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30:32Good morning. I'm [clears throat] Eric
30:35Blank and uh we're back on the record in
30:3725-0494
30:42E public service company of Colorado's
30:44rape case. Uh the witness order today is
30:48Garrett Lairman Anste O'Neal. But before
30:52we get that, uh I saw the company did
30:54circulate a series of uh documents. So
30:59maybe uh Mr. Zemer, we can uh start with
31:03uh uh those documents and then we can
31:07see if there's any commission questions
31:09on those documents and we'll uh take it
31:12from there if that works for you.
31:14>> Yes. Thank you, Chair Blake. Um, the
31:17company's uploaded into its box uh
31:19documents that were settled uh
31:21circulated to the parties and uh
31:23commission council yesterday. Those are
31:26uh hearing exhibit 155 rev one, which is
31:31a revision to the settlement agreement
31:34uh updating the baseline number in table
31:37five, I believe it is. The correct
31:40baseline number was used in the revenue
31:41requirement study. it was just a
31:43typographical error in the uh settlement
31:46document itself.
31:48The second thing in box is hearing
31:52exhibit 157 attachment APF29
31:56both PDF and executable versions of the
32:00cost of service model that makes the
32:04correction that commissioner Gilman
32:06identified in her discussion with Mr.
32:08Fredus.
32:10We also have what's been marked for
32:12identification as hearing exhibit 163
32:16which is the sales comparisons that was
32:19uh requested by the commissioners with
32:21Mr. Good enough.
32:23And then we have hearing exhibit 164
32:27uh energy insecurity working group uh
32:29supplemental report on disconnection
32:31surveys that was also discussed with uh
32:33Miss Howard during her discussion with
32:36the commissioners
32:38>> and um have the parties the party I know
32:42we've we got this uh last night so the
32:44parties have had an opportunity uh to
32:46review these documents.
32:48>> That's correct. We included the parties
32:50when we sent them to commission council
32:52and we have not heard back from anyone
32:53with any objections.
32:56>> Okay. Um let me see if there's um any uh
32:59comments or questions from the parties
33:01and then I'll uh turn it over to my
33:03colleagues. Uh um Mr. Bunker or uh Mr.
33:08Larson, comments, questions on these
33:10exhibits?
33:11>> Um I don't believe I have questions on
33:14these exhibits. However, I have five
33:16exhibits that are in UCA's Box account
33:22that concern a filing yesterday
33:24afternoon, which is the June 2026
33:28Comanche report. And there are three
33:32public documents and two confidential
33:35documents.
33:36>> That was a fairly extensive discussion
33:39throughout this hearing. We'd uh like to
33:41move to get those get those uh entered
33:44into the u into the record.
33:46>> All right, let's focus on these first
33:48and then we'll talk about that.
33:50>> Fair enough. Thank you.
33:52>> Uh Mr. Larson, did you have any just
33:55focus on this the these uh documents
33:57before we go to uh other other potential
34:00exhibits?
34:02>> Nothing to add from staff. Thank you.
34:04>> All right. Uh, Commissioner, uh, Plan,
34:08any comments on these, uh, documents?
34:11>> Uh, not for me. No.
34:13>> Uh, Commissioner Gilman, questions,
34:15comments, concerns?
34:17>> Yeah, just a couple questions. Mr. Zmer,
34:19um, [clears throat]
34:21I know the settlement agreement um, was
34:24revised, especially just to recognize
34:27the difference in those pension values.
34:29I noticed though on page 14 of the
34:32settlement, the revenue requirement was
34:35not revised from um it's 6 2.6 billion
34:42to the 2.595
34:46billion um from the updates from APF 29
34:50revision. So I was just curious if that
34:53was an oversight or something you
34:54planned on updating.
34:56Uh, Chair Gilman, thanks for pointing
34:58that out. We were kind of
35:00>> easy.
35:01>> He's fine. [laughter]
35:04>> I'm used to Sorry.
35:05>> You were doing great.
35:07>> My apologies.
35:08>> I can't argue with him.
35:10>> Uh, Commissioner Gilman, uh, you're
35:12correct. We were kind of on the fence on
35:14that just because um, whether to do it
35:18or not. Um, we can make that revision in
35:20the body of the settlement agreement if
35:23that would be uh preferable to the
35:25commission.
35:26>> I mean, I guess it would be helpful to
35:28know if the settling parties are still
35:31backing the old revenue requirement with
35:34them out there or the new revenue
35:36requirement.
35:37>> I I can't affirmatively bind any of
35:40them, but I would assume that they would
35:42be okay with the lower revenue
35:43requirement.
35:45>> Excellent. Um, so that was my uh and
35:47then I just had a question on the
35:48forecasting which was uh Mark does
35:51hearing exhibit 163 which was the Oh,
35:54sorry. Go ahead.
35:55>> Eric, can we just uh see if we can uh uh
35:59get a process uh to u um Mr. Zen, can
36:04you talk to the parties and see if you
36:05can get that fixed uh by launch and
36:08introduce uh a corrected version?
36:11>> Yes, we can do that.
36:14>> Thanks. Sorry. Okay. Um, with regard to
36:17hearings exhibit 163, which was the
36:19sales comparison, I just had a question
36:22honestly on some of the notes that were
36:25included there. Um, specifically, it
36:28refers to the JTS. In the second note,
36:32it says JTS rebuttal forecast also
36:34included clean heat levels of
36:36electrification aligned with the final
36:38order starting in 2025.
36:40So, to my understanding, rebuttal was
36:42filed in May 2025. The final order came
36:45out in November 2025. So I'm a bit
36:48befuddled as to how the rebuttal DTS
36:51numbers include something from the final
36:53order. And also I would note that the
36:56final order directed the company to
36:57include as much actuals of 2025 as
37:00available and to then um apply a delay
37:06um recognizing the delay in clean heat
37:10um introduction. So just a little
37:14confused honestly by those notes in
37:16terms of what that's actually indicating
37:17to us.
37:19>> Yeah, thank you Commissioner Gilman. I
37:21was the file moved into the other box so
37:24I was it took me a second to pull it
37:26down. Um my understanding is that the
37:29information reflects the final clean
37:32heat plan order.
37:34So I think when it says included clean
37:36heat levels of electrification, it it is
37:39the final order reference in the clean
37:41heat plan.
37:43>> So it's not the forecast the company
37:47submitted in rebuttal in the JT as it's
37:51labeled.
37:52>> I I think it's a combination. It's the
37:55rebuttal but with the clean heat levels
37:57of electrification that were approved in
37:59the clean heat plan. I think it's a
38:01timing issue that that JTS rebuttal
38:05preceded the final clean heat plan order
38:07and so we've incorporated the clean heat
38:10plan piece in that JTS rebuttal.
38:14>> Okay. And then I guess one followup on
38:16that. The first line of the notes says
38:19that those JTS 2025 forecast which I
38:22take it to mean both the direct and
38:24rebuttal include the company's high
38:27outlook for EV adoption. that final
38:30order in the GTS um to my recollection
38:33ordered the company to include the mid
38:36EV uh adoption, not the high. So that's
38:39where I'm having trouble picking what it
38:42did and didn't um select from the
38:44commission's orders.
38:46>> Yep. And I've uh reached the boundaries
38:49of my knowledge on this and um I can
38:51either get confirmation from Mr. Good
38:54Enough or we can make him available for
38:56these questions as appropriate.
38:58>> Okay. if you have confirmation that
39:00would be helpful. You know, to me, I
39:02think the use of this was to see side by
39:04side what's been provided in different
39:06proceedings in a way that we could kind
39:08of make an applesto apples comparison.
39:11And I guess at this point I remain a
39:13little confused about like what is
39:15actually being represented by these
39:16because it doesn't exactly match my
39:18recollection.
39:19>> Yeah, I can I can get that confirmation.
39:22>> Okay. Thank you so much.
39:25>> Um Mr. Bunker.
39:32>> Yes. Thank you, Mr. Chairman. Uh,
39:34yesterday afternoon in the e- filing
39:37system, there were five documents filed
39:40by public service and it concerns the
39:44Comanche 3 report as of June 2026.
39:49And there are fi, like I say, five
39:52documents.
39:54And this has been a fairly contested
39:58issue in this case. And the UCA would
40:01like to have these documents admitted so
40:05that you, the commissioners, and the
40:08parties can uh cross-examine and ask
40:13questions about this. And this includes
40:16a report, the large load forecast which
40:20is a confidential a public and a
40:23confidential appendix and then a root
40:27cause investigation
40:29which is also a public and a
40:32confidential
40:34uh report. So, we would move for
40:37admission of all five of these
40:39documents. And this may be something
40:42that the commission wants to revisit
40:44with some of the public services
40:45witnesses.
40:47This may also be uh well, this will be
40:50something that we we may go into during
40:53our remaining crossexamination.
40:57>> So, um here's my request, Mr. Brunker.
41:00Uh, can you have those exhibits uh uh
41:03have the legal assistants uh mark uh
41:05those exhibits with hearing exhibit
41:07numbers?
41:08>> Yes.
41:08>> Uh can you circulate uh those exhibits?
41:13>> Um I don't know who we got today, Miss
41:14Federico.
41:15>> Yes, there are I think they're already
41:17in their box account marked.
41:19>> Yes.
41:20>> Um 320, 321, 321 C, 322, and 322 C. Is
41:26that correct, Mr. Rucker? Yes, that is
41:28correct, Miss Feder Rico. So, I I
41:30believe we've already complied and
41:32anticipated that would be that would be
41:35a uh an issue in terms of getting them
41:38out there. And I note that all the uh
41:42parties in the case should have been
41:43copied with the eiling and should have
41:47access to these documents like we did as
41:49of yesterday afternoon. And
41:52>> so, just to be clear, they were efiled
41:54in a different case, correct?
41:57I believe that is correct.
42:00>> Okay. So, let's do this. Can you work
42:03with the uh council for the other
42:06parties? Circulate those documents uh to
42:10to council. Circulate it to commission
42:13council the and the asmarked hearing
42:16exhibit uh documents. And can you see if
42:20the parties uh um are comfortable uh
42:26have if there's any concerns with the
42:27admission of those documents
42:30and uh over lunch uh I mean I h I I I
42:35have I I saw some portion maybe of those
42:38documents come in last night. I haven't
42:40read them. Uh so maybe before lunch uh
42:45uh we can see where we're at with
42:47council. Um and over lunch we'll at
42:50least I'll take a look at them. Um and
42:53we'll decide the best way of proceeding.
42:56Uh um I don't know that we were going to
42:59end the hearing today. Uh to the extent
43:01we continue until tomorrow uh we can see
43:04where we land with those documents. Uh
43:08>> yes. Um, so does that work for you, Mr.
43:12Bunker, as a process going forward?
43:15>> Yes, it does. And and you ask a good
43:17question in terms of which proceeding
43:18these were filed in. I'm looking at the
43:21first page of the report. It's 25V0480E.
43:28So, it is a continuing and pending uh
43:32docket uh proceeding in front of the
43:34commission right now.
43:36>> All right. So it's a Comanche 2 variance
43:38uh request. So um so it is a different
43:41docket. So you you just got to treat
43:43those as any new exhibit in this case.
43:46We shouldn't assume um other council has
43:48them or has been uh properly noticed.
43:51The parties to the cases may not be uh
43:54fully the same. So um Mr. Zmer, does
43:58that process uh work for you?
44:01>> Uh yes. We'd like the opportunity to
44:02review and understand uh use in this
44:04proceeding. So that works well. Thank
44:06you.
44:07>> Yeah. Okay.
44:10>> If I could perhaps ask one clarifying
44:12question, there's a provision that we've
44:14talked about in the settlement agreement
44:17that uh says that if any term is is
44:22changed and I think it was uh
44:25Commissioner Gilman who asked this
44:26question. The first of the attachments
44:30uh from Mr. Zmer was a revised table
44:35five and that changes the revenue
44:37requirement admittedly down and that's a
44:40positive thing for consumers but uh
44:43there is at least one change and so I
44:48want to bring that up and kind of turn
44:51back to the early discussion we had uh
44:54at the first on the first day of the
44:56hearing in terms of is this a
44:59stipulation or a settlement agreement? I
45:01know the commission has has decided it's
45:03a settlement agreement, but nonetheless,
45:06there needs to be findings of fact and
45:09substantial evidence to support every
45:11provision. And uh just wanted to bring
45:14up the fact that paragraph 88
45:17uh is the provision in the settlement
45:19agreement which allows any party to
45:23withdraw for any reason. uh and any
45:27reason is not really defined in terms of
45:29major or minor. And so something as
45:32simple as this revised table could be
45:35could be enough for some party to walk
45:36away. So just bringing that up for so
45:39that we have it on the record.
45:41>> We'll leave that uh with the parties. I
45:43don't think there's any action the
45:44commission needs to take on that one. Uh
45:46just let me uh uh check with my
45:49colleagues. Uh, Commissioner Plant, you
45:51okay if we uh treat the uh uh Comanche
45:55documents the way we've discussed?
45:58>> Yeah, that's fine.
45:59>> Commissioner Gilman, any concerns with
46:01that?
46:02>> No concerns.
46:03>> All right. Um, Mr. Zelmer, Mr. Bunker,
46:08Mr. Larson, uh, anything else?
46:12>> Nothing from UCA. Thank you.
46:15>> Nothing.
46:17>> Uh, Miss Harper. Uh, sorry, one other.
46:21Did we discuss the um
46:25exhibit 164, the supplemental report
46:28regarding disconnection surveys? I
46:30believe we discussed that, right?
46:32>> Yeah, I'm I I read it. Uh um uh I
46:37appreciate you uh preparing it and
46:39filing it. Uh I may have a question for
46:41Miss Anste or uh Mr. Bennett on it. Uh
46:46but uh
46:48um
46:50uh I I respond with that.
46:53>> Okay. M we do have uh Mr. Pay available
46:56if if there are any questions.
46:58>> Okay, Miss Nelson.
47:00>> Uh yes, thank you, Mr. Chair. Um I just
47:04have a question about whether the
47:06commissioners have any questions for
47:08Chris Neil. Um, I know on the first day
47:12that uh one of you had mentioned that
47:15you had questions for him and we just
47:16wanted to double check this morning.
47:19>> Oh, Commissioner Plant.
47:21>> I do not.
47:22>> Commissioner Gum,
47:24>> I do not, but my note said you did.
47:27>> Yeah. Uh uh I He doesn't have to listen
47:31to the rest of the hearing, but I do
47:32have uh uh like three questions for him
47:36or something. So, uh, if you wouldn't
47:39mind keeping them available, that'd be
47:40great.
47:41>> That sounds good. Thank you.
47:43>> Thanks. Uh, Miss Harper, are we in
47:45trouble?
47:47>> Just, uh, clarifying, chair, I don't
47:50think we got to the point where Mr. Zmer
47:52actually moved for admission of those
47:54exhibits. Maybe he was going to do that
47:55later, but just want to make sure that
47:57gets done on the record.
47:59>> Uh, fair enough. Um, Mr. Zer.
48:03>> Uh yeah, based on the discussion, I
48:06think where we're at is we'll move uh
48:08for admission of hearing exhibit uh 157
48:12attachment APF29
48:15Rev one of both the executable and PDF.
48:20We'll also move for admission of hearing
48:23exhibit 164, the energy insecurity
48:27working group supplemental report
48:29disconnection surveys.
48:32And then we will wait to move admission
48:35on uh 155 rev one and
48:40163 the sales comparisons until we get
48:44those uh clarifications.
48:47>> Perfect. Uh any objections from the
48:49parties?
48:53Any uh concerns from my colleagues?
48:59Commissioner Gman. Nope. Uh, so move.
49:03Thank you, Mr. Zemer.
49:04>> Thank you.
49:07>> Uh, Mr. Larson, did you have something?
49:12>> Nothing from staff. Thank you, Mr.
49:13Chair.
49:15>> Uh, Miss King, welcome.
49:19>> Thank you.
49:20>> Uh, they're bringing out the big guns.
49:24>> I've missed quite a party. Uh,
49:27>> I assume it's our turn, but I'll wait
49:30for you.
49:31>> Yep. Uh, is Mr. Garrett there?
49:42>> Mr. Garrett, can you hold up your right
49:43hand?
49:45>> Do you swear to tell the truth, the
49:46whole truth, and nothing but the truth?
49:48>> I do. You
49:49>> can put your hand down.
49:52Is anybody with you or communicating
49:54with you in any way?
49:55>> No.
49:57>> Uh, if that changes, will you let us
49:58know?
50:00>> I will.
50:01>> Uh, uh, thank you. Uh, back to you, Miss
50:04King.
50:05>> Thank you. Good morning, Mr. Garrett.
50:08>> Good morning.
50:09>> Uh, for the record, since I haven't
50:11entered an appearance here, I'll just
50:12say it. I'm Michelle King. I'm here on
50:14behalf of the Colorado Energy Consumers.
50:17Would you please state and spell your
50:19name for the record?
50:21My name is David Garrett. G- A R E T.
50:26>> And by whom are you employed and in what
50:28capacity?
50:29>> I'm the managing member of Resolve
50:32Utility Consulting.
50:35>> And
50:36my understanding is that your testimony
50:39and exhibits, which is collectively
50:42exhibit 81, has already been admitted
50:46into the record um as in its revised
50:49version. And so if I were to ask you the
50:52questions that are presented in that
50:53testimony today, would your answers be
50:55the same?
50:56>> Yes, they would.
50:58>> Uh, and so in preparation to testify
51:01today, did you have occasion to review
51:04the settlement agreement which is marked
51:06as ex which is entered as exhibit
51:09155?
51:12>> Yes.
51:13And did you also have opportunity to
51:16review the testimony filed in support of
51:20that settlement and in opposition with
51:23respect to cost of capital issues?
51:26>> Yes.
51:28>> Okay. Um and Mr. Garrett, is it safe to
51:33say that your involvement in the
51:35proceeding has largely been with respect
51:37to cost of capital and depreciation
51:40issues, but not the full gamut of all of
51:42the other issues that might be portrayed
51:45in the settlement?
51:46>> Yes, that's correct.
51:48>> Okay. Thank you. And with that, Mr.
51:50Garrett is a available for what I
51:52believe to be the questions of the
51:54commission and chair.
51:56>> Uh, I think neither of you had questions
51:59for Mr. Garrett. Uh, Commissioner Gman,
52:01is that correct?
52:03Um, Mr. Garrett, in your answer
52:05testimony hearing exhibit 801 at pages
52:0854 to 55, uh, you describe a strategy
52:12that you call double leveraging where
52:14holding company debt is injected as
52:17equity into the operating co company.
52:20Uh, I assume uh, that sounds familiar to
52:23you.
52:24>> Yes.
52:25Um, yesterday, Miss Bullay argued that
52:28the strategy does not increase equity
52:30returns for investors, or at least
52:33that's what I um heard her arguing. Uh,
52:36do you agree with that?
52:39Uh, no. I I don't agree with that. I
52:41think [clears throat]
52:44effectively what is happening is that,
52:46you know, shareholders can get a high
52:48equity return on lowcost debt. Now, it's
52:51very common in the industry. I don't
52:53know. I haven't seen an electric utility
52:56that would be an exception uh to that.
52:59So, it's certainly a common practice,
53:01but I I as I see it, I I don't see it as
53:04very fair unless, you know, generally an
53:08adjustment is made for it.
53:11and uh all else equal. Does this
53:14structure create an incentive that
53:15rewards utilities for spending more
53:18capital compared to say a single
53:20operating company without a holding
53:22company uh structure?
53:25Well, I think the incentive to spend
53:27more, if I understand your question,
53:29would still be there um to the extent
53:32that the authorized ROE is set above uh
53:36the cost of equity, which in my opinion
53:39that generally also happens across the
53:41board too. So, it's very common, but
53:42that that does incentivize
53:45uh capital spending.
53:48I get that there's give and take in
53:50settlement agreements, but is it fair to
53:52say that this record supports a
53:54significantly lower common equity ratio
53:56than the 54.5% that the settlement
53:59adopts? For your example, in your answer
54:02to testimony at page six, line six, you
54:05argue that a 42% common equity uh ratio
54:09is appropo appropriate.
54:12So you're uh just to make sure I
54:15understand your question, you're saying
54:16does the settlement agreement adopt a a
54:18notably higher equity ratio than that?
54:22>> I'm I'm asking does the in your view
54:25does the evidence in the record of this
54:27case support a significantly lower
54:29common equity ratio than the 54.5%
54:33that the settlement adopts.
54:35>> Oh, I I see. I I think the evidence in
54:38terms of trying to estimate like a an
54:42accurate cost of capital
54:45estimate. I do think the evidence
54:47supports that lower common equity ratio,
54:51but I think it would be, you know, a se
54:53somewhat of a separate question if um
54:56that the the settlement comprehensively
54:58could be considered as as fair.
55:02>> All right, that's all I have. Um
55:06uh any redirect, Miss King?
55:08>> Uh just briefly,
55:11Mr. Mr. Garrett, when when Sher Blank
55:14was talking about double leverage and
55:17the potential incentive to increase
55:20capital spending, do you recall that
55:22conversation?
55:24>> Yes. And might there be other um
55:29other elements involved in the
55:31consideration of whether there is
55:34capital spending such as state goals
55:36that the utility is trying to meet.
55:40>> I would think yeah that's I would
55:42certainly that could also be a relevant
55:45factor there.
55:46>> Okay. and that the capital spend that is
55:50approaching. Do you have knowledge as to
55:53whether some portion of that is
55:56attributable to the utilities efforts to
55:59comply with state goals and policies?
56:02>> That's my uh general understanding
56:06regarding that issue.
56:08>> Okay. I have nothing further.
56:11>> Thanks, Mr. Garrett. Uh appreciate you
56:13uh dressing up and appearing. [laughter]
56:16Thank you, sir.
56:18>> All right. Thank you.
56:19>> Uh, you may be excused, sir. Uh, I think
56:22the next witness is Mr. Lairman.
56:27Mr. Lman, can you raise your right hand?
56:30Do you swear to tell the truth, the
56:32whole truth, and nothing but the truth?
56:33>> I do.
56:35>> Put your hand down. Is anybody with you
56:36or uh uh communicating with you in any
56:39way?
56:39>> No.
56:40>> If that changes, will you let us know?
56:42>> I will. Uh, back to you, Miss Benim.
56:50Oh, you're muted still.
56:52>> Thank you. Um,
56:55>> what is your name and can you spell it
56:56for the record?
56:58>> My name is Matthew Lairman. M A T H E W
57:01Lairman. L E H R M A N.
57:04>> And for whom are you employed?
57:05>> The city of Boulder.
57:07>> And what is your role?
57:09>> Um, I'm the senior policy adviser for
57:11energy utilities.
57:13Did you cause to be filed in the record
57:15the following testimony on behalf of the
57:16city of Boulder in this proceeding?
57:18Hearing exhibit 600, answer testimony of
57:21Matthew Larman, attachments 1 through
57:2326. Hearing exhibit 600, revised answer
57:26testimony of Matthew Larman, attachments
57:299 through 26, Rev 1. Um, hearing exhibit
57:33601, crosswans answer testimony of
57:34Matthew Larman. And hearing exhibit 602,
57:37settlement testimony of Matthew Larman.
57:39>> Yes, I did. all have been admitted into
57:42the record. Correct.
57:44>> Correct.
57:45>> Do you have any revisions to this
57:46testimony today?
57:48>> Yes.
57:49>> Um uh I would like to uh admit our
57:55hearing exhibit 600 attachment MAL26REV
57:582 which is in our box.com.
58:02Um it's a public service resource ad
58:04adequacy response. Um, Boulder's
58:07removing the confidential designation of
58:09the attachment because um, it was
58:11misdesated. It is actually a public
58:14redacted version.
58:16>> I sent noticed last week to the parties
58:17and no one has objected.
58:20>> Uh, any objections?
58:22>> No.
58:23>> So, move.
58:24>> And Matthew Lurman's now ready for
58:26crossexamination and questioning.
58:29>> Uh, what do I got? Um,
58:33sorry, this is printed so small. Uh,
58:37Mr. Simper, you're up.
58:39>> I got a handful of minutes. It shouldn't
58:41take that long. Good morning, Mr.
58:42Lairman. How are you?
58:44>> Good morning. I'm fine, thank you.
58:45>> Um, you filed testimony in opposition to
58:48the settlement. Correct.
58:49>> Correct.
58:50>> Um, notwithstanding that opposition,
58:52there are several provisions of the
58:54settlement that Boulder supports.
58:55Correct.
58:56>> Correct.
58:57>> Why didn't Boulder sign on to the
58:59settlement for just those portions?
59:02Um, I think the totality of the
59:06settlement um didn't support our broader
59:08our broader positions and um it it it
59:12didn't meet our needs in the in the uh
59:14in the totality of it.
59:17>> Right. But for example, parties like
59:19core only signed on for a specific
59:21provision. The city of Boulder would not
59:22sign on to any provisions of the
59:24settlement while still maintaining their
59:26ability to oppose other parts.
59:29>> Correct.
59:30Okay. Um, you also note some discussion
59:35with respect to cost of capital in your
59:36opposition testimony,
59:39namely that um the cost of capital
59:42agreed to in the settlement is higher
59:45than what most parties had proposed. Is
59:47that correct?
59:47>> Correct.
59:49>> Uh and the cost of capital agreed to in
59:51the settlement is lower than what the
59:53company had proposed. Correct.
59:55>> Correct.
59:57So would it be fair to characterize the
59:59fact that parties agreed to a cost of
1:00:01capital higher than they proposed and
1:00:02the company agreed to a cost of capital
1:00:05lower than it proposed? That the company
1:00:07that all of the parties that who signed
1:00:09on to the settlement came together and
1:00:11compromised?
1:00:13>> Um I think what they came to was in
1:00:15between. Yeah.
1:00:16>> Was in between proposed. Yep.
1:00:18>> That sounds good. Um, you had uh your
1:00:23your attorney um cross-examined uh
1:00:25company witness Mr. Salazar yesterday.
1:00:28Did you have an opportunity to view
1:00:29that?
1:00:31>> Um, I did. I think that was Friday, but
1:00:36>> and and Mr. Salazar uh testified that um
1:00:41the distribution
1:00:43equipment at issue in the PSPS is still
1:00:46being operated within spec. Do you
1:00:48recall that?
1:00:49>> I do.
1:00:50>> Okay. Thank you. Um,
1:00:54you testify a little bit about concerns
1:00:56with respect to the company's capital
1:00:58spend. Do you recall that?
1:01:00>> Yes.
1:01:01>> All right. Um, I'd like to bring up um
1:01:06in the company's box uh what's marked as
1:01:09hearing exhibit 167, please.
1:01:25Um, this is titled third quarter 2024
1:01:28earnings presentation October 31st,
1:01:302024. Does that look right to you?
1:01:33>> It does.
1:01:34>> Um, can we move to page five?
1:01:42Um
1:01:44uh this slide may or may not look
1:01:46familiar to you. This is the uh 2024 Q3
1:01:49earnings presentation. In the right
1:01:52hand, it's at least on my right hand uh
1:01:55you can see that the PiSco Energy uh
1:02:00forecasted rate based growth in the
1:02:02third quarter of 2024 is 12%. Do you see
1:02:05that?
1:02:06>> I do.
1:02:06>> All right. Um, moving on, I'd like to
1:02:09bring up uh exhibit 1523.
1:02:21>> Just give me a second.
1:02:23>> No, no worries.
1:02:26>> 1523 you said, correct?
1:02:27>> Yep.
1:02:35And this is the 2025 year-end earnings
1:02:37report presentation, correct?
1:02:40>> Uh, it appears to be.
1:02:41>> Yep. All right. Um, can we move to page
1:02:4530, please?
1:02:48So, this is essentially a year after the
1:02:51last one we saw. And here you can see
1:02:53public service on the right hand side is
1:02:55uh estimated 7% rate based growth.
1:02:57Correct.
1:02:59Uh that appears to be for the 2025 to
1:03:022030 period. I didn't notice what it was
1:03:05on the on the previous presentation.
1:03:07>> All right. But you do admit that 12% is
1:03:10less than 7% is less than 12%. Correct.
1:03:13>> Um can you go back to the other slide
1:03:15and I I don't know if it's for the same
1:03:16forecast period
1:03:17>> that was 167.
1:03:21It's one year short.
1:03:23>> That could be a big difference.
1:03:25>> Okay. Thank especially when you look at
1:03:27the low load forecast that was presented
1:03:29in uh in Mr. Bunker's admissions this
1:03:31morning.
1:03:31>> All right. So, um I'd like to move for
1:03:33the admission of both of these exhibits.
1:03:37>> Any objection?
1:03:39>> No objection.
1:03:41>> Uh so moved. And what was the exhibit
1:03:43number of the first one?
1:03:45>> Uh 167.
1:03:50>> And then I I would like to go back to
1:03:521523 real quick.
1:03:55Thank you. If we could go to slide 29.
1:04:00So here um just just to sort of show to
1:04:04achieve that 7% that's assumed in that
1:04:072030 period. um that doesn't if you're
1:04:10looking at the one third line down you
1:04:13can see the assumed capex that 26 is
1:04:16higher than 27 and that 28 is lower than
1:04:2027 and and that essentially it if you go
1:04:24read the the asterisks it flattens out
1:04:27for 28 29 and 30. Is that a fair
1:04:30representation of the numbers you're
1:04:32seeing before us
1:04:34>> for the base capital expenditures on
1:04:36this slide?
1:04:37>> Yep. Okay. And that means that the 7%
1:04:41identified in slide 30 does not
1:04:44necessarily correspond to an necessary
1:04:47an increase in capital expenditures um
1:04:50from that 2026 baseline.
1:04:53>> Uh you know I mean I'd have to like look
1:04:55back at the timing of this but I think
1:04:57there were there's two really important
1:04:59riders that were added in that time
1:05:01period. The WMA and the GMAC and I don't
1:05:03know if those are included in the 2024
1:05:06timeline. I didn't get a chance to look
1:05:07at the kind of the gross numbers that
1:05:09we're talking about in comparison here.
1:05:11And again, when you look at the uh some
1:05:14of the forecasts that were presented in
1:05:15in exhibits this morning on the large
1:05:17load forecast, I think there's there's
1:05:19some meaningful numbers that may or may
1:05:21not be included in both of these
1:05:23different slides.
1:05:24>> And just for the record, those exhibits
1:05:26have not been yet um moved into the
1:05:29record. Um all right, moving on.
1:05:33Uh in addition to your concerns with
1:05:36capital, you also have concerns with the
1:05:37company's on&m spend. Is that correct?
1:05:41>> The on&m is down compared to its uh
1:05:44peers. The reliability is down compared
1:05:46to peers as well.
1:05:47>> Um would you support an increase in the
1:05:49revenue requirement so that there would
1:05:51be more available O andM for the company
1:05:53to spend?
1:05:54>> There is a proposed increase in the
1:05:57revenue requirement.
1:05:58>> Okay. Thank you. Um, you also present a
1:06:03what I would call an earnings pin in
1:06:06your testimony. Is that correct?
1:06:08>> Uh, yeah, you'd call it that. Sure.
1:06:10>> All right. And you use the Illinois um
1:06:15uh performance-based rate uh order for
1:06:18KMED as your example. Is that correct?
1:06:22>> Yes. And you are aware that the that PBR
1:06:26in Illinois was statutoily mandated,
1:06:29correct?
1:06:30>> Yes.
1:06:31>> And you are aware that that Illinois
1:06:33statute required that the um
1:06:36performance-based rates be symmetrical.
1:06:38Correct.
1:06:39>> Uh yes.
1:06:41>> And you are aware that um based on that
1:06:45you Well, let me ask the question.
1:06:47Where's the symmetry in your proposal?
1:06:51The symmetry is to the benefit of
1:06:54customers for improved reliability.
1:06:56>> So from your perspective, the ROE would
1:07:01be less than the authorized and the
1:07:03company could only earn up to it.
1:07:05Correct.
1:07:06>> Well, the authorized would start at a
1:07:08floor and then there would be
1:07:09opportunity to earn additional ROE with
1:07:12improvements in in reliability.
1:07:14>> Okay. So, whatever the commission chose
1:07:16as the authorized ROE would be your
1:07:18floor. There would be a range. There
1:07:21would be a floor and then an opportunity
1:07:23to earn additional.
1:07:25>> But okay, that sounds good.
1:07:28>> Um,
1:07:36you also raised concerns with the DCA
1:07:38PIM. Did you hear Well, let me just
1:07:41confirm. You do raise concerns with the
1:07:43DCA PIM, correct?
1:07:44>> Correct.
1:07:45>> And did you hear the discussions with
1:07:48Mr. Pascuchi yesterday morning.
1:07:50>> I did.
1:07:51>> And did Mr. As part of those
1:07:54discussions, Mr. Pascuchi made clear
1:07:56that the DCA pin was required to be
1:07:57filed in this case. Correct.
1:08:00>> He did.
1:08:01>> Okay. Thank you. Um, last, you argue
1:08:05that the settlement should be rejected
1:08:06because it's mute on several of
1:08:09Boulders's issues.
1:08:11>> That's correct. Um,
1:08:13does the fact that the settlement is
1:08:15moot on Boulders's issues ultimately
1:08:17mean that
1:08:19that well, let me rephrase it. The
1:08:22settlement is clear that it is a as far
1:08:25as amongst the settling parties, a
1:08:26resolution of all the issues in the
1:08:28case. Is that a fair characterization?
1:08:30>> No, [clears throat] I think it's a
1:08:31resolution of the settling party's
1:08:33issues in the case.
1:08:34>> Well,
1:08:36I can
1:08:36>> not all the issues in the case.
1:08:38>> I can bring up the settlement if you'd
1:08:39like. Would that be helpful?
1:08:41>> I think those are the settlement the
1:08:43settling parties issues in the case.
1:08:45>> They are the settling parties case. But
1:08:47as amongst the settling parties, the
1:08:48settling parties agree that they've
1:08:50resolved all the issues as far as
1:08:51they're concerned
1:08:53>> to their concerns. Yes.
1:08:54>> Okay. Um that's all I have.
1:08:58>> Uh thank you uh Mr. Simper. Uh
1:09:06uh I think that's uh it for the cross
1:09:10the um Commissioner Plant. Any questions
1:09:14for u Mr. Lairman?
1:09:17>> Good morning, Mr. Lur.
1:09:18>> Good morning.
1:09:19>> Just a couple of questions. Um, in your
1:09:22opposition to the settlement testimony
1:09:23on page six, you talk about decades of
1:09:26constraining the revenue requirement
1:09:28while bolstering capital bias. Um, can
1:09:32you explain what you mean by that? I I
1:09:34would think that a lower revenue
1:09:36requirement would lead to reduced
1:09:38capital investment or or are you saying
1:09:40that the cuts are primarily coming from
1:09:43ON&M?
1:09:44>> Primarily from O andM. I mean I think at
1:09:46a very simple level I think net income
1:09:49is up and reliability is down and that's
1:09:52an untenable situation I think for for
1:09:54our customers in Boulder
1:09:56>> and you tie the the concerns around the
1:10:00reliability to reductions in on& and M
1:10:03specifically not to any kind of you know
1:10:07lack of investment on the distribution
1:10:09system or transmission system or
1:10:12generation or all those things. It's
1:10:14it's more of a personnel um sort of an
1:10:17issue. Is is that what you are
1:10:20asserting?
1:10:21>> I I think the on andm side is a is a
1:10:23major issue. Yeah, I think there are
1:10:25certainly probably investment sides. I
1:10:26think some of those are starting to be
1:10:27addressed um through the distribution
1:10:30system plan, through the wildfire
1:10:31mitigation plan. Um and so there is
1:10:35there is important investment capital
1:10:36investment being made. Um, and we're
1:10:38certainly not opposed to that, but I I
1:10:40think there are still challenges with
1:10:42with O andM. And I think you see that
1:10:44when you compare the O andM spend to
1:10:47pure utilities and then you also compare
1:10:49the reliability scores um with with the
1:10:51pure utilities.
1:10:54>> Can you walk through um the mechanics uh
1:10:58that you propose of tying uh ROE to
1:11:02reliability metrics and how h would h
1:11:05how that would happen over time? I think
1:11:07specifically
1:11:09you look at reliability in your
1:11:11testimony, but if you were to look at
1:11:13tying ROE to achievement of specific
1:11:17performance metrics, how would that from
1:11:20a sort of a mechanical [laughter]
1:11:23approach from the commission? How how
1:11:25would we structure that for it to work?
1:11:28would it be you know you start at
1:11:3350% lower ROE in the first year and
1:11:38there's an evaluation quarterly with
1:11:40adjustments or I I just I'm trying to
1:11:43understand mechanically how does how
1:11:46does this thing uh actually work?
1:11:48>> Yeah. Yeah. I think what we talked what
1:11:50I talked about in my testimony or
1:11:52Boulder talked about in its testimony
1:11:53was um setting a benchmark year for
1:11:57reliability and we looked at a 5-year
1:11:59average from that's I think included the
1:12:02last phase one rate case period um and
1:12:06then setting kind of a floor or baseline
1:12:10ROE authorized ROE that was something
1:12:13like the average of the earned ROE of
1:12:15those years and then looking at what the
1:12:17current currently authorized his ROE is
1:12:19and saying for
1:12:23every X% improvement in the ROE or in
1:12:26the reliability metrics from that
1:12:27baseline
1:12:29um then you can achieve say a 50 50
1:12:32basis point improvement or 100 bas basis
1:12:35point improvement all the way up to um
1:12:38from where I think last year's
1:12:41reliability metrics were towards from
1:12:43the baseline. So you're improving you're
1:12:45you're getting a measurement of
1:12:46improvement. We talked about it, I
1:12:48think, on an I think on an annual basis.
1:12:50Um, but you could certainly do it
1:12:52quarterly if you wanted. Um,
1:12:55>> so it would be so you'd set say
1:12:59um
1:13:00throw out a number 9.0 ROE
1:13:04and that would apply for the first year.
1:13:08There' be an evaluation of the
1:13:10reliability and you'd look at the delta
1:13:13between the reliability at the time of
1:13:15the case and the reliability at the end
1:13:18of that year and then that would trigger
1:13:21some sort of an incremental increase in
1:13:23ROE that would then be applied
1:13:27uh for the next year. Is that is that
1:13:31right?
1:13:31>> Yes. So would that so would that then be
1:13:34reflected in a a rate change on an
1:13:36annual basis that would reflect that
1:13:39change in
1:13:41>> yeah I think you I think you could set
1:13:42it up automatically I think is if you
1:13:44had as long as you had clear and
1:13:45transparent um you know mechanisms for
1:13:47tracking the improvement um and those
1:13:50could be reviewed I think yeah there
1:13:51could be if you say your your sad score
1:13:53is 100 and now it's 50 there's an x you
1:13:56know basis x basis point improvement in
1:13:59your or increase in your roe
1:14:01>> would Do you also adjust whatever the
1:14:04cost of debt would be at that time and
1:14:07and the whack? I mean, I'm just trying
1:14:09to figure out mechanically what if you
1:14:11take the whole equation of capital
1:14:14structure, right?
1:14:15>> And re recalculate that at that point
1:14:18and then just incorporate that into your
1:14:21change in rate.
1:14:22>> Yeah. I mean, I think the way that we
1:14:23talked about it was there was kind of
1:14:24like a floor and a ceiling of ROE. And I
1:14:27think in that way, you can probably set
1:14:29a kind of a target cost of debt in in
1:14:31that calculation based probably on the
1:14:33ceiling of of the RO of the authorized
1:14:36ROE range. Um, but you know, any
1:14:40movement in the ROE is like I said,
1:14:42subject to subject to improvements in
1:14:44the reliability scores. And so would the
1:14:46whack then be something that could move
1:14:51uh in [snorts] relation to the roe, but
1:14:53the the cost of debt would stay the same
1:14:58or
1:15:00>> Yeah, I think so. I had I don't kind of
1:15:02uh kind of want to like write this down
1:15:04and jot it down a little bit, but I I
1:15:06think probably would move a little bit.
1:15:07Yeah.
1:15:08>> Okay.
1:15:10Um,
1:15:11and my understanding uh is that with
1:15:15respect to the PSPS issues that Boulder
1:15:18would propose capitalizing a business
1:15:20recovery fund with $5 million from
1:15:22investors, is that a a gross amount? How
1:15:26would how would that be allocated or how
1:15:30would you propose claims to the fund
1:15:31would be evaluated and managed? Um,
1:15:36well, just start with that. How how
1:15:38mechanically would that work?
1:15:40>> Yeah, I mean so for a threshold matter,
1:15:42you have you can identify the customers
1:15:45that would be eligible simply by those
1:15:46that are affected by PSPS events. And
1:15:48that should be a really clearly
1:15:50straightforward here are the PSPS events
1:15:52that happen. Here are the feeders. Here
1:15:54are the customers. So you can you can
1:15:55kind of carve out the customers right
1:15:57there that were affected. Um and then
1:16:00similar to a claim that I think uh
1:16:02customers could make against public
1:16:03service now or any utility now and said
1:16:06here is you know here are the damages
1:16:08that we experienced as a result of uh
1:16:11you know of the loss of service in this
1:16:13case and there there could be claims
1:16:15made and then I think it would be
1:16:16probably adjudicated through the
1:16:18commission.
1:16:19>> So it would be through it would be
1:16:22through a process that the commission
1:16:23would would oversee. There' be claims
1:16:26that came in. There'd be an evaluation
1:16:28of those claims. Company would take a
1:16:31position on whatever. And then there
1:16:33would be allocation of those funds from
1:16:36that that fund that you're proposing is
1:16:40set up.
1:16:41>> That's right.
1:16:41>> I I I don't know that um
1:16:45as a commission we can actually direct
1:16:47investor funds. So if that's not
1:16:50something that's voluntarily assigned
1:16:54uh by the company to establish that
1:16:57fund, are there other ideas that you
1:16:59think would be fair for the allocation
1:17:02of uh monies to that fund?
1:17:05>> Um I mean the reason that we talked
1:17:07about that I think I think there
1:17:08probably are and it's kind of you know
1:17:10off the top of my head I'm not totally
1:17:13clear. I think the reason that we talked
1:17:14about shareholder funds is primarily
1:17:17because the company continues to earn on
1:17:20those assets that are not providing
1:17:21service while business customers
1:17:25are actually losing revenue and their
1:17:26businesses are being affected. So you
1:17:28have a business owner on Pearl Street in
1:17:30Boulder who is saying there's you know I
1:17:33have an electric provider that's
1:17:34continuing to generate profit while I'm
1:17:37potentially going out of business and
1:17:39it's a very difficult I think circle to
1:17:41square.
