Title: Appalachian Power Co. v. State Corp. Comm'n
Citation: N/A
Docket Number: 120394
State: Virginia
Issuer: Virginia Supreme Court
Date: November 1, 2012

Present:  Kinser, C.J., Lemons, Millette, McClanahan and Powell, 
JJ., and Russell and Lacy, S.JJ. 
 
APPALACHIAN POWER COMPANY 
 
v.  Record No. 120394 
 
 
OPINION BY SENIOR JUSTICE 
 
 
 
 
 
 
 
    ELIZABETH B. LACY 
STATE CORPORATION COMMISSION,  
    November 1, 2012 
ET AL. 
 
FROM THE STATE CORPORATION COMMISSION 
 
 
In this appeal, we consider whether the State Corporation 
Commission properly construed and applied Code § 56-
585.1(A)(5)(e) to deny rate adjustment clause recovery for 
certain costs incurred by Appalachian Power Company (“APCO” or 
“the Company”).  
Background 
 
Prior to 1999, the State Corporation Commission (“the 
Commission”) determined the rates electric utility companies 
charged consumers pursuant to Chapter 10, Article 2 of Title 56, 
Code §§ 56-234 through -245.1:1.  Under that regulatory regime, 
the rates could be changed following a review initiated by the 
Commission or upon an application filed by an electric utility.  
The Commission had broad discretion in selecting the methodology 
for determining rates including the rate of return on equity 
guided by the principle that the rates were to be just and 
reasonable, allowing the utility a reasonable return and 
imposing just rates on the consumer.  Code § 56-235.2. 
2 
 
In 1999, the General Assembly enacted the Virginia Electric 
Utility Restructuring Act, former Code §§ 56-576 et seq., which 
was designed to deregulate parts of the electric utility 
industry and introduce competition among the providers of 
electric generation.  1999 Acts ch. 411; Potomac Edison Co. v. 
State Corp. Comm’n, 276 Va. 577, 580, 667 S.E.2d 772, 773 
(2008).  The legislation established a transition period, during 
which the base rates of electric utilities were held constant or 
“capped.”1  However, utilities were allowed to file annual rate 
applications to recover incremental costs incurred for system 
reliability and for compliance with governmental environmental 
laws or regulations.  Code § 56-582(B)(vi); 2004 Acts ch. 827. 
In 2007, the General Assembly ended its program of 
deregulation and enacted Code § 56-585.1 which prescribed a new 
regulation regime.  2007 Acts chs. 888, 933.  The new 
legislation reaffirmed the Commission’s authority to regulate 
electric utility rates but prescribed certain procedures and 
methodologies which the Commission must follow in establishing 
such rates. 
                                                 
1 The initial transition period extended from January 1, 
2001 to July 1, 2007, but was extended to December 31, 2008, 
“unless sooner terminated by the Commission pursuant to the 
provisions of subsection C; however, rates after the expiration 
or termination of capped rates shall equal capped rates until 
such rates are changed pursuant to other provisions of this 
title.”  Code § 56-582(F); 2007 Acts chs. 888, 933. 
3 
 
Under the 2007 regulatory regime each utility was required 
to undergo an initial review by the Commission in 2009.  In this 
proceeding, the Commission conducted a review of each company’s 
2008 performance, set a rate of return and determined the rates 
to be charged going forward “until such rates are adjusted.”  
Code § 56-585.1(A).  The methodology for adjusting rates in this 
initial proceeding was set out in the statute.  Id. 
The legislation requires that, after the initial review 
proceeding, the performance of electric utility companies is 
reviewed every two years.  In the biennial review, the 
Commission considers the company’s rates, terms, and conditions 
for the provision of generation, distribution and transmission 
services for the preceding two years.  Id.  While the biennial 
review has some characteristics of the Chapter 10 base rate 
proceeding, the statute imposes significant limitations on the 
Commission’s discretion in adjusting rates.  Id. 
If the utility earned more than 50 basis points below the 
authorized fair combined rate of return, the Commission “shall 
order increases to the utility’s rates necessary to provide the 
opportunity to fully recover the costs of providing the 
utility’s services and to earn not less than such fair combined 
rate of return . . . .”  Code § 56-585.1(A)(8)(i).  If the 
utility earned more than 50 basis points above the fair combined 
rate of return established by the Commission, 60 percent of the 
4 
 
