*1 STATE OF MONTANA, ex OLSEN, ARNOLD rel. H. Plain
tiff and Appellant, v. PUBLIC SERVICE COMMIS SION THE OF MONTANA, STATE OF THE et al., MONTANA COMPANY, POWER Defendants Re spondents. 9676. No. January 22,
Submitted 1957. March Decided 1957. (2d) 308 Pac. *2 Mr. Olsen, Arnold H. Atty. Gen., former amicus curiae.
Mr. Forrest Anderson, Atty. H. Gen., Mr. William F. Crow- ley, Atty. Gen., Asst. and Mr. Leaphart, Jr., W. Charles former Atty. Asst. Gen., for appellant. Weir,
Mr. T. Helena, B. Mr. Corette, D. Robert Mr. William Coldiron, H. Mr. Finlen, J. T. Samuel Chase, Jr., Mr. B. Mr. Hauck, John Butte, C. Mr. Patten, James Secretary- B. former Counsel Board of Railroad Commissioners, and Mr. John Y. Potter, Secretary-Counsel, Commissioners, Board of Railroad respondents. Olsen, Mr. Mr. Leaphart,
Mr. Corette and Mr. Coldiron ar- gued orally.
PER CURIAM. brought by plaintiff was under
This action 70-128, challenge validity of an order made allowing defendant Board of Railroad an in- Commissioners gas charged by defendant, crease rates to Montana be Company. Power
The district court sustained order and this Board appeal followed. May appli- Company, Montana Power made
cation before the Service Commission to increase its rates Public charges. a public hearing and A held of cor- number porations, organizations associations, ap- individuals and labor peared protestants. Yery by pro- little evidence was offered they antagonistic except generally testants were to show charges instances any in the rates and some increase protestant financially particular position that the was not any increase in the to absorb increased rate and obliged pay those would it. would be detrimental who granted sought. The Commission increase question made A motion for reconsideration of denied. *3 but by plaintiff instituted none then
This action was any took further action. protestants other evidence was in below additional hearing the court At introduced. 70-128, trans- section court with
Consistent the Commission considera- copy the evidence to mitted a August supplemental order made a on tion. ruling. 1955, adhering to its former upholding the action judgment thereupon entered The court the Board. determining questions point that in outset, out we At the judge nor the this trial members neither the the court before voting duty merely on whether their discharge can court They rate. do or the new not prefer the old they individuals as power people or with the with the stand to either a choice make n company. by recognized governed must be the courts action facts, this court must applied as lawof
principles
107 writing stating grounds its decision in of the deci- render (cid:127) R.C.M., ; sion. 93-212. tp simply agree mention We these matters indicate we ‘‘ said, a popular with the Board when it decision would tobe. but, deny any increase, popular political decisions cannot be ” considered. assignments Plaintiff makes several of error. The first one urged part is that it wTaserror on the of the court to af Board, firm sup the order of the because he was not asserts ported by sufficient evidence.
Plaintiff placed by contends that too much reliance was upon Board the Company, showing evidence offered the re- production cost depreciation, arriving new less in at the value Company’s plant dedicated customers, to the service of its it is which entitled to a reasonable return. rate of Company
'The evidence shows that the Montana Power com- distributing gas in again menced natural 1931. In 1933 and in voluntary 1935 it sought' took reduction has rates and never or obtained increase until this proceeding commenced. Company Since the commenced its distributing gas, labor costs cent; 132 per gas pipes have increased the cost of has increased cent; per 100 equipment per the cost of automobile cent; gas per cent; meters 131 gas per valves 151 cent taxes per Company’s As plant cent. to valuation of the used to serve distinguished general customers, as from service to the Ana- Company, three figures conda different sets of were submitted. It reproduction shown that the cost depreciation new less of 1952. amounted to indices, figures computed
The value as of were from Handy in the Index Utility contained Whitman of Public Con- Costs, which compilation struction the evidence shows is a States. general use the United computation method of
This calculated to reflect the cost *4 plant inflationary under reproducing prices of the existing in plant of for evidence of value the used serving Other the general original plant shows that the customers cost of the was $23,022,028, that the original depreciation cost less as of $17,102,260. prop- The estimated assessed of its value erty, subject $10,000,000. ad about tax, to valorem point
At this of its should be noted the assessed value property property does not all the taxable and cannot include gas reserves, Constitution, XII, art. sec- because the under our basis, must tion cannot be taxed on an ad valorem bnt proceeds. taxed on annual net the July Commission, in its fixed from order, period The first 1, 1953, July testing period testing as the this period of the new For test the Com- reasonableness rates. expenditures $2,500,000 pany estimated for additions to its property serving general customers.
