Court Opinion

ID: 7076336
Source: CourtListenerOpinion
Date Created: 2022-07-24 08:16:38.606739+00
Date Added: 2024-06-11T16:12:47.079906
License: Public Domain

MAY, Judge,
concurring and dissenting.
I must respectfully concur in part and dissent in part. I agree the IURC correctly applied the New Services Test to Verizon, correctly found Verizon had not taken the Subscriber Line Charges into account when determining its fees, and correctly examined evidence and set a prospective rate for SBC. Also, while not agreeing with the amount of the refund, I *368concur in the analysis and remand for reconsideration of the availability of interest on the refund. However, I do not believe the issue of the Subscriber Line Charges was deferred from the first cause, such that the Commission in its order in this third proceeding could refund the charges retroactively to 1997. Accordingly I dissent from Sections IV, V.B., and VI of the majority's opinion and concur with the remainder.
The IURC has the authority to defer an issue from one proceeding to another, see Indiana Gas, 610 N.E.2d at 871, and as the majority correctly notes "it is not uncommon or unlawful for the IURC to defer an issue from another related cause for resolution." Op. at 8363. However, I do not believe the facts herein are analogous to Indiana Gas, where we noted:
[The initial order in GCA was designated as an "Order on Less than All Issues" and provided that, with respect to the return to be earned, "This issue will be addressed in a subsequent order." We hold that this language was sufficient to leave open the final determination of the rate for the affected period until resolution of the "return to be earned" issue and to give adequate notice to Gas Co. that that issue remained open. It was not necessary that the initial order recite specifically that it was subject to refund.
610 N.E.2d at 871.
Here, the October 6, 1999, order in the first proceeding, Cause No. 40880, notes the Subscriber Line Charges "are the subject of a separate docket before this Commission docketed as Cause No. 41100 [the second proceeding]. ..." Op. at 363 (quoting Appellant's App. at 112). However, that order does not, as the majority asserts, "defer[] the issue" or decline to "address the subject of the Charges because" the Subscriber Line Charges were the subject of the second proceeding. Op. at 363. Rather, the October 1999 Order in Cause No. 40880 provides:
Interstate subscriber line charges are the subject of a separate docket before this Commission docketed as Cause No. 41100 wherein the IPA filed a complaint before the Commission based upon the Tenth Cireuit Court of Appeals remand in CF. Communications Corporation et. al. v. Federal Communications Commission et.al.
(Appellant's App. at 112.) There is no deferral language in that paragraph.
Instead, there is substantial language in that October 1999 order suggesting the issue was not deferred. First, the IURC called that order a "FINAL ORDER." (Id. at 106 (emphases in original).) In addition, the order provided:
Therefore, we find that the payphone rates submitted by Ameritech and GTE, while including a substantial mark-up over direct costs, fall within the acceptable parameters determined by the PCC in its examination of payphone tariffs submitted by Bell Atlantic and GTE, and should be approved, with one exception for each which we describe immediately below.
The per message local usage charge of Ameritech and GTE do appear to be an exception. In the case of Ameritech, the rate is $.05 per message, which constitutes a mark-up over the direct cost of providing the service that exceeds the defacto ceiling determined by the FCC (4.8 times direct cost). In the October 29, 1997, Order in CC Docket 97-140, the FCC found that the rate for an unbundled payphone service provided by GTE (in another jurisdiction) was excessive because it included a similarly high mark-up and GTE did not provide adequate cost support. Ameritech, in its reply testimony, justified the $.05 per *369message rate based on the IURC's approval of it in Cause No. 38158 in 1987. However, in its October 29, 1997 Order in CC Docket 97-140, the FCC found that rates contained in state tariffs are not relevant under the new services test. (Order at paragraph 8)[.] Thus, Ameri-tech's per message rate for local usage does not appear to comply with the new services test. Similarly, GTE's per message rate for local usage includes a mark-up over the direct cost of providing the service which exceeds the ceiling established by the FCC.
In its Memorandum of June 18, 1999, the Commission's Staff recommended a per message local usage charge of $.0096 for Ameritech and $.014 for GTE. The Commission Staff indicates that such rates, which were developed based on the cost support date provided to the IURC, comply with the FCC's payphone orders and new services test. We find that Ameritech and GTE should be provided the opportunity to present alternative per message local usage charges for our further consideration in that such proposals should be accompanied by cost support and analysis. If Ameritech and/or GTE wish to present an alternative charge, they should do so by filing the proposed charge, cost support and analysis within 30 days from the date of this Order. In the event such alternative proposals are not made, the above described charges shall take effect, and refunds for the difference between such charges and the interim charges shall be made to the respective company's IPP customers.
