1
Meals charged to Company credit cards totaled $9,448. As noted earlier, we
2
limit meals to the lower of $25 per person or the actual amount. Meals are a normal
3
business expense, especially when employee travel is required.
4
Rental car ($6,625) and rental car gas ($1,239) were charged to the Company
5
credit card. When travelling, especially by air, renting cars is a common expense. As
6
noted in the Company travel policy, when renting a car, AEP's employees are asked
7
to be good stewards with the Company's expenses by filling up the gas tank before
8
returning the rental car, as the cost of that gas is much lower than what rental car
9
companies typically charge.
10
Parking accounted for $1,939 of third party credit charges. It is common for
11
employees that travel to incur parking fees, especially at airports.
12
Postage fees incurred on the Company credit card totaled $1,468. Over 99.7%
13
of these fees were incurred by the Austin office. Regulatory proceedings require the
14
personnel responsible for compiling, distributing, and serving documents to incur
15
postage charges.
16
Company employees charged $689 to their credit card for taxis. Taxis are a
17
common expense for employees that travel.
18
One toll of $4 was charged to the Company credit card by a witness in the
19
20
21
case and a credit for a hotel reimbursement of $44 makes up the remaining item.
Q.
WHY DO YOU BELIEVE THE $3,378 SUPPORTED BY "THIRD PARTY
INVOICES" SHOULD BE RECOVERED?
SOAH DOCKET NO. 473 -15-0617
PUC DOCKET NO. 42370
18
REBUTTAL TESTIMONY
RANDALL W. HAMLETT
50
1
A.
The $3,378 is supported by third party invoices and is further backed up by the
2
Company's internal controls, policies and procedures discussed in more detail later in
3
my rebuttal testimony.
4
page reference to where the third party invoice was provided, either in our original
5
filing or in the response to Staff's First Request for Information, Question No. Staff
6
1-1, Attachment 3. 1 am not sure why Mr. Luna included these items in his
7
recommended adjustment as the documentation supplied by the Company included
8
the only type of documentation he accepted, and he raises no objection to the level of
9
these expenses.
10
11
EXHIBIT RWH-2R provides a list of these charges and a
These expenses were reasonable, necessary and are appropriately
includable in recoverable rate case expenses.
Q.
DO YOU AGREE WITH MR. LUNA'S ADJUSTMENTS OF $2,117
12
CATEGORIZED AS "SYSTEM GENERATED TAX OBLIGATION" AND $1,694
13
CATEGORIZED AS "DUPLICATE TAX"?
14
A.
No on the $2,117 and yes on the $1,694. As the Company explained in its response
15
to Staff's First Request for Information, Question No. Staff 1-1, these items were
16
generated by the Company's Accounts Payable system. When an invoice from a third
17
party is received, it is reviewed for sales tax and if none has been billed, the system
18
will generate a payment to the appropriate state for the tax that should be collected.
19
In this instance, the sales tax billed on the invoice was inadvertently overlooked.
20
Upon further review of these items, it was determined that on four of the invoices, a
21
sales tax payment was generated, but the original invoice had already included that
22
tax. Those duplicate tax items totaled $1,694 and the Company agrees to remove that
23
amount (as part of the $2,267 discussed earlier).
SOAH DOCKET NO. 473-15-0617
PUC DOCKET NO. 42370
19
REBUTTAL TESTIMONY
RANDALL W. HAMLETT
51
1
On the remaining invoices, totaling $2,117, sales tax was not charged on the
2
original invoice and was correctly calculated by the SWEPCO Accounts Payable
3
system. Because the tax charge is calculated by the system, there is not a third party
4
invoice to provide aside from the original invoice from the vendor, which was
5
provided.
6
part of the charge for the service the vendor provided. SWEPCO's responsibility to
7
pay the sales tax to the taxing authority rather than to the vendor (who in turn would
8
have to pay the taxing authority) provides no legitimate basis to disallow these costs.
9
These are reasonable and unavoidable costs that should be recovered.
10
Q.
11
12
SWEPCO is not exempt from paying sales tax and those costs are a valid
DOES PURA OR ANY PUC SUBSTANTIVE RULE REQUIRE THIRD PARTY
INVOICES FOR RECOVERY OF RATE CASE EXPENSE?
A.
No. Mr. Luna, on page 6, lists two sections of PURA and one PUC Substantive Rule.
