Kentucky Administrative Regulations
Title 807 - ENERGY AND ENVIRONMENT CABINET PUBLIC SERVICE COMMISSION
Chapter 5 - Utilities
Section 807 KAR 5:076 - Alternative rate adjustment procedure for small utilities
Universal Citation: 807 KY Admin Regs Service 5:076
Current through Register Vol. 50, No. 6, December 1, 2023
RELATES TO: KRS 278.010, 278.030, 278.160, 278.180, 278.190, 278.310, 278.380
NECESSITY, FUNCTION AND CONFORMITY: KRS 278.040(3) authorizes the commission to promulgate administrative regulations to implement KRS Chapter 278. This administrative regulation establishes a simplified and less expensive procedure for small utilities to use to apply to the commission for rate adjustments.
Section 1. Definitions.
(1) "Annual report" means the financial and
statistical report incorporated by reference in
807 KAR 5:006,
which requires a utility to file the annual report with the
commission.
(2) "Annual report for
the immediate past year" means an annual report that covers the applicant's
operations for either:
(a) The calendar year
period prior to the year in which the applicant's application for rate
adjustment is filed with the commission; or
(b) The most recent calendar year period that
807 KAR 5:006,
Section 4(1), requires the applicant to have on file with the commission as of
the date of the filing of its application for rate adjustment.
(3) "Applicant" means a utility
that is applying for an adjustment of rates using the procedure established in
this administrative regulation.
(4)
"Gross annual revenue" means:
(a) The total
revenue that a utility derived during a calendar year; or
(b) If the utility operates two (2) or more
divisions that provide different types of utility service, the total amount of
revenue derived from the division for which a rate adjustment is
sought.
(5) "Rate" is
defined by
KRS
278.010(12).
(6) "Utility" is defined by
KRS
278.010(3).
(7) "Water district" means a special district
or special purpose governmental entity created pursuant to KRS Chapter
74.
(8) "Web site" means an
identifiable site on the Internet, including social media, which is accessible
to the public.
Section 2. Utilities Permitted to File Application. A utility may apply for an adjustment of rates using the procedure established in this administrative regulation if it:
(1) Had gross
annual revenue in the immediate past calendar year of $5,000,000 or
less;
(2) Maintained financial
records fully separated from a commonly-owned enterprise; and
(3) Filed with the commission fully completed
annual reports for the immediate past year and for the two (2) prior years if
the utility has been in existence that long.
Section 3. The Record upon which Decision Shall Be Made. The commission shall make its decision based on the:
(1) Applicant's annual report for the
immediate past year and the annual reports for the two (2) prior years, if the
utility has been in existence that long;
(2) Application required by Section 4 of this
administrative regulation;
(3)
Information supplied by the parties in response to requests for
information;
(4) Written reports
submitted by commission staff;
(5)
Stipulations and agreements between the parties and commission staff;
(6) Written comments and information that the
parties to the proceeding submitted in response to the findings and
recommendations contained in a written report that commission staff submitted;
and
(7) If a hearing is held, the
record of that hearing.
Section 4. Application.
(1) An
application for alternative rate adjustment shall consist of a:
(a) Completed Application for Rate Adjustment
before the Public Service Commission, ARF Form-1, that is made under oath and
signed by the applicant or an officer who is duly designated by the applicant
and who has knowledge of the matters established in the application;
(b) Copy of all outstanding evidences of
indebtedness, such as mortgage agreements, promissory notes, and bond
resolutions;
(c) Copy of the
amortization schedule for each outstanding bond issuance, promissory note, and
debt instrument;
(d) Depreciation
schedule of all utility plant in service;
(e) Copy of the most recent state and federal
tax returns of the applicant, if the applicant is required to file
returns;
(f) Detailed analysis of
the applicant's customers' bills showing revenues from the present and proposed
rates for each customer class;
(g)
Copy of the notice of the proposed rate change that is provided to customers of
the applicant; and
(h) Statement of
Disclosure of Related Transactions, ARF Form-3, for each member of the
utility's board of commissioners or board of directors, each person who has an
ownership interest of ten (10) percent or more in the utility, and the
utility's chief executive officer.
