BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION

Transcription

1 BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION IN THE MATTER OF SOUTHWESTERN PUBLIC SERVICE COMPANY S APPLICATION FOR APPROVAL OF ITS 2009 ENERGY EFFICIENCY AND LOAD MANAGEMENT PLAN AND ASSOCIATED PROGRAMS AND ITS PROGRAM COST TARIFF RIDERS, SOUTHWESTERN PUBLIC SERVICE COMPANY, APPLICANT ) ) ) ) ) ) ) ) ) ) ) CASE No UT DIRECT TESTIMONY of Ruth M. Sakya on behalf of SOUTHWESTERN PUBLIC SERVICE COMPANY October 31, 2008

2 TABLE OF CONTENTS GLOSSARY OF ACRONYMS AND DEFINED TERMS... iii TABLE OF ATTACHMENTS... iv I. INTRODUCTION AND QUALIFICATIONS... 1 II. ASSIGNMENT... 3 III. OVERVIEW OF SPS S APPLICATION... 4 IV. COST RECOVERY AND PROPOSED TARIFF RIDER A. Tariff Rider Costs B. Tariff Rider Calculation C Rider Bill Impacts V. INTERRUPTIBLE TARIFF TRANSITION VI. LOW-INCOME ENERGY EFFICIENCY COMMITMENT VII. CONCLUSION VERIFICATION ii

3 GLOSSARY OF ACRONYMS AND DEFINED TERMS Acronym/Defined Term Commission EUEA ICO Meaning New Mexico Public Regulation Commission Efficient Use of Energy Act Interruptible Credit Option 2009 Plan 2009 Energy Efficiency and Load Management Plan 2009 Rider 2009 Energy Efficiency and Load Management Tariff Rider Rule Commission s Energy Efficiency Rule, NMAC Saver s Switch SPS Tracker Xcel Energy XES Residential and business air conditioning and residential water heating cycling programs Southwestern Public Service Company Mechanism to track program costs and revenues Xcel Energy Inc. Xcel Energy Service Inc. iii

4 TABLE OF ATTACHMENTS Attachment Attachment RMS-1 Attachment RMS-2 Attachment RMS-3 Attachment RMS-4 Attachment RMS-5 Description 2009 Energy Efficiency and Load Management Plan 2009 Plan sections and sponsoring witness Energy efficiency accounting policies Calculation of Rider percentage Average customer impact study iv

5 Direct Testimony of Ruth M. Sakya I. INTRODUCTION AND QUALIFICATIONS Q. Please state your name and business address. A. My name is Ruth M. Sakya. My business address is 600 South Tyler St., Suite 2900, Amarillo, TX Q. On whose behalf are you testifying in this proceeding? A. I am filing testimony on behalf of Southwestern Public Service Company (SPS), a wholly owned subsidiary of Xcel Energy Inc. (Xcel Energy). Xcel Energy is a registered holding company that owns several electric and natural gas utility companies. 1 Q. By whom are you employed and in what position? A. I am employed by Xcel Energy Services Inc. (XES), the service company subsidiary of Xcel Energy, as a Manager, Regulatory Policy. Q. Please briefly outline your responsibilities as Manager, Regulatory Policy. A. My primary responsibilities include the direction and preparation of comments, testimony, and briefing materials on regulatory and legislative policy matters Xcel Energy is the parent company of four 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; and SPS, a New Mexico Corporation. 1

6 Direct Testimony of Ruth M. Sakya Q. Please describe your educational background. A. I graduated from the University of Wyoming in 1998 with a Bachelor of Science degree in Finance. In 2001, I graduated from the University of Wyoming with a Master of Science degree in Finance, with an emphasis in Regulatory Economics. I am currently pursuing my PhD in Public Affairs at the University of Colorado at Denver. Q. Please describe your professional experience. A. I began my career in 2000, as a Senior Policy Analyst at the Public Utility Commission of Texas. In 2001, I accepted a position as Rate Analyst at a multijurisdictional electric and gas utility. In 2002, I accepted a position as a Senior Analyst with Energy & Resource Consulting, LLC, a consulting firm specializing in services to regulatory agencies and municipal entities. In 2004, I was promoted to Supervising Analyst. Later in 2004, I accepted a position of Senior Rate Analyst, Revenue Analysis in the Governmental and Regulatory Affairs department of XES. In 2007, I accepted my current position of Manager, Regulatory Policy. Q. Have you previously filed testimony at any regulatory commission? A. Yes. I have testified before the Colorado Public Utilities Commission, Public Utility Commission of Texas, and New Mexico Public Regulation Commission (Commission). 2

