Attached files
| file | filename |
|---|---|
| 8-K - UIL FORM 8-K DATED JANUARY 7, 2010 - UIL HOLDINGS CORP | uil_form8kdated010710.htm |
| EX-99.1 - UIL EXHIBIT 99.1 - UIL HOLDINGS CORP | exh99-1.htm |
EXHIBIT
99
December
14, 2009
Ms.
Kimberley J. Santopietro
Executive
Secretary
Department
of Public Utility Control
10
Franklin Square
New
Britain, CT 06051
|
Re:
|
Docket
No. 10-01-02– Administrative Proceeding to Incorporate DPUC Approved Power
Supply Procurement Results into The United Illuminating Company's Standard
Service and Last Resort Service Rates and Charges Effective January 1,
2010 - REVISED
|
|
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Dear
Ms. Santopietro,
|
On December 8, 2009, The United
Illuminating Company (“UI” or the “Company”) filed its proposal in the
above-referenced docket to enable the Department of Public Utility Control
(“DPUC” or “Department”) to establish total new Standard Service and Last Resort
Service Rates that will take effect on January 1, 2010. Subsequent to
that filing, the December 2009 Transmission Adjustment Clause (“TAC”) filing was
finalized. The results of that filing, which was filed in Docket No.
09-12-01 on December 14, 2009, have now been incorporated in this revised
proposal. In addition, the proposed GSC rates have been further
reduced to reflect a lower working capital balance ($5 million vs. the
originally proposed $9.1 million). Finally, the amount of the 2010
estimated pension expense that is proposed to be incorporated into rates
effective January 1, 2010 has been reduced ($11.4 million vs. the original
amount of $12.153 million included in the December 8, 2009
filing). These two additional adjustments were incorporated into the
Company’s proposal in order to not increase Residential Rate R on January 1,
2010 as a result of this complete proposal.
The
Company proposes the following for each rate component:
1. Generation Services
Charge (GSC) – On November 25, 2009, the Company filed revised exhibits
in this docket incorporating the results of the Company’s power procurements for
2010, and updating its November 16, 2009 filing. These GSC rates also
incorporate (1) the adder to recover the GSC-allocated costs, which were
included in the GSC per the final decision dated February 4, 2009 in Docket No.
08-07-04 (“Rate Case Decision”), and (2) the estimated
adder
pertaining to the Company’s “Type B” procurements. In this revised
proposal, as noted above, the proposed GSC rates have been further reduced. The
adder necessary to recover the GSC-allocated costs has been reduced from 0.2477
cents per kWh to 0.0792 cents per kWh (to reflect a lower working capital
balance as noted above), a reduction of 0.1685 cents per kWh for all Standard
Service and Last Resort Service GSC rates from the rates that were included in
the December 8, 2009 proposal. Additionally, the Company identified
an overstatement in the previously submitted base GSC rates of 0.0594 cents per
kWh contained in Second Revised Exhibit 4. Incorporating all of these
changes results in the proposed GSC rates shown on Third Revised Exhibit 4, page
2 of 4.
2. Nonbypassable Federally
Mandated Congestion Charge (NBFMCC) – In its November 16, 2009 filing in
this docket, the Company included proposed NBFMCC rates as determined in its
response to Interrogatory EL-31 in Docket No. 09-08-01. In that
response, the Company proposed an NBFMCC rate of $0.00 per kWh, which would
preserve a working capital balance of approximately $5 million. The
Department’s Draft Decision in Docket No. 09-08-01, dated December 2, 2009,
determined that the appropriate NBFMCC rate to be effective as of January 1,
2010 should be based on the latest projections available for 2010. As
of the date of this filing, the projections that were filed in response to
Interrogatory EL-31 in Docket No. 09-08-01 are the latest
available. However, upon further review, the Company’s proposal is to
set the NBFMCC rate so that the projected December 31, 2010 NBFMCC working
capital balance will be $0. This will result in the NBFMCC rate being
a credit on customers’ bills. The proposed NBFMCC rates are shown on
Exhibit 6 submitted on December 8, 2009.
