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31:17is the uh court reporter ready Miss
31:21Samar PCO you ready I'm
31:25ready uh good afternoon we're now on the
31:28record it is 1 pm on Wednesday September
31:314th 2024 this is an evidentiary hearing
31:35in proceeding number 24
31:38al-49 G Public Service Company of
31:41Colorado's phase one Gaz rate case I'm
31:44Eric blank the chair of the commission
31:46can my colleagues introduce themselves
31:48for the record starting with
31:50commissioner plant on plant
31:53commissioner commissioner Gman good
31:56afternoon this is commissioner Megan
31:59uh thank you uh with that let's start uh
32:03with the entries of uh appearance of the
32:05party starting with uh Public
32:09Service oh good afternoon Commissioners
32:12can you hear me okay we can great my
32:15name is Tanis smartco I am Council for
32:18Public Service Company of Colorado and
32:20with me today are val har and Liz Brahma
32:23from the tap law
32:24fir thank you uh Charles staff
32:29good afternoon Commissioners Katie
32:31mcclin Assistant Attorney General on
32:33behalf of Staff of the Public Utilities
32:35Commission with me today are my
32:36co-counsels assistant Attorneys General
32:39Josh Horman and Justin
32:42Cox welcome uh Mr bunker
32:46UCA thank you Mr chairman good afternoon
32:49Commissioners uh senior Assistant
32:51Attorney General Gregory bunker on
32:53behalf of the uh utility consumer
32:57advocate and I'm also introducing the
33:00appearances of senior Assistant Attorney
33:03General Michelle Singer Nelson and
33:07Assistant Attorney General Kate krampton
33:10welcome welcome atmas
33:16energy good afternoon this is John
33:19Sherry with Hollen Hart appearing on
33:21behalf of atmas energy
33:23corporation
33:24welcome uh CNG
33:32good afternoon Mr chairman Commissioners
33:33Mark Davidson FL fir Fairfield and woods
33:35appearing on behalf of Colorado natural
33:37gas and the City of
33:40Pueblo
33:41welcome climo uh lidan Mr
33:53feno good
33:55afternoon uh Mr chairman and
33:57commissioner
33:58I think I can't my camera keeps going
34:01off there it is uh Richard Alano on
34:04behalf of climax Mone
34:07company welcome uh City uh I guess Mr
34:11Davidson already did the city of PLO
34:13tiger natural
34:19gas oh you're muted Miss
34:22CPR thank you uh good afternoon Leah
34:26caprita from Holland at night appearing
34:28on behalf of tiger natural
34:30gas welcome Uh Wood River
34:35Energy good afternoon chairman and
34:37Commissioners Brandon dipman of the law
34:39firm Wilson Williams Felman dipman
34:42appearing on behalf of Wood River
34:44Energy welcome and finally uh commission
34:49Council I'm Assistant Attorney General
34:51Wendy Rosati for commission Council and
34:53I'll be joined during this hearing by
34:55senior Assistant Attorney General Ruth
34:57Harper and Assistant Attorney General
34:59Mitchell
35:00deszo welcome uh did I miss
35:07anybody um moving on to electronic
35:10process we're going to conduct this
35:12hearing using electronic exhibits a
35:14spreadsheet marked as hearing exhibit
35:161000 lists the latest versions of the
35:18pre-filed testimony and
35:21attachments uh without that any
35:24objection to the admission of hearing
35:26exhibit 1000 the spreadsheet listing all
35:29of the exhibits not getting to the
35:31exhibits quite yet missar PCO no
35:35objection from the company anyone
35:39else hearing none hearing exhibit uh
35:431,000 is admitted is there a stipulation
35:47among the parties admitting all the
35:49items listed on uh hearing exhibit 1000
35:53or uh any objection to admitting all
35:56those exhibits
35:59misso sorry to talk over you chair no
36:03worries we did confer with all of the
36:06parties and everybody seemed to be okay
36:08with all the exhibits on hearing exhibit
36:101000 so I believe it is
36:13stipulated uh anybody think
36:17differently all the pre-filed exhibits
36:20listed on a hearing exhibit
36:221,000 uh are so
36:25admitted uh I think we have S Witnesses
36:28who are not scheduled to have any uh
36:31cross-examination who I'd like to excuse
36:34if
36:35possible
36:37um uh commissioner plant uh commissioner
36:42Gman any questions for company witness
36:45uh
36:46Marts none for me commissioner Gman uh
36:51none for
36:52me um Mr mortz is excus as I'm told
36:56commission counsel
36:58um doesn't have questions for him either
37:00and neither do I uh questions for Mr
37:05goodu commissioner
37:08plant um
37:11no commissioner Gman you sound a very
37:14uncertain commissioner
37:16plan I do not Ju Just to foreshadow I'm
37:20aware of which uh Public Service
37:22Witnesses I'm ready to let go but past
37:24Public Service I I'm not ready to commit
37:28all right uh uh uh commissioner plant um
37:33Mr shrub no commissioner
37:38Gan
37:39nothing uh Mr shrub is excused uh Mr
37:44deburger commissioner plant nope
37:47commissioner Gman no Mr Deen Burger's
37:51excuse um Miss Lovely commissioner plant
37:55no commissioner Gman
37:58no all right uh those five uh uh company
38:02Witnesses are
38:04excused uh um um Miss Ramos uh
38:09commissioner
38:11plant no commissioner Gilman um I just
38:15haven't gotten to the point I'd be happy
38:17to confirm like tomorrow morning all
38:20right for staff and other Witnesses I
38:23had just gotten through all of the
38:25public service witnesses to be sure they
38:27could be excuse I understand uh so um
38:32we'll uh take up uh witness excusals for
38:36staff UCA and Pablo uh first thing
38:40tomorrow
38:42um have any of the parties decided to
38:46wave uh their scheduled uh
38:54cross Miss
38:56mlin um um chair not necessarily waving
39:00but we would request to reallocate some
39:03of our time if that's possible we don't
39:05anticipate using the entire 60 Minutes
39:08on company witness pet but we would like
39:11to allocate 30 minutes of that to
39:14company witness Burman and keep 30
39:17minutes with
39:19P
39:25okay let me just write that down for a
39:29second Miss
39:32caprita uh we have a 60 minut tiger a 60
39:35Minutes reserved for uh Mr Burman and 20
39:40minutes for uh Mr P and I believe that
39:42we will be waving both of
39:44those okay thank
39:49you uh both Burman and p uh yes chairman
39:54thank you thank you um um Miss Nelson
39:58Miss singer Nelson yes um UCA will uh
40:03wave the 20 minutes designated for Mr
40:07Garder but we would like to move that 20
40:10minutes to Mr
40:16Burman thank
40:18you uh Mr
40:23feno thank you Mr chairman I have uh
40:25reserved no time for climax to
40:29cross-examine any of the witnesses and
40:32uh would expect to only uh be monitoring
40:37the case uh in and out periodically so I
40:40wanted to advise uh all the parties
40:43understand that anything that happens
40:45when I'm out would uh I'm uh uh have to
40:50accept so thank you all right thanks for
40:53the uh heads up uh Mr feno
40:59uh I don't think that enables us to
41:06excuse any more
41:10witnesses
41:13um so uh I'm told uh commission councel
41:18does not have any questions at the
41:19current time and they'll let us
41:22know um if that changes so I guess oh Mr
41:28yeah thank you chairman So like um
41:30climax Wood River does not have any
41:32Witnesses um on for cross we don't
41:35intend to cross-examine anyone or waving
41:37cross entirely so we would also like to
41:40be excused and understand that you know
41:42we're subject to whatever happens during
41:43the
41:44hearing uh thank you
41:46sir uh so excused uh Mr
41:51Sher likewise chairman on behalf of
41:53Atmos Energy I also ask to be excuse for
41:56the remainder of the hearing accordingly
41:57we wave our rights
42:00participation no excuse thank you
42:04sir anyone
42:08else all right any other preliminary
42:11matters uh before we uh get um Mr Burman
42:19Started Mr Burman you
42:23there uh chair blank I do have um a
42:26couple of preliminary matters yep i'
42:29like if that's
42:31okay first of all we do have a few
42:33exhibits that we would like to have put
42:35into evidence as part of preliminaries
42:37there are no substantive changes here
42:39they are all items that were left off of
42:41hearing exhibit 1,000 due to some
42:44non-substantive issues that didn't get
42:46resolved before that exhibit was
42:48prepared we've conferred with all of the
42:50parties and there's no objection to
42:52their admission and they're currently
42:54contained in our our box
42:57all right
42:59um uh do you want to make a motion with
43:03I mean is it like a dozen hearing
43:04exhibits or no it's five it's just five
43:08and I can list them off and move for
43:09their admission yeah without any detail
43:12if you can just list list the numbers
43:14maybe that'd be great and I don't know
43:16if Miss Federico is is in charge today
43:19but they are in our
43:20box yes I see them um if you can just
43:23still read through the numbers for the
43:24record and just to make sure I grabb
43:26them all okay I'll do that uh first is
43:28hearing exhibit 117 executable
43:31attachment APF
43:3415.5 rev
43:362 the next one is hearing exhibit
43:39executable attachment APF
43:431538 rev
43:462 the next one is hearing exhibit 123
43:51confidential executable attachment
43:55r-4 C rev
43:582 the next one is hearing exhibit 123
44:02confidential attachment R
44:06m4c and the last one is hearing exhibit
44:09123 attachment
44:12r-4 rev
44:15one uh any objections to the emission of
44:18those uh hearing
44:22exhibits hearing none so moved
44:27uh any other preliminary matters I have
44:30one more matter that may have been
44:32resolved with the reallocation of cross
44:34um we do have one witness availability
44:37issue that wasn't included in our notice
44:40uh company witness Miss giland is not
44:42available to testify today um so if Mr
44:46Burman would happen to finish early we
44:49might need to take Witnesses out of
44:50order but again he's had some cross time
44:53reallocated to him so that may not be
44:55necessary the parties are aware his
44:57chair but I wanted to alert the
44:58Commissioners as well perfect we'll uh
45:02accommodate Miss Gillian's uh schedule
45:06thank you other uh preliminary matters
45:10not from the
45:14company uh Mr Burman I will turn it over
45:18to my colleague Miss brma thank
45:22you uh Mr Burman do you swear to tell
45:25the truth the whole truth and nothing
45:26but truth I do oh sorry put
45:30your you put your hand down
45:35now a little rusty yeah it's a little
45:38rusty uh uh is anyone communicating with
45:42you or assisting you in any way no if
45:45that changes uh you'll let us know I
45:48will um Miss
45:55Brahma uh back to you Miss
46:02Brahma here just a moment if you would
46:04please my speakers are not working I
46:06just need one
46:07second yep
46:28let's try that does that work I can hear
46:31you thank
46:33you the changeover did not go smoothly
46:36for the first uh effort of the day but
46:38we'll go ahead uh good afternoon Mr
46:40Burman um thank you uh for being here we
46:43can hear you just fine um would you go
46:45ahead and state and spell your name for
46:47the record if you haven't already
46:48because I missed I may have missed if
46:49you were asked to do that no problem um
46:51Steven Burman s ven b r m thank you and
46:57what is your title I'm the regional vice
47:00president for Regulatory and pricing for
47:02a Public Service Company okay and did
47:05you cause to be filed in uh this case
47:08hearing exhibit 101 as your direct
47:11testimony hearing exhibit 118 as your
47:13supplemental direct testimony and
47:15hearing exhibit 124 as your rebuttal
47:18testimony yes I
47:20did uh as those do you have any
47:22corrections to those pieces of testimony
47:24as you sit here today I do not
47:28those pieces of testimony have already
47:29been admitted into the record so with
47:31that Mr Burman is available for
47:35cross-examination uh thank you uh uh
47:39Miss uh M mlin I have 90
47:44minutes thank you chair and good
47:46afternoon Mr bman my name is Katie mlen
47:48and I represent trial staff um I have a
47:52little bit of a lingering cough going on
47:53so I apologize if that impacts anything
47:56but I will try try to get through this
47:57as smoothly as possible so I'd like to
48:01start today by asking you how does the
48:04company Define
48:07affordability uh I wouldn't say the
48:10company has a stated definition of
48:12affordability I think it's um term that
48:15is used frequently in many different
48:18contexts um and is dependent really upon
48:22which how we're using it
48:25um so I guess I would say you
48:29know I don't know that we have a defined
48:32uh company supported definition of
48:37affordability does the company's concept
48:40of affordability only apply to income
48:42qualified
48:44customers I mean as as related to
48:47programs for income qualified customers
48:50yes you could use affordability in those
48:51terms but I wouldn't again I don't think
48:55we have a concept of
48:57stating the definition of
48:59affordability generally to all of our
49:02customers I think it's it depends on the
49:04context in which you're asking about it
49:06or we're talking about
49:07it okay um are the company's
49:11affordability concerns limited to only
49:13those that would qualify for the
49:15company's bill assistance
49:18programs the company is always looking
49:22to provide our services in the most
49:24cost-effective way that we can for our
49:26customer customers so I guess I would
49:28say we understand we have a number of
49:30customers that are more challenged in
49:33paying their bills and we have programs
49:36uh as appropriate defined and and
49:38developed for certain segments of our
49:41customers that are are most vulnerable
49:43but from an affordability standpoint I
49:45think we are constantly looking
49:48to craft or we're constantly looking to
49:51provide our services in in the most
49:53cost-effective way we can for customers
49:56does the company acknowledge that it has
49:58an obligation to consider rate impacts
50:01to all
50:05customers certainly yes the company
50:08considers the impacts of its rates yeah
50:11it's one of the things we core kind of
50:14pieces of the company's Vision to
50:16provide safe reliable cost-effective
50:19service and the commission requires that
50:22all advice letters include a rate impact
50:25analysis correct
50:27that's correct did the company provide a
50:29rate impact analysis with this advice
50:32letter I believe we did
50:36um in meeting the the requirements and
50:39the guidelines laid out by the
50:41commission and do you understand that
50:43when staff discusses the concept of
50:46affordability we're speaking to the
50:48overall energy burden on all customers
50:51created by the need to pay for this
50:53critical service provided by the company
50:58um I'll take your assertion that that's
50:59how staff is looking at
51:02affordability and are you familiar with
51:04the Public Utilities Commission mission
51:07statement I'm sure I've seen it but I
51:10probably could not recite it that's
51:12without being
51:13prompted we can go ahead and pull it up
51:15on the screen that's going to be in
51:17staff's box hearing exhibit 45
51:32I know that's a little bit small but if
51:33you could read the part that appears to
51:36be highlighted in
51:40purple-ish the Colorado Public Utilities
51:42Commission serves the public interest by
51:45effectively regulating utilities and
51:48Facilities so that people of Colorado
51:50receive safe reliable and reasonably
51:52priced Services consistent with the
51:54economic environmental and social values
51:56of our
51:58state this mission statement doesn't say
52:01that only income qualified customers
52:03should receive reasonably priced
52:05Services correct that's correct okay we
52:08can go ahead and take this
52:11down thank you now Mr bman you'd agree
52:14with me that this commission has broad
52:17discretion right yes okay now staff in
52:23the company disagree on whether a thir
52:2613mon average or year end is more
52:29appropriate when calculating rate base
52:32but simply put these are just two
52:34different accounting mechanisms to
52:36accomplish the same function
52:38establishing a base rate
52:41right I don't know that i' characterize
52:45them as either accounting mechanisms or
52:48accomplishing the same function they are
52:52methods of calculating rate base in the
52:54cost of service for purpose purposes of
52:56setting rates and one by definition
53:01imposes more lag than the
53:05other okay let's start talking about
53:07that a little bit more
53:10um you'd agree that 13-month average and
53:13year end are both just and reasonable
53:16mechanisms
53:18right uh I mean it again depending on
53:21the context I mean the company has
53:24always advocated for a 13-month average
53:26base when using a future test Year and
53:29that that makes sense and works within
53:32the confines of that structure but when
53:34using a historic test year I wouldn't
53:36agree that it's a reasonable way to
53:39calculate rate base imposes a
53:41significant amount of lag on the company
53:45in a a structure in an hty that's
53:48already uh starting with imposing
53:51lag but the commission has the authority
53:54and discretion to deter determine that
53:5613-month average is just and reasonable
53:59correct they do and they've done that in
54:02the past
54:03right they have in the 2015 gas rate
54:09case yes I believe that they ordered a
54:1213-month average and the commission also
54:14ordered a 13-month average in the 2017
54:17gas rate case
54:19correct just trying to remember if that
54:21was settled or if that was actually
54:22litigated um I know it did result in a
54:2513-month average
54:29we can pull up some testimony on that or
54:31if you want
54:33to just assume that it was a litigated
54:35case as I'm representing it u i take
54:38your representation thank you Mr
54:48bman now I want to briefly talk to you
54:50about the differences in year end and
54:5413mon in very simple terms year end rate
54:58base takes a snapshot of plant balances
55:02on one particular day of the year
55:06right it is a it's a point in
55:10time Peri ending period for the test
55:12Year
55:14yes okay but the company's estimate of
55:18operation and maintenance costs are
55:21included in the revenue requirement are
55:23representative of the entire calendar
55:25year test period
55:27correct they are they're very different
55:30two very different concepts there
55:32wouldn't be it would be inappropriate
55:34till consider the types of methodologies
55:36you do for rate base with
55:38onm sure but you would agree that we
55:41don't take a single snapshot of omm
55:43correct again that's because it wouldn't
55:46make sense to do so but yeah I mean I
55:48wouldn't compare the two concepts of o
55:50and m and rate base from a cost of
55:52service perspective it's appropriate to
55:55look at different ways to calculate rate
55:57base because you're talking about assets
56:00that are put in service at points in
56:02time whereas onm expense is a total
56:04annual amount for the test period so
56:08let's talk a little bit more about
56:10putting assets into service at points
56:12and time in using the
56:1513mon methodology that uses 13 data
56:19points right it takes correct it takes
56:24plant service at 13 different data
56:27points
56:33and if we have a plant that is added in
56:36one month and there's a plant removed
56:39and retired in a different month you'd
56:41agree that those would have different
56:49values
56:50well again they're somewhat different
56:53concepts here you've got you've got
56:56assets at go in service and then
56:57retirements also occur um probably every
57:01month just given the sheer number of
57:04assets and service by the
57:06company so changes occur throughout the
57:10year changes do occur throughout the
57:13year okay and it's the company's
57:15position that one snapshot one point in
57:19time is better than an average of the
57:23year that's correct I mean I think what
57:25you've got to understand this works I
57:27mean you're you're representing here
57:29that we're not potentially taking into
57:32account the retirements but when you
57:35look at that snapshot at the end of the
57:37period especially when it's a historical
57:39period you are capturing everything that
57:41has occurred prior to that period so it
57:45is an appropriate way to set rate base
57:47and it is a more accurate way to set
57:50rates that are more representative of
57:53the period in which customers are going
57:55to pay them
57:57so Mr Burman I want to return to talking
57:59about
58:01um some other aspects that go into rate
58:04base we don't take a snapshot of the
58:07company's revenues on a single day
58:09similar to not taking a single snapshot
58:11of o andm on a single day
58:14correct correct again very different
58:16concepts and not comparable it's a rate
58:18base okay but these are all used
58:22together to create a consistent Revenue
58:24requirement right
58:26correct you would need to have an annual
58:28revenue an annual onm and a rate base to
58:32create the revenue
58:34requirement so you understand that staff
58:37maintains a position that the 13-month
58:40average better conforms to the matching
58:43principle where all components of the
58:45revenue requirement are observed and
58:48measured over the same period of time I
58:50would disagree with the fact with that
58:53assessment I mean I think it doesn't
58:55either rate based methodology would
58:58apply fine with matching revenues in on
59:01andm
59:10okay so would you agree with me that in
59:13this rate
59:15case using a 13-month average results in
59:19a lower Revenue requirement for the
59:21company as compared to using yearend
59:24rate base right it does
59:40okay all
59:42right I have a few questions for you
59:45about the company's specific
59:47recommendations intended to support
59:50customers from a financial
59:52perspective could we please pull up the
59:55rebuttal test testimony of company
59:56witness Burman that's hearing exhibit
1:00:00124 and we're going to start on page 15
1:00:06please and if you could scroll down to
1:00:09line lines 14 through
1:00:1516 so Mr Burman one of the ways that the
1:00:19company is proposing to limit rate
1:00:21impacts to customers is through the
1:00:24revenue deferral mechanism correct cor
1:00:27correct and at a high level if this is
1:00:30approved the company would establish a
1:00:33regulatory asset that defers recovery of
1:00:36its Revenue increase from November 1st
1:00:39of 2024 through February 14th of 2025
1:00:43right that's right and is it fair to say
1:00:46that without this Revenue deferral
1:00:48proposal rate payers would be subject to
1:00:51a gas rate increase at the start of the
1:00:542024 2025 heating
1:00:57season without this yes rates are set to
1:00:59go into effect November
1:01:021st we can go ahead and take this one
1:01:05down I will probably be referring to it
1:01:07again but I have a couple more questions
1:01:09um on this
1:01:12topic now Mr bman it's the company that
1:01:15decides when they want to file a rate
1:01:17case right it is so the company chose to
1:01:21file a rate case knowing that the rate
1:01:23increases would likely occur immediate
1:01:25mediately before the heating season
1:01:28right the company chose one to file the
1:01:30right case correct okay now the company
1:01:34estimates that it will defer nearly $74
1:01:37million of incremental Revenue over this
1:01:41three and a half month
1:01:42period that sounds
1:01:44correct and the company proposes to
1:01:47acrew interest at whack on this deferred
1:01:50balance right yes so the company remains
1:01:55whole as it would the proposed rate
1:01:57deferral mechanism does not reduce the
1:02:00company's
1:02:04earnings correct the companies proposing
1:02:06the whack which is our our cost
1:02:10of of capital so yes for us us to put
1:02:14the money forward the the whack would be
1:02:17the rate that we would use to compensate
1:02:19for the cash
