The Illinois Supreme Court has overturned a ruling by state regulators denying recovery by natural gas local distribution companies (LDCs) of the carrying costs on the unamortized balance of their coal-tar cleanup costs. The Illinois Commerce Commission (ICC) had ruled that the utilities could recover the costs of statutorily mandated coal-tar cleanup expenses from ratepayers over a five-year amortization period. It also ruled, however, that shareholders should bear part of the cleanup burden by covering the carrying costs on the amortization.
The court rejected claims by the state's Citizens Utility Board that the ICC should have denied the entire amount because the expenses did not benefit current customers. It said that expenses incurred to comply with state and federal regulations have historically been recoverable from ratepayers and that a direct connection to current service was not required. The court also found that state utility law referred to "total cost" as the measure of recovery for prudent utility expenses. The ICC failed to support its decision to ignore the total cost convention when it ordered the sharing of coal-tar expenses, the court said. Citizens Utility Board v. Illinois Commerce Commission, No. 76816, Apr. 20, 1995 (Ill.Supr.Ct.).
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