Please see 9-11 Attachment which details the as-allowed Federal income tax calculation. Included in the attachment is the details of tax deprecation.

Transcription

1 9- (Prettyman) 9- How much income tax expense was allowed in the Company's last Rate case, Docket No.4434? Please identify the amount, and provide a breakout showing the amounts for each of the following: a) Current federal income tax expense (also provide the amount of federal taxable income and the FIT rate used). b) Current state income tax expense (also provide the amount of state taxable income and the state income tax rate used). c) Deferred federal income tax expense (also provide each book-tax difference for which deferred federal income tax expense was computed and identify the FIT rate used). d) Deferred state income tax expense (also provide each book-tax difference for which deferred state income tax was computed the state income tax rate used) e) Investment tax credit amortization. f) Any other components of income tax expense (identify, quantify and explain in detail). Please see 9- Attachment which details the as-allowed Federal income tax calculation. Included in the attachment is the details of tax deprecation.

2 SUEZ Water Rhode Island Case No Attachment Page of 2 Docket No.4434 Erhlblt t (Jolnl Sêfl êmenl) Schodulo 4 UNITED WATER RHODE ISLAND' INC. calculållon of CuÍenl lncoms Tax Rale Yoar Endcd Decêmbor 3, 24 Op6rallng Revenue O&M Expense Depreclatlon ExPense Property Tax Payroll Ïax Gross Rec ipts Tax. operallng lncome Before lncome Taxes lnteresl Exponse Exceess Tax DePr olallon Cunont Fedsrâl Taxåbls lncomo Amount por company at Presont Ralos (A) s 3,67,26 $ 2,3,468,37 36,24 õ9,25 46,878 s 348,28 447, (438,525) Setlloment Adluslmsnt8 (B) 46,67 Adjueled Per Sottlomsnt at Pressnl Rales (c) $ 3f6,333 Rovonue lnø sse/ ldâcreabel (D) $,28,ô Amounls Añor Rèv6nuo ncroabê (E' $ 4,S24,934 (76,2' 2,228,347 6,37 3,785 2,23,32 6,37 3t,832 3,832 ta,tszl (4e9) 68,7ô 58,766 $ ,5 29,43 I 477,664 s,89,78 $,867,273 (7,66) 36,98 439,642 _53 (29S,7) I,l8e,7o8 4gg,B ,92 Federal lncome Tax at 35% Defoned Federal lncomo Tax lnvêslmsnt Tax Cred t Amotllzatlon Total Federâl lncomo Tax $ 52,784 I 8,3S ß.al32 $ 47,S8 s -$----lgggzl -g--t9!g- $ (4,886) 8,39 f4.662ì $ 46,398 $ s,682 'l8,lg t Aßtì 8.8't s s 428.M9 Nolos: () csloülatlon of lnlôrês Deductlon Rate BasE Welghted Cost of Dobt lnt r st Doducllon $ 6,859,89 2,82/o $ 6,646,64 2.8o/o -tr 44r,247 $ g'6) s 439,642 $ ô,646,64 2,8Þlo $ 43$42 Federal lncome Tax Effêct at 35% lnterost Synohronlzation Adjustment re 2,682

3 SUEZ Water Rhode Island Case No Attachment Page 2 of 2 Jan-24 Feb-2O4 j''.2'4 A'pr24 May-24 Juñ-2O'4 Jul-24 Aüg-2't4 Sep-2 4 od-2o4 Nov-2'4 Oec-24 Total 24 24Oepr Rate 24 Tax Depr PUP Comp Sftwè O'lher PeF Prcp Comp Hdwe/lEnsp No -D pr Structuê 5, 2,658 22,578 22,5 8, 4,698 5,5 65,658 43,4 4,899 5, ,597 64,44 5,5 U 29,65 29,5 9,7,373,322 9,787 28,597 2.o/o 4.29Vo 2.ooo/. 27,466 3,383 4,85 5, 65,658 43,4 4, ,935 E A Comþ Sftwr Jun-23 Sep-23 Dec 't , ,39 U 9 3,383 Other 24 Additions 23 Add tions Pre2'3 Assets 2,629 2,86 54,432 2,629 2,86 54,432 2,629 2,86 54,432 2,629 2,8r6 54,432 2,629 2,86 54,432 2,629 2,86 54,432 2,629 2,86 54,432 2,629 2,86 54,432 2,629 2,86 54,432 2,629 2,86 54,432 2,629 2,86 9,432 2,629 2,86 54,432 3, , ,85 77,877 77,877 77,877 77, ,896

