BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION WASHINGTON UTILITIES AND ) TRANSPORTATION COMMISSION, ) ) Complainant, ) ) ) DOCKET NOS. UW-980072, v. ) UW-980258, and UW-980265 ) (consolidated) AMERICAN WATER RESOURCES, ) INC., ) ) Respondent. ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) ) WASHINGTON UTILITIES AND ) TRANSPORTATION COMMISSION, ) ) Complainant, ) ) DOCKET NO. UW-980076 ) v. ) ) SIXTH SUPPLEMENTAL ) ORDER: AMERICAN WATER RESOURCES, ) COMMISSION DECISION AND ORDER INC. ) DENYING PETITIONS FOR Respondent. ) CLARIFYING, AFFIRMING, AND ) REVIEW; ) ADOPTING INITIAL ORDER; ) REJECTING TARIFF FILING; ) AUTHORIZING AND REQUIRING ) REFILING ) DOCKET NOS. UW-980072, -980258, -980265 (consolidated), and UW-980076 NATURE OF PROCEEDING: American Water Resources, Inc. (AWRI) seeks a general rate increase for water service it provides in Washington State (Docket No. UW-980258). American Water Resources, Inc. also proposes to add newly acquired water systems to its tariff and charge the customers of those systems the company's generally applicable rates (Docket Nos. UW-980072 and UW-980265). Docket Nos. UW-980258, UW-980072, and UW-980265 are consolidated. American Water Resources, Inc. also proposes to decrease its "facilities charge" from $3,500 to $2,500 and redefine the customers to whom the facilities charge applies (Docket No. UW-980076). INITIAL ORDER: Administrative Law Judge Dennis J. Moss entered an Initial Order on November 24, 1998. The Initial Order would reject AWRI’s proposed tariff sheets and require AWRI to file for rates, and implement terms and conditions of service in accordance with the Initial Order’s findings and conclusions. ADMINISTRATIVE REVIEW: AWRI and Staff filed petitions for administrative review on December 14, 1998, and responses on December 24, 1998. AWRI and Staff ask the Commission to reverse, modify, or clarify various determinations made in the Initial Order. Both parties request review of, and changes to, the Initial Order’s capital structure, rate case expense, and facilities charge determinations. AWRI, in addition, asks the Commission to review and change the Initial Order’s determinations of issues related to return on equity, rate base, and revenue requirement (including clarification or adjustment to the Initial Order’s expense allocation to unregulated Satellite Management Agency operations), rate design, and addition of new systems. Staff asks the Commission to review and modify, or clarify, the Initial Order’s determinations of issues related to SMA allocation, refunds, and treatment of CWIP and AFUDC. Staff also asks the Commission to clarify how rates included in the Initial Order were calculated. COMMISSION: The Commission denies the petitions for review but clarifies various points, including minor adjustments to certain numbers upon which final rate determinations depend. AWRI has not shown the rates, charges, terms, and conditions of service it proposes through its filings in these dockets produce results that are fair, just, reasonable, and adequate, or in the public interest. The Commission accordingly rejects the proposed tariff sheets. AWRI is authorized and required to file revised tariff sheets consistent with the discussion, findings of fact, and conclusions of law contained in this Order. APPEARANCES: Richard Finnigan, attorney, Olympia, represents America Water Resources, Inc. Robert E. Beaty, attorney, Seattle, represents intervenor Daniel C. Williams. Mary Tennyson, Senior Assistant Attorney General, Olympia, represents the Commission Staff. MEMORANDUM Procedural Background. American Water Resources, Inc. (AWRI) filed on January 16, 1998, a proposed tariff revision designated Original Sheet No. 15.2 to reflect added service areas due to the company’s acquisition of nine water systems previously not subject to Commission jurisdiction. The filing would set tariff rates for the newly acquired systems at the same level as AWRI’s generally applicable rates. The Commission entered on February 25, 1998, a Complaint and Order Suspending Tariff Revision, Ordering Temporary Rates and Instituting Investigation. This matter is Docket No. UW-980072. AWRI filed on February 27, 1998, proposed tariff revisions designated Second Revision of Sheet No. 1 canceling First Revision Sheet No. 1; Fourth Revision of Sheet No. 17 canceling Third Revision Sheet No. 17; Third Revision of Sheet No. 18 canceling Second Revision of Sheet No. 18 and Original Sheet No. 18.6; and First Revision Sheet No. 27 canceling Original Revision Sheet No. 27. These proposed tariff revisions reflect AWRI’s request to increase its rates to recover additional annual revenue relative to the revenue amount produced by rates approved and effective as of August 1997. The Commission entered on March 25, 1998, a Complaint and Order Suspending Tariff Revisions, And Instituting Investigation. This matter is Docket No. UW-980258. AWRI filed on March 2, 1998, tariff revisions designated Second Revision Sheet No. 15 canceling First Revision Sheet No. 15, First Revision Sheet No. 