Bill Text: IN SB0512 | 2011 | Regular Session | Introduced
Bill Title: Annual utility rate reviews.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2011-01-18 - First reading: referred to Committee on Utilities & Technology [SB0512 Detail]
Download: Indiana-2011-SB0512-Introduced.html
Citations Affected: IC 8-1.
Synopsis: Annual utility rate reviews. Authorizes certain utilities to
elect to have an annual rate review. Establishes the timing and form of
the election. Requires a utility that elects to have annual rate review to
submit an annual forecast report and an annual reconciliation report.
Specifies the contents of the reports. Provides that an interested party
may request an evidentiary hearing before the utility regulatory
commission approves an election or an annual reconciliation report.
Provides that certain rate adjustment mechanisms may be suspended
during the period in which an election is in effect. Makes conforming
amendments.
Effective: July 1, 2011.
January 18, 2011, read first time and referred to Committee on Utilities & Technology.
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
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Conflict reconciliation: Text in a statute in this style type or
A BILL FOR AN ACT to amend the Indiana Code concerning
utilities.
(1) the requested increase relates to a different type of utility service;
(2) the commission finds that the utility's financial integrity or service reliability is threatened; or
(3) the increase is based on:
(A) a rate structure previously approved by the commission; or
(B) orders of federal courts or federal regulatory agencies having jurisdiction over the utility.
The phrase "general increase in basic rates and charges" does not include changes in rates related solely to the cost of fuel or to the cost of purchased gas or purchased electricity or adjustments in accordance with tracking provisions approved by the commission or in accordance with IC 8-1-37.
(b) No schedule of rates, tolls, and charges of a public, municipally owned, or cooperatively owned utility which includes or authorizes any changes in charges based upon costs is effective without the approval of the commission. Before the commission approves any changes in the schedule of rates, tolls, and charges of an electric utility, which generates and sells electricity, based upon the cost of fuel to generate electricity or upon the cost of fuel included in the cost of purchased electricity, the utility consumer counselor shall examine the books and records of the public, municipally owned, or cooperatively owned generating utility to determine the cost of fuel upon which the proposed charges are based. In addition, before such a fuel cost charge becomes effective, the commission shall hold a summary hearing on the sole issue of the fuel charge. The utility consumer counselor shall conduct
(c) Regardless of the pendency of any request for a fuel cost charge by any electric utility, the books and records pertaining to the cost of fuel of all public, municipally owned, or cooperatively owned utilities that generate electricity shall be examined by the utility consumer counselor not less often than quarterly, and the books and records of all electric nongenerating public, municipally owned, or cooperatively owned utilities shall be examined by the utility consumer counselor not less often than annually. The utility consumer counselor shall provide the commission with a report as to the examination of said books and records within a reasonable time following said examination. The utility consumer counselor may, if appropriate, request of the
commission a reduction or elimination of the fuel cost charge. Upon
such request, the commission shall hold a hearing forthwith in the
manner provided in sections 58, 59, and 60 of this chapter.
(d) An electric generating utility may apply for a change in its fuel
charge not more often than each three (3) months. When such
application is filed the petitioning utility shall show to the commission
its cost of fuel to generate electricity and the cost of fuel included in the
cost of purchased electricity, for the period between its last order from
the commission approving fuel costs in its basic rates and the latest
month for which actual fuel costs are available. The petitioning utility
shall also estimate its average fuel costs for the three (3) calendar
months subsequent to the expiration of the twenty (20) day period
allowed the commission in subsection (b). The commission shall
conduct a formal hearing solely on the fuel cost charge requested in the
petition subject to the notice requirements of IC 8-1-1-8 and shall grant
the electric utility the requested fuel cost charge if it finds that:
(1) the electric utility has made every reasonable effort to acquire
fuel and generate or purchase power or both so as to provide
electricity to its retail customers at the lowest fuel cost reasonably
possible;
(2) the actual increases in fuel cost through the latest month for
which actual fuel costs are available since the last order of the
commission approving basic rates and charges of the electric
utility have not been offset by actual decreases in other operating
expenses;
(3) the fuel adjustment charge applied for will not result in the
electric utility earning a return in excess of the return authorized
by the commission in the last proceeding in which the basic rates
and charges of the electric utility were approved. However,
subject to section 42.3 of this chapter, if the fuel charge applied
for will result in the electric utility earning a return in excess of
the return authorized by the commission, in the last proceeding in
which basic rates and charges of the electric utility were
approved, the fuel charge applied for will be reduced to the point
where no such excess of return will be earned; and
(4) the utility's estimate of its prospective average fuel costs for
each such three (3) calendar months are reasonable after taking
into consideration:
(A) the actual fuel costs experienced by the utility during the
latest three (3) calendar months for which actual fuel costs are
available; and
(B) the estimated fuel costs for the same latest three (3)
calendar months for which actual fuel costs are available.
