WHEREAS
on July 23, 2015, Maritime Electric Company, Limited ("Maritime Electric")
filed an application with the Island Regulatory and Appeals Commission (the
"Commission") seeking to amend rates of depreciation with respect to
Maritime Electric's several classes of property for the period beginning
January 1, 2016 (Commission Docket UE#21603) ("Depreciation Rate
Application");
AND WHEREAS on October 28, 2015, Maritime Electric
filed an application with the Commission seeking to approve proposed
amendments to the rates, tolls and charges for electric service for the
period beginning March 1, 2016 (Commission Docket UE#20942) ("General Rate
Application");
AND WHEREAS notices of the Depreciation Rate
Application and the General Rate Application were published by the
Commission on August 7, 2015 and October 28, 2015, respectively;
AND WHEREAS on January 29, 2016, Maritime Electric
filed with the Commission an agreement between Maritime Electric and the
Government of Prince Edward Island ("Agreement"), which Agreement addresses
or agrees to amend certain matters raised in the General Rate Application
and the Depreciation Rate Application, as well as other matters relating to
electric service in the Province of Prince Edward Island;
AND WHEREAS on January 29, 2016, the Commission issued
a procedural order directing that the General Rate Application and the
Depreciation Rate Application be consolidated and heard together in
Commission Docket UE#20942 (the "Amended Application");
AND WHEREAS a Notice of Public Hearing with respect to
the Amended Application was published by the Commission on January 29, 2016;
AND WHEREAS the Notice of Public Hearing outlined
certain details of the Agreement and invited members of the public to
comment on the Amended Application and to participate in a public hearing;
AND WHEREAS Maritime Electric filed an updated
application record with the Commission on February 5, 2016;
AND WHEREAS interrogatories were exchanged and public
comments were received with respect to the Depreciation Rate Application,
the General Rate Application, and the Amended Application;
AND WHEREAS a public hearing was held with respect to
the Amended Application on February 25, 2016;
AND WHEREAS the Government of Prince Edward Island was
granted formal intervener status in the Amended Application and permitted to
call evidence and cross-examine witnesses at the public hearing;
AND WHEREAS the Environmental Coalition of Prince
Edward Island Ltd. was permitted to ask questions of witnesses and make an
oral submission at the public hearing;
AND WHEREAS the Leader of the Official Opposition was
permitted to make an oral submission at the public hearing;
AND WHEREAS no other individuals requested intervener
status or the opportunity to make an oral submission at the public hearing;
AND UPON considering the written and oral submissions
received from the parties and from members of the public;
NOW THEREFORE pursuant to the
Electric Power Act, R.S.P.E.I. 1988, Cap. E-4 and pursuant to the
Island Regulatory and Appeals Commission Act,
R.S.P.E.I. 1988, Cap. 1-11;
IT IS ORDERED THAT
Rates, Tolls & Charges
1. Maritime Electric shall charge the rates,
tolls and charges for electric service as set out in
Appendix 1 hereto for
the period from March 1, 2016 to February 28, 2019, which rates, tolls and
charges are based upon the forecast values and input values set forth in
Appendix 2 hereto.
Return on Average Common Equity
2. Maritime Electric shall be entitled to earn a
maximum return on average common equity of 9.35 per cent for each of the
calendar years 2016, 2017 and 2018, and thereafter until varied by the
Commission.
Energy Cost Adjustment Mechanism
3. The Energy Cost Adjustment Mechanism ("ECAM")
set forth in
Appendix 3 hereto shall apply to the approved basic rates for
meter readings taken on or after March 1, 2016.
4. The base rate per kWh for use in the ECAM
shall be as set forth in
Appendix 2 hereto for each of the years March 1,
2016 to February 28, 2017; March 1, 2017 to February 28, 2018; March 1, 2018
to February 28, 2019, and thereafter until varied by the Commission.
Rate of Return Adjustment
5. During the period from March 1, 2016 to
February 28, 2019, Maritime Electric shall refund to ratepayers the balance
of the Rate of Return Adjustment ("RORA") account accumulated to December
31, 2015, being $15,156,765.