3. Systems Benefits Charge
(SBC) – In Docket No. 99-03-35RE15, the Department approved a change in
UI’s SBC rate effective as of January 1, 2010. This rate change was
incorporated in UI’s previous filings in this docket and is also shown in the
attached Third Revised Exhibit 4.
4. Transmission –
On December 14, 2009, the Company filed its request to adjust the TAC
rate in Docket No. 09-12-01, DPUC Semi-Annual Review of The
Connecticut Light and Power Company and The United Illuminating Company's
Transmission Adjustment Clause. The administrative proceeding
in that docket has already been scheduled for December 22, 2009. The
filed TAC rate is now incorporated into the Company’s revised proposal in this
docket. The Company requests that the Department take administrative notice of
the final TAC rate from Docket No. 09-12-01 and incorporate the results into
total rates effective as of January 1, 2010.
5. Competitive Transition
Assessment (CTA) – Per the Department’s Decision in Docket No.
99-03-35RE15, there is no proposed change in the CTA rate.
6. Conservation and Load Management
(CLM) Charge and Renewable Energy Investment (REI) Charge – There is no
proposed change in the CLM or REI rates.
7. Distribution -- The
proposed distribution rate effective as of January 1, 2010, factoring in all of
the items listed below, is shown on the attached Third Revised Exhibit
4.
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(a) Implementation of Step
Increase – The Rate Case Decision in Docket No. 08-07-04 approved an
increase in distribution revenue for 2010 of $19.14 million. As
stated on page 139 of that decision, “The Department has closed the
proceeding and has determined all adjustments for 2010 except the pension
expense”. In order to minimize the number and frequency of rate
changes that will be experienced by UI’s customers, the Company proposes to make
this increase effective as of January 1, 2010 instead of February 4, 2010, with
an offset (described below) to the decoupling adjustment. The
incremental distribution revenue attributable to the January 1, 2010
implementation date (34 days of incremental revenue, January 1 – February 3) is
estimated to be $1.8 million. The derivation of this incremental
revenue, coupled with the additional incremental revenue from the adjustments
described in sections 7(b) through 7(e) below, is shown on the attached Revised
Exhibit 5. This incremental revenue will be used to benefit customers
by offsetting the accumulated charge in the decoupling adjustment (item 7(f)
below).
(b) Pension & OPEB
Regulatory Asset (for 2009 Pension Expense) – In Docket No. 08-07-04, the
Department established a regulatory asset of $10.232 million (see Rate Case
Decision, at 57). As stated on page 52 of the Rate Case
Decision,
The
Department approves the expense but in order to mitigate the impact on
ratepayers’ bills, and as suggested by the Company, the Department will
establish a regulatory asset for the increase in the pension and OPEB expenses
as a result to the change in the year end discount rates for 2008, not reflected
in approved rates for 2009 of $10.2 million, without earning a return on this
deferral.
The
Company proposes to incorporate this regulatory asset into distribution rates
effective January 1, 2010. While the Rate Case Decision is silent on
the timing of the resolution of the regulatory asset for the 2009 pension
expense, it is reasonable to assume that recovery would have been anticipated to
occur during the February 4, 2010 – February 3, 2011 rate
year. Implementing the recovery beginning January 1, 2010 yields
incremental revenue of approximately $1.0 million, similar to the implementation
of the distribution step increase discussed above. The Company would
propose the same treatment as discussed in item No. 7(a) above
(c) Pension & OPEB
Expense - 2010 – On December 2, 2009, the Department reopened Docket No.
08-07-04 for the limited purpose of “examining UI’s pension and OPEB
expenses and to consider modifications to the approved distribution rates for
2010 so that rates can begin January 1, 2010”. In this
filing, the Company is providing a calculation of the estimated 2010 pension and
OPEB expense based on plan asset values and the applicable discount rate as of
October 31, 2009. Details of the assumptions used in this calculation
are on Exhibit 7 which was filed on December 8, 2009. The resulting
estimated incremental 2010 pension and OPEB expense that is above the amount
already included in rates is $12.153 million.
