Illinois Administrative Code › Title 83 - PUBLIC UTILITIES › Part 656 - QUALIFYING INFRASTRUCTURE PLANT SURCHARGE › Section 656.80 - Annual Reconciliation

Current through Register Vol. 48, No. 28, July 12, 2024
a) On or
			 before March 15 of each year, a utility that had a QIP surcharge in effect for all
			 or part of the immediately preceding calendar year shall submit to the Commission an
			 annual reconciliation regarding the results for the previous reconciliation year.
			 The annual reconciliation shall include testimony and schedules that support the
			 accuracy and the prudence of the qualifying infrastructure investment for the
			 reconciliation year, and shall be verified by an officer of the utility. The
			 schedules included with the annual reconciliation shall reflect all carry forward
			 adjustments from prior QIP surcharge reconciliation Orders, and the testimony shall
			 address how adjustments ordered in prior QIP surcharge reconciliations are reflected
			 in the current reconciliation. As required by this Section, the annual
			 reconciliation shall include a calculation of the R component necessary to adjust
			 revenue collected under the QIP surcharge rider in effect for the rate zone during
			 the reconciliation year to an amount equivalent to the actual level of
			 prudently-incurred QIP cost for the reconciliation year. In the event that the
			 earnings report filed under this Section for the rate zone shows that the utility's
			 actual rate of return has exceeded the level authorized in the utility's last water
			 or sewer general rate proceeding for the rate zone, as applicable, then the R
			 component shall include the credit required by subsections (c) and (d). Any
			 adjustment made through the R component shall be in effect for nine months
			 commencing on the April 1 immediately following submittal of the annual
			 reconciliation.
b) With the annual
			 reconciliation, the utility shall file a petition seeking initiation of the annual
			 reconciliation hearings required by Section 9-220.2 of the Act. After the hearing,
			 the Commission shall determine the amount of the adjustment, if any, that should be
			 made (through the O component) to the level of revenue collected by operation of the
			 QIP surcharge rider during the reconciliation year, so that the amount of such
			 revenue is equal to the actual level of prudently-incurred QIP cost for the
			 reconciliation year (to the extent that such adjustment has not already been
			 reflected through an adjustment made by the utility to the R component of the QIP
			 surcharge percentage).
c) In the annual
			 reconciliation, the utility shall include, for each rate zone in which a QIP
			 surcharge has been in effect, data showing operating income and rate base for the
			 reconciliation year, the such data being developed in accordance with subsection
			 (f)(4). If, for any such rate zone, the actual rate of return on rate base for the
			 reconciliation year exceeds the overall rate of return allowed in the utility's last
			 water or sewer general rate proceeding for the rate zone, revenues collected under
			 the QIP surcharge rider shall be reflected as a credit through the R component of
			 the QIP surcharge to the extent that such revenues contributed to the realization of
			 a rate of return above the last approved level. A credit value for the R component
			 will result in a reduction of the QIP surcharge percentage. To the extent, if any,
			 that a required adjustment for a reconciliation year has not been already made by
			 the utility (through the R component), the Commission shall require (through the O
			 component) that such an adjustment be made after the annual reconciliation
			 hearing.
d) Utilities shall calculate
			 the R component using the following formula:
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Where:
R = Utility-determined reconciliation component.
ActNetQIP = The average actual cost of the investment in QIP for the
				rate zone for the reconciliation year less actual accumulated depreciation and any
				accumulated deferred income tax (ADIT) liabilities net of deferred tax assets
				resulting from the of QIP for the rate zone for the reconciliation year. The average
				actual cost of QIP, net of depreciation and ADIT, shall be computed by using an
				average of 13 end-of-month balances of QIP less and accumulated depreciation and
				associated ADIT for the period from December 31 of the year preceding the
				reconciliation year through December 31 of the reconciliation year. (For utilities
				electing quarterly historical operation, the amount of the ActNetQIP shall be
				limited by the provisions of Section
				656.70(c)
				Part.)
AdjNetQIP = AdjNetQIP as defined in Section
				656.60.
				The effective date of the AdjNetQIP will be as disclosed in the document required
				following a rate case as described in Section 656.60.
PTR = Pre-tax return as described in Section
				656.50(a)(1)
ActNetDep = Actual net depreciation expense related to the average
				investment in QIP for the rate zone for the reconciliation year. Depreciation
				expense shall be calculated by multiplying the actual investment in QIP by plant
				account, net of retirements, by the approved depreciation rates for the respective
				accounts in which the specific items included in the average QIP investment are
				recorded. (For utilities electing quarterly historical operation, the amount of the
				ActNetDep shall be limited by the provisions of Section
				656.70(c).)
AdjNetDep = AdjNetDep as defined in Section 656.60. The effective
				date of the AdjNetDep will be as disclosed in the document required following a rate
				case as described in Section 656.60.
QIPRev = Actual QIP revenues collected during the reconciliation
				year through the QIP surcharge.
Rpy = The R component from the previous reconciliation year.
Opy = The sum of the O component and the calculated interest
				attributable to the O component, or the sum of any O components and the calculated
				interest attributable to the O components included in the calculation of the QIP
				surcharge percentage during the reconciliation year.
EEA = Excess earnings amount calculated in accordance with
				subsections (a), (c) and (f)(4). There will only be an EEA when the utility's actual
				rate of return for the reconciliation year exceeds the overall rate of return
				authorized by the Commission in the utility's last water or sewer rate proceeding
				for the rate zone.
e) Any
			 adjustment made by Order of the Commission under subsection (b) or (c) shall be
			 included in the O component and be in effect for either 12 months or 9 months,
			 beginning on the next January 1 (if 12 months) or April 1 (if 9 months) following
			 the Order of the Commission, or such other period as the Commission may direct in
			 the Order requiring that an adjustment be made.
f) Each annual reconciliation shall include the
			 following schedules:
1) A schedule showing, for
			 each rate zone for which a QIP surcharge rider was in effect, the QIP costs for the
			 reconciliation year;
2) A schedule
			 showing, for each rate zone for which a QIP surcharge rider was in effect, the
			 revenues arising through the application of the QIP surcharge during the
			 reconciliation year;
3) A schedule
			 showing, for each rate zone for which a QIP surcharge rider was in effect, the
			 reconciliation component determined by the utility showing the amount to be
			 recovered or refunded over a nine-month period commencing on April 1; and
4) Schedules showing the utility's calculation of
			 actual operating income and 13-month average rate base for the reconciliation year
			 by rate zone. This calculation of actual operating income and 13-month average rate
			 base shall be adjusted for any applicable adjustments accepted by the Commission in
			 the utility's last rate case for the rate zone. In calculating the amount of federal
			 and State income tax expense reflected in operating income, the utility shall
			 reflect as deductible interest expense for tax purposes the product that results
			 when the weighted embedded cost-of-debt reflected in the overall rate of return
			 calculation used in the utility's last rate proceeding for the rate zone is
			 multiplied by the rate base for the applicable rate zone as shown in the annual
			 reconciliation. In the event that the actual rate of return for any rate zone
			 exceeds the rate of return allowed in the utility's last water or sewer general rate
			 proceeding for the rate zone, a schedule showing the extent to which revenues
			 provided by operation of the QIP surcharge contributed to the difference between the
			 actual and last-authorized rate of return also shall be provided. The amount of the
			 revenues provided by the QIP surcharge that contributed to the actual rate of return
			 exceeding the overall rate of return authorized by the Commission in the utility's
			 last water or sewer rate proceeding for the rate zone shall be included as a credit
			 in the calculation of the R component.