i cases/2012-00023... · 04/10/2012  · requests are barry myers, john f. patterson, and jim...

225
SPRAGENS & HIGDON, P.S.C. A-TTORNEYS AT LAW ROBERT SPRAGENS, J R * P 0. BOX 68 I I5 COUmSOUARE ROBERT SPRAGENS, SR. FREDERICK A HIGDON LEBANON, KENTUCKY 40033-068 I (1920-lSS6) TELEPHONE (270) 692-3 I4 I *ALSO ADMITTED IN GEOROIA FAX: (270) 692-6693 G EN ERAL E-MAI L : s h (2 sp I age 11s 11 i pd 0 ii I d \v c 0 m WRITER ' 9 E- M A1 L : I S C I1 S (2, S 11 1 I a KC I1 S 11 I Ed 0 I1 I a \\I C 0 Ill October Y, 2012 Mr. Jeff Derouen, Executive Director Kentucky Public Service Commission 21 1 Sower Boulevard P.O. Box 615 Frankfort, Kentucky 40602 OCT 04 2012 PUBLIC SERVICE COMMISSION Dear Mr. Derouen: Re: Application of Taylor County Rural Electric Cooperative Corporation for an Adjustment of Rates; Case No. 2012-00023 Enclosed herewith please find an original and ten (1 0) copies of Taylor County RECC's Responses to the Commission Staffs Second Request for Information in this proceeding. With kind regards, I remain, Respe c tfu I I y s 11 b mit te cl , SPRAGENS & HIGDON, P.S.C. RS,JR:js Enclosures cc: Mr. John F. Patterson, Office Manager Taylor County RECC

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Page 1: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

SPRAGENS & HIGDON, P.S.C. A-TTORNEYS AT LAW

ROBERT SPRAGENS, JR * P 0. BOX 68 I I 5 C O U m S O U A R E ROBERT SPRAGENS, SR. FREDERICK A HIGDON LEBANON, KENTUCKY 40033-068 I (1920- lSS6)

TELEPHONE (270) 692-3 I 4 I *ALSO ADMITTED IN GEOROIA FAX: (270) 692-6693

G E N E R A L E - M A I L : s h (2 s p I a g e 11 s 11 i p d 0 ii I d \v c 0 m WRITER ' 9 E- M A1 L : I S C I1 S (2, S 11 1 I a K C I1 S 11 I Ed 0 I1 I a \\I C 0 Ill

October Y, 201 2

Mr. Jeff Derouen, Executive Director Kentucky Public Service Commission 21 1 Sower Boulevard P.O. Box 615 Frankfort, Kentucky 40602

O C T 0 4 2012

PUBLIC SERVICE COMMISSION

Dear Mr. Derouen:

Re: Application of Taylor County Rural Electric Cooperative Corporation for an Adjustment of Rates; Case No. 2012-00023

Enclosed herewith please find an original and ten (1 0) copies of Taylor County RECC's Responses to the Commission Staffs Second Request for Information in this proceeding.

With kind regards, I remain,

Res pe c tf u I I y s 11 b m it t e cl ,

SPRAGENS & HIGDON, P.S.C.

RS,JR:js Enclosures

cc: Mr. John F. Patterson, Office Manager Taylor County RECC

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EALTH OF KE

BEFORE THE PUBLIC SERVICE

atter of Adjustment of Rates of Taylor County Rural Electric Cooperative Corporation Case No. 2012-00023

APPLICANT’S RESPONSES TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

The applicant, Taylor County Rural Electric Cooperative Corporation, makes the

following responses to the “Commission Staffs Second Request for Information”, dated

Septermber 20, 2012, as follows:

1. The witnesses who are prepared to answer questions concerning each of these

Requests are Barry Myers, John F. Patterson, and Jim Adkins.

2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative

Corporation, is the person supervising the preparation of the responses on behalf

of the Applicant.

3. The responses and Exhibits are attached hereto and incorporated by reference

herein. /--

<-----

Attorneys at Law P.O. Box681 Lebanon, Kentucky 40033 Telephone: 270-692-41 31 Attorney for Taylor County Rural Electric Cooperative Corporation

1

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The undersigned, Barry Myers, as General Manager of Taylor County Rural

Electric Cooperative Corporation, being duly sworn, states that the responses herein

are true and accurate to the best of my knowledge and belief formed after reasonable

inquiry.

Dated: October y’ , 2012

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CO RPO RAT1 0 N

By:

COMMONWEALTH OF KENTUCKY

COUNTY OF TAYLOR

Subscribed, sworn to, and acknowledged before me by Barry Myers, as General Manager for Taylor County Rural Electric Cooperative Corporation on behalf of said Corporation this y’ ’A day of October, 2012.

My Commission Expires: 3-/hL7/-3

,wk ublic, Kentucky State At Large Notary I.D. ~ ? J - P J - /

CERTIFICATE OF SERVICE The undersigned counsel certifies that the foregoing responses have been

served upon the following, this Y f d day of October, 2012:

Oriainal and Ten Copies Mr. Jeff Derouen, Executive Director Kentucky Public Service Commission 21 1 Sower Boulevard Frankfort, Kentucky 40601

2

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copv Hon. Lawrence W. Cook Assistant Attorney General 700 Capitol Avenue, Suite 118 Frankfort, Kentucky 40601

3

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Taylor County Rural Electric Cooperative Case No. 20 112-00023

Commission Staffs Second Request for Information

1 .Refer to Revised Exhibit B filed on August 29, 2012, proposed Tariff Sheet No. 41, Schedule GP - General Purpose Service. Under the Minimum Monthly Charges, confirm that Taylor County intended to replace the $8.15 shown at the beginning of this section with the $10.00 that appears above it. Response: This is correct. The $8.15 should have been changed to $10.00.

Witness: John Patterson

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Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

2. Refer to Revised Exhibit B filed on August 29, 2012, Item 3, proposed Tariff Sheet No. 6, the Service Investigation Charge section. Taylor County is proposing to increase the Service Investigation Charge during regular working hours from $25 to $45. The Service Investigation Charge After Hours charge is currently $35. State whether Taylor County believes the Service Investigation Charge After Hours charge reflects the costs it incurs to provide this service. If no, provide the costs incurred for performing a service investigation after regular working hours or state that the costs are the same as those shown on the After Hours cost justification found on page 2 of Exhibit 15 of the application. Response: The time and costs for the Service Investigation and After Hours are similar and the costs would be the same.

Witness: John Patterson

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Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Infomation

3. Refer to Revised Exhibit B Tariff Sheet No. 31 filed on August 30, 2012, the Termination or Field Collection Charge section. Taylor County is proposing to increase the Termination or Field Collection Charge during regular working hours from $25 to $35. The Termination or Field Collection Charge After Hours charge is currently $35. State whether Taylor County believes the Termination or Field Collection Charge After Hours charge reflects the costs it incurs for this service. If no, provide the costs incurred for performing a termination or field collection after regular working hours or state that the costs are the same as those shown on the After Hours cost justification found on page 2 of Exhibit 15. Response: The time and costs would be the same as After Hours.