[Findings regarding Sprint].
Ameritech, Sprint, and GTE should file revised tariffs consistent with this finding within thirty days of the date of this Order. The Commission Staff, upon receipt and review of said revised tariffs, should approve said tariffs if they are determined to be in conformity with our findings herein.
[Finding regarding other incumbent local exchange carriers ("Locals") ].
IT IS THEREFORE ORDERED BY THE INDIANA UTILITY REGULATORY COMMISSION that:
1. Ameritech and GTE shall submit revised tariffs to incorporate the per message local usage charges reflected in Finding No. 5 herein within 30 days of the date of this Order; provided, however, that Ameritech and GTE may each propose alternative per message local usage charges accompanied with pertinent cost support and analysis within 30 days of the date of this Order for our consideration. To the extent any tariff ultimately approved by the Commission Staff for per message local usage charges reflects rates which are less than the interim rates approved by our October 15, 1997 Order, the difference shall be refunded to each company's IPP customers.
2. [Order regarding Sprint].
3. [Order regarding other Locals].
4. There shall be no further proceedings for Phase II of this Cause [regarding other Locals].
5. This Order shall be effective on and after the date of its approval.
(Id. at 112-15) (italics added; original emphasis removed). Nothing in those final paragraphs suggests the Commission left the Subscriber Line Charges open for determination in a later proceeding. Rather, it explicitly left open only the issue of the mark-up on the "per message local usage charge.3 Accordingly, the October 1999 *370order did not put SBC and Verizon on notice that the Commission had left unsettled the issue of the Subscriber Line Charges, could revise the tariffs retroactive to 1997, and could order a refund of overcharges. Cf. Indiana Gas, 610 N.E.2d at 871.
Nor does the remaining procedural history of this case support an inference that all parties had notice the issue of all Sub-seriber Line Charges post-1997 had been deferred to Cause No. 41100. After the October 1999 order in Cause No. 40830, it appears none of these parties-IPA, Verizon or SBC-presented evidence or argument in Cause No. 41100 regarding the validity of the Subscriber Line Charges after 1997. Instead, that cause remained what it had always been, a challenge to pre-1997 Subscriber Line Charges. I find the parties' failure to raise this purportedly deferred issue incompatible with the Majority's determination the Commission had deferred the issue to Cause No. 41000.
In addition, on October 10, 2002, the IPA filed a new complaint with the IURC, Cause No. 42808, in which is asked the IURC to review and adjust the tariffs set for SBC, Verizon, and Sprint in Cause No. 40830 because the tariffs were improper under the New Services Test as clarified in the Second Wisconsin Order. The petition alleged:
8. Respondents' rates (established before the FCC's NST Order) fail to comply with the New Services Test because they: (a) do not use forward looking direct economic costs; (b) contain overhead allocations significantly exceeding the allocations for comparable services, such as unbundled network elements; (c) do not follow the New Services Test methodology in setting rates for usage services; and (d) foil to take into account other sources of revenue, including EUCLs [also known as Sub-seriber Line Charges], resulting in double recovery of costs for Respondents.4
*3719. The FCC NST Order clarifies the Wisconsin Order, and both Orders are binding on the IURC in this matter {except to the extent that the Wisconsin Order was modified by the FCC NST Order). Because the FCC did not completely uphold the Wisconsin Order and further clarified the applicable standards for rate-setting, the IPA requests this Commission set aside Respondents' existing rates and establish new rates consistent with the New Services Test as set forth in the FCC NST Order.
10. Because Respondents' rates were unlawfully set and do not comply with the FCC NST Order, IPA is further entitled to a refund, with interest, for excess rates paid by its members since 1997, by virtue of Respondents' failure to charge rates that comply with the New Services Test.
(Appellant's App. at 45-46) (footnote in original) (emphases added). The IPA's 2002 complaint explicitly states rates "were set" by the Commission in Cause No. 4083,5 and the IPA wanted new rates established. The IPA did not request the IURC enter a long-awaited final order in Cause No. 40830 and refund the overcharges they were permitted by the preliminary order.
All those facts lead me to conclude the IURC did not intend to defer, and the parties did not believe the IURC had deferred, the issue of Subscriber Line Charges after 1997 to Cause No. 41100. Accordingly, there was no issue from Cause No. 41100 for the IURC to defer to this Cause No. 42303,5 and the IURC erred in this proceeding, Cause No. 42308, by ordering refunds retroactive to 1997.6
*372Therefore, I concur in part and dissent in part.

