Opinion ID: 2279962
Heading Depth: 1
Heading Rank: 7

Heading: Exclusion from Rate Base of the Richmond and Canco Road Properties

Text: The PUC excluded from rate base the Company's $1,573,793 investment in land in Richmond and its $162,655 investment in land on Canco Road, Portland. Neither of these properties is presently used and, according to the PUC, neither is required to be used within the meaning of 35 M.R.S.A. § 52. In Re Central Maine Power Company, 26 PUR 4th 388 (Me., P.U.C.1978), the Commission put the Company on notice that no land will be deemed eligible for inclusion in rate base as property used or required to be used in . . . service to the public, 35 M.R.S.A. § 52, unless the Company affirmatively demonstrates the existence of a definite plan for future use: In future rate cases, ... utilities must bear the burden of justifying the inclusion in rate base of property held for future use by demonstrating that a sufficiently definite plan exists for the use of such property.  26 PUR 4th at 400-01 (emphasis added). Both before the Commission and in this appeal, the Company has challenged the reasonableness of the definite plan standard. In the Company's view, that standard punishes the prudent acquisition of alternative generating sites; it overlooks that long lead-times in planning are necessary, since unforeseen obstacles can stymie current plans and rising land costs can render deferred acquisitions prohibitive. When the PUC first expressly adopted the definite plan standard, it explained: [W]e cannot burden ratepayers for an indefinite period with paying a return on company assets which confer no immediate benefit on and provide no guarantee of future benefit to Central Maine's ratepayers. 26 PUR 4th at 400. In the instant order, the PUC has reaffirmed its adoption of the standard, noting that the above-quoted rationale remain[s] as viable today as when first enunciated. Other Commissions support the PUC's position. E.g. Pennsylvania Public Utilities Commission v. West Pennsylvania Power Company, 32 PUR 4th 245 (Pa.P.U.C.1979); Re Central Vermont Public Service Corporation, 28 PUR 4th 469 (Vt.P.S.B.1978). As a rational compromise between automatically including and automatically excluding all property held for future use and, more importantly, as a workable interpretation of the statutory concept property . . . required to be used, the definite plan test for rate base treatment is a reasonable exercise of PUC discretion. The Company next contends that both the Richmond and Canco Road properties were subject to definite plans and therefore should not have been excluded from rate base. This question is one of fact, the Commission's answer to which must be affirmed if supported by substantial evidence. See e. g., Casco Bay Lines v. Public Utilities Commission, Me., 390 A.2d 483 (1978). According to Mr. Howe, a Company witness, the plan for the Richmond land is no more definite at present than it was when the PUC last excluded that land from rate base. 26 PUR 4th 388 (1978). Richmond is contemplated as an alternative site to a coal plant at Sears Island; the latter is still being actively pursued. In the event that the Sears Island plant is constructed, Richmond is nevertheless expected to be necessary for projected 1994 consumption. But it's still up in the air, according to Mr. Howe, what kind of generating facility will be built. The Richmond plant's capacity and the beginning construction date are also up in the air. Neither federal nor state licenses have been applied for; preliminary environmental studies were not known to have been undertaken. Mr. Howe conceded at the end of his testimony that he could not truly say whether a plant will actually be built in Richmond. The PUC was not clearly erroneous in concluding that the Company had failed to carry its burden of showing the existence of a definite plan. Regarding Canco Road, the PUC's decree states: Unlike [the Richmond property] . . . where it is not even clear that any plan even exists ..., here the Company apparently has at least decided what use to make of the Canco Road property. It is the definiteness of that use which is at issue. Based on this record we cannot conclude that the property will definitely be used. A service building housing clerical employees is presently located on Canco Road. That building is projected to expand in 1985, on or about. This projection may have been made five years ago, although Mr. Howe was uncertain. In the meantime, presumably, the Company purchased new data entry systems. Mr. Howe agreed that these purchases would possibly preclude the need for additional expansion. On the above record, the PUC concluded that the Company had not carried its burden of proof, a conclusion which is rationally supportable and therefore, will not be disturbed on appeal.