UNS Gas, Inc. - 2011 Rate Case

Docket Number
Assigned Staff
J. Jerich
R. Moore
W. Rigsby
M. Wood


On Friday, April 8, 2011, UNS Gas, Inc. (“UNSG” or “Company”) filed an application for an increase in permanent rates(link is external) (“Application”) with the Arizona Corporation Commission ("ACC" or "Commission") for the Company’s local natural gas distribution operations in Coconino, Yavapai, Santa Cruz, Navajo and Mohave counties.

UNSG is a Class A utility that provided service to approximately 146,500 customers, of which approximately 91% were residential customers, during the test year ended December 31, 2010 (Test Year).

The Company’s present rates were established in Decision No. 71623, dated April 14, 2010(link is external) (RUCO was an intervenor in that proceeding).  UNSG is a wholly owned subsidiary of UniSource Energy Corporation, a publicly traded utility holding company that is based in Tucson, Arizona.

UNSG’s application states that the Company had adjusted operating revenues of $55.2 million during the Test Year.  Operating expenses for the same period totaled $41.3 million thus resulting in an operating income of approximately $13.8 million.  This produced a Test Year rate of return of 7.54 percent when applied to the Company-proposed original cost rate base of $183.5 million.  UNSG is requesting an increase in base rates of $5.6 million or a 10.45 percent increase over Test Year revenues.  Under UNS' proposal, the monthly bill for an average customer would increase from $56.04 to $57.33.  In addition to an increase in revenues, UNSG is also seeking a revenue decoupling mechanism known as a Conservation Adjustor Tracker ("CAT") to mitigate the effects of the ACC's Gas Energy Efficiency Rules approved in Decision No. 72042, dated December 10, 2010(link is external).

On Monday, May 9, 2011, ACC Staff issued a sufficiency letter(link is external) informing UNSG that its application for a permanent rate increase meets the requirements of A.A.C. R-14-2-103.

On Tuesday, May 10, 2011, RUCO filed an application to intervene(link is external) in the UNS Gas, Inc. rate case.

On Wednesday, May 18, 2011, the Administrative Law Judge ("ALJ") assigned to the case issued a Procedural Order(link is external) scheduling a telephonic Procedural Conference for 10:00 a.m. on Friday, May 27, 2011 at the ACC's offices at 400 West Congress in Tucson.

On Friday, May 20, 2011, ACC Staff filed a Request for Procedural Schedule(link is external) which presented a proposed schedule for the rate case proceeding.

On Monday, May 23, 2011, the ALJ issued a Notification of Intervention(link is external) granting RUCO's request to intervene in the proceeding.

On Thursday, June 2, 2011, the ALJ assigned to hear the case issued a Procedural Order(link is external)scheduling the evidentiary hearing on the matter for 10:00 am. on Thursday, February 9, 2012 at 400 West Congress, Room 222 in Tucson.

In the event that a settlement agreement is reached, a settlement hearing will be held at 10:00 a.m. on Wednesday, January 18, 2012 at 400 West Congress, Room 222 in Tucson.

Direct testimony on required revenue from ACC Staff, RUCO and other intervenors was filed on Friday, October 28, 2011. 

In its direct testimony, RUCO recommended a revenue increase of $1,709,982 which is $3,911,754 lower than UNSG's proposed level of revenue increase of  $5,621,736.  RUCO's recommended $56,833,067 level of operating revenue is 2.99 percent higher than the Company's Test Year adjusted revenues of $55,181,086. 

Direct testimony on rate design and cost of service was filed as scheduled on Thursday, November 10, 2011.  RUCO Director Jodi Jerich testified against the Company's proposed decoupling mechanism.

UNSG filed rebuttal on Friday, December 9, 2011. 

On Thursday, January, 12, 2012, RUCO filed a motion(link is external) to continue the filing deadlines for surrebuttal testimony and rejoinder testimony which were due on Wednesday, January 18, 2012 and Monday, January 30, 2012 respectively.

On Thursday, January, 12, 2012, the ALJ assigned to the case issued a Procedural Order(link is external)granting RUCO's motion to continue the filing deadlines for surrebuttal testimony and rejoinder testimony.

ACC Staff's surrebuttal testimony was filed on Friday, January 27, 2012. 

RUCO and other intervenors filed surrebuttal testimony as scheduled on Wednesday, February 1, 2012.

On Thursday, February 2, 2012, RUCO filed a notice of errata on the surrebuttal testimony of RUCO witness Rodney L. Moore.

UNSG filed a final round of rejoinder testimony on Friday, February 3, 2012.

The evidentiary hearing on UNSG was concluded on Thursday, February 9, 2012.  No legal briefs will be filed on the matter.

On Wednesday, February 29, 2012, UNSG filed a request with the ACC seeking approval of a temporary Purchased Gas Adjustor ("PGA") credit adjustment of $0.045 per therm.  The requested PGA credit adjustment will mitigate the impact of the Company's pending rate increase by refunding overcollections for purchased gas that have been paid for by the Company's ratepayers.

After weighing all of the evidence presented during the proceeding, including comments from concerned ratepayers, the ALJ assigned to the case issued her Recommended Opinion & Order (link is external)("ROO") on Tuesday, April 10, 2012.  Under the ROO, a typical customer with an average consumption of 45 therms would see a monthly bill of $54.41.  The ROO also adopts a Lost Fixed Cost Recovery mechanism.

Exceptions to the ROO were due by 4:00 p.m. on Thursday, April 19, 2012. 

During the Regular Open Meeting held on Tuesday, April 24, 2012, the five sitting ACC Commissioners voted to adopt the ROO by a vote of 5-0.