Appeal from the Order of the Pennsylvania Public Utility Commission in case of Pennsylvania Public Utility Commission, County of Pike, Office of the Consumer Advocate, J.O. Ryder Rendering Co., Inc. v. Pike County Light & Power Company, No. R-832325.
Gerald A. Maher, with him, Andrew Gansberg, Maher & Babinecz, P.C., and Christopher Zettlemoyer, Reed, Smith, Shaw & McClay, for petitioner.
Wendell F. Holland, Assistant Counsel, with him, Albert W. Johnson, III, Deputy Chief Counsel, and Charles F. Hoffman, Chief Counsel, for respondent.
Gerald Gornish, Wolf, Block, Schorr & Solis-Cohen, for intervenor, J.O. Ryder Rendering Co., Inc.
Phillip F. McClelland, counsel, for intervenor, Office of Consumer Advocate.
President Judge Crumlish, Jr. and Judges Rogers, Williams, Jr., Craig, MacPhail, Barry and Colins. Opinion by President Judge Crumlish, Jr. This decision was reached prior to the resignation of Judge Williams, Jr.
[ 87 Pa. Commw. Page 453]
Pike County Light and Power Company appeals that portion of a Pennsylvania Public Utility Commission order which reduced by $58,558 its federal income tax expense for ratemaking purposes.*fn1 We vacate and remand for additional findings of fact.
On March 1, 1983, Pike filed Supplement No. 18 to Tariff Electric -- Pa. P.U.C. No. 7, to become effective May 1, 1983, requesting a rate base increase of approximately $644,800 in total revenue predicated upon a future test year.*fn2 An April 21, 1983 Commission order suspended Supplement No. 18 for seven months and instituted an investigation into its propriety. Following public hearings on this rate increase request, an Administrative Law Judge (ALJ) issued a Recommended Decision proposing that Pike's federal income tax expense for the test year be reduced by $58,558; this resulted from attributing to Pike $509,203 in loss carryovers supposedly available as tax deductions.*fn3 The Commission adopted this recommendation in an order entered November 22, 1983, thereby reducing Pike's rate base increase by $126,872.
In considering Pike's challenge to the Commission's order, our scope of review is limited to determining whether constitutional rights were violated, an
[ 87 Pa. Commw. Page 454]
error of law was committed, or the Commission's findings of fact or order were unsupported by substantial evidence. Park Towne v. Pennsylvania Public Utility Commission, 61 Pa. Commonwealth Ct. 285, 433 A.2d 610 (1981).
Pike first contends that the Commission contravened the established law on treatment of federal income tax expenses for ratemaking purposes in ordering that it recognize the carryover losses. Noting that it has participated in its parent corporation's consolidated federal income tax returns,*fn4 and that these returns contained deductions for its losses, Pike asserts that there are no longer any carryover losses that can be claimed on future returns. Pike further argues that it credited to the ...