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November 9, 1995


Appeal from Order of the Illinois Commerce Commission. ICC Docket 93-0252.

Petition for Leave to Appeal Denied January 31, 1996.

The Honorable Justice McNULTY delivered the opinion of the court: Cousins, P.j., and Gordon, J., concur.

The opinion of the court was delivered by: Mcnulty

The Honorable Justice McNULTY delivered the opinion of the court:

The Illinois Commerce Commission (the Commission) granted Central Telephone Company of Illinois (Centel) permission to restructure its rates and to increase its total revenues. In this appeal the Attorney General, on behalf of the People of the State of Illinois (the AG), and the Citizens Utility Board (CUB) raise several issues concerning the fundamental role of the Commission. We reverse the Commission's order and remand for further proceedings because the Commission neglected its duty to consider the interests of consumers when setting rates, and therefore its findings did not support the rate restructure it ordered.

In 1993 Centel, a wholly owned subsidiary of Centel Corporation, filed with the Commission revised tariff sheets which reflected a restructuring of rates, so that customers would pay a flat rate for connection to the telephone network plus a charge per call depending on the duration of the call. For Chicago area customers, the charge per call also depended on the time of day of the call and the distance between switching stations used in completing the call. Centel referred to the connection charge as its "network access line" charge or "NAL." The proposed tariffs eliminated a number of calling plans previously available, which permitted unlimited calling in certain areas for a flat fee. The proposed tariffs replaced the plans with the usage sensitive service (USS) that added a charge for each call.

Also in 1993 Centel Corporation merged with Sprint Corporation, and Centel became a subsidiary of Sprint. As a result of the merger Sprint eliminated a number of employment positions in Centel and Centel Corporation by consolidating operations. Centel offered its employees severance packages as part of its plan for reducing its work force. Centel designed the proposed rates to increase total revenues by $10.2 million annually, based on revenues and costs for the test year of 1992, with adjustments for known changes largely due to the merger.

The Commission suspended the revised tariffs, and hearing examiners took evidence concerning the proposed rates. The hearing examiners permitted intervention by a number of parties, including the AG and CUB. The Commission adopted most of the hearing examiners' findings, including approval of rate restructuring. Staff of the Commission proposed to adjust rates by eliminating the touch tone rate and the premium included in the business rate for custom calling and directory listings, and by reducing rates for business lines. The Commission ordered Centel to file new tariff sheets conforming to the staff's proposal, to produce an increase in revenues of $6.3 million annually, rather than the $10.2 million Centel sought.

CUB and the AG contend that the Commission failed to establish Centel's rates, failed to consider the impact of the proposed rates on Centel customers, failed to make findings necessary for judicial review, and made a number of findings which are contrary to the manifest weight of the evidence. Our supreme court has frequently reiterated the principles governing review of Commission orders in rate cases:

"Setting utility rates is a legislative rather than a judicial function. [Citations.] In the ratemaking scheme, the Commission and not the court is the fact-finding body. [Citation.] Apart from examining whether the Commission acted within the scope of its authority or infringed upon a constitutional right, a court is limited to reviewing whether the Commission set out findings of fact supporting its decision and whether the findings are against the manifest weight of the evidence." (People ex rel. Hartigan v. Illinois Commerce Comm'n (1987), 117 Ill. 2d 120, 142, 510 N.E.2d 865, 109 Ill. Dec. 797.)

This court lacks authority to "delve into the record and make a finding of fact in order to support a ruling of the Commission." ( Peoples Fruit & Vegetable Shippers Association v. Commerce Comm'n ex rel. Illinois Central R.R. Co. (1933), 351 Ill. 329, 333, 184 N.E. 615.) If the Commission's order does not include sufficient findings of fact, "the order is void." Peoples Fruit, 351 Ill. at 332.


The Public Utilities Act (the Act) (220 ILCS 5/1-101 et seq. (West 1992)), provides:

"If the Commission enters upon a hearing concerning the propriety of any proposed rate *** the Commission shall establish the rates or other charges *** which it shall find to be just and reasonable." (220 ILCS 5/9-201(c) (West 1992).)

Petitioners claim that the Commission violated this statute and improperly delegated authority by failing to impose directly new rates, when the Commission instead ordered Centel to file new tariffs to meet the specifications of the order.

