RATES AND REGULATION. Description - Determines the Operating Companies' revenue requirements and rates for electric and gas customers. Coordinates the regulatory compliance requirements and maintains relationships with the regulatory bodies. Method of Allocation - Rates and Regulation services will be allocated to the Operating Companies based on the Revenue Ratio.
RATES AND REGULATION. Franchisors reserve the right to regulate Franchisee, the Cable Television System, and the provision of Cable Services as expressly permitted by Federal, State, or local law.
RATES AND REGULATION. The Gas Company is regulated by the California Public Utilities Commission ("CPUC"). The CPUC consists of five commissioners appointed by the Governor of California for staggered six-year terms. It is the responsibility of the CPUC to determine that utilities operate within the best interests of their customers and have the opportunity to earn a reasonable return on investment. The regulatory structure is complex and has a very substantial impact on the profitability of the Company. PERFORMANCE BASED REGULATION On July 16, 1997, the CPUC issued its final decision on The Gas Company's application for performance based regulation ("PBR"), which was filed with the CPUC in 1995. For the five-year period that commenced January 1, 1998, PBR replaces the general rate case procedure and certain other regulatory proceedings. Under ratemaking procedures in effect prior to the PBR decision, The Gas Company typically filed a general rate case with the CPUC every three years. In a general rate case, the CPUC established a base margin, which is the amount of revenue to be collected from customers to recover authorized operating expenses (other than the cost of gas), depreciation, taxes and return on rate base. Under PBR, regulators allow future income potential to be tied to achieving or exceeding specific performance and productivity measures, rather than relying solely on expanding utility rate base in a market where The Gas Company already has a highly developed infrastructure. Key elements of the PBR include a reduction in base rates, an indexing mechanism that limits future rate increases to the inflation rate less a productivity factor, a sharing mechanism with customers if earnings exceed the authorized rate of return on rate base, and rate refunds to customers if service quality deteriorates. The change in regulatory oversight changes the way earnings are affected by various factors. For example, under PBR earnings are more reliant on operational efficiencies and less on investment in property, plant and equipment. PBR retains the balancing account mechanism by which The Gas Company refunds or collects in the future the difference between actual core revenue and the amounts authorized by the CPUC to be received in regulatory proceedings. Thus, full balancing account treatment allows the Company to fully recover amounts recorded as deferred costs or core revenue shortfalls, currently or in the future. The Commission's PBR decision established the following rules ...
RATES AND REGULATION. The Gas Company is regulated by the CPUC. The CPUC consists of five commissioners appointed by the Governor of California for staggered six-year terms. It is the responsibility of the CPUC to determine that utilities operate in the best interest of the customer with an opportunity to earn a reasonable return on investment. The regulatory structure is complex and has a very substantial impact on the profitability of the Company. CURRENT RATEMAKING PROCEDURES Under current ratemaking procedures, the return that the Company is authorized to earn is the product of the authorized rate of return on rate base and the amount of rate base. Rate base consists primarily of net investment in utility plant. Thus, the Company's earnings are affected by changes in the authorized rate of return on rate base, changes to authorized rate base, noncore market pricing, the variance in gas volumes delivered to noncore customers from CPUC-adopted forecast deliveries and by the Company's ability to control expenses and investment in line with the amounts authorized by the CPUC to be collected in rates. (See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations--Ratemaking Procedures.") The Gas Company's operating and fixed costs, including return on rate base, are allocated between core and noncore customers under a methodology that is based upon the costs incurred in serving these customer classes. For 1997, approximately 89% of the CPUC-authorized gas margin has been allocated to core customers and 11% to noncore customers, including wholesale customers. Under the current regulatory framework, costs may be reallocated between the core and the noncore customer classes once every other year in a biennial cost allocation proceeding ("BCAP"). The BCAP substantially eliminates the effect on core income of variances in core market demand and gas costs subject to the limitations of the "Gas Cost Incentive Mechanism" ("GCIM"). GCIM is a pilot program, which compares the Company's cost of gas with the average market price of 30-day firm spot supplies delivered to the Company's service area and permits full recovery of all costs within a tolerance band above the average. The cost of purchases above the tolerance band or savings from purchases below the average market price are shared equally between customers and shareholders. A filing has been made with the CPUC requesting a reward to shareholders under the procurement portion of the GCIM. The re...
RATES AND REGULATION. Determines the operating companies' revenue requirements and rates for electric, gas and water customers. Coordinates regulatory compliance requirements and maintains relationships with the regulatory bodies.
