Ariz. Admin. Code § 14-2-107

Current through Register Vol. 30, No. 25, June 21, 2024

Section R14-2-107 - Electric, Natural Gas, or Affiliated Water Cooperative Streamlined Rate Application Filing Requirements and Process

A. Definitions. In this Section, unless otherwise specified:

1. "Affiliated entity" means an "entity" as defined in A.A.C. R14-2-801 that, in relation to a cooperative, meets the definition of an "affiliate" in A.A.C. R14-2-801.

2. "Base revenue" means the revenue generated by permanent rates and charges, excluding:

a. Revenue generated through adjustor mechanisms, and

b. Revenue generated through miscellaneous service charges.

3. "CFC" means the National Rural Utilities Cooperative Finance Corporation.

4. "Commission" means the Arizona Corporation Commission.

5. "Cooperative" means a legal entity that is:

a. A domestic corporation or a foreign corporation authorized to transact business in this state;

b. Operated as a not-for-profit or non-profit;

c. Owned and controlled by its members; and

d. Operating as a public service corporation in this state by providing electric utility services, natural gas utility services, or water utility services from an affiliated entity.

6. "Customer" means anyone who receives utility service from the cooperative.

7. "Docket Control" means the organizational unit within the Commission's Hearing Division that accepts, records, and maintains filings.

8. "FERC" means the Federal Energy Regulatory Commission.

9. "File" means to submit to Docket Control, with the required number of copies and in an acceptable format, for recording under an appropriate docket number.

10. "Full permanent rate case decision" means a Commission decision:

a. Issued on an application filed under R14-2-103 and not under this Section,

b. In which the Commission ascertained the fair value of a public service corporation's property within Arizona and established a schedule of rates and charges for the public service corporation's provision of utility services within Arizona, and

c. Not issued under A.R.S. § 40-252.

11. "Non-price tariff change" means modification of one or more tariff provisions, either through altering existing tariff language or adding new tariff language, in a manner that substantively alters a requirement other than a rate or charge.

12. "Rate schedule" means a schedule of rates and conditions for a specific classification of customer or for other specific services.

13. "Rate structure change" means any of the following:

a. Introduction of a new rate schedule;

b. Elimination of an existing rate schedule;

c. A change in base revenue generated by the residential rate class greater than 150% of the overall base revenue increase;

d. A change greater than 35% in the customer charge within a rate schedule for residential customers; or

e. A change in the rate blocks or the percentage relationship of the prices among rate blocks.

14. "RUS" means United States Department of Agriculture, Rural Utilities Service.

15. "Staff" has the same meaning as in R14-2-103.

16. "Test year" means the one-year historical period used in determining rate base, operating income, and rate of return, which shall have an ending date within 12 months before the filing date for a rate application under this Section and shall include at least six months during which a cooperative's current rates and charges were in effect.

17. "Timely" means in the manner and before the deadlines prescribed in this Section.

B. Eligibility Requirements. Except as provided in subsection (C), a cooperative may file and pursue a rate application under this Section rather than R14-2-103 only if the following eligibility requirements are met:

1. A full permanent rate case decision for the cooperative has been issued within the 20-year period immediately preceding the filing of the cooperative's rate application;

2. The cooperative has not filed a rate application under this Section within the 12 months immediately preceding the filing of the cooperative's rate application;

3. The cooperative is required by law or contract to make a certified annual financial and statistical report to a federal agency, such as RUS or FERC, or an established national non-profit lender that specializes in the utility industry, such as CFC or CoBank;

4. The test year used in the cooperative's rate application complies with the definition of a test year in subsection (A);

5. The cooperative's rate application includes the most recent audited financials for the cooperative;

6. The cooperative's rate application does not propose an increase in total base revenue amounting to more than 6% of the actual test year total base revenue;

7. The cooperative's rate application uses its original cost rate base as its fair value rate base;

8. The cooperative's rate application proposes changes in rates and charges and non-price tariff language consistent with subsection (D) and does not propose

adoption of a new hook-up fee or another new type of fee;

9. The cooperative's rate application does not propose a rate structure change except for the elimination of a rate schedule if the rate schedule has had no customer participation within the one year prior to the test year through and including the test year;

10. The cooperative's rate application does not request financing approval and does not request consolidation with another docket;

11. The customer notice provided by the cooperative conformed to the requirements of subsection (F) and was approved by Staff;

12. For a distribution cooperative, the objections timely submitted by the cooperative's customers represent no more than 5% of all customer accounts or no more than 1,000 customer accounts, whichever is fewer; and

13. For a generation or transmission cooperative, no member distribution cooperative has filed a timely objection to the application, and the objections timely submitted by retail customers served by member distribution cooperatives represent no more than 3,000 customer accounts.

C. A multi-jurisdictional cooperative with less than 30% of its customers within Arizona that seeks only to implement rates for Arizona customers that are already effective in the jurisdiction where the majority of the cooperative's customers are located may pursue a rate application under this Section without meeting the eligibility requirements of subsections (B)(1) through (10).