7 Direct Testimony of Ruth M. Sakya 1 II. ASSIGNMENT Q. What is the purpose of your direct testimony? A. I provide an overview SPS s 2009 Energy Efficiency and Load Management Plan and associated programs (2009 Plan), support the requested variances from the Commission s Energy Efficiency Rule ( NMAC, Rule), and introduce the other SPS witnesses providing direct testimony in this proceeding. In addition, I discuss the costs to be recovered through the proposed 2009 Energy Efficiency and Load Management Tariff Rider (2009 Rider) and the mechanism to track program costs and revenues (Tracker), describe SPS s proposed rate design, and provide the bill impacts. I also explain how SPS will transition from its currently effective interruptible tariff to the new Interruptible Credit Option (ICO) tariff. Finally, I discuss SPS s commitment to spend $500,000 over a two-year period on low-income energy efficiency programs. Q. Are you sponsoring any sections of the 2009 Plan? A. Yes. The 2009 Plan is included as Attachment RMS-1 to my direct testimony. I sponsor the following sections of the 2009 Plan: II.D (Cost Recovery) and II.D.1 (Rate and Customer Bill Impacts). Although the 2009 Plan is attached to my direct testimony, it is supported by all of SPS s witnesses in this case. Attachment RMS-2 to my direct testimony lists each SPS witness and the section of the 2009 Plan they sponsor. 3

8 Direct Testimony of Ruth M. Sakya III. OVERVIEW OF SPS S APPLICATION Q. Please provide an overview of SPS s application. A. SPS is filing this application for approval of its 2009 Plan in accordance with the Efficient Use of Energy Act (EUEA), (Chapter 62, Article 17 NMSA 1978, as amended in 2008) and the Commission s Energy Efficiency Rule ( NMAC, Rule). Historically, SPS maintained an obligation to its customers and the environment by voluntarily offering conservation and load management programs in its service territories prior to this mandated Rule. In 2008, SPS began offering new programs designed to reach the goals established in the EUEA. SPS now seeks approval to continue offering its current programs as well as to implement new programs in SPS s proposed portfolio consists of 16 energy efficiency and load management programs, eight of which will continue from The 2009 Plan describes each of the proposed programs in detail, including the targeted customer segment and participation goals, energy and demand savings goals, proposed budgets, program administration, marketing and outreach plans, and measurement and verification plans. SPS s 2009 Plan presents cost-effective energy efficiency and load management programs which will provide system benefits and opportunities for participation across all customer sectors. 19 4

9 Direct Testimony of Ruth M. Sakya Q. Did SPS review the EUEA and the current Rule? A. Yes. In 2008, the statutory requirement changed to require New Mexico utilities to acquire all cost-effective and achievable energy efficiency and load management, and achieve savings of no less than five percent of 2005 total retail kilowatt-hour sales to New Mexico customers in calendar year 2014 and ten percent in 2020 as a result of energy efficiency and load management programs implemented starting in SPS is committed to using its best efforts to meet these statutory offerings and believes that its 2009 Plan establishes programs that will help meet these goals. Q. Which customers are eligible to participate in these programs? A. All residential (including low-income), business, and industrial customers served by SPS in New Mexico are eligible to participate in one or more of SPS s proposed energy efficiency programs, except those who have applied and been accepted as exempt customers. Q. When will SPS begin implementing the proposed 2009 Plan and associated programs? A. SPS has eight programs from its 2008 Plan that will continue to be offered in 2009 without interruption. All of the new programs proposed in the 2009 Plan will be implemented within one month of approval of this application. 20 5