Subdivisions (2) and (3) do not apply to an electric utility during
the period when an election approved under IC 8-1-37-3 is in effect
with respect to the electric utility.
(e) Should the commission at any time determine that an emergency
exists that could result in an abnormal change in fuel costs, it may, in
order to protect the public from the adverse effects of such change
suspend the provisions of subsection (d) as to the utility or utilities
affected by such an emergency and initiate such procedures as may be
necessary to protect both the public and the utility from harm. The
commission shall lift the suspension when it is satisfied the emergency
no longer exists.
(f) Any change in the fuel cost charge granted by the commission
under the provisions of this section shall be reflected in the rates
charged by the utility in the same manner as any other changes in rates
granted by the commission in a case approving the basic rates and
charges of the utility. However, the utility may file the change as a
separate amendment to its rate schedules with a reasonable reference
therein that such charge is applicable to all of its filed rate schedules.
(g) No schedule of rates, tolls, and charges of a public, municipally
owned, or cooperatively owned gas utility that includes or authorizes
any changes in charges based upon gas costs is effective without the
approval of the commission except those rates, tolls, and charges
contained in schedules that contain specific provisions for changes in
gas costs or the cost of gas that have previously been approved by the
commission. Gas costs or cost of gas may include the gas utility's costs
for gas purchased by it from pipeline suppliers, costs incurred for
leased gas storage and related transportation, costs for supplemental
and substitute gas supplies, costs incurred for exploration and
development of its own sources of gas supplies and other expenses
relating to gas costs as shall be approved by the commission. Changes
in a gas utility's rates, tolls, and charges based upon changes in its gas
costs shall be made in accordance with the following provisions:
(1) Before the commission approves any changes in the schedule
of rates, tolls, and charges of a gas utility based upon the cost of
the gas, the utility consumer counselor may examine the books
and records of the public, municipally owned, or cooperatively
owned gas utility to determine the cost of gas upon which the
proposed changes are based. In addition, before such an
adjustment to the gas cost charge becomes effective, the
commission shall hold a summary hearing on the sole issue of the
gas cost adjustment. The utility consumer counselor shall conduct
his the counselor's review and make a report to the commission
within thirty (30) days after the utility's request for the gas cost
adjustment is filed. The commission shall hold the summary
hearing and issue its order within thirty (30) days after it receives
the utility consumer counselor's report. The provisions of this
section and sections 39, 43, 54, 55, 56, 59, 60, and 61 of this
chapter concerning the filing, printing, and changing of rate
schedules and the time required for giving notice of hearing and
requiring publication of notice do not apply to such a gas cost
adjustment or such a summary hearing.
(2) Regardless of the pendency of any request for a gas cost
adjustment by any gas utility, the books and records pertaining to
cost of gas of all public, municipally owned, or cooperatively
owned gas utilities shall be examined by the utility consumer
counselor not less often than annually. The utility consumer
counselor shall provide the commission with a report as to the
examination of said books and records within a reasonable time
following said examination. The utility consumer counselor may,
if appropriate, request of the commission a reduction or
elimination of the gas cost adjustment. Upon such request, the
commission shall hold a hearing forthwith in the manner provided
in sections 58, 59, and 60 of this chapter.
