APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
BEFORE THE
ARKANSAS PUBLIC SERVICE COMMISSION
IN THE MATTER OF AN INTERIM RATE
SCHEDULE OF CENTERPOINT ENERGY
RESOURCES CORP., D/B/A CENTERPOINT
ENERGY ARKANSAS GAS, IMPOSING A
SURCHARGE TO RECOVER COSTS AND
EXPENSES REQUIRED BY LAW RELATING
TO THE PROTECTION OF THE PUBLIC
HEALTH, SAFETY AND THE ENVIRONMENT,
AND APPLICATION FOR APPROVAL OF A
RELATED TARIFF REVISION
)
)
)
)
)
)
)
DOCKETNO. 10-108-U
)
)
)
DIRECT TESTIMONY
AND EXHIBITS
OF
KELLY C. GAUGER
ON BEHALF OF
CENTERPOINT ENERGY RESOURCES CORP.
D/B/A CENTERPOINT ENERGY ARKANSAS GAS
Filed: October 31,2011
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
1
Q.
Please state your name, position and business address.
2
A.
My name is Kelly C. Gauger.
I am Director, Financial Accounting for CenterPoint
3
Energy, Inc. ("CNP"). My business address is 1111 Louisiana Street, Houston, Texas
4
77002.
5
Q.
What are your responsibilities as Director of Financial Accounting for CNP?
6
A.
As Director of Financial Accounting for CNP, I am responsible for the accounting books
7
and records of CNP's regulated gas and electric businesses, including financial
8
accounting for these business units, regulatory accounting and reporting, property
9
accounting, gas cost accounting, and revenue accounting. As such, I am responsible for
10
ensuring that CNP has adequate staff, processes and systems in place to meet our
11
financial and regulatory accounting and reporting requirements.
12
responsible for the adequacy of certain internal controls and compliance with §404 of the
13
Sarbanes-Oxley Act of2002 as they relate to CNP's regulated operations.
14
Q.
What are your educational background, professional qualifications, and previous
work experience?
15
16
In addition, I am
A.
I have served as Director, Financial Accounting for CNP since June 2006. Prior to this
17
position, I served as Manager, Financial Reporting for CNP from January 2001 to May
18
2006 and was responsible for CNP's external financial reporting to the Securities and
19
Exchange Commission ("SEC"). Before joining CNP in 2001, I served as Director, SEC
20
Reporting and Treasury Operations for Drypers Corporation, a manufacturer of baby
21
diapers with both domestic and international operations from January 1993 to November
22
2000.
23
function for Stewart and Stevenson from 1989 to 1992. I began my public accounting
Prior to working at Drypers Corporation, I managed the corporate reporting
1
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
1
career with the accounting firm of Arthur Andersen in Houston, Texas specializing in the
2
audit of public companies, primarily in the manufacturing and wholesale distribution
3
sectors. I graduated cum laude from Texas A&M University in 1984 with aBBA in
4
Accounting and Business Analysis, and I am a Certified Public Accountant in the State of
5
Texas.
6
Q.
Have you presented testimony before the Arkansas Public Service Commission (the
"Commission")?
7
8
A.
Yes. I previously presented testimony before the Commission in the instant docket.
9
Q.
Have you presented testimony in any other jurisdictions?
10
A.
Yes. I have filed testimony with the Mississippi Public Service Commission in Docket
11
No. 09-UN-334, testified before the Railroad Commission of Texas ("RRC") in Gas
12
Utilities Docket ("GUD") Nos. 9791 and 9902, and filed testimony with the RRC in
13
GUD Nos. 10006, 10007, 10038, 10097, and 10106.
14
compilation of accounting information used for periodic reporting requirements and
15
various rate and regulatory proceedings before public utility commissions in the States of
16
Arkansas, Louisiana, Mississippi, Oklahoma and Texas.
I have also supervised the
17
Q.
What is the purpose of your testimony?
18
A.
