XIX. Rate Design

Finally, turning to rate design, the parties agreed that metered rates would continue to provide recovery of 50% of AVR's fixed costs through the service charge component, with a single commodity rate. The resulting rates are set forth in the Tariff Schedules for the various classes of service in Appendix B. Special Condition 3 of the General Meter Service Tariff Schedule in Appendix B establishes a limited-term surcharge.⁴⁹ This surcharge is being established to provide AVR an opportunity to recover its adopted rates for the entire 2003 test year pursuant to D.02-12-063. At the same time, we minimize the rate impact on individual customers by extending the surcharge over a 24-month period.

A comparison of rates is set forth in Appendix F and Adopted Quantities including Tax Calculations are shown in Appendix D.

⁴⁹ Authorized rates are adopted with the intent of providing a utility an opportunity, not a guarantee, to recover adopted costs and to earn a reasonable return on its investment. Hence, a balancing account, which guarantees full recovery, is not the appropriate recovery mechanism in this instance.