Opinion ID: 1752828
Heading Depth: 2
Heading Rank: 2

Heading: The Meaning of Rate Group Reclassification

Text: Petitioners argue that rate group reclassification has acquired a technical or particular meaning and must be construed accordingly. [50] Petitioners insist that rate group reclassification means more than merely a process involving an increase in rates. Rather, petitioners assert it has been understood as a deliberative rate-design process aimed at balancing rates across populations by, among other things, adjusting rate-group boundaries. Therefore, petitioners contend that rate group reclassification in section 58.058 includes adjusting rate-group boundaries. As we noted, the PUC historically adjusted rate-group boundaries to achieve equitable rates for all customers. But, interpreting rate group reclassification in section 58.058 as allowing the PUC to adjust rate-group boundaries to achieve equitable rates directly contradicts section 58.025's prohibition against determining the reasonableness of an electing company's rates. We agree with the court of appeals that: Under rate-of-return regulation, rate-group reclassification was used as a rate-design tool to keep access-line growth essentially revenue neutral. The mandatory language of section 58.058 combined with section 58.025's promise that [Southwestern Bell] `is not, under any circumstances, subject to a complaint, hearing, or determination regarding the reasonableness' of its rates or revenuesconvinces us that rate-group reclassification cannot continue to be so used for utilities that opt for incentive regulation. [51]