The purpose of my testimony is to support the interim Government Mandated
19
Expenditure Surcharge (the "Surcharge") filed in this docket by CenterPoint Energy
20
Arkansas Gas ("CenterPoint Arkansas" or "the Company") to allow for recovery of
21
certain government-mandated costs under Ark. Code. Arm. § 23-4-501 et seq., more
22
commonly referred to as Act 310.
23
computation of the revenue requirement associated with the recovery of the Company's
More specifically, my testimony explains the
2
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
1
costs associated with state, county and municipal highway, road, street, bridge or
2
drainage rebuilds (the "Act 310 Additions"), as mandated by the Arkansas State Highway
3
and Transportation Department ("ASHTD") and the various counties and municipalities,
4
from the date of the Company's last general rate case through August 31, 2011.
5
Q.
the rate schedule is based?
6
7
Have you prepared any exhibits that support the revenue requirement upon which
A.
Yes. I have prepared five (5) exhibits identified as Exhibits KCG-1, KCG-2a through 2c,
8
and KCG-3 to my testimony which support the computation of the revenue requirement
9
that forms the basis of the Surcharge rates. I have also prepared Exhibit KCG-4 to show
10
the effect of the omitted reimbursement credit for Work Order ("WO") 42934439 as
11
noted in the Company's previous Act 310 filing in this docket as described in the
12
testimony of Mr. JeffBish.
13
Q.
Please describe Exhibit "KCG-1".
14
A.
Exhibit KCG-1 shows the computation of the revenue requirement associated with the
15
Act 310 Additions included in Mr. Bish's testimony. It includes the computation of the
16
return on the increase in net rate base and the increased annual depreciation expense and
17
property taxes that result from the Act 310 Additions, net of related income taxes. In his
18
testimony, Mr. Tom Stevens explains how the revenue requirement is used to determine
19
the billing rates for each customer class to allow the Company to recover its revenue
20
requirement.
21
Q.
calculated?
22
23
How does Act 310 require the revenue requirement and surcharge rates be
A.
Ark. Code Ann. § 23-4-503 provides as follows:
3
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
The amount of the surcharge to be added to the utility's rates shall be
calculated so as to produce annual revenues equal to the additional
annualized revenue requirement to which the utility would be entitled
had the additional expenditures been included in the utility's most
recent rate determination by the Arkansas Public Service
Commission.
1
2
3
4
5
6
7
Q.
requirements?
8
9
Did you calculate the Surcharge reflected in Exhibit KCG-1 consistent with these
A.
Generally, yes. Exhibits KCG-2a- 2c show the computation of the Surcharge using the
10
same method used to compute the final revenue requirement in Docket No. 06-161-U as
11
reflected in Staffs surrebuttal workpapers. However, for simplicity we have subtracted
12
from rate base the estimated undepreciated net plant retired instead of computing the
13
additional depreciation taken from the date of the last rate case on the retired plant. In
14
addition, the retirements have been computed using the average cost of pipe determined
15
for each type and size rather than using specific identification or FIFO (first in, first out),
16
which is the Company's method used for book purposes. Note that the effect of making
17
these assumptions is to reduce the amount the Company is requesting in its Act 310
18
Surcharge. This Surcharge calculation is consistent with the Company's last Act 310
19
filing in the instant docket.
20
Q.
What is the total project cost eligible for recovery under Act 310?
21
A.
As shown in Mr. Bish's Exhibit JAB-1, total project costs eligible for consideration under
22
Act 310 are approximately $10.2 million, an increase of $3.0 million since the
23
Company's last filing in this docket.
24
Q.
How is the adjusted rate base computed?
25
A.
As shown on Exhibit KCG-1, the adjusted rate base of approximately $9.1 million is
26
computed by starting with the cost of the Act 31 0 Additions since the Company's most
4
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
1
recent general rate case in Docket No. 06-161-U, excluding the cost of removal, of
2
approximately $9.8 million.
