Title: Continental Telephone Co. v. ALA. PUB. SERVICE COMMISSION
Citation: 479 So. 2d 1195
Docket Number: N/A
State: Alabama
Issuer: Alabama Supreme Court
Date: October 4, 1985

479 So. 2d 1195 (1985)
CONTINENTAL TELEPHONE COMPANY OF the SOUTH
v.
ALABAMA PUBLIC SERVICE COMMISSION; Jim Sullivan as its President; Lynn Greer, Associate Commissioner; and Jim Folsom, Jr., Associate Commissioner.
Governor George C. WALLACE, By and Through the PUBLIC STAFF FOR UTILITY CONSUMER PROTECTION
v.
ALABAMA PUBLIC SERVICE COMMISSION; Jim Sullivan as its President; Lynn Greer, Associate Commissioner; and Jim Folsom, Jr., Associate Commissioner.
83-1419, 84-48.

Supreme Court of Alabama.
October 4, 1985.
Rehearing Denied November 8, 1985.
*1197 John E. Grenier and Janet W. Taylor of Lange, Simpson, Robinson &amp; Somerville, Birmingham, for appellant Continental Telephone Co. of South (83-1419).
Euel A. Screws, Jr., Laveeda Morgan Battle, Amy Watson Stewart, and Wendell Cauley, Montgomery for appellant Governor's Public Staff for Utility Consumer Protection (84-48).
Stephen L. Skipper and Robert M. Hill, Jr. of Hill &amp; Young, Florence, and William J. Samford, Jr., Susan Shirock DePaula, and Robert F. Smith of Pappanastos, Samford, Roberts &amp; Blanchard, Montgomery, Charles A. Graddick, Atty. Gen., and Robert L. Rash, Asst. Atty. Gen., for Alabama Public Service Comm. (83-1419).
PER CURIAM.
This is an appeal by Continental Telephone Company of the South and a crossappeal by Governor George C. Wallace by and through the Public Staff for Utility Consumer Protection from an order of the Alabama Public Service Commission. The appeals were taken pursuant to the provisions of Code 1975, § 37-1-140.
On January 17, 1984, Continental Telephone Co. filed a proposed rate schedule with the Alabama Public Service Commission, requesting a rate increase of $6,547,990. After a hearing, at which the Governor's Public Staff for Utility Consumer Protection (Public Staff) and the Alabama Attorney General intervened, the APSC granted Continental a rate increase of $367,352. Continental and the Public Staff petitioned the APSC for reconsideration[1] and, after the APSC took no action on their petitions, appealed to this Court, pursuant to the provisions of Code 1975, § 37-1-140. Continental applied for supersedeas, which, after oral argument, this Court granted in the amount of $1,573,359.[2]
In its brief, and at oral argument, Continental vigorously insisted that it was deprived of due process of law during the hearings before the Commission. Continental contends that because it was denied due process, the Commission's order should be declared to be null and void and "the schedule of rates which Continental filed with the Commission should take effect as a matter of law."
Continental submits that three distinct violations of its rights to due process occurred in this proceeding, and claims that one of those violations also was a violation of the doctrine of separation of powers, and that each violation was independently sufficient to require that the Commission's final order be vacated.
The alleged violations include:
(a) the Attorney General's participation as both an adversary party-intervenor and an advisor to the Commission, through an assistant Attorney General;
(b) the Public Staff's adversary party participation in the proceedings on behalf of the Governor, because the Public Staff is merely a part of the Commission, and cannot be separated from the Commission; and
(c) the intrafamily relationship between the director of the Public Staff and a staff member of the Commission in violation of the basic ethical principle prohibiting conflicts of interest.
Similar "due process" claims were raised by Continental in its last appeal of a rate order. Continental Tel. Co. v. Alabama Pub. Serv. Comm'n, 427 So. 2d 981 (Ala. 1982). There, this Court discussed the "due process" claims, with a caveat that "we should not be understood as holding that the Public Staff had any legal status *1199 as a party." 427 So. 2d  at 997. Justice Shores specially concurred, as follows:
Joining her special concurrence were Chief Justice Torbert and Associate Justices Jones, Almon, and Embry. After issuance of this opinion, and apparently in response to the statements made in the opinion concerning the legality of the Public Staff's participation in that proceeding, Governor George C. Wallace and the Commission took actions regarding the Public Staff.
