Court Opinion

ID: 6757894
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:28:58.726112+00
Date Added: 2024-06-11T16:02:30.332382
License: Public Domain

Locher, J.,
concurring in part and dissenting in part. I concur in the holding of the majority requiring that CEI remove the accrued nuclear fuel disposal account balance from the rate base. I concur in the judgment only as to the accounting treatment of the costs of the cancelled nuclear plants. Otherwise, I dissent.
In Consumers’ Counsel v. Pub. Util. Comm. (1981), 67 Ohio St. 2d 153 [21 O.O.3d 96] (“CEI”), we refused to allow CEI to amortize as costs to be recovered from its ratepayers approximately $56,400,000 which it had invested in four cancelled nuclear power plants. Regrettably, the majority opinion signals an abject retreat from that stand. What CEI condemned, today’s holding condones.
Our decision in CEI reaffirmed the fundamental principle of rate base analysis. That is, a plant must be used and useful before the PUCO includes it in the rate base.
“If, as has been argued, these are parlous times for the utilities industry, and if, therefore, in order to attract and retain investment capital, utility companies must not only be granted a fair and reasonable rate of return pursuant to statute but must also be assured the return of capital invested in failed projects that would otherwise not be recoverable under the ratemaking formula, then the commission and the utilities should petition the General Assembly to enact changes in the ratemaking structure so as to provide this extra modicum of protection for the investors. Absent such explicit statutory authorization, however, the commission may not benefit the investors by guaranteeing the full return of their capital at the expense of the ratepayers. Under the ratemaking formula now in effect consumers are not chargeable for utility investments and expenditures that are neither included in the rate base nor properly categorized as costs. What we previously stated in a rate base case is applicable to the case at bar: ‘* * * It is only proper that their [the investors’] venture be found operational before they commence to recoup their capital outlays from the consumers.’ Consumers’ Counsel v. Pub. Util. Comm. (1979), 58 Ohio St. 2d 449, 456-457 [12 O.O.3d 378].” (Bracketed material sic.) CEI, supra, at 167-168. CEI, therefore, holds that CEI’s investors must bear the entire cost of the cancelled plants.
*117In this case, the PUCO expressly allowed CEI to recover an increased return on capital due to an “increase in investors’ perceived risk associated with the Court’s [CEI] decision.” The commission accomplished this by raising the rate of return from 17.02 to 17.30 percent.3 This approach by the PUCO allows CEI to gain indirectly, by means of an increased rate of return, what we prohibited it from receiving directly, by means of amortization, in CEI. The burden of the (supposedly) increased risk, therefore, is back on the consumers contrary to our observation in CEI that “* * * the commission may not benefit the investors by guaranteeing the full return of their capital at the expense of the ratepayers.” CEI, supra, at 167.
Regrettably, today’s decision marks the second time that the majority of this court has turned its back on CEI. See Consumers’ Counsel v. Pub. Util. Comm. (1982), 1 Ohio St. 3d 22 (“Consumers’ Counsel [1982]”). In that case, a procedural subterfuge prevailed over precedent to ensure that the utility would receive payment for its share of the expenses paid toward the same cancelled nuclear plants which were involved in CEI. Consumers’ Counsel (1982), supra, at 25 (Locher, J., dissenting).
Today, this court falls prey to a combination of semantic and statistical confusion. This is ironic indeed because: (1) the United States Supreme Court dismissed CEI’s appeal for want of a properly presented federal question, Cleveland Elec. Illum. Co. v. Office of Consumers’ Counsel (Jan. 25, 1982), 455 U.S. 914, 71 L. Ed. 2d 455; and (2) we have recently reaffirmed the holding of CEI and upheld its constitutionality in Cleveland Elec. Illum. Co. v. Pub. Util. Comm. (1983), 4 Ohio St. 3d 107 (“CEI [1983]”): “In the present case, we are confronted with exactly the same issue arising out of exactly the same set of facts. We are no more persuaded by appellant’s arguments today than we were when they were originally advanced in [CEI]. We adhere to our position taken in that case for the reasons expressed therein.” CEI (1983), supra, at 108-109.
We should have summarily reversed the PUCO’s holding as to investor risk and flotation costs because CEI is res judicata. That is, CEI stands for the proposition that ratepayers are not to pay for these cancelled nuclear plants. This rule should apply whether the mechanism used to subvert the “used and useful” principle is called “amortization” or anything else. The majority, however, desolates CEI.
Accordingly, I would remand this case to the PUCO for a determination as to the extent to which the rate of return includes elements of compensation for the nuclear plants and a reduction of the rate of return consistent with that determination.

 The PUCO also adjusted the rate of return upward in order to compensate CEI for flotation costs. See footnote 2 of majority opinion. We should also reverse and remand the decision of the commission for a determination of the extent to which this adjustment allows a return on investor capital in the cancelled plants and instruct the commission to reduce the rate of return accordingly.