10%, we disagree with the calculation and recommended 8.65% DSIC rate ALJ’s increase. We note that while Act 11 established a formula for calculating the initial 5% DSIC, there is no established formula for calculating an increase above the 5% DSIC cap. However, as earlier stated, since Act 11 gives the Commission authority and the discretion to grant a waiver of the 5% DSIC cap, we will determine an appropriate increase from the 5% DISC cap under the circumstances in this case. In this regard, we acknowledge the disagreement with the Company’s recommended 8.65% DSIC cap and the argument that the Commission ALJ’s Company’s should reject the recommended calculation of the increase and, instead, consider ALJ’s the totality of all the factors in this proceeding. The Company suggests a DSIC cap increase that appropriately balances the interests of the Company and those of its customers, rather than adopting the recommended calculation. UGI-CPG Exc. ALJ’s at 7-8. In particular, UGI-CPG argues that the calculation and recommended ALJ’s increase of 8.65% DSIC cap rate would potentially encourage gamesmanship on the part of utilities and should therefore, be rejected. UGI-CPG explains this potential Id. gamesmanship on the part of the utilities with regard to a DSIC waiver request, as follows: . . . but applying the approach would provide a perverse RD’s incentive for utilities to start with a lower original LTIIP investment, and then adopt a higher percentage increase in order to manipulate the outcome of the methodology. For instance, a utility that showed a 60% increase in its original LTIIP and only a 20% increase in its modified LTIIP would receive a much lower DSIC rate cap than an identically situated utility that showed a 20% increase in its original LTIIP, and a 60% increase in its modified LTIIP. UGI-CPG Exc. at 8.
10%, we disagree with the ALJ’s calculation and recommended 8.65% DSIC rate increase. We note that while Act 11 established a formula for calculating the initial 5% DSIC, there is no established formula for calculating an increase above the 5% DSIC cap. However, as earlier stated, since Act 11 gives the Commission authority and the discretion to grant a waiver of the 5% DSIC cap, we will determine an appropriate increase from the 5% DISC cap under the circumstances in this case. In this regard, we acknowledge the Company’s disagreement with the ALJ’s recommended 8.65% DSIC cap and the Company’s argument that the Commission should reject the ALJ’s recommended calculation of the increase and, instead, consider the totality of all the factors in this proceeding. The Company suggests a DSIC cap increase that appropriately balances the interests of the Company and those of its customers, rather than adopting the ALJ’s recommended calculation. UGI-CPG Exc. at 7-8. In particular, UGI-CPG argues that the ALJ’s calculation and recommended increase of 8.65% DSIC cap rate would potentially encourage gamesmanship on the part of utilities and should therefore, be rejected. Id. UGI-CPG explains this potential gamesmanship on the part of the utilities with regard to a DSIC waiver request, as follows: . . . but applying the RD’s approach would provide a perverse incentive for utilities to start with a lower original LTIIP investment, and then adopt a higher percentage increase in order to manipulate the outcome of the methodology. For instance, a utility that showed a 60% increase in its original LTIIP and only a 20% increase in its modified LTIIP would receive a much lower DSIC rate cap than an identically situated utility that showed a 20% increase in its original LTIIP, and a 60% increase in its modified LTIIP. UGI-CPG Exc. at 8.