15.1 Canceling Original Sheet No. 15.1; Original Sheet No. 15.3; Original Sheet No. 15.4; Original Sheet No. 15.5; Original Sheet No. 15.6; Original Sheet No. 15.7; Original Sheet No. 15.8; Original Sheet No. 15.9; and Original Sheet No. 15.10. These proposed tariff revisions reflect added service areas due to AWRI’ s acquisition of approximately 50 water systems and would set tariff rates for those systems at the same level as AWRI’s generally applicable rates. The Commission entered on March 25, 1998, a Complaint and Order Suspending Tariff Revision, Ordering Temporary Rates and Instituting Investigation. This matter is Docket No. UW-980265. AWRI filed on January 20, 1998, a tariff revision designated as Second Revision Sheet No. 25 canceling First Revision Sheet No. 25, to reflect a decrease in Facilities Charges from $3,500 to $2,500. The proposed tariff sheet also would redefine to whom the facilities charge applies. The Commission entered on February 25, 1998, a Complaint and Order Suspending Tariff Revision, Ordering Temporary Rates and Instituting Investigation. This matter is Docket No. UW-980076. The Commission entered an Order of Consolidation and Notice of Prehearing Conference with respect to Docket Nos. UW-980072, UW-980258, and UW-980265, and a Notice of Prehearing Conference in Docket No. UW-980076, on June 2, 1998. The Commission held a joint prehearing conference on June 17, 1998, at the Commission’s offices in Olympia, Washington before Administrative Law Judge Dennis J. Moss. A procedural schedule established at the prehearing conference set the evidentiary hearing for September 22 and 23, 1998. Subsequently, public comment hearing dates of September 17 and 23, 1998, were set by notice. Administrative Law Judge Dennis J. Moss heard these proceedings on due and proper notice on September 17, 22, and 23, 1998, in Spanaway and Olympia, Washington. The Commission received sworn public comment from 35 participants including ratepayers and current and former legislative representatives elected from districts which include AWRI customers. During the evidentiary phase, the Commission heard from five witnesses for AWRI and Staff. The record includes 594 transcript pages and 57 exhibits, including 7 sets of prefiled direct and rebuttal testimony cumulating more than 200 pages. Among the exhibits are numerous written public comments received on Public Counsel’s motions as illustrative of public concern and sentiment. AWRI, Staff, and Williams filed briefs on October 13, 1998. ALJ Moss entered his Initial Decision on November 24, 1998. AWRI and Staff filed petitions for administrative review on December 14, 1998, and answered each other’s petition on December 24, 1998. Discussion. This case is nothing less than a comprehensive review of AWRI’s operations as of the end of the test year, December 31, 1997, with consideration of restating and pro forma adjustments necessary to establish prospective rates, terms, and conditions of service that are fair, just, reasonable, and sufficient. The Initial Order resolves numerous contested issues and relates with approval the parties’ stipulations on many other issues. The Initial Order necessarily is long and highly detailed given the number of complex issues considered. As the caption above suggests, we affirm and adopt the Initial Order. Although we review the entire Initial Order and consider fully the record before us, we limit our discussion here to those specific points in the Initial Order, outlined above, where AWRI, Staff, or both ask us to determine a different result or state more clearly what the result we adopt implies or requires. I. General Rate Case (Docket No. UW-980258) Rate of Return: Capital Structure, Debt Cost, and Return On Equity. Capital structure, return on equity, and debt cost are three essential components the Commission must establish to determine AWRI’s overall rate of return or cost of capital. We consider the three components together to ensure a fair overall rate of return that balances AWRI’s interests as a business entity and the ratepayers’ interests as consumers tied to a monopoly provider upon which they depend for a vital commodity. The Initial Order establishes a 10.45 percent overall rate of return based on a hypothetical capital structure with 80 percent debt and 20 percent equity, return on equity at 12.60 percent, and cost of debt at 9.91 percent. We note first that neither AWRI nor Staff give direct attention to the overall rate of return; they instead focus exclusively on the underlying components. Both AWRI and Staff contest the Initial Order’s capital structure determination. AWRI contests the Initial Order’s return on equity determination. Neither AWRI nor Staff contests the Initial Order’s debt cost determination. AWRI and Staff both ask us to review the rationale behind the Initial Order’s capital structure determination. AWRI supports use of a hypothetical capital structure, but contests the debt to equity ratio the Initial Order would establish, and asks us to use a more idealized 60 percent debt and 