ML20087E164: Difference between revisions
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| number = ML20087E164 | | number = ML20087E164 | ||
| issue date = 03/12/1984 | | issue date = 03/12/1984 | ||
| title = Updated Info for Antitrust Review of OL Application | | title = Updated Info for Antitrust Review of OL Application | ||
| author name = | | author name = | ||
| author affiliation = ILLINOIS POWER CO., SOYLAND POWER COOPERATIVE, INC., WESTERN ILLINOIS POWER COOPERATIVE, INC. | | author affiliation = ILLINOIS POWER CO., SOYLAND POWER COOPERATIVE, INC., WESTERN ILLINOIS POWER COOPERATIVE, INC. | ||
Revision as of 01:49, 16 April 2020
| ML20087E164 | |
| Person / Time | |
|---|---|
| Site: | Clinton  |
| Issue date: | 03/12/1984 |
| From: | ILLINOIS POWER CO., SOYLAND POWER COOPERATIVE, INC., WESTERN ILLINOIS POWER COOPERATIVE, INC. |
| To: | |
| Shared Package | |
| ML20087E152 | List: |
| References | |
| NUDOCS 8403160050 | |
| Download: ML20087E164 (228) | |
Text
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I l l l Io i l Clinton Power Station Unit 1 i Docket No. 50-461 , Construction Permit No. CPPR-137 r ) i 1 1 UPDATED INFORMATION FOR ANTITRUST REVIEW 4 OF OPERATING LICENSE APPLICATION O Applicants: Illinois Power Company (IP) Soyland Power Cooperative, Inc. (Soyland) Western Illinois Power Cooperative, Inc. (WIPCO) I Date: March 12, 1984 , KO 1 M PDR u 1
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l (~N Updated Information for Antitrust Review of Operating License \_) Application for Clinton Power Station The information is provided per the items of Regulatory Guide 9.3. Item No. B.l.a - Anticipated excess or shortage in generating capacity resources not expected at the construction permit stage. Reasons for the excess or shortage along with data on how the excess will be allocated, distributed, or otherwise utilized or how the shortage will be obtained. Responses: IP - A copy of IP Projected Capacity and Demand at System Peak for the years 1984 through 1993, is provided herewith as Exhibit IP-1. Soyland - None WIPCO - See the attached table dated February 13, 1984 identified as Exhibit W-1). WIPCO plans to purchase power through its interchange agreements with Illinois Power Company
,. and Springfield-City Water, Light and Power to cover any deficiencies.
The most recent hourly peak load on the WIPCO integrated system was 41 Mw and occurred on July 28, 1980, during the hour ending 6:00 P.M., C.D.S.T. During this same time period the thermal generating resources had a dependable capacity of 57.7 Mw. WIPCO has no hydroelectric generating capacity. B.1.b - New power pools or coordinating groups or changes in structure, activities, policies, practices, or membership of power pools or coordinating groups in which the licensee was, is, or will be a participant. Responses: IP - Illinois Power Company has entered into an interconnection agreement with Kentucky-Utilities Company, dated January 1, 1983. This agreement provides for various power traneactions between the parties and is designated as IP FERC Schedule No. 91. (Ill. Commerce Commission (ICC) Docket No. 83-0189.) Early in 1982 representatives of Southern Illinois Power Cooperative (SIPC) and IP met, at SIPC's request, to f'] review the feasibility of an interconnection between the V t ( two systems. Studies indicated that an 138 KV interconnection at IP's Baldwin Power Station would j eliminate the need for SIPC to construct approximately sixteen miles of 69 KV line. Although the benefits to IP are minimal, IP entered into an interconnection agreement with SIPC, dated March 3, 1983. Completion of the interconnection facilities is presently estimated by June 1, 1984. The agreement has been submitted to the luul for j approval.--FERC and ICC filings will follow REA approval. Soyland - None WIPCO - None l B.1.c - Changes in transmission with respect to (1) the nuclear i plant, (2) interconnections, or (3) connections to
! wholesale customers.
Responses: i IP - (1) None (2) (a) A 345 KV interconnection was energized on October 25, 1983, between Central Illinois Public~ , Service Company (CIPS) Kansas Substation and IP's-Sidney Substation. O 4 (b) A 138 KV interconnection between IP and WIPCO was completed on June 25, 1982, at WIPCO's request, to serve a coal company, a customer of WIPCO near , j Elkhart. j (c) A 138 Kv interconnection between IP and WIPCO near Lanesville was completed on August 30, 1982. This interconnection was requested by WIPCO in order to improve service to its 69 lur system;in the area. i
-(d) Farmer City (See IP . response to B.1.f (l) (a))
(e) Southern Illinois Power Cooperative (See IP-response to B.l.b.) (3) See IP response to B.l.f. Soyland - (1) None. (2) None (3) None
- WIPCO - .(1) None-(2) .See IP' response to B.1.c. (2) (b) and . (c)
[ (3) None B.1.d - Changes in ownership;or contractual. allocation of the output of-the nucleartfacility. Reasons _and basis for such changes should.be included.. ,
- -2--
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)
! Responses: ! IP - No change from " Application for Amendment to Construction ! Permit No. CPPR - 137, Clinton Power Station, Unit 1, Docket No. 50-461" dated 1/31/78.
- Soyland - None WIPCO - None
, B.l.e - Changes in design, provisions or conditions of rate schedules and reasons for such changes. Rate increases j or decreases are not necessary. [_3conses: IP - (a) The agreements for Purchase of Power, under which IP's partial requirements wholesale customers are served, were amended in April, 1981 to incorporate a schedule for Supplemental Interruptible Electric Service. A copy of this schedule is attached as Exhibit IP-2. 1 (b) IP filed Rider S - Supplemental Interruptible Electric Service, with the ICC, effective July 3, 1981. A copy of Rider S is attached as Exhibit IP-3. !() (c) On May 24, 1983, Western Illinois Power Cooperative entered into a new three year Agreement for Purchase of. Power from Illinois Power Company. This Agreement will-terminate upon commercial operation of Clinton. Nuclear
- Unit #1. A copy of the Agreement is attached as Exhibit IP-4.
(d) As a part of a rate settlement reached on November 18, 1983, with the Partial Requirements Customers the Company agreed to a Short Term Energy Transmission .' Agreement, a copy of which is attached as Exhibit IP-5
, and a long term Electric Transportation Service 4
Agreement,.a copy of which is attached as Exhibit IP-6. (e) During 1983 the Company had discussions with the i City of Peru, Illinois and made a' proposal to transport j energy for the city from its proposed Starved Rock. Hydro Plant to its distribution facilities. ! (f) Illinois Power Company modified'its' electric-rate structure by proposing the implementation of time-of-day-(TOD) energy chargos applicable to large' residential and industrial customers in its retail rate increase request submitted to the Illinois commerce Commission (ICC) on August 8, 1980. The major purpose-of'this change was to fp/ _s_ insure:that:- (1) these large customers receive the-proper price signals concerning their consumption decisions, and (2) the utility' recover the incremental cost of supplying additional; energy. These design l e -
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-- . . _ - . . = _ - - . . .. - - _ - - . . _ _ - . . . ... -
i i e j O changes were approved by the ICC on July 1, 1981 (ICC Docket. 80-0544). TOD rate' implementation was expanded to large general service customers in the most recent rate l j increase approved by the ICC on January 12, 1983 (ICC
- Docket 82-0152). In addition to the TOD expansion, the
- Company's demand charges for. residential and industrial
! customers'are now based on the maximum monthly on-peak F demand in place of a contract capacity established during ' the previous summer period. A copy of these two 4 referenced ICC Orders and IP's presently effective j Schedule of Rates for Electric Service (Ill. C. C. No.
- 27) are attached as Exhibits IP-7, IP-8 and IP-9.
fI Soyland - None i WIPCO - See IP response B.1.e (c) . B.l.f - List of all (1) new wholesale. customers, (2) transfers from one rate schedule _to another including copies of schedules not previously furnished, (3) changes in licensee's service area, and (4) licensee's acquisition or mergers. i Responses: e . . IP - (1) (a) An. Agreement for Purchase of Power by Farmer City l () from IP was executed on September 26, 1983. Facilities are presently being constructed by both parties and wholesale partial requirements service is expected to commence in June, 1984. 1 (b) Partial requirements wholesale service was initiated for the Mt. Carmel Public Utility Co. on January 1, 1983. IP delivered power under this Purchase of Power Agreement ' to CIPS, who provided transmission service 1for Mt. Carmel. (c) Soyland Power Cooperative, Inc. requested, and has accepted, the assignment, effective June 8, 1983, of existing wholesale power agreements between IP and the following individual. electric cooperative members of
- Soyland
Clinton County,LMcDonough, Corn Belt, Southwestern, Farmers Mutual,'Tri-County,-Illinois. Valley,fMonroe County. (2) Effective January 1, 1984, Mt..Carmel transferred to a i full requirements wholesale Purchase Power Agreement.. (FERC Rate Schedule No. 87) !. (3)IP has )had no changes in its service area since_ the ' l
- / submission of the construction-permit application.-
< (4)IP has had no, acquisitions or mergers since 'the submission-of the construction' permit application. J
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/~' Soyland - None N j) WIPCO - None B.l.g - List of those generating capacity additions committed for operation after the nuclear facility, including ownership rights or power output allocations. Responses: IP - None Soyland - None WIPCO - None B.l.h - Summary of requests or indications of interest by other electric power wholesale or retail distributors, and licensee's response, for any type of electric service or cooperative venture or study. Responses: IP - Since the submission of the construction permit application, IP has studied proposals to purchase or to provide electric service on an interconnection or () wholesale basis to the following: (1) Proposals to Purchase (a) Cedar Point Light and Power Company contacted early l in 1981, relative to a possible sale of their system to IP. Merger discussions between Cedar Point and IP have been held since 1981 and the parties are in the process of negotiating a stock exchange to merge the two systems. (b) The City of Riverton, Illinois contacted IP in November, 1980, requesting a bid on their electric system. IP made a study of Riverton's system but no offer to purchase it was made because the City suspended negotiations. (c) IP and Mt. Carmel Public Utility Co. executed a stock exchange merger agreement late in 1981. On December 7, 1981, this merger agreement was filed with the ICC for approval. CIPS intervened and protested the proposed merger. On November 23, 1982, the ICC entered an order denying the IP-Mt. Carmel petition for a merger. A request for a rehearing by IP and Mt. Carmel was denied. On February 2, 1983, IP filed a Notice of Appeal, Case No. 83 MR5 in the Second Judicial Circuit Court, (') (_- Wabash County. Mt. Carmel filed its appeal in the same Court on February 3, 1983. CIPS filed its Motion for Leave to Enter Appearance and File
(~}
\m/
Petition to Intervene Instanter in the case on February 22, 1983. On December 14, 1983, the Circuit Court issued a ruling, upholding the ICC Order. IP and Mt. Carmel filed a Notice of Appeal of the Circuit Court ruling with the 5th District Appellate Court in Mt. Vernon, Illinois on January 13, 1984, where the case is pending. An Application for Merger of IP and Mt. Carmel was filed with FERC on December 14, 1981. (FERC Docket No. EC82-4-000). The application is pending before FERC. (d) The City of Carmi, Illinois, contacted IP in August, 1981, requesting a proposal to purchase the system. Negotiations were suspended by the City prior to IP making a proposal. (2) Requests for Interconncction or Wholesale Service: (a) Village of Chatha n, Illinois, preliminary inquiries. (b) Village of Flora, Illinois, preliminary inquiries. (c) City of Red Bud, Illinois, preliminary inquiries. (d) Wabash Valley Power Association, Inc., preliminary O inquiries. (e) Southern Illinois Power Cooperative, Inc. (See IP response to B.l.b) (f) Farmer City (See IP response to B.l.f) (g) WIPCO (See IP response to B.l.c (2) (b) and (c). (h) IP, Soyland and WIPCO are currently studying the benefits for joint participation in IP's existing fossil-fired generating units. (See Soyland and WIPCO responses below to B.1.h (2) ) Soyland - Soyland, WIPCO, and Illinois Power are currently studying the benefits, if any, for joint participation in existing Illinois Power fossil units. WIPCO - WIPCO is participa;ing with Soyland Power Cooperative and Illinois Power Company in a power supply study to determine the benefits, if any, for joint participation in Illinois Power Company's existing fossil-fired units. B.2 - Licensees whose construction permits include conditions pertaining to anti-trust aspects should list and discuss l sf- those actions or policies which have been implemented in-accordance with such conditions.
Response
(~'S In Appendix A of his letter to Joseph Sanders, Esq., ( ) Chief Public Counsel and Legislative Section, Anti-trust Division, U. S. Department of Justice, Mr. W. C. Gerstner (IP Executive VP) expressed the " STATEMENT OF POLICY CONCERNING BULK POWER SUPPLY ARRANGEMENTS WITH NEIGHBORING ELECTRIC SYSTEMS IN CONNECTION WITH CLINTON POWER STATION UNITS 1 AND 2". In compliance with that Policy, Illinois Power Company has entered into the following agreements: (1) Joint Ownership of Clinton Unit 1 with Soyland, (Soyland Power Cooperative, Inc.) and WIPCO (Western Illinois Power Cooperative, Inc.) (10. 5% and 9.5% , respectively). (2) Interconnection and Facility Use Agreements with both Soyland and WIPCO. (3) Interconnection Agreement with Springfield-City Water Light & Power (CWL&P) In addition, Illinois Power Company has investigated the possibility of service on an interconnection or wholesale basis with several municipalities as shown in items B. l . f (l) and B.l.h above. p_ List of Exhi?tts IP-1 IP Projected Capacity and Demand at System Peak for the years 1984 through 1993. IP-2 Illinois Power Co. Supplemental Interruptible Electric Service schedule with interconnected municipalities IP-3 Illinois Power Co. Rider 5 - Supplemental Interruptible Electric Service. IP-4 Agreement for Purchase of Power From Illinois Power Company by Western Illinois Power Cooperative, Inc. IP-5 Short Term Energy Transmission Agreement. IP-6 Electric Transportation Service Agreement. IP-7 Illinois Commerce Commission Order, Dockets 80-0544 and 80-0365. IP-8 Illinois Commerce Commission Order, Docket 82-1052. IP-9 Illinois Power Company - Schedule of Rates for Electric Service, r'] W-1 Estimated Capacity Requirements and Available Capacity (_/ for WIPCO in MWe 1983 through 1993. O O O Illinois Power Company Projected Capability and Demand at Systea Peak (Megawatts) 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 Units Added 760 Owned Capacity 3742 3742 3742 4502 4502 4502 4502 4502 4502 44641/ Joppa Capacity 203 203 203 203 203 203 203 203 203 203 System Capacity 3945 3945 3945 4705 4705 4705 4705 4705 4705 1667 Unreserved Purchases North Counties Hydro 2 2 2 2 2 2 2 2 2 2 Unreserved Sales Joppa Demand -148 -148 -148 -148 -148 -148 -148 -148 -148 -148 Adjusted Capability 3799 3799 3799 4559 4559 4559 4559 4559 4559 4521 Net System Demand 3110 3158 3206 3178 3228 3282 3340 3395 3450 3510 ; Reserved Sales Soyland 15 15 15 15 15 15 15 WIPC0 Turris 4 4 4 Reserved Purchases TVA -65 Adjusted Demand 3049 3162 3210 3193 3243 3297 3355 3410 3465 3525 Reserve with Scheduled Units 750 637 589 1366 1316 1262 1204 1149 1094 996 Percent Reserve (%) 24.6 20.1 18.3 42.8 40.6 38.3 35.9 33.7 31.6 28.3 C
- c
-1/Reflects a 38 MW derating due to flue gas desulfurization equipment installation, h 5
l H i 2/21/84
. - - - . _ _ . - .~ - _- - _ _ - - _ - - - - - . - .
i Exhibit IP-2 Page 1 of 3 t } Supplemental Interruptible Electric Service 4
; 1. Availability j
Service is available to any customer located in territory j served by Utility subject to the following conditions: t (a) that Customer takes. firm service under Agreement for Purchase of Pcwer from Illinois Power Company (Agr ee-ment) ; (b) that prior to the commencement of service Customer shall entor into a written agreement with Utility and specify a Supplemental Interruptible Capacity.
- 2. Conditions of Service (a) Supplemental Interruptible Electric Service is interrup-tible electric service provided to Customer in addition i
to service provided under the Agreement. The provision - of Supplemental Interruptible Electric Service is subject to unlim'.ted interruptions and curtailments by Utility and shall be subject. to interruptions prior to ' curtailment of service to any of Utility's customer ' O taking service under Service Classification 20. The
\s,/ capacity required to provide Supplemental Interruptible Electric Service shall be referred to as supplemental Interruptible capacity.. Whether or~not nc u.ce is i ' received by Customer in advance of.any interruption or curtailment, Utility shall have no liability to '
Customer, and Customer shall assume full responsibility for any loss, damagemor claim (including but not limited to product loss and loss of profits) by reason of any l interruption, curtailment or restoration of service. I (b) Supplemental energy shall be' defined for billing-pur-poses as all energy used by Customer during the on-peak i ' period defined in Customer's Wholesale Electric Service Agreement in excess of Customer's contract capacity. (c) Supplemental Interruptible Electric Service 'shall not be
' ~
available during periods in which service to Utility's customers taking service under firm or limited firm service classification is' curtailed. . (d) Firm Power is that demand and energy for which Customer-has contracted for under Article II,' Section 1 of the Agreement at the same point of delivery-as Supplemental Interruptible Electric Service. Customer shall pay each-month,- in addition to the charges in subsections 3 (a) and 3 (b) , the charges specified under Wholesale Electric-Service' Agreement for which-firm power was contracted. g
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Exhibit IP-2 Page 2 of 3
- 3. Rates The gross charge shall equal the sum of the charges below and other applicable charges under the Wholesale Electric Service Agreement, , increased by two percent.
(a) Supplemental Interruptible Electric Service (1) Demand Charge Customer shall pay no Contract Capacity charge or Capacity Reservation charge for Supplemental Electric Service unless Customer's maximum 15 minute demand established during a period of interruption exceedc the load limit specified by Utility plus the maximum amount of firm power for which customer has contracted. Customer shall pay to Utility for each such occurrence (in addition to the rates provided herein) an amount equal to S4. 34, $3.79 or S3.09 per kva based on the applicable delivery voltage, multiplied by the number of kva of such excess, and customer's contract capacity will be increased, without notice or other action, by the amount of such excess kva. In the event Customer is provided service under the ['\ provisions of the Interim Wholesale Electric N-- Service Agreement, the contract capacity will be the June 15 , 1980 kva nomination stated in subsection 2(c) of said agreement. (2) Energy Charge The energy charge for Supplemental Interruptible Electric' Service shall be determined as follows: (i) During periods in which Utility anticipates operating generating units having a heat rate greater than 15,000 Etu's per kwh or purchasing energy under the emergency provisions of its interchange agreements, the charge shall be 6.100 per kwh. (ii) During all other periods, the charge shall be determined in accordance with the provisions of subsection 3(c) of the Wholesale Electric Service Agreement. (b) Cost of Power Adiustment l The schedule of charges set forth above is subject to l [,4 the Cost of Power Adjustment provided-in_ subsection 3(d) of the Wholesale Electric Service Agreement. 1 Q} I e
^
. .. . , Exhibit IP-2 '
Page 3 of 3 A. . . ,, . , . . . x - -
, . . p- :-
- 4. Interruptions, Curtailments and notifications 1 (a) Utility shall have the right to make any. interruption or
! curtailment without notice to Customer. Utili ty ,
however, will' attempt to provide C'ustomer with two hours notice ofc any interruption or curtailment or when the ,
. energy charge in subsection 3 (a) (2)~ (i) of this Exhibit E -
l is in effect, but Utility shall have no obligation to 4 give such advance notice or to assume any liability for j failure to do so. (b) Notice of interruption or curtailment or when the energy
; charge in subsection 3 (a) (2) (i)' of this Exhibit E is in ; effect may be'given by telephone from Utility. Customer shall designate a representative to Utility to whom such -
notice of an interruption or curtailment can be ,
; provided. ,
) (c) Utility may agree to permit an interruption procedure to i be carried out by Customer's personnel, provided all steps in such procedure are subject to control by U tility . Customer shall provide, at Customer's expense, a direct line telephone connection between Utility's supply dispatch office and Customer's dispatch office upon six -(6) months written notice by Utility. l (d) After any interruption or curtailment of service, Customer shall not reconnect any load to Utility's j system without approval from Utility. 1 1 i a , AGRMT-WA i 1 . l l l
.< 1 R _ ,~ - . , . , - - - , . , . . . , . . , . , . , .m. . . . , . , - _, , _ . , -e
111. C. C. 'i " Fourth llevised Sheet No. 4)
. n . . r ince1Linst, Ill. C. C.- llo. 27' . . . .
%grd blevlucJ sheet. Pto . M Exhibit IP-3 {
Fage 1 c f3 l lLLINOIS POWER COMPANY l I SCHEDULE OF RATES FOR ELECTRIC SERVICE
' R itu tt 't .
Supplemental f orerrupt Ihle "F. lect ric Service
*l. ha i t al. ! ! i t y s e rv i. e i4 av.iil.ble to u., s u* r om. ierered to seteseorv r r*e.1 hv Utility wuhteet to the f ollowinst rce.t i t lan s :
fin that rust me r t akes f i rm r e rv i e ue. r re e l i t s ' crvice riaw ti trat tan 21 - Large Power Servtce with a o ntr .t crisctty 4 ' at least I un k w or etytcc tlasstlication 14 - Annu il I.oad fact or Litree Pnwer fervice. 1ml 8' ) t e st se r
- 9 e # of . .il l .ah le m e this 'f- it EF 'at a l t ? a t i "I <' ervies is of stich c ha r.u. t e r t a is r" s . e ni. 1 tas t r":.t ! .r .'t s i l .- at i ' t !re 1Y "t il a t v wit h mt to ti i tss t osme r o r
. i . m . . e- f. r r et" t 6.t- e "I vatt u .a . s .c i v .. I t r e t s u l l e ru N l l s l e il t h. .al *v .ir wellire.
.a fc) t ha t rialttv o.s y limit servana utWer the rider to M suitomers. and i .8 ) tin 't prior to the wom ement of crvice a ir t orier hall roter into i written g rec *ient with t'tilltv
...t pc. I'- oppi.m.ptil In t. e tespe t u ti * ,icitv.
2 P.ma l t l . e at w re t ct ( .i ) Supplemental Interrupt ible T.lec t r ic Servit < la interruptable electric servlet provided to rugtcmer in addit ion to acrvire provided undrr a fi rm service clunif ic.it ion. We previ,4 f on nf Supplemental laterruptthic riectric Servire f u subles t t o uni ta6 ted Interruption * .ind ciartallmentii hv Utility
.lurtra the on-pealt perto.in of botle mmme r anil winter aseasona. The capacit y reeluired to provi<le
".u po l emen t a l Interruptthic Flectric Servi
- e . hall be re ferard to u Supplemental Interruptible rapactiv. kbither or not r.ot i s . 18 terrivod hv ructomer in a.lvance of any interruption or rur-t a t int n t , l't t lit y sh,I l li eve no 11 iS i t it y to tu trmer. and t o t ome r *.h.e ll ae uns liall responathility for any l~m, dam.m er ci tim flu luding but p..t limited 'a p rochsc t loss and lar* < f profit s) isy r e.e. on of any interrnpr ion , s urt a i ttie rt or re foration ut servtre.
(h) Supplemert :.1 energv S ha l l be ilef it'ril l or h i l l i n,- purpo=c= .e i a l l ene twr ei nd hv ru.st ome r <tu ri nit t lac on-peak period defaned in ru l.ecr's firm srvare clas..lfication in exces a.f tuntoner's contract caracttv ar i apac t t v rc te rv it t en. (c) Supple *vutal interruptshle rie.tric Wrvics sha ll not he availabir du r itist pe r ind a in which service to l't i l i t v ' .- t u't o irr r
- t a k t er r e v i s e tenuci 'irm or llmit ed t irm e crvis e t-l w.i t (cat ion is curtailed.
(d) Ftte Power as ( b.i t dt.aand and int r a s er .hich rus.temer hag cont racted for en a f irm h.tnis under an appi tcable ervice cinun f tcarir e t L t.e ,arr point of delivery a supplemental Interruptible l lect rie hervlee, roarwer 1. ell pav eich mouth, in adJltion to the charren in subacetion )(a) and
)(b), the charges Fretilico unaer the Service cl utticar ir n f or wla tch f irm power was contracted.
*). Rateg
( .i ) Suppicnentil forerruptible f le rerte % r" t + (1) Demiad Charry - Cu s t ene r a ba l l pav . !O per hillie r perlod f or each Irw of hpplemental Inter-ruptah:e rapacity durtre ill 51111ir perto.ls in t !.c ovent rn tener'4 e i- t wn l 's m oni t e we.uid dor t ne a per iod on int errupt f an eMceeds t he at lingt spec t f l ed tw Itilite plo, the amos n t os l'irn ; owe r f or wb l . h ru n t ocae t has contracted. Co-t"*er shall c. f ta erilarv er r rb uch n i u r a ctice ( t r. .ohi t r iou to the .harreg providu in the ..vtemer'. :pp l ii ahir e t"In cla slicationi n i.td i t t oa il gount i rtua l to the .leeend c ha r te in the apalttaolo . rvir e etw .ita attee mult! plied hv the numhcr et kw of auch excess, an.1 r ... i.- ou n t af firm r wer t er whi. h ruerer.cr has cont racted will he increastd. without notice or other arttoc. 19 v the amount of .uerte e xce,oi kw. ehrertak i nd i r.it es . l.aere I n,6ued lau arv 11. 19MI l liett ive houa ry 13 I '/M ) i { Filed pursuant to 1 sur<t hv Lira r 11 lia ib s y illfrot Commerte t.onmimalen Viu President N order i n D.w k e t #e1-015.' 14 atur, t i l t uni,. Dated January 1.' . 1 " ti j
111. C. C. At . M
',* '.9' .
t .# , , , . *? .' Fifth Revised Meet <No. 8.4 - . c. ', " cancelling !!!. C. C. No. 27 Fourtti Revined Sheet ';a. .* ' Exhibit IP-3 eage z of 3 ILLINOIS POWER COMPANY SCHEDULE OF RATES FOR ELECTRIC SERVICE 11(DFir 4 . l'M. I' J
*l. La t e.s f. eint inued i f/) Icerps 8liarge The a cc rev e l+.ir, c ter u g o. t ,co r e ! le.t e t ruset t h is flertrir Nervice .* hall be deterM Ped at seltown
- 11) toeing pe r o s~ in si i. h s't t ilt y ..n t 1 4 p.. # . operatanr. generattur ontt, having .e he it s .1t r
.< it.e t i ui l '. h ' f es . pe r l '. h .. r put.1 e Inq notry un.le s the rew t e my tirost frn of g..t.
- e o. .. e - the . b.. e g e . : 1 be e . ! P. pre L wli, ftti irim. a; .s t h . r , rted . The h arf tu l t to % r ers t us .1 in ic urfance with the provi4i..ns ..I nin - s e L t.o li b ) of the e r v a t. . Clar5=tfication under which rust orie r t.iies firm 1.rvats th) Fisc i fht Alin .t em nt 1b =c hc.s.n l.- ..f c h i t .* it e n e t h ain*ve 14 eih jee t to ( loc har t t est Ad j us t me set prov i trel in liid r V.
!!n f.sc i .e At tie twent hall I.. i .e l . ti l .i t e .1 . owl .epplied aparate!v t ar c ach eront h eniv to tI c ac t s.15 kwh u ed hv ' n . t . += s aufeng the month.
84 Ad!ustmrut o f' *i s i rwie on -l'e a k a& mand _For Hitli g Purro c4 In the event that Customer's manimum un pealt demand eucceds the amount of firm power ior whicle Custc, er lias cont racted, ti e demand int hillinr under Customer's appitcable .erytce classification sha!! be [^ 'h Customer's mau lmum on-peak s tem.a rd te** tha Supplemental interruptible Capacity to the cuta nt not curtailed { j bait not leet t h us the amount of f irm power dem.netd s ent racted f ar under 6 ua.teme'r' 4 appli(able servis e (j s1iw ifinattan.
- 85. Ad lus t meti t of Firm Pawer ibnt r act l'aatelty or (11pacity h se t va t ion The amount of fira p..wer .setef aturd . sect rJing t o the provietona ot' rustomer's applicable nervice c l.rst f ic at ion *h411 he a.llua t c<t to the greater of the in!!owinitt (a) usut ome r '< man timim on. peak armand f rom lut'c 15 throur.h sertember 14 less the amount isf Supplemental n o t er re.r t t hir t.pactis a l tose.s tiv 1:t il li v da r t na .e pe r f ..t us cur t a s t ncnr .
th) tiotancr's - a 6 mum op-e .ik item in.1 from be ne 1) t hroar.% 9ept mber 14 Icss the cust erie r' 9 Supplemental irrcernetlhlr t apac it y dur t nr a perio.1 wi t h nn cur t e l lmre t .
*h, interenprion= aut Curtallmenen Le) Itility shall h.svc the right to make any interruption or curtailment without notice to Customet.
L't illtv. % wever, will attsmer ta prcvide Customer wi th twa hours not ice of any interruption or curt llment, hur l'r s . it y shall have no nhlir..ition to give such .ulvance not sce or to a**ume any liabilit) 1or fallure to do so it ) Nottre i as t ur rupt s n nr curta t imeer may b.? civen hv telephone from Pffliev. I:qstemer shall
<lecicnats 6 ~ pre-s t t it ive la Ift411tv en whoer notice of in interrupt ion or rurtailment can be prov t hol.
et) Iti!ity is e rre to permit ne antitruptjen prou dure o be c.orried i.ut by t ie.t utw r 's personuci, pro-vided a!! M i ps in u .' h pte ci.u r e are suhlert t o a..nt rol hv Itilltv. Cust omer wh.i t l provide. at his i=penu .' a v ect t ira t e lephor a soonecttan L. tween Uttlitv'8 Supplv Dispett.h office and Cugter'er'g dtepitih utftse f el) A f t e r .o* v in s t re eint ion ar e ue t .e i t ra ut of ervice. i nst ome r rh.s ! ! pct rs s otmect .in v la id t o l't il l t v 's averem im 6 t hout a pp e rs .. I t re = l'sility.
*ht. risk i n.!ica ti e e n is e
'/ ritective Januarv 14, 1883 l==ued .tannarv 13. l'ut is mc<1 hv f arry ft. Haah Filed Pursuint to
- vie e ers s i f t tit filinals Commer.c Coent* ion order in th rket O .015' ticca t u r . Illinoin rated f an% r v I .' . l H' b O
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twiginij Sheet .No. s.. .- f. . ; . , , . t ", ' . . * '.S s . * * * '
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Exhibit IP-3 Page 3_gf 3 ILLINOIS' POWER COMPANY SCHEDULE OF RATES FOR ELECTRIC SERVICE
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s Illbf'll :( - PAN 1
- 1. Ad.i t t ion.e l ('..mi t r iong ind d'ont r.u r Prov i s t ang (a) L'n to,cr4 t.iii l ne i.Pe lem nt .il toterruptille serviet under t h 6 r. litJer shall r ent rict fer ind tike ervlis I.r . ; r t m.a t s term .it ti,elve t i. ) .aro t h , i t.e ortm.arv term .it en t o.f c.I ter+ ri mv ( rne t.ie t sb.il l bc .aut..m.it t e.il l s e s tenited t r. a ve e r t.. v r.o r w i t ti LI.c privt!cce el e n t her p artv to terminate the c ant s .ic t at the end et the prim.,rv t e rm o r .in r i ne .mv enten.lc.l term en not less than 6 J.tyg w e l t t eti not:ro (b) t* t l i t t y m1v .. gree ta i nc ren ** i n s t < .*. r * - f i r's r<we r l'or whic h custome r has t ent ric ted it liv timr e p ro v i -I.- I c'e s t **e r h i e tv< t ottlity i. t le . t h ea t w. n t v- f o.o r (?4) hours not h 5.tarc ..c ts a nc ree.<
at t .i .- e i G \ 0 t H
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/ N, t ai ued 1.1mua r v ?4 1"4) 1.ltective January 18. L'f )
! ! Filed Pursu. int to issued I.y 1.irry D. fl.1ab
%_.d i11!no t e rmaerr. Ca mmt w ton i h e l'rcs tdct t order in P. e kct M2-0151 D*c.itor. I lli i.it s
!I.s t 4 tj .I sfpa.o ry l.'. ] 441.
EXHIBIT IP-4 T ." i ' ' ~ '
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- 1
] AGREEMENT FOR PURCIIASE OF POWER FROM ILLINOIS POWER COMPANY BY WESTERN ILLINOIS POWER COOPERATIVE, INC. 1 l l h I i DATED: May 24, 1983 i b
, . - - - , . , , . , - , - , -, - - , - - - , , - ,,.,,,.,..-,m..., ,r,,wwn,nny,,,,we,-,,w,,.,,.,,,- ,,-,,g-,m, ,-,,,,,,.,m,.,mm,,.
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CONTENTS .' - .; Section Pace No. *
, .I . . General Terms .
s.. p.
' 1 '.
II. Conditi'ons'of Service 1 'l
- I II . Rates and Charges 3 IV. Rate Renegotiations 3-5 V. Meter Reading and Billing 5 VI. Metering, Testing and Billing Adjustments 5-7 VII . Rights of Access 7 VIII. Continuity of Service 7 ;
i IX. Liability 7-8 i X. Term of Agreement 8-9 4 XI. Approval 9
\
APPENDIX Wholesale Electric Service Schedule Exhibit A Service Area Map Exhibit B i Points of Delivery Exhibit C 1 l l l
._ . _ _ . . _ . . . . . . . . ~ . . - . , . _ . . . _ . ._ . . . . , . .- ,- ,, _ . . _ . ,
*
- WIPCO Agreement Paga 1 of 9
, , , , 1 -< 6. . .;: . j, :f. .. . ca... + .. AGREEMENT'.FOR
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PURCHASE OF POWER f k/g ,
-FROM 'I'LLINOIS POWER COMPA'NY This is an Agreement For Purchase of Power dated as of ww n , 1983, between ILLINOIS POWER COMPANY (" Company"),
and the. Western Illinois, Power. Cooperative, Ince.(" Customer")..
'Cdmpany 'isl an ~ Illinois corporation with its business offi'ce at 500 South 27th Street in Decatur, Illinois, is engaged in the gen-eration, transmission, distribution and sale of electric energy to the public in various municipalities and areas in the State of Illinois, and is a public utility within the meaning of an Act entitled "An Act Concerning Public Utilities," approved June 29, 1921, as amended, set forth in Chapter 111-2/3, Section 1 et. sea, of the Illinois Revised Statutes, and now in force.
Customer owns and operates electric utility facilities and provides electric service to its member electric cooperatives. Customer desires to purchase electric energy at wholesale for its use and for resale to its member cooperatives, and Company desires and is willing and able to supply Customer with electric energy for these purposes, on the terms and conditions hereinafter set forth. In consideration of the mutual agreements herein contained, ('v ) the parties agree as follows: I. General Terms Company shall supply electric energy and Customer shall accept and pay for service rendered under the terms of Exhibit A attached hereto, and made.a part hereof, entitled Wholesale Electric Service Schedule. Agreement shall control if there is any conflict between it and the provisions of Exhibit A. Company shall render utility service for all of Cus-temer's requirements in those areas indicated on the Service Area Map, marked as Exhibit B. II. Conditions of Service
- 1. Company agrees. to supply and Customer agrees to accept electric energy at points of delivery as follows:
(a) Existing Points of Delivery Existing Points of Delivery are defined as those existing points of delivery at which electric [,4] - energy is being supplied on the effective date of s.) this Agreement and are set forth under such a
1 WIPCO Agreement Page'2 of 9
.. .~;. .f; .., . 4 ;
4 .? C, deskJ1 naYtIo"n on'ESEiNtC 'ahtShhhh h ret'ei. ' nergy c- shall be supplied and accepted under the terms so ( specified with reference to..each existing delivery.
\' s - pointi on' Exhibit' C. . .
- (b) Anticipated Future Deliverv Points Anticipated. Future Delivery-Points are, defined 1as. -
specific delive' yr poin'ts which,. Customer antici ' i pates will be ~ required during the ' term of this
- Agreement.
Such points are set forth under such designation on Exhibit C attached her'eto. Company agrees, upon notification by Customer that it desires a supply of energy at any one or more of said points, to promptly provide such supply under the terms.specified herein. Upon initiation of service at any such point, the reference to each such point will be relocated under the proper heading on Exhibit C. Customer shall, by December 1 of each year, pro-vide Company with Customer's contemplated power requirements at each existing and' anticipated point of delivery listed on Exhibit C for each of
' the next three calendar years. Such schedule shall not itself be deemed to be a request for
[d \ capacity at a particular delivery point. (c) Unanticipated Future Deliverv Points Company will also provide Customer with power at i additional points of delivery along Company's lines if available.in such lines and the point of delivery requested is reasonably satisfactory from the standpoint of Company's system operations. No such additional delivery point shall be within 5 miles of an Existing or Anticipated delivery point of Customer' listed on Exhibit C. The d? ut zyce of 5 miles shall be determined by mease-in along the transmission line serving such Fml a (n 'r Anticipated delivery point if the i auf _ti;. . ; . delivery point will be' served by the sca.e transmission line, and if not, by the dis-tance between the Existing or Anticipated delivery point and the additional delivery point measured along a r'oute V,ich would be ' practical ~ from an engineering standpoint for the construction.of a
- transmission'line betwoon such points.
- 2. All energy delivered by the Company to Customer,'in ps . accordance with Company's normal requirements,'shall (N
pass either through suitable fuses or. suitable circuit breakers to be ins'talled and maintained by Customer as I
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______~__________ _______________________________ ______ _
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- WIPCO Agreement Paga 3 of 9
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'ne'aV a8 pfacdIc5$)18 N ea po[ 'at'$hi$ e'ne gy [s delivered, and the installation of all lines and 9 '
equipment.of the Customer..over which energy sh_all1be-. tra'nsmitted, up to and' including Customer's circuit' breakers or fuses, and the interrupting rating of fuses and circuit breakers, relay settings and fuse sizes, shall be coordinated.with the Company's facilities. Company shall notify Cu.stomer at.the earliest. '
< practicable'-date of any~' changes'in fault cu'rrent or.
~
operating practices on Company's system'affecting ~ coordination on Customer's system and Customer's responsibility. However, the requirements for the installation of protective equipment upon Customer shall not be more stringent than would be imposed on Company by its system operating policies in comparable circumstances.
, 3. Custcmer shall extend its line to the point of delivery from Company. Company shall make the connection and furnish and install meters, recording devices and other apparatus necessary for the measurement of energy received by Customer from Company. Customor will provide a suitable location for the metering.
- 4. Customer agrees to use reasonable care to design its circuits so that loads of individual phases on its lines at the point of delivery will be balanced as
(- r nearly as practicable.
\~I 5. Customer and Company agree to maintain and operate their systems in accordance with sound engineering and operating practices, so as to minimize the likelihood of a disturbance in either system which might cause impairment of service to the other party's system.
I II . Rates and Charges
- 1. Customer agrees to pay Company monthly for electric service rendered during the preceding month at the rates and charges due and payable therefor as provided in the Schedule attached as Exhibit A or as subse-quently revised under Section X, paragraph 3.
- 2. Company shall add to all charges under this Agreement and those provided for in Exhibit A the amount of any existing tax or charge of any kind levied, assessed, cr charged by any municipal, state, or federal government, or authority becoming effective after the execution date of this Agreement, measured by but not included in the purchase price paid or revenues received by Company on account of the service rendered under this Agree-ment.
7 IV. Rate Renegotiations I' ;
- 1. After September 1, 1983, subject to the provisions of I
, WIPCO Agreement Paga 4,of 9
.. .: . , . . -4,
.U iaragrapb(efo'f"th'is 'S'est5.on' ik N er par't h s
\ written notice given to the other party, may requ.est
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- negotiations for the purpose.of establishing.a new. rate.
~
1 ifor'the ' elect'ric energy ~ to ~be s'upplied under this' Agreement. This request must contain the rate the ! requesting party proposes. After such notice, both parties shall promptly and in good faith engage in
. negotiations ,for this. purpose, and each party shall-make.availableromptly
~
p to'the other party.all . infoFmation which that party may reasonably request for
~ .
l , , the purpose of the negotiations. l
- 2. If, after a reasonable period which shall not exceed 12 months, the parties for any reason have not agreed to a new rate, the negotiations shall automatically terminate unless extended by mutual agreement of the parties. In the event negotiations are terminated, the party requesting the negotiations may seek the establishment of its proposed new rate by an appro-priate filing with or complaint or application to an appropriate regulatory agency deemed by the party making the filing, complaint or application to have jurisdiction of determination of wholesale rates of Company and a copy of such filing, complaint or application shall be furnished to the other party, provided nothing in this Agreement shall be deemed to constitute any waiver of the right of either party to object to the jurisdiction of the regulatory agency to (s /h which the filing, application er complaint is made by the other party. In the case of a filing of a proposed new rate by Company, such rate shall become effective in accordance with the procedure for the filing of rate changes provided for by Section 205 of the Federal Power Act, as amended, or as permitted by such other law or laws as may become applicable to the rates charged under this Agreement.
- 3. In case of any filing with or proceeding before a regulatory agency under this Section IV, the party which requested negotiations shall not seek thereby to establish a new rate more advantageous to it than the rate which it proposed at the time negotiations were requested, nor a retroactive effective date, nor shall it seek changes in the other provisions of this Agreement. Such party also agrees that it will not directly urge the approval by such agency of any other rate more advantageous to it, or other change in this Agreement without the written consent of the other party first obtained. Except as to the rate initially proposed in such negotiations and the fact that such negotiations have been held and no agreement reached, all other rates, if any, and other matters submitted in such negotiations by either party shall be- deemed to !
l 'T have been submitted in connection with the possible
\_) settlement of the issue an~d shall not constitute proof i or admission of any fact or otherwise be admissible in '
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,, WIPCO Agreement Paga 5 of 9 .
- e. ..' 2. . , . . , . ., : .. .i a .g$.gj,ence 'iri ,any' r'a.:. t u. <ts proceeding, without first
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- i * !.* W h obtaining the consent of the party submitting such fact n or ...evi,dence .in.. tha . negotiations., ;
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4 '. If any rate or effective date of such rate as finally determined by the regulatory agency having jurisdiction thereof is deemed unsatisfactory by either party, such _
' ' , . . party at.its op. tion may elect'to terminate this ~
9 i+-
, Agree' ment'on noti'ce to.ths[other. Min writing 1given .
within'60 days after such determ'ina' tion becomes final, effective on January 1 of a specified year which shall be not less than three years from the date of such notice; provided, however, that this provision shall not limit the right of either party to terminate this Agreement as may in this Agreement otherwise be specified herein.
- 5. If either party shall request negotiations for the purpose of establishing a new rate, that party shall not have the right to make another such request until after the expiration of 12 months following the month in which the previous request.was made.
V. Meter Reading and Billing
- 1. Company shall read meters and render bills monthly.
Bills will be rendered at a net charge using the rates and charges contained in Exhibit A in effect at the O time, including other charges in this Agreement. Bills will be rendered three days from reading date, and' payment shall be due fifteen days from the date of rendering the-bill. Accounts not paid in full within the net payment period will be subject to an additional charge of 2 percent. Should either over-billing or under-billing occur due 2. to causes other than inaccurate meter registration, it' shall be corrected by proper allowance or payment upon. written notice by either party to the other, by mail .oi-by personal delivery, provided that such notice must be given within one year following the date on which the bill to be corrected-is rendered.
- 3. If Customer has failed to pay any bill accruing under this Agreement on or before the thirtieth. day after day.
of billing, Company may discontinue delivery of elec-tric energy provided at least: fifteen days prior. written notice has been given to Customer. . Company will not be liable in.any-manner for any loss or-damage arising from such discontinuance of electric service. VI. Metering, Testing and Billing Adiustments
- 1. Company shall own and maintain the meters and related, O metering. equipment necessary!to measure the demand and' energy delivered to Customer by Company at the point
WIPCO Agreement
. ,. . . . . l.. .. , -:.. w:x. i- 'A 9'".6 ,ok 9_
c -s; of delivery.
'2.- Company-shalf test and. calibrate the meters b'y compari-
' ~ '
( son with accurate standards at approximate twelve month intervals.
- 3. Company shall make..special meter tests.at.the written .c. ~
request of. Customer.' ?If a spec'ial test made at.Cus-tomer's. request shall. disclose' that' meters'are r6gis-tering within 2 percent of 100 percent accuracy, Customer shall bear the expense of the test; otherwice, the cost of such test chall be borne by Company. Company shall give Customer three days advance notice of its intention to test and calibrate meters when such test is requested in writing by Customer. Customer shall be permitted to witness any meter tests made by Company. ,
- 4. Meters found by test to be registering inaccurately shall be restored to a condition of accuracy. If the inaccuracy exceeds two percent, the meter readings taken during the period 90 days preceding (or during such shorter period as may have intervened since the previous test) shall be corrected by the percentage of inaccuracy found by the test and billing adjusted accordingly. No prior readings will be corrected.
- 5. Company, upon Customer's request, shall provide Customer within a reasonable time after the end of the billing period and at least by the due date of the bill rendered, a written record of the successive 15 minute demands established by Customer at each delivery point.
- 6. Customer may at its own expense install and maintain additional metering equipment for the purpose of checking the meters installed by the Company, and the readings thereof. Customer shall be solely responsible for the comparative accuracy of its own metering equipment. Upon request of Customer, Company will modify, at Customer's expense, its demand recording equipment to make available to Customer parallel but isolated electrical contacts which Customer may use to drive its own demand recording equipment.
- 7. If the meters installed by the Company wholly fail to register the energy during any period of time, the amount of energy delivered during such period will be measured by means of the meters installed by the Customer, and'if the Customer has not so installed meters, or if its meters have wholly failed to register during this period of time, the amount of energy so delivered shall be estimated and agreed to by the
[,_1 Company and Customer based upon amounts previously
, delivered under substantially similar conditions.
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WIPCO Agreement I Pagn 7 of 9 . . . l
. . . . . , , , :; , . . : .;.., - " . ;. . , . * ** 7
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.w -;sU Ele 6trii$n.ergfsupp.'e.li d hereunder to Customer for use l
by the Customer or its member cooperatives in carryi.ng _ ,
~
~ on its, or their, . business of supplying electricity.-to[. ' ri.:
-its member c'coperatiVcs,' or their members, as the ca'se may be shall be metered at delivery voltage, which for this purpose may be less than 34,500 volts.
, ,;.V II . q Rights of_ Access ,...,c . ,e % r c.c .M J.% .:V - d: -5. * - N,
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Duly' authorized representat'ives o 'f'either party hereto shall be permitted reasonable access to the premises of the other party if required to carry out the provisions of this Agreement. Each party shall have access to the facilities of the other party at a mutuallt agreed-upon time for the purpose of removing its own fa'. .lities from the facilities of the other party where such L.moval is permitted under this Agreement. VIII. Continuity of Service
- 1. Company agrees to provide adequate and reliable service to Customer. However, Company shall not be liable to Customer for interruption or inadequacy of service, loss or damage to property, or injury (including death) to any person caused by act of God, public enemy, vandalism, strikes and other labor troubles or their equivalent, legal process, state, municipal or other governmental regulation, windstorm, flood, fire or
[-) k ' explosion, or other matter or thing beyond Utility's control, whether the same shall affect or occur in connection with the operations or property of Customer, Company or any other person including Customer's member cooperatives. 2. Company shall not be responsible for damages due to any failure to supply electricity, or for interruption, or reversal of the supply, if such failure, interruption, or reversal is without willful default or negligence on its pcrt, nor for interruptions, by underfrequency relays or otherwise, to preserve the integrity of Utility's system or interconnected systems. 3. Company may interrupt service to make necessary repairs or to make changes in equipment or to install new equipment, but only for such reasonable times as may be unavoidable. If the nature of the situation permits, reasonabic advance notice of these interruptions shall be given by Company. IX. Liability
- 1. Customer shall not be liable, and Company shall save Customer harmless against any and all claims, damages,
() liability or expense, resulting from or occasioned by
' ? the presence, use or maintenance of any electrical conductor or other type of equipment owned or l
'* WIPCO Agreement
- .x .t. ~<Page;8.of 9 c.e ' ". ' .*
maintained by company or Customer or by the escape of electric energy in or from any.such conductor or equip-
-ment, provi.ded :that :such claims , . damages , liability' 'or-expense shall be caused by Company's negligence or mis-conduct.
- 2. -Company shall not be. liable,.and Customer,shall,~sav.e; , .y ,
C.3 '
.0- : ' Company.iharmless:against-~any and alliclaims e damages ,- -
liability or. expense.resulting from or occasioned by- ' the presence, use or maintenance of any electrical conductor or other type of equipment owned or maintained by Company or Customer, or by the escape of electric energy in or from any such conductor or equipment, provided that such claims, damages, liability or expense shall be caused by Customer's negligence or misconduct.
- 3. Negligence or misconduct, as used herein, shall include but not be limited to f ailure to comply with all General Orders of the Illinois Commerce Commissicn applicable to the furnishing of electric service by Company or customer, all regulations of the United States Occupational Safety and Health Administration and the Structural Work Act of the State of Illinois, or failure to meet any standard of care derived from any of such orders, regulations or statute, provided that such failures to comply with the foregoing Orders, 9 regulations or acts or any standard of care derived therefrom shall have caused cr created, in whole or in part, the damage or loss.
X. Term of Acreement
- 1. This Agreement shall be for a term of three years com-mencing with the effective date of this Agreement. The Agreement shall continue thereafter from year to year unless cancelled by either party at the expiration of the primary or extended term upon not less than one year prior written notice. However, in any event this Agreement shall terminate upon commercial operation of Clinton Nuclear Unit No. 1.
- 2. All provisions of this Agreement which are obligatory.
upon or shall inure to the benefit of Company shall be cbligatory upon and inure to the benefit of all successors and assigns of Company. Also all provisions of this Agreement are obligatory upon or shall inure to the benefit of. Customer shall be obligatory upon and inure to the benefit of all successors and assigns of Customer. 3 .' Nothing contained herein shall be construed as affect-ing in any way the right of either party under this () (~ Agreement to unilaterally make application to the Federal Energy Regulatory Commission or any successor agency for a change in rates set forth in Exhibit A
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- WIPCO Agreement Page-9,of 9
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attached ' hereto under Section 2 05, or any similar pro-vision, of.the Federal Power Act and pursuan.t to ,the , Commis,sion! s - Rules: and' Regulatiods pro"tulgated there .- under er under any other applicable federal law or commission. y ., XI .y. Approval. -
; . 'S '
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This Agreement shall'not b'e bind'ing upon either party until approved by the Administrat Or of the Rural Electrification Administration and by any regulatory body which may have jurisdiction thereof, if approval of any such body is required. IN WITNESS WHEREOF, the parties have duly Agreement as of the day and year first above wr,itten entered but into this actually e:<ecuted on 24th day of vav , 1983, to an original and two copies all of which are considered to be duplicate originals. ILLINOIS POWER COMPANY WESTERN ILLINOIS POWER COOPERATIVE, INC. By W ' By ,u, ff / M > t Title Vice President Title President Date May 20, 1983 Date May 24, 1983 Attest: Attest:
/*
As to I91ino'is 'Poweg-Ccmpany ~ As to Western Illinois (Secretary) 1 Power #6 operative, Inc. i COOPR3-W 1
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WIPCO Exhibit A Paga 1 of 5
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; . Wholesale. Electr.ic Servic,e ',S.chedule ~
,- .s
- 1. Availability
; Service hereunder is: available. to ,the. Western IL.linoi's: :
' "Po'Oer Cdop'eiatife ,' 'In'ci (" Customer") from', Illinois ' Power
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Company (Company) subje~ct to the fo'llowing condi~tions:
- a. That Customer is engaged in the generation, transmission, and sale of electricity to its member cooperatives;
- b. That Customer is supplied from Company's lines having a capacity adequate to supply Customer's requirements in addition to the requirements of other customers already receiving service from such lines;
- c. That prior to the commencement of service hereunder, Custemcr shall execute and shall thereafter keep in full force and effect a written agreement with Company.
- 2. Conditions of Service service hereunder shall be provided to Customer subject to the following conditions:
m i g a. Should Customer desire to receive electric energy from
\c any source other than capacity owned and operated by Customer and to operate in parallel with the power supplied by Company to Customer under this schedule, it shall, in the absence of existing arrangements with tampany for the delivery of such power, give the Company reasonable notice of such desire, specifying the require-ments involved and the date when it desires parallel operation to commence. Reasonable notice shall be defined as notice sufficient to allow Company to. continue safe and efficient operation of its system and shall be interpreted in an engineering context considering the facilities and requirements involved;
- b. Company shall be reimbursed for any expenses incurred by reason of the addition of an alternate source of electric energy as referred to in subsection 2 (a);
- c. Service hereunder will be initially delivered to Customer from electric lines having capacity sufficient to serve Customer's energy requirements. Company retains discre-tion to select the supply line or lines from which
. service will be rendered to Customer. The supply line selected shall be the best available source with adequate capacity based on good engineering practices. Company also retains discretion to change such supply line or (x,m_') lines and to change the voltage of the supply line or
. WIPCO Exhibit A
.Page 2 of 5 h, .2.- _ Conditions of Service (continued). '
lines or other conditions of service. If such change is initiated by Company, the cost of providing service under the new conditions including the cost of
, ~~,. .w transformation.shallwbe bornecby Company.::- In~allcother.: .; -
', cases l .except for . changes caused by ~an increase in '
Customer's' ele ~ctr'ic energy requirements which shall be governed by Section II of the Agreement for Purchase of Power between the parties, costs of changes shall be borne by Customer;
- d. Customer shall provide and maintain all transformers and related facilities necessary for handling and utilizing the energy delivered hereunder;
- e. Company will provide and maintain three-phase vol tage connections, provided Customer will make available, without charge 'to Company, space required for Company's lines and delivery facilities, and;-
- f. Company will provide and maintain delivery points and metering equipment therefor. Such metering equipment shall be located on the high voltage side of Customer's transformation. Company, at its discretion, may elect to r3 install such metering equipment on the low voltage side
) of transformation (whether or not for the convenience of w
Company or Customer) and in such case, both the demand and energy consumption will be increased.to compensate Company for transformer losses as measured by such metering equipment, or in the absence of such measurement, by computing such losses based on the manufacturer's data pertaining to the specific transformers installed.
- 3. Rates and Charges The monthly charge shall equal the sum of the charges below and any other applicable charges.
3
- a. Demand Charge:
l Charge per Kva of i Billing Demand Delivery Voltage in any One Month 4160 or 12,470 volts
$4.26 34,500 or 69,000 volts $ 3. 76
- b. Energy Charge:
~x 2.60C per Kwh for all Kwh delivered by Company in any one
( ) month. O
. WIPCO Exhibit A Pagg 3 of 5
,;3 . Rates and Charges (continued) . . ,
l
. _ , - ,- r 1
- c. Cost of Power Adjustment:
(1) A Cost of Power Adjustment (CPA) will be applied to each Kwh of energy. billed: hereunder. during;.the
,'" billing. peri;od" a's defi6ed.herein.
' ~
Q) CPA = (FCCG
- ECPP + ECIP - FCIS) X 100 - 1.70C (CG + PP + IP - IS) X LF Whe re:
CPA = Cost of Power Adjustment. The amount rounded to the nearest . 001C per Kwh to ' be charged for each Kwh billed hereunder during any monthly " billing period" as defined herein. FCCG = Fuel Cost of Company Generation. The cost of fossil fuel as included in Account 151 and the cost of nuclear fuel as included in Account 518, according to the FPC Uniform System of Accounts,
,y consumed in " Company's plants" during the
" determination period."
y ECPP = Erargy Cost of Purchased Power. The net energy cost of energy purchased on an economic dispatch basis from other utilities under purchased power agreements during the " determination period," exclusive of capacity or demand charges. Otherwise, the actual identifiable fuel cost associated with such energy pur-chased. ECIP = Energy Cost of Interchange Purchases. The net energy cost of energy purchased on an economic dispatch basis from other. ut31ities during the " determination pcriod" under interchange or inter-
;onnection agreements irrespective of the designation assigned to such transsctions.
Otherwise, the actual identifiable fuel cost associated with such energy pur-chased. FCIS = Fuel Cost of Interchange Sales. The cost of fuel consumed in " Company's plants" to
, ~s generate energy sold to other utilities
( -
) during the " determination period" through all inter-system sales.
WIPCO Exhibit A i Paga 4 of 5. ,
~
h, ,
- 3. . Rates and Charces-(continued) '
, .r, ,
CG = Company Generation. All Kwh generated during the " determination period" in
- c. .. , ,
u . .. Company.'s
.pla.n ts.; .
y3 .,,
. . r ,
PP = Purchased Power. All Kwh purchased, except interchange purchases, from other utilities during the " determination period" irrespective of the designation of such purchases. IP = Interchange Purchases. All Kwh purchased or received from other utilities during the " determination period" under interchange or interconnection agreements irrecpective of the designation of such purchases. IS = Interchange Sales. All Kwh generated in
" Company's plants" which were sold or furnished to other utilities during the
" determination perlod" through all inter-gx system cales.
( )
'"' LF = Loss Factor. The estimated ratio of Kwh sales at the average delivery voltage of wholesale sales for resale to the Kwh generated for such sales. This ratio is
.97.
(3) Definitions (a) The " determination period" is defined as the calendar month immediately preceding the billing period. (b) The " billing period" is defined as the period beginning with the 4th billing cycle of the . month following the " determination period" and ending with the 3rd billing cycle of the next month. (c) " Company's plants" is defined as Company's i fossil' and nuclear generating plants and Company's share of any jointly owned or leased fossil and nuclear generating plants. o! i _ ./
+
- - WIPCO Exhibit A Page 5 of 5
., ~. ~-
h ' ("'s 4. Determination of Demands
. , c . '
'~~ , .
'a . x Ma'imum on-peak Kva demand'for each point of delivery will be the highest number of Kva delivered during any fifteen minute on-peak period for the billing period at such point c.of delivery
. .x . . hereunder.
~ '" ~: .' . . ' .:' -
;J
' J ' ..br. ^Thes on-peak -period.'id ithe 1r~ consecutive ho' rs u ' commencing at 10:00'a.m.'and ending at 9:00 p.m. on Monday through Friday excluding New Year's Day, Good Friday, Memorial Day (May 30) , July 4, Labor Day, Thanksgiving Day, Christmas Eve Day, and Christmas Day.
- c. Billing demand for any billing period shall be the sum for all points of delivery hereunder or the greater of the follcwing at each such point of delivery:
(i) The maximum on-peak Kva demand measured during the billing period, or (ii) 75 percent of the maximum on-peak Kva demand established during the period June 15 through September 14 of the previous twelve months.
- d. The maximum on-peak Kva demand established at any delivery point will be adjusted for temporary or per-manent transfers of load from one delivery point supplied by Company to another delivery point supplied by Company.
- 5. Additional Conditions and Contract Provisions
- a. If Customer requires service at any delivery point specified in Exhibit C for existing, new or added capacity which requires Company to install special apparatus, Customer shall execute and keep in full force and effect a written contract with Company for service which shall specify terms and conditions of service not inconsistent with those provided for herein.
- b. Nothing contained herein shall be construed as affecting in any way the right of either party under this rate schedule to unilaterally make application to the Federal Energy Regulatory Commission or any successor agency for a change in rates set forth in Section 3 hereof under Section 205, or any similar provision, of the Federal Power Act and pursuant to the Commission's Rules and Regulations promulgated thereunder or under any other applicable federal law or commission.
COOPR3-W/A
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PURSUANT TO SECTION I 0F
. .c AGREEMENT.FOR PURCHASE OF, POWER. O ,* -
, yE .
' BY WESTERN ILLINCIS POWER COOPERATIVE, INC... ]
FROM ILLINOIS POWER COMPANY ; I 2 ' *
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- I WIPCO Exhibit C Page 1 of 2 l
. . . ~.. .. * -
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Exi' sting and Anticipated Future Delivery Pbints Existing Supply Delivery. Points . , ....
.. . , ,' Location ,
;. .,: . Voltage. ' .c.- .-
Brightori SEk, $Wh, Sec. 5, 34.5 kv T7N, R9W, 3rd P.M., Macoupin County Bunker Hill h%, NEk, Sec. 12, 34.5 kv T7N, R8W, 3rd P.M., Macoupin County Butler NWk, NWk, Sec. 7, 34.5 kv T8N, R4W, 3rd P.M., Montgomery County Rinaker SWk, SWk, Sec. 33, 34.5 kv T10N, R7U, 3rd P.M., Macoupin County Staunton h%, NWk, Sec. 22, 34.5 kv T7N, R6W, 3rd P.M., Q
\ ;
Macoupin County Y Taylor Springs SWk, SWlc, Sec. 25, 34.5 kv T8N, R4W, 3rd P.M., Montgomery County Witt SWk, SWk, Sec. 10, 34.5 kv T8N, R2W, 3rd P.M., Montgomery Co nty Womac' NWlc, NEk, Sec. 32, 34.5 kv T10N, R6W, 3rd P.M., Macoupin County Harvel NEk, NEk, Sec. 2, 34.5 kv T10N, R4W, 3rd P.M., Montgomery County Honey Bend h% , SWk, Sec. 4, 34.5 kv T9N, R5W, 3rd P.M., Montgomery County Lomax SEk, Sec. 6 T8N, 69 kv R5W, 4th P.M., Henderson County ['N Knoxville h%, Sec. 29, T11N. 69 kv (' ~ ~ ' ) R2E, 3rd P.M., Knox County
. . e: .;; -; . ,.c. -
' i -
WIPC0 Exhibit 'C Page 2 of 2 Existing Supply Delivery Points Locatio n Voltage
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Building 262-268 N 12 kv East St. Carlinville, l WIPCO Mdqtrs SE!:, NF):, Sec. M 12 kv Building T15N, R10W, 3rd P.M., Morgan County 1 1 Anticipated Future Supply Delivery Points Location Voltace ( l l l V C00PR3-W/C
EXHIBIT IP-5 Page 1 of 10 l l
'SHORT TERM EMERGY TRANSMISSION A'GREEMENT 4
- i-
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_t. , ,. _..,. , THIS AGREEMENT was made on the day of , 19__ between the Illinois Power Company (hereinafter called the " Company") and the electric utility systems of the municipalities of Breese, Carlyle, Farmer City, Freeburg, Highland, Mascoutah, Princeton, Peru, and UTterloo, Illinois (hereinafter each called a " Municipal Utility" and collectively called " Municipal Utilities."). W I T N E S.S E T H: (,,') WHEREAS, each of the Municipal Utilities owns and operates Ns certain electric generating facilities; and WHEREAS, the Municipal Utilities desire to transmit energy to and from any other utility with an interconnection agreement with the Company; and WHEREAS, the Municipal Utilities are interconnected with the Company's facilities; and WHEREAS, the Company is willing to provide short term energy transmission service between the Municipal Utilities and any utility l with an interconnection agreement with the Company (hereinafter called
" Utility") under the terms and conditions contained herein.
l l MOW, THEREFORE, for and in consideration of the mutual promises l hereinafter contained, the Municipal Utilities and the Company agree 7 xj ) as follows:
9
- EXHIBIT IP-5
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. . ; .. , 'R- .
The purpose of this A'greement is to' provide'for t'he"trans-
. ~
(./
~
1. t . mission by the company of electric energy between the Municipal l
<' q f .:Util,iti,es, a.nd* ,with any' c.othen;gutility; whichqhas
,. .s
. ~.
an : interconnect;ionfy,.
' agreementIith the: CdmpAny"on T shbrt term b' asis'un'er d the terms and' conditions set forth herein.
- 2. This Agreement shall become effective as of the date executed subject to any necessary regulatory approval and shall continue in force for a term of five years. The Agreement shall continue j thereafter from year to year unless cancelled by either party at the expiration of the primary or extended term upon not less than two years prior written notice.
- 3. The Municipal Utility desiring to supply short term energy 1
(9 service shall notify the Company 24 hours in advance, or less if V agreed to by Company's dispatchers, of the time of commencement of short term energy service, specifying the quant'ity and planned duration of short term energy requested to be transmitted. The Municipal Utility supplying such service shall notify the Company of the time of actual commencement and termination of short term energy service. In each case, the notice may be initially given by telephone to the Company's designated dispatcher but shall be subsequently confirmed in writing. The Company shall bill the receiving Municipal Utility in accordance with notifications received from the supplying Municipal Utility, subject only to verification by the Company.of actual oper-ating conditions, and the receiving Utility shall', in all cases, be bound by notices sent to the Company by the supplying Municipal G Utility. In. cases where the receiving utility is not a party to this Agreement, the supplying Municipal Utility shall be billed by the Company. i
EXHISIT IP-5
, , , , ,, .s es . .. a
. . . .4 .s pa~ ige 3 ?o'f'10'
,..' ~. .,, 'v. . .r, .'. w . .- .i Ariy' s..cheduled 'trariisfersef shoi-t t'erm ' energy' shall' 'not af fec't in' any manner the computation of billings to Municipal Utilities for
- . .AerviCe.s .; rendered Jo athegt, by,.jthe, Company,,under,other;agreeme,nts.~
. . r.yc; For' any' ~ energy tran'sa'ction' tNa't occurs which' involves ' a 4.
utility not a party to this agreement, the Municipal Utility shall notify the Company at least 24 hours in advance, or less if agreed to by Company's dispatchers, of the time of commencement of short term energy service. In each case, the notice may be initially given by telephone to the Company's designated dispatcher but shall be subsequently confirmed in writing.
- 5. The Municipal Utility receiving short term energy trans-mission service shall compensate the Company in accordance with the following schedule:
[] V (a) $100 for each billing period in which Company's transmission facilities are used, plus (b) 0.4c for each kwh scheduled to be delivered by the supplying Municipal Utility under the provisions of this Agreement, except as provided in Paragraph 6.
- 6. The Municipal Utility which notified the Company that it was supplying short term energy to be transmitted hereunder shall, in fact, generate such electric energy during the specified hours at the specified level described in the notices provided to the Company.
If the supplying Municipal Utility fails to generate during l the specified hours at the specified level, the receiving Municipal
- Utility shall either arrange for another source of generation to 1
supply short term-energy to be transmitted hereunder or pay for any (,< l energy supplied by the Corapany in accordance with the " Wholesale l
- Electric Service Agreement."
l l
EXHIBIT IP-5
.. . n P.cga. 4 of.10...
- - - , . e. ..,,,, ..., <,.
.. f. ,
V 7. . Insofar as it is practical, . the : supplying and receiying. . Municipal Utilities shall operate.their sys.tems so as to generate and absorb substantially all of.the reactive kilovoltamperes. (kilovars)
- a. -
. .:. : *- K . ,; ~ . <... . .
Lp.:.; .r:?:. . c. , .. ? W;ln; i . s . : h V , > . . , . ; , n::.d.{._
~ requ.ied r ,
by' theirMwn ?sys, tems .: a'nd to'm'ainta : satisfac. tory fv,oltage , levels. The purpose of this provision is to permit sufficient latitude to the dispatchers when dispatching kilovars to obtain the most satisfactory joint system operation without working any undue hardship on any party by reason of the generation or absorption of a disproportionate amount of kilovars.
- 8. Nothing contained herein shall be construed as affecting in any way the right of either party under this agreement to unilaterally make application to the Federal Energy Regulatory Commission or any successor agency for a change in rates, terms or conditions under O-' Section 205, or any similar provision, of the Federal Power Act and pursuant to the Commission's Rules and Regulations promulgated thereunder or under any other applicable federal law or commission.
- 9. Company shall have the right to refuse to schedule transmission service, to reduce scheduled transmission service, or to terminate any transmission between Municipal Utilities at any time the Company determines, in keeping with good utility practice, that such transmission overloads its facilities, jeopardizes service to its firm customers, or interferes with any firm or emergency transmission obligation of the Company. Ilowever, the Company will make a special effort to provide transmission service during emergency conditions on one or more of the Municipal Utilities systems. In the event any curtailment or termination of transmission service is necessary, the
/m Company will initially notify by telephone and provide a written explanation to Municipal Utilities of any curtailed or terminated transmission service.
EXHIBIT IP-5 4
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. , . . ... .Page ;5 c of.#10.m.
~
,J 1.. .j<:
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\, . . .. cl'0 .. The?. company : undertakes..no -obliga. tion. to . construct .or modify >
any of.its facilities to facilitate service pursuant to this Agree-ment. I* the Munici .- ' ' :i,'. . e% .7 ] .., ..f:;,:..jQ,;..;,.y.;. y.>.p
.. C. M . pal y y %.Utilities g e p y desire additional
- C '. :-t y:. ' A,y h . Q:f .acilities a ~. : :.g or%. :(:. p.
.upgradidg of exis'ing t facilities, the Company's costs of constructing such facilities will be borne by the Municipal Utilities.
- 11. Electric energy to be transmitted by the Company pursuant to this Agreement shall be delivered by the supplying utility at its boundary with the Company and shall be delivered at the boundary of the Company with the receiving utility. The Company shall have no obligation or responsibility for arrangements for transmission of any electric energy outside the boundaries of its system.
