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29:15Good morning. I'm Eric Blank and we're
29:18back on the record in uh 25-0494E,
29:23the public service company of Colorado
29:25rate case. Uh
29:28uh just uh on any preliminary matters uh
29:34before we jump into the uh witness list,
29:38Mr. Bunker. Yes. Good morning, Mr.
29:40Chairman. As you may recall yesterday
29:43morning, I mentioned that we had four uh
29:47attachment testimony attachments in uh
29:51UCA's Box.com account, and I've
29:55conferred with other parties. At this
29:57point, I do not have objections from
29:59any. The uh the revision, if you will,
30:03to these attachments is really clerical.
30:07it is to change the attachment number in
30:11the header at the top of each attachment
30:13and [clears throat] that's it. And so I
30:16would move to uh uh admit these
30:20attachments and I can quickly go through
30:23them so uh uh we can we can get them
30:26from u the box account.
30:29>> Yeah, if you could just list the hearing
30:31numbers. Uh you don't have to pull them
30:33up. just list the hearing numbers so the
30:35record is clear and then I'll ask if
30:37there's any objections and we'll
30:40>> get them amended.
30:41>> Okay. Very good. Uh the first is uh
30:45hearing exhibit 300 attachment CWS
30:50111. So 111
30:53Rev 1. And this would be UCA's triplerr
30:56application in 24-0049g.
31:03The second uh document is hearing
31:07exhibit 300 attachment CWS
31:11112. So 112
31:14rev one and that is public services
31:17response to UCA discovery request 25-21.
31:22The third attachment is hearing exhibit
31:26304
31:27attachment KKK
31:30or I'm sorry KK-4
31:322 K's Rev one and this is a copy of the
31:36commission's decision C23-0538
31:41in proceeding 23R0408.
31:46And the third or fourth attachment is
31:50hearing exhibit 306,
31:52attachment CN-7,
31:56Rev One. This is the Colorado Sun
31:58article. And I'd move to admit each of
32:02these four into the record.
32:05>> Any objections?
32:08Uh, so admitted.
32:10>> Thank you.
32:14Any other preliminary matters? Uh,
32:18Mr. Captain Vandreek.
32:21>> Yes, Chair Blank. Um, I moved to admit
32:24hearing exhibit 900 yesterday from our
32:26box account and it appears that the
32:28answer testimony affidavit was not
32:30entered in along with everything else.
32:32So, I would just ask that the answer
32:35testimony affidavit be entered in as
32:37well.
32:38>> Uh, any objections?
32:41So, admitted. Thank you, sir.
32:43>> Thank you.
32:50>> Uh, any other preliminary matters?
32:55I guess my understanding is we're going
32:58to start with Ms. Allison, go to uh Mr.
33:01Salazar, Mr. Deagle, Mr. Mohler, Ms.
33:06Mccon,
33:08uh Mr. Freighus. Then we'll come back
33:11and see if we need Ms. Lovely and then
33:16we'll continue if we're still have time
33:18with Dr. Depw, Mr. Lei, Dr. Dali, Ms.
33:23Hoe,
33:25uh maybe Dr. Bonierina.
33:28Uh and then that may be uh it for the
33:31day. Uh Miss Brahma, uh does that sound
33:36right to you? It
33:38>> Thank you, Chair Blaine. Commissioners,
33:39yes, that does sound right to us. Um,
33:42subject to the need to juggle depending
33:44on how quickly things go today, of
33:46course. But we are ready with Miss
33:48Allison.
33:49>> Uh, Miss Allison, can you hold up your
33:51right hand?
33:53>> Do you swear to tell the truth, the
33:54whole truth, and nothing but the truth?
33:57>> Yes, I do.
33:58>> You can put your hand down. Is anybody
34:00with you or communicating with you in
34:02any way?
34:03>> No.
34:04>> If that changes, will you let us know?
34:07>> Yes, I will.
34:08Uh, back to you, Miss Brahma.
34:11>> Good morning, Miss Allison. Would you
34:12please state and spell your full name
34:14for the record, please?
34:16>> My name is Jod Allison. J O D Y A L L I
34:20S O N.
34:21>> And for whom do you work and in what
34:23position?
34:25>> I work for Excel Energy. My title is
34:28vice president of customer experience
34:31operations and transformation.
34:34Did you cause to be submitted hearing
34:36exhibit 115 as your direct testimony and
34:40hearing exhibit 147 as your rebuttal
34:42testimony in this proceeding?
34:45>> Yes, ma'am.
34:46>> And did you have any corrections to that
34:49testimony today?
34:51>> No, I do not.
34:53>> Uh thank you. Since the testimony has
34:55already been admitted, uh Miss Allison
34:57is available for questions.
34:59>> And I think there's no cross. Uh, I
35:02don't have questions for Miss uh
35:03Allison. I recall you didn't either,
35:06Miss Commissioner Plant, but can you
35:08confirm?
35:08>> No, I don't.
35:10>> Uh, Commissioner Gman.
35:12>> Hey, thank you. Uh, good morning, Miss
35:14Allison.
35:15>> Good morning.
35:16>> Uh, just a couple really brief
35:18questions. Um, so in the settlement, you
35:22withdrew your request for a new customer
35:25information system modernization
35:28tracker, right?
35:32Yes. Okay.
35:33>> I believe so. Yeah.
35:34>> Okay. Um and as I understand it, the the
35:382026 costs were that are expected by the
35:43company were related to developing an
35:45appropriate plan and work scope for that
35:49uh customer system.
35:51>> Correct.
35:52>> Okay. I just wanted to clarify to make
35:55sure I understand. Is the company still
35:57moving forward with that effort
35:59unchanged? It's just a matter of a
36:01difference in cost recovery.
36:06>> The company is moving forward with the
36:09initiative, the planning for the
36:11initiative. Yes.
36:12>> Okay. Got it. So that change in the
36:15company's position regarding the tracker
36:18does not change your intent on what you
36:22plan to accomplish in 2026.
36:25The company is moving forward with the
36:26planning in 26 to evaluate what our
36:29options and estimates look like to move
36:32forward.
36:34>> Okay. And that's what you were planning
36:35before when you had proposed the
36:36tracker, right? There's no change there.
36:40>> No.
36:41>> Okay. Um and then I'm just curious for
36:45if if you have insight. I know there
36:47were some cost ranges provided for what
36:50you were expecting for costs in 27 and
36:532028.
36:55Uh do you anticipate that's the duration
36:58of the expense or I'm just trying to
37:00understand if you all have a a wider
37:02view of what you're expecting to um to
37:05spend on that system.
37:08That's what we're going through right
37:09now is doing the work to prepare the
37:12estimates uh in through the planning
37:15process.
37:17>> Okay. And then um I presume part of that
37:19planning process would be looking at the
37:22scope and functionalities like that you
37:24need core to that system.
37:27>> Yes, we are working on the blueprinting
37:30and the scoping to develop the scope for
37:32what is needed.
37:34>> Okay. And then um is that a process when
37:38you're looking at the scope that's
37:39purely internal or do you involve any
37:42stakeholders in that process um of of
37:46what functionality you know is is most
37:48desired or inclusive in that scope
37:51>> as I included in my testimony. We are
37:54looking to gather stakeholder feedback
37:56to make sure that we get what we need in
37:58the scope.
38:00>> Okay. And that would be part of the 2026
38:02effort.
38:042026. Yes.
38:06>> Okay. All right. Great. Um, those are my
38:08only questions. Thanks. Just wanted to
38:10understand where that was going given
38:11your uh change in tracker position.
38:15>> Uh, Miss Brahma, any redirect.
38:18>> No redirect. Thank you.
38:20>> U, Miss Allison, uh, thanks for joining
38:22us today and you can be excused.
38:25>> Thank you.
38:27>> Uh,
38:30Mr. Salazar.
38:34Mr. Simpsons.
38:39>> Hello. I think we're waiting on Mr.
38:41Salazar.
38:43Can we get just a half a second to go?
38:46>> Yep.
38:47>> Get him ready.
39:01We're just moving too fast this morning
39:03so far. So, apologies.
39:06>> Uh, say it again. Uh, I lost you for a
39:08sec.
39:09>> We're moving a little fast this morning.
39:10So, I just, uh, we'll need an extra
39:12second. Thank you.
39:14>> Okay. And I think, uh, just to make
39:17sure, I have 10 minutes from uh,
39:19Boulder. Uh, yep, there you are. Uh, Mr.
39:23Salazar, can you hold up your right
39:24hand?
39:26Do you swear to tell the truth, the
39:27whole truth, and nothing but the truth?
39:29>> I do.
39:30>> Put your hand down. Is anybody with you
39:33or communicating with you in any way?
39:35>> No, there isn't.
39:37>> Uh, if that changes, will you let us
39:38know?
39:39>> I will.
39:40>> Uh, back to you, Mr. Sam, sir.
39:43>> Uh, thank you, Chair Blank. Uh, good
39:44morning, Mr. Salazar. Are you the same
39:48Gilbert Salazar who submitted direct
39:50supplemental and rebuttal testimony in
39:52this proceeding?
39:53>> Yes, I am.
39:54>> And uh those are hearing exhibits 109,
39:57129, and 141. Um do you have any
40:00corrections to your testimony?
40:02>> I do not.
40:03>> Uh your testimony has already been
40:04admitted to the record and therefore the
40:06witness is available for
40:07cross-examination.
40:09>> U Miss Van Gain with 10 minutes.
40:15Good morning, Mr. Salazar. I'm Bernie
40:18Benim and I am here on behalf of the
40:20city of Boulder this morning.
40:23[clears throat]
40:24We just wanted to talk to you a little
40:25bit about um
40:28tracking failure and the replacement of
40:30distribution equipment on feeders
40:33subject to wildfire safety operations.
40:36Um,
40:37>> so are you familiar with the answer
40:40testimony of Matthew Lairman?
40:43>> Uh, I am.
40:46>> And you reviewed the section of Mr.
40:48Lairman's testimony that recommended
40:50identifying feeders that experienced
40:52PSPS events and then tracking equipment
40:56replacement that occurred on those
40:57feeders from outages that were unrelated
41:00to PSPS events.
41:03Yes. [cough]
41:05[clears throat]
41:06>> And public service did not respond to
41:08this recommendation and rebuttal
41:09testimony.
41:12>> Uh I'm not aware of that, but but uh
41:16sounds fair that they did not.
41:19>> And public service didn't include this
41:21recommendation in the proposed
41:23settlement agreement.
41:25>> That's correct.
41:27You sponsored the response to Boulder
41:30Discovery request 21, correct?
41:34>> Uh, are we able to pull that up for me
41:37to look at?
41:38>> Yes. Um, Miss Federico, is it Miss
41:40Federico this morning?
41:42>> April or Miss Crane if you prefer?
41:45>> Thank you, Miss Crane. Can you pull up
41:47hearing exhibit 600 attachment MAL17?
42:09Thank you.
42:12Um, Mr. Salazar, this is uh the Pasco's
42:17response to Folder's Discovery request
42:2021. [clears throat and cough]
42:23>> Okay. Thank you.
42:24>> Yeah. Uh, so some customers that
42:28experienced an outage due to wildfire
42:30safety operations, including PSPS
42:32events, subsequently experienced outages
42:35unrelated to wildfire safety out
42:38operations such as failure of
42:41transformers, underground cable, or
42:44other equipment.
42:46Correct.
42:47And to make sure I understand you're
42:49you're saying during the weather event
42:51that occurred they
42:54>> sorry after the event so subsequently so
42:58after the the outages customer some
43:01customers experienced due to PSPS events
43:05they subsequently experienced outages
43:09unrelated to those uh PSPS events such
43:13as failure of transformers or failure of
43:15underground cable.
43:17or failure of other equipment.
43:19>> Okay. And and again, just to to make
43:21sure um I understand. So when we uh when
43:25we do a PSPS, we're going to proactively
43:28shut power off. The weather event is
43:31going to come through and then at that
43:33point we patrol those areas to identify
43:36damage. Are are you referring to the
43:38damages that we identified during that
43:40patrol? We're we are talking about
43:43subsequent failures uh a week later or
43:47longer.
43:50>> I understand now. Okay. And and um and I
43:53didn't catch the question on that.
43:56>> So So you agreed that they did
43:58experience subsequent failures uh
44:01unrelated to the PSPS events
44:05after the PSPS event outages occurred.
44:08>> Sure. Um uh they're
44:11very common that there's going to be
44:13that the infrastructure is back to a
44:15normal state and the chances of having
44:17an outage due to a failure of a piece of
44:19equipment uh can occur.
44:22>> Okay. And public service does not
44:24currently track capital assets or on
44:26andm records on feeders subject to
44:28wildfire safety operations. Correct. I
44:32>> in the circumstance that you're
44:33referring to. No, I don't believe we
44:35have tracking uh after the fact on those
44:38particular feeders.
44:42>> Um can we scroll down to
44:46um Boulder 21E? the answer to Boulder 21
44:54[clears throat and cough]
44:59and um Boulder or uh wildfire safety
45:03operations are not designed or
45:05implemented to accelerate equipment
45:07stress or failure. Correct.
45:12>> Uh yeah, correct. uh our wildfire safety
45:16oper operations. Uh uh there's not a
45:19there's not a uh relationship to stress
45:22or failure uh that we're aware of.
45:29>> So Boulder agrees that wildfire safety
45:33operations are not designed or
45:35implemented to accelerate equipment
45:38stress or failure. [clears throat] But
45:40is it fair to say that repeated
45:42deenergizing or re-energizing of
45:45equipment may accelerate wear and tear
45:48on distribution equipment, particularly
45:50equipment that is nearing the end of
45:52life?
45:55No, I I I wouldn't agree to that. I
45:57think that the um infrastructure that we
45:59have in place is designed for um to
46:02operate in that way. uh that's the to be
46:05able to uh energize and deenergize and
46:08uh open switches um shouldn't cause
46:12additional wear and tear on the
46:14equipment.
46:17>> So it's your argument that if a
46:20substation breaker or a switch gear
46:22failing immediately following a PSPS
46:25outage
46:26event um occurs, it is just a
46:29coincidence.
46:31Uh what I would say is if that piece of
46:33equipment failed um that it was nearing
46:36its end of life and uh unrelated uh to
46:40whether it was involved in a PSPs or
46:42not.
46:53Okay, just one moment.
47:03So you're saying that the company has
47:05tracked and documented that its
47:07equipment has not been exposed to any
47:09overvoltage surges or transients during
47:13PSPS deenergization or reenergization.
47:20Yeah, the the relationship that um is
47:22being proposed here between the two is
47:24not something that that we we track um
47:28as as we believe it's normal operation
47:29and it's what the equipment is intended
47:31for. Um
47:34so yeah, there there isn't a study or
47:37anything that we're tracking in relation
47:38to that.
47:49Yeah,
47:59one moment. Apologies.
48:08Yeah.
48:14>> So you would agree that when equipment
48:16failure occurs on your system, it is
48:18considered unplanned.
48:22>> Correct. I would agree to that.
48:24>> And the company has had equipment fail
48:26before. It would normally be expected
48:28based on age. Correct.
48:33>> Um not not always. There's uh you know
48:36for example the we have third party
48:39damages and accidents where equipment
48:41will fail uh carpole accident things
48:45like that um but age and aging
48:47infrastructure is very much a part of
48:50failure uh absolutely
48:55>> and is it also fair to say that the
48:57company has fully depreciated equipment
48:59that remains in service?
49:02>> Yeah, in some instances that's correct.
49:05So when a substation transformer fails
49:08and it is replaced by a new transformer,
49:10the company earns a return on that new
49:12equipment. Correct?
49:16>> Probably not the best person to to uh to
49:19answer questions about financing and and
49:22how the company earns return, but uh
49:24yeah, that would be a capital uh
49:26investment that you're referring to.
49:29So if PSPS accelerates equipment
49:32failures,
49:35the company would need to increase its
49:37expenditures on emergency repairs and
49:39equipment failures beyond the historical
49:41averages if if that was true. Correct.
49:45>> Objection assumes facts, not an
49:47evidence, namely the correlation between
49:49PSPS and equipment failures.
49:53I'm just asking if if if
49:56PSPS did accelerate equipment failures
49:59that this would need to occur
50:02that the company would need to increase
50:04its expenditures on emergency repairs
50:07and equipment failures
50:08>> and the witnessages
50:11>> and the witness has testified that there
50:13is no such connection.
50:16Uh with that clarification
50:18uh um I'll uh allow the um question to
50:25move forward.
50:30>> Yeah. Yeah. Again, we don't see a
50:33correlation. Um and and I don't uh
50:36believe that that's an industry um
50:39concern that that operating equipment is
50:42is degradating it faster. uh if that
50:45were to be the case then uh and um and
50:49again I don't believe that it is um if
50:52that were to be the case that would be
50:53something to look at and evaluate um and
50:56potentially make some adjustments and
50:58changes because it would uh be
51:01increasing the the degradation of that
51:04piece of equipment and the depreciation.
51:07And so you do agree then that it then
51:11the c you agree that the company would
51:13need to increase its expenditures on
51:15emergency repairs if that was the case.
51:17>> Um I don't know that I'd say that I
51:19agree. I think uh uh it'd have to be
51:22looked at and have to be studied to to
51:23find out.
51:25>> Okay. So does public service agree with
51:27Boulder's recommendation to track
51:29failure and replacement of equipment and
51:31feeders subject to wildfire safety
51:33operations?
51:36No, because uh we don't believe that it
51:38that is an issue or seen any evidence uh
51:41to suggest that it is an issue.
51:44>> And is there any evidence in the record
51:46supporting your opinion?
51:50>> Um
51:52I'm not sure if if there is or not. I I
51:55don't think that I don't think that
51:57there's a study done. So I would say no.
51:58I don't think there is evidence in
52:00there.
52:02>> Okay. Thank you. That is all of my
52:04questions.
52:06>> Mr. Simper, redirect.
52:10>> Uh, no, nothing. Uh, Chair Blank.
52:13>> Oh, sorry. Uh, let me just confirm that.
52:16Uh, Commissioner Plant, questions for
52:18Mr. Salazar.
52:19>> No questions.
52:21>> Uh, Commissioner Gman,
52:22>> I don't. Thanks.
52:24>> And still no redirect. Mr. Simsar, I'm
52:26assuming.
52:27>> Still nothing. Nope.
52:29>> Mr. Salazar, thanks for joining us this
52:32morning. and you may be excused.
52:34>> Thanks for having me.
52:38>> Uh, next on my list is Mr. Deagle
52:45and we're just waiting for him to pop
52:47up.
52:48>> And uh, I'm not sure we got your name
52:50right. Is it Deagle Digle?
52:53>> It's Deagle. You're correct. Sure.
52:56>> Got it. Uh, can you hold up your right
52:58hand?
53:00Uh, do you swear to tell the truth, the
53:01whole truth, and nothing but the truth?
53:04>> I do.
53:05>> Uh, you can put your hand down. Is
53:06anybody with you or communicating with
53:08you in any way?
53:09>> No.
53:11>> If that changes, will you let us know?
53:14>> I will.
53:15>> Uh, back to you, Mr. Simpson, sir.
53:17>> Uh, thank you. Good morning, Mr. Deagle.
53:19Are you the same uh Brandon Deagle who
53:21submitted uh direct and rebuttal
53:24testimony in this proceeding marked as
53:26exhibits 110 and 142?
53:29I am. Yes.
53:30>> Do you have any corrections to your
53:31testimony?
53:33>> I do not.
53:34>> Uh your testimony is already admitted
53:37into the record. So with that, the
53:38witness is available for
53:39cross-examination.
53:41>> I don't see any cross. Uh and I forget.
53:44Commissioner Plant, did you have
53:45questions for Mr. Deagle?
53:46>> I do not.
53:48>> Uh Commissioner Gman, did you or was it
53:50only me?
53:51>> I do not.
53:52>> I did have a couple. Uh mainly about um
53:56the TCA. Um my understanding is that in
53:59this case over $110 million of
54:02transmission related revenue requirement
54:05representing well over a billion dollars
54:07of capital spending is getting rolled in
54:09the rate bait rate uh base rates really
54:12in this case and that in 2026 the TCA is
54:17177 million. Is that an accurate
54:20characterization of uh what's going on
54:24here?
54:28I I can't hear him. Is that just me?
54:32>> I cannot hear him either. Ch.
54:34>> Okay.
54:37>> Can you hear?
54:38>> Oh, now I can apologize.
54:41Uh
54:43chair, I would need to look at the the
54:45particular numbers in the case regarding
54:47TCA. really the the rec recovery
54:50mechanism uh of the pro the projects is
54:54generally uh more of a consideration
54:56with our regulatory witnesses.
54:59>> Uh so I guess that's a conversation I
55:01want to I do want to have. Uh is uh is
55:06is Mr. PK the only witness who can talk
55:09about the TCA or is there somebody uh uh
55:12forthcoming? I'm trying to I have
55:14questions about what's in the TCA,
55:16what's not in the TCA. Is that not for
55:19you?
55:21>> Mr. Mr. Fright House can handle I think
55:24a good chunk of those
55:27Mr. Pay as well.
55:29>> Uh okay. Uh and uh the questions just
55:35have to do with uh whether a line uh
55:38expands transmission capacity or not. So
55:41that that's more for Mr. afraid us.
55:46>> Yeah. Or Mr. P, if there were particular
55:49questions on, you know, a scope of a a
55:52project in particular, we we could talk
55:54about that.
55:56>> Okay. I'll uh I'll I'll save my
55:58questions for Mr. Fredas. And just just
56:01so you know, Mr. Simper, it has to do
56:04with the prior rate case decision
56:06talking about expansion of transmission
56:09facilities and then uh there was a TCA
56:13advice letter that was suspended that
56:16sort of defined uh what the transmission
56:19expansion was, you know, and then uh
56:23sort of how that's implemented uh going
56:26forward. So with that, Mr. Deagle. Uh,
56:29sorry for having you put on a tie. Uh,
56:34uh, and I think
56:36>> I think you can be excused.
56:39>> Thank you. Appreciate the time, Chair
56:42Blank.
56:42>> Yeah, sorry. Um, uh, let's see. Uh, Mr.
56:49uh, who's next? Uh, Muller.
56:51>> Mr. Muller.
56:53[clears throat]
57:37They're going to go grab them.
57:39Apologies. Like I said, we're moving
57:40pretty fast this morning.
57:43>> No worries.
58:49Mr. Muller,
58:51welcome. Can you hold up your right
58:54hand?
58:56Do you swear to tell the truth, the
58:58whole truth, and nothing but the truth?
59:00>> I do.
59:01>> Put your hand down. Is anybody with you
59:03or communicating with you in any way?
59:06>> No.
59:07>> If that changes, will you let us know?
59:09I will
59:11>> uh uh with that uh back to you, Mr.
59:14Simpson.
59:15>> Thank you, Chair Blank. Uh Mr. Mohler,
59:17good morning. Uh are you the same Mark
59:20Mohler who uh filed direct supplemental
59:23and rebuttal testimony in this
59:24proceeding?
59:26>> I am.
59:26>> Um would you have any corrections to
59:28your testimony?
59:30>> I have no corrections.
59:32>> Uh your testimony has been admitted into
59:34evidence already. So, with that, the
59:36witness is available for
59:37cross-examination.
59:39>> I have uh 10 minutes for the city of
59:42Boulder.
59:45>> Uh thank you, Commissioner Blank. We
59:48actually are going to wave our time for
59:50Mr. Mohler because um we had to reserve
59:53this time in case Mr. Salazar couldn't
59:55speak on the issues that we were um
59:59asking him. Okay. Uh Commissioner Plant,
1:00:03questions for Mr. Mohler.
1:00:06Yes, I do. Thank you. Uh good morning,
1:00:08Mr. Miller.
1:00:10>> Good morning, Commissioner Plant.
1:00:12>> Um I have a a lot of confusion around uh
1:00:16the issue of um the meters and the meter
1:00:21the AMR
1:00:23um meter uh costs. So, I'm trying to
1:00:28understand uh what the costs are all
1:00:30about in in your direct testimony on
1:00:32page 31.
1:00:34you're discussing the AMR legacy meter
1:00:38recovery and recovering those costs over
1:00:4015 15 years. And then on line 20 you say
1:00:44this is 15 years roughly aligns with the
1:00:48remaining life of the installed AMI
1:00:50meters. And I'm wondering why are using
1:00:54the life of the AMI meters to recover
1:00:57AMR meter costs?
1:01:00>> Sure. Um, so when we looked at the
1:01:03entirety of the AMI replacement of AMR
1:01:08meters, part of that was the known
1:01:11residual value on the AMR meters. And
1:01:14since the AMI meters was a uh
1:01:18improvement in value proposition in
1:01:21terms of the reduced effort to read the
1:01:25meters, we felt that it made sense to
1:01:27amortize the remaining value of the AMR
1:01:31meters over the life of the AMI meters.
1:01:34So it kind of lined up with the the
1:01:36change in solution. So, the life of the
1:01:39AMR meters
1:01:41was a shorter period of time, but you're
1:01:44proposing to extend that period of time
1:01:47to align with the AMI or
1:01:51uh well, the AMR meters were taken out
1:01:53of service. So, we were no longer
1:01:56depreciating those once they came out of
1:01:58service. So, they were just sitting the
1:02:00dollars were just sitting in the
1:02:01company's reserve account uh for quant.
1:02:06And are those uh
1:02:10do those continue to to be in rate base?
1:02:13Are they there something that's existing
1:02:15in rate base?
1:02:16>> The residual value is part of rate base.
1:02:19That's correct.
1:02:21>> So
1:02:22there were about I think $16.7 million
1:02:26worth of additional meters that you said
1:02:28were installed during the interim period
1:02:30as you were deploying AMI. Uh correct.
1:02:34It's a difference between I think 83.9
1:02:36and 67.2.
1:02:38>> Yeah, that sounds about right.
1:02:41>> And
1:02:43as you were deploying the AMI, you were
1:02:46taking out the AMRs.
1:02:49So, did you did you not use the AMRs
1:02:53that were being removed? you got new
1:02:56AMRs for the additional meters that you
1:02:59said were installed during that interim
1:03:01period or were you using the existing
1:03:04AMRs that you took out?
1:03:06>> Uh I don't know. That's probably a
1:03:09better question for
1:03:12uh
1:03:13>> Mr. Nickel.
1:03:14>> Mr. Chad Nickel. Yeah.
1:03:16>> Nickel. Okay.
1:03:17>> Yeah. Yeah. He can talk about what the
1:03:20replacement strategy is and where they
1:03:22used a new meter or where they used a a
1:03:25meter that was previously pulled.
1:03:28>> Okay. Correct.
1:03:28>> But you are correct on the $16 million.
1:03:31>> And this is something that I've had a a
1:03:35real hard time understanding. back at
1:03:37the in the in the proceedings 16A588E
1:03:42for AMI uh replacements.
1:03:45Uh there was a hearing in 2017 and Miss
1:03:49Jackson stated for the company back in
1:03:521994 was when we started deploying AMR
1:03:55meters on our system. Those were
1:03:58deployed between 1994 and 1998.
1:04:01Those meters have an average life
1:04:03depreciation of 25 years is what we've
1:04:05been looking at. If you do the math, we
1:04:08are 25 getting pretty close to the end
1:04:11of that deployment time frame where the
1:04:1325 years would be reached. And in that
1:04:16context, we're looking at fully
1:04:17depreciated assets. And in the decision
1:04:20accepting the comprehensive settlement
1:04:22on that case, replacement of aging
1:04:26equipment was mentioned repeatedly in
1:04:29the decision C170556
1:04:32as a basis for the AMI replacement.
1:04:35Um, in paragraph 27,
1:04:38it reads, "During the hearing on
1:04:40settlement agreement, staff witness Paul
1:04:42Caldera stated that the current
1:04:43automatic meter reading meters are
1:04:46beginning to reach the end of their
1:04:48useful lives. On 28, OCC witness also
1:04:52testified that they believe that since
1:04:54the existing fleet of AMR meters is
1:04:56reaching the end of their lives, it's
1:04:58prudent to go forward with replacing the
1:05:00AMR meters." Paragraph 33, the
1:05:03commission said, "Because a large
1:05:05percentage of the company's existing
1:05:06meters are reaching the end of their
1:05:08useful lives, we conclude it's
1:05:09appropriate to replace."
1:05:12And at the time
1:05:14of the 2016 proceeding, the balance of
1:05:18the meter cost had 12 years left on
1:05:22their amortization
1:05:24and they've been, as you said, included
1:05:25in the rate base during that intervening
1:05:27time. Correct.
1:05:32I think your I don't know why your
1:05:34volume Did anybody else hear
1:05:38>> correct?
1:05:39>> Oh, there you go. Okay, go.
1:05:40>> Okay. Sorry.
1:05:43>> At that 2017 hearing, Commissioner
1:05:46Consilia asked uh Miss Jackson,
1:05:49rateayers are going to be paying for a
1:05:52period of time for 2 meters was the
1:05:55question. And the answer from Miss
1:05:57Jackson was for a short period I would
1:06:00say yes. And so if we look at that time
1:06:03frame, it's been 10 years.
1:06:06You would think if it had 12 years left
1:06:08on it, it's been in the rate base, it
1:06:11should be we should be two years away
1:06:13from full amortization.
1:06:15So, I'm wondering
1:06:18why we have such enormous costs and why
1:06:23we're going to continue to pay for these
1:06:25meters for another 15 years.
1:06:28>> Yeah. Um, I don't know the exact context
1:06:32of Miss Jackson when she referred to the
1:06:3512 years, but I'm assuming that was the
1:06:37average remaining life. So, when we
1:06:39place meters into service, we place them
1:06:42in service by vintage. So every uh meter
1:06:45will go in
1:06:47uh if a meter went in in 2000, it would
1:06:51have been twiated
1:06:53over 25 years from there. So when Miss
1:06:56Jackson was talking about the 12 years
1:06:58remaining life there, that might have
1:07:00been I'm assuming she was referring to
1:07:02the average remaining life. So there
1:07:05could have been meters that had just
1:07:07gone into service because a meter had to
1:07:09be replaced early. uh a new customer
1:07:12could have been hooked up by the
1:07:13company. Those would have still had a
1:07:15full 25 year remaining life on them. And
1:07:18then on the other side, there could have
1:07:21been meters with only like a year or two
1:07:23years left of life. So the 12 years
1:07:25wouldn't have been uh a remaining 12
1:07:29years for every meter that was out
1:07:30there. It would have been the average of
1:07:32all of those vintages.
1:07:34I guess what I'm trying to figure out is
1:07:36if if we had
1:07:39um 67.2 meter million at the time with
1:07:44an average life of 12 years, which would
1:07:46be pretty much paid for and advertised
1:07:49in the next couple of years.
1:07:51And now we have 83 million 12 years
1:07:56later or 10 years later.
1:07:59What happened? Why do we have [laughter]
1:08:01all of these AMR meters? It doesn't make
1:08:04any sense to me. We should be
1:08:07>> whittling them down, not building more.
1:08:11>> Yeah. So, Mr. Nickel will can talk more
1:08:14about this, but there we we were still
1:08:16continuing to install meters from that
1:08:19point on uh because of COVID and supply
1:08:22chain issues in getting meters. So,
1:08:25there were still old AMR meters going
1:08:27into service. Uh Denver is a growing
1:08:31metro area. So we would have been still
1:08:34installing meters on new premises. Uh we
1:08:37would have still been installing meters
1:08:38or uh replacing failed meters. Uh that's
1:08:43really more the operational side of it.
1:08:45And I would uh say you should talk to
1:08:47Mr. Nickel about the number of meters
1:08:50that were put into service during that
1:08:52period.
1:08:52>> Okay. Uh I can talk to the depreciation
1:08:55of them and how we even when they were
1:08:57going in in 2016 2020 we have an
1:09:02approved 25 year life. So we would still
1:09:04depreciate those meters over 25 years
1:09:08because that's our approved life by the
1:09:10commission even though there was a known
1:09:12change to AMR or I'm sorry from AMR to
1:09:16AMI.
1:09:17One of the components of Miss Jackson's
1:09:20testimony was that the residential
1:09:23meters cost about $47 for the actual
1:09:25meter. I think there's some there's
1:09:27obviously some installation costs, but
1:09:29that would be on and m 20 $221 for
1:09:33commercial meters.
1:09:36I'm trying to figure out $84 million.
1:09:41You know, that's almost 2 million
1:09:43residential meters. I'm trying to figure
1:09:45out how we get the scale, but you're
1:09:48saying that uh Mr. Nickel is the person
1:09:51to talk to about that.
1:09:54>> Yeah. And just from a depreciation
1:09:57perspective,
1:09:58um
1:10:00remember that the meters that would have
1:10:02gone in at the end would be completely
1:10:05or would still have the vast majority of
1:10:07their book value on them. anything that
1:10:09would have gone in uh post 2020.
1:10:13>> Well, that that's troubling to me and
1:10:16and I get that that's a question for Mr.
1:10:18Nickel, but we're putting in meters
1:10:22at the end as you said, which we know
1:10:25are only going to be in there for a
1:10:26couple of years as we're completing AMI
1:10:29roll out and yet we're buying new meters
1:10:32that have 25 year lives rather than
1:10:34using the ones that we're pulling out. I
1:10:37mean, that doesn't seem to be very good
1:10:40financial planning to me, but I can talk
1:10:44about that a little bit more with Mr.
1:10:45Nickel. Those are those are the only
1:10:47questions I had, Mr. Chairman. Thanks.
1:10:50>> Thank you, sir. Uh, Commissioner Gman,
1:10:52questions for Mr. Mhler.
1:10:54>> Yeah, Mr. Muller. Um, just a couple. I
1:10:57just want to make sure I'm tracking the
1:10:59um disagreement I think really between
1:11:03the company and UCA with regard to um
1:11:08uh net salvage rates inclusion of
1:11:12contingencies and overheads. Does that
1:11:14sound familiar?
1:11:16>> Yes. Yeah, it does.
1:11:17>> Is that specific to the production plan
1:11:21category or does that impact other
1:11:24categories? I was not entirely clear on
1:11:27that.
1:11:28>> Uh that only affects
1:11:32production. [clears throat]
1:11:34>> Okay.
1:11:34>> So, so it wouldn't affect distribution
1:11:37because distribution
1:11:39uh gas lines we use actual cost
1:11:41historical actual costs as the basis for
1:11:44cost of removal because it's more of
1:11:46like a recurring unit uh unit of
1:11:49retirement. In the case of generation,
1:11:52every power plant is different. Every
1:11:54wind farm is slightly different. So we
1:11:56have an engineering firm come in and do
1:11:58the estimating on those. So it is long
1:12:01long way around that. But it is unique
1:12:04to generation assets.
1:12:06>> Okay. Got it. So these are kind of the
1:12:09unique large generators. The more
1:12:12routine stuff is done without the
1:12:16contingencies and overheads because it's
1:12:18based on the actual historical cost of
1:12:20that category.
1:12:22>> Correct. Correct. Okay, thank you. I
1:12:24just want to confirm as you know I've
1:12:26I've been studying net salvage rates for
1:12:28years now and I thought I had a grasp on
1:12:30it and then I read that but I was pretty
1:12:33sure this was unique to production
1:12:34plant. I wanted to make sure that
1:12:36assumption was correct.
1:12:38Um, and then, um, just on the meter
1:12:43issue really quickly, can you confirm
1:12:45with me if meter installation costs are
1:12:48O& and M or do those go into like the
1:12:51capital balance for the new meters?
