16 Tex. Admin. Code § 7.7101 - Interim Rate Adjustments
(a)
General requirements. Pursuant to Texas Utilities Code, §
104.301, a gas utility
may file with the Commission an application for an interim rate adjustment,
subject to the requirements of this section. The director may reject any filing
that, at the time of filing or within a reasonable time afterward, does not
substantially comply with the requirements of this section.
(1) The filing date of the gas utility's most
recent rate case in which there is a final order setting rates for the area in
which the interim rate adjustment will apply shall be no more than two years
prior to the date the gas utility files its initial interim rate adjustment
application under this section. The gas utility shall state in its application
the gas utilities docket number of the gas utility's most recent rate
case.
(2) A gas utility shall file
its application for interim rate adjustment with the Commission at least 60
days before the proposed implementation date of the interim rate
adjustment.
(3) A gas utility shall
complete notice of its application for interim rate adjustment to all affected
customers in accordance with subsection (b) of this section no later than the
45th day after the date the gas utility files its application for interim rate
adjustment.
(4) An application for
interim rate adjustment is complete on the date the gas utility has filed at
the Commission all information required by this section.
(5) A gas utility shall not implement its
requested interim rate adjustment until the later of:
(A) the 60th day after the filing is
complete;
(B) the day after the
utility completes notice to customers; or
(C) the day after the last day of a
suspension period imposed pursuant to paragraph (6) of this
subsection.
(6) During
the 60-day period following a gas utility's filing of an application for
interim rate adjustment, the director may suspend the implementation of the
interim rate adjustment for a period of up to 45 days from the later of:
(A) the 60th day after the gas utility's
application is complete;
(B) the
proposed implementation date; or
(C) the day after the utility completes
notice to customers.
(b) Notice. The utility shall print the
notice of its application for an interim rate adjustment in type large enough
for easy reading. The notice shall be the only information contained on the
piece of paper on which it is written. A gas utility may give the notice
required by this section either by separate mailing or by mailing or otherwise
delivering the notice with its billing statements. Notice by mail shall be
presumed to be complete three days after the date of deposit of the paper upon
which it is written, enclosed in a post-paid, properly addressed wrapper, in a
post office or official depository under the care of the United States Postal
Service. The notice to customers shall include the following information:
(1) a description of the proposed revision of
rates and schedules;
(2) the effect
the proposed interim rate adjustment is expected to have on the rates
applicable to each affected customer class and on an average bill for each
affected customer class;
(3) the
service area or areas in which the proposed interim rate adjustment would
apply;
(4) the date the proposed
interim rate adjustment was or will be filed with each other regulatory
authority;
(5) the gas utility's
address, telephone number, and web site where information concerning the
proposed interim rate adjustment may be obtained; and
(6) a statement that any affected person may
file written comments or a protest concerning the proposed interim rate
adjustment with Gas Services, Market Oversight Section, Railroad Commission of
Texas, P.O. Box 12967, Austin, Texas 78711-2967.
(c) Contents of application. A gas utility
shall submit a signed original and two copies of the following information with
Gas Services as the utility's application for interim rate adjustment:
(1) a copy of the notice to customers and an
affidavit stating the method of giving notice and the date or dates on which
the notice was or will be given;
(2) a tariff or rate schedule or
schedules;
(3) an annual project
report, as more specifically described in subsection (d) of this
section;
(4) an annual earnings
monitoring report, as more specifically described in subsection (e) of this
section; and
(5) the gas utility's
business address, telephone number, and, if applicable, facsimile transmission
number and/or e-mail address.
(d) Annual project report. A gas utility
seeking to implement an interim rate adjustment shall electronically file with
the Commission an annual project report as part of the application.
(1) The annual project report shall be made
on a form approved by the Commission and found in the Gas Services section of
the Commission's website.
(2) The
annual project report shall describe by jurisdictional area:
(A) the gas utility investment projects
completed and placed in service during the preceding calendar year;
(B) the gas utility investment retired or
abandoned during the preceding calendar year; and
(C) the cost of, need for, and customers, by
class and location, benefitted by the change(s) in gas utility investment
projects.
