Rate of Return on Common Equity: Annual Survey of Electric Rate Case

Fortnightly Magazine - June 1 1995

Our 13th annual electric rate-case survey covers electric rate orders issued between

April 1, 1994, and March 31, 1995.

The survey tabulates rates of return on common equity (ROE) approved by state public utility commissions (PUCs) in major electric rate orders, but also includes some cases in which rate of return was not directly at issue, or where a rate adjustment resulted from a settlement agreement.

The figures were obtained from a survey of over 225 rate analysts at PUCs and the major investor-owned electric utilities. We asked respondents to 1) identify only cases in which cost of equity was at issue; 2) list figures only for electric service, in the case of a combined utility; 3) indicate whether a rate-of-return award was subject to an adjustment for management efficiency; and 4) list final figures for rate increases requested and granted. Respondents were asked to provide figures to two decimal places, if possible.

The footnotes explain variations from the basic survey criteria and provide additional detail. Appellate court orders that modify PUC decisions are not listed.

ROE

Increase Increase Previously New

(Decrease) (Decrease) Authorized Authorized

Case, Docket, Application Order Test Year Requested Granted Rate Rate

Jurisdiction/Company or Decision No. Date Date End Date ($ Million) ($ Million) (%) (%)

ALASKA

Municipal Light & Power Dept. U-94-90 6/30/94 12/2/94 12/31/93 2.7 2.1 13.00 12.00

ARIZONA

Arizona Public Service Co. U-1345-94-120 4/20/941 6/1/94 9/30/93 (38.3) (38.3) NA* NA*

153 PUR4th 396

CALIFORNIA

Pacific Gas & Electric Co. D.94-11-0762 5/9/94 11/22/94 12/31/95 131 104 11.00 12.10

158 PUR4th 217

San Diego Gas & Electric Co. D.94-11-0762 5/9/94 11/22/94 12/31/95 67.7 57.43 10.85 12.05

158 PUR4th 217

Sierra Pacific Power Co. D.94-11-0762 5/9/94 11/22/94 12/31/95 NA NA 11.10 11.30

158 PUR4th 217

Southern California Edison Co. D.94-11-0762 5/9/94 11/22/94 12/31/95 189.9 120.67 11.00 12.10

158 PUR4th 217

DISTRICT OF COLUMBIA

Potomac Electric Power Co. FC 929 4/4/944 5/4/94 (em (em 1.254 (em (em 4

HAWAII

Hawaiian Electric Co., Inc. 7700 7/26/93 12/28/94 12/31/94 53.8 50.5 13.00 12.15

Hawaii Electric Light Co., Inc. 7764 11/30/93 2/10/95 12/31/94 15.8 15.5 13.0 12.6

159 PUR4th 290

Maui Electric Co., Ltd. 7000 11/13/91 8/5/94 12/31/935 10.63 8.05 15.00 12.75

153 PUR4th 437

IDAHO

Idaho Power Co. IPC-E-94-5 6/30/94 1/31/95 12/31/93 37.1 17.2 12.25 11.006

ILLINOIS

Commonwealth Edison Co. 94-0065 2/10/94 1/9/95 12/31/94 461.7 303.2 13.00 12.28

158 PUR4th 458

INDIANA

PSI Energy, Inc. 39584 11/6/92 2/17/95 12/31/92 102.7 42.4 14.25 11.9

IOWA

Interstate Power Co. RPU-93-6 8/4/93 6/3/94 12/31/93 11.45 7.388 11.90 11.00

152 PUR4th 377

KANSAS

Empire District Electric Co. 190,360-U 3/17/94 9/7/94 12/31/93 0.72 0.51 12.25 11.60

LOUISIANA

Gulf States Utilities Co. U-19904 5/16/947 12/29/94 12/31/93 46.3587 (12.657) NA 10.95

159 PUR4th 54

MARYLAND

Potomac Edison Co. 8652 4/15/94 9/20/94 12/31/93 30.9 19.6 11.90 NA*

MICHIGAN

Consumers Power Co. U-10335 5/10/93 5/10/94 12/31/94 165.6 57.6 13.50 11.75

151 PUR4th 374

Upper Peninsula Power Co. U-10802 3/3/95 3/10/95 12/31/94 (2.9) (2.9) 11.75 11.75

MINNESOTA

Minnesota Power E-015/GR-94-001 1/3/94 11/22/948 12/31/94 34.3 19.0 11.56 11.6

MISSOURI

Empire District Electric Co. ER-94-174 12/1/93 8/2/94 12/31/93 7.97 7.35 NA* NA*

St. Joseph Light & Power Co. ER-94-163 11/22/93 6/30/94 12/31/93 5.5 2.15 11.67 NA*

MONTANA

Montana Power Co. 93.6.24 6/21/93 4/28/94 12/31/92 36.2 7.6 12.1 11.0

151 PUR4th 184

NEVADA

Nevada Power Co. 93-11045 11/19/93 7/6/94 12/31/93 (21.87)9 (6.25)9 NA NA*

Sierra Pacific Power Co. 94-6020 6/15/94 10/12/94 12/31/93 16.63 6.5* NA NA*

NEW MEXICO

Public Service Co. of New Mexico 2567 1/12/94 11/28/94 12/31/9310 (30)* (30)* NA 11.06*