amount of the earnings above the fair rate of return must be 
credited to customers’ bills and the electric utility may retain 
the remaining 40 percent of the excess earnings.  Code § 56-
585.1(A)(8)(ii).  The Commission may not order a rate reduction 
unless it finds that the electric utility earned more than 50 
basis points above the fair rate of return in two consecutive 
biennial reviews.  Code § 56-585.1(A)(8)(iii).  
The 2007 legislation also creates a new proceeding allowing 
a utility to petition the Commission for approval of a rate 
adjustment clause for the “timely and current” recovery from 
customers for costs incurred in certain identified programs.  
Code §§ 56-585.1(A)(4) through (6).  As relevant here, the 
Commission is directed to make rate adjustments allowing a 
company to recover projected and actual costs of projects which 
the Commission finds necessary to comply with state or federal 
environmental laws or regulations.  Code § 56-585.1(A)(5)(e). 
Once granted, a rate adjustment clause is combined with the 
company’s costs, revenues and investments in a biennial review 
proceeding if there are adjustments to the rates until the 
amounts of the adjustment clause are fully recovered.  Code 
§ 56-585.1(A)(3). 
Proceedings 
 
Pursuant to the regulatory review regime outlined above, 
APCO filed its petition for its initial review in 2009.  In that 
5 
 
proceeding APCO sought a rate increase of approximately $167 
million based on the Company's performance in the 2008 test 
year.  The Commission’s order implementing APCO’s adjusted rates 
included recovery for some, but not all the amounts sought by 
APCO for compliance with various state and federal environmental 
laws and regulations.  These rates became effective in August of 
2010.  In re Appalachian Power Co., Case No. PUE-2009-00030, 
(July 15, 2010).2 
 
In March of 2011, APCO filed a petition pursuant to Code 
§ 56-585.1(A)(5)(e), seeking a rate adjustment clause to recover 
$77 million, which it asserted represented the 2009 and 2010 
actual costs incurred by the Company, but not recovered through 
base rates, to comply with state and federal environmental 
requirements.3  The recovery APCO sought was incurred either 
directly by APCO for environmental projects required for 
compliance or through the capacity equalization charges it paid 
to its affiliates which included costs incurred by the 
                                                 
 
2 A copy of this order may be found using the Commission’s 
docket search website, 
http://docket.scc.state.va.us/CyberDocs/Libraries/Default_Librar
y/Common/frameviewdsp.asp?doc=103033&lib=CASEWEBP%5FLIB&mimetype
=application%2Fpdf&rendition=native (last visited September 28, 
2012).  
 
3 APCO contemporaneously made its biennial filing pursuant 
to Code § 56-585.1(A)(3).  That proceeding is not at issue in 
this appeal. 
6 
 
affiliates for compliance with state or federal environmental 
laws or regulations.4 
 
The Commission published an order calling for notice and 
hearing, scheduled public hearings associated with the petition, 
established a procedural schedule for the case, and assigned a 
hearing examiner to conduct all further proceedings on behalf of 
the Commission.  A number of parties filed notices of 
participation including the Old Dominion Committee for Fair 
Utility Rates and the Office of the Attorney General Division of 
Consumer Counsel, appellees in this appeal.  Public hearings and 
evidentiary hearings were conducted by the Commission and the 
hearing examiner. 
In his report and recommendations to the Commission, the 
hearing examiner concluded that Code § 56-585.1(A)(5)(e) 
entitled APCO to recover the environmental compliance costs it 
sought but, based on the testimony and evidence received, the 
hearing examiner recommended that the appropriate amount of 
                                                 