40 percent equity. Staff contests use of a hypothetical capital structure at all, and argues we should adopt AWRI’s actual capital structure which includes 94 percent debt and 6 percent equity, according to Staff. AWRI says its actual debt is slightly over 92 percent. Staff’s Petition states affirmative support for the Initial Order’s determination of a 12.60 percent return on equity even though the result reflects a 150 basis point adjustment to the 11.1 percent equity return Staff advocated at hearing. Staff Petition at 3. AWRI, however, remains unsatisfied and asks us to review the Initial Order’s return on equity analysis. AWRI insists a 14 to 15 percent return on equity is supported, and requests a 14 percent return on equity based on the results in certain past cases involving other small water companies. AWRI thus asks us to establish underlying capital structure and return on equity that would yield an 11.55 percent overall return. Staff’s request that we reject the Initial Order’s hypothetical capital structure in favor of AWRI’s actual capital structure would yield a 10.07 percent overall return. We note that AWRI asked for a 13.15 percent overall return in its post-hearing brief, based on a 50 percent debt, 50 percent equity hypothetical capital structure, 15 percent equity return, and 11.31 percent debt cost. Staff’s post-hearing brief advocated 10.54 percent overall return, based on AWRI’s actual capital structure, 11.1 percent equity return, and 10.5 percent debt cost. The observation is made too frequently to require attribution that determination of the components that underlie overall return, and hence determination of overall return itself, is at least as much art as it is science. The range of suggested capital structures and returns on equity advocated by AWRI and Staff at various points in this proceeding present the familiar palette from which we must blend a picture more representational than abstract. That is, we must be mindful of the final result and must determine underlying factors that balance the interests of the company against the interests of the consumers. Typically, this means setting the cost of debt based on the company’s actual debt costs during a representative period, setting the cost of equity (i.e., return on equity) at a level sufficient to attract investors in an open market, and establishing a capital structure that strikes an appropriate balance between safety and economy. There is much about AWRI, however, that is atypical and the principles that guide us are not easily applied. Accordingly, we must explore and apply relevant principles with an eye to adjustments required given AWRI’s particular circumstances. Having said that, there is at least one point we need not discuss at length: debt cost. The debt cost component is seldom controversial in rate cases, and this case is not exceptional in that way. Exhibit 11, page 4, displays AWRI’s actual debt at the end of the test year, including substantial shareholder debt with 12 percent interest imputed. Except for the shareholder debt interest imputation, the debt portion of the exhibit stands uncontested. The Initial Order accepts Staff’s argument that interest on shareholder debt should be allowed at 10.5 percent, a 200 basis point premium over the prime lending rate in effect during the relevant time period. Considering all of AWRI’s debt obligations at various interest rates the Initial Order finds AWRI’s weighted average cost of debt is 9.91 percent. The Initial Order’s cost of debt determination is not challenged by the petitions for review. We adopt the Initial Order’s debt cost determination. Return on Equity. AWRI asks the Commission to reverse the Initial Order’s determination in Finding of Fact No. 19 that: AWRI’s return on equity should be 12.60 percent to reflect a one hundred and fifty basis point addition to the level indicated by discounted cash flow analysis to recognize AWRI’s inherent risk and to encourage AWRI to reform its capital structure to include significantly more equity and less debt. AWRI asks the Commission to adopt a substitute finding that: AWRI’s return on equity should be set at 14 percent which is consistent with prior Commission decisions on the return on equity for small water systems to reflect the inherent riskiness of investment in small water companies. Staff’s Petition states its support for the Initial Order’s determination. AWRI’s Petition for Review, initial post-hearing brief, and Ms. Parker’s testimony (i.e., Exhibit T-10 at 53 and Exhibit T-15 at 44-45), all ask the Commission simply to adopt here the 14 percent equity return component stipulated by the parties in WUTC v. Rosario Utilities, LLC, Docket No. UW-951483, Fourth Supplemental Order (November 27, 1996), and accepted by the Commission as reasonable in that case. Ms. Parker refers also to WUTC v. Harbor Water Company, Inc., Docket No. U-87-1054-T, Third Supplemental Order (May 13, 1988), in which the Commission approved a 10.44 percent overall rate of return including a 13.97 percent equity return. AWRI