While the Commission's resolution of legal questions does not bind the court, courts give

"substantial weight and deference to an interpretation of an ambiguous statute by the agency charged with its administration and enforcement. [Citation.] The reason for this deference is that agencies can make informed judgments about the issues based on their experience, and they constitute an informed source for ascertaining the legislative intent. [Citation.] In construing a statute or regulation, an agency can take administrative notice of its own findings and orders." Moncada v. Illinois Commerce Comm'n (1991), 212 Ill. App. 3d 1046, 1052-53, 571 N.E.2d 1004, 156 Ill. Dec. 1024.

The Commission noted that it has in other cases ordered utilities to file tariffs in accord with its directions. Under the Commission's interpretation of the statute, as long as the Commission has established constraints which eliminate discretion, leaving the utility only to perform the necessary calculations, the Commission has not improperly delegated its ratemaking authority. We find the Commission's interpretation of the Act persuasive. See Citizens Utility Board ex rel. O'Malley v. Illinois Commerce Comm'n (1995), 275 Ill. App. 3d , N.E.2d .

Here the Commission established the exact total of the revenues allowed, and it directed Centel to revise its tariffs to eliminate the touch tone premium, and the business premium on specified charges, and instructed Centel to reduce the charges for business access lines to a level at which Centel's expected total revenue would equal the revenue the Commission permitted. By not ordering any reduction in other rates, the Commission approved the other rates as filed. We find that the Commission's order effectively eliminates discretion and therefore it comports with the mandate of section 9-201(c), which directs the Commission to establish rates.


The legislature included in the Act its findings that "universally available and widely affordable telecommunications services are essential to the health, welfare and prosperity of all Illinois citizens" (220 ILCS 5/13-102(a) (West 1992)), and "telecommunications services should be available to all Illinois citizens at just, reasonable and affordable rates" (220 ILCS 5/13-103(a) (West 1992)). Petitioners argue that the Commission violated these parts of the Act by failing to consider the impact of rate restructuring on Centel's customers.

The Commission answers:


The Commission acknowledges its responsibility for setting "just and reasonable" rates. 220 ILCS 5/9-201(c) (West 1992).

Our supreme court has held:

"The Commission is charged by the legislature with setting rates which are 'just and reasonable ' *** to the ratepayers [and] to the utility and its stockholders." (Emphasis in original.) ( Business & Professional People for the Public Interest v. Illinois Commerce Comm'n (1991), 146 Ill. 2d 175, 208, 585 N.E.2d 1032, 166 Ill. Dec. 10 (BPI), quoting 220 ILCS 5/9-201(c) (West 1992).)

Our supreme court has quoted the United States Supreme Court, finding that Court's views of agency responsibilities consistent with our court's views of the duties of the Commission:

"'The rate making process under the act, i.e., the fixing of 'just and reasonable' rates[,] involves a balancing of the investor and the consumer interests.'" ( Illinois Bell Telephone Co. v. Illinois Commerce Comm'n (1953), 414 Ill. 275, 287, 111 N.E.2d 329, quoting Federal Power Comm'n v. Hope Natural Gas Co. (1944), 320 U.S. 591, 603, 88 L. Ed. 333, 345, 64 S. Ct. 281, 288.)

Similarly, our supreme court earlier established that a just and reasonable rate must be less than the value of the service to consumers. ( State Public Utilities Comm'n ex rel City of Springfield v. Springfield Gas & Electric Co. (1919), 291 Ill. 209, 216, 125 N.E. 891.) The appellate court elaborated on this pronouncement in Camelot Utilities, Inc. v. Illinois Commerce Comm'n (1977), 51 Ill. App. 3d 5, 10, 365 N.E.2d 312, 8 Ill. Dec. 74:

"The Commission has the responsibility of balancing the right of the utility's investors to a fair rate of return against the right of the public that it pay no more than the reasonable value of the utility's services. While the rates allowed can never be so low as to be confiscatory, within this outer boundary, if the rightful expectations of the investor are not compatible with those of the consuming public, it is the latter which must prevail."

These decisions comport with authorities from other jurisdictions which hold that "the constitution requires *** that the regulatory body engage in a rational process of balancing consumer and investor interests to produce a rate that is just and reasonable." In ...

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