Court Opinion

ID: 9791998
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:21:44.655492+00
Date Added: 2024-06-11T07:37:40.043553
License: Public Domain

Justice MULLARKEY
dissenting:
I respectfully dissent. The Office of Consumer Counsel has raised significant questions which were not addressed by the Public Utilities Commission and which seriously undercut the validity of the staff study. Because the staff study formed the primary evidentiary support for the Commission’s decision adopting the rate restructuring, I would find that the Commission’s approval of the rate restructuring plan was not supported by substantial evidence.
It is important to put this case in context. As the majority notes, this is the Commission’s first attempt to restructure telephone rates since the 1984 break up of AT & T. Mountain Bell’s entitlement to a rate increase of $21 million is not at issue. What is at issue is who will pay for the increase. More specifically, this case decides what rates will be charged for what types of services.
The rate structure system traditionally has been intended to further the goal of universal telephone service. Mountain States Tel. & Tel. v. Public Utils. Comm’n, 763 P.2d 1020, 1023 (Colo.1988); *1099§ 40-15-110, 17 C.R.S. (1984) (general assembly declares that public policy of state is to allow competitive entry of providers of telecommunications service in the intrastate market as soon as practicable consistent with the continued availability of universal telephone service). To that end, other sources of revenue such as yellow pages advertising have been used to subsidize residential service. Mountain States, 763 P.2d at 1023. In this decision, however, the Commission adopts cost-based rates for services. This is a significant departure from past practices and results in a dramatic increase in the cost of basic exchange services. It is no exaggeration to say that the Commission has effected a fundamental shift in the burden of paying for the costs of telephone service in Colorado. Although the Commission-authorized increase of more than $40 million in charges for basic exchange services as well as the corresponding decrease in intraLATA charges of more than $26 million may be justified, I do not believe that the record in this case was adequate to support such a major revision in the telephone rate structure. Accordingly, I would reverse and remand for a new hearing.
The Commission rejected completely the justification put forward by Mountain Bell in support of its rate restructuring plan. Mountain Bell argued to the Commission that the rate restructuring proposal was necessary in light of the dynamic changes in the telecommunications industry caused by federal deregulation and rapid technological advancements, both of which have contributed to increased competition among telecommunication service providers. However, the Commission found that “Mountain Bell has not met its burden of proof to' establish that sufficient competition exists in the major markets to justify its pricing proposals.” The Commission acknowledged that Mountain Bell sponsored testimony and offered exhibits including studies indicating the extent of the increased competition which the company faced but the Commission rejected this evidence, stating that “[w]e find that each of the studies was riddled with extensive flaws and does not show what it purports to demonstrate_” Finally, the Commission stated that it agreed “that access charges should be lowered, but not because of the competitive threat of bypass as alleged by Mountain Bell.”
Although the Commission rejected Mountain Bell’s proferred justification for the rate restructuring, it nonetheless agreed that Mountain Bell’s rate restructuring proposals by and large were appropriate in light of the Commission staff’s cost of service study and the Commission’s support for “cost-based” pricing.1 Thus it is clear that the staff’s cost of service study was the primary if not the sole basis for the Commission’s decision adopting most of the rate restructuring plan proposed by Mountain Bell.
The Consumer Counsel introduced expert testimony challenging certain methodologies used by the staff in its study. This testimony cast doubt on the reliability of the study as the basis for the Commission’s adoption of the rates in this case. The Consumer Counsel presented testimony, corroborated by Mountain Bell’s witnesses, that the method by which the staff allocated access costs between local services and toll-related services, the so-called subscriber plan factor (SPF), led to an allocation which was arbitrary and capricious in that it did not reflect true cost causation. If this testimony were believed, it would destroy the Commission’s purported preference for cost-based rate charges. The Consumer Counsel’s expert testimony indicated that the SPF approach to cost assessment was developed as a result of political compromise in order to allocate costs between *1100interstate and intrastate telephone use and was not a suitable basis for determining intrastate rates. The Consumer Counsel presented testimony criticizing several other important aspects of the staff study with respect to the assignment of costs to local services. See maj. op. at 1096-97.
The majority is correct to recognize that in determining whether the Commission’s decision is supported by substantial evidence, the court must view the evidence in the record in a light most favorable to the Commission. However, even though the findings of the Commission need not take any particular form, the Commission should make findings to show which of the conflicting evidence it accepts as competent and worthy of belief and which of the evidence it rejects. Aspen Airways, Inc. v. Public Utils. Comm’n, 169 Colo. 56, 453 P.2d 789 (1969). Such findings were not made in this case with respect to the evidence offered by the Consumer Counsel to challenge the validity of the staff report.
This is not to suggest that the Commission must address every objection raised by a party or all testimony offered at a hearing no matter how trivial or incidental to the issue under consideration. However, here the evidence offered by the Consumer Counsel was not trivial but went to the heart of the issue. It challenged the validity of the staff study, which was the evidence upon which the Commission relied in largely adopting Mountain Bell’s rate restructuring plan. Thus, this court cannot engage in meaningful judicial review without knowing that the Consumer Counsel’s evidence was considered and the Commission’s reasons for rejecting it. In this major rate restructuring case, which effected such a fundamental shift in the burden of paying for the common costs of telephone access, it is especially critical that this court require the Commission to properly explain its decision. For the foregoing reasons, I respectfully dissent.
QUINN, C.J., joins in this dissent.

. The Commission rejected the "oft-repeated contention of Mountain Bell and AT & T Comm that toll rates subsidize basic exchange rates.” At the same time, the Commission affirmed its support for "cost-based” pricing. I find these two positions inconsistent. If neither local access nor long distance charges subsidized each other prior to the rate change, then the $26 million shift from toll charges to local access charges ordered by the Commission in this case apparently results in a new subsidy, i.e., local access charges subsidizing long distance charges.