UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION. Public Service Company of Colorado ) Docket No.

Transcription

1 Page of UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Public Service Company of Colorado ) Docket No. ER PREPARED TESTIMONY OF Deborah A. Blair XCEL ENERGY SERVICES INC. ON BEHALF OF PUBLIC SERVICE COMPANY OF COLORADO

2 Page of 0 0 I. WITNESS IDENTIFICATION AND QUALIFICATIONS Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. A. My name is Deborah A. Blair. My business address is 00 Larimer Street, Denver, Colorado 00. Q. ON WHOSE BEHALF ARE YOU TESTIFYING IN THIS PROCEEDING? A. I am filing testimony on behalf of Public Service Company of Colorado ( PSCo ), a Colorado corporation and electric utility subsidiary of Xcel Energy Inc. ( Xcel Energy ). Xcel Energy is a registered holding company that owns several electric and natural gas utility operating companies. Q. BY WHOM ARE YOU EMPLOYED AND WHAT IS YOUR POSITION? A. I am employed by Xcel Energy Services Inc., the service company subsidiary of Xcel Energy, as Director, Revenue Analysis. Q. PLEASE OUTLINE YOUR RESPONSIBILITIES AS DIRECTOR, REVENUE ANALYSIS. A. I am responsible for determining the overall revenue levels required in the regulatory jurisdictions of PSCo and SPS. I am responsible for calculating the cost of service studies filed before the state and federal regulatory authorities that regulate these Xcel Energy Operating Companies. I am also responsible for calculating all wholesale production and transmission formula rates currently in place, as approved by Federal Energy Regulatory Commission ( FERC or Xcel Energy is the parent company of the following four wholly owned utility operating companies: Northern States Power Company, a Minnesota corporation; Northern States Power Company, a Wisconsin corporation; Public Service Company of Colorado, a Colorado corporation ( PSCo ); and SPS (Southwestern Public Service Company, a New Mexico corporation) (collectively, Operating Companies, or individually, Operating Company ). Xcel Energy s gas pipeline subsidiary is WestGas InterState, Inc.

3 Page of 0 0 Commission ). I also prepare and file testimony supporting cost of service studies and formula rates before regulatory authorities with jurisdiction over these rates. Q. PLEASE DESCRIBE YOUR PROFESSIONAL EXPERIENCE. A. I graduated from Colorado State University in with a Bachelor of Science degree in Business Administration, with an emphasis in Accounting. I began my career with PSCo in June in the Accounting Division. I held several positions in the Accounting Division, including accountant for the Cheyenne Light, Fuel and Power Company, which at the time was a PSCo subsidiary, and accountant for PSCo. In, I accepted a position as a Rate Accountant in the PSCo Revenue Requirements Department. In, I was promoted to Supervisor, Revenue Reporting, and, in, I was promoted to Unit Manager, Revenue Requirements. In May, I was promoted to Director, Regulatory Support Services, for New Century Services, Inc., the predecessor to XES. In August 000, I accepted my current position of Director, Revenue Analysis of XES. Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORE ANY REGULATORY AUTHORITIES? A. Yes. I have testified in various state regulatory proceedings before the Colorado Public Utilities Commission, the New Mexico Public Regulation Commission, the Public Utility Commission of Texas, and the Wyoming Public Service Commission. I have also filed testimony in several FERC proceedings, specifically, Docket Nos. ER--000, ER , ER0--000, ER0-

4 Page of (the previously effective formula transmission rate for PSCo), EL0-- 00, ER0--000, ER (formula transmission rate for the two NSP Companies), ER (formula transmission rate for SPS), ER0--000, ER0--000, ER (formula production rate for NSPW), ER (formula production rate for PSCo), ER--000 (the currently effective transmission formula rate for PSCo), and ER Q. WHAT IS THE PURPOSE FOR YOUR TESTIMONY? A. I will describe the accounting associated with both the costs that will be incurred to facilitate the Joint Dispatch Agreement ( JDA ) as well as the revenue associated with the management fee that is being proposed as part of the JDA. Q. MR. WELCH DESCRIBES THE ACTIVITIES THAT ARE REQUIRED TO PERFORM THE JDA. HOW ARE THE COSTS INCURRED BY XCEL ENERGY SERVICES BUSINESS SYSTEMS ORGANIZATION FOR THE JDA GOING TO BE RECORDED? A. As described more fully in Mr. Welch s testimony, PSCo will incur both up-front capital costs and ongoing operating expenses to administer the JDA. The capital costs are associated with software developed to implement and support the JDA, which will initially be recorded in Account 0, Construction Work in Progress - Electric. Once placed in service, these assets will be transferred to Account 0, Miscellaneous Intangible Plant, and will be amortized over a period of three years, with such amortization recorded in Account 0, Amortization of Other Electric Plant. PSCo notes that, in its formula rate templates, intangible plant is allocated between Production, Transmission, and Distribution using a wages and salary allocator. In order to ensure that

