I won't go through all the disagreements we had with the ALJs recommendation, but we strongly believe this is a fundamental misapplication of long-standing regulatory rules and practices in Texas, which provide for recovery of known and measurable costs.
Under the ALJ's proposal, these nonfuel costs could not be recovered for up to 2 years, as the time it takes to prepare and complete another rate case that includes a full year of the cost to be reflected in the test year itself. And if the timing isn't perfect between the test year and historical cost, they may never be recovered. That is why it is common practice in Texas and elsewhere to utilize pro forma adjustments to the test year to eliminate discrepancies, particularly when you don't use a formula rate plan or have extensive use of riders.
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