Office of People's Counsel v. Maryland Public Service Commission

BELL, Chief Judge. The central issue in this case is whether telecommunication rates set pursuant to Maryland Code (1957, 1995 Repl.Vol.) Article 78, § 69(e) 1 , an “alternative” form of regulation, must meet the “just and reasonable rates” requirement of the traditional rate of return regulatory scheme, and in particular § 68(a). The Public Service Commission (the “Commission” or “PSC”), in Order No. 73011, In Matter of the Inquiry into Alternative Forms of Regulating Telephone Companies, Case ⁷ No. 8715, 1995 WL 848271 , adopted an alternative form of regulation, specifically a price cap regulatory plan. In so doing, it concluded that § 69(e) permits it to subscribe to a “broader and more forward-looking measure of rate reasonableness than can be obtained through an examination and matching of the [telecommunications company’s] rate base, revenues, and expenses.” More particularly, the Commission adopted the view that § 69(e) obviates the requirement that it set “just and reasonable rates” as §§ 68(a) and 69(a) prescribe.

Disagreeing with the Commission’s interpretation of the inter-relationship among these statutory provisions and alleging that the Commission’s factual determinations were arbitrary and capricious, the Office of People’s Counsel (“People’s Counsel” or “OPC”) sought judicial review of the Commission’s Order in the Circuit Court for Wicomico County. Although that court disagreed with the Commission, finding that § 69(e) did not relieve it of meeting the obligation § 68(a) imposes, to set “just and reasonable rates,” it nevertheless affirmed the Commission’s Order. The court concluded that “it does not follow ... that the determination of whether a rate is ‘just and reasonable’ is confined to or dictated by the provisions of Sec. 69(a). That ‘subsection’ applies to the determination when public service company rates are set by the ‘traditional method’ outlined in Sec. 69(a).

It no more applies to determinations made pursuant to the authority of Sec. 69(e) than to those made pursuant to the authority of Sec. 69(b).” We shall affirm the judgment of the circuit court. Factual and Procedural Context The Commission has regulated the telecommunication industry in Maryland since 1910. See 1910 Maryland Laws, ch. 180, § 18. Traditionally, the Commission utilized “test year” data to project the future cost of service and expenses of Bell Atlantic (the former Chesapeake and Potomac (“C & P”) Telephone Company of Maryland) and, ultimately, to set telephone rates.

The rates are designed to ⁸ yield to Bell Atlantic a “revenue requirement” sufficient to pay its prudent expenses and to allow it the opportunity to earn a fair return on investments. See Public Service Comm’n v. Baltimore Gas & Electric Co., 273 Md. 357 , 360 n. 2, 329 A.2d 691 , 694 n. 2 (1974), in which this Court, citing 1 A.J.G. Priest, Principles of Public Utility Regulation 45 (1969), summarized the determinations that undergird public utility rates, as follows: “The orthodox making of public utility rates requires four basic determinations: (1) what are the enterprise’s gross utility revenues under the rate structure examined; (2) what are its operating expenses, including maintenance, depreciation and all taxes, appropriately incurred to produce those gross revenues; (3) what utility property provides the service for which rates are charged and thus represents the base (rate base) on which a return should be earned and (4) what percentage figure (rate of return) should be applied to the rate base in order to establish the return to which investors in the utility enterprise are reasonably entitled.” Thus, the Commission’s role is to determine what rates the utility should be allowed to charge in future years to cover prudent expenses and earn a reasonable profit. The “rate-of-return” regulatory scheme is prescribed primarily in two statutes: Maryland Code (1957, 1995 Repl. Volume, 1997 Cum.Supp.) Article 78, §§ 68(a) and 69(a).

Pursuant to § 68(a), “The Commission shall have the power to determine just and reasonable rates of public service companies, whether as maximum, minimum or maximum and minimum, respectively. The rates so determined shall be fixed by order to be served upon each public service company affected thereby. This subsection does not apply to small rural electric cooperatives.” Section 69(a) addresses, inter alia, the “[sjtandard for determining rates and charges” and provides: “(a) ‘Just and reasonable rates’ defined; common carriers excepted.—‘Just and reasonable rates’ means rates which ⁹ are not in violation of any of the provisions of the article, which fully consider and are consistent with the public good, and which will result in an operating income to the public service company, except common carriers, yielding, after reasonable deduction for depreciation and other necessary and proper expenses and reserves, a reasonable return upon the fair value of the company’s property used and useful in rendering services to the public.” In the early 1980’s, the Commission began modifying the regulation of Bell Atlantic’s rates in an effort to allow Bell Atlantic more pricing flexibility, with the intent that Bell Atlantic would have the incentive to operate more efficiently. Subsequently, in the early 1990’s, the Commission began to investigate alternatives to rate-of-return rate-making for Maryland’s regulated telephone companies; however, recognizing that its authority in this area was limited by statute, § 68(a) requiring the Commission to “determine just and reasonable rates of public service companies,” it was unable to adopt certain attractive price plans recommended by Bell Atlantic.

