ML20032D949
| ML20032D949 | |
| Person / Time | |
|---|---|
| Site: | Black Fox |
| Issue date: | 11/16/1981 |
| From: | Stratton W PUBLIC SERVICE CO. OF OKLAHOMA |
| To: | |
| Shared Package | |
| ML20032D948 | List: |
| References | |
| 27068, NUDOCS 8111180541 | |
| Download: ML20032D949 (37) | |
Text
00(.hE.TED l
c O
.gg g 16 p3:24 f
t.
1
- EECB5ERVi E e
,trMggkCH 2
3 4
5 THE CORPORATION COMMISSION 6
OF THE STATE OF OKLAHOMA 7
8 CAUSE NO.27068 9
10 11 12 Application of Public Service Company of. Oklahoma 13 for an Adjustment in its Rates 14 and Charges for Electric Service in the State of Oklahoma 15 16 17 f
TESTIMONY OF 18 WILLIAM R.
STRATTON 19 i
20 21 I
22 l
23 24 l
25 S
'[
8111180541 811113 PDR ADOCK 05000556 I
PUBLIC SEFJ ICE COMPANY OF OKLAHOMA 1
TESTIMONY OF 2
WILLIAM R. STRATTON
~
3 Q.
Please state your name and employment.
4 A.
I am William k. Stratton, Senior Vice President, Finance of Public 5
Service compa, of Oklahoma.
My qualifications were recited in 6
Previous testim Ty.
7 Q.
Mr. Stratton, what issues will your testimony in phase III of.this 8
Cause address 7 9
A.
First, I will present updated figures for coal and nuclear 10 Projects at the Black Fox' site based on work done for the project 13 co-owners by Management Analysis Company (MAC) and Black & Veatch 12 Consulting Engineers (B&V).
In this connection I will present the 13 results of studies done at PSO to develop comparable data to that 14 of the Touche-Ross report.
Second, I will present data runs from 15 our corporate financial model which compare revenue requirements 16 and kwh rates under AFUDC and CWIP regulation (this is an update of 17 my prior testimony).
Third, I will address the customer / company i
18 impact and capital recovery issues added to this Cause by Order 19 197606 of September 1, 1981.
Previcus PSO testimony has validated 20 our projections for capacity requirements which the Black Fox 21' proj ect is intended to meet, and established the economic prudence 22 and viability of the project from inception to the present time.
23 l
24 l
25 i
1
r R
I
(..'
3 SITE SPECIFIC CONSTRUCTION COSTS 2
3 Q.
'Please decribe the construction cost projections now
- accepted by 4
PSO.
5 A.
In connection with other studies being done for the co-owners MAC 6
and B&V have developed site-specific cash construction projections 7
for 'the project.
MAC has presented a "most probable" case that 8
anticipates in-service dates for the nuclear project units of 1993 9
and 1995.
They have also developed a case with 1991 and 1994 10 in-service dates.
Additionally, there is an " outer bound" MAC cash it estimate that contemplates nuclear in-service dates of 1996 and 12 1999.
B&V has estimated costs for a coal alternative consisting of 13 two 670 megawatt units entering service in 1991 and 1994.
The B&V 14 estimate was ordered by PSO (and not the co-owners) so that we 15 could present evidence of costs for a coal alternative that:
1) 16 was comparable to PSO's 1400 megawatt share of the Black Fox i
17 nuclear project, and 2) was comparable to the 1991-94 timing l
l 18 assumed by Touche-Ross, thus rendering the capital costs I present 19 today on a basis that will aid the Commission as it compares our 20 study results with Touche-Ross's.
Total PSO construction costs l
l 21 (cash plus financing costs) for six alternatives - three under CWIP l
l 22 regulation and three under AFUDC regulation - are presented in the j
23 two following tables on a :otal cost, and a cost-per-kilowatt 24 basis:
1 25 l
2
TABLE I TOTAL PSO CONSTRUCTION COSTS (in billions) y AFUDC REGULATION CWIP RECULATION 2
'3' 91-94 91-94 93-95
'91-94 91-94 93-95 Nuclear Coal Nuclear Nuclear Coal Nuclear 4
Cash Construction 2.474 2.202 2.928 2.474 2.202 2.928 5
AFUDC 2.369
.599 3.334
.198
.154
.235 6
Total Construction $4.843
$2.801
$6.262
$2.672
$2.356 $3.163 7
TABLE II 8
TOTAL COST PER KILOWATT INSTALLED 9
91-94 91-94 93-95 91-94 91-94 93 Nuclear Coal Nuclear Nuclear Coal Nuclear 10 Total Construction
$3,459
$2,090
$4,472
$1.908
$1,758 $2,259 11 12 Q.
Please explain the tables.
13
.f A.
The cash construction costs stem directly from the MAC and B&V 14 estimates.
Coal construction costs are for the two 670-megawatt 15 units.
The nuclear cash construction costs are 60.87 percent of 16 MAC's total project cost estimate, representing PSO's share of the 17 l
nuclear project.
Financing costs (AFUDC) were calculated by PS0's l
18 financial group based on the construction profiles from MAC and B&V 19 and PSO's cost of capital.
In this connection, I should mention 20 that PSO's assumed cost of capital is higher than that used by 21 j
Touche-Ross in its study.
This is also the place to note that many l
22 of the assumptions we used were different from those adopted by 23 Touche-Ross.
For the record a comparative table of assumptions is 24 appended as Exhibit WS-5.
25 Q.
Did the use of different assumptions affect the comparability of the PSO and Touche-Ross studies?
3
A.
If the differences in assumptions were not set out for assessment
(.
I the answer would be yes, but I have set out the assumptions so they 2
may be taken account of in any comparison that is made.
Please 3
note there are other important differences that would*also have to 4
be acknowledged in any comparison.
First, the new PSO figures 5
commence with cash construction costs that are site-specific and 6
not generic as in the Touche-Ross and earlier PSO studies.
- Second, 7
the "most probable" MAC case contemplates in-service dates for the
_g nuclear units of 1993-95 and not 1991-94.
The significance of the 9
differences between the PSO and Touche-Ross studies could be 10 debated endlessly.
But what is important about them is their 13 similarities not their differences.
The close correspondence 12 between the total construction costs in the two studies, is shown 13 in the next table.
The average of the two PSO nuclear cases is 14 almost exactly equal to Touche-Ross's.
15 16 TABLE III l
17 COMPARISON OF TOUCHE-ROSS & PSO 18 TOTAL CONSTRUCTION COSTS (in billions) 19 20 T-R Mid-Case PSO 21 1991-94 Nuclear (1400 MW)
$ 5.5
$4.8 22 1991-94 Coal (1340 MW)
$ 3.1
$2.8 23 i
1993-1995 Nuclear (1400 MW)
N.A.
$6.3 24 l
25 l
l ll(_
4
II.
REVENUE REQUIREMENTS AND BUS BAR COSTS y_
1 Q.
What revenue requirements do you attach to the six alternatives?
2 A.
The following table presents the total revenue requirements on a 3
future dollar basis for the project alternatives using a 4
thirty-year operating life for each unit.
Thus, these figures 5
project future dollar revenue requiremen,s through 2024 or 2025.
6 7
TABLE IV 3
LIFE OF PROJECT REVENUE REQUIREMENTS (in billions) 9 AFUDC CWIP 10 REGULATION REGULATION 11 91-94 91-94 93-95 91-94 91-94 93-95 Nuclear Coal Nuclear Nuclear Coal Nuclear 12 Capital 20.6 12.1 27.0 12.3 10.6 14.9 13 Fuel 20.1 94.7 22.9 20.1 94.7 22.9
- {"
Other Operating 14.9 11.7 17.0 14.9 11.7 17.0 14 TOTAL
$55.6
$118.5 $66.9
$47.3
$117.0
$54.8 15 l
l 16 Q.
These figures are astronomical!
Please explain.
17 A.
They are huge, but can be put into perspective.
In the first 18 place they are in future dollars, meaning that the sum of all of 19 the years revenue requirements is expressed in this table in terms 20 of dollars inflated at a 9 percent rate.
