Weekly updates courtesy of Utility Regulatory News #3968

Although authorizing additional revenues of almost $3.5 million for a natural gas local distribution company, the Arizona Corporation Commission has instructed the company to provide supplemental funds for certain of its low-income ratepayer assistance plans, so as to mitigate the impact of the rate increase on its more vulnerable customers during the ongoing economic recession.

Citing the effects of a customer base that varies seasonally, and purporting to have experienced negative growth during the test period, the company, UNS Gas, had requested an increase of nearly $9.5 million and a rate of return on equity (ROE) of 11%. The company averred that the 11% ROE was reasonable given the business risks experienced by a group of comparable firms. The commission, however, deemed the company’s selected proxy group to be flawed in that it looked to the general business world rather than similarly situated utilities. The commission thus found the company’s risk assessment to have been overstated, noting that utility services are not discretionary for consumers and remain fairly stable even during economic downturns.

By the same token, the commission declared the company’s projected number of customers to have been understated. According to the commission, the company’s rate of growth may have slowed, but it was still growing nonetheless. The commission therefore settled on a 9.5% ROE for the company. Moreover, finding that customers with modest means have been more affected by the poor economy than has been the company, the commission ordered the company to 1) increase spending on various low-income weatherization initiatives; 2) add to its bill paying assistance funds; 3) increase the income eligibility level for certain programs; and 4) refrain from increasing the monthly customer charge for qualifying low-income plan participants. Subscribe to URN for the full story.