPHONE COMPANY, dba US West

Communications, Inc., Respondent, v. Ron EACHUS, Nancy Ryles and Myron B. Katz, Respondents, Citizens' Utility Board, Appellant.

UTILITY REFORM PROJECT, Plaintiff, v. Oregon Public Utility Commission, Defendant.

Pacific Northwest Bell Telephone Company, dba US West

Communications, Inc., Respondent, v. Ron Eachus, Nancy Ryles and Myron B. Katz, Defendant, Citizens' Utility Board, Intervenor.

Utility Reform Project, Appellant, v. Oregon Public Utility Commission, Respondent.

9001-0435; 9002-01260; CA A69043.

Court of Appeals of Oregon.

Submitted on Remand May 3, 1995.

Decided June 21, 1995.

Petitions for Review Denied Oct. 17, 1995.

Daniel W. Meek, Portland, argued the cause and filed the briefs for Utility Reform Project.

[135 Or.App. 43-A] Rion Bourgeois, Beaverton, argued the cause and filed the briefs for appellant Citizens' Utility Bd.

Charles L. Best, Portland, argued the cause and filed the brief for respondent Pacific Northwest Bell Telephone Co.

Keith L. Kutler, Asst. Atty. Gen., argued the cause, for respondents Oregon Public Utility Com'n, Ron Eachus, Nancy Ryles and Myron B. Katz. On the brief were Theodore R. Kulongoski, Atty. Gen., Virginia L. Linder, Sol. Gen., and Robert M. Atkinson, Asst. Atty. Gen.

Before RIGGS, P.J., and De MUNIZ and LEESON, JJ.

RIGGS, Presiding Judge.

This case is before us on remand from the Oregon Supreme Court. 320 Or. 557, 888 P.2d 562 (1995). It is an appeal from a circuit court judgment that stayed in part and affirmed in part an order of the Public Utility Commission (PUC) in an "own motion" proceeding, ORS 759.515, in which PUC, after a contested case hearing, reduced the rates of Pacific Northwest Bell Telephone Co. (PNB), nka US West Communications, Inc. The appellants are two citizens' advocacy organizations, the Citizens' Utility Board (CUB), and the Utility Reform Project (URP). We review PUC's decision pursuant to ORS 756.594 and may reverse only if the order is unreasonable or unlawful or not supported by substantial evidence.

On July 1, 1988, PNB filed a petition with PUC seeking an alternative regulatory form. PUC opened docket UT 80 to investigate that request. On December 6, 1988, PUC staff reported to the Commission that it had examined PNB's revenues, expenses, rate base and capital structure and that PNB was over-earning by approximately $50 to $60 million and recommended a separate docket to investigate PNB's revenue requirement. In response, PUC opened this "own motion" rate case pursuant to ORS 756.515. ¹ The case was docketed as UT 85.

On January 6, 1989, CUB filed a petition to intervene in UT 85 and a motion seeking an order pursuant to ORS 756.515(4) to require PNB to immediately file interim tariffs reducing its rates. On January 31, 1989, URP filed a complaint and petition to intervene in UT 85. PUC allowed both CUB's and URP's intervention. In Order 89-132, it denied CUB's motion to require PNB to file interim reduced rates. The order states that no purpose would be served by immediately reducing PNB's rates pursuant to ORS 756.515(4), because under ORS 756.515(5) and (6), PNB could obtain an automatic stay of the order simply by appealing it.

In the light of PUC's refusal to require PNB to reduce its rates, CUB asked that PUC declare PNB's existing rates to be interim and subject to refund if PNB was ultimately required to reduce its rates. ² PUC denied that motion in Order 89-491, ruling that it lacked authority to declare existing rates interim and subject to refund.

Hearings were held between June 5 and June 27, 1989. URP made no appearance at the hearings. On December 29, 1989, in Order 89-1807, PUC ordered PNB to reduce its revenues by $24,057,000 annually by reducing its rates effective January 1, 1990. In that order, PUC rejected its own staff recommendations to reduce by an additional $3.8 million per year PNB revenues earmarked for research and development performed by Bell Communications Research, Inc. (Bellcore), a centralized research and development organization funded by the seven regional "Baby Bell" telephone companies. PUC also denied a request by CUB for a refund of the excess revenues collected by PNB during the pendency of the rate case.

