RE:RE:RE:RE:ALA is a bargain ...JohnSP wrote: @
Capharnaum
So you are saying they can bank the expenses until it's a more politically acceptable time to raise the gas utility rates than current in middle of Covid?
Also, I read once that any unpaid accounts receivable (ie customers not paying their utility bills) can I assume after a certain time period, be added into the utility rates and recovered. So basically a no lose, albeit govt contriolled investment rate-of-return.
Under cost of service, the utility is guaranteed a return rate based on "regulated assets". Usually, rates are set to equal operating cost + amortization/depreciation + rate of return. However, some operating costs / amortization / depreciation can be put into a new "reported regulated asset" to be put into future rates. So, Altagas could propose to postpone costs or amortization/depreciation in order to keep lower rates for the next year. Those postponed costs or amortization/depreciation would be put back temporarily into the regulated assets base.
As to bad debt, it goes indeed into operating costs. Usually, in a cost of service model, these extra expenses are put into a regulated assets account to be recovered in later years. In the case of Altagas, these costs might already be taken care of in their COVID-19 regulated account that already got approval earlier in the year for most of their utilities.