Case Title: TRI COUNTY TELEPHONE v. WYOMING PUBLIC SERVICE COMMISSION

Citation: 

Docket Number: 99-248

State: wyoming

Court: Wyoming Supreme Court

Date: 2000-10-05T00:00:00Z

Document:
TRI COUNTY TELEPHONE v. WYOMING PUBLIC SERVICE COMMISSION2000 WY 18711 P.3d 938Case Number: 99-248Decided: 10/05/2000Supreme Court of Wyoming
 
TRI COUNTY TELEPHONE 
ASSOCIATION, INC., and TCT WEST, INC., Appellants (Petitioners),v. THE WYOMING 
PUBLIC SERVICE COMMISSION; STEVE ELLENBECKER, KRISTIN H. LEE, and STEVE FURTNEY, 
in their official capacities as Commissioners of the Wyoming Public Service 
Commission, Appellees (Respondents), and McLEODUSA; and AT&T COMMUNICATIONS 
OF THE MOUNTAIN STATES, INC., Appellees (Intervenors).

W.R.A.P. 12.09(b) 
Certification from the District Court of Big Horn 
County:

The Honorable Hunter 
Patrick, Judge

Representing 
Appellants: Chris Edwards of 
Simpson, Kepler & Edwards, L.C., Cody, WY. Argument by Mr. 
Edwards.Representing Appellees: Gay Woodhouse, Attorney General; 
Michael L. Hubbard, Deputy Attorney General; and Harry D. Ivey, Assistant 
Attorney General. Argument by Mr. Ivey.Representing 
Appellees/Intervenors: Elizabeth Zerga of Herschler, Freudenthal, Salzburg, 
Bonds & Zerga, Cheyenne, WY for McLeod USA; and Alan B. Minier of 
Rothgerber, Johnson & Lyons, L.L.P., Cheyenne, WY for AT&T 
Communications of the Mountain States, Inc. Argument by Mr. 
Minier.

Before 
LEHMAN, C.J., and THOMAS, GOLDEN, and HILL, JJ., and STEBNER, 
D.J.

LEHMAN, Chief 
Justice.

[¶1] Tri County 
Telephone Association, Inc. and TCT West, Inc. (collectively appellants) appeal 
an order of the Wyoming Public Service Commission (Commission). Because the 
Commission's order correctly applied the appropriate statutes and was in all 
respects in accordance with law, we affirm.

ISSUES

[¶2] Tri County 
presents this statement of the issues:

[¶3] Although 
their Petition for Review raises additional issues, Petitioners submit that the 
issue presented by the Petition for Review is limited to:

1. Was the decision of 
the Wyoming Public Service Commission contrary to law?

[¶4] The 
Commission's brief includes this statement of the issue:

[¶5] Whether the 
Wyoming Public Service Commission's decision was in accordance with law when it 
determined the Tri County companies may not unilaterally set their own rates for 
noncompetitive services, notify the PSC of those rates, and determine the amount 
they will be subsidized by the Universal Service Fund?

[¶6] Intervenors 
elected not to present a statement of the issues in their 
brief.

FACTS

[¶7] Appellants 
are telecommunications companies providing local exchange services to several 
Wyoming communities. Appellants applied to the Commission for a rate increase 
sufficient to recoup their total service long run incremental costs (TSLRIC), 
and also sought payments from the Universal Service Fund (USF)1 to the extent that individual 
customers' rates exceeded 130% of the statewide weighted average rate. On April 
29, 1998, the Commission issued an order denying the changes sought, instead 
agreeing on rates proposed by the intervening Consumer Advocate Staff 
(CAS).

[¶8] Eschewing 
traditional avenues for challenging the order, on November 25, 1998, each 
appellant filed, with the Commission, a Notice of Tariff Filing and Application 
for USF Funds. Those filings, and the accompanying price sheets, indicated the 
appellants' intent to begin charging a variety of rates, some as high as $527.29 
per month for basic residential telephone service. Appellants also requested 
that "the Commission immediately order the Administrator of the Universal 
Service Fund to recalculate the amount of universal service support available to 
the company from the Wyoming Universal Service Fund to ensure that such funds 
are available at the time the tariffs are effective." If those rates became 
effective, appellants' payments from the USF would increase by $480,000 per 
year.

[¶9] The CAS 
again received permission to intervene, as did AT&T and McLeodUSA. On March 
9, 1999, the Commission issued its Order Removing Unlawful Price Sheets from 
Commission Records and Dismissing Associated Cases. Appellants petitioned for a 
rehearing, which the Commission denied. Appellants next filed a petition for 
review in the district court, along with a motion for a stay of the Commission's 
order. The district court granted a stay and has continued it until the appeal 
is decided. Both the Commission and AT&T moved for certification of the 
appeal to this court, which the district court granted on August 23, 
1999.

