Rate Case Roundup: Virginia

In yet another rate docket resolved by settlement and one which echoed the situation in Vermont, where the final amount of rate relief exceeded that originally sought, the Virginia State Corporation Commission accepted all terms contained in a tendered agreement, under which a natural gas LDC was authorized to increase its rates and charges by $34.1 million. As first proposed by the LDC, though, its base rates would have risen by only $30.7 million. However, the total delineated in the stipulation drops to just $20.7 million when the costs of the LDC’s Steps to Advance Virginia’s Energy (SAVE) plan are netted out.

In applying for authority to raise its rates, the LDC, Virginia Natural Gas (VNG), had pointed to significant capital investments it has made in system reliability and integrity projects since its last base rate case. It stated that it remained committed to pursuing various other infrastructure upgrade and replacement measures as well. According to VNG, to accomplish those goals it was necessary that it be awarded additional revenues and an ROE set at 10.25%.

The rate agreement subsequently hammered out by the parties reflected the higher revenue requirement, premised in part on inclusion in rate base of $140 million in actual SAVE investments as of August 31, 2017. The settlement provided for an ROE of 9.5%, the midpoint of a range of reasonableness of 9.0% to 10.0%. However, the stipulating parties emphasized that the ROE value was to be used strictly for purposes of setting rates in the instant proceeding.

The commission observed that the agreement had been presented to it as a “black box” settlement, such that it did not document or explain in detail how the participants arrived at their final figures. Nevertheless, given that the amounts listed were the product of negotiation and compromise by parties who initially espoused divergent positions, the commission deemed the terms and provisions reasonable overall. Re Virginia Natural Gas, Inc., Case No. PUE-2016-00143, Dec. 21, 2017 (Va.S.C.C.).