APPLICATION OF SOUTHWESTERN PUBLIC SERVICE COMPANY FOR AUTHORITY TO CHANGE RATES AND TO RECONCILE FUEL AND PURCHASED POWER COSTS FOR THE PERIOD JANUARY 1, 2010 THROUGH JUNE 30, 2012 § § § § § § §
PUBLIC UTILITY COMMISSION
OF TEXAS DIRECT TESTIMONY of DANE A. WATSON on behalf of
SOUTHWESTERN PUBLIC SERVICE COMPANY
(Revenue Requirement)
(Filename: WatsonRRDirect.doc)
Table of Contents
GLOSSARY OF ACRONYMS AND DEFINED TERMS... 3
LIST OF ATTACHMENTS ... 4
I. WITNESS IDENTIFICATION AND QUALIFICATIONS ... 5
II. ASSIGNMENT AND SUMMARY OF TESTIMONY AND RECOMMENDATIONS ... 8
III. DEPRECIATION ANALYSIS PHILOSOPHY ... 10
IV. SPS BOOK DEPRECIATION STUDY ... 13
A. SUMMARY OF THE SPS STUDY ... 13
B. OVERVIEW OF DEPRECIATION STUDY METHOD ... 15
C. PRODUCTION AND OTHER PRODUCTION PLANT ... 17
1. LIFE OF ASSETS ... 17
2. NET SALVAGE OF PRODUCTION AND OTHER PRODUCTION ASSETS ... 24
3. DEPRECIATION RATE FOR PRODUCTION AND OTHER PRODUCTION ASSETS ... 28
D. TRANSMISSION, DISTRIBUTION, AND GENERAL PROPERTY ... 29
GENERAL ... 31 3. DEPRECIATION RATES FOR TRANSMISSION, DISTRIBUTION, AND
GENERAL PROPERTY ... 32 E. VINTAGE YEAR DEPRECIATION OF GENERAL PLANT ASSETS, FERC
ACCOUNTS 391-398... 35 V. CONCLUSION ... 38 AFFIDAVIT ... 39
Acronym/Defined Term Meaning
ALG Average Life Group
AR-15 FERC Accounting Release 15
Commission Public Utility Commission of Texas
Depreciation Study SPS Texas Book Depreciation Accrual Rate Study at June 30, 2013
EEI Edison Electric Institute
Entergy Entergy Texas, Inc.
FERC Federal Energy Regulatory Commission
IEEE Institute of Electrical and Electronics Engineers
SDP Society of Depreciation Professionals
SPS Southwestern Public Service Company, a New
Mexico Corporation
SPR Simulated Plant Record Method
TESCO Texas Electric Services Company
Test Year July 1, 2012 through June 30, 2013
TXU Texas Utilities Electric Company and successor companies
Attachment Description
DAW-RR-1 List of Appearances before Regulatory Bodies by Dane A. Watson.
(Filename: DAW-RR-1.xls)
DAW-RR-2 Southwestern Public Service Company – Texas Book Depreciation Accrural Rate Study at June 30, 2013
(Filename: DAW-RR-2.pdf)
DAW-RR-3(CD) Workpapers to SPS Depreciation Study
DANE A. WATSON
I. WITNESS IDENTIFICATION AND QUALIFICATIONS
1
Q. Please state your name and business address.
2
A. My name is Dane A. Watson. My business address is 1410 Avenue K, Suite 3
1105B, Plano, Texas 75074. 4
Q. By whom are you employed and in what position?
5
A. I am a Partner of Alliance Consulting Group. Alliance Consulting Group 6
provides consulting and expert services to the utility industry. 7
Q. On whose behalf are you testifying in this proceeding?
8
A. I am filing testimony on behalf of Southwestern Public Service Company 9
(“SPS”), a wholly owned subsidiary of Xcel Energy Inc. (“Xcel Energy”). Xcel 10
Energy is a registered holding company that owns several electric and natural gas 11
utility companies.1 12
Q. Please describe your educational background.
13
A. I hold a Bachelor of Science degree in Electrical Engineering from the University 14
of Arkansas at Fayetteville and a Master's Degree in Business Administration 15
from Amberton University. 16
1 Xcel Energy is the parent company of four utility operating companies: Northern States Power
Company, a Minnesota corporation; Northern States Power Company, a Wisconsin corporation; Public Service Company of Colorado, a Colorado Corporation; and SPS, a New Mexico Corporation. Xcel Energy’s natural gas pipeline subsidiary is WestGas InterState, Inc.
A. Since graduation from college in 1985, I have worked in the area of depreciation 2
and valuation. I founded Alliance Consulting Group in 2004 and am responsible 3
for conducting depreciation, valuation, and certain accounting-related studies for 4
clients in various industries. My duties related to depreciation studies include the 5
assembly and analysis of historical and simulated data, conducting field reviews, 6
determining service life and net salvage estimates, calculating annual 7
depreciation, presenting recommended depreciation rates to utility management 8
for its consideration, and supporting such rates before regulatory bodies. 9
My prior employment from 1985 to 2004 was with Texas Utilities Electric 10
Company and successor companies (“TXU”). During my tenure with TXU, I was 11
responsible for, among other things, conducting valuation and depreciation 12
studies for the domestic TXU companies. During that time, I served as Manager 13
of Property Accounting Services and Records Management in addition to my 14
depreciation responsibilities. 15
I have twice been Chair of the Edison Electric Institute (“EEI”) Property 16
Accounting and Valuation Committee and have been Chairman of EEI’s 17
Depreciation and Economic Issues Subcommittee. I am a Registered Professional 18
Engineer in the State of Texas and a Certified Depreciation Professional. I am a 19
Senior Member of the Institute of Electrical and Electronics Engineers (“IEEE”) 20
and served for several years as an officer of the Executive Board of the Dallas 21
Section of IEEE. I am also currently Past-President of the Society of 22
Depreciation Professionals. 23
A. Yes. The Society of Depreciation Professionals (“SDP”) has established national 2
standards for depreciation professionals. The SDP administers an examination 3
and has certain required qualifications to become certified in this field. I met all 4
requirements and hold a Certified Depreciation Professional certification. 5
Q. Have you previously testified at any regulatory commission?
6
A. Yes. I have conducted depreciation studies and filed testimony or testified on 7
depreciation and valuation issues before the Public Utility Commission of Texas 8
(“Commission”), the New Mexico Public Regulation Commission, and numerous 9
other regulatory bodies as listed in my Attachment DAW-RR-1. 10
RECOMMENDATIONS
2
Q. What is your assignment in this proceeding?
3
A. The purpose of my testimony is to: 4
• Discuss the recent SPS –Texas Book Depreciation Accrual Rate Study at
5
June 30, 2013, completed for SPS assets (“Depreciation Study”); and 6
• Support and justify the recommended depreciation rate changes for SPS
7
assets for the period between July 1, 2012 and June 30, 2013 (“Test 8
Year”), based on the results of the Depreciation Study. 9
Q. Please summarize your conclusions regarding depreciation rate changes for
10
SPS assets based on the results of the Depreciation Study.
