The New York Public Service Commission has approved a three-year rate plan for electric and gas service provided by Orange & Rockland Utilities, Inc. Under an approved settlement agreement reducing the company’s original rate request by 80%, the plan calls for a first-year electric rate increase of $8.6 million and a first-year gas rate decrease of $5.9 million. In the second year, electric revenues will increase $12.1 million and by $12.2 million in the third year. Gas revenues in the second year will increase $1 million, or 0.4%, and will increase $1 million in the third year.
The revenue requirements for all three years of the proposed rate plans are based on a capital structure with a 48% equity ratio and a 9% return on equity (ROE). Earnings sharing mechanisms during the three-year term of the rate plans begin with a sharing threshold of 9.6% and three tiers or bands of earnings sharing.
The commission’s ruling allows the utility to recover costs associated with the implementation of its advanced metering infrastructure (AMI) program which was first approved in the 2016 and later expanded. The commission reaffirmed the application of an opt-out fee for customers who choose not to use an AMI meter. The rate plan includes a financial incentive for investment in so-called “Non-Wires Alternatives” instead of traditional transmission and distribution infrastructure expansion.
Under the plan, the company will retain 30% of a non-wires project’s net benefit, while 70% of the net benefit will occur to customers. The incentive will be adjusted to reflect the difference between the estimated costs versus the actual costs of a project, sharing equally (50/50%) that difference with customers. The rate plan also includes recovery of certain expenditures under the state’s vaunted Reforming Energy Vision industry modernization program, including carbon reduction and platform service. Additional revenues are provided to fund electric vehicle and heat pump programs. Re Orange & Rockland Utilities, Inc., Cases 18-E-0067-1 et al., Mar. 14, 2019 (N.Y.P.S.C.).