Statutory Authority: 26 Delaware Code, Section 209(a) (26 Del.C. 209(a))

PUBLIC SERVICE COMMISSION

Statutory Authority: 26 Delaware Code, Section 209(a) (26 Del.C. 209(a))

PROPOSED

Regultions Docket No.4, Establishing Minimum Filing Requirements for all Regulated Companies Under the Jurisdiction of the PSC

BEFORE THE PUBLIC SERVICE COMMISSION OF THE STATE OF DELAWARE

IN THE MATTER |

OF THE REGULATION |

ESTABLISHING THE |

MINIMUM FILING |

REQUIREMENTS FOR |

ALL REGULATED | PSC REGULATION

COMPANIES SUBJECT | DOCKET NO. 4

TO THE JURISDICTION |

OF THE PUBLIC SERVICE |

COMMISSION |

ORDER NO. 5051

AND NOW, this 23rd day of March, 1999;

WHEREAS, the Public Service Commission (“Commission”) has previously adopted “Minimum Filing Requirements for All Regulated Companies” (“Minimum Filing Requirements”) to ensure uniform content in many of the submissions made to the Commission, including applications for rate adjustments; and

WHEREAS, by memorandum dated May 22, 1998, the Commission’s Staff sought changes and additions to the Minimum Filing Requirements for the stated purposes of increasing the procedural and practical efficiency of its oversight of the ratemaking process, and to lessen the administrative burdens of the same; and

WHEREAS, by its Order No. 4805 herein, the Commission provided for re-examination of the affected Parts of the Minimum Filing Requirements, along with the required public notice, and the solicitation of comment concerning the efficacy, reasonableness, and propriety of Staff's proposals; and

WHEREAS, Staff now advises that as a result of public comments regarding its original proposals, it has determined to abandon the same, and sponsor in their place new proposals; and

WHEREAS, under 29 Del. C. § 10118(c), it is incumbent on the Commission to determine whether Staff's latest proposals (as modified) reflect substantive changes from its original proposals; and

WHEREAS, the Commission is persuaded that Staff's latest proposals do reflect substantive changes from its original proposals; and

WHEREAS, for the reasons stated in its Order No. 4805 herein, the Commission continues to believe that those Parts of the Minimum Filing Requirements to which Staff's proposals are directed should be re-examined and, if appropriate, amended; and

WHEREAS, the Commission desires to give public notice, pursuant to 29 Del. C. §§ 1133, 10115, and 10118(a) and (c), of its intention to re-examine the subject Parts of the Minimum Filing Requirements, in light of Staff's latest proposals, and to solicit comment concerning the efficacy, reasonableness, and propriety of the same;

NOW, THEREFORE, IT IS ORDERED:

1. The Commission finds that Staff's latest proposed revisions to the Minimum Filing Requirements, as set forth in the notice attached hereto as Exhibit "A", reflect substantive changes from its earlier proposals, and so constitute new proposals within the meaning of 29 Del. C. §10118(c).

2. The Secretary of the Commission shall transmit to the Registrar of Regulations for publication in the Delaware Register the notice attached hereto as Exhibit “A.” Such notice shall be accompanied by a copy of the proposed and existing Minimum Filing Requirements.

3. The Secretary of the Commission shall cause the notice attached hereto as Exhibit “B” to be published in The News Journal and Delaware State News newspapers on or before April 1, 1999.

4. The Secretary shall cause the notice attached hereto as Exhibit “B” to be sent by U.S. mail to all public utilities who currently file rate applications under Parts A and B of the Minimum Filing Requirements for All Regulated Companies Subject to the Jurisdiction of the Commission and all persons who have made timely written requests for advance notice of the Commission’s regulation-making proceedings.

5. G. Arthur Padmore is continued as the Hearing Examiner for this matter pursuant to 26 Del. C. §502 and 29 Del. C. ch. 101, and is authorized to organize, classify, and summarize all materials, evidence, and testimony filed in this docket, to conduct the public hearing contemplated under the attached notice, and to make proposed findings and recommendations to the Commission concerning Staff’s proposed amendments on the basis of the materials, evidence, and testimony submitted. Hearing Examiner Padmore is specifically authorized, in his discretion, to solicit additional comment and to conduct, on due notice, such public hearings as may be required to develop further materials and evidence concerning any later-submitted proposed amendments. John S. Spadaro, Esquire, is designated as Staff Counsel for this matter.

6. The public utilities regulated by the Commission are notified that they may be charged for the cost of this proceeding under 21 Del. C. § 114.

7. The Commission reserves the jurisdiction and authority to enter such further Orders in this matter as may be deemed necessary or proper.

BY ORDER OF THE COMMISSION:

Robert J. McMahon, Chairman

Vice Chairman

Arnetta McRae, Commissioner

John R. McClelland , Commissioner

ATTEST:

Karen J. Nickerson, Secretary

EXHIBIT “A”

BEFORE THE PUBLIC SERVICE COMMISSION OF THE STATE OF DELAWARE

IN THE MATTER |

OF THE REGULATION |

ESTABLISHING THE |

MINIMUM FILING |

REQUIREMENTS FOR |

ALL REGULATED | PSC REGULATION

COMPANIES SUBJECT | DOCKET NO. 4

TO THE JURISDICTION |

OF THE PUBLIC SERVICE |

COMMISSION |

NOTICE OF COMMENT PERIOD ON PROPOSED CHANGES AND AMENDMENTS TO MINIMUM FILING REQUIREMENTS

In 1981, the Delaware Public Service Commission (the “Commission” or “PSC”) adopted “Minimum Filing Requirements for general rate increase applications. These requirements, which were last modified in 1984, govern the filing and content of rate increase applications made by utilities under the Commission’s jurisdiction. They are reproduced in their present form as attached.

Rate increase applications submitted to the Commission are reviewed and evaluated by the Commission’s Staff for the justness and reasonableness of the rates proposed. The Commission is informed by Staff that the frequency and number of such applications has, in recent years, increased significantly, resulting in a corresponding increase in the administrative burdens associated with Staff’s review. Staff has also identified certain practices that (it contends) tend to add significantly and unreasonably to these administrative burdens. According to Staff, these practices typically involve changes made by the utility to data on which the application relies, including changes to the test year (as that term is used in the Minimum Filing Requirements) and changes in rate base items, expenses, or revenues. Staff contends that the burden occasioned by such practices is most severe where multiple and material changes are made at different points in time during the pendency of a single application. Staff further contends that, where such changes are sought, they are often of a type that is avoidable through the applicant’s exercise of ordinary diligence in preparing its rate increase application.

Staff now seeks certain changes and additions to the Minimum Filing Requirements that are designed, it says, to curtail the offending practices. In this way, Staff explains, the efficiency of the rate review process will be increased, and its administrative burdens reduced.

The text of the proposed Minimum Filing Requirements, as modified by Staff’s changes and additions, is attached. These proposed changes and additions may be described as follows:

1. Part “A”, Section I(B)(1) of the Minimum Filing Requirements provides a definition of the “test year,” and specifies the time period to be reflected by the test year.¹ The last two sentences of this section now read: “In addition, the twelve-month period must end no more than seven months prior to the filing of the application for increased rates. For example, if the actual results of the operations for the 12-months ending March 31, xxxx, are used for the purpose of the test year, the application must be filed no later than October 31, xxxx.” Staff proposes that these two sentences be changed to read:

In addition, the twelve-month period must end no more than seven months prior to the filing of the application, but no sooner than one month after the final closing of the company’s books for the last month of the test year (post reversal of accrual entries), so that actual expenditures are reflected in the books of account. For example, if the actual results of operations for the twelve months ending March 31, xxxx, are used for purposes of the test year, the application must be filed no sooner than April 30, xxxx, but no later than October 31, xxxx.