. This conclusion is further supported by the Commission's follow-up order that resolved *370the per message local use charge issue:
In its Final Order of October 6, 1999 the Commission resolved each matter pending in this proceeding, with the exception of the issue of the per message local use charge applicable tio Ameritech and GTE that is discussed and resolved by this Order; determined that there shall be no further proceedings in Phase II of this cause; and, reached the following additional conclusions on the issues.
(Appellant's App. at 119) {emphasis added). That follow-up order also contains an example of deferral language the Commission could have used if it truly intended to defer from the first cause the issue of the Subscriber Line Charges: "Issues applicable to GTE regarding rates for Call Screening and International Toll charges, have not been resolved by this Cause and will be addressed and resolved under cause number 40857." (/d. at 123.) This suggests the Commission knows how to defer an outstanding issue to another cause number when it so intends.

. The Respondents' existing relevant rates and charges for Independent Payphone Providers were established pursuant to IURC Order in Cause No. 40830 dated October 6, 1999 ("IURC Order") where the Commission found no federal basis to require Respondents to submit cost support for their payphone rates based on TSLRIC or TELRIC, and that payphone providers are not subject to pricing standards for unbundled network elements. (IURC Order at 6.) In the same Order, the IURC approved Respondents' overhead allocations, relying upon language from a 1997 FCC Order in CC Docket 97-140, stating that uniform overhead loading is not mandated provided that the loading methodology selected, as well as deviation from it, is justified. (IURC Order at 6.). Finally, the IURC found the payphone rates submitted by Respondents Ameritech and Verizon were "within acceptable parameters determined by the FCC in its examination of payphone tariffs submitted by Bell Atlantic and GTE." In support of this finding, the IURC relied upon the same 1997 FCC order, which found Bell Atlantic rates for unbundled payphone functionalities amounting to 3.4 times direct costs were reasonable, and other [Locals] rates that amounted to 4.8 times direct costs were reasonable.

. The order for Cause No. 41100 did contain language deferring the issue of post-1997 Subscriber Line Charges to this proceeding, Cause 42303:
We find that EUCL charges, if any were inappropriately assessed to IPPs after the implementation of the Telecommunications Act of 1996, cannot be appropriately addressed in the instant proceeding due to the fact that the evidence and testimony addresses EUCL charges prior to the Telecommunication Act of 1996. We find that IPA's complaint regarding EUCL charges raised in 40830 is most appropriately addressed in Cause 42303, which considers IURC and FCC orders issued after the Telecommunications Act of 1996 and re-examines Cause 40830. This deferral of issues is consistent with the history of all the complaint cases filed in the history of the Commission regarding payphones. Cause No. 40830 deferred resolution of the EUCL/SLC issue to this cause. Subsequently, the filing of Cause No. 42303 subsumed the issue of EUCLs allegedly assessed post-TA '96.
(Appellant's App. at 349.)
However, as the IURC entered its order in Cause No. 41100 the same day it entered its order in this third proceeding, Cause No. 42303, I interpret that deferral language as a post-hoc justification by the IURC to permit it to refund a greater portion of the tariffs set by the October 1999 order in Cause No. 40830. With the advantage of hindsight, and the FCC's clarification of the New Services Test in the Second Wisconsin Order, we can see the rates set in that October 1999 order erroneously permitted double recovery of Subscriber Line Charges Nevertheless, the TURC may not retroactively correct that error. See Ind.Code § 8-1-2-68 ("the commission shall determine and by order fix just and reasonable rates, tolls, charges, schedules, or joint rates to be imposed, observed and followed in the future"). The IPA could have filed a direct appeal challenging the IURC's conclusion the "payphone tariffs submitted by Bell Atlantic and GTE ... should be approved, with one exception for ... [the per message local usage charge," (id. at 112), or the IPA could have done exactly what it did-wait until a new order by the FCC supported its argument and then file a new complaint with the IURC challenging the tariffs set in that October 1999 order.

. Because my opinion is not the majority opinion, I need not determine the extent to which the IURC can order a refund without impermissibly ordering a "retroactive rate reduction" as discussed in Section V.B. Nor do I need to determine the impact of the two-*372year limitation discussed in Section VL Accordingly, I dissent without opinion as to those portions of the majority's opinion.