State ex rel. GTE North, Inc. v. Missouri Public Service Com'n

• Decision Date: 26 May 1992
• Docket Number: No. WD,WD
• Citation: 835 S.W.2d 356
• Court: Missouri Court of Appeals
• Parties: Util. L. Rep. P 26,216 STATE of Missouri, ex rel. GTE NORTH, INC. and MCI Telecommunications, Corp., Respondents, and AT & T, Intervenor-Respondent, v. MISSOURI PUBLIC SERVICE COMMISSION, and Southwestern Bell Telephone Co., Appellants, and Office of Public Counsel, Intervenor-Appellant. 44143.

Page 356

835 S.W.2d 356

Util. L. Rep. P 26,216

STATE of Missouri, ex rel. GTE NORTH, INC. and MCI Telecommunications, Corp., Respondents and AT & T, Intervenor-Respondent, v.MISSOURI PUBLIC SERVICE COMMISSION, and Southwestern Bell Telephone Co., Appellants and Office of Public Counsel, Intervenor-Appellant.

No. WD 44143.

Missouri Court of Appeals Western District.

May 26, 1992.

Motion for Rehearing or Transfer Denied

July 28, 1992.

Application to Transfer Denied Sept. 22, 1992.

Steven Dottheim and Penny G. Baker, Deputy Gen. Counsels, Jefferson City, for appellantMissouri Public Service Com'n.

Katherine C. Swaller, Alfred G. Richter, Jr., Paula J. Fulks, & Joseph F. Jedlicka, III, St. Louis, for appellantSouthwestern Bell Telephone Co.

Janet L. Sievert, Asst. Public Counsel, Jefferson City, for intervenor-appellantOffice of Public Counsel.

Dale E. Sporleder, GTE North, Inc., Westfield, Ind. and W.R. England, III, Brydon, Swearengen & England, P.C., Jefferson City, for respondentGTE North Inc.

Leland B. Curtis and Carl J. Lumley, Curtis, Oetting, Heinz, Garrett & Soule, P.C., St. Louis and Edward J. Cadieux, Sr. Atty., MCI Telecommunications Corp., St. Louis, for respondentMCI Telecommunications Corp.

Before KENNEDY, P.J., and FENNER and BRECKENRIDGE, JJ.

BRECKENRIDGE, Judge.

The Missouri Public Service Commission(Commission) appeals from an order of the circuit court reversing and remanding portions of the Commission's Report and Order issued in tariff proceedings concerning GTE North Incorporated(GTE North).A brief description of the principals and their relation to the issues in this litigation follows in order to facilitate an understanding of this appeal.

The Commission is a regulatory body, created and established by the Missouri legislature to regulate public utilities, including telecommunications companies pursuant to Chapter 386 and Chapter 392 of the Missouri Revised Statutes.The Commission, on appeal, challenges the judgments of the circuit court, claiming that: (1) the Commission did not err in accepting Staff determinations of test year revenues while rejecting GTE North's proposed Separation Factors; ¹(2) the Commission did not err in adopting a rate design wherein originating and terminating intrastate interLATA carrier common line charges (CCLCs) are greater than originating and terminating intrastate intraLATA CCLCs as such does not constitute discriminatory charges; ²(3) the Commission did not err in not changing rates as requested by GTE North where there was no substantial and competent evidence produced to justify reductions in billing and collection charges; (4)the circuit court's judgments of October 24, 1990 and October 26, 1990 go beyond reversing and remanding to the Commission for further action and instead unlawfully set rates and charges; and (5)the circuit court lacks jurisdiction to enforce a remanded judgment and the Commission lacks jurisdiction to approve a tariff filing effectuating the circuit court's judgment once the Commission files an appeal to this court.

The Office of Public Counsel(OPC) intervened in the circuit court proceedings.The OPC, in support of the Commission's decision, points out that: (1) the difference in interLATA and intraLATA CCLCs is deeply rooted in telephone history; (2) the Commission's order wherein originating and terminating interLATA CCLCs are greater than originating and terminating intraLATA CCLCs does not constitute unlawful discrimination; and (3) once a notice of appeal is filed in the Missouri Court of Appeals, jurisdiction lies with the appellate court, preventing execution of the circuit court judgment.

Southwestern Bell Telephone Company was also allowed to intervene in the circuit court proceedings.Southwestern Bell supports the position of the Commission as to the authorization of different rates for interLATA and intraLATA services.

GTE North, a Wisconsin corporation authorized to do business in Missouri, provides local exchange and other telecommunications services in its service area in Missouri, including intrastate switched access service.³GTE North is subject to the jurisdiction of the Commission.GTE North is a respondent in the instant case, supporting the decision of the circuit court.