On September 20, 1983, the Governor signed Executive Order No. 17, establishing a "Public Staff in the Executive Branch of State Government of the Governor." Along with giving it other duties, Executive Order No. 17 instructed the Public Staff to "(3) draw from the Public Service Commission persons who are trained and experienced in rate making techniques and procedures with such persons' compensation funded by the Public Service Commission."
On December 3, 1983, the Commission issued a General Order which placed the Commission's Trial Staff "on loan" to the Public Staff for Utility Consumer Protection. The General Order stated that the loaned individuals would remain employees of the Commission and lose no rights, benefits, or compensation because of the transfer. The Commission further committed itself to fund the Public Staff and to employ additional individuals to assign to the Public Staff. Finally, the General Order provided that if the Public Staff is abolished or ceases to exist, the loaned personnel shall return to comparable positions within the Commission.
Continental thought that the Governor was without authority to issue the executive order, and that the Commission was without authority to take the action it took regarding the Public Staff, and, based upon its belief that its constitutional rights were being violated, moved to strike all the evidence presented by the Public Staff.
Governor Wallace argued, in response to Continental's motion to strike all evidence presented by the Public Staff, that his Executive Order No. 17, and the Commission's General Order of December 5, 1983, corrected the concerns specially addressed by Justice Shores in the 1982 Continental case. Continental disagrees, and we are constrained to hold that the actions taken by the Governor and the Commission did not solve the constitutional infirmities pointed out by this Court in the 1982 Continental case.
We are of the opinion that the Commission, by loaning its Trial Staff to the Governor under a new name, the Public Staff, merely attached a new label to a part of its personnel and attempted to clothe its personnel with a legal identity beyond what it wasthe Commission's Staff. In the Commission's General Order itself, the Commission states:
*1200 It seems clear that the Public Staff is merely the Commission Staff, or former Trial Staff, under a new label.
It is axiomatic that a fair trial in a fair tribunal is a basic requirement of due process. Fairness, of course, requires an absence of actual bias in the trial of cases, but our system has always endeavored to prevent even the probability of unfairness. In the 1982 Continental case, this Court recognized that due process was required in Commission proceedings and outlined a remedy for denial of due process. There, this Court said:
See also, Ex parte Alabama Textile Manufacturers Ass'n, 283 Ala. 228, 215 So. 2d 443 (1968); Ex parte Alabama Pub. Serv. Comm'n, 268 Ala. 322, 106 So. 2d 158 (1958).
Because we find that Continental's "due process" rights were violated, we have no choice but to insure that Continental will be accorded "due process." We elect to remand the cause to the Commission under the authority granted to this Court by Code 1975, § 37-1-143, for the purpose of conducting further proceedings as we shall hereinafter direct. Code 1975, § 37-1-143, provides, in part, as follows:
We believe that a remand of the cause will accord to Continental those "due process" rights to which it is entitled. Consequently, we refuse to void the order of the Commission, as Continental requests. Because of the action we take, we find it unnecessary to address the "separation of powers" argument Continental makes. Furthermore, because of the disposition we make on Continental's "due process" claim with regard to the Public Staff, we need not decide whether Continental's claim that its "due process" rights were also violated because the Attorney General participated as both an adversary party-intervenor and as an advisor to the Commission, through an assistant attorney general. Additionally, we pretermit any discussion of Continental's claim that the intrafamily relationship between the Director of the Public Staff and a staff member of the Commission violated ethical principles prohibiting conflicts of interest.
Even though we elect to remand the cause for "further proceedings," we have, nevertheless, reviewed Continental's claims on the merits, and, to facilitate the process on remand, we include our observations, which the parties may use and which the Commission may consider and apply. In reviewing the merits of Continental's claims, we have considered all the evidence and all the arguments, because we believe that such a review will assist the Commission and the parties in the proceedings on remand.