In response to requests from the industry and the Commission, the Maryland General Assembly amended the PSC Law in 1995, see 1995 Maryland Laws, ch. 140 and 141, by adding § 69(e) to Article 78. That section, effective June 1, 1995, states: “(e) Regulation of telephone company.—Notwithstanding the provisions of subsection (a) of this section or any other provision of law to the contrary, the Commission may regulate a telephone company by means of alternative forms of regulation, which may include, but not limited to, the use of price regulation, revenue regulation, ranges of authorized return, rate of return, categories of services, or price indexing, if it finds, after notice and hearing that the alternative form of regulation protects consumers by, at a minimum, producing affordable and reasonably priced basic local exchange service, as defined by the Commission, by ensuring the quality, availability, and reliability of telecommunications services through the State; encourages the development of competition; and is in the public interest.” ¹⁰ Soon after § 69(e) took effect, four “price cap” proposals, each offering an alternative method of regulating Bell Atlantic’s rates, were filed with the Commission. Also filed with the Commission were requests to reduce Bell Atlantic’s rates. The first “price cap” proposal, contained in a “Petition for Implementation of Competition Plus: A True Price Cap Plan for Maryland,” was made by MCI Communications, Inc. (“MCI”.) The MCI proposal was followed a short time later by a petition, filed by the Office of People’s Counsel, to reduce Bell Atlantic’s rates.

Subsequently, the Commission, by Order No. 73011, In the Matter of the Inquiry Into Alternative Forms of Regulating Telephone Companies, Case No. 8715, 1995 WL 848271 , instituted a formal proceeding to investigate the alternatives for regulating telephone companies permitted by § 69(e), its newly acquired statutory authority. Bell Atlantic also filed a “Petition for Adoption of a Price Cap Form of Alternative Begulation.” The PSC Staff and People’s Counsel later filed separate price cap proposals. The Commission’s order, which adopted a procedural schedule and required the parties to develop and file a list of issues, contemplated an investigation that would include “one evidentiary proceeding which will encompass an examination of all alternative regulation proposals ... as well as a review of Bell Atlantic’s rates as necessary to meet the requirements of [section] 69(e).” Also, it made clear that “[a]ll parties should be aware that the Commission envisions that this proceeding will involve something less than a traditional rate case.” Following the receipt of written testimony, evidentiary hearings before the full Commission, at which witnesses were cross-examined on their written testimony, and argument by the parties, the Commission issued Order No. 73011, In the Matter of the Inquiry Into Alternative Forms of Regulating Telephone Companies, Case No. 8715, adopting a Price Cap Plan, 2 (hereinafter, the “Price Cap Order”), to replace the ¹¹ rate-of-return regulation. The Commission thus abandoned traditional rate setting under § 69(a) in favor of a price cap under the new § 69(e).

The order described the plan adopted as an incentive-based price cap regime designed to simulate market competition. Under the plan, the PSC set the initial price for telecommunication services (“going-in-rates”), with future price changes being controlled by a formula that takes into account the rate of inflation, the increasing productivity of the Company and costs, such as taxes and regulatory requirements (“exogenous changes”), that are beyond the Company’s control. The Price Cap Plan the Commission adopted was of its own design, it having found that none of the plans proposed by the parties was acceptable in its entirety. Its Order adopting the plan does not expressly address the “just and reasonable” standard, but instead adopts a “broader and more forward-looking measure of rate reasonableness than can be obtained through an examination and matching of the Company’s rate bases, revenue, and expenses.” The Commission set Bell Atlantic’s “going in” rates, using its existing rates and ordered a reduction in the “access rates paid by long-distance carriers to terminate calls on Bell Atlantic’s local network.” Both People’s Counsel and MCI sought judicial review in the Circuit Court for Wicomico County.