1:02:22outlay but this 74 million does not
1:02:25include the comp's requested rack whack
1:02:28return on the Deferred balance
1:02:31right I believe that's correct I can't
1:02:33remember the exact calculation
1:02:36but okay that sounds correct okay so
1:02:39then I want to clarify some timing
1:02:41questions with you starting on February
1:02:4415th of 2025 rate payers would begin
1:02:47paying the increased base rates based on
1:02:51the outcome of this proceeding correct
1:02:53correct in addition rate payers would
1:02:56begin paying the estimated 74 million in
1:02:59the incremental deferred revenue correct
1:03:02correct and on top of that rate payers
1:03:04would also be paying a whack return on
1:03:07the incremental deferred revenue right
1:03:10as part of the RDS and and the reason
1:03:12the company proposed this is because
1:03:14what happens on February 14th is the
1:03:16yearly sear charge that's been in place
1:03:18for a number of months rolls off so this
1:03:22coincides with that and allows for
1:03:24instead of the customers having the rate
1:03:26increase November 1st with the yearly
1:03:28sear charge for three or four months and
1:03:31then that sear charge rolling off and
1:03:33rates going down it's a smoothing of the
1:03:36rates and we felt that that was an
1:03:38appropriate way to look at volatility
1:03:40for our customers and that's why we put
1:03:42this proposal forward so it's a
1:03:44smoothing of rates but it's not in and
1:03:47of itself a reduction in rates to rate
1:03:50pairs no it's not a
1:03:52reduction now I want to talk to you
1:03:54about some other Revenue deferrals that
1:03:57the company has done in the past um in
1:04:00particular your direct testimony
1:04:02discusses some similarities and
1:04:04differences between this proposal here
1:04:07and the one made in the
1:04:102020 gas rate case and we can refer to
1:04:14that deferral as the covid deferral to
1:04:16make it a little bit easier to
1:04:17understand do you recall this portion of
1:04:19your
1:04:22testimony the so you're referring to the
1:04:24co deferral or referring to I'm
1:04:27referring to the last time there was a
1:04:29RDS I'm referring to the covid deferral
1:04:32that the company do you recall
1:04:34discussing that in your
1:04:36testimony um you could point me to it I
1:04:38don't necessarily remember the exact
1:04:41context yeah absolutely um if we could
1:04:44please pull up hearing exhibit 101
1:04:47that's the direct testimony of company
1:04:48witness Burman and we'll look at page 62
1:04:55and that first question in lines 1
1:04:57through
1:04:59two does that refresh your memory a
1:05:01little bit Mr
1:05:03bman yes
1:05:10okay now if we could please pull up
1:05:13what's been marked as
1:05:15staff's exhibit 412 in our box
1:05:26if we could look at this first page
1:05:31here Mr Burman is this the same
1:05:34proceeding that we just looked at that
1:05:37you referenced in your direct
1:05:40testimony uh yes it looks to be so
1:05:44you're familiar with this resulting
1:05:46settlement and stipulation in this
1:05:48proceeding
1:05:55just looking this is
1:05:58the 2020 gas Ray case
1:06:01correct corre it's the 20 o49
1:06:10G okay I can see that if there's a
1:06:13specific piece of this you want to talk
1:06:14about you can maybe scroll down and
1:06:16point me to what we're looking at yeah
1:06:18absolutely we can go ahead and scroll
1:06:20down to page
1:06:2318 and I want to look at at this section
1:06:26here q that is titled rate
1:06:31implementation now this describes the
1:06:34full mechanism of the covid revenue
1:06:37deferral which you mentioned in your
1:06:39direct
1:06:40testimony looking at subpart B here did
1:06:44the company earn a return on the covid
1:06:48deferral I'm going to interject with an
1:06:50objection just very quickly because um
1:06:54I'll State the objection is vague but I
1:06:56want to make sure when we talk about the
1:06:58co deferral we're talking about the
1:07:00revenue deferral that happened in the
1:07:022020 case as opposed to the deferral of
1:07:04certain bad debt expense and other items
1:07:06that occurred during the covid time
1:07:07period because I think I'm sensing some
1:07:10confusion here perhaps between Miss
1:07:11mclin and my witness on that front I
1:07:14think I think I've got it all straight
1:07:16now but yes there was some initial
1:07:18confusion yes we're we're discussing the
1:07:21revenue deferral that happened in the
1:07:232020 gas rate case which I'll ref refer
1:07:25to is the covid deferral uh just for
1:07:28ease since there's several deferrals
1:07:29going
1:07:31on thank you for clarifying yeah thank
1:07:34you Miss
1:07:35Brahma I don't think there's a
1:07:37outstanding objection so keep going miss
1:07:39mlin okay um I'll go ahead and repeat my
1:07:42question Mr Burman so we're looking here
1:07:44at subpart B
1:07:48um did the company earn a return on the
1:07:51covid deferral the company did not earn
1:07:54a return in the
1:07:57did your direct testimony in this
1:07:59proceeding specify the difference in
1:08:02carrying charges between the covid
1:08:05deferral and the revenue deferral being
1:08:07proposed
1:08:09here I you I'm not sure I would have to
1:08:12go back and reference that testimony in
1:08:15that proceeding yeah absolutely so that
1:08:18would be the direct testimony in this
1:08:20proceeding of company witness Burman
1:08:22hearing exhibit 101 go back to page
1:08:2662 do you see the question where it asks
1:08:29are there both similarities and
1:08:31differences between what the company is
1:08:33proposing here and in proceeding
1:08:382049
1:08:40G okay I thought you were asking about
1:08:42my testimony in the prior case um I
1:08:46apologize it's I'm asking whether you
1:08:49described the differences in carrying
1:08:52charges between the covid deferral and
1:08:55the revenue deferral mechanism being
1:08:57proposed
1:09:01here I did not speak to the difference
1:09:03in carrying charges okay for
1:09:07completeness of the records staff
1:09:08requests admission of hearing exhibit
1:09:10412 into the
1:09:13record any
1:09:17objection uh just to confirm here 412
1:09:19was the settlement in the 2020 gas rate
1:09:21case that's correct uh no objection
1:09:25uh so
1:09:27moved okay we can go ahead and take this
1:09:30exhibit down thank you so
1:09:32much now I want to go back to something
1:09:34that you mentioned earlier when you
1:09:36discussed how the winter storm Yuri
1:09:38deferral is ending in February of next
1:09:42year this was another Revenue deferral
1:09:45that the company recently made
1:09:48right uh yeah I don't know how recent
1:09:51but it's been a couple years within the
1:09:53last couple years similarly the company
1:09:57did not earn a return on the winterstorm
1:09:59Yuri deferral did
1:10:01it that's
1:10:03correct okay now I'd like to return to
1:10:06your rebuttal testimony which is hearing
1:10:09exhibit 124 in this proceeding we're
1:10:12going to look back at page
1:10:1915 and I want to ask you about line 17
1:10:24where you mentioned the company
1:10:25reduction in equity ratio to help
1:10:28contain customer bills in the last gas
1:10:32rate proceeding the commission found
1:10:34that an equity ratio between 52 and 55%
1:10:38was reasonable
1:10:40right that's correct and in this
1:10:44proceeding the company is proposing an
1:10:47equity ratio at the very top of that
1:10:49range at 55%
1:10:53correct that's correct the commission
1:10:57set a whack in the last case that had a
1:11:02range of Roes and Equity ratios and Mr
1:11:05Johnson certainly can talk about why the
1:11:08company has chosen to manage to the 55%
1:11:11equity ratio and the value that provides
1:11:13to our customers but that is what we are
1:11:15seeking in this case is
1:11:1755% sure um but the company's proposed
1:11:2255% equity ratio is not a redu ction
1:11:26compared to the company's currently
1:11:28authorized equity ratio
1:11:30right I mean we there was a range
1:11:33authorized as part of a stated whack in
1:11:36the last case it is a reduction from
1:11:38where the company has been managing and
1:11:40historically where the company's equity
1:11:42ratio has
1:11:44been so the commission ordered a range
1:11:46between 52 and
1:11:4955 the company here is recommending
1:11:5355 how is that a reduction
1:11:56well the commission ordered a whack and
1:11:58that whack was based on a range of Roes
1:12:02and Equity ratios of which there were
1:12:05very few combinations that actually
1:12:07result in that whack and the company has
1:12:09been managing to the 55% at the high end
1:12:13of that ratio and the lower Roe to get
1:12:16to that whack uh because that is the
1:12:19most costeffective way to manage our
1:12:21Capital program for our customers and
1:12:24again Mr Johnson be the person to speak
1:12:25in detail of that but but that is you
1:12:29know correct that that is the high end
1:12:30of the range that was ordered in the
1:12:33last case okay now I want to move on to
1:12:37the next bullet here in your rebuttal
1:12:40testimony on lines 18 through 12 staying
1:12:43on this page 15 this is where you
1:12:45discuss the proposed Revenue decoupling
1:12:48mechanism which in very basic terms this
1:12:51works to separate the Company's base
1:12:54rate revenue from the amount of gas sold
1:12:57right
1:12:59correct but a decoupling mechanism
1:13:02essentially Works to keep the company
1:13:04whole
1:13:06correct it works to ensure the company
1:13:09collects the revenue or authorizing the
1:13:11revenue
1:13:13requirement so no matter how much
1:13:15despite despite the the actual gas sales
1:13:18correct okay so no matter how much the
1:13:21gas sales end up being the decoupling
1:13:24mechanism serves to guarantee that the
1:13:26company receives the same amount of Base
1:13:28rate
1:13:29Revenue correct and it works both ways
1:13:31if the company sells more gas and
1:13:33collects more they would return money to
1:13:35customers to to be at the same
1:13:38revenue and without a decoupling
1:13:40mechanism the risk of over or under
1:13:43recovery due to circumstances such as
1:13:47like weather conditions that would be
1:13:50borne by the company correct that's
1:13:53correct
1:13:55and using a decoupling mechanism would
1:13:57essentially shift that risk from the
1:14:00company to rate payers
1:14:05right it would shift the the weather
1:14:08risk yes but importantly here the
1:14:10company's seeking to implement this
1:14:13decoupling mechanism to ensure that
1:14:14there's no adverse or that there's
1:14:18there's no incentive for the company to
1:14:19not encourage um reduced throughput on
1:14:22the system but a decoupling me me ISM
1:14:25doesn't actually lower rates for rate
1:14:27payers does
1:14:28it it can um I'd like to point out that
1:14:33this is a list of things that are
1:14:36supporting customers and working towards
1:14:37State policy goals this is not meant to
1:14:39be a list of things that simply lower
1:14:42rates
1:14:43so if that's the context here I just
1:14:47just want to make sure it's clear you
1:14:49know the the purpose of this list um and
1:14:51this one in particular is more on the
1:14:54side of advancing State policy goals
1:14:57okay understood thank you Mr Burman
1:15:02um now I'd like
1:15:04to keep going and talk to you about your
1:15:08bullet point on lines 22 through 24
1:15:11where the company plans to maintain the
1:15:14expected life group depreciation
1:15:17methodology the company was ordered by
1:15:20the commission to adopt this methodology
1:15:22in the last rate case right correct okay
1:15:26now the following bullet on lines 25
1:15:29through 28 where the company proposes to
1:15:31accelerate
1:15:33depreciation accelerating depreciation
1:15:35increases the company's Revenue
1:15:37requirement does it not it
1:15:40does and it also serves to reduce the
1:15:43company's risk associated with stranded
1:15:46Assets in the future
1:15:49right it
1:15:51does okay and if we could scroll to the
1:15:54top of page 16
1:15:58please lines 1- 4 You discuss amortizing
1:16:03the prepaid
1:16:25I believe that is
1:16:26correct and if the company is proposing
1:16:28to earn a whack over the
1:16:3015 sorry the company is proposing to
1:16:34earn a whack over the 15-year period
1:16:38right I believe that is
1:16:40correct and do you recall that staff in
1:16:44this proceeding has raised concerns with
1:16:48how much of this asset is actually the
1:16:50responsibility of the company's rays
1:16:54I've not been particularly close to this
1:16:56issue and this is more of an issue for
1:16:58Mr shuby but
1:17:01um I'll take your assertion that staff
1:17:04has raised those
1:17:05issues now I want to touch on just this
1:17:08this last one here on lines five through
1:17:11six describe how the company has
1:17:13provided more information in this case
1:17:15than ever before I'm not really seeing
1:17:17the connection between providing more
1:17:19information as a specific way for the
1:17:22company to try to contain customer rates
1:17:26how does this keep rates lower for
1:17:28customers so again this is not a list of
1:17:31things that simply keep rates lower for
1:17:33customers this is a list of how the
1:17:35company has sought to recover its
1:17:39Revenue requirement and also adhere to
1:17:43State policy or Advanced State policy
1:17:44goals and so this is just another point
1:17:48of I think the commission has expressed
1:17:51interest in more support for investments
1:17:53in the past as we've moved moved into
1:17:56gas uh planning proceedings and giips
1:17:59and so the company really took a
1:18:01approach in this right case to provide
1:18:03as much information as possible to
1:18:05ensure that everything was there to
1:18:07evaluate the prudency of all the
1:18:09Investments put forward in this
1:18:11case now if we could scroll back to page
1:18:1515 I'd like to see the question that
1:18:18started off this bullet
1:18:22list now Mr B
1:18:26doesn't this question ask you for ways
1:18:29that the company is trying to contain
1:18:31customer rate
1:18:33impacts while addressing commission
1:18:35policy Direction and
1:18:41goals so yes both both things are true
1:18:44of this list okay thank you we can go
1:18:47ahead and take this exhibit
1:18:50down and Mr verman I want to move on and
1:18:54start talking to you about the company's
1:18:56gas system
1:18:58Investments so we're all on the same
1:19:00page the company does not earn a return
1:19:04on the gas that it sells to rate payers
1:19:07in and of itself right
1:19:12correct okay yeah and the company does
1:19:14not earn a return on the operation and
1:19:17maintenance expenses either that's
1:19:19correct but the company does earn a
1:19:22return on its capital Investments
1:19:24correct correct and this includes new
1:19:27gas
1:19:28infrastructure it
1:19:31does now in the company's last gas rate
1:19:34case the commission adopted an Roe range
1:19:37of 9.2 to 9.5 do you recall that I do
1:19:43but in this proceeding the company is
1:19:45proposing an Roe of 10.10
1:19:48correct correct okay now do you recall
1:19:53the portion of your direct testimony
1:19:55which described some Roes in other
1:19:58states which in your words you've
1:20:00described as
1:20:02Progressive yes okay and in particular
1:20:06you discussed a recent Roe decision from
1:20:09Con Edison in New York does that sound
1:20:11familiar it
1:20:16does and you stated that the New York
1:20:19commission found reason to increase con
1:20:22Edison's Roe due to in financial market
1:20:26conditions
1:20:28right I I don't remember exactly
1:20:30everything at that in that piece of
1:20:32testimony or all the specifics but that
1:20:35sounds correct yes I understand there is
1:20:38a lot of pages out there in this
1:20:41proceeding let's go ahead and pull up
1:20:44your direct testimony hearing exhibit
1:20:46101 I think it'll be a little bit
1:20:48helpful if we have it on the screen for
1:20:50us we're going to look at page 52
1:21:02now Mr Burman do you recall that this
1:21:06New York Public Utilities decision that
1:21:09you're referring to happened in July of
1:21:142023 uh that sounds correct
1:21:19okay and in this case the New York
1:21:22commission authorized a .25 Roe for Con
1:21:27Edison isn't that
1:21:31right again I don't remember all of the
1:21:35specifics of this order but I would take
1:21:38your assertion that that's correct okay
1:21:41could could we perhaps show Mr Burman
1:21:43the whole page so that he can see both
1:21:45the the text and the footnotes of his
1:21:47testimony yep absolutely and footnote 32
1:21:51is particularly important here yes I see
1:21:54do
1:22:05that
1:22:08okay so the New York commission
1:22:11authorized a 9.2 Roe for Con Edison
1:22:22right yes that's what it looks like
1:22:26we can go ahead and take this exhibit
1:22:27down thank
1:22:29you would a 9.25 Roe be within the Roe
1:22:34range that this commission authorized in
1:22:36the company's last gas rate
1:22:39case it would be in the range of the
1:22:41last case
1:22:43yes I want to turn to some of the
1:22:45statements that you made in your abuttal
1:22:47testimony regarding staff's Roe proposal
1:22:51specifically you took issue with staff's
1:22:53recommended Roe for New Capital
1:22:56investments in part because no other
1:22:58jurisdiction has adopted a lower Roe for
1:23:01new Investments right in part in part
1:23:06now wouldn't you agree that this
1:23:08commission has addressed novel issues in
1:23:10the
1:23:13past uh sure I think that they have okay
1:23:17and you know for example the clean heat
1:23:19plan is an example of how Colorado is
1:23:23charting its own course and doing
1:23:24something that's first of its
1:23:28kind yeah and I I
1:23:32guess I when I say in part that that's
1:23:34one of a number of reasons why I would
1:23:37disagree with staff's proposal and I
1:23:40think there's a reason why we haven't
1:23:42seen a differentiated Roe in other
1:23:46jurisdictions and it's probably because
1:23:49it's Frau with several
1:23:51challenges
1:23:53understood but my question is isn't the
1:23:57clean heat plan an example of something
1:24:00how Colorado is
1:24:02charting the first of its kinds on a new
1:24:09proceeding certainly one of the very few
1:24:12utilities doing similar things and this
1:24:15commission is the first Commission in
1:24:17the country to preside over a clean heat
1:24:19plan
1:24:21right I believe there have been things
1:24:24of different names that other states
1:24:26have looked have done but yes certainly
1:24:29one of the few states that has
1:24:31undertaken that type of a um planning uh
1:24:37proceeding do you believe that this
1:24:39commission is capable of handling novel
1:24:42and Innovative
1:24:44changes I do but that's far from a good
1:24:47reason to look at this differentiated
1:24:50Roe proposal it creates a number of
1:24:52other challenges that
1:24:55uh and a number of other reasons I'm
1:24:56happy to speak to as to why it's bad
1:25:01policy hasn't the company also engaged
1:25:05in first of its kind in the nation
1:25:07activities such as its Net Zero vision
1:25:10for natural
1:25:12gas
1:25:13yes don't you agree that the company
1:25:16should be at the Forefront of the gas
1:25:18industry
1:25:20Revolution I do and I think we are but I
1:25:23think again this is those things are all
1:25:27very worthy policy initiatives to be
1:25:31first of a kind as opposed to something
1:25:33that
1:25:34is a policy that the company would
1:25:37strongly disagree with and that you know
1:25:39may also contain legal challenges in
1:25:42implementing okay now I want to ask you
1:25:46a few more specific questions regarding
1:25:48staff's Roe um in your autal testimony
1:25:53you state that you understand staff's
1:25:56proposal to apply a lower composite Roe
1:25:59to all Investments is that a fair
1:26:01summary of your understanding
1:26:04correct okay if we could please pull up
1:26:07the answer testimony of Staff witness
1:26:09O'Neal that's going to be hearing
1:26:11exhibit
1:26:12401 and we're going to look at page five
1:26:15please uh yes that's just going to take
1:26:17me a a second to scroll all the way down
1:26:20there so give me just a second
1:26:43now I'd like to look at lines 12 through
1:26:4717 Mr bman could you please read that
1:26:50paragraph to yourself and let me know
1:26:51when you're finished
1:27:08okay so staff is actually recommending
1:27:11that the commission apply a different
1:27:13return on New Capital Investments that's
1:27:16different from how you described your
1:27:17understanding right except that's not
1:27:20how staff used or calculated it in their
1:27:23revenue requirements so yes I agree that
1:27:25that's what their words say but that's
1:27:27not how they implemented it in their
1:27:30calculation of the revenue
1:27:32requirement you'd agree with me that
1:27:35here in staff's testimony it provides
1:27:37the recommendation that a lower ROE
1:27:39should be applied for new Investments
1:27:42correct it does in my in my testimony
1:27:46what I was stating is that it well says
1:27:49that it appears they have just applied a
1:27:53lower Ro in the revenue requirement to
1:27:55all Investments to accomplish
1:27:58this we can go ahead and take this
1:28:00exhibit down thank
1:28:03you now isn't it possible from an
1:28:06accounting perspective for the company
1:28:08to apply a different Roe to something
1:28:12that is in rate
1:28:14base it would be very challenging it
1:28:17would require multiple cost of service
1:28:19models to accomplish that but the
1:28:22company has done that in the past
1:28:25I do not think we have done that in the
1:28:31past so the company never agreed to
1:28:34apply cost of debt to a different asset
1:28:37in rate
1:28:40base we have calculated a cost of debt
1:28:42on certain things in the past but we've
1:28:45never applied a differentiated Roe to
1:28:48whole segments of assets
1:28:55but you would agree that cost of debt is
1:28:57a different return than whack yes it
1:29:00would okay and so the company has
1:29:05applied cost of debt to something that
1:29:08is in the the company's rate
1:29:11base the way we've accomplished it is to
1:29:14do a calculation outside of the cost of
1:29:16service and make an adjustment to the
1:29:17cost of service so there have been very
1:29:19limited circumstances um in the past one
1:29:24I can think of as a water rights asset
1:29:26that was in rate based but that the way
1:29:29we had to do that was to do a very
1:29:32specific calculation and make an
1:29:34adjustment for a dollar amount in the
1:29:36cost of service there's not a clean way
1:29:38to apply two different Roes to two
1:29:41different segments of or categories of
1:29:45capital Assets in a cost of service
1:29:47model okay um I'd like to pull up what
1:29:51has been previously emitted as staff's
1:29:53hearing exhibit
1:30:08412 and I want to look at page
1:30:1215 and just a reminder this was the
1:30:17agreed stipulation and settlement in the
1:30:192020 gas rate case um the company was
1:30:23the company of party to the stipulation
1:30:25and settlement in that case
1:30:28yes and I want to look
1:30:32at section K subpart
1:30:40two Mr bman could you go ahead and read
1:30:42that to yourself and let me know when
1:30:43you're
1:30:47finished yep I'm
1:30:50finished so this is an example of the
1:30:53company agreeing to include something in
1:30:57rate base with a return at the cost of
1:31:01debt this is this is a regulatory asset
1:31:04not an actual asset but yes it is it's
1:31:07one of the very specific things I would
1:31:09say we had done this with it requires a
1:31:12calculation of that amount and then an
1:31:15adjustment in the cost of service to do
1:31:17this it's very different than saying all
1:31:19new business all capacity investment
1:31:21which are large categories of assets on
1:31:24a differentiated Roe let alone with the
1:31:27policy rationale for doing that would be
