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Follow-Up Items
After June 25, 2009 Transmission Customer Meeting
1.
Provide Transmission Peak DRO calculations by month for 2008.
Answer:
2008”.
2.
Please refer to the attached Excel file titled “SPS DRO calculations
Referring to Worksheet N, page 51 of 51, of the 2008 True-Up, explain the decrease in
the number of TR-IDR meters and the increase in average replacement cost.
Answer:
Wholesale transmission IDR meters were inadvertently excluded
from the meter count. The addition of the excluded meters increases the number
of TR-IDR meters to a total of 822 (654+168 = 822). The changes to average
replacement cost per meter is due to the use of more recent meter cost data. This
data was prepared and submitted in SPS’s most recent New Mexico retail rate
case (NM PRC Case No. 08-00354UT) and was included on page 15 of the
supporting workpapers section of the notebooks provided at the June 25, 2009
Customer Meeting and electronically via email on June 24, 2009 (attachment
titled “Supporting Documentation for Rates Eff 07-01-09.pdf”).
3.
Provide 2009 Projected Plant Additions detail.
Answer:
Please refer to the attached Excel file titled “SPS 2009 Projected
Transmission Plant Additions”.
4.
Referring to the Disclosure of Material Accounting Changes, what effects, if any, did the
following changes have on the Transmission Formula rates?
a.
During 2008, mainframe computer service costs were reallocated among the Xcel
Energy operating companies and FERC Accounts to better apportion costs by
company use and by cost function.
Answer:
For SPS, the reallocation of mainframe computer service costs
increased FERC Account 902, Meter Reading Expenses, by $317,000, total
company, for YTD December 2008 as compared to YTD December 2007. This
increase was offset by a decrease in mainframe computer service costs in FERC
Account 921, Office Supplies and Expenses. This accounting change lowered the
total company annual transmission revenue requirement (ATRR) for 2008 by an
estimated $34,000.
b.
During 2008, there was a change in the Shared Asset Cost Allocation
Methodology to include company network equipment, which resulted in an
increase in the Xcel Energy Services Inc. (XES or Service Company) facilities
chargeback to expense accounts.
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Answer:
The table provided below reports the estimated net impact of this
accounting change by FERC account for 2008:
SPS Shared Assets Network Equipment Cost by FERC Acct
FERC Acct
Amount
417.1
$
216.73
426.4
7,057.55
507
224,228.63
550
65,007.92
567
123,284.07
575.1
6,738.10
589
33,609.57
922
(1,298,556.00)
931
851,891.07
Net Impact to SPS
$
13,477.64
It is estimated that this accounting change increased the total company ATRR by
$64,000.
c.
In January 2008, there was a change in the methodology used to charge
aviation costs from the Service Company to the Operating Companies. Aviation
costs are now billed out to the Operating Companies using the corporate
governance three-factor formula based on revenue, assets and number of
employees. Prior to 2008, aviation costs were billed out based on a two-step
process. First, a usage rate was calculated to determine a flight cost per
passenger, then based on the employees using the aircraft and the work being
performed would determine how the costs were charged out to the Operating
Companies. Second, any undistributed costs were billed to the Operating
Company’s based on the top executive’s labor distribution.
Answer:
This accounting change lowered the total aviation chargeback to
SPS by an estimated $95,000, total company, comparing 2007 with 2008. It is
estimated that this accounting change lowered the total company ATRR by
$19,000.
d.
SPS adopted EITF No. 06-4 Accounting for Deferred Compensation and
Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance
Arrangements in 2008, which provides guidance on the recognition of a liability
and related compensation costs for endorsement split-dollar life insurance policies
that provide a benefit to an employee that extends to postretirement periods.
Therefore, this EITF would not apply to a split-dollar life insurance arrangement
that provides a specified benefit to an employee that is limited to the employee’s
active service period with an employer. Upon adoption of EITF No. 06-4 on
Jan. 1, 2008, SPS recorded a liability of $0.3 million for certain endorsement
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split-dollar life insurance policies, net of tax, as a reduction of retained earnings.
Thereafter, changes in the liability were reflected in operating results.
Answer:
The accounting entry was a debit to SPS’s Unappropriated
Retained Earnings, FERC Account 216, and a credit to the intercompany payable
account for Service Company. The Service Company entry was a debit to the
intercompany payable account and a credit to Other deferred credits, FERC 253,
for accrued FAS 106 liabilities. The only impact to the transmission formula rate
is the accounting entry to FERC Account 216. The entry amount, $0.3 million,
had no impact on the total company ATRR.
5.
Explain the change in the balance of the accumulated amortization reserve amount
reported on line 53 of the 2008 actual versus 2008 estimate variance analysis.
Answer:
2008 Actual Allocated Amount =
2008 Estimated Allocated Amount =
Variance Amount =
$ 2,698,416
$ 4,310,858
$(1,612,442)
For rates effective July 1, 2008, the accumulated electric intangible amortization
amount of $41,566,460 was taken from the 2007 FF1 page 200, line 21, column c.
This amount was then multiplied by the Wages and Salaries (W/S) allocator of
10.371% to calculate the formula allocated total company amount of $4,310,858.
This amount was not functionalized and was assigned entirely to intangible plant.
During discovery and settlement discussions, the parties agreed that the intangible
accumulated amortization will be functionalized.
For purposes of calculating the 2008 true-up and for the rates effective July 1,
2009, the accumulated intangible plant amortization was reported by function as
shown in True-up Worksheet C.2, 13MoAvgRateBase, lines 107, 112, 117, 122,
and 126. The functionalization resulted in decreasing the intangible plant
amortization reported as intangible in the formula from $41,566,460 at year-end
2007 to $28,508,367 at year-end 2008. The 13-month average amount of
$25,240,070 (line 126) for 2008 was multiplied by the W/S allocator of 10.691%
to calculate the formula allocated amount of $2,698,416.