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In re Request for Service in Quest's Tofte Exchange

July 22, 2003

IN THE MATTER OF THE REQUEST FOR SERVICE IN QWEST'S TOFTE EXCHANGE.


Minnesota Public Utilities Commission File No. P-421/CP-00-686

Considered and decided by Stoneburner, Presiding Judge, Forsberg, Judge, and Huspeni, Judge.*fn1

SYLLABUS BY THE COURT

1. When an agency acts in both its legislative and judicial capacities, our standard of review is a combination of the substantial evidence test and consideration of whether the agency acted arbitrarily and capriciously.

2. Where existing facilities are not available, the Minnesota Public Utilities Commission may require a telephone company assigned to an area to reasonably extend its facilities so as to provide service, but the commission cannot, without substantial evidence in the record, prevent the telephone company from recovering sufficient costs of extending its facilities so as to constitute a prudent investment.

3. A telephone company's challenge that an order is confiscatory is premature where rate structure has not yet been determined.

The opinion of the court was delivered by: Forsberg, Judge*fn2

Reversed and remanded

OPINION

Relator Qwest Corporation (Qwest) brings this certiorari appeal challenging orders issued by respondent Minnesota Public Utilities Commission (MPUC), that require Qwest to construct facilities to serve approximately 100 persons who live within the Tofte exchange area and to bear most of the cost of providing those services. Qwest asserts that the MPUC's decisions disregard existing tariff provisions and are unsupported by the record. During the pendency of this appeal, Qwest requested a stay of the proceedings, which we granted in part in an order dated June 13, 2003.

Because the MPUC's decision to require Qwest to bear most of the costs of providing service to these petitioners is unsupported by substantial evidence in the record and fails to adequately consider the tariff provisions that allow Qwest to recover a sufficient amount of its construction charges to constitute a prudent investment, we reverse and remand for further proceedings.

FACTS

On May 31, 2000, Robert Tyson and other residents within the Tofte exchange area filed a complaint with the MPUC requesting an investigation into Qwest's failure to provide telephone service to their residences. See Minn. Stat. § 237.081, subd. 1a (2002) (providing that MPUC "shall investigate the matters raised" in complaint made against telephone company that "service is inadequate or cannot be obtained"). Throughout this investigation, Qwest has not disputed that the MPUC has the authority to require Qwest to provide services to these petitioners. Rather, Qwest challenges the allocation of costs and argues that it is entitled to charge the petitioners line extension charges and excess construction charges under the terms of its tariff, known as the Exchange and Network Services Tariff (tariff). This tariff governs Qwest's local exchange activities in Minnesota.

Section 4.1.B.16 of the tariff deals with line extension charges and provides that "[c]ustomers * * * receive a free 700 foot allowance in cable installation starting at the nearest Network Facility," defined as an "existing facility which may serve more than one customer." After this 700-foot allowance, customers may be charged a fixed, ...


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