10 Direct Testimony of Ruth M. Sakya Q. What approvals does SPS seek in this case? A. SPS requests that the Commission grant: (i) approval of SPS s proposed 2009 Plan that will be implemented in 2009; and (ii) approval of SPS s recovery of 2009 Plan costs through the proposed tariff rider and proposal to annually true up cost recovery under the 2009 Rider. Q. Does SPS seek any variances in the proceeding? A. Yes, SPS seeks a variance from: (i) K.4 NMAC, which requires all utilities to file a proposal to remove disincentives or barriers at the time of a program filing or be precluded from recovering costs to eliminate barriers or disincentives associated with its proposed program; (ii) D.5 NMAC, which requires that the proposed tariff rider not increase any customer s bill by more than the lower of one and one-half percent or $75,000 per year ( statutory tariff rider caps Z NMAC); and (iii) R NMAC, which defines a low income customer as one with an annual household income at or below 200 percent of the federal poverty level. Q. Please discuss SPS s first variance request. A. SPS seeks a variance from K.4 NMAC, which provides: Failure to file a proposal to remove disincentives or barriers at the time of a program filing shall preclude the utility from recovering costs to eliminate barriers or disincentives associated with the proposed program. The utility may seek prospective recovery for costs of unforeseen barriers or disincentives, recognizing that 6

11 Direct Testimony of Ruth M. Sakya program approvals may need to be reconsidered in light of the revised information. Since the Rule was adopted, the statutory language regarding disincentives (and incentives) has been modified. The Commission is in the process of revising the Rule (Case No UT, In the Matter of a Rulemaking to Revise NMPRC Rule NMAC to Implement the Efficient Use of Energy Act). In this proceeding, interested parties are currently participating in a workshop process in the hope of submitting a consensus rule for Commission consideration by the end of the year (2008). SPS anticipates that a final Commission Rule will not be adopted until early As a result, SPS believes that it would be premature to file a proposal to remove disincentives and/or address incentives prior to adoption of the revised Rule. Rather, SPS asks the Commission to allow SPS to address the issues of disincentives and/or incentives resulting from the 2009 in its August 1, 2009 report filing (at which time SPS is also required to address disincentives from its 2008 Plan). Granting this variance will allow SPS to present a proposal to address the issues of disincentives and/or incentives resulting from the 2009 Plan, consistent with the recent changes to the EUEA that require any identified disincentives be removed in a manner that balances the public interest, consumers interests, and investors interests. 21 7

12 Direct Testimony of Ruth M. Sakya Q. Please discuss SPS s second variance request. A D.5 NMAC provides: The tariff rider shall be designed to assure that it will not increase any customer s bill by more than the lower of one and one-half percent or $75,000 per year, unless needed consents from the attorney general or large customer(s) have been obtained as part of the utility s program approval. As described in the definition section of the Rule ( Z NMAC), the reference is to the statutory tariff rider caps ; however, the statute has been amended to eliminate the one and one-half percent cap. Thus, SPS believes that the one and one-half percent cap is inconsistent with the statute and requests the Commission grant SPS to exceed the one and one-half percent cap when calculating its Rider. Granting this variance will eliminate the inconsistency between the Rule and the statute. Q. Please discuss SPS s third variance request. A. SPS is requesting a variance from R NMAC that defines a low income customer as a customer that lives with an annual household income at or below 200 percent of the federal poverty level. To conform with the 150 percent federal poverty level thresholds applied by local community agencies in administering other low-income assistance programs in SPS s service territory, SPS requests a variance from the 200 percent poverty level threshold to a 150 percent poverty 8

13 Direct Testimony of Ruth M. Sakya level threshold. Granting this variance will broaden the number of eligible participants for the Low-Income Program in SPS s service territory. Q. Who are the other SPS direct witnesses in this case and what are their areas of testimony? A. Direct testimony supporting SPS s application and request for approval of the 2009 Plan will also be provided by the following witnesses: Peter J. Narog Donald E. Garretson Suzanne R. Doyle Craig L. Berg Mr. Narog describes and supports SPS s proposed 2009 energy efficiency programs. In addition, he describes SPS s plan to meet its $500,000 lowincome energy efficiency commitment from Case No UT. Mr. Garretson describes and supports SPS s three proposed load management programs a new interruptible tariff, the Interruptible Credit Option (ICO), and new residential and commercial air conditioning and residential water heating cycling programs, Saver s Switch. Ms. Doyle explains and supports the Total Resource Cost Test assumptions and calculations, the Planning and Research Segment, and the measurement and verification requirements. Mr. Berg supports the development of the systemlevel avoided costs, which are used by Mr. Garretson to develop the ceiling price applicable to SPS s proposed load management programs and by Ms. Doyle to determine the cost-effectiveness of the proposed energy efficiency programs. 9