1:31:30is the difficulty of Performing the
1:31:33calculation a good reason not to
1:31:35implement otherwise good policy it's I
1:31:38would disagree that it's otherwise good
1:31:40policy and and that that's the primary
1:31:43reason not to do it is that it's bad
1:31:45policy but just in general is the
1:31:48difficulty of doing
1:31:50something good reason to not imp a good
1:31:55policy I I wouldn't not do it because of
1:31:58the difficulty of doing it if it was a
1:32:01good policy that was difficult to
1:32:02implement certainly the company would do
1:32:04that great we can go ahead and take this
1:32:06exhibit down thank
1:32:09you now in
1:32:112022 the company had an earned
1:32:14Roe of
1:32:177.81% right that sounds correct again I
1:32:22know wouldn't have that number committed
1:32:23to m
1:32:25but understood uh if the company earned
1:32:30an Roe of
1:32:317.71 on New Capital Investments as staff
1:32:35recommends wouldn't you agree with me
1:32:37that this return is only 10 basis points
1:32:40lower than the company's earned Roe of
1:32:447.81% in
1:32:482022 I would agree with you but
1:32:50certainly the company was authorized to
1:32:53earn a much higher are we and the fact
1:32:55that we under earned so significantly is
1:32:57why we're in this R case that we're in
1:33:02today is 2022 the only time that the
1:33:04company has ever under earned on Roe no
1:33:11okay now I
1:33:15have one more topic that I would like to
1:33:19discuss with you Mr
1:33:21Burman I want to talk to you about
1:33:24staff's recommendations regarding net
1:33:26Salvage do you recall the commission's
1:33:30order ordering supplemental Direct in
1:33:33this proceeding specifically requesting
1:33:36that the company answer questions
1:33:37related to net salvage value I
1:33:41do and the commission also requested
1:33:44supplemental Direct on this issue of
1:33:46depreciation of assets to the point of a
1:33:49negative rate base right
1:33:51correct so you recall where the Comm
1:33:54also requested that the company
1:33:56recalculate some of its depreciation
1:33:58schedules in this proceeding with the
1:34:00assumption that the commission would not
1:34:02allow a negative rate
1:34:05base
1:34:08correct at a high
1:34:10level do you remember that staff witness
1:34:12Rivera Lugo responded to the
1:34:15commission's inquiry by proposing to
1:34:17remove the estimated negative salvage
1:34:20value from the calculation of the
1:34:23company's depreciation
1:34:25rates yes that sounds
1:34:32correct within its accumulated
1:34:35depreciation Reserve do you know the
1:34:38approximate value the company carries as
1:34:41a cost of removal related regulatory
1:34:46liability I cannot remember the exact
1:34:49number at this time certainly some of
1:34:52the details of this topic would be more
1:34:55appropriate for Mr Mohler but happy to
1:34:57if you want to point me to that talk
1:34:59about them to the extent that I did in
1:35:01my
1:35:02testimony I think for the most part we
1:35:04can keep this pretty high level but does
1:35:06413 million sound right to you I before
1:35:10I'm going to object if you would please
1:35:12if you're going to throw numbers or or
1:35:14commission statements uh or put them to
1:35:16Mr Burman would you please show the
1:35:19document you're referring to so he can
1:35:22verify sure
1:35:24that seems
1:35:25reasonable um could we please pull up
1:35:29the rebuttal testimony of company
1:35:31witness mher hearing exhibit
1:35:39133 and we're going to look at page 39
1:35:56and lines 10 through
1:36:0614 I'll give you a second to get
1:36:08familiar with this Mr Burman and let me
1:36:09know when you're
1:36:18ready
1:36:20okay does the number 413 million and
1:36:23sound right to
1:36:25you that's what this says I assume the
1:36:28current situation that Mr mher is
1:36:30referring to is the testure in this case
1:36:34okay we can go ahead and take this
1:36:36exhibit down thank
1:36:41you now this regulatory liability
1:36:46represents the value that the company
1:36:48has been pre-collected from customers
1:36:51for the future cost of removal
1:36:55right
1:36:57okay and the company projects that
1:36:59accumulated depreciation Reserve will
1:37:02continue to grow in the future
1:37:05right yes we do as as new assets are
1:37:09place in service and with inflation that
1:37:12number continues to grow does the
1:37:15company consider this 413 million in
1:37:18rate F rate payer funded liability to be
1:37:22a material issue for commission
1:37:28consideration I mean I don't know
1:37:31depends on your definition of material I
1:37:33suppose but this is this is not a new
1:37:36issue this has been something that has
1:37:38been in rates and is
1:37:40a convention that's followed across the
1:37:42country by most utilities um and has
1:37:46certainly come into question recently
1:37:48but has not ever been an issue before
1:37:50when it's been in
1:37:52rates so so as long as the company is
1:37:55made whole there's nothing preventing
1:37:58the commission from considering
1:38:00alternate ways to account for and
1:38:03recover net salvage value
1:38:07right there's nothing preventing them
1:38:10from doing so although I would caution
1:38:13that there could be unintended
1:38:14consequences that we're not thinking
1:38:16about today because it's just not
1:38:18something that has really been done um
1:38:21in the industry it's not a model that
1:38:24anyone has adopted and I'm not sure
1:38:26there's a good reason to take the risk
1:38:30of those potential consequences right
1:38:33now sure do you think that in the
1:38:38company's future depreciation study
1:38:41those potential consequences could be
1:38:43evaluated I think all of these things
1:38:45are rip for evaluation in future
1:38:47depreciation studies
1:38:49okay now Mr Rivera Lugo and staff's test
1:38:53Tony proposes an alternate way to
1:38:56account for and recover net salvage
1:38:58value does that sound familiar
1:39:01does so you understand that staff is not
1:39:05recommending any changes to the
1:39:06treatment of net Salvage to be
1:39:09implemented in this
1:39:14proceeding um I'm not sure that that was
1:39:17my understanding of staff's testimony I
1:39:20thought that there were changes being
1:39:21recommended in this
1:39:26proceeding staff is not recommending any
1:39:29reduction in Revenue requirement
1:39:32regarding this proposal either is that
1:39:34different than how you understood
1:39:40it I I'd have to look at it closer but I
1:39:44I understood that Mr Rivera Lugo was
1:39:46recommending some changes to how
1:39:50certainly going
1:39:51forward um how this would be treated
1:39:54that company has concerns with those
1:39:58changes having an unintended consequence
1:40:02of severely under collecting the funds
1:40:05that would be needed in the future for
1:40:06retirement of these
1:40:09assets but does the company take any
1:40:11issue with evaluating these
1:40:13recommendations in a future depreciation
1:40:18study I think we would be open to
1:40:20evaluating all of these things in a
1:40:22future depreciation St
1:40:28study they may not change our opinion of
1:40:31whether they're viable or not but
1:40:34certainly that's a better place to have
1:40:37that discussion and evaluation than in
1:40:39this rate case and so you'd agree that
1:40:43including this in a
1:40:44future depreciation study would also
1:40:47help inform the commissioners of net
1:40:49Salvage and the issue of negative rate
1:40:51base
1:40:55yes and net Salvage is something that is
1:40:58typically evaluated in a depreciation
1:41:01studies so so typically when those
1:41:03studies occur if they're full
1:41:06comprehensive studies they would also be
1:41:08looking at any changes that should be
1:41:11implemented with regard to that
1:41:15Salvage now looking at the future and
1:41:18the company's forthcoming depreciation
1:41:20study is the company planning on filing
1:41:22this as a standal
1:41:26proceeding I don't know that we've made
1:41:28that decision but I would say an all
1:41:31likelihood yes okay do you think that it
1:41:34would be valuable for the Commissioners
1:41:36and stakeholders to have this in a
1:41:38standalone proceeding to fully allocate
1:41:41their time to this
1:41:43matter I do think it makes a lot of
1:41:45sense to have a depreciation study as a
1:41:47standalone proceeding and that there's a
1:41:49number of issues that likely need to be
1:41:51addressed in that proceeding
1:41:54and when does the company anticipate
1:41:56that it will complete the depreciation
1:41:58study so we are currently working on a
1:42:00study that we're obligated to file
1:42:03within six months of the final clean
1:42:05heat decision which I believe was issued
1:42:08a week or so ago a week or two ago so
1:42:10the clock has begun there so within six
1:42:12months um we're anticipating making a
1:42:15filing in that time frame
1:42:17um the the full scope of that
1:42:20study has yet to be determined there's
1:42:23certain things we're looking at but I
1:42:25mean to given the short time it may not
1:42:28have the full valuation that we could do
1:42:31of changes to net Salvage um if given
1:42:35more
1:42:38time do you think if the company had
1:42:41additional time maybe three months that
1:42:44they could prepare the depreciation
1:42:45study to incorporate more of this
1:42:48evaluation of net Salvage and negative
1:42:50rate base issues as proposed by staff I
1:42:53think the biggest challenge with net
1:42:55Salvage
1:42:57is that it it generally would
1:43:01require understanding what the full
1:43:04retirement cost of the entire system is
1:43:07which is not an analysis that I am aware
1:43:10that any utility has undertaken so it
1:43:13requires a number of assumptions and I
1:43:16I'm hesitant to speculate on the time
1:43:18that that type of an analysis would take
1:43:20to to really do it thoroughly and and I
1:43:24also think there's a lot of information
1:43:27that's not available at this time to
1:43:29really understand what that's going to
1:43:31look like I think as time goes by we
1:43:33will certainly have more information to
1:43:36inform these studies in the future we're
1:43:38going to do everything we can to provide
1:43:41the most thorough analysis in the the
1:43:44time frame we have to provide that for
1:43:45this next study I don't know that three
1:43:47more months is going to make a big
1:43:49difference but I certainly there there's
1:43:51discussion to be had on this regardless
1:43:54of of what analysis is put forward in
1:43:56that study
1:43:58understood is the company planning on
1:44:01addressing net Salvage in its
1:44:04depreciation study I don't recall if if
1:44:07we touched on that I think we generally
1:44:09do I don't know that we're going to have
1:44:11some novel analysis of the full
1:44:14retirement cost of the
1:44:16system is the company planning on
1:44:19providing an evaluation of net Salvage
1:44:22that would be consistent with Mr Rivera
1:44:24lugo's
1:44:28recommendations I'm not entirely sure
1:44:31that I wouldn't be I'd be speculating to
1:44:35try
1:44:35to guess that we would be able to
1:44:38accomplish all of
1:44:40that do you think having a thorough
1:44:43evaluation of net Salvage would be
1:44:44beneficial for the
1:44:46Commissioners I think there is always
1:44:49and certainly Mr
1:44:50Muller's more can provide more spefic
1:44:53specifics on these depreciation studies
1:44:55but net Salvage is always a piece that's
1:44:58looked at in that study and whether that
1:45:01will be looked at it can be looked at in
1:45:03a number of ways but it certainly is
1:45:05part of the study that we will will look
1:45:08at and I believe that staff will have an
1:45:11opportunity to again you know raise
1:45:14alternative ways to look at that in that
1:45:16proceeding
1:45:27just looking at my notes real
1:45:31quick so I think those are all the
1:45:34questions that I have for you Mr Burman
1:45:36and I think that I ended up using almost
1:45:38exactly 60 minutes which is what we
1:45:41predicted to begin with so we didn't
1:45:42need that extra 30 but I appreciate you
1:45:44answering these questions for us today
1:45:46thank you thank you Miss
1:45:48mclin uh
1:45:51UCA I have 80 minutes and just so you
1:45:55know maybe halfway through we're going
1:45:58to take a break at Rish so that sounds
1:46:02good thank you chairman um good
1:46:04afternoon Mr Burman I'm Michelle Singer
1:46:07Nelson uh representing the utility
1:46:10consumer Advocates good afternoon good
1:46:14afternoon um I think I'll start with uh
1:46:17pulling up hearing
1:46:20exhibit 500 attachment CWS
1:46:254 you'll notice some of my cross
1:46:27examination will overlap some of the
1:46:30topics that uh Miss mlin has already
1:46:34talked to you about but I think I'm
1:46:35going to address some a little
1:46:37differently and I'm going to try not to
1:46:43repeat but here is another page of the
1:46:47commission's um web page that talks
1:46:51about objectives can you uh scroll up a
1:46:54little bit thank
1:46:56you do you see here that uh the
1:47:01commission states that it serves the
1:47:03Public Public interests which requires
1:47:06the balancing of the needs of customers
1:47:09against those of utility service
1:47:11providers it's in the first line yeah I
1:47:14see that do you agree that that's uh the
1:47:19commission's role yes I do and then with
1:47:23regard to rates you can see there's a
1:47:25bullet the very first bullet it says
1:47:28with regard to rates uh the commission
1:47:31states that it will maintain rates as
1:47:34low as possible for residential and
1:47:37business customers consistent with
1:47:39minimum standards for service Safety
1:47:42economic viability and the environment
1:47:44do you see that I
1:47:46do okay we can pull that
1:47:49down so really um the commission
1:47:53emphasizes both in its mission statement
1:47:55and its statement of objectives that its
1:47:59U role is to serve the public interest
1:48:03which includes affordable rates to
1:48:07Consumers
1:48:10agree over the last several years
1:48:12there's been a focus both at the
1:48:14governor's office the commission and at
1:48:17the legislature to address consumer
1:48:20concerns with energy affordability would
1:48:23you agree I would
1:48:25agree and in February of 2023 Governor
1:48:29pus asked the Commission State agencies
1:48:32including the UCA and local distribution
1:48:36companies including Excel or Public
1:48:38Service Company of Colorado to work
1:48:42collaboratively to help reduce energy
1:48:45cost burden on the Colorado households
1:48:48and businesses do you recall that that
1:48:51does sound familiar
1:48:53okay can we pull up hearing exhibit 500
1:48:58attachment
1:48:59CWS D9
1:49:04please and in in response while that's
1:49:07being pulled up Mr Burman in response to
1:49:12uh Governor polis's letter the
1:49:14commission went ahead and put together
1:49:17um an affordability initiative initial
1:49:20work
1:49:21plan is that what we see on the screen
1:49:23can you scroll up a little bit maybe we
1:49:25can see the title thank you do you
1:49:29recall that I
1:49:33do have you reviewed this plan I do
1:49:37believe I reviewed it when it came out
1:49:40um having been a little over a year if
1:49:43you want to talk about anything specific
1:49:44I'd appreciate the refresher okay yeah
1:49:48let's turn to um page one paragraph one
1:49:57this is Page One um sorry after the
1:50:00cover page so page two thank you page
1:50:05three there we go um paragraph one the
1:50:09commission's role in
1:50:11affordability the commission states in
1:50:14the very last paragraph I mean very last
1:50:17sentence affordability is a critical
1:50:19part of the commission's oversight as it
1:50:22regulates Colorado Gas and Electric
1:50:25utilities do you see that I do okay and
1:50:29then um going to page I think it's on
1:50:34page
1:50:35four yes paragraph
1:50:43two oh it would
1:50:46be from your pages it would be page
1:50:56probably page six paragraph two where
1:50:59the commission specifically addresses
1:51:01gas utility base rate proceedings do you
1:51:03see
1:51:05that I do and there the commission said
1:51:09that it in the last uh two sentences the
1:51:12commission will continue to scrutinize
1:51:14Investments recalibrate returns and
1:51:18analyze the basis and pace for utility
1:51:21cost recovery as required to maintain
1:51:24overall Bill
1:51:26affordability these efforts keep base
1:51:28rates appropriately low appropriately
1:51:32below the levels the Gas Utilities
1:51:34proposed as
1:51:36justifiable and are essential when gas
1:51:39commodity prices are high during winter
1:51:42months so do you see that the commission
1:51:45even in uh the cases like this
1:51:48proceeding the commission um states that
1:51:52will uh really try to keep rates
1:51:57low I do see that
1:52:00yes can pull the exhibit
1:52:07down in this proceeding uh the
1:52:10commission also observed in a February
1:52:122023 order oh it's not in this
1:52:15proceeding I apologize but um attachment
1:52:20CWS to hearing exhibit
1:52:23500 is also an an
1:52:28order I'm sorry which which exhibit you
1:52:31just said attachment CWS you didn't say
1:52:33a number hearing exhibit 500 no an
1:52:37attachment number attachment
1:52:40cws8 8 thank
1:52:50you there too the
1:52:53commission at
1:52:55page 11 paragraph
1:53:0224 the commission stated that public
1:53:07services motion to modify comes at a
1:53:09time where it's increasingly critical to
1:53:12consider each decision the commission
1:53:14makes from the perspective of its impact
1:53:17on
1:53:20affordability did I read that see that
1:53:22can you can you remind me the date of
1:53:24this document yes you can go to the end
1:53:27of it it's April of or it's February of
1:53:302023
1:53:34okay and it's regarding Public Services
1:53:37renewable energy compliance
1:53:42plan okay you can take that
1:53:47down and then the legislature responded
1:53:50to affordability concerns by passing
1:53:52Senate bill 23291 in May of 2023 do you
1:53:56recall that Mr Burman I do and it that
1:54:00bill implemented changes to the law
1:54:02governing rate cases including
1:54:05restrictions on recovery of rate case
1:54:07expenses and a variety of other
1:54:10operating expenses from customers in uh
1:54:14base rates I'm going to object that
1:54:16mischaracterizes the test the
1:54:18legislation which in fact speaks for
1:54:20itself in any event
1:54:23can you uh recharacterize uh Missing or
1:54:26Nelson sure uh Mr Burman did uh Senate
1:54:30Bill 23 291 Implement changes to the law
1:54:35governing rate cases objection the
1:54:37legislation speaks for itself Miss
1:54:39Zinger Nelson has been paraphrasing both
1:54:41commission determinations and
1:54:43legislation that the words are on the
1:54:46page so if we could show the legislation
1:54:48that would be fine I thought that
1:54:50question well you can p the legislation
1:54:52but I thought that was a a reasonable
1:54:56question uh that did not seek to
1:54:59characterize uh the legislation so I'd
1:55:03overrall that objection and have Mr
1:55:05Burman
1:55:06answer there's
1:55:08currently yeah sorry there's I know that
1:55:12there's currently a rule making in front
1:55:14of the commission um to address rate
1:55:16case rules in compliance with Senate
1:55:18Bill
1:55:19291 so Senate bill you would agree that
1:55:22Senate Bill
1:55:23291 um modified the law relating to uh
1:55:29rate cases I'm I'm going to oh rate
1:55:33cases generally I'm sorry I thought you
1:55:34were going to say rate case expenses and
1:55:36I would have had the same
1:55:39objection Mr Burman yeah I the bill the
1:55:44bill certainly ordered the commission to
1:55:46undertake a rle making which it
1:55:47currently is undertaking okay um so the
1:55:51bottom line really all these questions
1:55:53were are going to Mr Burman that uh
1:55:56Colorado state government is find that
1:56:00affordability is a critical public
1:56:03interest in uh rate cases do you agree
1:56:06with
1:56:09that I don't know that I mean I would
1:56:12say yes that the a they find that
1:56:14affordability is a critical uh issue to
1:56:17address and it can be addressed in a
1:56:19number of ways within and outside of
1:56:21rate cases
1:56:24and thank you moving on to a different
1:56:30topic let's talk
1:56:33about the pancaking of rates are you
1:56:36familiar with that
1:56:39term I'm familiar with the
1:56:42term okay let's start out with um
1:56:45pulling up hearing exhibit
1:56:49101 SP2
1:56:52revised
1:57:09one Mr Burman is this an attachment to
1:57:12your
1:57:17testimony yes it
1:57:21is okay let's walk through
1:57:24this first of all it shows in um line
1:57:29one column
1:57:31A the total well line two column A the
1:57:35total base rate Revenue including
1:57:38transfers of 793 million
1:57:43561 and
1:57:45$237 is that
1:57:48correct that's correct that's the
1:57:51current 20
1:57:5223 revenue from base rate from base
1:57:58rates and then we've talked about you
1:58:01talked about with Miss mclin that the
1:58:04net revenue change that the company's
1:58:06seeking in this case to the base rate or
1:58:10the rate base is 170 mil
1:58:14655 17
1:58:17m655 1825
1:58:24yes I'm not sure if this is the
1:58:26attachment if this is reflective of the
1:58:29rebuttal okay position of the company or
1:58:31if this was the direct
1:58:33position yeah I was going to ask about
1:58:35that um just noting that in the rebuttal
1:58:39testimony this is attached to your
1:58:41direct testimony but in your rebuttal
1:58:44testimony uh the company modified the
1:58:48revenue change proposal to6 69
1:58:53million6 yes that sounds correct okay um
1:58:57and as far as the the percentage of
1:59:01change from the
1:59:042023 uh base rate Revenue to the what
1:59:08you're proposing in this proceeding is
1:59:11uh as listed here it's
1:59:1421.5% is that
1:59:15correct yes but um in your rebuttal
1:59:20testimony I knowe in your
1:59:22um supplemental testimony you do say
1:59:25that it that is changed to a
1:59:2921.4% increase is that right that's that
1:59:33sounds correct yes I didn't see a a
1:59:36revised hearing uh I didn't see a
1:59:39revised chart like this document in your
1:59:43um attached to your supplemental
1:59:45testimony did I miss something I don't
1:59:48think so no I think the changes were so
1:59:50IMM material we didn't um revise this
1:59:53chart for the new numbers in rebuttal
1:59:57okay but it is in I know it is stated
2:00:00testimony they would be slightly
2:00:01different all right um and then going on
2:00:05to the other categories of Revenue that
2:00:08are on sb2 revised one there's some
2:00:12non-fuel
2:00:13Revenue uh the DSM DS
2:00:17smca um is the demand side management
2:00:22adjustment which is 32
2:00:27m277
2:00:28649 is that
2:00:31correct that's correct and then finally
2:00:34you have the revenue from the GCA the
2:00:38fuel Revenue which is over $6 million do
2:00:42you see that yeah I do
2:00:46$626 so the total retail revenue for
2:00:51public service under the 2023 rates is
2:00:55$1.4
2:00:57billion is that right that is
2:01:01correct and the
2:01:04proposal um the total if the uh increase
2:01:09requested in this proceeding is approved
2:01:13is one would equal 1.6 billion do is
2:01:17that right that's correct
2:01:27okay can we turn to page two of this
2:01:32exhibit is there any way to make it
2:01:34larger oh thank you so much that's
2:01:37better
2:01:40um so here could you describe what this
2:01:44U exhibit is what this these three
2:01:47tables
2:01:49are yes the these tables are Bill imp
2:01:53packs the first table is the bill imp
2:01:57packs of the company's proposal on in
2:02:01its direct case uh by the classes listed
2:02:05here the next table down shows the bill
2:02:10impacts if the revenue deferral search
2:02:13charge proposal the company put forward
2:02:15were to be
2:02:17adopted
2:02:19um and then the third table just shows
