Gulf States Utilities Company Office of Public Utility Counsel And Public Utility Commission v. Coalition of Cities for Affordable Utility Rates ( 1994 )

Gulf States v. PUC IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN



ON MOTION FOR REHEARING



NO. 3-92-046-CV





GULF STATES UTILITIES COMPANY, OFFICE OF PUBLIC UTILITY COUNSEL, AND PUBLIC UTILITY COMMISSION,

APPELLANTS

vs.





COALITION OF CITIES FOR AFFORDABLE UTILITY RATES, ET AL.,

APPELLEES

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT

NO. 447,502, HONORABLE PAUL R. DAVIS, JR., JUDGE PRESIDING

We withdraw our opinion of September 15, 1993, and substitute this opinion to grant in part all the parties' motions for rehearing, except Gulf States' motion, which we overrule.

The Public Utility Commission of Texas, the Office of Public Utility Counsel, and Gulf States Utilities Company appeal from a district-court judgment rendered in a suit for judicial review of the Commission's final order in an electric-utility rate case conducted under the Public Utility Regulatory Act (PURA), Tex. Rev. Civ. Stat. Ann. art. 1446c (West Supp. 1994). ⁽¹⁾ The district-court judgment reverses the Commission's final order and remands the case to the Commission with instructions. We will modify the district court's specific instructions on remand, and affirm the judgment as modified. See Administrative Procedure Act ("APA"), Tex. Gov't Code Ann. § 2001.001-.902 (West 1994). ⁽²⁾

THE CONTROVERSY

Gulf States erected a new power-generating facility, the River Bend Nuclear Generating Station, and initiated in the Commission a contested case seeking the agency's adjudication regarding what portion of its total construction costs the utility might include in its rate base as being a "prudent" investment. ⁽³⁾ The Commission consolidated that proceeding with a rate case Gulf States had filed in the agency. The consolidated case is now before us following the Commission's final order and the district court's judgment on judicial review of that order.

The Commission determined in its final order that Gulf States was entitled to include in its rate base $2.273 billion of its construction costs on the River Bend project, that being the portion of total costs meeting the criterion of a prudent investment. The Commission's final order also declared, however, that the agency would not presently decide whether an additional $1.453 billion met the criterion of a prudent investment; rather, the Commission would defer that question for decision on motion for rehearing or in a subsequent agency proceeding.

Various parties filed their motions for rehearing in the Commission. See APA § 2001.145. These were overruled by operation of law. Several parties then sued in district court, as authorized by PURA section 69, seeking direct judicial review of the Commission's final order. Concurrently, Gulf States filed in the Commission a new contested case to obtain the deferred adjudication mentioned by the agency in its final order--an adjudication regarding what part of the $1.453 billion, if any, met the criterion of a prudent investment.

COLLATERAL ATTACK

Almost before direct judicial review began, the Office of Public Utility Counsel and twelve municipalities sued the Commission in district court in a cause independent of the various suits for judicial review brought under PURA section 69. These plaintiffs prayed for declaratory judgment that the Commission lacked the power to adjudicate in a separate contested case the prudence of the $1.453 billion expenditure which had already been considered in this proceeding. An action taken by an administrative agency in excess of its statutory powers is the well-recognized exception to the general rule that an agency's final order, like the final judgment in a court of justice, is immune from collateral attack. ⁽⁴⁾ Westheimer Indep. Sch. Dist. v. Brockette, 567 S.W.2d 780, 785-87 (Tex. 1978). Ancillary to their suit for declaratory relief, these plaintiffs requested a permanent injunction restraining the Commission from conducting any further proceedings to adjudicate the prudence of the $1.453 billion expenditure. The district court granted the permanent injunction after trial. ⁽⁵⁾

The plaintiffs ultimately prevailed in their collateral attack upon that part of the Commission's order which purported to defer until a subsequent proceeding an adjudication regarding the $1.453 billion. Coalition of Cities for Affordable Util. Rates v. Public Util. Comm'n, 798 S.W.2d 560 (Tex. 1990), cert. denied, 499 U.S. 983 (1991). The parties' competing arguments in the present appeal rest largely upon their conflicting interpretations of the supreme court's opinion in Coalition of Cities. We should therefore address that opinion before proceeding further.

In Coalition of Cities, the supreme court gave the following rationale in sustaining the plaintiffs' collateral attack:

1.  The Commission's order in the rate case consolidating docket numbers 7195 and 6755 constituted a final adjudication of the amount of River Bend capital costs prudently and reasonably incurred; that amount excluded $1.453 billion because Gulf States had failed to bear its burden of proof as to the prudence of those expenditures. ⁽⁶⁾

2.  The Commission lacked the statutory power to revisit its determination concerning the prudence of the $1.453 billion expenditure. ⁽⁷⁾

3.  Therefore, the Commission exceeded its statutory power in concluding that it could reexamine in a future agency proceeding the prudence of the costs on which Gulf States had failed to bear its burden of proof--the $1.453 billion expenditure. ⁽⁸⁾

4.  All parties had a legal right to a straightforward adjudication, in the original rate case, regarding the prudence of the $1.453 billion expenditure. ⁽⁹⁾

5.  By its decision in the collateral attack, the supreme court did not intend to bar Gulf States' legal right to a fair adjudication of the prudence issue or to restrict the scope of judicial review of that adjudication. ⁽¹⁰⁾

Upon this reasoning, the supreme court reversed the judgment of this Court and affirmed the district court's order that permanently restrained the Commission from proceeding to a decision in the new contested case initiated by Gulf States. To underscore the importance of the Coalition of Cities opinion to the outcome of this appeal, we note that the dissent arrives at its result based on its contradictory reading of that decision. The dissent insists that the prudence of the $1.453 billion of construction costs has never been finally adjudicated. Gulf States Utils. Co. v. Coalition of Cities for Affordable Util. Rates, No. 3-92-046-CV, slip op. at 3 (Tex. App.--Austin May 25, 1994, no writ h.) (Powers, J., dissenting). This view was the basis for our earlier decision in Coalition of Cities; we reversed the trial court's injunction, holding that the principles of res judicata were inapplicable because the Commission, by deferring its consideration, had never finally adjudicated the prudence of the $1.453 billion. Public Util. Comm'n v. Coalition of Cities for Affordable Util. Rates, 777 S.W.2d 814, 817 (Tex. App--Austin 1989), rev'd, Coalition of Cities for Affordable Util. Rates, 798 S.W.2d 560 (Tex. 1990). The supreme court reversed, basing its decision on the principles of res judicata. As both courts recognized, res judicata principles would not apply unless there had been a final adjudication concerning the $1.453 billion. Coalition of Cities, 798 S.W.2d at 564. There can be no dispute: the supreme court held that the matter has been finally adjudicated by the Commission. "More importantly, the PUC order must be considered final unless the PUC has statutory power to defer and reconsider." Id. The supreme court then ruled that the Commission exceeded its statutory authority in attempting to postpone its decision, and concluded, "Once the order in the initial docket became final, it was not subject to any further PUC review." Id. at 565. The dissent dismisses this language as mere dicta, ignoring that the finality of the Commission's adjudication was the very basis for the trial court's injunction and the supreme court's final ruling in Coalition of Cities, notwithstanding our intermediate decision holding otherwise. To insist now that this Court was right and the supreme court was wrong is to flaunt the authority of the high court to whose decisions we are obliged to defer.

