Court Opinion

ID: 9777974
Source: CourtListenerOpinion
Date Created: 2023-08-29 20:29:23.80005+00
Date Added: 2024-06-11T07:33:02.882427
License: Public Domain

Tom Glaze, Judge, concurring. As stated in the majority opinion, the United States Supreme Court has given guidance as to the considerations regulatory commissions should take into account when determining a just rate of return for a public utility. Bluefield Water Works & Improvement Co. v. Public Service Commission of West Virginia, 262 U.S. 679,692 (1923); Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591 (1944). Forty-two years after the Hope decision, however, it is unclear whether the Bluefield standard that a utility should be given a return generally equal to that being made by similarly risky businesses “in the same general part of the country” remains applicable. As the majority opinion points out, Hope did not mention the standard of regional or geographical comparison as a consideration, perhaps because of ambiguities in the Blue-field decision. I am of the opinion that it would be a reasonable and logical consideration for public utilities and the PSC alike to find regional comparables in determining an appropriate return on equity for a public utility. To me, it is an unwieldy approach to utilize companies like those used in this case because they are giants in the telephone industry and are located in distant parts of this country and beyond. Except for the fact that they provide telephone service to the public, those companies share very few similarities with Walnut Hill. If the Bluefield requirement of regional or geographical comparison is the rule today, Walnut Hill makes a good argument that the PSC failed to comply with Bluefield. But even if the Bluefield standard continues to be one of the factors to be considered, the record before this Court is not sufficient to show the Company met its burden in giving the Commission valid alternatives from which a return on equity could be computed. The Arkansas companies presented by Walnut Hill in its post-hearing brief to the Commission were not shown to be relevant or workable alternatives to those used by the Commission, because the record does not reflect how those Arkansas companies’ returns on equity were derived. Logically, it could well be that the same methodology used in the instant case was used when those Arkansas companies’ rates were determined. In this respect, the proof falls short in revealing how their returns on equity were calculated by the Commission. Indeed, we cannot be certain from the evidence that those returns were actually awarded by the Commission or simply achieved by those companies through good management economies and efficiencies. The Arkansas cases cited by the majority are clear as to the limited scope of our inquiry in reviewing a decision of the Public Service Commission. So long as the result achieved is supported by substantial evidence and cannot be said to be unjust, unreasonable, unlawful or discriminatory, or violative of the utility’s rights under the laws or Constitutions of the United States or State of Arkansas, judicial inquiry is at an end. Arkansas Public Service Commission v. Lincoln-Desha Telephone Co., 271 Ark. 346, 609 S.W.2d 20 (1980); Southwestern Bell Telephone Co. v. Arkansas Public Service Commission, 267 Ark. 550, 593 S.W.2d 434 (1980). However, even under this limited scope of review, our appellate courts would be bound by U.S. Supreme Court case law that has articulated and established guidelines to follow when, as here, a fair rate of return for a public utility must be determined. Clearly, if the regional or geographical comparison standard of Bluefield is still viable, the Commission did not follow it. Nevertheless, Walnut Hill had the burden of offering valid geographical comparisons if such existed and, from my review, the Company failed to do so. As I previously indicated, I am somewhat doubtful concerning whether the regional or geographical comparison standard of Bluefield remains viable after the Hope decision.1 While it may be argued that the Bluefield geographical standard is no longer required, I believe that standard employs a common sense approach and should be a part of any rate-making consideration whenever possible.   At least one writer is of the opinion that the Hope decision represents a restatement of the Bluefield decision, and he notes specifically that the Bluefield standard of regional comparisons was omitted by the U.S. Supreme Court in Hope. Charles F. Phillips, Jr., The Regulation of Public Utilities (Arlington, Va.: Public Utilities Reports, Inc., 1985), p. 336.