May 8, Response to Show Cause Order, Filing of Revised Tariff Sheet And Request for Any Necessary Waivers. The Dayton Power and Light Company

Transcription

1 The Dayton Power and Light Company 1065 Woodman Drive, Dayton Ohio May 8, 2018 Via etariff Honorable Kimberly D. Bose Secretary Federal Energy Regulatory Commission 888 First Street, N.E. Washington, D.C Re: Response to Show Cause Order, Filing of Revised Tariff Sheet And Request for Any Necessary Waivers The Dayton Power and Light Company Docket Nos. EL and ER Dear Secretary Bose: Pursuant to Section 205 of the Federal Power Act ( FPA ), 16 U.S.C. 824d, 18 C.F.R. Part 35, and the PJM Interconnection, L.L.C. ( PJM ) Open Access Transmission Tariff ( PJM Tariff ), PJM is submitting on behalf of The Dayton Power and Light Company ( Dayton Power or the Company ) a revised Attachment H-15 to the PJM Tariff, which attachment sets forth rates charged to load serving entities for transmission services provided by PJM to load within the Dayton zone. 1 As preserved in 9.1(a) and 9.1(e) of the PJM Tariff, Dayton Power has FPA Section 205 authority to set the rates for services under Attachment H-15 to the PJM Tariff and is thus a co-applicant in this filing. 1 Pursuant to Order No. 714, this filing is submitted by PJM Interconnection, L.L.C. ( PJM ) on behalf of The Dayton Power and Light Company ( Dayton Power ) as part of an XML filing package that conforms with the Commission s regulations. PJM has agreed to make all filings on behalf of the PJM Transmission Owners in order to retain administrative control over the PJM Tariff. Thus, Dayton Power has requested PJM submit this revision to Attachment H-15 of PJM s Open Access Transmission Tariff in the etariff system as part of PJM s electronic Intra PJM Tariff.

2 I. Contents of Filing. As discussed in the attached filing and supported by the attached Exhibits, the purpose of this filing is to comply with the Federal Energy Regulatory Commission s Order to Show Cause 2 by filing revised tariff sheets that reflect the effect on the stated rate for Network Integrated Transmission Service ( NITS ) for the Dayton Zone of a reduction in the federal income tax enacted by the Tax Cuts and Jobs Act of This filing contains the following parts: o o o This transmittal letter The Dayton Power and Light Company Response to the Order to Show Cause and Filing of Revised Tariff Sheets Exhibit 1 Redlined proposed PJM Tariff, Attachment H-15, compared to the existing PJM Tariff Attachment H-15 o Exhibit 2 Clean Proposed Tariff, Attachment H-15 o o o o o Exhibit 3 Methodology for Computing the Change in Rates Exhibit 4 Selected Pages of Trial Staff Comments in Support of Settlement in Docket No. ER , including Summary Cost of Service Study Exhibit 5 Selected Pages of Dayton Power s Application in Docket No. ER Exhibit 6 Selected Pages of Dayton Power s Application in Docket No. ER Certificate of Service II. Proposed Effective Dates and Good Cause Shown. Dayton Power requests that the Commission accept the modified Attachment H- 15 without modification, condition, or suspension. An effective date of March 21, 2018 is requested for the proposed modifications to Attachment H-15. To the extent any waivers are required for an effective date prior to the date of filing, good cause exists in that the filing reflects a rate reduction and is consistent with the refund effective date established by the Commission in the Complaint proceeding, Docket No. EL Alcoa Power Generating Inc. Long Sault Division, et al., Docket Nos. EL18-72, et al. (unconsolidated), 162 FERC 61,224 (Mar. 15, 2018) ( Show Cause Order ). 3 2