- 12. Service hereunder shall be subject to verification on the basis of meter readings at both the interconnection point and on
supplying Municipal Utility's generation integrated over each clock-hour period, and meters shall be maintained and tested by the Company in accordance with good utility operating practice. Existing metering equipment shall be used so far as practicable, and any new or addi-tional metering equipment shall be owned by the Company and leased to the Municipal Utility. For accounting purposes, segregation shall be made of electricity delivered hereunder from other scheduled trans-actions between the Company and any of the Municipal Utilities under other agreenents.
- 13. Bills for short term energy transmission service shall be rendered monthly to the Municipal Utility which receives the short i
term energy service, except in cases where the receiving utility is (~N not a Municipal Utility wherein the bill will be rendered to the (~) supplying Municipal Utility. Bills will be rendered in appropriate detail and may be rendered on an estimated basis. Each such bill shall be adjusted for curtailed service or for any errors in
l i EXHIBIT IP-5 l
" y-e: - -
. . . .P.4gn;6 of.10
. .e arithmetic,; computation l; estimating, or otherwise. All payments.shown-
~
to be due on.each such bill, subject to subsequent adjustment a , heretofore.provided shall be due and pay'able not later than fifteen v ;.- -
-:' pJ.':'T.;Fy.:'d%; , ; [-2rs .,.:y!;i:y ; ,,. .yny;x '.~ g9.y. :.q .aVC,: 'h in . .1~' % .s.:;:gl. d;~:,.
(15) days.after.such bill.is' rendered. .
- 14. The Company shall add to all charges under this Agreement the amount of any tax or charge of any kind levied, assessed or
- charged by any municipal, state or federal government or authority becoming effective after June 15, 1981 measured by but not included in the purchase price paid or revenues received by Company on account of the service rendered under this Agreement.
- 15. The Company shall not be liable in tort or contract to any of the Municipal Utilities for any damages, direct or consequential,
, resulting from any failure to provide service hereunder at any time
'-- for all or any part of the electric power generated by any Municipal Utility, or from any interruption, change or deficiency in quantity or quality of service caused by any such failure, unless such failure is the result of willful default by the Company; provided that in the event of any such failure, the Company shall use diligence to remove the cause of disability and to resume such transmission as promptly as practicable.
Municipal Utility shall not be liable for and Company shall save harmless against any and all claims, damages, liability or expense, resulting from or occasioned by the presence, use or maintenance of any electrical conductor or other type of equipment owned or main-tained by Company or Municipal Utility or by the escape of electric
-"s energy in or from any such conductor or equipment, provided that such claims, damages, liability or expense shall be caused by Company's negligence or misconduct. Company shall not be liable for and i
DWIBIT IP-5
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.. . w.P?937LO.E 1.0-1 .
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_ ,- Muni.cipa.l . Utility .shall save; Company harm 1,ess. against.. any..and all .- claims, damages, liability.or expense resulting from or occasioned by the presence, use of maintenance of any electrical conductor or other
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- P.i , owhe
. r . :.:z'd or.' maintained by . Company or Municipal. Utilitt, jype_of' equipment or by the escape of electric energy in or from any such conductor or equipment, provided that such claims, damages, liability or expense shall be caused by Municipal Utility's negligence or misconduct.
Negligence or misconduct, as used herein, shall include, but not be limited to, failure to comply with all Illinois Commerce Commission General Orders applicable to the f'rnishing u of electric service by electric utilities, all regulations of the United States occupational Safety and Health Administration and the Structural Work Act of the State of Illinois, or failure to meet any standard of care derived 7s t
\/
)
from any of such orders, regulations or statute.
- 16. This Agreement and all rights, obligations, and performance of the parties hereunder, are subject to all applicable state and federal laws and to all duly promulgated orders and other duly auth-orized actions of any state or federal authority having Jurisdiction.
- 17. This Agreement shall be binding upon and shall inure to the benefit of, and may be performed by, the succestors and assigns of the parties, except that no assignment, pledge or other transfer of this Agreement by any party shall operate to release the assignor, pledgor, or transferor from any of its obligations under this Agreement unless consent to the release is given in writing by the other party, or, if the other party has heretofore assigned, by such other party's assignee, pledgee or transferee, or unless such transfer is incident
/s to a merger or consolidation with, or transfer of all or substantially all of the assets of the transferor to, another person or. business
EXHIBIT IP-5 "
. i .- , ,. - .
. n
' e'n tity 'which 'slial'1, as a parti' of such ~ succession, assume all t'he l
obligations of the transferor under"this dgreement.
..._, .0.. ,, s.r,(IN; WIT,liESS. WHEREOy,:l ,tte .., Company.h.0a,cti;ng-:_byz its... duly :,Auth.orize?:,.;
' officer, and the Municip'al' Utilities, each' acting'herein by i~ts d'uly ~
authorized officials, have caused their respective names to be signed hereto and to duplicate Agreements of like tenor and date. ILLIt!OIS POWER COMPA!!Y BY ATTEST: Secretary (. ) CITY OF BREESE BY ATTEST: City Clerk CITY OF CARLYLE BY ATTEST: City Clerk CITY OF FARMER CITY BY
,,') ATTEST:
'm) i I
l l City Clerk
EXHIBIT IP-5 s . ;. - Pa'ge 9 o f .'10 ' - : '
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' CITY OF FREEBURG -
BY
, . .'.,. f'5. j .4 .t;rks
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City Clerk CITY OF HIGHLAND BY ATTEST: City Clerk CITY OF MASCOUTAH BY ATTEST: City Clerk CITY OF PRINCETON BY ATTEST: City Clerk CITY OF PERU BY ATTEST: City Clerk i l
, EXHIBIT IP-5 4 . ., . , . - ,
,_ Page,10.of.20 >..
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t (, CITY'OF WATERLOO- , BY ATTEST: **
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, , ':i;. .:q .: *f-{ ;n d { :k ;: . a ; c,_. . y _. ;
l City Clerk , I l 1 PR2 I i I 1
EXHIBIT.IP-6
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.page.1 og. 9 +-
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, . ELECTRIC TRANSPORTATION SERVICE. AGREEMENT 1
s Agreement Dated' ,
' 19__
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Between .c. 'Illindi5. q;; '.s.::l;d9.Q;.;::;.*. Power Company;.an .% ~ .. .:51rinols corpora'tlfon +- , , herein called " Utility" an'd
, herein called
" Customer".
Customer owns and operates an electric distribution facility and provides electric public utility service to customers located in and about the Customer desires to contract for clectric transportation l service, and Utility desires and is willing and able to provide Customer with electric transportation service on the terms and conditions hereinafter set forth. In consideration of the mutual agreements herein contained, the parties agree as follows:
- 1. Utility agrees to provide such electric transportation O service and Customer agrees to accept and pay for service rendered hereunder, all in accordance with the rates, charges, terms and conditions set forth in Utility's Transportation Service Schedule, a copy of which is attached hereto and made a part hereof, which shall be on file with the Federal Energy Regulatory Commission as part of Utility's schedule of rates for electric service.
- 2. Customer requires and Utility agrees t'o provide transportation capacity during the primary term (First Five
~
; Years) according to the.following five year schedule, beginning with the commencement of this agreement under 1
Article 10. This capacity will be the primary term
" transportation capacity" governed by the provisions of Sections 7a and 7b of the Electric Transportation Service Schedule.
l l Transportation Capacity I 1st year kva 2nd year kva 3rd year kva 4th year kva 5th year kva Transportation demand and energy will be delivered by () 3. Utility to Customer at- kv. ~ l r 4 - .
, .,.,y wn - . . , , . . - - %
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' . ',. . . EXHIBIT-IF-6.s . '
- Page 2.of.9
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- 4. .The Cus.tomer's point (s). of. delivery at.which electric h transportation demand and energy Gill be accepted'shall be:
, , . .- .c o . .:. '. . a. k ; . ... y p : .. ' .,. p: .;. :<; ..g .. W <.;.;:*: . . ; ?
T'h. e point (s') ' at which customer.'s. electric transportati.' ?1.<'.Q' '.'. .*r.Q. 2 5.: on.
' demand'and energv shall be meashred (metering point'(s))
~
shall be:
- 6. Transportation demand and energy shall be delivered to Customer subject to the following metering, recording, telemetering and control requirements:
- 7. The following additional or modified facilities and equipment, for which Utility shall be reimbursed, shall be required:
O
- 8. The following additional or modified facilities shall be installed, owned and maintained by the Customer:
- 9. Transportation demand and energy will be delivered to Utility from supplier (s) in accordance with the Customer's contract (s) with that supplier (s) as shown in Exhibit A.
- 10. This agreement shall be for a primary term of five (5) years beginning on and shall continue thereafter from year to year unless cancelled by either party at the expiration of the primary or extended term upon not less than two years prior written notice,
- 11. This agreement shall not prejudice any future agreement for-transportation service.
- 12. All provisions of this agreement which are obligatory upon or shall be to the benefit of Utility shall be to the benefit of all successors or assigns.of Utility.
- 13. All provisions of this agreement which are obligatory upon
\ or shall be to the benefit of Customer shall be to the benefit of all successors or assigns of Customer.
_ . . _ . _ _ . . - _ .. _ . _ . _ . _ _ . _ . . _ . _ _ . _ ,_ .__ _ _. _ .__._____m . . _ _ . . . _ _ _ _ 4
. . - . EXHIBIT IP-6 'l Page 3 o.f 9':.
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f j ILLINOIS POWER,CO!!PANY. ,
. (Customer) , .
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!, Date Date i l Attest: Attest: i J 1 k j As to Illinois Power Company As to i (Secretary) 4 1 l JACS : 4 I i l 3
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Exhibit A - - - e . ELECTRIC TRANSPORTATION SERVICE AGREEMENT ' 2 . ?.,'t .;v.O;.,;..l':;;.',i.i s? ': ?.Iab u..M a*. i.'?i-b O'.Q.: k.k y ..r o? * .% d to3;O' W'
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,1 . Supplier No. 1: Name l Location and Description of Delivery Point to Utility 4 1 4 j 4 Supplier No. 2: , l' Name t t
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! Location and Description of Delivery Point to. Utility i I 4 Supplier No. 3: Name , Location an'd Description'of Delivery Point to Utility - n 1 i I
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Exhibit IP-6
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ILLINOIS POWER COMPdNY
. WHOLESALE ELECTRIC SERVICE SCHEDULE
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- 1. Availability .
Service under this rate schedule in avaltal,1c anhjerr to the sullowing conditions: (a) Custoecr is engaged in the distribution and eate af electatrity to the general pub!!c. (b) Customer's f aellMtes will be intereennectent with Illincts .**wer r..mpany's (tiereaf ter called "I't tttty") factitties. (c) any party destring eteetrts, ersnaportation servire f rom Ittility shall cabe writtrn 4ppiteatisen therefer and clea t t furnf ah such lef ormat tan with reapect t o t he s equea t ed se rvice as l'e t i t t y nav reasonably require. (d) casroner .leures to t ranmort dem.in4t and encerv fr..a a surple smrie crher than I t:11tv. thtt will he laterromicc t e d wit h I't i f f s v 'n t ran nt r.a ins s ae 18 t r i. e. .ind (e) prior to et.e .ommencement of orwlce, customer uh tlI enter inta a wrteten agreement with t'e tilts for a prim.ary tere of five (3) ve.ac .
- 7. r..ast i t t ons o f service t.s ) Cugtomer requirew and l't ill t ) ..grece to iuppiv 4 mastenn aru.unt ut trinsport.etten capacity n eerding to a tranet.ortat tna capacity =chedule agreret t.. hetween 1;t titty and tustomer. 1hte r ipar t t y wtit fee the primary term "t ranspwrt.it ion rapselty" uecd hrs e in. At the emptrat tswa ..f the primarv tete. t attoner will aper tly .e new t rantportat ton capse t ty lor e t. h ouhaceperwt two year period. to the absevice et e sch spectiteat tan. the transport.it son capacity pe ref ted led the preytutig 9 ear shall rarry over to become the traw pertest ica capacit y f or the subsrquent year.
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(b) Servit e I tremider will he provided to cuatomer f rnes t hree-phaec elect ric lines h.svtna nosta.it standard voir.,g.* of 1. .*M . 12.176 l. 500. 69.000 or 119.t'fn voltdi and havina capacity Sullicle:nt to handle the I.as et nme r
- h t rw por t it tee rew. r rt* qui re ment J. tit t llt y ret .a t n.e discret tan tu select the aupply iter or l i ne.e t r.vi wht rh service will tie sendered to t u tnacr. l'slitty also ret atne discrvt ton to thange such supply line ur 16 nee anJ tre shange the volt ate of t he supply lines. %hould any rh.anite 1:1 service rennect inn become neeer. mary liv teason of ch.inrra tu .ervise condit tone er f actittlee initiated by l't t t t ty. the shauses in coat
- of provlJtnp. nt rvice under the new cenditions shall be borne by rtility, ir all other rases. ener9 of chanaen an acrvice tonnet s ton. *h.a t t he borne by Custoner.
i (c) tit t li ty = hall have the rieht to reduce or terminate tr.sasportat ton service at any time Uttitty deteratheel. tn herpln( with .anmd oper.stjng pr.ert Ice, that emergeeft condittens estet aad much curtaalment, rednet ton er trretn.at tan shall be la accordance utth the Federal rnurgy terulatory L..mmin= ton requirements. (d) Customer shall be temponithlr for contracting witle partv(s). here af ter Called "*sppiter". that will deliver transportation power t o t tility'4 t rinnalts ten avstem. I'tility shall lie responsible for enordinating joint ayatra wpe ration with the supply wurce to insiste the integrity of the inter-conn 6c t ed syst er. (e) Customer shall f.e tempan= thte for the cost of f acilflies. 4tetermined hv Utility, as necessary ta ret 1 tit tatercoenested eperations htth Utility. L'tility may require an automat te Circuit breaker at supply acurrets) interconnectinn t. prntect l'a ttity's system from a 1 sult on supplier's svsten and ta isolate the m ppi ter's generat ten dur ina a f ault na Ci ti ttv'n system. rustomer shall arrante and pay for the installattom et a circuit bre eher mat t=f actorv to l'Illity. L't tt ttv ahill ennt ral, eterate, and malet aln at Cosett*ter's espe n e ,atCh Ctreult breabee to ashure #atisf1ctory aperattnfe with its eIectrtC syttrn, if) l'ttttt% undt etaka s no ubligat ion to ennst ruc t or modify .me of tr u t acit tt ttt to prowtJa,servtCe pu r ses.an t t o t hi s Ag reesien t . If tl.a t ransente it twn service requires aJJtt tonal tactittles or an upgrading GI est9ttnt laClIttlet. 1.thllty's sn9te ni construCtlnt or upgrading such f aCillt tts will be borpe hv the (ustemet. (A) t uotamer shalt .irranse li.e snapplict to provtd .ses.1 maintain three+ phase voltage interconneCtton(s) where power f pr tIanapart at 6..se in deltvered in l't i!ity's system. Desita and construction of Supplier's f acillt tre shall he mihte. t te. Lttlity's appr.* val. L'u temer will hear the cents of thsee f actittles. (h) t, tert r ee power t rwap irted b i t t t tt y shall be Jelivere.I t.* t't illtv at acepply source (s) tute rriewe t f or(s) and a. hall hu rseelved by Cteotomer at (in dettgaated putnt(s) of delivery.
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EXHIBIT IP-6 Pays 6 of 9
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. l ILLINOIS POWER COMPANY WHOLE. SALE. ELECTRIC. SERVIC. E S.CHEDULE .
ELEf:Til!C TitAMpollTAf tOf8 5t'RVICE SCMDilLE
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- 2. Cendit tene af tervice (centinweg *, , ,1 (6) lit t lit y shall h.sve n.* nht tatat iva at temponethlltiv int transrartst ion of electric pcwer other than through the above stated e.otats at deliverv.
(j) tervice hereunder inhall be eiubiert en verle ir st aan on the heele nr rieter readtnce at Castruer's delivery point (s) Integrated ove r c-scIn e l Wh.ur period. Petere whall be maletained and tested by t*t tlity in attardance with l'tility's oper.at tur, pr.ortire. l'a t>t t eit meterina equipment shall te used in ao f ar ao practicable. no any eiew ne ad.itttonal meterina egulpnent shall be owned hv t'ttltty and leased to the rustemer. theromer shall makr non-ref und.ihle tant ribution to 1*t slity f or the selv.ible and non-saiv.ihte cost of 199 new 97 4J t t toeial =ce rtine; equipe.eet plus a enntilly ria tu t enance fee for the mete r su tons ag weti e hargre are n.it recvicaelv provtJtd f or in ancther estat tnet astreement hetween Et t t t r+ end s ustor c r.
- 6) teiltte and s%4 t ..ee r n.. . ..rtasse .s t re r.. h .v. u t rict e r ;re e t t t it ses t ar vn stor tne in-t ent.eneous demanda and operating t e. r.neti.n tion witt. t.tItitv'- t o .4 11-pat c h s'emte r t er t h.? purpo <e ca entitt ar t re and t ent ent af *vstra t o us , tallity hell own. tost..li .and m elot.ein such te f a cet er tue t ac t!!t ere mutually .igreed to hv i t il t e n and a.unt ne.cr. f ustomer .h. ell be tr ponenble f or the coat of inst.e t talion, ope rat ion and wa snten.nece of *asi h f a. I t t t le.e.
If friernstettur. facilttt+= hase not been mutualtv arrved upon. al.e e unto+ct shall whnit to L'tility'* t o.ed I'l pat s h s ent er on t r td ev et c as h w. . k . ne e. t i m.e t e- of tu total Puener at tit 9 watts of ifra.ind l i s t ed on an heu r l y lue. 6 % . t .. he t r on-ma t t e d ovr e t h I t t i l t v ' . L t.aewmt s s ion avst em t e a cas h d ay *.f the f ollowing t alend er we e k. A rre nne li t.et ime ptorraure so .ercount for the devt.ation. if any, bttween the eet tm.it rJ demasale requi red and t he .ac t ual Ji m ends leecurred sh. ell l** Included as part at the operating agreement required in Sretion 1(c) of thna rate .rhedule. I (1) I.he rer Luernme r la Frepeussible fier rost e sol tartletire frqtst red h I t illt v. Luntteer shall fRJhe
% arrangement s with l't llitt for tot.at wate in .eas. int e of .any root st ruc t ion.
Im) If 4.usfo*er is a e.uot.IP.* lty, civ r ewe f g , p.. l s ,wirre or n"palpmeent 3. laced hv l'tiltty .ut the %treets. 19enurn, all.vu -end pid l l, plaers in the etry los purpose = cl 6artvleg out this agreceent shtt! Le yaeiert f ram any were t.e l 4.s e h r usmen t e . I t. swese or rent.nl f ra t o e t illt v. (n) Stffracnf.etties "I t.t l l i t y sh.t t l be pe rmi t t e d ..(e egg t o t he p e rmi ss , of fie s t eme r to ca r ry nu t t he provisions et this r .at e u h dia lv . E t tllt s .enJ i nseto*er . hall satte have Jscrpe ta the factintseg af the other at a 84ut et.t I I v ef reed et+H time f ar (l.a purpose of temoving( fisettttics hiere such removat IR petaltted or trilu t rr.1 un.lcr t his F-s t e swhrdee l e. , (a) tustomer agrves to H=e ta a%ou sale rire to des te n .snJ maint.if e it s cirwutts so that totJs of the individual pham n on sta line, at the raint of delivery will he h.. lanced en nearly am praetteable. (p) Customer and t' tills, arrie to paintain an.I eevr ete their =vetene in accordaner with mound uttttty practaten. *a as t o at r ies t r e t he I t ke l t hood el a Jtsetarbance in either system which miitht cause impatrment et service ts* the other partv's avstem. (q) Customer shall provide nupptser(el resumeta) .a= required in Eshthtt A contatned herein. 1 Pate= and (harten (a) rugromer shall pas l't t t tts mo nthlv for a lect ree t r3n.pertation <ervice rendered at the charneg due and payable in is sordancr with the folloising schedules Demand t'h.irse Deliverv Valtifa at tes*tomer %#t hl y a h tree- per Fva of rans po rt.et ten Casac i t y 7.;on and 12.470 vntts 53.50 34.wo cd M.000 volt e $1.50 114.000 volt s $0.85 i i fa I i
EXHIBIT IP-6 .
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~ ILLINOIS POWER COMPANY
. ,,s WHOLESALE ELECTRIC SERVICE SCHEDULE- ,
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- 3. Bate, and Charges fenettnued)
(b) th her Charges titility shall attd ta jl rh.argen under thtw rate erhedisle the amannt ot any tas or charge of Any kind levied. aumem ed, or charped by .inv muutelpal. sf.ete or trderal r,averrment. or .tuthority mesnured ty l' but not included in the purchase price paid or revenues res elved by L'tility on account of the service rendereal under the sate *chedule. Any applia.st f an of thf . clause will constitute a chanite in rates
; which will require timely lilins under Sect t..n Ihll af the Itegulations of the Federal Tnergy 1
7egularary Commisaton.
- 4. "ater ve d tef wa atItIng (at l'r t il t v .tu t t r e ed m. t er , md e.o..lc s blit. mothlv, hlI t . s t !! Le r. n lcred e<lne t he rates .anJ rharren payment t an t a l ncil i n N.s t l an .I a. vifert at the time. a n. lu.Il ar, e t t.*r t h irges in tha n e ,a rc <rf+du te.
- i. halt 1,c duo thirty .tayn i rom the date +$f rrmlee ps t he ha ll. (crounts not paid in tis!! within 30 dave will by uhlect r e, o, addettonal ch.rge of I l//* %nthly on uppAtel balance.
th) lit 3In will be ren.lered tot .speropriate detett amt. when n-rewmary , m.sv he rendere.1 on an estimated haeln. A 1111, hall t*c a.Ilusted f or s urr.st led rrvt cr nr for en, et rarg in arithmetic, computation. cettmatine. .- otherwisc. (t) for .sununa inn and hillied p.rpones. t ran.por t.it ion a. rvice demand .end encrev delivered hereunder shall he scarrgated f rom power delivere,i f rom oths r ge lic.helce under other v.rcement s between the lit tltty. Customer and *nppiter b.). when latilty delivert demand and energy to ruttomer. <tensitanennsly and through a comr on metering potat. under the Elev t e tc f e mspertation service Ar,rsement and under other ag reesu nts w alls the Cu .remer, etert rit tr.esu. port.et ton service demand anJ cnergy what t be .ietermined to
% he the ciarrent monthly t ransportation capacity .e provided f or in Section 1(a). Demand anJ energy
\ delivered tinder the ether ageerment s will I c the total drmand and energy me.asured less the transpor.
s tation crv re dunand and energy. (d) I f Cu st ome r t.a s f a t ted to pay iny hill accruing under this rate erhedule within thirty days af ter date of hi ti tuit, l't alit y may dt4r.intinue tranyportation i.ervi;c provided at least ttiteen dayg prior written notice has been stiven tn Cu*tocer. ttality will not be liable in any manner for any loss or damage
.stigtng f rom such discont inuance of transpor tation sicevite. .
% Metering, featint ud Milline tip<t ment s (a) L'tility shall own end matarain the metern and relateJ mervring equipment ceces..ery to mea sure the demand and energy de t !vered to t'ustomer by Lttlity at tis paint (n) wt dettverv. "etering equipment gene rally shall he located on the blitle welf are stile ut t ransf orma t Ve its the rvent transformattan ehall be requirad 1.y restemer. l'ttllty it itg dt scret ten may elect to .nstall such metering equipment on the low valt we nide of t ransf ormae l'esi (whether or not for the cone.intence of Cuetumeri and in such case both the temand auJ vnergy consumption will be increased to Oc e pensate (;t tlity for transformer tosses
- a. meauered hv enapensated metering equipacut, or la the absence of unch measurceent. hv temputing such tunges haard on the manuf asturer'es d. ta pertalising to the speelfic transf ormers installed.
41 ) titillts may s eguire meter ten on suppiter's re nerat ion, t uetomer shall be responsable for the cost af the meter and rel.ated sorterleg equipment. t!ttlity shaII ewn APd SJantain (btbe metertPg f aCilities. (c) l't t !!f r sh if t tre.t and s at ebrate the ref ere hv rempareson with iccurate staedard9 at Jpprestmately twelve numt h i nt e rv.i t s. 6f) l'ttlity shall make spec t.al en ter test. at the reqirest of Customer. I f .8 special test made at Cu*temer's r e ques t shall dincinse that meters zere restatretng within 2 percent of IM percent accuracy. e.ue t ome r ha l l bea r t he cupens , of t he te=t t et tn:rwisc. the cost of much test sh. ell t'e horne hv L't s li ty , l'tility .hal t glW t unt ener three lav.e advance nottcc af its intentten in tett and calibrate met t* whe-n requented in we lt tra by Customer and Lumtemer shall be permitte-d to witmens any meter test s made by L'tttttv. te) P*eterm found by test to be ret t stering inaccur;stely shall be testored to a fondition of accuracy, if the Omarrur:ery cuceede J percent, the arter tradings taken during the perted of #fi day
- preceding (or
.tuting mw h aborter period w may leave intervened since the previnue test) shall t* s s orrected by the pertentsar of inaccurat e tound hv t he test and p..yment adju<t*d accordingly. %6 prior readiens util be retrected.
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EXHIBIT IP-6 Paqs e o$ 9
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ILLINOIS POWER COMPANY WHOLESALE ELECTRIC SERVICE SCHEDULE
. EIELTRIC TRAltFpORTAf tHIl M.3VICC SCIIFftUt.E - PACE 4 .-
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(a) If 11tility must curtall load due to an uncont rnilable event on itu system. Electric Transpartstion Service shall have the same priority af service a= other firs load. (h) The obligation of Utiller en transport dimand an.1 energy ta the Coistomer shall be limited to times dursng whit.h demand and enerr.v I .e actually erselved from the gupplier(s) by Utility for delivery to ttie Customer. (r) %=rvice undes t his schedu to may be ithrontfrued on attordance with the terms and provisions set forth herein, Urwever, l'r ti tty shAll not be 1(able f .9 ) heittty shsil provide a.1cquate .end re t tal.tr -e rv ira- to tustoevr. s n . dequ n w e r e v sa , u
- or Am.we s o prcperty, or injury (tneludinc v emt il t .m. -trikwa ar.d ot her labor t roupirn or tn r ut ene r f o r .or er rupt t.m o, Isarb) r .. o. , pe r y n . ,n. ca kv vt of a ud , pub i te .nemv. or other itovernmental regulation. windstorm. r!ood.
t he s e ..iu s v i t. nt . !real pro,c .. g r ai r , r.un t c l p.. I or tire or cinto ion. or other natter of thing besond L a t t t s's cont rol. whether t he name shall a f f ect occur in coun. st ion wi t h t he operat ion
- of prop try at rust omer, l't if tty or any other person.
fe) If t f il t v sh.s i l not t.e responsti.te in Jamage for any f ailuie to supply electricity or for interruptions or riversal of el.c *nrolv. 6 f ,ies ti f .e l l u r e . anterrupt f an, ar revers.it is without w(!!ful default or gro** ea r l t rym r on It% past. ror for interrispel.uts, hv un.terfrequoney relays or otherwise. En preserve the int t rei t y at railltv'i *vu om or intere onner t ed sy st.*m s (f) re If sty may mee rrupt +vrvire en make necennarv repairs or to make chances in equipment or to inctall new equipment,t.ut only for '.Weh reason.able times as may he unavoidable. !! the nature of the #1tua*
- ton permito, rc.tsanable adv.ince not tre of these interruptions shat! be given by Utility.
(g) rustomer -h it not be liable for arid I'tility whall nave Customer harmless against any and all claims. lam.e den . Itatuttty es expenn . resulting f rom or ucsantoned by the presence, use or maintenance of any the y clec t rical t.-i .Inc tor er othrr type of equipment ownsed wr maintained by I'tility or Custoner or hv ncape os elsstri secrr,y in or f rom any such enoductor or equtpownt. provided that such claim <. d mages. I t.+ 116 t v of esps eisc shall be cauanid by Ut ility's negligence or misconduct. 1(!!ity shall not Liability be liabis f or and Cust omer sh. ell have l't tlit y haemlens against any and all claims, damages. or esecame resulting f rom or ars.a.stuned by the premener. use or maintenance of any electrical conductor or other type of equipment owned or m.stntained hv rt t!!t y or Customer, or by the escape of electric energy in or f rom any such conductor nr rquipacist, provided that auch claims, dJasites, liability or espenov % hall be cau*cd by Cuaterict's negligence or statenduct. Negilitence or alsconduct. As used herein. .h.*ll 6nclude hut not b6 limited in failure to comply witti filinois formerce Commission Central alrder to. Ifio applicahle to the turnishing of electric service by t tility or Customer, all regulations of the t'na t ed States % upat ional Saf ety and llwalth Administrattan .ind the Structural Work Act of the State of tiltriots. or f.ellure to meet .any standard of care derived f rom any of such orders. regulations or meatute.
- 7. AJj t t lonal ron.lf t tone md t revigians fa) Tr.ennportartor rapacity is ti.e mavinum asemnt of pamer that is to be contracted Inr an acenrdance with the tiert ric *ransportation Service Ap.reement. In the event supplier (s) deliver Jemend and energy to be l'tility in ence*n et the Trangrettation Caratity, the Transportattam Capacity shall automatically incrramed. without notice or other action, to the amount of mastmum demand and energy reas*ered during any c loc k -hou r pe r tud.
(b) L ustomer nav r eluce a:w$tomer'4 trinnpurtat ten capacity upon prowtJing f:t tlity with twelve meaths' prior shall Cu stomer be permltted to reduce tustomer's transportation writesn nottre. Howevet. tu nJ event r capattty to i level below thir *pertfled under Section 2 of the fles.tric Trangportation Service
.n,rvement c or sectice 7( t) ot the Electric yranerortation service Schediile.
(c) t'tility ind Customer e-hall entet into an operating agterment which will include. but not be limited to. e<hedullne s ur t raitsportat. ton demand and energy tratisactions, nottitcatiott to partice to a tran=#ction, billleg lor demau.t and enerav t ransported and the reconciliat tun of any deviation between the this rate est Lriated deniand required ..n.t tite actual demand incurred provided in Section 2fk) of schedule. I
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- EXHIBIT. IP-6 Page.9 of 9
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WHOLESALE ELECTRIC SERVICE SCHEDULE El.Ei.TRIC TRAlt5PtMtTATitel $EstvicE PCllunit.E - Fact S
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. ' . f '- . .. , . , , , . . < * .,.,[.,(,'..,,,.c',' , }' , h *Mdttinnat Condition
- ned Prevletong (cantinuedh supplivr(s) to (d) Utitity will deliver an amount of energy I c.;m ti us that weit.h ta elelisered to l'e llity 2, ,
arenwne for Innses incurred on t'e llity'= se,.t re, the am.=ent ni encrav delivereit will be reduce <f liv the f a t t 3= t r.g f ac t .or t for nervice ce currinr I etween t'ustomer and fli t t it vt F ic t .'t 7.200 and I .470 volta .M 14.%0 and 69.Insit v.it t ie . f'4 l D4.00tl vol t .e .D1 h, t t i 16 e v .in.1 n..t ca..vttv4 dv i.ep t nu r f. s - b.,11 l e ;.r ov e le.1 in tr) 1.en.in.1 en.1 s i.. e in f us i. itler.i to s'i.~t. e u sor.l.ince wi s h pr. v f o tone of othrt .. rre e ni i t. ) w i t h I'a. e . ,c e . in tbc event t h.st f ir s t one r t .. He r t.sking -ste v le e innde r ner of et i t ie s 's who li .e li- agreveent . L't l i s t y -1 ell h t l1 s'arit ome r in acc ord.mcc witte tbv applisihte wlueles le ast reence t . (f) lorefar an It is. spract tsa l . t unt omer e l..e l l .te r.it o it< r st re no .in to s:enerat e .ind .ebsorb gubstan. flally all of thee reastavo power tillow.in s) e . .p.s r eet liv ti,-ivsten and en maintain *atsstactorv *nitare inc l u , The fwrpo. ** f them provt too 6 to perale .ut t i s e est fartrude in Ut tlity's dispitchern when
.it tpat rtilng kilovar= to rht. sin t he must sat 656utoe. twent *v t e's ope r a t tosi wi t hou t in rking any undue hardship ten .any party by reason el the gence lon or .ih orptt.*n ut a 41 proporttonate .imount of kilavern.
(g) Nothing contained herein shall he s onet tierd .i .if lect ing in .inv w.ev the right ut r6ther party under this rate schedule to untiatcrally in.ake .epplication to the Federal Energy prpul.itory fav.mington or .iny surichtur agency for a chaaro in rats *. t eram ar conditions under 'tection .'05, or an, sinti.or provt.
% s.lon, of the Fe der.a t P.nrer Art and pur>tient t. e l.e sorritesten's l'ujen and krgulat tnn* promisigat ed
) t hereinsder or under Juv ut her applic.thle feds t al law or rumml**lon. It is f urt f.cc provided. f.nwever.
(list in ti.e ah*ence et agrccesnt be f'u*t ome r .u. e t..nige ha ll he a ide in any term nr condittoc or servtre spet tiled in this 1. lie.tveale l ive t ric %-rvle r Sche lsale unt il t t han been finally appts,ved by the Foderal Envrav tiesial tory Commirnion or ont spe rcuor ar,ren # sender 5cctinn 106 of the l'ederal Pcwcr Act, i I JAC6 1 i [ i l l l I , .- , - - ._ ,__
EXHIBIT IP-7
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- .*.:NO:3 COMMERCE COMM:ssI0t,t
- .:.:Nors sewer =mNy , .
t 7:: posed general ncrease in . 30-0544 '
. 2; .
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;90-0269',.< . and . :, fo
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'On 1:s cwn sota:n 4
- =plementat::n of the Puhlic Util::y .
! Requiat::y Pal:c;es Ac- for the
- 11:ncis Power C:cpany, :
O _R 0__.I R By the Cems:ssi:n: Cn August 1. 1920, Illincis Power 0:mpany ("C: pany.
?.es;cndent" c *:llancis 7:wer") # 11ed tar:f' snetts *0 val:n :: ; :; sec general increases in its e.sct::: :stes effective Se;tence: 3. 1930.
Notice of the ;;:;osed general rate increase vas ;csted on a 0:nspicuous place in esca of Respondent's austness of'i:es ans ;ubilsned in newspacers af general circula ::n tar:ugacut Res;cndent's servics area ;ursuant : the re-qu;;ements of Section 36 of the Illinois Pusli: U:111 :es Act and the previs ns of General Order 157, Revised of the Ccmmission. An examinatten of the filed tariff sheets resulted in a " determinatten by the 00mmission that hearings shculd be held
- ncerning the prep :ety and reasonarleness af the pr:pesed general increases and snat. pending hear:ng and decisten taereon the filed tariff sheets snculd net become ef'ec-
- ve. Therefere, en August 20. 193C, the C:mm:ssion entered an 0 der suspending the effective face of the filed tariff sheets to and including January 5. 19dl. and on Oecence: 30,
, 1990. tho 00mmiss;:n resuspended tne effective date of tne filed tariff sheets to tnd : Luding July 5 1981. Petitions t Intarvene were 'alec en benalf of Central
- llancis Consumer Energy 0:encil (*0:0ZC**: Pral:1e Al-1:ance: :11:ncis Association o' C mmunity A :::n Agencies en benalf of Western Egyptian Econ:mic C;;crtunity Council.
30MW Osm= unity Service. I11:ncis " alley I: enc =:c Oevelopment C :;oratien, and Vers:1 on County Commun y Act n Agency; Oepartment of Oefense: Granite C;;y Steel :vasion of Na=
*:cnal Steel Corporatien. Clin Cor;cratzen. American Steel Found::es, a 0:vasion of Amsted Indust::es. J:nes &
- augnlin Steel Ocr;crsti:n. Ixcels :: Tsundry C =pany. "eneral Meters Car; :sti:n. Oeneral 7 :e and Rur:e C:mpany. Firest:ne Tire and Rutter 0 mpany, and Sorg-warne Chem : sis. 017:3100 Of 30:7 4arne: 02 ;0:stien t ' ndus:::al P:ver *.'sers* ); Pe:;1e Aga:ns :n' latten Nev: Ora:n and Feed Ass:clati:n Of Ill:-
ne:s: :llinois Pum;; "nteree: Researen
- u; (IP:RG*):
0 ;anising 0 ==10:ee f : Eastern Madisen : unty: Illan:13 Off::e of 0:nsumer Services t OC3'); Nata:nal 7:wn Meet;ng at Edwtedsvi.le: and 3:adley ?ar.s . w*. 21:ve Man:: 0:n- . terned *enants C qant:st;:n. 0:unzeling in: ::mp laints . *nc. ("Bradley Ps X*). In add::: n the # ll wing 3'ini: palities filed Pet -
- ns to Intervene or ecame f::na; :::erven::s by caus ng
- te f;1 atterneys: 7:wn
, :,. Norma ed...n.e
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.. n; e. trance
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( -All';ersens and ent :1es nereincefore listed were .. granted interventi:n by c:de: Of'this 0:nm:ssi n and ~211 owed full c;pc ::: ty to ; art : ; ate in these ;;cceedings. . Res;cndent :: ected the stervening Pe ::: n of CC3.and en Oecember 11, 1990 filed an A;;110ation'for Rehearing and Rec:nsidera:10n Of :he 0:mmissacn's Order granting the Petitica to :stervene of OCs, wnich. Appl;:staen was denied 4, .
% ..hy/ he C=amisalon en.0ecember.23, 1940.;* ' f. N. . '.<. - s f ,, .,,. , . *s,1. J , .,
Pursuant 2
. .ice t':"n'o: .,
.~ as ,refaired by ' law ' and by;
.. n .
. the rules-r
- -s e.~~,. .w .a.
and regulat ena of this 0:mmission, the initial heart q :n this cause was held bef::e a duly authori:ed Hearing Ex-a iner of the 0::: ssi:n at its offi:es in S; :qfteld.
*11:nois en Septe :e 13. 1980. Subsequent s :ne ana: al hearing date 33 hearings were held at the Offi:es of the 0:=m:ssa:n :n :ne days sacwn by the decket snee:s maintained by the Chief Clerk of this C:== ssion for pur;cses of this cause and as a par of the rece d in this case. Add::::nal hearings were held in the Illin :s mun:01;alates of 31ccm-in7 ton, 7::13, Occa ::, Oanville, Edwtrdsville ind Kewanee, at wh :n :: ss ;uti;: 2 2:ements were made by t=d en benalf f :ertain ;ersens and ent : es having an interes an the sub;ect matte Of this proceeding.
Cn June 4, 1990, the C =m:ssica entered an C de: 1:1-
- ating a pecceeding decketed as 30-0365, Oc censider, as required y the ?ualic 7t:11ty Regulat:ry ?cil: es Act
("?CRPA"), the ra:emaking standards of 52ct en 111 of 771?A as :ney relate :: Res;cndent. Not::e of the instituta:n of the PURPA pr:ceed:ng was sent to Res;cncent, := all parties allowed to antervene in Res;cndent's last general rate pr:ceeding, Lnd :s all parties : squared by the :llinois Publt : 'J :11 ties Act and the rules and regulata:ns of the
' Commission to be notified of a general rate proceeding. A notice was also pu=lished in 3 newscapers of general :::cu-('N la:Len in Res;cndent's service area and the official state newspape:.
Petitions to Intervene in :ne ?7RPA ;; ceeding were filed on behalf of OC5; Eelen Williams: Cepartment of Oe-fense: General Mot:rs 0:rporation; Cranate C :y steel, 0 visten of Nati:nal Steel Corporaticn; Excelsac: ?cundry Cor;crat:0n; Jones & Laughlin Steel Corporation: Olin Corpc= raticn: Sorg-Warner Chemicals, 0;visten of Sc g-Warner Corporati:n: American Steel ?cund::es, a 0 vis;:n of Amsted Indust es; General 71:e & Rurce: Company: F estone 71:e & Rumber C =pany; 3:adley Park and C:0EO. All persons and ent : es hereincefers listed were granted intervention by C:dar of this Commissa:n and allowed full op;c : unity to participate in ne PURPA docket. Pursuant to notice as required by law cnd by the rules and regulations of this 0 mmiss :n. One initial hearing in the P7RPA pr:ceeding was he;d :n July 3.1960 tefore a duly authert:ec Hear ny Ex : ner f :ne 0:=m:ssi:n at 1:s offices in 3;;;ngf; eld. :.lancia. Sabsequent :: the anatial , hear:ng. 5 add::::nal nearin s vers neld at the aff :es of l :ne 0:=m:ssi:n. !sst n:ny or.: exn::: 2 relevant :: :ne i susject atter :f the ?7RPA d:c4e: were filed in Occxet No. 30-0544 as well as ne P.A?A dec4e 2nd :::ss-exasinat :n of such evidence ::nducted :n One rec::d Of Occ4et Nc. 90-0544. A: ine hear:nq he'. d :n April ', * ?81. the Hearing Examiner censolidated Occ4et 'ic.10-0365 f:: :::ef:ng and fecasien w; n Occxet No. 50 0544. Che parties have filed i b: efs address nq the sum ect matter cf Octh decrets and the 0:mm ssion has fully c:ns derec the :::solidated record. On A;;;l 9 1791, at the ::n:lusi:n of full and ;util:
hear:ngs. the ::nsolida:sc re:::d Of fec4ets 50-0544 and 30 0365 was carte: *Eeard sn: Otran.* ::a1 Af umen: eas ,
I I l r I r r _ , .-, .
1 80-0544 and 80-0365 l heard by One C == ssa:n en Jane 9, 1981, at which ti=e the sa::er was =ar.<ed " Heard and Taken Under Advisement." l The censolidated record contains in excess of 4,800 pages of transcript and numercus pages of prepared written testi:cny and statista:a1 and o ner exhibits, The record provides, Inter al:a a detailed analysis of the financial affairs Of ne C =pany, 1:3 :;erating revenues and expenses, ne cr ginal ces: and trended original ces; and associated accrued depreciation of the company's pr perty, the cost of ca;1tal and other matters relating to the rate of return. NA*"JRE CT RES?Ch" EN"" 5 CPERAT!CNS Illinois Power C:=pany furnishes electric service within areas of Illancis cc=prising appr:xi=ately 15,000 square = les. At Oece=bar 31, 1979, the Cc=pany furnished elect :c service to approximately 516,858 electric cus c=ers in 429 c == unities, in areas having a ;cpulation of approx - mately 1,3'0,000. The largest c:::es in which electric service is provided are Monscuth, Galesburg, Kewanee, La Salle, and C :awa in north cent s1 Illinois; 31cemington, Normal Jackscnville, Decatur, Champaign, Urbana, and Dan-v;11e in central Illinois; and Wood River, Granite City, Collinsville, 3elleville, Centralia, and Mt. vernen in southwes: :llinois. The "c=;any's electric genera:Ing facill:tes have a net of abcut 3,815 MW, with abou 3,626 MW in summercapabilit"IsteamgeneratingplantsandOnerestin five c:nventiona l other generating facilities including internal cembustion t and hydre units. Respondent is currently c nstructing a sixth genera:Ing station near Clinton, I.linois, which will fx have a capability of 950 MW. Res;cndent will own 760 MW of I ) this unit and two wholesale electric coc;eratives will own
'A'*,/ One remaining 190 MW. Respondent also has abou: 55 MW o f capact:y available under centract with Electric Energy,
- nc., and maintains sterconnec.acns with ma:cr neignooring utilities.
?RCPCSED CHANCES !N E*.EC""UC RA*! SCECUt.ES Res;cndent preposes a general increase in : s charges for retail elect := service. The preposed elec. ::: rate increase, exclusive of additional charges for revenue taxes under Riders A and AA, is approx;mately $126.7 million, or 24.4%, cased en consu=ption for the calendar year 1980.
Under a staff proposed alternative method of c:=puting revenues :n ccanecta:n with the Uniform Fuel Ad ustment Clause, fuel adjustment revenues would be icwered by 51,933,000 resulting in an overall increase of $124,767,000. The pre;csed increases in charges for electr:c service include general increases for all retail service classif - cat;ons. The pr:pesed increase for the residential-small use class is 27.3%,.for One residential-general class is 24.3%, for tne general service class is 23.1%, for ths industrial :ust:mer c; ass is 24.7%, for the municipal class is 30.0%, and for the 11 gating class is 17.9%. Respendent's Manager of Rates testified tha: the proposed revenue re-quire =ents and revenue increase by class were based en an analysis of ::s: of service study results whica showed the manicipal and residential rust:mer classes to have substan-
- ally Icwer rates of return then the general service and induscr:a1 classes.
Rate Oes n Prin:::les and C:st of serv :e !nf:rmatien
- Respondent presen ed in evidence a summary cf en=edded i
[s; and mar; nal ::s data whica :: used in design:nq :s pro-N_/ x posed rates. An.e=:edded ::A Of service study cased on l
-3 w
1 1 1
)
30-0544 and 80-0365' s%,, 1979 book data adjusted : reflect year-end rate and tax levels was presented. This study showed the rate of return by cus :mer class. Marginal cos data whic: Respend-en used to set specific rate elements was also presented. A w : ness en behalf of Respondent presented data en marg nal ene:Ty costs by rating period and by func::enal - level of. service: long-run marginal capacity ecst, based on the marginal capaci:y cost of serving an add::ional incre-ment of load coine: dent w::n system peak; and incremental customer costs. Respondent's witness test- fled that Re-spondent's proposed bas;e energy charge for each class of service was determined based :n marginal energy :osts with an ad3ustment of approx: ately 10% :o reflect the Company's opportunity costs of foregone interchange transactions; and ina preposed demand charges were des:7:ed based en the 1:ng run marginal ces; of capact:y. Respondent's witnesses testified that additional c:;- teria were utiliced in des 7 :ng the propcsed rates. These
- 1 art s included value of service, cust:=er npact and understanding, revenue stam:1:ty, effectiveness in yielding
- a1 revenue t;uarenents, has:Oracal c:ntinuity of rate cesign and avo; dance of dispr:pc:::ena:ely large increases for individual cust:mers.
W::nesses testify q cn behalf of Stadley Ps k and on behalf of Industrial Power Users also presented, respec-
- vely, marginal cost and emceeded cost analyses. These witnesses' presentations were based on marg al and embedded cost data furnished by Illinois Power Company.
The witnesses testifying en behalf of Bradley Park di recommended that Respcndent's rates be set equal to marginal Isi. cost. The witnesses' rec:=mendation that elect:: city rates ( ,/ snould be set at mary:nal cost was based en welfare ecenemics. According Oc ec= nemic theory, social welfare is maximiced when price is equal to marg nal cost. The witnesses' analysis and recommendations were based on the standard of econcate efficiency and en the theory that the goal of rate regulation should be to achieve the most efficient allocation of resources. The Bradley Park witnesses testified that electricity rate regulation that p:cmotes economic efficiency is desir-able because :: helps ensure that these goods and services valued most by society are being produced f:cm the limited resources available. The witnesses stated tha: rates based en marginal costs (which measure tne change :n total ces: resulting from an additional unit of output) are the only costs that are truly causal and avoidable and thus they (and not embedded or average ecsts) reflect the resources that can be saved if the g=od, in this case elect :c :y, is not censumed. According to the Bradley Park w::nesses, the closer , estes come to being based :n marginal c=s:2, the bette ! p :ce signals customers receive stout the true ces; of the resources that will be used in p due q the marginal unit of elect :caty. 0;ven accurate price signals, tne customers will be acle to ;udge the consequences of the : censumpticn and energy resources will be allecated mest eff;ctently. In addition to promot:nq ec:ncmac efficiency and conservation, these witnesses indicated that marginal cost-based rates promote equ :y by more accura:ely ctarging cust:=ers for the costs of the elec ::ca y they consume. t s 1 i v t
*k*
f P 9 I 9 e
I 90-C544 .. l
, . '; .d.i.' Q !.';.' e. Q ? %,. '.L' ~ .'$. l '* s ' ? '- .?k ' Y ' t' I - */ '
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' **AW.0* '
' ?
- 1'
('"}~ s The Stadley Park witnesses did not evaluate ciner consadsrati:ns suen as value of service.
\ M- 2ndue 1:scrininatica, cust:mer acceptat:11ty, rate cent:-
nua:7. earn:ngs stat:11:7. c: cust:me: ::=prenensib:1;;y and respons:vtness but ackscwledged that these are appropriate considerations for the Commissicn to take into ac: unt in , the overall ratemaking process.
, t.ree witnesses. testifying.On behalf of the' Industrial" L,~
4
' s' . '> .
., APowe; Users effered evidence in opposition to the: principle of' basing elect:icity rates on marginal cost. The positten taken by these witnesses was that rates should be based en the actual emmedded c:sts used by the Commission to deter-mine the util::y's revenue requiremen a. The witnesses identified numerous pr:blems assoc:ated witn the use of marginal cos an setting u:111:y rates including the f=1-lowing:
- 1. Marginal costs are not used to establish the revenue requirement of the utility, and saculd therefore not be used to determine the ces to serve cust:mer classes.
- 2. There is no supportable or rata:nal way of mat:hing the so-called " marginal" costs for customer classes to the actual ces:s (revenue requirements) for the ut:11:7
- 3. Even if it were possible to precisely calculate and ut:11:e elasticities of demand among customer classes to adjust to marginal costs, such an approach fr would be highly inequitable for :: would
'g imply that two different cust:mers who
\.,/
y have coth the same embedded ces and the same marg al cost would have to be charged different rates.
- 4. There are numerous definitions and .
concepts of mar; nal ces:2. and no general agreement as to calcula:Ing them.
- 5. The marginal. cost of the theory is the
" marginal sccial cost." as cpposed to the
- private marginal ecs:s." but there is no method for calculat:ng marginal social ecsts.
- 6. Even if marginal social c:s:s could be accurately spee:fied. there is no reason to believe inat pricing elect ::ity at marg:nal cost would produce any better alloca:Lon of rescur:es than would prie nq of elect ::::7 at emcedded costs.
- 7. Regulatten is designed to permit a utall:7 to rec ver ::s total costs (including its marginal ecs: asscciated with the last unit of output), and is specif : ally not designed to ;er= : a utility to recover ::s ' marginal
- costs from all of its salcs.
S. Marginal cost rates are inherently-unstable since they violate the fixed [
>-~y ces:sivar:aale c s s d* stin ::en wn:Ch
/ ..
( v/ 3 t v
80-0*44 . s ' a r. . 2 ' Ji.w./- pjf.yand 40-0365 ' -J ' '-%.M' O T*-W..::C
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cw' %........ - c, . . at M, - -' * ' ' ' * ^'; ^ I^~T ( is fundamental to pr:viding proper price -
\ _,
si.gnals.and. tracking cests. The Industrial Pcwer Users' witnesses also testified that many methods for :=plementing marginal cos: based rates can result in unfair, acn-cost-justified curdens being placed on larger industrial cus:cmers which =ay lead these cust mers to reduce operations in, or to leave, a particular
' utility's service area >' to 'the detriment of;the. economy of , "-' .,. . /
' I U v . ' , , * #.the area.and'ofithe remaining customers who.must bear'a, . ... ', ~ * ' ,
'g., N, e .
Iarger: portion of the utility's ' fixed costs. The Industrial Power Users' witnesses relied heavily on the report of the Catario Energy Board on Principles of Electric 07 Pr:cang for Catario Hydro, dated Decemoer 20, 1979, whien concluded, after extensive hear:ngs, that economic efficiency is act a proper basis for electric::7 pr czng, that marginal ces: pricing should be re:ected for rate design purposes that marginal cest-based electricity rates should be re:ected, and that acccuntisq costs, ad;usted to a future test period, should be used for rate design purposes. The C nmassion has fully reviewed all the evidence submitted by the parties herets n :ne appr:priateness of asing marginal ::st er e==edded c:st as the : asis for rate design including the spec;f t: rate applica: ens of esca approach wn:ca are discussed in greater detail elsewnere in this Crier. The C:mmission is not in agreenent with the position taxen by the Industrial Power "sers that proble=s raised by their witnesses in :ennection with the use of nirginal cos: as One basis for se : ng electric utility rates should bar the use of this data in the racemaking process. The C:mmission finds :s positten with regard to these problems to be consistent w n that expressed by the New York Public Service Commission in its Cpinion No. 75-15
.f in the New York Generic Rate Oesign Case, No. 268C6:
"These are the principal arguments advanced g
s) in support of e pr:pesation that marginal costs have no preper role in electric rate structures. They do not in our Judgment overc=me the compelling affirmative presenta-tion by the marginalists. We conclude, therefore, that marginal costs do provice a reasonable basis for electric rate struc-tures. This finding does not mean that rate structures must in au cases embody marginal cost pricing :: that rats structure in inz case sneuld be based exclusively on su:n principles, but it d:es mean that marginal costs are an :=portant tool for consideration in all rate cases and that failure to take these principles into account should be fus:1 fled." Although the C:=m:ssion is of the cpinien Obat economic efficien:7 sneuld be the prine:ple criter:en :: elec ::c rate design. ne : mmiss10n is cogni: ant of the 1 portance of other considerat;:ns raised by the Industrial Power
*Jsers' witness su:n as :ust::er impact, cust:mer under-standing and acceptance, centinuity of rates, earnings stah:11:7 and value of service, and will proceed with caut::n.
The Commission stated in its recen 3rder in Union Electric 00., Occxet Nos. 30-0370 and 30-0368 Consciacated (Apr a 15, 1981), that marginal c:st methodologies are appr:priate f:: the pr:cang of electricity both within and among : lasses of service =ecause such pr:c:nq "pr: motes the effi lent use of the C:mpany's resources in produe:nq electricity and ;eads to equ::anle and reasonacle rates for all cust:mers. ' , f'~'g . i i l v
$0-0544 and 80-0365
- f s,?.;* % .CSl % Y h. f $.k. k %'55f.'i k & N '0. W .h .h h f . k 'Y Y W Y .0 . '? '' . $'
., h.
g..,_ ~ . The Coas:ssion. is ,of. :ne . opinion.that.the marginal cost :
. , data presented by Respcndent provide a proper basis for the Y'.a - '
. design of electric rates and should be utilized for that pur-pose in.this pr:ceeding. The Commission is also of the ep;nion that the add::::nal censiderations relied en by Respondent in designing rates are relevant to the ratemaking process and should be c=nsidered along with c=st of service 1 fc mation. As the C:mmissaca stated in the last Illinois Power rate crder, Docket No. 79-0071, quoting from Central Illinois Public Service Comneny.. Docken No.N76-0304 .J , ,, .-
,g- d . " c.,Q ..*,.Q y .JPPi 9- P8/ )jf .
,;,gf.' . o /..Q.'~ 9 > h . ,'", . '.'.b A! p . ' . ' . .. ; . I'
"*he' Commissi:n' has prev:cusly observed the Laportance of c:st-of-service studies in rate proceed: Lgs and has indicated in other rate cases, and continues to be of the opinicn.
that there are many fact::s, other than c:st of service, wh en ;; perly should be taxen into acccunt in setting rates. In Oceket No.
$8340, the Comm ssicn stated the following:
The deters:nat en of ust and reasona:Le rates is ad= :tedly not an exact science but encod:es managerial d: :retion. Innovative regulation. and general acceptance by the puhlac and the cust:mers served. Cast-of-servicu studies utalt:e the factual infernation of the past and : anno: incer; orate matters cf pub 11: ;olicy. social. Industrial or pol;;;:al changes which 4111 occur in the future. Cost analysis cannot establish the value of a utility service to a
- ust:mer or a class of customers.
'N Regardless of the metacd used. cost g
of service studies should be con-sidered only as a guide. . The Ccamassion also reiterates that there are many acceptiole methods of developing cost-of-service studies, ne one of which can be said to be free of ; edisposition or arb:- trariness or eliminates tne need for judgment with respect to questions of public policy and ecenemics.* The rec::d re 1ects, as summartmed above, that the various witnesses testify nq in this proceeding offered widely varytag opinions as to ne type of cest data wnica snculd be used in designing elect :c rates and on the extent to which considerations other : nan the cost of service snculd be evaluated in designing rates. The record reflects that specific demand and energy changes in Respondent's pr: posed tar:ffs are constatent with marginal cost while
;;ving weign: to otner inpertant considerations suen as cus:cmer inpact. One value of serv;:e. nistorical centinuity of rate dest;n and earnings sta :.::y.
Besidential service Classifica::en Respondent ;;: poses ine: eases in facilattes charges and all rate clocxs for Serv :e Classifications ("S.C.*) I and
- 2. It~ proposes to eliminate one of the three ex; sting .
energy cnarge biccks in :ne winter season far S.0. 1 and 2. leaving a flat sunner rate and a two-step winter rate. Respondent also pr: poses an :ncrease in on-peax energy charges in S.C. 4. Opticnal : ne-of-day servi:e. s
.~.
6
. - _- . _ . _ _ . _ _ _ _ _ _ _ . _____-_.___x_ _ _ _ _ _ _ _ - _ _ _ - _ _ . _ _ . - - - _ _ - _ _ _ _ _ _ . . _
80-0544 and
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/'~7 Respondent propcsos a new S.C. 3, de' m and-metered time-of-( day resident:a1 service applicable to customers using =cre
\ .than 150 o n per day in'any'one of:the four summer months.
Respondent states that it is pr posing this rate form for its largest residential customers because their energy consumption is high enough to indicate 'that the additional metering cost required to implement the rate form will be cost-effective, and because the demand-metered time of day rate form will more accurately. reflect the costs of serving - . . . ( . . . .
. ,,9
. r. .
6 ..,on's.C./3
;; these .customersw
- l Aespondent proposes that . customers :placedy te requi'redttoestay on it so?l'ong'as theit consump-.~" ' * .r >".'O~ c p. i tion in any sunser month as equal to or greater than 125 kwh per day. Respondent states that it expacts to CDtain ex-perience in administering this rate which will be relevant to further implementation of time-of-day rates for res:-
dential customers. Respendent preposes facilities charges of $5.00 per month for S.C. I and $8.50 for S.C. 2. Respendent presented a cast of cervice study which showed that the rates of return earned in 1979 based On present rates fr:m the 5.0. I and : cust:mers were substantially less than the C:=pany average and substantially less than that earned :n sales to general service and industrial customers. Respondent's witness estified that the prine ;al reason f:: the 1:v rate of return for the residential classes is the fact that the residential facilities charge dees not recover the full residential customer cost. He proposed increases in fa-cilities charges in ceder to allyn residential :stes more cicsely with the ces Of service. Respondent's witness presented data on embedded and incremental residential custome; costs. The witness pre-sented eatedded customer costs calculated using the minimum e dist :bution system approach which he testified was the N prevalent metacd used in the industry. Under this app cach.
) the cost is calculated en a minimum dist :butien system
\s / wnich the utility must have in place in order to stand ready to serve customers. The costs att buted to the customer component under this approach include a portion of the cost of dist: tutzen primary lines, seccndary lines, line ::ans-
- formers and :ustomer service drops as well as the full cent of meters, meter reading and billing and miscellaneous customer accounting expenses. Under this approach, Respond-ent showed a 1979 embedded customer ccst of 57.37 per month.
The witness also showed that the 1980 incremental cost of these facilities is 5:3.48 per month. A Commission Staff witness disagreed with Respondent's identification of the facilities which are att::butable to the customer compcnent. The witness testi-fled that the customer costs should be limited to the cost of the service drop. meters, meter read nq and miscellaneous custcmer expense using tne emtedded cost data presented by Respondent. The witness testified that the cost of these items was 53.60 per month and rec:mmended that the S.C. 1 facilities :harge te set at that level. He furtner spec-ified that in the event of rate level reduction. the cus-temer enar;e for S. C. 1 saculd not fall below 53.to. He recc= mended a facilities charge f r S.O. 2 of 55.10 per month in : der to recover certain additional c sts assoc - ated with serving S.C. 2 cust:mers and to maintain a dif-ferent:al between the rates. He pr: posed :: recover the revenue foregone by lowering the facilities :narge by raising energy charges in the sc=ce and the :::::al ci ck in the winter fr:m the level of 5.32c per <wn proposed by Respondent to 5.820 per 4wn. 4 Two witnesses testifying on behalf of Bradley Park also disagreed with Respondent's :alculatten of customer ::sts. N \
- s =
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. . hMO
. and 80-0365 These witnesses rec:= mended that rate's should~be set b'ased' On marginal costs and that any revenue therecy produced in excess of the legal. revenue requirements determined'by the C mmission should be reduced by lowering the cust:mer charge to a mtntmum of 51.00 per month. Uslag their calculation of ,
marginal cost-based revenues and based on the preposed full '
* . .. ' revenue requirements for the residential, classo these wit-- .
v.
- a;/,.' , 4 ,* * ... . ..-
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% ' ';a e' calc.ulated
' , .a1.f;customerr,
=t v charge;o.,f12 41ipes sonth.:.7, , M , ,. .* 0.N-l 4'". q> ;'
.i.4 0F . customers Inv61ved:ce the'dat-off. poinn'for eimplementati~on
- q / ' ,. .;..' ~~
in terms of annual kwh usage per customer although it ap-pears from information summitted by Respondent that approx:- matel-/ 124,000 residential cust:mers would be involved. . The Bradley Park witnesses' recommendat;en was based :n an analysis wh :n 00= pared the welfare benefits er gains wh::h wou;d accrue to sectety fr:m equating elect :e rates to marginal cas: to the additienal metering cests which Respondent would have to incur to :=plement time-of-day rates. Cne of the witnesses testified that a d;fferent :/pe
, of cost-benef;; test, c:= paring reduced costs to the ut:11:7 ft:m shifts or reductions in lead to addittenal =etering :
implements:::n ces:2. was ecenemically inappr:priate and should no: te ;erf:::ed :: used. The Bradley Park witnesses tes*d '* *d *"at their pro-posal was based en censiderations of scenesic efficiency in terms of max:m : ng the efficiency of aliccatien of re-sources resulting f cm elect :: rates and was net intended to reflect ncn-economic c teria. The witnesses presented varicus prepcsed rates, en both a ta=e-of-day and non-time-of-day basis for the residential, commere:41 and indust :a1 classes, designed to recever 100% of Respondent's proposed revenue requirements. SC% of t e preposed revenue require-ments and the current revenue requirements, based on 1979 usage. Steps or phases for moving fr m the current rates :: the full marginal-cess based rates were also presented although he time period for reaching the final prepesed rate was suggested. For the residential class, it was recem-mended that S.C. 1 be abolished and that charges to all residential class based on 1979 usage be stated as follows: All sw=mer kwn: 11.15c per kwh All winter kwh: 2.34C per kwh Cust:mer charge: 52.11 per month Respondent objected to the :stes and rate design pro-cosed by the witnesses for Bradley Park on a nt=ber of grounds including: (1) Their rate design failed to consider Laportant ratemaxing criteria such as customer impact and earnings stability: (2) Thel: rate design fa 1ed to consider the importance of having ind;vidual charges, such as fac;1:0:es :harges. reflect corresponding costs: (3) Thel rate dest;n did not reflect a proper computati:n of energy charges to reflect all apprecr: ate cests and cen-tained an excessive su=mer-winter d f-ferential. atout 4.75:1. particularly since the difference between Respend-ent's summer and via.ter peaks is nar-rewing: s
/ i
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, . .. . .i .. . .. . ... .
(4T The~recommehdation was based'cn a'fdrm of cest-benefit analysis which con-
'sidered the costs and benefits to o s
~
e ' society as a whole while failing to' consider the specific implementation costs, and benefits in terms of teduced
., . . . revenue. requirements,.to Res .
.& 2 M, C;;;pL,4 r. :l'. ;:yQ:(1.ts \tatepayersh.::fJi). pondent anda 4 7,,
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(5; The Bradley Park witnesses did not evaluate the = pact snat possible 1 cad shifts could have on Respondent's system reliability and costs; and (6) the analysis of welfare gains vs. addi-tional metering costs was prepared using data f cs other utilities which over-stated the likely response of Illinois Power custcmers to the preposed rate design and anderstated the add ::Onal meter nq cos ts. Respondent's witnesses presented various analyses to shev that the Bradley Park witnesses' p cposed rate design could result in wide swings in revenue and inccce during war =er or colder than normal weather, and that, while the rates proposed by the 3radley Park witnesses would recover about taa same revenue in total as Respondent's proposed rates and would give some customers smaller annual rate increases taan would be received under Respcndent's proposed rates, many customers would receive disproportzenately high scnthly and annual bill increases under the rate design
~g preposed by the Bradley Park witnesses.
t Witnesses appearing on behalf of Industrial Power Users N,%~,/ for reasons previously summart:ed herein cpposed the dest;n of rates based en principles of marginal cost. The positten of the Industrial Power User's witnesses was that rates should be based cn the same embedded cost data used by the Commission to determine revenue requirements for the utility. The wit-nesses prescnted embedded cost of service analyses showing that the rates of return earned by Respondent on sales to residential cust:mers were substantially less than en sales to industrial cust mers, and that the average cost of service per kwh is much lower for industrial than for residential cus-tomers due to such factors as intensity of use, load factor and facilities used. Industrial FJwer Users recommended an allocation of the proposed revenue incrase wnten would allocate a larger revenue increase to the residential class and a smaller increase to industrial customers. The Commission is of the opinion, as stated prev:cusly in this Order, that One principles of rate design stated by the witness for Stadley Part saould be a p ::ary ct;ective of rate regulation. The Commission is also of the opinion. he however, that cautzen saculd be exercised :n the implementa-tien of mar; nal cost based rates and that the specific rates and rate design p;cpesed by w :nesses f:: Bradley Park shculd not be adopted. The C mmission la particularly concerned with the impact on a substantial nu=ber of individual customers who would receive large bill increases under the rate design proposed by the Bradley Park witnesses, and On the adverse implications of their rate des ;n for earnings stanility, particularly the extreme summer /vinter differential which they have proposed. The Commissien accepts tne ::=e-of-day rate des ;n preposed by Respondent and finds that suca rates should be N :=plemented ne later than August 1, 1981. lf _at that time
'*' /
i facilities are not available and :nstalled at every cus-l ::=er's pre =:se in : der :: sensure demand. eacn such cus-l 6
30-0544 and 30-0365 9 timer should be billed according to the minimum centract capacity as specified by the rate. The Commissaan further finds that Respondent should file a report, not later than 60 days following the date of this Crder, addressing the feasibility of expanding Rate 4 to approximately the largest 5% of the residential class in order to implement a time-of-day rate for these customers for the summer seasen in 1982. Based on all the evidence of record, and tak q into ac: cunt the aforesaid exceptions, the C:mmission finds the Staff proposed rates to be reasonable and should be adopted. General Service Classifications Respondent proposes increases in all charges for the general service rates, Service Classifications 10, 11 and 13. In addition, Respondent's witness testified that, due to the availability of more sophisticated metering capabilities, Respondent proposed certain modifications to the time-of-day metering cption under S.C. 11 in order to provide a more precisely-defined on-peak period: and to eliminate the special =eter reading option under S.C. 11, which elimination may encourage more commercial customers to take time-of-day ser rice in order to limit the time period for measurement of demands to determine contract capacity. Respondent also propcsed to eliminate the provision in S.C. 11 for determination of the transformat.on charge based on connected load. These proposals are all reasonable and should be adopted. The witnesses testifying on behalf of Bradley Park recommended implementation of time-of-day rates over a five year period for general service customers censuming more than 33,000 kwh per year. s The final rates preposed by these witnesses to recover 1007 of the pr: posed revenue requirements were:
'- S.C. 10 S.C. 11 All summer kwb: 12.4ac/kwh 9.06c/kwh All winter kwh: 2.39c/kwh 2.0Gc/kwh customer Charge: 511.62/ month $65.76/ month The Commission is of the opinion that this recommendation should not be adopted at this time. However, the Ccamission further finds that Respondent should file a report. not later than 120 days following the date of this Order, addressing the feasibility of an explicit time-of-day rate for the largest Rate 11 customers.
Based on all the evidence the Commissicn is of the opir. ion and finds tnat the general service rates and rate design preposed by Respondent are reasonable and should be adepted. Industrial Service classification Respondent pr posed increases in demand, energy and transformation charges for the industrial service rates, Service Classifications
- 21. 24 and 30, and special centracts. Respondent preposes to Laplement time-of-day energy charges for industrial customers served under $.C. 21 and 24. The on-peak period will be 10:00 a.m. to 11s00 p.m. on week days, excluding cer ain holidays.
Respondent's witness testified that the proposed on-peak energy charge of 2.85c per kwh was established based on Respondent's marginal energy costs during the primary and secondary peak periods. The proposed off-pean credit of 0.55c per kwh (result;ng in an effective off-peak energy charge of 2.30c per kwn) was determined based on (1) analysts of the different:al between primary peak-secondary peax and off-peak energy c:sts on both an enhedded and - jg
, y marginal cost basts: (2) the need to maintain ta:1blocx eter,gy charges at least at short run marginal cost: (3) the need to
\v ensure that total revenue requirements are recovered. particularly in 11 gat of the poss 31 aty f lead shifting by cust:mers in i.-
t _ .a.-
80-0544~
.u- ., ,,m u ,. ;, . r) . .r > g., <
.- s
- o. ,and.80-0365'
m I } response to an on-peak /of f-peak differential; and (4) the need to
\s,g/ avoid giving disproportionately larger (e.c , 40% or greater) increases to individual cust:mers as a result of the change *in rate design.