14 Direct Testimony of Ruth M. Sakya IV. COST RECOVERY AND PROPOSED TARIFF RIDER A. Tariff Rider Costs Q. Is SPS allowed to recover the costs associated with implementing its proposed 2009 Plan and associated programs through an approved tariff rider? A. Yes. Both the EUEA ( (A)) and Rule ( A NMAC) allow a utility that undertakes cost-effective energy efficiency and load management programs the option to recover the costs of all the programs implemented through an approved tariff rider. Q. How does SPS decide which costs should be included in its requested rider? A. SPS identifies the costs that are specific to developing and implementing its New Mexico energy efficiency programs, including the direct costs of the programs themselves and the ongoing costs of running the programs. Generally speaking, these costs are related to: the programs (e.g., measures, materials, and equipment, rebates and bill credits), third-party provider payments, advertising and marketing expenses, independent evaluation payments, external legal counsel, consultants and contractors, labor and labor loadings directly related to providing or supporting New Mexico energy efficiency programs, and employee expenses directly related to providing or supporting New Mexico energy efficiency programs. I have provided a copy of the guidelines used by SPS to determine 10

15 Direct Testimony of Ruth M. Sakya which costs are properly included for collection through a tariff rider as Attachment RMS-3. Q. What are some examples of specific costs to be included in SPS s proposed Rider? A. The costs included in SPS s proposed Rider are those costs incurred by SPS that are solely related to the energy efficiency and load management programs identified in the 2009 Plan. Examples of specific costs that will be recovered through the 2009 Rider include: (1) the labor and benefits costs associated with an SPS Energy Efficiency Program Manager located in New Mexico, dedicated and assigned to assisting customers that participate in one or more of the proposed energy efficiency programs; (2) the cost of contractors hired to help develop the programs; and (3) the expenses associated with a third-party administrators. In addition, the Rider will include tangible program costs such as the switches installed for the Saver s Switch Program and customer rebates. Q. Have the costs identified in SPS s 2009 Plan and used as the basis of the proposed 2009 Rider been appropriately segregated from costs that would be included in a future rate case proceeding? A. Yes. In SPS s last energy efficiency case, Case No UT, the Commission approved SPS s proposal to use a Tracker to record costs and revenues associated with its energy efficiency and load management programs. 11

16 Direct Testimony of Ruth M. Sakya Costs and revenues recorded to the Tracker are excluded from general rate case revenue requirements determinations. SPS believes that its Tracker will assist SPS and the Commission to ensure that program costs are recorded appropriately and facilitate year-to-year reconciliations of under- and over-recoveries. B. Tariff Rider Calculation Q. Does SPS currently have tariff rider in effect? A. Yes, SPS currently has a tariff rider that has been in effect since June 1, The current rider (2008 Rider) percentage, set at percent, is designed to recover 2007 and 2008 planning and program costs, as approved in Case No UT. Q. Please describe SPS s proposed 2009 Rider. A. SPS s proposed 2009 Rider is set to percent. The formula for calculating the 2009 Rider percentage is similar to that used by SPS to calculate the 2008 Rider percentage. That is, the annual projected costs are divided by total rate revenue and computed as a percentage of the customer s total bill. The resultant percentage is applied to the customer s service availability charges, energy charges, fuel and purchased power cost adjustment clause charge, and when applicable, demand charges and riders, exclusive of gross receipts taxes and franchise fees. Attachment RMS-4 shows the details of this calculation

