I&E Statement No. Witness: Lisa A. Boyd PENNSYLVANIA PUBLIC UTILITY COMMISSION v. UNITED WATER PENNSYLVANIA, INC. Docket No. R-01- Direct Testimony of Lisa A. Boyd Bureau of Investigation and Enforcement Concerning: CUSTOMER CHARGES CUSTOMER GROWTH PROJECTION CUSTOMER USAGE PROJECTION MISCELLANEOUS AND NON-UTILITY REVENUE
TABLE OF CONTENTS CUSTOMER COST ANALYSIS... CUSTOMER CHARGES... CUSTOMER GROWTH PROJECTION... CUSTOMER USAGE PROJECTION... 1 MISCELLANEOUS REVENUES... 0 NON-UTILITY REVENUES... SUMMARY... i
Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. A. My name is Lisa A. Boyd. My business address is Pennsylvania Public Utility Commission, P.O. Box, Harrisburg, PA 1-. Q. BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY? A. I am employed by the Pennsylvania Public Utility Commission (Commission) in the Bureau of Investigation & Enforcement (I&E) as a Fixed Utility Valuation Engineer. 1 Q. WHAT IS YOUR EDUCATIONAL AND EMPLOYMENT EXPERIENCE? A. An outline of my education and employment experience is attached as Appendix A. 1 1 1 1 1 1 Q. PLEASE DESCRIBE THE ROLE OF I&E IN RATE PROCEEDINGS. A. I&E is responsible for protecting the public interest in proceedings before the Commission. The I&E analysis in the proceeding is based on its responsibility to represent the public interest. The responsibility requires the balancing of the interests of the public, ratepayers, and the Company. 1 0 1 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? A. The purpose of my direct testimony is to address the appropriate customer charges, other revenue adjustments, and the claimed usage levels related to United
Water Pennsylvania Inc. s (UWPA or Company) requested $,, base revenue increase. Q. DOES YOUR TESTIMONY INCLUDE AN EXHIBIT? A. Yes. I&E Exhibit No. contains schedules relating to my testimony. 1 1 1 1 1 1 1 CUSTOMER COST ANALYSIS Q. WHAT IS A COST OF SERVICE STUDY? A. A cost of service study (COSS) is an analysis of costs that attempts to assign to each customer or rate class its proportionate share of the Company s total cost of service (i.e., the Company s total revenue requirement). The results of these studies can be utilized to determine the relative cost of service for each class and help determine the individual class revenue requirements and, to the extent a particular class is above or below the system average rate of return, show the subsidy each class receives or conversely the additional revenues that class or classes contribute to the Company s overall revenues. In addition to the actual subsidy, a relative rate of return is also provided which shows how the rate of return for each class compares to the system average rate of return.
Q. WHAT IS A CUSTOMER COST ANALYSIS AND HOW IS IT USED? A. A customer cost analysis is part of a cost of service study that includes only customer related costs. It is used to determine the appropriate customer charges for the various classes and meter sizes. 1 1 Q. DID THE COMPANY PREPARE A CUSTOMER COST ANALYSIS TO SUPPORT ITS REQUESTED CUSTOMER CHARGE INCREASES? A. Yes. The Company presented a Customer Cost Analysis on Schedule H of UWPA Exhibit PRH-1. Based on the fully-allocated customer cost analysis, the Company determined that it incurs $1. per month in customer costs for each / th inch meter or meter equivalent. Based on the Company s claimed direct customer costs, it claims to incur $1. per month in customer costs for each / th inch meter or meter equivalent. 1 1 1 1 1 1 0 Q. WHAT DO YOU MEAN BY METER EQUIVALENT? A. A meter equivalent is used because the Company provides service to customers through various meter sizes and incurs more cost to provide service to the large meters. In the process, the Company weights the higher meter sizes proportional to the / th inch meter in order to analyze all costs on a / th inch meter basis (UWPA Ex. PRH-1, Sch. E, p. ).