 
4 Capacity equalization charges are charges APCO pays to 
acquire supplemental generation capacity to meet its native load 
demand.  The supplemental generation is acquired from facilities 
owned by APCO’s affiliates which, like APCO, are subsidiaries of 
American Electric Power Company, Inc.  The amount of the 
capacity equalization charges is determined through an 
Interconnection Agreement between APCO and its affiliates 
approved by the Federal Energy Regulatory Commission.  The 
Interconnection Agreement sets out a formula to show the 
affiliates’ costs of owning, operating and maintaining the 
generation facilities that supply the capacity purchased by 
APCO. 
7 
 
revenue recovery should be $63.3 million rather than the 
approximately $77 million sought by APCO.5 
 
The Commission rejected the hearing examiner’s construction 
and application of Code § 56-585.1(A)(5)(e) and held that the 
section did not authorize recovery of those costs which the 
Company had already been given the opportunity to recover 
through its base rates. 
The Commission also concluded that, even if APCO was 
entitled to recover actual compliance costs associated with 
categories of projects included in, but not recovered by the 
base rates, it could not recover the $27.3 million alleged as 
embedded in the capacity equalization charges because APCO 
failed to establish the actual amount of the environmental costs 
embedded in those charges. 
The Commission entered an order allowing APCO to recover 
$30 million for actual environmental compliance costs over a 
one-year period and denying recovery of the remaining 
approximately $6 million APCO claimed it incurred directly but 
did not recover through base rates to comply with environmental 
regulations and laws and approximately $27.3 million alleged to 
be environmental compliance costs embedded in the capacity 
adjustment charges paid to its affiliates.  APCO filed an appeal 
                                                 
5 APCO did not challenge the amount of recovery recommended 
by the hearing examiner before the Commission and does not do so 
in this appeal.  
8 
 
with this Court pursuant to Rule 5:21(a) naming the Commission 
and intervenors, Old Dominion Committee for Fair Utility Rates 
and the Office of the Attorney General Division of Consumer 
Counsel, as appellees. 
Discussion 
1.  Application of Code § 56-585.1(A)(5)(e) 
 
APCO raises three assignments of error containing a number 
of subpoints.  The overarching challenge which APCO advances is 
that the ratemaking methodology adopted by the Commission to 
implement Code § 56-585.1(A)(5)(e) ignored the plain and 
unambiguous language of the statute.  
 
The Constitution of Virginia vests administrative, judicial 
and legislative powers in the Commission in the exercise of the 
control and regulation of public utility companies.  Potomac 
Edison, 276 Va. at 586, 667 S.E.2d at 777.  In considering the 
appropriate standard of review to be applied when reviewing a 
Commission decision, we begin by giving a decision in which the 
Commission has exercised its expertise a presumption of 
correctness.  Id.  Our standard of review, however, will depend 
on the nature of the decision under review.  Id.  The decision 
under review here is the Commission’s construction and 
application of Code § 56-585.1(A)(5)(e).  This statutory 
construction issue is a question of law reviewed by this Court 
9 
 
de novo.  Christian v. State Corp. Comm’n, 282 Va. 392, 396-97, 
718 S.E.2d 767, 769 (2011).   
 
