Scates V. Arizona Corporation Commission

This appeal concerns the validity of the Arizona Corporation Commission's approval of an application by Mountain States Telephone and Telegraph Company for an increase in rates. The increase affected charges for all installation, moving and changing of telephones within the State of Arizona. It amounted to an annual rise in revenue to Mountain States of approximately 4.9 million dollars, representing about two percent of its entire annual revenue in the state. The Commission approved the increase without any examination of the costs of the utility apart from the affected services, without any determination of the utility's investment, and without any inquiry into the effect of this substantial increase upon Mountain States' rate of return on that investment. We hold that the Commission's action was in violation of Arizona's constitutional provisions regarding rate making as consistently interpreted by the courts of this state, and we reverse the judgment of the trial court upholding the increase.