§ 23-4-112 — Reserve accounting for storm restoration costs

(a) This section applies to storm restoration costs incurred on or after January 1, 2009. (b) Upon application by an electric public utility and after notice and hearing, the Arkansas Public Service Commission shall permit an electric public utility to establish a storm cost reserve account consistent with the then-current Federal Energy Regulatory Commission Uniform System of Accounts, as modified to allow a debit balance to reflect the excess of storm restoration costs over the amount recovered in rates or otherwise credited to the storm cost reserve account. (c) The use of reserve accounting under this section is subject to the following: (1) (A) The initial amount included in the storm cost reserve account for an electric public utility shall be the amount included in the electric public utility's currently approved rates for storm restoration costs. (B) Thereafter, in future rate proceedings, the Arkansas Public Service Commission shall determine the appropriate level of the storm cost reserve account considering the electric public utility's historical costs associated with normal storm damage and other factors; (2) As a condition of an electric public utility's recovery of storm restoration costs through rates or inclusion of storm restoration costs in the storm cost reserve account, the Arkansas Public Service Commission shall audit, analyze, examine, and adjust all storm restoration costs to ensure that only reasonable and prudent storm restoration costs are included in the storm cost reserve account or are recoverable through rates; (3) Simple interest on any balance, credit, or debit in the storm cost reserve account shall accrue at a rate equal to the electric public utility's last approved rate-base rate of return; (4) (A) An electric public utility shall only charge operations and maintenance storm restoration costs that are not otherwise recovered against the balance in the storm cost reserve account. (B) The Arkansas Public Service Commission shall ensure that the storm restoration costs charged to the storm cost reserve account are: (i) Timely; (ii) Specific to restoring retail electric service in Arkansas; and (iii) Subject to any ratemaking adjustments of the types of expenses included in the storm restoration costs that are consistent with the determination in the electric public utility's most recent application for a general change in rates. (C) An electric public utility shall: (i) File a quarterly report with the Arkansas Public Service Commission identifying each instance in which the electric public utility records storm restoration costs in the storm cost reserve account; and (ii) Provide with the quarterly report required by this subdivision (c)(4)(C) supporting documentation prescribed by the Arkansas Public Service Commission that includes without limitation: (a) Vegetation management spending; and (b) Labor costs; (5) (A) If an electric public utility spends less on storm restoration costs than the amount included in the electric public utility's currently approved rates for storm restoration costs in any calendar year, the electric public utility shall credit to the storm cost reserve account any difference between the amount in rates and the amount actually spent on storm restoration costs during that calendar year. (B) If an electric public utility has received any of the following payments to offset storm restoration costs, the electric public utility shall credit those payments to the storm cost reserve account: (i) Insurance payments; (ii) Payments from a governmental entity; or (iii) Any other third-party payments; and (6) (A) The Arkansas Public Service Commission shall determine the following in the electric public utility's next application for a general change in rates: (i) The recovery of any debit balance in the electric public utility's storm cost reserve account through the electric public utility's rates and charges over a reasonable period; or (ii) The appropriate ratemaking treatment of any credit balance in the electric public utility's storm cost reserve account. (B) After notice and hearing and a finding that it is in the public interest, the Arkansas Public Service Commission may approve other ratemaking treatment otherwise allowed by law of any balance, credit, or debit in the electric public utility's storm cost reserve account. (C) The Arkansas Public Service Commission shall establish the method of recovery of a debit balance in the electric public utility's storm cost reserve account and may impose conditions to ensure that amounts recovered through rates are reasonable and prudent. (d) This section: (1) Does not prevent the Arkansas Public Service Commission from adjusting an electric public utility's rate of return associated with the increased certainty of recovery of the electric public utility's storm restoration costs as a result of establishing a storm cost reserve account under this section; and (2) Does not prevent an electric utility from petitioning the Arkansas Public Service Commission to approve other methods of addressing storm restoration costs and the recovery of storm restoration costs through rates as allowed by law.

Legislative History

Acts 2009, No. 434, § 1.