3 III. Communications. Communications with respect to this filing and any subsequent proceedings should be directed to: Randall V. Griffin Chief Regulatory Counsel The Dayton Power and Light Company 1065 Woodman Drive Dayton, OH (937) (office) (937) (Facsimile) Sharon R. Schroder Director, Regulatory Affairs The Dayton Power and Light Company 1065 Woodman Drive Dayton, OH (937) (office) (937) (cell) IV. Additional Waivers. Dayton Power requests a waiver of any other filing requirements that might otherwise apply with respect to the proposed tariff change. Good cause exists for such a waiver in that the Commission s Show Cause Order specifically invited filings on a single issue basis in order to implement the effects of the Tax Cuts and Jobs Act of 2017 quickly and that there is historical precedent for such an approach in connection with legislatively-enacted changes in the federal corporate income tax rate. Show Cause Order at 4, n.6. V. Customers Affected and Notice Provided. The proposed rates would apply to any load serving entity within the Dayton Zone who receives Network Integrated Transmission Service through the PJM OATT. A copy of this Application is being served by Dayton Power counsel to the counsel of any entity that has intervened in Docket No. EL PJM has served a copy of this filing on all PJM Members and on all state utility regulatory commissions in the PJM Region by posting this filing electronically. In accordance with the Commission s regulations, 4 PJM will post a copy of this filing to the FERC filings section of its internet site, located at the following link: with a specific link to the newly-filed document, and will send an e- mail on the same date as this filing to all PJM Members and all state utility regulatory commissions in the PJM Region 5 alerting them that this filing has been made by PJM and is 4 See 18 C.F.R. 35.2(e) and (f)(3). 5 PJM already maintains, updates and regularly uses lists for all PJM members and affected state commissions. 3

4 available by following such link. If the document is not immediately available by using the referenced link, the document will be available through the referenced link within 24 hours of the filing. Also, a copy of this filing will be available on the Commission s elibrary website located at the following link: in accordance with the Commission s regulations and Order No Respectfully submitted, THE DAYTON POWER AND LIGHT COMPANY ss: Randall V. Griffin Randall V. Griffin Its Attorney 4

5 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION The Dayton Power and Light Company ) Docket No. EL Docket No. ER Response of The Dayton Power and Light Company To Order to Show Case, Filing of Revised Tariff Sheets And Request for Any Necessary Waivers The Dayton Power and Light Company ( Dayton Power ), pursuant to Rules 206(f), 209 and 213(a) of the Rules of Practice and Procedure 1 before the Federal Energy Regulatory Commission ( FERC or the Commission ), hereby responds to the Order to Show Cause issued March 15, Under the Show Cause Order: each Respondent must either (1) submit proposed revisions to its stated transmission rates or stated transmission revenue requirements to reflect the change in the federal corporate income tax rate and describe the methodology used for making those revisions, or (2) show cause why it should not be required to do so, as discussed in the body of this order. 3 The referenced change in the federal corporate income tax rate occurred as a result of enactment of the Tax Cuts and Jobs Act of Dayton Power is hereby complying with the Show Cause Order and, through PJM Interconnection, L.L.C. ( PJM ), submits a revised tariff sheet Attachment H-15 to the PJM 1 18 C.F.R (f), , and (2017). 2 Alcoa Power Generating Inc. Long Sault Division, et al., Docket Nos. EL18-72, et al. (unconsolidated), 162 FERC 61,224 (Mar. 15, 2018) ( Show Cause Order ). 3 Id. at pp. 4-5, Ordering Paragraph (A). 4 Tax Cuts and Jobs Act, Pub. L. No , 131 Stat (2017).

