r‘ k & D
BEFORE THE
ARKANSAS PUBLIC SERVICE: COMMISSION
IN THE M A T E R OF THE APPLICATION OF )
SOUTHWESTERN ELECTRIC POWER
1
COMPANY FOR APPROVAL OF A GENERAL )
CHANGE IN RATES AND TARIFFS
1
I
DOCKET NO. 09-0084
SURREBU7TAL EXHIBITS
OF
DONNA GRAY
DIRECTOR
FINANCIAL ANALYSIS SECTION
ON BEHALF OF THE GENERAL STAFF
OF THE ARKANSAS PUBLIC SERVICE COMMISSION
AUGUST 18,2009
?
SOUTHWESTERN ELECTRIC POWER COMPANY
DOCKET NO.09-008-U
SURREBUlTAL EXHIBITS OF DONNA GRAY
SURREBUTTAL EXHIBIT DG-1
Page Io f 3
LIST OF REGULATORY PROCEEDINGS
IN WHICH DONNA (KILBURN) GRAY
HAS FILED TESTIMONY OR OFFERED COMMENTS
BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION
AS OF JULY 2009
Docket No.
81-144-U
81-282-U
82-001-U
82-011-U
82-070-U
82-098-U
82-174-U
82-17 5 4
82-2 03-U
82-3334
82-3414
83-023-U
83-024-U
83-0644
83-0784
83-136-U
83-179-U
83-2534
84-0844
84-1 65-U
84-2074
85-047-U
85-0974
85-127-U
85-263-U
85-3084
86-006-R
86-0424
86-0844
86-098-U
86-1 10-U
86-121-U
86-135-U
86-139-U
Company
Arkansas Power 8t Light Co.
Russellville Water Company, Inc.
General Waterworks of Pine Bluff, Ark.
City of North Little Rock Electric Dept.
Carroll Electric Cooperative Corp.
Craighead Electric Cooperative Corp.
Farmers Electric Cooperative Corp.
Arkansas Western Gas Co.
South Central Arkansas Electric Coop.
Arkansas Oklahoma Gas Corp.
General Waterworks of Pine Bluff, Ark.
Arkansas Electric Cooperative Corp.
Woodruff Electric Cooperative
Southwestern Electric Power Co.
North Arkansas Electric Cooperative
Associated Natural Gas Co.
Oklahoma Gas and Electric
AT&T
Arkansas Electric Cooperative
Southwestern Bell Telephone Co.
Arkansas Electric Cooperative
Southwestern Bell Telephone Co.
Springhill Water
General Telephone of the Southwest
Customer Deposit Interest Rate
Associated Natural Gas
Rulemaking - Electric Coops.
Southwestern Bell Telephone Co.
Oklahoma Gas & Electric
Quapaw Water Co.
Arkla, Inc.
Louisiana Nevada Transit
Arkansas Electric cooperative
Southwestern Electric Power Co.
Issue
M34 Surcharge
Cost of Capital
Cost of Capital
Cost of Capital
Cost of Capital
Cost of Capital
Cost of Capital
Cost of Capital
Rate design
Cost of Capital
Cost of Capital
Cost of Capital
TIER Indexing Adjustment
Cost of Capital
Cost of Capital
Cost of Capital
Cost of Capital
Cost of Capital
Leveraged Lease
Cost of Capital
Leveraged Lease
Debt Issuance
Cost of Capital
Cost of Capital
1986 Interest Rate
Rate of Return
Margins Adjustment
Debt Issuance
Common Stock
Cost of Capital
Common Stock
Cost of Capital
Debt Issuance
Bond Refunding
SOUTHWESTERN ELECTRIC POWER COMPANY
DOCKET NO. 09-0084
SURREBUTTAL EXHIBITS OF DONNA GRAY
Docket No.
