State ex rel. Office of Public Counsel v. Public Service Com'n of Missouri, No. WD

• Decision Date: 03 August 1993
• Docket Number: No. WD
• Citation: 858 S.W.2d 806
• Parties: STATE of Missouri, ex rel. OFFICE OF THE PUBLIC COUNSEL, Appellant, v. PUBLIC SERVICE COMMISSION OF MISSOURI, et al., Respondent, Missouri Public Service, Intervenor-Respondent. 46901.
• Court: Missouri Court of Appeals

Page 806

858 S.W.2d 806

STATE of Missouri, ex rel. OFFICE OF THE PUBLIC COUNSEL, Appellant, v. PUBLIC SERVICE COMMISSION OF MISSOURI, et al., Respondent Missouri Public Service, Intervenor-Respondent.

No. WD 46901.

Missouri Court of Appeals Western District.

Aug. 3, 1993.

Douglas E. Micheel, Jefferson City, for appellant.

Steven Dottheim, Jefferson City, for respondent PSC.

James C. Swearengen, Jefferson City, for intervenor-respondent.

Before FENNER, P.J., and ULRICH and SPINDEN, JJ.

ULRICH, Judge.

The Public Counsel, pursuant to section 386.710, RSMo 1986, appeals the Report and Order of the Missouri Public Service Commission (Commission) which allows Missouri Public Service Company (MPS), a division of UtiliCorp United, Inc., a Delaware corporation, an accounting authority order authorizing MPS to defer and record depreciation expenses and carrying costs pertaining to two construction projects at the Sibley, Missouri, electricity generating station operated by MPS. MPS produces, transmits, distributes, and sells electricity to the public in areas authorized by the Commission. MPS owns and operates three generating units at Sibley known as the Sibley generating station. The ultimate issue presented is whether the Commission's Report and Order granting the accounting authority to MPS to defer and record depreciation expenses and carrying costs of the two projects to another year is legal and reasonable. ¹ The Report and Order of the Public Service Commission is affirmed.

Section 393.140, RSMo 1986, establishes the general powers of the Commission. Pursuant to granted authority, the Commission exercises general supervision of all electrical corporations furnishing or transmitting electricity in Missouri and all electrical plants owned, leased or operated by electrical corporations in Missouri. § 393.140(1).

Pursuant to section 393.140, MPS applied to the Commission for an accounting authority order to defer depreciation expenses and carrying costs associated with two construction projects at the Sibley generating station. The first construction project involved rebuilding generation units one and two at Sibley, which is expected to extend the life of both units by approximately twenty years. The second project at the Sibley generation station involves converting the plant to burn low-sulfur western coal. This second construction project was initiated to achieve the standards mandated by the 1990 federal Clean Air Act Amendment by reducing sulfur dioxide emissions. MPS will expend a total of approximately $78,000,000 on the first project, the 1991 and 1992 costs of which are expected to be $14,000,000. MPS will expend approximately $40,000,000 to convert the plant to burn low-sulfur western coal.

The Commission adopted the Uniform System of Accounts in exercise of its authority to prescribe uniform methods of keeping accounts, records, and books for electrical corporations engaged in the sale or distribution of electricity as prescribed by section 393.140(4). 4 CSR 240-20.030. The accounting authority order sought by MPS allows MPS to defer the costs of rebuilding electrical generating units one and two at Sibley and the cost of converting the plant to burn low-sulfur western coal by permitting MPS to record the expenses in Account No. 186. ² MPS was granted authority in an earlier related case before the Commission to defer to Account No. 186 expenses and carrying costs previously incurred by MPS at the Sibley rebuild and western coal conversion projects.

On December 20, 1991, the Commission entered its report and order granting MPS's application for an accounting authority order. The report and order provided in part

1. That Missouri Public Service, a division of UtiliCorp United, Inc., be hereby authorized to defer and record in Account 186 depreciation expense and carrying costs associated with the life extension and coal conversion projects at the Sibley Generating Station beginning January 1, 1992. If no rate case is filed on or before December 31, 1992, no recovery of these costs shall be allowed in any subsequent rate case.

The Public Counsel sought relief after the Commission entered its order. On January 8, 1992, the Commission denied the Public Counsel's timely application for rehearing pursuant to section 386.500, RSMo 1986. On February 3, 1992, the Public Counsel filed his petition for writ of review in the Circuit Court of Cole County. On September 15, 1992, the circuit court entered its order affirming the decision of the Public Service Commission. The Public Counsel filed its notice of appeal on September 24, 1992.

