Supplement 454 to Md. G-9: STRIDE Calculations to Reflect Implementation of Revised Gas Base Rates Pursuant to Order No

Transcription

1 John C. Frain Director Regulatory Strategy & Revenue Policy P.O. Box 1475 Baltimore, Maryland Telephone Fax January 7, 2019 Via Electronic Filing Terry J. Romine, Executive Secretary Public Service Commission of Maryland William Donald Schaefer Tower 6 Saint Paul Street, 16 th Floor Baltimore, Maryland Re: Supplement 454 to Md. G-9: STRIDE Calculations to Reflect Implementation of Revised Gas Base Rates Pursuant to Order No Dear Ms. Romine: In compliance with Order No in Case No issued on January 4, 2019, Order No in Case No issued on January 29, 2014, and Order No in Case No issued on May 30, 2018, Baltimore Gas and Electric Company ( BGE ) files herewith Supplement 454 to Md. G-9 to become effective with service rendered on or after January 04, In Supplement 454, BGE is reducing the STRIDE surcharges under Rider 16 to reflect the implementation of revised gas base rates pursuant to Order No Attachment 1 shows the calculation of the reduced 2019 STRIDE Revenue Requirement for investments not included in gas base rates, such that the 2019 STRIDE rates are calculated to only recover STRIDE project investments which were on STRIDE project lists included in previously approved STRIDE surcharge filings but were made after October 2018 (the final month of STRIDE investments included in the revised gas base rates pursuant to Order No ). Attachment 2 sets forth the calculation of the reduced 2019 STRIDE rates, which are based on the revenue requirement determined in Attachment 1. Attachment 2 also includes updated customer class allocation factors which reflect the class revenue requirements approved in Case No Additionally, the monthly surcharge caps have been updated as a result of Case No Finally, consistent with Rider 16, since the reduced 2019 STRIDE rates included in Attachment 2 are under the updated monthly surcharge caps, these STRIDE rates incorporate the over-collection imbalances (with carrying costs) that BGE has been tracking until the next time that the STRIDE rate is uncapped.

2

3 Supplement 454 Attachment 1 Page 1 of 2 BALTIMORE GAS AND ELECTRIC STRIDE REVENUE REQUIREMENT CALCULATION TO REFLECT IMPLEMENTATION OF GAS BASE RATES PURSUANT TO ORDER NO Effective with service rendered on or after January 4, 2019 RATE BASE: Expenditures eligible for tax repair deduction: Operation Main Replacement Service Replacement Pipeline Program 1 Program Total A 2019 Capital Expenditures $91.9 $0.0 $32.0 $123.9 B Capital Expenditures- Cumulative- Nov Filing $295.3 $29.3 $86.5 $411.1 C Included in Base Rates $194.6 $27.4 $51.6 $273.6 D = (B - C) Capital Expenditures- Cumulative- Adjusted $100.7 $1.9 $34.9 $137.5 E Book Depreciation Rate 1.45% 1.45% 3.32% F = (A * E / 2) + ((B - A - C) * E) Depreciation Expense- Book $0.8 $0.0 $0.6 $1.4 G Depreciation Reserve- Book -$0.8 $0.0 -$0.6 -$1.5 H = D + G Book Basis $99.9 $1.9 $34.3 $136.0 I Average Book Basis $54.3 $1.9 $18.6 $74.8 J Deferred Income Tax- Balance -$27.5 -$0.5 -$9.4 -$37.4 K Deferred Income Tax- Prorated -$14.0 -$0.5 -$4.8 -$19.3 L = I + K Average Rate Base $40.4 $1.4 $13.8 $55.6 M ROR (After Tax) 6.56% 6.56% 6.56% N = L * M Return on Rate Base $2.6 $0.1 $0.9 $3.6 O Conversion Factor 70.89% 70.89% 70.89% P = N / O Initial Revenue Requirement $3.7 $0.1 $1.3 $5.1