17 Direct Testimony of Ruth M. Sakya Q. Has SPS reconciled its 2008 costs and revenues in this proceeding? A. No. SPS did not launch its 2008 Plan or begin 2008 Rider collection until June As ordered by the Commission, SPS will provide a reconciliation its 2008 Plan costs and revenues with its August 1, 2009 Report. Q. How will SPS account for the 2009 Plan costs and revenues? A. Through its Tracker, SPS will record monthly expenditures and revenues collected through the 2009 Rider. Deviations between expenditures and revenues in any given month will be assessed carrying charges. As approved in Case No , SPS proposes to continue using the annual customer deposit interest rate set by the Commission under of the EUEA and B(2)(A) NMAC to assess symmetrical carrying charges. The 2008 rate is 3.28 percent, which SPS will use through the remainder of In 2009, SPS will use the new customer deposit interest rate set by the Commission. If SPS s expenditures exceed its revenues, then the carrying charges will be negative (SPS earns interest), whereas if the revenues exceed expenditures, the carrying charges will be positive (SPS pays interest). Q. When will the 2009 Rider be effective? A. SPS intends to replace the 2008 Rider percentage with the 2009 Rider percentage 30 days after Commission approval. The 2009 Rider will remain in place until the effective date of the next approved tariff rider. 13

18 Direct Testimony of Ruth M. Sakya C Rider Bill Impacts Q. To which tariff schedules is SPS s 2009 Rider applicable? A. The 2009 Rider is applicable to all of SPS s New Mexico retail rate schedules, subject to the statutory caps and exemptions described below. Q. What are the statutory caps? A. The EUEA limits customer bill impacts to $75,000 per year, per customer. As defined by the EUEA ( (D)), a customer means a utility customer at a single, contiguous field, location or facility, regardless of the number of meters at that field, location or facility. Q. How will SPS assure that customer bills do not exceed the statutory cap of $75,000 per year? A. SPS will use its billing system to track the $75,000 per year cap customer cap. Once the $75,000 cap amount is reached, the billing system will stop billing the customer under the 2009 Rider. Q. Is there an opportunity for large customers to apply for an exemption to SPS s Rider? A. Yes. Consistent with D NMAC, large customers may receive an exemption from paying 70 percent of the 2009 Rider if the customer demonstrates that it has exhausted all cost-effective energy efficiency opportunities in its facility (or group of facilities if facilities are aggregated in order to qualify). In 14

19 Direct Testimony of Ruth M. Sakya addition, consistent with F NMAC, credits for approved self-direct projects may be used to offset up to 70 percent of the 2009 Rider until the credit is exhausted. Any credit not fully utilized in the year it is received will carry over to subsequent years. Q. What impact would the 2009 Rider have on an average residential customer s monthly bill? A. For a residential customer using 500 kwh per month, the 2009 Rider percentage (set at percent) would add approximately $1.01 to an average monthly residential customer bill (for a total monthly bill of $47.62). Q. Has SPS developed an average customer impact study? A. Yes. Attachment RMS-5 shows how the proposed 2009 Rider will impact the average customer in each rate class. Below is a table that summarizes this information. Rate Schedule Residential Lighting (Schedule 500 kwh General Non Demand (Schedule 750 kwh General Service (Schedule 50 kw, 20,000 kwh Average Customer Impacts Avg. Monthly Bill* Avg. Monthly Bill Impact Total Bill $46.61 $1.01 $47.62 $69.49 $1.51 $71.00 $1, $31.28 $1, Large General Service (Schedule 50 kw, 20,000 kwh $83, $1, $84, * These monthly average bills exclude taxes and franchise fees; before 2009 Rider applied 15

20 Direct Testimony of Ruth M. Sakya Q. Were any changes to the existing tariff? A. Yes. In addition to updating the tariff percentage, SPS has revised the tariff to: clarify the application of the 2009 Rider to all components of a customer s bill (excluding gross receipts taxes and franchise fees); more accurately describe the costs to be covered through the 2009 Rider; comport with the statutory definition of customer ; remove the one and one-half of one percent cap; and clarify the application of the symmetrical carrying charge on a monthly basis

21 Direct Testimony of Ruth M. Sakya V. INTERRUPTIBLE TARIFF TRANSITION Q. Earlier, you mentioned that SPS is proposing a new interruptible tariff, the ICO. How will SPS transition from its current interruptible tariff to the new ICO? A. Because SPS s application, including the proposed ICO tariff, will not likely be approved until May 2009, SPS proposes that its existing tariff remain effective through As described by Mr. Garretson, interruptible load provides SPS with a resource roughly equivalent to a supply-side resource. As such, it is appropriate that all customers take service under SPS s firm rates. For those customers participating in the interruptible program, they should receive a credit for the interruptible load provided to the SPS system (as opposed to a reduction in their demand charge). As SPS transitions to its proposed methodology, all interruptible customers will be transferred to a firm rate (beginning January 1, 2010). For those customers wishing to continue participation in the interruptible program, they will be given the option of signing up under the ICO tariff. The existing interruptible program will not be offered past December 31,

