Court Opinion

ID: 6758150
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:29:09.737842+00
Date Added: 2024-06-11T16:02:30.811681
License: Public Domain

Locher, J.,
dissenting. The majority presents the issue in this case as being merely an exercise in applied accounting principles. Yet, the majority recognizes that DP&L has acknowledged, beginning with its application, that the purpose of this change is to influence rates:
“* * * [The] problem is that there is a substantial period of time between the point at which the accrual of AFUDC would historically cease (the commercial operation date of a project) and the point at which rates become effective after a rate case order which permit[s] revenues to be earned which reflect the project costs as a part of rate base. The length of time necessary for the current Ohio rate case procedure * * * means that this gap between these two points is normally ten months. This Application will permit DP&L to close that gap * * (Emphasis added.) Indeed, the Consumers’ Counsel has persuasively argued before this court that today’s decision will cost consumers $25 million in the next rate case alone.
Likewise, the accounting treatment itself is troublesome. Ohio Adm. Code 4901:1-9-05 states the commission’s preference that each electric light company maintain a system of accounts and records as adopted by the Federal Energy Regulatory Commission (formerly known as the Federal Power Commission). 18 C.F.R., Part 101, Electric Plant Instructions 403, 405, Section 3(17) defines “[a]llowance for funds used during construction” as including “* * * the net cost for the period of construction of borrowed funds used for construction purposes and a reasonable rate on other funds when so used * * (Emphasis added.) That same provision of the Code of Federal Regulations also requires that AFUDC not include on-line facilities: “Note: When a part only of a plant or project is placed in operation or is completed and ready for service but the construction work as a whole is incomplete, that part of the cost of the property placed in operation or ready for service, shall be treated as ‘Electric Plant in Service’ and allowance for funds used during construction thereon as a charge to construction shall cease. Allowance for funds used during construction on that part of the cost of the plant which is incomplete may be continued as a charge to construction until such time as it is placed in operation or is ready for service, except as limited in item 17, above.” (Emphasis added.) Id. at 406. See, also, FERC Release AR-5 (effective January 1, 1968).
Therefore, the majority errs by not requiring that the commission remain true to its own regulations. Rather, today’s decision will serve the utility’s expressed purpose of passing on to consumers costs which the General Assembly has not exempted from the test-year concept.
Accordingly, I would reverse the order of the Public Utilities Commission.
Celebrezze, C.J., concurs in the foregoing dissenting opinion.