advocated in its post-hearing brief that it be allowed an additional 1 percent risk premium, pushing its originally proposed return on equity to 15 percent. AWRI asks via its Petition that we “establish a cost of equity in the range of 14% to 15%,” arguing that “[t]he Company can do no more than point to recent cases in which the Commission has used a 14% to 15% return on equity to recognize the risks of investing in small water companies[,]” citing Rosario Utilities, LLC, Id. Although it is a matter of small, or no, consequence to our decision, we observe that AWRI, in fact, does not point us to any case in which we approved an equity return greater than 14 percent. More significantly, we observe that to the extent we might be inclined to rely on prior cases to determine what fundamentally is a question of fact, Rosario Utilities, LLC, is a completely inappropriate model. Rosario Utilities, LLC, presented the Commission with unique facts and circumstances; it truly is a “one of a kind” case, and thus not a case from which we are willing to extract underlying cost of capital factors for general application as AWRI suggests. The cost of capital model the Commission accepted in Rosario Utilities, LLC, is a wholly hypothetical construct stipulated by the parties in the total absence of any pertinent financial records. TR. 193 (Parker). Harbor Water Company, supra, is a more useful reference in the sense that it discloses general principles we continue to follow when analyzing contested cost of capital issues. The Commission’s discussion in Harbor Water Company focuses on the overall rate of return, 10.44 percent, which Staff and the utility agreed in that case was in the range of reasonable returns. Noting the parties’ agreement on the ultimate question, the Commission did not even concern itself in Harbor Water Company with Staff’s disagreement “with the methodology by which the figure was calculated.” Harbor Water Company, supra, at 33. Indeed, the Commission’s order does not disclose the underlying factors upon which Staff relied to accept 10.44 percent as a reasonable overall cost of capital. Thus, the unanalyzed, underlying equity return in Harbor Water Company provides no substantive support for AWRI’s proposed equity return in this case. To the extent we indulge AWRI by considering the case at all, our focus necessarily is on the overall rate of return determination, 10.44 percent, which, coincidently, is almost identical to the 10.45 percent overall rate of return the Initial Order would establish in this case. While we may look to other cases to validate overall rate of return determinations as being within a reasonable range, our main focus when the issue remains disputed is to establish a fair overall rate of return based on individual components grounded in facts, not abstractions from other cases that present dissimilar facts and circumstances. The available facts in this case relative to return on equity include principally those included in Staff’s DCF analysis, a familiar and widely accepted means to establish at least the starting point from which we can make a well-reasoned return on equity determination. We also know by virtue of our experience in rate regulation generally that small, closely held water companies such as AWRI inherently carry higher risks than the publicly traded companies upon which DCF analyses necessarily rest. AWRI, however, also is typical in that it is closely held and unlikely to attract any significant outside investment even if open to such investment. The Initial Order relies on these facts and observes there is no evidence to controvert Staff’s DCF result that yields an 11.1% rate of return on equity as a starting point from which to determine the return on equity issue. As AWRI acknowledges in its Petition, and consistent with our knowledge of AWRI’s inherent risk, the Initial Order accepts AWRI’s arguments that some adjustment to the raw DCF result is appropriate. Specifically, the Initial Order adds 150 basis points to Staff’s DCF result and, thus, would allow a 12.60 percent return on equity. The Commission concurs in that result, considering it as part of the overall rate of return picture including the final consideration to which we turn now, capital structure. Capital Structure. AWRI says “[t]he Initial Order rejects Staff’s position that the actual capital structure should be used [and] adopts the principle that a hypothetical capital structure is appropriate.” We are concerned that AWRI reads too much into the Initial Order. The Initial Order does not adopt a hypothetical capital structure for AWRI as some abstract “principle” of “appropriate” ratemaking procedure. Instead, the Initial Order adopts a hypothetical capital structure weighted more favorably to AWRI than its actual capital structure warrants as a practical means to achieve two ends. First, as already discussed in part, the 80/20 split coupled with AWRI’s actual debt costs and a 12.6 percent equity return yields a fair and reasonable overall return. Second, imputation of 10 to 15 percent