Dykema Gossett PLLC Capitol View 201 Townsend Street, Suite 900 Lansing, MI 48933 WWW.DYKEMA.COM Tel: (517) 374-9100 Fax: (517) 374-9191 Direct Dial: (517) 374-9198 Email: RAaron@dykema.com May 14, 2018 Kavita Kale Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway 3rd Floor Lansing, MI 48917 Re: Case No. U-20107 Dear Ms. Kale: Attached for electronic filing in Case No. U-20107, please find Indiana Michigan Power Company s Application, Testimony and Exhibits. Thank you. Sincerely, Richard J. Aaron RJA Enclosure California Illinois Michigan Minnesota Texas Washington, D.C.
STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter, on the Commission s own motion, ) to consider changes in the rates of all of the Michigan ) rate-regulated electric, steam and natural gas utilities ) to reflect the effects of the federal Tax Cuts and ) Case No. U-20107 Jobs Act of 2017: INDIANA MICHIGAN POWER ) Company files an application for determination of ) Credit A as described in order U-18494 ) APPLICATION Indiana Michigan Power Company (I&M or Company), in accordance with the Michigan Public Service Commission s (MPSC or Commission) February 22, 2018 Order issued in Case No. U-18494 (February 22 Order) submits this Application, supporting testimony and exhibits requesting approval of a Credit A that reflects the impact on I&M s rates, going forward, of the reduced federal income tax rate established by the Tax Cuts and Jobs Act of 2017 ( TCJA ). I&M requests approval of Credit A via the proposed Tax Reform Credit A Rider which results in a partial offset to I&M s retail electric base rates as established in Case No. U-18370. In support of this Application, I&M respectfully represents to the Commission as follows: 1. I&M is a corporation organized and existing under the laws of the State of Indiana and is authorized to do business in the State of Michigan. I&M's principal executive offices are located in the City of Fort Wayne, Indiana. I&M has corporate power and authority, among other things, to engage in generating, transmitting, distributing, and selling electric energy within the State of Michigan and within the State of Indiana. I&M is a wholly-owned subsidiary of American Electric Power Company, Inc. 2. I&M's electric business in the State of Michigan is subject to the jurisdiction of the Commission pursuant to 1909 PA 106, as amended, MCL 460.551 et seq.; 1909 PA 300, as 1
amended, MCL 462.2 et seq.; 1919 PA 419, as amended, MCL 460.51 et seq.; 1939 PA 3, as amended, MCL 460.1 et seq. 3. I&M provides electric service to approximately 128,000 retail electric customers in the State of Michigan. I&M's service area is located in southwestern Michigan and northern and eastern Indiana. 4. In its February 22 Order, the Commission directed I&M to file a Credit A application, supporting testimony and exhibits to address going-forward adjustments to base rates to reflect the reduction in the federal corporate tax rate from 35% to 21%. Ordering paragraph D of the February 22 Order directed I&M to file supporting testimony and base rate case exhibits similar to those included in the Case No. U-18238 filing requirements schedules A1 (revenue deficiency/sufficiency), B1 (rate base), C1 (operating income), C2 (revenue conversion factor), C8 (federal income tax), and D1 (cost of capital), and any other exhibits required to show the difference between the previously approved revenue requirement reflecting a 35% federal income tax expense and the new revenue requirement reflecting a 21% federal income tax expense. I&M was also directed to file cost of service studies similar to base rate case schedule F1, and proposed rate design and tariff sheets. 5. I&M s current retail electric rates were approved by the Commission s April 12, 2018 Order, as amended, in Case No. U-18370. The Company s current base rates for retail electric service include federal income tax expense amounts and a gross revenue conversion factor (GRCF) based on the federal income tax rate applicable to I&M s business of 35% in effect when I&M filed its rate case. As directed by the Commission, I&M s proposed Tax Reform Credit A Rider is designed to partially offset current retail electric utility rates to reflect the reduction in federal income tax expense and the GRCF resulting from the new 21% tax rate applicable to I&M s retail 2
electric utility business under the TCJA. 6. I&M calculates that changing the Company s federal income tax expense and the GRCF to reflect the TCJA s new 21% tax rate will reduce the Company s annual revenue requirement for retail electric utility base rates, set in Case No. U-18370, by approximately $8.7 million. 7. I&M proposes to flow the benefit of the tax reduction to each rate class in a manner that reflects the federal income tax burden each rate class currently bears under rates set in Case No. U-18370. In particular, the Company further proposes to establish a new rider, titled Tax Reform Credit A Rider as shown in Exhibit IM-10 (DEH-4), to reflect the going-forward impact of the federal income tax rate change to 21%. The Company proposes to compute the Tax Reform Credit A Rider based on the rate design targets that were approved by the Commission in U- 18370. The rate design targets were based upon the results of the Commission-approved class cost-of-service study from Case No. U-18370 which the Company updates here for changes to the GRCF and federal income tax expense as provided as Exhibit IM-8 (DEH-2). 8. I&M requests that the Commission implement the Tax Reform Credit A Rider detailed in the Company s testimony and exhibits. The Company requests that the Tax Reform Credit A Rider remain in effect until new base rates are set in a subsequent base rate proceeding. 9. Pursuant to the February 22 Order, I&M is requesting ex parte approval of the Tax Reform Credit A Rider. 10. I&M further requests, pursuant to the February 22 Order, that the assigned Administrative Law Judges set the below procedural schedule which affords the Commission a minimum of two weeks to render a decision: " I&M Testimony May 14, 2018 " Staff/Intervenor Testimony June 14, 2018 " I&M Rebuttal June 29, 2018 " Motions to Strike July 10, 2018 3
" Responses to Motions July 13, 2018 " Briefs July 17, 2018 " Reply Briefs July 27, 2018 WHEREFORE, I&M respectfully requests that this Commission: 1. Accept for filing this Application, which requests that the Commission grant ex parte approval of I&M s federal income tax expense and GRCF to reflect the TCJA s 21% tax rate will reduce the Company s revenue requirement for retail electric utility base rates by approximately $8.7 million. 2. Authorize and approve I&M s Tax Reform Credit A Rider. 3. Promptly make such investigation as it may deem necessary or advisable in the circumstances. 4. Grant I&M such other and additional relief as the Commission may deem reasonable and appropriate. Richard J. Aaron (P35605) Dykema Capitol View 201 Townsend Street, Suite 900 Lansing, Michigan 48933 517-374-9198 Direct 517-374-9100 Main RAaron@dykema.com Attorneys for Indiana Michigan Power Company Respectfully submitted, INDIANA MICHIGAN POWER COMPANY Cpftgy!L/! Yknnkcouqp Fkikvcnn{!ukipgf!d{!Cpftgy!L/!Yknnkcouqp! FP<!ep?Cpftgy!L/!Yknnkcouqp-!q?Kpfkcpc! Okejkicp!Rqygt!Eqorcp{-!qw?Fktgevqt!qh! Tgiwncvqt{!Ugtxkegu-! gockn?clyknnkcouqpbcgr/eqo-!e?wu! By Fcvg<!3129/16/25!26<67<32!.15(11( Andrew J. Williamson Director of Regulatory Services 4
STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION I In the matter, on the Commission s own motion, ) to consider changes in the rates of all of the Michigan ) rate-regulated electric, steam and natural gas utilities ) to reflect the effects of the federal Tax Cuts and ) Case No. U-20107 Jobs Act of 2017: INDIANA MICHIGAN POWER ) Company files an application for determination of ) Credit A as described in order U-18494 ) PRE-FILED DIRECT TESTIMONY OF BRYAN S. OWENS
