2011 Reconciliation

In its initial filing, the Company reported that it had experienced a power supply over-recovery of $500,585 during 2011. After adding the 2010 over-recovery roll in amount, the accrued interest for 2011 and a 2010 uncollectible mechanism over-refund, the total over-recovery amount at the end of 2011 was $1,130,213. However, the company proposed to reduce this over-recovery by $856,183 for an uncollectible amount resulting from a customer who filed Chapter 11 bankruptcy/reorganization in September 2011. The result of applying this uncollectible amount reduced the over-recovery balance from $1,130,218 to $274,030. When questioned during the discovery process the company took the position that this amount had been included in revenue and therefore it should be permitted to subtract it from revenue since it was not collected. CARE’s expert, a former CFO for a major utility company, stated that such treatment was contrary to accrual accounting practices for utilities. The company also took the position that because the sale was under its RTMP tariff it should be treated differently for accounting purposes. Ultimately, the company agreed to reducing its recovery request by the full $856,183 amount.