1:12:54>> They're capital. The installation costs
1:12:56are capital.
1:12:57>> Okay. Um, and then with regard, I don't
1:13:01know if you're the right person to
1:13:02answer this, but I figured I' I'd throw
1:13:04it out and get directed. um with regard
1:13:08to the company's um proposal to extend
1:13:12the depreciable life of wind assets,
1:13:14company own wind assets. Are you
1:13:16familiar with that?
1:13:17>> I am. I am.
1:13:18>> Okay. Um not necessarily a depreciation
1:13:21question. So I'm curious given the
1:13:24company's stance that it is their
1:13:26expectation at this point that those
1:13:28units will run um a longer amount of
1:13:32time you know to to a reasonable degree
1:13:34or or efficiency I think is assumed. Um
1:13:38does the company anticipate or plan any
1:13:41changes in treatment of um wind either
1:13:46company owned and or uh PPA in the
1:13:50resource planning space and bidding
1:13:53space
1:13:55>> uh
1:13:57change in expectedly.
1:13:59>> Yeah, I don't know how that's layered
1:14:01into the resource planning. My
1:14:03assumption would be that they would they
1:14:06they would plan for a longer life if we
1:14:08were assuming a longer life, but I I I'm
1:14:12speaking a little bit out of turn by
1:14:13saying that that that's really our
1:14:15planning group that should answer that.
1:14:16>> Do you have any idea if there's a
1:14:18witness in this proceeding who knows
1:14:20that relationship?
1:14:23>> Uh I don't know if there is.
1:14:26>> Okay. just it's of interest being that
1:14:30we have some resource planning uh
1:14:32bidding coming up and it seems as though
1:14:34the company has has
1:14:36>> modified their position on the expected
1:14:38life of these. So I'm very curious what
1:14:41that means for those bids both company
1:14:44owned and PPA.
1:14:46>> Okay.
1:14:48>> Um okay. Uh thank you. Those are my only
1:14:51questions. Appreciate it.
1:14:53>> Okay. I don't have anything to add. Mr.
1:14:55Simper. Uh, any redirect?
1:14:58>> Just real briefly. Uh, Mr. Mohler, good
1:15:00morning. Um,
1:15:03>> have are you familiar with Mr. Nichols
1:15:05rebuttal testimony at all?
1:15:09>> Uh, I have read through
1:15:12I've read through some of it.
1:15:14>> Would would it surprise you that Mr.
1:15:16Nichols testified that when Miss Jackson
1:15:19was estimating the stranded costs as
1:15:21part of the Aegis proceeding that the 60
1:15:24approximately $67 million she was
1:15:26testifying to was um the estimate of the
1:15:30remaining stranded costs upon completion
1:15:33of AMI installation. Would that surprise
1:15:35you at all?
1:15:37>> No. No. That that's my recollection.
1:15:40There was a projection out that it would
1:15:42be 67. That wasn't the point in time.
1:15:44that was the expected at uh
1:15:46installation.
1:15:48>> Thank you. And then just to just to
1:15:50clarify the as as part of the
1:15:52depreciation expense the company
1:15:54proposed in its direct to extend the
1:15:57depreciable lives of the wind farms um
1:16:01in this proceeding. Is that correct?
1:16:04>> That's correct. Um but it doesn't
1:16:07necessarily
1:16:08stand to reason that if that depreciable
1:16:11life is not is not extended that the
1:16:14company would not expect to run those
1:16:16wind farms beyond the current
1:16:18depreciable life. Is that correct?
1:16:21>> Uh correct. So
1:16:24yes uh these are all estimates. Uh our
1:16:28engineering teams do the estimating. We
1:16:31have wind farms that are 25 years. We
1:16:33have wind farms that are 35 years uh
1:16:36across our the company's fleet.
1:16:38>> All right. Thank you. Nothing further.
1:16:40>> Okay.
1:16:41>> Uh thank you for joining us uh this
1:16:43morning, Mr. Mhler. Appreciate you. Uh
1:16:46you may be excused.
1:16:48>> Thank you, Chairman Blank.
1:16:50>> Thank you. Uh Miss McCone,
1:16:54uh can you hold up your right hand? Do
1:16:57you swear to tell the truth, the whole
1:16:59truth, and nothing but the truth?
1:17:00>> I do. Put your hand down. Is anybody
1:17:04with you or communicating with you in
1:17:06any way?
1:17:07>> No, they are not.
1:17:08>> If that changes, will you let us know?
1:17:11>> I will.
1:17:13>> Uh, over to you. Uh, Miss Nelson, it's
1:17:17uh 9:48 and I see 60 minutes.
1:17:21Uh, you're up.
1:17:23>> Did Mr. Zmer want to
1:17:25>> Oh, yeah.
1:17:27>> Sorry. [laughter]
1:17:28>> Oh, we can.
1:17:29>> No, that's okay. Yeah,
1:17:32>> hearing already.
1:17:33>> Uh, go ahead. If you can be brief, Mr.
1:17:36Zemer, that'd be great.
1:17:37>> Uh, I think we can discard. Miss
1:17:40McCoen's uh, testimony has been
1:17:42admitted. So, we're moving quick.
1:17:45>> Thank you. Thank you, Mr. Zemer. Miss
1:17:47Nelson, up to you.
1:17:49>> Thank you. Good morning, Miss McCome.
1:17:51Good to see you.
1:17:52>> Good morning.
1:17:53>> I'm Michelle Singer Nelson. I'm
1:17:56representing UCA for the record.
1:17:59Um, I'm going to start with kind of a
1:18:02tracker and deferral 101.
1:18:06So, going through your direct testimony,
1:18:09I think if you want to pull it up,
1:18:11that's fine, but um, but I'm not going
1:18:14to pull it up right away. Um, so
1:18:17trackers operate by establishing a
1:18:20baseline cost and then tracking actual
1:18:24costs above or below that baseline. Is
1:18:27that right?
1:18:28>> That's correct.
1:18:30>> Okay. And the baseline cost for a
1:18:33tracker is typically derived from
1:18:35historical data or test year estimates.
1:18:39>> That's correct. It's typically based on
1:18:42the test year.
1:18:43>> Okay. Um and the difference between the
1:18:46baseline cost and the actual costs for
1:18:49an item subject to a tracker is deferred
1:18:53in a regulatory asset or liability.
1:18:55Correct. That's correct.
1:18:59>> And a regulatory asset is an
1:19:01underreovery
1:19:03that is recovered in a future rate case.
1:19:07>> That's correct.
1:19:08>> And a regulatory liability is an over
1:19:12recovery that's refunded to rateayers at
1:19:15some point.
1:19:17>> That's also correct.
1:19:19>> All right. in um public services direct
1:19:22case in this uh in this proceeding uh
1:19:26you represented or you presented five
1:19:29trackers in your testimony. Pension
1:19:32expense, property tax expense,
1:19:35commission administration fee, customer
1:19:38information system or CIS,
1:19:41modernization, and the electric damage
1:19:44prevention trackers.
1:19:47>> That's correct.
1:19:48>> Okay. and public service has now
1:19:51withdrawn its request for the CIS and
1:19:55damage prevention trackers. Correct.
1:19:58>> That's correct.
1:20:01>> Um but public service continues to
1:20:04propose that the commission approve the
1:20:07property tax tracker, the pension
1:20:10expense tracker, and the commission
1:20:12administration fee tracker.
1:20:15>> That's correct.
1:20:17>> Thank you for that.
1:20:19Um now talking about deferrals or
1:20:22regulatory assets which are slightly
1:20:26different than trackers. Uh you refer to
1:20:29regulatory assets that public service
1:20:32seeks to roll into rate base in this
1:20:35proceeding as deferrals. Correct.
1:20:38>> That's correct.
1:20:40And you explain that deferred accounting
1:20:43through a regulatory asset involves
1:20:46recording specific, often non-recurring
1:20:50or extraordinary costs for potential
1:20:53recovery in a future rate case.
1:20:56>> That's correct.
1:20:58>> Uh regulatory assets are not tred up or
1:21:02adjusted annually like a tracker is.
1:21:06>> That's correct.
1:21:08And um they're reviewed instead for
1:21:10prudence and reasonleness at the time of
1:21:13recovery.
1:21:15>> That's correct.
1:21:18>> So help me understand this. A utility
1:21:21such as public service requests
1:21:24authorization to defer costs in a prior
1:21:27proceeding and then the commission in
1:21:30that proceeding approves the deferral
1:21:32request.
1:21:35>> I'm sorry. ask that again. I may have
1:21:38missed that if you want.
1:21:39>> Yeah, I'm just trying to understand how
1:21:40it works. So, um, the commission in one
1:21:44proceeding
1:21:47authorizes the company to defer costs
1:21:51and then the commission approves in that
1:21:54proceeding the deferral request.
1:21:56Correct.
1:21:57>> That's correct.
1:21:58>> Okay. Um
1:22:01and you have requested several
1:22:05probably what 21 deferrals in this
1:22:09proceeding.
1:22:11>> Um I don't know the exact number subject
1:22:14to check I'd say that's accurate.
1:22:17>> Okay. So public service is seeking cost
1:22:21recovery in this rate case for deferrals
1:22:24of costs from prior proceedings.
1:22:27>> That's correct. Okay. Um,
1:22:32and that deferral request could either
1:22:34be a regulatory asset,
1:22:37so that it would be money coming to
1:22:40public service, or it could be a
1:22:42regulatory liability, which in which as
1:22:45you explained was a um
1:22:50some money that is due to rateayers.
1:22:52That's the regulatory liability.
1:22:56>> That's correct. Okay.
1:23:00And the deferral is the first step in
1:23:04preserving cost recovery in in that
1:23:07future rate case or in this case.
1:23:09Correct.
1:23:10>> Correct.
1:23:13>> I was curious about this too. Before the
1:23:16company actually brings the deferral to
1:23:20a rate case for cost recovery, does the
1:23:23company collect any revenue from
1:23:25rateayers on that deferral?
1:23:28>> No.
1:23:29>> Okay. Thank you.
1:23:34So on pages 22 through 24 of your um
1:23:40direct testimony which is hearing
1:23:41exhibit 117 and Miss Crane if you could
1:23:45pull that up it would be helpful
1:23:49pages 22 through 24. So start with 22.
1:23:54Okay. Here's table MAMD D1 and these are
1:23:59the deferrals brought forward for
1:24:02recovery in this proceeding. Can you
1:24:04scroll? Um, thank you so much. So, they
1:24:08go here's four of them. Going on to the
1:24:11next page, we see
1:24:16several additional ones
1:24:19and then I think they finish up your
1:24:22list finishes up on the final page.
1:24:27There you go. So, Miss McCone, are are
1:24:30these all of the deferrals that public
1:24:33service is requesting cost recovery for
1:24:36in this case?
1:24:39>> Yes.
1:24:42Okay, thanks.
1:24:47Um, moving on to the settlement. Could
1:24:50we pull up hearing exhibit 155, please?
1:24:56Go to page 27, table two.
1:25:13Okay. So this table discusses it says
1:25:17it's a the settlement agreement carrying
1:25:19charges for regulatory assets and
1:25:22liabilities. So this table lists
1:25:26um sorry there's a bug flying in front
1:25:29of [laughter] me. Uh this table lists um
1:25:32public services or the the settling
1:25:36parties proposal
1:25:38uh for regulatory assets and whether
1:25:41they include or don't include a carrying
1:25:43charge. Correct.
1:25:45>> Correct.
1:25:46>> And when carrying charge is used here,
1:25:49could you explain what that means from
1:25:51public services perspective?
1:25:55>> That's the charge for the time value of
1:25:57money.
1:26:00So, in this case, it looks like it could
1:26:02either be at the weighted average cost
1:26:04of capital or long-term debt.
1:26:08>> Okay. Um, can we just scroll down a
1:26:10little so we can see the whole table?
1:26:13Thank you. So, the ones that uh the
1:26:16settling parties have proposed
1:26:20get the carrying charge at whack include
1:26:22the innovative clean technology projects
1:26:25or ICT projects. Correct.
1:26:28Yes.
1:26:29>> Uh the prepaid pension asset slashret
1:26:32retirey medical
1:26:35that's carrying charge at whack.
1:26:37Correct.
1:26:38>> Yes.
1:26:39>> Uh advanced grid intelligence and
1:26:41security initiative. The aegis
1:26:43initiative that's at whack.
1:26:46>> Yes.
1:26:48>> Coal combustion residuals is at whack.
1:26:51>> Yes.
1:26:52>> Cabin Creek investment tax credit.
1:26:56>> Yes.
1:26:57And then finally on this table it says
1:27:00gain on sale of mineral rights. That's a
1:27:02carrying a charge at whack as well.
1:27:04>> Yes.
1:27:09>> Can we turn to the next page please?
1:27:15>> And here's table three which is entitled
1:27:18regulatory assets/lability
1:27:20balances included in settlement test
1:27:23year cost of service. So this table I
1:27:26think Mr. um Bunker went through it
1:27:29yesterday with Mr. Pay but just to visit
1:27:32it um briefly again today. Um as to
1:27:37let's see the pension expense
1:27:40and the Colorado tax rate change
1:27:44deferrals those are um regulatory
1:27:47liabilities. Correct?
1:27:49>> Yes they are.
1:27:51>> Okay. So that's money that's coming back
1:27:53to rateayers.
1:27:56>> Correct.
1:27:58>> And all the the rest of them are
1:28:00regulatory assets that um public service
1:28:04is seeking to recover in this case.
1:28:07>> Yes, that's correct. So it looks like in
1:28:10column
1:28:12column four the total deferred balance
1:28:16is $294
1:28:18million 966,327.
1:28:24>> Yes.
1:28:26>> Okay. And then the total included in
1:28:28rate base. Now does that mean
1:28:31in if it says included in rate base are
1:28:34those the ones that are going to have a
1:28:36whack return?
1:28:40I would have to reconcile those line
1:28:43items to the previous table. Oh,
1:28:45>> okay.
1:28:47Well,
1:28:47>> I'm not sure that's necessarily true.
1:28:51>> Well, we we talked about the ITC
1:28:53projects.
1:28:54Do you recall that that was going to
1:28:56have a um carrying charge at whack?
1:29:00>> Yes, that was my recollection.
1:29:02Um, we talked about Aegis
1:29:06and that's at the $73 million figure.
1:29:10Um, and that is recovering at whack.
1:29:13Correct.
1:29:14>> That's correct.
1:29:15>> The CCR at 11 million we discussed
1:29:19before. Correct.
1:29:22>> That's correct.
1:29:23>> Okay. And then if we go back to the So
1:29:27the two
1:29:27>> the other two I don't believe are at
1:29:30whack.
1:29:30>> Okay. Okay. I don't know if you were
1:29:31getting to that.
1:29:32>> No, I was going to ask you about that. I
1:29:36I was curious if we um as to whether or
1:29:40not everything in that column since it
1:29:42was included in rate base would acrue
1:29:47um the carrying charge at the whack
1:29:49rate.
1:29:51>> It appears that's a no.
1:29:54>> Okay. as to the wildfire mitigation plan
1:29:58and the legacy meters.
1:30:01>> Correct. I believe those were not at
1:30:03whack.
1:30:04>> Okay. If we go back to table two, could
1:30:06we, Miss Crane?
1:30:10So, those are legacy meters. That's
1:30:12long-term debt.
1:30:15And then the wildfire mitigation is at
1:30:18long-term debt. Okay.
1:30:21Thank you. I think that covers uh the
1:30:24carrying charges that are going to um be
1:30:27applied to the deferrals pursuant to the
1:30:31proposal in the settlement agreement. I
1:30:33appreciate that.
1:30:36Okay.
1:30:38Um do you know if the
1:30:43um regulatory liabilities that we talked
1:30:46about um there's no whack recovery for
1:30:50rateayers? is there.
1:30:53>> And which ones are you referring to?
1:30:56>> Let's um go back to table three. I'm
1:30:58sorry, Miss Crane.
1:31:01So, we talked about the Colorado tax
1:31:03rate change and the pension expense.
1:31:10>> It's not reflected in that total in rate
1:31:15base, but that might be a question for
1:31:17Mr. freus because I would assume that
1:31:23there'd be a carrying charge
1:31:28but maybe that's not what was approved
1:31:30in this or not in the settlement
1:31:31agreement. Apologies.
1:31:33So that's a better question for Mr.
1:31:35Fredus.
1:31:36>> Thank you.
1:31:38>> All right. I think I got that. Let's
1:31:40move on.
1:31:42Um,
1:31:44now, uh, talking about I'm going to ask
1:31:47you a few questions about Mr.
1:31:49Schloozac's testimony. Have you reviewed
1:31:52Mr. Schloozac's testimony relating to
1:31:55regulatory assets and and trackers and
1:31:58deferrals?
1:32:00>> I read it at one time,
1:32:02>> but you will probably need to refresh my
1:32:04memory.
1:32:05>> Okay. If then and we can pull it up. Um,
1:32:08Miss Crane, it's hearing exhibit 300 if
1:32:10we need to look at it.
1:32:24All right. And at page
1:32:2644,
1:32:32this um basic I have just a oneline
1:32:36question on this section. He talks about
1:32:39um the page 44. I think it starts at the
1:32:43bottom.
1:32:45There you go. Um shifting risk to
1:32:48rateayers. And so um he points out that
1:32:53trackers and regulatory assets shift the
1:32:56company's risk of not achieving full
1:32:58cost recovery to rate payers.
1:33:02Do you recall that?
1:33:06>> Yes.
1:33:08>> Okay. He also explains that approved
1:33:10regulatory assets preserve cost recovery
1:33:13of costs where costs would not be
1:33:16preserved or captured in a testy year
1:33:19revenue requirement. Do you agree with
1:33:21that statement?
1:33:23>> I'm sorry. Can you go to that section?
1:33:26>> Sure. It's at
1:33:28>> Sure. has no need than hearing
1:33:31>> 130 page 130 lines 10- 16
1:33:42I'll just give you a chance to re to
1:33:44read that if you want
1:33:55>> Got it. And so my question is whether
1:33:58you agree with the statement approved
1:34:00regulatory assets preserved re preserve
1:34:04recovery of costs where such costs would
1:34:06not be preserved or captured in a test
1:34:09year revenue requirement. Do you agree
1:34:12with that?
1:34:17I agree that customers will be paying
1:34:20actual costs when we preserve the
1:34:23recovery in a tracker or deferral.
1:34:27>> Okay. And if if th those costs between
1:34:31rate cases are not preserved in a
1:34:34tracker or deferral, then the the
1:34:39company does not recover those
1:34:42variations of cost between rate cases.
1:34:45Is that correct?
1:34:46>> That's correct.
1:34:47>> Thank you.
1:34:50Um and
1:34:54Mr. uh Schlooact also says that
1:34:57preservation of cost recovery through
1:34:59regulatory assets is a significant
1:35:02benefit to a utility and reduces a
1:35:05utility's risk of not recovering costs
1:35:07between rate cases. Do you agree with
1:35:10that?
1:35:12>> Yes. But again, I think that trackers
1:35:14benefit customers as well and that
1:35:16they're only paying for actual costs.
1:35:23There's also a benefit when there's a
1:35:25regulatory liability as well.
1:35:28>> But if they're only paying actual costs,
1:35:30they're paying actual costs that they
1:35:32wouldn't otherwise be paying. Um because
1:35:36cost recovery is done through a through
1:35:38rate cases based on test years. Correct.
1:35:42>> That's correct.
1:35:48So from a customer's perspective, Mr.
1:35:52Schloozac states that Piasco's earning a
1:35:55whack return on deferrals makes public
1:35:58services ba base rate proposal less
1:36:02affordable and is a detriment to rate
1:36:04payers.
1:36:09>> Do you recall?
1:36:11>> Oh, okay. Um, let's see. Page 132, lines
1:36:161 through 4.
1:36:29>> Okay. And what was your question?
1:36:32That uh do you recall Mr. exclusim
1:36:36that PiSco's earning a whack return on
1:36:38its numerous deferrals makes Pasco's
1:36:42base rate proposals less affordable and
1:36:45is a detriment to rate payers.
1:36:51Do you agree that's what
1:36:52>> is your mission?
1:36:54>> The question is whether you agree that
1:36:57that's um UCA's position in this case. I
1:37:02agree that's UCA's position in this
1:37:04case.
1:37:05>> Thank you.
1:37:07Can we pull up from UCA's box exhibit um
1:37:12312
1:37:27and Miss McCone I will identify this for
1:37:30the record. Um, it is the commission's
1:37:33decision granting in part and denying in
1:37:36part the application of public service
1:37:39for approval of its 2025
1:37:422030 gas infrastructure plan.
1:37:46Do you see that?
1:37:48>> I do.
1:37:49>> And its adopted date was April 15, 2026.
1:37:53Do you see that?
1:37:54>> I do. And it's in proceeding number 25 A
1:37:590220G.
1:38:03Correct.
1:38:05That's correct.
1:38:07>> Can we go to page 88
1:38:15and we'll go down to section K.
1:38:19I think you've scrolled up. There you
1:38:21go. Could you read into the record since
1:38:24this isn't um in the record yet? Can you
1:38:27read what the title of of section K is
1:38:30please?
1:38:32Issues raised for future consideration.
1:38:35Misaligned utility financial incentives
1:38:38under cost of service regulation and its
1:38:41impact on critical elements of the
1:38:43company's filing.
1:38:45>> Okay. And I think chair blank referred
1:38:47to this decision yesterday. Can we
1:38:50scroll to page 90 please?
1:38:57Paragraph 2 20 or sorry 216.
1:39:02Um do you see where the commission
1:39:04observes although the record evidence
1:39:07clearly shows the company has ignored
1:39:09multiple commission orders and that its
1:39:12capital spending may increasingly be
1:39:14driven by its financial incentives
1:39:16instead of the public interest.
1:39:19Immediate productive pathways are
1:39:21challenging given the company's posture.
1:39:24Significant asymmetries in the available
1:39:27information make it difficult for the
1:39:30parties in the commission to develop
1:39:32alternative capital spending plans and
1:39:35ensure any capital spending is optimized
1:39:38for customer benefit. Did I read that
1:39:41correctly?
1:39:42>> You did.
1:39:43>> And did you do you have that paragraph
1:39:45in mind?
1:39:47>> Somewhat. But I'm not that familiar with
1:39:49this proceeding,
1:39:51so I'm not sure what the context is
1:39:53around this paragraph.
1:39:55>> Well, I I will ask you a question. So,
1:39:58if we get down, I think paragraph 218
1:40:02is the key paragraph. So, slowly, if you
1:40:05want to read that to yourself,
1:40:08um I can I guess I can read it out loud,
1:40:10too. So, my question makes more sense in
1:40:12the record. Okay. Based on this record
1:40:16and the commission findings, it seems
1:40:18increasingly important to explore and
1:40:21find ways to reduce or break the link
1:40:25between growth in marginal capital
1:40:27spending and the company's earnings.
1:40:30Various approaches raised in this
1:40:33hearing for potential exploration in
1:40:35other cases involved differential equity
1:40:39returns for certain investments,
1:40:43larger performance incentives,
1:40:46securitizing
1:40:50safety spending, deferral of capital
1:40:53spending at the cost of long-term debt.
1:40:56And that's this that's the alternative
1:40:59that I'm going to be focusing on. So,
1:41:02deferral of capital spending at the cost
1:41:05of long-term debt, amortiz amortizing
1:41:09capital expenses in the year the costs
1:41:12were incurred,
1:41:14reducing returns on capital, enhanced
1:41:17prudency review, more stringent NPA
1:41:21processes as well as reforming cost
1:41:24allocation to avoid subsidizing new
1:41:28growth. Can you scroll up a little, Miss
1:41:30Crane?
1:41:32So, um, then the commission concludes
1:41:35this paragraph saying, "Given the
1:41:38limited options available in this
1:41:40proceeding, the the GIS proceeding,
1:41:43however, the company or the commission
1:41:45intends to explore these options in
1:41:48future proceedings, including upcoming
1:41:51rate cases.
1:41:55So, um, Miss McCone, if you want to just
1:41:58absorb that paragraph a little bit. I've
1:42:00got a question.
1:42:08Tell me when you're ready.
1:42:12>> I'm ready.
1:42:13>> Okay. So, the commission here talked
1:42:15about potential ways to um cut the tie
1:42:20between capital spending and um
1:42:25increases to to rates and um the
1:42:32revenue um that the company earns on its
1:42:37capital spending. So wouldn't
1:42:41you agree that red reducing returns on
1:42:45regulatory assets regulatory assets for
1:42:48capital expenses would mitigate the link
1:42:52between growth [snorts] and the
1:42:55company's earnings?
1:42:58What capital expenses are you referring
1:43:01to specifically? That's part of my
1:43:03testimony. There's a lot of
1:43:07things here.
1:43:08Well, the in paragraph
1:43:11>> sure the deferrals uh that the company
1:43:14is seeking to recover in this case that
1:43:18are for capital investments
1:43:23>> for which one specifically are do you
1:43:26have a specific
1:43:29deferral that you're questioning
1:43:32>> here? Let me go back to the list but
1:43:36specifically any of them. I don't have
1:43:38any specific one in mind but I know some
1:43:41of the deferrals relate to O andM
1:43:44expenses but other deferrals relate to
1:43:48capital investment legacy meters
1:43:55>> right what and what is your question
1:43:57around legacy meters
1:43:59>> is that included in the company's rate
1:44:02base for uh capital expense recovery
1:44:08It's in the settlement agreement.
1:44:11It's a settlement term. I'm not quite
1:44:13sure I understand your question. Do you
1:44:15know the difference between capital
1:44:17expenses and and operations and
1:44:20maintenance expenses?
1:44:22>> Yes, I do.
1:44:24And do you have in mind any deferrals
1:44:28that the company's requesting recovery
1:44:30for in this case that apply to capital
1:44:34expenses versus um on& and M expenses
1:44:40>> do I have in mind are you asking me
1:44:44which ones are capital versus and M?
1:44:46>> Yeah.
1:44:48>> Can you bring up the list?
1:44:49>> Sure. I think it goes back to either
1:44:53your testimony. Do you want to look at
1:44:55your testimony hearing exhibit 117
1:44:59and your table that we reviewed?
1:45:03>> We want to go back to the settlement
1:45:05agreement. I think
1:45:06>> okay then that's hearing exhibit 155
1:45:14page 27 or 28.
1:45:19There you go.
1:45:24Right. So, so what was your question
1:45:26again?
1:45:27>> Which of these relate to capital
1:45:30expenses versus
1:45:32um O andM expenses?
1:45:35>> I believe the innovative plane
1:45:37technology project has some capital
1:45:40expense.
1:45:43the
1:45:462020 wildfire mitigation plan,
1:45:50the EV make ready infrastructure,
1:45:55AGIS,
1:46:00legacy meters
1:46:03have capital expense.
1:46:06>> And then on table Oh, I'm sorry. I
1:46:09didn't mean to interrupt.
1:46:10>> No, go ahead. Um, table three on the
1:46:13next page
1:46:16shows the ones that are going to be
1:46:17included in rate base. Correct.
1:46:21>> Right. That's correct.
1:46:23>> Are those the same ones that you just
1:46:26walked through?
1:46:27>> I believe so.
1:46:28>> Okay. Thank you. So going back to my
1:46:31question, um we saw the commission's
1:46:35concern about the connection between the
1:46:38company's investments and capital growth
1:46:42and the company's earnings.
1:46:45Do you recall that in the commission's
1:46:47decision we just reviewed?
1:46:49I do.
1:46:51So wouldn't you agree that reducing
1:46:54returns on the regulatory assets for
1:46:57capital expenses,
1:46:59so having the returns not include
1:47:03carrying costs at whack would mitigate
1:47:06the link between growth and the uh
1:47:09company's earnings?
1:47:11>> Objection, your honor. Um could Miss
1:47:14Nelson break this up because Miss McCo
1:47:16already went through that not all of
1:47:18these are getting a carrying charge at
1:47:20whack. several of them are at long-term
1:47:22debt.
1:47:24>> Uh if you could focus your question a
1:47:26little more, Miss Nelson, I think that
1:47:28would help.
1:47:30>> Okay. Actually, it's not just whack.
1:47:32It's also long-term debt. And I think
1:47:35the total included in rate base that we
1:47:38walked through earlier with Ms. cone. In
1:47:41that final column, she identified those
1:47:44at as uh recovering
1:47:48uh carrying costs either at long-term
1:47:50debt or at whack. Correct, Miss McCome.
1:47:54>> That's correct.
1:47:57>> Okay. So, my question goes to either
1:47:59one. It's a carrying cost. And if if the
1:48:03commission were to make a decision that
1:48:08did not apply a carrying cost to uh
1:48:13these
1:48:14deferrals, then wouldn't that mitigate
1:48:18or minimize disconnect the link between
1:48:23capital investment
1:48:25and the company's earnings that the
1:48:27commission was concerned about in that
1:48:29paragraph?
1:48:31Well, I think what's been agreed to in
1:48:34this table is one provision of the
1:48:38settlement agreement. And I think
1:48:39there's been a lot of give and take
1:48:41around the entirety of the settlement
1:48:44agreement that has reduced our original
1:48:48request.
1:48:51>> Thank you.
1:48:54Let's move on. And I'm going to focus
1:48:56just on the coal combustion residual
1:48:59regulatory asset for a minute.
1:49:03You can take this down. Thank you, Miss
1:49:05Crane.
1:49:07All right, let's go back to um
1:49:11well, I guess I just asked you to take
1:49:13it down. And I'm going to refer to um
1:49:17the if you recall, Miss McCone, we did
1:49:19talk about the coal combust combustion
1:49:21residual asset and that was listed in in
1:49:25both charts, table two and three in the
1:49:27settlement agreement. Do you recall
1:49:29that?
1:49:30>> I do.
1:49:32>> Okay. Um can we pull up uh
1:49:37Coreyak's exhibit CWS
1:49:4063?
1:49:49And this um while Miss Crane is doing
1:49:53that, we uh this decision is um one that
1:49:58specifically addresses uh coal residual
1:50:03um regal residual regulatory asset.
1:50:08Um, can we go to or will you identify
1:50:12this exhibit, Miss McCullen? Can you see
1:50:14it?
1:50:15>> Yes, I can.
1:50:16>> Okay, please identify it for the record.
1:50:20>> Identify the hearing exhibit or the
1:50:23title, it's hearing exhibit 300,
1:50:26attachment CWS63.
1:50:29>> Okay. And and the title of the exhibit
1:50:32is the decision R230846
1:50:37from um proceeding number 23A339E
1:50:42and the matter of the application of
1:50:43public service for approval of deferred
1:50:46accounting treatment for incremental
1:50:49non-rine and extraordinary costs
1:50:52incurred um in accordance with coal
1:50:55combustion residual regulations. Did I
1:50:57read that correctly? Yes, you did.
1:51:00>> And this is the recommended decision of
1:51:03AlJ Adams.
1:51:07>> That's correct.
1:51:09>> Okay. And this decision, I think it was
1:51:12um well, it addressed the party's
1:51:15agreement regarding the treatment of the
1:51:18regulatory asset for coal combustion
1:51:20residual activities.
1:51:25Uh can we go to page three, paragraph
1:51:2711, please?
1:51:38All right. This specifically talks about
1:51:41the deferred accounting treatment and
1:51:44the settling parties agreement that um
1:51:47for a period of 12 years following
1:51:50approval of the agreement, public
1:51:52service will permit be permitted to
1:51:54defer all
1:51:56um costs relating to EPA's CCR
1:52:01regulations that cold combustion
1:52:03residual regulations into a regulatory
1:52:06asset. Do you see that? I do.
1:52:09>> Okay. Can we scroll up a little bit
1:52:12or scroll down? Yeah. Thank you. Um and
1:52:15it says at the end of that paragraph,
1:52:17public service shall initiate a
1:52:19proceeding to review this deferral
1:52:22request and may propose an extension of
1:52:25the deferred accounting treatment.
1:52:27It concludes by saying the regulatory
1:52:30asset will not earn a return. Do you see
1:52:33that?
1:52:34>> I do.
1:52:36>> Okay. Um, let's go to page four,
1:52:39paragraph 13.
1:52:44Paragraph 13 says, "Mr. Dew, who is a
1:52:47member of the staff, supports the
1:52:50company not earning a return on any
1:52:52recovery and points out that such
1:52:54treatment will reduce the burden on
1:52:57rateayers and further the public
1:52:59interest. Do you see that?"
1:53:02>> I do. So, uh staff in this
1:53:07um in this decision, uh the
1:53:12ALJ Harris actually refers to staff's um
1:53:17supporting of the company not earning a
1:53:19return on on recovery relating to CCR.
1:53:24Correct.
1:53:25>> Correct. And he says that not earning a
1:53:29recovery will reduce the burden on
1:53:31rateayers and further the public
1:53:33interest. Correct.
1:53:34>> That's correct.
1:53:38>> Okay, we can pull this down.
1:53:44>> We're gonna
1:53:46>> Sorry, just for notes. Can I Was that
1:53:48CWS63?
1:53:50>> Yes.
1:53:51>> Thank you.
1:53:53Excuse
1:53:55me.
1:53:57>> Um, we're going to switch topics. Uh,
1:54:01Mr. Chair, did you want to take a break?
1:54:03I know it's 10:30.
1:54:05>> Uh, you have about uh a little over 20
1:54:08minutes left. Uh, is that about still
1:54:11right?
1:54:12>> Probably. I might need a couple minutes.
1:54:14You know, I'm terrible at at guessing at
1:54:17how long things are going to take. And
1:54:19we do have 30 minutes that we reserve
1:54:21from Mr. Mr. Mohler waving Mr. Mohler,
1:54:24but I probably can get done in in a half
1:54:26an hour.
1:54:28>> Um, all right. Let's uh take a 10-minute
1:54:30break till uh 10:35 and uh we'll come
1:54:34back at 10:35. Thanks.
1:54:36>> Thank you.
2:04:40Just finishing up my snack. Uh, Miss
2:04:42Nelson, you're back.
2:04:43>> That's okay. [laughter] That's right.
2:04:47>> All right, Miss McCone. Um, I I need to
2:04:51revisit something real quickly. So,
2:04:54going back to um Ms. Uh Crane, can you
2:04:58pull up the settlement agreement again
2:05:00hearing exhibit 155 and table three?
2:05:07Um so Miss McCone uh we talked a lot uh
2:05:12previously about the regulatory assets
2:05:16um that are in listed on the uh left
2:05:20column and then the ones that are
2:05:22included in rate base in the far right
2:05:26column at least from my perspective that
2:05:29that's the way where they are left and
2:05:31right. Do you recall that?
2:05:34>> Yes.
2:05:35>> Okay. So um I was referring to the
2:05:40regulatory asset for capital investments
2:05:43as a capital expense. Do you recall
2:05:46that?
2:05:49>> Yes.
2:05:50>> Um I've been advised that there's no
2:05:53such thing as a capital expense in
2:05:55accounting. Um and instead it's a
2:05:58capital expenditure.
2:06:00Is is that correct?
2:06:03>> Yes. I mean, I think they're
2:06:04interchangeable. I knew what you were
2:06:06talking about.
2:06:07>> Okay. Um, so I just for the record would
2:06:10like to correct that statement and and
2:06:13um and just clarify that um those are
2:06:19more technically referred to as capital
2:06:21expenditures. Correct.
2:06:24>> Correct.
