State v. Public Service Com'n

• Decision Date: 07 November 2006
• Docket Number: No. WD 66480.,No. WD 66478.,No. WD 66479.,WD 66478.,WD 66479.,WD 66480.
• Citation: 210 S.W.3d 344
• Parties: STATE ex rel. PUBLIC COUNSEL, Appellant, v. PUBLIC SERVICE COMMISSION, Respondent, and Sprint Missouri, Inc., Respondent/Intervenor.
• Court: Missouri Court of Appeals

210 S.W.3d 344

STATE ex rel. PUBLIC COUNSEL, Appellant, v. PUBLIC SERVICE COMMISSION, Respondent, and Sprint Missouri, Inc., Respondent/Intervenor.

No. WD 66478.

No. WD 66479.

No. WD 66480.

Missouri Court of Appeals, Western District.

November 7, 2006.

Motion for Rehearing and/or Transfer to Supreme Court Denied December 19, 2006.

Application for Transfer Denied January 30, 2007.

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Michael F. Dandino, for appellant.

William K. Haas, Jefferson City, for Public Service Commission.

Paul H. Gardner, Jr., Jefferson City, for Sprint Missouri.

PAUL M. SPINDEN, Judge.

This case concerns the three tariff requests that Sprint Missouri, Inc.,¹ filed with the Public Service Commission. It proposed a "rebalancing" of its tariffs for intrastate access services and for basic local service by increasing basic local service rates for retail residential and business customers and reducing intrastate access service rates for long distance carriers. The Office of Public Counsel intervened in opposition to the proposed rebalancing, but the commission approved the proposal without a hearing. Public counsel appeals. Because the commission's orders were lawful, we affirm the circuit court's judgment.

This is the second time for this matter to come before us. In 2002, public counsel appealed the commission's order to approve Sprint's rebalancing of rates in 2001 without an evidentiary hearing, and this court reversed and remanded the case to the commission because the commission did not make adequate findings of fact concerning the rebalancing. State ex rel. Coffman v. Public Service Commission, 121 S.W.3d 534 (Mo.App.2003). In that case, this court explained the basic telecommunications infrastructure and the procedural history of the case. The same information is relevant to this case, so we repeat it without further citation.

FACTS

Relevant Telecommunications Infrastructure

Before a customer can make a telephone call, a telephone service provider must connect the customer's telephone to the company's central office or to a remote office, which, in turn, connects to the central office. This connection is the local loop. Switching equipment at the central office routes local calls to the called party. Connecting telephones over a local loop via local switching equipment is basic local service. Equipment at the central office also gives customers access to long-distance intrastate networks, which is intrastate access service. A long-distance call traverses long-distance intrastate networks until it arrives at the central office serving the called party, and the office's switching equipment routes the call via the local loop to the called party's telephone.

Section 392.245.9, RSMo 2000, governs the commission's regulation of telecommunications firms that qualify as price cap companies.² The statute requires the commission to investigate, within one year of a company's qualifying for "price cap," the costs of providing basic local service and intrastate access service and to compare those costs with the company's charge for those services. If the commission concludes that the costs of providing basic local service are higher than the price charged for it and that the costs of providing intrastate access service are lower than the price charged for it, the statute requires the commission to permit the company to rebalance its prices by increasing charges for basic local service and decreasing charges for intrastate access service. The statute also authorizes the commission to permit the company to increase charges for basic local service to offset profit lost in reducing intrastate access prices, but the increase cannot exceed $1.50 a month in a given year. A company is eligible for rebalancing only during the first four years of its qualifying for price cap.

The Rebalancing of Rates

Sprint qualified for price cap in 1999, and it rebalanced its rates during 2000. During 2001, it again wanted to rebalance its rates. It informally notified the commission, which arranged for a meeting of the commission's staff with Sprint personnel. During that meeting, Sprint explained cost studies that it had prepared to determine long-term incremental costs of providing basic access and intrastate access services.