STANDARD OF 
REVIEW

[¶10] We review 
appeals certified to this court pursuant to W.R.A.P. 12.09 with the same 
standard of review applicable in the district court. US West Communications, 
Inc. v. Public Service Comm'n, 989 P.2d 616, 618 (Wyo. 1999). That standard is 
found in Wyo. Stat. Ann. § 16-3-114(c) (Lexis 1999), which provides the 
reviewing court shall:

(ii) Hold unlawful and 
set aside agency action, findings and conclusions found to 
be:

(A) Arbitrary, 
capricious, an abuse of discretion or otherwise not in accordance with 
law;

. . 
.

(C) In excess of 
statutory jurisdiction, authority or limitations or lacking statutory 
right;

(D) Without observance of 
procedure required by law; or

(E) Unsupported by 
substantial evidence in a case reviewed on the record of an agency hearing 
provided by statute.

[¶11] Speaking 
specifically of the PSC, we have said:

[¶12] The PSC, 
in exercising its statutory powers to regulate and supervise public utilities . 
. . is required to give paramount consideration to the public interest, the 
desires of the utility being secondary. This court cannot usurp the legislative 
function delegated to the PSC in setting appropriate rates, but will defer to 
the agency discretion so long as the results are fair, reasonable, uniform and 
not unduly discriminatory.

[¶13] Mountain 
Fuel Supply Co. v. Public Service Comm'n, 662 P.2d 878, 883 (Wyo. 1983) 
(citations omitted). In recognition of the limited nature of our review, we 
said, "[t]he judicial function is exhausted when we can find from the evidence a 
rational view for the conclusions of the PSC." Telstar Communications, Inc. v. 
Rule Radiophone Serv., Inc., 621 P.2d 241, 246 (Wyo. 
1980).

DISCUSSION

[¶14] The 
Wyoming Telecommunications Act, which is codified at Wyo. Stat. Ann. §§ 
37-15-101 through -501 (Lexis 1999), was enacted in 1995 to "provide a 
transition from rate of return regulation of a monopolistic telecommunications 
industry to competitive markets and to maintain affordable essential 
telecommunications services through the transition period . . . ." Wyo. Stat. 
Ann. § 37-15-102 (Lexis 1999). The Act divides telecommunications services into 
two broad categories: competitive and noncompetitive. The services at issue here 
are classified as noncompetitive. The Commission's authority to regulate the 
prices of noncompetitive services comes from Wyo. Stat. Ann. § 37-15-203 (Lexis 
1999).2 US West Communications, Inc. v. 
Public Service Comm'n (US West I), 958 P.2d 371, 375 (Wyo. 
1998).

[¶15] We have 
determined, however, that the Commission's rate-making powers over 
non-competitive services are not unlimited. US West I, 958 P.2d  at 374-75. The 
prescribed course is that the local exchange company will file price schedules 
for its noncompetitive services with the Commission, pursuant to Wyo. Stat. Ann. 
§ 37-15-204(a) (Lexis 1999).3 Id. at 374. If the Commission finds 
the proposed rates unreasonable, it has the authority to set them aside pursuant 
to Wyo. Stat. Ann. § 37-15-405 (Lexis 1999).4 Id. We explained the Commission's 
function again, saying that the Wyoming Telecommunications Act "expressly 
limit[s] the [Commission's] rate setting powers to approval, modification, or 
rejection of a plan submitted by a company or the approval of a price index." US 
West Communications, Inc. v. Public Service Comm'n (US West II), 958 P.2d 376, 
382 (Wyo. 1998).

[¶16] The 
gravamen of appellants' argument is that § 37-15-204(a) allows them to set rates 
unilaterally for noncompetitive services and make those rates effective by 
filing them with the Commission. They further contend that, having increased 
their rates, they are entitled to receive additional payments from the USF on 
demand. The Commission responds that § 37-15-204(a) is merely a procedural 
provision for implementing rates it has already approved pursuant to the 
application procedure outlined in § 37-15-203(b). The Intervenors also argue 
that appellants' view of the USF would allow service providers to continually 
raise their rates, thus requiring ever-increasing payments from the USF in an 
unchecked, unlimited, and, ultimately, ruinous cycle.