Witness: John Patterson

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Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

4. Refer to Exhibit C of the application, the page just prior to Tariff Sheet No. 59. This page is titled “CATV Pole Attachments PSC Administrative Case No. 251.” State whether this page is current or if it contains outdated information. If it contains outdated information, state whether the page should be updated or deleted from the tariff. Response: This contains outdated information. This page should be deleted from the tariffs.

Witness: Jim Adkins

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ItemNo. 5 Page 1 o f 4

Witness: Jirn Adkins

TAYLOR COUNTY RECC CASE NO. 20 12-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Ouestion:

Refer to Exhibit €-I-3 of the application, the Prepared Testimony of James R. Adkins

(“Adkins Testimony”) page 4 of 15.

a. Mr. Adkins states that the fuel adjustment clause (“FAC”) under-recovery

“had its most significant amount during the test year in July 201 1 which exceeded

$544,000 for that one month.” Provide a copy of the FAC filing made with the

Commission which shows this under-recovery amount.

b. Reference is made to JRA Exhibit 1, which does not appear to be included

in the application. Provide a copy of JRA Exhibit 1 or indicate where it can be found in

the filing.

Response:

a. Please Exhibit JRA 1, page 3 for the rnonth of July 20 1 1 and Exhibit 19,

page 3 of 3, in the application which contains the reference information in the Adkins

Testimony. This data is based on the financial accounting records of Taylor County and

will not appear in any FAC filing made with the Commision.

b. Attached is a copy of Exhibit JRA 1 which was mistakenly left out of the

application.

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TAYLOR COUNTY RECC CASE NO. 2001 2-00023

PREPARED TESTIMONY OF JAMES R ADKINS

I- 1

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TAYLOR COUNTY RECC CASE NO. 20012-00023

PREPARED TESTIMONY OF JAMES R. ADKINS

d o . 5 Exhibit JRA 1

Page 3 of 2-

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TAYLOR COUNTY RECC CASE NO. 20012-00023

PREPARED TESTIMONY OF JAMES R. ADKINS

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Item No. 6 Page 1 of 1

Witness: Jim Adkins

TAYLOR COUNTY RECC CASE NO. 20 12-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to page 13 of 15 of the Adkins Testimony. Just below the middle of the page, Mr.

Adkins states that “All ETS customers under contract will see no increase in their ETS

rates.”

a.

contracts.

b.

contract.

c.

State the number of ETS Marketing rate customers who are not under

State the number of ETS Marketing rate customers who are not under

State the amount of increase that ETS Marketing rate customers not under

contract will receive.

Response:

The statement that “All ETS customers under contract will see no increase in their ETS

rates” was included by mistake. This statement does not apply to Taylor County.

a.

b.

None of the current ETS customers are under contract.

All of the current ETS customers, which is 23 in number, are not under

contact.

C. All ETS customers will receive an increase.

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Item No.7 Page 1 of 1

Witness: Jim Adkins

TAYL,OR COUNTY RECC CASE NO. 20 12-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to Page 14 of 15 of the Adkins Testimony. In response to question 17, Mr. Adkins

states that by placing more of its costs into a fixed component, Taylor County “will more

prone and incentivized to enter into additional DSM programs.” Identify and describe

the additional Demand-Side Management (“DSM’) programs to which Mr. Adkins is

referring.

Response:

Please see the response to Item 45 in this request for information.

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Taylor County Rural Electric Cooperative Case No. 20 12-00023

Cornmission Staffs Second Request for Information

8. Refer to Exhibit I of the application. The percentage increase per kWh usage appears to be calculated by dividing the Increase Amount by the Proposed Rate rather than the Existing Rate. Provide a corrected Exhibit I showing the increase calculated as a percentage of the Existing Rate. Response: The corrected percentages are attached.

Witness: Jim Adkins

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Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

Average Bill for Residential Rate Class Schedule AI - Farm and Home

Customer charge Energy charge

kwh Useage

0 25 50

100 150 200 250 3 00 350 400 450 500 600 700 800 900

1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000

The average monthly useage 1,140

Present $7.94

$0.08220 Existing - Rate

$7.94 10.00 12.05 16.16 20.27 24.38 28.49 32.60 36.71 40.82 44.93 49.04 57.26 65.48 73.70 81.92 90.14 98.36

106.58 114.80 123.02 131.24 139.46 147.68 155.90 164.12 172.34

101.62

Proposed $10.00

$0.083 13 Proposed

$10.00 12.08 14.16 18.3 1 22.47 26.63 30.78 34.94 39.10 43.25 47.41 51.57 59.88 68.19 76.50 84.82 93.13

101.44 109.76 118.07 126.3 8 134.70 143.01 151.32 159.63 167.95 176.26

104.74

Increase Amount Percent

$2.06 2.08 2.1 1 2.15 2.20 2.25 2.29 2.34 2.39 2.43 2.48 2.53 2.62 2.7 1 2.80 2.90 2.99 3.08 3.18 3.27 3.36 3.45 3.55 3.64 3.73 3.83 3.92

3.12

25.9% 20.8% 17.5% 13.3% 10.9%

8.0% 7.2% 6.5% 6.0% 5.5% 5.1% 4.6% 4.1% 3.8% 3.5% 3.3% 3.1% 3 .O% 2.8%

2.6% 2.5% 2.5% 2.4% 2.3% 2.3%

3.1%

9.2%

2.7%

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Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

9. Refer to Exhibit J of the application, page 1 of 8. a. Refer to Line 11. Confirm that the amount in the Increase Amount column for

the Farm and Home class of $847,856 includes the Residential Marketing rate increase of $74, and therefore, should instead be $74 less since the Residential Marketing rate increase of $74 is shown separately on Line 18. If this cannot be confirmed, explain. Response: Taylor County confirms this.

b. Refer to Line 19. (1) Explain how the amount of ($2,219) that appears in the Proposed Revenue

column was calculated. Response: This is simply the difference between the revenue requirement increase and the calculation of rates times billing units.

(2) Confirm that the proposed rates would result in an increase of $1,067,922 (the sum of the amounts in the Increase Amount column after correction for the $74 discussed in part a. to this question and prior to the subtraction of $2,219). If this cannot be confirmed, explain. Response: Taylor County confirms this.

c. There are no billings for rate schedules B2, B3, C2, and C3. Confirm that there are no customers on these rate schedules. Response: Taylor County confirms this.

Witness: Jim Adkins

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Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

10. Provide an electronic copy in spreadsheet format of Exhibits J and R of the application with all formulas intact and unprotected and with all columns and rows accessible. If it is necessary to update either exhibit in response to questions contained in this information request, provide the updated version instead of the original version in both hard copy and electronically.

