Opinion ID: 1865879
Heading Depth: 1
Heading Rank: 7

Heading: iiie

Text: The appellant's final contention is that the Commission arbitrarily set a rate of return without considering the rate necessary to cover all expenses. In Southern Bell Telephone and Telegraph Company v. Mississippi Public Service Commission, 237 Miss. 157, 113 So.2d 622 (1959), our Court noted the importance of fixing a rate which would not only provide for operating expenses, but would also sustain the capital costs of the utility such as service on the debt and dividends on the stock. Indeed, a fair return implies one which will enable a utility to gain enough profit to pay its interest requirements. In the case under consideration, neither the Commission's order, nor its arguments on appeal, shed any light on its findings as to cost of equity, the cost of indebtedness, or the weighted cost of capital. Furthermore, it is readily apparent that the utility, under its current rates, cannot pay the omitted officers' salaries and the interest expense on its $140,000 loan. Since the Commission has wholly failed to show any reason as to how it determined that the current rate of return was fair and reasonable, it must be concluded that the Commission has committed error by arbitrarily setting the utility's rate of return.