BRYAN OWENS 1 PRE-FILED DIRECT TESTIMONY OF BRYAN S. OWENS ON BEHALF OF INDIANA MICHIGAN POWER COMPANY CASE NO. U-20107 1 2 3 4 5 6 7 8 9 Q. Please state your name and business address. A. My name is Bryan S. Owens and my business address is Indiana Michigan Power Center, P.O. Box 60, Fort Wayne, Indiana 46801. Q. By whom are you employed and in what capacity? A. I am employed by Indiana Michigan Power Company (I&M or Company) as a Regulatory Analysis & Case Manager in the Regulatory Services Department. Q. Please describe your educational and professional experience. A. I graduated from the University of Missouri, Kansas City in 1996 with a Bachelor of Liberal Arts degree and in 1998 with a Bachelor of Science degree in 10 Accounting. In May 2003, I earned a Certified Public Accountant (CPA) 11 12 13 14 15 16 17 18 19 certificate in Missouri. In July 2010, I obtained a Colorado CPA license (0028436 Inactive) and in May 2018, I obtained an Indiana CPA license (CP11800151). I began my professional career in 1998, when I joined the accounting firm of KMPG, LLP. I was employed at KMPG from August 1998 to July 2001, as a senior auditor and senior tax specialist performing financial statement audits and preparing federal and state tax returns for individuals and corporations. From July 2001 to June 2004, I was employed by Overland Consulting, Inc., in Overland Park, Kansas as a senior consultant performing audits of utility FERC financial statements as part of general rate case reviews before the California
BRYAN OWENS 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Public Utilities Commission. From June 2004 to July 2008, I was employed by Aquila, Inc., in Kansas City, Missouri, as a senior regulatory analyst preparing rate case filings and managing compliance filings for several state jurisdictions including Missouri, Kansas and Colorado. In July 2008, Aquila, Inc. was acquired by Black Hills Corporation and Great Plains Energy, Inc. I joined Kansas City Power and Light (a wholly owned subsidiary of Great Plains Energy, Inc.) before joining Black Hills Corporation in December 2008. At Black Hills Corporation I was Manager, Colorado Electric Regulatory Affairs. In that role, I had responsibility for providing various financial analyses in support of utility operations and managing regulatory filings for the electric utility operations of Black Hills/Colorado Electric utility Company, LP. In November 2014, I joined Empire District Electric Company (Empire) as Assistant Director of Planning and Regulatory where I had responsibility for providing various financial analyses in support of utility operations and managing regulatory filings for the electric utility operations of Empire. In May 2017, I joined Indiana Michigan Power Company and assumed my current position as Regulatory Analysis & Case Manager. Q. What are your responsibilities as Regulatory Analysis & Case Manager? A. I am responsible for the preparation of regulatory filings and analyses. Q. Have you previously testified before any regulatory proceedings? A. Yes. I have submitted testimony on behalf of I&M before the Michigan Public Service Commission ( Commission ) in the following proceedings: " Case No. U-18243 (Renewable Energy and Cost Reconciliation)
BRYAN OWENS 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 " Case No. U-18263 (Energy Waste Reduction Plan) " Case No. U-18353 (Voluntary Green Pricing Program) I have also testified before the Arkansas Public Service Commission, the Colorado Public Utilities Commission, the Indiana Utility Regulatory Commission, the Kansas Corporation Commission, the Missouri Public Service Commission, and the Oklahoma Corporation Commission. PURPOSE OF TESTIMONY Q. What is the purpose of your testimony in this case? A. In a February 22, 2018 Order, in Case No. U-18494, the Commission directed I&M to file an application proposing a Credit A that reflects the impact on I&M s rates, going forward, of the reduced federal income tax rate established by the Tax Cuts and Jobs Act of 2017 ( TCJA ). The Commission ordered I&M to file this application within 30 days after the issuance of the final order in I&M s recent base case, Case No. U-18370. The purpose of my testimony is to support the change to I&M s revenue requirement approved by the Commission in Case No. U-18370 that was caused by the reduction of the corporate federal income tax rate from 35 percent to 21 percent. Company witness High will support a class cost of service and rate design for a proposed Tax Reform Credit A Rider to flow the tax savings back to customers. Q. Are you sponsoring any exhibits in this proceeding? A. Yes. I am sponsoring the following exhibits, which I will describe and refer to in my testimony:
BRYAN OWENS 4 1 2 3 Exhibit IM-1 (BSO-1): Exhibit IM-2 (BSO-2): Projected Revenue Deficiency (Schedule A-1, A1 Projected) Projected Rate Base (Schedule A-2, B1 Projected) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Exhibit IM-3 (BSO-3): Projected Net Operating Income (Schedule A-3, C1 Projected) Exhibit IM-4 (BSO-4): Computation of Gross Revenue Conversion Factor (Schedule A-3, C2 Projected) Exhibit IM-5 (BSO-5): Historical and Projected Federal Income Taxes (Schedule A-3, C8 Projected) Exhibit IM-6 (BSO-6): Projected Rate of Return Summary (Schedule A-4, D- 1 Projected) Q. Were these exhibits prepared by you or under your direction and supervision? A. Yes. DISCUSSION Q. What is the purpose of the proposed Credit A? A. On December 22, 2017, the TCJA was signed into law. Among other things, the TCJA permanently reduced the corporate federal income tax rate from 35 percent to 21 percent effective January 1, 2018. The purpose of the Credit A, as proposed in this filing, is to provide an offset to base rates approved by the Commission in Case No. U-18370. The revenue requirement approved in Case No. U-18370 included rates based, in part, on federal income tax expense and a gross revenue conversion factor ( GRCF ) calculated on a 35 percent federal income tax rate. The proposed Credit A reflects the reduction of the Commission approved revenue requirement in Case No. U-18370 caused by the change in the federal income tax rate from 35 percent to 21 percent.
BRYAN OWENS 5 1 2 3 4 5 6 7 8 9 10 11 12 Q. What is the reduction in revenue requirement caused by the reduction in the federal tax rate? A. As illustrated on line 24 of Exhibit IM-1 (BSO-1), and in Table BSO-1 below, the revenue requirement reduction caused by the reduction in the corporate federal income tax rate to 21 percent, is approximately $8.7 million. Q. Please summarize how the reduction in federal income taxes affects the revenue requirement approved by the Commission in Case No. U-18370. A. Table BSO-1 below compares the components of the revenue deficiency as authorized by the Commission in Case No. U-18370 to the components of I&M s revenue deficiency after application of the Credit A adjustments. As illustrated in Table BSO-1, reduction of the corporate federal income tax rate from 35 percent to 21 percent reduced income tax expense by $1,698,229, or approximately 40 13 percent. Table BSO-1 also shows the reduction to total deficiency of 14 15 16 17 18 19 $10,229,227 from the reduction of the GRCF from 1.6315 to 1.3424. Finally, as illustrated below and described by Company witness High, Table BSO-1 reflects an increase in the OATT adjustment by $1,548,375. Together, these changes result in a net $8,680,852 decrease in I&M s revenue deficiency associated with the reduction of the corporate federal income tax rate from 35 percent to 21 percent.