Witness: Jim Adkins

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TAYLOR COUNTY RECC CASE NO. 2012-00023

Item No. 11 Page 1 of 1

Witness: Jim Adkins

STAFF'S SECO D REQUEST FOR I

Question:

Refer to Exhibit K of the application, page 1 , column titled "Actual Test Year" and the row titled "Total". Have the non-cash patronage dividdends of $1,383,363 been included twice in the total amount of $3,910,413. If so, provide a corrected schedule.

Response:

They have twice een included. Please see the revised schedule provided below:

Actual Adjusted Test Year Test Year

Net Margins 1,545,760 952,575 Less: Non-cash patronage divididends - lntereston long-term debt 981,290 952,575 Total 2,527,050 1,905,150 Net Rate Base 52,572,340 52,323,723 Rate of Return 4.81 % 3.64% Equity Capitalization 50,679,645 50 , 086,460 Rate of Return 4.99% -__ 3.80%

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Item No. 12 Page 1 of 1

Witness: Jim Adkins

TAYLDR COUNTY RECC CASE NO. 20 12-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, page 5 of 53. Confirm that the third column on this

page, the Amount column represents the amount of payroll expense allocated to the

expense accounts listed. If this cannot be confirmed, explain.

Response:

The column labeled “Amount” represents payroll expenses allocated to the expense

accounts.

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Item No. 13 Page 1 of 1

Witness: Jim Adkins

TAYLOR COUNTY RECC CASE NO. 20 12-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQIJEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, page 6 of 53. Explain why expense accounts 582 -

Station Expense, and 591 - Maintenance of Station Equipment are directly assigned to

Lines rather than Stations.

Response:

These expense accounts were assigned to lines because of the small amount of this

expense and because they would be classified and allocated on the same basis as lines.

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ItemNo. 14 Page 1 of 1

Witness: Jim Adkins

TAYL,OR COUNTY RECC CASE NO. 20 12-00023

ESPONSE TO COMMISSION STAFF’S SECOND REQTJEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, page 18 of 53. Explain the difference between the

Total Invest for Acct 365, Conductors shown on this pas as $7,840,221 and the total of

$15,062,263 shown on page 11 of 53.

Response:

The amount listed on page 18 of $7,840,221 is the value of overhead conductor only in

Account 365. The amount of $1 5,062,263 listed on page 11 is the value of all items in

Account 365 including conductor, capacitors, switches, grounds and other items.

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Item No. 15 Page 1 of 1

Witness: Jim Adkins

365.00 $ 15,062,263 $ 38,367,884

Percent

TAYLOR COUNTY RECC CASE NO. 20 12-00023

33.02% $ 4,974,230 66.98% $ 10,088,032 $ 12,756,733 $ 25,611,151

33.25% 66.75%

RESPONSE TO COMMISSION STAFF’S SECOND REQtJEST FOR INFORMATION

Question:

Refer to Exhibit R , page 18 of the application, the table at the bottom of the page..

a. For the first column, confirm that Acct. 365 should be shown on the first

row and Acct. 364. If this cannot be confirmed, explain why the percentage amounts for

each account differ from those shown on pages 17 and 18 of 53.

b. Explain why the amounts in the second column, the Total Investment

column for each account does not reconcile with the investment amounts shown on pages

17-18 or page 11, lines 4 and S?

ResDonse:

The table listed at the bottom has two errors. One, the percentage amounts in the Percent

Consumer Related were reversed and the investment amounts in the Total Investment

columns were incorrect. Listed below is the appropriate information in the proper orders.

I Breakdown of Lines into Demand Related and Consumer Related Components I

This change results in percentage change of 0.07%.

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Item No. 16 Page 1 of 1

Witness: Jim Adkins

TAYLOR COUNTY RECC CASE NO. 2012-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, page 21 of 53. Explain the difference between the

total Cost for Acct. 368 Transformers, shown on this page as $10,973,212 and the total of

$12,850,077 shown on page 11 of 53.

Response:

The amount listed on page 2 1 of $1 O,973,2 12 is the value of transformers only in

Account 368. The amount of $12,85O,O77 $15 listed on page 11 is the value of all items

in Account 368 including transformers, regulators, cutouts and arrestors, and other items.

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Item No. 17 Page 1 of 1

Witness: Jim Adkins

TAYLOR COTJNTY RECC CASE NO. 20 12-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, page 27 of 53. The Transformers Demand Related

and Consumer Related Margin Requirements are shown as $121 , 1 12 and $80,027,

respectively. Explain why these accounts differ from the Transformer Demand Related

and Consumer Requirements of $125,479 and $55,773, respectively, shown on page 15

of 93.

Response:

The difference is due to the fact that different percentages were applied. The amounts

listed on page 15 of 53 were developed on the proper basis while those on 27 of 53 were

developed on another basis. Those margins requirements on page 27 were based on the

wrong information from page 19 of 53 while it should have been based on information

from page 21 for transformers. It should be noted that the data from page 27 of 53 is not

used any further in the COSS.

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ItemNo. 18 Page 1 of 1

Witness: Jim Adkins

TAYLOR COUNTY RECC CASE NO. 20 12-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, page 30.

a. Explain how the Demand Related Purchased Power amount of $7,850,075

was allocated to the rate classes.

b. Explain how the Energy Related Purchased Power amount of $24,498,163

was allocated to the rate classes.

Response:

a. For those rate classes billed under EKPC’s Schedule E, the demand related

costs based on the Demand Rate of the Wholesale Power Supplier have been allocated on

the basis of the sum of each rate classes’ monthly contribution to EKPC coincident peak

(“CP”) demand which is the basis for EKPC demand billing to each distribution system

served. The data for the contribution of each rate classes’ contribution to EKPC’s

wholesale peak demand is provided on page 40 of 53. For all other rate classes billed on

the basis of special wholesale rates, the demand costs have been directly assigned to the

appropriate rate class.

The meter and substation demand related costs have been billed on the

basis of the each rate classes’ contribution to EKPC’s CP demand. See page 40 of 53 of

this exhibit for the details.

b. For those classes billed on the basis of EKPC’s Schedule E wholesale rate,

the energy related costs are allocated proportionally based on the retail energy sales for

each rate class. Page 39 of 53 contains the details for this allocation. For those rate

classes billed on the basis of a special wholesale rate of EKPC, these energy costs are

directly assigned to each rate class.

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Item No. 19 Page 1 of 1

Witness: Jim Adkins

TAYLOR COUNTY RECC CASE NO. 20 12-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, pages 30-36. Explain why, with the exception of

Purchased Power Demand Related costs, none of the amounts on pages 30-34 reconcile

with the amounts on the Summary of Allocation of Expenses on pages 35 and 36.