D. A cooperative may propose any of the following in its rate application filed under this Section:

1. Changes to an existing adjustor rate;

2. Changes to an existing surcharge rate;

3. Changes to an existing hook-up fee or other fee;

4. Adoption of a new adjustor mechanism or surcharge mechanism, if the mechanism has been previously approved by the Commission;

5. Adjustment to the base cost of power;

6. Changes to non-price tariff language, including language that freezes participation in a tariff to existing customers;

7. Changes to depreciation rates, if supported by a depreciation study approved by Staff engineers; and

8. Waiver of one or more of the eligibility requirements in subsections (B)(1) through (B)(10), except (B)(3).

E. Pre-Filing Requirements. Before filing a rate application under this Section, a cooperative shall:

1. Analyze the cooperative's eligibility under subsection (B);

2. Submit to Staff, in both hard copy and electronic (with formulae intact) formats, a Request for Pre-Filing Eligibility Review, which shall include a draft application including the items and information described in subsections (G)(1) through (6), and a copy of the Proposed Form of Notice to be sent to the cooperative's customers;

3. No sooner than 30 days after the date Staff receives the Request for Pre-Filing Eligibility Review, meet with Staff to discuss the cooperative's eligibility under subsection (B) and any Staff modifications to the Proposed Form of Notice; and

4. After meeting with Staff, if the cooperative decides to pursue a rate application under this Section, file a Request for Docket Number and Proposed Form of Notice for Staff approval.

F. Notice Requirements.

1. A cooperative shall ensure that the Proposed Form of Notice submitted to Staff for approval includes, at a minimum, all of the following:

a. The cooperative's name and contact information;

b. The docket number assigned to the cooperative's rate application proceeding;

c. A summary of the rate relief requested by the cooperative in its rate application;

d. For a distribution cooperative, the monthly bill impact to a residential customer with average usage if the requested rate relief were granted by the Commission;

e. For a generation or transmission cooperative, the estimated rate and revenue impact to each member distribution cooperative served if the requested rate relief were granted by the Commission;

f. Instructions for viewing or obtaining filed documents;

g. Information regarding the Commission's process under this Section;

h. The deadline to file intervention requests and objections, which shall be a date no earlier than 30 days after the date Notice is mailed to customers;

i. Instructions for requesting intervention and submitting objections; and

j. Information regarding disability accommodations;

2. After receiving Staff approval for a form of Notice, a cooperative shall provide notice of its application as follows:

a. If a distribution cooperative, by sending the Notice, by First Class Mail, to each of the cooperative's customers; and

b. If a generation or transmission cooperative, by publishing the Notice in at least one newspaper of general circulation in the service territory of each member distribution cooperative served and by sending the Notice, by First Class Mail, to each member distribution cooperative served.

G. Filing Requirements. Within twenty days after completing the provision of Notice as required by subsection (F)(2), a cooperative shall file in the assigned docket a rate application under this Section, which shall include the following:

1. The legal name of the cooperative and identification of the test year;

2. A waiver of the use of reconstruction cost new rate base to determine the cooperative's fair value rate base;

3. A copy of the most recent certified annual financial and statistical report submitted by the cooperative to a federal agency, such as RUS or FERC, or an established national non-profit lender that specializes in the utility industry, such as CFC or CoBank;

4. A copy of the most recent audited financials for the cooperative;

5. The information listed in the table in R14-2-103(B)(1) for Schedule A-1, which shall be submitted in the format provided in Appendix Schedule A-1;

6. The information listed in the table in R14-2-103(B)(1) for Schedules B-2, C-1, C-2 (if applicable), E-5, E-7, E-9, and H-1 through H-5, which:

a. Shall be included on schedules labeled consistently with and containing the substantive information corresponding to the Appendix Schedules,

b. Shall conform to the instructions and notes contained on the corresponding Appendix Schedules,

c. May be submitted in the format provided in the Appendix Schedules or formatted in an alternate manner, and

d. May omit information that is not applicable to the cooperative's operations;

7. The information listed in the table in R14-2-103(B)(1) for Schedules B-3 and B-4, if requesting a change in depreciation rates in accordance with subsection (D)(7);

8. A copy of the Notice sent and, if applicable, published, as required under subsection (F)(2); and

9. Proof that the Notice was sent and, if applicable, published, as required under subsection (F)(2).

H. Pre-Eligibility-Review Objections and Requests. Any person desiring to object to the cooperative's rate application or to request intervention in the cooperative's rate case shall file an objection or request no later than the date specified in the Notice provided pursuant to subsection (F)(2).

I. Late Objections. In determining the cooperative's eligibility to proceed with its rate application under this Section, Staff shall not consider any objection that is filed after the deadline in the Notice provided pursuant to subsection (F)(2).

J. Eligibility and Sufficiency Review. Within seven days after the deadline for objections and intervention requests specified in the Notice provided pursuant to subsection (F)(2), Staff shall:

1. Review the cooperative's rate application, along with any objections timely filed under subsection (H), to determine whether the cooperative is eligible, under subsection (B), to pursue its rate application under this Section;

2. File either a Notice of Eligibility or a Notice of Ineligibility;

3. If the cooperative is eligible, complete the following:

a. Conduct a sufficiency review of the cooperative's rate application;

b. Determine whether the rate application complies with the requirements of subsection (G); and

c. File either a Notice of Sufficiency that classifies the cooperative as provided in R14-2-103(A)(3)(q) or a Notice of Deficiency that lists and explains each defect in the rate application that must be corrected to make the rate application sufficient.

