Opinion ID: 1993160
Heading Depth: 1
Heading Rank: 1

Heading: afudc accrual

Text: The company asserts that the commission erred with respect to the AFUDC. First, the company maintains that the commission's disallowance of $300,000 in AFUDC costs accrued from September through November, as a result of its prohibiting accrual of these costs as of September 1, 1990, was improper absent any showing of imprudence by the company in delaying implementation of the CIS. Second, it charges that the commission improperly ignored costs associated with the CIS that were incurred after November 1990 and continued through the completion date of May 1991. In this case the commission stated that it relied on the company's rationale for the delay in determining that the system could have been implemented by September 1, 1990. This court must now determine whether this decision was, in fact, lawful and reasonable. To affirm the commission's order, therefore, support must exist for its decision to suspend accrual of the AFUDC as of September 1, 1990. The facts on which the commission relied in issuing its order must demonstrate a result reasonably based on those facts. Rhode Island Consumers' Council v. Smith, 111 R.I. at 277, 302 A.2d at 762. It is well-settled law that when the end result of the commission's findings is fair and reasonable, this court will not interfere with the methodology utilized by the commission. In re Woonsocket Water Dep't, 538 A.2d 1011, 1014 (R.I. 1988); Narragansett Electric Co. v. Burke, 475 A.2d 1379, 1386 (R.I. 1984). The company must show that the commission abused its discretion. Narragansett Electric Co. v. Harsch, 117 R.I. 395, 414, 368 A.2d 1194, 1205 (1977). In the case before us, we do not find that the facts provided the commission with a reasonable basis for disallowing the AFUDC as of September 2, 1990, or that this end result was fair or reasonable. We are of the opinion that in making its determination to adjust AFUDC accrual negatively, the commission abused its discretion. The division presented, and the commission relied on, no evidence of impropriety or imprudence in the company's business-judgment decision to delay the CIS's implementation until a time later in the heating season when the company was less busy and after more testing could be conducted. The company's evidence, explaining the nature of the CIS, the testing process, and the reasons for delay because of potential implementation problems, demonstrated sound business judgment on the part of the company in order to maximize efficiency of the CIS and minimize customer-service disruption. The company should not be penalized for its diligence in the absence of contrary evidence demonstrating imprudence. Because there was no evidence indicating imprudent company decisions in delaying implementation of the CIS, we are of the opinion that the commission acted arbitrarily and unfairly in so limiting AFUDC accrual, fashioning a clearly, palpably, and grossly unreasonable adjustment. The commission relied on company testimony regarding construction and planned implementation of the CIS and decided that the system could have been functioning as of September 1, 1990. The commission's decision does not find support in the evidence but instead is a clearly unreasonable and arbitrary extension of the company's testimony. In fashioning this remedy, the commission did not logically extend the company's testimony. We find it unfair and unreasonable to the company, relying on the evidence presented, to expense prudently incurred capital costs and not be able to recover them through customers' rates. Therefore, we conclude that the commission improperly removed $300,000 from the rate base, $100,000 for each month for September, October, and November. The commission is hereby ordered to include $300,000 for AFUDC costs in the total CIS cost. The same principles as stated above also apply to the company's contention that the commission ignored the costs for the AFUDC that accrued after November 1990. For purposes of docket No. 1971, however, the issues and costs upon which the commission heard facts and made determinations involved estimated amounts as of November 30, 1990. Subsequent rates and costs are unknown because they were not presented in the rate case, docket No. 1971. The company's claim regarding these amounts is therefore not justiciable. This court cannot properly decide an issue or hear facts not previously before the commission because this practice would relegate to the court the function of factfinder. As we previously stated, this court is statutorily prevented from engaging in factfinding. Therefore, we decline to order the commission to include in the rate base accrual of the AFUDC after November 1990. For the reasons stated, the company's petition for certiorari is granted. The report and order of the Public Utilities Commission is affirmed in part and quashed in part. The commission's order disallowing the inclusion of training-labor costs in the total CIS costs to be capitalized and included in the rate base is affirmed. The order excluding $300,000 in AFUDC costs, accrued from September 1990 to November 1990, is hereby quashed. We direct the commission to include $300,000 in the rate base. The records certified to this court are remanded to the Public Utilities Commission with our decision endorsed thereon.