(3) Similar
investment projects, such as service lines or small tools that the gas utility
normally accounts for on a group basis, may be reported as a single investment
project.
(e) Annual
earnings monitoring report. A gas utility seeking to implement an interim rate
adjustment shall electronically file with the Commission an annual earnings
monitoring report as part of the application.
(1) The annual earnings monitoring report
shall be made on a form approved by the Commission and found in the Gas
Services section of the Commission's website.
(2) The annual earnings monitoring report
shall demonstrate the utility's earnings during the preceding calendar year. A
gas utility whose annual earnings monitoring report shows that the utility is
earning a return on invested capital of more than 75 basis points above the
return established by Commission final order setting rates in the utility's
most recent rate case for the area in which the interim rate adjustment was
implemented shall include with its annual earnings monitoring report a
statement of the reasons the rates are not unreasonable or in violation of
law.
(f) Methodology for
interim rate adjustments. Approval of a gas utility's application for interim
rate adjustment is subject to the requirements of this subsection.
(1) The components of the revenue to be
recovered through an interim rate adjustment shall be limited to those set
forth in this subsection. The revenue to be recovered through an interim rate
adjustment shall be incremental to that established in the gas utility's most
recent rate case for the area in which the interim rate adjustment is to be
implemented, as previously adjusted.
(2) All incremental values for investment,
accumulated depreciation, return on investment, depreciation expense, ad
valorem taxes, revenue related taxes, and incremental federal income taxes
shall be calculated and presented on a full calendar year basis, except as
provided in paragraph (3) of this subsection.
(3) The amount by which the gas utility may
adjust its rates upward or downward using the interim rate adjustment for each
calendar year is based on the difference between the value of the gas utility's
invested capital for the preceding calendar year and the value of the invested
capital for the calendar year preceding that calendar year; except for a gas
utility's first interim rate adjustment application following a rate case and
except for amounts that can be collected by the utility under Texas Utilities
Code, §
104.112. For the first
interim rate adjustment following a rate case, the allowed adjustment shall be
based on the difference between the gas utility's invested capital at the end
of the rate case test year and the invested capital at the end of the calendar
year following the end of such test year. The value of the gas utility's
invested capital is equal to the original cost of the investment at the time
the investment was first dedicated to public use minus the accumulated
depreciation related to that investment.
(4) Based on the difference between the
values of the investment amounts as determined under paragraphs (2) and (3) of
this subsection, a gas utility may adjust its revenue only by the following
components:
(A) return on
investment;
(B) depreciation
expense;
(C) ad valorem
taxes;
(D) revenue related taxes;
and
(E) federal income
taxes.
(5) The factors
used to calculate the return on investment, depreciation expense, and
incremental federal income tax used to compute the revenues to be collected
through the interim rate adjustment must be the same as those established or
used in the final order setting rates in the gas utility's most recent rate
case for the area in which the interim rate adjustment is to be
implemented.
(6) The gas utility
shall allocate the revenue to be collected through the interim rate adjustment
among the gas utility's customer classes in the same manner as the cost of
service was allocated among customer classes in the utility's most recent rate
case for the area in which the interim rate adjustment is to be
implemented.
(7) The gas utility
shall design the interim rate adjustment as either a flat rate to be applied to
the monthly customer charge or a volumetric rate to be applied to the initial
block usage rate. The interim rate adjustment, whether it is applied to the
monthly customer charge or the initial block rate, shall be shown on the
customers' monthly billing statements as a surcharge.
(g) Procedure for review. The director shall
ensure that applications for interim rate adjustments are reviewed for
compliance with the requirements of Texas Utilities Code, §
104.301; and this
section.
(1) The director may:
(A) suspend the implementation date of an
interim rate adjustment in accordance with subsection (a) of this
section;
(B) request assistance in
reviewing applications for interim rate adjustments from other Commission
divisions; and
(C) request
additional staff to achieve timely review of interim rate adjustment
applications.