The Commission and other appellees, however, assert that we 
have limited the de novo standard of review in certain cases 
citing opinions in which we have recited that “the practical 
construction given by the Commission to a statute it is charged 
with enforcing is entitled to great weight by the courts and in 
doubtful cases will be regarded as decisive.”  Piedmont Envtl. 
Council v. Virginia Elec. & Power Co., 278 Va. 553, 563, 684 
S.E.2d 805, 810 (2009) (citations and internal quotation marks 
omitted); Appalachian Voices v. State Corp. Comm’n, 277 Va. 509, 
516, 675 S.E.2d 458, 461 (2009); Commonwealth v. Appalachian 
Elec. Power Co., 193 Va. 37, 45, 68 S.E.2d 122, 127 (1951).  
Acknowledging that an agency cannot advance an interpretation 
that contradicts the statute, Davenport v. Little-Bowser, 269 
Va. 546, 554-55, 611 S.E.2d 366, 370-71 (2005)(citing Superior 
Steel Corp. v. Commonwealth, 147 Va. 202, 206, 136 S.E. 666, 667 
(1927)), the Commission suggests that our prior cases require 
that we treat the Commission’s decision as “decisive.”6  We 
disagree with the suggestion that in this case the Commission’s 
statutory interpretation must be considered as “decisive.”   
                                                 
6 The arguments raised by the other appellees in this appeal 
are substantially similar to those raised by the Commission. 
10 
 
The Commission’s statutory construction was first 
characterized as “decisive” in Appalachian Elec. Power Co., 193 
Va. at 45, 68 S.E.2d at 127.  In that case, the Commission 
construed a tax statute and held that electric utilities doing 
business in this state could deduct certain monies derived from 
operations in other states before computing their liability for 
the tax at issue.  The Commission had applied this construction 
of the statute for approximately a decade.  After concluding 
that the statute was ambiguous, the Court not only described the 
Commission’s interpretation as being decisive, it explained the 
reason for ascribing this level of deference to the Commission’s 
decision in that case.  Id.  Citing a number of previous cases, 
the Court explained that the “[l]egislature is presumed to be 
cognizant of such construction and when long continued, in the 
absence of legislation evincing a dissent, the courts will adopt 
that interpretation.”7  Id. at 45-46, 68 S.E.2d at 127.  In that 
                                                 
7 Miller v. Commonwealth, 180 Va. 36, 41-42, 21 S.E.2d 721, 
723 (1942)(public official’s statutory construction accepted by 
bench and bar for long period of time is canon of construction, 
unless paramount reason is found for change in construction); 
Commonwealth v. Stringfellow, 173 Va. 284, 289, 4 S.E.2d 357, 
359 (1939)(great weight afforded tax department’s long-standing 
and uniform statutory construction); Hunton v. Commonwealth, 166 
Va. 229, 242, 183 S.E. 873, 878 (1936)(court defers to tax 
official’s practical construction of tax laws when, for over 30 
years, neither legislature nor tax commission recommended change 
in law due to constitutional conflict); Smith v. Bryan, 100 Va. 
199, 204, 40 S.E. 652, 654 (1902)(court regards public 
official’s construction of statute of doubtful import as correct 
11 
 
case, as in others using this principle, the General Assembly 
had not altered the agency’s interpretation although it had the 
opportunity to do so during the intervening years.  Id. 
The Commission’s construction of the statute in this case 
is not a long-standing one and is not a construction which the 
General Assembly has had the opportunity to consider.  Thus, the 
presumption of legislative acquiescence does not apply.  Compare 
Beck v. Shelton, 267 Va. 482, 492, 593 S.E.2d 195, 200 
(2004)(when General Assembly was aware of interpretation of 
statute embodied in an Opinion of the Attorney General for five 
years and “fail[ed] to make corrective amendments” to statute 
during that time, such “failure . . . evinces legislative 
acquiescence in the Attorney General’s view”)(quoting Browning-
Ferris, Inc. v. Commonwealth, 225 Va. 157, 161-62, 300 S.E.2d 
603, 605-06 (1983)). 
In any case involving statutory construction we begin with 
the language of the statute.  Code § 56-585.1(A)(5)(e) provides 
in pertinent part:  
5.  A utility may at any time, after the 
expiration or termination of capped rates, but 
not more than once in any 12-month period, 
petition the Commission for approval of one or 
more rate adjustment clauses for the timely and 
current recovery from customers of the 
following costs: 
 
                                                                                                                                                             
when that construction remains unchanged by legislature or 
judicial decision over time).  
12 
 
. . . . 
 
e.  Projected and actual costs of projects 
that the Commission finds to be necessary to 
comply with state or federal environmental 
laws or regulations applicable to generation 
facilities used to serve the utility’s native 
load obligations.  The Commission shall 
approve such a petition if it finds that such 
costs are necessary to comply with such 
environmental laws or regulations . . . . 
 