Likewise, $3,660,000 reproduction new added cost gives contemplated plus additions an allow- which effect anticipated price for estimated increased value due ance changes. gross gas cus- general revenue from the sale
tomers, excluding Copper Company sales to the Anaconda $4,780,346. gross ex- was shown to be the sum of year, leaving penses shown to be for the same a were $666,234. balance of $666,- that the income of shows net
Mathematical calculation $39,179,067, per cent on a return of 1.70 represented 4.56 depreciation; in 1952 less cost reproduction new claimed cost, per cent on $23,022,028, original and 6.13 per cent on depreciation cost less to 1952. Before original $17,102,260, period submitted test court, figures for the were the district per on the actual net income 2.76 cent showing return of reproduction new on cost new $1,137,425 under $41,156,882, a re- July 1, depreciation as of less depreciation $17,- less original cost turn of 9.16 543,346. Company’s value found that the fair
'The Commission *5 109 customers, as of general gas to the selling used in property 1, $30,000,000. 1952, was December the valuation, to sum of this which was added
On test the rate of return during period, the made for additions 1954. year ending 30, June per be 5.12 cent for the would found that it Company, the As the Anaconda Commission to that imported Canada; from the gas the exclusive user of was the Com- had Anaconda ordered Federal Power Commission the used pay facilities for all the costs thereof and pany that Company, the revenues and Anaconda and serving it to the should be excluded from consider- expenses connected therewith general rates for the customers. figuring the ation Company the court However, hearing the before the expenses paid, received, and the return the revenues showed Company the allocation between from Anaconda earned the general shows the the customers. evidence submitted and than that from the greater from was received return earned also customers under the new rate. The record shows general gas proceeding was instituted that before this by per 61.3 Company was increased cent Anaconda approved by was the Commission. increase specific, shows, To be more evidence and the Commission found, Company’s property the value devoted 30, serving Company $13,- the Anaconda as of June yielded 100,000 earnings per that the a return 6.30 cent on that valuation. Company’s property
By adding the value of the devoted to gas general serving its customers value the Com- serving gas to the Anaconda pany’s property devoted to Com- plant, as found of the entire pany, value 30, $44,844,- as of serving all the customers June Company earned a return of 5.46 and on that value 334 per cent. separate testimony volumes of three
The record consists exhibits, the substance of which need not be many recited here.
It is sufficient to- sustain the order- of .the when not Board controverted. There is controverting showing no evidence made n
Company.
rule is
if
sustaining
substantial
there be
order
Board,
the courts will not interfere with
Billings
Utility
Comm.,
conclusion.
v.Co.
Public Service
62 Mont.
; Chicago, M.,
Plaintiff contends that the Commission and the trial court gave weight reproduction too much to the evidence of the cost depreciation in ascertaining new less the value of the Com- pany’s property public. used and useful in serving the He upon Hope relies the case of Federal Power Comm. v. Natural Co., 591, 281, 333, Gas U.S. S. Ct. 88 L. Ed. which he theory contends discredits that obtaining present of value. fallacy argument of his that is the Commission not did fix value reproduction on a new less depreciation cost basis. Company That value was claimed in be excess of $30,- whereas the Commission fixed the at value 000,000 when Company the Anaconda was excluded. When the Company included, used serve the Anaconda was property reproduction depreciation, claimed cost less new as of June 1954, $55,626,446, whereas the Commission found the $44,844,334. value to statute, 70-106, provides: section
Our R.C.M. ‘‘ may, discretion, investigate in its The commission and ascer- property every public actually utility value of the of . tain public. making useful for convenience In used and may commission avail itself investigation of all infor- such counties, assessment rolls of in the various mation contained public of the various branches of the gov- records state and the obtainable, information ernment, any or other and the commis-