THE DISTRICT-COURT JUDGMENT

Being thus advised by the supreme court's judgment in Coalition of Cities, the district court, in reviewing the agency's action in the original rate case, (1) reversed the Commission's final order on an unstated ground, and (2) remanded the rate case to the Commission with an instruction directing the agency to "exclude from rate base the relevant statutory-law expenses" and another instruction forbidding the agency to "reduce rate base by $1.50 for each $1.00 of interim rate revenues collected." We have not yet discussed these two instructions. They pertain to issues raised in the appeals taken by the Commission and the Office of Public Utility Counsel. For the present, we need only note that the instructions impliedly exclude from the Commission's consideration, on remand, any reexamination of the record. See State v. Mauritz-Wells Co., 175 S.W.2d 238, 241 (Tex. 1943) ("It is a settled rule that the express mention or enumeration of one person, thing, consequence, or class is equivalent to an express exclusion of all others.").

DISCUSSION AND HOLDINGS I.

In points of error one and two, Gulf States in effect complains that the district-court judgment, by limiting the scope of the remand to the Commission, permanently denies the utility an agency adjudication regarding what part of the $1.453 billion, if any, constituted a prudent investment that could be included in the utility's rate base. Under these two broad assignments of error, Gulf States marshals four distinct arguments as to why the district court's judgment cannot stand: (1) the disallowance of the $1.453 billion prevents the Commission from fulfilling its statutory duty to balance consumer and utility interests, and to set just and reasonable rates; (2) the district court erroneously refused to remand the cause to the Commission to take additional evidence under APA section 2001.175(c); (3) the disallowance results in confiscation and violates Gulf States' due-process rights; and (4) the Commission's erroneous conclusion of law 10, in which it purported to have authority to reexamine its prudence determination in a subsequent proceeding, "irreparably tainted" the Commission's entire final order. We will address these contentions in turn.

A.  Balancing Consumer and Utility Interests

Gulf States argues that because PURA requires the Commission to set rates that are just and reasonable to consumers and to utilities, see PURA §§ 2, 38, the Commission exercises the discretion to balance the interests of these groups when setting rates. Gulf States further alleges that, by attempting to reexamine the prudence of the $1.453 billion, the Commission was fulfilling its duty to balance these interests in a rate-making proceeding. From these premises, Gulf States draws the conclusion that the Commission must be given an opportunity to strike the balance that, but for its error of law, it would have struck in the second rate-making proceeding. We reject this contention. PURA ensures that the Commission's discretion to balance consumer and utility interests is not unbridled, but rather restricted by specific mandates. See, e.g., PURA § 41 (dictating precisely how Commission must compute certain components of rate base); id. § 41(c)(3) (defining certain categories of expenses wholly excluded from recovery through rates). Moreover, the nature of the process by which rates are set largely determines the extent of the Commission's discretion to balance the interests of utilities and consumers. Ratemaking occurs through the mechanism of an adjudicative hearing. See APA § 2001.003(1). In any proceeding involving a change in rates, the utility has the burden to prove the prudence and reasonableness of its expenditures before the Commission may approve the rate increase. PURA § 40; Coalition of Cities, 798 S.W.2d at 563; Public Util. Comm'n v. Houston Lighting & Power Co., 778 S.W.2d 195, 198 (Tex. App.--Austin 1989, no writ). The supreme court has succinctly stated one result attending the allocation of that burden: "A party who fails to meet its burden of proof loses. The party who has the burden but fails to persuade the trier of fact is not entitled to a second trial to present more evidence." Coalition of Cities, 798 S.W.2d at 563-64. This quotation reveals that the Commission's duty as fact-finder carries no correlative power to strike a balance, as to the setting of rates, unsupported by a utility's persuasive record evidence. See Jersey Central Power & Light Co. v. Federal Energy Regulatory Comm'n, 810 F.2d 1168, 1180 (D.C. Cir. 1987) (holding that balancing must be based on factual findings). ⁽¹¹⁾

B.  Remand Under APA Section 2001.175(c)

Gulf States further complains that the district court improperly denied its request to present additional evidence before the Commission pursuant to APA section 2001.175(c). Such a remand is justified when the additional evidence to be adduced is material and good cause exists for the requesting party's failure to present the evidence in the agency proceeding. APA § 2001.175(c); Buttes Resources Co. v. Railroad Comm'n, 732 S.W.2d 675, 680 (Tex. App.--Houston [14th Dist.] 1987, writ ref'd n.r.e.). The district court's decision to grant or deny a remand request will be reviewed for an abuse of discretion. Buttes Resources, 732 S.W.2d at 680. Gulf States presents two arguments in support of its position that a remand is warranted in this case.

First, Gulf States argues that the Commission should be permitted to receive evidence concerning the effects of the supreme court's determination in Coalition of Cities that the agency had no power to reexamine its implicit final adjudication of the prudence issue. Gulf States cites Independence Savings & Loan Association v. Gonzales County Savings & Loan Association for the proposition that a remand may properly be granted to allow an agency to consider how another adjudicative body's decision affects its own final order. See 568 S.W.2d 463, 465 (Tex. Civ. App.--Austin 1978, writ ref'd n.r.e.). In Independence Savings, a savings and loan association challenged a state agency's approval of a competitor's branch office application. The challenger sought, and the trial court granted, a remand so that the agency could consider a federal agency's intervening final order approving a federal savings and loan branch application for the same area. The approval of the federal branch directly affected the body of evidence underlying a fact finding upon which the approval of the state application turned--whether the new branch office was necessary to foster competition. See id. In this case, by contrast, the Coalition of Cities decision did nothing to alter or augment, either directly or indirectly, the historical investment data underlying the Commission's prudence determination, nor did it modify the standard by which the Commission reviews that historical data. Consequently, the supreme court's decision could not have affected the Commission's findings derived from that evidence. We therefore reject Gulf States' position that the issuance of the Coalition of Cities decision presents a basis for a remand to the Commission.