2:06:25>> Thank you. I appreciate that. Okay,
2:06:27let's move on. I think we can stay in
2:06:30this exhibit
2:06:32now. I'm moving to we're going to talk
2:06:34about the gain on sale. Um, if you're
2:06:38familiar with that topic, uh, we'll go
2:06:40to hearing exhibit 155 at page 31,
2:06:44paragraph 54.
2:06:50Just take a minute to look at that. Um,
2:06:52and this is where the parties agree to
2:06:56uh a 50% sharing of the gain on sale of
2:07:00the mineral rights in the amount of
2:07:03$9.35 million to customers. Correct.
2:07:07>> That's correct.
2:07:10So the ratemaking treatment here is to
2:07:13share with customers this amount over
2:07:16five years
2:07:18through the ECA.
2:07:21Is that right?
2:07:23>> Yes.
2:07:25>> By the way, do you know what motivated
2:07:27the company to even sell these mineral
2:07:30rights?
2:07:32>> I do not.
2:07:33>> Um do you think Mr. Fredus could address
2:07:36that issue?
2:07:39I think that would probably have been an
2:07:40issue for Mr. Beccay.
2:07:43>> Okay. Thank you.
2:07:48Now, let's go to paragraph Okay. Let's
2:07:52let's go back to par to page 15 of this
2:07:55agreement
2:07:59and look at paragraph 25. I'll give you
2:08:02a minute to review it. Um it says the
2:08:06settling parties agree to exclude oil
2:08:08and gas mineral rights royalty revenues
2:08:11from the calculation of present
2:08:13revenues. Correct.
2:08:15>> That's correct.
2:08:17>> So the settling parties
2:08:21are proposing to exclude the oil and gas
2:08:24royalty revenues from the settlement
2:08:26revenue require requirement. That's what
2:08:29this paragraph says. Correct.
2:08:31>> That's correct.
2:08:33And this is um do you know know the
2:08:36amount of this removal? Is it about 5.6
2:08:40million of annual oil and gas royalty
2:08:43revenues?
2:08:45>> I don't know. That would be a question
2:08:46for Mr. Fredus.
2:08:48>> Okay. Thank you.
2:08:57Can we pull up um hearing exhibit 313
2:09:01from UCA's box, please?
2:09:06Miss McCoen, this is going to be a
2:09:08response to um a discovery request from
2:09:12UCA to public service. I think you're
2:09:14the sponsor.
2:09:18Um so this is discovery request.
2:09:22UCA43-1.
2:09:25It's public services response. Can we
2:09:27scroll down?
2:09:30Let's see who the sponsor is.
2:09:34Okay. Miss McCone, are you one of the
2:09:36sponsors of this response?
2:09:39>> I am.
2:09:42>> Let's go to Oh, uh, Mr. Chair, I'll move
2:09:46for admission of hearing exhibit 313.
2:09:50Uh, any objection?
2:09:53>> No. Chair.
2:09:55>> So moved.
2:09:57>> Can we move back up to the questions?
2:10:00And I'm going to focus on question C. So
2:10:03it says regarding hearing exhibit 133 p
2:10:07rebuttled um and the testimony that the
2:10:10company did not reflect the gain on sale
2:10:12of the mineral rights in its rebuttal
2:10:14revenue requirement study as the mineral
2:10:17rights were non-depreciable property. So
2:10:21section C says, is it the company's
2:10:24contention that the gain on sale of the
2:10:27mineral rights should be treated the
2:10:29same as the gain on sale of the gold and
2:10:32service land? Can we go to answer and C
2:10:36please?
2:10:37So the answer is the company's rebuttal
2:10:40case recommends treating the gains in a
2:10:43consistent manner. The gain on sale of
2:10:46mineral rights should receive the same
2:10:48rate making treatment as the gain on
2:10:50sale of the golden service land.
2:10:56Miss McCone, was that your testimony in
2:10:58this proceeding?
2:11:01I did not have testimony on the gain on
2:11:05sale of mineral rights.
2:11:08>> Are you a sponsor of this response?
2:11:15I am
2:11:17>> and and this response says that the gain
2:11:20on sale of mineral rights should receive
2:11:22the same rate making treatment as a gain
2:11:24on sale of the golden service land.
2:11:27Correct.
2:11:28>> That's correct.
2:11:30>> Thank you.
2:11:31>> I think it's referencing my testimony on
2:11:33the Golden Service
2:11:36Center land. Okay.
2:11:38>> Okay, that makes sense.
2:11:43All right, I think this is my last
2:11:45topic. Um, and it's our favorite topic,
2:11:49Miss McCone, on rate case expenses, but
2:11:51I'm not going to spend a whole lot of
2:11:52time on on it. Um,
2:11:56so let's see. In your rebuttal
2:11:59testimony, and we can pull it up if you
2:12:01want it. We can pull this down, Miss
2:12:03Crane. Thank you. Um, if you want to
2:12:07pull up hearing exhibit 149, it's up to
2:12:09you, Miss McCome. I'm just going to talk
2:12:12about Ray case of dispenses a little
2:12:14bit.
2:12:16>> Uh, Miss Crane, if you could pull it up,
2:12:19it' probably help me follow a little
2:12:20easier.
2:12:21>> Okay. Thank you.
2:12:27>> And we're talking about rate case
2:12:29expenses, specifically page 45.
2:12:35Um, starting at line five,
2:12:39you testify here that the company does
2:12:41not support the caps proposed by staff
2:12:47and that you say that the
2:12:48recommendations would deny recovery of
2:12:51costs the company has actually incurred.
2:12:54Did I read your testimony correctly?
2:12:57>> Or will incur. Yes.
2:12:59>> Okay. Thank you. Um but then back in the
2:13:03settlement agreement uh the the
2:13:06nonunanimous agreement uh the company is
2:13:09has modified this proposal and has
2:13:12agreed to cap rate case expenses at 1.5
2:13:16million. Isn't that right?
2:13:18>> That's correct. That's a negotiated
2:13:20settlement term.
2:13:23>> Okay. Um can we pull up hearing exhibit
2:13:26149 m12? So, Miss Crane, it's just the
2:13:30exhibit. M
2:13:33I'm sorry. M A12.
2:13:53And while we're waiting, Miss McCone,
2:13:55this is going to be your Yeah. Thank you
2:13:58for enlarging that. So will you identify
2:14:01this please for the record?
2:14:03>> Uh this is hearing exhibit 140
2:14:06attachment MAM12. It reflects the
2:14:09updated rate case expense estimate and
2:14:11actuals to date.
2:14:13>> Okay. And what is
2:14:16when we look at the columns here um is
2:14:20the column that says updated for
2:14:22rebuttal the most um updated set of
2:14:26estimates in this chart?
2:14:28>> It is okay. Good. That's what I thought.
2:14:32So um now this the non-unanimous
2:14:36agreement capped the rate case expense
2:14:39recovery at 1.5 million. Correct? That's
2:14:44correct.
2:14:45>> And when we look up the updated for
2:14:48rebuttal, it looks like Mr. um
2:14:53Mr. Zonner's firm is still estimating
2:14:57600,000.
2:14:59Um Mr. Sincer's firm is estimating
2:15:03550,000
2:15:05and then Ms. Brahma's firm is still
2:15:08estimating 500,000. Do you see that?
2:15:11Yeah, I think you had those flipped, but
2:15:15those are the legal estimates.
2:15:17>> Okay. 1.65
2:15:21um million is what the current estimate
2:15:24is, correct?
2:15:25>> That's correct.
2:15:26>> And and then you've got consultant
2:15:28estimates including um the Brattle group
2:15:32for 165,000.
2:15:35Do you see that?
2:15:37>> I do. And then customer noticing
2:15:39expenses of 43,000,
2:15:44hearing costs of
2:15:4716 thou or yeah 16,000 and then you have
2:15:51a total rate case expense estimate
2:15:54um excluding purchase load at 1.9
2:15:58million. Correct.
2:16:00>> It actually includes the purchase loads.
2:16:04>> Okay. So
2:16:04>> I think you said exclude. Yeah, I was I
2:16:07was looking at line 19, but you looking
2:16:10at line 22. I see that. Yes. So, it's
2:16:14it's it's almost $2 million that the
2:16:17company um updated for rebuttal h has
2:16:20estimated for rate case expenses in this
2:16:23case. Correct.
2:16:25>> Yes.
2:16:27But with the cap of 1.5 million,
2:16:31how do um how is the remainder of rate
2:16:36case expenses
2:16:38recovered? Is that by shareholder
2:16:42contribution?
2:16:45The difference would be written off.
2:16:47Yes.
2:16:49>> Okay. Thank you. Um,
2:16:52and then I just I highlighted the
2:16:55brattle groups 165,000
2:16:58for is that for Ms. Bulkley's testimony?
2:17:02>> Yes, it is.
2:17:04>> And her recommendate her recommended
2:17:07return on equity and rebuttal testimony
2:17:10was 9.8%.
2:17:12Is that right?
2:17:14>> I I'm not quite sure. I didn't track
2:17:17Miss Bullay's testimony.
2:17:20Are you familiar with the proposal in
2:17:23the non-unanimous agreement at 9.3?
2:17:27>> I am.
2:17:29>> Okay. So, the company's no longer
2:17:32relying on Miss Bley to support its
2:17:34proposal for an ROE in this case.
2:17:37Correct.
2:17:38>> The company relies on Miss Bley's
2:17:41recommendation, but we negotiated
2:17:45something else in the settlement
2:17:46agreement.
2:17:51Okay, my very last line of questioning.
2:17:54Um, can we pull up hearing exhibit 314
2:17:58from uh UCA's box, please?
2:18:09I think this is a discovery response
2:18:11that you're a sponsor of. Um, can you
2:18:15identify the uh document for the record,
2:18:18please?
2:18:20>> Hearing exhibit 314, PiScar response to
2:18:23UCA 257.
2:18:26>> And it's the uh public services response
2:18:29to discovery request UCA 257. Correct.
2:18:34>> That's correct.
2:18:35>> Um, going down to the last
2:18:39page, could we see who sponsored it?
2:18:42Miss McCona, are you the sponsor of this
2:18:44exhibit?
2:18:45>> I am. Uh, Mr. Chair, I'd like to move
2:18:48for admission of UCA hearing exhibit
2:18:52314.
2:18:53>> Uh, any suggestions? Uh, Mr. Zummer.
2:18:58>> Let's scroll back up.
2:19:00>> U, hold on. So, admit it.
2:19:02>> Oh, sorry. I'm sorry.
2:19:04Um so Miss McCone, this asks about
2:19:09um a an earlier response from um the
2:19:14company to one of staff's requests and
2:19:17it's regarding the capping of rate case
2:19:19expenses in 22
2:19:220530e
2:19:24and then 23
2:19:270243e.
2:19:28Do you see that?
2:19:30>> I do. And um the 22 case and the 2023
2:19:35case uh was uh the company's previous
2:19:41rate case. Correct.
2:19:44>> Uh it was the last phase one and phase
2:19:46two rate cases. Yes.
2:19:48>> Okay. Thank you. Um,
2:19:54so, uh, paragraph three, subp part
2:19:57three, asks the company to admit that
2:19:59the company's estimated rate case
2:20:02expenses of 2,3,244
2:20:07uh, for the phase one proceeding exceeds
2:20:09what was approved by the commission for
2:20:12the company's phase 1 case in 2022 and
2:20:16phase 2 case in 2023. And if anything
2:20:20other than a full admission, please
2:20:22explain. Correct.
2:20:23>> That's correct.
2:20:24>> Let's go down to your response.
2:20:30Um, and the response says, "The orders
2:20:33speak for themselves, and the company
2:20:35also notes that the reference cap was a
2:20:39term of the settlement agreement to
2:20:40which the UCA was a party and not
2:20:43unilaterally ordered by the commission."
2:20:45Did I read that correctly?
2:20:47>> Uh, that's correct. I would note that
2:20:49the rebuttal estimate is now less than
2:20:52that cap.
2:20:54>> Thank you. Um in the in the previous uh
2:20:59phase one phase 2 proceeding, do you
2:21:02recall that the cap that was agreed to
2:21:05in the settlement agreement was $2
2:21:07million?
2:21:09>> I do.
2:21:11And uh would the company today
2:21:15commit to following the same approach in
2:21:17this phase one and phase two case and
2:21:20cap the rate cases the rate case
2:21:23expenses for both proceedings at 2
2:21:25million?
2:21:27>> What phase one and phase two case are
2:21:29you referencing?
2:21:31>> This phase one that
2:21:33>> Yeah, the phase one that we're in right
2:21:35now and then the future phase two that
2:21:37the parties agreed to. um that will be
2:21:41forthcoming.
2:21:42>> I think we've already agreed to a
2:21:44settlement cap of 1.5 for this phase
2:21:47one.
2:21:48>> And would the company commit to capping
2:21:51the remainder for phase 2 at 500?
2:21:55>> I don't think we at this time.
2:21:58>> Okay. Sorry, I misspoke and I
2:22:00interrupted you. My question was whether
2:22:03um the company would agree to capping
2:22:06the phase 2 rate case expenses at
2:22:08500,000.
2:22:11>> I don't believe so.
2:22:16>> All right, that's all I have. Thank you,
2:22:18Mr. Chair.
2:22:19>> Thank you, Miss
2:22:21>> Thank you.
2:22:23>> Thank you, Miss Nelson. I have uh 30
2:22:26minutes for AARP.
2:22:29Mr. Kuffman.
2:22:32>> Good morning. You may be uh pleased to
2:22:34find out that uh we don't we no longer
2:22:36have any cross for Miss McCone. I feel
2:22:39uh UCA had covered much of the ground I
2:22:42needed to and others issues have been
2:22:44resolved. So um I we we can wave our
2:22:48questions. Thank you.
2:22:50>> Thank you, Mr. Kaufman. I have 30
2:22:53minutes for EOC.
2:22:58Thank you, chair.
2:23:00Um, good morning, Miss McCone. My name
2:23:03is Casey Canelio and I represent Energy
2:23:05Outreach Colorado. I don't think we've
2:23:07ever met before, so it's nice to meet
2:23:09you this morning.
2:23:11>> Nice to meet you as well.
2:23:13>> All right. Well, let's get started. Um,
2:23:17first, Miss McCone, I'd like to draw
2:23:18your attention um to um attachment AB3
2:23:22to hearing EOC hearing exhibit 703. And
2:23:25that is a part of hearing exhibit 1500.
2:23:35If we could get that pulled up
2:23:47and while that's getting uh pulled up,
2:23:49Miss McCone, this is going to be
2:23:52up. So, it's attachment AB3 to hearing
2:23:55exhibit 703.
2:23:59I apologize if I Oh, sorry. It must be
2:24:01Sorry. It must be attachment AB4. My
2:24:03apologies. Sorry about that.
2:24:14And Miss McCone, this is going to be
2:24:16your response to um discovery request
2:24:18EOC 31. Thank you, Miss Crane. Sorry for
2:24:22the confusion. Um if we could scroll
2:24:24down a little.
2:24:27Um so Miss McCone, in your response to
2:24:30um EOC 31 subp part A, the company
2:24:34identified the most currently reported
2:24:36reset balance of approximately 141.6
2:24:40million. Is that correct?
2:24:51Sorry, did you respond?
2:24:52>> Yes, it is. Can you hear me? Okay.
2:24:55>> Yes. Sorry, that might be on me. Um, and
2:24:58so that that balance is as of February
2:25:012026,
2:25:02correct?
2:25:04>> That's correct.
2:25:05>> And that balance reflects funds that
2:25:07have been collected through the recess
2:25:10charge from the company's customers.
2:25:14>> That's my understanding. And turning to
2:25:16subp part B of this discovery response,
2:25:19you state that the company acknowledges
2:25:21that overcollected resalances have been
2:25:24carried forward into subsequent RE plan
2:25:27proceedings, right?
2:25:29>> Although it says that's not always been
2:25:31the case.
2:25:33>> Great. Um, we can discuss that a little
2:25:35later, but thank you. Um, so in other
2:25:38words, RESA balances are not necessarily
2:25:40exhausted at the end of a renewable
2:25:42energy plan cycle.
2:25:45It appears not.
2:25:47>> And instead those funds remain in the
2:25:49RISA account and are carried forward.
2:25:54>> That's my understanding.
2:25:56>> And the balance you've identified in
2:25:58this discovery response reflects funds
2:26:00accumulated over multiple RE plan
2:26:03periods.
2:26:07>> I'm not certain. I'm not the RISA
2:26:10expert, but I assume so.
2:26:14Okay. Um, and as we sit here today, the
2:26:16company continues to report a RISA
2:26:18balance of approximately $142 million.
2:26:24>> Correct. Thanks. Um, so turning back to
2:26:28subp part B, you state you and you just
2:26:31mentioned this, you state that while the
2:26:32company has rolled forward overed
2:26:35balances from customers in recent years,
2:26:38that has not always been the case.
2:26:42Correct.
2:26:44>> Okay, great. If we could now please turn
2:26:46to um EOCC hearing exhibit 703, which is
2:26:49Mr. Bennett's settlement opposition
2:26:51testimony,
2:26:53and turn to page 12.
2:27:01And while this is getting pulled up,
2:27:02Miss McCone, you in that prior discovery
2:27:04response we just had pulled up your when
2:27:07you identified that resa balance, you
2:27:08mentioned a 2006 docket um in in that
2:27:13discovery response. Correct?
2:27:17>> I may have missed that.
2:27:18>> Okay.
2:27:19>> Subject to Jack, I'll take your word for
2:27:21it.
2:27:22>> Okay. Um so in this section of Mr.
2:27:25Bennett's testimony. If we look at um
2:27:27starting at line five,
2:27:30um Mr. Bennett explains that he reviewed
2:27:33um the company's recent balance reports
2:27:35maintained in proceeding 06S-16E.
2:27:41Do you see that?
2:27:42>> I do.
2:27:44>> Great. Um and if we now go down to page
2:27:4713, line five, and look at figure AB1.
2:27:52Um Miss McCon, do you see that? Oh,
2:27:55thank you. Figure AB1 depicts um the
2:27:58annual overcolcted reset balances
2:28:00reported by the company from 2015
2:28:03through 2025.
2:28:06>> I do
2:28:07>> and every year reflected in this figure
2:28:10AB1 based on Mr. Bennett's analysis at
2:28:12least shows a positive overcolcted reset
2:28:15balance.
2:28:17>> It does. Um, and in fact, every year
2:28:21reflected in this table shows an
2:28:22overcolcted balance of at least
2:28:25approximately $40 million. Do you see
2:28:27that?
2:28:29>> Not necessarily, but I'll take your word
2:28:31for it.
2:28:32>> Okay.
2:28:34Um, sorry, I might make you do some
2:28:36light math in my questioning. So,
2:28:38[laughter]
2:28:39uh, just a heads up. Um, if we could
2:28:41now, um, pull up hearing exhibit 705.
2:28:44That is in EOCC's, uh, box folder.
2:28:59if we maybe zoom in just a little bit.
2:29:01Awesome. Um, Miss McCon, do you
2:29:03recognize this report as a company filed
2:29:07RISA annual report? And you can look at
2:29:09the um the title in the upper leftand
2:29:12corner.
2:29:16Yes, that's what it appears to be.
2:29:18>> Okay. Um, and subject to tech check, um,
2:29:23if this report was filed in, uh, March
2:29:26of 20 uh, 24, would you agree that this,
2:29:30um, report reflects the company's
2:29:32reported RISA balance as of year end
2:29:342023?
2:29:36>> Yes.
2:29:39Um, and looking at the the balance row
2:29:41in the highlighted
2:29:43uh blue number on the far right, it's
2:29:45showing that the company reported an
2:29:46overcolcted recent balance of
2:29:48approximately 97.5
2:29:50million.
2:29:52Yes.
2:29:54Um, chair, I'm going to have a couple of
2:29:56these um company filed reports in
2:29:58another docket. I I don't know if it's
2:30:00appropriate to move for admission of the
2:30:01securing exhibit through judicial notice
2:30:03under rule 1501c or what you'd prefer
2:30:05for these that are already in the
2:30:06commission's files.
2:30:08>> Uh we'll just uh admit them as evidence
2:30:12uh and I would do the motions uh one at
2:30:16a time. I think we use administrative
2:30:18notice mainly for decisions. So uh uh so
2:30:22is there a motion to admit this as uh
2:30:25evidence?
2:30:26>> Yes, please. Thank you.
2:30:27>> Uh Mr. presum any uh uh objections?
2:30:32>> Can we scroll through this?
2:30:37>> Do you want to just admit the first
2:30:40page? Uh
2:30:42uh that's kind of kind of near you.
2:30:45>> Yeah, I'd be okay with that. Um yeah,
2:30:47it's it was the full report, but I'm the
2:30:50first page is the only uh page that is
2:30:52relevant for for me. And it seems like
2:30:55there's a proper foundation for page
2:30:57one, but maybe not anything else. Mr.
2:30:59Zmer, would that work for you?
2:31:01>> Yeah, I I think my concern is like this
2:31:04looks like maybe an attachment to the
2:31:06report, not the entire report. Um, it is
2:31:10a company document. There's not Miss
2:31:13McCoen was not involved in preparation
2:31:15of this but uh understand that
2:31:20as a company document there's probably
2:31:22not basis to uh omit it on foundation
2:31:26purposes.
2:31:28>> All right. So, uh I guess uh I'd grant
2:31:31the motion um subject to Mr. Zmer's uh
2:31:35comments that this is not the full
2:31:37attachment uh that Ms. Mone was not the
2:31:40sponsoring witness. Uh but it is a a
2:31:44company document. So uh with those
2:31:47caveats
2:31:49uh it's uh admitted.
2:31:52>> Okay. Thanks. And I'm getting be doing
2:31:54um two more of these reports so we can
2:31:57address those in turn. Um but for now
2:32:02um Oh yeah. So this one's in. So if we
2:32:04can please pull up hearing exhibit 706.
2:32:12and just um go to page one. And so, Miss
2:32:15McCome, this is going to be another um
2:32:18company filed RISA annual report,
2:32:22um would you recognize it as one of a
2:32:24similar document as the one we just went
2:32:26over?
2:32:28Um, and subject to tech, if this report
2:32:31was filed on February 26, 2025, would
2:32:34you agree that this report reflects the
2:32:36company's reported RISA balance as of
2:32:38year end 2024?
2:32:41>> Yes. Um, and looking at the balance row
2:32:44in the highlighted blue number, uh, the
2:32:46company reported an overcolcted reset
2:32:48balance of approximately $122.6
2:32:51million.
2:32:54>> Yes, that's what I see.
2:32:56Um, so subject to the same parameters as
2:32:59the last um, hearing exhibit, I'd like
2:33:01to move for the admission of hearing
2:33:02exhibit 706.
2:33:04>> Uh, subject to those caveats. Any
2:33:07concerns, Mr. Zamar?
2:33:09>> Uh, no. Same same applies to this. Thank
2:33:11you.
2:33:13>> So, uh, so admitted.
2:33:15>> Thank you. Um, so Miss McComem, compared
2:33:17to the approximately $97.5
2:33:20million balance reflected in the prior
2:33:22report, um, this updated balance
2:33:25represents an an increase of
2:33:27approximately $25 million. Would you
2:33:29agree?
2:33:32And sorry to make you do math. I did
2:33:34warn you. Um, Miss McCome, this report
2:33:38also contains a line item for interest.
2:33:41Do you see that just above the balance
2:33:43row?
2:33:44>> I do.
2:33:46So interest is credited um to their
2:33:50account.
2:33:53>> It's my understanding that the balance
2:33:55has interest. Yes.
2:33:57>> Do you know where those interest
2:33:58payments come from?
2:34:02>> I don't.
2:34:04>> Okay. Do they do they come from the
2:34:06company or do they come from customers?
2:34:11>> Objection. your honor. Miss McCone
2:34:13answered that she doesn't know where
2:34:14they come from.
2:34:17>> Uh if you could uh re ask or ask another
2:34:20question.
2:34:21>> I'll just I'll just move on. Um but you
2:34:24do see that um this report reflects
2:34:26approximately $7 million in interest
2:34:28associated with their account during
2:34:30this reporting period.
2:34:36>> Okay. Thank you. Um
2:34:38do you recall Mr. Bennett's answer
2:34:40testimony. He stated that according to
2:34:42the company's testimony, in the last RES
2:34:45plan proceeding, the company reported
2:34:47paying over $35 million in interest on
2:34:51overcolcted reset balances in the last
2:34:5310 years.
2:34:55>> I don't recall, but subject to check,
2:34:58I'll take your word for it.
2:35:00>> Okay. Thank you. Um, and now, if we
2:35:03could please pull up hearing exhibit 705
2:35:05in EOCC's box. Um, and Miss McCone, this
2:35:08was this is the RISA report reflected
2:35:11referenced in your discovery response we
2:35:13went over earlier.
2:35:19>> Do you want to go back to 705?
2:35:21>> Oh, I'm so sorry. 707
2:35:39Okay, great. Um, thank you. And this is
2:35:42just one page. Uh, Miss McCone. Um, so
2:35:45this is the report where referenced in
2:35:47your discovery response where the
2:35:49company reported a more recent reset
2:35:51balance of approximately 141.6 million
2:35:55as of February 2026.
2:36:03Um, I'd like to move for the admission
2:36:05of of hearing exhibit 707.
2:36:08>> Uh, subject to all our prior caveats.
2:36:11Uh, Mr. Zemer.
2:36:13>> No objection. Other than our prior
2:36:16caveats.
2:36:17>> Yep. Uh, so moved.
2:36:19>> Thank you. Um, so Miss McCone, taken
2:36:21together, the company's reported visa
2:36:24balance increased by more than $40
2:36:26million between year end 2023 and
2:36:30February 2026.
2:36:34>> How much? I'm sorry.
2:36:35>> $40 million.
2:36:37>> Okay.
2:36:39>> Right.
2:36:42>> Okay. Um, and so that's over that's in a
2:36:44little over two a two-year time frame.
2:36:50Is that a question?
2:36:52>> Yes.
2:36:54>> Yes, I agree.
2:36:56>> Thank you. Um, and so would you agree
2:36:58the company has carried forward
2:37:00substantial resalances over the past few
2:37:02years?
2:37:05>> Yes.
2:37:07>> Thank you.
2:37:08Um, if we can now please pull up hearing
2:37:10attachment
2:37:1227, uh, which is part of UCI hearing
2:37:16exhibit 307
2:37:28and Miss McConn while this is getting
2:37:30pulled up. This will be um the
2:37:32commission commission decision C26-0213
2:37:37from the company's most recent um
2:37:40renewable energy plan proceeding. Do you
2:37:42see that?
2:37:43>> Thank you.
2:37:44>> Um and if we could please turn to um
2:37:47page 13 and go to paragraph 36.
2:37:54Um oh sorry page 12.
2:37:58There we go. Sorry about that. Um, so
2:38:00Miss McCon, do you see here the
2:38:02commission um, and I believe you
2:38:04discussed this in your rebuttal
2:38:06testimony, the commission addressed
2:38:08EOC's proposal to use a portion of
2:38:10accumulated res balances as a refund
2:38:12mechanism for bill assistance in the
2:38:14most reading most recent RE plan
2:38:16proceeding.
2:38:20>> I'm sorry, say that again.
2:38:22Um, do you see in this paragraph that
2:38:24the commission here is addressing EOCC's
2:38:28proposal to use a portion of accumulated
2:38:30resalances as a refund mechanism for
2:38:32bill assistance in the most recent RE
2:38:35plan proceeding?
2:38:37>> Am I seeing that the commission is
2:38:39saying to bring forward the reset
2:38:41balance?
2:38:44>> No, I'm just asking do you see here that
2:38:45the commission's addressing
2:38:48proposal?
2:38:48>> Yes.
2:38:49>> Okay,
2:38:49>> I see that. Thanks. Um, and the
2:38:52commission stated that IQ customers,
2:38:55income qualified customers have been
2:38:56contributing to the recess search charge
2:38:58for year for years. Do you see that?
2:39:02>> Where is that?
2:39:03>> Um, so that's going to be in paragraph
2:39:0536
2:39:07>> of that we have pulled up right here.
2:39:10>> Okay. Okay. I see that now.
2:39:12>> You do see that? Okay. Great.
2:39:14Um and the commission um further stated
2:39:17it shares EOCC's view that those
2:39:19customers deserve timely and meaningful
2:39:22benefits. Do you see that?
2:39:24>> I do.
2:39:26>> And the commission also stated that bill
2:39:28assistance can be a powerful near-term
2:39:30tool for households facing affordability
2:39:33pressures.
2:39:35>> Yes.
2:39:37Um, and then the commission stated, "We
2:39:39therefore encourage EOC to pursue its
2:39:43$25 million bill assistance proposal in
2:39:46a more suitable proceeding." Do you see
2:39:48that?
2:39:49>> I do.
2:39:50>> And the commission's suggested um public
2:39:53services next general rate case
2:39:55proceeding. Do you see that?
2:39:57>> I do. And would you agree with me that
2:40:00this proceeding is public services um
2:40:03next general rate case?
2:40:07>> When was this decision issued?
2:40:09>> April 2026.
2:40:14>> I wouldn't say it's necessarily the next
2:40:17Ray case after that decision.
2:40:21Okay.
2:40:23Sure. Um
2:40:25and um in the last part of this
2:40:27paragraph
2:40:29um the decision of this decision, the
2:40:32commission also express a desire for a
2:40:34fuller evidentiary record to be
2:40:37developed on this issue. Do you see that
2:40:39at the end of paragraph 36?
2:40:41>> I do.
2:40:42>> Okay, great. That leads me to my next
2:40:44few um questions. And so I'd like to now
2:40:47go back to hearing exhibit um 700, which
2:40:50is Mr. Bennett's answer testimony for
2:40:53EOC.
2:41:19>> Thank you, Miss Crane. Um, if we could
2:41:20go to page 36, please.
2:41:27Um, and if we could scroll down.
2:41:33Um, I'm sorry. Can we actually go to
2:41:35page 35? I'm trying to get to the
2:41:40There we go. Okay. Um,
2:41:44okay. Thank you. Um, so Miss McCon, you
2:41:48reviewed um Mr. Bennett's testimony in
2:41:50repair in preparing your rebuttal
2:41:53testimony addressing EOCC's recent
2:41:55proposal. Is that accurate?
2:41:58>> Yes, I reviewed it one time, but
2:42:01I I'll probably need your help with
2:42:03recollection.
2:42:04>> Okay. Uh, no problem. I think I
2:42:07identified the wrong page number here.
2:42:09So,
2:42:12um,
2:42:13one second. Okay. All right, if we could
2:42:15actually go to page 46, I apologize this
2:42:17testimony. Um,
2:42:20so Miss McComem, do you see here that
2:42:22the section of Mr. Bennett's answer
2:42:24testimony is titled basis for EOCC's
2:42:27proposed assistance level and supporting
2:42:29analysis?
2:42:30>> I do.
2:42:32>> And um, in this section
2:42:36um, would you agree with me that Mr.
2:42:38Bennett discusses IQ community solar
2:42:40programs um as the basis for EOCC's
2:42:44proposal.
2:42:49>> I don't know that I'm seeing that it's
2:42:51the basis for the proposal.
2:42:55>> Okay.
2:42:57Um Miss McConn, you're aware that EOC
2:42:59performs subscriber acquisition and
2:43:02subscriber maintenance activities for
2:43:04incomequalified community solar
2:43:06programs.
2:43:08I have a high level understanding.
2:43:11>> Okay. We won't yeah get beyond that. Um
2:43:14but would you agree that that includes
2:43:16doing subscriber acquisition for the
2:43:17company's own um IQ community solar
2:43:21gardens?
2:43:22>> Yes.
2:43:23>> Okay. So would you agree that EOC has
2:43:26direct experience working with IQ
2:43:28customers seeking access to community
2:43:31solar gardens and associated benefits?
2:43:34I can't really speak to what EOCC does
2:43:37there. Like I said, I'm not that
2:43:39familiar with these programs or
2:43:46Okay. But you were the witness that
2:43:47addressed EOC's proposal in your
2:43:49testimony. Okay. Um Okay. And you're not
2:43:53aware. Okay. And so Mr. Bennett notes in
2:43:56this um in his answer testimony at a
2:43:59high level that participation
2:44:02and CSG project development did not
2:44:05occur at a scale or pace originally
2:44:07anticipated under prior renewable energy
2:44:10plans.
2:44:12>> Understood.
2:44:14Um and you're not aware you're the one
2:44:17that the witness that filed rebuttal on
2:44:19this issue. Um the company didn't
2:44:20present present any testimony
2:44:22specifically disputing any of of those
2:44:25statements in this proceeding.
2:44:27>> They did not.
2:44:29>> Okay. Um if I could um take you now to
2:44:33page 47, table AB1.
2:44:38Perfect. Thank you, Miss McCone. Do you
2:44:40see that table AB1 presents EOCC's own
2:44:44analysis of IQ CSG participation and
2:44:48bill credits?
2:44:51>> I do and one of the figures reflected in
2:44:55this table is the incomequalified
2:44:57community solar weight list of
2:44:59approximately 8,400 customers.
2:45:04>> Understood.
2:45:06and customers participating in these
2:45:08programs receive bill credits that
2:45:11reduce their electric bills. Would you
2:45:12agree with that?
2:45:14>> Yes.
2:45:15>> And
2:45:18so EOCC's discussion of customers
2:45:21waiting for those CSG benefits is based
2:45:24upon EOCC's direct experience um and
2:45:27involvement in those programs.
2:45:30Interested.
2:45:33Um, and so regardless of the party's
2:45:36positions on EOCC's proposal, would you
2:45:38agree that a CSG bill credit could
2:45:41provide meaningful value to an
2:45:43incomequalified customer?
2:45:46>> I would assume that to be true
2:45:48[clears throat]
2:45:50>> and that would be particularly true for
2:45:52a customer facing increased electric
2:45:55bills following a rate case.
2:46:00>> Yes. assuming there's a big impact to
2:46:03those customers, that could be helpful.
2:46:06>> Okay, thank you.
2:46:08Um, great. We can take this um exhibit
2:46:12down. So, Miss McCone, you're aware that
2:46:14um Mr. PK's settlement testimony
2:46:16reflects an increase of approximately
2:46:19$2.25 million in annual recent revenues
2:46:22associated with approval of the
2:46:24non-unanimous settlement agreement.
2:46:26>> Yes, I saw that.
2:46:28>> Thank you. Um, so as we sit here today,
2:46:30the company reports a reset balance of
2:46:33approximately
2:46:34141.6 million. And if the comp
2:46:37commission approves the non-unanimous
2:46:39settlement agreement, that would result
2:46:41in additional revenues flowing into the
2:46:43RISA account.
2:46:45>> That's correct.
2:46:48>> And Miss McCone, I know you were
2:46:50unavailable yesterday, so I'm not sure
2:46:52if you listened to any of the testimony.
2:46:54Um, but are you aware that one of Mr. PK
2:46:57settlement workpapers reflects an annual
2:47:00reflects annual resale collections under
2:47:02current rates of approximately $35.75
2:47:06million.
2:47:09I'll take your word for it. Subject to
2:47:11check.
2:47:13>> Okay. Um, thank you. So, based on those
2:47:16figures, the current RISA balance of
2:47:18$141.6 6 million is approximately four
2:47:23years worth of annual reset collections.
2:47:27Would you agree?
2:47:29>> I'll have to take your word for it.
2:47:31>> Okay. Sorry to make you put you on the
2:47:33spot, make you do math. Um Okay, great.
