B-88109, OCTOBER 27, 1949, 29 COMP. GEN. 200

B-88109: Oct 27, 1949

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TELEPHONE SERVICE - ABATEMENT OF ESTABLISHED RATES WHILE A PUBLIC UTILITY HAS THE RIGHT TO FIX ITS OWN RATES WHEN THE RATES PRESCRIBED BY THE PUBLIC UTILITIES COMMISSION HAVE BEEN SET ASIDE BY COURT ACTION. WITH THE REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO WHETHER PAYMENT THEREON IS AUTHORIZED. OR REQUIREMENTS WHICH MAY BE LAWFULLY ESTABLISHED AND APPLICABLE TO SIMILAR SERVICES AND FACILITIES FURNISHED OR OFFERED BY THE COMPANY TO THE GENERAL PUBLIC IN THE SAME VICINITY OR TO OTHER SUBSCRIBERS OF THE EXCHANGE BY WHICH SERVICE IS FURNISHED HEREUNDER. BY A BILL IN EQUITY ALLEGING THAT THE SAID ORDER OF THE GEORGIA PUBLIC SERVICE COMMISSION WAS CONFISCATORY AND ASKED THAT THE PUBLIC SERVICE COMMISSION BE ENJOINED FROM ENFORCING SUCH A SCHEDULE OF RATES.

B-88109, OCTOBER 27, 1949, 29 COMP. GEN. 200

TELEPHONE SERVICE - ABATEMENT OF ESTABLISHED RATES WHILE A PUBLIC UTILITY HAS THE RIGHT TO FIX ITS OWN RATES WHEN THE RATES PRESCRIBED BY THE PUBLIC UTILITIES COMMISSION HAVE BEEN SET ASIDE BY COURT ACTION, WHERE A TELEPHONE COMPANY ELECTS TO CHARGE THE LESSER RATES SUBSEQUENTLY ESTABLISHED BY THE COMMISSION, RATHER THAN THE HIGHER RATES THE COMPANY PUT INTO EFFECT FOR THE PERIOD BETWEEN THE ABATEMENT OF THE OLD AND THE ESTABLISHMENT OF THE NEW RATES, SUCH LESSER RATES MAY BE PAID BY THE GOVERNMENT UNDER A CONTRACT FOR THE FURNISHING OF TELEPHONE SERVICE AT "LAWFULLY ESTABLISHED" RATES.

COMPTROLLER GENERAL WARREN TO MAJ. WILLIAM H. MCKENZIE, III, DEPARTMENT OF THE ARMY, OCTOBER 27, 1949:

THERE HAS BEEN RECEIVED BY REFERENCE FROM THE OFFICE OF THE CHIEF OF ENGINEERS YOUR THIRD INDORSEMENT DATED JUNE 22, 1949, TRANSMITTING A VOUCHER IN THE AMOUNT OF $1,650.36, STATED IN FAVOR OF SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY, INC., UNDER CONTRACT NO. W-09-133-ENG 797, DATED AUGUST 1, 1945, WITH THE REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO WHETHER PAYMENT THEREON IS AUTHORIZED.

UNDER THE TERMS OF THE CONTRACT THE COMPANY AGREED TO FURNISH CERTAIN TELEPHONE SERVICE TO THE CORPS OF ENGINEERS THROUGHOUT THE GEORGIA DISTRICT. ARTICLE 2 OF THE CONTRACT PROVIDES AS FOLLOWS:

THAT THE SERVICES AND FACILITIES FURNISHED HEREUNDER SHALL BE SUBJECT TO ALL RATES, CHARGES, RULES, PRACTICES, OR REQUIREMENTS WHICH MAY BE LAWFULLY ESTABLISHED AND APPLICABLE TO SIMILAR SERVICES AND FACILITIES FURNISHED OR OFFERED BY THE COMPANY TO THE GENERAL PUBLIC IN THE SAME VICINITY OR TO OTHER SUBSCRIBERS OF THE EXCHANGE BY WHICH SERVICE IS FURNISHED HEREUNDER.

