The mission of the Division of the Public Advocate (DPA) is to advocate for the lowest reasonable rates for consumers, consistent with the maintenance of adequate utility service and consistent with an equitable distribution of rates among all classes of consumers. Through our participation in proceedings before the Public Service Commission, we have helped to save ratepayers millions of dollars in avoided rate increases and litigation costs. We also work to ensure the customers are treated fairly and equitably by the utilities that serve them. Below is a brief description of some of the DPA’s more significant accomplishments:
- 2013 Annual Report of the Division of the Public Advocate (January 10, 2014)
- Definition of “Customer”: An Artesian Water Company (“Artesian”) customer filed a formal complaint with the PSC claiming that despite his request to terminate water water services at a property owned by him (but vacant), Artesian continued to assess the monthly customer and fire protection charges reasoning that the availability of water at the property did not remove the customer’s responsibility to pay those charges. While the DPA argued against this position, both the Hearing Examiner and the Commission accepted Artesian’s rationale. Dissatisfied with the result from the complaint docket, the DPA pursued the issue in a concurrent Artesian rate proceeding before the Commission. The Public Advocate fought for and required, as part of his agreement to settle the case, a revised tariff definition of “customer” that precluded Artesian from billing for any charges once the customer discontinued service at a particular address unless the customer turned service back on at the same location within a 12-month period. This revised tariff definition satisfied Artesian’s concern with capturing lost customer and fire protection charges from seasonal customers who turn service on and off within a twelve-month period, while protecting customers who permanently leave a property from being charged for services not received.
- Lowering rates of return: In 2012, the Public Advocate was successful in arguing for reduced returns on equity for two regulated utilities – Tidewater Utilities, Inc. and Delmarva Power and Light Company. Both companies were awarded by the Commission a return on equity of 9.75% which effectively helps lower customer rates since return on equity represents one of the largest costs in a rate case. In addition, at he time, these authorized returns on equity were among the lowest authorized returns on equity in the country. The DPA anticipates a ripple effect going forward as other utilities seek rate increases.
- Rate equity: In 2011, Tidewater Environmental Services, Inc. (“TESI”) filed a request with the PSC for an unprecedented increase of more than 90% for wastewater services, which it proposed to spread equally to all wastewater systems. Consistent with its statutory responsibility to ensure equitable rates among all classes of customers, the Public Advocate successfully argued against a proposal to apply uniform rates to all TESI customers. Based on a detailed investigation, the Public Advocate was able to demonstrate that communities are more costly to serve than others and prevented customers in communities with lower operating costs subsidizing customers in communities with higher operating costs. Finally, to avoid rate shock for customers in the Town of Milton, the Public Advocate was able to tender an agreement from TESI to phase-in the rate increase over a three year period.
- Build-out risk of new housing developments: In the same 2011 TESI case, the DPA discovered during its investigation that wastewater service agreements between TESI and developers resulted in a shift of the risk of a community not building out as planned from the developer to the residents in the community. In the settlement of that proceeding, the Public Advocate obtained a commitment from TESI to alter its wastewater service agreements with developers to protect customers from that risk.
- Natural Gas Supply Hedging: Prior to 2008, the Commission provided Delmarva Power and Light Company (“DPL”) with some descriptive guidelines for hedging its natural gas supply procurement. Hedging is permitted, but not necessarily required, in most jurisdictions to help stabilize prices and avoid rate volatility caused by swings in the market price of gas. In early 2009, it became evident that DPL had not been adhering to those guidelines and had purchased future gas contracts that were significantly higher than the current market price. However, because the PSC’s guidelines are not prescriptive, the DPA was unable to argue that the Company had violated a Commission order. Rather, the DPA worked with Commission Staff in crafting explicit rules for monthly hedging volumes and the convening of regular conference calls to verify Delmarva’s compliance. The DPA also secured a credit for Delmarva’s customers of approximately $340,000 which represent carrying costs paid by customers for prior natural gas purchases. The results of the DPA’s actions can be seen in the recent declining supply costs charged to Delmarva customers in the company’s annual filings.