The witnesses testifying on behalf of Bradley Park also ree:mmended implementatics of : me-of-day rates for all industrial customers, cut pr posed much greater on-peak vs. off-peak dif- .
. . .forentials t,han proposed by Responde.nte :.Their proposed.. final rats
.> c S'/*
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- - M a lf. .~ i.*4 *,%;- N.5% Kocpvek100%*o.O the.rpropose4f retenue troquirsment* vas t ' ; *.V '
- B, ^ / i Summer ;eak kwh: 2.31c/ kwh Winter peak kwh 2.57c/kwh Off-peak kwh: 1.55c/kwa Summer capac::7 charge: 521.35/kv per month W: ster capacity charge: 53 Customer charge: 35,980.56 per scath Based on the evidence heretofore reviewed c ncerning the impact on individual customers and given that Resp'ndent's preposal represents tne first attempt at : plementing time-r!-day industrial energy enarges for Res;cndent's cust:=ers, One Oc== ssa:n is of the opinion that the on-;eak/off-peak differential pr: posed by Respondent is the max 12cm that should be :=plemented at this time.
Witnesses testifying on behalf of the Industrial Pcwer Users once again testified that rates should be based solely on e= bedded costs and subst:ted evidence that Respondent's pr:pesed Rate 24 energy charges and on-peak /off-peak differential are excessive. Industrial Power Users presented evidence that the ratios of
" marginal" cost by time per:cd bear absolutely no relationship to the
- average" cost by time period and that average variable costs g during the summer on-peak hcurs are only 2% h qher than the j average for the year. Industrial Power Users' witness testified s_ ,/ that, when demand charges are understated and energy charges are everstated, wrong price signals and earnings instability result.
Respondent defended its proposed industrial charges as being appropriately based en marginal cost. Respondent's w : ness testified that Respondent's pr: posed industrial demand charge was approximately equal to the long run incremental cost of providing an additional kw of demand on peak, as determined by the cost of adding a c mbustion turbine peaking unit which would be the lowest-cost generation addition required to serve additional on-peak demand. He testified that the additional capital costs of base-lcad fae:11 ties are incurred not to meet ; ear demand but to serve customer energy requirements during all acurs of the year at the lowest possible cost. A witness for Respondent testified that Respondent's encedded cost of service metacdology preperly reflects the fact that add::1cnal cust:mer energy requirements may cause the utali:7 := construct additional capital-intensive base load plant to serve these requirements. In support of its analysis, Respondent also presented the testimony of a witness who demonstrated that as the system load f actor (annual energy requirements) :n a utility system increases, increased installation of base lead plant is indicated. This results in increased installed ces; of capacity per kw of peak demand and increased capact:y-related revenue re-quirements ;er <w of peak demand as the system load f ac cr increases. W::a respect to Respondent's proposed industrial energy charges. the evidence shows that they are 4ppr:priate appr:x-imaticas to short run marginal energy costs, which Respondent's x [4 t
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and 80-0365 witness testifie'd is' appropriat[ in order to insure that customers receive pec;er price signals concerning the : consumption decisions, and to insure that tas utility recovers the incremental. cost of supplying additional energy. In res; case to the contention by the Indust :a1 Power Users' witness that tht. picposed rate design would result in revenue instability, Aespondent's witnesses , . . . q . y .9 f., e gecless[ stable.thaniinduets,tal weemandsi 3.f r V.W,:. 1./J .teetified
;;c that there is,no evidenc Respondent's witness presented evidence to show that the Indust :a1 Power Users' p;cposed S.C. 24 was inapp::p:tata because it would have to be a;;1:ed to all subtransmissien level industrial cust:mers including tacse served en S.C. 21. and if so sp;1:ed, would result in dispec;crtionately high bill increases to many indust :al cust:mers.
The C:mmission is of the view that the time is long past when any ;;;;csal to base rates en em=edded costs can be seriously censidered. Res;cndent's ;;:pesed indust::a1 rate design appro-praately :eflects marginal c:st data in both :ne demand and energy charges, while taking into ace:unt :ther important :::stcaraticas suen as customer pact in its design of sne on-;eak/of f-pear differential. Furtaer, there is no evidence to su;; ort the assertion by the witness for the Indust :al Pcwer Users that the prepcsed rate design will lead to disturning earnings instability on the contrary, it appears that the propcsed rate des qn will more accurately reflect the cast c:nsequences of additi:nal kw and kwn consumptacn than would the alternative rate form pr:pesed by Indust :a1 Power Users' witness. The Commissicn is therefere of the cpinion and finds that the industrial rates and rate design pr: posed by Respondent are reasonable and should be adcpted.
~s The ccanission is of the opinion that ta:1 block energy charges should be set at sacrt-run marginal energy cost as proposed by Respondent, in order to pr0 vide pr:;er ;;1ce signals. Accord-
' ingly, in any revisions to its filed tariffs wh :h Res;cndent may be required to make in order to recover the revenues allowed by this Crder, Respondent shculd maintain tailblock energy charges at the levels preposed. However. If tae:e are customers, such as Elect:cschmelzwerk Kempten CMBE (ESK) or customers taking in-terruptible service, for wncm Res;cndent has pr: posed increases only in the energy charges. Respondent may alter such energy charges so that such customers do not receive disproportionately hign increases in relata:n to the total revenue increase allowed herein, and so that current relationships between interrupt:ble and firm rates are maintained.
Municipal Service and t :htine Service classifications Respondent preposes increases in the municipal service rates, S.C. 41 and 42, and the 1 gating rates. S.C. 39 and 45. Respond-ent also proposes to eliminate prospectively the contract term discount in 5.C. 41 and 45, because there is no longer any : cst
- ustift:ation for it. The discount will be eliminated p cspectively because legal considerata:ns prenibit its elimination for customers who have :entract ordinances in effect.
The C:mmission finds that the muni :;al service and 1;;nting rates and rate dest;n proposed by Respondent are reasonasle and should be adepted. 0:nclusi:n With the exceptions noted above. the C:=m:ssa:n finds Res;cndent's proposed rate dest;n appr:priate. Respondent snould reduce the proposed tariff filing to tne revenue award en:cdied in tais 0: der
,-s in the manner ;;c;osed by staff. theref::e. Pes; cadent snould
- educe each customer : lass (S C. 1 and 5.0. : saould te considered
()
/ i one class for taas purpose 1 ;;: pert;:nal to Res;cndent's ;;cpesed
. Increase ta eaen : lass. and witnan eaca class. cy reducing tne demand enar;e :: ine demand ::m;cnent f eaca rate. Energy :narges should te ad usted, as necessary, to reflect the :mmission's de-
- sica to maintain Res; cadent's existing fuel ad:ustnent clause as hereinafter discussed.
_-~~ I .
. 80 0$44 1 .
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p ( Adcotten of "Jniform Fuel Ad?ustment Clause - '"-
.x 4 :
As part of its filed tariff sheets, Respondent included a new
. fuel ad}ustment clause (" Rider F") La the form of the Uniform Fuel Adjustment Clause puc1:shed by the C:mmission in the Illinets Req 1 ster on July 18. 1980 as proposed General Order 211. *he design of
- Respondent's proposed base tariff charges, and Respondent's .
, f ....;,...
"werer:hesed
. q : . .'. ; f*. p; *. %.%.)s.
.. estimates,pn;the pavenue,effect o'cthefassumptien of J.he, that.the: proposed..
proposed;' tariff.revisionsf '. . tJ. .? fuel.adfustment% .W' t .~1,9 ' ' Y . * . " clause would be adepted. Staff preposed revenue and fuel expense ad3ustments if Respondent was allowed to adopt the Uniform Fuel Ad3ustment Clause in this Crder. The Commission is of the view that Respondent's proposed fuel ad3ustment clause should not be allowed to go into effect until General Crder 211 is adopted.
- =plementation of the uniform clause is premature at thia ::se.
Staff's preposed ad3ustments to revenue and fuel expense therefore should not be adcpted. A witness testifying en behalf of the Industrial Power Users retemmended that the fuel ad3ustment clause be :ers-based. and that the clause pr: vide for differential cnarges f : Just:=ers taking service at :fferent voltage levels to reflect differing 1:na losses incurred n serving cust:mers at different voltage levels. The C:mmassion nas reviewed the entire record in this proceeding including the testimony of this witness and the re-buttal offered by Respondent's witness and finds that the recome mendations of the Indust:141 Powers Users' witness shculd not be adopted.
**E Pt;BI.IC C'"I* I':"f RE7J' ATORY PCI.:CT!S AC*
In November 1979, the U.S. Congress enacted the Publa:
- Utility Regulatory Policies Act as part of the National Energy Act. The expressed purpcses of PURPA are to encourage: (1) conservation of energy supplied by electric utilities. (2) co-its :ation of the efficiency of use of facilities and resour:es by electric utilities, and (3 ) equitable rates to electric consumers.
Section 111(4) of PURPA pr vides that each state regulatory authority should censider the ratemaking standards esta: lashed in Section 111(d), and deters:ne whether or not it is appropriate to implement such standards. Consideration of ?URPA Standards Considerable evidence was taken en the : p = of compliance with the six electric utility racemaking standards of Section 111(d) of PUPEA. which were the sub3ect matter of Oceket No. 30-0365. Althougn witnesses differed in their interpretations of the requirements of the statute, no witness explicitly recommended that any of the six standards be rejected totally. Respondent's witness testified that the most important crateria for determining whether and to what extent to implement any of the six ratemaning standards is ecst-effectiveness. since af a standard was adopted which was not c:st effective two of the three purposes of PURPA would not be fur-hered, namely: cptima:ation of the use :f facil-ities and resources and ene:uragement of etaitacle rates f: censumers. Cest-o f-gervice standard The greatest cont :versy was engendered by the :st cf cervice standard of Secta:n 111t d)(1) . A *:mmission Staff wit-ness, as well as a witness appearing en benalf of Bradley Parx. testified that :nly basing rates :n marginal ::st data would sat:sfy tne P'JRPA cost of serv;:e standard, wn:le three witnesses for Industrasi P:ver Users and a witness for the Oepar =ent of
's Oefense testif;ed that :nly taa;ng rates on e cedded ecsts would i 4 l
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- d 7 f' }00' and SS4 80-0365
- (A) y * .' l-* satisfy the. standard. . The argumeilts.-offered by the. latter. wit-i .c
'?
nesses hhva previously been summar:2ed herein. Respondent's
. witnesses testified that both marg:nal and e=cedded cost data should be considered in the design of rates and that rates should-be based on ecst data to the extent compatible with other con-siderations relevant to ratemaking including historical continuity ,
of rate design, avoidance of disproportionate increases to par-
, ticular. c. lasses of. individual customerg due. to ; changes: ta. rste.... - W ~N 1 -
.W> / h g ; /.y ,c,f0 designs:e.aratings.,etah:Ai,ty,1effectivenessci W :'eldiaqftat d;.li[.54;. 4 M;gD :.W T.7".A .
. e "-- - ~
earnings requirements, customer understanding and value of serv ce. A Staff witness fr:s the C:= mission's Ec:nc= cs and Rates Department testified on the role of both marginal and e=:edded cost of service studies. That witness testified that both sn=rt-run and long-run marginal cost of serv::e studies should be ut:11:ed in both rate design and in determining inter-class revenue requ;;ements. The witness indicated that the use of narginal cost studies becomes critical when the results of the e= bedded studies vary signaficantly f::= the results of the marg nal studies. The witness indicated that fa:1ure Si rttes to reflect mary:nal costs could be very c:stly to censumers and the utility. Escedded cost of service studies do not reflect the Opportunity costs of a consumpt:ca decisacn which a marginal cost of service study reflects. Marginal costs, therefore, should be the primary input into both rate design ar.d inter-class revenue requirements. The witness rec:= mended that in future cases, in addition to its marginal c st of service studies. Respondent should prepare a study on inter-class revenue requirements based on marginal costs. The Commission adopts the staff's recommendation. In its April 15. 1991 Crder in Union Electric cemeany, supra, the Ccmmission stated that marginal costs sncuac ce used in
'( \
setting proper charges for elect::e service. Section 111 of PCR?A requires a determination of the apprcpriateness of :=plementing
,,,/ the PURPA standards "v n respect to each electric utility for which it has ratemaking authority * (empnasts supplied). The Commission is of the opinien that the record herein supports a similar conclusion.
The Commission has already in this Order stated its opinion that marginal cost shculd be utill:ed in setting electricity p;;ces and that other considerations analy:ed by the parties should be considered in the rate design process. The extent to which Respondent's proposed rates reflect cost and other con-siderat 0ns has been discussed in prev:cus sections of this Order. Oeclining block, sessenal, and interruptible rste standards A Staff witness f cm the Commission's Economics and Rates Section testified that Respondent's proposed rates s1tisfy the declining block, seasonal and interrupt ble rate standards of Sections 111[d)(2). 111(d)(4) and 111( d)(5) of Pt*RPA. With respect to the declining block rate standard. Respondent presented evidence to snow that those of its pr:pesed rates which do contain dec1:nang blacks are c:mposed :f an energy c st recevery por :en wnich is flat across all kwn. ;1us a demand cost recovery c:=penent in the in:tial blocxs. Respondent showed that its pr: posed residential rates are flat in the summer seasen and aave 2 bl cks in the winter seascn. Respondent's witness test:fted tnat the second winter energy charge block reflects winter weather-sensitive usage (space heating) wn ch Respondent's studies show cears no demand cost responsibility. The Cc=m:ss en recogni:ed this is an appropriate basis for winter energy charge lecxang in its recen: Order in Union Elec ric Co. surra, at p. 4. 6[\ Respondent further shcwed that at was : plement nq demand ( setering f:: these ust:mers 'Or w :ca demand meter:n; is cost-1 I t . . . . . . . . 9
l li
'*' . '4: 's . .:. k ? l. 4,kil O f;'l. % .'.l $ h ~'k}
. $? - l . A 0 Wg f c & *i ?
#'Y:"- Y 's' OW and 80-0365 N effective, -in order to be able 'to charge separately'for demand.-
related costs. It was the cptsien of witnesses testifying on the subject. and a reading of the statute indicates, that the PURPA declining block standard only applies to the energy-cost recovery portion of the rate schedule. With respect to seasonal rates, Respondent presented evidence, , , . i , o t. .,. . ..s. . ,..-9;. ,.y.:
. . :to.phow thethe' flectadnin .extentsto ederry !wAlch seasonal:
charge and/or ' c%st demand differences ^.ars':r.e a %. N' ' ' ' p*p
- p*
. , . . t, g -
c ' harge' portions d;its'j . various rate schedules. The record shows that 98% of Respondent's retail kwh are sold under rate classificaticas which contain seascnal energy and/or demand charges. In ::nnecti:n with interrupt:ble rates, Res;cndent presently makes ava:latie :nterrupt ble service to all : st:mers with demands greater than 500 kw: that t: offer interruptible rates to customers with smaller demands is not 1: Rely to se cos: effective due to the extensive ecnatoring and inplementat :n ecs:s assoc:ated with interrupt:ble rates. but that Res;cndent stands ready to negotiate a spec:al interrupt ble rate w :n any cust:mer where such a rate would te mutually tenefic:al: and that Respondent also offers interrupt ble serv :e :s industrial cust:=ers under Rider 5, whicn enamles :ust:mers :c pur: nase, on an interrupt:ble bas;s, additional energy during on-peak periods ac incremental energy costs witacut incurring additi:nal demand charges. In su= mary, the evidence presented shows that the Staf f witnesses'. conclusica that Res;cndent has implemented the de-clining block. seasenal and interrupt ble rate standards of P7RPA :s acceptable ;ending review in future cases. Time-of-dav rates and lead management standards A Staff witness testified that Respondent has made partial implementation of the time-of-day rate standard of Section 111(d)(3) of PUREA and is proceeding to further implementation of that standard in light of the engoing cost-benefit analysis 1: requires. It should be noted that while there was debate on the record concerning the extent to walen and speed at wai:n time-of-day rates should be implemented for large residential and large c mmeretal cust mers, there is no decate that implementation of time-of-day rates is cost-effective for industrial customers and probably nc: ::st-effective for small residential. small ecm-mercial and municipal customers. The extent to which Respondent is offering time-of-day rates has been discussed in the preceding section of this Order. The Commission is of the :pinien and finds that the Staff witnes:es' Opini:n is :orrect and that Respondent is implementing the ta te-of-day standard in a ::mely manner. In future rate cases the Company should present costbeneft studies analyzing time-of-day rate implementation vnere ecs: o f metering is significant. The Staff witness further testified that Res;cndent is implementing the 1 cad management standard of Section liitd) (6) my vir ue of a nummer of exper: mental pr: grams wh::n : is condue::nq in the area of direct lead ::ntr:1 and other lead management activities. Rescendent's V ness testified On Respondent's current load management activ les including residential hc=e energy aud::s: energy managemen programs for c:=mer:1a1 and industrial cust:mers; experiments in direct cent :1 of residential electric water heater load; and research programs in sclar-assisted , water heating, more efficient use Of hea pumps. more energy I eft :ent mot:rs. power fa ::: ::ntrollers and similar dev;:es, waste heat utal :sta:n. and use Of wind pcwer for generatten. The record descnstrates, and the 00mmissi:n cencludes. that Res;cndent's l (~~T engeing resear:n and energy management activ;;;es ::ns ::ute
) ::mpliance with the 1:ad management standard Of Secti:n liit d n t 6 )
(x ~, o f ?7RP A . In future rate cases tne C:mpany sneuld present :st/ tenefs: stud:es Of their 1:ad management pr: grams and an analys;a of cust ner rea::::n :s tnem. u_-- _
..e y 8. O yc,' ?.'p,'?.3 .W M f..'E,6 . M !. d ' N ,.';.'.Y..
M. ",".*/M J Y d [ 460S44I Y.' .* .* #4* E S .1 ^.f'./
. and 80-0365 b
\s,", , 3ased .cn all the evidence, the Commission is 6f the opinion ' ,
and finds that the six elect :c utility rateaaking standards of Section Ill(df of PURJA are appropriate and should be adcpted and implemented by Respondent to the exten* implementatica is cost effective. The Commission is further of the cpinion and finds that Respondent is st ving to implement all six standards to the extent implementation is cost effective at this time. da ..'fd. v
- Wd. ij..N. h. N.hf.$ /. h.k' [h.;$..F3M,biCIMCbbiIONAidbhkNMICNE kl hd(i@ k; 'N'N 6 h.', .
. uce:umTs er usPerecre Much of the evidence presented in this case concerning
, Respendent's need for an increase in its elect:10 rates related to Respondent's requirements for raising capital to finance 1:3 construction program, principally censisting of constru= lon of 4 Clinton Unit No.1, and present and foreseeable econemic and financial c:ndata:ns bearing en Respondent's at:11ty to raise capital f: m external sour:es. At Decem er 31, 1980, Respendent had a total cap 1:all:at :n Of $1,999,476.100 and net elect : utility plant in service of $1,029,996,748. Respondent's witness testified that Respondent plans electric ut:11ty : nstruction expenditures for the period 19e1 thrcugh 1983 of $883 million and plans outside financ;ngs during the years 1981-1982 of approximately $522 million if no rate increase is granted. An additional $125 million of nuclear fuel financing must be acecmplished th:cugh Illinois Power Tuel Company whcse cbligations are guaranteed by Respondent and whose financisi statements may be consolidated with Respondent's by security rating agencies for purposes of determining Respondent's credit rating. f 1 Respondent's evidence showed that 1 had an investment in Censtruction WerX in P cgress (" WIP") at Oecember 31, 1980 of
$927,115,748 or approximately 45% of its total capitalization, and that CW:P will increase to S.,422,201.000 at Oecember 31, 1982 at which time it is expected to constitute 57.6% of total capitalization.
. Evidence presented in this proceeding showed that the recent 7eriod has been characterized by ecencmic recession and high nflation which has been reflected in the capital markets by high interest rates associated with both short-ters and permanent financings . The record shows that in 1980. short-term interes rates were as high as 19.77% and averaged 11-15% for the years the average y; eld on new AA utility bonds was over 13% and u:111:7 preferred stock yields exceeded 11.5%. Data was presented to show that inflatten has seriously affected the market for utility c mmon stocks, the market prices of which have declined substan-t: ally in recent years.
A witness testifying on behalf of Respondent stated that investors have beccme disenchanted with Respondent's and other ut:11 ties' ccmmen stocks due to thet ::mparatively Icw growth in earnings per share, market price. took value and dividends; the high cst of new senior capital; and the sale of utall:7 3::cx below ecok value. He also testified based on a review of eccent economic :: ends and conditions that tne econema: trends and condittens, particularly hagn inflat n, vn :n have adversely affected utility finane:41 integ ::y and the capital markets will continue in the 1980-1982 per;:c, resulting in :: sing cost of senior :apital, difficulties in maintaining adequate interest coverages, declin:ng utility st:cx pri:es, and negative invester attitudes t: wards ut:11:7 securities. The ef fect of all this data is to show that it will me extremely difficult for ut:110:es including :llinois P ver := raise capital in the near term and that capital s: sed fr:m external s ur:es will be cetained at h ;h c=sts ::mpared to historical levels. j
')
( _ ,f Consideracle evidence was presented on the recent and foreseeacle financial c:nd :::n cf Res;cEdent. A witness sst fied I I I I f l t
l t i. , c; ;. . - . .. m m ..,':'.' *. .. /. ' . *
~~' < ~ ;80a0544 .. + :'y*M. V.Y ;' l
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, a.nd 80-03 65.' l for Respendent cn appr:pr: ate measures .of: financial integrity.
which he defined as a condit:en in which a utility has sufficient. financial strength to raise needed capital in good and bad market conditions at reasonable costs and with rates to customers that . are fair and rates of return to stackholders that 'are f air. The witness testified that a utility maintains financial integrity if its. (1) maintains high quality bond ratings, that is AA: (2)
. . generates at. least 50% of,its construe:1on cash . requirement (. ..;.. .
t ' . ', g' e;.. ' N'; 2e .Miaternallyi; O F.1 ells tiew/ common farocC at :driabove. Acokc yalise'.(3.N .. ; N.@. . ..6/@,j.
. .g- ,..
- 'after'sarket' pressure and issuance ecst;' (4) possesses adequate ~
financial strength or a sufficiently high c ==cn equity ratio and has adequate financial flexibility (5) earns a fia: return of good quality on invested capital in order to c:=pete f=r capital at reasonable test: and (6) charges rates to cust:mers that are no higher than necessary t: maintain a satisfact:ry level of financial integ ty. Respondent presented evidence on its hist:rical performance ecmpared to other similarly-rated utilities and its forecasted performance as measured by certain financial data whatn were identified as indicaters of the above measures of financial 1 stag::7 Hastext:a1 and forecasted data under vart:us :ste increase scenart:s was ; esented with respect to tne f:ll: wing stat:stics: (1) sterest :verage before inc:me taxes. Including an alicwance for funds used dur:ng construct::n (*ATU0C") (a seasure of interest coverage): (2) interest coverage before :nceme taxes, exclud:ng ATU0C (a measure of cash coverage of interest enligations): (3) internal cash generat;en as a percent of additions to utility plant (a measure of internal cash generatics and cash flow): (4) ATU0C as a percent of earnings appl;:able to com=on stock (a measure of quality of earnings): (5) return en average common stock equity (a measure of return to the ccmmen st:ck holder); and (6) ratto of total debt to total capitali:atten plus
. notes payable (a set-sure of capital ratio flexibility). Respondent also showed financial goals which it has esta=lished with respect to each of these statistics in order to maintain its financial s ,4- Integrity and its relative credit standing ecmpared to other AA utilities.
Evidence presented by Respondent's w ness showed that, with the exception of the last statistic above listed. Respondent's financial statistics were worse during 1975-1979 than the average for the twenty other ut:11tles carrying AA first mortgage bond ratings according to Moody's and Standard & Poor's rating services during the same period. A similar presentation was made by the Acccunts and Finance Cepartment of the Commission whose witness presented data for the period 1975-1979 and the yer: 1979 en 20 key credit and equity analysis ratios for Respondent and for all utilities with, respectively, AAA, AA, and single A security credit ratings. Oata was presented by the Staff on statistics such as interest coverage including ATUCC. Interest c verage less ATUCC. Internal ' cash generat On as a per:entage of t:tal debt tases dividend earned through internal generat :n. Internal cash generatten as a percentage of construction expend;tures. return en average equity, ATU0C as a percentage of earnings, dividend payout ratio. dividend yield, marxet to rock ratis. and pri:e-earnin;s ratic. The data
;;esented by Staff demcnstrated that (1) the finane a1 statistics for Respcndent deteriorated during the five-yea: period: 12)
Respondent's stat stics with respect to almost every financial ratic were verse than the average for all AA ut:11 ties, and in some cases were more ::mparable to the average for single A companies: and (3) the disparity between Respcndent's financial performance and that of ether AA utilities in the last year analyted. 1979. ;&rticularly w:ta respect to rat:cs pertaining to
- ash ficw. Including interest ::verage less ATUCC. internal gen-
, erat :n as a percentage Of t:tal debt tines dividend earned th::ugn internal ;enerataen. Internal generati:n as a per:entage -
(\ 5
\
of :enstruction expenditures. and ATUCC as a percentage of earnings. 4
1 l
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90-0544
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.~~T Respondent presented forecasts of its financial performance as measured by the six financial statistics waien it u:1112nd for
.\ >)
- , ' this purpose durin7 the pericd 1980 through .1982 if.it receives no-rate Lncrease. Forecasted data presented by Respondent showed decline in Respondent's financial integrity, and inability to maintain a position comparshle to that of other AA rated utilities.
The Company evidence showed poor performance with respect to those statistics relating to Respondent's cash position, includisq interest coverage excluding AF"DC, internal cash generadion as a
. . . . .r y
.; ::y.e percent ,gf . addit:ons to . utility; plant,. and 'ATUDC,,as ,a -pere.ent of. V W r*,M,jp +,
4
.. , i s -.
.- e..f. *..$.*.y . , earnings. ;Additio Illinois Power on other financial indicators including earnings per share, cash flow per share, and internal cash generation as a percent of debt. All of this evidence sacwed Respondent's finan-c:al positten would declase during the nex: 2 1/2 years.
Respondent's witness testified that if no electric rate increase was granted, Respondent would need to issue $125 million of long term debt during the second half of 1981 in crder to have sufficient cash to centinue its construction pregram; but that Respondent's interest coverages cc=puted in accordance with its scr gage indenture will P.ct perm:0 the assuance of more than 575 million of first mortgage bonds after mid-year 1981, and will not permit the issuance of any first mortgage tendo after year-end 1981. Under these c :cumstances, and if Respondent's securities were downgraded from AA to single A, Respondent states it would be required to sell 5125 million of debentures whica would carry a higher interest rate (forecasted by Respondent to be 15%) than first mortgate bcnds. The Ccmpany witness testified that if first mortgage bonds were devngraded, Respondent's preferred s:cck would also be downgraded to s =gle A. resulting in a hi;ner cost for a sale of $35 millicn of preferred stock planned for 1981. This witness also testified that in 1982 Respondent would again have to sell debentures rather than first mortgage bends, and would
, exhaust its ability to sell preferred stock under the coverage e' test of its Articles of Incorporatica necessitatt.9q the sale of (N
preference s:ccx at a higher rate of interest. Respondent claims 1: would also expect to be able to sell about 530 million less of common stock than planned due to its inability to earn its divi-dend and its unsatisf actory financial condition. Witnesses testifying on behalf of CCS also presented testimony and exhibits gertain ng to Respondent's present financial conditicn and ability to raise capital. One CCS witness presented testimony concerning factors reviewed by security rating agencies in establishing utility credit ratings and on comparisons of Respondent's financial performance to that of other AA utilities. The witness noted that Respondent sold first mortage bcnds in 1980 at yields to maturity of 11.45% for seven-year bonds and 12.70% for tair*y-year bonds which he enaracterized as reasonable costs. The witness offered his opinien that Respondent compares f avorably t0 other utilities. is not in financial Jeopardy and will centinue to be able to raise capital at reascnable cost withcut a rate increase. This witness and a second witness on behalf of CCS testified that certain finane:al goals utiliced by Respcndent as a measure of 1:s financial integrity and standing cc= pared to cther AA utall:tes did not need to te acaleved for Respondent o maintain its present AA first mortgage bcnd and preferred stock ratings. Their evidence was offered in support of a conclusion that the cc= mission should not rely en Pespondent's financial conclusions in detersining the amount of rate relief to be granted. The Assistant Director of CCS presented an exn ht which shewed the perfernance of eaca AA utility in each year 1975-1979 with respect to the six financial statist:cs used by Respondent. The data showed that in each year many of ine utilities did no: I achieve the financial ;oals wr.;ca Respendent has established. I ys t > V -2:-
t' *
, . 80-05'44. . '
w 80-0365 .*.. us y . & .M 3.9?A.^ 5. t . .. 1 . . .di; ,....c- a u.m .; .n .*
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('-s) An CCS witness also presented.an exhibit which showed certain. , s 2
. financial statistics compiled by 'an.' investment banking firm 'for .
AAA, AA, ' and single A utilities for 1975-1979. The. witness used this data to present a ecmparison of AA and single A utilities for this period. The presentation showed that AA utilities had, as a group, higher pre-tax interest coverage including ATU0C, higher pre-tax interest coverage excluding ArUDC, higher return on average common equity, and's lower debt ratto, than did single A .
,.,, ; ,._ utilities ..Q,,.,gA ,Q> p ;,,
/ ; f, - ?.. - l'J7 7; f : . .N. v rJtFUDC4esT. 9 AA and. A single, hqt111 ties..had. equivaleat; averagesifor 20%h ' y j,.N
, n . . . .. .
percentag f> earnings?syall'able;for comunon,*b6th ic and AA utilities had a lower internal cash generation as a per-centage of construction ex;enditures than did single A utilities, 45.1% versus 63.9%. It is to be observed from the witnesses' exhibit that for the same period Respondent had ATUCC as a percent of earnings of 32.6% and internal casa generation as a ;sreentage of construction expenditures of 33.74%; in 1980, Respondent had ATUDC as a percentage of earnings of 54.2% and internal cash generation as a percentage of additions of 24.0%. CCS witnesses also presented several forecasts for periods before and after the in-service date of Olinton 7 alt Sc.1. These forecasts, some of which assumed the granting of the full rate increase requested herein and others of which assumed tne granting of a somewhat smaller rate increase fe.e. 365.3 mill:en) in July 1981. were offered in support of a conc;usion that Respondent's financial c:nditlen, particularly its internal cash generatien, will imp:cve sc stant: ally after Clinten Unit No. 1 ts placed in service and in rate base at its full completed cost and the corresponding rate increase allowed to go into effect. CC3' Assistant 01:ector testified that Respondent's present financial position is only a temporary condition resulting from the burden of constructing a nuclear generating unit which involves a Icng lead time, higner construe:1on costs and high financing costs. The Commission is fully cognizant that Respondsnt's financial
'I condition should inprove after One in-service date of Clinton Unit x/ No. 1: hcwever, the evidence indicates that Respondent faces significant burdens in the near-term to finance its construction program which must be met if the project is not to be delayed and if unreasonable capital ecsts are to be avolded. The Commission finds no need to draw conclusions with respect to the a=111ty of predicting downgradings of Respondent's securities by reference to a specific set of financial statistics. However, the record indicates that Respondent's f;nancial performance during the recent past and forecast for the near tars. as measured by numercus financial statistics, is inferio to that of other AA utilities; and that leadas; security rating agencies presently view Respondent's internal cash generation, cash flow and dent coverages to be marginal for continued maintenance of AA security ratings.
The Commission has reviewed all the financial statistics, historical and forecasted. presented by witnesses in this case relating to Respondent's financial performance and that of otner utilities as well as the evidence presented on Respondent's construction and financing requirements and general ecencmac and financial market condit;:ns. :t is apparent ft:m this data that 1 will be d;f f: cult o ra:se capital in external financial ma Xets on reasonable terms, that Respondent has very substantial financing requ;;ements du: nq the next several years and vill be required to raise a large amcunt of capita' in relation :: its existing capitali:at;on and tnat Respondant's ability to do tais on reasonable ter=s will :e aeriously impaired unless 1:s financial integrity is maintained at reasonatie levels. The statistical data presented indicates tnat Respondent's financial condition has been deteriorating during the last several years relative to comparably-cated ut:110:es. The Commission has fully evaluated all this evidence. and its spec fic findings and cenclusions hereinafter set forth in relation to rate base, cperating inecme and rate of :sturn all reflect due considerat;:n of this evidence. f
< ~s
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.a 80-0564- . *
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and 30-0365. A,-
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*EST YEAR Witnes'ses destifying 'on behal'f' of Respondant presented data '
tn the net or:g;nal cost of Respondent's utility plant at Oe:ceter l 31, 1950 and actual operating results for the twelve months ended December. 31, 1980, and. detailed forecasts of Respendent's financial positten, utility plant and operating results for forecasted periods including the twelve months ending June 30, 1982, which . would be approximately the first full year fo11cwing the issuance. . .
.. f,,'.,. . ,.. p ,s..#vas this Order. . The; w&tness'. testifying ca:forecastedcinformation: - - - .,*f$"vt,Q jf,y
's, .
/p ; 'e .; , Msg ,
presentedW thorough and detailed statement' of' the procedurer'?; .* ?- used by Respondent to develcp its forecast and the cnderlying data and assumpta:ns utiliced in the forecast. - Respondent's witnesses also presented exatbits showing adjustments to hasterical and forecasted operat rg results ap-propriate for ratemaking purposes. A witness associated with a valuation engineering firm presented evidence on the trended original cost and trended cr:ginal cost less depreciation of Respondent's utility plant in service at Oece=:er 31, 1990 fr:m which evidence Respondent developed proposed f a:: value rate bases for the twelve montna ending Oecemmer 31, 19a0 and June 0, 1932. Respondent's Vice President oresented pr posed original cost and fair value rate tases and pr: posed operat ng ince=e statements for the 1980 and June 30, 1992 test years. The Commission is of the opinion that the twelve month period ending Oece=:er 31, 1780 pr:vides the appropriate bas:s for determining the test year data to be used for purposes of this pr:ceeding. The Consissten has, however. reviewed all the forecasted data presented by Respondent including information on procedures and assumptions supporting its forecasts. ELIOTR!c RATE BASE
N oricinal Cost Rate Base N- Respondent's Exhibit 1.27, p. 1, showed tne following original cost rate base before ad3ustments at Oecember 31.
1980: CRIGINAL COST RATE BASE BET PS AO,"US N S - OECIMBER 31. IMO Item Amount f000) Cr:ginal cost of plant in service $1.544.400 Reserve for depreciation (514,413) Net original cost of plant in service t.029.987 Land held for future use 17,284 Construction worX in progress 97,064 Small pro 3ecti - construction work in progress 370 Materials and supplies ~ 20,268 21ectric fuel inventory , 66,773 Accumulated provision for deferred I inecme taxes ' (143,53R) l Contributi:ns in a d of construction ( 1J,63;) ' Customer advances or c nstruction r 1.360) ~ Subtotal 46.;;3 Net original c:st rate base si.076.215 Original cost Rate Base - Oecember 3*. 1980 l Respondent showed in IP Ex. 1 27 aid 11.29 admitted in evicence its proposed rato case ad3ustments and net or ginal cost rate base at Cece :er 31. 1980. Respondent pr0 posed the following cr:qinal cost rate base applicable to a 1990 ( test year: . f- ,\
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!*em A-cunt (000)
Criginal' cost of ;lant in service $1,543,449 Reservc for depreciatica (513,193) Net craginal c=st of plant in service . 030.256
. ; R'te a '
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. ,. ;Th.*. 9 .t< W q.. ' p, .v *,' f .f.,;?g7'fr.anbase ad2ustments .-
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d heid fertfuturs0ase ' 12 Construction work La progress 510,000 small pro:ects-censtruction work in progress 370 Materials and supplies 20,147 Elect :: fuel inventary 61.642 Item A= cunt teco) Accumulated provision for deferred income taxes (143,538) Cont :buti:ns in sad of c nstruc-ica ( 10,631) Cust mer advances for const ct;en ( 1,362) Jurisdictienal allocati:n t 58.475) T al rs a base ad:ust=ents 340.,+i Net c ginal ecst rate base 51.,;0.747 Respondent's proposed rate base adjust =ent f:: land held for future use included only that land held for future use which has a defin te in-service date within ten years, in accordance with established Commission practice. Res;cn-dent also adjusted original cost rate base by deducting elect :c mer:handise inventory; deducting investment in . electric leased appilances and applicable depreciation reserve: and reducing the reserve for depreciation by the cumulative trount of depreciation expense applicable to f "() ( cont :buted property. Respondent also pr: posed ad;ustments
\_ ,/ for urisdict :nal allocation and elect::c fuel inventory wn ch are discussed below.
Jur:sdictional Aliccati n Respondent presented a rate base ad3ustment to deduct f cm retail base plant stems allocated to non-Jurisdict cnal customers, in compliance w;th the Commissien's directive in its Crder in Occket No. 79-0071, requi Ing Respondent to file in all future rate cases a cost of service study per-formed in accordance with Tederal Energy Regulatory Commis-sion ("TERC") guidelines to enable the Commission to remove f cm Jurisdicta:nal rate base, revenues and expenses the rate base, revenues and expenses att::butable to non-Juris-dictional cperations. Respondent's witness testified that the ad;ustment was prepared by first computing rate base and cperating expenses f:: 1960 for the ?.ctal Ccmpany using cest of service meth:ds accepted by FERC: then allocating rate base and expense items to each of the three wholesale classes served by -he Company using the allocatten methods specif;ed in the mest recent FIRC rate c der er which were used as a bas:s f:: the most recently-negotiated rate settlement accepted by TERC for each wholesale class served by Res;cndent. The witness testified that this app:cach assures that no rate base or expense item is excluded f cm feterminatten of overall revenue requirements. The rate base and expense items determined for each class were then added :: Obtain the total amcunt allocated :: the wholesale class. A witness testifying en :thalf of the Oepartnent =f Is s Oeiense posed two :::ticisms :f Respcndent's ::::sdict:cnal allocatics. T :st. ne test;f ed'Respendent should have N. 23-O
(____- l n , J . ; ,,s . s.; ..(, ; C. sy ,x . .;- :. - a. ~.~%...
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80-0544 bih'Y YadSO43b,- M4W M D '.O
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l\ )
,/ . performed thofallocations using.the twel'veiconcident peak
* (*1 C7") allocatica method which he stated is required by TERC and its staff. Second, he cejected to Res;cndent's use of average monthly plant balances to calculata amcunts to be ded:cted frea year-end rate base.
cn reauttal, Res;cndent's 01:ector of Economic Research
. showed that FIRC.has no.,pu21:shed guidelines.croquiring use 5 ,s u a 4.d. s.; .,.p,5:
f . /! ; [,%*' '7,' . - , @Q '[f'fAf!Os TMP 4eth4 Itset , the"yERC Sas Aproved tateL.settl'e ;F, ,' *M *;';.:..i i. ,. - 6%- 4 /. -
- seats between Respondent and its wholesale cust:mers based on other allocatica netacds; and that it has used other methods in deciding c:ntested cases involving other util-isies includ:ng ancther Ill nois utility. The w : ness also showed that FERC used average scnthly plant balances to determine the wnolesale rate bases on which Res;cndent's wholesale rates are based and that Res;cndent's apprcach therefore properly matches wholesale rate base :: the whole-sale revenues actually collected.
The Commissien has reviewed the allocation study pre-sented by Respcndent and the ;ur:sd :::cnal allocat:On adjustment ;; posed by Res;cndent. The ::mmission is of the opinicn that Res;cndent's methodology complies with the C:=m:ssion's d: rect:ve stated in Occret No. '9-0071, is reasonable and appropriate, and should be adc;ted.for pur-poses of this pr:ceeding. Electr:: Tuel inventerv Respondent precosed a rate base allowance for elect::c fuel inventcry of $61.642,000 based on the ac L1 amount of inventory at December 31, 1980 (566,773,000) ed3usted to reflect Respondent's targe coal inventory levels of 70 days supply at all plants and 90 days supply during five winter months at two plants which receive coal by barge; and fur-ss ther ad3usted to reflect average =ventory prices for c:al and oil ferecasted to be in effect during the twelve months ending June 30, 1982. Res;cedent's witness testified that allowance for 2 - 90-day su;;1y at the two plants served by river trans;c:ta-tion for the five winter scnths was necessary to insure adequate coal supplies at these stations dur nq periods when barge traffic may be impeded by free:Ing, ficoding or icw water on the waterways on which the fuel supply is trans-ported. He calculated that use of a 70-day coal supply at all staticas and a 90-day coal supply for five winter months at the two stations served by river transporta:Len results in a system average coal supply of 71.4 days on an annual basis. The witness also testified that repr:cing of fuel inventory to reflect price levels forecasted for the twelve months ending June 30. 1982 was necessary se that the rate base adjustment for fuel nventory would represent the investment required to su;;crt Respondent's fuel inventeries during the ft s: full year that new rate levels will te in effect. Oata was presented in evidence to show that the price of coal per ten and o:1 per ; allen held in inventory by Respondent has increased steadily over the recent historical period. Res; cadent's v;; ness. ano presented forecasted information. testified On the manner in which Res;cndent forecasted One fuel prices, on a plant-by-plant basis and separately for fuel c s:s and transportation costs, on which the preposed ;;;ce ad*ustments to fuel inventary were based. A Staff witness fr:m the 00mmission' Iconomics and Rates Secti:n pr: posed that fuel invent:ry be cased on en allcw-ance of a 70-day supply at all plants and a 90-day supply f : [s ( )
% - ; ee winter months at the two stations served my : ver ::ans-portation: and tha: One invent:ry be priced at tne mos recent availa=le h;s;::::a1 ; ::es vn;:n were these at Tetruary 23. 1981.
-24 .
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The Staff w :nesses' proposed adjusu=ent to elect ac fuel in-ventory amounts to a reduct cn of $5,296,000 from the Company's preposed or ; nal cost rate base. Inasmuch as coal deliver:es c= the waterways may be reduced for the per:od January through March and the sos: cur:ent :=ventory price is more reliable than the price forecasted for June 30, 1982 as proposed by the Company, the Commission is of the opinion that Staff's fuel inventory adjustment should be adopted. --...
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the- regoing 2 :.:- its- review ' of . . ., , e - all the evi:ence in this preceeding, including :s deter-minatten w :a respect :: construction wo X in pr:gress as here.safter discussed. the 0:ns ssion is of the c;inica and finds that Respondent's net cr:ginal cost rate base at Oecem er 31, 1790 wh :h sa:uld be ut:11:ed f:: purposes Of this pr:ceeding is 51,290,390,000. Fair '/alue Rate Base A witness in a valuation engineering firm, testifying on behalf of Res;cndent, presented evidence -a -'a -- 'ed cri;;nal : s and trended 0r:; nal c:s less depree:ati:n of Respondent's utility plant s: Cecesce 31, 1960. The wit-ness test fied that he determined tue :: rent ::s: of Re-spendent's elect::c utility plant using a ::end: q method wh : man method and, where necessary, based indicesonspecific both the to Handy II. ncis Power which he prepared. He testified that the trending metnod was used =ecause 1 is the fastes: and least expensive method to esttmate current cost and has the advantage of starting fres rec:rded ort-ganal cost. Custom indices specific to Respondent were developed to obtain greater precisten on acc0cnts wnere indices based en national, regi:nal or local averages might not pr:perly f l
; reflect Res;cndent's experience. The data used to c:=p;le
's _/ the spec;fac ind::es was taken frem the books and records of account maintained by Respondent. The w ness presented the following su= mary of :: ended c:st and trended cost less depreciation at Oecember 31, 1980:
Trended 00s: Trended Less Oepreciation item 00s t000) (0001 Intangible plan: 5 527 3 500 Production plant 1.7 1,453 1,255,000 Transmission plant 424.685 292,500 Dist :bution plant 1,053.868 628,000 General plant 134.613 59.000 Total depreciable plant 3,354,619 2,224,500 Land 24.256 25.000 Total 5 3 2 9.402 S 0.250.000 The w tness test:fied that he included hydraull: pre-duetten plant. wnl:n is fully depreciated. and land and land
- ghta at c ginal ::st: excluded leased pr:perty en : st:-
mer preciaes. wn:ca the 0:mm ssion has previ;usly excluced from rate base: and made all: cations of pr:perty Oc the gas utility. He further testif;ed that the amoun: of deprecia-tien deduc ed fr:m trendec : s: was equivalent to the ratio of boc4 deprec:ation : ar ; nal : st. Ac : ding to Respon-dent's w : ness tais metacc. wni:n ne C mmissi n has util-
- ed in recen fal: value :sses, produces a larger depre-c:ation oedue:: n taan would a scre accurate depreciatten study, and :terefore results in a censervative talue for
- ended costs ;ess de;;ecia:::n.
/
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- 1, ' d .y * $ *).'. f'}h .] 5';$Q* ),*. ].f. .$ '(~~.'le.Y lyh **'.? * *f.' U. ' Q E'l U ?.N I S .A*Y.Y
~ ;-l(lD, ' ) [ f * ",Q g j The Commission is of the cpanion and finds that the ~
sse trended cost and+the-trendsd c:st'less depreciation as. presented by Respondent's witness is reasonable and should be afopted for purposes of this proceeding. i Respondent's Vice President presented a fair value rate base determined on a weighting of 75% net original cost and 25% trended cost less depreciatten which has been used by
.: - . . the .y 'G . : 4 i .4..c
. witness;.,., -3".
; i]. , 4* Ml>l wf:,L* y,, pres.Commissten. in'recent, fairv'alue"rhte value.;decistor.a.. ,TheadMstments#
, . ented th& 1sroposedffair . band Vith * "G *9^'
on IP Ex. 11.30 admitted in evidence. Based on all the evidence and considerata:ns, including the trended cost less depreciata:n of Respondent's utility plant at Oece=ner 31, 1980: the net cr:ginal Oest of the utility plant at 2ecencer 31, 1980: the weighting utilired by Respondent's witness; and the rate base ad3ustnents discussed in this Order, the C =nission is of the opinion and finds that the fair value electr;c rate base at Oece=mer 31, 1980 which should be utili:ed for purposes of this proceeding is $1.585,400,300. I:.IC2:0 *.". "::,:""Y OPEMT:NG P.E*lL"JES , EX?DiSES ANO INCOME 1990 Ceeratine Results Respencent presented the following statement of its actual operating results for the calendar year 1990: Item Amount (000) Operating revenues S 567.357 Cperating expenses 3 Fuel for electric plants 240,601
) Power pur:hased for resale 6,527 s/ Power interenanged - Net (40,452)
Operation and maintenance 94,729 Cepreciation and amorti:ation 48,938 Taxes other than inceme taxes 51,274 Federal income taxes-current 13,437 State income taxes-current 6,529 Provisica for deferred income taxes 21,101 Income taxes deferred in prior years (3,849) Investment tax credit deferred-net 22.159 Total operating expenses 45e.694 Operating income s 101.4e3 Proposed Revisions to Electric Cerreciation Rates Based on the recommendati:n of the civil engineer testifying on its behalf who presented the results on his review of Respondent's present electric depreciation rates, Respondent pr:pcsed the following revistens to its elect :c depreciation rates: Electric Cecree:atien Rates ( Pin:tien Present Preccsed Production Steam 2.95% 3.32% Othe r-Dies el 3.00 3.00
-Combustien tartine 4.00 4.00 Hydraulic Fully deprec:ated Transnission 2.98 2.98 0 stributica 4.00 3.35
, neneral j ;;&nsportaticn and pcwer i Iss operated egua;nent 20.00 7.99 l I i Other~ 3.54 3.515 l \s_,/ C =pesite 3.4 3.3 l
1 1 8C-C544 l 2 f. , and 80-0365'4 *.n'
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i The sitnesses' p : cipal recommendations f : changes in g N",/ depreciatics rates pertain to..the steam. produc 1:n and. distribution functions. His recommended increase in the depreciation rate for steam production plant was based on the following factors: (1) the depreciation rats for steam production plant is a function of the production life of the facilities, the number of interim retirements, the number of Interim additions, and salvage value or removal cost: (2) the original. invested capital should be recovered by age 35, 3 ; . w..- the typicp1 sta, tion. hae'. produced aaout 80% of;1ts totak: 3 . . , . .
;4..;.f l,%;. ..4" '.- s .%..u.
., .~ " h fet t yheq,Wres' ( 31 the' investment 'id .ihterisr sdditionaV " " '. A '%, ,.'#-92*
and retirements should be recovered in less than 35 years to achieve total rec very at age 35: and (4) andustry data supports removal ::s: in excess of salvage value of 5% The proposed depreciation rate for steam pr:ducti n plant was reviewed by a Staff witness f == the C:mmission's Economics and Rates :epartment. who concluded that the preposed rate was reasonable and consistent with rates used by other Illino s util : es. The recem= ended change in the depreciati:n rate f:: dist :butien plant was based on an analys:s of average service lives based on 00mpany pr:perty records, ana :n simulated plant balance anc ret;;ement rate methods f:r unidentified mass accounts. Respondent's witness test:fied that he used Equal Group Life ac::uals to mat:n deprecia :cn to actual censu=ptica of capital in the dist : ution func-tion. He testified that this method avoids under-accrual and over-accrual for individual units at retirement. The 00mmission has reviewed the testimony and repert of Respondent's w ness pertaining to the recommended revisicas to electric depreciation rates. The Commission is of the cpinacn based en this evidence that the proposed rates are reasonable and appropriate and should be approved; and that
.)
,_,/ the pr posed depreciation rates suculd be utall:ed as appro-praate for ratemaking purposes in this proceeding.
Electric Ceeratine Inceme 12 Ment.is Encec Decem=er 31. 1990
. Respondent showed in evidence the adjustments which :
proposed be applied to historical 1980 operating income data for ratemaking purposes. The operating income statement proposed for use in :ennection with a 1980 test year was shown by Respondent to be the follcwing: E!.ECTRIO OPERATING IN00PI. *dITH ADJ'ST?CCS MI.'IE MC?OS E?CED OECT?GER 31. 1960 Itam Apcunt 1000) Cperating revenues
$$23 472 Cperating expenses Fuel for elec:::: plants 240.601 Power pur:nased for resale 6.527 Power inter:nanged - net (40.452)
Operation and ma:ntenance 108.438 Oepree:ation and amerti:st;:n 4a.052 Taxes Other than :nceme taxes 42.351 Federal incene taxes-current 1.067 3,602 State ine:me taxes-curren: 21.103 P:cvision for deferred anceme taxes (3.349) Inceme taxes deferred in prior years 22,159 Investment tax credit deferred-ne: 126.261)
'ur sdictional allocatzen 423.336 Total cperating ex;enses
$1 0 .34 Operating :ne:me b
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\/ .. Responden*'s pr: posed:1990 operating income statchent ~
\' reflected tne following adjust =ents wnich were not contested by any' party: (1) Operating revenues were reduced by the amount of revenues received fren wholesale sales in 1980. and operating expenses were reduced by the amount of expenses allocated to the wholesale classes (2) operating expenses were adjusted to exclude the effect of the Company's elec-tric ser-haru'tsing activitiesc. membership dues and; fees /in ..
,T. v ?;6,f 's f .$."I'. ;.certhin 'civ1'c!.and sociabeldbs :andithe' coat of analysislof. ', i 4 47 . !p N , f T,%y O
~' proposed' legislation and certain public information costs:
(3) operating revenues and expenses att :butable to Respen-dent's appliance leasing husiness were removed: (4) depre-c:at:0n and amorti:Ati:n expense were reduced by the ascunt att::tutable to c:nt::buted pr:perty; (5) cperating revenues and taxes were reduced to reflect tae removal of the :% excess State P"" "***y Tax and varicus Muni: pal 'Jtil-ity Taxes; (6) current and deferred state inecme taxes were adjusted to reflect the reduct :n effective January,1981 of the additional state ::come tax rate f:cm 2.85% :: 2.5%; (7) depreciation and a=c ::ation expense was ad;usted to re-flect the effect of the depreciation :ste changes prepcsed by Respondent: (3) taxes other than income taxes were ad-
;usted Oc reflect increased T:CA tax expense applicanle to the elect::: utility based on the change in the social security tax laws effective January 1.1981 whica increases the FICA base and rate f:Om $25,900 at 6.13% * $29,700 at 6.65%; and (9) Operat ng revenues and expenses were reduced by the amount f revenues and expenses associated with plant held for future use vn:ch was excluded from rate base be-cause it d d not have a definite in-service date vitain ten years.
Respondent's preposed cperating income statement in-ss cluded adjustments reflecting the effect en interest expense and income tax deductions of utill: nq the weighted average
% embedded cost of long term debt during the twelve months ending June 30, 1982 in determining the fal: rate of return is p cposed by Responden and hereinafter discussed. This ad)uscment was contested by a Staff witness f ca the Comm:ssion's Accounts and Finance Department who presented an alternative interest expense-ince=e tax ad;ustment based en the change in enbedded rates of long ter= dect and preferred stock he anticipated to result frem financings planned by Respondent during the twelve months ending June 30. 1982. The Commission is of the opinion that Staff's prerosed adjustment to interest expense and inccme tax deductions LL more reliable and shculd be ut:11:ed for purposes of this proceeding.
Respondent also proposed adjustments to reflect increases in operation and maintenance (*0&M") expense, invested capital tax expense, and real estate tax expense, on a cents per kwh basis, anticipated by Respcndent du:*ng 1981. Each of these ad;ustments was opposed by a witness for the Department of Oefense and a Staff witness f 0m the Ocmmission's Acc unts and T nance Oepart=ent as being outside the 1980 hasterical test pertad. The three ad-Justments pr: posed by Respondent are discussed below. P00csed Ad?ustmen t: : erstice and Maintenance Extense Respondent ad:usted C&M expense to reflect unit cost levels anticipated dur:nq the twelve montns ending June 30, 1982. The ad;ustment to O&M expense proposed by Respondent was $13,652.a41. Respendent argued that the ad;ustment was calculated in the same manner as the adjustment ut:11:ed by the Commission. In Respendent's last rate case. Occket No. 79-C071, as well as in 0:mmenwealth Edisen 00mcan't Occket No. 79-0214 (1560). Respencent c almec nat tne adjust =ent is necessary if 1; is : recover increased uni ::sts rea-
,s senably anticipated :: occur during the ft st year One new i rates are in effect.
V
-:s-h
i l 30-0544 j and 30-0365 Respondent ; resented evidence to sh w tha: 1:s electric O&M expense ;e %wn sold has increased stead:ly f:sm 0.330 per kwn in 1970 to 0.60c ;e: kva in 1979 and 0.650 per kwh in 1980, although remaining belcw the average for other util ties. Res; cadent's witnesses testified tha: O&M expense is forecasted :: :ncrease on a per unit basis to 0.75c per kwh f:: the twelve months ending Jane 3G, 1982 due to hagn ra:ss of inflatten affecting this area of Respen-dent's operatten and to slow energy sales g :wth. Respon-dent's evidence showed that disallowance of :ne ad!sst=en: in Respondent's last rate case would have resulted in a reductica in 1980 electric operating income of 54.943.838 and a reduction in the return on average equity fr:m 13.4% to 12.5% for 1980. Respondent's witness presented evidence to shev speci-fically identifiable increases in payroll and other expenses account =g for $8.330,344 of the total proposed ad:ustment to expense of $13,652,841. The specifically identifiable increases include wace increases already received by Respon-dant's employees du:Inq 1980 and the firs rwo centas of 1991, add:tional wage and salary expense increases ant:ci-pated as a result of renegotiation of uni:n con : acts covering about 71% of Respondent's work force wht:h expired June 30, 1981. and additional equipment rental expenses for a new 138 KV tie with Central Illinois Public Service ccm-pany. ; The Staff witness testifying on behalf of the C mmissica's Accounts and Finance Department, although reversing Respondent's proposed ad ustment, increased 1980 C&M expense by the annualized aacunt of payroll increases put into effect in 1980 and in the first two months of 1981. He also ad3usted cperating expenses for y the effect of the postal rate increase f:cm 15e to 18c.
- s. /
) The Comm:ssion has reviewed all the data and informa-t cn presented by Respondent in support of its propcsed adjus tment. The Ccmmission is of the cpinacn that Respon-dent's forecasts reflect the after tax effect of the ex-penses as well as the Commission's past practices in this connection and therefore Respondent's proposed ad;ustment should be approved and utilized for purposes of this pro-coeding.
Proposed Ad3ustment to invested Capital Tax Extense Respondent pr: posed to ad;ust expenses for taxes other than inccme taxes to reflect the expense for state tax on invested capital which would be incurred based on the anti-capated average capitalization structure of Respondent forecasted with rate increase at June 30, 1981 and June 30, 1982. The proposed adjustment to taxes other than income taxes was 32,942,000. The adjustment was calculated by applying the anticipated tax expensa per kwh for the twelve sonens ending June 30, 1982 to 1980 kwh sales. Respondent presented evidence to show what the invested capital tax expense would have been had it been in effec- '** -'e years 1970-1979 based on the Company's capitalization in' those years. The exhibit showed that this tax increased steadily on a total dollar and dollars per kwh basis. Respondent's Manager of Rates testified that since Respondent has de-talled financing plans for the next several years, total capitali:ation, en which the tax is computed, can be pre-dicted with reasonable accuracy.
)
1 Based on a review of Respondent's forecasted informa- j tion including its financing plans, and the hypothetical i effect of the invested capital tax applied to .storical j f data as presented by Respondent, the Commission is o'. the '
/ 'Ng'- opinion and finds that the pr: posed ad;ustmen to invested I ! capital tax expense is reasonacle te enable Respendent to I \s. / recover ::s c:s: of service during the first year rates
' s -
80-0544' ' s . e
. . ., .t s- ,..
and. 80-0365 w. ..c. . s. p.
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g
's /
') authorized by tais order are in effect, and saculd be adopted for ;ur;cses of this proceed =g.
Procesed Adiustment to Real Estate Tax Txtense Respondent proposed := ad3ust taxes other than inccme taxes by 5166.000 to reflect real estate taxing levels anticipated during the twelve months ending June 30, 1982. , ..
* ~ - ,.t,, y c . LThez adjustmenk was341culated)by. apply.1ngt theJatio. elec . .M.c y/ .* 'c.h~"
- c. /t,*E V,',;,;.",-
- - ~ " ' ? W tricreal estate taxes dWing the twelve months ending June * -
30, 1982 to electric plant in service and land held for future use dur:ng the corresponding period, to elect :: plant in service and land held for future use at Oece=ter 31, 1979. Kesconcent's vi: ness testified that the prepcsed ad3ustment reflects the increases in assessed valuations and taxing rates vn:ch Respendent will ex;erience during the first full year the rates are in effect. The w : ness pre-sented historical data to show that the ratio of real estate taxes to plant in service and land held for future use has increased steadily from 0.2838C per kwh in 1974 :: 0.4386C per kwh in 1980, and at is forecasted to increase :: 0.457:: per kwn during the twelve months ending June 30. 1932. Based en a review of the historical and forecasted data presented by Respondent in support of the prepcsed adjus - ment, the C:mmission is of the opinion that the preposed adjustment :: real estate tax expense is reascna=le and should be adcpted for purposes of this pr:ceeding. Additional Ad'ustments Precosed bv Staff Staff witnesses appearing on behalf of the Ccamission's p Accounts and Finance Department proposed certain additional "N ad:ustments to 1980 historical data for ratemaking purposes. Res;cndent contested certain of these ad;ustments. The adjust-A-_-) s ments preposed by the Commission Staff witnesses are discussed below. Ad?ustment for Advertisine Ex;enses Respondent presented evidence on its 1979 and 1980 advertising program and expenses which showed total 1980 electric utility advertising ex;enses of SJ65.536. A Staff witness who reviewed all advertisements used by Respondent in 1980, preposed to reduce advertising expense by 543,721
! to reflect tne expense associatad with certain advertise-ments that he censidered inappr:priate for ratemaking pur-poses.
Respondent contested %e ad;ustment with respect to two advertisements. each of whl.h had a 1980 expense of $15,000, which the Staff witness testified should be eliminated from operating expense on the grcunds that the advertisements i contained material of a type for which expenses are not to be included in operating expenses for ratemaxing purposes under the guidelines set f:rth in the Commission's Inter:s t Crder entered in Occket No. 79-C"16 en Novem er 5, 1980. Respondent claimed that since the two advertisements also contained Informa:Len en conservation. for wnica expenses may be included for ratemaking purposes pursuant to the Interim order in Occket No. 79-0 16. SC?. of the expense for these two advertisements snould be included in operating expenses for ratemaking purposes. The ccamission believes that the rule against allo-cating the expenses for individual advertisements set forth l In its Interim order in Occxet No. 71-0715 is appropriate
- and should te followed. Accordingly, tne Ocamission adepts 1
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, .i. and 80-0365 l
the advertise..7 ex;ense a'djustment pr:;csed by Sthff for ratemaxing ;ur;cses.
' Pr cesed Ad!ust' = ent of Invest =ent Tax Credit Amerti stic'n
. A. Staff. witness testifying on behalf of. the Commission!s . . . , . .
.;z : i. .* r. '. Acco.unts.cand;,Fthance repa:: ment .propeared*to stam::>.'for.' ratemakinge.u .: 9. b i G .,.~." -W '# M
~
c' ' I ' # * ~ purposes / the . a=cr:fratten cr
- flow' back cf' the invest =ent tax ' '
credit claimed by Res;cndent :n certain
- qualified progress expenditures
- made in :tnect; n vita constructi:n werX in progress at the ta=e taa: such c:nstrue::en werx in progress is included in ra:a base. The rec:rd sucwed that a: Cece=rer 31, 1390, qualified pr:gress ex;end;;urcJ ascunted :: 5869,624,000 en wh :n Kes;cndent has cla :ed and taken : vest =er.: tax cred :s :n the C: cant of
$65,319,000.
Respondent centested this ad;ustment on the ;;;unds that it is c:ntrary to the :nternal Revenue C:de and a;;11-cable federa. inc::e tax rules and re;ula:::ns wh::h require that, for ratemaking pur;cses, nvestment tax credit may Only be amorti:ed :: used Oc reduce cost of serv :e aver "the per;;d Of :::e actually used in c:=puting the tax. payer's regulated depreciation expense for :he propertf for vn a a cred;; is allowed." Respondent argued that anasmucn as the Staff did no: pr pose ina: the C:mpany advance or teg:n annual becx deprecia: en :narges at a poin: in :: e eariter than O.e in-ser/ :e date of the plant under cen-structicn, a proposed a=ortization per:od beginning e.ree years earl:,er, wnen construction work in progress is in-cluded in rate base, would be directly centrary to appli-cable tax rules and regulatsens. Res;cndent further argued that adoption of the pr: posed ad]ustment would place in ecpardy the prepriety of all investment tax r;redits claimed by Respondent for all past years not closed by the statute of it= tations and for all future years. an tacunt of credits greatly exceeding the
$65.319,000 of tax credits on " qualified progress expend;-
tures" prevacusly claimed by Respondent. The Commission has rev;ewed the pr:pesed ad;ustment recommended by Staff and the statutory provist:ns, regula-t cns and legislative history cited by Respencent. .The Commission is not persuaded that the adeptien cf the ad;ust-ment preposed by Staff wculd result in a better matching of rate revenues to the flow back of investment tax cred::s on qualified progress expend :ures associated with construct:en work in progress. Theref:re, the staff pr: posed ad3ustment should not be adopted. Ad?ustment of Return te 9eflect Pro Torra Fffect o f "ni fo rm Fue. Ac ustment :ause A Staff witness appearing en tee.alf Of the Acc:unts and F; nance Cepartment of the C:tcassion appiled the Unif rm Fuel Ad;ust=en: Clause ("7FAC"1. vnleh Respondent pr: poses Oc adc;; effective with the date o f this Order. :: 1980 fuel costs and fuel costs revenues pro forma, and conc.uded that there would have teen an Over-rec very cf fuel c:sta had the UFAC teen in effect during l?90. Inas=uch as the 7FAC centains pr:vistens for refunding any cver-recovery cf fuel c sts, the witness prepcsed an ad;ustment Oc return :o eliminate the over-recovery fr:m tes; year return. The ad;ust-sent wculd reduce tes; year return by 3654,000 :: provide a tetter matching of tes; year revenues and fuel c:sts. The 00mmission :a Of the Opinicn tnat the pr: posed ad;ust=ent
- saculd no
- te utali:ed f:r purposes of tnis proceeding since f'"', eneral Order 011 e::cdy nq the 7FAC has net been adopted.
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-,\ j i Eased on all the forego ng considerations, the C = mis-
*s,,/ sion is of the . opinion and finds that electric ;erating ' ,
nceme, with adjust =ents, for the test year 1980 which should be utall:ed for ;ur;oses of this proceeding is as follows: . I'IC*RIC CPERATINC INCCME STATEMENT, WI" A0 JUS! MINTS
'"dE*.*/I *2:f"H3 ENCQ CECEMBER 31. 1990
~,,5*l Y1;O & &*35 W .ff.);h,$.? E',*., ;&W.M;l,(~ *%.W% *:'. nwYbit400$k.;; CMM-lh,' Y.jf 59-Cperating revenues $523.470 C;erating expenses Fuel for electri: plants 240,600 Purchased Power not (33.920)
C;eration and maintenance 103.440 Oepreciation and amort::ation 48,050 Taxes other than incese taxes 42,350 Federal income taxes-current 4,820 State income taxes-eurrent 4,160 Provision for deferred inccme taxes 21.100 Inceme taxes deferred in pra : years (3,350) Investnent tax :redit deferred-net 22,150 Jurisdictional allecat; n (26.250) Total operating expenses 427.650 C;eratisq Income S 95.s20 Rate of Return Based on 1990 Test Year Based on the original cost and fair value rate bases and operating income statement for the 1980 test year adopted cy One Commission for purposes of this proceeding, fN Respondent's pro forma return for the 1980 test year at present rates is 6.04% on fair value rate base and 7.49% On l net original cost rate base.
] CCNS*RUC*!ON '40RX IN PRCCRESS Much of the evidence presented in this case related to Respondent's proposal to include in rate base an addit;onal 5412,936,000 of construction work in progress resulting :n a total amount of construction work in progress ("CWI?") in rate base of $510,000.000,- and to cease capital::ation of AFU0C on this amount.
The C:mmission has in previous cases involving pre-posals to include CWI? in rate base. including the last two Illinois Power Company rate orders. Oceket Nos. 75-0435 (June 15, 197') and 79-0071 (Novemmer 28, 1979). developed and applied a standard for deternaning when CWI? may appro-praately be included in rate base. The Commission statad its standard as follows in its Order in Docket No. 79-0071 ( at p.37):
"The Commission views the invest-ment of funds in CW!? as used and useful to the 'c ene f : Of the cust mer val:n may te ncluded as a c mponent of the rate base when, pursuant to a certift: ate Of convenience and necessity granted by the Commissien f:r c nstructica of sucn a plant, the invest =ent grows to a point where its signif;:ance is so great that it c:uld impair financing. To vnat extent such investnent. If any, should be included in the rate base for a particular puni;: utility, must, hcw-1
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ever, be deternined by the specift: ( )
- Irunstances in each rate pr:ceeding .
A. ,/ , and will be censidered by One 0 =nass :: on a case-oy-case basis." . t
- n su;po:: of its proposal to include an additional amount of ;WIP in rate base, Respondent presented evidence on the si:e of its investment in Cwl? in relasten to its a.,,
.,,- . ..,-- y ,as
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.. , q3g..c..s.ar 40141.C43rital13451Cn1 tgs.asi%:ty toixass.the.18 PAC 'of.*its construction prograse,eJadditional' 7,,..:s
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. capital..asEneasured
. L .n Statist:Cs suCn as interest C:verages,~ internal cash genera-Lon as a percentage =f addita:ns to plant, and ATUCC as a percent of earnings: and the effect of Respendent's large c:nstru :len pecgrim en invester attitudes ;cwards Respcn-fent's securities. Respondent also offered evidence en the comparative revenue require =ents result;ng fr:n :nclusion of ,
an amount of CW:? In rate base as cpposed to capitali:ati:n of ATUCC on that a=ount, and en other benefits of including CWIP in rate base fr:m the ;cint of view of both the utalt:7 and the ratepayer.
*he rec:rd sacws that st recenber 31, 1990. Respen-dent's investnent in CWI? was 3927,115,748 :: stituting approximately 46% of :ne total permanent cap :al;:stien of the Company at sna fate. Respondent's forecasts showed that its invest =ent in construction work in progress will exceed 51 billion by June 30, 1981 and wculd ::nst;:ute cver 53% of :stal capl:all:ati:n at Oeces er 31, 1991 and Over 57% of total cap;tal :stion by June 30, 1992.
A witness en behalf of Respondent testified en the effect of Respondent's large balance of electric construc-tien worn in progress on Res;cndent's financial cond :lon and ability to raise capital. The witness testified that
's the lack of a current cash return on a significant portica of kospendent's invested capital has resulted in deteriora-
) tion of 1:s abill:y to service adequately 1:s cutstanding
.\s_/ capital and to raise add:: enal capital for ::s current construc len program.
