Public Utilities Disclosure [Text Block] | 3. Below are descriptions of OTP ’s major capital expenditure projects that have had, or will have, a significant impact on OTP’s revenue requirements, rates and alternative revenue recovery mechanisms, followed by summaries of specific electric rate or rider proceedings with the Minnesota Public Utilities Commission (MPUC), the North Dakota Public Service Commission (NDPSC), the South Dakota Public Utilities Commission (SDPUC) and the Federal Energy Regulatory Commission (FERC) impacting OTP’s revenues in 2017 2016. Major Capital Expenditure Projects Big Stone South –Brookings Multi-Value Transmission Project ( MVP ) and Capacity Expansion 2020 CapX2020 ) Project 345 70 December 2011. MVPs are designed to enable the region to comply with energy policy mandates and to address reliability and economic issues affecting multiple areas within the MISO region. The cost allocation is designed to ensure the costs of transmission projects with regional benefits are properly assigned to those who benefit. Construction began on this line in the third 2015 September 8, 2017. OTP’s capitalized costs on this project as of September 30, 2017 $70.0 100% Big Stone South –Ellendale MVP —This is a 345 163 December 2011. second 2016 2019. September 30, 2017 $78.4 100% Recovery of OTP ’s major transmission investments is through the MISO Tariff (several as MVPs) and, currently, Minnesota, North Dakota and South Dakota Transmission Cost Recovery (TCR) Riders. Minnesota 2016 —The MPUC rendered its final decision in OTP’s 2016 March 2017 May 1, 2017. 8.61% 7.5056% 10.74% 9.41%. July 6, 2017 May 1, 2017 The MPUC ’s order also included: ( 1 2 Information on interim and final rate increases and interim revenue refund accrued is detailed in the tables below: ($ in thousands) Interim Rates Authorized April 14, 2016 Final Rates Revenue Increase – Annualized based on Test Year Data $ 16,816 $ 12,100 Revenue Percent Increase 9.56 % 6.23 % Return on Rate Base 8.07 % 7.5056 % Jurisdictional Rate Base based on Test Year Data $ 483,000 $ 471,000 Return on Equity 10.1 % 9.41 % Based on Equity to Total Capital of 52.50 % 52.50 % Debt to Total Capital 47.50 % 47.50 % Interim Revenue (in thousands) April 16, 2016 through September 30, 2017 Billed $ 21,847 Accrued Refund $ 8,237 Net Interim Revenue $ 13,610 Interest on Refundable Amount $ 233 Refund Liability as of September 30, 2017 $ 8,470 In addition to the interim rate refund, OTP will be required to refund the difference between ( 1 ECR and TCR riders based on the return on equity (ROE) approved in its most recent rider update and ( 2 9.41% 2016 April 16, 2016, September 30, 2017 $0.9 $1.4 12 November 1, 2017, OTP will continue to accrue the interim and rider rate refunds until final rates become effective, for bills rendered on and after November 1, 2017. The interim rate refund, including interest, will be applied as a credit to Minnesota customers’ electric bills beginning November 17, 2017. Minnesota Conservation Improvement Programs (MNCIP) not May 25, 2016 13.5% 2017 12% 2018 10% 2019 1.7% 50% $5.0 2016, $4.3 2015 $3.0 2014. Transmission Cost Recovery Rider —The Minnesota Public Utilities Act provides a mechanism for automatic adjustment outside of a general rate proceeding to recover the costs of new transmission facilities that meet certain criteria, plus a return on investment at the level approved in a utility’s last general rate case. Additionally, following approval of the rate schedule, the MPUC may In OTP ’s 2016 May 1, 2017, August 18, 2017 to contest the portion of the order requiring OTP to allocate costs between jurisdictions of the FERC MVP transmission projects in the TCR rider. OTP believes