22 Direct Testimony of Ruth M. Sakya VI. LOW-INCOME ENERGY EFFICIENCY COMMITMENT Q. Please describe SPS s low-income energy commitment. A. In the settlement of Case No UT, approved by the Commission on August 26, 2008, SPS committed to spend $500,000 to supplement funding for its low-income energy efficiency programs (see Section IV, paragraph 4 of the Uncontested Stipulation). 2 Q. When does SPS intend to expend the funds necessary to meet this commitment? A. SPS intends to meets its commitment in 2009 and Q. What are SPS s plans in this regard? A. Although SPS is still finalizing its plans, SPS proposes a partnership with the New Mexico Mortgage Finance Authority (MFA). SPS believes a partnership with the MFA will allow it to effectively leverage the funds and target lowincome customers within SPS s New Mexico service territory. Mr. Narog describes SPS s proposed plan for meeting this commitment in more detail Case No UT; In the Matter of Southwestern Public Service Company s Application for Approval of (1) Continued Use of its Fuel and Purchased Power Cost Adjustment Clause (FPPCAC) Using a Monthly Adjustment Factor Pursuant to NMPRC Rule 550, (2) the Existing Variance from Rule (A), and (3) the Report Regarding Collections Under the Previous Annual FPPCAC in Effect During the Period October 2001 through January 2002, and Collections Under the Existing Monthly FPPCAC for the Period February 2002 through May 2005; Unanimous Stipulation, at 8 (Dec. 4, 2007). 18

23 Direct Testimony of Ruth M. Sakya Q. Will SPS collect the funds expended for this commitment from any of its ratepayers? A. No. SPS is specifically tracking these funds such that they will not be recovered from SPS s ratepayers, either the annual rider or base rates. 5 19

24 Direct Testimony of Ruth M. Sakya VII. CONCLUSION Q. Please summarize your testimony. A. Through my testimony, I have provided a high-level overview of SPS s application and 2009 Plan as well as supported its requested variances. In addition, I discussed the nature of the costs to be recovered through the proposed 2009 Rider, the Tracker mechanism, the 2009 Rider rate design, and provided the bill impacts. I also described how SPS intends to transition between its current interruptible program and the proposed ICO tariff. Finally, I discussed SPS s commitment to spend $500,000 over a two-year period on low-income energy efficiency programs through a proposed partnership with New Mexico s MFA. Q. Were Attachments RMS-1 through RMS-5 and the sections of the 2009 Plan you sponsor prepared by you or under your direct supervision? A. Yes. A. Does this conclude your testimony? A. Yes. 20

25 VERIFICATION STATE OF TEXAS ) ) ss. COUNTY OF POTTER ) Ruth M. Sakya being first duly sworn on oath, deposes and states that she is the witness identified in the foregoing prepared testimony, that she has read the testimony and is familiar with its contents, and that the facts set forth are true to the best of her knowledge, information, and belief. SUBSCRIBED AND SWORN TO before me this day of October, Notary Public My Commission Expires: 21

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176 Attachment RMS-2 Page 1 of 2 Southwestern Public Service Company 2009 Plan Sections and SPS Sponsors Section Description Witness I. Portfolio Characteristics A. Public Participation Narog B. System Benefits Berg C. Broad Participation within Classes Narog D. Estimated Energy and Demand Savings Narog E. Non-Energy Benefits Doyle F. Ease of Program Deployment Narog G. Product Development Process Doyle H. Risk of Technologies and Methods Narog I. Programs Studied and Rejected and Future Programs Narog 1 Electric Water Heater Rebates Narog 2 Future Programs Narog J. Goal Setting Narog K. General Marketing Narog L. Total Resource Cost Test and Avoided Costs Doyle 1 Avoided Costs Berg 2 Discount Rate/Cost of Capital Doyle 3 Net-to-Gross Doyle 4 Transmission Loss Factors Doyle II. Program Delivery and Administration A. General Marketing and Outreach Plan Narog 1 Residential & Low-Income Narog 2 Business & Large Customer Narog B. Roles and Responsibilities Doyle C. Reporting Process Doyle D. Cost Recovery Sakya 1 Rate Impact and Customer Bill Impact Sakya 2 Shared/Allocated Program Costs Doyle 3 Budget Categories Doyle III. Program Detail A. Residential Segment Narog 1 Air-Source Heat Pump Rebate Narog 2 Evaporative Cooling Rebates (New Program) Narog 3 Home Energy Services (New Program) Narog 4 Home Lighting & Recycling Narog 5 Refrigerator Recycling (New Program) Narog 6 School Education Kits Narog 7 Saver's Switch (New Program) Garretson

