August 16, Ingrid Ferrell, Executive Secretary Public Service Commission of WV 201 Brooks Street Charleston, West Virginia 25323

Transcription

1 500 LtE STREET EAST * SUITE 1600 PO BOX 553 CHARLESTON, WEST VIRGINIA TELEPHONE * TELECOPIER I30 wwwjacksonkefly coni DIRECT TELEPHONE: (304) DIRECT TELECOPIER: (304) na~reslcv@iacksonkcliy.com State Bar No LLC August 16,20 18 VIA HAND DELIVERY Ingrid Ferrell, Executive Secretary Public Service Commission of WV 201 Brooks Street Charleston, West Virginia Re: West Virginia-American Water Company General Order No In the Matter of the Effects on Utilities of the Tax Cuts and Jobs Act Dear Ms. Ferrell: Enclosed for filing in the referenced matter is the original and twelves copies of a Joint Stipulation and Agreement for Settlement among West Virginia-American Water Company, CAD, Staff, the City of Charleston, and the County Commission of Kanawha County. Please file this letter and its enclosure. We also ask that you date stamp the extra copy provided and return it with our messenger. As always, we appreciate your assistance. Sincerely yours, Nicklaus A. Presley Enclosure cc: Certificate of Service ~1 &idgepon,w * Char1erton.W * Martmrburg.W * Morgancown.W * Whee1ing.W Denver. CO Cravdordrville. IN a Evansville. IN - Lexngton. KY Akron, OH - Pittsburgh. PA Warhtngton. DC

2 GENERAL ORDER NO PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON In the Matter of the Effects on Utilities of the Tax Cuts and Jobs Act JOINT STIPULATION AND AGREEMENT FOR SETTLEMENT Pursuant to W. Va. Code Q (f) and Procedural Rule 13(d), West Virginia- American Water Company ( Company ), the Staff of the Public Service Commission of West Virginia ( M ), the Consumer Advocate Division of the Commission ( CAD ), the County Cornmission of Kanawha County ( KCC ), and the City of Charleston ( CiLty, and collectively, the Parties ) join in this Joint Stipulation and Agreement for Settlement ( Joint Stipulation ). In this Joint Stipulation, the Parties propose a comprehensive settlement of the above- referenced proceeding as it relates to the Company. The Parties recommend that the Commission approve the Joint Stipulation without modification. Introduction and Procedural History 1. On December 22, 2017, President Donald Trump signed into law the 2017 Tax Cuts and Jobs Act ( Tax Act ). Among other things, the Tax Act reduced the federal corporate income tax rates to 21% from 35% ( Tax Rate Reduction ). 2. On January 3, 2018, the Commission initiated this proceeding to investigate the impact of the Tax Act on the revenue requirements of certain utilities. As a part of that Order, the Commission mandated the utilities to track the tax savings resulting from the Tax Act on a monthly basis beginning with the effective date of January 1, The Order also required the ,vi

3 utilities, on or before May 30, 2018, to pre-file testimony explaining the impact the Tax Act has on their federal income tax expense, as described in that Order. 3. In an Order entered on January 26,2018, the Commission stated that regulatory liability recognition on the financial statements of the utilities of any cost of service savings would serve to protect the interests of ratepayers until any federal tax benefits can appropriately be reflected in rates. 4. On March 8, 2018, the Commission denied requests by the West Virginia Energy Users Group ("WVEUG") and CAD for a bifurcation of the proceeding and schedule modification and established a schedule for interested parties to file testimony. 5. On May 30, 2018, several utilities filed direct testimony. The Company filed testimony on behalf of Rod P. Nevirauskas and John R. Wilde. 6. On June 22, 2018, the Commission entered an Order scheduling a hearing to commence on July 24,2018, and continuing on July 25 and July 26,2018, if necessary. Page 2 of the June 22, 2018 Order also directed utilities to address four questions in the presentation of their testimony at the hearing. 7. On July 2,2018, CAD, WVEUG, Lusk Disposal Service, the KCC, and the City filed direct testimony. Also on July 2, 2018, Staff filed an Initial and Final Joint Memorandum. 8. On July 12, 2018 the Commission entered an Order granting intervenor status to CAD, WVEUG, the KCC, and the City. The July 12, 2018 Order addressed several other procedural matters, including the establishment of an order of witnesses. 2

