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Home » Economy, Miscellaneous » Chairman John Avery Explains Rate Setting
Jan 9, 2015

Chairman John Avery Explains Rate Setting

John Avery

Avery went on to explain the rationale behind setting a rate that should last for the five-year period.

 

John Avery, Chairman, P.U.C.

“We would not want to set a rate that is designed to be changed five times within five years and so we tried to set a rate that will last for the five years if the forecast holds out to be accurate or fairly accurate.  So it depends on the actual performance over each year whether or not we need to make adjustments in order to keep the company on track.  But certainly we try to set one rate that if you apply that for the full five years and the forecast holds then over the five years the company will get the revenue that we expect them to get without having to change the rates every minute.  And so, if in the next rate review we find that the company performs exactly as we forecasted for the first year then there may be no real need to change the rate because if you expect then that forecast to continue then that rate should hold out over the five years.  So the rate reviews annually are just to make adjustments if the actual performance is materially different from the forecast.”

 

Interested parties were invited to submit written comments to the PUC last November; however, none were received.

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