2:02:22the difference between those the first
2:02:24and the second okay focusing on the
2:02:27first box uh so it looks like for the
2:02:31residential class you've got listed a
2:02:34current bill of
2:02:38$62.40
2:02:40and a dollar
2:02:43increase from this proceeding of
2:02:48$594 which is a 9.52
2:02:52% increase is that right that is right
2:02:56and then when it comes to small
2:02:59commercial customers uh the current bill
2:03:02listed is
2:03:05$268.5 uh the increase would amount to
2:03:11$22.74 which would be an 8.4 46%
2:03:17increase yes that's correct um and
2:03:20that's with the like you said the RSA
2:03:24implementation um either on February
2:03:2629th and you say or November 1st here is
2:03:30it isn't it right that the commission
2:03:32said that uh with the extension in this
2:03:34case the rates would actually go into
2:03:37effect on November
2:03:385th yeah I believe that is correct yes
2:03:41okay I think I think when we filed the
2:03:43case here we were requesting a November
2:03:46one effective date so that's why we're
2:03:48using that date here okay so for for um
2:03:53for residential class the increase would
2:03:55be
2:03:569.52% and small commercials
2:04:008.46% and the remainder of your customer
2:04:04classes are listed in that box
2:04:10correct all right I think just to make
2:04:14the record clear can we go to hearing
2:04:17exhibit
2:04:18124 which is um Mr burman's rebuttle
2:04:22testimony go to page
2:04:31seven see if I get it
2:04:34right okay um scrolling down um to line
2:04:4511 Mr Burman is this where you discuss
2:04:49the decrease
2:04:51of the company's uh Revenue requirement
2:04:54request yes it is thank you for bringing
2:04:57that up and could you could you read
2:05:00that for us please or at least explain
2:05:02it um as it's presented in your
2:05:05testimony yeah that that um this is
2:05:08essentially saying that the updated
2:05:10Revenue requirement in rebuttal is
2:05:15$69.65 uh or a
2:05:1821.4% um of the total 23
2:05:22Revenue base rate Revenue thank you
2:05:27um there's this is really a decrease
2:05:30from the company's direct testimony to
2:05:33your rebuttal testimony of less than 1%
2:05:37isn't that
2:05:38right that's
2:05:43right Mr Burman were you a witness in
2:05:47the uh Public Services
2:05:50last gas rate increase proceeding which
2:05:53was 22 a00
2:05:5646g I was and the hearing was held a
2:06:00couple years ago do you recall that I do
2:06:03in that case uh Public Services
2:06:07president Robert Kenny agreed that
2:06:09public services Colorado customers have
2:06:13been subject to a pancaking of rate
2:06:15increases do you recall that I'll object
2:06:18if this is if you'd like to share the
2:06:20testimony from that proceeding we can
2:06:22talk about that but asking the witness
2:06:24to recall specific
2:06:26words is uh calling for
2:06:29speculation Miss singer Nelson you want
2:06:31to respond uh yes uh we can pull up
2:06:34hearing exhibit 503 from uca's
2:06:40box and we can refresh Mr burman's
2:06:43recollection
2:06:53Mr Burman can you identify what you see
2:06:56on the
2:06:57screen this looks like a transcript from
2:07:00the hearing
2:07:03in the last in 22 Al
2:07:070046 okay and I'll represent you I think
2:07:10if you scroll down a little bit you can
2:07:12see the date but I'll represent
2:07:16this this is the August 17th hearing
2:07:20transcript can we can we go to page 118
2:07:24of this document
2:07:27please
2:07:30and
2:07:33okay we can scroll down a little bit
2:07:37to
2:07:40yeah okay here we go starting at line F
2:07:4816 I asked the question have you heard
2:07:50the expression p king of rates and Mr
2:07:53Kenny said I have heard of it
2:07:56yes um and at line
2:08:0019 I defined uh here in Colorado we've
2:08:04talked about the phrase pancaking of
2:08:06rates and it refers to establishing rate
2:08:09increases one after another so that the
2:08:12cumulative effect has a significant
2:08:14impact on the utility rates charged to
2:08:18customers or
2:08:20consumers do you see that Mr Burman I do
2:08:23see that and so when we let's move down
2:08:32to oh page
2:08:40122 can we Miss Nelson s Nelson or or
2:08:44maybe I should direct this either way
2:08:46apologies but can we please confirm
2:08:48whose testimony we're speaking to here
2:08:51oh sure we can go
2:08:54okay
2:08:57um yes I think we can go
2:09:04up I don't think we can go to the top of
2:09:08um I don't I I'm just trying to see if
2:09:12the um table of contents is included in
2:09:15this document but if you want to go up
2:09:17to the very beginning of the document
2:09:23and scroll down yeah thank you Mr Kenny
2:09:26starts
2:09:27on um page 18 Cross by Miss Nelson is at
2:09:34111 um and then I go through 136 it
2:09:38looks like does that help it does I just
2:09:42wanted to confirm we are not talking
2:09:44about the testimony of Mr Burman in that
2:09:46proceeding no no we're talking about Mr
2:09:48Kenny that's what my question was
2:09:50focused on is a recollection of Mr
2:09:52Kenny's
2:09:56testimony so going back to page 122 line
2:10:0023
2:10:10please the question line 20 the question
2:10:13is and would you agree that these cases
2:10:15together result in a pancaking of rate
2:10:17increases and Mr Kenny responded well I
2:10:20would agree as you as you defined it
2:10:23that it would fit that
2:10:25definition Mr Burman does that re uh
2:10:28does that refresh your recollection as
2:10:30to Mr Kenny's testimony in that
2:10:34proceeding it looks to me like Mr Kenny
2:10:37is not agreeing to your definition but
2:10:40agreeing to under that
2:10:43definition that this fits within that
2:10:49definition it doesn't L 22 say well I
2:10:53would agree as you defined it that it
2:10:56would fit that
2:10:57definition yeah I think the as you
2:11:00defined it is what I'm taking as in not
2:11:03necessarily agreeing with that
2:11:04definition but saying as you've defined
2:11:07it he agrees it fits the
2:11:12definition okay that's fine um
2:11:21in this proceeding in the commission's
2:11:23April 24 order asking public service to
2:11:27file supplemental testimony showing a
2:11:3015-year rate forecast uh the commission
2:11:33also expressed concern over how the
2:11:36company's ongoing vest Investments
2:11:39pancake into customer rates over time do
2:11:42you recall
2:11:43that I don't necessarily recall the use
2:11:46of the word pancake in the decision but
2:11:50um if you can point me to
2:11:54it will I do know that they asked for a
2:11:5715-year forecast yes I agree with
2:12:02that Mr um chairman can we can I ask the
2:12:06commission to take administrative notice
2:12:08of its April 2024 order it's
2:12:15c2424 at paragraph
2:12:1716 do you have any uh objection uh Miss
2:12:20Brown
2:12:22I guess I'm unclear on what we're taking
2:12:23of administrative notice
2:12:25for the fact that the commission
2:12:28described the um its concern about how
2:12:33the company's ongoing Investments
2:12:35pancake into customer rates over time I
2:12:39don't I will say I I I do have an
2:12:42objection to that partly we haven't
2:12:44shown that but more importantly it is a
2:12:46commission decision if the UCA would
2:12:47like to site to it in a brief or
2:12:49otherwise it exists the commission
2:12:51doesn't need to take administrative
2:12:52notice of it for UCA to site to
2:12:56it I mean what's the harm of taking
2:13:00administrative notice under those
2:13:02circumstances Miss brma I don't think I
2:13:04have a a concern with so much with the
2:13:06commission taking administrative notice
2:13:08that a decision exists it's just that uh
2:13:11Miss singer Nelson has referred to it
2:13:12for specific proposition without
2:13:14providing that and so if we're taking
2:13:17administrative notice or if the
2:13:18commission is taking administrative of
2:13:20notice um that there is a commission
2:13:22decision out there by that number and
2:13:24putting in the record for that purpose
2:13:25generally that's not my concern it's
2:13:27more for the proposition as singer
2:13:29Nelson states without identifying in the
2:13:33in the decision
2:13:36itself Miss singer
2:13:38Nelson any chairman blank the the point
2:13:43is that uh the commission expressed
2:13:48concern in this proceeding relating to
2:13:51the pancaking and and that language is
2:13:54actually used in the commission's order
2:13:57um and
2:13:59that
2:14:01the um continued rate increases are
2:14:05something that um is an issue that is
2:14:10going to be explored in this proceeding
2:14:12and it's important to the commission to
2:14:14explore that issue in this proceeding
2:14:17pancaking has a certain connotation to
2:14:20it that
2:14:21um Mr Kenny that I referred to in my
2:14:25cross-examination of Mr Kenny in 2022
2:14:28and I I think that um the commission's
2:14:32use of that term is is
2:14:35relevant let's uh take General notice of
2:14:38it uh it doesn't have to stand for the
2:14:41proposition that uh Miss singer Nelson
2:14:44is a starting and let's uh just move on
2:14:47if we
2:14:48could I'm ready to move on thank
2:14:53you
2:14:56okay
2:15:00now let's move
2:15:02to
2:15:06um hearing exhibit 100 attachment
2:15:13one and Mr Burman as part of or while
2:15:18that's being pulled up uh would you
2:15:20agree that as part of s sp23 291 the
2:15:25legislature required utilities to file a
2:15:2810-year uh rate Trend report whenever
2:15:31they ask for a rate
2:15:33increase and I'm Sorry Miss singer
2:15:35Nelson you said exhibit a 100 attachment
2:15:38one yeah it's the advice letter it's the
2:15:41attachment to the advice letter um yes
2:15:43Public Services had asked those be
2:15:46removed from the spreadsheet so they are
2:15:47not on the spreadsheet I I don't I if
2:15:50you want me to search for them I can try
2:15:53but um they were intentionally removed
2:15:55from the
2:15:57spreadsheet if I may um Public Service
2:16:00typically does not move the admission of
2:16:02advice letter as an exhibit in the
2:16:04proceeding and that so no different here
2:16:06than any other proceeding with respect
2:16:07to advice
2:16:10letters additionally they were I believe
2:16:12they had different titles um I believe
2:16:14they were attachments a b and c so which
2:16:16one if you want me to try to find it
2:16:19there's a b and c and then there's a
2:16:20attachment one as well and UCA would
2:16:24request
2:16:26um once I I leaya Foundation UCA would
2:16:30request for
2:16:33um admission of the rate Trend report
2:16:37that the company filed along with its
2:16:41advice letter pursuant to the recent law
2:16:44that was imple implemented requiring
2:16:47that they file a rate Trend Report with
2:16:49every rate in that they
2:16:53file Miss
2:16:56Brahma uh just one moment
2:17:01please just needed to confer with my
2:17:03client we are fine you're um Sher blank
2:17:05we can have that admitted into the
2:17:08record okay thank
2:17:11you and is Miss federo it's important
2:17:16that we actually have the document on
2:17:18the screen while we talk about it um I
2:17:21know I'm I'm just trying to find it
2:17:22because they had told me they wanted it
2:17:24hidden so I have to R it I understand
2:17:26thank
2:17:27you if I may clarify it we didn't mean
2:17:29hidden in the sense that it was you know
2:17:31hidden just in the sense that it was not
2:17:33admitted into the record as an exhibit
2:17:36understood understood nobody's in faring
2:17:39B no thank you
2:17:51I'm I'm understanding too um Miss singer
2:17:54Nelson are you looking for the advice
2:17:55letter itself or the attachment because
2:17:56it may not it's attachment one okay
2:17:59there it goes there it is thank you
2:18:01thank you that didn't take very
2:18:03long all right Mr Burman um now what is
2:18:07your title again it's vice president of
2:18:12regulatory Administration and
2:18:15pricing essentially yes regional vice
2:18:18president of regulatory and pricing okay
2:18:21um and can you identify the document on
2:18:23the
2:18:24screen yes this is the rate Trend report
2:18:27that was filed with the advice letter in
2:18:29this
2:18:30proceeding okay and
2:18:32uh chairman blank I'd move for
2:18:36admission any objection of this report
2:18:42so it so
2:18:44moved thank
2:18:46you so Mr Burman let's walk through it
2:18:49section by section
2:18:51so the very first section talks about
2:18:53the amount of increase in the rate
2:18:56Etc um or classification ready relative
2:18:59to the amount and effect on the date of
2:19:01the utilities filing do you see that I
2:19:04do and as we scroll down a little bit
2:19:07the first um item listed is the
2:19:11residential
2:19:14grsa and it looks like the company is
2:19:18stating that the uh General rate
2:19:21schedule adjustment from this proceeding
2:19:24will increase the grsa by
2:19:2931.7%
2:19:3431.4% correct that's the increase in the
2:19:38grsa right so it's the difference
2:19:40between the amount that's currently
2:19:42being collected and the amount that the
2:19:45company's proposing will be collected um
2:19:49if the rate increases a approv
2:19:51correct as it relates to the grsa I just
2:19:54want to be sure cognizant that this is
2:19:57not a bill impact or this is not a
2:19:58revenue change we've already looked at
2:20:00those things earlier in your your cross
2:20:03it's the grsa increase specific for that
2:20:06raid element correct and then small
2:20:11commercial um the same thing the grsa is
2:20:15it looks like there's going to be an
2:20:16increase from the current GSA in from
2:20:19this proceeding of
2:20:2331.4%
2:20:25correct scrolling
2:20:30down so uh here's the revenue deferral
2:20:34charge description it looks like the
2:20:37residential Revenue deferral searge is
2:20:41currently at
2:20:430% and the company's proposal if
2:20:46accepted would be an increase of 10.14%
2:20:51%c that's correct this that's the amount
2:20:55that would be calculated um in order to
2:20:58collect the revenue under the
2:21:00RDS okay thank you I'm moving down just
2:21:03scrolling to the next L uh couple lines
2:21:06we've got small commercial again and the
2:21:09revenue deferral sech charge will be um
2:21:13going from 0% to a
2:21:1699.06% if it's accepted in this
2:21:19proceeding that's
2:21:21correct going down to the next category
2:21:25asked by the rate Trend report is number
2:21:27two the amount in change in annual
2:21:30revenues collected by the utility as a
2:21:32result of the filing and here's where
2:21:35the company describes um the current
2:21:39grsa um and the proposed
2:21:41grsa um and this is based on your um
2:21:45direct testimony is that
2:21:48right that's correct
2:21:51and so the amount here is uh the
2:21:54proposed grsa is still the
2:21:5717,6
2:21:5955,8 125
2:22:02figure yes and then similarly for the
2:22:06revenue deferral
2:22:08surcharge um currently there's no RDS um
2:22:12but you're proposing 79
2:22:16m335
2:22:1864 correct yeah so I would just point
2:22:22out that these numbers are not additive
2:22:24on each other right this is um looking
2:22:26at points in time if the revenue
2:22:28deferral search charge was
2:22:30approved it would delay the rate
2:22:32implementation and thus it's it's
2:22:34basically a subset of the 100
2:22:37subm I was wondering about that thank
2:22:40you for that
2:22:41clarification um could we move to the
2:22:44next page please
2:22:50all right and
2:22:53now we're going to be looking at this
2:22:56chart and I know that the um type on the
2:22:59very bottom of the first table is kind
2:23:02of small oh thank you um that helps a
2:23:05lot um and so this chart responds to the
2:23:11legislation asking for a chart or other
2:23:14pictographic demonstration of each of
2:23:16the utilities rates um charges Etc
2:23:20including the total of all utility bill
2:23:23line items such as base rates and rate
2:23:26adjustment mechanisms for the 10 years
2:23:29prior to the date of the utility
2:23:31filing um do you see that I do and the
2:23:37utility filing in this case was in
2:23:40January of 2024
2:23:43correct yes that's correct so it looks
2:23:47like this chart goes through the end of
2:23:50uh December
2:23:532023 I see November 2023 yeah that's
2:23:57what it looks like I agree okay so it
2:23:59probably goes to the end of the year do
2:24:01you do you agree I think that's right I
2:24:03mean the last point there is November
2:24:06I'm not sure if it's November or
2:24:07December
2:24:09but okay it would have been the most
2:24:11recent information we had available so
2:24:13December's possibly not on here given
2:24:15the time frame of the filing it may not
2:24:17have been available at that time okay
2:24:21well let's let's um let's refer to it as
2:24:24November since it's the last number or
2:24:27the last date that's on this chart can
2:24:30we agree to that at least for walking
2:24:32through the chart so we can be accurate
2:24:34based on what the chart says yes okay
2:24:38thank you so um let's look at first of
2:24:43all let's look at um we noticed that
2:24:46there are a lot of different colors on
2:24:48this chart correct
2:24:51correct um and at the very bottom can
2:24:53you see Mr Burman the very bottom of the
2:24:58um the screen where it actually
2:25:02identifies the col the colors that go
2:25:04with each of the charges I can okay so
2:25:09there's a dark blue that's the service
2:25:13and facility charge do you see that I do
2:25:18and then there's a lighter blue which is
2:25:21the gas cost
2:25:23adjustment I see that as well um there's
2:25:27a it's an orange color and I think it
2:25:31only shows up
2:25:33um uh slightly but it's the Gas Energy
2:25:37Assistance
2:25:39charge
2:25:41yes uh green is the pipeline system
2:25:45Integrity adjustment is that
2:25:48correct correct
2:25:51gray which is what we're going to focus
2:25:53on primarily is the base rate usage
2:25:56charge do you see that I do and then the
2:26:00demand side management cost adjustment
2:26:03or the
2:26:05dmca is is another um darker blue and I
2:26:11think that's the one that is towards the
2:26:14top of all the figures when we're
2:26:16looking at the three different Blues the
2:26:19DSM CA is is the top blue do you
2:26:25agree uh yes right then we have the
2:26:29general rate schedule adjustment which
2:26:31is
2:26:33yellow correct and then the
2:26:36extraordinary gas cost uh recovery Rider
2:26:41which is more of a a brown do you see
2:26:45that I do okay great so as we walk
2:26:49through this
2:26:52uh let's
2:26:56see let's let's talk
2:27:10about
2:27:12okay now let's let's talk about the gray
2:27:15area I'm going to focus on that for now
2:27:18um the base rate Revenue uh the gray is
2:27:22relatively flat until the first
2:27:26noticeable increase in February of 2020
2:27:30you see that there's a little bump in
2:27:32the gray in February
2:27:352020 I do I just want to caution you you
2:27:38kind of have to look at the grsa and the
2:27:41base rate charges together because when
2:27:44you come out of a rate case essentially
2:27:46it just depends on if there's a phase
2:27:48two whether that's all being captured in
2:27:51the base rate usage versus the grsa
2:27:55which is what collects That Base rate
2:27:57Revenue until there's a phase two to to
2:27:59move it out by class so those two things
2:28:02are very much related okay thank you
2:28:05that's helpful um so we'll see we see
2:28:08the base rate and the grsa both going up
2:28:12together um to a level of of about 30
2:28:18cents per THM do you see that
2:28:21I
2:28:24do and then there's another base rate
2:28:27increase without the grsa that occur oh
2:28:31no with the grsa too that occurs um in
2:28:35February of
2:28:382021 that takes it up
2:28:41to about 50 cents per therm do you see
2:28:46that I do
2:28:52and then there's another significant
2:28:54increase that occurred between August
2:28:57and November of
2:29:032023 oh no the there's a big one in
2:29:06November 2022 do you see
2:29:09that yes that would be the last right
2:29:12case
2:29:13implementation okay so that's closer to
2:29:16the 60 cents per THM would you agree
2:29:23it looks like it's just below that yeah
2:29:26right okay I know it's hard because we
2:29:28don't have a
2:29:31r ruler to draw lines but um but B based
2:29:37on your view of this chart would you
2:29:40agree with uh that that's what the rates
2:29:43appear to be based on um the gray part
2:29:47of the chart what we've discussed
2:29:50I'm GNA object to that
2:29:51question it's very vague
2:29:55and that's fine I was just trying to
2:29:58summarize what we just talked about but
2:30:00that's fine I'll withdraw
2:30:02it so Mr rman it looks like in since
2:30:072020 in uh three to three and a half to
2:30:11four years residential customers
2:30:13experienced a a 150 per therm rate
2:30:17increase based only on base rate
2:30:21increases is that
2:30:25right um are you saying
2:30:28150%
2:30:30um yes from I don't from 20 cents a
2:30:36THM
2:30:38to nearly 60 cents per THM I think in
2:30:43many of the those periods when you're
2:30:45looking at the 20 there was a grsa in
2:30:47place that was really higher than that
2:30:53okay so you you're just um bickering
2:30:55with my description of the uh percentage
2:31:00increase yeah you're right I think I
2:31:02mean if you look at our rates they have
2:31:04not gone up by 150% in that period of
2:31:08time but you would agree that they they
2:31:11went from from February of 2020 slightly
2:31:16Before 40 cents a therm to
2:31:20uh November of
2:31:222023 to uh about 60 cents a
2:31:32THM it's really hard for me to tell on
2:31:34this chart but that that might be a lot
2:31:36closer to 50 cents
2:31:40but I see the increases I'm sure the
2:31:42data that underlies this chart is
2:31:44available I was going to ask you that I
2:31:46didn't see it in the rate Trend report
2:31:48filing is is it is it available anywhere
2:31:52where else in this um
2:31:55docket I would have to to check I'm not
2:31:58sure offand um I do know we also post
2:32:02these rate Trend reports on the website
2:32:04in compliance with 291
2:32:10so certainly certainly it
2:32:14exists and it would be easier for us to
2:32:17get to exact um
2:32:20figures if if we had the underlying data
2:32:24um rather than relying on the chart
2:32:26wouldn't you
2:32:28agree I would agree but the rate Trend
2:32:33report does um show an accurate
2:32:38depiction of the rate changes over the
2:32:42last 10 years yes it
2:32:47does and then focusing more on the the
2:32:51total um increase in rates and all the
2:32:54different categories that we talked
2:32:56about earlier um it looks like
2:33:00the residential rate going back to that
2:33:04February of 20120 date looks like the
2:33:07residential rate
2:33:10combined um is right
2:33:16around between 60 and 70 cents per THM
2:33:20would you agree with
2:33:23that that looks
2:33:25correct and then at one point it got to
2:33:29be over aund
2:33:32$160 per
2:33:36THM that is
2:33:40correct and then going down to the the
2:33:43next table for a small
2:33:46commercial customers
2:33:50again it looks like there's a an
2:33:53increase from the February
2:33:5520th
2:33:57rate to a rate of over
2:34:01a140 per THM in August of 2022 do you
2:34:07see
2:34:08that I do yeah these the spikes are
2:34:11obviously very much dependent on the
2:34:13cost of
2:34:16gas right it shows the grsa the GRS say
2:34:19is in the light blue
2:34:22color the GCA yes I mean the GCA I
2:34:27apologize um but but
2:34:30overall the small
2:34:32commercial um customers at this
2:34:36point looking at the nove November
2:34:4123 uh figure it's
2:34:46around slightly less than a dollar per
2:34:49therm
2:34:56you see that correct yes so uh the
2:34:59commercial small commercial rates
2:35:02doubled from February 2020 to November
2:35:072023 would you agree with
2:35:11that from February of
2:35:1620120 yes it's between 40 and 60 which
2:35:19would looks to be right about 50 and
2:35:23then now we're looking at just less than
