United Telephone Co. of Fla. v. Mayo

• Decision Date: 03 March 1977
• Docket Number: No. 49618,49618
• Citation: 345 So.2d 648
• Parties: UNITED TELEPHONE COMPANY of Florida, Petitioner, v. William T. MAYO et al., Respondents.
• Court: Florida Supreme Court

Page 648

345 So.2d 648

UNITED TELEPHONE COMPANY of Florida, Petitioner, v. William T. MAYO et al., Respondents.

No. 49618.

Supreme Court of Florida.

March 3, 1977.

Rehearing Denied May 31, 1977.

David B. Erwin, of Woods, Johnston & Erwin, and W. W. Hill, Jr., Vice President, Rate Counsel, United Telecommunications, Kansas City, Mo., for petitioner.

Prentice P. Pruitt and Jerry M. Johns, Tallahassee, for respondents.

Woodie A. Liles, Public Counsel, and C. Earl Henderson, Associate Public Counsel, Tallahassee, for the Citizens of the State of Florida, intervenor-respondent.

SUNDBERG, Justice.

This proceeding is before us on petition for writ of certiorari to the Florida Public Service Commission. Petitioner seeks review of Order No. 7109 which was issued by the Commission on February 13, 1976. On May 12, 1976, the Commission issued Order No. 7238, which denied a petition for reconsideration. Because an understanding of previous events is critical to our ultimate disposition of this cause, an extensive factual summary is presented below.

Petitioner United is an independent telephone company regulated by the Public Service Commission. Since 1967 it has furnished service to nearly 90,000 additional subscribers in its service region of a thirteen-county area in southwest Florida. During that time, United has operated under the same rate schedules.

Petitioner requested general rate relief from respondent Commission in Docket No. 750316--TP. By its petition dated June 7, 1975, United sought to put into effect increased rates designed to produce some $8.1 million in additional annual gross revenues. The petition was accompanied by several hundred pages of data in support of the application for rate relief. In this data were several adjustments for known and imminent changes that would affect future revenues and expenses. ¹ However, there was no reference to a wage and salary agreement which was due to take effect only one month after United filed its petition with the Commission (July 7, 1975). While the agreement was negotiated after the petition was filed, the agreement provided that wage and salary increases were retroactive to July 7, 1975. Petitioner made no mention of the wage and salary adjustment during four days of public hearings held before the full Commission in September, 1975. Petitioner first offered an exhibit mentioning the requested rate increase at a public hearing held in November. In addition to the public hearings held in September and November, supplementary hearings were held in December, 1975. ²

During the pendency of the instant cause, Southern Bell also had a rate increase request pending. United intervened in the Bell docket in support of Bell's petition for a rate increase. Intervention was permitted because Bell's achieved intrastate rate of return determines the toll rate of return, and therefore determines the toll revenues which will accrue to an independent telephone company like United under separate settlement agreements between Bell and the various independents.

On February 2, 1976, the Commission met in agenda conference in Tallahassee and voted to adopt modified staff adjustments and to fix United's overall rate of return at 9.10%, with a resulting 11.28% Return on equity. Eleven days later the Commission issued Order No. 7109, which granted the petition of United in part and gave consent to the operation of rate schedules designed to generate $3,180,000 in additional gross annual revenues. United served its petition for reconsideration on February 23, 1976. On April 5, 1976, the Commission met in agenda conference in Tallahassee and voted unanimously to deny the petition for reconsideration, issuing Order No. 7238, dated May 12, 1976. Petitioner then filed in this Court its petition for certiorari review of the aforementioned orders of the Commission.

Petitioner asserts, Inter alia, that: (i) the Commission deviated from the essential requirements of law in refusing to give effect to the July 7, 1975, wage and salary adjustment of United; (ii) the Commission deviated from the essential requirements of law in reducing United's revenue requirements for anticipated increases in toll settlement revenues as a result of the rate increase granted to Southern Bell; and (iii) the Commission acted unlawfully by fixing a rate of return for petitioner which was confiscatory, arbitrary, capricious, and not supported by competent, substantial evidence.

