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Court Reverses PSC on Sale of Telco Exchange

Fortnightly Magazine - April 15 1996

The Wyoming Supreme Court has ruled that the state Public Service Commission (PSC) acted outside of its authority when, in 1994, it directed U S WEST Communications, Inc., to sell a local telephone exchange to an unsuccessful bidder rather than to another company with whom the LEC had already contracted for the sale.

Earlier, the PSC had required upgrades in rural exchanges throughout the state, and had endorsed a plan to sell certain local exchanges to independent telephone companies in the public interest. But the PSC rejected terms in several sales arranged by U S WEST and refused to approve transfer of the associated certificates. See, e.g., Re U S WEST Communica., Inc., 149 PUR4th 353 (Wyo.P.S.C. 1994).

On review, the court said that the dispute was the result of the "PSC's excessive regulation of the communications industry." The PSC's order granting a conditional certificate to its preferred bidder "must be reversed as unlawful meddling," the court concluded. Union Tel. Co., Inc. v. Wyoming PSC, No. 94-269, Feb. 8, 1996 (Wyo.).

In a related case, the high court overturned a PSC decision to cap the sale price for the rural exchanges at 1.7 times net book value. The PSC has the power to attach conditions to existing certificates and to refuse to issue a certificate if an applicant is unfit or the service is not needed, but it cannot attach conditions prior to the issuance of a certificate, the court said. Tri-County Tel. Assoc., Inc. v. Wyoming PSC, No. 94-268, Feb. 8, 1996 (Wyo.). t

Cases were reviewed by Phillip S. Cross, an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.

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