25-0991-TF

The docket for the Village of Ludlow Electric Light Department's proposed 21.5% rate increase identifies several key areas of growth, each with specific considerations:

1. Power Supply and Resource Adjustments:
- Growth in renewable energy resource volumes, such as increased use of the Stetson Wind, Chester Solar, Fitchburg Landfill, Kruger, and McNeil resources. These adjustments are based on five-year average generation data (2020-2024) to better reflect current operating conditions and cost efficiencies.
- Replacement of expired low-cost, fixed-price resources with new or expanded renewable sources.
- Key considerations: Managing cost impacts (many of these adjustments reduce costs), ensuring firm supply, capturing available renewable energy credits (RECs), and reflecting market price changes in power supply planning 1, 1.

2. Labor and Compensation:
- Growth in employee compensation, including an approved 8.1% wage increase for union employees effective January 1, 2025, a 5% wage increase for non-union employees effective the same date, and proposed further increases for all employees effective January 1, 2026. Addition of a new lineman supervisor/safety officer position is also identified.
- Key considerations: The need to document and justify wage increases, secure board approvals, and ensure competitive compensation to retain workforce 2, 2.

3. Capital and Operating Expenses:
- Growth in operating expenses, including increases in property taxes due to higher asset valuations, adjustments in weatherization and payroll taxes, and new or replacement capital items such as a bucket truck with an estimated cost of $448,902.
- Key considerations: Applying accurate tax rates to updated valuations, documenting capital expenditures, and matching cost increases with necessary service enhancements 3, 2.

4. Rate Structure and Revenue Requirements:
- Growth in the overall cost of service (COS) from $8,170,489 (calendar 2024 test year) to a proposed $10,085,816 for the rate year (July 2025 – June 2026), driven by the above factors and requiring a proportional rate increase across all customer classes.
- Key considerations: Ensuring the rate increase is just, reasonable, and applied uniformly as required by Vermont law; managing the risk of refunding excess collections if the final approved rate is lower than proposed; and maintaining regulatory compliance during the investigation process 3, 4.

In summary, the areas of growth include expanded renewable energy procurement, increased labor costs, higher operating and capital expenses, and an overall increase in revenue requirements. The key considerations are cost containment, regulatory compliance, transparency of wage and capital justifications, and ensuring equitable rate adjustments for all customer classes.

The financial and timeline risks and concerns discussed in this docket include:

Financial Risks and Concerns:
- Increased power supply and transmission costs are primary drivers of the proposed rate increase, with higher energy market prices and open access transmission tariff (OATT) costs specifically noted as significant factors. For example, there is a $1,475,278 increase in energy market prices and a $248,396 increase in OATT costs due to a higher Schedule 9 rate 1, 1, 2.
- Labor expenses are projected to increase, including higher wages and the cost of employee medical insurance premiums and benefits 2.
- There is an explicit adjustment of net income to achieve a times interest earned ratio (TIER) of 2.0, indicating a concern with maintaining adequate financial health and debt coverage 2.
- Some cost increases are due to the expiration of prior credits or programs (e.g., a one-time credit from the McNeil resource in 2024, expiration of the Mystic cost of service agreement, and inventoried energy program), leading to higher ongoing costs 1.
- The Vermont Department of Public Service has recommended that the Commission open an investigation to ensure that estimates and forecasts, particularly those used for ratemaking, are fully updated and reflect current market conditions before approval. This indicates concern about the accuracy of financial projections and the potential for over- or under-recovery 2, 3.

Timeline Risks and Concerns:
- The Department of Public Service has called for an investigation into the justness and reasonableness of the proposed rate increase, which could delay final approval and lead to a refund obligation if any part of the increase is found to be unjustified. The utility is allowed to implement the rate increase immediately but must refund any amounts collected above what is finally determined as reasonable 3.
- The statutory process requires an investigation upon opposition from the Department, with a schedule including discovery, public hearing, and intervention deadlines. Delays or disputes in these stages could postpone resolution and create uncertainty for both the utility and customers 4, 3.
- The increase must be applied identically across all ratepayer classes, which may limit flexibility in addressing financial shortfalls or equity concerns between customer types 3.

