Opinion ID: 1325816
Heading Depth: 1
Heading Rank: 2

Heading: Rerating Issue

Text: In 1983, SCE&G applied for a change in its rate structure to add the V.C. Summer Nuclear Station, into its rate base. [1] The Commission excluded 400 megawatts (MW) or $114,770,512 of the investment in the V.C. Summer Plant from SCE&G's rate base. The Commission did not find that the capacity represented by the 400 MW was not used or useful but excluded this portion of the investment as part of a phase-in of the new plant. The Commission ordered the carrying cost of the 400 MW deferred. The entire depreciation expense of the V.C. Summer Plant was allowed. This order was affirmed by this Court in Hamm v. South Carolina Public Service Commission and South Carolina Electric and Gas , 294 S.C. 320, 364 S.E. (2d) 455 (1988). In 1987, SCE&G sought the inclusion of the 400 MW into their rate base (less depreciation) and the amortization of the previously-deferred carrying cost over a ten-year period. This action was accompanied by a proposed new depreciation rate which decreased SCE&G's depreciation expense. The net result was no increase in the consumer rates. The Commission approved SCE&G's requests. In so doing, the Commission noted there had been a system-wide rerating of SCE&G's generating units with a net decrease in total capacity of 69 MW. The Commission found this rerating to be immaterial. In Hamm v. South Carolina Public Service Commission and South Carolina Electric and Gas , 298 S.C. 309, 380 S.E. (2d) 428 (1989), we vacated the Commission's order and remanded the case for further findings of fact under Able Communication v. South Carolina Public Service Commission , 290 S.C. 409, 351 S.E. (2d) 151 (1986) on the issue of whether operational imprudence was reflected in those reratings. The Commission's order on remand is at issue in this appeal. The Commission's order on remand made the specific factual finding that the rerating was the result of normal operating and engineering constraints. Further, the Commission found no evidence of operational imprudence resulting in the rerating. Although the burden of proof of the reasonableness of all costs incurred which enter into a rate increase request rests with the utility, the utility's expenses are presumed to be reasonable and incurred in good faith. Missouri ex rel. Southwestern Bell Co. v. Public Service Comm'n of Missouri , 262 U.S. 276, 43 S.Ct. 544, 67 L.Ed. 981 (1923) (Brandis, Jr., J., concurring); West Ohio Co. v. Pub. Util. Comm'n , 294 U.S. 63, 55 S.Ct. 316, 79 L.Ed. 761 (1935); Boise Water Corp. v. Idaho Pub Util. Comm'n , 97 Idaho 832, 555 P. (2d) 163 (1976); City of Chicago v. Illinois Commerce Comm'n , 133 Ill. App. 3d 435, 88 Ill. Dec. 643, 478 N.E. (2d) 1369 (1985) (modified by statute as noted in People ex rel. Hartigan v. Illinois , 117 Ill. (2d) 120, 109 Ill. Dec. 797, 510 N.E. (2d) 865 (1987); Long Island Lighting Co. v. Pub. Serv. Comm'n , 134 A.D. (2d) 135, 523 N.Y.S. (2d) 615 (1987); City of Norfolk v. Chesapeake & Potomac Tel. Co. , 192 Va. 292, 64 S.E. (2d) 772 (1951). This presumption does not shift the burden of persuasion but shifts the burden of production on to the Commission or other contesting party to demonstrate a tenable basis for raising the specter of imprudence. Long Island, supra . This evidence may be provided by the Consumer Advocate as an intervenor through the liberal discovery provision provided for in S.C. Code Ann. § 37-6-605 (Supp. 1991) or through the Commission's broad investigatory powers. S.C. Code Ann. § 58-3-190 (1976) and § 58-27-1960 (1976). The ultimate burden of showing every reasonable effort to minimize fuel costs remains on the utility. Hamm v. South Carolina Pub Serv. Comm'n and Carolina Power and Light Co. , 291 S.C. 119, 352 S.E. (2d) 476 (1987). In this case, there was no direct evidence of imprudence. The Commission found the rerating itself did not suggest imprudence but was the result of normal operating and engineering constraints. The Commission sits as the trier of facts, akin to a jury of experts. South Carolina Tel. & Tel. Co. v. Pub. Serv. Comm'n , 270 S.C. 590, at 597, 244 S.E. (2d) 278, at 282 (1978). This Court is without authority to set aside an agency's judgment on a factual issue where there is substantial evidence of record to support the agency's decision. Hamm v. South Carolina Pub. Serv. Comm'n , 294 S.C. 320, 364 S.E. (2d) 455 (1988). We, therefore, affirm the Commission's inclusion of the 400 MW previously withheld from SCE&G's base rate.