(2) Upon
completion of the review; the director shall prepare a written recommendation,
which shall be provided to the applicant gas utility. The director may
recommend:
(A) approval of the application
for interim rate adjustment;
(B)
approval of some elements of the application to allow only those elements of
the interim rate adjustment to take effect without further Commission action;
or
(C) rejection of the application
for interim rate adjustment.
(3) The director's recommendation shall be
submitted to the Commission for decision at a scheduled open meeting.
(4) If the Commission approves an application
for interim rate adjustment, the gas utility shall either file the tariff or
rate schedule implementing the approved interim rate adjustment or shall,
within 30 days of the Commission's action, notify Gas Services that the tariff
or rate schedule initially filed with the application correctly implements the
approved interim rate adjustment.
(h) Annual interim rate adjustments. A gas
utility shall recalculate its approved interim rate adjustment annually in
accordance with the requirements of this section and shall file an application
for an annual adjustment no later than 60 days prior to the one-year
anniversary of the proposed implementation date of the previous interim rate
adjustment application.
(i)
Refunds. All amounts collected from customers under an interim rate adjustment
tariff or rate schedule are subject to refund. The issues of refund amounts, if
any, whether interest should be applied to refunded amounts and, if so, the
rate of interest, shall be addressed in the rate case a gas utility files or
the Commission initiates after the implementation of an interim rate adjustment
and shall be the subject of specific findings of fact in the Commission's final
order setting rates.
(j) Review for
reasonableness and prudence. In the rate case a gas utility files or the
Commission initiates after the implementation of an interim rate adjustment
under this section, any change in investment and related expenses and revenues
that have been included in any interim rate adjustment shall be fully subject
to review for reasonableness and prudence. Upon issuance of a final order
setting rates in this rate case, any change in investment and related expenses
and revenues that have been included in any interim rate adjustment shall no
longer be subject to review for reasonableness or prudence.
(k) Suspension of interim rate adjustment. A
gas utility may file a request to suspend the operation of an interim rate
adjustment tariff or rate schedule for any year subject to the following
requirements and conditions:
(1) A gas
utility's request to suspend operation of an interim rate adjustment tariff or
rate schedule shall be filed no later than the date on which the gas utility's
annual adjustment of the interim rate adjustment would have been
filed.
(2) A gas utility's request
shall be in writing and shall state the reasons the suspension is
justified.
(3) The director may
grant the suspension, provided that the gas utility has made a showing of
reasonable justification. If granted, the suspension shall be effective until
the next annual anniversary of the implementation date of the interim rate
adjustment.
(4) The utility's next
annual filing for interim rate adjustment shall be made in accordance with this
section.
(l) Rate case
filing. A gas utility that implements an interim rate adjustment under this
section and does not file a rate case before the fifth anniversary of the date
its initial interim rate adjustment became effective shall file a rate case not
later than the 180th day after that anniversary.
(m) Reimbursement. A gas utility that
implements an interim rate adjustment under this section shall reimburse the
Commission for the utility's proportionate share of the Commission's annual
costs related to the administration of the interim rate adjustment mechanism.
The Commission shall determine the amount of the reimbursement as follows:
(1) After the Commission has finally acted on
a gas utility's application for an interim rate adjustment, the director shall
estimate such utility's proportionate share of the Commission's annual costs
related to the processing of such applications.
(2) In making the estimate required by
paragraph (1) of this subsection, the director shall take into account the
number of utilities the Commission reasonably expects to file for interim rate
adjustments during the fiscal year, and the costs expected to be incurred in
processing such applications.
(3)
The utility shall reimburse the Commission for the amount so determined within
thirty days after receipt of notice of the amount of the
reimbursement.
(4) In the event
that the utility wishes to contest the amount of the reimbursement determined
by the director, it may file a request to have the Commission determine the
appropriate amount. In such event, the utility agrees to pay the amount
determined by the Commission within thirty days of the determination.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.