Opinion ID: 1297749
Heading Depth: 1
Heading Rank: 9

Heading: Working Cash Allowance in Rate Base.

Text: The commission in its decision explains that The purpose of including a working cash allowance in rate base is to compensate investors for capital which they have supplied to enable the company to operate efficiently and economically and for which they would not otherwise be compensated. If, through the availability and use of tax accruals, monies or other funds supplied by the subscribers, the investors are required to supply a smaller sum, their compensation should be proportionately less. (See also 48 Cal. P.U.C. 22.) [26] From the commission's decision it appears that after first allowing as a part of Pacific's rate base the gross working cash requirement ($8,803,000) which Pacific claimed, the commission disallowed various additional cash sums held by Pacific totaling $15,603,000, which the commission found, and Pacific does not dispute, had been accumulated by Pacific from revenues collected from customers in advance of paying expenses, taxes and depreciation; from funds provided by ratepayers to pay debenture interest; and from taxes withheld from employees. The net result was a deduction of $6,800,000 (which Pacific terms negative working cash) from Pacific's claimed rate base for the test year. Pacific asserts that the issue is how much working cash it must reasonably and prudently maintain and keep devoted to the public service for operating purposes, and, further, whether the $6,800,000 deducted from physical plant in the rate base is owned by it and dedicated by it to the public service. On the contrary, however, Pacific was allowed the working cash requirement which it asked, and its ownership and devotion of the property to public service is not challenged. Again the real question appears to be whether a double return should be permitted. The commission declared in its decision that Where, as in this case, the funds supplied to [Pacific] by others than investors are greater than the amount required ... for working cash, and the excess amount is not deducted from rate base, customers would be unreasonably required to pay a return on funds supplied by them to defray reasonable expenses and taxes [and debenture interest] and to provide a reasonable return on invested funds. This view appears sound and fair, the decision sets forth detailed findings on the subject, and no error is shown.