177 Attachment RMS-2 Page 2 of 2 Southwestern Public Service Company 2009 Plan Sections and SPS Sponsors Section Description Witness 8 Low-Income Program Narog B. Business Segment Narog 1 Cooling Efficiency Narog 2 Custom Efficiency Narog 3 Large Customer Efficiency Narog 4 Lighting Efficiency Narog 5 Motor & Drive Efficiency (New Program) Narog 6 Small Business Lighting Efficiency (New Program) Narog 7 Interruptible Credit Option (New Program) Garretson 8 Saver's Switch for Business (New Program) Garretson C. Planning and Research Segment Doyle 1 Overview Doyle 2 Consumer Education Doyle 3 Market Research Doyle 4 Product Development Doyle 5 Planning & Administration Doyle 6 Measurement and Verification Doyle

178 Attachment RMS-3 Page 1 of 1 Southwestern Public Service Company Guidelines for Recovery of NM EE and LM Costs Included Expense Type Included in Rider in Base Rates Measures, material, and equipment X Rebates and bill credits X Third party providers X Independent program evaluator X Carrying charges X Offsetting revenues (e.g., home energy audit) X Promotional & advertising expenses X Materials & Postage X External legal labor and expenses X Contractor and consultant labor and expenses X Internal labor and labor loadings: DSM planning & admin X Product portfolio management X Technical consultants X Market research related to EE and LM projects X Product development X Rebate processing X Risk analysis (Load Research) 1 X X Regulatory accounting (incremental labor responsible for EE and X X LM accounting only) Energy forecasting X IBM programming/rate change 2 X Account management X Revenue analysis X Regulatory administration X Internal legal X Employee expenses (follows employees labor charged to rider and X directly attributable to NM EE and LM programs) Sales rep incentives based on program attained goals and sales X 1 As an example, the impact study for the Saver s Switch program. 2 The exception would be large, special projects directly related to these programs.

179 Attachment RMS-4 Page 1 of 1 Southwestern Public Service Company Calculation of 2009 Rider Percentage Budgeted 2009 Costs Line No. Description Calculation Budget (Source: 2009 Plan) $ 5,000,802 2 Projected Revenues (Source: UT Compliance Filing Revenues) : 3 Residential Service Revenues $ 74,794,046 4 Small General Service Revenues $ 9,547,873 5 Municipal and Schools Revenues $ 8,557,939 6 Commercial and Industrial Revenues $ 172,093,115 7 Street and Area Lighting Revenues $ 3,844,003 8 Total Revenues (L3:L7) $ 268,836,976 9 Less: Billings not subject to 2009 Rider 1 $ (38,954,337) 10 Billings subject to 2009 Rider (L8 - L9) $ 229,882, Annual Energy Efficiency Percentage (L1/L10) % 1 Maximum billing is $75,000 per year, per customer.

180 Attachment RMS-5 Page 1 of 4 Southwestern Public Service Company Comparison of Monthly Bills at Present with 2009 Rider Present Proposed Proposed Bill Rider Total Bill % Residential - Tariff No kwh 100 $ $ 0.29 $ $ $ 0.56 $ $ $ 1.01 $ $ $ 1.47 $ ,000 $ $ 1.92 $ ,500 $ $ 2.82 $ ,000 $ $ 3.73 $ ,000 $ $ 5.54 $ Residential Heating Service - Tariff No kwh 100 $ $ 0.27 $ $ $ 0.51 $ $ $ 0.91 $ $ $ 1.31 $ ,000 $ $ 1.71 $ ,500 $ $ 2.51 $ ,000 $ $ 3.31 $ ,000 $ $ 4.91 $ Residential Electric Water Heating Service - Tariff No kwh 100 $ $ 0.28 $ $ $ 0.53 $ $ $ 0.96 $ $ $ 1.39 $ ,000 $ $ 1.81 $ ,500 $ $ 2.66 $ ,000 $ $ 3.51 $ ,000 $ $ 5.22 $

