Title: MISSISSIPPI PUB. SERV. COM'N v. Miss. Valley Gas Co.

State: mississippi

Issuer: Mississippi Supreme Court

Document:

358 So. 2d 418 (1978) MISSISSIPPI PUBLIC SERVICE COMMISSION, Appellant-Cross Appellee, v. MISSISSIPPI VALLEY GAS COMPANY, Appellee-Cross Appellant, Greenwood Utilities Commission, City of Clarksdale, and Yazoo City Public Service Commission, Appellees. No. 50254. Supreme Court of Mississippi. May 10, 1978. Bennett E. Smith, Asst. Atty. Gen., Jackson, Hall, Callender & Dantin, Maurice Dantin, Columbia, for Miss. Public Service Comm. Overstreet & Kuykendall, John M. Kuykendall, Jr., Carson M. Hughes, Jackson, for Miss. Valley Gas Co. *419 Lott, Sanders & Gwin, Hardy Lott, Greenwood, Sullivan, Smith, Hunt & Vickery, David R. Hunt, Clarksdale, Campbell & Campbell, T.H. Campbell, Jr., Yazoo City, William Thomas Miller, Washington, D.C., for Greenwood Utilities, City of Clarksdale and Yazoo City Public Service Comm. Before ROBERTSON, LEE and BOWLING, JJ. ROBERTSON, Presiding Justice, for the Court: Mississippi Public Service Commission has appealed from that portion of a final decree entered by the Chancery Court of the First Judicial District of Hinds County, Mississippi, on April 12, 1977: 1. Reversing the May 6, 1976, Order of the Commission which fixed the rate of return for Mississippi Valley Gas Company at 8.83%; and 2. Remanding the case to the Commission for further hearing after the Commission has furnished certain information to the Company. Specifically the information required was the data fed into, the questions asked, and the tasks assigned to, a giant computer at the University of Chicago, which computer produced the CRISPE tapes, the tapes used by Dr. James L. Bicksler, the Commission's only witness, as the sole basis for his expert opinion as to what constituted a fair and reasonable rate of return to the Company. The Company has cross-appealed from that portion of the final decree affirming the Commission's order, which: 1. Required the Company to file a revised rate schedule "for municipal generating facilities Rate Schedule # 110 in order that it conform with the lowest block (of charges) of Schedule # 108"; 2. Eliminated the $300 monthly facility charge made against the Greenwood Utilities Commission, the City of Clarksdale, Mississippi, and the Yazoo City Public Service Commission; and 3. Provided that "Rate Schedule # 111 shall hereafter be the same as Rate Schedule # 110, ...". This appeal presents three major issues for determination by this Court: On November 25, 1975, Mississippi Valley Gas Company filed with the Commission its schedule of proposed gas rate changes, a statement of the necessity for the proposed changes, and detailed supporting data, as required by Mississippi Code Annotated section 77-3-37 (1972). As provided in Section 77-3-39, the Company posted a refunding bond and placed the new rates into effect on December 26, 1975. Later the Company filed a petition to change to systemwide rates and a systemwide purchase gas adjustment provision. The Company also proposed a $300 per month facility charge, and increased gas rates for municipal electric generating plants operated by the Cities of Greenwood, Clarksdale and Yazoo City. Greenwood, Clarksdale and Yazoo City intervened and were successful before the Commission, and that portion of the Commission's Order affecting these three municipalities was affirmed by the Chancery Court. This Court is of the opinion, as was the chancery court that the Order of the Commission (a) requiring that the rate level of Rate Schedule 110 (Revised) and Rate Schedule 111 "conform with the lowest block of Rate Schedule # 108"; (b) eliminating the monthly facilities charge of $300.00 from Rate Schedule 110 (Revised); and (c) requiring the Company to keep the Commission apprised of gas available for Category 6 customers and when such gas is available, to furnish it "immediately to municipal generating facilities under rates as hereinabove set forth," is supported by substantial evidence and should be affirmed. On the rate issue, the Company's witnesses were its president and chief executive officer, Taylor G. Holland, Jr.; James W. Welch, Jr., senior vice-president and treasurer; E.R. Butler, senior vice-president of *420 operations; Richard S. Johnson, vice-president of Stone & Webster Management Consultants, Inc., of New York; W.C. Randolph, the Company's director of rates and pipeline supply; Wayne D. Monteau, manager of Financial Analytical Services for Stone & Webster; William A. Whitney, senior vice-president and trust officer for Deposit Guaranty National Bank; and John H. Geary, vice-president of Paine-Webber. The Company's officers testified at length and supplied detailed charts and tables as to the assets, facilities, income and increased expenses of the Company. They testified in detail as to the necessity for increased rates in these times of inflation. The Commission offered one witness, Dr. James L. Bicksler, Professor of Finance and Director of Research at Rutgers University Graduate School of Business. Professor Bicksler was employed by the Commission: Bicksler's testimony and his opinion as an expert on public utility matters was based entirely on the CRISPE tapes which were produced by a giant computer at the Center for Research and Security Prices at the University of Chicago. It was admitted that no data concerning Mississippi Valley Gas Company was submitted to the computer. Professor Bicksler, in discussing the Capital Asset Pricing Model (CAPM), which was used in the CRISPE tapes, testified: The word "Beta" is used throughout Professor Bicksler's testimony. He defined Beta in this way: When asked the question: Has there been any criticism of the capital asset pricing model (CAPM)? Dr. Bicksler replied: The professor was asked this further question about some of his approaches to "the fair rate of return" problem, and his answer was: Prior to the hearing, the Company, on March 30, 1976, pursuant to Mississippi Code Annotated section 11-1-51 (1972), filed a motion to direct and order Dr. Bicksler to furnish the written material, documents, letters and data fed to the computer, and the questions asked, and tasks assigned, to the computer, for the purpose of cross-examining Dr. Bicksler about the CRISPE tapes. This motion was renewed at the hearing but was denied by the Commission. The questions asked and the answers given by Dr. Bicksler were: BY CHMN DALE: Bicksler further testified: After this illuminating testimony from Professor Bicksler, who was the Commission's only witness, the Commission was able to make this finding in its order of May 6, 1976: In its opinion, the chancery court said: City of Laurel v. Upton, 253 Miss. 380, 175 So. 2d 621, 625 (1965), and Butler v. State, 245 So. 2d 605, 607 (Miss. 1971), are in accord. In 1 Pt. 2 Moore's Federal Practice, Pt. 2.717 at 142 (1977), we find this reasoning: As the chancellor stated in his opinion, Dr. Bicksler might have reached the right result, but in the present state of the record there is no way to tell. Because of the lack of substantial evidence supporting that portion of the Commission's Order reversed by the chancery court, the decree of the lower court is affirmed on direct and cross appeals, and this cause is remanded to the Commission for discovery of the data requested and any additional evidence that the Commission or Company care to adduce. The Commission should then reevaluate the entire record before rendering its opinion. AFFIRMED AND REMANDED TO THE COMMISSION. PATTERSON, C.J., SMITH, P.J., and SUGG, WALKER, BROOM, LEE, BOWLING and COFER, JJ., concur.