Opinion ID: 1662984
Heading Depth: 1
Heading Rank: 3

Heading: OPERATING REVENUES and OPERATING INCOME

Text: The operating income produced on an Act 97 rate base of $80,347,000 and a rate return of 8.3% is $6,668,800. The adjusted operating income found for the test year was $4,699,244. Therefore, the return on the Commission's rate base was $1,969,556 more than the adjusted operating income. ALAGASCO requested an increase in operating income of $2,600,750. (To produce this increase in operating income, ALAGASCO said it would have to receive $5,312,000 in additional pre-tax revenue.) The Commission majority allowed an increase of operating income of $1,969,556, a reduction of $631,194 from ALAGASCO'S request. An addition of $124,000 of operating income from new customers produced a total reduction of $755,194. The reduction in operating revenue by the Commission was $1,492,000. This reduction corresponded to the $755,194 reduction of operating income after applying a tax factor of 0.50615 ($755,194 divided by .50615 equals $1,492,000). Reducing the requested operating revenues of $5,312,000 by $1,492,000, the Commission granted an increase in operating revenue of $3,820,000. The major adjustment in dispute in this item which materially affected the end result was the weather adjustment, the difference being adjustment based on Birmingham temperatures by the intervenors' evidence, and adjustment based on state-wide temperatures by ALAGASCO'S evidence. The Commission majority accepted ALAGASCO'S evidence in arriving at its finding. This court stated in Alabama Electric Cooperative, Inc .: We do not weigh the conflicts in the evidence but accept as true those tendencies of the evidence and reasonable inferences to be drawn therefrom which tend to support the action taken by the Commission. The increase in operating revenue granted by the Commission majority is approved, as there is substantial evidence in the record to support the increase.