ML18230A834
| ML18230A834 | |
| Person / Time | |
|---|---|
| Site: | Harris  |
| Issue date: | 04/13/1977 |
| From: | Hoover D State of NC, Utilities Commission |
| To: | Peele K Office of Nuclear Reactor Regulation, State of NC, Utilities Commission |
| References | |
| Download: ML18230A834 (19) | |
Text
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'I CHIEF CI ERg IL.. UTILITIES COMMISSSTTT April 13, 1977 MEMO TO: Mrs. Katherine M. Peele Chief Clerk FRCM: Donald R. Hoover, Coordinator Electric Section, Accounting Division SUBJECT'arolina Power and Light Company, Docket No. E-2, Sub 297 Testimony and Exhibit of Donald R. Hoover Attached to this memorandum are revised Pages 5, ll, 12, 13, 14, 15, 16, and 17; revised Schedules 1, 1-2, 2 2-4 2-4b 3. 3-5 d 3-5; d c e ule 3-5f which reflect'hanges that should be made to my testimony Schedu and exhibit as filed March 23, 1977.
This revision is required to eliminate average Federal income tax accruals from the Staff's calculation of the Company's owance for pany s aallowa ing capi al, to adjust the Company's North Carolina retail allocation of the income tax effect of the Company's adjustment to annualize and normalize depreciation expense to a basis consistent with the allocation of the related depreciation expense, and to correct an oversight in the Staff's calculation of the end-of-period level of deferred income taxes.
DRH/ebw Attachment Docl<etN N-Qo -go~
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Bate of DocIIment.
HEGULA ORY DGCKEt'll.E
(Revised) taxes and investment tax credit arising from pro forma adjust-ments to reflect the related effect of additions to utility plant in service. The embedded cost of debt and the preferred dividend requirement are based on the Company's annualized cost at December 31, 1976. The returns after Staff accounting and pro forma adjustments and after the Company proposed increase in rates may be summarized as follows:
After Accounting And Pro Forma Ad ustments Present Proposed Itern Rates Rates 10 (a) (c)
Return on original cost net investment 7.69% 10.12%
12 Return on common equity 8,63% 15.37%
13 14 Q
~
Mr. Hoover, in your calculation of return on common equity, have 15 you included cost-free capital arising from the Job Development 16 Investment Tax Credit implemented by the Revenue Act of 1971?
17 A: Yes, the unamortized balance of the Job Development Investment 18 Tax Credit (JDC) was included as common equity, thus, allowing 19 the company to earn the full equity return on the unamortized 20 balance of this cost-free capital (JDC). This treatment is con-21 sistent with the Commission's findings in its Order Setting Rates 22 in the most recent Carolina Power & Light Company, General Rate 23 Case, Docket Ho. E-2, Sub 264, Order issued February 20, 1976.
24 25 Q: Mill you please describe and explain the noninvestor supplied 26 cost-free capital included in Schedule 1 of Hoover Exhibit 1~
(Revis ed)
Schedule 3-4a reflects a $ 1,000,000 increase in taxes other than income and is required to include in the test-year level of expense gross receipts'ax (net) applicable to the previously mentioned adjustments to operating revenues .
Schedule 3-4b reflects a $ 123,000 increase in taxes - other than income and is required to include in the test-year level of expense payroll taxes applicable to the previously mentioned adjustment to wages and fringe benefits expense.
10 Schedule 3-4c reflects a $ 1,735,000 decrease in taxes - other than income,and is required to include in the test-year, level of expense 13 property tax on additions to plant in service (other than Brunswick 14 Unit Vio. 1) for the period July 1, 1976 through December 31, 1976, 15 and to base this adjustment on the 1976 effective tax rate.
16 17 Schedule 3-4d reflects a $ 155,000 increase in taxes - other than 18 income and I
is required to include in the test-year level of expense 19 property taxes applicable to the actual construction cost of Brunswick 20 No. 1 at December 31, 1976.