3
undepreciated value of the retirements caused by the Act 31 0 Additions of approximately
4
$575,000. That amount was computed by multiplying the gross plant retirements by the
5
percentage of the accumulated depreciation for the applicable account divided by the
6
gross plant as determined in the last rate case to derive the estimated accumulated
7
depreciation on the retirements. The estimated accumulated depreciation on retirements
8
is then subtracted from the gross plant retirements to derive the estimated undepreciated
9
value of retirements.
From that amount I have subtracted the estimated
I then added the cost of removal incurred in connection with the replacement of
10
11
the old plant of approximately $408,000.
12
Additions by approximately $550,000 for the depreciation taken from the date the plant
13
was placed in service until September 30, 2011. As a result, I have ensured that the rate
14
base properly takes into account depreciation expense recognized from the date ofthe last
15
rate case to September 30, 2011, even though only Act 310 Additions made through
16
August 31, 2011 are included in this filing.
Last, I reduced the cost of the Act 310
17
Q.
What assumption did you use to determine the cost of the retired plant?
18
A.
As described above, the Company's average cost for the applicable size and type of pipe
19
was used to determine the cost of the pipe retired. This assumption is consistent with the
20
Company's prior Act 310 filing and the Commission's direction in Findings and
21
Conclusions number 6 in Order No.4 of the instant docket.
22
Q.
Have any other costs been considered in the computation of the Surcharge?
5
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
1
A.
Yes.
The Surcharge recognizes the additional annual depreciation expense and ad
2
valorem taxes the Company will incur related to the Act 310 Additions. The annual
3
depreciation expense of approximately $245,000 has been calculated using the
4
depreciation rates established in the last general rate case, applied to the difference
5
between the amount of gross plant additions resulting from the Act 310 Additions less the
6
amount of the related gross plant retired. The amount of the additional ad valorem taxes
7
of approximately $36,000 was computed by taking the net plant additions resulting from
8
the Act 310 Additions multiplied by 0.41 %, the adjusted tax rate per dollar of gross plant
9
established in the last general rate case. The reduction in income taxes of approximately
10
$198,000 as a result of the increased operating expenses and interest on the additional
11
rate base was subtracted to arrive at the reduction to operating income of approximately
12
$83,000. Those computations are shown in Exhibit KCG-1.
13
Q.
Company's revenue requirement?
14
15
What cost of capital has been applied to the net rate base to determine the
A.
The Company has applied the after-tax cost of capital of 5. 73% as determined in Docket
16
No. 06-161-U.
17
multiplied by the revenue conversion factor of 1.64885 determined in that same docket to
18
determine the total revenue requirement.
The total of the return and increased operating expenses was then
19
Q.
How much additional annual revenue will the proposed Act 310 surcharge produce?
20
A.
As shown on Exhibit KCG-1, the annual revenue requirement is approximately $992,000,
21
prior to inclusion of an adjustment for a reimbursement credit inadvertently omitted from
22
the Company's prior Act 310 filing as discussed below.
6
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
1
Q.
prior Act 310 Additions?
2
3
Did the Company take into account in this filing the additional depreciation on the
A.
Yes. In this filing and in each future Act 310 Surcharge filing made before our next
4
general rate case, the Company will talce into account the impact of the additional
5
depreciation talcen since the last Act 310 Surcharge filing on all the Act 31 0 Additions
6
since the date of the last general rate case. Note also that all Act 310 Additions from the
7
date used in Docket No. 06-161-U through August 31, 2011, the cutoff date used in this
8
filing, have been included in this filing.
9
Q.
Has the Company included in this filing the $31,376 reimbursement credit as
10
described in Findings and Conclusions number 7 from Order No. 4 in the instant
11
docket?
12
A.
Yes.
As discussed in Mr. Bish's testimony, the Company inadvertently omitted a
13
reimbursement credit for WO 42934439 when that project was included in the
14
Company's prior filing in the instant docket.
