§ 62-133. How rates fixed.
§ 62‑133. How ratesfixed.
(a) In fixing the ratesfor any public utility subject to the provisions of this Chapter, other thanbus companies, motor carriers and certain water and sewer utilities, theCommission shall fix such rates as shall be fair both to the public utilitiesand to the consumer.
(b) In fixing suchrates, the Commission shall:
(1) Ascertain thereasonable original cost of the public utility's property used and useful, orto be used and useful within a reasonable time after the test period, inproviding the service rendered to the public within the State, less thatportion of the cost that has been consumed by previous use recovered bydepreciation expense. In addition, construction work in progress may beincluded in the cost of the public utility's property under any of thefollowing circumstances:
a. To the extent theCommission considers inclusion in the public interest and necessary to thefinancial stability of the utility in question, reasonable and prudentexpenditures for construction work in progress may be included, subject to theprovisions of subdivision (4a) of this subsection.
b. For baseloadelectric generating facilities, reasonable and prudent expenditures shall beincluded pursuant to subdivisions (2) or (3) of G.S. 62‑110.1(f1),whichever applies, subject to the provisions of subdivision (4a) of thissubsection.
(1a) Apply the rate ofreturn established under subdivision (4) of this subsection to rights‑of‑wayacquired through agreements with the Department of Transportation pursuant toG.S. 136‑19.5(a) if acquisition is consistent with a definite plan toprovide service within five years of the date of the agreement and if suchright‑of‑way acquisition will result in benefits to the ratepayers.If a right‑of‑way is not used within a reasonable time after theexpiration of the five‑year period, it may be removed from the rate baseby the Commission when rates for the public utility are next established underthis section.
(2) Estimate such publicutility's revenue under the present and proposed rates.
(3) Ascertain suchpublic utility's reasonable operating expenses, including actual investmentcurrently consumed through reasonable actual depreciation.
(4) Fix such rate ofreturn on the cost of the property ascertained pursuant to subdivision (1) ofthis subsection as will enable the public utility by sound management toproduce a fair return for its shareholders, considering changing economicconditions and other factors, including, but not limited to, the inclusion ofconstruction work in progress in the utility's property under sub‑subdivisionb. of subdivision (1) of this subsection, as they then exist, to maintain itsfacilities and services in accordance with the reasonable requirements of itscustomers in the territory covered by its franchise, and to compete in themarket for capital funds on terms that are reasonable and that are fair to itscustomers and to its existing investors.
(4a) Require each publicutility to discontinue capitalization of the composite carrying cost of capitalfunds used to finance construction (allowance for funds) on the constructionwork in progress included in its rate based upon the effective date of thefirst and each subsequent general rate order issued with respect to it afterthe effective date of this subsection; allowance for funds may be capitalizedwith respect to expenditures for construction work in progress not included inthe utility's property upon which the rates were fixed. In determining netoperating income for return, the Commission shall not include any capitalizedallowance for funds used during construction on the construction work inprogress included in the utility's rate base.
(5) Fix such rates to becharged by the public utility as will earn in addition to reasonable operatingexpenses ascertained pursuant to subdivision (3) of this subsection the rate ofreturn fixed pursuant to subdivisions (4) and (4a) on the cost of the publicutility's property ascertained pursuant to subdivisions (1) and (1a) of thissubsection.
(c) The original costof the public utility's property, including its construction work in progress,shall be determined as of the end of the test period used in the hearing andthe probable future revenues and expenses shall be based on the plant and equipmentin operation at that time. The test period shall consist of 12 months'historical operating experience prior to the date the rates are proposed tobecome effective, but the Commission shall consider such relevant, material andcompetent evidence as may be offered by any party to the proceeding tending toshow actual changes in costs, revenues or the cost of the public utility'sproperty used and useful, or to be used and useful within a reasonable timeafter the test period, in providing the service rendered to the public withinthis State, including its construction work in progress, which is based uponcircumstances and events occurring up to the time the hearing is closed.
(d) The Commissionshall consider all other material facts of record that will enable it todetermine what are reasonable and just rates.
(e) The fixing of arate of return shall not bar the fixing of a different rate of return in asubsequent proceeding.
(f) Repealed bySession Laws 1991, c. 598, s. 7.
(g) Reserved.
(h) Repealed by SessionLaws 1998‑128, s. 4, effective September 4, 1998. (1899, c. 164, s. 2, subsec.1; Rev., s. 1104; C.S., s. 1068; 1933, c. 134, s. 8; 1941, c. 97; 1963, c.1165, s. 1; 1971, c. 1092; 1973, c. 956, s. 1; c. 1041, s. 1; 1975, c. 184, s.2; 1977, c. 691, ss. 2, 3; 1981, c. 476; 1981 (Reg. Sess., 1982), c. 1197, s.6; 1985, c. 676, s. 15(2); 1989 (Reg. Sess., 1990), c. 962, s. 4; 1991, c. 598,s. 7; 1998‑128, s. 4; 2007‑397, s. 8.)