The balance of the RORA account shall be refunded at the rates as set out in
Appendix 2 hereto for each of the years March 1, 2016 to February 28, 2017;
March 1, 2017 to February 28, 2018; March 1, 2018 to February 28, 2019, and
thereafter until varied by the Commission.
6. Any over earnings accumulated during the
period from January 1, 2016 to February 28, 2019 shall be deposited to a
separate RORA account, the balance of which shall be refunded to ratepayers
commencing March 1, 2019, or as further directed by the Commission.
7. With the exception of any amounts
over-refunded to ratepayers, Maritime Electric shall not be permitted to
recover any amounts from the RORA account(s), and in particular, Maritime
Electric shall not be permitted to recover from the RORA account(s) in the
event it does not attain a return on average common equity of 9.35 per cent.
In the event of an over-refund, Maritime Electric shall not be permitted to
recover all or part of the over-refund from ratepayers without the approval
of the Commission.
Weather Normalization Mechanism
8. The Weather Normalization Mechanism and Reserve
Account set forth in
Appendix 4 hereto is approved, on an interim basis, for
the period January 1, 2016 to February 28, 2019.
The Commission shall determine the appropriateness of continuing a
permanent Weather Normalization Mechanism and Reserve Account.
Depreciation Rates
9. Maritime Electric shall adopt the depreciation
rates set forth in
Appendix 5 hereto, effective as of January 1, 2016 (the
"Depreciation Rates"). The
Depreciation Rates shall remain in effect until varied by the Commission.
10. Maritime Electric shall record and
incorporate into the Depreciation Rates the recommended amortization of the
accumulated reserve variance associated with the Charlottetown Thermal
Generating Station commencing in 2016 and as outlined in
Appendix 6 hereto.
Further Studies
11. Maritime Electric shall undertake a rate
design study to consider changes to the multi-block residential energy
pricing structure, and related changes to Maritime Electric's other rate
structures. The rate design
study and a proposed rate structure shall be filed with the Commission on or
before April 30, 2018.
12. On or before April 30, 2017, Maritime
Electric shall prepare and file with the Commission a Point Lepreau cost
allocation classification study.
13. On or before June 30, 2018, Maritime Electric
shall file with the Commission an updated cost allocation study based on
financial results to December 31, 2017.
14. On or before June 30, 2018, Maritime Electric
shall file with the Commission a decommissioning study with respect to the
Charlottetown Thermal Generating Station.
15. On or before June 30, 2018, Maritime Electric
shall file with the Commission an updated depreciation study based on
financial results to December 31, 2017.
Annual & Monthly Reporting
16. In addition to all existing reporting
requirements and the reporting requirements set out herein, Maritime
Electric shall file with the Commission on or before February 28 in each of
2017, 2018 and 2019:
-
the actual values associated with each of the
inputs set forth in
Appendix 2 hereto, based on Maritime Electric's
actual financial results for the preceding year;
-
the year-end balance of the RORA account(s);
-
the year-end balance of the Weather Normalization
Reserve Account;
-
the audited rate of return on average rate base for
the previous fiscal year; and
-
the audited rate of return on average common equity
for the previous fiscal year.
17. In addition to Maritime Electric's current
monthly reporting requirements, Maritime Electric shall file with the
Commission as part of its monthly reports:
-
the monthly balance of the RORA account(s); and
-
the monthly balance of the Weather Normalization
Reserve Account.
18. Maritime Electric shall file with the
Commission, within six (6) months from the date of this Order, confirmation
of its rate base, including details of all accounts comprising its rate
base.
Material Change
19. as agreed to by the parties, Maritime
Electric, as applicant, and the Government of Prince Edward Island, as
intervener and a party to the Amended Application, shall notify the
Commission of any material change to any of the inputs set forth in
Appendix
2 hereto in a timely manner.
Reasons to Follow
20. The Commission shall provide detailed reasons
for the Order granted herein in due course.