GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2017

H                                                                                                                                                    2

HOUSE BILL 352

Committee Substitute Favorable 4/19/17

Short Title:      Rate Making/Water/Wastewater Public Utilities.	(Public)
Sponsors:
Referred to:

March 15, 2017

A BILL TO BE ENTITLED

AN ACT authorizing the utilities commission to use a fully projected future test period in rate making for water and wastewater public utilities.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 62‑133 is amended by adding a new subsection to read:

"(c1) As an alternative to the test period provided for in subsection (c) of this section, a water or wastewater public utility, as defined in G.S. 62‑3(23)a.2., may submit a request for Commission approval to utilize a fully projected future test period, which shall consist of a 12‑month period beginning on or after the date of filing of the application for a general rate case.

(1) When submitting a request for a fully projected future test period under this subsection, the utility shall provide an explanation as to why a fully projected future test period is more representative of the utility's operations than the test period prescribed in subsection (c) of this section. The Commission shall grant the utility's request if the Commission finds it is in the public interest.

(2) When utilizing a fully projected future test period under this subsection, the Commission shall determine, for rate‑making purposes, the projected rate base at the end of the future test period. Probable future revenues and expenses, including depreciation expense, accumulated depreciation and amortization, and other accumulated charges and credits to the rate base shall be annualized based on the plant and equipment projected to be in operation as of the end of the future test period, and otherwise adjusted as necessary to a representative ongoing level.

(3) The Commission shall adopt rules and regulations regarding information and data to be submitted upon notification by a water or wastewater public utility of its intent to use in a future rate case a fully projected future test period.

(4) No later than four months following the end of a fully projected future test period utilized pursuant to this subsection, the utility shall file with the Commission information and data evidencing all of the following items during the fully projected future test period, adjusted as appropriate to reflect the Commission's initial order setting rates in the proceeding:

a. Actual costs and in‑service dates for capital investment, as well as all actual and appropriately adjusted rate base balances as of the end of the future test period.

b. Actual and appropriately adjusted operating revenues.

c. Actual and appropriately adjusted incurred expenses.

d. Realized rate‑of‑return, based on the appropriately adjusted revenues, expenses, and rate base.

e. Any other information the Commission requests to use in determining the accuracy of the fully projected future test year period projections.

(5) The Commission shall adopt a rate adjustment mechanism to (i) track and true‑up any variations in the revenue requirement determined on the basis of the information provided in subdivision (4) of this subsection from that used to initially set rates in the general rate case proceeding and (ii) adjust the initially set rates as appropriate on a going‑forward basis, taking into account all applicable adjustments initially made by the Commission."

SECTION 2.  This act is effective when it becomes law and expires five years after the effective date.