Rate Case Roundup: Oregon

In an electric rate case in which rate design issues were partially resolved by settlement, the Oregon Public Utility Commission okayed an overall increase in revenues that was far lower than that requested by the utility, Portland General Electric Company (PGE). Whereas the utility had sought $99.9 million in rate relief (an increase of 5.6%), the commission authorized an increase of only $15.9 million, a rise of less than one percent. The additional revenues allowed by the commission represented only about half of the $32 million increase reflected in a prior stipulation first tendered by the parties.

In explaining that differential, the commission noted that after the $32 million rate agreement was presented in September, commission staff discovered that certain plant assets had been tracked in the wrong account or in more than one category. As an example, the commission observed that depreciation expense associated with PGE’s $7.6 million allowance for funds used during construction for a new generating facility had been inadvertently listed in the company’s revenue requirement.

As to that new generating station, which the settling parties recognized in rate base even though it was not yet completed and in service, the commission informed PGE, as it had other utilities in a similar situation, that as a general rule it frowns on placing construction work in progress in rate base. The commission warned the company that in future proceedings in which PGE wishes to include plant not yet in service in its rate base, it must provide a firm foundation for doing so. That is, the commission said, such recognition must be justified with “particularity” and “clear and convincing evidence” of the reasonableness and propriety of such.

The commission was more receptive to the rate structure aspects of the proposed stipulation. It pointed to the new basic monthly charge of $11 for residential customers as equitable and appropriate. The commission also applauded PGE’s commitment to adopt new time-of-use schedules for residential customers.

For business and general service customers, the settlement provided for an increase in the basic monthly charge of one dollar per month. The agreement also calls for the utility to include in its next general rate case an analysis of the effectiveness of its current volumetric-only pricing tariffs versus institution of separate demand charges.

Finally, with respect to cost-ofcapital matters, the commission related that the parties agreed to a capital structure of 50% debt and 50% equity, the same structure advocated by PGE. However, the commission said, the stipulation sets forth an authorized ROE of 9.5%, roughly the midpoint between the 9.75% ROE value sought by the company and the 9.2% ROE recommended by other parties. Re Portland General Electric Co., UE 319, Order No. 17-511, Dec. 18, 2017 (Ore.P.U.C.).