21 22 Schedul'e 3-'5 presents a summary of Staff adjustments to state and 23 Federal income tax expense. The calculation of each adjustment to 24 income tax expense is set forth in Schedules 3-5a through 3-5f.
25 26 Schedule 3-Sa reflects a $ 1,644,000 increase in state income tax
(Revised)
- 12 1 expense and is required to exclude from the test-year level of expense the tax effect of a prior period operating loss carry forward.
Schedule 3-5b reflects. a $ 1,479,000 net decrease in state and Federal income tax expense and is required to give effect to the Staff's depreciation adjustment applicable to Brunswick Unit No. l and to correct an oversight in the Company's calculation 'of deferred income taxes arising from normalization of accelerated deprecia-tion applicable to Brunswick Unit Ho. 1.
10 Schedule 3-Sc reflects a $ 214,000 net increase in state and Federal 12 income tax expense and is required to give effect to the Staff's 13 depreciation adjustment applicable to additions to utility plant in for the period July l, 1
14 service (other than Brunswick Unit No. 1) 15 1976 through December 31, 1976 and to provide for deferred income 16 taxes arising from normalization of accelerated depreciation appli-17 cable to these plant additions.
18 Schedule 3-5d reflects a $ 634,000 increase in income tax expense and is required to adjust for the income tax effect of Staff adjustments to the test-year level of revenues, 0&M expenses, and taxes - other 22 than income.
23 24 Schedule 3-5e reflects a $ 1,313,000 increase in income tax expense and is required to adjust for the income tax effect of the difference between interest expense, exclusive of interest on
(Revised) 13-1 customer deposits, used by the Company in its calculation of
. end-of-period income tax expense and the end-of-period interest expense assigned the Company's North Carolina retail operations in the Staff's calculation of return on common equity.
6 Schedule 3-5f reflects a $ 523,000 net decrease in state and Federal 7 income tax expense and is required to adjust the North Carolina retail allocation of the income tax effect of the Company's adjust-ment to annualize and normalize depreciation expense to a basis 10 consistent wich the allocation of the related depreciation expense.
12 Schedule 3-6 reflects a $ 390,000 net increase in the amortization 13 of investment tax credit and is required to include in the test-14 year level of expense amortization of investment tax credit arising 15 from pro forma adjustments to reflect the related effect of additions 16 to utility plant in service. Additionally, as shown in Schedule 17 3-6, the pre-1971 investment tax credit which was fully amortized at 18 June 30, 1976 has been excluded from the test-year level of expense.
19 20 Schedule 3-7 reflects a $ 3,000 increase in interest on customer de-21 posits and is required to adjust this item of cost to an end-of-22 period level.
23 24 Q: Nr. Hoover, do you have any further comments concerning the test-25 year level of revenues under present rates as reflected in the 26 testimony and exhibits of both the Company and the Staff?
., "'Revised)
A: Yes. Both the Company and the Staff have included. in the test-p year level of operations the pro forma effect, of. the addition of ..
3 Brunswick Unit No. 1 to utility plant in service. The Company 4 (Davis Exhibit No. 1, Page 2 of 9, Column 11) decreased North Carolina retail revenues under present rates by $ 34,518,582, F. retl~<:t the level of revenues which would have been realized had this unit been in service throughout the test year.
Ccnsistent with tMs revenue adj'ustment, the Company 9 decreased the test-year level'of fuel expense to reflect
'I 10 the effect of Brunswick Unit No. 1's lower cost nuclear generation which. would have displaced higher cost fossil this unit 'been in'ervice throughout the test year.
n 12 generation'had 13 The Company's adjustme'nts were based on the inclusion of Brunswick 14 Unit No. 1 in the test year level of operations at a 75X load factor.