2:35:27a doll per s looks a little less than
2:35:30double but again that's primarily
2:35:31related to gas costs and if you
2:35:34extrapolated this chart out you continue
2:35:36to see it decrease as gas prices have
2:35:39come
2:35:39down but the base rate the gray in the
2:35:44chart shows an
2:35:48increase correct
2:35:51correct and that's what the company's
2:35:53asking for an
2:35:55increase um in in this proceeding isn't
2:35:58that right the base Revenue
2:36:06increase do you know where in the record
2:36:09um the bill impact to customers is
2:36:15expressed in a per therm rates
2:36:24I'm not sure that it
2:36:28is expressed in per therm rates so as it
2:36:33sits now um the commission can't tell
2:36:37the per therm rate increase that is
2:36:41being requested by the company in this
2:36:47proceeding I would have to double check
2:36:49we typically file you know all of the
2:36:52the rate changes so to the extent that
2:36:55that could be
2:36:58in an attachment it's it's not typically
2:37:02how we look at Bill impacts we typically
2:37:04look at Bill impacts on a total dollar
2:37:07basis um consumers are build on a per
2:37:11THM rate though
2:37:13correct correct it but I think they
2:37:17typically are in interested in the
2:37:20change that we looked at earlier which
2:37:22is the change in their actual bill
2:37:25from before and after the rate
2:37:31change it's been the company's practice
2:37:34historically to provideed the bill
2:37:36impacts in the format that they were
2:37:37provided in my testimony that we looked
2:37:40at
2:37:41earlier so we can't really tell from
2:37:43this record how the um the new base
2:37:48rates
2:37:52well because of the use of a grsa we're
2:37:54not actually changing the per THM rates
2:37:57in this case we're right where that
2:37:59would happen in a phase two proceeding
2:38:02where those actual rates would change so
2:38:06here we're establishing the revenue
2:38:09requirement and using the grsa to
2:38:11collect that Revenue right and that
2:38:13would show up in the orange
2:38:16correct correct
2:38:21um so the the commission has no uh way
2:38:25based on this record to show in the
2:38:30format that you provided in your rate
2:38:32Trend report um how the grsa will
2:38:36increase compared to what exists now
2:38:40well we did walk through the change in
2:38:43the grsa percentage and what the how
2:38:47that impacts customers bills in the
2:38:50previous items we looked
2:38:52at okay but we just can't we can't see
2:38:56that in terms of a per THM rate which is
2:38:59what is depicted in your rate Trend
2:39:02report it is correct and that's why the
2:39:05grsa has its own line in this report its
2:39:08own color because we won't actually
2:39:10change per therm rates coming out of
2:39:13this rate case that'll occur in a phase
2:39:15two case in this rate case we'll just
2:39:18set a grsa and so if you were to take
2:39:20this chart further out based on the
2:39:23outcome of this case you'll you would
2:39:24see a new orange area for the
2:39:32grsa great
2:39:35okay
2:39:38um let me look and see if I'm done with
2:39:42that
2:39:48chart you testify in your
2:39:53uhel if you're done with this line maybe
2:39:55we should uh take a break okay are you
2:39:59done with this line yeah that's fine
2:40:02thanks chairman all right it's um uh 309
2:40:063010 310 let's come back at uh 3:20 I
2:40:11think you're about 50 minutes into your
2:40:14cross so you got about 30 minutes left
2:40:15Miss singer nelon thank you sure 320
2:40:4820
2:41:18e
2:41:48e
2:42:18e
2:42:48e
2:43:18e
2:43:48e
2:44:18e
2:44:48e
2:45:17e
2:45:47e
2:46:17e
2:46:47e
2:47:17e
2:47:47e
2:48:17e
2:48:47e
2:49:17e
2:49:47e
2:50:17e
2:50:47e e
2:51:23singer Nelson you got 30 minutes left
2:51:26thank you chairman blank um can we go
2:51:29back to the exhibit we just had up um
2:51:34which would be the um hearing exhibit
2:51:38100 attachment one and and go to page
2:51:41four please
2:51:49okay
2:51:50oops there we
2:51:53go all right uh Mr Burman do you see the
2:51:57chart that is on
2:51:59screen I do can you identify that for us
2:52:03please this is 10year trend of total gas
2:52:09revenue from the same rate Trend report
2:52:13that we were looking at
2:52:15earlier so this is revenue
2:52:19and it's on the very on the far left
2:52:23column um we've got the numbers
2:52:27zero to two billion is that correct
2:52:32that's correct and once again we have uh
2:52:36colors in the chart that reflect the
2:52:40different uh rate elements that are on
2:52:43customers gas bills is that right that's
2:52:47correct so this depicts the revenue
2:52:50associated with each of those rate
2:52:53categories or rate elements
2:52:56correct yes that's
2:52:58correct um I'm looking at the 2023 bar
2:53:03first it looks like the gas revenue is
2:53:09$1.8 billion is that
2:53:13right the total revenue
2:53:17yes and then uh the revenues appear to
2:53:20be unchanged between 2022 and
2:53:232023 so for 2022 as well it's it's $1.8
2:53:28billion doar of total
2:53:31revenues looks very close to the same
2:53:35yes and uh between 2021 and
2:53:402022 the bars show that the rate went
2:53:45from 1.2 billion to to 1 .8 so that's a
2:53:50$600 million increase in one
2:53:55year that looks about correct um granted
2:54:00that the vast majority of that is in the
2:54:03gas
2:54:04cost but that those are revenues to the
2:54:07company and the
2:54:09billions those are revenues but the gas
2:54:11cost recall is dollar for dooll cost to
2:54:15the company um pass through
2:54:19right it's a pass through that consumers
2:54:21have to pay correct it is the cost of
2:54:23the gas that the consumers use correct
2:54:26right so consumers pay for that in their
2:54:29rates they
2:54:31do and then in
2:54:352020 uh it appears that the revenue was
2:54:38right around a billion dollar uh figure
2:54:43is that
2:54:45accurate uh yes that looks right almost
2:54:48at the line so in two years
2:54:52the gas Revenue increased by 800 million
2:54:58do total revenue yes again driven
2:55:02primarily by Fuel
2:55:05costs and here we discussed before that
2:55:09um public service is requesting another
2:55:12$1 69.6 million in increased bait base
2:55:17rate Revenue news correct that's
2:55:29correct
2:55:30see oh did you review uh Mr scac UCA
2:55:34witnessed glus Zac's testimony in
2:55:37preparation for the hearing today I did
2:55:41can we pull up hearing exhibit 500
2:55:44please which is Mr slac's answer
2:55:47testimony
2:55:50and I'd like to go to page
2:56:0726 and that's going down
2:56:11to line
2:56:1510 from lines 10 to 20 Mr scac discusses
2:56:20the ever increasing dividend payouts by
2:56:23public services parent company is that
2:56:30right just refreshing one this
2:56:46sure uh yes he appears to be discussing
2:56:48the changes in dividend payouts okay and
2:56:51and um lines 15 and 16 he discusses a
2:56:56dividend
2:56:57increase uh for shareholders
2:57:01of
2:57:030.547 five per
2:57:07share per quarter or um $29
2:57:13cents
2:57:15perom for 2024
2:57:18I see he's discussed that
2:57:24yes um and Mr schulak also notes that
2:57:28Excel has increased its dividend
2:57:30payments for 21 consecutive
2:57:38years I think you can y I do see that he
2:57:40said that yes and that's uh he's
2:57:44referring to a document in in um
2:57:48footnote 15 that describes that 21-year
2:57:52consecutive dividend payout I see the
2:57:55reference and certainly Mr Johnson would
2:57:57be able to speak to dividends and why
2:58:00the company sets them as they
2:58:03do can we pull
2:58:06up
2:58:07um hearing exhibit 500 attachment CWS 7
2:58:13which is a public service response to
2:58:16Discovery and this is has already been
2:58:18admitted into evidence in this
2:58:21case and scroll
2:58:24down
2:58:26okay Mr
2:58:28Burman oh can you scroll up a little bit
2:58:32thank you um can you see that it asked
2:58:35for you to provide a schedule of the
2:58:37dividends or for the company to provide
2:58:40a schedule of the dividends declared and
2:58:42dividends paid to excel by public
2:58:45service for the past 10 years
2:58:49I can see that I also saw that this was
2:58:50sponsored by Mr Johnson so any detail on
2:58:54these numbers should be directed to him
2:58:57okay I was just going to ask you um to
2:59:00observe the increases in dividends from
2:59:052013 through 2023 as shown on this
2:59:10chart I see the increases as shown on
2:59:14this chart and again think Mr Johnson
2:59:17would would be
2:59:18a witness I could explain in detail why
2:59:21these
2:59:22occur all right so year
2:59:252013 the dividends paid was $264
2:59:29Million is that
2:59:33right that looks correct and in
2:59:372023 the dividends paid were
2:59:40$652 million is that
2:59:44right uh also looks correct
2:59:53all right we can take that down we'll
2:59:55move
2:59:59on let's talk
3:00:01about the 13-month average rate base
3:00:05issue and a little bit about the Roe
3:00:09debate in this
3:00:11proceeding um Mr Burman in your rebuttal
3:00:15testimony you state that the two issues
3:00:17that are key to the company in this case
3:00:19are cost of capital and rate case
3:00:22methodology is that right I think I
3:00:25stated that those are the two key issues
3:00:28with respect to the revenue requirement
3:00:30and the most impactful
3:00:33issues that's right uh you also testify
3:00:37that the use of average rate base simply
3:00:40acts as a driver for more frequent rate
3:00:44cases is that right
3:00:48it sounds familiar if you want to point
3:00:50me to the exact amount statements you
3:00:53know essentially as discussed with with
3:00:55staff's attorney the use of average rate
3:00:58base is going
3:01:00to create more regulatory lag uh
3:01:03especially one paired with a historic
3:01:05test year and so yes that's going to
3:01:09result in more frequent rate cases
3:01:11because it's going to continue to put
3:01:13set rates based on a period of time
3:01:16that's not representative of the time
3:01:18that customers are actually paying those
3:01:21rates uh do you recall that the
3:01:23commission's final decision in the last
3:01:25rate case that we talked about earlier
3:01:27the 2022 rate case um came out in
3:01:30December of
3:01:322022 and that public service received
3:01:35year end rate base in that case yes did
3:01:38you recall
3:01:40that and public service filed this rate
3:01:44case in January of this year
3:01:48correct
3:01:50correct so Public Service filed this
3:01:542024 Phase 1 rate case about 13 months
3:01:57after receiving year-end rate base for
3:02:00its 2022 gas rate case isn't that right
3:02:05that's right and I do believe the test
3:02:08year in that case was 2021 so
3:02:11again regulatory lag will exist in an
3:02:14hty regardless of year end rate base or
3:02:19average rate base year end rate base is
3:02:21just going to produce less lag than
3:02:23average rate base
3:02:25um so it's not going to eliminate a need
3:02:28for for rate cases when Investments are
3:02:30continuing and rate bases growing which
3:02:33is what we've seen uh and
3:02:36so certainly not unexpected that there
3:02:40another R case
3:02:43sorry and to the extent the commission
3:02:46um orders a third 13-month average rate
3:02:49case in this proceeding do you think
3:02:51you'll file another rate case in less
3:02:53than the 13 months that you filed this
3:02:56rate case following the last rate case
3:02:58even when a year end um rate based
3:03:02methodology was
3:03:03approved it's possible I mean it depends
3:03:06on a number of things in the case and
3:03:09outcomes right all of these pieces pair
3:03:12together uh and are determinative of
3:03:15this decision of one def file rate case
3:03:17it's not any one single issue that
3:03:18drives that
3:03:20decision so we might not we might see
3:03:23another rate um case proceeding in
3:03:312025 the company has not decided on when
3:03:34it's planed to file the X-ray case and
3:03:36certainly part of that decision depends
3:03:38on the outcome in this
3:03:39case all right let's move on do you
3:03:42testify in your rebuttal testimony that
3:03:45um
3:03:48in the context of the issues for cost of
3:03:51capital and the rate based methodology
3:03:54staff's and uca's recommendations on
3:03:56these issues would have a significant
3:03:59impact on the financial health of the
3:04:01overall utility and would be contrary to
3:04:04sound ratem policy do you recall that I
3:04:09do focusing just on uca's recommendation
3:04:12for a 13-month average rate based
3:04:15methodology for um a 2023 historic test
3:04:20year your assertion is that this is
3:04:23contrary to sound ratemaking policy
3:04:26correct my assertion is the the pairing
3:04:29of those things certainly is outside of
3:04:33the bounds of what we've seen across the
3:04:36country from other commissions uh in
3:04:39other rate cases in the last 18 months
3:04:42um this bully testifies to the average
3:04:45Roes that have been uh awarded to
3:04:48utilities that are well above what's
3:04:50been recommended in this case by UCA and
3:04:53then average rate base in an hty again
3:04:56is putting a significant amount of lag
3:04:58especially at a time when the psia has
3:05:01now um been built into base rates and
3:05:05and then dissolved uh creates an even
3:05:08greater burden than it has in the past
3:05:11when that rate based methodology has
3:05:13been used and the PSI existed um Mr
3:05:16Burman do you want me to direct you to
3:05:18exactly in your rebuttal testimony where
3:05:22you talked about the the specific
3:05:25significant impact um that the 13-month
3:05:29average rate based methodology would
3:05:31have and result in con it would be
3:05:35contrary to sound rate making
3:05:37policy sure you could just exactly where
3:05:42I said that okay let's go to uh rebuttal
3:05:45testimony hearing exhibit 124
3:05:48at page eight lines 5 through
3:05:577 so do you does this refresh your
3:06:04recollection yeah I think this says this
3:06:07is referring to both Roe and right based
3:06:10methodology and you say that uh staff
3:06:13and uca's recommendations would have a
3:06:15significant impact on the Financial
3:06:17Health the overall utility and would be
3:06:21contrary to sound ratem policy correct
3:06:25and what I just said was I was referring
3:06:27to both of these issues in tandle not
3:06:29one
3:06:32specifically the Commission in the 2017
3:06:35proceeding um Public Service Gas rate
3:06:38proceeding um approved a 13-month
3:06:41average rate based methodology in that
3:06:44proceeding correct I'm sorry wait year
3:06:48did you say 2017 2017
3:06:52yes and then um the company appealed
3:06:56that to Denver District Court do you
3:06:58recall
3:07:00that I do
3:07:03generally and uh the district court
3:07:06denied the company's appeal of the
3:07:0913-month average rate based
3:07:12methodology
3:07:16decision sound sounds correct but again
3:07:19that was several years
3:07:21ago so wouldn't you say that the the
3:07:24commission and the district court both
3:07:26disagreed with your assertion that a
3:07:2913-month average rate based method is
3:07:31contrary to sound ratemaking
3:07:34policy I think the commission makes
3:07:37those decisions with broad discretion in
3:07:40the context of a r case that includes a
3:07:43number of issues and I think the court
3:07:46acknowledged the commission broad
3:07:47discretion to make those decisions and
3:07:51that included approving the 13-month
3:07:54average methodology that's that's
3:07:57correct okay thank you can we take this
3:07:59down that exhibit down thank
3:08:02you um I've got an exhibit in box
3:08:06hearing exhibit
3:08:15506 and Mr Burman I'll just have you
3:08:17authenticate this document can you
3:08:19identify what's on the
3:08:23screen this looks like a discovery
3:08:26response from the company ECA
3:08:3126-5 can we look at subsection C please
3:08:35well let's scroll to the bottom and I'll
3:08:36move for
3:08:39admission Mr Burman did you sponsor this
3:08:43discovery response I am one of the
3:08:45sponsors yes okay
3:08:48um Mr chairman I move for admission of
3:08:51hearing exhibit
3:08:53506 Miss Brahman any objection no
3:08:56objections so moved thank you uh can we
3:09:00move to the question in subp part
3:09:04C so it says focusing just on uca's
3:09:08recommendations for a 13-month average
3:09:10rate base methodology for a 2023
3:09:13historic test year is it Mr burman's
3:09:16assertion that if
3:09:18if just uca's recommendations were
3:09:20approved there would be a significant
3:09:22impact on the financial health of the
3:09:24overall utility please provide
3:09:28documentation uh do you see that
3:09:31question I do and and then let's look at
3:09:34your answer in to sub um yeah subp part
3:09:41C you state that um application of the
3:09:45rate base would cause the company to
3:09:47recover roughly 10% less of its total
3:09:51revenue
3:09:54deficiency is that an accurate statement
3:09:57of your
3:09:58response that's
3:10:02correct in your testimony in rebuttal
3:10:05you you state that the impact of the
3:10:0813-month average rate base versus a year
3:10:11end rate base would be about $25 million
3:10:14on the revenue requirement do you recall
3:10:17all that I think that has been corrected
3:10:20since been corrected to $18
3:10:22million thank you and I'll ask you to
3:10:25can we pull up hearing exhibit 507 out
3:10:29of the uca's
3:10:34box and again Mr um Burman I just ask
3:10:38you to identify the
3:10:41document uh yeah another Discovery
3:10:44question
3:10:462613 and we'll move down to the bottom
3:10:49of
3:10:50it are you one of the sponsors I am and
3:10:54I would like to move for admission of
3:10:57hearing exhibit
3:11:00507 Miss brah no objection so move so in
3:11:05your response here this is where you
3:11:07clarify that the difference between the
3:11:11company's a rate based
3:11:13methodology and uh uca's rate based meth
3:11:17meth my tongue's getting tied um uca's
3:11:22rate base methodology is $18 million
3:11:25rather than 25 correct that's correct so
3:11:29if year end rate base is approved that's
3:11:32an additional $1 million that rate
3:11:34payers will bear in base rates
3:11:38correct it will increase the revenue
3:11:40requirement by $18 million correct thank
3:11:44you all right I just have a couple more
3:11:46questions
3:11:49questions um let me make
3:11:52sure
3:11:54y all right let's turn to the uh return
3:11:57on Equity the
3:11:59[Music]
3:12:00Roe would you agree that the company's
3:12:03Roe request is
3:12:0810.1% which is a reduction from the
3:12:11percent in the direct testimony of
3:12:1510.25% yes
3:12:18and then would are you aware that uca's
3:12:22recommended Roe is in the range of 99.0%
3:12:26to
3:12:2899.4% uh yes I am aware of that okay in
3:12:32the last Public Service Gas rate case
3:12:35the commission approved an Roe in the
3:12:37range of
3:12:3999.2% to
3:12:4199.5%
3:12:43correct correct as part of the stated
3:12:46whack and ranges the commission
3:12:49approved do you agree that the impact of
3:12:52Public Services uh Roe compared to uca's
3:12:56proposed Roe is more than $44
3:13:04million having not done those
3:13:06calculations it doesn't sound out of the
3:13:09realm of what I would expect them to be
3:13:12for a roughly 100 basis point difference
3:13:14in Roe
3:13:17Miss Federico can we pull up hearing
3:13:20exhibit 501 attachment
3:13:24raf2 which is uca's uh Revenue
3:13:27requirement
3:13:34model and again it's kind of small if
3:13:37you don't mind um increasing the size a
3:13:40little bit I'm G to focus on the on the
3:13:43very last column and the
3:13:47when you say last line far right yeah
3:13:52far right yeah far right
3:13:55column all right and uh the name of the
3:13:58column is UCA net revenue requirement
3:14:02okay and actually it's the second to
3:14:05last
3:14:08column the very
3:14:13bottom is this is this where you want it
3:14:15or no all the way at the bottom of the
3:14:19chart thank you
3:14:22okay so here it says the top of the
3:14:27column is
3:14:31labeled change due to cost of
3:14:36capital and the amount is
3:14:4044,8
3:14:412,000 $
3:14:4482,000 uh dollars do you see that
3:14:47I do I believe that is a combination of
3:14:50the uca's change recommended changes to
3:14:53both the capital structure and the
3:14:56Roa that's correct so that difference is
3:15:01$44 million compared to the
3:15:05company's uh
3:15:07proposal
3:15:13correct at several places and we can
3:15:17take this down Miss Federico thank you
3:15:19at several places in your rebuttal
3:15:21testimony you described the authorized
3:15:23Roe Roe as a function of what invest
3:15:27investors require to provide capital
3:15:30investment is that
3:15:34accurate that is one of the metrics yes
3:15:37that investors look at when providing
3:15:40capital and isn't it true that
3:15:42Colorado's policies aim to achieve
3:15:45decreased greenhous house gas emissions
3:15:48in 2030 and
3:15:512050 are
3:15:54inconsistent I'm sorry I'm sorry I'm I
3:15:57didn't let you finish okay um isn't it
3:16:00true that Colorado's policies aim to
3:16:02achieve decreased greenhouse gas
3:16:05emissions is inconsistent with
3:16:07attracting capital and natural gas
3:16:09infrastructure going
3:16:11forward uh I don't think I would agree
3:16:13with that um I don't think that the
3:16:17those goals are inconsistent with
3:16:19continuing to invest in a safe and
3:16:22reliable system for the 1.5 million
3:16:25customers that still rely on that that
3:16:28service do you agree that um natural
3:16:32gas um actually results in greenhouse
3:16:37gas
3:16:38emissions the customer combustion
3:16:41through use of their appliances does
3:16:43result in greenhouse gas
3:16:45emissions right and so the Colorado
3:16:49State policy is to decrease greenhouse
3:16:52gas
3:16:54emissions it is
3:16:57so including additional investment in
3:17:00order to enable additional natural gas
3:17:05usage would be inconsistent with the
3:17:08policy of reducing greenhouse gas
3:17:11emissions again I I would disagree I
3:17:14mean the the fact of the matter is a
3:17:17company invests in the natural gas
3:17:19system for many reasons safety
3:17:21reliability are two of those reasons and
3:17:24continuing to serve customers whom
3:17:27request natural gas service that the
3:17:29company's obligated to serve is another
3:17:31reason I don't think that it's
3:17:34inconsistent with the state policy for
3:17:36the company to continue to serve its gas
3:17:40customers do you agree that more Capital
3:17:42Investments going forward could lead to
3:17:45more stranded assets
3:17:47and um and
3:17:51plant I think it's a very it's a
3:17:54function of what we see in the future I
3:17:56mean the potential for stranded assets
3:17:58if there is a significant reduction in
3:18:01usage or significant customer Exodus
3:18:05from the gas system is there it doesn't
3:18:08change the fact that we need to invest
3:18:10in these assets for the customers that
3:18:12use them today
3:18:18let me take a minute to review my notes
3:18:20Mr chairman and I think I'm
3:18:38done all right I have nothing further
3:18:40thank you Mr Burman thank you thank you
3:18:45uh commission counsel
3:18:47uh any questions for Mr Burman no
3:18:51questions uh commissioner
3:18:58plant hi Mr Burman good afternoon it's
3:19:01good to see you good afternoon
3:19:03commissioner app um I just had a a
3:19:06couple of quick questions here um I
3:19:09wanted to kind of ask you a little bit
3:19:12about um your testimony when you were
3:19:14talking about um I'm assuming it's using
3:19:18a forward Look test year and the
3:19:21possibilities of having fewer or uh less
3:19:25frequent rate cases um how how would you
3:19:29perceive that
3:19:31working so sounds like a very general
3:19:35question right we're we're moving into a
3:19:37construct here where we're getting ready
3:19:40to file the first litigated Gip next
3:19:42year um which will lay out investment
3:19:45for the commission to exam