4 9. On July 13, 2018, several parties filed rebuttal testimony. The Company filed rebuttal testimony on behalf of Rod P. Nevirauskas and John R. Wilde Staff and CAD undertook formal and informal discovery. To avoid the additional expense that will result from litigating this case, and in an attempt to achieve certainty in the outcome, the Parties have endeavored to address or eliminate all issues in this case as it relates to the Company to reach a recommended comprehensive resolution. The Settlement Terms 12. Prospective Rate Reduction. The Parties agree and recommend that the Company will reduce its base rates on a prospective basis by $4,613,344 in annual base rate revenues ($4,569,444 for water and $43,900 for wastewater) on September 1, 2018 for service rendered on and after that date to account for the reduction in current federal income tax expense resulting from the Tax Rate Reduction. The Parties also agree and recommend for purposes of this Joint Stipulation that the annual base rate revenue reduction should be calculated on the basis of projected federal income tax expense for as shown in Appendix - A, which presents the Company's estimated federal income tax expense reduction for 2018.' 1 Appendix A presents the grossed-up values of the same forecasted pre-tax expense reduction for 2018 introduced into evidence as WVAW Cross-Examination Exhibit ~1

5 13. Stub Period. a) The Parties agree and recommend that the reduced amount of federal income tax expense the Company will have experienced between January I, 2018 and August 31, 2018 ( Stub Period ) resulting from the Tax Rate Reduction ( Stub Period Amount ) should be applied immediately to eliminate five proposed regulatory assets and a portion of a sixth regulatory asset, all as provided in this paragraph 13. b) For purposes of this case, the Parties agree and recommend that the Stub Period Amount should be calculated on the basis of the projected federal income tax expense for 2018 as shown in Appendix A, but limited to the Stub Period. Appendix A shows that the Stub Period Amount is $3,185,049. c) The Parties further agree and recommend that the entire Stub Period Amount should be applied to eliminate the entire amount of the following five proposed regulatory assets totaling $2,940,703, effective on the date of a Commission Order adopting this Joint Stipulation in its entirety in full resolution of this docket as it relates to the Company: i. the three regulatory assets specified in footnote 3, page 9 of WVAW Exhibit RPN-R and set forth in WVAW Exhibit RPN-6, a copy of which is attached as Appendix B, consisting of the incurred costs arising from a Harmhl Algae Bloom ($715,373), the Company s response to a 1,000- year flood event in summer 2016 ($361,962), and an unpaid receivable for water supplied to Queen Shoals Public Service District ($346,667); 4

6 the regulatory asset representing the Company s actual cost to construct and projected cost to uninstall a temporary water line to connect the Lashmeet PSD system to the Town of Matoaka system ($205,708), as authorized in the Commission Order dated June 4, in Case No W-PC and as documented in Appendix C; iii. the Company s actual cost currently being held in a CWIP account (as documented in Appendix D) to perform the WVAW Raw Water and Sediment Study for the Kanawha River ( ), September 15, 2016 prepared by Potesta & Associates, the executive summary of which was filed as Appendix C to the June 15, 2018 closed entry filing in Case No W-GI ($1,310,993), and which was part of the enhanced system resiliency report for the Kanawha Valley System required in paragraph 14 of the Joint Stipulation approved in the Commission Order dated June 15, 2017 in that docket and mandated by W. Va. Code c(b)(9)(A). d) The Parties further agree and recommend that the Company be permitted (i) to use the remaining $244,346 of the Stub Period Amount ($3,185,049 less $2,940,703) to eliminate a portion of a sixth regulatory asset relating to the Company s demolition of the Culloden Dam ($496,127) as provided in a Recommended Decision dated September 12, 2013 (Final Order dated October 2, 2013) in Case No W- PSD-PC and the final cost of which is documented in Appendix E and (ii) to recover the remaining $251,781 in Culloden Dam demolition costs through a 36-month vI

