Opinion ID: 1668575
Heading Depth: 1
Heading Rank: 6

Heading: is depreciation on contributions in aid of construction an allowable operating expense?

Text: It is well settled that contributions in aid of construction may not be included in the utility's rate base. See Southern Bell Telephone & Telegraph Company v. Mississippi Public Service Commission, 237 Miss. 157, 113 So.2d 622 (1959) and Mississippi Public Service Commission v. Hinds County Water Company and Dixie Water Company, 195 So.2d 71 (Miss. 1967). Coast contends, however, the depreciation on contributed property should be allowed as an operating expense. The chancellor, relying upon Mississippi Public Service Commission v. Hinds County Water Company and Dixie Water Company, supra , held that the Public Service Commission erred in not allowing the depreciation expense on contributed property as a deduction from the net utility income. However, the issue of depreciation on contributed property was not before the Court in the Hinds County Water Company case and it does not support the contention that such an expense should be allowed. The Commission properly excluded the annual depreciation on contributions in aid of construction. To permit such a deduction would allow the utility to recover the cost of property for which it had invested nothing. Accordingly, the chancellor's decision on this question is reversed.