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WALTER W. COHEN v. PENNSYLVANIA PUBLIC UTILITY COMMISSION (06/13/85)

decided: June 13, 1985.

WALTER W. COHEN, CONSUMER ADVOCATE, PETITIONER
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT. DAVID M. BARASCH, CONSUMER ADVOCATE, PETITIONER V. PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT



Appeals from the Orders of the Pennsylvania Public Utility Commission in the case of Pennsylvania Public Utility Commission, United States Steel Corporation, Office of Consumer Advocate, Pennsylvania Alliance for Jobs and Energy, Equitable Life Assurance Society, Joseph Horne Company, Kaufmann's, Gimbels, Gulf & Western Manufacturing Company, Armco, Inc. v. Duquesne Light Company, Nos. R-821945, R-821945C001, R-821945C002, R-821945C003, R-821945C004, R-821945C005, R-821945C006, R-821945C007, R-821945C008, and R-821945C009, and in the case of Pennsylvania Public Utility Commission, David M. Barasch, Acting Consumer Advocate, Sharon Steel Corporation, Borough of Enon Valley, State Representative Ralph D. Pratt v. Pennsylvania Power Company, Nos. R-832409, R-832409C001, R-832409C002, R-832409C003, and R-832409C004.

COUNSEL

Attorneys for Case No. 553 C.D. 1983:

Daniel Clearfield, Assistant Consumer Advocate, with him, Gerald H. Chakerian, Assistant Consumer Advocate, David M. Barasch, Acting Consumer Advocate and Walter W. Cohen, Consumer Advocate, for petitioner.

Bohdan R. Pankiw, Assistant Counsel, with him, Albert W. Johnson, III, Deputy Chief Counsel, and Charles F. Hoffman, Chief Counsel, for respondent.

Charles E. Thomas, with him, Charles E. Thomas, Jr., Patricia Armstrong and Thomas T. Niesen, Thomas & Thomas, and E. J. Strasburger, with him, Dennis S. Shilobod and Wayne Emery, McKenna, Messer, Shilobod & Gutnick, for intervenor, Duquesne Light Company.

Attorneys for Case No. 1364 C.D. 1984:

Daniel Clearfield, Assistant Consumer Advocate, with him, Craig R. Burgraff and David Wersan, Assistant Consumer Advocates, and David M. Barasch, Consumer Advocate, for petitioner.

Robert H. Young, with him, Daniel P. Delaney, James P. Melia, Assistant Counsel, Albert W. Johnson, III, Deputy Chief Counsel, and Charles F. Hoffman, Chief Counsel, for respondent.

David L. Harbaugh, with him, Alan L. Reed and Thomas P. Gadsden, Morgan, Lewis & Bockius, and, of Counsel: James R. Edgerly, Vice President and General Counsel, and Stephen L. Feld, for intervenor, Pennsylvania Power Company.

President Judge Crumlish, Jr. and Judges Rogers, Williams, Jr., Craig, MacPhail, Colins and Barry. President Judge Crumlish, Jr. and Judges Rogers, MacPhail, Doyle, Barry, Colins and Palladino. Opinion by Judge Barry. Judge Palladino dissents. Concurring Opinion by President Judge Crumlish, Jr. Dissenting Opinion by Judge Colins. Judge MacPhail and Judge Palladino join.

Author: Barry

[ 90 Pa. Commw. Page 101553]

C.D. 1983

The Office of Consumer Advocate (OCA) appeals a final order of the Pennsylvania Public Utility Commission (PUC) which permitted inclusion in its rate base of the cost of construction of four cancelled nuclear plants by Duquesne Light Company (Duquesne).

In 1967, Duquesne became a member of the Central Area Power Coordination Group (CAPCO)*fn1 which

[ 90 Pa. Commw. Page 102]

    developed a plan to construct seven nuclear power plants. In January, 1980, CAPCO, however, cancelled plans to construct four nuclear plants. At that time Duquesne's share of the expended cost was $34,697,389.00. In April, 1982, Duquesne requested an annual base rate increase of $155,000,000.00 effective June 29, 1982.

In January, 1983, the PUC issued a final order which granted Duquesne $105,850,000.00 on its rate request and allowed an annual revenue of $3,469,739.00 representing the amortization for the first year of a ten year period of the costs of $34,697,389.00 for the four cancelled nuclear plants. Thereafter, the OCA filed for reconsideration and modification based on a newly enacted statute added Section 1315 of the Public Utility Code (Code), 66 Pa. C.S. ยง 1315,*fn2 which allegedly disallowed recovery of these plant cancellation costs in rates.

The PUC denied this petition reasoning that Section 1315 was inapplicable to such costs. It held that Section 1315 prohibits the inclusion of the costs of plants not used and useful to the public in rate bases but does not prohibit the inclusion of reasonable costs of these plants in revenues as an expense.

The seminal issue involves whether costs of cancelled nuclear power plants can be included in Duquesne's rates. The resolution of this question depends upon whether Section 1315 prohibits amortization of the cancellation costs. Act 335, adding Section 1315, states as follows:

AN ACT

Amending Title 66 (Public Utilities) of the Pennsylvania Consolidated Statutes, providing

[ 90 Pa. Commw. Page 103]

    a limitation on the consideration of certain costs in the rate base for electric public utilities.

The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

Section 1. Title 66, act of November 25, 1970 (P.L. 707, No. 230), known as the Pennsylvania Consolidated Statutes, is ...


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