Due to the dispart:7 between total assets and assets producing a cash return. Respondent's casa earnings from operat; ns are insufficient to pay fixed charges and a reasonable ccmmon dividend. The gap between Operating income after fixed enarges and common dividend requirements has grown from 39.9 mill; n in 1977 to 536.4 million in 1980. This requires Respondent to raise add :: nal capital in order to have the funds needed to service existing capital, whica :ne witness testified dilutes earnings and the value cf present equity holders' investment and is viewed as a sign of a financially unsound enterprise by prospective investors, since a healthy firm generates suf-ficien: Income from its operations to service its out-standing capl:al withcut naving to sell add :::nal secur-Itles for this purpcse. Respondent's witness stated that centinued issuance of first mortgage tends and preferred stock to finance cen-struction wnica earns nc current casa return. ;1us the need to sell securities during per :ds of high inf'ation . and interes rates. has caused c:verage ratios specified in Respcndent's scrtgage indenture and inc rporation decuments to fall to near ne levels at vn ch no additi:nal bcnds or preferred stock can be issued. Prctective pr: visions in Respondent's mortgage indenture restrict the issuance of additional first mortgage : ends unless earnings from opera-tiens are two tines interest requirements en tne bonds cu: standing plus these pr:pesed to be issued. Respendent's evidence snowed ina :s scr: gage interest :verage rat:0 at (W)\
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/N Dece=mer 31,1?90 was 2.45 but that the coverage is fere-('sc) casted to fal; :o.l.65 at.Decemner 31, 1981.and to 1.37 at.
June 30. 1962. Respondent's 4; sess alsc testified that as the balance. of construction work 10 trogress increases. Respondent's internal generation of cash for construct:en requirements declines; due in substantial part to the fact that c.trrent dep ec:atzen. .which represents cash flowi.is b4 sed on t.ie_. s - ? 4.- ,- 5 - .- -
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glant.:iniserytcei.Qat We*,b4:11;;.in'.the' pesk; 9.'0:
%;ff.D. . x, .. .g.y 7.at costs such'. er Jian the i;osts'of facilities currently
. ,. *v -
being installed, and s therefore insufficient to fund current c:nstruction. Retained earnings are also inadequate for this ;urpose. Respondent's internal cass genera::en as a percentage of add :: ens to utility plant has declined frem 61.9% :n 1975 to 24% :n 1980 and is forecas: to decline to negative 1.5% for the 12 months ending June 30, 1982. Reduced internal casa generation of censtruct :n require-ments increases Respondent's reliance en the external capital marxets, vn:ch se the ; resent :1:e are character 1:ed by extremely h gn interes rates c:= pared to hist::: cal levels. Respondent's w : ness testified that f CW:? :s included in rate base. Respondent obtains additacnal cash return unica reduces 1:s need to assue add :10nal secura:1es to
- otain funds is pay interest and dividends. In addi:1cn.
interest coverage rat cs are : proved due to the greater cash earnings and reduced interest requirements since fewer securities are issued. A vice pres; dent of an investment firm testified en the effect of Respondent's large construction program cn inves-tor attitudes toward Respondent's securities. He stated A that while investor attitudes are relativel'I faverkble toward Respondent's senior securities because its security ( '\) ratings have not declined fr:m AA, a decline in creda standing and inus in investor attitudes toward Respondent's senior securities is likely if Respondent's financial and:cators are not maintained at necessary levels during One next several years. He further testified that, with respect to Respondent's c:= mon stock. Investor atti:n.es are neutral to negative cecause earnings per share have not grown 2n recent years and have declined in real terms: dividend growth has been negative :n real terms stock price appreciation has been inadequate; and the quality of earn-
- ngs has declined as the ATUCC portion of Respondent's earnings has risen.
The evidence showed that ATUCC as a percentage of Respondent's earnings per share has increased fr:m 15.1% in 1975 to 54.2% n 1980 and is forecast to be 82.2% for 1981 and 93.1% for the year ending June 30, 1982. Respondent's witness particularly emphastred that investors react nega-tively to earnings :n thc fern of AFCOC because they recog-nl:e that 1: Is not cash and that the utility may have to sell add:::cnal secur;; es s:sply to have the casa necessary to pay ::s c:= men dividends. Onereby reducing the value of existing invest:rs' investment in the Oo=pany. The witness testified ina: unless Respendent's cash flew is 1 proved and the ATU0C c:mponent of 1:s earnings reduced. Invester att - tudes : wards ::s c:mmen securities will deteriorate and investors will not be attracted to ::s new securities. Respondent's witnesses also presented evidence indi-
- sting that Respondent's large inves =ent :n CWIP may result in ::s secur ::es being downgraded by securt:7 rating agen- ,
caes. The record shows that Onese agencies rely on numercus ! f actors which include financial indica: Ors of cash flow. l Internal cash generat :n and cash coverage of fixed :narges !
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including interest ::verage bef:re income taxes, excluding ATU0C; internal cash generata:n as a percentage of additions t: utility ;1 ant; ATU;C as a percentage of earnings a;;11-cable to c::=en equity; dact ratic; cash. ficw :s long term deo and internal cash generatten as a percentage of fact. Data presented by witnesses on behnif of Respondent and witnesses en behalf of the. commission Staff ind :stad that .s. .
' ' $..j ' .( ' , *,.:,s'Jres Responden; is' expergencing/al.sefions idicline tin. tuse mha< - j.p:. *C,& 4Ns+ 9 'h..
t - p "-
'of financ:al'integrityJ Respondent's evidence sh'cwed * - '
that if :s senter securities were dcwngraded. ::s ability to raise ca;;tal would be ser Ously affected and 1:s s of capital wculd increase, since a substantial spread usually exists between the c:st of newly-issued AA rated puol : utility bonds and single A rated pumile utility bends: sc=e institu :cnal invest::s canno: :: will not pur:hase 20:11:7 tends rated icwer than AA: and utilities with lower quality bc=d ratings are in a weaker positten to compete for capital agains: the U.S. Govern =ent whose dett secur;;;es are viewed as having very little risk and recently have :arried very h ;n :nterest rates as well. A Staff w ness fr:m the 0:==:ssi:n's Pelt:7 Analysis and Resesren : vis;:n also tes: fled :n the effects Of a large construe:::n pr: gros on Respendent. He : served ::a: a c:n-struction pro;ect vn ch grews to a censiderahle per:en age of cperat;ng rate base places a :ensiderasle strain en the utility's financial post :en and that the ATUCC treat:en: Of construct;en ::sts places censiderable pressure en its financing requirements. The ultinate = pact in nany cases as an increase in the cost of cap :a1 and c:nstruct:en ::sts due te deterioration in the urality's financial cond : on. Inclusten of construction work in progress in rate base helps to =aintain the financial integrity of the ut:1107 and may reduce capital : sts and c s increases resulting fres construct :n delays. The Staff w : ness presented exhibits displaying results of c:eputer simula:::n runs sacwing financial ratics for Respondent for 1991-1985 If all ATUOO vere cap :all:ed and if varicus amounts of c:nstructi:n work in progress were included in rate base at a lower rate of return than that alleved plant in ser nce. These ext: bits showed Respendent would experience := proved financial ratios af :nstructi:n work in progress were included in rate base, even at a icwer rate of return than that appiled :s :pe-rating plant. Respondent addressed. In ::s evidence, the extent to which including CWIP in rate base balances ratepayer and steckholder interests. Respondent presented evidence to show that dur:ng the last several years in which Responden has been ecnstruct:nq and financ q 01:nten Unit No. 1, Respondent's stockholders have experienced a decline in the marxet price of their s:Ock, stagnant earnings and dividends wni:n have actually declined :n real terms. declining inte-res : verages. and a d::p in marAe price :: Occx value rat:3. Respcndent also showed that at June 30, 1991, :nly amou: 9% :f the ::tal inves =ent in CWIP would te included in rate base and that Respendent's pr:pesed a:cun: Of 5510 sallien : ce included.in rate base would represent :nly accut 474 of the :stal censtruct;:n wert in progress at June 30, 1981. Respendent's witnesses addressed certain tenefits to ratepayers Of including an a= cunt of OW!? In rate case. :: was pointed cut that ratepayers have benef; :ed fr:m Respcn-dent's low rates which have resulted in part fr:m Res;ca-dent's at:11:7 to maintain satisfact:ry finan :al integrity ina has enacled : :: raise ca;; al On faversmie terms. Respendent stated ina: inclus;:n f OW:? In rate base wil
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One of Res; cadent's w nesses testa'ied snat ratepayers teneft: from inclusion of d!? In rate-base because they receive assurances that electric energy supplies will centa-nue to be adequate: they receive the tenef : of lower cur-rent rates := the extent the utility's current capita' costs. are icwered due to the inclusion of CWIP in. rate taser .and ../ c
.,?".-'.#.. W. , .? a .' '.1 ,e' ,%*, M. . /Jacat'presect..cutemers 4:U.TreceWeise'rvicWfrd.m the;.new;..)," Q.W '
e
' plant and benefit"frem' de lower revenue requirements' when
- gces into service. Even current cust:ners vne never receive serv e from the plant may te benefitted if the value of their
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ser."..~e .'.-.s .e ..ew r.'.' .. A..d a ~ ~~~- * - - * *- .s s .' /. ~ ~, - ~ '. e h a.' .' c .' .- s re-de- r.e-sented, ext :::s to shew tha :::a; re
,venu.?
e require.ments over
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The analysis was presented :y Res:cndent using 00:n emcedded capital ::s and incre . ental cact:al c:s dzta.
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mental cap;;al ces: f:r One analys s, to:21 revenue require-ments over the life of the plant were shcun :: te 3:~2 million lower if 3510 mill:en :f censtrue ::n work in pro-gress s included :n rate case. j
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. .e <.adifference,
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in,, a._ revenue a.e.sc ..s.requireme.nts
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. .-a.,."..-..., , . =. a .e .- -i depreciata:n allowances Lnd return requirements cvar the service life of the plant. Res; d '
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. o,%.er .<ac. .. ... . . .-t .. ,.x. s .. ... a.i.ys . s would tend to maxe the alternative of excluding all c:n-struction wo X in progress f cm rate base even zure ex.
pensive. These addit:0nal f acters include the incidence of gr:ss revenue taxes 2nd the !11:nois invested capital tax. and future increases in the cost of spital vn;:n would result in higner total dol'ar return re quire =ents on the larger rate base which the utility will nave if all Ar.OC is
- ap :411:ed.
Respondent's w ness as well as a member of the Commis-ston's Pol;cy Analysis and Researen *1visi:n testified that if a utility has insufficien casn flew t: support current c..s.-".-..-., . . . 1. m a y de .' =. .- -. . c~r .' *. *.. . . c .' .' .. .- 2.- . e n . ~ ~. ~... g . . .. ... o n .,.. ,.,.q. a.3 ..a....
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A Staff wa ness fr:m the Ac::unts and T: nan:e epartment
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seritse and rates du : .; :ne M. year 11.fe of .ne plant,
.vo u..d *. e ..e .* .e.' e*, .. .s.. .* e .'..' r a - , .-. , e .' na .' .. , . .' ~. s .s and senett:s f:: cfferent generations o' ra epayers. The w : ness quann'aed .ae revenue requirements assec:,ated vi_'.
3510 m:111:n of C'4:7 and with .te corresponding amount of ,*
,f .y AC C. :ven as30.-yeaA.'.en:ge:441e plaat cl Ja.[ar.d 'st)cnted sthem (,y.) . . g'".l.}?, p
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pressed the following.::nclus1:n: ""*he ::se.-red varia cas an the ea. angs/pnce rancs of the c:mpared .Marfland ccm-panias. Pet:mac Edison C =pany and Oelnarva Pcwer and *.ign:
- mpany, were not stans u cally significan: 4: :ne nine:f.
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ment frequently made *. hat =arke: investors differennate between :ne capitall:ed A11cwance for Funds Used ".,uring Con-st:acn:n income and Opera:Ing ::ccme."
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=endati:n. 'sith respec to has c:==en s c ncerning TA33 No.
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/7 res :verage test of Res;cedent's Mortgage and Oeed ed (V) Trust. dated Nove:ce: 1, 1943.,: e record shews -24: .ae sc : gage specifies,a calculanen of ne eamings is: deter-minatt:n of interest 0:verage based en *:; era:Ing revenues
- and net non-operannq revenues," and does :: =ention AT.OC in 2.1s connecnon.
.In regard ce OCD w :nesses' " Market Indica ::
' Study" ce Commission views it as 1steresting but of Limited... . .
, ,. e. s; ... f .-
a q. T 2.g ",usg.fot punoses af..this.ps ceedia$.becauselot.it h l::.om .;.
. ,. se:;e and lack.*cf 'c=s;treility to the '1: stint casel 'The' f $ '( h ).:- h '.;.<h,; - L*9'f 7' rec :d shows e.at because two of O.e .hree Maryland util-nes analy:ed by the w . ness are sesidianes of heltng c:=; antes, ne based has study ea =ings per snare data for ce heltng :: ;an es. One of ae a ltng ::= paces :=tains caly amou: ::* of 1:s revenues f::m retni eparaa=s u Mary. tad unile the c c.e: c;erates in hve s nes and re-ce:.ves only 4: cut 18" of :..s revenues fres retnl :;eran=s in Ma:yland. The O.ard utility operates M these lurisdi -
- lens and less han SC". of :s revenues are :btained fr:s 0;e:3 ons in Mar / land. Furter, the rec :d shews -na: -he
;er:entage of Ar.OC :: ea==gs ex;enen:ed by O.ese utal-i nes dur m q te pened studied t d not reach 2.e 'evels .
seing expenenced 27 Res;cndent: n:: was data ;;esentec :: udicate sna: the percentage of C*dI? := ne* plant exper-Lenced by these u nlaties app cacned the levels vn:ca Re-s; cadent is ex; nencing. Res;cndent ; resented ev.dence m su;;c: Of ::s ;; -
;osal to include -ae spec h: a=ount of $510 milien of C'4I?
in rate base. It was noted O.at C.e C=nssion nas heret:- fore pe=1 ted an amcunt of construencn ve:X in ;;:gress to be included := Res;cndent's rate base equal to app :xamately 10*. of net onqual cost rate base. The ;;c;csed amoun: Of N 55'.0 sillion would censutu e a;;; xmately 36* cf the
) proposed on ginal cos rate base at Oece==e 31. 1980.
q ,/ Res;cndent clamed taa :: repares inclus:= cf scre c'4I? taan an amount equal to approxuately 10*. of rate base m c: der to maataan : s financial m:egnty and anhty :: raise capital en reasonacle te=s. Res;cndent's '/ ce President ;;esented forecasted data c mpanng financ:a1 rat cs of uteres: c:verage exclutng AFT.l0 C, internal cash generation as per:ent of adtacns to utthty plant. and Ar.OC as percent of ea=ugs (1) if nc rate increase were q; anted. (2) if a rate :::: ease based en an anount of C4t? equal to 10*. Of rate case were granted, and (3) If te full requested rate merease cased en m elu-sien of $510 malhen of C'4IP in rate base were ;; anted. A similar presentati:n was made by the Assistant 01-rector of OCS for years 1980-1984 us a g f ecasted data prepared by Respendent. These ::mpansens ind :sted that vn:le Oh nt:n
- n t No. 1 is under : nst:uen:n. Res;cedent's financial ;cs: n:n rela n nq :o cash coverages. Intenal cash genera n:n and cash flow as measured by nese sta ns n cs veuld not be sumstannally =;::ved by a rate ucreasa wh::h
=17 reflected m:hs = Of O'4!? egal t: M* Of :ste base.
A Staff wi ness 2;; earing an behalf of tas Acc:un:Is anc' F;ma.ca Cepart=en: Of =e ::.nas :n presented forecasted
!=anc:al and ;erstmq resuus f:: 190' f:: Res; ncent based
- n a nurter of hy;;:neses vni:a :::ained vancus assu=; nens as Oc amounts of consacn:n vc X n ;;:q;ess =chded :.n rate base ranging fr:s $9 .06 n i hen :: 16C0 nih:n w 2.
vancus rates =f retum rangug f :: 10.2 * :: 10 . 9 7*. . The wi =ess' presenta n n was devel ;ed :s m ; ::=puter : del ag
- acanques avalla:1e := ce :== ss = 3:aff.
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\
A re'r.ew Of the detailed presentation made by *ms , wl:5ess shows that< Respondent's f nancial posit on relating
\ %4 '#
o cash coverages. Internal cash generaticn and cash flow is noticeanly ::;r:ved as greater amcunts of CW12 are included ' ' in rate base. A witness testtfying on behalf of Respondent stated . .
'that f the amount of CwIP included in' rata base was limited . .
-l.;.n.,w .. .'*.<:
3 . ., E.tos LOL Respondent,would s :f:sanci al .' integrity! ' and.tfall. .far shorti.of zfmaintaining.,1,ts.f.;..cf its creditWratings wedid. b e' in ' ' ' ' - - -5'%;{.[Q
- ~ ;~~N-4p'hy.y~.
Jeopardy. The witness stated that under this 1:nitat.cn. Res;cndent would not te able to generate suffi::ent cash to improve the nree p:rtant f nane:al and :at::s Of interest 0 verage excluding AT7 C, :: ernal cash generatzen as a percentage Of additions to ut:11 ;' plant, and ATUCC as a percentage of earnings per share. There would be no real 1 prevement in Res; ndent's cash ficw. The Assistant Director cf CCS offered testim:ny en increases in the c st and construction schedule of Clint:n Unt: No. I as related to the proposal include CW:P in rate base. The witness presented evidence sn: wing that the estimated final ::st has increased fr:m 5551.75C,000 in 1974
- $1.732.981.000 in 1990, and that the seneduled c:mmeretal operation date has changed frem June 1980 :: Septemner 1333.
The CC5 witness attributed cost increases and schedule delays s changes in estimates of the scope of work to be acc =plished as conceptual designs were devel: ped into detailed designs use of assumed labor productivity rates "which have preven cnattainable:" and Res; cadent's fal.ure to anticipate regulatory changes or refine =ents pr:mulgated by the Nuc ear Regulatory Commission. He character::ed the industry experience in estimat nq nuclear c:nstructa:n costs
% as " uniformly dismal." The w : ness pointed out that delays in ::=merc al ;erata:n resul: in increased ::nstructa:n
\s_ ') :ost escalati:n and ATU;C ::s:2.
The CCS w : ness stated that Respondent suculd be deenad solely resiensible for increases in the ecst of Clinten Unit No. 1 beca:se Responden elected to c:nstruct the plant using a ce releping tecnnology wn:ch is cap :a1 Intensive and requires a long lead time. He also stated that any c:mpar-ison of ecs: increases for Clinten Unit No. 1 :: the indus-try experience should include all boiling water reactors (3WR) and pressuri:ed water reactors (PWR) cnder construc-t:cn. An officer of Respondent presented evidence on recent cost increases and construe:10n schedule changes for Clint:n Unit No. 1. He sponsored evidence wn:Ch br ke out cost increases as between direct construction costs, andarect expenses and ATU;C. and further explained One increased costs th : ugh a total of 78 line 1: ems. The witness ident - fied changing regulat:ry requirements, including new and amended regula;; ns, new engineering interpretattens of
;rier regulat ens. and stricter applicati:n :f quality assurance requirements, plus increases in :ne AEUTC rate ::
reflect higner :urrent capleal c:sts, as the =a cr reasons f:r : s increases. A Staff w : ness fr:m the Policy Analysis and Research Civ - sten of the Commission presented testimony and exhibits re-lating to a cc=parisen of the est: mated final ::s: and scheduled in-serv;:e date for Clinten Unit No. 1 Oc these for all Other ene-ana: nuclear react:rs, both BWR and PWR, cnder c:nstrue:: n. The witness' findings cased en als study were as f:ll ws: (1) the current est;=ated c:st f:: Clint:n Unit Nc. 1 :: pares favorably with these f: Other
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and 80-0365 t ,..<...sse .a syys n ..a.vag. s . ()
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,.e ..e No.1 is ::=;at;nie w :a those for all Other 3'a'Rs: (3) the estimated cost f:: 01:st:
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e.... ,.... . one-ani reactors ident: fled: (4) the lengtn of delay in the
. scheduled in-service date for.Clinton Unit No.1 since the . -
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. ;,f . 3' dathop ce an ~1ev.18,suar.ce ?cf, the wo;i$tructiborger:ni". .islbaloWidej i . . ',' ' i s '.,.$ 0 M. . .. . . ,.!. d' I.J.,'
- v. 2 < + '
. el. . fdr/all'.of the .teactor. s: 1.S T the ine'r.., ease,d esti -
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has risen a: One-hal' the average rate f:r al. 3WRs: ( 6) the wife range Of :cs:s a=cng rea:: rs can be ex;' . a:ned sys-temat:cally by rany fact::s. s:= a.a....se ,..<.<... ... . .. . .. . ....s. s... ... e.....,. f wh::a would have an
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..s ;ar:17. e.xplain the reasonanieness of its current est:-
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3WRs. 32.310 per KW f:: al. One-unit 3WRs. 31.6 3 per KW for all Ta'Rs. 31.313 per KW f:r al; ;; ants (SWRs and F4Rs), and 52,279 per KW f:: 2;l cne u:: rea: crs. The 0 =m:ssi:n has reviewed the ev;dence presented ay
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.<...-.....s pro;ect have been scbstant:al. the ::s :ncreases and the estimated f;nal cest are com;aratie to t e incustry exper-
- ence. The en.y conclusion val:n can te drawn fr:m the record is tna: Res;cndent has ceen sub;ect :: the same
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ndus try . In Occket No. 79-0071, One 00=m:ssi n decided t: :niti-ate
. 01 in , invasti.
.w.. e C. gation..*a
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. . . . u..estabi. .yo . . ;.,sho4.c... incentives,
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- st cen-gation of the need for an aud;t of management and 0:nst "c-
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incentive scheme to reward er penall:e Responcen f:: su-
.,e ..or c.- ,.or -.s ce.a.. . .s'. . ". .".. s . ..v a. s . ., a *.. .- . . w .a. . ..". .s currently teing ::nducted in Occse No. 30-0167, was in :1-ated because One C:==:ssion was of the opina n that the
. evaluati:n of such matters is beyond the sc pe Of a rate
. a s e , -..e a. d..' ..,- a...d s .".. u .' .d h. e .--... d ".c .a. d. ' . - a sa.,a.as.a . . . -
quiry. To the ex en: the evidence received in this case is relevant to the inqu;ry being c nducted in a ccket No. 30-0167 :: should be considered in that proceeding. The 00mmissi n has reviewed and analy:ed all evidence presented :y w;:nesses for Respendent. Staff and :::ervencrs
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Respendent's rate base. The 0;==1ssi:n has reviewed One 3.... 1.' a . . .d
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( . financ;ng needs, the es ent and 'creseeable ' state of ths
=apital marxe s and Res;cndent's present.ab;11:7:3 ra:se
- ap::al. :ncluding ::s ;:esent. ab:11:7 :s se'; add :::nal f t:st mortgage bonds and preferred s:cck sub ect to the '
coverage requiremen s of ::s mor. gage indenture and Ar.1=les of Incorporation: op nien testimony en Respendent's finan-c:a1 conditten and :n.the. impact. of its large balancs_of . .. . ...q. h.x; .,"~ My. dk %. y.
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. . *, ; h.v n.. '~ydIP.(oris
+
;, g e p1,ta g and '.ab4,1 4 :j,. ,o- mazntain; evidence financiak integrity and' of Re'spendent's'cirrent Iand:,td j'e,, Y" * '
pt: posed rate levels as c:= pared to these in effect for other :llin::s utilities. Based en all this evidence. the
- m:ssa:n 12 of the :ptst:n and finds tha: :ne sa:e of Res;cndent's investnent :n ::nst :::::n vo X :n ;;cq;ess en wh :a 1: :s presently earnin,g no casn :eturn is so grea
..A.. . .. . .s ...,g ..... . , L...a . g,.., .......,
......- . o . ..., .- g .s a.* s v ~ ~~ -
dent's amtlity :: raise capa:al to continue ::s const ction
;;ogran unless Res;cndent is allowed :: earn a cash re: urn
- n a larger ; rt :n Of tha: invest =ent.
..w..
. ._..m..s
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....s... e.a....,
. . . . .,..c..a.. .. ... ...
h
- s. t;;::: .e:f ::s ::nclus :n:
....a .. :.e 2a .....
t;) R 1 espcndent
.a........ -.c. .,. is age a;;;:...s.a.
acting aa .. t e preferred stock because : will not te a:le :: satisfy the interes: ::verage test si its scrtgage incenture and the div: end c verage requirement of s Arti:les of Ince:gora-
- n. ( ) T :ancial rata:s indicat ng interest ceverage.
- nternal cash generation and qual; 7 of earn ngs are deter-10: sting to a point where Respondent's secur :y ratings are in :e:pardy; downgrad.ngs vould raise the ces: of capt:a1 to Respondent and recuce the availability of cap :al in the external marxe s. (3) Respcndent's deteriorating internal cash generation is reducing its anality :: finance construc-
-s
- n f :m internal sour:ss and increasing ::s dependence on s
g the external : api al markets at a time of h ;n capital i
- s:s. (4) Res;cnt:nt's deteriorating finan :a1 :nteg ::7
'-"' resulting fr:m the burden of its large ::nstru:: en program
! :s negatively affect:nq investor at:::udes :: wards Respcn-dent's securities as reflected by Respondent's st:ck ;;;ce which is substantially telow book value :.erety impal n; Respondent's ab 11 y :: raise capa:21 th:: ugh the sale of
. : mmen st:ck. (5) C:ntinued difficulty in raising cap :a1 including the possible ;; habatten on issuance of add::::nal ft:s =cr qage bends and ;;eferred stock threatens Respcn-dent's th:11:7 to raise capa ai needed to c:=plete construc-
- en of Clinten Una: No. i and therefore can resul: in delaf in the c mpletten of the unit which would increase :s-ult; mate total cost.
*he amount of c nstructa:n vc X in ;; ogress which must be ncluded in rate base in : der to maintain Respondent's financial integ ::7 and ab 11:7 t: raise cap :a1 while maintaining reasonable :::ren rate 'evels la no: suscep-
- ble of :elag exactly determined th::ugn a ;;ecise matne-mat;:a; f:rmula. Appil:at;:n of 'ud;=en: by ne ::::ssi:n cased en full censiderata:n of all the facts s nere: f::e
- ted in:1uding the ef fect Of inclusi:n af any amoun: ef 74*? On :stepayers as measured :7 the resulting rate levels is necessary -- ** s determinati:n. Based n c:nsidera:::n .
Of all One evidence. the 0 =m:ss;:n is of the 0;;n on and ,
< . . d s . a . 5 3 -
- s. .' .'. . .~ ~.. .' .' . -..a.s -".c .. . o- '.o..k ...r r. g-.ss sneu;d be :::12ded in Resp ndent's ra:e base.
*n making this determination the C:mmiss :n relies par.
- ularly en the evidence ;;esented by Responden and 3taff vn:cn shcws that Ras; ndent's - financial statist :s rela:Ing
- interna. : ash genera:::= and : ash f; w. vn;:n are the
;;:ne:;al measure:ents :f :ne effect Of :s.'arge .
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,( _j s ;nif::antly := proved or even necessarily maintained at. . . . *p cc::enn levels if any stastantia117 lower a= cunt of CWl? is Included in :ste base. The 0 ==:ss n also :elles, with respect to the effect of this determination :n.the rate-
-payer, on- the evidence which shows tnat total revenue re-quirements ever the life of Clinton Uni: No. I will be lower my approx mately 5397 millien for each 5:00 millica of CWI?
included in rate base: ,ar.d on..the facn that, even with this., .,
".g.. g 7 e,, . .iamosat..'of3csg*-Jction .wogk ':si p=ogresFincluded;in; rate pasey' jyR. ,7, 'p.d.s .M.'i g's
., e . c.~ ** "*
" - Respondent's rates, particularly' ts residential rates? Will '
- entinue to be among the icwest available to ratepayers in tnis state.
Precosal to A iv i tower Rate of Feturn to ::n: ruction
'ac r e. :n ?rceress :neiuce: :n Pate ease A Staff w- tness fr:m the Policy Analysis and Resear:h 0171-sa:n of the 00mmiss;en, who test:fied generally :n favor of inclusion of OWIP in rate base. rec:m= ended tha CWI? In
;; ogress should te included in rate base at a ;;wer all:ved
- ate of :eturn than that appi :atie to plant :n serv; e.
The witness did not attemp :: quantify ne appr:p:14:e resurr d;fferent:al tetween Opera:Ing plant and CW ?. The witness based nas recommendati:n principally On three incen-
- ves to ne ut:1:ty vn:ch he testified would result f :m use of his propcsed methodolo77: (1) The utility wculd be f ::ed a earn s return ratner taan having :: automat:-
cally credited as under the ATU c ::eatment: (:) the 40:11:7 would rece:ve an :ncentive to avoid delays in construction s;nce the firm will be. allowed a hagner return on its in-ves: ment once tae project is completed and en line: and (3) any delays and ::s increases in the pro:ect which require add:: onal financing at higher current marginal costs of capital result an a reduction of the firm's earnings due to regulatory lag.
An economist testifying cn behalf of Respondent ccm-mented on the three incentives referred to by the Staff witness. Respondent's witness testified, w;:n respect to the f::st incentive, tha :: is the inclusion of CW:7 in rate base, no: :ne allowance of a variante return en CWIP, sna: requires the utility to earn its return. W::n regard to the second incentive, the ::a;any witness pointed out that the variable return to ed!? appr:ach must not be ap-plied in a manner that results in :ne overall rate of return allowed the utility being telcw : s c:st of cap :al, s;nce c do so would be inequ :anle o providers of capital and could result in a loss of the tenefits of including CWI? in rate base and ;ead to higher ::sts for ratepayers. In other words, this particular incentive can ex:st only if the utility is either rest :cted ft:m earning its overall cost of capital daring the construction peri d or allowed to earn in excess of its cost sf cap :al during the cperat'onal pert:d. In connecta:n with the th::d incent ve. Respon-dent's witness testified tha ne incentive ar:se fr:m the inclusion of CYI? :n rate :ase. not from the all wance of a variable rate Of return :n 04:P. Respendent's w ness summart:ed his views On the Staff witness' p::pesal by stating that, if the prepcsal :s adopted, 1: must not be applied in t manner wnlen centes Respondent the oppertunity .
to earn :ts overall ::s of ca;::al. The Ocmmission has reviewed the casts f r -he ;r:posal advanced by tre 3taff w : ness. including the supporting
- mputer analyses, and the re uttal testimony offered by Respondent. The record suqqests that at least certain of the incentives ; dent fted in connect; n with the " variable return to CW:P* appr:a:n ex;st : dependen:17 of One rate of f return applied CW:P inclu:ed in ra e case. :: also g's
%J
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) appears tha: he variable rett:n appr ach, if util :ed, =us,: .,
< . e structured in suen a way as : insure the ut:11:y an
- ortun
- y
- : earn ::s ::s: of cap :al, sin:e. if this is not.done, the teneft:s of including JWIP in rate base en-
hancing Respendent's abtitty to raise capital en reascnable' terms may se reduced or ; st. 5:nce implementation of the variable :stura approach in such a way as to insure Re- .
spenden*, an oppo unity.to earn its cost of. Capital . requires .. , , , , , .m .
,-y* . ,g
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.different.f4Lrate;.t:"4.?
- f. - . q.:.%?,S,@.-
* . hth :n*Jrn'all'oved operating' 'A * '-" ~
of return alicwed en c:nstructicn work in pregress, and there is no evidence in tas record to quantify an appro-
;riate differential, this ap;;each shculd be deferred at this tine and exp*: . red fur,.ner The 00=m:ssion is in the ;; cess of investigating the pcssible incentives for cent::1 of future costs at Res;cn-dent's " lint:n 'Jni No. 1 c=nstruction project (Occket No.
8C-0167), and tne staff witnesses' proposal is teing eval-uated in that 1 vestigatten. 3ased en the present rece d bef re :: in this 4:cXet. newever, the 00==:ssi:n is O f the 0; n; n that the 'varia:le return :: OW;P" a;; :ac sa:uld not be util :ed f : purposes of this ;;:ceed ng. RX"" :T R.CTI Respondent proposes that it he allowed a rate of return of 12.07% on 199C c :;inal c:s rate base. Res;cndent subn ::ed evidence wnaen :: cla;:s shows its cost of cap :a1 to be 11.30% during the ft st year rates approved by this Order are in effect. Respondent also prepcses an attrition factor of 0.77% to be included in determining the fair rate of return in order to enacle Respondent to earn its 11.30%
, clained cost of capital during One f::st year the rates are
} n effect.
s
\/ % Respondent's Vice President presented evidence showing the capital structure and ::s rates used s determine.
Respondent's ces: of cap :al during ,the twelve months ending June 30, 1782. The witness testified that the ;;; posed , cap :a1 structure and escedded costs took into account financings planned by Respendent during the twelve scnths ending June 30, 1982 af the full requested rate increase is q; anted. The w nesses' pr:pesed cap :al structure and cost of cap::a1 calculation shewn en nas exhita were as follows: Class of Cap :all:ation Weighted Security Ratie Oest C st Long Ters Oeat 47.944 8.95% " 4.29% Preferred Stock 12.19 8.46 1.03 Commen St:ck Equity 39.87 15.00 5.98-- r.=A . a c.,, Respondent's evidence also showed that at Oecemne: 31, 178C ::s capital structure cens:sted :f 49.87% icag term. deet. 12.56?. preferred s:ccx and 3?.57% : mmen at:ct equity, and tha 1:s em edded c:s: O f .:ng :s:= de:: and ; sferred s.:ce.s cap :al at that date were. respectively. 3.39% and s . 9 a .. . I l In support of 1:s ;;:pcsed cost of capital, Respondent presented the testinony of an economic expert :n the field l cf public ut:1; 7 regulatten including c:s: :f cap :al. l This witness expressed his opina:n that the :p;crtunity ::s of equity cap :a1 for Res;cndent curing the Ovelve mentas ending June 30. 1982 is appr:ximately 15.04 He alac test - l fled that the appropriate pert:d f:r deter =:ntng Res;cn-dent's capital s : cture and ::s: Of sen:c :apa al for i f
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% . r purveses of Ldetermining the Overall ecst'.of cap :al, is .the .
first full year new rate levels will be in effect. The o witness further testified that use of the forecasted capital s ucture as proposed by Respondent would be appr:priate since it would represent a move toward more equity and less doct which movement.as strongly supported by Respondent's , present 'and projected financial condition and financial'* **
- i .. 5% .. 5
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' " Respondent's witness identified the three principle . ;f . ' { -
F'{.%;. ) d, .# Y *.f m %,y ec:ncmac criteria for determining the cost of capital fc a pu=lic ut:lity. namely. maintenance of financial :::egrt:7, at:lity to a:::act new capital en reasonable ter=s. and acti;ty to provide rets.ns to the equity holder c =mensurate wa n returns on alterna::ve investment cpportunities. :n determining the earn =gs requirement en Respondent's c = men s:cck, the witness relied ;; ncipally on the ce= parable earnings or opportunity cost standard which facuses on what the investor's capital can earn in varicus alternative investments of c:= parable risk to Respondent's c:mmen stock. In support of his inalyses. Respondent's w : ness pre-sented data en current and foreseeable econcmac trends and cond:: ens and specific analyses pertaining :: the cost of common equity to Respcndent. The witness presented data showing that general 1 flatten in the economy and meney costs in the capital markets have been very hi;n in recent years, which has resulted :n 1= creases in the encedded costs of senior capital to Respondent and other utilities and in sharp declines in coverage ratics for Respondent and other util: ties: and has caused investors to switch investments from utility stocks to other hign-yielding inves =ents such as long-ters U.S. OcVernment bcnds or tax free municipal f
/' bcnds as the effective yields on these alternative invest.
A ments have approached or exceeded the yields en utility V stocks. According to Respondent's witness. In 1980 long-term U.S. Government bcnds carried a yield of 11.46% and hign-grade tax-free municipal bonds carrie t a yield Of 3.51%. He aisc showed that utility s :cks in general and Respondent's common stock in particular have declined substantially in market price and in market pr ce adjusted for inflation as compared to industrial common stocks; and that Respondent's dividend per share has deci ned substantially in inflation-adjusted terms while its dividend payout ratio has remained at a level (80% or greater) sa:stantially higher than payou: ratics of industrial firms. The witness concluded that for the foreseeanie future: (1) economic trends and cond:::ons which have adversely affected utility financial integrt:7 particularly h ;h inflation. will continue: (2) embedded costs of senic capital will continue to rise: (3) diff - culties in maintaining adequate coverages will centinue: (4) util;;y c:mmon stock prices will be negatively affected: (5) investors w:11 view inflatics as a major risk factor for u :lities: and (6) capital ces s for puml : u:11:0:es will remain high. In selecting investments of comparable ::sk to Re-spondent's commen stock. Respondent's witness focused on financial risk. which is the risk imposed on a firm's ccmmen equity holders by management's decision to issue different types of securities. He testified snat firms with higher business risk usually finance with lower dect ratios while fir =s witn lower business risk introduce greater amounts of cebt into their cap :a1 structures. As ut:10:es have experienced hiquer tusiness ::s4 since One late 1960s. they have :een perceived as having :ncreased financial risk due Is\ . to their highly ;everaged capa:21 structures. s_ / 9
.c f *) .h u , '; ;.5-gg' }j K." j' . - } -K s ' : b ' *?;? ' -('}.~
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C.- 9 ; r Respondant's w : ness found that, the business riskg and ;
~
( -
.
- consequently the financial
- risk, of utilities has increased-
- relative to that of industrial enterprises in recent years due to .high annual rates of inflation. rapidly increasing , e fuel costs, r: stag emsedded capt a1 costs ar.d dec1:ntng c: vers;e rat:cs, stagnant earnings per share growth, in- ,
. , . e :reased dependence by utilities on external funds to finance
. . ., , , , cons ruction,.and grosang resistance to.lurther ratesin- .,.p.. .
. j .,f f ,, a.,,.
, . . . . :'.h . . l Sk:;, 7.,.'., / [.eresses po f. s -
'airitet .4ase(.ons a . comparison 'of' price'-earningsirataos':and e..-
.<, . , ' ' 4. ..5 ! . %.-1 r,i 64:. . ,
,. - ,v . , . : . s .. ., price..tolbook. value ratios"of Nespondent and-other '- , utilities to those of industrial firms as measured by Stan-
+
dard & Poor's :ndex ("S&P"; of 400 :ndustrials, which ccm-
;arison provides a measure of invest:r perce;;;:ns of rela-
- ve risk among investments, : e w ness concluded -hat the financial risk of ut:110:es in general and Res;cndent in particular is currently comparable af not higher than the j financial risk of the average industrial firm. The w ness therefore c mpared, to determine the c;;ortunity ces: cf capital, the return en Res;cndent's com=on equity to that earned by S&P +00 Industrials in recent years. Industrial
, fir =s earned 14.6% and 16.5% en equity in 19 9 and 1979.
respectively, wh;le Respondent earned 12.50% and 10.16% in those years. Based en his analysis, Respondent's witness concluded that the opportunity cost of equity capital for Res;cndent is approximately 15% fer the twelve months ending June 30, 1982. He also Observed in support of has analysis that since new long term debt would cos: Respondent 12% or scre, a 15% return on Respondent's common equ 7wculdrepresenta-spread of only 3.00 percentage points or .ess over the ces: of senior capital, which the record indicates is equal to or l slagatly less than the spread between newly-tssued AA utall:7 bcnds and return earned by Res; cadent en average l c mmon equi:y in the years 1975-1980. 1 An ecencmac expert appearing en behalf of the Indus-trial Pcwer Users also offered evidence en the cost of capital to Respcndent. The witness presented calculattens which indicated a range of the estimated cost of equity
- cap 1:41 for twelve utilities which he stated were comparahle l :s Respondent of 13.38% to 14.31% and for Res;cndent spect-f:cally, 13.6a4 to 14.13%. He stated his epinace tha:
13.70% is a reaconable cost of common equity for Respondent. Using the capital structure ard embedded cost rates of senice capital at December 31. 1980, and a 13.70% return on common equity. the w : ness showed a weighted average cost of total capt:al at December 31, 1980 of 10.33%. < This witness relied principally on the discounted cash flow method for determining cost of equity capital. He also 1 presented a supplemental analysts in'whics he calculated the l spread between yields on AA utility bonds and rate of return earned on year-end commen s:Ock equity by Moody's ' 24 Utilities ever the ten year per :d 1970-19'9 which he added to the current yield on bonds of AA utilities. The Industrial Power Users' w : ness cal:ulated an average spread for the ten year period' of 2.164 and represented the current yield cn AA util;;y tends by the average yield :n Standard & Poor's AA utility bonds for the 15 s months ended September 30, 1980. whien he' calculated :: be 11.31%. l l The Industrial Power Users'. witness presented a cal-rulation of the cost of equity cap 1:a1 c Respondent using
- ne discounted cash flow ( *0Cy) method. under vn:ch the cost of equity cap;tal is stated to e equal Oc the present c mmon st:ck dividend . eld plus ant:cipated growth rate in dividends per saa.re. For als OCT analysis, the witness
! utill:ed a dividend y eld represented by the average div:d-g, end and average marxet price f:: :.e 34 mentns ended Octo er i 1 l ( . I
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- 2. 9. .'. ' g, . . , .G- 'and SQ-0368.*- . s i. ~ # 9' + 1-f-~s I I JV' ,31. 1980. .Ts represent anticipated growth in dividenda,per .
share, he used annual' gr:wth rates in boot value per share cver the five year period 1975-1979 (2.47%) and the ten year period.1970-1979.(2.92%).i , , e- , The Commission notes that while the discounted cash
-ficw approach ' seeks to calculate cost of capital through a '
.; '9 ,
, ...- mathematacals formula :.the selection 'ofrthe time periods to , t .%, .
J '.%. .
i '; 6e .used.'forj deternihing'dividecd jreld 'and growth' fata ris' . T i 3.- {. . ' N 4, .:W i. - ,
.~
J' '
' subject' to' consideraDIe -judgment. The Ccamassion is of' the opinion, based on the high interest rates and inflation which have prevailed in recent years, tha' **e OCT method is to be ut:11:ed, it should reflect greater ::nsiderati:n of data from the most recent has:Or: cal period.
The Industrial ?:ver 'Jsers' witness test fied that the determination of the cost of equity capital for utilities should not be based en comparisons to the returns earned by industrial firms mecause there is less risk associated w;th an investnent in utility cem=cn st:cX than w :h an invest-ment in industrial c:= mon stoc4. The witness supported his
- pinien with an ext: bit which sucwed tha: 3tandard & ?ccr's 40 "::ll: es and the g up of ut:lities analy:ed by sne witness each experienced a smaller var:ati:n in earnings per snare fr:m mean earnings per share than did Standard &
Poor's 400 Industrials ever the period 1970-1979. A Staff witness frem the C:=m ssien's Ac: unts and T: nance Oepartment presented an exhibit which displayed the capital ratics and costs he proposed te used for ratemaking pur-poses. The witness did not recommend a return en common equity but showed for purposes of his exhibit a range of equity costs of 14.0% to 16.0%. He utill:ed Respondent's f'ss capital structure of December 31, 1980 but ad;usted e=tedded I capt al costs to reflect increased costs anticipated for (, financings planned during 1981. He assumed that the icng-term dent financing planned for 1981 would cost 12% rather than 14% as forecasted by Respondent. The witness
- exhibit displayed the following information:
Class of Capt all:ation Weighted s ecu rt t-r Ratio Cos Ces: Long Term Oebt 49.87% S.30% 4.44% Preferred Stock 12.56 9.59 1.09 Commen Stock Equity 37.5? 14.0-16.0 4.26-6.01 [. ' I Total Capital 12/31/80 100.00% 10.78-11.53 The Commission has thoroughly reviewed the evidence presented by Respondent en its financing plans and fare-casted interest and preferred dividend rates and en anti-capated ecom.cmac and capital market c:nd: lens. The Com-mission is of the opinion that the cacital structure and l cost rates for sen? capt:al utall:ed to determine Respon- ) fent's cost of capital for purpcses of this proceeding should be those based en a capital structure and : s: rates at Cece=ter 21, 1990 ad;usted S reflect the effect of the 1981 financ;ng. Having taken notice of the current cost of capt:al and based on considera:1cn of all the evidence presented in this proceeding pertaining to cost of cap :al f:: Respondent, the 00mmission is of the opinien and finds that Respcndent's ! cost of c:mmen equity for the twelve months ended Cecenter
- 21. 1980 s 15h% and tha Respondent's overall cost of apital fs: the same per:cd is 11.47%.
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t g Respondent's Vice President testified that.if a 1980 ,, 4 x . test fear weri used, an attrition facecr. cf approximately e . 3.*??. shoulf ce added to the ecs: of capital determined for tae twelve mentns ending June 30, 1982 in arrivt..g at the fair. rate of return. in order to provide Responcent with a reasonable opportunity te earn its cost of capital during the first year rates authorized by..this order will be in
'effect. *he. commission .is of the opinion Jhat the rate of .- ~. -
, u; -
,, ';. ,. . ;*f'. .,. J.' .T Cretutn'4uthensed ih this .0gder.,takee ~ account of {1ess than*/ CA .,s7~. :. . y.'.' e5 .7: t}p's', f l.g.
V+ c - , S ^!ull. year during the ffrst. year ratescallowed by-thid order-
~
^ v- '
will be in'effect, and accordingly, concludes that the i proposed attrition facter not be adopted. Fair Wate o f se turn - 1960 Test Year The ::mmiss;en has determined to utilice historical data for the twelve months ended December 31, 1980, with appropriate ad;ust=ents as hereinabove discussed, as the basis for the test year in this proceeding. The C mmission therefore is of the cpanien and finds that the fair rate of return which Respendent should be allowed cn original cost rate base for the 1980 test year is 11.47%. The correspon- *^ ' , ,, ' s .dingx ceturn"onif air. value rate: base as 'hereinabove -deter-c ^' mined for:the 1980 test year is 9.25%. The Ocamassion, having examined the entire record herein, and ceing fully advised in the premises. is of the opinion and f;nds that: (1) Respondent is an Illinois corporation engaged in the generation, transmission, sale and delivery of alectricity in I11:ncis and as such is a public utility within the meaning of an act entitled
'is "An Act concerning public ut:11 ies," as amended:
s (2) the Commission has Jurisdiction cver Respondent and of the subject matter hereof: (3) on August 8. 1990. Respondent filed with this Commission tariff sheets centaining rate schedules by wn:ch it proposed a general increase in electric rates for all classifications of service, effec-tive Septemmer 4. 1980: said tariff filing was accompanied cy an appropriate supplemental statement in acccedance with the rules of the Commission; (4) fue nota:e of the filing of said cariff sheets was given by Respondent pursuant to 'aw . and the rules and regulations of the C:=m:ssien: l (5) on August 23, 1990, the C:=m:ssion l suspended the filed tariff sheets to and includisq January 5. ."981, and on Oe-cember 30, 1990, the 00mmission resus-pended said filed tar:ff sheets to and including July 5. 1981. all in accord-ance with the prov s: ns of Section 36 of the Illinois Public Utilities Act: (6) notice of the initial hearing held in this cause was mailed by the Chief Cle:X cf the Commissi:n :: Respondent. the Mayor. City Att:rney and Ole:A cf One I l ($s b t I . -.
t f;r , g ,< ; -l4J i .. f,: , . .; .,-
, . j. . , p . . , y ,. , ;. 80-os4 D *,'
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( ,,..,s. '. .~ .and 80-03 65 . . i.< , a --
;, ,- - ,, .g . s . q ._, , , .
( g municipal :ies within Respondent's * '
. N_ / . , , . electr:c service ' areas 'in .III:nc;s, . and- . i. . /.
to such other perscas or entities as are shown by the 20cket sheets maintained hy
., the Chief Clerk of the C:mmission, all- ~ .
In accordance with the requirements of the Illinois Puhlic Uti;1 ties Act and the rules 'and regulations
- of this Com . ,,,.. . . .. .. , . ,
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(77 on June 4, 1980,' the Commission entered an Order initiat nq a proceeding to cens:cer adcption cf the standards of Sect:Or 111 of the Puhl c Ut:11: Re-gulat:ry Policies Act as they re a e to Respondent: nctice of such proceeding was 7:ven to Respondent, to all parties allowed to stervene in Respondent's last general rate proceeding, to all parties ent:tled to notice of a general i rate proceeding, and. to such other ',
' persons and entitles as shown by the
- w . .
. % cket.shed.ts. maintained byrthe Chief *. . .N , . e - E .V . '..
ClerX of the Ccamission for such cause as required by law and the rules and regulations of the C:mmission notice was also puolashed :n 3 newspapers of general carrulation in Respencent's service territory and the official state newspaper said PURPA investigat; n was properly consolidated for triefing and
- decaston with the investigation con-carning Respondent's proposed electric rate increase
) (8) statements of fact and conclus: cts
\s,,/ reached in the prefatory part of this Creer are amply supported by tne evi-dence of record and are heremy ad pted as f;ndings of fact:
(9) use of a pro forma test year ended Dece: hor 31, 1980, with adjustnents as adopted herein, :s appropriate for ratemaxing pur;cses in this caser (10) Respondent's or:q:nal cost electric rate base for the test year ended Oecenter 31, 1980 is $1,230,090,000 (11) Respondent's fair value electric rate base for the tes; year ended Cecember 31, 1980 is $1,585,400,000: (12) rates which are presently in effect for electri: service furnished :: :ne custs-mers of Respendent de no pr: duce a fair and reasonasle return to Respondent en 1:s investnent :n electric plant in rate base and recovery of Operating ecs:s of electric service furn;sned to ::s cus:c-mers: such ex;st ng rates are no :n all respects just and reasonahie and should be permanently cancelled and annulled when rates allowed to tec:me effective
- y virtue of this Order become effec-
- ve:
I 1 t h s. l l l I l
8C-0544 and 8C-0365 (;21 tr.e fair rate of return v.h h Respendent sneu.4 :e all:wed :n its original ::s: rate :ase and fair value rate base as f und herein for the test year ended "ecencer 31s_1980, is.11.47% and 9.26% s .
.. , . 3,....
.. . .. . .i.n. spect,ively:
, ,,,, .4 ;
'(14)' ' rates proposed by Respondent for its elect :: Operations in Illinois would pr: duce a rate of return in excess of a return that is f air and reascnable; said filed tariff sheets ;r: posing said rates snculd be pernanently cancel 12d 2nd annulled:
(15) Respendent should be required to file tariff snee s setting forth rates that will pr: duce annual elect :: operating
- revenues of approxinately $627,490,000 and result in- annual Jurisdictional ~
cperating income' of approximately ~
$146.780.000 for :s elect :c cperatzens in Ill;ncis for the twelve nontns ended Decem er 31, 1980; such annual ;urts-d ::: nal Operating income would provide Respondent with a rate of return of
':.47% n its cr ginal cost elect ::
rate case and 9.26% n : s fair value electric rate base: such amounts of cperating income and return are not excessive and are fair, Just and rea-
,,, senacle:
e s ( / (16) Responden should be directed to design
'Ng' the rates to be set forth in the tariff sheets to be filed pursuant to Finding (15) Lbove in ace:rdance with the fan-dangs and principles c:ncerning rate design set forth in the prefa cry por-tien of this Crder; (17) the deprecia :en rates pr: posed for adaption herein by Respondent are proper and adeguate: Respondent shculd be directed to place such depreciation rates int: effect effective June 30, 1981:
(la) adept:cn of the six electric ut:11 y ratemaking standards of Secta:n ill of the Pubil: Utility Regulatory Policies Act by Rer;ctdent is app;cpriate to inplement the inree purposes stated in section 101 cf nat Act, but caly to the extent such adoptien is cost-effective: Respondent is, by its filed tariff sheets and etterwise. st :ving to :;1e-
=ent said six standards to the extent implementat:en :: presently : st-effective; (19) tais proceed:ng and Order and the findings and conclusi:nz centa;ned herein : nstitute satisfaction Of the Ocamassica's cbligation under Sect:Ons 111 and .1: of the Puni : Utility Re-gulatory Policies Act ta :ensider. and
/N deternine whether : adept and inple-
) ment. the standards :f secta:n 111 vith
, (
\_ ' respec t: Respcndent: ,
l l 1
. . . _ _ _ _ _ _ _ . _ _ . _ __ ._ _ _ _ _ . _ _ _ _ _ . _ . . . _ _ h-' _J
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and 80-03f.5 .
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- . .V
'(20y any meta:ns or ocjections made by any
( party neret: during the ecurse of these pr:ceedings which are unresolved should - ce resolved in a manner c:nsis*ent with
~
the f:ndings of faen.pnd ultimate c:n-e '. ~' . ., ;;.:$' ?,. .*. av. Wrn:r f... % 3 :.e clusions .h -e 4 :ti.': . herein 3.i .d contained: G..' G. . W.% ?.V!N.:?SW..'3 >..'s?.V;'*.&
' ^- .':.i %."'.Y Hr *
. .' It,I s tTHERETCRE CRDERC'hy the Cosumissic& th'at the . i l Suspensica Order entered August, 20,.1980 and the Resus-pensica Crder entered ::ecenter 30, 1980 he, and they are here=y, va:ateu and set aside.
7 S TJR'"EER CEERC . hat he tariff sheets : ntaining rate senedules pr:pesing a general increase :n elactr c rates filed by Respondent en August 20. 1980 he, and Oney are herecy, permanently cancelled and annulled. IT IS TJR'"ZER CEERC that Respondent be, and it is herety, directed to prepare and file with t2::s C: m ssion * *
- tart!! sheets for electric ser rice conforming with the .
Provisions.of Eindings.(:151 and (16) herointtogether".with... ,. - other applicable provisiens of'this Crder, which will enable ' Respondent to reasonacly cbtain the electric cperating results approved berein; said elect :: tariff sheets shculd become effective f3: serrice rendered en and after the day subsequent to -he date of filing sand with this C:mmission. IT IS T.MR CCERC, pursuant to Section 14 of the Illinois Push: *:tilities Act. that Respondent be directed < to place into effect effective June 30, 1981. the ele:::1c depreciation rates found to be pecper and adequate herein. p IT *S TJRTEER C C ERED that a..y motions or object :ns g made by any party hereto during the c:urse of these pre-
\ ceedings wnl:n are unresolved te. and O.ey are herety.
'\ resolved in a manner ::nsistent with the findings of fact and ultimate c:nclusions contained in taas Crder.
By order of the Comission 2.:s 1st day of July,1981. 1 Chat.~an 4 O U V f a v g b
. . .$ ,s ,.- q..( ' ' ( ' :.
. 80-05M . *#' '
v and ' ,- **
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'. . ,80-0365
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Commissioner Helen Schmid, di,,senting . in parts
. . .
- Thiis ir a. dissent 'only from'that' portion'od this order"which' ~
establishes a mandatory residential time-of-day rate (Rate 3 ) . A customer's bflis, and the rates for the cus* :mer class, should reflect the cost of serving that customer. That basic principle is tempered in each individual case by considerations
.,,such as overall . class;. revenge... requirement, , rate u . .
' . .. , ; p
- t. . , .C, y:,# Kreedom u from ~. controversy <ahdManrea'sonable - rates discrimination, simplicity,wi.'.lp.!,;,
.' - y, gp,*/
The utility's cost '
"l' of providing electricity variespublic . acceptability ins ant byand . revenueSince instant. stability.
the metering for such instantaneous changes in electricity costs to a consumer does not presently exist at a commercial level (and no one in this record has suggested to the Commission such a rate now be adopted), the rate design must, by necessity, approximate or generally reflect this ever changing cost. The extent of the cost approximaticn, given the considerations mentioned earlier in this paragraph, becomes the focus for class rate design. Over the past few years, and even before PURP;. (which standards do not constitute a mandate), this Commission has moved to flatter' unjustified declining . block rates. .The institution ci
" residential ' summer /winte e , differential ,rateslis.a. proper, vay to . .,
,. * . convey { the' fact 'that( tha' general' cost of. electric usage during" summer is higher than in the winter. The Commission instituted lower rates for the winter months, below what would have been required if a single, year-round, flat rate had been in place.
A mandatory time-of-day rate takes this cost pproximation a step further; not only are there rate level differentials based on season hut also on daily time periods and days of the week. To itpose this type of rate structure on the residential class when there is no shortage of electricity is, at the present time and on the eviden.ce before me, a mistake. Lcoking at the record, I can find no cost / benefit study to indicate the customer will be 9 A "better off" from such a drantic change. At oral argument, the Company admitted they did no. know what will happen. Thus, at the threshold. I have serious doubt on the appropriateness of the mac iatory residential rate for this Coxpany. I say "better off" because I believe a proper cost / benefit study should take into account not only direct utility costs, but attempt ?.o reflect the practical imposition mandatory tice-of-day rates may have on the residential consumer's lifestyle and on the company's overall risk. I happen tJ be the only Commissionar who has been subject to a tirre-o f-day rate and found it to be, at the very least, impractical. It is next to impossible to adjust the varying lifestyles of a family to a utility's peak load pattern. At present the daily on-peak periods of nost Illinois utilities vary from 11 to 15 hours so that shifting usage during the weekday is not easy. The financial penalty for not shifting usage is relatively severe. I question the general residential c - ar's acceptance of a mandatory rate. The timc-of-day rate be optional for a residential customer, not mandatory. Th. ac response to the repeated necessity of utility rate rel.y an racont years causes this ccmmission enough problems; we need voluntarily seek out no furtner residential customer cc: plaint. I am also concerned crout the ponnibility that .?.anda to ry time-o f-day rates, in conjunction with such rates for other customer classes, may tend to increase overall company risk as perceived by the capital markets. It would be a tragic ircny if a custoa.or could look for some financial benefit from a nandatory
" time-of-day rate structure only to see it croded or completely lost because the capital markets perceive the utility as a higher risk investment. I trust parties to future rate proceedings will address this concern.
Based on this record, the rato design con;iderations
.T" generally utili ed in the pact by this Comission and that type
( ! of expertise which arises from personal cxperience, I do not v ________________-_-_._______._a
___ _ _ _ .. . . . ._- - ___.__e - i, r s 0544 i y .
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. , . s l ~ ,.,.,,..e,x.believe it -mandatory
^ .. .. .. . ,.. . . - . . , ,c is' pres'ently 'in the. )ublic in.... . .terest "to institute th,e .
proposed time-of-day rate. This rate, under currr.nt,
~. cir,cumstance.s.,
is, in m.y opinion, unjus. t and unre.asonable. .
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- Commissioner Daniel'Rosenblum,' concurring in part and dissenting in part: , ,
r 'a -
,, . .a .... . .s: ..
-- ' v
- I support with enthusiasm the rate design portions of this Order. 'I cannot agree with the order's findings regarding
. revenue requirement and construction work ineprogress ' (CWIP).'
Finally,'I accept the remaining portions of the order. The ' rate desi'gn portion of that, order. re %.h' < ;'.< h e., #1MF.ipe/ficant',eterit9serd ,e' rational rat & attuctdrs.3 $ presents ' concur, ansigni
>. fully..inY" .... .'.
- 7. . .,20 '.d . h*.7"'
"'*<e
; . " the'datailed' analysisiand conclusion of the order relating 'to the " ,
,f .
importance of marginal cost pricing. I 'also concur' fully with the discussion of mandatory time of day rates. The marginal cost testimony of consumer intervenors, Staff and the Company provided an excellent record. Illinois Power should be commended for its cooperative and generally progressive approach to rate design. While I agree with the majority that Illinois Power is entitled to substantial rate relief, the final order grants too much money an't does not utilize CWIP and the AFUDC equity rato in a manner which' provides an adequate return on the current rate-
. payer's . forced investment
in Illinois Power's - massive Clinton project. ' ~
~ '
~
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- The 'responsibil'ity' of ' the commission 'is 'to balance the
~
~-G b; *T . ; '. -' ' *i . f. * ' ;
interests of Illinois Power and the ratepayer. In t.his case that essentially means who pays how much, and when, for the construc-tion of Clinton No. 1. Because of Clinton No. 1, Illinois Power currently has approximately $1 billion invested in construction work in progress. According to Illinois Power's 'own forecast, investment in CWIP will excced 57% of total capitalization within another year. This is an enormous investment in one nuclear generating station for a utility of Illinois Power's size ara experience-- an investment which has reached its current site because of numerous delays and cost-overruns. Illinois Power's investment in Clinton No. I was made with the Com:nission's approval. The inves tr..ent has continued and grown over the objections of consumer intervenors such as the office of Conau.mer Services and Central Illinois Censveer Energy Council. Yet, it is consumers (ratcpayers) who are being asked to pay. Whatever the merits of building Clinton, and whatever tha reasons for cost-overruns, we must nou accept its reality. The raality of Clinton means that we must somehow allow Illinois Pcwer to finance its construction. The difficulty is to somehow providt sufficient revenue while at the same time sharing the risk betw- , and balancing the interests of, ratopayers and the Company. It is the balancing of interests which is at the heart of our responsibility to set "just and reasonable" rates. Case law requires this balancing. State Pub. Util. Comm. ex rel._ City of Springfield v. Sprinefield Cas & Elec. Co., 291 Ill. 209 (1919); Cerro Caouer Producta Co. v. 111. Coat . Cor-m . , 83 Ill. 2d 364 (1980). For this Company, in the midst or its construction program, thin Cormission must balance the need to provide the Cor.pany with the maximum affordable credit ratings, while imple-menting adequate incentives to complete Clinton in as timely and cost effective a manner as possible and keeping current rates as low as possible. For purposes of this rate order, this Commission is faced with the need to allow Illinois Power sufficient revenues to maintain interest coverage ration at levels which will maintain maximum affordable credit ratings and allow the financing of the
,. balance - of Clinton construction at the lowest possible cost in accordance with the Hone and Bluefield capital attraction test.
Fed. Power Com. v. Hone Natural m s ro., 320 U.S. 591 (1944): Blueficid Co. v. Pub. Serv. Corsm . , 2 t> 2 U.S. 679 (1923). Both ITilnois Power and its ratepaycrs have a common interest in - maintaining the maximum affordable credit rating so as to avoid a
, derating and resulting higher interest charges. This is neces-s i .
f 80-0544 .
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. 30 0365 . O,;* *s.)
_ , , , . ; :. \ s) 1 : ~e ' _,M mi sary'. since 'the,. tbtal-) cost of the plant, and a reasonable _.
, share-holder return on investment, are all costs which are paid by the consumer.
'in the-future. The lower these costs .are. today, -the lower rates are-
~ -
The focus on interest coverage represents a significant - departure from traditional " ratemaking. In a traditional rate l case, by the Commission a rate base. multiplies a zeasonable return on rate base If the.' Company?s . operating. Ancome .is (highet) than the result: oL the; sult,iplicationi.. rates ake rJover- : .g.- +,s,f '. .l,.-.g* ,
; v. ij . . . .' , ..Q .3, e..g'*r .9 },?,.tlowembdMuth
'thatMfi',ure g '.ist re' acred. aised'.
An interest .. coverage case turns traditional ratomaking upside down. ' Instead'of con- , centrating on Illinois Power's electric utility jurisdictional operating the entire income, Company, the focus becomes pre-tax interest coverages of i.e., its Illinois electric operations, Illinois gas operations, FERC-regulated electric operations, and its construction operations at Clinton. The revenue requirement is determined by simply calculating how much revenue is necessary g to obtain the desired interest coverages. At t'.is point, the rate of return and the size of the rate base merely become vari-ables used to ratify the increase found by this interest coverage (sometimes called " net income?) method. Rate base is increased
- ,as.necessary:by-an' appropriate amount of CWIP, Some of IJ11nois
' Power.'s
. ' - financial' rhtio f exhibits
,argum. (for. example. 2.174 2.19J andf'2.21).'.and vits ?
?, * , . ., , -
ratemaking method. ents' comprehend this interest coverage financialWhile this Commission must be aware of the Company's overall creditworthiness and may sometimes use the intercut coverage method has method dangerous to determine side-effects. just and reasondble rates, this Commission's ability to effectively regulate. Thosa Co:npany The method minimites the expenses normally disallowed for purposes of ratemaking, such as lobbying and some advertising, are included by the financial markets for Company-wide interest coverages. Thus, the rates set ( f by the interest coverage method do pay for those supposedly disallowed expenses through a higher rate of return or moro CWIP
\ in rate bace, no matter what might be said in the Order. The result in that, under the interest coverage methodology, the Commission's ability to provide meaningful incentives to the Company ment's or to reflect efficiency is the Commission's determination of manage-regulator.
ninimizcd. Wall Street becomes the true This Commission should attempt to simulate the free market by rewarding well-run, and efficient public utilities and by not rewarding those which are poorly run or inefficient. Under the interest utility coverage with es much method, revenue weasmust provide even the poorly run necessary to enter the capital markets at a reasonable cost. I fear thattowhen period is over, the utilities will revert theirthe construction arguments for traditional ratemaking method might have ratepayer advantage. at a time when the interest coverage i The inclusion est coverage method,of CWIP, when combined with the use of inter-provido meaningful incentives further limits the Comnission's ability to completion of Clinton. for timely and cost effective Inclusion of CWIP also creates serious problems of intergenerational equity, and requires ratepayers to make a long-term " forced investment". For ratepayers with high discount rates, particularly thoco with low income or paying high interect rates. for credit, CWIP is a very poor invcatment. agree, however, with the majority and with Ccemissioner BarrettI that in itsthe Com.nission discretion, CWIP doesin have the statutory authority to include, rato bacc. I also reccqui o that, at a given level of rouuired revenue, the record reficcts that it E
~~
cheaper, on a present value basis, to include as much CulP as possible without lowering the equity return below reaconable level. Thus, the une of CWIP in rato bace, whenarequired to f provide aresults method, revenue in requirement lower cost todetermined the consumer. by the interent coverage - fh 2 _ _ _ _ - _ _ - - . _ _ _ - - - - - - - - - - - - ' - ' - - - - ^ - ^ - - '
S0-0544 p 8. . .
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'Becahse. of the "needJ 'to provide. sufficient revenue to. main-: '.4 tain target interest coverages in this case,. inclusion of CWIP is preferable, to an extremely high, rate of return on equity.. Either ,
. CWIP or' an extremely high rate of return could be used to achieve ,
the same revenue requirement, but the high rate of return would lead to higher future rates because it would be used to cap-
- 4
italize AFUDC. I would' include CWIP,ehowever', I'would do so if -
and only if the return on the forced CWIP investmont increased so Wto provide an adequate return to a ratepayet with a 20% dis- . rate.. . I would.have. reduqed..the. AFUDC. pgui.ty component.,byu2;?. w i,.i r.. '.;.g' @' . . .j, , ,, , * . . c. 8. . ; a 4 r, . 3.,..,
. . . . ., pegg,
; coungpoihts temincrease the "I'eturn" on ..the forced ' invest ' ' * ' ,
. !? ment', . lThis lower ATUDC . equity component is ' additionally justi-;
, e.
fied' by the guaranteed nature of the equity return. The total cost of Clinton would be lower and the Cor.pany would have an increased incentive to complete Clinton quickly, since it would capitalize equity cost of constructica at the lower rate of return. I would have allowed an equity return of 15td,13ld on
, the ARIDC equity component, and included $300 million of CVIP, for an increase in required revenues of approximately $90 mil-lion.
In the alternative, I would have rejected all CWIP and , encouraged rehearing, for trg- purpose 'of. permitting'the company -
. to attempt 3 tat. demonstrate a method . through which; an ' adequate. . .
~. , . -
. re.. consumer retArn- on' the forced 'CUIP ' investment .can: be' obtained. '
The majority's Order is based on an interest' coverage method of ratemaking which fails to provide adequate incentives to complete clinton promptly, fails to provide an adequate return on the forced investment in CUIP, and weights the balance too heavily in the Company's favor. I respectfully dissent. a
\
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- Commissioner Andrew Barrett, dissenting in'part:
~ '
Todaf 'tho' majority weighed the ' int'erests. o'f present rate-payers verses those of future ratepayers and current share-
- h. ol,ders.;.
I disagr.e.e with th,.e balance. struck based on the record. one of the major rate level issues in this case is the amount .cf CWIP, : if any, to be included in rate' base for return
.n opponents ~ c f .CWIbiaclusion,.. led by;:the r0ffic.etof .,: -4 y (. %.yNbs-24.,
....... ,. .j.. . .. N ., G. 4 4 1 purposes,S urvices-(0CS),cas
* . .7' ..Consthme'r
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" ,' - compecition. and .. that inon yue: thstaregulation .,is m 'sur,rogate' for 1 4Y *
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utility' / industrial plant < underfcon- - ' struction does not ' generate a return until completion. They argue inclusion of CWIP unreasonably shifts risk from the share-holders to ratepayers during the construction period t.nd that use of AFUDC adequately compensates the Company and shareholder. CCS states that CWIP in rate base gives a utility the incentive to overbuild with capital-intensive: plant and provides a disincen-tive to timely, cost effective construction. ocs argues CWIP in rate base violates the $1rtergenerational equity" principle followed by this commission in other regulatory accounting areas j such as depreciation, nuclear disposal costs, and tax normaliza- -
, tion and, ,in addition, violates the cost. of service standard of T ,;inpricing electricity . This; intervenor,' further.ial contends. Gat.;CWIP' ' - ** ,. * ;;.