15 The Staff'ncreased the Company's adjusted'evel of North Carolina "
17 retail revenues under present rates by $ 3,872,321 to reflect the level of revenues which would, have been realized had this"unit been in 1 9 service throughout the test year. This adjustment is consistent, with the Staff adjustment to increase the Company! s adjusted level of fuel expense which results from the. inclusion of Brunswick Unit'o. 1 in the test year level of operations at a 65K'load factor as recommended 23 by Staf f Vitness Qilliams. Thus, the onl'y difference in the Company and Staff adjustment to revenues and the collorary adjustment to fuel 25 expense to reflect the pro forma inclusion of Brunswick Unit No. 1 26
(Revised) 1 in the test year level of operations is that the -Company included this unit at a 75X load factor, whereas the Staff included this unit at a 65X load factor.
The Company's base rates include fuel expense at the level of 8.5 mills 6 per kwh. Therefore, $ 24;366,296 of the reduction in 'North Carolina 7 retail revenues as proposed by 'the Company'and $ 20,493,975 as proposed by the'taif'epresents fuel costs included in the Company's base rates in excess of the fuel expense which the Company would have in-10 curred had Brunswick Unit Ho. l been in service throughout the test year. This'xcess fuel'xpen'se would have been returned to the,Company's customers.'thxough operation 'of't'he fuel charge rider.
\ ~
14 15 The Company proposes to increase'ts'base rates by $ 69,238,676. In 16 designing the. proposed. rates'- instead'.of inc'ludin'g its'pro forma level of 17 fuel expense in its proposed base rates. the Company included fuel expense 18 at the level of 8.5 mills per kwh, which is the same level included in its 19 present rates. The Company views the fuel charge rider as a part of its 20 rate structure and considers the fuel clause an appropriate means by which 21 to return to its customers the excess fuel expense of $ 24,366,296, which 22 . under the Company's proposal would be inc'luded in revenues produced by 23 the base rates. In substance, the Company is asking the Commission 24 to include in its base rates excess fuel cost of approximately $ 24,366,296, 25, and to set the fuel clause base at 8.5 mills per kwh, thereby providing 26 for the return of the $ 24,366,296 excess cost included in the base rates
(Revised) to its customers throu'gh a negative fuel charge.
The fuel clause protects the Company from. sudden'nd dramatic in the cost of fuel over and above'he level included in 'ncreases its base rates. At the same time it'protects'he customer from sudden and dramatic decreases in the cost of fuel. below the level io"1uded in the base rates. 'I do not believe the 'f'uel clause was ever intended to protect the customer fr'om an excessive level of fuel cost included'n the base rates at the time those. rates were 10 fixed. Therefore, I recommend that the level of fuel expense included in the base rates be equal to the pro forma test year S
level of fuel expense rather than equal to a level of fuel expense
'I 13 in excess of 'the'ro forma test year level as proposed by the I
14 Company.'- Thus, if th'e Commission finds the Company'$ pro forma level. of fuel expense I
to be..proper, this level of. cost (expressed 16 in mills-'per kwh) should be included in the base rates and the 17 fuel 'clause base set to reflect this same level of'ost (expressed 18 in mills per kwh). Xf the Commission finds Staff Witness Williams'ro forma level of 6.89 mills per kwh to be proper, then this level 20 should be included in the base rates and the fuel clause base set 21 at 6.89 mills per kwh.
22 23 Q: Do you have any additional comment concerning Hoover Exhibit 1?
24 A: Yes. The Commission presently has before it for consideration'n 25 amendment to the Federal Power Commission's "Uniform System of
~
26
(Revised)
- 17 1 Accounts for f.icensees and for Natural Gas Companies". This amend-ment establishes a procedure to be followed in the'etermination of the rate to be used in computing the Allowance for Funds Used During Construction (AFUDC). The FPC's .stated objective in its proposed rule was "to establish a method which would give'ecognition to the 6 interrelationship between capital utilized for rate case purposes and the capital components of AFUDC in a manner that'would permit a utiIity to arhievc a rate of return on its tota'L uti ity operations, including its construction program, at approximately the rate which 10 would be allowed in a rate case".
12 The Commission Accounting Staff is in complete accord with this 13 iojective as stated by the FPC. However, for rate-making purposes 14 certain items of cost and capital are treated differently by the 15 'PC as compared to the North Carolina Utilities Commission (NCUC).
