2005 Rhode Island Code - § 39-1-27.5 — Performance based rates (PBR) for electric distribution companies.

    (a) To prevent residential customers from paying higher rates as a result of the phased introduction of competition to commercial and industrial customers pursuant to § 39-1-27.3, and to hold overall rate increases to the level of inflation, for the period beginning January 1, 1997 and ending on December 31, 1998, electric distribution companies shall implement a performance based rate plan. Electric distribution companies shall be precluded from filing to increase their rates pursuant to § 39-3-11 or from seeking increases in their purchased power adjustment clause for non fuel increases in purchased power expense under contracts with wholesale power suppliers when those increases would become effective after a full suspension during the period defined above ("the PBR period"), and during the PBR period only performance based rate increases as provided in this section shall be implemented. Performance based increases calculated in accordance with this section shall take effect for usage on and after January 1 of each year during the PBR period and shall be determined in accordance with the following procedure. On or before November 15 of 1996 and 1997, each electric distribution company shall file a report with the commission detailing the earned return on common equity from intrastate operations for the twelve (12) months ended as of the preceding September 30. Electric distribution companies shall be authorized to increase their base rates by a per kilowatt-hour factor equal to the average revenue per kilowatt-hour received by the electric distribution company during the prior twelve (12) month period ending September 30, excluding the costs of fuel and demand side management programs multiplied by the rate of inflation as measured by the change in the consumer price index over the most recent twelve (12) months for which data is available. Electric distribution companies having earned returns on equity greater than the return allowed as of July 1, 1996 by the commission (currently allowed rate) shall be required to credit to or for the benefit of customers one hundred percent (100%) of all earnings in excess of one and one-half percent (1.5%) above the currently allowed rate and fifty percent (50%) of all earnings between the currently allowed rate and one and one-half percent (1.5%) above the currently allowed rate of return on common equity by refunding revenues associated with such earnings through a refund factor implemented over a twelve (12) month period. Electric distribution companies that earned less than six percent (6%) return on common equity shall be authorized to increase their base rates by inflation as measured above and to implement a surcharge to collect over twelve (12) months the revenue necessary to make up the difference between the return on common equity earned during the historic period and six percent (6%). During the PBR period, electric distribution companies shall also be authorized, with commission approval, to change their base rates to reflect factors reasonably beyond their control including, but not limited to, changes in federal, state and local taxes and environmental remediation costs. On or before July 1, 1997, the commission shall establish performance standards to ensure that historic levels of safety, reliability and customer service do not deteriorate during the PBR period. Specifically, the commission shall establish symmetric performance standards in these areas that provide the company the opportunity to incur in aggregate an annual penalty or reward equal to one percentage point return on common equity that shall not be considered in determining any other returns on common equity within this section. Notwithstanding the foregoing, rates applicable to low income customers shall not be increased for any rate increases authorized pursuant to this subsection. Nothing in this paragraph shall be deemed to preclude an electric distribution company from seeking approval from the commission for :

   (1) Changes in the fully reconciling adjustment clauses in place to reflect changes in the cost of fuel and demand side management programs;

   (2) Reconciling adjustments pursuant to purchase power clauses that do not reflect increases in level of wholesale rates;

   (3) Revenue neutral rate design changes; and

   (4) Accounting changes.

   (b) Nothing in this subsection shall preclude the commission from considering the interests of ratepayers in the interpretation of this subsection. This section shall not apply to a quasi-municipal corporation.