State Regulatory Relations

NARUC Appoints New Treasurer and Member for Board and Executive Committee

Chairman Box of Illinois	Commissioner Parker of Alabama

National Association of Regulatory Utility Commissioners (NARUC) President Marsha Smith of Idaho appointed Chairman Charles Box of Illinois as the association's treasurer and Commissioner Susan Parker of Alabama to NARUC’s Executive Committee and Board of Directors.

The NARUC Executive Committee consists of the association’s chief officers — president, first vice president, second vice president and treasurer — and an additional member to ensure that each NARUC region is represented.

Chairman Box, who chairs the Illinois Commerce Commission (ICC), will replace former Treasurer Wendell Holland of Pennsylvania, who left in June. He has been a member of the Executive Committee since mid-2007, representing the Mid-America Regulatory Conference (MARC). As treasurer, Chairman Box is responsible for overseeing the association’s budget and the development and implementation of financial policies and procedures. In this role, he will continue his service on the Executive Committee, the Board of Directors and as chairman of the association’s Investment and Audit committees.

Chairman Box was appointed to the ICC in January 2006. Before that, he served 12 years, from 1989-2001, as mayor of Rockford, Ill. He has also served as the city’s administrator and legal director.

"Chairman Box is already an active and valuable member of the Executive Committee, so he is a natural selection as our Treasurer," said President Smith. "I look forward to working with Chairman Box in this new position. I also want to thank Chairman Holland for his contributions and service not only to NARUC, but to the citizens of Pennsylvania and the country as a whole."

Commissioner Parker, a member of the Alabama Public Service Commission since 2006, will represent the Southeastern Association of Regulatory Utility Commissioners (SEARUC) on the Executive Committee. She is also being appointed to the NARUC Board of Directors.

Prior to her PSC election, Commissioner Parker served as the state auditor in 1998 and was the first woman in Alabama nominated for the U.S. Senate in 2002. Before her government career, Commissioner Parker worked in public education for 25 years.

"I look forward to working with Commissioner Parker as a member of the Executive Committee," said President Smith. “She brings a strong enthusiasm and important perspective to the job and I appreciate her willingness to serve.”

NARUC Immediate Past President Jim Kerr of North Carolina will remain on the Executive Committee as a non-voting, ex-officio member.

New Members Join NARUC Water Committee

Commissioner Brandon Presley

Commissioner Robert Powelson

Commissioner Brandon Presley, Mississippi Public Service Commission and Commissioner Robert Powelson, Pennsylvania Public Utility Commission are the newest members of the National Association of Regulatory Utility Commissions (NARUC) Committee on Water.

Commissioner Presley is currently serving as Northern District Public Service Commissioner. Commissioner Presley, 30, was born in Nettleton, Miss. He is a 1997 graduate of Nettleton High School, and attended Itawamba Community College and Mississippi State University. He is a graduate of the 2001 Charter Class of the Community Leadership Institute and the 2004 State Executive Development Institute.

In May 2001, at 23, Brandon was elected mayor of Nettleton; becoming one of the youngest mayors in Mississippi history, garnering 78 percent of the vote. He was unopposed in his second term for mayor, which began in July 2005.

Commissioner Presley currently serves as chairman of the Board of Trustees at Itawamba Community College. He is a past Board member of the Mississippi Municipal League (MML) and was MML’s Legislative Chairman for 2006 and 2007. He is also a member of the Board of Directors of Gilmore Memorial Hospital. He is past-chairman of the Lee County Council of Governments and also served as president of the North Mississippi Mayor’s Association. He is past-president and current member of the Nettleton Lions Club and a member of the Nettleton Civitan Club.

Commissioner Powelson was nominated on June 19, 2008, by Gov. Edward G. Rendell to a one-year term on the Pennsylvania Public Utility Commission. The Senate unanimously confirmed Powelson on June 30, 2008. His term expires on April 1, 2009.

Previously, Commissioner Powelson served as the president of the Chester County Chamber of Business & Industry, a 1,600- member business organization that he joined in 1994. During his service as chairman, the Accrediting Board of the U.S. Chamber of Commerce awarded the Chester County Chamber a Three Star Accreditation standard of excellence. In 2005, he was selected by the Eisenhower Presidential Fellows to be a U.S. fellow in Singapore and Australia.

Prior to joining the Chester County Chamber, Commissioner Powelson was the director of Government Relations for the Delaware County Chamber, where he helped to develop the county’s economic development strategy. From 1990-91, Commissioner Powelson served as a staff assistant to Congressman Curt Weldon.

Commissioner Powelson has served on the Board of Directors of the Penn State Great Valley Campus, The United Way of Chester County, the Chester County Historical Society, the Transportation Management Association of Chester County, the Stroud Water Research Advisory Board and the Delaware County Community College Advisory Board. He also served as the secretary of the Board of Lincoln University. Commissioner Powelson holds a bachelor’s degree in administration from St. Joseph’s University and a master’s degree in governmental administration from the University of Pennsylvania with a concentration in public finance.