4 9-2 (Prettyman) 9-2 Does the Company have a cost of service study file in Excel from its last rate case, Docket No. 4434? If so, please provide it, with formulas and cross references intact. Please provide a copy of that COSS in Excel. Also, please address the following for each COSS: a) How were income taxes allocated among rate classes in the cost of service study in the Company's last rate case? Explain fully and show allocations in detail. b) How were the Company's ADIT balances allocated among rate classes in the cost of service study in the Company's last rate case? Explain fully and show allocations in detail. A cost of service study was not performed in Docket No The proposed increase in the last rate case was an across-the-board increase to all classes of customer.

5 9-3 (Gil) 9-3 CIAC. Refer to the response to Division 3-8. a) Did the Company receive any collection of taxable CIAC during 27? b) If "yes" please identify the amounts of taxable CIAC and explain to which plant accounts the CIAC amounts relate. c) Does the Company have an opinion on whether any of the CIAC collected in 27 will be required to be included as taxable income on its federal income tax return for tax year 27? If not, explain fully why not. If "yes" please explain the opinion and the basis for it. d) Did the Company reflect any amounts of federal income tax for CIAC received in 27? If so, please identify such amounts. If not, explain fully why not. a) Per Attachment 3-8 the Company didn t receive any additional contribution in 27 b) N/A c) N/A d) N/A

6 9-4 (Gil) 9-4 CIAC. Did the Company receive any collection of CIAC during 28 through April 3? a) If "yes" please identify the amounts of CIAC and explain to which plant accounts the CIAC amounts relate. b) Does the Company have an opinion on whether any of the CIAC collected in 28 will be required to be included as taxable income on its federal income tax return for tax year 28? If not, explain fully why not. If "yes" please explain the opinion and the basis for it. c) Did the Company reflect any amounts of federal income tax for CIAC received in 28? If so, please identify such amounts. a) Per Attachment 9-4 the Company didn t receive any additional contribution as of April 28. b) As a result of the TCJA effective December 22, 28 all CIAC will be taxable. c) N/A

7 SUEZ Water Rhode Island Case No Attachment Page of CIAC January 3,32,27 3,324,634 3,35,575 3,355,575 3,355,575 3,532,575 February 3,32,27 3,324,634 3,35,575 3,355,575 3,355,575 3,532,575 March 3,32,27 3,324,634 3,35,575 3,355,575 3,355,575 3,532,825 April 3,32,27 3,324,634 3,35,575 3,355,575 3,355,575 3,583,325 May 3,32,27 3,324,634 3,35,575 3,355,575 3,392,325 3,584,325 June 3,32,27 3,345,34 3,35,575 3,355,575 3,393,325 3,585,325 July 3,32,27 3,347,465 3,35,575 3,355,575 3,469,325 3,586,325 August 3,32,27 3,349,795 3,35,575 3,355,575 3,469,825 3,586,825 September 3,32,27 3,349,795 3,35,575 3,355,575 3,532,75 3,637,75 October 3,32,27 3,376,57 3,35,575 3,355,575 3,532,575 November 3,32,27 3,35,575 3,35,575 3,355,575 3,532,575 December 3,324,634 3,35,575 3,355,575 3,355,575 3,532,575 Notes: Actual January 24 through April 28 Projected May 28 through September 29

