Opinion ID: 1944130
Heading Depth: 1
Heading Rank: 3

Heading: Volume Discounts

Text: Verizon contends that the Board has unlawfully prohibited Verizon from entering into toll special contracts contrary to the specific mandate of 30 V.S.A. § 229. Under 30 V.S.A. § 229, utilities are prohibited from offering customers any discount or deviation from their tariffed rates. With the prior approval of the Board, however, utilities may enter into a contract to furnish any special product or special service not provided for or covered in the schedule. 30 V.S.A. § 229. In this case, Verizon sought Board approval for three toll special contracts. The Board ruled, however, that volume discounts should not be offered in special contracts under § 229 but should be offered in tariffed volume-based discounts available to all customers to ensure that rates do not unjustly discriminate between similarly situated customers in violation of 30 V.S.A. § 218. The Board found that the sole difference between the three toll special contracts and the tariffed services was price and volume, and that the selective offering of such discounts unjustly discriminated between customers. It concluded that simple volume discounts should not be offered in selective special contracts but rather in tariffed volume-based discounts available to all customers. Such discount tariffs would largely obviate the need for toll special contracts, reducing the Board's burden in approving all such contracts, and ensure that Verizon does not unjustly discriminate between similarly situated customers. Further, the Board concluded that tariffed discount rates will allow competitors to purchase the services at discount for resale. On the other hand, the Board ruled that toll special contracts would be permitted when the customer's usage characteristics are fundamentally different from those of the typical customer of similar usage that would be covered in the volume-based discount tariff. Verizon contends that the Board's blanket disapproval of toll special contracts is contrary to the option that the Legislature has provided to utilities in § 229. Section 229, however, prohibits any discounts from tariffed rates and requires Board approval for special services. The Board concluded that the services at issue here were not special, but simply volume discounts and thus violate § 218 unless offered in tariffed schedules to all customers. Verizon's conditional right to seek to enter special contracts under § 229 does not trump its statutory duty to offer nondiscriminatory rates to all customers. Moreover, the Board's disapproval of toll special contracts was not complete; it allowed for toll special contracts when the services contracted are indeed special, or fundamentally different from those of other customers with similar volume usage. We find no clear error in the Board's ruling. Verizon also maintains that the Board has prohibited it from entering into toll special contracts while leaving its competitors unfettered, and that this ruling is based on the faulty assumption that Verizon has a monopoly on toll services. We disagree. The Board noted that the toll market is increasingly competitive but that Verizon's position as incumbent still provides benefits that support different treatment. The Board's decision, however, was based on the lack of any evidence that competitors were making use of toll special contracts. Indeed, the Board noted that it had not approved any toll special contracts for Verizon's competitors, which, as the Board found, shows that the competitors are not using toll special contracts but are using tariffs with volume discounts. Thus, we reject Verizon's contention that the Board has subjected it to unjustified disparate treatment on the basis of an erroneous assumption that it has a monopoly on toll services.