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STATE OF MISSISSIPPI EX REL EDWIN LLOYD PITTMAN, ATTORNEY GENERAL v. MISSISSIPPI PUBLIC SERVICE COMMISSION & SOUTH CENTRAL BELL TELEPHONE COMPANY

NOVEMBER 27, 1985

STATE OF MISSISSIPPI EX REL EDWIN LLOYD PITTMAN, ATTORNEY GENERAL
v.
MISSISSIPPI PUBLIC SERVICE COMMISSION & SOUTH CENTRAL BELL TELEPHONE COMPANY



BEFORE WALKER, ROY NOBLE LEE AND HAWKINS

HAWKINS, JUSTICE, FOR THE COURT:

The parties to this direct appeal from an order of the Mississippi Public Service Commission are the State of Mississippi, upon the relation of the Honorable Edwin Lloyd Pittman, Attorney-General (Attorney-General), the appellant, and the Mississippi Public Service Commission (Commission) and South Central Bell Telephone Company (SCB), the appellees.

As a historical note, this case is the first case in which there has been a direct appeal from an order of the Commission to this Court under the Mississippi Constitution, Article VI, 146, as amended November 8, 1983; Miss. Code Ann. 9-3-9 (1984 Supp.); and under the 1983 Mississippi Public Utilities Act, Ch. 467, Laws 1983, Miss. Code Ann. 77-3-1, et seq., (1983 Supp.), which created new sections of the code and amended others pertaining to public utilities. It is also the first telephone rate case since the American Telephone and Telegraph Company (AT & T) was required by a United States District Court to divest itself of its local service corporations, of which SCB was one. *fn1 It is the second time this Court has considered an appeal from a rate order in which the Attorney-General found himself in disagreement with the Commission. State, ex Rel. v. Miss. Pub. Ser. Comm., 418 So. 2d 779 (Miss. 1982); State, ex Rel. v. Miss. Pub. Ser. Comm., 435 So. 2d 608 (Miss. 1983).

 The Attorney-General has appealed from the final order of the Commission on March 16, 1984, awarding a considerably reduced rate increase from that initially requested by SCB. The major issue we address on this appeal is whether the order of the Commission is supported by substantial evidence. Concluding it was, we affirm.

 FACTS

 Prior to January 1, 1984, SCB was one of a number of AT & T subsidiaries, called the "Bell System." By order of the United States District Court dated August 24, 1982, SCB, effective January 1, 1984, would no longer be a subsidiary of AT & T. SCB is presently a subsidiary of Bell South Corporation. *fn2

 As a result of the United States District Court order, SCB in Mississippi was divided into two Local Access Transport Areas (LATAs), the south LATA comprising Jackson, Harrison, and Hancock counties, and the north LATA comprising the rest of the state. After January 1, 1984, SCB could no longer provide long distance service across a LATA boundary or interstate. Also, SCB could no longer provide telephones used by customers, all customer premise equipment (CPE) being transferred to a subsidiary corporation of AT & T. SCB was required to furnish access to its lines and facilities to all other carriers at a regulated charge. Because of these and other mandated changes in the organization and operations in all the Bell System, SCB on November 18, 1983, filed its Notice of Intent to increase rates, effective January 1, 1984, to produce $131,443,000 additional revenue, as provided under Miss. Code Ann. 77-3-77 and 77-3-39 (1983 Supp.), and also moved for emergency relief. There was no objection to emergency relief and the Commission on December 20, 1983, issued its order granting temporary rate relief authorizing SCB to generate additional revenue in the amount of $25,149,000.

 By order of December 13, 1983, the Commission established procedural steps for handling this case. Prehearing conference and discovery deadline dates were set, the date for the Commission staff and intervenors to file testimony and exhibits was set, and finally the date of public hearing was set. A later procedural order was entered January 3, 1984, delaying the various date settings.

 SCB had filed with its notice the direct testimony and exhibits which constituted its case-in-chief at the final hearing.

 In the 1983 Act, provision is made for the Commission to have a staff to make recommendations in rate cases. Miss. Code Ann. 77-3-8 and 77-3-37 (8) (1983 Supp.). The Commission engaged Stephen P. Wolfe, president of Fineco Consulting Services, Inc., to assist its staff and to make recommendations. Following a two-day pre-hearing conference between SCB and the Commission staff, attended by the Attorney-General, and in accordance with Miss. Code Ann. 77-3-47 (1983 Supp.), stipulations between the Commission

 and SCB were made. One result of these stipulations was SCB reduced its proposed revenue requirement from $131,443,000 to approximately $86,000,000.

 Public hearings were conducted February 15 through the 24th. On March 16, 1984, the Commission entered its order approving a rate that would generate an increase in revenue in 1984 of $57,374,000, thus increasing the $25,149,000 interim rate increase by $32,225,000.

 LAW

 The record in this case reveals thorough investigation by the Commission, an appearance by all interested parties, and a commendable concern by the Commission to scrupulously adhere ...


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