Notice of Intended Action

Rate cases, tariffs, and rate regulation election practice and procedure, amendments to ch 26

Untitled document

ARC 4046C

UTILITIES DIVISION[199]

Notice of Intended Action

Proposing rule making related to rate cases, tariffs, and rate regulation and providing an opportunity for public comment

The Utilities Board hereby proposes to amend Chapter 26, "Rate Cases, Tariffs, and Rate Regulation Election Practice and Procedure," Iowa Administrative Code.

Legal Authority for Rule Making

This rule making is proposed under the authority provided in Iowa Code sections 474.5, 476.2 and 476.33.

State or Federal Law Implemented

This rule making implements, in whole or in part, Iowa Code sections 476.2, 476.6 and 476.33.

Purpose and Summary

The purpose of this proposed rule making is to update and revise the Board's rules establishing procedures for filing applications for rate increases by rate-regulated utilities. The changes include updating of language regarding electric cooperatives and municipal utilities, implementation of requirements for utilities using a future test year, updating of the filing and notice requirements required to comply with Iowa Code section 476.6 and adding requirements for general rate case filings by small utility companies. The Board issued an order on July 31, 2017, requesting stakeholder comment about amendments to Chapter 26. Consumer Advocate, MidAmerican Energy Company, Interstate Power and Light Company, Iowa American Water Company, Black Hills Energy, the Iowa Association of Electric Cooperatives, and the Iowa Association of Municipal Utilities filed comments. The Board reviewed the stakeholder comments and the recent legislation (2018 Iowa Acts, Senate File 2311) providing for application based upon a future test year and proposes the following amendments to the rules in Chapter 26.

The Board issued an order on September 21, 2018, commencing this rule making. The order is available on the Board's electronic filing system, efs.iowa.gov, under Docket No. RMU-2016-0027.

Fiscal Impact

After analysis and review of this rule making, the Board tentatively concludes that the amendments will have no effect on the expenditure of public moneys within the state of Iowa.

Jobs Impact

After analysis and review of this rule making, no impact on jobs has been found.

Waivers

Chapter-specific waiver provisions are unnecessary since any person may apply for waiver of any Board rule under rule 199—1.3(17A,474,476).

Public Comment

Any interested person may submit written comments concerning this proposed rule making. Written comments in response to this rule making must be received by the Board no later than 4:30 p.m. on October 30, 2018. Comments should be directed to:

Iowa Utilities Board

Electronic Filing System (EFS) at efs.iowa.gov

Phone: 515.725.7337

Email: efshelpdesk@iub.iowa.gov

Public Hearing

An oral presentation at which persons may present their views orally or in writing will be held as follows:

December 18, 2018

10:30 a.m. to 12:30 p.m.

Board Hearing Room

1375 East Court Avenue

Des Moines, Iowa

Persons who wish to make oral comments at the oral presentation may be asked to state their names for the record and to confine their remarks to the subject of this proposed rule making.

Any persons who intend to attend the oral presentation and have special requirements, such as those related to hearing or mobility impairments, should contact the Board and advise of specific needs.

Review by Administrative Rules Review Committee

The Administrative Rules Review Committee, a bipartisan legislative committee which oversees rule making by executive branch agencies, may, on its own motion or on written request by any individual or group, review this rule making at its regular monthly meeting or at a special meeting. The Committee's meetings are open to the public, and interested persons may be heard as provided in Iowa Code section 17A.8(6).

The following rule-making actions are proposed:

Item 1. Amend rule 199—26.1(17A,476) as follows:

199—26.1(17A,476) Scope and applicability.

26.1(1) This chapter contains utilities board procedural rules applicable only to rate-regulated utility rate cases, rate case tariff filings, and rate regulation election by electric cooperatives. The board's general contested case procedural rules that also apply to these types of proceedings are contained in 199—Chapter 7also apply to these types of proceedings.

26.1(2) The purpose of these rules is to facilitate the transaction of business before the board and to promote the just resolution of controversies. Consistent with this purpose, the application of any of these rules, unless otherwise required by law, may be waived by the board pursuant to 199—1.3(17A,474,476). The filing and notice requirements in this chapter do not apply to municipal utilities exempted from rate regulation pursuant to Iowa Code section 476.1(4) and municipal natural gas and electric utilities subject to regulation pursuant to Iowa Code section 476.1B.

26.1(3) The filing and notice provisions in this chapter do not apply to electric utilities with fewer than 10,000 customers or electric cooperatives or associations subject to the provisions of Iowa Code section 476.1A that have not elected to be rate regulated by the board.

26.1(4) The filing and notice provisions in this chapter do not apply to natural gas utilities with fewer than 2,000 customers pursuant to Iowa Code section 476.1C, unless a valid petition is filed with the board pursuant to Iowa Code section 476.1C(1)"d."

Item 2. Rescind rule 199—26.2(17A,476) and adopt the following new rule in lieu thereof:

199—26.2(17A,476) Definitions. Terms not otherwise defined in these rules shall be understood to have their usual meaning.

"Bridge period" shall mean the period between the last available calendar year and the beginning of the proposed future test year.

"Charges" shall mean amounts billed to customers for a nonrecurring service or commodity rendered or offered by the public utility.

"Commodity" or "commodities" shall mean water, sanitary sewage, storm water drainage, electricity, or natural gas.

"Effective date" shall mean the date, approved by the board, on which the utility may begin charging the new rate or charge.

"Future test year," in determining just and reasonable rates, means any 12-month period beginning no later than the date on which a proposed rate change is expected to take effect.

"Historical test year" means the calendar year preceding the year in which the application for a general rate increase is filed unless the board approves an alternative test year time period prior to a utility's rate case filing.

"Rate amounts" shall mean the total bill rendered to a customer pursuant to a given rate schedule.

"Rates" shall mean amounts per unit billed to customers for a recurring service or commodity rendered or offered by the utility.

Item 3. Amend rule 199—26.3(17A,476) as follows:

199—26.3(17A,476) Proposal of settlements.

26.3(1) In proposed settlements which resolve all revenue requirement issues in a rate case proceeding, parties to the settlement shall jointly file the revenue requirement calculations reflecting the adjustments proposed to be settled.

26.3(2) In proposed settlements which resolve some revenue requirement issues in a rate case proceeding and retain some issues for litigation, each party to the settlement who has previously filed a complete revenue requirement calculation shall file its revenue requirement calculation reflecting the adjustments proposed to be settled and any remaining issues to be litigated.

26.3(3) In proposed settlements which produce an agreed-upon revenue requirement as a mutually acceptable outcome to the proceeding without an agreement on each revenue requirement issue, parties to the settlement shall jointly file schedules as exhibits to the settlement supporting documentation reflecting the specific adjustments for which the parties reached agreement.

26.3(4) For those issues included in the proposed settlement which were not specifically resolved, the schedules supporting documentation should identify the range between the positions of the parties.

Item 4. Amend rule 199—26.4(476) as follows:

199—26.4(476) Rate case expense.

26.4(1) A utility making an application pursuant to Iowa Code section 476.6 shall file, within one week of docketing of the rate case, the estimated or, if available, actual expenses incurred or to be incurred by the utility in litigating the rate case. Except for expenses incurred in preparation of the rate filing and notification of customers, the expenses shall be limited to expenses incurred in the time period from the date the initial application is filed through the utility's reply brief briefs unless the time period is extended by the board. Each expense shall be designated as either estimated or actual.

26.4(2) Estimated or, if available, actual expenses shall identify specifically:

a. Printing costs for the following:

(1)Rate notification letters.

(2)Initial filing.

(3)Testimony.

(4)Briefs.

(5)Other (specify).

b. Postage costs.

c. Outside counsel cost:

(1)Number of attorneys engaged as outside counsel.

(2)Hours per attorney engaged as outside counsel.

(3)Cost/hour and support for the reasonableness of this rate.

d. Outside expert witness/consultant:

(1)Number of outside consultants employed.

(2)Hours per consultant employed.

(3)Cost/hour per consultant employed and support for the reasonableness of this rate.

(4)Scope of work and reason consultant was needed.

e. Expenses stated by individual for both outside consultants and utility personnel:

(1)Travel.

(2)Hotel.

(3)Meals.

(4)Other (specify).

f. Other (specify).

26.4(3) Rate case expense shall not include recovery for expenses that are otherwise included in test year expenses, including salaries for staff preparing filing, staff attorneys, and staff witnesses. Rate case expense shall include only expenses not covered by test year expenses for the period stated in subrule 26.4(1).