On October 25, 2001, Sprint applied for a tariff that rebalanced its rates³ and was to become effective on December 11, 2001. It filed its cost studies in support of its application. Public counsel objected on December 3, 2001, and asked the commission to suspend the proposed rates on the ground that Sprint's cost studies were flawed. It requested a contested hearing on the issue. On December 4, 2001, the commission ordered Sprint to file a verified copy of any cost study that demonstrated that its proposed tariffs complied with Section 392.245.9, and it ordered its staff to file a verified copy of any analysis that demonstrated that the proposed tariff complied with Section 392.245.9. After the filing of these documents, the commission denied the public counsel's request for a hearing and approved Sprint's proposed rebalancing. The commission denied the public counsel's request for rehearing, and public counsel filed a writ of review in the circuit court, which affirmed the commission's actions. Public counsel appealed to this court, and we reversed and remanded the case to the commission on the ground that the commission did not make adequate findings of fact concerning the rebalancing. Coffman, 121 S.W.3d at 542-43.

While the 2001 rebalancing of rates case was moving through the courts, the commission also approved tariffs that rebalanced Sprint's rates for 2002 and 2003. The commission's orders for these tariffs referred to its 2001 rebalancing order and noted that it relied on its 2001 rebalancing order to justify its decision to approve the 2002 and 2003 rebalanced rates. The commission denied the public counsel's motion for rehearing, and public counsel filed petitions for writ of review on the 2002 and 2003 rebalancing orders with the circuit court. Because this court had remanded the 2001 rebalancing order to the commission and because the commission based its 2002 and 2003 rebalancing orders on the 2001 rebalancing order, the circuit court remanded the 2002 and 2003 rebalancing orders to the commission for it to make findings of fact for those orders, too.

Concerning the 2001 rebalancing, public counsel again requested a hearing while the commission was responding to this court's mandate. The commission, although not convinced that a hearing was necessary, directed the parties to file written arguments and testimony. The parties filed their respective arguments, testimony, and affidavits. On December 23, 2004, the commission issued an "Order on Remand" making additional findings of fact and conclusions of law in regard to Sprint's proposed rebalancing of 2001 rates. The commission concluded that a hearing was not required and based its decision on the previous record without relying on evidence submitted after the case was remanded. The commission again concluded that Sprint provided sufficient evidence to justify its proposed rebalancing. Public counsel filed a motion for rehearing, and the commission denied that motion. Public counsel filed a petition for writ of review with the circuit court.

On March 3, 2005, the commission also issued an "Order on Remand" concerning Sprint's proposed rebalancing of 2002 and 2003 rates. The commission again found that its orders were "wholly dependent" on the order that it had issued concerning rebalancing of 2001 rates, so the commission adopted its findings of fact and conclusions of law issued in its order to rebalance 2001 rates. Public counsel filed motions for rehearing in those cases, and the commission denied them. Public counsel filed petitions for writ of review with the circuit court.

The circuit court consolidated the three cases for briefing and argument. On December 9, 2005, the circuit court found that the commission's orders were lawful and reasonable and affirmed the commission's orders allowing Sprint to rebalance its 2001, 2002, and 2003 rates. Public counsel appealed each case to this court, and we consolidated them.

DISCUSSION

Review of Noncontested Cases under Section 386.510.

In the first appeal of this case, this court concluded that the price cap statute, Section 392.245.9, did not expressly require the commission to grant a hearing in response to a tariff request. We reasoned:

All the statute requires is that the [c]ommission conduct an "investigation" of the costs of providing basic local and intrastate access services within one year of a company coming under "price cap" regulation. The statute does not require any additional investigation or hearing when that company seeks rebalancing of its rates. We hold, therefore, that the statutory language does not, itself, require a hearing.

Coffman, 121 S.W.3d at 539. We also found that, because no protected property interest was at stake, the law did not require a hearing. Id. See also State ex rel. Jackson County v. Public Service Commission, 532 S.W.2d 20, 31 (Mo. banc 1975), cert. denied, 429 U.S. 822, 97 S.Ct. 73, 50 L.Ed.2d 84 (1976). Thus, in a "file and suspend" case under Section 392.245.9, the matter is a noncontested case. Coffman, 121 S.W.3d at 539.

We also determined that Section 386.510, RSMo 2000, provides the exclusive procedure for judicial review of all of the commission's orders, including those involving noncontested cases. Id. at 540-41. See also State ex rel. AG Processing, Inc. v. Public Service Commission, 120 S.W.3d 732, 735 (Mo. banc 2003); State ex rel. Atmos Energy Corporation v. Public Service Commission, 103 S.W.3d 753, 758 (Mo. banc 2003). Section 386.510 says:

Within thirty days after the application for a rehearing is denied, or, if the application is granted, then within thirty days after the rendition of the...