As a second justification for its requested remand, Gulf States avers that it should be allowed to present additional evidence to prove the prudence of expenditures above $2.273 billion because the Commission in effect imposed a new and different standard of proof after the close of the evidence. According to Gulf States, the Commission required the utility to prove the prudence of expenses to be included in rate base by means of a detailed cost-reconciliation study. Gulf States maintains that because the Commission's evidentiary requirement was completely unprecedented, Gulf States had good cause for failing to present the cost reconciliation study to the Commission in the first instance.

Gulf States relies on an opinion of this Court upholding a remand when the requesting utility did not know in advance and could not reasonably anticipate the time period for which it could recover prudently incurred costs. See Public Util. Comm'n v. Houston Lighting & Power Co., 715 S.W.2d 98, 105 (Tex. App.--Austin 1986), aff'd in part & rev'd in part on other grounds, 748 S.W.2d 439 (Tex. 1987), appeal dism'd, 488 U.S. 805 (1988) (HL&P). Gulf States tries to bring itself within the holding of HL&P by the bare allegation that the Commission in this cause had never before required such a rigorous reconciliation of costs in order to determine the prudence of expenditures. Gulf States has provided us no way to test the accuracy of this contention. However, even assuming the verity of Gulf States' allegation, we believe HL&P is distinguishable.

Unlike the utility in HL&P, Gulf States was fully aware of those costs the prudence of which it would have to justify in order to include them in its rate base. Gulf States failed to present evidence sufficient to persuade the Commission that those costs were prudent, even though it knew in advance that its success would turn on the probative force of its evidence. We think this situation analogous to that presented in Texas Oil & Gas Corp. v. Railroad Commission, 575 S.W.2d 348 (Tex. Civ. App.--Austin 1978, no writ). There, the appellant sought a remand to the agency to introduce seismic data that was material to the dispute, but which the court found had been available during the original agency proceedings. The court rejected the appellant's argument that, because it mistakenly believed certain evidence would be unnecessary to contradict its opponent's evidence, it had good cause for failing to present that evidence. The court flatly rejected the contention that errors in judgment made by a party during the agency hearing constitute good cause for ordering the agency to consider additional evidence. Id. at 352.

The agency record in the instant case reflects that Gulf States had a full and fair opportunity to present all the historical facts necessary to justify the prudence of its expenditures. That the fact-finder found a substantial portion of Gulf States' evidence unpersuasive does not of itself warrant a remand. The agency is the sole judge of the weight to be accorded the evidence presented before it. See Southern Union Gas Co. v. Railroad Comm'n, 692 S.W.2d 137, 141 (Tex. App.--Austin 1985, writ ref'd n.r.e.). The litigant must bear the consequences for failing to marshal the most persuasive case possible. Consequently, we cannot conclude that the district court in this case abused its discretion in refusing to grant a remand under APA section 2001.175(c).

C.  Confiscation and Violation of Due Process

Gulf States further maintains that the disallowance of $1.453 billion results in an unconstitutional confiscation and violation of its due-process rights. Gulf States correctly observes that a regulated utility dedicates its property to public service and thus is constitutionally entitled to a fair return on its investment. Duquesne Light Co. v. Barasch, 488 U.S. 299 (1989); Federal Power Comm'n v. Hope Natural Gas Co., 320 U.S. 591 (1944). To pass constitutional muster, the overall result of a rate order must be just and reasonable. Duquesne, 488 U.S. at 307-08; Hope, 320 U.S. at 602.

Relying on these authorities, Gulf States asserts that a disallowance of $1.453 billion is neither just nor reasonable, and, therefore, the rate the Commission set is confiscatory. As we have previously discussed, Gulf States overlooks the procedural context in which rates are set--a contested hearing in which the utility bears the burden of proof. A utility is unquestionably entitled to recover rates that will enable it to operate successfully, to maintain its financial integrity, to attract capital, and to compensate investors for the risk assumed. However, the utility's fiscal security is assured only through proof that it has prudently invested those monies that it seeks to recover from the public. Absent persuasive evidence of the prudence of a utility's expenditures, the Commission may not calculate a rate intended to provide the utility a "fair" return on its property and investment. Rather, the determination of just and reasonable rates is wholly dependent upon findings of fact derived from evidence presented in a contested-case hearing.

The dissent argues that due process guarantees Gulf States a decision on the prudence of the $1.453 billion in costs. We conclude, as the supreme court held in Coalition of Cities, that the prudence of these costs has been finally adjudicated. Due process requires no more. At bottom, Gulf States maintains that the paramount importance of providing the utility a fair return on its property and investment overrides all countervailing considerations, including the requirement that the utility bear the burden to show the prudence of the expenditures it would recover through rates. We reject this position. To hold otherwise would be tantamount to allowing the utility to ignore the administrative process the legislature established for the purpose of setting rates.

D.  The "Irreparable Taint"

A reviewing court must reverse or remand a contested case for further proceedings "if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are affected by other error of law." APA § 2001.174(2)(D). To prevail on its challenge of the Commission's order, Gulf States must show that its substantial rights have been prejudiced by the agency's error of law. To meet this burden, Gulf States argues that the Commission's attempt to postpone its consideration of the $1.453 billion, based on the erroneous assumption that it could revisit the prudence inquiry, precluded the agency from reaching a correct result in the original rate proceeding. In so arguing, the utility ignores the fact-finding mission of the administrative agency and how those findings serve the process of judicial review. The supreme court has noted the purposes served by administrative findings of fact:

One purpose no doubt is to restrain any disposition on the part of the [agency] . . . without a full consideration of the evidence and a serious appraisal of the facts. Another is to inform protestants of the facts found so that they may intelligently prepare and present an appeal to the courts. Still another is to assist the courts in properly exercising their function of reviewing the order.

Miller v. Railroad Comm'n, 363 S.W.2d 244, 245-46 (Tex. 1962). The agency must articulate findings that support its conclusions of law. The reviewing court tests the agency's conclusions to determine whether they are reasonably supported by the findings and by substantial evidence in view of the reliable and probative evidence in the record as a whole. Texas Health Facilities Comm'n v. Charter Medical-Dallas, Inc., 665 S.W.2d 446, 452 (Tex. 1984). Gulf States would have us invert this process by holding that an erroneous conclusion undermines the validity of the agency's fact-finding, irrespective of the record evidence.