2:47:36I just have a couple more um sections to
2:47:39go over with you. Um, Miss McCone, in
2:47:43your rebuttal testimony, you discuss the
2:47:45company's approximately $14 million
2:47:48revenue uh decoupling pilot balance.
2:47:51Correct.
2:47:52>> That's correct.
2:47:53>> And under the non-unanimous settlement
2:47:56agreement, the company proposes to
2:47:58return those funds to customers through
2:48:00the electric commodity adjustment or ECA
2:48:03rider. Is that correct?
2:48:07Um, so in other words, the the
2:48:09settlement contemplates returning those
2:48:11funds broadly to customers through a
2:48:14credit applied through the ECA writer.
2:48:18>> Well, it's for residential customers
2:48:20only, but widely to residential
2:48:23customers.
2:48:24>> Okay, thank you for that clarification.
2:48:26Um, Miss McCone, are you aware that EOC
2:48:29witness Mr. Bennett identified the RDA
2:48:32pilot balance as one example of a
2:48:34funding source that the commission could
2:48:36consider when evaluating customer
2:48:39affordability program proposals in this
2:48:42proceeding.
2:48:43>> I think I recall that he gave that as an
2:48:45example, but I didn't think that was his
2:48:47proposal.
2:48:49>> Okay. Um, and the company in response to
2:48:51that didn't evaluate whether directing a
2:48:54portion of those overcolcted RDA funds
2:48:57through targeted um through a targeted
2:48:59bill assistance mechanism would provide
2:49:01greater relief to income qualified
2:49:03customers.
2:49:04>> We did not do that evaluation. No.
2:49:07>> Okay. Thank you. Last set of questions.
2:49:10Um, if we could please pull up hearing
2:49:11exhibit 602
2:49:15and turn to page 21. And Miss McCome,
2:49:17this will be Boulder's settlement
2:49:19opposition testimony.
2:49:30And while that's getting pulled up, Miss
2:49:32McCon, did you review this um testimony
2:49:34from the city of Boulder that was filed
2:49:36last week?
2:49:38Don't
2:49:39>> for this week. Sorry. [laughter]
2:49:41>> I may have looked at some of it. I don't
2:49:43know that I read it in its entirety.
2:49:46Okay. Um well, do you see here that that
2:49:49Boulder filed um testimony in opposition
2:49:52to the non-unanimous settlement
2:49:53agreement?
2:49:54>> I did see that.
2:49:56>> And if we look at pages or lines um 8 to
2:50:009, um Boulder's witness, Mr. Lairman,
2:50:04states the settlement does not address
2:50:05EOCC's recommendation to use $25 million
2:50:08of unspent RISA funds for targeted bill
2:50:11assistance.
2:50:12>> I see that. And if we look at pages or
2:50:16sorry lines 14 to 15, Boulder further
2:50:19notes uh that the commission directed
2:50:21EOC to pursue this proposal in a general
2:50:24rate case.
2:50:27>> Yes, I see that.
2:50:29>> And lines 15 to 16, you see that Boulder
2:50:33states that it's uh supportive of EOCC's
2:50:35proposal.
2:50:38>> Yes.
2:50:40Okay. Um thank you so much, Miss McCona.
2:50:42Those are all my questions. Thank you.
2:50:46>> Uh thank you. Uh I think that concludes
2:50:49the cross. Commissioner Plank questions
2:50:51for uh Miss McCone.
2:50:54>> I have no questions for Miss McCone.
2:50:56>> Uh Commissioner Gman.
2:51:00>> Hi. Uh good morning, Miss McCone.
2:51:03>> Morning, Commissioner. Um just really
2:51:06briefly um just so that I can understand
2:51:09with regard to the Golden Service Center
2:51:12and its surrounding land. I understand
2:51:14it's a building and land, right?
2:51:17>> I believe it's two buildings and land.
2:51:19>> Okay. Thank you. Um how long has the
2:51:23company owned the land and the
2:51:25buildings?
2:51:27>> I don't recall, but that is in my direct
2:51:30testimony. Sorry, I don't have that
2:51:32date.
2:51:32>> Okay. No, no worries. And then has that
2:51:36been um a part of rate base since it was
2:51:41purchased andor built?
2:51:43>> The buildings but not the land.
2:51:46>> Okay. So the buildings are rape base and
2:51:48the land is not in rate base.
2:51:50>> Correct.
2:51:50>> Okay. Um and in being in rate base um
2:51:55both the the actual asset of the
2:51:58building. What about the like property
2:52:01taxes and maintenance on the building?
2:52:03Those
2:52:04have all been expensed.
2:52:07>> Okay. So that's like it been in the
2:52:08company's revenue requirement.
2:52:11>> Correct.
2:52:12>> Okay. Um what about the land uh property
2:52:15taxes and maintenance on the land?
2:52:18>> There is a little bit of expense
2:52:19associated with the land as well.
2:52:22>> For property tax and maintenance.
2:52:24>> Yes.
2:52:26>> Okay. And were those in revenue
2:52:28requirements in previous years while
2:52:30that was owned?
2:52:31>> Yes.
2:52:32Okay, thanks. I just not not clear on
2:52:35those points. Um, those are my only
2:52:37questions. Thanks.
2:52:38>> Thank you.
2:52:39>> Thank you, Commissioner Gman. Uh, I
2:52:42don't have anything for Miss McCone. Uh,
2:52:44any redirect. Uh, Mr. Zmer.
2:52:47>> Uh, yes, Chair. I just a time check. I
2:52:51should be done before noon. Just wanted
2:52:54to confirm you wanted to go through till
2:52:57the noon hour. I'm hoping you don't have
2:52:5840 minutes, but if you do, we'll get it
2:53:02done before lunch. [laughter]
2:53:04>> Well, it won't be 40 minutes. I promise.
2:53:07Um,
2:53:09is it Miss Crane uh
2:53:13running the show here? Okay. Could you
2:53:15uh please pull up hearing exhibit 117?
2:53:57and could we go to page uh 31?
2:54:03Uh, Miss McCoen, you had a conversation
2:54:07with uh EOCC council regarding Mr.
2:54:10Bennett's uh suggestion regarding use of
2:54:14RDA balances uh for bill assistance or
2:54:18direct directing support to uh income
2:54:20qualified customers. You recall that?
2:54:23>> I do.
2:54:25>> And could you uh review your question
2:54:27and answer here at lines 1 through 10?
2:54:42done. Okay.
2:54:44>> Uh is is it your understanding that the
2:54:47company's proposal is uh in compliance
2:54:50with a prior commitment?
2:54:52>> Yes.
2:54:55>> And that commitment's out of the 2022
2:54:57electric rate case.
2:54:59>> That's correct.
2:55:02>> Okay. Uh, could we pull up hearing
2:55:05exhibit 149?
2:55:19Can we go to page 91, please?
2:55:26And can we scroll down?
2:55:31Yeah, just this Q&A here at uh 10
2:55:34through 18.
2:55:36Um you also had a discussion with EOCC
2:55:39council regarding use of reset balances
2:55:43uh for EOCC's uh funding proposal. Do
2:55:46you recall that?
2:55:47>> We do.
2:55:49>> Is it your understanding that there's
2:55:51been a decision on the appropriateness
2:55:53of using reset balances for that
2:55:56purpose?
2:55:57>> Yes. Uh my understanding is that the
2:56:01decision was the RECA is not the
2:56:02appropriate source of funding for such
2:56:04programs.
2:56:10>> Okay. Uh, could we go to um hearing
2:56:16exhibit 136 Thanks.
2:56:50Can we go to page six?
2:56:56Uh, and can we just scroll down so Miss
2:56:58Mcome can see the full question answer
2:57:01at line starting at line four.
2:57:05Miss Bone, can you uh review this
2:57:07question answer?
2:57:17>> I've reviewed it.
2:57:18>> Okay. You had a conversation with uh UCA
2:57:21council regarding Miss Balkley's
2:57:23analysis in this proceeding. Do you
2:57:25recall that?
2:57:26>> I do.
2:57:27Is it your understanding that Miss
2:57:29Balkley's analysis provided a range of
2:57:33reasonable cost of equity for the
2:57:35company?
2:57:36>> Yes.
2:57:38>> And then is it your understanding that
2:57:40the company used that analysis to help
2:57:43inform its ROE recommendation in this
2:57:46proceeding?
2:57:50>> Okay. Uh could we go back to hearing
2:57:55exhibit
2:57:58uh 313
2:58:01which was uh UCA's I think it came in
2:58:04through box.
2:58:20You had a conversation with uh UCA
2:58:22council regarding this discovery
2:58:24response. Do you recall that?
2:58:25>> I do.
2:58:27>> And is this discovery response asking
2:58:30about the company's rebuttal testimony
2:58:32position?
2:58:35>> Yes.
2:58:37>> And it's not directed at the company
2:58:39where the settling parties reached uh an
2:58:43agreement on the Golden Service Center
2:58:46and Mineraloids.
2:58:48>> That's correct.
2:58:50Okay. Uh, could we go to
2:58:55hearing exhibit
2:58:57uh CWS63?
2:59:01I think that was part of sorry, hearing
2:59:03exhibit 300 attachment CWS63.
2:59:24And if we could scroll down uh so we can
2:59:26see paragraph 14.
2:59:39Can you review that quickly?
2:59:46reviewed.
2:59:48>> Okay. You had conversation with UCA
2:59:50council regarding the coal combustion
2:59:52residuals uh
2:59:55regulatory asset. Do you recall that?
2:59:57>> I do.
2:59:59And what's your understanding uh
3:00:01regarding paragraph 14 here regarding
3:00:04the treatment of that asset in this case
3:00:07>> that we would bring it forward for
3:00:10review in this case and determine the
3:00:14amortization periods
3:00:19>> and recovery of the unavertised balance
3:00:21and rate base.
3:00:22>> Right.
3:00:24Can we bring up hearing exhibit 134?
3:00:52Can we go to page 46?
3:00:59If we can just scroll down so this uh
3:01:01Q&A is avail or can be seen. Yep.
3:01:07Uh can you review this for a second,
3:01:08Miss McCone?
3:01:28I've reviewed.
3:01:29>> Okay. This is Mr. Fredus' rebuttal
3:01:32testimony, but is it your understanding
3:01:35that this discussion here is about what
3:01:37costs are being deferred pursuant to
3:01:40that settlement agreement?
3:01:57I'm sorry. What was your do you
3:01:59>> Yeah. Is it your understanding or this
3:02:01discussion here is about what costs are
3:02:04being deferred pursuant to the
3:02:05settlement agreement?
3:02:07>> Correct.
3:02:08And then if we scroll down,
3:02:15you see the quote here
3:02:18with the italiciz starting on 23 and
3:02:21running to uh par line three on the next
3:02:24page. That's the paragraph that we just
3:02:26looked at in the commission's
3:02:28[clears throat] decision on this on
3:02:30ultimate recovery of the costs that are
3:02:32being deferred. Is that right?
3:02:34>> That's correct.
3:02:36>> Okay. Uh, could we pull up hearing
3:02:39exhibit 155?
3:03:03And can we go to page 30?
3:03:11uh you had discussion with uh UCA
3:03:15council about the capping of rate case
3:03:17expense in this proceeding. Do you
3:03:18recall that?
3:03:19>> I do.
3:03:22>> And if we look at the uh second sentence
3:03:25here, can you explain uh how that cap
3:03:29relates to the company's actual costs in
3:03:31this proceeding?
3:03:34that if the actual costs come below the
3:03:371.5 million that the company will credit
3:03:39the difference in the next rate case.
3:03:42>> So if the company's actual costs for
3:03:45this proceeding are 1 million that
3:03:49difference is going to be credited to
3:03:52customers.
3:03:53>> Correct.
3:03:57>> Okay. Uh last one and we don't need uh
3:04:01an exhibit for this. It's more of a
3:04:03theoretical discussion. You had you had
3:04:05a discussion with uh UCA council
3:04:07regarding trackers and deferrals. Do you
3:04:09recall that?
3:04:10>> I do.
3:04:12>> Um
3:04:15conceptually you testified
3:04:17[clears throat] that a tracker
3:04:18establishes a baseline and then the
3:04:21actual costs are tracked against that
3:04:23baseline. Do you recall that?
3:04:25>> Yes.
3:04:26>> And the baselines are typically
3:04:27established in rate case proceedings.
3:04:30>> Yes.
3:04:31So in this proceeding when a baseline is
3:04:34established
3:04:36is that the cost that customers are
3:04:39paying on a going forward basis.
3:04:41>> Yes.
3:04:43>> But if actual costs are less than that
3:04:46what happens
3:04:47>> then it's refunded to customers in a
3:04:49future case.
3:04:52>> And is there an example of that in this
3:04:54proceeding?
3:04:55Uh the property tax expense tracker and
3:04:58the pension expense tracker
3:05:02>> both have a regulatory liability.
3:05:06>> And regarding the property tax tracker,
3:05:07is that approximately $20 million?
3:05:11>> That sounds about right.
3:05:13>> And is the company's proposal uh under
3:05:17the settlement agreement, the settling
3:05:19party's proposal uh to refund that to
3:05:22customers through the ECA? Yes, it is.
3:05:30>> Uh, I have nothing further, Chair Blank.
3:05:32Thank you.
3:05:33>> Uh, thank you. Um, I think maybe we'll
3:05:37take a little bit. Miss Nelson, did you
3:05:39have something?
3:05:43>> No, Mr. Chair. I was just um observing
3:05:47as the redirect went on.
3:05:50>> Oh, all right. Uh so my understanding is
3:05:55we'll uh continue with uh Fredus uh
3:05:58after lunch we'll see if we have
3:06:00questions for lovely and then we'll go
3:06:03to Dr. Dew uh Mr. Lei Dr. Dy
3:06:10and uh uh Dr. Bonerina
3:06:14and then maybe we'll start uh uh cross
3:06:18of Ms. O'Neal we'll see and then on
3:06:22Monday we'll go back to Piscuchi Wner
3:06:25Bulley Hansen and Nickel and then keep
3:06:29going with cross of staff after that is
3:06:33uh Mr. Larson is that your understanding
3:06:36or
3:06:37>> uh yes Mr. Chair we we will do our best
3:06:40to make that work. I just wanted to
3:06:41clarify really quickly. We did
3:06:43understand the your comments from
3:06:45yesterday at the end of the day to
3:06:47suggest that staff would not be going
3:06:49until Monday. Uh but we will we're in
3:06:52the process right now of just kind of
3:06:54checking to make sure that that nobody
3:06:55planned around that.
3:06:57>> Um at least uh Dr. Deio, Mr. Lei, Dr.
3:07:01Dy, and Dr. for Bonji or Dina. Uh I'm
3:07:04not going to be ready to um ask
3:07:07questions of Miss O'Neal or Miss Msley
3:07:12uh today.
3:07:13>> Sounds good. And we'll keep you updated
3:07:15on on where everyone's at once we get
3:07:18back from the break.
3:07:19>> Okay. Does that work for you, Mr.
3:07:21Zelmer?
3:07:24>> Yes, it does.
3:07:25>> Okay.
3:07:25>> Mr. Mr. Chair, if I may interrupt for a
3:07:28sec, I did actually plan on what you
3:07:32represented yesterday that you thought
3:07:34staff wouldn't start until Monday
3:07:36morning. So, um that's how I prepared
3:07:39for today. Um so, uh I would just gently
3:07:45request that we wait until Monday.
3:07:48>> So, you're not ready for Mr. Lei or uh
3:07:51Dr. Daly,
3:07:53>> correct?
3:07:56Uh, I guess we're gonna have an early
3:07:58day today. Uh,
3:08:01>> at least
3:08:03say again. Uh,
3:08:04>> at least it's sunny.
3:08:06>> Yeah. [laughter] Yeah. How hot is it?
3:08:11>> Uh,
3:08:11>> and more pleasant here.
3:08:14>> Uh, uh, uh, 88. Um,
3:08:19uh, all right. Uh let's uh take a break
3:08:22till uh 12:45
3:08:25and then we'll finish up uh Mr. uh
3:08:28Fredus and uh we'll uh see about Ms.
3:08:34Lovely and then we'll take uh call it an
3:08:36early day. So thanks all.
3:08:40>> Thank you.
4:14:37All right. Do we have Mr. Frereda?
4:14:45>> There you are, sir.
4:14:47>> Yep. Uh, can you hold up your right
4:14:48hand? Well, actually, uh, let me just
4:14:51say we're back on the record in
4:14:5225-0494E,
4:14:54the company's right case. Uh, can you
4:14:57hold up your right hand? Do you swear to
4:15:00tell the truth, the whole truth, and
4:15:01nothing but the truth?
4:15:02>> I do.
4:15:03>> Put your hand down. Is anybody with you
4:15:05or communicating with you in any way?
4:15:08>> Uh, no.
4:15:09>> If that changes, will you let us know?
4:15:11>> I will.
4:15:13>> Uh, back to you, Mr. Zimmer.
4:15:16>> Thank you, Chair Blank. Good afternoon,
4:15:18Mr. Fredus.
4:15:20>> Good afternoon.
4:15:21>> Could you please state and spell your
4:15:22name for the record?
4:15:24>> Uh, my name is Arthur Freighus. F A R T
4:15:27H U R F R E I T A S.
4:15:33>> Uh, Mr. Fredus, your direct testimony
4:15:35hearing exhibit 102. Supplemental direct
4:15:38testimony hearing exhibit 124. Second
4:15:41supplemental direct testimony hearing
4:15:43exhibit 131. Rebuttal testimony hearing
4:15:47exhibit 134 and settlement testimony
4:15:50hearing exhibit 157 have been previously
4:15:53admitted to the record. So Mr. Fredus is
4:15:55available for cross-examination.
4:15:58>> Uh I got 60 minutes for UCA. It's 1250.
4:16:03Miss Runker.
4:16:05>> Thank you Mr. Chairman. [clears throat]
4:16:07Good afternoon Mr. Freighes. How are
4:16:09you?
4:16:10>> Good. How are you, Mr. Bunker?
4:16:11>> I'm well, thank you.
4:16:13Uh, I think your council, Mr. Zmer, just
4:16:16uh went through the testimony you filed.
4:16:19You filed five separate pieces of
4:16:21testimony and attachments in this case.
4:16:24Is that right?
4:16:27>> I I couldn't hear you.
4:16:28>> Oh. Uh, that's correct.
4:16:30>> Ah, thank you. Thank you. I wanted to
4:16:32make sure that you hadn't somehow muted
4:16:34yourself and I I couldn't hear you. And
4:16:37by the way, if you see me look to my
4:16:38right, it is because I have a separate
4:16:42screen that has some documents and
4:16:45questions on it. So, I am paying
4:16:46attention even if I'm turning away from
4:16:49you.
4:16:51Uh the commission ordered public service
4:16:53to file supplemental direct testimony to
4:16:56address a number of issues including
4:16:59updating the test year data and the
4:17:02Comanche 3 costs that were included in
4:17:05public services direct case. Is that
4:17:07right?
4:17:11>> Yes. Can you hear me? Okay.
4:17:13>> Uh it was a little bit low on the volume
4:17:15but yes I could. Thank you.
4:17:18And as to the updated test year and
4:17:21Comanche 3 costs that were included in
4:17:24the proposed rate base, you addressed
4:17:28those two issues in your second
4:17:29supplemental direct testimony and
4:17:32attachments. Is that right?
4:17:35If I remember correctly,
4:17:38um
4:17:39the there was one Comanche 3 Revenue
4:17:43requirement provided in first
4:17:44supplemental and then as part of the
4:17:47update to 2025 actuals in second
4:17:51supplemental, I also included a Comanche
4:17:543 revenue requirement.
4:17:56>> Okay, thank you for that. And with
4:18:00respect to the test year, the commission
4:18:02specifically asked public service to
4:18:04provide most recent actual data for the
4:18:082025 test year ending December 31, 2025
4:18:13using a 13-month average ratebased
4:18:16methodology
4:18:18and without a depreciation annualization
4:18:21adjustment. And that is what's in your
4:18:24your second supplemental direct
4:18:26testimony. Correct. attachments.
4:18:29>> Uh there is a version of that in second
4:18:32supplemental. Yes.
4:18:34>> Okay.
4:18:35And uh let's turn to [clears throat]
4:18:37your second supplemental direct
4:18:39testimony.
4:18:41And that's hearing exhibit 131.
4:18:45And on page six,
4:18:51and maybe this helps walk through some a
4:18:53little bit of this background for us. On
4:18:55page six at U lines 2 through 10, here
4:19:00you indicate your attachment APF20
4:19:04is the revenue requirements study for
4:19:07the calendar year ended December 31,
4:19:092025
4:19:11and it reflects actual capital additions
4:19:14through December 31, 2025
4:19:18along with actual O andM expense and
4:19:21revenues for the 12 month period ending
4:19:24December December 31st, 2025. Is that
4:19:27all accurate?
4:19:29>> Yes.
4:19:32And then in your footnote four on the
4:19:36bottom of that page, uh here you state
4:19:39APF20
4:19:41and on lines 14 to 16 on that page and
4:19:45the footnote for you, uh indicate you
4:19:48developed APF 20 uh using the process
4:19:54described in your direct testimony to
4:19:57develop AP attachment APF F1
4:20:02and that included using year in
4:20:04ratebased methodology. Right.
4:20:06>> Correct.
4:20:08>> And that 2025 test year in your
4:20:12attachment APF
4:20:14one used actual data for January to June
4:20:18of 2025
4:20:21and forecasted data for July through
4:20:24December of 2025. Right.
4:20:28for capital for uh revenue for O andM it
4:20:32was actual data for the 12 months ended
4:20:35June of 2025
4:20:39yes
4:20:44okay let's u stay with your second
4:20:46supplemental direct testimony move to
4:20:48page 11
4:20:54and here at lines three through 10. You
4:20:58testify that Pasco's net base rate
4:21:01revenue deficiency after accounting for
4:21:05the writer revenue is about $355.6
4:21:09million
4:21:11in Pasco's initial direct testimony.
4:21:16and the net base rate revenue deficiency
4:21:20when using the 2025
4:21:23fullyear actual data in your second
4:21:26direct supplemental direct testimony is
4:21:29about $332.9
4:21:32million correct
4:21:34>> yes
4:21:36>> so would you agree then that the
4:21:39difference between using part actual
4:21:42data and part forecasted data for 2025
4:21:47And when using all actual data for the
4:21:512025 test year ending December 31, 2025
4:21:56is a reduction in the revenue
4:21:58requirement deficiency of about $22.7
4:22:02million.
4:22:04>> I believe there was some corrections
4:22:06that were also included in uh attachment
4:22:09APF20 that also were um contributing to
4:22:13some of that difference.
4:22:17Okay. But you agree the total is $22.7
4:22:20million when using actuals for the
4:22:24entire year of 2025,
4:22:27>> including the effect of the corrections.
4:22:29Yes.
4:22:30>> Okay.
4:22:33And in the commission's decision
4:22:35ordering PSCO to file supplemental
4:22:38direct testimony, the commission did not
4:22:42direct PSCO to develop a revenue
4:22:44requirement study using actual data for
4:22:482025 test year ending December 31, 2025
4:22:54using the year-end ratebased method. Is
4:22:57that correct?
4:22:59Uh that wasn't in the order, but I
4:23:01believe um that commitment
4:23:03[clears throat] was made in uh Mr.
4:23:04Burman's direct testimony.
4:23:08>> Okay.
4:23:11Do you agree that when changing PESCO's
4:23:15proposed ratebased methodology from year
4:23:18end to 13-month average
4:23:22and not including annualization
4:23:25adjustments, this results in about $60.6
4:23:29million less in PiSco's revenue
4:23:32deficiency.
4:23:34>> Um, do you have a work paper that shows
4:23:37that? believe I had a an attachment to
4:23:39one of my testimony that would uh
4:23:42provide this information.
4:23:44>> Uh the the note I have is to Mr.
4:23:46Fernandez's answer testimony. So, if we
4:23:49could pull up here in exhibit 301
4:24:00and I don't recall the specific
4:24:01workpaper you're referring to.
4:24:11If we could go to page seven
4:24:16of Mr. Fernandez's testimony at uh page
4:24:197, line 11 through 13.
4:24:23Uh here is the discussion regarding the
4:24:26result is about $60.6 million less in
4:24:31the revenue deficiency.
4:24:34And you'll see up above that it talks
4:24:36about your uh attachments
4:24:39APF2,
4:24:41APF20.
4:24:45So do you do you have any reason to
4:24:46dispute the the result of using 13-month
4:24:50average instead of year-end rate base is
4:24:54about $60.6 million.
4:24:57>> Um we can check that real quick in
4:24:59attachment APF21.
4:25:01Okay, let's pull up a
4:25:03>> And I have a I have a hard copy of my
4:25:05testimony here in front of me, so I can
4:25:07uh check real quick.
4:25:10>> Okay. Well, just so the record's clear,
4:25:12we'll we'll pull it up on the screen if
4:25:14we could.
4:25:16Attachment APF21, and you can tell us
4:25:18where
4:25:21you are um referring to in that
4:25:24document.
4:25:43Can we please pull up uh Mr. Frightus's
4:25:46attachment? Thank you. There it is.
4:25:48Okay, Mr. Frightus. uh which um
4:25:52[clears throat]
4:25:53which tab.
4:25:54>> So if we go let's start at the last the
4:25:56page 41 at the end
4:26:01>> then if we scroll down a little bit.
4:26:15So
4:26:16>> make this slightly larger please.
4:26:20Excellent. Thank you.
4:26:24>> The uh in so on this exhibit the um
4:26:28first column so on on line 55 that 503
4:26:33million that is um the
4:26:38oh I apologize. This is this is um
4:26:41comparing APF
4:26:431 to APF 20. That is not what you're
4:26:46asking. I'm sorry. Um I believe that
4:26:49yes, the 60 million
4:26:51>> maybe I don't mean to talk over you. Are
4:26:53we maybe thinking attachment APF23?
4:26:58[clears throat]
4:26:58>> Um APF23 is the revenue requirement
4:27:03study using uh 13-month average. Um, and
4:27:08so if we if we wanted to bring that up,
4:27:09we could and and compare the number in
4:27:13that attachment to the 526 million that
4:27:16was in the second column of the one we
4:27:17were just looking at. That that would be
4:27:20um the comparison to to to look at.
4:27:23>> Okay. Thank you.
4:27:30>> So if we just scroll down
4:27:33uh first page.
4:27:36Okay. So, oh sorry, one more up. There
4:27:39we go. Right there. So, line uh 35.
4:27:43So, using a 13-month average, their
4:27:46revenue deficiency is 442 million and
4:27:50that compares to the 526 million or 503
4:27:55million that is APF20. And so that
4:27:59difference is the impact of uh 13-month
4:28:03average and removing the depreciation
4:28:06adjustment.
4:28:08>> And does that total in in your
4:28:10calculation about 60.6 million?
4:28:14>> Yes, that's that's 60 million. Yes.
4:28:17[snorts]
4:28:17>> All right. Thank you.
4:28:19>> Can I just ask a question? Does this
4:28:20assume the 22 million uh from going from
4:28:24actuals?
4:28:26I apologize for interrupting Mr. Bunker.
4:28:28>> No, that's fine. Good question.
4:28:30>> Does this does this include the 22 or 20
4:28:33million uh from going from forecasted to
4:28:36actual or uh uh is that uh in or is that
4:28:43$22 million in addition to the 60
4:28:46million?
4:28:48The 22 million would be in addition to
4:28:50the 60. So this is compare the 60
4:28:53million is comparing
4:28:552025 actual data on a year-end basis to
4:28:592025
4:29:00actual data on a 13-month average basis
4:29:03without the depreciation expense
4:29:04adjustment.
4:29:07So the the first attachment that that I
4:29:10mistakenly directed us to that was a
4:29:12comparison of the impact of updating
4:29:14from uh the cost of service using some
4:29:19forecasted information in the direct
4:29:20case to all actuals in second
4:29:22supplemental.
4:29:27>> I apologize.
4:29:29>> Not a [clears throat] problem. And let
4:29:31me just uh ask one clarifying question
4:29:34just so our record is clear. And that is
4:29:36when you combine the $22 million
4:29:40reduction for using actuals for all of
4:29:452025
4:29:47along with the $60 million reduction
4:29:51we've just talked about. When you use
4:29:5413-month average rate base, that total
4:29:57is a reduction of 82 roughly $82
4:30:01million. Is that right?
4:30:03>> I agree with that. Yes.
4:30:05>> Okay.
4:30:09U let me ask you a couple questions
4:30:11about Comanche 3 and and with respect to
4:30:15Comanche 3, the commission directed
4:30:17Pasco to provide an itemization
4:30:20of its PBLO unit 3 costs that are
4:30:23included in the company's proposed rate
4:30:26base together with accompanying
4:30:28itemization of associated ON&M expenses.
4:30:32Do you recall that from the commission's
4:30:34order?
4:30:35>> Yes.
4:30:37and your attachment APF24
4:30:42to your uh second supplemental direct
4:30:46testimony. That's hearing exhibit 131.
4:30:50[snorts]
4:30:51This is your
4:30:53Comanche 3 revenue requirement using the
4:30:572025 actual year.
4:31:02Is that correct?
4:31:03>> Yes.
4:31:05And if we could pull up attachment APF24
4:31:13and if we turn to page four of that uh
4:31:16that document when it's brought up
4:31:22is it correct that the total annual
4:31:24revenue requirement for Comanche 3 is
4:31:27about $15 million.
4:31:32Uh can we scroll down please?
4:31:41Uh so using I believe the 105 that
4:31:44you're referring to was from um first
4:31:48supplemental which was still using uh
4:31:51some forecasted information. Uh this
4:31:54revenue requirement here is using all
4:31:56actuals and it's about 111 million.
4:31:59Okay, thanks for that clarification.
4:32:03>> And there was also there was also a
4:32:05correction in there. Um there was a data
4:32:08querying issue that I had in first uh
4:32:12supplemental direct that was corrected.
4:32:15Um and and then subsequently corrected
4:32:17in the second supplemental. So that
4:32:20that's also been incorporated into this
4:32:21111 [clears throat] million.
4:32:24>> Okay. So just uh make sure we're both on
4:32:27the same page when using all actuals all
4:32:31actual data for 2025
4:32:34the Comanche 3 revenue requirement is
4:32:38$111 million. Is is that right?
4:32:42>> Uh that's correct. And I would also note
4:32:44that that is based on the uh weighted
4:32:48average cost of capital that was
4:32:49proposed in uh it was included in second
4:32:52supplemental direct. So, it's based off
4:32:54of the and actually if we scroll up a
4:32:56little bit, the amounts that are in the
4:32:58top of this page.
4:33:00[snorts] So, the the 7.44%
4:33:04weighted average cost of capital that
4:33:05that 111 is based off of that level of
4:33:08whack.
4:33:09>> Okay.
4:33:10Um, thank you for that that uh
4:33:14discussion. And the question would be uh
4:33:18under the settlement agreement the
4:33:20proposed whack is 7.14%
4:33:24right?
4:33:26>> I believe that's correct. Yes.
4:33:28>> So that's a 30 basis point reduction in
4:33:32the whack. What does that do if you will
4:33:36to that $111 million annual revenue
4:33:39requirement for Comanche 3?
4:33:42Um I believe at the uh whack established
4:33:48in the settlement that the 111 becomes
4:33:50approximately 108 million
4:33:58and if the uh if the whack was changed
4:34:02to 7% as as was suggested by some of the
4:34:08interveners.
4:34:10Do you do you know what every one or 10
4:34:14basis points of change would would
4:34:17cause?
4:34:19>> I'd have to do the math of that.
4:34:22>> We we could do the math here just um
4:34:24going from 744 to 714 and that change in
4:34:28the uh revenue requirement based on that
4:34:31change in the whack, but I don't I
4:34:32haven't done that math ahead of time.
4:34:34>> Okay. All right. Well, [clears throat]
4:34:36it sounds like the the change for every
4:34:4010 basis points for that 30 basis point
4:34:44change from 7.44 to 7.14
4:34:49was about $10 million per basis point or
4:34:53for 10 basis points. So, is it
4:34:56reasonable to say one basis point would
4:34:58be about a million dollars?
4:35:02So, we went from 111 to 108.
4:35:07Um,
4:35:08>> my math did not work. You're correct.
4:35:10That's why you're That's why you're
4:35:11wondering. My math doesn't work there.
4:35:14Um, it it's about $100,000 per basis
4:35:17point, isn't it?
4:35:18>> I think that's more the correct level.
4:35:21Yes.
4:35:22>> Okay.
4:35:31Didn't quite add up.
4:35:35All right. Thank you.
4:35:40Rebuttal testimony.
4:35:43And that is um [clears throat]
4:35:46hearing exhibit
4:35:5013 uh four I believe.
4:35:57Yeah. And at page 14
4:36:04and starting on line eight
4:36:12and lines 8 through 14 here, you state
4:36:15the
4:36:17rebuttal testimony rate base generally
4:36:20reflects a year-end balance methodology.
4:36:23Is that right? Yes.
4:36:26>> And then within that uh that testimony
4:36:29uh passage, [snorts] you indicate that
4:36:33there were six categories of expenses
4:36:36that did not use the year-end balance
4:36:40methodology.
4:36:42So is it accurate to conclude a 13-month
4:36:45average method was used for these six
4:36:48categories of expenses?
4:36:51Uh well, fuel inventory is um not a
4:36:5513-month average. It's the average of
4:36:57the averages is, you know, way to think
4:36:59about that. Um
4:37:02but the other components are 13-month
4:37:05average. And then cash working capital
4:37:07is cash working capital doesn't exist on
4:37:10the balance sheet. So it's not um it's
4:37:14not an average of anything. It's a
4:37:16calculation done within the cost of
4:37:18service model based on um lead lag lead
4:37:22lag factors and uh the level of revenues
4:37:25and expenses that are in the cost of
4:37:28service model. So it's it's a slightly
4:37:29different animal that it exists in rate
4:37:32based but it's not an item that exists
4:37:35on the balance sheet if that makes
4:37:36sense.
4:37:38>> Okay.
4:37:41[clears throat]
4:37:42Turning uh same page on lines 15 through
4:37:4618 here you testify that uh UCA
4:37:52uh staff and AARP all recommended using
4:37:57a 13-month average ratebased methodology
4:37:59in this case. Is that right?
4:38:01>> Yes.
4:38:03And with respect to the various
4:38:06intervenors answer testimony, did any
4:38:09party other than public service
4:38:12specifically advocate using the year-end
4:38:15ratebased method?
4:38:18>> Um, I believe CEC took no position on
4:38:22that, but I'm not aware of any other
4:38:25parties besides public service that um
4:38:28recommended year end.
4:38:30>> Okay. Thank you for that clarification.
4:38:33If we could go to page 15, uh, starting
4:38:36at line five
4:38:39here, you discuss your disagreement with
4:38:41various interveners using the 13-month
4:38:44average, uh, ratebased methodology.
4:38:47And would you agree that in public
4:38:50services last gas rate case that was the
4:38:532024 case 24-0049G
4:39:00in that case the commission held the use
4:39:03of 13-month average ratebased
4:39:06methodology was appropriate in that
4:39:07case.
4:39:09>> I agree that's what the commission
4:39:11ordered out of that case.
4:39:14And if we could go to page 22 of your
4:39:17rebuttal testimony,
4:39:20uh, at lines 10 through 14.