8 9-5 (Gil) 9-5 CIAC. Refer to the response to Division 3-8. a) Does the Company anticipate receiving any collection of taxable CIAC during 28 or through September 29? b) If "yes" please identify the amounts of taxable CIAC and explain to which plant accounts the CIAC amounts relate. c) Does the Company have an opinion on whether any of the CIAC collected in 28 or 29 will be required to be included as taxable income on its federal income tax return for tax years 28 and 29? If not, explain fully why not. If "yes" please explain the opinion and the basis for it. d) Did the Company reflect any amounts of federal income tax for CIAC received in 28 or 29? If so, please identify such amounts. a) Yes, the Company anticipates receiving $28,5 from May 28 through September 29 b) CIAC Account Amount 343 Mains $267, 345 Services 4,5 Total $28,5 c) As a result of the TCJA effective December 22, 28 all CIAC will be taxable. d) The Company didn t reflect any federal income tax for CIAC in 28 or 29 since any applicable tax would be paid for by the developer.

9 9-8 (Prettyman) 9-8 Identify each regulatory filing, including each filing for each surcharge or rider rate adjustment, that the Company plans to file in 28. In terms of regulatory filings with the Commission, the Company does not anticipate any filings other than the current rate case. There are no surcharge or riders currently available to the Company.

10 9-9 (Prettyman) 9-9 When does the Company plan to file its next Rhode Island base rate case? The Company is not able to determine when the next rate case would be filed. It would depend upon the outcome of this proceeding, the amount of future capital investment and whether the Company s DSIC proposal was accepted.

11 9-2 (Arp) 9-2 Rate Case Expense. Has the Company included in operating expenses or rate base any amounts of rate case expense from prior rate cases? If so, identify, quantify and explain each such amount. The rate case expense included in operating expenses is the total estimated cost to process the current rate case and the proposed amortization period of 3 years for an annual amortization of $6,333 as shown on Exhibit 3, Schedule 5. The Company include the unamortized rate case expense in rate base as discussed in the response to 9-22.

12 9-22 (Gil) 9-22 Rate Case Expense. Has the Company included in rate base any amounts of rate case expense for the current rate case? If so, identify, quantify and explain each such amount. Yes the Company included the average balance of rate case expense, net of deferred tax, as shown on Exhibit 4, Schedule, page of 5.

13 9-23 (Prettyman) 9-23 Rate Case Expense. How long does the Company anticipate that the rates established in this rate case will be in effect? Please see response to 9-9.

14 9-24 (Jacobs) 9-24 Lead. During 26, 27 and 28 have any portions of the Company's water utility system not been in full compliance with federal and state maximum levels of lead? If so, explain fully. No. SWRI is in full compliance with federal and state maximum lead levels.

15 9-25 (Jacobs) 9-25 Lead. Explain in detail how the Company tests for levels of lead in the water that it provides. The Company follows all federal and state Lead and Copper Rules. The Company is currently on a reduced monitoring schedule that requires the Company to test for lead and copper every three (3) years. The last test was performed in 25 and is next due in 28. The last test results for 25 was fully compliant and did not exceed the lead and copper maximum limits.

16 9-26 (Arp) 9-26 Power Costs. Provide copies of the monthly power cost invoices for each month of 27 and 28. The Company has a contract with ECOVA to manage the power invoices. Please refer to Attachment 9-26 for the summary of 24, 25, 26, 27 and 28 YTD.