3:19:47and approve for the next six years um
3:19:50how that pairs with our clean heat plans
3:19:53uh I think also works in tandem there in
3:19:56the Cadence with the clean heat plans um
3:20:00so from an efficiency standpoint I I do
3:20:03think we would see less proceedings if
3:20:05we were to look at multi-year plans for
3:20:08rate cases and that doesn't always mean
3:20:11they have to be three or four
3:20:14forward-looking test years
3:20:17um there's a lot of ways to construct
3:20:20multi-year plans and I I know that it's
3:20:22a big challenge to Think Through you
3:20:24know what that looks like and whether
3:20:26that's done through rule but uh
3:20:28certainly even as we think about the
3:20:29electric side of the business and all of
3:20:31the various Riders and and proceedings
3:20:34that we have there to seek recovery it's
3:20:39a lot of proceedings and it it feels
3:20:42inefficient at times right that that we
3:20:44go through you know maybe five or six
3:20:47different types of proceedings and
3:20:49setting rats and is there an opportunity
3:20:51to condense that into one um it's a big
3:20:55undertaking I think it's it's certainly
3:20:57something that we should continue to
3:20:59consider as it relates to gas here I
3:21:02think as we look at the the gas
3:21:04infrastructure plans and come out of
3:21:06those litigated plans with decisions
3:21:09that presumably are are approving the
3:21:11assets that are proposed there pairing
3:21:14that with a multi-year rate structure
3:21:17could make a lot of sense and there's a
3:21:18lot of opportunities to build in
3:21:21performance metrics and and customer
3:21:23protections into those structures I
3:21:25think it doesn't have to be you know
3:21:27completely clear cut um three fty uh you
3:21:32know we we've looked at these things
3:21:34like earnings tests in the past
3:21:36um I think there's a lot of opportunity
3:21:39there to to consider now we didn't bring
3:21:41that in this proceeding and that was
3:21:43intentional given the time frame that
3:21:45we're in and the C heat plan pending
3:21:47when we filed this case and the Gip
3:21:49coming up next
3:21:52year okay uh yeah I was just trying to
3:21:56understand sort of the mechanics of how
3:21:58it would work but I um because you had
3:22:01mentioned it in your testimony and and
3:22:03uh I just was trying to get a little bit
3:22:05more of an insight into that um on uh
3:22:10when Miss mcglaughlin was uh asking you
3:22:13about um your rebuttal testimony and the
3:22:16list of actions there you said that it
3:22:17was intended to be a list of policy
3:22:20goals not necessarily to reduce rates uh
3:22:24but uh to contain customer rate impacts
3:22:27while
3:22:28achieving policy goals is that is that
3:22:31is that an accurate
3:22:34characterization yeah I think so it was
3:22:36a basically a list of of things the
3:22:40company brought forward and considered
3:22:42in this case to both Advance towards
3:22:45policy goals and also so ensure
3:22:47Financial stability of the company and
3:22:49in its request so like you were giving
3:22:52the example decoupling proposal may
3:22:54impact rates to go either up or down but
3:22:57wouldn't disincentivize efficiency
3:23:00Investments or you know shift the equity
3:23:03ratio the Roe as long as these are done
3:23:06in order in a broader look at um
3:23:11achieving a policy goal that would that
3:23:14would be the objective correct
3:23:18all right I just wanted to make sure I
3:23:19understood that um and Miss singer
3:23:23Nelson was just uh just now asking about
3:23:25the you know potential of stranded
3:23:27assets and this is something that the
3:23:29commission has talked about in other
3:23:32cases about you know an inherent risk
3:23:36associated with decreasing numbers of
3:23:38gas customers over time as we're looking
3:23:40out into the future and um the how that
3:23:45may would be expected to have an upward
3:23:48impact on rates in the long term how
3:23:52does how does a company think about
3:23:54that so I think you
3:23:58know from a theory perspective I I think
3:24:01we all can agree that coming out of the
3:24:03clean heat plan and the programs that we
3:24:05will see implemented through that we
3:24:08would expect to see those result in more
3:24:12electrification and fewer customers
3:24:15requesting gas service and potentially
3:24:17decrease throughput for those that
3:24:19continue to use the system and so I
3:24:21agree that there's
3:24:23certainly a concern about long-term
3:24:26potential for stranded assets I think
3:24:29it's based on where we are today I think
3:24:31it's fairly longterm we haven't
3:24:33seen the customers declining to this
3:24:37point um could that change very soon
3:24:40possibly um but I think it's a little
3:24:43early to be making
3:24:46I'd hate to make a knee-jerk
3:24:48reaction that results in increased
3:24:52customer costs today that are maybe not
3:24:55necessary I think that's why the company
3:24:58put forward this alternative to consider
3:25:01to gradually start to accelerate
3:25:03depreciation in a way that makes sense
3:25:06from a customer cost perspective like if
3:25:08we think about 1% of a residential
3:25:11customers bill and if we think that
3:25:13that's an appropriate amount for
3:25:14customers today to pay to start to
3:25:17accelerate and protect against future
3:25:19stranded assets that's about $15 million
3:25:23and so we didn't include that as a
3:25:25recommendation but we're certainly open
3:25:27and agreeable to a policy like that if
3:25:30the commission wants to start to
3:25:32accelerate depreciation and for concern
3:25:34around stranded assets okay that that
3:25:37makes sense and that is it I mean I
3:25:40would imagine it's reasonable to to try
3:25:43and mitigate those costs to the extent
3:25:47that we can um or the potential for
3:25:50stranded assets that like that to the
3:25:52exent yeah I mean I think it is and I
3:25:54think what you're going to see in the
3:25:56next depreciation study is that you know
3:25:58we we still lack and Mr Muller talks
3:26:01about this in his testimony in this case
3:26:03we still lack definitive policy or
3:26:07definitive data to suggest you know a
3:26:10change in asset lives that's not based
3:26:13on engineering right to say like we're
3:26:15we think the assets are going to retire
3:26:17like if we were to early retire a coal
3:26:18plant is what I usually liken it to
3:26:21that's that's a policy where we can have
3:26:23a stated policy that we're going to
3:26:24retire a plant 20 years early and we can
3:26:27build depreciation rates now to reflect
3:26:30the new asset life we don't really have
3:26:32that here um and there's there's various
3:26:36ways we could look at analysis one of
3:26:38which we intend to undertake in this
3:26:41depreciation study of as we see
3:26:44declining throughput what are we think
3:26:46that throughput looks like from now to
3:26:48the end of life of the system now that's
3:26:50the tricky part is what's the end of
3:26:52life of the system and making an
3:26:54assumption there but you could build a
3:26:56depreciation rate to follow the decline
3:26:59and throughput to better match that and
3:27:01collect the the cost to recover those
3:27:04assets over a different period of time
3:27:07based on what you expect throughput to
3:27:09do I think the key is is we're we're
3:27:11pretty early in the process and as we
3:27:14move through this we're going to get
3:27:15better and better data every year as we
3:27:17see customer adoption change and that's
3:27:20going to inform the next depreciation
3:27:22study so we have an opportunity to start
3:27:24to make changes today but we're going to
3:27:26have better information to make those
3:27:28changes with as we move forward right
3:27:31gotcha um on the the issue around
3:27:34executive compensation I mean it's I
3:27:37think it's reasonable to assume that a
3:27:41significant part of a CEO's job is to is
3:27:43to maximize shareholder value that's
3:27:46kind of one of the big roles of a CEO as
3:27:49a shareholder relations and and um you
3:27:54know maximizing Roe reducing regulatory
3:27:57lagog maximizing profits Innovation
3:28:00finding efficiency in operations all
3:28:02those things um so as you know we're
3:28:06looking at some of the the um executive
3:28:11uh compensation here and they're trying
3:28:14to maximize shareholder value value
3:28:16certainly how is that portion of their
3:28:19role directly serving great payers or
3:28:23how do you see it serving rate payers I
3:28:26think a lot of the things you just
3:28:28mentioned are dual purposed right so so
3:28:32maximizing that value and ensuring
3:28:36efficient operations is part of how we
3:28:38you can maximize that value um but also
3:28:42you know as I've talked a lot about in
3:28:44my testimony having
3:28:47a return and a capital structure that
3:28:51allows a company to go out and compete
3:28:53effectively for Capital benefits our
3:28:55customers and in the long term you know
3:28:59certainly can provide more value than if
3:29:02we were to end up in a position where we
3:29:04were downgraded or our cost of capital
3:29:07changes from that perspective so I think
3:29:09you know for a long time and I think Mr
3:29:11Johnson could talk more about this we've
3:29:15floated around the cusp of of the lower
3:29:18ends of some of those financial metrics
3:29:20especially on the gas side of the
3:29:21business and as Miss bulley points out
3:29:24you know our current return is well
3:29:27below the national average and you pair
3:29:29that with a historic test year and
3:29:31average race you'll start you'll get to
3:29:34a point very quickly where on day one
3:29:36whatever the authorized return is
3:29:38company's likely going to earn under
3:29:40earn that by 100 basis points um just by
3:29:42virtue of regulatory lag so those are
3:29:45the things I think that we should be
3:29:48thinking about and and I think when
3:29:50executives are focused on you know
3:29:53returning that value they're trying to
3:29:55do it in a way that's balanced because
3:29:57at the end of the day you know we depend
3:29:59on our customers and and the company's
3:30:01only successful as providing quality
3:30:05service to our customers it's a I mean
3:30:08it's a pretty unique business I think
3:30:11really you know when you look
3:30:13at you know comparative sort of you know
3:30:17Fortune 500 companies or whatever it
3:30:19might be the
3:30:21utility particularly the regulated
3:30:23utility uh business is a unique one I
3:30:27think um and that's where I think
3:30:31there's um I'm sort of challenged a bit
3:30:34at looking at the levels of the
3:30:37executive compensation understanding
3:30:40that you're trying to attract people in
3:30:43a in a competitive
3:30:44Marketplace but
3:30:46but the um the work of the com the other
3:30:51competing companies out there is not
3:30:55similar to um to the work of a regulated
3:30:59utility where you've got the the rate
3:31:02payers
3:31:03directly um you know footing the bill
3:31:05for for various things that maybe are
3:31:09not focused on their specific and direct
3:31:13interest so I'm trying to understand you
3:31:17know how that percentage breaks down and
3:31:22when you've got yeah I mean I understand
3:31:25that you got to compete in the
3:31:26marketplace again you know to to attract
3:31:29to attract um you know
3:31:31talent but it is a different market
3:31:34right and so how much of that
3:31:36responsibility should fall on the rate
3:31:38payers should it be 100% should it be
3:31:41something else 50% 20% I don't know um I
3:31:44just wanted to see if you had thoughts
3:31:45on that yeah I think I would encourage
3:31:47you to maybe talk to Mr desich a little
3:31:49bit about that and I
3:31:52think I do think that we design our
3:31:56executive compensation to be competitive
3:31:58with others industry players not outside
3:32:02of the utility industry
3:32:03necessarily um so I don't think like you
3:32:06know we're trying to to compete with
3:32:08Google and Microsoft for their types the
3:32:12executives that they're trying to
3:32:13attract yeah if they did I think we'd be
3:32:16talking about a whole different comp
3:32:17structure here um but yeah I think Mr
3:32:19desich is much more well versed in kind
3:32:21of that structure of the compensation
3:32:24and and why it is structured the way it
3:32:26is right great thanks I don't I don't
3:32:28have any further questions thanks thank
3:32:31you commissioner plant uh commissioner
3:32:33Gman hi good afternoon Mr Burman good
3:32:37afternoon just have a couple questions
3:32:40for you
3:32:42um can you kind of briefly describe for
3:32:45me high level what types of expenditures
3:32:48show up in the new business category of
3:32:53expenditures yes I'm gonna probably keep
3:32:56it at a pretty high level Mr Garder is
3:32:58going to do a better job of getting
3:33:00detailed about that but um it's one of
3:33:04the things I think that's important to
3:33:06recognize about the new business
3:33:07category is that it's not all investment
3:33:10related to just bringing new customers
3:33:12onto the system we also see things like
3:33:17um replacement of meters for existing
3:33:19customers fall into that category and
3:33:22these categories I think you're aware
3:33:25when we moved into the the gas
3:33:26infrastructure planning kind of
3:33:28construct we shuffled things around
3:33:31between categories to align everything
3:33:34with the gas planning roles um but there
3:33:38are things you know there is a
3:33:39significant portion of that bucket
3:33:42related
3:33:43to replacement of meters and other I
3:33:48think customer cited kind of
3:33:51infrastructure for existing customers
3:33:53and not just new customers and then
3:33:54certainly all of the things that all the
3:33:57Investments that are made to bring on
3:34:00new customers who are request in
3:34:04service okay um yeah that's helpful and
3:34:08um I know there was a table that
3:34:10essentially showed um new business
3:34:13expenditures um for addition that were
3:34:16made in 2022 and
3:34:182023 and um essentially the value shown
3:34:21in there was
3:34:222381 million in those new expenditures
3:34:27um or New Capital additions 2022 and
3:34:312023 which comprised about
3:34:3323.8% of the capital additions in that
3:34:36time period um so I I just wanted to Rel
3:34:41this to something else to kind of
3:34:43understand how things look moving
3:34:44forward
3:34:46um are you roughly aware that um Senate
3:34:50Bill 23 291 required changes to the
3:34:53companies line extension policy I am um
3:34:58can you go over maybe at a high level um
3:35:01what changes you understand to be
3:35:03necessary or have already been
3:35:05undertaken by the company in order to
3:35:08respond to some of the directives around
3:35:10um changes to customer cost
3:35:12responsibility and line extension
3:35:14allowances yeah I'm probably not going
3:35:16to get everything just right but there
3:35:18have been I think three
3:35:21dates that policy has changed and and at
3:35:24each of those dates the line extension
3:35:26policy changed for new applications
3:35:28after that date the last of which was
3:35:31June of this year so we've now
3:35:34implemented all of the changes the
3:35:36company has filed and the commission has
3:35:38approved to line extension which
3:35:41eliminate the 28% I think it was
3:35:44off-site credit and uh the cost of the
3:35:48meter for customers um born by the
3:35:51customer so the company started to look
3:35:53at this
3:35:55and I would certainly expect if if where
3:35:58you're going with this question is how
3:35:59does that impact the new business bucket
3:36:01going forward we expect to see decreases
3:36:04in the tens of millions of dollars to
3:36:06that bucket annually so if that's you
3:36:09know 100ish million dollars a year that
3:36:11you're seeing there I would expect when
3:36:14when we really start to get to a point
3:36:16now again this is for new applications
3:36:19primarily after June of this year and
3:36:22there's some period of time it takes for
3:36:24those applications to turn into the
3:36:27actual investment that the customer will
3:36:29cover we'll start to see an offsetting
3:36:31customer contribution there um and I
3:36:34would expect to see that new business
3:36:37category declining um at least by 10
3:36:40to20 million annually once fully
3:36:43implemented okay yeah and looking at
3:36:46this $238 million figure which I
3:36:50understand to represent essentially two
3:36:51years of capital additions so average
3:36:56119 million a year do you have any idea
3:37:00kind of the proportion in terms of how
3:37:03that breaks out at least for the years
3:37:05representative in terms of how much of
3:37:07that was um the type of things that are
3:37:10being eliminated like the offsite
3:37:11allowance service line contributions the
3:37:14meters and reg Regulators versus this
3:37:17kind of replacement of
3:37:19existing um gear on existing residences
3:37:23I think that there was a table in Mr
3:37:26Gardner's testimony now didn't talk
3:37:28about this specifically where but there
3:37:30was a table I think that broke down into
3:37:32like four categories um that you're may
3:37:35be referring to for what falls into that
3:37:38new business investment um and a chunk
3:37:42of this is going to be in meters right
3:37:44because that's a big place where where
3:37:46the policy has changed for customers
3:37:48paying for the meter um and then there
3:37:52will be some other areas but I do think
3:37:55that this is this is something that we
3:37:58plan to bring forward in the Gip and
3:38:00have you know much better line of sight
3:38:03to exactly how we expect those costs to
3:38:07be adjusted based on the line extension
3:38:09policy
3:38:10changes yeah no that's how about I'm
3:38:12just trying to get kind of some better
3:38:14insight into
3:38:16how we expect this to play out I know
3:38:18kind of the general assumption with a
3:38:19lot of these expenses that y all bring
3:38:21to the right cases is that essentially
3:38:23they continue to increase into the
3:38:25future and this seems like perhaps a
3:38:28notable um Divergence from that General
3:38:32principle in that existing policy or
3:38:35policy as it is now that is in various
3:38:38stages of being implemented essentially
3:38:40necessitates that this line item will
3:38:43likely decrease in my opinion unless
3:38:44youve changed unless you disagree
3:38:48with no I agree with that assessment
3:38:50okay um and um I just wanted to talk
3:38:55briefly about the upcoming depreciation
3:38:58study um sure the company's planning on
3:39:02completing so my understanding on the
3:39:04timing of that will be within 60 days of
3:39:07completion of the the
3:39:10finalization not sure I have the exact
3:39:12word right of the clean heat proceeding
3:39:15is accurate six months months 60 days
3:39:19there is another proceeding within 60
3:39:21days right on cost causation yes which
3:39:23is something that's kind of intertwined
3:39:25here I think yes okay yes you're totally
3:39:28right six months um for that to start um
3:39:33uh it sounded to me like from some of
3:39:35your prior testimony you're a bit
3:39:36uncertain as to the scope of the
3:39:38upcoming depreciation study so I just
3:39:41wanted to get a better understanding um
3:39:45is that that accurate or has the company
3:39:47already scoped and started that study
3:39:49just for my understanding yeah we're in
3:39:52the process of doing that we have
3:39:54engaged our um consultant to will
3:39:57perform the study but you know what what
3:39:59I was talking kind of with commissioner
3:40:01plant about
3:40:04is what typ typical depreciation study
3:40:07would be based on engineering lives
3:40:08right and that's not necessarily the
3:40:11intent here um we're we're thinking
3:40:14about how policy is going to impact the
3:40:17lives of these assets and that's where I
3:40:19think we do have a lack of information
3:40:23to really do anything more than make
3:40:26some broad assumptions um you know as we
3:40:29see adoption of some of the clean heat
3:40:31programs as we start to see data that
3:40:34shows customer adoption of heat pumps
3:40:36and other things that are really
3:40:38impacting the system it's going to
3:40:40provide a lot more I think for future
3:40:43studies to use to to determine that
3:40:46because we don't we can't necessarily
3:40:48say to our consultant that we think
3:40:51regulator stations need to decrease our
3:40:53lives by 20 years like we don't have a
3:40:55policy that dictates something like that
3:40:58so we're looking at things like that
3:41:00units of production that I mentioned um
3:41:02now the challenge with that again is
3:41:04that the way that analysis would
3:41:06typically be performed and I think atmus
3:41:08did this maybe in their clean heat plan
3:41:11um is you'd pick an end date for the
3:41:14system and then you'd say okay from now
3:41:15until that end date here's what the
3:41:17units of production each year look like
3:41:19and you could set your rates based on a
3:41:22decreasing units of production over time
3:41:25well we don't really have knowledge of
3:41:28what an end date to the system will look
3:41:30like so we'll have to make some
3:41:31assumptions there but I do think there's
3:41:33analysis that we can do and plan to do
3:41:36and I think that proceeding will present
3:41:40an opportunity for the commission to
3:41:42inject questions and potentially ask for
3:41:45us to look at different analysis um as
3:41:49well um yeah and I I'm glad you brought
3:41:52up the units of production method
3:41:54because I was going to ask you if you
3:41:57were familiar of course you are um I
3:42:00wanted to ask about one other kind of
3:42:03somewhat related concept there
3:42:05especially with regard to how you might
3:42:07plan to pursue it in that depreciation
3:42:09study just for my understanding um and
3:42:12that's the net Salvage being that so
3:42:15much of the nut Salvage is um presumably
3:42:19based upon um the estimated inflation um
3:42:23over the years it's expected to be in
3:42:26service um that brings the useful life
3:42:29or estimated useful life of that
3:42:32equipment um to be an important
3:42:34characteristic in the net Salvage
3:42:36calculation as well so curious if your
3:42:40plans involve or if it's possible when
3:42:42you look at the depreciation studies
3:42:44also
3:42:45involve net Salvage in that to the
3:42:49extent of of using a similar um
3:42:54methodology you know if the units of
3:42:56production works and you all can can try
3:42:58to project that forward is that also
3:43:01something reasonable to bring to the net
3:43:03Salvage discussion to have perhaps a
3:43:06better realization as to the actual time
3:43:09period that we're talking about for
3:43:11decommissioning of these assets you know
3:43:14if presumably if depreciation wise we
3:43:17have a new assumption on the life of the
3:43:19assets it seems to me that could carry
3:43:22over into the net Salvage lifetime that
3:43:25you're using to determine that total
3:43:27cost so I know that was a super long
3:43:30explanation but just curious as to your
3:43:34understanding on the relationship of
3:43:35those and if that's something you all
3:43:37think you will be looking at as well as
3:43:39part of that study yeah I think that
3:43:42that what the concept you're saying
3:43:44makes a lot of sense sense and that
3:43:47there is an impact on the salvage rate
3:43:49based on the change in any depreciation
3:43:52rate and so yes that certainly would be
3:43:54in scope in this study the piece that I
3:43:56think is more time consuming is to
3:44:00actually try to more accurately estimate
3:44:04the total cost of retiring the system
3:44:07right which is ultimately what you're
3:44:09going to need to collect uh in order to
