NOTICES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Section 1307(e) Reconciliation Statement Pilot Program; Tentative Order
[43 Pa.B. 1536]
[Saturday, March 16, 2013]Public Meeting held
February 28, 2013Commissioners Present: Robert F. Powelson, Chairperson; John F. Coleman, Jr., Vice Chairperson; Wayne E. Gardner; James H. Cawley; Pamela A. Witmer
Section 1307(e) Reconciliation Statement Pilot Program;
Doc. No. M-2013-2345492
Tentative Order By the Commission:
The Pennsylvania Public Utility Commission (Commission) seeks to streamline administrative procedures governing the filings of Section 1307(e) reconciliation statements in order to more efficiently utilize Commission resources. In this Tentative Order, the Commission proposes to eliminate an evidentiary hearing, a recommended decision, and a Commission order on Section 1307(e) reconciliation statements when there is no material issue of fact in dispute. When there is no material issue of fact in dispute, the Commission proposes to simply issue a Secretarial Letter regarding the utility's reconciliation statement. When there is a material issue of fact in dispute, the Commission proposes that the Office of Administrative Law Judge (OALJ) hold such evidentiary hearings as may be necessary and issue an initial decision rather than a recommended decision. If no exceptions are filed and no Commission review is requested, the ALJ's initial decision will become final by operation of law.
This Tentative Order will first describe the current procedures and then propose new procedures for all Section 1307(e) reconciliation statements for a one-year pilot period, except for reconciliation statements associated with Section 1307(f) proceedings. In this Tentative Order, we invite all public utilities and interested parties to file comments, if so desired.
Background
Section 1307 of the Public Utility Code sets forth procedures governing automatic adjustment clauses. 66 Pa.C.S. § 1307. An automatic adjustment clause is a cost recovery mechanism in a tariff provision that allows a public utility to recover, outside the context of a base rate case, certain variable operating costs, such as fuel or purchased power. Commission review of automatic adjustment clauses is a four-step process. First, the Commission reviews a Section 1307(a) automatic adjustment clause proposed by the utility, approving a final version of the clause via Public Meeting action. Second, the Commission reviews subsequent automatic adjustment clause filings and, if computed accurately and in compliance with the tariff, the rate change is permitted to become effective as filed via Secretarial Letter, except for rate changes effective on one day's notice by operation of tariff.1 Third, the Commission reviews and holds a hearing regarding the Section 1307(e) reconciliation statements and, absent any issues, approves via Public Meeting action. Fourth, the Commission conducts audits of reconciliation statements and, upon completion, the Bureau of Audits (Audits) issues a public report via either Public Meeting action or via Secretarial Letter pursuant to delegated authority. This Order proposes streamlining administrative procedures governing Step Three: review of Section 1307(e) reconciliation statements.
Section 1307(e) of the Public Utility Code is a ratemaking provision that involves automatic adjustment reports and proceedings. 66 Pa.C.S. § 1307(e). Section 1307(e) was designed to provide utilities with a method to increase or decrease rates to reflect changes in specific costs in an efficient manner without the extensive filing requirements and review process of a traditional base rate case.2 The specifics of a utility's automatic adjustment clause, such as the date of the reconciliation period, are contained in the utility's tariff.
Section 1307(e)(1) requires public utilities using an automatic adjustment clause to annually file a statement showing revenues received and expenses incurred pursuant to the automatic adjustment clause within 30 days following the end of the 12-month period specified in the tariff. 66 Pa.C.S. § 1307(e)(1). The Code requires the Commission to ''hold a public hearing'' within 60 days of the filing of the reconciliation statement. 66 Pa.C.S. § 1307(e)(2). Within 60 days of such hearing, the Commission is required to issue an order directing refunds of over-collections to the utility's patrons or recovery of under-collections from the utility's patrons. Section 1307(e)(3). In actuality, these orders do not direct refunds or recovery in the vast majority of cases because the refund or recoupment of the over/under collection amounts in reconciliations have already been provided for as part of the automatic adjustment clause tariff filings that occur outside the Section 1307(e) reconciliation process. Thus, absent any issues raised pertaining to the utility's use of the automatic adjustment clause, such orders regarding the reconciliation statements become mere administrative formalities providing no additional substance or necessary legal effect.
Discussion
I. Current Commission Procedures for All Reconciliation Statements
Upon receiving the reconciliation statement required by Section 1307(e)(1), the Commission assigns the matter to Audits to review the statement and verify mathematical accuracy and compliance with the tariff. Audits prepares a hearing exhibit and summary of the filing for the Bureau of Investigation and Enforcement (I&E). I&E then files a notice of appearance in the OALJ proceeding. Parties can object to and challenge the reconciliation statement in writing. OALJ schedules and holds a hearing with an I&E attorney, an Audits witness, and utility attorneys and witnesses. Several hearings are held consecutively on the same day for multiple public utilities. The assigned Administrative Law Judge (ALJ) admits the reconciliation statement into record on motion of the utility or I&E. I&E offers a statement into evidence indicating that acceptance of the statement is subject to further review as to accuracy or reasonableness of the underlying transactions. The ALJ then issues a recommended decision and accepts the filing insofar as it is undisputed, noting that it is subject to further review and revision as may be necessary as a result of an audit or other proceeding. The ALJ also notes that acceptance does not constitute approval of accuracy or reasonableness of underlying transactions. Finally, the Commission adopts the recommended decision through an order at Public Meeting.