7 amortization in the base rates determined in the Company s pending general rate cases, Case Nos W-42T and S-42T (collectively, Rate Case ). e) The Parties further agree and recommend that in the Rate Case, the Company will amend its filing to reflect (i) the elimination of the proposed amortization of the regulatory assets associated with the H mhl Algae Bloom, the 1,000-year flood, the Queen Shoals water sales receivable, and the Culloden D m Demolition and (ii) the addition of an amortization for the $25 1,78 1 in remaining Culloden Dam Demolition costs. 14. Net Excess ADITS. a) The Parties agree and recommend that after the Company has determined (i) its protected and unprotected accumulated deferred income taxes balances ( Excess ADITs ) and (ii) the appropriate amortization periods through the application of the Average Rate Assumption Method ( ARAM ), the Company should implement a credit to customers to the extent consistent with federal normalization requirements through the mechanism described in subparagraph (b) below in an amount equal to the combined annual base rate impact of: 1. the flow back of the protected portion of the Excess ADITs as determined under ARAM; and the amortization of the unprotected portion of the Excess ADITs over a period of years to be determined at that time; and 6

8 a corresponding adjustment to rate base to avoid an inconsistency between the calculation of deferred tax expense and the rate base established in the Rate Case, together and expressed as an annual revenue requirement, the Excess ADIT Credit. b) The Parties agree and recommend that in the commission s final order in the Rate Case, the Commission should establish a second rate change through which the Company will implement the Excess ADIT Credit to take effect on a target date of July 1, (or as soon as is reasonably possible after the determination of the Excess ADIT Credit) and in accordance with the procedure described in subparagraph (c) below. c) As soon as is reasonably possible, the Company will file schedules showing the amount, components, and calculation of the Excess ADIT Credit as a closed entry in the Rate Case docket. Staff and CAD may file any response within 20 days of the Company s filing, and the Company may file any reply within 5 days of receiving such response. Based on these filings and any hearing it may wish to hold, the Commission will issue an order establishing the Excess ADIT Credit effective for service rendered on and after July 1, (or such later date to be set by the Cornmission as circumstances may require). 7

9 d) The Parties agree and recommend that the rate reduction associated with the Excess ADIT Credit should remain in effect until new rates from the Company s next base rate case go into effect, and that the continuation of the flow back of protected Excess ADITs and the amortization of the unprotected Excess ADITs should be incorporated into the revenue requirement approved in that base rate case. General Provisions 15. The Parties support this Joint Stipulation and represent that each of its provisions acceptably resolves all issues raised in this case with respect to the Company. Based on the record, the Parties recommend that the Commission accept this Joint Stipulation in complete resolution of this case with respect to the Company. 16. This Joint Stipulation results from a review of all evidence and filings in this case, the Parties analyses of the existing and foreseeable financial condition of the Company, the existing statutory and regulatory framework, and extensive, good faith negotiation. The Joint Stipulation embodies substantial compromises and modifications by the Parties of their respective positions, and is proposed to expedite and simplify the resolution of this case in the context of an overall settlement with respect to the Company. 17. The Parties recommend that the Commission adopt this Joint Stipulation as being in the public interest, without adopting or recommending the adoption of any of the compromise positions set forth herein as ratemaking principles applicable to future regulatory proceedings, except as may otherwise be provided herein. Each component of the Joint Stipulation (including this paragraph) is integral to and inseparable from the others, and no ~ 1

10 Party advocates the Commission s resolution of any issue proposed in this Joint Stipulation other than in the context of its support for the Joint Stipulation as a whole. 18. This Joint Stipulation is subject to the Commission s acceptance and approval. It will be ineffective until and unless approved by the Commission in all of its material terms and without modification. If the Commission does not grant that approval, then the Parties reserve their rights to fully advocate their positions, unlimited by the terms of the Joint Stipulation. [signature page follows] ~ 1