I

As point one on appeal, the Public Counsel claims that the circuit court erred in affirming the Commission's report and order, contending that MPS's application for an accounting authority order was controlled by section 393.140(8) and not section 393.140(4). Subsection 393.140(8) requires the Commission to conduct a hearing. The Commission declared in its report and order that section 393.140(4) was controlling and concluded that the section did not require the Commission to conduct a hearing "[i]f a utility seeks a Commission decision for deferral." Sections 393.140(4) and (8) are as follows:

The commission shall:

(4) Have power, in its discretion, to prescribe uniform methods of keeping accounts, records and books, to be observed by ... electrical corporations ... engaged in the manufacture, sale or distribution of ... electricity ... for municipal, domestic or other necessary beneficial purpose. It may also, in its discretion, prescribe, by order, forms of accounts, records and memoranda to be kept by such persons and corporations. Notice of alterations by the commission in the required method or form of keeping a system of accounts shall be given to such persons or corporations by the commission at least six months before the same shall take effect. Any other and additional forms of accounts, records and memoranda kept by such corporation shall be subject to examination by the commission.

(8) Have power to examine the accounts, books, contracts, records, documents and papers of any such corporation or person, and have power, after hearing, to prescribe by order the accounts in which particular outlays and receipts shall be entered, charged or credited.

(Emphasis added).

Although it concluded that a hearing was not required, the Commission conducted a complete hearing at which the Public Counsel participated fully. According to the Public Counsel, nothing would have been presented that was not presented at the hearing had the Commission considered its jurisdiction pursuant to section 393.140(8) rather than section 393.140(4). MPS argues that the question of whether its application to the Commission for accounting authority to defer its expense associated with the Sibley plant projects is a contested case requiring a hearing or a noncontested case not requiring a hearing is moot because the Commission conducted a full hearing. The Public Counsel argues that the issue should be addressed anyway because it is a recurring issue of general public interest and will evade appellate review unless this court exercises its discretionary jurisdiction and reviews the issue in this case. State ex rel. Laclede Gas Co. v. Public Serv. Comm'n, 535 S.W.2d 561, 565 (Mo.App.1976).

Contrary to the position of the Public Counsel, the issue of whether the Commission exercised its authority to consider MPS's request to defer expenses incurred at the Sibley electrical production facility under subsection 393.140(4) or subsection (8) does not present a situation which will preclude determination of the issue should it be contested in another case, and the refusal to determine the issue in this case will not impair the issue or violate the general public interest. The Public Counsel received the hearing that section 393.140(8) would have provided, and, if the Commission erroneously determined that its authority to consider MPS's deferral request was under 393.140(4) and not subsection (8), the Public Counsel was not prejudiced. Error without prejudice provides no grounds for reversal. Neavill v. Klemp, 427 S.W.2d 446, 448 (Mo.1968); Patison v. Campbell, 337 S.W.2d 72, 76 (Mo.1960). The issue is moot, and point I is denied.

II

As point II, the Public Counsel claims that the Commission erred in granting MPS authority to defer the expense of rebuilding a portion of the Sibley plant and converting to low-sulfur western coal by recording the expenses in Account No. 186, Uniform System of Accounts, because, he claims, the expenses are not unusual or extraordinary expenses includable in Account No. 186 and must be recorded in another account. Account No. 186 records unusual or extraordinary expenses not included in other accounts. Thus, the Commission, by authorizing MPS to record the carrying costs and the depreciation expenses of the two construction projects at the Sibley generating station in Account No. 186, found the sums expended on the two projects to be unusual and extraordinary expenses not included in other accounts. Recording carrying costs and depreciation expenses in Account No. 186 defers these amounts to MPS's next rate case following the date the newly-constructed facilities are placed in service. Accounting rule No. 186 is as follows:

Account No. 186 Miscellaneous Deferred Debits

A. For major utilities, this account shall include all debits not elsewhere provided for, such as miscellaneous work in progress, and unusual or extraordinary expenses, not included in other accounts, which are in the process of amortization and items the proper final disposition of which is uncertain.

(emphasis added).

The Uniform System of Accounts defines "extraordinary items" as

[t]hose items related to the effects of events and transactions which have occurred during the current period and which are not typical or customary business activities of the company.... Accordingly, th...