ML20003F005
| ML20003F005 | |
| Person / Time | |
|---|---|
| Site: | Comanche Peak  |
| Issue date: | 07/31/1980 |
| From: | Clint Jones TEXAS, STATE OF |
| To: | |
| Shared Package | |
| ML19240B984 | List:
|
| References | |
| 3250, NUDOCS 8104170660 | |
| Download: ML20003F005 (38) | |
Text
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4 o
a K
O DOCKET NO. 3250 RE: APPLICATION OF TEXAS l
PUBLIC UTILITY COMMISSION ELECTRIC SERVICE COMPANY l
FOR A RATE INCREASE l
'0F TEXAS r
DIRECT TESTIMONY OF CATHERINE P. JONES ACCOUNTING DIVISION PUBLIC UTILITY COMMISSION OF TEXAS l
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JULY 1980 i
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I I
1810.417 0 M 1
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1 DOCKET NO. 3250 2
RE: APPLICATION OF TEXAS l
PUBLIC UTILITY COPHISSION ELECTRIC SERVICE COMPANY l
~
3 FOR A RATE INCREASE l
OF TEXAS 4
DIRECT TESTIMONY OF CATHERINE P. J0NES 5
Q.
Please state your name and business address.
6 A.
Catherine P. Jones, 7800 Shoal Creek Boulevard, Austin, Texas 7
78757.
8 Q.
By whom are you employed and in what position?
9 A.
I am employed by the Public utility Commission of Texas as a 10 Chief Accountant III.
11 Q.
Please describe your responsibilities.
12 A.
My responsibilities include reviewing rate increase applications 13 filed with the Commission and preparing testimony and exhibits 14 for the rate hearings on those applications. In addition, I have 15 reviewed Annual Reports filed with this Commission for compli-1 16 ance with our reporting requirements and assisted those 17 utilities having problems with the interpretation of those re-18 quirements.
I have also conducted special investigations as a 19 result of complaints filed with the Commission.
20 Q.
Please state your educational background, business experience, 21 and professional qualifications.
22 A.
I received a Bachelor of Business Administration degree with a 23 major in accounting from the University of Texas at Austin.
24 After graduation, I spent about two years with the independent 25 accounting firm of Haskins & Sells in Houston, Texas as a member
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Jones Testimony, Page 2 1
of the audit staff.
While with Haskins & Sells, I attended a 2
utility seminar with emphasis on ratemaking. In addition, I was 3
in charge of the audit of a large gas utility client. In October 4
1976, I began my employment with the Public Utility Commission of 5
Texas. In August 1977, I attended the Annual Regulatory Studies 6
Program sponsored by the National Association of Regulatory 7
Utility Commissioners in Michigan.
I also attended the Ninth 8
Annual Conference of the Institute of Public Utilities held in 9
December,1977 and several other utility oriented conference:.
10 I am a Certified Public Accountant and a member of the American 11 Institute of Certified Public Accountants and the Texas Society 12 of Certified Public Accountants.
13 Q.
Have you previously testified before this Commission?
14 A.
Yes, I have.
15 Q. Ms. Jones, in, connection with the present case before this 16 Commission, Docket No. 3250, have ycu performed an examination 17 and review of the Rate Filing Package and supporting information 18 filed by Texas Electric Service Company and Subsidiary (TESCO or 19 Company) in support of its request to increase and change rates 20 amounting to $122,904,361 annually?-
21 A.
Yes, I have.
In addition, I have reviewed the audit w6rkpapers 22 of the independent accountant for TESCO and its affiliated 23 companies.
I have also performed an on-site examination of the 24 Company's books and records and the books and records of Texas 25 Utilities Services, In.. (TUSI), Texas Utilities Fuel Company t
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Jones Testimony, Page 3 s
1 (TUFCO) and Texas Utilities Generating Company (TUGCO).
2 Q.
What exactly will be the purpose of your testimony?
3 A.
The purpose o.' my testimony will be to present the Staff's 4
recommendations as to the test period cost of service for the 5
year ended March 31, 1980 and its rate base and invested capital 6
at March 31, 1980 derived as a result of my review and examina-7 tion of TESCO's rate increase application.
8 Q.
I have before me your Exhibit I, pages 1 through 10, and Exhibit 9
II, pages 1 through 3.
Were these exhibits prepared by you or 10 under your supervision as a result of your review and examination 11 m5ntioned previously?
12 A.
Yes, they were.
13 Q.
Regarding Exhibit I, would you please describe its arrangement 14 and the manner in which it has been presented?
15 A.
Page 1 of my Exhibit I presents TESCO's test period cost of 16 service and related adjustments to increase this test period 17 cost of service for the Company's claimed revenue deficiency as 18 shown on Schedule A, page 1 of the Rate Filing Package, rear-19 ranged to conform to this Commission's definition of cost of 20 service.
21 The amounts presented in Column (4) represent the additional 22 revenue requirement claimed by the Company in the amount of 23
$122,904,361.
Column (5) is TESCO's total claimed cost of 24 service which when compared to the Company's computed test 25 period operating base rate revenue indicates a needed base rate
/
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Jones Testimony, Page 4 1
revenue increase of $157,771,422.
This amount, when combined 2
with the decrease in fuel revenues, results in the total 3
requested increase of $122,904,361.
4 Q.
When you discuss revenue requirements, are you referring to test 5
perio'd cost of service?
e 6
A.
Yes.
The Commission's Substantive Rules specifically define 7
" cost of service" as that amount of revenue required to cover all 8
reasonable and necessary costs incurred by the utility in 9
rendering service to the public which includes a fair and 10 reasonable return on the adjusted value of invested capital used 11 and useful in providing service.
In determining this cost of 12 service upon which to base rates, one must look at a representa-13 tive twelve-month period.
The period selected must be thor-14 oughly examined to determine that no non-recurring expenditures 15 are included in the cost of service and that, if known and 16 reasonably measurable changes have occurred, adjustments are 17 made to reflect those changes.
18 The Company has proposed such adjuctments and it is the differ-19 ences in interpretation of "known and measurable" and " fair and 20 reasonable return" that give rise to the Staff's adjustments 21 presented in Column (6) of page 1 of my Exhibit 1.
These 22 adjustments amounting to $88,339,880 are a result of the Staff's 23 detailed analysis, examination and recomputations of data 24 included in the Rate Filing Package, responses to requests for 25 information of the Staff and intervenors and data obtained from
t Jones Testimony, Page 5 1
the Company during the Staff's on-site examination.
2 Column (7) represents the Staff's "as adjusted" test period cost 3
of service for TESCO for the twelve months ended March 31, 1980 4
amounting to $755,868,357.