2. Part “A”, Section I(C) of the Minimum Filing Requirements governs the filing of direct testimony and supporting exhibits, as well as the modification of test period data. It now reads: “Prepared direct testimony and supporting exhibits must be filed coincident with the filing of the applications for rate relief. This filing requirement shall not prohibit the utility from subsequently submitting further testimony and exhibits in a timely fashion as necessary or proper to address issues raised during investigation of the filing; nor shall it (or B.2., above) prohibit the utility from proffering an exhibit or exhibits in the form of a fully projected test period, provided (1) such period shall consist of twelve consecutive months ending not later than the end of the first year during which the proposed rates are to become effective; (2) it is supported by relevant testimony establishing a verifiable link between the test period defined in Section B.2. and the projected test period; and (3) it is in format consistent with such test period. Modifications in test period data occasioned by reasonably known and measurable changes in current or future rate base items, expenses (i.e., labor costs, tax expenses, insurance, etc.) or revenues may be offered in evidence by the utility up until the time the utility fields its rebuttal testimony." Staff proposes that the phrase "investigation of the filing," as it appears in the second sentence of this section, be changed to read "investigation of the application." Staff next proposes that the word "also" be inserted immediately before the word "proferring" in that sentence, and that the following parenthetical language be added immediately before the word "provided" in the same sentence: "(in addition to the test period described in I.B.2. above)." Staff further proposes that the last sentence of this section be changed to read:

Modifications in test period data occasioned by reasonably known and measurable changes in current or future rate base items, expenses (i.e., labor costs, tax expenses, insurance, etc.) or revenues may be offered in evidence by the utility at any time prior to its introduction of rebuttal evidence; provided, however, that if any party makes timely objection to the proffered modifications, such objections shall be promptly presented to the Hearing Examiner for a decision on due consieration of the parties' respective positions. For purposes of this Section I(C), an objection shall be timely if made within five (5) business days of the utility's proffer of modifications.

3. Part “A”, Section 1(E) of the Minimum Filing Requirements addresses Staff’s review of rate increase applications for compliance with the Minimum Filing Requirements, and the penalties for noncompliance. This section now reads: "The Commission Staff will review all filings for compliance with the format and instructions furnished herein and notify the utility within 30 days after the date of filing of any defects in compliance. The utility after such notification by the Commission Staff will then have 30 days to correct these defects. If such defects are not corrected, the Commission may reject a utility's rate application for non-compliance with the Minimum Filing Requirements." Staff recommends that the first sentence's reference to "filings" and "filing" be changed to "applications" and "application." Staff further recommends that the following language be added to the end of this section:

Notwithstanding anything to the contrary in this Section I(E), if such defects are, in Staff's discretion, so numerous or serious as to materially impair Staff's timely review of the application, Staff may reject the same thereby rendering it a nullity for all purposes (including without limitation the purposes contemplated under 26 Del. C. § 306), provided, however, that any such rejection by Staff may be challenged by the utility upon timely request for reconsideration to the Commission. For purposes of this Section I(E), a request for reconsideration shall be timely if presented in writing to the Commission within five (5) business days of Staff's rejection of the application to which it relates. In the event a utility's challenge to Staff's rejection of an application under this Section I(E) is successful, the application shall be reinstated ab initio. Nothing in this Section I(E) shall prevent a utility from filing an application in draft form for Staff's informal review and approval without prejudice, such informal review and approval not to be unreasonably withheld by Staff. The requirements of this Section shall be in addition to, and not in place of, the requirements of Rule 6.2 of the Rules of Practice and Procedure of the Delaware Public Service Commission.

4. Part "A", Schedule No. 2-B is titled "Intangible Assets Claimed in Rate Base." It includes a column heading titled "Revenue Included Test Year." Staff recommends that this column heading be deleted.

5. Part “B”, Section 1(B) of the Minimum Filing Requirements provides a definition of the “test year,” and specifies the time period to be reflected by the test year. Staff recommends that the language of this section be replaced in its entirety by the language it proposes for the corresponding section within Part "A" of the Minimum Filing Requirements (including the language of the existing Sections I(B)(2)(a) and (b) of Part "A", which remain unchanged under Staff's proposals).

6. Part “B”, Section I(E) of the Minimum Filing Requirements addresses Staff’s review of applications for compliance with the Minimum Filing Requirements, and the penalties for noncompliance. Staff recommends identical changes to the ones it proposes for the corresponding section within Part “A” of the Minimum Filing Requirements.

7. The Minimum Filing Requirements are accompanied by an explanatory memorandum titled "Minimum Filing Requirements - General Information." The General Information document includes a brief explanation of the applicability of Part "A" of the Minimum Filing Requirements, under the heading "Part A - Rate Increase Applications -Major Utilities." The first sentence under this heading now reads: "Part A applies to utilities or divisions thereof with annual gross intra-State revenues of $1 million or more." Staff proposes to add the following parenthetical language at the end of the sentence: "(at the time of filing)." The second paragraph under this heading now reads:

Based on 1978 intra-State revenue levels, the following Delaware utilities would be subject to Part A at the present time:

Artesian Water Company

Chesapeake Utilities Corporation

Delmarva Power & Light Company (Electric Division)

Delmarva Power & Light Company (Gas Division)

Rollins Cablvue, Inc.

The Diamond State Telephone Company

Wilmington Suburban Water Corporation

Staff proposes to delete this paragraph. Finally, the General Information document includes a corresponding explanation of the applicability of Part "E" of the Minimum Filing Requirements, titled "Part E - Quarterly Reporting Requirements - Major Utilities." The first sentence under this heading now reads: "All major utilities subject to the jurisdiction of the Commission (those with annual gross intra-state revenues of $1 million dollars or more shown in Part A of these instructions) are required to file quarterly information in accordance with the instructions contained in Part E." Staff proposes to revise this sentence to read: "All major utilities, except Bell Atlantic-Delaware, Inc., subject to the jurisdiction of the Commission (those with annual gross intra-state revenues of $1 million dollars or more shown in Part A of these instructions) are required to file quarterly information in accordance with the instructions in Part E."

The Commission has authority to issue such rules, and to effect the proposed changes and additions, under 26 Del. C. § 209(a).

The Commission hereby solicits written comments, suggestions, compilations of data, briefs, or other written materials concerning Staff’s proposed changes and additions to the Minimum Filing Requirements. Ten (10) copies of such materials shall be filed with the Commission at its office located at 861 Silver Lake Boulevard, Cannon Building, Suite 100, Dover, Delaware 19904. All such materials shall be filed on or before May 1, 1999.

In addition, the Commission’s duly appointed Hearing Examiner will conduct a public hearing concerning Staff’s proposed changes and additions on a date to be determined, and after receipt of written comments. Notice of such public hearing will be published at a later date in the Delaware Register of Regulations and in two newspapers of general circulation. Interested persons may present comments, evidence, testimony, and other materials at that public hearing.

The Minimum Filing Requirements, Staff’s proposed changes and additions to the same, and the materials submitted in connection therewith will be available for public inspection and copying at the Commission’s Dover office during normal business hours. The fee for copying is $0.25 per page.

Any individual with disabilities who wishes to participate in these proceedings should contact the Commission to discuss any auxiliary aids or services needed to facilitate such review or participation. Such contact may be in person, by writing, telephonically, by use of the Telecommunications Relay Service, or otherwise. The Commission’s toll-free telephone number in Delaware is (800) 282-8574. Persons with questions concerning this application may contact the Commission's Secretary, Karen J. Nickerson, by either Text Telephone (“TT”) or by regular telephone at (302) 739-4333 or by e-mail at knickerson@state.de.us.

EXHIBIT "B"

BEFORE THE PUBLIC SERVICE COMMISSION OF THE STATE OF DELAWARE

IN THE MATTER |

OF THE REGULATION |

ESTABLISHING THE |

MINIMUM FILING |

REQUIREMENTS FOR |

ALL REGULATED | PSC REGULATION

COMPANIES SUBJECT | DOCKET NO. 4

TO THE JURISDICTION |

OF THE PUBLIC SERVICE |

COMMISSION |

NOTICE OF COMMENT PERIOD ON PROPOSED CHANGES AND AMENDMENTS TO MINIMUM FILING REQUIREMENTS

In 1981, the Delaware Public Service Commission (the "Commission or "PSC") adopted its Minimum Filing Requirements for general rate increase applications. These requirements, which were last modified in 1984, govern the filing and content of rate increase applications made by utilities under the Commission's jurisdiction.

In May 1998, the Commission's Technical Staff ("Staff") sought changes and additions to the Minimum Filing Requirements for the stated purposes of increasing the procedural and practical efficiency of Staff's oversight of the ratemaking process and reducing administrative burdens. On May 26, 1998, the Commission initiated proceedings to give public notice of Staff's proposals and solicit comment concerning their efficacy, reasonableness, and propriety.

Based on the comments received by Staff in the course of the proceedings, Staff has abandoned its original proposals in favor of new proposed revisions. Staff is proposing to: (1) clarify the definition of "test year;" (2) clarify when and how a utility can submit modifications to its filing during the proceeding; (3) address the review of an initial rate application for compliance to the Rules and penalties for non-compliance; and (4) make other textual changes. The Minimum Filing Requirements, Staff's newly proposed changes and additions to the same, and the materials submitted in connection therewith will be available for public inspection and copying at the Commission's office during normal business hours.