. x expensive'to resident ' custom'en "than ,
, *: s .-
rate base 4 is 'more AFUDC and amounts to a confiscation of ratepayer capital and, as such, is a discriminatory rate in violation of Section 38 of the Public Utilities Act. Finally, this intervenor contends that CWIP is not "used and useful" property, thus, the Commiccion has no statutory authority to include it in rate base for ratemaking purposes. I on the other hand, the Company argues that this Commission' has allowed CWIP in rate base for over 50 years with presumed legislative acquiescence. !!owever, a review of the cited cases p shows that the CWIP allowed was either that classified by this Commission as short-term construction on which no AFUDC is cal-culated, or projects where the order indicated completion would quickly occur. Clinton is still 2 (3? 4?) years fro:a ccmpletion. IP also triec to argue "used and useful" can apply to Clinton, but try as it might, it could not do so without changing "and" to
; "or"; at page 35 of their reply brief, IP asserts the phrase i means "one category of the other". The company states the dol-l lars invested in Clinton are devoted to public utility service and that the record shows CUIP cost less or no more than AFUDC cn a precent value basis up to a 20% discount rate. The Company states that, generally speaking, today's customers are also tomorrow's customers, Clinton's construction costs and delays are not out of line with the recent industry experience and that CWIP provides no encouragement for IP to build unneeded facilities; the Company has delayed a planned peaker unit and has put Clinton II on indefinite " hold".
I' I believe this commission does have the statutory authority to include, in its discretion, a measure of CWIP in rate base i , (see, for example, Section 30 of the Act). I agree with past orders of thic Commiccion which has found CWIP, under proper circumstances, to be used and useful ihvcstment (see, for example, Ci t.CO , Dochet Sa925, 59179 Consolidated (1975); CIPS, Docket 76-0304 (1977); Illinois Power, Docket 76-0435 (1977); and _i,llinoi s Power, Dockut 79-0071'(1979)). In the last two Illinois
~
Power general rate crdero, this Commicsion has added major plant CWIP equal to 10% of the Corepany's original cost rato base with-out the CWIP. In the February, 1930 Edison rate order (Docket - 79-0214), the CWIP included in rate base we much less than 10%
'* of the original cost rate base er.cluding CWIP. However, IP seeks total CVIP inclusion in rate base of apprnximately 50% of its original coct rate base excluding all Cu!P. This request would, in my opinion, e f fectively shift a significant amount of con- .
struction period rick to the detriment of the reitepayer today. ( [k % While I agree fully with the current Commission's gtandard for Cu!P inclusion, it appears to me that this is not the pro;,cr case to make such a major departute frr.m the informal 10% rule et
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80-0544
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. <thurch.; . Serf 9uis ?questiD6s 's't'111 exist',aboute the magni'tude of and * .
.the reasons for the Clinton . cost overruns. To state that Clin- '
,n ton's overruns are concistent with industry erperience.in similar projects NC is . to . . admit that electric - utilities generally 'are ,
failing in 'their' collective attempts to control nuclear con-struction cost increases.,, , a '
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Based on a 10% CWIP allowance which, on this record, means no 15%$ additional equity return. CWIP, and the balance of the order, including the with, which L. agree, - . . . .
'.'t." tr.*g,*,
f.,...,,. 5550 :63.'sillion. ; dollars,, - Lhe,
;or. ajrevenue Jiocrease Q,. ,5 c 'e' , , -'I.I'?f..,,- ; 1 1
3 '.g.,y' 9,67% "increpsd
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!. 7 required;would be:. ~over present
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- Decatur, Illinois
- July.7, 1981 -
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Messrs. Wendell J. Kelley B-05
- C. W. Wells -
'B-13
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- . ii4 : : . ': Larry' 'Di.! Hinb3 .ah Bs25?_. " Y *C ~ ;. . *:;*-l ' '- ~
- Illinois Power Company ICC Docket Nos. 80-0544 and 80-0365 The Illinois Commerce Commission issued Illinois Power Company's rate order on Wednesday, July 1, 1981. Attached are seven. schedules providing.an analysis of that order.-
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. , 'Schsdule 'l' summi,rize's . . --Illiho.. ..is Power's'n ~'reque'sted ' eluctric . '
revenue increase, percentage increase, and rate of return. Schedule 2 provides a narrativa highlighting the important l aspects of the rate order. Schedulo 3 provides the imputed rate of return on common stock equity. O) ( Schedule 4 is a summary of the adjustments to net original cost rate base. Schedule 5 provides a list of proposed ~ adjustments and the Staff position and Commission decision on each one. Schedule 6 is Exhibit A which shows the amount and percentage of revenue increase by the new revised electric service classifications based on the December 31, 1980 test year. 1 Schedule 7 provides a comparison of the bill-for typical ' Rate 1 and Rate 2 customers under the new IPC rates and the present rates of other Illinois utilities. ( Nf NAE.~ f C. K.' Miller EGK/CKM/MFB4 Attachs. ! cc: A. E. Gray, B-16 M. P. Mladiner, E-17 E. R. Turner, E L. F. Altenbaumer, F-10 ! pg W. M. Davis, E-20 Ilart, S-i!-W l iQ W. T. O. E. MacBride, S-H-W t I
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Schedule 1 .. . :. . . , . . > 5
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Illinois _..ICC' DocMOti" Nos . ., Power . Comp,any, ....
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80-6344'and 80-0365 Twelve. Months Ended. December.31, 1980 . .
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-. Test Year , . . . , . . . . . n ,, , s . ,: . . .
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Summary Particulars Electric Utility
- 1/ $126,700,000 Revenue Increase Requestg RevenueIncreaseGrantedp- 104,020,000
'3 ~ -
,..' Peri:ent Analycis . * ,- .
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Percent Revenue Increase Requested 24.4% Percent Revenue Increase Granted 19.87% Granted Amount as a Perc t of Request 82.1% Rate of Return Requestgp ll.42S Rate of Return Granted- 11.47% Imputed Return on Common Equity Requested 15.0L Imputed Return on Common Equity Cranted 15.5%
~1/ All revenue amounts exclude tax additions such as Excess State Public Utility Tax and Municipal Use Tax.
2_/ Utilizing Net Original. Cost Rate Base and Net Operating Income as proposed by Illinois Power Company.
-3/ Utilizing Net Original Cost Rate Base and Net Operating Income found to be appropriate by Illinois Commerce Commission.
4
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1 Schedule 2 ' s Paga 1 of 3
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. .. . :.. ;Illi'nois Power Company fw LICC Docket ~Nos. 80-0544-and 80-0365 , ^
(]' Summary-bf Important Aspects'of Rate Order
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n - Overview . P - . . , -' :*' l o
' " ' odd'Y On/ July.f ei 'in Dockst N [S 6A.' '80-0544 0and 8' 0'Is8h';thed$iiEYiUCommerce 0365lgrariEi' rig' T11Tnois 'Po'wer- ' # I'd Company an increase of S104,020,000 in its electric rate revenues. This increase is equivalent to a 19.87% increase in electric rate revenues based on the pro forma test year ended i'
December 31, 1980. Illinois Power had requested an increase of
$126,700,000 in rate revenues which would have corresponded to a ; 24.4% increase. The Commission order provides 82.1% of the
] Company's electric request.
.The m'ost.'significantJaspectsJof this or' der relate':to the .' '
;O-authorized rate' of return .on common" equity' and the~ in~clusion of construction work in progress in the rate base. The Commission granted Illinois Power a return on common equity of 15.5% and allowed $375 million of CWIP in rate base. Also notable is the Commission's discussion of the six PURPA ratemaking standards.
The order in this docket affirms the appropriateness of all the PURPA standards with special emphasis placed on Commission acceptance of marginal cost and pricing concepts. The Commission g/" also found Illinois Power to be implementing all six standards in an appropriate manner. Significant Developments
- 1. Rate of Return The approved revenue increase is based on an electric rate of return of 11.47% on the electric net original cost rate base. The corresponding rate of return on fair value rate base is 9.26%. The approved revenue increase produces an imputed return on common equity of 15.5% for Illinois Power Company.
Testimony concerning the appropriate rate of return on common equity was presented by Company, Staff, and Industrial Intervenor witnesses. The rates filed by Illinois Power were based upon an imputed return on common equity of 15.00 and a Company witness testified that the current cost of equity for IP was approximately 15%. A l witness on behalf of'the industrial intervenors claimed l Illinois Power's current cost of equity was 13.70t. The Commission Staff supported an imputed return on common equity in the range of 14.0% to 16.0%. The return on common equity granted by the Commission is 15.5% and falls within f the range suggested by the Staff. An attrition adjustment of 0.77% proposed by the Company was not accepted by the ( "% ( ,/ Commission.
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Schedule 2 Paga 2 of 3
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\ NI' Illinois Pow'er' Companyt presented evide'nce based on the ' '
actual ~ year ended December 31, 1980 and'the forecasted year
.ending June 3 0',0 1 9 8 2 . Adjustments to~ the historical ~and -
3 forecasted operating results appropriate for ratemaking
.'The ..
-l J :f' ;;t@ purposes were al'so. presented.by. company witnesses.Commiss
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e . 5djnstbd'foF khann"chanYgeis ewa's?thi Spropriat'e' test year"t'o" N ' - be used in this proceeding. Construction Work in Progress was a major issue in this docket. Illinois Power supported the inclusion of a total of $510 million of CWIP in rate base. Witnesses on behalf of the Office of Consumer Services opposed the inclusion of any CWIP in rate base. Staff witnesses proposed the inclusion .of CWIP in . rate -base but ~ suggested. a lower rate 'of
' . - . return.,on then.CWIP component.of rate. base than on non-CWIP- ;- ,-
-rate base.
The Commission did not utilize a variable rate of return to CWIP and approved a total of $375 million of CWIP in rate base. In support of its decision regarding CWIP, the Commission specifically noted (1) the need to maintain the Company's financial integrity particularly relating to internal cash generation and the cash flow needs of the (~ Company, (2) the determination that revenue requirements (T) over the life of Clinton No. 1 will be reduced by approximately $397 million for cach $200 million of CHIP included in rate base, and (3) the fact that, even with the approved amount of CHIP, Illinois Power rates will continue to be among the lowest in this state. The major adjustment proposed by the Company to its return statement related to operation and maintenance expenses. The Company proposed an adjustment to O&M expense to reflect unit cost levels anticipated during the twelve months ending June 30, 1982. Evidence was also presented by the Company to show specifically identifiable increases in payroll and other expenses accounting for over 60% of the proposed adjustment. The Commission adopted this adjustment stating that it was in accordance with past Commission practice. A summary of proposed Company and Commission' Staff adjustments to rate base and return items is attached as Schedulo 5. The Commission's decision concerning each adjustment is also noted.
- 3. Additional Studies The Commission has ordered Illinois Powar to file two
(^'N studies relating to the feasibility of time-of-day rates. b Mithin 60 days of the date of the order in this docket, the
Schedule 2
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' Cothpa. ~.~ ;f. : .+ .; . s :.: -ny. should' ~ filea report add'i essing the feasibility .. of expanding ~ Rate 3 to approximately 5%'of~.the residential .
class for the ' summer sensort 'in 1982 . Approximately 23,000' ; customers would be included in such a rate.. ~, The Company "'
." ~also was directed'to file a reporti not'later than'120 days -
following the date of this. Order, addressing the feasibility the ., largest . Rate ll ...i. , . , v ., .. ; .t
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of an 'exp[ ps ,;,. licit(',. time-of
, day ..frate
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L As a result of its discussion of the six PURPA standards, the Commission ordered Illinois Power to file two additional studies in future rate cases. A staff witness recommended that in future cases, in addition to its marginal cost studies, the Company should prepare a study on inter-class revenue requirements based on marginal costs. The Staff also recommended that in future cases the Company present cost / benefit studies of Company 31oad canagement. ..
, programs 4and an. analysis.-of' customer' reaction'to them.. The :
Commission adopted.both Staff. recommendations. 1
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Schedule 3 u _, . - ..<-- - ~.
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ICC 'Do6ket '~Nos .' 80-0544 and 80-0365 Capital Structure and Authorized Rate of Return Imputed Rate of Return.on Average Common Equity Capitalizappon Earnings Rate of Particulars'
- Ratio- Rate Return .'
.c. . .
~. .
Long Term Debs 47.94% 8.90 4.26% Preferred Stock 12.19 8.46 1.03 Common Equity 39.87 15.52/ 6.18 100.00% 11.47t 1/ Capitalization at 6/30/82 2/ Using Rate Case Rate of Return on Not Original Cost Rate Base at 11.47t as authorized by the Illinois Commerce Commission. l l [
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. - , .Sch.idule 4 -
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Illinois Power. Company .
._. .. .. ICC Docket *Nos. 80-0544;andz80-0365: .
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,... 1, . ' . 6-v , - Q,,.>. . . < 4.-22.K h te Base /.and :Operkttinge Incoins.J ':I "?'e .., . '.)e ?E# '? .c for Year Ending~ December 31, 1980 Electric Utility Proposed by Granted by Particulars Company Commission (000) (000) hriginal Cost Rate B'ase' - ' '
; $ ' .9 1 0 ,'7'4 7 S' 905,090 -
Construction Work in Progress 510,000 375,000-Net Original Cost Rate Base $1,420,747 $1,280,090 Rate of Return 11.42% 11.47% Return Requirements $ 162,201 S 146,777 Return at Existing Rate Levels S 90,639 $ 89,429 Adjustment for Allocated Income Taxes on Additional CWIP Included in Rate Base 9,495 6,391 Adjusted Return at Current Rate Levels S 100,134 $ 95,820 Return Deficiency 17 S 62,067 S 50,957 Revenue Deficiency- S 126,700 S 104,020
-1/ Revenue deficiency equals return deficiency multiplied by tax factor of 2.04134 t i kg
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Schrdulo 5
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l Illinois Power Company *
. ICC Docket Nos., 80-05.44 and.80-0365 .
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Proposed Adjustments to Rate Base and Return Items .
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f i: 'i . ' _.r.: *Ir. 8 i .': f .' 'i.i. +: ; ' '. ,A V" 4 Commission Adjustments Proposed by IP Staff Position Decision Jurisdictional Adjustment Not contested Adopted Legislative E:' pense Adjust. Not contested Adopted Leased Appliances Not contested Adopted Depreciation on Contrib. Property Not contested Adopted PUT & MUT. Taxes Not contested Adopted Replacement. Income Tax e . Rate Change Not contested Adopted Capital Tax Adjustment Opposed Adopted O&M Adjust. to Reflect 1982 Price Levels Opposed Adopted Real Estate Tax Adjust. Opposed Adoptepj Interest Expense Adjust. Opposed Denied-Proposed Deprec. Rates Not contested Adopted FICA Tex Increase Not contested Adopted Land Held for Future Use (In service after 1990) Not contested Adoptogj Fuel Inventory Price Adjust. Opposed Denied-CWIP Additions Partially Supported Partially Accepted Additional Adjustments Proposed by Staff Commission Decision Advertising Expense Adjustment Adopted ITC Amortization Adjustment Denied UFAC Return Adjustment Denied !
-1/ Commission denied IP adjustment in favor of adjustment proposed by Staff witness.
~2/ Since UFAC provision was denied by the Commission, this adjustment was unnecessary.
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. .7 Exhibi A .
Final' Rates ILLINOIS POWER COMPANY - G. s
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r. Estimated Electric Revenue Increase if ., . Twelve Months Ended December 31, 1980' .-.
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- Line Service Revenue Incr.l.. ease f- / ,
- o. Classification Customers Mwh
' Amount (000) Percent. ' '
(1) (2) (3) (4) . k.(5) *
' I.',
1 1 112,363 343,000 $ 2,800 : . c1(. 0%
^
2 2 353,279 3,587,000 ..
. 36,500 .,71.0.'
3 3 897 48,000 - 200 .,12.2 , 7 4 4 -
.' *15. 5 - .
5 Residential Subtotal 466,546 3,973,000 '. 39,500 ~~120.5 .J -
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6 10 27,847 137.000 1,900 2-19.9 ' 7 11 26,699 2,306,000 - 20,500 719. 0 ; 3 -13 - 5,000 '
.514.4 9 Cencral Service Subtotal 54,546 2,448,000 22,400 Y,19.1 -
. . s 6 10 21 320 2,737,000 19,200 .k20.8 -,
11 24 34 2,892,000 - 16,400 '?20.6 12 13 30 Individual Contracts 2 3 207,000 667,000 700 3,000 l.1425 i ( ,-
, 'c18.4 ,
14 Industrial Subtotal 359 6,503.000 39,300 [,.20.4 ~.~ 2 . -. 15 39 - 76,000 , 400 $,9.6
- 16 45 379 54,000 700 -
.[23.2 !.. ,
17 Lighting Subtotal 379 130,000 1,100 .14.7 mC 10 43 234 195,000 1,400 .Ti$.0 - 0F . 19 42 32 41,000 300 * ' .24'.1
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20 Municipal Service Subtotal 316 236,000 1,700 ,.24.8
- k. , [
21 Total 522,146 13,295,000 $104,000 '
'[20.1%
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1/ Dased on actual fuel cost adjustments for the twelve months ended December 31, 1980. f - -
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ICC Docket Nos. 80-0544 and 80-0365 Electric Bill Comoarisons - 1 l S.C. 11/ S.C. 2 2/ j Percent Over Percent Over { Annual or (Under) Annual or (Under). l Utility Amount IP Revenue . Amount. IP Revenue
~
Illinois' Powerf L- $21.0.'35' t" $676.17 -
'~'%- '
i Union Electric 190.75 (9.3) 558.89 (17.3) Iowa-Illinois G&E 241.98 15.0 782.51 15.7 Central Ill. Pub. Serv. 249.62 18.7 751.75 11.2 Central Ill. Light Co. 256.67 22.0 763.84 13.0 Commonwealth Edison 1! 273.93 30.2 872.90 29.1 1/ Typical small residential customer with annual usage of 3,522 kwh. 2/ Typical residential cust6mer with annual usage of 11,465 kwh.
-3/ Commonwealth Edison rates effective July 2, 1981 were not available. The reported amount was estimated by increasing the previous rate by 14%.
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Schedule 7
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Illinois P_ower' Company ICCnDocket
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ic"_Bl'll*':Compahi'sciis'?' s.c. l1/ s.c. 22/ Percent Over Percent Over Annual or (Under) Annual or (Under) Utility Amount -IP Revenue Amount IP Revenue Illinois Power
.$210.35 .%.. , $673.54- %' . ,
Unio'n Elec'tric'
'190.'75' ' ( 9' .' 3 ) * ' : 5 5 8.'8 9" '
(17. ) Iowa-Illinois G&E 241.98 15.0 782.51 16.2 Central Ill. Pub. Serv. 249.62 18.7 751.75 11.6 Central Ill. Light Co. 256.67 22.0 763.84 13.4
- ^ommonwealth Edison 256.05 21.7 817.98 21.4 l_/ Typical small residential customer uith annual usage of 3,522 kwh.
2_/ Typical residential customer with annual usage of 11,465 kwh. ( v i I l
EXHIBIT IP-8 STATE OF ILUNOfS lllinoi.s Conunerce Commission 337 EAgf CAPITOL AvthWE SPftlNGPIELD. ILUNOls 32708 January'13,.E983 , Re: 82-0152
Dear Sir / Madam:
Enclosed herewith is certified copy of order entered by the Commission. Kindly acknowledge receipt. 4 Very truly yours, Rose M. Claggett Chief Clerk RMC:alb l 0
.. ... .. ,, . e ,
STATE OF, ILLINOIS ,. , ... , [] # ILLINOIS COMMERCE COMMISSION ws/ Illinois Power-Company ,
- 82-0152 Proposed general increase in : '
electric'and-natural gas rates. 3.
. . ,, , ,0RDER. .
. % '%.:c i .' , % *E *N.*yhe Commiss,i.ony,' ,, ,, .,'(.
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5 6.h ).). f, }:,< f . _: .i . , ys _& s y .,q.. On February 19, 1982, Illinois Power Company (" Company,"
" Respondent" or " Illinois Power") filed revised tariff sheets in which it proposed general increases in its electric and gas rates effective March 22, 1982.
Notice of the proposed general rate increase wag posted in a conspicuous place in each of Respondent's business of fices and pub-lished in newspapers of general circulation throughout Respondent's service area, and the proper sheets were maintained for public in-spection.in Respondent's business offices pursuant to the require- ,. s. +
. mentstof Section 36 ief .the Illinois- Public Utilities Act and the '
4 . provisions of . General. order .157e Revised, of',the Commission. Respon- *'
. . . *N. .. .'
'i dent'haal'so?
s complied.with th'a "preffling" requirements" contained: i
'in the Commission's Ge'neral order 210.
An examination of the filed tariff sheets resulted in a detur-mination by the Commission that hearings should be held concerning the propriety and reasonableness of the proposed general increases and that, pending hearing and decision thereon, the filed tariff sheets should not become effective. Therefore, on March 10, 1982, the Comnission entered an order suspending the effective date of the filed tarif f sheets to and including July 19, 1982, and on
-s July 14, 1982, the Commission resuspended the effective date of the
[ filed tariff sheets to and including January 19, 1983.
}
Petitions to Intervene were filed on behalf of Central Illinois Consumer Energy Council: The People of the State of Illinois (" People"): U.S. Department of Defense Illinois Public Intereat Research Group ("IPIRG"): A.E. Staley Manufacturing Company Monsanto Company Jcnes & Laughlin Steel Corporation Olin Corpor-ation: Borg-Warner Chemicals Division of Borg-Warner Corporation General Tire & Rubber Company General Motors Corporation: The Illinois Association of Community Action Agencies ("IACAA") : Madison Concerned Citizens Organization: Jessie Mae Marbles Deverly M. Cafin Ebbie Lees Merdice Robinson Gertrude Palmer; Cdna Rowan Vermilion County Citizens Action Committee for Econcmic opportunity, Inc.; Senool District 116 Board of Education, Champaign County, Illinois (" Urbana School District") ; Carlisle Tire and Rubber Company, Divisic'.: of Carlisle Corporation PPG Industries, Inc.: Granite City Steel Division of National Steel Corporations
. Amoco Chemicals Corporation Community Unit School District No. 3 Board of Education, Champaign and Piatt Counties, Illinois (" Mahomet-Seymour School District") ; McNeil Asphalt Co.: Anthony-Cak, Inc.;
Champaign Asphalt Company University Asphalt Co.: Keene Road Builders, Inc.: Maclair Asphalt Company, Inc.: Reese. Construction Company: Gunther Construction Company: Illinois Asphalt Pavement Association: Illinois Valley Paving Company Advanced Asphalt Company: Wabash Asphalt Company, Inc. Firestone Tire & Rubber Company; and Randall L. Plant. In addition the following municipalities filed Petitions to Intervene or became formal intervenors by causing to be filed the written appearance of their attorneys: Town of Normal, Village of Buffalo, City of Galesburg, City of Spring Valley, City of Peru, City of LaSalle, City of Kewanee, City of Belleville, City of Dan-ville, City of Urbana and Village of Glen Carbon.
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'All pesons and entities hereinbefore listed were ' granted 's intervention by Order.of. this Commission and allowed full opper- -
tunity to participate in these proceedings. y Pursuant,to notice as. required by law and by the. rules and
- regulations of this Commission, the initial hearing in this cause was held before a duly authorized. Hearing Examiner of the Commission. '.
at its offices-in Springfield', Illinois, on April 16, 1982. In 4 - . addition.to Bespondent and. Int,erv$nors, appearances ' vere entere4 by.... . . ' s.. . 2.... .
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6, a f '/J . l . . Finan'ce and Engineering Departments and its Policy Analysis and Research Division ("Staf f" or "Staf f witness") . Subsequent to the initial hearing date additional hearings were held at the of fices of the Commission or elsewhere on forty-one days as shown by the docket sheets maintained by the Chief Clerk of this Commission for purposes of this cause and as a part of the record in this case. Hearings were also held in the Illinois municipalities of Danville, Urbana, Bloomington, Spring Valley, Decatur, East St. Louis, Kawanee, Belleville, Granite City and Galesburg, at which times statements were made by and on behalf of certain members of the , public and.other entities. having an interest in. the subject '
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,- . . . . , . r 1,' 1982, at the co'nclesion of full and 'public on October hearings, the record in this proceeding was marked " Heard and Taken." Briefs were filed by the parties. Oral argument was heard by the Commission on January 1, 1963, at which time the motter was marked " Heard a>d Taken under Advisement."
The record contains in excess of 4,700 pages of transcript and numerous pages of prepared written testimony and statistical and other exhibits. The record provides a detailed analysis of the financial af f airs of Respondent, its operating revenues and expenses, the original cost and trended original cost and associated f~~',T g, / accrued depreciation of Respondent's property, the cost of capital and other matters relating to rate of return and other issues raised in this case. NATURE OF RESPONDENT'S OPERATIONS Illinois Power furnishes electric and gas service within areas of Illinois comprising approximately 15,000 square miles. At December 31, 1981, the Company furnished electric service to approximately 525,426 electric customers in 422 communities, in areas having a population of approximately 1,405,000. The largest cities in which electric service is provided are Monmouth, Galesburg, Kewanee, LaSalle and Ottawa in north central Illinois: Bloomington, Normal, Jacksonville, Decatur, Champaign, Urbana and Danville in central Illinois and Wood River, Granite City, Collinsville, Belleville, Centralia and Mt. Vernon in southwest Illinois. The Company's electric generating facilities have a net summer capability of approximately 3,815 MW, with approximately 3,626 MW in five conventional steam generating plants and the rest in other generating facilities including internal combustion and hydro units. Respondent also has approximately 55 MW of capacity available under contract with Electric Energy, Inc., and maintains interconnections with major neighboring utilities. Illinois Power is currently constructing a sixth generating station near Clinton, Illinois, designated as Clinton Unit No. 1. Respondent will own 760 MW of this unit and two wholesale electric cooperatives will own the remaining 190 MW. Respondent's evidence indicates that Clinton Unit No.1 is scheduled to be in service in August 1984 at an estimated final cost of $2,170,086,000. At December 31, 1981, Respondent furnished gas service to approximately 383,474 gas customers in 322 communities having a (-ss total population of approximately 1,075,000. The largest cities in which gas service is provided are the same as those in which electric service is provided, with the exception of Ottawa, Bloomington and Normal, and the addition of East St. Louis and Peru, Illinois.
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82-0152 PROP 0520 CHANCES IN~ ELECTRIC RATE SCHE 00tES - The proposed changes in charges for electric service include general increases for all retail service classifications. Respon-
, dent's witness testified that the proposed revenue . requirements and, . ~ ~
re'venue' increase by class' were based' on the 'results of a marginal ' cost of service study which showed that the municipal and residential
. customer classes provide a relatively. low percentage recovery of- - :
. marginal. costs at current rates. Respondent's proposed rate. design, .
. : . k..g . GL 6;;.~r6.ultsun:.1.arer percentagujacrwer.f pthewcIapey,,than.f%
..o'ther" classes of5 service? ' - M ~ * ~ ' .pJ,MyO.F.';
l(Nh- '/ A Staf f witness stated that Respondent's proposed allocation of its electric rate increase among the customer classes makes substantial progress in bringing class revenues in line with cost of service, referring to a marginal cost of service study presented by another Staff witness. The Staff witness proposed two rate design changes, discussed in a subsequent section of this Order, that would result in an allocation of revenues slightly dif ferent from that proposed by Respondent. The rate design Staff witness also recommended that any reduction .in. Respondent's proposed rates , be made 'on a pro rata . basis in.a11 service classifications except t S.C. 30 and Rider S, which would remain as , filed, and.S.C.10 and ..
42, whichtwould' receive's reductiori of 259 more'than the proportionate -
amount of the overall reduction. A witness appearing on behalf of Industrial Power Users stated that embedded cost studies deserve greater weight than marginal cost studies in determination of cost responsibility of the various customer classes. He recommended the allocation of a greater percentage of the proposed increase to the residential class, .and a smaller percentage to the industrial class. He considered cost of service principles and the principle of gradualism. Specifically, the relative percent increases were limited to a C/.) maximum of 1.5 times the average percent increase (excluding fuel recovery). This Industrial Intervenor witness testified that residential rates under his proposed allocation to the residential class still fell short of the cost of serving that class under either an embedded cost or marginal cost measure, and that the industrial rates resulting from his allocations to the large general service and large power classes exceeded both embedded and marginal costs. The witness recommended that any reduction in the requested rate levels be allocated among the classes in the same proportion as the witness used to allocate the increase, and that any reduction in industrial rates be accomplished by reducing energy charges only. The Commission is of the opinion that Respondent's allocation of its proposed rate increase among the various classes of service, with the exception of S.C.10, reflects the marginal costs of serving each class to the extent possible withcut providing a disproportionately large increase to any one class. Illinois Power's allocation of its proposed rate increase is therefore approved, and any reduction in rates necessary to comply with this Order shall be made on a pro rata basis except to S.C. 30 and Rider S, which should not be reduced from the filed rates and Service 01assification 10 which should receive a reducticn of 25% more than the proportionate amount of the overall reduction. Rate Design Principles and Cost of Service Information Respondent presented in evidence both embedded and marginal cost data, but relied on margical cost information in designing its proposed rates. Respondent's witness presented data on marginal energy costs by rating period and by functional level of servicer marginal demand costs, including marginal costs of generation, i l b)
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' costs.- ,Another Company witness testified that marginal costs . wore -
used <in establishing enefgy, demand a'nd customer. charges. .
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Other marginal cost. data was presented by Staf f and Residential
' - -Intervenor witnesses. An embedded cost study was presented by an 3-Industrial Power Users witness.
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' Three' witneeses' testify'ing' on' behalf' of 'the In'duatirial' P5wer '
iety of.. basing.electrig
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.n'./t.O.'g .Usera offered. evidence.attackigg;.the pro l,ratis'bn*ma6;i'nal 'ost W Th's: position ;J V ,,'k tf4 (a en4,Ty:ithese'witn4sses'we
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c - that rates should be based on the embedded costs used by the Commis-sion to determine the utility's revenue requirements. The witnesses identitied numerous problems associated ~with the use of marginal costs in setting utility rates, and also testified that many methods for implementing marginal cost based rates can result in unfair, non-cost-justified burdens beir.q placed on larger industrial customers which may lead these customers to redece operations in, or to leave, a particular utility's service area, to the detriment of the economy of the area and of the remaining customers who must bear a larger portion of the utility's fixed costs. , The Commission has fully reviewed all the evidence subreitted .
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- - b'y tho' parties hereto.on'the appropriateness'of using.' marginal" cost- . ,. .
or embedded cost as the basis for rate design. The commission finds no basis in the record to change its position on this matter established in Respondent's last rate Order in Docket Nos. 80-0544 and 80-0365. In that order, the Commission concluded that marginal costs provided a reasonable basis for electric rate design. Other criteria such as historical continuity of rate design, customer im-pact and understanding, and revenue stability deserved secondary consideration. The Commission is of the opinion that the marginal cost data presented by the Staff witnesses provide a proper basis for the design of electric rates and should be utilized for that purpose in this proceeding. Respondent's cost-of-service witness presented evidence showing Respondent's load weighted marginal energy cost at the generation level by rating period for the years 1982 through 1986. The wit-ness testified that these marginal costs include or.ly the out-of-pocket costs, such as fuel and variable operaticn and maintenance expense, incurred in serving additional firm load. The witness stated further that by making additional firm sales, Illinois Power may have to forego the opportunity to sell economy energy on the interchange market and, therefore, loss of interchange profits is an additional cost of serving native load. Respondent attempted to determine the amount of this additional cost and included it in marginal energy cost as an opportunity cost adjustment factor. Two witnesses for the Industrial Power Users opposed the use of an opportunity cost adjustment factor. They argued that loss of profits on interchange sales should not be considered in deter:sining marginal energy costs because Paspondent has no obligation to serve other utilities. They also claimed that use of the opportunity cost adjustment destroys the basic concept of calculating costs, and results instead in the calculation of the price to some other utility at which Respondent could sell power. This position was also persuasively argued in the Brief filed on behalf of the asphalt contractors, active Intervenors in this proceeding. A Staff witness also opposed use of an opportunity cost adjustment, citing practical problems in estimating opportunity costs. Respondent's cost-of-service witness defined the marginal capacity cost of generation as the cost of adding generating capac-ity to meet peak demand. He testified that the least expensive capacity that can be added to meet peak demand is a combustion
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's' tur$1ne and that'Illin is Power us'ed NNe costs as'sociated with the addition of. a combustion turbine in determining its marginal y,
). capacity cost;.of. generation. Witnesses. for Residential Intervenors ** - '
- as well as Commission Staf f witnesses supported Respondent's method.
. , , , , .. . An. Industrial Power Esera , witness opposed, Respondent's method
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~ claiming' that' usec costs associated with addition of a combustion turbine are the costs of meeting increased demands of short dura- ,
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- tion only.' Respondent? e witness' testified in. rebuttal that addition * *
, . of base. load. , capacity, might.be, the . lowest cost . option in. meeting,. , 4 -
fe. . ,' . ,. 2/ J.b ,1 q';'6(31acegesed./demandd'of . tonger .dgratiorr// butMaly41 fit. he?. savings"in e' t" ,,*. 9> *'.1.U'V>@@* *,, energj costs 'outw' e igh the additional capacity costs' of the base load unit relative to the combustion turbine. In that case, after removing the cost associated with energy savings, the remaining demand-related portion of the cost of the base load unit would be less than the cost of the combustion turbine. The witness concluded that the combustion turbine method therefore determines the maximum cost of meeting additional demand regardless of the duration of that demand. It is the Commission's opinion that the specific energy charges in Respondent's proposed starif f s are overpriced to the extent that . they contain a marginal, energy. cost which includes an opportunity , ,
. , ,. cost;adiustmenti factor'. /ihe opportunity cost ' adder; used.by the . .. - . < ' '?(
Comp'any has been shown by both Intervenor 'and Staff witnesses to be conceptually flawed. A Staff witness has shown further that the 1980 data used to calculate the foregone opportunity of inter-change sales is an unreliable method to calculate the opportunity cost for rates effective in 1983. The Company's 1983-84 marginal energy costs revised for the delay in the Clinton project but with-out the opportunity cost adjustment are the appropriate costs for setting rates in this case. The use of combustion turbine costs to estimate marginal generation cost is a theoretically sound method that has found wide:pread application in the electric utility industry and should be accepted in this case. Os Residential Service Classifications Respondent proposed increases in facilities charges and all rate blocks for S.C. I and 2. Respondent has designed its proposed S.C. I to eliminate the initial wintar energy block and to increase the differential between summer and winter charges to 4.05C per KWH. The same dif ferential applies to the summer charge and winter tail block charge in proposed S.C. 2, and a differential of 0.93c per KWH is established between the summer energy charge and the first block winter charge. Respondent proposes to raduce the threshold for mandatory time-of-day service under S.C. 3 from 150 to 140 KWH por day, and to increase the time-of-day dif ferential from 0.55C per KWH to 1.00c per KWH. S.C. 3 would be made optional for cus-tomers below the 140 KWH per day threshold, and S.C. 4, optional residential time-of-day service, would be eliminated. Respondent proposes facilities charges of $9.50 per month for S.C.1 and $10.50 per month for S.C. 2 single phase service. Re spon-dent presented a marginal cost of service study which showed that current revenues including facilities charges recover approximately 60% of marginal cost including customer costs. Respondent's cost-of-service witness defined the cost of connecting a new customer to Respondent's system as the carrying charge on facilities needed to provide the customer with minimal load, and the cost of operating and maintaining those facili-ties. The witness testified that some distribution primary and secondaty costs are customer-related because a portion of distri-bution plant is required to stand ready to serve the customer a
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'. 82-0152 j regardless of his energy usage. ' Illinois . Power used minimum size -
- q_ ,/ and zero intercept methods to classify embedded distribution. costs for the years 1976-1980 into demand-related and customer-related components .
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; Respondent alsoJ' conducted an engineering analysis'of' cust'omer; ' .* s work orders to determine the cost of minimum size facilities that
.would.be necessary to. connect. a new customer to the syctem. . In
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- <** **sttadies', Respon "ofJthese . s costs to be in the range of $18 to $28 per month.
The cost-of-service Staf f witness recognized Respondent's engineering analysis to be a proper method for classification of distribution system investment into customer-related and demand-related components. The Staf f witness excluded minimum distribution costs from his marginal cost analysis on the grounds that, although these costs are clearly not demand-related, it is equally clear that they are not customer-related. Hence these costs can not be considered marginal. The.Staf f witness' cost study showed that current revenues for the residential class recover approximately- , 03% of, the, margi.nal . ,;;
. cost of se.rving . the class.
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A Commissicn Staf f witness testified that' f acilities charges should be based on the marginal cost of the service drop, meters, meter reading and miscellaneous customer expense. Using the data presented by Respondent, the Staf f witness testified that the cost of these items was $7.67 per month and recommended that facilities charges for residential rates be set at that level. The Staff witness proposed to recover the revenue foregone in lowering the f acilities charge by raising energy charges to levels closer to marginal cost. [ The witness testifying on benalf of the Reaidential Intervenors
\s.s did not attempt to determine fact 11 ties charges based on marginal customer costs. The witness recommended that energy charges should first be set based on marginal demand and energy costs, and that any revenue thereby produced in excess of the legal revenue require-
. ments determined by the Commission should be reduced by lowering the f acilities charge to a minimum of $1.00 per month. The witness testified that the cost of the minimum distribution system should be classified as a marginal demand cost. Using his calculation of marginal cost-based revenues and based on the proposed full revenue requirements for the residential class, this witness recommended a facilities charge of 32.45 per month.
The Commission is of the opinion that, in order to insure prope cost recovery and equitable apportionment of cost respon-sibility among customers, and to avoid the pricing of energy charges above marginal cost, residential facilities charges should move toward residential marginal customer costs when the revenues collected by pricing all rate components at marginal costs fall short of the revenue requirement. However, Respondent's proposed residential customer charges of $9.50 and $10.50 per month respectively produce excessively large bills to the low usage consumers under both rates. For the purposes of this case, the Commission finds that customer charges of $ 5.00 and $6.50 for service classifications 1 and 2 are reasonable and should be implemented at this time. A rate design Staf f witness proposed residential rates with higher energy charges than those proposed by Illinois Power. Respondent's proposed rates produce increases of 20% to space heating customers in both residential service classifications. The Commission Staf f witnesses' proposal results in a larger percentage increase for space heating customers as opposed to non-space-heating customers. Respondent's witness stated in rebuttal (N. that this sends an erroneous price signal to space-heating customers I that costs of serving them are increasing faster than costs of ( N. / serving non space-heating customers. 6-
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.The witness for ' Residen'tial Intervenors presented proposed .
, . residential rates designed to recover 100% of Respondent's proposed' i revenue requiremento, 50% of the proposed increase in revenues and i the current revenue requirements,. based on 1981 usagef; Steps or ' , , ' ' , ' ,,
' phases for' moving from the current rates to/the full m' a rginal-cost
based rates were also presented, though no time period for reaching
.the final proposed rate was suggested..,It was . recommended that u .- >- -
S.C.1 be abolished a'nd that charges to all non-time-of-day . , ,
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A Co'mmis'sion Staf f witness testified that the rate relation-ship between S.C. I and S.C. 2 are confused when a winter discount to conserve in the summer is given, and that frequent rate switching makes it difficult for customers to anticipate the amount of their b il ". s . The Commission Staff witness recommended that- S.C. I and S.C. 2 be combined when this can be done withont disproportionate
- increases to S.C. 1. Tha Commission Staff witness found no cost
! dif ferences in serving the two classes of customers.
Respondent's witness cbjected to the rates and rate design 1 proposed by the Residential Intervenor witness en the grounds that:' ,.
. (1) his . method of rate design',would leadato. rates;which result in ( . , . . . s'.
- very largetincreases 'in'1 summer ' energy charges, -(2) he ralled to' '
adequately consider cJStomer impact, and (3) he failed to reflect
; marginal customer cost in the f acilities charge. Typical sill com;.arisons submitted by the witness showed that his proposed rates would causa disproportionately high monthly and annual bill in-creases to many of Illinois Power's customers. Under the various
, percentage increases and consumption patterns considered in the l witnesses' billing comparisons, many customers would receive large increases in summer bills with slight reductions in some or all of the other months. The Commission agrees with Staff witnesses and Residential Intervencra that the current effering of separate Rates 1 and 2 docs not send an effective price signal to all residential customers, but finds that combining the rates in this case produces excessive
!, charges for many customers. In the interim, however, the proposed seasonal differential for Service Classification 1 is too wide and ', should be moderated through retention of the existing 2-block structure for winter usage. The energy charges in Service Classifi-cations 1 and 2 should be determined in the followi:q manners the initial winter energy block for both rates should remain at the present levels the winter tailbloch for both Service Classifications 1 and 2 should be increased to 3.90 per RWN. The summer energy charge in each rate should be established at the same level for both rates. The Company should, at its next rate filing, propose a d
single rate available for all customers currently on Service Classi-fications 1 and 2. The Commission is of the opinion that residential time-of-day rates should not be expanded until full analysis of the efficacy of such rates by this Commission has been completed. General Service Classifications Respondent proposes increases in all charges for the general j service rates, S.C. 10, 11 and 13. In addition, Respondent pro-3 poses to lower the maximum contract capacity provision in S.C. 11
, from 500 to 400 KW. Respondent's rate design witness testified that this will shif t approxinately 100 customers with total consumption N of approximately 170,000,000 RWH to a time-of-day rate under S.C.
21. A Staf f witness recommended a reduction of 0.4C in S.C. 10 4 energy charges. This would eliminate the 0.3C differential currently maintainrad over the S.C. 11 energy charge. - Respondent's witness testified that this differential is designed to recover transformation costs that are recovered through a separate charge of 500 per KWH
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. .any, change in transformation costs. g g , , . ,,
Based on all the evidence the Commission is of the opinion that;the Staff.witnesst propcsed. reduction of the sunumer energy. .
- charge 'for S.C.510 is not supported by cost. and should not be >
. f; ' Staff witne. ,ro,0.ev w : 1 s*.c'. :'.. . . . ., . .
gs t. .* V8 i.acoepted1 9 gy.. g ,c. 3.10 : Thea'geo 254is,1ou greaterdoe.,ac.e,t
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from filed rates. Adjustments to' filed rates to meet the revenue award should come from the first block of the winter energy charge and the customer charge. Industrial Service Classifications Respondent has proposed a number of changes to its industrial rates that were not contested by other parties. Under the proposed rates, demand charges are based on maximum monthly on-peak demand instead of a contract capacity. Interruptible service is provided
. under a time-of-day rate, increasing by approximately 300 million
. KWH the amount.of ,Respon. dent's ' energy sales -that are subject tct . .
' time-cf-day provisions. " The' minlaum cap & city reservation for' S.C'.
30, Limited Firm Service, has been ' reduced from 2,000 KW to 1,000 KW, making interruptible service available to approximately 70 additional large power customers. Respondent also submitted a number of changes to the terms and conditions of its proposed industrial electric rates as originally filed. These changer af fect S.C. 21 and 24, Rider S and the contracts with Granite City Steel and the University of Illinois. These changes are reflected in the following proposed tariff sheets as shown in Respondent's Exhibit 6.23: Second Revised Sheet No.
- 20. Second Revised Sheet No. 21, Third Revised Sheet No. 22, Second Cs) Revised Sheet No. 43, Third Revised Sheet No. 44, Original Sheet No. 44.1, Tenth Revised Sneet No.11, Eighth Revised Sheet No.12, Seventh Revised Sheet No.13, Seventh Revised Sheet No.14, Fourtn Revised Sheet No.15, all to Section 1 of Appendix to Schedule of Rates and Seventeenth Revised Exhibit B to Agreement Approved in Docket No. 534753 .11 of ILL.C.C. No. 27, Schedule of Rates for Electric Service.
The Commission finds that all the foregoing changes are reason-able and they are therefore approved.
'the Industrial Power Users' electric rate design witness testified that embedded cost of service data should be given greater weight than marginal cost information in designing rates. The witness proposed alternative rates for S.C. 21 and 24 customers based on embedded costs. This witness stated that Respondent's proposed industrial rate design, which includes lower demand charges and higher energy charges than those recommended by the witness, has the ef fect of recovering fixed costs in energy chargas thereby subjecting Respondent to revenue or earnings instability should industrial energy sales rise or f all f aster than industrial customer billing demands.
Four witnesses on behalf of the asphalt contractors tsstified that lowering the availability of Service Classification 11 from 500 to 400 MW will result in increases as large as 1764. In rebuttal, the Respondent proposed to provide such customers a " bill limiter" that prevents any customer moving to Service Classifica-tion 21 from Service Classification 11 from receiving demand and energy charges, exclusive of fuel adjustment and add-on taxes, in excess of 10.lc per KWH in the summer and 8.5c per KWH '.n the winter. O 8-
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} .A Commissio'n' Staff witness reposed a season' a i differential of v -
, 0. 50 per .WH in. on-peak energy e arges under S,C.- 21, 24- and 30.
Respondeas and Staff witnesses both agreed that the cost differential will be in effect for two years. Paspondent's witness stated that since there is no long-term seasonality in marginals energy ecsts, . . , ;
'there sticuld' be 'no' seasonal differential in energy costs. The wit- ,
ness further testified that the only way to implemer.t seasonal energy. costs without. meter changes is to define the seasons by - J.'
' billing. periods based 'on meter'.r ,,.-
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whi'ch the. rates 'ar'e determined, June 15 through September 14, does not necessarily match the billing periods. Respondent proposes a new 3.C. 25 for industrial customers willing to gaarantee an annual load factor of approximately 90%. Respondent's witness testified that this rate is similar to S.C. 24, except the customer guarantees a higher load f actor and receives a greater energy charge discount. Under Respondent's S.C. 24, the customer agrees to pay for 400 WH per W of contract capacity (equivalent to a load factor of approximately 55%) in exchange for a discount of .150 per WH from the energy charge .that he. would otherwise pay under S.C. 21. A' customer takino service.under pro-
' -. ' j posed S.C. . 25 would', guarantee payment .for 5.85 WH; per W of con- -
~
l~ 4 tract capacity, and' receive a discount of .200 per WH A Conmission Staf f witness recommended elimination of S.C. 24 and, by implication, rejection or proposed S.C. 25, on two grcunds. a The Staff witness asserted that the rate structure does not carry a strong price signal because customers unable to use the full amount of energy that they agreed to purchase may evaluate their marginal cost of electricity at zero. The Staff witness also claimed that Respondent has not shown the anount and value of the reduction in revenue fluctuation achic 'ad by S.C. 24. Respondent contended that ac the tire when an industrial cus-D tomer contracts to maintain a certain lond factor and incurs the risk of unused consumption, he receives '.hrt proper price signal. According to Respondent, the implication.cf the Staff witnesses' objection is that A customer facing unusud consumption might make a wastefu2 or inefficient use of erergy, and that the only possible way to use a substantial amount of electricity in this manner - would be to use it in a process that currectly employs another fuel. Illinois Powar points out that a witness for the Industrial Power Users testified that fuel switching is impossible in many industrial end uses, and where it is possible, it is impractical in the short run because of the capital investment and Icad time required. Further, Respondent's witness testified that some customers actually incur unused consumption, which leads Respondent to conclude that the Staff witnesses' concerns about wasteful energy use are unfounded. Respcodent further stated t' hat even if the benefits of guaranteed load factor rates are difficult to quantify, they should not be ignored. The principal benefit claimed by Respondent is that these rates guarantee a certain level of revenuas and thus allow Respondent to shif t a portion of its business risk to its industrial customers. Customers not willing to assume the risk can take Rat
- 21, which is equivalently priced except for the load :
f actor discount of approximatelp 44. 9-t f O O p y $ 5 z !
. - ....]. f y :; . N 7 ,C.f .%f*. M.N(l*%' . S',Wa W S W.Wh*.Y $ W
. . $' N- ' YW'O p % % m . p s. e .4 ~ M . y .ly.n ; M M . Y ? \.3. W : % W W . W W - 3MMSWbS2C .
.The Commission is of the opinion' th'at the~ proposed industrial
, rate design appropriately reflects marginal demand and . energy costs -
except for the lack of seasonality in the time-of-day energy charges. However, implementing a seasonal timemf-day rate for only .two years will .. send, a confusing price signal to customers. . ,,. S.C.24 has been:shown not -to produce the ill effects discussed by the Staff witness, i.e. that it encourages wasteful consumption or gives too large of..a discount. ..The Staff witness *. cost' study in -,
' fact shows that S.C. 24 is set'at an appropriate levelfof cost ..
, .r.. .* b ,,,<. 4 @. L' -
...- k recovery %nd.f:should She W.;i,-ld . . A..; .r.. .a . ,'
;y- Comuni'ssidn: rejects the~ establishment
.edopt;ed.:forl purposes of>S'Cf 25~ as of. the thisiA asen, ThaTl'i Respondent has failed to show that the additional guarantee of revenues provides any significant value to the Company at this time, and bacause pricing studies of this kind should not be extended without further careful study.
The Commission accepts the Staff witnesses' recommendation to set winter tailblock demand charges at $2.50 per KW and to adjust filed rates to awarded revenues by lowering the first block of the winter demand charge while keeping this charge the same for both
,S . C . 21 and S.C. 24 service classifications.
~
i, Municipal Service and. I,ighting Service Class'ific'ati~onal ,. . Resporident proposes increases in the municipal service rates, S.C. 41 and 4 2, and in the lighting rates, S.C. 39 and 45. Respon-dent's witness testified that proposed municipal service rates remain lower than proposed general service rates in recognition of franchise and long-term contract benefits provided to Respondent by its municipal customers. A Commission Staf f vitness proposed to eliminate the dis-tinction between S.C.10 and S.C. 42 by combining the two rates. S.C. 42 customers who move to S.C. 10 would have the same rates as proposed by the Company. Respondent's witness testified in rebuttal s that some S.C. 42 customers would not qualify for S.C. 10, and that some of the large low load factor customers transferring to S.C.11 and 21 would .be adversely affected due to significant rate increases. The Commission finds that the municipal service and lighting rates and rate design proposed' by Respondent are reasonable and should be adopted. The proposed rates should be lowered in a mar.ner that maintains the relative rate relationship with general servici ates PROPOSED CHANCES IN CAS RATE SCHEDUI.ES Tae proposed increases in charges for gas service include general increases for all retail service classifications except for interrupt 1cle service. Respondent proposes to restructure its commercial and industrial rates by classifying customers now served under S.C. 63 and 66 .into proposed S.C. 63, 64 and 65. Present S.C. 66 would be eliminated. Respondent's witness testified that the Company's gas revenue requirements are determined primarily by customer costs, so that allocation of the rate increase among the various classes of service depends primarily on the extent to which current facilities charges reflect marginal customer costs. Illinois Power's gas marginal customer cost study showed that the-disparity between facilities charges and marginal customer costs was greatest in the residential and small commercial service classifications. These classifications received larger percentage increases than those received by the large commercial and industrial service cla.ssifications under hspondent's proposed rate design. G
- . j; ~ s ...:y,ys Q,& .:,m.f.y.e;y % &.Q: L. 4 %.:.:q,q,5yi .
< A.% w % ,w q w ,
% .N.ww;,
. 4 .,: w . w w ,* Q N ..f I. w At-witness n @ "$o% r- :- :4~w-? v t: s."
r Respondent'tesifiSN*that the proposed:4.i.. gas - e ..'.Q . p*2 W .y ib o
/) rates were designed to recover the requested revenue increase by first establishing facilities charges at marginal custon.or cost,
\ _,/ to the extent possible, without creating adverse customer impact, and then increasing all commodity charges by a uniform amount per therm to recover the remainder of the increase, taking into '
account the range of marginal commodity costs. established by- - Respondent's cost of service study. Accordingly, the witness
,. recommended .that .any. reduction in proposed rates necessary to _ ,.
.$. comply with this order should be made by uniform reductions in' h . C~. . ,,1;.M
-.c. - enamodity;#.harges,q. with.,acostr estab11she'd by'the average lower.
. .: . . ., y ;fr g1 Limit for commodity; charges. .of gas.* "The-? witness
+*-
poin that this method of rate reduction will help offset the increase in total commodity charges due to purchased gas adjustment increases. A rate design Staff witness stated that Respondent's marginal gas cost studies were useful in rate design and class revenue allocations. He accepted the company's allocation of the proposed increase, noting that the difference in rate levels followed cost patterns. The Staff witness recommended that any reduction from the proposed rates be allocated among the classes in the same proportion as the proposed increase. He ' proposed to decrease the proposed charges by . reducing- the declining. block characteristics
- of ' the various gas service' classifications. .
An Industrial Power Users witness recommended allocation of a greater percentage of the proposed increase to the residential class. He stated that his recommendation was based on consid-eration of both embedded and marginal cost studies. He also recommended that any reduction in the proposed rates be allocated among the classes in proportion to his allocation of the increase, and that any reduction be accomplished by reducing commodity charges only, leaving facilities charges intact. [ \ Rate Design Principles and Cost of Service Information Respondent presented in evidence both embedded and marginal cost data, but relied primarily on marginal cost information in designing its proposed rates. Respondent's witness presented data on marginal customer costs by size of metering installation, and marginal commodity cost of gas as influenced by weather severity. Respondent's witness testified that Illinois Power's proposed commodity charges were based on marginal commodity costs, and that proposed facilities charges were based on marginal customer costs. Respondent's rate design witness testified that, in addition to recovering costs including a fair return on investment, other criteria were used in developing the proposed rates, including minimization of future revenue deficiencies, value of service, customer impact and understanding, revenue stability, effectiveness in yielding total revenue requirements, historical continuity of rate design, and avoidance of disproportionately large increases for individual custcmers or classes. Residential and Small Commeref al Service Classifications Respondent presented a gas marginal customer cost study to show thac increased facilities charges are needed to bring residential and small commercial rates in line with marginal costs. Present facilities charges for S.C. 51-Residential and 63-Small Commercial are 53.75 per month and 54.62 per month, respectively, but Respondent's study showed that the marginal customer cost of the service installation for these classes is approximately $21 per month. Respondent's rate design witness testified that considerations of customer impact prevent movement f-~g to full marginal cost in residential facilities charges at this ( ) time, and that Respondent therefore proposes facilities charges
\__/ ct $10.00 per month for S.C. 51 and $21.00 per month for S.C. 63.
l , 1 1 11 -
l
* . 4);.v. Q' ' -?,.g.:O fy.-Q P .u.y ' .~. i...+.~ I.W ' .W. Q&N2--76.S&DQ .lr: d VO6:f;;. ~,%.X
~
..~
;:,y C ;g-l r.' ,. _
;;y Ai.-4 :g@&. ; ;,';* i;:r. ,.y:)H..;ic.Wr..c. w:.v'.@ i::p :n.%*'l.f N.W; 6.4b .0fMON MW .'% %:'d.T?$*"5 O
(j A rate design Staff witr.ess recognized that Respondent's gas marginal customer ' cost study, by' focusing on 'recent installations of new customers, relies on a bane of actual marginal costs. The witness eliminated the minimum distribution system and determined ' ' ' monthly customer costs'of 517'V0 for S.C. 51 and from $17 to' 535
~
for S.C. 63. He proposed facilities charges of $7.60 for S.C. 51 and 8 21.00 .for S.C. 53. ,y ' . ~e.
*s'I ,,,. ...' * -??h,,;,'.E. $i.desio'pdeWs.Eiknase tishiiodtist V proposed'.Y.'C.%an'
' id.*:'-Yu; h' ' ih.h' i :
d ~ " " '
.' ' ' ~ ' - "
are -desighed to' recover ~ marginal" demand' costs in fr'ont~ block ' comnodity charges. The witness stated further that the proposed tailblock charges reflect Respondent's marginal commodity cost of gas, and that tailblock charges are the same in all of Pespondent's proposed gas rates except for adjustments to reflect losses for various levels of service. The rate design Staf f witness recommended a two-block rat <. for S.C. 51 with a tailblock commodity charge of 3C per therm higher than that proposed by Respondent. The Staff witness also recommended flattening S.C. 63 and increasing the tailblock. ' commodity charge by 2C per therm above Respondent's proposed charge.. He , testified that.a declining bicck. r.esidential rate ,;. design,' such as that proposed by Respondent, sends a price sigdal to the typical space-heating customer that gas service is cheaper during the winter peak season. Respondent's witness testified in rebuttal that customers are likely to be af fected more by the total amount of their bills than the amount of the per therm commodity charge, and that a typical residential space-heating customer receives a powerful price signal as his bill increases from the relatively low levels experienced in the fall months to the higher amounts experienced x during the winter heating season. s- Respondent's witness testified further that the Staff witnesses' proposed flattening of residential and small commercial gas rates woulo transfer a portion of fixed cost recovery to the tailblock commodity charge. According to Respondent's witness, this would increase the subsidization of non-space-heating customers by space-heating cuscomers and would increase the charges to space-heating customers in winter months. The Commission finds that in setting rates based on marginal cost, the customer charge should not, as proposed by the Company, enjoy priority over the commodity charge. Such a policy produces inordinately high bill increases for low-use customers and blunts the conservation signal sent by setting commodity charges at marginal costs. The Commission therefore adopts Staff witnesses' proposal to combine the first two blocks of Service Classification 51 and sets the tailblock charge 1.00 per therm above the level proposed by Respondent. The proposed f acilities charge of $10.00 is excessive and should be reduced to f 7.50. Any further reduction from filed rates should come from the front block of the commodity charge. Commercial and Industrial Servico Classifications Respondent proposas to restructure its commercial and industrial gas rates to classify customers by size of meter installation instead of peak-day demand. Respondent's rate - design witness testified that the reclassification would allow
*acilities charges to be set at levels that more closely represent the widely varying costs of facilities used by comeercial and industrial customers.
F J
^
. 2 y.G . q.e,r.v .* . p:. ij.,q.N:.4 "'6-0 dy.9 W.4 /4 3'? *W V.MS ":'d'io1*52
- ., :-;.;v. ~..g.:$i .p: &'I.ytNo.' . #W.? A .IP.<
rate design Staff: W.n '*6 Eitness & L &*' accepted' M' d'ent'W.'$M.dWM"4W.% Respoi: s propose restructuring- of commercial and industrial gas rates. He preposed
'} raising the S.C. 64 commodity charge by IC per therm .above. the .
S.C. 65 charge on the grounds'that demand cost differences in'the , two retes should be reflected in commodity. charges. The Staff witness recognized that a study of, marginal demand costs.is not ~
,^ s
. - . . ..> available,.but- stated that smaller -customers are likely to be further back on the distribution system and cause marginal demand costs at.that level. . He r.lso examined seasonal. usage patterns .. .
and found 'that .the smaller. customers on the.whole are more .
.t'Kj'Co i ident Nith ,ther pypted peak.
.ac
.M 4 4 ,<;.%...
. commodity . charges la re < necessary'
- n. 3.'C.'ol.,He}.
E .,'- 69recomtised'ithat. and .75' where' rate iBqOivalent%..I
' ' *
- M '
- h Nf.M.*G b migration poses a problem.
Industrial Power Users' rate design witness recommended rates for S.C. 64, 69, 75 and 85 with the same facilities charges as those proposed by Respondent and lower commodity charges to account for the lower allocation of gas rate increase recommended by the witness for these service classifications. Respondent's witness testified in rebuttal that the Staff witnesses' proposed rates would disrupt Respondent's rate structure by increasing tailblock charges'in-S.C. 63 and 64, thereby creating non-cost-justified incentives to . transfer.among. service. . s' 1 classifications. He .te'stified that. a 'custome'r .'in- the upper ~ ' ranges of consumption under S.C. 63 and 64 would find it cheaper to install an oversized meter in order to obtain a lower commodity charge under S.C. 64 or 65. The witness stated that Respondent's uniform tailblock charges give the customer an incentive to choose the smallest, least expensive metering installation consistent with his needs. This Staff witness also proposed to eliminate Respondent's guaranteed load factor industrial gas rate, S.C. 69. Respondent
,_s proposed a slight reduction in the S.C. 69 facilities charges
[ from the level proposed in the rate as originally filed. This s
' change is reflected in Respondent's Exhibit 6.31, which is Fourth Revised Sheet No. 10 of ILL.C.C. No. 25, Schedule of Rates for Gas Service.
The Commission finds for reasons stated in the discussion of S.C. 24, that the proposed structure for S.C. 69 he accepted at the relative rate levels proposed by Respondent. The adjustment to the facilities charge in S.C. 69 should be accepted.
'Jhe Commission is of the opinion that the proposed allocation of the revenue increase among classes is reasonable and supported by marginal cost data. The Company has not proposed large increases for Service Classifications 64, 65, 69, 75 and 85, and therefore these rates should not be reduceJ. The change in the demand charge for the first 30,000 therms in Service Classification 69 is accepted. All reductions from filed rates should be shared pro rata between Service Classifications 5.1 and 63. The Commission finds the increase in the Service Clasaification 63 -
Customer Charge, to be excessive and should be reduced to $10. The tailblock commodity charge should be raised 0.50 per therm above -he filed level. Any further adjustments to meet the revenue requirement should come from the first two blocks of the commodity charge. Service Classification 51 should be adjusted - as described above. FINANCIAL CONDITION AND FINANCING REQUIREMENTS OF RESPONDENT Much of the evidence presented in this case concerning Respondent's need for an increase in its electric rates related to Respondent's requirements for raising capital to finance its construction program, principally censisting of construction of Clinton Unit No. 1. At December 31, 1981, Respondent had a total [ capitalization of $2,106,987,000, and net utility plant in (. _j} service of $1,288,212,000. Respondent's 1981 ccnstruction expenditures were $349,515,000. 82-0152 u : s: .n.,1 - 2, ..%. c &;. f. b.; g. 4_;;M .) .y .;': .i.u. W ..,y.' y.Y . jv m :-;% 7.::.a.D .k. L:pp :.:h
- T d.N.-:: & ~~.s...M.N,Hr.'Go mn:'a V.L;%: HDsE
.4 "; O,~';h %s .witness Respondent S-testifl'ed t' 'l" W'.4.&:'M ha Respondent 9,.}%'. -4 s planned - . H. It. ' ;$.h'# '
. i
(j t N electric utility construction expenditures for the period 1982 through 1984 total $993,287,000. Respondent's planned permanent outside- financings durinf the 1983 psriod total approxLmately $270 - million if no rate increase is granted. In addition, the balance 1 of short-term debt cuestanding at December 31, 1984, would be sub- I
'stantial. -Projected financings do not include short-te'rm debt which '
may be issued by Respondent's subsidiary, Illinois Power Fuel Com-pany,. for which Respondent provides , credit . support. . .. 3 p. . ih- ~* '.k. . al- ) '[*.Y b.Respon.derit'g,,4videncephokepthat it., hail .arr..inveMment.$n /7" e'lbet - -
~
$1,191,374,000, or. approximately 57% of its total capitalization, and that electric construction work in progress will increase to
$1,533,691,000 at December 31, 1982, at which time it is expected to constitute approximately 63% of total capitalization and to
- S1,819,611,000 at December 31, 1983, at which time it is expected to constitute approximately 67% of total capitalization.
Respondent stated that its most pressing problem is the need to generate sufficient cash to support construction requirements. Evidence presented in this proceeding shcwed that the recent period has been characterized by high interest rates in the capital markets associated with both short-term and permanent fi-
~
'nancings'. The record shows that in 1981 the average' yield on '
double A utility bonds was in the range of 14-16%; and utility preferred stock yields exceeded 13%. The evidence further indicates that meney costs are declining somewhat from these extremely high levels but can be expected to remain at levels which are high by nistorical standards. In June, 1982, Respondent sold $50 million of guaranteed debentures through its subsidiary Illinois Power Finance Company, N.V. , at a cost to Respondent o f 14.6 3%. In July, 1982, $75 million of first mortgage bonds were sold at a cost to Respondent of 14.983%. These cost
, rates may be compared to cost rates of 11.60% and 12.82% on Respon-
.(s_f dent's last two issues of long-term debt which occurred in 1980 and to the embedded cost of long-term debt at December 31, 1961, of 8.38%. Without a rete increase, Respondent asserts that it must raise an additional 3364,000,000 in new permanent capital through outside financing during 1983 and 1984.
Considerable evidence was presented on the recent and fere-seeable financial condition of Respondent. Witnesses on behalf of Respcndent addressed the characteristics of financial integrity for a public utility and the significance of financial indicators such as security ratings and financial ratios to the evaluation of a utility's financial condition. Financial integrity was defined as a condition wherein a company has sufficient financial strength to raise needed capital in good and bad markets at reasonable costs and with rates to customers and rates of return to stockholders that are fair. Investors rely on various measures to evaluate the financial integrity of the firm, including bond and stock ratings, coverage ratios, internal cash generation, level and quality of earnings, l dividend stability and growth, and dividend payout ratios among ' o the rs . Respondant's evidence showed that bond and preferred stock ratings are important criteria of financial integrity which af fect the cost cf a utility's senior capital, as investors generally - require higher interest rates to purchase lower rated senior securities. For example, in 1981, the yields on Moody's triple A rated utility bonds, on a monthly basis, were 45-82 basis points lower than yields on Moody's double A rated utility bonds.
- s ,) -1*-
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~
4
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,e [c - . %. ,. , ts f ..; y :.;, Q ..:4% 2..e. :i;h+ ,::i. m *. w9 ~.W. ;:iv - G.M.. . &:vG m-9'd.4. , ~ n <-
w ". :n r W M n' WhdP.s
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- dent s 4t' ~%
u dies' have: : sh6wn~
.:.w .7the MTif 4 tieren.W+.4.WWW6.MMinb ce'in
{~'g s yields between double A.and single A bonds to be 35-45 basis points. Such differences may translate into millions of dollars of additional
'- # revenue requirements over the life of a bond issue that carries the icwer rating. Bond ratings also affect the utility's access to the capital markets, as many large institutional investors are prohibited from' purchasing. senior ' securities which dofnot have high quality ratings.
. . , . .. .. .. . . . . . . . . . ., ..~. -
A ~ rating of triple A or double A is ' considered to be a high. M'd . al. it, ,,. . quality. . rating.y Tpe determi.'napgn of.,bo$ ratinga.,isi.in.purug-W/.v.;Q,.;, ibm' ;py[*S/;, J ihfluenced'byidats such'f asecoverage 'ratior; -internal cash generation -
**2' and level and quality of earnings. Utilities whose earnings available for common includes a significant portion of AFUDC are considered to have lower quality earnings.
The evidence showed that af ter being rated double A by both of the major security rating agencies fcr a nurber of years, Respon-dent's first mortgage bonds and preferred stock were downgraded to AA- by one of the agencies in April,1982. Also the other agency has assigned Respondent's senior securities a rating of Aa3, which is the lowest rating in the AA category. Respondent states that its
- financial condition has been declining over a number of years as evidenced by deteriorating financial, statistics , culminating in . . '
the downgrading of'its securitiesf and that its securities may be further downgraded unless its financial condition is improved. Respondent's witness testified that Respondent's financial statistics must be improved above 1982 levels in order to avoid further downgradings. Respondent presented evidence on its hinterical performance compared to double A rated utilities and its forecasted performance as measured by certain financial data which were identified as indicators of the above measures of financial integrity. Historical and forecasted data under various rate increase scenarios was presented with respect to the following statistics: (1) interest ['s.,,,\) coverage before income taxes, including AFUDC (a measure of interest coverage) ; (2) interest coverage before income taxes, excluding AFUDC (a measure of cash coverage of interest obligations); (3) internal cash generation as a percent of additions to utility plant (a measure of internal cash generation and cash flow); (4) AFUDC
- as a percent of earnings applicable to common stock (a measure of quality of earnings); (5) return on average common stock equity (a measure of return to the common stc kholders); and (6) ratio of total debt to total capitalization plus notes payable (a measure of capital ratio flexibility) . Respondent also showed financial goals which it has established with respect to each of these statistics in order to maintain its financial integrity and its relative credit standing compared to double A rated utilities.
Respondent identified these goals as goals for a double A rating. Data compilel by Respondent's witness showed that Respondent's financial statistics were worse over the five-year period 1977-1981 than the average for the twenty other utilities carrying double A first mortgage bond vitings according to both major rating services during the same period, and that in 1981, Respondent's performance was worse than the average for the double A utilities in every statistic except total debt as a percentage of total capitalization plus notes payable. Further, Respondent's performance with re-spect to four of the six ratios was worse in 1981 than for the entire 'five-year period, indicating a deteriorating trend. Respondent's interest coverage ratio excluding AFUDC for the l five-year period was 60 basis points below the average for double A utilities. Over the five-year period, Respondent's internal l cash generation as a percentage of utility plant was only one-half of the ratio achieved by the double A utilities as a group. In 15
a:,.ny n .L N*:y:, !.v.s. , , L9 q:Q 4, U.a.h. A.S. 5 %.1 ;'r . - p ):.:.+ m % b , M .M.*.%?. Q Aq i :*h*. >.*U %',45 d.kh,M !,h .& SM Y-v.QY.0*$'$Q h*' V,& K.&, $ 9 Ay,'j N?O D N W & D O ,G1' (3 ( ,) 1981', internal cash generation was 56.7% for the double A utilities but only 19.3% for' Respondent. While the double A utilities, as a group, improved internal cash generation from 54.5% in 1977 to 56.7% in 1981, Respondent's internal cash generation fell from ' ' ' 31.8t'to"19.34. AFUDC as a percent of earni'ngs was-486.for 4 Respondent versus only 28% for the double A utilities over the five-year period, and 57 1% versus only 29.4% for the. double A .. e
.util'ities in 1981. '
s" "8'
- M~i[f; iff :f: 3< .-i,~.fl.T*s#.l.d
*% >W. W' d spondtht?presont %-Y$d hr.Is f foredests' N .V o '$.h+ Mllial' performance-*
fi 'ts*financ ' ' ' Wh;&MW5f..