15
reimbursement credit of ($31,376) has been reflected in the current filing in two parts as
16
shown in Mr. Bish's Exhibit JAB-1: 1) as part of the Booked Addition column ($24,131)
17
and 2) as part of the Booked Removal Costs column ($7,245). 1 Effectively, the Adjusted
18
Rate Base in Exhibit KCG-1 has been reduced by the entire $31 ,3 76 in the current filing.
As detailed in Exhibit KCG-3, the
19
In addition, the reimbursement credit for WO 42934439 changed the amount of
20
the MRP credit. As shown in Exhibit JAB-I, the prior filing amount of ($11,279) is
21
reversed (Column [F] "Reimbursement and Other Credit") and the correct amount of
22
($7,662) is included (Column [D] "MRP Credit"). The MRP credit, therefore, changes
1
Mr. Bish's Exhibit JAB-I also includes $19 in trailing charges for WO 42934439, resulting in total amounts of
($24,113) and ($7,244) respectively for the Booked Addition and Booked Removal Cost colunms.
7
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
1
the prior Act 310 filing adjustment from ($31,376) to ($27,759) before accumulated
2
depreciation.
3
In Exhibit KCG-4, I have shown the effect of this omitted reimbursement credit
4
on the revenue requirement as calculated in the prior Act 310 filing. Accordingly, the
5
change in the revenue requirement is ($2,811 ). Applying the pre-tax cost of capital from
6
Docket No. 06-161-U of 7.84% as determined in Findings and Conclusions number 7
7
from Order No. 4 in the instant docket, I calculated the adjustment to the current filing's
8
revenue requirement net of interest to be ($3,031). I then netted this adjustment against
9
the amount in the current Act 310 filing on Exhibit KCG-1 for a net annual revenue
10
requirement of $989,000, an increase of approximately $280,000 from the annual revenue
11
requirement in the prior Act 31 0 filing.
12
Q.
Please summarize your conclusions.
13
A.
My conclusion is that the Company has computed its revenue requirement in accordance
14
15
with the provisions of Act 310 as follows:
•
The amount of the rate base includes all appropriate adjustments to ensure the
16
Company's Act 310 Additions, related retirements and accumulated depreciation
17
are properly reflected.
18
•
Additions have been properly computed.
19
20
21
The incremental depreciation expense and property taxes related to the Act 310
•
The income effects of the Act 310 Additions have been adjusted for the applicable
income taxes.
8
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
•
1
The cost of capital applied to the rate base and the gross-up factor used to
2
determine the revenue requirement are the same as was approved in the
3
Company's last general rate case, Docket No. 06-161-U.
4
As a result, the revenue requirement is substantially the same as the additional annualized
5
revenue requirement to which the Company would be entitled had the additional
6
expenditures been included in the Company's most recent rate determination.
7
Q.
Does this conclude your testimony?
8
A.
Yes, it does.
9
Exhibit KCG-1
ACT 310
Pagelofl
CENTERPOINT ENERGY ARKANSAS DIVISION
CALCULATION OF ACT 310 SURCHARGE
FOR OCTOBER 2011 FILING
Line
No.
(1)
~
(3)
Description
(2)
Adjusted Rate Base
Line M
3
4
5
6
7
8
Required Operating Income
Depreciation Expense Increase
Property Tax Increase
Fixed charges
Total Expense Increase before income tax effect
Income taxes
Operating Income Reduction
Line
Line
line
Line
9
Revenue Deficiency
Line 2 + Line 8
10
11
Gross-up factor
Revenue Requirement
Line 9 *Line 10
A
B
C
C1
D
01
New Distribution Main
New Distribution Services
Retired Distribution Main
Net Book Value of Retired Mains
Retired Distribution Services
Net Book Value of Retired Services
2
E
Net Increase to Gross Plant
F
G
H
Net Removal cost
New Annual Depreciation Expense-Mains
New Annual Depreciation Expense-Services
Old Annual Depreciation Expense-Mains
Old Annual Depreciation Expense-Services
Increased annual depreciation expense
Additional accumulated depreciation on Act 310 Additions
Increase in Net Plant
K
L
M
Footnotes:
A Aftertax Rate of Return from Docekt No. 06-161-U
B Weighted Cost of Debt from Docket No. 06-161-U
C Combined State and Federal Tax rate
D Gross up factor from Docket No. 06-161-U
E Depreciation rates from Docket No. 06-161-U
WP Reference
&!!.Q.Y.n!!
