Opinion ID: 1297749
Heading Depth: 1
Heading Rank: 18

Heading: Post-Test-Period Adjustments.

Text: [40] Pacific complains that the commission arbitrarily refused to adjust test-period results to allow for subsequent changed conditions, chiefly increased wage and salary rates and the resulting larger pension payments and payroll taxes, or to make adequate findings with respect to the claimed changes. However, Pacific does not suggest that corresponding changes which would increase future income, chiefly larger revenues and greater operating efficiencies, likewise be reflected in test-period adjustments. The commission found that during the period of some five years following the increase in Pacific's rates permitted by the 1958 decision, the wages paid by Pacific had increased each year. However, although the telephone rates remained relatively stable, increasing revenues and wage-saving technological improvements more than offset the increased wages. For the post-test-period of 1963 the wage increases paid by Pacific over 1962 came to $20,000,000 while revenues increased some $91,200,000, thus resulting in a net revenue increase of over $71,000,000. Further, while annual revenue per telephone increased steadily from $143.13 in 1959 to $157.33 in 1963, the wages-charged expense per average telephone actually decreased during the same period, from $50.46 to $49.16; the same trend of decreasing annual wage expense charged against each $100 of revenue was experienced during the period. Thus actual experience subsequent to the test period demonstrated that increased revenues and operating economies more than offset increased wage rates. The commission further found that new and improved automated procedures and other technological improvements and economies, such as customer dialing of toll messages, will result in continuing cost savings, and that the effects of such savings and of increasing revenues make it unnecessary to adjust test year wages for the effects of wage rate increases subsequent thereto. Again the approach of the commission appears reasonable, Pacific is in no position to complain of the refusal to make the post-test-period adjustments it sought, and no error is shown.