In addition, the revenues generated 5
from sources other than base rate revenues and base rate revenues 6
of $271,437,310 and $414,999,505, respectively, are presented in 7
order to arrive at the Staff recommended base rate revenue 8
deficiency of $69,431,542.
9 Q.
What is presented in the remaining pages of your Exhibit I?
10 A.
The remaining pages show the detailed computations of the 11 Staff's adjustments presented in Column (6) of page 1.
12 Q.
Would you explain your adjustment to fuel as reflected on page 2 13 of Exhibit I?
14 A.
I have made adjustments to fuel expense using the Company's 15 methodology.
TESCO's adjustment consisted of four components.
16 The first part of the adjustment was to reflect the replacemsnt 17 of the gas from the Old Ocean fuel contract with the higher 18 priced TUFC0 gas. The second component was to restate other fuel 19 sources at year-end prices.
The third and fourth parts of the 20 adjustment reflected the effect of Kwh sales on fuel costs.
21 For purposes of my computation, I have combined the restatement 22 of fuel due to the expiration of the Old Ocean contract and year-23 end price levels.
As shown on page 3 of my Exhibit I, I have 24 adjusted the year-end price level for lignite fuel. The Company 25 used'the weighted average lignite price for the month of March i
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Jones Testimony, Page 6 1
1980 in their computation. The use of this price would be proper 2
if the ' costs and operations at all the lignite plants in March 3
were representative.
In my opinion, March 1980 was not a 4
representative month of operations.
The capacity factors for 5
the lignite units for the test year were approximately of 63.7 6
percent at Big Brown (BBSES), 60.8 pe. cent at Monticello 7
(MOSES), and 66 percent of Martin Lake (MLSES).
During March, 8
the capacity factors were 48.8 percent, 76 percent, 50 percent, 9
respectively. By using a weighted average cost for March 1980, a 10 greater weighting is given to M0SES (76 percent). Big Brown was 11 given the least weighting and has the lowest priced fuel.
I 12 recomputed the weighted average cost of lignite using the total 13 test year mBtus at the respective plants at. the average cost for 14 March, April, and May 1980.
Based on a review of the lignite 15 costs for the year and the two subsequent months, the average of 16 these months is more representa*,ive than March.
The resulting 17 lignite price is 70.95 cents per mmBtu compared with the 72 cents 18 used by the Company.
19 Q.
What other adjustments have you made to fuel expense?
20 A.
I have reclassified $215,855 from operations and maintenance 21 expenses as shown on page 2.
In February and March 1980 these 22 expenses were improperly charged to power operations by TUGCO.
23 These amounts were reclassified to fuel expense in April and May 24 1980. As a result, test year operations and maintenance expenses 25 were overstated and fuel expense was understated.
I have also
P-o Jones Testimony, Page 7 1
removed social club dues allocated from TUFC0 and TUGCO.
The 2
Commission's Substantive Rules disallows inclusion of such dues 3
in the cost of service whether directly incurred by the utility 4
or included within billings from affiliates.
5 My two remaining adjustments to fuel expense are detailed on page 6
3.
I have recomputed the effect of a change in Kwh sales on fuel 7
expense.
Mr. Ted Vogel of the Economic Research Division will 8
testify to the Kwh sales changes.
9 Q. Are these two adjustments similiar to those made by the Company?
10 A.
Yes. The only differences are Kwh sales and the heat rate used 11 to compute the reduction in mBtus.
I have used the test year 12 average heat rate at the gas plants which burn TUFC0 gas. This 13 heat rate is consistent with the use of the TUFC0 gas price to 14 determine the dollar impact on fuel expense.
The Company used 15 the average heat rate for all units, including lignite, which is 16 inconsistent with the pricing.
17 Q.
Page 4 of Exhibit I presents the Staff adjustments to operation 18 and maintenance expenses. Would you explain these adjustments?
19 A.
I have made an adjustment to payroll expense.
The Company has 20 proposed an adjustment to increase payroll expenses by 21
$6,511,238 to recognize both the number of employees at March 31, 22 1980 and wage rates which will be in effect in October 1980. The 23 Staff has reviewed the Company's computation and agrees with 24 their methodology. However, the Company inadvertently included 25 in their computation the wages of several employees added to the l
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r Jones Testimony, Page 8 1
payroll subsequent to March 31, 1980. The Staff recomputed the 2
payroll' adjustment excluding the employees added after the test 3
year. The result of the recomputation is to reduce the proposed 4
payroll adjustment by $29,904.
I have also adjusted payroll 5
related costs to reflect the effect of the adjustment to payroll 6
expense.
7 Q.
Referring to page 6, please explain your, adjustment to payroll 8
expense at the Monticello plant.
ThelignitepiantsareoperatedbyTUGC0usingTUGC0 employees.
9 A.
10 The Company adjusted TUGC0 payroll expense using the last pay 11 period in March 1980 to develop a percentage increase of the year 12 ended base salaries over the average year base salaries. I have 13 also used this methodology in computing my adjustment to the '
14 Monticello (MOSES) payroll.
In developing the percentage 15 increase, I included salaries for the administrative and super-16 visory and accounting and technical employees located at the 17 mining facility in Hopkins County.
The inclusion of these 18 salaries had a minimal impact on my adjustment. The majority of 19 my adjustment is the result of a difference in the allocation of 20 this payroll expense to TESCO.
21 TESCO owns an av.erage of 37.895 percent of all three units at 22 M0SES. All costs are allocated to TESCO on this basis with the 23 exception of special projects and fuel.
These expenses are 24 allocated using the ownership percentage in the individual 25 units. The Company allocated the increased total payroll using e
Jones Testimony, Page 9 1
37.895 percent.
In computing the actual test year payroll to 2
TESCO of $3,674,290 the Company used the percentage of cost 3
charged to TESCO to the total costs for the test year of all 4
three units.
This resulting percentage of 36.89 reflects the 5
impact of the allocation of special projects.
The Company, in 6
using this percentage, understated test year actual payroll 7
allocated to TESCO and overstated the necessary adjustment to 8
expense.
I have used the ownership percentage of 37.895 to 9
arrive at my adjustment to MOSES payroll of $554,901 which is 10
$111,874 less than the adjustment proposed by the Company.
11 Q.
Have you made any other adjustments on page 4 which relate to 12 allocations from TUGCO?
13 A.
Yes.
My next adjustment on page 4 is the reclassification of 14 fuel expenses improperly charged to operation and maintenance 15 expenses during the test year.
This reclassification was 16 discussed previously.