11
A. The Depreciation Study and analysis performed under my supervision fully 12
support SPS’s proposed depreciation rates applied to June 30, 2013 depreciable 13
plant balances for Production plant, Other Production plant, Transmission plant, 14
Distribution plant (Texas only) and General Property plant. The Depreciation 15
Study follows the Commission’s long-standing precedent for Average Life Group 16
(“ALG”) straight-line depreciation. In this way, all customers are charged for 17
their appropriate share of the capital expended for their benefit. In order to ensure 18
intergenerational equities, the Commission should adopt the life, interim 19
retirement characteristics, and net salvage parameters proposed in this study. The 20
Depreciation Study supports a negative five percent net salvage for its Production 21
and Other Production assets, instead of the positive five percent net salvage that is 22
the currently approved rate for SPS. The positive five percent net salvage is not 23
reflective of SPS’s recent experience and negative five percent net salvage is 24
proposes updated service lives and accounts for increased removal costs for 2
Transmission and Distribution assets in the proposed depreciation rates. SPS’s 3
depreciation rates should be set at the levels supported in the Depreciation Study 4
in order to recover SPS’s total investment in property over the estimated 5
remaining life of the assets. 6
Q. How is the Depreciation Study used to determine SPS’s depreciation expense
7
for the Test Year?
8
A. SPS uses depreciation rates determined in the Depreciation Study to calculate the 9
appropriate depreciation expense for the Test Year. The information presented in 10
the Depreciation Study is based on June 30, 2013 Test Year depreciable plant 11
balances and all of the conclusions are based on those balances. SPS witness Lisa 12
H. Perkett will discuss the impact of the new depreciation rates on SPS’s Test 13
Year depreciation expense. 14
Q. Please describe the depreciation analysis philosophy reflected in the current
2
Depreciation Study.
3
A. The objective of any sound depreciation philosophy should be the matching of 4
expense with revenue over the life of the asset. In general, the life of the asset is 5
determined by several factors including the rate of physical deterioration, 6
obsolescence, weather, maintenance, or (in some cases) the economic usefulness 7
of an entire operating unit. The function of depreciation is to recognize the cost 8
of an asset spread over its useful life. Book depreciation techniques should not 9
accelerate or defer the recovery of an asset in comparison to its appropriate useful 10
life. 11
Q. What objective should the Commission strive to achieve in setting
12
depreciation rates?
13
A. The objective of computing depreciation is to ensure that all customers using the 14
assets pay their pro rata share for the investment, including the cost of retirement. 15
This objective is achieved by allocating the cost or depreciable base of a group of 16
assets over the service life of those assets, on a straight-line basis, by charging a 17
portion of the consumption of the assets to each accounting period. 18
Q. Is this objective consistent with Commission rules and historic practice?
19
A. Yes. As evidenced by P.U.C. SUBST. R. 25.231(b)(1)(B) and the Commission’s 20
prior rate decisions, the Commission has a long standing practice of establishing 21
depreciation rates using the straight-line depreciation method based on the actual 22
historic data of the utility. The straight-line method of depreciation operates by 23
from all customers that use the asset over its useful life. 2
Q. What is the best evidence that the Commission can rely on to ensure that the
3
cost of certain assets are ratably recovered over the service life of the asset?
4
A. The best evidence is the actual experience of the specific group of assets being 5
analyzed. This evidence is found in the Depreciation Study based on plant 6
investment in service at June 30, 2013. 7
Q. What happens when depreciation rates are not adjusted to reflect the actual
8
life and retirement characteristics of the assets?
9
A. When depreciation rates are set at a level that does not reflect the actual life and 10
retirement characteristics of a utility’s assets, the cost of the asset will not be 11
recovered on a pro rata basis from all customers that use the asset. For example, 12
in instances where the net salvage rate for certain plant accounts is set at a level 13
that is insufficient under current conditions to recover the cost of the asset, SPS 14
will not accrue a reasonable level of removal cost over the useful life of the plant 15
asset. This, in turn, means that future customers will have to pay a 16
disproportionate share of the removal costs to make up for the payment deferrals. 17
Q. Is the situation you just described at issue in this case?
18
A. Yes. Currently, SPS is using a positive five percent net salvage for its Steam 19
Production and Other Production assets. This net salvage percent was adopted in 20
the Unanimous Stipulation in Docket No. 357632 and remained unchanged in the 21
2 In the Matter of the Application of Southwestern Public Service Company for Authority to
Change Rates and to Reconcile Fuel and Purchased Power Costs for 2006 and 2007, and to Provide a
Five percent positive net salvage is neither reflective of SPS’s recent experience 2
nor the long-standing precedent of this Commission. My proposed depreciation 3
rates return net salvage percentages to negative five percent net salvage rates for 4
Steam and Other Production plant. 5
Q. What actions should be taken in order to remedy the change in dismantling
6
costs and other changes in life and net salvage?
7
A. The Commission should approve SPS’s proposed depreciation rates which more 8
accurately reflect service life and net salvage for SPS’s existing assets. The 9
depreciation rates proposed in the Depreciation Study more accurately reflect 10
SPS’s current experience and future expectations and also allow for the recovery 11
of depreciation expense that has been under-accrued in the past. In addition, 12
adoption of the proposed depreciation rates should ensure, going forward, that 13
current SPS customers pay more of their pro-rata share of the investment over the 14
remaining life of the investment. This ensures that future customers are not 15
unduly burdened by having to pay a disproportionate share of any remaining 16
investment balance for removal costs at the end of the asset’s life. 17
3 In the Matter of the Application of Southwestern Public Service Company for Authority to
Change Rates and to Reconcile Fuel and Purchased Power Costs for 2008 and 2009, Final Order
Approving Stipulation, Docket No. 38147 (Mar. 25, 2011).
4 In the Matter of the Application of Southwestern Public Service Company for Authority to
Change Rates and to Reconcile Fuel and Purchased Power Costs for the Period January 1, 2010 Through
A.
