Pacific Tel. & Tel. Co., Application of

• Decision Date: 13 July 1951
• Docket Number: No. 7665,7665
• Citation: 71 Idaho 476,233 P.2d 1024
• Parties: Application of PACIFIC TEL. & TEL. CO.
• Court: Idaho Supreme Court

Page 1024

233 P.2d 1024

71 Idaho 476

Application of PACIFIC TEL. & TEL. CO.

No. 7665.

Supreme Court of Idaho.

July 13, 1951.

Maurice H. Greene, Boise, for appellant.

Cox, Ware & Stellmon, Lewiston, McMicken, Rupp & Schweppe, Seattle, Wash., for The Pacific Tel. & Tel. Co.

Robert E. Smylie, Atty. Gen., & J. N. Leggat, Asst. Atty. Gen., for Public Utilities Commission.

KEETON, Justice.

The Pacific Telephone and Telegraph Company, a public utility, engaged in furnishing telephone service for hire in the states of California, Oregon and Washington, and in Nez Perce and Lewis Counties, and a portion of Idaho County, Idaho, hereinafter referred to as the Company, made application dated March 21, 1949, to the Public Utilities Commission of Idaho, hereinafter referred to as the Commission, for permission to increase certain of its rates for telephone service in the Idaho area served by the Company.

The Lewiston, Grangeville, Craigmont, Lapwai, Cottonwood, Kamiah and Kooskia Chambers of Commerce, and the Culdesac Grange, Lewis Valley Grange, and Lewiston Farmers Union appeared and protested the proposed increase.

The Commission held hearings on the matter which were concluded November 10, 1949. Thereafter, on January 14, 1950, the Commission entered its order No. 2024 granting the application. Petition for rehearing and reconsideration was filed by some of the protestants, appellants here. This petition was denied February 1, 1950. Appeal was taken from the original order granting the application and the order denying the petition for rehearing and reconsideration.

In the order appealed from, the Commission accepted the Company's book values in finding that the increase would give a return of 1.69% on the value of the Company's plant in Idaho, which was found to be $1,370,139--this figure being arrived at by finding that the valuation of the property used and useful is the sum of $1,929,093, less depreciation and amortization reserve of $675,121, leaving a value of $1,253,972, plus working capital of $116,167, making a total value, for rate making purposes, of Idaho properties, of $1,370,139.

The schedule of rates approved by the Commission will increase the Company's gross revenue by approximately $115,000 on its intrastate telephone service in Idaho. By increases sought before the Department of Public Utilities of Washington, in the area served by the Idaho exchange, a further sum of $30,000 would be raised in additional annual gross revenue.

The Commission was originally created by a legislative act, 1913 S.L. Chap. 61, p. 247, and the statute has, subsequent to that time, by various legislative acts, been supplemented and amended.

By authority granted, the Commission is given, under prescribed conditions and procedure, authority to investigate, supervise, regulate, fix and establish rates and rate schedules for public utilities, Sec. 61-503 I.C., and enforce nondescriminatory service which shall be just and reasonable. Sec. 61-301, 61-302 and 61-303 I.C.

Telephone service is a public utility within the meaning of the act, Sec. 61-121 and 61-129 I.C.

Orders of the Commission may be reviewed by the Supreme Court as provided for in Sec. 61-629 I.C., hearings in the Supreme Court being limited to a determination of whether the Commission has regularly pursued its authority, including a determination of whether the order appealed from violates any right of the appellants under the Constitution of the United States or the State of Idaho.

The Commission is a fact finding body authorized to investigate and determine, in the first instance, the issues presented by the petition, and when its findings of fact are supported by competent, substantial evidence, such findings are binding on the Supreme Court. Conversely, conclusions made must be sustained by competent evidence. State ex rel. Taylor v. Union Pac. Railroad Co., 60 Idaho 185, 89 P.2d 1005.

