ADFITs: Not a Phantom
In his article, "Phantom Taxes: The Big Payback" (Courts and Commissions, 7/1/96, p. 41), David Wise argues that utility recovery of stranded facility costs...
The Michigan Public Service Commission (PSC) has authorized Michigan Consolidated Gas Co., a natural gas local distribution company (LDC), to enter into a special contract permitting KMart Corp. to aggregate its warehouse with its retail locations to qualify for transportation service at all sites. (The LDC currently provides transportation service to the warehouse facility, but serves KMart's 43 area retail outlets under its sales tariff.)
The approved special contract includes a "price-cap" pricing provision that will raise transportation charges annually by the percentage increase in the Consumer Price Index minus 1 percent. The LDC says the price cap provides incentives to pursue system efficiencies and cost reductions as well as rate certainty for KMart. The PSC found the contract in the public interest, but did not "express a view on the extent to which the price cap is appropriate." Re Michigan Consolidated Gas Co., Case No. U-11171, Oct. 7, 1996 (Mich.P.S.C.).
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