K. Eligibility and Sufficiency Determinations. Staff's determinations of eligibility, ineligibility, sufficiency, and deficiency are not Commission decisions or Commission orders under A.R.S. §§ 40-252 or 40-253. A cooperative or intervenor that disagrees with Staff's determination of eligibility, ineligibility, sufficiency, or deficiency may petition the Commission to review Staff's determination by filing a petition in the docket. A Commissioner may include a petition for review as an agenda item to be considered by the Commission at an Open Meeting. If a petition for review is not included in an Open Meeting agenda within 30 days after the date it is filed in the docket, the petition for review shall be deemed denied.

L. Request for Processing under R14-2-103. Within 75 days after a Notice of Ineligibility is filed, a cooperative may file a Request for Processing under R14-2-103. If a cooperative files a Request for Processing under R14-2-103, all further activity under this Section shall cease, and the cooperative's rate application shall be deemed a new rate application, filed under R14-2-103, on the date the Request for Processing under R14-2-103 is filed.

M. Docket Closure. If a Request for Processing under R14-2-103 is not filed within 75 days after a Notice of Ineligibility is filed, the Hearing Division shall issue a procedural order administratively closing the docket.

N. Action on Notice of Deficiency. After Staff files a Notice of Deficiency:

1. The cooperative shall promptly address each defect listed in the Notice of Deficiency and file all necessary corrections and information to bring the rate application to sufficiency; and

2. Within 10 days after receiving the cooperative's corrections and information, Staff shall again take the actions described in subsection (J)(3).

O. Substantive Review and Staff Report. After Staff files a Notice of Sufficiency, Staff shall:

1. Conduct a substantive review of the rate application;

2. Prepare a Staff Report that shall include Staff's recommendations and may include a Request for Hearing that complies with subsection (Q); and

3. File the Staff Report (and a Recommended Order if no Request for Hearing) within:

a. 150 days after the Notice of Sufficiency is filed, for a rate application requesting adjustment to the base cost of power;

b. 120 days after the Notice of Sufficiency is filed, for a rate application requesting a new adjustor mechanism; and

c. 60 days after the Notice of Sufficiency is filed, for any other rate application.

P. Responses to Staff Report. Within 10 days after Staff files a Staff Report:

1. The cooperative shall file a Response to the Staff Report, which may include a Request for Hearing that complies with subsection (Q) or a Request for Withdrawal; and

2. Each intervenor shall file a Response to the Staff Report, which may include a Request for Hearing that complies with subsection (Q).

Q. Request for Hearing. A Request for Hearing shall include, at a minimum, an explanation of the requesting party's reasons for believing that an evidentiary hearing should be held; a summary of each issue on which the party believes evidence should be provided; and a recitation of the witnesses and documentary evidence that the requesting party believes could be produced to provide evidence on each issue.

R. Responses to and Action on Request for Hearing.

1. A party shall file any response to a Request for Hearing within five business days after the Request for Hearing is filed.

2. The Hearing Division shall rule on each Request for Hearing within 10 business days after it is filed and may require oral argument or other proceedings at its discretion in considering a Request for Hearing.

3. The Hearing Division may extend the party response deadline or Hearing Division's ruling deadline for good cause.

4. If a hearing is granted, the Hearing Division shall preside over all further proceedings in the case.

S. Action on Request for Withdrawal. The Hearing Division shall rule on each Request for Withdrawal and may require party responses, including oral argument, or other proceedings at its discretion in considering a Request for Withdrawal. If withdrawal is granted, the Hearing Division shall issue a procedural order administratively closing the docket.

T. Requirement for Service. A party that files a document under this Section shall also serve a copy of the document on each other party to the case, in accordance with the Commission's rules or as otherwise authorized by the Commission.

U. Revenue Increase Cap. No Commission decision issued under this Section shall increase a cooperative's base revenue by more than 6% of the cooperative's actual test year total base revenue, unless the cooperative meets the requirements of subsection (C). In calculating the 6% base revenue increase cap, the Commission shall not include the revenue derived from a change to the base cost of power, an existing adjustor rate, an existing surcharge rate, an existing hook-up fee, or another existing fee or the addition of a new adjustor mechanism or surcharge mechanism.

V. The Commission may, at any stage in the processing of a cooperative's rate application under this Section, determine that the rate application shall instead proceed under R14-2-103.

W. Recommended Opinion and Order. The Hearing Division shall issue a Recommended Opinion and Order within 90 days after the last day of a hearing held under this Section.

X. The Commission may, for good cause, waive an eligibility requirement of subsection (B).

Ariz. Admin. Code § R14-2-107

New Section made by final rulemaking at 19 A.A.R. 397, effective April 9, 2013 (Supp. 13-1). Amended by final rulemaking at 24 A.A.R. 2750, effective 11/20/2018.