Opinion ID: 2347721
Heading Depth: 1
Heading Rank: 13

Heading: Allocation of the Rate Case Costs

Text: The Companies requested that they be permitted to recover their costs in the consolidated proceedings. The Commission substantially allowed this expense but allocated the costs among all nineteen of General's Maine subsidiaries, thirteen of which were not involved in the instant proceedings. [44] Reasoning that the consolidated proceedings would be relevant to all of General's Maine subsidiaries in their rate cases over the next two years and that any savings would be allocable to all of the subsidiaries, the Commission concluded that [f]airness requires that the costs be so allocated as well. The Companies complain that the costs should not have been allocated to subsidiaries who were not even parties to the rate case proceedings. They further argue that a related decision to allocate the tax and management and service fees of the rate case over a five-year period was unsubstantiated and erroneous in both law and fact. We disagree. As to the five-year amortization of the rate case expense, it has been noted that [t]he five-year term has . . . been used so frequently as to have become something of a norm. 1A. Priest, supra at 67. The criterion for determining the length of the amortization period is frequently based upon a reasonable estimate of the prospective average period between rate proceedings, i. e. the length of time during which the new rates will apply. 1 A. Priest, supra at 68. Here, the Companies present no evidence to support their contention that the amortization over five years of the tax and management and service fees involved in the rate case expense was unjust or unreasonable. We find such allocation to be an exercise of the sound discriminating judgment of the Commission. We also find no abuse of discretion in the Commission's allocation of the expense to thirteen subsidiaries which did not actually participate in the proceedings. It is entirely logical and reasonable to assume, as did the Commission, that future rate proceedings by other General subsidiaries will be less time-consuming and costly because of this first, very complex, rate case. The allocation was reasonable and justified.