Therefore, if the calculation of AFUDC is to interface with rate-17 making in North Carolina, .it will be necessary for the NCUC to mod l.fy either the FPC AFUDC formula or its own rate-making practices 19 <<nd procedures. Should the Commission adopt the FPC's AFUDC formula 20 without modification, it will. become necessary for "me to revise my testimony'and exhibits to reflect the related effect of the Commission's 22 decision in this regard.
23 24 Q: 0~"s this complete vour direct testimony?
25 A: Yes, it does.
26
Docket No E-2 -..Sub 297
~
Hoover Exhibi CAROLINA POWER a LIGHT COHPANY Schedule 1 (Revised)
North Carolina Retail Operations RETURN ON COHHON EQUITY AND ORIGINAL COST NET INVESTHENT Twelve tionths Ended June 30, l97~
(Adjusted for Known Changes Through December 31, 1976)
(000's Omitted)
Ad usted Before Pro osed Increase Ad usted After Pro osed Increase Total N;C.Retail Overall, -N.C.Retai Overal
'ompany Original Embedded Cost Net Original- Embedded Cost Net .
Line Capital- Ratio Cost Net Cost>,I Ratp Operating Cost Net Cost Rate Operating No. Item ization X Investment eg Income (a)
- 1. Long-term debt $ 1,103,463
- 45. 29 595,031 7.71 3.49 $ 45,877 $ 595,031. 7.71 3.49 $ 45,877
- 2. Preferred stock 336,018- 13.79 181,176 8.01 1.10 14,512 181, 176 8. 01 1.10 14,512
- 3. Connnon equity 875,967 35.95 472,319 8.63 3.10 40,775 472,319 15.37 5.53 72,588 Cost-free capital 121~063-3/ 4.97 65 297 65,297 4.
- 5. To ta1 $2 436 511 100.00 $ 1 313 823 7.69 $ 101 164-7/ $ 1 3l3 823- 10.12 $ 132 977-9/
1/ Company Financial and Operating Report for the month of December, 1976 filed with the Commission.
2/ Hoover Exhibit 1, Schedule l-l, Line 6, Column (b).
3/ Hoover Exhibit 1,.Schedule 1-2, Line 4, Column (b).
4/ Hoover Exhibit 1, Schedule 2, Line 14, Column (b).
5/ Debt and preferred cost rates were provided by Company. Return on corumon equity of 8.63% is calculated by dividing Line 3, Column (g) by Line 3, Column (d) and 15.37% by dividing Line 3, Column (k) by Line 3, Column (h).
6/ Column (c) x Column (e).
7/ Hoover Exhibit 1, Schedule 3, Line 13, Column (d).
8/ Column (c) x Column (i).
9/ Staff adjusted net operating income for return Hoover Exhibit 1, Schedule 3, Line 13, Column (d), S101,164 pl'us net operating income for return from proposed rate increase Davis Exhibit No. 4, Page 1 of 5, Line 13, Column (3), $ 31,813.
Docket No. E-2, Sub 297 Hoover Exhibit 1 Schedule 1-2 (Revised)
CAROLINA POWER 6 LIGHT COMPANY North Carolina Retail Operations CALCUIATION OF ACCUMULATED DEFERRED INCOME TAXES Twelve Months Ended June 30, 1976 (Adjusted for Known Changes Through December 31, 1976)
(000's Omitted)
Total Line Company No. Item Amount (a) (b)
Accumulated deferred income taxes - Accounts 281 and 282- $ 119,068
- 2. Accumulated deferred income taxes applicable to
'dd:
Brunswick fP 1- 9,221
- 3. Deduct: Accumulated deferred income taxes Account 190-1/ ~72261 Total accumulated deferred income taxes 6121 063 1/ Company Financial and Operating Report for the month of December, 1976.
2/ Hoover Exhibit 1, Schedule 3-5b, Line 12, Column (b).
Docket No. E-2, Sub 297 Hoover Exhibit 1 Schedule 2 ..