BRYAN OWENS 6 Table BSO-1 _Ea _Fa _Ga#A#_Fa#0#_Ea Rsxi#4 Rsxi#5 Hiwgvmtxmsr Tiv#Gsqqmwwmsr# Svhiv#mr#Gewi#Rs1# Y04<6;3 Xe #Ehnywxih Hmjjivirgi Vixyvr#sr#Vexi#Fewi Vexi#Fewi '######## =<7/9=6/887 '#### =<7/9=6/887 '################# 0 Vexi#sj#Vixyvr#sr#Vexi#Fewi 81;8<( 81;8<( Xsxep#Vixyvr#sr#Vexi#Fewi '########## 89/;33/<9= '###### 89/;33/<9= '################# 0 S)Q '######## 55;/998/944 '#### 55;/998/944 '################# 0 Hitvigmexmsr#)#Eqsvxm~exmsr ############ 88/596/<<5 ######## 88/596/<<5 #################### 0 Vikypexsv}#Hifmxw#)#Gvihmxw ############# +5/3<=/;=3, ######### +5/3<=/;=3, #################### 0 Xe iw#sxliv#xler#mrgsqi#xe iw ############ 46/484/739 ######## 46/484/739 #################### 0 Mrgsqi#Xe #I tirwi ############### 7/473/576 ########### 5/775/347 ##### +4/9=</55=, Xsxep#Viziryi#Viuymviqirx ########## 687/<65/554 ###### 686/466/==5 ##### +4/9=</55=, Xsxep#Ehnywxih#Viziryi ########## 657/4=;/775 ###### 657/4=;/775 #################### 0 Xsxep#Hijmgmirg}#Fijsvi#EJYHG/#KVGJ/#erh#SEXX#Ehnywxqirx ############ 63/967/;;= ######## 5</=69/883 ##### +4/9=</55=, Piww>#EJYHG ############# +6/46=/375, ######### +6/46=/375, #################### 0 Xsxep#Hijmgmirg}#Fijsvi#KVGJ#erh#SEXX#Ehnywxqirx ############ 5;/7=8/;6; ######## 58/;=;/83< ##### +4/9=</55=, KVGJ#Jegxsv ##################### 419648 ################# 416757 Xsxep#Hijmgmirg}#Fijsvi#SEXX#Ehnywxqirx ############ 77/<8=/<35 ######## 67/963/8;8 ### +43/55=/55;, SEXX#Ehnywxqirx ############### 8/6=6/757 ########### 9/=74/;== ####### 4/87</6;8 Xsxep#Hijmgmirg} '########## 83/586/559 '###### 74/8;5/6;7 '### +</9<3/<85, Rsxi#4>##Eqsyrxw#sfxemrih#jvsq#I lmfmx#mq0;#+hil0;, Rsxi#5>##Eqsyrxw#sfxemrih#jvsq#I lmfmx#mq0<#+hil0<, 1 2 3 4 5 6 7 8 9 10 Q. What does Exhibit IM-1 (BSO-1) illustrate? A. Exhibit IM-1 (BSO-1) illustrates the revenue requirement as approved by the Commission in Case No. U-18370 at the federal income tax rate of 35 percent, and the reduction to the Commission-approved revenue requirement caused by the reduction in the federal income tax rate to 21 percent. Q. Please describe Exhibit IM-2 (BSO-2). A. Exhibit IM-2 (BSO-2) illustrates the calculation of rate base as approved by the Commission in Case No. U-18370. The rate base approved by the Commission in Case No. U-18370 was not impacted by the reduction of the corporate federal income tax rate.
BRYAN OWENS 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Q. What does Exhibit IM-3 (BSO-3) illustrate? A. Exhibit IM-3 (BSO-3) illustrates an increase in I&M s Commission-approved Michigan-jurisdictional adjusted net operating income of approximately $1,698,000. This increase in net operating income was caused by the decrease in current federal income tax expense as illustrated on Exhibit IM-3 (BSO-3), line 8. Q. Please describe Exhibit IM-4 (BSO-4). A. Exhibit IM-4 (BSO-4) provides the calculation of the GRCF with a 21 percent federal income tax rate. As a result of the reduction of the corporate federal income tax rate to 21 percent, the GRCF is reduced from 1.6315 to 1.3424. Q. Please describe Exhibit IM-5 (BSO-5). A. Exhibit IM-5 (BSO-5) illustrates the reduction in I&M s test year federal income tax expense resulting from the reduction of the corporate federal income tax rate to 21 percent. As illustrated on Exhibit IM-5 (BSO-5), line 6, total Michiganjurisdictional tax expense after applying a tax rate of 21 percent, was reduced by $1,698,229. Q. Please describe Exhibit IM-6 (BSO-6). A. Exhibit IM-6 (BSO-6) illustrates the rate of return on rate base as approved by the Commission in Case No. U-18370. The rate of return on rate base was not affected by the reduction of the corporate federal income tax rate to 21 percent.
BRYAN OWENS 8 1 2 3 4 5 6 7 8 9 10 Q. How does I&M propose to pass along to customers the benefits from the reduction of the corporate federal income tax rate? A. As further described by Company witness High, I&M proposes to flow the benefit of the reduction to each rate class in a manner that reflects the federal income tax burden each rate class currently bears under rates set in Case No. U-18370. In particular, I&M proposes to establish a Tax Reform Credit A Rider, that will remain in effect until new base rates are set in a subsequent base rate proceeding. Q. Does this conclude your pre-filed direct testimony? A. Yes.
Indiana Michigan Power Company Case No.: U-20107 Revenue Deficiency Exhibit No.: IM-1 (BSO-1) Projected 12-Month Period Ending 12/31/2018 Schedule A-1, A1 Projected Page: 1 of 1 Witness: Bryan Owens (a) (b) (c) Michigan Line Jurisdictional No. Description Source $000 1 2 Rate Base Exh. IM-8 (DEH-2) 984,694 3 4 Adjusted Net Operating Income Exh. IM-8 (DEH-2) 30,903 5 6 Overall Rate of Return Line 4 / Line 2 3.14% 7 8 Rate of Return Commission Order 5.76% 9 10 Income Requirement Line 2 x Line 8 56,701 11 12 Income Deficiency Line 10 - Line 4 25,798 13 14 Revenue Conversion Factor Exh. IM-4 (BSO-4) 1.3424 15 16 Subtotal Line 12 x Line 14 34,631 17 18 OATT Costs Exh. IM-8 (DEH-2) 6,942 19 20 Total Revenue Deficiency Line 16+Line 18 41,572 21 22 Pre TCJA Deficiency Exh. IM-7 (DEH-1) 50,253 23 24 Tax Reform Credit A Rider Line 20 - Line 22 (8,681)
