Opinion ID: 1668575
Heading Depth: 1
Heading Rank: 7

Heading: are legal and accounting fees incurred in preparation for the rate hearing allowable expenses?

Text: The Commission contends that legal and accounting expenses incurred in preparing for the rate case are abnormal, non-recurring expenditures and, therefore, should be disallowed. While these expenses are not annual ones, they are expected by any utility subject to regulation by the Public Service Commission. The legitimacy of such expenses, when reasonable, is well recognized. See 1 A. Priest, Principles of Public Utility Regulations 67-69 (1969). However, since utilities normally do not apply for an increase each year, the total cost for preparing for the rate case should not be allowed in the test year. Instead, the cost should be amortized over a number of years reasonably representing the period, as shown by experience, between applications for a rate increase. For the reasons stated above the decree of the chancery court is affirmed in part, reversed in part, and this cause remanded to the Public Service Commission for further hearings consistent with this opinion. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED TO THE PUBLIC SERVICE COMMISSION FOR FURTHER HEARINGS CONSISTENT WITH THIS OPINION. PATTERSON, C.J., BROOM, P.J., and ROY NOBLE LEE, BOWLING, HAWKINS, PRATHER and ROBERTSON, JJ., concur. DAN M. LEE, J., concurs in result only.