Gulf States suggests that the Commission would have altered its findings of facts based on the evidence presented had it known it could not grant the utility a second chance to present more persuasive evidence. However, the Commission is not permitted to determine a just and reasonable rate and then "back into" the required findings of fact. A basic purpose of requiring findings of fact is to ensure that an agency's decision comes after, not before, a careful consideration of the evidence. Agency conclusions should follow from its serious appraisal of the facts. Gulf States here suggests that if the Commission had known its decision would be final, it would have reshaped its findings of fact to "back into" a decision more favorable to the utility. We reject this cynical view of the administrative process.

In conclusion of law 18, the Commission held that $1.453 billion of River Bend capital costs should not be included in Gulf States' rate base. In conclusion of law 18A, the Commission found that "GSU [Gulf States] has not met its burden of proof that the capital costs of River Bend above a reasonable Definition Cost Estimate of $2.273 billion were reasonably and prudently incurred." The following underlying findings of fact reflect the Commission's evaluation of the evidence Gulf States presented in support of the prudence of the $1.453 billion increase in plant costs.

121.  The Increment Estimate File (IEF) was primarily a cost tracking and accounting tool and was not designed to provide a detailed justification of cost increases.

122.  The fact that GSU had a legitimate process for reviewing and approving changes in project costs does not show that those costs were reasonable.

124.  The PLG Report's Analysis of the reasons for growth in the cost of River Bend was cursory and inadequate.

125.  PLG has cited low cost per Kw as an indication of prudent management and a key measure of management performance in other proceedings. The absence of a cost-per-Kw comparison in this case damaged the credibility of the PLG report.

131.  GSU could have developed a far more complete and accurate investigation of the reasons for the growth in River Bend costs.

132.  GSU's non-statistical explanations of the reasons for the high capital cost of River Bend were inadequate and unconvincing.

162.  The fact that River Bend's costs are within a 90 or 95 percent statistical confidence interval does not explain or justify the high cost of the plant.

163.  The Statistical Analyses presented in this docket were inadequate to prove the reasonableness or prudence of River Bend construction costs.

Gulf States elected not to present any cost-per-kilowatt analyses of River Bend's cost growth. ⁽¹²⁾ Instead it relied on (1) statistical evidence that the Commission found "inadequate"; (2) non-statistical evidence, the Incremental Estimate File ("IEF"), which the Commission found "inadequate and unconvincing"; and (3) the PLG Report, which was not credible without a cost-per-kilowatt comparison.

Having found that Gulf States could have developed a more complete and accurate explanation for the cost increases at River Bend, the Commission erroneously attempted to afford the utility a second chance to do so. The Commission's effort exceeded its statutory authority. Coalition of Cities, 798 S.W.2d at 564. But this error cannot have tainted the Commission's basic findings that Gulf States' statistical and non-statistical evidence was inadequate and unconvincing unless the facts are appraised after an agency reaches its conclusions rather than before.

Returning to the basis for this point of error, Gulf States must show that the harm it suffered, the exclusion of $1.453 billion in costs from rate base, was caused by the Commission's erroneous conclusion that it could reexamine the prudence of those expenditures. The Commission's error was affording Gulf States a second chance to present persuasive evidence that its expenditures were prudent and reasonable. However, a second chance to present evidence is not a "substantial right" utilities may claim. Id. at 565. There can be no harm done to a substantial right that never existed. Failure to succeed is not a recognized ground for a rehearing. The harm complained of in this appeal, exclusion of $1.453 billion from rate base, resulted from the unpersuasiveness of the evidence Gulf States chose to present to the Commission in the single proceeding to which it was legally entitled.

Although the Commission may have intended to reevaluate the prudence of the $1.453 billion in cost increases at a later date, it also intended to disallow those costs based on the record evidence presented in this proceeding. See Conclusion of Law 18. This was the only conclusion it could make based on its findings that Gulf States' evidence was not persuasive. Gulf States argues that the Commission might have granted its motion for rehearing had it known it could not revisit the prudence of the excluded costs in a future proceeding. We reject this basis for a remand because the individual commissioner's thought processes are immaterial to judicial review. We judge the agency order on the basis on which it purports to rest. Pedernales Elec. Coop., Inc. v. Public Util. Comm'n, 809 S.W.2d 332, 341-42 (Tex. App.--Austin 1991, no writ). We affirm the district court's ruling that no causal link exists between the Commission's error of law and the harm the utility has suffered by the exclusion of substantial dollars from rate base. See United States v. Morgan, 313 U.S. 409, 418-20 (1941); Texas State Bd. of Examiners in Optometry v. Carp, 388 S.W.2d 409, 416 (Tex. 1965).

Having rejected all four arguments that Gulf States asserts under points of error one and two, we overrule those points.

II.

Some appellees argue that Gulf States waived its complaint regarding the agency's adjudication that expending $1.453 billion for construction costs on the River Bend project was not prudent. The waiver results, they contend, from the fact that Gulf States did not assign error to the deferral of this prudence determination in its motion for rehearing, filed in the Commission pursuant to APA section 2001.145. Waiver is, of course, the ordinary consequence when a complaining party fails to preserve its complaint by a proper assignment of error contained in its motion for rehearing filed in the agency. See Lindsay v. Sterling, 690 S.W.2d 560, 563 (Tex. 1985).

The motion-for-rehearing requirement of APA section 2001.145 rests on the principle that an administrative agency should have an opportunity to correct its own errors if the relations between reviewing courts and agencies are to be orderly and if the agencies are to exercise effectively their delegated powers of administration. Absent such an opportunity, the agencies would become mere recorders of evidence and the power of administration would effectively be transferred in large part to the courts. See 2 Frank E. Cooper, State Administrative Law 559-602 (1965). Consequently, the general rule is that a party must ordinarily preserve its claim of error by first raising it in the agency; conversely, a party may not raise it for the first time on judicial review of the agency order. The requirement is not without exception. Questions of law, for example, may be raised for the first time in a reviewing court when necessary to prevent an injustice. Hormel v. Helvering, 312 U.S. 551, 556-57 (1946). This may occur, for example, when the highest court in a jurisdiction gives its decision on an applicable question of law after the agency has rendered its final order and the case is pending on judicial review. Hormel, 312 U.S. at 558-59. Or other circumstances may arise after the agency renders its order, affecting its enforcement, which will allow a party to raise the matter for the first time on judicial review. National Labor Relations Bd. v. Jones & Laughlin Steel Corp., 331 U.S. 416, 428 (1946).