26.4(4) Total allowable rate case expense shall include expenses incurred by board staff and the consumer advocate for the time period stated in subrule 26.4(1). The rate case expense to be filed by the utility shall not include these expenses.

26.4(5) The reasonableness of the estimates shall be litigated during the proceeding. At the request of the consumer advocate or the utilities board, company the utility shall make witnesses available on any item included in the estimated rate case expense for cross-examination during the hearing.

26.4(6) Actual utility expenses shall be filed in the same format and detail as estimated expenses and shall be filed within two weeks after filing the final brief. All material variances shall be fully supported and justified.

26.4(7) The board may schedule any additional hearings to litigate the reasonableness of the final expenses.

26.4(8) The recovery mechanism for rate case expense shall be determined by the board. Recovery may be through base rates, by means of a rider, or otherwise. The applicable recovery period will be determined in the rate proceeding. Recovery through a rider will end once the expense is fully recovered.

This rule is intended to implement Iowa Code section 476.6(8).

Item 5. Amend rule 199—26.5(476) as follows:

199—26.5(476) Applications and petitions.

26.5(1) Customer notification procedures.

a. Definitions. Terms not otherwise defined in these rules shall be understood to have their usual meaning.

(1)"Rates" shall mean amounts per unit billed to customers for a recurring service or commodity rendered or offered by the public utility. "Rate amounts" shall mean the total bill rendered to a customer pursuant to a given rate schedule.

(2)"Charges" shall mean amounts billed to customers for a nonrecurring service or commodity rendered or offered by the public utility.

(3)"Commodity" or "commodities" shall mean water, electricity, or natural gas.

(4)"Effective date" shall mean the date on which the first customer begins receiving the service or commodity under the new rate or charge.

b. a.Notification of rate increase to customers.

(1)All rate-regulated public utilities , except those exempted from rate regulation by Iowa Code section 476.1 which propose to increase rates or charges , shall mail or deliver a written notice pursuant to paragraph "c" or "d" provide written notice of the proposed increase to all customers in all affected rate classifications.

1.The written notice shall be mailed or delivered before the application for increase is filed, but not more than 62 days prior to the filing the application with the board. Any public utility exempt from rate regulation by Iowa Code section 476.1, which proposes to increase rates or charges, shall mail or deliver, not less than 30 days prior to the proposed effective date, a written notice pursuant to paragraph "c" or "d" of the rate or charge increase to all customers in all affected rate classifications.

2.A rate-regulated utility shall file its proposed notice, which shall be subject to approval by the board, not less than 45 days before the utility proposes to mail the notice to its customers.

Provided, however, that if a telephone utility is proposing to increase rates for only interexchange services, excluding EAS and intrastate access services, the utility shall cause the notice of proposed increase to be published, in at least one newspaper of general circulation in each county where such increased rates are proposed to be effective. The notice shall be published at least twice in such newspaper no more than 62 days prior to the time the application for the increase is filed with the board.

(2)The notice requirements in this paragraph are not applicable to rate increases for telecommunications services. Rate notice requirements for intrastate access service rates are subject to the requirements of 199—22.14(476).

c. b.Standardized notice Requirements for rate increase notices.

(1)Rate-regulated utilities. Any rate-regulated utility company may use the following forms for notification of its customers without seeking prior board approval. If the utility is asking for a general and interim increase, it should use Form A below. If the utility is asking for only a general increase, it should use Form B below.

Form A

Dear Customer:

(Company Name) (We) are asking the Iowa Utilities Board for an increase in (type of service) utility (rates) (and) (charges) with a proposed effective date of (date).

The proposed increase in annual revenues will be approximately $(number), or (number)%.

Although the effect of the proposed increase on your bill may vary depending upon the type and extent of usage, the (average monthly increase per customer for the primary customer classes) (and) (actual increase in nonrecurring charges per customer) (is) (are):

(Charges)

(Customer

Class)

Current

(Charge)

(Monthly

Rate)

+

Proposed

Increase

=

Proposed

(Charge)

(Monthly

Rate)

Percentage

Increase

This proposed increase in (rates) (and) (charges) may be docketed by the Board, which suspends the effective date of the proposed (rates) (and) (charges). If the proposed (rates) (and) (charges) are suspended, we are asking the Board for temporary authority to place into effect the following interim increase (collected subject to refund), to be effective (date). The Board may set interim (rates) (and) (charges) other than these:

Proposed Interim Rate Increase

(Charges)

(Customer

Class)

Current

(Charge)

(Monthly

Rate)

+

Proposed

Increase

=

Proposed

(Charge)

(Monthly

Rate)

Percentage

Increase

After a thorough investigation, the Board will order final (rates) (and) (charges) which may be different from those proposed, and determine when the (rates) (and) (charges) will become effective. If the final (rates) (and) (charges) are lower than the interim (rates) (and) (charges), the difference between the final and interim (rates) (and) (charges) will be refunded with interest.

You have the right to file a written objection to this proposed increase with the Board and to request a public hearing. The address of the Board is: Iowa Utilities Board, 1375 E. Court Avenue, Room 69, Des Moines, Iowa 50319-0069. The Board should be provided with any facts that would assist it in determining the justness and reasonableness of this requested increase. This information will be made available to the Consumer Advocate, who represents the public interest in rate cases before the Board.

A written explanation of all current and proposed rate schedules is available without charge from your local business office. If you have any questions, please contact your local business office.

Form B

Dear Customer:

(Company Name) (We) are asking the Iowa Utilities Board for an increase in (type of service) utility (rates) (and) (charges) with a proposed effective date of (date).

The proposed increase in annual revenues will be approximately $(number), or (number)%.

Although the effect of the proposed increase on your bill may vary depending upon the type and extent of usage, the (average monthly increase per customer for the primary customer classes) (and) (actual increase in nonrecurring charges per customer) (is) (are):

(Charges)

(Customer Class)

Current

(Charge)

(Monthly

Rate)

+

Proposed

Increase

=

Proposed

(Charge)

(Monthly

Rate)

Percentage

Increase

This proposed increase in (rates) (and) (charges) may be docketed by the Board, which suspends the effective date of the proposed (rates) (and) (charges). After a thorough investigation, the Board will order final (rates) (and) (charges) which may be different from those we requested. These final (rates) (and) (charges) will become effective at a date set by the Board.

You have the right to file a written objection to this proposed increase with the Board and to request a public hearing. The address of the Board is: Iowa Utilities Board, 1375 E. Court Avenue, Room 69, Des Moines, Iowa 50319-0069. The Board should be provided with any facts that would assist it in determining the justness and reasonableness of this requested increase. This information will be available to the Consumer Advocate, who represents the public interest in rate cases before the Board.

A written explanation of all existing and proposed rate schedules is available without charge from your local business office. If you have any questions, please contact your local business office.

(2)Utilities not subject to rate regulation. A utility not subject to rate regulation may use the following form for notification of its customers without seeking prior board approval.

Dear Customer:

On (date), (responsible party) approved an increase in (rates) (and) (charges) affecting prices for (type of service) that you receive. The increase will apply to your usage beginning on (date).

The increase in annual revenues will be approximately $(number), or (number)%.

Although the effect of the increase on your bill may vary depending upon the type and extent of usage, the (average monthly increase per customer for the primary customer classes) (and) (actual increase in nonrecurring charges per customer) (is) (are):

(Charges)

(Customer Class)

Current

(Charge)

(Monthly

Rate)

+

Proposed

Increase

=

(Charge)

(Monthly

Rate)

Percentage

Increase

A written explanation of all current rate schedules is available without charge from our local business office. If you have any questions, please contact our business office.

(3)General requirements for a form notice. The standardized notice provided under this subsection shall be of a type size and of a quality which is easily legible. A copy of the notice with dates, cost figures, and cost percentages shall be filed with the board at the time of customer notification.

Any utility offering services or systems involving detailed rate schedules must include in its notification to customers a paragraph specifically noting the services or systems for which any increase is proposed and advising customers to contact the utility's local business office for further explanation of the increase.

Any "average" used in the standard form shall be a median average.

(1)Rate-regulated utilities are subject to the notice requirements contained in this paragraph. Examples of approved notices can be found on the board's website at iub.iowa.gov. At a minimum, customer notification of proposed increases in rates must include the following information:

1.If the utility is proposing to place rates in effect on a temporary basis, an explanation of the interim rate process applicable to the proceeding and, with respect to such proposed interim rates, all of the information that this subrule requires a utility to submit concerning final rates.

2.A description of the proposed increase in rates or charges.

3.The proposed effective date of the proposed increase in rates and charges, stating that ultimately the board will determine when any changes in rates or charges become effective.