17 SUEZ Water Rhode Island Case No Attachment Page of Summary of Power Invoices Row Labels KWH Sum of Cost Row Labels KWH Sum of Cost Constellation NewEnergy/464,484,8 $ 37,82 Constellation NewEnergy/4,75,4 $ 57,4 //24,2 $,34 Jan 5,2 $ 9,72 2//24 96, $ 8,898 Feb,2 $ 9,368 3//24 88,4 $ 8,37 Mar 94, $ 8,78 4//24 95,2 $ 8,84 Apr,2 $ 9,48 5//24 24,8 $,579 May 38,2 $ 2,83 6//24 5,8 $ 3,985 Jun 78,4 $ 6,55 7//24 2,4 $ 9,477 Jul 29,8 $ 8,584 8//24 22,8 $ 9,7 Aug 227, $ 9,637 9//24 7,8 $ 5,99 Sep 92, $ 6,62 //24 2,4 $,27 Oct 22,8 $,663 //24 2, $ 9,467 Nov 2,8 $ 8,98 National Grid - Rhode Island/73,783,39 $ 9,36 Dec 77,8 $ 6,3 2//23,249 $ 234 National Grid - Rhode Islan,952,527 $ 2,686 //24 25,2 $ 8,64 Jan 3,23 $ 8,74 2//24 7,9 $ 7,886 Feb 5,646 $ 7,578 3//24 97,53 $ 7,6 Mar 8, $ 7,78 4//24 2,46 $ 7,68 Apr 3,33 $ 7,223 5//24 5,767 $ 7,53 May 53,4 $ 8,58 6//24 64,49 $ 9,889 Jun 2,46 $,875 7//24 226,366 $ 2,36 Jul 243,496 $ 3,34 8//24 228,235 $ 2,37 Aug 262,49 $ 2,9 9//24 87,634 $,6 Sep 223,92 $,58 //24 45,49 $ 8,77 Oct 49,392 $ 8,965 //24 23,6 $ 7,984 Nov 25,598 $ 7,239 2//24 23,852 $ 8,237 Dec 7,276 $ 7,826 Grand Total 3,267,839 $ 246,957 Grand Total 3,72,927 $ 269, Row Labels KWH Sum of Cost Row Labels Sum of Billed Quantity Sum of Cost Constellation NewEnergy/464,679,8 $ 45,535 Constellation NewEnergy/4,66,4 $ 26,82 2//25 6, $,387 2//26 2,8 $ 8,97 //26 4,6 $ 9,63 //27 93,8 $ 7,7 2//26, $ 8,75 2//27 88,8 $ 6,788 3//26 7, $ 9,27 3//27 92,6 $ 7,2 4//26 93,8 $ 8,26 4//27 7,2 $ 8,98 5//26 3,8 $ 9,859 5//27 8,2 $ 8,74 6//26 24,8 $ 7,742 6//27 53,2 $,573 7//26 247,8 $ 2,468 7//27 2,6 $ 5,985 8//26 223,4 $ 9,354 8//27 22,4 $ 6,45 9//26 8,6 $ 5,865 9//27 74,8 $ 3,25 //26 69, $ 4,643 //27 56,6 $,83 //26 7, $,6 //27 54,8 $ 4,4 National Grid - Rhode Island/73 2,62,95 $ 29,77 2//27 3,6 $ 7,897 //26 32,9 $ 8,438 National Grid - Rhode Islan,879,835 $ 36,827 2//26 3,436 $ 8,55 2// $ 2 3//26 35,992 $ 8,62 //27 2,37 $ 9,48 4//26 22,86 $ 8,78 2//27 3,56 $ 8,829 5//26 4,598 $ 9,67 3//27 7,2 $ 8,944 6//26 238,278 $ 3,367 4//27 32,34 $ 9,738 7//26 283,794 $ 5,456 5//27 3,8 $ 9,95 8//26 257,38 $ 4,342 6//27 8,834 $ 2,23 9//26 24,73 $ 2,682 7//27 247,289 $ 6,84 //26 4,58 $,848 8//27 246,978 $ 6,22 //26 39,658 $ 9,427 9//27 24,74 $ 4,74 2//26 25,58 $ 8,75 //27 84,524 $ 3,473 Grand Total 3,742,75 $ 275,35 //27 78,4 $ 8,333 2//27 2,788 $ 9,764 Grand Total 3,54,235 $ 263, YTD Row Labels KWH Sum of Cost Constellation NewEnergy/464 5,4 $ 9,82 //28 5,4 $ 9,82 ENGIE Resources 25,2 $ 9,424 2//28 8,4 $ 6,92 3//28 68, $ 5,33 4//28,8 $ 7,9 National Grid - Rhode Island/73 58,293 $ 4,56 2//27 2,444 $ 265 //28 29,22 $,25 2//28 25,668 $, 3//28 24,285 $,59 4//28 26,874 $ 9,92 Grand Total 863,893 $ 79,75

18 9-27 (Arp) 9-27 Power costs. Identify the amount of power supply costs recorded in each account by month for January 24 through April 28. Please refer to the response and attachment to 9-26

19 9-28 (Arp) 9-28 Power Costs. Does the Company record power costs in any other accounts besides 562 and 56? If so, in which other accounts are power costs recorded? The power cost from invoices are in accounts 56 and 562.