In reviewing the merits of Continental's claims of confiscation, we have applied the *1201 scope of review which is clearly delineated in the last appeal to the Court by Continental:
Continental Telephone v. Ala. Pub. Serv. Comm'n, 427 So. 2d  at 984-985.
Continental claims that the final order of the Commission results in confiscation of its property. If shown, of course, confiscation of a public utility's property is violative of basic constitutional rights guaranteed by the Fifth and Fourteenth Amendments to the United States Constitution and Sections Six and Thirteen of the Alabama Constitution. Alabama Pub. Serv. Comm'n v. Southern Bell, 253 Ala. 1, at 12-13, 42 So. 2d 655, 663 (1949).
In determining whether confiscation is shown, we necessarily consider the elements of a rate case. In this connection, this Court has determined, "There is no way to determine whether a rate is fair, reasonable, and non-discriminatory except to examine the elements of which it is composed." Southern Bell, supra, 253 *1202 Ala. at 16, 42 So. 2d  at 666. More recently, the Court has stated that this review "must include an examination of all the elements of which it is composed." Alabama Power Co. v. Alabama Pub. Serv. Comm'n, 390 So. 2d 1017, 1025 (Ala.1980) (emphasis added).
A rate case is composed of four essential elements: the rate base, capital structure, rate of return, and operating results. An analysis of the Commission's final order and the treatment of the elements of this rate case will indicate whether the order is unconstitutionally confiscatory, as alleged by Continental.
In its brief, and at oral argument, Continental called our attention to two principal areas wherein it says the Commission's order is confiscatory, viz.: "Inside Wire" and "Intrastate Toll Revenues."
These two issues were the only ones raised by Continental in its petition for reconsideration filed with the Commission.
In its brief, Continental summarized its argument on the adjustments involved in these two issues and other adjustments, as follows:
In order to determine whether confiscation occurred, we will address each issue as to which Continental claimed confiscation occurred.
As pointed out above, Continental claims that it requested the Commission to deregulate "inside wire," but that the Commission refused the request, and, in addition, failed "to restore to the calculation of operating income, the expenses and income related to inside wire."
The Public Staff, in its brief, does not specifically address the issue of the Commission's treatment of "inside wire."
The Attorney General, while stating in his brief on Continental's application for supersedeas that Continental appeared to be entitled to $364,021 in additional revenues, in his brief on the merits, argues:[3]
The Commission makes a similar argument:
Although the Attorney General attaches a copy of the order issued in APSC Docket 18480 as an appendix in its brief, and the Commission, in its order, bases its decision on the requirements of the order in APSC Docket 18480, we fail to find any reference in the briefs or the Commission order to the portion of the record where this order is a part of the record in this case.
Continental, in its reply brief, states as follows:
Continental does, in fact, then analyze the effect of the "18480 order" and argues that it is not applicable and that "[t]he Commission has never suggested, until the filing of the brief in this case, that Continental was not in compliance with the 18480 order or that Continental file any tariff regarding inside wire, nor is there a reference to a tariff filing in the 18480 order." Whether applicable or not, we are constrained to limit our review to the Commission order itself, which appears to have been based upon one of its prior orders which was not made a part of the proceeding then before it; therefore, based upon the evidence produced by Continental during the proceeding, we hold that the Commission erred in its treatment of the "inside wire" adjustment.
We find that Continental has shown that the final order of the Commission is confiscatory and that an amount of $185,875 must be deducted from net operating income and, after application of the retention factor of .510616, the amount of $364,021 must be added to the new rates allowed Continental in this case.
As previously pointed out, Continental claims that the portion of the Commission's final order with respect to intrastate toll revenues is erroneous because the Commission used 1983 data instead of 1984 data in computing the amount of revenue Continental would receive by means of "access charges," which mathematically are a product of the number of minutes of use (MOU) that Continental's telephone equipment is used in completing long distance calls and Continental's rate to the long distance carrier for the use of its facilities, this rate being called the common carrier line charge.
Continental challenges the Commission's computation of total test year MOU, contending that the Commission should have used a computation made by one of Continental's witnesses. In order to understand the Commission's computation of test year MOU, it is helpful to be familiar with the chronology of the testimony respecting this issue.
