BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION ) ) ) ) ) ) DIRECT TESTIMONY BARBARA L. CASEY MANAGER, REGULATORY FILINGS ENTERGY SERVICES, INC.

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1 BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF ENTERGY ARKANSAS, INC. S APPLICATION FOR AN ORDER FINDING THE DEPLOYMENT OF ADVANCED METERING INFRASTRUCTURE TO BE IN THE PUBLIC INTEREST AND EXEMPTION FROM CERTAIN APPLICABLE RULES DOCKET NO. -00-U DIRECT TESTIMONY OF BARBARA L. CASEY MANAGER, REGULATORY FILINGS ENTERGY SERVICES, INC. ON BEHALF OF ENTERGY ARKANSAS, INC. SEPTEMBER, 0

2 Direct Testimony of Barbara L. Casey I. BACKGROUND AND INTRODUCTION Q. PLEASE STATE YOUR NAME, TITLE, AND BUSINESS ADDRESS. A. My name is Barbara L. Casey. My business address is West Capitol Avenue, Little Rock, Arkansas 0. I am employed by Entergy Services, Inc. ( ESI as a Manager, Regulatory Filings. Q. ON WHOSE BEHALF ARE YOU TESTIFYING? A. I am testifying on behalf of ( EAI or the Company. 0 Q. PLEASE DESCRIBE YOUR EDUCATION, PROFESSIONAL AND WORK EXPERIENCE. A. I have a Bachelor s degree in Business Administration in Accounting from the University of Central Arkansas, Conway, Arkansas. I am a Certified Public Accountant and licensed to practice in Arkansas. I am a member of the American Institute of Certified Public Accountants and the Arkansas Society of Certified Public Accountants. I began my career with EAI (then known as Arkansas Power & Light Company in as a Staff Accountant I, in the General Accounting group; in, I was promoted to Staff Accountant II. In, I began working in the Taxes & Special ESI is a subsidiary of Entergy Corporation that provides technical and administrative services to the Entergy Operating Companies. The Entergy Operating Companies include EAI; Entergy Louisiana, LLC; Entergy Mississippi, Inc.; Entergy New Orleans, Inc.; and Entergy Texas, Inc.

3 Direct Testimony of Barbara L. Casey Studies group. I worked in that group until 0. Thereafter, I worked in the Regulatory Accounting & Tax Group. After a reorganization of the accounting and tax functions in, I began working in Regulatory Accounting. In October 00, I was promoted to Senior Staff Accountant, Regulatory Accounting. In this role, I was responsible for preparing accounting and financial data along with supporting testimony for the Entergy Operating Companies rate filings. In January 0, I was promoted to Regulatory Project Coordinator in the Regulatory Filings department. In this role, I was responsible for providing analysis and support to EAI in the preparation of cost-of-service studies, rider updates, and other rate-related filings. In July 0, I was promoted to my current position as Manager in the Regulatory Filings department. In my present position, I am responsible for general rate-related regulatory support in the areas of regulatory accounting for EAI. 0 Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORE A REGULATORY COMMISSION? A. Yes, I testified before the Arkansas Public Service Commission ( APSC or the Commission in Docket No. --TF, in which I discussed the Company s 0 Arkansas Nuclear One ( ANO Decommissioning Cost Rider Update; Docket No. -0-U, in which I addressed the necessary updates to the Capacity Cost Recovery Rider due to the Union Power Station ( UPS acquisition; Docket No. --U, in which I described

4 Direct Testimony of Barbara L. Casey EAI s proposal to recover costs associated with the Company s application for approval to acquire the Power Block generating resource at UPS; Docket No. -0-U, in which I supported financial information used to develop the Company s cost of service study; and Docket No. -0-FR, in which I support the financial information used to develop EAI s Rate Schedule No., Formula Rate Plan Rider ( Rider FRP, filing in July 0. 0 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? A. The purpose of my testimony is to support the Company s application for an order finding the deployment of advanced metering infrastructure ( AMI to be in the public interest and exemption from certain APSC rules. More specifically, I will:. describe the Company s recommendation to utilize Rider FRP to recover the costs of EAI s investment in AMI and other AMIrelated costs, and to reflect the estimated Operational Benefits described by Company witness Jay A. Lewis in rates;. request approval of regulatory asset treatment for 0 and 0 customer education costs and 0 information technology ( IT operations and maintenance ( O&M costs;. provide an estimate of the annual revenue requirement effect of including these amounts in Rider FRP; and. provide proposed changes to EAI s Schedule of Exemptions.