4.The proposed overall increase in annual revenues stated in dollars and as a percentage for each applicable customer class. The overall increase shall include the utility's estimated rate case expenses as a separate line item.

5.A table that includes the utility's primary customer classes and for each class shows the current average monthly bill, the proposed average monthly bill increase, the proposed average monthly bill, and the percent increase in average monthly bill. The utility shall highlight on the notice the rates that are proposed for a customer receiving the notice.

6.If a utility proposes significant changes to nonrecurring charges, the notice should include a table that contains the following for each nonrecurring charge: the amount currently charged, the proposed charge, and the percent increase.

7.A statement indicating that the impact of the proposed new rates on amounts billed to customers may vary depending on the type and extent of usage.

8.A statement indicating that a written explanation of all current and proposed rate schedules is available without charge from the utility's local business office.

9.A statement indicating how a customer may contact the utility with any questions concerning the proposed increase in rates or charges.

10.A statement indicating that customers have the right to file written objections to the proposed increase with the board and to request a public hearing to determine whether the rate increase should be allowed. The statement must include the board's mailing address and email address and the board's electronic filing system website address. The statement must also direct customers to provide the board with any facts that would assist the board in determining the justness and reasonableness of the requested increase, and indicate that the written objection will be made available to the consumer advocate, who represents the public interest in rate cases before the board.

11.The date, time, and place of any applicable consumer comment meetings.

12.A statement indicating that after a thorough investigation, the board will make a determination on final rates and charges which may be different from those that the utility proposes, and that if final rates or charges are lower than interim rates or charges, the utility shall refund the difference with interest to customers.

(2)Any utility offering services or systems involving detailed rate schedules shall include a paragraph in its notification to customers specifically noting the services or systems for which any increase is proposed and advising customers to contact the utility for further explanation of the increase.

(3)The proposed notice may contain blank spaces for dates, cost figures, and cost percentages; however, the board may request that the utility provide figures to assist the board during its review of the proposed notice.

(4)A copy of the notice with the final dates, cost figures, and cost percentages must be filed with the board in the rate proceeding docket at the time of customer notification.

(5)The form of the notice, once approved by the board, may not be altered except to include dates, cost figures, and cost percentages reflecting the latest updates. The type size and quality shall be easily legible.

d. c.Other customer notification forms Deficiencies. Within 30 days of the rate-regulated utility's filing of its proposed customer notice, the board shall issue an order either approving the notice or identifying any deficiencies and setting forth the corrections and additional information necessary for the notice to comply with Iowa Code chapter 476 and with board rules. A notice found to be deficient under this rule shall not constitute adequate notice under Iowa Code section 476.6. If the board fails to issue an order within 30 days of filing, the proposed notice shall be deemed approved without change.

(1)Prior approval. Any public utility, as defined in Iowa Code section 476.1, which proposes to increase rates or charges and is not in substantial compliance with the form prescribed in 26.5(1)"c" above, shall submit to the board not less than 30 days before providing notification to its customers in accordance with 26.5(1)"b," ten copies of such proposed notice for approval. The board, for good cause shown, may permit a shorter period for approval of the proposed notice.

(2)Form. The proposed notice as submitted to the board pursuant to 26.5(1)"d"(1) may contain blank spaces for dates, cost figures and cost percentages; however, a copy of the approved notice with dates, cost figures, and cost percentages shall be filed with the board at the time of the customer notification. The form of the notice, as approved by the board, may not be altered in the final form except to include dates, cost figures, and cost percentages reflecting the latest updates. The notice shall be of a type size and of a quality which is easily legible and shall be of the same format as that which was approved by the board.

(3)Required content of notification. The notice submitted for approval pursuant to 26.5(1)"d"(1) shall include, at a minimum, all of the information contained in the standard notice of 26.5(1)"c."

(4)Notice of deficiencies. Within 30 days of the proposed notice's filing, the utility shall be notified of either the approval of the notice or of any deficiencies in the proposed notice. In the event deficiencies are found to exist in the proposed notice, the board will describe the corrective measures necessary to bring the notice into compliance with Iowa Code chapter 476 and board rules. A notice found to be deficient under this rule shall not constitute adequate notice under Iowa Code section 476.6.

(5)Fuel adjustment clause. Nothing in this subsection shall be taken to prohibit a public utility from establishing a sliding scale of rates and charges or from making provision for the automatic adjustment of rates and charges for public utility service, provided that a schedule showing such sliding scale or automatic adjustment of rates and charges is first filed with the board. Such adjustment factors that result from the sliding scale shall be printed on the customer's bill.

e. d.Automatic adjustment clauses Reserved. The notice requirements in this chapter do not apply to rates filed pursuant to an automatic adjustment mechanism approved by the board. Nothing in this paragraph shall be construed to prohibit a public utility from making provision for the automatic adjustment of rates and charges for public utility service, provided that a schedule showing the automatic adjustment of rates and charges shall first be filed with and approved by the board.

f. e.Delivery of notification notice.

(1)The notice, as it appears in 26.5(1)"c" or as approved by the board in accordance with 26.5(1)"d," shall be mailed or delivered to all affected customers pursuant to the timing requirements of 26.5(1)"b."

(2)Rate-regulated utilities. Notice of all proposed increases may be mailed to all affected customers. The notice may be mailed with a regularly scheduled mailing of the utility. Notice, except for proposed nonrecurring service charge increases, shall be conspicuously marked, "Notice of proposed rate increase," on the notice itself. If a separate mailing is utilized by a utility for customer notification except for proposed nonrecurring service charge increases, the outside of the mailing shall also be conspicuously marked, "Notice of proposed rate increase."

(3)Utilities not subject to rate regulation. Notice of all increases may be mailed to all affected customers. The notice may be mailed with a regularly scheduled mailing of the utility. Notice of all increases, except nonrecurring service charge increases, shall be conspicuously marked, "Notice of rate increase," on the notice itself. If a separate mailing is utilized by a utility for customer notification of an increase, except a nonrecurring service charge increase, the outside of the mailing shall also be conspicuously marked, "Notice of rate increase." This subparagraph does not apply to municipal utilities.

(4)Failure of the postal service to deliver the notice to any customers shall not invalidate or delay a proposed rate increase proceeding.

(5)After the date the first notice is mailed or delivered to any affected customer and until such rates are resolved in proceedings before the board, any person who requests service and is affected by the proposed increase in rates shall receive a notice specified in paragraph 26.5(1)"b" not later than 60 days after the date of commencement of service to the customer.

(6)Approved notice will be required for each filing proposing an increase that is not directly identifiable with a previous customer notification.

(7)This subrule shall not apply to telephone utilities proposing to increase rates for only interexchange services, excluding EAS and intrastate access services.

(1)The notice as approved by the board shall be mailed or delivered electronically to all affected customers pursuant to the timing requirements of paragraph 26.5(1)"a." Notice of proposed increases may be mailed with a regularly scheduled mailing of the utility. Electronic notice shall only be sent to customers who have agreed to receive electronic notice.

(2)Notice shall be conspicuously marked "Notice of Proposed Rate Increase" on the notice itself. If a separate mailing is utilized by a utility for customer notification, the outside of the mailing shall also be conspicuously marked "Notice of Proposed Rate Increase." For notices delivered electronically, the subject line shall include "Notice of Proposed Rate Increase."

(3)Failure of the postal service or Internet service provider to deliver the notice to any customers shall not invalidate or delay the proposed rate increase proceeding.

(4)After the date the first notice is mailed or delivered to any affected customer and until such rates are resolved in proceedings before the board, any person who requests service and is affected by the proposed increase in rates shall receive a notice specified in paragraph 26.5(1)"a" not later than 60 days after the date of commencement of service to the customer.

(5)Approved notice is required for each filing proposing a rate increase that is not directly identifiable with a previous customer notification.

f. This subrule shall not apply to telephone utilities proposing to increase rates for only interexchange services, excluding EAS and intrastate access services.

26.5(2) Applications filed in accordance with the provisions of Iowa Code section 476.7.

a. Any rate-regulated public utility filing an application with the board requesting a determination of the reasonableness of its rates, charges, schedules, service, or regulations shall submit at the time the application is filed , factual evidence and written argument offered in support of its filing and provided that the public utility is not a rural electric cooperative, it shall also submit affidavits containing testimonial evidence testimony and exhibits in support of its filing for a general rate increase. All such testimony and exhibits shall be given or presented by competent witnesses, under oath or affirmation, at the proceeding ordered by the board as a result of the application, and the proceeding itself shall be governed by the applicable provisions of 199—Chapter 7 and rule 199—26.4(476).

b. All of the foregoing requirements shall likewise apply in the event the board shall, on its own motion, initiate initiates a formal proceeding to determine the reasonableness of a public utility's rates, charges, schedules, service, or regulations.

c. All testimony and exhibits shall be marked and identified in compliance with the naming convention as described in the board's electronic system standards or as required by board order.

