Tariff Filing of New England Tel. & Tel. Co., In re

• Decision Date: 28 December 1984
• Docket Number: No. 84-517,84-517
• Court: Vermont Supreme Court
• Parties: In re TARIFF FILING OF NEW ENGLAND TELEPHONE & TELEGRAPH CO.

Page 746

488 A.2d 746

145 Vt. 309

In re TARIFF FILING OF NEW ENGLAND TELEPHONE & TELEGRAPH CO.

No. 84-517.

Supreme Court of Vermont.

Dec. 28, 1984.

Reargument Denied Feb. 6, 1985.

Christopher M. Bennett, Boston, Mass., for plaintiff-appellee.

Gerald R. Tarrant, Montpelier, for defendant-appellant.

Before ALLEN, C.J., and HILL, UNDERWOOD, PECK and GIBSON, JJ.

GIBSON, Justice.

The Department of Public Service (Department) has filed a motion for stay of a Public Service Board (Board) order, issued September 21, 1984, granting a $3,253,000 rate increase to New England Telephone and Telegraph Company (NET). The increase, "based entirely upon changes in depreciation rates and policies," was not to go into effect, however, until NET had received authorization from the staff of the Federal Communications Commission (FCC) to begin booking its newly proposed depreciation rates. On October 12, 1984, the staff of the FCC gave NET permission to begin booking its proposed depreciation rates "on an interim basis" pending a ruling by the FCC, expected sometime in January 1985. Although the rate increase was characterized by the Board as a "temporary increase," full hearings were held, and the parties agree that the order was a final order on the merits.

While this case was pending, a general rate case, not limited to the issue of depreciation, was being heard by the Board. On October 5, 1984, the Board issued its order granting NET a $7,500,000 rate increase therein. The $7,500,000 increase was put into effect, together with the $3,253,000 increase, on October 14, 1984. The Department's request for a stay of the $3,253,000 increase was denied by the Board on October 29, 1984.

This Court's authority to stay an order of the PSB derives from 30 V.S.A. § 14, which authorizes the Court to suspend the execution of an order "as justice and equity require." In considering whether to take action under this authority, the Court has, in the past, looked at certain guidelines, characterized as "helpful generalizations," as follows: (1) the likelihood of success of the appealing party on the merits, (2) whether the party seeking the stay will suffer irreparable injury if the stay is not granted, (3) whether the issuance of a stay will substantially harm other parties, and (4) the location of the best interests of the public. In re Allied Power & Light Co., 132 Vt. 554, 556, 326 A.2d 160, 162 (1974).

The Department contends that it is likely to succeed on the merits of the appeal because (1) the Board's order, by focusing entirely upon changes in depreciation rates and policies, constitutes selective updating, a forbidden rate-making procedure, In re Central Vermont Public Service Corp., 144 Vt. 46, 59, 473 A.2d 1155, 1162 (1984); (2) the order constitutes retroactive ratemaking by forcing present and future customers to pay for past under-accruals, see id. at 56-57, 473 A.2d at 1160-61; and (3) the rate increase was not based on a known and measurable change but rather on a contingency, consisting, first, of approval of the depreciation rates by the FCC staff, and secondly, of final approval by the FCC. See In re Village of Stowe Electric Department, 134 Vt. 559, 565, 367 A.2d 1056, 1060 (1976).

As has been stated by former Chief Justice Barney, "[t]he function of the Supreme Court, or a Justice of it, in passing upon a motion for a stay, is not to second-guess the Board, but to act in opposition only when the action of the Board cannot be supported...." Allied Power, supra, 132 Vt. at 555, 326 A.2d at 161. When considering the likelihood of success on the merits, the Court must be careful not to allow the argument on the interlocutory issue to be expanded into a full-blown debate on all issues likely to be raised on appeal and, as a general rule, should limit itself to granting a stay on this ground "only when the basis for the ruling in favor or against the stay below is so tenuous that its invalidity is suggested on the face of the matter, or the order smacks of bad faith or frivolousness." Id. at 556, 326 A.2d at 162.

The proceeding below concerned itself solely with the depreciation rates and policies of NET, with the full impact of the authorized changes being passed on to the ratepayers. It is the duty of the Board to set rates that are just and reasonable, In re Central Vermont Public Service Corp., 143 Vt. 120, 121-22, 463 A.2d 525, 525-26 (1983); 30 V.S.A. §§ 218, 225-227 (Supp.1984); however, nowhere in its findings or in its discussion of the issues does the Board make any determination as to whether the rate increase authorized herein is just and reasonable. In support of the Board's action, NET points to the general rate case that was under consideration concurrently with the instant proceeding, and argues that the general rate case gave the Board and the parties a full opportunity to address all of the rate-making factors which might be affected by any depreciation changes. However, that case is also on appeal before this Court, and whatever the ultimate outcome therein, there has been no determination that the rates in the instant proceeding are just and reasonable.

This Court on two recent occasions has held that establishing utility rates by selectively updating one cost factor alone without assessing other cost or revenue factors is an improper or forbidden procedure. In re Central Vermont Public Service Corp., su...