PSC Decision Sets Table For More Important Discussions
The state Public Service Commission’s decision last week in the Jamestown Board of Public Utilities’ mini rate case clears up much more than simply how much electric rates will increase for BPU customers.
The 1.69 percent electric rate hike should be seen by some as the third-most important item in the 33-page decision.
We note the commission’s approval of revenue contribution made by the utility to the city. Those who read the paper regularly know how big a point of controversy this has been. The PSC gave guidance about how best to decide if the dividend is actually harming the utility’s financial performance. It is interesting to note the Public Service Commission pegged the BPU’s net surplus at more than $70 million, or 83 percent of its capital structure before saying, “We do not have any concerns over the recent level of contributions when compared to income.”
As for claims from ratepayers outside the city who have argued the revenue contribution was basically a tax by the city on non-city businesses and residents, the commission wrote that argument isn’t logical. As has been argued by Mayor Sam Teresi, it was the city and its taxpayers which created the initial investment in the utility. Expansion has created ratepayers outside the city, but not investors. The city is entitled to require a dividend payment, and it wouldn’t be right to make a similar payment to ratepayers outside the city. “The return usually given to the investor (thereturn on surplus) will go to others, who have not provided an investment in the utility,” the commission wrote.
The commission also finally put an end to uncertainty over how the BPU should use proceeds from off-system sales that had accumulated after the utility’s coal boiler dismantling fund reached its limit. It is helpful to have the state’s approval to use some of that money for required overhauls of the gas turbine the BPU uses to generate power. Another part of the money will be used to create an overhaul reserve fund. If there is money left after those two funds are capped, it will be given back to ratepayers as fuel adjustment.
There should be no confusion moving forward about the dividend payments. Removing those peripheral issues means the community can focus on what is truly important – right-sizing Jamestown’s budget so that it doesn’t have to use BPU dividend payments in the first place.
That is a much more productive discussion.