The Minnesota Court of Appeals has upheld a Minnesota Public Utilities Commission (PUC) ruling that Minnegasco's appliance sales and service business should be charged for the value of goodwill related to Minnegasco's name, reputation, and image. The court also ruled that the cost of responding to emergency gas leak calls should be shared by the utility and its appliance service businesses (Docket Nos. C5-94-1820 and C7-94-1821). The Minnesota Alliance for Fair Competition had alleged that Minnegasco used the goodwill of its regulated utility to subsidize its unregulated appliance sales and repair business, and used its emergency gas leak response program to subsidize its unregulated appliance sales. The court agreed with the PUC that Minnegasco's goodwill should be valued to the extent it benefits unregulated operation, and that the value should be imputed as a percentage of revenue in subsequent rate cases. (The PUC noted the "classic precept" that goodwill has no value in monopoly situations, but claimed that diversification created authority to impute revenue for goodwill benefitting unregulated operations). The court also agreed that gas leak response costs should be allocated in part to unregulated operations.
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