20 9-29 (Jacobs) 9-29 Tank painting. What actual tank painting has the Company conducted in each year, 23 through 27 and to-date in 28? Explain fully and identify each tank that was painted, the related cost, when the painting was completed, and over what period the Company is amortizing the cost. No tanks were painted between 23 and present. Last tank painted was Boston Neck tank in 22.

21 9-3 (Arp) 9-3 Tank painting. What expected tank painting is the Company estimating will occur in 28? Explain fully and identify each tank that is expected to be painted, the related cost, when the painting is expected to be completed, and how the Company proposes to amortize the cost. The Company is not painting any additional tanks in 28. Please refer to Exhibit 3 Schedule 9 for the list of tanks currently being amortized.

22 9-3 (Gil) 9-3 Tank painting. Has the Company included any tank painting cost or tank painting amortization expense in its request for cash working capital? If "yes" identify the amounts and show the impact on the Company's cash working capital request. Yes the Company included the /8 amount of Tank Painting Amortization ($9,82 x /8= $2,477) in the Cash Working Capital in Rate Base.

23 9-32 (Jacobs) 9-32 Well efficiency testing. How much expense has the Company recorded for well efficiency testing in each year, 24 through 27, by account? Please refer to the response to 9-33

24 9-33 (Jacobs) 9-33 Well efficiency testing. How much expense has the Company recorded for well efficiency testing by account: a) in the test year? $4, b) in the rate year? $2,45 SWRI Contractor well testing costs Test Year Rate Year Well Cost Well Cost Well Cost None $9 $9 3 $, 2 $, 5 $,367 $,367 4 $, 6 $,367 $,367 7 $,367 $,367 $9 3 $3, 4 $5, $. $4, $2,45 Well 3 estimated as part of rehab

25 9-34 (Arp) 9-34 Inflation factors. a) Identify each inflation factor used by the Company in its application and the source for each such factor. b) Does the Company have more current information (e.g., Blue Chip Economic Indicators, etc.) for any of the inflation factors that it used in its application? c) If the answer to part b is "yes" identify and provide the most current information for each inflation factor. a) Please refer to Exhibit 3 Schedule 7B for the computation of the inflation factor b) The most current information that the Company has is Blue Chip Financial Forecasts Vol. 37, No. 5, May, 28 c) The factors are still the same as originally projected.

26 9-35 (Arp) 9-35 Management fee. How much management fee expense is the Company requesting? Show amounts by account. Please refer to Exhibit 3 Schedule 4 and 4A for the Management and Services fee and the account.

27 9-36 (Arp) 9-36 Management fee. What services are provided for in the management fee? Explain fully. Please refer to MFR 2.89 ( e ) for copy of the Agreements between SUEZ Water Management and Services and SUEZ Water Rhode Island that describe the services provided.

28 9-37 (Arp) 9-37 Management fee. Identify and provide management fee invoices for each month in 26, 27 and 28 to date. Per agreement attached in MFR 2.8 ( e ) M&S allocates the cost through transfers not through invoices. Please see below the monthly allocations for 26, 27 and 28 to date. Account January $ 35,729 $ 4,349 $ 43,78 February 36,3 34,294 35,37 March 5,973 38,859 36,346 April 44,844 37,8 36,937 May 28,32 43,979 June 28,647 38,22 July 36,27 38, August 38,7 36,45 September 37,52 46,524 October 45,289 39,76 November 4,233 3,39 December 4,93 37,89 Total $ 463,49 $ 46,774 $ 52,37

29 9-38 (Arp) 9-38 Property Tax Expense. a) Identify the test year and rate year amount of property tax expense that is reflected in the Company's application. b) Identify the amount of property tax expense, by account, for each year 24 through 27. a & b Please refer to Exhibit 3 Schedule 8 for the Property Tax Expense.