The present worth of 21 such a dollar, discounted back from 2021 at 9h percent is only 2.7 22 Cents.
l 23 1
24 t
l 25 III. LEVELIZED BUS-BAR COSTS Q.
What will you be presenting in the realm of levelized bus bar
( '.
l costs?
5
A.
I bring two sets of comparative data to the Commission (J.U 1
representing 10-year and life-of-project levelized bus bar costs.
2 Q.
Why two sets?
3' A.
'The 10-year study is for comparison with Touche-Ross's work.
By 4
the way, remember that the so-called 10-year cost actually covers 5
10 years of project operation, so it really addresses of one unit 6
for 7 years and one unit for 10 years of operation.
7 Q.
What is a levelized charge and how is it developed?
8 A.
It represents the annual charge necessary to amortize costs over a 9
set period of time.
In a 10-year levelized bus bar cost study the 10 combined capital and operating costs for the first ten years of 11 project. operation are discounted at the cost of capital rate back 12 to commencement of service values; capital costs during 13 construction are escalated.at the same rate to the in-service C_
14 date. Dese values are summed and the revenues required to 15 amortize this total.in equal annual payments at a carrying charge 16 equal to the cost of capital is calculated.
17 Q.
And a levelized bus bar cost per kwh'is simply this annual charge 18 divided by the number of kilowatt hours expected to be generated by 19 the plant?
20 A.
Yes.
21 Q.
What are the 10-year levelized bus bar costs from the PSO study?
22 A.
They are shown in the following table.
For comparison Touche-23 Ross's figures are also shown where applicable.
24 25
(
6
e TABLE V t I 1
10-YEAR LEVELIZED BUS BAR COSTS 2
UNDER AFUDC REGULATION 3'
91-94 91-94 93-95 4
Nuclear Coal Nuclear 5
PSO 187 mills 179 mills 239 mills 6
Touche-Ross 176 mills 155 mills N/A 7
3 Q.
Why are PSO's levelized bus bar costs for 1991-94 coal so much 9
higher than Touche-Ross's?
10 A.
Because PSO's and Touche-Ross's calculations of bus, bar costs 11 differ in several respects.
As a matter of fact, if we have any
- 12 serious dispute with Touche-Ross it is over their application of 13 the bus bar cost concept and methodology.
14 Q.
What is the conceptual difference?
15 A.
We would not agree to use of a 10-year levelized bus bar cost 16 comparison as the only tool for comparative evaluation of projects 17 with a service life of 30-years.
Whe'n the trade-off is between 18 capital and operating costs, the comparison should take life cycle 19 cost into consideration.
Touche-Ross's results indicate that the 20 economics of a nuclear project will not outweigh those of a coal l
21 project within the first 10 years of operation.
In the life cycle 22 study the opposite appears to be the case.
As the Touche-Ross I
23 study acknowledges, the 10-year case is biased in favor of coal.
24 Proper evaluation requires that that bias be recognized and taken 25 into account.
This is not to deny the higher degree of uncertainty I
l g.
embodied in study results that cover a forty-year time horizon.
7
9 Q.
What are the differences in method between PSO's and Touche-Ross's
- kh?
I levelized bua bar studies?
2 A.
There are several.
Our study addrasses tax expense in the 3
c'onstruction period; theirs does not.
Our study takes account of 4
the accumulated deferred tax offset to rate base in the calculation
~
~
5 of capital costs; theirs does not.-
There are also some differences 6
in the assumptions used in the tus studies, the most important 7
among operating expenses being cur higher escalation rates for fuel 8
and fuel transportation which raise our projected ccal O&M costs 9
over theirs. Also, we made our calculations en the basis of the 10 new tax law, which they could not have done.
The effect of these 31 differences is to reduce the capital-related revenue requirements 12 in PSO studies; this tends to favor the more capital intensive 13 nuclear project.
C.
14 Q.
Why were your 10-year levelized bus bar cost calculations done on i
15 the basis of AFUDC regulation and not CWIP?
l
(
16 A.
To maintain the correspondence with Touche-Ross's. Also, the I
17 discounting concepts applied in any levelized bus bar approach vill 18 equalize costs over project life so regulatory treatment is not 19 germane.
i 20 Q.
What were PSO's life cycle levelized bus bar costs?
21 A.
They are set out in the following table.
22 l
23 24 l
25
. 40):
1 vp-8
TABLE VI g:
'TEI 1
30-YEAR LEVELIZED BUS BAR COSTS 2
-3 91-94
'91-94 93-93 Nuclear Coal Nuclear 4
191 mills 240 mills 237 mills 5
Q.
What conclusions do the foregoing study results point to?
S A.
For one thing, they lend additional credibility to the prudence of 7
PSO's project management decisions respecting the Black Fox 8
station.
In the 1991-94 coal vs. nuclear comparison, nuclear is 9
clesrly preferable.
Even if one sets the figures that relate to 10 MAC's "most probable" nuclear case against those for 1991-94 coal, 11 it is manifest, from the standpoint of project economics, that 12 there was no basis to abandon the nuclear project.
Thus, the 13 C- '.
decision to proceed with toe project on a minimal cost basis over 14 the past two years is validated; and certainly the comparative 15 economics pre-1979 clearly favored nuclear.
On the other hand, it 16 is clear that now is the time to undertake the comprehensive l
~ 17 l
studies and evaluation of study results upon which the project 18 owners have embarked.
19 20 21 IV.
FINANCIAL ANALYSIS 22 Q.
What is the status of the financial analysis effort at PS0?
23 A.
It is ongoing, and will remain so.
However, the work done to 24 date - on a crash basis, I might say - permits me to offer evidence
.'.5 that can be set alongside the Touche-Ross study output for i,,.
evaluation by the Co= mission.
lV 1
r I
9 l
c Nothug in uur new studies calls the conclusions of the prior LC >
V.#
1 studies into serious question. Together they provide a perfectly 2
adequate record for commission decision making. What is needed now f
3'
'i.s a Commission decision.
4 Q.
Why is that?
5 A.
Financial and other studies are only part of the input' to PSO's 1
6 decision process and PSO is only one of three co-owners who must 7
reach a collective decision on the luture of the project. This 8
business decision will be facilitated, and likely accelerated, if.
9 the key inputs expected from the Commission's decision in this 10 phase are available.
11 Q.
Please discuss your financial studies.
12 A.
They were done on the same corporate financial model as the 13 studies filed by Touche-Ross.
The differences, in addition to new 14 tax law factors, are newly available MAC/B&V costs instead of 15 generic costs, PSO's higher cost of capital assumptions, and 16 incorporation of assumptions concerning disposition of the proceeds 17 of the sale of mineral leases. Only CWIP studies were run.
18 Q.
Why were no AFUDC studies done?
l 19 A.
Given the filing requirements for this testimony time did not 1
20 permit it.
On the subject of AFUDC vs. CWIP regulation I am 21 prepared to stand on my previously filed testimony and accompanying l
22 exhibits US-1 through WS-4, the differences in inputs that time has j
23 l
wrought would not affect the results of those studies on the l
24 CWIP/AFUDC issue.
25 Q.
What cases were considered?
, /73 A.
Using PSO's corporate financial model a financial simulation was I.i ~
produced covering two basic scenarios: 1400MW nuclear and 1340MW 10
coal, both with CWIP in the rate base.
In each case the in-service
- I 1
dates for the two-unit projects were established at 1991 and 2
1994.
3' Q.
Nhy wasn't a financial study relating to the MAC "most probable" 4
1993-95 nuclear case run?
5 A.
Such a study would not be comparable to the Touche-Ross study 6
which was confined to 1991-94 in service dates. Also, limitations 7
in PSO's financial modeling capability precluded such a study in 8
the time available.
Our model reaches out only ten years, and 9
major modifications which would take many weeks to accomplish would 10 be required to extend its' horizon an additional five years.
These 11 limitations extend to Touche-Ross who used our corporate model in 12 their financial studies.
13 Q.
Isn't the absence of a financial study on the "most probable" case s
?
14 still a serious omission?
15 A.
Ultimately such a study will probably be performed at PSO.
But 16 its absence from this record is not critical.