The Commission hereby solicits written comments, suggestions, compilations of data, briefs, or other written materials concerning Staff’s proposed changes and additions to the Minimum Filing Requirements. Ten (10) copies of such materials shall be filed with the Commission at its Dover office. All such materials shall be filed on or before May 1, 1999.

BEFORE THE PUBLIC SERVICE COMMISSION OF THE STATE OF DELAWARE

IN THE MATTER |

OF THE REGULATION |

ESTABLISHING THE |

MINIMUM FILING |

REQUIREMENTS FOR |

ALL REGULATED | PSC REGULATION

COMPANIES SUBJECT | DOCKET NO. 4

TO THE JURISDICTION |

OF THE PUBLIC SERVICE |

COMMISSION |

NOTICE OF COMMENT PERIOD AND PUBLIC HEARING ON PROPOSED CHANGES AND AMENDMENTS TO MINIMUM FILING REQUIREMENTS

In 1981, the Delaware Public Service Commission (the "Commission" or "PSC") adopted its Minimum Filing Requirements for general rate increase applications. These requirements, which were last modified in 1984, govern the filing and content of rate increase applications made by utilities under the Commission's jurisdiction. They are reproduced in their present form as Exhibit 1.

Rate increase applications submitted to the Commission are reviewed and evaluated by the Commission's Staff for the justness and reasonableness of the rates proposed. The Commission is informed by Staff that the frequency and number of such applications has, in recent years, increased significantly, resulting in a corresponding increase in the administrative burdens associated with Staff's review. Staff has also identified certain practices that (it contends) tend to add significantly and unreasonably to these administrative burdens. According to Staff, these practices typically involve changes made by the utility to data on which the application relies, including changes to the test year (as that term is used in the Minimum Filing Requirements) and changes in rate base items, expenses or revenues. Staff contends that the burden occasioned by such practices is most severe where multiple and material changes are made at different points in time during the pendency of a single application. Staff further contends that, where such changes are sought, they are often of a type that is avoidable through the applicant's exercise of ordinary diligence in preparing its rate increase application.

The text of the proposed Minimum Filing Requirements, as modified by Staff's changes and additions, is attached as Exhibit 2. These proposed changes and additions may be described as follows:

1. Part "A", Section I(B)(1) of the Minimum Filing Requirements provides a definition of the "test year", and specifies the time period to be reflected by the test year.² The last two sentences of this section now read: "In addition, the twelve month period must end no more than seven months prior to the filing of the application for increased rates. For example, if the actual results of the operations for the 12-months ending March 31, 19xx, are used for the purpose of the test year, the application must be filed no later than October 31, 19xx." Staff proposes that these two sentences be changed to read:

In addition, the twelve-month period must end no later than seven months prior to the filing of the application, but no sooner than one month after the final closing of the company's books for the last month of the test year (post reversal of accrual entries), so that actual expenditures are reflected in the books of account. For example, if the actual results of operations for the twelve months ending March 30, 19xx are used for purposes of the test year, the application must be filed no sooner than April 30, 19xx, but no later than October 31, 19xx.

2. Part "A", Section I(C) of the Minimum Filing Requirements governs the filing of direct testimony and supporting exhibits, as well as the modification of test period data. It now reads: "Prepared direct testimony and supporting exhibits must be filed coincident with the filing of the applications for rate relief. This filing requirement shall not prohibit the utility from subsequently submitting further testimony and exhibits in a timely fashion as necessary or proper to address issues raised during investigation of the filing; nor shall it (or B.2., above) prohibit the utility from proffering an exhibit or exhibits in the form of a fully projected test period, provided (1) such period shall consist of twelve consecutive months ending not later than the end of the first year during which the proposed rates are to become effective; (2) it is supported by relevant testimony establishing a verifiable link between the test period defined in Section B.2. and the projected test period; and (3) it is in format consistent with such test period. Modifications in test period data occasioned by reasonably known and measurable changes in current or future rate base items, expenses (i.e., labor costs, tax expenses, insurance, etc.) or revenues may be offered in evidence by the utility up until the time the utility fields its rebuttal testimony." Staff proposes that the phrase "investigation of the filing", as it appears in the second sentence of this section, be changed to read "investigation of the application". Staff next proposes that the word "also" be inserted immediately before the word "proffering" in that sentence, and that the following parenthetical language be added immediately before the word "provided" in the same sentence: "(in addition to the test period described in I.B.2. above)". Staff further proposes that the last sentence of this section be changed to read:

Modifications in test period data occasioned by reasonably known and measurable changes in current or future rate base items, expenses (i.e., labor costs, tax expenses, insurance, etc.) or revenues may be offered in evidence by the utility at any time prior to its introduction of rebuttal evidence; provided, however, that if any party makes timely objection to the proffered modifications, such objections shall be promptly presented to the Hearing Examiner for a decision on due consideration of the parties' respective positions. For purposes of this Section I(C), an objection shall be timely if made within five (5) business days of the utility's proffer of modifications.

3. Part "A", Section I(E) of the Minimum Filing Requirements addresses Staff's review of rate increase applications for compliance with the Minimum Filing Requirements, and the penalties for noncompliance. This section now reads: "The Commission Staff will review all filings for compliance with the format and instructions furnished herein and notify the utility within 30 days after the date of filing of any defects in compliance. The utility after such notification by the Commission Staff will then have 30 days to correct these defects. If such defects are not corrected, the Commission may reject a utility's rate application for non-compliance with the Minimum Filing Requirements." Staff recommends that the first sentence's reference to "filings" and "filing" be changed to "applications" and "application". Staff further recommends that the following language be added to the end of this section:

Notwithstanding anything to the contrary in this Section I(E), if such defects are, in Staff's discretion, so numerous or serious as to materially impair Staff's timely review of the application, Staff may reject the same, thereby rendering it a nullity for all purposes (including without limitation the purposes contemplated under 26 Del. C. § 306); provided, however, that any such rejection by Staff may be challenged by the utility upon timely request for reconsideration to the Commission. For purposes of this Section I(E), a request for reconsideration shall be timely if presented in writing to the Commission within five (5) business days of Staff's rejection of the application to which it relates. In the event a utility's challenge to Staff's rejection of an application under this Section I(E) is successful, the application shall be reinstated ab initio. Nothing in this Section I(E) shall prevent a utility from filing an application in draft form for Staff's informal review and approval without prejudice, such informal review and approval not to be unreasonably withheld by Staff. The requirements of this Section shall be in addition to, and not in place of, the requirements of Rule 6.2 of the Rules of Practice and Procedure of the Delaware Public Service Commission.

4. Part "A", Schedule No. 2-B is titled "Intangible Assets Claimed in Rate Base". It includes a column heading titled "Revenue Included Test Year". Staff recommends that this column heading be deleted.

5. Part "B", Section I(B) of the Minimum Filing Requirements provides a definition of the "test year", and specifies the time period to be reflected by the test year. Staff recommends that the language of this section be replaced in its entirety by the language it proposes for the corresponding section within Part "A" of the Minimum Filing Requirements (including the language of the existing Sections I(B)(2)(a) and (b) of Part "A", which remain unchanged under Staff's proposals).

6. Part "B", Section I(E) of the Minimum Filing Requirements addresses Staff's review of applications for compliance with the Minimum Filing Requirements, and the penalties for noncompliance. Staff recommends identical changes to the ones it proposes for the corresponding section within Part "A" of the Minimum Filing Requirements.

Based on 1978 intra-State revenue levels, the following Delaware utilities would be subject to Part A at the present time: Artesian Water Company

Chesapeake Utilities Corporation

Delmarva Power & Light Company (Electric Division)

Delmarva Power & Light Company (Gas Division)

Rollins Cablevue, Inc.

The Diamond State Telephone Company

Wilmington Suburban Water Corporation

Staff proposes to delete this paragraph. Finally, the General Information document includes a corresponding explanation of the applicability of Part "E" of the Minimum Filing Requirements, titled "Part E - Quarterly Reporting Requirements -Major Utilities." The first sentence under this heading now reads: "All major utilities subject to the jurisdiction of the Commission (those with annual gross intra-state revenues of $1 million dollars or more shown in Part A of these instructions) are required to file quarterly information in accordance with the instructions contained in Part E." Staff proposes to revise this sentence to read: "All major utilities, except Bell Atlantic - Delaware, Inc., subject to the jurisdiction of the Commission (those with annual gross intra-state revenues of $1 million dollars or more shown in Part A of these instructions) are required to file quarterly information in accordance with the instructions in Part E."

