Opinion ID: 1188004
Heading Depth: 1
Heading Rank: 3

Heading: the commission's order is supported by substantial evidence viewed in its totality

Text: In reviewing Commission orders this court is required to determine if the order is sustained by law and supported by substantial evidence. [6] An appeal here is for judicial review only, and this court is required to exercise its own independent judgment as to both law and facts. [7] The determination of whether there is substantial evidence in support of the Commission's findings does not require that the evidence be weighed, but only that the totality of the record be examined and the proof found to be more than mere scintilla. [8] The evidence should be found to possess something of substance and of relevant consequence  something that carries with it fitness to induce conviction. [9] There is a presumption of correctness that accompanies the findings of the Commission in matters it frequently adjudicates and in which it possesses expertise. [10] In the performance of its duties the Commission has wide discretion, and this Court may not substitute its judgment on disputed questions of fact unless the findings are contrary to law or unsupported by substantial evidence. [11] The order reflects that various factors were of concern to the Commission in establishing the credit rate for customer-owned equipment. First, there was the lack of an experience period for determining the effect of customer-owned telephones on the existing operations and on the revenue needs of the telephone company. Because the broad averages used in the cost study were based on large numbers, the Commission justifiably entertained fears that it would not be until a sufficiently large number of Bell-provided telephones were replaced with customer-supplied instruments that Bell could experience a reduction in its costs as a result of the FCC-mandated program. The decrease to be expected could not occur until a period of time [will have elapsed which was] long enough to be reflected in the overall costs of operations. A second concern of the Commission was the difference in the theory now used to compute the rate of basic services for company-supplied equipment (value-of-services) and the proposed approach for credit on extension services to customers with privately-owned telephones (cost-of-services). The use of the latter basis (cost-of-services) would have resulted in a higher credit rate allowance, while the former formula (value-of-services) would have brought about a lower rate of credit. Third, the cost study did not take into consideration a proper allocation for both interstate and intrastate functions. Using the pure cost theory, the Commission noted, the credit rate would be lowered only by a third while under the savable costs basis the credit rate would be reduced by more than one half. Fourth, Bell's cost study included items which, in the Commission's expert opinion, were unlikely to decrease with the introduction of customer-owned equipment. These items consisted of maintenance and administration expenses. Bell's position that such items would drop was viewed as an unrealistic estimate for the foreseeable future. All of these concerns were clearly unveiled during the Commission hearing. Agency counsel expressly advised the parties the Commission would have to weigh the various factors included in the cost study and might accord less weight to some of the cost items estimated in Bell's study. The problem was identified as one of selecting the suitable theory for gauging the amount of credit to be allowed. The Commission's counsel disagreed with Bell's pure cost analysis for ascertaining the credit rate allowance because the actual rate for basic services is generally determined on a value-of-services approach. Bell's explanation for its analysis was that it was dealing with a credit allowance on equipment instead of a proposed rate increase of an existing tariff. Inasmuch as it had no prior experience in fashioning a formula for fixing a credit rate for services no longer provided, Bell's view was that a cost analysis was the only way to establish such a rate. Bell's problem in implementing the new FCC program is multi-faceted: (a) the development of a new class of customers and a new class of service, (b) operating under a present tariff that is structured on rates for all basic services which include the provision of telephone instruments and (c) the legal requirement of allowing credit to a small class of users for a portion of the extension service expense which is no longer incurred by the class. Bell aptly described this situation as being in a new ballgame. Commission counsel emphasized during the hearing that the Commission's function was one of setting the decreased rate at the level which is in the overall public interest. Counsel expressed concern that it was premature to project a proper credit rate and that Bell's proposal may not turn out to be fully compensatory to the utility. The protestants offered no aid by demonstrating a sounder approach to allocating equipment credit. Their only argument was that the credit allowance should equal the present rate charge for extension service with Bell-provided equipment. This, of course, assumes that the present rate includes no costs other than the telephone itself  an assumption the Commission rejected as unfounded. Other cost factors noted in the order as being comprised in the existing rate consist of inside wiring, its maintenance and repair, the use of the exchange network from alternate locations as well as miscellaneous value items of service considerations. The proceeding instituted by Bell was not one for an across-the-board revision in the existing tariff structure but rather one to implement the FCC-mandated registration equipment program through certain narrowly-targeted changes to benefit but a small class of customers  those who will provide their own telephone instruments. No evidence was presented as to the interrelationship of the credit allowance to be approved with the totality of the existing intrastate tariff structure. Since Bell had neither experience nor empirical data dealing with the services to be discontinued, it could not show the anticipated impact of the change on the total rate structure. [12] The recommended 60 credit, based on an unacceptable cost analysis, was Bell's preliminary approach to the problem of complying with the federal mandate. This court has the duty to determine whether a rate order under review may reasonably be expected to maintain financial integrity for the affected utility and yet provide appropriate protection to the relevant public interest, both present and foreseeable. Within the Commission's larger responsibility to oversee and preserve the integrity of the rate structure is its charge of preventing one class of rate payers from subsidizing another by paying more than its fair share. This factor is of critical concern to the Commission when it is called upon to structure rates in a new arena  as it was the case here  without the benefit of an experience period. The Commission's order reflects a well-founded apprehension that an overbroad credit allowance might have an adverse impact on the total revenue needs within the framework of the existing rate structure. [13] The Commission was constrained to deal with the problem in a narrow channel. It doubtless intended its authorized credit rate as a temporary measure until the full impact of the new federally-mandated program can be further studied and adequately assessed. In summary, the totality of the evidence reveals that the Commission order is sustained by substantial evidence supporting the protective posture the regulatory body assumed in the public interest of maintaining the financial integrity of existing tariff structure until an experience period will have revealed the proper approach to be pursued.