ML19308A427

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Testimony in Response to Tx Utils Generating Co & Houston Lighting & Power First Set of Interrogatories
ML19308A427
Person / Time
Site: South Texas, Comanche Peak  Luminant icon.png
Issue date: 08/01/1979
From: Rogers O
GEORGIA POWER CO.
To:
Shared Package
ML19208C305 List:
References
E-9521, E-9522, NUDOCS 7909260348
Download: ML19308A427 (4)
v • d • e


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4 gU GEORGIA POWER COMPATf FPC DOCKET WOS. E-9521 & E-9522 PREPARED TESTIMONY OF 0.F. ROGERS U 1Q PLEASE STATE YOUR NAME AND ADDRESS.

2 3A My name is 0. Franklin Rogers. My businesss address is 1000 Crescent 4 Avenue, N.E., Atlanta, Georgia 30309.

5 6Q BY WHOM ARE YOU EMPLOYED?

7 8A I am a member.of the firm of Southern Engineering Company of Georgia.

9 10 Q PLEASE STATE YOUR EDUCATIONAL BACRGROUND.

11 12 A I attended Emory University in Atlanta for two years and Georgia 13 Institute of Technology for two years, receiving a degree of Bachelor 14 of Industria1' Engineering from Georgia Institute of Technology in 1955.

15 I also attended Emory University Law School.

16 17 Q PLEASE STATE YOUR PROFESSIONAL EXPERIENCE.

18 19 A Upon graduation frem Georgia Tc'ch, I served three years as an officer 20 in the United States Navy, af ter which I began working for Southern 21 Engineering Company in 1958. I have, during that time, neaded the .

22 Retail and Wholesale Rate Departments in my Company. I have performed 23 rate studies for over seventy-five : ural cicctric cooperative and '

24 municipal systems in thirteen states during this period of time. I 25 have participated in wholesale rate and contract negotiations with

\a/ 26 thirty-six privately owned investor utilities in nineteen states.

27 During this period of time, I have prepared or participated in pre-28 paring numerous cost of service studies of investor-owned utilitics, 29 rural electric cooperatives and municipal systems.

30 31 Q MR. ROGERS, WITH RESPECT TO ELECTRIC RATE CASE MATIERS, HAVE YOU EVER 32 GIVEN TESTIMONY BEFORE THIS COM!ISSION OR ANY STATE UTILITY REGULATORY 33 COMMISSION?

34 35 A Yes, I have.

36 37 Q WILL YOU PLEASE IDENTIFY THOSE PROCEEDINGS AND THE COMMISSIONS BEFORE 38 WHICH YOU HAVE TESTIFIED?

39 40 A I havc testified as a rate expert before several State Commissions 41 including North Carolina, South Carolina, Kentucky and Indiana. I have 42 previously testified before the Federal Power Commission in the follow-43 ing proceedings: Mississippi Power & Light Company, FPC Docket No.

44 E-7577; Carolina Power & Light Company, FPC Docket No. E-7564; Georgia' 45 Power Cenpany, FPC Docket No. E-7548; Public Service Company of Indiana, 46 FPC Docket No. E-7645; Alabama Power companv, .FPC Docket No. E-7674;

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47 Gulf Power Company, FPC Docket No. E-7686; Mississippi Power Company, 48 FPC Docket No, E-7625; Florida Power Corporation, FPC Docket No. E-7679; 49 Duke Power Company, FPC Docket No. E-7720; Pennsylvania Electric Company, 50 FPC Docket No. E-7718; Public Service Company of New Har.pshire, Docket V -

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2 ,E-7740; Virginia Electric and Power Company, ,PC Docket No. E-8026; 3 Carolina Power & Light Company, FPC Docket No. E-8881; Toledo Edison 4 Company, FPC Docket No. E-7929; Codsumers Power _C_ompany, FPC Docket 5 No. E-7803; Appalachian Power Company, FPC Docket No. E-7775; Missis-6 sippi Power Company, FPC Docket No. E-7625; Carolina Power and Light 7 Company, FPC Docket No E-8884; Alabama Power comoany, FPC Docket No.