26.5(3) Tariffs to be filed.

a.A rate-regulated public utility shall not make effective any new or changed rate, charge, schedule, or regulation until it has been approved by the board and the board has determined an effective date, except as provided in Iowa Code section 476.6, subsections 11 and 13 sections 476.6(8) and 476.6(9).

b.If the proposed new or changed rate, charge, schedule, or regulation is neither rejected nor approved by the board, the board will docket the tariff filing as a formal proceeding within 30 days after the filing date.

c.Proposed new or changed rates, charges, schedules, or regulations which contain energy efficiency expenditures and related costs which are incurred after July 1, 1990, for demand-side programs shall not be included in a rate-regulated utility's proposed tariff which relates to a general increase in revenue. A utility may propose to recover the costs of process-oriented industrial assessments not related to energy efficiency as defined in rule 199—35.2(476). The filing is not a contested case proceeding under the Iowa administrative procedure Act unless and until the board dockets it as a formal proceeding.

d.No person will be permitted to participate in the filing prior to docketing, except that the The consumer advocate and any customer affected by the filing, except as limited by 199—subrules 22.12(1) and 22.13(1), may submit within 20 days after the filing date a written objection to the filing and a written request that the board docket the filing, which request the board may grant in its discretion. Such written objections and requests for docketing shall set forth specific grounds relied upon in making the objection or request.

26.5(4) Letter of transmittal Transmittal letter and tariff changes. Three copies of all tariffs and all additional, original, or revised sheets of tariffs and the accompanying letter of transmittal shall be filed with the board and

a.Two versions of all applicable proposed tariff revisions as detailed in paragraph 26.5(4)"b" along with an accompanying transmittal letter shall be filed at the same time as an application for a general increase in rates. The transmittal letter shall include or be accompanied with such information as is necessary to explain the nature, effect, and purpose of the proposed tariff or additional, original, or revised sheets submitted for filing changes. Such The information shall include, when applicable:

a. (1)The amount of the aggregate annual increase or decrease proposed.

b. (2)The names of communities affected.

d. (3)A summary of the reasons for filing and such other information as may be necessary to support the proposed changes.

c. The number and classification of customers affected.

e. b.A marked version of the pages to be changed or superseded showing additions and deletions, if the tariff is prepared with word processing software supporting such marking. All new language must be marked by highlight, background shading, bold text, or underlined text. Deleted language must be indicated by strike-through. The marked version may be in either paper or electronic form and may be prepared manually or by word processing. When a marked version is infeasible or not meaningful, the letter or transmittal should state the reason for its omission. The marked version shall show all additions and deletions, with all new language marked by underlined text and all deleted language indicated by strike-through. The original sheet shall include the following symbols in the right margin to indicate the place, nature, and extent of any text changes.

(1)The symbol C shall indicate a change in regulation.

(2)The symbol D shall indicate a discontinued rate or regulation.

(3)The symbol I shall indicate an increased rate.

(4)The symbol R shall indicate a reduced rate.

(5)The symbol T shall indicate a change in the text that does not include a changed rate or regulation.

26.5(5) Evidence Testimony and exhibits to support applications based on a historical test year. Unless otherwise authorized by the board in writing prior to filing, a A utility must when proposing changes in tariffs or rate schedules rates, which changes relate to a general increase in revenue , shall prepare and submit file with its proposed tariff the following evidence in the form of testimony and exhibits in addition to the information required in 26.5(8)based upon a historical test year. The board shall act on requests for waivers not later than 14 days after filing of those requests. If no action is taken on a request for waiver, it shall be deemed denied.

a. Factors relating to value. A statement showing the original cost of the items of plant and facilities, for the beginning and end of the last available calendar year, any other factors relating to the value of the items of plant and facilities the utility deems pertinent to the board's consideration, together with information setting forth budgeting accounts for the construction of scheduled improvements.

b. Comparative operating data. Information covering the latest available calendar year immediately preceding the filing date of the application test year.

(1)Operating revenue and expenses by primary account.

(2)Balance sheet at beginning and end of test year.

c. Test year and pro forma income statements. Schedules Information setting forth revenues, expenses, net operating income of the last available calendar year, the adjustment of unusual items, and by adjustment to reflect operations for a full year under existing and proposed rates. The format of the information to be filed is available on the board's website at iub.iowa.gov.

d. Additional evidence testimony and exhibits for rural electric cooperatives. In addition to the foregoing evidence, a rural electric cooperative that has elected to be rate-regulated by the board shall file schedules information setting forth utility long-term debt and debt costs, accrued utility operating margins and other components of patronage capital, the cooperative's plan to refund utility patronage credits, the ratio of utility long-term debt to retained utility operating margins, the times interest earned ratio, the debt service coverage, authorized utility construction programs, utility operating revenues from base rates, and utility operating revenues from power cost adjustment clauses.

e. Additional evidence testimony and exhibits for investor-owned utilities. In addition to the foregoing evidence, an investor-owned utility shall file, at the same time the proposed increase is filed, the following information. For the purposes of these rules, "year of filing" means the calendar year in which the filing is made. Unless otherwise specified in these rules, the information required to be filed in this paragraph shall be based upon the calendar year immediately preceding the year of filing in which the application for a general rate increase is filed.

(1)Rate base for both total company and Iowa jurisdictional operations calculated by utilizing a 13-month average of month-ending balances ending on December 31 of the year preceding the year of filing, and also calculated on a year-end basis, except for the cash working capital component of this figure, which will be computed on the basis of a lead-lag study as set forth in subparagraph (5).

The rate base for the Iowa jurisdictional operations of rate-regulated telephone utilities will be computed on the basis of actual month-end balances which have been verified and adjusted to reflect the results of true-up procedures. True-up is the comparison of actual usage for each deregulated service with any previous estimates of deregulated usage for a given time period for the purpose of adjusting rate base and income statement allocations between deregulated and regulated services. Trued-up month-end balances for each deregulated service will be completed through the end of the test year prior to the date of filing a general rate case.

(2)Revenue requirements for both total company and Iowa jurisdictional operations to include: operating and maintenance expense, depreciation, taxes, and return on rate base. The Iowa jurisdictional expenses of rate-regulated telephone utilities will be adjusted to reflect allocation factors which have been computed as a result of actual month-end balances which have been verified and adjusted to reflect the results of true-up procedures. True-up is the comparison of actual usage for each deregulated usage for a given time period for the purpose of adjusting rate base and income statement allocations between deregulated and regulated services. Trued-up month-end balances for each deregulated service will be completed through the end of the test year prior to the date of filing a general rate case.

(3)Capital structure calculated utilizing a 13-month average of month-ending balances ending on December 31 of the year preceding the year of filing, and also calculated on a year-end basis.

(4)Schedules Information supporting the proposed capital structure , schedules and information showing the calculation of the proposed capital cost for each component of the capital structure and schedules showing requested return on rate base with capital structure and corresponding capital cost.

(5)Cash working capital requirements, including a recent lead-lag study which accurately represents conditions during the test period. For the purposes of this rule, a lead-lag study is defined as a procedure for determining the weighted average of the days for which investors or customers supply working capital to operate the utility.

(6)Complete federal and state income tax returns for the two calendar years preceding the year of filing and all amendments to those returns. If a tax return or amendment has not been prepared at the time of filing, the return shall be filed with the board under this subrule at the time it is filed with the Internal Revenue Service or the state of Iowa department of revenue.

(7)Schedule of Information showing monthly Iowa jurisdictional expense by account as required by chapter 16 of the board's rules 199—Chapter 16 unless, upon application of the utility and prior to filing, the board finds that the utility is incapable of reporting jurisdictional expense on a monthly basis and prescribes another periodic basis for reporting jurisdictional expense.

(8)For gas, electric, and water, sanitary sewage, and storm water drainage utilities, a schedule of monthly consumption (units sold) and revenue by customer-rate classes, reflecting separately revenue collected in base rates and adjustment clause revenues. For telephone companies, a rate matrix as set forth in the company's annual report (page B-16), shall be filed along with a statement of the total amount of revenue produced under the rate matrix.

