Court Opinion

ID: 5162196
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:57:37.752184+00
Date Added: 2024-06-11T08:25:40.459656
License: Public Domain

ROVIRA, Justice,
dissenting:
In Colorado Municipal League v. Public Utilities Commission, 687 P.2d 416 (Colo.1984) (Colorado Municipal League I), we concluded that the Public Utilities Commission (PUC) had erred as a matter of law because it failed to make explanatory findings of fact concerning its decision to annualize in-period wage increases without a productivity offset. We reversed and remanded with the admonition that: “We offer no guidance to the PUC in the resolution of this issue, except to say that its order is arbitrary and capricious in annual-izing test period wage increases with no accompanying adjustment or offset for other changes in absence of adequate findings of fact.” 687 P.2d at 426.
On remand to the PUC, the Colorado Municipal League (CML) took the position that the PUC was limited to the evidentiary record as it then existed except as to matters relating to a refund and attorney fees. The staff of the PUC was of the view that the evidentiary record already made should be initially considered, and evidentiary hearings should be held only if the existing record was insufficient to comply with this court’s 1984 opinion. Mountain Bell concurred in the staff position.
The PUC, following what I perceive to be a correct reading of Colorado Municipal League I, took no further evidence but did make explanatory findings of fact concerning its decision to annualize test period wage increases without a productivity adjustment.
*47The PUC, in its 1985 supplemental decision, found that price level increases to Mountain Bell’s booked wage and salary expenses are warranted in order to properly and consistently maintain revenues, expenses, and rate base during the test year. Further, the PUC found that Mountain Bell properly adjusted wage and salary expense to reflect in-period wage increases. The PUC also found that the effect of the adjustments is to place salary costs into the test year as if the increases had occurred on the first day of the test period using the average number of employees during the test period. The PUC then explained why it did not apply a productivity offset to this in-period wage increase:
6. To measure productivity associated with wages, total revenue is divided by weighted man hours. Productivity obtained by Mountain Bell during the test period itself is inherently reflected in the revenues associated with that test period. That is why the proposal by Jamshed K. Madan, who appeared on behalf of Colorado Ski Country USA and Colorado-Wyoming Motel and Hotel Association (Ski Country), to reduce the in-period wage increase by a productivity offset, is inherently flawed. To deduct productivity that has already been included in Company revenues from the wage increase expense within the test period, the result [is] a double counting and a distortion of the matching relationship among revenue, expense, and investment. . To adopt the type of adjustment proposed by Ski Country witness Madan would result in a utility which had the least amount of productivity being rewarded for not being productive. The more productive utility would be penalized by having its productivity double counted against it within the test year.
(Emphasis in original.)
Finally, the PUC noted that it had made in-period test year adjustments in rate cases affecting Mountain Bell since 1968, and that it had consistently annualized adjustments for changes in wages during the test period without a productivity offset.1
By way of conclusion, the PUC held that: [A]n in-period productivity offset would distort the matching relationship and result in a disincentive rather than an incentive for productivity_ We conclude that a separate in-period productivity offset to the wage increases would result in double counting, distorting a proper matching relationship, and would be harmful both to Mountain Bell and its ratepayers.
The majority holds that without further evidence in the record the PUC could not make the findings necessary to support its supplemental decision. I disagree. I read Colorado Municipal League I to allow the PUC to explain the basis for its decision based on the existing record. If our intent was to the contrary, we would have remanded with instructions to have a further evidentiary hearing, and not allow the alternative of explanatory findings of fact.
In my opinion, the PUC has followed both the letter and spirit of our mandate and has provided adequate and rational findings explaining why it allowed annuali-zation of test period wage increases with no adjustment for productivity.
Accordingly, I would affirm the judgment of the district court upholding the PUC’s decision.
I am authorized to state that Justice KIRSHBAUM joins in this dissent.

. The PUC distinguished between a productivity offset for an in-period wage increase and one for an out-of-period wage increase. The former is measured by the receipt of revenues in the test period. The latter must have some kind of productivity offset in order to maintain a proper matching relationship.