Bellsouth Telecommunications, Inc. D/B/A South Central Bell Telephone Co., v. Tennessee Regulatory Authority, et al.

This consolidated appeal of three separate proceedings involves the efforts of BellSouth Telecommunications, Inc. to take advantage of the 1995 legislation easing the traditional regulatory burdens on telecommunications service providers. After making significant adjustments in BellSouth’s reported operating results, the Tennessee Public Service Commission determined that BellSouth’s current earned rate of return exceeded its authorized rate of return and that BellSouth was receiving $56.285 million in excess revenues. The Commission directed BellSouth to reduce its rates by $56.285 million and set the initial rates in the company’s price regulation plan accordingly. On this appeal, BellSouth and another intervening party take issue with the procedures employed by the Commission to consider and act upon BellSouth’s application for a price regulation plan. We have determined that these proceedings were not preempted by the federal Telecommunications Act of 1996. We have also determined that the General Assembly did not give the Commission authority to adjust BellSouth’s reported operating results and that the Commission should have convened a contested case hearing when BellSouth took issue with the Commission’s decision to adjust its reported operating results. Accordingly, we vacate the Commission’s January 23, 1996 order and all earlier related orders.