The question of estimated intrastate MOU first arose in a generic docket on access charges which the Commission instituted to permit all telephone companies operating in Alabama to put into place access *1206 charges to take effect on the divestiture of the Bell System so that these companies would continue to receive long distance revenues. Docket 18908. In that docket, in estimating its 1984 MOU for the purpose of establishing its access charges to take effect on January 1, 1984, Continental represented to the Commission that its estimated 1984 total intrastate minutes of use would be 136,417,104. (Commission Exhibit 32 in this case, Docket 18978.)
The company's initial witness on this subject in this case, Mr. Boccucci, presented an estimate which was lower than the company's estimate presented in the generic access charge docket, his estimate of 1984 total intrastate minutes of use in this docket being 127,369,509. Mr. Boccucci was unable to explain the differences between the Company's estimated 1984 minutes of use in docket 18908 and his estimate in the present docket, 18978, or to reconcile the two estimates.
The Governor's Staff's witness, Mr. Larkin, in computing the Company's estimated 1984 intrastate toll revenue, used the estimated 1984 minutes of use which the Company had presented in docket 18908, 136,417,104. Mr. Larkin used 136,417,104 because this number had been computed using the 1982 actual minutes of use increased by an estimated 8% rate of growth in intrastate long distance calling between 1982 and 1984, which Mr. Larkin stated was a reasonable growth estimate. In rebuttal, the Company presented the testimony of yet another witness, Mr. Yaconis, who claimed to have computed his estimate of 1984 intrastate toll revenue based on an annualization of actual MOU for the first five months of 1984, his estimate being 107,980,000. After filing his rebuttal testimony, Mr. Yaconis submitted a revision of his estimate of 1984 total intrastate MOU to 110,209,000. The parties disagree on the reason for the revision, but we find that this disagreement does not affect our treatment of the legal issue presented.
The Commission rejected all of the specific computations offered by the various witnesses, electing to utilize the 1983 actual minutes of use of 124,693,000 increased by 8% for estimated growth between 1983 and 1984 to 134,668,444. It is the Commission's use of the 1983 actual minutes of use increased by 8% for estimated growth rather than Mr. Yaconis's final estimate of 110,209,000 which Continental contests, alleging in its brief that "the latest data available should be employed in setting rates" and that "there is nothing in the record to suggest the actual 1984 Continental data on intrastate MOU is not accurate or unverifiable." It is the last stated contention that is at issue.
The Public Staff takes the position that the Commission's rejection of the Company's 1984 actual experience was "reasonable." Continental says this position is contrary to the one taken by the Public Staff earlier. Continental argues:
The principal argument of the Governor and the Attorney General is that Continental substantially changed its estimates during this proceeding, and in hearings specifically set by the Commission to consider access charges in Docket 18908. Continental answers these arguments, as follows:
The Commission argues that "any consideration of access charge rates has been separated into a separate inquiry [Docket 18908] and any further consideration of such rates should be addressed in that case."
We first address the principal question presented to us, and that is whether the following finding by the Commission is erroneous:
Like the Commission, we are aware that because of the implementation of divestiture and the FCC charge plan the Commission has a difficult job in setting rates which are reasonable and fair, as mandated by the Code of Alabama, but the Commission, and this Court, must deal with the realities of divestiture in the telecommunications industry.
