June 29, 2011
DPUC Final Decision Denies the Yankee Gas Services Company’s Requested Rate Increase
The Department of Public Utility Control today rendered a final Decision that denied the requested revenue increase for Yankee Gas Services Company. Yankee originally requested a cumulative $78.507 million (8.53%) increase over current revenues. However, during the course of the proceedings, the Company modified its filings twice, reducing its cumulative request to $68.542 million (7.47%). The Department’s final Decision approves cumulative revenues of $936,854,000 million, a cumulative increase of $5,645,000 million (0.59%) over current revenues. The Department’s reduction to the Company’s request was primarily due to increased sales forecast, current capital market conditions, decreased payroll, reductions to rate base and savings from the proposed NU/NStar Merger.
The exact effect of the approved revenues on each rate class (residential heating and non-heating, various commercial/industrial, etc.) will not be known until later in 2011. The Company will be ordered to file new tariffs (rates) for the first year by July 11 that will produce the first year revenue permitted by the Department’s decision. Once approved by the Department, new rates will become effective late July.
Lead Commissioner on this matter, Amalia Vazquez Bzdyra, noted that: “In this case the evidence presented by the Company did not support the need for the requested increase in revenues. In numerous circumstances, the Company failed to provide justification or sufficient evidence in support of their requests. The DPUC always strives to find a balance between the financial needs of the Company and the interest of its ratepayers. I am pleased, in these times economic times, that Yankee’s ratepayers are spared a material increase in their cost for this essential service.”
In any request for an increase in revenues, the applicant must prove that it requires the additional revenue to meet its obligations. State law directs the Department to calculate rates that are adequate to ensure safe, adequate and reliable service. In this case, the evidence presented did not convince the Department that Yankee requires significant additional revenue to meet its obligations to its ratepayers.
State law further directs the Department to set an allowable rate of return on equity so that a company can earn a return on its investment and attract additional capital. Yankee’s current return on equity is set at 10.10%; but will change to 8.83%.