17 I have also removed social club dues from TUGC0 which I will 18 discuss later in my testimony.
19 Q.
Please explain the remaining adjustments on page 4.
20 A.
The Company has proposed an adjustment to increase postal 21 expense to reflect the year end level of customers and an 22 anticipated postal rate increase. While the increase in postal 23 expense due to an increase in customers represents a known and 24 measurable change, the proposed postal rate increase is neither 25
'<nown nor measurable at this time. The process of raising postal
Jones Tcstimony, Page 10 I
rates is similar to the process a utility must go through to 2
raise its rates. The process. lasts about ten months and involves 3
a hearing with intervenors.
The likelihood that the requested 4
rates will be those that are granted cannot be measured. Because 5
of the uncertainty of the ultimate level and effective date of 6
the postal increase, the Staff has eliminated the portion of the 7
adjustment that relates to the postal rate increase.
8 The next adjustment on page 4 relates to the first year estimated 9
cost of the Residential Conservation Service Program.
The 10 Residential Conservation Service Program (RCSP) was initiated as 11 a result of the National Energy Conservation Policy Act (NECPA) 12 of 1978.
The general purpose of the RCSP is to reduce the 13
. residential consumption of energy by providin'g conservation 14 information to each residential customer and conducting, at the 15 request of the customer, an on-site inspection of the customer's 16 residence for the purpose of advising the customer of estimated 17 energy savings if he were to implement recommended energy con-18 servation measures for his residence.
TESCO will be offering 19 these energy audits to their residential customers in 1981.
20 The Company has proposed an adjustment of $675,000 to cover the 21 costs of the program announcement, the offering of the audit, and 22 the hiring of auditors. The Company based its adjustment for the 23 RCSP on the assumption that the program announcement would cos_t 24 10c per customer plus postage, that the offering of the audit 25 would cost Sc per customer contacted plus postage, and that with i
Jones Testimony, Page 11 1
a 5% response rate, 20 additional employees would be required to 2
perform the 19,992 estimated annual audits. While an adjustment' 3
to recognize the costs of the RCSP is necessary, the Staff does 4
not completely agree with the cost estimates the Company has 5
utilized in computing the adjustment. From information obtained 6
from the Te> - Energy and Natural Resources Advisory Council-7 (TENRAC) and Paul Smolen, the Commission representative to the 8
State advisory consnittee, the Staff has recomputed the adjust-9 ment for the RCSP on page 7.
The Staff utilized the most recent 10 available cost estimates in computing the adjustment._ I have 11 estimated that the program announcement will cost 5t per resi-12 dential customer with no postal expense required. The offering 13 of the audit is estimated to cost 154 per residential customer 14 contacted plus 154 postage. The response rate is estimated to be 15 3% of the residential customers who are actually offered the 16 audit. These differences result in a substantial decrease in the 17 estiinated costs of the RCSP, the majority of which is attribut-18 able to the auditors' wages. TESCO, in assuming a 5% response 19 rate of all residential customers contacted, estimated it would 20 require 45 auditors to perform the anticipated audits. Of the 45 21 auditors required, 25 would be employees currently on the 22
, ayroll and 20 additional employees would be required. At the 3%
p 23 response rate, the Staff has estimated that 6,585 audits will be 24 performed each year and that only 15 auditors will be required 25 thereby eliminating the need for additional employees.
The
Jones Testimony, Page 12 1
Staff is recommending $87,800 for the estimated cost of the first 2
year of the RCSP rather than the $675,000 requested by the 3
Company.
4 Q.
Your next adjustment is to the provision for insurance and 5
casualties. What does this provision represent?
6 A.
This is an accrual made to expenses for which there is no current 7
cash out flow.
The accrual is necessary because of the diffi-8 culty in obtaining insurance for catastrophic losses such as 9
boiler explosions, wind storm damage and fire without a signif-10 icant amount being designated 'as deductible from coverage.
In 11 some cases, the deductible can be as high as two million dollars.
12 Even if a Company could obtain coverage with a lower deductible, 13 the premium costs could be prohibitive. By allowing the Company 14 to accrue for losses over an extended period of time, the impact 15 on the ratepayer or the stockholder is reduced. In addition, it 16
. allows the management of a Company to apply its expertise in risk 17 management and thereby seek' the most economic type of coverage to 18 the benefit of the ratepayer. The Commission has recognized this 19 need and allowed this Company to accrue for such losses in l
20 previous cases.
21 The history of losses experienced by TESCO in recent years 22 justifies the continued need for such accrual. However, because 23 the level of the provision is at the discretion of management, it 24 needs to be closely evaluated.
25 TESCO has requested to increase the provision to $1,740,000.
Jones Testimony, Page 13 1
This provision is based on the need to achieve a target reserve 2
balance. of $5,000,000 in three years.
Also included in the 3
computation is the anticipated cost to be incurred over the next 4
two years related to a rotor repair at the Eagle Mountain plant.
5 I do not agree with the method used by TESCO in determining the 6
requested provision.
By including the anticipated. cost of the 7
rotor repair, TESCO is requesting recovery of this loss over a 8
three year period. In my opinion, this anticipated cost should 9
not have any effect on the current provision. I have recomputed 10 the needed provision using the Company's methodology excluding 11 the cost of the Eagle Mountain repair.
Based on this computa-12 tion, the provision granted in Docket #2606, $1,320,000, is a f
13 reasonable level to be included in the cost of service.
14 Q. Are you recommending the amortization of the cost of the Eagle 15 Mountain repair over a future. period?
16 A.
No.
An alternative to the insurance reserve provision is the 17 amortization over a future time period after the loss has 18 occurred.
The Staff has rejected this alternative in previous 19 cases and I feel the reserve is the preferable method.
The 20 effects of the Eagle Mountain loss would need to ba considered 21 only if the reserve was insufficient. To consider this loss in 22 the current provision defeats the purpose of the reserve set out 23 previously in my testimony.
24 Q.
Will your recommended provision achieve a $5,000,000 reserve by 25 1982?
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Jon2s Testimony, Page 14 a
1 A.
No. In 1982 the reserve balance will be approximately $3,700,000 2
after considering the anticipated costs of the "ot;. repair. The,
3
$5,000,00'0 reserve will be reached in the next jear,1983, if no 4
further losses occur.
5 Q.
Has 1982 always been the target date set by the Company?
6 A.
No.
In each of the previous cases, Docket fl903 and Docket 7
- 2606, the date has changed.
In Docket #1903, it was 1980; in 8
Docket #2606,1981. Although these date changes are the apparent g
result of building the reserve over three years, I have seen no 10 justification or support for the three year period.
