PETITIONER’S EXHIBIT 38 IURC CAUSE NO. 45253 REBUTTAL TESTIMONY OF MARIA T. DIAZ FILED DECEMBER 4, 2019 MARIA T. DIAZ -1- REBUTTAL TESTIMONY OF MARIA T. DIAZ DIRECTOR, RATES AND REGULATORY PLANNING ON BEHALF OF DUKE ENERGY INDIANA, LLC CAUSE NO. 45253 BEFORE THE INDIANA UTILITY REGULATORY COMMISSION I. INTRODUCTION 1 Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. 2 A. My name is Maria T. Diaz, and my business address is 1000 East Main Street, 3 Plainfield, Indiana 46168. 4 Q. BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY? 5 A. I am employed by Duke Energy Indiana, LLC (“Duke Energy Indiana,” 6 “Applicant” or “Company”) as Director, Rates and Regulatory Planning. Duke 7 Energy Indiana is a wholly owned, indirect subsidiary of Duke Energy 8 Corporation. 9 Q. ARE YOU THE SAME MARIA T. DIAZ THAT PRESENTED DIRECT 10 TESTIMONY IN THIS PROCEEDING? 11 A. Yes, I am. I 12 Q. WHAT IS THE PURPOSE OF YOUR REBUTTAL TESTIMONY? 13 A. I am responding to the certain portions of the prefiled testimony of Office of the 14 Utility Consumer Counselor (“OUCC”) witness Glenn A. Watkins, Citizens 15 Action Coalition of Indiana, Inc.(“CAC”)/Indiana Community Action 16 Association/Environmental Working Group (together “Joint Intervenors”) witness 17 Jonathan F. Wallach, The Duke Industrial Group (“IG”) witness Nicholas 18 Phillips, Jr., Walmart Inc. (“Walmart”) witness Steve W. Chriss, and The Kroger 19
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PETITIONER’S EXHIBIT 38
IURC CAUSE NO. 45253 REBUTTAL TESTIMONY OF MARIA T. DIAZ
FILED DECEMBER 4, 2019
MARIA T. DIAZ -1-
REBUTTAL TESTIMONY OF MARIA T. DIAZ DIRECTOR, RATES AND REGULATORY PLANNING
ON BEHALF OF DUKE ENERGY INDIANA, LLC CAUSE NO. 45253
BEFORE THE INDIANA UTILITY REGULATORY COMMISSION
I. INTRODUCTION 1
Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. 2
A. My name is Maria T. Diaz, and my business address is 1000 East Main Street, 3
Plainfield, Indiana 46168. 4
Q. BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY? 5
A. I am employed by Duke Energy Indiana, LLC (“Duke Energy Indiana,” 6
“Applicant” or “Company”) as Director, Rates and Regulatory Planning. Duke 7
Energy Indiana is a wholly owned, indirect subsidiary of Duke Energy 8
Corporation. 9
Q. ARE YOU THE SAME MARIA T. DIAZ THAT PRESENTED DIRECT 10
TESTIMONY IN THIS PROCEEDING? 11
A. Yes, I am. I 12
Q. WHAT IS THE PURPOSE OF YOUR REBUTTAL TESTIMONY? 13
A. I am responding to the certain portions of the prefiled testimony of Office of the 14
Utility Consumer Counselor (“OUCC”) witness Glenn A. Watkins, Citizens 15
Action Coalition of Indiana, Inc.(“CAC”)/Indiana Community Action 16
Association/Environmental Working Group (together “Joint Intervenors”) witness 17
Jonathan F. Wallach, The Duke Industrial Group (“IG”) witness Nicholas 18
Phillips, Jr., Walmart Inc. (“Walmart”) witness Steve W. Chriss, and The Kroger 19
thorn
New Stamp
PETITIONER’S EXHIBIT 38
IURC CAUSE NO. 45253 REBUTTAL TESTIMONY OF MARIA T. DIAZ
FILED DECEMBER 4, 2019
MARIA T. DIAZ -2-
Co. (“Kroger”) witness Justin Bieber. My testimony rebuts their prefiled 1
CONFIDENTIAL REBUTTAL WORKPAPER 2-MTD PREPARED BY 7
YOU OR UNDER YOUR SUPERVISION IN ACCORDANCE WITH THE 8
REBUTTAL POSITIONS AND OTHER CORRECTIONS PROPOSED BY 9
THE COMPANY? 10
