APSC FILED Time: 11/24/2015 10:57:47 AM: Recvd 11/24/2015 10:46:36 AM: Docket 15-015-U-Doc. 312 BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF THE APPLICATION OF ENTERGY ARKANSAS, INC. FOR APPROVAL OF CHANGES IN RATES FOR RETAIL ELECTRIC SERVICE ) ) ) ) NON-PROTECTED SURREBUTTAL EXHIBITS OF JEFF HILTON DIRECTOR OF REVENUE REQUIREMENTS ON BEHALF OF THE GENERAL STAFF OF THE ARKANSAS PUBLIC SERVICE COMMISSION NOVEMBER 24, 2015-1-
SURREBUTTAL EXHIBIT JH-1 APSC FILED Time: 11/24/2015 10:57:47 AM: Recvd 11/24/2015 10:46:36 AM: Docket 15-015-U-Doc. PAGE 1312 OF 1 SUMMARY OF OPERATIONS (1) (2) (3) Arkansas Retail Jurisdiction Line As Adjusted No. Description By Staff 1 Adjusted Rate Base $ 5,858,174,236 2 Adjusted Operating Revenue $ 1,084,904,648 3 Adjusted Operating Expense $ 964,919,706 4 Adjusted Operating Income $ 119,984,941 5 Current Rate of Return 2.05% 6 Required Rate of Return 4.48% 7 Required Operating Income $ 262,446,206 8 Operating Income Deficiency $ 142,461,265 9 Revenue Conversion Factor 1.6406 10 Revenue Deficiency (Excess) $ 233,721,457 11 Total Revenue Requirement $ 1,318,626,105 12 Less: Other Revenues $ 26,481,952 13 Total Rate Schedule Revenue Requirement $ 1,292,144,153 14 Percentage Increase Recommended 21.54% -2-
SUMMARY OF RATE BASE SURREBUTTAL EXHIBIT JH-2 PAGE 1 OF 1 (1) (2) (3) (4) (5) (6) Arkansas Line Total Company Staff As Adjusted Retail No. Description March 31, 2015 Adjustments By Staff Jurisdiction 1 Gross Utility Plant-In-Service $ 9,556,269,881 $ 15,182,006 $ 9,571,451,887 $ 9,571,363,393 2 Less: Accumulated Depreciation $ (4,800,757,780) $ 518,371,210 $ (4,282,386,571) $ (4,282,351,966) 3 Net Utility Plant-In-Service $ 4,755,512,101 $ 533,553,216 $ 5,289,065,317 $ 5,289,011,427 4 Plant Held for Future Use $ 787,014 $ (787,014) $ - $ - 5 Construction Work in Progress $ 286,061,243 $ (286,061,243) $ - $ - 6 Working Capital Assets $ 4,469,823,502 $ (3,943,861,397) $ 525,962,105 $ 525,956,901 7 Other $ 19,192,394 $ 24,013,772 $ 43,206,166 $ 43,205,908 8 Total Rate Base $ 9,531,376,253 $ (3,673,142,665) $ 5,858,233,588 $ 5,858,174,236-3-
ADJUSTMENTS TO RATE BASE SURREBUTTAL EXHIBIT JH-3 PAGE 1 OF 1 APSC FILED Time: 11/24/2015 10:57:47 AM: Recvd 11/24/2015 10:46:36 AM: Docket 15-015-U-Doc. 312 (1) (2) (3) (4) Staff's Line Adj. Staff No. No. Description Witness (5) Total Adjustments 1 Adjustments to Utility Gross Plant-In-Service 2 RB-5 Decommissioning and ARO Robertson $ (111,717,077) 3 RB-6H Energy Efficiency Program Costs Brooks (498,296) 4 RB-10 Working Cash Assets Dunn (211,504,412) 5 RB-14 Plant Transfers Robertson 282,797,585 6 RB-18 Power Block 2 of Union Power Station Robertson 321,981,622 7 RB-26 Wholesale Baseload Butler (265,877,417) 8 Total Adjustments to Utility Gross Plant-In-Service $ 15,182,006 9 Adjustments to Accumulated Depreciation 10 RB-5 Decommissioning and ARO Robertson $ 64,535,149 11 RB-10 Working Cash Assets Dunn 534,084,211 12 RB-14 Plant Transfers Robertson (131,500,265) 13 RB-18 Power Block 2 of Union Power Station Robertson (110,863,249) 14 RB-26 Wholesale Baseload Butler 162,115,365 15 Total Adjustments to Accumulated Depreciation $ 518,371,210 16 RB-3A Removal Of Plant Held For Future Use Robertson $ (787,014) 17 RB-6C Removal of CWIP Robertson $ (286,061,243) 18 Adjustments to Working Capital Assets 19 RB-2 13 Month Average Balance Dunn $ (336,082,485) 20 RB-4 Fuel Inventory Dunn (52,732,428) 21 RB-10 Working Cash Assets Dunn (3,548,006,321) 22 RB-18 Power Block 2 of Union Power Station Robertson 1,433,388 23 RB-20 Disallowable Expenses Dunn (91,285) 22 RB-21 Rate Case Expenses Dunn - 25 RB-26 Wholesale Baseload Butler (8,382,266) 26 Total Adjustments to Working Capital Assets $ (3,943,861,397) 27 Adjustments to Acquisition Adjustment 28 RB-14 Acquisition Adjustment Amortization Robertson $ (1,226,534) 29 RB-18 Acquisition Adjustment - Union Power Robertson 25,240,306 30 Total Adjustments to Acquisition Adjustment $ 24,013,772 31 Total Rate Base Adjustments $ (3,673,142,665) -4-
STATEMENT OF INCOME AND EXPENSE SURREBUTTAL EXHIBIT JH-4 PAGE 1 OF 1 (1) (2) (3) (4) (5) (6) Line Total Company Staff As Adjusted Arkansas No. Description March 31, 2015 Adjustments By Staff Jurisdiction 1 Operating Revenue: 2 Sales Revenues $ 1,682,141,017 $ (623,718,321) $ 1,058,422,696 $ 1,058,422,696 3 Other Sales for Resale $ 378,291,794 $ (378,277,691) $ 14,103 $ - 4 Other Operating Revenues $ 93,329,368 $ (66,847,313) $ 26,482,054 $ 26,481,952 5 Total Operating Revenue $ 2,153,762,178 $ (1,068,843,325) $ 1,084,918,853 $ 1,084,904,648 6 Operating Expenses: 7 Fuel $ 432,477,122 $ (432,477,122) $ - $ - 8 Purchased Power $ 509,705,964 $ (509,705,964) $ - $ - 9 Production Expense $ 201,323,924 $ 81,414,078 $ 282,738,001 $ 282,736,076 10 Transmission Expense $ 42,907,667 $ (12,911,378) $ 29,996,289 $ 29,995,949 11 Electric Regional Market Expense $ 3,916,466 $ (3,916,466) $ - $ - 12 Distribution Expense $ 70,830,861 $ 4,454,929 $ 75,285,790 $ 75,284,957 13 Customer Accounts Expense $ 37,101,319 $ (757,930) $ 36,343,389 $ 36,343,389 14 Customer Service & Information Expense $ 79,284,213 $ (74,533,354) $ 4,750,859 $ 4,750,826 15 Sales Expense $ 716,621 $ 564,543 $ 1,281,164 $ 1,281,152 16 Administrative & General Expense $ 184,212,568 $ (3,065,879) $ 181,146,689 $ 181,145,325 17 Depreciation & Amortization Expense $ 287,737,183 $ (33,666,126) $ 254,071,057 $ 254,069,355 18 Regulatory Debits $ (33,430,647) $ 33,957,303 $ 526,656 $ 526,656 19 Taxes Other Than Income Taxes $ 95,109,116 $ (39,514,602) $ 55,594,514 $ 55,594,065 20 Loss (Gain) from Disposition of Allowances $ (9,201) $ 390,744 $ 381,542 $ 381,542 21 Total Operating Expense $ 1,911,883,176 $ (989,767,225) $ 922,115,951 $ 922,109,291 22 Federal & State Income Tax $ 61,164,105 $ (18,350,985) $ 42,813,120 $ 42,810,415 23 Total Expenses $ 1,973,047,280 $ (1,008,118,210) $ 964,929,071 $ 964,919,706 24 Net Utility Operating Income (Loss) $ 180,714,898 $ (60,725,115) $ 119,989,783 $ 119,984,941-5-