(4)
(5)
Footnote A
1 * 5.73%
K
E * .41%
1 * 2.48%
Line 3 + Line 4 + Line 5
Line 6 * 39.225%
Line 3 + Line 4- Line 7
Ad Valorem Taxes
Footnote B
Footnote C
$
$
$
$
$
~
(6)
$
9,061,752
$
519,238
$
$
82,570
601,808
$
992,2~.1_
Line A+ Line B - Line C- Line D
Additions
Footnote E
Line A* 2.74%
Line
Line
Line
Line
Footnote E
B * 4.96%
C * 2.74%
D* 4.96%
G + Line H -Line I- Line J
Footnote E
Footnote E
Additions
Line A+ Line B- Line C1 - Line 01 + Line F- Line L
0
From:
Exhibit KCG-4
Net Amount
244,583
36,323
224,731
505,637
198,336
1.64885
FootnoteD
Additions
Additions
Mains
Mains
Services
Services
December
2010 Filing
Adjustment
$
$
$
9,691,847
86,899
915,512
$
4,014
$
8,859,221
$
$
$
$
$
265,557
4,310
$
$
9,691,847
86,899
$
573,135
$
2,119
$
408,210
25,085
199
244,583
549,950
$
_l_Q,061 ,752
$
0
(3,031) $
989,260
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
Exhibit KCG-2a
ACT 310
Page 1 of 3
CENTERPOINT ENERGY ARKANSAS DIVISION
CALCULATION OF ACT 310 REVENUE REQUIREMENT
FOR OCTOBER 2011 FILING
Line
No.
(1)
Amount
(3)
Description
(2)
Adjusted Rate Base
Ref KCG-1
(4)
$
9,061,752
Line 1
Line 8
Footnote
(5)
2
Adjusted Operating Revenue
3
Adjusted Operating Expense
$
82,570
4
Adjusted Operating Income
$
(82,570)
5
Current Rate of Return
5.73%
Line 2
Footnote A
6
Required Rate of Return
5.73%
Line 2
Footnote A
7
Required Operating Income
$
519,238
Line 2
8
Operating Income Deficiency
$
601,808
Line 9
9
Revenue Conversion Factor
1.64885
Line 10
10
Revenue Deficiency (Excess)
$
992,291
Line 11
11
Total Revenue Requirement
$
992,291
Line 11
12
Less: Other Revenues
$
13
Total Rate Schedule Revenue Requirement
$
992,291
Line 11
Footnotes:
A After tax Rate of Return from Docekt No. 06-161-U
B Gross up factor from Docket No. 06-161-U
Footnote B
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
CENTERPOINT ENERGY ARKANSAS DIVISION
CALCULATION OF ACT 310 UTILITY OPERATING INCOME
FOR OCTOBER 2011 FILING
Line
No.
(1)
Amount
(3)
Description
(2)
Exhibit KCG-2b
ACT 310
Page 2 of 3
RefKCG-1
(4)
1
Operating Revenue:
2
3
Non-Gas Sales Revenue
Other Operating Revenues
4
Total Operating Revenue
5
Operating Expenses:
6
7
8
9
10
11
12
13
14
15
Cost of Gas Purchased
Transmission of Gas by Others
Operating Expense
Maintenance Expense
Customer Accounts Expense
Customer Service & Information Expense
Sales Expense
General & Administrative Expense
Depreciation Expense
Amortization Expense
Taxes Other Than Income
16
Total Operating Expense
$
280,906
17
Federal & State Income Tax
$
198,336
Line 7
18
Total Expenses
$
82,570
Line 8
19
Net Utility Operating Income (Loss)
$
(82,570)
Line 8
$
244,583
36,323
Line 3
Line 4
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
Exhibit KCG-2c
ACT 310
Page 3 of 3
CENTERPOINT ENERGY ARKANSAS DIVISION
CALCULATION OF ACT 310 INCOME TAXES
FOR OCTOBER 2011 FILING
Line
No.
