Under the levelized energy adjustment clause, or LEAC, rate authorization, Georgetown said CUC is prohibited by the commission from using LEAC rate revenue for any purpose other than fuel oil and related expenses.
In the Jan. 2012 regulatory session of CPUC, Georgetown said it will also recommend to the commission to allow the consultant to look into the impact of reimbursing consumers for any amount determined to have been over-recovered.
Georgetown, the commission’s technical consultant, reported that the current LEAC rate is set at an effective fuel price of $3.55 per gallon, inclusive of the volatility elements.
However, the current price of fuel oil and the Oct. 2011 gas oil futures are priced at less than $2.90 per gallon — a difference of $0.65 per gallon or almost 20 percent.
“This over-recovery situation has existed since approximately the May 2011 timeframe,” Georgetown said.
Georgetown believes that CUC was in a similar over-recovery situation between May 2010 and Nov. 2010.
The consultant, however, said CUC was in an under-recovery position during the Feb. 2011 to April 2011 timeframe.
But those under-recoveries do not appear to offset the substantial over-recovery of CUC, it said.
“CPUC should address certain policies concerning LEAC rate administration,” Georgetown said.
Georgetown said aside from the revised LEAC rate, the commission should also make a reconciliation of past fuel and related costs included in the LEAC rate.
“We envision that the reconciliation will require a second proceeding since the issue of whether CUC has over-recovered its fuel and related costs is at issue,” Georgetown said.
It said it will present during the Jan. 2012 regulatory session findings and recommendations regarding the reconciliation of historic LEAC expenses and revenues.
Before Dec. 21, Georgetown said it will file its reconciliation recommendation with the commission.
Georgetown said CUC will be permitted to present and support its arguments for amending the LEAC rate reconciliation regarding the “as collected vs. ‘accrual’ method.”
CUC has proposed that any reconciliation be prepared on the basis of “as collected” method, which is different from the method approved by the commission, Georgetown said.
“We believe this will be an important proceeding based upon what appears to be substantial over-recoveries during the May 2010 to Nov. 2010 timeframe and the May 2011 to the present,” Georgetown said.