4:39:31Here you list reasons that could impact
4:39:33the company's ability to earn its
4:39:35authorized ROE.
4:39:38And one of the reason, one of those
4:39:40listed reasons is the time between rate
4:39:43cases. Is that right?
4:39:45>> Yes.
4:39:47>> Is it correct that the company controls
4:39:50when it files rate cases?
4:39:53>> That's correct.
4:39:56>> And another item you mentioned in this
4:39:58passage is partial or no returns on
4:40:01portions of rate base. Is that right?
4:40:04>> Yes.
4:40:06And wouldn't these partial or full
4:40:09removals of rate base be reflected in
4:40:13the authorized revenue requirement in a
4:40:15rate case?
4:40:19>> Um
4:40:21well they if there if there are items
4:40:23that are not getting a return then
4:40:25they're not in rate base.
4:40:27>> Correct.
4:40:29>> Okay. Thank you. U a third item you
4:40:32mentioned in this testimony passage is
4:40:35the allowance or is the disallowance of
4:40:38expenses. Is that correct?
4:40:40>> Yes.
4:40:42>> And wouldn't disallowances also be
4:40:45reflected in the authorized revenue
4:40:47requirement in Ray case?
4:40:49>> Yes. They would they would show as
4:40:52expenses that were removed.
4:40:54>> Okay.
4:40:56And at lines 15 through 16 here on page
4:41:0022,
4:41:01you mentioned no return on regulatory
4:41:04assets as another factor leading to the
4:41:08company not earning its authorized
4:41:10return. Is that right?
4:41:12>> It's a contributing factor. Yes.
4:41:16Can you confirm that without the
4:41:19establishment of a regulatory asset,
4:41:23neither the return on or the return for
4:41:26that asset would be recoverable unless
4:41:29it was in the test year?
4:41:34Um,
4:41:36not quite sure I'm following your
4:41:38question. Um,
4:41:41if it's if something is not a regulatory
4:41:43asset, I where would it exist? I guess
4:41:46is my question. It would have to be in
4:41:49the test year as a request you're
4:41:50making, wouldn't it?
4:41:55Well, if if we're requesting recovery of
4:41:58a regulatory asset, then my expectation
4:42:02that it was the request to create the
4:42:04regulatory asset was
4:42:07um made in a prior case,
4:42:10>> right? So, if you didn't have that
4:42:13regulatory asset created in a prior case
4:42:17and it's not
4:42:20a cost included in the test year,
4:42:24that wouldn't be recoverable, would it?
4:42:32Um,
4:42:34well, if a regulatory asset didn't
4:42:37exist, there's nothing to recover, I
4:42:39guess. I guess I'm I'm still having a
4:42:41little bit of trouble following your
4:42:42question, but if I understand it
4:42:44correctly, I think that's my answer is
4:42:45that if it wasn't established, there's
4:42:49nothing to recover.
4:42:51>> Okay, good. Thank you. Uh, if we could
4:42:54go to hearing exhibit 157,
4:42:58this is your settlement testimony.
4:43:04And on page five
4:43:09at lines 8 through 17
4:43:12here you indicate the settlement uses a
4:43:15test year based on the 12 months ended
4:43:17December 31, 2025
4:43:21and you refer to that as the settlement
4:43:24test year in uh quotes and that it's
4:43:27calculated on a year-end basis for all
4:43:30plant and plant related balances
4:43:33included in rate basis. Is that right?
4:43:36>> Yes.
4:43:37>> So, we're in agreement the settlement
4:43:40test year uses all actuals for the
4:43:43calendar year ending December 31, 2025.
4:43:47Right.
4:43:48>> Yes.
4:43:50And on
4:43:52page five here at lines 12 to 14, you
4:43:57state the basis for the settlement test
4:43:59year is the revenue requirement study I
4:44:02sponsored. By I, I mean you, Mr.
4:44:05Frightus, sponsored in my rebuttal
4:44:08testimony hearing exhibit 134,
4:44:11attachment APF25
4:44:14as adjusted by the settlement. Is that
4:44:16correct?
4:44:18>> Yes.
4:44:20And then on page seven at lines 3
4:44:23through 13,
4:44:26here you provide an explanation that the
4:44:29rebuttal testimony revenue requirement
4:44:31study presented in your attachment APF25
4:44:37served as the starting point for the
4:44:40settlement test year revenue requirement
4:44:42study and it incorporates actual 2025
4:44:47data.
4:44:48and the corrections and updates
4:44:50discussed in your rebuttal testimony. Is
4:44:52that right?
4:44:54>> Yes.
4:44:56>> And in Piesco's rebuttal case, the
4:45:01company requested
4:45:03a netbased revenue increase of about
4:45:06$327.2
4:45:07million. Is that right?
4:45:10Uh
4:45:12it could bring up
4:45:14>> and I see that number if if I can help
4:45:16you here on page seven line 16. So same
4:45:19page just uh
4:45:22>> that answer. Uh so do you agree 3027.2
4:45:27million?
4:45:29>> Yes.
4:45:30>> Okay. Thank you.
4:45:33And then if we go to page eight of your
4:45:35settlement testimony here, you identify
4:45:4012 revenue requirement adjustments that
4:45:43are made in the settlement. Is that
4:45:44right?
4:45:45>> That's correct.
4:45:48And is it accurate to understand these
4:45:5012 revenue requirement adjustments made
4:45:54in the settlement are adjustments to
4:45:57Piasco's rebuttal case revenue
4:46:00requirement
4:46:02which was reflected in your attachment
4:46:05APF25.
4:46:08>> Correct.
4:46:09>> Okay.
4:46:12in your settlement testimony attachment
4:46:14APF29
4:46:17that sets forth the settlement test year
4:46:19revenue requirement cost of service
4:46:21model. Is that right?
4:46:23>> That's correct.
4:46:25>> Okay.
4:46:27And if we go to page nine, starting on
4:46:31line 17 and on to page 10 through line
4:46:34two,
4:46:37here you state the settlement results in
4:46:40a base rate increase of about $385.9
4:46:45million
4:46:46and a net increase of about $224.9
4:46:51million
4:46:52after the roll in of several writers
4:46:55into rate base. Right.
4:46:57>> Yes.
4:47:00And if we could refer on page 11,
4:47:05you have uh in your settlement testimony
4:47:10and I may have the wrong well page 11
4:47:13and then on the top of page 12
4:47:19and your table
4:47:22your table uh AP APF-1
4:47:27One
4:47:29here you described the settlement
4:47:32capital structure
4:47:35of 5450%
4:47:39equity 4450%
4:47:42long-term debt
4:47:44a cost of long-term debt of 4.55%
4:47:49an ROE of 9.3%
4:47:52and a whack of 7.14%.
4:47:55Is that all correct? Yes.
4:47:59>> And would you would you agree in PiSco's
4:48:03recent 2024 gas raid case that was
4:48:06preceding 24-0049G
4:48:11the commission set public services whack
4:48:14in that case at 7.0%.
4:48:19Uh I would agree that that is what the
4:48:22whack was set at, but I would also note
4:48:24that um that was for the gas utility and
4:48:28uh Miss Balkley can talk to this much
4:48:31more than I can, but that utility has a
4:48:34different risk profile than the electric
4:48:36utility and so it's uh it naturally
4:48:38makes sense that those uh weighted
4:48:41average cost of capital numbers would be
4:48:42different.
4:48:44Uh are you also aware that the uh public
4:48:48service appealed this case to Denver
4:48:50district court and one of the holdings
4:48:53in the de Denver district court case was
4:48:57to affirm the commission's 7.0%
4:49:00whack decision.
4:49:03>> I am aware of that outcome for the gas
4:49:06utility. Yes.
4:49:08>> Okay.
4:49:10Let's uh let's talk for a minute about
4:49:13the two transmission writer revenue
4:49:16requirements
4:49:17and were you listening to the hearing
4:49:20this morning and the chairman's question
4:49:22to Mr. Digle
4:49:25and I think I have that pronunciation
4:49:27right Mr. Digle about the roll in of the
4:49:31two TCA writers into the seven
4:49:34settlement revenue requirement in this
4:49:37rate in base rates in this case.
4:49:40>> Yes, I was I was watching.
4:49:42>> Okay. if we could access uh UCA's box
4:49:48account and hearing exhibit 315.
4:50:10And you will see that this is uh this
4:50:13document I'll represent as Pasco's
4:50:15response to UCA discovery request number
4:50:1949-7.
4:50:22And if we could scroll to the second
4:50:23page,
4:50:25is it correct that you are the sponsor
4:50:27of this response, Mr. Freight?
4:50:30>> Yes.
4:50:32>> I'd move to admit hearing exhibit 315.
4:50:36>> Any objection, Mr. Zmer?
4:50:38No chair blank.
4:50:41to admit it.
4:50:43>> And in particular, let's look at the
4:50:45table here on
4:50:48on page two under uh sub paragraph D and
4:50:54in particular the TCATCA-D
4:50:59roll in.
4:51:01And it shows how this number has changed
4:51:04from direct to rebuttal
4:51:07and that the settlement agreement
4:51:09reflects public services rebuttal case
4:51:13request. Is that right? 16 well roughly
4:51:17$161 million.
4:51:21>> Correct. That's the calculated amount of
4:51:23the roll in based on 2025 actuals.
4:51:26>> Okay. And can you explain
4:51:32the difference between these two
4:51:34writers, the TCA versus the TCA-D?
4:51:41Sure. Uh the TCA is recovering
4:51:45uh transmission capital whereas the TCAD
4:51:50is recovering distribution capital. Um
4:51:54that at a high level that's the
4:51:55difference. Um, if you want me to go
4:51:57into more detail on exactly what is
4:51:59included in either of them, I'm happy
4:52:01to. But I think I'll stop there to see
4:52:03if that's enough.
4:52:04>> Uh, for our purposes, I think that's
4:52:06that's enough. And although Pasco is
4:52:11rolling in the amounts from these two
4:52:13TCA writers,
4:52:16that does not mean these two writers go
4:52:18away. Is that correct?
4:52:21>> Well, the TCAD will go away. um as that
4:52:26was only an interim rider until the GMAC
4:52:30rider took effect in 2026. Um so that
4:52:33TCAD component which is approximately
4:52:37$45 million or so that goes away
4:52:40completely. Um the TCA
4:52:43will still have some assets in it after
4:52:47the roll in. Um but you know it's
4:52:50currently
4:52:53oh $170ish
4:52:57million I think. um that will go down by
4:53:00about $116 million when capital
4:53:06that is currently in the TCA
4:53:09that was placed into service through
4:53:102025. When that capital moves into base
4:53:13rates, it comes out of the TCA. And so
4:53:16what's left in the TCA is essentially
4:53:19capital placed into service after
4:53:22December 31st, 2025.
4:53:24>> Okay.
4:53:25So, help me understand. $161 million is
4:53:31being rolled into base rates, but I
4:53:34think you said $45 million is
4:53:37attributable attributable to the TCA-D
4:53:42writer, which goes away
4:53:45after it's transferred. So, is $161
4:53:49million the correct amount for the
4:53:52rollover since it $45 million's a one
4:53:56time a one-time roll in and the other
4:54:00amount perhaps not. Help help help me
4:54:03understand that.
4:54:05So the 161 million is the correct amount
4:54:10of uh capital both transmission and
4:54:13distribution capital that is currently
4:54:16in riders that is being transferred into
4:54:19base rates. 45 of that is distribution
4:54:23capital and the other 116ish million is
4:54:28transmission capital.
4:54:32>> Okay.
4:54:34If it's going into base rates though and
4:54:36$45 million of it will essentially cease
4:54:40to be necessary but it's still in rate
4:54:42base. How is that eliminated? I I guess
4:54:45that's my my hangup that I'm maybe just
4:54:47not understanding.
4:54:51>> Um
4:54:54well I guess maybe another way to think
4:54:55about it is it's being rolled into base
4:54:59rates but it's being rolled out of those
4:55:01riders. And so the entire amount in TCAD
4:55:09is rolling into base rates. And so um
4:55:14the TCAD is currently collecting about
4:55:16$45 million. And so it goes from 45
4:55:19million to zero because that amount is
4:55:22now in base rates.
4:55:26>> Okay.
4:55:28I may come back to this. I'm I'm still
4:55:30digesting what you're saying. Um so even
4:55:34after the rolling of these revenue
4:55:36requirements, there still would be
4:55:38amounts existing
4:55:40in the existing TCA writers. Correct.
4:55:44>> In the TCA itself. Yes.
4:55:47>> But not in the TCAD as you've explained.
4:55:50Is that right?
4:55:52>> Correct. So the TCA
4:55:54>> or TCAD, I'm sorry.
4:55:56>> Right. TCAD is um collecting
4:56:01capital or recovering capital placed
4:56:03into service in 2024 and 2025. And since
4:56:082025, that's the test year for the base
4:56:10rate case. And so that's why the TCAD
4:56:15goes to zero upon rate effective date
4:56:18from this case because those 2024 and
4:56:212025 capital costs are now in base
4:56:24rates. Does that help?
4:56:27>> Yes.
4:56:29Uh explain uh why is the company rolling
4:56:33in these specific amounts
4:56:37into base rates
4:56:40rather than leave them in the writers.
4:56:44>> I believe that's what the tariff
4:56:45requires is that every time we have a
4:56:47base rate case,
4:56:48>> those amounts get incorporated into base
4:56:50rates.
4:56:51>> Okay.
4:56:53And so the looking at this uh discovery
4:56:57response that we were talking about,
4:57:02the total amount
4:57:05the total amount of the revenue
4:57:08requirement for the TCA revenue
4:57:13is 161 million and that will be what is
4:57:17that is what's covered in the settlement
4:57:20agreement, right?
4:57:24Um the 161 wasn't real clear. Would you
4:57:27like me to rephrase it?
4:57:29>> If you wouldn't mind, please.
4:57:31>> Okay. So So the $161 million of the TCA
4:57:36revenue requirement for the settlement
4:57:38agreement
4:57:40that is the amount we see here in this
4:57:43last column of the table uh on the
4:57:46second row. Correct.
4:57:49>> That that's correct. And let me just
4:57:51note that that is both TCA and TCAD.
4:57:56>> Yeah. And as we already confirmed that
4:57:59was the rebuttal position
4:58:02as well as we can see in that middle uh
4:58:05that middle column uh row uh second row
4:58:08correct.
4:58:10>> Uh that's the amount that existed in
4:58:14rebuttal which is based off of 2025
4:58:17actual capital costs. But let me let me
4:58:19just clarify that um the amounts on that
4:58:23rollin line are not a function of
4:58:26anything of any issue in um in the rate
4:58:31case. That amount you can think of it as
4:58:34that's the amount of capital that is
4:58:37rolling out of the riders
4:58:40using the methodology established for
4:58:43those riders. So whatever happens in the
4:58:46in the uh rate case
4:58:50apart from changing test year which is
4:58:52why you see the difference between 170
4:58:53and 160 million but um you know are we
4:58:57ratebased method none of that stuff
4:58:59impacts that second line because that
4:59:01second line is being calculated based on
4:59:05the rules and the methodology that are
4:59:06established for the riders. And so
4:59:09that's why you don't see a change in the
4:59:12roll in amount between the rebuttal
4:59:14column and the settlement agreement
4:59:16column even though the ROE changed for
4:59:19example.
4:59:20>> Yep. Okay. Can you show us where in your
4:59:25attachment APF25
4:59:29we can find this uh rebuttal amount of
4:59:33the $161
4:59:35million. That was hearing exhibit 134,
4:59:39your attachment APF
4:59:4125.
4:59:44Just trying to track track where this is
4:59:46coming from.
4:59:48Uh so those roll in amounts. Let me step
4:59:50back for a second. Uh attachment APF 25
4:59:54is providing the revenue requirement for
4:59:57all capital in calendar year 2025. Those
5:00:02TCA rollin amounts are just a subset.
5:00:05And so it is not specifically broken
5:00:08out. Um the amounts were actually
5:00:11presented in rebuttal in attachment
5:00:15I believe it was APF26
5:00:19that the rolling amounts were were
5:00:21presented based on 2025 actuals.
5:00:27>> Okay.
5:00:32Um,
5:00:34let's look at your rebuttal testimony
5:00:36for a moment.
5:00:38Uh, that's hearing exhibit 134
5:00:43and at page 12, line 19 through page 13,
5:00:49line two,
5:00:52and in particular your footnote 13. On
5:00:56the bottom of page 13
5:00:59[snorts] here, you indicate the whack
5:01:01percentage used for the $161 million
5:01:05total revenue requirement for your
5:01:08rebuttal revenue requirement was 7.44%.
5:01:12Correct.
5:01:14>> Yes.
5:01:15>> And was this 7.44%
5:01:19whack applied to the two TCA rollins?
5:01:24>> No. As I mentioned a couple minutes ago,
5:01:28um the rollin amounts are calculated
5:01:32based off of the methodology
5:01:35um and inputs to the riders themselves.
5:01:39So currently because um the roe and the
5:01:43whack from this case haven't been
5:01:45approved yet, the roe and whack that the
5:01:48TCA is using is still based off of the
5:01:522022 case. And so that for the TCA
5:01:56specifically, the $116 million, which
5:01:59is, you know, TCA's portion of the 160,
5:02:03that is being calculated based off of
5:02:06the uh 93 ROE that was established in
5:02:10the 2022 case.
5:02:14And so that's what I meant when I
5:02:15mentioned earlier that um nothing in
5:02:18this rate case impacts the amounts that
5:02:22show up on that rider roll in line
5:02:24because that line is being calculated
5:02:27based off of the methodology established
5:02:29in the tariff for the riders
5:02:33>> and and uh I think you just mentioned
5:02:35the roe in the uh 2022 case was 9.3%
5:02:40correct?
5:02:42>> Yes. And do you recall the whack? It
5:02:45seems to me it was like 6.95%
5:02:48but I might be wrong on that.
5:02:50>> Um I don't recall what it was from the
5:02:53last case but I I will mention that the
5:02:56um the methodology for the TCA uses um
5:03:01actual cost of debt. It uses the the
5:03:04last authorized return on equity in the
5:03:07calculation of the whack, but it uses
5:03:08actual capital structure and uh actual
5:03:12cost of debt. So there could be some
5:03:15differences between the whack that was
5:03:16established in the 2022 case and the
5:03:20whack that is used in the TCA
5:03:24because of of changes in capital
5:03:26structure and cost of debt, but the ROE
5:03:28will be the same.
5:03:31>> Okay.
5:03:33Uh if we could go back to the uh hearing
5:03:36exhibit uh 315
5:03:40in the table we were looking at on page
5:03:42uh two. [clears throat] Can you explain
5:03:46the difference uh between the
5:03:51TCA and TCAD roll in amount for direct
5:03:54at 170.5
5:03:58million approximately versus the
5:04:00rebuttal and settlement agreement uh
5:04:03number which is roughly say $9 million
5:04:08less or a little over $9 million.
5:04:11>> Sure. Um so if if you recall the direct
5:04:15case was filed in late November of 2025
5:04:20and at that point in time um the amount
5:04:24of TCA of the TCA particularly that was
5:04:28uh on customer bills was based on
5:04:31forecasted information uh for 2025.
5:04:36>> And so that's what's represented in the
5:04:38$170 million amount. Um but in rebuttal
5:04:42uh when we updated to actuals for
5:04:45calendar year 2025
5:04:47uh I recalculated the values of the TCA
5:04:50based on actual 2025 capital uh amounts
5:04:55and that that's what accounts for the
5:04:57difference is that uh moving from the
5:05:00forecasted amount in the TCA as of uh
5:05:04November of 25 to actual capital
5:05:07expenditures or capital plant balances.
5:05:10is in um the actual year and rebuttal in
5:05:122025.
5:05:14>> Okay. So, the difference uh ju just to
5:05:17make sure I'm on the same page as you,
5:05:19the difference of roughly $9.5 million
5:05:22is going from forecasted numbers to
5:05:25actual numbers.
5:05:26>> That's correct.
5:05:28>> Okay.
5:05:29Thank you. Uh if we could look at the
5:05:32settlement agreement itself here in
5:05:34exhibit 155.
5:05:47And here on page uh 31
5:05:56in paragraph uh 52 the the discussion of
5:06:01the gain on sales of depreciable and
5:06:04non-epreishable property is is set out.
5:06:09And in paragraph 54 in particular,
5:06:12there's an agreement that the company
5:06:14shall credit $9.35 million
5:06:18for the gain on the mineral rights sold.
5:06:21Is that correct?
5:06:22>> Yes.
5:06:24>> And the language states gain on sale and
5:06:28net and not net gain on sale. Is that
5:06:32correct?
5:06:39>> Uh, it says 50% of the gain on mineral
5:06:42rights sold.
5:06:44>> Okay. Uh, were you listening to my uh
5:06:48questions to Mr. Pay yesterday on this
5:06:50topic?
5:06:52>> Uh, yes.
5:06:54>> And did you hear Mr. Pay mentioned
5:06:56subtractions from the sales price for
5:07:00fees or he may have used the phrase
5:07:02transaction fees. Do you recall that?
5:07:05>> Yes.
5:07:06>> And do you know what those fees were or
5:07:09were there any fees?
5:07:11>> Um I believe there were some. I don't
5:07:14know what they are, but I I think they
5:07:17might have been included in a discovery
5:07:18response provided.
5:07:21I know that there were some discovery
5:07:22responses that were provided on um the
5:07:26sales price.
5:07:27>> Okay.
5:07:29>> Is it your understanding that this $9.35
5:07:33million gain on sale does not include
5:07:38any subtractions from for the fees or
5:07:41transaction fees?
5:07:43>> My understanding is that is net of
5:07:46transaction fees.
5:07:48>> Okay.
5:07:50So
5:07:53this agreement to share or credit $9.35
5:07:56million for the gain on the mineral
5:07:58rights sold represents 50% of the gain.
5:08:03Is that correct?
5:08:06>> Yes.
5:08:08>> And so this amount represents a 50%
5:08:11share with rateayers. Correct.
5:08:14>> That's correct.
5:08:17Do you know did PES Pasco did not
5:08:20allocate any cost to the mineral rights
5:08:23when it bought the Fort St. Frain land?
5:08:26Is that correct?
5:08:28>> That's my understanding.
5:08:31>> So with a Z
5:08:34cost basis, the gain on sale was 100% of
5:08:38the sales price. Correct.
5:08:41>> A net of transaction fees.
5:08:43>> Yeah. And if we look at $9.35
5:08:47million as being 50%,
5:08:51then multiplying that by two, the sale
5:08:53price, the gain on sale was $18.7
5:08:57million. Is that right?
5:09:00>> I would agree with that math. Yes.
5:09:02>> Yeah. So, the sale price of the mineral
5:09:07estate associated with the Fort St. Rain
5:09:11land was about $18.7 million.
5:09:16Agree?
5:09:18>> Approximately. I'm not sure how much the
5:09:20transaction fees were, but um the sales
5:09:23price would have been the 18.7 plus
5:09:26transaction fees.
5:09:28>> Okay.
5:09:30And as I reviewed your settlement
5:09:33testimony, this is hearing exhibit 154.
5:09:36I did not see any mention of the gain on
5:09:39mineral rights sharing or the credit in
5:09:42the amount of $9.35 million. Am I right
5:09:46or did I miss did I miss that
5:09:48discussion?
5:09:50Uh you're correct that it's not in my
5:09:52settlement testimony because as the part
5:09:56A indicates here uh this is being
5:09:58returned through the ECA and my
5:10:01settlement testimony is specific to base
5:10:04rates and the cost of the base rate cost
5:10:06of service. So those are two separate
5:10:08things.
5:10:10>> Okay. So the if you recall when we were
5:10:13looking at your testimony and I don't
5:10:15think we need to go to this to see it on
5:10:19uh
5:10:20page eight you listed 12 adjustments to
5:10:24the settlement test year revenue
5:10:27requirement and this obviously is not
5:10:30one of them. Is that correct?
5:10:32>> That's correct.
5:10:35So,
5:10:41was there a specific reason why it
5:10:44wasn't discussed in your settlement
5:10:46testimony?
5:10:48>> Uh, my settlement testimony is uh
5:10:52specific to base rates.
5:10:53>> Okay.
5:10:54>> And uh since this is not a base rate
5:10:56item, it's going through the ECA. There
5:10:59was it doesn't impact the cost of
5:11:00service and so there was no reason for
5:11:02me to talk about it. Okay. Okay. U were
5:11:07you listening to Commissioner Gilman's
5:11:10questions to Ms. McCone about the Golden
5:11:14Service Center land uh earlier this
5:11:17morning?
5:11:18>> I was. Yes.
5:11:21>> Uh Mr. Frightis, is it your
5:11:23understanding that the Golden Service
5:11:25Center sale included two buildings and
5:11:28the land?
5:11:31That is my understanding based on Miss
5:11:33Mcome's testimony.
5:11:34>> Okay. And the land is a non-depreishable
5:11:37asset. Is that correct?
5:11:40>> That's correct.
5:11:42>> And the land since its purchase has been
5:11:45included in rate base. Is that correct?
5:11:48>> That's correct.
5:11:50>> Okay. So, Miss McCon's response to
5:11:53Commissioner Gilman this morning on
5:11:56whether the land was in rate base and
5:11:59she said it was not. Uh, that was not
5:12:02correct. Is that right?
5:12:05>> I believe she misspoke. Uh, land is in
5:12:08rate base.
5:12:10>> Okay. Thank you for that clarification.
5:12:14Um staying with the settlement agreement
5:12:17and um
5:12:21let's go to page 15
5:12:25paragraph 25.
5:12:40And here there is in paragraph 25 there
5:12:44is an agreement to exclude oil and gas
5:12:47royalty revenues from the calculation of
5:12:50present revenues. Is that correct?
5:12:52>> That's correct.
5:12:55>> And these royalty revenues were for the
5:12:59Fort St. Fra mineral rights. Is that
5:13:01correct?
5:13:03>> They were for all producing mineral
5:13:05rights, not just the ones that are from
5:13:08uh land around Fort St. training.
5:13:11>> Okay.
5:13:13Um,
5:13:15thank you for that u for that uh
5:13:18explanation.
5:13:20U these royalty revenues were originally
5:13:23in Piasco's direct case revenue
5:13:25requirement in your attachment APF1
5:13:29in the approximate amount of $5.6
5:13:32million. Is that correct?
5:13:34>> That's correct.
5:13:36>> And that $5.6 $6 million represented 50%
5:13:41of the total net royalty revenues from
5:13:45the Fort St. Fra mineral estate. Is that
5:13:47correct?
5:13:49>> That was 50% of the royalty revenues
5:13:53received for all producing
5:13:55uh royalties, all producing wells
5:13:57regardless of parcel of land.
5:14:00>> Okay.
5:14:00>> And I will note also that is for the 12
5:14:04months ended June of 2025.
5:14:07Okay. So, it's it's not actuals for all
5:14:11of 2025. Is that right?
5:14:14>> That's correct.
5:14:15>> Okay. And a a couple of times in your
5:14:18last u responses,
5:14:21you've indicated this was for all
5:14:25royalties for all all properties. Which
5:14:30other properties are you referring to
5:14:31besides Fort St. Fra?
5:14:35I I don't know specifically where the
5:14:37other um properties are, but I know that
5:14:40the royalty amounts are all royalties
5:14:44received by public service, not specific
5:14:48to any one parcel of land. I'm not sure
5:14:51where the other ones are, but they're
5:14:53included.
5:14:54>> Okay.
5:14:57[clears throat and cough]
5:14:59Okay. So, we we talked about this $5.6 6
5:15:02million and it representing 50% of the
5:15:06total royalty revenues and that was
5:15:09included as other revenue in your direct
5:15:13case revenue requirement attachment
5:15:15APF1. Is that correct?
5:15:18>> Yes.
5:15:21>> And that 50% amount decreases the 2025
5:15:26test year revenue deficiency. Is that
5:15:28correct?
5:15:29>> That's correct.
5:15:31So 100% of that amount of $5.6 million
5:15:37would be $11.2 million. Correct?
5:15:41>> Yes.
5:15:43>> So is is the amount of $1.2 million of
5:15:48royalty revenues
5:15:50just for 2025,
5:15:53in other words, actual and just for
5:15:562025.
5:15:58That would be actual for the 12 months
5:16:00ended June of 2025. So July 24 through
5:16:04June of 25.
5:16:08So do do you know uh what the amount of
5:16:11royalty revenues for the actual
5:16:16test year 2025 for the full year ending
5:16:19December 31, 2025.
5:16:22What that royalty amount was?
5:16:25Uh the
5:16:27amount shared with customers would have
5:16:30been about 5.4 million. So double that.
5:16:34Was that 9 five 10.8?
5:16:38>> Uh 10.8 million. Okay.
5:16:40>> Yeah.
5:16:41And and where is that reflected in the
5:16:45uh in either your rebuttal case or your
5:16:50or your uh settlement testimony and the
5:16:54settlement revenue requirement?
5:16:56>> Well, it's not because the um the
5:16:59royalties were sold and so that revenue
5:17:02is no longer being received by public
5:17:05service and so it's no longer an ongoing
5:17:07revenue stream. And I explained that in
5:17:10my second supplemental direct, I
5:17:11believe.
5:17:12>> Okay.
5:17:13So, I'm glad you went there because that
5:17:16was really leading into my next
5:17:18question, and that is PiSco sold its
5:17:21mineral rights for a one-time amount of
5:17:23about $18.7 million. Correct.
5:17:28>> That's my understanding. Yes. And by
5:17:31doing this on a going forward basis, the
5:17:34company will not have annual revenue
5:17:36requirements
5:17:38such as it received in 2025. Is that
5:17:41correct?
5:17:43>> Those uh mineral rights have been sold.
5:17:45Yes.
5:17:47>> Can you explain what motivated
5:17:49[clears throat] the company to sell the
5:17:53Fort St. Frame Mineral Estate, which
5:17:55produced about $1.2 2 million per year
5:17:59in royalties for a one-time amount of
5:18:03$18.7 million.
5:18:06>> I cannot I was not part of that
5:18:07transaction or the the decision making
5:18:10behind that transaction. Um my
5:18:13involvement began when uh the royalty
5:18:16revenues ended and I needed to remove
5:18:18them from the cost of service.
5:18:21>> Okay.
5:18:23U if we could go to your second
5:18:25supplemental direct testimony. This is
5:18:27hearing exhibit 131.
5:18:39And if we could go to page seven
5:18:45and at lines four through 15
5:18:50here and I believe it was the first time
5:18:53and this is in your second supplemental
5:18:55direct testimony.
5:18:56You mentioned that you had excluded the
5:18:5950% share of royalty revenues due to the
5:19:02sale of the Fort Zrain mineral rights.
5:19:05Is this correct?
5:19:12Uh, I would make a clarification that
5:19:14it's all the mineral rights, not just
5:19:17Fort St. Brain.
5:19:18>> Okay. Would you agree? Uh, you've
5:19:21mentioned that uh several times. Would
5:19:23you agree with me? I I know you've said
5:19:26that you don't know what the other
5:19:29mineral rights necessarily are, but is
5:19:31it your understanding that Fort St.
5:19:34grain mineral right revenue was the
5:19:36largest
5:19:38percentage or portion of of those annual
5:19:41mineral rights.
5:19:44That's my understanding. I don't know
5:19:46exactly how big it was of the total but
5:19:49um
5:19:51some portion of of it the majority I
5:19:54guess uh is from property around the
5:19:58Fort St. Fra uh unit.
5:20:01>> Okay, that that that's helpful. And and
5:20:04so you're saying that uh after that
5:20:07explanation that here in your second
5:20:10supplemental direct testimony, you
5:20:13excluded the 50% royalty revenue share
5:20:16with uh customers
5:20:19in that uh testimony. Is that right?
5:20:23>> Correct.
5:20:24And your supplemental your second
5:20:27supplemental direct testimony was filed
5:20:30March 24th of 2026.
5:20:33Is that right? And if we need to, we
5:20:35could go to the first page of the
5:20:37testimony.
5:20:40>> Second supplemental or first? I'm sorry,
5:20:42which one?
5:20:42>> The second supplemental testimony.
5:20:45Second supplemental direct testimony.
5:20:48>> Right. Um
5:20:50I think that's right. If we want to just
5:20:52jump to the first page, confirm that.
5:21:00>> Yep. March 24th. Yes.
5:21:03>> Okay. Thank you. And um
5:21:07on page seven, you indicate
5:21:11that you remove this 50% share amount
5:21:14because these royalty revenues will no
5:21:16longer be received on a going forward
5:21:19basis with respect to such conveyed
5:21:22mineral interests. Is that correct?
5:21:24>> Yes.
5:21:27Now moving to your
5:21:30your rebuttal testimony which is which
5:21:34is uh hearing exhibit 134
5:21:39and on page 56
5:21:45at lines 9 through 11.
5:21:54Here you repeat that the remove 50% of
5:21:57royalty revenues
5:22:00uh that you remove the 50% royalty
5:22:03revenues because the company will no
5:22:05longer receive associated revenue. So
5:22:08there's nothing to credit on a going
5:22:10forward basis. Is that correct?
5:22:13>> Correct.
5:22:15>> And this rebuttal testimony was p was
5:22:18filed on May 20th,
5:22:202026
5:22:22about three weeks ago. Is that right?
5:22:24>> Is that right?
5:22:25>> Yes.
5:22:28>> But is it correct the company did
5:22:30continue to receive royalty revenue
5:22:32beyond December 31,
5:22:352025 and into 2026.
5:22:41>> Um that is correct. But my understanding
5:22:44is that um the terms of the contract are
5:22:47that uh any revenues received after
5:22:52um a specific point established in the
5:22:55contract uh those revenues belonged to
5:22:58the purchaser of those rights. And so um
5:23:01as part of the settlement of this whole
5:23:03transaction uh that accounting was done
5:23:05and those revenues were were conveyed to
5:23:08the buyers and they were not uh kept by
5:23:11public service.
5:23:14So, if I understand you, in addition to
5:23:17the one-time sale for the $18.3
5:23:21million,
5:23:23uh, the sale also included giving any
5:23:26future future mineral right revenue as
5:23:30of the date of the sale to the purchaser
5:23:33of the mineral rights.
5:23:37Um, I would [sighs] maybe phrase it as
5:23:42the
5:23:44sale of the mineral rights established a
5:23:48point in time [clears throat]
5:23:51where the purchaser had uh claim on the
5:23:56mineral rights, not public service.
5:23:58>> Yeah.
5:24:02>> Okay.
5:24:02>> Mr. Mr. Bunker, just so you know, you're
5:24:05about uh an hour uh and five or 10
5:24:08minutes in. I know you had some reserve
5:24:10time, but just a gentle uh reminder.
5:24:15>> Thank you. I am getting very close to
5:24:18being finished and uh I appreciate um
5:24:21another uh probably five five minutes
5:24:25and I I know we waved some time earlier,
5:24:27so I appreciate that. Thank you, Mr.
5:24:29Chairman.
5:24:31Um,
5:24:33the mineral rights sold, and I'm I'm
5:24:36scrolling back through my notes now as
5:24:38as we talked. The mineral rights were
5:24:40sold uh for
5:24:44what total dollar amount?
5:24:48>> I don't recall, but I can't remember
5:24:50what the transaction costs were. I
5:24:53believe that was provided in a discovery
5:24:55response, though. Yeah, I I I think we
5:24:58uh as I scrolled as we were talking
5:25:00here, I think it was $18.7 million plus
5:25:04transaction costs, right?
