Utilities At Issue - April 2017
The 2017 Pepco and Washington Gas Rate Case Horizon
Below is an update for the 2017 regulatory year. There have been a number of filings by the electric and natural gas utilities that will impact future rates paid by AOBA members.
Rate cases that have been or may be filed according to the following timeline:
Pepco:
MD – Pepco request for rate increase in MD for $68,619,000 filed March 24, 2017. Decision expected October 20, 2017.
Washington Gas:
VA – Application for a rate increase filed June 30, 2016; rates effective November 28, 2016 with the December 2016 billing month, subject to refund. Settlement Agreement presented to Hearing Examiner on April 18th. Decision expected soon.
MD:
– The STRIDE Case, Case No. 9335, requires WG to file a rate case prior to 2019. WG has stated in its regulatory filing that the Company plans to file a rate case in its fiscal third quarter 2018, i.e. April, May, June 2018.
– Petition for Approval of tariff revisions to facilitate natural gas expansion for unserved or underserved customers filed on December 7, 2016. Hearings are scheduled for May 1st and 2nd.
AltaGas to Acquire Washington Gas Light for $6.4 Billion
On January 25, 2017 WGL Holdings, Inc. and AltaGas Ltd. announced that the Board of Directors for both companies have approved an agreement and merger plan for AltaGas to acquire WGL for $6.4 billion. WGL has stated it will retain its headquarters in Washington DC to manage its utility business and will remain regulated by the Commissions in DC, MD, and VA.
On April 24, 2017, AtlaGas Ltd and WGL Holdings, Inc. filed their Merger Application with the DC Public Service Commission, Formal Case No. 1142, the Maryland Public Service Commission, and the Virginia State Corporation Commission, Case No. PUE-2017-00049.
Pepco Requests an $85,477,000 Rate Increase in the District of Columbia – Formal Case No. 1139
On June 30, 2016, Pepco filed an application requesting authority to increase electric distribution rates by $85,477,000, which has been recently reduced to $76,766,000. Pepco requested an increase in the authorized return on equity (ROE) from the current 9.4% to 10.6%. Pepco also proposed an overall rate of return (ROR) of 8.0%, an increase from the current ROR of 7.65% authorized in the last rate case, Formal Case No. 1103. AOBA has recommended the Commission should authorize an ROE for Pepco of 9.25% and an overall rate of return for the Company of not greater than 7.33%. AOBA has further recommended that Pepco be granted no more than approximately a $20,000,000 increase in revenue requirement.
AOBA intervened in the case and is opposing the requested rate increase in the filing of expert witness testimony by Revilo Hill Associates. Evidentiary hearings have concluded. AOBA anticipates that any potential increase will most likely be effective on or about July 25, 2017.
Pepco’s proposed increases to distribution rates for each customer class are shown in the chart below.
Decision Issued in Washington Gas District of Columbia Rate Case, Formal Case No. 1137
On February 26, 2016, WG filed a request to increase existing rates and charges for gas service for customers in the District of Columbia. WG sought an increase in the Company’s weather-normalized annual revenue of $17.4 million. Of the $17.4 million revenue increase request, $4.5 million represents costs associated with system upgrades previously approved by the DCPSC; costs that are currently recovered from customers in surcharges (the PROJECTpipes and Mechanical Coupling surcharges).
On March 3, 2017, the District of Columbia Public Service Commission denied WG’s request for a $17.4 million increase and authorized a rate increase in the amount of $8,510,251 based on a return on equity of 9.25% and a rate of return of 7.57%. The Commission also denied WG’s request for a proposed Revenue Normalization Adjustment (RNA). The RNA is a billing adjustment which would calculate a credit or a charge to monthly distribution charges for firm customers based on the difference between the actual revenue received by WG and the level of revenue the Company is allowed to collect. WG proposed a similar adjustment in an earlier case, with strong opposition from AOBA.
The Commission also approved a new rate design for Group Metered Apartment (GMA) customers. Under the prior rate design, C&I and GMA customers were billed on the same rate schedule which reflects the same charges. WG has established separate rate schedule for C&I and GMA customers, under which C&I customers would be billed under Schedules 2 (sales service) and 2A (delivery service) and GMA customers would be billed under Schedules 2B (sales service) and 2C (delivery service). Interruptible customers will be billed under schedule 3A.
