Court Opinion

ID: 9647176
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:25:36.267699+00
Date Added: 2024-06-11T18:11:46.187883
License: Public Domain

Tom Glaze, Judge, concurring in part and dissenting in part. I concur with the majority’s reasoning upholding the Commission’s authorized rate of return and repression and Yellow Page adjustments, but I dissent as to the pre-emption issue. Although I largely concur in the result reached by the majority, I am truly perplexed by the manner in which the Commission applied the Discounted Cash Flow (DCF) formula. While I must agree with the majority that the appellant has not shown such a clear abuse of discretion that overturning the Commission’s action is warranted, I do feel the Commission has approached the outer limits of its discretion by misapplying the formula it used and reaching the result it did in this case. It makes absolutely no sense to use a formula based on certain premises and theories and then to disregard those premises and theories in the application of the formula. The Commission’s particular application of the DCF formula was clearly contrary to the testimony of the expert witnesses on both sides. Had the Commission not taken the upper end of its cost of equity range as its reference point, I would be unable to affirm a different, lower cost of equity calculation in view of the testimony and recommendations of the expert witnesses who testified on the issue of cost of equity. The Commission should not adopt a formula like the DCF method, and then incorrectly or inconsistently apply the formula, contrary to the testimony of the expert witnesses before it, in such a manner as might yield an unfair result. I am of the opinion that, if the Commission is going to employ a ratemaking formula, it should stick to the formula and not pick and choose outside the formula’s boundaries in order to achieve a result. Although I am concerned with the data used by the Commission in calculating Bell’s cost of equity, I cannot say, under the facts of this case, that the result reached was unjust. Even though the method employed may be afflicted with infirmities, this court cannot intercede unless the method additionally yields an infirm result. When the Commission decides to use a formula such as the DCF, I believe it should avoid toying with or misapplying that formula. To continue to do otherwise will eventually cause an unjust result and reversible error.