Opinion ID: 2033289
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: [¶ 2.] Essential to the operation of the telecommunications systems is the switched access service. This noncompetitive service facilitates communication between consumers who have chosen different providers for their telephone services. In application, a switched access service rate is charged to the resell carrier for originating and terminating access to customers who employ a different carrier. [1] Obviously, this rate has a direct effect on the profits of resell carriers. [¶ 3.] Historically, U.S. West had foregone revenues from the switched access service it provided to long distance carrier companies. In 1994, U.S. West petitioned the PUC for price regulation and, on March 30, 1994, began charging 3.14 cents per minute for intrastate switched access transactions. [¶ 4.] On June 12, 1995, U.S. West entered into a stipulation with the PUC and agreed that the rates charged for switched access services would be determined by a price regulation plan [2] and not by rate of return regulation. [3] Furthermore, a price ceiling was to be determined by using the switched access rules found in ARSD 20:10:27 through 20:10:29. The duration was also addressed: The Parties agree ... that this price regulation plan should remain in effect until such time as the Parties shall mutually agree to its termination, revision or amendment. Either U.S. West or the [PUC] may unilaterally terminate this price regulation plan if any authority of the [PUC] necessary for the effective administration of this Stipulation are preempted by federal legislation or federal regulatory order or rule; or by any order of the [PUC] that substantially alters the pricing flexibility provided for in this Stipulation.... [¶ 5.] In 1996, U.S. West determined that it could no longer afford to provide this service at 3.14 cents per minute. US West conducted a cost study and filed it for approval with the PUC on June 24, 1996. The study supported a rate increase of 6.6 cents per minute for switched access service. Later, on June 13, 1997, pursuant to SDCL 49-31-12.4, U.S. West implemented a rate of 6.4 cents per minute. [¶ 6.] On July 30, 1996, the following companies were allowed to intervene: Sprint Communications Company; MCI Telecommunications Corporation; Express Communications, Inc., AT & T Communications of the Midwest, Inc.; Telecommunications Action Group (TAG) [4] ; and Dakota Cooperative Telecommunications, Inc. Express Communications, Inc. later withdrew from the action. [¶ 7.] A hearing was held before the PUC on October 9-10, 1996. During this hearing, U.S. West presented a second cost study report, which supported a rate increase for switched access service of 6.4 cents per minute, down two-tenths of a cent from its first cost study report. Three PUC staff members proposed a rate of 6.15 cents per minute and U.S. West acceded. US West then sought approval from the PUC for that rate. [¶ 8.] In a 2-1 vote, the Commission reopened the record on December 19, 1996 based, in part, on its determination that the numbers presented by U.S. West were not verified. [5] AT & T's motion to disapprove the rate increase and close the docket was granted on January 27, 1997. US West appealed. In reversing and remanding, the circuit court stated that [t]he Commission did not find that it's own staff's witnesses were unreliable, unbelievable or not credible. [¶ 9.] Based on the circuit court's reversal, U.S. West implemented the rate of 6.4 cents per minute on June 13, 1997. [6] On July 3, 1997, the PUC issued an Order to reopen the record and specifically rejected the analysis of the PUC staff members. It determined that U.S. West's responses to data requests were not obtained under oath and its cost study calculations were not independently verified by the PUC staff for accuracy or validity. Based on those determinations, the PUC ordered its staff to conduct an on-site investigation and file its own report. It also required that any additional evidence received be verified by U.S. West employees. [¶ 10.] On December 1, 1997, U.S. West implemented the rate of 4.14 cents per minute. [¶ 11.] On September 23, 1998, the PUC found that because the rate increase to 6.15 cents per minute was more than a 100 percent increase, it would constitute a rate shock if implemented immediately. [7] It also determined that the increase in access charges would result in a 58.1% decrease of net income to some TAG members. [8] Consequently, the PUC ordered that the rate increase be implemented in increments, as follows: June 13, 1997 $0.0364; December 1, 1997 $0.0414; June 1, 1998 $0.0465; December 1, 1998 $0.0515; June 1, 1999 $0.0565; December 1, 1999 $0.06095. The PUC also ordered that U.S. West refund or credit its switched access customers the difference between the rate U.S. West implemented on June 13, 1997 (6.4 cents) and the rate the PUC approved effective on the same date (3.64 cents) with 9.62% interest per annum. [9] US West appealed to the circuit court. [¶ 12.] The circuit court affirmed the PUC's decision but remanded for reconsideration of two confidential exhibits 154 and 160. After reconsideration, the PUC entered amended findings of fact and conclusions of law consistent with its second decision. The circuit court affirmed. US West appeals.