11 ~ E ~ F the O Parties ~ respectfully, recommend and request that the Commission make appropriate findings of fact and conclusions of law adopting and approving the Joint Stipulation in its entirety, including the attached exhibits. Dated and effective this 16Ih day of August, WEST VIRGiNIA-AMERICAN WATER COMPANY By Counsel Nicklaus A. Presley, Esq. JACKSON KELLY PLLC 1600 Laidley Tower Post Office Box 553 Charleston, West Virginia (304) THE STAFF OF THE PUBLIC SERVICE COMMISSION OF WEST VIRGINIA By Counsel John Auville, Esq. Public Service Commission 201 Brooks Street, P 0 Box 812 Charleston, WV CONS VOCATE DIVISION B J Roberts, Esq. Thomas White, Esq. Heather Osborn, Esq. Consumer Advocate Division 700 Union Building 723 Kanawha Boulevard, East Charleston, WV ~1

12 WHEREFOREy the Parties respectfully recommend and request that the Commission make appropriate findings of fact and conclusions of law adopting and approving the Joint Stipulation in its entirety, including the attached exhibits. Dated and effective this day of August, WEST VIRGINIA-AMERICAN WATER COMPANY By Counsel Christopher L. Callas, Esq. Nicklaus A. Presley, Esq. JACKSON KELLY PLLC 1600 Laidley Tower Post Office Box 553 Charleston, West Virginia (304) THE STAFF OF THE PUBLIC SERVICE COMMISSION OF WEST VIRGINIA By Counsel Public Service Commission 201 Brooks Street, P 0 Box 812 Charleston, WV s CONSUMER ADVOCATE: DIVISION By Counsel Jacqueline Roberts, Esq. Thomas White, Esq. Heather Osborn, Esq. Consumer Advocate Division 700 Union Building 723 Kanawha Boulevard, East Charleston, WV ~1

13 THE COUNTY COMMISSION OF KANAWHA COUNTY, WEST VIRGINIA By Counsel P.O. Box 3627 Charleston, WV THE CITY OF CHARLESTON, WEST VIRGINIA By Counsel 501 Virginia Street, East Charleston, WV ~ 1

14 GENERAL ORDER NO PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON In the Matter of the Effects on Utilities of the Tax Cuts and Jobs Act CERTIFICATE OF SERVICE I certify service of Joint Stipulation and Agreement for Settlement on August 16, 2018, by United States First Class Mail, postage prepaid, as addressed: John R. Auville, Esq. Public Service Commission of WV PO Box 812 Charleston, WV Counsel for Commission Staff Susan J. Riggs, Esq. Jason C. Pizatella, Esq. Thomas & Battle, PLLC Spilman Center 300 Kanawha Boulevard, East Charleston, WV Counsel for WEUG Jackie L. Roberts, Esq. Tom White, Esq. Consumer Advocate Division 700 Union Building 723 Kanawha Boulevard, East Charleston, W Counsel for Consumer Advocate Division Derrick Price Williamson, Esq. Barry A. Naum, Esq. Spilman Thomas & Battle, PLLC 1100 Bent Creek Blvd. Suite 101 Mechanicsburg, PA Counsel for WEUG Todd M. Swanson, Esq. Steptoe & Johnson, PLLC Chase Tower, Eighth Floor P.O. Box 1588 Charleston, WV Counsel for Hope Gas, Inc., d/b/a Dominion Energy of West Virginia, & Peoples Gas WV Andrew Gunnoe, Esq. P.O. Box 3627 Charleston, W Counsel for the Kanawha County Commission William C. Porth, Esq. Robinson & McElwee, PLLC 700 Virginia Street East Suite 400 Charleston, WV Counsel for Appalachian Power Company & Wheeling Power Company Mandi Kay Carter, Esq. 501 Virginia Street, East Charleston, WV Counsel for City of Charleston vI