The actions having been consolidated, following a hearing, the court issued an Opinion and Order, affirming the Commission’s Order. The court specifically concluded that, when setting rates pursuant to § 69(e), the Commission still was required by § 68(a) to set “just and reasonable” rates. People’s Counsel noted its appeal to the Court of Special Appeals. Before the case was heard by the intermediate appellate court, this Court, on its own motion, issued a Writ of Certiorari. ¹² Before this Court, People’s Counsel argues that, by adopting the Price Cap Order, the Commission (1) improperly interpreted Article 78, § 69(e) and, as a result, failed to set “just and reasonable” rates for the telecommunications industry, as § 68(a ) requires and (2) acted arbitrarily, thus in violation of the residential telephone customers’ substantive due process rights.

People’s Counsel urges the Court to reverse and remand the case to the Commission for further proceedings. In addition to determining that the “just and reasonable rates” standard of § 68(a) applies to rates set pursuant to § 69(e), People’s Counsel asks the Court to require the Commission: “to explain the term ‘just and reasonable rates’ as applied to alternative forms of regulation under § 69(e), and to establish criteria to evaluate rates under that definition; “to explain ‘affordable and reasonably priced basic local exchange service’ as required by § 69(e) and develop criteria for its application; “once all explanations and criteria are in place, to reevaluate whether all rates set in Order No. 73011 are ‘just and reasonable’ and whether the elements of basic local exchange service are ‘affordable and reasonably priced’; and “to make adequate findings of fact based on the record, conclusions of law and determinations of the issues based on a reasoned analysis of those finding and conclusions.” Addressing the standard of review of Commission decisions, People’s Counsel contends that the issue this case presents concerns legal, not factual, determinations. Thus, it points out that, when administrative agencies like the Commission determine questions of law, “[ajppellate courts are not bound by the decision of the agency, but may substitute their interpretation of the statute for that of the agency.” Because, People’s Counsel maintains, in this case, the Commission was required only to interpret a statute, this Court is not obligated to give any deference to the Commission’s interpretation. Predictably, the Commission takes a contrary view, arguing instead that “[a] review of the relevant statutory and case law ¹³ clearly demonstrates that ‘a great deal of discretion is necessarily vested in the Commission in order that it may discharge its important and complex duties,’ ” (quoting People’s Counsel v. Public Service Comm’n., 52 Md.App. 715, 722 , 451 A.2d 945, 949 (1982), cert. denied, 295 Md. 441 (1983)).

The Commission also maintains that a significant measure of its discretionary authority includes evaluating and balancing conflicting opinions and recommendations presented during hearings, and using its expert judgment to arrive at reasoned determinations that are statutorily required to be accorded great judicial deference. The Legislature has clearly defined the powers of the Commission, as follows: “ § 1. Jurisdiction and powers of Commission generally. “The jurisdiction and powers of the Public Service Commission shall extend to all public service companies, as hereinafter defined, engaged in or operating a utility business in this State.... The powers of the Commission shall be liberally construed; and the Commission shall have the powers specifically conferred by this article and by any other law, and also all implied and incidental powers necessary and proper to carry out effectually the provisions of this article.” Md.Code (1957, 1995 RepLVol.) Art. 78, § l. 3 The scope of the Court’s review also is expressly defined: “§ 97.

Scope of Review. “Every final decision, order, rule or regulation of the Commission shall be prima facie correct and shall be affirmed unless clearly shown to be (1) in violation of constitutional provisions, or (2) not within the statutory authority or jurisdiction of the Commission, or (3) made upon unlawful procedure, or (4) arbitrary or capricious, or (5) affected by other error of law, or (6) if the subject of review is an order entered in a contested case after hearing, such order is ¹⁴ unsupported by substantial evidence on the record considered as a whole.” Art. 78, § 97. In addition, this Court has made clear that a decision of the Commission is subject to judicial review, but it will not be disturbed on the basis of a factual question except upon clear and satisfactory evidence that it was unlawful and unreasonable. See Public Service Commission v. Byron, 153 Md. 464, 479 , 138 A. 404, 410 (1927); West v. United Rys. & Elec. Co., 155 Md. 572, 582 , 142 A. 870, 873 (1928) (quoting Interstate Commerce Commission v. Union Pac.

R.R. Co., 222 U.S. 541 , 32 S.Ct. 108 , 56 L.Ed. 308 (1912); Mayor and Council of Crisfield v. Public Serv. Comm’n, 183 Md. 179, 185-87 , 36 A.2d 705, 708-09 (1944); Public Serv. Comm’n v. Baltimore Transit Co., 207 Md. 524, 531 , 114 A.2d 834, 836-37 (1955); Public Serv. Comm’n v. Baltimore Gas & Elec.