5 Direct Testimony of Barbara L. Casey II. COST RECOVERY 0 Q. WHY DOES EAI PROPOSE TO RECOVER THE COSTS OF ITS INVESTMENT IN AMI AND OTHER AMI-RELATED COSTS THROUGH RIDER FRP? A. In APSC Docket No. -0-U, EAI filed notice of its intent to be regulated under a formula rate plan pursuant to Ark. Code Ann. --0 et seq. EAI elected this cost recovery methodology in order to: deal with the constraints of traditional rate regulation - particularly historic test years and the requirement to file comprehensive base rate cases in order to adjust rates - in an economic environment typified by relatively flat sales growth and increasing investments in generation, transmission, and distribution assets. EAI s investment in AMI, which is a multi-year project, is precisely the type of investment in assets that was contemplated in Docket No. - 0-U for inclusion in Rider FRP. In fact, EAI s Rider FRP uses a projected test year, so the capital investments forecasted to close to plant in each year and any forecasted O&M expenses are included in the Rider FRP rate calculation for each specific year. Through this rate setting mechanism, AMI deployment costs will be reflected in rates near the time they are incurred. Likewise, customers will see the effects of the Docket No. -0-U, McDonald Direct Testimony at, - (April, 0. New capacity acquisitions are covered by the on-going use of EAI s Rate Schedule No., Capacity Acquisition Rider. Docket No. -0-U, Lewis Direct Testimony at, - (April, 0.

6 Direct Testimony of Barbara L. Casey quantified and non-quantified benefits from AMI described by EAI witnesses Jay A. Lewis and Oscar D. Washington at the time the benefits are realized. Q. WHEN WILL RIDER FRP BEGIN TO INCLUDE THE FORECASTED INVESTMENT FOR AMI AND THE ASSOCIATED INFRASTRUCTURE? A. AMI capital investments will not begin to close to plant in service until 0. Thus, the July 0 Rider FRP filing, for the 0 Projected Year, will be the first to include forecasted AMI amounts. This is also the first Rider FRP filing in which EAI will include any forecasted expense amounts associated with the AMI deployment. As explained in more detail by Mr. Lewis, the expense amounts included beginning with the 0 Projected Year will be offset by expected Operational Benefits. 0 Q. HAS EAI ALREADY INCURRED COSTS RELATED TO AMI? A. Yes. Costs have already been incurred in connection with matters such as vendor evaluation and selection and preliminary design work described by EAI witness Rodney W. Griffith. These costs are currently reflected in construction work in progress and will be included in a future Rider FRP filing concurrently with when they are expected to be placed in service. EAI has also incurred some additional O&M expenses in 0 related to the customer education plan described by Mr. Washington and expects, in

7 Direct Testimony of Barbara L. Casey total, a similar amount to be incurred in 0. I describe these costs in more detail below. Q. PLEASE DESCRIBE THE CUSTOMER EDUCATION EXPENSES. A. As explained by Mr. Washington, the Company is planning to implement a comprehensive customer education program concurrent with the AMI ramp-up and deployment. For 0 and beyond, these amounts will be included in the annual O&M forecast to be included in Rider FRP. However, approximately $,000 is expected to be incurred in 0 and is also budgeted in 0. Q. HOW DOES THE COMPANY PROPOSE TO RECOVER THE 0 AND 0 CUSTOMER EDUCATION COSTS? A. Because the Company had not yet presented its Application in this case for consideration by the Commission, O&M costs expected to be incurred in 0 and the 0 Projected Year were not included in the 0 Rider FRP filing. Therefore, the Company is requesting a Commission order authorizing deferral of these 0 and 0 customer education costs to a regulatory asset for subsequent recovery through Rider FRP. Such an 0 order would allow these expenses to be recorded on the Company s balance sheet as a regulatory asset until they are included in rates. EAI This request does not fall within the scope of Attachment C, General Section, Item L of Rider FRP.

8 Direct Testimony of Barbara L. Casey proposes that the total amount be included in the July 0 Rider FRP filing as part of the total AMI costs for the 0 Projected Year. Q. ARE THE CUSTOMER EDUCATION COSTS THE ONLY AMOUNTS EAI IS SEEKING APPROVAL TO DEFER? A. No. In addition to the customer education costs in 0 and 0, there are approximately $,000 of O&M expense for IT maintenance and support expected to be incurred in 0 that were also not included in the 0 Rider FRP filing. EAI proposes to also include these costs in the regulatory asset for recovery in 0. Including this expense amount, the regulatory asset is estimated to be approximately $, Q. HAVE YOU PREPARED AN ESTIMATE OF THE ANNUAL REVENUE REQUIREMENT TO BE INCLUDED IN RIDER FRP FOR THE AMI INVESTMENT AND RELATED COSTS? A. Yes. Table below summarizes the annual estimated revenue requirement for each year from 0 through full deployment in 0. As described by Mr. Lewis and Mr. Griffith, the Company expects to incur both O&M expense and O&M savings generated by the Operational Benefits. Each year, the revenue requirement reflects the net of the estimated O&M expenses and savings. I also would note that these amounts are based upon the cost of capital approved in Docket No. - 0-U, and the actual revenue requirement in a given year will depend