181 Attachment RMS-5 Page 2 of 4 Southwestern Public Service Company Comparison of Monthly Bills at Present with 2009 Rider Present Proposed Proposed Bill Rider Total Bill % Small General Service - Tariff No kwh 250 $ $ 0.63 $ $ $ 1.07 $ $ $ 1.51 $ ,000 $ $ 1.95 $ ,500 $ $ 2.83 $ ,000 $ $ 3.70 $ ,500 $ $ 4.58 $ ,000 $ $ 5.46 $ Secondary General Service - Tariff No kw kwh 10 2,000 $ $ 4.49 $ ,000 $ $ 6.52 $ ,000 $ $ 8.55 $ ,000 $ $ $ ,000 $ 1, $ $ 1, ,000 $ 1, $ $ 1, ,000 $ 1, $ $ 1, ,000 $ 2, $ $ 2, ,000 $ 3, $ $ 3, Secondary General Service, Low Load Factor - Tariff No kw kwh $ $ 1.54 $ $ $ 6.44 $ $ $ $

182 Attachment RMS-5 Page 3 of 4 Southwestern Public Service Company Comparison of Monthly Bills at Present with 2009 Rider Present Proposed Proposed Bill Rider Total Bill % Primary General Service - Tariff No kw kwh ,000 $ 3, $ $ 3, ,000 $ 5, $ $ 5, ,000 $ 7, $ $ 7, ,000 $ 9, $ $ 9, ,000 $ 13, $ $ 13, ,000 $ 18, $ $ 18, , ,000 $ 36, $ $ 36, , ,000 $ 54, $ 1, $ 55, ,000 1,200,000 $ 73, $ 1, $ 74, Primary General Service, Interruptible - Tariff No kw kwh ,000 $ 3, $ $ 3, ,000 $ 5, $ $ 5, ,000 $ 7, $ $ 7, ,000 $ 8, $ $ 8, ,000 $ 13, $ $ 13, ,000 $ 17, $ $ 18, , ,000 $ 33, $ $ 34, , ,000 $ 52, $ 1, $ 53, ,000 1,200,000 $ 70, $ 1, $ 72, Large General Service - Tariff No kw kwh 4, ,000 $ 59, $ 1, $ 60, ,000 1,600,000 $ 93, $ 2, $ 95, ,000 2,400,000 $ 128, $ 2, $ 131, ,000 1,600,000 $ 118, $ 2, $ 121, ,000 3,200,000 $ 187, $ 4, $ 191, ,000 4,800,000 $ 256, $ 5, $ 262, Large General Service, Interruptible - Tariff No kw kwh 4, ,000 $ 48, $ 1, $ 49, ,000 1,600,000 $ 83, $ 1, $ 84, ,000 2,400,000 $ 117, $ 2, $ 120, ,000 1,600,000 $ 97, $ 2, $ 99, ,000 3,200,000 $ 166, $ 3, $ 169, ,000 4,800,000 $ 235, $ 5, $ 240,333.97

183 Attachment RMS-5 Page 4 of 4 Southwestern Public Service Company Comparison of Monthly Bills at Present with 2009 Rider Present Proposed Proposed Bill Rider Total Bill % Small Municipal and School Service - Tariff No kwh 250 $ $ 0.55 $ $ $ 0.91 $ $ $ 1.27 $ ,000 $ $ 1.63 $ ,500 $ $ 2.35 $ ,000 $ $ 3.07 $ ,500 $ $ 3.78 $ ,000 $ $ 4.50 $ Large Municipal and School Service - Tariff No kwh 10 2,000 $ $ 3.74 $ ,000 $ $ 5.78 $ ,000 $ $ 7.83 $ ,000 $ $ $ ,000 $ 1, $ $ 1, ,000 $ 1, $ $ 1, ,000 $ 1, $ $ 1, ,000 $ 2, $ $ 2, ,000 $ 3, $ $ 3,528.48