1:17:42>> Yeah. I mean we we've talked in this
1:17:44case about you know a similar situation
1:17:47where customers have been paying for
1:17:50example for the PBLO 3 coal plant while
1:17:54not receiving any service from it. Um
1:17:57but of course that's all of the customer
1:18:00base and that's not the affected
1:18:03um you know population to a PSPs. So,
1:18:07I'm just I'm trying to figure out how we
1:18:08could if there weren't investor funds
1:18:10that were allocated that how we could
1:18:14appropriately
1:18:15allocate funds when we're talking about
1:18:18a relatively narrow band of customers
1:18:22and a very large [laughter] revenue
1:18:25base.
1:18:26>> Right. Right. Yeah. It's uh I I don't
1:18:29have a I don't have a clear answer for
1:18:31that in in this in this moment. Um I
1:18:33think our like as I just explained our
1:18:35proposal came from a very specific line
1:18:37of reasoning.
1:18:38>> Okay. Thank you. That's uh those are all
1:18:40the questions I had. Appreciate it.
1:18:44>> Uh Miss King, you trying to jump in?
1:18:49>> Yes. And while we didn't reserve time
1:18:51for Mr. Lairman, given the conversation
1:18:53that was just had with Commissioner
1:18:55Plant, I'm wondering if I might have
1:18:58less than 10 minutes, five minutes maybe
1:19:01of questions for Mr. Lairman.
1:19:06>> Uh, Miss Harper, this one's a bit
1:19:08unusual. Any advice? I I'm inclined to
1:19:11uh allow it.
1:19:16>> Yes, I think that's fine.
1:19:18>> Yeah, go ahead, Miss King.
1:19:20>> Thank you. Good after Good morning, Mr.
1:19:22Lairman. We know each other. Michelle
1:19:24King on behalf of the Colorado Energy
1:19:26Consumers.
1:19:27>> Um, I had a couple of questions for you.
1:19:31Uh, with respect to Boulder's proposal
1:19:33to tie ROE to some benchmark reliability
1:19:39measure.
1:19:41Do you recall that conversation you
1:19:43just?
1:19:43>> I do.
1:19:44>> Okay. Um,
1:19:46[clears throat]
1:19:47in
1:19:49in your experience of dealing with
1:19:51return on equity issues, is it your
1:19:53understanding that ROE is typically tied
1:19:57to the cost of equity uh based on some
1:20:01bellweather cases of the Supreme Court?
1:20:06Um I think there are ways to calculate
1:20:10an estimated cost of equity but I don't
1:20:12know that necessarily what comes up in
1:20:14the the final result the authorized ROE
1:20:18is necessarily the actual you know cost
1:20:21of equity
1:20:22>> but cost of equity is a significant
1:20:24factor in determining a utility's
1:20:27reasonable return on equity that it
1:20:29might be authorized to earn eligible to
1:20:31earn.
1:20:33>> Yeah. If you can figure it out, I think
1:20:35it should certainly
1:20:36>> Okay. Um, [clears throat] and in your
1:20:40proposal to tie ro necessarily to cost
1:20:46of equity, but rather to reliability
1:20:48performance. That's a deviation from
1:20:52that foundation, right?
1:20:53>> No, I think that foundation is what
1:20:55informs the range that you're setting. I
1:20:58think
1:21:00not differently from what I think public
1:21:02service and the settling parties have
1:21:04proposed with regard to the the DCA PIM.
1:21:06There's an opportunity to earn more um
1:21:09or less, but I think the you know the
1:21:11foundational calculations are still
1:21:13involved in setting that range.
1:21:15>> Okay. And so the DCA PIM being an
1:21:19example that there are other ways to
1:21:23influence behavior or reward or or
1:21:27disincentivized behavior outside of the
1:21:30ROE context. Correct.
1:21:33>> Absolutely.
1:21:34Um, and with respect to your proposal
1:21:37about tying it to the ROE context, when
1:21:40you talk about a benchmark reliability
1:21:43that you would use as the floor or
1:21:45baseline to determine those potential
1:21:48fluctuations in ROE
1:21:51currently that the reliability metrics
1:21:55upon which we rely
1:21:57um include or I can ask you what are
1:22:01your what's your understanding of what
1:22:03the reliability metrics upon which we
1:22:04currently rely. What do they include?
1:22:07>> I think SAD, safety, and and Katie are
1:22:09the most common ones. I think there
1:22:11there are others as well that are
1:22:12included in the in the quality of
1:22:14service report. And that can be at a
1:22:15system level, that could be at a feeder
1:22:17level, it could be by division of the
1:22:20company. There's ways there's ways to uh
1:22:22to slice and dice.
1:22:23>> And are you aware, Mr. Lairman that
1:22:26Sadi, Safy and Katie do not capture
1:22:31impacts on reliability to large
1:22:35consumers that may be occurring based on
1:22:39momentary outages,
1:22:43fluctuations in voltage,
1:22:45harmonic distortion.
1:22:48Are you aware that Sadi Safety and Katie
1:22:50do not capture those kinds of impacts?
1:22:53Yes, I I think I alluded to that. I
1:22:55think there are, you know, reliability
1:22:56indices or measurements that might not
1:22:58be fully captured in those three, but I
1:23:00think those are, you know, three common
1:23:01ones.
1:23:03>> And right now, we don't measure the
1:23:06kinds of reliability impacts that would
1:23:09capture those impacts for large
1:23:11customers. Are you aware of that?
1:23:12>> And I think we should,
1:23:14>> but are you aware that we currently
1:23:16don't?
1:23:16>> Yes.
1:23:17>> Okay. And so if Boulder's proposal were
1:23:19adopted,
1:23:21there may be fluctuations to an ROE
1:23:25based on reliability.
1:23:27So for example, let me present a
1:23:29hypothetical.
1:23:31uh if reliability for residential and
1:23:34small commercial customers were
1:23:36improving
1:23:38and at the same time reliability for
1:23:40large users was was worsening.
1:23:44Under your construct, if we were tying
1:23:47the ROE to improvements in the benchmark
1:23:52measures upon which we rely that might
1:23:55in cause an increase to the ROE based on
1:23:57this hypothetical. Are you with me?
1:24:01>> Yeah. I'm not sure we could make the
1:24:03claim about the large customers if we're
1:24:04not measuring them. Um that their
1:24:06reliability is not is is changing one
1:24:09way or the other. But I do think at a
1:24:13very high level, I think Satie and
1:24:14Safety and Katie are great places to
1:24:16start for, you know, a very good
1:24:17systemwide or even feeder level,
1:24:19division level um assessment of
1:24:21reliability.
1:24:23>> And and my point here though, Mr.
1:24:25Lairman is that if you were to find that
1:24:28there are improvements in SAT safety and
1:24:31Katy, but there were worsening impacts
1:24:35for large users from momentary outages
1:24:38or voltage sags or things like that that
1:24:41could be very costly and damaging.
1:24:45um there might be an increase to an ROE
1:24:48that large users would have to pay in
1:24:52the weighted average cost of capital
1:24:53calculation even though they're
1:24:56experiencing worsening reliability under
1:24:58this hypothetical.
1:25:00Does that make sense as I presented
1:25:02that?
1:25:03>> It does make sense. Yes.
1:25:04>> Okay. And so that would if approved uh
1:25:07and I'm not suggesting that it should be
1:25:09on the contrary, but if approved uh that
1:25:13would need to be ironed out. Would you
1:25:14agree with that?
1:25:16>> I would like to address that. Yeah.
1:25:17>> Okay. Thank you. Thanks for the
1:25:19indulgence of the commission.
1:25:21>> Yeah, no worries. Uh uh do you have
1:25:25anything else? Uh Commissioner Plant.
1:25:31>> No, I don't. Sorry.
1:25:33>> Okay. Uh Commissioner Goen.
1:25:36>> Hi. Good morning, Mr. Lairman. How are
1:25:37you?
1:25:38>> Good morning.
1:25:39>> Um I just have a few questions for you.
1:25:42Um first we'll stay on the um
1:25:45reliability influence on ROE I guess
1:25:48reliability adjustment. Um so you list
1:25:52in your answer testimony Satie safety
1:25:54and Katie both with and without major
1:25:57event days as kind of the main metrics
1:26:01that would that would be tracked and be
1:26:02the determining factors. Is that right?
1:26:04>> That's right.
1:26:06So, I'm curious. I know like on page 52
1:26:08of your answer testimony, you give these
1:26:10tiers. 100% 80%, 50%, 0%. Um, and I was
1:26:16curious. I don't know if you spell out.
1:26:18I could have definitely missed it. Um,
1:26:21do you think they would have to hit the
1:26:23benchmarks in all of those?
1:26:25understandably like they tend to travel
1:26:27together but like how how do you treat
1:26:30the three different metrics potentially
1:26:32six different metrics with and without
1:26:35major days um in terms of qualification
1:26:38for the tiers
1:26:39>> yeah I mean ideally in the way that we
1:26:40laid it out it would be hitting all of
1:26:42them I think there could be
1:26:44differentiation I mean we I used a very
1:26:46high you know 0% 50% 100% but it could
1:26:49be you know a few percentage each as
1:26:52you're hitting each individual target
1:26:54but again understanding that they're
1:26:55they're generally moving together in in
1:26:57the same direction. So our preference
1:27:00would be for for hitting all of them,
1:27:01but you you could imagine some
1:27:03differentiation for hitting certain but
1:27:05not others.
1:27:06>> Okay. And then do you have a specific
1:27:10proposal with regard to this for how
1:27:12PSPS would be treated? Like is that just
1:27:16in those calculations or excluded in any
1:27:19way?
1:27:21Yeah, it's challenging because you know
1:27:24typically PSPS only affects you know a
1:27:26certain portion of of the distribution
1:27:28system. And so I think it would be
1:27:33in an idealized world you know you could
1:27:35you could measure all these reliability
1:27:37metrices by feeder or by division rather
1:27:39than on a systemwide level. Um I think
1:27:41that starts to get really tedious and
1:27:43and complicated and just timeconuming
1:27:45more than anything. um the you know the
1:27:48PSPS events on the one hand um it's a
1:27:52very important tool for public service
1:27:54to have to protect the system to protect
1:27:57customers and on the other hand there
1:27:58are real world you know customer impacts
1:28:01to those so
1:28:04you know I would be
1:28:09I would be in I would be inclined to to
1:28:12measure them and kind of like assess the
1:28:13impact um and certainly as I talked
1:28:16about separately in my testimony that we
1:28:17have um maybe at least some anecdotal
1:28:21concerns at this point about PSPS events
1:28:24causing subsequent outages on a few
1:28:26different feeders in Boulder. And so
1:28:28that's one reason we'd like, you know,
1:28:30PSPS events and the impacts tracked to
1:28:32try to understand, you know, is
1:28:35operating the system in a PSPs
1:28:37environment the way that it is causing
1:28:40accelerated wear and tear causing, you
1:28:42know, uh, early replacement of of
1:28:45equipment, which is then leading to
1:28:47replacement of new, you know, assets and
1:28:49rate base. So I think there's, you know,
1:28:51my preference would probably be to think
1:28:52about
1:28:54tracking the effects of PSPS outages a
1:28:56little bit a little bit separately
1:28:58um at least initially.
1:29:01>> Okay. And is that potentially I I
1:29:03believe the commission's um undertaking
1:29:06[clears throat] of PSPS rule making um
1:29:09perhaps some of that
1:29:11reporting could be addressed there.
1:29:13>> I think that would be right for that
1:29:15conversation.
1:29:16>> Okay. Um, and then I know you bring up
1:29:19reliability, which understandably there
1:29:21have been, um, some struggles in in
1:29:23Boulder. Um, but I know there's also
1:29:27environmental concerns, cost containment
1:29:30priorities for customers, uh, customer
1:29:32service issues. So, you know, the
1:29:36commission's talked in the past,
1:29:38especially in the in the DSP proceeding,
1:29:41about how we properly incorporate really
1:29:44kind of the highest level priorities for
1:29:46performance
1:29:48uh in a meaningful way. Um and so just
1:29:52curious here in just addressing
1:29:55reliability.
1:29:56I mean I don't want to make the perfect
1:29:58the enemy of the good here but like
1:30:00there are other priorities as well where
1:30:02we need to ensure good performance. So I
1:30:06don't know any comment on that. I just
1:30:07noted like you know the commission's
1:30:09expressed in the past other high level
1:30:11policy priorities in addition to
1:30:14reliability.
1:30:20Can can you maybe repeat the question?
1:30:22>> Yeah, sorry. No, I'm just noting the
1:30:25commission has addressed that there are
1:30:28these high level priorities across
1:30:30several different categories. Um, and
1:30:32your suggestion addresses reliability,
1:30:35which notably is is one of those, but
1:30:37there are some other um other priorities
1:30:40in terms of performance. So I was
1:30:42curious if you had any concept of how
1:30:44this proposal would integrate with any
1:30:48sort of way that we could track and
1:30:50provide performance-based regulation in
1:30:52those other areas as well
1:30:55>> for the other areas. So for
1:30:57>> well how how would it work together
1:30:59right? We have environmental priorities
1:31:01we have cost containment priorities we
1:31:02have customer service priorities
1:31:05>> this one kind of sets reliability alone
1:31:08>> it does and I think you know there's
1:31:10other PIMs that are that are addressed
1:31:12alone as well and I think um you know I
1:31:15think we agreed with Mr. Pascuchi's
1:31:17discussion about the need for kind of a
1:31:20holistic analysis of PIMs before tacking
1:31:23on um while while tacking on many many
1:31:26different pimps. I think I think Boulder
1:31:28is very supportive of that discussion to
1:31:30try to do some alignment. So, it's hard
1:31:32in this moment to say
1:31:35we need to design one PIM. I need to
1:31:37design one PIM that's going to meet
1:31:39public policy goals on environmental
1:31:41performance, customer service,
1:31:42affordability, reliability. I don't
1:31:45necessarily think those are in conflict
1:31:46in any way. Um I think it's um I think
1:31:51it's important to address all of them,
1:31:52but I do think that that holistic py
1:31:54discussion is um would be really really
1:31:57valuable to to probably get at some of
1:31:59these answers and try to tease out which
1:32:01are the right levers to pull for for
1:32:03which individual problems versus which
1:32:05are other other levels levers we can
1:32:06pull that would that might meet multiple
1:32:08objectives.
1:32:10>> Okay. Um, and kind of pulling on that a
1:32:13little more, I know you're concerned um,
1:32:16I think from your testimony on um, no
1:32:19constraint on cost controls for either
1:32:22capital or on ONM to meet some of the
1:32:24PIMs proposed um, in this proceeding by
1:32:27the settling parties. Is that accurate?
1:32:30>> Yeah, for the DCA PIM and for the um,
1:32:32for the Kashi3i 3 PIM. So would we be
1:32:35I'm trying to figure out if we would be
1:32:37in kind of a a similar location with
1:32:40this py where so much is online in roe
1:32:44for reliability. How do you ensure cost
1:32:46containment? Um not that we don't all
1:32:49want increased reliability but at what
1:32:51cost to what level
1:32:54remains an important question and it
1:32:56seems like the incentive would be there
1:32:58for increased spending kind of like your
1:33:01criticism of the other pimp.
1:33:02>> No doubt. Um yeah, so I think the the
1:33:04critical difference between what we're
1:33:06talking about for reliability PIM versus
1:33:09um the DCA PIM or the Comanche 3 PIM is
1:33:12um for the latter two for the generation
1:33:14related PIMs um public service has an
1:33:18obligation to serve. And when when when
1:33:21we talked about our DC API criticism,
1:33:25um I mean public service acknowledged
1:33:27there's not really market options.
1:33:28There's not really options to buy new
1:33:30capacity and they're short. um you know
1:33:33or or build new capacity and they're
1:33:34short in 20 2027 and 2028. So there's a
1:33:38built-in incentive right there just to
1:33:40maintain um maintain their
1:33:42infrastructure to ensure that it's
1:33:43available to ensure that it's providing
1:33:45service and
1:33:47it's it's it's very similar with
1:33:49Comanche 3. The Comanche 3 um has the
1:33:51added I think situation where it's
1:33:54scheduled to retire in a very near term.
1:33:56you know, we're talking like three and a
1:33:57half years. And,
1:34:00you know, there's been, I think, three
1:34:02outages in the last five years that
1:34:04would have subject subjected when you
1:34:06look at their historical analysis, you
1:34:08know, it's between like 27 and $30
1:34:11million of penalty in three of, you
1:34:12know, the last five years kind of thing.
1:34:14And if
1:34:16I I don't I don't know what the
1:34:17conversation looks like if there's
1:34:18another outage like that at Comanche 3.
1:34:20Um whereas on the reliability py you
1:34:23have like direct day-to-day impacts for
1:34:26customers and there are ways you can
1:34:28look at the the five-year average that
1:34:30we presented um previous that that led
1:34:33up to the last phase one rate case and
1:34:36compared to the reliability scores from
1:34:38the last two years and there's a
1:34:39significant difference. It's just a wide
1:34:41it's a wide gap and it's just it's it's
1:34:44again it's very hard to square you know
1:34:46from what I said from the outset where
1:34:47there's this this increase in net income
1:34:49and increase in dividends to
1:34:50shareholders and at the same time
1:34:52customers are receiving worse
1:34:54reliability and you know we're talking
1:34:57about affordability and I don't think
1:35:01that should come you know
1:35:04from rateayers
1:35:06in a in a in a time when we're we have
1:35:08to operate PSPS when condition the
1:35:10system of the condition is such that we
1:35:12have PSPSs as an important tool
1:35:15uh you know I I I think it's really
1:35:17important to focus on you know some
1:35:19improvements in reliability when we know
1:35:21we have um some very easy already
1:35:24built-in incentives to maintain the
1:35:26availability of the generation fleet
1:35:29>> okay um just one or two more questions
1:35:32and I know you expressed concern about
1:35:34the company favoring capital investments
1:35:36over on&m and especially over personnel
1:35:40Um, does that sound familiar?
1:35:42>> Uh, yes.
1:35:43>> Okay. Um, I was curious if there are any
1:35:46more kind of creative ways to look at
1:35:48this. I know some of the concern is that
1:35:50once you set the rates, the knee cuts or
1:35:55um not increasing at a minimum um cost
1:35:58for personnel and on and m go kind of
1:36:01directly to the company's bottom line.
1:36:03And I was curious are there trackers or
1:36:05other things you can conceive we should
1:36:08be looking at so that that kind of
1:36:11inherent incentive is not there to cut
1:36:14these customerf facing um you know um
1:36:19areas where the company does not earn on
1:36:21but may be inclined to to cut. So I
1:36:24don't know just any any thoughts you
1:36:27have on how we can ensure that is not
1:36:29seen as an opportunity.
1:36:32Yeah, I mean this is a very good
1:36:34conversation for example for the quality
1:36:35of service plan and I think some of the
1:36:37customer service metrics that you see um
1:36:39that are discussed there in addition to
1:36:41the reliability metrics. Um
1:36:46I mean I guess in the context of moving
1:36:48the needle are the QSP incentives
1:36:51actually big enough to drive
1:36:55behavior?
1:36:56>> Uh it doesn't it doesn't appear. So I'm
1:36:58reluctant to like offer a full opinion
1:37:00without you know looking at the next QSP
1:37:02application but no I I mean I think
1:37:04they're um you know much in the same way
1:37:07where when you look at like the DCA PIM
1:37:09and there's a cap on the disincentive
1:37:11but it's easy to imagine it's you know
1:37:14it's not easy but it is possible that um
1:37:17the performance of the fleet could be
1:37:19well in excess of if it was if the PIN
1:37:21was uncapped as we talked about in our
1:37:23testimony um you know the
1:37:24[clears throat] penalty would be much
1:37:25higher than 30 million but you're
1:37:26capping it yet in that scenario. If the
1:37:28if the penalty would have been 100
1:37:30million, you could imagine really
1:37:31significant um you know, impacts to
1:37:34customers in terms of health and safety
1:37:37and businesses operating and things like
1:37:40that. And so, yeah, to your point, you
1:37:42know, is there does PSCO respond to
1:37:45financial incentives? Yes, I think that
1:37:46they do. And I think that um maybe the
1:37:50QSP disincentives are not are not
1:37:53sufficient.
1:37:55>> Okay, thanks. Those are my only
1:37:56questions.
1:37:58Uh thank you, Commissioner Gilman. Uh
1:38:01can we pull up hearing exhibit uh 1523
1:38:06at page 30?
1:38:11And I this is the same graph you uh or
1:38:17same uh slide you saw with Mr. Simpson.
1:38:20Do you see the public service company
1:38:23uh committing to grow uh rate base at a
1:38:27compound annual growth rate of 7%.
1:38:30>> I do.
1:38:31>> We turn to page 21.
1:38:35And you see the company is committing to
1:38:38grow earnings per share at 6 to 8%. Is
1:38:42that right?
1:38:43>> That's right.
1:38:44>> Can we turn to go back to page 29?
1:38:50And do you see how um between 26 and
1:38:542030
1:38:56uh capital spending falls by more than
1:39:0050%.
1:39:03>> Uh yep that looks right.
1:39:06>> Uh can you just maybe I needed to ask
1:39:09this to Mr. Pette but how can you
1:39:12possibly grow rate base by 7% while
1:39:14you're cutting capital spending in half?
1:39:17Uh I mean you can do one or the other
1:39:20but I don't think you can do both. Uh do
1:39:23you disagree with that?
1:39:26>> It is probably a better question for Mr.
1:39:28Pquette or someone at public service. Um
1:39:31I think as I mentioned earlier I think
1:39:34this my interpretation of this slide is
1:39:36this is you know base capital
1:39:37expenditures. not inclusive of things
1:39:40that are in the any of the riders and
1:39:42PSCO has a number of writers um that are
1:39:45probably also contributing to um the
1:39:49returns that they're talking about for
1:39:50shareholders.
1:39:52>> And do you know if this uh includes the
1:39:54NTP?
1:39:56>> I do not know if this if this includes
1:39:59the NTP
1:40:00>> and Mr.
1:40:03Pquette testified that the company grew
1:40:05capital spending at a 35% compound
1:40:08annual growth rate from 2021 to 2025 and
1:40:12tripled its annual capital spending.
1:40:16Does that history raise any uh issues
1:40:19for you about uh if uh capital spending
1:40:23versus rate base uh uh does that raise
1:40:27any concern for you about whether this
1:40:29capital spending cuts are going to uh
1:40:32actually occur?
1:40:34I mean, I think the commission staff did
1:40:36an investigation that looked at what
1:40:40the
1:40:42base the uh the base rate and then also
1:40:45what net income would look like out
1:40:47through something like 2031. I think
1:40:49that's referenced in our testimony. And
1:40:51you know, it's you're looking at
1:40:52something like a tripling of of of
1:40:54returns over that time period. So,
1:40:57[gasps]
1:40:58um and and I think similar to what Mr.
1:41:00Mucker filed this morning. I think when
1:41:02you look at some of the potential
1:41:04customers that may be coming online,
1:41:05there's I I don't know if all of that
1:41:08potential growth is is is reflected here
1:41:10in what in what is included in this uh
1:41:13in in this slide. All right, you can
1:41:16take this down. Um back to the uh
1:41:20service quality starting on page 39. And
1:41:23we don't have to pull this up. Starting
1:41:24on page 39 of your answer testimony and
1:41:27in response to your questions uh to
1:41:29Commissioner Gilman, you uh outline
1:41:32concerns with a company's service
1:41:34quality performance suggesting that it
1:41:36may be a result of misaligned financial
1:41:38incentives that encourage capital
1:41:40spending and disincentive that
1:41:42disincentivize O&M. Is that fair?
1:41:45>> Uh yep, that that sounds right. And
1:41:48consistent uh with your discussion with
1:41:51Commissioner Plan and Miss King and
1:41:52starting on page 50 of your answer
1:41:54testimony, again, we don't have to pull
1:41:56it up. You suggest that we tie ROE
1:41:58levels to improvements and reliability.
1:42:01Is that fair?
1:42:02>> That's right.
1:42:04>> All right. Given that this commission
1:42:05has sometimes been reluctant to adopt
1:42:08differentiated
1:42:09roles for some of the reasons outlined
1:42:12by uh Miss King in your discussion with
1:42:14her, what would you think if the
1:42:17commission in this case increased the uh
1:42:20QSP penalty caps so that the company was
1:42:23more appropriately incented to maintain
1:42:26reliability and customer service, you
1:42:29know, at levels that may be more
1:42:31commensurate with the uh on&m cuts we
1:42:34saw. saw in 2023.
1:42:36So, what do what do you think uh just
1:42:39raise the caps and penalties uh in the
1:42:42QSP um in this case? Thoughts on that?
1:42:46Um
1:42:48I'm not a lawyer and so
1:42:51>> yeah, fair. No, I'm not I'm asking you
1:42:53the policy question, not the legal
1:42:54question.
1:42:55>> Right. Right. Um, I mean I I guess
1:42:57subject to
1:43:00the amount that you're going to raise
1:43:01the cap to and if there's any changes in
1:43:04the metrics that have to be hit and then
1:43:07I think you'd also I'd be curious to
1:43:09know in the totality of the case um you
1:43:12know what other decisions are going to
1:43:13be made. Are there other PIMs that are
1:43:14approved or you know what is the ROE
1:43:17what is the equity ratio um you know
1:43:19things like that but I think it's um I
1:43:23think it's something that has to be
1:43:24considered. Yes. Would you support that
1:43:27as an alternative to your ROA? I know
1:43:30I'm asking you on the spot, but uh
1:43:34I mean again kind of subject to the
1:43:37totality of the case and more
1:43:39specifically to your question, I think
1:43:41you know what are you raising the the
1:43:43the penalty caps to? Is there any
1:43:46changes in the reliability score?
1:43:49Yeah, I would the idea would be to just
1:43:52increase the caps for the reasons uh uh
1:43:55Commissioner Gilman uh suggested in her
1:43:58conversation with you. It's just too
1:43:59small to matter. So make it so it's not
1:44:02too small to matter.
1:44:03>> Yes.
1:44:03>> And then everything else just goes
1:44:05through. You have the metrics, you have
1:44:07the things you're just uh creating a QSP
1:44:11with uh that's equivalent uh to the
1:44:15incentives to cut O andM. So
1:44:18>> yeah, I think if you can make it not
1:44:19small enough to matter, I think uh the
1:44:22settling parties
1:44:24have numbers in their in their proposed
1:44:26Comanche 3 pam, this is off the top of
1:44:27my head here, that they talk about as
1:44:29significant enough to matter. Um and so
1:44:31yeah, if you can make it big enough to
1:44:34matter, then I I think that's uh I think
1:44:36that's a good path forward.
1:44:38>> Uh that's all I had. Back to you, Miss
1:44:40Van.
1:44:43>> Thank you, Chairman.
1:44:45Um,
1:44:47Mr. Lairman, you were cross-examined by
1:44:49Mr. Sims for the company. Do you
1:44:52remember that?
1:44:53>> I do.
1:44:55>> It was about why Boulder didn't sign on.
1:44:58He asked you why uh Boulder didn't sign
1:45:00on to certain provisions of the
1:45:02settlement. Can you expand on Boulder's
1:45:05objections to the settlement?
1:45:09>> Um, again, we talked about this in our
1:45:10settle in our settlement testimony. I
1:45:13think um there are unanswered questions
1:45:16around our our our PSPS business tracker
1:45:18or our business reimbursement fund, our
1:45:20PSPS capital tracker there. Um we are
1:45:25supportive of EOCC's energy outreach
1:45:26Colorado's proposal to use RHISA funds
1:45:30to expand, you know, funding for the PIP
1:45:32and for the GAP or the EAP program. Um,
1:45:36and those those are significant to us
1:45:38and
1:45:39they're they're important in in in the
1:45:41full context of of the proposal and
1:45:43without them it's it's it's hard to
1:45:46support some but not others.
1:45:49>> And Mr. Simpson um also spoke with you
1:45:53about the DCA at PIM. Do you remember
1:45:55that?
1:45:56>> I do.
1:45:57>> Would you clarify your concern regarding
1:45:59the DCA PIM?
1:46:01>> Uh, yeah. I think at a high level
1:46:04there's um there there's no need for an
1:46:07incentive for nor normal co course of
1:46:09business operations. Um
1:46:12PSCO is is short capacity in 27 and 28.
1:46:16They've already acknowledged, you know,
1:46:17in this hearing that they wouldn't be
1:46:19able to build new generation um in time
1:46:22to meet that need and there's limited
1:46:23opportunities for market purchases in
1:46:25that same time period. And so um you
1:46:29know they have an obligation to serve
1:46:30and so that right there is the incentive
1:46:32to
1:46:34um you know to maintain maintain their
1:46:36in maintain their generation fleet
1:46:39>> and can you clarify whether Boulder's
1:46:41objection to the DCA PIM was to the fact
1:46:43that it was filed or uh was it actually
1:46:46around the structure of the PIM itself?
1:46:48Yeah, it's it's poor design where I'm
1:46:51aware aware that it was, you know, that
1:46:53there was a prop requirement to file it,
1:46:55but um a poor design, you know, a
1:46:58requirement to file does not mean that
1:46:59it should be automatically approved as
1:47:01proposed or modified. Um, I mean it
1:47:04thinking about it another way besides
1:47:05the the various design elements that I
1:47:07just laid out, it's it's not really
1:47:09clear to me that um, you know, some of
1:47:11the units they would have to be
1:47:13available for, you know, their XEO would
1:47:17have to be some you know for better than
1:47:2049 hours a year. So it's not really
1:47:22clear to me when you start paying for
1:47:24like that much of incremental
1:47:26improvement like is what is the benefit
1:47:28to customers? is a commensurate with
1:47:30with the incentive that they would be
1:47:31receiving. Um and so and then on the
1:47:35flip side the cap disincentive
1:47:39really doesn't you know it shifts risk
1:47:41to customers. It doesn't really there
1:47:42there is a benefit up to that cap and
1:47:44then beyond that there can be real risk
1:47:46to customers but you know PSCO and its
1:47:48and its shareholders are protected and
1:47:50they're protected in a scenario that
1:47:52could be very very bad when you have
1:47:53multiple units um you know that are that
1:47:56their XEF exceeds the deadband high.
1:48:00>> Thank you.
1:48:02Um shifting gears Commissioner Plant
1:48:04asked about O andM spend. Do you
1:48:06remember that?
1:48:08>> I do.
1:48:09Uh do you believe investment in asset
1:48:12health and reliability to be an element
1:48:14of on&m that has been underinvested in?
1:48:19>> Um I do think there could be greater
1:48:22investment in asset health and
1:48:23reliability.
1:48:24>> And would this be the result of
1:48:26suppressing rate growth given other
1:48:28capital investments that might result in
1:48:31higher return to the company?
1:48:34>> It's it certainly could be yes.
1:48:37And Commissioner Plant asked you about
1:48:39PSPS recovery fund. Do you remember
1:48:43that?
1:48:43>> I do.
1:48:46>> In PESCO's WMP proceeding, did Boulder
1:48:48present argument that rateayer dollars
1:48:51would be justified given the net benefit
1:48:53to customers by not starting a wildfire?
1:48:57>> Uh, we did.
1:48:59>> Thank you.
1:49:02And Miss King asked you about your
1:49:05proposal to tie the ceiling of the ROE
1:49:07to improve reliability.
1:49:09Um, in your answer testimony, did you
1:49:12provide a basis for the floor that you
1:49:14recommended?
1:49:15>> I did. I think it was the five years of
1:49:19the average of the the five-year average
1:49:21of the earned ROE.
1:49:24>> Thank you.
1:49:26Um and then commission commissioner
1:49:29Gilman asked you about inclusion of the
1:49:32PSPS events on reliability data. Do you
1:49:34remember that?
1:49:35>> I do.
1:49:37>> Um has the commission authorized
1:49:39substantial capital investment for
1:49:41public service to reduce the need for
1:49:43PSPS?
1:49:44>> Yes.
1:49:46>> So public service has tools to improve
1:49:48reliability even on wildfire risk
1:49:51feeders.
1:49:52>> Yes.
1:49:54capital and onm expenses
1:49:56to do to to reduce reli PSPS risk.
1:50:01>> Thank you. That is all my questions.
1:50:05>> Uh thank you, Mr. Lurman. Uh you may be
1:50:08excused.
1:50:11Uh let's take a 10-minute break till
1:50:1310:30 and we'll uh start again with uh
1:50:17Miss uh Anste.
1:50:20Thanks.
2:00:35Miss Any
2:00:36>> Miss Anste, welcome.
2:00:39>> Morning.
2:00:40>> Uh, can you raise your right hand?
2:00:43Do you swear to tell the truth, the
2:00:45whole truth, and nothing but the truth?
2:00:47>> I do.
2:00:48>> You can put your hand down. Is anybody
2:00:50with you or communicating with you in
2:00:52any way?
2:00:53>> No.
2:00:54>> If that changes, will you let us know?
2:00:57>> Yes.
2:00:58>> Uh, back to you, Miss McClacklin.
2:01:01>> Thank you, chair. And I just want to
2:01:03make sure my microphone is working and
2:01:05everybody can hear me.
2:01:06>> We can hear you fine.
2:01:08>> Great. My power went off this morning
2:01:10and so I had to scramble to get to a new
2:01:12location. [laughter] Just wanted to make
2:01:13sure everything was going okay.
2:01:15>> Can I ask you, are you an Excel
2:01:17customer?
2:01:19I am.
2:01:22>> Um, but I will continue. Uh, Miss Anste,
2:01:25um, could you please state your name and
2:01:27spell it for the record?
2:01:29>> Any t r i c i a ns t y.
2:01:35>> And by whom are you employed and in what
2:01:37capacity?
2:01:38>> I employed by the Colorado Public
2:01:40Utilities Commission and I am the
2:01:42affordability manager. And did you cause
2:01:46to be filed what has been marked as
2:01:47hearing exhibit 409 the answer testimony
2:01:50of staff witness Anie?
2:01:52>> Yes.
2:01:53>> And did staff enter into the
2:01:54comprehensive settlement agreement
2:01:56that's been marked as hearing exhibit
2:01:58155?
2:01:59>> Yes.
2:02:00>> And is Miss O'Neal the settlement
2:02:01witness for staff?
2:02:03>> Yes.
2:02:04>> Miss Anie is available for commissioner
2:02:06questions. Thank you.
2:02:08>> I forget Commissioner Plant. Did you
2:02:10have questions for Miss Anste?
2:02:12>> Yeah, just a couple. Um, good morning,
2:02:14Miss Anste. Good to see you.
2:02:17>> Um, a couple questions around, uh, your
2:02:21testimony hearing exhibit 107. You
2:02:24recommended approving the PIP with
2:02:27modifications.
2:02:28Um, were the modifications that you
2:02:31proposed accepted in the settlement or
2:02:32is that something they agreed to discuss
2:02:35in the EIWP?
2:02:38Um, so Miss O'Neal can discuss what was
2:02:44accepted in the settlement agreement.
2:02:46Uh, but my understanding is almost all
2:02:49of my modifications suggested were
2:02:51accepted in that settlement.
2:02:53>> Okay. And was there specifically your
2:02:56recommendation around prioritizing the
2:02:58most vulnerable customers including
2:03:00those who have repeated disconnection 6%
2:03:02or higher energy burden customers uh
2:03:06with household members 65 and older five
2:03:09and younger was that included in the uh
2:03:13the settlement agreement?
2:03:16>> I believe it was.
2:03:18>> Okay.
2:03:18>> Or there was at least that commitment.
2:03:20Yes.
2:03:21And then um you had some other uh
2:03:24recommended recommendations
2:03:27um specifically removing late fees from
2:03:30residential customer bills and removing
2:03:32the reconnection fees that are
2:03:33associated with the improved technology.
2:03:36Do you know if those were included?
2:03:39>> Uh they were not.
2:03:41>> And uh raising the current cap of 100 to
2:03:45125. Uh was that something that was
2:03:49included as well?
2:03:50Yes. And
2:03:52>> I think one of the things that you
2:03:53suggested and I don't know that we can
2:03:55do that this year, but was that you
2:03:58increase the cap in the electric and
2:04:01lower the gap cap from 100 to 75. I
2:04:04don't I guess that has to be done in the
2:04:07gas proceeding. Is that correct?
2:04:10>> Yes. and more it was like if if we can't
2:04:14remove that cap or because it's
2:04:17financially you know um not capable for
2:04:21the company to do so that you know then
2:04:24lower the gas cap but um as I said in
2:04:27the settlement they agreed to move that
2:04:29remove that cap.
2:04:30>> Okay. And then another recommendation
2:04:33was identify and report areas of higher
2:04:36rearages, disconnection rates or DI
2:04:38communities to perform outreach with
2:04:41community based uh organizations. Was
2:04:44that a part of the agreement?
2:04:47>> I believe so. Um yes.
2:04:51>> Okay.
2:04:52um on on the uh EAP, you and I I think I
2:04:58uh touched on this with the company
2:05:01witness, but you note that there's four
2:05:03different methodologies that were
2:05:05highlighted in the EIWG report for
2:05:08calculating the number of eligible
2:05:09customers, but the the company decided
2:05:11not to use any of those. In your view,
2:05:14of those five methods, the four in the
2:05:17EIWG and the fifth that the company uh
2:05:21adopted, is there a methodology that's
2:05:24better uh that the commission should
2:05:26maybe consider uh approving as a
2:05:30methodology so everybody is using the
2:05:32same the same process or
2:05:36>> uh yes, staff had looked at that
2:05:39maybe about a year ago and there was
2:05:43some methodology that seemed to be a
2:05:46little more um appropriate. EOCC had
2:05:49come up with a methodology that I
2:05:51believe
2:05:52staff felt was a little more
2:05:54appropriate. I'd have to go back into
2:05:56that um report to confirm that. But
2:06:01>> do you know what that what it's called
2:06:03or how the commission could find that?
2:06:05Uh
2:06:06>> um
2:06:08yes. I believe that that was like a an
2:06:10internal
2:06:13I can't remember to be honest. I
2:06:14wouldn't be able to remember which
2:06:16methodology was the preferred one. I'd
2:06:19have to go back and look at that. Um
2:06:23but you know, I'd be happy to provide
2:06:25that information.
2:06:27>> Yeah. Um, I'm not sure how, but if you
2:06:29could provide that, I know you if it's
2:06:31not in the settlement, you probably
2:06:32can't put it in your SOP, but uh, if
2:06:35there's some way that you could
2:06:36communicate what that one uh was to the
2:06:39commission, that would be very helpful.
2:06:43Um,
2:06:45let me
2:06:46see. Yep, that's that's it for my
2:06:49questions. Thanks, [laughter]
2:06:51>> Commissioner Plant. Uh, Commissioner,
2:06:53go.
2:06:54>> I don't have any questions. Thanks.
2:06:56>> All right. Uh well, I just want to start
2:06:59out saying, Miss Anste, uh I greatly
2:07:02appreciate your answer testimony on
2:07:04disconnections. Uh for me, it really
2:07:06shined an is a light on issues that
2:07:08often get uh ignored. So, thank you. Uh
2:07:14uh uh are you generally aware of Senate
2:07:16Bill 21272?
2:07:19I'm sure you are. uh and that it imposes
2:07:21several obligations on this commission
2:07:23regarding regulatory policies that
2:07:25impact DI communities. Yes,
2:07:29>> I'd like to briefly read section
2:07:3040-2-1083B
2:07:33of that statute, which says, "The
2:07:35commission shall promulgate rules
2:07:37requiring that the commission and all
2:07:38its work, including its review of all
2:07:41filing and its determination of all
2:07:43adjudications,
2:07:45consider how best to provide equity,
2:07:48minimize impacts, and prioritize
2:07:50benefits to DI communities, and address
2:07:53historical inequalities."
2:07:55subject uh to later check. Would you
2:07:58accept that I read that correctly?
2:08:00>> Yes.
2:08:02>> All right. Um I'm concerned that in the
2:08:06historical uh 2025 test year, the
2:08:08company may have concentrated
2:08:10unprecedented numbers of disconnections
2:08:13in DI or minority communities. When
2:08:17asked, the company could provide no
2:08:18evidence that this wasn't the case. Do
2:08:21you think it's consistent with a statute
2:08:23to concentrate uh these kinds of numbers
2:08:26of disconnections in DI communities?
2:08:30>> Um I would say that yes, historically um
2:08:34across the US the reports show that
2:08:37people who live in uh DIC communities
2:08:41definitely are disconnected at a higher
2:08:44proportion than those outside.
2:08:48Do you think that's con do you think
2:08:49that practice is consistent with uh the
2:08:54statutory obligations
2:08:57>> the practice of dis um no I think that
2:09:00that those two are need to come into
2:09:03balance.
2:09:05>> Do you think it's good regulatory uh
2:09:07practice to concentrate disconnections
2:09:09in uh DI communities?
2:09:13>> No.
2:09:15Um, don't we need data to ensure that we
2:09:18comply with the statute and set good
2:09:20policy?
2:09:22>> Yes.
2:09:23>> Okay. Um, I'm also concerned that when
2:09:27certain customers, particularly in DI
2:09:29communities, are disconnected for
2:09:30extended times that other issues such as
2:09:33homelessness, family separation, and
2:09:36health problems may be greatly
2:09:37exacerbated. When asked, the company
2:09:40said it was not aware of any data that
2:09:42would help us understand the link
2:09:44between disconnection and these other
2:09:46potential adverse impacts. Uh do you
2:09:49think that additional data in this uh
2:09:52area could help us better comply with
2:09:53the statute?
2:09:56>> Um
2:09:59maybe I think knowing everyone's
2:10:01particular I certainly think the length
2:10:04of disconnection. Yes. Um how knowing
2:10:07how long someone is disconnected is
2:10:09definitely um someone who's disconnected
2:10:12for 72 hours or longer is usually an um
2:10:16an indicator of being permanently
2:10:19disconnected or having uh more
2:10:23significant
2:10:25health outcomes.
2:10:27I think um knowing other particulars of
2:10:31the household might not help, but it
2:10:33will and is helpful to know where people
2:10:37are most likely being disconnected.
2:10:41>> Uh if we disconnected someone and it led
2:10:44to homelessness, wouldn't that make us
2:10:46want to reconsider our disconnect
2:10:48choice?
2:10:50>> Yes. Yes, it would.
2:10:53Um, and if it caused health problems or
2:10:56uh a separation of the family, wouldn't
2:10:58we want to know that before we
2:11:00disconnected them?