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Michigan Public Service Commission Case No. U-20107 Indiana Michigan Power Company Exhibit IM-3 (BSO-3) Jurisdictional Net Operating Income Schedule A-3, C1 Projected Projected 12-Month Period Ended 12/31/2018 Page 1 of 1 Witness: Bryan S. Owens (a) (b) (c) (e) (e) U-18370 Order U-18370 Order Michigan Michigan Michigan Jurisdictional Jurisdictional Jurisdictional Net Operating Net Operating Income Income Line 35% FIT Rate 21% FIT Rate No. Description ($000) Change ($000) Source 1 Operating Revenues $ 324,197 $ 324,197 Exhibit IM-8 (DEH-2) 2 3 Operating Expenses 4 Fuel and Purchased Power Expense 97,935 97,935 Exhibit IM-8 (DEH-2) 5 Operating and Maintenance Expense 129,731 129,731 Exhibit IM-8 (DEH-2) 6 Depreciation and Amortization Expense 53,174 53,174 Exhibit IM-8 (DEH-2) 7 Taxes Other than Income Taxes 13,151 13,151 Exhibit IM-8 (DEH-2) 8 Income Taxes 4,140 (1,698) 2,442 Exhibit IM-8 (DEH-2) 9 Total Operating Expenses 298,131 (1,698) 296,433 10 11 AFUDC 3,139 3,139 Exhibit IM-8 (DEH-2 12 13 Net Operating Income $ 29,205 $ 1,698 $ 30,903 Exhibit IM-8 (DEH-2) 14 15 Operating Income Adjustments 16 Operating Revenue Adjustments Incl. above Incl. above 17 Operating and Maintenance Expense Adjustments Incl. above Incl. above 18 Depreciation and Amortization Expense Adjustments Incl. above Incl. above 19 Regulatory Debit and Credit Adjustments Incl. above Incl. above 19 Taxes Other than Income Adjustments Incl. above Incl. above 20 AFUDC Adjustments Incl. above Incl. above 21 Tax Related Adjustments Incl. above Incl. above 22 Total Operating Income Adjustments - - - 23 Non-Applicable 24 AFUDC Incl. above Incl. above 25 Tax Related Incl. above Incl. above 26 Total Non-Applicable - - - 27 Adjusted Net Operating Income $ 29,205 $ 1,698 $ 30,903 Exhibit IM-8 (DEH-8)
Michigan Public Service Commission Case No.: U-20107 Indiana Michigan Power Company Exhibit No.: I&M-4 (BSO-4) Computation of Gross Revenue Conversion Factor Schedule No.: A-3, C2 Projected For the Forecasted Test Year Ended December 31, 2018 Witness: B. S. Owens Tax Rates Percentage of Incremental Gross Revenues 1 Operating Revenues 100.00% 2 Less: Uncollectible Accounts Expense 0.0000% 3 Income Before Income Taxes 100.00% 4 Less: 5 Public Utility Assessment Fee (MPSC) 0.2240% 0.2240% 6 Base Subject to State Income Taxes 99.7760% 7 Less: State Income Taxes (Line 6 x Effective State Tax Rate) 5.4920% 5.4797% 8 Income Before Federal Income Taxes 94.2963% 9 Less: Federal Income Taxes (Line 8 x Federal Tax Rate) 21.00% 19.8022% 10 Operating Income Percentage 74.4941% 11 Gross Revenue Conversion Factor (100% / Line 10) 1.3424
Indiana Michigan Power Company Case No.: U-20107 Calculation of Changes in Income Taxes Exhibit No.: IM-5 (BSO-5) And Other Changes Resulting from the Tax Cuts and Jobs Act of 2017 Schedule No.: A-3, C-8 Projected For the Forecasted Test Year Ended December 31, 2018 Witness: Bryan Owens Line Tax Effect as Tax Effect if Difference If Total No. Column A Amount in Order Filed @ 35% Rate was @ 21% Rate was @ 21% Tax Expense 1 Total Michigan Jurisdictional Tax Expense as indicated $ 4,140,243 in MPSC Order 2 Michigan Jurisdictional Pre-Tax Book Income Before FIT $ 12,317,244 $ 4,311,035 $ 2,586,621 $ (1,724,414) (Including the calculation for interest synchronization) 3 Michigan Jurisdictional Flow-Through & Permanent Items $ 351,906 $ 123,167 $ 73,900 $ (49,267) (A) (excluding Section 199 Deduction elimination) 4 Elimination of Michigan Jurisdictional Section 199 Deduction $ (62,000) $ (13,020) $ 13,020 (B) 5 Other Specific Tax Items (Tax Feedback of Property-Related $ (156,081) $ (156,081) $ (93,649) $ 62,432 Basis Differences Embedded in Flow-through Depreciation) - Michigan Jurisdictional 6 Total Reductions to Michigan Jurisdictional Tax Expense $ 4,278,122 $ 2,553,853 $ (1,698,229) $ (1,698,229) as a result in applying a tax rate of 21% instead of 35% to the income tax expense components as indicated in MPSC Order and other changes impacting income tax expense per the TCJA 7 Total Michigan Jurisdictional Tax Expense after applyiing $ 2,442,014 a tax rate of 21% instead of 35% to the income tax expense components as indicated in MPSC Order and other changes impacting income tax expense per the TCJA (A) Schedule M adjustments that are fully normalized have not been included since they have no tax effect. (B) Section 199 Deduction eliminated with TCJA
Michigan Public Service Commission Case No.: U-20107 Indiana Michigan Power Company Exhibit No.: IM-6 (BSO-6) Rate of Return Summary Schedule No: A-4, D-1 Projected Projected 13-Month Period Ended 12/31/2018 Witness: Bryan Owens (a) (b) (c) (d) (e) (f) (g) % % % % % WITH WEIGHTED WEIGHTED Line 13-MONTH AVERAGE PERMANENT RATE BASE COST COST COST No. CAPITAL ELEMENT BALANCE CAPITAL ADJUSTMENTS RATE PERMANENT RATE BASE 1 $ 2 LONG TERM DEBT 2,453,538,462 51.42 40.30 5.15 2.65 2.08 3 SHORT TERM DEBT 103,471,731 2.17 1.70 2.29 0.05 0.04 4 PREFERRED STOCK 0 0.00 0.00 0.00 0 0.00 5 COMMON EQUITY 2,214,804,802 46.41 36.38 9.90 4.59 3.60 6 7 TOTAL WITHOUT TAXES 4,771,814,995 100.00 78.39 7.290 5.72 8 9 ACC. DEF. ITC (3%) 0 0.00 0.00 0.00 10 ACC. DEF. FIT 1,280,872,064 21.04 0.00 0.00 11 ACC. DEF. JDITC 34,861,134 0.57 7.29 0.04 12 13 TOTAL WITH TAXES 6,087,548,193 100.00 5.76 14 15 * EXCLUDES UNAMORTIZED PREMIUM, DISCOUNT, ISSUANCE EXPENSE AND COST OF REACQUIRED DEBT. EXCLUDES SPENT NUCLEAR FUEL DISPOS 16 ** EXCLUDES RIVER TRANSPORTATION DIVISION 17 *** INCLUDES PREMIUM ON PREFERRED STOCK. 18 **** INCLUDES COMMON STOCK, OTHER PAID IN CAPITAL, RETAINED EARNINGS AND PREMIUM ON COMMON STOCK.
STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION n the matter, on the Commission s own motion, ) to consider changes in the rates of all of the Michigan ) rate-regulated electric, steam and natural gas utilities ) to reflect the effects of the federal Tax Cuts and ) Case No. U-20107 Jobs Act of 2017: INDIANA MICHIGAN POWER ) Company files an application for determination of ) Credit A as described in order U-18494 ) PRE-FILED DIRECT TESTIMONY OF DANIEL E. HIGH
PRE-FILED DIRECT TESTIMONY OF DANIEL E. HIGH ON BEHALF OF INDIANA MICHIGAN POWER COMPANY DANIEL HIGH 1 1 2 3 4 5 Q. Please state your name, business address, and title. A. My name is Daniel E. High, and my business address is 1 Riverside Plaza, Columbus, Ohio 43215. My current title is Staff Regulatory Consultant. Q. By whom are you employed and what is your position? A. I am employed by the American Electric Power Service Corporation (AEPSC) as 6 a Staff Regulatory Consultant in Regulated Pricing and Analysis. AEPSC 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 supplies engineering, financing, accounting, and planning and advisory services to the eleven electric operating companies of the American Electric Power (AEP) System, one of which is Indiana Michigan Power Company (I&M or the Company). Q. Please describe your educational and professional background. A. In December 1989, I received a Bachelors of Science Degree in Energy Management from West Liberty University. In May 1997, I received a Masters of Business Administration degree from Ashland University. In February 1990, I joined Columbus Southern Power Company as a Marketing and Customer Services Representative in the Marketing and Customer Services Department of the Columbus Region. In August 1998, I joined the Regulated Pricing & Analysis Department as a Regulatory Consultant. From 2006 through 2008, I performed duties as a Regulatory Consultant in Transmission & Interconnection Services under the Regulatory Services Department, where I was responsible for rate design and maintaining wholesale
DANIEL HIGH 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 contracts. In January 2009, I returned to Regulated Pricing & Analysis under the Regulatory Services Department as a Staff Regulatory Consultant. Q. What are your responsibilities as a Staff Regulatory Consultant? A. My responsibilities include preparation of cost-of-service studies, rate design and tariff provisions for AEP operating companies, as well as other projects related to regulatory issues and proceedings, individual customer requests, and general rate matters. Q. Have you previously submitted testimony in any regulatory proceedings? A. Yes. I have submitted testimony before the Michigan Public Service Commission ( MPSC or Commission ); before the Public Service Commission of Kentucky on behalf of Kentucky Power Company; and the Indiana Utility Regulatory Commission on behalf of I&M; and before the Public Utilities Commission of Ohio on behalf of Ohio Power Company. PURPOSE OF TESTIMONY Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony is to support the class cost-of-service studies (CCOSS), rate design and rider tariff sheet that underlie the Company s Credit A, or going-forward tax credit as explained in greater detail by Company witness Owens. Q. Are you sponsoring any exhibits in this proceeding? A. Yes, I am sponsoring the following exhibits: 22 23 Exhibit IM-7 (DEH-1): Schedule A-6, F1 Projected, U-18370 Final Order CCOSS (35% FIT)
1 2 3 4 Exhibit IM-8 (DEH-2): Exhibit IM-9 (DEH-3): Exhibit IM-10 (DEH-4): DANIEL HIGH 3 Schedule A-6, F1 Projected, U-18370 Final Order CCOSS (21% FIT) Credit A Rate Design Tax Reform Credit A Rider 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Q. Were these exhibits prepared by you or under your direction or supervision? A. Yes. OVERVIEW OF CREDIT A CCOSS Q. Please briefly describe the general nature and purpose of a class cost-ofservice study. A. A class cost-of-service study is utilized to determine the revenue requirement for the services offered by the utility and to determine the costs that different classes of customers impose on the utility system. A class cost-of-service study is a basic analytical tool used in utility rate design. When all of the jurisdictional costs are allocated or assigned to the various customer classes, the result is a class cost responsibility study that is a guide in establishing rates based on costs. Q. What is the purpose of the Company s Credit A CCOSS? A. The purpose of the Company s Credit A CCOSS is to reflect the going-forward tax credit changes to the federal income tax law associated with the Tax Cuts 20 and Jobs Act of 2017 ( TCJA ). The Commission-approved base rates 21 22 23 established in the Company s most recent base rate case (U-18370) reflect the higher federal income tax rate of 35% that was still in effect at the time of the base rate case filing in 2017. Using a multi-step process explained below, I
DANIEL HIGH 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 computed the Company s Credit A amounts by rate class and the corresponding class rates. Q. What is the source of data used to prepare the Company s Credit A rates? A. Exhibit IM-7 (DEH-1), the class cost-of-service study underlying the Commissionapproved rates in Case No. U-18370, is used as the starting point for computing the Company s proposed Credit A rates. Q. Please explain the process used to compute the Company s proposed Credit A and resulting rates. A. In order to compute the proposed Credit A amount, I first created Exhibit IM-8 (DEH-2) to reflect the necessary changes to Company s CCOSS associated with the TCJA s going forward tax credit. Specifically, Exhibit IM-8 (DEH-2) reflects the following changes: 1. Recomputed Current Tax Expense to reflect the TCJA 21% federal income tax (FIT) rate; 2. Recomputed Current Income; 3. Recomputed Income Increase; 4. Applied updated Gross Revenue Conversion Factor (GRCF) reflecting 21% FIT rate and recomputed Revenue Increase; 5. Recomputed OATT Adjustment (discussed in detail below); and 6. Determined final Tax-Adjusted Revenue Increase. After making the CCOSS changes above, I compared the revenues from IM-7 (DEH-1) to the revenues from IM-8 (DEH-2) to solve for the Credit A amounts by
DANIEL HIGH 5 1 2 3 4 5 6 7 8 9 10 class and by function. Exhibit IM-9 (DEH-3) provides the CCOSS comparison and resulting total revenue reduction of approximately $8.7M. Q. Within the Credit A CCOSS, where does the Company reflect the Federal Income Tax changes? A. Specifically, the Company includes the Federal Income Tax changes from Exhibit IM-5 (BSO-5), as supported by Company witness Owens, in the tax section of the Credit A CCOSS highlighted in blue in Exhibit IM-8 (DEH-2). Q. Please explain the OATT adjustment the Company includes in its class cost of service studies. A. When the Company prepares a class cost-of-service study it includes an 11 adjustment to remove the embedded cost of transmission. The 12 13 14 15 16 17 18 19 20 21 22 Company s entire traditional embedded cost of transmission, net of the revenues the Company receives from PJM as a Transmission Owner, are removed from the Company s revenue requirement. What remains in the CCOSS includes the OATT charges. Q. Please explain the OATT adjustment change in the Credit A CCOSS. A. The OATT adjustment from the Commission-approved class cost-of-service study from its most recent base case in Case No. U-18370 was $5,393,424, as shown in Exhibit IM-7 (DEH-1), which was added to the Company s revenue deficiency. The revised OATT adjustment shown in Exhibit IM-8 (DEH-2) is $6,941,799, which is included in the Company s total revenue deficiency as shown in Exhibit IM-1 (BSO-1).
DANIEL HIGH 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Q. Does the Credit A CCOSS prepared by the Company appropriately address changes from the TCJA? A. Yes. Company witness Owens calculated the reduction in the Federal Income Tax associated with TCJA and it is included in the Company s Credit A CCOSS. The results of this study reflect the appropriate adjusted Credit A revenue reduction for I&M s tariff classes. Q. Please discuss how the Company is proposing to calculate the Credit A rates for each tariff class. A. As discussed above, the Credit A revenue reduction amount is approximately $8.7M and is calculated in Exhibit IM-9 (DEH-3) as the difference between the total proposed sales revenue from Exhibit IM-8 (DEH-2) and the total proposed sales revenue from Exhibit IM-7 (DEH-1). The Company is proposing to calculate Credit A rates for each tariff class using the billing determinants that support the Commission-approved rates in Case No. U-18370, the Company s most recent base rate case. Exhibit IM-9 (DEH-3) computes the Credit A rates for each customer class by dividing the individual class Credit A revenue reductions by the class-specific billing determinants (energy and/or demand) Q. Please discuss Exhibit IM-10 (DEH-4). A. The Company proposes to establish a new rider, titled Tax Reform Credit A Rider as shown in Exhibit IM-10 (DEH-4), to reflect the going-forward tax credit changes to the federal income tax law. The credit rates calculated in Exhibit IM-9
DANIEL HIGH 7 1 2 3 4 5 6 7 8 (DEH-3) are reflected in Exhibit IM-10 (DEH-4) and are applicable to both Standard and Open Access Distribution (OAD) service tariff customers. Q. What is the period of time that the Credit A rates will be in effect? A. The effective date of Credit A will be on a service-rendered basis after the Commission s final order and will remain until Commission-approved rates are implemented in the Company s next base rate case. Q. Does this conclude your pre-filed direct testimony? A. Yes, it does.