15 Samuel F. Hanna, Esq. Hanna Law Office 3508 Noyes Avenue Charleston, WV Counsel for Lusk Disposal Service, Inc. & Allied Waste Services of North America, LLC, d/b/a Republic Services of West Virginia David B. Hanna, Esq. Hanna & Hanna, PLLC PO Box 3967 Charleston, WV Counsel for Beckley Water Company Elizabeth Schindzielorz, Esq. Dinsmore & Shohl, LLP 707 Virginia Street East Suite 1300 Charleston, WV Counsel for Waste Management of West Virginia, Inc. Marc J. Slotnick, Esq. Bailey & Wyant, PLLC PO Box 3710 Charleston, WV Counsel for Kanawha County Commission Christopher L. Callas 13

16 West Virginia-American Water Company Estimated Tax Reduction for 2018 Summary Appendix A - Total Company Page 1 of 4 I I Stub Period 1 Financial Item Water** Wastewater Annual Total * Water+* Wastewater Jan - Aug 2018 Operating Revenue $138,821,532 $926,285 $139,747,818 $95,039,702 $624,425 $95,664,127 Operation and Maintenance Expense Depreciation and Amortization General Taxes Total Operating Expense, Net 58,038, ,456 58,549,574 40,916, ,849 41,268,168 23,140, ,670 23,282,734 15,280,722 96,611 15,377,333 17,258,991 14,939 17,273,930 11,645,388 9,946 11,655,334 98,437, ,065 99,106,238 67,842, ,407 68,300,835 Operating Income (Loss) $40,384,360 $257,220 $40,641,580 $27,197,274 $166,018 $27,363,292 Other (Income) Expense (13,974,395) (3,491) (13,977,886) (8 952,375) (2,327) (8,954,702) Income (Loss) before Taxes Provision for Taxes*** State Tax 6.50% Federal Taxable Income Federal Tax 35% Federal Tax 21% Tax Expense Reduction for 2017 Tax Act Pre-tax Impact of TUA applying 2018 gross up factor of $26,409,965 $253,729 $26,663,694 $18,244,899 $163,691 $18,408,590 1,716,648 16,492 1,733,140 1,185,918 10,640 1,196,558 24,693, ,236 24,930,554 17,058, ,051 17,212,032 8,642,661 83,033 8,725,694 5,970,643 53,568 6,024,211 5,185,597 49,820 5,235,416 3,582,386 32,141 3,614,527 (3,457,064) (33,213) (3,490,278) (2,388,257) (21,427) (2,409,684) (4,569,444) (43,900) (4,613,344) (3,156,727) (28,322) (3,185,049) * 6 months actuals, 6 months forecasted ** Excludes DSIC, Removed Freedom Chemical Spill Related Transactions of $18.lm *** Re-calculated manually at statutory rates for the purpose of this response **** Negative TUA Surcharge would begin October 1,2018 and continue till new rates are effective Feb Less: Write off Regulatory Assets 3,436,830 Harmful Algal Bloom 715, YR Flood Costs 361,962 Queen Shoals 346,667 Matoaka Temporary Line 205,708 Kanowha River Study 1,310,993 Culloden Dam 496,127 Stub Period Remaining 0 Remaining Balance of Culloden Dam Reg Asset to be amortized 251,781 Client Work\ v1-8/14/18

