Court Opinion

ID: 9551657
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:56:49.402401+00
Date Added: 2024-06-11T15:24:21.013690
License: Public Domain

HODGES, Justice,
dissenting:
I must respectfully dissent for three reasons: 1) The Corporation Commission is not required to adopt reproductive cost in determining a rate base for a public utility;1 2) the burden is on the utility, not the *42Corporation Commission, to prove the need for consideration of reproduction cost; and 3) the determination of an adequate rate of return should be left to the Commission unless the rate is confiscatory.
I and II
Reproduction cost is merely one of the elements which the Commission should consider, and is not conclusive in establishing a rate base.2 There is no constitutional requirement “that the owner who embarks on a wasting-asset business of limited life shall receive at the end more than he has put into it.”3 The opinion of the majority is inconsistent with Tecumseh Gas System v. State, 565 P.2d 356 (Okl.1977), in which this Court recognized, with approval, the Commission’s decision in that case not to take reproduction cost into consideration. Tecumseh argued that it was entitled to earnings on the reproduction cost new of the plant, less current accrued depreciation based on the original cost of the plant, and that the Commission had failed to give substantial consideration to reproduction costs. The Commission refused to accept the argument because: 1) Tecumseh did not intend to reproduce or replace the plant, 2) this theory totally ignored the present age and condition of the plant, and 3) under current conditions, no utility would construct a completely new plant system exactly like the existing plant. The Commission noted that Tecumseh’s figures of reproduction cost new were not based on actual observed appraisals of the plant value, age, condition or obsolescence, while the Commission considered technological and maintenance obsolescence.
This case is similar to Tecumseh. There is no evidence that Lone Star intends to reproduce the plant, or that it would construct a new system like the existing plant; nor did Lone Star introduce any actual observed appraisals of plant value, present age and obsolescence. The adoption of the valuation urged by Lone Star would result in an increase of the rate base without updating the system which serves the ratepayers, and based on Tecumseh the Commission could not adopt the valuation without further evidence.
In determining a gas rate base, the Corporation Commission is not limited to any particular theory or method, but it should consider all proper elements pertinent to a particular case.4 The burden of proof rests on Lone Star, not the Corporation Commission. The burden of proof is the duty to produce evidence as the case progresses; to establish the validity of the claim by substantial evidence; and though the duty to produce evidence may pass from party to party, the burden of proving the rate base is on the party seeking to have reproduction costs considered in a proceeding to increase the rate base.5
Ill
A rate of return which is not confiscatory should not be disturbed on appeal. This Court has no power to legislatively review ratemaking or to establish new rates in appellate proceedings.6 In determining the rate of return, the Commission acts in its legislative capacity and exercises exclusive original jurisdiction over ratemaking.7 This Court is concerned in the area of rate of return only if the rate is alleged to be confiscatory, and a utility who contends that a rate order results in confiscation has *43the burden of proving confiscation with clarity and definiteness.8
Lone Star has not shown that the rate is confiscatory. Confiscatory rates are those which do not afford a fair and reasonable return on the property on the investment at the time it is used in public service. A return is fair and reasonable if it: covers utility operating expenses; debt service and dividends; compensates investors for the risks of investment and is sufficient to attract capital; assures confidence in the enterprise’s financial integrity; and also provides protection to the existing and foreseeable relevant public interests.9
It is not enough for Lone Star to allege confiscation in the hope that this Court will disagree with the complex decision of the Commission and substitute it with another more to its liking. There is a strong presumption in favor of the validity of conclusions reached by an experienced administrative body after a full hearing.10 This Court should not interfere with the exercise of ratemaking power unless confiscation is clearly established by the record before us. The established principle which should guide this Court is that the party seeking the rate increase carries the burden of proof that confiscation will occur, and that the Court will not interfere with the exercise of ratemaking power unless confiscation is clearly established. I am not persuaded that Lone Star will suffer confiscation based on a 10.5% rate of return. If the total effect of the rate order is not unjust or unreasonable, judicial inquiry must cease.11 This Court may not substitute its own judgment for that of the Commission in an area of expertise which the Commission supervises.
I am authorized to state that Justice Simms and Justice Wilson concur in the views herein expressed, and join with me in this dissenting opinion.

. See Federal Power Com'n. v. Hope Natural Gas Co., 320 U.S. 591, 605, 64 S.Ct. 281, 289, 88 L.Ed. 333, 346 (1944).

. Lone Star Gas Co. v. Corporation Com’n., 170 Okl. 292, 39 P.2d 547, 556 (1935).

. Federal Power Com’n. v. Natural Gas Pipeline Co. of America, 315 U.S. 575, 593, 62 S.Ct. 736, 746, 86 L.Ed. 1037, 1053 (1942).

. Carey v. Corporation Com’n., 168 Okl. 487, 33 P.2d 788 (1934).

. See Lone Star Gas Co. v. Corporation Commission, 170 Okl. 292, 39 P.2d 547, 553 (1935) for burden of proof in gas rate proceedings; See Standard Marine Ins. Co. v. Traders’ Compress Co., 46 Okl. 356, 148 P. 1019, 1021 (1915) for generalized discussion of burden of proof.

. Wiley v. Oklahoma Natural Gas Co., 429 P.2d 957 (Okl.1967).

.Okl.Const. art. 9 §§ 18, 24.

. Lindheimer v. Ill. Bell Tel Co., 292 U.S. 151, 169, 54 S.Ct. 658, 665, 78 L.Ed. 1182, 1194 (1934); Southwestern Public Service Co. v. State, 637 P.2d 92, 97 (Okl.1981); Southwestern Bell Tel. Co. v. State, 181 Okl. 246, 71 P.2d 747, 758 (1937).

. Permian Basin Area Rate Cases, 390 U.S. 747, 792, 88 S.Ct. 1344, 1373, 20 L.Ed.2d 312 (1968); Boston Edison Co. v. Dept. of Public Utilities, 375 Mass. 1, 375 N.E.2d 305, 314 (1978); State v. Tri-State Telephone & Telegraph Co., 204 Minn. 516, 284 N.W. 294, 305 (1939).

. Darnell v. Edwards, 244 U.S. 564, 569, 37 S.Ct. 701, 61 L.Ed. 1317 (1917); See Tulsa Area Hospital Council v. Oral Roberts, 626 P.2d 316, 320 (Okl.1981).

. Southwestern Public Service Co. v. State, note 8, supra.