"" * - ,f.2.
as measured by the six financial statistics during the period 1982 through June 30, 1984 if it receives no rate increase. Forecasted dats presented by Respondent showed a general and severe declit:a in Respondent's financial integrity, and inability to maintain a position comparable to that of double A rated utilities. The evidence showed particularly poor performance with respect to those statistics relating to Respondent's cash position, inclading interest coverage excluding AFUDC, internal cash generation as a percent of additions to utility plant, and AFUCC as a percent of earnings. Respondent also presbnted historicalland forecasted informa- , tion'on internal cash gersration and cashr flow per share. All of this evidence showed Respondent's financial position would continue to decline during the period studied. Respondent expressed concern that failure to improve its financial statistics and financial condition over 1981-1982 levels would result in further downgrading of its securities which would affect its ability to raise capital and its cost of capital _ Respondent's evidence showed that the market price of its stock has fallen substantially over time on a nominal-dollar s basis and, in particular, on an inflation-adjusted basist and i that the market price-to-book value ratio of its common stock has k,,s/ also fallen over time. In 1980 and 1981, Respondent sold' 10,600,045 shares of new common stock at an average price below average book value; this reduced the book value of existing stockholders' investment in Respondent by $50.6 million. In March, 1982, Respondent sold 4 million shares of new common stock at a price less than book value. Illinois Power's evidence presented in this proceeding shows that Respondent faces continued heavy construction and financing requirements over the next two years, and provides a basis for serious concern over Respondent's ability to meet its capital requirements on reasonable terms. Although capital rarkets may become somewhat more hospitable in the near term than in 1981, the record suggests the need for concern with respect to Respondent's wherewithal to withstand any adverse developments affecting its ability to raise capital. The record demonstrates that Respondent's financial performance during the recent past and forecast for the near term, as depicted by numerous measures including the recent downgrading of Respondent's senior securities, is inferior to that of utilities with high quality bond and preferred stock ratings. The People contend that if the Commission believes that Respondent's approach to measuring financial health through the six goals is reliable, it should use different goals or standards so as to avoid granting more of an increase than is necessary during a period of substential unemployment and recession. Only 50 to 65% of the rate increase can be justified by relianc7 on these six financial ratios. An award of 63.5% of the incre3se; 68% of the incremental CWIP and a 15.3% return on equity allows Respondent to essentially meet the 1981 average for the Double A companies for four of the ratios and to materially improve its ratios for internal cash generation (17.1% in 1982 up to 34.9% in 1983) and AFUDC as a percent of earnings (56.7% in 1982 down to
\_ 41.2% in 1983). &g) s.h U*t%6 3.9 s,q w % <ys.'ign<j h W W W 4,Q .' h*-@ 9 N Y nW % <*W '
f QO'
- O M< M.,k;istorical.comslissW4a,-powWN fs.v aA " -M
.h #
M he l &nd forec,asted,-presented.6y titheMinamqisi;seqitia(Loopg , witnesses 'in this* case, :M -;qc c3:$.Q N.Ng-relating to Respondent?s financial performance and that of other util'ities as well as the evidence presented on Respondent's , construct' ion and financing requirements and general econceic.and financial market conditions.- It is apparent from the evidence that Respondent has very substantial financing requirements during the'nent..twer years .and will be required 1to raise a-large" . - .* amount of capital in relation to its existing capitalisation and ' that Respondent's ability.to do this on reasonable. terms will be
' seriously impaired unless'its' financial integrity is maintained ,, ,,,,y , ' Z 3.f,r.i+..p'g'bs,.jN 48)essoneMe W ... "/other dafdrisat#3ewg1,sff ion. presented i,X11&aois- (ope,C4,iptatietica1Cdata iWdicates'that'Yetpondent*s" 'eht- - }l. 3.;,,\,
finds:ia. - - "; y,,df
.' ,l4,Q g'-
~-
condition has been deteriorating during the last several years. The Commission has fully evaluated all this evidence and its specific findings and conclusions hereinafter set forth in relation to rate base, operating income and rate of return all reflect due consideration of this evidence. The Commission intends the authorized rates granted in this Order to be the minimum it could allow in meeting its respon-
- sibilities, and emphasizes that Illinois Power has the burden of reducing its extenditures to increase its internal cash generation. '
- This obligatior. of 'the utility the Commission takes very seriously.
Respondent must reduce its expenses and hence by.its own actions , improve its internal cash position. In effecting these expense ~ reductions, ~ Respondent will directly benefit its customers considering the extent of its construction program and current economic conditions. Respondent should file detailed expense reduction plans with the Commission's Chief Clerk within sixty (60) days of the date of this order. e TEST YEAR Respondent proposes use of a fully forecasted 1983 test year in this proceeding. Respondent submitted forecasted information for use as the basis for test year data which was developed by-
,,/ Respondent using its corporate computer model. Respondent's witness presented testimony and exhibits concerning Respondent's corporate model and ' the methodologies and procedures used to -
develop the forecast. He also presented detailed statements of the major assumptions used in preparation of the forecasted information. Respondent, in its evidence, submitted audited information 1 from an independent auditing firm required by General Order 210 in connection with use of its forecasse , test year, including (1) an opinion from a certified public accounting firm evidencing compliance with guidelines for financial forecasts of the American Institute of Certified Public Accountants; (2) a statement that the forecasted information presented was ret anable, reliable and made in good faith and that the assumptions 1 methodologies used to prepare the forecasted information were the same assumptions , and methodologies used to prepare forecasted information for ' management and for distribution to the financial community; '3) data for the " historical" (1981) and " current" (1982) periods; and (4) during the course of the proceedings, actual results through July 31, 1982, and comparisons of the forecasted information to actual results. Respondent's 1983 test year data reflects the effects of. significant cost reduction efforts in 1981,-1982 and 1983. I Respondent's witnesses explained that Respondent established a l cost reduction task force in 1981 to identify operating and construction expenditures which could be eliminated or deferred, and possible reductions in inventories. Respondent's witnesses testified that in 1981'and 1982, the task force identified reductions of $50,000,000 in cash requirements, including a
$5,000,000 reduccion in operating expenses, a $25,000,000 reduction-in fuel inventories, and a $20,000,000 reduction in construction expenditures.' For 1983, the task force identified further
- expenditure reductions of approximately. 329,000,000, including
! $4,800,000 of reductions in: operating and maintenance expenses l and $24,000,000 of reductions,in construction expenditures. l
-~4+ .-- .-,ee,.,,u +-.--w-- ,-r--. .-*w,- +-,. wen a .e . . , .. , .s,- w, - . - - - . . .- yam , ,--w- %.- --,,sonemny p-,. ,
.- ~. - .
82-0152
. , . . Y.* J. , . q."&:. ..f.;pQiraji.l rh .N. i w-: ,f.q . Q.:f}.QM . ' $ .% : ... % 0-f e . h.Y.i ?5.'& -
s:q.lp, .?%&. a g-Qq.. $;gQ.pg.?QQQiy.jg.f.rg Q q- Q 'y. g q.f;.*i Q , g iq.r.V Nf.Q % Q 9
^
are being achieved through layof fs of present employees and elimination of presently vacant positions, deferral.of management
-salary increases for at.least six months, a freeze on hiring of new engineers, reduction in planned construction expenditures, retire -
L ment of two peaking units and other measures. Respondent reflected the, cost reductions'in its. Proposed.1983 rate. base and operating -
'+
income statements. Respondent's witness testified that the work of the cost reduction taskcforce is an ongoing effort with no. stated termination date. , , (4;' O n l$.O..$,b : 'h ~.*.Y.,*, Ah .f
! h Q.
y j
' .b. f 5. {
O.h<!' .. h...?h.fY ' of Galesburg (" Normal and Galesburg") and the Urbana School District contend that Illinois Power's cost reduction task force was established to identify, eliminate, reduce or defer, inter alia, operating expenses. The burden is on the Company to justify-the expenses it is claiming. This burden is increased during a time of recession and high unemployment such as that now being experienced. These Intervenors claim that Respondent did not take significant steps at cost reduction or confirm that the efforts of the task force were effective. A member of the Economics and Rates Department o'f the Commis-
- sion Staff analyzed the electric and gas. sales forecasts underlying 4 Respondent's financial' forecast. He concluded that RJapondent's '
overall approach to forecasts was a sound one and that the high degree of disaggregation would help Respondent to foresee new trends before the impact on actual sales appeared. He also concluded that Respondent devoted considerable effort to obtaining a sound data base for the forecast. The witness also noted that use of a 1 current test year would most likely understate the sales level during i the tenure of the proposed rates. The witness concluded that the e sales forecast showed a relatively greater revenue deficiency for the electric utility than the gas utility. Based on a review of all the data presented by Respondent, both historical and forecasted, the Commission is of the opinion and finds that the twelve month period ending December 31, 1983 i is the appropriate test year which should be used for purposes d of establishing rates in this proceeding. RATE BASE , Respondent proposed the following net original cost and fair i value rate bases for the 1983 test year ! 1983 Original Cost Rate Base 1 Electric Gas Combined Amount Amount ' Amount Item (000) (000) (000) Original Cost of Plant in. servica $1,666,995 $ 383,308 $2,050,303 Reserve for depreciation (630,369) (112,863) (743,232) Net original cost of plant
- in service $1,036,626 S 270,445 $1,307,071 Rate base adjustments
-I.and and land rights held for future use 11,143 33 11,176 Investment in IP Gas
' Supply Company - 3,957 3,957 Construction work-in progress- 875,000 - 875,000 Materials and supplies exclusive of merchandise 23,727 2,922 26,649 4
lV r
. 18
- . ~ * + - - - - - - , - v- -*--r --7 ,e- ,--*=-c- -*-,-t1 u-- w *-+---+c '
+---e t -e e-+ g---
82-0152
, .c ' - t. ,:t , .
- eGy. a; h ; , .-* . ~ + > ', ,,S: L$ w'" 'f. R "' W W '. O' = -h Y 5 % =U % * *;1 l 4.*V,:;*c:?.
A.):$-J*t-."-9.M:-lNi'NAI^%h
~~'W.SS'el inventoryYN* WC.D.N.%* 6 ?*5W'YE5Y5'YY*
Y W.* bb'"'h
- W 5*'
'Tlectrig fu 46,931 - 46,931 O Gas and-propane in storage - 46,953 46,953
(' u Ace'mulated provision for deferred income taxes (193,'419) (30,513) (223,932) Contributions in aid of construction . . (12,221) (6,525), (18,746) ' ' , .
' Customer advances 'for con- -
struction (1,470) (2,278) (3,748)
. Total rate bass ad 749,691- . 14,549.' 764,240
'.1 n Y' (*. ;. ': };f,, U.&M Y.l~iginal.N.*$5 .' ~' ..
* '% $ j1 ',uatments.
9 Xd W .E Q:.I.i. ':O 78 6 ,,3'17 O' ~ i f.Il*
$ '2 8 % % .%'4,9 9 4 ;~ ,l$2,071',' 31~
, -L e costiate* base
' 'Not'or 1983 Fair Value Rate Base Electric Utility Adjusted Item Amount (000) Amount (000)
Trended cost less depreciation of plant in service- $2,385,650 Weighting . .25 S. 596,413 Net original cost of plant in service '1,036,626 Weighting .75 777,470 Fair value of plant in service 1,373,883 Total rate base adjustments 749,691 Fair value rate base $2,123,574 Gas Utility g f Adjusted v Item Amount (000) Amount (000) Trended cost less depreciation "of plant in service S 706,550 Weighting .25 S 176,636 Net original cost of plant in-service 270,446 Weighting .75 202,834 Fair value of plant in service 379,472 Total rate base adjustments 14,549 Fair value rate base S 394,021 Corbined Item Amount (000) Amount (000) I Trended cost less depre-ciation of plant in service $3,092,200 Weighting .25 S 773,050 Net original cost of plant t in service 1,307,071 l Weighting .75 980,304 Fair value of plant in service 1,753,354 Total rate base adjustments 764,240 Fair value rate base $2,517,594 0\
\.J - L9 -
82-0152
. . l . g m. .; _ n... :..,..i.f. f. i.' : 4 + .'. {.:'p- i n .sN .~ .-k.R :194= . - p'LWt? ' n
- .'.MQF -
h ~ C5MO.49.'?dWWtNM'M'D.d The amounts shown above are as set .forth onid:MNSYMWMYMM'MD$ib l
' Respondent's' Exhibits 4
'2.57-2 58'hnd 9.30-9.31 Revised and as modified by data set forth '
in IP Exhibit 2.60 'which showed the estimated 1983 effect on Re-spondent of the Tax Equity *and Fiscal Respcnsibility Act of 1982. These were further adjusted by Respondent on late filed IP Exhibit 9.34 which reflected the exclusion of Mt.. Carmel PuDlic . Utility, .Co. -
. _...s' .
f'romlrate base, the ' addition of Mt'.' Carmel as 'a wholesale electric; customer and the exclusion of Mt. Carmel customers who would have been served as retail electric ,and gas customers by Illinois Power,- -
- l..,*-.' f'.%" 0*C* k' ".$ $ *.0~
*S ?' .
N.5 ?S!A* h Nkk.f.1 .l'..$. 'k. h h .! $ h TThe smodhts 'specifie'd 'for the rate base a'djustments '(land and
- a. . .Ibi.Y'~
land rights held for future use, investment in IP Gas Supply Com-pany, materials and supplies, electric fuel inventory, gas and propane in storage, accumulated provision for deferred income taxes, contributions in aid of construction, and customer advances for construction) , other than construction work in progress, are the averages of the thirteen monthly balances for each item. The proposed electric and gas rate bases also reflect the following additional adjustments: (1) removal of elements attributable to Respondent's appliance leasing business; (2) removal of depracia-tion attributable to contribyted property; (3) exclusion of.-land held for future use which does not have a definite in-service date - on or before December 31,,1992; (4); determination of the accumulated - - provision for defe'rred income tares using a method of computation, proposed by a Staff witness, intended to comply with Internal Revenue Service requirements; and (5) reduction of electric rate base by S2,076,000 and gas rate base by $2,048,000 to reflect the impact on plant in service of anticipated 1983 cost reductions identified by Respondent's cost reduction task force. Fair Value Rate Base A witness in a valuation engineering firm, testifying on behalf of Respondent, presented evidence on the trended original cost of plant in service at December 31, 1982 and December 31, 1983. The witness testified that he determined the current cost of Respondent's electric and gas utility plant at September 30, 1981 using a trend-ing method based on the Handy-Whitman Index, the indices maintained by the Bureau of Labor Statistics and Stevens Valuation Quarterly for types of equipment classified in general plant accounts 391-398, and, where necessary, indices specific to Respondent which he prepared. He testified that a trending method was used because it is the fastest and least expensive method to estimate current cost and has the advantage of starting from recorded original cost. Custom indices specific to Respondent were developed to obtain greater precision on accounts where indices based on national, regional or local averages might not properly reflect Respondent's experience. The data used to compile the specific indices was taken from the books and records of account maintained by Respondent. The witness testified that he added net additions and retirements at original cost, as projected by Respondent for the periods September 30, 1981 to December 31, 1982 and December 31, 1983, to the trended cost of plant in service at September 30, 1981, to determine trend-ed cost at December 31, 1982 and 1983. He further testified that depreciation was deducted so that the remaining trended cost was equivalent to the ratio of net original cost to original cost. This method, which the Commission has utilized in recent fair value rate cases, produces a larger depreciation deduction than would a more accurate depreciation study, and therefore results in a con-servative value for trended cost less depreciation. 20 - pc . .
82-0152 l$.
- W' . O % . *
~
, ,' ,.i e 4 , . e c by a .' ~ + .~ ~ < 7: j , ;;, .
.~\l.~
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l
" ~
The' witness, on IP Exhlbit 3.3 and 3.5,~ presented the'following sumary of trended cost and trended cost less depreciation at w.%.MwW ~ l b/ . December 31,. 1983.s. - Electric Utility
. . , . . . . . . . . . .: . . . . . . . e Trended Cost' Trended Cost Less (millions) Depreciation (millions)
. +
i . ~. . ..
,, .. . . . $ .-. ..5. . .5 **1-
. . ~ .
; ;.-.;;N:' h '.:~'5 . Q?!. ., -} ,a'Intangiblejplant.(f:Q..W*.Y*;~}
- :
- bN.;'. %.> X " 0:D
~ :s., S' ,.-'.
Pioducti~on$;lan. p I:: t . .
'1,9'30.5 1,2 Y: .
0 6. 9 . . ~' Rd?'. . '.:*U*i,'s.k:y. Transmission plant 537.3 328.5 Distribution plant 1,340.7 760.1 General plant 122.6 66.5 Total depreciable plant $3,931.1 $2,360.0 Land (original cost) 29.1 Total $2,391.6 Gas Utility Trended Cost Trended Cost Les's (millions) Depreciation (millions)
- Intangible plant S .1 $ -
Manufactured gas production plant 16.1 Underground storage plant 53.6 Transmission plant 148.0 Distribution plant 738.5 General plant 64.5 i Total depreciable plant $1,020.7 $ 706.1 Land (original cost) 5.4 Total S 711.5 The witness testified that he included hydraulic production plant, which is fully depreciated, and land and land rights, at original cost; excluded leased property on customer premises, which the Comission has previously excluded from rate bas (: and-made appropriate allocations of property to the gas utility. The Commission is of the opinion and finds that the trended cost and the trended cost less depreciation as presented by Respon-dent's witness is reasonable and should be adopted for purposes of this proceeding. Respondent's witness testified that the value of trended cost less depreciation used by Respondent to develop the 1983 fair value rate base was the average of trended cost less depreciation at December 31, 1982 and December 31, 1983. The witness presented a fair value rate base determined on a weighting of 75% net original cost and 25% trended cost less depreciation, which has been used by the Commission in recent fair value decisions. Based on all the evidence and considerations, including the trended cost less depreciation of Respondent's electric and gas p)
- Gas utility depreciation is not maintained by function. ,
t, G 21
82-0152 . y . ;.y e. :S >x* .x
- y ..
. , i .- 4:' :.; ,' ;J;** t -
M: .~. U.' Uf% ' ~ *; ' ,' .M W ' iW.*QhlQ;~,.Q'
.1: }.%.=o'.Y,5.QU$. !N A.6.frH.I' N ', bf.5*'?.Y.*.VIW; ?'"!' W.Y *li'$$'!iWI Y
. Y Y S'r? N
- utility plant at December 31, 1982 and December 31,'1983:~ the net
[ original cost of utility plant for the 1983 test year the weighting Q] -utilized by Respondent's witness; and the rate-base adjustments discussed in this Order including the determination with respect , to electric construction work in pro'gresss as hereinaf ter discussed, I the Commission is of the opinion and finds.that Respondent!s net - ,
. i
' original. cost and fair value rate bases for the 1983 test year .
which should be used for purposes of this proceeding are as follows: . r < .
. 3 ; ,,*. .! 6#:'. .i.70 @. .' .Y. . "Y
i:*T"T - %.
.~ ;* YH.:*2&!q':. ' p i ..'f'dl .0y :N,
< ' Y:-l-[ic.i'N.
_.] ;; Original Cost Rate' Base . ..'a s s. l ' .M-Q ',P Electr Ufility: $1',536,310,000 Gas Utility: 3 284,994,000 Combined: $1,821,304,000 Fair Value Rate Base Electric Utility: $1,873,567,000 Gas Utility: $ 394,021,000 Combined: $2,267,588,000 OPERATING REVENUES, EXPENSES . AND INCOME Respondent presented the following operating income statement
- for the 1983 test year at proposed rates:
1983 coerating Income Statement Electric Gas Combined Amount Amount Amount Item (000) (000) (000) Operating revenues * $895,603 $571,400 S1,467,003 p Operating expenses Fuel for electric plants 312,237 (v) 312,237 Gas purchased for resale - 427,161 427,161 Power purchased for resale 31,277 - 31,277 Power interchanged-net capacity (4,513) - (4,513) Energy (38,985) - (38,985) Operation and maintenance 115,888 40,587 156,475 Depreciation and amortization 52,799 13,908 66,707 Taxes other than income taxes 56,493 22,170 78,663 Federal income taxes-current 86,587 22,730 109,317 State income taxes-current 16,G43 3,567 20,210 Provision for deferred income taxes 32,168 8,378 40,546 Income taxes deferred in prior years (10,068) (7,678) (17,746) Investment tax credit deferred-net 22,90S 840 23,748 Total operating expenses 673,434 531,663 1,205,097 Operating income S222,169 $ 39,737 3 261,906
- Includes add on taxes The amounts shown are as set forth on Respondent's Exhibits 2.57-2.58 and as modified by data set forth on Ip Exhibit 2.50 which I
showed the estimated 1983 ef fect on Respondent of the Tax Equity and Fiscal Responsibility Act of 1982. These were further adjusted by Respondent on late filed IP Exhibit 9.34 which reflected the exclusion of Mt. Carmel Public Utility Co. from rate base, the j - 22 -
l l 82-0152 O addition of Mt. Carmel as a wholesale electric customer and the exclusion of Mt. Carmel customers who would have been served as retail electric and gas customers by Illinois Power, as of December 3, 1982. Respondent's' proposed operating income statement reflected '
* *a; . - the fo11 w4ng 9 adjustaientse, .(1)..opegating expenses. wars adjusted : .. .. .
. ..og. 77 . ,3,., J::.q to-iendludh membership " dues, and Teea *iscertain:ivic and'socialMM,'rM E , f5 g M.*
S'
- w :- c clubs and the cost of analysis of proposed legislation and certain public information costs: (2) cperating expenses and operating revenues and return attributable to Respondent's appliance leasing business were removed; (3) operating expenses and return were adjusted to remove depreciation attributable to contributed propertyr (4) operating revenues and operating expenses and return were reduced to reflect the removal of the two percent excess State Public Utility Tax and various Municipal Utility Taxest (5) operating expenses and return were adjusted to reflect income tax allocation procedures recommended by a Staff
. witness on behalf of the Commission's Accounts and Finance Departments (6) 1983 electric operation and maintenance expense was reduced by $3 654,000 and 1983 gas operation and maintenance expense was reduced by $1,161,000 to reflect'1983 expenditure reductions identified by Respondent's cost reduction task forces and (7) operating revenues and operating expenses and return were adjusted to reflect the inpact of certain modifications to the design of industrial electric and gas rates which were proposed during the proceedings.
Respondent's proposed budget for 1983 advertising expenses is $514,000. The Company's advertising budget was cut from
$468,703 in 1981 to $236,000 in 1982 because of Illinois Power's
s g
cash flow problems. Normal and Calesburg contend that Respondent's
,j Supervisor of Advertising and Media Production had not and could
*s / not assess the effectiveness of the advertising program. The People and the Urbana School District clain that the advertising expenditures have not been justified as a benefit to subscribers.
The proposed 1983 advertising budget returns to the 1981 level plus inflation. The Commission is of the opinion that there is no justification for returning to the 1961 level when the cash flow problem .still exists, a recession is in progress, and there is no evidence that the increased advertising coverage purchased by that higher 1981 level was any more effective than the coverige purchased at the 1982 level. Therefore, the Commission allcws no more than $236,000 for advertising in the test year. Normal and Calesburg argued that the 1982 Lincoln Continental automobile provided the Respondent's chief executive officer and Illinois Power's use of a Springfield apartment were not justified. The evidence shows an insufficient use of the apartment to warrant this expenditure and accordingly it is disallowed. It is the Commission's opinion that this luxury automobile creates an appearance of indifference to the economic circumstances of Illinois Power's ratepayers. Respondent's operating inccee and rate base should be adjusted to replace the 1982 Lincoln Continental autcmobile with a fleet car. Proposed Revisions to Cas Utility Deereciation Rates Respondent's proposed test year gas utility depreciation and amortization expense was based on revisions to its gas utility depreciation rates for which it seeks approval in this proceeding. Based on the reccmmendations of a valuation engineer who testified in its behalf, Respondent proposed the following revisions to gas depreciaticr rates: 0) t N_ 82-0152
.' ,- y; ; n .+ .
.c . +, .g. g -
- r .* * ' .? h.Tf.pf';h.e?.l.*.i.j l.iQ' .'$4{ agl =}. ?
. '{j l i.l5. ;.k. '. 'YU ,.;;b..' *. QQ.L . ' N . .'.' ', ;I' ..W
' Function Carrent Rate Proposed Rate Production 4.256 4.08%
Underground storage-- .
' Account,350 ,
4.00. - 2.34 Account 359 4.00 2.51 Other '
. 4.00 2.49 ,
Transinission L 70 - 2'.95
* *
- 3.' W: $ '{.Q.&,*J
*};..
f* _._ ;.:).Y09.W%'f4.24
*** N. fA*&ba&l ':' b.h_'
I N.j$;;jk$.5,.Q:
- Account 390 2.97 Accounts 392 & 396 16.00 6.11 Othe r 4.24 3.10 Total Gas Plant 2.95 3.95 The Commission last revised Respondent's gas depreciation rates in Docket No. 50651 (December 22, 1964).
Respondent's proposed depreciation rates are based on two components: (1) average service lives for plant in service; and (2) anfallowance for' negative salvage. To determine the first-component, Respondent's witness made an analysis of average service , lives by function based on . Illinois Power's property records, the use of the simulated plant balance and retirement rate methods, and special studies for those accounts such as underground storage in which data on retirements are too limited to permit an actuarial or simulated analysis. The witness used Equal Life Group ("ELG") accruals to match depreciation to actual consumption of capital in the transmission and distribution functions. The witness testified that ELG accruals are recommended as the best way to match depre-ciation to the actual consumption of capital plant because this method avoids under-accrual rnd over-accrual for individual units
, at retirement.
(j The witness identified the second component of the proposed depreciation rates, negative salvage, as the excess cost of abandoning or removing retired property over its salvage value. He testified that most negative salvage occurs in underground gas facilities because they are not economically salvageable. Mains and services are normally abandoned rather than salvaged, and these abandonments cause the Company to incur such costs as excavating, evacuating gas, capping, backfilling and frequently repaving. These costs generally are not of fset by any salvaged material. The witness further testified that re overy of negative salvage through depreciation is a generally accepted accounting procedure and con-forms to the Uniform System of Accounts. The witness examined Respondent's negative salvage experience over the five year period 1976-1980 to determine the appropriate negative salvage components of Respondent'c gas depreciation rates. The witness testified that the total dollar amount of cost of re-moval experienced by Respondent increased from $561,000 in 1976 to
$745,000 in 1980, and that negative salvage averaged 18.5% during this period and ranged annually between 13.8% and 23.7% of retired plant. Respondent's witness utili:ed a negative salvage rate of 17% for the gas utility as a conservative estimate because it was t
exceeded in all but one of the five years 1976-1980 and was lower than the five year average of 18.51. l l Since Respondent does not classify salvage by account for the l qas utility (and is not required by the Uniform System of Accounts for Gas Utilities, General Order 179, to do so) , the witness made an allocation of total gas utility negative salvage expense to the various functions. However, tae witness testified that no negative salvage expense was allocated to land rights and cushion gas asse-O ( t w
.44
82-0152 p.- ; ,' ~~ *
- . . , . . , . , .c.c - .
. u. , ,
~ , . . - . . .
- s
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; ' '..gc l4 *. , ..,Q M * [, . Sf: fkh...:
,iated' wlth underground storage nor to general equipment classified? q.W:yl,f:
in Accounts 391-398 since these assets are not subject to any ('"')N ( , , - significant cost of removal at retirement. The witness allocated a negative salvage expense based on the total gas utility rate of 17% to all accounts other than those just named in proportion to
, ,.., , ,d,epreciation expense for ea.ch account. ,, v m e4 - ,.
A member of the Commission's Engineering Department, now deceased
- but who during his tenure served this Commission with distinction, jli. .*. (.p Ov.'.vge:.9.f4 ~. presented
. Thes testimony.concerning .tha.p.roposed. dypteciation Staffiwitriess@i$notfehnikengRthe?dettfrrstinsti.sN.theN~ -
~ * '
9rates..yN.
.- ,d..,.[.D.
. . -E average service lives' used in the proposed depreci~ation rates. How-ever, he testified that in the Staf f's view, additional information relating to the negative salvage values by functional groups or individual accounts needed to be provided, as well as more specific information on the Respondent's negative salvage experience by function for the period studied by Respondent's witness.
In response to the Staff witnesses' request, Illinois Power's witness reviewed the negative salvage experience by function by means of an examination of retirement work orders for 1976-1981 to
- determine salvags and. cost of removal for each functional classifi-cation. Using the actual data on negative salvage by function for the five year period 1976-1980, .dse witness determined an appropriate negative salvage component for each function. The witness testified that the combination of the component to recover the original invest-ment (based on average service lives) and the component for negative salvage results in the proposed depreciation rates. The witness also testified that the examination of work orders showed no extraordinary retirements or unusual costs of removal during the five year period which might make that period atypical.
Respondent's witness also reviewed Respondent's 1981 experience. He testified that in 1981, the cost of removal was higher than it r ~g had ever been before, S829,000. However, net salvage was positive 4
; for the first time in the last eleven years. Respondent's witness
\
N_/ stated that the positive net salvage occurred because Respondent was reimbursed $512,000, of which approximately $11,000 represented reimbursement for cost of removal, by the State of Illinois, for gas mains abandoned in connection with the construction of I-270 near East St. Louis. The $501,000 reimbursement net of cost of reaoval was not actually salvage but rather payment for the cost of replacing the abandoned mains with new mains. The witness testified that reim-bursements of this magnitude have not been experienced in the recent past and are not foreseen in the future, and that if these reimbursements are not considered, the net negative salvage for 1981 is 5485,000, an amount which is comparable to that experienced in 1976-1980. Respondent's witness tastified that inclusion of 1981 data in his study would still indicate an overall negative salvage requirement of 17% to be a conservative estimate. The Commission has reviewed the testimony and exhibits of Respondent's witness pertaining to the recommended revisions to gas utility depreciation rates. The Commission is of the opinion based on this evidence that the proposed gas utility depreciation rates are reasonable and appropriate and should be approved by the Commis-sion pursuant to Section 14 of the Illinois Public Utilities Acts and that the proposed gas utility depreciation rates should be used for ratemaking purposes in this proceeding. Economic Recovery Tax Act Respondent presented evidence for the tax period reflecting the tax law changes under the Economic Recovery Tax Act of 1981 ("E RTA") . Any utility which wishes to avail itself of certain tax O
. 25 .
f I
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- 9. . .
z .
) , .,- ., , ,
t .
.,g b ~; 3 S l,; [ % ':u ' $ .l .#,' Q.h1. '.~.9.W. N4.9; s'.<. 3 4.~:.Q:. . , . .M ~'*.. .*g g gj g: p .f a d . 4.*
- QNL. q .;.a -
~
Ns benefits in ERTA must be permitted to fully normalize Investment Tax Credits ("ITC") and the deductions under the Accelerated Cost Recovery System ( " ACRS * ) . Any other accounting and ratemaking
, , . treatment will r.esult.in.the -loss.of.these. benefits to Respondent A. .
- and, ultimately, to its ratepayers. ' Respondent has utilized the proper accounting in this proceeding and has been permitted to recover *in the-rates authorized herein the full amount necessary-sRes eshouldc./4.;/.A
'nts" - < p'N.j .. y(;.. .~
+;;. . i v a. ' ,. .r. c*.r. r y.iV.D.
. toucomplycon'
.continuesto' .withform tthis./withfalt normalization requireneig.
appi-ibable account';ing,^potidentsrekiu'ites'
~
- '? .
of ERTA, including the normalization of ITC and ACRS benefits so as to minimize its tax liability. Based on all the foregoing considerations, the Commission is of the opinion and finds the electric and gas operating income, with adjustments, for the 1983 test year which should be utilized for ratemaking purposes in this proceeding is as follows: Operating Income Electric Utility: S184,050,000 Gas' Utility:
$ 34,142,000
. Combined:
$218,192,000 J Based on the originsi cost and fair value rate bases and operating income statement for the 1983 test year adopted by the Commission for purposes of this proceeding, Respondent's pro forma return for the 1983 test year at present rates is 11.98% on original cost electric rate base, 9.89% on fair value electric rate base, 11.98% on original cost gas rate base, and 8.67% on i fair value gas rate base.
1 I CCNSTRUCTION WORK IN PROGRESS I
) Respondent presented a considerable amount of evidence in
\s_/ support of its proposal to include in rate base an additional
$500 million of construction work in progress resulting in a total amount of construction work in progress ('CWIP") in rate base of S875 million, and to cease capitalization of an allowance for funds used during construction ("AFUCC") on this amount.
The Commission has in previous cases involving proposals to include CWIP in rate base, including the last three Illinois Power Company rate orders, Docket Nos. 76-0435 (June 15, 1977), 79-0071 (November 28, 1979) and 80-0544 (July 1, 1981), developed l and applied criteria for determining when CWIP may appropriately l be included in rate base. The Commission stated as follows in f its Order in Docket No. 80-0544 at p. 33: i "The Commission views the investment of funds in CWIP as used and useful to the benefit of the customer which may be included as a component of the rite base l when, pursuant to a certificate of convenience and i necessity granted by the Commission for construction of such a plant, the investment grows to a point where its significance is so great that it could impair financing. To what extent such investment, if any, should be included in the rate base for a particular public utility, must, however, be determined by the specific circumstances in each rate proceeding and will be considered by the Commission on a case-by-case basis." The Commission, pursuant to The Illinois Public Utilities Act, has the discretion to include a portion of Respondent's construction work in progress in rate base if and when the evidenes in the record supports such inclusion. (See: Citizens for a Better Environment, v. Illinois Commerce
-~
Commission, 103 Ill. App. 3d 133). _ v
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fs In support of its proposal-to include an additional amount of ( i CWIP in r* ate' base, Respondent presented evidence on the size of its N+ / invertment in CWIP in relation to its total capitalization; and on the impact of this large. balance of CWIP on its financial condition and ability to raise additional capital. Respondent also offered evidence .on the comparative revenue requirements resulting from inclusion of an amount 'of CWIP in rate base as opposed to capitaliza-tion of AFUDC on that amount, and on .other benefits of including CWIP in rate base from the point of view of both the utility and
% l we ,;; p.J yfu. .:....? .@i '. . the. ratepay'er;ingluding' Vith 'the profect 6nderions~ideVation.reductionc
'Re-' "' "in th.# cost '
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- Fociuireme'nts asdodikt'ed-spondent also presented evidence to show the ef fect on its financial condition of including varying amounts of CWIP in rate base.
The record shows that at December 31, 1981, Respondent's investment in electric CWIP was $1,191,374,000 constituting approximately 57% of total permanent capitalizatica at that date. Respondent's investment in electric CWIP as a percent of total capitalization has increased from 40% at Dece nber 31, 1979 and 46% at December 31, 1990 and Respondent projects that its investment in electric CWIP will be $1,533,691,000, or approximately 63% of - total capitalization, at December 31, 1982, and will be $1,819,611,000, or approximately 67% of total capitalization, by December 31, 1983.- , These amounts of electric CWIP may be compared to Respondent's balance of net original cost of utility plant (electric and gas) in 1 service which was 51,288,212,000 at December 31, 1981, and is pro-
- jected to be S1,304,522,000 at December 31, 1982. Electric CWIP was 53% of net electric utility plant (including construction work in progress) at December 31, 1981 and is projected to grow to 59%
of net electric utility plant at December 31, 1982 and to 63% of net electric utility plant at December 31, 1983. A witness fe; Respondent testified on the effect of Illinois i Power's large balance of electric CWIP on Respondent's financial
,1 condition and ability to raise capital. The witness testified that the lack of a current cash return on a significant portion of Re-spondent's invested capital has resulted in deterioration of its ability to service adequately its outstanding capital and to raise additional capital for its current construction program. Due to the disparity between total assets and assets producing a cash return, Respondent's cash earnings from cperations have been in-suf ficient in nine of the last ten years to pay fixed charges and a reasonable common dividend.
He testified that the gap between operating income and interest, preferred dividend and common dividend requirements has grown from S6.6 million in 1976 to $46.7 million in 1981 and is projected to be $51.8 million for 1982. This requires Respondent to raise additional capital in order to have the funds needed to service existing capital, which the witness testified dilutes earnings and the value of pre ent equity holders' investment and is viewed as a sign of a financially unsound enterprise by prospective invest-o rs , since a healthy firm generates sufficient income from its operations to service its outstanding capital without having to sell additional securities Scr this purpcse. The Company witness testified that continued issuance of first mortgage bonds and preferred stock to finance construction which earns no current cash return may cause coverage ratios specified in Respondent's mortgage indentare and incorporation documents to fall to near the levels at which no additional bonds or preferred stock can be issued. This problem is exacerbated by the need to sell securities during periods of high inflation and interest rates. New fixed-income securities must be sold at incremental costs . which are much higher than the existing embedded cost of capital. Interest and preferred dividend requirements are increased sub-stantially without a corresponding increase in cash earnings. As a f 's result, coverage ratios fall to unacceptable levels. (v) 6
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('~'h -Respondent's evidence showed' that- its interest coverage ratio . .
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) calcul'ated in. accordance.with its mortgage indenture was 3.73 times
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as recently as 1975 but has fallen'to 2.58 times in 1981'and would . fall to 2.23 times in 1983, which would be a new low. Respondent is prohibited from selling. additional first mortgage. bonds if interest '
"i 'obligaticas on bonds' outstanding and those proposed to be sold '
would cause the coverage ratio to fall below 7 00 times. ,
. ... Hospondent' w - -
7.g;7. @ ?;},W,;<. f.t;CNIPiidcDoaso$y..s itness also internal
. testified .that{ a.sg.t;ha.balanget, scash.for. asofa .,i;g, . N. ,;..;..;E., g>.,My";g:'
;3espondeat%; *.generafioncof .. .--
3' construction requirements declines, due'in substantial ^part.'to'the fact that current depreciation, which represents cash flow, is based on the original cost of plant in service that was built in the past at costs much lower than the costs of facilities currently being installed, and is therefore, insufficient to fund current construction. Retained earnings are also inadequate for this pur-pose. Respondent's evidence indicates that its internal cash genera-tion as a percent of additions to utility plant has declined from 31.8% in 1977 to 19.3% in 1981 and is forecasted to decline to 11.9% for 1983 and. co 6.8% for t'he 12 months ending June 30, 1984. Reduced internal. cash generation of construction require'ments in-creases' Respondent's reliance on the external capital markets. As a utility must raise more and more capital externally at incre-mentally higher rates, embedded costs of capital are raised, interest and preferred dividend requirements increase and coverage ratios further decline. Illinois Power's evidence sh3ws that Respon-dent has experienced all these impacts. In addition, the ability of the firm with substantial capital requirement to stay out of the capital markets when conditions are unfavorable is reduced. Respondent's witness testitied that if CWIP is included in e rate base, Respondent obtains additional cash return which reduces [ its need to issue additional securities to obtain funds to pay
\s interest and dividends. Interest coverage ratios are improved due to the greater cash earnings and reduced interest requirements since fewer securities are issued.
Respondent also presented evidence pertaining to the growth in the AFUDC component of its earnings. Respondent's witness testified that utilities whose earnings available for common include a significant portion of AFUDC are considered to have lower quality earnings. Respondent's evidence showed that its balance of AFUDC as a percent of earnings available for common increased from 22.4% in 1977 to 57.1% in 1981 and is projected to increase to 68.5% in 1983 and to 71.6% for the twelve months ending June 30, 1984. Respondent's evidence indicates that its 1981 ratio of AFUDC as a percent of earnings was higher than that of any of the 20 double A utilities analyzed by Respondent for comparative purposes. Respondent also presented evidence indicating that Respondent's large investment in CWIP may result in its securities being furth.r downgraded by security rating agencies. Respondent's first mortgage bonds and preferred stock were downgraded f rom AA to AA- by one of the major rating agencies in April 1982 and are rated Aa3, the lowest rating in the AA category, by the other major rating agency. Respondent's witness testified that the downgrading will result in higher costs for future issues of senior securities. There is evidence to show that these agencies rely on numerous factors such as financial indicators of internal cash generation; fixed charge coverages, including and excluding AFUDC; AFUDC ratio; debt ratios, and construction program and financing requirements, including ratios of interest coverage before income taxes, excluding AFUDC internal cash generation as a percent of additions to utility
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gsg: planti and AFUDC as 'a percent of earnings applicable to common. . These are ratios which are specifically af fected by the regulatory . i s/ treatment of CWIP. Respondent's evidence showed that it is experiencing declines in all these measures. Evidence.was- presented by Illinois Power tolsh'cw~ that in '
.- ~
recent yea'r s,' a number of factors have combined to create a more - hostile environment for utility operations thereby increasing the risks of' the utility business; perceived by investors. Eigh levels ~
>,Wi '..c :.;.t. ..;'/. pt,1qilatied ttighf nte' i rest!satesy;&orpyergmos caN4al-intense,' *%
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latory restrictions on utility operations and construction, and rapid fuel price escalation, have increased the risk of investments in utilities including Respondent as evidenced by increasingly higher capital costs. In the more difficult capital markets, the adequacy of the utility's level of financial integrity is of particular importance. Illinois Power presented evidence comparing its important financial statistics to those of double A rated utilities over the period 1977-1981. These data indicated Respondent's financial condition to.be deteriorating during a period of heavy construction expenditures and.financi.ng requirements, and showed its historical financial performance to be significantly worse than that of double A rated utilities. Respondent also presented evidence for the purpose of evaluating the ef fect on its financial ratios and financial condition of including varying additional amounts of construction work in progress ia rate base. Respondent presented projections of financial ratios for the period January,1983 through June 30, 1984, under various assu=p-tions as to the amount of rate increase allowed in this proceeding including the amount of CWIP in rate base. Respondent focused attention on financial ratios relating to internal cash generation and cash flow which are affected by the treatment of CWl? since, as
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k'j Respondent's witness testified, Respondent's principal problem is the need to support is construction program. Respondant's evidence showed that its financial ratios would improve with greater amounts of CWIP in rate base but that only with the full amount of CWIP proposed by Respondent would Respondent be able to meet its financial goals for the double A bond rating, or the 5-year averages for double A utilities, in 1983 and 1984. Respondent also presented an analysis of the extent to which operating income would be suf ficient to cover fixed charges and common dividend requirements in 1983 under the various assumptions modeled. This analysis indicated that if a rate increase were granted without inclusion of additional CWIP in rate base, operating income would fall short by meme $57.9 million of covering capital service require-ments, assuming no increase in the current common stock dividend. Forecasts of Respondent's financial condition were also pre-pared by members of the Commission's Accounts and Finance Department using the Ccmmission's Regulatory Analysis computer model. These analyses projected numerous financial ratios such as interect cover-age ratio before tax including AFUDC, interest coverage ratio before tax excluding AFUDC, coverage of long-term debt excluding AFUDC, cash dividend coverage, internal funds as percent of construction expenditures, internal cash generation as percent of debt, AFUDC as percent of earnings for common, and cash flow per share, under various assumptions as to the amount of rate increase allowed Re sponden t in this proceeding, including the amount of CWIP included in rate base. Staf f witnesses' projections showed that if Respon-dent is granted a rate increase without inclusion of additional CWIP in rate base, these financial ratios would improve in the post 1993 period.
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#A ES O' Respondent also showed that its proposed amount of $875 million
/'~N of CWIP to be included in rate . base would represent only 57% of
(
. the - total CWIP at December 31, -1982 'and approximately 48% of the
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- total CWIP. at December 31, 1983. Respondent's witness testified that this data indicates that Respondent's stockholder's have borne in the past And,will continue to .
" burden of : supporting, Respondent' bear in the future
- s. construction a sub,stantial.
program. . Respondent further stated that both it and its customers have realized substantial. benefits,from this en==fssion'.s, previous,, actions. - ' m.,s .* ;@.m.' M U* inzipcludimpa pojrtion'.of s'alectAic'CNIPllhJtaCCbas(/'14Eterms*/6fm Y N. . W.
?*:J., - O. -f.%yg.y3/y r'e' duction'of' the amount of permanent financings required in a period .
of high capital costs, maintenance of Respondent's financial integ-rity and ability to raise capital, and reduction in the revenue requirements associated with Clinton Unit No.1 over the service life of the plant. Respondent's witness also testified that inclusion of CWIP in rate base has enabled Respondent to avoid mortgage coverage problems over the three year period 1980-1982 during which Respondent has financed over $1,000,000,000 of construction expenditures. The witness sponsored an exhibit which displayed Respondent's coverage ratio and amount of first mortgage bonds issuable under the terms of its mortgage for each quarter of 1980-1982 as. compared to those which would have been experienced had CWIP not been included in Respondent's rate base. This exhibit indicated that had CWIP not been included in its rate base, Respondent would effectively have been precluded from selling any material amount of first mortgage bcnds after the first quarter of 1981. Respondent's witnesses con-cluded that the maintenance of financial integrity and ability to raise capital on reasonable terms resulting from inclusion of CWIP in its rate base benefits both Respondent and its ratepayers. Respondent presented evidence to show the reduction in final cost of, and revenue requirements associated with, a project where CWIP is included in rate base and capitalization of AFUDC on the [g,)\ corresponding investment is ceased. The cost of Clinton Unit No.1 is estimated by Respondent to be reduced by approximately $133,000,000 because of the inclusion of 597 million of CWIP in rate base in Docket No. 79-0071 and an additional $278 million of CWIP in Docket No. 80-0544. Further, the revenue requirements over the service life of Clinton Unit No. 1 are estimated by Respondent to be reduced by approximately $767,000,000 due to this Commission's pre-vious actions in including CWIP in rate base. Inclusion of CWIP in rate base in Docket Nos. 79-0071 and 80-0544, and the associated cessation of capitalization of AFUDC, has reduced the revenue requirement (raturn, depreciation and taxes) for the first year of operation of Clinton Unit No. 1 by an estimated $48.7 million. Respondent presented evidence to show the relationship between the amount of CWIP included in rate base in this case and the additional revenue requirements to service the investment in Clinton Unit No. I when it is placed in service. Res pondent's presentation showed that if no CWIP were included in rate base in this case, an increase in electric operating revenues of
$505,352,000 weuld be required to service the investment in Clinton Unit No. I when it is placed in service. If $375 million of con-struction work in progress were included in rate base, an increase in electric operating revenues of $405,184,000 would be required to service the investment in Clinton Unit No. I when it is placed in service.
If $875 million of CWIP were included in rate base in this case, an increase in electric operating revenues of $274,683,000 would be required to service the investment in Clinton Unit No. I when it is placed in service. Respondent contends that inclusion of i
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additiongl amounts of CWIP in rate base wi11.further reduce the (\
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additional revenue requirement necessary to service the investment in Clinton Unit'No. I when it is placed in servics'and'will thereby,
'-~') . spread*
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out over a
- longer period of time the increase in operating revenues needed to so; port the plant when it goes into operation.
~ ' ' '
Rhspondent's witness identified other'be'nefits 'a'risin'y from l inclusion of ~ CWIP' in rate base in addition to benefits such as maintenance of the firm's financial integrity, maintenance of lower
- capital costs. wh%ch af fect,both, current .and future. , rates,. and re- ,. - 4
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- s associated with'k (it.inal.1cosyaf. aTyroMaitt.and
'The' witness testified M.*revenueTrgqnirements,7 that ratepayers benefit from the inclusion of CWIP in rate base because they receive assurances that electric energy supplies will continue to be adequate, which assurances enhance the value of assets owned by the ratepayer, such as a home or business. While most present customers will receive service from the new plant and will benefit from the lower revenue requirements when it goes into service, even current customers who never receive service from the plant may be benefitted if the value of their property is increased by the prospect of continued efficient service. .
In addition,' this witness testified that difficulties in financing expansion resulting from the AFUDC' approach may cause.a utility to install less capital-intensive, higher fuel cost plant, even if it is not the alternative with the lowest overall revenue requirements. He stated that if a utility has insuf ficient cash flow to support current construction, it may defer completion of its current construction program without regard to the economic con-sequences of deferral. Inclusion of CWIP in rate base reduces the probability of delays (and hence, higher costs) in construction activities for financial reasons. A witness for Respondent presented an exhibit which showed that
- p. total revenue requirements over the life of the plant will be less if CWIP is included in rate base than if CWIP is excluded, and that, (s
s-
) on a present value basis, the revenue requirement streams under the two alternatives are equal. The analysis was presented using the firm's marginal capital cost data and showed that total revenue requirements are lower by $745,500,000 over the life of the plant if $875 million of CWIP is included in rate base for two years an the construction period.
The Company witness stated that the difference in revenue re-quirements is due primarily to the fact that if all AFUDC is capicalized, the final installed cost of the project is greater, requiring greater depreciation allowances and return requirements over the service life of the plant. The witness testified that other factors not explicitly included in his analysis would tend to make the alternative of excluding all CWIP from rate base even more expensive. These additional f actors include the incidence of gross ravenue taxes and the Illinois invested capital tax, and higher costs of capital if all AFUDC is capitalized. Respondent presented evidence to shcw that while CWIP has been included in its electric rate base for the past several years, Respondent has maintained electric rates which are among the lowest available to ratepayers in Illinois, and that this position would not be altered with the requested rate increase. Respondent's wit-ness testified that the proposed rate increase including the pro-posed amount of CWIP is appropriate because it would help to restore ( Respondent's financial condition to reasonable levels yet would leave Respondent with rates comparable to and in most cases less than those charged by other Illinois utilities. A' . 31
82-0152
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l C. .... r.....p.g,p ;Two witnesses appearing on behalf of Intervenors offered I -~b testi, mony on the subject of CWIP. One witness, appearing on behalf V* . of 'the U.S. Departmene Lof Defense -("DCD") ,. reviewed Respondent's - .
. financial ratios whi'ch would result from. granting no rate increase,
' 50% of the requested rate increase, and 100% of the requested rate increase. He stated that failure to allow any rate increase or additional"CWIP would lead to nsome- financial deterioration at a time when Respondent must raise large amounts of capital to finance' con-struction. He expresaed his opinion that allowing no more than 50%
be aufficient to maintain, ,; ,. . v..A J{.7 h E *, b @..of.the proposed additional.CWIP.would es'pondene'y financial conditioh J. par't icularIyi,itsh,. interest,coverJMyer$(/ *g*'"'y*3}@ f
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* * 'ra' tid,9 at levels 'eqnf'to dr greater than those achleve'd'in recent .
years during which, according to the witness, Respondent has attracted capital on f avorable terms and maintained f avorable financing ratings. The witness presented no specific analysis of the reasonableness of the costs at which Respondent is currently raising capital, such as the sale of long-term debt in 1982 at costs of 14.634 and 14.9834, and made no comment on the downward trend of Respondent's financial indicators in recent years nor on the implications of the recent downgrading of Respondent's first mortgage bonds and preferred stock. Although agreeing with Respondent's witness that total revenue requirements over the life of a project are , reduced if CWIP is included in rate base, the DOD witness contested the conclusions of Respondent's witness concerning the present values of the two alte rnatives. The witness disagreed with the use of the utility's marginal cost of capital as the proper discount rate for present value analysis on the ground that it was too low. The DCD witness presented an analysis similar to that presented by Respondent's vitness using different parameters. The witness also stated that rate base treatment of CWIP is a departure from cost of service pricing and suggested that excluding all CWIP f rom rate base in-creases incentives for timely and cost-effective construction activities.
%~ A utility engineer appearing on behalf of the Village of Buffalo testified against the inclusion of CWIP in rate base. The '
witness did not base his position on any analysis of the financial condition of Respondent but rather cn objections to CWIP in princi-ple. The witness summarized his objections to CWIP as follows: it includes in rate base property which is not "used and useful;" it violates the regulatory principle that rates should correspond to the cost of service; it blurs the roles of investers and consumers and causes ratepayers to assume the function of investors; it im-pacts management incentives for planning and cost control and com-plicates regulatory oversight; and it results in economic cost, on a present value basis, to ratepayers which is greater than that resulting from capitalization of AFUDC. In support of the latter point the Village of Buffalo witness offered a comparison of revenue requirements associated with in-clusion of CWIP versus capitalization of AFUDC. His analysis indicated that the revenue requirements associated with capitaliza-tion of AFUDC were greater in total but lower on a present value basis than the revenue requirements associated with inclusion of CwIP in rate base depending on the time period analyzed and the dis-count rate used. The witness based his present value analysis on Respondenc's embedded cost of capital and used discount rates higher than Respondent's cost of capital which he contended were more representative of ratepayer opportunity costs.
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(_s/ ** y The dommicsion hotes that'it has d'iscretion.to determine an - . increment of CHIP to' be "used and useful" within the meaning of Section 36 of the Illinois Public Utilities Act which may be included as a component of. Respondent's ,ratesbase., (Seet.. Citizens for a , ' Better Environment v. Illinois commerce Cormission, supra.! , The Village of Buffalo witness testified that if the Commission
* , 4.. . . det, ermined that Respondent's financial . integrity,would be threatened - 4 .- .
- i. ,.p,. Q K,s. .y.Chytempits11s'atir>n?oAM1.'AFUD,C'rt resejrt :sMouldThe bedJ.tNEyee Mf 4)Q@~%[,..'- d @,,,,,* M .* W surcharges in' the form of contributions in aid of constraction* or
~
~
customer advances for construction rather than to inclusion of CWIP in rate base. He made reference to three regulatory commission decisions from other jurisdictions, two involving small gas utili-ties and one involving a small water utility, to support his pro-posal. The witness presented no specific plan for implementing this proposal. The Village of Buffalo witness tostified on the risks associ-ated with a nuclear construction program which he described as having a higher dollar-per-kilowatt construction cost than other technol-ogies, resulting in higher financing costs; having longer lead ' times to construction, resulting in greater exposure to cost in-creases due to inflation; and being subject to incressing real costs due to the maturing nature of the technology. He st&ted that the one factor above all others driving the trend of increasing real costs for nuclear construction has been the proliferation of regulatory standards which affect power plant design thereby re-sulting in delays, increased requirements for material and labor and reduced labor productivity. He noted that Respondent had attempted to lessen its risk associated with construction of the Clinton facility by selling a portion of its interest in the plant to other utility systems. I \ On rebuttal, an economist testifying oa behalf of Respondent
\s_/I opposed the present value analyses of Intervenor witnesses. Respon-dent's witness stated that the use of a different rate for dis-counting than the rate used to determine the initial value of the streams of revenue requirements (i.e., the utility's marginal. cost of capital) is lacking any empirical or theoretical support. The witness testified that the appropriate discount rate for use in the present value comparison under consideration is the firm's marginal cost of capital which is both the opportunity cost of the capital employed and the social opportunity cost of funds, that is, the weighted average of all individual opportunity costs.
The Illinois Power witness also stated that the analysea of the Intervenor witnesses failed to take into account a number of factors which if considered would raise the revenue requirements associated with capitalization of AFUDC relative to the revenue requirements associated with inclusion of CWIP in rate base, including the fact that if CWIP is not included in rate base, the utility must undertake additional outside financing during the con-struction period, thereby (1) raising embedded costs which are applicable to the entire rate base during the construction and in-service periods: (2) supporting increases in the AFUDC rate and hence in the total amount of capitalized AFUDC and (3) increasing the utility's expense for the invested capital tax which is based on total capitalization. Other factors not taken into account or not fully taken into account were revenue taxes, the invested capital tax and the impact of higher capital costs if CWIP is excluded from rate base. Respondent's witness, a certified public accountant, presented rebuttal evidence concerning the proposal to utilize contributions in aid of construction or customer advances for construction in lieu of CWIP. The witness noted that this proposal would not alleviate
~N downward pressure on Respondent's coverage ratios since the funds V
82-0152 f
~'s accumulated under this proposal would not be includable in net I earni,ngs or revenues for the purpose of calculating interest coverage ratios. He questioned whether the total revenue requirements associated with the alternative proposals would not in fact be greater than those associated with inclusion of CWIP in rate base.
The witness also challenged the opinion of the Intervenor witness that funds received under the alternative proposals would not be includable in gross income ror federal tax purposes, noting that the proposals were a severe departure f rom the traditional application
.. of contributtons ,in aid of construction.and cus.tomer advances. for ... -
s, .. m. . , V . "constructioirand'that. the"I'aternal luonue Service'has 'chhllenged-the claimed non-taxable status of a similar surcharge plan used by another utility. Respondent's witness also challenged the contention that inclusion of CWIP in rate base defeats incentives for control of construction costs. He identified ongoing financial and operating incentives which Respondent has for timely and cost-ef fective con-struction. Financial incentives identified by the witness include the avoidance of additional outside financings which, if they are required, increase interest and preferred. dividend requirements, raise embedded capital costs and if common equity must be sold, dilute earnings and may negatively affect the price of cwmmon stock. If common stock is sold at prices below book value, stock-holders' capital is confiscated. The Company witness also stated that reductions in the ratio of internal cash generation to total construction expenditures increase the risk to Respondent's stcckholders that future dividend growth will be lower and raise the likelihood that senior securities will be downgraded. Operational incentives include the need to keep construction costs low in order to keep rates low thereby sup-porting increased sales which provide an expanded base for fixed cost recovery, and enhancing Respondent's ability to compete with alternate energy sources or with other utility service territories in which industrial customers may locate plants or to which they might shift production. The witness testified that including a portion of CWIP in rate base does not remove the financial and operating pressures which provide these, incentives. He stated that even if the full amount of CWIP proposed by Respondent were included in rate base, Respondent's security holders would still be required to support 43-52% of Respondent's invest =ent in Clinton ' Unit No. 1 in 1983. Normal and Galesburg contend, with respect to CWIP in Illinois Power's rate base, which was joined in by the Urbana School District, that ratepayers be given the opportunity to participate in equity holdings at a discount and in a manner which would lower their utility costs by dividends ef fectively of fsetting rates. Specifically they urge Respondent to of fer shares of its stock to its ratepayers at a discounted rate when CWIP, in the magnitude of that involved in this case, is sought to be included in rate base so as to provide their ratepayers with an equitable and fair means to participate . when the Company seeks to acquire additional capital. These Inter-venors argue that the Commission should relieve ratepayers from the responsibility of providing investment capital without the benefits of investors, and lef t with the total burden of ceat and risks for the investments of others. nespondant claims that the inclusion of CWIP in rate base does not result in ratepayers providing investment capital but only supporting the investment through a cash return requirement. All the investment in CWIP which Illinois Power seeks to have included in rate base -has already been provided by investors through the cap-ital markets. It is Respondent's position that the inclusion of CWIP in rate base only-results in the provision of a return on that investment during the construction period.
\
9
7,, I 82-0152 s The Commission is of the opinion 'tdat Illinois Power' should study making available to its ratepayers a stock purchase option
, or similar plan of financing wh1 rein the ratepayers become partici i
\s ,/ pating members by investment in CWIP in rate base, and in return possibly receive dividends and lower rates. The results of this study should be reported to the Commission. .
'N
'l The Commission notes that it has under investigation in Docket No. 80-0167 the question of proper incentives for effective cost control performance at the Clinton project.
^
An officer of Respondent,' with' responsibilities for the' Clinton construction project, presented testimony and exhibits , concerning the cost and schedule status of the project. The witnesses' evidence principally addressed increases in the esti-mated cost of the project which have occurred since the conclusion of Respondent's last rate proceeding. A revised cost estimate was prepared in December 1981 and April 1982 the latter estimate was associated with a one-year extension of the scheduled in-service date. Respondent's witness presented an exhibit which broke out the cost increasas in the December 1981 estimate over the previous estimate (issued in December 1980) 'as between direct construction costs of Respondent's centractor, direct construction costs of Respondent, owner's expenses, architect / engineering costs, and AFUDC, and further discussed these iacreases through a total of 27 line items, including a decrease in AFUDC attributable to inclusion of additional CWIP in rate base commencing in July, 1981. A second exhibit sponsored by the Illinois Power witness set forth a similar analysis of cost increases between the December 1981 and April 1982, cost estimates includiag identification and discussion of 25 line items. This exhibit specifically identified
$246.6 million of the total 5350.9 million cost increase in the April, 1982 cost estimate as resulting from the one-year schedule
( extension, including $115.5 million of additional AFUDC. Additional information on the cost increases in the two estimates, provided in discovery, were placed into evidence during cross-examination. These exhibits explained the cost estimating system used by Respondent, provided further detail on the rajor f actors resulting in cost increases, and provided informatien on some 32 line items of cost for t": December 1981 cost estimate and some 46 line items of cost ' ,r the April 1982 estimate and on a 1 number of other factors not specifically quantifiable into particular coat increases.
; The Illinois Power witness identified the principal factors , contributing to the cost increases and schedule extension reflected in these estimates such as the impact of changes in regulatory requirements and interpretations of regulations, additional equip-ment and testing required as a result of the Three Mile Island accident, increased expenditures for quality control / quality assurance activities, the impact of a January,1982 stop work order on safety-related electrical cable ~ tray installation arising out of a dif ference of. opinion between Respondent and the Nuclear Regulatory Commission regarding the proper timing of inspections of completed work, which resulted in several changes in installation i and inspection procedures, the need to redesign the plant's control rod drive system in light of new load requirements,'and an increase in the AFUDC rate reflecting higher money costs.
In its Order in Docket No.~ 80-0544, the Commissi'on after a detailed review of the evidence including evidence presented by' Respondent similar to that described above, noted that,although cost f'~% l () ,
- 35.- c-
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82-0152 increases for the Clinton project- have been substantial, the cost estimates and estimated final cost are comparable to the industry
. experience; and concluded that Respondent has been subject to the k' Vc,') same factors which have affected the . entire electric utility in-dustry. Illinois Power's evidence in this case indicates that such factors hava continued to impact Respondent resulting in further cost increases. The Commission, however,-intends to continue to monitor closely the cost and schedule status of the Clinton pro-ject through the monthly reports and periodic cost catimates which it requires Respondent to file,. . ,
- . f ;. O 'y.h'. f ;Q:.' & y & jl$? & $$$h yi$c hs $h han e r n N also addressed in testimony the topic of CWIP in the context of a firm with a large construction budget. The witness identified several problems associated with capitalization of AFUDC in the con-text of a large construction program. He testified chat the capitalization of AFUDC f ails to provide sufficient cash earnings to meet the financing needs of utilities with major, long-term con-struction budgets; that cash flow problems, declining interest coverage ratios, and earnir.gs from operations which are insuf ficient to pay the dividend, result in higher added risk that is directly translated into a demand for a higher rate of return, and that
, investors discount. AFUDC earnings t. that when carrying costs on CWIP are met by issuing more securities, investors are asked to providu not only capital but also the dollars required to service that capital, a practice which has been universally condemned in other contexts; that a utility with cash flow problems may be under heavy pressure to delay a construction schedule, which will es-calate the cost of the plant and increase operating costs by delaying replacement of less efficient older units by more efficient new units; and that the price signal provided if no CWIP is included in rate base is unrealistically low, and a precipitous rate increase may be required when the plant comes in service in order to service the related investment, which may come as a shock to the ratepayer.
[ ('- This Staff witness stated that by comparison, the inclusion of CWIP in rate base increases internally generated funds, improves interest coverage ratios and improves quality of earnings, thereby reducing the level of risk perceived by investors. These benefits accrue at a time when the utility's need for capital is the greatest. Further, the rate base treatment of CWIP provides the ratepayer with a quid Lro Luo in the form of lower revenue require-ments associated with Tt. e plant than if AFUDC is capitalized. The Staff witness testified that tne inclusion of CWIP in rate base should be no more than necessary to assure adequate cash flow to cover all operating expenses, the interest charges on debt, the dividend obligation on preferred stock and a reasonable level of dividends or. common stock. The witness rejected certain philosophical arguments advanced in opposition to rate base treatement of CWIP. He stated that the objection that the inclusion of CWIP converts ratepayers into investors is misplaced, since the historical position of the investor supplying the capital is not disrupted; the ratepayer a services the investment carrying costs but does not provide the capital. The witness testified that the argument that inclusion of CWIP will stimulate unnecessary plant construction is without foundation, since the addition of capacity at much higher than previous embedded costs will put the utility under earningr pressare that means lower earnings, not higher.p ofits. Finally, the Staf f witness characterized the inter generational equity challenge as of ten mistaken. Under pricing structures based ( ,/ .
82-0152
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* ' on 'embeddad' costs, ra'tes'wili never ' exceed m$rginal' costs during
- gI perio,ds'of cost escalation, and the futura subsidization contention g is not realized. Consumption patterns of present. customers create N- / .
such of the need for capacity expansions and for replacement of - existing facilities. Refundings of maturing debt at current costs in excess of the cost of debt retired create a measure of the cash
~
flow problems and are.directly related to existing capacity and current generation ratepayers.-
.The Staf f witness , addressed the problem oft' he sizeable rate .
y.cn f ., m...,4 viacrease required,wh m;A..large,new capital-intmoeive;besehoed ..e p**; g' ..' Qy o ri'6f/a'pl'an for '* pig' t . J,,;' *6"
, 4 g, pg.acWi'n seervice."Ife )Loposed 'coneliteratii~ - - '
moderating the initial rate increase associated with placing the plant in service by setting rates at the not income level and allow-ing the restoration of carrying charges to rate base through a capitalization procedure. This procedure would be followed until the boek cost of the plant were equal to the cost which would have resulted if no CWIP had been included in rate base. The witness presented exhibits depicting 1982-1987 values for certain financial statistics under various assumptions of the amount of CWIP in rate base as well as under the witness' plan. These projections were prepared using the Commissicn's Regulatory Analysis Model. , Respondent contends that' the Staff witness' proposed plan or ' any timilar plan for alternative ratemaking treatment of the Clinton . plant when it is placed in service would be a significant action with serious ratemaking and financial L9plications. The Staff witness' proposal did not receive sufficient study and was not sufficiently evaluated on the record in this proceeding to provide a basis for an informed decision. The Commission, in reviewing the Staf f witness' proposed plan, is of the opinion that it addresses some of the serious objections raised by varidus parties in this and other rate cases. It provides some solations to such issues as cash flow and financing needs [) i _,) which occur during extended periods of construction and plant additions, avoidance of extraordinary changes in rate base and rates, correct pricing signals and a more reasonable representation and procedure for accouncing for plant costs. The Commission is also of the opinion that Respondent should research the applicability of the plan in future cases and resolve the problems which such a proposal may presents this study should be conducted in conjunction with the Commission Staf f with the expectation of producing a positive and workable proposal. This study should be completed and a report filed with the Commission's Chief Clerk's Of fice not later than 12 months from the date of this orders copies of the report should also be served on the Manager of the Commission's public Utilities Division, with copies made available to all parties on request, The Commission has thoroughly reviewed and analyzed all the avidence presented by witnesses for Respondent, Intervenors and Staf f in this case relevant to the issue of whether and to what extent construction work in progress should be included in Respon-dent's rate base. The Commission has reviewed the historical and forecasted financial sittistics presented by Respondent and Staff, including projections of financial statistics if varying amounts of CWIP are included in rate bases the comparisons made by witnesses for Rospendent at.d Staf f between Respondent's historical and fore-casted !!nancial performance and that of other utilities having high gaality credit ratingst information in the record on the factors _mai49 red by security rating agencies and the factors which.influ-
.a , e invester attitudes towards Respondent's securities data on ens size of Respondent's construction program in relation to its total capitalization and net plants evidence concerning the cost and uchedule of Respondent's construction program; information on V' .
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82-0152 [m\ * ( ,,) the* impact which rate base treatme'nt of CWIP has previously had 2 ' en maintaining Respondent's ability to raise capital;'iata on the reductions in installed cost of and total revenue requirements associated with Clinton Unit No. 1 resulting from inclusion of CWIP in -rate bases evidenc'e on the comparative revenue requirements-resulting from inclusion or exclusion of CWIP in rate base; testimony on other asserted benefits or burdens to the ratepayer
- and . stockholder of inclusion or ; exclusion .of,CWIP in rate bases . .: . -
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' CdetA:ce Responde'nt!s' constructien} andlfinaabing. heedsicthei eurtentj@' . 4
'and' fbreseeable'stateCor the c'apital ' markets'and Respondent's ~ *
, i present ability to raise capitalt evidence on Respondent's financial condition and the impact of its large balance of CWIP on its ability to maintain financial integrity and to raise capital including the recent downgrading of its senior securities; evidence of Respsndent's current and proposed rate levels as compared to those in effect for other Illinois utilities; and evidence on the size of the operating revenue increase which will be required to service the investment in Clinton Unit No. I when it is placcd in service, and the lessening of this increase which may be occasioned if additional CWIP is , included in rate base at this, time. ,
, ,. Based on all this evidence,,the Commission is of the opinion ,_ -r i and ' finds that the size of Respondent's -investment in construction work in progress on which it is presently earning no cash return is so gceat that it is impairing and will continue to impair Respondent's ability to raise capital to continue its construction program unless Respondent is allowed to earn a cash return on a larger portion of that investment.
The Commission notes among others the following factors of record in support of its conclusions (1) Respondent's investment in construction work in progress is sizeable, exceeding 60% of s y Respondent's total capitalization and approximating its net plant 3 in services taking into account the CWIP presently included in y rate base, some 38% of Respondent's total capitalization presently earns no cash return. (2) Respondent faces considerable additional financing requirements during the next two years in order to com-
.plete its construction program. (3) Respondent's financial condition as measured by financial ratios indicating interest coverage, internal cash generation and cash flow and quality of earnings have deteriorated over the past several years: Respondent's senior securities have recently been downgraded and are in jeopardy of further downgrading; downoradings raise the cost of capital to Respondent and reduce the availability of capital in the external markets. (4) Rasponcent's low level of internal cash generation is limiting its ability to finance construction from internal sources and increasing its deper.dence on the external capital markets. (5) Respondent's high parcentage of AFUDC earnings to total earnings is reducing the quality of its earnings which is a circumstance viewed negatively by investors that af fects the cost of capital. (6) Respondent has been required, in order to support its construction program, to sell a substantial amount of new common stock at prices below book value during the last three years; this impairs Respondent's ability to raise capital through the sale of common stock. (7) Continued difficulty in raising capital eculd threaten Respondent's ability to raise capital needed to complete construction of Clinton Unit No. I and therefore result in delay in the completion of the unit which would increase its ultimate total cost.