INCOME AND EXPENSE ADJUSTMENTS NON-PROTECTED SURREBUTTAL EXHIBIT JH-5 PAGE 1 OF 1 (1) (2) (3) (4) (5) (6) (7) (8) (9) Staff's Total Expense Income Line Adj. Staff Operating Adjustments Tax Total Expense Impact on No. No. Description Witness Revenue Before Taxes Expense Adjustments Net Income 1 IS-1A Revenue And Expense Brooks (984,244,783) $ (651,046,495) $ (651,046,495) $ (333,198,288) 2 IS-1B Load Data Product Fees Brooks (4,294) $ - $ - $ (4,294) 3 IS-1C Miscellaneous Service Fees Brooks (240,677) $ - $ - $ (240,677) 4 IS-05 Decommissioning And Aro Robertson $ (26,146,548) $ (26,146,548) $ 26,146,548 5 IS-6A Provision For Rate Refund Brooks (1,618,556) $ - $ - $ (1,618,556) 6 IS-6B Regulatory Debits And Credits Brooks $ 4,717,458 $ 4,717,458 $ (4,717,458) 7 IS-6D Interest Expense Reclassification Dunn $ 383,652 $ 383,652 $ (383,652) 8 IS-6E Federal Litigation Fees Brooks $ (1,043,848) $ (1,043,848) $ 1,043,848 9 IS-6F Economic Development Rider Brooks $ 556,800 $ 556,800 $ (556,800) 10 IS-6G Non-Utility Property Expenses Robertson $ (33,828) $ (33,828) $ 33,828 11 IS-6H Energy Efficiency Program Costs Brooks $ (75,984,529) $ (75,984,529) $ 75,984,529 12 IS-6I Miscellaneous Robertson $ 8,984 $ 8,984 $ (8,984) 13 IS-6J Postage Increase Brooks $ 84,068 $ 84,068 $ (84,068) 14 IS-07 Income Tax Hilton $ - (20,229,472) $ (20,229,472) $ 20,229,472 15 IS-08 Grand Gulf Expenses Brooks $ (218,878,237) $ (218,878,237) $ 218,878,237 16 IS-11 Storm Damage Roberts $ 6,256,272 $ 6,256,272 $ (6,256,272) 17 IS-12 Interest Synchronization Dunn $ - $ - $ - 18 IS-13 Depreciation Annualization Robertson $ 9,422,624 342,029 $ 9,764,653 $ (9,764,653) 19 IS-15 Fukushima Hilton $ (2,331,295) $ (2,331,295) $ 2,331,295 20 IS-16 O&M Payroll Taylor $ 10,428,783 $ 10,428,783 $ (10,428,783) 21 IS-17 Fas 106 & Pension Expense O&M Taylor $ 12,184,612 $ 12,184,612 $ (12,184,612) 22 IS-18 Power Block 2 of Union Power Station Robertson $ 23 IS-19 ANO Stator Incident Hilton $ (3,739,134) $ (3,739,134) $ 3,739,134 24 IS-20 Disallowable Expenses Brooks $ (1,217,502) $ (1,217,502) $ 1,217,502 25 IS-21 Rate Case Expenses Roberts $ (199,367) $ (199,367) $ 199,367 26 IS-22 Lake Catherine 4 Reliability Expenditures Hilton $ (1,913,680) $ (1,913,680) $ 1,913,680 27 IS-23 Capacity Costs Brooks (970,516) $ (20,790,297) $ (20,790,297) $ 19,819,781 28 IS-24 MISO Roberts (82,621,494) $ (14,795,279) $ (14,795,279) $ (67,826,214) 29 IS-25 Long - Term Incentive Compensation Taylor $ (5,389,487) $ (5,389,487) $ 5,389,487 30 IS-26 Wholesale Baseload Butler $ (28,907,568) $ (28,907,568) $ 28,907,568 31 IS-27 Transmission Reorganization Taylor $ (3,768,242) $ (3,768,242) $ 3,768,242 32 IS-28 ANO Flood Barrier Hilton $ (3,930,389) $ (3,930,389) $ 3,930,389 33 IS-29 Vegetation Management Roberts $ 2,758,831 $ 2,758,831 $ (2,758,831) 34 IS-30 External ITC Transaction Costs Brooks $ (50,754) $ (50,754) $ 50,754 35 IS-31 Moark Agreement Dunn $ (5,822) $ (5,822) $ 5,822 36 IS-32 Stock Options Taylor $ (3,431,126) $ (3,431,126) $ 3,431,126 37 IS-33 Nrc Oversight Hilton $ (1,849,107) $ (1,849,107) $ 1,849,107 38 IS-35 Short-Term Incentive Comp Taylor $ (380,682) $ (380,682) $ 380,682 39 IS-37 Non-Recurring Expenses Hilton $ (2,207,031) $ (2,207,031) $ 2,207,031 40 IS-38 Environmental Chemical Costs Butler $ 41 IS-39 Mutual Assistance Taylor 856,994 $ - $ - $ 856,994 42 IS-40 Loaned Labor Taylor $ (2,489,853) $ (2,489,853) $ 2,489,853 43 TOTAL ADJUSTMENTS ($1,068,843,325) ($989,767,225) ($18,350,985) ($1,008,118,210) ($60,725,115) -6-