In summary, the docket highlights risks related to rising costs, forecasting accuracy, regulatory review delays, and the possibility of future refunds if rates are not deemed just and reasonable.

The primary stakeholders in Vermont Public Utility Commission Docket No. 25-0991-TF (Village of Ludlow Electric Light Department rate case) are:

- Village of Ludlow Electric Light Department (Ludlow Electric): The utility that filed for a 21.5% overall rate increase effective July 1, 2025. Ludlow Electric is the proponent of the rate increase proposal 1, 2.
- Vermont Public Utility Commission (the Commission): The regulatory authority responsible for investigating and ultimately approving, modifying, or denying the proposed rate increase. The Commission is neutral and acts as the adjudicator 1, 1.
- Vermont Department of Public Service (the Department): The state agency charged with representing the interests of the general public in utility matters. The Department recommended that the Commission open an investigation into the justness and reasonableness of Ludlow Electric’s proposed rate increase, indicating opposition or at least skepticism toward the proposal as filed 1.
- Members of the public / ratepayers: Individuals and businesses served by Ludlow Electric who may be affected by the rate increase. Their positions are not detailed in the excerpts, but they are entitled to participate, comment, or intervene in the proceeding 2.

Summary of positions:
- Ludlow Electric: FOR the 21.5% rate increase.
- Vermont Department of Public Service: AGAINST or at least not supportive of the rate increase as proposed; they requested the investigation.
- Vermont Public Utility Commission: Neutral/arbitral.
- Ratepayers/Public: Not explicitly stated in the excerpts, but generally presumed to be concerned about rate increases and able to participate in the process 2.

Key events and scheduled submissions in the Village of Ludlow Electric Light Department rate case proceeding include:

- May 16, 2025: Ludlow Electric filed a proposed tariff with the Vermont Public Utility Commission (PUC) seeking a 21.5% rate increase to take effect July 1, 2025 1, 2.
- June 16, 2025: Vermont Department of Public Service (DPS) recommended that the PUC open an investigation into the proposed rate change 3, 2.
- June 27, 2025: PUC issued an order opening an investigation and scheduled a July 8, 2025 scheduling conference 2, 2.
- July 8, 2025: Scheduling conference held via videoconference 4, 4.
- July 24, 2025: DPS serves first round of discovery on Ludlow Electric 4, 4, 5.
- August 14, 2025: Ludlow Electric responses to first round of discovery due 4, 4, 5.
- August 20, 2025: Public hearing at 7:00 p.m.; information session at 6:30 p.m. hosted by DPS 4, 4.
- August 27, 2025: Deadline to file motions to intervene 4, 4, 5.
- August 28, 2025: DPS and pending intervenors serve second round of discovery on Ludlow Electric 4, 4, 5.
- September 3, 2025: Responses to motions to intervene due 4, 5.
- September 18, 2025: Ludlow responds to second round of discovery 5, 5.
- October 9, 2025: DPS/intervenor prefiled testimony due 5, 5.
- October 23, 2025: Ludlow Electric serves discovery on DPS and intervenors 4.
- November 13, 2025: DPS responses to discovery due 4, 4.
- November 25, 2025: Deadline for parties to file stipulations or proposed schedules for continued litigation 4, 4.

This timeline covers both events that have occurred and future scheduled deadlines as of July 28, 2025.

Docket Summary: Vermont Public Utility Commission Case No. 25-0991-TF concerns the Village of Ludlow Electric Light Department’s request for an overall rate increase of 21.5%, to take effect for service rendered on or after July 1, 2025. The proposed rate increase is applied identically across all customer classes and is driven primarily by rising power supply costs, labor costs, and net income requirements. The increase reflects an additional retail revenue requirement of $1,784,956. The Vermont Department of Public Service recommended that the Commission open an investigation into the justness and reasonableness of the proposed tariff change. During the investigation, Ludlow Electric is permitted to implement the 21.5% increase as a surcharge, subject to refunding any revenue collected above amounts deemed just and reasonable by the Commission after final review. The cost of service study used a 2024 test year, with $8,170,489 in costs, adjusted by $1,915,327 to reach a rate year cost of service of $10,085,816. A procedural schedule has been established, including discovery and a public hearing, with a statutory timeline of up to seven months for Commission determination 1, 2, 3.