Court Opinion

ID: 7872962
Source: CourtListenerOpinion
Date Created: 2022-09-08 20:53:29.699284+00
Date Added: 2024-06-11T16:31:18.435873
License: Public Domain

WOLLMAN, Chief Justice
(dissenting).
I would affirm the judgment of the circuit court.
As the majority opinion points out, MDU’s purchases constitute only thirty-three percent of Knife River’s total annual tonnage, the remaining sixty-seven percent being sold to other purchasers, which in 1976 included Otter Tail Power Company, Fergus Falls, Minnesota; Public Service Department, Moorhead, Minnesota; American Crystal Sugar Company, Moorhead and Renville, Minnesota; Fergus Falls State Hospital, Fergus Falls, Minnesota; American Colloid Company, Gascoyne, North Dakota; Dresser Minerals, Gascoyne, North Dakota; Nalco Chemical Company, Gas-coyne, North Dakota; and Big Stone Plant, Big Stone City, South Dakota. The uncon-tradicted testimony establishes that the contracts with these other purchasers were entered into on the basis of arm’s length negotiations. Indeed, several of these purchasers were represented by counsel from major law firms in Minneapolis and Chicago.
There is substantial evidence in the record to the effect that it is not realistic to use the historic cost approach in determining the return on equity for companies engaged in coal mining. Even aside from that, however, the exhibits upon which the Commission relied to compare Knife River’s profits with that of five independent coal companies was prepared by a witness whose opinion it was that profits in the coal mining industry are presently excessive. Moreover, the evidence regarding the average rates of return on net worth for the five independent coal companies is not sufficiently detailed to warrant the conclusion that those rates represent the upper limits for a reasonable rate of return for Knife River. If Knife River’s prices are competitive, and I am satisfied that the record establishes that they are, then, as the majority opinion states, the Commission must rely on those competitive prices in determining the reasonableness of Knife River’s profits.