Hence, if the raises approved in this proceeding before us and the schedule of charges fixed by the Commission are justifiable, Sec. 61-622 I.C., just and reasonable to the Company and the people served, and permit the Company to maintain adequate, efficient, just and reasonable service, Sec. 61-302 I.C., are nondiscriminatory, and do not establish unreasonable differences as to rates, charges and service between localities, or classes of service, Sec. 61-315 I.C., and if the rates fixed by the Commission are based on competent, substantial evidence to support the findings and conclusions made, Idaho Power & Light Co. v. Blomquist, 26 Idaho 222, 141 P. 1083, the same should be by this Court upheld.

In determining the issue presented, the Commission held extensive hearings and among other things found that the Company operated its Idaho property at a loss from 1940 to 1949, and that losses for 1946 were $70,990, for 1947, $44,840, and 1948, $58,051.

It is the duty of the Commission not only to fix just and reasonable, nondiscriminatory rates, but to see that adequate service is furnished and in fixing such rates to allow the utility furnishing the service to make a just and reasonable profit or return on its investment.

The main elements in fixing reasonable rates for service rendered by public utility are the cost of rendering service on an economical and efficient basis, fair return to the utility on its property used and useful in such service and fairness to consumers. Mountain View Rural Telephone Co. v. Interstate Telephone Co., 55 Idaho 514, 46 P.2d 723; Boise Artesian Water Co. v. Public Utilities Commission, 40 Idaho 690, 236 P. 525.

By the provisions of Sec. 61-640 I.C. the Commission is required, in the determination of schedule of rates and charges, to hold a hearing, and among other things to be determined at such hearing, where rate schedules are involved, is the value of the property used and useful in furnishing the service of such utility.

With this brief analysis of the principle involved here, we will discuss the facts found by the Commission, the evidence on which such findings are based, and the assignments of error presented and argued by the appellants.

The first four assignments of error present the general contention that the schedule of rates approved is discriminatory as between classes of service, between communities and between interstate and intrastate service. These assignments are based on the contention that if the Company proved anything, it proved it was entitled to a percentage increase over former rate schedules, and that the increases, if any, for the securing of additional revenue should apply equally to all classes of service and all localities, and further, that the method used by the Commission to increase the revenues of the Company violated Sec. 61-315 I.C.

The interpretation of Sec. 61-315 I.C. contended for by appellants is supported by no citation of authorities and our individual research has found no case supporting it.

This method (percentage increase) of fixing rate schedule for a public utility would, in many instances, be in itself discriminatory. Rates once established and fixed, regardless of changed conditions, or other factors, would thereafter have to be increased or decreased simply by a mathematical computation which in many instances would in itself result in an inequity, and be impractical in application.

The initiation of a rate schedule in the first instance is an attribute of management, and where such rate schedule so proposed does not violate some provision of the statute, or the Constitution, and is approved by the Commission, before it can be set aside by this Court, it must be shown to be unreasonable, unjust, arbitrary, or not supported by competent evidence.

In the case of United States v. Illinois Central Railroad Co., and Wyoming Railway Co. v. United States, 263 U.S. 515, 44 S.Ct. 189, 192, 68 L.Ed. 417, the Supreme Court of the United States held: 'A carrier is entitled to initiate rates and * * * adopt such policy of rate-making as to it seems wise.' Any rate so made or initiated, or asked for, is of course subject to the approval of the Commission. See City of Norfolk v. Chesapeake & Potomac Telephone Co. of Virginia, 192 Va. 292, 64 S.E.2d 772; Lowden v. Illinois Commerce Commission, 376 Ill. 225, 33 N.E.2d 430; Springfield Gas Light Co., 70 P.U.R. N.S. 82.

In Springfield Gas Light Co., supra, the theory of percentage increase was rejected.

We therefore conclude that Sec. 61-315 I.C. does not require a percentage increase over former schedules in fixing and determining a new rate schedule. We also call attention to the concluding paragraph of said section: 'The commission shall have the power to determine any question of fact arising under this section.'

Appellant next contends that an approval of a schedule of rates requires a valuation of the Company's property used and useful in the service.

The Commission did fix the value. It is the appellant's contention that the method used in so fixing the value of the Company's property conflicted with the method...