ORDER NO. 96-199

ENTERED JUL 29 1996

THIS IS AN ELECTRONIC COPY

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UM 767

DISPOSITION: RECONSIDERATION DENIED

On May 3, 1996, the Public Utility Commission of Oregon issued Order No.

96-117, establishing depreciation rates for U S WEST Communications, Inc., (USWC). The Commission deemed the depreciation rates to be effective as of January 1, 1995. On July 2, 1996, USWC filed an application for reconsideration of that portion of Order No. 96-117 that established January 1, 1995, as the effective date for the new depreciation rates. On July 18, 1996, the Commission’s Staff filed a response to the application.

USWC Arguments

USWC contends that the Commission made an error of law in establishing January 1, 1995, as the effective date for the change in USWC’s depreciation rates. The first argument is that the order denies USWC the ability to recover a portion of its authorized depreciation rates. It argues that it could not have applied for deferred accounting prior to the entry of Order No. 96-117, so it was effectively denied the opportunity to recover on the new depreciation rates between January 1, 1995, and May 3, 1996. USWC acknowledges that in its current rate proceeding before the Commission, docket No. UT 125, appropriate depreciation rates will be considered. It argues, however, that information used in future rate proceedings will not be accurate.

USWC’s second argument is that Order No. 96-117 amounts to retroactive ratemaking. It argues that the Commission lacks authority to go back in time and adjust ratemaking mechanisms. It argues that the order is tantamount to retroactively changing the facts of the situation.

Discussion and Resolution

ORS 756.561 authorizes a party to apply for reconsideration of a Commission order. The Commission may grant reconsideration "if sufficient reason therefor is made to appear." Commission Rule OAR 860-14-095 provides that the Commission will grant an application for reconsideration if the application establishes one or more of the following grounds:

(a) New evidence which is essential to the decision and which was unavailable and not reasonably discoverable prior to the issuance of the order;

(b) A change in the law or agency policy since the date the order was issued, relating to a matter essential to the decision;

(c) An error of law or fact in the order which is essential to the decision; or

(d) Good cause for further examination of a matter essential to the decision.

USWC alleges an error of law.

The arguments USWC makes in its application for reconsideration are similar to those it made during the hearing and in its briefs. The Commission believes it has authority to establish the new depreciation rates as of January 1, 1995, or the date the order was issued, or January 1, 1997, as requested by USWC. Choosing the January 1, 1995, date did not retroactively change the rates USWC charged its customers from that date until Order No.

96-117 was issued on May 3, 1996. Order No. 96-117 is consistent with previous Commission orders and with generally accepted accounting principles.

This is an accounting proceeding, not a ratemaking proceeding. USWC and the Commission’s Staff have agreed to use the depreciation rates established in Order No. 96-117 as part of the process of setting prospective rates for USWC when the order in USWC’s current ratemaking proceeding, docket No. UT 125, is issued. If USWC thinks the setting of depreciation rates as of January 1, 1995, disadvantages it in a future rate proceeding, it may raise the issue at that time.

The Commission decided in Order No. 96-117 that it preferred to set the new depreciation rates as of the time the depreciation study underlying the new depreciation rates was completed. The application for reconsideration has not changed its mind.

ORDER

IT IS ORDERED that the application for reconsideration of Order No. 96-117 is denied.

Made, entered, and effective ________________________________________.

A party may appeal this order to a court pursuant to ORS 756.580.