The Commission found that the testimony of Mr. Yaconis regarding the 1984 MOU was inaccurate. We do not find that determination substantiated in the record. The Public Staff and the Attorney General attempt to uphold the finding by claiming that prior estimates of MOU by the company itself showed the inaccuracy of the 1984 actual data. Logical reasoning would say that proof of an actual amount would not be shown to be inaccurate by proof that prior estimates were different from the actual results. Consequently, we cannot agree with the Commission's finding on MOU. The Commission's other finding that any revenue deficiency caused by its finding could be adjusted in a pending docket should not prevent the recovery of this revenue deficiency in the subject docket. In General Tel. Co. of the Southeast v. Alabama Pub. Serv. Comm'n, 335 So. 2d 151, 158, 159 (Ala. 1976), this Court said that "[E]laborate calculations which are at war with realities are of no avail," and that "The law is well-settled that the Commission may not rely upon a reckoning when actual experience is available and establishes that the predictions have been substantially incorrect," and further that "To prefer the forecast to the survey is an arbitrary judgment." As the Commission pointed out, and as we are aware, divestiture had a tremendous impact on the telecommunications industry; therefore, the principles above enunciated regarding forecasts and actual experiences take on added significance, especially during the phase-in of divestiture. We hold, therefore, that the Commission order with regard to intrastate toll charges can be handled in those proceedings. "If rates are prospective, they must correspond to the actual needs of the company during the time they are in effect." Continental Telephone Co. of the South v. Alabama Pub. Serv. Comm'n, 427 So. 2d 981, 991 (Ala.1982). If the "actual" data is flawed because it was annualized based on only six months of experience, this fact could be the subject of a special hearing after remand. Cf. General Tel. Co. of the Southeast v. Alabama Pub. Serv. Comm'n, supra.
The Company, although relying on the foregoing two principal issues, nevertheless, argues that several other adjustments to the rate base and operating income resulted in confiscation. We will address each issue separately.
Continental claims that its earnings are being eroded because it is adding new investments at unit costs in excess of average unit costs. The Company argues:
38 PUR 4th at 556.
"648 P.2d  at 41."
The Commission and the Attorney General counter that the traditional use of the "test year" is reasonable and takes into account known and measurable changes in the company's rate base. The Public Staff takes the position that "an attrition adjustment, such as the company has proposed, which projects plans into the future, is in direct contradiction to the mandate set out by our legislature in the 1978 amendment to § 37-1-80, Code of Alabama (1975), as amended." The Public Staff argues:
While we find that the Company has not shown error in this case, we do not agree that the Commission cannot, or should not, consider an adjustment for attrition, if shown by the proof offered. Code 1975, § 37-1-80, even as amended, still states as follows:
If a utility can show that it is managing the business of the company honestly, efficiently, and economically, or stated differently, that there is no showing of poor and uneconomical management, and can show that it needs to enlarge its plants, facilities, or equipment in order to "provide ... adequate service," then in determining a just rate of return the Commission "shall give due consideration" to those requirements. Code 1975, § 37-1-80. Having said this, however, we do not find that the Commission erred in this case in finding that the forecast adjustments were not verifiable; consequently, we affirm the final order of the Commission disallowing an adjustment for attrition. By affirming the order of the Commission, however, we do not hold that attrition will not occur. If it does, the Company can file a new request with the Commission, which it has done. If the Commission prefers to have periodic hearings, with their consequent cost and expense, which ends up costing ratepayers and the public at large, then that is a legislative choice.
During oral argument on the Company's request for supersedeas, counsel for the Company told us that "inflation is the principal reason we are here" and asked that we allow an adjustment for inflation or the Company would be back "next year." As we have already pointed out, the Company has already filed a new rate request with the Commission; therefore, the Company has fulfilled its forecast. The Company, on this appeal, asks us to adopt the reasoning of the Oklahoma Supreme Court in Lone Star Gas Co. v. Corporation Comm'n of Oklahoma, 648 P.2d 36 (Okla.1982), on the question of attrition and inflation.
In Lone Star, a natural gas utility appealed from an order of the corporation commission which had denied its request for a rate increase. The Court addressed the issues of attrition, inflation, and regulatory lag, as follows:
We could, of course, reach a similar result in this case, but we do not, because the aggrieved Company can, as many other utilities have during the past two decades, file repeated requests with the Commission for rate relief, and, thereby cut down some on regulatory lag.
As we stated earlier, we are not holding that the Company will not suffer increased expenses, only that we do not feel compelled, especially in view of the separation of powers doctrine, to usurp the powers of the Commission as the ratemaking agency. Furthermore, there is an obligation, spelled out in our rate-making statutes, that utilities should operate honestly, efficiently, and economically. Code 1975, § 37-1-80. For us to require the Commission to make an adjustment for inflation automatically would not encourage utilities to take positive steps to reduce and minimize expenses to deal with the problem of inflation.
