Opinion ID: 1325816
Heading Depth: 1
Heading Rank: 9

Heading: Health Care Costs & Construction Work in Progress (CWIP)

Text: Finally, the Consumer Advocate argues that the Commission erred in allowing an adjustment for projected health cost and its inclusion of construction work in progress in the rate base. The Consumer Advocate maintains the projected health cost increase was not a known and measurable expense. The Commission compared the health care cost in 1985 to 1988 to arrive at a yearly percentage increase. The test year figures were then adjusted to reflect the projected increase. As this Court held in Southern Bell Telephone v. Public Service Commission, supra , adjustments for known and measurable changes in expenses may be necessary in order that the resulting rates reflect the actual rate base, net operating income, and cost of capital. The adjustments are within the discretion of the Commission and must be known and measurable within a degree of reasonable certainty. Absolute precision, however, is not required. Michaelson v. New England Tel. & Tel. Co. , 121 R.I. 722, 404 A.(2d) 799 (1979). We find the Commission's adjustment to health care expense was not an abuse of discretion. The Consumer Advocate further argues that the CWIP was included in the rate base in error. The advocate's position is that the CWIP was also not known and measurable. We find there is evidence the CWIP was incurred during the test year and thus known and measurable. Accordingly, we AFFIRM in part, REVERSE in part, and REMAND. HARWELL, C.J., and CHANDLER, FINNEY and MOORE, JJ., concur.