Response:

The amounts contained in the Summary of Allocation of Expenses on pages 35 and 36 is

based on the allocation of revenue requirements where while the revenue requirements

equals costs plus margins. The amounts contained in pages 30-34 is based on the

allocation of total costs with no margins.

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Item No. 20 Page 1 o f 2

Witness: Jim Adkins

TAYLOR COUNTY E C C CASE NO. 2012-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, pages 35-36, the table at the bottom of the pages.

Explain why the amounts in the last row , Revenue Requirements, sum to $43,362,462

after including the Lighting row of $142,462) rather than the amount shown in the Total

column of $43,369,134.

Response:

Energy costs were allocated on an incorrect basis. Attached are new pages for pages 35

and 36 of 54.

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Item No. 21 Page 1 of 1

Witness: Jim Adkins

TAYL,OR COUNTY RECC CASE NO. 20 12-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQTJEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, pages 37-38 of 53.

a. Refer to page 37. For rate classes Farm and Home, General Power 1,

Street Lighting, and Residential ETS, explain how the Demand Related billing units were

calculated.

b. Pages 37 and 38 show that, for rate classes General Power 2, Large

Industrial B 1 and Large Industrial C1, the cost of service study supports a smaller

customer charge and a larger demand charge than currently approved. Explain to what

extent Taylor County considered proposing a reduction to customer charge and increase

to the demand charges for these classes.

c. Refer to page 38. Explain the purpose of the $214,5 1 1 that appears in the

middle of the page.

Response:

a. The demand billing unts for the rate classes listed in (a) above are based

on the load research data provided by EKPC. The demand units represents the sum of the

monthly individual customers peak demand for each rate class. Please see page 42 of 53

for the details of demand billing units.

b. The customer charge for these rate classes does include some of the cost

associated with substation costs of the wholesale supplier. It then determined to leave

this charge alone. An increase in demand rates for these classes is justified but it judge

best to leave this charge alone as well. However, Taylor County is increasing the energy

rate only because of its FAC under-collection.

C. It is an amount that has been included in error.

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Item No. 22 Page I of 1

Witness: Jim Adkins

TAYLOR COUNTY RECC CASE NO. 2012-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, page 45. Explain why there is no allocation to rate

classes B 1, C 1 and C3.

Response:

The investment in services and the cost to operate and maintain are the responsibility of

the customers in those rate classes.

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Item No. 23 Page 1 o f1

Witness: Jim Adkins

TAYLOR COUNTY RECC CASE NO. 2012-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, page 46. Explain why there is no allocation to rate

classes B 1, C 1 and C3.

Response:

The meters for the rate classes has been purchased and paid for by EKPC as load

research meters.

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Item No. 24 Page 1 of 1

Witness: Jim Adkins

TAYLOR COUNTY RlECC CASE NO. 2012-00023

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to Exhibit R of the application, page 47. Explain the differences in customer

number for the Street Lights rate class on the this table and on pages 43-46.

Response:

The customer number for lights in each one of the tables and its basis is as follows:

a. Page 43 - Lines; Based on the number of accounts with lights

only and not other service on that account.

b. Page 44 - Transformers; Based on the number of transformers for

lights only accounts.

C. Page 45 - Services; Rased on the number of lights requiring

services beyond the normal service drop for other service at the same location.

D. Page 46 - Meters; No costs allocated to meters since lights do

not have their own separate meter.

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Item No. 25 Page 1 of 1

Witness: Jim Adkins

Other Capital Credits

TAYLDR COUNTY RECC CASE NO. 2012-00023

12561 9

RESPONSE TO COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Question:

Refer to Exhibit R of the application on page 48.

a. The metering and substation charges appear to be omitted from the

schedule. Explain why they are not included.

b.

c.

Provide a detailed breakdown of the $1,090,334 of Other Revenue.

Explain how the total was allocated to the rate classes.

Response:

a. The metering and substation costs have been summed with the wholesale

demand costs as a part of the demand costs because they are considered to be demand

related.

b. A breakdown of the Other Revenue is listed below:

OTHERREVENUE

Accouni f 424

Rent from Electric Prop. Other Electric Revenue Interest Income M isc. Non-o pe rati ng I ncome

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Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

26. Refer to Exhibit S of the application, page 4 of the application, which shows the amount of the proposed increase based on attaining a TIER of 2.0X.

a. Describe the methodology employed by Taylor County in determining that 2.0X was the appropriate TIER on which to base its requested rate increase. Response: A TIER of 2 . 0 ~ will allow Taylor County to increase its margins to a level to meet its mortgage requirements for TIER and DSC.

b. Is Taylor County aware of any studies performed by the Rural Utilities Service (“RUS”) or the National Rural Utilities Cooperative Finance Corporation (“CFC”) on the subject of the appropriate TIER level for an electric distributive cooperative? If yes, identify the studies and when they were performed. Response: Taylor County is not aware of any studies, however, both RUS and CoBank have minimum requirements in their mortgage agreements.

Witness: Jim Adkins

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TAYLOR COUNTY RURAL ELECTRIC COOPEMTIVE CORPORATION CASE NO. 2012-0023

COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

27. Refer to Exhibit W of the application, which provides a comparison of balance sheet account levels for the test period and the 12 months immediately preceding the test period.

a. Page 2 of 8 shows that Account 136.00, Temporary Cash Investment decreased by $2,121,771, from $6,443,085 to $4,321,314, from 2010 to the 201 1 test period. Provide a detailed explanation for why this account decreased by this magnitude.

Response: See Exhibit V page 3 of 3 of the original application.

b. Page 2 of 8 shows that Account 144.1 , Accum Prov for Uncoll Cons A/C increased by $133,598 from ($162,472) to ($296,070), from 2010 to the 201 1 test period. Provide a detailed explanation for why this account increased by this magnitude.

Response: Amount Reserved for Uncollectable Accts $225,019.1 6 Amount of Written Off Accounts Collected 58,170.1 4 Less Amount Written Off 149,591.46

Total 133,597.84

c. Page 3 of 8 shows that Account 165.1, Prepayments - Insurance increased by $268,377 from $25,589 to $293,966, from 2010 to the 201 1 test period. Provide a detailed explanation for why this account increased by this magnitude.

Response: The Premium for Property and Liability Insurance for 201 1 was paid in December, 2010. This premium for 2012 was paid in November, 201 1.

d. Page 3 of 8 shows that Account 182.1 , Extraordinary Property Losses decreased by $182,451 from $618,293 to $435,842 from 2010 to the 2011 test period. Provide a detailed explanation for why this account decreased by this magnitude.

Response: This is the amount amortized each year for five (5) years for the retirement of meters when Taylor County converted to AMR meters.

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e. Page 4 of 8 shows that Account 219.2, Nonoperating Margins decreased by $1,196,590 from ($4,793,994) to ($3,597,404) from 2010 to the 201 1 test period. Provide a detailed explanation for why this account decreased by this magnitude.

