Opinion ID: 1771223
Heading Depth: 1
Heading Rank: 4

Heading: storm reserve

Text: Other juridictions have allowed utilities to provide for storm reserves. Cited in the quotation from Narragansett, supra, at 178-179 are references to decisions where utilities were allowed to provide for storm reserves. In Re Detroit Edison Co., 43 P.U.R.4th 478 (1981), the Michigan Public Service Commission in considering severe storm damage stated: The existing rates do provide for O and M expenses, which include expenses to cover repair, replacement and maintenance arising out of weather conditions. However, those rates provide only for the recovery of normal or ordinary expenses. They do not provide for the recovery of extraordinary expenses such as those being dealt with in this case. 43 P.U.R.4th at 487. The New York Public Service Commission in Re Long Island Lighting Co., 9 P.U.R.4th 21 (1974), approved the recovery of past storm losses as well as the establishment of a reserve. We conclude on this record that five year average $500,000.00 accrual appears to be the most reasonable amount to compensate the company for past losses and to provide, in time, a reserve against future storm losses. 9 P.U.R.4th at 35. See also, Re Long Island Lighting Co., 7 P.U.R.3d 140, 142 (1955). In a proceeding involving Florida Power Corporation, 81 P.U.R.3d 394 (1969), the Florida Public Service Commission stated: (1) This commission has for years recognized the use of a storm damage reserve which involves making periodic charges to operating expenses and accruing these amounts in a reserve. The area Florida Power Corporation serves is susceptible to hurricane damage. The purpose of this reserve is to avoid as much as possible extraordinary storm damage repair charges when such losses do occur. ..... 81 P.U.R.3d at 395. These cases indicate that it is common practice for public service commissions to permit as an item of expense chargeable to ratepayers the establishment of a reserve for storm damage and to authorize, as a legitimate expense of operation, annual contributions to those storm reserves. We think this is reasonable. But, however, as with expenses for storm damage actually incurred, charges for establishment of a storm reserve are allowable only after a hearing.