Ponderosa Telephone Company et. al.

36 Cal. App. 5th 999; 2019 Cal. App. LEXIS 594 (June 18, 2019).

Petitioners were small independent local exchange carriers contesting the Commission’s determination of their respective returns on equity (“ROE”) for ratesetting purposes. The Court of Appeal (Fifth District), however, affirmed the Commission’s decision. The Court viewed its role as one of determining whether the Commission had erred in its resolution of certain factual issues. Even Petitioners’ constitutional claim, which rested on Hope-Bluefield, turned, in the Court’s view, on a factual analysis. Framing the issue before it in that fashion set the bar quite high for the Petitioners but the Court’s analysis finds support in other decisions of the Court of Appeal. The Court stated several times that the methodology the Commission employed to set ROE was not as important as the resulting rate, citing decisions of the US Supreme Court holding that:

“It is not theory but the impact of the rate order which counts. If the total effect of the rate order cannot be said to be unreasonable, judicial inquiry…is at an end. The fact that the method employed to reach that result may contain infirmities is not then important.’”

Whether the rates resulting from the ROE “cannot be said to be unreasonable..” was, according to the Court, a factual question. Employing the “substantial evidence” test embraced in Section 1757(a)(4), the Court could not conclude that “substantial evidence” did not exist to support the Commission’s findings. (Notably, a finding supported by “substantial evidence” need not be supported by a preponderance of the evidence.) The Decision reflects the difficult challenge faced by petitioners advancing claims based on a factual dispute, as Petitioner’s constitutional claim became styled. Asserting that the Commission made an erroneous factual finding is no longer impossible as it was prior to 1996 (see Camp Meeker at Para. 39) It remains, however, the most difficult claim to advance by one seeking reversal of a Commission decision. (See Ames at Para. 15.)

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