6 Open Access Transmission Tariff ( OATT ) to reflect the effect of the change in federal income tax rates on the Network Integrated Transmission Service ( NITS ) stated rate applicable to transmission service within the Dayton Zone. 5 The proposed revised tariff sheets reflect a decrease of $61.19 per MW per month (or about 5.5%) in the stated NITS rate from $1, per MW per month to $1, per MW per month. The requested effective date for the revised Attachment H-15 tariff sheet is March 21, 2018, consistent with the date of publication of Notices of Initiating of Proceeding in the Federal Register, which is also the refund effective date set forth in the Show Cause Order. 6 Exhibit 1, attached hereto, is a Black-lined Attachment H-15 showing the differences between the proposed Attachment H-15 and the currently effective Attachment H-15. Exhibit 2, attached hereto, is the Clean Proposed Tariff Sheet, PJM OATT, Attachment H-15. Exhibit 3, attached hereto, sets forth the formula and data used to develop the proposed revision to the stated transmission rate and sources for the data. Exhibit 4, attached hereto, contains the relevant pages from Commission Trial Staff s Comments in a prior case that is the source for the amount of income taxes reflected in Dayton Power s current stated rate within the currently effective Attachment H-15. Exhibit 5, attached hereto, contains selected pages from Dayton Power s Application in Docket No. ER that is the source for the federal and state income tax rates that were 5 Pursuant to Order No. 714, this filing is submitted by PJM Interconnection, L.L.C. ( PJM ) on behalf of The Dayton Power and Light Company as part of an XML filing package that conforms with the Commission s regulations. PJM has agreed to make all filings on behalf of the PJM Transmission Owners in order to retain administrative control over the PJM Tariff. Thus, The Dayton Power and Light Company has requested PJM submit this revised Attachment H-15 in the etariff system as part of PJM s electronic Intra PJM Tariff Fed. Reg (Mar. 21, 2018); Show Cause Order at Ordering Para. (D). -2-

7 used in that case and applied here to compute the effects of the federal income tax reduction enacted in the Tax Cuts and Jobs Act of Exhibit 6, attached hereto, contains selected pages from Dayton Power s Application in Docket No. ER that is the source for the billing determinants applied in that case to develop the currently effective stated NITS rate and applied here to compute the effects of the federal income tax reduction enacted in the Tax Cuts and Jobs Act of I. Background of Existing Stated Transmission Rate. Dayton Power s current Network Integrated Transmission Service ( NITS ) stated rate of $1, per MW per month is a function of the cost of service studies developed in Docket No. ER , as modified by a black-box settlement that included a $40,100,000 annual transmission revenue requirement, with a further adjustment established in Docket No. ER to establish a stated monthly transmission rate based on the use of 1 CP billing determinants. Docket No. ER was a case in which Dayton Power first proposed unbundled generation, ancillary services, and transmission rates in connection with establishing its own open access transmission tariff. The original application, filed December 19, 1997, included a cost of service study that yielded a proposed annual NITS transmission revenue requirement of $64.5 million. 7 After an extensive process, a black-box settlement was reached and filed on January 20, 1999, which included a settlement NITS transmission revenue requirement of 7 See Trial Staff Comments in Support of Settlement in Docket No. ER (attached in pertinent part as Ex. 4, p. 2 (filed Feb. 9, 1999). -3-

8 $40,100, There was no explicit agreement as to the individual elements that were changed in order to reach the $40,100,000 figure. Certain elements of the original cost of service study that are relevant to this current filing would not have changed, however. In particular, the federal income tax rate used was 35% and the state income tax rate used was 0.108%. 9 While not an explicit part of the Stipulation, when the Commission Trial Staff filed comments in support of the Stipulation, it included a summary Cost of Service table that tied to the $40,100,000 revenue requirement. The relevant portions of Staff s comments and the summary Cost of Service table are attached hereto as Exhibit 4. That summary Cost of Service table shows that the annual net amount of federal taxes reflected in the transmission rate was $4,367,134 and the net amount of state income taxes reflected in the transmission rate was $14,251. See Exhibit 4, hereto, at Attachment A (Transmission Column). In 2004, Dayton Power joined PJM and the related Docket No. ER established Attachment H-15 of PJM s Open Access Transmission Tariff ( OATT ), which sets forth the $1, per MW per month NITS stated rate that has remained in effect to this day. 10 There was one significant adjustment made between Docket Nos. ER and ER The Commission in several cases prior to 2004 had announced a strong preference for the use of the 1 CP method for designing transmission rates. Thus, when Dayton Power and PJM filed the original proposed Attachment H-15 in Docket No. ER , a 8 See Exhibit 4, attached hereto, Staff Comments in Support of Settlement, pp See also, The Dayton Power and Light Company, Docket No. ER , Offer of Settlement, Attachment 5, Sch. 10 (OATT, Original Sheet No. 69) (filed Jan. 20, 1999). 9 See Exhibit 5, Workpapers T-2, pp. 3 attached hereto. 10 As originally put into effect in Docket No. ER , the $1, figure did not clearly identify that it was a MW per month charge. That was corrected in filings made by PJM on Dayton Power s behalf in Docket No. ER (Sept. 9, 2015) as part of a larger settlement in The Dayton Power and Light Company, Docket Nos. ER , et al. -4-

