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of the instrument air upgrade at Units 1 or 2 as of December 31,
1985, and it failed to begin construction of the system at Unit 2
as of December 31, 1985.
5. Spent Fuel Rack Systems
Petitioner also claims an ITC for the costs of the spent
fuel rack systems installed at St. Lucie Unit 1 and Turkey Point
Unit 4 (spent fuel racks in issue) during the 1988, 1989, and
1990 taxable years of $6,713,729, $532,892, and $6,646,960,
respectively. Petitioner contends that the spent fuel rack
system was conceived, designed, and constructed as a unit, and
that the spent fuel racks at St. Lucie and Turkey Point nuclear
power plants constitute a single functionally integrated
property. Respondent argues that the spent fuel racks in issue
and the already existing spent fuel racks at St. Lucie Unit 2 and
Turkey Point Unit 3 constitute separate property; and therefore,
petitioner failed to (1) incur or commit any costs before 1986,
or (2) begin construction before 1986.
Petitioner relies on the testimony of Mr. Bible, FPL’s
engineering manager, to support its contention that the spent
fuel racks constitute a single property. Specifically, Mr. Bible
testified:
We have in the past had the licenses and we have
transferred fuel from one pool to the other. The
designs are such that they can accommodate fuel from
either unit.
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