2:11:01>> Yes.
2:11:03>> Okay. Uh, in our prior rate case order,
2:11:05we asked the company and the energy and
2:11:07security working group to reach out to
2:11:09disconnected customers to determine what
2:11:12happens to those customers after uh
2:11:15disconnect. Uh prior to this case, uh
2:11:18was staff of theware aware of the calls
2:11:20uh the company had made or did you just
2:11:22find out uh uh during this case like we
2:11:27did?
2:11:28>> Uh no, I was aware.
2:11:30>> Okay. And is it fair to say those calls
2:11:32were not very successful in in reaching
2:11:36customers that had been permanently
2:11:38disconnected?
2:11:39>> Yeah, I would agree with that.
2:11:42I'm also concerned that uh I'm also
2:11:44concerned that the communities that
2:11:46experience the most disconnection may
2:11:48also have levels of education, income,
2:11:50health care, and English proficiency
2:11:53that are well below um our state
2:11:55average. Do you see a risk that people
2:11:58facing these challenges may find it
2:12:00difficult to opt into existing bill
2:12:02assistance programs? And isn't that what
2:12:05uh we found in hearing exhibit 1509,
2:12:07which is the um C energy office
2:12:12evaluation of the PIP?
2:12:16>> Yeah, I think there are some significant
2:12:18barriers
2:12:19um for everybody across the board to
2:12:21access
2:12:23um energy assistance. I I think that
2:12:27um what we're doing to move in the
2:12:30settlement agreement helps move us
2:12:32towards removing some of those barriers.
2:12:36Would you agree that uh if a zip code or
2:12:39a census track or DI community had le
2:12:42levels of education, income, healthcare,
2:12:45and English proficiency that were
2:12:48significantly below the state averages,
2:12:50that community may have more difficulty
2:12:54opting in uh to a bill assistance
2:12:56program as compared to a zip code with
2:13:00people that had better language, health,
2:13:03education levels.
2:13:05Um
2:13:07maybe yes.
2:13:13Uh given that I'm further concerned that
2:13:15our current approaches to billis
2:13:18instance may systematically allocate
2:13:20funds away from uh DI communities that
2:13:24may be experiencing the most
2:13:25disconnections and need the most help
2:13:28and toward customers that may be better
2:13:30able to navigate the complex leap and
2:13:33other opt-in processes. When asked the
2:13:36company could not provide any evidence
2:13:38showing that this concern was not a
2:13:40problem of you are you aware of how bill
2:13:44uh assistance dollars are being
2:13:45allocated where by zip code or census
2:13:48track and to whom
2:13:51>> do you know how many dollars Oh sorry
2:13:53>> no that's okay I am not aware that um
2:13:56there's a certain amount of dollars
2:13:57being put towards um any specific
2:14:01communities at this time
2:14:04>> would that data be useful in seeing if
2:14:06we comply with the statute and setting
2:14:08good public policy.
2:14:10>> Yes.
2:14:12>> Uh can we pull up hearing exhibit 409
2:14:15attachment TA7
2:14:18which is uh a staff discovery request uh
2:14:22uh to the company. Do you recall this?
2:14:24It's attachment 7 to your answer
2:14:26testimony.
2:14:29>> I'm just waiting for it to show up.
2:14:35Do you see that?
2:14:37>> Yep.
2:14:38>> Do you see question C asking about the
2:14:40percentage of electric customers
2:14:43permanently disconnected for non
2:14:45non-payment? Is it fair to say that the
2:14:48company did not provide this
2:14:49information?
2:14:51>> Yes.
2:14:52>> Would this information be useful in
2:14:54setting appropriate policy and helping
2:14:56ensure we comply with the statute?
2:14:59>> Yes.
2:15:00Do you see question E asking about the
2:15:03percentage of customers the company
2:15:04disconnected for non-payment due to lack
2:15:07of receiving a bill or due to AMI
2:15:09meeting re meter errors? Is it fair to
2:15:12say that the company did not provide
2:15:14this information?
2:15:15>> Yes.
2:15:16>> Would this information be useful in
2:15:18setting appropriate policy or ensuring
2:15:20we comply with the statute?
2:15:23>> Yes. Would census track data be helpful
2:15:26in addressing these issues and help us
2:15:28determining if we're uh complying with
2:15:30the statute?
2:15:32>> Yes.
2:15:34>> All right. You can take this down.
2:15:40I guess I'm my concern is that we're
2:15:44concentrating disconnects in DI
2:15:46communities and systematically
2:15:48allocating the benefits away from those
2:15:51communities uh through opt-in program uh
2:15:55approaches
2:15:57um that make members of these
2:15:59communities uh more difficult to opt in.
2:16:03Um I don't think there's any evidence
2:16:06when asked that uh that isn't happening.
2:16:09And I just ask you how is this okay? How
2:16:13can we be concentrating disconnects in
2:16:15DI communities and systematically
2:16:18allocating the benefits elsewhere?
2:16:22>> Um
2:16:23I don't necessarily have data showing me
2:16:27that those disconnections are
2:16:30concentrated in those areas. Although um
2:16:34I have an educated guess and from what
2:16:36you've mentioned uh before is that that
2:16:39is true. Um it is something that needs
2:16:42to be rectified. I think that um we're
2:16:46moving towards rectifying that
2:16:49um
2:16:51by
2:16:53when someone now is going to be
2:16:54disconnected in a notification on the
2:16:57letter or wherever they're receiving
2:16:59their disconnection information. It's
2:17:01going to tell them that if they can
2:17:03income, if they can attest to their
2:17:05income, and that can be through
2:17:06selfisestation,
2:17:08you don't have to fill out crazy forms
2:17:10or give tax information out
2:17:14that they will then get a hold on
2:17:16disconnections. And I think that that
2:17:18makes that that helps to level the
2:17:21playing field here of where
2:17:24um everybody regardless of whether you
2:17:26get into the program, whether you're in
2:17:28PIP or not, you're going to get a hold
2:17:30on the disconnection
2:17:33and I see that as a huge benefit.
2:17:36I think that's rectify that.
2:17:38It seems like the top 15 zip codes in
2:17:41terms of the number of disconnections
2:17:43experienced over 35% of the
2:17:45disconnections.
2:17:47Loosely consistent with Miss Howard's
2:17:49supplemental direct testimony in the
2:17:52Gaze case hearing 1510 in this case.
2:17:55What do you think about us requiring the
2:17:57company to autoenroll in an energy
2:18:00affordability program the customers in
2:18:02these DI communities or zip codes that
2:18:06experience the most disconnections
2:18:08before they can be disconnected?
2:18:10>> I think that's a a great option, a way
2:18:13to um look at a pilot program which is
2:18:15also part of the settlement. And I think
2:18:19that that um I think that that could be
2:18:22a really good option to consider.
2:18:25>> In your answer testimony at page 22, you
2:18:28and you we don't have to pull it up. You
2:18:30express concern about funding adequacy.
2:18:33Yet, as I understand it, the settlement
2:18:35agreement terms would greatly expand the
2:18:37pool of eligible customers without
2:18:40expanding the resources by anywhere near
2:18:43the same amount. While I understand uh I
2:18:47mean it sounds like we can't even
2:18:48quantify the number of eligible
2:18:50customers. While I understand the
2:18:52benefit of reaching more customers,
2:18:54wouldn't this expansion further divert
2:18:57the limited pool of funds away from the
2:18:59DI and other communities experienced the
2:19:03most disconnections for whom, as we just
2:19:05discussed, opting in appears to be a
2:19:07significant barrier. So I just I just
2:19:10sort of don't get it. We don't have
2:19:12enough money and we're greatly expanding
2:19:15uh the pool of eligible customers in
2:19:18ways that are almost certainly going to
2:19:21divert resources away from these
2:19:23customers who were really struggling to
2:19:26even identify or reach. So this just
2:19:29whole thing I'm struggling to make sense
2:19:31of this whole thing. So help me
2:19:33understand how this makes sense.
2:19:35>> Sure. I mean we know that what is
2:19:38happening right now is not working. We
2:19:41>> agree with [laughter] that.
2:19:42>> Right. Right. So something needs to be
2:19:45done. I think um time and again staff
2:19:49has seen that uh 6% was considered
2:19:53it was hard to get people enrolled.
2:19:56So we have to do something else. going
2:19:58below 6% makes sense in terms of the
2:20:02affordability um you know percentage
2:20:05percentage of income payment
2:20:08and
2:20:10and then also asking um you know the
2:20:13company to then say in six months like
2:20:15what does this look like? I just don't
2:20:17think we know enough.
2:20:19This is the appropriate response to get
2:20:21us more data to understand
2:20:24what where we can go from here. If we
2:20:27see that enrollments are increasing or
2:20:31decreasing in DIC's, I think we're going
2:20:35to have a better idea, but we can't know
2:20:37until we do something
2:20:40>> that you and I are totally aligned on
2:20:42that. Uh uh let me see what you think of
2:20:45this idea. uh assume that the commission
2:20:48opened an investigatory docket in its
2:20:51decision in this case, provided staff
2:20:54with full discovery and audit rights,
2:20:57and ordered staff to find answers to the
2:20:59questions we just discussed and other
2:21:02related ones. So none of this we can't
2:21:06tell you how long people are being
2:21:09disconnected or who's permanently
2:21:11disconnected or can't I mean just we
2:21:15empower staff to dig into the
2:21:18disconnections
2:21:19and figure this out. I feel like uh I'm
2:21:24concerned that this is just shining a
2:21:28light in the absolute wrong place. That
2:21:30the place we got to shine the light on
2:21:33is the disconnections in these DI
2:21:35communities and how we allocate
2:21:38benefits. And I'm just struggling to see
2:21:41why expanding the pool of eligible
2:21:43customers
2:21:45helps that fundamental problem in any
2:21:48way. And I I think there's a decent
2:21:51chance we're not in compliance with the
2:21:53statute. I don't think anybody has the
2:21:55data to know. So what do you think about
2:21:59giving you six months to giving you
2:22:01[laughter] audited discovery rights and
2:22:04do what you started in your answer
2:22:06testimony and figure out what's going on
2:22:08with these disconnects? I mean, it's
2:22:11just like there's just no light on it.
2:22:13Um so sorry for the tirade. Uh um sorry
2:22:19uh for the digression, but any thoughts
2:22:21on that?
2:22:25>> Yeah, I mean I think a lot of the
2:22:28disconnections
2:22:30again, as you've said, I don't have the
2:22:32information on where they are located. I
2:22:35will say I think a lot of the
2:22:36disconnections are related to leap not
2:22:39being year round with gas rates being
2:22:42cheaper than electric. So you see people
2:22:44getting disconnected at a different time
2:22:46a year, right, than when they could get
2:22:48their elite benefits. So I think there's
2:22:51a lot of pieces at play. Um
2:22:56I mean
2:22:57>> why not just go figure it out, get the
2:22:59data, [laughter] the data exist.
2:23:02>> I guess I that sounds great to me, but I
2:23:07also know that this isn't in line with
2:23:10um what the settlement agreement is. I
2:23:13think the settlement agreement
2:23:14[laughter]
2:23:15>> does kind of address some of this. It
2:23:18would give us that data. It would just
2:23:20go about it in a different way than what
2:23:22you're suggesting.
2:23:24>> I mean, you didn't get the data through
2:23:26discovery rights in this case. I don't
2:23:28think you're going to get the data
2:23:30through some consensual voluntary
2:23:32process and it's focusing on the wrong
2:23:35stuff.
2:23:36No,
2:23:38>> I mean we have time and again seen that
2:23:41people who are making between 20 and
2:23:43$30,000 a year are not getting into this
2:23:47program because
2:23:50of the way it makes it if people are
2:23:53saving energy then 6% they're falling
2:23:56below that 6%. So we know I mean that
2:24:00has to be fixed. That has to be fixed.
2:24:02Well, I'm I'm fine with that. But
2:24:07the other piece of this is we're, you
2:24:10know, hiring people to do outreach and
2:24:12education. The company knows who it
2:24:15disconnects. We know they know that. We
2:24:18don't know that. So, let's start with
2:24:22that. It's so simple than trying to run
2:24:24this outreach and education. Let's just
2:24:27start with who we're going to disconnect
2:24:29and stop or at least be a way more
2:24:32thoughtful and informed about who we're
2:24:34disconnecting in DI communities. Doesn't
2:24:37this statute require that?
2:24:40>> Certainly the statute requires that. And
2:24:42I will say that um last summer reached
2:24:46out to folks who had either been
2:24:48disconnected were repeatedly behind on
2:24:50their bill or um repeatedly disconnected
2:24:54and referred them to the utility bill
2:24:56help program. And in that time within
2:24:59four weeks I saw 4,000 applications come
2:25:02in. So they are doing that and that kind
2:25:05of outreach does work. Um, and just as a
2:25:10a reference, the year before I received
2:25:12a total of 780 applications.
2:25:15So, in a four-week span with just Excel
2:25:19reaching out and so it works and I think
2:25:23that uh we're headed in that direction.
2:25:25Additionally, with the rule changed for
2:25:27this connections to be required to
2:25:29reported by census block group, I think
2:25:31we're getting to where you you want to
2:25:33go.
2:25:36>> I don't think so. You can just see we
2:25:39don't even have the data. Nobody can
2:25:41even tell us the data. So I don't see
2:25:43how you can say we're getting there. We
2:25:46we need the data uh as a starting point,
2:25:49I think. Um
2:25:52so uh look, I understand you're bound by
2:25:54a settlement agreement. Uh uh but I'd uh
2:25:58ask uh uh trial staff to plead in the
2:26:02alternative. uh uh and if you I mean if
2:26:06assume for purposes of this question we
2:26:08did uh order an investigation. Do you
2:26:11have any guidance about what that uh
2:26:13investigation should look like? Just
2:26:16systematically look at the questions we
2:26:18discussed. Where are the disconnections
2:26:20occurring? Uh where's the bill
2:26:22assistance dollars getting allocated?
2:26:25What happens to the people who are
2:26:27permanently disconnected? You know, just
2:26:29get all your data. Is there any other
2:26:32guidance on what we should be looking
2:26:34for?
2:26:35>> Um I think just looking at the s if if
2:26:39we're going to measure outreach and
2:26:41education doing it in a more um
2:26:43substantive way, you know, um saying you
2:26:46reached out to all these people is not
2:26:49really
2:26:51saying anything substantive like how
2:26:53many people are being enrolled once you
2:26:55do that outreach and that type of thing.
2:26:58>> Yeah. I mean
2:27:01I mean we know who we're disconnecting,
2:27:03right? [laughter]
2:27:06Can't we not have somebody knock on
2:27:08their door?
2:27:10[laughter]
2:27:10>> Yeah.
2:27:11I I mean I I I mean we don't know how
2:27:14many pe I mean we just don't even have
2:27:15the basics and doing what we're doing
2:27:18just doesn't seem to be
2:27:23working from my I mean for five and a
2:27:25half years I've been asking these
2:27:27questions and you can just see in your
2:27:29discovery responses you're get you're
2:27:32not getting answers. So
2:27:35>> yeah, I mean I think the questions
2:27:37you're asking if if we were to go into
2:27:40that direction, those are the questions
2:27:43and the answers we would want. Um and
2:27:46and some mapping to support that. um it
2:27:50would be a lot easier to see and be able
2:27:52to confirm where people are being
2:27:54disconnected the most
2:27:57and what those outcomes are which
2:27:59ultimately uh anyone knows that well not
2:28:03anybody but it is clear that there is an
2:28:05energy poverty cycle
2:28:08right so we know that once you get
2:28:09disconnected it's very difficult to pull
2:28:12yourself out of that cycle
2:28:15>> isn't that where we want to concentrate
2:28:17our uh whatever limited resources as we
2:28:19have.
2:28:23>> Yes.
2:28:24>> Do you think the settlement agreement
2:28:26does that?
2:28:28>> I think it does. I I think it brings us
2:28:31closer. Um because we can't change
2:28:33everything
2:28:33>> closer [laughter]
2:28:35closer. You don't have the data.
2:28:38>> You don't have the data.
2:28:41Miss McGlaclin, good luck with redirect.
2:28:44>> I just Mr. Sure. I just had a a quick
2:28:47question that just occurred to me and
2:28:49and this if if this is already addressed
2:28:52in your testimony, I apologize, but or
2:28:54in the settlement, but um you were
2:28:58talking about, you know, when there's a
2:28:59disconnection notice, there's
2:29:02uh information in that notice about how
2:29:04to do self attestation for income
2:29:07qualification.
2:29:09Is there also [clears throat]
2:29:11on the company side a cross check of
2:29:15those customers with existing programs
2:29:19within the state. For example, if
2:29:20they've already qualified for, you know,
2:29:23whatever program that's an income based
2:29:25qualification that they would
2:29:27automatistation,
2:29:29they would automatically be assumed to
2:29:31be qualified because they have already
2:29:34done the income qualification
2:29:36>> as I understand it. Um, yes. that's
2:29:39considered categorical eligibility. Um,
2:29:42and it wouldn't mean they would
2:29:43necessarily be enrolled, right? But they
2:29:46would then be considered for the program
2:29:48and then your energy burden would be
2:29:51calculated based upon that. And that was
2:29:53an Excel's uh proposal.
2:29:56>> So that doesn't need to then go through
2:29:58that self attestation
2:30:00process. It's done on the back end.
2:30:03>> Correct. As I understand it, what would
2:30:07happen is that um whoever was applying
2:30:10and I think in the future maybe this
2:30:12would be a greater uh you know working
2:30:16with state agencies but as it would be
2:30:18for now you would if say for example
2:30:20you're in SNAP you would show that um
2:30:22letter that says I'm in SNAP and then
2:30:25you would automatically be assumed to be
2:30:27income qualified for the program. So
2:30:29there's no mechanism for just
2:30:32cross-checking,
2:30:34you know, one database against another.
2:30:36You have to get a a copy of a letter
2:30:38from the person showing that they're Is
2:30:41that something that we just don't have
2:30:43the technical capability to do or is it
2:30:46something that I mean doesn't seem like
2:30:49it's that hard?
2:30:51>> Uh I [laughter] we do not have the
2:30:54technical ability to do that right now.
2:30:56That doesn't mean it couldn't happen in
2:30:58the future, but that would definitely be
2:31:00something um that state agencies would
2:31:02have to come together to look at. Um
2:31:05especially in regards to like customer
2:31:09um privacy issues. Um I don't think it's
2:31:12something that can't be overcome. It
2:31:14would it would require some work.
2:31:17>> It would need a technical backend is
2:31:18what you're saying basically.
2:31:19>> Correct.
2:31:20>> Okay.
2:31:20>> And as I understand it, that's not
2:31:22always the cheapest.
2:31:24>> Okay. Thanks. Yep.
2:31:26>> I asked one question, sheriff. Sorry.
2:31:28>> Far away. [laughter]
2:31:30>> Um, Miss Anancy, I just wanted to follow
2:31:33up on I think you had mentioned that
2:31:36there are people making 20 $30,000 a
2:31:39year who are not getting into these
2:31:42programs. And I'm just curious if you
2:31:44can elaborate on that or if you
2:31:46understand
2:31:47like what is causing that. It seems to
2:31:50me they should meet the income
2:31:51threshold. you know what what's the
2:31:54what's the issue preventing them from
2:31:56>> Sure usually the issue well there's two
2:32:00scenarios that I see the most of but one
2:32:02of them is trying to preser you know
2:32:05save energy be energy efficient so it
2:32:07looks like your energy usage is very low
2:32:11your bills are really low so when you
2:32:13look at your bills versus your income
2:32:14you're falling below that 6%
2:32:18um and and and to be clear in reality
2:32:21anybody who is making, you know, is a
2:32:24middle or higher income person is
2:32:26definitely not paying 6% of their income
2:32:29in energy bills. So, that's one thing.
2:32:33Um, the other is if say they're only a
2:32:35gas customer, right? Their gas um bills
2:32:39appear to be affordable because gas is
2:32:42rates currently are a little cheaper
2:32:44than electric. Um, so they may not get
2:32:47in on the gas side, but might get in
2:32:50with their other electric provider if
2:32:52that's a different. So those are some
2:32:55some of the reasons. And I
2:32:59um will think, hey, that must be
2:33:01affordable. But again, 6% it's just the
2:33:05math, the way it all works out with
2:33:09people trying to conserve so that they
2:33:11don't get behind just get disconnected.
2:33:13It's really showing that um it's not
2:33:16affordable.
2:33:18>> And are there specific provisions in the
2:33:21settlement that you think will remedy
2:33:23this or you think it
2:33:25>> additional work? All right. Help me
2:33:27understand what particular points of the
2:33:29settlement you think will best improve
2:33:31this which
2:33:32>> yeah um lowering the uh energy burden is
2:33:36going to change a lot. Um then putting
2:33:38that hold on disconnections for anybody
2:33:41who's either in the PIP program or is
2:33:43and can prove they're income qualified
2:33:46is huge.
2:33:47Those things three things are going to
2:33:50really help um stop people from being
2:33:54disconnected and also catching up on
2:33:56what they're behind on. Um there is a
2:33:59rear forgiveness uh that's already in
2:34:01the evening gap programs, but when you
2:34:05get somebody into one of these programs
2:34:07and then you you get a rearge clearance,
2:34:11but then also get a hold on a
2:34:13disconnection and a credit, it's putting
2:34:15you at a more even playing field to
2:34:18catch up to then keep your bill
2:34:22affordable on a regular basis.
2:34:26>> Okay. Thank you. Appreciate Yeah.
2:34:28>> So, so you think those provisions are
2:34:31just something we got to do anyway?
2:34:34>> Yes.
2:34:35>> I mean, my my fear is that if you create
2:34:38a much larger pool of optin customers
2:34:42and reward people for participation,
2:34:46you're going to systematically allocate
2:34:49money to the c maybe to the customers
2:34:52who need it the least. because to get
2:34:56so to get through all the hoops to
2:35:00apply, you know, to opt in the leap or
2:35:03whatever, PIP, um, you just have to have
2:35:07a certain amount of education, English
2:35:11language proficiency,
2:35:14everything else. And you got to be, it's
2:35:15got to happen in the right season. Uh uh
2:35:19I mean I tried to
2:35:22sign up for uh
2:35:25lead I went to the EOC website, the
2:35:28public service website, the uh the LEAP
2:35:32website. It's not easy. Uh
2:35:35>> uh so that's the concern is that you're
2:35:38going to take our limited dollars and
2:35:40allocate it even more to the people who
2:35:43need it maybe the least. So if do do you
2:35:48have an answer to that concern? Because
2:35:50I hear you for those what you said. I'm
2:35:52like, "Oh yeah, we got to do that." But
2:35:55how do you how do you address my concern
2:35:58that we're not like taking a jar of
2:36:01peanut butter that's empty and spreading
2:36:04it over, you know, an even larger
2:36:08mix of eligible customers where
2:36:11participation is viewed as success,
2:36:15you know, not how many people are making
2:36:17home homeless is success.
2:36:21>> Yeah. I I I well, a couple things here.
2:36:25There's a lot to unpack in that, but um
2:36:27I would say
2:36:29I think we're looking at both, right? We
2:36:31want we want to reduce those
2:36:33disconnections, right? We don't want
2:36:36people disconnected, but what we're
2:36:37trying to do is prevent it before it
2:36:39even gets there. And I think we're both
2:36:40saying the same thing there. But I'm
2:36:42saying if you got to opt in, you're not
2:36:44preventing anything because the people
2:36:47who uh are most at risk I think are
2:36:50least able to opt in. So that's the
2:36:53concern and I haven't heard any answer
2:36:55to that concern.
2:36:57>> So I think with some of the problem with
2:37:01the PIT program in general is there was
2:37:04like the middleman, right? You have to
2:37:06get referred. By having Excel directly
2:37:09accept applications, I think we're
2:37:11removing a very big barrier here. Number
2:37:14one.
2:37:15Um, but number two, I think we're
2:37:18talking about a pilot program that would
2:37:20be addressing potentially exactly what
2:37:22you're talking about, and that is in the
2:37:24settlement that we will talk about a
2:37:25pilot
2:37:27um
2:37:28that could potentially reach out to
2:37:30people um who are in that more
2:37:34concentrated area who maybe aren't even
2:37:36aware of the program
2:37:38um or having having access
2:37:43because in what I'm hearing you say is
2:37:45like what you think is that there should
2:37:47be autoenrollment is that
2:37:49>> of just like
2:37:51people in disproport in like 10 or 15
2:37:54disproportionately impacted
2:37:56communities maybe.
2:37:58>> Yeah. So I I think that that is a really
2:38:01worthy, you know, if looking at that by
2:38:03census block group um and overlaying
2:38:05that with um DIC's, I I think that could
2:38:09be a very viable pilot program.
2:38:14>> What do you think of say say we approved
2:38:16the settlement agreement but also
2:38:18ordered a staff investigation, would you
2:38:20have any concerns with that?
2:38:22>> No.
2:38:24And I will say that just because we say
2:38:27we're lowering the energy burden, it
2:38:30we're not changing who becomes income
2:38:32qualified.
2:38:33And I will say that a lot of folks who
2:38:37are income qualified at that higher end
2:38:40of the income qualified bracket,
2:38:44even with a lowered energy burden, will
2:38:46likely not get into the program. I think
2:38:49we're just making a level set again to
2:38:51help the people who we really are truly
2:38:54intending to help.
2:38:55>> All right. So, uh I'll just ask it again
2:39:00for my own benefit. It sounds like if we
2:39:02approve the settlement agreement, uh and
2:39:05uh ordered a staff investigation into
2:39:07these disconnect questions and issues,
2:39:09you'd strongly support that?
2:39:12>> Yes.
2:39:13>> All right. Well, we may have done a
2:39:16bunch of your redirect for you, Misslin,
2:39:18[laughter]
2:39:19but anywhere you'd like to go.
2:39:22>> Thank you, chair. Uh, just a couple of
2:39:24questions.
2:39:27Miss Anie, you're having a long
2:39:29conversation with the chair about all
2:39:31this information on disconnections. Is
2:39:33it your understanding that the company
2:39:35is collecting the information that the
2:39:37chair was talking about?
2:39:38>> Yes.
2:39:40So would they be able to provide it in a
2:39:42future proceeding like the chair was
2:39:44discussing?
2:39:45>> Yes.
2:39:46>> Okay. And you also talked about um
2:39:55so this this data issue would the
2:39:58working group and the potential pilot
2:40:00program that's discussed in the
2:40:01settlement agreement. Would this be a
2:40:03good place to start talking about the
2:40:05disconnection data that the chair was
2:40:07referencing? Absolutely. Yes.
2:40:14>> And you were also talking with the chair
2:40:16about um budget possible budget
2:40:18constraints on the program and if
2:40:22the program becomes budget constrained
2:40:24at some point, could we reassess the
2:40:27budget and whether things are meeting
2:40:29their targets?
2:40:30>> Absolutely. Um, and that's why we would
2:40:33reconvene a commissioner's information
2:40:35meeting 6 months down the line to
2:40:38reassess that.
2:40:39>> And would this reassessment also have
2:40:42potentially some information on the most
2:40:45vulnerable individuals that are in this
2:40:47program?
2:40:48>> Yes.
2:40:49>> Okay. And last question, do you consider
2:40:52the settlement progress?
2:40:55>> Yes. This is far and away some of the
2:40:58most progress I've seen us make.
2:41:01in the PIP and the Gavin program.
2:41:07>> Thank you so much. I have no further
2:41:09questions.
2:41:11>> Thank you, Ms. uh Insty. Uh this is the
2:41:14only chance I get to talk to you, so
2:41:16[laughter] I took advantage.
2:41:19>> Thank you.
2:41:21>> Uh
2:41:23Mr. Larson.
2:41:27Um, is there any
2:41:29>> Can you hold up your right hand?
2:41:32>> Do you swear to tell the truth, the
2:41:33whole truth, and nothing but the truth?
2:41:36>> I I I do. Just needed to unmute myself.
2:41:38Yes. [laughter]
2:41:39>> Oh, I was wondering why you took their
2:41:41hand down.
2:41:43[gasps] Uh, is anybody with you or
2:41:45communicating with you in any way?
2:41:47>> No.
2:41:48>> If that changes, will you let us know?
2:41:50>> Yes.
2:41:52>> Oh, back to you, Mr. Larson.
2:41:55>> Thank you. Uh, good morning, Miss
2:41:56O'Neal. Can you please state and spell
2:41:59your name for the record? Excuse me.
2:42:01>> Yes. My name is Erin O'Neal. It's Erin.
2:42:04E R I N. O'Neal. O apostrophe N I L L.
2:42:10>> By whom are you employed and in what
2:42:12capacity?
2:42:13>> Uh, I am employed by the Colorado Public
2:42:15Utilities Commission as the deputy
2:42:17director of fixed utilities.
2:42:20Did you cause to be filed in this case
2:42:22hearing exhibit 400 which is your answer
2:42:24testimony and its attachments?
2:42:27>> Yes.
2:42:28>> Did staff subsequently enter into a
2:42:30nonunanimous comprehensive settlement
2:42:33agreement marked as hearing exhibit 155?
2:42:36>> Yes.
2:42:38>> After that agreement, did you cause to
2:42:39be filed hearing exhibit 413, which is
2:42:42your settle settlement testimony?
2:42:45>> Yes.
2:42:46And does your settlement testimony
2:42:48reflect staff's most current position on
2:42:50the issues in this particular
2:42:51proceeding?
2:42:52>> Yes, it does.
2:42:55>> Uh, Miss O'Neal is ready for questions.
2:42:58>> Miss Nelson, over to you.
2:43:01>> Thank you. Uh, good morning, Miss
2:43:04O'Neal. Michelle Singer Nelson
2:43:06representing UCA for the record.
2:43:09>> Just have a few questions. Can we pull
2:43:11up um hearing exhibit 155 and go to page
2:43:1620 please?
2:43:23And this is the section of the
2:43:26non-unanimous agreement that addresses
2:43:29legacy meters. Do you see that?
2:43:31>> I do.
2:43:33>> Okay. And with regard to legacy meters,
2:43:36uh the non-unanimous agreement proposes
2:43:40that number one, um and it's in subp
2:43:44part A, the commission,
2:43:47um include
2:43:49a the uh legacy meters as a regulatory
2:43:53asset in the test year and the amount is
2:43:56$83.3
2:43:59million.
2:44:02Uh yes it's
2:44:05it is the regulatory asset is in the
2:44:09test year it's not in rate based because
2:44:11it's not earning a whack return but but
2:44:13yes I would agree with you that it is in
2:44:15the cost of service.
2:44:17Okay. And um subp part B, it says the
2:44:20regulatory asset shall be amvertised
2:44:22over 15 years.
2:44:25Correct.
2:44:26>> Correct.
2:44:27>> And the regulatory asset shall reflect a
2:44:31carrying charge calculated at the cost
2:44:34of long-term debt. Correct.
2:44:37>> Correct.
2:44:38>> Can we scroll to the next page, please?
2:44:44And then u subp part D also states that
2:44:48the company's base rate cost of service
2:44:51shall reflect an 11 million total
2:44:54revenue credit over the next 10 years to
2:44:58reflect the disagreement regarding the
2:45:00increase in plant balance um compared to
2:45:04the initial forecast. And this is
2:45:06reflected in the settlement test year as
2:45:10annual revenue credit of $1.1 million.
2:45:17Is that correct?
2:45:18>> Yes.
2:45:20>> Thank you. Now going to page 29. Let's
2:45:24look at table four.
2:45:28All right. And Whoops. Okay. Thank you
2:45:31for enlarging that. Um you'll see Miss
2:45:34O'Neal that the last line on the left
2:45:37hand side uh the first column it talks
2:45:41about Aegis legacy meters. Is that uh
2:45:45the same subject that we were just
2:45:46discussing?
2:45:48>> Yes.
2:45:49>> Okay. And um
2:45:53let's see. So it shows that the total
2:45:56deferred balance is the $83,281,000.
2:46:02Correct.
2:46:04>> That's correct.
2:46:05>> And it will be amvertised over 180
2:46:09months.
2:46:11Correct.
2:46:12>> Correct.
2:46:13>> So in the test year there's going to be
2:46:16uh slightly over $5.5 million attributed
2:46:20to legacy meters. Correct. That is what
2:46:24this table shows. Yes.
2:46:25>> Thank you.
2:46:27Um can we pull up hearing exhibit 400
2:46:31and go to page 70 please?
2:46:44Okay.
2:46:46Miss O'Neal, do you recognize this um
2:46:49document and this table ETO5?
2:46:53>> Yes.
2:46:54>> Uh is this your answer testimony filed
2:46:57in this proceeding?
2:46:59>> It is.
2:47:00>> And at table ETO5 shows the company's
2:47:04proposed legacy meter cost amortization
2:47:07from its direct testimony. Correct.
2:47:11>> Correct.
2:47:13And the beginning balance up at um 2026
2:47:19um it shows a beginning asset balance of
2:47:22$83.9 million.
2:47:26Is that right?
2:47:27>> That's correct.
2:47:28>> And then the regulatory asset
2:47:30amortization as proposed by the company
2:47:33was over 15 years and it was uh over
2:47:39$5.5 million.
2:47:42Uh that is what this table shows.
2:47:45>> Okay. And um
2:47:48can we scroll down to
2:47:51page? Yeah, thank you. Just no, this is
2:47:54fine on this page lines 6 through 8
2:47:58here. So the the table shows the um
2:48:02company's proposed legacy meter cost
2:48:04amortization
2:48:06with the beginning asset balance of
2:48:09slightly over 83 million, the 15-year
2:48:12amortization.
2:48:14And you uh conclude at lines 6 through 8
2:48:18that the company is proposing that
2:48:20customers in 2040 would still be paying
2:48:24for assets that are not used and useful
2:48:26today and were deemed to be obsolete in
2:48:302017. Did I read that correctly?
2:48:33>> You did.
2:48:38>> Okay.
2:48:42Um, can we move to page 73 of hearing
2:48:45exhibit 400?
2:48:51And Miss O'Neal, this is still your
2:48:54answer testimony filed in this
2:48:56proceeding. Correct.
2:48:57>> Correct.
2:48:58Um, would you agree with the following
2:49:01statements that permitting cost recovery
2:49:04of both AMI and legacy AMR meters
2:49:09removes the positive incentive for the
2:49:12company to manage the costs and to
2:49:15transition technologies in an efficient
2:49:17manner?
2:49:20>> Um, yes.
2:49:22Would you also agree that just because
2:49:24AMR legacy meters were used and useful
2:49:28at one point in time does not mean that
2:49:31the equipment remains used use and
2:49:34useful when it's removed from service
2:49:37and retired?
2:49:40>> I'm sorry, what was the question?
2:49:43>> Do you agree? Uh it's basically your
2:49:47statement at paragraph three there. Just
2:49:50because a piece of equipment was used
2:49:52and useful at one point in time does not
2:49:55mean that the equipment remains used and
2:49:57useful when it's removed from service
2:50:00and retired. Do you agree with that
2:50:02statement? Do you still agree with it?
2:50:04>> I do.
2:50:06>> Thank you. And then finally,
2:50:09um, do you agree with the statement that
2:50:12customers should not bear the cost of
2:50:14paying for two kinds of meters, one of
2:50:17which is absolute obsolete and no longer
2:50:21used and useful.
2:50:24>> Um, I agree. I think there are instances
2:50:27I I still agree with the statement. I
2:50:28think there are instances where uh a
2:50:30stranded or retired asset may be
2:50:32recovered if it is a policy choice um
2:50:35for the commission to make but generally
2:50:37it is a questionable practice.
2:50:40>> Correct. And and that's what you say in
2:50:43lines 14 through 16 of your testimony.
2:50:46Correct.
2:50:47>> Correct. Thank you.
2:50:51All right. I'm going to focus You can
2:50:54take that down. Thank you. I'm going to
2:50:56focus on the agreement's proposal for an
2:50:59annual revenue credit of $1.1 million.
2:51:04Um,
2:51:07that 1.1 million would only be over 10
2:51:10years. Is that right?
2:51:12>> That is what the settlement is. Correct.
2:51:15>> And the total amount um as stated in the
2:51:19settlement agreement would be 11
2:51:21million. Correct.
2:51:23>> Correct.
2:51:27The original estimate for the legacy
2:51:29meter costs were was 72 million in the
2:51:33original ages proceeding in 2016. Do you
2:51:36recall that?
2:51:38>> I believe that's correct, but if you
2:51:39could pull up a where that's in the
2:51:42record, that would be helpful.
2:51:43>> Sure. It's in your testimony hearing
2:51:46exhibit 400
2:51:48at page 74
2:51:52lines 10 through 13.
2:51:59>> Okay. Thank you.
2:52:01>> All right.
2:52:05Um and then in the company's 2021
2:52:08electric rate case, the estimate
2:52:10decreased
2:52:11to 67.2 2 million
2:52:15and that's also on this page. Correct?
2:52:18>> Yes, I see that.
2:52:20>> And now here in this case, the amount
2:52:22has jumped from the 67.2
2:52:26by about 16.1 million to the 83.3.
2:52:31Correct.
2:52:32>> Correct.
2:52:33>> Would you agree with me that represents
2:52:35about a 24% increase over the 2021
2:52:39amount?
2:52:41Um, I would accept your math. Yes.
2:52:44>> Thank you. Um, can we go to um hearing
2:52:49exhibit 155 attachment five, please? And
2:52:52I think it there's a Rev one there that
2:52:56was filed.
2:53:15The Rev one was just for the executable.
2:53:18This is the PDF. If you need the
2:53:19executable, let me know.
2:53:21>> Oh, okay. That's fine. I think we can
2:53:23just do the PDF. Would you just blow it
2:53:25up a little bit?
2:53:29Thank you. Can Can you see that now,
2:53:32Miss O'Neal?
2:53:34>> Uh, mostly.
2:53:36>> Yeah. I'll let you know if I need it
2:53:38blown up further.
2:53:39>> Okay. Um, so can you identify this for
2:53:42the record, please?
2:53:45>> Sure. This is attachment five to the
2:53:47settlement agreement which is hearing
2:53:48exhibit 155. And it shows the um the
2:53:53schedule for uh recovery of the legacy
2:53:56meters. And then the the last line there
2:53:59shows the it reflects the annual deduct
2:54:03um cost of service deduct of $1.1
2:54:05million a year for the first 10 years.
2:54:09>> All right. Um and it looks like on gosh
2:54:14the left hand side there's a column
2:54:17under the boxes that uh talk that has a
2:54:21a list of the description. Correct.
2:54:25Um I'm I'm sorry. Can you Can you say
2:54:28that again?
2:54:30>> On the very from my view of it, it's on
2:54:33the very left
2:54:37hand side, the first column under the
2:54:40box. Um there is uh something that says
2:54:43description and so there's a list of
2:54:46items that are under the description
2:54:48column. Does that help?
2:54:49>> Yes, correct.
2:54:51>> Okay. And we'll see the LTD return rate
2:54:55is 4.55%
2:54:58all the way across the chart from year
2:55:00one to year 15. Correct.
2:55:03>> Correct.
2:55:04>> All right.
2:55:08And
2:55:10year one
2:55:12um the LTD return in year 1 is 3.7
2:55:17million. Correct.
2:55:19It's a little small, so I'm not sure
2:55:23that that sounds right. Um but but I
2:55:26actually can't quite see.
2:55:28>> Okay. Can we um year one, if we just
2:55:31move over a little bit more to the left?
2:55:34Thank you. So, um do you see that now?
2:55:38Year one, it'd be the third line down.
2:55:403.789
2:55:42million.
2:55:43>> Yes, I see it now. That's
2:55:44>> and that's the uh the uh LTD return
2:55:50amount.
2:55:52>> Yes, correct. That's the re the return
2:55:54at the long cost of long-term debt.
2:55:56>> Okay, great. Thank you. Um and you see
2:55:59it goes down year by year. Correct. It
2:56:02starts at that 3.789
2:56:05million and over time uh is reduced.
2:56:10Correct.
2:56:11>> Correct.
2:56:15Um
2:56:18would you agree that in setting base
2:56:20rates in this case what actually occurs
2:56:23is that an unamverised balance is at
2:56:2783.3 million and it remains unchanged
2:56:31until the next rate base or rate case
2:56:37>> an unamortised balance.
2:56:40I'm I'm sorry. Can you repeat the
2:56:42question? Sure. Um, in setting base
2:56:45rates here in this case, what actually
2:56:48occurs is the unavertised balance is at
2:56:5383.3 million and it remains unchanged
2:56:56until the next rate case.
2:57:01>> Um, correct.
2:57:05Therefore, the company will be applying
2:57:07its um long-term debt rate of 4.55%
2:57:12to the static or unchanging amount of
2:57:1583.3 million until the company's rates
2:57:19are changed in the next rate case.
2:57:24>> So, I'm not sure I agree with that. I
2:57:25mean, the proposal here is to treat this
2:57:27as an amortization. So, it's a constant
2:57:29amount over that period of time. So it's
2:57:33it is an I mean it's not treated as as
2:57:37some as a sort of plant balance in rate
2:57:41base. It's treated as an amortization.
2:57:43So those two things are different.
2:57:48>> Um so is okay.
2:57:51Um I'll go to my next question.
2:57:55Um,
2:57:57is it true that the the company would be
2:58:00earning its 4.55%
2:58:02on on the balance of 83.3 million until
2:58:06the next rate base or or would the
2:58:09company be earning at um on lesser
2:58:13amounts over time?
2:58:15>> Um, it's earning the long-term debt you
2:58:18through the amortization for the plant
2:58:21balance over the 15-year period. It's it
2:58:24I mean it's advertised like a mortgage,
2:58:26right? It's it's a levelized
2:58:27amortization amount start with a
2:58:30starting balance of you know
2:58:31approximately $84 million.
2:58:35So that you can see the revenue
2:58:37requirement goes down over time and the
2:58:39amortization levelizes that yeah that
2:58:42decline in in the balance over that
2:58:45period 15 years.
2:58:49Okay.
2:58:55Can we look at the uh gross up income
2:58:58tax? Can we go back to the description
2:59:00column, the very first column on this?
2:59:04Oh, thank you. So, we see gross up
2:59:06income tax. Um,
2:59:10and the first year, can you see the
2:59:12amount of 669,285?
2:59:17>> Yep.
2:59:20Uh, were you listening to Commissioner
2:59:22Gilman's questioning of Mr. Freighus on
2:59:25Friday about income taxes and income tax
2:59:28gross up among other tax topics?
2:59:31>> I did. It was fascinating. [laughter]
2:59:34>> Um, do you understand that staff has
2:59:38agreed to allow an income tax gross up
2:59:40on a debt only return?