more equity than actual is intended to send a positive signal to AWRI that the Commission favors a more balanced actual capital structure than AWRI presently maintains. We must acknowledge, however, Staff’s point that AWRI has ignored previous suggestions that AWRI should reform its capital structure. Staff is correct that there is an inherent incentive in the form of higher available return on equity relative to debt that ought to encourage Mr. Fox--AWRI’s principal shareholder, principal creditor, and principal decision maker--to retire debt in favor of equity. Staff also observes correctly, however, that by making loans to AWRI his almost exclusive form of investment in the company, Mr. Fox obligates AWRI to “substantial monthly interest payments” that provide Mr. Fox “a secured income.” Staff Petition at 2. We observe, too, that while AWRI’s extraordinarily high debt ratio places the company at high risk of business and financial failure, as principal creditor, Mr. Fox will enjoy a favorable position if bankruptcy ensues. Nevertheless, we adopt for now the incentive approach the Initial Order would emplace. Staff no doubt will reexamine the issue in AWRI’s next rate case; if there is no improvement in AWRI’s actual capital structure the Commission may be required to take a different approach. We expressly reject AWRI’s argument that we should adopt a hypothetical capital structure such as the 50 percent debt, 50 percent equity structure AWRI advocated at hearing, or the 60 percent debt, 40 percent equity structure suggested by AWRI’s Petition. The case AWRI cites to support its argument for an idealized capital structure, WUTC v. U S West Communications, Inc., Docket No. UT-950200, Fifteenth Supplemental Order (April 1996), exemplifies the usual situation when hypothetical capital structures exhibiting such ratios sometimes are adopted to protect consumers from leveraging by an equity rich company. Equity rich companies are inherently safe; imposing on such companies a hypothetical capital structure with equity less than actual promotes economy (i.e., lower capital costs) and produces lower rates for consumers with no sacrifice of safety. If the equity rich company follows the lead suggested by imposition of a more idealized, hypothetical capital structure, the actual increase in the company’s debt ratio benefits shareholders by reducing capital costs if, as is typical, debt costs less than equity, and because interest on loans is tax deductible. Actual reformation of capital structure under such circumstances is neutral for customers because they already have the benefit of lower rates under the hypothetical capital structure. AWRI presents the opposite situation; it is, in fact, equity poor. The usual rationale for adopting a hypothetical capital structure does not apply. As Staff argues via its Response, hypothetical adjustments that understate actual debt do little, if anything, to actually increase safety if the actual debt obligation remains unchanged. Staff Response at 10. Unlike returns on equity, where dividends typically are at the Board of Director’s discretion and reinvestment in the company is common, debt obligations must be satisfied on a regular basis and are sunk costs, at least to the extent of interest payments. Unpaid creditors can force debtors into bankruptcy if the debtor fails to meet its loan obligations; shareholders have no similar rights if dividends or other returns on equity investment are not forthcoming, except in the most extreme situations. Hypothesizing increased equity, then, benefits AWRI’s shareholders so long as return on equity exceeds interest on debt but imposes higher rates on AWRI’s customers without actually improving AWRI’s financial security. We approve the 80 percent hypothetical debt ratio determined under the Initial Order only because it is realistic to believe AWRI can achieve an actual structure at that ratio, or better, in the short term and improve on the ratio further during the intermediate term, and certainly before AWRI’s next rate case when the issue can be reconsidered. Thus, we reward AWRI up front with a modest hypothetical adjustment to promote action by AWRI and its principal shareholder and creditor, Mr. Fox, to steer the company immediately toward a more secure capital structure. At bottom, then, we adopt the Initial Order’s cost of capital determinations as reflected in Table 3 to the Initial Order, attached here as part of Appendix A. The overall result is fair and the individual capital structure components accomplish specific ends, all within the bounds of reasonableness established by the record of facts and circumstances peculiar to AWRI at present. Rate Base. AWRI asks us to “delete” the Initial Order’s Finding of Fact number 8 which says: AWRI stand-alone systems (i.e., six-pack systems) with no customers at December 31, 1997, should not be considered used and useful and should be excluded from rate base. AWRI acknowledges that thirty-six of its water systems, each designed to operate on a stand-alone basis to serve six customer