With respect to petitioner's first assertion, the Commission contends that United's wage and price adjustment of July 7, 1975, was proposed at such a late stage of the proceedings that it was properly ignored by the Commission in resolving petitioner's application for rate relief. When petitioner's application and supporting data were filed, information concerning the wage agreement was inexplicably omitted. Petitioner did not mention the requested rate increase until November, four months after the wage adjustment took effect. Petitioner offered only a single page, seven-line exhibit substantiating the increase. Even then, the exhibit was not offered until the witness who sponsored it, United's finance expert, was cross-examined.

Respondent's preparation for this cross-examination was understandably complex. Intelligent interrogation of petitioner's witness could only transpire after United's financial records were closely scrutinized. The Commission concedes that proper attention might have been devoted to the wage and price adjustment had it been given ample time to put its analytic machinery in motion. However, the Commission contends that several minutes before the finance witness is to be cross-examined is not the appropriate time to introduce financial data which have been in existence for more than four months and which ostensibly show a need for an additional $467,637 in rate relief. According to the Commission then, the exhibit has no probative value inasmuch as its auditors were precluded from performing their customary investigation of the validity of the proffered information. ³

If this Court were required to determine at what specific chronological point in a proceeding the Commission could refuse to receive additional evidence, our task would be arduous indeed. But our review on certiorari is not broad enough to require this determination. Our duty is only to ascertain whether the Commission's findings are supported by competent and substantial evidence and whether the Commission acted in accordance with the essential requirements of law. See General Telephone Co. v. Carter, 115 So.2d 554 (Fla.1959). In making these determinations, we initially note that United bears the burden of showing that the order with which it takes issue fails to comply with the essential requirements of law. Great Southern Trucking Co. v. Douglas, 147 Fla. 552, 3 So.2d 526 (1941); Atlantic Cost Line R.R. v. Railroad Commission, 5 So.2d 708 (Fla.1942); Miami Bridge Co. v. Railroad Commission 20 So.2d 356 (Fla.1944); Pensacola Transit v. Douglass, 34 So.2d 555 (Fla.1948).

In this case, both petitioner and the Commission present interests to which we are sensitive. From the petitioner's perspective, the wage and salary adjustment unquestionably created additional intrastate expenses which increased its revenue requirements. On the other hand, the Commission was already engrossed in analyzing voluminous and complex data when petitioner sought to admit evidence of the wage and salary adjustments. The addition of a significant variable at that time necessarily would have disrupted the Commission's intricate calculations.

Although we respect the validity of both parties' positions on this issue, we find that petitioner has failed to carry its burden. We find no justification for petitioner's failure to introduce the wage adjustment at a timely stage of the proceedings. Nowhere does United attempt to refute respondents' contention that the delay prevented the Commission from performing its usual audit of the figures contained therein. Nor does United refute the respondents' contention that the Commission was validly exercising its discretion in according the exhibit the treatment it did. Having failed to show that the treatment accorded its wage and salary adjustment deviates from the essential requirements of law, the petitioner cannot prevail as to its first point.

While we must find for the Commission in the case Sub judice because petitioner failed to carry its burden of proof, we nevertheless express a certain uneasiness with the fact that no time limits are specified in the Commission's rules of procedure for admission of evidence. The Commission conceded that the introduction of new material after a hearing has begun is not unequivocally prohibited by its rules. See Order No. 7238. However, none of the Commission's procedural rules specifically address this issue. ⁴ The petitioner is entitled to rely on certain guidelines regarding the admissibility of this sort of evidence. We urge the Public Service Commission to adopt specific and intelligible rules governing this area, for in an appropriate case we will not hesitate to rule in a fashion necessary to protect an applicant from arbitrary or capricious procedure invoked by the Commission.

United next contends that the Commission deviated from the essential requirements of law in reducing United's revenue requirements by $993,000 for anticipated increases in toll settlement revenues. In Order No. 7109, the Commission reduced United's gross revenue

by $993,000 which represents the additional revenues derived from Southern Bell Telephone & Telegraph Co. through the settlement process by virtue of granting that company rate relief in Docket No. 74805--TP(CR) Order No. 7018, dated December 4, 1975.

Specifically, petitioner alleges that the Commission's action was unlawful because it arrived at this figure by taking judicial notice of evidence that was not a stated part of the...