11 Q.
Please continue explaining the adjustments shown on page 4.
12 A.
The next adjustment is to other operation and maintenance 13 expenses. I have adjusted the Company's adjustment to the level 14 recommended by Mr. Vogel of the Economic Research Division.
15 I have removed contributions and dues which are specifically 16 disallowed by this Comission. These expenditures include con-17 tributions to the United Methodist Women, Blundell Creek Baptist i
18 Church, Antioch Missionary Baptist Church, Ministerial Alliances 19 of Greater Fort Worth, Church of God in Christ, County Judges and 20 Commissioners Association of Texas and Southwestern Baptist 21 Theological Seminary, which are expenditures in support of 22 religious and political causes. Additional expenditures include 23 contributions to Rotary Clubs, Jaycees, Lions Clubs, Kiwanis 24 Clubs, and Optimist Clubs, which are expentitures in support of 25 or membership in social and fraternal organizations. I have also l
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Jones Testimony, Page 15 1
excluded social club dues allocated to TESCO from TUGC0 and TUSI 2
in the monthly billings for power operations and services 3
provided, respectively.
4 I have recomputed uncollectibles using the Staff recommer.ded 5
cost of service. Uncollectibles vary in relation to revenues as 6
do other expense items.
One of these is the Public Utility 7
Commission (PUC) assessment.
I have reclassified the Public 8
Utility Commissior. assessment to Taxes Other Than Income for 9
this computation.
This reclassification was based on the 10 opinion of the General Counsel's division that this assessment 11 is a tax.
12 Q.
Page 8 details your adjustment of $1,068,985 to Taxes Other Than 13 Income. Please explain these adjustments.
14 A.
All of my adjustments are recomputations of revenue related 15 taxes using the Staff recommended cost of service. In computing 16 these taxes, the Staff has -used rates which are slightly 17 different from those proposed by the Company.
In computing the 18 adjustment to street rental and State gross receipts taxes, the i
19 Company attempted to compute a rate which properly matches the 20 revenue with the corresponding t:x expense.
The Company 21 compared test year revenue related taxes to calendar year 1979 l
22 revenues excluding intersystem sales.
The Staff agrees that a f
23 proper matching occurs when test year tax expenses are utilized l
24 in conjunction with 1979 revenues. However, the Staff used total 25 1979 revenues to compute the tax rates for street rental and l
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Jones Testimony, Page 16
+
1 State gross receipts taxes. Total test year revenues were used 2
to compute the rate for the PUC assessment. These recomputations 3
were necessary as the rates were applied to total cost of 4
service.
5 Q.
Ms. Jones, your computation of Federal income taxes as shown on 6
your Exhibit I, page 9 starts with the return dollars as deter-7 mined by the Staff. Would you explain your approach as presented 8
on this Exhibit?
9 A.
It is my opinion that the method that should be used pursuant to 10 sound ratemaking practices for computing test period income 11 taxes is to determine such taxes as a derivation of the test 12 period return amount.
The test period return amount is the 13 amount of dellars which will allow the Company to recoup its debt 14 and preferred stock capital costs and provide a fair return to 15 its equi'.y holders.
This return to equity holders is an after 16 income tax amount. Therefore, it is necessary to start with the 17 return dollars less amounts for debt interest plus any other i
18 items on which deferred taxes have not been previously provided 19 or which are direct offsets to taxes payable.
The resulting 20 taxable inco:ne after income taxes of $104,946,209 must then be 21 grossed up to arrive at net taxable income before income taxes.
22 This number, multiplied by the Federal income tax rate of 46 23 percent less tax credits and the consolidated tax savings, 24 provides the actual test period income taxes.
My computation 25 results in a $32,281,180 reduction of the Company's claimed test J
Jones Testimony, Page 17 1
period Federal income taxes.
2 Q.
The Company has requested that their cost of service include full 3
normalization of timing differences.
Does your computation of 4
Federal income taxes take this into consideration?
5 A.
Yes. Because my computation starts with the return amount after 6
income taxes, the tax timing differences that are normalized 7
(i.e., accelerated depreciation, capitalized taxes, pension and 8
thrift plan costs.) have no effect on my total tax calculation.
9 Those tax liabilities are either current or deferred, but remain 10 the same in total.
Only those non-normalized tax differences, 11 such as taxes and other costs capitalized and those previously 12
. flowed through to the ratepayer, need to be taken into consider-13 ation. Book depreciation now includes these certain costs that 14 are no longer deductible for tax purposes.
15 This increases the Company's actual tax liability (present and 16 future) 'above the amount that would have been determined if a 17 flat 46 percent were applied to income before Federal income 18 taxes.
For this reason, I have added back depreciation in the 19 amount of $3,938,930 which represents depreciation on these 20 differences in the basis for tax depreciation versus book depre-l 21 ciation.
22 Q.
The amount that you have deducted. for interest in your tax 23 calculation differs from that shown on Schedule H-1 of the Rate 24 Filing Package, does it not?
25 A.
Yes, it does.
In determining my interest amount, I have taken 1
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o Jones Testimory, Page 1A 1
the weighted average interest cost in percent, a', presented by 2
Mr. Child, and applied it to the Staff "as adjusted" invested 3
capital. The purpose of this calculation is to allocate to the 4
invested capital only that portion of the_ total interest costs 5
that would reduce operating income before taxes.and accordingly 6
have an effect on the amount of Federal income taxes included in 7
the cost of service.
This treatment recognizes that the addi-8 tional interest cost will-act as deductions against any non-9 operating income that may arise "below the line" or from non-10 utility operations.
11 Q.
Have you made any other adjustments in arriving at your test 12 period Federal income taxes?
13 A.
Yes, I have recomputed the Company's' amortization of deferred I
14 investment tax credits.
Prior to 1977, the investment tax 15 credits generated by TUFC0 and TUGC0 were allocated to the r-16 operating companies and carried on their books. Consistent with 17 the change to straight line depreciation by TUFC0 and TUGC0 it is i
18 necessary to adjust the ratable amortization of these investment i
19 tax credits.
My resulting amortization of deferred investment 20 tax credits is $2,273,480.
21 Q.
How did you calculate the Staff's return amount?
22 A.
Using the weighted average capital cost of TESCO at March 31, l
23 1980, as presented by Mr. Child, on the Staff's "as adjusted" 24 original cost of invested capital shown on page 2 of my Exhibit l
25 II, I have recomputed a f' air and reasonable return on the
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Jones Testimony, Page 19 1
adjusted value of invested capital of $155,405,463.
2 Q.
Have you reviewed the Company't proposed adjusted value of 3
invested capital at March 31, 1980?
