Bryant v. Arkansas Public Serv. Comm'n

Winston BRYANT, Attorney General for the
State of Arkansas v. ARKANSAS PUBLIC SERVICE
COMMISSION

CA 95-629                                          ___ S.W.2d ___

                  Court of Appeals of Arkansas
                       Divisions I and IV
                 Opinion delivered April 9, 1997


1.   Public Service Commission -- standard of appellate review. -- The
     appellate courtþs review of an order of the Arkansas Public
     Service Commission is limited and governed by Ark. Code Ann.
      23-2-423(c) (Supp. 1995), which provides in part that the
     Commission's findings of fact, if supported by substantial
     evidence, shall be conclusive and that the review shall not be
     extended further than to determine whether the Commission's
     findings are supported by substantial evidence and whether the
     Commission has regularly pursued its authority, including a
     determination of whether the order or decision under review
     violated any right of the petitioner under the laws or
     Constitution of the United States or of the State of Arkansas.

2.   Public Service Commission -- wide discretion in approach to rate
     regulation. -- The Public Service Commission has wide discretion
     in choosing its approach to rate regulation, and the appellate
     court does not advise the Commission concerning how to make
     its findings or exercise its discretion. 

3.   Public Service Commission -- Commission's action in calculating rates must
     be based on substantial evidence -- total effect of rate order must not
     be unjust, unreasonable, unlawful, or discriminatory. -- The appellate
     court is generally not concerned with the method used by the
     Commission in calculating rates as long as the Commissionþs
     action is based on substantial evidence and the total effect
     of the rate order is not unjust, unreasonable, unlawful, or
     discriminatory.

4.   Administrative law & procedure -- standard of appellate review. -- The
     appellate court views only the evidence most favorable to the
     appellees in cases presenting questions of substantial
     evidence, and the burden is on the appellant to show a lack of
     substantial evidence to support an administrative agencyþs
     decision; to establish an absence of substantial evidence to
     support a decision, the appellant must demonstrate that the
     proof before the administrative tribunal was so nearly
     undisputed that fair-minded persons could not reach its
     conclusion; the question on review is not whether the
     testimony would have supported a contrary finding but whether
     it supports the finding that was made.

5.   Public Service Commission -- rate-design determinations -- noncost factors
     as well as cost-of-service studies may be used. -- A cost-of-service
     study is merely one tool that may be used in rate-design
     determinations and noncost factors can also be taken into
     consideration.

6.   Public Service Commission -- Commission not bound to accept one or other
     of conflicting views, opinions, or methodologies. -- The Public Service
     Commission is never compelled to accept the opinion of any
     witness on any issue before it, nor is it bound to accept one
     or the other of any conflicting views, opinions, or
     methodologies.

7.   Public Service Commission -- allocation of gas mains -- Commission's
     experience, technical competence, specialized knowledge, and discretionary
     authority in area recognized. -- The allocation of gas mains is an
     area in which it is appropriate to recognize the  Commissionþs
     experience, technical competence, and specialized knowledge,
     and the discretionary authority conferred upon the Commission;
     the Public Service Commission has wide discretion in choosing
     its approach to rate regulation, and it is not bound by a
     particular method of evaluation.

8.   Public Service Commission -- sufficient evidence presented to support
     Staff's and utility's predictions of downward trend in gas use. --
     Sufficient evidence was presented to support Staffþs and
     appellee utilityþs sales forecasts that predicted a downward
     trend in gas use where appellee utility's witness testified
     that, because of improved energy-efficient construction
     standards, extensive renovation and weatherization of existing
     homes, and the use of more efficient end-use equipment,
     conservation was the primary cause of the utilityþs declining
     load, and where a Staff witness also testified that loss of
     gas-fired air-conditioning customers was a significant factor
     in the decline of the utility's summer usage and that, at the
     current rate of decline, Staff projected that no residential
     gas-fired air-conditioning units would be in service in three
     to four years.

9.   Public Service Commission -- substantial evidence supported Commission's
     conclusion that Stipulation presented just and reasonable resolution of
     case. -- Where the Public Service Commission found that the
     provisions of the Stipulation were clearly within the
     reasonable range of opinions and recommendations presented by
     the various expert witnesses and that, based upon their expert
     testimony, substantial evidence existed to support its
     conclusion that the Stipulation presented a just and
     reasonable resolution of the case, the appellate court could
     not say that the Commissionþs finding in this regard was not
     supported by substantial evidence.

