Recently you may have read or heard about our General Rate Application Order and that Maritime Electric has over-earned or over-collected $10 million from customers. We want to take this opportunity to explain what it means and how these amounts are being returned to you.
When the Island Regulatory and Appeals Commission (IRAC) approves rates, the rates are based on estimates of future sales and expenses. To the extent that amounts collected from customers exceed our actual costs, including the amount we are allowed to earn in a given year, these amounts are set aside with interest to be returned to customers in a manner approved by IRAC. This is an approved mechanism which has been used in the past to ensure all amounts are returned to customers and has helped to stabilize past rate increases.
To put it another way, we have a cap or ceiling that we as a company are permitted to earn and anything collected over that is set aside with interest to be refunded to customers in full. Maritime Electric does not, and has not requested to keep these amounts.
Our sales forecasts are just that, forecasts, and we do our best to estimate what our 80,000-plus customers will use in electricity in a given year. We update these forecasts at least twice a year.
With the increase in usage of electricity, we have been challenged to get the forecast completely accurate and we are doing our best in this area.
In the recent rate filing, Maritime Electric proposed to return the over-collected amounts to customers over the next three years and stabilize rate adjustments for that period. IRAC has ordered that the amounts be returned next year instead.
We are regulated by IRAC and they approve the rates charged to recover all of our expenditures, capital plans and overall operations spending to supply electricity and service to our customers.
We are respectful of IRAC’s decision and we will fully comply with the order.
We have over 180 Islanders working in our company to supply service to you every day.
We value our customers and wanted you to hear from us directly about this issue and to clarify for the record.
John Gaudet is president and CEO of Maritime Electric.