The Commission has authority to issue such rules, and to effect the proposed changes and additions, under 26 Del. C. §209(a).

The Commission hereby solicits written comments, suggestions, compilations of data, briefs or other written materials concerning Staff's proposed changes and additions to the Minimum Filing Requirements. Ten (10) copies of such materials shall be filed with the Commission at its office located at 1560 S. DuPont Highway, Dover, Delaware 19901. All such materials shall be filed on or before May 1, 1999.

In addition, the Commission's duly appointed Hearing Examiner will conduct a public hearing concerning Staff's proposed changes and additions on a date to be determined. Interested persons may present comments, evidence, testimony and other materials at that public hearing.

The Minimum Filing Requirements, Staff's proposed changes and additions to the same, and the materials submitted in connection therewith will be available for public inspection and copying at the Commission's Dover office during normal business hours. The fee for copying is $0.25 per page.

Any individual with disabilities who wishes to participate in these proceedings should contact the Commission to discuss any auxiliary aids or services needed to facilitate such review or participation. Such contact may be in person, by writing, telephonically, by use of the Telecommunications Relay Service, or otherwise. The Commission's toll-free telephone number is (800) 282-8574. Persons with questions concerning this application may contact the Commission's Acting Secretary, Karen J. Nickerson, by either Text Telephone ("TT") or by regular telephone at (302) 739-4333 or by e-mail at knickerson@state.de.us.

STATE OF DELAWARE

PUBLIC SERVICE COMMISSION

Minimum Filing Requirements For All Regulated Companies Subject to The Jurisdiction of the Commission

Minimum Filing Requirements

General Information

Background

Over the course of the past few years the number of applications filed with the Commission for an increase in utility rates, changes in cost adjustment clauses, and security certificates have increased dramatically. Heretofore utilities coming before the Commission filed varying amounts of data, primarily financial data, in support of its application and is seldom, if ever, in a uniform format. Frequently it is necessary for the Commission Staff to request substantial amounts of additional data through the interrogatory process in order to evaluate applications and/or an inordinate amount of technical hearing time is required to adduce needed data.

Furthermore, the Commission intends to more closely monitor the financial performance of Delaware utilities on a continuing basis and also is required to report certain information annually to Federal agencies and others which frequently requires surveys and/or telephone calls to the utilities to obtain such data.

Purpose of Minimum Filing Requirements

The Commission believes that the adoption of minimum filing requirements for all utilities is in the public interest. The primary purpose of prescribing minimum filing requirements is to expedite action on the many applications of utilities in the State. Action will be expedited if most of the basic supporting information is furnished at the time of the filing of an application rather than being supplies in response to interrogatories or otherwise brought out on a piecemeal basis in time-consuming technical hearings. Furthermore, the Commission believes it is desirable to standardize to the greatest extent possible the format for the presentation of financial and operating data to the Commission for ease of understanding and comprehension by all parties involved.

Compliance With Minimum Filing Requirements

It is intended that the required information be furnished in accordance with the format and instructions furnished herein. If exceptions are requested or proposed, they should be fully explained and justified. Exceptions may be granted if good cause is shown by the utility. The Commission Staff will review all filings for compliance with the format and instructions furnished herein and notify the utility within 30 days after the date of filing of any defects in compliance. The utility after such notification by the Commission Staff will then have 30 days to correct these defects.

General Rate Increase Defined – For the purpose of compliance with the Minimum Filing Requirements a general rate increase is generally defined as an application by a regulated company for an increase in rates which meets one or more of the following guidelines:

1. Any increase in base rates for the basic service rendered (other than cost adjustment clauses – Part C).

2. Any rate change which would increase jurisdictional operating revenues by more than 1%.

3. Any tariff change which would impact more than 1% of the existing customers but may have no overall revenue effect.

The following generally would not meet the criteria set forth above:

1. A tariff filing reflecting a change in text without a change in rate.

2. A tariff filing to establish a rate for a new service.

3. A tariff filing to change or increase a single non-recurring charge.

4. Any changes in rates for non-jurisdictional services.

Following is a brief description of the various sections of the Minimum Filing Requirements:

Part A – Rate Increase Applications – Major Utilities

Part A applies to utilities or divisions thereof with annual gross intra-State revenues of $1 million or more at the time of filing. When an application is made for a general rate increase, utilities with less than $1 million of annual intra-State revenues but which would exceed $1 million if the proposed rates were to become effective are subject to Part A of these regulations.

~~Based on 1978 intra-State revenue levels, the following Delaware utilities would be subject to Part A at the present time:~~

~~Artesian Water Company~~

~~Chesapeake Utilities Corporation~~

~~Delmarva Power & Light Company (Electric Division)~~

~~Delmarva Power & Light Company (Gas Division)~~

~~Rollins Cablevue, Inc.~~

~~The Diamond State Telephone Company~~

~~Wilmington Suburban Water Corporation~~

Part B – Rate Increase Applications – Small Utilities

Utilities with less than $1 million of annual gross intra-State revenues are subject to Part B when an application is made for a general rate increase.

Part C – Cost Adjustment Clauses – All Utilities

Utilities which have or propose to include cost adjustment clauses in their tariff (such as the fuel adjustment clause) are subject to Part C. When an application is made to change the monthly adjustment charge or to include or delete such a clause from their tariff, no size criteria applies to the requirements of Part C.

Part D – Issuance of Securities – All Utilities

All utilities which are required to obtain Commission approval for the issuance of securities, such as common stock, preferred stock, or long-term debt, are required to comply with the requirements of Part D at the time application is made for issuance of securities.

Part E – Quarterly Reporting Requirements – Major Utilities

All major utilities, except Bell Atlantic-Delaware, Inc., subject to the jurisdiction of the Commission (those with annual gross intra-state revenues of $1 million or more shown in Part A of these instructions) are required to file quarterly information in accordance with the instructions contained in Part E. Such utilities should file the required financial data relative to the twelve months ended each calendar quarter not later than 60 days following the reporting quarter. No quarterly reporting is required for any utility whose annual gross intra-state revenues are less than $1 million.

Part F – Annual Reporting Requirements – Small Utilities

All small utilities subject to the jurisdiction of the Commission are required to file annually in accordance with the applicable section of part F. Such utilities are required to file the required financial data relative to each calendar year not later than March 31 of the year following the reporting year.

STATE OF DELAWARE

PUBLIC SERVICE COMMISSION

MINIMUM FILING REQUIREMENTS - PART A

RATE INCREASE APPLICATION - MAJOR UTILITIES

I. Instructions

A. Prefiling Announcement

In order for the Commission to schedule its future workload in an efficient manner, every public utility shall file with the Commission a Notice of Intent to file a general rate increase application not less than two (2) months prior to filing its application or notice of increase. This notice must include, in addition to the statement of intent to file, the dates of proposed test year and test period. If a regulated company cancels, changes or delays a proposed general rate increase application previously reported to the Commission, an amended report must be filed promptly reflecting such change of plans.

B. Test Year and Test Periods

1. Test Year Defined. The test year is the actual historical period of time for which financial and operating data will be required. The test year data must include the actual “Per Books” results of operation for a 12-month period at the end of a reporting quarter. In addition, the twelve month period must end no later ~~more~~ than seven months prior to the filing of the application, but no sooner than one month after the final closing of the company’s books for the last month of the test year (post reversal of accrual entries), so that actual expenditures are reflected in the books of account. ~~for increased rates.~~ For example, if the actual results of operations for the 12-months ending March 31, 19xx, are used for the purpose of the test year, the application must be filed no sooner than April 30, 19xx but no later than October 31, 19xx.

2. Test Period Defined.

a. The test period consists of twelve consecutive months ending at the end of a reporting quarter utilized by the utility to support its request for relief. The test period may be the same as the test year or may include some of the months included in the test year and some months projected, such as six months “actual” and six months “projected”, but may not include more than nine months “projected”.

Updating Projected Test Periods.

b. If the filed test period is other than the test year (historic period), three additional months of projected total company data as filed shall be updated to actual total company data and provided to Staff and all parties within sixty days after the close of the quarter, unless a later date for submitting this additional data is otherwise ordered by the Hearing Examiner.