13
However, none of these provisions require third party invoices for recovery of rate
14
case expense.
15
reasonable and necessary but does not specify or restrict how that must be
16
demonstrated. His citation to the PUC Substantive Rule, however, is inappropriate,
17
as I am informed by counsel that the Rule is not applicable to this case. In any event,
18
nowhere does the Rule require third party invoices for a determination of
19
reasonableness.
As noted by Mr. Luna, PURA basically requires that the costs be
SOAH DOCKET NO. 473-15-0617
PUC DOCKET NO. 42370
20
REBUTTAL TESTIMONY
RANDALL W. HAMLETT
52
1
Q.
HAS MR. LUNA PROVIDED AN EXPLANATION OF WHY HE IS DEPARTING
2
FROM STAFF'S PRIOR PRACTICE AS IT RELATES TO DOCUMENTATION
3
REQUIREMENTS EXPECTED OF AEP COMPANIES?
4
A.
No, he does not.
5
Q.
DO YOU BELIEVE IT IS APPROPRIATE TO MAKE THIS CHANGE NOW?
6
A.
No, I do not. SWEPCO had no reason to retain third party invoices for every penny
7
spent.
8
policy that complied with IRS guidelines and in the form previously accepted by PUC
9
Staff and the Commission. It is unreasonable to change documentation requirements
The Company maintained its documentation in accordance with Company
10
on an after-the-fact basis.
11
requirement in advance, it could have instructed its employees to retain every piece of
12
paper for every penny spent, though I dispute the reasonableness of such a
13
requirement. Mr. Luna notes SWEPCO's argument that "it has followed its standard
14
documentation process used in previous rate case expense filings . . ." but then makes
15
no attempt to explain what has changed or why that argument is not persuasive. He
16
simply repeats his unsupported claim that "Without receipts [he was] unable to
17
determine the reasonableness and necessity of SWEPCO's request."6
18
Q.
Had the Company known about this documentation
DO YOU BELIEVE MR. LUNA'S NEW AND ABSOLUTE REQUIREMENT OF
19
THIRD PARTY INVOICES FOR EVERY PENNY SPENT IS A REASONABLE
20
REQUIREMENT?
21
22
A.
No, I do not. Mr. Luna simply concludes, without any explanation, that nothing other
than third-party paper receipts can support the reasonableness of an expense.
He
6 Direct Testimony of Joe Luna at 13.
SOAH DOCKET NO. 473-15-0617
PUC DOCKET NO. 42370
21
REBUTTAL TESTIMONY
RANDALL W. HAMLETT
53
1
ignores the voluminous support detail provided in the form of manager-reviewed
2
employee expense reports, most of which reflect data directly inputted by the
3
Company's credit card vendor. Even though this documentation contains essential
4
information from a third party, he unreasonably dismisses such information as
5
relevant only for tax deductibility purposes.
6
SWEPCO's expense documentation comports with IRS guidelines is not to suggest
7
that a deductible expense is automatically reasonable for the PUC's purposes. Rather,
8
meeting IRS guidelines is evidence that SWEPCO's rate case expense support
9
documentation is organized, thorough, and sufficiently detailed to describe the nature
10
Of course, my point in noting that
of the expenses at issue.
11
Mr. Luna's requirement of third party receipts for every charge would be
12
burdensome and impossible in the case of certain expenses such as mileage and sales
13
tax. The practice employed by the Company is reasonable. That practice as applied to
14
the AEP companies was to follow Company policy and IRS guidelines, rely on credit
15
card system output and manager-reviewed expense reports to document expenses, and
16
follow established Commission practice regarding the types and levels of expenses
17
that are considered to be reasonable. This approach has served the Company and the
18
Commission well by providing adequate assurance of the reasonableness of
19
SWEPCO rate case expenses.
20
21
IV. CONCLUSION
22
Q.
DOES THIS CONCLUDE YOUR REBUTTAL TESTIMONY?
23
A.
Yes.