5:25:07>> I think based on the um amount of the,
5:25:10you know, taking the gain that is in the
5:25:13settlement agreement, multiplying it by
5:25:14two gets the total gain and then we add
5:25:17the transaction costs back. Um yes.
5:25:22>> Okay. But um that's I can't recall what
5:25:26the the other transaction settlement
5:25:28costs are.
5:25:29>> Okay. Do you know if the company if
5:25:33Pasco
5:25:35retained kept for itself [snorts]
5:25:38100% of the gain on sale?
5:25:45>> Uh according to the settlement
5:25:46agreement, we're providing 50% of that
5:25:49to customers. Okay.
5:25:50>> Through the ECA. Okay.
5:25:55Um,
5:25:56were you listening this morning to Miss
5:25:58Singer Nelson's questions to Ms. McCome?
5:26:03>> Yes.
5:26:04>> And would you agree there were a number
5:26:06of questions on deferrals and regulatory
5:26:08assets and regulatory liabilities?
5:26:12>> Yes.
5:26:14>> And would you uh would the company agree
5:26:18to put this $5.6 $6 million that was
5:26:22originally in the direct case revenue
5:26:24requirement
5:26:26and then took it out in subsequent
5:26:28revenue requirements
5:26:31into a deferral or a regulatory
5:26:34liability to be advertised over five
5:26:36years to benefit rateayers.
5:26:40>> Uh which 5.6 million are you referring
5:26:42to, Mr. Bunker?
5:26:44>> The uh the Fort St. rain um
5:26:50royalty amount
5:26:54>> from the direct case, the amount that
5:26:56was included in APF1. Um that amount was
5:27:00not a regulatory asset. That was
5:27:03>> revenue that was received by the company
5:27:05that it is no longer receiving.
5:27:10>> Right. And would you uh would you agree
5:27:12to put that in a deferral or a
5:27:14regulatory liability?
5:27:16Uh, no. That is no longer revenue the
5:27:18company's receiving.
5:27:21>> Okay.
5:27:28With that, Mr. Freightus. Thank you. And
5:27:30Mr. Chairman, I have no further
5:27:32questions.
5:27:33>> Thank you, Mr. Bunker. Is it Fritus or
5:27:35Fridus? I
5:27:37>> It's actually Freighus.
5:27:39>> Freighus. So, it's not an E, it's not an
5:27:41I. It's a a long a
5:27:44like neighbor. afraid neighbor that that
5:27:49>> I'm sure I'll forget. Uh but uh Mr.
5:27:51Kaufman,
5:27:53>> thank you.
5:27:54>> 30 minutes, but you've waved cross so
5:27:56you're good.
5:27:57>> Okay. I I don't think I'll take that
5:27:59long. Uh uh Mr. Freighus. Uh my name is
5:28:02John Kaufman. I represent AARP and um
5:28:07>> Mr. Kaufman.
5:28:08>> How are you?
5:28:09>> I'm fine. How are you?
5:28:10>> I'm fine. I just wanted to uh first ask
5:28:13some questions about the um uh the
5:28:1513month average versus endofear
5:28:18ratebased issue and um uh and try to put
5:28:23it in context. Now, and I understand
5:28:26from your testimony and from your
5:28:27discussion with Mr. Bunker that uh this
5:28:29is a a $60.6
5:28:32million issue, right, between between um
5:28:35our parties.
5:28:37>> That's correct.
5:28:39And so that seems like a material amount
5:28:41of money. And so I it was trying to put
5:28:43it in context what that meant for the
5:28:46average household, but I didn't want to
5:28:48trust my lawyer math. So would you would
5:28:50you help me kind of uh try to understand
5:28:52the the impact here? Um by um so if it's
5:28:57if if it's a revenue requirement issue
5:28:59of $60.6 $6 million. And um uh you um
5:29:06uh is would you would you agree that
5:29:09you're uh the the residential portion of
5:29:11that revenue for the utility company is
5:29:14about 36%.
5:29:16Company's revenue.
5:29:18>> I'm not familiar with the breakdown of
5:29:21um our our customers. Um my my role is
5:29:26total revenue requirement. Um okay. the
5:29:29folks who work on the rates, they they
5:29:31can explain how that gets allocated the
5:29:33classes much better than I can.
5:29:35>> So, do you know how many residential
5:29:36customers um are served by Excel PSGO in
5:29:41Colorado?
5:29:44>> I believe um someone earlier today or
5:29:48maybe yesterday said that there was 1.5
5:29:51million residential and small commercial
5:29:54customers. Maybe
5:29:55>> I mean I saw a number a little higher,
5:29:561.6 6 million. But just just given that
5:30:00ballpark, would you be surprised if if
5:30:02this issue would wouldn't be worth $13.5
5:30:05per household per year?
5:30:10Uh well, it would be
5:30:14on average, you know, this is assuming
5:30:18um every customer is identical to every
5:30:21other customer. um 60 million divided by
5:30:261.6 million whatever that number is is
5:30:30on average the
5:30:32>> total annual impact and then divide that
5:30:34by 12 for a monthly impact I guess.
5:30:37>> Well uh you AP has asked me to kind of
5:30:39look at this from the residential
5:30:40perspective. So you still have to take
5:30:42just a residential portion of that of
5:30:43the race right because this issue
5:30:46impacts large customers and small
5:30:47customers just on an equal percentage
5:30:49basis right that's how this The revenue
5:30:52requirement is is all customers. Yes.
5:30:55>> But uh does uh does $13 seem like a lot
5:30:58of money for a family to pay each year
5:31:00based on the you know which way the
5:31:01commission goes on this policy decision.
5:31:05>> I guess it depends on the family,
5:31:07>> right?
5:31:08>> I don't know that could answer that way
5:31:10or the other. So I found your your
5:31:12testimony interesting and in you know
5:31:14rebuttal you went through a lot of prior
5:31:15cases uh that went different ways and uh
5:31:19you gave a lot of reasons why you
5:31:21thought it was more fair to the utility
5:31:22company right about the timing of
5:31:25recovery of costs and inflation
5:31:28and um but I'm wondering are there any
5:31:30issues any arguments that you put forth
5:31:33in in all that testimony that dealt with
5:31:36how this would somehow benefit
5:31:38customers?
5:31:41my my arguments in my rebuttal testimony
5:31:45are around rate making.
5:31:47>> That's that's my role. And so um I
5:31:51advocate for year-end rate base um based
5:31:55on ratem principles and particularly
5:31:59creating a test year that is
5:32:01representative of the level of costs
5:32:03that are expected during the time that
5:32:05rates are in effect. So that's that's my
5:32:09perspective
5:32:10uh in my arguments in my rebuttal
5:32:12testimony
5:32:13>> and u regardless of how the commission
5:32:16uh votes on this issue uh to to like
5:32:19keep the 13-month average or do the the
5:32:21the end of test year as you propose um
5:32:24the quality of service that the average
5:32:26household receives in their from their
5:32:27electric company is going to be about
5:32:28the same right it's not going to change
5:32:31the quality of service or reliability
5:32:36>> I don't know that I'm the right person
5:32:38to answer call your service uh issues.
5:32:41I'm the the ratem expert. Mhm. Well, and
5:32:45so I I do understand your arguments
5:32:48about timing and and how it might be,
5:32:50you know, more fair from a um you know,
5:32:53regulatory lag perspective or whatever,
5:32:56but I I I'm focused on do you think that
5:32:59this regulatory change uh no matter how
5:33:02the commission votes on this would
5:33:04somehow send an incentive to the utility
5:33:08about how it operates the electric
5:33:10utility?
5:33:11you think it matters as to how the
5:33:14utility um manages its operations?
5:33:18>> Uh well, let me just clarify first that
5:33:21um maintaining a year-end rate base
5:33:24would not be a change. That was what was
5:33:26established in the 22 case. Um
5:33:30so with that said,
5:33:31>> I mean that was that was a settle
5:33:33settled case, right?
5:33:35>> Just like this one. Yes.
5:33:36>> But but a unanimously settled case,
5:33:38wasn't it?
5:33:41believe it was unanimous
5:33:42non-comprehensive if I remember
5:33:44correctly.
5:33:45>> Okay. Right. Right. Um anyways um
5:33:50but uh let me ask it this way. If um
5:33:55uh the no matter which way the
5:33:57commission votes on this, the same
5:33:59assets will be dedicated to public
5:34:01service, right?
5:34:04It's just they're just the same.
5:34:06>> Yeah. Sorry.
5:34:07>> Yeah. Let me maybe phrase it this way
5:34:09that um the same assets are being used
5:34:13to serve customers regardless of how
5:34:15those assets are valued in rate base.
5:34:18>> Right. So at the end of the day it's
5:34:19just sort of an accounting decision by
5:34:22the regulator. Would that be fair?
5:34:25>> Uh it's a ratemaking decision really.
5:34:28>> Right.
5:34:30Um anyway, um I think I think that's
5:34:33that's all I wanted to ask you about and
5:34:35I'll just yield the rest of my time. U
5:34:38appreciate talking to you.
5:34:40>> Thank you, Mr. Kaufman.
5:34:43Um Commissioner Plant, I think Core Wave
5:34:47Cross. Commissioner Plant, questions for
5:34:49Mr. uh Freighus.
5:34:51>> I do not have any questions.
5:34:53>> Uh Commissioner Gilman, questions for
5:34:55Mr. Freighus. I think you do.
5:34:58>> Yeah, I do. Um, good afternoon, Mr.
5:35:00Freighus.
5:35:01>> Good afternoon, Commissioner.
5:35:03>> I'm not sure I followed you on the
5:35:04neighbor link with your name, but we'll
5:35:07we'll do more math than phonics, so
5:35:11that's a good thing.
5:35:12>> Yeah. So, the the EI in neighbor has the
5:35:15same sound as the EI in my last name.
5:35:18That's that's the
5:35:19>> Okay. All right. I was trying to quickly
5:35:21do the I was like, I'm not getting
5:35:22there. I'll just I'll move on thinking
5:35:25through other things. Um anyway. Okay.
5:35:28Um I want to ask about a few tax issues
5:35:32first. So to do this I wanted to use uh
5:35:35APF 29 which service
5:35:39>> study that you submitted as part of the
5:35:41settlement agreement. Does that make
5:35:43sense?
5:35:44>> Yep.
5:35:45>> Um and I want to look at a few locations
5:35:48in here but just from my understanding I
5:35:50think you submitted you know at least
5:35:52three versions of this from direct to
5:35:54rebuttal to the settlement. Um, as I
5:35:57understand it, like the mechanics and
5:35:59what each thing is doing should be the
5:36:01same independent of the version. It's
5:36:04just some of the assumptions about what
5:36:05is in, what is out, treatment of certain
5:36:07things may change, right?
5:36:09>> For the most part, yes.
5:36:11>> Okay, got it. Um, let me know if you see
5:36:14something that might work differently in
5:36:16a different version, but I just kind of
5:36:18assume this discussion generally works
5:36:21for most of those. Um so if we can start
5:36:24with the second tab which is the O1
5:36:27revenue requirement.
5:36:29>> Yes.
5:36:29>> Um I just want to get a kind of a firmer
5:36:33understanding from you if we scroll down
5:36:35just a little online. Um
5:36:40uh scroll down just touch more. Thanks.
5:36:44Um it's your line 23 documents line 29.
5:36:50Mostly I'll refer to the Excel um
5:36:53there's two Excels here, the Microsoft
5:36:56product excels um line number just to
5:36:59keep us straight. Um so on that line we
5:37:02see the gross up factor of 132.41%.
5:37:07>> Can you talk me through at a pretty high
5:37:10level the mechanics of what that's doing
5:37:13and why here?
5:37:14>> Sure. Um
5:37:18so if you think about at a high level
5:37:21and just conceptually
5:37:23what a revenue requirement is, you can
5:37:26think of it almost as like an upside
5:37:28down income statement. So if you think
5:37:31about what an income statement is, you
5:37:32start at the top with revenue and then
5:37:34you have your expenses and you subtract
5:37:36them and you come down to um net income.
5:37:39And in there there's uh you know you
5:37:41calculate so you take your revenues and
5:37:43you subtract off um your operating
5:37:46expenses and you come up with an
5:37:48operating income number and then that's
5:37:50the number that you have to pay taxes on
5:37:51income taxes on. Right? That's so far
5:37:54we're we're kind of all on the same
5:37:55page. Um and so
5:37:59what this gross up factor is doing is
5:38:04acknowledging the fact that the income
5:38:08tax amount that is being calculated on
5:38:11the row just above so on Excel row 28
5:38:15the 125 million
5:38:18>> um
5:38:20that number is
5:38:22it's it's turning that number into a
5:38:27revenue number acknowledging the fact
5:38:29that so that $166 million
5:38:34after it goes through rates and gets
5:38:36paid by customers, it turns into revenue
5:38:38on the income statement. And so so it
5:38:39shows up on that top line. And so the
5:38:43company is going to have to pay income
5:38:45tax expense on that revenue. And so what
5:38:49that gross up factor is doing is
5:38:53essentially
5:38:55incorporating into
5:38:58the
5:39:00tax amount
5:39:03the income taxes that get paid on that
5:39:06line item. And so this this is a little
5:39:08bit different than say like O andM or
5:39:12other expenses because um
5:39:17so let's just take property tax expense
5:39:19for example. So property tax expense
5:39:22exists is as an expense item in the
5:39:25revenue requirement and it would be in
5:39:28um
5:39:30row 32. So that $1.6 billion part of
5:39:35that number is property tax expense. So
5:39:38that property tax expense is exists as
5:39:40an expense but it also after it gets
5:39:44turned into revenue through the ratem
5:39:47process exists in revenue as well. And
5:39:50so when you have revenue minus expenses
5:39:53equals zero there's no income tax effect
5:39:56to it. But that same um that same
5:40:01situation doesn't exist for the um
5:40:06income tax item on Excel row 28 because
5:40:09that is a calculation that's like a
5:40:11fallout of um of the net operating
5:40:15income. And so income tax expense gets
5:40:19built into the revenue line item, but
5:40:22there's no there's not an offsetting
5:40:24operating expense called income taxes
5:40:27because that's derived on the income
5:40:29statement. And so without that tax gross
5:40:33up,
5:40:34there would be insufficient revenue to
5:40:37pay for the
5:40:40um income taxes
5:40:43on that revenue due to the tax component
5:40:47of return. Is that it's a little bit
5:40:49sort of circular, but does that make
5:40:50sense?
5:40:51>> I think so. Yes. And I I've been working
5:40:53on this in in my spare time trying to
5:40:55figure it out. So um so basically the
5:40:58premise is that part of the company's
5:41:00revenue requirement in other words
5:41:02customers pay for the income tax that
5:41:07the company will pay as a result of its
5:41:09revenues.
5:41:12>> Right. Yes. And then
5:41:14>> because that looks like more revenue
5:41:16because you're collecting from customers
5:41:18the amount of your income taxes or your
5:41:22um calculated income taxes I guess I
5:41:25would say. um you add a little more to
5:41:29make sure that they pay for the income
5:41:32taxes as well as any tax on the revenue
5:41:34to pay the taxes.
5:41:36>> You got it.
5:41:38>> Okay. Okay. I was m I was making sure I
5:41:41had it right. I understood because at
5:41:42first this one really baffled me but I
5:41:44taken some time to work through wanted
5:41:46to make sure
5:41:47>> that is not a simple concept in revenue
5:41:49requirements
5:41:50>> of the right understanding. Okay. Um,
5:41:53can we turn to 200,
5:41:56which is a few over?
5:42:01Perfect. Thank you. Um, and I think you
5:42:05noticed I had let Miss Crane know I
5:42:06would kind of bounce back and forth
5:42:07between 200 and 001. So, I think she
5:42:10just put them side by side just to make
5:42:12this maneuvering a little easier. It's
5:42:14the same document. Um so um on Excel
5:42:21line 68 here
5:42:24we've got um
5:42:30uh the earnings before interest and
5:42:32taxes.
5:42:33You see that?
5:42:34>> Yes.
5:42:36>> And then the interest deduction a few
5:42:39lines below that. And then we've got a
5:42:42whole section of schedule M's as we go
5:42:45down um with the total of those on Excel
5:42:48line 145.
5:42:51>> Yes.
5:42:52>> Okay. Um so you talked in your direct
5:42:55testimony about timing differences um
5:42:59and frequently that being related to
5:43:01accelerated tax depreciation. And so to
5:43:04my understanding that's what these
5:43:05schedule M are doing, right? Like
5:43:07basically if you get accelerated
5:43:09depreciation
5:43:11um from a tax perspective the tax
5:43:14depreciation treatment will be pretty
5:43:16different than your accounting
5:43:19depreciation treatment. Is that
5:43:21generally what's going on here?
5:43:23>> Yes, that's correct. Um timing
5:43:25differences in schedule M's are often
5:43:27used uh interchangeably. I think it's
5:43:30schedule M of the federal tax form is is
5:43:34where that comes from.
5:43:36>> Okay. Um, and this is pretty
5:43:38substantial. I mean, if we go down to
5:43:40line 145 on the Excel, we're talking
5:43:43about $220 million on an annual basis,
5:43:47right, of this this timing mismatch.
5:43:52>> Um,
5:43:54yes, a couple things though. Um, so
5:43:57these timing differences are um they're
5:44:00pre-tax numbers and so um they they look
5:44:05very large but um they actually get only
5:44:10used inside of the tax calculation
5:44:12itself.
5:44:13And the second thing is depending on
5:44:17what type of a timing differences it is.
5:44:20So there's two types at a high level.
5:44:22There's temporary and permanent. Um in
5:44:26and the vast majority of our timing
5:44:28differences are temporary timing
5:44:30differences. Um as those are mostly the
5:44:33result of tax depreciation versus book
5:44:36depreciation. Um
5:44:39temporary timing differences are offset
5:44:43pretty much dollar for dollar with
5:44:45deferred tax expense which is this next
5:44:47category a little bit further down. And
5:44:50so um they just look
5:44:54different because um a timing difference
5:44:56is on a pre-tax basis whereas a deferred
5:44:59tax expense is a post tax basis. And
5:45:02what I mean by when I say that is um you
5:45:06can derive the deferred tax expense
5:45:09amount by taking your time your
5:45:11temporary timing difference and
5:45:13multiplying it by the tax rate times
5:45:16times negative 1. And so that's how it
5:45:18it in the in the in the sense of a Revan
5:45:21requirement, that's how they all sort of
5:45:22fit together. And so um and actually if
5:45:26we just jump back to the Revan
5:45:28requirement tab real quick, everything's
5:45:30kind of more compressed so we can kind
5:45:31of see it a little bit easier. Um so on
5:45:36Excel row 14, that additions and
5:45:39deductions number
5:45:41is basically getting
5:45:44um mostly offset by the deferred income
5:45:49taxes item on Excel row 24.
5:45:54So most of that $220 million is going to
5:45:57be a temporary timing difference. it is
5:46:00being offset by um that deferred income
5:46:03tax expense item.
5:46:06>> It's just running by most because I'm
5:46:07looking at 220 million and it's offset
5:46:09by 22 million. So I wouldn't consider
5:46:12that most,
5:46:12>> right? So the the $220 million is I say
5:46:16that's a pre-tax number. And so if you
5:46:19took that 220 million and you multiplied
5:46:22it by the the sort of the composite
5:46:24income tax rate which is about 24 a.5%
5:46:28um you would come to something that's
5:46:31much closer to the 22
5:46:33million and so since 22 the 220 million
5:46:37>> to like double that right because it's
5:46:4010%.
5:46:42I mean 22 million is 10% of 229,
5:46:47>> right? Yeah. Keeping keeping in mind
5:46:49that some of the $220 million is um
5:46:53permanent timing differences which don't
5:46:56reverse through through deferred tax
5:46:58expense.
5:47:00>> Okay.
5:47:00>> And so um but in a nutshell that's
5:47:03that's sort of how timing differences or
5:47:06schedule M's um work and how they fit
5:47:10into
5:47:12um the the revenue requirement
5:47:13calculation and the income tax
5:47:14calculation. Um so temporary timing
5:47:18differences and deferred tax expense,
5:47:20those go together because they're
5:47:22they're um one is a pre-tax, one's a
5:47:24post tax. Um but they largely will
5:47:27offset each other.
5:47:30>> Maybe I agree, disagree, largely. Um but
5:47:35um okay so the way I'm thinking of the
5:47:37schedule M is like if we've got a new
5:47:40wind plant that comes in for tax
5:47:42purposes you're able to depreciate it um
5:47:46within the first few years um I'm not
5:47:48sure the the number of years um but
5:47:51really on your books you're advertising
5:47:53in over to be determined 20 25 30 years
5:47:59um it sounds like in the in the early
5:48:02years that would result like for the
5:48:04impact of that project as a pretty
5:48:07severely negative schedule M and then it
5:48:09would gradually kind of correct back.
5:48:12Does that tend trend to zero or does it
5:48:14ever go positive as as the years go on
5:48:17and you kind of catch up?
5:48:19>> Uh so temporary timing differences,
5:48:23which in this case we're talking about
5:48:25differences between tax depreciation and
5:48:28book depreciation, those always go back
5:48:31to zero. And so it's exactly as you
5:48:34explained where um in the first year
5:48:38um
5:48:40book depreciation is let's just assume
5:48:4220-year asset life for for book
5:48:45purposes. So um book depreciation is
5:48:49120th. So let's just say that's $20. Um
5:48:53tax depreciation is is accelerated and
5:48:56it depending on exactly the type of
5:48:58asset and its life. There's there's IRS
5:49:00tables that that show you exactly what
5:49:02that number is. But for example sake,
5:49:04let's just say that tax depreciation is
5:49:07$30. And so you've got $20 book
5:49:10depreciation, $30 tax depreciation. So
5:49:13you have a $10 timing difference. And in
5:49:16this case, it is negative because um tax
5:49:20depreciation is higher than book
5:49:21depreciation. And so you've got a a $10
5:49:25temporary timing difference because in
5:49:26the future it'll turn around. um due to
5:49:30differences between tax rules and
5:49:33financial book rules. And so that's sort
5:49:36of the the beginning of where timing
5:49:39differences and for that matter ADIT
5:49:42starts from because that timing
5:49:44difference is um essentially put onto
5:49:48the uh it's put into rate base uh as
5:49:51ADIT
5:49:53and so that basically we're giving
5:49:55customers the
5:49:58the financial benefit of the fact that
5:50:01um the IRS has allowed accelerated
5:50:04depreciation on on fixed assets.
5:50:08>> Okay. Okay. So, it has to do with this
5:50:10this comparison of book depreciation and
5:50:14the tax depreciation and then we make
5:50:17make some magic out of there. So, I have
5:50:19a question relative to the other issue
5:50:23here with regard to the change uh
5:50:26potential change in wind plant
5:50:28depreciable life book depreciable life
5:50:32um here. So I'm curious if the
5:50:35commission changes that from 25 years to
5:50:3730 years as you've proposed in the
5:50:39settlement agreement, how does that
5:50:42impact the schedule M and have you
5:50:45already made those adjustments in your
5:50:48uh settlement cost of service?
5:50:52Uh
5:50:53so let's see if we increase the
5:50:58book life by five years that would
5:51:00decrease book depreciation because we're
5:51:02now spreading costs over a longer period
5:51:04of time. So that would make the timing
5:51:08difference a little bit bigger.
5:51:11Um
5:51:13which would over time
5:51:17um
5:51:19let's see
5:51:23so that would make adit going forward
5:51:27over time it would make adit
5:51:30a bit more negative until the point at
5:51:32which adit turns around and starts
5:51:35coming back towards zero. Because if you
5:51:37think about the way AdIT works, it
5:51:39starts at zero and then as your timing
5:51:42differences are negative because your
5:51:44tax depreciation is higher than your
5:51:45book depreciation, AdIT goes negative
5:51:49and then at some point your book
5:51:51depreciation becomes larger than your
5:51:53tax depreciation. And so the adit tends
5:51:57back towards zero. So it starts at zero,
5:52:00becomes negative, then goes back to
5:52:01zero. And so by extending the book life
5:52:06a little bit more I think it makes the
5:52:09adit go a little bit more negative. Um
5:52:12but in any given year
5:52:16I think because this is a timing a
5:52:19temporary timing difference
5:52:21the change in the
5:52:24schedule M or the timing difference is
5:52:26offset by the deferred tax expense
5:52:28that's incorporated into
5:52:31um the tax calculation. So there's
5:52:33really no immediate um revenue
5:52:37requirement impact of that. you know
5:52:38going forward over time it will show up
5:52:41through rate base through adit but um
5:52:44first year there's the immediate
5:52:46reduction to depreciation expense
5:52:48because we're um lowering it due to the
5:52:51longer life but I believe the tax
5:52:54calculation is largely unaffected
5:52:57because
5:52:58we're really dealing with temporary
5:53:01timing differences and those get offset
5:53:03between
5:53:04schedule M's and defer tax expense in
5:53:08this calculation that we're looking at
5:53:09on the screen.
5:53:10>> Yeah. So, I I didn't intend to make you
5:53:12do like all the math on the spot or
5:53:15solve for the for the total. I guess my
5:53:18assumption is that if the book
5:53:20depreciation
5:53:22of assets like that change, you would be
5:53:25incorporating that into your cost of
5:53:28service to make sure I mean we're not
5:53:30going to sit here in five minutes and
5:53:32figure [laughter] out what the outcome
5:53:34is, but that that would be the proper
5:53:36treatment of it to ensure that the
5:53:38actual treatment at the end of this is
5:53:40what's used in the cost of service.
5:53:42>> So we incorporated the reduction to
5:53:45depreciation expense for sure. that's
5:53:47definitely in there. Um the impact to
5:53:51ADIT
5:53:52isn't going to show up until the future
5:53:54until it won't even start until rates
5:53:57become effective because that's when
5:53:58we'll change depreciation rates um the
5:54:02book depreciation rates anyways. And so
5:54:05the ADIT portion doesn't really start to
5:54:08show up until it doesn't even start
5:54:10until August 29th of of this year. And
5:54:14then the next Ray case we file the ADIT
5:54:18impact will be in that in those
5:54:20balances.
5:54:22>> Okay. So you're saying it's
5:54:23inconsequential for this revenue
5:54:24requirement based on this information
5:54:27but you will be incorporating any change
5:54:30to the book depreciation and as it
5:54:32impacts you know adit and these other
5:54:35things after change is made.
5:54:38>> Okay.
5:54:39>> That's correct. going going forward um
5:54:41this the impact to schedule M's deferred
5:54:44tax expense and ADIT will all be
5:54:47reflected in in the next cost of
5:54:50service.
5:54:51>> Okay. Okay. Got it. Um and then um what
5:54:56what exactly are the permanent schedule
5:54:58M on 200? We also have permanent
5:55:01schedule M's. Um
5:55:03>> Sure. Wow. We're really going into like
5:55:05some detail on tax calc right.
5:55:12Uh so that is
5:55:15um really the result of um AFUDC. So
5:55:20allowance for funds used during
5:55:21construction. Um, from IRS
5:55:26uh tax rules,
5:55:29the equity component of AFDC
5:55:32is not taxed. And so it never shows up
5:55:34on our tax return, but it does show up
5:55:38as uh income on our financial on our
5:55:41books. And so because it's on our
5:55:44financial statements but not on our tax
5:55:46returns, that creates the permanent
5:55:48timing difference. So that's that's kind
5:55:50of what a permanent timing difference is
5:55:51is something that is on one side but not
5:55:56both. So depreciation expense is on both
5:55:59sides, right? It's there's tax
5:56:00depreciation and there's book
5:56:02depreciation. It just happens at
5:56:03different points in time. So it's
5:56:05temporary, but um AFDC equity is
5:56:10something that only exists on our
5:56:13financial books side. It doesn't it's
5:56:15not an item that appears on our tax
5:56:18returns. And so because of that it
5:56:20becomes a permanent timing difference.
5:56:23>> Okay. And then what's the source? We can
5:56:24we can look at 200 if you want. It's
5:56:26like Excel line you know 116 on but what
5:56:30are the really significant adjustments
5:56:33like what what just what's the basis of
5:56:34those because they'll turn all those
5:56:36total utility values from severely
5:56:39negative to like severely positive
5:56:41values.
5:56:42>> Yeah. So um it's it's basically um any
5:56:47of the adjustments that we made to
5:56:51plant or to rate base you know so think
5:56:54um you know we removed wildfire plant
5:56:57because that is recovered through the
5:56:59WMA um I removed the um plant associated
5:57:04with Rocky Mountain Solar because that
5:57:06is now in the ECA at least currently
5:57:08anyways um Comanche 2 Craig one. So
5:57:13these items that were removed from rate
5:57:16base um all of those have you know a
5:57:19plant and service accumulated
5:57:20depreciation depreciation expense
5:57:23components but they also have these
5:57:25timing difference and deferred tax
5:57:26expense components as well. So when we
5:57:29we remove pieces of rate base or assets
5:57:32from rate base for you know for whatever
5:57:34reason we remove all components that
5:57:37impact the revenue requirement into
5:57:38including the components that impact the
5:57:40tax calculation.
5:57:42>> Okay. Okay. Got it. Thank you. Sorry I'm
5:57:45trying to figure out whenever there's a
5:57:47big swing. I'm very curious what what is
5:57:49going on to make it happen. Um okay. So
5:57:51now as we look on here, we've got um on
5:57:54Excel line 149, the state income tax
5:57:58expense, and that goes over that column.
5:58:01H is the um adjusted total Colorado PUC.
5:58:06Um
5:58:06>> yes,
5:58:07>> it's not like frozen, but but that's
5:58:09what H is. Um so we've got the state
5:58:11income tax expense at 8.6 million and
5:58:15then a few lines down the federal income
5:58:16tax expense at 39.2 million. You see
5:58:20those?
5:58:22I'm curious if we can go back to the
5:58:23revenue requirement tab just before um
5:58:26toward the top there.
5:58:29Um Oh, no. Yeah, there it is. Um lines
5:58:33uh Excel 18 and 22 lists state income
5:58:36tax and federal income tax expenses
5:58:39also, but those are pretty significantly
5:58:42different numbers, those on schedule
5:58:44200. So, I'm curious if you can um
5:58:46explain to me the difference.
5:58:49>> Sure. Um, you can think of of um the tax
5:58:54calc on the page we're looking at here
5:58:56as um income taxes based on proposed
5:59:00rates. So based on the proposed rate
5:59:04base, the proposed whack
5:59:06um everything that's in the cost of
5:59:08service. And so this is this is the um
5:59:12as requested level of income taxes.
5:59:16Whereas on attach uh schedule 200, what
5:59:21we're looking at there is um
5:59:25income taxes at present rates. Maybe
5:59:27that's the best way to think about it is
5:59:29um so this is what was actually
5:59:31experienced based on actual 2025
5:59:36revenues, actual 2025 expenses.
5:59:39Um and then then you run the net
5:59:41operating income calculation and you
5:59:44come to a
5:59:46maybe probably I guess a way to say that
5:59:48is is uh earned operating income not so
5:59:53on the revenue requirement you have
5:59:54authorized return this is earned return
5:59:57think of it that way and that difference
5:59:59is what's causing the difference income
6:00:02tax expense on this tab compared to
6:00:04what's on the revenue requirement tab
6:00:06does that make sense
6:00:08>> I think so that this would be like more
6:00:11kind of based on like actuals and then
6:00:13the revenue requirement is what you hope
6:00:16comes true at the end of the week,
6:00:19>> right?
6:00:20>> Okay. And it's a pretty big difference.
6:00:21I mean, it's from state income tax uh
6:00:25expense from 8.6 million up to 18.2 and
6:00:29then federal from 39 to 83.
6:00:34>> Right. And and that's sort of the reason
6:00:36that the uh revenue deficiency, you
6:00:39know, that's part of the reason the
6:00:39revenue deficiency is so big is because
6:00:43um current revenues are not sufficient
6:00:46to um to cover operating expenses plus
6:00:50the authorized return. And so that
6:00:53difference, you know, we have to pay our
6:00:55operating expenses. So any shortfall
6:00:57comes out of net operating income. It
6:01:00makes it smaller than what the
6:01:01authorized return is. And that
6:01:03difference is showing up in the tax calc
6:01:05because we just have less net income to
6:01:08pay taxes on or operating income to pay
6:01:10taxes on.
6:01:11>> Got it. Okay. Um Okay. So, um just a
6:01:15little further down, these are the
6:01:17deferred taxes you were talking about
6:01:18before that to some degree offset the
6:01:20schedule M doing that. Um and um so
6:01:27looking again like let's say at a wind
6:01:29plan where you've got most your tax
6:01:30benefits upfront but your actual book
6:01:33book depreciation's taking longer. Um in
6:01:37those first few years where the
6:01:38company's getting that accelerated
6:01:40depreciation, not necessarily paying
6:01:42taxes on the asset up front, that's when
6:01:45those deferred taxes are kind of
6:01:47primarily accumulating. Is that
6:01:50>> correct?
6:01:51>> Yeah. So um two things are happening. So
6:01:55um the deferred tax expense portion of
6:01:59of um the revenue requirement is um
6:02:03shows up as a large negative as a large
6:02:05positive number. So it's increasing the
6:02:07revenue requirement but at the same time
6:02:10uh ADIT which is in rate base is
6:02:12accumulating and getting bigger and
6:02:14that's a reduction to the re to rate
6:02:17base and so therefore a reduction to the
6:02:18revenue requirement. So that's also
6:02:21accumulating as well and because you
6:02:23know for example wind have such uh short
6:02:26tax lives it accumulate the adit
6:02:29accumulates very quickly.
6:02:33>> Okay. So um as I understand it like this
6:02:38especially the tax treatment like all
6:02:41this combination has led to fairly large
6:02:44ADIT balances right I think it's like
6:02:472.4 four billion compared to a 12.5
6:02:50billion dollar rate base.
6:02:53>> Right. If we go to the tab 100, we can
6:02:55see it there.
6:02:59>> Yeah, there it is.
6:03:01>> Yep. So, if we just scroll down,
6:03:02>> I think it's line 128.
6:03:08>> Yeah, there we go. Um,
6:03:11so totally, yeah, total adit is 2.4
6:03:15billion.
6:03:17Um and that's a reduction to rate base
6:03:19because it's a negative.
6:03:22>> Okay.
6:03:22>> Compared to the net plant of you know 14
6:03:25billion roughly you know off the top of
6:03:28my head. And so then the the theory goes
6:03:31or the process goes um if you keep it it
6:03:35seems as though with the tax
6:03:38depreciation the way that it is if you
6:03:41keep having these really significant
6:03:43investments the ADIT appears to be
6:03:46growing
6:03:47and then it would only be if you have
6:03:50kind of disproportionately more of these
6:03:52assets after that phase of their life
6:03:54than you do new ones that you would see
6:03:57this beginning to decline. mind, right?
6:04:02>> Uh
6:04:03yes. So, um if we got to a point like a
6:04:08steady state point where um we're no
6:04:12longer investing
6:04:14uh at the rate we're investing now,
6:04:16we're kind of let's just say we're like
6:04:17a steady state. Um
6:04:20the assets that were placed into service
6:04:24now that are creating this $2.4 four
6:04:26billion dollar reduction to rate base
6:04:28that ADIT
6:04:30would start to reverse. It would it's
6:04:32called unwind. It would start unwinding
6:04:34and ADIT would then trend back towards
6:04:37zero over time.