Co., 273 Md. 357, 361-62 , 329 A.2d 691, 694 (1974); Baltimore Gas & Elec. Co. v. Public Serv. Comm’n, 305 Md. 145, 161-62 , 501 A.2d 1307, 1315 (1986)). Such a decision is accorded the respect due an informed governmental agency that is aided by a competent and experienced staff.

Potomac Edison Co. v. Public Serv. Comm’n, 279 Md. 573, 582-83 , 369 A.2d 1035, 1041 (1977), citing Balto. Trans. Co. v. Pub.

Ser. Comm., 206 Md. 533, 558 , 112 A.2d 687, 698 (1955). Questions of law, however, are “completely subject to review by the courts,” Cambridge v. Eastern Shore Public Serv. Co., 192 Md. 333, 339 , 64 A.2d 151, 154 (1949)(citing Mayor & Council of Crisfield v. Public Serv.

Comm’n, 183 Md. at 189 , 36 A.2d at 710 ). See also Baltimore Gas and Elec. Co. v. Department of Health and Mental Hygiene, 284 Md. 216 , 395 A.2d 1174 (1979), although the agency’s interpretation of a statute may be entitled to some deference. See Baltimore Gas & Elec.

Co. v. Public Serv. Comm’n, 305 Md. at 161-62 , 501 A.2d at 1315 . That deference is, by no means, dispositive, nor anywise as great as that applicable to factual findings or mixed questions of law and fact. Baltimore Building and Constr.

Trades Council v. Barnes, 290 Md. 9, 14 , 427 A.2d 979, 982 (1981). ¹⁵ This is consistent with the standard of review applicable to all administrative agencies. Ramsay, Scarlett & Co. v. Comptroller, 302 Md. 825, 836-37 , 490 A.2d 1296, 1300-02 (1985). See Liberty Nursing Center, Inc. v. Department of Health and Mental Hygiene, 330 Md. 433, 443 , 624 A.2d 941, 946 (1993); Caucus Distrib., Inc. v. Maryland Securities Comm’r, 320 Md. 313, 324 , 577 A.2d 783, 788 (1990); Maryland State Police v. Lindsey, 318 Md. 325, 334 , 568 A.2d 29, 33 (1990); State Election Bd. v. Billhimer, 314 Md. 46, 58 , 548 A.2d 819, 825 (1988), cert. denied, 490 U.S. 1007 , 109 S.Ct. 1644 , 104 L.Ed.2d 159 (1989); Washington Natl Arena v. Comptroller, 308 Md. 370, 378-79, 519 A.2d 1277, 1281-82 (1987). Barnes is an example of a case in which review of an administrative decision resolving a legal question was involved.

At issue in that case was the meaning of “interested person” as used in the Maryland Prevailing Wage Law, Maryland Code (1957,1979 Repl.Vol.) Art. 100, § 101(c). 4 290 Md. at 14 , 427 A.2d at 981 . Considering “the language of the enactment in its natural and ordinary signification,” id. at 15, 427 A.2d at 982 , this Court held that the Commissioner of Labor and Industry wrongly determined that a labor union council was an “interested person” within the meaning of that section. Rejecting the argument that the agency’s interpretation of the statute was not given proper deference, the Court explained: ¹⁶ “The Council misunderstands the standard of review. We pay great deference to findings of fact of an administrative agency since it has heard and observed the witnesses.

The standard for review of the decision of an administrative agency was stated for the Court by Chief Judge Hammond in Insurance Comm’r v. Nat’l Bureau, 248 Md. 292, 309 , 236 A.2d 282 (1967), as ‘whether a reasoning mind reasonably could have reached the factual conclusion the agency reached.’ (Emphasis added.) This has been repeated in a host of cases since then. See, e.g., Resetar v. State Bd. of Education, 284 Md. 537, 554 , 399 A.2d 225 (1979); Folly Farms I, Inc. v. Trustees, 282 Md. 659, 670 , 387 A.2d 248 (1978); Shell Oil Co. v. Supervisor, 278 Md. 659, 670 , 366 A.2d 369 (1976); and Pemberton v. Montgomery County, 275 Md. 363, 367-68 , 340 A.2d 240 (1975). Here, however, the review is one of law. It is true that as we stated in Holy Cross Hosp. v. Health Services, 283 Md. 677, 685 , 393 A.2d 181 (1978), in the matter of statutory construction it is well understood that the view taken of a statute by administrative officials soon after its passage is strong, persuasive influence in determining the judicial construction and should not be disregarded except for the strongest and most urgent reasons.

