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May 19, 2009
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State Regulatory Relations

Commissioner Powelson

Commissioner Clyburn

Obama Intends to Nominate Clyburn for the FCC

President Obama announced his intention to nominate Commissioner Mignon Clyburn of South Carolina to the Federal Communications Commission on April 29.

Commissioner Clyburn currently serves as chair of NARUC’s Washington Action Program and oversees the Association’s “Anybody Can Serve, So Let’s Conserve” energy efficiency program. Prior to that, Commissioner Clyburn chaired the Southeastern Association of Regulatory Utility Commissioners and serves on the Association’s Audit Committee and Utilities Market Access Partnership board.

NARUC President Frederick Butler of New Jersey and Committee on Telecommunications Chairman Ray Baum of Oregon issued the following statement in response to the news: “President Obama is to be commended for selecting someone of the caliber of Mignon Clyburn for the FCC. She will bring a crucial State perspective and more than 10 years of experience on telecommunications and infrastructure issues to Commission. As Chair of our Washington Action Program, Commissioner Clyburn has proven to be an effective leader of NARUC's Congressional and Agency advocacy. She will be missed, both at NARUC and at the South Carolina Commission. We look forward to working with Commissioner Clyburn in her new role, and solidifying our strong relationship with her federal colleagues.”

Before her 1998 election to the PSC, Commissioner Clyburn spent 14 years as the publisher and general manager of the Coastal Times, a weekly newspaper in South Carolina. She graduated from the University of South Carolina.

Commissioner Clyburn’s nomination must be approved by the Senate.


Massachusetts DPU Reaffirms Single Tariff Pricing

The Massachusetts Department of Public Utilities recently rejected a proposal that it adopt separate rate structures for different portions of a water utility’s service territory to capture and isolate the specific capital and operating costs of the treatment facilities serving such areas. Petition of Aquarion Water Company of Massachusetts, D.P.U. 08-27 (Order issued March 31, 2009). In reaffirming its support of “single tariff pricing,” the DPU reasoned as follows:

Setting rates on the basis of individual communities requires detailed information on the respective plant and operating expenses on a community-by-community basis. It also requires detailed information related to cost causation. For this purpose, cost causation goes beyond merely assigning plant and operating costs to individual communities, but also includes the relationship of these costs to system demand.

For example, while the weighted cost of capital is generally accepted to be the same across a utility’s service area, a significant portion of the Company’s capital assets in Millbury were financed through a zero-percent interest loan through the MWPAT. If the capital financed through MWPAT were to be allocated solely to Millbury operations, the weighted cost of long-term debt would increase to approximately 8.2 percent in Service Area A and Oxford and remain at 6.18 percent in Millbury (see Exh. DPU 2-15, Att. A). In addition, customers in Oxford have benefited from the presence of Wheelabrator on Aquarion’s system because Wheelabrator contributes to a more favorable maximum-to-average day demand ratio for the Company’s system as a whole (Tr. 5, at 769-770). Because Oxford has no industrial base, a stand-alone Oxford system would have a lower load factor and, thereby, require customers in Oxford to bear the additional costs of meeting these maximum-to-average day demands (Exh. DPU 1-28).

As discussed above, the Department has found that single-tariff pricing provides benefits to customers associated with operational and functional consolidation. In addition, single-tariff pricing is consistent with the goal of administrative simplicity. Although the Department has, on occasion, departed from this general practice, these exceptions to the general principles behind single-tariff pricing have been based on the specific facts in those proceedings. D.P.U. 86-27-A at 77-85; D.P.U. 17885, at 5. Based on these considerations, the Department finds that there is insufficient basis for reinstating a system of community-specific rates and will retain the existing pricing structure for Aquarion.


Golden State Water To Decouple Sales And Revenues

On May 7, 2009, the California Public Utilities Commission approved a settlement agreement between Golden State Water Company and the commission’s Division of Ratepayer Advocate that authorizes Golden Sate Water to implement a rate design that incorporates an inclining block rate structure for residential customers and that decouples sales and revenues. Application of Golden State Water Company, Decision 09-05-005. The decoupling will be achieved through rate mechanisms that track differences between authorized and actual volumetric/quantity rate revenues and differences between authorized and actual purchased water, purchased power and pump tax costs. If the net of the two exceeds 2.5 percent of Golden State Water’s authorized revenue requirement for the preceding year, the company will file within 30 days an advice letter amortizing the balance. If the percentage is 2.5 percent or less, the balance will be amortized in Golden State’s next general rate case.


California PUC Sets Cost Of Capital For Large Water Utilities

The California Public Utilities Commission has established a base year 2009 ratemaking return on common equity of 10.2 percent for California Water Service Company, California American Water Company and Golden State Water Company. Application of California Water Service Company et al., Decision 09-05-09 (May 7, 2009). In addition, the PUC adopted for 2009, 2010 and 2011 a temporary interest rate balancing account whereby the three companies may record any differences between the actual and forecasted interest cost of long-term debt issued after Jan. 1, 2009. In so doing, the PUC noted “the financial markets’ dislocation” and the need for “reasonable and measured responses to ensure that [the companies] remain viable enterprises capable of attracting and retaining investment capital.”


New DC Commissioner

Commissioner Powelson

Commissioner Lori Murphy Lee

Lori Murphy Lee was recently nominated by Mayor Adrian M. Fenty and confirmed by the Council of the District of Columbia as a commissioner.

Commissioner Lee joins the Commission with over 15 years of legal experience in the federal government and private sector. Commissioner Lee practiced law at the United States Department of Justice, Executive Office for Immigration Review, for over 12 years. As an attorney with the Department of Justice she reviewed administrative proceedings from over 250 immigration judges across the United States involving complex legal and factual issues. Concurrent with her professional responsibilities Commissioner Lee was an active member in her union, the American Federation of Government Employees (AFGE), and served as both vice president and acting president.

As an associate in private practice Commissioner Lee represented clients in the areas of government procurement, employment law, and white collar crime, including extensive negotiation and litigation. Her expertise in the field of government contracts led her to co-author Understanding the New Administrative Bid Protest Process, published in Contract Management in January 1997.

Commissioner Lee is a member of the Gas Committee of the National Association of Regulatory Utility Commissioners (NARUC) and a general member of the Mid-Atlantic Conference of Regulatory Utilities Commissioners (MACRUC).

Commissioner Lee is a fifth-generation Washingtonian and a graduate of the National Cathedral School. She received a Bachelor of Arts from Duke University and a Juris Doctor from George Washington University Law School. She resides in the District's Colonial Village neighborhood with her husband and daughter.