C. Testimony and Exhibits.

Prepared direct testimony and supporting exhibits must be filed coincident with the filing of the applications for rate relief. This filing requirement shall not prohibit the utility from subsequently submitting further testimony and exhibits in a timely fashion as necessary or proper to address issues raised during investigation of the application ~~filing~~; nor shall it (or B.2., above) prohibit the utility from also proffering an exhibit or exhibits in the form of a fully projected test period, (in addition to the test period described in I.B.2. above) provided (1) such period shall consist of twelve consecutive months ending not later than the end of the first year during which the proposed rates are to become effective; (2) it is supported by relevant testimony establishing a verifiable link between the test period defined in section B.2. and the projected test period; and (3) it is in format consistent with such test period.

Modifications in test period data occasioned by reasonably known and measurable changes in current or future rate base items, expenses (i.e., labor costs, tax expenses, insurance, etc.) or revenues may be offered in evidence by the utility at any time prior to its introduction of rebuttal evidence; provided, however, that if any party makes timely objection to the proffered modifications, such objections shall be promptly presented to the Hearing Examiner for a decision on due consideration of the parties’ respective positions. For purposes of this Section I.C., an objection shall be timely if made within five (5) business days of the utility’s proffer of modifications. ~~up until the time the utility files its rebuttal testimony.~~

D. Due Date

The information required in subsequent sections of Part A is to be filed with the Commission at the time of the utility’s application for an increase in rates.

E. Penalty for Non-Compliance

The Commission Staff will review all applications ~~filings~~ for compliance with the format and instructions furnished herein and notify the utility within 30 days after the date of filing of any deficiencies in compliance. The utility after such notification by the Commission Staff will then have 30 days to correct these deficiencies. If such deficiencies are not corrected, the Commission may reject a utility’s rate filing for non-compliance with the Minimum Filing Requirements. Notwithstanding anything to the contrary in this Section I.E., if such defects are, in Staff’s discretion, so numberous or serious as to materially impair Staff’s timely review of the application, Staff may reject the same, thereby rendering it a nullity for all purposes (including without limitation the purposes contemplated under 26 Del. C. § 306); provided, however, that any such rejection by Staff may be challenged by the utility upon timely request for reconsideration to the Commission. For purposes of this Section I.E., a request for reconsideration shall be timely if presented in writing to the Commission within five (5) business days of Staff’s rejection of the application to which it relates. In the event a utility’s challenge to Staff’s rejection of an application under this Section I.E. is successful, the application shall be reinstated ab initio. Nothing in this Section I.E. shall prevent a utility from filing an application in draft form for Staff’s informal review and approval without prejudice, such informal review and approval not to be unreasonably withheld by Staff. The requirements of this Section shall be in addition to, and not in place of, the requirements of Rules 6 and 8 of the Rules of Practice and Procedure of the Delaware Public Service Commission.

F. General Guidelines

1. Schedules shown are for illustrative purposes and may be modified to fit the individual company as long as the data intent is complied with. The burden of proof remains by Statute on the utility; therefore, if applicant utility believes that additional information is necessary to support its case or is proposing a position which requires a departure from the basic schedules, the utility should supplement the standard filing requirements as required to support its position.

2. The Commission may require utilities to supply information to supplement these minimum requirements during the course of the staff investigation of a specific case. The utility will be required to provide a duplicate copy of any such information requested by Staff to all intervenors to the proceeding as directed by the Commission. It is, however, the intent of the Commission in establishing minimum filing requirements to minimize the subsequent interrogatories and data requests.

3. All schedules submitted to the Commission shall be typed and shall contain the name of the planned witness who will testify to the accuracy of the data.

4. Supportive work papers must be made available for Staff inspection upon request subsequent to the filing.

5. If required data has been previously filed, it may be incorporated by reference.

6. All data, statements and exhibits filed pursuant to these minimum filing requirements shall be identified by paragraph designation for which they are submitted.

7. Trade secrets, proprietary or otherwise privileged information of the utility shall be made available pursuant the these Rules only upon a showing of good cause and pursuant to a protective order of the Commission.

8. The Commission will require 10 copies of the application for rate relief and the accompanying prepared testimony and supporting exhibits.

9. All test year data, test period and data offered for any other time period will be presented in a format consistent with the uniform System of Accounts unless otherwise ordered by the Commission.

II. General Information

A. Description of Company - If Presently Not On File With Commission

1. Provide a corporate history including dates of incorporation, subsequent acquisitions and /or mergers.

2. Describe completely all relationships between applicant utility and its parent, subsidiaries and affiliates. Furnish a chart or charts which depict(s) the inter-company relationships.

3. Provide a system map indicating all cities and counties and other government subdivisions to which service is provided.

4. Provide a statement of reasons for the proposed increase including an explanation of the major factors which gave rise to the decision to seek a rate adjustment. Also include an estimate of the dollars associated with each such major factor such as “Wage Increase $50,000” or “Increase in Chemical Expense $100,000”. A detailed reconciliation of each and every item is not required, just the principal items and an estimate of the dollar impact, to the extent possible.

5. Provide a statement identifying any significant element of the application which to the applicant’s knowledge represents a departure from prior decisions of the Commission and the associated revenue requirement. This would include proposed accounting changes or accounting changes that have occurred since the last rate Order.

B. Plant Capacity and Service

1. Electric Utilities: Provide an explanation of the system’s operation and state plans for any future expansion or modification. Provide schedules relating to generating capacity as follows:

a. A schedule showing latest projections of capacity additions and retirements for the next ten years by unit of generation.

b. A schedule showing reserve capacity at the time of the projected daily system peak for the next ten years and indicate growth rate incorporated in arriving at such peak load projections.

2. Gas Utilities: Provide an explanation of the system’s operation, and state plans for any future expansion or modification of facilities. Describe how respondent obtains gas supply as follows:

a. Explain how respondent stores or manufactures gas.

b. Describe the potential for emergency purchases of gas.

c. Provide the amount of gas in MCF supplied by each of various suppliers in the test year.

d. Provide plans for future gas supply.

e. Indicate any existing or anticipated curtailments and explain reasons for same.

3. Telephone: State all major current service objectives and indicate any areas where present service does not meet current internal service objectives. Provide schedules as follows:

a. Provide a schedule showing each central office, the type of equipment, i.e., SXS, ESS, etc., installed capacity in lines, equivalent lines in use, and estimated date of replacement.

4. Water: Provide a description of all major utility property including an explanation of the system’s operation and all plans for any major future expansions or modifications of facilities in the next five years. Provide a system map showing pumping stations, purification, and/or filter plants, reservoirs, wells, springs, booster stations, standpipes, distribution mains and transmission mains. A description of the present and projected supply of water should also be provided.

5. Cable Television: Provide a description of all major system property. Provide a system map showing the location of antennas, headend, earth station and major cable distribution plant. State plans for future system expansion including miles of cable to be added, number of homes passed, expected saturation levels (including basic and premium services) for the next five years.

C. Amount and Percent of Increases

1. A schedule showing the dollar amount of the increase by category of service, customer class, or type of service rendered as appropriate and also showing the percent increase over present revenues in the same categories.

III. Financial Results of Operations

A. Financial Summary

1. An overall financial summary must be furnished on Schedule No. 1. The “rate base” calculation for the purposes of the test year should reflect book figures. The extent additional “calculated” amounts are referenced, e.g., Cash Working Capital, these amounts should be consistent with the methodology employed for the test period rate base calculation.

2. Jurisdictional versus Total Company Results. In the event the total company results are different from the results applicable to the Delaware jurisdiction, then two schedules shall be submitted and designated as schedule 1A, covering the entire company, and Schedule 1B, covering the Delaware jurisdictional results.

B. Supporting Documents

1. The following documents must be filed with the application if presently not on file with the Commission:

a. Annual Report to Stockholders for applicant, its subsidiaries and its parent for last five years.

b. Annual Reports to Federal Regulatory jurisdictions, such as FERC, REA, FCC, etc., as applicable.

c. SEC 10K Reports for last five years and most recent SEC 10Q Report for applicant or parent. If both applicant and parent have public stockholders, submit for both.

d. Most recent proxy statement for applicant or parent. If both applicant and parent have public stockholders, then submit for both.

e. All securities prospectuses for applicant and parent for most recent five year period.