INDIANA MICHIGAN POWER COMPANY - MICHIGAN COST-OF-SERVICE STUDY TWELVE MONTHS ENDING DECEMBER 31, 2018 Indiana Michigan Power Company Case No. U-20107 Exhibit No.: IM-7 (DEH-1) Page 1 of 7 Witness: Daniel E. High INDIANA MICHIGAN POWER COMPANY - MICHIGAN Case No. U-18370 COST-OF-SERVICE STUDY (STAFF) Exhibit S-19 TWELVE MONTHS ENDING DECEMBER 31, 2018 Witness Gottschalk Allocation Total Total Total Total Total Label Constant Factor Function Retail RS SGS MGS LGS LP MS WSS EHS EHG IS OL SL 1 2 3 13 16 17 18 19 20 Rate Base P-T-D Plant in Service Production Demand 640,421,710 PROD_DE TOTAL 640,421,710 275,576,207 19,219,588 149,477,014 55,378,259 122,926,878 5,477,217 5,011,669 1,329,385 902,530 3,915,698 620,961 586,305 GSU 8,321,324 PROD_DE TOTAL 8,321,324 3,580,701 249,730 1,942,231 719,558 1,597,251 71,168 65,119 17,273 11,727 50,879 8,068 7,618 Total 648,743,034 TOTAL 648,743,034 279,156,908 19,469,318 151,419,245 56,097,817 124,524,129 5,548,385 5,076,788 1,346,658 914,257 3,966,576 629,030 593,923 Transmission Total 226,809,248 TRAN_TO TOTAL 226,809,248 97,522,985 6,915,905 54,584,946 18,800,249 43,329,767 2,303,757 1,631,249 509,493 337,754 573,009 154,020 146,115 Distribution 360 Land and Land Rights 6,806,845 DIST_CPD TOTAL 6,806,845 3,366,909 230,085 1,726,093 613,480 685,004 73,673 52,746 14,803 11,296 19,877 6,480 6,399 361 Structures and Improvements 3,681,399 DIST_CPD TOTAL 3,681,399 1,820,952 124,439 933,536 331,793 370,476 39,845 28,527 8,006 6,109 10,750 3,505 3,461 362 Station Equipment 48,930,979 DIST_CPD TOTAL 48,930,979 24,203,013 1,653,968 12,408,010 4,410,000 4,924,149 529,600 379,165 106,408 81,200 142,884 46,582 46,002 364 Poles 69,634,372 DIST_POLES TOTAL 69,634,372 40,197,213 2,769,963 15,828,513 4,354,578 3,953,703 760,666 433,227 172,580 119,563 756,305 151,410 136,651 365 Overhead Lines 111,241,962 DIST_OHLINES TOTAL 111,241,962 65,373,544 4,508,812 24,918,106 6,569,837 5,701,506 1,216,581 670,681 279,956 191,810 1,319,492 259,010 232,627 366 Underground Conduit 10,643,552 DIST_UGLINES TOTAL 10,643,552 6,079,130 418,686 2,440,036 687,292 638,810 116,188 67,420 26,140 18,230 109,356 22,182 20,083 367 Underground Lines 37,866,619 DIST_UGLINES TOTAL 37,866,619 21,627,752 1,489,562 8,680,928 2,445,184 2,272,696 413,363 239,859 92,998 64,857 389,055 78,916 71,449 368 Transformers 50,959,129 DIST_TRANSF TOTAL 50,959,129 32,528,715 2,252,189 10,593,921 2,147,499 1,241,550 560,441 259,508 137,735 89,665 852,560 156,842 138,505 369 Services 32,855,435 DIST_SERV TOTAL 32,855,435 26,443,354 3,271,908 962,588 25,168-42,586 57,663 3,593 13,422 138,738 1,853,628 42,788 370 Meters 18,046,188 DIST_METERS TOTAL 18,046,188 9,480,171 2,059,970 4,317,036 611,970 479,409 166,760 285,142 19,701 42,467 580,210-3,352 371 Installations on Cust Premises 8,943,456 DIST_OL TOTAL 8,943,456 - - - - - - - - - - 8,943,456-373 Street Lighting 5,448,999 DIST_SL TOTAL 5,448,999 - - - - - - - - - - - 5,448,999 Total 405,058,934 TOTAL 405,058,934 231,120,751 18,779,582 82,808,766 22,196,801 20,267,303 3,919,703 2,473,937 861,919 638,619 4,319,227 11,522,011 6,150,316 Total P-T-D Plant in Service 1,280,611,216 TOTAL 1,280,611,216 607,800,644 45,164,805 288,812,958 97,094,867 188,121,199 11,771,845 9,181,974 2,718,070 1,890,629 8,858,812 12,305,060 6,890,353 General & Intangible Plant 41,443,965 LABOR_M TOTAL 41,443,965 20,180,339 1,501,672 8,853,359 3,126,332 6,479,467 344,020 293,227 81,005 56,402 276,543 188,797 62,802 Total Electric Plant in Service 1,322,055,180 1,144,599,995 TOTAL 1,322,055,180 627,980,983 46,666,477 297,666,316 100,221,199 194,600,666 12,115,865 9,475,201 2,799,075 1,947,031 9,135,354 12,493,857 6,953,155 177,455,185 Plant Held for Future Use Production 754,305 RB_GUP_EPIS_P TOTAL 754,305 324,581 22,637 176,058 65,226 144,786 6,451 5,903 1,566 1,063 4,612 731 691 Transmission 30,047 RB_GUP_EPIS_T TOTAL 30,047 12,919 916 7,231 2,491 5,740 305 216 67 45 76 20 19 Distribution 40,049 RB_GUP_EPIS_D TOTAL 40,049 22,851 1,857 8,187 2,195 2,004 388 245 85 63 427 1,139 608 Total 824,401 TOTAL 824,401 360,351 25,410 191,476 69,911 152,530 7,144 6,364 1,718 1,171 5,115 1,891 1,318 Construction Work in Progress General 4,247,367 RB_GUP_EPIS_G TOTAL 4,247,367 2,068,173 153,898 907,333 320,401 664,045 35,257 30,051 8,302 5,780 28,341 19,349 6,436 Production 3,429,486 RB_GUP_EPIS_P TOTAL 3,429,486 1,475,722 102,922 800,456 296,553 658,279 29,331 26,838 7,119 4,833 20,969 3,325 3,140 Nuclear 24,460,075 RB_GUP_EPIS_P TOTAL 24,460,075 10,525,275 734,067 5,709,080 2,115,101 4,695,032 209,195 191,414 50,774 34,471 149,555 23,717 22,393 Transmission 8,301,115 RB_GUP_EPIS_T TOTAL 8,301,115 3,569,297 253,119 1,997,784 688,081 1,585,850 84,316 59,703 18,647 12,362 20,972 5,637 5,348 Distribution 20,925,195 RB_GUP_EPIS_D TOTAL 20,925,195 11,939,613 970,146 4,277,870 1,146,679 1,047,001 202,490 127,803 44,526 32,991 223,130 595,223 317,723 Total 61,363,238 TOTAL 61,363,238 29,578,081 2,214,152 13,692,523 4,566,814 8,650,208 560,589 435,809 129,368 90,437 442,967 647,251 355,040 Retentions (1,958,912) RB_GUP_CWIP TOTAL (1,958,912) (944,227) (70,683) (437,109) (145,787) (276,142) (17,896) (13,912) (4,130) (2,887) (14,141) (20,662) (11,334) Electric Utility Plant 1,382,283,907 TOTAL 1,382,283,907 656,975,187 