Response: The entry to allocate the Nonoperating Margins from East Kentucky Power for 2009 was not made until January 201 1.

Witness: John Patterson

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TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION CASE NO. 2012-0023

COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

28. Refer to Exhibit X of the application, which provides a comparison of income statement account levels for the test period and the 12 months immediately preceding the test period.

a. Page 1 of 5 shows that Account 419, Interest and Dividend Income increased by $79,587 from ($63,053) to ($142,641) from 201 0 to the 201 1 test period. Provide a detailed explanation for why this account increased by this magnitude. Response: Taylor County received $6,000,000.00 in FFB loan funds in September 2010. This amount was invested which resulted in the increase in account 41 9.00

b. Page 2 of 5 shows that Account 427.2, Long Term Interest-LBC increased by $375,751 from $460,221 to $835,971 from 2010 to the 2011 test period. Provide a detailed explanation for why this account increased by this magnitude. Response: In August 201 0 Taylor County borrowed $5,420,301.68 from CoBank to pay off RUS 5.0% loans. This resulted in an increase in CoBank interest expense.

c. Page 2 of 5 shows that Account 427.3, Interest on FFB Loan increased by $251,968 from $0 to $251,968 from 2010 to the 201 I test period. Provide a detailed explanation for why this account increased by this magnitude Response: Taylor County received $6,000,000.00 in FFB loan funds in September 201 0.

d. Page 2 of 5 shows that Account 442.3, Industrial Sales decreased by $641,517 from ($2,865,162) to ($2,223,644) from 2010 to the 2011 test period. Provide a detailed explanation for why this account decreased by this magnitude. Response: During the month of February 2010 TGP reduced the amount of energy they purchased resulting in lower sales.

e. Refer to page 2 of 5. Provide a detailed breakdown of account 456,

Compensation Sales Tax $7,293.45 Reconnect and Collection Charge 34,166.00 Meter Test 120.00 Return Check 8,555.00 Service Investigation 325.00

Other Electric Revenue for the test year ended November 30,201 I. Response:

Total $50,459.45

f. Refer to page 3 of 5. Provide a detailed breakdown of account 555.1, Purchased Power Saloma Sub. State whether this account represents purchases

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of power from East Kentucky Power Cooperative, Inc. (“East Kentucky”) which is sold to Tennessee Gas Pipeline (“TGP”). If no, explain what this account represents. Response: Yes this account represents purchases from East Kentucky which are sold to TGP. A copy of the Purchased power bills for this account are included in Item 47 of this filing.

g. Page 3 of 5 shows that Account 586, Meter Expense increased by $72,582 from $386,389 to $458,971 from 2010 to the 201 1 test period. Provide a detailed explanation for why this account increased by this magnitude. Response: Taylor County completed installing AMR meters in April 2009, the two employees that were primarily changing the old to new meters then began reading meters by substation and charging time to Acct 902. In 2011 Taylor County began changing meters for test on a random basis while reading meters, the labor, benefits and transportation expense for changing these meters was charged to account 586.00 causing the increase.

h. Page 3 of 5 shows that Account 593, Maint of Overhead Lines increased by $91,980 from $1,487,394 to $1,579,375 from 2010 to the 201 1 test period. Provide a detailed explanation for why this account increased by this magnitude. Response: Labor, Benefits and Transportation increased.

i. Page 4 of 5 shows that Account 902, Meter Reading Expense decreased by $34,841 from $126,949 to $92,109 from 2010 to the 2011 test period. Provide a detailed explanation for why this account decreased by this magnitude. Response: See answer for 28G of this filing.

j. Page 4 of 5 shows that Account 903, Cons Records & Collection Exp increased by $42,174 from $769,313 to $811,487 from 2010 to the 2011 test period. Provide a detailed explanation for why this account increased by this magnitude. Response Labor and Benefits increased, also the number of credit card payments made by consumers increased increasing the amount charged for processing credit card payments.

k. Page 4 of 5 shows that Account 904, Uncollectible Accounts increased by $12,778 from $219,174 to $231,952 from 2010 to the 2011 test period. Provide a detailed explanation for why this account increased by this magnitude.

Response: An entry for postage on mailing bills for $6,932.81 was charged to Acct. 904 instead of Acct 903. Also the amount of Revenue Billed increased which caused the Reserve for uncollectible to increase.

I . Page 4 of 5 shows that Account 926, Employees’ Pension & Benefits decreased by $23,344 from $77,563 to $54,220 from 2010 to the 2011 test period. Provide a detailed explanation for why this account decreased by this

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magnitude. Response: The difference in the amount of Anthem Blue Cross spread for 2011 as compared to 2010 was $30,154, and the amount of the Co- op’s 401 k contribution was $1 0,607more. Fire Retardant uniforms purchased were $5,043. less.

m. Page 5 of 5 shows that Account 930.1, Director’s Fees & Mileage increased by $11,717 from $159,974 to $171,691 from 2010 to the 2011 test period. Provide a detailed explanation for why this account increased by this magnitude. Response: This was the amount of increase in Anthem Blue Cross pa id for Directors.

Witness: John Patterson

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Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staff‘s Second Request for Information

29. Refer to Exhibit 1 of the application. On pages 3 and 4 the column titled “Wage Rate” indicates that the wages included in the column were in effect as of January I, 201 1. On pages 6 and 7 the wage rate is indicated to be as of December 1, 2011. Explain which date is the correct effective date of the wage rates used in Exhibit 1. Response: The correct effective date is December 1, 201 1.

Witness: Barry Myers

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Taylor County Rural Electric Cooperative Case No. 20 lZ-OOO23

Commission Staffs Second Request for Information

e. Refer to page 6. Expand this schedule by providing a detailed analysis for Distribution Plant in the same format as that provided for General Plant. Response: The schedule is attached.

f. On page 6 the total accumulated depreciation is shown as $18,735,173. The Confirm this amount is correct and should not be $18,828,023. Response:

$1 8,735,173 is the correct amount.

g. Refer to Exhibit 3, page 4 of 6, and Exhibit 21, the Service Life and Net Salvage Study (“depreciation study”). The depreciation study indicates that, except for its automated metering infrastructure (“AMI”) meters, Taylor County uses a 3.0 percent depreciation rate for all distribution plant accounts, which make up nearly 95 percent of its total utility plant. Given that it uses a single rate for a large portion of its distribution plant and no previous depreciation study performed, explain why, as shown on page 4 of 6 of Exhibit 3, Taylor County’s reserve ratio has steadily increased such that it nearly doubled from 1996 (12.62 percent) to 2011 (23.59 percent). Response: Prior to 1986, the composite rate for distribution plant was 2.4%.

h. The amount of the proposed depreciation expense adjustment, $458,113, represents a 22 percent increase above the test year depreciation expense amount. In Case No. 201 1-00096, noting its provisions regarding gradual changes to depreciation, the Commission cited RUS Bulletin 183-1 in limiting South Kentucky Rural Electric Cooperative Corporation (“South Kentucky”) to a seven percent increase in its depreciation expense rather than the 12 percent increase that had been proposed.

