Appeals from the Orders of the Pennsylvania Public Utility Commission in case of Pennsylvania Public Utility Commission v. Philadelphia Electric Company No. R-811626, and in case of Pennsylvania Public Utility Commission et al. v. Philadelphia Electric Company, No. R-80061225.
Andre C. Dasent, Deputy City Solicitor, with him Joseph C. Crawford, Deputy City Solicitor, Alan J. Davis, City Solicitor, Mark A. Aronchick, City Solicitor, Herbert Smolen, Deputy City Solicitor, and Michael S. Chuhinka, Assistant City Solicitor, and of counsel; Nicholas J. Scobbo, for petitioners, William J. Green and the City of Philadelphia.
Irwin A. Popowsky, Assistant Consumer Advocate, with him David Wersan and Craig R. Burgraff, Assistant Consumer Advocates, David M. Barasch, Acting Consumer Advocate, and Walter W. Cohen, Consumer Advocate, for petitioner, Walter W. Cohen, Consumer Advocate.
Marlane R. Chestnut, Assistant Counsel, with her, Barry Applebaum and Gregg C. Sayre, Assistant Counsels, Albert W. Johnson, III and Steven A. McClaren, Deputy Chief Counsels, and Charles F. Hoffman, Chief Counsel, for respondent.
Robert H. Young, with him Walter R. Hall, II, David B. MacGregor, Margaret B. Dardess and Michael Nearing ; of counsel, Edward G. Bauer, Jr., and Irene A. McKenna, Morgan, Lewis & Bockius, for intervenor, Philadelphia Electric Company.
President Judge Crumlish, Jr., and Judges Williams, Jr., Craig, MacPhail and Doyle. Opinion by President Judge Crumlish, Jr.
We have consolidated for argument and disposition appeals of William J. Green and the City of Philadelphia (City) and Walter W. Cohen, the Consumer Advocate of Pennsylvania (Consumer Advocate) from two orders of the Public Utility Commission (Commission) entered April 24, 1981 and May 21, 1982. The two orders allowed the Philadelphia Electric Company (PECO) annual rate increases of $185,899,000 and $221,708,000, respectively. We affirm.*fn1
The City appeals the Commission's order allowing the inclusion in rate base of $185,899,000 for various
types of construction work in progress (CWIP). PECO intervenes in support of the order and the Consumer Advocate intervenes in opposition to the order. We affirm.
On July 29, 1980, PECO filed Supplement No. 19 to Tariff Electric-Pa. P.U.C. No. 25 to become effective September 27, 1980. PECO requested an adjusted base rate increase for approximately $303,729,000 in annual revenue based upon a future test year ended March 31, 1981. By order dated August 28, 1980, the Commission initiated an investigation and suspended Supplement No. 19 for seven months. The ALJ issued a Recommended Decision, proposing the approval of the inclusion in rate base of the various types of CWIP. On April 24, 1981, the Commission allowed the inclusion in rate base of $185,899,000 for three types of CWIP: (1) $164,321,000 for future pollution control modifications at PECO's Eddystone and Cromby stations to be made nine months beyond the test year (December 31, 1981); (2) $1,185,000 of safety-related future modifications to the Peach Bottom nuclear plant to be made nine months beyond the test year;*fn2 and (3) $20,393,000 of "traditional" non-revenue producing CWIP to be completed before the end of 1981.*fn3
The Public Utility Code (Code)*fn4 "authorizes utilities to seek a just and reasonable return on the fair
value of property used and useful in the public service." The Bell Telephone Co. of Pennsylvania v. Pennsylvania Public Utility Commission, 47 Pa. Commonwealth Ct. 614, 629, 408 A.2d 917, 925 (1979). Whether any particular property is used and useful in rendering such service is a policy decision left to the discretion of the Commission. Id. at 629, 408 A.2d at 925. The Commission has the authority to make adjustments to rate base, UGI Corp. v. Pennsylvania Public Utility Commission, 49 Pa. Commonwealth Ct. 69, 79, 410 A.2d 923, 929 (1980), and valuation of property. See 66 Pa. C.S. § 1311.
The City argues that the Commission's decision to include non-revenue producing CWIP in rate base amounts to an arbitrary abuse of discretion. Consumer Advocate intervenes by contending the Commission's decision was based upon factual error and non-specific and inconsistent reasoning.
Section 1311 of the Code, 66 Pa. C.S. § 1311, states:
The commission may, after reasonable notice and hearing, ascertain and fix the fair value of the whole or any part of the property of any public utility, insofar as the same is material to the exercise of the jurisdiction of the commission, and may make revaluations from time to time and ascertain the fair value of all new construction, extensions, and additions to the property of any public utility. When any public utility furnishes more than one of the different types of utility service, the commission shall segregate the property used and useful in furnishing each type of such service, and shall not consider the property of such public utility as a unit in determining the value of the property of such public for the purpose of fixing rates.
In fixing any rate of a public utility engaged exclusively as a common carrier by motor vehicle, the commission may in lieu of other standards established by law, fix the fair return by relating the fair and reasonable operating expenses, depreciation, ...