We believe such an exceptional case exists here. By the terms of its final order, with its findings of fact and conclusions of law, the Commission purported to defer the prudence adjudication as to the $1.453 billion in cost growth above the adjusted definitive cost estimate ("DCE"). Because, at the time, it appeared the Commission's final order would not permanently foreclose a decision on the issue, it is difficult to see how Gulf States could view itself as prejudiced by this aspect of the agency decision and be required to complain of it in a motion for rehearing. As it turned out, of course, the Commission lacked the statutory power to postpone its decision until a future contested case. But this question of law was not determined by the supreme court until long afterward in Coalition of Cities. Shall waiver now be interposed, in these circumstances, to prevent Gulf States from challenging an agency adjudication of a critical issue in the only contested case in which it may permissibly be decided? We believe such a holding would be manifestly unjust under the circumstances. See Hormel, 312 U.S. at 558-59. Concluding that Gulf States did not waive its legal right to complain of the disallowance effected by the Commission's final order, we now address the utility's complaint that the disallowance was not supported by substantial evidence.

III.

In its third point of error, Gulf States complains that the Commission's order is arbitrary and capricious and unsupported by substantial evidence. See APA § 2001.174(2)(E), (F); Charter Medical, 665 S.W.2d at 452-53.

In disposing of this point, we observe initially that Gulf States' efforts to obtain rate recognition of its overall investment in the River Bend project presented for the Commission's determination two distinct inquiries: first, whether Gulf States' decision to resume the project following a construction hiatus was prudent at the time the decision was made in 1979; and second, what portion, if any, of the extensive cost growth beyond the projected completion costs was prudently incurred? To satisfy these inquiries, Gulf States relied upon both statistical and non-statistical evidence. A cost tracking report called the Incremental Estimate File ("IEF") and testimony explaining it constituted Gulf States' principal non-statistical evidence; cost comparisons with other nuclear power plants constructed at the same time as River Bend were the focus of its statistical evidence. Gulf States chose not to present any cost-per-kilowatt data on the plant.

With regard to the first inquiry, the Commission determined that Gulf States' decision to restart and complete construction of the River Bend project was prudent. In reaching this conclusion, the Commission reviewed Gulf States' 1979 DCE, the utility's projected total cost for completing River Bend. The Commission concluded, however, that Gulf States' DCE was too low. Based on evidence from the various parties, the Commission decided that Gulf States had failed to consider foreseeable expenses, like those attending the more rigorous nuclear regulatory climate in the aftermath of Three Mile Island. The Commission also found that Gulf States' fifty-month completion schedule was overly ambitious and that a sixty-month projection would have been more realistic. From these various indicators of expenses foreseeable in 1979, the Commission adjusted the DCE upward to $2.273 billion, ⁽¹³⁾ and determined that from a 1979 perspective, the decision to go forward with foreseeable construction costs of $2.273 billion was prudent.

With regard to the second inquiry, the determination of what portion of actual construction costs was reasonably and prudently incurred, the Commission began with the adjusted DCE figure of $2.273 billion and found that these projected costs were prudent. Finding of Fact 164. The Commission then examined the evidence presented to determine what portion, if any, of the $1.453 billion actual cost growth above the adjusted DCE had been prudently incurred. The Commission did not find the evidence persuasive to justify including any of the $1.453 billion in rate base. Finding of Fact 164A, Conclusions of Law 18, 18A. In its third point of error, Gulf States raises a number of arguments to show that the Commission's refusal to be persuaded was arbitrary and capricious and unsupported by substantial evidence--in short, that the final order is unreasonable when considered in light of the entire record.

Gulf States' principal contention is that, because no party ever advocated a disallowance as large as that which actually occurred, the Commission had no basis for disallowing the entire $1.453 billion. This argument turns on the assumption that a utility's expenditures are presumed prudent unless shown to be otherwise. Both PURA and case law reflect the fallacy of this position. See PURA § 40 (utility bears burden to show prudence of expenditures to be included in rates); see also Coalition of Cities, 798 S.W.2d at 563 (utility enjoys no presumption that its expenditures were prudently incurred); Public Util. Comm'n v. Houston Lighting & Power Co., 778 S.W.2d at 198 (to raise rates, utility must bear burden of proving that each dollar of cost incurred was reasonably and prudently invested). These authorities indicate that the failure by parties challenging a rate increase to seek a total disallowance does not, ipso facto, render the unchallenged expenditures prudent. A utility may not rely on such burden-shifting to make its prudence case. "A utility has the burden to prove the prudence and reasonableness of its expenditures before a rate increase can be approved." Coalition of Cities, 798 S.W.2d at 563. The Commission determined that Gulf States did not meet its burden of demonstrating that any of the cost growth was prudently incurred and therefore the $1.453 billion in costs above the adjusted DCE should not be included in rate base. See Conclusions of Law 18, 18A. If there is any evidence supporting either an affirmative or a negative finding, we must uphold the agency decision. Charter Medical, 665 S.W.2d at 453. To prevail on this point of error, Gulf States must show that reasonable minds could not have reached the conclusion the Commission reached. Texas State Bd. of Dental Examiners v. Sizemore, 759 S.W.2d 114, 116 (Tex. 1988). The Commission's conclusion that the utility did not meet its burden of proving the prudence of its $1.453 billion in costs is comparable to a jury's failure to find an issue. See Pedernales Elec. Coop., 809 S.W.2d at 337. A jury's failure to find need not be supported by any evidence, but may not stand in the face of overwhelming evidence of the fact's existence. Schmeltekoph v. Johnson Well Serv., 810 S.W.2d 865, 869 (Tex. App.--Austin 1991, no writ). In conducting a substantial evidence review of an agency's failure to find, we must uphold the agency's order if substantial evidence in the record would support either affirmative or negative findings. Charter Medical, 665 S.W.2d at 453. An agency's negative findings will be sustained unless the evidence conclusively requires affirmative findings. Gerst v. Goldsbury, 434 S.W.2d 665, 667 (Tex. 1968). When the evidence is contradictory, we resolve any conflict in favor of the agency's decision. Auto Convoy Co. v. Railroad Comm'n, 507 S.W.2d 718, 722 (Tex. 1974). Even when the reviewing court may have struck a different balance, it may not substitute its judgment for that of the agency. Sizemore, 759 S.W.2d at 116. The burden is on Gulf States to demonstrate from the evidence that it conclusively established the prudence of the $1.453 billion expended. Charter Medical, 665 S.W.2d at 453. Here, the findings of fact and the record evidence adequately support the Commission's conclusion that the utility failed to meet its burden of proof.

