WPC # VU:a % 0(b w4 0J 0TR 0^ 0h 0rl 0| Z 0b 0 1ux 0d U*Q B){ DC AM 4f.v~v B D3 0@5 AOu 0D D/ BHP LaserJet 4Si/4SiMX PS 600dpiPSCRIPT0 ,rAZ"Arial RegularX($- -Ӏ D 3|x 2 0Indent123  2" 0Indent20 23  2, 0Indent30 0 23  26 0Indent40 0 0 23  2@ 0Indent50 0 0 0 23  2J 0Indent60 0 0 0 0 23   #2T 0Indent70 0 0 0 0 0 23  2^ 0Indent80 0 0 0 0 0 0 23    ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P 8Mac DefaultMac Default ` X<  9p`(Arial% Line 7 d7Border 1dd-C << G !  #d#     YYY FILEDXOctober2,1996CecilW.CrowsonAppellateCourtClerk   \\RA'\PtPtHH(FG(HH(d'@Styl{WP}01  HH  2$HH  Geneva  <Px443!#4$*$$*$ KK  Geneva  Geneva .,6 Geneva   BA Op Geneva  BA Op Geneva  d%%%%'dxd("$    -C<< CLevel 1Level 2Level 3Level 4Level 5($$   1  ' dxdP Pd ! .           \RA'\7XXdd7BELLSOUTH    ) TELECOMMUNICATIONS,INC.,  )      ) Petitioner/Appellant,  ) AppealNo.      ) 01A019509BC00400VS.      )       ) PublicServiceCommissionL !;+'h|ML`  `LKEITHBISSELL,STEVEHEWLETT, ) No.9501050SARAKYLE,Constitutingthe  ) TennesseePublicServiceCommission, )       ) Respondents/Appellees.  )      @ COURTOFAPPEALSOFTENNESSEE@ MIDDLESECTIONATNASHVILLE@ APPEALEDFROMTHETENNESSEEPUBLICSERVICECOMMISSION@ ATNASHVILLE,TENNESSEEFORAPPELLANT:     FORAPPELLEES:BennettL.Ross     DianneF.NealNashville,Tennessee    PublicServiceCommission       Nashville,TennesseeFORINTERVENOR    FORTENNESSEECONSUMERS:AT&TCOMMUNICATIONS,INC:   CharlesW.Burson       AttorneyGeneral&ReporterValSanfordJohnKnowWalkup     MichaelE.MooreNashville,Tennessee    SolicitorGeneral              L.VincentWilliams       ConsumerAdvocateDivision       Nashville,Tennessee              @ REVERSEDANDREMANDED           BENH.CANTRELL,JUDGECONCUR:LEWIS,J.KOCH,J.  @ OPINION X  TheTennesseePublicServiceCommissionorderedthecompletionofapreviouslyauthorizedinvestigationofthefutureearningsofBellSouthTelecommunications,despitelegislativedevelopmentsthatstrippedtheCommissionofitsauthoritytousesuchaninvestigationtosettelephonerates.BellSouthfiledapetitionwiththiscourtforreviewofthePSCsorder,arguingthatcompletionoftheinvestigationwasinconsistentwiththelegislativepurpose.WereversetheCommissionsorderandremandthecaseforfurtherconsiderationbytheTennesseeRegulatoryCommission.@ I.   PromptedbyapetitionfiledbytheStateConsumerAdvocate,thePublicServiceCommissionvotedonMarch28,1995toconductaninvestigationoftheintrastateearningsofSouthCentralBell(nowBellSouthTelecommunications)foraoneyearfuturetestperiod.Underthestatuteineffectatthattime,suchaninvestigationoffutureearningswasarequiredpreliminarystepintheperformanceoftheP.S.C.sfunctionofestablishing justandreasonableratesfortelephoneservice.  OnMay25,1995,theLegislatureenactedtheTeleommunicationsReformAct,nowcodifiedatTenn.CodeAnn.655201etseq.Thenewactwasexpresslydesignedtoencouragecompetitioninthetelecommunicationsservicesmarket,anditcreatedanalternativetothetraditionalmethodofestablishingconsumertelephoneratesbyfuturerateofreturnanalysis.  Underthenewprocedure,atelephonecompanycouldapplyforpriceregulation,andtheP.S.C.wasrequiredtoimplementapriceregulationplanwithin90days,basedonanauditoftherateofreturnearnedbytheutilitywithinthemostrecentreportingperiod.SeeTenn.CodeAnn.655209(c)and(j).Thusthestatutepermittedexpediteddecisionmakingbasedonretrospectiveratherthanprospectivefinancialdata.  BellSouthappliedonJune20,1995forpriceregulationunderthenewstatute.Nonetheless,onJuly14,1995theCommissionvotedtocompletetheearningsinvestigation,reservingtheissueof whetheranyusecouldbemadeoftheresultsofthisinvestigationunderthepriceregulationschemesetoutintheTelecommunicationsAct....BellSouthfiledapetitionunderRule12,Tenn.R.App.P.toappealthatorder.ThePSCandintervenorAT&Tfiledajointmotiontodismissthepetition,onthegroundthattheorderofinvestigationwasnotafinalordersubjecttoappellatereview.  OnOctober25,1995,thiscourtdismissedthejointmotiononthegroundthat interlocutoryadministrativeordersarereviewablewheretheagencyhasplainlyexceededitsstatutoryauthorityorthreatensirreparableinjuryinclearviolationofanindividualsrights.ThiscourtalsostayedallproceedingsintheCommissionrelatedtotheearningsinvestigation,anddirectedthattheappealproceed.  OnJuly1,1996,thePSCwasreplacedbyanew,appointedagencycalledtheTennesseeRegulatoryAuthority.SeeTenn.CodeAnn.651201.OnJune11,1996,thiscourtheardoralargumentsonBellSouthspetitionforreview.NeitherinthebriefsnorinoralargumentdidthePSCarticulateareasonwhytheinvestigationshouldcontinue.Thepartiesallacknowledgethattheinformation X gainedthroughtheinvestigationwouldbeirrelevanttoBellSouthsrates.ThePSCarguesonlythattheinvestigationmightservesomepurpose.  WethinkthePSCsdecisiontocontinuetheinvestigationissimplyarbitrary,adecision thatisnotbasedonanycourseofreasoningorexerciseofjudgment.SeeJacksonMobilphonev.TennesseePSC,876S.W.2d106at111(Tenn.App.1993).Anagencysarbitrarydecisionevenapreliminary,procedural,orintermediateonemaybereversedbythereviewingcourt.Tenn.CodeAnn.45322(a)(1),(h)(4).  Weareawarethatinadoptingregulatoryreformthelegislaturewascarefultosaythatnothingintheactwould affecttheauthorityanddutyoftheCommissiontocompleteanyinvestigationpendingatthetimetheactbecameeffective.SeeActs1995,ch.408.ButwedonotthinkthelegislatureintendedtoauthorizethePSCtocontinueaninvestigationthatnolongerhadanypurpose.  We,therefore,reversethePSCsordercontinuingtheearningsinvestigationandremandthecausetotheTennesseeRegulatoryAuthorityforfurtherproceedingsconsistentwiththisopinion.TaxthecostsonappealtothePSC.         _____________________________       BENH.CANTRELL,JUDGECONCUR:______________________________SAMUELL.LEWIS,JUDGE______________________________WILLIAMC.KOCH,JR.,JUDGE"  %