Summary of the SPS Study
2
Q. Have you prepared a Depreciation Study for SPS?
3
A. Yes. I undertook a comprehensive analysis of annual depreciation for SPS that is 4
based on SPS’s depreciable plant in service as of June 30, 2013. The 5
Depreciation Study analyzed the property characteristics of SPS’s Production 6
plant, Other Production plant, Transmission plant, Distribution plant, and General 7
Property plant and proposes depreciation rates for these assets. The study is 8
attached to my testimony as Attachment DAW-RR-2. 9
Q. What depreciation rates are you recommending in this proceeding?
10
A. My recommended depreciation rates for SPS are provided in Appendix A of the 11
Depreciation Study. Based on updated service life and net salvage rates for SPS’s 12
depreciable plant in-service as of June 30, 2013, I derived the appropriate 13
depreciation rates for Production plant, Other Production plant, Transmission 14
plant, Distribution plant (Texas only), and General Property plant. 15
Q. When did the last change in SPS’s depreciation rates occur?
16
A. The last change in SPS’s depreciation rates became effective on January 1, 2009. 17
Those rates were established based on the stipulation agreement in SPS’s 2008 18
rate case, Docket No. 35763.5 Under the stipulation agreement, the depreciation 19
rates were the rates recommended by the Alliance of Xcel Municipalities. The 20
continued the use of the rates implemented in Docket No. 35763. 2
Q. Did you present a depreciation study in Docket No. 35763?
3
A. Yes. I presented a depreciation study in my direct testimony in that docket. I also 4
presented a partially updated depreciation study in Docket No. 38147, but it was 5
not a comprehensive update to my depreciation study in Docket No. 35763. I did 6
present a comprehensive depreciation study in Docket No. 40824. However, that 7
case was settled and the existing approved rates from Docket No. 35763 are still 8
being applied. 9
Q. What has changed since your last comprehensive depreciation study?
10
Some life changes were indicated, but net salvage in most of SPS’s assets 11
continues to be much more negative than those reflected in SPS’s current 12
depreciation rates for several reasons. First, SPS has decided not to request actual 13
experience and dismantling cost study estimates for all Production plant, but to 14
request the Commission return to its long-standing precedent of negative five 15
percent for all production plant net salvage. The negative five percent net salvage 16
for Production plant and Other Production plant is supported by the dismantling 17
cost study conducted by TLG Services for SPS’s 2012 rate case (Docket No. 18
40824). Using the negative five percent net salvage would be a first step in 19
setting production plant depreciation rates that will stop deferring the costs and 20
aid SPS in recovering from current customers their pro rata share of costs that is 21
currently serving these customers. 22
continues to rise. Life and net salvage were examined for both functions and 2
minor changes in life are recommended. Almost every account in Transmission 3
and Distribution continues to exhibit increased cost of removal resulting in 4
increasingly negative net salvage. SPS’s proposed depreciation rates in this case 5
reflect this reality. 6
Finally, SPS seeks to continue use of Vintage Group Amortization for its 7
General Plant Assets in Federal Energy Regulatory Commission (“FERC”) 8
Accounts 391-398. The only change in depreciation expense in these accounts 9
will come from updated life and net salvage estimates for accounts in that group. 10
B.
Overview of Depreciation Study Method
11
Q. What definition of depreciation did you use in preparing your Depreciation
12
Study and testimony?
13
A. The term “depreciation,” as I use it, is a system of accounting that distributes the 14
cost of assets, less net salvage (if any), over the estimated useful life of the assets 15
in a systematic and rational manner. It is a process of allocation, not valuation. 16
Depreciation expense is systematically allocated to accounting periods over the 17
life of the assets. The amount allocated to any one accounting period does not 18
necessarily represent the loss or decrease in value that will occur during that 19
particular period. Thus, depreciation is considered an expense or cost, rather than 20
a loss or decrease in value. SPS accrues depreciation based on the original cost of 21
all property included in each depreciable plant account. On retirement, the full 22
depreciation reserve. 2
Q. Please describe your Depreciation Study approach.
3
A. I conducted the Depreciation Study in four phases, as shown in Attachment 4
DAW-RR-2. The four phases are: Data Collection, Analysis, Evaluation, and 5
Calculation. I began each of the studies by collecting the historical data to be 6
used in the analysis. After the data had been assembled, I performed analyses to 7
determine the life and net salvage percentage for the different property groups 8
being studied. As part of the process for the study I conducted in Docket No. 9
40824, I conferred with field personnel, engineers, and managers responsible for 10
the installation, operation, and removal of the assets to gain their input into the 11
operation, maintenance, and salvage of the assets. Because that process occurred 12
recently, in 2012, that information was also used in this Depreciation Study. The 13
information obtained from field personnel, engineers, and managerial personnel, 14
combined with the study results, is then evaluated to determine how the results of 15
the historical asset activity analysis, in conjunction with SPS’s expected future 16
plans, should be applied. Using all of these resources, I then calculated the 17
depreciation rate for each function. 18
Q. What property is included in the Depreciation Study?
19
A. There are five distinct classes of property in this study: Production, Other 20
Production, Transmission, Distribution (Texas only), and General Property. The 21
Production Plant functional group consists of all structures, boiler plant 22
equipment, turbogenerator equipment, accessory electrical equipment, and other 23
power plants. The Other Production function consists of similar assets used at 2
SPS’s combustion turbine facilities. The Transmission plant functional group 3
consists of structures, substations, and transmission lines used in the transmission 4
of energy to the distribution system. The Distribution plant functional group 5
consists of structures, substations, transformers, meters, services, distribution 6
lines, guard lights, and street lighting used in the distribution and end use of 7
energy on the distribution system. The General plant functional group contains 8
facilities associated with the overall operation of the business such as land and 9
water rights, office equipment, and computers rather than with a specific 10
transmission or distribution classification. 11
Q. What depreciation methodology did you use?
12
A. The ALG, straight-line, remaining-life depreciation system, was employed to 13
calculate annual and accrued depreciation in the studies for all plant except small 14
dollar item assets found in FERC Accounts 391-398. The ALG methodology is 15
the same method used in prior studies and has been approved by this Commission 16
in prior dockets both for SPS and other companies within Texas. 17
C.
Production and Other Production Plant
18
1. Life of Assets
19
Q. Please describe the methodology you used to determine life for Production
20
and Other Production plant.
21
A. For Production and Other Production plant, most components are expected to 22
have a retirement date concurrent with the planned retirement date of the 23
will cease operations. The terminal retirement date along with the interim 2
retirement characteristics of the individual assets that will retire prior to the 3
facility ceasing operation, describe the pattern of retirement of the assets that 4
comprise a generating unit. The estimated terminal retirement dates for the 5
various generating units were determined based on consultation with SPS 6
management, financial, and engineering staff and are shown in Attachment 7
DAW-RR-2, Appendix D. Interim retirement curves were used to model the 8
retirement of individual assets within primary plant accounts for each generating 9
unit prior to the terminal retirement of the facility for all steam generating units. 10
Other production facilities were not modeled with an interim retirement curve. 11
Q. What is an interim retirement curve?
12
A. An interim retirement curve projects how many of the assets or units within a 13
facility that are currently in-service will retire each year prior to the final 14
retirement of the whole facility, using historical analysis and judgment. The life 15
span procedure assumes all assets are depreciated (straight-line) for the same 16
number of periods and retire at the same time (the terminal retirement date). 17
Adding interim retirement curves to the procedure reflects the fact that some of 18
the assets at a power plant will not survive to the end of the life of the facility, but 19
will be retired earlier than the terminal life of the facility and should be 20
depreciated (straight-line) over a shorter time frame to match their projected lives. 21
In this study, we analyzed each account separately to estimate an interim 22
retirement curve for FERC Accounts 311-316. Assets in the Other Production 23
incorporated for those units. 2
Q. Has the Commission previously reflected interim retirements in depreciation
3
rates?
