The utility must meet three criteria:
1. The rate of return test:
◾ If the SRC increase is granted, the rate of return must not exceed the annually updated benchmark rate of return.
◾ Alternatively, if the SRC increase is granted, the net operating income must not exceed 6 percent of operations and maintenance expenses.
2. The present rates test:
◾ If the utility’s present rates were authorized in a conventional rate case, they must have been in effect for at least a full annual reporting cycle, which is a calendar year. The annual report that covers this calendar year must have been filed with the PSC so the rate of return can be reviewed.
◾ If the utility’s present rates were authorized in an SRC, they must have been in effect for at least 12 months.
3. The last full rate case test:
◾ For class AB utilities, the requested effective date of the SRC must be within 5 years of the effective date of the last conventional rate case.
◾ For class C and D utilities, the cumulative increase of all SRCs since the last conventional rate case must not exceed 40 percent.