9 stated rate was developed using the $40,100,000 annual revenue requirement established in Docket No , and 1 CP billing determinants. 11 The Commission accepted the use of the 1 CP method, which was non-controversial with respect to Dayton Power and was one aspect of resolving a contested issue with respect to the other utility in the proceeding, American Electric Power. 12 II. Methodology for Revising the Stated Transmission Rate. Attached as Exhibit 3 is the formula used to revise the stated transmission rate. It was developed as follows: A. Step 1: Dayton Power first reviewed Order No. 475, which was issued by the Commission in with respect to the Tax Reform Act of 1986, and referenced in the Show Cause Order. 14 Order No. 475 established the following formula that is replicated in Exhibit 3: Where K = D D(E/F) I D= Composite income taxes allowable included in rates in effect on the date that the change in the Federal corporate income tax rate becomes effective. 11 See Application of PJM Interconnection, L.L.C., AEP East Operating Companies and The Dayton Power and Light Company, Docket No. ER , n. 23 (July 30, 2004). Selected relevant pages are attached hereto at Exhibit PJM Interconnection, L.L.C., AEP East Operating Companies and The Dayton Power and Light Company, Docket No. ER , 108 FERC 61,318 (2004) at P28 and Ordering Paragraph (C). 13 Rate Changes Relating to the Federal Corporate Income Tax Rate for Public Utilities, Order No. 475, FERC Stats. & Regs. 30,752, order on reh g, 41 FERC 61,029 (1987). 14 Show Cause Order, at 4, n

10 E= Composite income tax factor using the new Federal corporate income tax rate and the effective state income tax rate from the rate application docketed upon with existing rates are based. This is computed by the following formula: Composite marginal income tax rate 1- composite marginal income tax rate F= Composite income tax factor using the old Federal corporate income tax rate. This is computed using the same formula used for determining E. I= Test period billing units from the rate application docket upon which the rates are based. Absent extraordinary circumstances a public utility shall use demand billing units. This information is usually available in Statement BG of the rate application and/or settlement or compliance documents. K = Required rate reduction per billing demand unit. B. Step 2. Dayton Power then reviewed filed documents and cost of service studies from Docket No , modified only by using the 1 CP monthly billing determinants applied in Docket No. ER , and applied the relevant data from those documents to the above formula. Dayton Power changed only the federal corporate income tax rate from 35% as used in Docket No to the new federal corporate income tax rate of 21%. Dayton Power made no adjustments to the state income tax rate that was used in Docket No The results, as shown in Exhibit 1, are that: D = $4,381,385 E = F = Source: Sum of net federal and state income taxes as reflected in Trial Staff Comments in Support of Stipulation, Attachment A (Transmission Column) Docket No. ER (attached here in Ex. 4) Composite Tax Rate using 21% FIT and 0.107% SIT Source: Tax Cut and Jobs Act for FIT; Filed Workpapers from Application in Docket No. ER , T-2, p. 3 of 8 for SIT rate (attached here in Ex. 5) Composite Tax Rate using 35% FIT and 0.107% SIT Source: Ex. 4, Filed Workpapers from Application in Docket No. ER , Workpapers T-2, p. 3 of 8 for FIT and SIT rate (attached here in Ex. 5) -6-

