Opinion ID: 1668575
Heading Depth: 1
Heading Rank: 4

Heading: must a typical test year, based upon experience, be used to establish the rate base and rate of return?

Text: The Commission (appellant) contends that it properly based its order upon a typical test year. While the use of a projected test year is permissible, the utility must meet its burden of showing by substantial evidence that the test year adopted for use in calculating the rate base and rate of return is reasonable and better suited for such determination than all other alternatives. Mississippi Power & Light, et al. v. Mississippi Public Service Commission, 435 So.2d 608 (Miss. 1983). In the Commission's brief it is stated that in determining the rate base and rate of return, the Commission's calculations were based on the figures for the test year ending December 31, 1979, without any projected rate of return for the proforma period. This was error without taking into consideration any increased expenses caused by inflation or otherwise. When operational expenses increase and such increases are properly substantiated, then it is error for the Commission not to take the increases into consideration. According to the Commission's own brief that was not done in this case.