4
A. Yes. The Commission included interim retirements in Docket No. 15195.7
5
Q. Has the Commission made any recent rulings regarding interim retirements?
6
A. Yes. In the Entergy Texas, Inc. (“Entergy”) rate proceeding, Docket No. 39896;8 7
the Commission excluded interim retirements in the depreciation rate 8
computation. Specifically, the Commission found in its Order on Rehearing, 9
Finding of Fact 100, that “[t]he retirement (actuarial) rate method, rather than the 10
interim retirement method, should be used in the development of production plant 11
depreciation rates.” Also in the Southwestern Electric Power Company rate 12
proceeding, Docket No. 40443;9 the Commission stated in Finding of Fact 195, 13
“[t]he rate at which interim retirements will be made is not known and 14
measurable. Incorporation of interim retirements would best be done when those 15
retirements are actually made. It is not reasonable to incorporate interim 16
retirements, resulting in a reduction in the depreciation expense of $1 million on a 17
Texas retail basis.” 18
7Application of Texas Utilities Electric Company for the Reconciliation of Fuel Costs,
Docket No. 15195 (Aug. 26, 1997).
8 Application of Entergy Texas Inc. for Authority to Change Rates, Reconcile Fuel Costs, and
Obtain Deferred Accounting Treatment, Docket No. 39896 (Sep. 14, 2012).
9 Application of Southwestern Electric Power Company for Authority to Change Rates and
rate computation?
2
A. No. It is critical to include interim retirements in the depreciation rate 3
computation. 4
Q. Why is it critical to include interim retirements in the depreciation rate
5
computation?
6
A. Interim retirements model how plant assets are actually retired prior to a terminal 7
retirement of an entire facility. To exclude interim retirements means that in the 8
future all production investment will remain in service for depreciation purposes, 9
until the facility retires, even though some of those assets will be functionally 10
retired. 11
Q. Please give an example of including interim retirements in the depreciation
12
rate computation.
13
A. Consider a plant facility costing $1,000,000 with a 10-year life and negative 10 14
percent net salvage. In that situation, the accrual rate and capital recovery stream 15
would be as shown below. 16
Chart DAW-RR-1
17
Year Plant Retirement Accrual
Rate Annual Accrual Net Salvage Depreciation Reserve 1 1,000,000 11.00% 110,000 110,000 2 1,000,000 11.00% 110,000 220,000 3 1,000,000 11.00% 110,000 330,000 4 1,000,000 11.00% 110,000 440,000 5 1,000,000 11.00% 110,000 550,000 6 1,000,000 11.00% 110,000 660,000 7 1,000,000 11.00% 110,000 770,000 8 1,000,000 11.00% 110,000 880,000 9 1,000,000 11.00% 110,000 990,000 10 1,000,000 1,000,000 11.00% 110,000 (100,000) 0
capital recovery would be as follows: 2
Chart DAW-RR-2
3
In this situation, the company’s assets are not fully recovered, thus creating an 4
intergenerational inequity that must be recovered from future customers. 5
Q. What would be the effect of changing the depreciation accrual rate when the
6
interim retirement occurs?
7
A. If the depreciation rate is changed when the interim retirement occurs, the capital 8
recovery pattern would change to the following: 9
Year Plant Retirem
ent Accrual Rate Annual Accrual Net Salvage Depreciation Reserve 1 1,000,000 11.00% 110,000 110,000 2 1,000,000 11.00% 110,000 220,000 3 1,000,000 11.00% 110,000 330,000 4 1,000,000 11.00% 110,000 440,000 5 1,000,000 11.00% 110,000 550,000 6 1,000,000 120,000 11.00% 110,000 (12,000) 528,000 7 880,000 11.00% 96,800 624,800 8 880,000 11.00% 96,800 721,600 9 880,000 11.00% 96,800 818,400 10 880,000 880,000 11.00% 96,800 (88,000) (52,800)
Year Plant Retirement Accrual Rate Annual Accrual Net Salvage Depreciation Reserve 1 1,000,000 11.00% 110,000 110,000 2 1,000,000 11.00% 110,000 220,000 3 1,000,000 11.00% 110,000 330,000 4 1,000,000 11.00% 110,000 440,000 5 1,000,000 11.00% 110,000 550,000 6 1,000,000 120,000 11.00% 110,000 (12,000) 528,000 7 880,000 12.50% 110,000 638,000 8 880,000 12.50% 110,000 748,000 9 880,000 12.50% 110,000 858,000 10 880,000 880,000 12.50% 110,000 (88,000) 0
Note that the annual accrual rate increases by 13.64 percent after the interim 2
retirement occurs in order to fully recover the investment in the plant. 3
Q. What would be the recovery pattern if interim retirements were included
4
from the plant’s inception?
5
A. The average service life would be modified to reflect an interim retirement. The 6
calculations are as follows. 7
Average service life = (120,000 x 4 +880,000 x 10)/ 1,000,000 = 9.52 8
years. 9
The accrual rate would be (1- net savage percent)/9.52 = 11.55%. 10
The capital recovery stream would be as follows: 11
Year Plant Retirement Accrual Rate Annual Accrual Net Salvage Depreciation Reserve 1 1,000,000 11.55% 115,546 115,546 2 1,000,000 11.55% 115,546 231,092 3 1,000,000 11.55% 115,546 346,639 4 1,000,000 11.55% 115,546 462,185 5 1,000,000 11.55% 115,546 577,731 6 1,000,000 120,000 11.55% 115,546 (12,000) 561,277 7 880,000 11.55% 101,681 662,958 8 880,000 11.55% 101,681 764,639 9 880,000 11.55% 101,681 866,319 10 880,000 880,000 11.55% 101,681 (88,000) 0
The important point from this example is that unless depreciation rates include a 2
component for retirements that occur during the life of the plant, then the cost 3
those assets will not be fully recovered when the plant is retired. Failing to 4
address the reality of early retirement violates the matching principle and creates 5
intergenerational inequity when assets that are retired and replaced over the 6
plant’s operation are not recovered during the plant’s life. Additionally, reflecting 7
the earlier retirements during the life of the assets allows the depreciation expense 8
for all generations of customers (all else being equal) to be based on the same 9
depreciation rate. 10
Q. Have all production assets for SPS that have been placed in service remained
11
in service until the plant finally retires?
