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2008 ROE Survey - Rates, Risks & Regulators

Economic uncertainties raise doubts about utility returns.

Fortnightly Magazine - November 2008

permanent rate recovery of costs associated with damages caused by Hurricanes Rita and Katrina.

20.  Utilities directed to file full ROE analysis reflecting reduced risk associated with “up-front” recovery of future storm costs.

21.  Increase to monthly customer charge for increased operating expense and equipment replacement. Commission also approves “Capital Surcharge” to generate $.546 million over five-year year period to fund capital additions.

22.  Figures shown are total revenue requirement, not revenue sufficiency or deficiency. Approved settlement agreement based on $54.4 million total revenue requirement. Company initially requested rates to recover $56.6 million in revenue.

23.  Order approving stipulation that decreases electric distribution rates and establishes a new five-year alternative rate plan.

24.  ­Rate plan contains a high-end earnings-sharing provision mandating reliability investments if earnings exceed 11% ROE during term of rate plan.

25.  Reflects reduced risk to investors stemming from improvements in capital structure and divestiture of nuclear assets.

26. Settlement agreement.

27.  Settlement silent on ROE. Utility continues to use ROE authorized in prior rate case.

28.  Demand-side management programs in rate base earn a 5% enhancement on ROE, or 15.6%.

29.  The Tracy combined-cycle generating unit earns a 1.5% incentive ROE, or 12.1%.

30.  Revenues required under three-year rate plan.

31.  Rate order includes earnings-sharing plan allocating 50% of actual earnings above 10.7% ROE to shareholders.

32.  Order establishing three-year rate plan.

33.  Figure shown is levelized annual increase for each of three rate years ending June 30, 2009, 2010 and 2011.

34.   Equity earnings sharing mechanism with 50% sharing of earnings between 10.2% and 11.2%, 7.5% above 11.2%. Figure shown is base figure for revenue requirement.

35.  Commission orders further reduction of $53.924 million for issues not settled under stipulation.

36.  Last rate order issued 2002.

37.  Settlement agreement. ROE not specified.

38.  ROE for natural gas distribution utilities set in accordance with OEB Draft Guidelines on a Formula-Based Return on Common Equity for Regulated Utilities (Ontario Energy Board, March 1997).

39.  For electricity rate applications (transmission and distribution) the $ shown as requested and approved are the total revenue requirement, not as revenue sufficiency or deficiency.

40.  ROE for electricity transmitters and distributors set, beginning on 2007 in accordance with the Report of the Board on Cost of Capital and 2nd Generation Incentive Regulation for Ontario’s Electricity Distributors .

41. Settlement agreement.

42. Settlement agreement. ROE not specified.

43.  Application to adjust rates under formula rate plan.

44.  Settlement agreement. ROE not specified.

45.  Board approves memorandum of understanding (MOU) as a bottom-line settlement in which overall rate level is found just and reasonable.

46.  Figure shown stated in MOU pending adoption of alternative regulation plan or order in future rate proceeding.

47.  Approved stipulation authorizes stated revenue increase, as well as a four-year, performance-based rate plan.

48.  Plan required company to share with ratepayers earnings in excess of 10.5%.

49.  Subsequently revised to $34 million.

50.  Net