Iowa Admin. Code r. 199-19.18 - Capital infrastructure investment automatic adjustment mechanism
(1)
Eligible
capital infrastructure investment. A rate-regulated natural gas
utility may file for commission approval a capital infrastructure investment
automatic adjustment mechanism to allow recovery of certain costs from
customers. To be eligible for recovery through the capital infrastructure
investment automatic adjustment mechanism, the costs shall either:
a. Meet the following criteria:
(1) The costs are beyond the direct control
of management;
(2) The costs are
subject to sudden, important change in level;
(3) The costs are an important factor in
determining the total cost of capital infrastructure investment to serve
customers; and
(4) The costs are
readily, precisely, and continuously segregated in the accounts of the utility;
or
b. Be costs for a
capital infrastructure investment which:
(1)
Does not serve to increase revenues by directly connecting the infrastructure
replacement to new customers;
(2)
Is in service but was not included in the gas utility's rate base in its most
recent general rate case; and
(3)
Replaces or modifies existing infrastructure required by state or local
government action, to meet state or federal natural gas pipeline safety
regulations, or to otherwise enhance safety as approved in advance by the
commission. The utility shall make an annual filing with the commission to seek
advance determination of projects that meet this criterion.
(2)
Determination of recovery factor. The utility may recover a
rate of return and depreciation expense associated with eligible capital
infrastructure investments described in subrule 19.18(1). The allowed rate of
return shall be the approved average cost of debt from the utility's most
recent general gas or electric rate review proceeding before the commission.
Depreciation expense shall be based upon the depreciation rates allowed by the
commission in the utility's most recent general gas rate review proceeding
before the commission.
(3)
Recovery procedures.
a. To
recover capital infrastructure investment costs that meet the criteria in
paragraph 19.18(1)"a" through an automatic adjustment
mechanism, the utility is required to obtain prior commission approval of the
automatic adjustment mechanism. The utility shall file information in support
of the proposed automatic adjustment mechanism that includes:
(1) A description of the capital
infrastructure investment and the costs that are proposed to be recovered
through the automatic adjustment mechanism;
(2) An explanation of why the costs of the
capital infrastructure investment are beyond the control of the utility's
management;
(3) An exhibit that
shows the changes in level of the costs of the capital infrastructure
investment that are proposed to be recovered, both historical and
projected;
(4) An explanation of
why these particular capital infrastructure investment costs are an important
factor in determining the total cost of capital infrastructure investment to
serve customers;
(5) A description
of proposed recovery procedures, if different from the procedures described in
paragraph 19.18(3)"c"; and
(6) The length of time that the automatic
adjustment mechanism will be in place.
b. Recovery of capital infrastructure
investment costs that meet the requirements in paragraph
19.18(1)"b" may be made by the utility by filing a proposed
tariff with a 30-day effective date no later than April 1 of each year. Only
one tariff filing to recover capital infrastructure investment costs shall be
made in a 12-month period. After December 13, 2017, any recovery previously
approved shall be aligned with an April 1 filing period when the utility next
seeks recovery under this rule. The utility shall file information in support
of the proposed automatic adjustment rates that includes:
(1) Proof that the capital infrastructure
investment is a project that was approved in advance by the commission as
specified in 19.18(1)"b"(3).
(2) The location, description, and costs
associated with the project.
(3)
The cost of debt from the utility's most recent general gas or electric rate
review proceeding before the commission and the applicable depreciation rates
from the utility's most recent general gas rate review proceeding before the
commission.
(4) The calculations
showing the total costs that are eligible for recovery and the rates that are
proposed to be implemented.
(5) The
utility shall provide supporting documentation, including but not limited to
work orders and journal entries, to the commission staff or the office of
consumer advocate upon request.
c. The utility shall calculate the rates for
the recovery of the capital infrastructure investment through the automatic
adjustment mechanism over the 12-month period beginning from the effective date
of the tariff, unless otherwise ordered by the commission. The calculated rate
shall include a reconciliation that reconciles the actual revenue recovered
through the automatic adjustment mechanism with the costs of the eligible
capital infrastructure investments proposed to be recovered over the previous
collection period. Unless otherwise specified in an approved tariff, the
capital infrastructure investment factor shall be recovered by a fixed monthly
surcharge to customers, to be determined by totaling eligible investment costs
for the prior calendar year, adjusted for the reconciliation amount, then
dividing the total recovery amount among customer classes based upon the
utility's most recent approved cost of service study, dividing the class
recovery amounts by the number of months in the recovery period, and then
dividing the assigned costs by the number of customers in each respective
class. The recovery amount will be limited to annual depreciation plus a return
on the undepreciated balance based on the cost of debt.
d. Recovery of a return on and return of
capital infrastructure investment that is eligible for recovery pursuant to an
automatic adjustment mechanism, including any recoveries approved prior to
December 13, 2017, shall continue until the effective date of temporary rates
in a subsequent general rate proceeding or, if temporary rates are not
implemented, until final rates approved by the commission in the utility's next
general rate proceeding. To continue recovery, a utility shall file a proposed
tariff each year. Once temporary or final rates are effective, the automatic
adjustment mechanism shall reset to zero. No more than five years of capital
investment recovery, including any recoveries approved prior to December 13,
2017, shall be allowed between general rate proceedings unless otherwise
approved by the commission. A utility may continue recoveries allowed under
this rule until the investments are fully depreciated or until the utility's
next general rate proceeding.
Notes
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