SOAH DOCKET NO. 473-15-0617
PUC DOCKET NO. 42370
22
REBUTTAL TESTIMONY
RANDALL W. HAMLETT
54
SOAH Docket No. 473-15-0617
PUC Docket No. 42370
EXHIBIT RWH-1R
Page 1 of 2
Entergy Texas, Inc. - Rate Case Expense Docket No. 40295
Meal Receipt Accepted by Staff and Commission
Date:
Card Type:
Acct 4:
Card Entry:
Trans Type:
Trans Key:
4uth [,nde:
Check:
Table:
Server:
14ay02'12 08:50pM
AMEX
XXXXXXXXXXX1007
SSqIPEO
PURCHASE
EIE006194191851
543235
4312
Ne/1
27 THOMAS 14
Subtotal:
Contains:
•
Date
•
Number of People ("A6/1")
Tip
•
•
Total Amount Requested
23-83
7ip:_
Total:
2- -7•
-_...•----____._^.
Signature
I agree to pay above total
according to my card issuer
agreement.
Provided as part of ETIs Response to
StaffRFI 9-1, Addendum 2,
Accounting Consulting LegalInvoices,
DWMR (6-13-12), PDFpage 65.
SWEPCO - Rate Case Expense Docket No. 42370
SWEPCO Expense Report for Meal
Number
6
Category Mea! - Business
Amount
Date
22 Feb 2012
Meth.Pmt. Carporate Card
Pers.Amount
GL Code
520
Location
Comp. Paid 1
Exp.Type
0.0
Expense
Client
Comp. Paid 2
48.91
United States
48.91
0.0
Provider
CCB OF BOSSIER
Guideline
Unlimited Recovery on #6
0.00
Fin. Code
103.11405. L EGAL. EON 018181. S WPCTX1201.9280002.286...TX.520
Description
Taxes
TAX 174
0.001
0.00 VAT
0.00
Num of
Guideline
er
2 People
Unit
p
Unlimited
Units
Attendees
MURPHREE,
Name
Title
employee
ANDREW L
Name
Brenda Meyers
Title
Director of Business
Operation
Contains:
•
Date
•
Number of People ("Num of Units 2 People")
•
Total Amount Requested
•
Name of Restaurant ("CCB of Bossier")
Employee Name and Title
•
Provided as part of SWEPCO's Docket
No. 42370 Application, Volume 4 of 5,
EMPLOYEE EXPENSES tab, March
2012 tab, page 17.
SOAH Docket No. 473-15-0617
PUC Docket No. 42370
EXHIBIT RWH-1R
Page 2 of 2
Entergy Texas, Inc. - Rate Case Expense Docket No. 40295
Taxi Receipt Accepted by Staff and Commission
Tefelshcr.ne #
NEW ORLEANS CARRIAGE CAB CORP
JEF PERSON CARRIAGE CAB
C1iECKER
1 YELLOW CAB CO.
'
Contains:
PA,SSENGER'S RECEIPT, TAXICAB FARE
20
CJate
•
Total Amount
•
Name of Taxi Company
(ambiguous, 3 names)
Amount of Fare $
Other Charges u
Total . ....... .....$
Driver's Nam
Provided as part of ETI's Response to
StaffRFI 9-1, Addendum 2,
A ccounting Consulting LegalInvoices,
DWMR (5-15-12), PDF page 98.
Cab Number
SWEPCO - Rate Case Expense Docket No. 42370
SWEPCO Expense Report for Taxi
Number
Date
Gl. Code
46
08 Mar 2012
510
Exp.Type
Provider
Expense
Client
YELLOW CHECKER CAB CO Guiideiine
Fin. Code
103.1 3128. LEGAL.eon018181.swpctx1201.9230001.290....510
Category Taxi/Limo Fare
Meth.Pmt. Corporate Card
Location United States
Amount
Pers.Amount
Comp. Paid 1
Comp. Paid 2
Unlimited Recovery on #46
24.00
0.0
0.0
V
24.0
0.00
Description Taxi transportation for Welsh Unit 2 NBV analysis
Taxes
TAX 174
©.00
Contains:
•
Date
•
Name of Taxi Company ("Yellow Checker Cab Co.")
•
Total Amount
•
Purpose of Taxi Ride ("Taxi transportation for
Welsh Unit 2 NBV analysis")
0.0Q VAT
0.00
Provided as part of SWEPCO's Docket
No. 42370 Application, Volume 4 of 5,
EMPLOYEE EXPENSES tab, May
2012 tab, page 70.
56
SOAH Docket No. 473-15-0617
PUC Docket No. 42370
EXHIBIT RWH-2R
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