Illinois Bell Telephone Co. v. Illinois Commerce Commission

381 N.E.2d 999, 64 Ill. App. 3d 645, 27 P.U.R.4th 605, 21 Ill. Dec. 552, 1978 Ill. App. LEXIS 3325
CourtAppellate Court of Illinois
DecidedOctober 12, 1978
DocketNo. 14706
StatusPublished
Cited by3 cases

This text of 381 N.E.2d 999 (Illinois Bell Telephone Co. v. Illinois Commerce Commission) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Illinois Bell Telephone Co. v. Illinois Commerce Commission, 381 N.E.2d 999, 64 Ill. App. 3d 645, 27 P.U.R.4th 605, 21 Ill. Dec. 552, 1978 Ill. App. LEXIS 3325 (Ill. Ct. App. 1978).

Opinions

Mr. JUSTICE CRAVEN

delivered the opinion of the court:

The Illinois Commerce Commission (Commission) timely appeals from a decision of the Sangamon County circuit court reversing and remanding a Commission order entered February 4, 1976, on a request for a general rate increase by Illinois Bell Telephone Company (Illinois Bell). The City of Chicago, an intervenor before the Commission, cross-appeals from that portion of the circuit court decision affirming the Commission’s authorization of an increase in the rate for local coin telephones.

On March 7, 1975, Illinois Bell filed proposed tariffs with the Commission seeking changes in Bell’s rate structure and a general increase in telephone rates applicable to all Bell exchanges in Illinois. On February 4, 1976, the Commission entered its order granting Illinois Bell a general increase in rates and directed Bell to file new tariffs which would provide for an operating income of “about *219,589,000 or a rate of return of approximately 8.75%” on an “original cost” rate base of *2,509,589,000. The Commission found the ordered rate to be just and reasonable. Following the Commission’s denial of rehearing petitions, Illinois Bell, and intervenors Cook County State’s Attorney, the City of Chicago, and the State of Illinois Department of General Services filed notices of appeal in Sangamon County circuit court. The cases were consolidated for decision.

On September 2, 1977, the circuit court filed an order affirming portions of the Commission’s decision and reversing and remanding in part. Enforcement of the order was stayed pending appeal. Timely-notices of appeal were filed by the Commission, the Cook County State’s Attorney, the Department of General Services, and the City of Chicago. Although a notice of cross-appeal was filed by Illinois Bell, the company has since determined to forego the cross-appeal.

Illinois Bell is one of 24 operating companies of the American Telephone and Telegraph Company Bell System. All of the capital stock of Illinois Bell is owned by ATT. At the time of the administrative hearings, Illinois Bell served approximately three million customers located in Illinois and Northern Indiana. Further facts necessary for the disposition of the issues raised will be discussed.

The Commission first argues that the trial court erred in determining that the Commission’s use of a net “original cost” rate base was contrary to Illinois law and the court’s decision to remand the case for the Commission’s determination of fair value. Illinois Bell argues that the Commission acted outside of the scope of its authority in improperly excluding reproduction cost as a factor in determining the rate base for Illinois Bell’s property attributable to Illinois intrastate operations.

Numerous estimates of rate bases were tendered to the Commission during the hearings, which totalled some 7,741 pages of transcript. Testifying on behalf of Illinois Bell, Mr. Knorr offered a net original cost estimate of Bell’s property to be *2,540,473,000. The Commission staff, through its exhibit No. 6, found a net original cost of *2,467,796,000. While Mr. Lattimer, treasurer of Illinois Bell, testified that the company sought a 9.5 to 10% rate of return based on net original cost, the Commission allowed a rate of return of 8.75% on a final net original cost rate base of *2,509,589,000.

Mr. Knorr supplied testimony for Illinois Bell concerning their estimates of “current value” of the company’s property. The witness described the concept of “current value” as essentially the number of December 31,1975, dollars it would take to build the then-existing Illinois Bell system. Mr. Knorr used three different indexes in ascertaining a “current value” figure for the Bell system’s Illinois intrastate operations. The first index, called a Telephone Plant Index (TPI), was based on the cost of constructing Illinois Bell plants from 1939 up to and including 1975, as modified by a “translator” of the dollar value invested in each year into 1975 dollars. The second index used was the Consumer Price Index (CPI) and the translating number for the historical dollar investment was that as developed from the United States Department of Labor figures. The third index number, Gross National Product Implicit Price Deflator (IPI), was based on figures developed by the United States Department of Commerce. Using the three indexes, Knorr came up with “current value” for Bell’s Illinois intrastate operations to be as follows: Based on TPI, the current value for Illinois intrastate operations was *4,464,016,000; current valued based on CPI was *4,737,712,000; and current value based on IPI was *4,639,182,000. Knorr thought the “TPI” figure was the best of the group and that the other two figures were included for the purpose of showing how non-Bell indexes would arrive at the same approximation as TPI. The difference between Bell’s current value estimate of *4,464,016,000 and the Commission’s rate base figure of *2,509,589,000 is approximately 1.95 billion dollars. Additional revenues generated by 1.95 billion at a 8.75% rate of return would be *170,625,000.

This court follows its decision rendered today in Union Electric v. Illinois Commerce Com. (1978), 64 Ill. App. 3d 700, 382 N.E.2d 143, where this court, in construing “value” and just and reasonable rates, determined that the Illinois Supreme Court has commanded the Commission to consider evidence of current economic conditions, including reproduction cost, but that the court has not held reproduction cost must be the sole element in the final Commission determination of fair value. In this case, considerable evidence of current economic conditions, including “current value” was considered by the Commerce Commission; in its discretion, a rate base value founded on original cost was chosen. We find the Commission acted within the scope of its statutory authority in determining the value of Illinois Bell’s intrastate property. Union Electric.

The Commission also appeals that part of the circuit court order reversing and remanding the Commission’s findings regarding a directory assistance charging plan. Since the filing of this appeal, it has been brought to this court’s attention, by both the Commission and Illinois Bell, that hearings are scheduled to be held concerning implementation of directory assistance charging and that, even if the circuit court were upheld, the hearings therein ordered would probably be consolidated with the pending case before the Commission. The Commission requests this issue be dismissed as moot due to the subsequent events while Illinois Bell asks that this issue be dismissed “by agreement.” Based on the facts before this court, we conclude that the circuit court order reversing and remanding the Commission’s decision on directory assistance charging is now moot.

The next issue relates to certain requests for discovery which the hearing examiner ruled upon and the Commission found to be properly granted. The circuit court found that parties before the Commerce Commission are entitled to prehearing discovery “as a matter of right.” Both the Commission and Illinois Bell argue to this court that, to the extent the judge based his decision on the Civil Practice Act and the Supreme Court Rules (as allegedly argued below by the Cook County State’s Attorney), the court erred.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Union Electric Co. v. Illinois Commerce Commission
396 N.E.2d 510 (Illinois Supreme Court, 1979)
Illinois Bell Telephone Co. v. Illinois Commerce Commission
385 N.E.2d 159 (Appellate Court of Illinois, 1979)
Union Electric Co. v. Illinois Commerce Commission
381 N.E.2d 1002 (Appellate Court of Illinois, 1978)

Cite This Page — Counsel Stack

Bluebook (online)
381 N.E.2d 999, 64 Ill. App. 3d 645, 27 P.U.R.4th 605, 21 Ill. Dec. 552, 1978 Ill. App. LEXIS 3325, Counsel Stack Legal Research, https://law.counselstack.com/opinion/illinois-bell-telephone-co-v-illinois-commerce-commission-illappct-1978.