A. Yes, they were. Petitioner’s Confidential Exhibit 38-A (MTD) Schedules 1 11
through 6 support the “Calculation of Net Operating Income for Wholesale and 12
Retail Customers” at the Jurisdictional Study and is an update to Petitioner’s 13
Confidential Exhibit 7-D (MTD) Schedules 1 through 6 filed in my direct 14
testimony. Petitioner’s Exhibit 38-B (MTD) Schedules 1 and 2 support the 15
“Summary of Net Operating Income and Rate of Return under Present and 16
Proposed Rates for Retail Customers by Rate Group” at the Retail Cost of Service 17
Study step (4CP) and is the updated version of Petitioner’s Confidential Exhibit 7-18
G (MTD) Schedules 1 and 2 (4CP). Petitioner’s Exhibit 38-C (MTD) is the 19
updated decoupling tariff. Petitioner’s Exhibit 38-D (MTD) is the Company’s 20
production peaks. Petitioners’ Confidential Rebuttal Workpaper 1-MTD includes 21
JS1-JS21 (MTD) and COSS1-COSS30 (MTD), and is the updated version of the 22
PETITIONER’S EXHIBIT 38
IURC CAUSE NO. 45253 REBUTTAL TESTIMONY OF MARIA T. DIAZ
FILED DECEMBER 4, 2019
MARIA T. DIAZ -21-
Company’s Excel-based COSS replica,1 which support Petitioner’s Confidential 1
Exhibit 38-A (MTD) and Exhibit 38-B (MTD) for 4CP. A 12CP version of the 2
COSS replica was also filed as Petitioner’s Confidential Rebuttal Workpaper 3
2-MTD and includes JS22-JS42 (MTD) and COSS31-COSS60 (MTD). In my 4
revised direct Petitioner’s Exhibit 7-G (MTD) Schedule 2, the overall proposed 5
rate increase was 15.43% (not including Utility Receipts Tax) and in Petitioner’s 6
Exhibit 38-B (MTD) Schedule 2, the overall proposed rate increase is 13.96% 7
(not including Utility Receipts Tax). Witness Davey explains the Company’s 8
changes resulting in the lower overall proposed rate increase to retail customers. 9
Q. DOES THIS CONCLUDE YOUR REBUTTAL TESTIMONY? 10
A. Yes, it does. 11
1 The COSS replica is a series of Excel-based schedules that were prepared and previously provided to the intervening parties and the Commission which verified the results of the Company’s PowerPlan model used for the preparation of the Jurisdictional Separation Study and Retail Cost of Service study.
Current Income TaxesFederal 23,695 15,577 ‐ 39,272 2,896 42,168 30,741 State (4,882) 7,778 ‐ 2,896 3,090 5,986 3,570 Total Current Income Taxes 18,813 23,355 ‐ 42,168 5,986 48,154 34,311
Total Operating Expenses 2,412,123 16,390 (84,188) 2,344,325 (9,327) 2,334,998 2,175,593
Net Operating Income 514,855$ (137,590)$ ‐$ 377,265$ 9,327$ 386,592$ $ 342,359$
(Thousands of Dollars)
As Filed
DUKE ENERGY INDIANA, LLCCalculation of Net Operating Income for
The Company's Wholesale and Retail CustomersFor the Twelve Months Ended December 31, 2020
PETITIONER’S EXHIBIT 38-A (MTD) IURC Cause No. 45253
A B C D E F G H I JPetitioner's Exhibit 38‐A (MTD)
IURC Cause No. 45253Schedule 2Page 1 of 1
TotalCompany Adjusted Updated Electric Total Total
Original Cost Pro Forma Original Cost Original Cost Steam Utility To Be Wholesale RetailDescription Depreciated Adjustment Depreciated Adjustments Depreciated Service Allocated Customers Customers
Electric Plant in ServiceProduction Plant 5,769,941$ (538,934)$ 5,231,007$ 1,982$ 5,232,989$ $ 4,791,650$ Transmission Plant 1,490,136 (34,033) 1,456,103 ‐ 1,456,103 1,453,178 Distribution Plant 2,581,405 (45,375) 2,536,030 ‐ 2,536,030 ‐ ‐ 2,536,030 Total Classified Plant 9,841,482 (618,342) 9,223,140 1,982 9,225,122 8,780,858