6:04:39>> Okay. Yeah. I guess what I'm trying to
6:04:41figure out is like given the tax
6:04:43treatment and the companies I think
6:04:45we've it's heard it described as an
6:04:46investment cycle or something like that.
6:04:49Meaning you're expecting very large
6:04:52capital investments coming. Um
6:04:55>> yes,
6:04:56>> I I guess when you know customers are
6:04:59paying this deferred tax assuming that
6:05:03at some point there actually will be tax
6:05:06liability for the company. It's my
6:05:09understanding you're not in a tax
6:05:10liability situation. And so I'm trying
6:05:12to figure out like at some point does
6:05:14this not make sense anymore where we're
6:05:16just keep collecting deferred taxes, but
6:05:21given this investment cycle and the tax
6:05:23treatment, there's really not a time in
6:05:26the near future, it's expected that that
6:05:29that will actually flip.
6:05:33>> Um if we could actually jump back to the
6:05:35revenue requirement tab real quick. So,
6:05:38um, you're correct that we will be
6:05:41collecting the deferred taxes. So, in
6:05:44this case, the $22 million on Excel row
6:05:4724. Um, but because of the presence of
6:05:52the timing differences on Excel row 14,
6:05:56that is making the state income tax
6:05:59expense and the federal income tax
6:06:00expense number. So, you know, the 18 and
6:06:03the 83 million,
6:06:05those numbers are lower because of the
6:06:07presence of that schedule M.
6:06:10And so, oftentimes the the
6:06:14line items that are state and federal
6:06:16income taxes, they're they're oftentimes
6:06:18called current tax expense, whereas, you
6:06:21know, line 24 is deferred tax expense.
6:06:25Um so
6:06:28this difference between um tax
6:06:32depreciation and book depreciation is
6:06:36lowering current tax expense but it's
6:06:39increasing deferred tax expense dollar
6:06:42for dollar. And that's sort of what I
6:06:43mean by um it offsets the the the
6:06:47schedule M offsets deferred tax expense.
6:06:49It's really just shifting
6:06:52um tax expense between amounts we have
6:06:56to pay now versus amounts we have to pay
6:06:58later. But the cost of service the tax
6:07:01calculation sort of factors all of that
6:07:03in.
6:07:05>> Okay.
6:07:06Okay. I'll move on to tax credit. We're
6:07:10just on the left. Okay. So on 200, if we
6:07:14keep going down, um, we've got tax
6:07:17credits like line 188 or so. Um, I'll
6:07:20actually say it's it's probably going to
6:07:22be better for us to go to 201.
6:07:26Sorry, Miss Crane. It's a few over to
6:07:28the right.
6:07:29>> Um, because 2011 has basically just the
6:07:32detail behind all of this, right?
6:07:38Um, and so let's see. Uh, Excel line 182
6:07:43should be the tax credits.
6:07:50Am I wrong? Let me see.
6:07:53Oh, no. 148.
6:07:59Maybe a lot of lines here.
6:08:03Yes,
6:08:06you got there. Sorry.
6:08:17Yeah. Let's see.
6:08:20Okay. Tax credits. Oh, can we change the
6:08:22view? Can you just go up to view and do
6:08:24normal?
6:08:31Thanks.
6:08:32Oh, I'm sorry to the beginning.
6:08:40Okay, so these are tax credits. I will
6:08:42say this caught my attention because the
6:08:44tax credit line on the revenue
6:08:46requirement tab in your direct testimony
6:08:48was um
6:08:51negative and now it's positive in um
6:08:54rebuttal and settlement. So I I was
6:08:56looking into these. So if you see Excel
6:08:58line 1408 and uh 1409,
6:09:03those look to be uh transfer of uh line
6:09:071408. It says transferability cost solar
6:09:10PTC and um the one right below it is
6:09:14transferability wind PTC. Do you see
6:09:16those?
6:09:17>> Yes.
6:09:18>> Okay. Um and those are at least the wind
6:09:21one is is a pretty significant number.
6:09:245.67 six, seven million dollars. Um, and
6:09:28I was curious, um, what are those? I I'm
6:09:32presuming that's some transaction that
6:09:33happened in the second half of 2025.
6:09:37>> Uh, so those items are, um, related to
6:09:42the two right above it. So, it's labeled
6:09:45schedule M149 wind power credit and then
6:09:48schedule M 317 solar credit.
6:09:51So those two line items represent the
6:09:54production tax credits that are
6:09:56generated by wind and solar facilities.
6:09:58And so if we scrolled over to the right,
6:10:00we would see those two line items are
6:10:02being those are very large negatives
6:10:03because those are are credits that um
6:10:07that the company earns.
6:10:22They're positive. That's part of what
6:10:23was throwing me off.
6:10:25>> So, yes, the um the transferability line
6:10:30items are positive because they
6:10:33represent
6:10:34um the transaction costs for um selling
6:10:39PTC's to third parties.
6:10:42um
6:10:45because uh because we have so much tax
6:10:49depreciation and we generate so many
6:10:51PTC's from our renewable resources, we
6:10:54have more PTC's than we're able to use
6:10:56on our own tax returns. And so in order
6:11:00to um be able to utilize those, we sell
6:11:04them to third parties. And I there was a
6:11:07a docket, you know, a few years ago when
6:11:10transferability was first passed as part
6:11:12of uh I think it was the inflation
6:11:14reduction act if I remember correctly.
6:11:16Um
6:11:19we we did the analysis to determine that
6:11:22it is um more cost-effective for us to
6:11:26sell PTC's to third parties and get the
6:11:28cash that way rather than um putting
6:11:32those PTC's in rate base as a deferred
6:11:35tax asset, meaning it increased rate
6:11:37base and waiting until we had the
6:11:40taxable income to be able to claim those
6:11:43tax credits,
6:11:44>> right? Um
6:11:45>> so so I guess what am I looking at in
6:11:47line let's say 1409 which is the wind
6:11:49transferability wind I'm looking at a
6:11:52cost I've got 5.3 million
6:11:56>> in a cost right not a
6:11:58>> right
6:12:00>> that is the cost the transaction cost of
6:12:06uh selling those wind etc
6:12:11>> right that's correct
6:12:13>> and and That's I'm presuming I will say
6:12:15just these are lines that did not exist
6:12:17in the direct cost of service. Um you
6:12:20can look but it's like your attachment
6:12:22say whatever F1.
6:12:24>> Um these are just brand new lines. So is
6:12:27this some transaction presumably that
6:12:29happened in the second half of 2025
6:12:31which may not show up in your direct?
6:12:34>> Um
6:12:46that that could be the case maybe. Um,
6:12:51at the end of the day though, all these
6:12:52things are in the ECA, so they they
6:12:55shouldn't be affecting base rates at
6:12:57all. And so that's that's actually what
6:12:59I'm a little bit concerned about. I want
6:13:01to make sure that that
6:13:02>> I All right, so I have two notes for you
6:13:04then. We're we're I think we're on the
6:13:07same page here. My first note uh column
6:13:11G here if we can go just a little left.
6:13:16Column G lift these as looks like steam
6:13:19production functional allocator.
6:13:23I just had a question about that.
6:13:26You see that
6:13:34>> uh comm G is in girl. You can see it
6:13:36says
6:13:36>> oh um
6:13:41>> so for the for the purposes of um the
6:13:45revenue requirement actually column G is
6:13:47not used um that's actually an item that
6:13:51would show up in a phase 2 case but
6:13:54since this is only a phase one um that
6:13:57allocation is not
6:13:58>> I said in the case that you all are
6:14:00going to file a phase two in the next 12
6:14:03months I just wanted to make sure if
6:14:05there a mistake there that
6:14:07>> yeah and it and it should actually be um
6:14:10PTC's should be allocated to um the
6:14:13functions based on energy because that's
6:14:15how they're generated.
6:14:17>> Okay.
6:14:18>> So um that that's how in a fa in the
6:14:20phase two case that's how it should show
6:14:21up.
6:14:22>> Okay. Just in case that wasn't an
6:14:24appropriate entry I wanted to bring that
6:14:25to your attention because it didn't
6:14:27strike me as something that would be
6:14:28>> Yep. I I appreciate that. We can make
6:14:30sure that that
6:14:31>> is fixed.
6:14:32>> Okay. And then um you you hit the nail
6:14:36on the head of my question of does this
6:14:38really belong here versus I I understood
6:14:42the PTC transactions both the revenue
6:14:45and the cost associated
6:14:48with the transaction to be an ECA issue.
6:14:51Um the reason this caught my attention
6:14:53is if it flows through whereas on the
6:14:56revenue requirement tab um Excel line 25
6:15:01then pulls the tax credits totals.
6:15:06So it is it it appears to me to be
6:15:09pulling this information into your
6:15:12revenue requirement tab.
6:15:25uh that yeah, I would agree with you. It
6:15:27it does look like to me that it those
6:15:30two items are making their way into
6:15:34um into the revenue requirement that
6:15:37that needs to be fixed. I I can fix
6:15:39that.
6:15:40>> Okay, got it. Um
6:15:44>> Okay. And then yeah, just like for
6:15:47comparison purposes, in your direct
6:15:49case, the tax credits line there, I'm
6:15:52not saying it would be identical, but in
6:15:55your direct case, it was like negative 3
6:15:56million and now it's positive almost 3
6:16:00million.
6:16:02>> Largely, it looks like because of those
6:16:05costs.
6:16:06>> Yep. Yeah. the the the top item, the R&
6:16:10credit, that would that does properly
6:16:12belong in in base rates, but these um
6:16:16the wind power credits, the solar
6:16:17credit, and then the transaction costs
6:16:20offsetting those, those should all be in
6:16:22ECA.
6:16:23>> Okay, got it. Um I guess we'll maybe
6:16:27we'll talk about at the end of this with
6:16:29the chair when we get a revised version.
6:16:31Um
6:16:33>> but it seems like we could get a revised
6:16:34version. Um, okay. Back to um,
6:16:42uh, okay, hold on. Let me see. I had a
6:16:45few questions, but I feel like maybe
6:16:46some were answered already. So, let me
6:16:48see where I am on my list here.
6:16:58Okay. Got it. Got it. Got it. Um,
6:17:08okay.
6:17:10Got it.
6:17:17Okay. I think those are my tax
6:17:19questions. I have a few other questions
6:17:20for you, but I think they'll be less
6:17:21tedious.
6:17:23>> Um, okay. So, um, I wanted to go on to
6:17:28earned return. Um
6:17:30>> okay.
6:17:31>> So in your um rebuttal testimony, you
6:17:37had showed a table that showed um the
6:17:39company's earned returns. Um I I think
6:17:43we're done with this exhibit, Miss
6:17:46Crane. I'm pretty sure. Um
6:17:50uh so in your rebuttal, you showed a
6:17:53table. APF R4 where you showed the
6:17:56company's earned returns um from 2017
6:17:59through 2025. Are you familiar with
6:18:01that?
6:18:02>> Yes.
6:18:03>> Okay. For 2025, you had listed the
6:18:06earned return as 5.73%.
6:18:09Does that sound familiar?
6:18:11>> Yes.
6:18:12>> Okay. Um I do I I sent over to Miss
6:18:16Crane um Excel's uh 2025 Q4 earnings
6:18:21presentation
6:18:23which shows um the company reporting an
6:18:26earned ROE of 7.55%.
6:18:30>> So I was curious what the difference is.
6:18:33We we can pull it up if if you'd like.
6:18:35We have it ready. Um yes,
6:18:37>> but what is the difference in what's
6:18:38being presented in that investor
6:18:40present? It's on page 24.
6:18:42um what's being shown in this investor
6:18:45presentation versus in your testimony to
6:18:47us on your uh earned ROE.
6:18:50>> Sure. There there's a couple of things
6:18:52uh going on. So for one, this is total
6:18:57PCO operating company. So it's gas,
6:18:59electric, thermal um and it's also on um
6:19:03GAAP rules as opposed to um regulatory
6:19:07accounting rules if you will. Um
6:19:11whereas so that's what this is the um
6:19:155.8 eight whatever the exact number was
6:19:1887 or something like that. um that you
6:19:21can think of as um base rate electric
6:19:26only return and so it is excluding
6:19:31um
6:19:33anything in riders so um you know TCA
6:19:37capital or TCAD capital or um there's a
6:19:42little bit of of uh capital is
6:19:44associated with Rocky Mountain Solar
6:19:46that facility is in the ECA so um that
6:19:51rate base and those revenues are not
6:19:53factored into the 5.87 because they're
6:19:55not in base rates. Um
6:19:59because the the 5.87 87 is coming out of
6:20:01the appendix AN report which um the the
6:20:07scope of that report is essentially to
6:20:10um
6:20:12what would a rate case look like and
6:20:13what does the earned return look like
6:20:16for base rates if you used actual
6:20:20information from your current year but
6:20:23you used all of the same um regulatory
6:20:26principles that were established in your
6:20:28last base rate case. And so that's why
6:20:31we're pulling the financial impact of
6:20:34riders out for the purposes of the
6:20:36appendix A. And so all of the revenues
6:20:39that's associated and cost associated
6:20:41with TCA, TCAD, you GMAC, well, that was
6:20:44didn't exist in 25, but um TCA, TCAD,
6:20:48and um the Rocky Mountain Solar Facility
6:20:52that's in ECA, those are kind of off to
6:20:55the side and not impacting the appendix
6:20:58A 5.87. 27 but they are incorporated
6:21:00into the 755 and so that difference is
6:21:02is that's accounting for the vast
6:21:04majority of the difference.
6:21:06>> Okay. Okay. Um and I will say in
6:21:102024 there was a a better match between
6:21:13these two sources. Um, so is it in part
6:21:18the case that because we have
6:21:20significant amount new riders
6:21:23and I think those riders kind of
6:21:25disproportionately target capital
6:21:27expenses versus on&m
6:21:30that
6:21:31you are seeing the base rate number look
6:21:35lower because those writers have been
6:21:38taken out which largely center around
6:21:41these capital expenditures.
6:21:45I think that's right. Um, and I think
6:21:47it's
6:21:48it's it's a function of the of the way
6:21:51that the appendix A is is
6:21:54established. um rather than using
6:22:00the regulatory principles established
6:22:02from the most recent base ray case, it
6:22:05might be better, at least in my opinion,
6:22:07if I was trying to get a a better look
6:22:08at um what a utilities earned return
6:22:12was, I'd want to do it um where
6:22:16everything gets put into the into the
6:22:20analysis rather than trying to make it
6:22:22look like what a rate case was.
6:22:24>> Okay. Um, I'm not sure if there's a way
6:22:26to um to to accomplish that, but that
6:22:30just thinking out loud, that's how I
6:22:33would try to show what a true earned
6:22:36return is from a you know, for the
6:22:38electric utility, for example. Um, is is
6:22:41have everything in including stuff that
6:22:44is in riders.
6:22:46>> Okay. And that's not necessarily how it
6:22:48was done in your table R4,
6:22:52>> right? because th that that table is
6:22:55reflecting the results of the appendix A
6:22:57filings, the annual reports in the
6:22:58appendix A.
6:23:00>> Okay. Okay.
6:23:02>> Thank you for that. I was trying to
6:23:04figure out and it seems logical that we
6:23:07have an increasing mismatch between
6:23:08these two because we have a significant
6:23:12amount more money in riders
6:23:14>> exactly
6:23:15>> from 2025. Oh, in the in the wildfire
6:23:17WMA, that's one more source of large
6:23:20amounts of capital that is is not in the
6:23:22appendix A because that's in a rider.
6:23:24>> Yep. Okay. Okay. Awesome. Um, Mr. K, we
6:23:27can take this down. Chairman, I don't
6:23:30know the situation about putting
6:23:32exhibits in. I don't know if we need it,
6:23:34but it was helpful for illustrative
6:23:36purposes.
6:23:38>> If you want to rely it in on as evidence
6:23:41and making your decision, you should put
6:23:42it in. If it was just for the purpose of
6:23:45framing your questions to Mr. Freighus,
6:23:47you don't need it in.
6:23:49>> I think it was helpful to understand the
6:23:51issue. So, I guess I would suggest we
6:23:53put it in.
6:23:54>> Uh, any objection, Mr. Zemer?
6:23:59>> No.
6:24:00>> Sorry. It had an exhibit number on the
6:24:02top. Miss Crane can read it for us if if
6:24:04you need it.
6:24:05>> I I think it's uh fair. So, we're good.
6:24:08>> Okay, great. Thanks. Um, okay. A
6:24:12question on um the regulatory assets um
6:24:16regarding the con the inclusion of the
6:24:18regulatory assets um that have expenses
6:24:23that go past the effective date of
6:24:25rates. You familiar?
6:24:27>> Yes.
6:24:28>> Um so
6:24:30are you saying that if we include those
6:24:33in here that the company would
6:24:36essentially consider those regulatory
6:24:38assets closed after this rate case?
6:24:42Yeah, that that's essentially what we're
6:24:43doing. So, if you think about the table
6:24:45that's in um the the settlement
6:24:48agreement that lists all the regulatory
6:24:50assets, what we're really talking about
6:24:52is Aegis
6:24:55um the EV make ready um asset and
6:25:00wildfire the the 2020 WMP uh deferral.
6:25:05So those three regulatory assets are
6:25:09basically ending at the end of this when
6:25:11rates become effective from this case
6:25:12because the assets that are creating
6:25:14those regulatory assets are getting
6:25:17rolled into base rates. So we don't need
6:25:20that regulatory asset anymore. And so,
6:25:23um, what what we had done, and I talk
6:25:27about this in my testimony, um, I didn't
6:25:30rebuttal testimony in particular, is
6:25:32that, um, for those assets,
6:25:37um, we know sort of what how, you know,
6:25:41we know what the assets are that are
6:25:44creating the um, the deferral. We know
6:25:47the depreciation rate that is applied to
6:25:50those assets. And so there's not really
6:25:53a for it's not a forecast per se uh in
6:25:56that there's uncertainty. It's sort of
6:25:58more like you know if you were to
6:26:00project out what your mortgage payment
6:26:02is going to be in five years. We can do
6:26:05that because we know what the balance
6:26:06is. We know what the interest rate is.
6:26:07We know what the term is. And so it's
6:26:09sort of just a more of a mathematical
6:26:11calculation. It's it's the same concept
6:26:13with those three regulatory assets. And
6:26:16so, you know, our position is that just
6:26:19from a regulatory efficiency
6:26:20perspective, let's just extrapolate out
6:26:23those balances through the rate
6:26:25effective date because we know that
6:26:26they're going to be gone after that. And
6:26:29so we can just take care of those three
6:26:31items in this case and be done with it
6:26:34rather than having to maintain a portion
6:26:38of that those regulatory assets on our
6:26:40books until the next case which really
6:26:43only represents
6:26:45January 1 of 26 through August 28th
6:26:492026. It's just that short period of
6:26:51time that we would have to just deal
6:26:54with later. Whereas our approach is just
6:26:58we can extrapolate out through rate
6:26:59effective date take care of it all now
6:27:02and then these will be gone.
6:27:04>> Okay. And is there any issue with regard
6:27:08to like perk or other accounting
6:27:09standards and doing it that way?
6:27:13>> Uh no I don't believe so.
6:27:15>> Okay. I just wanted to make sure I
6:27:18asked. Um I have a question on pension
6:27:21costs. Um, in your direct testimony, um,
6:27:26the company had stated that the retail
6:27:29pension costs in the text test year
6:27:33will set the deferral. Um, and I just
6:27:37wanted to compare within your direct um,
6:27:42when you use that on um, in table APF
6:27:48D11,
6:27:50it looks like you use the total electric
6:27:52and not the um, retail allocated
6:27:57portion.
6:27:59Um, so the you're talking about for the
6:28:02pension tracker, is that
6:28:04>> Yeah, the baseline.
6:28:06>> We want to just pull up your um direct
6:28:08testimony
6:28:10table. APFD11.
6:28:13See if I can figure out what page that's
6:28:15on.
6:28:19APFD11.
6:28:22Let me just search that maybe.
6:28:29Oh, perfect. Okay. So, here in the
6:28:32non-qualified pension, you pull 290525.
6:28:35You see that?
6:28:36>> Yes.
6:28:37>> Okay. And then if we go up a couple
6:28:39pages, we'll find table APFD9.
6:28:45One more table.
6:28:51There you go. Um,
6:28:53you can see that uh 290525 number again.
6:28:58>> Yep.
6:28:58>> For non-qualified pension, it's in the
6:29:00total electric column, not the CPU
6:29:02column.
6:29:04>> So, I was wondering if you're pulling
6:29:05over the right amount or if you're
6:29:07pulling over um the total amount
6:29:09inadvertently.
6:29:11Uh so in this case um and this is this
6:29:14is direct which these numbers would have
6:29:16changed um when we updated to the uh
6:29:20actual 2025 amounts. Um but you're
6:29:24correct in in this case um we should be
6:29:28pulling the 278 amount down to the
6:29:31tracker baseline down below. Um
6:29:34>> okay
6:29:34>> I forget where I think it's in the
6:29:36settlement agreement. Yeah, I think in
6:29:38the settlement agreement there's a table
6:29:40that that outlines the um tracker
6:29:44baselines that will be established from
6:29:47this case going forward and we can
6:29:49confirm that those are the retail
6:29:51amounts.
6:29:52>> I'll leave that to you and Mr. Zmer if
6:29:54you can confirm to me we're taking just
6:29:55the retail amount um in the company's
6:29:58latest version that would be very
6:30:00helpful. Um and then I I think we're
6:30:05done with this. pretty sure. Um, okay.
6:30:09Just a couple more questions. Um, sorry
6:30:12to torture you with so much spreadsheet
6:30:14on a Friday afternoon, but I get the
6:30:15feeling you like the spreadsheets. So,
6:30:18um, so a couple questions on mineral
6:30:20rights. Um, so as I understand it, um,
6:30:25the company has not put the gain of that
6:30:28sale in the cost of service. Right.
6:30:31>> Correct.
6:30:32>> Okay. What' you say? You're flowing it
6:30:34through the ECI under the settlement
6:30:36agreement.
6:30:37>> That's correct.
6:30:38>> 50% through the ECI settlement
6:30:41agreement. Okay. Um and I was trying to
6:30:45figure out in um let me see which number
6:30:49this is.
6:30:52I haven't seen it in any of the
6:30:55documents that I've been looking at like
6:30:57an APF2.
6:30:59Um, and I was trying to figure out even
6:31:01if you don't intend to flow it through
6:31:04as part of Raybase. Um, would you still
6:31:08show it and then just do an adjustment?
6:31:10Like I guess I was a little confused
6:31:11that I wasn't seeing it represented at
6:31:13all. Um, and if that was really the
6:31:16appropriate way to deal with it.
6:31:18>> Um,
6:31:21we could do that. you know, if it makes
6:31:23more sense from a transpar transparency
6:31:26perspective, we can put a line item in
6:31:28there in the regulatory asset section
6:31:30that shows this amount and then have an
6:31:33adjustment that removes that exact same
6:31:35amount, noting that it's going to go
6:31:37through the ECA. Um, I think given the
6:31:40short amount of time we had between
6:31:42answer and rebuttal and rebuttal and and
6:31:45settlement, um, it was faster to just
6:31:47not include it because we got to the
6:31:49same place.
6:31:50>> Okay. Yeah. I mean, if you're asking my
6:31:52personal opinion, I think for
6:31:54transparency purposes, it's helpful to
6:31:55see it rather than not see it, so we
6:31:57know what happened. Um, and then I was
6:32:00just curious, given the treatment of
6:32:02that, are there other gains or losses um
6:32:06in the test year that don't appear in
6:32:08the cost of service?
6:32:10>> No, there's no other gains or losses.
6:32:12>> Okay. So, that one was kind of unique.
6:32:14That was the only gain that's not being
6:32:16shown.
6:32:17>> Okay. Yeah.
6:32:18>> Um
6:32:20okay let me see. Okay one more one more
6:32:23topic but it's brief. Um
6:32:25>> so when we look at the situation uh
6:32:28agreed to in the settlement agreement of
6:32:29like taking the legacy meters and moving
6:32:32those to long-term debt only
6:32:35>> as a yes recovery. Um, I'm curious how
6:32:39functionally that works, especially
6:32:42given in in the macro sense if the
6:32:44company gets what they've asked for in
6:32:46the settlement agreement and gets a 54.5
6:32:5154.5
6:32:53um equity to debt ratio. Does that just
6:32:56get made up elsewhere? Like if you're
6:32:59targeting that overall percentage and we
6:33:01have this one asset that gets treated
6:33:03differently,
6:33:05is there really an adjustment and like
6:33:08you end up at I'm making up numbers, but
6:33:10like 54.2
6:33:13in real life because of the treatment of
6:33:15this specific asset or does it gets
6:33:17balanced out where something else just
6:33:19ends up with more equity percentage?
6:33:22Um so from a a debt to equity
6:33:25perspective
6:33:27um the company doesn't capitalize
6:33:31individual assets we capitalize our
6:33:33entire rate base and we do that on a
6:33:36total operating company basis not you
6:33:38know not gas versus electric um you know
6:33:41when when our treasury team goes out and
6:33:43you can ask Mr. Wayer about this on
6:33:46Monday more. Um when they go out to
6:33:49capitalize public service, they're
6:33:52looking at all of the capital needs
6:33:54across the entire operating company. So
6:33:56we're not we're not um raising debt for
6:34:02um you know the legacy meters or small
6:34:05pieces of um of of individual assets. So
6:34:09what we're doing really is
6:34:12we're using that the overall capital
6:34:14structure that is established in array
6:34:16case but what we're doing is we are um
6:34:20changing the equity portion of that
6:34:24capital structure and setting its rate
6:34:27equal to the long-term debt rate.
6:34:30And so we're still funding
6:34:33um like legacy medias for example, we're
6:34:35still funding that asset with the same
6:34:38combination of debt and equity as we are
6:34:40with the rest of rate base, but we're
6:34:42just setting the return on the equity
6:34:45component for that one asset at the same
6:34:49rate as the long-term cost of debt. So
6:34:51we're reducing the equity portion of the
6:34:53capital structure for that asset. And
6:34:55the way we do that inside of the cost of
6:34:57service is um I basically calculate the
6:35:00difference between here's what the
6:35:03return is at full whack. Here's what the
6:35:06return is at um just debt only. Uh
6:35:10assuming that the um equity and debt
6:35:13rates are set equal to each other at the
6:35:16long-term debt rate. And that difference
6:35:19is put into uh miscellaneous revenue as
6:35:23an increase to revenue. And so therefore
6:35:24a decrease to the the the deficiency. So
6:35:28that's how we accomplish it through the
6:35:30cost of service. Since anything that's
6:35:32in rate base, you know, rate base is
6:35:34just is is one big number. Um anything
6:35:38that is in rate base gets applied the
6:35:41weighted average cost total weighted
6:35:43average cost of capital. And so if there
6:35:45are any assets that are earning
6:35:47something like a long-term debt rate, we
6:35:50accomplish that by adjusting other
6:35:52operating revenues to account for that.
6:35:55>> Okay? Basically, a manual adjustment
6:35:58>> to act as if that
6:36:00>> to act like that asset got that
6:36:03treatment when in reality there's just
6:36:05this giant strength.
6:36:07>> That's right. And um
6:36:10I think attachment five to the
6:36:12settlement agreement um is the
6:36:16calculation of the revenue requirement
6:36:17for um legacy meters. I think that it
6:36:21might show that calculation for you so
6:36:23you can kind of see how it's done.
6:36:26>> Okay. And I think there is some
6:36:28remaining controversy right about the
6:36:32company including a tax gross up like on
6:36:36a return for let's say the legacy meters
6:36:39when there's an agreement it's at
6:36:41long-term debt understanding this is
6:36:43just a mathematical correction but I
6:36:46think what people think they agreed to
6:36:48is that you're representing that as a
6:36:51long-term debt financing.
6:36:54>> Yeah. the the the disagreement is around
6:36:58what is actually happening really in the
6:36:59background. So um are we when when we
6:37:05are ordered a long-term debt return on
6:37:09legacy meters for example does that
6:37:12really mean go fund that asset with
6:37:15long-term debt or is that more like I
6:37:18had just described where the equity and
6:37:22debt components of the capital structure
6:37:25for that asset are um set equal to the
6:37:29long-term debt. rate. Um, and based on
6:37:33the way that I understand that the
6:37:36company is capitalized in terms of debt
6:37:37and equity, um, what's really happening
6:37:41from an operational perspective is the
6:37:43way I describe it where, um, Legacy
6:37:46Meters is still being funded with the
6:37:48same mix of debt and equity. It's just
6:37:50that the equity component is earning a a
6:37:52lower return. And so because there's
6:37:55there still is an equity component even
6:37:58though um it's earning at a lower rate
6:38:01there is still an income tax obligation
6:38:03associated with that equity component
6:38:05and so therefore there needs to be a tax
6:38:07gross up
6:38:09>> is the lower rate it's all hypothetical
6:38:12but is the lower rate of that
6:38:14hypothetical equity component considered
6:38:17in the gross up
6:38:20>> uh it's considered
6:38:24or whatever
6:38:25>> it's considered in the um in the return
6:38:31against which taxes are calculated. So
6:38:34the lower equity return means that
6:38:36there's just lower income taxes to pay.
6:38:39But the actual gross up factor itself is
6:38:42a calculation based on tax rates, not
6:38:45equity rates.
6:38:47>> Okay. So, you mean in in like the giant
6:38:49pot of it all, you're paying this much
6:38:52less income tax because Okay, there
6:38:56>> right.
6:38:56>> Um,
6:38:57>> yeah.
6:38:57>> All right. Thank you um for allowing me
6:38:59to torture you with those detail
6:39:01questions on Friday afternoon. I
6:39:03appreciate it. So, that's all I got.
6:39:05>> Uh, just one question before we take a
6:39:07quick break. Uh, Commissioner Gman, do
6:39:09you still have questions for uh, Miss
6:39:11Lovely?
6:39:13>> No, I think we got them answered.
6:39:15Thanks. Um, I think that's it.
6:39:18>> All right, let's take a 10-minute break
6:39:20till uh 3:20 and we'll come back at
6:39:243:20.
6:49:27you out there, Mr. Zmer?
6:49:32>> Yep, there you are.
6:49:33>> I turned the microphone on, not the
6:49:35camera. Sorry.
6:49:36>> Okay. Uh we're back on the record in the
6:49:38public service company of Colorado uh
6:49:40electric rate case. Mr. Freighus, uh I
6:49:44just want to follow up with you a little
6:49:45bit on that conversation you had with
6:49:46Mr. Bunker about um end of year versus
6:49:4913month average rate base um and see if
6:49:53I got the intuition right. Uh can we
6:49:56pull up hearing exhibit 131 APF20 at
6:49:59page two? And I think you said uh to Mr.
6:50:03bunker that this is the actual not
6:50:05forecasted spending with the end of year
6:50:07rate base. Is that right?
6:50:11>> Uh APF 20 would be actual. Yes.
6:50:14>> Okay.
6:50:28And you can just go uh down to the next
6:50:31page.
6:50:34So you can see rate base is 12.616
6:50:38on line three. Is that right?
6:50:41>> Yes.
6:50:42>> And a whack of 7.44%.
6:50:45Uh 2025 earnings are 939 on line five. I
6:50:51think I got that right. Right.
6:50:54>> 938.
6:50:57>> Okay. I round it up. Uh and total taxes
6:51:02uh gross are 180.4 on line 24.
6:51:07You see that?
6:51:08>> Correct.
6:51:08>> Yep.
6:51:09>> Yep.
6:51:09>> And uh O and M is 1.652 million uh
6:51:14billion on line 26,
6:51:18right?
6:51:18>> Uh that that would be O andM and
6:51:20depreciation expense and taxes other
6:51:23than income.
6:51:24>> Okay.
6:51:25Uh, can we uh keep this uh available,
6:51:29but can you go to APF23
6:51:35and
6:51:42same if you can go to the same page
6:51:45and I just want to go through the same
6:51:48thing. So rate base is now 12.043 43 or
6:51:52$573 million lower. And the earnings on
6:51:57rate base are $8.96 on line five or $43
6:52:01million
6:52:02uh lower.
6:52:06Uh and taxes are 170.4 on 24 or $10
6:52:11million lower.
6:52:14And it looks like and M with
6:52:16depreciation
6:52:18uh and taxes is 1.6 644 billion or 8
6:52:23million lower. Would you agree with all
6:52:26that?
6:52:27>> Uh yes.
6:52:29>> And what drives the on andm difference
6:52:31between 13-month average versus end of
6:52:34year? So most of that difference is
6:52:37going to be um the depreciation expense
6:52:40because in APF20
6:52:42we've got depreciation annualization but
6:52:44in APF23
6:52:46that one was prepared without that
6:52:48depreciation expense adjustment. That's
6:52:50that's the vast majority of it. There's
6:52:52a little bit of of changes and
6:52:54allocators in there. Um but that's
6:52:57pretty minor.
6:52:59>> Okay. So uh so just so I understand so
6:53:02the difference between these two
6:53:04approaches is $43 million in earnings
6:53:08sort of whatever $7.44% 44% whack times
6:53:12the uh whatever $570 million difference
6:53:16in rate base $10 million in taxes which
6:53:21I guess is the to corporate tax rate
6:53:23plus state taxes and 8 million in O andM
6:53:27is that sort of the intuition behind how
6:53:29we got to the 61 million
6:53:32>> correct
6:53:33>> and would and would this difference of
6:53:36about 61 million roughly translate
6:53:39uh to what the opposition parties are
6:53:41asking for in the settlement agreement
6:53:44or it sounds like not it'd be more like
6:53:46$8 million lower. So 53 million would be
6:53:51a better number to think about the
6:53:53impacts of the settlement agreement and
6:53:55credit metrics and all that stuff.
6:53:58>> Um I'm not quite sure I'm following your
6:54:01question. Um
6:54:02>> so so right as I understand the issue in
6:54:04this case uh I mean lots of other
6:54:08differences but one of the things the
6:54:10opposition is asking for is to
6:54:13maybe do the settlement agreement plus a
6:54:17uh a 13-month average rate base. Right.
6:54:21And I'm just trying to figure out what
6:54:23that would look like. Uh um it would you
6:54:27just take out the 61 in the exact way we
6:54:30calculated or would it be like 53?
6:54:35It would be a little bit lower. The the
6:54:37impact of let me say it this way um the
6:54:41impact of um
6:54:4413-month average rate base on the
6:54:47settlement cost of service attachment
6:54:48APF uh 29 would be a little bit lower
6:54:52because the whack is lower, right?
6:54:54Because Yeah, that's a couple million.
6:54:56That's easy. But uh what about the O
6:54:59andM?
6:55:01>> Um
6:55:02that would there would be um a
6:55:06depreciation expense impact as well
6:55:07because the settlement agreement does
6:55:10explicitly include
6:55:12um depreciation expense annualization.
6:55:16>> Okay. Uh so so it' be a very so it' be
6:55:20like a $59 million difference in revenue
6:55:23requirement.
6:55:26more or less. I know it's not exact on
6:55:28this record. We don't have the exact
6:55:30number, but that would that would be
6:55:32roughly at
6:55:34>> order of magnitude and and you know,
6:55:36that's something I could I could
6:55:38calculate that out exactly.
6:55:41>> Okay. I'm just trying to understand the
6:55:43uh intuition.
6:55:45Uh you you could take this down.
