RCA seeks comments on tighter timelines

In response to directive from Legislature, commission proposes ways to reduce the deadlines for dealing with utility tariff filings

Alan Bailey

Petroleum News

Acting in response to state legislation passed in January 2011, the Regulatory Commission of Alaska is seeking public comments on some possible ways of reducing the statutory deadline for the commission’s review of utility tariff changes. In an order issued on Nov. 10 the commission published some ideas for complying with the legislation. The commission wants comments by Nov. 23, with reply comments due by Nov. 30.

There have been concerns in the past that the cost and time involved in achieving commission approval of a revised utility tariff, as a result for example of some new natural gas supply contract for an energy utility, may unnecessarily impede implementation of new commercial arrangements. The January legislation requires commission proposals for reducing the statutory timeline for reviews of tariff changes involving changes to a utility’s revenue requirements or rate design. A change in utility revenue requirements, presumably arising from a change in the utility’s costs, would involve a change in the rates that the utility charges its customers. A change in rate design involves changing the way in which a utility structures its rates between different types of customer.

Under current state statutes, the commission has to complete its review of a utility tariff change within 450 days of the utility completing its filing of the change with the commission. And by far the most time consuming part of a tariff review is the period during which all of the various entities involved in the case request, obtain, examine and assess information relating to the proposed tariff change, the commission said in its Nov. 10 order. Activities during this period can include hiring experts, writing testimony, holding settlement discussions and preparing for a hearing.

Several timelines?

Maximum complexity occurs when there is a combination of both a new revenue requirement and a change to the rate design. In this type of situation, information discovery and analysis can take up to 319 days, thus driving a need for the full 450 days for the complete tariff review, the commission said.

However, in a simple situation in which either the revenue requirement or the rate design has been changed, but not both, 135 days may be adequate for the discovery and analysis process. That would lead the potential for setting a 270-day deadline for a commission review.

There are also situations where a tariff change is relatively straightforward, but where the change applies to multiple utilities, typically in situations where a single holding company owns several utilities. In that case, 228 days would probably be sufficient for discovery and analysis, leading to a 360-day deadline for the complete review, the commission said.

Another possibility would be a shortened timeline for a commission decision over a utility revenue or rate design change in a situation where a similar filing has been settled for the same utility within the previous three years, and where changes in the utility’s return on equity or capital structure are not involve, the commission said.

In its order the commission also commented on the importance of the role of the state attorney general’s public advocacy section in reviewing tariff changes on behalf of the Alaska public. The attorney general often intervenes in the commission’s tariff cases, but has limited staff to assess the various and sometimes complex issues raised by a tariff change, the commission said. Any reduction in the statutory deadline for tariff reviews may require additional staff in the attorney general’s public advocacy division, and possibly higher rates of pay to ensure that the attorney general can hire the staff that it needs, the commission said.

The commission also commented that in the past year it has fulfilled numerous requests from utilities for expedited consideration of tariff changes, in situations where there is an urgent business need for a tariff decision. Carrying out these expedited reviews has involved rescheduling other commission work commitments, the commission said.