(2) Except as provided in
807 KAR 5:001,
Section 8 for electronic filings, the applicant shall:
(a) Submit one (1) original and five (5)
paper copies of its application to the executive director of the commission;
and
(b) Deliver or mail one (1)
paper copy to the Office of Rate Intervention, Office of the Attorney General,
1024 Capital Center Drive, Suite 200, Frankfort, Kentucky 40601-8204 or
transmit by electronic mail an electronic copy in portable document format to
the Office of Rate Intervention at rateintervention@ag.ky.gov.
(3) Each party filing documents
with the commission shall be responsible for reviewing and redacting any
personal identifying information in compliance with the rules and procedures
set forth in
807 KAR 5:001,
Section 4(10).
(4) The application
shall not contain any request for relief from the commission other than an
adjustment of rates.
(5) A utility
may make written request to the executive director for commission staff
assistance in preparing the application.
Section 5. Notice. Upon filing an application for an alternative rate adjustment, a utility shall provide notice as established in this section.
(1) Public
postings.
(a) A utility shall post at its
place of business a copy of the notice no later than the date the application
is submitted to the commission.
(b)
A utility that maintains a Web site shall, within five (5) business days of the
date the application is submitted to the commission, post on its Web sites:
1. A copy of the public notice; and
2. A hyperlink to the location on the
commission's Web site where the case documents are available.
(c) The information required in
paragraphs (a) and (b) of this subsection shall not be removed until the
commission issues a final decision on the application.
(2) Customer Notice.
(a) If a utility has twenty (20) or fewer
customers, it shall mail a written notice to each customer no later than the
date on which the application is submitted to the commission.
(b) If a utility has more than twenty (20)
customers, it shall provide notice by:
1.
Including notice with customer bills mailed no later than the date the
application is submitted to the commission;
2. Mailing a written notice to each customer
no later than the date the application is submitted to the
commission;
3. Publishing notice
once a week for three (3) consecutive weeks in a prominent manner in a
newspaper of general circulation in the utility's service area, the first
publication to be made no later than the date the application is submitted to
the commission; or
4. Publishing
notice in a trade publication or newsletter delivered to all customers no later
than the date the application is submitted to the commission.
(c) A utility that provides
service in more than one (1) county may use a combination of the notice methods
listed in paragraph (b) of this subsection.
(3) Proof of Notice. A utility shall file
with the commission no later than forty-five (45) days from the date the
application was initially submitted to the commission:
(a) If notice is mailed to its customers, an
affidavit from an authorized representative of the utility verifying the
contents of the notice, that notice was mailed to all customers, and the date
of the mailing;
(b) If notice is
published in a newspaper of general circulation in a utility's service area, an
affidavit from the publisher verifying the contents of the notice, that the
notice was published, and the dates of the notice's publication; or
(c) If notice is published in a trade
publication or newsletter delivered to all customers, an affidavit from an
authorized representative of the utility verifying the contents of the notice,
the mailing of the trade publication or newsletter, that notice was included in
the publication or newsletter, and the date of mailing.
(4) Notice Content. Each notice issued in
accordance with this section shall contain:
(a) The date the proposed rates are expected
to be filed with the commission;
(b) The present rates and proposed rates for
each customer classification to which the proposed rates will apply;
(c) The amount of the change requested in
both dollar amounts and percentage change for each customer classification to
which the proposed rates will apply;
(d) The amount of the average usage and the
effect upon the average bill for each customer classification to which the
proposed rates will apply;
(e) A
statement that a person may examine this application at the offices of (utility
name) located at (utility address);
(f) A statement that a person may examine
this application at the commission's offices located at 211 Sower Boulevard,
Frankfort, Kentucky, Monday through Friday, 8:00 a.m. to 4:30 p.m., or through
the commission's Web site at http://psc.ky.gov;
(g) A statement that comments regarding the
application may be submitted to the Public Service Commission through the
commission's Web site or by mail to Public Service Commission, Post Office Box
615, Frankfort, Kentucky 40602;
(h)
A statement that the rates contained in this notice are the rates proposed by
(utility name) but that the Public Service Commission may order rates to be
charged that differ from the proposed rates contained in this notice;
(i) A statement that a person may submit a
timely written request for intervention to the Public Service Commission, Post
Office Box 615, Frankfort, Kentucky 40602, establishing the grounds for the
request including the status and interest of the party; and
(j) A statement that if the commission does
not receive a written request for intervention within thirty (30) days of
initial publication or mailing of the notice, the commission may take final
action on the application.