Q. HAS THE COMMISSION PREVIOUSLY DETERMINED WHAT ITEMS SHOULD BE RECOVERED IN A CUSTOMER CHARGE? A. Yes. In a PPL Gas case, at Docket No. R-0001 (Order entered February, 00), the Commission agreed with the argument that the residential customer charge is to be limited to those costs which directly relate to the meter and service drop and customer service expenses associated with meter reading and billing (Order pages 1-1). These are direct customer costs and the Commission s adoption of the cost limitations appears to preclude the inclusion of other items in the determination of a customer charge. 1 1 1 1 1 1 1 1 0 1 Q. WHAT ITEMS DID THE COMPANY INCLUDE IN ITS CUSTOMER COST STUDY? A. As shown on UWPA Exhibit PRH-1, Schedule H, the Company determined the cost to provide service to a / th residential customer to be $1. per month based on direct costs. To reach this $1. per month cost, the Company included the following: (1) transmission and distribution expense related to supervision, meters, structures and improvements, and services; () total customer accounting expenses; () several administrative and general expenses, including advertising expense, taxes, and depreciation expense; and () return dollars and income taxes on meters, services, computer software, land and office buildings, and furniture (I&E Exhibit No., Sch. 1).
Q. SHOULD THE COMPANY HAVE INCLUDED ALL OF THESE ITEMS LISTED ABOVE TO DETERMINE THE COSTS THAT SHOULD BE RECOVERED IN THE CUSTOMER CHARGE? A. No. Any customer cost analysis used as a basis for establishing fixed monthly customer charges should only include direct customer costs. Traditionally, direct customer costs include only the type of costs that increase each time a new customer is added, or decrease when a customer is lost. 1 1 1 1 Q. HAVE YOU CALCULATED WHAT THE /TH INCH MONTHLY CUSTOMER CHARGE SHOULD BE FOR UWPA? A. Yes. The result of a customer charge calculation reflecting only basic customer costs yields an incurred Company cost of $1. per month for each / th inch meter or meter equivalent (I&E Exhibit No., Sch. ). My calculation is based on the method approved by the Commission in a recent PPL Gas Utilities Corp. rate case (Pa. PUC v. PPL Gas Utilities Corp., Docket R-0001). 1 1 1 1 0 1 Q. WHAT ITEMS DID YOU INCLUDE IN YOUR CUSTOMER COST ANALYSIS TO DETERMINE THE APPROPRIATE CUSTOMER CHARGE? A. I included the following direct customer costs: transmission and distribution expenses related to meters and services, expenses for meter reading, billing, and
postage, depreciation expense for meters and services, and the rate base related return and income taxes for both meters and services. (I&E Exhibit No., Sch. ). Q. HAVE YOU INCLUDED ANY ADDITIONAL EXPENSES IN YOUR ANALYSIS THAT WERE NOT INCLUDED IN THE PRIOR UWPA CASE CUSTOMER COST ANALYSIS? A. Yes. I included a prorated share of fringe benefit expenses and payroll taxes based on the allowed wages. Fringe benefits and payroll taxes are an unavoidable part of the total wage expense and allowed salaries should be increased by these payroll costs. 1 1 1 1 1 1 1 Q. HAVE YOU INCLUDED ANY ADDITIONAL RATE BASE ITEMS IN YOUR ANALYSIS THAT WERE NOT INCLUDED IN THE PRIOR UWPA CASE CUSTOMER COST ANALYSIS? A. Yes. I included the return dollars and the associated depreciation expense for Computer Software - CIS. In response to an I&E interrogatory, I&E-RS-1-D, the Company confirmed that this software is not utilized for any activities that are not customer account related (I&E Exhibit No., Sch. ). 1 0 1 Q. HAVE YOU INCLUDED ANY ADDITIONAL ADJUSTMENTS TO RATE BASE IN YOUR ANALYSIS THAT WERE NOT INCLUDED IN THE PRIOR UWPA CASE CUSTOMER COST ANALYSIS?