10.  Public Service Commission -- appellate court may consider Stipulation in
     reviewing sufficiency of evidence to support rate allocation. -- It is
     appropriate for the appellate court, in reviewing the
     sufficiency of the evidence to support the rate allocation in
     the Stipulation, to consider the Stipulation itself, as it is
     the functional equivalent of testimony in support of it and
     evidence that the rates included in it are just and
     reasonable.

11.  Public Service Commission -- evaluation of testimony in rate case is for
     Commission. -- The evaluation of testimony in a rate case is for
     the Public Service Commission, not the courts, and in order to
     hold the testimony does not constitute substantial evidence,
     the appellate court must find that the testimony has no
     rational basis.

12.  Public Service Commission -- objection to order must have been urged before
     Commission in application for rehearing to ensure appellate consideration.
     -- Under Ark. Code Ann.  23-2-423(c)(2) (Supp. 1995), no
     objection to any order of the Public Service Commission may be
     considered by the court of appeals unless the objection had
     been urged before the Commission in the application for
     rehearing.

13.  Public Service Commission -- whether rate difference is unreasonable is
     question for Commission. -- Arkansas Code Annotated  23-3-114
     (1987) does not prohibit rate differences; it merely prevents
     unreasonable rate differences; whether a rate difference is
     unreasonable is a question for the Public Service Commission.

14.  Public Service Commission -- substantial evidence existed for Commission's
     approval of corridor rates. -- The appellate court determined that
     evidence was presented to the Public Service Commission from
     which it could find that corridor rates were a just and
     reasonable response to the threat of bypass, that substantial
     evidence existed for the Commissionþs approval of corridor
     rates, and that the Attorney General failed to show that the
     corridor rates were unjust, unreasonable, or discriminatory.

15.  Public Service Commission -- new issue may not be presented after hearing
     is concluded. -- Under Rule 3.13 of the Public Service
     Commissionþs Rules of Practice and Procedure, a hearing is
     deemed concluded when the presiding officer so determines; a
     new issue may not be presented after the hearing is concluded.

16.  Public Service Commission -- appellate court must review total effect of
     rate order. -- To hold that the Public Service Commission could
     not adopt a Stipulation because no party in its prefiled
     testimony testified in support of the exact same terms as
     those included in the Stipulation would effectively eliminate
     the Commissionþs power to set rates that it finds are just and
     reasonable; it is the total effect of a rate order that the
     appellate court must review, and if the total effect of a rate
     order cannot be said to be unjust, unreasonable, unlawful, or
     discriminatory, judicial inquiry is concluded.

17.  Public Service Commission -- no evidence that utility acted imprudently in
     allocation of corridor rate costs. -- The appellate court determined
     that there was no evidence that appellee utility acted
     imprudently; the appellate court could not say that the Public
     Service Commissionþs approval of the allocation of the
     corridor rate costs was not supported by substantial evidence.
     
18.  Public Service Commission -- Commission took necessary steps to determine
     whether allocated revenues should be recovered. -- Where the Public
     Service Commission required appellee utility to keep and
     provide detailed justification records so that the Commission
     could consider at appellee utilityþs next rate hearing all
     factors and circumstances bearing on the issue of automatic
     recovery of lost revenues from appellee utilityþs remaining
     customers, the appellate court concluded that the Commission
     took the steps that it deemed necessary to determine whether
     the allocated revenues should be recovered; the Public Service
     Commission has wide discretion in choosing its approach to
     rate regulation, and the appellate court does not advise the
     Commission on how to make its findings or exercise its
     discretion.


     Appeal from the Arkansas Public Service Commission; affirmed.
     Winston Bryant, Att'y Gen., by:  Shirley E. Guntharp, Deputy
Att'y Gen.; M. Shawn McMurray, Deputy Att'y Gen.; and Virginia H.
Castleberry, Ass't Att'y Gen., for appellant.
     Connie Griffin Carroll, for appellee Arkansas Public Service
Commission.
     Kathleen D. Alexander, Gen. Counsel; Charles D. Harder, Ass't
Gen. Counsel; and Wright, Lindsey & Jennings, by: N.M. Norton Jr.
and J. Mark Davis, for appellee Arkansas Louisiana Gas Company. 

