Current through Reg. 50, No. 13; March 28, 2025
(a) Application.
This section applies to utilities requesting recovery of expenses for
ratemaking proceedings (rate-case expenses) pursuant to Public Utility
Regulatory Act (PURA) §36.061(b)(2) and to municipalities requesting
reimbursement for rate-case expenses pursuant to PURA
§33.023(b).
(b) Requirements
for claiming recovery of or reimbursement for rate-case expenses. A utility or
municipality requesting recovery of or reimbursement for its rate-case expenses
shall have the burden to prove the reasonableness of such rate-case expenses by
a preponderance of the evidence. A utility or municipality seeking recovery of
or reimbursement for rate-case expenses shall file sufficient information that
details and itemizes all rate-case expenses, including, but not limited to,
evidence verified by testimony or affidavit, showing:
(1) the nature, extent, and difficulty of the
work done by the attorney or other professional in the rate case;
(2) the time and labor required and expended
by the attorney or other professional;
(3) the fees or other consideration paid to
the attorney or other professional for the services rendered;
(4) the expenses incurred for lodging, meals
and beverages, transportation, or other services or materials;
(5) the nature and scope of the rate case,
including:
(A) the size of the utility and
number and type of consumers served;
(B) the amount of money or value of property
or interest at stake;
(C) the
novelty or complexity of the issues addressed;
(D) the amount and complexity of
discovery;
(E) the occurrence and
length of a hearing; and
(6) the specific issue or issues in the rate
case and the amount of rate-case expenses reasonably associated with each
issue.
(c) Criteria for
review and determination of reasonableness. In determining the reasonableness
of the rate-case expenses, the presiding officer shall consider the relevant
factors listed in subsection (b) of this section and any other factor shown to
be relevant to the specific case. The presiding officer shall decide whether
and the extent to which the evidence shows that:
(1) the fees paid to, tasks performed by, or
time spent on a task by an attorney or other professional were extreme or
excessive;
(2) the expenses
incurred for lodging, meals and beverages, transportation, or other services or
materials were extreme or excessive;
(3) there was duplication of services or
testimony;
(4) the utility's or
municipality's proposal on an issue in the rate case had no reasonable basis in
law, policy, or fact and was not warranted by any reasonable argument for the
extension, modification, or reversal of commission precedent;
(5) rate-case expenses as a whole were
disproportionate, excessive, or unwarranted in relation to the nature and scope
of the rate case addressed by the evidence pursuant to subsection (b)(5) of
this section; or
(6) the utility or
municipality failed to comply with the requirements for providing sufficient
information pursuant to subsection (b) of this section.
(d) Calculation of allowed or disallowed
rate-case expenses.
(1) Based on the factors
and criteria in subsections (b) and (c) of this section, the presiding officer
shall allow or recommend allowance of recovery of rate-case expenses equal to
the amount shown in the evidentiary record to have been actually and reasonably
incurred by the requesting utility or municipality. The presiding officer shall
disallow or recommend disallowance of recovery of rate-case expenses equal to
the amount shown to have been not reasonably incurred under the criteria in
subsection (c) of this section. A disallowance may be based on cost estimates
in lieu of actual costs if reasonably accurate and supported by the
evidence.
(2) A disallowance
pursuant to subsection (c)(5) of this section may be calculated as a proportion
of a utility's or municipality's requested rate-case expenses using the
following methodology or any other appropriate methodology:
(A) For utilities, the ratio of:
(i) the amount of the increase in revenue
requirement requested by the utility that was denied, to
(ii) the total amount of the increase in
revenue requirement requested in a proceeding by the utility.
(B) For municipalities, the ratio
of:
(i) the amount of the increase in revenue
requirement requested by the utility unsuccessfully challenged by the
municipality, to
(ii) the total
amount of the increase in revenue requirement challenged by the
municipality.
(3) If the evidence presented pursuant to
subsection (b)(6) of this section does not enable the presiding officer to
determine the appropriate disallowance of rate-case expenses reasonably
associated with an issue with certainty and specificity, then the presiding
officer may disallow or deny recovery of a proportion of a utility's or
municipality's requested rate-case expenses using the following methodology or
any other appropriate methodology:
(A) For
utilities, the ratio of:
(i) the amount of
the increase in revenue requirement requested by the utility in the rate case
related to the issue(s) not reasonably supported by evidence of certainty and
specificity, to
(ii) the total
amount of the increase in revenue requirement requested in a proceeding by the
utility.
(B) For
municipalities, the ratio of:
(i) the amount
of the increase in revenue requirement requested by the utility in the rate
case challenged by the municipality relating to the issue(s) not reasonably
supported by evidence of certainty and specificity, to
(ii) the total amount of the increase in
revenue requirement challenged by the municipality.