New York OKs Decoupling

As reported in PUR Utility Regulatory News, the New York Public Service Commission (PSC) adopted a three-year rate plan for Orange & Rockland Utilities, Inc.'s (O&R) electric delivery service. The plan includes earnings sharing, a decoupling plan and other features aimed at enhancing conservation and energy efficiency. Rates for the company's electric delivery service have not increased generally since 1993. The ruling authorizes O&R to increase rates for electric delivery services in order to generate incremental annual electric revenues of nearly $15.6 million in each of the three rate years ending June 30, 2009, 2010 and 2011. This amount results in an increase in total company electric revenues of approximately 2.5 percent per year.

Under the rate plan, the commission established a return on equity of 9.4 percent. As an incentive to minimize costs and achieve efficiencies, the rate plan provides for an equity earnings-sharing mechanism. If the level of equity earnings over the life of the rate plan is greater than 10.2 percent but less than or equal to 11.2 percent, the company will share the earnings in this range equally with ratepayers. The benefits of equity earnings above 11.2 percent would be shared 75 percent with ratepayers and 25 percent with the company. The rate plan also continues customer-service performance and system-reliability targets designed to ensure that customers receive a high level of service and that outages are minimized to the greatest extent possible. If targets are not met, the rate plan provides that up to approximately $2.7 million of company electric revenues could be forgone annually. The plan continues the company's existing low-income program that provides billing credits for qualified customers as well.

The PSC modified the agreement presented in the case by expanding the applicability of mandatory hourly pricing to those customers with demand in excess of 500 kilowatts (kW), instead of demand in excess of 1,000 kW, to allow for greater participation in O&R's variable pricing program. In so doing, it said that hourly pricing programs provide price signals that would facilitate efforts to reduce the electric system's peak period demand and to shift the load to off-peak, less expensive time periods.

It also adopted a revenue decoupling proposal advocated by the utility, but modified the plan to incorporate certain reconciliation measures promoted by its staff. In 2007, the PSC directed all major electric and gas utilities to file proposals for true-up based revenue-decoupling mechanisms, so as to eliminate barriers to utility promotion of energy efficiency, renewable technology and distributed generation. Under the PSC's approved plan, total revenues are subject to reconciliation on a per-class basis for eight customer classes, including residential, residential time-of-day, and various general, commercial and industrial classes. The reconciliation would be performed by comparing, on a monthly basis, actual delivery revenues per class with the delivery revenue target per class.

Under the plan, O&R is required to establish three Merchant Function Charges (one charge each for three different sets of service classifications). The charges would apply only to full-service customers and would be used to recover costs the company incurs to provide competitive, commodity-related services. The relevant costs include those for commodity procurement, including purchased power working capital costs, credit and collections, and uncollectibles. Commodity procurement and associated credit and collections costs would be recovered from full-service customers on a specified ¢/kWh basis and would range from .078¢/kWh to $.313¢/kWh in rate year one. Re Orange & Rockland Utilities, Inc.,Case 07-E-0949, July 23, 2008(NY.P.S.C.).

Aqua Pennsylvania Granted Rate Increase

By Order entered July 31, 2008, the Pennsylvania Public Utility Commission (PUC) granted Aqua Pennsylvania (AP) an increase in annual water rates totaling $34.4 million, or approximately 82.6 percent of the increase sought by the company. Pennsylvania Public Utility Commission v. Aqua Pennsylvania, Inc., Docket No. R-00072711. In so doing, the commission rejected various adjustments recommended by the opposing parties to AP’s claimed pro forma revenues, payroll expense, capitalization rate, incentive compensation and purchased water costs. In addition, the PUC set AP’s common equity allowance at 11.0 percent, commenting favorably on AP’s performance in the areas of water quality, customer service and low-income customer assistance.

California Desal Plant Clears Hurdle

The California Coastal Commission, on August 6, 2008, approved a proposal by Poseidon Resources, Inc. to build what will become the nation’s largest drinking water desalination plant. The facility, to be located at the Agua Hedionda Lagoon in Carlsbad adjacent to the Encina Power Station, will utilize reverse osmosis technology to produce up to 50 million gallons per day, or roughly 9 percent of the drinking water needs of the San Diego area. To address various environmental concerns, Poseidon submitted, and the commission adopted, a voluntary Energy Minimization and Green House Gas Reduction Plan and a Marine Life Mitigation Plan. Under those plans, Poseidon agreed to restore 55.4 acres of marine habitat along the Southern California coast, to spend $1 million on reforestation in areas burned during recent wildfires, and to purchase about 15,000 tons of carbon offsets.

San Francisco Adopts Tougher Building Standards Case

On August 4, 2008, San Francisco Mayor Gavin Newsom signed into law “green building codes” for new large construction and renovations of existing structures. According to the San Francisco Chronicle, the new regulations, which will be phased in over a number of years, are expected to save 220,000 megawatt hours of electricity and the consumption of 100 million gallons of drinking water.