Rate base disallowance - a perspective

Journal Article · Thu Oct 31 04:00:00 EST 1985 · Public Util. Fortn.; (United States)

OSTI ID:6494114

Studness, C M

Rate base disallowances, (a portion of plant) are new as a common feature of rate decisions, and unlike the deferral of a rate increase under phase-in, they represent a permanent avoidance of a rate increase. Since disallowance has not been used frequently in the past, just what does and does not constitute the imprudence on which it rests remains unclear. That is, in terms of the Supreme Court's Bluefield Water Works decision (1922), substance must be given to what is an extravagant cost and what is an exorbitant or inflated price. This is a matter for the courts to determine in suits that utilities are now bringing against their regulators over disallowances. If the courts hold strictly that imprudence results only from a failure of a management to control events that should be controlled by any basically sound management, most of the disallowances involving plants that have been competently built will probably be reversed. In that case, the long-term effect of the current spate of disallowances on future utility construction programs is unlikely to be great.

• OSTI ID: 6494114
• Journal Information: Public Util. Fortn.; (United States), Journal Name: Public Util. Fortn.; (United States) Vol. 116:9; ISSN PUFNA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
293000 -- Energy Planning & Policy-- Policy
Legislation
& Regulation
296000* -- Energy Planning & Policy-- Electric Power
ELECTRIC UTILITIES
LAWSUITS
POWER PLANTS
PUBLIC UTILITIES
RATE STRUCTURE
REGULATIONS