Missouri Court of Appeals, Western District / May 11, 2021
In the Matter of the Petition of Missouri-American Water Company for Approval to Change an Infrastructure System Replacement Surcharges; Missouri-American Water Company and Missouri Public Service Commission vs. Office of the Public Counsel
The Office of Public Counsel appealed an order from the Public Service Commission that allowed Missouri-American Water Company to increase rates via its Infrastructure System Replacement Surcharge (ISRS). Public Counsel argued the Commission misinterpreted an IRS advisory opinion and misapplied statutes regarding the calculation of net operating loss (NOL) offsetting accumulated deferred income taxes (ADIT). The appellate court reversed and remanded, holding that the Commission's method of calculating NOL by subtracting accelerated depreciation from zero new revenues was inconsistent with the Internal Revenue Code's definition of NOL, which requires considering all income.