General Plant 427,852 1,412 429,264 ‐ 429,264 406,662 Intangible Plant 27,357 775 28,132 ‐ 28,132 26,651 Total Electric Plant in Service 10,296,691 (616,155) 9,680,536 1,982 9,682,518 9,214,171
Regulatory AssetsProduction Related 366,674 19,062 385,736 2,880 388,616 ‐ 387,548 Transmission Related 19,551 (4,035) 15,516 415 15,931 ‐ ‐ 15,931 Distribution Related 37,334 (6,270) 31,064 515 31,579 ‐ ‐ 31,579 General Related 1,555 (284) 1,271 168 1,439 ‐ ‐ 1,439 Total Regulatory Assets 425,114 8,473 433,587 3,978 437,565 ‐ 436,497
Total Original Cost Depreciated Rate Base 11,316,266$ (617,705)$ 10,698,561$ 5,960$ 10,704,521$ $ 10,195,192$
As Filed
DUKE ENERGY INDIANA, LLCAllocation of Original Cost Depreciated Rate Base toThe Company's Wholesale and Retail Customers
As of December 31, 2020(Thousands of Dollars)
PETITIONER’S EXHIBIT 38-A (MTD) IURC Cause No. 45253
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A B C D E F G H I JPetitioner's Exhibit 38‐A (MTD)
IURC Cause No. 45253Schedule 3Page 1 of 1
TotalCompany Adjusted Updated Electric Total Total
Original Cost Pro Forma Original Cost Original Cost Steam Utility To Be Wholesale RetailDescription Depreciated Adjustment Depreciated Adjustments Depreciated Service Allocated Customers Customers
ProductionProduction Equipment 238,802$ (210)$ 238,592$ ‐$ 238,592$ $ 218,184$ Limestone and Other FGD Reagents 2,140 ‐ 2,140 ‐ 2,140 1,957 Total Production 240,942 (210) 240,732 ‐ 240,732 220,141
Taxes Other than Income TaxesPayroll Related 14,307$ (585)$ ‐$ 13,722$ ‐$ 13,722$ $ 12,935$ Property Related 52,107 6,098 ‐ 58,205 ‐ 58,205 55,634 Revenue Related 25,170 (25,170) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Total Taxes Other than Income Taxes 91,584$ (19,657)$ ‐$ 71,927$ ‐$ 71,927$ $ 68,569$
Total Operating Expenses Excluding Income Taxes 2,335,643$ 29,110$ (84,188)$ 2,280,565$ (14,960)$ 2,265,605$ $ 2,118,277$
(Thousands of Dollars)
As Filed
DUKE ENERGY INDIANA, LLCAllocation of Operating Revenue Deductions Excluding Income Taxes
To the Company's Wholesale and Retail CustomersFor the Twelve Months Ended December 31, 2020
PETITIONER’S EXHIBIT 38-A (MTD) IURC Cause No. 45253
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A B C D E F G H I JPetitioner's Exhibit 38‐A (MTD)
IURC Cause No. 45253Schedule 5Page 1 of 1
Adjusted Updated Electric Total TotalTotal Pro Forma Total Total Steam Utility To Be Wholesale Retail
Description Company Adjustment Company Adjustments Company Service Allocated Customers Customers
Deferred Income Taxes
Federal 36,812$ (24,900)$ 11,912$ 2,588$ 14,500$ $ 16,228$ State 21,237 (11,175) 10,062 (2,941) 7,121 7,127
Total Deferred Income Taxes 58,049$ (36,075)$ 21,974$ (353)$ 21,621$ $ 23,355$
Investment Tax Credit
Production (382)$ ‐$ (382)$ ‐$ (382)$ ‐$ $ $ (350)$
Petitioner's Exhibit 38‐A (MTD)IURC Cause No. 45253
Schedule 6Page 2 of 2
Adjusted Updated Electric Total TotalTotal Pro Forma Revenue Total Total Steam Utility To Be Wholesale Retail
Description Company Adjustment Credits Company Adjustments Company Service Allocated Customers Customers