Ill amake revaluation its own initiative may any time of sion ’’ property. such must the Commission what methods is silent as to The statute has property. This court ascertaining of the the value use in value present means the fair property that of the held the value important is depreciation reproduction new an that cost less Power Co. v. determining Tobacco River in the value. factor (2d) 886, 521, 530, 98 Comm., 109 Mont. Pac. Public Service case, this court said: 890. In =x= * reproduc- values, cost of Original cost, assessment theory, public records mentioned new, prudent investment tion 70-106], R.C.M. section now section [R.C.M. end, namely all means an opinions of value are supra, pro- error in the We can find no determination value. allowing reproduction of cost cedure court admitted evidence of value." new, less.depreciation, to be reproduction in addition to cost here there was submitted So original depreciation cost less and the depreciation less new property concerned, far as value so taxable assessed records, the Commission examined record shows re- 70-106, and, from all the ferred to evi- theory the value as above noted not on one dence, fixed all considering theories. but after value Hope binding upon the Public ease not Serv ice square Montana. Its action must with Commissionof *7 the decisions of court. New York statutes and this Montana NY. Comm., 569, 309 132 v. Public Service N.E. Telephone Co. Light Co., 847; Valley v. Round & Power 80 Ariz. (2d) Simms (2d) 378. under statutes 145, 294 Pac. such' choosing in a arriving has latitude method of as a wide at ours useful in plant serving public. used and value of the Telephone Comm., Bell Co. v. Compare Illinois Commerce 414 (2d) 329; In 275, Telephone 111 N.E. re Diamond State Co., Ill. 317, (2d) 304; City 103 Terry 317, 9 48 Del. A. of Marietta v. 173, N.E. Comm., (2d) 74; 148 Ohio St. 74 Utilities Public New Telegraph Telephone & Co. v. Public England Service Comm., 112 374, (2d) 801;
148 Me. 94 Chesapeake Telephone A. & Potomac City 170, Co. Baltimore Comm., v. Public 201 Md. Service (2d) 249; 93 A. Jersey In Light Co., re New Power & 9 N.J. 498, (2d) 26; 89 A. Equitable Utility Gas Comm., Co. v. Public 160 Super. Pa. 51 458, (2d) 497; A. England In re Tele New phone Telegraph Co., 494, 115 Vt. (2d) 135; 66 A. City of & Fort Smith v. Telephone Southwestern Bell Co., 220 Ark. (2d) 247 474; S.W. Birmingham Electric Co. v. Alabama Pub Comm., lic Service 254 Ala. (2d) 449; So. Northern States Power Comm., Co. v. Public Service N.D. (2d) N.W. Application
In Telephone of Diamond Co., supra, State court held it was not error for the Commission to determine compromise base original a between cost and re- production cost.
In considering reproduction cost the Commission may, and did,
doubtless consider the fact not all plant reproduced would ever be present Compare form. Ches apeake Telephone & City Potomac Co. of Baltimore v. Public Comm., supra. Service right
The court holding that the Commission did not err in fixing the plant value of the of the defendant, Montana Company, Power used and useful in serving its customers. No one is questioning the rate of return allowed Commission in this case. is noteworthy
It Hope case, strongly so relied on by plaintiff, the Federal Power Commission allowed a rate of per return of cent. 6%
Had the Commission here allowed per cent return it 6% could have found a value much less than it did. fixing
Instead of the entire 30, 1954, value as of June $44,844,334, if the Commission were to allow a return of 6% per cent, it could have fixed the value at $37,420,000, in- stead of the value of June for the plant serving general valuation of the customers
113 if it might have fixed a value Commission return was reasonable. thought per cent 6Y2 requisite submit not company did Plaintiff contends that the capital. its cost of information bonds outstanding, of stock to shares Information relative paid, interest indebtedness, and other dividends plant ac- expenditures, taxes and expenses, capital operating files in office every 1932 in the year since were counts for of the Public Service Commission. these rec- that the Commission considered
The record shows along recites that these records were considered ords. Its order making in determination of re- with other elements rate. arriving at what was or a reasonable turn and that the did not Plaintiff next contends make findings. proper findings
The Commission’s order contains seventeen of fact covering pages transcript. three require any findings
Our statutes not do of fact to be made by necessary findings the Commission. Where are their reviewing function is inform the court of the basis of the Comm., Colorado-Wyoming order. Gas Co. v. Federal Power 626, 1235; 65 324 U.S. S. Ct. 89 L. Ed. Pacific Tel. & Tel. (2d) 220 Flagg, Co. v. 189 Or. Pac. adequate to findings made the Commission here' were basis of order and sufficient. the court of the are
