Court Opinion

ID: 6757189
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:28:09.398963+00
Date Added: 2024-06-11T16:02:28.748344
License: Public Domain

Per Curiam.

R. C. 4909.15(A)(1) authorizes the commission to include in a utility’s rate base a reasonable allowance for CWIP. The pertinent part of R. C. 4909.15 reads:
“(A) The public utilities commission, when fixing and determining just and reasonable rates, fares, tolls, rentals, and charges shall determine:
“(1) The valuation as of the date certain of the property of the public utility used and useful in rendering the public utility *164service for which rates are to be fixed and determined. The valuation so determined shall be the total value as set forth in division (J) of section 4909.05 of the Revised Code, and a reasonable allowance for materials and supplies and cash working capital, as determined by the public utilities commission. The commission may, in its discretion, permit a reasonable allowance for construction work in progress but, in no event, may any allowance for construction work in progress be made by the commission until it has determined, after a physical inspection, that the particular construction project is at least seventy-five per cent complete.”
The only other legislative restraint placed upon the commission’s authority to permit an allowance for CWIP is R. C. 4909.15(E) which limits the amount of the allowance to 20 percent of the total valuation, excluding the allowance made under R. C. 4909.15(A)(1).
In this appeal, appellant challenges the propriety of the allowance for CWIP for Bruce Mansfield Unit No. 3. The appellant bases its challenge upon essentially three grounds.
Appellant’s first challenge raises the question of how the commission is to determine when a particular construction project is at least 75 percent complete. R. C. 4909.15(A)(1) provides that the commission may not permit an allowance for CWIP until it has determined, “after a physical inspection,” that the project is at least 75 percent complete.
In reaching its conclusion that Bruce Mansfield Unit No. 3 was more than 75 percent complete, the commission relied on testimony of its staff witness. He testified that his conclusion was based upon a number of criteria, including physical inspection, which played only a minor part, elapsed time test2 and dollars obligated test.3 The commission, while acknowledging that a physical inspection must be made prior to the determination, stated that, “in determining how percent completion should be calculated, measurements which do not specifically *165recognize that percent completion is a function of elapsed time and obligated capital should be avoided.”
On the other hand, appellant argues that the determination of percent completion must be based upon a physical inspection. The commission rejected this argument.4
We disagree with appellant’s proposition. R. C. 4909.15 (A)(1) states that the commission must make its determination after a physical inspection. It does not state that the determination is to be based upon the physical inspection. It is un-controverted that a member of the commission’s staff did make a physical inspection of Bruce Mansfield No. 3 during its investigation.
If the General Assembly had intended that the determination be based upon a physical inspection, it would have used that language. Rather, by stating that the determination be made after a physical inspection, the General Assembly decided that the physical inspection was the starting point for such determination.
Therefore, while the commission must make a physical inspection prior to determining the percent which a particular construction project is complete, we hold that R. C. 4909.15 (A)(1) does not require the determination to be based upon a physical inspection.
Appellant’s next challenge revolves around the meaning of “particular construction project” in R. C. 4909.15(A)(1). In determining that Bruce Mansfield Unit No. 3 was more than 75 percent complete, the commission’s staff -witness allocated to Bruce Mansfield Unit No. 3 a pro-rata portion of certain *166facilities which it shares with Bruce Mansfield Units Nos. 1 and 2.
The facilities in question are primarily for air pollution control and fuel handling. They are complete and already in the company’s rate base.5 Appellant argues that in making the determination that a particular project is more than 75 percent complete, the commission may consider only those portions of the project which are not already in the rate base.
The commission held that it was proper to allocate a portion of the shared facilities to Bruce Mansfield Unit No. 3. We agree.
Witnesses not only for the company, but also for the appellant, testified that the shared facilities, air pollution control and fuel-handling components, were essential to the operation of Bruce Mansfield Unit No. 3. R. C. 4909.15(A)(1) permits the commission to make an allowance based upon the extent to which “a particular construction project” is complete. The particular construction project in question is a coal-fired generating plant. The allocation by the commission of a pro-rata portion of facilities already in service, which are essential to the operation of the construction project, is a proper application of R. C. 4909.15(A)(1).
Lastly, appellant argues that the commission acted contrary to its own previously established guidelines for allowances of CWIP. Appellant contends that the commission in its previous cases has required that a project be in service at the time the rates become effective, or shortly thereafter. See, e.g., Columbus & Southern Ohio Electric Co., No. 77-545-EL-AIR (March 31, 1978); Ohio Edison Co., No. 77-1249-EL-AIR (November 17, 1978).
The commission argues that it has not established a rule. Rather, the commission maintains that whether a project will be in service at the time the rates go into effect is just one factor it considered in the exercise of its discretion in favor of an allowance for CWIP.
In Consumers’ Counsel v. Pub. Util. Comm. (1979), 58 Ohio St. 2d 108, we approved the commission’s method for determining which projects qualified for a reasonable CWIP *167allowance. There, the commission determined that only those projects which were completed by the end of the test year or when the rates took effect, qualified for a CWIP allowance. Id. at 111. See, also, C&SOE v. Pub. Util. Comm. (1979), 58 Ohio St. 2d 120, 123-124. However, we also noted that:
“The method adopted by the commission to implement this purpose does not appear unreasonable to this court. The commission acknowledged that the standard applied in this cause does not establish rigid criteria for the future. In resolving this cause, the commission applied the method it believed could achieve a result approximating the intended purpose of the statute. This standard, based as it was on the particular set of facts before the commission, bore a reasonable relationship to the purpose of the legislation***.” Consumers’ Counsel, supra, at 112-113.
Thus, the rigid criteria appellant seeks to impose do not exist. Rather, each determination is to be based upon the particular facts of the case. Here, the determination that Bruce Mansfield Unit No. 3 qualified for a CWIP allowance did not amount to an abuse of discretion.
For the foregoing reasons, the order of the commission as to the allowance for CWIP is affirmed.

Order affirmed.

Celebrezze, C. J., W. Brown, P. Brown, Stephenson, Holmes and C. Brown, JJ., concur.
Locher, J., dissents.
Stephenson, J., of the Fourth Appellate District, sitting for Sweeney, J.

 Under this test, the percentage of completion is determined by measuring the time that has elapsed since the beginning of the project as a percentage of the anticipated time of construction.

 The dollars obligated test employs a similar method of establishing the percentage of completion. This test uses dollars rather than time.

 In explaining why the determination of percent completion should not be based upon a physical inspection, the commission stated, as follows:
“Although the statute requires a physical inspection prior to a determination of percent completion, it is patently obvious that a physical inspection cannot lead to a precise quantification of percent completion, particularly where a project of the enormous size, cost and complexity of a generating facility is involved. The Commission finds it revealing, but not in the least surprising, that neither Mr. Schultz or Mr. Lewis [appellant’s witnesses] would offer a judgment as to the percent completion of any of the multitude of the unit’s components which they inspected. Yet, after a single visit to the site, these witnesses were prepared to state categorically that this project, which includes a generating unit structure the size of a 21-story building, a 400 foot cooling tower, a 600 foot chimney, a massive air quality control system, miles of piping and circuitry, as well as thousands of tons of equipment and materials either on-site or in place, was 62 percent complete at date certain. Nobody is that expert.* * *”

 The value of those facilities was not included in the allowance for CWIP. Hence, there was no “double billing” for these items.