PPL Electric Stmt. 14-RJ at 12-13; PPL Electric MB at 57-58. The Company explains that the purpose of purchasing insurance is to spread losses over an extended period of time and to provide PPL Electric with access to the reinsurance market, which is the source of non-affiliated storm damage insurance available. PPL Electric Stmt. 14-RJ at 5. The following chart shows payments in premiums and its reimbursements from its affiliated insurance company: 2007 2008 2009 2010 2011 Total ($000) Premiums $6,725 $7,260 $6,960 $10,850 $10,850 $42,645 Reimbursements $12,112 $5,032 $0 $5,499 $26,500 $49,143 PPL Electric RB at 24. The Company has adequately explained its use of insurance, and its claims are approved. The issue remaining is the value of money due to the delay in processing claims. I&E points out that the PPL witness Novatnack testified that the Company was required to present only one aggregated claim under the policy, but that reviewing the policy resulted in a change of testimony admitting that it was Company's policy, not the insurance company's requirement at all. This results in an inevitable delay in the payment of claims from the time that the loss is incurred, and provides a benefit to the insurance company to the detriment of the ratepayers. As the amounts of the recovery from the insurance company can be substantial, PPL Electric should be directed to cease this practice and to file its claims on a more frequent basis. c. Damage Reserve Account The I&E recommendation that this Company may be better off with a storm damage reserve account or rider is worth pursuing: If PPL had utilized a risk management approach with a storm reserve account within the regulated utility, its profitability
PPL Electric Stmt. 14-RJ at 12-13; PPL Electric MB at 57-58. The Company explains that the purpose of purchasing insurance is to spread losses over an extended period of time and to provide PPL Electric with access to the reinsurance market, which is the source of non-affiliated storm damage insurance available. PPL Electric Stmt. 14-RJ at 5. The following chart shows payments in premiums and its reimbursements from its affiliated insurance company: 2007 2008 2009 2010 2011 Total ($000) Premiums $6,725 $7,260 $6,960 $10,850 $10,850 $42,645 Reimbursements $12,112 $5,032 $0 $5,499 $26,500 $49,143 PPL Electric RB at 24. The Company has adequately explained its use of insurance, and its claims are approved. The issue remaining is the value of money due to the delay in processing claims. I&E points out that the PPL witness Novatnack testified that the Company was required to present only one aggregated claim under the policy, but that reviewing the policy resulted in a change of testimony admitting that it was Company's policy, not the insurance company's requirement at all. This results in an inevitable delay in the payment of claims from the time that the loss is incurred, and provides a benefit to the insurance company to the detriment of the ratepayers. As the amounts of the recovery from the insurance company can be substantial, PPL Electric should be directed to cease this practice and to file its claims on a more frequent basis. c. Damage Reserve Account The I&E recommendation that this Company may be better off with a storm damage reserve account or rider is worth pursuing: If PPL had utilized a risk management approach with a storm reserve account within the regulated utility, its profitability
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