Efforts to Get Corporation Commission to Reopen Southwestern Bell Case Continue
By: Constitution Staff
On December 19, the Oklahoma Supreme Court ruled 8-1 against a group of former Southwestern Bell customers that were seeking to force the Oklahoma Corporation Commission to reopen a rate case decided by a bribed vote. The former customers were appealing a 2016 Corporation Commission (OCC) decision that had denied their request to reopen the controversial decision the agency made in 1989. The case is very similar to a current request to reduce utility company rates in view of the federal tax cuts that went into effect this year.
When the Tax Reform Act of 1986 was passed by Congress and signed by President Ronald Reagan, lowering tax rates for corporations and changing the ways corporate taxes were calculated, the OCC did not have time to investigate exactly how these tax changes would affect all the utilities it regulated before the changes went into effect in July 1987. So the OCC issued orders placing several utilities’ rates subject to refund between July 1987 and whenever the commission was able to determine the impact of the lower tax rates on those utilities. By doing this, the OCC was anticipating that if a regulated monopoly public utility is paying significantly lower taxes, its costs would be lower and that the benefit should accrue to the ratepayers in the form of lower rates. If the lower rates would be delayed going into effect, then existing rates must be declared “temporary” to permit excess revenues collected to be refunded later when the final orders would be issued.
But, in 1989, the OCC voted 2 to 1 (with only Commissioner Bob Anthony dissenting) to accept a settlement negotiated by the agency’s staff with Southwestern Bell to reinvest the millions it saved through the federal tax cut into upgrading its network instead of refunding to customers and lowering rates.
However, it was later learned that the OCC decision was decided by a bribed vote. With the help of Commissioner Anthony who was first elected to the commission in 1988, federal prosecutors secured bribery convictions against former Commissioner Bob Hopkins, who had voted in favor of the settlement, and William Anderson, an attorney who worked on behalf of Southwestern Bell and other utility companies. Hopkins was convicted for taking a $10,000 bribe received from Anderson. Hopkins and Anderson, who are both now deceased, went to federal prison following their convictions.
Anthony, who still serves as a commissioner, was the only current member willing to reopen the case. Commissioners Dana Murphy and Todd Hiett voted against reopening the case. In his discussion in support of rehearing the case, Anthony said the matter deserved reconsideration because of the bribery scandal. He also questioned whether or not Southwestern Bell, which later acquired the AT&T name, had accurately represented to the commission staff how much money it actually saved by the 1989 federal tax cut.
The commission’s ruling in the Southwestern Bell case has been bouncing around for over three decades from the Corporation Commission to the Oklahoma Supreme Court and to the U.S. Supreme Court. Anthony also made several attempts to convince other commissioners to reopen the case. In the 2016 attempt, the applicants pushing to reopen the case, contended that the customers are owed more than $16 billion, including interest, although there is questions concerning what interest rates should be applied.
Following the recent Oklahoma Supreme Court ruling, Anthony issued a statement expressing his disappointment in the decision. “It’s a sad day for Oklahoma when the state’s highest court can’t even determine that bribery is unconstitutional,” he wrote. “Today the Supreme Court has agreed with AT&T that ‘Bribed votes do count' in Oklahoma. I continue to vehemently disagree.”
The applicants will now appeal their case to the U.S. Supreme Court.
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