[¶17] The 
resolution of this case lies in determining when a local exchange company must 
comply with the application procedure of § 37-15-203(b). Subsection (a) of that 
section unambiguously states, "[p]rices for telecommunications services which 
have not been determined by the legislature or the commission to be competitive 
shall be regulated by the commission in accordance with this section." That 
plain language appears to put appellants' local exchange services squarely 
within the Commission's regulatory authority. The parties disagree, however, 
over whether subsection (b) applies here. Appellants contend that it applies 
only to applications for "incentives and innovative or nontraditional price 
regulation, including price indexing," and further contend that their proposed 
rates do not fit within that category. The Commission argues that all rates for 
noncompetitive services must be submitted through the subsection (b) application 
procedure.

[¶18] Appellants 
rely on US West I, where we said:

The statutory language in 
the Telecommunications Act is clear and unambiguous. The PSC fails to 
acknowledge that the Telecommunications Act limits the PSC's powers to: (1) 
setting aside an unreasonable rate which has been filed, or [(2)] approving, 
modifying, or [] rejecting a local exchange company's application for incentives 
or nontraditional price regulation.

[¶19] The PSC 
may not sidestep the legislature's clear limitation of its powers, no matter how 
pristine its motives may be. Moreover, the legislature appears to have 
anticipated the resistance to the abrogation of the PSC's prior rate-making 
powers in Wyo. Stat. § 37-15-408. This statute specifically lists the PSC's 
statutory powers which carry over from the Public Utilities Act to the 
Telecommunications Act. Notably, not one of the statutes which formerly granted 
rate-making powers to the PSC is included in the Telecommunications Act. The 
legislature's detailed omission of these statutory provisions serves to remove 
any doubt as to the very limited rate-making powers which remain with the 
PSC.

[¶20] US West I, 
at 375. The facts here, however, are distinguishable from those in US West I. In 
that case, US West had not sought a change in its rates; rather, customers 
initiated a petition for changes. When US West responded to the Commission's 
request for information, the Commission, of its own volition, elected to treat 
the proceedings as an application for innovative price regulation. US West I, at 
376.

[¶21] The 
difference between the cases, essentially, is the difference between rate making 
and rate regulation. As we said in US West II:

[¶22] The 
statutory language in Wyo. Stat. § 37-15-203 is clear and unambiguous. The PSC's 
contention that it continues to have the authority to set rates for 
non-competitive telecommunications services fails to acknowledge that the new 
provisions expressly limit the PSC's rate setting powers to approval, 
modification, or rejection of a plan submitted by a company or the approval of a 
price index. Moreover, the company's ability to reject the PSC's order if its 
plan is materially altered, or to elect to be regulated by price index, is 
clearly inapposite to the proposition that the PSC may set a price for services 
over the objection of the company.

[¶23] US West 
II, at 382 (emphasis in original). That language clearly shows that while the 
Commission may not "set a price for services over the objection of the company," 
it still has regulatory authority over noncompetitive telecommunications 
services. Furthermore, a conclusion that the Commission has authority to 
regulate the prices of noncompetitive telecommunications services is necessary 
to give effect to § 37-15-203(a), which mandates that the Commission "shall" 
regulate such services. As the Commission points out, such a view is in keeping 
with its position that § 37-15-203 requires substantive regulation, while § 
37-15-204 sets forth the procedural requirements for implementing prices 
approved by the Commission. We agree.

[¶24] The 
Commission's authority to regulate appellants' noncompetitive telecommunications 
services is further evidenced by the conduct of appellants themselves. Before 
attempting to change their prices unilaterally, appellants submitted an 
application for a rate increase to the Commission. Only after the Commission 
approved a smaller increase than they asked for did appellants decide they were 
not subject to the application process at all.

[¶25] The 
Commission's order is affirmed.

FOOTNOTES

1 The 
Universal Service Fund is authorized and governed by Wyo. Stat. Ann. § 
37-15-501(Lexis 1999), which reads:

(a) 
There is hereby established the universal service fund within the special 
revenue fund to be administered in accordance with this section. The fund shall 
be administered by the commission. All telecommunications companies shall 
contribute to the universal service fund. The dates for contributions to the 
fund and disbursements from the fund shall be set by the commission, after 
notice and opportunity for hearing, as necessary to accomplish the objectives of 
the fund as specified in subsections (c) and (d) of this section. The costs of 
administering the fund may be included in determining required 
contributions.

(b) 
The commission shall after notice and opportunity for hearing, designate the 
method by which the contributions shall be calculated, collected and distributed 
in order to achieve the goals set forth in W.S. 37-15-102. The commission shall 
authorize an additional monthly charge to customers, in the amount specified by 
the commission, to recover each contributor's required payment to the universal 
service fund.

(c) 
The commission shall administer the monies in the universal service fund to 
assist only those customers of telecommunications companies located in areas of 
this state with relatively high rates for essential services. The commission, 
after notice and opportunity for hearing, shall determine a reasonable amount 
and a fair method of distributing monies. The commission may authorize a credit 
to customer bills, in the amount specified by the commission, to reflect 
distributions received by the local exchange company from the universal service 
fund. The commission shall ensure that the method shall promote the emergence of 
competition in providing local exchange service.