     John E. Jennings, Judge.
     This appeal results from Order No. 8 entered by the Arkansas
Public Service Commission (Commission) in Docket No. 94-175-U,
which approved a Joint Proposed Stipulation (Stipulation) entered
into by Arkansas Louisiana Gas Company, a division of NorAm Energy
Corporation (Arkla), the Staff of the Arkansas Public Service
Commission (Staff), and Arkansas Gas Consumers (AGC).  The
Stipulation allowed Arkla to raise its overall rates by $6,976,606
and allocated these rates among Arklaþs various classes of
ratepayers.  The Attorney General was also a party to the
proceedings but objected to the Commissionþs adoption of the
Stipulation and brings this appeal.  He contends that the
Stipulationþs allocation of the rate increase is not supported by
substantial evidence; that the Stipulationþs provision allowing
Arkla to recover its corridor rate costs from all ratepayers is an
abuse of the Commissionþs discretion and unreasonably and illegally
discriminatory; and that the allocation of the corridor rate costs
among the ratepayers is not supported by substantial evidence.  We
affirm the decision of the Commission.
     In May 1994, Arkla filed an application with the Arkansas
Public Service Commission for an annual rate increase of
approximately $10 million.  Docket No. 94-175 was established, AGC
was granted intervenor status in the docket, and the Attorney
General notified the Commission of his intent to participate in the
proceedings.  Staff then began conducting an extensive audit and
analysis of Arklaþs application, books, and records.  Over 5,000
pages of exhibits, records, and direct, rebuttal, and surrebuttal
testimony were filed by the parties.  Arkla amended its request to
seek a $10.1-million annual increase in rates, Staff recommended a
$4.6-million annual increase for Arkla, and the Attorney General
argued that Arkla was entitled to a $2.7-million increase.  One
week before the Commissionþs hearing on Arklaþs application was to
begin, the parties began preliminary discussions to determine
whether there was a possibility of narrowing the issues or settling
the entire matter.  As a result of their discussions, a stipulation
was reached among Arkla, Staff, and AGC, that was filed with the
Commission on January 23, 1995.  
     The Stipulation reflected an agreed-upon revenue deficiency
that allowed Arkla to increase its rates by $6,976,606.00.  The
resulting rate increase was allocated among Arklaþs customer
classes, with $6,860,988.00 (98.3%) of the increase being assigned
to the residential class.  The Stipulation also provided for the
allocation of the revenues lost from the use of the corridor rates. 
The Stipulation included Arklaþs agreement not to file another
application requesting a general change in its rates and tariffs
prior to June 1, 1996, unless an immediate and impelling necessity
existed under the provisions of Ark. Code Ann.  23-4-408, and
Arklaþs agreement to dismiss its appeals before the Arkansas Court
of Appeals in Case Nos. CA 94-487 and CA 94-731.
     Order No. 8, entered by the Commission on March 15, 1995,
approved the Stipulation in its entirety.  The Attorney General
petitioned for rehearing of Order No. 8, and the Commission denied
his petition in Order No. 9.  On June 13, 1995, the Attorney
General filed a notice of appeal from Orders No. 8 and 9.
     This courtþs review of the Commissionþs order is limited and
governed by Ark. Code Ann.  23-2-423(c) (Supp. 1995), which
provides in part:
          (3) The finding of the commission as to the facts,
     if supported by substantial evidence, shall be conclu-
     sive.

          (4) The review shall not be extended further than to
     determine whether the commission's findings are supported
     by substantial evidence and whether the commission has
     regularly pursued its authority, including a determina-
     tion of whether the order or decision under review
     violated any right of the petitioner under the laws or
     Constitution of the United States or of the State of
     Arkansas.