(3) A gas utility may apply for a change in its gas cost charge not
more often than each three (3) months. When such application is
filed, the petitioning utility shall show to the commission its cost
of gas for the period between its last order from the commission
approving gas costs in its basic rates and the latest month for
which actual gas costs are available. The petitioning utility shall
also estimate its average gas costs for a recovery period of not less
than the three (3) calendar months subsequent to the expiration of
the thirty (30) day period allowed the commission in subdivision
(1). The commission shall conduct a summary hearing solely on
the gas cost adjustment requested in the petition subject to the
notice requirements of IC 8-1-1-8 and may grant the gas utility the
requested gas cost charge if it finds that:
(A) the gas utility has made every reasonable effort to acquire
long term gas supplies so as to provide gas to its retail
customers at the lowest gas cost reasonably possible;
(B) the pipeline supplier or suppliers of the gas utility has
requested or has filed for a change in the costs of gas pursuant
to the jurisdiction and procedures of a duly constituted
regulatory authority;
(C) the gas cost adjustment applied for will not result, in the case of a public utility, in its earning a return in excess of the return authorized by the commission in the last proceeding in which the basic rates and charges of the public utility were approved; however, subject to section 42.3 of this chapter, if the gas cost adjustment applied for will result in the public utility earning a return in excess of the return authorized by the commission in the last proceeding in which basic rates and charges of the gas utility were approved, the gas cost adjustment applied for will be reduced to the point where no such excess of return will be earned; and
(D) the utility's estimate of its prospective average gas costs for each such future recovery period is reasonable and gives effect to:
(i) the actual gas costs experienced by the utility during the latest recovery period for which actual gas costs are available; and
(ii) the actual gas costs recovered by the adjustment of the same recovery period.
Clause (C) does not apply to a gas utility during the period when an election approved under IC 8-1-37-3 is in effect with respect to the gas utility.
(4) Should the commission at any time determine that an emergency exists that could result in an abnormal change in gas costs, it may, in order to protect the public or the utility from the adverse effects of such change suspend the provisions of subdivision (3) as to the utility or utilities affected by such an emergency and initiate such procedures as may be necessary to protect both the public and the utility from harm. The commission shall lift the suspension when it is satisfied the emergency no longer exists.
(5) Any change in the gas cost charge granted by the commission under the provisions of this section shall be reflected in the rates charged by the utility in the same manner as any other changes in rates granted by the commission in a case approving the basic rates and charges of the utility. However, the utility may file the change as a separate amendment to its rate schedules with a reasonable reference therein that such charge is applicable to all of its filed rate schedules.
Chapter 37. Utility Annual Rate Review
Sec. 1. As used in this chapter, "utility" means the following:
(1) An energy utility (as defined in IC 8-1-2.5-2).
(2) A utility operated by a department of public utilities created under IC 8-1-11.1-1, including a wastewater utility created by interlocal agreement under IC 36-1-7.
(3) A public utility (as defined in IC 8-1-2-1(a)) or a municipally owned utility (as defined in IC 8-1-2-1(h)) that:
(A) produces, transmits, delivers, or furnishes water; or
(B) collects, treats, or disposes of wastewater.
Sec. 2. (a) Notwithstanding any other law, a utility may elect to have its rates and charges adjusted under this chapter.
(b) To make an election, a utility must file with the commission a notice that includes the following:
(1) A verified statement that the utility has received a general rate order within the two (2) years immediately preceding the date on which the notice is filed, unless the utility files the notice at the same time it files a request for a general rate proceeding.
(2) The procedures and reporting schedules proposed by the utility to establish rates and charges under this chapter.
(3) Methods to calculate the following:
(A) For an investor owned utility, the utility's actual and projected jurisdictional rates of return on common equity.
(B) For a municipally owned utility, the utility's actual and projected net operating income.
(4) Distribution methods for the allocation of resulting revenue changes among the utility's rate schedules, and rates and charges within rate schedules.
(5) Any rate adjustment mechanisms, including rate adjustment mechanisms under IC 8-1-2-42, in effect for the utility that the utility designates to be suspended during the period when the utility's rates and charges are subject to an election under this chapter.
(6) Performance incentives previously approved by the commission that will be excluded from determining:
(A) the utility's jurisdictional rate of return on common equity, if the utility is an investor owned utility; or
(B) the utility's jurisdictional net operating income, if the utility is a municipally owned utility;
during the period when the utility's rates and charges are subject to an election under this chapter.
(c) A utility may file a notice under subsection (b) at the same time it files a request for a general rate proceeding.
Sec. 3. Not more than sixty (60) days after receiving a utility's notice under section 2 of this chapter, and subject to section 4 of this chapter, the commission shall issue an order that:
(1) establishes the:
(A) procedures and reporting schedules to be used in establishing the utility's rates and charges;
(B) calculation methods for actual and projected jurisdictional rates of return on common equity or net operating income, as applicable;
(C) distribution methods for allocation of revenue changes;
(D) rate adjustment mechanisms to be suspended while the utility's election under this chapter is in effect; and
(E) performance incentives that will be excluded from the jurisdictional rate of return on common equity or net operating income determinations; and
(2) specifies a range for:
(A) a jurisdictional rate of return on common equity for an investor owned utility that is:
(i) fifty (50) basis points, or five-tenths (0.5) of one (1) percentage point, below; and
(ii) fifty (50) basis points, or five-tenths (0.5) of one (1) percentage point, above;
the jurisdictional rate of return on common equity authorized by the commission in the utility's most recent general rate proceeding; or
(B) a jurisdictional net operating income for a municipally owned utility that is:
(i) five percent (5%) below; and
(ii) five percent (5%) above;
the net operating income authorized by the commission in the utility's most recent general rate proceeding.
