Opinion ID: 1720100
Heading Depth: 1
Heading Rank: 5

Heading: Allocation of Decommissioning Expense and Transmission Costs

Text: GSU argues the commission erred in allocating decommissioning expenses of the River Bend plant between the regulated and deregulated portions. GSU further contends that the commission erred in disallowing a portion of the cost of the transmission plant [7] associated with River Bend. In 1987, the commission adopted an order excluding $1.4 billion of GSU's River Bend investment from the rate base, based on its determination that GSU could have and should have built a coal plant of the same size as River Bend for $1.4 billion less. That determination was affirmed by this court. Gulf States Utilities Co. v. Louisiana Public Service Commission, 578 So.2d 71 (La.1991). Subsequently, the commission approved a deregulated asset plan, which essentially split up GSU's share of River Bend, permitting the company to keep most of the benefits of about 150 megawatts of the asset. This approach allowed it to avoid writing off the $1.4 billion disallowance. Under the deregulated asset plan, the commission adopted the principle that all expenses and investment in River Bend be allocated between the regulated and deregulated portions of River Bend, but an express exception was made as to decommissioning expenses. In the instant proceeding, the commission's consultant and special counsel recommended that the commission reconsider the treatment for decommissioning expenses and order that future decommissioning expenses be allocated between regulated and deregulated River Bend, including only the regulated percentage in the regulated cost of service. The commission adopted this recommendation. The commission also allocated the expenses of the River Bend transmission plant between the regulated and deregulated components of the deregulated asset plan, finding this treatment was consistent with its prior treatment of the other investments and expenses associated with River Bend. As to the decommissioning expenses, GSU argues the commission's decision constitutes an additional imprudence disallowance, since the commission had previously held that all decommissioning costs were excepted from the deregulated asset plan and could be recovered through the rate base. GSU contends that the ratepayers have a significant public interest in the decommissioning, since it involves issues of public health and safety in connection with the removal of nuclear wastes and facilities. We find no merit to GSU's argument. Although we recognize that the commission initially made an exception to the deregulated asset plan for the decommissioning expenses, the commission's present order is consistent with its treatment of other expenses arising from River Bend. Since GSU receives the benefit from the deregulated portion of River Bend, it logically follows that it should bear the decommissioning expenses for this portion. As to the transmission plant costs, GSU argues there was no basis to exclude a portion of these costs from the rate base. GSU relies on the testimony of its expert witness, J. David Wright, who stated that the original disallowance was based on the difference between a nuclear plant and a coal plant, but that the transmission plant would have been necessary regardless of what type of plant had been built. In rejecting this argument, the commission stated: Mr. Wright's argument is misplaced and does not warrant inclusion of the full general and transmission plant in the rate base. Mr. Wright's argument misconstrues the history of River Bend. The coal plant proxy that he refers to predated the Commission's adoption of the Deregulated Asset Plan. Prior to adoption of the Deregulated Asset Plan, the Commission permitted Gulf States to recover from ratepayers all River Bend operating expenses. With the adoption of the Deregulated Asset Plan, the Commission established the principle of allocating all investment and operating expenses (except for decommissioning expenses discussed supra) between regulated and deregulated components of the Deregulated Asset Plan. Simply stated, the general and transmission plant is needed for the service and operation of the deregulated portion of River Bend. We think the commission properly resolved the issue. Since the transmission plant is necessary for both the regulated and deregulated portions of River Bend, it would be unfair to require the ratepayers to shoulder all the costs. In sum, we find that the commission's decisions on the allocation of the decommissioning expenses and transmission plant costs are consistent with its earlier deregulated asset plan. Accordingly, we are unable to conclude these decisions are arbitrary and capricious.