HB 352 — Rate Making/Water/Wastewater Public Utilities.

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2017 H 21 HOUSE BILL 352 Committee Substitute Favorable 4/19/17 Short Title:

Rate Making/Water/Wastewatermaking/Water/Wastewater Public Utilities.

Representatives Watford and Collins (Primary Sponsors).

For a complete list of sponsors, refer to the North Carolina General Assembly web site.

Energy and Public Utilities, if favorable, State and Local Government II March 15, 2017 A BILL TO BE ENTITLED AN ACT AUTHORIZING THE UTILITIES COMMISSION TO USE A FULLY PROJECTED FUTURE TEST PERIOD IN RATE MAKING FOR WATER AND WASTEWATER PUBLIC UTILITIES.

62-133 isreads amendedas byrewritten: adding a new subsection to read:

"(c1)"§ As62-133. an alternative to the test period provided for in subsection (c) of this section, a water or wastewater public utility, as defined in G.S.

62-3(23)a.2.,How mayrates submitfixed. a request for Commission approval to utilize a fully projected future test period, which shall consist of a 12-month period beginning on or after the date of filing of the application for a general rate case.

(1)… When(c1) submittingIn alieu requestof forthe a fully projected future test period underprovided thisfor subsection,in thesubsection utility(c) shallof providethis ansection, explanation as to why a fullywater projectedor futurewastewater testpublic periodutility, isas moredefined representative of the utility's operations than the test period prescribed in subsectionG.S. (c) of this section.

The62-3(23)a.2., Commissionmay elect to use a fully projected future test period which shall grantconsist of the utility's12-month requestperiod ifbeginning with the Commissionfirst findsmonth itthat isthe new rates will be in effect after application of the publicfull interest.suspension period permitted under G.S.

(2)62-134. When utilizing a fully projected future test period under this subsection, the Commission shall determine, for rate-making purposes, the projected rate base at the end of the future test period.

ProbableWhen futureusing revenuesa andfully expenses,projected includingfuture depreciationtest expense,period accumulatedunder depreciationthis andsubsection, amortization,the andCommission othershall, accumulatedfor charges and credits to the rate basemaking shallpurposes, bedetermine annualized based on the plant and equipment projected torate bebase inat operation as of the end of the future test period,period. and otherwise adjusted as necessary to a representative ongoing level.

(3) The Commission shall adopt rules and regulations regarding information and data to be submitted upon first notification by a water or wastewater public utility of its intent to use in a future rate case a fully projected future test period.

(4)When Noa laterpublic thanutility fourelects monthsto followinguse thea endfully ofprojected afuture test period in any rate proceeding and the fully projected future test period utilizedforms pursuanta tosubstantive thisbasis subsection,for the final rate determination by the Commission, the public utility shall fileprovide, withas specified by the Commission informationin andits final order, appropriate data evidencing allthe accuracy of the followingestimates itemscontained duringin the fully projected future test period, adjustedand asthe appropriateCommission tomay, reflectin theits Commission'sdiscretion, initialafter orderreasonable settingnotice and hearing, adjust the public utility's rates inon the proceeding:basis of that data.

a.Notwithstanding the provisions of subsections (b) and (c) of this section that require the Commission to consider the cost of the public utility's property used and useful, if a public utility elects to use a fully projected future test period as authorized by this section, the Commission shall permit facilities projected to be in service during the fully projected future test period to be included in the rate base.

Actual…." costsSECTION and2. in-service dates for capital investment, as well as all actual and appropriately adjusted rate base balances as of the end of the future test period.

*H352-v-2*This Generalact Assemblyis Ofeffective Northwhen Carolinait Sessionbecomes 2017law. b.

Actual*H352-v-1* and appropriately adjusted operating revenues.

c.

Actual and appropriately adjusted incurred expenses.

d.

Realized rate-of-return, based on the appropriately adjusted revenues, expenses, and rate base.

e.

Any other information the Commission requests to use in determining the accuracy of the fully projected future test year period projections.

(5) The Commission shall adopt a rate adjustment mechanism to (i) track and true-up any variations in the revenue requirement determined on the basis of the information provided in subdivision (4) of this subsection from that used to initially set rates in the general rate case proceeding and (ii) adjust the initially set rates as appropriate on a going-forward basis, taking into account all applicable adjustments initially made by the Commission." SECTION 2.

This act is effective when it becomes law and expires five years after the effective date.

Page 2 House Bill 352-Second Edition