Remember that 17 revenue requirements and levelized bu's bar costs for the 1993-95 18 case have been provided.
These studies, which relate strictly to 19 the project, could be done; but the financial simulation, which l
20 requires input respecting every aspect of the company's business 21 through 1995,could not.
Finally, and most pertinent to the matters 22 at hand, PSO's maximum annual financing requirements for the 23 1993-95 case are quite near those for the 1991-94 case.
For 24 purposes of this Cause, the 1991-94 case is adequate to present 25 financibility issues for Commission decision making, and PS0 will re.
not object to a decision on the basis that financial studies for the 1993-95 case were not available.
I 11
l Q.
Was a financial projection related to the " outer bound" case as
- %??
I presented by MAC done?
.-r,~-
2 A.
No, the project would be a sub-marginal endeavor from either the 3
financial or economic standpoint if the upper bound case were to 4
eventuate, ks PSO and the co-owners ponder the future course of 5
the Black Fox project af ter the decision in this Cause, we will 6
evaluate the probabilities and costs of the adversities embodied in 7
MAC's " outer bound" case.
We will also consider anticipatory or 8
remedial actions to cope with them.
9 Q.
Your last answer infers that the co-owners' decision will come 10 after the order in this Cause is entered.
11 A.
Yes.
We are expecting an order during 1981.
While the Commission 12 deliberates we will be carrying on more studies and detailed 13 evaluations.
This Commission's order will be a critical decision s
4 14 input for PSO and of significance to *ne co-owners as well.
15 Q.
What will be the project owners' decision process?
16 A.
As I see it, it will involve further work by MAC and B&V, a great 17 deal of detailed analysis by each owner of its specific economic, 18 financial and business situation as related to the project's 19 future.
Out of this work will come a series of individual 20 acknowledgements and, finally, a collective decision on whether to 21 proceed with the project as now conceived or to pursue an 22 alternative course.
23 Q.
Has the 670 megwatt, two unit coal alternative been established as 24 the substitute for nuclear capacity?
25 A.
Most emphatically not.
As Mr. Meyer stated in PSO's opening testimony in this phase our presentation relating to two 670
- G[,-
megwatt coal units establishes a parallel by which coal fired 12
capacity in nearly equivalent amount and simultaneous timing can be compared for economic and financial purposes with the 1400 megwatt I
2 nuclear case for PSO alone.
Only thus can the Commission obtain I
comparable data on this record to evaluate the impact'of the
,4 project upon the company and its customers.
5 Q.
Then the owners could decide to continue on with the nuclear 6
project?
7 A.
That is certainly under consideration.
Project economics as 8
between coal and nuclear are in rough equilibrium.
Protection of 9
the current investment is a powerful incentive to continue. The 10 project is certainly licerisable.
If the owners joint need for 11 power projections indicate capacity requirements which Black Fox 12 nuclear could meet it would still have to be given serious 13 consideration notwithstanding the obvious problems of project C
14 finance.
15 Q.
What if Black Fox nuclear no longer meets the need for power?
16 A.
In that case - keeping in mind always that the existing investment-17 needs to be recovered - it seems clea'r to me that the conversion 18 alternative has much to commend it.
I must emphasize, however, 19 that the specifics of the conversion alternative, whether a joint 20 or PSO-only venture, would take much time and study to emerge.
21 Speaking strictly from PSO's standpoint, it is essential to obtain 22 an expression from the Commission whether the nuclear project 23 should go forward or not, and, if not, specification of the capital l
24 recovery principles that the Commission would adopt.
l l
25 Q.
Why is the capital recovery decision so important to PSO?
g.
A.
Because PSO simply cannot tolerate an outright write-off of our
- p.. -
l present investment in the project.
This would be financially l
13 I
disastrous, as well as grossly inequitable.
A utility is not kj 1
Permitted to enjoy the full fruits of its business successes, so it 2
does not have that resource to absorb the major adversities it 3
encounters.
Just as the effects of major natural occurrences are amortized thicough' rates, so should the. effects of other major 4
5 uncontrollable set-backs.
If Public Service Company of Oklahoma is 6
to remain a viable entity providing energy services to eur retail.
7 and wholesale customers, recovery of the Black Fox investment is a 8
necessity if the nuclear option proves impossible.
9 Q.
What will the decision process involve?
10 A.
First, a decision to continue with nuclear as the preferred fuel yy or not.
I believe.that decision could come within a month af ter l
32 the Commiscion's order.
By saying this I do not wish to convey an 13 impression that an alternative system expansion plan could be 14 Presented to the Commission in such a short time frame.
Quite to l
l 15 the contrary, especially if the decision is that the site should be l
16 converted to a coal fired generation station.
Under that 17 circumstance, all three co-owners would have to conduct careful 18 system expansion planning studies.
We would totally reevaluate the 19 sizes of the units to be employed, their timing and the ownership 20 shares in these units.
l 21 Q.
When might a conversion alternative be developed?
l 22 A.
It would clearly be well into the spring or early summer of 1982 23 before PSO could present such a plan to the Commission.
Such a 24 plan would be presented consistently with the precepts of the 1
25 Advanced Planning Rules now being considered by the Cocmission.
If the coal alternative is pursued we would seek a Commission ruling l(b, m
l' that the coal-convertible portion of PSO's existing investment in 14 L
Black Fox bt continued in the CWIP account and be granted rate base
~'kE 1
treatment as a cash earning asset of this company.
s...,n.,, - _
2 Q.
What about conservation alternatives to tne nuclear project?
-3' A.
They too will be studied. -All our financial ' case studies force 4
the ' conclusion that under present and fores ~ eable utility economics e
S PSO must have its construction investment in the rate base if we 6
are to provide central station capability of any magnitude to meet 7
load growth and replace existing gas fired capability at a pace 8
commensurate with the physical and economic obsolescence of our 9
existing plants.
Even with construction investment in the rate 10 base the company's financial strength will be tested to the hilt 11 under any program that combined a comprehensive conservation ef fort 12 (which would include capital intensive elements) with a compatible 13 construction program.
One fact often lost in the exhortations to
' C'.
14 utilities to be more active in conservation is the cost of 15 conservation programs theuselves.
Saving a kilowatt through 16 conservation at three-quarters the cost of installing a new 17 kilowatt of capacity involves substantial investment which itself.
18 requires a financial healthy utility.
Not only that, but 19 conservation investment on a significant scale represents a novel I
20 business strategy for the electric utility industry, and legal 21 questions have been raised concerning the propriety of including 22 conservation investments in rate base.
Such an untried program 23 will be viewed by the investment community as carrying an increased 24 business risk.
For that reason it is likely to require a 25 countervailing reduction of financial risk involving a higher equity ratio and a higher cost of capital.
Moreover candor requires me to report that investors now see a diminution in the 15
_ - ~ _. -
i regulatory certainty of compensation of utility investments.
Who "ijh 1
is to predict whether, 7 or 10 years hence - when for all we know
-- c ~
2 nuclear power may again be in favor - that investments in 3'
conservation programs may not be the stepchild.
Earlier testimony 4
in this Geuse recounted recent industry history in which first one 5
then another fuel or business strategy has risen to favor only to 6
fall from grace in a few years.
Conservation, the Messiah of 1981 7
may be the pariah of 1989 - especially if the optimistic benefits 8
Projected are not realized.
9 Q.
What alternatives were considered in your financial studies?'
10 A.
The two cases are based on' the 91-94 nuclear and coal construction 11 cost estimates presented by MAC and B&V.
The first assumes 12 continuation of the nuclear project.
The second assumes conversion 13 of the project to coal. The intent is to provide data comparable k,
14 to Touche-Ross's, but using site-specific construction costs.
15 Q.
How was the recent sale of undeveloped oil ard gas leases treated?
16 A.
The gain was netted against the convertible construction 17 investment in the conversion case, as' Touche-Ross has proposed.
In 18 the nuclear case the gain was credited back to.the ratepayers.
19 Q.
What gain on the lease sale was used in your analysis?
20 A.
$47 million.
21 Q.
Do PSO's studies provide for a return on both the unamortized 22 non-convertible construction investment and the lease sale gain?