In its report, the Examiner explained that "it was up to GSU, not the intervenors, to justify these costs . . . [to] explain why River Bend is the fifth most expensive plant, per KW, in the United States." Examiner's Report at 128. After all the evidence had been presented, the Examiner reported, "GSU doesn't know why River Bend cost so much." Id. The Examiner and the Commission found the utility's non-statistical evidence, principally the IEF report, "inadequate and unconvincing." Finding of Fact 132. The Examiner found that Gulf States' statistical evidence showing the River Bend costs to be within a 90 or 95 percent confidence range did not explain or justify the high cost of the plant. Proposed Finding of Fact 162. The Examiner and the Commission agreed Gulf States "could have developed a far more complete and accurate investigation of the reasons for the growth in River Bend costs." Finding of Fact 131.

The Examiner reluctantly relied on Gulf States' statistical evidence to include a large portion of the increased costs in rate base. Its finding of fact 163 states: "[A]lthough statistical analysis is an imprecise measure, it is the best one offered in the proceeding." The Commission disagreed and found that Gulf States' best evidence was not good enough. The Commission's finding of fact 163 states, "The statistical analyses presented in this docket were inadequate to prove the reasonableness or prudence of River Bend construction costs." In weighing the credibility of the evidence, the Commission was performing its proper function. City of El Paso v. Public Util. Comm'n, 839 S.W.2d 895 (Tex. App.--Austin 1992, writ granted). The APA section 2001.174 forbids this Court from usurping the agency's adjudicative authority. Charter Medical, 665 S.W.2d at 452; Sizemore, 759 S.W.2d at 117. Gulf States also complains, in essence, that the Commission failed to consider testimony of certain witnesses and failed to credit evidence that the hearing examiners found persuasive. In response, we observe that an agency may or may not accept witnesses' testimony; the agency, not the reviewing court, is the judge of the weight to be accorded that testimony. Southern Union Gas Co., 692 S.W.2d at 141. Hence, we may not reverse the Commission's determination that Gulf States' evidence was too superficial or otherwise unpersuasive to quantify prudent expenditures associated with cost growth. Taken together, the findings of fact and the record evidence provide a reasonable basis for the Commission's conclusion that Gulf States failed to establish the prudence of River Bend's construction costs in excess of $2.273 billion. We overrule the third point of error.

We note the dissent comes to a different conclusion by limiting the utility's burden to going forward with evidence of prudence while shifting the burden of persuasion to the party seeking to establish that a utility's expenditures are imprudent. Gulf States Utils. Co v. Coalition of Cities for Affordable Utility Rates, No. 3-92-046-CV, slip op. at 4 (Tex. App.--Austin May 25, 1994) (Powers, J., dissenting). Our supreme court has rejected this contention: "A party who fails to meet its burden of proof loses. The party who has the burden but fails to persuade the trier of fact is not entitled to a second trial to present more evidence." Coalition of Cities, 798 S.W.2d at 563-64. In an earlier decision in which the dissenting justice joined, this Court likewise rejected the burden shifting now advocated by the dissent:

We understand Gulf States to mean that once it offered evidence that its decision would benefit its ratepayers, it had satisfied its burden of proof, which then shifted to either the Commission or the intervenors to show the availability of a ``distinctly superior alternative' to the decision taken. We find no basis in either PURA § 40 or the caselaw construing it for such burden shifting.

Gulf States Utils. Co. v. Public Util. Comm'n, 841 S.W.2d 459, 476 (Tex. App.--Austin 1992, writ denied). It is too late to argue that in a ratemaking proceeding in Texas the burden of persuasion does not fall squarely on the utility claiming the prudence of its expenditures. The supreme court's ruling in Coalition of Cities cannot be ignored by labeling it dicta. See also Texas-New Mexico Power Co. v. Texas Industr. Energy Consumers, 806 S.W.2d 230, 233 (Tex. 1991); City of Somerville v. Public Util. Comm'n, 865 S.W.2d 557, 563 n.17 (Tex. App.--Austin 1993, no writ); Cities of Abilene v. Public Util. Comm'n, 854 S.W.2d 932, 940-41 (Tex. App.--Austin 1993, writ requested) (adopting the proposition that the utility did not carry its burden of proof by merely "opening its books to inspection").

IV.

In its final order, the Commission permitted Gulf States to include in its rate base certain deferred expenses associated with River Bend that the utility had accrued from the time the new facility was placed in operation through December 1987. In its fourth point of error, Gulf States assails the district court's reversal of this decision; the Commission, as appellant, urges the same challenge in its first point of error. The matter of these deferred expenses originally arose in an earlier rate proceeding, PUC Docket No. 6525, filed in late 1985. The parties to that proceeding, the same as those now before us in this appeal, entered into a stipulation settling that case, which the Commission approved by written order in June 1986. ⁽¹⁴⁾ All parties agreed that various costs associated with River Bend and a coal powered generating plant, Big Cajun 2, Unit 3, would be accrued and deferred until Gulf States' next rate case. The proceeding underlying this appeal was Gulf States' next rate case.

In reversing the Commission's inclusion of deferred expenses in rate base, the district court relied on this Court's original opinion in City of El Paso v. Public Utility Commission. In our original opinion in City of El Paso, we concluded that PURA section 41(a) forbade inclusion in rate base of any deferred expenses associated with a newly constructed plant accruing after the plant's dedication to public use. However, we withdrew that opinion and substantially modified City of El Paso on motion for rehearing. City of El Paso, 839 S.W.2d at 901. On rehearing, we held that PURA section 41(a) only precludes inclusion in rate base of post-in-service carrying costs and does not speak to the question of whether post-in-service operating and maintenance ("O & M") costs may be included. Id. at 915-16. "Accordingly, whatever other objections may be made to the inclusion in rate base of post-in-service O & M costs, such inclusion is not inconsistent with PURA section 41(a)." Id. at 916.

The district court's judgment reversing the Commission's order is thus at odds with our modified holding in City of El Paso and cannot stand. Moreover, because the Commission failed to distinguish in its findings of fact between post-in-service carrying costs and post-in-service O & M costs, we cannot determine what portion of the total deferred expenses added to Gulf States' rate base were permissibly included. Consequently, we must remand this matter to the Commission for its reexamination of the deferred-expense-recovery question consistent with our final decision in City of El Paso. We sustain Gulf States' fourth and the Commission's first points of error.

