Opinion ID: 1668575
Heading Depth: 1
Heading Rank: 5

Heading: is work-in-progress properly included in the rate base?

Text: The appellee contends that the cost of the new water treatment plant, along with the cost of other repairs and improvements, should be included in the rate base. Bobby Berry, an engineer for Coast, testified as to the cost of these repairs and improvements and the time needed to complete them. In Mississippi Power & Light, et al. v. Mississippi Public Service Commission, supra , the Commission properly excluded work-in-progress. However, in that case there was no evidence as to when the additions were to be placed in service. The Court clearly indicated, however, that if there had been such proof, the work-in-progress could be used as part of the test year rate base to the extent that it would be used or useful during the test year. The Court stated that: We are of the opinion the Commission did not err in excluding CWIP from the proposed rate base. As MP & L contends it would lower future rate base depreciation and tax costs which would benefit future customers as opposed to existing customers. It must also be noted that although MP & L presented evidence as to what percentage of the CWIP would be used or useful during the test year, they did not show what percentage would be used or useful during any given time during the test year. Therefore, the Commission found the inclusion of these projects would not reflect the actual expenditures, and it appears to us this was correct. Had MP & L proven what percentage would go on-line during what particular months of the year, and made the appropriate adjustments, the Commission's order seems to indicate this amount could properly have been included. We are of the opinion that since MP & L did not meet its burden of proof concerning this issue, the Commission was correct in denying its inclusion in the rate base. (435 So.2d at p. 626). It is evident from the testimony that the proposed repairs and improvements would be operational during the test year. Therefore, these items would properly be included in the rate base to the extent of their usefulness in the test year.