Page 1 of 2 CAROLINA POWI.'R 6 I.IGHT COMPANY (Revised)
North Carolina Retail Operations ORIGINAL COST NET IVIESTMENT Twelve Months Ended June 30, 1976 (Adjusted for Known Changes Through December 31, 3.976)
(000's Omitted)
N.C.
Line Retail No. Item 0 erations (a) (b)
Electric plant in service 1/ $ 1,495,418 Decrease in Brunswick /fl adjustment 2/ (14,415) 2.
- 3. Decrease to reflect actual get additions from July 1, 1976 to December. 31, 1976 (12,703)
- 4. Electric plant in service - adjusted (Ll + L2 + L3). 1 468 300
- 5. Less: Accumulated depreciation4/ 241,939
- 6. Difference in annualized depreciation expense and actual depreciation expense for the year ending December 31, 19765/ 8 715
- 7. Total accumulated depreciation (L5 + L6) 250 654
- 8. Net electric plant in service (L4 - L7) 1 217 646
- 9. Net nuclear fuel- 6/ 26,652
- 10. Net increase in nuclear fueL to December 31, 1976-/ 1 224 Net nuclear fuel - adjusted (L9 + L10) 27 876
- 12. Net electric plant in service including net nuclear fuel (L8 + Lll). 1,245',522
- 13. Allowance for working capital-8/ 68 301
- 14. Total original cost net investment (L32 + T13) $ 1'13 823
Docket No. E-2, Sub 297 Hoover Exhibit 1 Schedule 2-4 (Revised)
CAROLINA POWER '6 LIGHT COMPANY North Carolina Retail Operations
SUMMARY
OF WORKING CAPITAL REQUIREMENT Twelve Months Ended June 30, 1976 (Adjusted for 'Known Changes Through December 31, 1976)
(000's Omitted)
Line N. C. Retail No. Item erations (a) (b)
- 1. Materials and supplies 1/ $ 49,213
- 2. Cash working capital 2/ 19 088
- 3. Total allowance for working capital (Ll + L2) ~68 301 1/ Hoover Exhibit 1, Schedule 2-4a, Line 3, Column (d).
2/ Hoover Exhibit 1, Schedule 2-4b, Line 9, Column (d).
Docket No. E-2, Sub 297 Hoover Exhibit 1 Schedule 2-4b CAROLINA POWER & LIGHT COMPANY (Revised)
North Carolina Retail Operations CALCULATION OF CASH WORKING CAPITAL Twelve Months Ended June 30, 1976 (Adjusted for Known Changes Through December 31, 1976)
'(000's Omitted)
Line Total Allocatiy, N. C. Retail No. Item ~Corn@an Factor- 0 erations (a) (b) (c) (d)
- 1. Minimum bank balances 1/ $ 9,777 .67077 $ 6,558
- 2. Prepayments2/ 2,302 .48411 1,114
- 3. 45 days expenses cash 3/ 26 270
- 4. Total (Ll + L2 + L3) 33 942
- 5. Deductions:
accruals 2/ 17,725 .67077 11,889
- 6. Tax
- 7. Customer deposits 4/ 3 831 2 965
- 8. Total deductions (L6 + L7) 21,556 14,854
- 9. Total cash working capital (L4 L8) 819 088 1/ Company response'o NCUC Form E-l, Section C, Item 5-q, Page 1 of 2.
2/ Thirteen month average for the period ending December, 197o, excluding Federal in'come wx accruals.
3/ One-eighth ope ations and maintenance expense less purchased power.
($ 209>073 - ($ 1,084))
4/ Information provided by the Company.
5/ Company jurisdictional a11ocation study.