86-144-U
86-162-U
86-168-U
86-170-U
86-193-U
86-19 4 4
86-2024
8 6-209-U
86-2454
86 -248 R
86-255-U
86-2574
86-2644
-
87-005-U
87-013-U
87-0344
87-056-TF
87-120-TF
87-131-C
87-201-U
88-0424
89-128-U
89-2034
90-096-U
90-125-U
91-093-U
92-178-U
93-081-U
93-190-U
94-058-U
94-126-U
94-175-U
94-4394
95-039-U
95-161-U
96-3604
98-1 14-U
99-2554
99-266 -U
00-177-U
SURREBUITAL EXHIBIT DG-1
Page 2 of 3
Company
Issue
General Telephone of the Southwest
Bond Issuance
Cost of Capital
Utility Acquisition
Debt Issuance
1987 Interest Rate
Debt Issuance
Debt Issuance
Notes Issuance
Cost of Capital I Refund
Minimum Filing Requirements
Common Stock Issuance
Merger
Common Stock Issuance
Bonds I Preferred Stock
Bond Refinancing
Preferred Stock Issuance
Earnings Level
Grand Gulf Rider M33
Aid to Construction
Affiliate Transactions
Net Salvage
Cost of Capital / Rev. Req. Issues
Corp. Organization I Debt Financing
Cost of Capital I Rev. Req. Issues
Bond Issuance
Rate of Return I FERC Methodology
Stipulation on Gas Costs / Purchasing
Practices
Cost of Capital / Prior Stipulations
Cost of Capital
Ozarks Electric Cooperative
Telephone and Data Systems
Yehot Telephone Co.
Customer Deposit Interest Rate
Arkla, Inc.
Mountain Home Telephone
Arkansas Oklahoma Gas
Farmers Electric Cooperative
Rulemaking
Arkansas Power & Light Co.
Contel
Oklahoma Gas 8L Electric
Arkansas Power & Light Co.
Oklahoma Gas & Electric
Southwestern Electric Power Co.
Mississippi County
Arkansas Power & Light Co.
North Arkansas Electric
GTE Southwest
Cleveland County Telephone
Arkansas Power & light Co.
Noark Pipeline System
Arkansas Electric Coop. Corp.
Arkansas Power & Light Co.
Arkla Energy Resources
Arkla Energy Resources
Arkansas Louisiana Gas Co.
Arkansas Louisiana Gas
Notice of Inquiry-Section 712 of
the Energy Policy Act of 1992
Empire District Electric Company
Arkansas Power & Light Co.
Arkansas Louisiana Gas Company
Arkansas Power & Light Co.
Arkansas Oklahoma Gas Corp.
Arkansas Electric Coop. Corp.
Entergy Arkansas, Inc.
Entergy Arkansas, Inc.
Arkansas VatIey Etec. Coop
Arkansas Western Gas
Entergy Arkansas, Inc.
Bond Issuance
Bond and Stock lssuances
Case Overview I Cost of Capital
Hybrid Lease of Rail Cars
Issue Notes
Transfer of Property
Cost of Capital / Stipulation Revenue
Requirement I Regulatory Review Tariff
Annual Regulatory Earnings Review Tariff
Rate of Return
Stipulation on Gas Costs
Stranded Cost Mitigation Measures
SURREBUTTAL EXHIBIT DG-4
Page 3 of 3
SOUTHWESTERN ELECTRIC POWER COMPANY
DOCKET NO. 09-008-U
SURREBUTTAL EXHIBITS OF DONNA GRAY
Docket No.
0I- 0 8 4 4
01-2094
01-2434
01-296-U
04-10 9 4
04-141-U
06-096-U
06-101-U
06-12 4 4
07-009-U
07-16 0 4
08-161-U
87-j66-TF
Company
Issue
Entergy Arkansas, Inc.
Entergy Arkansas, tnc.
ARKLA
Entergy Arkansas, Inc.
Southwestern Bell Telephone, L.P.
Arkansas Electric Coop. Corp.
Entergy Arkansas, Inc.
Entergy Arkansas, Inc.
Arkansas Western Gas Company
Southwest Power Pool
AWG I SourceGas
Empire District Electric Co.
Entergy Arkansas, Inc.
