Opinion
No. 81-512
Decided December 30, 1981.
Public Utilities Commission — Telephone companies — Rate increase — Rate base determination — Investment tax credit — Not includable, when.
APPEAL from the Public Utilities Commission of Ohio.
On February 29, 1980, appellant, The Ohio Bell Telephone Company, filed an application for increase in rates with appellee, Public Utilities Commission of Ohio. Subsequent to an investigation of the application by the commission staff, the commission conducted 41 days of hearings which concluded on October 29, 1980.
Testimony and exhibits were submitted by appellant, the commission staff and intervenors in support of their respective rate base proposals. Appellant sought to include in the rate base the amount of the pre-1971 investment tax credit which remained unamortized in its accounting records. The staff recommended that this amount not be included in the rate base unless appellant could show that the benefits from this tax credit were "flowed-through" to the ratepayers when they were taken for tax purposes. In its opinion and order entered on December 3, 1980, the commission found that "the record in this case does not show that the customers of the applicant have received the benefit of the unamortized balance." Accepting the staff's recommendation, the commission deducted this amount from appellant's rate base proposal.
The cause is now before this court upon an appeal as of right.
Mr. Donald W. Morrison, Mr. Charles L. Orloff and Mr. Charles S. Rawlings, for appellant.
Mr. William J. Brown, attorney general, Mr. Marvin I. Resnik, Ms. Jane L. Miller and Mr. David M. Neubauer, for appellee.
Appellant contends that the decision of the commission to exclude from the rate base the unamortized balance of the pre-1971 investment tax credit was unreasonable and unlawful.
Appellant argues that the reduction of the rate base by this amount was unauthorized by statute. A similar argument was rejected in Babbit v. Pub. Util. Comm. (1979), 59 Ohio St.2d 81, 91, wherein we held that the commission's reduction of the rate base by the amount of accumulated tax deferrals was authorized by R.C. 4909.05 and 4909.15(A)(1).
Appellant's remaining arguments essentially contest the degree of proof the commission required to sustain the inclusion of this amount in the rate base. R.C. 4909.18 provides that in a hearing upon an application for increase in rates "* * * the burden of proof to show that the proposals in the application are just and reasonable shall be upon the public utility."
During the years when this tax credit was in effect, Ohio law required utilities to "flow-through" these tax benefits to the ratepayers as they were used for tax purposes. See Cincinnati Gas Electric Co. v. Pub. Util. Comm. (1962), 173 Ohio St. 473. Appellant asserts that its burden was met by establishing the "effect" of this flow-through requirement. The commission required appellant to show that the "flow-through" actually occurred in order to sustain its burden of proof. Appellant submitted no evidence tending to show that these tax benefits were flowed through, and the commission determined appellant did not meet its burden of proof.
The findings of the commission will not be disturbed unless they are manifestly against the weight of the evidence and are so clearly unsupported by the record as to show misapprehension, mistake or willful disregard of duty. Consumers' Counsel v. Pub. Util. Comm. (1981), 67 Ohio St.2d 153, 156. In light of this standard, the commission's determination to exclude this amount from the rate base is neither unreasonable nor unlawful.
Accordingly, the order of the commission is affirmed.
Order affirmed.
CELEBREZZE, C.J., W. BROWN, SWEENEY, LOCHER, HOLMES, C. BROWN AND KRUPANSKY, JJ., concur.