The Company proposed certain adjustments to test year payroll expenses. The Commission allowed an adjustment for the 1984 wage increases, but denied an adjustment for proposed wage and salary increases for non-union and management employees for 1985. In Alabama Gas Corp. v. Alabama Public Service Comm'n, 425 So. 2d 430 (Ala.1982), this Court held at 435:
We recognize that the circumstances of each case can vary, but there is no measurable difference in the circumstances of this case and those of the last Continental appeal. We hold, therefore, that the Commission erred in disallowing Continental's proposed adjustment for payroll expenses.
Continental made two separate and distinct adjustments to the September 1983 *1212 annualized revenue generated from customer premises equipment ("CPE"). These adjustments reflect (1) the anticipated continued erosion of the terminal equipment lease base, and (2) the anticipated effect of Continental's aggressive single line set sales plan.
The Commission rejected the second adjustment based on the proposed sales plan, and Continental did not appeal this action of the Commission.
The Commission accepted the first Continental adjustment, but limited the adjustment to April 1984. Continental claims that the Commission should have carried the adjustment through February 1985, the midpoint of the first year of new rates, arguing that since the CPE marketplace was opened to competitive supply, Continental has suffered significant customer migration away from Continental-provided leased terminal equipment and a corresponding erosion of revenue derived from that terminal equipment.
We cannot say the Commission erred in disallowing an adjustment for CPE to reflect the alleged "expected level of CPE revenue in the first year of new rates"; therefore, the Commission's order is due to be affirmed in this respect. As pointed out earlier, the Company has filed a new rate proceeding. Actual experience under this rate order will be available in that proceeding. Experience may, or may not, show the Company's projections were accurate, but we cannot, pursuant to our scope of review, overturn the Commission's finding.
The Commission entered the following order in connection with the item "Imputed Interest on JDIC":
The Attorney General, in his brief, states the purpose of the Commission's order, as follows:
In its brief, the Commission recognizes that "[t]here is substantial dispute as to whether the interest synchronization methodology utilized by the Commission (re: leaving JDIC in the rate base for the purpose of computing interest synchronization) violated the provisions of Internal Revenue Code § 46," but the Commission claims that several regulatory bodies and courts have included JDIC in the interest synchronization adjustment "with apparently no negative tax consequences to the utilities involved."
The Company, of course, says that if the order stands, "it is clear that the Internal Revenue Service will disallow the investment tax credit, thus costing the customers of Continental substantial sums of money."
Continental also claims that the Commission's method of treating JDIC is inconsistent with past Commission practices, and jeopardizes its ability to take JDIC in the future. Because the Commission itself recognizes that "[t]here is a substantial dispute" whether its treatment of JDIC violates the Internal Revenue Code, we are constrained to hold that the Commission's order is erroneous. We addressed this issue in Continental's last rate appeal, as follows: "[W]hile stare decisis does not apply to decisions of administrative agencies such as the Public Service Commission, consistency is essential if arbitrariness is to be avoided." Continental Tel. Co. v. Alabama Pub. Serv. Comm'n, 427 So. 2d 981, 993 (Ala.1982).
Continental claims that the evidence does not support an award of less than 16% on equity and 11.3% on overall rate of return. We disagree. We believe that the Commission's finding that Continental was entitled to a return on common equity of 14.65% and an overall rate of return of 10.99% is reasonable. We are not convinced, however, that the order entered by the Commission will produce these rates of return.
In response to our order on supersedeas, the Company has filed three separate reports which the Company claims represents the actual experience of the Company under supersedeas. These reports are attached as appendices A, B, C, D, E, and F to this opinion. Of course, these reports are not part of the record in this case, and the opposing parties have not had an opportunity to cross-examine witnesses who prepared the reports or to verify them from the Company records. Nevertheless, if the reports accurately reflect current experience of the Company, we are faced with a situation similar to that which we faced in General Tel. Co. of the Southeast v. Alabama Pub. Serv. Comm'n, 335 So. 2d 151 (Ala.1976). There, this Court, faced with *1214 conflicting evidence based upon the same record, determined that actual experience under the order would be the best evidence. In the General Telephone case, we said we would remand a case when we found it "expedient" to do so.
