Request No. OPC 60-7
Page 1 of 7
RELIANT ENERGY HL&P
DOCKET NO. 22355
OFFICE OF PUBLIC UTILITY COUNSEL
Q.
Regarding OPC’s 28th RFI-1, please provide all calculations used to derive the allocation
formulas or factors for all years 1997-2000.
A.
By agreement of the parties, Reliant Energy HL&P is not providing the 1997 data since it is
not available. OPC28-1 refers to all corporate cost expenditures assigned to each Reliant
Energy subsidiary or division for 1997 - 2000. In the 2000 Corporate Cost Center
Assignment Manual filed in the RFP as Figure KJO-7, the corporate cost centers are each
assigned based upon one of the cost assignment methods described in the Manual. Listed
below are the corporate cost centers grouped by assignment methodology.
Based on assets (all companies):
•
125040
Government Affairs
•
125044
Federal Relations
•
125047
Third Party Legislative Initiatives
For an illustration of how a cost center's dollars are assigned based upon assets please see the
response in OPC60-6. The actual calculations for these cost centers were provided in
response to Request No. OPC19-1, pages 15 & 25 - 30 for 1998, pages 53 - 56 & 67 for 1999
and pages 82 & 107 - 113 for 2000 in this docket. The allocation statistics were provided as a
confidential response in response to Request No.OPC60-2 and OPC60-3 in this docket.
Based on assets (HL&P & Entex):
•
125042
Texas State Relations
•
125050
Houston Relations
For an illustration of how a cost center's dollars are assigned based upon assets please see the
response to Request No.OPC60-6. The assets in this calculation would only include the
applicable assets, (i.e., HL&P & Entex). The actual calculations for these cost centers were
provided in response to Request No. OPC 19-1, pages 15 & 25 - 30 for 1998, pages 53 - 56 &
67 for 1999 and pages 82 & 107 - 113 for 2000 in this docket. The allocation statistics were
provided as a confidential response in response to Request No.OPC60-2 and OPC60-3 in this
docket.
Request No. OPC 60-7
Page 2 of 7
Based on assets (all companies except HL&P)
•
125048
State Affairs
For an illustration of how a cost center's dollars are assigned based upon assets please see the
response to Request No.OPC60-6. The assets in this calculation would only include the
applicable assets, (i.e., all companies except HL&P). The actual calculations for this cost
center were provided in response to Request No. OPC 19-1, pages 82 & 107 - 113 in this
docket. This cost center was created in 2000. The allocation statistics were provided as a
confidential response in OPC60-2 in this docket.
Based on REI labor dollars:
•
•
•
•
125198
125203
125308
125309
Corporate Overhead
Corporate Risk Management
Employee Benefits (Burden)
Executive Benefits
For an illustration of how a cost center's dollars are assigned based upon REI labor dollars,
please refer to response OPC60-4. The actual calculations were provided in response to
Request No. OPC19-1, page 15 & 25 - 30 for 1998, pages 53 - 56 & 67 for 1999 and pages
82 & 107 - 113 for 2000. Cost Center 125308, Employee Benefits (Burden), has no Plan for
2000 so it does not appear in 2000. The assignment statistics for labor dollars are contained
within the cost center assignment calculations. These calculations are considered
confidential and were provided under the Protected Material classification pursuant to the
protective order in this docket in response to Request Nos. OPC19-1.
Based on total RER labor dollars:
•
125016
Reliant Energy Resources Employee Benefits
.
104397
Reliant Energy Resources Miscellaneous Overheads
For an illustration of how a cost center's dollars are assigned based upon RER labor dollars,
please refer to the above paragraph. The actual calculations for these cost centers were
provided in response to Request No. OPC19-1, page 67 for 9/99 - 12/99 and pages 81 & 84 90 for 2000 in this docket. The assignments from these cost centers apply to the former
NorAm affiliates. The assignment statistics for labor dollars are contained within the cost
center assignment calculations. These calculations are considered confidential and were
provided under the Protected Material classification pursuant to the protective order in this
docket in response to Request Nos. OPC19-1.