12
A. No. From 1977-2012, SPS has retired approximately $208 million in assets in the 13
production function prior to final plant retirement. That is approximately 12 14
percent of the plant in service in production for FERC Accounts 311-316 as of 15
June 30, 2013. I recommend the Commission re-evaluate the interim retirement 16
assets incorporate an interim retirement curve model that recognizes the reality 2
that some assets will retire prior to plant retirement date. 3
2. Net Salvage of Production and Other Production Assets
4
Q. What is the significance of net salvage rates for SPS Plant assets?
5
A. In general, net salvage values are the amount received for retired property 6
(salvage) less any costs incurred to sell or remove the property (removal). When 7
salvage exceeds removal (positive net salvage), the net salvage reduces the 8
amount to be depreciated over time. When removal exceeds salvage (negative net 9
salvage), the negative net salvage increases the amount to be depreciated. In this 10
Depreciation Study, the net salvage percentages used is not based on actual 11
experience and dismantling cost estimates but on this Commission’s 12
long-standing precedent of negative five percent for each property account, except 13
land and water rights accounts where a zero percent net salvage is used. 14
Q. What are the currently approved net salvage values for Production and
15
Other Production assets?
16
A. The currently approved net salvage rates for Production and Other Production are 17
positive five percent, with zero percent net salvage for land rights accounts. 18
Those rates were set in the stipulation agreement in Docket No. 35763. 19
Q. What has been the Commission’s practice in approving net salvage
20
percentages for Production and Other Production assets?
21
A. The Commission has historically used negative five percent and zero percent net 22
salvage rates for Production and Other Production, respectively. Most recently, 23
in Docket No. 39896, Entergy’s recent rate case.10 2
Q. When was the negative five percent first used at the Commission?
3
A. The Commission first used negative five percent in 1978 in Docket No. 190311 for 4
Texas Electric Services Company (“TESCO”). The basis for the negative five 5
percent was a study conducted by Electric Bond and Share Co. on two 6
lignite-fueled generating units owned by what would eventually become TXU. 7
The final order in Docket No. 1903 quoted the reason to change to the negative 8
five percent net salvage for production as “to more clearly reflect actual 9
retirement experience of its generating units [TESCO’s proposal of negative five 10
percent] is a more accurate estimate of net salvage values that will be experienced 11
in the future.” 12
Q. What was the basis for the Commission’s approval of zero percent net
13
salvage for Other Production Plant?
14
A. In the mid-1980s, net salvage values for Other Production were based on the 15
specific facts and circumstances surrounding the assets in that function. For 16
example, the first assets in Other Production were small internal combustion 17
engines (similar to a large car engine) with very little removal cost and no costs 18
associated with environmental issues. The facts supported a zero percent net 19
10 Docket No. 39896, Order on Rehearing, FoF 101 (Nov. 1, 2012).
11 Application of Texas Electric Service Company for Authority to Change Rates and Inquiry by
Public Utility Commission of Texas into Certain Affiliated Transactions of Texas Electric Service
Company, Texas Power and Light, and Dallas Power and Light Company, Docket No. 1903 (Apr. 20,
Electric Company had only a very small number of assets related to leased 2
combustion turbines in the Other Production function. Part of the lease cost was 3
the removal of the combustion turbines at the end of the lease. Again, the facts at 4
that time supported a zero percent net salvage for Other Production. In contrast, 5
in today’s environment, suggesting that a zero percent net salvage rate for SPS is 6
appropriate for its combustion turbine plants is not supportable by the facts 7
surrounding the retirement and removal of those assets. 8
Q. Earlier in your testimony, you stated that the TLG Production Dismantling
9
Cost Study presented in SPS’s 2012 rate case (Docket No. 40824) supports
10
SPS’s proposal to use negative five percent net salvage values for Production
11
and Other Production plant. How does the TLG Production Dismantling
12
Cost Study support SPS’s proposal?
13
A. The TLG Production Dismantling Cost Study represents a more realistic 14
projection of Production and Other Production terminal net salvage values for 15
SPS than do the values reflected in SPS’s current net salvage rates. The TLG 16
Production Dismantling Cost Study is a more accurate estimate of terminal net 17
salvage values that SPS will experience in the future for the following three 18
reasons: 19
1. Over the years, dismantling costs have continued to increase as evidenced 20
by companies filing increasingly negative net salvage studies. Vague 21
suggestions of “productivity increases” have been far outweighed by the 22
12.Application of Texas Utilities Electric Company for Authority to Change Rates
, Docket No. 11735 (Jan. 28, 1994).
regulations and escalating labor costs required to remove generating plants 2
from service. Companies have become more environmentally 3
sophisticated since the late 1970s. The original 1978 study did not even 4
consider the costs of removing asbestos, transit, and other environmental 5
hazards that now have to be considered at a significant cost. 6
2. The TLG Production Dismantling Cost Study represents a site-specific 7
analysis of every Production facility owned by SPS. Site-specific data for 8
SPS owned assets are far superior to data extrapolated from an analysis 9
with a small sample size (only two lignite-fueled units) that are owned by 10
another company. 11
3. Utility assets typically have a long useful life. When those assets are 12
retired, the cost to demolish and dispose will have increased significantly 13
because of inflation. Ever changing environmental regulations and 14
disposal requirements must also be factored into dismantling cost. 15
However, SPS is requesting only to move from the current positive five percent to 16
a negative five percent as a first step in reflecting the costs needed at the time of 17
retirement of these facilities. 18
Q. Is the use of the Commission precedent negative five percent a conservative
19
representation of the dismantling costs SPS will incur at the end of the lives
20
of its generating assets?
21
A. Yes. The actual cost that SPS will eventually incur will be much higher and at 22
future prices. Given that the generating units are expected to be in service a 23
number of years before retirement and dismantling, the negative five percent used 24
in the study is very conservative. If the estimated costs in 2012 dollars from the 25
TLG dismantling study or the future costs for dismantling were used in the study, 26
the resulting depreciation rates would be significantly higher than those 27
recommended in this filing. 28
rates?
2
A. The TLG study would reflect higher removal costs and therefore more negative 3
net salvage. 4
3. Depreciation Rate for Production and Other Production Assets
5
Q. Please describe the results of the Depreciation Study for Production Plant.
6
A. The results of the analysis conducted in the Depreciation Study, based on the 7
service life of production assets and the revised net salvage rates, resulted in an 8
increase to SPS’s depreciation rates for production plant. SPS’s present 9
depreciation rates were compared to the Depreciation Study recommendations in 10
Appendix B of Attachment DAW-RR-2. The rates proposed for Production assets 11
would be an increase of approximately $22 million, or a 1.3 percent increase in 12
annual depreciation rates, from SPS’s present depreciation rates. Ms. Perkett will 13
discuss the effect of the proposed rates on SPS’s test-year depreciation expense. 14
Q. Please describe the major changes that resulted in the increase.
15
A. The major reason for the increase in depreciation rates is the reflection of a 16
negative five percent net salvage compared to the positive five percent net salvage 17
amounts embedded in current rates. P.U.C. SUBST. R. 25.231(b)(1)(B) requires 18
SPS to ratably recover from customers the future cost to remove all assets 19
currently in service on a straight-line basis over the life of the assets. This means 20
that net salvage rates must be calculated in order to allow recovery in current rates 21
of the expected cost to remove the assets that SPS currently has in service over 22
the expected life of those assets. P.U.C. SUBST. R. 25.231(b)(1)(B) ensures that 23
current and future, that benefit from the use of the asset on an equitable basis. 2
The Commission’s rules and historic practice of using straight-line depreciation to 3
ensure the equitable recovery of removal costs for assets support SPS’s proposed 4
depreciation rates and net salvage amounts. Without proper recognition of 5
removal costs, the concept of straight-line depreciation is also violated as the rates 6
will have to increase at the end of a unit’s life or after the plant has retired to 7
ensure full recovery of costs. 8
Q. Please describe the results of the Depreciation Study for Other Production
9
plant.
