Direct Testimony of James T. Selecky On Behalf of ABATE

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BRUBAKER & ASSOCIATES, INC.
James T. Selecky
Page 13
be passed on to the ratepayers in the form of a permanent rate reduction and any
unrecovered implementation costs should be disallowed.
Q IS THERE ANY OTHER SOURCE OF REVENUES THAT SHOULD BE USED TO
OFFSET STRANDED COSTS?
A Yes. As a result of DECo’s securitization, for a period of six years approximately $50
million per year of the reduction in DECo’s revenue requirement associated with
securitization is allocated to the low-income and energy efficiency fund administered
by the MPSC. At the end of the six-year period, these funds should be used to further
reduce stranded cost. It is my understanding that the MPSC has not previously
addressed the disposition of these funds at the end of the six-year period.
DECo’S POSITION
Q BEFORE YOU DISCUSS DECo’S PROPOSAL FOR CALCULATING NET
STRANDED COSTS, WHAT IS MEANT BY THE TERM “NET STRANDED COST”?
A Generally, the term refers to costs that are permitted to be collected from customers
under regulation, but cannot be recovered in a competitive market. ABATE witness
Mr. Phillips addresses the term “net stranded cost” in detail in his prefiled testimony.
Q HAS DECo PROVIDED A METHOD FOR RECOVERING ITS CLAIMED NET
STRANDED COST?
A DECo has proposed a method for recovering what it defines as net stranded cost.
Under DECo’s definition, net stranded cost is the net economic harm or benefit
experienced by DECo as a result of customers participating in the retail electric
choice program. That is, if a customer chooses to take generation service from an