8 E-8851; Gulf Power Company, FPC Docket No. E-8911; Potomac Electric 9 Power Company, FPC Docket No. E-8741; Florida Power & Licht Company, 10 FPC Docket No. E-8008; Delvarva Power & Light Company, FPC Docket 11 No. E-8947; and have submitted prepared testimony in Mississippi 12 Power Company, FPC Docket No. E-9135 and Virginia Electric and Power 13 Company, FPC Docket No. E-9147, 14 15 Q MR. ROGERS, POULD YOU PLEASE LIST FOR US THOSE PRIVATELY OWNED ELECTRIC 16 COMPANIES WITil WlIICll YOU IIAVE PERSONALLY CONDUCTED NEGOTIATIONS ON' 17 BEHALF OF WHOLESALE CUSTOMERS INVOLVING SUBSTANTIAL Cl!ANGES IN THE 18 RATES OR CONTRACTS AND TIIOSE COMPANIES WITil WHICH YOU HAVE PERSONALLY 19 BEEN INVOLVED IN CASES BEFORE Tile FEDERAL POWER COMMISSIDN.

20 21 A Yes, I might add that all of these cases occurred during the 1960's 22 to the present time, to this constitutes recent experience.

23 24 Although I do not recall all of the docket numbers, I will indicate 25 the docket numbers of those cases filed since 1969. The companies are:

bd 26 27 Florida Power Corporation (two occasions) (E-7679), Gulf Power 28 Company (E-7686), Georgia Power Company (four occasions)(E-7548 29 and E-8170), Virginia Electric & Power Company (three occasions) 30 (E-7611 and E-8026), Carolina Power & Light Company (E-7564),

31 Delmarva Power and Light Company of Delaware (three occasions) 32 (E-7560 and E-7769), Delmarva Power and Light Company of Virginia 33 (three occasions)(E-7560 and E-7769), Delmarva Power & Light 34 Company of Maryland (three occasions)(E-7560 and E-7769), West 35 Penn Power Company, Pennsylvania Electric Company (three occasions) 36 (E-7718), Metropolitan Edison Company (three occasions)(E-7630),

37 New Jersey Power and Light Company (two occasions), Jersey Central 38 Power and Light Company, Luke Power Company (four occasions) 39 (E-7557, E-7720 and E-7994), Public Service Company of Indiana 40 (E-7645), Northern Indiana Public Service Company (E-7758),

41 Detroit Edison Company (E-7687), Central, Illinois Public Service 42 Company, Illinois Power Company, Kentucky Utilities Company, New 43 York State Electric & Gas Corporation, Alabama Power Company (two 44 occasions)(E-7674), Oklahoma Gas and Electric Company, Public' 45 Service Company of Oklahoma, Public Service Company of New Hamp-46 shire (E-7742), Central Illinois Light Company (E-7577), Niagara 47 Mohawk Power Corporation, Mississippi Power Company (E-7625), Central 43 Vermont Public Service Corporation (two occa'sions)(E-7685 and.

49 E-7798), Florida Power & Light Company (E-8008), Indiana and Mich-50 igan Electric Company (E-7740), Appalachian Power Company (E-7775),

\/ 51 Pehnsylvania Power and Light Company, and Consumers Power Company 52 (E-7803).

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..'fL 1Q HAVE YOU TESTIFIED BEFORE OTHER COSNISSIONS?

2 3A Yes. I have testif t'ed before the Atomic Safety and Licensing 4 Board of the United States Atomic Energy Commission (noo the 5 Nuclear Regulatory Commission) in Consumers Power Company (Mid-6 land Plant, Units 1 and 2), NRC Docket Nos. 50-329A and 50-330A.

7 Additionally, I have testified before the Atomic Safety and 8 Licensing Board in the matter of Alabama Power Company -(Joseph 9 M. Farley Nuc1 car Plants, Units 1 and 2), NRC Dockets tios. 50-348A 10 and 50-364A.

11 12 Q BY UHOM. IS YOUR FIRM RETAINED IN TilIS PROCEEDINC? .

13 14 A By the Cooperative Intervenor.

15 16 Q WHAT WAS YOUR ASSIGUMENT IN TIIIS PROCEEDING 7 17 18 A My acsignment in this proceeding was to provide background information 19 concerning negotiations with the' Georgia Power Company in which I 20 participated as a consultant to OEMC. The result of these negotiations 21 has an obvious impact on cost of service issues in this proceeding.

22 23 Q PLEASE DESCRIBE THE COST OF SERVICE ISSUES.