(1) Explain whether Taylor County was aware of the decision in Case No. 201 1- 00096 prior to filing its application. Response: Taylor County is aware that South Kentucky was not granted its requested rates due to the fact that the following were not provided with its application: Squared Error; Index of Variation; Conformation Index; and Retirement Experience. Taylor County has provided each of these elements of the depreciation study with this application. Taylor County is of the opinion that the rates provided in the application should be accepted based on the merits of the depreciation study, not South Kentucky’s study.

(2) If the answer to part h.3. of this request is affirmative, explain what consideration Taylor County gave to the ruling in Case No. 201 1-00096 in deciding to request an increase in depreciation expense of 22 percent. Response: Refer to (’I) of this response.

Witness: Jim Adkins

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Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

30. Refer to Exhibit 3 of the application. On Page 1 Taylor County states that its depreciation rates and procedures

follow RUS Bulletin 183-1. In Exhibit 21, page 3 of the Scope section, the rates indicated for Accounts 362, 366, 367, 369, 370, 371 and 373 are outside of the rate ranges published in RUS Bulletin 183-1. Explain fully this discrepancy and why the rates being proposed by Taylor County are appropriate. Response: RUS allows for rates above or below the “RUS Low and High” range when the rates are supported by a depreciation study.

a.

b. Has Taylor County sought formal approval from RUS for depreciation rates that are outside the RUS ranges? If so, provide documentation of RUS approval of those rates. If not, does Taylor County plan to do so and when? Response: Taylor County is in the process of seeking RUS approval for the rates supported in the study. There has not been any correspondence from RUS at this time.

c. How long have Taylor County’s current depreciation rates been in effect? Response: This Commission allowed Taylor County to increase the depreciation rate for distribution plant from 2.4% to 3.0% during October 1986 in Case No. 9536.

d. Page 2 shows Account 371, Security Lights with a balance of $70,361 and does not show Account 373, Street Lighting as of the end of the test year. Page 5 shows Account 371, Security Lights with a balance of $1,634,097 and Account 373, Street Lighting with a balance of $70,361 as of the end of the test year. Explain this discrepancy and provide corrected schedules as necessary. Response: The schedule pulled information from another worksheet, and was off by 1 line. Attached is the corrected page.

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Account Number

Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

Description

Distribuhn plant: 362 Station equipment 3 64 365 Overhead conductors /devices 366 Underground conduit 367 Underground conductor devic 368 Line transformers 369 Services 3 70 Meters 371 Security lights 373 Street lights

Poles, towers & fixtures

General plant: 389 Land 390 Structures and improvements 391 Office furniture and equipment 3 9 1 . 1 392 Transportation equipment 393 Stores 394 Tools, shop and garage 3 95 Laboratory 396 Power operated equipment 397 Communication 398 Miscellaneous

Computer

November 30,201 1 Depreciation Adjustment

Items 11/30/11 Normalized Test Year Fully Balance Expense Expense Depreciate

0 23,305,62 1 15,062,263

445,130 2,274,480

12,850,077 5,417,379 5,457,588 1,721,222

70,361

6.67% 3.54% 2.76% 2.38% 4.65% 2.98% 3.86% 6.67% 6.00% 6.39%

0 825,019 415,718

10,594 105,763 382,932 209,111 364,02 1 103,273

4,496

0 637,303 412,377

1 1,324 60,737

350,352 148,864 15 1,076 46,621

1,925 66,604,12 - _ 1 2,420,928 1,820,578

59,845 5 1 1,624 215,928 483,168

1,853,120 8,209

15,477 100,008 167,025 122,312 135.1 54

2.0% 6.0%

16.7% 16.0% 6.0% 6.0% 6.0%

16.0% 8.0% 6.0%

3,671,870

3,739 3,139 3,232 3,292

57,664 57,998 141,284 142,884

96 96 0 0

1,121 1,05 1 0 0

770 610 6,780 6,145

214,687 215,215

Total electric plant 70,275,991 2,635,615 2,035,793

3 2 4 ~ 1 6 2 ~ 137,: 970,l

6,1

81,. 167,l 1124 22,

15;

Items that are fully depreciated are removed from the ending balance to compute test year depreciation.

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Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Stafr s Second Request for Information

31. Refer to Exhibit 4 of the application. a. Provide a detailed analysis of Other Taxes in the amount of $42,849.

Response: This is the PSC tax based on revenues less one-half of the power cost as assessed by the PSC.

b. Provide a comparative schedule of property tax expense for each year of the period 2007 through 201 1.

Amount Paid

201 1 448,968 2010 436,734 2009 433,075 2008 4 16,672 2007 41 8,789

Witness: Jim Adkins

Page 79: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,
Page 80: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

32. Refer to Exhibit 5 of the application. a. Provide an update of the current interest rates for outstanding long term debt

as of the most recent date available and continue to update monthly until the date of the hearing in this proceeding. Response: Rates are attached.

b. On pages 2 and 3, in the section labeled “RUS loans”, there is a line indicated as “Advance payment” reducing the total debt outstanding for RUS loans. Explain this amount and the impact on annual interest expense. Response: RUS allows cooperatives to make non-refundable advance payments on long-term debt. These advances can only be reduced by making debt service payments and earn 5% interest income. This has no effect on annual interest expense.

c. On page 4, lines 25 through 27 refer to a payment made by Big Sandy to East Kentucky. Explain this statement. Refer to Exhibit 6 of the application. Response: This should have been removed and not included with Taylor County’s application.

Page 81: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

1 Taylor County Rural Electric Cooperative Exhibit 5 Case No. 20 12-00023 page 2 of 4

Schedule of Outstanding Long-Term Debt Format 8a November 30,201 1 Schedule 2

cost Type Date Date Rate Annualized Test Year

of of of Outstanding to cost Interest Debt Issued Issue Maturity Amount Maturity Col (d)x(g) cosl

(a) (b) (c) ( 4 (€9 (i)

2

3

4

5

6

I

8

9

10

1 1

12

13

14

15

16

17

18

19

20 L1

22

23 L4

25

26

27

28

29

30

3 1

32

33

34

35

36

37

38

39

40

41

RUS loans 1B200 4/26/95 1B201 4/26/95 1 B202 4/26/95 1B210 6/1/99 1B215 6/1/99 1 B220 611 199 1 B22 1 11/1/04 Advance payment

4/17/30 970,131 4/17/30 639,446 4/17/30 1,280,350 5/23/34 1,615,573 5/23/34 1,437,638 5/23/34 709,209

10/24/39 694,26 1 (1,113,923)