48,835,356 311,113,207 104,712,136 203,127,262 12,665,702 9,903,461 2,926,032 2,035,752 9,569,295 13,122,336 7,298,179 Accum. Depreciation and Amortization Production (241,746,145) RB_GUP_EPIS_P TOTAL (241,746,145) (104,024,403) (7,255,003) (56,424,527) (20,904,164) (46,402,391) (2,067,538) (1,891,803) (501,816) (340,687) (1,478,096) (234,400) (221,318) GSU (2,972,464) RB_GUP_EPIS_P TOTAL (2,972,464) (1,279,064) (89,206) (693,785) (257,034) (570,555) (25,422) (23,261) (6,170) (4,189) (18,174) (2,882) (2,721) Transmission (81,017,980) TRAN_TO TOTAL (81,017,980) (34,835,948) (2,470,414) (19,498,156) (6,715,591) (15,477,721) (822,919) (582,694) (181,995) (120,648) (204,683) (55,017) (52,193) Distribution (101,667,009) RB_GUP_EPIS_D TOTAL (101,667,009) (58,009,720) (4,713,546) (20,784,431) (5,571,245) (5,086,954) (983,819) (620,941) (216,336) (160,289) (1,084,096) (2,891,946) (1,543,687) General (16,632,153) RB_GUP_EPIS_G TOTAL (16,632,153) (8,098,706) (602,646) (3,553,000) (1,254,649) (2,600,318) (138,061) (117,677) (32,509) (22,635) (110,981) (75,767) (25,204) Total (444,035,751) TOTAL (444,035,751) (206,247,841) (15,130,814) (100,953,900) (34,702,683) (70,137,939) (4,037,759) (3,236,377) (938,825) (648,448) (2,896,031) (3,260,012) (1,845,123) Net Electric Plant in Service 938,248,157 TOTAL 938,248,157 450,727,346 33,704,542 210,159,307 70,009,454 132,989,323 8,627,944 6,667,084 1,987,207 1,387,304 6,673,264 9,862,324 5,453,056
INDIANA MICHIGAN POWER COMPANY - MICHIGAN COST-OF-SERVICE STUDY TWELVE MONTHS ENDING DECEMBER 31, 2018 Indiana Michigan Power Company Case No. U-20107 Exhibit No.: IM-7 (DEH-1) Page 2 of 7 Witness: Daniel E. High INDIANA MICHIGAN POWER COMPANY - MICHIGAN Case No. U-18370 COST-OF-SERVICE STUDY (STAFF) Exhibit S-19 TWELVE MONTHS ENDING DECEMBER 31, 2018 Witness Gottschalk Working Capital Assets Allowance Inventory-Non Current 4,042,017 PROD_ENERGY TOTAL 4,042,017 1,667,481 121,427 834,411 394,254 891,376 37,103 38,008 7,937 5,371 14,172 15,677 14,802 Cash and Cash Equivalents - NP TOTAL - - - - - - - - - - - - - Special Deposits - Gross Plant 1,865,351 RB_GUP TOTAL 1,865,351 886,568 65,902 419,838 141,306 274,114 17,092 13,364 3,949 2,747 12,913 17,708 9,849 Accounts Receivable Direct 19,448,772 RSALE TOTAL 19,448,772 8,778,042 691,215 4,135,931 1,598,784 3,579,042 169,795 153,193 32,981 27,533 68,752 130,111 83,392 Accounts Receivable Retail Sales 210 RSALE TOTAL 210 95 7 45 17 39 2 2 0 0 1 1 1 Accounts Receivable System Sales 5,199,901 SS TOTAL 5,199,901 2,162,004 156,183 1,099,021 496,695 1,119,610 47,137 47,399 10,317 6,986 20,706 17,408 16,437 Accounts Receivable Factoring (17,722,192) RSALE TOTAL (17,722,192) (7,998,765) (629,852) (3,768,760) (1,456,851) (3,261,310) (154,721) (139,593) (30,053) (25,089) (62,648) (118,560) (75,989) Accounts Receivable Gross Plant 657,206 RB_GUP TOTAL 657,206 312,358 23,219 147,919 49,785 96,577 6,022 4,709 1,391 968 4,550 6,239 3,470 Accounts Receivable - Energy 3,807 PROD_ENERGY TOTAL 3,807 1,570 114 786 371 840 35 36 7 5 13 15 14 Uncollectibles (1,186) SS TOTAL (1,186) (493) (36) (251) (113) (255) (11) (11) (2) (2) (5) (4) (4) Accounts Receivable - Related Party 6,997,360 RB_GUP TOTAL 6,997,360 3,325,722 247,213 1,574,909 530,071 1,028,265 64,116 50,133 14,812 10,305 48,441 66,428 36,945 Fuel Inventory 4,963,827 PROD_ENERGY TOTAL 4,963,827 2,047,761 149,119 1,024,704 484,166 1,094,660 45,564 46,676 9,747 6,595 17,404 19,252 18,177 Allowance Inventory-Current (118,481) PROD_ENERGY TOTAL (118,481) (48,878) (3,559) (24,458) (11,556) (26,128) (1,088) (1,114) (233) (157) (415) (460) (434) Special Deposits - Payroll 13,038 LABOR_M TOTAL 13,038 6,348 472 2,785 983 2,038 108 92 25 18 87 59 20 Materials & Supplies - Prod 18,394,815 RB_GUP_EPIS_P TOTAL 18,394,815 7,915,368 552,044 4,293,424 1,590,628 3,530,825 157,322 143,950 38,184 25,923 112,470 17,836 16,840 Materials & Supplies - Trans 1,450,173 RB_GUP_EPIS_T TOTAL 1,450,173 623,543 44,219 349,005 120,205 277,042 14,730 10,430 3,258 2,160 3,664 985 934 Materials & Supplies - Dist 1,894,701 RB_GUP_EPIS_D TOTAL 1,894,701 1,081,089 87,843 387,346 103,828 94,802 18,335 11,572 4,032 2,987 20,204 53,895 28,769 Prepayments - Payroll Related 19,105,951 LABOR_M TOTAL 19,105,951 9,303,274 692,281 4,081,459 1,441,261 2,987,079 158,595 135,180 37,344 26,002 127,488 87,037 28,952 Prepayments - Net Plant Related 422,627 NP TOTAL 422,627 203,027 15,182 94,665 31,535 59,904 3,886 3,003 895 625 3,006 4,442 2,456 Prepayments - Ins. Production Demand 79,650 RB_GUP_EPIS_P TOTAL 79,650 34,274 2,390 18,591 6,887 15,288 681 623 165 112 487 77 73 Prepayments - Ins. Transmission Demand 5,732 PROD_DE TOTAL 5,732 2,466 172 1,338 496 1,100 49 45 12 8 35 6 5 Prepayments - Dist Plant 162,023 RB_GUP_EPIS_D TOTAL 162,023 92,448 7,512 33,123 8,879 8,107 1,568 990 345 255 1,728 4,609 2,460 Prepayments - Gross Plant Related 423,007 RB_GUP TOTAL 423,007 201,048 14,945 95,207 32,044 62,161 3,876 3,031 895 623 2,928 4,016 2,233 Accrued Utility Assets (899,261) RSALE TOTAL (899,261) (405,874) (31,960) (191,235) (73,924) (165,486) (7,851) (7,083) (1,525) (1,273) (3,179) (6,016) (3,856) Other Current Assets-Payroll - LABOR_M TOTAL - - - - - - - - - - - - - Cook Refueling Outage Levelization 10,673,546 PROD_ENERGY TOTAL 