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

4.   REGULATORY MATTERS

 

2012 General Rate Case

 

In anticipation of commercial operation of SPP, on December 21, 2012, Chugach submitted a general rate case with the RCA to increase system base rate revenues by $30.0 million, or approximately 26 percent on total base rate revenues of $115.0 million.  Chugach requested that the proposed rates become effective on an interim and refundable basis beginning in February of 2013.  In addition to the base rate increases, the filing requests approval to update and expand Chugach’s operating tariff to include both firm and non-firm transmission wheeling service and attendant ancillary services in support of third-party transactions on the Chugach system.  The expansion of the tariff was made, in part, to accommodate wheeling services in anticipation of the expiration of the HEA and MEA wholesale customer contracts in 2014.  Because of efficiency improvements associated with the commercial operation of SPP, Chugach also submitted a request in a separate filing to the RCA to adjust its fuel rates effective at the same time as the requested base rate increases contained in the general rate case filing.  This allows the interim base rate increases to be synchronized with expected reductions in fuel costs reflected in Chugach’s fuel rates.

 

On February 1, 2013, Chugach submitted a supplemental filing to the RCA removing the impacts associated with a one-year amortization of distribution storm-related costs from its retail revenue requirement.  On February 6, 2013, the Commission opened Docket U-13-007 and issued Order No. 1 approving Chugach’s supplemental filing for rates effective February 6, 2013 on an interim and refundable basis.  In addition, the Commission also approved Chugach’s request to assess transmission wheeling charges on economy energy transactions that originate from the Chugach system.

 

In total, when factoring both base rate increases and reductions in fuel costs, the net increase to Chugach retail end-users is approximately 6 percent, while the net increase to retail end-users of Chugach’s wholesale customers is approximately 4 percent to 7 percent.  As is standard practice in general rate case proceedings, the RCA order required Chugach, at its option, to either place the interim and refundable amounts received into an escrow account or pay the statutory annualized interest rate of 10.5 percent on any future refunds required in the docket.  Chugach elected to place the interim and refundable amounts into escrow.    At March 31, 2013, the interim and refundable amount subject to refund was $1.8 million and is treated as a reduction in cash provided by operating activities on the Statements of Cash Flows.