4 RATE BASE: Expenditures not eligible for tax repair deduction: Operation Main Replacement Service Replacement Pipeline Program 1 Program Total Supplement 454 Attachment 1 Page 2 of 2 Q 2019 Capital Expenditures $23.0 $0.0 $8.0 $31.0 R Capital Expenditures- Cumulative- Nov Filing $73.8 $7.3 $21.6 $102.8 S Included in Base Rates $48.7 $6.8 $12.9 $68.4 T = (R - S) Capital Expenditures- Cumulative- Adjusted $25.2 $0.5 $8.7 $34.4 U Book Depreciation Rate 1.45% 1.45% 3.32% V = (Q * U / 2) + ((R - Q - S) * U) Depreciation Expense- Book $0.2 $0.0 $0.2 $0.4 W Depreciation Reserve- Book -$0.2 $0.0 -$0.2 -$0.4 X = T + W Book Basis $25.0 $0.5 $8.6 $34.0 Y Average Book Basis $13.6 $0.5 $4.6 $18.7 Z Deferred Income Tax- Balance -$0.2 $0.0 $0.0 -$0.2 AA Deferred Income Tax- Pro Rated -$0.1 $0.0 $0.0 -$0.1 AB = Y + AA Average Rate Base $13.5 $0.5 $4.6 $18.6 AC ROR (After Tax) 6.56% 6.56% 6.56% AD = AB * AC Return on Rate Base $0.9 $0.0 $0.3 $1.2 AE Conversion Factor 70.89% 70.89% 70.89% AF = AD / AE Initial Revenue Requirement $1.3 $0.0 $0.4 $1.7 COSTS TO RECOVER: AG Depreciation Expense / Savings and Property Taxes $1.1 $0.1 $0.7 $1.9 REVENUE REQUIREMENTS: AH = (P + AF + AG) Revenue Requirement $6.1 $0.2 $2.4 $ For Main Replacement, STRIDE surcharge recovery is limited to estimated Nov18 & Dec18 capital expenditures.

5 BALTIMORE GAS AND ELECTRIC COMPANY STRIDE SURCHARGE CALCULATION TO REFLECT IMPLEMENTATION OF GAS BASE RATES PURSUANT TO ORDER NO GAS RIDER 16 Supplement 454 Attachment 2 Effective with service rendered on or after 01/04/2019 Total 2019 STRIDE Revenue Requirement $8,700,000 A Attachment 1 Line AH CN 9484 Rev Requirement (a) Percent of Total Revenue Requirement Allocation of Revenue Requirement Prior Over- Collected Imbalance (b) Total STRIDE Revenue Requirement Forecasted Billing Determinants (c) Uncapped Monthly Surcharge Monthly Surcharge Cap 2019 STRIDE Monthly Surcharge B C D=A*C E F G H=F/G I=Q J=(Min of H,I) Schedule D/GORR (1) 327,698, % $ 5,866,318 (190,636) $ 5,675,682 7,634,615 $ 0.74 $ 2.00 $ 0.74 Schedule C 127,088, % 2,275,077 (13,802) $ 2,261, ,453 $ 4.26 $ $ 4.26 Schedule IS 28,971, % 518,640 - $ 518,640 1,116 $ $ 1, $ Schedule ISS 2,232, % 39,966-39, $ $ $ Total 485,991, % $ 8,700,000 $ (204,438) $ 8,495,562 Calculation of Monthly Surcharge Cap CN 9484 Rev Requirement (a) CN 9484 # of Bills (d) CN 9484 # of Customers Rev Req per customer Rev Req per cust / Sch D Rev Req per cust Schedule D Monthly Surcharge Cap (e) Monthly Surcharge Cap K L M=L/12 N=K/M O=N/(N for Sch D) P Q=M*N Schedule D/GORR (1) $ 327,698,665 7,553, ,417 $ $ 2.00 $ 2.00 Schedule C $ 127,088, ,369 44,031 $ 2, $ 2.00 $ Schedule IS $ 28,971,773 1, $ 311, $ 2.00 $ 1, Schedule ISS $ 2,232, $ 43, $ 2.00 $ $ 485,991,123 (a) Source: BGE Case No Compliance Filing, Supplement 453 (c) Forecasted Billing Determinants for January-December Schedule D: Sheet G-3 Column 8, Line 3 - Schedule C: Sheet G-4 Column 8, Line 6 (d) Source: BGE Case No Compliance Filing, Supplement Schedule IS: Sheet G-5 Column 6, Line 7 - Schedule D: Sheet G-3 Column 1, Line 1 - Schedule ISS: Sheet G-6 Column 6, Line 7 (b) These amounts represent the imbalances shown in the Company s March 15, 2018 filing in Case No. - Schedule C: Sheet G-4 Column 1, Line 1 - Schedule IS: Sheet G-5 Column 1, Line 1 - Schedule ISS: Sheet G-6 Column 1, Line (Mail Log #219450) for Schedules D and C, including carrying costs that have accrued over (e) Source: Public Utilities Article 4-210(d)(4)(i)(1), Md. Code Ann (1) GORR = Grantors of Rights of Way

