Ralph R. Mabey, trustee in the Chapter 11 bankruptcy proceedings of Cajun Electric Power Co-op., has entered into an amended asset-purchase agreement with Louisiana Generating LLC for the purchase...
Return on Equity: A Survey of Recent Rate Cases From State PUCs
- Standards No. 130 (Reporting Comprehensive Income) which required company to disclose a contingent minimum pension liability.
- Utility required to file cost of service update pursuant to prior ruling approving a merger to determine if rate reduction is required.
- PSC finds no rate decrease necessary. Rates capped through 2006 pursuant to prior approved merger agreement.
- Initial rate increase serves as basis for newly approved performance-based rate plan.
- Rate increase shown offset by $3.09 million elimination of universal service fund interim rate, $21.68 million gas cost adjustment, $0.73 million transitional energy facility adjustment, $6.78 million temperature adjustment clause rate adjustment, and $6.64 million gas supply service rate roll-in.
- Three-year rate settlement approved 10/25/01. Commission approved rate plan modification 6/14/04 extending rate for 2 years to 6/06. ROE remains at 10.3% as decided in prior ruling. Prior ruling includes revenue sharing as follows: 100% to shareholders from 10.3% to 11.3% - 50/50 sharing of earnings from 11.3% to 14% - Above 14% 100% to ratepayers.
- Commission updates revenue sharing plan. New sharing points as follows: 100% to shareholders at 10.3% to 10.5% earnings level - 70% shareholders/ 30% ratepayers at 10.5% to 11.3% earnings - 65% shareholders/ 35% ratepayers at 11.3% to 14% earnings and 100% to ratepayers at 14% and above earnings.
- Proposed rates filed May 16, 2003. Utility also filed electric rate unbundling plan pursuant to prior order.
- Multi-year rate plan calls for rate freeze through 2008. PSC approves initial rate increases as shown through implementation of electric retail access surcharge and natural gas merchant function charge.
- Electric plan requires equal sharing with ratepayers of earnings above 12.25% threshold, while gas plan requires equal sharing above 12%.
- Rate case was settled - ROE was NOT settled. Staff refused to go higher than 10%. Company refused to go lower than 10.75. In the end, case was settled on dollar amount.
- Order approving agreement restricting ability of utility to seek future rate increase and reducing allowed ROE.
- Utility filed cost of service study pursuant to prior ruling.
- Proceeding follows finding by Department that sale of interest in nuclear facility by utility reduced revenue requirement.
- Department reduces 10.5% ROE included in settlement agreement finding lower rate better matched existing market conditions.
- Order approving application for authority to construct new generating facilities.
- Commission finds it reasonable to set the following financial terms for facility lease: 12.7% return on equity and capital structure of 55% equity and 45% debt.
- Final requirement unstated.
- Commission rejected 0.25% "Wyoming-specific" risk premium proposed by the utility to account for past disallowance of deferred power costs.
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