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Court Considers Inflation Adjustments, Advertising Costs

Fortnightly Magazine - August 1996

The Pennsylvania Commonwealth Court has asked the state Public Utility Commission (PUC) to explain 1) why it disallowed a substantial portion of advertising costs in setting rates for National Fuel Gas Corp., a local distribution company (LDC); and 2) why it had rejected the LDC's request for a separate inflation adjustment of 2.58 percent for 17 cost elements.

The court found the PUC's rationale (em that the LDC's advertising was "in essence targeted to seek and retain load" (em insufficient, since recovery of costs associated with similar advertisements had been allowed in previous cases. The court also pointed out that the PUC had approved comparable inflation adjustments in prior cases without specifically requiring a definitive study of the relationship between inflation and each item adjusted in the past. National Fuel Gas Distribution Corp. v. Pennsylvania Public Utility Commission, No. 43 C.D.1995, 1996 WL 272327, May 23, 1996 (Pa.Commw.Ct.).

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