Regulatory filings, decisions drive dynamic December actions to 5-year high

Overall utility rate case activity was energetic in December 2022, according to preliminary data tracked by Regulatory Research Associates.

State regulatory jurisdictions recorded one of the highest levels of combined rate case filings and decisions for any month in the last five years with 39 cases, tying May 2019.

There were 11 initial filings in December 2022 — the highest level since August 2022, which saw an end-of-summer spike of 17 filings.

Decided cases were at their highest level in December 2022 compared with any other month in the last four years. Over the last five years, only December 2018 had a greater number of decisions, with a single case more.

* Rate case filings in December 2022 rose noticeably compared to November 2022, with 11 proceedings initiated in the month compared to eight in November. Initial filings and decisions peaked in December, consistent with the uptick typically observed in the final month of the year.

* Regarding rate case decisions, December was the high for 2022, with 28 decisions observed.

* Total rate case activity of 39 cases was considerably above the 2022 average of 21.75 actions per month.

* Regulators authorized 21 new returns on equity during the month, ranging from 7.85% to 10.50%. In the six initial cases filed during December 2022 that disclosed ROE figures, the utilities requested ROEs ranging from 9.44% to 10.50%.

Mergers and acquisitions activity

Alaska — The Regulatory Commission of Alaska approved the sale of AltaGas Ltd.'s Alaskan natural gas transmission, distribution and storage assets to TriSummit Utilities Inc. for $800 million. The sale transfers ownership of local distribution company Enstar Natural Gas Co., the transmission and distribution pipeline operator Alaska Pipeline Co., AltaGas's 65% indirect interest in Cook Inlet Natural Gas Storage Alaska LLC and other unregulated operations.

New Jersey — The buyout of South Jersey Industries Inc., or SJI, poses multiple risks while providing inadequate to no benefit for ratepayers, according to the opinion of the New Jersey consumer advocate. While the February 2022 announced acquisition of SJI by an infrastructure investment fund has been approved by the Federal Energy Regulatory Commission and the Federal Communications Commission and cleared the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the transaction has yet to receive the required approval by the New Jersey Board of Public Utilities. However a decision may be near. For additional details, refer to the article SJI buyout poses risks, inadequate benefits for ratepayers says consumer advocate.

Rate case initial filings

The accompanying table reveals that utilities initiated seven electric and four gas rate proceedings in December 2022. The rate changes requested in the electric cases aggregated to a net increase of approximately $1.5 billion and the gas case filings support a $240.6 million hike.

In the electric cases where the companies seek a new authorized return on equity, the utilities requested ROEs ranging from 10.25% to 10.50%. Requested ROEs in gas cases ranged from 9.44% to 10.30%.

Resolved rate cases

Twenty-eight rate proceedings — 17 electric and 11 gas — were resolved during the month, as depicted in the accompanying chart. The rate changes authorized in the electric cases aggregate to an increase of $2.08 billion while the gas cases totaled $288.6 million.

In four limited-issue proceedings, the rate increase reflected a previously approved equity return. In the decisions where new ROEs were specified, the companies were authorized equity returns ranging from 7.85% to 10.50%, with the lowest ROE in the range awarded to Ameren Corp. subsidiary Ameren Illinois. The utility with the highest awarded ROE of 10.50% was Georgia Power, a subsidiary of Southern Co.

Significant rate case-related activity

Michigan — On Dec. 16, 2022, DTE Electric Co., or DTE-E, filed for a rehearing of a Nov. 18, 2022, Michigan Public Service Commission rate case order that authorized a significant revenue reduction from the company's request based on a lower electric sales forecast. DTE-E requested the commission reconsider the administrative law judge's sales forecast, which it alleges was made "in error and is inconsistent with the Commission's acceptance of the same approach in other cases and with respect to other customer classes." DTE-E testified that the consequences of the decision reduced its rates by more than $100 million.

Minnesota — On Dec. 7, 2022, the Minnesota Public Utilities Commission voted to allow Minnesota Energy Resources Corp. an interim increase in gas base rates of almost $37 million as its recently filed rate case, Docket No. G-011/GR-22-504, proceeds.

