§ 23-4-1206 — Formula rate review - Required information

Arkansas § 23-4-1206

• Jurisdiction: Arkansas
• Title: 23

Text

(a) A formula rate review mechanism approved by the Arkansas Public Service Commission shall specify the minimum information required with each annual rate review filing. (b) Annual formula rate review filings under an approved formula rate review mechanism shall be developed using the formula rate review test period designated by the public utility under § 23-4-1205(a)(2) . (c) (1) Annual formula rate review filings shall be prepared consistent with the Arkansas Public Service Commission's order on the public utility's application for a general change in rates and charges. (2) In the case of a formula rate review test period that uses a test period based on a projected year, an electing public utility may support any portion of the electing public utility's projected data through the use of information that relies on historical averages. (d) Any costs disallowed by the Arkansas Public Service Commission in its order on the public utility's application for a general change in rates and charges shall not be eligible for recovery under a formula rate review mechanism. (e) (1) If a formula rate review test period utilizes projected data under § 23-4-406 or a projected year, rate changes under § 23-4-1207 shall include an adjustment to net any differences between the prior formula rate review test period change in revenue and the actual historical year change in revenue for that same year. (2) A public utility shall report any differences between the prior formula rate review test period change in revenue and the historical year change in revenue for the same year. (3) Netting shall not begin until a public utility has accumulated a full twelve (12) months of a historical year to prepare a report. (4) (A) When calculating the adjustment to net any differences under subdivision (e)(1) of this section, the Arkansas Public Service Commission shall include the actual historical year change in revenue for a historical year, which shall be determined as follows: (i) For the purpose of including all of the elements of the change of revenue in calculating an adjustment to net any differences under subdivision (e)(1) of this section, the Arkansas Public Service Commission shall ensure that the revenue received for the historical year shall be composed of: (a) Prior formula rate review test period changes in revenue; (b) Netting revenue from a prior formula rate review test period; and (c) In order to isolate the change in revenue for the corresponding prior projected year being netted, prior projected year revenue for the year being netted; and (ii) The Arkansas Public Service Commission shall calculate an adjustment to net any differences under subdivision (e)(1) of this section by calculating the differences between the prior formula rate review test period changes in revenue and the prior projected year revenue for the year being netted. (B) If the prior formula rate review test period change in revenue being netted was limited by § 23-4-1207(d)(2) , the Arkansas Public Service Commission shall ensure that the revenue recovered shall be either: (i) Applied first to any revenue amounts remaining from the prior approved formula rate review test periods specified in subdivision (e)(4)(A) of this section, second to the netting adjustment specified in subdivision (e)(4)(A) of this section, and last to the prior projected year revenue for the year being netted specified in subdivision (e)(4)(A) of this section; or (ii) Proportioned by: (a) Calculating the sum of: (1) The revenue adjustment amount determined under § 23-4-1207(b) ; and (2) The netting adjustment determined under subdivision (e)(2) of this section and this subdivision (e)(4); (b) Calculating the percentage of the sum represented by: (1) The revenue adjustment amount determined under § 23-4-1207(b) ; and (2) The netting adjustment determined under subdivision (e)(2) of this section and this subdivision (e)(4); and (c) Applying the percentages calculated in subdivision (e)(4)(B)(ii) (b) of this section to the actual historical year change in revenue for that same year. (C) (i) For the initial term of a formula rate review mechanism approved and in effect on or before March 15, 2021, a public utility may choose to apply either subdivision (e)(4)(B)(i) or subdivision (e)(4)(B)(ii) of this section for the term of an approved formula rate review approved under § 23-4-1208(a)(1) . (ii) The Arkansas Public Service Commission shall authorize the public utility to use the chosen methodology. (iii) Except as provided in subdivisions (e)(4)(D) and (E) of this section, the authorized methodology shall remain in effect. (D) During the final year of the initial five-year term of any formula rate review mechanism approved and in effect before March 15, 2021, that uses a test period based upon a projected year, the public utility shall follow subdivision (e)(4)(B)(ii) of this section. (E) (i) During any five-year extension term of a formula rate review mechanism that uses a test period based upon a projected year, the public utility shall propose, and the Arkansas Public Service Commission shall authorize, a public utility to follow subdivision (e)(4)(B)(ii) of this section for the five-year extension of the term of the formula rate review mechanism. (ii) For any formula rate review mechanism that uses a test period based upon a projected year and has an initial term that commences after January 1, 2021, the public utility shall follow subdivision (e)(4)(B)(ii) of this section for the initial five-year term of the formula rate review mechanism. (f) The public utility shall submit documentation fully supporting all calculations and adjustments as required by the rules of the Arkansas Public Service Commission. (g) (1) Except as provided in subdivision (g)(4) of this section and § 23-4-1208(a)(2)(A)(ii) and (5) , a public utility or any other party to the proceeding subject to the Arkansas Public Service Commission's rules and procedures may propose additional adjustments that are based on factors unique to the public utility. (2) The Arkansas Public Service Commission shall not make any adjustments to the rates that are approved in the application for a general change in rates and charges during the formula rate review term except for those made under § 23-4-1205(c)(3)(B) . (3) If a public utility has designated its formula rate review test period as based on a projected year under § 23-4-1205(a)(2) , the public utility shall be allowed to recover its allowance for funds used during construction that is determined according to the uniform system of accounts adopted by the Arkansas Public Service Commission and any applicable accounting guidance issued by the Federal Energy Regulatory Commission and conforms with generally accepted accounting principles, through rates developed using a projected year. (4) Unless the Arkansas Public Service Commission finds that it is in the public interest and makes specific findings in support, the Arkansas Public Service Commission shall not approve any adjustments or changes to the formula rate review filings that are inconsistent with the findings in the Arkansas Public Service Commission's order on the public utility's application for a general change in rates or charges, including a review of all of the components of a public utility's books and records, including the balance sheet and income statement accounts as were included in the findings in the Arkansas Public Service Commission's order on the public utility's application for a general change in rates or charges, and shall continue to treat those items in a manner consistent with the findings in the Arkansas Public Service Commission's order on the public utility's most recent application for a general change in rates or charges, except that an adjustment shall not be approved under this subsection that is inconsistent with other provisions of this chapter.

Legislative History

Amended by Act 2021, No. 894,§ 3, eff. 4/25/2021. Amended by Act 2021, No. 404,§ 3, eff. 3/22/2021. Superseded by Act 2021, No. 894and repealed by Act 2023, No. 180,§ 1, eff. 8/1/2023 Added by Act 2015, No. 725,§ 3, eff. 3/27/2015.