6:55:49Thanks. Um I just have one more thing
6:55:51for you. Um, I I I have some concerns. I
6:55:55don't think they're addressable in this
6:55:57case, but I'd like to raise them. Uh,
6:56:01uh, and you may not be able to answer
6:56:03the ultimate question, which is a
6:56:05process question. It may be a statement
6:56:07of position thing, but um, if you would
6:56:10humor me and allow me to walk through
6:56:12the concern as best you can, and uh,
6:56:16we'll do it with a full understanding.
6:56:17You may not be the perfect witness. I
6:56:19don't know if the perfect witness exists
6:56:20in this case. Uh but the first question
6:56:23I think you um do know. So it it sounds
6:56:27like uh there's $110 million. Put aside
6:56:31the TCAD and distribution expenses. Just
6:56:35in terms of transmission related TCA,
6:56:38that's about $110 million uh revenue
6:56:41requirement in 2025. And that represents
6:56:45something like $ 1.5 billion dollars of
6:56:48capital spending. Is is that again not
6:56:51exact but rough intuition?
6:56:52>> Um
6:56:54>> yeah. So if you if we think about the
6:56:56size of the rider roll in amount in this
6:57:00case, that's $116 million for just the
6:57:03TCA. And that so that represents um the
6:57:07amount of capital currently in the TCA
6:57:09that would move into base rates. And I
6:57:12think that
6:57:16>> and and the intuition for capital is
6:57:18just dividing the 110 million by
6:57:20whatever the whack whack is averaged
6:57:24over time. Okay. And do you know what is
6:57:26there? I thought I saw an estimate for
6:57:28the 2026 TCA. Uh do you know if that's
6:57:31on this record?
6:57:33>> Uh
6:57:35I don't think it is. I think we were
6:57:38using 2025
6:57:40TCA levels. I think it's been sort of
6:57:43mentioned. Um I think it's likeund
6:57:47I don't know. I thought it was $170
6:57:49million for just the TCA maybe, but I
6:57:52I'd have to check exactly what it is.
6:57:55>> So that would be another two billion.
6:57:56That that's the number I have in my
6:57:58notes. That would be another $2 billion
6:58:00worth of transmission capital.
6:58:03Well, well that that 170 includes the
6:58:06116 or 110. So incremental for 2026.
6:58:11It's it's not that not that
6:58:14>> so more like a billion. It'd be 60
6:58:17billion.
6:58:17>> Okay.
6:58:18>> Yeah.
6:58:19>> Yesterday let me re represent to you
6:58:21that I had a conversation with Mr. PK
6:58:23that divided capital spending into three
6:58:26or four buckets. One of his buckets was
6:58:28steel for fuel spending. and other
6:58:30involved beneficial electrification and
6:58:33a third was capital spending to replace
6:58:35aging infrastructure. We also discussed
6:58:38that the commission seemed to be have an
6:58:40evolving uh policy that tended to
6:58:42provide accelerated cost recovery for
6:58:45investment that lowered cost or
6:58:47increased revenues such as buckets one
6:58:49and two but provide perhaps provided
6:58:52less attractive cost recovery for
6:58:54replacing aging assets. that that's
6:58:56important but may not produce downward
6:58:58pressure on customer rates. Uh it sounds
6:59:02like you were listening uh yesterday and
6:59:05would you accept that characterization
6:59:07of the conversation that conversation?
6:59:11>> Okay. And in the transmission space,
6:59:14this policy at first uh appears to have
6:59:16been implemented in the last rate case
6:59:19which was also combined with a TCA
6:59:21proceeding. And um I can pull up the
6:59:25decision, but see if you would agree
6:59:27that the language was uh in the decision
6:59:30was to ensure the TCA primarily promotes
6:59:33new construction and expansion of
6:59:35transmission uh facilities, including
6:59:38for example the development of the CPP.
6:59:41to implement that goal. The decision
6:59:43defined, and now I'm quoting, the
6:59:44transmission project eligible for
6:59:47recovery through the TCA as those that
6:59:50result in a net increase in transmission
6:59:52capacity. Um, would you accept that that
6:59:56captures the the decision? And I can
6:59:58pull it up. I have it marked and
7:00:00standing by.
7:00:02>> You don't have to do that. I I recall
7:00:04that decision from the 22 case.
7:00:06>> Okay.
7:00:08And um
7:00:11actually this one I think I will pull
7:00:12up. Can you pull up hearing exhibit
7:00:141521?
7:00:16And let me represent to you that this is
7:00:18direct testimony for Mr. Rosac, a
7:00:21company witness in an advice letter
7:00:23filing uh from 2023. Uh you can see the
7:00:27proceeding number. And this is where uh
7:00:30we implemented that uh revised approach
7:00:32to C CP TCA policy we just discussed.
7:00:37Um,
7:00:38do you see that? Um, that's direct
7:00:40testimony from that case.
7:00:43>> Yes.
7:00:44>> Uh, can we turn to page nine, line
7:00:46seven?
7:00:51And it says uh here to determine whether
7:00:54a 2024 transmission project would result
7:00:57in a net increase in transmission
7:00:59capacity. The company evaluated whether
7:01:02the project would result in create
7:01:04increased capacity at the element or
7:01:06circuit level based on a comparison
7:01:08between the rated capacity values pre
7:01:10and post project. Did I read that right?
7:01:14>> Yes.
7:01:15And is it reasonable to assume that uh
7:01:18that definition determines whether a
7:01:20project is allowed to be included in the
7:01:22TCA?
7:01:24>> Yes, that's my understanding.
7:01:26>> Okay, you can take this down. And I
7:01:29think your most uh uh recent TCA filing
7:01:33was made in October 25 in 25-462E.
7:01:38Can we pull up what has been marked as
7:01:40hearing exhibit 1522?
7:01:43And let me uh represent that this is the
7:01:46transmission project description attach
7:01:48attached to that uh October 2025 uh uh
7:01:54advice letter filing um subject to later
7:01:59check. Would you scroll over to Yeah.
7:02:02All the way to the right so we can see
7:02:04uh the Yeah.
7:02:07Uh would you accept subject to later
7:02:10check that characterization of this
7:02:12document?
7:02:14>> Yes, I recognize this is attachment
7:02:15three.
7:02:16>> Okay. Um can you just scroll down the
7:02:20item uh 7 75?
7:02:28Uh yeah, you you you can uh stop there.
7:02:31If you can just uh uh um expand uh so
7:02:37you can say it. Do you see purpose of
7:02:39project regional expansion? I think
7:02:42that's the Colorado Power Pathway.
7:02:45>> Yep, I do.
7:02:47>> All right. Can you go up to uh item
7:02:49number one
7:02:51just all the way up to the top?
7:02:54And do you see a summary description of
7:02:57work performed?
7:02:59>> Yes.
7:03:00Rebuild, rebuild, and just scroll
7:03:02through the items. And I think you can
7:03:04see ju just slowly scroll down. All of
7:03:07these are rebuild, rebuild, tear down,
7:03:10tear down, rebuild, rebuild, tear down.
7:03:14Um, is it fair to say most most of these
7:03:18and again subject to later check? Uh
7:03:21yeah, keep going
7:03:28that you can stop. So do you see there
7:03:31most of these are all asset renewable
7:03:33rebuild and reliability investments.
7:03:35Does again subject to later check uh and
7:03:40you know we haven't really got into the
7:03:42dollar amounts. Uh does it look like uh
7:03:46items 1 through 74 are generally asset
7:03:49renewable renewal rebuild and
7:03:51reliability uh investments.
7:03:55>> Uh some of I noticed that in in some of
7:03:58the items um they were wildfire related.
7:04:02>> True. And and as I understand
7:04:06the scope of the TCA, it is, you know,
7:04:09as you explained, it is um
7:04:12elements that increase transfer cap
7:04:14capability on the transmission system.
7:04:17Um but it is also um
7:04:21transmission projects related to the
7:04:23wildfire. So the the approved through
7:04:25the WMP
7:04:26um those are eligible for TCA recovery
7:04:29regardless of whether they are
7:04:31increasing capacity or not. And then um
7:04:35there's also a bucket of transmission
7:04:39projects that are for lack of a better
7:04:42term grandfathered. So, they were, let
7:04:45me, if you recall, I'm sure you do, um,
7:04:48the decision in the 22 case that was
7:04:52consolidated with the TCA,
7:04:55um, became the new rules requiring
7:04:58capacity expansion became effective with
7:05:00projects starting in
7:05:032024, if I remember correctly. But, um,
7:05:07the test year for the last electric ray
7:05:10case was calendar year 2022. So there
7:05:12was this year uh 2023 that had some
7:05:16transmission projects that um were sort
7:05:19of like caught in the middle if if you
7:05:20will. And what was decided if I remember
7:05:24correctly is that that year
7:05:27um would still use the eligibility
7:05:31criteria from prior to that decision. So
7:05:34in 2023, any transmission project
7:05:37um incremental [clears throat] to the
7:05:39test year was eligible for the TCA. It
7:05:41was only starting in calendar year 2024
7:05:44where we then applied the new criteria
7:05:47of does it increase transfer capability
7:05:49or not.
7:05:51Um, so wi with that caveat in mind, I'm
7:05:54not quite sure exactly um what uh those
7:05:59projects are, but they could be, you
7:06:01know, one of those two as well. And then
7:06:04I will also mention that it's also my
7:06:06understanding that um
7:06:10you know, the these are like what we
7:06:13call level two projects, meaning they're
7:06:16like sub levels of a larger project. So
7:06:19if the larger project is um overall is
7:06:23increasing transfer capability then um
7:06:27the elements all elements of that
7:06:29project also are included in the TCA
7:06:32because they're they're needed for that
7:06:34overall project. So the Colorado pathway
7:06:38for example um you know land is needed
7:06:42to build the stuff on. You know we need
7:06:44to put the transmission tower somewhere
7:06:45and so we have to buy land for the
7:06:46rideways. Um land by itself doesn't
7:06:50increase transfer capability but we
7:06:52can't build pathway without the land.
7:06:55And so therefore the land is eligible
7:06:58because it's part of the overall project
7:07:00that is increasing transfer capability.
7:07:02And so there could be some of that in
7:07:04there as well. Um I I don't know if I'm
7:07:07quite close enough to this to speak to
7:07:10any specific line item on this schedule,
7:07:13but um just in general that is the
7:07:16approach that the company has used on
7:07:19figuring out, you know, which elements
7:07:21or which projects are included in the
7:07:24TCA versus what are not.
7:07:26>> Well, sounds like you may be a pretty
7:07:28good witness to have asked these
7:07:30questions, too. So uh uh uh and I'm not
7:07:35going to ask about any individual
7:07:36project. um uh and on this list uh I'd
7:07:41assume well I know some of them uh
7:07:44projects are eligible for the TCA and
7:07:46some are not but assume for purposes of
7:07:50this question that there's an ongoing
7:07:52concern about uh broad elevated levels
7:07:56of capital spending given that it has
7:07:58increased from under two billion in 2022
7:08:01to over five billion in 2025.
7:08:05Um, and I guess I have uh two questions
7:08:09that uh I'm not expecting you you'll be
7:08:12able to answer, but uh first, how much
7:08:15has the non wildfire,
7:08:18non uh you know, projects that uh
7:08:22projects that aren't part of regional
7:08:24expansion, but uh uh asset renewable and
7:08:28reliability projects increased since uh
7:08:32uh 2021, both in the TCA and outside it.
7:08:36And second,
7:08:38uh, depending on the answer to the
7:08:40first, does the company have any advice
7:08:42about the best way to pen to potentially
7:08:45revisit this, you know, the criteria
7:08:49we're using to determine which which
7:08:51asset renewable and reliability projects
7:08:54get included in the TCA
7:08:57and assume we'd want to look at this,
7:08:59you know, either simultaneously with or
7:09:01prior to the uh, next TCA filing. So, do
7:09:05you have any advice where we can sort of
7:09:07look at um what you know just sort of
7:09:11the history of this, what's in the TCA,
7:09:13what's not in the TCA, whether there's
7:09:16scope creep um uh and sort of
7:09:21potentially
7:09:22uh revisiting the uh uh um approach that
7:09:29was abducted adopted in Mr. Rosac
7:09:32Rosac's uh testimony.
7:09:35Uh, so in terms of what is in the TCA,
7:09:39um, I would maybe direct you to these
7:09:42attachment threes in the TCA filings
7:09:44themselves. Um, because they list out,
7:09:48uh, every single project that's being
7:09:50proposed to be included in the TCA. And
7:09:53then if you scroll to the right a little
7:09:55bit, um, they give a an a line element
7:09:59rating prior to and then a line element
7:10:01rating after. So that's that's the
7:10:04criteria
7:10:05um that Mr. Rosac was talking about in
7:10:08his testimony in terms of does it meet
7:10:11the uh eligibility requirements. Um so I
7:10:16would I would maybe suggest looking at
7:10:18these attachments
7:10:20uh going back to 2023 anyways. That's
7:10:23when the change uh took effect in term
7:10:25to to figure out and see here's what's
7:10:28in the TCA and then in terms of what's
7:10:32not in the TCA. Um
7:10:37that one um
7:10:38>> I think it's on this spreadsheet too. Uh
7:10:41at least some of the prior ones had TCA
7:10:43versus nonTCA.
7:10:45Uh, I guess I guess what I'm asking
7:10:48since uh uh I mean I could do that, but
7:10:51it wouldn't be uh admissible as evidence
7:10:54[laughter] unless you wanted to
7:10:55cross-examine me. So, uh I guess um um
7:11:01I guess I'm looking for some help uh
7:11:04trying to pull that together and and
7:11:06just see if there's been uh creep about
7:11:10ordinary course transmission uh projects
7:11:14uh increasing in the TCA. I mean I mean
7:11:18we could just wait till October. Uh I'm
7:11:20not a big fan of suspending vice letter
7:11:24tariff filings like that. I mean, I
7:11:26guess we could bifurcate
7:11:28uh that and let the CPP stuff go and
7:11:32look at it in the other ones. So, I I
7:11:34don't think I'm not looking for you to
7:11:36answer it now. Uh but but does that
7:11:39concern make sense to you, Mr. Freighus?
7:11:42>> It does. And and maybe one suggestion I
7:11:45have is um you know in in October if we
7:11:48wanted to wait until that point in time
7:11:52um I don't think we necessarily have to
7:11:54suspend the advice letter. we could let
7:11:58it go into effect and knowing that the
7:12:02TCA does have a true up and so um we
7:12:06could let the advice letter go into
7:12:07effect have a proceeding where we can
7:12:10explore all of these issues and then at
7:12:12the end of that proceeding um
7:12:16whatever is decided can be implemented
7:12:18through the true-up process of the TCA.
7:12:21So that that's that's one
7:12:24>> I'm sorry was that
7:12:25>> when's the true up
7:12:27Uh the true up happens at the same time
7:12:29that we file the um TCA for the upcoming
7:12:32year. So in October we will file the TCA
7:12:36for 2027, but we will also true up 2025.
7:12:42So it all happens at the same time.
7:12:44>> Well, all right. I think I'd like to see
7:12:47it before October 27. Uh but uh
7:12:52appreciate the uh uh suggestion. Um, all
7:12:56right. Uh, um,
7:13:00well, I I guess you could file the data
7:13:02if we uh ask for it in this rate case.
7:13:05You could file the data in uh uh October
7:13:092026.
7:13:10Uh, and then um
7:13:16see if there's a need to suspend maybe
7:13:18your your thing uh your proposal works.
7:13:20Uh um so all right. Uh any other advice
7:13:25about how to look at this?
7:13:28>> Um I I would also maybe I think Mr.
7:13:32Deagle's uh testimony attachments um I
7:13:36think provide at least going back to the
7:13:38last Ray case provide um project level
7:13:41information on transmission projects
7:13:43um at least through 2025 anyways because
7:13:46that's what what this Ray case is is
7:13:48concerning. So that might provide some
7:13:49additional information on um the level
7:13:52of transmission investment and and the
7:13:54types
7:13:56>> and uh especially on these asset
7:13:59renewable and reliability requirement
7:14:01projects. Uh it sounds like Mr. Deagle's
7:14:05uh testimony is the best place for
7:14:07detailed project um budgets.
7:14:11um you know g given the cost overruns
7:14:14we've seen how do we uh keep costs under
7:14:17control seems like when we do pins uh
7:14:21those costs uh came in at or below
7:14:24expectation but when we don't do pins
7:14:28um um it seems messy. So any advice on
7:14:32how we get the project level detail and
7:14:36how would we from a process perspective
7:14:38uh um develop pimps if that's the way
7:14:42the parties in the commission wanted to
7:14:43go.
7:14:46>> Um I I would maybe check with Mr. I know
7:14:50he's already been up on the stand, but
7:14:52he he is probably the best person to
7:14:54really talk about um how transmission
7:14:57projects are planned, how the cost
7:14:59estimates are developed, and um
7:15:02additional measures that the company has
7:15:04taken to try to refine those uh cost
7:15:07estimates to um hopefully head off the
7:15:10issue some of the issues that have been
7:15:12raised in in this proceeding regarding
7:15:15cost overruns. Um, I think some of
7:15:18that's in his testimony, but he's
7:15:19definitely the better person to He's the
7:15:22expert in that area. Certainly not me.
7:15:26>> Uh, you can take this down. Uh, I think
7:15:28that's, uh, all I have. Uh, thank you,
7:15:31Mr. Freighus. Uh,
7:15:34uh, Mr. Zmer, redirect.
7:15:37>> Thank you, Chair Blank. Um,
7:15:41[clears throat]
7:15:42Mr. Fredus, I'd like to start with your
7:15:44discussion with Commissioner Gilman
7:15:46about tax gross up. Um, is it your
7:15:50understanding that applying a tax gross
7:15:52up is a common thing done in regulatory
7:15:55ratem?
7:15:57>> Yes, that's that's standard rate making
7:16:00revenue requirement calculations.
7:16:02>> Okay. And then uh can we pull up uh
7:16:06hearing exhibit 143?
7:16:20Oh, I'm I'm sorry. 134. Mr. I'm afraid
7:16:24this is rebuttal testimony.
7:16:50Can we go to page 23?
7:17:00And you had a discussion uh if we scroll
7:17:02down a little bit um
7:17:07about this uh with with Mr. Bunker and
7:17:11about the company's uh earned versus
7:17:15authorized return. Do you recall that?
7:17:18>> Yes.
7:17:20Um, is it your understanding that and he
7:17:24brought up timing of rate cases and and
7:17:26different factors, but is this
7:17:28discussion that you're having uh reflect
7:17:32the actual results of every year as
7:17:35opposed to what occurs in a test year?
7:17:39>> Yes, this this table is um the actual
7:17:42earned returns based on the appendix A
7:17:44annual reports to the commission.
7:17:49Okay. And then you also had a discussion
7:17:52with Mr. Bunker. And if we could pull up
7:17:54hearing exhibit uh 157, I just wanted to
7:17:57clarify one thing.
7:18:08And could we go to page 14?
7:18:20Sorry, just a second.
7:18:42>> Uh, I'm sorry, Miss Crank. Can we go to
7:18:45the the settlement uh exhibit 157
7:18:48actually or 155
7:19:06and can we go to page uh 17?
7:19:12If we scroll down to paragraph 31,
7:19:16um you had a conversation with Mr.
7:19:18Bunker about the rate ratebased
7:19:20convention used in settlement test year.
7:19:22Um there are except and you testified
7:19:26that year end is used. Uh do you recall
7:19:28that?
7:19:30>> Yes.
7:19:32>> But are there some exceptions to that?
7:19:36>> There are. Um and those are the items
7:19:39that are on the screen right now.
7:19:41>> Um
7:19:43Those are pretty standard. Those have
7:19:44been um treated in this manner for many
7:19:49many Ray cases. Um so this is this is
7:19:52having
7:19:54different methodologies for different
7:19:56items in Ray bases is um pretty
7:20:00standard. It's been done for many uh
7:20:03many Ray cases and there's reasons be
7:20:05there's good reasons behind it.
7:20:08>> Okay. And these are the same exceptions
7:20:11that were used in the company's uh
7:20:13rebuttal testimony revenue requirement.
7:20:15Is that right?
7:20:16>> That's right.
7:20:18>> Okay. Uh could we pull up hearing
7:20:20exhibit uh 156
7:20:40and go to page 19.
7:20:48You had a conversation with Mr. Kaufman
7:20:50about customer benefit about customer
7:20:54benefits associated with the year- end
7:20:56ratebased convention. Do you recall
7:20:57that?
7:20:59>> Yes.
7:21:01>> Uh
7:21:03is it your understanding that Mr. Pay or
7:21:06Mr.
7:21:06testimony here identifies uh some of the
7:21:11important aspects from the company's
7:21:13perspective of using your end rate base.
7:21:16Do some of those also relate to customer
7:21:18benefits?
7:21:21Uh they do [clears throat] um you know
7:21:23as uh seen here and in the settlement
7:21:27agreement um you know it is a uh
7:21:30carefully crafted
7:21:32um outcome that allows uh both the the
7:21:38company to continue making the
7:21:40investments that serve customers and you
7:21:43know provide the uh safe and reliable
7:21:46service that they want while also
7:21:48recognizing the concerns of the uh
7:21:51parties to to the settlement. So, um you
7:21:54know, one aspect of the settlement being
7:21:56year-end rate based, but is a component
7:21:58of an overall larger package that um
7:22:02does attempt to uh serve both customer
7:22:07benefits and customer interests as well
7:22:08as uh company interests.
7:22:12And for the rate base that's used in the
7:22:15settlement test year, that involves
7:22:17capital additions through December 31st,
7:22:202025. Is that your understanding?
7:22:23>> That's correct.
7:22:25>> What does that mean in terms of those
7:22:28assets being available to serve
7:22:29customers during the period rates are in
7:22:31effect?
7:22:33Uh so during the period rates are in
7:22:36effect um you know the asset all of the
7:22:40assets placed into service through the
7:22:41end of 2025 are fully serving uh
7:22:45customers uh during the rate effective
7:22:47period and in fact they're uh they were
7:22:50serving customers they're serving
7:22:52customers right now and so they've been
7:22:53serving customers
7:22:55um
7:22:57from essentially January 1st through uh
7:23:01today and right now they're not in rates
7:23:04and so customers are getting the benefit
7:23:06of of those assets without yet having to
7:23:10um pay for the cost of those through
7:23:12rates.
7:23:15>> And here on Mr. P's testimony on line
7:23:1811, he talks about additional regulatory
7:23:20lag through the use of 13-month average
7:23:22rate base. And in your rebuttal
7:23:25testimony, you talked about um both the
7:23:30that topic as well. Can you discuss how
7:23:33that fact that the assets are in service
7:23:37and serving customers during the rate
7:23:39effective date, but the additional lag
7:23:41of 13-month average rate base, how that
7:23:44connects between cost recovery or costs
7:23:47that are reflected in rates and the
7:23:49service that customers are receiving?
7:23:52Um yeah, so as as I mentioned um you
7:23:57know the assets that were placed into
7:24:00service through the end of 2025 are
7:24:04current currently serving customers. Um
7:24:06they're not in uh rates yet and so the
7:24:10customers are receiving the benefits of
7:24:12those assets. Um but the company isn't
7:24:16isn't receiving cost recovery uh yet.
7:24:19Once under the settlement agreement um
7:24:23when rates become effective from this
7:24:25case, the customers will be uh receiving
7:24:28the benefits of those asset will
7:24:31continue to receive the benefits of
7:24:32those assets, but the company will begin
7:24:35recovering the cost of those assets. Um,
7:24:39if a 13-month average ratebased
7:24:42methodology is used, um, that
7:24:47reduces the uh the the cost recovery
7:24:50that the company is receiving from
7:24:53assets that are fully serving customers
7:24:55through the rate effective period. Um,
7:24:57you know, as an example, a a
7:25:01transmission asset, for example, that is
7:25:03um placed into service at the end of uh
7:25:07in December of 2025, for example, under
7:25:10a 13-month average ratebased
7:25:13methodology,
7:25:14customers are getting the benefits.
7:25:17They're getting the full benefits of
7:25:19that asset, but C the company is only
7:25:21receiving 113th of the cost recovery
7:25:24from that asset because it it happened
7:25:26to go into service at in December of the
7:25:29test year. And so um it
7:25:33because of the uh forward-looking nature
7:25:37of of rate making and um the additional
7:25:41lag that is imposed upon the company
7:25:44through an average ratebased
7:25:45methodology. It just further um
7:25:49exacerbates the mismatch between uh
7:25:51customer benefits that they're receiving
7:25:53and um recovery of costs for the c for
7:25:57the company.
7:26:00Thank you. Could we move over to hearing
7:26:02exhibit 134
7:26:07and go to page
7:26:0916.
7:26:14And if we can just scroll down uh so we
7:26:16can see the whole table or at least the
7:26:19bottom. That's that's good. Thank you.
7:26:22Um you also [clears throat] had a
7:26:24discussion with Mr. coffin about the
7:26:25history of the use of 13-month average
7:26:29and year- ed rate base in various cases
7:26:32and you've got this table uh identified
7:26:34here. Um
7:26:37the third from the bottom is decision
7:26:40C22642
7:26:43and that's in the company's uh
7:26:48or sorry the second to last one C230592.
7:26:52That's the decision in the company's
7:26:54last phase one electric rate case. Is
7:26:57that right? That's
7:26:58>> right.
7:27:00>> And that's indicated there uh with a
7:27:02settlement notation.
7:27:05Yes. Is that your recollection?
7:27:07>> Is it your recollection that the city of
7:27:09Boulder opposed that settlement?
7:27:16>> I don't know. I don't believe that they
7:27:18did.
7:27:20>> Um, we could pull up hearing exhibit uh
7:27:26300 attachment CWS77.
7:27:49And if we can scroll down
7:27:57just to the
7:28:01opening paragraphs, I
7:28:12Um, can we go back up?
7:28:23Uh, we've got the settling parties here
7:28:26defined.
7:28:28Um,
7:28:30do we see Boulder in that list?
7:28:44I can't see what's behind the red
7:28:46submitted to Colorado PUC filing system.
7:28:49Um,
7:29:08let me see if I can
7:29:11>> I I do remember that this the settlement
7:29:15agreement in the 22 case was uh
7:29:18unanimous. It it was non-comprehensive
7:29:21in that there was one item, one issue
7:29:23that was left for the commission to
7:29:24decide, but it was a a otherwise
7:29:27unanimous settlement.
7:29:30>> Uh can we go to page 10?
7:29:41Does the first sentence of paragraph 28
7:29:43help refresh your recollection?
7:29:46It looks like it was opposed by Boulder.
7:29:48>> Okay.
7:29:50Uh can we go back to exhibit 134?
7:29:58Uh and if we could scroll down,
7:30:02uh the second to last one, uh C220642.
7:30:08Uh is it your understanding that's the
7:30:11company's uh 2022
7:30:14gas
7:30:16rate case.
7:30:17>> Yes.
7:30:19>> And the um notation there of year end
7:30:24that means it was a litigated decision.
7:30:28>> That's correct.
7:30:29>> Okay. Um
7:30:32la I think
7:30:35Oh, sorry, not last. Uh there was one
7:30:37other thing I wanted to clarify uh
7:30:39regarding your discussion with
7:30:41Commissioner Gilman on the wind life
7:30:44change.
7:30:46>> Do you recall that discussion?
7:30:48>> Yes.
7:30:49>> And you recall discussing that the
7:30:53impact to Adit will show up after the
7:30:56rate effective date. Do you recall that?
7:30:59>> Yes.
7:31:01But the will the change in the
7:31:03depreciation rates show up in
7:31:05depreciation expense in the settlement
7:31:07test year?
7:31:09>> Yes. So the the impact on depreciation
7:31:12expense
7:31:14um as a result of the um agreed upon
7:31:18depreciation rates is included in the
7:31:20settlement test year in the settlement
7:31:22revenue card.
7:31:26Okay, last area. Uh, I just wanted to
7:31:30talk about Ryder Roland for a few
7:31:32minutes. Um, could we pull up hearing
7:31:34exhibit 315
7:31:37that, uh, UCA used during Mr. Fredus'
7:31:41cross-examination?
7:31:54if we can scroll down to the table.
7:32:00Thank you. Okay. Um,
7:32:05are you you want to review this for just
7:32:06a second so you can ground yourself?
7:32:09>> I'm I'm ready to go. I remember this
7:32:11table.
7:32:11>> Okay. So, let's start with the top line.
7:32:16Please describe what the top line is
7:32:19showing for these various items.
7:32:23>> That that is the um
7:32:27total revenue deficiency
7:32:30um
7:32:32for uh
7:32:35all capital being requested in this
7:32:38case. So in in uh the first the direct
7:32:41columns labeled direct that was based on
7:32:45um the capital included in the
7:32:48a attachment APF1 and then in the um
7:32:53other columns it's based on uh actual
7:32:572025 capital um included in in the
7:33:02attachments that support uh the rebuttal
7:33:04and settlement agreement revenue
7:33:06requirement calculations um those
7:33:09amounts in are [snorts] inclusive of the
7:33:13amounts that are in um the second row
7:33:16the TCA TCAD roll in um amounts. So for
7:33:21example in the rebuttal that 488 million
7:33:24is inclusive of the capital in the 160
7:33:29million on the next row down.
7:33:32And to put it another way, that top line
7:33:36reflects capital that is currently as of
7:33:40today in the TCA and TCAD. Is that a
7:33:45correct statement?
7:33:47>> Yes.
7:33:49>> Okay.
7:33:50So the total line is kind of independent
7:33:54of writers. It's just capital add
7:33:58capital additions through December 31st,
7:34:002025.
7:34:02That's correct.
7:34:03>> Okay. Now, the next line, the roll in,
7:34:08is that the revenue associated with
7:34:11those riders? Basically, what customers
7:34:13are currently paying?
7:34:16>> That's that's correct. Yeah, it's it's
7:34:18the revenue requirement based on of for
7:34:20each of those riders, the revenue
7:34:22requirement
7:34:23of uh the capital in those riders
7:34:26[snorts] through 2025.
7:34:30And so then the third line, what's the
7:34:33purpose of the third line?
7:34:36>> The third line is just to show um
7:34:41really the impact to customers as a
7:34:44result of um this case. So the roll in
7:34:49line that that number is already on
7:34:51customers bills. And so um for the for
7:34:56the customers that's just it's basically
7:35:00if you think about as moving dollars
7:35:01from one pocket to the other. Um it's
7:35:04just moving dollars from they're already
7:35:06on their bill from the line that says
7:35:08TCA to the line that says base rates.
7:35:10That that's really what this table is is
7:35:13trying to show. And so that
7:35:16really the bottom line is the number to
7:35:18look at in terms of what is the imp
7:35:20impact to customers.
7:35:24>> Thank you. And then um you discussed the
7:35:28160 million
7:35:30161 million rollin number with Mr.
7:35:32Bunker quite extensively. Uh did you
7:35:35review uh UCA witness
7:35:39uh testimony in opposition
7:35:42to the settlement agreement? I did.
7:35:44>> I did.
7:35:46>> And what was his position or UCA's
7:35:49updated position regarding the roll in
7:35:52amounts for the TCA TCAD?
7:35:56Um
7:35:59if I [clears throat] recall his position
7:36:01was that um
7:36:04UCA was willing to concede and roll in
7:36:09um the TCA at the year end levels if I
7:36:13recall correctly.
7:36:15And so it would be the same $161 million
7:36:20$161 million that would be used to
7:36:24calculate this net net effect. Is that
7:36:27correct?
7:36:28>> That's correct. As I was uh discussing
7:36:31with Mr. Bunker, that that row the TCA
7:36:34roll in number is not calculated based
7:36:37on what is agreed to or settled or
7:36:41ordered in this case. that is calculated
7:36:45based on the methodology outlined in
7:36:49each of the rider or tariffs in in that
7:36:51methodology. So it's independent of um
7:36:54what is in the settlement agreement or
7:36:56what ultimately ends up being ordered.
7:37:03>> With that I think I am done. Thank you
7:37:05Mr. Predus.
7:37:07>> Uh uh thank you Mr. Freighus uh for your
7:37:11Friday afternoon grilling. Uh you may be
7:37:14excused.
7:37:15>> Thank you.
7:37:17>> Uh anything else before we break uh for
7:37:20the day? I think we're coming back uh on
7:37:23Monday with Piscuchi Wner Buck Bokeley
7:37:27Hansen Nickel and then we'll just jump
7:37:30right into the staff witnesses. Uh Miss
7:37:33Chartran.
7:37:35>> Uh yes, chairperson blank. We have two
7:37:38items. First one is core will wave its
7:37:41cross time for both witness O'Neal and
7:37:44witness Glusac.
7:37:47>> Okay.
7:37:49>> And second um I have a schedule conflict
7:37:52on Monday and to accommodate this the
7:37:56company is agreeable to have witness
7:37:58Hansen be available after immediately
7:38:02after Mr. Puuchi.
7:38:05And so if there's no objection, core
7:38:08makes that request that witness Hansen
7:38:10be the second witness on Monday.
7:38:12>> Do you want to have him be the first
7:38:14witness?
7:38:16>> I think that I think that um the company
7:38:19prefers that Mr. uh Pakusi uh he that he
7:38:23goes first and that that will work for
7:38:26us.
7:38:28>> Okay, perfect.
7:38:30So uh it'll be Pescuchi Hansen and then
7:38:35uh back to Wer Blay.
7:38:39>> Okay.
7:38:40>> Thank you.
7:38:42>> Uh any other matter matters uh before we
7:38:46break for the uh weekend.
7:38:51Hope everybody has a great uh weekend.
7:38:53>> Oh, I do have one question. Sorry. Oh,
7:38:56[laughter]
7:38:57the weekend's not ready to start.
7:39:00>> Um, just to get um some uh resolution,
7:39:04Mr. Zmer. So, yesterday I had asked for
7:39:06a more direct comparison between the
7:39:09native retail load forecast and the
7:39:12sales um figures that we see kind of
7:39:15across proceedings, but most
7:39:16specifically from JTS to what we're
7:39:19seeing for the 2025 actuals. And I think
7:39:22the chair had also asked for um some
7:39:26non-weather normalized actual actuals I
7:39:29think you called them as part of that
7:39:31request to be able to compare across
7:39:33proceedings. So I was just curious if
7:39:35that's something that the company will
7:39:37be able to provide during the pendency
7:39:38of the hearing.
7:39:41>> Yeah, we are currently pulling that
7:39:42information together. Um, I think we're
7:39:46assessing
7:39:48how and what we're able to get, but
7:39:50we're we're actively working on it and
7:39:52we'll we can provide you an update on
7:39:54Monday status.
7:39:55>> Okay. Thanks. And then the other thing
7:39:57is if the company is planning on
7:39:59submitting a revised um settlement
7:40:03revenue requirement based on the um PTC
7:40:08transfer issue that Mr. Predis and I
7:40:11went through. Um, yeah, we would be
7:40:14amendable to that. If the commission um
7:40:17would like that filed, we can get that
7:40:19pulled together. Uh, we should have an
7:40:21update on that on Monday as well.
7:40:24>> Okay. I mean, I think it would be
7:40:25helpful to see an accurate version.
7:40:27>> Um, I support Commissioner Gilman's uh
7:40:30request, so if you could do that, uh,
7:40:34that'd be great.
7:40:37Anything else, Commissioner Gilman?
7:40:40Anything else, Mr. Omar,
7:40:43>> no. Just have a nice weekend.
7:40:44>> You too. Uh, see everybody 9:00 a.m. on
7:40:47Monday. Have a good one.
7:40:48>> Thank you.

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