Opinion ID: 1833875
Heading Depth: 1
Heading Rank: 5

Heading: in regard point e:

Text: Petitioner contends that the Commission erred in its determination as to what constituted a fair rate of return on invested capital of both companies. The Commission found Southern Bell entitled to a fair rate of return of 6.80% and Florida Power & Light entitled to a 6.95% fair rate of return. Petitioner makes the assertion, but without convincing proofs in support, that both rates should be lower and contends that the methods utilized by the Commission to determine said rates constituted departure from essential requirements of law and is not supported by competent substantial evidence, but we find nothing in the record to substantiate Petitioner's assertion on this point. There is no showing in either case by Petitioner that withstands the end result test discussed earlier in this opinion. Other points raised by the Petitioner relating to one and not the other utility have been considered also, including contentions that in the Southern Bell case the Commission: (1) improperly allowed all Western Electric profits from the sale of telephone equipment to Southern Bell to be included as part of Southern Bell's operating expenses in the determination of a fair return for it, notwithstanding both companies are owned by the American Telephone & Telegraph Company; (2) improperly accepted an arbitrarily fixed A.T. & T. dividend requirement of $4.00 per share on its common stock issued to obtain capital for Southern Bell in its determination of a fair return for the latter, and (3) in the Florida Power & Light Company rate case, arbitrarily and unlawfully denied the Petitioner the right to examine the books and records underlying the Company's exhibits. The Commission found that the evidence did not show the prices paid by Southern Bell to Western Electric for telephone equipment were excessive but were in fact less than would have been paid other similar suppliers, or that Western's profits thereon were unreasonable. It found that telephone subscribers in Florida have substantially benefitted from the economies and efficiencies resulting from such sales between Southern Bell and Western Electric. Consequently, the Commission did not agree that the fact Western Electric and Southern Bell were subsidiaries of A.T. & T. affected the return allowed Southern Bell. The record reflects A.T. & T. has a policy of paying a $4.00 per share common stock dividend to maintain the position of its stock in the money markets; that A.T. & T. is the money raiser and financial overseer of the Bell System, of which Southern Bell is a unit. The Commission did not find A.T. & T.'s policy of maintaining the $4.00 dividend resulted in increasing the financing costs of Southern Bell and augmented the rates of its subscribers. In answer to the complaint the Petitioner was not permitted to examine the books and records of the Florida Power & Light Company underlying its exhibits, the Commission states the Petitioner made no effort to comply with the Commission's production and discovery rules (Rule 310-2.88 and Rule 1.28) but attempted an en masse examination or fishing expedition into the Company's records. Except for the failures of the Petitioner as indicated, we deem it would have been proper for the Commission to have accorded the Petitioner the right to examine relevant books and records of the Company under reasonable conditions and safeguards. See 73 C.J.S. Public Utilities § 54, p. 1122. We do not find error in the specific findings and determinations of the Commission concerning these three points. Such findings and determinations of the Commission are presumed to be valid and reasonable absent clear and convincing showings to the contrary. 43 Am.Jur. Public Utilities and Services § 186, pp. 695, 696. In summary, our principal holding in these cases is that from our study of the record evidence we find we should not disturb the two orders of the Commission because a test of the orders by the end result rule discloses the Commission's use of the end-of-the-year method in ascertaining the rate bases of the two utilities considered in relation to the maximum percentages allowed on such bases for fair returns on investments to the utilities does not produce rates confiscatory to the utilities or excessive or exorbitant to their consumers or patrons. However, our ruling on this issue applies only to the instant cases and is not a binding precedent precluding the Commission from using the average investment during the test year method for rate base determinations in future rate cases. Moreover, the average investment method is expressly commended to the Commission as the better and sounder practice, except in abnormal and extraordinary situations and conditions where its use would clearly produce rates confiscatory to a utility. Other contentions of Petitioner were specifically ruled upon and decided but also without binding the Commission to follow such rulings as precedents in future cases if to do so would be unreasonable or tend to produce rates confiscatory to a utility or excessive to its consumers or patrons. Thus, for the reasons stated the writ of certiorari is discharged and Orders Nos. 4076 and 4078 of the Florida Public Service Commission should be and are hereby affirmed. It is so ordered. CALDWELL, C.J., and THOMAS, ROBERTS and THORNAL, JJ., concur.