It has repeatedly been held that the Commission has wide discretion
in choosing its approach to rate regulation and this court does not
advise the Commission as to how to make its findings or exercise
its discretion.  Bryant v. Arkansas Pub. Serv. Commþn, 54 Ark. App.
157, 168, 924 S.W.2d 472 (1996); Bryant v. Arkansas Pub. Serv.
Commþn, 50 Ark. App. 213, 219, 907 S.W.2d 140 (1995).  The
appellate court is generally not concerned with the method used by
the Commission in calculating rates as long as the Commissionþs
action is based on substantial evidence and the total effect of the
rate order is not unjust, unreasonable, unlawful, or
discriminatory.  50 Ark. App. at 219-20.  The appellate court views
only the evidence most favorable to the appellees in cases
presenting questions of substantial evidence, and the burden is on
the appellant to show a lack of substantial evidence to support an
administrative agencyþs decision.  Bryant v. Arkansas Pub. Serv.
Commþn, 46 Ark. App. 88, 102, 877 S.W.2d 594 (1994).  To establish
an absence of substantial evidence to support a decision, the
appellant must demonstrate that the proof before the administrative
tribunal was so nearly undisputed that fair-minded persons could
not reach its conclusion.  AT&T Communications of the SW, Inc. v.
Arkansas Pub. Serv. Commþn, 40 Ark. App. 126, 131, 843 S.W.2d 855
(1992); Arkansas Elec. Energy Consumers v. Arkansas Pub. Serv.
Commþn, 35 Ark. App. 47, 71-72, 813 S.W.2d 263 (1991).  The
question on review is not whether the testimony would have
supported a contrary finding but whether it supports the finding
that was made.  35 Ark. App. at 72.
     The Attorney Generalþs first point on appeal concerns the
Commissionþs approval of its Stipulationþs allocation of the $6.9
million rate increase among the rate classes.  The Attorney General
does not appeal the overall rate increase, but the Stipulationþs
apportionment of the rate increase among the various classes of
ratepayers.  Specifically, he focuses on the Stipulationþs
provision that allows 98% of the rate increase to be allocated to
the residential ratepayers, which he contends is not supported by
substantial evidence.  In support of his contention, he relies on
the cost-of-service studies that his expert witness and Staff
prepared in order to determine Arklaþs revenue requirement.  He
argues that these studies reflect that, at the time of Arklaþs rate
request, it was earning a positive rate of return on its
residential ratepayers and a negative rate of return on its GS-5
and GS-6 ratepayers and that the figures refute Arklaþs assertions
that the residential ratepayers have been subsidized by the
industrial ratepayers.  
     Staffþs cost-of-service study, Exhibit DC-2, showed that,
based on equal rates of return, Arkla was receiving a 4.69% rate of
return from its residential ratepayers compared to a -5.34% rate of
return from its GS-5 class.  Staffþs surrebuttal Exhibit DC-7 cost-
of-service study, showed that Arkla received a 3.96% rate of return
from its residential class as compared to a -2.59% rate of return
from its GS-5 class.  The Attorney Generalþs cost-of-service
studies demonstrated that rates would need to be increased by
18.07% for the GS-5 class as compared to 1.45% for the residential
class to achieve equal rates of return. 
     The Attorney General is correct in his assertion that the
individual cost-of-service studies prepared by his expert witness
and Staffþs witness showed that Arkla was earning a positive rate
of return from its residential class and a negative rate of return
from some of its industrial classes.  These cost-of-service
studies, however, were not the only evidence before the Commission,
nor did Staff advocate allocating the rate increase based on these
studies.  Staffþs senior gas analyst, Donna Campbell, who prepared
Staffþs cost-of-service studies, testified that she proposed no
change in GS-5's and GS-6's revenue requirements because of bypass
concerns.  This Court recognized in Bryant v. Arkansas Public
Service Commission, 50 Ark. App. at 237, that a cost-of-service
study is merely one tool that may be used in rate-design determina-
tions and noncost factors can also be taken into consideration. 
See also Arkansas Elec. Energy Consumers v. Arkansas Pub. Serv.
Commþn, 20 Ark. App. 216, 222, 727 S.W.2d 146 (1987).  The
Commission is never compelled to accept the opinion of any witness
on any issue before it, nor is it bound to accept one or the other
of any conflicting views, opinions, or methodologies.  Bryant v.
Arkansas Pub. Serv. Commþn, 46 Ark. App. at 103.
     We also note that the results of the Attorney Generalþs and
Staffþs cost-of-service studies were disputed by Arkla and AGC
because of their gas main allocations.  In preparing its cost-of-
service study DC-2, Staff used the zero-intercept method.  It used
a minimum pipe size of 1.25 inches in preparing DC-7.  The Attorney
Generalþs cost-of-service studies allocated mains based on the
zero-intercept method and the demand method.  
     In his prefiled testimony, Arkla witness Collier Mickle
testified that Arklaþs system serves a considerable number of
customers in rural areas; that its distribution grid is used far
more by the lower-volume customer classes, especially the residen-
tial classes, than larger-volume customers; and that, because of
the rural nature of Arkansasþs system, there is a high ratio of