CURRENT INCOME TAX ADJUSTMENTS - TOTAL COMPANY SURREBUTTAL EXHIBIT JH-6 PAGE 1 OF 1 APSC FILED Time: 11/24/2015 10:57:47 AM: Recvd 11/24/2015 10:46:36 AM: Docket 15-015-U-Doc. 312 (1) (2) (3) (4) Line State Income Federal Income No. Description Taxes Taxes 1 Operating Revenues $ 1,084,918,853 $ 1,084,918,853 2 Less: 3 Operating Expenses $ (922,115,951) $ (922,115,951) 4 Fixed Charges $ (93,731,737) $ (93,731,737) 5 Other Adjustments $ (117,738,708) $ (222,447,744) 6 Operating Income Before Taxes $ (48,667,542) $ (153,376,578) 7 State Income Tax @ 6.5% $ (3,163,390) $ 3,163,390 8 Adj. to State Tax - EOI/ESI $ 868,083 9 State Income Tax $ (2,295,307) 10 Federal Taxable Income $ (150,213,188) 11 Federal Income Tax @ 35% $ (52,574,615) 11 Adj. to Federal Tax - EOI/ESI $ 4,871,382 12 Federal Income Tax $ (47,703,233) 14 Test Year Tax $ 413,605 $ (19,825,959) 14 Adjustment $ (2,708,912) $ (27,877,275) 16 Calculation of Fixed Charges Amount 17 Total Rate Base $ 5,858,233,588 18 Weighted Cost of Debt 1.60% 19 Fixed Charges $ 93,731,737-7-
REVENUE CONVERSION FACTOR SURREBUTTAL EXHIBIT JH-7 PAGE 1 OF 1 (1) (2) (3) (4) (5) (6) (7) LN Description Total Retail RES SMALL GEN SERVICE LARGE GEN SERVICE LIGHTING 1 Arkansas Corporate Tax Rate 6.50% 6.50% 6.50% 6.50% 6.50% 2 Federal Corporate Tax Rate 35.00% 35.00% 35.00% 35.00% 35.00% 3 Composite Tax Rate (1) 39.23% 39.23% 39.23% 39.23% 39.23% 4 Uncollectible Accounts Ratio 0.4100% 0.6923% 0.0957% 0.0207% 0.2950% 5 Forfeited Discounts Ratio 0.6200% 1.1732% 0.1589% 0.1145% 0.4938% 6 Revenue Conversion Factor (2) 1.6158 1.6375 1.6444 1.6439 1.6421 Notes: (1) Composite Tax Rate = Arkansas Tax Rate + (1 - Arkansas Tax Rate) x (Federal Tax Rate) Composite Tax Rate = L 1 + (1 - L1-L3)' (L2) (2) Revenue Conversion Factor = 1 / ((1 - Composite Tax Rate) x (1 - Uncollectible Accounts Ratio + Forfeited Discounts ratio)) Revenue Conversion Factor = 1 / ((1 - L4) x (1 - L5 + L6)) Total Retail Revenue Conversion Factor is weighted per COS -8-
APSC FILED Time: 11/24/2015 10:57:47 AM: Recvd 11/24/2015 10:46:36 AM: Docket 15-015-U-Doc. 312 ENTIRE SURREBUTTAL EXHIBIT JH-8 PROTECTED HSPI PURSUANT TO ORDER NO. 1 IN PAGE 9 OF THE FILED EXHIBITS -9-
SURREBUTTAL EXHIBIT JH-9 EAI RESPONSE TO APSC-5.9 APSC FILED Time: 11/24/2015 10:57:47 AM: Recvd 11/24/2015 10:46:36 AM: Docket 15-015-U-Doc. 312 ENTERGY ARKANSAS, INC. ARKANSAS PUBLIC SERVICE COMMISSION Docket No. 15-015-U Response of: Entergy Arkansas, Inc. to the Fifth Set of Data Requests of Requesting Party: Arkansas Public Service Commission Staff Filed: 5/11/15 Question No.: STAFF 5-9 Part No.: Addendum: Question: Please provide a schedule of all non-recurring, abnormal, prior period adjustments or other out-of-period events and transactions recorded/included during the test year and the pro forma year. The schedule should include, but should not be limited to, the following: FERC account and sub account number (if applicable), description of item/event to include a narrative, transaction date, transaction amount, and a notation of