The amount of CWIP which st.ould be included in rate base in order to maintain Respondent's financial integrity and ability to raise capital while maintaining reasonable current rat
- 1evels is not susceptible of being exactly determined through a precise mathematical formula. Application of judgment by the Commission based on full consideration of all the factors heretofore cited including the effect of inclusion of an amount of CWIP on rate-
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p&y ('~') g . thi,ers as measured by the resulting rate levels is necessary to s' determination. ., V ., r Based on consideration of al'1 the evidence, the Commission is of the opinion and finds that $625 million of CWIP should be * , , included in Respondent's rate base., In making this deter'm ination., the Commission relies particularly on the deterioration of Respondent's financial condition and on the evidence presented by Respondent .
, and Staff which shows that Respondent's . financial statistics .
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program on the ability to raise capital and which are specifically affected by ra's base treatment of CWIP, will not be improved to necessary levels if any rubstantially lower amount of CWIP is included in rate base. The Commission also relies, with respect to the effect of this determination on the ratepayer, on the evidence which shows that total revenue requirements over the life of Clinton Unit No. I will be lower by some $49,575,000 if this ar.ount of CWIP is included in rate base than if it is excluded and that the present , value of revenue requirements for inclusion o~f CWIP in rate base are equal to or less than the present value of revenue requirements ., , associated with capitalization of AFUDC on ths fact that inclusion of additional CWIP in rate base will reduce the amount of additional securities required to be sold to support construction, which if sold would be issued at cost rates higher than current embedded costs thereby increasing both present and future rates; on the fact that inclusion of CWIP in rate base heretofore has reduced the total cost and total revenue requirements for Clinton Unit No. I and that inclusion of additional amounts would have similar l impacts on the fact that ratepayers as well as the utility would
- be harmed if Respondent's fintncial condition were to deteriorate l further, resulting in higher current costs of capital or possibic
/Ni added delays in the completion of its construction programs on
('-- the fact that inclusion of additional CWIP in rate base at this time will lessen the size of the revenue increase Respondent will require when Clinton Unit No. 1 is placed in service; and on the fact that, even with this amount of CWIP included in rate base, Respondent's rates, particularly its residential rates, will con-tinue to be among the lowest available to ratepayers in this State. RATE OF RETURN The use of an average forecasted capital structure for the test year is preferred by the Commission. The use of an end of year forecasted capital structure would have consumers paying rates higher than actual costs would dictate as necessary throughout the forecasted test rate. The use of the average forecasted capital structure will have consumers paying rates which would I overcompensate Respondent for the first six months of the forecasted test year and un2ercompensate Respondent for the last six mcnths of the test year. In this manner, Respondent should only be reimbursed for total costs. Respondent's evidence shows that its proposSd tariffs would produce a 12.64% rata of return on the conbined electric and gas rate bases for the 1983 test year. The capital structure and em-bedded costs shown on IP Exhibit 9.34 Revised are as follows: f'%
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e . .. r. , . ., . . . .- l Electrie Utility Class *of Security: 'C'a'pitilisation ' Ratio. ." Cost . ." Weighted' Cos t' r I4ng Term Debt 47.52% 0.61) 4.57%
. . Preferred Stock. . 9.66 . 11 . 9 7 s .. .0,77- .
~ Casuson Stock Equity 42.82 16.58 7.10 Cost of Capital
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Nb- 'f Class of Security capitalization Ratio Cose Weighted Cost 1 I4ng Term Debt 47.52% 9.61% 4.574 Preferred Stock 9.66 7.97 0.77 L Comon Stock Equity 42.82 20.08 a.60 Cost of Capital 13.944 Combined Basis 4 Class of Security Tmitalizatio'n Ratio' cos't Weighted Cost Long Term Debt * *
- 4. 5 7 t' 47.52% '
- 9. 6'1% .
Preferred Stock 9.66 7.97 0.77 ; common Stock Equity 42.82 17.05 7.30 ' Cost of Capital 12.646 The ::ates of return on f air value rate base produced by Respondent's proposed rates are 10.54% for the electric utility and 10.154 for the gas utility for the 1983 test year. Respondent's proposed embedded cost rates and capital structure are based on the weighted average capital structure (average of thirteen monthly balances) forecasted for the 1983 test year. The forecast was based en the issuance of $200 million of long-term debt at a cost rate of 14 percent in 1982 and $100 million of long-term debt at a cost rate of 12 percent in 1983. Respondent's actual capital structure at December 31, 1981, and the projected capital structure at December 31, 1982, were shown i by the evidence and appears on IP Exhibit 9.13 to be as follows: Decembe r 31, 1981 December 31, 1982 Long Term Debt 47.33% 48,12% Preferred Stock 11.92 10.27 Comon Stock Equity 40.75 41.61 100.00% 100.00% Respondent's capital structure witness, testified that Responden t has been raising its equity component in light of the increasing business risk it h s experienced in the past several years. He l testified that Respondent has capitalization goals of 45 percent or i less long-term debt, 12 percent or less preferred stock, and 43 percent or more common stock equity. The witness stated that in-creasing the equity component relieves some of the pressure on Re-spondent's coverage ratios and permits Respondent to sell a lesser i amount of new senior securities at current high cost rates. A financial consultant' appearing on behalf of the Department of Defense recommended that a capital structure with a slightly lower equity ratio and slightly higher debt component than that proposed by Respondent be employed for test year purposes. The i i -
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1 .- ** * '" is /witnes'riitidicated that' the Sigiser' delst ' component 'codid N$ch'i~eved
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(sI l by the sale of new debt rather than new equity in 1983 as fore-casted by, Respondent. . The new-'debtrweald have a higherc qost, than.,
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. originally forecasted by Respondent. .
A member of the Commission's Economics and Ratea Department,
.,who holds a doctorate in finance, ' presented- data to evaluate ; the .
Corgany's proposed capital structure. The witness presented the actual capital atructures at December 31, 1981 and the forecasted
. . capital structures for 1984-1946 for.nine electric utilities which .
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.f , y* p.,, .j.he;,fpund;to,be compaarabler.to:
r RespondeW ..jnaspon' dents f'o' ecasted hafi'tal" structure wa(*not" dis
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the forecasted capital structures of the comparable utilities. On the basis of this analysis, the witness did not recommend any change in Respondent's proposed capital structure. Respondent of fered the testimony of a professor of Finance and Managerial Economics, from the University of Wisconsin, as to the yeneraleconomictrends (and their impact on Respondent) and the
.nvestor required return on equity of Respendent. This witness reviewed general economic trends and cenditions relevant to the determination of the cost of common equity for Respondent, including ,
statistics on gross national produce, industrial prod.ction, in - flation and interest rates. Based. on his analysis of, economic *, trends and cond'itions, Respondent's witnogs concluded that high inflation rates, high interest rates, rising capital, construction and operating costs, declines in sales growth, and increasing environmental and other regulatory restrictions have increased the risk of electric utilities. Respondent's witness performed a risk premium analysis and a discounted cash flow (*CCF") analysis in connection with estimating the investor-required return on equity for Respondent. As a set of alternative investment opportunities for use in his risk premium analysis, the witness utilized the S&P 400 Industrial Index. He supported the risk-comparability of an investment in s common stock of Respondent and an investment in the common stock or the average S&P 400 Industrials firm by reference to the factors which have negatively af fected Respondent and other public utilities in recent years and have increased the risk of utilities relative to that of industrial firms. To determine the risk premium for the average S&P industrial firm, the witness referred to two studies, one of which examined actual rates of return on common stocks and on long-term U.S. Treasury securities for various historical periods, and the second of which used the DCF method to estimate investor-required returns on groups of industrial common stocks at various points in time f rom 1964 to 1979, and determined risk premiums by comparing these investor-required returns to corresponding yields to naturity on long-term U.S. Treasury securities. According to the witness, these studies indicated a risk premium for industrial common stock relative to long-term U.S, Treasury securities in the range of 5.04 to.7.01. Using an average yield on U.S. Treasury securities of 14.3% snd a risk premium of 5t. the witness estimated the investor-required return on common equity to be 19.3%. For his DCF analysis, Respondent's witness used Respondent's current indicated dividend and a representative market price and employed a method of calculation which takes into account Respon-cent's quarterly payment of dividends. He estimated a near-term (5 year) investor-expected growth rate for Respondent of 3.5% per year by reference to published forecasts which indicated projected near-term growth rates, on average, of 3.6-4.2%; and an earnings retention analysis which suggested a near-term growth rate of 3.1-3.84. He estimated a longer term (beyond 5 yects) investor-expected growth rate of 5.0% to 5.5%. Using the above data, the witnesses CCF estimate of the investor-required return on equity s for Respondent was 17.7-18.0%. U
82-0152 g h ,%. e p,9. .'.e f.Q, , .*),*-:i.::. '.*l .),y.* ,;.&.']lk:l-Qli ';f.< f:lpl '-n '.W M:h.* .'*.!: I'.? O %-[.[*$ k . V ii
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- Takin(.'in'to" adcounthi's' risk 'premida and'DCY analyses;' Re' I
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- spondent's witness concluded that the inves*Mr-required return en
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(V) * . Respondent's ccmmon equity is .at .least' 194. He adjusted his . ' Cinvestor-requireci return estimate .to reflect. the higher cost of- .. equity raised through the sale of new shares of commen . stock due to flotation costs and expenses, to underwriting costs, and to market pressure on stock price which he associated-with new stock offerings. With this adjustment, the. witness estimated the cost of equity capital to be 19.54. He used Respondent's . proposed test
- _ year capital structure and projected embedded- cost. rates to. deter - -
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The Department of Defense ("D00") offered the testimony of two witnesses, both financial consultants, on issues relating to the cost of capital. The first witness addressed the relative riski-ness of Respondent's come.on stock compared to that of industrial firms. He offered various measurements as to the relative riski-ness of investments in common stock. On the basis of the results of his examination of risk, the witness indicated that an invest-ment in Respondent's common stock is not as risky as an investment in industrial common stack. The witness opposed the analyses of relative riskiness employed by Respondent's witness, and Offered , specific objections to the risk premium and DLF analyses performed , by Respondent's witness. This witness 'also. eddressed the question - of the proper adjustment to cost of equity estimates to reflect issuance costs. He recommended an adjustment for this purpose of On to 0.3% depending on the number and size of new common stock issues. The second witness appearing on behalf of the DOD estimated the cost of equity capital for Respondent using the DCF method. The witness perforned a DCF analysis using data for 94 electric utilities. He determined dividend yields for the 94 utilities using f ~g data on current indicated dividands and data on the market price of g ) common stock. To estimate investor-expected dividend growth rates, ss ,s/ the Department of Defense witness referred to historical data on growth in dividends, earnings and book value per share. He identi-fled growth rates in earnings, dividends and book value for the 94 utilities as a group over recent periods ranging f rom 0.9% to 5.7% per year. The DOD witness based his dividend growth rate estimates principally on historical growth rates in book value per share rather than on the higher historical growth rates for dividends and earnings. He also examined an earnings recention analysis for this purposes however, the witness noted that investor growth expections may be af fected by the prospect of dilution due to sale of new common stock below book value. In addition, the witness performed a separate DCF analysis for Respondent alone, using dividend yield, market price, and growth data for Respondent. The DOD witness concluded that the total cost of attracting new common equity capital for Respondant, based on his analysis of 94 utilities and including the allowance for issuance costs recom-mended by his associate, was in the range of 14.3-15.4%; and that the total cost of attracting common equity capital for Respondent based on his DCF analysis of Respondent alone was 14.3-15.7%. He recommended a return on equity for cost of service purposes of 14.9% and an overall rate of return of 11.761. A Profess:r of Finance from Washington University, appearing on behalf of the Industrial Intervenors, used- two methods in deter-mining a cost of equity capital to Illinois Power. He applied a risk adjusted mcney cost method which involves adding a pure interest rate, a financial risk premium and an inflation premium. Using this approach, the witness deve'oped a cost rate of common equity of 13.09% to 14.096 by adding an historical real rate of interest v ea-utsa
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- c. .o't .2.214, a ' financial. risk premium' of 3.884 and. an inflation . . . 2.. -
,-s premium 6f 7-84. Af ter the adjustments for issuance costs and j h market pressure,,this method produced s required rate of return of ,,
( ,,/.
', ,13. 7 8 t ' to.14.'8 3 6. t -
'The witness also app'1 ed a DCF approach in which he added a l
dividend yield and the anticipated . future growth rate in dividends ~ . per share to produce a cost of common equity capital.' The witness. -
~
analyzed these elements with respect to Illinois Power and twelve
, comparable utility companies. To compute the, dividend yield, the *
. . witness used .a 29-month period. ended May .31,1982 and' an average . ,,',
**. [ ;. . ,' .W,' 91f"..W,of .dividende : pef ehare fosi the!yssue 194Q IfSL and),tNedn' dica _ted 7. F.*y,a .*,J-.% f ?,,k,'N dividend for'1982.* 'nve -computed ' yields were then adjusted upward by 5% to allow for issue expenses and market price-pressure result-ing from the issuance of additional shares.' This resulted in an adjusted yield of 13.194 for Illinois Power and 12.31% for the com-parable firms.
In order to determine the growth rate to be used in connection with the DCF method, the Industrial Intervenors witness computed tne growth in bock value per share both for Illinois Power and the twelve comparable companies. The growth rates were computed for a ten-year period, 1971-1981. _This resulted in a ten-year growth rate - , in bock value per share of Illinois Power's common stock of 1.78%
.and an average growth rate for the comparable companies of 3.29%, ,
Combining the weighted average dividend yield and the growth rate in book value per share for Illinois Power and the twelve com-parable companies resulted in an indicated cost of common equity capital of 14.97% for Illinois Power and 15.604 for the comparable companies. On the basis of his risk premium and DCT analyses, the Industrial Intervenors witness concluded that the cost of equity capital to Illinois Power was 14.904. His decision to select 14.90% as the cost of common equity capital was influenced by the f acts fr~'g that (1) the general levels of inflation and interest rates, hence
; cost of equity capital, have declined and are continuing to decline, and (2) the tremendous improvement in the financial position of Illinois Power which has reduced the risk of its common stcck-holders.
An economist appearing on behalf of the People also presented evidence on the cost of capital to Respondent. This witness pre-sented a DCF analysis of the cost of capital for Respondent alone using dividend and market price data for Respondent to determine dividend yield and historical data on Respondent's earnings retention rate, earned return on equity, growth in dividends, earnings and book value per share to estimate investor-expected future growth in Respondent's dividends. This analysis produced an estimated cost of equity capital of 14.4% to 15.4%. The witness also developed a sample of 24 utilities which he beliesed comparable to Respondent based on a series of risk measures. The witness then prepared cost of equity estimates for the sample group of utilitier using each of six growth rate techniques. The six growth rate measures indicated a range of cost of equity esti-mates for the 24 utilities of 9.21-19.134. The range of the cost of equity estimates for the 24 utilities as a group for the six growth rate techniques was 14.46-15.26%. Based on both of his analyses, the witness indicated a bare bones cost of equity for Re-spondent in the range of 14.4-15.31, with a midpoint of 14.851. The economist for the People also addressed the issue of an appropriate adjustment for issuance costs, and concluded that the appropriate additive adjustmer.cs for flotation costs is 40 basis points based upon the Company's yearly SalJs of new stock in previous years. With this adjustment, the witness recommended a return on m
82-0152 .. _ .
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equity of l'4.8% to 15.7% with a midpoint of 15.25%. - He associated fg his recommended return on equity with allowance- of 67% of the re .. ( c, .s .5 ~ as /'
) ., 'g .
queste& additional' construction work iniprogress 'is rate' base li.e.,,- ,
~ ~'
, . a f total' of $710 million) . He' testified that if an. additional' amount -
'of construction work in progress significantly greater than 67% of the proposed additional amount were allowed,. the required return on equity would be lowered, and that if an additional amount of .
CNIP' included in rate base were 'significantly lower than 67% of the
, be proposed raisedv additional amount, the required, return on, equity woyld ,
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;Two * , . ):. .. . ..jF6h. f f -Q ness made no*'i ,* $.h.Mndl'ng or.h-reconenendation con- .
cerning capital structure, embedded cost rates or overall rates of retu rn. The Staf f witness who presented testimony on Respondent's capital structure also of fered evidence on the cost of capital to Respondent. The witness used a DCF model which considers the quarterly payment of dividends to determine the cost of equf.ty capital. He determined the dividend yield using Respondent's current indicated annual dividend per share and current market price data. To determine the investor-expected dividend growth. rate,. the i 1 witness' examined historical data *on growth in book value per share, earnings per share and dividends per share for Respondent over various time periods, and concluded that the historical growth rate is in the range of 2.0% to 3.04. He also employed the retention rate approach. Based on a review of histerical data on retention rates for Respondent and nine comparable firms, he concluded that the minimum retention rate expected by investors is 20%. The Staff witness used 25% as the maximum expected retention rate. Based on a review of historical earned returns en equity for
'N Respondent and the comparable companies, and giving particular
/ weight to earned rates of return as of July 2, 1982 based on the trailing twelve months, the witness concluded that 14.0% is the minimum earned return expected by investors. He further testi.fied that with Respondent's cot uction program expected to moderate in the future, an earned re _rn of 16.0% would be the maximum expected earned return on equity. The combination of the range of expected earned rates of return of 14.01-16.0% and the expected retention rates of 20%-25% indicated a range of expected growth rates of 2.8% to 4.0%, which the Staff witness used for purposes of his analysis. In his judgment, Respondent's historical growth rates in book value, dividends and earnings did not equal the investor expected grawth rate in this case.
The Staf f witness allowed an adjustment of 14 basis points for flotation expenses. This adjustment allows Respondent to recover the actual dollar cost of public stock issues since the last rate case. To assure the proper repayment, the witness used a two yeac amortization period with the present value of the yearly payments equal to the actual issuance costs. The witness did not make an a.'estment for additional public of ferings since rate relief will redut: tha probability ( f new issues during 1993 and 1984. Based on the data identified above, and including an adjustment for flotation costs, the Staff witness estimated the cost of equity for Respondent to be 16.02% to 17.37% with a mid-point of 16.70%. He proposed on Staf f Exhibit ROR 1.14 an overall rate of return between 12.224 and 12.80%, with a midpoint of 12.51%. G - 44 - l
82-0152 -
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~ The Commission has thoro aghly reviewed the evidence presented; y , . by Respondent for. its. financing plans and. forecasted:. interest. and'. 5 i -r ,*;
.,- preferred dividend rates and cap %talization goals and the reasons' , ,
advanced in support thereof. 'The' Commission -is of the opinion that-the weighted average capital structure and embedded cost rates for senior -capital projected. by. Respondent.for the test year should.be utilized to determine the weighted cost of capital and fair rate of return in this proceeding. .
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- 9. . - ~ The .Comission! has.. thoroughly geviewed,.the.an.thods 4 sed. Dy..the .nid.9'f""r
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. .,* M , ditiesses Ltd.'ad%st the"retiffh onJequitf" tar 'capturetflotheion efc 1g'j. .
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i '1 " ' - penses. The Commission is of the opinion that amortizing the actual or estimated dollar cost of new equity issues over the period the rates are expected to be in ef fect such that the present value of the yearly payments equal the actual or estimated issuance costs is the appropri, ate method of reimbursing utilities for issuance expenses. Based on consideration of all the evidence presented in this proceeding pertaining to cost of capital for Respondent, including its substantial financing requirements and the impact of the
- magnitude of its construction program on the risk of invas.tment in, its securities, .the Commission is o_f the opinion and finds that * '
Respondent's cost of common equity.for the test year is 15.50% and the Respondent's overall cost of capital for the same period is 11.984 as follows: Class of Security Cacitalization Ratio Cost Weighted Cos_t_ Long Term Debt 47.52% 9.61% 4.$7% Preferred Stock 9.66 7.97 0.77 Comon Stock Equity 42.82 15.50 6.64 Cost of Capital 11.986
'N Having given due consideration to all the evidence presented in this proceeding and current conditions including recent and proposed increases of substantial magnitude in the pricas of pip 6line gas supplies available to Respondent which may of feet the marketability of such gas and the recovery of costs therefor, which recovery is the subject of inquiry by this Comission in Docket No. 82-0559, the Commission is of the opinion and finds that the fair rate of return which Respondent should be allowed on its original cost electric rate base for the 1983 test year is 11.981 and that the fair rate cf return which Respondent should be allowed
. cn its original cost gas rate base for the 1983 test year is i 11.981. The corresponding returns en fair value electric and gas rate bases are 9.634 and 8.67%, respectively. The Commission, having examin.ad the record herein, and being fully advised in ths premises, is of the opinion and finds thatt (1) Respondent is an Illinois corporation engaged in the generation, transmission, sale and delivery of electricity and the distribution.and sale of natural gas in Illinois and as such is a public utility within the meaning of the Illinois Public Utilities Acts (2) the Commission has jurisdiction over Respondent and of the subject matter hereof; O) y w
82-0152
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' ' ;N :( 3) S on February 19,'1982,' Restendenk i file'd Yith this'.
g- , Commission tariff sheets containing rate sched21es by which it proposed a general . increase in electric ,y.,".. (s *, , , ,
' rates'and a general incredse in natural gas rates <
' for all 'elassifications' of service, effective' . -
March 22, 19823 said tariff filing was secompanied by an appropriate supplemental statement. in accor-
' dance with the. rules of the Commissions ,
.s (4) due notice of the filing of said filed tariff.
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G.. '/J ..isheets T ? ' #was.:given Q g* .. 'I'r..
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(5) on March 10, 1982, the Commission suspended tho filed tariff sheets to and including July 19, 1982, and on July 14, 1982, the ccmmission resuspended said filed tariff sheets to and including January 19, 1983, all in accordance with the provisions of Section 36 of the Illinois Public Utilities Acts g (6) notice of the initial hearing held in this cause was mailed by the Chief Clerk of the Commission to
. Respondent, the Mayor or Attorney and Clerk of the municipalities within Respondent's electric -
. .and gas service. areas ~in Illinois, and to such ,
other persons or entities as are shown by t h e docket sheets maintained by the Chief Clerk of the Commission, all in accordance with the require-ments of the Illinois Public Utilities Act and the rules and regulations of this Commissions (7) statements of fact and conclusions reached in the prefatory portion of this Order are amply supported by the evidence of record and are hereby adopted as findings of facts f\ (8) use of a pro forma test year ending December 31, (' 1983, with adjustments as described herein, is appropriate for ratemaking purposes in this cases (9) Respondent'4 original cost electric rate base for the test year ending December 31, 1983 is S1,536,310,0003 (10) Respondent's fair value electric rate base for the test year ended December 31, 1983, is
$1,873,567,000; (11) Respondent's original cost gas rate base for the test year ending December 31, 1983, is
$284,994,0003 (12) Respondent's fair value gas rate base for the -
test year ending December 31, 1983 is
$394,021,0003 (13) rates which are presently in ef fect for electric servic6 furnished to the customers of Respondent do not produce a fair and reasonable ceturn to Respondent on its investment in electric plant in rate base and recovery of operating costs of elec-tric service furnished to its customers; such existing rates are not in all respects just and ,
reasonable and should be permanently cancelled and annulled when rates allowed to become effective by virtue of tais Order become effectives h _
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a fair and. reasonable return.to Respondent. . investment in ga's plant in.. rate base and- - -
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' recovery of ' operating costs ~ of, gas service furnishe'd to its customers; such existing rates are not in all. respects just and r.easonable and should be - . ,
permanently cancelled' and annulled when rates . allowed to become ef fective by virtue of this
., . Order become,effectives. . , .
. ~y3.,' l **l 'd(~(. C, M /L. $M15'P, .? tiiMIhriefrite NhEstdri,NRilirh[Reeho'n'denMo s.h' .uldk*cN ' . I d*'.kh *E $.9.N:.N be al16wed on its original cost electric ' rate base and fair value electric rate base as found herein for the test year ending December 31, 1983, is 11.984 and 9.834, respectively (16) the fair rate of return which Respcndent should be allowed on its original cost gas rate base and fair value gas rate base as found herein for the test year ending December 31, 1983, is 11.984 and 8.67%, respectively: (17)~ rates proposed by Respondent for' its electric . operations, in Illinois would -produce a rate .of - return in excess of a return that is fair and reasonablet said filed tariff sheets proposing said electric rates shoold be permanently can-celled and annulled: (18) rates proposed by Respondent for its gas operations in Illinois would produce a rate of return in 1 excess of a return that is fair and reasonable said filed tariff sheets proposing said gas rates should be permanently cancelled and annulled; m (19) Respondent should be required to file tarif f sheets setting forth rates for electric service that will produce annual electric operating revenues of approximately 5804,792,000 and result in annual ocerating income of approximately $184,050,000 for its electric operations for the twelve months ending December 31, 1983: such annual operating income would provide Respondent with a rate of return of approximately 11.98% on its original cost electric rate base of $1,536,310,000 and - 9.83% on its fair value electric rate base of
$1,873,567: such amounts of operating income and return are not excessive and are fair, just and reasonabler (30) Respondent she'lld be required to file tariff sheets setting torth rates that will produce annual gas operating revenues of approximately $541,399,000 and result in annual operating income of approximately 534,142,000 for its gas operations for the l twelve months ending December 31, 1983; such annual
[ operating incomo would provids Respondent wit. a l rate of return of approximately 11.98% on it, original cost gas rate base of $284,994,000 and 8.67% on its fair value gas rate base of
$394,021,0003 such amounts of operating income and return are not excessive and are fair, just and reasonable; g
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(21) . .under rates allowed . .to become ef fective by virtue s
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. : able to earn approximately 5219,1~92,000 on -its'. ..
combined utility operations 'or an overall rate. of ' return of'11.98% on the combined criqinal cost rate base of.$1,821,304,000 found herein.and of 9.63% on the combined fair. value" rate-base of $2,267,588,000 fownd hereins.such smount' of operating income, resultant return and the rates '
., .; producing same are faire.just.and reasonable . .,.
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022T e rates- . to be set forth in the tarif f sheets to be filed pursuant to Findings (19) and (20) above in accordance with the findings and principles con-cerning rate design set forth in the pref atory portion of this Orders said authorized revenues should be exclusive of add-on taxes and comply fully with recently enacted House Bill 991 (23) the gas utility depreciation rates proposed for adoption herein by Respondent are proper and adequate Respohdent should be directed to place - such depreciation rates into effect effective
~ * *
- January ifl983: .
l (24) Respondent is found to be in compliance with the provisions of ERTA, ACRS Section 168(e) (3) and Section 46(f) , and Respondent should continue with the applicable accounting and normalization require-ments of this Acts (25) this Order is intended to comply with the require-ments of Section 209(d) of the Economic Recovery Tax Act of 1981 so as to ensure that Respondent will es i be allowed to utilize ACRS and the tax credits (\s_,/ provided in Section 38 of the Code, that the tax benefits associated with the use of ACRS and the credits provided in Section 38 of the Code should be normalized for ratemaking purposes (26) any motions or objections made by any party hereto during the course of these proc (tdings which are unresolved should be resolv6d in ( manner consistent with the findings of fact and ultimate conclusions herein contained. IT IS THEREFORE ORDERED by the Commission that the Suspension Order entered March 10, 1982, and the Resuspension Order entered July 14, 1982, be, and they are hereby, vacated and set aside. IT IS FURTHER ORDERED that the tarif f sheets containing rate schedules proposing a general increase in electric and gas rates filed by Respondent on February 19, 1982 be, and they are hereby, permanently cancelled and annulled. IT IS FURTHER ORLERED that Respondent be, and it is hereby, directed to prepare and file with this Commission tarif f sheets for electric and nacural gas service conforming with the provisions of Findings (19), (20) and (22) herein together with other applicable provisions of this order, which will e 4able Respondent reasonably to obtain the electric and gas operating results approved herein said electric and gas tarif f sheets to become ef fective within five (5) calendar days af ter filing same with this Commission for service rendered on and af ter the effective date of the tarif f, with individual tarif f sheets to.be corrected within that time period, il necessary. m V - 48 - b ~
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f IT IS FURTHER CRDERED, pursuant,to Section 14 of the Illinois. .
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L ~ * *'Public Utilities Act', that Respondent'be,-directed'to place"into' ' ' effect effective January.1, 1983,' the gas utility depreciation ' rates found to be proper and adequate in this proceeding. IT' IS FURTHER ORDERED that ' Respondent'b' ,' and it is hereby,' e , authorized and directed to take all steps necessary to obtain all tax benefits pursuant i , and.normalisation.requ.to all appropriate irements and relevant of' the Economics. Recovery,account Tax Act ng y ,. . 3 r. e, c 41. g , ".e, Tt. .* ..oge1931,; Adcolerated.cose;Recoverg Systes Sect'ionJ16&(ett3) .andf ';cyy;i'. ej ", f,? 'tc.". Section'46(f). IT IS FURTHER OPIERED that Respondent be, and it is hereby, directed and required te file detailed expense reduction plans with the Ccmmissien's Cnief Clerk within sixty (60) days of the date of this Order. IT IS FURTHER CRDERED that any motions or objections made by any party hereto during the course of these proceedings which are unresolved be, and they are hereby, resolved in a manner consistent with the findings of fact and ultimate conclusions contained in. this Order. ,
~
By Or'de'r of the Commissien this 12'th day of anuary, 1983. (SIGNED) MICHAEL V. HASTEN Chairman (S E A L)
)
J Commissioner Andrew C. Barrett dissenting in part. as to construction work in progress; a written opinion will be filed. i O r i 1
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02-0152 3
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,/N 1 Commissioner Daniel Rosenblum d,issenting:-
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I Ag' I cannot support th'e' Commission's'd' e cision'to grant an' l I excessively large increase to Illinois Power. The decision is e.not supported by the record. The decision is. contrary to sound - regulatory theory. The decision fails to balance the interests
' of ratepayers and shareholders.
../.'., '
4.: i The Commissio'rt erbaN have xNised T.olall' Y o V the addition jf.' '5 0 . v I . >'
.cc .( 7,w ;,,; '4ay "additidnebconstruttiE, work in prdgreW(CWIP) ? Th's' Commis ~ ' --~7,W Jr? N,
.t
'sion should also have authorized a slightly lower rate of return
(" on equity of 15.25 percent. The result would have been a fin-ancially stable utility and a rate increase more than $50 million smaller than that authorized today. The decision is premised on the assumption that it is advan-tagsous to authorize sufficient revenues to maintain Illinois Power's current bond rating. Analysis of various financial ratios suggests that an increase in the range of that approved today is necessary to maintain the current rating. The Commission's decision might have been reasonable if the zecord demonstrated that .the costa of maintaining the current . bond rating were justified by the benefits to ratepayers. There is no such d monstration. It is one thing to state that, all other things being equal, an AA rating is better than an A rating. There is no cost benefit analysis, however, proving that it is in the ratepayer's best interest to maintain the current ratings. There is also no other justification for the size of today's increase. Since the increment of CWIP allowed into rate base in to-day's decision is in large part an attempt to provide the r's revenues necessary to maintain current bond ratings, the failure ( to prove the necessity of maintaining those ratings eliminates
\w the support for the additional CWIP.
It should be observed that inclusion of additional CWIP is not consistent with the criteria set forth in the most recent Illinois Power Rate Order, Docket No. 80-0544 (July 1, 1981), where the Commission stated at page 33: The Commission views the investment of funds in CWIP as used and useful to the benefit of the customer which may be included as a component of the rate base when, pursuant to a certificate of convenience and necessity granted by the commission for construction of such a plant, the investment grows to a point where its significance is so great that it could impair fin-ancing. To what extent such investment, if any, should be included in the rate base for a particular public utility, must, however, be determined by the specific circumstances in each rate proceeding and will be , considered by the Commission on a case-by-case basis. l The crucial point is that there is no showing that additional CWIP is necessary in order to tvoid the threat of " impaired financing". In fact, with Illinois Power's current ratings, it I is absolutely clear that Illinois Power is in no danger of having l its ability to finance impaired. l An argument can be made that additional CWIP should be included, whether or not justified by financial ratios and bond ratings, because there is a reduction in total revenue require-ments in connection with the project under construction. This argument has merit only for those ratepayers with discount rates in excess of Illinois Power's.
) It is necessary to balance the interests of Illinois Power
_/ and its ratspayers and, more specifically, the interests of those
.. . .~ . .. - . .. . _ - -
- - - _ - . _ -- -~ - _ ~
I 82-0152 ratepayers with relatively high discount rates versus those with relatively low discount rates. , i ! Those ratepayers with high discount rates no- our pro-taction far more than those with lower discount estes. In more human terms, it is the unemployed and the undaremployed who need our protection. Families living on unemployment insurance and i i public assistance, or on rapidly dwindling savings, cannot afford - i to invest in the future savings which might result from inclusion ! of additional CWIP or the maint.tnance of a high bond rating. The commission's myopic focus on bor.d ratings and financial ratios has blinded it to the reality that many of 1111acis Power's ratepayers simply cannot afford to pay now to save later. , ,f Finally, the Commission's decision does not advance the proper goals of regulation. It certainly do;J not simulate the i free market. In the free market, to the extent it exists, a company as overextended as is Illinois Power,-with its massive over budget and delayed construction program, would never expect
- to have bond ratings as high as those of Illinois Power. Its shareholders could never expect to earn a not income rate of return in excess of 18 percent. Its shareholders would not have a regulatory agency to insulate them from risk and to pass those !
risks on to customers. The Commission's reliance on " financial ratio" or " net income" regulation actually reduces the ability to regulate properly. Finsncial ratio regulation makes almost meaningless the distinction between "above the line" and "below the .line" expenses. It makes little difference whether an expense is disallowed, when the Commission is focusing on cash flow and will simply csapensate for the disallowed expense elsewnere. In fact, l a company may benefit if enough expenses are disallowed. The , Commission may find it necessary to raise the rate of return on equity which, according to the majority's policy, will result in an increase in the AFUDC rate to the detriment of future rate
- payers. (When construction is completed and Illinois Power sees-
- i the possibility of earning a rate of return on its expanded rate base it is highly unlikely that we will see requests for fi-nancial ratio regulation.)
The commission's focus on financial ratios'also lessens the ' ability to respond to changes in the market. While required r rates of return have decreased based on current market condi-tions, that decrease is not reflected in the financial satios
. which determine the size of the " required" increase. (A more ! thorough analysis utilizing current market conditions may indi-cate that financial ratios do change with changes in the market,
- however, that analysis is not in the record. )
4 i The overall effect of financial ratio regulation is an inability to balance interests. The effect of such regulation, whether or not intentional, is to shift risk to the ratepayer and to reward shareholders. Thus, Illinois Power's shareholders are treated as though 'l its management decisions regarding Clinton I warrant the advan-
- tages of its current bond rating, while ratepayers pay sub-stantially higher rates. -
My reasons for dissenting are best illustrated by Illinois l Power's 1982 Lincoln Continental. The Commission, on page 23 of - the order, properly found that ".. .the luxury automobile creates an appearance of indifference to the economic circumstances of Illinois Power's ratepayer." Unfortunately, even if the amount were not too trivial to make a differ 4nce, the adjustment ordered d by the Commission could not affect the rate increase in this case-because of.the focus' on financial ratios and bond ratings. The-
- real problem is that Illinois Power's AA- and Aa3 ratings are luxuries which ratepayers do not need and etnnot afford. Au-
]' l \* : i s e T'
- 7+- 7 *
, 82-0152 thorizing a rate increase designed to maintain these " Lincoln Continental" bond ratings creates an appearance of indifference to the dire financial straits of many of Illinois Power's rate-payers.
.. ?
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O , STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION
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CERTIFICATE Re: 82-0152 I, ROSE M. CLAGGETT, do hereby certify that I am Chief i Clerk of the Illinois Commerce Commission of the State of Illinois and keeper of the records and seal of said Commis-sion. C' I further certify that the above and foregoing is a true, correct and complete copy of order made ra entered of record by said Commission on January 12, 1983. Given under my hand and seal of said Illinois Commerce Commission at Springfield, Illinois, on January 13, 1983. Chief Clerk O l l
EXHIBIT IP-9 111. C. C. No. 27 Eighth Revised Sheet No. 1 Cancelling 111. C. C. No. 27 Seventh Revised Sheet No. &
/
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ILLINOIS POWER COMPANY SCHEDULE OF RATES FOR ELECTRIC SERVICE f f TABLE OF CONTENTS Service clasetticattan Descriptien Sheet No. l
- Standard Terms and Conditions 2-3
- Index of Coemunities Served 4-6 1 Residential Service - Small Use 7 e
2 Reeldential Service 8 3 Reeldential Service - targe Use 9-10 l
- Cancellation Sheet 11 10 remeral Service - Small Use 12 11 Demand !!etered General Service 13-15 13 Unnecered General Service 16-17 21 Large Power Service 18-20.1 i
~ 24 Annual Load Factor large Power Service 21-24
\
/ 30 Limited Fire Service 25-28 i
39 Outdoor Area Lighting 29-31 41 Municipal Service 32-33 42 Miscellaneous Municipal Service 34-35 45 Municipal Street Lighting Service 36 38 Riders A Funicipal Tax Additions 39 AA State of 1111nois Revenue Taxes 40 D Temporary Service 41 F Fuel Cost Adjustment 42-42.1 S Supplemental Interruptible Electric Service 43-44.1 ! T Hunicipal Taxes on Consumers of Utility Services 45
*F Parallel Generation Service 46-48 l
eAsterisk indicates change.
~,/
l 1ssued May 31, 1983 Effe:tive June 6. 1983 l Filed Fursuant to Issued by Larry D.11aab i 1111 acts Commerce Commission Vice President l Order in Docket 82-0488 Decatur. Illinois Dared May 11. 1983. L I
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* - 111.' C. C. No. 47'
*4 Sixth Revised Sheet.No. 2-Cancelling 111. C. C. No. U Tifth Revised Sheet No. 2 ILLINOIS POWER COMPANY SCHEDULE OF RATES FOR ELECTRIC SERVICE
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STANDARD TERMS AND CONDITIONS The Standard Terms and Conditions set f orth below and 111. C. C. No. 24 - Rules. Regulations and Conditions Applying to Electric Service apply to all pertinent electric service classifications and riders. except that where provisions not consistent herewith or with the above-mentioned rules. regulations and conditions are set out in individual service classification, riders and special contracts on file with the Illinois Cotmerce Commission the provisions of the service classifications. riders and special contracts shall govern.
- 1. Resa?e and Redistribution Energy supplied to any Customer under 111. C. C. No. 27 is not available for resale or redistribstion.
- 2. Exclusive Source of Power ,
Sersica shall not be available to any Customer where Customer purchases electric energy f rom any other source than Utility.
- 3. Modification of Schedule of Rates and Contracts i
Any service classification, rider, standard term or condition or rule, regulation or condition applying to electric service. any substitution therefore, and any existing or future contract required by a service classification to be entered into between Utility and Customer for electric service shall be amended f rom time to time to incorporate any revisions and changes in the particular service classifica-tion, rider. standard term or condition, or rule, regulation or condition applying to electric service g (including without listration changes in rates charges, and terms or conditions of service) when such revision. change or substitution shall be approved or permitted to go inta ef fect under the Public Utilities Act or as otherwise provided by law. Nothing contained in any service classification. tider, standard term or condition. or rule, regulation or condition applying to electric service. or in any existing or future contract.shall af fect or be construed as af fecting in any vsy the right of Utility unilaterally and without consent of Customer to take or initiate action, as permitted by applicable laws and regulations, to make revisions or changes in any service classification. rider, standard term or condition, or rule, regulation or condition applying to electric service, or in any existing or future contract. 84 Terms of Payment (a) Customer's bills will be rendered at monthly intervals bearing the date on which net payments are due, namely not less than 21 days after date distributed for resident:-1 customers and 14 days for non-residential customers excepting those non-residential customers in Subsection 4(d). Utility will assess a late payment charge in an amount equal to 1\% per month on any. amount. including amounts previously past due. for utility service which is considered past due. (b) Utility will. in accordance with the Commission's General Order 172, extend the date on which payment is due by up to 10 days in those circumstances and for those residential customers specified j in the General Order. Utility may recertify those residential customers annually to insure they still qualify for the 10 day extension.
- (c) Utility shall automatically waive the additional charge of 1 % for bills paid af ter the due date l
provided such allowances are not made more often than once every six months. (d) Utility will not assess a late payment charge en the amounts osing from Federal. State. County and local governments (including, but not limited to townships, municipalities and school districts) until 45 days f rom the date of the issuance of the bill for utility sarwice. except that the provisions of "An Act to require prompt payments by the State of Illinois for goods or services" (111. Rev. Stat. 1901. ch. 127, par. 132.401 et seq.). as amended. control in the situations to which the Act applies. j (e) The late payment charge provided for in subsection 4(a) above shall not be in lieu of or affect l Utility's right to collect interest as provided by law or by contract on accoun* of failure of Customer to pay charges when they become due and payable. l G l
- Asterisk indicates chap.e.
l i Issued September 30. 1983 Effective November 1. 1983 l Filed Pursuant to tesued by tarry D. Haab Illinois Commerce Commission Sector vice President Ceder in Docket 82-0391 Decatur. Illinois Dated September 21. 1993.
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e$. Additional Chartes for 9 tate kevenue Tauee State Public Utility Tas of 53 and Illinois commerce Cocaission Cross Fevenue Tax of 0.C8% on electr'.c service will be added to the billing as prov1Jed in Section 36 of the Public Utilities Act, as amended, se stated in Rider AA of Utt11.y's Schedule ua Rates for f.lectric Service.
- 6. Additional Chartes for Municipal Tau Whenever and so long as any municipal of quasi-municipal corporation shall impose the tax authortred by Section 8-11-2 of the Illinois Municipal Code, no amended. Utilaty shall. pursuant to Section 36 at the Public tit 111ttes Act. as amendeJ. edd certain additional charges for services rendered in such munici-palttles. The muntelpalities im which such charges shall be applicable and the amount of such additional I
thersee shall be as stated in Rider.A of Utility's $chedule of Rates for Electric Service. r- s
- 7. Additional Chartes for Service in Certain Coneunitive Whenever and so long as any municipal or quast-municipal corporation shall require Utility to pay a consideration for any f ranchtse or privilege. or shall taa Utility as may be provided by law. and if such consideration or tax is based on . percentage of Utility's gross earnicas or gross receipts f rori electric service to Customers within the territorial limits of such taxing bodies. the charge for service to each Customer within such territettal limits which would otherwise be made shall be increased (by separate billing item or iters) by the same percentage or amount plus such additional percentage or amounts to cover costs of accounting. the resulting increases in other taxes and other matters as may be permitted by law, a
- 8. Additinnel Chartes for Not Sufficient Fund Checks (a) When more than one NSF (Not Sufficient Funes) check is received by Utility within a twelve (12) month period f rom a residential customer. Utility shall assess a charge of $5.00 for the second and
'f each subsequent occurrence.
(b) Utility shall assess a charge 6f $5.00 when non-residential customer's check is returned to Utility for NSF. (c) Upon receipt of three NSF cneeks within a twelve (12) month period. Customer may be placed on a
" cash basis. In such case. Utility shall require payment to be made by United States Currency.
Money Order or (.ertified Check.
- 9. Additional Charges for Realdenrtal Service (RCS) Fuerty Audit Residential customers who receive an energy addit under the 1111 mots Residential Conservation Setvice Frogram Plan shall pay Utility. in advance, a charge of fif teen dollars ($15.00).
' Aste ?1sk inJ1 cates chs.se.
beard Novesser 13. 1982 Ef fective with bills issued issued av 1.arry D. Haab upon House Bill 991 of the 1 ((N Vice President Decatur. Illinois 82nd 1111ccis Ceneral Assembly becoming law.
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This indes of cosssunities served is applicable to Utility's Schedule of Rates for Electric Service and Rules, Regulations pad Conditions Applying to Electric Service set forth in 111. C. C. Nos. 27 and 24, respectively. BELLEVILLE SERVICE AREA Belleville District Belleville East Carondelet Maeystown Scott Field (U) Surksv111e (U) Fayetteville M111stadt Shiloh Cahokia-(Part) Tieraville (U) New Athens Smithton Centreville Harrisonville (U) New Hanover (U) SwanJea O'Fallon Valmeyer *
. Columbia . .Hecker Darmstadt (U) tensburg St. Labory Wartburg (U)
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frer. ton District Albers Daetansville (U) Lacanon Sr. Rose (U) Aviston Germantown New Baden Sunsnerfield Bartelso Jamestown (U) New Memphis (U) Trenton Beckemeyer BLOOMINCTOM SERVICE AREA Bloomington District: Bloomington Downs Cridley Meadows (U) CarIock E11sworth Hudson Nr. rea1 Chenoa El Paso Kappa Fanola Colfax Flanagan Lake Bloomington(U) Secor Conserv111e Funks Grove (U) Le Roy Shirley (U) Cooksv111e Goodfield Lexington Stanford Danvers Craymont (C) Mackinaw Towanda CHAMPAIGN SERVICE AREA Champaign District: Bondv111e Mahomet Royal Thomasboro Champatan Mansfield Savoy Urbana Lodge (U) Mayview (U) Seymour (U) White Heath (U) Montical.o District: Monticello DANVILLE SERVICE AREA Danville District: Belgium Ftthian Muncie Sidell tuneenville (U) Ceorgetown Ogden filton Chrisman Grape Creek (U) Olivet (U) Vermilton Crove (U) Collison (U) Hegeler (U) Ridge Farm Westville Danville Indianola Scottland (U) DECAit'R SER"!CE APEA ' Clinton District: Clinton De Witt Maron Weldon Deland Lane (U) Wapella Decatur District Argenta Dawson 1111opolis Mt. Auburn Boody (U) Decatur Laie City (U) Mt. Zion Buffalo Elwin (U) Lanesville (U) Niantic Casner (U) Forsyth La Flace (U) Oakley (U) Cerro Cordo Harriston Mechanicsburg creana Cisco Hervey City (U) M11 mice (U) Warrensburg Dalton City
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/ (U) Unincorporated J
Issued July 2. 1981 Effective July 3,1981 Issued by Larry D. Haab Vice President Decatur. Illinois
a - - - -- _- _ 111. C..C. No. 27 ,
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CALESBt'RC SfRVTCT AREA ' Aledo Districts Aledo Joy North Henderson Shale City (U) Alexis Ketthsburg Norwood (U) Viola Alpha New Boston Rio Wanlock (U) Burgess (U) (New) Windsor seaton Woodhull C11 christ (C) Calesburg Districts Abingdon Calesburg Hermon (U) Prairie City Avon Cilson Knoxville St. Augustine De Long Greenbush (U) Lake Bracken (U) Watage East Calesburg Henderson
. Revenee ' District s - Altona . . Elmira (U)- . Mineral . , Oeceola'(U)' .
1 . Annawan' Calva Nekoma (U) Sheffield Atkinson Kawanee Neponset Clah (U) Bishop Hill La Fayette New Bedford Victoria Buda Lake Calhoun (U) Oneida Wynnet Cambridge Manitus Monmouth District: Servick (U) Cladstone 1.ittle York Baritan 31ggsv111e Good Hope Lomax Sciota 81:ndinsv111e Gulfport Media Smithshire (U) Cameron (U) Kirkwood Monmouth Stronghurst Cast.an (U) La Harpe Oquawka Terre Haute (U) Carlaw (U) b CRANITE CITV SERVICE AREA Collinsville District: Caseyv111e Grantfork Marine St. Jacob Collinsville Hollywood Heights (U) Maryville Troy Fairview Heights (Part) Edwardsville District: Edwardsville Hamel Foag (U) Worden Clan Carbon Granite City District: Brooklyn Madison Pentoon Beach Venice Granite City National City Wood River District: Bethalto Moro (U) Romana Wanda (U) Cottage Hills (U) Frairietown (U) South Roxana Wood River East Alton Rosewood Heights (U) HILLSBORO SERVICF ARM Carlinv111e Districts Atwater (U) Carlinville N11 wood Standard City Gillespie District: Benid Dorchester C111es1ple Sawyerv111e Brighton Eagarv111e Lake C111espie (U) Wilsonville Bunker Hill East Gillespie Mt. Clare Woodburn (U) Greenville Dietrict: Creenv111e Mulberry Grove Pleasant Mound (U) Smithboro Hockdale (U) Fierron Focahontas Tumalco (U) Keyesport Hillsboro District Butler Fillmore New Douglas Sorento Chapman (U) Hillsboro Panama Taylor Springs Coffeen Irving Schram City Witt Donne 11 son N Litchfield District: Clarksdale (U) Litchfield Palmer Raymond i Harvel Morrisonville %l (U) Unincorporated Issued July 2. 1981 Effective July 3.1981 Issued by Larry D. Haab Vice President Decatur. Illinois
111. C. C. No. 77
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FTLLSBCR0 SERVICE ARFA - Continued Staunton District Alhambra Mt. Olive White City Williamson Livingston Staunton Vandalla District: Bayle City (U) Brownstown Ramsey Vanda11a Bingham Hagarstown (U) Shobonier (U) Vernon Bluff City (U) Herrick J ACKSONVII.t.E SERVICE AREA Jacksonville' District Arcadia (U) . Chapin - Jacksonville Sin lair (U)
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LA SALLE SERVICE AREA La Salle District: Arlington Hennepin Mark Standard Bureau Junction Hollowayville McNabb T1skilwa Cherry Kasbee c(U) Mt. Palatine (U) Triumph (U) Dalsell La Moille North Utica Troy Grove De Pue La Salle Peru Van Orin (U) Dover Magnolia Seatonville Zaaring (U) Granville Malden SprinR Valley b Ottawa District: Dayton (U) Milbrook (U) Newark Serena (U) Harding (U) Hillington Norway (U) Sheridan Marseilles Naplate Ottawa Wedron (U)
*MT. VERNON SERVICE AREA Centralia District: Central City Huey Posey Shattue (U)
Centralia Irvington Raccoon Lake (U) Walnut Hill Terrin (U) Junction City Richview Wamac Hoffman Patoka Sandoval Eldorado District.: Eldorado Junction Raleigh Shawneetown Enfield Old Shawneetown Ridgway Texas City (U) Equality Mt. Vernon Districts Addiev111e Bonnie Mt . Ve rnon Ckawville Aahley Dix Nashville Venedy Beaucoup (U) Hoyleton Nason Valtonv111e Bluford Huegely (U) New Minden Woodlawn ( Salem District: Cartter (U) Kell Odin Sales l j Chester District: Brosen (U) Chester Du Quoin District: Du Bois Holden (U) St. Johns Tamarca Du Quoin Pinckneyv111e Sunfield (U) Sparta Districts Ava Evansville Preston Sparta Baldwin Marissa Red Bud - Suburban Steelev111e Campbell Hill Modoc (U) Reily Lake (U) Swanwick (U) Clarmi (U) Oakdale (U) Renault (U) Tilden Coulterville Percy Ruma Walsh (U) Willisv111e ! Cutler Prairie du Rocher Schuline (U) l Ellis Crove l A (U) Unincorporated i s s kv/
- Asterisk indicates change, Issued February 10. 1983 Effactive March 14. 1983 Issued by Larry D. Haab Vice President Decatur. Illinois j
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Any customer !ccated in territory nerved by Ut t! sty may take service used.'t this service classification ochjeet to the tallowing ennditlenet (a) that the predomin.snt use is for demees te purposess in eingic occupancy. In a one unit apartment or restdance. or la for general farm rurpnece. and (b) t' nat the energy da tivered is not rescid ..e redist ributed, and te) that Cuttamer's averate daily unsac d.ortn1 any three of the f oeir hitting periods in the prior summer seanna has been less th.sn 13 kwh (.er d y. nd
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The ennditione 'not totth in ic). .and (J) above are mattsf ted for initial ervice if met by the preceding, e . uccupant of the preetsee served. A. Condittane of Servire only mirale phase service witl he provt.ted. e), parce 4 (a) f*act16tles Charge 81.00 per month rb) Fnergy Charge
- the fellowies charaen alealt apply to all asure for htlin :arned durina flee f ollowins avanannt (j Sureer seaann (1) Wint er ha :an til Nilowart heure Rwh) Kilowatt hours (kinh)
Used in Any one Month Charges t' sed in Anv nne Mar.th Charte= For all kwh A.74c per kwli For the first 72% bwh 5.70c per 'i.=s For all over 225 kwh 3.79c per kwh (1) Summer Krasan to Llic f tret hilling tettod having an ending neter reading date e.n or att r June 15 and ttw a *wcceedine senthly hillina pert. ta. (2) Winter Scaenn to all billing perinds not in the summer mensen. (r) Fuel reat Adjustmeset The energ., cl.arges in wubeection 1(b) are aubject to the Fuel Cost Adjustment nrovided in Pidet F. i
'foTP This nervice elemetticat ten is .aublert to t tility's stindsrd Terms and C mdttiene in its Schedule
' of pates for Electric Service, i
*Aetertok indtrat** tidace.
Issued January 13. 19M1 Eftective January 12. 1 % 1 tsaued by laery D. Ha.ib [k
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Filed fNorasiant to (Litnots Commerce Commissie n prder in Docher R?.0152 nated Jsew ry it. lea 1 Yle Prentdent Decatur, Illippts
111. C. C. Na. 27 Fif th Revteed Meat se. a *
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- i Any customer located in territory served by Utility may take service undet this service classification subject to the fellowing conditiones (a) that the predominant use to for doseatic purposee in single oe.upancy. In a one unit apartment or resideace, or la f or general f arm purposes. and (b) that the energy delivered la not resold or redistributed and fc) that Customer's average dativ gnage during any three cf the four killing periode in the prier ausseer season has been less than l$0 huh per day pravided that any custemer served cader Service Claantit-cation 3 m y ant be served vader thia service clanetticat te.n it custocier's average datly usate in any auamer billing perted in the prior summer season was equal to or greater than 123 kwt per day.
2.1 Cenditince ef 9ervf ee , Single phase service Three phase service may be preetded under the terms and conditions of Utility's Rules. Regulations and Conditions Applying to Electric Service.
- 83. Rates (a) Fact!!ttee Charge $4.30 per month for sangte phase servtce
$11.50 per month f or thrse phase service (b) Energy Charge
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The following charges shall apply to all usage for billa lenued during the fetIcwing seasonst
,,,..e <e** nm m nrer se.e., m Kilowatt hours (kwh) Kilowatt hours (>wh)
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For all kuh 6.74c per hwh For the first #79 kwh i.70c per kwh For all over 8J5 kwa 3.79c per hwli (1) Summer sessan la the first billins perted having an ending eeter reading date on or af ter June 15 and the 3 succeeding monthly billins periods. (2) Winter Season le att billing periods not in the summer season. (c) Fuel Coat Adjustment The energy charges in subsectlen j(h) are puhjert to the Fuel Coat Adjustment provided in Rider F. NOTE: This service etaastftcation is subject to Utility's $randard Terme and Candittene in its Schedule of Rates for Flectric Service.
*astett sh indtestes chanee.
toeved January 13. 1983 Ef f ective January 18. 1983 leaved by 1.a r r y O. HaAb Filed Pure *sant tu Viec cregl.i.-ut Illinete toniaerce Cors.teeton Order tn Cochet 82-0132 Decatur. IIntnote Dated January 12. 1983.
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' el. Availahtitty Any Custoner located in territory served by Utiltty mar take service under this service classification subject to the fo110 wing conditions:
] (a) that the predominant use is for domestic purposes in s'asle occupancy. in a one unit apartment os j residence, or :s for general farm purposes, and (b) that the energy delivered is nar resold or rediatributed and (c) that Ctmomer's average dally usage disting any two .*r more of the Inur bit!!ng periodg 14 the prior summer season has besa equal to or greater than jW hwh per day. Summer season is the first billing period having an ending meter readine date e n nr af ter June 15 and the three succeeding monthly billing periods. Any Customer. served under this servfee claentfication shall continue to be. served under thid,servicefelasstiteation eo .long as Cuneemer's averate daily. usage during any. monthly .- . ,, billing period in the prior summer season is equal to or greater than 125 kwh per day. (d) any Customer not taking service pursuant to subsection 1(c) may elect to take service under this service classifiestion. If such Customer withdrawa from this service classifttatten during the . first twelve months of service. Cu=tomer shall pay Ut t11er $15.00 plus 31.00 per month for each month of the inttial twelve month period that Customer did not remain on Service Classification 3.
- 2. Conditions of Kervice Single phase service. Three phase service may be provided under the terne and conditions of Utility's gules, Begulations and Conditions Applying to glectric Service.
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# (a) Fac111tles Charge 511.50 per month for sinute phase service
$16.$o per month f or three phane service (h) 1)emand Lharge The following chargen shall apply to each kw of billing demand for bills issued during the following seasonst Kilowatte (ku) of 8111tna Demand -
1 stab 11shed in Any One Month (3) Chargen Summer Season (1) $7.80 per kw Winter Season (2) $1.40 per kw (1) Summer season is the first billing period having an ending meter reading date on of af ter June 15 and the 3 succeeding monthly billing periods. (2) Winter seaman is all billing periods not in the summer season. (3) The billing demand in kw to equal to the hip.hvet number of kwh used during AQV one hour in .in en-reak period, as defined in subsection 3(c)(1). during the billing period. er eertok todtrates chanee. Isnued January 13. 1983 Effective January 18. 1983 jD Filed pursuant to tasued by larry D. Haa5 f 111:nals Canneres Cosnieston Vice tresident k Order in Docket 82-0l$2 Decatur. Illinois Dated January 12, 1983. l
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(c) EnerAy Charte 4 The following charges shall apply to all usage for bills issued: For a!! kun used durina For all kuh used durtar 4 en peak peettads (1) af f.peth per te d, (2) 1' 1 3.30c per kuh /. Soc per kwh l
, , e. (1) . The en-peak pertad to the.11 consecutive .l.eu.re . commencing a.t Itt:fW1 a.m. and endine at ,940q p.m., . , ..,. ,
on Monday through Tetday eveludios new Year's Day, Can.8 Friday. l'ennetal D.sv (May 30). July 4.' ? Labor Dav. Thankestving f sy. Chrtsemas f've Day and Christmas ilar. (2) The of f-peak period is all hours not in the on-peak period. (d) Fuel Cast Adjustment ! The energy charges la subsettian 3(c) are subject to the Fuel Cost Adjustment previded in linder F. t 4Q 1 4 1 h a i 1 NOTE: Thtg service clasallication is subject to UtilitF's StacAird Terme end (Wdirtene in its Schedule of ) hates for tiectric Service.
*4etertet indtsates chanae.
!seued January 13. 1983 Fffective January is. 1983
$ Filed Fursuant to !ssuea by I.arry D. Haab 7
'. )!!1ncle comerce Cawntsstan Vice l' resident Order in Docket 87-0152 Decatur. LIltnote-Dated January 12. 1983. l l
111. C. C. No. 27 Fifth R vited Shest No. _ L&
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SCHEDULE OF RATES FOR ELECTRIC SERVICE
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CANCELL.\ TION $ H E r. T i Effactive January 18, 1983 issued January 13. 43 Filed Fursuant to Issued by Larry D. Haab Illinois Commerce .nsion Vice Freefdent Order in Docket 82 v.42 Decatur. Illinois Deted January 12. 1983.
. - 111. C. C. No.- 77 ;. .
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- Fourth Fevised Sheet No. 12 4
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*1. Availabiltry Any Customar located in territory served by Utility may take service under this service classification subject to the fo11oving conditions:
(a) that the energy delivered is not resold or redistributed. and (b) that Customer's average daily usage has not equaled or exceeded 61 kwh per day during any billtr g period in the most recent auemier season.
- 2. Candittons nf Service (a) Only single phase scrvice v111 be provided.
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, (b) Utility will' piovide ' ant maintain all' facilities necessary to deliver one standard delivery voltage
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at one specified location and to measure the une of energy at the dclivery voltaae to Customer. Customer shall provide all necrusary f acilitten for ut!!!sstion of service at the specified standard delivery voltsge and for receipt of such service at a single point of delivery.
*). Rates (a) Facilitten Charge $10.00 per month (b) Energy Charge The following charges shall apply to all usage for bills tsaued during the following seasons:
f O Swer Season (1) Winter Seseen (2) k Kilotett hourt (kwh) Milowatt hours (kwh)
%/
Used in Any the Month Cha rp e s, hcd in Any One N nth Charges For all kwh 8.44c per kwh For the first 1300 kwh e.2tc per kwh For all over 1300 kwh 3.20c per kwh (1) Siawer Season is the first billing period having an er.dtng meter reading date on or af ter June 15 and the 3 succeeding monthly billing periods. (2) Winter Season la all htiling period
- not in the nummer season.
(c) Fuel Cost Adjustment The energy chstges in subsection 3(b) are subject to the Fuel Cost Adjustment provided in Rider F. a NOTE: This service classification is subject to Utility's standard Terms and Conditions in its Schedule of Rates for Electric Service.
- Asterisk indicates change.
gg Issueit January 13. 1983 1.f fective January 18.1983 Filed Pursuant to Issued by 1.arry D. Haab g ) - Vice President 3 / 111tnois C e rce Commission N/ Ordee in Docket 82-0l$2 Decatur. lilinois Dated January 12. 1983.
111. C. C. No. 2y Fourth Ravised that be. 13 " 3 j- - C'enes111cs ,Ill. C. C. No. 27 - 3. ' I ~
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' '- . Third Revised Sheet-No. t3 O>
ILLINOIS POWER COMPANT
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Any Cust'er located in territory served by Uti!!ty may take service under this service classification subject to the following conditions: (a) that the energy deltvered is not resold or redia:ributed. and (b) that Customer's contract capacity, as defined in this service classification la less than 400 kw.
- 2. Conditions of Servfre (a) Service will be delivered to customer at no more than ene of the (nJ!owing standard delivery voltages:
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Single pinase service
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120/240 volts 120/208 volts Three phase nervice - 3 wire 240 or 2400 voltg. detta connected 4A0 volts, delta or ungrounded wve connected Combined single phaw and three phase service 320/206 or 277/480 volts. wys connected 120/240 volts single phase. 240 volts three phase, delta connected (2) Primary service, as available 2400/4160 or 7200/12.470 volts. wyc connected (3) Other standard voltares ut11 he provided by Util1*y. an availaib te. under terms of Utility's i//A] 4 Rules. Regulations and Conditions Aaplytna to Flectric Service.
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(b) Utility will provide and matntain all fas111tica necessary to deLivar one standard delivery voltage at one specified location to Customer.- Custemer shall provide all necessary f acilities for utilitation of nervice at the wrecified delivery voltage and for the receipt at a single point of de live ry . Where hoch single and three phase s.orwice is required. Customer shall provide the necessary virtog for Utility tn measure both single and three phaec nervice through a single meter. (c) Ut!!ity will normally measure Customer's service at the delivery voltate. In the event Utility requires measurement of Co temer's service at 4 voltage other than the delivery voltage, the measured demand and energy consumptun shall be torressed or decreased by ene percer.t to compensate for transformer losses.
*3. Sates (a) Factitties Charge $15.00 per month for single phase service
$19.00 per month for three phase service (b) Trannformation Lharge (1) If Uttttty installs transformern to transfore the voltage f rom Utility" avattable distribution voltage to tt.a service snitage dent red by Customer. the monthly charge aut! be 50.48 per kw of t ransformation rapacity.
(2) Customer's transtornation capacity shall be the highest measured demand of Custome r during any billing period. but not less than 10 kw.
*Aerertei indicJtee chare *.
tesued knuary 13. 1983 Effective January 18 1983 Filed Fursuant to Is ued by Larcy D. Naah Vice President [/%} s < 111 trots Cosuserce Cossstseten order la os+cket 82-0152 Decatur. 'IItnuts bI Dated January 12. 1983.
l 111. C. C. No. 27 I
* ' - ;,Fif th ReviIed Sheet No. -14 .
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Fourth Revised Sheet No. Le (n y> . / C lLLIN015 POWER COMPANY > SCHEDULE OF RATES FOR ELECTRIC SERVICE
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e3. pates (centinued) (c) Energy Charge The following charges shall apply to all mynge for hi!!s tr9ued during the following seasons: Summer Season (1) Kilowatt hours (kwk) Used in Anv One Month Charges For the first 250 kwh used per kw of contract capacity 8.14c per kwh For all kwh in excess of 250 kwh used per kw of contract capacity 2.80c per kwh Wie.4er Season (2) .
' + .
Kilowatt hours (kwh) Used in Any one Month Chartes. For the first 175 kwh used per kw of contract capacity $.9tc per keh For all kwh in excess of 175 kwh used per kw of contract capsetty 2.60c per kwh (1) Summer Season is the first billina period having an ending metvr reading date on er after June 15 and the 3 succeeding monthly billing pertada. (2) Winter Season le all billing periods not in the aussser seasoc. * (d) Fuel Cost AJjustment De energy charges in subsection 3(c) are subject to the fuel Cost Adjustment provided in Rider F. j (e) Determination of Contract Capacity A contract capacity of not less than 10 kw shall be determined based on load data supplied by Customer prior to taking service under this service classification. Customer's contract capacity shall he increased, or decreased, without notice or other metica, to Customer's sautsua demand during any summer season billing pectod occursing during the twelve consecutive billing periods ending with the current billing period. but not less than 10 kw. (f) Time-of-Day Demand Metering Uption Customer may elect to have littlity install a meter which will mearure demands during the 11 consecutive hours of 10:00 a.m. through 9:00 p.m. on Monday through Friday during the period of June 15 through geptember 14. but excluding July 4 and 1.aber Day. If Customer so elects. the demands as registered by this meter will be used for the establishment of Customer's contract capacity as provided for in subsection 3(e) hereof. Customer electi.13 this option shall pay an additional charge of $3.00 per month. 84 Additional Condittune and Cenernet Provistons (a) In the event Custsmer shall cease all operations and discontinue business at the location at which service la being rendered under a9y contract. Customer say upon not less than 30 days written notice to Lt111ty. cancel the contract then in ef fect at the beginning of any billing period coassencing after the expiration of the primary term. i
- Aetcrisk indicates change.
Issued January 13.143 If fective January 18, 1983 Filed rursuant to Issued by Larry D. Haab Vice Fregtdent l j 1111 mote Commerce Coasr* sion Decatur. 1111r.ois (/ Crder 1r Doc's et s2-015g Dated January 12. 1983.
111. C. C. No. 27
. . Third. Revind She t No. 45 . ..
.'- Cancelling 111.'C6 C.- No. - 27 First Kevined knoet ,3lo. 45 V. '
SCHEDULE OF RATES FOR ELECTRIC SERVICE ILLINOIS POWER. COMPANY. , . 7 1- ,.
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- 64. gdtt tonal Conditions and Contract Prnvisions frontinued (b) Any estating er future ccntract required by thin service classification to be entered into or entered into between Utility and customer f or electric aervice shall be amended from time to time to .
incorporate any revisions and changes in ti te service claselfication. rint or any standard terms or f conditions. or rule. regulation or condition applying to electric service (including without limitation .hanges in rates charges, and terms or conditions of service) when such revision. change or substitution shall be approved or permitted to go into vticct under the Pub!!c Utilities Act or as otherwise provided by law. NotMng contained in any service classification, rider, standard 1::rm or condition. or rule. regulatten or conditlan applying to electric service, er in any existing or future contract shall af fect or be construed as af fecting in any way too right of utility
-un!!aterally and without consent of Gustomer to takr or initiate action, as perattted by applicable laws and regulatione, to make revisione or changsa in any service classification. rider, standard '
- " term er condition. or' rule, regulation et'. condition applys.ig.to. electric servica.. or in any .zisting or future contract.
3 J NOTE: This service cltssificattan is s.ibject to Utility's Srandard Terms anJ Conditions in its Schedule of Rates for Flectric Service.
*Asterf ek Indicates change.
Issued January 13. 1983 Effective January 18. 19P3 h
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Filed Pursuant to 1111rois Corecree Coessission f asued by 1. airy D. Haah Vice President
-s' / Order to Docket 82-0152 Uecatur. Illinois
Dated January 12. 1983.
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Ill. C. C. No. 27 n Fif th Revisd Shwt ha. Le
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lLLIN015 POWER COMPANY i ~
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' SCHEDULE OF RATES FOR E'LECTRIC SE'RV' ICE
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Any Customer located in territory served by Utility may take service under this service classification for billboards, phone booths. traf fic signals varning lights of all types and amplifier systems installed along public communication systems where the operation is on a continuous baste or in the case of lighting services, where such service is controlled by a photo-electric cell. 1
- 2. Conditions of Servlee (a) Only single phaar service will be provided.
