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:
Rules and Regulations Regarding the Use of Fully Projected Test Years (Docket L-2012-2317273 )
In the PUC's Secretarial Letter on Fully Projected Future Test Years, published in the September 1, 2018 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
Clarified Notice of Proposed Rulemaking – Fully Projected Future Test Year (Docket No. L-2012-2317273)
This proceeding arose from the Commission’s 2017 Advanced Notice of Proposed Rulemaking (ANOPR) wherein soliciting stakeholder comments. The ANOPR also directed Commission Staff to convene stakeholder meetings on the information to be filed by a public utility when the public utility is requesting a general rate increase more than $1 million using a fully projected future test year. In lieu of comments, Stakeholders requested that the Commission move directly to stakeholder meetings. The Commission subsequently convened numerous stakeholder meetings on the ANOPR throughout 2018 and 2019, ending with the final stakeholder meeting on October 30, 2019.
On August 24, the Commission issued a Clarified Notice of Proposed Rulemaking wherein proposing to standardize and streamline the filing requirements for information and data related to various ratemaking components for a public utility in a base rate case proceeding and seeking comment on the proposed amendments. The Commission indicated its goal is to: (1) develop consistency in filing requirements across public utility types; (2) incorporate the appropriate standard discovery requests; and (3) eliminate the filing of unnecessary information. Although the PUC’s proposal does define the different periods that lead up to the use of a fully projected future test year (“FPFTY”) and requires data for the test year (historic period, future period, and the fully projected test year) to be filed, the Commission is seeking comments to further define the filing requirements that will be put in place.