4 A.
Yes. Page 1 of my Exhibit II presents the recommended adjusted 5
value of invested capital pursuant to this review.
6 Q. Would you briefly explain page 1 of your Exhibit II?
7 A.
This Exhibit presents the major components of the proposed 8
adjusted value of invested capital of $1,683,081,418 at 9
March 31, 1980.
I have used the mix percentages presented by Mr.
10 Child in his testimony and the current cost of plant in service, 11 net of adjustment for age and ~ condition, proposed by 12 Mr. Saathoff in his testimony.
Original cost of net plant and 13 other elements of invested capital are shown on pages 2 through 3 14 of my Fxhibit II.
l 15 0
On page 3, a Staff adjustment to the Company's end of period i
16 accumulated provision for depreciation was made.
Would you 17 explain the nature of this adjustment and its effect on the net 18 I
original cost of plant in service?
19 A.
The Company has increased its test year depreciation expense by i
20
$516,868. This adjustment reflects tie increase in depreciable 21 plant at March 31, 1980 over depreciable plant in service during i
22 the test year.
By making this adjustment, the Company has 23 attempted to reflect a cost of service consistent with the 24 balance of year-end net plant in service.
However, to be 25 completely consistent, there should be a correspcoding increase
~
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Jones Testimony, Page 20-1 in the end-of-period accumulated provision for depreciation. My 2
adjustment to increase the accumulated provision for deprecia-3
- tion, and thereby decrease net original cost of plant, 4
recognizes that there will be contir:ued diminution in plant 5
investment through the recovery of this investment via the 6
depreciation provision. Therefore, in order to reflect a repre-7 sentative test period for prospective ratesetting, I have 8
increased the accumulated provision for depreciation by one-half 9
of the adjustment, $258,434.
10 Q.
The Company has proposed to include all construction work in 11 progress (CWIP) in the rate base. The Staff, however, does not 12 agree with the inclusion of 100% of CWIP. Would you explain the-13 reason for this?
14 A.
The inclusion of CWIP within the invested capital of the Company 15 i s, by law, dependent on the maintaining of that Company's i
16
" financial integrity." Within my analysis, I asked Mr. Child to 17 provide me with certain firiancial indicators and the levels 18 which, in his professional opinion, would have to be attained by l
19 TESCO for it to maintain its " financial integrity."
These 20 indicators were the interest coverages excluding and including i
21 allowance for funds used during construction (AFUDC) before 22 taxes, the percentage of internal cash generation and the 23 percentage of income available for common generated from AFUDC.
24 Mr. Child reviewed the results of the inclusion of various levels 25 of CWIP on the financial indicators and selected the level which, l
l
Jones Testimony, Page 21 1
in his opinion, provided the most satisfactory results..The 2
level of-CWIP chosen represents fifty percent of CWIP, or 3
$269,039,930, as shown on page 3.
4 Q.
Why have you adjusted the Company's amunt for electric plant 5
held for future use?
6 A.
There are many factors to be considered in analyzing plant held 7
for future use.
Most of these are difficult to quantify and 8
represent reasons other Comr:issions have decided to disallow 9
plant held for future use entirely.
In certain instances, a 10
-company might not even be able to find a substation site in a 11 rapidly growing area if the site had not been purchased in prior 12 years.
This factor may cause some utilities to gamble on the 13 growth in certain areas by purchasing sites ahead of time.
If 14 the projected growth does not take place as anticipated, rate-15 payers have paid the carrying cost of property that may be 16 delayed in use for many years or cancelled altogether. This is a 17 risk that should be borne by the ratepayers only when it can be 18 shoan that the Cocpany has a definite plan for the property's use 19 within a reasonable time period.
I have excluded the Titus 20 County Water Rights as there is no specific plan to use these 21 prior to 1990. In my opinion, inclusion _of property which will 22 not be placed in service for ten or more years places an 23 unreasonable burden on the ratepayers.
24 Q.
You have adjusted working capital co.<nward by 514,352,628.
25 Could you please discuss this adjustment?
i O
e s.
Jones Testimony, Page 22 1
A.
Page 3 of Exhibit II shows the detailed amounts of working 2
capital allowed by the Staff.
I have agreed with the Company 3
concerning the requirements for materials and supplies, working 4
funds and fuel gas inventories.
I do not, however, agree with 5
the Company's proposal for prepayments, fuel oil inventories, 6
and working cash.
7 The Company.as proposed to include in invested capital an 8
average of prepayments.
In March 1979, the Company. prepaid 9
approximately $744,000 in retirement plan costs.
This prepay-10 ment was also included in April 1979.
In the usual course of 11 business, the Company does not prepay these costs.
In deter-12 mining a reasonable level of prepayments to include in working 13 capital, I have eliminated this amount and recalculated the 14 average of the remaining prepayments.
I have allowed the year 15 end level of fuel oil inventory as recommended by Mr. Saathoff of 16 the Engineering Division.
17 I have recomputed the working cash allowance requested by the 18 Company using the Company's methodology and Staff adjusted 19 operation and maintenance expenses excluding fuel expense.
20 A.
Would you please e nlain your adjustment for Other Cost-Free 21 Capital?
22 A.
Yes. The Company changed its method of calculating depletion for 23 tax purposes in 1977. However, the method used to calculate the 24 depletion allowance for book purposes did not change.
Because 25 the method used for tax purposes resulted in a greater deduction l
l.=
Jones Testimony, Page 23 1
for. depletion than that reflected on-TESCO's books, the Company 2
has had the use of additional dollars at no cost.
I have also 3
removed the 1979 and first quarter of 1980 contribution to the 4
Edison Electric Institute.
These contributions are for the 5
delayed Liquid Breeder Reactor project and are not payable until 6
1982 at the earliest.
7 Q.
Ms. Jones, would you please sumarize your conclusion pertaining 8
to Texas Electric Service Company's claimed test period cost of 9
service and revenues?
10 A.
I am recomending a reduction in the Company's claimed test 11 period cost of service of $60,428,656 which results in a fair and 12 reasonable test period cost of service of $755,868,357.
After 13 excluding revenues from sources other than base rates there '
14 remains a base rate revenue deficiency of $69,431,542.
15 Q.
What do the revenues from other sources represent?
16 A.
As shown on page 10 of Exhibit I, the $271,437,310 that I have 17 deducted from cost of service is comprised of two major souras.
18 One source is miscellaneous operating revenues as detailed on 19 Schedule N-4 of the Rate Filing Package adjusted for the f
20 estimated number of audits that will be conducted as partlof the 21 RCSP discussed'previously. The other represents fuel adjustment 22 clause revenues in the amount of $267,060,659, 23 Q.