pipe investment per customer, which is rarely found in serving
industrial customers.  He stated that Arkla takes these factors
into consideration by recognizing that the annual throughput has
practically nothing to do with the cost of pipe investment.  Pipe
investment, he explained, is undertaken according to the flow
requirements that are expected to be placed upon it at a given
location at a given time and, therefore, Arklaþs cost-of-service
study used pipes that are two inches in diameter as the prevalent
minimum size.  He stated that, in allocating all costs to customer
classes, Arkla used an allocation methodology which yields a result
that more closely approximates the actual cost of providing service
to an individual customer or group of customers and that Arkla
modified the results of its cost-of-service study for purposes of
rate design in order to reduce the rate impact on residential
customers.  He stated that the modification results in greater cost
recovery from some nonresidential-customer classes as compared to
the results of its cost-of-service study but also represents an
additional step toward þtrueþ cost-of-service rates.  Mr. Mickleþs
testimony was corroborated by that of Arkla witness David Sullins,
who also noted that Staffþs calculation used only plastic pipe,
which represents only 31% of the pipe footage in Arklaþs system,
and that Arkla has a significant investment in steel within its
system.
     Staffþs senior gas analyst, Donna Campbell, argued that
performing a zero-intercept analysis of the cost of gas mains was
not possible because of data constraints and also recommended use
of a minimum-size methodology, although she disagreed with Arklaþs
use of a two-inch main as the minimum size.  She acknowledged that
Arkla had indicated that a two-inch main would be installed
regardless of the required diameter needed and that virtually all
new mains that are designed to directly serve residential or small-
business customers are two-inch mains.  
     Richard Baudino, a utility rate and economic consultant,
testified for AGC.  He also disagreed with Staffþs and the Attorney
Generalþs allocation of gas mains, stating that Staff omitted steel
mains from its calculation which excludes 69% of the distribution
mains and recommended that Arklaþs two-inch main be adopted.  He
also stated that the Attorney Generalþs zero-intercept method was
flawed because he used only data for plastic pipe.  He stated that
allocating gas mains solely on demand skews the results in favor of
the residential class and unfairly loads the cost on general
service customers. 
     In addressing the allocation of gas mains in Bryant v.
Arkansas Public Service Commission, 50 Ark. App. at 234, this Court
noted that it is an area in which it is appropriate to recognize
the  Commissionþs experience, technical competence, and specialized
knowledge, and the discretionary authority conferred upon the
Commission.  The Public Service Commission has wide discretion in
choosing its approach to rate regulation, and it is not bound by a
particular method of evaluation.  Southwestern Bell Tel. Co. v.
Arkansas Pub. Serv. Commþn, 267 Ark. 550, 567-68, 593 S.W.2d 434
(1980). 
     The Attorney General also seeks to discredit Arklaþs cost-of-
service study by arguing that the Attorney Generalþs sales forecast
is the only one supported by substantial evidence.  We disagree. 
Sufficient evidence was presented to support Staffþs and Arklaþs
sales forecasts that predicted a downward trend in gas use.  Arkla
witness Lisa Black testified that, because of improved energy-
efficient construction standards, extensive renovation and
weatherization of existing homes, and the use of more efficient
end-use equipment, conservation is the primary cause of Arklaþs
declining load.  Staff witness Kim Davis also testified that loss
of gas-fired air-conditioning customers is a significant factor in
the decline of Arkla summer usage and that, at the current rate of
decline, Staff projects that no residential gas-fired air-
conditioning units will be in service in three to four years. 
     The Attorney General has not demonstrated that the Commission
erred in not adopting his or the Staffþs cost-of-service studies,
nor has he demonstrated that the rate allocation included in the
Stipulation and approved by the Commission is not supported by
substantial evidence.  He argues that neither Staff nor the
Attorney General show in their cost-of-service studies that
residential ratepayers should be singled out for the largest rate
increase; however, counsel for the Attorney General acknowledged in
her opening argument to the Commission that the residential
ratepayers did not lose as much in the Stipulation as they would
under Arklaþs, AGCþs, or Staffþs testimony.  The Commission also
had for its consideration over 5,000 pages of prefiled testimony
and exhibits, which were admitted into evidence.  
     Arkla witness David Sullins testified that the allocation of
costs among customer classes was an open issue with respect to the
Stipulation and that all of the parties except the Attorney General
were able to reach a compromise on that issue.  He stated that only
the Attorney General recommended rate increases for the larger
industrial customers, and in that respect, the Stipulation
represents a compromise of the positions of all parties, including
the Attorney General.  He also stated that the Attorney General
