Opinion ID: 2826975
Heading Depth: 2
Heading Rank: 2

Heading: Regulatory Proceeding Expenses

Text: [¶23] OPA also argues that the Commission abused its discretion by including in its revenue requirement calculation fifty percent of Bangor Gas’s regulatory proceeding expenses because there was insufficient evidence supporting the expense calculation.8 However, because the Commission’s decision to include the regulatory proceeding expenses in its revenue requirement analysis had no impact on its decision to approve the ARP, we need not address the merits of that decision. 7 Indeed, the valuation method proposed by OPA and Bucksport Mill—Energy West’s 2007 acquisition cost of $500,000—might more closely reflect a “current value” assessment than does the original cost valuation; the purchase price paid in 2007 reflects a snapshot market value of the company’s assets at that time. 8 OPA also contends that the Commission improperly “amortized” these expenses rather than “normalizing” them. Contrary to OPA’s argument, the Commission’s analysis is consistent with normalization and reflects the Commission’s effort to normalize Bangor Gas’s expenses despite an infrequent regulatory history. See Pine Tree Tel. & Tel. Co. v. Pub. Utils. Comm’n, 634 A.2d 1302, 1304 (Me. 1993) (explaining the normalization analysis). 13 [¶24] Although, as the Commission concedes, Bangor Gas did not strictly comply with the filing requirements for regulatory proceeding expenses, the utility’s overall revenue requirement was otherwise fully litigated and the Commission considered “a wide array of possible rate base calculations” as supported by each parties’ filings, rebuttal filings, and data request responses. Significantly, because the ARP that the Commission adopted for Bangor Gas did not change the utility’s starting point rates from then-current levels, the Commission’s decision to normalize a portion of Bangor Gas’s regulatory proceeding expenses in its revenue requirement analysis had no impact on the ARP’s ultimate starting point rates. In other words, because the Commission decided to maintain starting point rates at then-current levels, it did not set the rate that Bangor Gas’s customers would pay based on the revenue requirement figures presented by either Bangor Gas or OPA. Rather, it considered each parties’ filings in determining what revenue the utility would require and thus what rate could justly be charged to the utility’s customers pursuant to a traditional rate-making methodology, and then compared that rate to the ARP starting point rates to determine whether the ARP rates were just and reasonable. See 35-A M.R.S. §§ 301(4), 4706(3). [¶25] In its order, the Commission noted that the revenue requirement figures proposed by Bangor Gas would indicate a revenue shortfall that would 14 justify a rate increase, and the figures proposed by OPA would indicate a windfall that would require a rate decrease—the primary reason for the difference between the two approaches being the different property valuations in determining the rate base. The Commission took neither route, and instead found that Bangor Gas’s then-existing rates were reasonable starting point rates and did not need to be changed. It is safe to say that this dispute over an expense item representing an insignificant portion of the revenue requirements presented by each party,9 neither of which were used to set the utility’s rates, did not affect the Commission’s decision to adopt the ARP. The entry is: Judgment affirmed. On the briefs: Timothy R. Schneider, Esq., and William C. Black, Esq., Maine Office of the Public Advocate, Augusta, for appellant Office of the Public Advocate Todd J. Griset, Esq., and Andrew Landry, Esq., Preti Flaherty Beliveau & Pachios LLP, Augusta, and Linda M. Glover, Esq., Winstead PC, Houston, Texas, for appellant Bucksport Mill, LLC 9 The additional $40,000 regulatory proceeding expense accounts for an approximate one-half-percent increase in Bangor Gas’s approximately $8 million revenue requirement. 15 Matthew Kaply, Esq., Carol MacLennan, Esq., and Mitchell Tannenbaum, Esq., Maine Public Utilities Commission, Augusta, for appellee Public Utilities Commission Alan G. Stone, Esq., and Benjamin J. Smith, Esq., Skelton, Taintor & Abbott, Auburn, for appellee Bangor Gas Company, LLC At oral argument: Timothy R. Schneider, Esq., for appellant Office of the Public Advocate Andrew S. Hagler, Esq., for appellee Public Utilities Commission Alan G. Stone, Esq., for appellee Bangor Gas Company, LLC Public Utilities Commission case number 2012-598 FOR CLERK REFERENCE ONLY