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The Company proposes that a portion of this estimated incremental pension expense be incorporated into rates on January 1, 2010. In order to avoid an increase to Residential Rate R on January 1, 2010 as a result of this complete proposal, the Company has included $11.4 million of the 2010 estimated pension expense into rates, effective January 1, 2010. Similarly to the 2009 pension and OPEB expense discussed in item No. 7(b) above, incremental revenue of approximately $1.2 million generated by including the 2010 pension and OPEB expense in rates as of January 1, 2010 as opposed to February 4, 2010 is proposed to be netted against the decoupling adjustment.
In
January 2010, the Company will file the final 2010 pension and OPEB expense
values, based on plan asset values and the applicable discount rate as of
December 31, 2009, as contemplated in the Rate Case Decision. Any
difference between the final 2010 pension and OPEB expense and the portion of
the estimated pension and OPEB expense which has been included in rates ($11.4
million) will be established as a regulatory asset or liability for future
recovery or credit.
(d) Reconsideration 2009
Regulatory Asset (for 2009 Reconsideration Revenues) – The June 2, 2009
decision on reconsideration in Docket No. 08-07-04 approved an increase in
distribution revenue of $0.655 million for the 2009 rate year. In
accordance with pages 58, 78 and 111 of that decision, this amount has been
added to the $10.232 million 2009 pension expense regulatory asset described in
item 7(b) above. Similar to the 2009 pension expense regulatory
asset, recovery of the 2009 reconsideration amount is necessary to recoup the
one-time revenue requirement shortfall from 2009. Implementing the
recovery beginning January 1, 2010 yields incremental revenue of approximately
$0.1 million, similar to the implementation of the distribution step increase
discussed above. Again, this incremental revenue is proposed to be
netted against the decoupling adjustment.
(e) Reconsideration 2010
Revenue – The June 2, 2009 decision on reconsideration in Docket No.
08-07-04 also approved an increase in distribution revenue of $0.939 million for
the 2010 rate year. Similar to the 2010 pension expense in item 7(c)
above, recovery of
the full 2010 $0.939 million revenue requirement shortfall is necessary to
recoup in rates the ongoing revenue requirement adjustment approved by the
Department. Implementing the recovery beginning January 1, 2010
yields incremental revenue of approximately $0.1 million, similar to the
implementation of the distribution step increase discussed
above. Again, this incremental revenue is proposed to be netted
against the decoupling adjustment.
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(f) Decoupling
Adjustment – In Docket No. 08-07-04, the Department approved a decoupling
mechanism as a two-year pilot (see Rate Case Decision, at
126). According to the Department-approved Decoupling Rider, the
Company will file the results of the decoupling mechanism within 60 days of the
close of the rate year on February 3, 2010 (i.e., by April 4,
2010). Subsequent to that filing, the appropriate charge or credit to
customers will be determined. Based on the latest information available as of
September 30, 2009, the decoupling mechanism has accumulated a $6.5 million
charge, and the Company anticipates that the April 2010 filing will necessitate
a charge to customers. The estimated incremental revenue resulting
from the proposed recoveries above in items 7(a) – (e) above to be netted
against the decoupling adjustment is projected to be $4.1m (see Revised Exhibit
5). The Company does not propose any change to the operation of the
previously approved Decoupling Rider.
(g) 2010 Retail Revenue
Requirement Summary – The final 2010 distribution retail revenue
requirement incorporating all of the proposed adjustments above for rates
effective as of January 1, 2010 is $286.5 million (see Third Revised Exhibit 4,
page 4 of 4). The table below provides a detailed reconciliation from
the Rate Case Decision to the amount shown on Third Revised Exhibit
4.
Final Resulting Retail
Rates
Third Revised Exhibit 4 shows the total
Standard Service and Last Resort Service rates incorporating the Company’s
proposal. The total system average Standard Service retail rate will
decrease from 21.8283 to 21.5934, a decrease of 0.2349 cents per kWh, or
1.08%. Residential Rate R will remain at 23.9180 cents per kWh. In
order to incorporate these changes into rates on January 1, 2010, the Company
respectfully requests approval not later than December 23, 2009.
Please contact me if there are any
questions with respect to this filing.
Respectfully
submitted,
By
_______________________
Michael
A. Coretto
Associate
Vice President – Regulatory & Legislative Affairs
cc: Service List
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