New Hampshire state regulators on April 29 granted Unitil Energy Systems’ (UES) request to increase its distribution rates to recover a total additional revenue requirement of about $2.8m (Docket No. DE 13-065).
That sum is related to a settlement agreement approved by the state Public Utilities Commission (PUC) in April 2011 as part of UES’ most recent distribution rate case, as well as the company’s request to increase funding to the major storm cost reserve (MSCR) and to continue a storm hardening pilot program with increased funding for one year.
The PUC ordered UES to consult with staff and the Office of Consumer Advocate (OCA) during the course of the company’s review and analysis of the pilot program and to prepare a full report of the pilot to be filed by Jan. 17, 2014.
UES on Feb. 28 filed proposed tariff pages in relation to an increase in distribution rates consistent with a step adjustment provided for in the settlement agreement. With the proposed tariff, UES filed an explanation of the request along with 2012 reliability enhancement program (REP) and vegetation management program (VMP) annual reports, as well as separate system reliability analyses and recommendations for the Capital and Seacoast regions in its service territory, the PUC added in its April 29 order.
UES requested to make permanent the one-year pilot program that was approved by the PUC in April 2012. The company assumed that the one-time amount of $535,000 approved at the time would remain in base rates, and proposed to increase the funding from the pilot by adding $888,000 to the permanent storm hardening program, bringing the total annual cost to $1.423m.
According to the PUC’s April 2012 order, UES proposed to implement the VMP storm hardening pilot program for three circuits in the Seacoast area in New Hampshire. The towns of Plaistow, Newton and Atkinson in New Hampshire had expressed interest in having additional tree work performed. UES said the pilot would involve more tree removal than is customarily done in the VMP program and would also include “ground to sky” removal of tree branches overhanging electric facilities.
The PUC said in its April 29 order that the company also proposed to increase the annual revenue for its MSCR from $400,000 to $800,000.
According to the company, for a residential default service customer using 600 kWh per month, the total rate impact associated with the step adjustment, the storm hardening program and the MSCR would be a bill increase of $2.07 per month, or an increase of 2.4%.
The PUC also noted that the company said its actual REP capital expenditures in 2012 were about $1.99m, or $244,219 greater than the approved $1.75m in REP spending.
UES also said that the storm hardening pilot program was successful and that it helped prevent tree-related failures and subsequent electric incidents. UES requested to make the project permanent for a total annual cost of $1.423m.
Additionally, UES said the proposed increase in the MSCR was based on its average annual spending for storm costs, which the company calculated to be $655,763. The PUC added that according to UES, the MSCR balance is a deficit of $719,840 at Dec. 31, 2012, and since then, it had paid additional costs for storm events, including related to a February blizzard.
Following a hearing, UES modified its request in April regarding the storm hardening in light of comments from staff and the OCA. Instead of a permanent program, the company asked that the PUC approve an additional one-year period at a cost of $1.423m.
The PUC noted that the OCA did not object to the step adjustment, but it did object to UES’ other requests for increases, asserting that there was no basis in the record for the proposed additional increases. UES, the OCA said, should wait until the next rate case, scheduled for 2016, for consideration of the proposed increases related to the MSCR and the pilot program extension.
Staff said the step adjustment was appropriately calculated and that there appeared to be a reasonable basis for the proposed $400,000 annual revenue increase to the MSCR.
The PUC also noted that staff said the UES filing presented insufficient information to allow a full evaluation of the pilot program. However, staff recognized the benefits to the storm hardening program as it represented a reasonable and thoughtful measure to improve response to storms by taking preventive measures.
Staff recommended that UES be allowed to continue the program for another year at the requested funding level of $1.423m, provided that the company analyzes and documents the results of the program and provides its review to staff and OCA with enough time for a full investigation prior to the company requesting any further extension of the pilot.
The PUC said it finds that the proposed step increase results in just and reasonable rates, and approved the adjustment to distribution rates effective with service rendered on and after May 1.
The PUC also approved UES’ request to increase the annual revenue to the MSCR to $800,000, noting that without the increase, “UES could be running a significant deficit in the MSCR for a number of years and customers would have to pay the carrying costs associated with the deficit.”
The PUC said it agreed with staff that some measure of benefits has resulted from the pilot program and approved its continuation for another year.
“We direct the company to closely consult with staff and the OCA, including meeting with the staff and OCA as needed, during the course of [UES’] analysis and review of the pilot program,” the PUC said.
UES’ parent company is Unitil (NYSE:UTL).