Appeals from the Order of the Pennsylvania Public Utility Commission in the case of Pennsylvania Public Utility Commission v. Bell Telephone Company of Pennsylvania, No. R-78120719.
Edward J. Riehl, with him Robert H. Griswold, McNees, Wallace & Nurick, for petitioners.
Bohdan R. Pankiw, Assistant Counsel, with him Steven A. McClaren, Deputy Chief Counsel, and Joseph J. Malatesta, Jr., Chief Counsel, for respondent.
Daniel J. Whelan, with him John P. Fons and James B. Ginty, for intervenor, The Bell Telephone Company of Pennsylvania.
Daniel Clearfield, Assistant Consumer Advocate, with him Walter W. Cohen, Consumer Advocate, for intervenor, Office of Consumer Advocate et al.
President Judge Crumlish, Jr. and Judges Mencer, Rogers, Craig and Palladino. Opinion by President Judge Crumlish, Jr. Judges Mencer and Palladino did not participate in the decision in this case.
[ 64 Pa. Commw. Page 492]
In this consolidated appeal,*fn1 we are asked to set aside an order of the Pennsylvania Public Utility Commission (Commission) entered on April 21, 1980, allowing a $77.3 million increase for business telephone services. Intervenor, Bell Telephone Company of Pennsylvania (Bell) has filed a motion for partial dismissal of the petition alleging that certain issues presented by the petitioners were not raised below.
On December 12, 1978, Bell filed tariff provisions, with the PUC, designed to generate $156 million in
[ 64 Pa. Commw. Page 493]
additional revenues. The increase, targeted at all classes of service, was to be implemented evenly over the subsequent two-year period. Several complaints were filed against the tariff provisions. On January 10, 1979, the Commission adopted its initial order which suspended the tariff and began its investigation into the legality of the proposed tariff revisions.
At the same time the Commission adopted its initial order, it gave Bell an option of pursuing its proposed tariff or filing alternative tariff revisions designed to produce $77.3 million that would become effective on sixty days' notice subject to investigation and refund, and cancellation of the December 12 tariff revisions. The Commission's order contained certain guidelines for the alternative tariffs to be filed on or before January 22, 1979:
(1) The alternative tariff provisions would produce revenues allowing Bell to earn a rate of return not greater than 9.65%.*fn2
(2) To offset increases in rates only for those vertical business services*fn3 designated in two schedules attached to the order. Schedule A, Competitive Services -- Equipment & Systems for Flexible Tariffs, and Schedule B, Non-Competitive Offerings -- Not Sufficiently Compensatory.
(3) The services "subject to competition"*fn4 were to be flexibly priced so long as the floor and ceiling rates for those flexibly priced services "each will result
[ 64 Pa. Commw. Page 494]
in positive revenue contributions from the service offering. . . ."
On January 22, 1979, Bell filed the alternative tariff provisions. After hearings and a report by an administrative law judge (ALJ) the Commission voted to effectuate the tariff revisions on March 23, 1979, subject to investigation and refund. An investigation into the tariff revisions commenced in April of 1979 with hearings held through August. On November 5, 1979, and subsequent to the hearings, the ALJ found insufficient evidence to sustain the actual competitiveness of the services listed in Schedule A as "Competitive Services," rejected Bell's flexible-pricing tariffs and found as a matter of fact and law that Bell's tariff revisions were "grossly discriminatory."*fn5
By order adopted April 18, 1980 and entered April 21, 1980, the Commission rejected the recommended decision of the ALJ and found the alternative tariff to be just and reasonable.
Petitioners, by way of their petitions for review, have launched a broad-sided attack against the order of the Commission as it was finally adopted and the manner by which it was adopted. Specifically, the petition delineates four areas of complaint:
(1) The Commission, allowing Bell to implement profit maximization, flexible pricing rates for selected business services, has engaged in de facto deregulation prohibited by the Code.
(2) Rates set under profit-maximization, flexible pricing discriminate against customers of vertical business services in ...