UNS Electric, Inc. - 2009 Rate Case

Docket Number
Assigned Staff
W. Rigsby
D. Pozefsky
Ben Johnson Ph.D. (Ben Johnson Associates)


On April 30, 2009, UNS Electric, Inc. (“UNSE” or “Company”) filed an application for an increase in permanent rates (“Application”) with the Arizona Corporation Commission ("ACC" or "Commission") for the Company’s electric distribution operations in Mohave County in northern Arizona, and Santa Cruz County in southeastern Arizona.

UNSE is a Class A utility that provided service to approximately 89,000 customers, of which 88% were residential customers, during the test year ended December 31, 2008 (Test Year).

The Company’s present rates were established in Decision No. 70360, dated May 27, 2008 (RUCO was an intervenor in that proceeding). UNSE is a wholly owned subsidiary of UniSource Energy Corporation, a publicly traded utility holding company that is based in Tucson, Arizona.

According to UNSE’s application, the Company had adjusted gross revenues of $160,926,065 during the Test Year. Operating expenses for the same period totaled $150,922,718 thus resulting in an operating income of $10,003,347. This produced a Test Year rate of return of 5.69 percent when applied to the Company-proposed original cost rate base of $175,818,913. UNSE is requesting an increase in base rates of $13.5 million or a 7.5 percent increase over Test Year revenues.

On Friday, May 29, 2009, ACC Staff issued a sufficiency letter(link is external) notifying UNSE that its Application met the requirements of A.A.C. R14-2-103.B.7.

On Wednesday, June, 17, 2009, the Administrative Law Judge ("ALJ") assigned to the case issued a procedural order(link is external) setting the evidentiary hearing in the matter for Thursday, February 4, 2010 at 10:00 am at the Commission's Phoenix office at 1200 W. Washington.

On Tuesday, July 14, 2009, RUCO filed a motion to intervene(link is external) in the case on behalf of residential ratepayers.

During the discovery phase of the proceeding, RUCO's technical staff performed an audit to verify the financial information presented in UNSE's Application and conducted a full cost of capital analysis.

Direct testimony on required revenue and cost of capital from ACC Staff, RUCO and other intervenors was filed on Friday, November 6, 2009. Direct testimony on rate design was filed on Friday, November 13, 2009. Company rebuttal testimony was filed on Friday, December 11, 2009. ACC Staff, RUCO and other intervenors filed surrebuttal testimony on Friday, January 15, 2010. A final round of rejoinder testimony from the Company was filed on Monday, January 25, 2010.

The evidentiary hearing on UNSE's request for an increase in rates began as scheduled at 10:00 a.m. on Thursday, February 4, 2010, and concluded on Thursday, February 11, 2010. The case was heard by the ACC's Chief Administrative Law Judge.

Final accounting schedules were filed on Monday, March 1, 2010. Per a procedural order(link is external)issued on Wednesday, March 3, 2010, RUCO filed its initial closing legal brief on Tuesday, March 23, 2010. Reply briefs were filed on Friday, April 2, 2010.

After weighing all of the evidence presented during the proceeding (including public comments and correspondence from concerned ratepayers), the Chief Administrative Law Judge issued her Recommended Opinion and Order(link is external) ("ROO") on Friday, August 20, 2010.

On Thursday, September 2, 2010, RUCO filed exceptions to the the CALJ's ROO. RUCO's filing seeks to deny recovery of a company-wide pay raise in 2010.

On Wednesday, September 22, 2010, ACC Commissioners passed an amended Recommended Opinion and Order ("ROO") on UNSE's request or an increase in rates. The final decision includes a provision to offer billing credits for new line-extensions.