5 Page of 0 0 Transmission customers do not bear any costs associated with these JDA-related capital projects, PSCo proposes to calculate the impact of such allocations on the transmission revenue requirement and include an offsetting revenue credit in the formula rate template, resulting in zero net impact. A negative revenue credit for the same amount would then be recorded in the production formula rate template to appropriately shift these costs to Production. The costs for ongoing support and maintenance activities for this software will be directly tracked by Business Systems under specific work orders. Since these activities will impact only systems used by the production function for Joint Dispatch, the costs of these activities will be recorded in Account, System Control and Load Dispatching. In PSCo s formula rates, expenses recorded in Account are 00 percent allocated to PSCo s Production customers. Under the JDA, PSCo s Production customers pay all costs of the JDA (offset by revenues from management fees collected from other JDA Parties) and also benefit under the JDA through economy energy efficiencies, as described by Mr. Welch. Q. HOW WILL COSTS INCURRED BY COMMERCIAL OPERATIONS BE RECORDED? A. The costs associated with Commercial Operations activities are presently recorded in Account, System Control and Load Dispatching. The Joint Dispatch activities will similarly be expensed to this account. As described above, in PSCo s formula rates, expenses recorded in Account are 00 percent allocated to Production customers. Under the JDA, PSCo s Production

6 Page of 0 0 customers pay all costs of the JDA (offset by revenues from management fees collected from other JDA Parties) and also benefit under the JDA through economy energy efficiencies. Q. WHAT IS THE ACCOUNTING THAT WILL BE ASSOCIATED WITH THE MANAGEMENT FEE? A. Revenues associated with the management fee will be recorded in Account, Other Electric Revenues. In PSCo s formula rates, these revenues will be revenue-credited to PSCo s Production formula customers to offset the JDArelated costs incurred by retail and wholesale Production customers. If recovery of management fee revenues exceeds costs incurred to administer the JDA, such excess would benefit PSCo s Production customers. Wholesale Production ratepayers will receive the benefit of this revenue through PSCo s forwardlooking formula rate while the retail jurisdiction s share of this revenue will be managed pursuant to the directives of the Colorado Public Utility Commission. Q. ABOVE YOU STATE THAT SOME COSTS ASSOCIATED WITH THE JDA WILL BE ALLOCATED USING SALARIES AND WAGES, RESULTING IN COSTS GOING TO PRODUCTION, TRANSMISSION AND DISTRIBUTION. HOW DOES PSCO PROPOSE ASSURING COSTS ARE NOT BORNE BY THE PSCO TRANSMISSION FUNCTION? A. As previously described, in PSCo s formula rate templates, intangible plant is allocated between Production, Transmission, and Distribution functions using a wages and salary allocator. This includes both amortization expenses as well as

7 Page of 0 0 impacts to the return and income tax portions of the revenue requirement resulting from the inclusion of the allocated portion of the intangible assets in rate base. In order to ensure that Transmission customers do not bear any costs associated with these JDA-related assets, PSCo proposes to calculate the impact of such allocations on the transmission revenue requirement and include an offsetting revenue credit in the formula rate template, resulting in zero net impact. A negative revenue credit for the same amount would then be recorded in the production formula rate template to appropriately shift these costs to Production. PSCo estimates that the cost of the JDA IT system that would initially be allocated to Transmission is $, for the first twelve months after the assets are placed in service, based on an estimated cost of $,0. Exhibit No. PSCo is the projected calculation for the transmission credit to offset the JDA costs that are allocated to transmission. PSCo proposes that, throughout the three-year useful life of these assets, PSCo will calculate the impact on the revenue requirement in the PSCo Transmission formula rate resulting from return, income taxes, and amortization on these JDA assets and include a revenue credit in the Transmission formula rate to offset such costs. PSCo will credit the Transmission formula rate on Table, Workpaper F- of Attachment O of its formula rate template and supply Transmission customer workpapers that identifies how the credit was determined including the actual capital costs, and updated allocation factors. Likewise a negative credit will be on Table, Schedule H in the Production formula rate template and PSCo will provide Production customers workpapers that show the calculation based on actual costs and update allocation

8 Page of factors. Through this transfer, Transmission customers will be made whole and will not be required to bear any portion of the costs associated with the JDA. Rather, PSCo s retail and wholesale Production customers will bear the costs of the JDA that are not offset by the management fee paid by the other JDA parties. Q. DOES THIS CONCLUDE YOUR TESTIMONY? A. Yes.