| How Utility Rates Are Determined |
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* Special note: Information in this factsheet applies only to investor-owned utilities. People´s utility districts, cooperatives and municipally-owned utilities set their own rates, and some smaller telephone and water companies are not regulated or are partially regulated. In addition, some telephone companies file price lists for a limited number of non-basic services. Prices for those services may be changed on short notice.
As a utility customer, you are aware of how much you pay each month for your utility services. But, do you know how those rates are determined and how you can participate in setting them?
The Public Utility Commission controls the basic rates that certain electric, gas, telephone and water utilities charge their customers.
All regulated utilities must file rate and service schedules (tariffs) with us. Tariffs also contain the terms under which utilities provide service.
CHANGES TO RATES/SERVICES
Before a regulated utility can change a rate or service, it must first file the change with us. The company´s filing needs to contain a clear statement of what it is requesting, the effect the proposed change will have on company revenue, and the reasons for the change. We require the company to fully justify its need if the proposal will result in any increase of revenue.
Within 15 days of a rate filing that affects all or most of the company´s rate schedules, we require the utility to notify its customers of the rate proposal through a newspaper advertisement, an insert in customer billings, or an announcement mailed directly to each customer.
PROCESSING A RATE PROPOSAL
Under Oregon law, a regulated utility may file for a rate change at any time. Usually we have 30 days from the filing date to take action or the change will automatically go into effect. For some price-listed services offered by telecommunications utilities, prices may be changed on short notice.
When we receive a rate proposal, it is carefully reviewed by our staff. Based on their findings, they make a recommendation for action to the Commission in a public meeting. The Commission then has several options.
If the Commission determines that the proposal is justified, it may allow the tariff to go into effect as the utility requested. If this happens, affected persons may file a complaint asking that the matter be set for hearing. The tariff remains in effect subject to refund. The Commission may also allow a rate change to take effect on an interim basis, subject to refund. If we determine at a later date that an adjustment is necessary, the interim rates may be revised.
Complex filings need more study than can be accomplished in 30 days. In these cases, the Commission will suspend the matter for up to six months. For detailed cases requiring a more thorough investigation, the Commission may extend the suspension for an additional three months. Usually existing rates remain in effect during the suspension period. The Commission suspends most major rate change proposals to permit a detailed analysis.
After a rate filing is suspended or a complaint is filed, our administrative Hearings Division usually schedules a Pre-Hearing Conference to identify the individuals or groups who would like to participate or comment on the rate change proposal. Evidentiary hearing dates are set and the parties may informally discuss the issues they plan to raise at the hearing(s).
HEARINGS
In most major cases, we schedule a formal hearing or series of hearings. The Commission holds two types of public hearings: evidentiary hearings and public comment hearings.
We give the public an opportunity to express opinions at public comment hearings. During these meetings, members of the public hear the major details of the proposal and are free to comment. Participants are not subject to cross-examination. Public comment hearings are generally held in communities affected by the proposal.
Only the company, the Commission staff, intervenors and public counsel are permitted to offer testimony and cross examine witnesses at an evidentiary hearing. During these hearings, the witnesses for each party must take the stand to present their testimony and other evidence. The Commissioners and the Administrative Law Judge (ALJ) presiding over the case may ask them questions, and they must submit to a cross-examination from attorneys for the other parties. We hold these hearings in Salem.
In more complex rate cases,, our staff presents formal testimony. The testimony- includes detailed analyses by experts in utility economics and rates. In some cases, our staff and the company will reach a settlement on part or all of the rate proposal. The supporting testimony and any settlement reached must be presented to the Commission for approval.
HOW YOU CAN PARTICIPATE
If you would like to participate in a PUC case, you may ask to be designated as either a party or interested person. The designation will determine how you may participate and what information you will receive as the case progresses.
Party status confers certain rights in the case, such as the ability to present testimony, cross-examine other parties, file briefs, and request judicial review of Commission orders. Persons may intervene as a party in a proceeding with a showing of sufficient interest. The requirements for petitions to intervene are found in OAR 860-013-0021. The PUC allows intervention if the petitioner has sufficient interest in the proceeding and the petitioner´s appearance and participation will not unreasonably broaden the issues, burden the record, or unreasonably delay the proceeding. For instructions on how to petition to become an Intervenor, contact the Administrative Hearings Division, (503) 378-6678.
A person who does not want the rights and responsibilities of a party may ask to participate in a docket as an interested person. These individuals do not have the right to actively participate in the docket, but will receive copies of any public documents that the PUC generates, such as notices, rulings, and orders.
HOW AN EVIDENTIARY HEARING WORKS
With an ALJ presiding, exhibits are marked and a court reporter records all proceedings and testimony. Testimony must address the issues in the case. The utility company will have an attorney and expert witnesses present to testify and answer questions. To be most effective, testimony or comments should be carefully organized. If possible, it is best to provide written expert testimony.
Here´s how a hearing usually progresses:
- The utility presents its testimony in writing, followed by cross-examination.
- Interveners present their written testimony, followed by cross-examination.
- Our staff presents its testimony in writing, followed by cross-examination.
- The utility company presents rebuttal testimony, followed by cross-examination.
THE COMMISSION´S DECISION
When the hearing is completed, the ALJ closes the record and recommends an action to the Commission. The Commission may adopt the recommendation or make changes based on the testimony that has been presented.
The Commission will only authorize rate increases that are fair and reasonable to customers. The company must be allowed the opportunity to make enough money to meet reasonable expenses, pay interest on debts, and provide a reasonable return to stockholders. After the Commission has signed the order and it is issued, the company makes the authorized rate change. If you do not agree with the Commission´s order, you may ask the Commission to re-hear the case or reconsider the decision. This must be done within 60 days from the date of the order.
Judicial Review - You also have the option of appealing the decision directly to the courts. Appeals go to the Circuit Court first, then to the Court of Appeals, and possibly to the Supreme Court. A court appeal also must be made within 60 days.
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