dissenting.
I
I dissent from the decision and opinion of the majority allowing Toledo Edison an additional increment in its cost of common equity based on the perceived increased risk to investors which is attributable to our decision in Consumers’ Counsel v. Pub. Util. Comm. (1981), 67 Ohio St. 2d 153 [21 O.O.3d 96], dismissed in 455 U.S. 914 (“CEI”).
In Consumers’ Counsel v. Pub. Util. Comm. (1983), 4 Ohio St. 3d 111, 116 (“CEI II”), I expressed my dismay because that decision marked “* * * the second time that the majority of this court ha[d] turned its back on CEI. See Consumers’ Counsel v. Pub. Util. Comm. (1982), 1 Ohio St. 3d 22 (‘Consumers’ Counsel [1982]’).” 4 Ohio St. 3d, at 117. Today’s decision is, therefore, the third time that the majority of this court has departed from CEI by allowing Toledo Edison to recover via an increased cost of common equity what CEI prohibited by means of amortization. I can only conclude that what I viewed as an “abject retreat” in CEI II has become a stampede. CEI is a noteworthy precedent which we should follow. The majority of this court, however, has reduced CEI to an inconvenient citation which is distinguished summarily.
Accordingly, for the reasons stated in my dissent in CEI II, 4 Ohio St. 3d, at 116-117,1 dissent from the holding of the majority allowing Toledo Edison to increase its cost of common equity based on the perceived increased risk to investors which is attributed to CEI.
II
That portion of the majority opinion which affirms the commission’s manipulation of the cost of common equity disregards the holding of CEI. In addition, the majority’s treatment of the requested amortization of a “depreciation variance” ignores the rationale of CEI. That is, the cornerstone of the CEI analysis is this court’s traditional recognition of the test-*411year concept. “It is our opinion that R.C. 4909.15 (A)(4) is designed to take into account the normal, recurring expenses incurred by utilities in the course of rendering service to the public for the test period.” CEI, 67 Ohio St. 2d, at 164 (footnote omitted). See, also, Dayton Power & Light Co. v. Pub. Util. Comm. (1983), 4 Ohio St. 3d 91, 106-107 (Locher, J., dissenting).
“The extraordinary loss sustained by CEI in connection with the terminated nuclear plants cannot be transformed into an ordinary operating expense pursuant to R.C. 4909.15 (A)(4) by commission fiat. The commission’s statement that ‘[cancellation does not create a past loss, but gives rise to a current cost’ is unpersuasive. Under this rationale we question whether there could ever be a ‘past loss’ the return of which would not be recoverable in future ratemaking proceedings notwithstanding the commission’s assertion to the contrary.” CEI, 67 Ohio St. 2d, at 164.
I disagree, therefore, with the majority’s summary dismissal of CEI as authority controlling the issue of amortization of depreciation variance. A closer examination of the issues and testimony reveals the flaws in the majority approach.
For example, the majority merely mentions that the depreciation variance at issue is the difference between the “booked” and “theoretical” depreciation reserves. The definition of these terms, however, is important to an understanding of the real issues in this case.
“Booked” depreciation is the original allowance for depreciation. “Theoretical” depreciation is the proposed allowance. By definition, therefore, there will be a difference between the two.
As acknowledged by one of Toledo Edison’s own witnesses in this case, amortizing that difference transforms the customary whole life depreciation method — which is the original service life estimate — into the remaining life method. The commission itself has already disapproved of the remaining life approach.
“From a legal standpoint, remaining life is on something less than solid ground. This Commission has previously been presented with proposed depreciation accrual rates utilizing remaining life rates and has rejected such rates primarily because we found it would be unfair to make present and future ratepayers ‘pay for the past inadequacy’ of past depreciation rates. See, e.g., Dayton Power & Light Co., Case No. 79-372-GA-AIR, Opinion and Order, May 7, 1980, at p. 14. We also believe that the implications of C&SOE v. Pub. Util. Comm.(1980), 64 Ohio St. 2d 175 [18 O.O.3d 389] [dismissed in 452 U.S. 933] and Consumers’ Counsel v. Pub. Util. Comm. (1981), 67 Ohio St. 2d 153 [21 O.O.3d 96] address this issue. Although these decisions are not on all fours factually with the instant case, the Ohio Supreme Court’s pronouncements with respect to the impropriety of recovering past losses through present and future rates can certainly not be ignored. Of particular interest is the fact that the Court did not view the reasonableness or prudence of the initial decision, be it the Commission’s, as in Columbus and Southern, supra, or management’s, as in Consumers’ Counsel, supra, to be *412material to the question of whether the loss occasioned thereby could be recognized through future rates. Here, the present accrual rates were fixed by the Commission based on the best evidence available at the time. The fact that the estimate of service lives has now changed does not justify charging the present ratepayers for this past misallocation. ” In re General Telephone Co. (April 26, 1982), case No. 81-383-TP-AIR, et al., at page 26. (Emphasis added.)
The commission’s own words, therefore, condemn the result which the majority affirms. Furthermore, a minority of this court has already recognized the inequity of permitting utilities to manipulate depreciation figures to increase rates. See Duff v. Pub. Util. Comm. (1978), 56 Ohio St. 2d 367, 382 [10 O.O.3d 493] (Locher, J., dissenting).
Therefore, the commission erred by failing to rule coincident with the testimony of its own staff witness:
“Q Would you agree that the amount of depreciation reserve deficiency does not represent costs to the Company of providing electric service during the test year, or during the time period when the rates set in this case will be in effect?
U* * *
“A * * * It clearly represents a catch-up of a past underaccrual which was found in 1975, and if anything, it just reflects the past misallocation of depreciation expense prior to 1975. So it therefore does not affect the actual cost during the test year at all, no.” (Emphasis added.)
Accordingly, I dissent from the majority opinion in toto because the majority continues to erode the holding, and ignore the reasoning, of CEI.