Request No. OPC 60-7
Page 3 of 7
Internal Customer Support Costs
Based on operating expenses (less fuel and purchased power):
•
125006
Office of the CEO (Hogan)
•
125007
Performance Management
•
125013
Office of the CEO (Harvey)
•
125020
Legal
•
125049
Corporate Community Relations
•
125100
Comptroller
•
125101
Financial Accounting
•
125102
Federal Tax
•
125109
State & Local Tax
•
125208
Check Processing
•
125209
Strategic Planning
•
104303
Reliant Energy Resources Legal
•
104308
Reliant Energy Resources Accounting
For an illustration of how a cost center's dollars are assigned based upon operating expenses
(less fuel and purchased power), please see the response to OPC60-3. The actual calculations
for these cost centers were provided in the confidential response to request No. OPC19-1,
pages 14 & 19 - 24 for 1998, 49 - 52 & 67 for 1999, and 81 & 84 - 90 for 2000 in this
docket. Cost center 125013, Office of the CEO (Harvey) was created in 9/99. Cost centers
125109, State and Local Tax, 104303, Reliant Energy Resources Legal, and 104308, Reliant
Energy Resources Accounting were all created in 1999. Cost center 125208, Check
Processing, does not appear in 2000, as it had no costs planned in 2000. The statistics for
operating expense (less fuel and purchased power) were provided as a confidential response
in OPC60-2 and OPC60-3 in this docket.
Based on ratio of the assignment of cost center distribution of CFO:
•
125005
Chief Financial Officer (Naeve)
This cost center, like others, follows the distribution of costs based upon its span of
management control or control of costs centers reporting to it. The CFO is different from
other costs centers because it has a diversity of functions reporting to it. Some of the cost
centers have financial service responsibilities, others have compilation and analysis
responsibilities, and others have an employee focus such as executive benefits. Given this
diversity, the CFO's costs are distributed in proportion to the assignment of cost centers
reporting to it. For example, in 2000, the Investor Relations, cost center No. 125211 is
Request No. OPC 60-7
Page 4 of 7
assigned based upon assets. The Office of the Comptroller, cost center 125100 and Strategic
Planning, cost centers 125209 are assigned based upon operating expenses less fuel and
purchase power. Corporate Development, cost center 125213 is non-billable. The VP
Finance, cost center No. 125250 is assigned based upon adjusted operating expense
(operating expense with capital expenditures less depreciation, cash flow proxy).
The calculations below show the assignment of CFO costs in the Summary of the
Distribution of Corp. Costs - Budget 2000 filed on pages 81 - 113 of confidential
response to OPC19-1.
(A) Determine Assignable Costs
Non-billable +
Assignable Costs
=
Total CFO Costs
(Corporate Development)
$300,294
+
$352,518
=
$652,812
(B) Determine the cost center's percentage of total cost of all cost centers reporting to the CFO. (1)assigned/non-assigned costs as filed in the confidential response to Request No. OPC19-1, pages 4466.
Cost Center
Investor Relations
VP Finance
Comptroller
Strategic Plan
Corp Development
Total
Assignable Cost (1)
$1,078,202
$1,176,809
$ 771,639
$ 3,627,153
$5,664,962
$12,318,765
Assignment Basis
Assets
Cash Flow
Operating Exp.
Operating Exp.
Non-billable
Percentage
8.75%
9.55%
35.72%
45.98%
100.0%
(C) Spread CFO assignable costs based upon assignment basis of reporting cost centers.
Cost Centers Reporting to the CFO
Investor Relations
VP Finance
Exp.
Comptroller & Strategic Planning
Corp Development
% of Total
8.75%
9.55%
Cost
Assignment Basis
$ (8.75% of $652,812) Assets
$ (9.55% of $652,812) Operating Exp. + Cap
35.72%
$ (35.72% of $652,812) Operating Expense
45.98%
$(45.98% of $652,812) Non-billable
Total Non-billed/Assigned CFO Costs
100.00%
$ 652,812
Note: The cost assignment model for 2000 in the confidential response to OPC19-1 is being
revised as there is an error in the calculation of the CFO's cost. The calculation did not
reflect all the direct reports of the CFO. The revised calculation will represent that presented
Request No. OPC 60-7
Page 5 of 7
above.
This method is consistent with the concept of distributing costs based upon the cost centers
being managed and is the most efficient method of distributing costs. The actual calculations
for the CFO were provided in the confidential response to request OPC19-1, pages 14 & 19 24 for 1998, pages 49 - 52 for (12/98 - 8/99) and pages 81 & 84 - 90 for 2000 in this docket.