30 SUEZ Water Rhode Island Case No Attachment Page of 2

31 SUEZ Water Rhode Island Case No Attachment Page 2 of 2

32 9-39 (Arp) 9-39 Vehicle accident. Refer to the response to Division 3-4(g). Show in detail how the Company accounted for the cost of repairing the vehicle that was in an accident which caused the Maintenance and Repair amount for the test year to be so much higher than in preceding years. Include the journal entries and show the amounts by account. Please refer to 9-39 Attachment for copy of the repair invoice for $3,562.46

33 9-4 (Gil) 9-4 Customer Information System (CIS). a) Show in detail how the Company has amortized the cost of the CIS, including the amount of amortization for each year, and the remaining unamortized balance as of December 3 of each year. b) Refer to page 5 of the Decision in Docket No When did the Company start recording the $59,42 per year amortization for the CIS based on Docket No which used a 2 test year and a 22 rate year, and which was to be amortized over an 8-year period? c) As of December 3, 27 did the Company have any remaining unamortized balance for the CIS? If so, identify, quantify and explain that balance, and show how it was produced based on the amortization schedule being used by the Company. d) Did the Company record any accumulated deferred income tax associated with the CIS? i) If "yes" identify the amount of ADIT at December 3, 27 associated with the CIS and show in detail how the state and federal income tax rates that were applied to derive that amount of ADIT. a, b,c. &d Please refer to 9-4 Attachment

34 SUEZ Water Rhode Island Case No. 48 CUSTOMER INFORMATIN SYSTEM (CIS) 9-4 Attachment Page of Date CCB Amount Depreciation 2.5% Balance Tax Depr 33.3% Tax Balance Book vs Tax Accumulated Diff 552,856 2/3/2 8, ,74 46,7 56,785 (37,289) 37,289 2/3/22 67,34 476,733 84, ,499 (6,945) 54, /3/23 69,766 46,967 84,285 38,24 (4,52) 268, /3/24 69, ,22 38,24 (68,448) 337,22 4 2/3/25 69, ,436 69, , /3/26 69,766 97,67 69,766 97,67 6 2/3/27 69,766 27,94 69,766 27,94 7 2/3/28 69,766 58,38 69,766 58,38 8 2/3/29 58,38 58,38 2/3/27 Accumulated Deferred 35% 44,766 (27,94 x 35%) 2/3/27 Accumulated Deferred 2% 26,86 (27,94 x 2%)

35 9-4 (Arp) 9-4 Identify each affiliate that charged or allocated cost to SWRI during the test year, and show the amount of cost allocated by each affiliate, by account. SUEZ Water New York-Labor transfer in Account 5 $ 7,578 As shown on Exhibit 3 Schedule 2 SUEZ Water Management and Services Account 985 $48,678 As shown on Exhibit 3 Schedule 4

36 9-42 (Arp) 9-42 Identify each affiliate for which SWRHI has reflected cost during the rate year, and show the amount of cost that SWRHI has requested in the rate year from each affiliate, by account. SUEZ Water New York-Labor transfer in Account 5 $,23 As shown on Exhibit 3 Schedule 2 SUEZ Water Management and Services Account 985 $59,952 As shown on Exhibit 3 Schedule 4

37 9-43 (Arp) 9-43 Does SWRI receive invoices from any affiliates? If so, identify and provide the invoices for charges from each affiliate in the test year and for each month subsequent to the test year for which such invoices are available. Please refer to the response to 9-37

38 9-44 (Gil) 9-44 Has the Company added any customers since the end of the test year? If so, identify the number of customers added in each rate class by month through April 3, 28. The Company hasn t added or lost any specific amount of customers. The Company has approximately 3 seasonal customers that connect in the summer depending on the weather. Please refer to 9-44 Attachment for the updated MFR 2.8h Billed Consumption by Customer Class (in ' Gallons) and number of Meters in Service

