Direct Testimony of James T. Selecky On Behalf of ABATE

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BRUBAKER & ASSOCIATES, INC.
James T. Selecky
Page 15
Q HAS DECo PROPOSED ANY OTHER RATE ADJUSTMENTS THAT ARE
UNIQUE?
A Yes. In addition, DECo is proposing the creation of Equalization Transition Charge
Adjustment (ETCA), which is intended to eliminate rate skewing. This results in an
increase in the RAST rates for commercial secondary and commercial/industrial
primary customers and a rate reduction for residential customers.
Q DO YOU AGREE WITH DECo’S DEFINITION OF NET STRANDED COST?
A No. DECo’s definition of net stranded cost is not specifically related to its generation
assets. In fact, DECo’s procedure would include earnings of the Company in excess
of its last authorized rate of return. For example, in Case No. U-11495, the
Administrative Law Judge issued a proposal for decision that stated DECo was
earning $101.6 million in excess of its authorized rate of return. Since Act 141 froze
DECo’s rates, customers never realized a rate reduction. Under DECo’s proposed
plan, the Company would be allowed to retain most of this overearning.
DECo’s proposed calculation of net stranded cost does not focus on costs
specifically, but focuses on lost revenues. When the Commission established costs
to be securitized, an analysis was made of specific cost. DECo’s definition of net
stranded cost should be more appropriately referred to as lost revenue. It is critical
that the Commission examine DECo’s cost and determine which costs are stranded,
and not rely on lost revenue calculations.