The Michigan Court of Appeals has upheld a 1991 ruling by state regulators permitting Consumers Power Co. to recover $760 million in costs associated with its abandoned Midland nuclear generating project. The utility had requested recovery of over $2 billion after it halted construction in 1984.
The court rejected claims by ABATE, a ratepayers group, that the commission lacked authority to apply a "prudent investment" test to recovery of plant costs regardless of whether the investments eventually proved necessary or beneficial. It said the prudent investment test was well recognized and that the commission was not bound by any particular formula in arriving at just and reasonable rates. The court also rejected allegations that state law required application of the "used and useful test" to exclude all investment not used in providing service to ratepayers. It said the commission could consider a number of factors in addition to cost of service, including obsolescence and risks of business. The court also rejected claims by Consumers that the commission was inconsistent in applying the rate standards in the case and that the eventual award was so low it was confiscatory. ABATE v. Michigan Public Serv. Comm., Nos. 141277 et al., Dec. 29, 1993 (Mich.Ct.App.).
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