The Commission properly notes that its final order reduces deferred expenses, not rate base, by $1.50 for every $1.00 in interim rates collected. On remand the Commission must reassess the deferred-expenses issue and reconsider its interim rate offset against Gulf States' deferred expenses in light of our decision in City of El Paso. Although both the Commission and the Office of Public Utility Counsel urge a point of error challenging the district court's reversal of the interim rate offset against Gulf States' deferred expenses, we do not decide those points of error at this time. Because we must reverse the Commission's final order and remand the cause to the agency for reassessment of the entire deferred-expenses issue, ⁽¹⁵⁾ we will not anticipate which issues will or will not survive the Commission's reexamination of the deferred-expense-recovery question.

V.

In its fifth point of error, Gulf States complains that the district court erred in affirming the Commission's treatment of the utility's federal income tax expenses. Applying the "actual taxes paid" doctrine announced in Public Utility Commission v. Houston Lighting & Power Co., 748 S.W.2d 439 (Tex. 1987), appeal dism'd, 488 U.S. 805 (1988), and Public Utility Commission v. GTE-SW, 833 S.W.2d 153 (Tex. App.--Austin 1992, writ granted), the Commission refused to award Gulf States' shareholders any tax savings associated with the $1.453 billion and therefore reduced the examiners' recommended tax calculation by approximately $30 million.

Under its fifth point of error, Gulf States urges this Court to reconsider our position on the actual-taxes-paid doctrine reflected by our decision in GTE-SW. We continue to read HL&P to require that tax savings flowing from deductions for disallowed expenses be passed on to rate payers. See GTE-SW, 833 S.W.2d at 168-69. Any changes in this actual-taxes-paid doctrine must be effected by the supreme court. We overrule Gulf States' fifth point of error.

VI.

There remains for consideration Gulf States' sixth point of error complaining of the restrictive remand resulting from the specific instructions the district court gave in its final judgment. Because we agree that the recovery of deferred expenses is the only issue that requires the Commission's reconsideration, we hold that the district court properly remanded this cause to the Commission with limiting instructions. See Public Util. Comm'n v. Gulf States Utils. Co., 809 S.W.2d 201, 212 (Tex. 1991). We overrule Gulf States' sixth point of error.

CONCLUSION

We hold that the district court correctly concluded that substantial evidence supports the Commission's exclusion of $1.453 billion of River Bend construction costs from rate base. We also affirm the district court's judgment that there is no causal link between the harm Gulf States suffered in this exclusion and the Commission's erroneous attempt to afford the utility another opportunity to present more persuasive evidence regarding the prudence of those expenditures. We agree that the Commission's order must be reversed and remanded for reconsideration of deferred expenses, but we reform the specific instructions to order the Commission to reassess the proper recovery of deferred expenses, including the offset of $1.50 from deferred expenses for every $1.00 of interim revenue, in light of this Court's final opinion in City of El Paso. We modify the district court's judgment and, as modified, it is affirmed.

Bea Ann Smith, Justice

Before Justices Powers, Aboussie, and B. A. Smith

Modified and, as Modified, Affirmed

Filed: May 25, 1994

Publish

1.   The appellees are the municipalities of Huntsville, Conroe, Panorama Village, Somerville, West Orange, Willis, and Cut And Shoot, under the name "Coalition of Cities for Affordable Utility Rates"; the municipalities of Beaumont, Bevil Oaks, Bridge City, China Groves, Nederland, Nome, Orange, Port Arthur, Port Neches, Rose City, Silsbee, Sour Lake, and Vidor; Big Three Industries, Chevron Chemical Company, E.I. duPont de Nemours & Co., Firestone Synthetic Rubber & Latex Co., Goodyear Tire & Rubber Co., Mobil Chemical Company, Olin Corporation, PD Glycol, Texaco Chemical Company, Temple-Eastex, Inc., Union Carbide Corporation, and Union Oil Company of California, under the name "Texas Industrial Energy Consumers"; and North Star Steel of Texas, Inc. The Commission and the Office of Public Utility Counsel are also appellees with respect to certain parts of the trial-court judgment, but they also bring their own appeal from certain other aspects of the judgment. We will refer to all the foregoing as "appellees" except when we consider the appeals taken by the Commission and the Office of Public Utility Counsel.

2.   All citations in this opinion are to the current Administrative Procedure Act rather than the former Administrative Procedure and Texas Register Act because the recent codification did not substantively change the law. Act of May 4, 1993, 73d Leg., R.S., ch. 268, § 47, 1993 Tex. Gen. Laws 583, 986.

3.   The "prudent investment test" with which we deal in the present appeal is not explicitly set out in PURA. Cf. PURA 41(a) (construction work in progress). Its origin is well described, we believe, in the brief furnished us by Coalition of Cities for Affordable Utility Rates:

[T]he "prudent investment test" is subsumed within the traditional ratemaking principles embodied in PURA, Sections 38, 39 and 41, and that any imprudent expenditures can and should be disallowed; . . . The source of the prudent investment test was Justice Brandeis's concurring opinion in Missouri ex rel. Southwestern Bell Tel. Co. v. Public Service Commission; he stated that "dishonest or obviously wasteful or imprudent" expenditures could Constitutionally be excluded from a utility's rate base. 262 U.S. 276 (1927). In one of the seminal cases applying the prudent test, the New York Appeals Court stated, "It is neither just nor reasonable for a utility's customers to bear the cost of inefficient management or poor planning." Long Island Lighting Co. v. Public Service Commission of the State of New York, 523 N.Y.S.2d 615, 620 (A.D. 3 Dept. 1987).