Docket No. E-2, Sub 297 Hoover Exhibit 1 Schedule 3 (Revised)
CAROLINA POWER 6 LIGHT COMPANY North Carolina Retail Operations OPERATING INCOME STATEMENT Twelve Months Ended June 30, 1976 (Adjusted for Known Changes Through December 31, 1976)
(000's Omitted)
N.C. Retail N.C. Retail Line After Company S taff After Staff No. ~
Item (a) (b) (c) (d)
- l. 0 eratin Revenues:
816 668 2/
- 2. Net o pera ting 'revenues 446 250 8462 918
- 3. 0 eratin Revenue Deductions:
4 ~ Net operating and maintenance 193,337 15,736 3/ 209,073
- 5. Depreciation 51,430 (1,087)K 50,343
- 6. Taxes, other than income 40,545 (457)- 40,088
- 7. Income taxes - state 2,350 1,796 6/ 4,146
- 8. Income taxes - Federal 20,289 '69 7/ 20,658
- 9. Investment tax credit net 14,744 (390)8/ 14,354
- 10. Deferred income taxes 24,094 (1,151)9/ 22, 943
- 11. Interest on customer deposits 146 10/ 149
- 12. Total revenue deductions 346 935 14 819 361 754
- 13. Net operating income for return 99 315 $ 1,849 ~101 164
. 1/ Davis Exhibit: Na.', Page 1 of 9, Column (7) .
2/ Hoover Exhibit No. 1, Schedule 3-1, Line 59 Column (b) ~
3/ Hoover Exhibit No. 1, Schedule 3-2, Line 8, Column (b) ~
4/ Hoover Exhibit No. 1, Schedule 3-3, Line 3, Column (b) ~
5/ Hoover Exhibit No. 1, Schedule 3-4, Line 5, Column (b)-
6/ Hoover Exhibit No. 1, Schedule 3-5, Line 7, Column (b) ~
7/ Hoover Exhibit No. 1, Schedule 3-5, Line 7,, Column (c) ~
8/ Hoover Exhibit No. 1, Schedule 3-6, Line 7, Column (c)-
9/ Hoover Exhibit No. 1, Schedule 3-5, Line 7, Column (d) .
10/ Hoover Exhibit No. 1, Schedule 3-7, Line 79 Column (b) ~
Docket No. E-2, Sub 297 Hoover Exhibit l CAROLINA POWER & LIGHT COMPANY Schedule 3-5 Page 1 of 2 North Carolina Retail Operations (Revised)
SUMMARY
OF STAFF ADJUSTMENTS TO STATE AND FEDERAL INCOME TAXES Twelve Months Ended June 30, 1976 (Adjusted for Known Changes Through December 31,. 1976)
(000's Omitted)
Amount Increase and Decrease Line Current No. Item State 'ederal Deferred (a) (6) (c) (d)
Adjustment to current book accrual of State income tax expense $ 1,644
$ {789) $
- 2. Adjustment to reflect change in income tax expense due to Brunswick Unit No.. 1 depreciation expense adjustments 78 3~, s84 -~ (2, 141)
Adjustment to reflect change in income tax expense due to depreciation expense adjustments applicable t:o additions to plant in service for the period July 1, 1976 through December 31, 1976 .{734)- 1,045-~
- 4. Adjustment to reflect the income tax effect of Staff adjustments to revenues; 0&M expenses and taxes other than income.
- 5. Adjustment to reflect the tax effect of interest expense allocation 'adjustment 154 1~
l, 159
- 6. Adjustment to, reflect change in allocation, factor for taxes on year-end depreciation and normalization 13/ ~411 14/ ~55)15/
Total (Ll through L6) 8'1 796 $ 369 ~$ 1 151
Docket No. E-2, Sub 297 Hoover Exhibit 1 Schedule 3-5 Page 2 of 2.
(Revised)
CAROLINA POWER & LIGHT COMPANY North Carolina Retail Operations
SUMMARY
OF STAFF ADJUSTMENTS TO STATE AND FEDERAL INCOME TAXES Twelve Months Ended June 30, 1976 (Adjusted for Known Changes Through December 31, 1976)
(000's Omitted)
Footnotes 1/ Hoover EWibit 1', Schedule 3-5a, Line 18, Column (c).
2/ Hoover Exhibit 1, Schedule 3-5a, Line 18, Column (c) X..48.