The Commission, on remand, is instructed to reopen the hearing within 60 days after receipt of the certificate of judgment of this Court for the purposes of making the determinations we have set out in this opinion. In the meantime, the supersedeas order made in this Court, and the bonds given pursuant thereto, shall remain and continue in full force and effect until final disposition of this cause. General Tel. Co. of the Southeast v. Alabama Public Service Comm'n, supra.
On remand, the Commission can consider, as it did in General Telephone, whether the actual experience of Continental produced the rate of return which the Commission itself found to be "reasonable." Because we hold that the Public Staff should not have participated in the proceedings, the Commission is directed on remand to exclude all evidence and arguments of the Public Staff, and to determine, without reference to that evidence or those arguments, whether Continental is entitled to receive revenues in addition to those allowed, but in no event to exceed an amount of revenue necessary to produce a reasonable rate of return.
The Governor's Public Staff for Utility Consumer Protection filed a cross-appeal and alleged that the Commission's final order contained mathematical and legal errors, which the Public Staff claims, if corrected, would reduce the Company's revenue requirement by $690,212, creating a revenue excess of $322,860.
Specifically, the Public Staff contends that the Commission erred in computing the rate base interest synchronization adjustment, and failed to consider evidence which showed Continental received more revenue than the Commission found was received during the test period attributable to the interestate phase-out of "customer premise equipment."
Because of our holding on the "due process" claim, we refuse to consider the Public Staff's cross-appeal.
We are aware that the divestiture of AT &amp; T has had a tremendous impact on the telecommunications industry and that regulatory agencies such as the APSC and the various telephone companies have had to live through a period of some uncertainty because of the divestiture. Hopefully, time will help to settle some of the uncertainties in the industry.
The policy of the legislature, and the constitutions of both the federal and state governments, provide that when a company's property is devoted to public use, the Company is entitled to a fair rate of return. Although there have been disagreements over the years on the question of what is a fair rate of return, most appeals in rate cases have involved complex accounting adjustments and approximations on which conclusions by experts have differed, and this Court has been called upon to resolve the disputes.
As this Court said in General Tel. Co. of the Southeast v. Alabama Pub. Serv. Comm'n, supra, at 156:
As we view the law, a utility is under a duty to provide adequate service to the public; it is to manage its business honestly, efficiently, and economically. If the *1215 company performs these functions, it is entitled to a rate of return which will be fair to it and fair to the consuming public.
Those basic, simple rules should govern the Commission, the parties, and this Court, as we carry out our responsibilities under the laws and constitutions to which we are all bound.
83-1419 AFFIRMED, IN PART; REVERSED, IN PART; AND REMANDED.
84-48 AFFIRMED.
TORBERT, C.J., and MADDOX, FAULKNER, JONES, ALMON, SHORES, BEATTY and ADAMS, JJ., concur.
*1216 APPENDIX A
*1217 APPENDIX B
*1218 APPENDIX C
*1219 APPENDIX D
*1220 APPENDIX E
*1221 APPENDIX F
PER CURIAM.
The Honorable George C. Wallace, as Governor, as an intervenor in this case, has requested a rehearing in this cause, and makes the following claims:
Regarding the "due process" claims, the Governor claims that the record on appeal was inadequate to support Continental's claims of "due process" violations, and that this Court ignored statutory provisions which authorized the Governor to intervene in the proceeding, hire attorneys, and present evidence. Specifically, the Governor says that "the Court failed to address the provisions of Section 37-1-18, Code of Alabama that the Consumer Utility Rate Hearing Fund may be ... drawn upon by the chairman of the public service commission, the governor, and the attorney general for purposes of hiring attorneys, public service commission staff personnel, and expert witnesses to present the case for the consumer in utility rate increase hearings and all appeals arising therefrom."
After reviewing the Governor's contentions, we are still of the opinion that Continental adequately demonstrated that it was not accorded "fundamental fairness" in the rate hearing; therefore, we are of the opinion that the Governor's application for rehearing on the "due process" issue is due to be denied.
