Opinion ID: 1961637
Heading Depth: 2
Heading Rank: 4

Heading: Antitrust Suit Expense.

Text: Under its license contract with AT&T, NET is charged with a share of the cost of defending the antitrust suit by the Department of Justice (DOJ) against AT&T, Western Electric and Bell Telephone Laboratories, the named defendants in that action. NET included the $197,250 expense in its test-year cost of service. The Commission disallowed the expense, reasoning that defense of the suit primarily benefited shareholders, not ratepayers, and that NET had failed to prove any specific justification for the expense as required by an earlier order. See New England Tel. & Tel. Co., Re: Proposed Increase in Rates, F.C. # 2213 (Me. P.U.C. June 10, 1977). In its 1977 order, the Commission allowed as a ratemaking expense NET's $2,000 share of the cost of defending the DOJ suit, but stated that in future rate cases the expense would not automatically be allowed without specific justification. NET contends that the Commission erred in requiring it to justify specifically the reasonableness of the DOJ suit expense. NET further contends that the decision whether to allow the DOJ suit expense should not hinge on its ability to show that the defense of the suit primarily benefits ratepayers. According to NET, there exists a presumption of management prudence requiring the Commission to allow all actual expenses unless it clearly appears that they are excessive or unwarranted or incurred in bad faith, citing Central Maine Power Co. v. Public Util. Comm'n, 153 Me. 228, 244, 136 A.2d 726, 736 (1957). NET asserts that the DOJ suit expense should have been allowed because it is a prudent expense, unavoidable under the circumstances and beneficial to both shareholders and ratepayers. The Commission defends its position by arguing that NET failed to satisfy the burden of proof imposed by 35 M.R.S.A. §§ 69 & 307 (1978 & Supp.1981-1982) and by the prior Commission order. Under sections 69 and 307, NET must demonstrate the justness and reasonableness of the DOJ suit expenses for ratemaking purposes. See Casco Bay Lines v. Public Util. Comm'n, Me., 390 A.2d 483, 493 (1978). NET presented two witnesses who testified about the costs of the DOJ antitrust suit; however, neither witness gave testimony compelling the conclusion that it was just and reasonable to charge Maine ratepayers with those costs. From the lack of evidence in the record the Commission could rationally decide that NET had not satisfied its burden of proof, and this Court has no basis for disturbing that decision on appeal. [41] See Central Maine Power Co. v. Public Util. Comm'n, Me., 433 A.2d 331, 341 (1981). The Commission did not treat its 1977 order as imposing a higher standard of proof than sections 69 and 307 already require. In effect, the order merely placed NET on notice that thereafter it would be required to establish specifically the justness and reasonableness of the DOJ-defense expense, and nothing in the record indicates that the Commission treated its earlier order as creating a higher standard of proof than the statute provides.