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HomeMy WebLinkAbout20101109_3148.pdfDECISION MEMORANDUM TO:COMMISSIONER KEMPTON COMMISSIONER SMITH COMMISSIONER REDFORD COMMISSION SECRETARY LEG AL WORKING FILE FROM:TERRI CARLOCK DATE:NOVEMBER 5, 2010 RE:ANNUAL DETERMINATION OF THE INTEREST RATES ON DEPOSITS COLLECTED FROM CUSTOMERS FOR THE CALENDAR YEAR 2011. CASE NO. GNR-10-01. Every year the Commission sets the interest rate to be paid on customer deposits for the next calendar year. Rule 106 of the of the Customer Relations Rules for Gas, Electric and Water Utilities provides: "the Commission will determine the twelve-month average interest rate for one-year Treasury Bills for the previous November 1 through October 31 , round that rate to the nearest whole percent... (IDAP A 31.21.01.106 and IDAP A 31.41.01.104). This average interest rate is 0.33% as shown on Attachment A. However, Staff believes zero is not a "whole percent" interest rate, therefore Staff recommends the rate be set at 1 %, as is currently the 2010 rate. Rule 9 of the Customer Relations Rules for Gas, Electric and Water Utilities allows the Commission on its own motion to approve a deviation of the rule in unusual circumstances (Exemption from Rules , IDAP A 31.21.01.009). Staff believes the current low interest rates represent an unusual situation. Fairness supports the belief that payment of zero interest is not the intent behind the rule stating "interest will be payable on all deposited amounts.Id. The chart on Attachment B shows the interest rates since 1990 and the Order numbers approving those rates. COMMISSION DECISION What interest rate should be paid on deposits collected from customers for the calendar year 2011? J~ ~~cR Terri Carlock u/tcarlocl AnnDetIntRaes 11-20 1 O. TC ONE-YEAR TREASURY RATES Week Ended Rate %Week Ended Rate % 11/6/2009 5/7/2010 11/13/2009 5/14/2010 11/20/2009 5/21/2010 11/27/2009 5/28/2010 12/4/2009 6/4/2010 12/11/2009 6/11/2010 12/18/2009 6/18/2010 12/24/2009 6/25/2010 12/31/2009 7/2/2010 1/8/2010 7/9/2010 1/15/2010 7/16/2010 1/22/2010 7/23/2010 1/29/2010 7/30/2010 2/5/2010 8/6/2010 2/12/2010 8/13/2010 2/19/2010 8/20/2010 2/26/2010 8/27/2010 3/5/2010 9/3/2010 3/12/2010 9/10/2010 3/19/2010 9/17/2010 3/26/2010 9/24/2010 4/2/2010 10/1/2010 4/9/2010 10/8/2010 4/16/2010 10/15/2010 4/23/2010 10/22/2010 4/30/2010 10/29/2010 AVERAGE 33 % Source: Federal Reserve Treasury Rates One-Year Constant Maturities ATTACHMENT A Interest Rates on Deposits Calendar Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Interest Rate Order No. 22836 23425 23971 24578 25242 25788 26233 26681 27248 27828 28234 28575 28896 29158 29386 29653 29932 30200 30469 30692 30965 ATTACHMENT B