3:44:11fund it and that that's the piece where
3:44:14I think there
3:44:17I think I think that there's a lot of
3:44:18challenges in that and I don't know that
3:44:20there's any universal way to do that or
3:44:23that anyone's really undertaken that on
3:44:25a gas utility so that something novel
3:44:29around what that cost looks like is
3:44:31probably not going to happen in the
3:44:33study that's going to get filed in six
3:44:35months but I think that's something that
3:44:37we should be talking about and that
3:44:38could be part of a separate demle or
3:44:41decommissioning and um dismantling study
3:44:44in the future
3:44:45um you know there Mr mher could talk a
3:44:48little bit more about this there's
3:44:50there's different ways to do this and
3:44:52certainly there's kind of different ways
3:44:54we account for this from uh asset
3:44:56retirement obligations on our financial
3:44:58statements versus what goes in our
3:44:59depreciation rates
3:45:02um but I do think there will be an
3:45:04impact on those rates based on any
3:45:06changes in the depreciation rates
3:45:08themselves as you
3:45:10suggest okay and and you see that as
3:45:12being in scope that's in scope that um
3:45:17what one other thing too I mean it seems
3:45:19to me this um units I keep missing it
3:45:22units of
3:45:23production method is very much relying
3:45:26upon
3:45:28um well-informed gas throughput
3:45:32forecasting as well so not unrelated to
3:45:36some of the efforts we're undertaking
3:45:38elsewhere uh I don't know if there's a
3:45:40question there but no I mean I I I
3:45:43understand the the comment and I think
3:45:45that the it kind of goes back to what I
3:45:47was talking about before when I say like
3:45:48we're in the early stages we're going to
3:45:50have plenty of the future depreciation
3:45:53studies and we don't have to do
3:45:55everything in this one right like I
3:45:58think we will have ample opportunity in
3:46:00formed by better data um and different
3:46:04policies in the future and I think each
3:46:08incremental step will work its way
3:46:10towards getting us there yeah just
3:46:13perhaps the extent to which you can out
3:46:15a a methodology that can be um looked at
3:46:20by folks and then move forward obviously
3:46:23conditions will change but um it would
3:46:25be nice if we didn't relitigate and
3:46:27refight about some of the basic kind of
3:46:30methodology Concepts every time so that
3:46:33could be something it seems could be
3:46:35accomplished in the first go around even
3:46:37if we don't have all the data perfect um
3:46:39yep one other question
3:46:42um when we talk about commissioning uh
3:46:45the commission had asked a supplemental
3:46:47direct question to essentially get some
3:46:49trending information related to the
3:46:51method of
3:46:52decommissioning in terms of um you know
3:46:56essentially what percentage of assets
3:46:59are retired in place versus physically
3:47:01removed uh which is clearly a much more
3:47:04expensive and an intensive process um
3:47:09and the response just to paraphrase I
3:47:11think the company could find about four
3:47:13projects in the last five years that
3:47:15were actually physically removed um from
3:47:18the ground does does that sound accurate
3:47:20to you yeah my general understanding is
3:47:23a vast majority of it is left in
3:47:26place um so I was curious I mean clearly
3:47:29that's um a lower cost option for
3:47:34decommissioning um but I I figure you
3:47:36might be the right witness to answer a
3:47:38more general question for me in terms of
3:47:41um do your franchise agreements or any
3:47:45other right of-way agreements or
3:47:46anything have any um bearing on your
3:47:50decision on if infrastructure is removed
3:47:53or retired in place um I'm curious if
3:47:55the vast majority of this is being
3:47:58retired in place is that the expectation
3:48:02of a lot of these agreements uh over the
3:48:05long term it's a good question I don't
3:48:09necessarily know the answer to I would
3:48:12suspect it's not something that has been
3:48:15contemplated significantly in those
3:48:17franchise agreements in the past just
3:48:19because I don't know that there was an
3:48:21expectation that there was going to be a
3:48:23lot of retirement and as things were
3:48:26replaced obviously if you're in the
3:48:27ground replacing something you're
3:48:28removing the old um my best guess is
3:48:32that this will be a bigger issue maybe
3:48:34in the future as those agreements come
3:48:38up for Renewal but I I don't know of
3:48:41anything that's in them that impacts
3:48:42this today okay just curious as we're
3:48:46talking depreciation that Salvage are we
3:48:49making assumptions that are consistent
3:48:52with what the other
3:48:54stakeholders also expect to happen with
3:48:56regard to any decommissioning that might
3:48:58happen on the
3:49:00system y that's a good question we could
3:49:02certainly look into that and get more
3:49:04information who knows could be helpful
3:49:06thing as part of the uh appreciation
3:49:09study to better understand um those are
3:49:12my only questions thank you Mr Burman
3:49:14thank you than you thank you
3:49:16commissioner
3:49:17Gman uh good afternoon Mr Burman um good
3:49:21afternoon chairman is it uh fair to say
3:49:24that public service is a single legal
3:49:26entity that is financed and rated by the
3:49:28Credit Agencies as such with one set of
3:49:32Consolidated financials across both the
3:49:35electric and gas sectors and I'm really
3:49:38just paraphrasing something Mr Johnson
3:49:40said yes that that's a fair statement
3:49:45um at the same time my understanding is
3:49:47that common Equity is raised at the
3:49:49Excel Energy holding company level
3:49:52across both the electric and natural gas
3:49:55businesses and not specific to the um
3:49:58Public Service Company natural gas
3:50:00business is that
3:50:02fair fair yes certainly Mr Johnson is
3:50:05going to be much more well versed in
3:50:07that's holding company issues and I will
3:50:10understood um I just want to uh talk a
3:50:14little bit about the big picture of
3:50:16financial sit situation uh can we pull
3:50:19up what has been marked as hearing
3:50:20exhibit
3:50:221100 and uh let me just say this is the
3:50:25uh Excel Energy it's called steel for
3:50:28fuel 2.0 and it's a September investment
3:50:32investor meeting presentation from um
3:50:36this month and um if we could turn to uh
3:50:40just first of all do you recognize this
3:50:42as a investor meeting presentation
3:50:45and I I understand Mr Johnson will be
3:50:47the more of the expert on this yeah I do
3:50:50recognize it all right can we go to uh
3:50:54page
3:50:5854 so I guess this is uh entitled uh
3:51:04rate of equity results ongoing
3:51:07earnings uh would you agree at the
3:51:09holding company Excel Energy uh level
3:51:12you're getting 11.09
3:51:15% I again Mr Johnson's the expert on you
3:51:20know the difference in the holding
3:51:22company versus the operating companies
3:51:24but yes that's what this says and when
3:51:27you were responding uh uh to UCA and
3:51:31talking about uh the lower return on
3:51:35Equity at the Public Service Company
3:51:36level I assume that's a
3:51:387.82
3:51:40correct and and uh if we could just go
3:51:44to uh page six for a
3:51:48second it seems like the target is 9 to
3:51:5211% um and I I know from reading the
3:51:55credit agency reports that there's a
3:51:57bunch of concern about Wildfire
3:51:59mitigation but at least on this metric
3:52:02of Roe it seems like 11.09 is higher
3:52:05than this
3:52:07range is is that
3:52:11fair the yeah but the I mean I guess the
3:52:1311.09 is just
3:52:16one is just the the holding company
3:52:19right and this Total return incompasses
3:52:23all the operating companies and the
3:52:24holding company right all right um let's
3:52:28turn to page 63 if we would
3:52:33could so um this is labeled Public
3:52:36Service Company based Capital
3:52:38expenditures by function do you see that
3:52:42I do and do you would you agree with me
3:52:45that this shows a total cumulative
3:52:475-year capital budget of over $19
3:52:51billion it does yes all right that just
3:52:56seems like a stunning number to me Mr
3:52:59dman it's a big number and obviously a
3:53:02lot of that on the electric side but yes
3:53:05all right uh keep this handy um Miss
3:53:07feder Rico but can we pull uh up hearing
3:53:10exhibit
3:53:121101 for a second
3:53:18and let me represent to you that this is
3:53:20basically the same thing for March
3:53:242023 uh and if we could go to page
3:53:3069 do you see that I mean it's not quite
3:53:33the same years it's 2023 to
3:53:372027 uh but do you see that the five
3:53:40years is 11.3 billion I do
3:53:45so basically in one year you've
3:53:49increased your capital budget by
3:53:52something like8
3:53:55billion uh is that is that fair or I
3:53:58guess it's 70% it works out to be yeah I
3:54:01mean I think it's definitely
3:54:02representative of a lot of what's
3:54:04happening on the electric side with
3:54:06regard to the the resource plans and and
3:54:11New Generation resources follow on
3:54:13transmission and distribution and
3:54:16knowing that all that's you know coming
3:54:17in the distribution system plan later
3:54:19this year as well but I think from a gas
3:54:22perspective it's about the same or
3:54:25less Yeah well yeah if you could take
3:54:28this down and put up the other one again
3:54:30for a
3:54:32sec
3:54:34um yeah just to put this in perspective
3:54:37I think your total Gas and Electric rate
3:54:39base is maybe $15 billion currently $ 11
3:54:43billion and electric and 4 bilon and gas
3:54:46something like that
3:54:48M so this is basically doubling the
3:54:51Public Service Company rate
3:54:54base you know it depends I guess a
3:54:56little on depreciation but more or less
3:54:59is is that fair it's a significant
3:55:02period of investment yes it's fair and
3:55:06is it fair to say that this does not
3:55:09present evidence of a company struggling
3:55:11to raise uh Capital to invest in
3:55:13Colorado
3:55:15well I mean this is this is the planned
3:55:18Capital this we haven't raised this
3:55:21Capital yet and so I mean
3:55:23there's I think Mr Johnson will express
3:55:26some of the risk and concern we have
3:55:28around wildfire and other things
3:55:31potentially impacting our ability to
3:55:33raise this capital and what the cost to
3:55:35raise it will
3:55:36be did uh to the best of your knowledge
3:55:39and I I'll I can ask Mr Johnson but is
3:55:41the Wildfire mitigation plan spending in
3:55:44here I think not for the most part I
3:55:47believe
3:55:48not and um did the company ever a ever
3:55:53inform us about these proposed Capital
3:55:55cost
3:55:56increases uh and do we ever get a chance
3:55:58to unine on this before we see it in an
3:56:01individual ad hoc proceeding or after
3:56:04the fact in a ray case I mean I'm just
3:56:06digging up stuff from the financial
3:56:09Community yeah so I mean I think it like
3:56:13there's a lot of pieces to that question
3:56:16right I mean like certainly the resource
3:56:18plans have a lot of the generation
3:56:20investment that come in front of you
3:56:22guys to to look at and approve that'll
3:56:25be in the generation line um we're going
3:56:28to be filing a big distribution system
3:56:31plan and that's going to have all these
3:56:33years that you're looking at here so
3:56:34you'll have an opportunity to evaluate
3:56:36that in that plan and this is
3:56:39representative of a plan that is in
3:56:43place and being commun communicated to
3:56:44the investment Community but but many of
3:56:46the pieces of this plan will come to the
3:56:49Commission in planning proceedings
3:56:50whether it be DSP Gibs on the gas side
3:56:53now resource plans um from a
3:56:56transmission perspective I think we have
3:56:58a couple different planning proceedings
3:56:59that go with transmission um so those
3:57:02are where I think it may not be the
3:57:05timing may not be the same as when it
3:57:07gets presented at this level to the
3:57:09investment Community but there are
3:57:10planning proceedings I think for the
3:57:12vast majority of these
3:57:15Investments one last uh question on the
3:57:18electric side uh since 2010 let me
3:57:21represent to you that retail electric
3:57:23sales growth in Colorado has uh uh
3:57:27averaged about 3% per year so just any
3:57:31thoughts on how we keep rates from
3:57:33rising rapidly Rising if we have to
3:57:35spread these greatly higher Capital
3:57:38costs over a relatively fixed electric
3:57:42sales uh sales base
3:57:45yeah I'm going to stay pretty high level
3:57:47on this so I don't get too far out over
3:57:49my skis but I think there and we are in
3:57:51a gas rate case we are in gas rate case
3:57:55right so there's there's a number of
3:57:58potentials here I think we will we
3:58:00expect to see those numbers on the uh
3:58:05load increase significantly I think one
3:58:07of the things that is probably in this
3:58:09investor presentation is around data
3:58:11centers and the load that we expect to
3:58:13see from that and we're going to see
3:58:15more like a 1 to 3% increase there I
3:58:18think that that particular opportunity
3:58:22presents a chance to to structure rates
3:58:26in a way where if a Google or Microsoft
3:58:30or somebody doing a lot of AI powering
3:58:34uh wants to come in and and get a load
3:58:36from the company wants to to be here in
3:58:39Colorado you know there's an opportunity
3:58:41to charge them a rate that helps offset
3:58:43some of these costs for residential
3:58:45customers for example um and depending
3:58:48on how much we discount the
3:58:50rate and I I know that that has been uh
3:58:54a historic practice I I don't expect
3:58:56that we would be discounting the rates
3:58:58going forward right I think that there's
3:59:01there's definitely a demand there and
3:59:03there's a demand for that that um
3:59:06capacity that not a lot of utilities can
3:59:09meet today and so those companies are
3:59:10really looking for what they can get in
3:59:13in the near term and I think willing to
3:59:16to pay for that so that's one
3:59:18opportunity at a super high level I
3:59:20think you know we talked about
3:59:22potentially beneficial electrification
3:59:24seeing more um conversion over to the
3:59:26Electric System now that presents
3:59:28challenges we've talked about on the gas
3:59:30side in this proceeding but I would
3:59:32expect that the the growth on the
3:59:34electric side is going to significantly
3:59:36outpace what it's been for the last 10
3:59:39years all right fair enough um let's
3:59:42shift to uh capital spending uh on the
3:59:45natural gas side uh just looking at this
3:59:48it looks like in 2024 you're telling uh
3:59:52the financial Community you're going to
3:59:54spend uh
3:59:56$460 million dollar uh on your natural
3:59:59gas business am I reading that line
4:00:03correctly yes that's correct all right
4:00:06you can um take this down um can we uh
4:00:09so 460 million in 2024 let's look at
4:00:122023 what's in this rate case uh can we
4:00:16turn to Mr Gardner's direct testimony at
4:00:18hearing exhibit 105 at page
4:00:2213 and uh I think what you'll see is
4:00:26that 2023 spending is way above uh what
4:00:29your projecting or what that table
4:00:32showed for um uh natural gas spending I
4:00:36think that Mr Gardner is saying it's uh
4:00:40536 uh million page 13
4:00:45so do you do you see that
4:00:48536 uh million for
4:00:512023 yeah this is capital additions for
4:00:55one not Capital spend so you're going to
4:00:57get more lumpiness in the additions then
4:01:01you will in the spend because this is
4:01:03this is actually how much Capital won in
4:01:06service in
4:01:092023 so some of the spend the spend
4:01:12could have occurred in 2022 or even 2021
4:01:16and the project goes in service in 23 so
4:01:20I do think Mr Gardner has Capital spend
4:01:23tables as well um which is more
4:01:26indicative in in apples to apples with
4:01:29the chart you were looking
4:01:31at but I guess just focusing on 2022
4:01:34versus
4:01:352023 it looks like there's a a very
4:01:39large increase like Capital spendings
4:01:41jumping by 15%
4:01:46it yeah and I think that has a lot to do
4:01:48with the lumpiness of additions Because
4:01:51the actual spend from year to year is
4:01:55has been fairly consistent uh on the gas
4:02:00business and so you would not expect so
4:02:04you think the 2023 year is an anomaly
4:02:07and that uh uh spending is not
4:02:10increasing I mean if you looked at the
4:02:13that rate Trend graph uh that UCA put up
4:02:16there I mean it's showing very large uh
4:02:20increases in capital spending over time
4:02:24I mean I think so for one when we looked
4:02:26at the investor deck that we had up the
4:02:28the spend was pretty much the same I
4:02:30think every year and I'd also point out
4:02:33from the discussion I had with
4:02:34commissioner Gilman that that those
4:02:36spend numbers are not contemplating the
4:02:38customer contributions from the change
4:02:40in line extension policy so those would
4:02:43be like the company would outlay the
4:02:45spend but the the customer would
4:02:47potentially provide a contribution in
4:02:49Ada construction that would offset some
4:02:51of those future year so we would expect
4:02:53it to be net even less um but the
4:02:56capital additions is what's going in the
4:02:58rate base so this is all net of uh net
4:03:02of customer
4:03:05contributions this should be yes um and
4:03:10this could so when you look at additions
4:03:11like you could see it move around more
4:03:14significantly up and down from year to
4:03:16year just depending on the inservice
4:03:18date because you could have projects
4:03:20that W in service in January and the
4:03:22vast majority of the spend on those
4:03:24projects occurred in the prior in the
4:03:26the previous year but because it want
4:03:29ins service in January you're seeing on
4:03:31this chart the entire amount as a 2023
4:03:37number all
4:03:39right um just briefly uh talk about uh
4:03:43the 15-year rate forecast provided by Mr
4:03:46matley and his supplemental direct
4:03:49testimony it's confidential and I don't
4:03:52want to try and clear the room but uh
4:03:54subject to later check if I represented
4:03:56to you that sales were projected to the
4:03:59client fairly
4:04:01significantly I think because of the you
4:04:03know clean heat plan conversation you
4:04:05had with commissioner Gman uh beneficial
4:04:10electrification um any reason to doubt
4:04:13that representation that sales are going
4:04:15to decline fairly significantly no I
4:04:18think that we we used in that 15-year
4:04:20model something consistent with what was
4:04:23put forward in clean
4:04:24heat all
4:04:26right um and that also showed uh Mr
4:04:30matley also showed rapidly declining uh
4:04:34Capital
4:04:35spending um which is not necessarily
4:04:39what you're communicating to the
4:04:40financial Community it's more or less
4:04:42flat um yeah I think in those first five
4:04:46years I think a lot of that decline
4:04:49starts to come after year five and that
4:04:51in that model um but agree that the the
4:04:56changes in that model are driven by more
4:04:59by a decrease in unit sales than they
4:05:01are by an increase in Revenue
4:05:06requirement so I guess again where uh I
4:05:10guess we don't have a clear record
4:05:12whether capital is going to keep
4:05:14increasing although I think it has
4:05:16significantly increased but maybe now
4:05:19you're saying it's and maybe this is
4:05:21more a question for Mr Gardner but it
4:05:24sounds like we're spreading a fairly
4:05:26fixed amount of capital over a declining
4:05:28sales base so um it sounds like over
4:05:32time we may start to substantially raise
4:05:35customer rates and I think that's what
4:05:38the modeling showed in the the clean
4:05:40heat plan and it's what Mr matley shows
4:05:43if we don't really substantially reduce
4:05:46Capital costs in the natural gas
4:05:49business any comments on on on that
4:05:53thinking I think that's correct and I
4:05:56think that's why you started to see some
4:05:58of the you know there's there's
4:06:00assumptions being made because we
4:06:02haven't actually seen that scenario play
4:06:05out yet right we're still seeing
4:06:08customers added to the system every year
4:06:10not not leaving the system um but
4:06:14I agree that the the fair assumption as
4:06:16you start to see less usage on the
4:06:18system would be less investment in the
4:06:20system as well but it does create and I
4:06:24think that's why we talk about strandard
4:06:25assets right it does create the op the
4:06:27potential for um those remaining assets
4:06:31to be a higher rate burden on the the
4:06:34customers that are still in the
4:06:36system so I guess you know we talked a
4:06:39little bit about the potential for
4:06:41growing load on the electric side we
4:06:44talked a little bit about steel for fuel
4:06:45which is you know a clear business plan
4:06:47that reduces you know costs and sort of
4:06:51win-win wind for the company customers
4:06:53and the environment is there anything
4:06:56like that on the natural uh gas
4:06:59side um that that you see I mean it
4:07:04seems like the primary tools are going
4:07:06to be beneficial electrification and DSM
4:07:09so it's just uh you know going to be a
4:07:12declining sales business uh
4:07:16um would you C would you say that any
4:07:19different I think that's a challenge
4:07:21right is that you're to in order to
4:07:24decrease emissions it is necessarily
4:07:28going to be a declining business um so
4:07:34the more we create policy to incentivize
4:07:37those emissions reductions we're likely
4:07:39to see those declines to the extent that
4:07:41it's beneficial electrification now I
4:07:43think there's some other things that
4:07:45have been put forward and discussed in
4:07:47in proceedings around hydrogen blending
4:07:51and those things are a little more
4:07:53around the edges and maybe not as
4:07:55material as some of the electrification
4:07:57but there's not a clear picture to
4:08:01to analogize your electric side right
4:08:05like there's
4:08:06not some
4:08:08clear pathway there that that is going
4:08:12to change this Paradigm it's going to
4:08:15likely start to look like a higher
4:08:16burden for the customers left on the gas
4:08:19system if we start to see significant
4:08:22movement from gas to electric at that
4:08:25point I think we're going to have to
4:08:26start talking about different rate
4:08:28designs where that burden should lie uh
4:08:31should some of that lie on the electric
4:08:33side I think all of those things kind of
4:08:35come into play because you start to get
4:08:38to a point where you have to look at
4:08:39where you're going to recover those
4:08:41remaining costs from
4:08:44should a prudent utility or regulator
4:08:47acting as a Fiscal Agent on behalf of
4:08:50current and future customers start to
4:08:52fairly aggressively manage down Capital
4:08:55spending now given you know declining
4:08:58sales and the uncertainty about the
4:09:00future of this business and you know
4:09:04maybe 2023 is an anomaly but it sure
4:09:08doesn't look like we're managing down
4:09:10Capital spending
4:09:13I think that's the challenge is that I
4:09:15mean and you should talk to Mr Gardner
4:09:17about the Investments that we make and
4:09:20continue to make but we also have to be
4:09:23prudent around making safety Investments
4:09:25and being sure that the customers that
4:09:27are using the system have safe and
4:09:29reliable service and we as I said we we
4:09:33are still receiving requests for new
4:09:36natural gas service and we've seen
4:09:38through DSM that the use per customers
4:09:40declined over time um but we're still
4:09:43see an increases in number of customers