23 A.
Yes, a return hac been considered in both cases on a consistent-24 basis.
Similarly, a ten year amortization is used in the 25 conversion case and a ten-year pay-back in the nuclear case.
Q.
Did you develop variations of the tvo scenarios?
16
A.
Yes, va varied the level of return allowed on the unamortired
[
l[' '..
I balance of investment or lease sale gain.
Exhibit WS-6 presents
-.9q
.2 study results for four return levels under each of the two
'. 3' 5cenarios.
They permit a comparison of PSO's cases tb the 4
Touche-Ross CWIP case on such important financial parameters as 5
coverage, return on equity, percent of construction investment 6
internally generated, and AFUDC as a percent of return on equity.
l 7
Q.
Is the 1991-94 MAC case comparable to the Touche-Ross case?
8 A.
Strictly speaking, it is MAC's "most probable" case that imposes 9
an approximately equal financial strain as the Touche-Ross low case 10 for nuclear, which they us'ed for purposes of financial analysis.
IT But a 1993-95 case really isn't comparable to a 1991-94 case even 12 if it could be executed on the corporate model.
Therefore, I 13 believe that our 1991-94 nuclear financial study is. adequate.
14 MAC's 1991-94 costs would put PSO's financial integrity to a severe 15 test, even under supportive regulation.
16 Q.
Please decribe the four return levels under each of the two 17 scenarios.
18 A.
They are as follows, in declining order:
1)
Full Return - this 19 return is calculated on the full embedded cost of capital including 20 a 16 1/2 percent equity return.
2)
PSO Common - this return-21 calculation utilizes the embedded cost of debt and preferred and 22 the common dividend rate for the equity return.
3)
PSO Partial -
23 this return is calculated on the embedded cost of debt and 24 preferred.
4)
Touche-Ross Partial - this return computation 25 utilizes the' embedded cost of debt and preferred and a zero cost 7
for equity capital.
Q, Please describe the results of your study.
17
i
_s A.
The results of our study are shown on Exhibit WS-6.
The schedule
- ~.
' ingg,7 _-
1 contains eight columns, four columns for the nuclear continuation p -..
2 and four for the coal conversion.
Each of the two scenarios is
-3 shown under the various return calculations described *in the
'4 Previous answer.
On the three pages of the exhibit, certain 5
financial data is presented.
For each category, 9 years of data is 6
shown sc that side-by-side comparisons can be made.
7 Q.
Please describe the first page of Exhibit WS-6.
8 A.
The ' firs't item shown is total cash construction for the company 9
(i.e. all projects including the scenario proje.n) for the nine 10 years 1982 - 1990, followed by the construction investment 11 applicable to the scenario project.
Nine year totals are indicated 12 for each of the cash flows shown.
These totals represent the total 13 construction dollars for 1982 - 1990 only and do not represent the 14 total cost of the project.
The data under the nuclear scenario for 15 total construction and the nuclear project is comparable to 16 Touche-Ross (TR) Exhibit VII-2 on page 81 of their report and the
~17 nine year expenditure totals are within $13 Million of the TR 18 Report.
The next item shown is.the percentage of construction ~
19 funds generated internally.
All of the scenarios are run with CWIP 20 in the rate base,.which produces the highest internally generated 21 funds, yet internal generation still falls below the 40% standard 22 in the heavy construction years.
There is no significant 23 difference in the internally generated 'unds when comparing coal to 24 nuclear through 1990 due to CWIP regulation.
The nuclear scenario 25 is comparable with Exhibit VII-4, p. 83 of the TR Report and the TR Partial and Full return columns in the conversion scenario are comparable with the partial and full return columns with CWIP in Exhibit X-3, p.
106 of the TR Report.
18
The last item shown on page one is the percentage of balar.cc for c
" h. -
I common attributable to AFUD'C (net of tax).
As would be expected
.. py,
y-2 under CWIP regulation, this percentage is insignificant in all 3
periods for both scenarios. This is an indication that the company's reported ' arnings are actually available to pay financing 4
e 5
costs on the company's construction program.
The nuclear scenario 6
columns are comparable with the CWIP section of Exhibit VII-4, p.
l 7
83 of the TR Report and the TR Partial and Full return columns in 8
the conversion scenario are comparable to the partial and full 9
return columns with CWIP in Exhibit X-4, p. ~107 of the TR Report.
j 10 Q.
Please describe page two of WS-6, 11 A.
The first two items show the securities to be issued in the l
12 various cases.
The company's financial model finances to a 13 predetermined capital structure and will in certain instances give 14 negative numbers. You can see, however, that these negative l
15 numbers are small. In reality the company will finance in 16 economically sized issues.
Important to note in these sections-is
~17 that both the debt and common financing requirements are less under 18 coal'than they are under nuclear due to the higher capital costs of 19 the nuclear construction program.
In addition, under the coal 20 scenario the common equity financing requirements are significantly 21 higher when only a partial return is realized on the unamortized 22 non-convertible investmer.t balance.
Such external financing-is 23 required to cover the return deficiency if proper security is to be 24 maintained for the bond holders.
Under nuclear continuation.'the 25 variation in total common issues declines with a declining return,
f, component.
This is because a higher return rate works to the t-s-
ratepayers' interest in the amortization of the lease sale proceeds 19
O to their credit in the nuclear case.
Sections 3 and 4 of page 2 I
show indenture coverages and Moody's coverages, all of which remain
~~
2 adequate throughout the nine years in both cases. Adequat: Pbody's 3
coverage insures the company's ability to finance at ' reasonable 4
costs.
The nuclear continuation data for Moody's coverage is 5
comparable to the CWIP section data in Exhibit VII-4, p. 83 of the 6
TR Report and the Full and TR Partial columns under the coal' l
7 conversion are comparable to the full and partial return columns I
8 with CWIP on Exhibit X-2, p.105 of the TR Report. Under AFUDC
'9 regtilation, these coverages could not be maintained, and the l
10 company's ability to finan~ce at reasonable costs would be II jeopardized as shown on these TR Report exhibits.
12 Q.
Please describe page three of Exhibit WS-6.
13 A.
The first item on page three is the additional rate relief that 14 will be required in each of the years shown under the two scenarios I
15 and their variations. These additional rate requirements are i
I 16 predicated upon the fact that the financial model has rate relief 17 in 1981 of $44 million, representing 'the interim rate relief 18 obtained in late 1980.
The amounts by which_the rate relfef has 19 been decreased or increased.for nuclear or coal respectively is 20 shown in the second table on this page entitled amortization and 21 return.
In both cases the amortization and return amounts decraase 22 l
from one year to the next and under the 10 year amortization l
23 assumption both would cease after 1991. This amortization and l
24 return table shows the effect that various return treatments can 25 have.
The bottom line of any cuch analysis from the customer's i
1 view is the required rate relief.
The rate relief under the nuclear scenario when added to the amortization of the lease sale 20 1
L-
gain, which Touche-Ross did not consider, ranges from $460-474
-h2 r.,
million for the nine years.
This is comparable to $460 million on y
~
-.;--=; _ -
2 Exhibit VIII-1, p. 86 of the Touche-Ross Repo'rt.
However, PSO's 3'
nuclear rate impact is lower than TR due to the flowback of the 4
lease sale gain to the customer.
The amortization rate relief 5
under coal conversion for the TR partial and full columns of WS-6 6
compares closely with the nine year totals on Exhibit X-7, p. 110 7
of the TR Report. A comparison of PSO's nine year total rate g
relief under coal conversion with TR Partial or Full return to the 9
CWIP full and partial columns of Exhibit X-8, p.111 of the TR 10 Report indicates PSO's rate relief is about $70 million less than yy TR.
This is because, even though PSO is based on 16 % ROE and TR 12 15% RCE, PSO's coal construction during-the nine years is $760 13 million less.
Under CWIP regulation this means rate increases would be lower.
The third item on page three shows the return on 34 j5 average common equity under each of the various assumptions. Under 16 the coal conversion scenario, the company's only opportunity to 17 earn its required 16 %
18 return is when a full return is allowed on the unamortized balance 39 of the amortizing investment.
The financial ramifications of 20 failure to earn a full return were manifested on page two of WS-6 21 in higher requirements for outside financing.