(9)Schedules Information showing that the rates proposed will produce the revenues requested and information showing the dollar and percent increase expected for various rates of consumption within major rate classes. In addition to these schedules this information, the utility shall submit in support of the design of the proposed rate a narrative statement describing and justifying the objectives of the design of the proffered rate. If the purpose of the rate design is to reflect costs, the narrative should state how that objective is achieved, and should be accompanied by a cost analysis that would justify the rate design. If the rate design is not intended to reflect costs, a statement should be furnished justifying the departure from cost-based rates. This filing shall be in compliance with all other rules of the board concerning rate design and cost studies.

(10)All monthly or periodic financial and operating reports to management beginning in January two years preceding the year of filing. The item or items to be filed under this rule include: (a) reports of sales, revenue, expenses, number of employees, number of customers, or similar data; and (b) related statistical material. This requirement shall be a continuing one, to remain in effect through the month that the rate proceeding is finally resolved. Notwithstanding other provisions concerning the number of copies to be filed, one copy of each report shall be filed under this rule.

(11)Schedule of Information showing monthly tax accruals separated between federal, state, and property taxes, including the methods used to determine these amounts.

(12)Allocation methods, including formulas, supporting revenue, expense, plant or tax allocations.

(13)Schedule Information showing interest rates, dividend rates, amortizations of discount and premium and expense, and unamortized 13 monthly balances of discount and premium and expense, ending on December 31 of the year preceding the year of filing, for long-term debt and preferred stock.

(14)Schedule Information showing the 13 monthly balances of capital common stock expense associated with common stock, ending on December 31 of the year preceding the year of filing.

(15)Schedule Information showing the 13 monthly balances of capital surplus paid-in capital in excess of par, separated between common and preferred stock, ending on December 31 of the test year preceding the year of filing. For the purpose of this rule, capital surplus means amounts paid in that are less than or are in excess of par value of the respective stock issues.

(16)Stockholders' reports, including supplements for the year of filing and the two preceding calendar years. If such reports are not available at the time of filing, they shall be filed immediately upon their availability to stockholders.

(17)If applicable, securities and exchange commission Securities and Exchange Commission Form 10Q for all past quarters in the year of filing and the preceding calendar year, and Form 10K for the two preceding calendar years or, if applicable, comparable filings for corporations headquartered outside of the United States. If these forms have not been filed with the Securities and Exchange Commission at the time the rate increase is filed, they shall be filed under this subrule immediately upon filing with the Securities and Exchange Commission. This requirement is not applicable for any such reports which are routinely and formally filed with the board.

(18)Any prospectus issued during the year of filing or during the two preceding calendar years.

(19)Consolidated and consolidating financial statements.

(20)Revenue and expenses involving transactions with affiliates and the transfer of assets between the utility and its affiliates.

(21)A schedule Information showing the following for each of the 15 five calendar years preceding the year of filing, and for each quarter from the first quarter of the calendar year immediately preceding the year of filing through the current quarter.

1.Earnings, annual dividends declared, annual dividends paid, book value of common equity, and price of common equity (each item should be shown per average actual common share outstanding, adjusted for stock splits and stock dividends).

2.Rate of return to average common equity.

3.Common stock earnings retention ratio.

For common stock issued pursuant to tax reduction act stock ownership plans, employee stock option plans, and dividend reinvestment plans: net proceeds per common share issued, and number of shares issued and previously outstanding at the beginning of the year. This shall be set forth separately for each of the three types of plans, and reported as annual aggregates or averages.

4.For other issues of common stock: net proceeds per common share issued, and number of shares issued and previously outstanding for each issue of common stock.

(22)If the utility is applying for a gas rate increase, a schedule for weather normalization, including details of the method used the model used to calculate the weather normalization adjustment and documentation supporting the model inputs. The weather normalization model preferred by the board is available on the board's website at iub.iowa.gov.

(23)All testimony and exhibits in support of the rate filing, attached to affidavits of the sponsoring witnesses. All known and measurable changes in costs and revenues upon which the utility relies in its application shall be included.

1.Unless otherwise required, an original plus ten copies of all testimony , and exhibits, and four copies of all other information , shall be filed in the board's electronic filing system as described in 199—14.5(17A,476). Three copies of each of the preceding items In addition, three exact duplicate paper copies of documents filed electronically shall be provided to the board, and three copies shall be provided to the consumer advocate. In addition, two electronic copies of each computer-generated exhibit which complies with the standards in 199—7.7(476) and two copies of a brief description of the software and hardware requirements of noncomplying electronic copies of computer-generated exhibits shall be filed with the board and the consumer advocate. Two copies of the noncomplying electronic copies shall be provided upon request by any party or the board. The paper copies shall be certified by an officer of the utility or by an attorney representing the utility.

2.If the utility which has filed for the rate increase is affiliated with another company as either parent or subsidiary, the information required in subparagraphs 26.5(5)"e" (3), (4), (6), (13) to (19), and (21) shall be provided for the parent company (if any) and for all affiliates which are not included in the consolidating financial statements filed pursuant to this rule.

(24)Information relating to advertisements including:

1.A portfolio of all advertisements charged to ratepayers either produced, recorded or a facsimile thereof;

2.Cost data for all advertisements and the accounting treatment utilized; and

3.An account of total advertising expense including a breakdown of the expense by category.

f. All At the time of filing an application for increased rates, all rate-regulated utilities shall submit at the time of filing an application for increased rates file, as exhibits to testimony, all workpapers and data used to prepare the analysis and data submitted in support of the application. All workpapers shall substantially comply with the standards in 199—subrule 7.10(5).

g. Additional evidence testimony and exhibits. The applicant may submit file any other testimony , schedules, and exhibits, and data which it deems pertinent to the application.

(1)Additional evidence may include:

1.Testimony, schedules, exhibits, and data concerning the cost of capital infrastructure investment that will not produce significant revenues and will be in service in Iowa within nine months of the test year.

2.Testimony, schedules, exhibits, and data concerning cost of capital changes that will occur within nine months after the conclusion of the test year that are associated with a new generating plant that has been the subject of a ratemaking principles proceeding pursuant to Iowa Code section 476.53.

(2)The utility shall specifically identify and support the information, including providing an estimate at the time of filing and addressing prudence issues, regarding the changes that will be verifiable within nine months of the test year, with such verification provided to other parties as soon as the data is available. To be considered, the verifiable information must be offered into the record prior to the closing of the record at the hearing in the proceeding.

(3)A utility electing to file additional evidence under this paragraph shall include in the reports required in subparagraph 26.5(5)"e"(1) any capital infrastructure investments that will not produce significant revenues and have been placed in service in Iowa, or capital issuances that have been completed that are associated with a new generating plant that has been the subject of a ratemaking principles proceeding pursuant to Iowa Code section 476.53.

(4)A utility electing to file additional evidence under this paragraph shall provide additional schedules as required by subparagraphs 26.5(5)"e"(13), (14), and (15) related to capital issuances that have been completed that are associated with a new generating plant that has been the subject of a ratemaking principles proceeding pursuant to Iowa Code section 476.53.

Subparagraphs 26.5(5)"g"(1) through (4) are repealed effective July 1, 2007. However, any proceeding that is pending on July 1, 2007, that is being conducted pursuant to Iowa Code section 476.3 or 476.6 shall be completed as if subparagraphs 26.5(5)"g"(1) through (4) had not been repealed. Upon repeal of subparagraphs 26.5(5)"g"(1) through (4), the board may still consider the adjustments addressed in those subparagraphs, but shall not be required to consider them.

26.5(6) Evidence requested by the board Testimony and exhibits to support applications based on a future test year. The applicant shall furnish any additional evidence as ordered by the board at any time after the filing of the tariff Unless otherwise authorized by the board in writing prior to the filing of an application for a general increase in revenue based upon a future test year, the utility shall include the following testimony and exhibits to support the application.

a. Future test year. The evidence filed pursuant to this subrule shall be based upon any 12-month period beginning no later than the date on which the proposed rate change is expected to take effect.

b. Projected information. Information setting forth projected revenues, expenses, net operating income of the 12-month period beginning no later than the date on which the proposed permanent rates are expected to take effect, the adjustment of unusual items, and reflecting operations for a full 12-month period under existing and proposed rates shall be filed. The format of the spreadsheets is available on the board's website at iub.iowa.gov.

c. Projected comparative operating data. Information and data shall be filed as follows:

(1)Projected operating revenue and expenses by primary account.

(2)Projected balance sheet.

d. Additional testimony and exhibits. In addition to the foregoing testimony and exhibits, the following information, which shall be based upon any 12-month period beginning no later than the date on which the proposed rate change is expected to take effect, shall be filed.

(1)Projected rate base for both total company and Iowa jurisdictional operations.

(2)Projected revenue requirements for both total company and Iowa jurisdictional operations to include operating and maintenance expense, depreciation, taxes, and return on rate base.