IT APPEARS THAT ON JANUARY 23, 1948, THE GEORGIA PUBLIC SERVICE COMMISSION PRESCRIBED A SCHEDULE OF RATES FOR INTRASTATE TELEPHONE SERVICE, WHEREUPON THE TELEPHONE COMPANY SOUGHT RELIEF IN THE SUPERIOR COURT OF FULTON COUNTY, GEORGIA, BY A BILL IN EQUITY ALLEGING THAT THE SAID ORDER OF THE GEORGIA PUBLIC SERVICE COMMISSION WAS CONFISCATORY AND ASKED THAT THE PUBLIC SERVICE COMMISSION BE ENJOINED FROM ENFORCING SUCH A SCHEDULE OF RATES. IN ITS PETITION THE TELEPHONE COMPANY FURTHER SET UP IN EXHIBIT "B" THERETO A SCHEDULE OF RATES DESIGNED TO PRODUCE ONLY TEMPORARY EMERGENCY RELIEF PENDING ACTION BY THE PUBLIC SERVICE COMMISSION IN ESTABLISHING JUST AND REASONABLE RATES ON A PERMANENT BASIS FOR INTRASTATE TELEPHONE SERVICE IN THE STATE OF GEORGIA. ON AUGUST 24, 1948, THE SUPERIOR COURT OF FULTON COUNTY, GEORGIA, ENJOINED THE PUBLIC SERVICE COMMISSION FROM ENFORCING THE RATES PRESCRIBED IN ITS ORDER OF JANUARY 23, 1948, AND, IN EFFECT, ALLOWED THE RATES SET OUT IN EXHIBIT "B" BY RESTRAINING AND ENJOINING THE PUBLIC SERVICE COMMISSION FROM INTERFERING WITH THE TELEPHONE COMPANY IN PLACING INTO EFFECT RATES AND CHARGES NOT IN EXCESS OF THOSE SET OUT IN EXHIBIT "B" TO ITS PETITION UNTIL SUCH TIME AS THE PUBLIC SERVICE COMMISSION SHOULD PRESCRIBE A SCHEDULE OF JUST AND REASONABLE RATES, OR UNTIL THE FURTHER ORDER OF THE COURT. ON DECEMBER 22, 1948, THE COURT ISSUED AN ORDER MODIFYING ITS DECREE OF AUGUST 24, 1948, BY REMOVING THEREFROM THE INJUNCTION AGAINST THE PUBLIC SERVICE COMMISSION FROM INTERFERING WITH THE COMPANY IN PLACING INTO EFFECT RATES NOT IN EXCESS OF THOSE SET OUT IN EXHIBIT "B.' IMMEDIATELY UPON THE SIGNING OF THIS ORDER THE TELEPHONE COMPANY PLACED IN EFFECT AS OF DECEMBER 23, 1948, A SCHEDULE OF RATES IN EXCESS OF THE RATES SHOWN IN EXHIBIT "B" TO ITS ORIGINAL PETITION. THE PUBLIC SERVICE COMMISSION BY ORDER DATED JANUARY 10, 1949, EFFECTIVE JANUARY 12, PRESCRIBED A SCHEDULE OF RATES WHICH WERE IN EXCESS OF THE TEMPORARY RATES SPECIFIED IN EXHIBIT "B" TO THE TELEPHONE COMPANY'S ORIGINAL PETITION, BUT LESS THAN THE ARBITRARY RATES PLACED IN EFFECT BY THE TELEPHONE COMPANY AS OF DECEMBER 23, 1948. THE TELEPHONE COMPANY THEN ELECTED TO MAKE THE RATES ESTABLISHED BY THE ORDER OF JANUARY 10, 1949, RETROACTIVE TO DECEMBER 23, 1948, IN LIEU OF THE RATES THAT HAD BEEN ARBITRARILY PLACED IN EFFECT BY THE COMPANY ON DECEMBER 23, 1948. THE CONTROVERSY INVOLVES ONLY $1.75, THIS BEING THE DIFFERENCE BETWEEN THE RATE IN EFFECT DURING THE PERIOD OF THE INJUNCTION AND THE RATE ESTABLISHED BY THE PUBLIC SERVICE COMMISSION ORDER OF JANUARY 10, 1949. THE PERIOD COVERED BY THIS CHARGE ON THE INSTANT VOUCHER IS FROM DECEMBER 23, 1948, TO JANUARY 11, 1949.

THE RULE IS THAT WHERE THE COURTS HAVE SET ASIDE THE RATE FOR A PUBLIC UTILITY FIXED BY THE PUBLIC UTILITIES COMMISSION AS CONFISCATORY, THE PUBLIC UTILITY HAS THE RIGHT TO PRESCRIBE AND COLLECT RATES OF ITS OWN MAKING UNTIL NEW RATES HAVE BEEN ESTABLISHED BY THE OFFICIAL AUTHORITY. CITY OF HUTCHINSON V. HUTCHINSON GAS COMPANY, 264 P. 68; CITY OF HUTCHINSON V. SOUTHWESTERN BELL TELEPHONE COMPANY, 200 P. 301. IN THE INSTANT CASE, HOWEVER, AT THE TIME THE DECREE OF AUGUST 24, 1948, WAS ISSUED THE COURT RESTRAINED THE COMPANY FROM CHARGING RATES IN EXCESS OF THOSE SET FORTH IN EXHIBIT "B" TO ITS PETITION. THEREAFTER, WHEN THE COURT REMOVED THIS RESTRICTION BY ITS MODIFICATION ORDER OF DECEMBER 22, 1948, IT WOULD APPEAR THAT, IN THE ABSENCE OF ANY OTHER RATE WHICH HAD BEEN ESTABLISHED BY OFFICIAL AUTHORITY, THE TELEPHONE COMPANY NOT ONLY WAS NO LONGER REQUIRED TO CONTINUE IN EFFECT THE RATES SET FORTH IN EXHIBIT "B," BUT WAS FREE TO PROMULGATE RATES OF ITS OWN UNDER WHICH IT COULD OPERATE UNTIL OTHER RATES WERE FIXED BY THE PUBLIC SERVICE COMMISSION.

IN VIEW THEREOF, AND SINCE THE TELEPHONE COMPANY ELECTED TO CHARGE THE RATE ESTABLISHED BY THE COMMISSION'S ORDER OF JANUARY 10, 1949, INSTEAD OF THE HIGHER RATE IT HAD INTENDED TO PLACE IN EFFECT ON DECEMBER 23, 1948, THIS OFFICE PERCEIVES NO LEGAL OBJECTION TO PAYING SUCH RATE ON AND AFTER DECEMBER 23, 1948.

ACCORDINGLY, THE VOUCHER IS RETURNED HEREWITH, AND YOU ARE ADVISED THAT PAYMENT THEREON IS AUTHORIZED, IF OTHERWISE CORRECT.