11 I = 36,192 MW 12 x 1 CP monthly billing determinants. Source: Pre-filed Testimony of Sharon R. Crawford, Ex. SRC-3 from Application in Docket No. ER (attached here in Ex. 6). and K = $61.19 per MW per month. [Calculated] C. Step 3. The required rate reduction (K) of $61.19 per MW per month was then applied to the existing stated rate of $1, per MW per month, which yielded a new rate to be incorporated into PJM OATT Attachment H-15 of $1, per MW per month. This rate was then multiplied against the same billing determinants used in Docket No. ER to show an annual revenue requirement amount of $37,885,386, which is also reflected in the new proposed tariff sheet. III. Effective Date and Request for Necessary Waivers. The Show Cause Order established a refund effective date as of the date the Show Cause Order was published in the Federal Register, which occurred on March 21, Dayton Power requests an effective date for the revised proposed PJM OATT Attachment H-15 tariff sheets of March 21, To the extent a waiver is required for a proposed effective date that is prior to the date of filing, Dayton Power requests such a waiver and notes that good cause for a waiver exists in that the proposed change is a rate reduction. Dayton Power also requests a waiver of any other filing requirements that might otherwise apply in connection with a proposed change in tariff rates. In this regard, the Commission, in its Show Cause Order, specifically invited Dayton Power and similarly situated utilities to file the proposed rate adjustment on a single-issue basis, noting -7-

12 historical precedent for such an approach in connection with changes in the federal income tax rate. 15 IV. Service. Dayton Power has served all parties that have intervened in Docket No. EL PJM has served a copy of this filing on all PJM Members and on all state utility regulatory commissions in the PJM Region by posting this filing electronically. In accordance with the Commission s regulations, 16 PJM will post a copy of this filing to the FERC filings section of its internet site, located at the following link: with a specific link to the newly-filed document, and will send an e- mail on the same date as this filing to all PJM Members and all state utility regulatory commissions in the PJM Region 17 alerting them that this filing has been made by PJM and is available by following such link. If the document is not immediately available by using the referenced link, the document will be available through the referenced link within 24 hours of the filing. Also, a copy of this filing will be available on the Commission s elibrary website located at the following link: in accordance with the Commission s regulations and Order No V. Conclusion The Dayton Power and Light Company hereby requests that the Commission: 1) accept this response to the Show Cause Order; 2) approve, with an effective date of March 21, 2018, the proposed revised stated transmission rate of $ per MW per month and the corresponding 15 Show Cause Order at 4, n See 18 C.F.R. 35.2(e) and (f)(3). 17 PJM already maintains, updates and regularly uses lists for all PJM members and affected state commissions -8-

13 annual revenue requirement of $37,885,386 as reflected in the proposed tariff sheet attached hereto as Exhibit 1 and filed in etariff format; 3) grant any necessary waivers with respect to the effective date and any other filing requirements that might otherwise be applied and 4) direct Dayton Power to work with PJM to compute and distribute refunds appropriately. Respectfully submitted, The Dayton Power and Light Company Randall V. Griffin Randall V. Griffin Chief Regulatory Counsel The Dayton Power and Light Company 1065 Woodman Drive Dayton, OH (937) (office) (937) (Facsimile) Dated: May 11,