The coal conversion 22 TR Partial and Full columns are comparable to the partial and full 23 return, with CWIP, columns on Exhibit X-5, p.
108 of the TR Report, 24 the only reconciling difference being that PSO solved for 16 %
25 return on equity whereas TR solved for 15%.
The TR Report reveals the devastating impact of the no return situation.
~.
fi *;
w 21 b
l The last item on page 3 shows the dividends paid in each year b~
I assuming a 10% payout on the average common equity balance.
These 2
dividends have been calculated by the model without regard to any 3'
'of the dividend re'strictions contained in the company's bond 4
indenture or articles of incorporation.
5 Q.
Would you summarize your financial analysis.
6 A.
Our results with the site specific cash construction on a CWIP 7
regulation basis is extremely close to the Touche-Ross Report for 8
the.nine year period. Any variations can be explained by (1) the 9
small variations from year to year between our site specific and 10 Touche-Ross's generic construction cash expenditures relative to il nuclear, (2) a large variation of such expenditures relative to 12 coal, and, (3) our study using 16 % return on equity vs.
13 Touche-Ross 15%. Since our results are relatively close to theirs 14 under CWIP regulation, PSO would concur with TR's projections of 15 devastating results under AFUDC regulation.
16 Q.
What estimates-were used as the-starting point-for amortization 17 and return of Black Fox Station sunk' costs?
18 A.
The estimates used in the financial model represent costs as of 19 July, 1981 and are as follows:
20
($000) 21 Sunk Costs
$192,272 22 Cancellation Costs 42,670 23 Costs Convertible from Nuclear to Coal (25,372) 24 Salvage (10,583) 25 For An Estimated Total Cost to Amortize
$198,985 w,
This was rounded to $199 million.
2.7 :
22
~
Q.
Will these numbers change?
"kf 1
A.
Yes.
As time passes sunk costs will increase.
MAC's testimony
.-~~--- -
i refers to sunk costs as of January,1982 and is therefore a higher
~ ~ ' ~
-3' number than shown here.
The exact amount of the initial-4 amortizable balance cannot _ be determined in advance, but will.
5 reflect salvage recoveries and cancellation costs actually 6
. realized.
Estimates could be used as the basis for setting the 7
level of investment to be amortized and compensated, with provision 8
for ' future adjustment as the balance becomes firm.
9 10 V.
IT CAPITAL RECOVERY ALTERNATIVES 12 13 Q.
What' will you cover next?
14 A.
The final consideration raised in Order No. 197606, - -
" capital 15 recovery alternatives applicable to the various investment l
l l
16 components of the project in the event of cancellation or I
17
. conversion to a coal fired facility." This is a subject which the 18 Commission's consultants have addressed at length. Witnesses from 19 MAC and B&V have identified.and quantified these investment 20 components in previous testimony.
21 Q.
Do you have any preliminary observations?
22 A.
Yes.
I must first touch briefly on the capital recovery scenario 23 posited by Mr. Talbot of ESRG.
Mr. Talbot apparently believes
- that -
24 PSO's non-convertible investment of $199 million should first be l
25 written off as a loss and then recovered without a return component l
g7 from the ratepayers over some unspecified time horizon.
This a v..
totally unrealistic solution.
Such a write-off would utterly 2
23
- -., ~, -. - -.
destroy PSO's equity capitalization.
It would extinguish retained i _,
1 earnings, thereby eradicating the common dividend, the bulwark of c
2 value in an electric utility equity, which is the basis for all
'3 o'ther financing.
The immediate impact would be a down'-grading by no 4
less than two notches of all senior securities, thereby boosting the 5
compa'ny's cost of debt by no less than 1 1/2% and rendering access 6
to the capital markets conjectural at best.
Moreover, it would do 7
this at a time when Mr. Talbot and his clients are urging an
-8 aggresive conservation program.
Earlier I pointed out that major.
9 conservation programs carry major financing requirenents in a 3
to climate of increased investor risk.
Mr. Talbot assumes too much if l
11 he expects PSO to absorb a near fatal shock to its financial 12 integrity and still perform successfully as the chosen instrument 13 for conservation initiatives.
He can't have his cake and eat it
/~ '.
14 too.
If this Commission concludes that it is in the best interest 15 of Oklahoma that the Black Fox project be converted to coal, it must
~
i 16 prescribe a method of capital cost recovery that will permit the i
17 company to proceed simultaneously to meet capability expansion needs 18 as well as conservation program requirements and objectives.
19 Pursuing this dual objective requires core, not less, financial l
20 capacity.
t l
21 Q.
Please move now to the consideration of the capital recovery 22 alternatives discussed by Touche-Ross.
23 A.
At the outset,.let me say that the Touche-Ross partial return l
24 recommendation does approach the lower bound of reasonableness.
25 Corporate financial considerations lead me to propose a j.,
modification to the Touche-Ross recommendation.
It is as follows:
that the sharing concept, with which we agree, take into account at 24
a a minimum, all cash requirements of the outstanding investment in i
p.
-Ce
__ z 1.
Black Fox.
It is not only the bond holders and preferred
- n.-- - -
l 2
stockholders who are looking to a stream of revenues from this
'3 "nvestment. The common equity investors likewise ant *icipate a i
4 dividend stream that will continue to grow in nominal dollar value 5
as has been experienced since 1952.
In every class of investment 6
there is a legitimate expectation of a current cash flow stream 7
while the investment is being amortized.
We believe-the 8
Touche-Ross recommendation falls short in recognizing this 9
entitlement in a heretofore prudent investment.
As has been 10 testified by a Touche-Ross principal " Cash-flow is the name of~the 11 game".
To that er 4, we believe that the return component should 12 recognize the entirt current cash requirement related to the 13 investment in the Black Fox project.
The stockholder would forego h-14 the accumulation of retained earnings on this liquidating 15 investment.
The return to be provided during amortization should 16 be 9.6%, which is PSO's composite interest and dividend rate, and 17 still well below the company's actual cost of capital of 12.33%.
18 Q.
What about offsetting the net proceeds of the recent sale of -
i 19 mineral leases against the amount to be amortized?
20 A.
We agree this should be done, as it is consistent with the sharing 21 concept.
This would reduce the amount to be amortized by 22
$46,671,000.
23 Q.
You say that an offset would further the shar'ing concept, how so?
24 A.
The non-producing leases sold were among the assets of PSO's 25 exploration program which is financed by uncompensated investment-7.-
on the part of PSO's investors, amortized over time by PSO's e
25
rate-payers.
The investment in the leases sold was $7,606,000, of 2
1
- which approximately $4,277,000 had been amortized prior to sale,
.=-
~
2 leaving $3,329,000 still being financed in total by the
'3 stockholders.
As is true with the entire exploration' program there 4
had been a sharing in the costs related to the leases ' sold.
PSO 5
investors had advanced the $7.6 million to acquire them, had earned 6
no return on this investment at any point in the process and 7
ratepayers had retired the investment to the extent of $4.3 8
million by the time the leases were sold, when PSO stockholders 9
vere still carrying $3.3 million.
On a " stand alone" basis, the 10 proceeds of the lease said would properly be shared between the 11 ratepayer and investor.
12 Q.
Please describe PSO's gas exploration program.
13 A.
PSO, with the consent of the Commission, embarked upon a program
(~ '"
14 of volitional investment in non-utility fuel assets in 1970 to 15 secure an indigenous Oklahoma fuel supply.
Ratepayers are 16 amort 1 zing PSO's investment in the creation of a fuel reserve to 17 serve them.
Through 1980 PSO's Oklahoma fuel exploration program 18 involved a total expenditure of $79.6 million, which had been 19 retired to the extent of $44.3 million by tuel clausa charges to ' '
l' 20 ratepayers.
Meanwhile, as this program matured the ratepayers 21 received fuel clause credits of more than $57 million, a $13 22 million margin of credits over charges.
All this time PSO 23 investors have supported this program, including non-producing 24 leases, at an opportunity cost of many millions of dollars from 25 returns foregone.
l g ;h Q.
Should the sharing concept apply to this program too?