inform in discussing be subserved each of purpose useful would No They pro- findings. cover all the issues involved these ceeding. pointed holding, has that under the in Petition
Plaintiff out 5 A. Transport, N.J. of Public Service Coordinated go beyond must (2d) 580, the Public Service Commission utility commission, that it offered books of account realities. it is contended the state get must Otherwise Holmes, City of Louisville v. Cumber of Mr. Justice ment Co., 741, 742, 32 S. Ct. 56 L. Ed. Tel. & Tel. U.S. land complained every play would come wherein he into figure is “set delusive exactness.” down with Transport criticising
In the Coordinated case the court was *9 following the in the matter: failure Board Board “The it recognize duty go figures that under a to to was behind the companies’ il- by get realities, books and at well shown the is when, by in- by the fact that on cross-examination an lustrated principal for party, companies one of the witnesses terested the they how a paid that he did not know much had for testified property, commissioners, bus one the instead of particular produced, inquiry the information to be cut short the requiring by said stating: ‘He he did not We into facts know. have the oath’.” He is under accept to that. Company produced The proceeding. no such
Here there was all its original property. cost of The showing the It pro- not restricted. its witnesses was cross-examination requested or desired. Furthermore the information duced all entirely Transport ease involved circumstances the Coordinated proceeding In that the those here. case started from different merely rate ease to the full-fledged but increase not as a out compensate cents to for increased from five to seven fare bus a granted period. was for trial The increase of labor. costs it trial found the increased period months was After a six as much increased revenue as was about twice produced rate the Upon reopening company case the bus then anticipated. originally not had on increase as done sustain tried to theory merely but wage on that it theory of increases It proper sought rate base. was return a then a fair provided original hearing if a full- uphold increase as to hearing. correctly by concluded the court fledged rate It exhibit, “Development one-page entitled: of esti- single a 1948,” as was not December sufficient base mated rate by it. showing contended for The base establish the to begin compare not with that made in that case does made here . showing made before that on the the Board
We conclude increase granting did not abuse its discretion in tbe rate sought. any figures If there be fault submitted with Company that- produced there some evidence to must placed ruling effect. The Commission cannot be error for according only evidence before it. general remedy consumers are not without if fact the
present place, rate is excessive. In first under 70-119, parties may proceedings interested institute be- fore the Commission to have rates decreased providing showing they any can be made that way are unreasonable. question of the reasonableness the rates is never fore- closed, but to warrant changes evidence must be submitted. dangerous practice protestants It is rely solely, is here, upon case showing the weakness of public made utility which comes testimony forward with of witnesses skilled particular and trained in the making. field of rate remedy bring pressure Another upon bear officials in Washington, C.,D. steps to take which, to relieve the tax load *10 according to the record consumes about one-half of the increase granted. here
On the record here we made would be derelict in duty our were we to hold that lower court erred in upholding the action of the Board.
Plaintiff, relying 70-106, K.C.M. section it contends upon
was incumbent the Commission to make an investi gation of its own before authorizing an increase in rates. This section of permissive only. the statute is gives It the Board authority in its discretion at time and of its own initiative property to make a revaluation of the any public utility. It need not do if proof so satisfied with the submitted it. to The district court here was bound to observe 70-128, section subd. (6), which reads: act,
“In all under this actions the burden proof shall be upon party attacking resisting or the order of the commis- sion show that the order is unlawful to or unreasonable, as the may case be.” showing made here.