Aligned with GTE North, MCI Telecommunications Company(MCI) intervened in the original Commission proceedings.MCI is an interexchange telecommunications company (IXC) authorized to provide intrastate interexchange telecommunications in Missouri.In that capacity, MCI is a customer of GTE North's intrastate switched access service.AT & T Communications of the Southwest, Inc., (AT & T) is also aligned with GTE North as an interexchange telecommunications company that purchases intrastate switched access service from GTE North.

PROCEDURAL HISTORY

On March 23, 1989, GTE North filed proposed tariffs with the Commission which would have increased its annual revenues by a combination of increases and decreases in charges for various services.The net request was for an $8,355,000.00 increase in annual gross revenues.This case was docketed as TR-89-182.This case was eventually consolidated with No. TR-89-238andNo. TC-90-75.One of these cases, TC-90-75, involved a complaint by the Commission Staff against GTE North, initiated in the belief that GTE North was, in fact, overearning by approximately $1.3 million to $2.1 million.The Staff requested a decrease in GTE North's rate base.

On February 9, 1990, the Commission issued its Report and Order in TR-89-182.In that report, among other things, the Commission rejected the use of GTE North's proposed Separation Factors.Separation is the process by which a telephone public utility's investment, expenses, and revenues are allocated between interstate and intrastate operations.GTE North's proposed Separation Factors were based on 1988 data adjusted for Federal-State mandated changes effective January 1, 1989.The Commission decided instead to use Separation Factors based on 1988 data without these requested adjustments.

One of the proposals of GTE North was a decrease in billing and collection charges of $320,181.00 for interLATA toll calls and $39,936.00 for intraLATA toll calls to be collected under its contract with AT & T.The Commission rejected GTE North's proposed reduction, on the finding that there was insufficient evidence in the record for the adoption of the proposal.

The Commission also rejected GTE North's proposal to bring parity between interLATA and intraLATA CCLCs for both originating and terminating traffic.The Commission found that the proposed shift "results in too high a price for the GTE North customers to pay to achieve a minimum benefit for long-distance customers."

On March 12, 1990, GTE North filed a petition in the circuit court for a writ of review.MCI, an intervenor in the Commission proceedings, also filed for a writ of review on March 22, 1990.GTE North sought judicial review of the Commission Report and Order, challenging the Commission's determination as to Separation Factors and billing and collection charges.MCI sought review on the interLATA/intraLATA issue.These cases were consolidated for review in the circuit court and in this appeal.

The circuit court found error in the Commission's acceptance of its Staff's computation of GTE North revenues and its rejection of GTE North's proposed level of investment and expenses based upon Separation Factors one day after the test year.The court below found that the Commission's failure to follow or explain why it was not following Re Staff of Missouri Pub. Serv. Comm'n v. Southwestern Bell Tel. Co., 104 P.U.R.4th 381(June 20, 1989), was error.The circuit court further found that the Commission erred in failing to make findings of fact and conclusions of law on the merits of GTE North's proposal to reduce billing and collection charges and found also that that part of the Commission's Report and Order regarding billing and collection charges was "unauthorized by law" and "made upon [an] unlawful procedure."

Finally, the circuit court concluded that the Commission's report was "unlawful and unreasonable because GTE North must charge MCI and other IXCs the same rates for switched access service regardless of whether MCI and other IXCs use that service to provide interLATA toll service or intraLATA toll service, in that GTE North provides exactly the same service under such circumstances."The circuit court found this to be discriminatory pricing prohibited by § 392.200.2, RSMoSupp.1991.

The circuit court remanded to the Commission directing it to "allow GTE North to increase local service rates and charges to recover the cost of service associated with the use of GTE North's proposed Separation Factors."On the issue of billing and collection charges, the circuit court directed the Commission to

... consider the evidence [on GTE North's proposal to reduce its Billing and Collection charges] and any additional evidence the parties may offer.Absent a reasonable basis for not accepting GTE North's proposal, the Commission should approve the reduction in Billing and Collection charges with appropriate increases in the rates and charges for other services equal to the amount of the reduction.

The circuit court, on the interLATA/intraLATA issue stated:

GTE North's access charges for the origination and termination of intraLATA toll traffic, including the lower CCLC, are presumptively reasonable and compensatory.SeeSection386.270 R.S.Mo.To achieve the parity required under Section392.200.2 R.S.Mo., the higher CCLCs currently included in GTE North's access charges for the origination and termination of interLATA toll traffic, which were left in effect by the Report and Order, should be reduced to the level of the lower CCLCs included in GTE North's access charges for intraLATA toll traffic.

The Commission directs this court to the above-quoted passages,...