39 SUEZ Water Rhode Island Case No Attachment Page of SUEZ Water Rhode Island, Inc. Billed Consumption by Customer Class (in ' Gallons) and number of Meters in Service Consumption 27 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Residential 25,39 28,458 9,98 2,82 29,625 22,68 29,84 4,66 57,836 43,599 38,832 36,33 393,29 Commercial 9,988 2,54 3,929 7,37 6,467 5,75 3,86 22,564 24,797 8,26 7,487 7,764 89,562 Industrial ,232 Public Authority,584,88,545,239,233,879 2,96 2,543 3,59 3,73 2,676 2,26 25,393 Resale 7,856 6,889 5,58 7,2 44,825 32,29 5,836 45,986 29,748 25,499 9,76 36,66 Total 54,92 58,749 5,275 46,77 47,688 84,576 77,636 9,2 32,49 95,42 85,63 75, ,93 Meters 27 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Residential 7,396 7,399 7,45 7,459 7,497 7,55 7,56 7,525 7,532 7,53 7,499 7,48 7,48 Commercial Industrial Public Authority Resale Total 8,7 8,72 8,89 8,26 8,33 8,34 8,326 8,335 8,342 8,329 8,27 8,253 8,272 Average Consumption 27 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Residential Commercial Industrial Public Authority Resale 8,928. 8, ,79. 8, , , , ,993. 4, , , ,92.33 Consumption 28 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Residential 27,55 3,889 9,243 9,972 98,656 Commercial,55 3,69 4,8 8,972 47,664 Industrial ,94 Public Authority 2,44,34,278,873 6,96 Resale 9,95 23,899 9,434 8,234 8,662 Total 6,765 7,968 54,34 49, ,82 Meters 28 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Residential 7,472 7,473 7,478 7,57 7,485 Commercial Industrial Public Authority Resale Total 8,246 8,246 8,25 8, ,263 Average Consumption 28 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Residential Commercial Industrial Public Authority Resale 9,547.28, ,77.6 9,6.96,82.7

40 9-45 (Gil) 9-45 Has the Company lost any customers since the end of the test year? If so, identify the number of customers lost in each rate class by month through April 3, 28. Please refer to the response to 9-44.

41 9-46 (Gil) 9-46 Water sales. Identify the annual water sales in total, and by rate class, for each year, 22 through 27. Include related Excel files with your response. Please refer to MFR 2.8h Billed Consumption by Customer Class (in ' Gallons) and number of Meters in Service and to the excel format in response to DIV 2-

42 9-47 (Gil) 9-47 Water sales. Identify water sales, in total, and by rate class, for the test year and estimated for the rate year. Include related Excel files with your response. Please refer to the MFR 2.8h Billed Consumption by Customer Class (in ' Gallons) and number of Meters in Service for the consumption by class for Test Year and MFR 2.8h Residential Water Consumption Trend and MFR 2.8h Water Consumption Projection for the Water Projection by Class for the Rate Year.

43 9-48 (Gil/Jacobs) 9-48 Page 26 of the Commission's Decision in Docket No stated that: "It is, therefore, incumbent upon the utility to explore alternatives to address declining consumption that will not continue to financially stress its ratepayers." a) Since the 22 test year in Docket No. 4434, did the Company experience declining consumption? If so, identify the amount of consumption in total per year 22 through 27, and explain the cause of any year-over-year declines. b) Identify, quantify and explain each action taken by SWRHI since that case (Docket No. 4434) to address declining consumption. c) For each action listed in response to part b, please explain the impact on SWRI's request for a rate increase in the current rate case. a) Yes the Company is experience a declining consumption in all classes, especially in Residential and Resale as shown on MFR 2.8h Residential Water Consumption Trend, Water Consumption Projection also explained in Ms. Gil testimony pages 6 through 8. b) While the Company is always concerned about lost water whether it be from unaccounted for water, leaks or theft, it appears that the largest decline is with the resale customers. The Company has tried to determine the reason for this but as of today the Company have been unsuccessful. The Company will continue to review this situation. The Company routinely performs, testing of large meters and promotes conservation and wise use of water. Since the last rate case, the Company has a new Manager and other than the general items previously mentioned, nothing specific has been addressed, c) See response to b.