- i l
26
i
{
A.
It is time that PSD investors, whose funds have been committed to 1
this program, share in the benefits that it is producing. We
~
. 1 -----
2 believe that a method to introduce this sharing may be at hand in 3
' connection with the capital recovery alternatives tha't the l
,4 Commission will consider in this case should the nuclear project be 5
converted.
The proceeds from the succesful gas fuel exploration 6
program should, in our judgment, be a sc.urce of funds to amortize 7
and compensate the investment in nuclear fuel diversification if 3
that is to.be discontinued.
In that vein, PSO suggeststo the 9
Commission that the proper capital recovery alternative to apply, 10 if the Commission believes that Black Fox site ought to be 11 dedicated to coal, is one in which the investment not transferable 12 to the coal plant be established as a deferred debit, then reduced 13 by the net proceeds of the recent sale of oil and gas leases, and C
14 thereafter the net revenue stream from PSO's Oklahoma exploration 15 program should contribute to amortization and compensation of the 16 investment.
We forecast approximately $70 million in net Oklahoma 17 exploration revenues over-the next 8' years.
18 Q.
Are there other sources of funds to help amortize the investment 19 than the revenues from the on-going program?
20 A.
Yes.
As the leases recently sold are drilled, additional revenues 21 will flow from PSO's retained interests in those properties. Those 22 revenues can supplement the revenues from PSO's own Oklahoma j
23 program.
Of course these prospective revenues cannot now be-24 estimated.
l 25 Q.
What other fuel-related sources of revenue might be drawn upon to aid in amortization?
1 l
27
[
~
A.
Another fuel related revenue stream which is available to retire I
and compensate the amortizable investment in Black Fox is the net proceeds to PSO from off-system sales of gas undertaken to balance
~3
'deliverabilities of gas under contract to PSO with boiler fiiel l
l 4
requirements.
Gas must be contracted for in quantities sufficient 5
.to meet peak day and peak season boiler fuel needs, but at off--peak
.6 times the wells must still be prodt$ced lest "take or pay" charges 7
become an onerous financial burden or even accumulate to the point 8
of unrecoverability. The ratepayers have made only nominal 9
contributions.to sustain the gas contracting program which has long 10 benefited them with an assured fuel supply at very favorable 11 prices.
At the moment the entire benefit of this program is being 12 flowed to ratepayers, when under any concept of fairness a sharing 13 is in order. The net proceeds from the sale of seasonally surplus 14 gas should therefore be dedicated, under the sharing concept, 15 toward the retirement and compensation of amortizable investment in 16 Black Fox should the occasion arise.
17 Q.
What other. sources might there be?
l 18 A.
Obviously, allrproceeds from material salvage should be credited-19 toward amortization.
20 Q.
How would you characterize this alternative program for l
l 21 amortization?
22 A.
This multi-sourced capital recovery alternative will probably-not 23 require any increase in base rates, nor surcharge that would 24 increase the revenue requirement established in Phase I this case.
I 25 Rather it would rationalize the shared risk concept between PSO investors and ratepayers by balancing the results obtained from PSO's immensely successful gas fuel programs (from which, at the 1
28
moment, our ratepayers are receiving the entire net benefit)
' Eh I
against the extraordinary revenue requirements associated with the
__c--
2 Potential conversion of the Black Fox project.
' 3 Q.
What return factor should be allowed on -the unamortized investment?
4 A.
No less than the 9.6% PSO-Common return used in our financial 5
studies.
If the revenue sources dedicated to amortization are 6
limited to those I have mentioned above, a full return should be 7
granted because of the risk'that those sources will not fully.
8 retire the investment to be amortized.
~
9 10 VI.
THE CONSERVATION FUND
, 11 Q.
Do you have further comments?
12 A.
At this point there is another subject which should be touched 13 upon in connection with potential conversion of Black Fox to coal.
(?*'
14 It relates to PSO's prospective investments in conservation.
PSO 15 has presented conservation and load management goals.
One area of 16 continuing dispute between the company and come intervenors is what 17 might be attainable through a conservation program that embodies 18 activities, including the so-called "sof t path" alternatives, more 19 vast than PSO contemplates at present.
While PSO regards its goals 20 as ambitious, our program is slated to go forward at a measured l
21 Pace and only af ter evaluation of each proposed conservation 22 strategy.
We have felt that comparative financial tests must' be 23 made if we were to expect the Commission to consider conservation 24 investments favorably for return treatment within rate cases.
On 25 the other hand, the conversion alternative does re-open the fqg planning window for a time during which the commencement of a new yd:
generating facility might be deferred.
Within that plannin5 29
s window, we agree with the intervenors that additional stimulus
'k p (albeit a high risk stimulus from the business standpoint)'should j
_mn 2
be given to the conservation program.
To that end, PSO offers for 3^
' Commission consideration a program to tap the flow of funds *~from
~~
4 the revenue streams dedicated to amortization of the nuclear 5
investment for the purpose of establishing a Conservation Fund, 6
Probably "below the line," as a supplemental activity at PSO. We 7
would propose that this fund be established as a revolving fund for 8
higher risk conservation investments.
It would receive revenues at 9
a level of $100,000 per month for one year, and $150,000, per month 10 in the ensuing year, with a review at the end of two yea'rs.
The 3;
fund-supported conservation initiatives would be carried on by a 32 separate profit center group within PSO whose results would be 13 judged on a business basis.
This profit center would have the 34 oversight of a Citizens' Advisory Board for guidance on program 15 directions and applications.
16 17 VIII.
THE ORDER 18 Q.
What should the Phase lII order cover?
~~
19 A.
PSO believes _that the Phase III Trder in this Cause should include 20 the following decision elements:
21 First, after review of the record, a determination that PSO's 22 forecasting techniques and forecasts are acceptable and endorsed by 23 the Commission.
24 Second, a recognition of the need for additional capacity on PSO's 25 system in accordance with forecast needs, even as tempered by the more optimistic conservation projections advanced on the record in f:.t.:
r.
this cause.
30
[
i Third, a recognition that the company has acted prudently with
' bF
[
1 respect to the Black Fox project in its initiation, in its
-w.__ at:v.
2 expansion of the project to cover the needs of the co-owners 'who
-3
'also serve electric consumers in Oklahoma, in its vigorous ~ '
4 prosecution through March 1979, in the reduction on the level.of 5
financial outlay on the project subsequent to Three Mile Island 6
incident,.and in its present level of expenditures on behalf of the 7
proj ect, which are minimal and prudent from the standpoint of asset 8
protection.
9
' Fourth, to express the Commission's conclusion whether, in the 10 public interest, the Black Fox project should be built as planned 11 or converted -to a coal fired facility, subject to future review of 12 a power supply plan and construction program to be presented by.,,
13 Public Service Company of Oklahoma.
14-Fif th, if the Commission concludes that the project should go 15 forward as now planned, to include the Black Fox construction 16 investment in rate base in the this Cause and award a cash return
'17 on the-same.
~
18 Sixth, if the Commission concludes that the project should be -
19 converted to a coal fired facility, to prescribe the principles for 20 disposition of the investment:
(a) covering the amount convertible 21 to a coal fired facility, (b) indicating whether CWIP treatment j
22 should be accorded on such investment forthwith or await future 23 review by the Commission of the Company's power supply plan and, 24 (c) as to the balance, prescribing that it be amortized and the i
n 25 principles governing amortization.
- e9%.-
Seventh, in recognition of the interests of co-owners and the
- ts benefit to Oklahoma of a mutual decision by the co-owners on the 31
-E
_ _. _ _.. _ _ _. _ _. _,.. _... _ ~
.. ~.
l future of the Black Fox project, a period of not less than 30 days
]
from the date of the order should be established by which PSO shall
. - ~..
2 indicate its acceptance thereof (or propose modifications thereto) 3 with an opportunit'y for' appropriate representations from the ~ '
4 co-owners.
