Position of CBIA

According to CBIA, there is a mismatch in timing between the removal of meter ownership costs for line extension allowance calculation purposes and the implementation of unbundled electric service rates which exclude meter costs. Therefore, CBIA believes that meter costs cannot be simply removed from the extension allowance calculations while existing bundled rates are set to recover costs of installing meters that will actually never be incurred by the utility.

Further, CBIA argues that the TURN proposal does not represent a fair outcome to the mismatch problem. CBIA points out that TURN proposes to address the ratemaking timing problem by keeping meter costs in the electric distribution rate used to calculate the allowance - despite the express directive in Conclusion of Law 5 that meter costs be removed from allowances. Also, CBIA points out that the TURN proposal requires meter costs be included in the "job costs" in accordance with D.97-12-098 but also requires that meter costs, irrespective of the revenues generated by the job in question, be non-refundable - in violation of the revenue justification principles endorsed by D.97-12-098 in the Line Extension Rulemaking.

CBIA notes that D.97-12-098 authorized the electric utilities to charge applicants for the cost of meters to the extent that the cost of meters was not justified from a revenue generation standpoint. According to CBIA, by including the cost of meters in the "net revenues" calculation, and by reducing allowances generally to reflect only distribution costs, the Commission endorsed a line extension mechanism that guaranteed that new applicants for service would generate sufficient revenues to cover the cost of the installed meter.

CBIA contends that by charging applicants the full cost of the meter installation, and allowing only direct access customers to buy meters from non-utility meter providers, the obvious effect will be to require every new applicant for service who is not already a direct access subscriber to bear the full installed cost of meters, without regard to whether the revenue produced by the installation will offset the meter costs.

Also, CBIA argues that the TURN proposal is not only discriminatory to new applicants for service, but it is anticompetitive as well. Because up to 37% of the Income Tax Component Contribution (ITCC) is applicable to utility charges for service and equipment, CBIA contends that the utility would not be able to price its meters competitively. CBIA amends that the only real competition would be among non-utility meter providers because the utility would be effectively foreclosed from providing a meter at competitive cost. Assuming that non-utility meter providers would choose higher prices, rather than market share, and would price their meters at levels slightly below what the utility must charge (including the tax "gross up"), such non-utility meter providers would be able to reap an unwarranted and potentially significant windfall, according to CBIA.