14 EXHIBIT 1 ATTACHMENT H-15 TARIFF SHEET REDLINED FORMAT PROPOSED COMPARED AGAINST EXISTING

15 ATTACHMENT H-15 Annual Transmission Rates -- The Dayton Power and Light Company For Network Integration Transmission Service 1. The annual transmission revenue requirement is $40,100,00037,885,336 and the rate for Network Integration Transmission Service is $1, , per MW per month. Service utilizing facilities at voltages below 69 kv will be subject to additional charges as set forth in paragraph 5 below. 2. Within the Dayton Zone, a Network Customer's peak load shall be adjusted to include transmission losses equal to 3.0% of energy received for transmission, as well as any applicable distribution losses as reflected in applicable state tariffs or service agreements that contain specific distribution loss factors for said Network Customer. Notwithstanding section 15.7 of the Tariff, the transmission loss factor of 3.0% also shall apply to point-to-point transmission service with a point of delivery in the Dayton Zone. 3. The rate in paragraph 1 of this Attachment shall be effective until amended by the Transmission Owner(s) within the zone or modified by the Commission. 4. In addition to the rate set forth in paragraph 1 above, the Network Customer purchasing Network Integration Transmission Service shall pay for transmission congestion charges, and any other applicable charges, in accordance with the provisions of this Tariff, and any amounts necessary to reimburse the Transmission Owner(s) for any amounts payable to them as sales, excise, btu, carbon, valueadded, or similar taxes (other than taxes based upon or measured by net income) with respect to the amounts payable pursuant to the Tariff. 5. a. Unless otherwise specified in a service agreement that is in effect and on file with the Commission, in addition to the rates and charges set forth and adjusted as provided in paragraphs 1-4 above, a Network Customer receiving service utilizing facilities at voltages below 69 kv shall pay a Wholesale Distribution Charge comprised of a monthly demand charge per kilowatt (as stated below) multiplied by the Network Customer s contribution (in kilowatts) to the PJM Network Service Peak Load for the Dayton Zone; excluding any metered peak load received at receipt points operating at 69 kv or above. b. The monthly demand charge shall be as follows: $1.32 per kw for Network Customers served through interconnection facilities operating at 12 kv, which include: the Village of Arcanum, the Village of Eldorado, the Village of Lakeview, the Village of Mendon, and the Village of Yellow Springs. Page 1

16 $0.82 per kw for Network Customers served through interconnection facilities operating at 33 kv, which includes: the Village of Waynesfield. 1 c. Buckeye Power, Inc. and its members that are served through interconnection facilities operating below 69 kv are not subject to the Wholesale Distribution Charge set forth in this paragraph 5 because their wholesale distribution charges are specified in a service agreement that is in effect and on file with the Commission. Any modifications to such charges or any future applicability of a Wholesale Distribution Charge to Buckeye Power, Inc. or its members shall be effective only if made and approved by the Commission as the result of filings made in conformance with the provisions of a settlement approved by the Commission in Docket Nos. ER , et al. d. Any Network Customer not identified in paragraphs 5.b or 5.c who seeks wholesale distribution service from The Dayton Power and Light Company through interconnection facilities operating at below 69 kv shall pay a Wholesale Distribution Charge as set forth above based on the voltage level of the interconnection facilities. 1 As provided in the Settlement approved by the Commission in Docket Nos. ER , et al., the rates, terms, and conditions set forth in paragraphs 5.a and 5.b are fixed and not subject to change absent mutual consent of The Dayton Power and Light Company and the Network Customers identified in paragraphs 5.b and 5.c through and including December 31, Pursuant to the Settlement, neither The Dayton Power and Light Company nor the Network Customers may unilaterally file to change these rates with an effective date prior to January 1, Page 2

17 EXHIBIT 2 PROPOSED TARIFF SHEET H-15 CLEAN FORMAT

18 ATTACHMENT H-15 Annual Transmission Rates -- The Dayton Power and Light Company For Network Integration Transmission Service 1. The annual transmission revenue requirement is $37,885,336 and the rate for Network Integration Transmission Service is $1, per MW per month. Service utilizing facilities at voltages below 69 kv will be subject to additional charges as set forth in paragraph 5 below. 2. Within the Dayton Zone, a Network Customer's peak load shall be adjusted to include transmission losses equal to 3.0% of energy received for transmission, as well as any applicable distribution losses as reflected in applicable state tariffs or service agreements that contain specific distribution loss factors for said Network Customer. Notwithstanding section 15.7 of the Tariff, the transmission loss factor of 3.0% also shall apply to point-to-point transmission service with a point of delivery in the Dayton Zone. 3. The rate in paragraph 1 of this Attachment shall be effective until amended by the Transmission Owner(s) within the zone or modified by the Commission. 4. In addition to the rate set forth in paragraph 1 above, the Network Customer purchasing Network Integration Transmission Service shall pay for transmission congestion charges, and any other applicable charges, in accordance with the provisions of this Tariff, and any amounts necessary to reimburse the Transmission Owner(s) for any amounts payable to them as sales, excise, btu, carbon, valueadded, or similar taxes (other than taxes based upon or measured by net income) with respect to the amounts payable pursuant to the Tariff. 5. a. Unless otherwise specified in a service agreement that is in effect and on file with the Commission, in addition to the rates and charges set forth and adjusted as provided in paragraphs 1-4 above, a Network Customer receiving service utilizing facilities at voltages below 69 kv shall pay a Wholesale Distribution Charge comprised of a monthly demand charge per kilowatt (as stated below) multiplied by the Network Customer s contribution (in kilowatts) to the PJM Network Service Peak Load for the Dayton Zone; excluding any metered peak load received at receipt points operating at 69 kv or above. b. The monthly demand charge shall be as follows: $1.32 per kw for Network Customers served through interconnection facilities operating at 12 kv, which include: the Village of Arcanum, the Village of Eldorado, the Village of Lakeview, the Village of Mendon, and the Village of Yellow Springs. Page 1

