Opinion ID: 1973623
Heading Depth: 1
Heading Rank: 5

Heading: Pool Sale Rate Increase

Text: The circuit court held that the adjustment adopted by the PUC, designed to reflect the Upper Mississippi Valley Power Pool (UMVPP) agreement rates that became effective November 1, 1975, to OTP's sales to other systems, was arbitrary, capricious and not supported by substantial evidence on the record. The PUC increased OTP's revenues by $81,548.00 before taxes, because the increased UMVPP rate was a known and measurable change that would occur in the test period. The PUC recognized that the increased UMVPP rate was attributable in part to the higher costs of the Big Stone Plant and that a failure to relate the increased UMVPP rate to the sales being made by OTP from Big Stone would result in a mismatch of expenses and revenues. The PUC held, however, that it would be improper to recognize the increased costs associated with the Big Stone Plant in the test period, but fail to recognize the increased revenues that would be forthcoming from sales by OTP of power from Big Stone. The circuit court, in overruling the PUC on this issue, rested its finding on the fact that OTP was bound by contract to sell participation power at a fixed rate, which contracts would not expire until after the winter of 1976-1977. As we view the record, there was a valid purpose in the adjustment adopted by the PUC. There was no uncertainty about the increased UMVPP rates going into effect, and there was little, if any, uncertainty about the amount of sales OTP would make from its Big Stone unit. Although the company was bound by the fixed contracts, the PUC was justified in considering that it would be inequitable for the retail customers to bear the higher costs of Big Stone without taking into account the fact that future sales would be made at a higher rate specifically designed to take into account the higher costs of the newer fossil units such as Big Stone. We find there was substantial evidence to support the decision of the PUC with regard to this item and that it was not arbitrary or an abuse of discretion. We affirm the decision and order of the circuit court as it relates to Compensating Bank Balances and Inflation Adjustments. We reverse with respect to Transmission Plant Allocation, Construction Work in Progress, and Power Pool Sales. The case is remanded accordingly. WOLLMAN, C. J., and DUNN and MORGAN, JJ., concur. HENDERSON, J., concurs in part, dissents in part.