(1)
State Income
Taxes
(3)
Description
(2)
Federal Income
Taxes
(4)
RefKCG-1
(5)
Footnote
(6)
Operating Revenues
2
3
4
Less:
Operating Expenses
Fixed Charges
$
$
280,906
224,731
$
$
280,906
224,731
Line 3 + Line 4
Line 5
5
Operating Income Before Taxes
$
505,637
$
505,637
Line 6
6
State Income Tax@ 6.5%
$
32,866
$
32,866
7
Federal Taxable Income
$
472,771
8
Federal Income Tax@ 35%
$
165,470
9
Less lTC Amortization
$
165,470
Total State & Federal Income Tax
$
198,336
Line 7
12
Calculation of Fixed Charges
13 Total Arkansas Rate Base
14 Weighted Cost of Debt
$
9,061,752
2.48%
Line 1
Line 5
15 Fixed Charges
$
224,731
Line 5
10 Total Federal Income Tax
11
Footnotes:
A Weighted Cost of Debt from Docket No. 06-161-U
Footnote A
Exhibit KCG~3
ACT 310
Page 1 of 1
CENTERPOINT ENERGY ARKANSAS DIVISION
WORK ORDER 42934439 ~August 2010
FOR OCTOBER 2011 FILING
SOURCE:
BW~
COOM order &WBS
August 2010, Order #42934439
I
Company code
I
0062
I
I
Controlling area
I
GNP Controlling Area
Hl/008/2010
HI
Act (not statist , Statistical actual
Fiscal year/period
Fiscal Year Variant
Statistics 10
Value type
Installation
76.91%
10
WBS Element
Company code
Partner Order
0062
0062
0062
0062
Overall Result
42934439
42934439
42934439
42934439
Order type
"7260,7270,7350 HWY 167/82 AHTD JOB 7007
"7260,7270,7350 HWY 167/82 AHTO JOB 7007
"7260,7270,7350 HWY 167/82 AHTD JOB 7007
"7260,7270,7350 HWY 167/82 AHTO JOB 7007
ARC3
ARC3
ARC3
ARC3
Cost
Element
530999
559994
641001
641002
S/112079/CE/PIIN
MN
Pine Bluff Oist
Pub lmpr lnst
Mains
S/112079/CE/PIR
MMN
Pine Bluff Oist
Pub lmpr Rem
Mains
Amount
Amount
M&S~lnvento
Issued
Cant in Aid of Canst
Construction OH
Stores Overhead
Prior MRP Credit
Current MRP Credit
Reimbursement Credit
Removal Cost
0
&
9
0
Ties to Exhibit JAB-1 "Booked Addition" or Column [B] ~Order #42934439
Ties to Exhibit JAB-1 "Booked Removal Costs" or Column [C]- Order #42934439
See Exhibit JAB~1 "Reimbursement and other Credit" or Column [F]- Order #42934439
See Exhibit JAB-1 "MRP Credit" or Column [D]- Order #42934439
$
$
0
0
Amount
14.2~
7 244.82 0
$0.71 +$
{31,376.4•
3.0!
-$ 24,131.62:r
~$
$2.35
$2.17
-$24,112.85
-$7,244.11
q;
t-~
11,278.81
(7,661.89)
(24,131.62)
(7,244.82)
(27,759.52)
#
$
$ 14.25
....
Total
100.00%
Cost of Removal
23.09%
2.1~
$
.,
~$
31 ,356.S
Exhibit KCG-4
ACT 310
Page 1 of 1
CENTERPOINT ENERGY
ARKANSAS JURISDICTION
CALCULATION OF ACT 310 SURCHARGE- Correction to December 2010 Filing
FOR OCTOBER 2011 FILING
From 10-108-
Line
No.
