In Re the Application of Diamond State Telephone Co.

Carey, Judge

(concurring in part and dissenting in part).

I concur with that part of Justice Bramhall’s opinion holding that the Superior Court erred in establishing its own rate base in this case. I disagree with the reversal of the Commission’s finding as to the rate base.

It may well be that the opinion of July 24 attributed to appellee certain contentions which were not contained in appellee’s original briefs. I would be willing to accept a modification of that opinion in those respects. Moreover, it should be made clear that nothing in that opinion was meant to indicate either approval or disapproval of the Company’s traditional dividend rate; this was not questioned at the hearing and is not an issue in the case. While the original opinion should be perhaps revised in some respects, nothing brought out in reargument convinces me that there should be any change in the result.

My position is this: (1) the Act does not make the Superior Court an appellate administrative or legislative body; (2) that *231Court should not reverse the Commission unless it has violated some constitutional provision, ignored some statutory requirement or abused its discretion; Central Maine Power Co. v. Public Utilities Commission, Me., 109 A. 2d 512; (3) none of those grounds for reversal has been shown to exist in this case with respect to the rate base, save in the disallowance of anything for working capital; (4) the Commission having made an error of law in excluding working capital, and the Court having pointed out that mistake, the Commission rather than the Court is the proper body to fix the amount thereof in the first instance.

Rates consist of a prognostication based largely upon estimates. In any given case, no one certain figure can be identified as the only correct rate base. If either the base or the rate of return is so slow as to amount to confiscation, then the utility’s constitutional rights are violated. Likewise, there are upper limits for these figures beyond which the public would be harmed. So long as a Commission stays within those limits, a Court of Law has no business upsetting the Commission’s action unless there be a statutory violation or an abuse of discretion. To me the important question in this case is whether the Commission’s action was within what some Courts have called “the zone of reasonableness”.

Whether or not some of us misunderstood appellee’s original argument in this Court, its present contention is summarized in these words:

“The present fair value of the utility’s property must be determined from the evidence in each case, and all elements of value must be given ‘such weight * * as may be just and right in each case.’ Where, as in this case, the present price levels are substantially higher than the price levels reflected in the original cost of the utility’s property, and where its reproduction cost at present prices, or its original cost trended to present price levels, is fairly and reasonably calculated, then such depreciated reproduction cost or trended original cost is the best evidence of the present fair value of the property and should be given predomi*232nant weight. Under such circumstances a determination of fair value which gives predominant weight to original cost does not give weight which is ‘just and right’ to all the elements of value.”

Although appellee’s original brief was interpreted — apparently incorrectly — as suggesting that its usual dividend rate justified a higher value than $22,000,000, its present brief strongly repudiates any such suggestion. Moreover, it criticises the language of the original opinion of this Court to the effect that circuity of reasoning is incorporated into the statute by including probable earnings as a factor in determining fair value. On the contrary, it expressly argues that it is fallacious to treat such earnings as evidence of value in a rate-making case, although they may properly be considered in other types of hearings such as mergers.

It, therefore, seems to me now that the Company’s only contention (and I see no reason for this Court to seek out other possible contentions) is this: because of present inflated price levels, which are not apt to recede, the Commission placed too much reliance upon original cost and not enough upon replacement cost. The present majority of this Court cites figures from the record tending to support this claim: they say little about the evidence criticising the Company’s estimates of reproduction cost; nor about the numerous decisions which have pointed out the inherent weaknesses and unreliability of such estimates; nor about'the recent cases in other states approving comparable percentages of increase. Chesapeake & Potomac Telephone Co. v. Public Service Commission, 201 Md. 170, 93 A. 2d 249; City of Pittsburgh v. Pennsylvania Pub. Util. Comm., 174 Pa. Super. 4, 98 A. 2d 249.

Clearly, the Commission did not ignore the evidence concerning inflated costs; otherwise it would have set a base somewhere near original cost. We do not know whether it took original cost depreciated and added 12% or 19% (depending on what figure it was based), or whether it took reproduction cost depreciated and subtracted 25%. Whatever method was followed, *233the result was a substantial, not a mere token, recognition of inflation. That being true, and no confiscation being charged, it is hard to understand how a Court of Law can justifiably say that the Commission failed to give proper weight to the testimony, without further holding that the Court is permitted to substitute its opinion for that of the Commission. By reversing the Commission on this point, this Court is in effect saying to the Commissioners, “You have abused your discretion, or you have violated the statute, in that you did not allow quite as high a percentage of increase for inflated present costs as the Superior Court would have allowed had it fixed the base originally”. To me this is simply another way of saying that the Superior Court is an appellate administrative body under this statute, a statement with which I am not in accord.

With respect to working capital, the Commission made a mistake of law and the Superior Court properly reversed. But original determination of the amount to be included under that heading is a function of the Commission, and should not be taken over by the Court.

I would order the case remanded to the Commission with instructions to increase the rate base only by such amount as it ■ determines to be a proper allowance for working capital.