Court Opinion

ID: 9738662
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:00:04.292003+00
Date Added: 2024-06-11T07:24:07.754397
License: Public Domain

FOSHEIM, Justice
(concurring specially).
Regarding disallowance of CWIP on which no AFUDC was taken, the majority opinion reads:
In its application company opted to treat the $303,607 as a capital asset and include the entire sum in its computation of base rate, rather than capitalize it as AFUDC, and the PUC excluded it from company’s rate base. In doing so the PUC stated in its rehearing decision that it is proper to exclude all CWIP from rate base.
The opinion concludes the PUC thus stated the rule too narrowly because it does not allow for a showing as to the imminence of use of the CWIP.
In South Dakota Public Utilities Commission v. Otter Tail Power Co., 291 N.W.2d 291 (S.D.1980), we held that a utility generally is not allowed to earn a return on construction until it is actually placed in service, and based on the facts in that case, we concluded that the refusal of the PUC to include such amounts in rate base was not arbitrary or capricious or an unwarranted exercise of discretion.
The imminence of use is an exception to that rule. It permits the computation of the rate base to include the value of assets not presently in use if the time for using them is so near that they may be said, at least by analogy, to have the quality of working capital. Application of Northwestern Bell Telephone Co., 78 S.D. 15, 30, 98 N.W.2d 170, 178 (1959).
This exception is subject to the further condition that, although the property under construction has reached the point of imminent use, it should not be included in rate base if inclusion results in a double return because of additional revenue resulting therefrom. Application of Northwestern Bell Telephone Co., supra.
Accordingly, the PUC did not erroneously state the rule. They simply did not add the exceptions, which was appropriate because the absence of evidence rendered them irrelevant, The issue was therefore properly dispatched by the PUC, silent as to exceptions much as we approved in South Dakota Public Utilities Commission v. Otter Tail Power Co., supra.