Upload
easter-heath
View
225
Download
7
Tags:
Embed Size (px)
Citation preview
GENERAL RATE CASEGENERAL RATE CASE
SAM REID &
MARK FROSTKENTUCKY PUBLIC SERVICE COMMISSION
TYPES OF RATEAPPLICATIONSTYPES OF RATEAPPLICATIONS
• 807 KAR 5:076. Alternative rate adjustment procedure for small utilities (ARF)
• 807 KAR 5:001, Section 10. General Rate Case.
TYPES OF GENERALRATE CASES
TYPES OF GENERALRATE CASES
• Historical
– Allows adjustments for for known and measurable changes
– Test Period: the 12 consecutive calendar months
SUSPENSION PERIODSUSPENSION PERIOD
• ARF - Goal 90 Days
• General Rate Case - Historical:– Rates suspended for 5 months from the
effective date of the rates.
– Commission decision (Order) issued within 10 months.
REVIEW PROCESS REVIEW PROCESS
1. Application is Filed
3. Staff is Assigned to Case & Reviews Application
4. Staff Schedules Field Review
REVIEW PROCESS (Cont.)REVIEW PROCESS (Cont.)
4. Confirmation Letter mailed
5. Staff Conducts Field Review
6. Staff Prepares & Issues Report
7. If Requested: Informal Conference and/or Hearing is Scheduled
REVIEW PROCESS (Cont.)REVIEW PROCESS (Cont.)
8. Commission Reaches Decision & Issues Final Order
9. Rehearing is Granted or Denied
10. Order on Rehearing Issued
ASSISTANCE PROCESSASSISTANCE PROCESS
1. Request for Rate Case Assistance is filed with:
Beth O'Donnell
Executive Director
Public Service Commission
P.O. Box 615
Frankfort, KY 40602
FIELD REVIEW FIELD REVIEW
•General Ledger, Cash Receipts, and Cash Disbursements Journals.
•Copies of the Accountant's workpapers and year-end adjusting journal entries.
FIELD REVIEW (Cont.)FIELD REVIEW (Cont.)
•Invoices:– Test Period– Six Months Prior– From the test period to current date.
•Monthly customer usage records for the test period.
BILLING INFORMATIONFORMAT
BILLING INFORMATIONFORMAT
Customer name
Account
number
12 months of usage
Total
Account
Name Number Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
John Doe 11010 84900 73600 86100 99700 99300 94800 124300 86000 93100 107300 94000 104900 1159010
John Doe 11020 82400 61900 68100 76200 70700 59400 68700 59800 56100 70700 59700 60600 805320
John Doe 11030 39200 23900 56500 28900 21300 40800 60400 35600 33600 33300 30900 19800 435230
John Doe 11040 62900 37100 35800 48900 52600 58600 96400 68600 36700 44200 36500 51400 640740
John Doe 11050 18500 26200 18900 27700 22200 20600 25000 22400 22900 28100 22600 21900 288050
Billing AnalysisBilling Analysis
Summarization of customer
bills-By meter size
-Customer classification
Determines test year revenue
Show customer usage patterns
Data QualityData Quality
•Bill adjustments – Misread meters– Leak adjustments
•Usage should be adjusted as well as dollar amounts in billing information
•Remove Inactive accounts
Declining BlockDeclining Block
First 2,000 gallons $15.00 Min. Bill
Next 3,000 gallons 4.00 per 1,000 gallons
Next 5,000 gallons 3.50 per 1,000 gallons
Over 10,000 gallons 3.25 per 1,000 gallons
FIELD REVIEW (Cont.)FIELD REVIEW (Cont.)
•Supporting Documentation for pro forma adjustments.
•Schedule of employees– job duties;– length of employment;– test-period salary;– date of pay increases and current
salary.
REVIEW OF TEST YEAR OPERATIONS
REVIEW OF TEST YEAR OPERATIONS
• Reconcile Books to Test Year Amounts
• Review:– Disbursements Journal– Adjusting Journal Entries– Proper Accrual Accounting– Invoices for Test Year Expenses
ALLOCATION OF COMMON COSTS
ALLOCATION OF COMMON COSTS
• Shared Costs are Allocated - Eliminates cross subsidization.
• Cost Allocation System.
• No System - a basis for logical estimates must be determined.
ADJUSTMENTS TO TEST Period
ADJUSTMENTS TO TEST Period
• Adjusts Test period numbers to reflect 12 months of normal, on-going operations.
• Adjustments MUST be BOTH known and measurable.
• Adjustments must be adequately documented.
METHODS FOR DETERMINING A REVENUE
REQUIREMENT
METHODS FOR DETERMINING A REVENUE
REQUIREMENT
Rate of Return
Debt Service Coverage (DSC)
Operating Ratio
REVENUE REQUIREMENTREVENUE REQUIREMENT
Level of revenue required for a utility:
–to properly operate and maintain its system;
–meet its financial obligations;
–basis for determining the annual revenue to collected from rates.
DEPRECIATION EXPENSEDEPRECIATION EXPENSE
• General Rule: – Bond Ordinance– Commission
• Exception: Private Utilities - CIAC• Straight-Line Depreciation Method
• Depreciation schedules available for review
Cost of Service StudyCost of Service Study
ALLOCATION of costs of providing water service to various types of customers
RECOVERS those costs through a rate structure that is fair, just and reasonable
Cost of Service StudyCost of Service Study
-Limits interclass and intraclass rate
subsidies
-Tracks costs and provides accurate
price signals
-Enhances revenue stability
MAINTAIN RECORDSMAINTAIN RECORDS
• Use the appropriate system of accounts.
• Records should be:–Logical
–Well organized
–Well documented