IV. Rate Base

A. Rate Base Defined

1. 26 Del. C. ' 102(3) defines Rate Base as follows:

“(3) “Rate base” means:

a. The original cost of all used and useful utility plant and intangible assets either to the first person who committed said plant or assets to public use or, at the option of the Commission, the first recorded book cost of said plant or assets; less; b. Related accumulated depreciation and amortization; less;

c. The actual amount received and unrefunded as customer advances or contributions in aid of construction of utility plant, and less;

d. Any accumulated deferred and unamortized income taxes and investment credits related to plant included in paragraph a. above, plus;

e. Accumulated depreciation of customer advances and contributions in and of construction related to plant included in paragraph a. above and plus;

f. Materials and supplies necessary to the conduct of the business and investor supplied cash working capital, and plus;

g. Any other element of property which, in the judgment of the Commission, is necessary to the effective operation of utility.”

B. Jurisdictional Rate Base Summary

1. Submit a jurisdictional rate base summary on Schedule 2.

2. Indicate on schedule 2 in the column titled “26 Del. C. ' 102(3) Letter Ref.” the appropriate letter reference designating the Section of the Code upon which the applicant relies for the inclusion of each item in Rate Base as set forth in IV A. 1. above.

C. Used and Useful Utility Plant

1. Submit schedules showing plant in service by major plant categories for total company, as allocated to this jurisdiction with adjustments, if any are proposed. This data shall be submitted as Schedule 2A.

2. Where rate base is computed using a twelve-month average, this data will be needed for the end of each month included in the calculation.

3. Where rate base is allocated among jurisdictions, indicate the basis for the allocation factors used.

4. Adjustments proposed must be fully explained.

D. Intangible Assets

1. If intangible assets are claimed in rate base, complete Schedule No. 2B.

2. Provide a statement of the specific reasons for inclusion in rate base.

E. Accumulated Depreciation and Amortization

1. Submit schedules showing accumulated reserve for depreciation by major plant categories on Schedule No. 2C if records permit.

2. When rate base is computed using a twelve-month average, this data will be needed for the end of each month included in the calculation.

3. When rate base is allocated among jurisdictions, indicate the basis for the allocation factors used.

4. Adjustments proposed must be fully explained.

F. Unrefunded Customer Advances and/or Contributions in Aid of Construction

1. Provide a schedule showing the actual amounts at the beginning and end of the test year and test period.

2. If estimated amounts are included, explain the basis of such estimate.

G. Accumulated Deferred Income Taxes and Unamortized Investment Credit

1. Provide a complete analysis of all deferred income taxes on Schedule No. 2D. Provide one schedule each for Federal Income Taxes and an additional schedule for State Income Taxes.

2. The specific deferred income taxes shown on Schedule 2D lists some but not necessarily all deferred income taxes that may be applicable to a particular utility, hence the accounts shown should be modified as appropriate.

3. Provide a statement which fully explains the utility’s deferred tax accounting practices, i.e., the basis upon which annual tax deferrals are determined and the basis upon which deferred tax reserves are charged or credited to current period.

4. Provide the amount of amortization of Investment Tax Credit and/or Job Development Credit included as a reduction of Income Tax Expense in the test year.

5. Provide the amount of ITC or JDC available but not utilized as of the end of the test year.

H. Accumulated Depreciation of Customer Advances and Contributions in Aid of Construction

1. Provide a statement which describes the accounting procedures used to segregate depreciation reserves between investor provided and contributed property.

2. Provide a Schedule showing the actual amounts at the beginning and end of the test year and test period.

3. If estimated amounts are included, explain the basis of such estimates.

I. Material and Supplies

1. If a claim is made for Material and Supplies, provide a Schedule showing the balance in each of the major groupings of material and supplies for each of the twelve months preceding the test year, for the test year and for the test period.

2. If estimated balances are included, explain the basis for such estimates.

3. Explain any unusual fluctuation for the period of time for which monthly balances are included.

J. Investor Supplied Cash Working Capital

1. Complete Schedule 2E showing the components of investor supplied cash working capital included in the rate base claim.

2. Other items. If any other items are included in the working capital claim, provide a full and complete explanation in support thereof including the calculation which demonstrates the amounts so included as investor-provided funds with reference to 26 Del. C. ' 102(3).

K. Other Element of Property

1. Schedule 2F shall be completed to provide the amount, description and justification for inclusion in rate base.

2. Provide a statement of the specific reasons for inclusion in rate base with reference to 26 Del. C. ' 102(3).

3. If a rate base claim is made for property under construction but not used and useful in whole or in part during the test period, provide a schedule showing each major project and indicate whether or not the project will add capacity or replace existing capacity or both. If major units of capacity are being added, show in calculation the additional revenue expected to be realized. If major units of capacity are being retired, indicate the type of property, its original cost, accumulated reserves for depreciation and the expected date of retirement from service.

V. Net Operating Income

A. Jurisdictional Summary of Net Operating Income

1. Submit a jurisdictional summary of net operating income on Schedule No. 3 for the test year on an actual basis and for the test period.

B. Revenues

1. Submit a schedule showing operating revenues by major revenue category, including other operating revenues and uncollectible operating revenues, for the test year, and for the test period. This data shall be submitted on Schedule 3A.

2. Electric, Gas and Water Utilities. For each tariff rate, submit a schedule showing the volume of tariff unit sales for two years preceding the test year, the test year, and the test period. For the purpose of this section, the volume of tariff unit sales means:

Electric - KWH sold

Gas - MCF sold

Water - Gallons sold and hydrant fees.

3. Provide a schedule showing the dollar revenues associated with the unit volume shown in Section V.B.2. Electric and gas utilities should show Fuel and Gas Adjustment revenues separately by customer class.

4. Telephone and Cable Television Companies. For each tariff rate revision, submit a schedule showing the number of units in service consistent with the test year and/or the test period. Opposite the units in service show the present and proposed rates for service and the present and proposed revenues.

5. If test period volumes of sales or tariff units are based on an estimate or forecast, provide a full and complete explanation of the basis and assumptions underlying such forecast, including weather assumptions and any price elasticity effects.

6. Adjustments to test period revenues should be fully detailed and explained including all mathematical calculations related thereto. This information should follow Schedule 3A with appropriate adjustments referenced to the amounts shown on Schedule 3A.

C. Operating Expenses

1. Submit a schedule showing operating expenses, by major expense category for the test year and for the test period. This data shall be submitted on Schedule 3B.

2. Adjustments to test period operating expenses should be fully detailed and explained including all mathematical calculations related thereto. This information should follow Schedule 3B with appropriate adjustments referenced to the adjustment amounts shown on Schedule 3B.

3. Copies of invoices should be attached for raw materials purchased at prices higher than those experienced during the test year and an adjustment is made where a future test period is not used.

4. Submit a Schedule 3C showing test year and test period payroll and employee benefit experience. The expense portion of the total payroll costs should equal the payroll and benefit expense included in the various categories of Schedule 3B.

5. Complete Schedule 3D for the five highest paid executives showing the most recently approved base salary and the value of other benefits on an annual basis using the most recent actual data available.

6. Provide a statement of procedures used for determining depreciation rates utilized to compute the depreciation expense claim (Schedule 3B), including a statement of the depreciation rates either approved by or implicit in the rate determination made by the Commission in the last rate proceeding. Provide a schedule showing the calculation of claimed depreciation expense by major plant categories (if not provided in the detailed supporting adjustments in Item C(2)) if available.

7. Provide a copy of the most recent depreciation study that is relied on to support the depreciation rates used for the purpose of Schedule 3B if a change in depreciation rates is proposed.

8. Electric utilities only shall submit the following for the most recent actual twelve month period preceding the test year and for the test year and test period.

a. A schedule showing the KWH generated by generation unit along with the applicable fuel, other and maintenance expenses.

b. A detailed analysis of power purchased from others including KWH purchased and cost.

c. A detailed analysis of interchange power transactions setting forth separately purchased power and power sold and the dollars associated with each.

d. A schedule showing the details of any temporary capacity sales or purchases.

e. If deferred fuel cost policy is followed, describe the procedure and state manner in which amount of deferred fuel cost on balance sheet at end of most recent twelve month period reported was determined and state in which month such fuel expense was incurred. Provide amount included in test year expense which is derived from deferred fuel cost.

f. Submit a schedule showing fuel cost in excess of base compared with fuel cost recovery by months for the most recent twelve month period and for the test year.

g. Provide a reconciliation of total KWH generated, purchased or required through interchange with total KWH sold for resale, retail, interchange, interdepartment use, system losses, etc.

9. Furnish test year summary of sales promotion, advertising and miscellaneous sales expenses on Schedule 3E. Classify advertising expense by purpose, i.e., product or service promotion, service aids, personnel and institutional.

10. Furnish a schedule of all test year contributions for educational or other charitable purposes which are included in the operating expense totals which applicant seeks to recover from rate payers on Schedule 3F.