3/ Hoover Exhibit 1, Schedule 3-5b, Line 6a, Column (b).,
4/ Hoover Exhibit 1, Schedule 3>>5b, Line 6b, Column (b).
5/ Hoover Exhibit 1, Schedule 3-5b, Line 15, Column (b).
6/ Hoover Exhibit 1, Schedule 3-5c, Line 5, Column (b).
7/ Hoover Exhibit 1, Schedule 3-5c, Line 8, Column (b) .
8/ Hoover Exhibi't 1, Schedule 3-5c, Line 14, Column (b) 9/ Hoover Exhibit. 1, Schedule 3-5d, Line 6, Column (b) .
10/ Hoover Exhibit 1, Schedule 3-5d, Line 7, Column (b) .
11/ Hoover Exhibit 1,. Schedule 3-5e, Line 4, Column (b) .
12/ Hoover Exhibit I', Schedule 3-5e, Line 5, Column (b).
13/ Hoover Exhibit 1, Schedule 3-5f, Line 3, Col~
14/ Hoover Exhibit 1,,Schedule 3-5f, Line 6, Column (d).
15/ Hoover Exhibit.l,. Schedule 3-5f, Line 9, Column (d).
Docket No. E-2, Sub 297 Hoover Exhibit 1 Schedule 3-Se
( Revised)
CAROLINA POWER & LIGHT COMPANY North Carolina Retail Operations CALCUL'ATION OF ADJUSTMENT TO REFLECT THE INCOME TAX EFFECT OF INTEREST EXPENSE ALLOCATION ADJUSTMENT Tvelve Months Ended June 30, 1976 (Adjusted for Known Changes Through December 31, 1976)
(000's Omitted)
Line No. Item Amount (a) (b)
- 1. Interest expense per Company 1/ $ 48,446
- 2. Interest expense per Staff 2/ 45,877
- 3. Decrease in interest expense (Ll - L2) ~2569 Increase in state income tax expense (L3 x .06) 154
- 5. Increase in Federal income tax expense (L3 - L4 x .48) S 1,159 1/ Dav.s Exhibit No. 4, Page 3 of 5, Line 1, Column 6.
Hoover Exhibit 1, Schedule 1, Line 1, Column (g).
Docket No. E-2, Sub 297 Hoover Exhibit 1 Schedule 3-5f CAROLINA POWER 6 LIGHT COMPANY North Carolina Retail Operations CALCULATION OF ADJUS'QKNT TO ALLOCATION OF INCOME TAX EFFECTS OF DEPRECIATION EXPENSE ADJUSTMENT Twelve Months Ended June 30, 1976
{Adjusted for Known Changes Through December 31, 1976)
{000's Omitted)
North Carolina Line Total Allocation Retail No. Item ~Corn m~n 1/ Factor Ooerations-/
(a) (b) (c) (d)
Company adjustment to State income tax on year-end depreciation and normali-zation 0 (1,015) .61'4982/ (624)
- 2. Staff adjustment to State income tax on year-end depreciation and normalization (1,015) ~681)
- 3. Decrease in State income tax liability ~337)
Company adjustment to Federal income tax on year-end depreciation and normali-zation (7,903) ,619185/ (4,893)
- 5. Staff adjustment'o Federal income tax on year-end depreciation and normaliza-tion (7,903) .67113"/ ~3306
- 6. Decrease in Federal- income tax liability 7'. Company adjustme'nt to deferred income taxes for income tax normalization 9,442 ,67694/ 6,392
- 8. Staff adjustment to deferred income taxes for income tax normalization 9,442 .671l3-/
- 9. Decrease in defer ed income taxes ~33 6 337 1/ Davis Exhibit No. 1, Page 6 and 7 of 9.
2/ Based on income before State income taxes.
3/ Column {b) X Column (c).
4/ Factor used by Staff and Company to allocate depreciation expense. adjustment for plant in service at June 30, 1976.
5/ Based on income before Federal income taxes.
6/ Based on allocation of total deferred taxes to North Carolina retail.