In its Replies to Exceptions, the OSBA points out that, as the OCA readily admits, the adoption of the revenue allocation proposal requires the Commission OCA’s to agree to the version of the COSS. According to the OSBA, because the ALJ OCA’s correctly rejected the OCA cost allocation methodology, the revenue allocation OCA’s methodology should similarly be rejected. OSBA R.Exc. at 13-14. In its reply, PPLICA states that the proposed COSS is contrary to OCA’s Commission precedent and unsupported by the NARUC Manual and, as such, any revenue allocation based on the proposed COSS must be summarily rejected. In OCA’s response to the argument about gradualism, PPLICA acknowledges that OCA’s gradualism is a legitimate ratemaking construct designed to mitigate unreasonable rate increases. However, according to PPLICA, because COSS shows that residential PPL’s customers are paying rates significantly below cost-of-service, revenue allocation PPL’s limits gradualism adjustments to ensure that customers paying above-cost rates move reasonably closer to cost-of-service. PPLICA posits that as the recommendation to ALJ’s approve revenue allocation incorporates gradualism, it should be approved by the PPL’s Commission without modification. PPLICA R.Exc. at 9-10. d. Disposition Based upon our prior determination and discussion, with respect to supra, the rejection of the OCA COSS, we are in agreement with the ALJ that proposed PPL’s revenue allocation should be approved. As the revenue allocation OCA’s recommendation is based upon its COSS, which we have rejected, we conclude that its allocation proposal should similarly be denied. Additionally, we find that revenue PPL’s allocation proposal is consistent with moves all rate classes closer to cost of Lloyd, service in a reasonable manner and considers the principle of gradualism. Accordingly,
In its Replies to Exceptions, the OSBA points out that, as the OCA readily admits, the adoption of the OCA’s revenue allocation proposal requires the Commission to agree to the OCA’s version of the COSS. According to the OSBA, because the ALJ correctly rejected the OCA cost allocation methodology, the OCA’s revenue allocation methodology should similarly be rejected. OSBA R.Exc. at 13-14. In its reply, PPLICA states that the OCA’s proposed COSS is contrary to Commission precedent and unsupported by the NARUC Manual and, as such, any revenue allocation based on the OCA’s proposed COSS must be summarily rejected. In response to the OCA’s argument about gradualism, PPLICA acknowledges that gradualism is a legitimate ratemaking construct designed to mitigate unreasonable rate increases. However, according to PPLICA, because PPL’s COSS shows that residential customers are paying rates significantly below cost-of-service, PPL’s revenue allocation limits gradualism adjustments to ensure that customers paying above-cost rates move reasonably closer to cost-of-service. PPLICA posits that as the ALJ’s recommendation to approve PPL’s revenue allocation incorporates gradualism, it should be approved by the Commission without modification. PPLICA R.Exc. at 9-10. d. Disposition Based upon our prior determination and discussion, supra, with respect to the rejection of the OCA COSS, we are in agreement with the ALJ that PPL’s proposed revenue allocation should be approved. As the OCA’s revenue allocation recommendation is based upon its COSS, which we have rejected, we conclude that its allocation proposal should similarly be denied. Additionally, we find that PPL’s revenue allocation proposal is consistent with Lloyd, moves all rate classes closer to cost of service in a reasonable manner and considers the principle of gradualism. Accordingly,
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