Calculation of Current State Income TaxNet Income Before Income Taxes and AfterNet Additions / Deductions to Income 107,949$ 81,955$ ‐$ 189,904$ 16,881$ 206,785$ $ 149,950$ Add: State Tax Adjustment (159,539) 23,510 ‐ (136,029) 40,618 (95,411) (83,535) Taxable Net Income for Current State Income Tax (51,590) 105,465 ‐ 53,875 57,499 111,374 66,415
Current State Income Tax (2,773) 5,669 ‐ 2,896 3,090 5,986 3,570 Adjustments to Current State Income Tax (2,109) 2,109 ‐ ‐ ‐ ‐ ‐ ‐ ‐ Total Current State Income Tax (4,882)$ 7,778$ ‐$ 2,896$ 3,090$ 5,986$ $ 3,570$
Calculation of Current Federal Income TaxNet Income Before Income Taxes and AfterNet Additions / Deductions to Income 107,949$ 81,955$ ‐$ 189,904$ 16,881$ 206,785$ $ 149,950$ Deduct: Current State Income Tax (4,882) 7,778 ‐ 2,896 3,090 5,986 3,570 Taxable Net Income for Current Federal Income Tax 112,831 74,177 ‐ 187,008 13,791 200,799 146,380
Current Federal Income Tax 23,695 15,577 ‐ 39,272 2,896 42,168 30,741 Adjustments to Current Federal Income Tax ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Total Current Federal Income Tax 23,695$ 15,577$ ‐$ 39,272$ 2,896$ 42,168$ $ 30,741$
Total Current Income Tax 18,813$ 23,355$ ‐$ 42,168$ 5,986$ 48,154$ $ 34,311$
(Thousands of Dollars)
As Filed
DUKE ENERGY INDIANA, LLCCalculation of Current Federal and State Income Tax and
Allocation to the Company's Wholesale and Retail CustomersFor the Twelve Months Ended December 31, 2020
PETITIONER’S EXHIBIT 38-A (MTD) IURC Cause No. 45253
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A B C D E F G HPetitioner's Exhibit 38-B (MTD)
IURC Cause No. 45253Schedule 1
TotalOperating
Original Cost Electric Expenses Federal Total NetDepreciated Operating Excluding and State Operating Operating Rate of
Retail Rate Groups Rate Base Revenues Income Taxes Income Taxes Expenses Income Return(Note 1)
Rates TS, MS and FS 2,778 1,134 781 77 858 276 9.94%
Total Retail 10,195,193$ 2,517,952$ 2,118,276$ 57,315$ 2,175,591$ 342,361$ 3.36%
Note 1) Operating Revenues exclude rents from electric property, sales to other electric companies and miscellaneouselectric revenues. These revenues have been reflected as reductions to operating expenses for purposes ofthe cost of service study.
(Thousands of Dollars)
Duke Energy Indiana, LLCSummary of Net Operating Income and Rate of Return
Under Present Rates for the Company's Retail CustomersBy Rate Group from the Retail Cost of Service StudyFor the Twelve Months Ended December 31, 2020
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A B C D E F G H I J K L M N O P QPetitioner's Exhibit 38-B (MTD)
IURC Cause No. 45253Schedule 2
OPERATING REVENUES LESS: 5.1% OPERATING OVERALLORIGINAL COST REVENUE TOTAL NET AT AVERAGE TOTAL REDUCTION IN PLUS: REVENUE TOTAL PERCENT NETDEPRECIATED OPERATING REMAINING OPERATING OPERATING RATE OF RATE OF SUBSIDY ( ) SUBSIDY ( ) RATE OPERATING REMAINING OPERATING INCREASE OPERATING RATE OF
Retail Rate Groups RATE BASE REVENUE IN RIDERS REVENUE INCOME RETURN RETURN OR EXCESS OR EXCESS INCREASE REVENUE IN RIDERS REVENUE (DECREASE) INCOME RETURN(Note 1)
Note 1) Operating Revenues exclude rents from electric property, sales to other electric companies and miscellaneouselectric revenues. These revenues have been reflected as reductions to operating expenses for purposes ofthe cost of service study.