Why have you adjusted test period base rate revenues?
24 A.
The Company computed test period base rate revenues using the 25 adjusted Kwh sales for customers, weather, and elasticity. Con-
t.
Jones Testimony, Page 24 I
rates, it' is necessary to recompute test period base rate 2
revenues in determining the deficiency.
3 Q.
Is there anything else you wish'to discuss?
4 A.
Yes.
During the course of my review, two items came to my 5
attention which c'o not affect this case, but will affect subse-6 quent cases. The first item involves the Company's investment in 7
some of their lignite leases. The Company entered into an option 8
in February to sell some of their lignite leases to a third 9
party. These leases were transferred from plant held for future 10 use to non-utility plant in March 1980.
If this option is 11 exercised, the sale will take place later this summer.
Due to 12 the accounting complexities of recording this transaction and 13 the resulting ratemaking treatment of the gain on the sale, I 14 recomend the Company be ordered to file an application for sale 15 with the Commission and allow the Staff to review the accounting 16 treatment at the time of sale.
17 The second item relates to social club dues charged to TE5CO by 18 affiliates.
Included in the cost of the Commanche Peak project 19 are social club dues.
Although these costs are minor, I would 20 recommend TESCO identify and remove the total amount along with 21 the related AFUDC from Account 107.
22 Q.
Does this conclude your testimony?
j 23 A.
Yes, it does.
24
(
25 l
r Exhibit I(Jones) page 1 of 10 PUBLhC UTILITY COMMISSION OF TEXAS TEXAS ELECTRIC SERVICE COMPANY AND SUBSIDIARY COST OF SERVICE TWELVE MONTHS ENDED MARCH 31,1980 Company Stalf Line Claimed Exhibit Test Period Income As No.
Description Reference
. Amount (a)
Deficiency Total (a)
Adjustments Adjusted (1)
(2)
(3)
(4)
(5)
(6)-
(7) 1 Fuel l(Jones) p. 2
$ 275,730,493 $ (35,302,290) $ 240,428,203
$ 26,632,456 $ 267,060,659 2
Operations and Maintenance l(Jones) p. 4 151,463,486 651,393 152,114,879 (6,082,912) 146,031,967 3
Depreciation 50,986,049 50,986,049 50,986,049 4
Taxes Other Than inenme 1(Jones)p. 8 46,268,793 4,243,888 50,512,681 (t,068,985) 49,443,696 5
Federat income Taxes f(Jones) p. 9 48,415,637 70,523,230 118,938,867 (32,281,180) 86,657,687 6
Interest on Customers' D* posits 282,836 282,836 282,836 7
Return II(Jones) p.
I 120,245,358 82,788,140 203,033,498 (47,628,035) 155,405.463 8
Total Cost of Service
$ 693,392,652 $ 122,904,361 $ 816,297,013
$(60,428,656) $ 755,868,357 9
Fuel and Other Revenues f(J mes) p. 10 (279,805.985) 34,866,061 (244,938,924)
(26,498,386) (271,437,310) 10 Base Rate Revenue O H,586,66_7
$ l}7 731d22 $ 571,358,089
$(86,927,042) $ 484,431,047
_7 1
11 Test Period Base Rate Revenue (413,586,667)
(4,412,838) (414.999,505)(b) 12 Base Rate Revenue Deficiency (Excess)
$M7,13 422
$[83,y 9 8}0) $ 69,431, 42 I /57/M/,422 (a) Schedule A, page 1 (Rate Filing Package).
(b) Obtained from Ted Vogel, Economic Research Division 9
Exhibit I (Jones)
Page 2 of 10
~
CUBLIC UTILITY COMMISSION OF TEXAS TEXAS ELECTRIC SERVICE' COMPANY AND SUBSIDIARY FUEL EXPENSE TWELVE MONTHS ENDED MARCH 31, 1980 Description Amount Consolidated fuel expense
$155,402,321 (a)
Fuel component of purchased power 5,138,793 (a)
Adjustments to reflect price changes 123,136,930 (b)
Reclassification from operation and maintenance 215,855 (c)
Removal of social club dues (830)(d)
Less:
Fuel component of intersystem sales (5,754,234)(a)
Exploration and development (102,150)(a)
Transportation and storage (263,544)(a)
Adjusted recoverable fuel costs for test year sales
$277,773,141 Adjustment to reflect Kwh sales adjusted for customers, weather, and price elasticity (235,256)(b)
~
Recoverable fuel costs for test year at present rates
$277,537,885 Adjustment to reflect Kwh sales adjusted for price elasticity at proposed rates (10,477,226)(b)
Fuel - Staff
$267,060,659 Fuel - Company (240,428,203)(a)
Staff adjustment S 26.632.456 (a) Schedule A, page 34 (Rate Filing Package) and Company response to Commission request C-1.
(b) Exhibit I (Jones) page 3.
(c) Exhibit I (Jones) page 4.
(d) Determined from review of books and records of TUFC0 and TUGCO.
9 t
Exhibit I (Jones)
Page 3 of 10 PUBLIC UTILITY COMMISSION OF TEXAS TEXAS ELECTRIC SERVICE COMPANY AND SUBSIDIARY FUEL EXPENSE TWELVE MONTHS ENDED MARCH 31, 1980 Description Amount Adjustment to reflect price changes Lignite consumed (mmBtu) 108,532,714 (a)
Ligr.ite price - Staff
$.7095 (c)
Lignite price - Company
(.7200)(a) X
(.0105).
Adjustment due to lignite price
$(1,139,593)
Adjustment for price changes-Company
-124,276,523 (b)' $123.136.930 l
Adjustment to reflect Kwh sales for customers, weather and price elasticity i
Staff adjustment to test year Kwh sales (10,164,869)(d)
Heat rate X
11127 (e)
Reduction in mmBtus (113,104)
Price X
$2.08 (b)
(235.256)
Adjustment to reflect Kwh sales for price elasticity at proposed rates Staff adjustment to Kwh sales (452,694,125)(d)
Heat rate X
11127,(e)
Reduction in mmBtus (5,037,128)
Price X
$2.08 (b)
$(10.477.226)
(a) Company's response to Commission request C-1.
(b) Schedule A, page 34 (Rate Filing Package).
(c) Computed from Company response to Commission request C-1 and informal request for information.
1 (d) Ted Vogel, Economic Research Division.
(e) Computed from power reports for gas fired units contained in March,1980 Financial and Operating Report.