2:59:43>> Uh, that is what this reflects. Yes.
2:59:47Um,
2:59:49can we pull a peering exhibit 319 from
2:59:52UCA's box, please?
3:00:07Miss O'Neal, I will identify this as the
3:00:10commission's decision R23-0755
3:00:16and proceeding number 22
3:00:180348G
3:00:20which is the Agmas
3:00:22um
3:00:24rate case
3:00:27and the recommended decision of Judge
3:00:30Farley. Do you see that?
3:00:32>> I do. Can we go to page 66 or paragraph
3:00:3666, please?
3:00:39>> Do you happen to know page number?
3:00:41>> Um gosh, I'm sorry. I don't I didn't
3:00:44note that.
3:00:59There we go.
3:01:02Um, and can you see this section? It's
3:01:04section C. Calculation of weighted cost
3:01:07of long-term debt for SSIR cost
3:01:10recovery.
3:01:12>> I see that heading.
3:01:16>> Let's see. Okay. Um, and I'm focusing on
3:01:22uh the second line. Um here, uh, Judge
3:01:26Farley states that the ALJ finds and
3:01:30concludes that the interest component of
3:01:33ATMs' weighted average cost of long-term
3:01:36debt should not be grossed up for taxes.
3:01:40You see that?
3:01:41>> I do.
3:01:43And additionally, in addition, the
3:01:45record establishes that the only other
3:01:48Colorado gas utility with an SSIR with a
3:01:52debt only return, Black Hills Colorado
3:01:55Gas, does not employ a tax gross up of
3:01:58the interest component of the return.
3:02:01Did I read that correctly?
3:02:03>> You did.
3:02:04So, do you agree that Judge Farley and
3:02:08ultimately the commission in this case
3:02:10approved only a debt return with no
3:02:13income tax gross?
3:02:16>> Um, I was not a witness in this
3:02:18proceeding, but that seems to be what
3:02:20the words on the page say. The decision
3:02:22can speak for itself.
3:02:24>> Thank you. We can pull this down. Um,
3:02:27and can we pull up um hearing exhibit
3:02:32318 from UCA's box?
3:02:46Um, and I would identify this as well as
3:02:50uh hearing exhibit 318. It's decision
3:02:52number C25-0314.
3:02:56Um proceeding number 24-49G.
3:03:01Um and this is public services gas rate
3:03:05case decision. Correct.
3:03:07>> Uh there appears to be. Yes.
3:03:09>> Okay. Um in this case and we can go to
3:03:13the paragraph specifically but uh this
3:03:16is another case where the commission
3:03:18denied the utility which was public
3:03:21service here an income tax gross up on
3:03:24its debt only return for its gas inven
3:03:27gas inventory storage gas. Correct.
3:03:33>> I would need to be I I I will take your
3:03:35word for it. would need to be reminded
3:03:36of of the actual paragraph, but I I have
3:03:38no reason to dispute what you stated.
3:03:42>> Okay, paragraph 29. And again, I don't
3:03:46have the page number. I apologize.
3:03:5429. That's where this is discussed.
3:03:57Um
3:03:59so uh starting at line
3:04:03three in paragraph 29, the return will
3:04:05be adjusted for income taxes before
3:04:08being multiplied by the average gas cost
3:04:12inventory as UCA points to in its second
3:04:16trip application. The commission has
3:04:19previously signaled that intended to
3:04:21more fully examine this issue and now
3:04:24this proceeding and UCA's advoc advocacy
3:04:28have provided opportunity to do so upon
3:04:31reconsideration. We find it appropriate
3:04:33to clarify the treatment of public
3:04:35services short-term debt costs for
3:04:38stored gas recovered through the GCA.
3:04:42The GSIC will be calculated to recover
3:04:44from rateayers, a reasonable
3:04:47um
3:04:49measure of the associated financing
3:04:52costs the company incurs, but the
3:04:54company will not be permitted to profit
3:04:56on gas commodity costs consistent with
3:04:59how those costs are recovered for other
3:05:02gas utilities. So would you agree with
3:05:05me there that the commission determined
3:05:08that
3:05:10um the public service should not get an
3:05:13income tax gross up on its debt only
3:05:16return for the storage cost.
3:05:22>> I mean it states that the return will be
3:05:24adjusted for income taxes before being
3:05:27multiplied by the average gas cost
3:05:30inventory.
3:05:32I'm honestly not clear. I think I would
3:05:33need more more context around this, but
3:05:36but clearly this is addressing in some
3:05:38way the the the tax gross up process. I
3:05:42just I'm not entirely clear without more
3:05:44context around this issue from this
3:05:46paragraph.
3:05:48>> Okay. Uh Mr. Chair, I would ask that um
3:05:52the commission would take administrative
3:05:54notice of hearing exhibit 318, which is
3:05:57its decision in uh 24-0049G.
3:06:05>> Any objections?
3:06:08So, so notice
3:06:15>> um
3:06:18so uh with regard to the $11 million
3:06:21credit that that's in the settlement
3:06:23agreement,
3:06:25um would you agree that the settling
3:06:27parties agreed to a um
3:06:32time value of money return or this LTD
3:06:36return
3:06:37um with an income tax gross up to the
3:06:40company but did not agree to the same
3:06:44return for the revenue credit credit to
3:06:47rate payers.
3:06:50>> Um I mean the $1.1 million is a
3:06:53negotiated number. So I mean whether you
3:06:56think of that as including or not
3:06:58including a tax gross up I think the the
3:07:00takeaway there is just that it is a $1.1
3:07:02million reduction to the overall cost of
3:07:05service. Um, that's, you know, that's
3:07:07what that number reflects. There's no
3:07:09math behind that that would or would not
3:07:12apply a tax grow,
3:07:14>> but it's not specifically mentioned in
3:07:16the non-unanous
3:07:18nonunanimous agreement that there should
3:07:23be a long-term debt component to the
3:07:26credit to the customers. Correct.
3:07:31>> Correct. Again, it's it's just a cost of
3:07:33service adjustment um of $1.1 million
3:07:37for the first 10 years.
3:07:41>> Thank you. Um I'm just going to turn to
3:07:44one more topic. Um and I would first
3:07:48state that are you aware that UCA's
3:07:52recommended net revenue deficiency in
3:07:54this case is uh right around $138
3:07:59million.
3:08:01That's consistent with my recollection
3:08:02from UCI's direct testimony.
3:08:05>> And in staff's answer testimony, staff
3:08:08recommended a revenue deficiency of um
3:08:12just over 188 million. Is that correct?
3:08:16>> That sounds right. Yes.
3:08:23The total revenue increase for um public
3:08:26service that's proposed in the
3:08:28non-unanimous agreement is approximately
3:08:32225 million. Correct.
3:08:35>> Um I think it was just uh adjusted by
3:08:39about $2.5 million this morning based on
3:08:41on um the resi revised cost of service.
3:08:44But yes, approximately right that you
3:08:46know less a few million dollars from
3:08:49recent modifications. So, is it 223 now?
3:08:53>> I have actually yet to to review that
3:08:55cost of service um model, but that's my
3:08:57recollection is that it was
3:08:59approximately two$ two and half million
3:09:00dollar adjustment reduction from what
3:09:03had previously been um provided.
3:09:07>> Um would you agree that this is tens of
3:09:11millions of dollars more than the
3:09:13company has ever recovered in a rate
3:09:15case in Colorado?
3:09:17Um, I have no I have I've not reviewed
3:09:21that. I have no reason to dispute that,
3:09:22but nor would I find that particularly
3:09:24surprising.
3:09:26>> Um, do do you recall Mr. Schulzak's
3:09:29testimony in opposition to the
3:09:32settlement agreement addressing that
3:09:34topic?
3:09:34>> I do.
3:09:37And do you recall that he described that
3:09:40the um increase from the last highest
3:09:46increase uh to public service rate
3:09:49increase to public service was more than
3:09:52$40 million.
3:09:54>> Uh I I don't recall that specific
3:09:56number, but that wouldn't surprise me.
3:09:59And so this is also tens of millions of
3:10:02dollars more than staff recommended for
3:10:05the revenue increase in answer
3:10:07testimony. Correct.
3:10:08>> Correct.
3:10:12>> Can we go to page 400 or hearing exhibit
3:10:15400 page 14 of um that testimony please?
3:10:27And at line 14,
3:10:41I think this is my testimony. I'm not
3:10:43sure if you meant to pull up Mr.
3:10:44Sloozac's um testimony.
3:10:47>> No, this is what I meant to pull up. Can
3:10:50you see uh line nine, please?
3:10:53Um, would you agree with me that you
3:10:56state here that the cumulative rate
3:10:58increase since the company's last
3:11:00general rate increase preceding 220530e
3:11:06is substantially greater than the 10%
3:11:09shown in Mr. Burman's attachment one?
3:11:14>> You read that correctly. Yes.
3:11:20Um, and can we go to page 15, please?
3:11:25And I I'm focusing on figure E01.
3:11:30>> Miss O'Neal, did you prepare this figure
3:11:34for your answer testimony?
3:11:37>> And it shows the uh total rate trend
3:11:40from 2023 through 2026. Correct.
3:11:44>> It does. Correct.
3:11:46Uh the average monthly residential rate
3:11:49goes from the from approximately
3:11:53low $80 per month as of 1123
3:11:59to around 110 per month as of 10126.
3:12:04Correct.
3:12:05>> Yes. With some seasonal variation.
3:12:09In addition to the increases from the
3:12:11general rate case, customers have
3:12:14incurred increases in riders, including
3:12:18what you show here is the PPA
3:12:22rider, the transmission rider costs,
3:12:26distribution writer costs, generation
3:12:29writer costs, and other programs and
3:12:31writers. Correct.
3:12:34>> Yes. And if you just per those those
3:12:35writer categories are sort of grouped
3:12:38categorically. So that's not an
3:12:40individual writer. It's you know there
3:12:42are approximately 11 or 12 writers. So
3:12:45this is just grouping certain writers
3:12:47into those categories that this not
3:12:49representing each individual writer.
3:12:51>> Thank you. Um
3:12:58let's see ETO1. So this shows the dates
3:13:01and rate impacts of the major rider
3:13:04adjustments since 2023.
3:13:09Correct.
3:13:12>> Can we scroll down a little bit?
3:13:18>> Would you agree that the cumulative rate
3:13:20impact excluding the fuel and PPAs is
3:13:2433.1%.
3:13:28>> Uh I believe that is correct. I think
3:13:30that number is shown further down in my
3:13:32testimony
3:13:33>> on the next page. Yes, please. Can you
3:13:36scroll down a little bit more? Okay,
3:13:41there you go. And further down from
3:13:43that, you actually um talk about the the
3:13:47numbers, but you would agree with me
3:13:49that your testimony states that the
3:13:52cumulative rate impact excluding fuel
3:13:54and PPAs is 33.1%.
3:13:59>> That is my corre recollection of the
3:14:00number. Yes. And the rate impact
3:14:02including fuel and PPAs is 25.9%.
3:14:07Correct?
3:14:09>> Uh I I I remember that recall that
3:14:13number less precisely but I that sounds
3:14:15right but I I do not recall exactly.
3:14:17>> Okay.
3:14:19Um, can we go to uh table or uh it
3:14:25actually is figure ET04 at page 20.
3:14:32There we go.
3:14:36It shows the company's forecasted growth
3:14:38in rate base over the next 10 years.
3:14:40Correct.
3:14:43>> Uh, that's correct.
3:14:46And the company's forecasted growth rate
3:14:49in base rates from 2025 to 2020 2035
3:14:54is approximately 10.5%.
3:14:57Correct. And I think that's further down
3:14:59on your testimony if we can go down the
3:15:02narrative under your table.
3:15:03>> I think it was up at the top of this in
3:15:06line one. Isn't that number that I saw
3:15:08that?
3:15:08>> There you go.
3:15:10>> Thank you. So you would agree with me
3:15:12that your testimony shows that the
3:15:15forecasted growth rate and base rates
3:15:18for the 10 years starting in 2025 going
3:15:22through 2035 is 10.5%.
3:15:26>> That is what this chart shows.
3:15:30>> Can we move to the next page please?
3:15:37And this figure ETO5
3:15:40shows the average total rate increase
3:15:42across all customer classes for the next
3:15:4510 years is projected to be 3.4%
3:15:49per year. Correct.
3:15:51>> That is what the show is. Correct.
3:15:57Do you agree that the growth in
3:15:59electricity rates at a pace above
3:16:01inflation over a long period of time
3:16:04will be harmful to the business
3:16:07environment in Colorado, harmful to the
3:16:10state's efforts to electrify
3:16:12transportation and heating and simply
3:16:15unaffordable for residential customers?
3:16:19>> Objection. Mr. Chair, can we break that
3:16:20up? That sounded pretty compound.
3:16:24>> Okay. I suspect she's just reading from
3:16:27Mr. O'Neal's testimony, but sure.
3:16:30[laughter]
3:16:31>> Yeah, that that's true. At hearing
3:16:33exhibit 400 at page 22, lines 3 through
3:16:37seven. Yeah.
3:16:38>> Denied.
3:16:42>> Keep going, Miss Nelson.
3:16:45Miss O'Neal, do you also believe that
3:16:47the company's cost estimates and its
3:16:50long-term rate forecasts are too low
3:16:53such that the actual increases will be
3:16:55higher than projected?
3:16:58>> Uh staff is concerned that those that
3:17:00the company's capital uh projections are
3:17:04often uh lower than what they turn out
3:17:06to be. I think there is a lot of
3:17:08uncertainty in that long-term rate
3:17:10model, but but yeah, staff is concerned
3:17:12that those capital costs uh may be too
3:17:14low.
3:17:16>> Thank you for indulging me, Miss O'Neal.
3:17:19I'm I'm done. Thank you. Thank you, Mr.
3:17:22Chair.
3:17:23>> Uh yeah, let's um uh EOC, I have 30
3:17:28minutes. Do you uh do you think uh
3:17:31you're going to need the whole 30
3:17:33minutes or should we and should we take
3:17:34a break or if it's less maybe we'll keep
3:17:37going. What's your preference, Miss uh
3:17:40Cano?
3:17:41>> Thanks, Chair. Yeah, I think I'll need
3:17:43the full 30 minutes and I don't want to
3:17:45upset people by going into their lunch
3:17:47hour. So, also happy to get started and
3:17:49we could take a a break when is
3:17:51appropriate.
3:17:53>> Uh all right. Yeah, let's uh let's do
3:17:55that. Let's uh if you have a natural
3:17:57breaking point after 10 or 15 minutes,
3:17:59we'll take a break.
3:18:00>> Great.
3:18:03Okay. Um good morning, Miss O'Neal. Uh
3:18:06my name is Casey Connealio and I
3:18:08represent Energy Outreach Colorado.
3:18:09We've met before and it's good to see
3:18:11you today.
3:18:12>> Uh good morning.
3:18:14>> Um Miss O'Neal, I'd first like to direct
3:18:17your attention to your crosswer
3:18:19testimony which is hearing exhibit 412.
3:18:22And if we could turn to page eight.
3:18:30Okay. Um, Miss O'Neal, in this section
3:18:34uh of your crosans answer testimony, you
3:18:36discuss commission decision C26-0213,
3:18:41which is from the most recent um company
3:18:44renewable energy plan proceeding. Does
3:18:46that sound accurate?
3:18:48>> Yes.
3:18:49and you rely on portions of that
3:18:51commission decision in support of
3:18:53staff's recommendation that the
3:18:55commission reject EOCC's uh RISA refund
3:18:58proposal.
3:19:01>> Um I discuss the decision. I wouldn't
3:19:04say that I use that as the basis for my
3:19:07recommendation to reject the proposal.
3:19:10>> Okay. Thanks for clarifying that. Um,
3:19:13I'd like to, um, pull up hearing
3:19:15exhibit, um, 708, which is in EOCC's box
3:19:19folder,
3:19:32and I think this is, yeah, this is a
3:19:33two-page document. Um, but Miss O'Neal,
3:19:35this is um, staff's responses to EOCC
3:19:38Discovery request one. And if we could
3:19:41scroll down a little.
3:19:44Thank you. Um so Miss O'Neal in response
3:19:47to EOCC11 some part A and we'll go down
3:19:50to the second page in a second um to
3:19:52show your response but staff um admitted
3:19:55that the company stated in that decision
3:19:57that we just discussed that IQ customers
3:20:00have been contributing to the recess
3:20:01charge for years while the prior solar
3:20:04rewards community program delivered far
3:20:06less capacity than was anticipated. Is
3:20:10that correct? And we can scroll down to
3:20:11the second page if you don't recall your
3:20:13answer.
3:20:13>> I I do. Yep. Correct.
3:20:15>> Okay. Thank you. Um and in response to
3:20:18EOC11 subp part B, if we could scroll
3:20:21back up to the first page, please. Um
3:20:23staff admitted that the commission
3:20:25stated we share EOCC's view that these
3:20:28customers deserve timely and meaningful
3:20:30benefits.
3:20:34>> I'm sorry, you read that correctly. And
3:20:36yes, I admitted to that. I didn't hear a
3:20:38question. Okay. Yeah, I just wanted to
3:20:40confirm that you that you did admit to
3:20:42that question. Thank you. Um and then in
3:20:44response to EOCc11 subp part C, staff
3:20:47admitted um that your crosans answer
3:20:50testimony admitted discussion of those
3:20:53two commission findings. Does that sound
3:20:55accurate?
3:20:56>> Correct. It did not specifically discuss
3:20:58those two points.
3:20:59>> Okay. And if we could scroll down to the
3:21:01second page again. Um Miss O'Neal, you
3:21:04were the sponsor um of these responses.
3:21:06Is that correct? Correct.
3:21:08>> Okay. Um I'd like to move for the
3:21:09admission of hearing exhibit 708.
3:21:12>> Any objections?
3:21:15>> No objection.
3:21:17>> So move.
3:21:18>> Great. Thank you. Um so Miss O'Neal,
3:21:21while your testim while your crosans
3:21:23answer testimony discussed portions of
3:21:25commission decision C26-0213
3:21:30um
3:21:32that support staff's position. It does
3:21:33not it did not discuss the commission's
3:21:36findings regarding years of resa
3:21:38contributions by income qualified
3:21:39customers.
3:21:42>> Uh it did not discuss
3:21:48I'm sorry. Can you re repeat the
3:21:50question?
3:21:51>> Yeah, no problem. Sorry if it was
3:21:53confusing. Um so your cross answer
3:21:55testimony did discuss portions of that
3:21:57commission decision we went over
3:21:59C26-213.
3:22:01>> Correct.
3:22:02Um but but your crosans answer testimony
3:22:04did not discuss those commission
3:22:06findings regarding how incomequalified
3:22:09customers have contributed to the recess
3:22:11charge for years.
3:22:13>> I guess the thing that I'm struggling
3:22:15with is I mean it did my testimony did
3:22:17discuss that that the commission
3:22:18decision in the res and the res
3:22:20settlement addressed income qualified
3:22:23programs and benefits to customers going
3:22:26forward. that that was the resolution of
3:22:27that proceeding is that you know in the
3:22:30future that that that the roll forward
3:22:33of of the CSG capacity would go and and
3:22:36I'm not the res witness so um if I get
3:22:38the details of this wrong I I I will
3:22:40apologize upfront but the what the
3:22:43decision concluded the commission's
3:22:45decision affirmed the res settlement
3:22:47which addressed the future benefits to
3:22:49incomequalified customers including
3:22:51catching up from the history so I did
3:22:55not discuss specific specific REZ
3:22:57balances, but I did discuss the issue of
3:23:00the benefits to income qualified
3:23:02customers of the RES programs and how
3:23:04that was to be addressed going forward.
3:23:08>> Okay. Thank you. Um, if we could go back
3:23:12to Miss O'Neal's cross um answer
3:23:14testimony, which is hearing exhibit 412,
3:23:16and go to page um 10. And Miss O'Neal,
3:23:21I'll direct you to lines um 10 to 13.
3:23:24Um, so Miss O'Neal, in your crosans
3:23:26answer testimony, you testified that it
3:23:28would be inappropriate to collect money
3:23:30from rateayers and provide it directly
3:23:32to an outside third party.
3:23:35>> Uh, omitted a few words, but yes, that's
3:23:38that's correct. That's essentially what
3:23:39I stated.
3:23:40>> Okay. Um, and by outside per third
3:23:43party, you were referring to Energy
3:23:44Outreach Colorado.
3:23:46>> Correct.
3:23:47>> Um, if we could now pull up hearing
3:23:49exhibit 709, which is in EOCC's box
3:23:53folder.
3:23:55And Miss O'Neal, this is going to be
3:23:56another discovery request response from
3:23:59staff.
3:24:08Um, so Miss O'Neal and Discovery EOC
3:24:10asked staff whether um staffs performed
3:24:13any evaluation of Energy Outreach
3:24:15Colorado's operational ability to
3:24:17administer targeted bill assistance for
3:24:19income qualified customers. Do you see
3:24:21that?
3:24:22>> Yes.
3:24:23And staff's response was that it had not
3:24:26performed such an analysis.
3:24:28>> Correct.
3:24:30>> And you were the sponsor. Uh oh, sorry.
3:24:32And so staff did not evaluate EOCC's
3:24:36um operational [clears throat]
3:24:38ability to administer the proposed
3:24:40assistance.
3:24:41>> Um we do not evaluate nor are we
3:24:43contesting EOCC's ability to provide a
3:24:45rares or other services.
3:24:47>> Okay.
3:24:49>> Excuse me.
3:24:49>> Thank you. And you are the sponsor of
3:24:50this discovery response. I am.
3:24:53>> Okay, great. I'd like to move to admit
3:24:54uh hearing exhibit 709.
3:24:57>> Any objection?
3:24:59>> No objection.
3:25:01>> So admitted.
3:25:02>> Okay. Um last discovery response to turn
3:25:05to if we could um pull up hearing
3:25:07exhibit 710 in EOCC's box folder.
3:25:22And this is a three-pager. If we could
3:25:24scroll down a little bit to see just
3:25:26these questions.
3:25:32Um maybe we'll put it in the first just
3:25:34leave it on the first page of um it's
3:25:37not broken up in a good way. Um so Miss
3:25:40O'Neal um this is a staff discovery
3:25:44discovery response um to EOCC. In some
3:25:46part A to this response, staff admitted
3:25:49it recognizes Energy Outreach Colorado
3:25:51as the primary nonprofit entity
3:25:54specifically referenced and utilized
3:25:56within Colorado's um energy assistance
3:25:58framework. if you could scroll down to
3:26:00page two to see the answer.
3:26:03>> Yeah. Uh clarification that that um subp
3:26:06part A specifically identifies that EOC
3:26:09is a is mentioned in statute which I
3:26:11think is is part of what staff is
3:26:12acknowledging here that that EOC is the
3:26:14primary energy assistance organization
3:26:17that is specifically mentioned as part
3:26:19of Colorado statute and yes admit to
3:26:22that.
3:26:22>> Thank you. Um and staff um doesn't
3:26:25contend there currently exists another
3:26:26organization providing services
3:26:29identical to those provided by Energy
3:26:30Outreach Colorado. Staff is we we have
3:26:33not done that research. We are not aware
3:26:35of any other organization that's doing
3:26:37this nor are we aware that there is not.
3:26:39>> Okay. Um and if we could scroll down a
3:26:42little bit more to see the sponsor of
3:26:44these um discovery responses.
3:26:51U Miss O'Neal, you were the sponsor of
3:26:53these um discovery responses, correct?
3:26:55>> Correct.
3:26:56>> Okay. I'd like to move for the admission
3:26:57of hearing exhibit 710.
3:27:00>> Any objection?
3:27:02>> No objection.
3:27:04>> So moved.
3:27:06>> U Miss O'Neal, staff's recommendation uh
3:27:08to reject EOCC's reset proposal was not
3:27:11based upon any evaluation of EOCC's
3:27:14operational capabilities, was it?
3:27:17>> No.
3:27:19Okay. Um, this is a good, uh, breaking
3:27:22point. Um, Chair Blank, if we want to,
3:27:24uh, go to lunch.
3:27:26>> Yep. Uh, uh, let me just check with, uh,
3:27:29Mr. Bunker. You can take the exhibit
3:27:31down. Uh, any, uh, progress on the, uh,
3:27:37um, unit three, um, documents.
3:27:47Oh, maybe you uh Mr. Simpsons
3:27:52>> uh the company will object to their
3:27:54entry.
3:27:56>> Uh Miss Nelson.
3:27:59>> Um and I would say that u UCA plans on
3:28:03introducing them through the testimony
3:28:06of uh Ms. Henry Seros. Um, and I I
3:28:11understand we were notified by public
3:28:13service that they were objecting, but we
3:28:16don't understand what the objection is,
3:28:20and we haven't heard from anyone else
3:28:22with regard to any objections or
3:28:26otherwise their perspectives.
3:28:28>> All right. Can you make sure uh um uh
3:28:31commission council has uh those
3:28:33documents uh now? I haven't. Uh, and if
3:28:37Commission Council can send it to the
3:28:39three commissioners, uh, that'd be
3:28:41great. And, uh, we'll we'll just take
3:28:44this up, uh, um, when, uh, Miss Henry
3:28:49Thermos Surus uh, uh, takes stand. Mr.
3:28:52Bunker,
3:28:55>> u, I was just joining in if you had any
3:28:57questions, and it sounds like it sounds
3:28:59like you do not.
3:29:00>> Uh, no. Uh, all right. So, we'll just,
3:29:04uh, go ahead, Mr. Sir,
3:29:05>> no. Just procedurally, how do you intend
3:29:07to do that? Do you intend to do that in
3:29:08redirect because you don't have an
3:29:10opportunity for direct um for direct
3:29:13examination with Miss Henry Seros?
3:29:22>> Yes. And and yes, we planned on doing it
3:29:24through redirect.
3:29:27>> Okay. [laughter]
3:29:29Service is about to wave its cross.
3:29:35That is correct, Mr. Simply this cross.
3:29:38>> Well, and and um just as a side note to
3:29:42that, I mean, yesterday there was a lot
3:29:44of discussion or throughout this
3:29:46hearing, there's been a lot of
3:29:48discussion of the um the May report and
3:29:52now that it's been updated, it's it's
3:29:54the company's information. It's not like
3:29:57the company is unfamiliar with the
3:30:00information. And it's obviously relevant
3:30:03because it's an update to what was
3:30:07discussed relating to the the May report
3:30:11and it reflects the updated
3:30:14um return to service date for Comanche
3:30:173. So that's that's the intent for UCA
3:30:22to get it into the record.
3:30:24>> You don't argue.
3:30:25>> Yeah, let's not argue it now. Uh I need
3:30:27to read the documents. I I I don't know.
3:30:29Commissioner Gman, Commissioner Plan,
3:30:30have you read the documents? I I
3:30:32haven't.
3:30:34>> Um, I perused through in the other
3:30:37proceeding, but not the entirety last
3:30:39night.
3:30:40>> Yeah. So, if Commission Council can get
3:30:42us uh these documents, I'll read them uh
3:30:44over lunch. Uh, and we'll uh fight about
3:30:48it uh after lunch. Uh um Mr. Larson, did
3:30:54you have anything to add on the process?
3:30:57Um, I just actually just a clarifying
3:30:59question for Michelle. I we got an
3:31:02initial email that included the
3:31:03documents, but that was then recalled
3:31:06and I don't believe we've received an
3:31:08updated version. I could be missing it
3:31:10and I apologize if so, but I just wanted
3:31:12to clarify that. Now, I think we need to
3:31:14do some cleanup as far as that goes
3:31:17because initially it was sent out to
3:31:20everyone who signed NDAs in this
3:31:23proceeding, but they may not be
3:31:25consistent with those that signed NDAs
3:31:28in the um in the 25V proceeding. So, um
3:31:33that's um I think that's what the glitch
3:31:36was, but we can work on it over the
3:31:39lunch hour and and make sure that the
3:31:41proper parties get copies and especially
3:31:44um commission council.
3:31:47>> Yeah, if you could get that out now,
3:31:48that would be useful.
3:31:50>> Okay.
3:31:50>> Um All right. Uh 12:45 and we'll uh take
3:31:56this up uh after lunch. Thanks all.
4:15:42All right. Uh,
4:15:45I guess Mr. Bunker, Mr. Simpson, are you
4:15:48out there?
4:15:52Let's uh see if we can uh uh resolve
4:15:55this. So, I guess uh Mr. Simper UCA is
4:16:00requesting admission of uh three
4:16:04documents
4:16:06uh uh the June 2026 commandry report uh
4:16:11appendix B and appendix C. It sounds
4:16:14like you have an objection. Can you and
4:16:17I can make up three or four. I can think
4:16:19of several [laughter] objections, but uh
4:16:22why don't you make your objection? We'll
4:16:24let Mr. bunker decide and uh we'll um
4:16:28see if we can uh make a decision.
4:16:31>> Sure. I mean the company objects
4:16:33certainly on relevance grounds. Uh
4:16:36procedurally we believe it's to be quite
4:16:38prejuditial to enter this kind of
4:16:40additional evidence um in the record so
4:16:43late in the proceeding and so late in
4:16:44the hearing. Um, also the issue that
4:16:47Miss Nelson had identified as the reason
4:16:49for getting it in, which is the updated
4:16:51inservice date, that's already on the
4:16:53record. So, um, there's [clears throat]
4:16:56no particular reason to get it in. Um,
4:16:58and then finally,
4:17:01uh, just from a a logistics standpoint,
4:17:04we note that while Miss Henry Seros did
4:17:07enter in the May report, she did not
4:17:11enter into evidence the large load
4:17:13forecast that came with the May report.
4:17:15And we also note that attachment C,
4:17:17which is the root cause analysis, which
4:17:19is also confidential, just so everybody
4:17:21knows, um, uh, is is brand new. Nobody's
4:17:25had a chance to review it. Nobody's um
4:17:28no nobody's quite frankly qualified to
4:17:30review it. It's a very very technical
4:17:32document and it's very very challenging
4:17:34to work with. Um just to admit into
4:17:37evidence now for somebody to use an SOP.
4:17:40We don't that's just wholly
4:17:41inappropriate. Frankly, there's not been
4:17:43an opportunity to review. There's not
4:17:45been an opportunity to put up um
4:17:47witnesses and other factual support as
4:17:50to what it means and what it says and to
4:17:51have other people talk about it. Um
4:17:54ultimately [clears throat] though, none
4:17:56of those things are relevant to this
4:17:57proceeding. There are no costs in this
4:17:59case related to the unit 3 outage.
4:18:03Again, um the large load forecast is
4:18:06just forward-looking large load. By the
4:18:09way, I'll note it's the same as the May
4:18:10one. So, um I believe UCA just should
4:18:14have has waved their opportunity to put
4:18:16that into evidence at this point in
4:18:18time. Um, so it's just not clear to me
4:18:21why this information is necessary to be
4:18:24put in the record at this late hour.
4:18:27>> U Mr. Bunker, can you respond?
4:18:29>> Sure, I'd be happy to. Uh, frankly, it's
4:18:31highly relevant and in fact, we had
4:18:34testimony from Mr. Hansen just yesterday
4:18:38regarding the root cause analysis and
4:18:41his discussion of Comanche 3 and this
4:18:45moving date of when Comanche 3 may or
4:18:49may not be back in service. It's highly
4:18:53relevant in the sense that number of
4:18:55witnesses address this issue and the
4:18:59settlement agreement which we're
4:19:01referring to as the nonunanimous
4:19:03agreement. It provides a $30 million
4:19:07figure if there is some kind of an issue
4:19:10with Comanche 3 and continued outages.
4:19:14So, it is relevant in a number of ways
4:19:18through the testimony of a number of
4:19:20witnesses and frankly it's kind of
4:19:23surprising. the public service would
4:19:25have known yesterday that they were
4:19:27filing this and they didn't mention it
4:19:30during the course of this hearing and
4:19:33the testimony by Mr. Hansen that this
4:19:36document uh in terms of in particular
4:19:39the root cause investigation
4:19:42was going to be filed uh yesterday
4:19:45afternoon. And so we have we believe a
4:19:50number of grounds that uh would suggest
4:19:54that it is relevant. It is admissible.
4:19:57It is information that the commission
4:20:00can consider in its overall decision and
4:20:03in particular with regard to the
4:20:05settlement provision in this $30 million
4:20:07amount which of course UCA objects to as
4:20:12being an inadequate number uh in terms
4:20:16of the dollar uh figure and if the
4:20:20commission will not allow say admission
4:20:24of I've moved to admit these documents,
4:20:28we would request administrative notice
4:20:31in the alternative that you can take
4:20:33administrative notice of documents
4:20:35within the PUC Z filing system.
4:20:38>> If if let me well go ahead
4:20:40>> if I may, Chair. Uh a just a couple of
4:20:42things. Um number one, you know, just to
4:20:45try to reach a chord here, we'd be okay
4:20:47with the body of the of the report to be
4:20:50led into evidence just to kind of make
4:20:53it a little easier. Um, that's very
4:20:55consistent with what what UCA had put
4:20:57into the into the record um earlier.
4:21:00>> And you said hearings about 320,
4:21:03>> correct? Just not not the large load
4:21:05attachment and not the root cause
4:21:06analysis. The other thing I'll note is
4:21:09that when Mr. Hansen talked about the
4:21:11root cause analysis, he explicitly
4:21:13testified that he had not read it. So,
4:21:16um, so to tie that back to any evidence
4:21:18in the record, I think is is is
4:21:20immaterial. Um and then last, you know,
4:21:23the large load forecast is also
4:21:24immaterial. So, um we recognize that
4:21:27there had been lots of opportunities
4:21:28that Comanche 3 is at issue in this
4:21:31case, but we're talking about very
4:21:33specific evidence that is not. And
4:21:35again, just in in an effort to reach a
4:21:37chord since um we did not object to the
4:21:40inclusion of the body of the Comanche 3
4:21:42report for May, we'd be okay letting in
4:21:44the June report as well.
4:21:46>> That that was certainly where I was
4:21:47going to land. I didn't see how that was
4:21:49uh not relevant. Um and I guess just
4:21:53pushing back to you um Mr. Bunker, uh
4:21:56the large load forecast, it sounds like
4:21:59uh you had the opportunity to put that
4:22:01in with the May report. Uh you chose not
4:22:04to. So it seems like uh um that it
4:22:09should probably uh uh be out, but uh m
4:22:14Mr. Kaufman.
4:22:17Uh yes, your honor. I simply wanted to
4:22:19go into the record in support of UCA on
4:22:21this issue. It it seems uh relevant
4:22:23information and something that I don't
4:22:25know why the commission wouldn't want to
4:22:26have
4:22:27>> y
4:22:27>> when deciding this case. Y
4:22:29>> that's all.
4:22:30>> And if I could add one further comment,
4:22:32Mr. Chairman, I think Mr. Zimser uh
4:22:35suggested that the root cause analysis
4:22:38report, which is the appendix three,
4:22:41that it was not previously available.
4:22:45So, I'm fine with leaving the large load
4:22:49forecast out, but the fact that the root
4:22:52cause investigation was not previously
4:22:54available. There's no way that the UCA
4:22:58could have included that based on that
4:23:01representation.
4:23:03And so, I would I would uh request that
4:23:06the root cause investigation analysis
4:23:09also be included, which is hearing
4:23:12exhibit 322.
4:23:14There's, as I understand it, a public
4:23:16version and a confidential version.
4:23:18>> Just just one note there. I did not say
4:23:20it was not available. I did say that the
4:23:23witness to whom Mr. Bunker pointed who
4:23:26had raised the raised a point of a any
4:23:28kind of root cause analysis, not a
4:23:30specific report, by the way, um said he
4:23:33had not reviewed any specific report to
4:23:35that effect. So there is no um there's
4:23:38no evidentiary tie um that would have
4:23:42opened the door to bring this this very
4:23:44late piece of evidence that's
4:23:46functionally not relevant. At the end of
4:23:48the day the prudence of the Comanche 3
4:23:50outages for [clears throat] you know at
4:23:53at least the ECA if the settlement is
4:23:55approved there's going to be a separate
4:23:56prudence review. There is nothing with
4:23:59respect to the company's prudence or to
4:24:01the company's actions regarding the
4:24:03Command G3 outage that is at issue with
4:24:05this case. It's just not relevant. And
4:24:08to Mr. bunker's request for
4:24:10administrative notice. Certainly, the
4:24:12commission is allowed to put documents
4:24:15in its possession to administrative
4:24:16notice, but any entity
4:24:19is allowed the ability to
4:24:23explore those documents, cross those
4:24:25documents, put in evidence of those
4:24:26documents, and I don't think it would be
4:24:28appropriate at this late stage in the
4:24:30proceeding to essentially have us put in
4:24:33a witness to explain what that document
4:24:35means. Um, it's unclear to me what UCA's
4:24:38use is going to be. Um, except I guess
4:24:40in their SOP and that document is so
4:24:43technical and so challenging. I mean, I
4:24:46read these things for a living myself
4:24:47and I I need help understanding it that
4:24:50I'm really concerned that that it's just
4:24:52not going to be able to be used
4:24:54appropriately without the appropriate
4:24:56factual support for for different
4:24:58witnesses to interpret it, you know, for
4:25:00what it actually says.
4:25:02>> Mr. Bunker, if
4:25:05especially on the relevance grounds.
4:25:07>> Sure. The relevance ground is that we've
4:25:09got a performance uh framework that
4:25:12provides a $30 million fee that is tied
4:25:16to the performance of Comanche 3. This
4:25:21root cause analysis helps understand
4:25:25what some of those issues are and
4:25:27whether the commission should or should
4:25:30not approve the $30 million amount,
4:25:34whether it should be, let's say, more
4:25:37than that, double that, triple that.
4:25:40What uh what we're concerned about is
4:25:43that there were questions regarding the
4:25:45root cause analysis yesterday from I
4:25:48think uh several of the commissioners
4:25:51and it is it is highly relevant in terms
4:25:56of this is a provision in the in the
4:25:58settlement agreement. This is a this is
4:26:01an issue that the commission
4:26:03specifically asked for supplemental
4:26:06direct testimony in terms of what is the
4:26:10annual revenue requirement and it's $105
4:26:13million for Comanche 3. And the point is
4:26:18that this is a significant amount of
4:26:20money for a facility that has not
4:26:24performed. Rateers are paying for that.
4:26:27That's what this case is about. It's a
4:26:29rate case whether rates should be
4:26:31increased or not increased and by what
4:26:34amount. This is in there's no doubt that
4:26:38it's relevant and for public service to
4:26:41suggest that it isn't just I I believe
4:26:44is just not accurate.
4:26:46>> Commissioner Gilman, do you have a a I
4:26:50mean it's
4:26:52uh
4:26:53likely relevant and it's perhaps pre
4:26:56prejuditial. That's what we're trying to
4:27:00decide. Uh, Commissioner Gman, do you
4:27:03have a view when it's uh relevance for
4:27:06you?
4:27:09>> Um,
4:27:11I mean, I guess the suggestion of the
4:27:14settling parties is to take up the
4:27:16prudence of uh PBLO unit 3 expenses
4:27:20later, but that is merely their
4:27:24proposal. So, I'm not sure that all unit
4:27:283 expenses are not relevant at this
4:27:31point in time in the operation of the
4:27:33plant, but uh be happy to take a break
4:27:35and talk with council if you think that
4:27:37would be helpful.
4:27:40>> Uh I'm not sure council's going to
4:27:42resolve it for you. [laughter]
4:27:46Uh Commissioner Plant, uh uh do you have
4:27:50a view on the relevance?
4:27:53Yeah, I mean I I can see the I can see
4:27:56the the relevance of it. Um, you know,
4:28:00and I I would opt for u you know
4:28:04including but um I'm not sure what the
4:28:08what the um the potential negative uh
4:28:11aspects are and would want to talk to
4:28:13council about that before.
4:28:15>> Um why don't you uh help us understand
4:28:19why you think it's so prejuditial? It's
4:28:21uh a company document filed uh in
4:28:24another case that the commission's going
4:28:26to rely on. So why do you think it's uh
4:28:30so prejuditial? I I think I agree with
4:28:32Mr. Bunker and uh commissioner's plan
4:28:35and uh Gilman that it's clearly
4:28:37relevant. Help me understand. Can you
4:28:40help us understand while it why it's uh
4:28:43uh pre prejuditial? I I absolutely I I
4:28:48mean it's an incredibly technical
4:28:50document. I mean you can pull any
4:28:52sentence you want out of it and um and
4:28:57you know it's very very hard to
4:29:00understand like quite frankly the
4:29:02conclusion that it reaches is not
4:29:04abundantly clear. So so we'll start
4:29:06there. Number two, you know, I to the
4:29:10extent there are conclusions or
4:29:12inferences to be drawn from such a
4:29:14report, it's a standalone third-party
4:29:16report. I mean, I we would absolutely
4:29:19want the opportunity to have witnesses
4:29:21available to explain what how we read
4:29:23it, what we think it says, what it means
4:29:26to have creep metal metallergy issues,
4:29:29what it means to have certain
4:29:30temperature issues. Um, and none of
4:29:33those specific root causes related to to
4:29:37the current outage is relevant. I mean,
4:29:40I understand the issue at here is
4:29:42fundamentally that there are dollars at
4:29:44stake with respect to Comanche 3, but
4:29:46those are all prospective looking to its
4:29:48operations,
4:29:49>> but but but the unit was out in 2025. We
4:29:54have a historical 2025 test year in
4:29:58front of us
4:30:00>> and presumably some of these costs were
4:30:03incurred in 2025.
4:30:05So it's not completely irrelevant. Uh
4:30:08and I ag and think you there is a
4:30:11settlement agreement but um um other
4:30:15parties may take different approaches
4:30:17including on the 2025 historical test
4:30:19year. So, I guess I'm starting to lean
4:30:22with my colleagues. [laughter]
4:30:24>> Well, I can talk to you about that. You
4:30:26know, Commissioner, the the the incurred
4:30:29costs of fuel and replacement power are
4:30:31not in this case. They're in the ECA
4:30:33where Prudence Review is currently
4:30:35slated to occur. There are no capital
4:30:37costs related to the outage in this
4:30:39case. That's on the record uh many many
4:30:42times. there's no O andM costs related
4:30:44to the the the the the
4:30:48plant because those haven't been
4:30:49adjusted in light of the Comanche 3
4:30:51outage. So if you're looking at the 25
4:30:54historical test year with respect to
4:30:56Comanche 3, there's just no costs. And
4:30:59so to think that it's representative
4:31:01from that perspective, it is because it
4:31:04reflects the fact that the that the unit
4:31:05is an outage and until the unit comes
4:31:07back, we don't have capital additions to
4:31:09put in. And the the O andM is reflective
4:31:13of 25 andm where the plant was out and
4:31:16the fuel component of of the plant is
4:31:19all handled through the ECA. So again
4:31:22for this particular proceeding there's
4:31:25just nothing with respect to the
4:31:26historic test year that that has to do
4:31:28with the prudence of the outage because
4:31:30the current test the historic test year
4:31:32represents the fact that the plant was
4:31:34out.
