The settlement makes permanent a temporary rate increase of $5.2m which went into effect in July 2010, and also provides for an additional rate increase of $5m which goes into effect on 1 May 2011.
The settlement extends through 1 May 2016 and provides for a long-term rate plan and earnings sharing mechanism, with estimated future rate increases of $1.5m, $1.9m and $1.4m to occur on 1 May 2012, 1 May 2013 and 1 May 2014, respectively.
The rate plan allows the company to file for additional rate relief if its return on equity is less than 7% and a sharing of earnings with customers if its return on equity is greater than 10% in a calendar year.
The settlement provides that Unitil’s authorized return on equity will remain at 9.67%, and that the company will use a common equity ratio of 45.45% and an overall weighted cost of capital of 8.39% to determine changes to distribution rate levels.
