How does a rate case work?
Before a TPUC regulated electric, natural gas, water, and sewer company can change a rate or service, it must first file a Petition with the Tennessee Public Utility Commission (“TPUC”).
Under the traditional rate increase case filing, the company must provide a clear statement of what it is requesting, the effect the proposed change will have on company revenue, and the reasons for the change.
Telecommunications companies generally have greater pricing flexibility and do not have to file a traditional rate case with the Commission to adjust rates either up or down.
TPUC does not regulate the rates of municipal electric, gas, or water and sewer systems, rural electric cooperatives, public water supply districts or public sewer districts, wireless telephones or cable television.
When a regulated Tennessee utility files for a rate increase, TPUC will require that interested parties be notified and that the filing be announced to the general public. When notice is received, the agency charged with representing the interest of consumers, known as the Consumer Advocate, may file a petition to intervene on behalf on consumers. The Commission will set a procedural schedule for the case, that will include hearing dates and public comment opportunities based on dates given by all parties in the case/docket. By law, the Commission has a maximum of 11 months from the date the case is filed to make a decision on the proposal; most cases are decided within 6 months.
Because the issues are complex, the Commission will suspend the proposed rates to allow for a thorough investigation. Existing rates remain in effect during the suspension period. The Commission may determine that the proposal is justified only in part, and it may allow the company to increase rates, but less than the utility requested. The Commission also hears rate decrease cases where a utility may request lowering rates.
Prior to any hearings, TPUC staff will conduct an independent, thorough investigation of the company’s books and records. This permits the staff to provide the Commission with a recommendation in the case.
Other parties, such as the Consumer Advocate Division with the Attorney General’s Office, or industrial customers may also submit recommendations as to what type of rate change, if any, should be granted. Other parties must first file a Petition to Intervene, and request that it be granted by the Commission. Parties in a rate case meet in a pre-hearing conference to discuss issues in the case. This procedure may help parties reach agreements which settle all or some issues in the case. This frequently results in cases being concluded sooner than the 11-month time period provided by law.
The Commission must approve any proposed settlement to ensure that the agreement is a reasonable resolution of the case and in the public interest.
Formal evidentiary hearings are held. Testimony is prepared, exhibits are marked, and a court reporter records all proceedings and live testimony. Testimony must address the issue in the case. The utility company will have an attorney and expert witnesses present to testify and answer questions.
In most cases, the utility, TPUC staff, Public Counsel and any intervenors will present testimony in writing, followed by cross-examination. In some cases, the Commission will hold a local public hearing to give the public an opportunity to express its opinion. Local public hearings are generally held in the communities affected by the proposal.
After the hearings are complete, a transcript of the case is prepared and parties file briefs that summarize their positions. Commissioners review that record in making their decision.
The Commission will only authorize rate increases that they think are fair and just 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.
Once a decision has been reached, the Commission will announce that decision through a written report and order. That order is subject to appeal to a court by any of the participants in the case, except the Public Service Commission staff.
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TRA (Tennessee Regulatory Authority) was established in 1996. In 2017, Governor Bill Haslam signed legislation officially renaming TRA as the Tennessee Public Utility Commission (TPUC) to better align Tennessee with regulatory industry standards. If you have a TPUC regulated utility, and you still have billing or service-related questions that your provider has not answered, or just an inquiry in general, please call TPUC at (800) 342-8359 / (615) 741-2904 or visit their website.