Pursuant to ORS 756.580, ³ PNB and URP each filed "suit" in the circuit court of Multnomah County, the county in which PNB's principal office is located, seeking to vacate PUC's order. CUB intervened. PUC filed motions to dismiss both suits for lack of jurisdiction. The court denied those motions, and on April 24, 1990, it issued an order pursuant to ORS 756.590 ⁴ staying PUC Order 89-1807. The effect of the stay was to relieve PNB of the duty of reducing its rates pending the outcome of the litigation. PNB agreed that if PUC ultimately prevailed in the litigation, PNB would be required to refund to its customers all revenues received in excess of the target revenue set in Order 89-1807, from the effective date of the PUC order, January 1, 1990, until the conclusion of any appeals.

On March 7, 1991, the circuit court affirmed PUC's order in all respects. It denied CUB's request to lift the stay of Order 89-1807 pending further appeals.

PNB and URP filed notices of appeal to this court and CUB filed a notice of cross-appeal. After reaching a negotiated settlement with PUC, PNB withdrew its notice of appeal. Pursuant to the settlement, PNB reduced its rates as required by Order 89-1807 and refunded to its ratepayers the excess revenue it had received since January 1, 1990.

On March 30, 1994, we remanded the case to the circuit court with instructions to dismiss the proceeding, on the ground that the Multnomah County Circuit Court did not have subject matter jurisdiction for the appeal of own motion rate cases. Pacific Northwest Bell Telephone Co. v. Eachus, 127 Or.App. 177, 181, 872 P.2d 21 (1994), rev. allowed 320 Or. 109, 881 P.2d 141. The Supreme Court reversed our decision and remanded the case to us for further proceedings. We now review PUC's order.

CUB's contentions all relate to its desire to obtain for ratepayers a refund of rates paid between the date on which PUC opened the own motion proceeding and the date it issued Order 89-1807. CUB contends that PUC erred when it denied CUB's motion to declare as "interim" PNB's rates as of December 6, 1988, and subject to refund from that date, pending the outcome of the rate case. CUB notes that when a telecommunications utility seeks a rate change or increase, PUC has the authority and traditionally grants the utility an interim rate increase subject to refund, pending hearing on the reasonableness of the rate, pursuant to ORS 759.185. As we held in Citizens' Utility Board v. Public Utility Commission, 128 Or.App. 650, 877 P.2d 116, rev. den. 320 Or. 272, 882 P.2d 1114 (1994), that statute applies only in the context of new or increased rates sought by the utility pursuant to ORS 759.180. ⁵ CUB does not argue that ORS 759.185 is directly applicable to this own motion proceeding; it contends, however, by way of analogy, that when PUC brings an own motion proceeding to investigate existing rates, ratepayers are entitled to have the existing rates declared to be interim rates and subject to refund pending the outcome of the own motion proceeding.

ORS 756.515 itself makes no provision for declaring existing rates interim. CUB relies on three general provisions regarding PUC's ratemaking authority: Subsection (4) of ORS 756.515 provides that, after making an investigation on its own motion, PUC may "make such findings and orders as the commission deems justified or required by the results of such investigation." ORS 756.040(1) authorizes PUC to protect ratepayers and the public "from unjust exactions and practices and to obtain for them adequate service at fair and reasonable rates." ORS 756.040(2) vests powers in the commission "to do all things necessary and convenient" in the exercise of its jurisdiction. CUB contends that within those broad grants of authority to oversee ratemaking, the legislature has given to PUC the power to issue an order declaring existing rates to be interim.

We agree that the text of those statutes are broad enough to permit the type of order that CUB seeks. However, other provisions of the public utility statutes show that PUC's authority to declare rates to be interim and subject to refund is circumscribed.

ORS 759.175 to ORS 759.250 establish the process by which a telecommunications utility receives approval of its rate schedule. That process includes the filing of schedules, subject to public inspection, ORS 759.175; the holding of a hearing in which the telecommunications utility must show that its requested rates are "just and reasonable," ORS 759.180; and the suspension of new rates pending hearing, ORS 759.185. ORS 759.205 provides that, once a rate schedule has been approved,

"[n]o telecommunications utility shall charge, demand, collect or receive a greater or lesser compensation for any service performed by it within the state, or for any service in connection therewith, than is specified in printed rate schedules as may at the time be in force, or demand, collect or receive any rate not specified in such schedule. The rates therein are the lawful rates until they are changed as provided in this chapter." (Emphasis supplied.)

Thus, rates that have been approved and are in force may be adjusted only pursuant to the process described in the statutes.

Although PNB was earning more than its authorized rate of return until Order 89-1807 reduced PNB's rates, it was doing so pursuant to rates that had been approved by and filed with PUC and that complied with all previous PUC rate orders. Compare Pacific Northwest Bell Telephone Co. v. Katz, 116 Or.App. 302, 841 P.2d 652, rev. den. 316 Or 527, 854 P.2d 940 (1993) (PUC has authority to order a refund of amounts over-collected under...