Rate Case Roundup: Vermont

Looking at a memorandum of understanding submitted in a natural gas LDC’s rate proceeding, the Vermont Public Utility Commission embraced the settlement, finding that the 4% increase provided for therein was just and reasonable. The additional revenues so awarded reflected the same amount requested by the LDC, Vermont Gas Systems.

While the percentage increase may appear relatively small, the company stated in its rate application that it was sensitive to the billing effect the additional revenue requirement could have on customers. The company therefore had asked that $12 million of its system expansion and reliability fund (SERF) be used to mitigate such impacts. In the stipulation filed with the commission, the amount of the SERF to be used for that purpose was lowered to $10.71 million. The commission agreed that it would be appropriate to withdraw that sum from the SERF and apply it to the LDC’s base rates instead.

The commission drew attention to one aspect of the memorandum of understanding, that being a requirement that the costs of one particular project initiated under the SERF be amortized over a 10-year period rather than be recovered in rates all at one time. The commission expounded that because the development costs associated with that project (the Addison pipeline extension) surpassed $1 million, it would be more beneficial for customers for that expense to be spread out over the next 10 years. In addition, the commission highlighted a provision in the stipulation prohibiting the company from retaining that portion of its revenues otherwise due it under an earnings sharing mechanism.

The commission lauded the parties for incorporating that term in the agreement, noting that by forgoing its share of earnings for the next year, ratepayers were saved as much as $1.01 million. A table attached to the stipulation shows a return of 8.50% on shareholder equity. Re Vermont Gas Systems, Inc., Case No. 17-1238-INV, Oct. 26, 2017 (Vt.P.U.C.).