A. Yes. I included a prorated share of the Accumulated Deferred Income Tax (ADIT) relative to meters and services as a reduction to rate base. Q. HOW DID YOU DETERMINE THE DOLLAR AMOUNT FOR METERS AND SERVICES ADIT? A. I used the Company s COSS allocation of ADIT for meters and services and prorated by the ratio of rate base allowed in direct costs for meters and services versus rate base allowed in the fully allocated costs for meters and services (I&E Exhibit No., Sch. ). 1 1 1 1 Q. WHY DOES UWPA NOT INCLUDE ADIT IN ITS DIRECT CUSTOMER COST ANALYSIS? A. In response to an I&E interrogatory, I&E-RS-1-D, the Company stated that it relies on the direct customer cost methodology used in the Aqua Pennsylvania rate case at Docket No. R-0000 (I&E Exhibit No., Sch. ). 1 1 1 1 0 Q. DID THE COMMISSION ADDRESS ADIT IN A DIRECT COST ANALYSIS IN ITS ORDER AT DOCKET NO. R-0000? A. No. The Commission did not address ADIT in its Order at Docket No. R- 0000 (Order entered August, 00).
Q. WHY IS IT UNREASONABLE TO EXCLUDE ADIT IN THE DIRECT COST ANALYSIS? A. Since the Company reduces its rate base claim by ADIT in the overall claim, it is unreasonable that the share of ADIT allocated to meters and services does not flow through to the direct cost analysis. 1 1 1 1 1 1 1 1 0 1 Q. WHY DO YOU RECOMMEND THAT THE OTHER ITEMS CLAIMED BY THE COMPANY BE REMOVED? A. The other items claimed by the Company are indirect customer costs that the Commission has agreed should not be recovered in the customer charge and some are not even customer cost related. For example, advertising expense is neither a direct nor an indirect customer cost. I excluded the remaining transmission and distribution expense, customer accounting expense, administrative and general expenses, since they are neither direct customer costs, nor indirect customer costs that the Commission determined should be recovered in the customer charge. I also excluded the remaining rate base items and the corresponding depreciation expense amounts for the same reason. One should note that I did include those certain indirect costs that are unavoidable payroll costs, fringe benefits and taxes, and I included a rate base allowance for the Company s CIS software. Both of these allowances are consistent with the Commission Order at Docket No. R- 0000 (Order entered August, 00), which the Company referenced in response to I&E interrogatory, I&E-RE-1-D (I&E Exhibit No., Sch. ).
CUSTOMER CHARGES Q. IS UWPA PROPOSING TO INCREASE THE MONTHLY CUSTOMER CHARGES? A. Yes. The Company is proposing to increase the / th inch customer charge from $.00 to $1.00 per month, which is an increase of.%. The Company is proposing similar.% increases to large meter sizes (UWPA Statement No., p. 1). 1 1 1 Q. WHAT IS THE BASIS FOR THE PROPOSED $1.00 PER MONTH CUSTOMER CHARGE FOR A / th INCH RESIDENTIAL CUSTOMER? A. The basis for the $1.00 per month Residential / th customer charge is the Company s overly inclusive customer cost analysis that shows the Company incurs a cost of $1. per month to provide service to a / th inch Residential customer. 1 1 1 1 1 0 1 Q. WHAT / th INCH RESIDENTIAL CUSTOMER CHARGE DO YOU RECOMMEND? A. I recommend the $.00 per month / th inch Residential customer charge be increased to $1. per month. My recommended increase is an increase of 1.% over the current customer charge. I recommend that larger meter size monthly charges be increased by the same 1.% recommended for the / th inch residential customer charge.
Q. WHAT ARE THE RESULTING MONTHLY CHARGES BY METER SIZE FOR YOUR RECOMMENDATION? A. The new customer charges resulting from my recommended 1.% increase are as follows: Meter Size Current Rate I&E Recommendation /"-/" $.00 $ 1. 1" $.0 $.0 1-1/" $.0 $. " $. $. " $ 1.0 $ 1. " $.0 $ 0. " $.0 $ 1.1 " $ 1.0 $. " $ 1,1.0 $ 1,0. Q. WHAT IS THE BASIS FOR YOUR RECOMMENDED CUSTOMER CHARGES? A. My recommendation for customer charges is based on the updates I made to the direct cost analysis. 1 1 1 Q. IF THE COMMISSION GRANTS LESS THAN THE FULL INCREASE, WHAT CUSTOMER CHARGES DO YOU RECOMMEND?
