Southern Bell Telephone & Telegraph Co. v. Louisiana Public Service Commission

HAWTPIORNE, Justice (dissenting). I am of the opinion that a rehearing should be granted for further consideration of this court’s holding that a return of not less than 6 per cent on the property rate base is necessary to avoid discrimination. As I view the matter, the Constitution of this state (Article 6, Section 4) vests in the ' Commission the power to fix reasonable and just rates, and of course if the rates fixed are just and reasonable, they will not be confiscatory. The Constitution does not *235 require that every public utility be allowed the same rate of return, and therefore I do not think the court should say to the Commission: “You fix the rates under a mathematical formula to return not less than 6 per cent on the property rate base.” The court should not, in my opinion, fix any uniform rate, but should concern itself with determining whether the rates fixed by the Commission are just and reasonable, for under the facts and circumstances in one utility company case a return of more than 6 per cent would be just and reasonable, while in others a return of less than 6 per cent would be just and reasonable. Furthermore, I do not think it proper to say that because the Commission has in the past allowed a return of not less than 6 per cent to other utilities, then it should not at the present time, or even in the future, allow a return of less than 6 per cent. Economic conditions change from time to time, and what was a reasonable and just return in the past may not be just and reasonable now or in the future. Under the facts in the instant case Southern Bell may well be entitled to have the rates fixed so as to return more than 6 per cent in order for the rates to be just and reasonable, or the ruling of the Commission fixing rates so as to return 4.46 per cent may be just and reasonable. On this I express no view. I think also that a rehearing should be granted so that this court may give further consideration to its existing jurisprudence. In Gulf States Utilities Co. v. Louisiana Pub.Serv.Comm., 1952, 222 La. 132 , 62 So. 2d 250, 253 , the Louisiana Public Service Commission allowed Gulf States Utilities Company a rate of return of only 4.35 per cent although the Commission’s records showed that for a period of six years, and in 29 cases in which it had fixed rates, it had allowed a return of 6 per cent in matters of that sort. In approving the rate increase there sought by the utility company this court said: “ * * * if 6% is and has been considered by the Commission to be a just and equitable rate of return, it would seem that refusal to grant an applicant a rate increase which would enable it to earn 6% would be inequitable and unjust in the absence of exceptional circumstances.” In Southern Bell Tel. & Tel. Co. v. Louisiana Public Service Comm., 1957, 232 La. 446 , 94 So.2d 431, 436 , decided after the decision in the Gulf States case, the Commission denied to Southern Bell an increase in rates which the telephone company said was needed to provide it with a 6 per cent return. In effect, what the Commission did there was to order the telephone company to reduce its rates to a level at which a 6 per cent return could not be realized. The district court set aside the ruling of the Commission ordering the reduction of the rates, being of the view that the opinion of this court in the Gulf States case necessitated *237 this action. On appeal, however, this court reinstated the order of the Commission reducing the telephone company’s rates so that there was a return of less than 6 per cent, saying: “There is no constitutional requirement that every regulated company be allowed the same rate of return.” In the instant case this court seemingly has returned to its holding in the Gulf States case, as it cited that case in support of its holding here. Thus it will be seen that the decision in Southern Bell Tel. & Tel. Co. v. Louisiana Public Service Comm. (1957), supra, overruled the Gulf States case without saying so, whereas the present decision has the effect of overruling this court’s decision in the 1957 Southern Bell case and of reinstating the holding in the Gulf States case. The district judge in rendering his decision in the 1957 telephone company case followed the decision of this court in the Gulf States case and was reversed; in the instant case the same district judge followed the decision of this court in the first telephone company case, only to be reversed again. Thus it is apparent that our recent decisions in these utility company cases are very confusing and leave the Commission, the utility companies, and the district courts of this state in hopeless doubt about this fundamental problem of ratemaking.