WG filed its revised rates schedules on March 17, 2017. The new rates are effective for service rendered on and after March 24, 2017.
For budgeting purposes, the approved rate increases are set forth in the chart below.
| Description |
Operating Revenues (Delivery Service) |
Operating Revenues |
| Increase % | Increase % | |
| Residential | Proposed Approved | Proposed Approved |
| Heating and/or Cooling | 17.4% 7.0% | 10.3% 4.1% |
| Non-heating and Non-cooling | ||
| Individually Metered Apartments | 21.7% 50.7% | 11.4% 38.2% |
| Commercial & Industrial | ||
| Heating and/or Cooling | ||
| Less than 3,075 therms | 11.2% 5.2% | 7.0% 3.3% |
| 3,075 therms or more | 5.9% 3.4% | 4.3% 2.5% |
| Non-heating and Non-cooling | 3.3% 3.8% | 2.3% 2.7% |
| Group Metered Apartments | ||
| Heating and/or Cooling | ||
| Less than 3,075 therms | 4.0% 5.5% | 2.6% 3.6% |
| 3,075 therms or more | 7.8% 4.6% | 5.9% 3.5% |
| Non-heating and Non-cooling | 5.6% 4.7% | 4.1% 3.5% |
| Interruptible | 0.4% 0.4% | 0.4% 0.4% |
| Total Sales/Delivery Revenue | 11.5% 5.6% | 7.6% 3.7% |
| Total Operating Revenue | 7.6% 3.7% |
Washington Gas Files Petition for Gas Expansion in Maryland, Case No. 9433
On December 7, 2016, Washington Gas filed a petition for approval of revised tariffs that would facilitate access to natural gas for customers that are currently unserved or underserved by Washington Gas, which would be financed by current ratepayers. AOBA has intervened in the case to protect members’ interests and filed testimony of its expert witness on March 1, 2017. Hearings are scheduled for May 1st and 2nd. AOBA successfully challenged a similar proposal WG made before the Maryland General Assembly in 2016.
Settlement Reached in Washington Gas Request for Rate Increase in Virginia for $45.6 million, CASE NO. PUE-2016-00001
On June 30, 2016, Washington Gas filed an application with the VA State Corporation Commission (VASCC) requesting a $45.6 million increase in the rates charged to the company’s Virginia customers. Interested parties, including AOBA, opposed this requested rate increase and after extended discussion and debate, the parties reached a settlement agreement reducing the rate increase to $34 million. On April 18th, 2017, the settlement agreement or “Stipulation” was presented to a VASCC hearing examiner for review and, if acceptable, final approval.
Of the $34 million rate increase agreed to by the parties, $19.9 million reflects costs previously authorized for the Company’s accelerated pipe replacement programs. If approved as expected, customers will receive a rate refund reflecting the difference between the original $45.6 increase placed in effect Dec. 1, 2016 and the agreed upon $34 million. At press time, the VASCC was expected to issue a decision approving the Stipulation and $34 million rate increase soon.
NEW: PJM Balancing Congestion Charge – Effective June 1, 2017
On January 31, 2017, the Federal Energy Regulatory Commission (FERC) issued an order reallocating balancing congestion charges from Financial Transmission Right (FTR) holders to energy suppliers. The balancing congestion charge is a new charge that will impact all suppliers in the PJM zone. Each supplier will manage the change in law differently; some suppliers may add the cost to their fixed price product with ancillary charges while others may choose to pass the charge through as a separate line item beginning June 1st or after. For budgeting purposes, AOBA recommends members contact their third party energy supplier to discuss how this charge will impact their supply costs.
SAVE THE DATE: AOBA’s Utility & Energy Market Update
AOBA will host the next Utility and Energy Market Update on Wednesday, Aug. 2, 2017, from 11:30am to 1:00pm at AOBA’s NEW office. Lunch will be provided. Meeting topics will include DC Water rates, an energy market briefing, and utility updates for electricity and natural gas in the District of Columbia, Maryland, and Virginia.