Opinion ID: 1250892
Heading Depth: 3
Heading Rank: 1

Heading: Whether the Commission Correctly Calculated the Imputation

Text: 12. The first issue is whether the Commission correctly calculated the amount of the imputation from USWD to U S WEST. The amount of the imputation before these proceedings commenced was $8,368,000. U S WEST initially proposed continuing at this rate, but, during the hearings, it adjusted its proposal to $12,647,000. Staff proposed an imputation of $14,784,000, and the AG proposed an imputation of $19,284,000. However, the parties were not merely arguing about dollar amounts. Each party presented expert testimony regarding the proper formula or formulae that the Commission should use to calculate the imputation. The Commission ultimately adopted the amount of $12,647,000, using the methodology in U S WEST's adjusted proposal. The AG argued that its method of computing the imputation was the only method that the Commission could properly select. 13. The New Mexico Constitution, Article XI, Section 7 requires that the Commission consider the earnings, investments, and expenditures derived from or related to the sale of directory advertising and other directory listing services. Consideration involves deliberation, pondering, and judgment, but does not prescribe any specified conclusion. See United Bhd. of Carpenters & Joiners v. Industrial Comm'n (In re School Bd.), 363 S.W.2d 82, 90-91 (Mo.Ct. App.1962) (per curiam) (holding that statute requiring labor commission to consider wage rates established by collective bargaining agreement did not require commission to follow or adopt those wage rates). In this case, the record indicates that the Commission did consider these earnings, investments, and expenditures. 14. The Commission imputed $12,647,000 of directory-advertising revenue. Section 7 does not require the Commission to impute all or any certain amount of these earnings, investments, and expenditures. The Commission [is] not bound to the use of any single formula or combination of formulae in determining rates. . . . It is the result reached, not the method employed, which is controlling. Mountain States 1977, 90 N.M. at 338, 563 P.2d at 601; see also State Corp. Comm'n v. Mountain States Tel. & Tel. Co., 58 N.M. 260, 267, 270 P.2d 685, 689-90 (1954) (concluding that the Constitution does not impose upon the Commission the use of any one formula in determining rates). The determination of the proper formula or formulae for calculating the directory-advertising imputation is a discretionary function of the Commission. 15. The AG urged us to adopt the California approach, approved in several other states. Under the California approach, the Commission would treat U S WEST and USWD as a unitary enterprise for purposes of computing a reasonable rate of return. See City of L.A. v. Public Util. Comm'n (Pacific Tel. & Tel. Co.), 7 Cal.3d 331, 102 Cal.Rptr. 313, 323, 497 P.2d 785, 795 (1972) (in bank). However, the California approach has not been universally accepted; rather, courts and commissions in other jurisdictions have used a wide variety of approaches in determining the contribution that directory advertising should make towards supporting local telephone service. See, e.g., Alabama Pub. Serv. Comm'n v. South Cent. Bell Tel. Co., 130 Pub.Util.Rep.4th (PUR) 92, 94, 1992 WL 486391 (Ala.P.S.C.1992) (fixing an imputation of 52% of directory-advertising gross revenues). 16. Moreover, the New Mexico Commission is not required to select a particular methodology for directory imputation merely because another jurisdiction has chosen that methodology, particularly since there are many different and competing approaches. See Mountain States 1977, 90 N.M. at 338, 563 P.2d at 601. The Commission properly exercised its discretion in selecting the method for calculating the directory-advertising imputation. Furthermore, the imputation selected by the Commission amounted to an increase of more than fifty percent over the prior imputation. The prior imputation was already enough to equal over one month's basic local service for every residential customer in New Mexico. After reviewing the record we cannot say that the result reached by the Commission was not just and reasonable.