4:31:35>> All right. Well, for now let's admit the
4:31:38uh the report. We're not going to admit
4:31:40the alert forecast. Uh let's keep going
4:31:43with the hearing. Uh, I'm gonna at the
4:31:47the next break I'll um
4:31:50uh uh let uh my colleagues uh uh confer
4:31:55with council and when we come back we'll
4:31:58uh we'll uh take a vote and try and
4:32:01resolve it. Uh Miss Federico, did you
4:32:03have a comment?
4:32:05>> Just a question. Um can can Mr. Bunker
4:32:08let me know the numbers of what we're
4:32:10admitting now? I just don't want to put
4:32:13the wrong one in. I can do that. We're
4:32:15admitting 320 and we're not admitting
4:32:19321 C.
4:32:22>> So, but 321, 322, and 322 C are
4:32:29>> I'm sorry. I have hearing exhibit 320 is
4:32:31the June 2026 Comanche report
4:32:35>> and that is being
4:32:37>> and that's being emitted. Hearing
4:32:39exhibit 321C is appendix B, the large
4:32:42load forecast. that is not being
4:32:44admitted. And hearing exhibit 32020
4:32:47322C,
4:32:50the root cause investigation is up for
4:32:53grabs. And um my proposal is to have uh
4:32:59Commissioner Gilman and Plant talk to
4:33:01council over the next break. Maybe we'll
4:33:04make it a little bit longer of a break
4:33:06and we'll come back and we'll just uh
4:33:08we'll vote.
4:33:10>> Got it. Thank you.
4:33:12Um,
4:33:12>> yeah. And that, uh, Mr. Chairman, that's
4:33:14how I followed your discussion as well.
4:33:18>> Uh, Mr. Simpson, anything else before we
4:33:21jump back to Miss O'Neal?
4:33:24>> Uh, no, just one note um before we move
4:33:27on, which is Mr. Bunker said that they
4:33:30they know where what they're interested
4:33:32in in the report to kind of prove the
4:33:34point that about future operations of
4:33:37the plant. And I'd be curious um and I
4:33:39think it's probably an important
4:33:41[clears throat] part of this discussion
4:33:42to for Mr. Bunker to identify what
4:33:44portion of the report is at issues. So
4:33:47maybe we can see if we agree or don't
4:33:49agree.
4:33:49>> I actually that that that would be
4:33:51really helpful. Maybe we could uh admit
4:33:53just a portion of the report uh as a way
4:33:56to resolve this. But Mr. Bunker,
4:33:59>> I don't believe that is what I said. I
4:34:01said the root cause analysis was
4:34:04important because of the discussion by
4:34:08various witnesses including Mr. Hansen
4:34:11yesterday. The only thing I've heard in
4:34:14terms of why it's prejuditial is because
4:34:16it's just so complicated. We've got a
4:34:19lot of really smart people in this in
4:34:22this uh case in this trial. And to say
4:34:25that it's just too complicated for any
4:34:27of us to figure out, I I don't agree
4:34:31with that. In terms of the report
4:34:33itself, it's already been admitted, but
4:34:35I have not specifically said that UCA
4:34:38knows what it is going to rely on or
4:34:42not. We just got this last uh yesterday,
4:34:45late yesterday afternoon, like everybody
4:34:47else did,
4:34:48>> and we're we're scrambling to get up to
4:34:50speed on it. the reports in uh right so
4:34:54um
4:34:54>> it's the root cause analysis correct
4:34:56>> yeah that's the issue and do you have
4:35:00another reason why it's prejuditial
4:35:02other than it's technical maybe
4:35:04>> yeah we don't have an opportunity to
4:35:06defend or to it's not that it's
4:35:09technical it's that we don't have an
4:35:11opportunity to to use it as evidence in
4:35:15any kind of case we won't have an
4:35:17opportunity to rebut its use we won't
4:35:19have any opportunity to deal with it as
4:35:22evidence unless there's, you know, a lot
4:35:25more proceeding here, which I don't
4:35:26think would be appropriate. That's
4:35:28really what it is. If UCA quotes
4:35:31something in there um that's wrong, I
4:35:34don't have an opportunity to correct it
4:35:35except in my SOP. If that's the whole
4:35:38issue is that it's prejuditial because
4:35:41it it's not that there aren't a lot of
4:35:42smart people, but I'm not aware of any
4:35:44metallergists on staff at UCA. And it's
4:35:48that kind of technical document. I also
4:35:50think quite frankly it's presidential
4:35:52because as the commissioners read it, we
4:35:54don't have an opportunity to elucidate
4:35:56it from the company's point of view and
4:35:58no other party has an opportunity to
4:35:59elucidate it from that point of view as
4:36:01well. Um and it's not that the document
4:36:04is complicated. It's that that the
4:36:05document doesn't speak for itself. It
4:36:08cannot stand alone on an evidentiary
4:36:09basis. It needs not just foundation but
4:36:12it needs some kind of support especially
4:36:15for this kind of proceeding. That's why
4:36:17we re we see it as pre prejuditial. We
4:36:19are concerned that what it says cannot
4:36:23won't be taken as won't be used
4:36:26appropriately or will be misinterpreted
4:36:28and we won't have an opportunity to
4:36:30respond. That's why we believe it to be
4:36:32prejuditial.
4:36:33>> Um Miss Harper, why don't you jump in
4:36:35here instead of trying to council
4:36:38commissioners Gilman and uh plant in
4:36:40private? Uh do you have a ve of uh of uh
4:36:46this document?
4:36:48>> Yes, I would sustain the objection from
4:36:50uh Mr. Simpson.
4:36:52>> Can you give a little bit more
4:36:54[laughter]
4:36:55>> for um almost all of the reasons that he
4:36:58said. I I think that it was coming from
4:37:00a third uh party that it would
4:37:04necessarily have more process around it
4:37:06so that we could get evidence on the
4:37:09report. um
4:37:12it is coming in um very late in the
4:37:16hearing. Th uh those would just be some
4:37:18of the reasons.
4:37:22>> If if I could perhaps respond, Mr.
4:37:24Chairman,
4:37:25>> uh the concern that we have is this is a
4:37:29public service document. They may have
4:37:31retained a third party to create this
4:37:34this uh report. But the point is,
4:37:39excuse [clears throat] me, it is their
4:37:40document. They have filed it with the
4:37:42commission
4:37:44and they're arguing that they're not
4:37:46going to have a chance to explain it.
4:37:48Well, they've filed it and it's in the
4:37:50commission file and and now it is out in
4:37:54the open, if you will, in terms of there
4:37:58will be other parties, whether it's in
4:38:01this proceeding or the proceeding in
4:38:03which it was filed in that will address
4:38:07issues within within that. And the the
4:38:12larger point is the settlement agreement
4:38:14provides for a performance framework
4:38:17that's related to Comanche 3 and and the
4:38:21setting of rates in this case. This
4:38:24deals specifically with the issues that
4:38:27the Comanche 3 plant has has ran into
4:38:31that we were sitting through
4:38:34cross-examination yesterday and
4:38:36commissioner questions trying to get an
4:38:39understanding of what this issue was all
4:38:41about and whether August of 2026
4:38:46was a reliable uh estimate in terms of
4:38:49when Comanche 3 might come back online.
4:38:53We're all still trying to figure that
4:38:54out. This is probitative and relevant
4:38:58information that helps un explain that.
4:39:03>> I mean, I we we're willing to stipulate
4:39:06to the new date. The UCA is willing to
4:39:08poke at that. They've had an opportunity
4:39:10to cross-examine the appropriate
4:39:11witnesses from that perspective.
4:39:13Nobody's actually raised the issue of
4:39:15the root cause other than what was in
4:39:17Mr. Hansen's testimony who actually
4:39:20explicitly testified that he has not
4:39:22read this report. So, you know, and Mr.
4:39:26Bunker makes a really good point. This
4:39:28is filed in another proceeding and it
4:39:30will be available in that other
4:39:31proceeding and it will be likely
4:39:32available in wherever the commission
4:39:34chooses to analyze prudence. But what's
4:39:37important with that is it will come with
4:39:39process. It will come with an
4:39:41opportunity for the company to present
4:39:43witnesses. It will come with an
4:39:44opportunity for UCA and other parties to
4:39:46present witnesses. And sure, this is
4:39:49going to be exhibit A in any prudence
4:39:51review. We acknowledge that. But we're
4:39:53not in a prudence review. We're not
4:39:55looking at the cost of command G3. We're
4:39:57not looking at the replacement power
4:39:59cost of command G3. And everything in
4:40:01this docket with respect to command G3
4:40:04is about future performance of the
4:40:06plant. And there's more than adequate
4:40:09information on this record to make that
4:40:12kind of assessment. There's years of of
4:40:14evidence on this record about Comanche
4:40:173's troubled performance. And so to the
4:40:20to the extent that that's going to
4:40:22impact UCA's point of view, they have
4:40:24plenty of information to rely on to say
4:40:27that they don't like the performance
4:40:29metric, that the performance metric is
4:40:30too low. The root cause analysis is not
4:40:33going to to make or break that argument
4:40:36for them and it is going to be highly
4:40:38prejuditial to the company without some
4:40:40material opportunity to lay foundation
4:40:43and lay support and to have a back and
4:40:45forth so everybody understands what the
4:40:46report is getting at.
4:40:48>> I guess uh uh um Commissioner Gman uh
4:40:53I'm inclined to uh defer to our uh
4:40:56council. Uh um do you have a view on
4:41:00this having heard from council?
4:41:03>> Um yeah, I would probably uh have a
4:41:06preference to take a break and speak
4:41:07with council. So
4:41:09>> Okay. All right. Uh let's let's keep
4:41:12going um uh with Miss O'Neal and then uh
4:41:17at the next break I'll uh uh we'll take
4:41:20a longer break and you can uh talk to
4:41:22council and we'll uh take a vote.
4:41:26Uh, keep going.
4:41:30>> Um, thank you, chair. By my
4:41:31calculations, I have about uh 20 minutes
4:41:33left of my cross of Miss O'Neal. And if
4:41:35I need to borrow a couple minutes from
4:41:37uh my reserve 30 minutes for Dr.
4:41:39England, UCA UCA's witness, um, I'd like
4:41:42to do that, but hope to finish in the
4:41:44next 20 minutes.
4:41:46>> Yeah.
4:41:46>> Okay. Um, hello again, Miss O'Neal. I
4:41:49hope you had a good lunch break.
4:41:51>> Good afternoon, Miss Canalio.
4:41:53Um, Miss O'Neal, you reviewed um, Mr.
4:41:56Andrew Bennett's answer testimony for
4:41:58EOC when you prepared your crosans
4:42:01answer testimony in this case, correct?
4:42:03>> Correct.
4:42:04>> And your crosswer testimony was intended
4:42:07to respond to EOCC's recommendation
4:42:09regarded targeted RISA funded bill
4:42:12assistance. Correct.
4:42:14>> Correct.
4:42:15>> Okay. If we can now please pull up
4:42:16hearing exhibit um 700, which is Mr.
4:42:18Bennett's answer testimony, and turn to
4:42:20page 37.
4:42:23Yeah, it's just going to take me a
4:42:24minute to scroll there. One second.
4:42:27>> No worries. Thank you.
4:42:44And I guess while this is getting pulled
4:42:45up, Miss O'Neal, do you recall that Mr.
4:42:46Ben uh testified in his answer testimony
4:42:49in this case that um participation and
4:42:53project development in prior income
4:42:55qualified community solar garden
4:42:56programs did not occur at the scale or
4:42:59pace originally anticipated under prior
4:43:01renewable energy plans.
4:43:04>> I I do recall that. Yes.
4:43:06>> Okay. And that is right here on um
4:43:10starting on line one. But thank you. um
4:43:12staff didn't present uh testimony
4:43:14disputing that that statement in either
4:43:17the last res plan case or in your
4:43:19crosans answer testimony in this case,
4:43:21did it?
4:43:22>> Correct.
4:43:24>> Um if we can now go to page 47 of this
4:43:27um testimony and look at table AB1 on
4:43:31line one. Um do you see this table, Miss
4:43:33O'Neal?
4:43:34>> It could be a little bit bigger, but
4:43:36yes, I do see it.
4:43:37>> Yeah, maybe we can enlarge it a little.
4:43:41Awesome. Uh, Miss O'Neal, do you see
4:43:43that one of the figures reflected in
4:43:44table AP AB1 is an income qualified um
4:43:49community solar garden weight list of
4:43:50approximately 8,400 company customers.
4:43:55>> Uh, I see that. And of the 6,700 IQ
4:43:59customers that EOC lists as um able to
4:44:03get into an IQ CSG, um do you see that
4:44:06they receive an annual um benefit of
4:44:10$720 off their bill?
4:44:13>> Uh I see that that's what this table
4:44:15reflects. Yes.
4:44:16>> And staff didn't present any testimony
4:44:18disputing these figures in this
4:44:21proceeding. Correct.
4:44:22>> Correct.
4:44:24And you'd agree with me that customers
4:44:26participating in these programs um
4:44:28receive bill credits that reduce
4:44:30electric bills.
4:44:32>> Correct.
4:44:33>> And bill assistance similarly provides a
4:44:36direct financial benefit to
4:44:37participating customers in these
4:44:39community solar gardens.
4:44:41>> Um it does though I do not think of
4:44:43those as being equivalent things.
4:44:46allowing somebody to participate in a
4:44:47community solar garden provides a
4:44:49financial benefit and also allows them
4:44:51to participate in a renewable energy
4:44:53program. So, they both provide a
4:44:56financial benefit, but they are not the
4:44:57same.
4:44:58>> Okay. Thanks. Um, if we could pull up um
4:45:04the last hearing exhibit which is in um
4:45:06EOCC's box folder.
4:45:10>> I believe it's right
4:45:13>> 7-Eleven.
4:45:19>> And Miss O'Neal, this is the court
4:45:21reporter. Please keep your voice up.
4:45:24>> Apologies. I will try.
4:45:28Uh, Miss O'Neal, are you generally
4:45:30familiar with the company's um 2022 to
4:45:332025 renewable energy plan proceeding
4:45:36that took place a couple years ago?
4:45:38>> Um, very generally, but as I mentioned
4:45:40earlier, I was not a witness in this
4:45:42proceeding.
4:45:43>> Okay, understood. And we'll keep it at a
4:45:46a high level. Um, are you familiar that
4:45:49with the fact that the commission
4:45:50approved a settlement agreement for the
4:45:52company's 2022 to 2025 renewable energy
4:45:55plan? Yes.
4:45:58>> Um, and this is the decision approving
4:46:00that. Do you see that?
4:46:01>> I see that.
4:46:02>> And you're aware that staff was a
4:46:04signatory to that settlement agreement?
4:46:07>> Yes.
4:46:08>> Um, if we could please turn to page uh
4:46:1013 of this document and look at
4:46:13paragraph 36.
4:46:16Maybe zoom in a little bit.
4:46:20Um, Miss O'Neal, do you see that
4:46:22paragraph 36 of this decision addresses
4:46:24a settlement's treatment of donated
4:46:27community solar subscriptions for
4:46:29incomequalified customers?
4:46:31>> Uh, I have not previously reviewed this
4:46:34paragraph, but that does appear to be
4:46:36what it is discussing.
4:46:38>> Okay. Do you see here that um on in this
4:46:43paragraph 36 approving the settlement,
4:46:45it refers to these donated CSG
4:46:48subscriptions as a form of energy
4:46:49assistance?
4:46:53>> Uh can you to read it? Sorry.
4:46:56>> Sure.
4:47:05>> I see that. Yes.
4:47:06>> Okay. And um these subscriptions would
4:47:09provide bill reduction benefits to
4:47:11participating income qualified
4:47:13customers.
4:47:14>> That is my understanding. Yes.
4:47:16>> And those subscriptions were provided
4:47:19were to be provided through programs
4:47:21funded through the mechanism.
4:47:25>> Again, without having reviewed in in
4:47:27detail, this is the res proceeding. So I
4:47:29would assume that that's an accurate
4:47:30reflection.
4:47:31>> Okay. So staff previously supported a
4:47:34settlement agreement that characterized
4:47:36RISA supported benefits to income
4:47:38qualified customers as a form of energy
4:47:40assistance.
4:47:44Um
4:47:48I the the process seems different as
4:47:50these are donations but um again I'm not
4:47:54super familiar with the details of this.
4:47:57>> Okay, that's fair. Um, can I move for
4:47:59administrative notice of of commission
4:48:01decision C22-0678?
4:48:08>> Any objection?
4:48:10>> No objection.
4:48:12>> So noticed.
4:48:13>> Thank you. Um, if we can now please pull
4:48:15up um, Miss O'Neal's crosser testimony
4:48:18which is hearing exhibit 412
4:48:25and turn to page um, 11.
4:48:30And Miss O'Neal, while this is getting
4:48:31pulled up, um, your crosshancer
4:48:34testimony identifies the company's PIP
4:48:37program as the appropriate mechanism for
4:48:40providing bill assistance to income
4:48:41qualified customers.
4:48:44>> Correct.
4:48:45>> And staff in joining the non-unanimous
4:48:48settlement supports the company's
4:48:49proposed enhancements to this program
4:48:52intending uh intended to increase
4:48:54participation.
4:48:56>> Correct.
4:48:57Uh but the company is not projecting
4:48:59enrollment for all potentially eligible
4:49:02households in the EP offering is it?
4:49:05>> We should be so lucky as to to get
4:49:07everybody who qualifies in into a
4:49:09program.
4:49:11>> Okay.
4:49:13>> Okay. [laughter] Um so even under the
4:49:15company's projected participation levels
4:49:18uh which I believe is around 15% subject
4:49:20to check potentially eligible IQ
4:49:22households would remain unenrolled in E.
4:49:26Correct. I I think that is the correct
4:49:29expectation. I I don't know what the
4:49:31actual number would be, but I think one
4:49:33could reasonably expect it would not be
4:49:35100%.
4:49:36>> Okay. So, an expanded EAP program would
4:49:39not mean that every potentially eligible
4:49:42income qualified household will receive
4:49:44assistance through this program.
4:49:46Correct? Again,
4:49:48I I they would be eligible, but I think
4:49:51the expectation is that the enrollment
4:49:53of qualified customers will be less than
4:49:55100%.
4:49:57Okay. Um if we could now turn to um
4:49:59hearing exhibit 400,
4:50:03which I believe is Miss O'Neal's answer
4:50:05testimony
4:50:13and turn to page 14.
4:50:19Uh, Miss O'Neal, in your answer
4:50:20testimony, you discuss on lines um, 8 to
4:50:23nine here, um,
4:50:27oh, thank you. Um, you discuss what you
4:50:31describe as a sharp increase in recovery
4:50:33through writers.
4:50:36>> Correct.
4:50:37Um, and if we go to figure ET01, which I
4:50:41know you went over with Miss Nelson on
4:50:42page 15,
4:50:46um, this figure in your answer testimony
4:50:49illustrates the total bill trends
4:50:51experienced by residential customers.
4:50:53>> That's correct.
4:50:54>> And if we could scroll down a little bit
4:50:56to see the source at the end. Yep,
4:50:58that's perfect. Um, and figure ETO
4:51:02reflects the impact of both base rates
4:51:04and rider charges on customer bills.
4:51:06Correct.
4:51:08>> Correct.
4:51:09>> And one of the rider categories
4:51:10reflected in figure E01 is um what you
4:51:13call generation rider costs.
4:51:16>> Correct.
4:51:18>> And um in this footnote here um to the
4:51:21to figure ETO1 you say the generation
4:51:24rider costs include the RISA rider. Is
4:51:27that accurate?
4:51:28>> That is how I that's my charact
4:51:30characterization of the riders into
4:51:32these different categories. But yes, I
4:51:33included the RISA in the category
4:51:35generation related costs.
4:51:38>> Okay. So the RISA writer is one of the
4:51:41components contributing to the total
4:51:42bill amounts reflected in figure E01.
4:51:47>> It is a percentage base writer. So as
4:51:49the base increase increases, the amount
4:51:51that is recovered through the 1% RSA
4:51:53rider would also increase and that is
4:51:55reflected on this chart. Yes.
4:51:57>> Okay. Um Miss O'Neal I don't know if you
4:51:59heard my discussion with Mr. PK last
4:52:01week, but are you aware um that company
4:52:05witness Mr. BK testified last week that
4:52:07approval of the non-unanimous settlement
4:52:10agreement would result in approximately
4:52:11$2.25 million in additional annual RISA
4:52:15revenues?
4:52:17>> I I did hear that cross. Yes.
4:52:19>> Okay. And staff supports approval of a
4:52:22settlement agreement that would increase
4:52:23annual RISA collections by that amount.
4:52:27slightly modified by the cost of service
4:52:29uh rev 2 but but yes that that the
4:52:32settlement um anticipates an increase in
4:52:36the total cost of service which would
4:52:38increase re revenues as a percentage
4:52:41rider.
4:52:42>> Okay. And the settlement agreement uh
4:52:44doesn't direct any portion of those
4:52:46additional reser revenues towards um the
4:52:49approximately 8,400 customers
4:52:52um noted by EOC that are on the income
4:52:54qualified community solar garden weight
4:52:57list. Does it?
4:52:58>> It does not.
4:53:00>> Okay. Uh last line of questions. Um we
4:53:03can take this um exhibit down. Um Miss
4:53:06O'Neal, were you present um during
4:53:07Commissioner Plant's questioning of
4:53:09company witness Mr. Pascuchi um
4:53:12yesterday morning.
4:53:13>> Uh yes.
4:53:15>> Um and did you hear Commissioner Plant
4:53:17ask the following question? Why can't we
4:53:19just subtract out the things people have
4:53:23paid during the time period for which
4:53:25they didn't receive any performance so
4:53:28that you end up backing out those costs?
4:53:34>> Okay.
4:53:36I do not recall that question or the
4:53:37context for it and and that was I'm not
4:53:40sure what the what was being backed out
4:53:41which costs and what was referenced. So
4:53:44I might need a little more context if
4:53:45you're going to ask me a question about
4:53:47that.
4:53:48>> That's fine. It was in regards to um
4:53:50Comanche 3's performance and and when
4:53:52the unit was down. Does that refresh
4:53:55your recollection?
4:53:57>> Um it depends. I mean,
4:54:02what what's the I'm not sure what the
4:54:03question is, so please go.
4:54:05>> Yeah, I'm just asking if you recalled
4:54:06that that line of questioning that
4:54:08Commissioner Plant had for one of the
4:54:09company's witnesses when talking about
4:54:12um
4:54:14a period where they didn't receive any
4:54:15performance from a company asset.
4:54:18>> Yeah. I mean, I specifically remember
4:54:19discussions about different ways of of
4:54:21managing and responding to the Comanche
4:54:25um the the historical performance and
4:54:29the performance incentive or the you
4:54:31know framework that's proposed here. Um
4:54:33I don't recall that specific question,
4:54:35but I recall a general discussion um
4:54:38with Commissioner Plant and Mr. Pascuchi
4:54:40regarding um ways to think about uh the
4:54:44performance of Comanche 3.
4:54:46>> Okay. Um well turning to the issue that
4:54:49we're we're talking about this
4:54:50afternoon. Um staff does not dispute
4:54:52that income qualified customers have
4:54:54contributed to the research search
4:54:55charge for years. Correct.
4:54:57>> Correct.
4:54:58>> And um staff does does not dispute that
4:55:02prior income qualified community solar
4:55:04participation and project development
4:55:06did not occur at a scale or pace
4:55:08originally anticipated.
4:55:10>> Um again I am not the res witness but I
4:55:13am not aware of staff disputing that.
4:55:15>> Okay. and staff um does not dispute that
4:55:18thousands of income qualified customers
4:55:20remain on waiting lists for those re
4:55:22plan benefits.
4:55:24>> Um again I I have not reviewed those
4:55:27numbers in detail but I am not aware of
4:55:28staff disputing that um in any context.
4:55:32>> Okay. Um, and did you hear in my
4:55:35discussion last week with Miss Company
4:55:37witness, Miss McCone, that the company's
4:55:39most recently ported reported Risa
4:55:42overcollected balance is $142.5 million.
4:55:46>> I recall that discussion. Yes.
4:55:48>> Okay. Um, and so staff uh doesn't
4:55:51dispute that the that the company
4:55:53currently reports an existing reset
4:55:56balance in excess of $140 million.
4:55:58Again, I I've not reviewed that
4:56:00calculation, but I recall the discussion
4:56:02and and the bringing up the exhibit that
4:56:04reflected um a number along those lines.
4:56:07>> Okay. Um thank you, Miss O'Neal. Those
4:56:10are all my questions.
4:56:11>> Thank you, M.
4:56:12>> Uh thank you. Uh just want to see who's
4:56:16next.
4:56:18I think uh we're up to Commissioner
4:56:21questions. Commissioner Plant.
4:56:24>> Thanks.
4:56:25>> Good afternoon, Miss O'Neal. Good
4:56:28afternoon, Commissioner Plant.
4:56:30>> Um, I just have a couple of questions.
4:56:33Um,
4:56:35I didn't quite understand uh regarding
4:56:38the settlement. So, the the Comanche for
4:56:41performance framework, you've got the
4:56:44XEO baseline and then the 3% deadband
4:56:48around that. What's the 25 megawatt D
4:56:53rate and does that directly
4:56:57increase the XCOF
4:57:00percentage or what is that where is that
4:57:02coming from?
4:57:03>> Uh great great question. So um as a
4:57:07result of the most recent outage um the
4:57:11the company expects that the unit go on
4:57:14a going forward basis will have a
4:57:16permanent date of 25 megawws. So
4:57:20previously the maximum output of the
4:57:22unit was 250 megawatts of which um
4:57:25public service has a 500 megawatt share
4:57:28approximately. Um going forward the the
4:57:31company anticipates that that will be
4:57:33permanently you know 725 megawatt
4:57:36maximum whereas you know when the unit
4:57:39was approved right the expectation was
4:57:42for it to have to be 750 megawatts. So
4:57:46as part of the negotiation, it was very
4:57:48important to staff to reflect that
4:57:49permanent drate as a consequence to the
4:57:52company, not to to rateayers. So
4:57:55essentially that's like 25 megawatts is
4:57:57always kind of in a forced outage state.
4:58:01Um so the maximum even if the unit
4:58:03operated perfectly, the the the minimum
4:58:07XO UF would be 3.3% which reflects that
4:58:11that unavailability of 25 megawws. Um we
4:58:16agreed that you know if it is in planned
4:58:19outage like that then it kind of doesn't
4:58:21count against that but it is essentially
4:58:23count account counted for in the XEO
4:58:26calculation as a as an unplanned 25
4:58:29megawatt outage um in in each outage
4:58:32instance that that counts against the
4:58:34company's performance in that regard. So
4:58:37again, the best the company could ever
4:58:39do is a 3.3%
4:58:42forced outage rate.
4:58:44>> Does that help?
4:58:46>> I think
4:58:48um
4:58:50see um on the on the uh wind farm uh
4:58:55treatment of the wind farms in the in
4:58:57the settlement. There were a couple of
4:58:59concerns that you raised. Um I didn't
4:59:01know if you had found any uh if you had
4:59:05received any answers from the company in
4:59:07the course of uh you know coming up with
4:59:09the the um the 30 years as opposed to
4:59:14the 35 or 25. But one of the concerns
4:59:16you raised was a potential maintenance
4:59:18and replacement costs that weren't
4:59:19included in the analysis. I didn't know
4:59:21if you would been able to get assurances
4:59:24that those you know adding the five
4:59:27years uh to the expected life would uh
4:59:31have any implications in that regard.
4:59:33>> Yeah. Um again appreciate the question.
4:59:36Um so we we have no additional
4:59:39information or discovery responses on
4:59:41that. I would add sort of two things.
4:59:43One is that Cheyenne Ridge, which is one
4:59:45of the two units, has a um consumer
4:59:49protection mechanism that compares the
4:59:51levelized cost of energy of the unit
4:59:53versus what the expectation was at the
4:59:56time of the CPCN and has some sort of
4:59:58checks against that number. Um and as
5:00:01part of the settlement agreement, the
5:00:03company agreed to, you know, extend that
5:00:06that customer protection mechanism um
5:00:09specifically for Cheyenne Ridge. So as
5:00:12the unit is extended, those costs would
5:00:14sort of be caught up in that and at
5:00:16least we have a sort of flag and a
5:00:18baseline that we can check those numbers
5:00:20against to make sure that those costs
5:00:21are coming in at a reasonable level um
5:00:24and then you know evaluate them at the
5:00:26time. There's no automatic um penalty
5:00:29associated with that, but it was
5:00:30specifically anticipated that if costs
5:00:32got above that that that was a
5:00:34potential. Um so you know in in future
5:00:37when we see those costs come in if if
5:00:39they exist we can sort of review them
5:00:41against the sort of structure of the
5:00:43original expectation from the CPCN on
5:00:45the levelized cost of energy from from
5:00:48Cheyenne Ridge. Um Rush Creek does not
5:00:51have the same um customer protection
5:00:54mechanism. They both have a another sort
5:00:57of performance metric which is a
5:00:58long-term degradation metric. gets a
5:01:00little confusing in the details, but but
5:01:02those degradation sort of metrics were
5:01:04also extended as part of the um
5:01:06settlement agreement. So, just want to
5:01:08note that that's part of why staff was,
5:01:10you know, ultimately comfortable with a
5:01:12five-year extension with some of those
5:01:13protection mechanisms also got extended
5:01:15through that process. Um, for Rush
5:01:18Creek, I'd say in terms of costs, we're
5:01:19relying on um, sort of normal rate
5:01:23making that, you know, as the company
5:01:25incurs on&m costs or capital additions
5:01:27that those would be reviewed for
5:01:28prudence at the time, you know, if and
5:01:31when they are occur in the future. Um
5:01:33and again I think as part of my
5:01:35testimony I had also attached a um an
5:01:38ENL study I believe it was that that
5:01:40reflected that sort of current wind
5:01:43lives seemed to be you know just just
5:01:46under 30 years sort of looking across
5:01:48the industry. So 30 years seemed like a
5:01:50reasonable expectation as opposed to the
5:01:5235 years that the company had originally
5:01:55proposed. So, I think with the extension
5:01:57of those customer protection mechanisms,
5:02:00staff was comfortable with a five-year
5:02:01extension for those plants.
5:02:04>> You're you anticipated my next two
5:02:06questions. I think it was an LBNL study,
5:02:08right?
5:02:09>> LBN. That's right. Apologies.
5:02:10>> Um, so moving on to the meter pricement.
5:02:14um you looked at attachment five to
5:02:16hearing exhibit 155 um uh with the UCA
5:02:21representative and I wanted to um ask
5:02:24you a couple questions about that
5:02:26because I didn't quite understand and I
5:02:28don't know if we can bring that up um
5:02:31hearing exhibit 155 attachment five uh
5:02:34the spreadsheet.
5:02:35>> Yes, just give me a second to scroll up
5:02:37there.
5:02:37>> Okay, thanks.
5:02:55Okay. So, uh, if you can go I don't know
5:02:59if I'm Oh, yeah. I'm just the one that's
5:03:01zoomed in here. Um, so there's the
5:03:04amortization expense of 5.5 million. Um,
5:03:09down a ways down on that. That's the
5:03:13total amount. Is that correct? that's
5:03:15collected through rates to pay back the
5:03:20>> I believe that's correct. Yes.
5:03:22>> So if you look at the balances the
5:03:25unavertised balance yeartoear
5:03:29it's uh reduced by 5.5 million.
5:03:35But then you also have your long-term
5:03:38debt return of various different
5:03:41amounts, but those amounts equal 4 1/2%
5:03:45times whatever that unavertised balance
5:03:47is. So 3.78, 3.53, 3.284,
5:03:52etc. So what I'm having a hard time
5:03:55understanding is I would expect that the
5:03:58amount you get from the rates five and a
5:04:00half you would subtract out the interest
5:04:04that you have to pay before you reduce
5:04:06the unavertised balance.
5:04:09But it appears here that the amount of
5:04:13that 5.5 million across those 15 years
5:04:16equals 83 million. The total amount is
5:04:1983 million and then there's another 30
5:04:21million for the long-term debt interest
5:04:24payments. And I can't understand where
5:04:26that's coming from.
5:04:35Yeah, I apologize, Commissioner Plant.
5:04:38I'm not I did not put this spreadsheet
5:04:40together and I'm also not an accountant.
5:04:43So, [gasps]
5:04:43so I I'm not sure that I can explain
5:04:46this any better. Um,
5:04:51yeah,
5:04:55>> I don't know if um maybe we can get
5:04:57clarification on this somewhere else.
5:04:59What I'm wondering is, is it actually
5:05:04a little over 9 million in that first
5:05:06year that's coming out of rates, 5 a.5
5:05:09million of which is going to the
5:05:11unavertised balance,
5:05:13or
5:05:15is this just not
5:05:18correct? I I I I there's there's 83
5:05:22million, as far as I can tell, there's
5:05:2483 million being collected through the
5:05:25amortization expenses. the amortization
5:05:29balance is 83 million and then there's
5:05:31another 30 million going to debt and I
5:05:33can't figure out where that's coming
5:05:34from or if it's included in the rates
5:05:36somehow. Um, so that's just my ultimate
5:05:40question.
5:05:41>> Yeah, I I I believe it is that the sum
5:05:44of those things, the amortization
5:05:45expense and the amount that's going to
5:05:47pay the the debt return less the the um
5:05:51revenue credit. Um, but I I think the
5:05:54staff can work with the company to get
5:05:56clarification on that. Um if that's
5:05:59>> so the so that you you believe the
5:06:01annual cost in year one would be 3.78
5:06:05million plus 5.55 million.
5:06:10>> I believe that's correct but but really
5:06:13I I I I
5:06:17shouldn't even guess because I would
5:06:18need to review this more carefully to to
5:06:20be clear on that and how that how it
5:06:22gets reflected in the cost of service.
5:06:24So, um I I I hazard to guess. I guess
5:06:30plan.
5:06:30>> Is that maybe the
5:06:33the the revenue requirement number?
5:06:43That does look accurate. Um [laughter]
5:06:47yes, this is the sum of those two
5:06:49things, the amortization expense and the
5:06:51the interest payment.
5:06:54Okay, I can I'll take I'll take a look
5:06:56at that a little closer. Um July
5:07:01>> um Okay. And then um to your um
5:07:09your uh answer testimony
5:07:12on page 20. Yeah, I'm done with that um
5:07:16spreadsheet if you want to take it down.
5:07:17On page 26, you sort of argued against
5:07:20performance based rate making largely
5:07:23due to information asymmetries.
5:07:28Um, but if performance is based on
5:07:31outcomes, isn't the asymmetry of
5:07:35information on inputs avoided? I mean if
5:07:38we're if we're evaluating based on uh
5:07:42performance based on what is done as
5:07:45opposed to what is going into the
5:07:47calculation isn't doesn't that take away
5:07:50that asymmetry?
5:07:53>> Um I don't I don't think so because I
5:07:56think there's still a question about
5:07:57what is the reasonable amount of money
5:07:59to to pay for that performance. Um I I I
5:08:04will also say you know based on on you
5:08:07know the concept of performance-based
5:08:08racing rate making and as was discussed
5:08:11a lot earlier um this morning the
5:08:14question of what is the objective and
5:08:16what is the performance that you're
5:08:17trying to establish right is if you're
5:08:21targeting around a sad metric there's a
5:08:23whole lot of other performance things
5:08:26that you might care about and so it's
5:08:28it's hard to know first of all what it
5:08:29is that you're trying to to create a
5:08:32performance metric or performance rate
5:08:35making to incentivize and then what is
5:08:38the you know expected cost that ought to
5:08:40be associated with achieving that level
5:08:43of of reliability that again there's I
5:08:46think retain remains an asymmetry of
5:08:49information about what is a reasonable
5:08:51level of reliability to to achieve for a
5:08:54reasonable amount of money and that is
5:08:56the company who always has a better um
5:08:59estimate of what those costs should
5:09:01than any other party. Um, so I don't I
5:09:05don't think that that that
5:09:07alleviates the concern. It it continues
5:09:10to be an issue of of having it is
5:09:13difficult to observe what the baseline
5:09:15should be. Um,
5:09:17with with the one exception I I would
5:09:19say in terms of of performance metrics
5:09:22of where there is a competitive
5:09:25solicitation process. So I think the
5:09:26generating assets is the closest places
5:09:29to have sort of an easily observable
5:09:31baseline that um isn't sort of lacking
5:09:34an asymmetry of information. Almost
5:09:36anywhere else I think it's very
5:09:38difficult to independently observe what
5:09:40the reasonable baseline is. So your, if
5:09:44I understand correctly, your issue with
5:09:48the uh information asymmetry isn't with
5:09:52necessarily the performance
5:09:55of a of some a unit or whatever it is
5:09:58that the performance is associated with,
5:10:00but rather the costs and the prudency of
5:10:04the costs that are necessary to achieve
5:10:07the that performance. Is that what I'm
5:10:10>> Yeah. So I think it I
5:10:13probably more often yes like you know
5:10:15and mostly I'm sort of answering in in
5:10:18response to the you know Boulder's
5:10:20proposal around you know reliability
5:10:22metric so I think understanding what the
5:10:24baseline sort of what an expectation of
5:10:27reliability you know what we're trying
5:10:29to target might be easier although even
5:10:31that I think is actually more
5:10:32complicated because I think it depends a
5:10:34lot on locationational values of you
5:10:37know is this a systemwide thing are we
5:10:39actually trying to address DI
5:10:40communities like what are we trying to
5:10:42do? Even a SAD reliability metric is
5:10:44hard to define in terms of what is the
5:10:47goal. Um but certainly possible, right?
5:10:49The QSP defines sort of objectives based
5:10:51on historical performance. Um generally
5:10:54um for for SATI just recognizing that
5:10:56there is some nuance and granularity to
5:10:59even that metric. Um and then yeah sort
5:11:02of what is the reasonable amount of
5:11:04money? how easy is it or hard to you
5:11:07know attain any particular performance
5:11:09metric is is hard to observe. So trying
5:11:11to make sure that you're sort of
5:11:12calibrating all of that correctly is
5:11:15difficult. Um so I think it gets more
5:11:18difficult the more you pull back and
5:11:21have a macro you know incentive. So, you
5:11:24know, if you're trying to do reliability
5:11:26across the entire system or, you know,
5:11:29for better or worse, right, parties
5:11:31attempted to try to establish an
5:11:33emissions PIM for public service system
5:11:36and we were unsuccessful and it gets
5:11:38harder and harder when you start looking
5:11:40at a systemwide kind of performance
5:11:42because there's a lot of unintended
5:11:44consequences of what are all the costs
5:11:46and if you push on one objective, it
5:11:49tends to have over, you know, other
5:11:53downstream effects on other things. If
5:11:55we're pushing on emissions, are we
5:11:56increasing costs? Are we um you know,
5:12:00yeah, what other unintended consequences
5:12:02come about? It gets very hard to dist
5:12:06what what are the reasonable ways to
5:12:07measure the thing that we're trying to
5:12:09incentivize and you know, is that
5:12:12parameterized kind of correctly to to be
5:12:15a reasonable to get to a reasonable
5:12:17outcome. So I think staff has has had
5:12:20had a difficult with performance
5:12:22difficult time getting behind
5:12:24performance-based rateming because we
5:12:26just haven't seen it work in a lot of
5:12:28places
5:12:29well on that sort of macro level.
5:12:32Individual performance incentive
5:12:33mechanisms that are targeted at
5:12:35individual things or we have can sort of
5:12:37you know clearly define an objective and
5:12:40measure what the outcome was. You know I
5:12:42think staff is reasonably comfortable
5:12:44with QSPs and PIMS and you know
5:12:46performance frameworks. Um, you know, in
5:12:49this instance, pulling that back to
5:12:52systemwide kind of metrics just gets a
5:12:55lot harder to figure out what are the
5:12:56unintended consequences and what is the
5:12:59appropriate baseline.
5:13:01>> Yeah, I think you're right. The PBRs in
5:13:04the US are t are targeted to address
5:13:06specific problems. I think in Hawaii
5:13:08it's AMI effectiveness. In Illinois,
5:13:10resilience, uh, customer service, New
5:13:13York peak reduction.
5:13:15Um, of those areas of success from those
5:13:20states for PBRs, which do you feel like
5:13:24are the most important or the most uh
5:13:27should be a focus for us here in
5:13:29Colorado?
5:13:31>> Um, so
5:13:34I have not reviewed all the results from
5:13:36all all the different states. I'm not
5:13:38necessarily staff's best PBR witness,
5:13:41but I I will offer that sort of I feel
5:13:43like at this point in time, there's been
5:13:45a lot of discussion around reliability
5:13:48and appropriate um O andM expenditures.
5:13:51And I was personally happy to to see
5:13:54that the PUC sunset included a
5:13:56requirement for us to do some rules
5:13:58around quality of service plans because
5:14:00I do think that that's an area that
5:14:02needs more focus. um both the definition
5:14:06of what we expect to see from the
5:14:08system, the granularity. I think that's
5:14:10a great place for the commission to try
5:14:11to be addressing equity issues and
5:14:14looking at the reliability of the system
5:14:15and whether that is correlated with DI
5:14:18communities and whether there's more
5:14:20that can we can do to define some
5:14:22incentives um around performance on uh
5:14:25addressing you know DI community
5:14:27performance. Um, and that that's just an
5:14:30area that that will help with some of
5:14:32the capital bias that's been discussed a
5:14:35lot in this proceeding is defining what
5:14:37is quality of service and and putting
5:14:39some focus there. I think we've made
5:14:42progress in other areas of, you know,
5:14:44pushing on capital expenditures through
5:14:46more cost to construct PIMs and things
5:14:47like that. And I think that's generally
5:14:49been um positive with some unintended
5:14:52consequences. Um but I think like if if
5:14:55we could start trying to address a
5:14:57certain area I think looking at that um
5:15:00the QSP and the QSP rulemaking. I will
5:15:03note that the company is currently in in
5:15:062026 in its third year of its current
5:15:09sort of three-year QSP cycle. So the
5:15:12next QSP um for public service is due
5:15:15kind of any moment. Um so it is also a
5:15:18good time and opportunity for us to be
5:15:20looking at the quality of service plan
5:15:23the metrics and again the settlement
5:15:25calls out spec several specific areas
5:15:27that parties were interested in seeing
5:15:29more development of QSP metrics both on
5:15:31power quality and on some of the WMP
5:15:34PSPS um activities and kind of the staff
5:15:38looks forward to having that
5:15:40conversation as part of that um QSP
5:15:42process.
