Court Opinion

ID: 8048035
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:06:21.844443+00
Date Added: 2024-06-11T16:37:35.779671
License: Public Domain

Blandin, J.,
dissenting in part: To determine the relative amount of plant and associated expenses which should be apportioned to intrastate and interstate operations respectively, the majority report of our commission divided the minutes of exchange use by three. It thereby credited to exchange use only a fraction of the minutes so used and thus departed from all previous separations formulae here or elsewhere which are based on actual use. The report itself concedes that this drastic procedure goes beyond that adopted in *223any other jurisdiction. However, justification is sought by claiming that this division by three is only an extension of the so-called Charleston separations formula which makes a similar division by two. This formula was unanimously adopted by the Federal Communications Commission after exhaustive study less than a year before our commission’s report. At the meeting at which this plan was adopted two of our Commissioners were present and supported the plan. The reason for the division by two in the Charleston Plan is that in exchange calls, under the company’s recording system, the time used by the person making the call is added to the practically identical time consumed by the one receiving it. Thus if Jones in Lebanon calls Brown in Lebanon and they talk for five minutes, the result would be a credit of ten minutes to this exchange call. It may be argued with some logic that this results in a disproportionate amount of cost being credited to the exchange operations, so the ten minutes is divided by two. However, if Jones in Lebanon calls Brown in Boston and they talk for five minutes this all should be and is credited to interstate service. This obvious explanation has been recognized in other jurisdictions and we know of none where the reason for the division is otherwise interpreted. It seems therefore clear that the Charleston Plan does not depart from the actual use principle in its separations procedure. Furthermore, the plan itself states unequivocally that “sound separations procedures should be based on the ‘use’ principle” (company’s exhibit 32a p. 1), and this plan is so based. Nowhere in the Charleston Plan is there mention or suggestion of “equating” toll and exchange use or of dividing or multiplying to equate such use by the introduction of any element of value of service. It seems to me that any surmise that this plan embodies anything of this sort is without foundation in fact.
Supply (cost of service) and demand (value of service) are separate and independent factors in the determination of utility rates. The object of separating joint plant and apportioning it among local exchange, intrastate toll and interstate toll uses is to ascertain the costs applicable to each kind of service. The measure of the cost of such service under existing rate structures must be the actual use of the plant in rendering each kind of service. To introduce, as would our commission, the demand or value of the service in reckoning this cost is to give weight to an extraneous and unrelated factor. The aggregate value of each service to consumers may be measured by the total revenue derived therefrom. But to *224separate the cost of property on this basis is clearly improper for it entails circuity of reasoning. If the property were so separated, then the relative total revenues would be used to determine a rate base for each kind of service and this rate base in turn would be used to determine the rates necessary to produce the revenue required to cover operating expenses and an adequate return on investment. Yet in dividing by three the actual minutes that the plant was used for local exchange cost in the reckoning of relative use, the commission was introducing the element of value based on the rates consumers are willing to pay for the services. Such a procedure incorporates indirectly a factor which so far as we know no jurisdiction has permitted to be brought in directly.
Our commission concededly without precedent or experience upon which to base such action makes a radical departure from the use principle by dividing the actual minutes of exchange use by three. In so doing it violates the long established principle that the separation must be based on actual use. Smith v. Illinois Bell Tel. Co., 282 U. S. 133, 150, 151; Norfolk v. Chesapeake &c. Tel. Co., 192 Va. 292. As the commission admits “the full effects of the Charleston plan are not yet fully known, or realized.” In other words, this plan while possessing a findably logical basis has not yet completely proved itself and is to an extent an unknown. Upon this unknown the majority opinion of our Court would permit the commission to superimpose another unknown factor in the hope of obtaining a fair result. I am unable to find an adequate justification in law or logic for such a procedure. Unquestionably the matter of separations is one of great difficulty and reasonable latitude must be granted the commission in the performance of its task. New England Tel. & Tel. Co. v. State, 95 N. H. 353, 357. Federal Power Commission v. Pipeline Co., 315 U. S. 575. But its conclusions must be based on “facts and reason.” New England Tel. & Tel. Co. v. State, supra, 359. Here it is not a fact that dividing the minutes of actual use on exchange calls by three can by any rational processes lead to a fair separation based on actual use as the law requires. Smith v. Illinois Bell Tel. Co., supra, 150, 151. Nor does it seem the hope that somehow this figure three arbitrarily chosen will produce a just result is a sufficient reason to permit its use. To say, as does in effect the majority opinion of our court, that the method of arriving at the result is immaterial so long as a fair result is reached seems to me to beg the question. It is impossible to tell in this case whether a fair result has been *225obtained since it rests upon errors of law and fact. Assuredly, it is the duty of our court to supervise the methods employed by the commission to the extent that such methods shall not be arbitrary but shall be based on reason. Cf. Wisutskie v. Malouin, 88 N. H. 242, 245. For us to do otherwise would be to destroy eventually the integrity and effectiveness of the whole regulatory process. “The public, as well as the parties, is entitled to a finding of the public good on a hearing without error of law.” Parker-Young Co. v. State, 83 N. H. 551, 560; Boston & Maine R. R. v. State, 97 N. H. 380, 384. It seems to me the commission has erred as a matter of law in its apportionment of property and expenses between intrastate and interstate services and that as a result of this error the petitioner’s constitutional rights are violated. Therefore, I would remand the case for a redetermination of this issue and for such revision of the order as may result therefrom.