Opinion ID: 2202769
Heading Depth: 2
Heading Rank: 2

Heading: Dickerson Unit 4

Text: In the early 1970's Dickerson Unit 4 was conceived as an 850 MW [megawatt] coal-fired, base load unit to be completed in 1976. As declining load-growth rate projections emerged in the 1970's, it was delayed and work was sharply curtailed on the unit. In 1977 the unit was replanned as an 800 MW joint venture with Baltimore Gas and Electric Co. (BG & E) scheduled for 1985, and later for 1987. In October 1979, BG & E withdrew from the joint venture, PEPCO sought a new partner for the venture without success, and in 1980 cancelled the unit in light of the continuing downward trends in load-growth rate projections. Order No. 7716 at 51. PEPCO sought to make up for the loss resulting from the closing of Dickerson Unit 4 (DU-4) both by amortizing the loss and by including the unamortized portion of the investment in the rate base. The Commission ruled that PEPCO would be allowed to do only the former. OPC argues that PEPCO did not prove that the planning and cancellation decisions involving DU-4 were prudent, and therefore that the Commission's decision to allow PEPCO to amortize its abandonment loss over a ten-year period was arbitrary and unreasonable. The Commission carefully considered OPC's argument and rejected it in the following portions of its order: Mr. Gold for OPC offered an economic analysis of alternative generation planning scenarios from which he concluded that installation of Dickerson Unit 4 in either 1985 or 1987 and the postponement of Chalk Point 4 until 1997 would have been more economic than PEPCO's actual course of conduct. Mr. Gold's study, however, is based upon current load forecasts and assumptions as to fuel and other costs, rather than on reasonable assumptions as of the late 1970's when the decision to cancel was made. This tends to undercut the probative value of the study, since the measure of prudence should be made as of the time the decision was made, not by hindsight.       Finally, we note that PEPCO argues that OPC's underlying premise that Dickerson Unit 4 should have been moved up to replace Chalk Point Unit 4 was not a feasible option, because there was insufficient lead time as of 1980. OPC argues that the decision should have been made earlier than 1980. OPC's contention ignores the fact that prior to 1980, Dickerson Unit 4 was planned as a joint venture with BG & E which put constraints on PEPCO's ability to shift its scheduling. It also ignores the fact that from the end of 1978 PEPCO was anticipating the near-term retirements of the old Benning and Buzzard Point units, producing a future need for cycling-to-peaking units, rather than base-load units such as Dickerson Unit 4 in the early 1980's. We cannot find that PEPCO made an imprudent decision with respect to Dickerson Unit No. 4. To disallow amortization of the project loss would be to apply a standard  not of reasonable prudence, but  of absolute stockholder liability for plant cancellations. We decline to accept this standard, and we approve PEPCO's amortization proposal. Order No. 7716 at 60, 62. These excerpts from the Commission's order fully meet the requirements of Washington Public Interest Organization v. Public Service Commission, supra . OPC has not met its considerable burden of demonstrating error. People's Counsel v. Public Service Commission, supra, 399 A.2d at 46; see Goodman v. Public Service Commission, 309 A.2d 97, 101 (D.C.1973).