Storm Recovery (Rider SR)
Grand Gulf Refund Plan
Cost of Capital
Ice Storm Cost I Transition Cost
Cost of Capital / Depreciation Rates
Cost of Capital I Depreciation Rates
Securities Issuance
Cost of Capital
Cost of Capital
Note Issuance
Merger
Bond Issuance
Nuclear Decommissioning
SURREBUlTAL EXHIBIT DG-2
Page 1 of I
SOUTHWESTERN ELECTRIC POWER COMPANY
DOCKET NO. 09-0084
SURREBUTTAL EXHIBITS OF DONNA GRAY
Southwestern Electric Power Company
Staff Surrebuttal Cost of Capital Recommendation
Specificto GR Rider
Component
Long-Term Debt
Preferred Stock
Common Equity
ADIT
Post -1970 ADlTC - LT Debt
Post -1970 ADITC - Preferred
Post -1970 ADlTC - Common
Customer Deposits
CAOL
Other Capital Items
Amount
7,474,982,504
4,700,221
7 ,256,466,577
429,608,723
Proeortion
39127%
0.13%
33.45%
1-I-44%
Rate
6.03%
4.87%
10.00%
0.00%
6.03%
Weighted Cost
2.37%
Pre-tax
0.01%
0.02%
5.50%
3.34%
0.00%
0.02%
0.00%
9,276,401
0.25%
25,954
7,880,699
39,315,727
389,599,369
0.00%
0.21%
j .05%
4.87%
10.00%
3.62%
0.02%
0.04%
0.37%
3.85%
0.00%
0.00%
4.47%
0.06%
144,615,001
$3,756,411,176
100.00%
5.86%
Sources: Staff witness Jo Ann Sterling Surrebuttal Exhibit JS-I
1.6454 Revenue Conversion Factor for Income Taxes provided by Staff witness Bill Taylor
2.37%
0.00%
0.02%
0.00%
0.03%
0.04%
0.00%
0.06%
8.04%
SOUTHWESTERN ELECTRIC POWER COMPANY
DOCKET NO. 09-008-U
SURREBUTTAL EXHIBITS OF DONNA GRAY
SURREBUITAL EXHIBIT DG-3
Page 1 of4
ARKANSAS PUBLIC SERVICE COMMISSION
STAFF’S INTERROGATORY
DOCKET NO. 09-008-U
COMPANY NAME:
Southwestern Electric Power
DATE REQUESTED:
July 29,2009
DATE REQUIRED:
August 14,2009
NO.: APSC- 202
INFORMATION REQUESTED:
Please address whether the amounts of investment, depreciation expense, and operation and
maintenance expense and the in-service time frame for StaII as estimated in Donald R. Moncrief
Exhibit DRM-7Rare based on the most current information available to the Company. If not,
please provide a calculation in the same format as the above-referenced exhibit based on the most
recent estimate for each input. PIease provide a full explanation of the basis for and source of the
most recent estimate, whether the most recent estimate is the filed amount or a different amount
provided in response to this request.
RESPONSE NO. APSC-202
Since Exhibit DRM-7R was filed on July 24, the Stall Plant estimates have changed. Attached is a
revised Exhibit DRM-7R(exceI spreadsheet “Exhibit DRM-7R-Revised 8-14-09.~1~”)utilizing
the most recent estimates of investment, depreciation, and operations and maintenance expense.
The investment amounts are now estimated to be $433 million plus a capitdized portion of a
Long-term Service Agreement (LTSA) that will be completed with the Siemens Company. The
LTSA will provide on-going maintenance to the Stall combustion turbines. Current estimates are
that approximately 64% of the annual LTSA charges will be capitalized and 36% expensed. The
attached excel spreadsheet “APSC 202 O&M.xls” providcs the current Stall Plant m u d
investment and O&M projections. The depreciation rate utiIized in the revised Exhibit DRM-7R
incorporates a 35-year life (2.8571%) as discussed in SWEPCO’s responses to APSC Staff Data
Request Nos. 101 and 152.
The process that was undertaken to put together a more reaIistic working budget for the Stall Plant
began with comparing the detailed budgets of similar sister units within the AEP system.
SWEPCO reviewed the actual operating costs of AEP’s existing combined cycle pIants to
determine operating similarities and differences with the Stall Plant in order to more accurately
project future Stall Plant operating costs. Some of the parameters reviewed included: operating
characteristics, equipment manufacturers, sources of cooling water (cooling towcrs, cooling lakes,
rivers), boiler manufacturer, balance of plant systems, and MW capacity.
After this review, it was determined that the Stall PIant was most similar to AEP’s Lawrenccburg
and Northeastern 1 units. SWEPCO analyzed die current and historic actual budgets for these two
units to estimate the operating costs of the Stall Plant. SWEPCO aIso investigated industry user
groups regarding operating issues and discussed operations with employees of Progress Energy’s
SOUTHWESTERN ELECTRIC POWER COMPANY
DOCKET NO. 09-008-U
SURREBUTTAL EXHIBITS OF DONNA GRAY
SURREBUlTAL EXHIBIT D E 3
Page 2 of 4
Docket No. 09-008-U
APSC-202
Page 2 of 2
Hines Plant, which currently operates a unit identical to Stall, to ensure that potentid safety and
reliability issues were identified and included in the budget projections.