Sec. 4. (a) Not more than thirty (30) days after a utility files a notice under section 2 of this chapter, an interested party may:
(1) petition the commission to become a party to the proceeding; and
(2) request an evidentiary hearing.
(b) If the commission denies a request for a hearing, the commission shall issue an order concerning the election under section 3 of this chapter.
(c) If the commission approves a request, the commission shall
hold an evidentiary hearing on the utility's notice.
(d) The commission shall establish a procedural schedule to
conduct a hearing under this section. However, the commission
shall issue an order on a utility's election not later than one
hundred twenty (120) days after the utility files a notice of election
under section 2 of this chapter.
Sec. 5. (a) A utility may withdraw a notice filed under section 2
of this chapter at any time before the commission rules on the
notice.
(b) A utility may rescind an election approved under section 3
of this chapter not later than ninety (90) days after the date on
which the order approving the election is issued.
(c) A withdrawal under subsection (a) or a rescission under
subsection (b) is without prejudice to a subsequent election or
request to change the utility's basic rates and charges in a general
rate proceeding.
Sec. 6. (a) An election approved under section 3 of this chapter, or a renewal of an election under subsection (b), expires on the earlier of the following dates:
(1) The date on which the utility receives an order from the commission to change its basic rates and charges in a general rate proceeding in which the utility rescinded or did not renew its election.
(2) Six (6) fiscal years after the date on which the utility's election approved under section 3 of this chapter took effect.
(b) A utility may elect in a general rate proceeding to continue or renew its election approved under section 3 of this chapter. If a utility so elects, the utility's election approved under section 3 of this chapter remains in effect pending issuance of the rate order in the utility's general rate proceeding.
(c) If a utility does not renew its election, and at least one hundred eighty (180) days before the date on which the utility's election expires, the utility shall notify the commission of the rate adjustment mechanisms suspended under section 3(1)(B) of this chapter that will take effect on the date the election expires.
(d) During the period an election is in effect under this chapter, a utility may petition the commission to modify any or all of the procedures, schedules, and methods established under section 3 of this chapter. The commission shall rule on a petition in the manner set forth in sections 3 and 4 of this chapter.
Sec. 7. (a) At least sixty (60) days before the start of a utility's fiscal year, the utility shall:
(1) file a forecast report with:
(A) the commission; and
(B) the office of utility consumer counselor; and
(2) transmit copies of the report to interested parties that have submitted written requests.
(b) A forecast report filed under subsection (a) must include the following:
(1) For an investor owned utility, the utility's forecast of its jurisdictional rate of return on common equity for the succeeding fiscal year.
(2) For a municipally owned utility, the utility's forecast of its jurisdictional net operating income for the succeeding fiscal year.
For purposes of forecasting its jurisdictional rate of return on common equity or net operating income under this subsection, a utility may include in its rate base construction work in progress.
(c) If a utility's forecasted rate of return or net operating income, as applicable, falls outside the applicable range determined under section 3(2) of this chapter, the utility's annual forecast report must:
(1) identify the increase or decrease in revenue needed to adjust the utility's jurisdictional rate of return on common equity or net operating income, as applicable, to the midpoint of the range; and
(2) include tariff sheets containing the proposed revised rates and charges needed to increase or decrease the utility's revenue to return the utility's jurisdictional rate of return or net operating income, as applicable, to the applicable midpoint.
Sec. 8. A utility may not include in its calculation of its jurisdictional rate of return or net operating income, as applicable:
(1) income received by the utility from performance incentives that are:
(A) approved by the commission; and
(B) not excluded under section 3(1)(E) of this chapter; or
(2) a reconciliation credit or surcharge allowed under section 14(b)(2) of this chapter.