11. Submit a statement showing amounts spent in test year and test period on influencing legislation both at the state and national levels which applicant seeks to recover from ratepayer. Where this activity is less than full time, furnish the basis for allocations of payroll and related costs.

12. Furnish a listing of all test year and test period dues paid or to be paid by the company for social and service clubs which applicant seeks to recover from ratepayer. Include costs paid directly by company for any executive or employee recreational or “conference” facilities. Complete Schedule 3G.

13. Provide an analysis of actual and project rate case expenses on Schedule 3H.

14. Provide a schedule by major expense category of all the amounts charged or credited from each affiliated company for the test year and the test period. Provide the basis of allocation or basis of charging. State whether there has been a change in allocation method or pricing formula since the last general rate case and, finally, describe the services or products provided in Delaware and the benefits of such arrangements.

15. Operating Taxes.

a. Complete Schedule 3I to agree with the amount shown on Schedule 3, line 12, for the test year and for the test period.

b. Complete Schedules 3J and 3K in support of the amount of current and deferred state and federal income tax claimed by the utility for ratemaking purposes as reflected in total on Schedule 3I.

c. Provide a statement of the utility’s income tax accounting practice with respect to timing differences related to liberalized depreciation, the Asset Depreciation Range System, accelerated amortization and cost of removal and all other timing differences such as employee benefits and taxes capitalized.

d. Provide a statement of the utility’s accounting practice with respect to Investment Tax Credits (ITC) and Job Development Credits (JDC) including a copy of all elections filed with the Internal Revenue Service related thereto.

e. Utilities which “normalize” all or any portion of ITC or JDC must complete Schedule 3L.

f. If the utility is part of an affiliated group of companies and its federal income tax return is filed as part of a consolidated federal income tax return, please provide a statement of the procedure used to allocate the consolidated federal income tax liability, the benefits of the consolidated return, and how those benefits are reflected on the utility’s books.

g. Complete Schedule 3M for all other Federal, State and local taxes for the test year and for the test period.

D. Allowance for Funds Used During Construction (AFUDC)

1. Provide a schedule showing the following:

a. The AFUDC rate employed by the Commission in the last rate Decision.

b. The AFUDC rate used in each month from the end of the test period in the last case through the end of the test year and test period.

2. Provide a statement which describes the methodology employed to complete the AFUDC rates for all periods of time specified in Item 1. above.

3. Provide a statement which fully describes how the AFUDC is applied in the accounting procedures.

E. Other Income

1. Provide a schedule which describes the nature and amount of each item of other income for the test year and test period.

VI. Rate of Return

A. Summary of Claimed Rate of Return

1. A summary report of the proposed fair rate of return shall be supplied on Schedule 4 which contains a weighted cost of capital analysis.

2. The Company’s actual and estimated capital structure shall be submitted on Schedule 4A for the end of the test year and test period. A capital structure which is based on a time period beyond the test year should be accompanied by a statement of projected new issues and retirements.

B. Embedded Cost of Debt

1. Describe how short-term debt is allocated between rate base and non-rate base CWIP. Describe compensating balance requirements of credit line banks and supply documentation in support of such requirements. If the compensating balance requirements exceed the cash and float included in working capital claim, give a statement explaining the excess.

2. Complete Schedules 4B and 4C to show the composition of the embedded cost of long-term debt or provide the information in some other manner as the Company would normally develop such costs. Use the debt costs most appropriate to the capital structure adopted, e.g., if a test year end capital structure is used, use a test year end embedded cost analysis.

3. Describe long-term debt reacquisitions by company and parent company, if applicable, as follows: reacqusitions by issue by year; total gain by acquisitions by year; accounting of gain for income tax and book purposes.

4. In the event that applicant believes the true or economic cost of debt exceeds the nominal costs shown in Schedule 4C because of convertible features, sale with warrants or for any other reason, a full statement of the basis for this claim should be provided.

C. Embedded Cost of Preferred Stock

1. Complete Schedules 4D & E to show the cost of preferred stock. Use the preferred stock cost rates most appropriate to the capital structure adopted for cost of capital computations, i.e., if a test year end capital structure is used, use a test year end embedded cost analysis.

2. Describe preferred stock reacquisitions by company and by parent company, if applicable, as follows: reacquisitions by issue by year; total gain by acquisitions by year; accounting for gain for income tax and book for financial reporting purposes.

3. In the event that applicant claims a true or economic cost higher than the nominal rate shown in Schedule 4E due to convertibility or for any other reason, a full statement of the basis for this claim shall be furnished.

D. Common Equity Cost Rates

1. Provide data on all common equity public stock offerings (including registered secondary offerings) for the current year and for the previous five calendar years. Use Schedule form 4F.

2. Provide a summary statement of all stock dividends, splits or par value changes in last five years.

3. Provide comparative financial data on Schedules 4G and 4H for the test period without rate increase for the test year, for the most recent calendar year and for the next most recent calendar year.

4. Provide complete analysis and support of claimed common equity return rate.

5. State what coverage requirements or capital structure ratios are required in the most restrictive of applicable indentures and how these measures are to be computed.

E. Parent-Subsidiary Relationship

1. Where applicant is a subsidiary of a parent corporation, the data provided for in Schedules 4A, B, C and D shall be provided for the parent company or on a consolidated basis as well as for applicant.

2. If applicant proposes to utilize the capital structure or capital costs of the parent company, or provide such data on a consolidated basis, the reasons for this claim must be fully stated and supported.

VII. Gross Revenue Conversion Factor

A. Provide a calculation on Schedule 5 to show how many dollars of gross revenue increase are required to realize $1.00 of net return increase.

VIII. Rates and Tariffs

A. Provide a copy of proposed Tariff Schedules.

B. By appropriate marginal designation, in the proposed Tariff Schedules, classify proposed changes in accordance with code shown below:

C Changed Regulation

D Discontinued Rate or Regulation

I Increased Rate

N New Rate or Regulation

R Reduced Rate

S Reissued Matter

T Change in text without change in rate or regulation

C. Provide rationale for proposed tariff changes (other than across the board percentage increases).

D. Provide a cost of service study, showing rates of return by customer class or type of service rendered for the test year and for the test period, if available, at present and proposed rates.

E. For test period only, provide schedule, by customer classification or category of service, showing present revenues, pro forma adjustments, proposed increases and percent of increase.

F. Provide detailed calculation substantiating the adjustment for additional revenues from annualizing changes in customers and growth in use per customer during test year if applicable.

Minimum Filing Requirements

Part A

Rate Increase Applications - Major Utilities

Example Schedules to be Completed

(The example applications are not reproduced here. For copies of the example please contact the Public Service Commission or the Registrar of Regulations.)

STATE OF DELAWARE

PUBLIC SERVICE COMMISSION

MINIMUM FILING REQUIREMENTS - PART B

RATE INCREASE APPLICATION - SMALL UTILITIES

I. Instructions

A. Prefiling Announcement

In order for the Commission to schedule its future workload in an efficient manner, every public utility shall file with the Commission a Notice of Intent to file a general rate increase application not less than two (2) months prior to filing its application or notice of increase. If a regulated company cancels, changes or delays a proposed general rate increase application previously reported to the Commission, an amended report must be filed promptly reflecting such change of plans.

B. Test Year and Test Periods

1. Test Year Defined. The test year is the actual historical period of time for which operating and financial data will be required. The test year must include the actual “Per Books” results of operation for a 12-~~twelve~~ month period at the end of a reporting quarter ~~ending no more than four months prior to the filing of the application for increased rates~~. In addition, the twelve month period must end no later than seven months prior to the filing of the application, but no sooner than one month after the final closing of the company’s books for the last month of the test year (post reversal of accrual entries), so that actual expenditures are reflected in the books of account. For example, if the actual results of operation for the 12-~~twelve~~ months ending March ~~December~~ 31,19xx, are used for the purpose of the test year, the application must be filed no sooner than April 30, 19xx but no later than ~~April~~ October 301, 19xx ~~of the following year~~.

2. Test Period Defined.

a. The test period consists of twelve consecutive months ending at the end of a reporting quarter utilized by the utility to support is request for relief. The test period may be the same as the test year or may include some of the months included in the test year and some months projected, such as six months “actual” and six months “projected”, but may not include more than nine months “projected”.

