Minutes of the Annual Meeting of the Power - New York Power ...

F. Issue: Request for CoS Credit for Authority’s Investment Income.
Public Comments:
The Neighboring States argue that the Authority’s investment income should be
treated as derived from “customer-contributed” capital and therefore credited
against the CoS. (NS Comments, § 3). NYAPP concurs with this position.
(Russell at 41).
Staff Analysis:
This novel argument again runs counter to the ratemaking principles established
in the contracts. The preference rates are cost-based rates where no working
capital charge is included and no real rate of return is earned. A portion of the
Authority’s investment income is derived from the Hydro Projects, but the
Authority’s investments are not preference customer-contributed capital for which
the interest must be credited to the preference customers. A claim for a share of
the Authority’s investment income would produce preference rates that are below
cost in violation of Auer Settlement principles. Yet, that is exactly the result if
investment income derived from such excess revenues is used as a credit to the
CoS.
Recommendation:
Staff recommends that a credit not be provided for investment income.
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