The Governor, in his brief, claims that this Court's "holding" regarding JDIC is erroneous, as a matter of law. Because we addressed the issues raised by Continental on appeal, we can understand how the Governor construed our opinion as being a "holding" on that question. The opinion states, however, as follows:
As pointed out by us in our original "observations," the Commission, in its brief, admitted that there were substantial disputes whether the interest synchronization methodology utilized by the Commission would violate provisions of the Internal Revenue Code. The Governor claims that a proposed Federal Treasury regulation issued after this case was appealed conclusively shows thatthe Commission's treatment of JDIC will not violate the Internal Revenue Code. On remand, the parties, of course, may present evidence or authority in support of their respective positions on this question.
OPINION EXTENDED; APPLICATION FOR REHEARING OVERRULED.
TORBERT, C.J., and MADDOX, FAULKNER, JONES, ALMON, SHORES, BEATTY and HOUSTON, JJ., concur.
ADAMS, J., not sitting.
[1]  In its petition for reconsideration, Continental requested the Commission to reconsider the "Commission Final Order" solely with respect to:

1. Inside Wire. Continental did not request reconsideration of the Commission's denial of Continental's request to deregulate inside wire, but submitted that the "Commission Final Order" was incorrect in calculating the mathematical effect of such denial upon income available for return.
2. Intrastate Toll Revenues. Continental submitted that the Commission should use the minutes of use ("MOU") actually tabulated by Continental in 1984 and submitted in this case by the testimony of William A. Yaconis, a witness of Continental. Continental requested reconsideration only of the MOU employed in the calculation and did not request reconsideration of any other aspect of the "Commission Final Order" concerning intrastate toll revenues.
The Public Staff requested the Commission to reconsider the calculation of access charges related to intrastate toll revenues and the customer premises equipment ("CPE") interstate offset.
[2]  Telephone Company of the South (Continental) on September 17, 1984, filed its application pending appeal pursuant to Section 31-1-141 [should have read 37-1-141] and Section 31-1-127 [should have read 37-1-127] through 128, Code of Alabama 1975, as amended to supersede the order of August 16, 1984, of the Alabama Public Service Commission (Commission), APSC Docket No. 18978, and to allow Continental to charge and collect the increase in its rates as filed with the Commission in this cause.
"The application states, under oath, that the estimated approximate amount by which Continental revenues will be increased in six months by reason of the increased rates and charges sought is $3,179,413 (approximately $6,226,624 annually).
"The application for supersedeas being argued and submitted and duly examined,
"IT IS CONSIDERED by the Court that, pending appeal of this cause, Continental is entitled to have the order of the Commission superseded to the extent that the company may charge and collect, pending appeal, at a rate that will produce an additional annual increase in revenues of $1,573,359 over the $366,985 [should have read $367,352] annual revenue increase awarded by the Commission, the Court being of the opinion that Continental has established its need for supersedeas in the following categories, and in the following amounts:
"IT IS, THEREFORE, ORDERED that Continental file with the Commission, pending appeal, a schedule of rates and charges which will produce an additional annual increase in revenues of $1,573,359 over the annual amount awarded by the Commission in its order of August 16, 1984, and that Continental shall state, in writing, under oath, to this Court the approximate amount by which its revenues will be increased in six months by reason of such rates, pending appeal, pursuant to this order.
"IT IS FURTHER ORDERED that Continental file with this Court a report as hereinafter prescribed on or before February 18, 1985, reflecting the experience of Continental for the preceding three months. Additional reports shall be filed with the Court monthly thereafter during the pendency of this appeal.
"The reports required to be filed shall contain the following computations:
"1. The annualized rate of return to equity collected under supersedeas as granted by this Court.
"2. The annualized rate of return to equity under the Commission's order without supersedeas in any amount.
"3. Compute the annual rate of return to equity under full supersedeas.
"All filings made pursuant to this order shall be made available to all of the parties to this cause.
"It is noted that Continental has filed its supersedeas bond in this cause on September 17, 1984. Said bond is hereby approved."
[3]  In his brief on supersedeas, page 8, the Attorney General said: "Whatever the method employed, it would appear the company is due $364,021 in additional revenues."