17 West Virginia-American Water Company Estimated Tax Reduction for 2018' Appendix A - Total Company Page 2 of 4 Actual ** Operating Revenue $12,249,339 $11,418,351 $11,727,729 $11,096,082 $12,049,459 $12,394,296 $12,302,909 $12,425,961 $12,039,746 $11,987,462 $10,075,042 $9,981,441 $139,747,818 Operation and Maintenance Expense $5,799,838 $5,196,390 $5,083,045 $4,841,141 $5,159,572 $5,149,155 $4,973,873 $5,065,155 $4,962,233 $4,985,955 $3,621,468 53,711,750 $58,549,574 Depreciation and Amortization $1,899,839 $1,911,082 $1,924,188 $1,928,299 $1,933,599 $1,941,795 $1,910,922 $1,927,610 $1,935,973 $1,957,284 $2,001,550 $2,010,593 $23,282,734 General Taxes $1,602,008 $1,294,483 $1,515,991 $1,363,566 $1,437,538 $1,491,644 $1,471,668 $1,478,437 $1,355,075 $1,446,295 $1,415,576 $1,401,650 $17,273,930 Total Operating Expense, Net 9,301,685 8,401,954 8,523,223 8,133,007 8,530,708 8,582,594 8,356,462 8,471,202 8,253,280 8,389,535 7,038,594 7,123,994 99,106,238 Operating Income (Loss) $2,947,654 $3,016,396 $3,204,506 $2,963,076 $3,518,751 $3,811,703 $3,946,447 $3,954,760 $3,786,466 $3,597,927 $3,036,448 $2,857,447 $40,641,580 Other [Income) Expense ($1,127,552) ($1,085,451) ($1,159,707) ($1,175,487) ($1,158,942) ($1,119,871) ($1,063,287) ($1,064,405) ($1,238,718) ($1,253,503) ($1,255,256) ($1,275,708) (13,977,886) Income (Loss) before Taxes $1,820,102 $1,930,945 $2,044,799 $1,787,589 $2,359,809 $2,691,832 $2,883,160 52,890,355 $2,547,748 $2,344,425 $1,781,192 $1,581,739 $26,663,694 Provision for Taxes'"' State Tax 6.50% Federal Taxable Income 118, , , , , , , , , , , ,813 1,733,140 1,701,795 1,805,433 1,911,887 1,671,396 2,206,421 2,516,863 2,695,755 2,702,482 2,382,144 2,192,037 1,665,415 1,478,926 24,930,554 Federal Tax 35% 595, , , , , , , , , , , ,624 8,725,694 FederalTax 21% 357, , , , , , , , , , , ,575 5,235,416 Tax Reduction for 2017 Taw Act (238,251) (252,761) (267,664) (233,995) (308,899) (352,361) (377,406) (378,347) (333,500) (306,885) (233,158) (207,050) (3,490,278) * Excludes DSlC ** Removed Freedom Chemical Spill Related Transactions of S18.lm *** Re-calculated manually at statutory rates for the purpose of this response

18 West Virginia-American Water Company Estimated Tax Reduction for 2018 Water Appendix A - Water [ Actual ** I Forecasted J Financial item Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Total Page 3 of 4 Operating Revenue $12,172,747 11,347, ,652, ,316, $12,223,737 $12,343,007 $11,961,795 $11,914,320 $9,999,774 $9,905,941 $138,821,532 Operation and Maintenance Expense 5,766,958 5,154,625 5,016,431 4,737,172 5,125,025 5,097,769 4,936,611 5,021,727 4,925,579 4,947,801 3,578,577 3,669,844 58,038,118 Depreciation and Amortization 1,887,625 1,898,871 1,911,896 1,916,008 1,921,308 1,923,546 1,899,388 1,916,081 1,924,450 1,945,767 1,990,038 1,999,087 23,140,064 General Taxes 1,600,779 1,293,532 1,514,157 1,362,380 1,436,371 1,490,522 1,470,435 1,477,213 1,353,896 1,445,040 1,414,331 1,400,336 17,258,991 Total Operating Expense, Net 9,255,362 8,347, ,075,560 8,482,703 8,517,836 8,306,434 8,415,021 8,203,925 8,338,607 6,982,946 7,069,266 98,437,173 Operating Income (Loss) $2,917,385 $3,000,076 $3,209,795 $2,941,551 $3,484,161 $3,799,016 $3,917,304 $3,927,986 $3,757,871 $3,575,713 $3,016,828 $2,836,675 $40,384,360 Other (income) Expense (1,127,440) (1,085,271) (1,159,491) (1,175,308) (1,158,530) (1,119,224) (1,062,996) (1,064,114) (1,238,427) (1,253,212) (1,254,965) (1,275,417) (13,974,395) Income (Loss) before Taxes $1,789,945 $1,914,805 $2,050,303 $1,766,243 $2,325,631 $2,679,792 $2,854,308 $2,863,872 $2,519,444 $2,322,501 $1,761,863 $1,561,258 $26,409,965 Provision for Taxes*** StateTax 6.50% 116, , , , , , , , , , , ,482 1,716,648 Federal Taxable Income 1,673,598 1,790,343 1,917,034 1,651,437 2,174, , ,677,720 2,355,680 2,171,538 1,647,342 1,459,776 24,693,317 Federal Tax 35% 585, , , , , , , , , , , ,642,661 Federal Tax 21% 351, , , , , , , , , , , ,553 5,185,597 Tax Reduction for 2017 Tax Act (234,304) (250,648) (268,385) (231,201) (304,425) (350,785) (373,629) (374,881) (329,795) (304,015) (230,628) (204,369) (3,457,064) (309,696) (331,299) (354,743) (305,595) (402,380) (463,657) (493,851) ( ) * Excludes DSlC ** Removed Freedom Chemical Spill Related Transactions of S18.lm *** Re-calculated manually at statutory rates for the purpose of this response Client Wo~~8~Z vl-~i4/18