4:09:45and the company continues to have an
4:09:47obligation to serve those customers and
4:09:50there's nothing that's been put in place
4:09:52to take away the customer's Choice uh to
4:09:55make that decision to use natural gas so
4:09:58that's where all these incentive
4:09:59programs coming out of clean heat work
4:10:01right to try to incentivize customers to
4:10:04move towards
4:10:05electrification um but I think that's a
4:10:07challenge like from from a cost
4:10:09perspective your premise makes sense but
4:10:11I'm not sure where you cut and still
4:10:13operate a safe reliable business for the
4:10:16customers using it don't we have to
4:10:21cut I mean I know you got Financial I
4:10:24mean the problem here is you got
4:10:25Financial incentives to spend which is
4:10:29sort of manifest by that you know1 19
4:10:34billion and it's just really tough to
4:10:38see how this is going to work in a
4:10:40declining sales business
4:10:43so I I think the first places you start
4:10:46to see that reduction is new business
4:10:48and capacity right which we've already
4:10:50talked about with the line extenstion
4:10:51changes are going to start to to chip
4:10:54away at that new business and then as
4:10:56fewer customers are coming onto the
4:10:59system over time that'll also chip away
4:11:01at both of those categories um and and
4:11:05certainly the companies exploring
4:11:07non-pipeline Alternatives and things
4:11:09we're going to bring bring forward in
4:11:10the Gip and have already brought forward
4:11:12in other proceedings to avoid those
4:11:14capacity Investments so those are the
4:11:16areas I think we're really targeting
4:11:17right now to reduce the capital spend um
4:11:21and I I expect to see that start to
4:11:25change and the reality is like those
4:11:28those numbers you're looking at are
4:11:30based on best information at the time
4:11:32which is why you're seeing in one year
4:11:34to the next a significant increase we
4:11:36may also see a significant decrease in
4:11:39those gas numbers from year to year as
4:11:41we move through some of these other
4:11:42proceedings
4:11:45yeah I mean I'm just struggling with
4:11:48this increase uh and I guess the other
4:11:52thing I'd say about that 536 is it
4:11:55doesn't include uh um shared corporate
4:11:59well let me ask it as a question is it
4:12:01fair to say that that 536 doesn't
4:12:04include shared Corporate Services or in
4:12:06Information
4:12:08Technology it does not no those are just
4:12:10the categories you see here and if I
4:12:13represent it to you that uh I think Mr
4:12:16Dion bger said that was another $92
4:12:19million uh in 2023 would you have any
4:12:22reason to doubt
4:12:24that no but again those are things that
4:12:28we may have to rethink how those are
4:12:31allocated between Gas and Electric in
4:12:32the future if we start to see a shift in
4:12:35the two
4:12:37businesses that's question for you if uh
4:12:40this commission wanted to manage down
4:12:42Capital spending Till There was a
4:12:44clearer uh plan forward given declining
4:12:47sales and all the uncertainty you know
4:12:50what are our choices to do that I think
4:12:53that's a discussion we should have in
4:12:54the gas infrastructure planning
4:12:56proceeding right that's where the
4:12:57Investments going to be brought forward
4:12:59in front of the commission and Justified
4:13:01and um I think that's the appropriate
4:13:04venue to have that
4:13:06discussion is regulatory lag one of the
4:13:08tools to do
4:13:10that it's certainly a tool and I think
4:13:13you know quite frankly that's why the
4:13:15company brought the proposal we did I
4:13:17mean we brought a proposal for
4:13:20essentially a historic test year on year
4:13:22end rate base which does impose
4:13:24regulatory lag um as opposed to
4:13:28proposals we brought prior to this for
4:13:31ft and
4:13:36MPS so on behalf of the company I don't
4:13:38know if you can say this but is it your
4:13:41plan to start managing down Capital
4:13:44spending or is that a question for Mr
4:13:47Gardner or for Mr Johnson I don't know I
4:13:49mean I I think it's the question is how
4:13:51all these things play together over time
4:13:54to result in that I mean the company
4:13:56plans to make the Investments and only
4:13:59the Investments necessary to offer safe
4:14:01and reliable service to our customers
4:14:04and
4:14:05so I I can't say that we would manage it
4:14:09down artificially when there's still a
4:14:11need to make investments to form that
4:14:14for customers but I I think that many of
4:14:17the policies that have been put in place
4:14:19and will be put in place will result in
4:14:21a decrease in capital spending going
4:14:25forward given the history and given your
4:14:27incentives
4:14:29to apparent incentives to put stuff in
4:14:31rate base can you
4:14:34see uh how that's a struggle for
4:14:39us I I I understand the struggle I think
4:14:45from the company's perspective you know
4:14:47all of the investment that we've just
4:14:48talked about on on that investor deck
4:14:51are things that are required to serve
4:14:53customers based on what we're projecting
4:14:56that customer load to be
4:15:00um and it's a challenge we're we are
4:15:03certainly in a growth cycle on the
4:15:05electric side and with the
4:15:07electrification of many parts of our
4:15:09Lives comes additional cost for the
4:15:12system system to to support that that
4:15:15burden of load um as we've talked about
4:15:19here I think we've got a lot of policies
4:15:21that will hopefully start to naturally
4:15:25bring down the capital spend on the gas
4:15:27side but on the electric side that's
4:15:29probably a whole another conversation
4:15:30that's outside of the scope of what
4:15:32we're here to talk about I just wanted
4:15:35to have the conversation to contrast it
4:15:38with what's going on the gas side um
4:15:42that's all I um have you missed uh Mr
4:15:45Burman um uh thank you uh Miss Brahma uh
4:15:51redirect I do have quite a bit um it
4:15:54might be I wanted to before I dive in
4:15:56our um I'm not sure I can contain it to
4:15:5915 minutes I it's not going to be hours
4:16:01but I do uh I'm just not sure of the
4:16:03commission's timing today and thought
4:16:05perhaps I would ask the question before
4:16:06I start if we're continuing or or what
4:16:10would be the preference I think I think
4:16:12think we got a relatively hard
4:16:15stop um at 5
4:16:20um
4:16:22um I think I'd like to get it started uh
4:16:26but if it's going to be inefficient take
4:16:28longer um we can resume tomorrow morning
4:16:33but um I I think I can start I think
4:16:36some of the questions that were just
4:16:37discussed with with Commissioners might
4:16:39be a good place for us to start and then
4:16:40we can try take a break right around 5
4:16:42to move on to um some of the other items
4:16:45if that works yep um Mr Burman I think
4:16:49there may be an opportunity here in
4:16:51light of some of the questions you've
4:16:52been asked throughout the course of your
4:16:54uh testimony today maybe bring a little
4:16:56bit of clarity into the record around
4:16:58the the um company's uh spending and and
4:17:02um how the commission might look at it
4:17:03going forward so would it be okay if we
4:17:05brought up please uh hearing exhibit um
4:17:081100 which was just discussed um with
4:17:11the chair uh and in particular page uh
4:17:1963 so this document is the most recent
4:17:24um uh investor presentation has
4:17:27discussed with the chair and uh Mr
4:17:29Burman do you recall discussing in
4:17:31particular the natural gas line as as
4:17:34the one that's you know what we're here
4:17:35to talk about today in particular yes
4:17:38yes um and let's I'd like to bear in
4:17:41mind for just a moment two things in
4:17:43relation to this slide one is um draw
4:17:46your attention to the total number over
4:17:48five years for natural gas of
4:17:502.22 Z million dollars do you see that
4:17:53or billi do yes I do okay and and then
4:17:57I'd also like to draw your attention
4:17:59just for a moment to the Renewables line
4:18:02um that we see on the slide with a total
4:18:05about 4.2 billion dollars you see that I
4:18:08do and um does does that line have any
4:18:12anything um in it relating to
4:18:15gas do you know um I assume not I don't
4:18:21know for sure but I I don't believe it
4:18:23does okay let's go back to hearing
4:18:26exhibit
4:18:271101 if we could which was the prior
4:18:29investor presentation and I believe we
4:18:32looked at page 23
4:18:45uh oh maybe it wasn't page 23 I can find
4:18:48that for
4:18:50you it may have
4:18:55been 69 oh my apologies thank
4:19:00you so on this slide you see the natural
4:19:03gas line here of uh totaling to
4:19:062590 yes and compared to the subsequent
4:19:11investor presentation total of about
4:19:1422
4:19:16uh uh
4:19:182.2 um would you agree that there's a
4:19:21difference there of um about uh let's
4:19:26see 15% reduction in a plan spend for
4:19:30natural gas as between the 2023 investor
4:19:33presentation and the 2024 investor
4:19:35presentation yeah that that looks
4:19:37correct okay now you mentioned talking
4:19:40that this is expenditures and that the
4:19:42data in Mr Gardner's testimony is
4:19:44additions do you recall that discussion
4:19:46I do okay and maybe just taking that in
4:19:50terms of a a quick hypothetical if you
4:19:53have a project that you're implementing
4:19:54over several years let's just say three
4:19:57years uh and and for the sake of this
4:19:59argument let's just say uh you're
4:20:01spending about a million dollars a year
4:20:03on a sizable project how does the spend
4:20:07and uh versus the additions relate to
4:20:10that hundred million dollars over year
4:20:12for of $3
4:20:14million yeah the expenditures so like if
4:20:16we look at this chart you would see a
4:20:18million dollars in each of the years of
4:20:21expenditure but then you'd see $3
4:20:23million of additions in the year that it
4:20:25won in
4:20:26service and is that what you meant by
4:20:28the lumpiness then you might be spending
4:20:29the same amount to hire the contractors
4:20:32and get the work started and so on
4:20:34year-over-year but you won't see it in
4:20:36capital additions or in rates until the
4:20:37project is complete that's right and
4:20:40that's where you can you could Theory
4:20:43see something like $500 million of
4:20:46additions in one year and $300 million
4:20:48in the next year but you could have
4:20:50spent the same amount in each of those
4:20:52years it just has to do with the
4:20:53inservice states okay uh now you you
4:20:57were also asked some questions about um
4:21:01the overall increase and particularly on
4:21:03the electric side here and one thing I
4:21:04noted on this particular slide from 2023
4:21:07is that it does not have the Renewables
4:21:09line that we looked at on the slide
4:21:12presentation from
4:21:132024 uh do you know why that might
4:21:17be I am not 100% sure other than we
4:21:23broke it out differently or those are
4:21:26things that are coming out of a more
4:21:27recent resource plan yeah maybe I can
4:21:30ask my question a different way I mean
4:21:32maybe if you could just speak to how the
4:21:33the recent um approval of the clean
4:21:36energy plan and phase two of the Erp are
4:21:39is affecting what you might be expecting
4:21:41to spend on the electric side of the
4:21:42business in 2024 on you know win-win uh
4:21:46scenarios as compared to what you were
4:21:47expecting in
4:21:492023 yeah I I would guess that a chunk
4:21:53of that there's probably some assumption
4:21:55in here but probably significant portion
4:21:58of that was not contemplated in this
4:22:00presentation until after it was approved
4:22:03do you recall that the um the Erp Phase
4:22:062 is approved in roughly January of this
4:22:09year sounds correct do you do you recall
4:22:13and and I'm putting on the spot here but
4:22:14do you recall roughly the size of the uh
4:22:17amount approved in that in that phase
4:22:19two I suspect that Cher blank might
4:22:22remember it better than I
4:22:25do um it was
4:22:28significant s right it speaks for itself
4:22:30we can go look it up but I just I wanted
4:22:32to kind of point out that that was
4:22:33something that had happened between then
4:22:34and now um one other question that I
4:22:36think maybe ties back to the discussion
4:22:39you had with um commissioner plant as
4:22:41well as is chair blank was the question
4:22:44about how might the commission weigh in
4:22:47on some of these proposed expenditures
4:22:49and let's let's keep it primarily to gas
4:22:51for this for this particular discussion
4:22:53just for the sake of Simplicity um I
4:22:55believe you mentioned the gas
4:22:57infrastructure plan is one way um that
4:22:59the commission will be able to look at
4:23:01forward and and weigh in on future
4:23:03Investments is that fair that's fair um
4:23:07and commissioner uh plant also asked you
4:23:09about how fyps or myps future test years
4:23:14and multi-year plans might give the
4:23:16commission or how that might factor into
4:23:18rate cases can you maybe speak to how
4:23:20that would also or wouldn't give the
4:23:23commission the opportunity to look at
4:23:24Future
4:23:25Investments yeah so maybe first that it
4:23:29just occurs to me also that on top of
4:23:31the the gas infrastructure plans we also
4:23:33have new cpcn roles on the gas business
4:23:36and so you're likely as we see larger
4:23:39projects we're going to be filing cpcn
4:23:42for those projects that we haven't filed
4:23:43in the past so there's new opportunity
4:23:45to evaluate some of those things going
4:23:48forward but as as it relates to an myp
4:23:51certainly that's an opportunity if the
4:23:53company brings that forward to to be
4:23:55looking at the forecasted investment
4:23:57over the period of time there which
4:23:59would be a future period of time and
4:24:01weigh in on what that should look like
4:24:02and how those plans should be
4:24:06structured um so if we had for example
4:24:09this case was filed in uh early 2020 4
4:24:13the test year is
4:24:152023 um if the commission or excuse me
4:24:19if the company had filed an fyp we'd be
4:24:21looking at I don't know what period but
4:24:232024 2025 Investments something like
4:24:26that yeah likely if it if it mimicked
4:24:29what we've kind of done in the past
4:24:30you'd probably be looking at 24 25 and
4:24:3226 in this case and the three or myp
4:24:35okay thank you um one of the other
4:24:39questions that came up I think was in
4:24:41relation to Mr Gardner's testimony uh
4:24:44this would be exhibit 105 page 13 we
4:24:48could switch to that
4:25:06please okay thank you so going back to
4:25:09the discussion we had a moment about ago
4:25:12about spend versus Capital
4:25:14additions um we see that the 2022 actual
4:25:18Capital additions were about
4:25:19$465
4:25:21million um my memory is that that
4:25:24roughly equates to what we're seeing in
4:25:25the 2024 investor presentation for spend
4:25:29for for uh 2024 is that your
4:25:32recollection Mr
4:25:35bman you're saying the 22 additions
4:25:38versus the 24 spend in the presentation
4:25:41yeah those are pretty
4:25:44close and is that no we're talking spend
4:25:48versus you know additions so is that a
4:25:51bit of a coincidence do we know exactly
4:25:53what the relationship is
4:25:56there well this is so we're talking
4:25:58about 22 additions and
4:26:0124 spend right so different
4:26:05years probably more of a coincidence
4:26:08that they're very close we' need to look
4:26:11at spend for each of these years in
4:26:13order to have apple yeah I think the
4:26:15spend is the key because I believe in
4:26:18that the spend is fairly consistent from
4:26:21year to year okay and is the company
4:26:23experiencing cost pressures outside of
4:26:28um what you choose to build how much
4:26:31it's costing the company to
4:26:33build customers yeah certainly um
4:26:38especially in 22 and 23 right as we
4:26:40we've seen significant inflation
4:26:42with a lot of materials and other things
4:26:45um that have pushed up some of those
4:26:47costs uh now it's easing a little bit
4:26:50now but
4:26:52still significantly more than it has
4:26:54been
4:26:57historically and
4:27:00um the other thing I'd like to just talk
4:27:02to you about briefly and and this might
4:27:03tie some slightly different pieces
4:27:05together the the 2023 number here the
4:27:13do you
4:27:14recall a discussion you had with um
4:27:17Commissioners about how that relates to
4:27:19some of the line extension and other
4:27:21changes that are happening right now in
4:27:24terms of um customer costs and
4:27:26incentives to not install new gas
4:27:31facilities
4:27:33yes and maybe it would help a little bit
4:27:35if we pulled up if we could take this
4:27:38down and pull up hearing exhibit 122
4:27:43which is the supplemental direct
4:27:45testimony of Mr P starting at page 10
4:28:22so we could scroll down to table jjp
4:28:26sd2 I thought this might be helpful to
4:28:28you Mr Burman in relation to or to help
4:28:31explain to us um how the 2023 and 2024
4:28:36Investments whether we're talking about
4:28:37spender additions investor presentations
4:28:39or otherwise relate specifically to some
4:28:42of the more recent determinations on
4:28:44align extension policy changes Yep this
4:28:46is the table I was trying to remember uh
4:28:49when we walked through that but yeah it
4:28:51talked about the 28% off-site
4:28:53distribution credit going away uh and
4:28:56that was effective November of 23 along
4:28:59with the 50% of the gas meters and the
4:29:03service lateral uh construction
4:29:04allowance being reduced and then moving
4:29:07to 100% responsibility of the meter in
4:29:10June of 24 and then all of the
4:29:12construction allowances eliminated so
4:29:15now as we sit here today any new
4:29:17application is going to be subject to
4:29:19all of these additional costs um from
4:29:22the customer side and would the com the
4:29:25company have had the opportunity to
4:29:26build any assumptions around this into
4:29:28the
4:29:292023 investor
4:29:31presentation no based on the timing of
4:29:34when this um was implemented it was
4:29:37still very fresh and would not have been
4:29:39into that presentation does the company
4:29:42have data about the extent to which
4:29:44these changes will specifically
4:29:47incentivize customers to not uh choose
4:29:50Natural Gas Service going
4:29:53forward no I don't think we have
4:29:55anything that would suggest what we
4:29:57expect that to result in um we certainly
4:30:00will be providing as I said in the the
4:30:04next gas infrastructure plan how we
4:30:07anticipate these costs or these customer
4:30:11contributions coming in and offsetting
4:30:12cost but too early to say you know what
4:30:15that actually will mean for customers
4:30:18making a different
4:30:19choice and so if we could turn to um
4:30:23page
4:30:25uh uh 14 of the same same document and
4:30:31Mr pet can you know speak to these more
4:30:32specifically but did the company
4:30:34nonetheless try to identify the impacts
4:30:37at least on on a project basis for some
4:30:40of the new line extension policy
4:30:44changes yeah I I see here that we're we
4:30:48did try to put these assumptions in
4:30:50place and show like what it would be on
4:30:51a project basis okay and and in fact
4:30:55um Mr P is probably the right person
4:30:58would you say to just talk more about
4:31:00this if we need more detail okay and I'd
4:31:03like to just you we we've talked about
4:31:04new business specifically here and and
4:31:06we're kind of at the end of time for
4:31:08today but maybe if you could just help
4:31:10us a little bit um to the question
4:31:11questions about the company's you made
4:31:14the comment um in response to a question
4:31:16that the company only builds what it
4:31:18needs to build and we've talked about
4:31:20that a little bit with respect to new
4:31:21business and the the company's Advance
4:31:23how do you how does the company manage
4:31:25that with respect to other categories
4:31:27like I'm talking very high level because
4:31:29we have other Witnesses who will speak
4:31:30to the details of some of these but with
4:31:33respect to for example safety where
4:31:35there are fima obligations or capacity
4:31:37expansion where there are reliability
4:31:38concerns did you just speak to how the
4:31:40company manages those costs and needs
4:31:43effectively for customers yeah on one
4:31:46like the safety bucket in particular
4:31:48right where there's thema guidelines
4:31:50over a long period of time of of where
4:31:54the system needs to be the company
4:31:56spreads those costs out over a longer
4:31:59period of time so that there's a pretty
4:32:01consistent amount of spend in each year
4:32:04uh related to those categories and then
4:32:06on things like new business it's really
4:32:08dependent on how many customers are
4:32:11requesting service in a particular year
4:32:13what investments need to be made to for
4:32:15meter Replacements and other things for
4:32:17existing customers so it's a little
4:32:19harder to forecast and typically you
4:32:22know company looks at what we've done
4:32:23historically but it can vary from year
4:32:25to year um which is quite frankly why
4:32:29you probably see in that investor
4:32:30presentation a pretty flat uh capital
4:32:34expenditure forecast you know we may
4:32:37actually start to see that change as we
4:32:39get more data from year to year as I
4:32:41suggested you know similarly the
4:32:43electric increasing you may see gas
4:32:45decreasing and then lastly Mr Burman for
4:32:48today I'm not unfortunately not done
4:32:50with my redirect but um is there a place
4:32:53in this record where the commiss can go
4:32:56to see some fairly detailed and
4:32:58extensive discussion about the company's
4:33:00plans and programs to continue to evolve
4:33:03its investments in the gas system to
4:33:05meet future need to address changes
4:33:08customers changes and and carbon
4:33:10emission uh concerns yeah I mean I think
4:33:14that the direct testimony of Mr Mars is
4:33:16really where the company attempted to
4:33:18lay out kind of how we see all these
4:33:20planning proceedings playing together
4:33:22and what the future might look like and
4:33:24and that it's pretty unique piece of
4:33:26testimony because it's not necessarily
4:33:28directly related to the ask in this case
4:33:29but was really intended to help
4:33:31illustrate where the company thinks the
4:33:33gas business is going uh and how these
4:33:35planning proceedings work
4:33:38together thank you uh I think this might
4:33:40be a good place to pause Mr chair and um
4:33:43we can pick up tomorrow if that
4:33:45works yeah I think that makes uh sense
4:33:48uh uh before we break uh any uh comments
4:33:52from uh uh
4:33:58Council chairman Michelle Singer Nelson
4:34:01um I don't know if you moved uh for
4:34:04admission hearing exhibit 1100 and and
4:34:091,000
4:34:12and so I don't know if they're part of
4:34:13the record yet or not so 1100 and 1101
4:34:18are the two exhibit numbers um Miss
4:34:21Brahma any uh concerns if we uh move
4:34:23those into evidence no
4:34:25concerns um so moved thank you and then
4:34:29the one other issue is I think for
4:34:32tomorrow um UCA would like to move uh 30
4:34:37minutes from Mr matley to miss gilland
4:34:46okay that's all I have thank you um Miss
4:34:50mclin yeah excuse me um staff is going
4:34:54to wave their cross on company witness
4:34:55mhler so I just wanted the parties to be
4:34:58aware of that for timing
4:35:00tomorrow
4:35:02perfect uh anything else uh uh before we
4:35:08adjourn all right uh see everybody uh
4:35:12tomorrow at 900 a.m.
4:35:16thanks thank
4:35:40you e

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