1. Procedural History
Sierra Pacific Power Company (Sierra) applied on August 1, 2008 for general rate relief and authority to increase its rates by $6.6 million in the portions of eastern California that it serves.3 The increase, for which Sierra requested an effective date of April 1, 2009, represented an 8.1% overall increase for the utility's California retail customers. The proposed increase reflected a return on equity of 11.4% and a cost of debt of 6.8%. Sierra also requested adoption of a Post Test-Year Adjustment Mechanism (PTAM) to recover cost increases other than those recovered through Sierra's Energy Cost Adjustment Clause (ECAC) during the two years between rate cases. Sierra further requested a 33% increase in spending for its energy efficiency programs, in particular to expand the "SolarGenerations" program it currently offers its Nevada customers to include its California customers.
On September 10, 2008, the Division of Ratepayer Advocates (DRA) and The A-3 Customer Coalition (A-3CC) each timely filed protests of the Application. DRA raised various areas of concern for which it asserted that it would review Sierra's calculations and methodologies, do its own analysis, and develop its own forecasts of revenue requirements, expenses, allocations, and examine the reasonableness of Sierra's proposed PTAM and expansion of energy efficiency programs.
A-3CC, which represents large commercial customers primarily in the Lake Tahoe region, protested the disproportionate impact of Sierra's Marginal Cost Study (MCS) and proposed a rate design for A-3 category customers. A-3CC asked the Commission to reject Sierra's MCS because of statistical error and to order Sierra to use the same methodology it used in its last GRC. A-3CC also argued that the proposed 14.25% rate increase for A-3 customers was more than 5% above the average for all classes, and asked the Commission to maintain the current cap for increasing rates for any one customer class to the overall average percentage increase in revenue requirement, plus 5%. In contrast, Sierra sought to raise the cap to 5.5% which would allow a more substantial increase to A-3 customers.
On November 7, 2008, Administrative Law Judge (ALJ) Melanie Darling conducted a prehearing conference (PHC) attended by Sierra, DRA and A-3CC. On November 20, 2008, assigned Commissioner Bohn issued a Scoping Memo and Ruling which confirmed the categorization as ratesetting and the need for hearing, defined the issues, and established a schedule for the proceeding.
On December 19, 2008, Sierra filed an Amendment to its Application to increase the proposed revenue requirement by $2.3 million, for a revised total increase of $8.9 million, an 11% overall increase based on present rates, and to make "a few minor rate design changes."4 Sierra stated the amendment resulted from corrections to its cost allocation study related to production and transmission demand in the California service territory. A-3CC calculated the amendment would increase the proposed rate for the A-3 class by 17.2%.
As a consequence of Sierra's amendments, on January 2, 2009, DRA filed a Motion for an Extension of Time for various scheduled dates adopted in the Scoping Memo. On January 13, 2009, ALJ Darling issued a Ruling that adopted a revised procedural schedule, including a revised date of June 16, 2009 to begin the evidentiary hearings. On June 11, 2009, the parties informed ALJ Darling that they had reached a settlement agreement in principle on all contested issues for the proceeding. Following a telephonic status conference on June 12, 2009, ALJ Darling issued a ruling that postponed the evidentiary hearings scheduled for June 16-22, 2009 until the Motion for Approval of Settlement was submitted and the Commission reached a decision on whether to approve it.
3 Sierra serves California customers in Nevada, Placer, Sierra, Plumas, Mono, Alpine, and El Dorado Counties.
4 Amendment to Application of Sierra in its 2008 GRC at 2.