whether the amount represents a direct assignment of costs or an allocation of costs. Response: The following pro forma adjustments were included in Entergy Arkansas, Inc. s ( EAI ) filing. See also the direct testimony of Gregory R. Zakrzewski and Ina P. Laney. Adjustment 06A - Eliminate Provision for Rate Refund. This adjustment eliminates amounts related to a prior year refund. Adjustment 06I - Eliminate Miscellaneous Items Recorded in the Test Year. This adjustment eliminates non-recurring amounts related to Loss on Disposition of Property. Adjustment 15 Fukushima. This adjustment removes test year amounts and normalizes incremental Fukushima expenses incurred at Arkansas Nuclear One ( ANO ). This adjustment requests regulatory asset treatment of the incremental Fukushima expenses incurred at ANO not recovered in base rates as of February 1, 2016 and amortizes these amounts over 5 years. EAI did not request a return on the proposed regulatory asset. Adjustment 22 Lake Catherine Unit 4 Sustainability / Reliability Expenses. This adjustment reflects the amortization of the reliability expenditures the Company will be making at this power plant. It also requests regulatory asset treatment of the reliability expenditures incurred at Lake Catherine Unit 4. EAI did not request a return on the proposed regulatory asset. 15-015-U STAFF 5-9 LR17-10-
SURREBUTTAL EXHIBIT JH-9 EAI RESPONSE TO APSC-5.9 APSC FILED Time: 11/24/2015 10:57:47 AM: Recvd 11/24/2015 10:46:36 AM: Docket 15-015-U-Doc. 312 Question No.: STAFF 5-9 Adjustment 27 Transmission Reorganization. This adjustment removes the Transmission Reorganization Costs that occurred during the test year and amortizes these costs over 3.5 years. This adjustment also removes costs associated with the Docket 13-028-U Human Capital Management Reorganization and amortizes the remaining unamortized balance as of January 31, 2016 over a 3.5 year period. Adjustment 28 ANO Flood Barrier. This adjustment removes test year amounts and normalizes total ANO flood barrier expenses over 5 years. It also requests regulatory asset treatment of the ANO flood barrier expenses. The Company does not request a return on the proposed regulatory asset. Adjustment 30 External ITC Transaction Costs. This adjustment eliminates nonrecurring external costs related to the ITC Transaction. The following non-recurring, abnormal costs were recorded in the test year: 1. Cost associated with ANO Transformer Fire Recovery of $1,156,602 ($1,049,018 are EAI Direct costs, and $107,583 are allocated costs). See Attachment 1 for details associated with these costs. 2. Costs associated with turbine/generator outage on the Remmel Unit 2 of $555,479. All costs are EAI Direct costs. See Attachment 2 for details associated with these costs. 15-015-U STAFF 5-9 LR18-11-
APSC FILED Time: 11/24/2015 10:57:47 AM: Recvd 11/24/2015 10:46:36 AM: Docket 15-015-U-Doc. 312 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing has been served on all parties of record by electronic means via the Electronic Filing System this 24th day of November, 2015. /s/ Dawn Kelliher Guthrie Dawn Kelliher Guthrie -12-