Section 6. Except as provided in 807 KAR 5:001, Section 8(2), an applicant shall not be required to provide the commission with advance notice of its intent to file an application for rate adjustment using the procedure established in this administrative regulation.
Section 7. Effective Date of Proposed Rates.
(1) An applicant shall not place the proposed
rates into effect until the commission has issued an order approving those
rates or six (6) months from the date of filing of its application, whichever
occurs first.
(2) If the commission
has not issued its order within six (6) months from the date of filing of the
application, the applicant may place its proposed rates in effect subject to
refund upon providing the commission with written notice of its intent to place
the rates into effect.
(3) The
applicant shall maintain its records in a manner to enable it, or the
commission, to determine the amounts to be refunded and to whom a refund is due
if the commission orders a refund.
Section 8. Amendment of Proposed Rates.
(1) Except if responding to the findings set
forth in a commission staff report filed in accordance with Section 11 of this
administrative regulation, an applicant shall not amend the proposed rates set
forth in its application unless the applicant:
(a) Files written notice of the proposed
amendment with the commission; and
(b) Publishes notice of the amended proposed
rates in the manner provided in Section 5 of this administrative
regulation.
(2) An
applicant shall not place amended proposed rates into effect until the
commission has issued an order approving those rates or six (6) months from the
date of filing of the written notice of proposed amendment, whichever occurs
first.
(3) If the commission has
not issued an order within six (6) months from the date of filing of the notice
of amended proposed rates, the applicant may place the amended proposed rates
in effect subject to refund upon providing the commission with written notice
of its intent to place the rates into effect but shall maintain its records in
a manner to enable it, or the commission, to determine the amounts to be
refunded and to whom a refund is due if the commission orders a
refund.
Section 9. Test Period. The reasonableness of the proposed rates shall be determined using a twelve (12) month historical test period, adjusted for known and measureable changes, that coincides with the reporting period of the applicant's annual report for the immediate past year.
Section 10. Discovery.
(1) The minimum
discovery available to intervening parties shall be as prescribed by this
subsection.
(a) A party in the proceeding may
serve written requests for information upon the applicant within twenty-one
(21) days of an order permitting that party to intervene in the
proceeding.
(b) Upon serving
requests upon the applicant, the party shall file a copy of the party's
requests with the commission and serve a copy upon all other parties.
(c) Within twenty-one (21) days of service of
timely requests for information from a party, the applicant shall serve its
written responses upon each party and shall file with the commission one (1)
original and five (5) copies.
(2) The commission may establish different
arrangements for discovery if it finds different arrangements are necessary to
evaluate an application or to protect a party's rights to due
process.
Section 11. Commission Staff Report.
(1) Within thirty
(30) days of the date that an application is accepted for filing, the
commission shall enter an order advising the parties if commission staff will
prepare a report on the application.
(2) If a commission staff report is prepared,
the:
(a) Commission staff shall:
1. File the report with the commission;
and
2. Serve a copy of the report
on all parties of record; and
(b) Report shall contain the commission
staff's findings and recommendations regarding the proposed rates.
(3)
(a) Each party shall file with the commission
a written response to the commission staff report within fourteen (14) days of
the filing of the report.
(b) This
written response shall contain:
1. All
objections to and other comments on the findings and recommendations of
commission staff;
2. A request for
hearing or informal conference, if applicable;
3. The reasons why a hearing or informal
conference is necessary; and
4. If
commission staff reports that the applicant's financial condition supports a
higher rate than the applicant proposed or recommends the assessment of an
additional rate or charge not proposed in the application, the filing party's
position on if the commission should authorize the assessment of the higher
rate or the recommended additional rate or charge.
(c) If a party's written response fails to
contain an objection to a finding or recommendation contained in the commission
staff report, it shall be deemed to have waived all objections to that finding
or recommendation. A party's failure to request a hearing or informal
conference in the party's written response shall be deemed a waiver of all
rights to a hearing on the application and a request that the case stand
submitted for decision.
(d) If a
party fails to file a written response with the commission within this time
period, it shall be deemed to have waived all objections to the findings and
recommendations contained in the report and all rights to a hearing on the
application.
(e) Acceptance of the
findings and recommendations contained in the commission staff report by all
parties in a proceeding shall not preclude the commission from conducting a
hearing on the application, taking evidence on the applicant's financial
operations, or ordering rates that differ from or conflict with the findings
and recommendations established in the commission staff report.