4.   In PURA § 69, the legislature provided a means for attacking directly the legality of the Commission's final order in a contested case: "Any party to a proceeding before the commission is entitled to judicial review under the substantial evidence rule." A suit under this statute is unknown to the common law. The suit must be brought, within a specified period of time, in a district court of Travis County, against the Commission as defendant; there is no jury; the record of agency proceedings must be admitted in evidence; and the court must ordinarily determine from such record alone whether to award one of two kinds of relief--it may affirm the Commission decision (in whole or in part) or reverse the Commission decision and remand the case to the agency for any of six specified errors of law. APA § 2001.171-.176. A suit under PURA § 69, governed by APA sections 2001.171-.178, is the exclusive method by which a Texas court may review the legality of actions taken by the Commission, with one exception: A suit for declaratory or injunctive relief will lie when the Commission acts in excess of its statutory authority or "jurisdiction." Westheimer Indep. Sch. Dist. v. Brockette, 567 S.W.2d 780, 785-87 (Tex. 1978). Aside from this exception, the Commission's final orders are immune from collateral attack. See Alamo Express, Inc. v. Union City Transfer, 309 S.W.2d 815, 827 (Tex. 1958); Thompson v. Railroad Comm'n, 240 S.W.2d 759, 763 (Tex. 1951); 2 Frank E. Cooper, State Administrative Law 631-40 (1965); 2 Am.Jur.2d Administrative Law § 494, at 301 (1962).

5.   The plaintiffs did not sue in Coalition of Cities to set aside the Commission decision and remand the case to the agency; in other words, they did not sue under PURA § 69 in a direct attack upon the Commission's final order in the rate case we now review. They sued instead, in a collateral attack upon that order, for declaratory and injunctive relief that would restrain the Commission from hearing and adjudicating Gulf State's contested case brought subsequently to adjudicate the prudence of the $1.453 billion that the Commission purported not to have adjudicated by the final order in the previous rate case. The plaintiffs contended, as they were bound to do if their collateral attack was to be successful, that the Commission had exceeded its statutory power in the rate-case order by attempting to defer final adjudication of the $1.453 billion to a subsequent proceeding, which would constitute a second adjudication of the prudence of that expenditure.

6.   "``Every factual, legal and policy issue [bearing on the River Bend rate case] was thoroughly explored and canvassed,' during the . . . hearings that continued for 132 days . . . ." Coalition of Cities, 798 S.W.2d at 561-62. The supreme court further explained:

Because of a "lack of sufficient evidence", the PUC, in its finding 164A, "excluded from plant in service" all "capital costs in excess of $2.273 billion." A party who fails to meet its burden of proof loses. The party who has the burden but fails to persuade the trier of fact is not entitled to a second trial to present more evidence. By stating that GSU failed to meet its burden of proof on the prudence of the $1.453 billion, the PUC effectively disallowed that amount from the rate base.

Id. at 563-64 (citations omitted).

7.   [T]he PUC order must be considered final unless the PUC has the statutory power to defer and reconsider such critical issues. Such was the holding in Sexton v. Mount Olivet Cemetery Ass'n, [720 S.W.2d 129, 146 (Tex. App.--Austin 1986, writ ref'd n.r.e.)], in which the Banking Commissioner sought to revisit an issue determined in a prior order . . . .

Coalition of Cities, 798 S.W.2d at 564 (emphasis added).

8.   The only legislative authorization for PUC reexamination of an earlier determination concerns the power to revoke or amend a certificate of convenience and necessity under certain circumstances outlined in PURA section 62(a). . . . Thus, limited by statute and lacking any inherent power, the PUC was powerless to defer its decision to a future proceeding.

. . . .

Accordingly, we hold that the doctrines of res judicata and collateral estoppel bar a utility from relitigating before the PUC the prudence of its past investment for inclusion in that utility's rate base.

Coalition of Cities, 798 S.W.2d at 564, 565.

9.   All parties were entitled to a straightforward decision from the PUC the first time this case was presented. Permitting relitigation offends the policy reasons supporting the doctrines of res judicata and collateral estoppel. Both a public utility and consumers benefit from a final decision about whether cost overruns at a power plant have been sufficiently justified. With a complex and controversial project like a nuclear power installation, a utility and its investors need a determination to prevent relitigation of the same previous investment decision on each occasion that a rate increase is requested. The same finality that benefits the utility investors can serve the interests of consumers who know that if a utility is once denied relief because of its failure to prove its case, it may not return repeatedly on the same facts until the PUC yields.

Coalition of Cities, 798 S.W.2d at 565.

10.   In Coalition of Cities the supreme court stated:

All issues relating to the merits of the administrative order, including the prudence of all elements of construction costs, remain to be addressed by the trial court [in the rate case where] the burden is upon [Gulf States] to show that the PUC's order is not supported by substantial evidence. The claim of the dissent that we have at this point "assess[ed] a $1.453 billion penalty (permanent disallowance) on GSU," . . . is incorrect.

Coalition of Cities, 798 S.W.2d at 565 n.7 (emphasis added).

11.   See supra note 3.

12. In fact, before entry of a final order, the Commission provided Gulf States with numerous opportunities to provide evidence to meet its burden of proof. The transcript of the final order meeting contains the following:

Commissioner Campbell: I guess I would be inclined to give a second bite at the apple because of the uniqueness. . . . [N]o one likes to see a utility pushed into bankruptcy. . . . Would the Company rather we just go on and not consider the remand?

Gulf States' Attorney: If it can't be settled, it's got to be decided.

* * * * *

Commissioner Greytok: Now this Commission is sitting here--I hear Commissioner Campbell offering you the opportunity--and I think its been obvious that we're offering all of you the opportunity to do something for ratepayers to make this whole thing fly. . . . What I'm hearing is that you don't want that consideration.

* * * * *

Gulf States' Attorney: What I'm saying to you is, I'm not going to tell you anything but straight what we think. What we think is, a remand isn't necessary because we met our burden of proof.

13.   The examiners and the Commission derived the adjusted DCE as follows:

  $ 1.729 billion Gulf States 1979 DCE

.183 Amount added to reflect a 60-month rather than a 50-month schedule.

.100 Amount added to cover cost of certain safety and TMI-related "backfit" requirements foreseeable in 1979.

.018 Amount added for specific engineering cost changes foreseeable in 1979.

$ 2.030 billion

.243 15% of "to-go" costs as of 1979 added as informal contingency to cover foreseeable changes (e.g., cost escalation/inflation and TMI-related regulation) and known but unquantifiable changes (e.g., stricter piping requirements and ongoing vendor negotiations).

$ 2.273 billion

14. ¹⁴  The stipulation and order entered in Docket No. 6525 provide:

The Commission further reserves the right to consider, and all parties to the rate case described above shall have the right to raise, the reasonableness, prudence and appropriate regulatory treatment of any deferred expenses in the rate case in which rate base treatment for plant is requested.

15.   The topics left for consideration on remand to the Commission, pursuant to the trial court's judgment, are interrelated and appear to bear ultimately upon deferred expenses allowed to become part of the Gulf States rate base. They appear to bear as well, at least in part, upon deferred costs associated with the River Bend project.