Sec. 9. (a) Not more than forty-five (45) days after a utility files its annual forecast report under section 7 of this chapter, the commission shall issue an order approving the revisions to the utility's rates and charges calculated under section 7(c) of this chapter to adjust the utility's jurisdictional rate of return or net
operating income, as applicable, to the midpoint of the applicable
range specified in section 3(2) of this chapter.
(b) If the commission fails to issue an order within forty-five
(45) days after the utility files its annual forecast report under
section 7 of this chapter, the rates and charges proposed in the
utility's annual forecast report are considered approved.
(c) Revised rates and charges approved under subsection (a) are
effective for the utility's succeeding fiscal year.
Sec. 10. (a) Not more than five (5) months after the end of a
utility's fiscal year, the utility shall:
(1) file a reconciliation report with:
(A) the commission; and
(B) the office of utility consumer counselor; and
(2) transmit copies of the report to interested parties that have
submitted written requests for the report.
(b) A reconciliation report filed under subsection (a) must
include the following:
(1) For a utility that is an investor owned utility, the utility's
actual jurisdictional rate of return on the utility's common
equity during the preceding fiscal year.
(2) For a utility that is a municipally owned utility, the
utility's actual jurisdictional net operating income during the
preceding fiscal year.
(3) The appropriate reduction or increase in revenue
calculated under section 11 of this chapter.
Sec. 11. (a) If a utility's actual jurisdictional rate of return on
common equity or net operating income, as applicable, exceeds the
permissible range specified under section 3(2) of this chapter, the
utility shall calculate the reduction in the utility's revenue needed
to lower the utility's jurisdictional rate of return on common equity
or net operating income, as applicable, to the upper limit of the
permissible range specified under section 3(2) of this chapter.
(b) If a utility's actual jurisdictional rate of return on common
equity or net operating income, as applicable, is below the
permissible range determined under section 3(2) of this chapter,
the utility shall calculate the additional revenue required to
increase the utility's jurisdictional rate of return on common
equity or net operating income, as applicable, to the lower limit of
the permissible range determined under section 3(2) of this
chapter.
Sec. 12. (a) Not more than forty (40) days after a reconciliation
report is filed with the office of utility consumer counselor under
section 10(1)(B) of this chapter, the utility consumer counselor
shall:
(1) audit the report; and
(2) submit its findings, including any changes needed to
correct errors or otherwise bring the report into compliance
with this chapter, to the following:
(A) The utility.
(B) The commission.
(C) Interested parties that have submitted written requests
for the findings.
(b) If a utility wishes to respond to the findings included in the
audit, the utility shall submit its response to:
(1) the commission; and
(2) the office of utility consumer counselor;
not later than twenty (20) days after the findings are issued under
subsection (a).
Sec. 13. (a) Not later than thirty (30) days after a utility files a
reconciliation report under section 10 of this chapter, an interested
party may:
(1) petition the commission for review of the report; and
(2) request an evidentiary hearing.
(b) If the commission approves the request, the commission shall
establish a procedural schedule to conduct an evidentiary hearing
under this section.
Sec. 14. (a) Not later than one hundred twenty (120) days after
a utility files a reconciliation report under section 10 of this
chapter, the commission shall review the report to determine
compliance with this chapter.
(b) If the commission determines that a utility has complied with
this chapter, the commission shall issue an order that:
(1) approves the amount of any increase or decrease in
revenue calculated under section 11 of this chapter;
(2) calculates any:
(A) credit needed to generate a decrease in revenue; or
(B) surcharge needed to generate an increase in revenue;
calculated under section 11 of this chapter;
(3) distributes the credit or surcharge approved under
subdivision (2), as applicable among:
(A) the utility's rate schedules; and
(B) each rate schedule's rates and charges;
based on the revenue distribution methods approved by the
commission under section 3(1) of this chapter.
(4) specifies the period during which the adjustments are effective.
(c) If the commission determines that a utility has not complied with this chapter, the commission shall issue an order that specifies:
(1) the areas of noncompliance; and
(2) the procedure by which the utility may amend and resubmit its report.
Sec. 15. A determination by the commission in a general rate proceeding is not subject to review or hearing under this chapter.
Sec. 16. This chapter does not limit the right of a utility to:
(1) petition the commission for a general rate proceeding, including the percentage of revenue increase sought in the general rate proceeding;
(2) apply for a financial incentive under IC 8-1-8.8; or
(3) petition the commission for any relief available under this title, other than rate adjustment mechanisms suspended under section 3(1)(D) of this chapter.