.'A
.r-
~
Exhibit I (Jones) iPage 4 of 10-PUBLIC UTILITY C0 m!SSION'0F TEXAS go TEXAS ELECTRIC SE..s!CE COMPANY AND SUBSIDIARY OPERATION AND MAINTENANCE EXPEN5ES
= STAFF ADJUSTMENTS TWELVE MONTHS ENDED MARCH 31, 1990' Oescription
~ Adjustment Payroll Staff payroll adjustment
$ 6,481,334 (b)
Company payroll adjustment-(6,511,238)(a)
~$,
(29,904).
Fayroll Related Costs Fercent payroll related costs.
-Staff acjustment to payroll
. (29,904)(a) 15.9051 i
-(4,756)
X Payroll Changes at Monticello' i
Staff payroll adjustment 554,901 (c)
Company payroll adjustment (666,775)(a)
(111,874) i.
Reclassification Reclassification to fuel expense (215,855)(d)-
Postage Expense Staff postage expense adjustment 23,631 (e)
Company postage expense adjustment (292,874)(a)
(269,243)
Residential Canservation Service Procram Staff amount 87,800 (f)
Company amount-(675,000)(a)
(587.200) 4 Provision for Insurance Staff amount
$ 1,320,000 (g)
Corpany amount (1,740,000)(a)
(420,000)
Other Operation and Maintenance Staff acJustrent.
$ 1,519,350 (h)
Company adjustment (4,407,655)(a)-
(2,688,305)
Disallowed Expenses i
Elimination of oues and contributions in accordance with Substantive Rule 052.02.03.032 (16,536)(1) l Uncoilectibles Staff cost of service 3755,268,357 (j)
Rate X
.0036156 (k)
Staff uncollectibles 5 2,732,916 Company uncollectibles (2,982,449)(a)
(249,531)
Public Utility Comission Assessment Reclassification to Taxes Otner Than Income--
(1,289,708) (a)
Total staff adjustments
$f6.082.912)
See Exhibit I (Jones) page 5 for Foctnote explanations.
.s Exhibit I (Jones)
Page 5 of 10 PUBLIC UTILITY COMMISSION OF TEXAS TEXAS ELECTRIC SERVICE COMPANY AND SUBSIDIARY OPERATION AND MAINTENANCE EXPENSES FOOTNOTES (a) Schedule A (Rate Filing Package).
(b) Determined from information obtained in review of books and records and Company response to Commission request C-1.
(c) Exhibit I (Jones) page 6.
(d) Determined from on-site review of books and records of TUGCO.
(e) Computed using Company response to Commission request C-1 and Schedule N-3 (Rate Filing Package).
1 (f) Exhibit I (Jones) page 7.
(g) Docket No. 2606 final order.
(h) Testimony of Ted Vogel, Economic Research Division.
(i) Determined from Company response to Commission request C-20 and on-site review of books and records.
(j) Exhibit I (Jcnes) page 1.
(k) Computed using Company response to Commission request C-1.
h m.---
- - ~~-
g w
ees-+
g.m
-.-3 y.
y y..p
-t-r
O L
Exhibit I (Jones)-
Page 6 of 10 PUBLIC UTILITY COMMISSION OF TEXAS TEXAS ELECTRIC SERVICE COMPANY AND SUBSIDIARY PAYROLL EXPENSE AT MONTICELLO SES STAFF ADJUSTMENT TWELVE MONTHS ENDED MARCH 31, 1980 Description Amount Annualized base salaries
.$8,957,270 (a)
Actual test year base salaries (7,808,976)(a)
Increase in base salaries 51,148,294 Percent increase 14.7%
Total payroll to operation and maintenance expense.
X 9,961,312 (b)
Increast in total payroll
$1,464,313.
Percent to TESCO X
37.895%(b)
Adjustment to M0SES payroll - Staff
$ 554.901 (a) Computed using Company response to Commission request C-1 and response to informal request.
(b) Schedule A, page 7 (P. ate Filing Package).
O e
Exhibit I (Jones)
Page 7 of 10 PUBLIC UTILITY COMMISSION OF TEXAS TEXAS ELECTRIC SERVICE COMPANY AND SUBSIDIARY RESIDENTIAL CONSERVATION SERVICE PROGRAM STAFF ADJUSTMENT TWELVE MONTHS ENDED MARCH 31, 1980 Description Amount
, Program Announcement End of test year residential customers 438,994 (a)
Printing cost per customer X
).05 (b)
$21,950 Offering of Audit Residential customers offered the audit each year 219 497 (c) 5.30(b)
Printing and postal cost per customer X
65,850 Adjustment for Residential Conservation Service Program - Staff S87.800 (a) Schedule N-3 (Rate Filing Package).
(b) Computed using information obtained from Texas Energy and Natural Resource Advisory Council.
(c) Computed as one-half of year end customers per Schedule N-3 (Rate Filing Package).
6 ExhibitI(Jones)
Page 8 of 10 PUBLIC UTILITY COMMISSION OF TEXAS TEXAS ELECTRIC SERVICE COMPANY AND SUBSIDIARY TAXES OTHER THAN INCOME STAFF ADJUSTMENT TWELVE MONTHS ENDED MARCH 31, 1980 Staff Description Adjustment Public Utility Commission Assessment Cost of service - Staff
$755,868,357 (a)
Rate X
.001573 (b)
PUC assessment - Staff 5 1,188,973 PUC assessment - Company $1,188,973 Street Rental taxes Cost of service - Staff
$755,868,357 (a)
Rate X
.020968 (d)
Street rental taxes - Staff 5"15,849,047 Street rental taxes - Company (17,249,850)(c)
(1,400,803)
State Gross Receipts Taxes Cost of service - Staff
$755,868,357 (a)
Rate X
.012868 (d)
Gross receiots taxes - Staff 5 9,726,514 Gross receipts taxes - Company (10,583,669)(c)
(857.155)
Total Staff adjustment 1112068,985)
(a) Exhibit I (Jones) page 1.
(b) Computed using Company response to Commission request C-1.
(c) Schedule I.8 and A (Rate Filing Package).
(d) Computed using Company response to Commmission request C-1 and December,1979 Financial and Operating Report.