(d) 
In accordance with the method of distribution determined by the commission, a 
telecommunications company shall receive funds under this section to the extent 
that its local exchange rates, after consideration of any contributions from the 
federal universal service fund, exceed one hundred thirty percent (130%) of the 
weighted statewide average local exchange rates.

(e) 
The operation of the universal service fund may be suspended by the commission, 
based upon a public interest finding, after notice and an opportunity for a 
hearing, that the fund is not then serving its intended 
purpose.

(f) 
The commission's decisions under this section shall be subject to the provisions 
of the Wyoming Administrative Procedure Act.

2 Wyo. Stat. 
Ann. § 37-15-203 reads:

(a) 
Prices for telecommunications services which have not been determined by the 
legislature or the commission to be competitive shall be regulated by the 
commission in accordance with this section.

(b) 
The prices of any local exchange company may contain provisions for incentives 
for improvement of the company's performance or efficiency, lowering of 
operating costs, control of expenses or improvement and upgrading or 
modernization of its services or facilities. Any local exchange company may 
apply to the commission for incentives and innovative or non-traditional price 
regulation, including price indexing. The commission shall issue a final order 
approving, modifying or rejecting any application made under this subsection 
within one hundred eighty (180) days of the filing date of the application with 
the commission. If no order is issued by the commission within the one hundred 
eighty (180) day period, the application shall be deemed approved as filed. If 
during consideration of an application for regulation under this subsection, the 
commission materially alters the plan as filed in the application, the applying 
local exchange company may notify the commission in writing, at any time, but 
not later than sixty (60) days after any final commission order on the 
application, that it elects not to be price regulated as approved by the order. 
The local exchange company's prices shall then be regulated as they were prior 
to the application until such time as a new application is filed, approved and 
accepted.

(c) 
During the transition to total service long-run incremental costs pursuant to 
W.S. 37-15-402, noncompetitive services prices shall be established in public 
hearing in accordance with the Wyoming Administrative Procedure Act and other 
applicable provisions of this chapter.

(d) 
Any holder of a certificate of public convenience and necessity to provide local 
exchange service may elect to be regulated by a price index approved by the 
commission. The price index shall only apply to noncompetitive services offered 
by the exchange company. The commission may approve indexes which provide 
additional flexibility for nonessential tele-communications services and 
nonaccess services.

3 Wyo. Stat. 
Ann. § 37-15-204(a) reads:

A 
local exchange company shall file with the commission, in such form and detail 
as the commission may require, schedules showing all competitive and 
noncompetitive telecommunications services terms, conditions and prices, 
including prices set by contract, currently in effect and charged 
to customers by the company in this state. All prices for new noncompetitive 
telecommunications services, and any change in prices for noncompetitive 
telecommunications services, shall be filed thirty (30) days prior to the 
proposed effective date unless a shorter filing period is authorized by the 
commission. No price increase for a noncompetitive service shall be effective 
unless the customer has been given notice by the provider at least one (1) full 
billing cycle prior to the proposed increase. All price changes for competitive 
services shall be effective as provided for in the company's price schedule. No 
price or price change is effective until filed in accordance with this section. 
Prices charged for competitive services shall be in accordance with its price 
schedule unless a separate contract is negotiated. For purposes of this 
subsection, the rules, regulations, policies, practices and other requirements 
relating to services shall be filed with the commission in such form and detail 
as the commission may require. Rules, regulations, policies, practices and other 
requirements relating to competitive services shall be subject to the same 
requirements under this chapter as the prices of competitive services. Those 
relating to noncompetitive services shall be subject to the same requirements 
under this chapter as the prices of noncompetitive 
services.

4 Wyo. Stat. 
Ann. § 37-15-405 reads:

Any 
person, and the commission on its own motion, may complain to the commission 
concerning the reasonableness of the price of any non-competitive 
telecommunications service. Any notice and hearing of any complaint shall be in 
accordance with the Wyoming Administrative Procedure Act and this chapter. The 
commission shall only set aside any price it finds after notice and hearing to 
be unreasonable or unreasonably discriminatory. If the commission sets aside a 
price as unreasonable or unreasonably discriminatory, the telecommunications 
company shall have sixty (60) days to file a new price which is reasonable. The 
company shall refund any charges found to be unreasonable as ordered by the 
commission. Any price set in compliance with the provisions of W.S. 37-15-402 is 
presumed to be fair and reasonable, subject to rebuttal by the commission or any 
party to the hearing.