See, e.g., F. & M. Schaefer v. Comptroller, 255 Md. 211, 218 , 257 A.2d 416 (1969); Smith v. Higinbothom, 187 Md. 115, 132-33 , 48 A.2d 754 (1946); and John McShain, Inc. v. Comptroller, 202 Md. 68, 73 , 95 A.2d 473 (1953), and cases cited in each. However, as Judge Delaplaine said for the Court in Rogan v. Baltimore & O.R. R., 188 Md. 44, 58 , 52 A.2d 261 (1947), ‘(W)here the language is plain and unambiguous, the judicial construction cannot be controlled by extraneous considerations. No custom, however venerable, can nullify the plain meaning and purpose of a statute.’ Schaefer could be cited for the latter proposition because we there held, despite the prior construction by the Comptroller, that his ‘rule as (t)here sought to be applied (was) an invalid attempt to render taxable that which the General Assembly ha(d) precisely defined as not taxable.’ 255 Md. at 219 , 257 A.2d 416 .” ¹⁷ Id. at 14-15, 427 A.2d at 981-82 . We made the same point in Baltimore Gas & Elec.

Co. v. Public Serv. Comm’n, 305 Md. at 161-62 , 501 A.2d at 1315 , when we said: “The weight to be accorded an agency’s interpretation of a statute depends upon a number of considerations. Although never binding upon the courts, the contemporaneous interpretation of a statute by the agency charged with its administration is entitled to great deference, especially when the interpretation has been applied consistently and for a long period of time. “Another important consideration is the extent to which the agency engaged in a process of reasoned elaboration in formulating its interpretation of the statute. When an agency clearly demonstrates that it has focused its attention on the statutory provisions in question, thoroughly addressed the relevant issues, and reached its interpretation through a sound reasoning process, the agency’s interpretation will be accorded the persuasiveness due a well-considered opinion of an expert body. “In addition, the nature of the process through which the agency arrived at its interpretation is a relevant consideration in assessing the weight to be accorded the agency’s interpretation.

If the interpretation is the product of neither contested adversarial proceedings nor formal rule promulgation, it is entitled to little weight.” (Citations omitted). See generally 2A N. Singer, Sutherland on Statutes and Statutory Construction § 49.05 (“an agency’s interpretation is not binding on the court, and will not be upheld if it is considered to be clearly erroneous.” (footnote omitted)). In the instant case, the term, “affordable and reasonably priced local exchange service,” as used in § 69(e), has never been interpreted, much less consistently applied, for a substantial period of time by the Commission. Moreover, the Commission’s proffered interpretation of § 69(e) is neither long-standing nor a product of a “process of reasoned elaboration.” Therefore, with respect to the interpretation of § 69(e), ¹⁸ the scope of this Court’s review is essentially plenary, with a primary reliance upon the plain meaning and purpose of the statute.

Substantial deference, however, is accorded to the Commission’s factual determinations and to its implementation of the statutory provisions based on those factual determinations. The Commission contends that, under § 69(e), it is not required to apply the “just and reasonable rates” standard of sections 68(a) and 69(a) because that standard applies only to a rate-of-retum regulation, not to alternative means of telecommunication regulation, such as a price cap regulatory scheme. The Commission argues: “The Act specifically permits traditional rate base/rate-of-return regulation to be supplanted by alternative modes of regulation. Thus, rate-of-return regulation merely is one of a list of choices.

While the alternative forms of regulation must protect consumers, this protection may be achieved within the new regulatory structures authorized by the Act, not by requiring superimposition of old methods which are no longer mandatory.” To be sure, the “old method” of establishing rates that conform to the “just and reasonable rates” standard and requirements of sections 68(a) and 69(a) is no longer mandatory when regulation is done by means other than the traditional rate-of-return methodology. This approach, the Commission argues, is not only supported by legislative intent, but is made crystal clear by the Legislature’s use in the first clause of § 69(e) of the language, “Notwithstanding the provisions of subsection (a) of this section.” Stated differently, according to the Commission, the “notwithstanding” clause of § 69(e) permits the Commission to disregard the requirements of § 69(a) because that statute has historically been interpreted to mean that “the Commission must use a rate-of-return methodology to establish just and reasonable rates.” (emphasis in original). Relying on People’s Counsel v. Heintz, 69 Md.App. 74, 87 , 516 A.2d 599, 606 (1986) for support, the Commission asserts that “[t]he ratemaking provisions of [t]he Public Service Commission Law consistently have been interpreted to link ‘just and ¹⁹ reasonable rates’ to a rate-of-return methodology.” Therefore, the Commission reasons, when the rate-of-return methodology is not used or another methodology is used, the applicability of the “just and reasonable rates” standard becomes “optional,” rather than mandatory. People’s Counsel disagrees, contending that the Commission’s interpretation of sections 68(a), 69(a) and 69(e), the relevant statutory provisions, does not conform with the Commission’s previous interpretation of the significance of the “just and reasonable” standard in telecommunication regulations, the rules of statutory construction or the legislative history of those provisions.

