Utility Use of Fully Projected Test Years

Issue:

The ability of a utility to utilize a future test year or a fully projected future test year has already been approved in Act 11 of 2012.  However the legislation also required that, “The commission shall promptly adopt rules and regulations regarding the information and data to be submitted when and if a future test period or a fully projected future test year is to be utilized.”  The commission was to also specify the “appropriate data evidencing the accuracy of the estimates contained in the future test year or a fully projected future test year…”

Six years later the commission is finally getting around to this requirement.  As stated in the ANOPR , “The Commission has jurisdiction to employ the concept of a FPFTY as authorized by Act 11 of 2012, which amended Section 315 of the Public Utility Code.” Also, “The purpose of this ANOPR is to solicit comments and input on the procedures and filing requirements for utilities that use a FPFTY.”

IECPA Position:

The use of fully projected test years by utilities is a bad policy resulting in increased utility rates to customers. The regulatory process does not allow for retro-active rate making. Therefore if the utilities over projected their costs and rates are based on these inflated projections, there is no refund to customers of that over collection. However given that the PA law currently allows utilities to use projected cost when establishing their rates, there at least needs to be a robust set of guidelines, measurements of projection accuracy and corrective actions for consistent over projections.

Details:

L-2012-2317273 Rules and Regulations Regarding the Use of Fully Projected Test Years

In the PUC's Secretarial Letter on Fully Projected Future Test Years, published in the September 1 edition of the Pennsylvania Bulletin.  Per this letter there will be 4 stakeholder meetings held at the PUC on 9/27/18, 10/30/18, 11/28/18, and 1/23/19.  Agendas for these meetings are provided in the Secretarial Letter.  The PUC is also recommending that stakeholders exchange Position Papers prior to each scheduled meeting, per the template also contained in the Secretarial Letter.  The deadline for submitting formal Comments in this proceeding remains deferred.

IECPA filed an Initial Position Paper and attachment