5:15:45>> Thanks. I don't have any further
5:15:46questions.
5:15:48>> Uh, thank you, Commissioner Plant.
5:15:49Commissioner Gilman.
5:15:54>> Hi. Good afternoon, Mr. Neil.
5:15:56>> Good afternoon, Commissioner Gilman.
5:15:58>> Um, okay. I have a couple areas of
5:16:02questions for you. First, we'll start
5:16:03with the resaw
5:16:05um and EOC's suggestion. Um so as you're
5:16:09familiar EOC points to an overcolction
5:16:11in the RISA as a major issue unressed by
5:16:14this settlement and they have suggested
5:16:18um using that to target energy
5:16:20assistance.
5:16:22So I just wanted to understand um
5:16:24knowing you know quite a few of the
5:16:26proceedings that go on before the
5:16:28commission um what is kind of the
5:16:31current vision or a plan for that
5:16:34overcolcted balance in the resaw and
5:16:37like what are the expectations there?
5:16:40>> Um yeah absent EOCC's proposal.
5:16:43>> Um again I I am not the the staff's RISA
5:16:47witness but I'll I'll take my best shot
5:16:49at that. Right. I do think the resa the
5:16:51res excuse me settlement um you know
5:16:55reflected the plan for increased um
5:16:58CSG's in inclusive community solar is as
5:17:01part of um you know the future plans for
5:17:04the rez and that the anticipation was
5:17:07that all of the sort of backlog
5:17:09continues to roll forward. So the re the
5:17:12current res plan is to try to you know
5:17:16increase budgets and that will use up a
5:17:19good deal of if not all of what's in the
5:17:21reset balance. I don't have that
5:17:22projection but I think the company
5:17:24projected that that reset balance would
5:17:26be substantially declining over time and
5:17:29that all of the sort of benefits that
5:17:31are due to income qualified customers
5:17:33remain and that that the plan approved
5:17:36in that settlement was to catch up with
5:17:38those benefits. that that's, you know,
5:17:40that that sort of backlog of delivered
5:17:42benefits for income qualified customers
5:17:45would be, you know, would acrew to the
5:17:46future. Um, and that we're not just
5:17:48wiping that site clean and pretending
5:17:50that those benefits didn't matter or
5:17:52should not be realized in the future.
5:17:54Um, the details of all the specific, you
5:17:56know, income qualified programs approved
5:17:58in the RES. Um I would I would suggest
5:18:02we you know we could look through the
5:18:03actual settlement in the in the res
5:18:05because I am not as familiar with that
5:18:07but that's my understanding is that that
5:18:08that was the intent and that all of
5:18:10those benefits you know would acrew in
5:18:12the future.
5:18:13>> Okay. No I I think you helped me out. I
5:18:15was kind of looking from a macro sense
5:18:17like what is the trend we expect in that
5:18:20over collection and and this imbalance
5:18:23of um benefits. Oh I I think you're just
5:18:26both of those. Um, okay. Moving on to
5:18:30PBLO unit 3.
5:18:33Um,
5:18:35so I had talked with Mr. Scoochi um that
5:18:40essentially what's considered
5:18:41replacement power for the unit 3
5:18:43breakdown as well as who should bear the
5:18:45cost responsibility. What that mechanism
5:18:48looks like would all essentially not be
5:18:51settled under the settlements proposal
5:18:55um until this standalone prudence review
5:18:58filing likely concluded in early 2028
5:19:02based on the timing in the settlement
5:19:04agreement. Does that sound accurate? I
5:19:07>> think that's accurate for the current
5:19:08outage, right? The 2025 to 26 outage um
5:19:13you know the settlement um contemplates
5:19:15that as a standalone provenence review
5:19:16that right all of the costs associated
5:19:19with that should be reviewable in that
5:19:22process. So replacement power costs, any
5:19:25on andm capital additions associated
5:19:27with um you know fixing the unit. Um all
5:19:31of the customer impacts to that are sort
5:19:34of subject to to that prudence review.
5:19:36Um and that yes, we would expect that
5:19:38prudence review to be filed to I don't
5:19:41remember the the date in the settlement,
5:19:42but take know nine months after that
5:19:44would would be when we'd expect it to be
5:19:46resolved, but that all of the issues
5:19:47associated with this current outage are
5:19:50covered there. the the performance
5:19:52framework is, you know, is a
5:19:55forward-looking mechanism that um
5:19:57hopefully is designed to kick in about
5:19:59when this unit is back online. We all,
5:20:01you know, hope that it is back on the
5:20:03current expected schedule of August, but
5:20:06time will tell.
5:20:08>> Yeah. And I keep getting confused
5:20:10between June and July, but it's in the
5:20:12middle of 2027 when that filing, that
5:20:15prudence review filing is expected to be
5:20:17filed. And I'm curious given that the
5:20:20company has already completed a root
5:20:23cause analysis, they have a lot of this
5:20:26data already. Are are you aware what
5:20:28exactly is going to take a year in order
5:20:30to even begin sorting out the prudence
5:20:32of this?
5:20:35>> Yeah. So I mean I think the root cause
5:20:37analysis is right is trying to answer
5:20:39the question of what went wrong with the
5:20:41unit when it originally came offline,
5:20:44right? And then the process of trying to
5:20:46fix it to p pull apart the turbine to
5:20:49put it back together to buy replacement
5:20:51parts to get them from the original
5:20:53owner which I think is Mitsubishi right
5:20:56there's a there's a lot that goes into
5:20:57the then repairing of the unit and
5:21:00that's a different question right so the
5:21:01root cause analysis is more about you
5:21:04know what caused the initial event and
5:21:06then the rest of the consequence to
5:21:08rateayers will also depend on when the
5:21:10unit actually comes back online. So for
5:21:12instance, replacement power costs, we
5:21:14can't calculate that without knowing
5:21:16when the unit is back on and the
5:21:18circumstances of that. Even a projection
5:21:20of those costs would probably be
5:21:21inaccurate. And again, we don't actually
5:21:23know when the unit is going to be back.
5:21:25So it doesn't really make a lot of sense
5:21:27to to do a a prudence review proceeding
5:21:30without having, you know, being able to
5:21:33review the entirety of the event and all
5:21:35of the consequences to customers. And we
5:21:37can't do that until the unit is back on.
5:21:40um and then takes the company some
5:21:42amount of time to do that modeling
5:21:43particularly the replacement power cost
5:21:45modeling you know is somewhat labor
5:21:47intensive um so I think then there's
5:21:49just sort of a you know a little buffer
5:21:51right between what is hopefully the end
5:21:53of the event and when it would you know
5:21:55the company could get the filing
5:21:56together and and put all of that
5:21:58together in an application to file with
5:22:00commission
5:22:02>> I think in this case the little buffer
5:22:04of 11 months
5:22:08>> assuming the unit is back on in August
5:22:11Okay. Um
5:22:14and then uh I'm curious, so with the
5:22:18settlement um the cost to operate PBLO
5:22:22unit 2 and Craig one would be in the
5:22:25PCCI and fuel costs for them in the ECI
5:22:28in in the interim. Um I talked with Mr.
5:22:32Prescoochi about um some of the
5:22:35potential complication of allocating
5:22:37those costs in a way now before we
5:22:40determined who what is the scope of what
5:22:43costs and who is responsible um for some
5:22:46of those costs. He had suggested
5:22:49um that there was uh a possibility of
5:22:52crediting in the PCCI or ECA if those
5:22:57costs were collected and the cost
5:22:58responsibility changes in the future. Do
5:23:01do you view that as as easy as it's
5:23:03founded? Um or did this raise uh
5:23:06complications in the future?
5:23:08>> Yeah. So I mean I think it's sort of the
5:23:10good and the bad of the ECA, right? It
5:23:12has become something of a dumping ground
5:23:14in part because it is a reasonably easy
5:23:17mechanism. It has a deferred account
5:23:19balance um which is a fairly easy
5:23:22mechanism, you know, to do refunds and
5:23:25credits. Um it it really is the reason
5:23:27why the ECA has become the the balance,
5:23:30you know, the place where we balance a
5:23:32lot of like small credits, property
5:23:34taxes or whatever kind of go through the
5:23:35ECA even though it's not fuel related
5:23:37because of that deferred account
5:23:39balance. Um it's not ideal. I think the
5:23:42alternative is to have a line item on
5:23:44your bill for every little thing that
5:23:45goes through the ECA and that does not
5:23:47seem sound like an appealing um way to
5:23:50do it either. Um so yeah I mean I think
5:23:54accounting wise I would agree that I
5:23:56think it's relatively easy. I realize
5:23:58that it is not ideal for for um
5:24:01interveners to um to have to sort of
5:24:04intervene and argue in multiple
5:24:06proceedings. Um but but it also kind of
5:24:11you know there's just an awful lot of
5:24:12things going on. So trying to figure out
5:24:14how to parse them the best we can. it
5:24:16was important to staff to make sure that
5:24:17all those costs were recoverable or
5:24:19excuse me, reviewable someplace, not
5:24:22necessarily recoverable. Um, and that's
5:24:24kind of what the settlement agreement
5:24:25lays out is what is the place where all
5:24:28of these costs, Comanche 2 extension
5:24:30costs, Craig costs that, you know,
5:24:32current outage costs for Comanche 3,
5:24:34where are those going to be reviewed?
5:24:36We're not assuming at this point in time
5:24:38that any of that is prudent. Want to to
5:24:41do the review before um any of those
5:24:43dollars get
5:24:45final recovery.
5:24:47>> Okay. And your original um suggestion
5:24:51was to instead put those operating costs
5:24:54in a regulatory liability with no carry
5:24:57charge to wait until we sort out the
5:24:59prudence. I presume
5:25:01>> that was that was staff's original um
5:25:04proposal and again the the main driver
5:25:07there just being wanting to make sure
5:25:09that there was a place to review them. I
5:25:11think the company's original had
5:25:12proposal have been to put them in the um
5:25:14the seer which kind of doesn't get
5:25:16reviewed at this point as it's a sort of
5:25:18percentage automatic mechanism and we'll
5:25:21see what the plant balances are at at
5:25:23the end of of 2020 excuse me 2030 and
5:25:26staff was not comfortable with that. We
5:25:28want to make sure that those costs have
5:25:30a venue to be reviewed for prudence.
5:25:33>> Okay. And then as I've understood kind
5:25:36of staff's position in the past to be I
5:25:38mean you mentioned the ECA as a dumping
5:25:41dumping ground. Um but it it is kind of
5:25:46necessarily on a fairly quick time
5:25:48frame, right? Like it's intended to
5:25:49track commodity costs and be pretty
5:25:51quickly responsive and therefore like
5:25:53the review and process around it is
5:25:56pretty brief compared to many other
5:26:00proceedings. And so you had mentioned
5:26:02like that's a good venue for some little
5:26:04things um for some big things that are
5:26:07more controversial that it feels like
5:26:09what I've seen from staff in the past is
5:26:11that can be a difficult fit because of
5:26:14the really abbreviated time frame with
5:26:17which we have to adjudicate the ECAs.
5:26:20>> So so yes and no. I mean, the fact that
5:26:23the ECA in particular has a specific
5:26:26annual prudence review application means
5:26:29that sort of unless we have a big major
5:26:32obvious concern with something being
5:26:35wrong in the quarterly ECA, staff can
5:26:38generally let those go, you know, make
5:26:40sure that the math works out and that
5:26:42the sort of commodity costs are being
5:26:44appropriately adjusted and then review
5:26:46the prudence of that as part of that
5:26:49application process. the GCA like
5:26:52doesn't doesn't have that process but
5:26:54also doesn't isn't hasn't become a
5:26:56dumping ground. So sort of there's a
5:26:58separate process for the GCA if we had
5:27:00concerns there. Um but the ECA be in
5:27:03part because there is so much that is
5:27:05going through that and we want it to be
5:27:06able to return costs relatively quickly
5:27:09like in this instance that you know the
5:27:11overolctions on decoupling are going to
5:27:13go back to you know credited to
5:27:14customers through the ECA in order to be
5:27:17able to do that quickly. That's an
5:27:18effective place to do that. And then the
5:27:21annual ECAP PCCA application allows for
5:27:25that sort of wholesome exploration of
5:27:28whether or not all of those processes
5:27:30and costs were prudent and you know
5:27:32implemented correctly. So I think the
5:27:35structure works fairly well and SAP has
5:27:37you know litigated the last I don't I
5:27:39don't know how many ECA prudence reviews
5:27:41and taken pretty deep dives to make sure
5:27:43that we're comfortable with the costs
5:27:45that are flowing through that mechanism.
5:27:47Okay. Um, and curious as part of the
5:27:50settlement, has staff made any
5:27:52commitments as to its position regarding
5:27:54the scope and responsibility for
5:27:56replacement power costs or those are all
5:27:58kind of being freshly litigated in that
5:28:00upcoming proceeding.
5:28:02>> Yeah. So, um, you know, the company
5:28:05committed to doing the the replacement
5:28:07power cost modeling as part of this
5:28:10current Comanche um outage, the 2526
5:28:15outage. Um, in staff's testimony, this
5:28:18was in the testimony of Dr. Bonji Odino,
5:28:20we had originally asked for some sort of
5:28:22automatic replacement power cost
5:28:24modeling for future, you know,
5:28:26substantial outages. The settlement
5:28:29agreement contemplates that staff and
5:28:31the company would meet in sort of Q1 of
5:28:33each year to look back at the previous
5:28:36year and say, "Hey, um what were the
5:28:39major outages that were significant?"
5:28:41And the company would commit to modeling
5:28:43up to four instances um of outages to
5:28:47look at the replacement power costs. So
5:28:49I I think that's actually a great
5:28:51landing place for us so that we can
5:28:53identify what are the things that
5:28:54happened in the previous year that were
5:28:56most concerning in terms of outages but
5:28:58not have some automatic sort of rubric
5:29:01that may or may have caused a lot of
5:29:03work for the company that wasn't
5:29:05particularly insightful. Um so for
5:29:07Comanche we have you know explicit
5:29:10commitment from the company to model
5:29:12this outage and the replacement power
5:29:13costs and going forward I think a better
5:29:16structure of identifying what are the
5:29:18the outages that are most concerning and
5:29:21look at the appropriate replacement
5:29:23power modeling um that would be
5:29:25presented as part of those annual ECA um
5:29:27prudence review processes. So we were
5:29:29quite happy with that as an outcome.
5:29:31>> Okay. So they've agreed they'll do the
5:29:33replacement power cost modeling for the
5:29:36current outage but staff has not
5:29:38committed that you agree with their
5:29:41methodology or outcomes
5:29:44>> already to that.
5:29:45>> Correct. And and we have in the past you
5:29:48know litigated some of the the
5:29:49methodologies around replacement power
5:29:51modeling because yeah that that is um
5:29:54there's definitely different ways to do
5:29:56that and it's correct. Um I think that
5:29:58will be a wholesome discussion at the
5:30:00time that that prudence review is filed.
5:30:03>> Okay. A lot of moving parts in this one.
5:30:05So I just want to understand what you
5:30:07all have and haven't already committed
5:30:09to. Um and then has staff made any
5:30:13commitments as part of the settlement
5:30:14agreement to your position and a
5:30:18prudency review or other future filings
5:30:21regarding the scope and responsibility
5:30:23for repair costs for the unit?
5:30:26No, I mean
5:30:28correct. None of all of that is to be
5:30:30reviewed. Um the again all of it. So the
5:30:35costs of that are allocated to the
5:30:38company for the operations of Craig, the
5:30:40cost of the extensions of Comanche 2,
5:30:42the replacement power costs for the
5:30:44current outages, the capital additions
5:30:45and onm costs associated with that. All
5:30:47of that is reviewable in the future.
5:30:50there's been no agreement and no
5:30:52assumption that any of that is prudent
5:30:55or not.
5:30:56>> Okay. Um and then with regard to the
5:30:59permanent um unit 3 derates
5:31:02um would cost responsibility for kind of
5:31:06the lost value of lost
5:31:10capacity.
5:31:12Um do you think that is part of the um
5:31:15unit 3 princy filing?
5:31:18Um, I think it certainly could be. Yes.
5:31:22>> Okay. Um,
5:31:25okay. Moving on to a news topic. Um, Mr.
5:31:30Lairman and and I believe other
5:31:32witnesses also expressed concern about
5:31:34the company's apparent capital bias that
5:31:37leads them to um perhaps not necessarily
5:31:40focus on ON&M or personnel expenditures.
5:31:44Um, and we've heard from the company,
5:31:47um, their perspective that this wasn't
5:31:48an intentional cutting of personnel, but
5:31:50perhaps too slow to respond to market
5:31:53conditions that led to there being fewer
5:31:55people working in customer service. Um,
5:31:58other parties may take a different view
5:32:00as to the motivations and and what went
5:32:02on there, but as a result, there were
5:32:05fewer people serving customers,
5:32:07especially in customerf facing roles,
5:32:08which led to customer service declines
5:32:11that the customers experienced. um and
5:32:14and independent of the motivation or the
5:32:17reason the company did not pay those
5:32:19humans and therefore retained the money
5:32:22in that case um which aid in their
5:32:24profits. So, I'm curious um if you see a
5:32:28remedy to this going forward. You know,
5:32:30I've tried to think through if there's a
5:32:32more creative solution like using
5:32:35personnel costs as a tracker. So, there
5:32:38is no inherent benefit to the company
5:32:41when they have fewer humans, but if they
5:32:44need more, there's a surge in solar
5:32:46applications or whatever, it tracks and
5:32:49you can get more. So, just curious on
5:32:51any thoughts of that. This seems like a
5:32:53persistent problem. I don't know how
5:32:55many rate cases I've done now. Um but
5:32:57this is not a new issue and I feel like
5:32:59it would be nice to finally come up with
5:33:01a way to um solve for this.
5:33:04>> Yeah. Um great question. I we have all
5:33:07thought about this as well and obviously
5:33:09if there was like an easy silver bullet
5:33:11hopefully we would have all landed on
5:33:13it. I mean as I think about this issue
5:33:16and kind of this is speaks to on andm
5:33:18questions at large right and I think
5:33:22there's been some you know talk or
5:33:24proposals around either you know tracker
5:33:26or sharing on and m or even like getting
5:33:29a capex kind of return on and m I don't
5:33:33think staff is supportive of any of
5:33:34those solutions right this isn't capital
5:33:36that needs to be um financed and should
5:33:39get a return I think a py on and m I'm
5:33:42not even sure what the objective would
5:33:44be right do we want them to spend more
5:33:45or less um right if we're we have an
5:33:48incentive for them to reduce O and M
5:33:50that they get to share like that's
5:33:51continuing the the problem of them
5:33:53potentially not having spending enough
5:33:55on O andM and if it goes the other
5:33:57direction we're asking them to spend
5:33:58more money like I'm I'm not sure how we
5:34:01do that um I think where where we all
5:34:04generally land is feeling like this is a
5:34:07really good thing to discuss as part of
5:34:09that QSP is what are the what are the
5:34:12objectives ives are the goals that we
5:34:14want the company to meet and making sure
5:34:17we're having a clear definition of what
5:34:19that is. What is the reliability we we
5:34:21expected to rece to the excuse me
5:34:25customers to receive? What is the great
5:34:27granular? Again, I I want to not miss
5:34:28this at all because I know my QSP folks
5:34:31will be unhappy if I if I [laughter]
5:34:33don't don't reiterate again that
5:34:35systemwide reliability is not the only
5:34:37thing we care about, right? But the but
5:34:39the experience of customers across the
5:34:42system in DI communities in rural
5:34:44communities whatever are all very
5:34:45important. So so needing to make sure
5:34:47that like that's not one number in terms
5:34:48of reliability. But if we can define the
5:34:51goal and create some you know
5:34:54consequence or or focus on that that is
5:34:56the point of the of the PIMS and why
5:34:58we've kind of gone I think the
5:35:00commission as a whole has gone down the
5:35:02road of rather than adopting
5:35:05performance-based rate making sort of
5:35:07large have worked on establishing
5:35:10individual pins with targeted objectives
5:35:14right so in this instance I think that's
5:35:16a good QSP discussion what is customer
5:35:18service you know good customer support,
5:35:21what does that look like? Um, you know,
5:35:24power quality, Satie, safety, Kaye,
5:35:27Seami, Cely, like all of the metrics,
5:35:30um, that can be evaluated as part of
5:35:31that that QSP. Um, is a good place to
5:35:35define what is the commission's
5:35:37expectation for quality of service. Does
5:35:39that reflect continuous improvement
5:35:41where the we expect the company to
5:35:43continue to to get better every year?
5:35:46Um, and and what is that worth? and what
5:35:48is the budget that should be associated
5:35:50um with that performance to create a
5:35:53strong incentive for the company to
5:35:55counteract some of that capital bias.
5:35:58Sorry, that was a long-winded answer.
5:36:00>> No, that's okay. Uh I'm, you know,
5:36:04constantly uh thinking of this problem.
5:36:07So,
5:36:08I don't mind the length of an answer if
5:36:10we get any progress. Um
5:36:14uh few questions on the DCA, Pam. Um,
5:36:19so
5:36:22sorry, let me see. Oh, it's my
5:36:24understanding that the settlement at the
5:36:25DCA, Pam, would include an exclusion for
5:36:29extraordinary circumstances.
5:36:31I was curious from your perspective, is
5:36:33that a term that's defined or widely
5:36:35understood among the settling parties?
5:36:39>> No, I I I feel like this is this has
5:36:41come up in a number of different venues.
5:36:43I kind of agree with the company that
5:36:45it's it is intentionally undefied
5:36:48because we don't know what could happen
5:36:50that could you know reasonably be argued
5:36:52to be outside of the company's control
5:36:54that some you know major extraordinary
5:36:56circumstance and we all kind of reserve
5:36:59the rights to make those arguments at
5:37:02the time when we see what that
5:37:03circumstance is. So the XEu XEO
5:37:07metric is very very clearly defined
5:37:10reported to to to NERK as you know pages
5:37:13and pages of definitions of exactly sort
5:37:15of what goes into that calculation. And
5:37:17so I think we're very comfortable that
5:37:19sort of the basic calculus is relatively
5:37:22straightforward but that there needs to
5:37:24be some amount of allowance for things
5:37:26that we don't foresee. Um circumstances
5:37:29beyond the company's control and it's
5:37:30hard to define what those would be. Um,
5:37:33so kind of leaving that language a
5:37:35little bit open so that you know the
5:37:37company has some ability to make an
5:37:39argument in the future that isn't isn't
5:37:42a guarantee that you know we we can um
5:37:45attempt to argue you know disagree with
5:37:47that if if we think we would in the
5:37:49future. So we're sort of all kind of
5:37:50reserving all rights with a little bit
5:37:52of flexibility around a pretty clearly
5:37:54defined metric.
5:37:56>> Okay. And um I think the commission's
5:37:59talked in the past especially in the JTS
5:38:01about trying to the greatest extent
5:38:03possible to make similar
5:38:06um expectations on performance and
5:38:08financial risk among PPAs and company
5:38:11owned projects. And I'm curious if you
5:38:13see um an opening there with regard to
5:38:16the extraordinary
5:38:18circumstances to look to PPA agreements
5:38:22and contracts to try to understand is
5:38:26there a standard that we're already
5:38:27expecting of the other power producers
5:38:29that constitute something extraordinary.
5:38:32Um so that to the extent possible they
5:38:34can be treated the same.
5:38:36Yeah, I think that's a great question
5:38:38and I think yes, we I think we could
5:38:40look at that and see what's in those
5:38:42clauses. We have not taken that done
5:38:44that analysis, but I think we could. Um,
5:38:46but since you brought it up, if you'll
5:38:48allow me, I I think part of the other
5:38:50thing that we were trying to do with the
5:38:53DCP DCA PIM in the context of sort of
5:38:57resource planning is, you know, we have
5:39:00now because we had a settlement on PIMS,
5:39:03you know, we have structured both cost
5:39:05to construct and performance PIMs for
5:39:08new generating units that are coming out
5:39:10of resource plans. So, I think we've
5:39:12made a lot of progress in defining what
5:39:14those PIMs would look like for, you
5:39:18know, for forward-looking projects that
5:39:20are coming online. Now, one of the
5:39:22things the DCA py does, I think, in
5:39:24staff's view is kind of plug a hole,
5:39:27right? We we have those performance
5:39:29metrics around new stuff, but we want to
5:39:33make sure that the old stuff also um is
5:39:37maintained and performs. And so I think
5:39:41where we've we've seen some concerns um
5:39:44in other areas where if we unevenly
5:39:46apply performance incentive mechanisms
5:39:48that right some things get a lot of
5:39:50attention and some things get none. Um
5:39:52so part of the intent of that DCA PIM is
5:39:54to put all of the units um on a little
5:39:57bit more even footing where we're trying
5:39:59to indicate that the the performance and
5:40:01capacity availability for all of those
5:40:04units is important not just the new
5:40:06stuff. Um so slightly different question
5:40:08than when you asked just asked.
5:40:10>> No, but it's it's all related because I
5:40:13was going there anyway and looking at
5:40:15especially given the commissions per
5:40:17interest around ensuring to the extent
5:40:20possible we're treating uh company owned
5:40:23MPA generation similarly especially in
5:40:25terms of performance expectations in
5:40:27terms of um financial risk especially
5:40:31for non-performance
5:40:32or for increased costs going forward.
5:40:35Um, and curious if you all have done any
5:40:39analysis of the DCA PIM. Um, first of
5:40:42all to kind of compare those risks and
5:40:45performance expectations to what you'd
5:40:47see in a PPI, but then also to compare
5:40:50like the incentives to the anticipated
5:40:53like actual benefits gained by improved
5:40:57performance.
5:40:58>> Yeah. And and as Dr. Bunierina had
5:41:01mentioned yesterday. No, we we have not
5:41:05done that sort of benchmarking exercise.
5:41:07My intuition is that sort of the the
5:41:11structure of the pins,
5:41:15you know, it's it's putting a
5:41:17performance structure around the company
5:41:18units. It is not equivalent to making
5:41:21their cost recovery like a PPA. This is
5:41:23not pushing as much risk onto the
5:41:26company as a PPA would. They're still
5:41:28getting base rate recovery for these
5:41:29units. This is sort of a more marginal
5:41:32price signal to them or cost signal than
5:41:35sort of a a full-blown PPA type recovery
5:41:38would be. um you know a little bit this
5:41:41feels like this goes back into a lot of
5:41:42history right around the the 2021 ERP
5:41:47where there was a lot of discussion
5:41:48about PIMS and how to design them and
5:41:50what's appropriate for company owned
5:41:51generation and and where we came out was
5:41:55something that was trying to put some
5:41:56meaningful dollars on the table for the
5:41:58company without pushing them to a full
5:42:00sort of PPA type cost recovery model. um
5:42:05staff had made some some recommendations
5:42:07in that proceeding to be more like a PPA
5:42:09and I think the commission had landed on
5:42:12you know there's advantages to a mix of
5:42:14PPA and companyowned sort of structuring
5:42:17of assets and ownership and that those
5:42:20you know the objective wasn't to try to
5:42:22make them the same. Um so this is where
5:42:25we've kind of continued to land. The
5:42:27intent here was to have the DCA PIM look
5:42:30more similar to the other PIMs the
5:42:33company has for generating assets,
5:42:35particularly those new assets coming out
5:42:37of an ERP. Again, not trying to say that
5:42:39one asset is more important than the
5:42:41other. We want them all to be available
5:42:43and the energy resources all to run
5:42:46well. Um, so trying to kind of create
5:42:48some reasonably even incentives for the
5:42:51company.
5:42:52>> Okay. I will say there has been an ERP
5:42:55since the 2021 ERP where the commission
5:42:57gave some directives with regard to how
5:43:00similarly they would like some of these
5:43:02risk and performance expectations to be.
5:43:05Um but um so for both um the unit 3 and
5:43:10the DCA pins, we've heard other parties
5:43:14express concerns that there is no real
5:43:16containment of O andM or capital
5:43:19expenses to meet these especially if
5:43:21we're going to provide financial rewards
5:43:24on the upside. Um and just curious if
5:43:27there is any way to get a better handle
5:43:30on that. Is there like a ratio that
5:43:32makes sense or some sort of evaluation
5:43:36um to ensure we're not spending far more
5:43:39money than it's worth to achieve a
5:43:42certain marginal improvement?
5:43:45>> Yeah. So great question. So I think
5:43:47maybe you know different answer for for
5:43:49the two different structures. So the so
5:43:51the DCA PIM um you know I think
5:43:55reasonable concern one of their
5:43:57agreements as part of the settlement was
5:43:59for us to do a holistic PIM report and
5:44:01for us to sort of the staff to work with
5:44:03the company and what that would look
5:44:04like. Um you know all of the costs on
5:44:07and M or capital additions for the
5:44:09existing fleet will get reviewed in the
5:44:11future. Um I think a reasonable question
5:44:14would be is there suddenly some you know
5:44:16drastic increase in the on andm costs
5:44:18and all of the these you know the fleet
5:44:21and is that worth it? Is that a
5:44:23reasonable prudent investment to be
5:44:25making in order to ensure the
5:44:26availability of the fleet? Um I think we
5:44:29could look at you know some reporting
5:44:31requirements around that as well as sort
5:44:34of you know that's a thing that would be
5:44:36normal for staff to look at is the
5:44:37trends and on and m you know especially
5:44:39in in a rate case you know is what's
5:44:41included in the o um on&m expenditures
5:44:44for generating assets consistent with
5:44:46how they have operated or you know the
5:44:49costs in the past recognizing that those
5:44:51are lumpy um so that that's not always
5:44:53incredibly straightforward um but but I
5:44:56think those are reasonable things to do
5:44:57to kind track and monitor and look at
5:45:00historical trends to make sure that
5:45:02we're not seeing some, you know, huge
5:45:04increase in O and costs that um is a
5:45:06detriment to customers.
5:45:08On Comanche, I mean, we've there's been
5:45:12a lot of discussion, right, about the
5:45:13lack of um cost sort of containment as
5:45:17part of that performance framework. I do
5:45:19have to say I don't think staff is
5:45:21terribly worried about that for for a
5:45:23couple reasons, right? As as several
5:45:26people have noted, the O andM costs, you
5:45:28know, potential increase in ON& and M
5:45:30costs are not part of this rate case.
5:45:32And so that's these this rate case is
5:45:34based on a historical test year. Those O
5:45:36andM costs are not going to be reflected
5:45:38as part of this cost of service. At some
5:45:41future rate case, we can review those O
5:45:43andM costs. Again, if that occurs before
5:45:45before 2030, we have also made known and
5:45:48measurable adjustments to take out the
5:45:49costs for retiring units. So again, not
5:45:52worried that those are not going to be
5:45:54reviewed in the future. And similar on
5:45:57the capital additions, I think the
5:45:58company recognizes that they have a lot
5:46:01of risk if there's a suddenly an
5:46:03enormous amount of money capex spent on
5:46:05this unit that there's going to be a lot
5:46:07of questions about whether that's that's
5:46:10was prudently incurred costs. I don't
5:46:14not we're not concerned that people
5:46:15aren't going to review the c capital
5:46:17additions costs for Comanche in the
5:46:19future. Not saying I know now that they
5:46:22would be imprudent just saying that
5:46:23there will be a lot of attention and
5:46:24review and the company definitely has
5:46:26risk of um lack of recovery on all all
5:46:32things Comanche related moving forward.
5:46:35Um anyway so so I think staff is
5:46:37reasonably comfortable that that review
5:46:40is is will be robust in the future.
5:46:45>> Okay. And then um wanted to talk about
5:46:47kind of the bleed over of some of the
5:46:49changes of assumptions here into ERP
5:46:52proceedings just briefly. So um you know
5:46:56you're like on day four so you've heard
5:46:58all my questions already but um uh first
5:47:01of all with the changes to expected wind
5:47:03live um does that have like do you
5:47:07expect that has some relationship to
5:47:09what we'll see in ERP bidding and if the
5:47:13company changes its assumption on lives
5:47:16what do we look at for PPAs you know is
5:47:19there an imbalance to what we're
5:47:20allowing for the life of those assets in
5:47:23bidding
5:47:24Yeah. So, I mean, in terms of bidding, I
5:47:27don't think it's a like um developers
5:47:30are already able to bid whatever they
5:47:32want in terms of the the life of a wind
5:47:34plant. So, you'll see 15, 20, 25 year,
5:47:37you know, bids in there and then a
5:47:39levelized cost that's associated with
5:47:41those. It's or accelerating costs, but
5:47:43you know, the the developers, there's no
5:47:45constraint on them if they want to to
5:47:47change the the performance um you know,
5:47:50costs that they're bidding into the ERP.
5:47:52So, I think they're able to respond um
5:47:55you know, if they're looking at their
5:47:56own equipment and, you know, determining
5:47:58that it will, you know, perform for
5:48:00longer, they can bid that into the ERP
5:48:03and that's their calculation and risk um
5:48:06to take. I would expect the the
5:48:08five-year extension of these units to be
5:48:11reflected in phase 2 modeling. Um we
5:48:14were not explicit about that. I would
5:48:15be, you know, h happy to clarify that
5:48:18with the company, but if if we're
5:48:19approving that, right, I think that's
5:48:21the intent is that the assumption is
5:48:22that these units would continue to be
5:48:24operating for the additional five years.
5:48:27Um, so I would expect that to be
5:48:28reflected as part of that phase 2 JTS
5:48:31modeling, but that
5:48:33>> you're saying that existing units would
5:48:35necessarily in the encompass modeling
5:48:37reflect this new life.
5:48:39>> Correct.
5:48:40>> Okay. Um I I don't take anything for
5:48:43granted so I I like to ask I like
5:48:45>> No, it's a it's it is a question we
5:48:47should have asked and pinned down so I
5:48:48appreciate it. Um and then with regard
5:48:51to the others like specifically the DCA
5:48:53PIM maybe unit three but probably more
5:48:56relevant the DCA PIM you know if we've
5:48:59now established a firmer baseline for
5:49:02the expected availability of those units
5:49:06does that translate to something that is
5:49:08already in the ERP modeling or that
5:49:10should be updated to reflect what we are
5:49:13acknowledging here as the expected
5:49:15performance.
5:49:16>> Yeah. And here's where I would say like
5:49:18I I don't think of them as being exactly
5:49:21equivalent. So I think what what you
5:49:23want in the um in the encompass modeling
5:49:26is really the the company's best
5:49:29expectation of the availability of those
5:49:31those units. Um we can get the right
5:49:34ELCC's. We can try to understand the the
5:49:36you know required reserves and and you
5:49:39know capacity only if the company is
5:49:42really providing its best estimate. The
5:49:44DCA PIM sort of in similar ways to the
5:49:48to the Comanche framework is a little
5:49:50bit more about calibrating a goal with a
5:49:53reasonable baseline that was more tied
5:49:56to industry objectives so that we can
5:49:58kind of measure the company's
5:49:59performance and and I don't think of
5:50:02them as actually being the same. I don't
5:50:04think the DCA PIM baselines are now our
5:50:07expectation of what we see in modeling
5:50:10um in the JTS. I think those are
5:50:12slightly different things. Here's a
5:50:14structure and parameters with a deadband
5:50:16sort of with the goals associated, you
5:50:19know, particularly for the DCA pin
5:50:20because it's based on on potentially
5:50:23fairly old fleet units. Um, that's more
5:50:26about, you know, what we should be able
5:50:27to expect the company to perform
5:50:30the actual or I said that backwards, but
5:50:34you know, sort of this is the the
5:50:36reasonable goal for the company to try
5:50:38to be achieving. We want the JTS to just
5:50:42be really what is our best understanding
5:50:44of how the the the expectations
5:50:46recognizing that the statistics around
5:50:47that you know outcomes can be different
5:50:50from what our expectations are. We want
5:50:52to plan for that you know our our best
5:50:54understanding of those performance of
5:50:56those units. So I don't think they're
5:50:58equivalent and I don't think we would
5:51:00expect to see the DCA PIMS updated as
5:51:04the new expectation in the JTS modeling.
5:51:08>> Okay. Um couple questions on regulatory
5:51:11assets just um issues Mr. Schloozac
5:51:15fixed that. So I was curious some of
5:51:17your perspective on some of them. Um so
5:51:21Mr. Schloozac expressed concern that the
5:51:23settlement agreement on the excess
5:51:25liability insurance premium should have
5:51:27been capped at $50 million per the
5:51:30previous agreement and this agreement
5:51:32would provide for $75.2 million. So, I I
5:51:35was just curious if you could shed some
5:51:37light on if you see the previous
5:51:39agreement the same as he does and um why
5:51:43not?
5:51:44>> No, that's a great question. Um so, yes,
5:51:47we absolutely read the the requirements
5:51:50the same as UCA. I think the difference
5:51:52there is that it was a is and and Dr.
5:51:56Deep was the one who testified, but I
5:51:58but I prepped on this because I was
5:51:59hoping somebody would ask. Um, my
5:52:01understanding is that this was based on
5:52:04the actuals for 2024
5:52:07and a capped $50 million for 2025 and
5:52:11that that $75 million balance is is
5:52:15accumulative over two years. And so, you
5:52:18know, a deferral is an accumulation
5:52:19unlike the cost of service annual
5:52:21number. So I think the the cost for 2024
5:52:27was
5:52:29I think the 20 I think the cap hit in
5:52:31you know kicked in for 2025. So I think
5:52:33it was something like 25 million for
5:52:352024 and then the cap of 50 million for
5:52:382025 gets us to the deferred balance.
5:52:41the 24 2024 number may that might not be
5:52:44quite exactly right, but I'm I'm
5:52:46positive that that's what's happening
5:52:47here is we recognize the same $50
5:52:50million cap that you see I mentioned. I
5:52:52do think that's in Dr. Tapoo's um answer
5:52:55testimony. It's just that that deferral
5:52:58is an accumulation across across more
5:53:00than
5:53:00>> Okay. So, you see the $50 million
5:53:02happens annual, not cumulative. And you
5:53:05seeing it as cumulative. I'm really
5:53:08happy to make your studying pay off. Um
5:53:10I I just figure no question is too
5:53:13mundane. So I am here for all
5:53:15>> that's what that's what we're here for
5:53:17>> detailed questions. Um also around the
5:53:20aegis deferral
5:53:23um obviously you know he had pointed to
5:53:25just the concern about the reach forward
5:53:27for
5:53:29expenses not yet incurred. Um I suppose
5:53:33that's just something you came to in the
5:53:35settlement agreement. it is. But I also
5:53:38agree with the company's
5:53:39characterization of sort of we have a
5:53:41lot of deferrals as UCA points out and
5:53:44if we can try to start collecting them
5:53:47and being done and kind of like and now
5:53:49this is closed and here's the projection
5:53:51through the end of this and then we can
5:53:54you know just work on resolving them so
5:53:56that we're not hanging on to these
5:53:58deferrals forever. staff is supportive
5:54:00of of that of even if it, you know,
5:54:04frontloads that recovery a little bit
5:54:06but allows us to get it off the books to
5:54:08clean it up to not push that forward to
5:54:11future generations. Um,
5:54:15we do not like forecasted amounts. They
5:54:18do agree with the company's
5:54:19characterization that these sort of look
5:54:20forwards are more mechanical than sort
5:54:22of a typical forecast. um but also just
5:54:26wanting to get the the deferrals closed
5:54:28out and paid off and taken care of. It
5:54:30was a big driver for this case and
5:54:32that's unfortunate, right? That these
5:54:34deferrals that we've kind of punted to
5:54:36the future, at some point we need to
5:54:38pay. And you know, the sooner we can get
5:54:41that done and over with and more aligned
5:54:43with when those costs were incurred,
5:54:46that makes sense from an
5:54:47intergenerational equity perspective. Um
5:54:50you know, we don't have a prudence
5:54:52question with those costs. better to get
5:54:54them taken care of.
5:54:56>> Okay. Um and then on the coal combustion
5:54:58residuals, um those are included in the
5:55:01settlement agreement revenue
5:55:02requirement. Um you see some argues here
5:55:06that the settlement that the company
5:55:08agreed to that CCR would not earn a
5:55:11return. I'm curious if that was your
5:55:13understanding throughout or if that was
5:55:15just in the interim until they were
5:55:17introduced into a rate case. Like do you
5:55:18have a different understanding from UCA
5:55:21on that?
5:55:22>> Yeah. Yes, I think we we agree with the
5:55:25company that the the reading of that
5:55:27that decision was that it would get no
5:55:29return until they were brought forward
5:55:30in a rate case and then it would be an
5:55:32open question. So I think that's a
5:55:34that's a settlement issue of you know
5:55:36what's the reasonable way to treat that.
5:55:38I think there's different ways that it
5:55:40could have been handled. Um you know in
5:55:42the interest of the settlement we staff
5:55:44agreed to a a wack return on that um
5:55:47this $12 million deferral um part of the
5:55:50cost of service. Um and then the
5:55:53settlement agreement um provides the
5:55:56company 50% um reimbursement for their
5:55:59environmental long-term incentive for
5:56:03personnel. Um this is something the
5:56:05commission previously had had denied. So
5:56:08I was curious um have has the company
5:56:11changed their goals for that program to
5:56:13definitively exceed state law targets?
5:56:16Was there something particularly
5:56:18compelling here or this was just part of
5:56:19the settlement give and take situation?
5:56:22>> Yeah, this is very much just part of the
5:56:24the um negotiation settlement. There was
5:56:27there's no more magic to it than that.
5:56:29>> Okay. So, no nothing that compelled you
5:56:33that their um requirements now uh exceed
5:56:37state law targets or anything like that.
5:56:39That has been an issue in the past with
5:56:41recovery investment money.
5:56:43>> Correct.
5:56:44>> Okay. Um, okay. Just a couple more
5:56:47questions. Um,
5:56:50so I wanted to ask you a little bit
5:56:52about the appendix A annual reports. Are
5:56:55you familiar with those?
5:56:57>> I am.
5:56:58>> Okay. Were you listening to my
5:56:59conversation with Mr. Freighus on
5:57:01Friday?