10,673,546 4,403,230 320,646 2,203,386 1,041,086 2,353,810 97,975 100,366 20,958 14,182 37,424 41,397 39,086 Other Accounts Receivable 169,096 RB_GUP TOTAL 169,096 80,368 5,974 38,059 12,809 24,849 1,549 1,211 358 249 1,171 1,605 893 Reg Asset - Prod Demand 5,229,344 RB_GUP_EPIS_P TOTAL 5,229,344 2,250,209 156,937 1,220,550 452,190 1,003,756 44,724 40,923 10,855 7,370 31,974 5,070 4,787 Reg Asset - Transmission Demand 84,060 RB_GUP_EPIS_P TOTAL 84,060 36,171 2,523 19,620 7,269 16,135 719 658 174 118 514 82 77 Reg Asset - direct assign - prod demand 29,575,595 RB_GUP_EPIS_P TOTAL 29,575,595 12,726,505 887,588 6,903,063 2,557,448 5,676,940 252,946 231,446 61,393 41,680 180,833 28,677 27,076 Reg Asset - Payroll 2,380,263 LABOR_M TOTAL 2,380,263 1,159,023 86,246 508,477 179,556 372,137 19,758 16,841 4,652 3,239 15,883 10,843 3,607 Reg Asset - Nuclear Decomm Study - RB_GUP_EPIS_P TOTAL - - - - - - - - - - - - - Reg Asset - Deferred Severance Costs - LABOR_M TOTAL - - - - - - - - - - - - - Reg Asset - Dry Cask Storage - RB_GUP_EPIS_P TOTAL - - - - - - - - - - - - - Other Current Assets - Prod Demand Related - RB_GUP_EPIS_P TOTAL - - - - - - - - - - - - - Other Current Assets - Energy Related 3,846,910 PROD_ENERGY TOTAL 3,846,910 1,586,992 115,566 794,134 375,223 848,349 35,312 36,173 7,553 5,111 13,488 14,920 14,087 Other Deferred Debits - Dist Plant (119,742) RB_GUP_EPIS_D TOTAL (119,742) (68,323) (5,552) (24,480) (6,562) (5,991) (1,159) (731) (255) (189) (1,277) (3,406) (1,818) Other Deferred Debits - Energy 105 PROD_ENERGY TOTAL 105 43 3 22 10 23 1 1 0 0 0 0 0 Other Deferred Debits - Factoring 517,102 RSALE TOTAL 517,102 233,390 18,378 109,966 42,508 95,159 4,514 4,073 877 732 1,828 3,459 2,217 Other Deferred Debits - Gross Plant 49,097 RB_GUP TOTAL 49,097 23,335 1,735 11,050 3,719 7,215 450 352 104 72 340 466 259 Other Deferred Debits - Net Plant 5,404,711 NP TOTAL 5,404,711 2,596,382 194,153 1,210,608 403,284 766,075 49,701 38,405 11,447 7,991 38,441 56,811 31,412 Other Deferred Debits - Payroll - LABOR_M TOTAL - - - - - - - - - - - - - Other Deferred Debits - Prod Plant 1,232,545 RB_GUP_EPIS_P TOTAL 1,232,545 530,369 36,990 287,681 106,580 236,583 10,541 9,645 2,559 1,737 7,536 1,195 1,128 Total - Assets 125,431,678 TOTAL 125,431,678 55,748,172 4,027,239 27,891,936 10,664,873 23,064,729 1,099,377 993,998 255,159 174,997 720,957 481,881 308,360 Liabilities Accumulated Provisions (4,087,041) LABOR_M TOTAL (4,087,041) (1,990,106) (148,089) (873,083) (308,307) (638,980) (33,926) (28,917) (7,988) (5,562) (27,272) (18,618) (6,193) Accounts Payable (24,966,491) RB_GUP TOTAL (24,966,491) (11,866,133) (882,053) (5,619,254) (1,891,286) (3,668,837) (228,765) (178,874) (52,849) (36,769) (172,838) (237,013) (131,818) Accounts Payable - Related Party (11,838,198) RB_GUP TOTAL (11,838,198) (5,626,487) (418,237) (2,664,445) (896,779) (1,739,629) (108,472) (84,816) (25,059) (17,435) (81,954) (112,383) (62,503) Taxes Accrued-Payroll (541,685) LABOR_M TOTAL (541,685) (263,763) (19,627) (115,716) (40,862) (84,689) (4,496) (3,833) (1,059) (737) (3,614) (2,468) (821) Taxes Accrued-Gross Plant (130,889) RB_GUP TOTAL (130,889) (62,209) (4,624) (29,459) (9,915) (19,234) (1,199) (938) (277) (193) (906) (1,243) (691) Taxes Accrued-Gross Receipts (40,760) RSALE TOTAL (40,760) (18,397) (1,449) (8,668) (3,351) (7,501) (356) (321) (69) (58) (144) (273) (175) Taxes Accrued-MI Single Business - NP TOTAL - - - - - - - - - - - - - Taxes Accrued-Income Taxes (11,084,395) NP TOTAL (11,084,395) (5,324,860) (398,183) (2,482,807) (827,087) (1,571,126) (101,930) (78,764) (23,477) (16,390) (78,837) (116,513) (64,422) Interest Accrued (5,569,953) RB_GUP TOTAL (5,569,953) (2,647,301) (196,783) (1,253,640) (421,941) (818,507) (51,037) (39,906) (11,791) (8,203) (38,560) (52,877) (29,408) Regulatory Liability - Direct - DSM over-recov - RSALE TOTAL - - - - - - - - - - - - - Other Current & Accrued Liabilities (16,953,425) EXP_OM TOTAL (16,953,425) (7,661,037) (557,757) (3,680,259) (1,436,135) (3,080,991) (148,285) (135,388) (34,011) (23,387) (97,097) (61,717) (37,359) Other Deferred Credits - Gross Plant (54,053) RB_GUP TOTAL (54,053) (25,691) (1,910) (12,166) (4,095) (7,943) (495) (387) (114) (80) (374) (513) (285) Other Deferred Credits - Pole Attach. - Dist Plant (112,018) RB_GUP_EPIS_D TOTAL (112,018) (63,916) (5,193) (22,901) (6,138) (5,605) (1,084) (684) (238) (177) (1,194) (3,186) (1,701) Other Deferred Credits - CIAC Advance-Dist Plant (95,744) RB_GUP_EPIS_D TOTAL (95,744) (54,630) (4,439) (19,574) (5,247) (4,791) (927) (585) (204) (151) (1,021) (2,723) (1,454) Other Deferred Credits - Energy (5,313) PROD_ENERGY TOTAL (5,313) (2,192) (160) (1,097) (518) (1,172) (49) (50) (10) (7) (19) (21) (19) Other Deferred Credits - Direct - Cust Advance Re (1,136,907) RB_GUP_EPIS_D TOTAL (1,136,907) (648,703) (52,710) (232,425) (62,301) (56,886) (11,002) (6,944) (2,419) (1,792) (12,123) (32,340) (17,263) Total - Liabilities (76,616,874) TOTAL (76,616,874) (36,255,424) (2,691,214) (17,015,495) (5,913,961) (11,705,890) (692,023) (560,406) (159,567) (110,941) (515,954) (641,886) (354,113) Total Working Capital 48,814,804 TOTAL 48,814,804 19,492,747 1,336,025 10,876,441 4,750,911 11,358,839 407,354 433,592 95,592 64,057 205,003 (160,005) (45,752)