10
A. The results of the analysis conducted in the Depreciation Study, based on the 11
service life and the revised net salvage rates, resulted in an increase to SPS’s 12
depreciation rates for Other Production plant. SPS’s present depreciation rates 13
were compared to the Depreciation Study recommendations in Appendix B of 14
Attachment DAW-RR-2. The rates proposed for Other Production assets is an 15
increase of approximately $865,000, or a 0.31 percent increase in annual 16
depreciation rates, from SPS’s present depreciation rates. Ms. Perkett will discuss 17
the effect of the proposed rates on SPS’s test-year depreciation expense. 18
D.
Transmission, Distribution, and General Property
19
1. Life of Transmission, Distribution, and General Assets
20
Q. What is the significance of an asset’s useful life in your Depreciation Study?
21
A. An asset’s useful life is used to determine the remaining life over which the 22
remaining cost (original cost plus or minus net salvage, minus accumulated 23
over future periods. 2
Q. How did you determine the average service lives for each account?
3
A. The establishment of appropriate average service lives for each account within a 4
functional group was determined by using either of two widely accepted 5
depreciation analyses: actuarial analysis or Simulated Plant Record (“SPR”) 6
methods. Because the vintaged data used in actuarial analysis contains more 7
information than the un-aged data used in SPR analysis, actuarial analysis is the 8
preferred analysis tool when there are a sufficient number of transaction years 9
available to model an account. Mass distribution accounts did not contain 10
vintaged transaction history, so SPR analysis was used for these accounts. Graphs 11
and tables supporting the actuarial analysis and SPR analysis and the chosen Iowa 12
Curves (which represent the percentage of property remaining in service at 13
various age intervals) used to determine the average service lives for analyzed 14
accounts are found in the SPS Depreciation Study (Attachment DAW-RR-2) and 15
the workpapers filed in Attachment DAW-RR-3(CD). As detailed in the study, I 16
relied on my judgment to incorporate any differences in the expected future life 17
characteristics of the assets into the selection of lives. The objective of life 18
selection is to estimate the future life characteristics of assets, not simply measure 19
the historical life characteristics. More information can be found in the life 20
analysis section of the SPS Depreciation Study in Attachment DAW-RR-2. 21
Transmission, Distribution, and General function assets from the lives
2
embedded in the current depreciation rates?
3
A. Yes. As shown in Appendix C of Attachment DAW-RR-2, 17 accounts have 4
increases in life. The greatest change is an increase of 20 years in FERC Account 5
366. There is one account, Account 393 Stores Equipment, where a decrease in 6
life of 10 years is recommended. The lives for the other 14 accounts remained 7
unchanged. 8
2. Net Salvage Rates Transmission, Distribution, and General
9
Q. How did you determine the net salvage rates that you used in your study for
10
Transmission, Distribution, and General property?
11
A. I examined the experience realized by SPS by observing the average net salvage 12
rates for various bands (or combinations) of years. Using averages (such as the 13
5-year average band) allows the smoothing of timing differences between when 14
retirements, removal cost and salvage are booked and smoothes the natural 15
variations between years. By looking at successive average bands, or “rolling 16
bands,” an analyst can see trends in the data that would signal the future net 17
salvage in the account. This examination, in combination with the feedback of 18
SPS personnel related to any changes in operations or maintenance that would 19
affect the future net salvage of SPS, allowed for the selection of the best estimate 20
of future net salvage for each account. 21
A. Yes. This methodology is commonly employed throughout the industry and is the 2
method recommended in authoritative texts. 3
Q. Does your Depreciation Study reflect any change in the net salvage values of
4
the Transmission and Distribution property from the existing net salvage
5
rates embedded in SPS’s current depreciation rates?
6
A. Yes. The net salvage values for both Transmission and Distribution property 7
continue to experience increasing cost of removal and declining gross salvage. 8
The recommended net salvage values used in the calculation of the Transmission 9
and Distribution depreciation rates, along with the current net salvage values for 10
comparison, are listed in Attachment DAW-RR-2, Appendix C with detailed 11
computation in Appendix E-2. Additionally, Attachment DAW-RR-2 contains a 12
detailed net salvage analysis for Transmission and Distribution property, by 13
account 14
3. Depreciation Rates for Transmission, Distribution, and General
15
Property
16
Q. Please describe the results of the Depreciation Study for Transmission plant.
17
A. The results of the analysis conducted in the Depreciation Study, based on the 18
service life of transmission plant and the revised net salvage rates, resulted in an 19
increase to SPS’s depreciation rates for transmission plant. SPS’s present 20
depreciation rates as authorized by the Commission were compared to the 21
Depreciation Study recommendations in Appendix B of Attachment DAW-RR-2. 22
The rates proposed for Transmission assets is an increase of approximately 23
$309,000, or an approximately 0.0228 percent increase in annual depreciation 24
the proposed rates on SPS’s test-year depreciation expense. 2
Q. Please describe the results of the Depreciation Study for Distribution plant.
3
A. The results of the analysis conducted in the Depreciation Study, based on the 4
service life of distribution plant (Texas only) and the revised net salvage rates, 5
resulted in a decrease to SPS’s depreciation rates for distribution plant. SPS’s 6
present depreciation rates as authorized by the Commission were compared to the 7
proposed Depreciation Study recommendations in Appendix B of Attachment 8
DAW-RR-2. The rates proposed for Distribution assets is an increase of 0.10 9
percent from SPS’s present depreciation rates. Ms. Perkett will discuss the effect 10
of the proposed rates on SPS’s test-year depreciation expense. 11
Q. Please describe the results of the Depreciation Study for FERC Accounts
12
389-390 (land rights, and structures and improvements).
13
A. The results of the analysis conducted in the Depreciation Study, based on the 14
service life of FERC Accounts 389-390 and the revised net salvage rates, resulted 15
in an increase to SPS’s depreciation rates for FERC Accounts 389-390. SPS’s 16
present depreciation rates as authorized by the Commission were compared to the 17
proposed Depreciation Study recommendations in Appendix B of Attachment 18
DAW-RR-2. The rates proposed for FERC Accounts 389 - 390 would be an 19
increase of $861,000, or an approximate 1.4 percent increase in annual 20
depreciation rates, from SPS’s present depreciation rates. Ms. Perkett will discuss 21
the effect of the proposed depreciation rates on SPS’s test-year depreciation 22
expense. 23
depreciation rates for electric Transmission and Distribution property.
