Case Name: SOUTH CENTRAL BELL TELEPHONE CO. v. LOUISIANA PUBLIC SERVICE COMMISSION
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1973-01-15
Citations: 272 So. 2d 667
Docket Number: No. 52794
Parties: SOUTH CENTRAL BELL TELEPHONE CO. v. LOUISIANA PUBLIC SERVICE COMMISSION.
Judges: SUMMERS, J., dissents and assigns reasons.
Reporter: Southern Reporter, Second Series
Volume: 272
Pages: 667–674

Head Matter:
SOUTH CENTRAL BELL TELEPHONE CO. v. LOUISIANA PUBLIC SERVICE COMMISSION.
No. 52794.
Supreme Court of Louisiana.
Jan. 15, 1973.
Dissenting Opinion Jan. 19, 1973.
Rehearing Denied Feb. 19, 1973.
Calvin E. Hardin, Jr., Baton- Rouge, James D. Sparks, Monroe, Harvey Peltier, James W. Hammett, New Orleans, W. M. Booker, Jr.; Breazeale, Sachse & Wilson, Victor A. Sachse, III and Victor A. Sachse, Baton Rouge, for plaintiff-relator.
Marshall B. Brinkley, Baton Rouge, for defendant-respondent.

Opinion:
SANDERS, Justice.
South Central Bell Telephone Company is a public utility, providing telephone service in Louisiana. As such, its rates are subject to the control of the Louisiana Public Service Commission.
On June 11, 1971, the Nineteenth Judicial District Court for the Parish of East Baton Rouge granted South Central Bell a rate increase to 7.925 per cent on the average net investment devoted to intrastate telephone service. The judgment was not appealed. South Central Bell then filed tariffs, or rate schedules, with the Commission to implement the rate increase. These were approved by the Commission in July, 1971.
On December 17, 1971, Bell applied for another rate increase by filing an appropriate petition, Docket No. 11,048, with the Louisiana Public Service Commission. This petition sought a return of 9.5 per cent. The evidence has now been heard, and the case has been submitted to the Commission for a decision.
Twelve days after filing the above petition, Bell filed a second petition, Docket No. 11,062. This second petition alleged that operating costs had drastically increased and that a new rate schedule was necessary in order to realize the 7.925 per cent earnings already approved by the 1971 court judgment.
The Commission determined that it would not proceed to allow a tariff increase without exploring the relevant evidence and that it would do so within the framework of the "general rate" case then pending (Docket No. 11,048). Although phrased in terms of a dismissal, the order in effect consolidated the issues. .As the Commission put it:
"The Company's reasoning that the Court has bound this Commission ad in-finitum to automatic rate increases 'pursuant to the judgment of Court of June 11, 1971.', without hearings, without test of the applicability of the principles and methods used in developing the data, without the benefit of cross examination and intervention by other parties, offends elementary principles of justice and due process. It is absolutely essential that this Commission perform extensive further analysis of the Company's presentation. This is immediately apparent from even a superficial review of the material furnished in support of the interim increase .
"On further examination, we discover that South Central is anticipating an increase of almost 16% in its operating expenses before taxes in 1972 which it is made to appear will apparently be accompanied by increases in revenues of only 8%. Suffice it to say that we are not convinced by the unilateral and self-serving Company presentation in this proceeding. In the course of Docket No. 11048, the Company will be required to explain in detail its current inability to keep expenses in line with the growth in customer service requirements, and to describe what extraordinary action it has taken to curb this devastating trend in expenses. Until the Company has made such showings to the satisfaction of the Commission, we would be remiss under our obligation to the consumers of this state, were we to grant the company any portion of its proposed rate increase."
Treating this order as a denial of relief, Bell appealed to the Nineteenth Judicial District Court. On July 18, 1972, that Court, in written reasons for judgment, ruled as follows:
"This Court commented at the hearing that South Central Bell Telephone Company was entitled to a hearing before the Louisiana Public Service Commission on the matters presented herein. The Court is now satisfied that the Louisiana Public Service Commission fully intends to explore in depth the matter of additional expenses claimed by South Central Bell."
South Central Bell has now appealed to this Court.
The petition at issue in this case is sometimes referred to as a "make whole" petition. In essence, however, it seeks interim relief prior to the decision in the general rate case, now under advisement by the Commission.
Whether South Central Bell seeks an adversary hearing on the petition is unclear. In its brief, the Utility states:
"But to reject the application without a hearing is not the proper performance of the function of the commission save only, as in this case, where a hearing would serve no useful purpose." (Italics ours.)
Assuming, however, that such a hearing is sought, we hold that the consolidation of the issues raised in the second petition with the general rate case is neither arbitrary nor capricious. Such an order falls well within the discretionary authority of the Commission to regulate its own procedures.
The main thrust of the arguments in this Court is toward securing an immediate rate increase to avoid unconstitutional confiscation. South Central Bell strongly urges this Court to grant a rate increase, before the decision of the Louisiana Public Service Commission, based upon the affidavits and other submissions attached to the petition.
Such a plea for a rate increase without the normal hearing brings the case within the ambit of our decision in South Cen. Bell Tel. Co. v. Louisiana Pub. Serv. Com'n, 256 La. 497, 236 So. 813 (1970). There, this Court held that a return of 5.87 per cent was non-confiscatory, stating:
"Under Article 6, Sections 3-9, of the Constitution of Louisiana the Public Service Commission has exclusive jurisdiction in the first instance to fix or change any rate to be charged by a public utility, and the courts are without power to fix or change rates until that Commission has acted. Nevertheless, a violation of constitutional rights, such as confiscation of property, would require a court to exercise the necessary authority to grant relief from the constitutional abuse.
"The Company's contention, simply stated, is that, principally because of the increased cost for acquisition of capital, present rates and charges for services yield a rate of return so inadequate as to be confiscatory, and that it must be allowed an immediate rate increase.
"Admittedly, the Company in the first half of 1969 received a rate of return of 5.87 per cent on its average net investment. The record shows that the Company sold an issue of debt capital at a cost of 8.53 per cent in November, 1969. However, a simple comparison of these two rates is not decisive of the legal question before us.
"We need not, indeed we cannot, determine what are valid permanent rates and charges. We can determine only whether a continued imposition of present tariffs would constitute confiscation of the Company's property. Although it may be that the Company should receive a higher rate of return on its investment and is entitled to have the Commission fix rates and charges which will produce such a return, the record does not justify a finding that the present rate of return is so inadequate as to be confiscatory. .
"We reiterate: We are not here concerned with a determination of reasonable telephone rates and charges or with a valid yield of return on the Company's investment for its operations. We pass only upon the question of whether the Commission's action or inaction amounts to a constitutional violation — that is, confiscation of the Company's property. We hold that the Company has failed to establish that the Commission's enforcement of present rates is tantamount to confiscation.
In the present case, South Central Bell concedes that it realized a rate of return of 7.40 per cent in 1971. For 1972, the projected rate of return is 6.33 per cent. We likewise hold that these rates are non-confiscatory. We, of course, express no opinion as to the merits of the pending petition for a rate increase.
The Louisiana Public Service Commission now has the general rate case under advisement. The entire telephone rate structure, including the matters raised in the present case, are under review. We find no adquate reason for disturbing the orderly procedures of the Louisiana Public Service Commission, as it discharges its constitutional duty of regulating utility rates in Louisiana.
For the reasons assigned, the judgment of the district court is affirmed, at appellant's costs.
SUMMERS, J., dissents and assigns reasons.
BARHAM, J., dissents with written reasons.