Opinion ID: 2331279
Heading Depth: 1
Heading Rank: 4

Heading: Double Recovery of Bad-Debt Expenses

Text: We must also confess to concern about double recovery for bad debt due to implementation of the Policy. Gas Consumers argues that the utilities' existing rate bases include an allowance for bad debt. It contends that requiring ratepayers to make an additional direct payment through utilities' Purchased Gas Adjustment or Gas Supply Rate tariffs for the bad debt of Policy participants means that the utilities are impermissibly recovering bad-debt expenses twice, which violates the requirement that utility rates be just and reasonable. The PSC responds that the last time base rates were set for Arkansas gas utilities was in 1996 and 1997. It maintains that because of the extraordinary circumstances of winter 2000-2001, the level of bad debt contained in those rates has been greatly exceeded. The PSC further contends that the only bad-debt expense being recovered under the Policy is that attributable to Policy participants and that the Policy accelerates bad-debt recovery. Arkla, AWG, and the Attorney General agree that the winter of 2000-2001 resulted in extraordinary gas expenses and unprecedented bad debt necessitating the Policy. The Attorney General adds that should the PSC believe that a double recovery has occurred, it can require the utilities to file a general rate case to remedy excessive profits. Gas Consumers cites a paucity of authority in support of its contention, but its premise that double recovery of bad debt occurred, at least to some degree, appears to be obvious. A bad-debt expense was built into the rate base and with the implementation of the Policy, the bad debt for disconnected customers attributable to the 2000-2001 winter is again surcharged to all ratepayers. The PSC and utilities argue that the Policy was needed to pay bad debt because it was an exceedingly bad winter. Yet, variation in the harshness of winters and any resulting bad debt from one winter to the next would necessarily have been factored into the rate base. Nevertheless, because we are unable to glean from the record before us the extent of double recovery for bad debt, we refrain from reversing on this issue.