Court Opinion

ID: 9692455
Source: CourtListenerOpinion
Date Created: 2023-08-25 15:54:41.260837+00
Date Added: 2024-06-11T11:28:01.053092
License: Public Domain

CHILSON, District Judge
(dissenting).
The plaintiff will be referred to as the “Company” and the Public Utilities Commission as the “Commission”.
On October 1, 1970, the Company filed with the Commission, a revised draft of rates for the purpose of producing additional revenue, the rates to become effective December 7, 1970.
The Commission, exercising its statutory authority,1 suspended the effective date of the rates for a period of 120 days.
On March 25, 1971, the Commission entered a final judgment (Decision No. 77230) with respect to the Company’s application for a rate increase, in which the Commission determined the “fair” and “necessary” rate of return to the Company to be 8.9%. This determination was based upon the use of an historical test year period from November 1, 1969, to October 31, 1970. The Commission, in determining the rates to produce the 8.9% return, refused to consider the evidence offered by the Company that in the year, 1971, its wage rates and the investment per telephone installed would increase and that by virtue thereof, the rates established on the test year period would not be sufficient to provide the 8.9% return.
The Commission, in its Decision No. 77230, in explanation of its refusal to consider the Company’s estimates of increased expenses and investment stated:
“We have held before, and now hold again, that once a correcting matching of revenues, expenses and investment in property is made, it is reasonable to assume that a projection of rates based on the test year conditions will continue to produce sufficient revenues in the future.” (Page 15). * * *
“The company has, of course, maintained that in the year 1971, the relationship between revenues, expenses and rate base that existed during the test year, will not be maintained to the end that the Company’s operating earnings will decline substantially.” (Page 16).
The Commission replied to the Company’s contention as follows:
“The rationale of using the past test year may be summarized as the Maine Commission did in Re Central Main Power Co., 29 PUR3d 113,125:
‘A test year is justified as a basis for forecast of future rate of return on the assumption that the growth of revenues and of income will tend to take care of the growth in the rate base; and that the factors which interfere with this corrective tendency can be allowed for by measurement or judgment.’” (Page 16). (Emphasis added.)
Admittedly, the “assumption” of the Commission, that the growth of revenues and of income would take care of the increased expenses and investment and return to the Company 8.9% return on its rate base, was not valid for the *89year 1971, and, up to the present time, it is not disputed that the Company is presently earning substantially less than 8.9%.
It is admitted that the deficiency between the Company’s earnings and the 8.9% return fixed by the Commission can never be recouped by the plaintiff and constitutes an irreparable loss, unless relief is granted by the Commission or a Court.
To prevent this irreparable loss, the Company on three occasions applied to the Commission asking for interim and temporary relief by permitting the Company to charge rates which would yield the 8.9% return which the Commission had fixed. The Company offered to collect the additional rates under bond and subject to refund should it later be determined that the Company was not entitled to the increase. These applications were denied by the Commission.
The so-called Johnson Act, 28 U.S.C. § 1342 provides:
“The district courts shall not enjoin, suspend or restrain the operation of, or compliance with, any order affecting rates chargeable by a public utility and made by a State administrative agency or a rate-making body of a State political subdivision, where: * X X
(4) A plain, speedy and efficient remedy may be had in the courts of such State.”
If the Company has a plain, speedy, and efficient remedy in the courts of the State of Colorado, this Court is without jurisdiction to consider the Company’s complaint and the action should be dismissed.
Although the statutes of the State of Colorado provide for a state district court review of any order or decision made by the Commission (1963 C.R.S. 115-6-14-15), the Colorado Supreme Court has restrictively construed these statutes.
In Mountain States T & T Co. v. Public Utilities Commission, Colo., 491 P.2d 582, the Company sought a preliminary injunction to enjoin the Commission from interfering with the charging of higher rates during the period of trial and appellate proceedings, the rates then presently fixed by the Commission being alleged to be confiscatory and therefore unconstitutional. The Colorado Supreme Court in denying injunctive relief stated:
“Even upon a substantial showing of probable success in ultimately establishing that the rate authorized is unjust, unreasonable, and even confiscatory, the sanction of any equitable relief should properly be directed to the administrative agency to permit and set such higher rates as will be deemed to be more consistent with fairness and reasonableness than the current rates under challenge.”
The Company has applied to the administrative agency (the Commission) for relief and its application has been denied. Relief from this denial appears to be barred by the decision of the Colorado Supreme Court in Mountain States T & T Co. v. Public Utilities Commission, Colo., 494 P.2d 76. There the Company sought injunctive relief from the Commission’s order refusing to permit an interim increase in telephone rates to be charged pending final determination of a request for a permanent rate increase. The Supreme Court stated:
“Where the statutory procedures before the PUC are not unduly delayed or prolonged, but progress on a prompt schedule as contemplated by law, a trial court should not intervene by entering an order requiring the higher rates requested by the utility pending final PUC determination.”
In Public Utilities Commission v. Poudre Valley R. E. Association, Colo., 480 P.2d 106, the Colorado Supreme Court stated:
“Unless and until an administrative matter is reduced to a final judgment, settling all the issues between the parties, we will not review it.”
We construe the foregoing decisions as prohibiting the state district courts *90from reviewing the decision of the Commission denying the Company’s applications for a temporary increase in rates to enable it to earn the 8.9% return which the Commission fixed and which, admittedly, the Company is not presently earning.
We conclude that in view of these decisions, it would have been a useless gesture for the Company to have applied to the state district court for relief.
We conclude that the Company has no plain, speedy or efficient remedy in the courts of the State of Colorado to adjudicate the merits of its claim that the present rates are confiscatory and are in violation of the Federal Constitution. Consequently, we conclude that this Court has jurisdiction of the subject matter of the complaint.
We now turn to the question of whether or not the Company is entitled to relief. It claims that the rates established and permitted to be charged by the Commission do not produce the 8.9% return, are confiscatory, and amount to the taking of the Company’s property without due process of law in violation of the Fourteenth Amendment to the Federal Constitution.
As we have previously stated, it is admitted that the rates presently in effect do not earn 8.9% return which the Commission established as “fair” and “necessary”. The verified complaint states that for the period from April 1, 1971, through December 31, 1971, the Company’s revenues and earnings were over $12 million short of earning the 8.9% return.
The 8.9% return was established by the Commission after evidentiary hearings and a consideration of the factors involved in such a determination. (See Decision No. 77230). In these circumstances, the establishment of rates by the Commission which will not produce the rate of return fixed by the Commission amounts to a confiscation of the Company’s property in violation of the Fourteenth Amendment of the Federal Constitution.2
We hold the Company is entitled to injunctive relief fashioned to increase rates to produce the 8.9% return fixed by the Commission until such time as the Commission shall enter a final judgment in the rate proceedings presently before it, at which time the Company will have a plain, speedy and efficient remedy in the courts of the State of Colorado to review final judgment.

. 1963 C.R.S. — 115-6-11.

. “There may be conflict in evidence upon the question as to what will induce investment or money in utilities, and as to what is a fair and reasonable return thereon; but when all the evidence has had proper consideration and a rate of return arrived at, then unquestionably that rate of return should be allowed and any lower rate would be confiscatory.” Indiana Bell Telephone Co. v. Public Service Commission, 300 F. 190 (1924).