Opinion ID: 1194147
Heading Depth: 1
Heading Rank: 7

Heading: spread or design of the rate increase

Text: Voluminous evidence was presented before the Commission, all of which was undisputed, that of the classes of customers served by Oklahoma Natural, to wit: Residential, Commercial, Wholesale for resale, Regular Industrial and First Interruptible, the rates of return from the residential and commercial customers are substantially less than the rates of return for other classes of customers, to the degree that residential and commercial classes are being subsidized by the regular industrial, first interruptible, and wholesale for resale customers. The evidence further established that the rate of return from residential customers was less than the cost to Oklahoma Natural of furnishing natural gas to them. Based upon such evidence, the Commission found and determined that steps should be taken to prevent the adoption of any rate structure which would result in any particular class earning a negative rate of return; that as an ultimate goal, rates should be structured in such a way that the rates of return for each customer class at least fall within some determined reasonable range around the system average rate of return; and that in this proceeding the rates should be structured so that meaningful progress can be realized, with an eye on customer impact, toward rates which are more closely aligned with cost of service but also with consideration given to the value of service, customers' ability to pay, customer elasticity and social considerations, since cost of service should not in fact be regarded as the sole factor in determining rates. Another such consideration would be an analysis of which class is responsible for the greatest risk to the system and the increased cost attributable thereto. Based upon these considerations, the Commission allocated the rate increase to the various customers as follows: Residential Commercial Wholesale Regular First Industrial Interruptible Revenue Inc. $7,790,201 $5,706,981 --- $6,191,900 $1,059,261 % Increase 4.90 7.53 --- 2.86 .40 Add'l Franchise Tax on Bills 3,334,206 1,629,520 --- 897,103 --- Revenue Increase with Franchise 11,124,407 7,336,501 --- 7,089,003 1,059,261 % Revenue Increase 7.00 9.68 --- 3.27 .40 We find that there was substantial evidence on the basis of which the Commission determined the spread or design or the rate increase. The order of the Oklahoma Corporation Commission is affirmed. IRWIN, C.J., BARNES, V.C.J., and HARGRAVE and OPALA, JJ., concur. HODGES, SIMMS and DOOLIN, JJ., concur in part and dissent in part.