... environment has been challenging for utilities in recent years. Lengthy, contentious rate case proceedings and several unfavorable orders are signs of deterioration in what had been a historically constructive jurisdiction. This development came at an inopportune time, Fitch Ratings believes, as investor- owned utilities (IOUs) were taking on large capex programs to comply with stringent environmental control mandates. Traditional Cost Recovery Mechanisms: General rate case (GRC) filings are the primary venue for utilities to recover most capital investments. Rate cases generally rely on historical test years with adjustments for known and measurable changes within six months of the end of the test year. Use of rider mechanisms, such as storm and demand programs, remains limited and allowed amounts are usually small. Capex preapproval is permitted and utilities can earn a return on construction work-in-progress (CWIP). However, IOUs were...
