Tel: 804.864.1100

Tel: 804.864.1100

The GreeneHurlocker Blog

Virginia Attorney General Reports on Utility ROE Enhancement Adders

In November 2012, Virginia’s Attorney General, Kenneth Cuccinelli, issued a report on his office’s review of the statutory adders that were a part of Virginia’s unique ratemaking system.  The goal of the study was to review the adders and determine if they were advancing the goals of the 2007 Regulation Act:   (a) protecting customers from price volatility and unnecessary rate increases, (b) reliability, (c) fuel diversity, (d) environmental benefits and (e) economic development.

Notably, the report concluded that:

  • The adder associated with achievement of the Renewable Portfolio Standard has cost customers of Virginia’s two investor-owned utilities, Appalachian Power and Dominion Virginia Power, about $740 million, yet the adder not served to advance the environmental concerns that led to its inclusion in the 2007 Act.  The utilities have not built any new renewable energy facilities, but have relied on purchases of Renewable Energy Credits (or RECs) from previously constructed facilities.
  • The generation adders for new generation projects that have been approved will increase the two utility companies’ combined revenue requirements by an estimated $284 million over the term of the adders, and have not advanced the key goals of the 2007 Act in light of the substantial costs they impose.

The Attorney General concluded the report with a call for more discussions on the adders, their costs, and whether they are achieving their intended results.  The Attorney General’s press for “serious policy discussions” on these issues, combined with candidacy for Governor and next year’s election, could make for an interesting upcoming General Assembly session.  In a press conference, Mr. Cuccinelli stated that the 2007 statute has been a “very favorable deal for the two utilities,” a claim that the utilities dispute.

Another interesting subplot will be the Attorney General’s advocacy in Dominion’s recent filing before the State Corporation Commission for approval to construct a 1,380 MW natural gas facility (Docket Number PUE-2012-00128).  Dominion would benefit from the generation adder which would apply to this proposed new facility.  In additional to all the other issues that will arise during that case, the attorney general’s report and advocacy during the case will be worth following.

The General Assembly has recently directed the Attorney General and the Commonwealth’s two utilities to engage in discussions as to potential legislative changes to the ROE Adders that were the subject of the Attorney General’s report.

About GreeneHurlocker, PLC

GreeneHurlocker PLC, located in Richmond, Virginia, provides a full range of litigation, energy law, and administrative/regulatory services. GreeneHurlocker is committed to delivering the highest quality legal services to its clients in a professional, effective and cost-efficient manner. Please contact Brian Greene or Eric Hurlocker at (804) 864-1100 for more information, or visit us on the web at www.GreeneHurlocker.com.  You can also follow us on Twitter: @GreeneHurlocker.

 

 

Virginia Commission Approves Virginia-American Water Rate Case Settlement

On December 12, 2012, the Virginia State Corporation Commission issued a Final Order approving a Stipulation that allows Virginia-American Water Company to increase its rates by almost $2.3 million, although the increase is significantly less than what the Company had initially requested.

The Company’s service territory includes four different Districts, each with its own revenue requirement.

  • In Hopewell, the Company had requested a 12.5 increase and settled for no increase.
  • In Prince William, the Company sought a roughly $1.8 million increase and settled for about $1.1 million.
  • In Alexandria, the Company sought about $1.7 million and settled for $930,000.
  • In the Eastern District, represented by GreeneHurlocker, the Company sought a 34% increase (approximately $570,000) and settled for an approximate 13.5% increase (about $228,500).  In the Eastern District, the Company settled for 38% of its requested amount.

The settlement includes a 9.75% return on equity, which is lower than the 11.3% ROE that the Company requested and also lower than the Company’s previously-authorized ROE of 10.7%.

The Company, which had been collecting its proposed rates since July 12, 2012 on an interim basis subject to refund, is required to issue refunds, with interest, by March 12, 2013.

About GreeneHurlocker

GreeneHurlocker, PLC, located in Richmond, VA, provides a full range of litigatino, energy law, and administrative/regulatory services.  GreeneHurlocker is committed to delivering the highest quality services to tis clients in a professional, effective, and cost-efficient manner. Please contact Brian Greene or Eric Hurlocker at (804) 864-1100 for more information, or visit us on the web at www.GreeneHurlocker.com.  You can also follow us on Twitter: @GreeneHurlocker.

End of Year Planning

As companies start working on their end of year planning and reviewing current-year results, we want to remind business leaders and owners to keep in mind the following:

  1. Do you have a succession plan to address the unexpected incapacity or death of a key officer, director or owner?  You may want to check your bylaws, operating agreement or other organizational documents to ensure that these issues are addressed as you want them.  Remember, as your organization changes, you may need to revisit these areas from time to time.  If you are a small business it is particularly important that you address these issues to ensure that your business will continue uninterrupted (or at least with minimal interruption) during a period of change.
  2. Do you have adequate insurance coverage for key officers, directors or owners?  Areas to consider are life insurance programs, disability policies and long-term insurance.  Also, don’t forget to make sure that your assets are adequately insured (particularly if you have added or shed assets during the year), including business risk insurance programs.
  3. Do you have a line of credit or other credit facility in place?  While your business may have adequate liquidity at the present time, you may wish to consider putting a line of credit  or other credit facility in place while operations are going well.  Making these arrangements now (i) may provide a safety net to guard against a temporary down-turn in your cash flow or an unexpected liability, and (ii) may give your business the confidence to take advantage of a growth opportunity without undue delay.
  4. Do you know a good business counselor or coach?  Whether your company is in start-up mode or has been in business for years, there are a number of very good business counselors and coaches available to work with business owners and officers on a periodic basis or to address a specific issue that your business may be facing.
  5. Are your people happy?  While this one often goes without saying, the end of the year is a good time to take the temperature of your organization and assess your working environment.   With the amount of time spent working at your business, it is important to make sure that your people remain motivated and dedicated to the success of the business.

These are the types of issues that can make a difference when it comes to the future success and viability of your business.  These issues can also impact, on a personal level, the individuals who work for or with you.  Let us know if you have any questions or desire additional information on these or other business-related issues as 2012 comes to a close.

 

Energy Policy and November 2012

As we move closer to the upcoming elections this year, it has become clear that energy policy will be a significant campaign issue.  All sectors have a stake in the outcome of the election and the resulting path energy policy may take.

Recently, Mr. Romney issued a white paper outlining his vision for energy independence as part of his Plan for a Stronger Middle Class.  Click to see entire paper http://www.mittromney.com/sites/default/files/shared/energy_policy_white_paper_8.23.pdf.  The renewable energy industry has already weighed in on the Romney program in a fashion that may surprise you.

President Obama has issued his own energy program, the “All of the Above” Energy Strategy, which you can view at   http://www.barackobama.com/record/environment?source=issues-nav.

We will continue to update you on developments on this key election day issue over the course of the next two months.