Attached files
| file | filename |
|---|---|
| 8-K - UIL FORM 8-K DATED JANUARY 7, 2010 - UIL HOLDINGS CORP | uil_form8kdated010710.htm |
| EX-99 - UIL EXHIBIT 99 - UIL HOLDINGS CORP | exh99.htm |
EXHIBIT
99.1
 |
STATE
OF CONNECTICUT
|
DEPARTMENT
OF PUBLIC UTILITY CONTROL
TEN
FRANKLIN SQUARE
NEW
BRITAIN, CT 06051
|
APPLICATION
OF THE UNITED ILLUMINATING COMPANY TO INCREASE ITS RATES AND CHARGES -
PENSION AND OPEB EXPENSES
|
December
30, 2009
By the
following Commissioners:
DECISION
DECISION
A. Summary
The
Department approves UI’s 2010 forecasted increase to pension and OPEB
expenses. The Department also will allow UI to increase its
distribution rates January 1, 2010. All components of the
distribution rate increase for 2010, except the pension expense, was previously
approved in the original decision in this docket. The rate change was
scheduled for February 4, 2010. The Department will allow an
effective date of January 1, 2010 to avoid further rate changes. All
over collections for this brief period will be returned to
ratepayers.
B. Background
On
February 4, 2009, the Department issued a Decision in Docket No. 08-07-04, Application of the United
Illuminating Company to Increase its Rates and Charges (UI Rate
Case). In this Decision, the Department stated that it will reopen
this proceeding to update the pension and other post retirement employee benefit
(OPEB) expenses for 2010 based on December 31, 2009 year-end
valuations. The Decision also stated that at that time, the
Department will finalize the revenue requirements for 2010 so that distribution
rates can be put into effect on February 4, 2010. No other
adjustments would be considered at that time.
On
December 2, 2009, the Department, on its own motion, reopened the instant docket
for the limited purpose of incorporating the actual plan asset values and
discount rates and their impact on pension and OPEB expenses and to consider
modifications to the approved distribution rates for 2010 so that rates can
begin January 1, 2010.
C. Conduct
of the Proceeding
By Notice
of Reopened Hearing dated December 15, 2009, the Department held a public
hearing on this matter on December 23, 2009, at the offices of the Department,
Ten Franklin Square, New Britain, Connecticut 06051.
D. Parties
and Intervenors
The
Department designated The United Illuminating Company, 157 Church Street, New
Haven, Connecticut 06506-0901 and the Office of Consumer Counsel (OCC), Ten
Franklin Square, New Britain, Connecticut 06051, as Parties to this
proceeding.
| DOCKET NO. 08-07-04RE01 | Page 2 |
II. UI
PROPOSAL
In the UI
Rate Case Decision dated February 4, 2009, the Department allowed pension
expense of $15,202,500 for 2009 and $13,899,500 for 2010 and other post
retirement employee benefit expenses (OPEB) of $6,708,000 for 2009 and
$6,563,000 for 2010. The Department also established a regulatory
asset for the expected increase in the pension and OPEB expenses as a result to
the change in the year end discount rates for 2009 of $10.2 million, without
earning a return on this deferral. Furthermore, due to the steep
decline in the value of UI’s pension plan assets as a result of the
unprecedented turmoil in the world capital markets during the time of UI’s rate
proceeding, the Department established a pension tracker mechanism that would
reopen the instant docket by fiscal year end, December 31, 2009, for the limited
purpose of incorporating the actual plan asset values and discount
rates, while all other actuarial assumptions remain constant, and
their impact on pension and OPEB expenses for year 2010. The
Department closed the UI Rate Case proceeding and determined all adjustments for
2010 except the pension expense.
By letter
filed December 22, 2009, UI proposes to make its pension expense increase
effective as of January 1, 2010 instead or February 4, 2010, in order to
minimize the number and frequency of rate changes that will be experienced by
UI’s customers. UI proposes to incorporate the actual expense of
$10.232 million for 2009 and the Company’s calculation of the estimated 2010
pension and OPEB expense for 2010 based on plan asset values and the applicable
discount rate as of October 31, 2009 into distribution rates effective January
1, 2010. UI’s incremental 2010 pension and OPEB expense that is above
the amount already included in rates is estimated to be $12.153
million. However, in order to avoid an increase to residential rates
on January 1, 2010, UI included $11.4 million, only a portion of the $12.153
million in estimated pension expense into rates for 2010. The Company
expects to file the final 2010 pension and OPEB expense values in January 2010,
based on plan asset values and the applicable discount rate as of December 31,
2009, as contemplated in the UI Rate Case Decision. UI suggests that
any difference between the actual 2010 pension and OPEB expense and the portion
of the estimated pension and OPEB expense which has been included in rates
($11.4 million) will be established as a regulatory asset or liability for
future recovery or credit.
During
the hearing, UI testified that the current plan asset values have increased
approximately $10 million dollars since their October 31, 2009
forecasts. The increase in the plan asset values would impact pension
by lowering the forecasted expense amount in the range of $1 million to $2
million. Tr. 12/23/09. UI also concurred that the original
regulatory asset of $10.232 million will be removed from 2011
rates. Tr. 12/23/09.
To
further minimize the number and frequency of rate changes that will be
experienced by UI’s customers, UI also proposed to implement all previously
approved 2010 distribution rate increases that were scheduled for February 4,
2010 on January 1, 2010. December 22, 2009 Letter.
| DOCKET NO. 08-07-04RE01 | Page 3 |
III. DEPARTMENT
ANALYSIS
The
Department will allow the $10.232 million increase to pension expense that was
held as a regulatory asset for 2009 and UI’s 2010 forecast of $11.4 million
increase in pension expense to be incorporated into the distribution rates for
2010 so that rates can begin January 1, 2010. At the time that the
actual pension and OPEB plan asset values and discount rates are available for
2010, the Department will examine and review the fiscal year-end 2009 figures
and determine the proper adjustments to the pension and OPEB
expenses. The Department will adjust the regulatory asset for 2010 at
that time.
The
Department approves all the requested January 1, 2010 distribution rate changes
as proposed by UI. UI states the incremental revenue from January 1,
2010 to February 4, 2010 is $4.1 million and the Company will net the amount
against the decoupling adjustment to be decided later in 2010. The
Department agrees that UI shall net the $4.1 million against the decoupling
adjustment when it makes that filing later in 2010.
IV. CONCLUSION
AND ORDER
A. Conclusion
The
Department approves UI’s 2010 forecasted increase to pension and OPEB
expenses. The Department also approves all distribution rate changes
effective January 1, 2010.
B. Order
|
1.
|
UI
shall reduce its distribution rates by $10.232 million for rates beginning
February 4, 2011.
|
|
DOCKET
NO. 08-07-04RE01
|
APPLICATION
OF THE UNITED ILLUMINATING COMPANY TO INCREASE ITS RATES AND CHARGES -
PENSION AND OPEB EXPENSES
|
This
Decision is adopted by the following Commissioners:
CERTIFICATE OF
SERVICE
The foregoing is a true and correct
copy of the Decision issued by the Department of Public Utility Control, State
of Connecticut, and was forwarded by Certified Mail to all parties of record in
this proceeding on the date indicated.
|
/s/
Kimberley J. Santopietro
|
Dec.
30, 2009
|
||
|
Kimberley
J. Santopietro
|
Date
|
||
|
Executive
Secretary
|
|||
|
Department
of Public Utility Control
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