Prepared By: Donald R.Moncrief
Title: Director Regulatory Pricing & Analysis
SOUTHWESTERN ELECTRIC POWER COMPANY
DOCKET NO 09-008-U
SURREBUTTAL EXHIBITS OF DONNA GRAY
SURREBUlTAL EXHIBIT DG-3
Page 3 of 4
SOUTHWESTERN ELECTRIC POWER COMPANY
Alternative Generation Recovery (GR)RIder
SUMMARY OF ANNUAL IMPACT OF GR RIDER
USING AVERAGE BALANCES FOR THE YEARS 2010 THROUGH 20t3
I
Arkansas Jurisdictional
-
Rovlsed GR Rider Return on and of New
Gonoratlon Facllitles Placed in Service
and Dopraclatlon B O&M
I
2010
I
($000)
Investment
Stall
EXHIBIT DRM-7R
Page 1 of 1
RevIsed 8114109
19.7S%l
_.
-
-~
-
Revised GR RidN Return on and of=
Generatlon Facillties Placed In SenrJceand
DeprecIatIon & O&M
Return
9.91%
5436.741
Stall
OEM
52.924
I
Arkansas Only
Stall 6 IIlDnthS
586,387
-
Depradatlon 6 Months
Stall
$4,279,398
Slat[
2.8571 %
1,234,067
Stall
-
08M 6 Months
Stall
578.367
ITotal StaIt 2010
$6.091.652
-
RevIsnd GR Rldnr Return on and of New
Gcnomtion Facilities Placed In Sewlce
and Doprociation & O&M
201-I
I
1
$6,730,999
S80.130
2.8511%
2,517,951
DeDreeIation
O&M
Stall
9
Total Stall 2012
-
Revised GR Rider Return on and of New
Generatlon FacIlitles Placed In Service and
Depredation & O&M
Return
(SOOO)
Stall
Stall
9.91%
Investment
Investrnent
O&M
Return
(SOOO)
9.91%
Stall
5441.486
$449.568
OBM
Stall
55.572
56.534
Arkansas Only
SIaIl
S07.326
58,651,300
DeprecIatton
Stall
2.8571%
2,494,989
Stall
I.i02,142
I=
ITotal stall 201I
$12,248,511
Stall
Depredation
Stall
$88.925
$8,809,755
2.8571%
2,540.663
O&M
Stall
Total Stall 2013
$12,642,844
I
SOUTHWESTERN ELECTRIC POWER COMPANY
DOCKET NO 09-008-U
SURREBUTTAL EXHIBITS OF DONNA G M Y
SURREBUITAL EXHIBIT DG-3
Page 4 of 4
Stall O&M Budget
2010
-
201I
-
2012
-
2013
-
O&M
Long Term Services Agreement
819,588
5.845.747
2,903,079
3,653,799
4,273,343
7,414,036
6.348,050
6,279,524
Total O&M Budget
6,665,335
10,317,115
10,001,849
10,552,867
Estimated LTSA reclassification
from O&M to Capital
3,741.,278
4,744,983
4,062,752
4,010,095
Adjusted Total O&M Budget
2,924,057
5,572,132
5,939,097
6,533,972
436,741,278
441,486,261
445,549,013
449,567,908
Year
Adjusted Capital Amount
Beginning Balance
433,000,000
SOUTHWESTERN ELECTRIC POWER COMPANY
DOCKET NO.09-008-U
SURREBUTTAL EXHIBITS OF DONNA GRAY
SURREBUTTAL EXHIBIT DG-4
Page 1 of I
ARKANSAS PUBLIC SERVICE COMMISSION
STAFF’S INTERROGATORY
DOCKET NO.09-008-U
COMPANY NAME:
Southwestern Electric Power
DATE REQUESTED:
JuIy 29,2009
DATE REQUIRED:
August 12,2009
NO.: APSC-201
MFORMATION REOUESTED:
Please identify the date by which the Company anticipates the need to implement new rates from
its next generaI rate case and generdly identify the factors influencing that need and timing.
RESPONSE NO. APSC-201
The Company will need to implement new rates concurrent with the Tuck Plant in-service date.
Therefore, the Company expects to file its next rate case in the 4th quarter of 2011 given the
anticipated in-service date of the Turk Plant of October 2012, This timing will allow rates to be
implemented in the 4th quarter of 2012 at the same time as the Turk Plant begins commercial
operation.
Preparer: Thomas P. Brice
Title: Director Business Operations Support
CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing has been served on all parties of
record by forwarding the same by postage prepaid first class mail, hand delivery andlor
electronic mail on August 18, 2009.
n
Lori L. Burrows