2
A. Changes in service life, gross salvage, gross removal costs, curve selection, and 3
adjustments due to a theoretical reserve comparison are all factors that affect the 4
calculation of the depreciation accrual. The proposed changes in the Depreciation 5
Study analysis for Transmission and Distribution assets suggest adjustments that 6
both increase and decrease the total accrual. However, one of the factors 7
influenced the accrual calculation notably and consistently in one direction: most 8
of the increase in depreciation expense for Transmission and Distribution assets 9
can be attributed to the effect of changes to net salvage rates. 10
In Docket No. 38147, the stipulation did not move net salvage rates to 11
accurate levels. For nearly every Transmission and Distribution asset group, the 12
residual value of assets has been decreasing while at the same time labor and 13
disposal costs having been increasing. The effect on the calculation of net salvage 14
is then two fold. There is a downward trend on gross salvage and an upward 15
trend on the cost of removal that has been occurring for many years. When net 16
salvage becomes increasingly negative, depreciation expense increases over 17
previous levels. To remedy the shortfall caused by the current depreciation rates, 18
the Commission should approve the net salvage parameters proposed in the 19
Depreciation Study to provide SPS straight-line asset recovery and prevent 20
intergenerational inequities. 21
Accounts 391-398
2
Q. Please describe the Vintage Group methodology.
3
A. For general plant assets in accounts 391-398, SPS is requesting to continue to use 4
a vintage year accounting method approved by the FERC in Accounting Release 5
Number 15 (“AR-15”), Vintage Year Accounting For General Plant Accounts, 6
dated January 1, 1997. AR-15 allowed utilities to use a simplified method of 7
accounting for general plant assets, excluding structures and improvements 8
(referred to as “general plant”). The AR-15 release allowed high-volume, 9
low-cost assets to be amortized over the associated useful life, eliminated the need 10
to track individual assets, and allows a retirement to be booked at the end of the 11
depreciable life. This method is often referred to as “amortization of general 12
plant.” 13
Adopting the method of accounting allowed in AR-15 changes the level of 14
detail maintained in the asset records and performs the depreciation calculation at 15
a vintage level rather than at a total account level. The plant asset balances will 16
be maintained by vintage installed with the retirement being recorded when book 17
depreciation has been completed. The empirical retirement data for actuarial or 18
semi-actuarial analysis will no longer be reliable, however, the determination of 19
useful life can be made appropriately with the use of market forces, manufacturer 20
expected life, technological obsolescence, business planning, known causes of 21
retirement, and changes in expected future utilization. 22
The depreciation calculation uses a useful life applied to a vintage versus 23
the entire account. The depreciation recovery is complete when the vintage 24
salvage and removal costs. 2
Q. Please describe the methodology or technique employed in analyzing the life
3
of Vintage Group Property.
4
A. Similar to the Transmission, Distribution, and General plant structure and 5
improvement assets described above, vintage group property for these accounts 6
was analyzed using actuarial analysis. Life parameters for other accounts in this 7
group were derived from the stipulation agreement in Docket No. 35763. By 8
evaluating the retirement forces and the impact on the current in-service property, 9
an appropriate recovery period was determined. 10
Q. Has the Commission approved Vintage Group amortization for other
11
companies in Texas?
12
A. Yes. In the most recently fully litigated cases regarding depreciation, the 13
Commission approved vintage group amortization for Oncor Electric Delivery 14
Company, LLC (Docket No. 3571713), CenterPoint Energy Houston Electric LLC
15
(Docket No. 3833914), and Entergy (Docket No. 39896). 16
Q. Please describe the results of the Vintage Group Depreciation Study.
17
A. The vintage group depreciation analysis recommends slight adjustments to 18
depreciation parameters for this group. SPS requests only a change to the service 19
life of one account, FERC Account 393 Stores Equipment. The study also 20
recommends a change to the net salvage percentages for five general plant 21
13 Application of Oncor Electric Delivery Company, LLC for Authority to Change Rates,
Docket No. 35717 (Aug. 31, 2009).
Transportation Equipment, Account 394 Tools, Shop and Garage Equipment, 2
Account 396 Power Operated Equipment, and Account 397 Communication 3
Equipment. SPS’s present depreciation rates were compared to the Depreciation 4
Study recommendations in Appendix B of Attachment DAW-RR-2. The rates 5
proposed for Vintage Group property are an increase of $6.1 million, or 6
approximately 3.7 percent increase in annual depreciation rates, from SPS’s 7
present depreciation rates. It should be noted that $5.0 million of this increase is 8
attributable to the reserve position and necessary recovery, which is shown on 9
Appendix A-2. Ms. Perkett will discuss the effect of SPS’s proposed depreciation 10
rates on SPS’s test-year depreciation expense. 11
14 Application of Centerpoint Energy Houston Electric, LLC for Authority to Change Rates,
Q. Were Exhibits DAW-RR-1 through DAW-RR-3 prepared by you or under
2
your direct supervision and control?
