Gas – Rates
Application
In this decision, the AUC considered whether Apex Utilities Inc. (“AUI”) complied with AUC directions made in AUC Decision 26616-D01-20221 regarding AUI’s Cost-of-Service (“COS”) review (“COS Review Decision”) and reviewed AUI’s resulting 2023 distribution rates.
Decision
The AUC determined that AUI complied with its directions from the COS Review Decision, other than failing to remove the true-up (timing) adjustment for shared corporate services costs. The AUC directed AUI to remove the $190,000 adjustment at the time of other true-ups to 2023 rates.
The AUC approved AUI’s 2023 distribution rates on an interim basis. The AUC also approved AUI’s 2023 Special Charges Schedule, Retailer Distribution Services Rules, and AUI’s request to finalize its 2021 interim performance-based regulation (“PBR)” rates based on the calculation of its 2021 going-in revenue and K-bar amounts.
Applicable Legislation
Natural Gas Billing Regulation, AR 185/2003.
Pertinent Issues
Compliance with Decision 26616-D01-2022
In the COS Review Decision, the AUC directed AUI to use the TriSummit Utilities (“TSU”) shared corporate services costs at a 2021 forecast level and then normalize that forecast to 2023 dollars, using approved inflation and customer growth escalation factors. In addition to performing the directed adjustments, AUI removed $190,000 of credits listed as a true-up (timing) from the 2021 forecast shared corporate services costs allocated to it by TSU. AUI explained that it excluded costs from the true-up (timing) cost category because these amounts represent differences between billed and actual 2020 costs that were not accrued in 2020. AUI indicated that while these differences are recognized in the 2021 year for accounting purposes, they represent part of the cost of services provided in 2020 and not 2021. The AUC decided not to allow AUI proposed adjustment. Just as there was a timing adjustment in 2021 for differences between billed and actual 2020 costs, presumably, there was or will be an adjustment in 2022 for differences between billed and actual 2021 costs. Following AUI’s logic, the adjustment for (expected) differences between billed and actual 2021 costs should have been added to the 2021 forecast costs to arrive at a more precise number for that year.
2023 Distribution Rates
AUI noted that an unadjusted allocation of revenue requirement to each rate class based on the current Phase 2 allocations would increase the delivery rates of Rate 4/14 (Irrigation) customers by 39.9 percent and increase the bill impact, excluding commodity costs by 29 percent. To mitigate rate shock and consider affordability to its Rate 4/14 customers, AUI allocated $50,000 from Rate 4/14 customers to Rate 3/13 (demand) customers to increase the rate for Rate 4/14 customers to 10 percent in delivery rates and 8.7 percent in bill impact excluding commodity costs. Rate 3/13 was identified as the offsetting rate class, as it will see a decrease in rates for 2023.
The AUC found that AUI’s schedules and 2023 rate calculations were accurate and reasonable. The AUC approved AUI’s 2023 rates on an interim basis.