the MPUC-ordered treatment conflicts with federal authority over transmission of electricity in interstate commerce and rates for the transmission of electricity subject to the jurisdiction of the FERC as set forth in the Federal Power Act of 1935, Environmental Cost Recovery Rider —OTP has an ECR rider for recovery of OTP’s Minnesota jurisdictional share of the revenue requirements of its investment in the Big Stone Plant Air Quality Control System (AQCS). The ECR rider provides for a return on the project’s construction work in progress (CWIP) balance at the level approved in OTP’s 2010 2016 North Dakota General Rates — O n November 2, 2017 $13.1 8.7%. 7.97% 10.30%. January 1, 2018. OTP ’s most recent general rate increase in North Dakota of $3.6 3.0%, November 25, 2009 December 2009. 8.62%, 10.75%. Renewable Resource Adjustment —OTP has a North Dakota Renewable Resource Adjustment which enables OTP to recover its North Dakota jurisdictional share of investments in renewable energy facilities. This rider allows OTP to recover costs associated with new renewable energy projects as they are completed, along with a return on investment. Transmission Cost Recovery Rider —North Dakota law provides a mechanism for automatic adjustment outside of a general rate proceeding to recover jurisdictional capital and operating costs incurred by a public utility for new or modified electric transmission facilities. For qualifying projects, the law authorizes a current return on CWIP and a return on investment at the level approved in the utility's most recent general rate case. Environmental Cost Recovery Rider —OTP has an ECR rider in North Dakota to recover its North Dakota jurisdictional share of the revenue requirements associated with its investment in the Big Stone Plant AQCS and Hoot Lake Plant Mercury and Air Toxics Standards (MATS) projects. The ECR rider provides for a current return on CWIP and a return on investment at the level approved in OTP’s most recent general rate case. South Dakota 2010 —OTP’s most recent general rate increase in South Dakota of approximately $643,000 2.32% April 21, 2011 June 1, 2011. 8.50%. Transmission Cost Recovery Rider —South Dakota law provides a mechanism for automatic adjustment outside of a general rate proceeding to recover jurisdictional capital and operating costs incurred by a public utility for new or modified electric transmission facilities. Environmental Cost Recovery Rider —OTP has an ECR rider in South Dakota to recover its South Dakota jurisdictional share of revenue requirements associated with its investment in the Big Stone Plant AQCS and Hoot Lake Plant MATS projects. Rate Rider Updates The following table provides summary information on the status of updates since January 1, 2015 Rate Rider R - Request Date A - Approval Date Effective Date Requested or Approved Annual Revenue ($000s) Rate Minnesota Conservation Improvement Program 2016 Incentive and Cost Recovery A – September 15, 2017 October 1, 201 7 $ 9,868 $0.00 536/kwh 2015 Incentive and Cost Recovery A – July 19, 2016 October 1, 2016 $ 8,590 $0.00275/kwh 2014 Incentive and Cost Recovery A – July 10, 2015 October 1, 2015 $ 8,689 $0.00287/kwh Transmission Cost Recovery 2017 Rate Reset 1 A – October 30, 2017 November 1, 2017 $ (3,311 ) Various 2016 Annual Update A – July 5, 2016 September 1, 2016 $ 4,736 Various 2015 Annual Update A – March 9, 2016 April 1, 2016 $ 7,203 Various 2014 Annual Update A – February 18, 2015 March 1, 2015 $ 8,388 Various Environmental Cost Recovery 2017 Rate Reset A – October 30, 2017 November 1, 2017 $ (1,943 ) - 0.935% of Rev 2016 Annual Update A – July 5, 2016 September 1, 2016 $ 11,884 6.927% of Rev 2015 Annual Update A – March 9, 2016 October 1, 2015 $ 12,104 7.006% of Rev North Dakota Renewable Resource Adjustment 201 6 Annual Update A – March 15, 2017 April 1, 2017 $ 9,156 7.00 5% of Rev 2015 Annual Update A – June 22, 2016 July 1, 2016 $ 9,262 7. 