(b) Customer's connected load at any one location sball not exceed 10 kw. (c) Line estensions will be made in accordar:ce with Utility's Rules. Regulations and Conditions Applying to Elegtcie Service. , , , q , . ., , (d) Utility will furnish. install and operate the necessary service drop. Customer . hall furnish and (Jetall the necessary fuses to protect Customer's equipment. The point of delivery to Customer shall b6 at the point of connection of Utility's servlee drop ta Customer's facilities. 4 (e) Customer shall furnish. Install, operate and maintain all other service f acilf ties and equipment that ssay be ?equired in order to take service f rom Utility at a particular location. Where the operation of Customer's f acilittee are to be controlled by a photo-electric cell. Utility shall furnish. Install and maintain the cell at its cost and espense. Utility shall have the right to inspect and test Customer's facilities and Customer shall permit Utility access to Customer's premises for such purposes. (1) Customer aArcos not to increase connected load or chnnge the char.atter of factittles without, in each case, providing not less thun 10 days vrtt ten natice tn Utility. r \ v 1
*). a,p eg, (a) Facilities Charge $6.00 per month for each point of delivery i (b) Eneray Charge All service rendered shall be billed monthly at the following energy charges Non-Controlled Unmetered Serv t ce For all kwh 3.95c per kwh Unmatered Service controlled by a Photo-Flectric cell Far all kwh 2.94c per kwh The kwh consumed by Customer in each month shall be determined by multiplying the kw of connected load (including any auFtItery equipment) as estimated by Utility on the basis of appropliate tests and rated capacity of the connected load by one-twelf th of the annual hours of operation as es imated by Utility.
.(c) Fuel Cost Adjustement The energy charges in subsection 3(b) are subject to the Tuel Cost Adjustment provided in Sider F.
- Asterisk indicates change.
Effective January 18, 1983 Iseued .tanvary 13, 1963 Filed Pursuant to issued by 1.arry D. Haab (g . Vice President 1111nois Commerce Cossatssion ( ) order in Docket 62-0152 Decatur. 1111acis g' 'j Dated January 12. 1983. i l
4 4 111. C. C. No. 77
*hird Revised Sheat Eo. 17
' Canes 111ct 111. . C. C. No. 27 , ,. , ,
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lLLINCIS POWER COMPANY .' (O) c '
'5CHEDULE OF RATE 3 FOR ELECTRIC SERVICE
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's) Custeamr shall be required to enter into a written contreet for servics Fer a primary term of not legs than one year. The primary term shall hi automatic 111y extended fros! year to year with the privilege of rither party to terminate s he cont ract at the end of the prisiary term nr at any time during any estended term on not less than 30 staya written notice. if Customer terminates the con-tract within the primary or extended term. Customer shall pay Otility a sua equal to the monthly f acilities charge and chargis for any leased f acilities. multiplied by the number of months remaining in the term.
(b) Any existing or future contrast required by this service cla,sification to be entered into or entered into between Utility and Customer for electric service shall be amended f rom cine to cine to incor-parate any revisions and changes in thie service classification or any rider, standard term or con. dition, or rule. regulation or condition .1pplying to electric service (including without limitation changes in rates, charges, and terms or conditions of service) when such revision, change or subst!= tution shall be approved or permitted .to go into, ef fect under the Public Utilities Act et as otherwise ' - a. provided by lawk Nbthing ' contained in any service' classification, rider.. standard'. term or condigion. or rule regulation or condition applying to electric service, or in any caistine, or future contract. shall affect or be construed as affecting in any way the right of irtility un11stera11y and withcut consent of Custnmer to take or initiate action, as permitted by applicable laws and regulations, to make revisions or changes in any service classification, vider standard tern or conficion. or rule, regulation or condition applying to electric service, or in any existirg or future contract. I
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NOTE: This nervice clanniticat' ion is subject to t'tility's Standard Terme and conditions in its Schedule of pares for Electric Service.
- Asterisk indicates change.
Effective January 18. 1983 Issued January 13. 1983 Tsaued by 1.arry D. Hash g Filed Pursuant to Vice President Illinois Cosmarce Commissica i Order in Docket 82-0152 Decatur. Illinois
,b-) Dated January 12. 1983.
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111. C. C. km.. 27
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' ' Cancetting 111. C. C. No. 47
* -* Third gevised Sheet No. 18 e
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. ILi.INOIS POWER COMPANY.; .c - b SCliEDULE OF RATES FOR ELECTRIC SERYlCE .
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*l. Availabil t ry Any Customer located in territory served by ittility may take service under this service classification eubject to the following conditions:
(a) that customer is located adjacent to Utility's linen possessing capacity adequate to supply Customer's requirements in addition to the requirements of other Customers already receiving service f rom such lines. or that Utility shall have sufficient time before Custonee shall require service to construct such lines. and (b) that the energy delivered is nat resold or redistributed, and (c) that service la not available .under this service classification where Customer purchases. electric *' 2 energy from any- source other thae Utility, sad- '.
*. . ' - 4 ,.
(d) that any Customer generating a portion of Customer's electric energy reqwitenents shall not operate equipment in parallel with titility's f artlitten unless prior written permission to do no has been obtained t rna utility. and (e) that prior to the commenecaent of service. Customer with contract capacity in excess of 1.000 kw shall enter into a written contract with Ut!!1ty in accordance with this service classification.
- 2. Conditions af Service (a) Service shall be delivered to Customer at only one standard three phase or ceabination single and three phase delivery voltage as follows:
(1) Seccadary service 240 or 2400 volts, delta connected 480 volts. delta or unarnunded wye connected 120/204 or 277/480 volta, wye connected (2) Primary servire, an avnti-ble 2400/4160 or 7200/12470 volts, wye connected 34.5. 69 or 138 kw phase to phast (b) Utility will provide and maintain all fatt11ttes necessary to deliver one standard delivery voltage at one spscified location to Customer. Customer shall provide all necessary f acilittee for utt11 ration of service at the specified delivery voltage and for the receipt at a single point of delivery. Where both single and three phase service is required. Customer shall provide the nece eary wiring for Utility to measure both single and three phase service through a single estet. fc) Utility will normally measure Customer's service at the delivery voltage. In the event Utility requires measurement of Custaamr'r service at a voltage other than the delivery voltage. the measured demand and energy consumption shall be increased or decreased to compensate for transformer losses. s i a i I I
- Asterisk indicates change..
Issued J,muery 13. 1983 Effective January 18. 1983
%i Filed Pursuant to Illinois Connerce t.ommission Isawd by Larry D. Hasb Vice President ' k. ,/ Ordee in Docket No. 82-0152 Decatur. I111nute .
Dated January 12. 1963. s
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- fe,. ** ' '# 111. C.*C. No..' t7 ..'
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- I 'Fif th gevised Sheet No. 19
, Cancelling 121. C. C. No. 27 Fourth Revised Sheet No. 19 p.
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. ILLINOIS POWER COMPAN - -
SCHEDULE OF RATES FOR ELECTRIC SERVICE
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- 3. sates (a) Demand Charges (1) Monthly Demand Charge The following demand charges sha41 apply to each kw of mazimum on-peak demand occurring during the billing period ter customer served froa supply itnes beving the following voltare:
134 kv. 69 kw 4 34.5 h v 12.47 kw and below Summer Seasce(1)
- R- , .
For each kw of max { sun ou-pev. demand. $9.50 per kw . $10.47 per kw Winter Season (11) For each kw of maximum on-peak demand up to 90% of customer's contract capacuy $4.97 per kw $ 4.97 per kw for all kw of maximum on-peak demand in excess of 90% of Customer's contract capacity #2.42 per kw $ 2.42 per kw (1) Summer Season ta the first billing period having an ending meter reading date on or af ter p.g ,'e n e 15 and the three succeeding bt!!!ng periods.
# 1 (s (11) Winter Season is all h1111pg perioda not la the Sueswr Season.
(111) The on-peak perted is the 11 coraceutive hours coseencing at 10:00 .m. and ending at 9:00 p.re. on Monday through Friday earluding New Year's Day. Cood Friday, Mennetal Day (May 30). July 4. l. abor Day. Thanksgiving Day. Christmas Eve Day and Christmas Day. (iv) The of f-peak period is all hours not in the on-peak period. (2) Transformation Charge (1) If I'tility installs t ransf otaer. to transform the voltage f rom Utility's avail.ble trans-mission or distribution voltage to the service voltage desired by Customer, the monthly charga shall be *0.48 per kw of transformation capacity. (11) Customer's transformation capacity < ball be the highest measured dessand of Customer during any b1111pg period but not less than 430 kw. (b) Energy Charge (1) The following ebarges alS11 apply to all usage for bille issued for nervice f rom supply lines having ttie following voltagest Kilowett hours (kwh) Chareet Used in Any One Month 133 av. w kw ind 14. 5 kw 12.47 kv and Below For the first 100.000 kwh 4.14c per kva 4.14e per kwh For all ever 100.000 kwh 3.30c per kwh 3.40c per kwh . l 1 1 84sterisa indicJtes chJnee. j I
% !asued Jacuary 18, 1983 Effective January 18. 1983 '
I Filed Pursuant to Issued by I.arry D. Haab g"' / 1111 nots Coemerce Commissien Vlee !*resid.nt l order in Docket 82-0152 Decatur. 111tnots Dated January 12. 1963.
.*.. 111..C..C. ns.. -
. R 7- [ ~ l
,Tbird Revised Sheet No. 20 e - Cancelling !!1. C. C. No.
27 First Revised Sheet No. 20 v) *
'lLLIN015 POWER COMPANY -
SCHEDULE OF RA.TES FOR ELECTRIC SERVICE ,
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tae.. feenrtnued) e 3.- (2) Time-of-Use Energy Credit A cradtt of 1.00c per kwh shalt apply to all kilowatt'eaurs used during the off-peak period in each month. (1) The off-peak period for determination of an energy credit is the 13 consecutive hours commet-ins at 9:06 p.m. and ending at 10:00 1.m. on weekdays. all hours on the weekends and all hourt es Eve Year's Day Good Friday. Memorial Day (MJy 30). July 4. Labor Day. Thankaa;ving Day, Christmas Eve Day and Christmas Day. (11) The on-peak period is all other hours not in the off-peak period.
'.(c) 'For any customer . transferred,to this service classification frps Service ClassLlication 11 on or * .
af er ' January ^18; 1983, the sum'of the menthly demand charge and the energy charga set forth in Sec' ion 3(a)(1) and 3(b) above shall not be greater than an average cost of 9.77C per kwh for a summer season billing period or 7.09c per kwh for a vinter season billing period. (d) Fuel Cost Adjustment . The energy charges is eqSsection 3(b) are subject to the Fuel Cast Adj1stment provided in pider F. (e) power Factor Adjustmens The following power f actor adjustment provisions are applicable to all customers with a contract capacity te excess of 1.000 kw. The charges provided in subsection 3(a) are based on an average power ' actor during the period of maximus kw demand of 851 lagging. If the average power factor is
# f",1 between 85: tagging and 100% (unity). the charges shall be decreased 0.49c per kw of ad!vated demand for each one percent or major fraction thereof that the average power factor exceeds 852 lagging.
,, if the averase power factor le less than 85% !agging the charges shall be increased 0.73c per kw of adjusted demand for each one percent or majer fraction thereof that the average power factor is less than 85% lagging. In cases of leading power factor, the adjustment shall be calculated as though the power facter vs;a 1002 (unity).
(f) Determination of Contract Capacity and Maximum On-peak Demand (1) The contract capacity shall be equal to customer's maximum on-peak demand occurring duttag the twelee consecutive billing periods ending with the current billing period, and occurring between June 15 and September 14. adjusted. if necessary. under the provisions of sectica 3 of Rider $. In no event shall a contract capacity be less than 400 kw. (2) The maximum on-peak demand is the highest number of kw delivered during any 15 minute period of the on-peak period, defined in subseetton 3(a)(.)(111). in the billing period adjusted, if necessary, under subsection 2(c) hereof and/or prnvisions of section 4 of Rider S.
*a. Additional Condittens and contract previsions (a) The contract with Utility shall specify a contract anpacity. The primary term for the contract shall be determined as follows:
(1) Cuatomers who are not taking service f rne tittlity under the previaton. of this or any other of Utility's service clanallicarteena nhalt tuntract int and take servire fur a primary term est 3 years unless the contract capacity exceeds 1500 kw. In wsich case the primary term shall be 5 year 9 (2) Custerere taking service under the provisions of thin ne any other of Utility's service classifications who desire to enntract for additional contract capacity may contract for and take service for a primary term equal to the rematader of the prieary term of the contract under which service in being provided but ant less than one yeart execpt that if Utility is required ta install additional f ac111t tes io serve Customer's load. Customer and Utility shall enter into a eew contract spectfying the new contract capacity required by Custoner. The new contract shall 'ee for a term of years deteretneJ as followe. but not less than the rematader of the primary term of the ptroent contracts
- Asterisk indicates chante.
Lesued January 17. 1983 Effective January 18 t's83 [f . g- ) Filed Pursuant to 1111 nets Comneree commission issued by Larry D. Raab Vice PrettJent (x, _ / Order in Docket 82.C152 Decatur. Illinois Dated January 12. 1983.
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.!!!.' C. C. No.
- 27 First Revlwed Sheet.No. 20.1 ILLINOIS P0,WER COMPANY .
SCHEDULE OF RATES FOR ELECTRIC SERVICE ,. - . :4 . r, , ~ . v . :.*: .;:orn. '
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SERVICE C125SIFICATION 21 - PAGE 4
- 4. Addittenal Conditions and Contract provisf ens feont inued)
(1) One year if the new or added contract capacity required la less than 500 kw. or (11) Three years if the new or added enntract cepacity r 7ut red is from 500 to 1500 kw. or (111) Five years i.f the nov or added contract car aetty required is greater than 1500 kv. (h) Extension or ter'nination of tne teria of any contract shall be determined as fc11ows: (1) The primary or extended term of any contract shall be automatically extended from year to year
- with the privilege of either party to terminate t'.a contract at the end of the primary tetis or -'.(-
thereafter on not less than 30 days written notice. (2) in the event Customer shall cease all operations and discontinue business at the location at which service is beina rendered under such contract. Customer may, upon not less than 30 days written notice to Utility, cancel the contract then in effect at the beginnies of any billing period commencing af ter the expiration of the primary tete. (c) Any culating er future contract required by this service classification to be entered into or enterri into between tittlity and Custnmer for electric nervlee Aball be an. ended from time to time to incorporate any revisions and changes in this .ervice classification or any rider, standard term or condition, or rule, regulatten or condition applying to electric service (including without 11sitation changes in rates, charges, and terms nr cc9ditions of service) when such revision, change or substitution shall be approved or permit *.ed to to into ef fect unuer the Public Utilities Act or j an otherwise provided by 1 w. Nothing evetatned in any service classification rider. standard term ( -4 or condit ion. or rule, regs.ation or :ondition applying to electric nervice, or in any esisting or
\ d future contract shall af fect er be construed as af fecting in any way the right of Cttlity unilaterally and without consent of Customer to take or initiate action, as permitted by applicable laws and regulations, to make revisions or changes in any service classification, rider, standard term or condition. or rule, regulation or condition applying to electric service, or in any existing or future contract.
l NO O This nervice classification is subject to Utility's Standard Terms and Conditions in its Schedule of Raten for Electric Service. tsnued January 13. 1993 Effective January 18, 1983 Filed Pursuant to issued by !.arry D. Haab 1111ncts Commerce Cors=1 seton Vice President order in Decket 82-0152 Decatur Illinois Dated January 12. 1933.
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- Third Revised Sheet No. 21 i
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ILLIN0IS POWER COMPANY
'. SCHEDULE OF RATES FOR ELECTRIC SERVICE -
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- 1. Avellability Any Customer torated in terrttnry served by L.tility nav rake nervice under this 8ervice s tassification subject to the iollowing conditione:
(a) that Uillity shall not be oblicated to rerve new Customer or additional load for existing Customers if Utility f or any cason does not have available generating and transmission facilities adequate to cerve such additional load, an1 (h) that the energy delivered is not resold er rs dist rthuted. anbl (c) that service 'is not available under this service classification where Customer purchases electric energy f rom my hource uther than Wtility. and * ' < . . (d) that any Customer generatinit a portion of Customer's elect ric energy requirements shall not operate equipment in parallel with Utility's f acilit jen untens prior written perminston to do so has been obtained f rom l'tility, and (e) that prior en the cc.vaensement of nervice. t untomer r. hall enter ir.co a written contract with Utility in accord $nce with thin acrvice clanificat ion.
- 2. Conditions of Service (a) Service w111 he delivered to t uttoseer f rem three phasia electric linen having nominal standard voltarce of either L5. Me or 11A kv and posses ning guificient capability to nupply the specit ted remerved rancity. Utility lealt have the r i r,ht to neiert e be =upply lineos f rom which service will be rendered to Cu*tomer.
1
/ (b) Comtemer sh tll provtJe and Nint ain . ell t ran:+toinern an l relat ed f acilit ica necessary f or supplytng and uttilzing the energy delivered.
(c) Utility will psovide and mainta!n coc t hree pha=c delivery voltage.
! (J) Customer aball make JWallable, with.Mt sharfA to Utility. rpace required for Utility'M line9 and delivery Iacilities.
(e) Utility w1LI provide and maintain one point af delivery and metering equipeent therefort. except as
.saw be otherwise provided in Utilltv'n 1eien. Pegulationn and Conditions Applying to klectric Service. % erb metering equipment nh all be located on the high voltage side of transformation if transformation shall be required by Customer unless Utility elects to install such metering i equipment on the low voltage side ut transformation. in which case both the demand and energy consumption aball be incteened to compensate Utility for transformer losses
*). Raten (a) Monthly Nwnd Charge The followice demand charges shall apply to each kw of maxieum on-peak demand occurring during the -
billing period. Sumeier Scanon Cha rge s For each kw of maximum on ,eak Jemand $9.50 per kw { gnter Scanon For each kw of n.axiimm on-peak demand up to 901 of Customer's capacity iteservation $4.97 per kw For all kw of maximum on-peak demand in escens of 901 of Cuetooer's Capacity Reservation $2.42 per kw
*Asterlek indicatc1 chinge.
j p inmued January 18. 1981 Fffective January 18. 1983 l Filed pursuant to lesued be f u ry D. Haab '
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Illinois Cremerce Ccce=iselon Tice Presidert Order in Docket A2-0152 Decatur. Illinois Dated .lanuary 12.19M1. l. I.
111. C .C. No. ~ 27 -
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- 22
. Cancelling 111. C. C. No.
27 , Fourth Revised Sheet tio. 22 i ' ' V # ICLINOIS PDWER' COMPANY'~ SCHEDULE OF RATES FOR ELECTRIC SERVICE _
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e3. Rates (continued) (1) Summer Season is the fint billing period having an ending meter reading date on or af ter June 15 and the three succeeding billing periods. (ii) Winter Season is all billing periods not in the Summer Sesson. (iii) The on-peak period is the 11 con *ecutive hours coestencing at 10:00 a.m. and ending at 9:00 p.m. on Monday through Friday excludins New Year's Day Cood Friday, Memorial Day (May 30). July 4.1. abor !%y. Thnksgiving Day. Christmas F.vr ^ay. and Christmas 9ay.
- 8. t v ) The off-peak period is all hours not in the on-peak 1'e ri od.
e (b) F,nergy Charge' (*.stomer shall be charged for each billing perio'd. 412.60 per kw of capaetty'renervatioe.' plus 3.30c per kwh for all kwh used in the billing period in excena of 400 kwh per kw of capactty reservation. (c 1 Time-ef-Use Facray Credit A credit of 1.00c per kwh shall apply to all kilowatthours used during the off-peak period in each morth. (1) The off-peak period for determination of an energy credit is the 13 consecutive hours commencing at 9:03 p.m. and ending at 10:00 a.m en weekdays, all hours on the weekends. and all hours on Jew Year's Day. Good Friday. Memorial Day (May 30). July 4. Labor Day. Thanksgiving Day, Chrintmas Eve Day, and Chrfstmas Day, s (2) The on-peak period is all other hours not in the off-peak period.
, ) \# (d) Annual Lead Tactor Credit Annually at the conclusion of the December billing period. an Annual 1. cad Factor Credit ahall be calculated and credited to the custemr's bill.
(1) The excesa or unused energy for each month shall be calculated in the following manner Fach month's kwh consumptian lees the quantity (400 kwh per kw times the capacity reservation in effect for the current month). A positive result indicates excesa energy for any month and a negative result indicates unused energy for any month.
- Asterisk indicates change.
[ tenued January 13. 1983 Effective January 18. 1983 l ) liled Purnuant to issued by larry D. Haab
\"/ 1111 note Commerce Coesninston f*ce Frentdent Decatgr, Illinois order in Docket 8?-0152 Dated January 12. 1983.
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- Cancelling 111..C. C./No. 27 j X Tirst Revised Sheet No. 23 l
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i Q ,/ i ILLINOIS POWER COMPANY SCHEDULE OF RATES FOR' ELECTRIC SERVICE
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ec , SERVICE C1.ASSIFICtTION 24 - PACC 3
*3. Rates (continued)
(2) The num of all monthly excesa energy equals the annual excess energy. (3) The sum of all monthly unused energy equals the annual unused energy. (4) If the annual acets energy is greater than or equal to the annual unused energy, the Annu.' Load Factor Cre#tt ds M be equal to 3.30 cents per kwh times the annual unused energy. If tne annual excese er.ergy a s less than tSe annual unused energy, the Annual 1.oad Factor Credit shall be equal to 3.30 coes per kwh times the annual excess energy
' + ,
(e) . Power Factor 'Adjuat' men ( . The charges for each month shall be increased 0.4dc per kw of the maximum 15 minute demand measured in the month for each one percent or major fraction thereof by which Customer's measured power factor te less than 951 laggina. The measured power f actor in the average power f actor during the same 15 minute period in which the maximum demand is measured. No adjustment shall be made for pswer factors of 95% or higher. (f) Fuel Cost Adjustment The energy charges in subsections 3(b) and (c) are subject to the Fuel Cost Adjustment provided in Rider F. The Fuel Cost Adjustment shall be calculated and applied separately for each month only to the actual kwh used by Customer during the month. N Determination of capacity #eaervation and Maximum on-Peak Demand
*4.
)
(a) The capacity reservation shall be equal to Customer's maximum on peak demand occurring during the twelve consecutive billing periode ending with the current billing period. and occurring between June 15 and September 14. adjusted, if necessary, under the provisions of section 5 of Rider S. In no event shall the capacity reservation he less than 3.000 kw. (b) The maximum on peak demand is the htsbest number of kw delivered during any 15-minute period of the on-peak period, as defined in subsection 3(a)(111). in the billing perios adjusted. If necessary under subsection 2(e), and/or section 4 of Rider S.
*5. Adottfong Conditione and contract Provision =
(a) The primary term for the contract shall be determined as follows: (1) Customers who are not taking service from Utility under the provisions of this service - classification or Service Classification 21 shall contract for a primary term of five years. (2) Customere taking service under the provisions of this service classification who desire to contract for additional capacity and those customers taking service ander Service Classift-cation 21 may conttact for and take service f ar a primary term equal to the remainder cf the primary term of the contract under which they are being served, but not less than one years except that if Utility is required to install additional facilities to serve Customer's load. Customer and Utility shall enter into a new cor. tract specifying the new capacity reservation required by Customer. The new contract shall be for a ters of years determined as follows, but l I not less than the remainder of the primary ters of the pre +ent contract: (1) One year if no new or additi. mal capacity reservation is required or if the new or added capacity reservation is less than 500 kw. or l
*Astertsk indicates change.
I h l l ( j) A issued January 13. 1983 F11ed Pursuant to Issued by Larry D. Haab Effective January 18. 1983 111Laois Commerce Cossatssion 71ce President ( Decatur. Illinois Order in Docket 82-0152 ., Dated January 12. 1983.
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, . ILLINOIS POWER COMPANY SCHEDULE OF. RATES FOR EL. ECTRIC SERV. ICE. . ,
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*5. Addletonal canditionis and contract pre v t s t on.a frontinued)
(11) Three years tf the new or added capacit y reservation is equal to or greater than 500 kw but less th n or equal tri 1500 kw. or (111) Five years if the m:w nr added capacity reservation is more than 1500 &v. (b) Extension nr termination cf the term of any contract shall he determined as followst it) The primary or extended rcrm of any centra 4t shall he automatically en tended f rom year to ye.1r with the< privilesc at either par t e to rerminate the contsart at the chd of the pristary term er thereafter on not less th.in !? month written notice. in the event Cuntomer shati cesse ,all operatiana ar d discontinue business "at th'e locatton at
- '(2) which acrvice in being rendered under much contract. Customer suy. pron not less than 30 dawn written notice to L'tility, cancel the ca.ntract then in eflect at the beginning of any billtog period connencing af ter the expiration of the primary term.
(c) An initial develcrnent period may he established by mutual agreetwnt during which billings shall be based upon measured demands or capacity reservat ion not less th.en the greater of the following quantitiest (1) ",.000 bw. or (2) one-third of the ult imette capacity rewrvat ion aperil led in t he contrart. os
/
(3) the highest mea =sared demand slure re as= nring .ee rvle r under t he curitrart. Much developecnt period shall terminate when measured we*1nds exceed 80% of the capacity reservation
%' or at the first .mntwernary J.ite of the contract, whichever s vent occurs first.
(d) Any relat ing eer fut us c roist r.as-t regis t real tw t h in .4* rv ice cl.igsll' t rat ion to be entered into or ries cred f os o betwo-e a l't illt v a nd C*s st omet Ion cice t rir s ervice h. ell he ame.n.bwl f roen t f ue toetur to inccrporate auf revi.stoch ord ch. engr.s tu thig servire clanalt it at ion or any rider. St.indard teir. or condition. or rule, regulatlan or ccedir tim arriving to electric <ervice (including without limitation change.s in rate <. rbarge$. and termg or conditions of service) when auch revision chanze or souhetitut ion ishall be ippraved or pern6tted ree ga into effert under the Public Utilities Art or as otherwin provide.1 hv law. NeithinP contatord in any iservice clannification. rider, standard term or cr.nttition, er rule, regislat tom or ronditinu stprlying to electric n twice or in any cutstieg or future cemtract shall alfcet or be countrued as af fecting in any way the right of irti!!ty unilaterally and without consent of Custonn r to take or initiate action, as permitted by applitable laws and regislations, tn make reviat<mm of changen f n any nervice classif f ratirm. rider, standard term or comtitian, or rule, regulation nr cenilf t ton applying to electric nervfec. ar in any ruf 9 ting or future contract. NOTF.: This nervice classification is subjcet to Utility's gindard Terms and Conditions in its Schedule of itates for F.lec6tte Service.
- Asterisk indicates chacce.
O' . Ef fective January 18. 1983 tesued January L3. 1983 g- Issued by tarry D. Haab Filed Pursuant to Vice prentdent tilinois Cossnerce forsetssion Decatur. Illinola Order in Docket 82 0152 Dated January 12.108).
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ILLINOIS' POWER COMPANY SCHEDULE OF RATES FOR ELECTRIC SERY:CE
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Limited Firu Service ' l
- 1. Availability 1 Any C w peer located in territory served by Utility may take service under this service classification subject to the following conditions:
(a) that service is not available under this service classification if the ut111:a11on of servics is of such character that service cannot be interrupted at any time by Utility without loss to Customer or damage to property or persons and without adversely affecting the public health, safety and welfare, and (b) that the energy' delivered is not resold or redistributed, and (c)" that ser'vice is not'available'under t'his service classification wher's Cust'omer purchas'es electric energy from any other source than Utility, and (d) that any Customer generating a portion of Customer's electric energy requirements shall not operate equipment in parallel with Utility's facilities unless prior written pereirston to do so has been obtained from Utility, and (e) that service to Customer hereunder will not, in Utility's judgment, impair Utility's ability tc serve the requirements of its firm customara and customers already taking service under tais service classification, and ! (f) that prior to the commencement of service C.rstomer shall enter into a written cop *ract wi". Vtility in accordance with this service classification.
- 2. Conditions of Service (a) Service will be delivered to Customer from asisting three phase electric lines having a nominal standard voltage of 3i. 5, 69 or 138 kw and possessing suf ficient capability te supply the specified capacity. Utility shall have the right to select the supply lines from which service will be rendered to Customer.
(b) Customer shall provide and maintain all transformers and related facilities (including all switches, relays, communication circuits and other equipment necessary to establiah and maintain control by Utility's Supply Dispatchcr) necessary for handling and utilising the energy delivered. Utility l will furnish and maintain control facilitten within its Supply Dispatcher's office. (c) Utility will entend the three chase line necessary to provide service to Customer, provided the cost of such line entension does not exceed one and one-half times the annu.1 revenue from Customer as estimated by Utility. Customer shall deposit with Utility a e.s2 equal to any costs in excess of one and one-half times such estimated annual revenue. '.efunds of such deposits will be made in accordance with Utility's Fules, Regulations and Conditions Applying to Electric Service. (d) Utility will Provide and maintain one three-phase delivery v.,1tage. ( (e) Customer shall make available, without charge to Utility, space require' for Utility's lines and delivery facilities. (f) Utility will provide and maintain ene point of delivery and metering eq.ipment therefor, except as otherwise provided in Utility's Rules, Regulations and Conditions Applying to Electric Service. Such metering equipment shall be located on the high voltage side of transformation in the event transformarim shall be required ky Customer unless Utility elects to inatell such estering equipment on the low voltage side of transformation, in which case both the demand and energy consumption shall be increased to compensate Utility for transfe rner losors. (g) Utility will sal et interruptions in service from time to time as provided for herein. Whether or not notice is received by Customer in advance of the interruption, Utility shall have no 11akility to Customer, and Custever shall assume full responsibility, for any loss, damage, or clain (iw.luding but not 11satted to product lose and loss of profits) by resos of any interruption or restoration of g service. Customer taking service receives a reduced charge in consideration of which Customer ( ) assunee all risk of loss sed danape to customer's property or 9usiness resulting from service V ~ interruptions. Iesued July 2,1981 Effective July 3,1981 Issued by Larry D. Haab Vice Freefdent ~ Decatur, I m nois
I 11. I'. C. No. 27 Fifth Revined Ocet No. 2h rancelling 111. C. C. No. 27 fourth Revised Sheet ho. 26 0 k ILLINOIS POWER COMPANY SCHEDULE OF RATES FOR ELECTRIC SERVICE KFRVICE CLA551FICAT!0N 10 - PACE 2
*3. Rates (a) Limited Ftra Capacity Charge The monthly capacity charge per kw of reserve capacity shall bes Ellevatts (kw) cf Reserve Capacity Cha rtet For the first 1.000 kw 51.850.00 For alt . ver t.000 kw $ l.00 per kw (b) Energy Charge The energy charge for all limited fire energy delivered during the ht111pg period shall be 3.26c per kwh.
(c) Ttsie-of-Une Fnergy credit A credit of 1.00c per kwh shalt apply to all kilowatthours used du.ing the of f+ peak period in each month. (1) The of f-peak period for determination of an energy credit is the 13 consecutive hours comment:nc at 5400 p.m. and ending at 10:00 a.m. on weekdays eli hours on the weekenda and all hours on New Tenr's nny Co.=t Friday. Memprlat liny '.Kay 3u). July 4. latwir they. Thankagtving par, Christmas Fve Day and Clitistman Day. 4 (11) The on-peak period is all other hourn not in the of f-peak period, t (d) Power Factor Adjusteent The charges f or each month shall be incrarsed 0.48e per kw of the matinum 15 minute demand measured in the month for each one percent or major fraction thereof by which Customer's measured power factor is less than 951 langing. The measured power factor is the average power factor during the same 15 minute period. No adjustment shall be made for power factors of 951 or higher. (e) Fuel Cost Adjustment The energy charges in subaection 3(b) are subject to the Fuel Cost Adjistment provided in Rider F. (f) Fire Power (t) Firm Power is that demand and energy for which Customer has contracted on a fire I=aste under an applicaHe service classification at the same point of delivery at which limited firm service is taken. (2) Customer shall yay each month. in addition to the char;;:es in Section 3. the charges specified under the service classification for which firm power was contrected. (3) In the event Customer's mautzun 15 minute demand estabitshed during a period of interruption exceeds the load limit specified by Utility plus the maximum amount of contracted firm powes. Customer shall pay to Utility for each such occurrence (in addition to ths rates provided herein) an amount equal to 59.69 per kw multiplied by the number of kw of such excess, and t'ustomer's contracted fire power will be increased, without notice or other action, by the amount of swain encess kv.
#Astartak indic..tes change.
N Effective January 18. 1983 -
) tesued January 13. 1983 issued by larry D. Raab 3
j Filed Fursuant to 1111ncts Commerce Connission . Vice President Order in Docket 82-0152 Decatur. 1111 acts Dated January 12. 1983.
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. .'* Third Revis64 flhest No. 27 .
Cancelling ill. C. C. W. 27 First Pevised Sheet No. 27
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' l' ILLINOIS POWER CONPANY '
SCHEDULE OF RATES FOR ELECTRIC SERVICE .
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*4 Interruptions and Curtailments (a) Interruptions of Serstcc Other than In t en t lema l interrupti.ms or Curtailments The following described letc rruptions of 4.unt osei-r's service shall not be deemed as " intentional f rit~rruption" as defined in subacer ton 4(h).
* (1) Interruptions caused by ect of Cod. public cuemy. strikre. state, municipal or other govern-mental interference, windarnre flood, fire. cuplosion or any matter or thinr. over which Utility has no control, wl rtlier in conrection with the operatione or property nf either Customer.or Utt11tv.
J' (2) Interruptions caused by emerp.cncies that cause Utility to order curtallment ~of service to f f ra ,a
-cuatomets.in wrder to prarect the, general.public'and preserve the integttty of its system and -
the nym.mn of notr,hherina uttitttes wiese electric systems are interconnected with the electrir system of Uttitty. (h) Intentional Interruptlann fr.tentional tercrruptions aball t.c all Interruptions of Cuatamer's limited fire load nada be Utility. Sett le interruption
- mesy tv h ule ot .any time at l~tilj ty's note discretion. Subject to tt.e condit timn of 4(c) hereot .
Far any intent tonal interruption. Utility mJy npecsty a man tmum Ilmit for Cu8tequer's load and the pe rlo<te in which much limits are effective. (c) 1.imitatione l'pon Int entional Interruptinna The frequency of intentional irrerruption,s will f.e no more than 60 per catruder year with such interrupt tems occurring nre no more than 45 d.nys dur ing sisch year. The total hours of 'nt ent tonal (V) interrupt ions will not exceed the eqisivaletit al 20fl boisra ov' total interrupt ion in any calendar year
.emt no single Intentlenal interrnprion will be longer than 12 consecut ive 'emrm.
(a) Nottcc of interruption alt t l tty Shall nave the riltht to habe any intearnptton without nottre to Custeewr. . l' t i l i t y , tieweve r , will attopt t e* provide rustomer with auf fletent aJeance not !re of tnrentianal interruptters to permit an ordef t v shut down of Ciscromer's operarian. but tititity shall have no chlt,tation to give such adv..nre nat tre or to annme any I tahtlity for latiure to do so. tiotice of Interruptinn may be given by telephone f rom L'ttif ty. IJtility may agree to permit an interruption procedure to be 4 :*rried sme by 4.ugtomer% peranencl . provided all stepe ir quele proredure are no.h)cr t to remt rol by lit t ilt y. In al l ot her c. ige,s.1:t ll it y wi ll m re==pi lsle flee reqntreJ intre ruption hy a uvitching arrangement which tw under its msic control. After any interruption of nervite. Cuntomer shall not reconnect any load without approval f rom L!t tljty.
*%. Additional rondit tanu and Contract Provigiann (a) The contract witts Lit tlity shalt specify a reserve capacity of not Irns than 1.000 kw. Such coctract may also specify an amount of fits powe r. The primary terst for the untract ple!I he $ years and t hers al t er f rosi " car t o t ear.
( ts ) Cunt ooiet s t.ih init m svice icelet a bc provi eloem on t his m rvice rI wall trat I.m who desire to renteart for addittonal t rwrved c apac it y and ru>teners takf pit service under %+rvice riansit trat ion !! or 24 hereceder piay ti-e t rac t for . tad take wety tre f or a pr tiniary art 1m c. qual to the remainder of the primary t e rm o f t he rent rac t under which they are being erved. an.t thereaf ter from year tn year, provided that. if additional three-phmso line in in* tilled pursuant to sectico ZIc) hereof. the primary term of that cont ract or ntw contract sh. ell be not ic%g than % ve.erw. (c) Customer *n reserve capacity shall be inercaped subject tn the limitations in subwetion 1(f). wheurver the remerve capacity f n ef fect whall have been execeded during three 15 minute demand i interva's, no two of wh'.ch shall be eclected in any one calendar day. In such case. (untomer's l
- Ast er i nk indientes chance.
Ellective Janu.1ry 18 1983 ; Imeued .tanuary 13. !4A3 Insm d by I.arry D. Itaah j Filed pursuant . to 4 tilinoin Commerce Ocassimiston Vice 1*reshtrut
\'j Decatur. lilinois nrder in Ibeket N2-otS2 Dated January 17. 19113.
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ILLIN'OIS P6WER COMPANY-SCHEDULE OF RATES FOR ELECTRIC SERVICE
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*5. Additlar.a1 Conditions and Contract Prnefalen. (cont i,mu d, ),
reservw capacity n'iall he increa<cd willamt mit i re to the av.vare of such ttiree measureJ demands a;d any cuinting rontract shall hc ilcemed to haveshall beenherome aremical tactu4e such. increased reserve capacity. Such increased resserve cap.icity ef t.fectine with the hilling period in whic's the third of nuch metered extrass demanda t:liall havr ocstarred. (d) An initial development pertoel way be establiasheit hv mu ssal agreement during which Customer's monthly e dem.ind for billice purponce.
- hall be the maximes 15 minute dcriand etablished durtng the development pe r t o l . The development perfod sle.nll not escced t? months.
(c) During thu uff-pcak perliul armoediately f ollowirst any not tre af laterruption er egetallment. Or,? nner may vucceed Ira rcFerVe Capacity by 100*. prowlded prior approval hJ9 heen ohtalped f rom Utillt. . If , such approvat Jn granted. tLic itemands entab1bhed duritHg .rancle pit-peak periodg w Of not.be use<d for , hilling purposce:. off-pcak pertoi!s, for the. p.erpo*c= of thin paragraph. nhall be t hose coner.gt tve houra commencing at 9:00 p.m. and ending at 10:00 a.m. **n the t'ullowing d.sy. (f) The primary or extended term o' the contract shall be automatically extended f rem year to year with the privilege ci either party to terninate the cemt ra-t at t he -nd of the primary term or there..fter on not less than 12 mocthe written notice, rustnmer's reserve capacity may be reduced at the end of lesg tha, 1/ rmntha. Ilowes e r , the primary term ur during any cutended term an written pot tco uf not in no event shall a reserve capacity he reduced more than once jn any 12 month period, fa) In ti.e event of stic permanrnt chandonment of the operat ions or any of Customee 's l'arillt ten whirte ut 8i ter elerI rir corrgy , t'ust een e :.h.e 4 i h.svp ehe pr 1v i lcre al redue ing ilie. re wewe raperie y me tweivc mont hs prior writ t en not ire. lloc .tamsunt of Firm Power provielcil le.r leereIn whall ali . he protmr* tienately reduced, in el c event t'uatomer shall ceanc all operar l.ma and dinrsma inue im* tncgs at the locat ion at whirls s ecrstre le helng remic r cst no.ler .mele rent r.ict . 4:ust omer may , upon not les< tin pt in d.svr. writtrn not ice to I! illtv. cancel t he a-ont ract t hen la ef fo rt .it the herinning of any blLiitigt pcried commencing after the espirarlen o n the thces ch i ..I lost term. Ih) Cuatt s.ricr sh.iI I e+ot h. ave the r1yht to O ne e e arse. Itn t int t cd I ( rn rc..sq ve c.sp.ec I t v rw cpt t (1) to the curent that Utilite han con =e nteil in wr it ing to runtome?'4 writ ten restm at to increase reserve carscity within a specified time by t he t ernas ut she contrart, et (2) to the crtveir that . sects ine s c.o.cd rew rve s'ap.u it y i*t r.an.onn.r will not. Lu l'italty's jtidgmen t tapilt Pt ilit y's ah t i t t y to acrve the requirements of it9 fi rst c ustomera and it9 other custumers triking nervive useder thin cervice closuf fication. ft) Any sisit tner .:r future cont r.u t required hv tiilis acrvice clat.atf trat ion to ha enters d loto or entered into lictween Ht liit y anJ I:n .t omer for cice t ric wrvire ha t : he amended fr. atar ta e ime to incor-parate any revintons and clianiten in tiilm nervice claulf ication er any rider. meandard term or condition. or rule opplying to electric service sincluding withcut liritation changes in rates, charpes. and terms or conditions of servire) wtwn such revidon, chanpf or substitution shall le approved or permitted ta ne inta clicct umler the rubile Utilt t ten Act nr an othetwin.- provided.hv law. Psothing rontained in .mv wrvice clannificar 8 m. rids r. atandard tein or condition, or rnie applyinr to electric nervice. or in any existing or future centract. shall affect or he construed as affecting in any way the right of littlity unilaterally and without consent of Customer to take or initiate action. as permitted by applicabic laws and regulationg, to make revisions or changes in any service class fication, rider, atandard term or conditlan or rule applying to electric service. or in nny existine. ir future contract hoTI': This service classificat ion la inuhteet to Utility's Standard Terme and Conditions in its Schedule et R.etes for f lectric '.crvice.
- A=tret sh tndleaten etance-
# Iffective .tapuary 18. 1943 Inoucd .tanuary 13. la83 tenued by L.arry it. Ha sh Filed ltrouant to Vice prepident-litipot s Commerce Coinni=41on
( onder in Ikschet 82-0152 Decatur. Illtimis DatcJ Jarmary 12.1*43.
Ill. C. C. Na. .77 Firs 29-
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ILLINOIS POWER COMPANY (0 .
, St...:.00LE OF RATES FOR ELECTRIC SERVICE '
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Any Customer located in territory served by Utility may take service under this service c!assification for lighting outdoor areas, where the period of lightics is limited f rom dusk to da.2, subject to the following conditions: (a) that Custotar is located adjacent to Utility lines from which such service can be rendered, and (b) that Customer enters wto a written contract with Utility for service.
- 2. Condit! ens of Service (a) Utility shall furnist and install on Customer's premises an automatiu11y controlled itghting f;ixture equipped with the type of lamp and lumen rating selected by Customer. and such fixture shall, ,
be attached E.t a standard type wood pole. Utility shall furnish all electric energy required to operate such fixture. (b) Except for underground facilities installed and maintained by Customer under subsection 2(c), all lamps and additional facilities of Utility shall be operated and maintained by Utility. (c) Underground facilities shall be provided caly upon payment of the additional charges specified in subsectioa 3(b) and upon the following conditions: (1) Direct-buried underground cables shall be used only in areas which will remain free of obstructions. Customer shall be responsible for any additional maintenance, repair or (l'. I. replacement costs if part or all of the area over such cables is subsequently paved or covered by other obstruction.
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% (2) In area determined by Otility not to be suitable for direct-buried underground cables, ducts or flexible concuit shall be installed by Customer or at Customer's . expense, by t'tility.
Customer shall retain ownership of such ducts or conduit and shall be responsible (when notified by Utility that such maintenance, repair or replacement is necessary) for the . maintenance, repair or replacement of such ducts or conduit. (3) Custemer shall be resronsible for and Utility shall not be liable for any damage to ground cover (such as grass shrubs end trees) resulting f rom the installation, repair or replacement of underground f acilities, and personal injury or property danage should any person other than Utility or its employees dig into underground facilities. t l f k k Issued July 2.1981 Effective July 3,1981 Issued by Larry D. Haab Vice President Decatur Illinois. l
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li'LIN015 POWER'CO'MPANY' r SCHEDULE OF RATES FOR ELECTRIC SERYlCE s
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e3. Ita t e s (a) Lamp Charges if the lighting flatere can be insta11cd on an entstieg distribution type wood pole and service can be supplied f rom an episting averhead secondary cf reuit on the pole the monthly charges applicable to such installation shall be as f ollowst Wattage Charge s 1.ven Rating Per Month Type of Lamp Rat tns: Area 1.tahting eincandescent '2,500) Not' Availabls= ta new 5 ,
fnntallations af ter January 18. 1983 5 5.A0 4.000) Not ovatinhlc in 6.40 6.000) new cuatemers af ter 7.25
" 10.000) September 20. 1969 9.25 Mercury Vapor 6.400 115 4.85
" 9.400 250 5.40 16.000 400 8.50
" 45.200 1.000 t6.65 Sodium vapor 6.500 100 6.50 15.000 150 7.00 22.000 250 9.35 ft.65
]4 " 45.000 400
'Nj Directional t.twhring Mercury Vapor 16.00u 400 10.40 I7,90
" 45,200 I.000 Sodium vapor 22.000 250 13.35 45.000 400 16.00 (b) Additional Charren if additional facilities or fixtures other than l'tility's standard type of rearranaement of entsting f acilities shall be required to serve r ustomer. Lf tility shall install, operate a.d maintain such facilities for an additional monthly charge of 1.5% of the estimated reproduction cost new of such additional frtilities at the 'ime of rental or rearrangement as may be required. These charges shall be in addition to the 1sup charges.
- 4. Contract Provistotis The contract shall specify a ters of years determined as follows.
(a) One year. if additional facilities are not required. of (b) Three years, where additional f acilities er rearrangement are required. The primary or extended term of any contract shall be automatically extended f rom year to year with tf*e privliege of ettber party to terminate the contract at the end of the primary tein or at any tine daring acy extended term on not less than 10 days written notice.
- Asterisk indicates change.
Effective January 18. 1983 j issued January 13. 1983 Piled Pursuant to . Tanned by tarry D. Haab j Vice President v 1111pois Camerce Cossatssion Order in Docket 82-0152 Decatur. 111tnois . Dated January 12. 1983. l l l
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ILLINOIS POWER COMPANY . '
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- 5. Additional Cenditions and Contract Provisions Any existiny. or future contract required by thia service classification to be entered into or entered into between Utility and Custumer for visvtric nervice hail he . amended f roes time to time to incorporate any revisions and changer in this service claneificat tun ur any ridst, standard term or condition, or rule, regulation or condition applying to electric wrvice (including without lir.itation changes in rates, charges, and terms or conditions of service) when much revision, change or substitution shall be approved Nothing or permitted to go into ef fect under the Public Utilities Act or as otlierwise provided by law.
contained in any service classification, rider. standard term or condition, or rule, regulation or condition applying to electric service. 2r in any existing or future contract shall af fect or be construed as affecting in any way the rir,ht of Utility smilater. ally and without consent of Customer to take or initiate .ection, a4 permitted by . applicable laws .md regulaticus, to make revisions or changes in any servicu classtitcation, rider, stamlarJ term or cuiulttion. or rule, regulation or condition applyton to - electric service, or in any existina or future coastact.
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i NOTE: This service cl.assification is subject to L't111ty's Standard Tern and Conditions in its Schedule of Rates for Electric Service. i l t
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Effective July 3, 1981 tasued July 2,1981 issued by Larry D. Haab
/% Vice President i Decatur. tilinois I
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This nervice classification is available to any city, village or town (hereinaf ter called " Municipality"), in which Utility is rendering electric service under a f ranchise ordinance having a rern of not less than 20 years, granting Utility the priv61rge of occupying the streets slieys and other public places for the purpose of transminston, sair and distribution of electric nervice. This schedule is not applicaWe to resale. standby or auxiliary service.
- 2. Cenditions of Service (a) Service will he furnished at standard primary or necendary distributton voltane at Utility's option, th) Utility will combine meter readings for all nervice rendered *o the ".untelpality under thin Serytce
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Classification.
*3. Ratee , ,
(a) Fact 11 tine charse $6.50 per month fur each point of delivery sh) Fnergy Charge The f ollowing chary.sn shall apply to all usage for bills issued du a na the following seannael Summer Season (1) Winter Se. son (21' illowatt hours (kwh) Etiowatt hourn (kwh) Ured in Any One Month Ch i rges Used in Any One Month ,Charget For all kwh 5.28e per kwh For the first 1300 kwh times the total number of delivery ( r poinen 4.78c per kwh
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For all kwh in excess of ' 1300 kwh timen the total nusiher of delivery point s 3.20c per kwh (I) Summer Season is the bitting periods of June July. August and hptember. (2) W!nter .ason is all billing periods not in the summer neamon. (c) Fuel Cost Ad j ust me nt the energy chargen in subsection 3(b) are subject to the Fues Cost Adjustment provided in Rider F. (d) Contract Tern Discount The charges in subsection 3(b). reduced by I.70c per t wh shal' be subject to a itscount of 10% tf Customer has in effect a contract ordinance vita an effective date prior to July 3.1981 and a term of to years or more. 4 Contract Provi s t ens Service will not be provided by t'tility unless a contract ordinance has been adopted by Punicipality authorizing the purchase of service for a ters of not less than 10 yeart or the remaining term of any entsting electric franchise ordinance. 4Antertek indicates ch.ince. Effective January 18. 1983' Issued January 13. 1983 Filed Pursuant to- Innued by 1.arry D. Haab S 1111 mote Commmerce Commission Vice President i order in Docket 82-0152 Decatur. Illinois
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,L/ Dated January 12. 1983.
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- 5. Additional Conditions and Contract Previste ns Any existing or future contract required by this service classification to be entered into or entered into between Utility and Customer for electric service shall be amended from time to time to incorporate any revisions and changes in this service classification or any rider, standard term or condition. or rule.
tegulation or condition applying to electric service (including without limitation changes in rates, charges, and terms or conditions of service) when such revision, change er substitution shall be approved oi permitted to go into effect under the Public Utilities Act or as otherwise provided by law. Nothing contained in any service classification, rider, standara term or condition, or rule, regulation or condition applying to electric service, or in any existing er future contract shall affect or be construed er af fecting in any way the right of Utility unilaterally and without consent of Customer to take or initiate action, as permitted ,by applicable laws and regulations, to make revisions or changes in any service classification, rider. - standard term cr condition or rule, regulation or condition applyirs to - , electric service, or in any existing or future contract.
'N NOTE: This service classification is subject to Utility's Standard Terms and conditions in its Schedule of Rates for Electric Service.
f l b Issued July 2.1981 Effective July 3.1981 Issued by Larry D. Haab Vice President Decatur, Illinois
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- 1. Availsbility This service closaf fication is avat tohly to any city, vill.iite. or town ene to any park nr nenitary district iltuated withl.,or adjacent to Utility'g distribut ten ystin in any such city, villare or town (herein.af ter called "Muntcipailty") in which Ut ility is resi.tering cle tric service under an ordinance granting L'tility the priv.lege of occupying the streets alleys, and other public places fer the purpose of traqsatssion, diatribution, and sale nf electric service. This schedule is not applicable to resale, standby, er auxiliary sm vice.
- 2. Condit t .ns of Service (a) tervice will be furnished at .t.indard prieory or ecenndary J1stribution volt.ege r.t Utility's option.
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(h) JetLittwill combine mater reandings for all inervice rendgred to the punicipality .under this service. '
'clasntftratina.
*). Rates (m) Facilitten (barge Sin.00 per =onth per delivery point (b) F4:ergy Charge the follow 1pa chargen sball apply to all usage for bills issued during the followintt seasonst Suns.or Kcason (t) Winter Season (2)
Kilowatt hours (kwh) kilowatt hours (kwt J Chargen sine 4 in A ty One MontF grg lined in Any the Month ter att kwh 7.07c per kwh For the first 1300 kwh (d tieeg the total number of delivery points i.20; per kwh For all kwh in excess of IMO kwh times the total musibet of delivery g.oints 2.20e rer kwh (1) Siimmer Season is the billina periods of June. July. August atal September.
- 12) 1dinter Seanon In all billing periods not in the suaww r season.
(c) Fuel root t.djustment Tl.a energy charges in subsectics 3(b) are subject to the Fuel Cast Adjustment provided in flfder F. 4 Contract Provisions
'.ervice will not he prnvided try Ot tlit y unlesa a contract ordinince han been adopted by Municipality autheristng the purchame of nervice for a term not less than i yea rs.
. Astet t sk f ndicatet enange, Flicerive January 18. 19M1 s tasued January 1J. 19H3 issued by 1.arry D. Hanh 1 Filed Pure nt to
/ Illinois tcamerre Conminston Vice Freesident
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nated January 12. '983. .
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Any existing or future contract required by this service classification to be entered into or entered into between Utility and Customer for electric service shall be amended from time to tire to incorporate any revisions and changes in this service classificacica or any rider, standard term or condition, or rule, regulation .or condition applying to electric service (including without limitation changes in races, charges, and terms or conditions of service) whta such revision, change or substitution shall be approved or permitted to go into effect under the Public Utilities Act or as otherwise provided by law. Nothing contained in any service classification, rider, etandard term or condition, or rule, regulation or condition applying to electric service, or in any saisting or future contract shall affect or be construed as affecting in any way the right of Utility unilaterally and without consent of Customer to take or
. initiate action, as permitted by applicable laws and regulations, to make revisions or changes in any service classification, rider, standard ters or condition, or rule, regulation or condition applying to electric service, or in any existing or-future contract. .
I NOTE: This service classification is subject to Utility's Standard Terms and d'onditions in its Schedule of Ratte fer Electric Service.
\w l Issued July 2, 1961 Effective July 3, 1981 l Issued by 1,arry P. Itaab
! Vice President i Decatur, Illinois
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Nntelpal St reet 1.f ght ing hervice
*l. Avallnbiltty This parvice clasat*tcation is available rn any city. village, or town. or to any park district attuated within or adjacent to any city, village er tvwn (hereAtter CAIled "MunifIpakity"). In whICh t'tility Is rendering electric nervice under on ordinance prantipp. Utility the privilege of occupying the #Creets, alleys and other public places in malJ euntripality for the purpose of transmisminn, distributton and sale of electric service and under the spectrie listrations herein previded. rn other municipalities (f.e.. citlen. villages and town
- in which Utility eloca not have a fran hise). and citizen groups.
The rata = providr d wittan.t e mtr.u r term or qq.uit ity dinounta shalt t e .availabic to Nnicipalitten in which Ut titty has .no currently et'tcetive f r.enchlec or wit h cit t ren groups contracting to take street I hthe the =vrvler trem Utility for not lenn f loan a % wear ,seriod in .arcae* wherc Ut i li t y .<wice and op. raten .
, sJequate elect ric service pacilit ten.- ,
Incandencent langa phall not he available for new Inntallationn.
*2. 4.laan of Service Utility will furnish the clannes of service described helow. cach at the correspeeling charges per lamp per month, trcluding maintennpre, electric encray requirements, and replacements of 1.impa and other glassware as required on systeen owned and operated by Utllity, but <m l y includi,ng ciretric energy requires ntu and lamp replarreents on hystram nwped and operate.1 by Munfripality.
Class A - lacandescent lamps on standard overhead wood pole construction, owned and operated by Utility. (See avalla bility) Class S - Incandes. cent lamps on standard overhead concrete pole construction or on cristing metal
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pule construction. owned and operated by Utility. (See availability) Clann 0 - Ftther incandescent. mercurv vapor or nodium vapor lampas evned and operated by Municipality. (See availability) Class 0 - Either mercury var"r or nadium vapor lampa e.n standard everhead woest role construction, owned and operated by l'tilltv. Clage l' - Flther mercury vapor or sodium vapor lamps on standard everhead concrete pole constructie*, er en ext nr ing metal pule construct ion, owned an.1 operated by Utility.
*). Rates (n) Chargen per t.asar per Month.
The f ollowing rates are based on 4.000 lin:are per year hurning schedule including all hourn of darkncnnt Cla.a A Class 4 Clane C Cisne D Cla== E incaeuteerent, (nee Availability) i g
$ - $1.5o $ - * --
1.000 1.umen $3.95 2,500 I.umen 4.70 7.90 7.35 - - 4.eto lamen n. s ta R.95 3.45 . - -
' h.000 1.umen 8.15 11.85 4.60 - -
i 10.000 1.umen 11.00 15.10 - - s l f. l
*Astertek indicare4 change.
i .Effeettve fanuary 18. 1983
\ Isaned January 13. '983 4
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-./. Filed Pursuant en 111tnots Conseerce Commtenten View Preasident Decatur, Illinois
! ' order in noehet 82-0152 Dated January 12. 1981. f l r
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SCHEDULE OF RATES FOR ELECTRIC SERVICE
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*3. Rates (continued)
Mercurv Vapor C l a w n__A Cir.am R Clasa C Class _D Class E D 7.200 Lumen. 175 Watts - - $ 2.70 $ 8.70 $13.90 11.000 1.umen . 250 Watt.s - - 3.60 9.70 15.20 400 batts - - 5. e>0 12.45 15.95 17.000 1.umen. 30.000 f.ueen. 70u Waets - - 8.W 18.10 D. 20 1.000 Wsten - - 10.h0 20.05 29.40 46.000 Lumen. Sodium vapor Class A Cla== n Cla%. C Class D Claw E Q_t t, e_ S.700 f.umen. 100 batts - - $ 3.20 $10.h5 $16.80 ' 150 Watts - - 5.15 11.40 17.00 15.000 f umen. 250 Watts - - 1.40 13.40 20.00 23.000 1.umen.
- - 10.80 41.45 23.15 46.500 immen. 400 hatts (b) Contract Term Discoiant The charges in nubsection 3(a) shall be subject to a discount of 10% if Cisstomer has in ef fect a f contract ordinance uith an ef fective date prior to July 3.1981 and a term of to years or mure.
(c) Quantity Di* counts f-The ch.arges in naharctions 1(.i) .ind Jib) shall he muhjett to adJ1t tonal dinounts, an f ollous j Fer the first $ 4M.4h of the f oregoing charges per month. no dipecunt. For the next $14').3M of the foregoins charge:s per month. 3% discount. For the next $678.44 of the foregoing chargea per month. 5% discount. br all over $872.28 of the foregoing ca.arges per month. 10% discount (d) Additional Charges Where L tilltf installs, oper.ites, and maintains facilitien etber than tl.cse f acilities used in stanJard overhead street lighting installation. Customers sha!! oay a ennthly charge equal to 1.5% of the reproduction cost new of much additional f acilities. The.se additional charges sha!! ')e in additica to those charges provided for above. 4 Con t rac t Frovi n t en n Utility shall not be required to provide or insta11 street itghting systems and /acilities or furnish service under t'ais service classification unless a contract ordinance has been adopted by Municipality authorising the purchase of service for a term of not less than 5 ycars from the date of such (natallation.
- 5. Premature Replaceae.it of Merc.ary hane I. amps in the event Customer requests t!Lif tty to replace a mercurv vapor lamp i ith a sodium vapor lamp during the -
primsry term of any contract in cristence as of - Nosember 28 1977. the Customer must pay 1:tility for the 1 cost of labor (including tran>portation and overheads) for replacing such lamp.
*Anterink indientes chante.
Inne.i .lanuary 13. 1983 Fffective January IM. 69fi 3 Filed rurnuant to t ar.ned I.y tm ry D. Haab ttituota r mancrre rometente.n vicr Frent. tent (y order in Ibcket N-OlW ikratur. tilinula , Dated January 12. 1983. l 1 l l 1
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- i First Revited Sheet No.- '38 O
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- 6. Additional Conditions and Contract Provisions Any existing or future contract required by this service classification to be entered into or entered into between Utility and Customer for electric service shall be amended from time to time to incorporate any revisions and changes in this service classification or any rider, standard tern or condition. or rule. regulation or condition applying to electric service (including without limitation changes in rates, charges. and terms or conditions of service) when such revision. change or substitution shall be approved Nothing or permitted to go into effect under the Public Ceilities Act or as otherwise provided by law.
contained in any service classification, rider, standard term or condition, or rule, regulation or condition applying to electric service. or in any existing or future contract shall af fect or be construed as af f ecting in any way the right of Utility unilaterally and without conseat of Customer to take or initiate action. as permitted by applicable laws and regulations. to make revisions or changes in any service classification. rider, standard and term or condition, or rule, regulation or condition applying to electric service, or in any existing or future contract.
%s NOTE: This service classification is subject to Utility's Standard Terms and Conditions in its Schedule of Rates for Electric Service.
( Effective July 3. 1981 lasued July 2,1981 1ssued by Larry D. Haab Vice President Decatur. Illinois
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- Twelfth Revised Sheet No. 34 Cancelling 111. C. C. No. 27 Eleventh Revised Sheet No. 39 ps
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Pursuant to the provisions of Section 36 of the Public Ctt11 ties Act, as amended, authorizing cartsin additior.a1 charges for services rendered in municipalities imposing the tax authorized by Section 8-11-2 of the Illinois Municipal Code. Utility will add the percentage shown below opposite the names of such municipalities to all billings (which shall include the percentage addition for State of 1111 cots Revenues Taxes shown on Rider AA) for electricity furnished for use or consumption and not for resale, and for all services rendered in connection therewith, within the corporate limits of such municipalities (except items of such billings re-sulting from transactions not subject to much tax). The effective date for such additions will coincide with the date upon which the gross receipts frem such billings become subject to tax. The amount of the additions will be separately designated on each Customer's bill as " Municipal Tax" or by a similar legend. Name of Ibnicipal Percentage Addition Effective Municipality . Tax Rates to Billings Date Arlington 5.00% 5.15% october 1. 1967
*Ava 3.00% 3.09% December 6. 1983 Belleville 1.00% 1.03% November 1. 1983 Bloomington 2.00% 2.06: May 1. 1979 Brooklyn 5.00% 5.15% August 21, 1961 Buffalo 5.00% 5.15% September 25, 1970 Cahokia 5.00% 5.15% November 1. 1969 Cambridge 2.30% 2.37% November 1.1962 Centreville 5.00% 5.15% September 1. 1969 Champaign 2.75% 2.83% November 1. 1964 Cherry 5.00 5.15% January 4 1961 % Colfax 5.00% 5.15% February 1. 1979 Colnebia 3.00% 3.09% September 1. 1981 Dawson 5.00% 5.15% February 6, 1967 De Pue 2.00% 2.06% September 16. 1978 East Carondelet 3.00% 3.09% January 1. 1956 East Calesburg 3.00% 3.09% August 22. 1971 East St. 1.ouis 5.00% 5.15% Feb rua ry 15. 1968 Equality 5.00% 5.15% June 1. 1974 raithsborg 5.00% 5.15% turch 15. 1964 1.aSalle 2.00% 2.06% July 1, 1982 Madison 5.00% 5.15% July 1. 1981 Marseilles 3.00% 3.09% october 1.1981 Maryville 3.00% 3.09% June 1, 1966 Mt. Olive 5.00% 5.15% october 1. 1957 National City 5.00% 5.15% August 1. 1979 Newark 5.00% 5.15% Kovember 1. 1966 New Athens 2.76% 2.84% December 31. 1981 Normal 5.00% 5.15% July 1. 1965 Pontoon Beach 5.00% 5.15% December 18 1970 Prairie du Rocher 3.00% 3.09% January 1. 1976 Ridgway 5.00% 5.15% December 1, 1971 Shawneetown 5.00% 5.15% September 1, 1967 South Roxana 5.00% 5.15% october 1. 1976 Steelev111e 3.00% 3.09% october 1. 1963 Urbana 5.003 5.15% October 1. 1974 Valmeyer 4.00% 4.12% June 4. 1982 Venice 3.00% 3.09% July 1. 1979 /m\
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- Asterisk indicates change.
1ssued December 5. 1983 Effective December 6. 1983 Issued by 1.arry D. Haab Senior Vice President Decatur. Illinois
111..C. C. No. 27 s . . . , . .
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27 Cancelling Ill'. C. C. W. Second Revised Sheet No. 40 I V- .lLLINOIS POWER COMPANY- , SCHEDULE OF RATES FOR ELECTRIC SERVICE
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Pursuant to the provisions of Section 36 of the Public Utilities Act. as amended, authorizing certain additional charges for services rendered in the State of Illinois on account of the addition of State Public Utility Tax and the Illinois Commerce Commission Cross Revenue Tax. Utility will add such taxes to all billings for electricity furnished for use or consumption and not for resale, and for all services rendered in connection therewith (except items of such billing resulting from transactions not subject to such tax). The percentage additions to all billings subject to the State Revenue Taxes and the date on which such billings will become effective are as follows: Percentage Addition Effective Date State Tax 5.00*
- January 3. 1983 State Public Utility Tax Illinois Commerte Coe: mission
- January 3.1983 Cross Revenue Tax 0.0A%
Total State Revenue Taxes 5.08% O
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- Asterisk indicates change.
Issued February 10. 1983 Effective March 14. 1983 Issued by Larry D. Haab Vice President Decatur. Illinois
111. C. C. No. 27
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- 1. Availabi11ty Service is available for temporary or short-term electric service but is not available for resale, standby or auxiliary service.
- 2. Conditions of Service (a) Customer shall pay in advance the estimated charges for service under the applicable service classification, plus the non-salvable cost, as estimated by Utility, of installing and removing all additional facilities necessary to render service.
(b). Customer's contract capacity under the applicable service classification shall not be less than minimum transformer capacity required to s ve Customer's load. (c) If the period of service shall exceed 6 weeks. the advance payment in subsection 2(a) will be limited to the estimated charges for the first $ weeks' service, provided however, that Customer shall first have established credit to Utility's satisfaction. This shall be contingent upon payment in full of the first and each succeeding monthly bill for service within 10 days from the date thereof. (d) Af ter service is discontinued. Utility will refund the balance. if any, of funds deposited by Customer remaining af ter deducting the estimated non-salvable costs of providing service and any balance due from Customer for service rendered. [ (e) Af ter discontinuance of service. Utility may at its discretion remove the additional facilities installed for service. However, if Utility elects to leave such f acilities installed and service is Dj again requested at the same location, such service will be made available only af ter payment by Customer of one of the following amounts: (1) the monthly charge in ef fect 6 hen service was discontinued. prorated over the period from the data service was discontinued through the date service is again made available, or (2) the cost of installing and removing all necessary additional facilities as provided in subsection 2(a).
- 3. Rates Customer will be served under the provisions of Utility's Service Classifications 10.11 or 21, whichever is applicable (except that the provisions thereof related to term of contract shall not apply) subject to the above terms.
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l Issued July 2.1981 Effective July 3.1981 Issued by Larry D. Haab Vice President
. Decatur. Illinois
111. C. C. No. '27 41 S
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- Cancelling Ill.- C. C. No.
27 Fourth Revised Sheet No. 42
.' ILLINOIS POWER COMPANY -
SCHEDULE OF RATES FOR ELECTRIC SERYlCE
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- Applicable to Service Classifications 1. 2. 3. 10. 11. 13. 21. 24, 30. 41. and 42, and all large power contracts permitted to become ef fective by the Illinois Comerce Commission.
This rider is applicable to kilowatthours (kwh's) of energy supplied to Customera served by Utility under the above designated service classifications and individual contracts on file with the Illinois Commerce Cossaission (Con: mission) where the charge for such energy is subject to adjustment for increases and decreases in the cost of fuel. Costs passed through the fuel adjustment clause represent either actual historical costs or estimates of historical costs (when actual is not available at time of computation), subject to adjustment as actual costs become available. The fuel costs used in calculating fuel adjustment charge are the total of allowable fuel and, fuel related costs as identified herein. The charges for all kwh's of energy supplied to designated customers shall be increased or decreased by a fuel adjustment charge or credit determined as follows: x GT FAC = - BFC + R, + R, where FAC = Fuel Adjustment Charge or Credit per kwh. The amount in cents per kwh. rounded to the nearest
.001c, to be charged for each kwh billed during any monthly billing period.
t The FAC is subject to adjustment to minimize accumulated over/under recoveries of fael costs by application of the automatic reccnciliation f actor (R* ) and the ordered reconciliation factor ("f (R,) as defined herein. CF = Allowable Cost of Fuel associated with Utility owned generating plants. Fuel cost includes the cost of all toss 11 and nuclear fuel consumed in Ctility's owned plants and/or in plants evned by wholly-owned subsidiaries of Utility and/or the Utility's share of fossil and nuclear fuel consumed in jointly owned or leased plants during the determination period. CPP = Allowable energy Cost associated with Purchased Power. Purchased power includes emergency. contract and economy purchases. Only the energy related portion of the charges for power purchased during the determination period is included. All other associated chstges are specifically excluded. Non-monetary exchanges of power are not included. CNS = Fuel Costs associated with sales Not Subject to the Fuel Adjustment Clause. Non-jurisdictional sales include sales f or resale, interdepartmental sales, energy furnished without charge, and other sales not subject to the fuel adjustment clause. Such fuel costs are calculated on the basis of the average fuel costs during the determination period except in the case of fuel costs associated with interchange power sales (emergency. contract and economy power sales to other electric utilities) which are the amounts recovered with respect to fuel in such sales, ordinarily the incremental coat of such fuel. S = Sales. Kwh's billed to ultinate consumers, during the determination period, subject to the fuel adjustment clause. BFC = Base Fuel Cost. The base fuel cost is the fuel cost included in the energy charges of Utility's service classifications. This base cost is equal to 1.750 cents per kilowatthour. R, = Automatic Reconciliation factor. The automatic reconciliation factor (R,) is triggered when the accumulated balance of the over/under r coveries of allowable costs at the end of the Inst month of the determination period exceeds ten percent of (CF + CPP - CNS) for the determination period. t
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- Asterisk indicates change.
Issued yebruary 10. 1983 Effective March 14. 1983 Issued by Iarry D. Haab Vice President Decatur Illinois q l
Ill. C. C. No. 27
- Second Revised. Sheet No. - d 2. L
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