(3)Projected capital structure.

(4)Information showing the calculation of the proposed capital cost for each component of the capital structure and information showing requested return on rate base with capital structure and corresponding capital cost.

(5)Projected cash working capital requirements, including a lead-lag study which represents conditions during the future test period. For the purposes of this rule, a lead-lag study is defined as a procedure for determining the weighted average of the days for which investors or customers supply working capital to operate the utility.

(6)Projected federal and state income taxes for the future test year.

(7)Information showing projected monthly Iowa jurisdictional expenses by account.

(8)Projected monthly consumption (units sold) and projected revenue by customer-rate classes, separately reflecting revenue collected in base rates and adjustment clause revenues. The same information for the calendar year prior to the filing of the application shall also be filed.

(9)Information showing that the rates proposed will produce the revenues requested and information showing the dollar and percent increase expected for various rates of consumption within major rate classes. The applicant shall submit in support of the design of the proposed rate a narrative statement describing and justifying the objectives of the design of the proffered rate. If the purpose of the rate design is to reflect projected costs, the narrative should state how that objective is achieved, and should be accompanied by a cost analysis that would justify the rate design. If the rate design is not intended to reflect projected costs, a statement should be furnished justifying the departure from cost-based rates.

(10)Projected monthly tax accruals separated between federal, state, and property taxes, including the methods used to determine these amounts.

(11)Allocation methods, including formulas, supporting projected revenue, expense, plant or tax allocations.

(12)Projected interest rates, dividend rates, amortizations of discount, premium, and expense, and unamortized balances of discount, premium, and expense for long-term debt and preferred stock.

(13)Projected common stock expense.

(14)Projected capital in excess of par, separated between common and preferred stock.

e. Workpapers, spreadsheets and formulas. All rate-regulated utilities shall file with an application for increased rates, as exhibits to testimony, all workpapers, spreadsheets and formulas, and data used to prepare the analysis and data submitted in support of the application.

f. Additional testimony and exhibits. The applicant may submit any other testimony and exhibits that the applicant deems relevant to the application.

g. Bridge period. As part of an application based on a future test year, a utility shall file the information required in subrule 26.5(6) for the bridge period.

26.5(7) Applications pursuant to Iowa Code section 476.6 that are not general rate increase applications. At the time a rate-regulated public utility, other than a rural electric cooperative that has elected to be rate regulated by the board, files for new or changed rates, charges, schedules, or regulations except in conjunction with general rate increase applications, it shall submit file the following:

a. Any cost, revenue, or economic data underlying the filing.

b. An explanation of how the proposed tariff would affect the rates and service of the public utility.

c. All testimony and exhibits in support of the filing attached to affidavits of the sponsoring witnesses.

26.5(8) Requests for temporary Temporary authority pursuant to Iowa Code section 476.6. A rate-regulated utility may implement without board approval temporary rates, charges, schedules, or regulations ten days after filing notice with the board regarding the rate-regulated utility's implementation pursuant to Iowa Code section 476.6(9)"b."

a. A utility that chooses to implement temporary rates, charges, schedules, or regulations pursuant to Iowa Code section 476.6(9)"b" shall file the following:

(1)A statement that the utility has elected to implement temporary rates, charges, schedules, or regulations pursuant to Iowa Code section 476.6(9)"b."

(2)A bond or other corporate undertaking subject to review and approval by the board that at a minimum is equal to the increased amount that will be recovered through temporary rates. The bond or corporate undertaking shall include a commitment to refund, as directed by the board, any amounts in excess of the amounts that would have been collected under final rates, charges, schedules, or regulations ultimately approved by the board.

b. If at the conclusion of the proceeding the board determines that the temporary rates, charges, schedules, or regulations placed into effect on a temporary basis were not based upon previously established regulatory principles, the board may consider ordering refunds based upon the overpayments made by each individual customer class, rate zone, or customer group.

c. If at the conclusion of the proceeding the board finds that permanent rates are less than temporary rates implemented by a utility, the board shall order refunds with interest at a rate consistent with Iowa Code section 476.6(9)"c."

a. A request for temporary authority to place in effect any suspended rates, charges, schedules, or regulations shall be separately identified and shall include:

(1)For each adjustment or issue, a brief explanation of the adjustment or issue and its purpose which includes the specific regulatory principles relied on to support the adjustment or issue and citations to either the rules, statutes, or decisions in which the regulatory principle was codified or previously applied.

(2)Schedules supporting the proposed temporary rate capital structure, schedules showing the calculation of the proposed capital cost for each component of the capital structure, and schedules showing requested return on rate base with capital structure and corresponding capital cost.

(3)All workpapers supporting the request for temporary authority. The workpapers shall substantially comply with the standards in 199—subrule 7.10(5).

b. Within 30 days of the filing of a request for temporary authority, an objection may be filed. An objection to a request for temporary authority shall separately identify each disputed adjustment or issue and shall include:

(1)A brief explanation of the basis for the disputed adjustment or issue which includes the specific regulatory principles relied on and citations to either the rules, the statutes, or decisions in which the regulatory principle was codified or previously applied.

(2)All workpapers supporting the objection to the request for temporary authority. The workpapers shall substantially comply with the standards in 199—subrule 7.10(5).

c. Within 15 days of the filing of the objection, the utility may file a reply.

d. For this rule, the following filing requirements apply:

(1)Request for temporary authority—original plus ten copies.

(2)Objections to request—original plus ten copies.

(3)Replies—original plus ten copies.

(4)Exhibits—original plus ten copies. In addition, two electronic copies of each computer-generated exhibit shall be filed. Only electronic copies of computer-generated exhibits that comply with 199—7.7(476) shall be filed.

(5)Electronic workpapers—two copies and two hard-copy printouts.

(6)Other workpapers—five copies.

(7)Specific studies or financial literature—two copies. In addition, three copies of each document filed shall be provided to consumer advocate.

Item 6. Rescind and reserve rule 199—26.6(476).

Item 7. Amend rule 199—26.7(476) as follows:

199—26.7(476) Rate investigation. The board shall commence a rate investigation upon the motion of the general counsel or the consumer advocate alleging that a rate-regulated utility's annual report, a special audit, or an investigation by the board staff or the consumer advocate, indicates that the earnings of that public utility may have been or will be excessive as required by Iowa Code section 476.3. The board may also commence a rate investigation upon the motion of any interested person.

Item 8. Amend rule 199—26.8(476) as follows:

199—26.8(476) Procedural schedule in Iowa Code sections 476.3 and 476.6 proceedings.

26.8(1) In any proceeding initiated as a result of the a complaint filed pursuant to Iowa Code section 476.3 or a filing by a public utility of new or changed rates, charges, schedules , or regulations pursuant to Iowa Code section 476.6, the utilities board or presiding officer shall set a procedural schedule based on the following guidelines, unless otherwise ordered by the utilities board or presiding officer pursuant to this rule. The times and places of consumer comment hearings meetings shall be set at the discretion of the utilities board or presiding officer on a case-by-case basis. The procedural schedule for an application for a general rate increase and associated revised tariffs shall be as follows, unless otherwise ordered by the board.

Prepared direct testimony and exhibits in support of the filing—date of initial filing.

Docket case as a formal proceeding, suspend effective date of new or changed rates, charges, schedules or regulations and establish procedural schedule—not later than 30 days from the date of initial filing.

All further testimony—completed not later than six months from date of initial filing.

Cross-examination of all testimony—completed not later than seven months from date of initial filing.

Briefs of all parties—filed not later than eight and one-half months from date of initial filing.

a. Case docketed as a formal proceeding and effective date of new or changed rates, charges, schedules, or regulations suspended not later than 30 days from the date of initial filing.

b. Direct and rebuttal testimony and exhibits from consumer advocate and other parties filed within five months from the date the application for a general rate increase is filed.

c. Consumer advocate and other parties cross-reply testimony and exhibits filed 15 days after responsive testimony.

d. Reply testimony and exhibits from the utility filed not later than six months from the date of the application for a general rate increase is filed.

e. Hearing completed not later than seven months from the date the application for a general rate increase is filed.

f. Briefs of all parties filed not later than eight and one-half months after the date the application for a general rate increase is filed.

26.8(2) In a proceeding initiated as a result of the filing of a complaint pursuant to Iowa Code section 476.3, the utilities board or presiding officer shall set a procedural schedule based on the following guidelines, unless otherwise ordered by the utilities board or presiding officer pursuant to this rule.

Prepared direct testimony and exhibits in support of the filing—date of initial filing.