No such duty Board to Likewise, were we to concede that the mandatory, if assume that investigation be and we make its own per- duty discharged, there is no rule of law was not all of the Board on that to set aside the acts mits the courts account. present might grounds
Those facts for from office removal duties, if or neglect perform there be wilful refusal to R.C. 94-5516, principle law, M. section but under no of which advised, any authority part we there on the of the court are nullify to action of the Board for failure make inde- justi- pendent investigation where evidence submitted to fies the order made. holding say plain
It would be an unheard of tiff attorneygeneral proving sustains the burden of that the rates alleged by merely showing client, are unreasonable as that his 72-124, Commissioners, the Board of Railroad failed to witnesses, examiners, experts, engineers, call its accountants provided by and other assistants for section 70- dissenting* opinion law, per- Were the to become then if the produced differing sonnel of the Board from that of utility if Board must stand public between the utility seemingly obliged accept then would be the testi- mony personnel own to the exclusion of that furnished utility company, hearing provided and the law would mockery, empty gesture an lacking become a hollow in es- process due of law. sentials of properly according only trial court ruled evi-
dence before it. judgment is affirmed. (dissenting). BOTTOMLY
MR. JUSTICE *11 application by plaintiff corporation, Here we have an before for an increase Service Commission in its rates and the Public hearing public corpora- A was held and a number charges. appeared organizations labor associations, and individuals tions, the record from apparent It is such increases. protestants of entirely on rates the increased granted the very little evi- corporation, as by the submitted the evidence However, the Com- protestants. the introduced dence was rates maximum increased in full the schedule granted mission Company. Montana Power by the requested in a here are not generally as protestants in such cases all the go into tech- financially or otherwise able position or the necessary the Commission bring before questions nical reasonable, just fair and exactly what constitutes as to facts they expected Neither should existing conditions. under people the of Montana so, especially to do where required nor Legislature, provided their for a Public Service through have expense public is maintained at and which Commission which fairly represent public interest and between stamd should utility, public upon duty, power and and and which the imposed authority granted determining and when and allow- is charged by monopoly, rates to see ing reasonable to be just public rates be fair and both to the that such and only justification public is monopoly. This main- taining a Public Service Commission. 70-101, section created the
R.C.M. Commission. 70-103, power section full R.C.M. invests with regulation, utility. supervision, and control of the 70-105, provides every unjust R.C.M. charge by utility prohibited
unreasonable is and declared granted rate increase the instant unlawful. cause contrary public policy therefore to the of the State of Montana. 70-106, grants 1947, section to the Commission authority investigate power and ascertain the value of every utility public used for the property convenience granted Also public. powers Commission are broad rolls, use of all information contained in assessment pub- in the government, the branches of state including lic records of Board of public Equalization, Of the State records *12 any other obtainable may information and Commission the utility’s time its own initiative make a revaluation of such of. n . properties. authority 70-109, grants 1947, R.C.M. to the Commission to accounts, books, papers public examine the records and any of utility. 1947, 70-121, provides
R.C.M. section that if, upon due in- vestigation hearing, and the rates, Commission finds that the tolls, schedules, joint charges, unjust, unreasonable, rates or. unjustly discriminatory, preferential or or to be or otherwise provisions 70, chapter violation R.C.M. Title power shall Commission have the to fix and sub- order therefor, rates, tolls, charges schedules, stituted rate or such or just as shall be and reasonable. in expressing power Commission its of regulating rates utility a must corporation itself make investigation its due appraise utility’s
and properties, value determine for operation, itself the costs of allow depreciation, desig- for and nate a or rates allow a fair return on the actual bona fide investment. limit duty
It is Commission to regulate of the and profit use far as property, quality of the so and of service rendered is concerned. simply automaton, sits as an
When the Commission without determining its exercising by own initiative all these factors through engineers, examiners, experts, and its own accountants provided and other assistants Commission R.C.M. 70-118, and simply testimony takes the utility questions, not, on such matters and the Commission is my opinion, fulfilling responsibilities its and duties public of its under the law creation. Utilities,
By chapter 1, of Title Public reading the whole intent of Legislature it seems clear that the through Public Service would, was that the Commission State full all agents, disclosure of matters under con- its own make of the Commission sideration, that the members could then so investiga- by its own dne developed the facts weigh check utility. before produced against tion failed the Public Service appearing It herein as is investigation any independent to make omitted I re- statutes, would required by the above for and provided the Commission judgment and the matter back to send verse upon it fully perform imposed duties so enable investigation and determination thus allow it to make own approving allowing before or the facts and circumstances whatever. rate increase *13 ADAIR: MR. JUSTICE dissenting opinion Bottomly. Mr. Justice
I concur CO., MINERALS ENGINEERING Corporation, A Plaintiff GREENE, v. MARTHA Respondent, Treasurer EQUALI- and STATE BOARD OF County, Beaverhead Appellants. ZATION, al., et Defendants 9738. No. February 20, Submitted 1957. Decided March 1957. (2d) 308 Pac.