ALJ/MFG/epg DRAFT Item 5
12/21/2000
Decision PROPOSED DECISION OF ALJ GALVIN (Mailed 11/21/2000)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
IN THE MATTER of the Application of SIERRA PACIFIC POWER COMPANY, for authority to establish authorized rate of return on common equity for electric distribution for Year 2001. (U 903 E) |
Application 00-05-018 (Filed May 8, 2000) |
^ |
David Norris, Attorney at Law, for Sierra Pacific Power Company, applicant.
James Weil, for Aglet Consumer Alliance; Ron Knecht for Advocates for the Public Interest; and Shirley Woo, Christopher Warner, and Andrew Niven, Attorneys at law, for Pacific Gas and Electric Company, interested parties.
Robert C. Cagen, Attorney at Law, for the Office of Ratepayer Advocates.
TABLE OF CONTENTS
TITLE Page
OPINION 2
I. Summary 2
II. Jurisdiction 3
III. Request 4
IV. Proceeding Type 5
V. Prehearing Conference 5
VI. Presiding Officer and Scope of Proceeding 5
VII. Customer Notice 6
VIII. Evidentiary Hearings 6
IX. A Fair Return 6
X. Capital Structure 7
XI. Interest Rate Increases and Forecast 9
XII. Return on Common Equity 11
XIII. ROE Implementation 22
XIV. Automatic Trigger Mechanism 22
Comments on Proposed Decision 27
Findings of Fact 27
Conclusions of Law 28
ORDER 29
I. Summary
Sierra Pacific Power Company (Sierra) is authorized a 10.80% Return on Common Equity (ROE) for its 2001 test year. This authorized ROE results in a corresponding 9.01% return on rate base, 58 basis points1 lower than the 9.59% ROE that was last authorized Sierra. This change in ROE applied on Sierra's 2001projected California results in a $839,000 reduction in its 2001 test year California electric revenue requirement. This revenue requirement reduction averages approximately $1.59 a month when divided by Sierra's 44,100 total California customers. Because Sierra's rates are currently frozen there will be no impact on the rates of Sierra's customers until its pending cost of service and Performance Based Ratemaking (PBR) application is concluded.
Sierra is required to adjust its authorized revenue requirement to reflect the ROE being adopted in this decision and to adjust its rate components associated with the change in revenue requirement by an advice letter filing.
We also adopt a trigger mechanism that will replace Sierra's annual cost of capital filing as set forth in the body of this decision.
The 2001 adopted capital structure for Sierra is summarized as follows:
Weighted | |||
Ratio |
Cost |
Cost | |
Long-Term Debt |
47.56% |
7.47% |
3.55% |
Preferred Stock |
7.67 |
8.10 |
0.62 |
Common Equity |
44.77 |
10.80 |
4.84 |
Total |
100.00% |
9.01% | |
This compares with the following capital structure and weighted cost of capital last authorized for Sierra:
Weighted | |||
Ratio |
Cost |
Cost | |
Long-Term Debt |
44.12% |
7.77% |
3.43% |
Preferred Stock |
8.84 |
8.00 |
0.70 |
Common Equity |
47.04 |
11.60 |
5.46 |
Total |
100.00% |
9.59% | |