The Commission contends that because Code § 56-
585.1(A)(5)(e) “is silent on the intersection of base rate 
recovery and adjustment clause recovery,” subsection (C) of Code 
§ 56-585.1 requires the Commission to adopt a “ratemaking 
methodology” to implement the adjustment rate clause section 
which will produce just and reasonable rates as directed in 
Chapter 10 of Title 56 of the Code.8  Noting that nothing in the 
statute gives a utility the right to recover all of its actual 
environmental compliance costs, the Commission reasons that by 
including such costs in its base rates, a company has the 
opportunity to recover such costs, which can be supplemented by 
costs for projects not already included in the base rates.  This 
                                                 
8 Code § 56-585.1(C) provides: 
Except as otherwise provided in this section, the 
Commission shall exercise authority over the rates, 
terms and conditions of investor-owned incumbent 
electric utilities for the provision of generation, 
transmission and distribution services to retail 
customers in the Commonwealth pursuant to the 
provisions of Chapter 10 (§ 56-232 et seq.), 
including specifically § 56-235.2. 
13 
 
result, the Commission concludes, is “fully supported by the 
plain language of the Act.” 
The Commission also contends that the ratemaking 
methodology it chose is consistent with Code § 56-585.1 when 
read as a whole.  Subdivision (7) of Code § 56-585.1(A) requires 
the Commission to consider a petition for a rate adjustment 
clause for environmental compliance costs “on a stand-alone 
basis without regard to the other costs, revenues, investments, 
or earnings of the utility.”  Thus, the Commission continues, 
the base rate and rate adjustment clause proceedings are 
separate proceedings and incorporation of base rate items when 
setting adjustment clause rates “would exceed the Commission’s 
authority in adjustment clause proceedings.”  According to the 
Commission, other “costs, revenues, investments, or earnings” 
are appropriately disregarded by limiting the adjustment clause 
rates only to environmental costs not already included in base 
rates. 
The primary objective in statutory construction is to 
determine and give effect to the intent of the legislature as 
expressed in the language of the statute.  Halifax Corp. v. 
First Union Nat’l Bank, 262 Va. 91, 99-100, 546 S.E.2d 696, 702 
(2001).  When a statute is unambiguous, we must apply the plain 
meaning of that language.  Id.  If the statute is subject to 
more than one interpretation, we must apply the interpretation 
14 
 
that carries out the legislative intent.  Brown v. Lukhard, 229 
Va. 316, 321, 330 S.E.2d 84, 87 (1985).  Rules of statutory 
construction prohibit adding language to or deleting language 
from a statute.  BBF, Inc. v. Alstom Power, Inc., 274 Va. 326, 
331, 645 S.E.2d 467, 469 (2007). 
The statute quoted above clearly states the intent of the 
legislature.  It states that the Commission “shall” approve a 
utility’s petition for a rate adjustment clause filed pursuant 
to Code § 56-585.1(A)(5)(e) if the three conditions set out in 
the statute are met: (1) only one petition for a rate adjustment 
clause seeking recovery under the section is filed in any 12-
month period; (2) the costs are actual or projected costs; and 
(3) the Commission finds that the costs were necessary to comply 
with state or federal environmental laws or regulations.  
Further, the statute states that the purpose of the rate 
adjustment clauses is to allow for the “timely” and “current” 
recovery of qualified costs.  Code § 56-585.1(A)(5).  The rate 
adjustment clause proceeding stands in direct contrast to the 
more lengthy base rate proceeding, which under Code § 56-585.1 
only occurs every two years.9 
There is no dispute that the costs APCO seeks to recover 
were incurred in qualified environmental projects and that these 
                                                 
