Commissioner Honorable Statement
May 31, 2016
Docket No. ER16-1301-000
Dissent on Emera Maine Tariff
“In today’s order, the Commission granted Emera Maine’s request that would allow it to adjust, for formula rate purposes, load, revenue, and sales data to account for “known and measurable” anticipated changes. This decision effectively allows Emera Maine to avoid one of the downsides of its formula rate – i.e., regulatory lag - while still receiving all of the benefits. In short, the Commission is allowing Emera Maine to have its cake and eat it too.
“I agree with the Maine Commission’s concerns that this proposal combines Emera Maine’s estimates and historical data, which is at odds with the simplified ratemaking process that formula rates traditionally provide. This proposal also allows Emera Maine to make its own determinations on which adjustments to apply. To illustrate this point, consider two examples: one where load is decreasing and one where load is increasing. Emera Maine is currently proposing to adjust the load figure used in their formula because several industrial customers are either ceasing or significantly curtailing operations. The loss of an existing load can clearly be considered “known and measurable.” Alternatively, in cases where load is expected to increase and a new industrial customer emerges, I would be concerned that this new industrial customer’s lack of load history could be used to preclude a “known and measurable” adjustment, the type of adjustment that would benefit customers generally. These similar examples lead me to believe that Emera Maine’s proposal is unbalanced.
“The Commission’s solution to Emera Maine’s flawed request is to require a true-up mechanism. This mechanism does not absolve this unjust and unreasonable proposal nor does it benefit Emera Maine’s customers. Indeed, there would be no true-up in cases when Emera Maine chooses not to apply an adjustment that would benefit consumers. The true-up mechanism also would not protect customers in times when load increased from year-to-year. Instead, the mechanism would only apply to the “known and measurable” adjustments themselves. Lastly, if a true-up mechanism is needed to fix errors to adjustments that are “known and measurable,” I question whether those adjustments are indeed “known and measurable.”
“While I am sympathetic to Emera Maine’s current situation – one that might have resulted in a $2.1 million under-recovery of its revenue requirement for 2016-2017 absent the Commission’s action today – I do not believe the adjustment mechanism proposed by Emera Maine is just and reasonable. There are advantages and disadvantages to each rate structure and I would consider a proposal to calculate load using data other than actual data filed in FERC Form 1. Any departure, however, would need to be balanced to benefit both consumers and the utility when appropriate.
“Accordingly, I respectfully dissent.”