UCA warns year-end rate-base method inflates bill impact by roughly $60 million

UCA witnesses told the Public Utilities Commission that a year-end rate-base convention adopted in the settlement materially raises the revenue requirement in this rate case compared with a 13-month average method.

On June 17, UCA's Cory Skluzak explained that switching from a 13-month average to a year-end convention (and accounting adjustments tied to depreciation annualization) moves a large amount of plant into rate base in a single step and materially changes who carries the near-term cost burden. "It smooths it out. It averages the plant," he said of the 13-month approach, arguing it better matches revenues and expenses. He added that the combined difference between the year-end result and the 13-month average in this case is on the order of $60 million, with roughly $16 million of that attributable to depreciation annualization.

Why it matters: The choice of rate-base convention affects whether large recent capital additions are included in base rates immediately (year-end) or spread across months (13-month average). UCA described the year-end approach as amplifying the near-term customer bill impact while boosting the return for shareholders.

Arguments on both sides: Company witnesses and settlement proponents have favored year-end in prior filings and argued it is a common practice in recent cases; UCA pointed to matching principles and commission statements endorsing the smoothing effects of 13-month averaging. Commissioners questioned witness knowledge limits and asked how the change compared to prior cases.

Next steps: The commission will consider those arguments in briefs and the post-hearing statements; UCA said it will press for a methodology that better matches revenue and investment timing to protect affordability.