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Regulatory Matters
6 Months Ended
Mar. 31, 2013
Regulatory Matters [Abstract]  
Regulatory Matters

Note 9 – Regulatory Matters

 

On March 27, 2013, Distribution Corporation filed a plan (“Plan”) with the NYPSC proposing to adopt an “earnings stabilization and sharing mechanism” that would allocate earnings above a rate of return on equity of 9.96% evenly between shareholders and an accounting reserve (“Reserve”).  The Reserve would be utilized to stabilize Distribution Corporation’s earnings and to fund customer benefit programs.  The Plan also proposed to increase capital spending and to aid new customer system expansion efforts.  Discussions were held with NYPSC staff and others with respect to the Plan. 

 

In a related development, on April 19, 2013, the NYPSC issued an order directing Distribution Corporation to either agree to make its rates and charges temporary subject to refund effective June 1, 2013, or show cause why its gas rates and charges should not be set on a temporary basis subject to refund (“Order”).  The Order recognized Distribution Corporation’s Plan and, while lauding the Company’s cost-cutting and efficiency achievements, determined nonetheless that the Plan did not propose to adjust “existing rates . . . enough to compensate for the imbalance between ratepayer and shareholder interests that has developed since . . . 2007 . . .”  The Order commences a “temporary rate” proceeding under which a utility’s rates and charges are subject to refund or recoupment following further proceedings to establish a permanent rate.  The Order also provides for an examination of the “applicability and appropriateness of PSL §66(20) as a potential remedy in addition to temporary rates.”  PSL §66(20) is a subdivision of the Public Service Law that provides the NYPSC with stated authority to direct a refund of revenues received by a utility “in excess of its authorized rate of return for a period of twelve months.”  Distribution Corporation is evaluating the Order and plans to respond with information as directed by the NYPSC, and otherwise as is determined necessary and appropriate.