3
A. Yes. 4
Q. Does this conclude your pre-filed direct testimony?
5
A. Yes. 6
SOUTHWESTERN PUBLIC SERVICE COMPANY
LIST OF APPEARANCES BEFORE REGULATORY BODIES BY DANE A. WATSON
Line
No. Asset Location Commission
Docket (If
Applicable) Company Year Description
1 New Jersey Board of Public Utilities GR13111137 South Jersey Gas 2013 Gas Depreciation Study
2 Various FERC RP14-247-000 Sea Robin 2013
Gas Depreciation Study 3 Arkansas Arkansas Public Service Commission 13-078-U Arkansas Oklahoma Gas 2013 Gas Depreciation Study 4 Arkansas Arkansas Public Service Commission
13-079-U Source Gas
Arkansas 2013 Gas Depreciation Study 5 California California Public Utilities Commission Southern California Edison 2013 Electric Depreciation Study 6 North Carolina/South Carolina FERC ER13-1313 Progress Energy Carolina 2013 Electric Depreciation Study 7 Wisconsin Public Service Commission of Wisconsin 4220-DU-108 Northern States Power- Wisconsin 2013
Electric, Gas and Common Transmission, Distribution and General 8 Texas Public Utility Commission of Texas 41474 Sharyland 2013 Electric Depreciation Study 9 Kentucky Kentucky Public Service Commission 2013-00148 Atmos Energy Corporation 2013 Gas Depreciation Study 10 Minnesota Minnesota Public Utilities Commission 13-252 Minnesota Power 2013 Electric Depreciation Study 11 New Hampshire New Hampshire Public Service Commission DE 13-063 Liberty Utilities 2013 Electric Distribution and General 12 Texas Railroad Commission of Texas 10235 West Texas Gas 2013 Gas Depreciation Study 13 North Dakota North Dakota Public Service Commission PU-12-0813 Northern States Power 2012
Electric, Gas and Common Transmission, Distribution and
SOUTHWESTERN PUBLIC SERVICE COMPANY
LIST OF APPEARANCES BEFORE REGULATORY BODIES BY DANE A. WATSON
Line
No. Asset Location Commission
Docket (If
Applicable) Company Year Description
14 Alaska Regulatory Commission of Alaska U-12-154 Alaska Telephone Company 2012 Telecommunicatio ns Utility 15 New Mexico New Mexico Public Regulation Commission 12-00350-UT SPS 2012 Electric Depreciation Study 16 Colorado Colorado Public Utilities Commission
12AL-1269ST Public Service
of Colorado 2012
Gas and Steam Depreciation Study 17 Colorado Colorado Public Utilities Commission
12AL-1268G Public Service
of Colorado 2012
Gas and Steam Depreciation Study 18 Alaska Regulatory Commission of Alaska U-12-149 Municipal Power and Light City of Anchorage 2012 Electric Depreciation Study 19 Texas Texas Public Utility Commission 40824 Xcel Energy 2012 Electric Depreciation Study 20 South Carolina Public Service Commission of South Carolina Docket 2012-384-E Progress Energy Carolina 2012 Electric Depreciation Study 21 Alaska Regulatory Commission of Alaska U-12-141 Interior Telephone Company 2012 Telecommunicatio ns Utility 22 Michigan Michigan Public Service Commission U-17104 Michigan Gas Utilities Corporation 2012 Gas Depreciation Study 23 North Carolina North Carolina Utilities Commission E-2 Sub 1025 Progress Energy Carolina 2012 Electric Depreciation Study 24 Texas West Texas Gas 2012 Gas Depreciation Study 25 Texas Texas Public Utility Commission 40606 Wind Energy Transmission Texas 2012 Electric Depreciation Study 26 Texas Texas Public Utility Commission 40604 Crosss Texas Transmission 2012 Electric Depreciation Study
SOUTHWESTERN PUBLIC SERVICE COMPANY
LIST OF APPEARANCES BEFORE REGULATORY BODIES BY DANE A. WATSON
Line
No. Asset Location Commission
Docket (If
Applicable) Company Year Description
27 Minnesota Minnesota Public Utilities Commission 12-858 Northern States Power 2012
Electric, Gas and Common Transmission, Distribution and General 28 Texas Railroad Commission of Texas 10170 Atmos Mid-Tex 2012 Gas Depreciation Study 29 Texas Railroad Commission of Texas 10174 Atmos West Texas 2012 Gas Depreciation Study 30 Texas Railroad Commission of Texas 10182 CenterPoint Beaumont/ East Texas 2012 Gas Depreciation Study 31 Kansas Kansas Corporation Commission 12-KCPE-764-RTS Kansas City Power and Light 2012 Electric Depreciation Study 32 Nevada Public Utility Commission of Nevada 12-04005 Southwest Gas 2012 Gas Depreciation Study 33 Texas Railroad Commission of Texas 10147, 10170 Atmos Mid-Tex 2012 Gas Depreciation Study 34 Kansas Kansas Corporation Commission 12-ATMG-564-RTS Atmos Kansas 2012 Gas Depreciation Study 35 Texas Texas Public Utility Commission 40020 Lone Star Transmission 2012 Electric Depreciation Study 36 Michigan Michigan Public Service Commission U-16938 Consumers Energy Company 2011 Gas Depreciation Study 37 Colorado Public Utilities Commission of Colorado
11AL-947E Public Service
of Colorado 2011 Electric Depreciation Study 38 Texas Texas Public Utility Commission 39896 Entergy Texas 2011 Electric Depreciation Study 39
MultiState FERC ER12-212
American Transmission Company 2011 Electric Depreciation Study
SOUTHWESTERN PUBLIC SERVICE COMPANY
LIST OF APPEARANCES BEFORE REGULATORY BODIES BY DANE A. WATSON
Line
No. Asset Location Commission
Docket (If
Applicable) Company Year Description
40 California California Public Utilities Commission A1011015 Southern California Edison 2011 Electric Depreciation Study 41
MultiState Atmos Energy 2011
Shared Services Depreciation Study 42 Mississippi Mississippi Public Service Commission
2011-UN-184 Atmos Energy 2011 Gas Depreciation
Study 43 Texas Texas Commission on Environmental Quality Matter 37050-R Southwest Water Company 2011 WasteWater Depreciation Study 44 Texas Texas Commission on Environmental Quality Matter 37049-R Southwest Water Company 2011 Water Depreciation Study 45 MultiState CenterPoint 2011 Shared Services Study 46 MultiState CenterPoint 2011 Depreciation Reserve Study (SAP) 47
Pennsylvania NA NA Safe Harbor 2011
Hydro Depreciation Study 48 Michigan Michigan Public Service Commission U-16536 Consumers Energy Company 2011 Wind Depreciation Rate Study 49 Texas Public Utility Commission of Texas 38929 Oncor 2011 Electric Depreciation Study 50 Texas Railroad Commission of Texas 10038 CenterPoint South TX 2010 Gas Depreciation Study 51 Multistate NA NA Constellation Energy 2010 Fossil Generation Depreciation Study
SOUTHWESTERN PUBLIC SERVICE COMPANY
LIST OF APPEARANCES BEFORE REGULATORY BODIES BY DANE A. WATSON
Line
No. Asset Location Commission
Docket (If
Applicable) Company Year Description
52 Multistate NA NA Constellation Energy Nuclear 2010 Nuclear Generation Depreciation Study 53 Alaska Regulatory Commission of Alaska U-10-070 Inside Passage Electric Cooperative 2010 Electric Depreciation Study 54 Texas Public Utility Commission of Texas 36633 City Public Service of San Antonio 2010 Electric Depreciation Study 55
Texas Texas Railroad
Commission 10000 Atmos Pipeline Texas 2010 Gas Depreciation Study
56 Multi State – SE US FERC RP10-21-000
Florida Gas Transmission 2010 Gas Depreciation Study 57 Maine/ New Hampshire FERC 10-896 Granite State Gas Transmission 2010 Gas Depreciation Study 58 Texas Public Utility Commission of Texas 38480 Texas New Mexico Power 2010 Electric Depreciation Study 59 Texas Public Utility Commission of Texas 38339 CenterPoint Electric 2010 Electric Depreciation Study 60 California California Public Utility Commission A10071007 California American Water 2009-2010
Water and Waste Water Depreciation
Study
61
Texas Texas Railroad
Commission 10041 Atmos Amarillo 2010 Gas Depreciation Study 62 Georgia Georgia Public Service Commission 31647 Atlanta Gas Light 2010 Gas Depreciation Study 63 Texas Public Utility Commission of Texas 38147 Southwestern Public Service 2010 Electric Technical Update 64 Alaska Regulatory Commission of Alaska U-09-015 Alaska Electric Light and Power 2009-2010 Electric Depreciation Study