suggested further increases for the industrial customers but that
such increases were inconsistent with Arklaþs cost-of-service study
and the recommendations and findings of Staff.  
     Arkla witness Todd Cooper stated that Arklaþs cost-of-service
study indicated that its largest gas consumers continue to pay more
than their economic cost of service and therefore Arkla proposed to
hold constant the distribution rates for GS-2, GS-3, GS-4, GS-5,
and GS-6 customers and collect the requested increase from
residential and GS-1 customers.  He stated that this approach over
time will tend to negate the unequal rate of return that currently
exists between customer classes without causing rate shock.  
     Staff witness Donna Gray testified that the evidence in the
record and the possibility of rate stability over the next two
years were the primary factors that Staff considered in deciding to
enter into the Stipulation.  She stated that there had been a
pattern from the previous rate cases of annual increases of $5
million, that Staff had determined that ratepayers would be faced
with at least a $3-million increase over the next two years, and
that, in her opinion, the Stipulation provided a more favorable
outcome than the ratepayers would have gotten through litigation in
another rate case.  She stated that the approximate $6.8-million
rate increase that will be borne by the residential ratepayers
represents a 3.8% increase in their total overall gas bill and will
cause an average residential bill to increase $1.46 per month.  Ms.
Gray further explained that the industrial ratepayersþ potential
for bypass and its impact on the remaining customers was a major
consideration for Staff in developing its ultimate recommendations
with regard to cost allocation and rate design. 
     Richard Baudino, consultant for AGC, stated that, based upon
his evaluation of the strengths and weaknesses of the partiesþ
cases, the Stipulationþs revenue-increase allocation strikes a
balance between the partiesþ various testimony, the cost-of-service
studies filed, the avoidance of rate shock to any classes, and the
risk of litigation. 
     The Commission found that the provisions of the Stipulation
were clearly within the reasonable range of opinions and
recommendations presented by the various expert witnesses and that,
based upon their expert testimony, substantial evidence existed to
support its conclusion that the Stipulation presented a just and
reasonable resolution of the case.  We cannot say the Commissionþs
finding in this regard is not supported by substantial evidence.  
     It is appropriate for this Court, in reviewing the sufficiency
of the evidence to support the rate allocation in the Stipulation,
to consider the Stipulation itself, as it is the functional
equivalent of testimony in support of it and evidence that the
rates included in it are just and reasonable.  See Bryant v.
Arkansas Pub. Serv. Commþn, 46 Ark. App. at 102-03.  The evaluation
of testimony in a rate case is for the Public Service Commission,
not the courts, and in order to hold the testimony does not
constitute substantial evidence, the court must find the testimony
has no rational basis.  See Southwestern Bell Tel. Co. v. Arkansas
Pub. Serv. Commþn, 267 Ark. at 568.
     We decline to address the Attorney Generalþs argument that the
Commissionþs failure to state in Order No. 8 the proper method for
allocating gas mains or the cost-of-service study it used in
approving the Stipulation is enough to justify remand.  The
Attorney General admits in his brief that the Commission does not
have to rely entirely on a particular cost-of-service study to
decide how rates are allocated per class.  Furthermore, the
Attorney General did not make such a request in his petition for
rehearing.  þNo objection to any order of the commission shall be
considered by the Court of Appeals unless the objection shall have
been urged before the commission in the application for rehearing.þ 
Ark. Code Ann.  23-2-423(c)(2) (Supp. 1995).  
     The Attorney Generalþs second point concerns the Commissionþs
approval of the Stipulationþs provision that allows Arkla to
collect its corridor rate costs from all ratepayers.  Arkla witness
David Sullins explained that corridor rates are rates designed by
Arkla to accurately reflect the cost of servicing customers for
whom bypass is economically and operationally feasible.  The
Stipulation includes two corridor rate schedules:  the metering and
regulating rate schedule (MR-1) and the pipeline corridor rate
schedule (PC-1).  Customers eligible for MR-1 rates consist of
those customers whose delivery point on Arklaþs distribution system
is within 300 feet of an alternative pipeline or other natural gas
source and who can demonstrate that bypass of Arklaþs distribution
system is economically feasible.  Customers eligible for PC-1 rates
are those within 2,000 feet.  Under the terms of the Stipulation,
Arkla is allowed to recover from its remaining ratepayers its
corridor rate costs, i.e., the rates it will lose if a ratepayer
elects to receive corridor rates, in the following proportions:
          Residential              70.6%
          GS-1                10.1%
          GS-2                11.3%
          GS-3                  2.7%
          GS-4                  1.8%
          GS-5                  2.3%
          GS-6                  1.2%