Ohio — AES subsidiary The Dayton Power and Light Co.'s pending electric rate case has concluded; however, the Public Utilities Commission of Ohio issued a final order Dec. 14, 2022, which requires that the utility implement a new electric security plan prior to the introduction of new rates. The utility may not be able to raise rates until July 2023. The issue stems from a provision in the company's existing ESP framework that requires the company's base rates to remain frozen, which was a contentious matter in the rate case.

Significant non-rate case activity

California — On Dec. 22, 2022, California Public Utilities Commission staff proposed a framework for the strategic retirement of the natural gas distribution systems that serve more than 11 million customers across the state. The plan outlined criteria for determining where gas utility infrastructure retirements would yield the greatest benefits, as well as a rough blueprint for phasing out the gas grid in batches.

In an unrelated matter, on Dec. 1, 2022, the PUC directed PG&E Corp. subsidiary Pacific Gas and Electric Co. to take all necessary actions to keep the 2,240-MW Diablo Canyon nuclear plant running until 2030, implementing a state law that halted the plant's decommissioning process. The commission's move also directed and authorized the utility subsidiary to establish two new cost-tracking accounts to record costs associated with extended operations at Diablo Canyon.

Iowa — An application for advance ratemaking principles filed by Alliant Energy Corp. subsidiary Interstate Power & Light Co. — initially denied Nov. 9, 2022, by the Iowa Utilities Board — was reopened by the board Dec. 29, 2022. The board agreed to accept updated testimony from the company regarding the suitability and cost efficiency of its proposed renewable energy generation projects compared with other potential generation technologies. Simultaneously, it firmly disallowed reconsideration of the company's proposed battery storage projects, which were deemed a burden on ratepayers in an environment of escalating costs.

New Jersey — The New Jersey Board of Public Utilities issued draft guidance in December for the state's third offshore wind solicitation, targeting at least 1,200 MW and up to approximately 4,000 MW of capacity.

Pennsylvania — On Dec. 8, 2022, the Pennsylvania Public Utility Commission rejected a settlement that included a nearly $1 million penalty for NiSource Inc. subsidiary Columbia Gas of Pennsylvania Inc. over a 2019 explosion in Washington, Pa., saying it wanted more information on measures the utility had taken following a 2018 explosion at a NiSource utility system in Massachusetts.

Virginia — On Dec. 15, 2022, the Virginia State Corporation Commission issued a reconsideration of an Aug. 7, 2022, order in which the commission revised customer protections for Virginia Electric and Power Co.'s Virginia Beach Offshore Wind Project (Coastal Virginia Offshore Wind). The modified provisions include cost-sharing provisions and a less stringent operating performance metric than that initially ordered by the commission.

Texas — The state's Sunset Advisory Commission, or SAC, has proposed more resources to support ongoing Public Utility Commission of Texas, or PUCT, initiatives. The SAC is poised to finalize a set of recommendations for the Texas State Legislature to consider in its upcoming session. The review kicked off in November with the release of a SAC staff report regarding the PUCT, Electric Reliability Council of Texas Inc. and Office of Public Utility Counsel. Hearings were held Dec. 6, 2022, and Dec. 7, 2022.

Commissioner elections, other commission membership developments

Arkansas — On Dec. 20, 2022, the Southwest Power Pool named Kimberly O'Guinn, an Arkansas Public Service Commission regulator, as its director of state regulatory policy. O'Guinn will depart to Southwest Power Pool in January 2023. The departure provides newly elected Governor Sarah Huckabee Sanders the opportunity to nominate a new commissioner to the body.

California — California Gov. Gavin Newsom announced Dec. 22, 2022, the nomination of Karen Douglas to the California Public Utilities Commission, replacing commissioner Clifford Rechtschaffen, whose term expires in January 2023. Newsom also reappointed Commissioner John Reynolds to the commissioner. Both appointments are subject to confirmation by the California Senate, and their terms would expire in January 2029.

District of Columbia — On Dec. 20, 2022, the Council of the District of Columbia confirmed the appointment of clean energy expert Ted Trabue Jr. to the District of Columbia Public Service Commission. Trabue took office as the newest commission member Dec. 27, 2022, with a term extending to June 30, 2026.