44 9-49 (Arp) 9-49 Conversion to monthly billing. Identify all costs, by account, that the Company has included in its requested rate year revenue requirement relating to the conversion to monthly billing. The only additional cost included in the rate year revenue requirement is related to additional postage. This could be found on Exhibit 3 Schedule and A. The additional amount would be $94,538.

45 9-5 (Prettyman) 9-5 Conversion to monthly billing. Will the conversion to monthly billing reduce the Company's cash working capital requirement? a) If not, explain fully why not. b) If so, identify, quantify and explain the reduction. Include supporting workpapers. If the Company performed a full lead/lag study, an adjustment would have been made, however the Company did not perform such a study. Because the Company is relatively small, in order to keep costs lower, the Company utilized the /8 th method to calculate cash working capital. As such it is not able to quantify the impact.

46 9-5 Incentive compensation. 9-5 (Arp) a) Identify the amount of incentive compensation that the Company has included in its recorded test year balances, by account and amount. b) Identify, quantify and explain all amounts of incentive compensation that the Company has removed from its recorded test year balances, by account and amount, in arriving at its requested rate year revenue requirement. c) Identify the amount of incentive compensation that the Company has included in its requested rate year revenue requirement, by account and amount. d) Referring to the Company's response to part c, are there any amounts for incentive compensation for the Company's exempt employees included in the amounts identified in response to part c? i) If so, identify, quantify and explain those amounts, by account. e) Has the Company included any amounts of incentive compensation associated with meeting financial performance goals for its exempt employees in its requested rate year revenue requirement? i) If "yes" explain fully and identify the amounts, by account and amount. f) Provide a listing of exempt employees for the test year and rate year. g) For each exempt employee, identify their total compensation for the test year and rate year. h) For each exempt employee, identify the amount of incentive compensation for the test year and rate year, in total and by account. i) For each exempt employee, identify the amount of incentive compensation related to meeting financial performance goals, for the test year and rate year, in total and by account. a) Please refer to the response to 3-3 part a and b. b) c) d) Please refer to the response to 3-3 part c and d. e) i) Please refer to the response to 3-3 part e. f) g) h) Please refer to Exhibit 3 Schedule 2A

47 9-52 Chemicals Page of 2 (Arp) a) Identify each type of chemical that the Company uses in the water treatment process. b) For each chemical identified in response to part a, identify the quantity of the chemical used in each year, 22 through 27, and for the test year and rate year. c) For each type of chemical identified in response to part a, identify the amount requested by the Company in the test year, including: i) the quantity requested ii) the unit price requested iii) the total expense requested, by account. d) For each type of chemical identified in response to part a, identify the amount requested by the Company in the rate year, including: i) the quantity requested ii) the unit price requested iii) the total expense requested, by account. e) For each type of chemical identified in response to part a, identify and provide the three most recent invoices. f) Does the Company maintain any inventory of chemicals? g) If the response to part f is "yes" provide the following monthly information for each chemical inventory for each month of 26, 27 and 28 to date: i) beginning quantity ii) beginning total cost iii) beginning unit cost iv) monthly purchases (quantity and cost) v) ending quantity, total cost and unit cost h) Include related Excel files for your responses.

48 9-52 Page 2 of 2 (Arp) a), b), c), d) Please refer to Exhibit 3 Schedule 5 and 5A e) Please refer to the response to COM -25 f) Yes the Company maintains an inventory of Chemicals g) The Company does an inventory and reconciliation once a year. h) Please refer to the response to 2-2

49 9-53 (Jacobs) 9-53 Chemicals. Has the Company identified any relationship between the quantity of chemical use and the quantity of water treated and supplied to customers? a) If not, explain fully why not. b) If so, identify the relationship between the quantity of treated water and the quantity of each chemical used by the Company in the treatment process. Include supporting explanations and workpapers. Include related Excel files. The Company s chemical usage has a direct correlation with quantity of water treated. The Company s raw water from its wells maintains consistent characteristics which rarely fluctuate. So as water production increases so doses chemical usage. Seasonal temperature also has an effect on sodium hypochlorite (CL2) dosage. As the temperature of the water increases in the summer time the dosage of CL2 needs to increase to ensure proper disinfection residuals in the Company s tanks and distribution system.