157 PUR4th 540

Texas-New Mexico Utilities Co. 2531 8/23/93 5/16/94 NA 1.95 0.40 NA NA*

NEW YORK

Consolidated Edison Co. of New York, Inc. 94-E-0334 4/29/94 4/6/95 3/31/96 168.7 011 11.6 11.10

New York State Electric & Gas Co. 93-E-060112 4/29/9412 8/15/94 7/31/95 139.512 108.9 10.8 11.4

.Pp

155 PUR4th 337

Orange & Rockland Utilities, Inc. 93-E-0082 1/29/93 6/10/94 12/31/94 17.1 013 11.45 10.6013

OHIO

Ohio Power Co. 94-996-EL-AIR 7/6/94 3/23/95 3/31/95 152.4 66.0 14.34 NA*

OKLAHOMA

Empire District Electric Co. PUD 940000343 4/27/94 10/19/94 12/31/93 0.60 0.40 NA NA*

OREGON

Portland General Electric Co. UE-88 11/8/93 3/29/95 12/31/9614 119.814 102.714 12.5 11.6

PENNSYLVANIA

UGI Utilities, Inc. R-00932862 11/1/93 7/27/94 6/30/94 4.2 1.3 NA 10.58

West Penn Power Co. R-00942986 3/31/94 12/30/94 12/31/94 80.1 55.5 11.50 11.50

TEXAS

El Paso Electric Co. 12700 1/10/94 3/3/9515 6/30/93 41.4 2515 13.25 12.00

Texas Utilities Electric Co. 11735 1/22/93 5/27/9416 6/30/92 760.3 449 13.20 11.35

VERMONT

Central Vermont Public Service Corp. 5701/5724 1/18/94 10/31/94 12/31/93 17.87 8.575 12.0 10.017

2/15/94

Green Mountain Power Corp. 5695 10/1/9318 5/13/94 NA 11.1 3.75* 12.1 10.5*

153 PUR4th 232

VIRGINIA

Appalachian Power Co. PUE920081 12/4/92 6/27/94 6/30/92 31.4 17.9 13.25 11.40

Potomac Edison Co. PUE930033 4/30/93 11/18/94 12/31/92 10.0 4.486 12.75 11.20

Potomac Edison Co. PUE940045 6/22/94 3/9/95 3/31/94 6.6 3.0 11.20 11.50

WEST VIRGINIA

Monongahela Power Co. 94-0035-E-42T 1/18/94 3/17/9519 12/31/93 61.275 16.978 12.00 10.85

Potomac Edison Co. 94-0027-E-42T 1/14/94 3/17/9519 12/31/93 12.2 (0.99) 14.5 10.85

WISCONSIN

Madison Gas & Electric Co. 3270-UR-107 4/14/94 12/8/94 12/31/95 (5.8) (4.187) 12.0 11.7

Wisconsin Power & Light Co. 6680-UR-109 1/13/94 12/8/94 12/31/95 0 (12.34) 11.60 11.50

158 PUR4th 80

Wisconsin Public Service Corp. 6690-UR-109 4/15/94 12/19/94 12/31/96 (10.8) (10.9) 11.3 11.5

* Settlement/stipulation

NA (em Not available/not specified

1 Date that proposed settlement between company and commission staff was submitted to the PUC.

2 Order in annual cost-of-capital proceeding for California's energy utilities.

3 Amount was authorized by Decision 94-04-078, issued 4/20/94.

4 Proceeding involved an application for reconsideration, resulting in accounting corrections yielding an additional $1.25 million to a rate increase authorized 3/4/94. The ROE authorized in the 3/4/94 decision (11.00 percent) was unchanged on reconsideration.

5 Company used a two-year test period (calendar years 1992 and 1993).

6 The commission considered management efforts in demand-side management and customer relations in deriving the authorized ROE, but the company has filed for reconsideration, seeking an ROE of 11.75 percent.

7 Proceeding was not a general rate case, but a commission-initiated review of revenue requirement following the company's merger with Entergy Corp. GSU filed its required cost-of-service study on 5/16/94, forecasting a revenue shortfall of $46.358 million.

8 Date of initial order. An order on reconsideration was issued 3/15/95.

9 Revenues were reduced pursuant to stipulation, upon a commission staff recommendation that the company's rates be decreased.

10 Cost-of-service evidence was presented for both 1992 and 1993.

11 Three-year settlement was reached, with no increase in the first year and limited increases in the second and third years.

12 Application was filed 4/29/94 for a second-year rate increase pursuant to the terms of a settlement adopted 11/9/93 in Case 92-E-1084/5.

13 Because an investigation into possible misuse of corporate funds had delayed the company's rate case to such an extent that supporting data had become stale, the commission terminated the rate proceeding on 6/10/94 and lowered the company's target ROE to 10.6 percent.

14 The company used a two-year test period for calendar years 1995 and 1996, requesting $58.9 million for 1995 and $60.9 million for 1996. It was granted $50.9 million for 1995 and $51.8 million for 1996, with the authorized ROE of 11.6 percent remaining constant.

15 Interim order only. The commission was expected to reconsider the case and issue a revised final order by the end of April.

16 Order on rehearing. Original order was issued 4/20/94.

17 Figure reflects a reduction of 0.75 percent as a penalty for mismanagement of power-supply options and cost-effective energy-efficiency resources.

18 Date of original request. A memorandum of understanding/settlement was filed 1/31/94.

19 Order on reconsideration. Original order was decided 11/9/94.

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