6 Attachment 3 Supplement 454 to Md. G-9 Tariff Pages

7 92-G Gas - Baltimore Gas and Electric Company determined for residential, Schedule C, Schedule IS, and Schedule ISS customers. The Reconciliation Rate is in effect for the period of May though December each year and is determined by dividing the Imbalance by the forecasted number of bills for residential and non-residential customers for this period. The Imbalance is debited or credited against the costs eligible for recovery during the 12-month rate effective period. When the Imbalance represents an over-collection of costs at year end, Carrying Costs are applied to the Imbalance using the Company s most recent Gas authorized rate of return in the calculation of the Reconciliation Rate. In the event the Imbalance for a customer class represents an over-collection of costs and the Current Rate plus the Reconciliation Rate for that customer class is capped at the maximum monthly charge (defined below), the Company will hold the Imbalance amount above the cap until the STRIDE surcharge is less than the maximum monthly charge (i.e., is uncapped) at which point this Imbalance amount (including carrying costs) will be applied against the costs eligible for recovery during that future period. The STRIDE surcharge is subject to a maximum monthly charge of $2.00 per month for residential customers. For Schedule C customers the maximum monthly charge is $ ; for Schedule IS customers the maximum monthly charge is $1, ; for Schedule ISS customers the maximum monthly charge is $ The maximum monthly charge is capped based on the proportion of total non-residential base distribution per customer revenues to total residential base distribution per customer revenues, as determined in the most recently approved base rate case, multiplied by the $2.00 residential monthly cap. Eligible Costs The revenue requirement for the STRIDE surcharge is based on eligible costs as defined in the STRIDE legislation, incurred by the Company associated solely with its STRIDE plan, and as approved by the Commission each year. They include the following categories: a) Depreciation and amortization, b) Earnings on the net investment as determined by applying the Company s most recent gas authorized rate of return, adjusted for taxes and bad debt expense, to the average investment balance net of deferred taxes, and c) Property and other applicable taxes. Future Rate Proceedings Upon a Commission Order in a gas distribution rate proceeding that occurs while the STRIDE plan is in effect, the STRIDE surcharges will be reset due to the following: a) The revenue requirement associated with the STRIDE surcharge will be reduced to remove the investments reflected in the new base rates, b) The revenue requirement for STRIDE costs that are not included in the new base rates is updated to reflect the new rate of return approved in the new rate case, c) The percentages used to allocate the STRIDE revenue requirement to residential and nonresidential customers are updated to reflect the new base distribution revenues authorized, and d) The Schedule C, IS and ISS caps are reset by calculating the new base distribution per customer revenues as a proportion to the new residential base distribution per customer revenues, and then multiplied by the $2.00 residential monthly cap. P.S.C. Md. -- G-9 (Suppl ) 018/0426/20198 Filed 017/0727/20198 Effective

8 92-G Gas - Baltimore Gas and Electric Company determined for residential, Schedule C, Schedule IS, and Schedule ISS customers. The Reconciliation Rate is in effect for the period of May though December each year and is determined by dividing the Imbalance by the forecasted number of bills for residential and non-residential customers for this period. The Imbalance is debited or credited against the costs eligible for recovery during the 12-month rate effective period. When the Imbalance represents an over-collection of costs at year end, Carrying Costs are applied to the Imbalance using the Company s most recent Gas authorized rate of return in the calculation of the Reconciliation Rate. In the event the Imbalance for a customer class represents an over-collection of costs and the Current Rate plus the Reconciliation Rate for that customer class is capped at the maximum monthly charge (defined below), the Company will hold the Imbalance amount above the cap until the STRIDE surcharge is less than the maximum monthly charge (i.e., is uncapped) at which point this Imbalance amount (including carrying costs) will be applied against the costs eligible for recovery during that future period. The STRIDE surcharge is subject to a maximum monthly charge of $2.00 per month for residential customers. For Schedule C customers the maximum monthly charge is $11.09; for Schedule IS customers the maximum monthly charge is $1,196.70; for Schedule ISS customers the maximum monthly charge is $ The maximum monthly charge is capped based on the proportion of total non-residential base distribution per customer revenues to total residential base distribution per customer revenues, as determined in the most recently approved base rate case, multiplied by the $2.00 residential monthly cap. Eligible Costs The revenue requirement for the STRIDE surcharge is based on eligible costs as defined in the STRIDE legislation, incurred by the Company associated solely with its STRIDE plan, and as approved by the Commission each year. They include the following categories: a) Depreciation and amortization, b) Earnings on the net investment as determined by applying the Company s most recent gas authorized rate of return, adjusted for taxes and bad debt expense, to the average investment balance net of deferred taxes, and c) Property and other applicable taxes. Future Rate Proceedings Upon a Commission Order in a gas distribution rate proceeding that occurs while the STRIDE plan is in effect, the STRIDE surcharges will be reset due to the following: a) The revenue requirement associated with the STRIDE surcharge will be reduced to remove the investments reflected in the new base rates, b) The revenue requirement for STRIDE costs that are not included in the new base rates is updated to reflect the new rate of return approved in the new rate case, c) The percentages used to allocate the STRIDE revenue requirement to residential and nonresidential customers are updated to reflect the new base distribution revenues authorized, and d) The Schedule C, IS and ISS caps are reset by calculating the new base distribution per customer revenues as a proportion to the new residential base distribution per customer revenues, and then multiplied by the $2.00 residential monthly cap. P.S.C. Md. -- G-9 (Suppl. 454) Filed 01/07/2019 Effective 01/04/2019