Court Opinion

ID: 6759936
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:30:26.33292+00
Date Added: 2024-06-11T16:02:34.265504
License: Public Domain

Locher, J.,
concurring in part and dissenting in part. I concur in the holding of the majority that certain “noncash” items can properly be included in the cash working capital allowance contemplated by R.C. 4909.15(A)(1) based upon our decision in Consumers’ Counsel v. Pub. Util. Comm. (1986), 25 Ohio St. 3d 213, 25 *272OBR 275, 495 N.E. 2d 930.1 concur in judgment only with respect to the issues concerning interstate revenue, excise taxes, and billing practices. Otherwise, I dissent.
I cannot agree with the majority that the PUCO did not err in failing to deduct customer-provided working capital from the rate base of the companies involved herein. Cincinnati v. Pub. Util. Comm. (1954), 161 Ohio St. 395, 53 O.O. 304, 119 N.E. 2d 619, requires a deduction for customer-provided funds which will be constant with reasonable certainty in the foreseeable future and which are available for investments in materials and supplies, or for use as working capital.
In the instant case, the customer-provided funds consist of payments made in advance of service for local calls. These prepaid funds are a primary determinant of the negative results in the lead-lag studies. Both companies, like most local telephone companies, charge consumers a flat rate for local service. It is disturbing that the PUCO and the majority conclude that these payments made in advance of service are not capable of calculation with reasonable certainty. In my view, these customer-provided funds are determinable with a reasonable degree of certainty. The telephone companies obviously know what they charge as a flat rate. The companies can also easily determine how many customers they service. Simple mathematics can also determine the total amount of these advance payments that are received month after month. A capable lead-lag study can arrive at an average.
Furthermore, to reinforce the view taken by the PUCO, the majority relies upon Cleveland v. Pub. Util. Comm. (1982), 70 Ohio St. 2d 290, 24 O.O. 3d 370, 436 N.E. 2d 1336. This reliance is misplaced. Cleveland involved the question of whether customers’ equalized payments under East Ohio Gas Company’s budget billing plan should be deducted from the rate base as customer-provided funds. In that case, the PUCO found that natural gas sales fluctuated widely depending upon weather conditions. This fluctuation defeated Cleveland’s contention that the budget billing generated constant funds with reasonable certainty. To the contrary, telephone companies’ “sales” and working capital requirements are not affected by weather fluctuations. In fact, their billings possess no similarity to a gas distribution company’s budget system. As of the date certain in this case, approximately 416,000 of Cincinnati Bell’s 424,000 residence customers paid a monthly flat rate for basic service, in advance of the service month. Cleveland is not dispositive. Therefore, I cannot agree that the advance billings in the instant case are not constant and available.
I realize that the PUCO entered an allowance for working capital of zero. However, where there is no working capital against which to make an offset, any offset should be made directly against the company’s rate base. “We only require that due account be taken of customer deposits. If the formula is not designed to accommodate an offset to working capital, and we were not informed by the parties on this matter, then it may be necessary to deduct customer deposits directly from the rate base. The result would be the same.” Consumers’ Counsel v. Pub. Util. Comm. (1979), 58 Ohio St. 2d 108, 115, 12 O.O. 3d 115, 119, 388 N.E. 2d 1370, 1375. The rationale for an offset is to permit investors to earn a return only on that property for which they have supplied funds, not on funds contributed by customers. Id. See, e.g., Consumers’ Counsel v. Pub. Util. *273Comm. (1983), 4 Ohio St. 3d 111, 4 OBR 358, 447 N.E. 2d 749. Today’s decision totally ignores that well-established principle.
I am also deeply disturbed with the manner in which the majority reaches today’s decision. Throughout the majority opinion, extensive reference is made to the “expertise” of the PUCO. I certainly hope that this casual approach to affirming the PUCO decision will not prevail in all utility cases before us. This is due to my concern that a utility company “is a quasi-public corporation and has possessed a virtual monopoly * * *. The public interest increases with a monopoly, for, as such, its actions are not regulated by the strictures of the market place.” Central State University v. Pub. Util. Comm. (1977), 50 Ohio St. 2d 175, 180, 4 O.O. 3d 373, 375, 364 N.E. 2d 6, 9 (Locher, J., dissenting).
If this extreme deference to the PUCO had prevailed in the past, every consumer in Ohio would still be paying for the advertisements and charitable contributions of this state’s utility companies. See Cleveland v. Pub. Util. Comm. (1980), 63 Ohio St. 2d 62, 17 O.O. 3d 37, 406 N.E. 2d 1370. The PUCO, the legislature and this court must make certain that utility companies are properly regulated for the primary benefit of consumers. Thus, in reviewing the decision of the PUCO, this court should not lightly grant its imprimatur.
Based on the foregoing, I would remand this case to the PUCO to calculate the amount of customer-provided funds that should be offset against the rate base.
H. Brown, J., concurs in the foregoing opinion.