Based on Operating Expenses (including fuel and purchased power, capital expenditures; less
depreciation expense)
•
•
•
•
•
•
125250
125200
125201
125210
125212
104304
•
125402
Vice President - Finance
Treasurer
Financial Services
Corporate Finance
Assistant Treasurer - International
Reliant Energy Resources Finance (RER
companies only)
Chief Risk Officer
For an illustration of how a cost center's dollars are assigned based upon adjusted operating
expenses (with fuel and purchased power, capital expenditures and less depreciation
expense), please see the response to OPC60-2. The actual calculations for these cost centers
were provided in the confidential response to request No. OPC19-1, pages 14 & 19 - 24 for
1998, 49 - 52 & 67 for 1999, and 81 & 84 - 90 for 2000 in this docket. adjusted operating
expenses. Cost centers 125250, Vice President of Finance and cost center 125402, Chief Risk
Officer were established in 2000; cost center 125212, Assistant Treasurer - International is
assigned to the European business units, and cost center 104304, Reliant Energy Resources
Finance assigned to RER companies only was established in 1999. The statistics for adjusted
operating expenses (with fuel and purchased power, capital expenditures and less
depreciation expense) were provided as a confidential response in OPC60-2 and OPC60-3 in
this docket.
Based on number of employees (all companies):
•
125045
Internal Relations
•
125306
Employee Benefits and Qualified Plans
(Administration)
•
125307
Human Resources - Executive Administration
For an illustration of how a cost center's dollars are assigned based upon employee count,
please see the response in OPC 60-4. The actual calculations were provided in response to
Request No. OPC19-1, pages 15 & 25 - 30 for 1998, pages 49 - 52 & 67 for 1999 and pages
81 & 84 - 90 for 2000 in this docket. The statistics for numbers of employees were provided
Request No. OPC 60-7
Page 6 of 7
as a confidential response in OPC60-2 and OPC60-3 in this docket.
Based on internal audit labor charges (all companies):
•
125400
Internal Audit
For an illustration of how a cost center's dollars are assigned based upon direct charges of the
cost center, please see the response in OPC60-1. The actual calculations were provided in
the confidential response to OPC19-1, pages 14 & 19 - 24 for 1998, pages 49 - 52 & 67 for
1999 and pages 81 & 84 - 90 for 2000 in this docket.
Based on direct labor charges of cost center:
•
125111
Property Tax
For an illustration of how a cost center's dollars are assigned based upon direct charges of the
cost center, then see the response in OPC60-1. . The actual calculations were provided in the
confidential response to OPC19-1, pages 49 - 52 & 67 for 1999 and pages 81 & 84 - 90 for
2000 in this docket.
Based on finance charges/bank fees:
•
125202
Cash Management
For an illustration of how a cost center's dollars are assigned based upon direct charges of the
cost center, please see the response in OPC60-1. The actual calculations were provided in the
confidential response to OPC19-1, pages 14 & 19 - 24 for 1998, pages 49 - 52 & 67 for 1999
and pages 81 & 84 - 90 for 2000 in this docket.
Based on direct charges of cost center:
•
125220
Regulatory Planning and Analysis
For an illustration of how a cost center's dollars are assigned based upon direct charges of the
cost center, then see the response in OPC60-1. The actual calculations were provided in the
confidential response to OPC 19-1, pages 81 & 84 - 90 for 2000 in this docket. This cost
Request No. OPC 60-7
Page 7 of 7
center did not exist at Reliant Energy Corporate in 1999 or 1998.
External Stakeholder Support Costs
Based on assets (all companies):
•
125018
President and Chief Operating Officer (Letbetter)
•
125019
Corporate Communications
•
125150
World Energy Congress
•
125204
External Relations
•
125205
Investor Services
•
125206
Financial Communications and Media Relations
•
125207
Advertising and Brand Equity
•
125211
Investor Relations
•
125221
Vice President - Regulatory
•
125225
Branding/Promotions
For an illustration of how a cost center's dollars are assigned based upon assets, please see
the response in OPC60-6. The actual calculations were provided in response to Request No.
OPC 19-1, pages 15 & 25 - 30 for 1998, pages 53 - 56 & 67 for 1999 and pages 82 &107 - 113
for 2000 in this docket. World Energy Congress, Cost Center 125150, has no Plan in 2000 so
it does not appear in the 2000 cost center assignment manual. The allocation statistics were
provided as a confidential response in OPC60-2 and OPC60-3 in this docket.
Attachments: None
Sponsor: Kim Ousdahl