~
e Exhibit I (Jones)
Page 9 of 10 PUBLIC UTILITY CD*NISSION OF TEXAS TEXAS ELECTRIC SERVICE COM?ANY AN3 SUBSIDIARY' FEDERAL INCOME TAXES TWELVE MONTHS J'C3ED MARCH 31, 1980 Descriotion Amount i
Return per Exhibit II (Jones) page 1
~$155,405,463-Interest (47,822,349) (a) j Non-normalized-timing differences
-I and other credits:
Amortization of investment tax credit 5(2,273,480)
Depreciation Consolidated tax sevings
~
3,938,930 (461,457)
Other (3,840,898)
(2,636,905)'
Taxable income after income taxes 5104,946,209 Factor for Federal incere taxes before amortization of tax credits and other X.851851852 Federal income taxes before amortization of tax credits and otner 5 89,398,622 Amortization of investment tax credits (2,273,480).(c)
Consolidated tax savings and surtax exemption (467,455) (b)
Staff Federal income taxer 5 86,657,687-Company Federal income taxes (118,938,267) (b)
Staff adjustr.ent S(??.?a!.100) l (a) Weignted average cost of debt applied to Staff invested capital.
(b) Schedule A (Rate Filing Package).
(c) Feconouted using response to commission request C-1 and Docket 2606 workpapers.
t.
a v.
Exhibit I (Jones)
Page 10 of 10 PUBLIC UTILITY COMMISSION OF TEXAS TEXAS ELECTRIC SERVICE COMPANY AND SUBSIDIARY FURTND OTilER REVENUES TWELVE MONTHS ENDED MARCil 31, 1980 Company Staff Test Period As Description Amount (a)
Adjustments Total (a)
Adjustments Adjusted Recoverable fuel Costs
$275,730,493
$(35,302,290)
$240,428,203
$26,632,456
$267,060,659 (c)
Other Revenues 4,075,492 435,229 4,510,721 (134,070)(b) 4,376,651 Total
$2JJ_,i]QL,985
$(LBELa63)
$241,9A92i
$2E 49M6 '
s m.437.310 (a) Schedule N-2 (Rate Filing Package).
(b) Computed using Staff adjustment to residential. conservation program and Schedule N-4 (Rate Filing Package).
(c)
Exhibit I (Jones) page 1.
O G
Exhibit II (Jones)
Page 1 of 3 PUBLIC UTILITY COMMISSION OF TEXAS i
TEXAS ELECTRIC SERVICE COMPANY AND SUBSIDIARY ADJUSTED VALUE OF INVESTED CAPITAL AND RETURN WELVE MONTHS ENDED MARCH 31, 1980 Exhibit Mix Descriction Reference Computation Amount Net Plant - Original Cost II (Jones) p.2
$1,100,955,464 Percentage Mix Child X
63.875%
$ 703,235,303 Net Plant Current Cost Saathoff
$1,957,068,261 Percentage liix Child X
36.125%
l 706,990,909 j
Construction Work in Progress II(Jones)p.2 269,039,980 Plant Held for Future Use II (Jones) p.2
-3,694,185 i
Nuclear Fuel in Process II (Jcnes) p.2 25,581,796 Workint Capital II (Jones) p.2 67,196,106 Customer's Deposits II (Jones) p.2 (3,920,772)
Accumulated Deferred Federal Income Taxes II (Jones) p.2 (69,758,408)
Reserve for Insurance and Casualties II (Jones) p.2 (1,802,321)
Other Cost Free Capital II (Jones) p.2 (7,175,360) s Adjusted Value of Invested Ca;; ital
$1,683,081,418 Return 0 9.23 *;
5 %4ns.44 (a)
\\
(a) Exhibit II (Jones) page 2.
i
A S
Exhibit II (Jones)
Page 2 of 3 PUBLIC UTILITY COMMISSION OF TEXAS TEXAS ELECTRIC SERVICE COMPANY AND SUBSIDIARY INVESTED CAPITAL AND RETURN TWELVE MONTils ENDED MARCil 31, 1980 Company Staff Exhibit As Description Reference Amount (a)
Adjustments Adjusted Original Cost of Plant in Service
$1,483,200,358
$1,483,200,358 Accumulated Depreciation II (Jones) p.3 (381,986,460)
(258,434)
(382,244,894)
Net Plant in Service
$1,101,213,898 (258,434)
$1,100,955,464 Construction Work in Progress II (Jones) p.3 538,079,959 (269,039,979) 269,039,980 Electric Plant lield for Future Use II (Jones) p.3 3,948,445 (254,260)-
3,694,185 Nuclear Fuel in Process 25,581,796 25,581,796 Working Capital II (Jones) p.3 71,548,734 (14,352,628) 57,196,106 Customers' Deposits (3,920,772)
(3,920,772)
Accumulated Deferred Federal Income Taxes (69,758,408)
(69,758,408)
Reserve for Insurance and Casualties II (Jones) p.3 (1,802,321)
(1,802,321)
Other Cost Free Capital II (Jones) p.3 (7,175,360)
(7,175,360)
Tntal Invested Capita 1 11.664.891.33.1
$(291.080.661) 11.373.8102620
""h 2k Mff (b) la) Determined from Schedule 8 (Rate Filing Package),
fb) Testimony of Chris Child, Economic Research Division.
ExhibitII(Jones)
-c'
. page 3 of 3 PUBLIC UTILITY COP?ilSSION OF TEXAS TEXAS ELECTRIC SERVICE COMPANY AND SUBSIDIARY INVESTED CAPITAL AND RETURN STAFF ADJUSTMENTS MARCH 31, 1980 Staff Description Adjustment Accumulated Depreciation Adjustment to reflect one-half of adjustment to expense (258,434)(a)
Construction Work in Progress Construction Work in Progress - Staff
$269,039,980(b)
Construction Work in Progress - Company (538,079,959)(g)
$(269,039,979)
Plant Held for Future Use Exclusion of Titus County water rights (254,260)(c)
Working Capital Inirteen month average of materials and supplies 9,284,803(d)
Thirteen, month average of prepayments 4,688,502(f)
Thirteen month average of fuel gas inventory 4,627,205(d)
Year end fuel oil inventory 21,407,491(d)
Average working funds 4,241,098(d)-
Working cash allowance 12,947,007(e)
Staff working capital 5 57,196,106 Comp'.ny working capital
$(71,548,734)(d)
$ (14,352,628)
Other Cost Free Capitel Taxes tccrued not yet payable
$ (6,837,593)(h)
Payable to Edison Electric Institute (337,767)(h)
L (7,175,360)
(a) Computed using Schedule A (Rate Filing Package).
(b) Represents fifty percent of adjusted construction work in progress.
(c) Exhibit WMT-5, Taylor testimony.
(d) Schedule G (Rate Filing Package).
(e) Computed as one-eighth of Staff operation and maintenance expenses adjusted for items charged to expense per Schedule G-3 (Rate Filing Package).
(f) Determined from Schedule G (Rate Filing Package ) and Company response to Commisnion request C-15.
(g) Schedule B (Rate Filing Package).
(h) Determined from information obtained during review of books and records.