5:57:02>> I did.
5:57:03>> Okay. So, we were talking about his uh
5:57:06earned return table, which was table APF
5:57:09R4 in his rebuttal. um and how these
5:57:13earned returns differed from some of
5:57:16what uh public service company was
5:57:18reporting elsewhere. Um and it sounded
5:57:21like the main issue there was the
5:57:22exclusion of riders especially
5:57:25considering that revenue from riders has
5:57:28uh increased significantly over the past
5:57:30year certainly over the past two years.
5:57:31Are you familiar with all that
5:57:33discussion?
5:57:34>> I heard that discussion. Yes.
5:57:36>> Okay. Um, so this essentially led to a
5:57:39difference in the reported uh earned ROE
5:57:42in the company's um table in Mr.
5:57:46Freredis' testimony from being 5.73%
5:57:50uh to and and that's actually what is
5:57:52represented in appendix A to my
5:57:54understanding to what they present in
5:57:57their uh earnings presentation to
5:57:59investors of 7.55%.
5:58:02So, um, okay. So, I just wanted to delve
5:58:05in just for a moment into appendix A.
5:58:08It's my general understanding that the
5:58:10annual appendix A report is is rooted in
5:58:13electric rule 306A
5:58:16and gas rule 406A.
5:58:20And based on this, there's kind of a
5:58:21questionnaire on what utilities are
5:58:24required to to submit. And so I'm just
5:58:28curious from your perspective given the
5:58:31questioning there are. I'm not
5:58:33necessarily reading it to say you should
5:58:35exclude writers. That seems like more a
5:58:38choice than a directive. So perhaps you
5:58:41could give me some insight into what you
5:58:44believe appendix A asked for if you
5:58:46think there are um improvements needed
5:58:49there if we're getting this sort of
5:58:51confusing reporting um from utilities
5:58:55that's not directly comparable to really
5:58:57anything else.
5:59:00>> Yeah, that was a fascinating discussion.
5:59:02Um I mean I think the intent of the
5:59:05appendix A's and they and this is
5:59:07reporting we've gotten for a very long
5:59:08time and has not really substantively
5:59:10changed. I think when it was developed
5:59:13the idea was um was to get a good
5:59:16understanding of the company's
5:59:18regulatory books and that that would be
5:59:20different than their tax books or GAP
5:59:23books. I mean for instance you know to
5:59:24your point about the um executive
5:59:27compensation right they can pay their
5:59:29executives whatever they want. not all
5:59:31of that is necessarily recoverable from
5:59:34Colorado rateayers. So that would be a
5:59:36difference between their regulatory
5:59:37accounting and their, you know, IRS or
5:59:40you tax GAP accounting, right? Um, and
5:59:43there's a lot of things like that of
5:59:44what we allow for recovery of from the
5:59:47state's perspective versus costs that
5:59:50they might incur. Any disallowance that,
5:59:52you know, that occurs, um, any bonus
5:59:54they paid may be treated differently.
5:59:57Um, so there's lots of reasons why those
5:59:59things might be different. And what we
6:00:01wanted, you know, the purpose of the
6:00:03appendix A is to get that regulatory
6:00:05look to be able to to check the
6:00:07compliance and make sure that what they
6:00:10are, you know, actually collecting from
6:00:14customers is reflective of that cost of
6:00:16service and sort of see what that
6:00:17results would look like in between rate
6:00:19cases as well as in in test years. Um, I
6:00:22think what's happened obviously in
6:00:24recent years, as I talked about on my
6:00:25answer testimony, is that there's a lot
6:00:27more capital writers now than there had
6:00:30been in the past. And I would have to
6:00:32actually review the appendix A questions
6:00:34to to see, but my guess is that it could
6:00:37be interpreted either way as a request
6:00:39to include rider, you know, returns on
6:00:42capital that's recovered through writers
6:00:44or not. Um, but I I think this is a good
6:00:47call out and an opportunity for staff
6:00:49and the commission to look at that
6:00:51questionnaire to determine whether it's
6:00:54really capturing the things that we want
6:00:55it to and whether it ought to be
6:00:57revised. Maybe maybe we want both looks
6:00:59at the world of including and or
6:01:01excluding riders. The beauty of that
6:01:04questionnaire is that it's actually that
6:01:05the rules reference it, but the
6:01:07questionnaire itself is not called out
6:01:09in rules. And the intent there was to be
6:01:11flexible so that we could look at it and
6:01:13see whether it's actually giving us the
6:01:15information we we want. So it's been
6:01:17reported that way for a very long time.
6:01:19So I would not want to make changes to
6:01:21that willy-nilly because I think having
6:01:23that long history of being able to see
6:01:25how it's been reported over a long
6:01:27period of time is very helpful. but
6:01:29maybe an additional look at the world
6:01:31where we're asking utilities to do some
6:01:34of that same reporting inclusive of
6:01:36riders so we can get a better
6:01:38understanding on their actual returns um
6:01:41would be helpful. I will also note that
6:01:43I'm not I am not the finance person but
6:01:46there was some discussion about the sort
6:01:48of double leveraging and stuff this
6:01:49morning. It's not clear to me that a
6:01:51100% of the difference between the
6:01:54earned sort of regulatory return and
6:01:56what they're reporting to investors is
6:01:58as a result of writers. I don't know.
6:02:00But I think that's part of the point,
6:02:02right? Is that perhaps if we had better,
6:02:04more detailed reporting, we'd get a
6:02:06better handle on sort of what what is
6:02:08really driving the difference between
6:02:09those two numbers. Um, I don't know if
6:02:13that actually answers your question, but
6:02:14I think it was a very interesting thing
6:02:16for for um staff perked up and was very
6:02:18um interested in that that conversation
6:02:20in that suggestion.
6:02:22>> Yeah. And I guess do you have any
6:02:26do you understand if all utilities are
6:02:29even reporting it the same? Like it
6:02:32seems like perhaps the question is a a
6:02:35bit open for interpretation. So I'm
6:02:38curious, do we really know for sure that
6:02:40over time this utility has reported it
6:02:42in the same convention? And even in real
6:02:45time, are different utilities reporting
6:02:47it in the same convention?
6:02:50>> Yeah, it's a good question. My I am we
6:02:53do have staff members that take a deep
6:02:55dive on the appendix A and make sure
6:02:56that the utilities are complying with
6:02:58with all the requirements that are in
6:03:00there and taking a look at those
6:03:01numbers. I am not that staff member. Um,
6:03:04so I I think our understanding is that
6:03:07everybody is essentially reporting it
6:03:08the same way, but I I think it is well
6:03:12worth checking and making sure that
6:03:13that's that's the case and trying to be
6:03:15a lot more clear with everybody, both
6:03:17gas gas and electric utilities. Um, you
6:03:20know, obviously the capital rider issues
6:03:21are much more prevalent um for public
6:03:23service electric than anybody else. Um,
6:03:26so it would be the biggest difference
6:03:29here. Um but I I cannot guarantee that
6:03:32it is being done the same for each
6:03:34utility.
6:03:36>> Okay. Well, I certainly would have
6:03:38interest going forward in understanding
6:03:40how those reports can be improved, how
6:03:42we can ensure they're consistent uh both
6:03:45across utilities but also from time to
6:03:47time with the same utility and how we
6:03:49can really better liken that information
6:03:51to information that might be available
6:03:53elsewhere which at least at the current
6:03:55moment looks quite different and can be
6:03:57a very confusing situation. So um any
6:04:01great help you can provide I understand
6:04:03this may not be your main uh
6:04:06>> your main deep dive but um I think staff
6:04:09would ideally be helpful to help us
6:04:11identify those things. Yeah, agree. And
6:04:13I mean obviously the objective of the
6:04:15appendix A was to give us that sort of
6:04:17look at what what is the regulatory
6:04:20accounting based on the things that the
6:04:22commission has approved and if all of
6:04:24that is ignoring a great deal of what
6:04:26the commission has approved through TEPs
6:04:29and GMAC writers and clean heat plans
6:04:31and stuff like then we're not getting
6:04:32the look that we that we want. So agree
6:04:35I think it it is essentially not serving
6:04:37its purpose as currently um constructed.
6:04:41>> Okay. Um, well, thank you. Those are my
6:04:43only questions.
6:04:47>> Thank you, uh, Commissioner Gilman. Uh,
6:04:50hey, so Neil,
6:04:55>> uh, I want to dig a little deeper into
6:04:56the O andM spending and customer
6:04:59service. Uh, and just create a little
6:05:01background. Uh, based on Mr. Pay's oral
6:05:05testimony. This record seems clear that
6:05:07the company cut on and M by 40 million
6:05:09in 2023 and that these savings acrewed
6:05:13to the company and not customers. Would
6:05:16you accept that characterization or
6:05:18would you say it different?
6:05:21>> Um, no. I mean, I think as as Mr. K
6:05:24pointed out, I think it's it's unclear
6:05:25exactly what got cut and you know
6:05:28whether that's sort of a lumpiness
6:05:30factor or an intentional um cutting of O
6:05:33and M, but but I think the numbers would
6:05:35support that.
6:05:36>> Okay. Uh, can we pull up what has been
6:05:39marked as hearing exhibit 1524?
6:05:42And let me represent to you that this is
6:05:45the uh Colorado PUC trial staff
6:05:48investigation in the customer care and
6:05:50billing issues from April 2025.
6:05:54I think you did this uh presentation.
6:05:56So, I'm going to assume you recognize
6:05:58this.
6:05:59>> I I think Dr. Buniardina and um our DOE
6:06:03fellow Tamar Moss did the actual
6:06:05presentation but I am familiar with the
6:06:06document.
6:06:07>> Okay, thank you. Can we go to page two?
6:06:11>> And do you see that customer complaints
6:06:14uh per thousand for example file with a
6:06:16PU more than tripled from 2022
6:06:20uh to 2024 all the way uh in the right
6:06:23column?
6:06:24>> I see that. Yes. On page four, do you
6:06:27see the decline in customer satisfaction
6:06:30from 2020 to 2024?
6:06:34>> I do.
6:06:35>> Uh on page five, do you see that public
6:06:38service company average response time to
6:06:40a customer call in 2024 was seven times
6:06:43uh page five?
6:06:46If you could go down one.
6:06:54Thank you. Do you see uh that the
6:06:57average response time to a customer call
6:06:59was over 7 minutes when the uh QSP
6:07:02metric is 45 seconds or over 10 times
6:07:05longer? And do you see that the
6:07:07percentage of calls answered with in 45
6:07:10seconds fell uh since 2022?
6:07:13>> I see that. Uh on page six, do you see
6:07:18if you could go to the next page, do you
6:07:20see that uh 200,000 calls were
6:07:22terminated by customers or over four
6:07:25times as many calls from 2022 and over a
6:07:28100,000 were auto disconnect connected?
6:07:31Uh is that right?
6:07:33>> That is what this shows. Yes.
6:07:35>> And uh I guess Mr. K was arguing that
6:07:39perhaps some of the outage and
6:07:40reliability concerns were weather
6:07:43related, but do you think any of uh this
6:07:45is weather related?
6:07:48Um
6:07:50I I have no idea how much the in terms
6:07:53of customers being terminated, but the
6:07:56process that the company implemented to
6:07:58autod disconnect customers um is you
6:08:02know seems like a choice that was made
6:08:03to to create a process whereby customers
6:08:05would would be auto disconnected.
6:08:08>> All right. Uh any objections uh if this
6:08:11was uh admitted into evidence?
6:08:16Mr. Larson.
6:08:20>> Um, I don't I don't have any objections.
6:08:24Thanks.
6:08:25>> Thanks. Uh, can we pull up hearing
6:08:27exhibit uh 1525?
6:08:30Let me represent this is a 2024
6:08:32settlement agreement in the 2023 quality
6:08:36of service proceeding 23A-356E.
6:08:43>> Do you see that? I do.
6:08:46>> Uh can we go to page two at and look at
6:08:50the bottom?
6:08:53Do you see that? Uh uh and maybe scroll
6:08:57a little to the top of page three. Do
6:08:59you see that the uh CBG SAT metric is
6:09:03capped at an annual amount of 7.73
6:09:05million?
6:09:07>> Correct.
6:09:08And if you can go to page three, do you
6:09:10see that the customer complaint
6:09:12penalties are capped at 1.1 million?
6:09:16>> Yes.
6:09:17>> And telephone response time if you keep
6:09:19going down is capped at 1 million. 1.1
6:09:22million.
6:09:23>> Correct.
6:09:25>> And if you can keep uh going down and
6:09:28the CI CMI is capped on page four at 1.1
6:09:32million. Is that fair?
6:09:34>> That is fair. And then the same for C L
6:09:37I at the bottom of page four.
6:09:42>> Yep, I see that.
6:09:44>> I know that subsequent uh you can take
6:09:46this. Well, actually um I know that
6:09:49subsequent decision index some of these
6:09:51caps to inflation, but I believe Mr. P
6:09:54testified that the total QSP cap was in
6:09:58the 10 to 15 million range. Uh would you
6:10:01agree with that or would you say it
6:10:03different? Yeah, I think it's
6:10:04approximately $12 million is the the
6:10:07total um potential penalty budget on and
6:10:12an annual basis approximately.
6:10:14>> Okay. Any objections if uh this was met
6:10:16admitted, Mr. Larson?
6:10:19>> No objection.
6:10:21>> Okay. If we could admit it, that'd be
6:10:23great. Um and just one more thing. Uh,
6:10:28can we pull up 517?
6:10:32And uh, you might recogn
6:10:35>> Did you mean 1517?
6:10:37>> Oh, yeah. Sorry. 1517. Thank you.
6:10:46And let me just represent this is the
6:10:48staff outage report from 254I-394E.
6:10:53And uh, do you recognize this, Miss
6:10:56O'Neal? I do.
6:10:58>> We could turn to page 13
6:11:04and you can see these are the actual
6:11:06penalties uh paid by the customers under
6:11:08this program. Is that that fair?
6:11:11>> Yes.
6:11:12>> All right. So, I guess here's the
6:11:14question I'm trying to get to. You can
6:11:16take this down. I'm concerned that the
6:11:19company is making a simple business
6:11:21decision that creating $40 million in
6:11:23pre-tax earnings in 2023
6:11:26was more valuable than whatever expected
6:11:29cost was associated with the subsequent
6:11:31QSP penalties and reputational,
6:11:34regulatory or brand damage resulting
6:11:37from the customer shortcomings.
6:11:40Do you have any thoughts uh if that's
6:11:43what's going on here?
6:11:46So I have no reason to believe that the
6:11:49company is intentionally
6:11:52reducing reliability, right? The company
6:11:54clearly has an incentive to reduce O
6:11:57andM between rate cases. That's both
6:11:59good and bad, right? As the company
6:12:01identified, being efficient um and you
6:12:05know, if possible, reducing cost while
6:12:07maintaining service is a good outcome.
6:12:09It is
6:12:11as I sort of talked about with
6:12:12commissioner plan it is difficult to
6:12:14know what the right amount of O andM
6:12:16spending is right we want it to be
6:12:19enough to maintain reliability but not
6:12:21so much that when we get to a test year
6:12:23the company is going to be overreovering
6:12:25on on&m expenses. So I think as I said
6:12:30then that you know the the QSP is a good
6:12:32place to have that discussion of what is
6:12:34the performance that we expect to see
6:12:37and and what is a at least some way of
6:12:40trying to counterbalance that capital
6:12:42bias to put some attention onto those
6:12:45reliability performance metrics. Um
6:12:49I I may have lost the thread of your
6:12:51question apologies and I'm not sure if
6:12:53I'm now answering it or not. I guess I
6:12:56I'm just worried that the
6:12:59that the company is not financially
6:13:03motivated to uh avoid these problems
6:13:08because the in because the benefits of
6:13:10cutting the on and m are so much greater
6:13:14than the penalties under the QSP.
6:13:17Um so that's the concern. I mean, I'm
6:13:20not trying to get to uh intent whether
6:13:24there was some conversation in probably
6:13:26Minnesota that said, "Oh, let's cut O
6:13:30and M and we won't worry what happens to
6:13:32quality of service." But I mean, clearly
6:13:35it seems like the incentives are not
6:13:38aligned. So,
6:13:40any comments on that? I I mean I think
6:13:43SA staff shares a lot of that concern
6:13:45which is I think why we have in many
6:13:48instances sort of pushed for PIMs of
6:13:52different kinds right I mean I think
6:13:53it's a similar concern on the DCA PIM
6:13:56right recognizing that there's some
6:13:57discussion about whether that makes
6:13:58sense or not that we have the same
6:14:00concern there of if there's not a sort
6:14:02of more explicit um incentive for the
6:14:05company or consequence to not
6:14:07maintaining its units that the
6:14:09performance might not be as as good as
6:14:12it could be. Um, and so just trying to
6:14:14to work within a system to align those
6:14:16incentives and create an interest in the
6:14:19company um to perform in specific
6:14:23quantifiable areas. Um, so so yes, I
6:14:27mean I think that that that is an
6:14:29incentive for the the company to reduce
6:14:32on and m um as a way to to make earnings
6:14:36um in between rate cases. I think that
6:14:38incentive exists. Are you worried that
6:14:40the same thing is going to happen again
6:14:42after this rate case that in 2026 the uh
6:14:46company will once again uh cut and m and
6:14:50we'll see uh more customer service
6:14:53problems uh arise this year and next
6:14:57>> um I mean yes and no like
6:15:00that incentive is clearly not entirely
6:15:03obated here um I think there's there's
6:15:06pieces of this that are pushing in the
6:15:08direction of trying to address and and
6:15:10sort of counterbalance some of that um
6:15:13bias. I think having a QSP rule making I
6:15:16think having a WMP and PSPS rule making
6:15:20where we have a wholesome discussion
6:15:22about what are the performance metrics
6:15:24and and structures for those programs
6:15:27that we expect to see from the company
6:15:29and defining some of that performance
6:15:31will help. Um as I noted earlier the the
6:15:35QSP we're in our the last year of the
6:15:37electric QSP. This is a discussion to to
6:15:40pick up and have as part of that as well
6:15:42is to are these the right metrics and
6:15:44the right dollars to to have associated
6:15:47with the company's QSP. Um but but yes f
6:15:52making sure you know the idea that that
6:15:56there is a balance between capital and
6:15:58spending and reliability and on and m
6:16:00yes this this is I think a a obviously
6:16:03an area that the commission and staff
6:16:04are concerned with. Assume for purposes
6:16:07of this question that the company cut uh
6:16:11on&m by $40 million again in 2026
6:16:16and we had the exact same customer
6:16:19services and reliability problems that
6:16:21we just discussed as in 2024.
6:16:25How does the settlement agreement or any
6:16:27of the rulemakings uh you mentioned
6:16:30protect customers against that scenario?
6:16:35Um
6:16:38so uh
6:16:43this break case is a based on a
6:16:45historical test year. Um so the the cost
6:16:48of of service is based on the 2025 test
6:16:51year. It is not really speaking to 2026
6:16:53clearly other than performance incentive
6:16:56mechanisms or you know performance
6:16:57frameworks that are proposed as part of
6:17:00this. So um you know this did not touch
6:17:03on QSP metrics as we have a structure
6:17:06and an application to to do that. So in
6:17:09terms of actual specific distribution
6:17:12reliability outcomes this does not this
6:17:17proceeding and settlement does not
6:17:19address that.
6:17:21>> Can we pull up what has been marked as
6:17:22hearing exhibit 15 uh 26? Uh let me
6:17:26represent that this is the form 10K for
6:17:29public service company for quarter 1 of
6:17:322026.
6:17:40Do you see uh uh on the second line for
6:17:44the quarterly period ended March 31,
6:17:472026?
6:17:48>> I see that.
6:17:50>> Uh can we turn to page four, the
6:17:53consolidated income statement?
6:17:56And if you can uh focus in on u do you
6:18:00see the white line under operating
6:18:03expenses? The fourth line down uh do you
6:18:05see operate operating and maintenance
6:18:08expenses and do you see in uh the first
6:18:12quarter of 2025 the company spent 242
6:18:15million and the first quarter of 2026
6:18:18the company uh spent 230 million. Do you
6:18:22see that
6:18:24>> they cut um O andM spending by 11
6:18:26million?
6:18:27>> I see that.
6:18:29>> Is it fair to say that if this level of
6:18:31O andM cuts were maintained across the
6:18:33calendar year, we'll see another $40
6:18:35million plus actual cut in O andM in
6:18:382026.
6:18:40Is that math? Uh [laughter]
6:18:44>> four times 10, yes, is is 40 million.
6:18:47Yes, I I can confirm your math.
6:18:49>> Thank you. You can take this down. I
6:18:51understand that this is indicative and
6:18:53not determinative and tons of other
6:18:56things uh can be going on but it does
6:19:00seem suggestive that the same things
6:19:02happening all over again. Any comments
6:19:05or thoughts?
6:19:08Um again hard hard to reach a conclusion
6:19:11from one one quarter of uh results but
6:19:16um you know as I we said the company
6:19:19does have an incentive to reduce on and
6:19:21m that is good and bad um and that you
6:19:25know I think in staff's view this was
6:19:27just not necessarily the right venue to
6:19:29be addressing you know distribution
6:19:31system planning or quality of service
6:19:33penalties that we have venues um for
6:19:36trying to take a look at those. Um, so
6:19:39this settlement agreement did not focus
6:19:41on the reliability, distribution level
6:19:44reliability.
6:19:45>> Fair enough. Um,
6:19:47see what you think of this question.
6:19:49I've always viewed Colorado as a light
6:19:51touch regist regulatory state. For me
6:19:54that implies that if QSP exists with
6:19:57defined metrics and penalties there's an
6:20:00assumption or trust that a regulated
6:20:02monopoly will utility will at least to
6:20:04some degree degree moderate its behavior
6:20:08to take into account the expectation uh
6:20:11that it will provide reasonable service
6:20:14at fair rates and you know not just act
6:20:17solely in pursuit of its own bottom line
6:20:19even if the caps are set too low or the
6:20:22metrics are not perfectly defined. I'm
6:20:25now concerned that this truster
6:20:26assumption may not apply uh as strongly
6:20:30to this utility um as it has in the
6:20:33past. Um you've been here a long time. I
6:20:36just be curious if you share that
6:20:39concern that um it's just much more
6:20:43aggressive about responding uh uh to
6:20:47misaligned financial incentives. I mean,
6:20:50it's all over the settlement agreement.
6:20:52you fix like or try and address 10
6:20:55misaligned incentives. We probably heard
6:20:58five more, you know, whether it's
6:21:02capital spending on a transmission or
6:21:04distribution case, uh operation of the
6:21:07plants, you know, you put a payment on
6:21:09the CPP and it comes in on budget,
6:21:12everything else doesn't. Uh uh do you
6:21:16think it's changed over time? Um, I
6:21:18mean, I've been here 5 and a half years,
6:21:20and I I think uh there's a sharper focus
6:21:24on taking advantage of misaligned
6:21:26regulatory incentives than there has
6:21:28been in the past, but uh or I'm
6:21:30concerned that it is, but I don't get to
6:21:33talk to the company uh um and you know,
6:21:37except in these contexts. So, I'm just
6:21:39really curious to hear your view of
6:21:41this.
6:21:43So
6:21:46I I do feel like there has like in the
6:21:49past and when I first came to the
6:21:50commission
6:21:52the company was sort of starting with
6:21:54this implementation of its steel for
6:21:56fuel strategy which was a win-win and
6:21:58was a great sort of way to go about this
6:22:01that created real opportunities for the
6:22:03company to invest and earn and grow its
6:22:05earning base at the same time that there
6:22:07was a a savings proposition for
6:22:09customers right through reduced fuel and
6:22:12and that that proposition worked and
6:22:14kind of got everybody sort of rowing in
6:22:17the same direction and and sort of
6:22:18creating benefits, right? But that
6:22:21proposition doesn't last forever. And I
6:22:22don't I'm not saying that we're done
6:22:23with I mean, I still think we are seeing
6:22:25as the units come online from the
6:22:28approvals in the 2021 ERP that that you
6:22:32know, we are still implementing pieces
6:22:34of that steel for fuel strategy and that
6:22:36that proposition of additional cap
6:22:39capital with some reduced fuel savings
6:22:41is still part of the dynamic of what's
6:22:43what's happening in the state. Um, but
6:22:46the sort of what does that look like in
6:22:48the next generation of how do we align
6:22:51company earnings incentives and quality
6:22:53of service? I feel like that's the
6:22:54struggle we're having right now is is
6:22:56not knowing exactly what comes next to
6:22:58align those incentives. at the same time
6:23:00that the company's infrastructure is
6:23:02aging and you know I don't know that I
6:23:06have any evidence to to support the like
6:23:09the investment cycle conversation about
6:23:11right is is this the the moment in time
6:23:13when we suddenly need to replace a lot
6:23:15of equipment. It seems to to be at least
6:23:18um anecdotally accurate right that
6:23:21there's an awful lot of of distribution
6:23:23system and transmission investment
6:23:25that's coming before us now. um a lot of
6:23:28work to be done on wildfire um which is
6:23:32increasing costs without you know an
6:23:34offsetting sort of reduction in rates.
6:23:37There's certainly benefits to customers
6:23:39from wildfire mitigation. Um so I don't
6:23:42want to imply that there isn't there's
6:23:43huge benefits to doing that that work.
6:23:45They're just not in rate reductions like
6:23:47the steel for fuel was. So I think what
6:23:49you're asking is just a very very
6:23:50complicated question. I think it is
6:23:53accurate to say that we want to to
6:23:55figure out how you know the future looks
6:23:58like something that will benefit both a
6:24:00healthy utility and its customers and
6:24:03that I don't think that we have heard
6:24:05any articulation of what that vision is.
6:24:08I don't think we've ever heard the
6:24:09company articulate that it is
6:24:10intentionally reducing reliability
6:24:13either. Um but but I do think that is
6:24:15the question is what is the vision for
6:24:17the next generation um for you know
6:24:20Excel and its Colorado customers. All
6:24:23right, hold on to that thought. We're
6:24:25going to come back to that a little bit.
6:24:26Uh but uh uh just sticking to the QSP
6:24:31um uh and this concern that the company
6:24:34is just going to follow its uh financial
6:24:37incentives given the lack of uh adequate
6:24:40regulatory pen penalties. Uh Boulder has
6:24:43its own proposal. Uh but what do you
6:24:45think about the following? Given the
6:24:48size of the O andM cuts and the
6:24:49company's claim that they've resolved
6:24:51the quality of service uh concerns,
6:24:54should we in our order in this case
6:24:57increase each of the QSP cops uh by a
6:25:01factor of say five to send a message uh
6:25:05that the type of poor service
6:25:07performance that we saw in 2024 is
6:25:10unacceptable.
6:25:11and uh um to solve uh to address a
6:25:16concern which I don't think I've heard
6:25:18is addressable in any of the um
6:25:22solutions you've offered future
6:25:24rulemakings the next QSP.
6:25:27Uh I mean I think uh I'm concerned on M
6:25:31cut now. I'm concerned that it's going
6:25:34to lead to the exact same thing. So it's
6:25:37like uh fool me once, shame on you. for
6:25:40me twice. Shame on me. [laughter]
6:25:43So any comments uh to that uh uh
6:25:48proposal?
6:25:50>> Yeah, I mean I think that the commission
6:25:53has an approved QSP program for the
6:25:57company that goes through 2026. that was
6:25:59a substantial increase both in the
6:26:01number of metrics and the numbers of
6:26:03dollars at stake as that you know in
6:26:05that if the commission finds that that's
6:26:08not sufficient my suggestion would be to
6:26:11to take it up in the QSP cycle that
6:26:14again should be filed this year for a
6:26:16pro QSP program that starts in 2027 and
6:26:20that that's a more appropriate venue
6:26:22than ordering that in this proceeding on
6:26:24this record
6:26:25>> perhaps but do you understand it's not
6:26:27going to influence and so and I'm
6:26:29spending in 2026 and if [laughter] they
6:26:32ship the customer service department to
6:26:34India
6:26:36>> I I I do understand the timing issue I
6:26:39do and I mean that was a struggle for
6:26:41staff and number of these things right
6:26:42why it was important for us to start the
6:26:44DCI PIM in 2026 and for the Comanche PIM
6:26:47to start as soon as this rates effective
6:26:49in this area I I understand the timing
6:26:51concern I do um I I just think that
6:26:54there's there's not a a record there's
6:26:55not been and I'm not I'm not the lawyer
6:26:57But right, there hasn't been discussion
6:27:00and testimony and definitions of, you
6:27:03know, what the right metrics are and
6:27:05that whether there's different ways to
6:27:06to focus those dollars on different
6:27:08pieces of that. And that is what the QSP
6:27:11application and process is for is to to
6:27:14establish those things. Um,
6:27:17feels like you're making your intent
6:27:19loud and clear to the company and
6:27:21expectations of what that next USP will
6:27:24look like. Well, I need another vote and
6:27:26uh it's uh and it's not clear how far we
6:27:29can go in this case, but I mean we do
6:27:30have a proposal from Boulder in front of
6:27:32us.
6:27:34>> Um agree. I think the the Boulder um
6:27:37proposal, right, is to as I understand
6:27:39it, and I did not review that testimony
6:27:42very closely, um was more about tying
6:27:44the O andM results to
6:27:48um to O uh to ROE earnings. And and
6:27:52again, I mean, I feel like in
6:27:53particular, that one feels like a
6:27:55caution to me in the sense of there's an
6:27:57awful lot of things that the company
6:28:00does and that customers care about.
6:28:02Emissions reductions, um, you know, e
6:28:05equity implementations, like there's
6:28:08just a lot. So, to pick one metric and
6:28:11say that that's what you're going to tie
6:28:13the roe to feels a bit tenuous to me. um
6:28:18and and maybe should be part of a bigger
6:28:20conversation.
6:28:21>> I understand. Um it seems like uh just
6:28:24shifting topics, it seems like capital
6:28:26spending has tripled from 2021 to 2025
6:28:30and that this higher spending, capital
6:28:33spending, increased rate base, earnings,
6:28:35interest, expense, depreciation, and
6:28:37taxes and uh is likely far and away the
6:28:41biggest driver behind the rate increase
6:28:43in this case and is likely to drive
6:28:46sustained future rate in increases.
6:28:49Would you accept that characterization
6:28:51or would you say a different?
6:28:53>> Well, I'd say that the capital that's
6:28:55being rolled into rate base now, the the
6:28:58largest rate impact to that is going to
6:28:59be now, right? As that stuff gets
6:29:01depreciated in the future, it will have
6:29:03a lower it it's future capital spending
6:29:06that will continue to drive future rate
6:29:09increases.
6:29:09>> Agreed. Agreed. Um, so can we pull up
6:29:13your answer testimony hearing exhibit
6:29:15400 of page 17
6:29:18and uh do you see uh where you calculate
6:29:22that the annualized growth in rates from
6:29:242023 to 2026 is 10% and a cumulative
6:29:2833.1%.
6:29:31I think you talked about this with uh
6:29:34other uh in other uh crosss.
6:29:38>> Yes, I see that. And if we go down a a
6:29:41page, do you see that inflation is
6:29:43roughly a third of uh of that such that
6:29:47the company's proposed rates are
6:29:50uh growing three times faster than
6:29:53inflation during this period?
6:29:55>> Yes, for base rates. Correct.
6:29:58>> Uh given that the settlement agreement
6:30:00lowered rates, well, this is revenue
6:30:02requirement, isn't it?
6:30:05um
6:30:06>> on page 17.
6:30:08>> Uh that might
6:30:10>> I mean it I g go up a page. I don't
6:30:12think it's space rates. I think it's
6:30:14revenue requirement
6:30:17or rate impact. It's really revenue
6:30:19requirement.
6:30:23>> Uh yeah, the third the 33% is is total
6:30:26revenue requirement but just um saying
6:30:28that that's exclusive of fuel. actual
6:30:31rate impact to customers is slightly
6:30:33lower but not
6:30:34>> you know but but not small.
6:30:36>> All right. All right. Fair. Fair enough.
6:30:38Revenue requirement minus fuel. Uh uh
6:30:42and it's and this is based on the
6:30:45company's proposal, right? It's uh not
6:30:49the actual settlement agreement. So, if
6:30:52we were trying to redo this number, the
6:30:5510% and the 33.1%
6:30:59with a settlement agreement, I'm not
6:31:00asking you to do it, but it'd probably
6:31:02be like maybe a 9% compound annual
6:31:06growth rate or and uh uh and the 33
6:31:10might be 30% or 28 to to 30 uh um any
6:31:17comment on that? Do do you have any view
6:31:20about what the settlement does to this
6:31:22trajectory?
6:31:23>> Yeah, so I think the settlement the the
6:31:25bill impact calculation from the company
6:31:28um approximated that the the bill impact
6:31:30coming out of this would be closer to 6%
6:31:32versus the sort of 11% that's here. So
6:31:35maybe think of knocking off four or
6:31:37five% from that. I think that was maybe
6:31:39the the retail the residential customer.
6:31:42So I think overall it's a 4%ish
6:31:44reduction. So yeah. So the cumulative
6:31:46would become 29 you know cumulative
6:31:50annual annualized 8 to 9% instead of 10.
6:31:54>> Okay fair fair enough. And then can you
6:31:57go down uh later on on page 20 line one
6:32:03uh you show rate based growth of 10%
6:32:06year-over-year
6:32:08um through uh and rate growth on the
6:32:11next page of 5% through 30 2035 uh
6:32:15depending I guess on load growth. Is
6:32:17that fair? I think this is uh 10.5% per
6:32:21year. Is that right?
6:32:23>> I think that's accurate for this chart.
6:32:25Yes.
6:32:26>> All right. Um, you can take this down.
6:32:29So, here's my fundamental question to
6:32:31you. I guess this settlement agreement
6:32:33addresses a bunch of misaligned
6:32:35incentives and uh appreciate how many
6:32:40issues you're trying to address. But on
6:32:42the core issue of rising capital
6:32:44spending leading the current and future
6:32:47rate increases.
6:32:48Uh perhaps due to the capital bias
6:32:51concerns expressed by multiple
6:32:53witnessing witnesses in this case. I'm
6:32:56struggling to see how the settlement
6:32:58agreement moves the needle. even after
6:33:01the settlement agreement uh where it,
6:33:03you know, you're still seeing rate
6:33:05increases uh way above uh inflation,
6:33:09probably triple inflation.
6:33:11And I'm just really concerned that this
6:33:14uh perpetuates the status quo on the
6:33:17core long-term rate impact and
6:33:18affordabilility issues surrounding
6:33:21capital spending and and just doesn't
6:33:25move the needle. it doesn't change what
6:33:28Moody's calls uh you know the upsizing
6:33:31of the already cap uh elevated capital
6:33:34spending plan. So can you just help me
6:33:38on this uh horror issue about how we uh
6:33:42how we keep uh uh things affordable in
6:33:46Colorado.
6:33:48I I could try. Um I I mean I think part
6:33:53of this is a framing of what can be done
6:33:55in a rate case based on a historical
6:33:57test year, right? And you know, for
6:34:00better or worse, a great deal of the of
6:34:03the rate base that is now, you know,
6:34:06reflected in or proposed to be included
6:34:08in base rates in this proceeding came
6:34:10out of planning proceedings or CPCN's or
6:34:13ordinary course, you know, investments
6:34:15that have already occurred, right? the
6:34:18plant in service. You know, this is not
6:34:20based on a forecasted test year or, you
6:34:23know, forecast of what the company will
6:34:25spend in the future. It's plant that is
6:34:26in service largely legacy meters aside.
6:34:30Um,
6:34:31so,
6:34:33you know, there's I think staff and
6:34:36others struggle with how much can be
6:34:38accomplished in a in a rate case.
6:34:42not suggesting that we should be moving
6:34:44to forecasted or MYPs as the you know
6:34:46clearly one of the few benefits left to
6:34:48customers is some amount of regulatory
6:34:50lag. Um so it's very important to to
6:34:52staff and other parties to continue to
6:34:55reflect that. um you know that planning
6:34:59proceedings
6:35:00um are the the better place to try to
6:35:02figure out what what the capital
6:35:05expenditures will be in the future and
6:35:08also recognizing that there's a lot of
6:35:09dollars here in terms of reviewing on
6:35:11and m and capital additions for things
6:35:13like the Comanche outage that have not
6:35:15been decided yet.
6:35:16>> Can can I just push back on that uh
6:35:18about making these decisions and
6:35:20planning cases? Uh I mean it's just
6:35:23really hard in a DSP uh to set capital
6:35:27budgets for this commission, right? Or
6:35:31or a or a GP, right? Where we're talking
6:35:34about gas safety or uh ordinary force
6:35:38transmission. I mean, if we start
6:35:40capping those budgets, we're going to
6:35:42own the problem. So, you know, my
6:35:46concern coming out of those cases is
6:35:48that you had to fix the uh capital bias
6:35:52to the extent you can. And I think
6:35:56there's language in those orders that
6:35:58says that. Um, so I we do have options
6:36:02in this case, right? There's this, you
6:36:04know, 13-month average. there's
6:36:06different returns on equity and uh uh
6:36:11cap uh capital structure. Um
6:36:16you know I I just it's any comments on
6:36:19the difficulties of assoc of setting
6:36:22uh um capital budgets and those planning
6:36:26cases.
6:36:28I mean if we do we're going to own
6:36:31safety and reliability. Uh so it seems
6:36:34like
6:36:36you know trying to find uh
6:36:41dealing with capital bias directly in
6:36:43this it so I I don't know any comment
6:36:47>> so I mean yes and no like as I made the
6:36:52same same comment to commissioner Gilman
6:36:53right if there were a silver silver
6:36:54bullet we'd all be sort of centering
6:36:56around it right that that ray making in
6:36:59this process is really complicated with
6:37:03a lot of incredibly detailed decisions
6:37:04and just continues to get worse and more
6:37:07complicated each year as we look at the
6:37:09the landscape of of a very, you know,
6:37:13getting to be very interesting and
6:37:15innovative industry, right? Like, and
6:37:16this is mostly a good thing, but it
6:37:18makes this whole conversation very
6:37:19complicated. And I guess I would just
6:37:22say like that this is part this Ray case
6:37:24is part of that solution. I mean, I
6:37:26think staff tried to push very hard on
6:37:27the things where we felt like the
6:37:29company's performance was not great.
6:37:30transmission costs, legacy meter costs,
6:37:33um a whole host of of other adjustments
6:37:35as part of that cost of service.
6:37:38The the balance on the the the ratebased
6:37:41convention felt very much to us like
6:37:43this is plant that is in service. We do
6:37:45prefer the 13-month average, but but
6:37:48given the sort of concessions and
6:37:50acknowledgement of of all the other
6:37:53performance, you know, reductions
6:37:54associated with performance, it's a
6:37:56reasonable balance. And given the
6:37:58company's credit metrics and everything
6:37:59that we talked about um yesterday, this
6:38:04morning, I don't even remember
6:38:06>> like hearing years each day is like a
6:38:08year like seven days like
6:38:11>> Exactly. And that that this taken as a
6:38:13whole and it's just $40 million of risk
6:38:16onto the company for performance of of
6:38:17units, 30 million, but that's all
6:38:19downside risk, right? There's no upside
6:38:22for the company for for Comanche. and
6:38:24that that in total that that's a
6:38:26reasonable structure and that a lot of
6:38:29what we were trying to do here was to do
6:38:31that risk shifting of risks. Um is it
6:38:35possible to reduce the cost of service
6:38:37and keep the credit metrics? I don't
6:38:39know. I I think we felt like this cost
6:38:41of service landed in a place that was
6:38:43reasonable in a balance of all of those
6:38:45things and that it achieved one of
6:38:47staff's main objectives which was to
6:38:49shift risks back to the company to
6:38:52create consequences around overages on
6:38:54transmission to create consequences on
6:38:56mismanaging legacy meters to create
6:38:58consequences if there is additional
6:39:00outages on Comanche in the future and
6:39:03that that risk profile and you know that
6:39:06helps this equation of trying to find
6:39:09ways to make sure that those incentives
6:39:11are aligned for the company. Um, and and
6:39:14also acknowledges that there is plant
6:39:16that's in service that's used and useful
6:39:18that that that
6:39:21again, legacy meters aside, nobody was
6:39:23contesting that the that the actual
6:39:25infrastructure was not needed to serve
6:39:28customers. So, this felt like the
6:39:30reasonable place to land. Balancing all
6:39:32of those things,
6:39:33>> I guess I'm just concerned it's all
6:39:35backward like the M and QSP. It's all
6:39:38backward looking and doesn't uh shape
6:39:40future behavior. But can we pull up
6:39:43hearing exhibit 104 AEB uh-10?
6:39:47Let me represent to you this uh uh
6:39:50document benchmarks capital spending uh
6:39:53from 2026 to 2030 divided by 2024 plan
6:39:57and service for a peer group of
6:39:59utilities. And I just look at this and I
6:40:04worry that the capital spending is just
6:40:08way beyond is getting beyond way beyond.
6:40:11The concern is the capital spending in
6:40:14Colorado is just getting beyond the
6:40:17revenues and sales base. And when you
6:40:20think about 50-year amortizations,
6:40:23uh, uh, it's not good. So, I'm just
6:40:28curious if uh you have any comments on
6:40:32on this graph and how Colorado is
6:40:35benchmarking
6:40:37uh you know again capital spending
6:40:39versus historical plan on service as
6:40:42compared to utilities like Dominion
6:40:44which may be experiencing rapid data
6:40:47center growth. So, do do you have any
6:40:49context guidance on how to think about
6:40:52uh this and how we benchmark against
6:40:54national utilities?
6:40:56Yeah. So I mean I guess maybe just a
6:40:59couple things. So one is I agree that
6:41:01this is concerning and something to be
6:41:02paying attention to and monitoring and
6:41:04trying to understand and making sure
6:41:06that we are
6:41:08you know reviewing every sort of capital
6:41:11addition and being reasonable. And I
6:41:13think the commission has made reasonable
6:41:15steps to try to do more
6:41:17institutionalizing of of PIMS and cost
6:41:20to construct metrics to try to create
6:41:22more downward pressure at least within a
6:41:25project on on cost containment and drive
6:41:27some of those al you know better
6:41:29alignment on that. I think the west in
6:41:32particular is facing a lot of wildfire
6:41:33risk that's creates a lot of need for
6:41:35investment that unfortunately isn't
6:41:37associated with growth as we talked
6:41:39about earlier but does have huge
6:41:41benefits for customers that may make
6:41:43that you know Colorado look a little
6:41:44different than others and the same steel
6:41:46for fuel thing that we talked about
6:41:47earlier is going to do the same thing
6:41:49it's going to drive more capital
6:41:50additions um than potentially other pure
6:41:54utilities but I haven't taken a deep
6:41:56dive on this and I mean I I don't want
6:41:57to then bl you know brush over it say
6:42:01that it's not concerning. I think it's
6:42:02both. I think some of this is
6:42:04explainable and there are differences
6:42:06across utilities and regions and this
6:42:08also highlights an area that is is of
6:42:11concern and does require very careful
6:42:13management and scrutiny and pushing back
6:42:17on you know the plans for the future.