II. Proposed Commission Procedures for Reconciliation Statements When There Is No Material Issue of Fact in Dispute
All Section 1307(e) reconciliation statements will be filed with the Commission's Secretary's Bureau and assigned to Audits. The Commission will also require public utilities to serve the Office of Consumer Advocate, the Office of Small Business Advocate, and the Bureau of Investigation and Enforcement with Section 1307(e) reconciliation statement filings. A person or party must file a written objection within twenty days to challenge a Section 1307(e) reconciliation statement.
Upon assignment, Audits will review the statement and verify mathematical accuracy and compliance with the tariff. If the reconciliation statement is not challenged and there is no material issue of fact in dispute, Audits will issue a Secretarial Letter through delegated authority, accepting the filing insofar as it is undisputed, noting that it is subject to further review and revision as may be necessary as a result of an audit or other proceeding. Audits will also note that acceptance does not constitute approval of accuracy or reasonableness of underlying transactions.
III. Proposed Commission Procedures for Reconciliation Statements When There Is A Material Issue of Fact in Dispute Or Other Challenge
All Section 1307(e) reconciliation statements will be filed with the Commission's Secretary's Bureau and assigned to Audits. The Commission will also require public utilities to serve the Office of Consumer Advocate, the Office of Small Business Advocate, and the Bureau of Investigation and Enforcement with Section 1307(e) reconciliation statement filings. A person or party must file a written objection within twenty days to challenge a Section 1307(e) reconciliation statement.
Upon assignment, Audits will review the statement and verify mathematical accuracy and compliance with the tariff. If the reconciliation statement is challenged or there is a material issue of fact in dispute, the matter will be referred to OALJ for hearing and decision. However, instead of issuing a recommended decision, the ALJ will issue an initial decision since this is not a ''rate determination proceeding'' requiring issuance of a recommended decision under Section 335(a) of the Public Utility Code. See 66 Pa.C.S. § 335(a).3 If no exceptions are filed and Commission review is not requested, the ALJ's initial decision will become final by operation of law. If exceptions are filed or if Commission review is requested, the Commission will review and adopt an appropriate order at Public Meeting.
Conclusion
Implementing the above-noted procedures will streamline the process for filing Section 1307(e) reconciliation statements, ultimately saving the Commission time and resources. In this Tentative Order, the Commission proposes to eliminate an evidentiary hearing, a recommended decision, and Commission Public Meeting action regarding Section 1307(e) reconciliation statements when there is no material issue of fact in dispute. When there is no material issue of fact in dispute, the Commission will forego the evidentiary hearing process and issue a Secretarial Letter accepting the reconciliation statement. When there is a material issue of fact in dispute or other challenge that requires an evidentiary hearing, the Commission proposes that OALJ, after hearing and briefing, will issue an initial decision rather than a recommended decision. If no exceptions are filed and no Commission review is requested, the initial decision will become final by operation of law. This will eliminate the need for the Commission to act at a subsequent Public Meeting.
By way of this Tentative Order, we invite all public utilities and interested parties to file comments, if so desired. Through this Order, the Commission proposes these new administrative procedures governing the filing of Section 1307(e) reconciliation statements for a one-year pilot period. In the event the Commission determines that it will continue the new procedures after the initial one-year pilot period, the Commission will notify the appropriate stakeholders, subject to initiation of a proposed rulemaking to reflect such new procedures; Therefore,
It Is Ordered That:
1. During a one-year pilot period, the Commission proposes to adopt the above-noted procedures governing the filing and review of Section 1307(e) reconciliation statements as set forth in this Order.
2. During the pilot period, in addition to the Section 1307(e) reconciliation statement filings served with the Commission, the Commission will require public utilities to serve the Office of Consumer Advocate, the Office of Small Business Advocate, and the Bureau of Investigation and Enforcement with Section 1307(e) reconciliation statement filings. A person or party must file a written objection within twenty (20) days to challenge a Section 1307(e) reconciliation statement.
3. Any interested party is provided thirty (30) days from the date of entry of this Tentative Order to file comments to this Tentative Order. If no comments are filed within thirty (30) days, the Commission will subsequently issue a Final Order establishing the above-noted procedures on a one-year pilot basis, subject to initiation of a proposed rulemaking.
4. The proposed effective date for the new procedures is for Section 1307(e) reconciliation statements filed on or after July 1, 2013.
5. A copy of this Order shall be published in the Pennsylvania Bulletin and posted on the Commission's website at www.puc.pa.gov.
6. A copy of this Order be served on the appropriate stakeholders in this matter, including all natural gas, electric, steam, and water public utilities, the Bureau of Investigation and Enforcement, the Bureau of Audits, the Office of Administrative Law Judge, the Office of Consumer Advocate, and the Office of Small Business Advocate.
ROSEMARY CHIAVETTA,
Secretary
[Pa.B. Doc. No. 13-487. Filed for public inspection March 15, 2013, 9:00 a.m.] _______
1 The Commission recently determined that it would eliminate Public Meeting consideration of non-Section 1307(f) automatic adjustment clause tariff filings that raise no issues and are otherwise routine in nature. Nevertheless, all such tariff filings are subject to complaint via Section 701 of the Public Utility Code.
2 See National Fuel Gas Distribution Corp. v. Pa. Public Utility Commission, 473 A.2d 1109, 1117-1119 (Pa. Cmwlth. 1984) (describing the legislative intent behind Section 1307 of the Public Utility Code and emphasizing the Commission's power to ''[design] detailed procedures by which a utility shall translate a mandatory rate adjustment mechanism prescribed by the Commission into particular customer charges'').
3 As noted herein, the reconciliation statement itself does not contain or propose any rate changes. Rate changes are contained in the automatic adjustment clause filings that have already occurred outside the Section 1307(e) reconciliation process.
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