Vermont regulators: Scheduling conference to be held Jan. 16 regarding VEC’s rate filing

The commission said that until a final determination is made in the proceeding, increased rates are to be implemented by means of an identical 3.29% surcharge to each class of VEC’s ratepayers under the rate design tariffs previously approved by the commission

The Vermont Public Utility Commission, in a Dec. 30, 2019, order, said that a scheduling conference will be held before a hearing officer on Jan. 16 in Montpelier, Vt., regarding Vermont Electric Cooperative’s (VEC) revised rate schedules and tariff documents filed in November 2019 with the commission reflecting a proposed 3.29% rate increase to take effect on Jan. 1, 2020.

The commission said that it accepts the state Department of Public Service’s recommendation that the commission open an investigation into VEC’s tariff filing to investigate the justness and reasonableness of the proposed tariff revisions.

As noted in VEC’s November 2019 petition, the accompanying exhibits and supporting schedules, based on a July 1, 2018, to June 30, 2019, test year, as adjusted for known and measurable changes, show a revenue shortfall, under VEC’s current rates, of about $2.5m. VEC said that it requests approval to increase its retail rates by that amount, which is 3.29% above current revenue levels. The increase should be implemented through an identical 3.29% increase to all rate schedules, VEC said, adding that it is not requesting a change in rate design.

As noted in the Nov. 15, 2019, prefiled testimony of VEC CFO Michael Bursell, the rate request is VEC’s first change in rates since Jan. 1, 2014, and that the key driver of the request is net power supply costs, which will increase by $3m over test year levels. This increase exceeds the total requested $2.4m increase, although VEC has been able to mitigate it by savings or revenue increases in other areas, Bursell said, adding that this increase results mainly from increases in capacity costs, with other factors including lower revenues form the sale of renewable energy certificates (RECs) due to changes in the REC market; the addition of two new utility scale solar projects that VEC contracted with solely to avoid those projects coming online as higher-cost net-metering projects, higher costs for standard offer projects; and general purchase power contract price increases.

In prefiled testimony, Katie Orost, a transmission and rate tariff supervisor for VEC, noted that overall, transmission costs are forecast to decrease for VEC in all categories of cost, with the biggest decrease being in VELCO transmission costs, and that is due to several factors, but primarily because of VEC’s success in reducing its coincident peak loads in the state.

Orost said that overall, VELCO transmission charges to VEC are forecast to decrease from a test year total of about $3.8m to about $3.2m in 2020. The primary reason for lower VELCO costs is that VEC’s forecast non-coincident peak load and coincident loads at the time of the Vermont monthly peaks during the ATY are lower than the loads observed during the TY, Orost said. That is, at least in part, due to VEC’s use of its Hinesburg battery to reduce its peak, as well as shifting deliveries that would have been included in the Vermont load from the New England transmission system to the asynchronous Hydro-Québec system, Orost said, noting that for the past 12 months, that load ranged from 8.5 MW to 17.3 MW. There are several other reasons for the decrease, including that the majority of VELCO’s new capital projects are considered “pooled transmission facilities” and are paid for by the entire New England region through the “RNS Schedule 9 rates,” Orost said.

Among other things, the commission said in its order that until a final determination is made in the proceeding, increased rates are to be implemented by means of an identical 3.29% surcharge to each class of VEC’s ratepayers under the rate design tariffs previously approved by the commission.