9 Direct Testimony of Barbara L. Casey upon, at a minimum, the actual forecasted cost of capital for that Projected Year. Table Forecasted Revenue Requirements ($M Estimated Annual AMI Plant in Service Closings Estimated Net Operation and Maintenance Expense (Savings.. (. (. (. Estimated Revenue Requirement..... Q. DOES RIDER FRP INCLUDE A TRUE-UP MECHANISM? A. Yes. Rider FRP includes a netting of Historical Year costs that will account for any differences between the actual investments made and the net O&M incurred and the forecasted amounts included in the prior Rider FRP filing.

10 Direct Testimony of Barbara L. Casey III. EXEMPTIONS FROM RULES Q. PLEASE EXPLAIN THE CHANGE TO EAI S SCHEDULE OF EXEMPTIONS. A. Mr. Washington explains that the Company does not believe it is necessary to continue the meter testing program pursuant to Special Rules Electric Rule.0(B during the deployment of the advanced meters. Thus, I have included a revision to EAI s schedule of exemptions to add an additional schedule, Schedule of Exemptions from Special Rules Electric, to include an exemption from this rule during deployment. If this exemption is granted, the Company anticipates filing to withdraw this language early in 0 or after deployment is complete, or as the testing program resumes. I have attached this proposed additional schedule as well as necessary revisions to EAI s Policy Schedule No., Meter Testing Program, and EAI s Table of Contents to my direct testimony as EAI Direct Exhibit BLC-. Q. DOES THIS CONCLUDE YOUR DIRECT TESTIMONY? A. Yes.

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12 CERTIFICATE OF SERVICE I, Laura R. Landreaux, do hereby certify that a copy of the foregoing has been served upon all parties of record by forwarding the same by electronic mail and/or first class mail, postage prepaid, this th day of September, 0. /s/ Laura R. Landreaux Laura R. Landreaux

13 BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF ENTERGY ARKANSAS, INC. S APPLICATION FOR AN ORDER FINDING THE DEPLOYMENT OF ADVANCED METERING INFRASTRUCTURE TO BE IN THE PUBLIC INTEREST AND EXEMPTION FROM CERTAIN APPLICABLE RULES DOCKET NO. -00-U EAI DIRECT EXHIBIT BLC- TARIFF ADDITION AND REVISIONS

14 APSC FILED Time: //0 ::0 PM: Recvd //0 :: PM: Docket ARKANSAS PUBLIC SERVICE COMMISSION EAI Direct -00-U-Doc. Exhbit BLC- Original Sheet No. ES. Schedule Sheet of Page of Replacing: Sheet No. Name of Company Kind of Service: Electric Class of Service: As Applicable Docket No.: -00-U Order No.: Part II. Exemption Schedule No. Effective: Title: Schedule of Exemptions from Special Rules Electric PSC File Mark Only.0. SCHEDULE OF EXEMPTIONS FROM SPECIAL RULES ELECTRIC.. Meter Testing Programs and Filing Requirements.0.B Meter Test Programs for In-Service Meters (EAI is exempted from complying with in-service meter testing of SRE.0.B. during the Company s Advanced Meter Infrastructure (AMI deployment. In-service meter testing will resume following the completion of the deployment of AMI. THIS SPACE FOR PSC USE ONLY

15 APSC FILED Time: //0 ::0 PM: Recvd //0 :: PM: Docket ARKANSAS PUBLIC SERVICE COMMISSION EAI Direct -00-U-Doc. Exhbit BLC- th Revised Sheet No. P. Schedule Sheet of Page of Replacing: rd Revised Sheet No. P. Name of Company Kind of Service: Electric Class of Service: Not Applicable Docket No.: -00-U Order No.: Part IV. Policy Schedule No. Effective: Title: Meter Testing Program (MTP PSC File Mark Only.0. METER TESTING PROGRAM Rule.0(g( of the Arkansas Public Service Commission ( Commission Rules of Practice and Procedure requires that each electric utility file its test method for in-service meters. Rule.0.C of the Commission s Special Rules - Electric (SR-E provides that a utility shall state in its tariffs on file with the Commission which sampling method is used by the utility for testing new meters and which sampling method is used for testing inservice meters... TEST PROGRAM FOR NEW METERS To ensure that new meters conform to the accuracy requirements of Rule.0.B of the Commission s Special Rules - Electric, before installation by the utility, all new meters will be inspected and tested in a meter shop or laboratory under the sampling method indicated below: ( 0% of all new combination kw/kwh and kva/kwh meters will be tested. ( New kwh only meters will be tested on a sampling basis conforming to ANSI C.-,..... IN-SERVICE METER TESTING PROGRAM In accordance with.0.b of the Commission s Special Rules - Electric, all in-service meters will be tested by the utility under the program indicated below. All meters will be tested under the same program: ( Periodic interval ANSI C.-,... and..., for combination kw/kwh, kva/kwh and Three Phase kwh only meters. ( Variable interval ANSI C.-,... ( Statistical sampling ANSI C.-,..., for Single Phase kwh only meters... METER TESTING PROGRAMS AND FILING REQUIREMENTS.0.B Meter Test Programs for In-Service Meters (EAI is exempted from complying with in-service meter testing of SRE.0.B. during the Company s Advanced Meter Infrastructure (AMI deployment. In-service meter testing will resume following the completion of the deployment of AMI. THIS SPACE FOR PSC USE ONLY

