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Cost Decoupling Placed on Hold

Fortnightly Magazine - October 15 1996

While approving an increase in base rates of $26.8 million for Pacific Power and Light Co., the Oregon Public Utility Commission (PUC) has rejected a proposal to adopt a revenue decoupling mechanism and establish a systems benefits charge as part of the rate ruling. The rate spread adopted for the new tariffs includes increases ranging from 1.8 percent for large industrial customers to 6 percent for residential users.

The PUC concluded that a "cost-of-service decoupling" plan and systems benefit charge might conflict with reforms it might adopt in its upcoming review of alternative forms of regulation. Proponents had argued that both were necessary to "help assure a successful transition from traditional cost-of-service regulation."

On the rate spread issue, the PUC approved a marginal-cost study that used a "minimum system approach" to allocate distribution costs, concluding that commercial and industrial customers paid a higher rate relative to cost of service. Re PacifiCorp, dba Pacific Power & Light Co., UE 94, Order No. 96-175, July 10, 1996 (Ore.P.U.C.).

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