573% of Rev 201 4 Annual Update A – March 25, 2015 April 1, 2015 $ 5,441 4.069% of Rev Transmission Cost Recovery 201 7 Annual Update R – August 31, 2017 January 1, 2018 $ 8,593 Various 201 6 Annual Update A – December 14, 2016 January 1, 2017 $ 6,916 Various 2015 Annual Update A – December 16, 2015 January 1, 2016 $ 9,985 Various Environmental Cost Recovery 201 7 Annual Update A – July 12, 2017 August 1, 2017 $ 9,917 7.633% of base 201 6 Annual Update A – June 22, 2016 July 1, 2016 $ 10,359 7. 904% of base 2015 Annual Update A – June 17, 2015 July 1, 2015 $ 12,249 9.193 % of base South Dakota Transmission Cost Recovery 201 6 Annual Update A – February 17, 2017 March 1, 2017 $ 2,053 Various 2015 Annual Update A – February 12, 2016 March 1, 2016 $ 1,895 Various 2014 Annual Update A – February 13, 2015 March 1, 2015 $ 1,538 Various Environmental Cost Recovery 2017 Annual Update A – October 13, 2017 November 1, 2017 $ 2,082 $0.00 483/kwh 201 6 Annual Update A – October 26, 2016 November 1, 2016 $ 2,238 $0.00536/kwh 201 5 Annual Update A – October 15, 2015 November 1, 2015 $ 2,728 $0.00643/kwh 1 Approved on a provisional basis in the Minnesota general rate case docket and subject to revision in a separate docket . The following table presents revenue recorded by OTP under rate riders in place in Minnesota, North Dakota and South Dakota: Revenues Recorded under Rider Rates Three Months Ended September 30, Nine Months Ended September 30, Rate Rider (in thousands) 2017 2016 2017 2016 Minnesota Conservation Improvement Program Costs and Incentives 1 $ 2,499 $ 2,839 $ 6,567 $ 7,554 Transmission Cost Recovery (594 ) 779 2,849 4,188 Environmental Cost Recovery 1,669 3,127 7,305 9,362 North Dakota Renewable Resource Adjustment 2,213 2,170 5,822 6,151 Transmission Cost Recovery 2,410 1,950 6,305 6,155 Environmental Cost Recovery 2,396 2,762 7,272 8,344 South Dakota Transmission Cost Recovery 596 335 1,324 1,397 Environmental Cost Recovery 613 691 1,755 1,951 Conservation Improvement Program Costs and Incentives 104 135 520 418 1 Includes MNCIP costs recovered in base rates. FERC Wholesale power sales and transmission rates are subject to the jurisdiction of the FERC under the Federal Power Act. The FERC is an independent agency with jurisdiction over rates for wholesale electricity sales, transmission and sale of electric energy in interstate commerce, interconnection of facilities, and accounting policies and practices. Filed rates are effective after a one Multi-Value Transmission Projects —On December 16, 2010 On November 12, 2013 may 12.38% ’s transmission rates to a proposed 9.15%. 15 November 12, 2013 February 11, 2015. December 22, 2015 10.32%, September 28, 2016 10.32% September 2016 On November 6, 2014 50 January 5, 2015 November 12, 2013 ’s incentive rate filing, OTP’s ROE will be 10.82% 10.32% 0.5% September 28, 2016. On February 12, 2015 may 12.38% 8.67%. second second 15 February 12, 2015 May 11, 2016. June 18, 2015 February 16, 2016. June 30, 2016 ’ ROE should be 9.7%. second Based on the probable reduction by the FERC in the ROE component of the MISO Tariff, OTP had a $2.7 December 31, 2016, first 15 February June 2017 2016 $2.7 December 31, 2016 $1.6 September 30, 2017. In June 2014, two proceeding involving New England Transmission Owners (NETOs). The issue of how to apply the FERC ROE methodology has been contested in various complaint proceedings, including the two April 2017 June 2014 not June 2014 April 2017 On September 29, 2017 second second first |