6:42:21>> All right. Uh let's just a couple quick
6:42:23questions hopefully on uh transmission.
6:42:26I think Mr. uh Freighus testified that
6:42:28the company, you can take this down, was
6:42:30rolling $115 million in the TCA uh
6:42:34transmission revenue requirement,
6:42:36supporting roughly $1.6 billion of
6:42:38capital spending over three years in the
6:42:41base rates in this case, and that it
6:42:43effectively zeroed out the TCA. Would
6:42:46you agree with that
6:42:48>> for any reason? I think I characterized
6:42:50it wrongly.
6:42:51>> No, I think that's right. I mean I think
6:42:53there are some residual dollars still
6:42:55remain in the TCA but yes I think that's
6:42:57that's largely accurate.
6:42:58>> All right and uh if I represented to you
6:43:01that in the um long-term rate model
6:43:04hearing exhibit 123 JJ P1 we don't have
6:43:07to pull it up the base case run uh
6:43:11identifies roughly 7.8 billion in new
6:43:13transmission investment from 2026 to
6:43:162030. Would you have any reason to doubt
6:43:19that representation?
6:43:21Uh I that sounds right.
6:43:24>> Um well I could pull it up but um maybe
6:43:26we don't have to. Uh I talked about a
6:43:29hearing exhibit uh showing the list of
6:43:32uh transmission projects attached to the
6:43:35uh company's October 2025 TCA uh filing.
6:43:40you know, had like 470 individual items
6:43:45and if I represented to you that there
6:43:47was a lot of rebuilds uh re asset
6:43:51renewable reliability requirement
6:43:53projects, would you accept that uh uh
6:43:57representation?
6:43:59>> Uh I have not reviewed that specific but
6:44:01I have uh document but I have reviewed
6:44:04other TCA lists of projects and and that
6:44:06would not surprise me um to to see that.
6:44:09All right. Um, I'm just concerned that
6:44:12the way the TCA is being applied,
6:44:14particularly given the size of the
6:44:16spending, uh, it may not be consistent
6:44:18with the spirit behind the commission's
6:44:20prior rate case order. Uh considering
6:44:23all the uh capital spending driven rate
6:44:26impacts uh concerns we just discussed,
6:44:29any guidance now that the TCA is reset
6:44:32to zero about potential TCA reform
6:44:35either prior to or as part of the fall
6:44:382026 TCA filing. You know, we ended up
6:44:42capping the GMAC on this exact concern.
6:44:46Um, should we look at capping the TCA
6:44:48revenue requirement for projects that
6:44:50don't don't have CPCN's or regional
6:44:53expansion projects? Should we explore
6:44:55changing the approach to determining
6:44:57what projects result in a net increase
6:45:00in transmission capacity and qualify for
6:45:02the TCA? just any quick thoughts uh
6:45:06about how we uh perhaps get a better
6:45:10handle in the TCA and how we get a
6:45:12control on cost so we don't see uh
6:45:15ongoing uh things like uh Miss Miss Ho
6:45:19testified to
6:45:21>> Yeah. So, a couple thoughts. So, I I
6:45:23because I did hear this discussion with
6:45:25you and Mr. Freighus, um it wasn't
6:45:28entirely clear to me if I I can ask you
6:45:31a question. Um
6:45:33>> Sure. [laughter]
6:45:34whether the concern was that the the
6:45:37current standard is not being applied
6:45:40correctly and that sort of there are
6:45:41projects that maybe should not be
6:45:43qualifying for TCA recovery that have
6:45:46been included which staff can certainly
6:45:48take a you know a closer look at those
6:45:51things and like you know that that's all
6:45:54fine or whether the intent of your
6:45:57question was also a little that that
6:45:58you're not sure the current definition
6:46:00of what ought to qualify is right and
6:46:03whether you were intending to try to
6:46:05revisit the sort of qualification
6:46:07standard itself.
6:46:09>> So, uh we set a standard in the last
6:46:12rate case uh that had to do with uh let
6:46:17me see if I can quote the exact language
6:46:19uh result in a that projects that result
6:46:22in a net increase in transmission uh
6:46:25capacity qualify for the TCA. I'm not
6:46:29trying to revisit that at all. it there
6:46:32was a subsequent uh decision where you
6:46:35know that was defined by like the
6:46:38amperage of the circuit level that I'd
6:46:42like to revisit. Uh so it's uh
6:46:46revisiting that decision not the prior
6:46:49Ray case decision which what I would
6:46:50view as established standard in
6:46:53Colorado.
6:46:55>> Yeah. Yeah, I mean this feels like a
6:46:56procedural question of like I don't
6:46:58think obviously this was not an issue
6:47:00that parties raised in this proceeding,
6:47:02right? This was about rolling TCA into
6:47:06base rates.
6:47:07>> I know but it's [clears throat] the core
6:47:08issue when you look at uh how much uh
6:47:11transmission capital spending there is
6:47:13and try and get us incentives right.
6:47:16>> Yeah. I mean I would also say that right
6:47:19the the commission just opened a
6:47:21transmission planning rule making. So I
6:47:23mean I think there's at least
6:47:24potentially some venue for you to to
6:47:26think about PIMS and TCA process and
6:47:29what qualifies and sort of what the
6:47:31standard metric is or how that gets
6:47:32reported and whether there's you know
6:47:34potential changes there. So I mean I
6:47:36guess procedurally it feels like that
6:47:39might be an appropriate venue to have at
6:47:40least some of the discussion that maybe
6:47:42you're looking for. I think there was
6:47:44some dis discussion if I'm correct on
6:47:46PIMS and their interaction with our
6:47:48transmission planning framework. Do you
6:47:50understand there'll be $4 billion dollar
6:47:52of additional transmission capital spent
6:47:55by then? [laughter]
6:47:57>> Um I I I do and I mean and really
6:48:00largely there has been a lot of
6:48:01transmission CPCN's right between power
6:48:04pathways and the Denver metro upgrade
6:48:06projects and the synchronous condensers
6:48:08um that have been approved. So yes, I
6:48:10think there's a great deal of CPCN
6:48:12approved transmission spending that is
6:48:14expected in the next couple years.
6:48:18Um just two last questions. The company
6:48:21keeps saying that this uh capital
6:48:23spending is driven in large part by the
6:48:25clean energy transition and public
6:48:28policy. But how do you feel about the
6:48:30clean uh energy transition if you know
6:48:34we lose on affordability?
6:48:38>> Um I think that is a bad outcome. Right.
6:48:40I mean I right clearly
6:48:44[laughter]
6:48:44>> you know we need we absolutely need to
6:48:46balance both right that that the the
6:48:49state's goals and objectives and and
6:48:51certain requirements in the clean energy
6:48:52planning are you know clear and again
6:48:55this was part of the struggle as I
6:48:56referenced earlier with defining an
6:48:58emissions performance incentive
6:49:00mechanism that meaningfully captured the
6:49:03cost of trying to get to incremental
6:49:05emissions reductions and what ultimately
6:49:07failed that that's a it's a difficult
6:49:08balance to have within a pin
6:49:10and within the planning framework at
6:49:12large.
6:49:14>> All right, last question. Uh, assume
6:49:16that the commission approve the uh
6:49:18energy affordability uh portions of the
6:49:21settlement agreement but uh requested
6:49:25that staff uh uh but opened an eye
6:49:28docket and requested staff uh look into
6:49:31the questions uh I discussed with Ms.
6:49:36uh an unste uh any guidance or advice
6:49:40about how to how to set that up or um
6:49:43how to frame it?
6:49:45>> Yeah, I guess two thoughts. Um you know,
6:49:47one reaction I had listening to the
6:49:49discussion this morning was, you know,
6:49:53some of the information and data that
6:49:55you are looking for and that clearly
6:49:57Miss Anste was looking for, um I'm not
6:50:00sure the company has in his possession
6:50:02right now. So, so some of this may just
6:50:04be a little bit of a question of time
6:50:06and directives to the company to start
6:50:09tracking and and doing some analyses
6:50:11that maybe don't exist today. So, just
6:50:14want to recognize that that process is
6:50:15not easy or simple or straightforward,
6:50:18right? Just to, you know, acknowledge
6:50:21that it it appears that this is not all
6:50:23data that the company readily has at
6:50:25this moment in time. Um, and I think as
6:50:28a result of some of that, right, that
6:50:30for staff that pilot program was very
6:50:32important, right, as the place to really
6:50:34be doing some more of the proactive
6:50:37addressing of disconnections by CBGS
6:50:39that that you were anticipating and that
6:50:43things that we can do to set that pilot
6:50:45up well and data that we want the
6:50:47company to start tracking. like all of
6:50:49that makes sense and is great. And I to
6:50:51me that's part of what what we ought to
6:50:53be focusing on and driving to, right, is
6:50:55setting that pilot up as to be as
6:50:58successful as possible to target the
6:51:00issues that that you raised this morning
6:51:02and the concerns that you've voiced. Um,
6:51:04and make it something that, you know,
6:51:06hopefully is is beneficial and has good
6:51:08results and can be expanded to all of
6:51:10Excel's service territory. Um, there is
6:51:12clearly a balance between what we can do
6:51:14today based on the information we have
6:51:16and trying to make progress. while we
6:51:18figure out some of the rest of the
6:51:19stuff. Um, so I think that's that's the
6:51:22balance.
6:51:25>> Um, sorry for uh going into our break.
6:51:28Let's take a 20 minute break till 3:40.
6:51:32Um, and I'm not sure we're going to get
6:51:34to um redirect Mr. Larson. We got a hard
6:51:38stop at 4 for uh public or quasi hard
6:51:42stop at 4 for a public comment hearing.
6:51:44Uh but let's uh take a 20-minut break
6:51:46and see if we can resolve the uh
6:51:48evidentiary issues uh uh around the uh
6:51:53Comanche 3 root cause report. And if you
6:51:56guys need more time uh just have uh the
6:51:59legal assistance uh post something on
6:52:02the uh on the sign. Thanks. It's 340.
7:11:14Commissioner Gilman, are you there or do
7:11:16you need a few more minutes?
7:11:42Uh let's let's come back at uh say uh
7:11:48350. Uh Commissioner Gman needs a few
7:11:50more moments.
7:20:42Take the sign down.
7:20:44Commissioner complaint. Commissioner
7:20:46Gilman, who wants to go first?
7:20:51>> Um, that doesn't matter me, but
7:20:53[laughter]
7:20:54>> you're on. Go ahead.
7:20:55>> Uh, yeah. So, um I guess the the mo the
7:21:00motion is whether to accept the
7:21:05uh the damage report as in into the
7:21:10evidence. Is that basically it?
7:21:13>> Correct.
7:21:14>> And I would I would uh vote to not
7:21:17include it into the evidence.
7:21:20>> Commissioner Gilman.
7:21:23>> Yeah. Sorry. Thanks for the time to sort
7:21:26through that. Um, I agree. I think it's
7:21:29likely reasonable to sustain the
7:21:32objection, but really for me just on
7:21:34procedural grounds in terms of our abil
7:21:36our inability, I guess, to to question
7:21:40Excel witnesses and sort out some of the
7:21:42questions related to it. Uh, I I didn't
7:21:44see a lot of validity in the argument
7:21:47that it was irrelevant. I think it
7:21:49likely is relevant, but I don't think
7:21:51that we have a process at this point in
7:21:53the hearing to uh to deal with its
7:21:55inclusion.
7:21:58>> I agree. Uh
7:22:02uh so uh with uh apologies uh Mr.
7:22:06Bunker, the motion is uh denied.
7:22:10>> Uh ch Mr. Chairman, if I could, is it
7:22:15possible for
7:22:17you to reconsider perhaps the first 10
7:22:22pages of the Comanche 3 root cause uh
7:22:26report, which is that exhibit C, which
7:22:31is the executive summary that lays out
7:22:33some of the information in terms of the
7:22:37multitude of issues without going into a
7:22:41lot of the detail. They'll be on that.
7:22:44>> Um, Mr. Simpsons.
7:22:46>> Uh, no. I I think that's an even poorer
7:22:49idea, frankly, because the remainder of
7:22:52the report provides at least some
7:22:54context to what's in the executive
7:22:55summary, frankly. Um and again for the
7:22:58same procedural grounds um without an
7:23:01opportunity for us to propound a witness
7:23:04um to help at least explain that
7:23:06document and otherwise provide a
7:23:09sufficient record for its reliance. We
7:23:11are still very concerned and um you know
7:23:14and I don't think just the executive
7:23:16summary is going to make a material
7:23:18difference to any of that.
7:23:21>> Mr. Kaufman.
7:23:23>> Yes. Thank you. Um uh I if it's
7:23:27appropriate at this point I'd like to
7:23:28make a motion that these documents in
7:23:31question be preserved in the record as
7:23:33an offer of proof.
7:23:37>> I will second that motion. I was
7:23:38thinking the same thing. Thank you, Mr.
7:23:40Kaufman.
7:23:41>> So that that the record would be clear
7:23:43on appeal
7:23:45>> if needed. Uh,
7:23:48Miss Harper, uh, I've got a lot of PEC
7:23:52experience, not so much in, uh,
7:23:54[laughter] trial court. Uh, can you, uh,
7:23:57walk me through what an offer of proof
7:23:59is? It's just, uh, it's, uh, retained in
7:24:02the record. It's not, uh, admiss, it's
7:24:05not usable as, uh, evidence in this
7:24:08decision and deliberation, but it's
7:24:10available uh, on appeal. Is that sort of
7:24:13the I see you're singing your head. Is
7:24:15that the simple uh intuition, Mr. Com?
7:24:19>> Yes, that was my intent. [clears throat]
7:24:20That was the intent of my motion.
7:24:22>> Yeah. I mean, that seems totally
7:24:24reasonable to me. M miss uh Mr. Simpson,
7:24:27any objection to that?
7:24:28>> I'm not going to object to that. No.
7:24:30>> Okay. Uh anything else uh on this?
7:24:37>> No. But thank thank you for your
7:24:38consideration to uh all three of you,
7:24:41Mr. Chairman and Commissioners.
7:24:42>> Yeah. We're we're trying to do our best
7:24:45to sort through this, Mr. Bunker, and
7:24:47we're taking the request seriously. So,
7:24:50uh um uh Miss Federico,
7:24:54>> I just wanted to clarify. Um is that for
7:24:57both the 321 and 322 that we're keeping
7:25:01as an offer of proof or just one or the
7:25:03other?
7:25:04>> I just think it's the uh root causes
7:25:06report.
7:25:08>> Correct. It would be hearing exhibit 322
7:25:12the uh Comanche 3 root cause
7:25:16investigation appendix C.
7:25:20>> Okay. And I'm I since it's just an offer
7:25:23of proof, I'm only keeping the
7:25:25confidential version, right? Not the
7:25:26public version.
7:25:28>> Correct.
7:25:28>> Okay. Thank you.
7:25:30>> Council will work with you to figure out
7:25:32how to do that properly, Miss Feder
7:25:34Rico. So, don't worry about it. You
7:25:36don't we don't need to resolve that now.
7:25:38>> Uh Mr. Chairman, if I could, the public
7:25:41version has the caption page and nothing
7:25:44else beyond that. [clears throat] It
7:25:46literally is just the one page that's
7:25:49the caption and nothing nothing beyond
7:25:51that.
7:25:52>> I understand. For this purpose, it's a
7:25:54confidential version.
7:25:55>> Yes.
7:25:57>> Uh all right. Um I guess Commissioner
7:26:01Plan, Commissioner Gman, uh we got a
7:26:03public comment hearing at 4:30. Uh, do
7:26:05you want to continue with redirect or
7:26:07you want to uh call it a day,
7:26:11Commissioner Plant?
7:26:14>> I I'm uh fine going until just before
7:26:17the
7:26:19um the public hearing if it if it uh
7:26:22sort of gives us a good stopping place.
7:26:24But
7:26:25>> All right. That okay for you,
7:26:27Commissioner. Good one.
7:26:28>> Yeah, right. Until you said that, I
7:26:29thought it started at 4. So, um,
7:26:31>> I thought it started to mess [laughter]
7:26:34to me apparently.
7:26:37>> Well, the bad news is it goes to say
7:26:39Well, the news is it goes to 6:30, not
7:26:41six.
7:26:44Um, [clears throat]
7:26:44>> I also just learned that. Yeah.
7:26:46>> Uh, so, uh, all right, why don't we keep
7:26:50going till like 4:15 or 4:20? So, uh,
7:26:53Mr. Larson, if you get through your
7:26:54redirect today, uh, I'm sure Miss Miss
7:26:57O'Neal would appreciate that. [laughter]
7:27:00Yeah, Mr. Chair, I'll do my best to try
7:27:02and get through it before uh 4:15 420,
7:27:05but I might not be able to get
7:27:07everything. Uh I I'll I'll try my best,
7:27:09though.
7:27:10>> Understood.
7:27:12>> All right. Good afternoon, Miss O'Neal.
7:27:15Um so, I want to take us back to before
7:27:19lunch when uh you were being questioned
7:27:22by UCA's council. Um, and you mentioned
7:27:28that uh in response to one of Miss
7:27:30Nelson's questions uh that uh the
7:27:35increase that the company was requesting
7:27:37in this case as as part of its direct
7:27:39case, the rate increase was uh not
7:27:41surprising. And I just wanted to see if
7:27:44you could elaborate on what you meant by
7:27:46that.
7:27:48Yeah, I I mean I think it's it's
7:27:51probably largely a truism that the
7:27:53largest ever increase in terms of
7:27:55dollars that's been requested is
7:27:57whatever the most recent case was,
7:27:59right? That you know, we don't generally
7:28:01expect given inflation that the the
7:28:03company's cost requests are going to
7:28:06decline. And I'm not sure this is the
7:28:07the greatest percent increase the
7:28:10company has ever um a asked for. And I
7:28:14mean it again [clears throat] it just
7:28:16doesn't seem surprising that the most
7:28:18recent increase you know in in cost is
7:28:20the is the largest. I think if you
7:28:23plotted the rate increases in dollars
7:28:25for the last whatever you know 10 rate
7:28:27increases you would see that that line
7:28:28goes up. Um that's just kind of an
7:28:30inflationary reality. Um so again not
7:28:34not surprising um to me that that's the
7:28:36case.
7:28:38[clears throat]
7:28:39>> Thank you. Now, uh, turning to to some
7:28:41of the questions, uh, regarding EOCC's
7:28:44issues in this case. Um, do you recall
7:28:47EOCC's council's questions to you about
7:28:49the commission decision in the RES
7:28:52proceeding?
7:28:53>> I recall that. Yes.
7:28:55>> Is it your understanding that the
7:28:57commission in that case upheld the ALJ's
7:28:59recommended decision approving the
7:29:01settlement in its entirety?
7:29:03>> That is my understanding. Yes.
7:29:06Is it your understanding that the
7:29:07recommended decision by the ALJ did not
7:29:10consider EOCC's proposal to be a you a
7:29:13legal use of RISA funds?
7:29:16>> That is my understanding of the
7:29:17recommend. Yes.
7:29:20>> Is it your understanding that the entire
7:29:22RISA balance was accounted for in the
7:29:24commission approved settlement agreement
7:29:26resolving the 2026 through 2027 RE plan?
7:29:30>> Yes, that is my understanding.
7:29:33and you had some discussion with EOCC's
7:29:36council regarding uh CSG subscriptions.
7:29:40Um and there was a bit of a termin ter
7:29:43terminological debate there. So do you
7:29:46just to clarify, do you consider donated
7:29:49CSG subscriptions to be the same thing
7:29:51as bill assistance?
7:29:53>> No. And as I as I think I pointed it out
7:29:56at one point in my discussion with Miss
7:29:58Connealio, right, that CSG subscriptions
7:30:00come with um you know support for a
7:30:04community solar garden, right? That the
7:30:05point of that is that it's it's also
7:30:07participation in a renewable energy
7:30:09program. That's why there's an IQ
7:30:11program within those is to let IQ, you
7:30:14know, qualified customers participate in
7:30:17renewable programs. It's not just bill
7:30:19assistance.
7:30:22And in followup to your discussion with
7:30:24Commissioner Gilman on the EOCC issues,
7:30:27uh, where you discussed the rollover of
7:30:28funds from the last RES to the 2026 to
7:30:322027 RES, would any modifications to the
7:30:35RES budget impact the projects and
7:30:37portfolios already established in the
7:30:392026 2027 plan?
7:30:41>> Yes, I assume that it would.
7:30:45Um, now
7:30:48do you recall a discussion with EOCC's
7:30:50council uh about your crosans answer
7:30:53testimony where you stated that even
7:30:55outside of the even aside from the RESA
7:30:58issue uh it would be an inappropriate
7:31:00use of rateayer funds? Do you remember
7:31:02that?
7:31:02>> I do.
7:31:04>> Now, and just to be clear, is it staff's
7:31:07position that EOC has not made like
7:31:09helpful or responsible use of funds?
7:31:13No, I I think it's staff's position that
7:31:15EOC seems to to have have good programs
7:31:18that are helpful to um to customers and
7:31:20provides benefits to customers.
7:31:23>> Now, that being said, why is it staff's
7:31:26position that even outside of the REIA
7:31:29this would be an inappropriate use of
7:31:30rateayer funds?
7:31:32>> Um
7:31:36the objective of this is unclear. It's
7:31:38not clear that any other organization
7:31:40who does beneficial things to customers,
7:31:43an equity group, other income qualified
7:31:46representatives would also not want to
7:31:48have funds allocated to them that are
7:31:50rateayer funds. This isn't a utility
7:31:53program. It doesn't come with clear
7:31:55objectives and tracking and oversight
7:31:57from the commission. You know, doing
7:32:00this at least within the RES context at
7:32:02at least the proposal as you stated. I
7:32:05think, you know, our understanding is
7:32:07that that's not a legal use of RISA
7:32:08funds, but at least is it within the
7:32:10context of an established utility
7:32:13program. If the proposal was to do it
7:32:16outside of that, I think staff just
7:32:17feels like that's an inappropriate way
7:32:19to allocate rateayer funds to to just
7:32:23again unilaterally decide outside of a
7:32:25program with clear goals, objectives,
7:32:27and and guard rails to be funding
7:32:29another outside organization is not an
7:32:31appropriate use of rateayer funds.
7:32:35Thank you. And and Mr. Chair, just uh
7:32:38point of clarification, we're I am at a
7:32:40kind of good stopping point here before
7:32:42I start getting into some of the
7:32:43commissioner's questions. I can keep I'm
7:32:45happy to keep going if you'd like or we
7:32:47can
7:32:49>> for another 15 minutes. That'd be great.
7:32:52>> Yeah, sounds good. Um now, uh you had
7:32:56some discussion, Miss O'Neal, with
7:32:58Commissioner Plant about, um
7:33:02systemwide, uh PBR, performance-based
7:33:05rate making versus uh specific targeted
7:33:09pins and uh those sort of more targeted
7:33:14structures. So, um and I I believe Chair
7:33:17Blank asked some questions with respect
7:33:19to to Mr. Lairman's uh recommendation as
7:33:22well. So, I just I just wanted to give
7:33:24you opportunity to maybe kind of
7:33:25articulate staff's sort of overall view
7:33:29on those issues.
7:33:31>> Yeah. I mean, it's it's interesting,
7:33:33right? because I think staff is is in
7:33:35the same place with the as the
7:33:36commission of sort of struggling with
7:33:38trying to figure out how to set up the
7:33:40right incentives to get to the right
7:33:42outcomes. frustrated at times with some
7:33:44of the of the, you know, reliability,
7:33:47cost overruns,
7:33:49um, you know, customer service issues
7:33:52that we've experienced with this utility
7:33:54and completely understand the impulse to
7:33:56to try to, you know, figure out what the
7:33:59right response is and that
7:34:00performance-based ratem is a reasonable
7:34:02question to ask. Um, I think staff
7:34:06struggles with having not seen that
7:34:08implemented well, not knowing how to
7:34:10benchmark it. the few times we've done
7:34:12things like earnings tests, it has not
7:34:13gone well. The company has ended up
7:34:15drastically over earning that trying to
7:34:18sort of calibrate, you know, a a sad
7:34:20metric to to earnings is a tenuous
7:34:25um connection and has picked one metric
7:34:28that you care about.
7:34:30You know, it's just a very very
7:34:31complicated system and I think staff has
7:34:34not been able to figure out how to avoid
7:34:36the very detailed looking through the
7:34:39TCA list to make sure all the projects
7:34:41are qualifying and doing the audit of
7:34:44the company's reliability and you know
7:34:47all of the things that staff is is here
7:34:49for to to try to you know come up with
7:34:52some more global incentive structure.
7:34:55Like not saying we're not like there's
7:34:56no more discussion to be had of it but
7:34:58this has been the hesitation. There's we
7:35:00have not been able to find some
7:35:02structure to propose that we think would
7:35:04work that is benchmarked well that is
7:35:06not creating you know an asymmetric
7:35:10system that isn't gameable from the
7:35:12utilities perspective and really
7:35:15appreciate the struggle and you know
7:35:17happy to continue to engage on thinking
7:35:19about how to set up incentives properly.
7:35:23We have not seen performance-based ratem
7:35:26work in that global setting in any in
7:35:29any structure. And so it's just been a
7:35:31real struggle to try to put a lot of
7:35:32weight behind that as the solution as
7:35:36opposed to doing detailed QSPs and PIMS
7:35:40and performance frameworks. Um it's not
7:35:42ideal or perfect either. Um but but I
7:35:45feel like you know for from staff's
7:35:47perspective that's been the better use
7:35:49of um you know procedural energy um is
7:35:53to try to push in those directions.
7:35:57>> And um you had some discussion with
7:36:00Commissioner Plant and and some of the
7:36:02other uh questioners about the Comanche
7:36:063 framework and specifically the the
7:36:09baseline uh that's included in the
7:36:11settlement agreement the 13.49 49. Um, I
7:36:15was hoping you could just elaborate on
7:36:16on what that's based on and maybe just
7:36:20staff's overall position on on why the
7:36:23framework developed in the settlement
7:36:24agreement is reasonable.
7:36:26>> Yeah, I mean there's a number of of
7:36:28characteristics of that of that
7:36:30framework that I think staff is really
7:36:32very happy with. Um, the baseline is a
7:36:35is a number based on industry. I think
7:36:37it's a sets a reasonable goal and target
7:36:40for the company one that it has
7:36:41struggled to to meet over a long period
7:36:44of time. Um it is sort of the whole of
7:36:49that structure I would I would say it
7:36:51characterize it as being sort of
7:36:53calibrated to get to the right kinds of
7:36:56outcomes. Right? That it creates a
7:36:58strong incentive for the company if they
7:37:01miss the mark. it is not going to be
7:37:03easy for them to to meet that um XEF
7:37:06especially starting from a you know 3.3%
7:37:09D rate position that the 3% deadband
7:37:12gives them sort of working room it gives
7:37:14them an opportunity to stay within that
7:37:17range but it's not going to be easy and
7:37:19that the whole thing kind of hangs
7:37:20together as a calibrated pole I think
7:37:23one other thing that hadn't come up
7:37:24today but came up with UCA was the the
7:37:29maximum penalty is hit out of like 43%
7:37:32target as opposed to 100%. And I think
7:37:35from staff views that staff's view
7:37:36that's also important that kind of
7:37:38concentrates the impact into a smaller
7:37:40range. You don't have to have a
7:37:42year-long outage to get to the 30%
7:37:44penalty. You can have a 43% outage to
7:37:48get to that. So I think from our world
7:37:50it sort of creates more consequence
7:37:52within kind of the normal outage range.
7:37:56Um while parties also retain the ability
7:37:59to challenge the imprudence if there is
7:38:01an even longer outage. Right? We have
7:38:03not given up our rights to you know
7:38:05challenge a year-long outage and argue
7:38:07for even additional consequence within
7:38:10an ECA prudence review context if
7:38:12something extraordinary happens. So I
7:38:15think there's a lot of things reasons
7:38:17why we like the structure the way that
7:38:19it is. Um and the offsets I think again
7:38:23in our mind the company cannot earn a
7:38:25reward which I realized is important to
7:38:27a lot of parties. Um even though staff's
7:38:30original proposal would have allowed
7:38:31that, I think it does create an
7:38:33incentive for good behavior, right? That
7:38:35if the company exceeds that expectation
7:38:38and provides additional available
7:38:40capacity to to rateayers that that
7:38:43there's some ability to offset that
7:38:44penalty and that that whole structure
7:38:47again is very calibrated to get to the
7:38:50results and have the impacts and shift
7:38:52the risk in an appropriate way. And so
7:38:56sort of taken as a whole staff thinks
7:38:58that that framework works very well kind
7:39:00of again as it's as it's calibrated. Um
7:39:04I think the commission can also can like
7:39:06play with that and it's an executable
7:39:08and and put in different like levels of
7:39:11XCUF and see what the outcomes would
7:39:13have been and and sort of verify it for
7:39:15themselves that this seems like a
7:39:16reasonable outcome given the structure
7:39:19of that mechanism.
7:39:22And and just honing in on on part of
7:39:24that, uh you you we discussed in some of
7:39:27the questions about the um there's a
7:39:31standalone prudence review proceeding uh
7:39:33envisioned in the settlement agreement
7:39:35for the 20 the current outage at command
7:39:373. Correct.
7:39:38>> Correct.
7:39:40>> Does anything in the settlement
7:39:41agreement prevent staff in the event of
7:39:44some future large outage? Is there
7:39:48anything that prevents staff from from
7:39:50challenging uh or or seeking uh sort of
7:39:55recovery or or prudence issues with that
7:39:57in a later proceeding?
7:39:59>> No, the only sort of constraint there
7:40:01would be that if the commission were in
7:40:03some future case to determine some large
7:40:07penalty or disallowance associated with
7:40:09an additional outage, the the
7:40:13performance framework penalty would sort
7:40:15of count towards that. So if there was
7:40:16some instance where the commission
7:40:17determined that there should be a 100
7:40:19million debt disallowance in a given
7:40:21year and the company had incurred sort
7:40:23of the 30 million penalty, this
7:40:25contemplates that the 30 million would
7:40:26count against the hundred. So the the
7:40:28com commission would or the company
7:40:30would owe another 70 million that like
7:40:33but that's the only thing that just that
7:40:35that would be acknowledged that this
7:40:36penalty exists and would be counted
7:40:38towards a future disallowance should one
7:40:40occur.
7:40:43And uh turning to some of the questions
7:40:46that you some of the discussion you had
7:40:48with Chair Blank about about QSP
7:40:50metrics. Um Chair Blank asked you if you
7:40:54thought the QSP disincentive amounts
7:40:56were sufficient to change the company's
7:40:58behavior. Do you remember that?
7:41:00>> I do.
7:41:02Was it staff's recommendation to your
7:41:04knowledge to use the QSP metrics as the
7:41:06basis to determine what reliability
7:41:08investments should be prioritized via
7:41:10recovery through the GMAC?
7:41:12>> Yes, that was staff's position in the in
7:41:15the company's DSP proceeding.
7:41:18And uh you had a just sort of on a
7:41:22broadening the aperture on that subject,
7:41:24you had an extended discussion with
7:41:26chair blank about the opportunities both
7:41:28in this case and in other proceedings to
7:41:31realign uh the regulatory incentives of
7:41:35the company. Do you recall that
7:41:37discussion?
7:41:38>> I do.
7:41:40>> Can you just elaborate on on staff's
7:41:42overall position on these issues in
7:41:45regards to this particular case?
7:41:48Yeah, I mean I I think staff completely
7:41:51agrees with the with the general
7:41:53objective that that Chair Blank was
7:41:54discussing in terms of trying to address
7:41:57capital bias, managing long-term
7:41:59affordability. Um, and that staff really
7:42:02took this cases with a view of trying to
7:42:04do here what we thought we could with
7:42:07with a break case based on a historical
7:42:10test year and really focus our advocacy
7:42:14on shifting risk to the company and
7:42:16creating consequences for poor
7:42:19performance and that those were
7:42:20reasonable goals to try to achieve
7:42:22within the rate a rate case while well
7:42:25while ultimately resulting in just in
7:42:27reasonable rates, right? that allow the
7:42:29utility to recover a cost of prudently
7:42:31incurred investments. Like that
7:42:33combination of things um drove a lot of
7:42:36stocks advocacy on transmission, legacy
7:42:39meters, um you know, the the PIMS sort
7:42:44of all of this was carefully, you know,
7:42:46constructed to try to to drive to those
7:42:48to create a consequence. We are not here
7:42:50making decisions about future
7:42:52investment, but we can try to make sure
7:42:54there's a consequence and when the
7:42:56company has a cost overrun on a
7:42:58transmission project, right? So having
7:43:01some acknowledgement that the company's
7:43:02budgets on a number of its transmission
7:43:04CPC exams were um you know the the
7:43:07actual costs came in substantially over
7:43:09a budget that was very important to
7:43:10staff to make sure that it's clear to
7:43:12the company that there's a consequence
7:43:14for those sorts of of results. um and
7:43:17you know feeling like that's part of
7:43:19what can be accomplished within a ray
7:43:21case based on a historical test period.
7:43:23Um so that's very much how how staff
7:43:25approached this proceeding.
7:43:28And so just putting it in a in a more
7:43:31pointed way, is it is it your testimony
7:43:34that the staff has taken every
7:43:36opportunity it could in this particular
7:43:38case in regard to this settlement
7:43:40agreement to uh realign the regulatory
7:43:44incentives as as you discussed with with
7:43:46chair blank?
7:43:48>> Yes, I think trying to work within the
7:43:50framework of this proceeding. Um
7:43:52appreciate the conversations about QSPs
7:43:54and again would love to have that
7:43:55discussion in that venue. QSP
7:43:57rulemaking, WMP and PSPS rulemaking.
7:44:00There's a lot of been discussion
7:44:01particularly from Boulder regarding
7:44:03concerns about the company's performance
7:44:05staff has been working very hard on on
7:44:07working to try to get to rulemaking on
7:44:10the PSPS um and WMP and I think a lot of
7:44:13that discussion is going to be really um
7:44:16helpful to that rule making. There's a
7:44:18lot there um just trying to say what can
7:44:22be accomplished within the context of a
7:44:25rape case. Um, and teeing up a lot of
7:44:27policy questions is great. The
7:44:28discussion has been great and there will
7:44:30be lots of venues to further those
7:44:32discussions and staff feels like we
7:44:35accomplished what we could within the
7:44:37construct of this proceeding.
7:44:41>> Thank you. And and Mr. Chair, I I think
7:44:44we're at the 15 minutes now. I I don't I
7:44:47still have a a bit more ground to cover
7:44:50and I don't know if I want to keep going
7:44:52or you want me to
7:44:56Uh you're muted to
7:44:58>> how much more can we finish by 4 or 25?
7:45:03>> Um yeah, I think we can we can do that.
7:45:05Uh I will Yeah, let's see here. Um just
7:45:09looking at my list. Um,
7:45:13actually I I was hoping to try and
7:45:15clarify something and I I might not be
7:45:17able to to do this properly, but you you
7:45:21had a discussion with Commissioner Plant
7:45:23about attachment five to the um
7:45:26settlement agreement. Do do you recall
7:45:28that?
7:45:29>> I do.
7:45:30>> Yeah. So, can we pull up actually Miss
7:45:33Federico, can we pull up the the
7:45:35executable version of attachment five to
7:45:38hearing exhibit 155?
7:45:40>> Yeah. Um, you might want to start your
7:45:42question. It's going to take me a minute
7:45:43to get the executable version up.
7:45:46>> Sure. Um, I I don't know that I can ask
7:45:49anything without like referring I don't
7:45:51know if it'll be helpful to ask any
7:45:53questions without referring to it, but
7:45:55um, if it takes a little bit to get it
7:45:57up, that's totally fine.
7:46:38a 155 executable attachment by Rev One.
7:46:42Right.
7:46:43>> Correct.
7:46:54Thank you. And if you could just scroll
7:46:55down just a little bit.
7:46:58There we go. Now, understanding that
7:47:01that you are not an accountant, Miss
7:47:03O'Neal, and I certainly am not an
7:47:06accountant. Uh I just wanted to try and
7:47:09clarify this here. So, is it your
7:47:12understanding that the revenue
7:47:14requirement that we see on Excel line 28
7:47:18is the sum of the long-term debt return
7:47:21on the balance which we see on line 19,
7:47:25the grossed up income tax, which we see
7:47:27on line 24, and the amortization expense
7:47:31that we see on line 26.
7:47:34>> Yes, I believe that's correct.
7:47:37And is it your understanding that the
7:47:39total annual expense to rateayers is the
7:47:43sum of the revenue requirement which you
7:47:45see in line 28 minus the revenue credit
7:47:49which we see in line 30?
7:47:51>> Yes, that's correct.
7:47:54>> And do you believe that clarifies the
7:47:56issue uh that Commissioner Plant was
7:47:59asking about?
7:48:01>> Uh I hope so. [sighs and gasps]
7:48:05Does that help, Mr. Plant? Okay.
7:48:08[laughter]
7:48:09>> No, we're not doing that.
7:48:12>> Fair enough. Uh, so, um,
7:48:18looking through my list here. Um,
7:48:22there was a lot of discussion, Miss
7:48:24O'Neal, through both Cross and the
7:48:26commissioner's questions about the the
7:48:28various tradeoffs and compromises.
7:48:32um they were included in this settlement
7:48:34agreement. So, can you just summarize uh
7:48:38staff's overall view as to why this
7:48:40settlement agreement is just and
7:48:43reasonable in its totality?
7:48:45>> Um, yes. And I will note that it looks
7:48:48to me like my camera's not working and I
7:48:50don't know why that is. I didn't change
7:48:51anything. I don't know if anybody else
7:48:52can see me.
7:48:55>> You might take down the exhibit and see
7:48:56if that helps.
7:48:57>> Yeah.
7:48:59and uh just keep the keep keep going. We
7:49:03we've been looking at you for hours. So,
7:49:06>> pretty not a pretty picture. Anyway, um
7:49:09I mean I think from SAS perspective,
7:49:11this is a is a reasonable balance of a
7:49:13lot of different complicated things.
7:49:15There's a lot of pieces to this
7:49:17settlement agreement. It incorporates a
7:49:18re incorporates a reasonable whack that
7:49:20balances affordability with the health
7:49:22of the utility in order for public
7:49:24service to be able to maintain its
7:49:26credit rating which allows them to to
7:49:28get lower you know cost debt than they
7:49:30otherwise would. It incorporates
7:49:32numerous reductions to the cost of
7:49:34service and all all these are sort of
7:49:36articulated in my settlement testimony.
7:49:39Um and again those adjustments are are
7:49:42largely in staff's view focused on you
7:49:45know areas where where the company's
7:49:47performance perhaps could be a little
7:49:49bit better. Sort of trying to create
7:49:50that consequence and risk for the
7:49:52company associated with with those kinds
7:49:55of concerns. Um this provides a great
7:49:58deal of meaningful progress regarding
7:50:00energy assistance um for incomequalified
7:50:03customers. an opportunity to present a a
7:50:05a pilot program. Um, you know, really
7:50:08meaningful shifts in the way that the
7:50:10PIP program is administered. It shifts,
7:50:13you know, $40 million of operational
7:50:15risk to the company, 30 million from um
7:50:18Comanche 3 and another, you know, up to
7:50:2012 million for the for the remaining
7:50:22fleet, which I think was very important
7:50:23to staff to have a more sort of holistic
7:50:26performance structure for all of the the
7:50:29generating assets. So, we don't create
7:50:30sort of the whack-a-ole do well in one
7:50:33unit and let others um you know,
7:50:36potentially languish. Not that the
7:50:37company would do that, but just creating
7:50:38the overall framework for all of the the
7:50:40units. Um it's a reasonable compromise
7:50:43on a whole host of things. When when
7:50:45plant lives, sharing of mineral rights,
7:50:49um prudent review of, you know, review
7:50:51for prudence of all of the coal plants
7:50:54costs, it avoids certain creation of
7:50:56certain riders. Like we didn't talk
7:50:57about the CIS deferral. That was also
7:51:00very important to staff that we're not
7:51:01creating the same situation with the
7:51:03deferrals that we're in right now. That
7:51:05we try to resolve the deferrals we can
7:51:07without creating new ones. um company
7:51:10wants to present an application or a
7:51:12CPCN for a program, that's fine, but we
7:51:14didn't want to be creating more
7:51:16deferrals um to be trying to address it
7:51:19some future date. So, there's a lot of
7:51:21cleanup um in this settlement and a lot
7:51:25of very detailed hard work. Um, as part
7:51:29of that, the compromise on on the
7:51:30ratebased convention, I think staff
7:51:33views as very reasonable that um, you
7:51:35know, that we still have a rate base
7:51:38that is based on plant that is in
7:51:39service. Staff continues to prefer
7:51:4213-month average as a more reasonable
7:51:44outcome, but in the context of all of
7:51:46the other back and forth and compromises
7:51:49in this settlement, this was a very
7:51:51reasonable place to land. and and staff
7:51:53believes this is a this really does
7:51:55balance a a huge number of issues in
7:51:58this very complicated case. Um and that
7:52:01it is a reasonable place that results in
7:52:03just and reasonable rates.
7:52:08>> All right. Well, thank you, Miss O'Neal,
7:52:09and and Mr. Chair. I think I I was able
7:52:11to build a bunch of my questions into
7:52:13that final one there. So, I think we're
7:52:15uh I think we're good on redirect.
7:52:17>> Thanks for uh working that through, Miss
7:52:19O'Neal. Uh thanks for joining us today.
7:52:22You can be excused.
7:52:25Uh, anything else uh before we adjourn
7:52:28for the day? I think we start at 100
7:52:31p.m. tomorrow
7:52:33uh with the UCA and other witnesses.
7:52:38Mr. Simper, anything else or are we
7:52:40good?
7:52:42>> I think we're good for now.
7:52:45>> Okay. All right. With that, we're journ.
7:52:47See everybody at 1 tomorrow.

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