Docket case as a formal proceeding to suspend effective date of new or changed rates, charges, schedules or regulations and establish procedural schedule—not later than 30 days from the date of initial filing.

All further testimony—completed not later than six months from date of initial filing.

Cross-examination of all testimony—completed not later than seven months from date of initial filing.

Briefs of all parties—filed not later than eight and one-half months from date of initial filing.

26.8(3) 26.8(2) In setting the procedural schedule in a case, the board or administrative law judge presiding officer shall take into account the existing hearing calendar and shall give due regard to other obligations of the parties, attorneys and witnesses. The board or administrative law judge presiding officer may , on its own motion or upon the motion of any party, including the consumer advocate, for good cause shown change the time and place of any hearing. Any effect such a change has on the remainder of the procedural schedule or the deadline for decision shall be noted addressed when the change is ordered.

26.8(4) 26.8(3) Additional time may be granted a party, including the consumer advocate, upon a showing of good cause for the delay, including but not limited to:

a. Delay of completion of previous procedural step.

b. Delays in responding to discovery or consumer advocate data requests.

Any effect such an extension has on the remainder of the procedural schedule or the deadline for decision shall be noted in the motion for extension and the board order granting the extension.

26.8(5) 26.8(4) If any party, including the consumer advocate, wishes to utilize the electric generating facility exception to the ten-month decision deadline contained in Iowa Code section 476.6, it the party shall expeditiously file a motion seeking this exception including an explanation of that portion of the suspended rates, charges, schedules or regulations necessarily connected with the inclusion of the generating facility in rate base. Any other party may file a response to such a motion.

26.8(5) Subsequent proceeding for general rates increase based upon a future test year. When approving rates based upon a future test year, the board shall set a procedural schedule and hearing date for a review of the approved rates to determine whether actual costs and revenues are reasonably consistent with the approved rates.

Item 9. Amend rule 199—26.9(476) as follows:

199—26.9(476) Consumer comment hearing meeting in docketed rate case of an investor-owned utility company. The board shall may hold consumer comment hearings meetings to provide an opportunity for members of the general public who are customers of an investor-owned a rate-regulated utility company involved in a docketed general rate case to express their views regarding the case before the board as well as the general quality of service provided by the utility. However, specific service complaints must follow the procedure prescribed in 199—6.2(476). Nothing shall prohibit the board from holding consumer comment hearings meetings on any other docketed rate case.

26.9(1) The consumer comment hearing will be presided over by either the board member(s) or an administrative law judge assigned by the board. A member of the board shall be assigned to preside over a consumer comment meeting. Representatives from the utility company shall be present to explain, in a concise manner, the pertinent points of the company's utility's proposal. The company's utility's representatives shall also respond to any questions directed to them the utility. All representatives from the utility company that are participating, except for legal counsel, shall be under oath. All board staff members that are participating in the hearing shall be under oath.

26.9(2) Individuals who wish to testify at the consumer comment hearing need not preregister with the board but need only sign up at the time of the hearing. The board member(s) or administrative law judge may limit the length of testimony when a large number of persons wish to testify. Sworn testimony shall become a part of the permanent record of the rate proceeding.

26.9(3) All participants in the hearing may correct misinformation within testimony. Correction of misinformation may be made at the time of the hearing during oral presentation or, if the misinformation does not come to the attention of the participants until after the hearing, correction of misinformation may be submitted in writing to the board within 20 days after the oral presentation. Written submissions shall be limited to a statement identifying the party whose testimony is to be corrected, and a brief statement of the incorrect testimony. This shall be followed by a brief statement of the correct information. This procedure shall be utilized to correct only such information that is clearly erroneous. Written submissions of corrections of misinformation shall not be used to slant, clarify or add to the testimony given during oral presentation. Corrections of misinformation which comply with this rule shall become a part of the permanent record.

The consumer comment hearing is not an appropriate forum for any party to make a record for or against the rate case.

26.9(4) 26.9(2) The consumer comment hearing meeting shall be held in a major population center served by the utility company at a time of day convenient to the largest number of customers. The board may schedule consumer comment meetings at multiple locations. It Each meeting shall be conducted in a facility large enough to accommodate all who wish to attend. Notice of the consumer comment hearing meeting shall be sent by the board's public information office to newspapers, radio, and television stations in the area served by the utility company board to appropriate media outlets.

26.9(5) 26.9(3) Individuals unable to attend a consumer comment hearing may submit written comments to the board. Written comments shall become part of the permanent case file of but shall not constitute evidence in the rate proceeding, but not part of the record as sworn testimony.

26.9(6) Consumer comment hearing may be waived by the board if the interests of the public are better served without a hearing.

This rule is intended to implement Iowa Code sections 474.5, 476.1 to 476.3, 476.6, 476.8, 476.10, 476.31 to 476.33.

Item 10. Rescind and reserve rule 199—26.10(476).

Item 11. Amend rule 199—26.11(476) as follows:

199—26.11(476) Consideration of current information in rate regulatory proceedings Switching from a future test year to a historical test year. Consistent with Iowa Code section 476.33, a utility may file an application for a rate regulatory proceeding under Iowa Code section 476.6 using either a historical test year or future test year. A utility shall not file an application for a general rate increase using a historical test year within four years from the date the board issues a final order in the subsequent proceeding following the approval of rates based upon a future test year. If a utility provides both gas and electric service, the limitation in the preceding sentence on using a historical test year shall only apply to the service for which the utility's rates were set using a future test year.

26.11(1) Test period. In rate regulatory proceedings under Iowa Code sections 476.3 and 476.6, the board shall consider the use of the most current test period possible in light of existing and verifiable data respecting costs and revenues available as of the date of commencement of the proceedings.

26.11(2) Known and measurable changes. In rate regulatory proceedings under Iowa Code sections 476.3 and 476.6, the board shall consider:

a. Verifiable data, existing as of the date of commencement of the proceedings, respecting known and measurable changes in costs not associated with a different level of revenue and known and measurable revenues not associated with a different level of costs, that are to occur within 12 months after the date of commencement of the proceedings.

b. Data which becomes verifiable prior to the closing of the record at the hearing respecting known and measurable:

(1)Capital infrastructure investments that will not produce significant additional revenues and will be in service in Iowa within nine months after the conclusion of the test year.

(2)Cost of capital changes that will occur within nine months after the conclusion of the test year that are associated with a new generating plant that has been the subject of a ratemaking principles proceeding pursuant to Iowa Code section 476.53.

Verifiable data filed pursuant to paragraph 26.11(2)"b" shall be provided to other parties as soon as the data is available so that other parties have a reasonable opportunity to verify the data to be considered by the board.

Paragraph 26.11(2)"b" is repealed effective July 1, 2007. However, any proceeding that is pending on July 1, 2007, that is being conducted pursuant to Iowa Code section 476.3 or 476.6 shall be completed as if paragraph 26.11(2)"b" had not been repealed. Upon repeal of paragraph 26.11(2)"b," the board may still consider the adjustments addressed in the paragraph, but shall not be required to consider them.

26.11(3) Postemployment benefits other than pensions. For rate-making purposes, the amount accrued for postemployment benefits other than pensions in accordance with Financial Accounting Standard No.106 will be allowed in rates where:

a. The net periodic postemployment benefit cost and accumulated postemployment benefit obligations have been determined by an actuarial study completed in accordance with the specific methods required and outlined by SFAS No.106.

b. The accrued postemployment benefit obligations have been funded in a board-approved, segregated and restricted trust account, or alternative arrangements have been approved by the board. Cash deposits shall be made to the trust at least quarterly in an amount that is proportional and, on an annual basis, at least equal to the annual test period allowance for postemployment benefits other than pensions.

c. The transition obligation is amortized over a period of time determined by the board that does not exceed 20 years.

d. Any funds, including income, returned to the utility from the trust not actually used for postemployment benefits other than pensions shall be refunded to customers in a manner approved by the board.

e. The board finds the benefit program and all calculations are prudent and reasonable.

26.11(4) An actuarial study of the net periodic postemployment benefit cost and accumulated postemployment benefit obligations shall be determined and filed with the board at the time a rate increase is requested, when there has been a change in postemployment benefits other than pensions offered by the utility, or every three years, whichever comes first.

26.11(5) For a period not to exceed three years commencing January 1, 1993, a rate-regulated utility may record on its books each year as a deferral the difference between the amount accrued in accordance with SFAS 106 and the amount which would have been recorded for postemployment benefits other than pensions on a pay-as-you-go basis for that year. In calculating the amount to be deferred, the utility may include in the deferral the amortization of transition obligation costs in accordance with SFAS 106.

