Summary: A rate case is the formal process used to determine the amounts to charge customers for electricity, natural gas, private water and steam service provided by regulated utilities. Rate cases are a primary instrument of government regulation of these industries. Interested persons may intervene and become parties in a utility company’s rate case. Typical intervenors include: industrial, commercial and other large-scale users of electricity; public interest groups; representatives of residential, low-income and elderly customers; local municipal officials; and, dedicated advocacy groups. The applicable legal requirements require the Public Service Commission (PSC) to render a decision within 11 months after a major rate case is filed. Rate cases proceed in an entirely public and open process.
Rate-Setting Process: To begin, the utility company submits a filing to demonstrate the need for a rate increase. Included in the rate filing are estimates of expenses, including operating expenses (labor, pension costs, materials, fuel); depreciation costs; taxes; a return on investor-provided capital; and recognition of utility plant additions and capital expenditures.
- Months 1-4: The Department of Public Service provides a staff team that is charged with the responsibility to analyze the utility rate filing and represent the public interest. The team includes lawyers, accountants, engineers, economists, financial analysts and consumer service specialists who audit and investigate the company’s proposals. The team typically develops an opposing position and counter-proposal to the rate filing. Other interested groups can also file testimony and challenge the utility rate filing. An Administrative Law Judge is assigned to preside over the case, hear all the evidence and provide recommendations to the PSC.
- Months 5-7: The testimony filed by staff and other interested groups are received; rebuttal testimony by utility company is allowed; hearings with cross-examination of all expert witnesses are conducted. Groups participating in the rate case may negotiate a settlement of the issues and submit it to the Administrative Law Judge for review.
- Months 7-9: Initial and reply briefs are filed with the Administrative Law Judge; Administrative Law Judges may issue a recommended decision; public statement hearings are held in affected service territories.
- Months 9-11: Additional briefs are filed with the PSC. Commission deliberations are held in open and public meetings and a written order is issued resolving all outstanding issues and matters necessary to determine the utility company’s revenue requirements and the amounts to charge customers.
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