19 Wes Virginia-American Water Company Estimated Tax Reduction for 2018 Wastewater Appendix A - Wastewater Page 4 of 4 I Actual * I Forecasted 1 Financial Item Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Total Operating Revenue 76,591 71,247 75,450 78,971 82,595 77,444 79,172 82, ,142 75,268 75, ,285 Operation and Maintenance Expense 32,880 41,765 66,614 43,969 34,547 51,386 37, ,654 38,154 42,891 41, ,456 Depreciation and Amortization 12,214 12,211 12,291 12,291 12,291 12,249 11,534 11,529 11,523 11,518 11,512 11, ,670 General Taxes 1, ,186 1,167 1,122 1,233 1,224 1,179 1,255 1,245 1,314 14,939 Total Operating Expense, Net 46,323 54, ,446 48,005 64,758 50,029 56,181 49,356 50, , ,065 Operating Income (Loss) 30,268 $16,320 ($5,288) $21,525 $34,590 $12,686 $29,143 $26,774 $28,595 $22,215 19,620 $20,772 $257,220 Other (Income) Expense (112) (180) (216) (179) (412) (647) (291) (291) (291) (291) (291) (291) (3.491) Income (Loss) before Taxes $30,157 $16,140 (S5.5M) $21,346 $34,178 Sl2,MO $28,852 $26,483 $28,304 $ $19,329 $20,481 $253,729 Provision for Taxes"' State Tax 6.50% 1,960 1,049 (358) 1,387 2, ,875 1, ,425 1,256 1,331 16,492 Federal Taxable Income 28,197 15,091 (5,146) 19,959 31,956 11,257 26,977 24,762 26,464 20,498 18,073 19, ,236 Federal Tax 35% 9,869 5,282 (1,801) 6,986 11,185 3,940 9,442 8,667 9,262 7,174 6,325 6,702 83,033 Federal Tax 21% 5,921 3,169 (1.081) 4,191 6,711 2,364 5,665 5,200 5,557 4,305 3,795 4,021 49,820 Tax Reduction for 2017 Tax Act (3,948) (2,113) 721 (2,794) (4,474) (1,576) (3,777) (3,467) (3,705) (2,870) (2,530) (2,681) (33,213) * Re-calculated manually at statutory rates for the purpose of this response CIienl Wo~\ vl-8114/18

