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BELL TELEPHONE COMPANY PENNSYLVANIA v. COMMONWEALTH PENNSYLVANIA (02/06/75)

decided: February 6, 1975.

THE BELL TELEPHONE COMPANY OF PENNSYLVANIA, APPELLANT,
v.
COMMONWEALTH OF PENNSYLVANIA, PENNSYLVANIA PUBLIC UTILITY COMMISSION, APPELLEE



Appeal from the Order of the Pennsylvania Public Utility Commission in case of Pennsylvania Public Utility Commission v. The Bell Telephone Company of Pennsylvania, R.I.D. 55 and R.I.D. 57, Order of December 12, 1974, entered December 21, 1973.

COUNSEL

John B. King, with him Donald F. Clarke, Gerard J. St.John, George P. Williams, III, Irving R. Segal, and Schnader, Harrison, Segal & Lewis, for appellant.

Albert W. Johnson, III, Assistant Counsel, with him Daniel F. Joella, Assistant Counsel, and Edward Munce, Acting Counsel, for appellee.

Gerry J. Elman, Deputy Attorney General, with him Lawrence Silver, Deputy Attorney General, and Israel Packel, Attorney General, for intervening appellee, Commonwealth of Pennsylvania.

Lewis M. Taffer for intervening appellees, Alliance for Consumer Protection and Elizabeth Gunter.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Rogers.

Author: Rogers

[ 17 Pa. Commw. Page 334]

This is a public utility rate case.

The appellant, The Bell Telephone Company of Pennsylvania (Bell), in December, 1972 and January, 1973

[ 17 Pa. Commw. Page 335]

    filed tariffs with The Pennsylvania Public Utility Commission (Commission) which increased Bell's annual revenues $56,417,000 for non-toll services to be effective February 7, 1973, and $3,386,700 for toll services to be effective January 22, 1973, or a total of $59,803,700 at the December 31, 1972 level of operations. The Commission allowed the tariff respecting toll services to become effective as proposed. The tariff revisions for non-toll services were suspended, an investigation instituted and numerous complaints received for filing.

After lengthy hearings, the Commission entered its final order on December 21, 1973. The Commission found that the fair value of Bell's property used and useful in public service at the end of 1972 to be $1,875,000,000 and that a fair rate of return which Bell should be allowed to earn on that fair value was 8%*fn1 ($150,000,000). It allowed operating revenue deductions of $636,557,000, producing, when added to the return, allowable operating revenues of $786,557,000, compared to Bell's proposed revenues of $806,338,642. The Commission thus disallowed $19,781,642 of the proposed rate increase. Among the items of expense substantially reduced was that for test year Federal income taxes claimed by Bell in the amount of $92,139,718 and computed by the Commission on the basis of operating revenues and operating expenses allowed by its order at $81,439,232. Included in the Commission's computation is a deduction from the amount of Federal income tax Bell will be required to pay of the sum of $3,500,000 described by the Commission simply as a "judgment amount" disallowance. As we ...


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