3.875% 37,593 38,269 5.375% 34,370 34,893 1.500% 19,205 19,649 3.750% 60,584 61,916 3.875% 55,708 56,475 3.625% 25,709 25,972 3.750% 26,035 26,477

6,232,685 259,204 263,650

FFB loans H00 10 1/4/08 12/26/42 5,896,63 1 3.306% 194,943 196,65 1

CoBank loans 127635 4/1/77 3 1224 711 I79 34038 3/1/82 36387 9/1/84 36527 9/1/89 36527 3/1/93 60352 12/1/95 654T9 6/1/03 17829 1 6/1/03

3/23/12 61221 14 21201 1 7 8/24/19 8/23/24 2/21/28

1 112213 0 5/30/11

187,200 389,944 666,159 734,283 659,992

1 ,030,964 1,3 84,085

628,065 512811 8 4,830,903

10,5 1 1,595

5.64% 2.99% 2.99% 5.44% 5.44% 6.78% 2.99% 6.69%

10,558 1 1,659 19,918 39,945 35,904 69,899 41,384 42,018

11,163 12,786 21,541 40,666 36,212 70,501 44,24 1 42,40 1

4.52% 218,357 237,016 489,642 5 16,526

Total long term debt and annualized 22,640,911 943,789 976,827

Annualized cost rate [Total Col. 6 ) / Total Col. (d)] Actual test year cost rate [Total Col (k) / Total Reported in Col (a)]

4.17% 4.31%

Page 82: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,
Page 83: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Secand Request for Information

33. Refer to Exhibit 6 of the application. a. Provide a narrative description of each section of the actuarial valuation study

describing the process involved and how the amounts reported in the study are determined. Response: The estimated future payments to existing employees when they retire, the existing retired employees, and those on disability are discounted to current dollars. Employees are expected to retire at age 62, or with 30 years experience. Insurance premiums were estimated to increase by 5%, then reduced by %% per year until level at a 3% annual increase.

It should be noted that retired directors no longer participate in the retiree insurance program.

b. The cover letter included a journal entry to adjust accumulated other comprehensive income at December 31 , 201 1 in the amount of $1,099,060. Did Taylor County record the entry suggested? Response: Taylor County made the entry as of May 31,2012.

c. Page 1, line 17, shows the test year accrual for Statement of Financial Accounting Standards 106 costs. In the same format shown as of January 1, 2012, on pages 2-8 of Exhibit 6, provide the actuarial variance results as of January 1, 2011 that resulted in the 2011 accrual of $222,900. Response: Attached is the previous study which indicated that the annual accrual should have been $333,792, however, Taylor County failed to make the necessary increase in accrual. This was an oversight in the accounting department as there was some turnover at that same time.

d. Refer to the fourth page of Exhibit 6, which has the heading, Exhibit 2 ( I ) $110,892 is the amount of the “Amortization of net loss” on line 3 under

“Other changes in plan assets and benefit obligations recognized in other comprehensive income.”

(i) Provide the amount of the net loss being amortized. Response: The loss from the previous study was $2,772,206, and was being amortized over 25 years.

(ii) identify the period over which the loss was incurred and the period over which it is being amortized. Response: The postretirement benefits are not funded, therefore, the loss is cumulative from the inception of the adoption of FAS 106.

(2) On line 4 under the same heading, $1,099,060 is shown as the ”Adjustment for current net loss.” Provide a general description of how the loss was derived along with the source documents which show its derivation. Response: This is the difference between what the accumulated postretirement benefit obligation (“APBO”) as reflected in the general ledger and the APBO calculated in the current study.

e. Refer to the fifth page of Exhibit 6, specifically, the top portion of the page which has the heading “FAS 106 Expense Components.”

(1) Explain the derivation of the amounts shown for the service cost, interest cost, and the amortization of actuarial loss. Response: The service and interest cost

Page 84: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information are the difference in APBO from the beginning of the period to the end of the period, with the interest cost as the average APBO beginning and ending times the discount interest rate. The amortization of actuarial loss is amortization of the amount in accumulated other comprehensive income.

(2) Provide the amount of the loss being amortized. Response: $4,190,921. (3) Identify the period over which the loss was incurred and the period over

which it is being amortized. Response: The postretirement benefits are not funded, therefore, the loss is cumulative from the inception of the adoption of FAS 106. The loss being amortized is $4,190,921 , which is being amortized over 20 years.

f. Explain how the "Expected pay-as-you-go expense of $375,537" was derived. Response: This is the estimated premiums for current retirees. Retirees are assumed to live at 78 years for females and 74 years for males. The $375,537 assumes that several of the current retirees will not have premiums paid during the next year.

g. Refer to the bottom portion of the fifth page of Exhibit 6. Explain why the annual amounts shown for estimated payments are expected to decline approximately 40 percent between 2012 and 2015. Response: This reflects the aging of current retired employees and the mortality for paying premiums.

Witness: Jim Adkins

Page 85: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TJDLEY SHR-YOCK, CPA, PSC CERTIFIED PUBLJC ACCOIJNT ANTS

P.O. BOX 542

LAWRENCEBURG, KY 40342 145 COLLEGE STREET

(502) 839-8112 MEMBER KY SOCIFTV

or CPA'S

January 17,2009

John Patterson, Office Manager Taylor County Rural Electric Cooperative 625 West Main Street Campbellsville, Kentucky 4271 8

Dear John:

Please find enclosed the actuarial valuation results as of January 1, 2008 for Financial Accounting Standard No. 106 - Employers' Accounting for Postretirement Benefits Other than Pensions.

The annual accrual for 2009 should be as follows:

Employees $31 3,403 Directors Total

The accrual for 2009 includes current service and interest costs and amortization of the actuarial gains and losses.

If you have any questions or would like to discuss these results, please give me a call.

Sincerely,

W. Dudley Shryock, CPA

Page 86: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Medical Insurance Premiums

FAS 106 Obligation as of December 31,2008

Entries to record the effects of SFAS No. 158 are as follows:

(1) Accum other comprehensive income 209.00

Accu m postretirement benefits 228.30

Record adoption of SFAS No. 158

Monthly entry for 2009

Employee benefits 926.00 Director expenses 930.10

Accum other comprehensive income 209.00 Accum postretirement benefits 228.30

$3,202,753 $3,202,753

$26,117 $1,699

$9,241 $1 8,575

Record SFAS No. 106 expense.

Page 87: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Medical Insurance Premiums

FAS 106 Obligation as of January I, 2009

FAS 106 Expense Components

1. Service cost

2. Interest cost

3. Expected return on assets

4. Amortization of transition obligation

5. 6. Total FAS 106 expense

Amortization of actuarial (gain) / loss

($52,394)

275,298 -

- 11 0.888

$333.792

7. Expected pay-as-you-go expense $217,434

Page 88: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

A.

B.

C.

D.

