Section 656

Section 656.60 Determination of the Qualifying Infrastructure Plant Surcharge Percentage

a) The QIP surcharge percentage shall be expressed as a percentage carried to two decimal places. The QIP surcharge percentage shall be applied to the total amount billed to each customer located in the same rate zone based on the utility's otherwise applicable rates and charges. The QIP surcharge percentage shall not be applied to the exclusions listed in Section 656.30(a).

b) In calculating the QIP surcharge percentage, the utility may choose either annual prospective operation or quarterly historical operation based on QIP investment data for a prior three-month period. Annual prospective operation may be selected only if the utility's immediately preceding rate case for the rate zone utilized a future test year as defined in 83 Ill. Adm. Code 287 and the utility submits the information required by Section 656.70(d)(7).

1) Annual Prospective Operation

Utilities choosing annual prospective operation shall determine the QIP surcharge percentage for the operation year using the following formula:

((NetQIP + AdjNetQIP) x PTR) + (Net Dep + AdjNetDep) + (R x 1.33) + ((O + INT) x Om)

x 100%

PAR

Where:

S%	=	QIP surcharge percentage.
NetQIP	=	The average forecasted cost of the investment in QIP for the rate zone for the operation year less forecasted accumulated depreciation and accumulated deferred income taxes (ADIT) in QIP for the rate zone for the operation year. The average forecasted cost of QIP, net of depreciation and any ADIT liabilities (net of deferred tax assets) resulting from the QIP, shall be computed by using an average of 13 end-of-month balances of QIP, less accumulated depreciation and ADIT for the period from December 31 of the year preceding the operation year through December 31 of the operation year.
AdjNetQIP	=	The actual amount of netQIP as of the end of the QIP forecast period used in the utility's last rate case for the rate zone less the amount of NetQIP the Commission approved to be added to the utility's rate base as of the end of the QIP forecast period.
PTR	=	Pre-tax return as described in Section 656.50(a)(1).
Net Dep	=	Net depreciation expenses related to the average investment in QIP for the rate zone for the operation year. Depreciation expenses shall be calculated by multiplying the average forecasted cost of the investment in QIP by plant account, net of retirements, by the approved depreciation rates for the respective accounts in which the specific items included in the average QIP investment are recorded. The average forecasted cost of the investment in QIP by plant account, net of retirements, shall be computed by using an average of 13 end-of-the-month balances of QIP by plant account and retirements for the period from December 31 of the year preceding the operation year through December 31 of the operation year.
AdjNetDep	=	The actual amount of NetDep applicable to the QIP forecast period used in the utility's last rate case for the rate zone less the amount of NetDep that the Commission approved for the QIP forecast period used in the utility's last rate case for the rate zone.
R	=	Utility-determined reconciliation component (R component) calculated for the reconciliation year under the reconciliation feature as described in Section 656.80(d). The reconciliation component shall be collected over nine months from April through December.
O	=	The Commission-ordered adjustment component (O component).
INT	=	The calculated interest attributable to the O component. This interest shall be calculated as described in Section 656.80(i).
Om	=	The Commission-ordered O component multiplier. Om is a timing factor applied to the O component and the INT to allow for the collection of the O component and the INT over the remainder of the operation year. For example, if the O component and the INT were included in the QIP surcharge percentage on January 1, the Om would be 1.00. Similarly, if the O component and the INT were included in the QIP surcharge percentage on April 1, the Om would be 1.33.
PAR	=	The projected total water or sewer QIP base rate revenues, as applicable, for the rate zone for the period from January 1 through December 31. The projected revenue shall not include the exclusions listed in Section 656.30(a).

Following the final order in each rate case, and before the Effective Month that will initiate the inclusion of AdjNetQIP and AdjNetDep, the utility shall file a public document in the rate case that provides the calculation of AdjNetQIP and AdjNetDep, including each component used to determine AdjNetQIP and AdjNetDep.

2) Quarterly Historical Operation

Utilities choosing quarterly historical operation shall determine the QIP surcharge percentage for the quarter using the following formula:

((NetQIP + AdjNetQIP) x PTR x .25) + (NetDep + AdjNetDep) + (R x .33) + ((O + INT) x Om)

x 100%

PQR

Where:

S%	=	QIP surcharge percentage.
NetQIP	=	Original cost of QIP less accumulated depreciation and any accumulated deferred income tax (ADIT) liabilities net of deferred tax assets resulting from the QIP for the rate zone. NetQIP shall be the level of investment in QIP existing at the end of the calendar month in which an investment sheet is filed, net of depreciation and any ADIT liabilities (net of deferred tax assets) resulting from the QIP.
AdjNetQIP	=	The actual amount of NetQIP as of the end of the QIP forecast period used in the utility's last rate case for the rate zone less the amount of NetQIP the Commission approved to be added to the utility's rate base as of the end of the QIP forecast period.
PTR	=	Pre-tax return as described in Section 656.50(a)(1).
NetDep	=	Net quarterly depreciation expense applicable to NetQIP less the quarterly depreciation applicable to the plant being retired.
AdjNetDep	=	The actual amount of NetDep applicable to the QIP forecast period used in the utility's last rate case for the rate zone less the amount of NetDep that the Commission approved for the QIP forecast period used in the utility's last rate case for the rate zone.
R	=	Utility-determined reconciliation component calculated for the reconciliation year under the reconciliation feature as described in Section 656.80(d). The reconciliation component shall be collected over nine months from April through December. No reconciliation component amount shall be included for the January through March quarter.
O	=	Commission-ordered adjustment component.
INT	=	The calculated interest attributable to the O component. This interest shall be calculated as described in Section 656.80(i).
Om	=	The Commission-ordered O component multiplier. Om is a timing factor applied to the O component and the INT to allow for the collection of the O component and the INT over the remainder of the operation year. For example, if the O component and the INT were included in the QIP surcharge percentage on January 1, the Om would be 0.25. Similarly, if the O component and the INT were included in the QIP surcharge percentage on April 1, the Om would be .33.
PQR	=	Projected quarterly water or sewer QIP base rate revenues, as applicable, for the rate zone during the calendar quarter when the QIP surcharge percentage shall be in effect. The projected quarterly revenue shall not include the exclusions listed in Section 656.30(a).

(Source: Amended at 40 Ill. Reg. 9467, effective July 1, 2016)