Cite as: 535 U. S. 467 (2002)
Opinion of the Court
in dicta. We remarked that "a State's decision to arbitrarily switch back and forth between methodologies in a way which required investors to bear the risk of bad investments at some times while denying them the benefit of good investments at others would raise serious constitutional questions." 488 U. S., at 315.37 In other words, there may be a taking challenge distinct from a plain-vanilla objection to arbitrary or capricious agency action 38 if a ratemaking body were to make opportunistic changes in ratesetting methodologies just to minimize return on capital investment in a utility enterprise.
In Duquesne itself, there was no need to decide whether there might be an exception to the rate-order requirement for a claim of taking by rates, and there is no reason here to decide whether the policy of constitutional avoidance should be invoked in order to anticipate a rate-order taking claim. The reason is the same in each case: the incumbent carriers here are just like the electric utilities in Duquesne in failing to present any evidence that the decision to adopt TELRIC
theory, but the impact of the rate order which counts' ") (quoting FPC v. Hope Natural Gas Co., 320 U. S. 591, 602 (1944)). The utilities in Duquesne, like the incumbents here, made "[n]o argument . . . that . . . reduced rates jeopardize the financial integrity of the companies, either by leaving them insufficient operating capital or by impeding their ability to raise future capital." 488 U. S., at 312. Nor did they show that allowed rates were "inadequate to compensate current equity holders for the risk associated with their investments under a modified prudent investment scheme." Ibid.
37 Justice Scalia, joined by Justice White and Justice O'Connor, concurred, and noted that "all prudently incurred investment may well have to be counted" to determine "whether the government's action is confiscatory." Id., at 317.
38 The incumbents make the additional argument that it was arbitrary or capricious for the FCC to reject historical costs, Brief for Petitioners in No. 00-511, at 44-49, but this is simply a restatement of the argument that the FCC was unreasonable in interpreting § 252(d)(1) to foreclose the use of historical cost in ratesetting, which we have already addressed, see Part III-B-2, supra.
527
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