Rate Review Process
Generally it is the responsibility of the utilities to review utility revenue requirements and apply for new rates as required. Regular rate reviews provide the opportunity to assess the operating performance of a utility. The PUB promotes the user-pay principle in rate setting to encourage conservation and send proper price signals to consumers. Fair and equitable rates are highly dependent on the accuracy of the underlying utility records. Many operating and administrative resources are shared between municipal operations and the utility. The appropriate allocation of costs is essential to avoid inappropriate cross-subsidization.
Consistent with its desire to restrain regulatory costs, the PUB has developed a set of spreadsheets to assist municipalities in preparing rate studies. The spreadsheets are formula driven and by following the completion instructions, they may assist a municipality in preparing a rate application. However, the spreadsheets may be varied by the utility to address the individual circumstances of each utility. These variations must be explained in order for the Board to process the application.
Processing an Application
After the utility files its application with the PUB, a public notice of application will be issued and the fter the utility files its application with the PUB, a public notice of application will be issued and the utility is responsible for its posting and/or publishing using Board Guidelines. Directions will be provided with the notice. As stakeholder responses are received, they are added to the rate application file, and forwarded to the municipality.
The application is then reviewed and and any necessary information requests are sent to the applicant. Upon the receipt and review of the responses, the Board may request further information. Once the Board is satisfied that the necessary evidence has been received, a final review is completed. The Board panel will determine whether a public hearing is in the best interest of the community or whether a paper review process will suffice. This determination will depend on many variables, such as the volume of stakeholder response, the nature of those responses and/or the magnitude of the requested increase.
If a paper review process is advisable, the Board will complete its review and render a decision by way of a Board Order.
If it is determined that a public hearing is necessary, PUB staff will engage utility administration to determine a mutually agreeable hearing date. A public notice of hearing will be issued and the hearing held, usually in the evening and at a location convenient to utility customers. Subsequent to the hearing, the Board will complete its review and render a decision by way of a Board Order.
Public hearings provide stakeholders the opportunity to voice their concerns about a rate application in an open public hearing to the municipality in question. Public hearings are valuable to the Board as they afford the public the opportunity to address the panel with their concerns.
The public hearing process is as follows:
1. The chairperson for the hearing will make his or her opening comments, including admitting into the record the prepared exhibits.
2. The applicant will then be asked to summarize the application. This should include:
a. a brief summary of the application’s request;
b. the reasoning for revised rates;
c. any other important information that is relevant to the scope of the hearing.
3. Stakeholders will then be given an opportunity to ask their questions on the application.
4. Stakeholders will be given the opportunity to address any other relevant issues or concerns they may have regarding the application.