connections, had no customers at the end of the test period or even at the time AWRI filed for new rates. AWRI argues that because “some of the six-packs had customers” by the time of the evidentiary hearing, “most, but perhaps not all . . . had at least one customer” by the time initial briefs were filed, and “[t]oday, all do have at least one customer[,]” the Commission should overturn the Initial Order’s determination that this plant should not be considered used and useful in the public service for purposes of establishing rates in this proceeding. AWRI would have us ignore one of the key facts upon which the Initial Order’s used and useful determination rests: the test year for purposes of determining rates in this proceeding ended on December 31, 1997. The test year concept is essential to match rate base to revenues and expenses and otherwise to fix the point in time at which we take a detailed look at the host of factors that go into prospective rate determinations in the context of general rate cases. Our goal is to know as of a date relatively contemporaneous with the filing of a case what plant is required to be in service to meet the needs of the number of customers on the system at that date, and to know what expenses will be incurred to own and operate that plant. Then, we can know the company’s revenue requirement and design rates to recover that revenue. Given the ten month period our governing statutes permit to investigate and determine rates consistent with due process requirements, and the regulatory lag inherent to careful, balanced decision-making processes, pro forma adjustments to actual test period data are allowed to account for known and measurable changes not offset by other factors. Pro forma adjustments, then, are “known and measurable” at the time the case is filed. That, necessarily, is where the line is drawn. When parties suggest the use of ever changing data in rate proceedings the suggestion must be rejected absent compelling reasons. When the occasional exception to the rule is allowed and, for example, a post-test period addition to rate base is recognized, there must be corresponding adjustments to revenue, expense, and customer count or mismatches are inevitable and it soon is impossible to know what rates are fair, just, reasonable, and compensatory. AWRI presents no reason for us to recognize post-test period additions to rate base. Indeed, it appears AWRI does not disagree conceptually with our analysis above. Although AWRI asks us to “delete” the eighth finding from the Initial Order--and inferentially suggests we restore the disallowed rate base ($15,996) associated with the six-packs by modifying Finding of Fact number 16--AWRI takes no exception to Findings of Fact numbers 9 and 10 which also validate disallowance from rate base of facilities acquired or placed in service after December 31, 1997, as follows: 9. Facilities placed in service after December 31, 1997, should be excluded from rate base as plant not used and useful as of the end of the test period. 10. Post-test-period plant additions and contributions in aid of construction (CIAC) are not valid pro forma adjustments to rate base when there are no adjustments to account for additional customers and no analysis is made of potentially offsetting adjustments to revenue and expenses. None of the 36 six-pack systems in question had customers on December 31, 1997, or even when AWRI filed its rate case on February 27, 1998. The 36 six-pack systems were not in use, or needed, to provide service to any of the 1,730 customers recognized at the end of the test year for purposes of determining rates. Thus, for purposes of this rate case, it does not matter that some of the six-pack systems in question had customers by the time of the evidentiary hearing, or later, or that they will have customers in the future. What matters is the situation that prevailed at December 31, 1997, and this plant was not then used and useful. We approve the Initial Order’s $15,996 used and useful adjustment to remove this plant from rate base. AWRI’s rate base discussion also touches on the Initial Order’s acquisition adjustment analysis, but AWRI does not contest the Initial Order’s determination in Finding of Fact number 7, as follows: The evidence does not support a finding that AWRI’s acquisitions of operating utilities have bestowed on its existing, acquired, or potential customers benefits commensurate with the $200,194 acquisition adjustment amount AWRI proposes to include in rate base. The proposed adjustment to rate base should be disallowed. Nevertheless, AWRI’s petition discusses at length the guidance it professes to draw from the Initial Order's analysis and rejection of AWRI’s proposed acquisition account adjustment to rate base. AWRI undoubtedly should be guided by sound principles and careful judgment in all its decision making. To the extent the Initial Order provides useful illumination of acquisition adjustment principles, AWRI certainly may benefit from internalizing those principles. Yet, we discern both fr