5 Finally, in the interest of perception by the financial community 6
as to the future of utility regulation in Oklahoma, particularly in i
7 what will be a time of financial stress for PSO whether it goes a
8 forward with the Black Fox project or not, an indication of the 9
Commission's view and anticipated treatment of construction 10 investments in the rate-making process.
l 11 r
12 l(!>
14 15 16 17
~
18 19 20 21 22 l
l 23 24 25 h
32 i
t
,, o EXHIBIT WS 5 ASSUMPTIONS 'USED FOR BUSBAR COS* CALCULATIONS r,. a TR PSO-Site
' Generic
' Specific Discount rates Back 12 %
14.71%
Out 12 %
14.71%
Tax law Old New Capitalization 48-10-42 48-10-42 Cost of squity 15%
16 %
Cost of preferred 10%
13%
Cost of L-T debt 10.8%
13.5%
Cost of S-T debt 11.0%
14.7%
Inflation rate 8.5%
9.5%
Escalation rate during construction Coal 9.5%
9.5%
Nuclear 10.5%
9.5%
Coal-cost
$7.25/ Ton
$7.65/ Ton
-escal.
9%
10 %
Tans-cost
$15.00/ Ton
$17.58/ Ton h
10 %
13 % thru 84 11 % thereafter Cars-cost
$40,000 each
$42,000 each
-escal.
10%
9 thru 91 10 thereafter
. Car maint. -cost 3.25c/M1.
2.0c/Mi.
-esca1.
8Z 106%
Coal O&M-cost 3.5 mill /kWh 3.45 mill /kWh
-escal.
8%
94%
Nuclear O&M-cost 4.0 mill /kWh 6.5 mill /kWh
-escal.
8%
9%
Insurance-cost
$500,000/ unit
$500,000/ unit
-escal.
84%
9%
Decom. TR-invest at 12 %
$75.4 m2.111on
$75.4 million
-PSO invest at 11%
8%
9%
Nuclear fuel-cost 22.66 mill /kWh 32 mills /kWh levelized levelized Construction Cost per KW Coal 91 & 94 w/AFUDC
$2 317
$2 090 Nuclear 91 & 94 w/AFUDC
$3 947
$3 459 p"'i Nuclear 93 & 95 w/AFUDC
$4 472
EXHIBIT WS 6 PAGE 1 0F 3 PUBLIC SERVICE COMPANY OF OKLAHOMA
.m.- -
CASE STUDY SUMMARIES x_;c -.
- =
LATEN 18 VEAF.
la A meRT pt ATiaM W Ww CSnP P
E ce4 Timer wm4 2 - 18 5 o MW CoM UERT "To doAL 2.- 670 Ed
[
lttnteN --+
Fou.
P50 haTML Psa conned TT Mensi.
' 1:ou.
1% hCTut.
Pso cawuN TR. MGM CMH CoM511 tut.Tso4 TcTN commW
!l 1
'i if (coo'.Q 1991 9t tse, l#
l.-},'
h.
U l'
,r g
gg3 3,q, g:
I l:-)
1 l:-l e
1 g.:
- 1 7 q
__l713oth_.T
',Ii jgg'qrf,O I
I' I 'I I' 'I I
I I I
'l 'l i
I 1994. _
+
e r-r r i
r-r - r t-r ' -- - i gggg 333 g, -
y,.
1996
'38fo81
'. '1 :
.i 1zi93g' i~
gg7 y,,34g_
l 1
1: t I i
i:-
-ii I.i: :
i i..
y.g I
8' i T'
'~ '
' ' E' M l
nSt
'scr.ast.
ig,eeg
I
'~1'I i
' 'l 'l i
l' l
' i 1969
_'381989,
' l: ' ]' "
3,, q~ :'-"-
g n gCy is9a soonst. '.'
.' i arat.
aqus9:o i g.7, yzz ma e= sh nawr
.- l.
- I.
h
.i
.g Ceco'0 _ net _ ___rf2o7..t.
=
, 3%3 gq.3,g:
i t. i
-1 n p' -
<siz,j: - ' -
t--
- t i --- - - : - _,
M1H
,167'1B' ',' l' l j j..!
d
./
. i C-
'.I 3
8 i
!8 i
'9
.nu 2iz63C J~i II d'
'g; 933, I,' - t -
l
' h I
I I' M91
_3115Vo._t,
3$
,g g --t r--
r t
u i.
.m-.
n,,
.39,g
' ' ' I* 1 kyo77;-
I' 1991
.598'126
'i II I I
'I I 8
- I I
' ' lI I I I I*
'TcT%L 4c(747
! q337 IMo
_2 toqs,g
' ' I,'_,'I l
I o31629 i
I es imem escem r.o 1.1 3*
MB3 SA b
1A 1.
16..
L.L "BL W
-o--
11 ff;
' //0
/05
/os fs
=
53 L
53
'i SV 1A
' p.
gri gz
=
M94
.35 36 36 70 47 t,7:
49
=
1%S 3S._
L' 34- _a, 3fo 36L 71 7G 0 +.
13 7/I ~ >T
~
yn
' 7,t' n%
3'l; 31 d
39 3
7f.
/i~
MS7 36:
36 L M
- 30 g
71 7/
7/.
2
=
MBS 4A 4A 14 0
VA ti 45, 4d 4c) 45 u
MB9 43 43 yj 93 li 27 yy; gg g
-M-37 37-3L l' 37._l u 3S.
39 _
39
.[_3 39_.
n l
i m,
% cewco AWtx.
I I
(413'T o' T%.
l'47.
I.47 2 41
- 3.39' 3.3oi
_.. T.40
__ 2 60,.
3
_ 2,.f&
_ 2.G 3'__
1 41_
2.36 I
i.
1.7o 4.03!
NB3 T.43 3.37 3'.f8 3.74 M61 3.f4.
35o!
3~.fo!
3.94l 4'.os 4.z4 in 4 11 4.fi i 196f 3.fB
. 3 5fl 3.sd I
461i
.49o 3'.r: l
'e 4.96 5.86 ;
1986 3.4s 3:.vd 3'.*(i 3 43 s.2t
. c.90:
s.37 j s.64' E..'
1991._,
3.44 3 92.!
_3.82l__
3.H l.
.G.fo
,,.. f.Cl i
_.. 6.Cf. _
i
(. 90~
2 m
=
I
'3 8& l f.?o i l S.Bo-1%
3.89
'I.B 3 88l f.Bo' f.19 a'
iMi 2.13
.t.as; 2.83 2.st i 3.ff:
i 3.s9 :
n 3.59; I 3.Cf 1990 1 94 i;.93 1 83 l'.83 2.Szi 2 84' 2 99:
1 06.'
u i
I l
l 1
i I l
i l
EXHIBIT WS 6
,, o PAGE 2 0F 3
-E PUBLIC SERVICE COMPANY OF OKLAHOMA
^
- -W T -
CASE SIUDY SUMMARIES 18 'TF.4 189 ear l'Amot.Ti?.4Tiold dFtT% twit l' l'
M.TVRil --+
courtout umwl l-lifo smel t couvett To l ccat. 2.- 670l'=4 F ut.L.
' PSO PatTias.1 Pso cas==ent1 T1t Mcnat.'
1:uu.
I Pso Pae.fint.
950 ca.=ae=L ret funst '
c o w was.
no u Os>
< A 7. )
tas>
< as?
.< a )
9 3
1
$(5) l4 s toco, coa) ess i23
~ Aa
- 2A 20
.<S->
I
- </>
/>
issi 4/
40 4/;
51
- (1) i (5 )>
- (/>
nst 4G GS bS by
< /1 )
( //?
X// >
i( 7) 77.
I 76 in26 74 _
75
_...< // )
7f 7V 7A
(//)
_. _.<f)
_ _ '< f )
KS)
Ms7 7f.
Kf>
34)
.,( 1 )
.ns S1 S3 o S3 5A lA1
- 30 30 j3A 11 11 Vf
'//5 nei
'/1
'/f
///
J/G
/
nse
^
TA T/.
11 6/:
! TS
- fs l15
.5 16
, ~
. roTAL. _
_ __ y&/._
J.153
., _155 i__ Vf3
.I a
_f/75 j./ff
.{_/17
..J21
.I l
- !.I i.k/V)
' !(33 i
,'( 7) i 1
DEET 155 tE mbt
{/y)
, /p)
I:
(
l 1 f) 7)
l'(/V>
- (72 8
r {moioa.)
ngs
. th
. i (,G 46 l ' 33 i
l
! l33
!. l33 Ms1
'/2/.