A. My recommendation for a 1.% increase to customer charges should be scaled back proportionately to the overall allowed revenue increase. For example, if the Company received 0% of its original request, I would recommend an increase to all customer charges of.% (1.% x 0%). For example, I&E is recommending an increase of $,,0 in this proceeding, which is.% of the Company request ($,,0 $,,). Based on this recommendation, I would recommend an increase of.1% to all customer charges (1.% x.%). 1 1 1 CUSTOMER GROWTH PROJECTION Q. DID THE COMPANY PREPARE A CUSTOMER GROWTH PROJECTION TO DETERMINE FPFTY CUSTOMER CHARGE REVENUES? A. Yes. Company witness Caryl D. Jersey performed a customer growth analysis (UWPA Statement No. and UWPA Exhibit No. CDJ-1). 1 1 1 1 1 0 1 Q. HOW WAS THE COMPANY S CUSTOMER GROWTH PROJECTION DERIVED? A. The Company calculated an average monthly customer growth rate from the historic test year (HTY), multiplied that by 1 months, and then divided that by two for a half-year convention annual growth. The Company used a 1 month change to project new customers in the future test year (FTY) and a 1 month change to project new customers in the FPFTY (UWPA Statement No.,
p. ). The Company s final results for FPFTY customer accounts are presented in UWPA Exhibit No. CDJ-1, Sch.. Q. DO YOU AGREE WITH THE PROPOSED CUSTOMER GROWTH? A. No. First, the Company applies a 1 month change from the HTY to the FTY, which is the 1 month period, instead of applying the 1 month change from the FTY to the FPFTY, which is the actual 1 month period. Aside from reversing the growth rate placement, the Company s growth projection is based on the actual monthly change reported in the HTY and does not consider historic growth rates beyond that single year. The Company s method is a very limited view of customer growth. 1 1 1 1 1 1 1 1 0 1 Q. WHAT CUSTOMER GROWTH PROJECTION METHODOLOGY DO YOU RECOMMEND? A. I recommend using an historical average customer growth rate to project a customer count in the FPFTY. I utilized the actual annual bill counts that were provided in response to an Office of Consumer Advocate (OCA) interrogatory, OCA-I-, to determine historic year-to-year growth rates (I&E Exhibit No., Sch. ). I used a three-year average of customer growth from actual bill counts for the year ended September 0, 0 through the HTY ended September 0, 01. The resulting average customer growth rate was then applied to the average customer count in the HTY to establish a FTY customer count, and the average 1
growth rate was then applied to that FTY customer count result to establish the FPFTY customer count (I&E Exhibit No., Sch. ). Q. HOW DOES YOUR FPFTY CUSTOMER COUNT PROJECTION COMPARE TO THE COMPANY S CUSTOMER COUNT FPFTY CUSTOMER COUNT PROJECTION? A. The results of the Company method versus my recommendation are as follows: Customer Class Company FPFTY Customer Count I&E FPFTY Customer Count Residential,0,1 Commercial,0, Industrial 0 Large Industrial 1 Pub Auth 1 1 1 1 Q. DOES YOUR CUSTOMER COUNT ANALYSIS REFLECT ANY CHANGES TO CUSTOMER ACCOUNTS OTHER THAN THOSE PREDICTED BY THE HISTORIC GROWTH RATE? A. Yes. I revised the large industrial customer count to reflect a single large industrial customer as opposed to the two current large industrial customers. 1
