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PENNSYLVANIA POWER & LIGHT COMPANY v. P.U.C. AND SECRETARY DEFENSE UNITED STATES (03/14/73)

decided: March 14, 1973.

PENNSYLVANIA POWER & LIGHT COMPANY
v.
P.U.C. AND SECRETARY OF DEFENSE OF THE UNITED STATES, INTERVENOR



Appeal from the Order of the Pennsylvania Public Utility Commission in case of Petition of Pennsylvania Power & Light Company, Order dated March 28, 1972.

COUNSEL

Robert H. Young, with him Allen W. Stewart, Vincent Butler and, of counsel, Morgan, Lewis & Bockius, for appellant.

Philip P. Kalodner, Counsel, with him Daniel F. Joella, Assistant Counsel, and Dominic J. Ferraro, Assistant Counsel, for appellee.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Kramer. Dissenting Opinion by Judge Wilkinson.

Author: Kramer

[ 8 Pa. Commw. Page 323]

This opinion and accompanying order will be dispositive of cross motions. The Pennsylvania Public Utility Commission (PUC) filed a motion to quash the appeal of the Pennsylvania Power & Light Company (PP&L) from an order of the PUC dated March 28, 1971. Thereafter, PP&L filed a motion to dismiss the PUC's motion to quash. This Court restricted the argument to the "cross motions," and postponed argument

[ 8 Pa. Commw. Page 324]

    on the merits pending the determination of the motions.

Following the filing of the PUC order, which is an exhaustive adjudication into the many facets of an electric utility rate case initiated by the filing for increased rates by PP&L, PP&L filed, on April 27, 1972, an appeal in this Court, in which it set forth its specifications of error alleged to have been committed by the PUC. Because there appeared to be some misunder-standing between the parties as to exactly what was contained in the specification of errors filed by PP&L (as was evidenced both in their briefs and at oral argument), we set forth verbatim those paragraphs of the Petition on Appeal which are pertinent to our ruling on the motions here involved:

"6. Appellant assigns as error the findings contained in the Order under the headings 'Accrued Depreciation,' 'Fair Value,' and 'Annual Depreciation and Amortization' and paragraphs numbers 1 and 2 of the Order on the following grounds:

"(i) The Commission erred in applying its adopted policy for determining accrued and annual depreciation in rate proceedings which makes it impossible for the Appellant to recover its original cost investment in utility property over the life of such property by way of annual depreciation charges. Appellant's property is thereby confiscated in violation of the Constitution of the Commonwealth of Pennsylvania and of the Constitution of the United States.

"(ii) The Commission erred in adopting reductions in average service lives of Appellant's utility property without providing for a concurrent increase in annual depreciation expense to permit Appellant to recover its original cost investment in such property over the service life of such property.

"(iii) The Commission erred in adopting the 'Life Span' method in determining an increased accrued depreciation

[ 8 Pa. Commw. Page 325]

    for Appellant's utility property without providing a concurrent increase in annual depreciation allowance to permit Appellant to recover its original cost investment in such stations over the service life of such stations.

"(iv) The Commission erred in the determination of accrued depreciation of Appellant's utility property in excess of Appellant's actual experienced depreciation recovery of its original cost.

"(v) The Commission erred in the determination of accrued depreciation of Appellant's utility property in excess of that established by the actual service life experience of such property.

"(vi) The Commission erred in determining an increased accrued depreciation for Appellant's utility property by eliminating recognition of realizable salvage.

"(vii) The Commission erred in determining that Appellant's original cost rate base at December 31, 1970, was only $850 million in as much as it increased the accrued depreciation on Appellant's utility property by almost $39 million without recognition of the deficiency thereby created in Appellant's recovery of its original cost and without providing any means for the recovery of such original cost investment.

"(viii) The Commission erred in determining that the fair value of Appellant's utility property used and useful in providing electric public utility service at December 31, 1970, was $969 million in so far as that finding reflects the errors in the Commission's determinations of accrued depreciation and ...


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