People’s Counsel first points to Re Chesapeake and Potomac Telephone Co., 79 Md. PSC 169 (1988), in which the Commission addressed the “just and reasonable rates” standard, articulated in § 68(a), within the context of alternatives to rate-of-return rate-making. There, the Commission opined: “The concept of just and reasonable rates is the cornerstone of regulation in Maryland and every other jurisdiction of the United States. The phrase “just and reasonable rates” appear frequently in The PSC LAW and the laws of many other jurisdictions. Any regulatory methods adopted by this Commission must result in just and reasonable rates in accordance with the provisions of The PSC Law.” “Importantly, Section 56 ... states that ‘the Commission shall enforce compliance by the public service companies with all requirements of the law.’ Thus, the general authority of the Commission is broad, but the Commission must make certain that a public service company’s rates and charges adhere to the ‘just and reasonable’ statutory requirement.” Id. at 188-89.

Furthermore, People Counsel argues that the Commission’s interpretation of the statutes is “overly expansive” and renders § 68(a) nugatory. While People’s Counsel seems to agree with the Commission that the § 69(a) definition of “just ²⁰ and reasonable rates” is not directly applicable to alternative forms of regulation adopted under § 69(e), it maintains that § 68(a), as an “enabling” provision, requires the Commission to set just and reasonable rates for all public service companies, whenever § 69(e) is employed to determine rates, whatever the methodology utilized, and to develop a definition for “just and reasonable” consistent with that methodology. As support, he points out that in Baltimore Gas & Elec. Co. v. Public Serv.

Comm’n, 305 Md. 145 , 501 A.2d 1307 (1986), we said: “BG & E places great weight on the introductory phrase in § 54F(c), ‘[notwithstanding any other provisions of this article,’ interpreting it to mean that in construing § 54F we must not look beyond the language of this single section. As we read it, this phrase simply means that the procedure set forth in § 54F controls within its area of applicability in spite of any apparent conflict with other parts of the Public Service Commission Law. It does not mean that § 54F must be interpreted in a vacuum, without due consideration of other consistent and complementary portions of the article.” Id. at 158, 501 A.2d at 1313 . 5 Section 68(a) and, for that matter, Md.Code (1957, 1995 RephVol.) Art. 78, § 28(d), 6 People’s Counsel maintains, ²¹ charge the Commission with the responsibility of ensuring that public service companies only charge rates that are “just and reasonable.” Additionally, People’s Counsel argues that the Commission’s conclusion that rates are “affordable and reasonably priced” is not a substitute for finding that rates are just and reasonable under § 68(a). He reasons: “The legislative intent, as evidenced by the statutory language and the legislative history, requires the [Commission] to make a finding that consumers have affordable and reasonably priced basic local exchange service and that the rates are just and reasonable under [section] 68(a).” People’s Counsel adds that a failure to find that rates are just and reasonable effectively provides the public with no assurance that the telecommunications company is not “extracting monopoly profits.” Next, People’s Counsel points to the “legislative history” of § 69.

It maintains that, when the Commission requested in 1994 that Bell Atlantic submit draft legislation to modify § 69(a) and allow alternative forms of regulation, it clearly articulated its desire that an amendment to § 69 not repeal the “just and reasonable rates” standard. In In re Regulation of Firms, Including Current Telecommunications Providers and Cable Television Firms, Which May Provide Local Exchange and Exchange Access Service In Maryland In Future, 85 Md. PSC 187, 1994 WL 810629 (1994), the Commission wrote: “In order to eliminate any questions or doubts about the scope of our authority, we favor a simple legislative amendment to Article 78 which makes clear the authority of the Commission to consider alternative to rate base/rate of return methodology in determining just and reasonable rates for any public service company. * * * “[W]e note that [t]he PSC Law currently sets the very broad policy of enabling the Commission to ‘determine just ²² and reasonable rates of public service companies ... ’ (Art. 78, Section 68(a)). The purpose of our directive to [Bell Atlantic] to submit draft legislation and our