1 1 1 1 1 1 1 1 0 Q. WHY ARE YOU REDUCING THE LARGE INDUSTRIAL CUSTOMER COUNT BY ONE CUSTOMER? A. The Company reports two large industrial customers, Magee Rieter Automotive and Fresh Express, Inc. I reviewed the Company s reported actual usage for the two large industrial customers in the HTY, and I found that Fresh Express, Inc. did not meet the required usage limit for large industrial customers of million gallons (UWPA. Exhibit D, II.1). Further, in response to OCA interrogatory, OCA-IV-, the Company provided additional actual monthly usage for the two large industrial customers for the months of October 01 through January 01 (I&E Exhibit No., Sch. ). A comparison of the same four months of HTY usage data to that provided in the interrogatory response indicates that usage is down.% for the same period in the FTY ((,,),). In light of the HTY data for Fresh Express, Inc. and the usage trend in the FTY, I asked the Company to provide five years of historic usage data for the large industrial customers in I&E-RS- (I&E Exhibit No., Sch. ). A review of this data showed that Fresh Express, Inc. met the large industrial customer usage limit in only one of the five years (01) and is not on track to meet the usage requirement in the FTY. Accordingly, I reclassified Fresh Express, Inc., as an industrial customer and subsequently projected revenues for Fresh Express, Inc. at the industrial rates. 1
Q. HAS THE COMPANY PROJECTED REVENUES FOR FRESH EXPRESS AT THE INDUSTRIAL RATES FOR WHICH IT QUALIFIES? A. No. Instead, the Company has merely stated in response to OCA-IV- that it believes that Fresh Express, Inc. should remain a large industrial customer, because it believes that its proposed changes tariff language may affect customer usage (I&E Exhibit No., Sch. ). 1 1 1 1 1 1 1 1 Q. SINCE YOU PROJECTED REVENUES AND RATE CLASSIFICATION FOR FRESH EXPRESS AT THE INDUSTRIAL RATES FOR WHICH IT QUALIFIES, ARE YOU RECOMMENDING THAT THIS CUSTOMER BE RECLASSIFIED AND CHARGED INDUSTRIAL RATES? A. No, not specifically. The Company can leave Fresh Express, Inc. classified as a large industrial customer if it desires; however, the subsidization of this one customer s rates by revenues from all other customer classes is unjust and unreasonable, and it should not be permitted to continue. I have projected revenues for Fresh Express, Inc. at the industrial rates to credit all rate classes for the revenues that this customer should be providing. If the Company wishes to maintain Fresh Express, Inc. s rate classification, Company shareholders should absorb the revenue shortfall, not Company ratepayers. 1
CUSTOMER USAGE PROJECTION Q. DID THE COMPANY PREPARE A CUSTOMER USAGE PROJECTION TO DETERMINE FPFTY USAGE REVENUES? A. Yes. Company witness Caryl D. Jersey performed a customer usage analysis (UWPA Statement No. and UWPA Exhibit No. CDJ-1). 1 1 1 Q. HOW WAS THE COMPANY S CUSTOMER USAGE PROJECTION DERIVED? A. Except for the residential class, the Company calculated a normal usage based on an historical eight years of data, excluding 0 where a change in the billing system affected the annual usage pattern. For the residential class, the Company utilized a trend analysis of the eight years of data in order to capture the Company s position that residential usage is declining (UWPA Statement No., p. ). 1 1 1 1 1 0 1 Q. DO YOU AGREE WITH THE COMPANY S SELECTION OF EIGHT YEARS OF HISTORIC DATA? A. No. The eight years of data selected captures a residential decline that is no longer representative of more recent historical usage. Additionally, the eight years of data encompasses the 00-00 recession that would have likely impacted both customer growth and usage. 1
1 1 1 1 Q. DO YOU AGREE WITH THE COMPANY S POSITION THAT RESIDENTIAL USAGE IS DECLINING? A. Yes, to a degree. As the efficiency of appliances and fixtures that use water has improved, the average residential usage has declined as these improvements are implemented in existing households and included in new construction. However, there is a point where improvements will realize little additional conservation, and the majority of households will have water conserving appliances and fixtures in place. Based on the most recent three years of historic usage data provided by the Company in response OCA-I-, I believe that Pennsylvania water customers have reached the point that additional large declines cannot be expected (I&E Exhibit No., Sch. ). In fact based on published data from the United States Environmental Protection Agency, Pennsylvania is among the lowest in per capita water usage in the country, 0- gal/day/person, so while the decline in other states may be greater, continued declining usage in Pennsylvania is unlikely (I&E Exhibit No., Sch. 1). 