. '/A/
.I
.=
'/A/
I 37 i ! J7
/A/.
i37 i
37 nef...u_.,'/A4._
j_i/1 _p;;f
- /4/
'/;/.
- /A/_..!._ /1
! ! /7
/1 ns6
/ya i/44
. /YA
'/5A A1 1 ;Ay i
AV NB7
/4/i t/6/
.j/4/
I../4/- i: ! 37 1
l ;;37 J7.
.j37
~.
nsa
. '/50 J/50
, '/50
/50 t
10 As%
13 1
'/37
'/37.
l _ '/31 l 'l/71 90 10 10
. l/71 3
>=
l 171
~/71
.. nso.
l._ A7b ^
'A7S A7G
?76
..[._ AV7 M7 i._ M 1
.M7
~
ToTat.
i //4/:
! //40
//6/,
i //4/.
/J7 451 451 651 n
l:
l!l i.i j
.l.
i f.49li l.
j.
l c=wtm cS
- j i W 4.
15WF-1981 4 19!
f.3%
- 6.36 S.04 4 68 2
4 93' N.fs' 19 9
//.17 4 3T 4.33, 4 818i 6.tfl 4 21?
- 4.33 4 0f:
i
_. 19M
.._3 51 Sw_
. 3.3cl 3.311_
_._ CBo'.
39fi
.1 _.. 3.97 37f!
Ss3L
'3 f4 '
15 L34 34
. 4 &3 i I '3.4t!
3 77 l
'3.9fi li%
'i. I t.
3 831 23331
- 3. s('
7.17,
S.69!
370j 3.f4 !
19%7 1 96!
2 97!
4.97.!
f 98
. G.of
,. '3.'f f !
'3.'ft'
. '3.3Z.
=
Y935 2 67;
' 96; 146' 2 69i
'7.'f1 i 1 14:
e 2 16
' 2.9E:
MB9
- f. 2 BLl
.._. set'.
1,tS3 _ _.443i
- 4. C&R
!. "24
_. t&4
! 2.&l!
neo
- z.rs!
sw i !._t.2m 2w c.4c:
m 4.w!
I L-i-L'.g 2
_j_y.i mav's ce,sw i
! J 'l I
!.4.I L i
.s.
y.es
- 4. sci
' y.su y.w r 4 48r net i y.ss-y.2t.
na i 4.s6, 4 62:
4.ssj N.41 !
4 5:!
n.#oi un3 -
4.rs; n.34 i
! 4.is!
esi 4.2s!
4.st
' 4.s: j q.37:
n.9s!
n.3ti 2a M?,(
4 0fI 4.06' n.o$ !
4.fi l l4.'fI!
428' 4 3a !
.f.85 t
_..19 %._. _1. 3.41 !.
.. _3A3 ?
u '3.94l 3 9C '
l 4.32!
4.21!
=
4 23
'. # 01 ;
HB7
' 3.9f 364l 3.6& l 3.68i
- 4.s&l
- 46i 2'
' 4 09 3 99:'
1963 3.11 3 71!
3.71l 3.Boi
' 4.63 i
~3 98 :
)
22
'3.98 i
- 198
19Bi 3.78 1.'76l 7711 3.19:
l 3 96 :
! '3 9f; l
22 19f-
' 3.9a i R30 3.76
. 3 171
-l311 l 3 77:
.66!
,I 3 47 i 3.Bfi
'3
' '3.87; a
I i l
1 I i
I n
i
CGil51I 'n'S 6
.." o PAGE 3 0F 3
[";.s PUBLIC SERVICE COMPANY OF OKLAHOMA
.:. m.
CASE STUDY SUMMARIES
~ F wnw ledM la i
"f1tt4 bitAt A % e ritw Tiaas coq:39,t_ smva 2.- uso w cou betT to aewt t-noLw.
~
teTucM -t svu.
m nanm. mca
- . vanes.'
~ i:vu.
esa Pacn u.
u m c:- M Te. Pa=Ti=J R RTE. REuEF
- Mgg, l l 72' 7f 14 7p
, go3 43, q{.
94 (FC#,#00) 1963
- 1 19
!i I?
II l-7' Go
.l SLI 63l
!! 'd ljl
' !. 'If; II 3d 19 6'l i;I 2k ll f 28'. ll 77l
. jj SI 8
N0(
46 l 46' I:
- 8
[;l;M.
I:
- 7; i:
3B
!l ft
!i 4 47 _
'. No i;
7(
_t Sf
'I iB_
19% -
43 _.
VC.
'I j,
%,j 9u J Gol j
82; 19 9I h
11
,' i k_
's 7o i l il g
- d. n y is se i
aj g
19 s _
L 17 j
fli ir n
19M
.h %
8-h '. fI '..
_.h+.
28
28
- I (b.
_ L 9 21 e
ft 60 v5 81, ji a.
2B
- 28 1990 90 91,
'77 "TJ' rM. _ _!
394 3%
396' l # 12-
.I a 7p:
I f74 ee I
fJo i
- f.T Meefit*Tet)
- is i l Rau gg
,l 33) jy j
gg y
,4,7 7 y
g3
,a 3S 24 I
1993
. < 83,7 f.' < l 7 j f,10 7 i % j 7j )
j No 72' 33' 13' is
.. 1964
.,. C 11!?
. : Tl ?
._ _ < 10 7
! C7. ?
37 30' 38 1.
21,'
'a 9'?
<_.9 7
<_. 7l )
.' k_.
2 6'.
ti 2 8. _
198f d ilp
' f< O. d. ib
. 47l )
t 32!
2&'
.. '.s 27
'20' 19E
< toi?
1987
<97
- Y 8')
..< 6' ?
- < t I;
tt sf
.j 2(
. 4 &l>7!j 2t.
sq
>i,
- . k 7'?
<1 7
Nt6 y 97 13, 23 19; M91 t. ?>
- !C'b
..< 1 >
.<.s ?
4, 21 k.
18
- 710.__
( c7
' (th
<s7
'( f>
. !j 23 ifl l
ToTAt.
' < 09 7 l
( vt!'>
( 77 >_
l < 59 7 co li 11 87I 1
$94 t '23L si l
2813 I
'199_.
9ETVN 64 AVER 4E ComeoM j,
,j.
l l
,/flg7
,j j l
j
=
l EQu sTi ggz
/5ft/
/f30 ff;;2
/4' 9 6
ffy0
/Sf2 H,//
n l983 ISSo M72 KW__
11M 1S47 4TA
.A71 I?.It I4.50 ISYS ISLA JVB 1
1984 l'18f i
/4 43
/M3
'/6f5 h
i:
1577 e... JS71._ _..1941
=
/S7/
/fff
=
19th-
/GS1
/UI IC7S Ql:
IS13 Mol ISAS 1ssi
%S7 ff,S1
/Cff
% do
%lo ISSI
=
1981
/4'S3 KSS K42
't-Il V
'IG2/
/S10 l
1981 A'2
/4.S'/
/s5t
.. _ _ /sJA S
1990 I&:S2 KSA MS4 _
KV3
....- _JM
_. __ScG_.
/C13 5 21
%dENM pac.1%t 40 40, 10 40 ye 10 43.
j i
14 VA
- ~ i 40 j 40 l
( " B E0 l'193 f.I V3, V3 V4 VA
( /m,m) 1 t'i 50, y
59 J '
50, So. _t i Vfj l
V(
YV YV nar
<,a to i
vu n
u, 1%
7k a
4a vs y
44 7
'I i'
VT 7/s
.Vf Vf_
7/
Vf_
i l
19s1 16 aN if, i:
Sp So 56 U
So i
1996 IS.
76 SM 54 1961
.. /oq
. l]i/c6 j! Sd
.l Sf
/ef,
! /of 4d 45 J jl/;JL
- ! //i jj 77 7')
p 45; y ~45 I
1990
' l/JA
.; 4
?f 77 l
,I rorm_
=-
=j n
,.l i
i
. [
l<w
/
-