24 25 A I have been advised by Dr. Livingstone of the Company's methods used

\*J 26 to establish federal and state income tax expense charged to the cost 27 of service during the test year. Particularly, I have been advised 28 that the Georgia Power Company scehs to establish rates on test year 29 data which include current federal and state income tax expense 30 incurred specifically because of certain asset sales to Oglethorpe 31 Electric Membership Corporation during 1975.

32 33 Q WOULD YOU PLEASE DESCRIBE EVENTS AND SUBSEQUENT TRANSACTIONS OCCURdING 34 DURING THE LATTER IIALF OF 1974 AND EARLY 1975 WHICll LED 'IO OEMC'S PURCIIASE 35 0F THESE ASSETS OF THE GEORGIA POWER COMPANY.

36 37 A on April 24, 1974 Georgia Power Company and its wholesale customers 38 executed a settlement agreement which exempted the Georgia Power 39 Company from undergoing an antitrust review in accordance with the 40 1970 Amendment to the Atomic Energy Act of 1954 before issuances of 41 licenses to construct certain nuclear generating facilities. In return 42 the Georgia Power Company obligated it,self, in part, to sell appropriate 43 shares of nucicar facilities to its whoicsale customers under conditions 44 articulated in the settlement agreement.

45 46 Thereafter the Georgia Power Company and Oglethorpe Electric Membership 47 Corporation (OEMC) then entered negotiations to determine the percentage 48 ownership in the Hatch Nuc1 car Plant to be acquired by OEMC, the ,acquisi-49 tion price of such facilities, and other details involving the operations, 50 respons1bilities and integration of the jointly owned facility.

E g y 4 t-N 1 During the later part of 1974 and early 1975 the details were ironed 2 out by the parties through negotiations., It was agreed that ODIC would 3 acquire a 30% undivided interest in the Hatch Nuclear Plant. It was also agreed that ODIC would pay the Georgia Power Company 30% of the 4

5 accrued Hatch construction costs as of the date of closing, and then be 6 responsibic for 30% of the remaining costs of construction until cach 7 unit of the plant became commercial. On January 16, 1975, the parties 8 closed the sale of the Hatch Plant. -

9 10 Approximately one month later during negotiations on the sale of certain 11 transmission facilities to Odic, representatives of Georgia Power Company 12 stated that they had discovered that the negotiated sale of the Ibtch i 13 Plant at " cost" had actually resulted in approximately a $3.3 million net .

14 income loss to the Georgia Power Company. They explained that during the 15 negotiations with ODIC they had not considered all of the income tax 16 consequences resulting from the sale of thirty percent of the Hatch Plant 17 to ODIC. Specifically they apparently had failed to consider the fact 18 that certain tax deductible overhead items associated with the Hatch Plant ,

19 construction .had been flowed-through to income during the period of 20 construction. As of the date of the sale the Company had to book an 21 abnormal amount of income tax expense which then became due and payable 22 on an accelerated basis because GPC sold part of the asset.. -

23 24 Co=pcny representatives said since GPC and ODIC had bargained in good 25 faith to convert the Hatch facilities at " cost" and since this tax lia-bd 26 bility had not been factored in the sale's price, that ODIC should now 27 compensate the Cenpany for this oversight which amounted to a before 28 tax figure cf $6.C million.

29 30 As a direct result of this ad=ission and request, CDiC agreed to pay 31 the Georgia Power Company $6.6 million over and above the book cost of 32 what later turned out to be the " July" and " August" transmission asset 33 sales between GPC and ODIC. In doing so, ODIC expected that this issue 34 had been laid to rest permanently with all parties in agreement.

35 36 Q. BASED UPON YOUR CONVERSATIONS WITH DR. LIVINGSTONE DO YOU FEEL THAT IT 37 IS NOW PROPER FOR THE GEORGIA POWER COMPANY TO RECOVER THROUGH ITS PATES 38 TO ITS CUSTOMERS THE SAME FEDERAL AND STATE INCOME TAX COSTS THAT UERE A 39 CONSIDERATION IN THE AMOUNTS OD!C PAID FOR THE JULY AND AUGUST TRANS-40 MISSION ASSET SALES?

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42 A. No, of course not. The Georgia Power Company has aircady been reimbursed 43 for these costs.

44 45 Q. DOES THAT CONCLUDE YOUR TESTIMONY?

46 47 A. Yes.

48 49 50 ,

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