1 1 1 1 0 1 Q. WHAT USAGE PATTERN DOES THE COMPANY S ACTUAL USAGE RECORDS DEMONSTRATE? A. The Company s actual usage for the eight years of data provided reflects relatively constant usage for the entire eight year period for all rate classes except the residential rate class. This supports the use of an average or normal usage for these classes. 1
For the residential class over the past eight years, there was an obvious declining curve in the first five years of historical usage; however, usage for the most recent three years has been virtually flat. By including the earlier five years in predicting a residential usage trend, the Company is projecting a declining usage rate that is not supported by the most recent three years of historical residential usage. In illustration of the historical usage pattern, I prepared a graphical representation of the actual usage data provided directly from the Company in its response to OCA-I- is as follows:,000,000,00,000,000,000 1,00,000 1,000,000 Residential Commercial Industrial Lg Industrial Pub Auth 00,000-1 1
Q. FROM THE COMPANY S ACTUAL HISTORICAL USAGE DATA, WHAT METHOD DO YOU RECOMMEND FOR A FPFTY USAGE PROJECTION? A. I recommend a straight three year average of historical data for the FPFTY usage projections. This methodology will capture declining usage by placing the average usage over an increasing customer count for both the residential and commercial classes where the graph indicates minimal usage declines over the past three years. In the industrial, large industrial, and public authority rate classes, where usage is relatively flat and customer count changes minimally, the three year average will be reflective of steady usage. 1 1 1 1 1 Q. WHAT ARE THE USAGE PROJECTIONS FROM YOUR THREE YEAR AVERAGE METHODOLOGY? A. The results of my three year average usage calculations are included as I&E Exhibit No., Schedule 1. A comparison of the Company s FPFTY usage and my recommendation is as follows: Customer Class Residential Commercial Company FPFTY Usage (000 Gal) I&E FPFTY Usage (000 Gal),,1,, 1,0, 1,, Industrial,,00 Large Industrial 0,1 1, Pub Auth,1,1 1
Q. WHAT IS THE RESULTING AVERAGE ANNUAL USAGE PER CUSTOMER BY CUSTOMER CLASS FOR YOUR RECOMMENDED USAGE AND CUSTOMER COUNT ADJUSTMENTS? A. The annual usage per customer by customer class result is as follows: Customer Class I&E FPFTY Usage I&E Customer Count Annual Usage per Customer Residential,,,1. Commercial 1,,,. Industrial,00 1,. Large Industrial 1,,1. Pub Auth,1 1,.1 Q. WHAT ARE THE COMPANY S FPFTY ANNUAL USAGE RESULTS FROM ITS FPFTY CLAIM? A. The annual usage per customer by customer class result for the Company is as follows: 1 Customer Class Company FPFTY Usage 0 Company Customer Count Annual Usage per Customer Residential,,1,0 1. Commercial 1,0,,0.0 Industrial, 0 1,. Large Industrial 0,1,.00 Pub Auth,1.0
MISCELLANEOUS REVENUES Q. WHAT IS INCLUDED IN THE COMPANY S MISCELLANEOUS REVENUES? A. Miscellaneous revenues include items such as late fees, returned check charges, turn-on fees, fire flow tests, etc. as detailed in UWPA. Exhibit D, II.0. Q. HAS THE COMPANY PROJECTED ANY INCREASE IN MISCELLANEOUS REVENUES FOR THE FPFTY? A. No. The Company is utilizing the HTY total of $, in its miscellaneous revenue projection. 1 1 1 1 Q. DO YOU AGREE WITH THE COMPANY S CLAIM? A. No. Miscellaneous revenues include late payment fees, which are a function of customer revenue. As a minimum, miscellaneous revenues should increase for higher late payment fees at higher revenues. 1 1 1 1 0 1 Q. HAS THE COMPANY MADE ANY PROJECTIONS OF INCREASES ANTICIPATED IN MISCELLANEOUS REVENUES? A. Yes. Although not included in the filing, the Company responded to OCA interrogatory OCA-IV- with calculations of the FPFTY miscellaneous revenue increases (I&E Exhibit No., Sch. 1). The increases provided included increased late payment fees for FPFTY late payment fees at present rates, $,1, increased 1