26.11(6) Recovery of the deferrals authorized in subrule 26.11(5) will be considered only in rate cases filed prior to December 31, 1995.

This rule is intended to implement Iowa Code sections 476.1 to 476.3, 476.6, 476.8, 476.10 and 476.31 to 476.33.

Item 12. Amend rule 199—26.12(476) as follows:

199—26.12(476) Rate regulation election—electric cooperative corporations and associations.

26.12(1) Application of rules. Electric cooperative corporations and associations shall not be subject to the jurisdiction of the utilities board except as provided in Iowa Code section 476.1A and paragraphs "a," "b," and "c" of this subrule chapter.

a. Procedure for election by members. Upon petition of not less than 10 percent of the members of an electric cooperative or upon its own motion, the board of directors of an electric cooperative shall order a referendum election to be held to determine whether the electric cooperative shall be subject to the jurisdiction of the utilities board. A petition for election shall be completed within 60 days of commencement.

(1)Any member of an electric cooperative desiring a referendum election shall sign a petition for election addressed to the board of directors of an electric cooperative, in substantially the following form:

PETITION FOR ELECTION

TO: (Board of Directors of subject electric cooperative)

The undersigned members request you call an election to submit to the members the following proposition:

Shall . . . (name of the electric cooperative) be subject to rate regulation by the utilities board?

Signature

Address

Date

(2)Where signatures are made on more than one sheet, each sheet of the petition shall reproduce above the signatures the same matter as is on the first sheet. Each petitioner shall sign their the petitioner's name in their the petitioner's own handwriting and shall write their the petitioner's address and the date on which they the petitioner signed.

(3)The petition shall be filed with the board of directors of the electric cooperative and an election shall be held not less than 60 days nor more than 90 days from the date on which the petition was filed.

(4)On the election date, the board of directors of the electric cooperative shall mail by first-class mail to each member of the electric cooperative a ballot containing the following language:

Shall . . . (name of the electric cooperative) be subject to rate regulation by the utilities board?

□ Yes

□ No

(5)The ballot shall also contain a self-addressed envelope to return the ballot to the secretary of the board of directors of the electric cooperative. The ballot shall be dated when received by the secretary. The ballot must be received by the secretary not more than 30 days after it was mailed to the members. The election procedure shall require a signature form for verification, but shall not allow the signature to be traced to the vote of a particular member.

(6)The issue in the election shall be decided by a majority of the members voting whose ballots are received by the secretary. Fifty-one percent of the membership shall constitute a quorum for the election. The secretary shall certify the results of the election and file the results with the executive secretary of the utilities board within 30 days of the election.

b. Procedure for election by board. Upon the resolution of a majority of the board of directors of an electric cooperative, the board may elect to be subject to the jurisdiction of the utilities board. The secretary of the board of directors of the electric cooperative shall file a certified copy of the resolution with the executive secretary of the utilities board within 30 days of the adoption of the resolution.

c. Effective date. Upon the resolution of a majority of the board of directors of an electric cooperative or when a majority of the members voting vote to place the cooperative under the jurisdiction of the utilities board, the utilities board shall determine an effective date of its jurisdiction which shall be not more than 90 days from the election. On and after the effective date of jurisdiction, the cooperative shall be subject to regulation by the utilities board.

d. Prohibited acts. Funds of an electric cooperative shall not be used to support or oppose the issue presented in the election. Nothing shall prohibit a letter of explanation and direction from being enclosed with the ballot.

e. Procedure for exemption. After the cooperative has been under the jurisdiction of the utilities board for two years, the members or the board of directors of the electric cooperative may elect to remove the cooperative from under the jurisdiction of the utilities board in the same manner as when electing to be placed under the jurisdiction of the utilities board as allowed by Iowa Code section 476.1A(4).

f. Frequency of election. An electric cooperative shall not conduct more than one election pursuant to this subsection subrule within a two-year period.

26.12(2) Rate increase considerations—rural electric cooperatives. The board's consideration of the fair and reasonable level of rates necessary for rural electric cooperatives that have elected to be subject to rate regulation by the board shall include the following:

a. After investigation of the historical test year results and pro forma adjustments thereto, the board shall determine the extent to which the applicant has met the following conditions:

(1)Revenues are sufficient for a times interest earned ratio of from 1.5 to 3.0 for coverage of interest on outstanding utility short-term and long-term debt; or

(2)Revenues are sufficient for a debt service coverage ratio of from 1.25 to 2.50 on utility long-term debt; or

(3)Utility operating margins are sufficient for a ratio of from 1.5 to 2.5 of utility operating margins to interest on utility short-term and long-term debt; or

(4)Utility operating margins are sufficient for a ratio of from 1.25 to 1.75 of utility operating margins plus utility depreciation, all divided by utility long-term interest plus principal; and

(5)Utility operating margins are sufficient to return utility patronage capital credits accumulated from utility operating margins, with a retention of such credits of no more than 20 years allowed, subject to modification where compelling circumstances require time period adjustments.

b. In addition to the information in "a" paragraph 26.12(2)"a" above, evidence of the necessity for the requested rate relief may include, but need not be limited to, utility operating margins which will enable the cooperative to attain and maintain a reasonable ratio of utility long-term debt to retained utility operating margins. Cooperative's authorized construction program and an official policy statement of its board of directors on a desired ratio will be considered factors in the determination of the reasonableness of any such ratio.

c. The utilities board's initial decision will become final 15 days following its date of issuance; however, if filed within that 15-day period, allegations of error by the cooperative , staff or any intervenor as to the utilities board's findings of fact, together with a statement of readiness to present testimony, will serve to hold final disposition in abeyance pending the scheduling and completion of an evidentiary hearing. When such allegation is made, testimony in support of such position must be filed within 30 days of such filing. Upon receipt of the testimony, the utilities board will schedule additional filing dates and set the matter for hearing. When a hearing is scheduled, final disposition of the rate proceeding will be accomplished under the contested case provisions of the Iowa administrative procedure Act and the utilities board's rules and regulations thereunder.

Item 13. Adopt the following new rule 199—26.13(476):

199—26.13(476) Rate proceedings for small utilities. For purposes of this rule, a small utility shall mean a utility subject to rate regulation that serves fewer than 5,000 customers. A small utility that has had a full rate case before the board within the past ten years shall be eligible to file an application for a rate increase under this rule no more frequently than once every 24 months.

26.13(1) At least 60 days prior to filing an application under this rule, a utility shall participate in a public technical conference with board staff and the consumer advocate at which the utility shall provide an overview of its planned rate increase application.

26.13(2) A utility filing under this rule is subject to the notice requirements of subrule 26.5(1) and the temporary rate provisions of subrule 26.5(8).

26.13(3) A utility's filing under this rule will take the form of a proposed tariff with a 90-day effective date along with supporting testimony and exhibits.

26.13(4) A utility shall file information showing the revenue requirement and revenue deficiency for Iowa jurisdictional operations, a template for which can be found on the board's website at iub.iowa.gov. If the utility is applying for a gas rate increase, the utility shall file information utilizing the weather normalization model preferred by the board which is available on the board's website.

26.13(5) The filing shall be based upon the following assumptions:

a. Adjustments to book values shall be limited to 400 series accounting entries that are required to be excluded from rates.

b. Return on equity (ROE) will be based on average ROEs awarded to similar utilities for the prior year as reported by Regulatory Research Associates.

c. Utility and parent capital structures will be the same as those approved in the utility's last rate case.

26.13(6) The proposed overall rate increase will be applied uniformly to all rates and charges so that no changes in class cost of service allocations occur.

26.13(7) No new rates, charges, or riders shall be proposed.

26.13(8) Proposed rate increases shall be capped at 5 percent.

26.13(9) The board establishes a rebuttable presumption that rate case expense in excess of $50,000 for a filing under this rule is unreasonable.

26.13(10) The recovery mechanism for rate case expense shall be determined by the board. Recovery may be through base rates, by means of a rider, or otherwise. The applicable recovery period will be determined in the rate proceeding. Recovery through a rider will end once the expense is fully recovered.

Item 14. Amend 199—Chapter 26, implementation sentence, as follows:

These rules are intended to implement Iowa Code sections 474.3, 474.5, and 474.6, 476.1 to 476.3, 476.6, 476.8 to 476.10, 476.15, 476.31 to 476.33 and 546.7.

Utilities Division


This Organization is a part of the Commerce Department

Closed For Comments

This notice is now closed for comments. Collection of comments closed on 10/30/2018.

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  • Rate cases, tariffs, and rate regulation election practice and procedure, amendments to ch 26
  • Published on 10/10/2018
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