UNDER PRESENT RATES UNDER PROPOSED RATESPRIOR TO SUBSIDY ( ) EXCESS REALLOCATION AFTER SUBSIDY ( ) EXCESS REALLOCATION
Duke Energy Indiana, LLCAssignment of Operating Revenues to the Company's
Retail Customers By Rate Group after the Proposed Rate Increaseand Proposed Reallocation of Subsidy ( ) Excess Revenues between Rate Groups
For the Twelve Months Ended December 31, 2020(Thousands of Dollars)
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PETITIONER'S EXHIBIT 38-C (MTD) IURC Cause No. 45253
Issued: Effective:
Duke Energy Indiana, LLC IURC NO. 15 1000 East Main Street Original Sheet No. 99 Plainfield, IN 46168 Page 1 of 2
REVENUE DECOUPLING MECHANISM (RDM)
1. Provision for Adjustment and Applicability
The base rates per kWh to the nearest 0.001 mills ($0.000001) for electric service set forth in Rate Schedule RS (Residential Electric Service), Rate 6.3 (High Efficiency Residential Service) and Rate CS (Schedule for Commercial Electric Service) shall be adjusted by amounts hereinafter described which amount is referred to as the “Revenue Decoupling Mechanism” (RDM). The RDM shall be calculated, as a charge or credit, and applied to Rate Schedules RS, 6.3, and CS to recover or refund the balance in the Deferred Accounts. The Deferred Accounts shall be established by a monthly adjustment hereinafter described, which monthly adjustments are summed to determine a yearly adjustment for Rate Schedules RS, 6.3, and CS. Customers served on Rider 7.1, Optional High Efficiency Total Electric Commercial service, and Rider 20, YOUR FIXED BILL, are excluded. RDM is a five-year program.
2. Definitions
For purposes of this Adjustment: “Commission” means the Indiana Utility Regulatory Commission.
“Relevant Rate Order” means the final order of the Commission in the most recent rate case of the Company setting the rates of the Company or the most recent final order of the Commission prescribing or setting the factors and procedures to be used in the application of this Adjustment.
3. Computation of the RDM Deferral Accounts for each of the Rate Schedules RS, 6.3 and
CS
RDM Deferral m,g = C m,g X FRC m,g – kWh m,g X FEC g Where:
C m,g = The number of customers billed during month m for customer class g
FRCm,g = The allowed fixed revenue per customer for customer class g in month m as approved in the Company’s most recent general rate case. kWh m,g = Billed sales during month m for customer class g. FEC g = The fixed energy charge for customer class g.
The sum of the monthly RDM Deferrals for a year within Rate Schedules RS (including 6.3) and CS is used to determine the annual RDM dollar adjustment for each rate schedule.
PETITIONER'S EXHIBIT 38-C (MTD) IURC Cause No. 45253
Issued: Effective:
Duke Energy Indiana, LLC IURC NO. 15 1000 East Main Street Original Sheet No. 99 Plainfield, IN 46168 Page 2 of 2
The annual RDM dollar adjustment shall not exceed more than four percent of allowed revenues for each rate class. Deferrals in excess of four percent are carried over to the subsequent year(s) RDM deferral balance computation (or retail rate case.)
4. Computation of the RDM Adjustment for each of the Rate Schedules RS, 6.3 and CS
Effective with bills rendered beginning with the first billing cycle or the effective date of the Commission’s order, if later, the RDM Adjustment to refund or recover the balance in the RDM Deferral Account, shall be calculated to the nearest 0.001 mills ($.000001) by the following formula: RDM Adjustment = Annual RDM dollar adjustment divided by projected annual billed kWh to the applicable customers. Projected and actual recoveries under the RDM are reconciled, with any under or over recovery being recovered or returned over a subsequent twelve-month period.
5. RDM Rates
Retail Rate Class RDM Adjustment Charge/Credit
($ Per kWh) Rate RS, including 6.3 $0.000000 Rate CS $0.000000