Updating Projected Test Periods.

b. If the filed test period is other than the test year (historic period), three additional months of projected total company data as filed shall be updated to actual total company data and proved to Staff and all parties within sixty days after the close of the quarter, unless a later data for submitting this additional data is otherwise ordered by the Hearing Examiner.~~It is suggested but not required that the test year selected correspond with the company’s financial year.~~

~~3. The test year may be adjusted to reflect changes that are known and measurable at the time of the filing.~~

C. Due Date

The information required in subsequent sections of Part B is to be filed with the Commission at the time of the utility’s application for an increase in rates.

D. Testimony and Exhibits

If the utility plans to submit prepared testimony and exhibits, they must be filed coincident with the filing of the application for rate relief.

E. Penalty for Non-Compliance

The Commission Staff will review all applications ~~filings~~ for compliance with the format and instructions furnished herein and notify the utility within 30 days after the date of application ~~filing~~ of any deficiencies in compliance. The utility, after such notification by the Commission Staff, will then have 30 days to correct these deficiencies. If such deficiencies are not corrected, the Commission may reject a utility’s rate filing for non-compliance with the Minimum Filing Requirements. Notwithstanding anything to the contrary in this Section I.E., if such defects are, in Staff’s discretion, so number or serious as to materially impair Staff’s timely review of the application, Staff may reject the same, thereby rendering it a nullity for all purposes (including without limitation the purposes contemplated under 26 Del. C. § 306); provided, however, that any such rejection by Staff may be challenged by the utility upon timely request for reconsideration to the Commission. For purposes of this Section I.E., a request for reconsideration shall be timely if presented in writing to the Commission within five (5) business days of Staff’s rejection of the application to which it relates. In the event a utility’s challenge to Staff’s rejection of an application under this Section I.E. is successful, the application shall be reinstated ab initio. Nothing in this Section I.E. shall prevent a utility from filing an application in draft form for Staff’s informal review and approval without prejudice, such informal review and approval not to be unreasonably withheld by Staff. The requirements of this Section shall be in addition to, and not in place of, the requirements of Rules 6 and 8 of the Rules of Practice and Procedure of the Delaware Public Service Commission.

F. General Guidelines

2. The Commission may require utilities to supply information to supplement these minimum requirements during the course of the Staff investigation of a specific case. The utility will be required to provide a duplicate copy of any such information requested by Staff to all intervenors to the proceeding as directed by the Commission. It is, however, the intent of the Commission in establishing minimum filing requirements to minimize the subsequent interrogatories and data requests.

3. All schedules submitted to the Commission shall be typed and shall contain the name of the person responsible for the preparation of the data.

4. Supportive work papers must be made available for Staff inspection upon request subsequent to the filing.

5. If required data has been previously filed, it may be incorporated by reference.

6. All data, statements and exhibits filed pursuant to these minimum filing requirements shall be identified by paragraph designation for which they are submitted.

II. General Information

A. Description of Company (If presently not on file with Commission or if it has been submitted in a prior proceeding, it can be incorporated by reference and only include updates)

1. Provide a corporate history including dates of incorporation, subsequent acquisitions and/or mergers.

2. Describe completely the ownership of the utility and all relationships between applicant utility and its parent, subsidiaries, and affiliates. Furnish a chart or charts which depict(s) the intercompany relationships.

3. Provide a system map indicating all cities and counties and other government subdivisions to which service is provided.

III. Financial Results of Operations

A. An overall financial summary must be provided on Schedule 1. The information needed to complete Schedule 1 is obtained from subsequent Schedules.

B. Supporting Documents - Submit internally prepared financial statements or those prepared by an outside accountant or CPA for the most recent twelve month period available to correspond with the historical test year selected by the utility.

IV. Rate Base

A. Rate Base Defined

1. 26 Del. C. ' 102 (3) defines Rate Base as follows:

“(3) “Rate base” means:

b. Related accumulated depreciation and amortization; less;

c. The actual amount received and unrefunded as customer advances or contributions in aid of construction or utility plant, and less;

d. Any accumulated deferred and unamortized income taxes and investment credits related to plant included in paragraph a. above, plus;

e. Accumulated depreciation of customer advances and contributions in and of construction related to plant included in paragraph a. above, and plus;

f. Materials and supplies necessary to the conduct of the business and investor supplied cash working capital, and plus;

g. Any other element of property which, in the judgment of the Commission, is necessary to the effective operation of utility.”

B. Rate Base Summary

1. A Rate Base Summary must be provided on Schedule 2. The rate base elements set forth on Schedule 2 correspond with the definition of Rate Base set forth on IV above. Utilities are not required to use all of these elements or may wish to include others not shown under the category of “Other Elements of Property” (line 10).

2. Indicate on Schedule 2 in the column titled “26 Del. C. ' 102 (3) Letter Ref.” the appropriate letter reference designating the Section of the Code upon which the applicant relies for the inclusion of each item in Rate Base as set forth in Item IV. B. 1. above.

3. The column on Schedule 2 “Actual at Test Year End” means “per books” with the exception of Investor Supplied Cash Working Capital, line 8. For “Actual Test Year End” Investor Supplied Cash Working Capital, use the same procedures used for developing “claimed rate base” but applied to test year actual results of operations.

4. Proposed adjustments to or computations of rate base elements (i.e., Investor Supplied Cash Working Capital) must be fully explained on Schedule 2A.

5. Detailed description of Utility Plant in Service and related depreciation reserves must be provided on Schedule 2B. The totals must agree with the column titled ”Actual Test Year End” on Schedule 2.

C. Please provide a narrative statement covering the following points for monopoly services not subject to competition:

1. Please explain any physical deficiencies in the present property and an estimate of the cost to correct such deficiencies. If plans are underway, disclose the nature of such plans.

2. Provide an estimate of customer or usage growth for two years following the end of the test year and how the utility plans to meet such growth and provide the estimated cost of providing additional facilities to meet expected growth.

3. Gas and water utilities must provide a narrative description of their respective sources of supply.

V. Net Operating Income Summary

A. A summary of net operating income must be provided on Schedule 3.

1. The “Actual for Test Year” column means actual “per books” revenue and expense for the historical test year selected without exception.

2. Operating revenues and expenses should be set forth by type of service or customer class and operating expenses by type. Supplemental schedules may be used for this purpose so long as they conform to the format of Schedule 3.

3. Proposed adjustments to test year operating revenues or experience must be fully explained on schedule 3A. Supporting documentation should be provided when available such as formal wage agreements, copies of invoices reflecting higher prices for materials purchased, tax notices, etc.

4. A calculation of Federal and State Income Taxes must be submitted on Schedule 3B.

5. Provide a narrative explanation of any Schedule “M” items (items included in determining Federal and State Income Taxes not included in Income Available for Return e.g. capitalized portion of Social Security taxes and relief and pensions (line 8), depreciation on IDC, S/S taxes and R/P capitalized (line 6), also any surplus items affecting taxable income not included in line 1) and if deferred taxes are provided on the utility’s books, explain the nature of the deferred taxes and the amounts related to the test year periods as set forth on Schedule 3B.

6. Provide a calculation of present annual revenues based on test year volume of sales at present tariff rates and also showing the revenues expected to be derived from proposed rates on Schedule 3C. Utilities which have “block” rates are to base this calculation on a bill analysis for the test year selected.

B. Provide a narrative statement covering cost increases expected to be incurred over a two-year period following the end of the test year, but not included in the operating expense claim for monopoly services not subject to competition.

VI. Cost of Capital Summary

A. A Cost of Capital Summary must be provided on Schedule 4 based on actual test year data and on the basis of the utility’s fair rate of return claim.

1. If the fair rate of return claim is based on a capital structure different from test year actual, explain the reasons for such differences. If the difference is related to planned new financings or refinancing, please provide the detail with respect to such planned financing including the amount, cost rate, terms, etc.

2. Provide an explanation, with supporting calculations, of the methodology used to arrive at the cost rate for common equity. If a rate of return study was performed, provide a copy of such study.

3. Provide a detailed calculation of the claimed cost of debt and preferred stock on Schedules 4A and 4B, respectively.

Minimum Filing Requirements

Part B

Rate Increase Applications - Small Utilities

Example Schedules to be Completed

(The example applications are not reproduced here. For copies of the example applications please contact the Public Service Commission or the Registrar of Regulations.)

2 DE Reg. 1741 (04/01/99) (Prop.)

^{1 Part "A" of the Minimum Filing Requirements governs the filing of rate increase applications by major utilities. Part "B" governs filings by small utilities.}

^{2 Part "A" of the Minimum Filing Requirements governs the filing of rate increase applications by major utilities. Part "B" governs filings by small utilities.}