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management listening to ftc decision2

FTC Rules On Rate Application

Following the submission of our Company’s application to the Fair Trading Commission (FTC) for a review of the existing electricity tariffs, on May 8, 2009 and the subsequent Rate Hearing, conducted between October 7 and October 23, 2009, the FTC announced its decision today, Thursday, January 28, 2010 on the proposed revision of the existing rates and rate structure at the Lloyd Erskine Sandiford Centre.

The FTC has allowed the Company to increase electricity rates and service charges to allow it to earn a rate of return of 10.0% on rate base, up from the 6.07% earned in 2008 and less than the 10.48% that was requested.  A decision on the proposed pilot rates that were subject of a subsequent consultation process will be announced at a later date.  The new tariffs will go into effect from March 1, 2010.

Following is the official Order issued by the FTC, which summarizes its decision and provides guidelines for further action by the Company, which has been given two weeks to resubmit re-calculated rate structures for the SVP and LP commercial customer groups.

It is hereby ordered as follows that:

1. The rate base as computed by the Applicant and calculated as $544,198,726 is hereby approved.

2. The capital structure of Debt 35% and Equity 65% used by the Applicant in the determination of its rate of return is hereby approved.

3. The rate of return on rate base of 10.48% is denied. The Applicant is granted a rate of return on rate base of 10%.

4. The revenue required of $502,238,415 is denied. The Applicant is granted a revenue requirement of $499,165,291.

5. The request that the proposed tariffs come into effect from October 1, 2009 is denied. The Commission hereby orders that the new tariffs be effective from March 1, 2010 and shall be applied to all bills from March 1, 2010.

6. The existing Standards of Service be retained pending a decision by the Commission on its review of the Standards of Service.

It is further ordered that:

7. The reduction in the revenue requirement arising from the reduced rate of return should be assigned as follows:

(a) Firstly, the Domestic Service (DS) 0–100 kWh block is expanded to 0–150 kWh

(b) Secondly, the Applicant shall, after satisfying the above, apply the resulting balance to the Large Power (LP) and the Secondary Voltage Power (SVP) service classes in a 60:40 ratio.

8. The Applicant remove the ratchet billing from the demand charge of the SVP and LP classes and adjust the demand and/or energy charge accordingly.

9.   The General Service tariffs as detailed in Schedule K-2 of the Application  are approved.

10. The Fuel Clause Adjustment tariff as detailed in Schedule K-6 of the  Application is approved. 

11. The Street Lights tariffs as detailed in Schedule K-7 of the Application are  approved.

12. The Applicant’s Service Charge tariffs as detailed in Schedule K-8 of the Application are approved.

13. The first block for the Employee service class is 0-150 kWh and the second block is 151-500 kWh.

14. The rates for the first two blocks of the Employee class shall be 20% less than the rates for the corresponding blocks of the DS class after deducting the early payment discount.  The rates for the remaining two blocks will be the same as those proposed by the Applicant.

15. The Applicant shall submit to the Commission within two weeks of issuance of this Decision and Order a revised rate schedule along with detailed tables showing proof of revenue similar to that provided in response to Question 33 of the Commission’s Interrogatories Series #1.

16. The Applicant shall continue to provide annual regulatory reports to the Commission on or before May 31 each year.

For further information on the FTC’s Decision click here