Last edited by Voodoozil
Friday, July 24, 2020 | History

2 edition of Return allowed in public utility rate cases. found in the catalog.

Return allowed in public utility rate cases.

Return allowed in public utility rate cases.

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Published by Arthur Andersen & Co. in [Chicago] .
Written in English

    Places:
  • United States
    • Subjects:
    • Public utilities -- Rates -- Law and legislation -- United States -- Cases -- Indexes.

    • Edition Notes

      ContributionsArthur Andersen & Co.
      Classifications
      LC ClassificationsKF2103.A54 R47 1954
      The Physical Object
      Pagination2 v. :
      ID Numbers
      Open LibraryOL1965075M
      LC Control Number90198559

      Understanding Rate Case Components. Understanding Rate Case Components. Rate Base: The Commission determines if new plant has been put in service and is now "used and required to be used" in providing "efficient and sufficient" service. If new plant has been shown to provide a benefit to consumers it is allowed in the rate base.   For comparison, the Public Staff of the N.C. Utilities Commission, the state’s utility customer advocate, has proposed a 9% return on equity with a capital structure of 50% equity and 50% debt.

      The applicable legal requirements require the Public Service Commission (PSC) to render a decision within 11 months after a major rate case is filed. Rate cases proceed in an entirely public and open process. Rate-Setting Process: To begin, the utility company submits a filing to demonstrate the need for a rate increase. Included in the rate.   The settlement must be approved by the Public Utility Commission, which is expected to take it up Jan. If the deal is approved by Feb. 5, the new rates .

      return of the 76 other utility operating companies. Only two other states have broad formula rate mecha-nisms for electric utilities similar to the Alabama Rate RSE. However, each of these states, Louisiana and Missis-sippi, allows for greater public involvement and transpar-ency before major rate increases are granted. Moreover. According to a recent report released by Accenture, from to , US utilities filed an average of five rate cases per quarter with state regulators. .


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Return allowed in public utility rate cases Download PDF EPUB FB2

If a utility has a capital structure of 50% debt, as regulators encourage, then: rr rd + re. Where: rd = return on debt and re = return on equity. So if the utility is allowed an 8% overall rate of return and obtains debt for 5% (rd), its return on equity will be 11% (re).

If the allowed rr is raised to 9%, then the re will be 13%. Utility ratemaking is the formal regulatory process in the United States by which public utilities set the prices (more commonly known as "rates") they will charge consumers. Ratemaking, typically carried out through "rate cases" before a public utilities commission, serves as one of the primary instruments of government regulation of public utilities.

Get this from a library. Return allowed in public utility rate cases; digest of cases. [Arthur Andersen & Co.]. by Bob Shively, Enerdynamics President and CEO “ process of setting an allowed ROE has consistently proven to be the most contentious and subjective part of a rate case proceeding.”[1] Much of the key natural gas Return allowed in public utility rate cases.

book electricity infrastructure in the U.S. operates under the cost-of-service ratemaking. This is true for electric transmission and distribution, gas. The rates of return allowed by public utility commissions varies, but a return on the rate base of 8% to 10% per year is a good representative figure.

‹ Electricity Industry Structure and Regulation up Economic Dispatch and Operations of Electric Utilities ›. Utility General Rate Case – A Manual for Regulatory Analysts POLICY AND change its’ rate only after the Commission establishes that the new rate is just.

Public Utilities Code states: “[A] public utility shall not change any rate or so alter any classification, contract, book depreciation, return, taxes, etc. The allowed rate of return (return on assets) drives a utility’s profitability.

Expenses are simply passed through, including fuel in cases where regulated utilities own power plants. Historically, critics have said that so-called “rate of return regulation” does not properly motivate utilities to operate efficiently.

ALLOWED RATE OF RETURN n Two critical standards that come from U.S. Supreme Court cases from the early ’s n Bluefield Waterworks n The public utility is entitled to such rates as will permit it t o earn a return on the value of the property to that generally being made at the same time and in the same general part of the.

The "rate base” is the value of the company’s assets minus accumulated depreciation. The allowed return on assets, or Return on Equity (ROE) drives a utility’s profitability.

Expenses are simply passed through to customers. By having a set rate of return, utilities essentially are incentivized to make unnecessary investments in order to. by multiplying the allowed rate of return by the utility’s total dollar amount of rate base The Allowed Rate of Return can be considered as the rate of return that is permitted, but not guaranteed.

34 Rate of Return The principles of a fair rate of return were established in two U.S. court cases, one inand one in Rate base is the value of property on which a public utility is permitted to earn a specified rate of return, in accordance with rules set by a regulatory general, the rate base consists of the value of property as used by the utility in providing service.

It may be calculated by any one or a combination of accounting methods, such as fair value, prudent investment, reproduction. * Bonbright, James C, Principles of Public Utility Rates, Columbia University Press, New York NY,p. The Bonbright principles, as well as the Hope and Bluefield decisions, help regulators to determine rates for investor-owned utilities that balance the interests of utility ratepayers with those of utility shareholders.

Instead, each utility’s state public utility commission or, in some cases, the federal energy regulatory commission, sets the electric rates that each utility can charge its customers, and as.

If the return on the coal-ash balances were done away with, she said, Duke would need to change a deal it just made with rate-hike opponents to cut its utilities’ return. UTILITY RATES STUDY. The Public Utilities Commission, in consultation with the Office of Energy Background – Cost Recovery in Rate Cases Setting rates for utilities is based on the principle of providing a increases for costs of the same nature and kind and the same rate of return allowed in the most.

Rate Base. The value of property on which the utility is allowed to earn a specified rate of return, in accordance with rules set by the Commission. The values below reflect actual approved utility rate bases by year from to The Federal Energy Regulatory Commission (FERC) has jurisdiction over electric transmission rate base and.

For this reason, the PSC developed a staff-assisted rate case (SARC) program which allows small water or wastewater utilities with annual revenues under $, to request PSC staff assistance in developing its rate case.

For utilities that provide both water and wastewater service, revenues must be under $, to request a SARC. Rates which are not sufficient to yield a reasonable return on the value of the property used at the time it is being used to render the service of the utility to the public are unjust, unreasonable, and confiscatory, and their enforcement deprives the public utility company of its property, in violation of the Fourteenth Amendment.

Accounting Review of Rate Case: Rate Base Critical Concepts • Original Cost – In Illinois, rate base is measured based on original cost, that is, the cost when the utility plant assets were first put to utility service.

Section of the Public Utilities Act (PUA) states: The Commission, in any determination. (6) allows a return on investment at the level approved in the utility's last general rate case, unless a different return is found to be consistent with the public interest; (7) provides a current return on construction work in progress, provided that recovery from Minnesota retail customers for the allowance for funds used during construction.

Public Utility Research Center University of Florida P.O. Box Gainesville, FL the allowed rate of return and is the interest that the company pays on its debt plus the return it must provide to between rate cases), and rate cases may be costly to perform. Lastly, rate of return regulation.RATE CASES - Introduction: Today, utility rate setting is getting increased attention and interest from the public.

When a utility company files a request for a rate change, the attention of those affected by the change turns toward the Public Utilities Commission “Commission” and the Division of Public Utilities and Carriers “Division.

Under rate base treatment, $2 million will be collected in the first year with $18 million to be deferred, while earning the allowed rate of return, say 8%.

By the rule of 72, the interest divided into 72 yields the time to double the initial amount (72/8 = 9 years).