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Tuesday, September 13, 2005
Ind. Decisions - Court of Appeals reverses IURC decision in sale of Merrillville water utility
Office of Utility Consumer Counselor v. Lincoln Utilities, Inc., and Indiana Water Service, Inc. (9/13/05)
The OUCC raises one issue for our review, which we restate as whether the IURC should have included property contributed in the aid of construction (“CIAC”) in its fair value determination of Lincoln. * * *Rate-making is a legislative function. Pub. Serv. Comm’n, 235 Ind. at 81, 131 N.E.2d at 312. It is for the legislature to decide how the IURC should value utilities like Lincoln, which have high levels of CIAC and low fair values making it difficult for them to attract purchasers. Absent the legislative authority to do so, the IURC improperly included CIAC in Lincoln’s fair value.
Conclusion. Indiana Code Section 8-1-2-6 excludes CIAC from the calculation of a utility’s fair value. This is consistent with our decisions prohibiting a utility from earning a profit on the contributions of others. Thus, the IURC improperly included CIAC when it assessed Lincoln’s fair value at 90% of the Appellees’ agreed purchase price. We reverse and remand.
Posted by Marcia Oddi on September 13, 2005 12:32 PM
Posted to Ind. App.Ct. Decisions