late payment fees for FPFTY late payment fees at proposed rates, $,, and increased NSF check charge revenue for the FPFTY at proposed rates, $,0. The total increase the Company projected for the FPFTY miscellaneous revenues at proposed rates is $,1 above the claimed miscellaneous revenue of $,. 1 1 1 1 1 Q. HOW DID THE COMPANY CALCULATE THE INCREASE TO LATE PAYMENT FEE REVENUES IN THE INTERROGATORY RESPONSE? A. The late payment fee revenue increase for the FPFTY at present rates was calculated by multiplying the Company reported. percent of customer revenues for late payment fees times the Company s proposed rate revenues at present rates and subtracting the HTY late payment fees for the resulting increase of $,1. The Company repeated this calculation for the FPFTY proposed revenues. The reported increase to the FPFTY at proposed rates is the difference between FPFTY late payment fee revenues at present rates and FPFTY late payment fee revenues at proposed rates, $,. 1 1 1 0 1 Q. WHAT DO YOU RECOMMEND FOR MISCELLANEOUS REVENUES? A. For purposes of my recommended revenue adjustments to the FPFTY revenue at present rates, I have used the Company s reported. percent late payment fee revenue and applied that to my customer revenues to establish an upward adjustment to miscellaneous revenues of $, due to late payment fees
(($,, (excludes antenna and miscellaneous revenues) x 0.%) - $1, (I&E Exhibit No., Sch. 1)). My recommendation for FPFTY miscellaneous revenues at present rates is $0,0 ($, + $,). NON-UTILITY REVENUES Q. WHAT IS NON-UTILITY REVENUE? A. Non-utility revenue is revenue that does not count as part of Company income in determining the ratepayer revenue requirement; it is categorized as below-the-line revenue. 1 1 1 Q. WHAT DOES THE COMPANY INCLUDE IN NON-UTILITY REVENUE? A. In response to an I&E interrogatory, I&E-RS--D, the Company provided a breakdown of four years of non-utility revenues, which included antenna rental, wage garnishment fees, scrap service, etc. (I&E Exhibit No., Sch. 1). 1 1 1 1 1 0 1 Q. DO YOU AGREE WITH THE REVENUES THE COMPANY HAS CLASSIFIED AS NON-UTILITY REVENUE? A. No. The antenna revenue should be utility income and should be allocated to all rate classes to reduce the ratepayer revenue requirement. Antenna revenue is received through rental of space on Company property such as water tanks for the placement of cellular or other antennas. Since ratepayers reimburse the Company
for rate base plant and equipment through their rates, income derived from the rental of space on Company utility plant should flow to the ratepayers. Q. WHAT IS YOUR RECOMMENDATION FOR ANTENNA REVENUE? A. I recommend an allowance of $, in antenna revenue be included in Company miscellaneous service revenue. My recommendation is based on the average of the four years of antenna rental income reported on I&E-RS--D (($1,1 + $, + $,1 + $,) ) (I&E Exhibit No., Sch. 1). 1 1 1 1 1 1 1 1 SUMMARY Q. SUMMARIZE YOUR ADJUSTMENTS TO THE FPFTY REVENUES AT PRESENT RATES. A. The total of all my recommended adjustments to revenues from my individual recommendations to customer count, usage, miscellaneous revenues, and nonutility revenues, as well as the accompanying fall out changes to the distribution system improvement charge (DSIC) and state tax adjustment surcharge (STAS) revenues utilizing the rates included in the Company claim, is an increase of $1,0, to FPFTY present rate revenues. The adjustments by rate source are as follows:
Breakdown of Revenue Adjustment - FPFTY @ Present Rates: Revenue Source Company Claim I&E Recommendation Adjustment Service Charge $,, $,0, $,0 Volume Charge $,00, $,,00 $1,1,0 Miscellaneous Revenue $, $0,0 $, DSIC $,0,1 $,1,00 $, STAS ($,) ($,) ($,) Antenna Rental Revenue $0 $, $, 1 1 1 1 1 Increase to Revenue Claim: $1,0, I have included the individual rate class adjustments in my accompanying exhibit for a breakdown by rate class (I&E Exhibit No., Sch. 1, p. 1). The individual rate class revenue adjustments reflect the same percentage breakdown of meter size and usage block by customer class that is reflected in UWPA WP CDJ-1, Schedule, and page (I&E Exhibit No., Sch. 1, p. ). The exception to the original allocations on my accompanying schedule is the reallocation of the Fresh Express, Inc. revenue to the industrial usage rates; I reallocated million gallons from large industrial rates to industrial rates to eliminate the effect of ratepayers subsidizing the Fresh Express rates. A summary by rate class in comparison to UWPA Exhibit CDJ-1, Schedule 1, is attached as I&E Exhibit No., Schedule 1, and page 1. A further breakdown of the class revenue increases separated into the customer count adjustment share and the usage adjustment share is provided for the residential and commercial classes and is attached as I&E Exhibit No.,
Schedule 1, and page. For the residential class, $,1 of my recommended $, increase is specifically due to the customer growth adjustment. For the commercial class, $,0 of my recommended $1, increase is specifically due to the customer growth adjustment. Q. DOES THIS CONCLUDE YOUR DIRECT TESTIMONY? A. Yes.
Appendix A LISA A. BOYD PROFESSIONAL EXPERIENCE AND EDUCATION EDUCATION & TRAINING: National Association of Regulatory Utility Commissioners Utility Rate School October -November, 01. Harrisburg Area Community College, Harrisburg, Pennsylvania Accounting & Finance Course Work, 0 credits, 00-0 Pennsylvania State University, Harrisburg, Pennsylvania Bachelor of Science; Major in Electrical Engineering Technology, 1 EXPERIENCE: 1/01 - Present Fixed Utility Valuation Engineer Pennsylvania Public Utility Commission, Bureau of Investigation & Enforcement 1/0 1/01 Fixed Utility Financial Analyst Pennsylvania Public Utility Commission, Bureau of Investigation & Enforcement 01/0 1/0 Accountant 1 Pennsylvania Department of Revenue, Gaming Division 0/00 01/0 Unemployment Compensation Tax Technician Pennsylvania Department of Labor & Industry, UC Tax Services /00 1/00 Front Office Manager Country Inn & Suites, Mechanicsburg, PA 01/1 0/00 General Manager J&L Autoworks, Mechanicsburg, PA
LISA A. BOYD PROFESSIONAL EXPERIENCE AND EDUCATION EXPERIENCE, CONT.: 0/1 /1 High Reliability Program Manager/Design Engineer McCoy Electronics Company, Mt. Holly Springs, PA TESTIMONY SUBMITTED: I have testified and/or participated in the following proceedings: Equitable Gas Company LLC, Docket Nos. R-01-0, R-01-01, R-01-0 Columbia Gas of Pennsylvania, Inc., Docket No. R-01-1 PGW, (f), Docket No. R-01- UGI Utilities Inc., (f), Docket No. R-01- UGI Utilities Inc., UGI Penn Natural Gas, Inc., UGI Central Penn Gas, Inc., Docket No. P-01- PPL Electric Utilities Corporation, Docket No. R-01-0 Pennsylvania American Water Company, Docket No. R-01- Cooperstown Water Company, Docket No. R-01-1 City of Bethlehem Bureau of Water, Docket No. R-01-0 First Energy Companies DSP, Docket Nos. P-01-1, P-01-1, P- 01-1, P-01-1 Pike County Light & Power Company (Electric), Docket No. R-01- Columbia Gas of Pennsylvania, Inc., Docket No. R-01-0 PGW, (f), Docket No. R-01-0 UGI Utilities Inc., (f), Docket No. R-01-0 City of Lancaster Bureau of Water, Docket No. R-01-1 Citizens Electric Company of Lewisburg, PA, Docket No. R-01-1 Peoples Natural Gas Company LLC, Docket No. R-01- First Energy Companies, Docket Nos. R-01-, R-01-, R- 01-, R-01- PECO Energy Company, Docket No. P-01-1