(1}
Description
(2}
WP Reference
(3}
$
Adjusted Rate Base (M)
Footnote A
4
Required Operating Income (L 1 *5.73%)
Depreciation Expense Increase (K)
Property Tax Increase@ .41% (E *.41%)
5
6
7
8
9
10
11
Fixed charges (L1 "2.48%)
Total Expense Increase before income tax effect (L3 + L4 + L5)
Income taxes @39.225%
Operating Income Reduction (L3 + L4 + L7}
Revenue Deficiency (L2 + L8}
Gross-up factor
Revenue Requirement (L9 • L10)
A
New Distribution Main
New Distribution Services
Additions
Additions
$
Retired Distribution Main
Net Book Value of Retired Mains
Retired Distribution Services
Net Book Value of Retired Services
Net Increase to Gross Plant (A+B+C+O)
Mains
Mains
Services
Services
$
F
Net Removal cost
Additions
G
H
Footnote
Footnote
Footnote
Footnote
L
New Annual Depredation Expense-Mains (A • 2.74%)
New Annual Depreciation Expense-Services (B" 4.96%)
Old Annual Depreciation Expense- Mains (C• 2.74%)
Old Annual Depreciation Expense- Services (D* 4.96%)
Increased annual depreciation expense
Additional accumulated depreciation on Act 310 Additions
M
Increase in Net Plant (A+B+C1 +D1 +F+L)
2
3
8
c
C1
0
01
E
I
J
K
Footnotes:
A Aftertax rate of return from 06-161-U
B Weighted Cost of Debt (2.48%) from 06-161-U
C Combined State and Federal Tax rate (39.225%)
D Gross up factor from 06-161-U
E Depredation rates from 06-161-U
$
Ad Valorem Taxes
6,465,685
Difference
(7}
l!
Amounts
(5}
Amounts
(4}
(6}
$ 6,493,279
$
(27,594)
370,484
$
372,065
$
(1,581}
1.64885
706.793
$
1.64885
709,604
$
(2,811)
$ 6,835,170
70,369
$
$
$
(20,514)
Annual
Interest
(9}
Total
(10}
173,477
25,734
160,349
359,560
(141,037)
Footnote B
Footnote C
FootnoteD
$
6,814,656
70,369
$
6,814,656
70,369
(605,707)
(379,173) $
(379,173) $
{1,479) $
(1,479) $
{2,8022
6,276,516
295,469
E
E
E
E
Pre-Tax
Cost of
Capital
(8}
$
$
302,714
$
$
{7,245)
(27,759)
{334,322) $
165
186,722
3,490
(16,596)
{1392
173,477
{334,157) $
Additions
$
To:
O:ExhibitKCG-1
6,465,685
$ 6,493,279
$
(27,594)
7.84% $
(220) $ (3,031)
0
APSC FILED Time: 10/31/2011 10:03:28 AM: Recvd 10/31/2011 9:39:55 AM: Docket 10-108-u-Doc. 21
CERTIFICATE OF SERVICE
I, Stephanie J. Elmore, do hereby certify that a true and correct copy of the foregoing has
been served on the below-listed persons by hand delivery, electronic mail, and/or first class,
postage prepaid, U.S. mail on the 31st day of October, 2011.
Ms. Cindy Uhrynowycz
Arkansas Public Service Commission
1000 Center Street
Little Rock, AR 72201
Mr. Brian Donahue
Arkansas Gas Consumers, Inc.
P. 0. Box 567
Jacksonville, AR 7207 6
Mr. Shawn McMurray
Office of the Attorney General
323 Center Street
Little Rock, AR 72201
Mr. Emon Mahony
Office of the Attorney General
323 Center Street
Little Rock, AR 72201
Mr. Dave Slaton
Arkansas Public Service Commission
I 000 Center Street
Little Rock, AR 72201