APPLICATION OF FLORIDA TELEPHONE CORPORATION
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The Florida Railroad & Public Utilities Commission initially denied Florida Telephone Corporation's rate increase application due to poor service quality, but was overruled by the Florida Supreme Court, which held that service complaints and rate applications must be treated separately. The Commission subsequently approved the previously denied rate increase.
The Florida Supreme Court held that the Commission has no authority to deny a rate increase based on poor or inadequate service and that service complaints and rate applications must be treated separately. Consequently, the Commission must allow the rate increase that it previously found to be reasonable from a financial standpoint.
“this commission has no authority to deny an increase in rates because of poor or inadequate service, but must treat service complaints and rate applications separately”
Establishes the legal principle that rate-setting and service quality regulation are separate regulatory functions
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Join FLexlaw to unlock all legal intelligenceFlorida Telephone Corporation applied for authority to increase its general exchange rates and charges. The Commission found the utility was entitled …
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On September 1, 1953 this commission entered an order denying the application of Florida Telephone Corporation for authority to increase its general exchange rates and charges.
In said order we found that the utility was entitled to earn a return of 7.13% on a rate base of $5,479,415 and that in order to produce such a return its general exchange revenue would have to be increased by the gross amount of $160,015 or 18.359%. We further found, however, that the service being rendered by the company did not justify rates and charges which would produce the return which the commission found would be fair and reasonable, and we denied the application because of the poor service being rendered.
The telephone company was dissatisfied with the commission’s order and instituted certiorari proceedings in the Supreme Court of Florida for a review thereof. The Supreme Court has entered its decision therein and has held that this commission has no authority to deny an increase in rates because of poor or inadequate service, but must treat service complaints and rate applications separately.
In the meantime, the utility has divested itself of several of its smaller and non-profitable exchanges — what effect the sale of these non-profitable exchanges will have on its earnings cannot be determined at the present time.
The company has submitted to the commission a tariff of proposed rates and charges which will produce the additional gross revenues found to be reasonable by the commission and which the Supreme Court has said must be allowed regardless of the poor service being rendered by said utility.
Now, therefore, in consideration of the decision and order of the Supreme Court of Florida, it is ordered and adjudged that the *133Florida Telephone Corporation be and it is hereby authorized to increase its rates and charges pursuant to the tariff aforesaid and in an amount sufficient to produce $160,015 additional gross revenues as mentioned in our previous order.
It is further ordered that said telephone company may increase its general exchange rates and charges as aforesaid effective with its billing dates on and after May 1, 1954.