TITLE 39
Public Utilities and Carriers
CHAPTER 39-1
Public Utilities Commission
SECTION 39-1-27.7.1
§ 39-1-27.7.1 Revenue decoupling.
(a) The general assembly finds and declares that electricity and gas revenues
shall be fully decoupled from sales pursuant to the provisions of this chapter
and further finds and declares that any decoupling proposal submitted by an
electric distribution company as defined in subdivision 39-1-2(12) or gas
distribution company included as a public utility in subdivision 39-1-2(20)
that has greater than one hundred thousand (100,000) customers, shall be for
the following purposes:
(1) Increasing efficiency in the operations and management of
the electric and gas distribution system;
(2) Achieving the goals established in the electric
distribution company's plan for system reliability and energy efficiency and
conservation procurement as required pursuant to subsection 39-1-27.7(c);
(3) Increasing investment in least-cost resources that will
reduce long-term electricity demand;
(4) Reducing risks for both customers and the distribution
company including, but not limited to, societal risks, weather risks and
economic risks;
(5) Increasing investment in end-use energy efficiency;
(6) Eliminating disincentives to support energy efficiency
programs;
(7) Facilitating and encouraging investment in utility
infrastructure, safety, and reliability; and
(8) Considering the reduction of fixed, recurring customer
charges and transition to increased unit charges that more accurately reflect
the long-term costs of energy production and delivery.
(b) Each electric distribution company as defined by
subdivision 39-1-2(12) and gas distribution company included as a public
utility in subdivision 39-1-2(20) having greater than one hundred thousand
(100,000) customers shall file proposals at the commission to implement the
policy set forth in subsection (a) herein. The commission shall approve such
proposals, provided they contain the features and components set forth in
subsection (c) herein, and that they are consistent with the intent and
objectives contained in subsection (a) herein. The existence of any of the
ratemaking mechanisms set forth in this section shall not be relied upon or
cited for the purpose of making any adjustments in the determination of the
distribution company's cost of capital. Actions taken by the commission in the
exercise of its ratemaking authority for electric and gas rate cases shall be
within the norm of industry standards and recognize the need to maintain the
financial health of the distribution company as a stand-alone entity in Rhode
Island.
(c) The proposals shall contain the following features and
components:
(1) A revenue decoupling reconciliation mechanism that
reconciles annually the revenue requirement allowed in the company's base
distribution rate case to revenues actually received for the applicable twelve
(12) month period, provided that the mechanism for gas distribution shall be
determined on a revenue per-customer basis, in a manner typically employed for
gas distribution companies in the industry. Any revenues over-recovered or
under-recovered shall be credited to or recovered from customers, as
applicable; and
(2) An annual infrastructure, safety and reliability spending
plan for each fiscal year and an annual rate reconciliation mechanism that
includes a reconcilable allowance for the anticipated capital investments and
other spending pursuant to the annual pre-approved budget as developed in
accordance with subsection (d) herein.
(d) Prior to the beginning of each fiscal year, gas and
electric distribution companies shall consult with the division of public
utilities and carriers regarding its infrastructure, safety, and reliability
spending plan for the following fiscal year, addressing the following
categories:
(1) Capital spending on utility infrastructure;
(2) For electric distribution companies, operation and
maintenance expenses on vegetation management;
(3) For electric distribution companies, operation and
maintenance expenses on system inspection, including expenses from expected
resulting repairs; and
(4) Any other costs relating to maintaining safety and
reliability that are mutually agreed upon by the division and the company.
The distribution company shall submit a plan to the division
and the division shall cooperate in good faith to reach an agreement on a
proposed plan for these categories of costs for the prospective fiscal year
within sixty (60) days. To the extent that the company and the division
mutually agree on a plan, such plan shall be filed with the commission for
review and approval within ninety (90) days. If the company and the division
cannot agree on a plan, the company shall file a proposed plan with the
commission and the commission shall review and, if the investments and spending
are found to be reasonably needed to maintain safe and reliable distribution
service over the short and long-term, approve the plan within ninety (90) days.
(e) The commission shall have the following duties and powers
in addition to its existing authorities established in title 39 of the general
laws:
(1) To maintain reasonable and adequate service quality
standards, after decoupling, that are in effect at the time of the proposal and
were established pursuant to § 39-3-7.
(2) The commission may exclude the low income rate class from
the revenue decoupling reconciliation rate mechanism for either electric or gas
distribution. The commission also may exclude customers in the large commercial
and industrial rate class from the gas distribution mechanism.
(3) The commission may adopt performance incentives for the
electric distribution company that provides a shared savings mechanism whereby
the company would receive a percentage of savings realized as a result of
achieving the purposes of this section while the remaining savings are credited
to customers.
(4) The commission shall review and approve with any
necessary amendments performance-based energy savings targets developed and
submitted by the Rhode Island energy efficiency and resources management
council. Said performance-based targets shall also be used as a consideration
in any shared savings mechanism established by the commission pursuant to
subdivision (3) herein.
(f) The Rhode Island energy efficiency and resources
management council shall propose performance-based energy savings targets to
the commission no later than September 1, 2010. The targets shall include, but
not be limited to, specific energy kilowatt hour savings overall and peak
demand savings for both summer and winter peak periods expressed in total
megawatts as well as appropriate targets recommended in the opportunities
report filed with the commission pursuant to subdivision 39-2-27.7(c)(3). The
council shall revise as necessary these targets on an annual basis prior to the
reconciliation process established pursuant to subsection (c) of this section
and submit its revisions to the commission for approval.
(g) Reporting. Every electric distribution company as
defined in subsection (a) herein shall report to the governor, general
assembly, division of public utilities and public utilities commission on or
before September 1, 2012. Said report shall include, but not be limited to, the
following elements:
(1) A comparison of revenues from traditional rate regulation
and how the revenues have differed as part of an approved decoupling structure;
(2) A summary of how the company is achieving the
performance-based targets that may have been adopted pursuant to subdivision
(e)(4);
(3) A summary of any shared savings the company may have
received pursuant to the performance incentives authorized in subdivision
(e)(3);
(4) A summary of how the company is achieving the service
quality standards required in subdivision (e)(1);
(5) An overview of how decoupling is impacting revenue
stabilization goals that have resulted from decoupling; and
(6) A summary of any customer education programs provided.
History of Section.
(P.L. 2010, ch. 15, § 1; P.L. 2010, ch. 17, § 1.)