16 APSC FILED Time: //0 ::0 PM: Recvd //0 :: PM: Docket ARKANSAS PUBLIC SERVICE COMMISSION EAI Direct -00-U-Doc. Exhbit BLC- th Revised Sheet No. TC- Schedule Sheet of Page of Replacing: rd Revised Sheet No. TC- Name of Company Kind of Service: Electric Class of Service: All Docket No.: -00-U Order No.: Effective: TABLE OF CONTENTS PSC File Mark Only Part II. Exemptions Class of Service Exemption Schedule No. and Name Sheet Number All. Schedule of Exemptions from General Service Rules ES- All. Schedule of Exemptions from Rules for Conservation ES- and Energy Efficiency Programs All. Schedule of Exemptions from Special Rules Electric ES- THIS SPACE FOR PSC USE ONLY

17 APSC FILED Time: //0 ::0 PM: Recvd //0 :: PM: Docket ARKANSAS PUBLIC SERVICE COMMISSION EAI Direct -00-U-Doc. Exhbit BLC- rd th Revised Sheet No. P. Schedule Sheet of Page of Replacing: nd rd Revised Sheet No. P. Name of Company Kind of Service: Electric Class of Service: Not Applicable Docket No.: U Order No.: Part IV. Policy Schedule No. Effective: // Title: Meter Testing Program (MTP PSC File Mark Only.0. METER TESTING PROGRAM Rule.0(g( of the Arkansas Public Service Commission ( Commission Rules of Practice and Procedure requires that each electric utility file its test method for in-service meters. Rule.0.C of the Commission s Special Rules - Electric (SR-E provides that a utility shall state in its tariffs on file with the Commission which sampling method is used by the utility for testing new meters and which sampling method is used for testing inservice meters... TEST PROGRAM FOR NEW METERS To ensure that new meters conform to the accuracy requirements of Rule.0.B of the Commission s Special Rules - Electric, before installation by the utility, all new meters will be inspected and tested in a meter shop or laboratory under the sampling method indicated below: ( 0% of all new combination kw/kwh and kva/kwh meters will be tested. ( New kwh only meters will be tested on a sampling basis conforming to ANSI C.-,..... IN-SERVICE METER TESTING PROGRAM In accordance with.0.b of the Commission s Special Rules - Electric, all in-service meters will be tested by the utility under the program indicated below. All meters will be tested under the same program: ( Periodic interval ANSI C.-,... and..., for combination kw/kwh, kva/kwh and Three Phase kwh only meters. ( Variable interval ANSI C.-,... ( Statistical sampling ANSI C.-,..., for Single Phase kwh only meters... METER TESTING PROGRAMS AND FILING REQUIREMENTS.0.B Meter Test Programs for In-Service Meters (EAI is exempted from complying with in-service meter testing of SRE.0.B. during the Company s Advanced Meter Infrastructure (AMI deployment. In-service meter testing will resume following the completion of the deployment of AMI. THIS SPACE FOR PSC USE ONLY

18 APSC FILED Time: //0 ::0 PM: Recvd //0 :: PM: Docket ARKANSAS PUBLIC SERVICE COMMISSION EAI Direct -00-U-Doc. Exhbit BLC- rd th Revised Sheet No. TC- Schedule Sheet of Page of Replacing: nd rd Revised Sheet No. TC- Name of Company Kind of Service: Electric Class of Service: All Docket No.: U Order No.: Effective: // TABLE OF CONTENTS PSC File Mark Only Part II. Exemptions Class of Service Exemption Schedule No. and Name Sheet Number All. Schedule of Exemptions from General Service Rules ES- All. Schedule of Exemptions from Rules for Conservation ES- and Energy Efficiency Programs All. Schedule of Exemptions from Special Rules Electric ES- THIS SPACE FOR PSC USE ONLY