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Public utilities

Regulatory Testimony on Electric Utility Certificates and Public Convenience Case

Strategic Insights

— 2 min read

Christopher M. Garrett, Vice President, Financial Strategy and Chief Risk Officer for PPL Services Corporation, representing Kentucky Utilities Company and Louisville Gas and Electric Company, submitted rebuttal testimony to the Public Service Commission (PSC) case 2025-00045, addressing concerns raised by the Attorney General's office and the Sierra Club regarding the companies' applications for certificates of public convenience and necessity. Garrett responded to direct testimony presented by Lane Kollen and Stacy L. Sherwood on issues including Allowance for Funds Used During Construction (AFUDC), Post-In-Service Carrying Costs (PISCC), and Battery Energy Storage Systems (BESS) Investment Tax Credit (ITC) normalization.

Key Takeaways:

  • Christopher Garrett, Vice President, Financial Strategy and Chief Risk Officer for PPL Services Corporation, testified on behalf of Kentucky Utilities Company and Louisville Gas and Electric Company.
  • Garrett addressed recommendations made by Lane Kollen and Stacy L. Sherwood regarding AFUDC calculations, PISCC deferrals, and BESS ITC normalization.
  • The companies disagreed with Mr. Kollen's recommendation to limit AFUDC to CWIP amounts actually paid and to use average daily balance of short-term debt when calculating WACC.
  • The companies proposed an alternative approach using the WACC as of December 31, updated annually to accrue AFUDC.
  • The companies responded to concerns raised by the Attorney General and Sierra Club regarding PISCC deferrals, arguing that regulatory asset treatment at a WACC return level remains a more efficient and equitable alternative to frequent general rate cases.
  • The companies agreed with the Commission's position that the four categories identified by Ms. Sherwood are not determinative, but rather illustrative.
  • The companies argued that without deferral treatment, they may have no option but to file a rate case proceeding for each asset when it reaches service, which would not only include carrying costs but also incremental rate case expenses.
  • The companies were generally supportive of making the opt-out election for the battery ITC, provided that timely and reliable cost recovery is available.

Statistics:

  • The total amount of deferrals proposed by the companies is $406 million over the life of the assets.
  • The companies argue that regulatory asset treatment would reduce the frequency of rate case filings and the associated costs incurred in those proceedings.
  • The opt-out election for the BESS ITC would result in a total shortfall of $1.4 million in customer contributions to the rate base.

Sources:

  • Rebuttal Testimony of Christopher M. Garrett, Vice President, Financial Strategy and Chief Risk Officer on Behalf of Kentucky Utilities Company and Louisville Gas and Electric Company, Case No. 2025-00045.
  • Direct Testimony of Lane Kollen on Behalf of the Attorney General's Office, Case No. 2025-00045.
  • Direct Testimony of Stacy L. Sherwood on Behalf of Sierra Club, Case No. 2025-00045.

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