9 A utility company may still apply for temporary rate 
increases at any time.  Code §§ 56-585.1(B) and -245. 
15 
 
costs have not been recovered and cannot be recovered in the 
future through the mechanism of the base rates.  Yet, the 
ratemaking methodology adopted by the Commission prevents the 
recovery of the very costs which the statute identifies as being 
recoverable through a rate adjustment clause.  Providing a 
utility with the opportunity to recover environmental compliance 
costs is inconsistent with the statutory mandate providing for 
the timely and current actual recovery of such costs which, in 
this case, means such costs will never be recovered. 
 
The Commission’s methodology not only contradicts the 
intent of the legislature reflected in the statute, it 
effectively adds a fourth condition to the statute: the costs 
sought were not costs that could have been recovered in the 
Company’s base rates.  Adding words to a statute in this manner 
violates a well-established tenet of statutory construction.  
BBF, Inc., 274 Va. at 331, 645 S.E.2d at 469 (courts, in 
construing a statute, must apply its plain meaning, and “we are 
not free to add [to] language, nor to ignore language, contained 
in statutes.”)(quoting SIGNAL Corp. v. Keane Fed. Sys., 265 Va. 
38, 46, 574 S.E.2d 253, 257 (2003)). 
 
The Commission’s reliance on the authority contained in 
subsection (C) of Code § 56-585.1 as support for its ratemaking 
methodology is misplaced.  That subsection specifically makes 
the Commission’s exercise of its Chapter 10 ratemaking authority 
16 
 
subject to the other provisions of Code § 56-585.1.  Therefore, 
any ratemaking methodology which the Commission adopts to 
implement Code § 56-585.1(A)(5)(e) may not contradict that 
section.  As pointed out above, the ratemaking methodology 
adopted by the Commission conflicts with the intent and the 
plain language of Code § 56-585.1(A)(5)(e). 
 
Finally, the directive that the Commission consider a 
petition for a rate adjustment clause under Code § 56-
585.1(A)(5)(e) on a stand-alone basis does not require the type 
of separation the Commission suggests.  Indeed, even under the 
Commission’s methodology, reference to a utility’s base rates 
would be required to determine whether the projects which 
incurred the actual or projected costs sought to be recovered 
were included in the computation of the base rates.  
Furthermore, reference to base rate revenues would be necessary 
to ensure that the amount requested as an actual unrecovered 
cost had in fact not already been recovered.  
 
Rather, the “stand-alone” language in subdivision (7) of 
subsection (A) of the statute means that the utility’s costs, 
revenues, investments or earnings should not be considered when 
determining the amount of the rate adjustment clause.  Nothing 
in the language of this subdivision suggests or requires that 
actual costs incurred in environmental compliance projects may 
17 
 
not include costs associated with such projects if the projects 
were included in formulating base rates. 
 
For these reasons, we hold that Code § 56-585.1(A)(5)(e) 
allows recovery of unrecovered costs incurred by a utility for 
environmental compliance projects necessary to serve the 
utility’s native load obligations even if the projects which 
incurred those costs were included in the utility’s base rates. 
2.  Recovery of Compliance Costs Embedded 
 in Capacity Equalization Charges 
 
The Commission also denied recovery of the environmental 
compliance costs embedded in the capacity equalization charges 
that APCO sought because the evidence did not “accurately 
reflect actual ‘costs of projects’ used to serve the Company’s 
native load customers.”  APCO has assigned error to this 
alternate holding and we now address that issue. 
APCO argues that it produced sufficient evidence to support 
recovery for the environmental compliance costs embedded in the 
capacity equalization charges.  APCO points to uncontradicted 
evidence that a portion of the capacity payments included costs 
that its affiliates incurred for projects required to comply 
with environmental laws and regulations and evidence of the 
amount of capacity equalization charges APCO paid to its 
affiliates during the time periods in question.  APCO also 
relies on the testimony and exhibits of its witnesses and 
18 
 
