| (a) Application. This section applies to utilities
requesting recovery of expenses for ratemaking proceedings (rate-case
expenses) pursuant to Public Utility Regulatory Act (PURA) §36.061(b)(2)
and to municipalities requesting reimbursement for rate-case expenses
pursuant to PURA §33.023(b).
(b) Requirements for claiming recovery of or reimbursement
for rate-case expenses. A utility or municipality requesting recovery
of or reimbursement for its rate-case expenses shall have the burden
to prove the reasonableness of such rate-case expenses by a preponderance
of the evidence. A utility or municipality seeking recovery of or
reimbursement for rate-case expenses shall file sufficient information
that details and itemizes all rate-case expenses, including, but not
limited to, evidence verified by testimony or affidavit, showing:
(1) the nature, extent, and difficulty of the work
done by the attorney or other professional in the rate case;
(2) the time and labor required and expended by the
attorney or other professional;
(3) the fees or other consideration paid to the attorney
or other professional for the services rendered;
(4) the expenses incurred for lodging, meals and beverages,
transportation, or other services or materials;
(5) the nature and scope of the rate case, including:
(A) the size of the utility and number and type of
consumers served;
(B) the amount of money or value of property or interest
at stake;
(C) the novelty or complexity of the issues addressed;
(D) the amount and complexity of discovery;
(E) the occurrence and length of a hearing; and
(6) the specific issue or issues in the rate case and
the amount of rate-case expenses reasonably associated with each issue.
(c) Criteria for review and determination of reasonableness.
In determining the reasonableness of the rate-case expenses, the presiding
officer shall consider the relevant factors listed in subsection (b)
of this section and any other factor shown to be relevant to the specific
case. The presiding officer shall decide whether and the extent to
which the evidence shows that:
(1) the fees paid to, tasks performed by, or time spent
on a task by an attorney or other professional were extreme or excessive;
(2) the expenses incurred for lodging, meals and beverages,
transportation, or other services or materials were extreme or excessive;
(3) there was duplication of services or testimony;
(4) the utility's or municipality's proposal on an
issue in the rate case had no reasonable basis in law, policy, or
fact and was not warranted by any reasonable argument for the extension,
modification, or reversal of commission precedent;
(5) rate-case expenses as a whole were disproportionate,
excessive, or unwarranted in relation to the nature and scope of the
rate case addressed by the evidence pursuant to subsection (b)(5)
of this section; or
(6) the utility or municipality failed to comply with
the requirements for providing sufficient information pursuant to
subsection (b) of this section.
(d) Calculation of allowed or disallowed rate-case
expenses.
(1) Based on the factors and criteria in subsections
(b) and (c) of this section, the presiding officer shall allow or
recommend allowance of recovery of rate-case expenses equal to the
amount shown in the evidentiary record to have been actually and reasonably
incurred by the requesting utility or municipality. The presiding
officer shall disallow or recommend disallowance of recovery of rate-case
expenses equal to the amount shown to have been not reasonably incurred
under the criteria in subsection (c) of this section. A disallowance
may be based on cost estimates in lieu of actual costs if reasonably
accurate and supported by the evidence.
(2) A disallowance pursuant to subsection (c)(5) of
this section may be calculated as a proportion of a utility's or municipality's
requested rate-case expenses using the following methodology or any
other appropriate methodology:
(A) For utilities, the ratio of:
(i) the amount of the increase in revenue requirement
requested by the utility that was denied, to
(ii) the total amount of the increase in revenue requirement
requested in a proceeding by the utility.
(B) For municipalities, the ratio of:
(i) the amount of the increase in revenue requirement
requested by the utility unsuccessfully challenged by the municipality,
to
(ii) the total amount of the increase in revenue requirement
challenged by the municipality.
(3) If the evidence presented pursuant to subsection
(b)(6) of this section does not enable the presiding officer to determine
the appropriate disallowance of rate-case expenses reasonably associated
with an issue with certainty and specificity, then the presiding officer
may disallow or deny recovery of a proportion of a utility's or municipality's
requested rate-case expenses using the following methodology or any
other appropriate methodology:
(A) For utilities, the ratio of:
(i) the amount of the increase in revenue requirement
requested by the utility in the rate case related to the issue(s)
not reasonably supported by evidence of certainty and specificity,
to
(ii) the total amount of the increase in revenue requirement
requested in a proceeding by the utility.
(B) For municipalities, the ratio of:
(i) the amount of the increase in revenue requirement
requested by the utility in the rate case challenged by the municipality
relating to the issue(s) not reasonably supported by evidence of certainty
and specificity, to
(ii) the total amount of the increase in revenue requirement
challenged by the municipality.
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