          Total                     100%

Sullins testified that Arkla had identified thirty-four customers
that appear to qualify for the corridor rate schedules and that, if
all eligible customers elected to receive corridor rates, the
maximum amount of lost rates that would be collected from the
remaining ratepayers would be $500,000.  
     The Attorney General argues that the Stipulationþs provision
that allows Arkla to recover from its other ratepayers its corridor
rate costs violates the þjust and reasonableþ provisions of Ark.
Code Ann.  23-4-103 and 23-4-104 (1987) and is price
discrimination, prohibited by Ark. Code Ann.  23-3-114(a) and (b)
(1987). 
     Arkansas Code Annotated  23-4-103 (1987) provides:
          All rates made, demanded, or received by any public
     utility, for any product or commodity furnished, or to be
     furnished, or any service rendered or to be rendered, and
     all rules and regulations made by any public utility
     pertaining thereto shall be just and reasonable, and to
     the extent that the rates, rules, or regulations may be
     unjust or unreasonable, are prohibited and declared
     unlawful.

Arkansas Code Annotated  23-4-104 (1987) states that all charges,
tolls, fares, and rates shall be just and reasonable and that no
charge shall be made in any tariffs, rates, fares, tolls, sched-
ules, or classifications except as provided in this act.  Arkansas
Code Annotated  23-3-114 (1987) provides:
          (a)(1) As to rates or services, no public utility
     shall make or grant any unreasonable preference or
     advantage to any corporation or person or subject any
     corporation or person to any unreasonable prejudice or
     disadvantage.

            (2) No public utility shall establish or maintain
     any unreasonable difference as to rates or services,
     either as between localities or as between classes of
     service.

          (b) The commission, in the exercise of its jurisdic-
     tion granted by this act, may fix uniform rates applica-
     ble throughout the territory served by any public utility
     whenever in its judgment public interest requires such
     uniform rates.

     Section 23-3-114 does not prohibit rate differences; it merely
prevents unreasonable rate differences.  Wilson v. Arkansas Pub.
Serv. Commþn, 278 Ark. 591, 594, 648 S.W.2d 63 (1983); Bryant v.
Arkansas Pub. Serv. Commþn, 50 Ark. App. at 238.  Whether a rate
difference is unreasonable is a question for the Commission.  Ark.
Code Ann.  23-3-114(c).  Here, evidence was presented to the
Commission from which it could find that corridor rates were a just
and reasonable response to the threat of bypass.  
     Arkla witness David Sullins testified that, in developing
corridor rates, Arkla was confronted with bypass of its largest
customer, that bypass was economically feasible for that customer,
and that several other large customers had indicated that they were
in the process of assessing their bypass options.  He stated that
the corridor rates represent the costs of servicing the customers
that qualify for those rates and are necessary to prevent a
substantial number of customers from bypassing Arklaþs distribution
which would result in an even greater degree of revenue shifting to
its remaining customers as a result of bypass. 
     Staff witness Donna Gray also testified that the corridor
rates directly identify a portion of the bypass potential and are
a reasonable solution at this time.  She stated that a major
consideration for Staff in developing its ultimate recommendation
with regard to cost allocation was the impact on the remaining
ratepayers if industrial ratepayers left the system and their fixed
costs were spread among the remaining customers.  
     AGC witness Richard Baudino recommended approval of the
corridor rates, stating that they would allow Arkla to continue to
receive fixed cost contribution from the ratepayers who had bypass
options and thereby mitigate the loss of revenue that would occur
if a customer bypassed the system.
     The Commission in Order No. 8 stated that the potential for
bypass of Arklaþs system was indeed present and that even the
Attorney Generalþs witness recognized the existence of this
problem.  The Commission stated that, although it had some concerns
regarding the treatment of the revenues lost to corridor rates, its
concerns were not with the availability of the corridor rates as
appropriate tools to assist Arkla in controlling bypass.  We find
that substantial evidence existed for the Commissionþs approval of
corridor rates and the Attorney General has failed to show that the
corridor rates are unjust, unreasonable, or discriminatory.
     The Attorney General also argues under this point that the
Commission erred in not finding that the establishment of the
corridor rates constitutes a promotional practice under Section 2
of the Commissionþs Promotional Practice Rules and Title 23 of the
Arkansas Code.  We do not address this issue because it was not
timely raised.  It first appears in the Attorney Generalþs post-
hearing brief that was filed after the hearing was concluded.  Rule
3.13 of the Commissionþs Rules of Practice and Procedure provides
that þ[a] hearing shall be deemed concluded when the presiding
officer so determines.þ  The Attorney General has not cited us to
any authority that allows a new issue to be presented after the
hearing is concluded.  
     The Attorney Generalþs final point involves the Stipulationþs
provision that allows Arkla to collect from its remaining
ratepayers the revenue lost as a result of an industrial
ratepayerþs election to use corridor rates.  The Attorney General
argues that the allocation of these corridor rate costs to the
remaining ratepayers is not based upon substantial evidence. 
Specifically, he argues that, although neither Arkla nor Staff
suggested that residential ratepayers should bear any of the cost
of these rates, the Stipulation requires residential ratepayers to
bear 70.6% of their cost.
     Arkla witness David Sullins testified that it was AGC who
recommended that the corridor rate costs be applied to all customer
classes, including the residential class.  He explained that the
Stipulation reflected a compromise of all the parties and that AGC
agreed to an increase for its larger customers in return for the
agreement to include the residential customers in the allocation. 
There was also evidence that, even with the additional allocation
of corridor rate costs, the residential rate would still be less
than the deficiencies for the residential class that were
recommended by Staff witness Donna Campbell.
     We recognize that the Stipulation represents a compromise of
the partiesþ positions.  To hold that the Commission could not
adopt the Stipulation because no party in its prefiled testimony
testified in support of the exact same terms as those included in
the Stipulation would effectively eliminate the Commissionþs power
to set rates which it finds are just and reasonable.  See Bryant v.
Arkansas Public Service Commission, 46 Ark. App. at 103.  It is the
total effect of a rate order that we must review, and if the total
effect of a rate order cannot be said to be unjust, unreasonable,
unlawful, or discriminatory, judicial inquiry is concluded.  46
Ark. App. at 103.  
     The Attorney General also refers us to our opinion in Bryant
v. Arkansas Public Service Commission, 50 Ark. App. at 213, where
we stated that the local distribution companies (LDC) such as Arkla
also must share some responsibility in balancing the interests
between all ratepayers and þ[w]here the LDC can be shown to have
lost the contributions of industrial customers through imprudent
judgments, LDC shareholders, rather than LDC ratepayers, may be
made to bear the consequences of the LDCþs inability to handle
competition.þ  50 Ark. App. at 239.  Here, however, there is no
evidence that Arkla acted imprudently.  While we share the Attorney
Generalþs concern for the residential ratepayers and continue to
urge the Commission to closely scrutinize the allocation of a
utilityþs rate increase, we cannot say, under the facts of this
case, that the Commissionþs approval of the allocation of the
corridor rate costs is not supported by substantial evidence. 
     The Attorney General also stresses that Arkla has no incentive
to deny GS-4, GS-5, and GS-6 class applications for corridor rates
because Arkla will collect its lost revenues from other ratepayers. 
The Commission expressed the same concern.  To that end, it
required Arkla to keep and provide detailed justification records
so that the Commission can consider at Arklaþs next rate hearing
all factors and circumstances bearing on the issue of automatic
recovery of lost revenues from Arklaþs remaining customers.  The
Commission took the steps that it deemed necessary to determine
whether the allocated revenues should be recovered.  We have
repeatedly held that the Public Service Commission has wide
discretion in choosing its approach to rate regulation, and the
appellate court does not advise the Commission on how to make its
findings or exercise its discretion.  Bryant v. Arkansas Pub. Serv.
Commþn, 50 Ark. App. at 219. 
     Affirmed.
     Robbins, C.J., and Rogers and Stroud, JJ., agree.
     Crabtree and Roaf, JJ., concur.