20 I Appendix B to Joint Stipulation I West Virglnla-Amerkan Water Company - Water Regulatory Expense Other For the Twelve Months Ended December 31,2017 Exhibit RPN-6 Statement G Adjustment 48 Page 1 of Adiusbnent for GOfnR Level ReRUlatOrV Exwnre Other Amortiation Amortization Months Monthly Months Amount At Description Period Amount in Period Amortization Remaining 2/28 f20l9 Harmful Algal Bloom (HAB) 3/1/2019 2/28/2022 $715, $19,871 $715, YR Flood Costs 3/1/2019 2/28f , ,oss Queen Shoals 3/1/2019 2/2a/ , , ,667 Totals 1,424,003 39,556 1,424,003 Amortization perind- 3 years 474,668 (a) Amortizat Ion Amortization Months Monthly Months Amount At Description Perbd Amount in Period Amortization Remaining 2/28/2019 Culloden Dam Demolition 2/1/2019 1/1/ , , ,683 Totals 329,845 9, ,207 Monthly Amortization 9,162 (b) Total Reglatory Expense Other 483,830 (c)=(a)+(b) Percentage to Water )6 Going Level Expense - 483,830 Test Year Per Book Expense 1,560 Going level Adjustment $

21 West Virginia-American Water Company Matoaka Summary Appendix C Profit Center JE# Description WBS DATE AMOUNT or WBS 2824 KR KR PV PV PV PV PV PA PA PA PA PA PA PA MATOAKA EMERGENCY INTERCONNECT Division of Highways West Virginia Pipeline 401k Expense Labor Expense Accrual FICA Group Insurance Expense Defined Compensation Plan Expense Labor Natural Account Group Insurance Expense 401k Expense FICA Labor Overtime - Natural Account Labor Non-scheduled Overtime - Natural A Defined Compensation Plan Expense SCE-Annual Incentive Plan (41) SCE-PBOP Expense - (41) SCE-Pension Expense - (41) SCE-Transportation Oper - A&G - (41) SCE-Insurance Workers Comp - (41) Estimated cost to uninstall and remove temp line 6/26/2018 7/12/2018 7/1/ I /1/2018 7/1/2018 7/1/2018 7/20/2018 7/20/2018 7/20/2018 7/20/2018 7/20/2018 7l /20/2018 7/ / /31/2018 7/31/2018 7/31/2018 TBD $ 6, , , , Total $ 205,708 Client Work\ v 1-8/14/18

22 West Virginia-American Water Company Kanawha River Study Summary Appendix D Profit Center Description WBS DATE AMOUNT or WBS KANAWHA RIVER STUDY 2831 Contract Engineering Services 2831 Contract Engineering Services 2831 Contract Engineering Services 2831 Contract Engineering Services 2831 Contract Engineering Services 2831 Contract Engineering Services 2831 Contract Engineering Services 2831 Contract Engineering Services 2831 Contract Engineering Services 2831 Contract Engineering Services 2831 Contract Engineering Services R28-01S1.14.P-0004 R28-01S1.14. P-0004 R28-01S1.14. P-0004 R28-01S1.14.P-0004 R2 8-01s P-0004 R28-01S1.14. P-0004 R28-01S1.14. P-0004 R28-01S1.14.P-0004 R28-01S1.14. P-0004 R28-01S1.14.P-0004 R28-01S1.14.P /5/ / /11/ /11/ /30/ /16/2016 9/2/ / /30/2017 $ 108, , , ,367 10, , , ,996 79, ,074 5,920 Total $ Client Work\ ~1-8/14/18

23 West Virginia-American Water Company Cuiloden Dam Summary Appendix E Profit Center JE# Description WBS DATE AMOUNT or WBS CULLODEN DAM DEMOLITION 2831 KR Kanawha Stone Company none 9/30/2017 $ 122, KR Kanawha Stone Company none , KR Civil Tech none 9/30/2017 9, SX Remaining balance in reserve none 9/30/2017 (8,934) 2831 WE Civil Tech /31/2017 7, RE Potesta /31/ RE Kanawha Stone Company /31/ , RE Kanawha Stone Company /31/ , RE Civil Tech /31/2018 2,000 Total $ 496,127 Client Work\ v 1-8/14/18