Fortnightly
Alabama Approves Acquisition Premium Adjustment
February 1, 1995Phillip S. Cross
The Alabama Public Service Commission (PSC) has approved an acquisition premium adjustment allowing Alabama Gas Corp., a natural gas local distribution company (LDC), to recover from ratepayers the difference between the depreciated original cost and the fair market value of a gas system purchased from a municipality. While approving the LDC's purchase of the Alabaster Gas Distribution System, the PSC found amortizing the amount over a 30-year period (with rate base treatment of the unamortized balance) appropriate because of "pent-up" demand for gas service in the area. Nevertheless, the PSC excluded from the adjustment $501,671 paid by the utility in excess of the PSC's determination of fair market value for the property. It placed this amount in a deferred equity account to be recovered only as new customers are added to the system. Re Alabama Gas Corp., Docket 23792, Nov. 7, 1994 (Ala.P.S.C.).
Phillip S. Cross is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.
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Electric Discount Rates-An Update
New York
While reaffirming its recently approved rules for flexible rate discounting by electric utilities, the New York Public
Service Commission (PSC) has refused to replace its requirement that shareholders share the cost of the discounts. Consolidated Edison Co. of New York, Inc. had asked the PSC to allow utilities to collect the full revenue shortfall from ratepayers as long as they agree to write down uneconomic generation plant in an equal amount. Con Edison claimed that the approach was similar to sharing, but would better enhance a utility's future competitiveness. The PSC rejected the proposal, but noted that its rate discount rules would not prevent utilities from suggesting ways to improve competitiveness while protecting core customers.
The PSC also reviewed its requirements for demand-side management (DSM) audits of discount customers. The original order required "independent and comprehensive" audits to ensure that flexible rate programs are used to encourage cost-effective DSM where possible, but cautioned that they not be "overprescriptive," since that a utility's competitors are not subject to the same requirement. Nevertheless, on rehearing, the PSC required utilities to tailor their customer audits using a model developed for a "subscriptive service" DSM program currently administered by Niagara Mohawk. The PSC noted, however, that it did not intend to establish audit requirements "so onerous as to dissuade customers, who are otherwise eligible, from opting for flexible rates." Re Competitive Opportunities Available to Customers of Electric and Gas Service, Case Nos. 93-M-0029 and 94-E-0952, Nov. 30, 1994 (N.Y.P.S.C.).
North Carolina
The North Carolina Utilities Commission (UC) has modified its existing interim regulations on self-generation deferral rates. Utilities seeking approval for rate discounts must now evaluate the proposed discount customer's conservation and energy-efficiency activities. The UC had previously refused to condition approval of rate discounts on the implementation of all cost-effective DSM alternatives, requiring only that utilities support each discount application with a statement that "discusses" the result of an energy-efficiency or conservation audit of the customer. Re Self-generation, Deferral Rates, Dispersed Energy Facilities and Economic Incentive Rates, Docket No. E-100, Sub 73, Nov. 23, 1994 (N.C.U.C.).
The UC also has adopted interim guidelines for economic development rates to give utilities the pricing flexibility necessary to adjust to greater competition. However, the UC has limited these discounts to new load, because efforts to retain existing customers involves broader issues such as retail wheeling and intrastate competition between utilities. It also removed the DSM audit requirement included in the self-generation deferral tariff so as not to unduly limit utilities' flexibility to make commitments to attract new customers. Re Self-generation, Deferral Rates, Dispersed Energy Facilities and Economic Incentive Rates, Docket No. E-100, Sub 73, Nov. 28, 1994 (N.C.U.C.).
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