Commission Staff which included computations or estimates of the 
portion of the capacity equalization charges attributable to 
environmental compliance costs incurred by its affiliates.  APCO 
asserts that the use of different formulae by its witnesses and 
Commission Staff to arrive at the amount of environmental 
compliance costs embedded in the capacity equalization charges 
did not absolve the Commission from weighing the evidence and 
determining a proper recovery amount.  Finally, APCO asserts 
that the evidence and calculations it presented were “identical 
in form, detail and scope” to evidence accepted by the 
Commission in prior cases under Code § 56-582 during the former 
deregulation transition period.  
 
The Commission, in its alternate holding denying these 
costs, noted that although Code § 56-585.1(A)(5)(e) allows 
recovery for actual and projected costs, in this proceeding APCO 
sought recovery of costs it identified as actual, not projected 
costs.  The Commission’s ruling was based on its determination 
that nothing in the testimony or calculations regarding the 
capacity equalization charges paid by APCO or the 
Interconnection Agreement contains any identification or 
specific quantification of the amount of environmental costs 
embedded in those charges.  In applying the statutory language 
referring to “actual costs,” the Commission held that estimates 
of environmental compliance costs produced in this case “did not 
19 
 
sufficiently demonstrate [the] actual costs” as required by the 
statute.  The Commission also noted that using “one of the 
varying calculations in the record could result in a double 
recovery of costs through the Company’s base rates and 
adjustment rate clauses.” 
 
The Commission’s decision under review here is that the 
evidence was insufficient to prove “actual costs.”  This finding 
of fact will not be reversed unless it is “contrary to the 
evidence or without evidence to support it.”  Mutual Sav. & Loan 
Ass'n v. Commonwealth, 212 Va. 557, 559, 186 S.E.2d 13, 14 
(1972). 
 
In its alternate holding, the Commission applied the plain 
language of the statute, which in this case limits rate 
adjustment clauses to “actual costs,” and held that the 
estimates of environmental compliance costs embedded in the 
capacity equalization charges did not meet the statutory 
requirement.  Acceptance of estimates in proceedings brought 
under other statutes which did not require evidence of “actual 
costs” does not require or suggest that estimates should be 
sufficient in this proceeding.  Furthermore, APCO’s argument 
that the Commission failed to weigh the evidence and instead 
ignored it is without merit.  The record is clear that the 
Commission considered the evidence and found that it did not 
satisfy the statutory requirement of “actual costs.” 
20 
 
Based on this record, we cannot say the Commission’s 
decision is contrary to the evidence or without evidentiary 
support. 
Conclusion 
 
In summary, in this appeal APCO sought recovery of $33.3 
million in environmental compliance costs that the Commission 
denied.  For the reasons stated, we hold that APCO is entitled 
to a rate adjustment clause for recovery of actual costs it 
directly incurred for environmental compliance in 2009 and 2010, 
but did not recover through its base rates.  We will reverse 
that portion of the Commission’s decision denying recovery of 
environmental compliance costs on the basis that those costs are 
connected with projects included in APCO’s base rates which the 
Company had the opportunity to recover.  
We will affirm that portion of the Commission’s decision 
denying APCO recovery of environmental compliance costs alleged 
to be embedded in the capacity equalization charges APCO paid to 
its affiliates in 2009 and 2010.  Accordingly, we will remand 
the case to the Commission for further proceedings consistent 
with this opinion. 
 
 
 
 
 
 
 
Reversed in part, 
 
 
 
 
 
 
 
 
   affirmed in part 
 
 
 
 
 
 
 
 
   and remanded.