(f) If commission staff reports that the
applicant's financial condition supports a higher rate than the applicant
proposed or commission staff recommends the assessment of an additional rate or
charge not proposed in the application and commission staff's proposed rates
produce a total increase in revenues that exceeds 110 percent of the total
increase in revenues that the applicant's proposed rates will produce and the
applicant amends its application to request commission staff's proposed rates,
the commission shall order the applicant to provide notice of the finding or
recommendation to its customers.
Section 12. Notice of Hearing.
(1) If the commission orders a hearing, the
applicant shall publish in a newspaper or mail to the applicant's customers
notice of the hearing.
(2) The
notice shall state the purpose, time, place, and date of the hearing.
(3) Newspaper notice shall be published once
in a newspaper of general circulation in the applicant's service area no fewer
than seven (7) and no more than twenty-one (21) days prior to the
hearing.
(4) Mailed notices shall
be mailed at least fourteen (14) days prior to the date of the
hearing.
Section 13. Utility Personnel Participation in Commission Proceedings.
(1) An authorized official or employee of the
applicant who is not licensed to practice law in Kentucky may, on behalf of an
applicant that is a water district, corporation, partnership, or limited
liability company, file the application, responses to commission orders and
requests for information, as well as appear at conferences related to the
application.
(2) An applicant that
is a water district, corporation, partnership, or limited liability company
shall, at a hearing conducted on the application, be represented by an attorney
who is authorized to practice law in Kentucky.
Section 14. Filing Procedures.
(1) Unless the commission orders otherwise or
the electronic filing procedures established in
807 KAR 5:001,
Section 8, are used, if a document in paper medium is filed with the
commission, five (5) additional copies in paper medium shall also be
filed.
(2) All documents filed with
the commission shall conform to the requirements established in this
subsection.
(a) Form. Each filing shall be
printed or typewritten, double spaced, and on one (1) side of the page
only.
(b) Size. Each filing shall
be on eight and one-half (8 1/2) inches by eleven (11) inches paper.
(c) Font. Except for ARF Form-1 and ARF
Form-3, each filing shall be in type no smaller than twelve (12) point, except
footnotes, which shall be in type no smaller than ten (10) point.
(d) Binding. A side-bound or top-bound filing
shall also include an identical unbound copy.
(3) Except as provided for in
807 KAR 5:001,
Section 8, a filing made with the commission outside its business hours shall
be considered as filed on the commission's next business day.
(4) A document submitted by facsimile
transmission shall not be accepted.
Section 15. Use of Electronic Filing Procedures in lieu of Submission of Paper Documents. Upon an applicant's election of the use of electronic filing procedures within the time limits established in 807 KAR 5:001, Section 8(2), the procedures established in 807 KAR 5:001, Section 8, shall be used in lieu of other filing procedures established in this administrative regulation.
Section 16. The provisions of 807 KAR 5:001, Sections 1 through 6, 8 through 11, and 13, shall apply to commission proceedings involving applications filed pursuant to this administrative regulation.
Section 17. Upon a showing of good cause, the commission may permit deviations from this administrative regulation. Requests for deviation shall be submitted in writing by letter to the commission.
Section 18. Incorporation by Reference.
(1) The following material is incorporated by
reference:
(a) "Application for Rate
Adjustment before the Public Service Commission", ARF Form 1, July 2014;
and
(b) "Statement of Disclosure of
Related Party Transactions", ARF Form 3, November 2013.
(2) This material may be inspected, copied,
or obtained, subject to applicable copyright law at the commission's offices at
211 Sower Boulevard, Frankfort, Kentucky 40601, Monday through Friday, 8:00
a.m. to 4:30 p.m., or through the commission's Web site at
http://psc.ky.gov/.
8 Ky.R. 835; eff. 4-7-1982; 22 Ky.R. 994; 1312; 1-3-1996; 38 Ky.R. 132; 629; 765; eff. 11-4-2011; 39 Ky.R. 320, 1159; eff. 1-4-2013; 40 Ky.R. 704; 1123; eff. 1-3-2014; 41 Ky.R. 156; 494; eff. 10-31-2014; Crt eff. 3-27-2019.
STATUTORY AUTHORITY: KRS 278.040(3), 278.160(1), 278.180
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