Louisiana — In a runoff held Dec. 10, 2022, voters elected Davante Lewis to a six-year commissioner term on the Louisiana Public Service Commission's District 3 seat. Lewis defeated three-term Democratic party incumbent Commissioner Lambert C. Boissiere III, receiving 59% of the vote compared to Boissiere's 41% tally. Lewis' term of office as a PSC commissioner commenced in January 2023 and extends until December 2028.

New Mexico — On Dec. 30, 2022, Gov. Michelle Lujan Grisham announced the appointments of Brian Moore, Gabriel Aguilera and Patrick O'Connell to the New Mexico Public Regulation Commission for terms of two, four and six years, respectively. The appointments were selected from a pool of nine candidates.

Texas — On Dec. 13, 2022, Commissioner Christi Craddick of the Railroad Commission of Texas was unanimously elected to serve as chair of the commission. The timing of a change in the commission chair is at the commissioners' discretion. Craddick replaces Commissioner Wayne Christian who became chairman on Sept. 28, 2021.

Gubernatorial activity

Newly elected Hawaii Gov. Joshua Green was sworn into office Dec. 5, 2022. Green was elected Nov. 8, 2022, after defeating Republican challenger Duke Aiona and will serve a four-year term that extends to December 2026. Members of the Hawaii Public Utilities Commission are appointed by the governor, and during Green's first term in office, the terms of two current commissioners will expire.

Also, on Dec. 5, 2022, Alaska Gov. Mike Dunleavy began his second term as governor after being elected during the 2022 general election. Dunleavy defeated Democrat Les Gara, Republican Mike Pierce and independent Bill Walker in the first round of a ranked-choice voting election. The governor's new term expires in December 2026. Members of the Regulatory Commission of Alaska are appointed by the governor, and three current commissioners will see their terms expire during Dunleavy's second term.

Legislative activity

In December 2022, the California State Legislature and Maine State Legislature convened new legislative sessions.

Ohio — House Bill 507, which declares natural gas "green energy" and requires state agencies to lease lands to qualified bidders, was sent to Ohio Gov. Mike DeWine's desk in December 2022. The bill text defines energy as green if it is generated by a source that "releases reduced air pollutants" and/or is "more sustainable and reliable relative to some fossil fuels." It includes a declaration that green energy "includes energy generated by using natural gas."

Policy matters

Maine — A citizens' initiative to establish a publicly owned electric utility in Maine has gathered enough valid signatures to be considered by voters in 2023. The initiative to establish a consumer-owned utility now goes to the Maine Legislature for consideration, which can either enact the proposed bill as written or put the question to a statewide vote in November 2023.

New York — the New York State Climate Action Council voted Dec. 19, 2022, to approve a plan for meeting the state's ambitious climate law targets, including 100% zero-emission electricity by 2040, and a host of other measures. The 22-member committee voted 19-3 in favor of adopting the New York State Climate Action Council Scoping Plan, outlining recommended policies and actions to help meet the goals and requirements of the 2019 Climate Leadership and Community Protection Act, the state's Department of Environmental Conservation said in a statement.

Virginia — On Dec. 7, 2022, the Virginia Air Pollution Control Board greenlit a pitch to withdraw state from the Regional Greenhouse Gas Initiative. A 60-day public comment period will follow before the proposal returns to the state Department of Environmental Quality, which will craft a final version of the rule that will also be open for public comment.

Federal matters

In December, two U.S. Republican lawmakers from Pennsylvania introduced legislation to lower hurdles for natural gas pipeline permitting and to advance the long-stalled Mountain Valley Pipeline LLC natural gas transportation project.

The U.S. Senate voted Dec. 15, 2022, against including Sen. Joe Manchin's proposed permitting reforms for energy projects in a must-pass defense authorization bill.

On Dec. 22, 2022, the U.S. Senate advanced a $1.7 trillion bipartisan government spending bill with historic funding increases for clean energy research and development and other climate-related programs. The funding package — passed in the U.S. House on Dec. 23, 2022, on a largely party-line vote — authorizes budget increases for carbon management programs across multiple federal agencies.

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