Opinion ID: 2279609
Heading Depth: 1
Heading Rank: 7

Heading: Water Company's Contentions

Text: [¶ 11] In addition to arguing unpersuasively that the referee erred in refusing to apply the replacement cost new less depreciation and the ability to finance methods of valuation, and erred in his reliance on the comparative sales method of valuation, the Water Company contends that the referee erroneously excluded $12,000 in construction work in progress (CWIP) and $9,937 in inventory (material and supplies) from the value of the Water Company. The referee concluded that the evidence provided an insufficient basis for a finding of additional CWIP that should be included in the net operating plant account. That decision is supported by the record. The referee found that the materials and supplies were also not included in the net operating plant accounts of the comparable companies used as the basis for determining the appropriate factor for application of the comparable sales method. That conclusion is based on extensive testimony offered by both parties about various methods of valuing water utilities. His decision to exclude the $9,937 in equipment and material from the valuation of the Rangeley Water Company finds support in the record. [¶ 12] The Water Company also argues that the referee erred in reducing the multiplier derived from the comparative sales analysis from 1.65 to 1.55 to reflect the reduction in the value of the Water Company because of its noncompliance with the Safe Drinking Water Act. There is substantial evidence in the record to support the referee's conclusion that the Water Company was not in compliance with the Act and that its noncompliance lessened the value of the company's assets. Although the referee found scanty evidence to suggest how the reduction in value should be reflected in the multiplier applied to the Water Company's assets, the referee's application of a .10 reduction in the multiplier appropriately considered numerous aspects of the Water Company's physical plant. [6]