                 Terry Crabtree, Judge, concurs.


     As the residential consumer assumes proportionately more of
the cost of providing services, a public utilityþs business
judgment, bypass options, and cost allocation proposals must be
carefully scrutinized to avoid placing the greatest cost burden on
the consumers who are least able to afford such costs.  This court
is mindful that the Commission has broad discretion in exercising
its regulatory authority and, if an order of the Commission is
supported by substantial evidence and is neither unjust, arbitrary,
unreasonable, unlawful, or discriminatory, then we must affirm that
order.  See Bryant v. Arkansas Pub. Serv. Commþn, 54 Ark. App. 157,
168, 924 S.W.2d 472, 480 (1996).  
     The 5,000-page record developed throughout the course of this
rate case and the complexity of the issues effectively prevent any
simple discussion of the allocation of rates among the utility
ratepayers.  The majority concludes that this settlement is a
compromise agreement of the interested parties and is adequately
grounded in substantial evidence to preclude this courtþs
intervention.  Based on this courtþs deference to the expertise of
the Commission and our limited review, I agree, but I suspect that
this case pushes the bounds of what can possibly survive review as
þreasonableþ without reducing our standard of review to a mere
formality.  The bottom line is that this court has found that an
allocation of 98.3% of a rate increase for the residential class is
not unjust, unreasonable, unlawful, or discriminatory.  What then
could possibly amount to an unreasonable allocation for future rate
increases?  
     The evidence presented to the Commission shows that the bypass
problem is not likely to go away or be easily addressed.  In fact,
in its decision, the Commission acknowledged its concern about this
issue and the problems it will continue to present in the near
future.  Under our appellate standard of review, solutions to this
problem cannot come from this court.  I therefore write this
concurrence to stress that solutions to this problem must be
addressed by the utilities, the Public Service Commission Staff,
the Commission, and all other interested parties, including the
Attorney General.
     Roaf, J., joins.