19 $0.82 per kw for Network Customers served through interconnection facilities operating at 33 kv, which includes: the Village of Waynesfield. 1 c. Buckeye Power, Inc. and its members that are served through interconnection facilities operating below 69 kv are not subject to the Wholesale Distribution Charge set forth in this paragraph 5 because their wholesale distribution charges are specified in a service agreement that is in effect and on file with the Commission. Any modifications to such charges or any future applicability of a Wholesale Distribution Charge to Buckeye Power, Inc. or its members shall be effective only if made and approved by the Commission as the result of filings made in conformance with the provisions of a settlement approved by the Commission in Docket Nos. ER , et al. d. Any Network Customer not identified in paragraphs 5.b or 5.c who seeks wholesale distribution service from The Dayton Power and Light Company through interconnection facilities operating at below 69 kv shall pay a Wholesale Distribution Charge as set forth above based on the voltage level of the interconnection facilities. 1 As provided in the Settlement approved by the Commission in Docket Nos. ER , et al., the rates, terms, and conditions set forth in paragraphs 5.a and 5.b are fixed and not subject to change absent mutual consent of The Dayton Power and Light Company and the Network Customers identified in paragraphs 5.b and 5.c through and including December 31, Pursuant to the Settlement, neither The Dayton Power and Light Company nor the Network Customers may unilaterally file to change these rates with an effective date prior to January 1, Page 2

20 EXHIBIT 3 FORMULA USED TO COMPUTE RATE EFFECT OF FEDERAL INCOME TAX CHANGE

21 FORMULA USED TO COMPUTE RATE EFFECT OF FEDERAL INCOME TAX CHANGE FERC Formula: K = (D-D(E/F)) / I K D E Description from 1986 FERC Order Required rate reduction per billing demand unit. Composite income taxes allowable included in rates in effect on the date that the change in the Federal corporate income tax rate becomes effective Composite income tax factor using the new Federal corporate income tax rate and the effective state income tax rate from the rate application docket upon which existing rates are based. This is computed by the following formula: composite marginal income tax rate 1 composite marginal income tax rate $ $ 4,381, F Composite income tax factor using the old Federal corporate tax rate. This is computed by the same formula used for determining E I Test period billing units from the rate application docket upon which the rates that are in effect are based. Absent extraordinary circumstances a public utility shall use demand billing units. This information is usually available in Statement BG of the rate application and/or settlement or compliance documents. 36,192 1

22 EXHIBIT 4 SELECTED RELEVANT PAGES FROM TRAIL STAFF COMMENTS AND SUMMARY COST OF SERVICE STUDY SUBMITTED IN DOCKET NO. ER IN SUPPORT OF SETTLEMENT

23

24

25

26

27

28

29

30

31 EXHIBIT 5 SELECTED RELEVANT PAGES FROM APPLICATION IN DOCKET NO. ER

32

33

34

35

36

37

38

39

40

41

42 EXHIBIT 6 SELECTED RELEVANT PAGES FROM APPLICATION IN DOCKET NO. ER

43

44

45

46

47

48

49