Taylor County Rural Electric Medical Insurance Premiums

FAS 106 Obligation as of January 1, 2009

Accumulated Postretirement Benefit Obligations (APBO) as of January 1 , 2009

1. Actives not yet eligible 2. Actives fully eligible 3. Retirees and dependents

4. Total APBO

Future accruals

Total Expected Postretirement Benefit Obligations (EPBO) (A4 + B)

Reconciliation of Funded Status

Emplovees Directors Total

$2,213,015 $1 45,981 $2,358,996 641,673 102,182 743,855

1,453,932 - 34,255 1,488, I87

4,308,620 282,418 4,591,038

2,098,105 134,706 .._- 2,232,811

$6,406 , 725 $41 7,124 $6,823,849

1. Accrued Postretirement Benefit Cost 2. Assets 3. Funded Status = (D1 -I- D2) 4. Unrecognized Transition Obligation 5. Unrecognized (Gain) / Loss 6. Unrecognized Prior Service Cost 7. APBO

(03 -t D4 + D5 + D6)

January 1, 2009

$1,388,285 0

1,388,285

3,202,753

-

-

$4,591,038

Page 89: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Medical Insurance Premiums

FAS 106 Obligation as of January 1,2009

A. Accrued Post reti remen t Benefit Cost

1.

2.

3.

4.

5.

6.

7.

Balance January I, 2008

Accrual for 2008

Payout for 2008

Balance December 31 , 2008

Accrual for 2009

Estimated payout for 2009

Estimated balance December 31 , 2009

$1,433,764

240,000

(28 5,479)

1,388,285

----

333,792

(21 7,434) -

$1,504,643

Page 90: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Medical Insurance Premiums

FAS 106 Obligation as of January I, 2009

A. Development of Actuarial (Gain)/Loss during 2008

1.

2.

3.

4.

5.

6.

7.

8.

9.

Expected APBO as of December 31,2008

Actual APBO as of January 1 , 2009

Actuarial (gain)/loss as of January 1 , 2009 = (2) - (1)

Unrecognized (gain)/loss as of December 31 , 2008

Cumulative (gain)/loss = (3) + (4)

10% corridor

(Gain)/Loss subject to amortization = (5) - (6)

Future working lifetime to expected retirement

Amortization of (gain)/loss = (7) / (8)

9. Amortization of Transition Obligation

1.

2.

3. Annual amortization

Transition Obligation as of January 1 , 1995

Number of years in amortization

$1,388,285

4,591,038

3,202,753

3,202 , 753

430,547 ~ - 2,772,206

25

$1 10,888

Page 91: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Medical Insurance Premiums

FAS 106 Obligation as of January 1,2009

Alternate assumptions: Impact on obligations and expense of a health care cost trend increase of 1%

Current Alternate

F)lan Ass um ptio ns % Change

APBO 4,591,038 5,200,000 13.3%

EPBO 6,823,849 7,700,000 12.8%

FAS 106 Expense 333,792 380,000 13.8%

Estimated payments for the next five years are:

2009 201 0

201 I 201 2 201 3

$201,810 21 0,221 216,162 210,267 198,823

Page 92: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor Cou ty Rural Electric

AS 106 Assumptions

Covered Groups All eligible employees.

Eligibility Employees who retire at age 60 and have 30 years of servcice.

Spouse Taylor County pays family medical coverage for retirees and their dependents.

Medicare At age 65 retirees will commence with Medicare "Carve Out" cove rag e.

Contributions Taylor County pays the premium for eligible employees and their spouses. The Cooperative will not pay the retired employee portion of medical premiums for those hired after December 1,2005. The retiree may continue coverage at their own expense.

Life Expectancies Per annuity tables female employees can expect to live until age 78.2 and male employees can expect to live until age 73.8.

Retirement, withdrawals, and mortality Estimate that employees will retire at age 62 and will be replaced in the normal course of business.

Discount rate 6.0%

Medical inflation rate 8% per year decreasing by 0.5% per year until 5.5% per year.

Page 93: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

or County Rurall Electric

Terminations Rates vary by attained age for employees. Sample rates are as fallows:

No. of &E Rate Emplovees

20 15% 3 30 7 % 8 40 3% 15 50 1% 15 60 0% - 6

Eligibility classes Based on the employees, retirees and those on disability as of January 1, 2009 are as follows:

Employees Directors

Actives not fully eligible 43 2 Actives fully eligible 4 3 Retirees and dependents - 30 _. 1

- 6 Total 77 -

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Page 95: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

34. Refer to Exhibit 8 of the application. a. Provide documentation to support the approximate 5 percent increase in

medical insurance premiums. Response: A copy of the invoices is attached. It should be noted that the premiums for 201 3 will increase another 10%.

b. Page 2 shows a proposed expense for single participants of $106,933. Provide the calculation that results in this amount. Response: 12 employees times 12 months times $742.59 equals $1 06,933.

Witness: John Patterson

Page 96: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

sure Taylor County RECC Group Number(s). 00023004

Effective Date: 12/01/2011 - 11/30/2012

Anthem Sales Representative Jan Mitro

Deductible (singlelfamily) Physician I Specialist Office Services Copayment IP Facility I OP Hospital ACF; Surgery OP ACF: Other I IP & OP Professional Services Out-of-pocket Maximum (singlelfamily) Lifetime Maximum Emergency Room Urgent Care Rx - Retail Member Pharmacy Rx - Mail Order Pharmacy Rx - Deductible andlor Out-of-Pocket Employer Contribution (singleffamily)

Subscriber Only Subscriber +Spouse Subscriber +Child Subscriber +Children Subscriber +Family Total Number of Contracts

Subscriber Only Subscriber + Spouse Subscriber +Chiid Subscriber +Children Subscriber + Family Total Monthly Premium Total Annual Premium % Rate Increase

Current Blue Access 3.0

String Option 002G

$0 I $0

$10 /$30

No Copay I No Copay

No Copay / No Copay

$1,000 /$2,000 Unlimited

$100

$50 $10/$20/$30 $20/$40/$60

na na

na

29 0 1 25 76

$707.23 $1,950.29 $1,950 29 $1,950 29 $1,950 29

$122,117.7a $1,465,413.36

This year‘s renewal rate includes changes to the standard medical plan to ensure compliance with the

requirements of the recently enactel federal health care reform legislstioi Some of the changes in the standar

medical plan include no lifetime maximums, elimination of certain

annual limits, and the expansion 01 the definition of dependents

‘ Anthem Blue Cross and Blue Shield is the only carrier being offered. * Anthem Blue Cross and Blue Shield reserves the right to recalculate anylall rates if actual enrollment or split between tiers varies by 4- 10% from quoted enrollment. * The minimum employer contribution level is 25% of total premium but not less than 50% of the single premium.

The minimum acceptable participation is the greater of (a) 50% of total eligible full-time employees or (b) 75% of net eligible full-time employees. * Refer to your sales brochure(s) for benefit details and limitations. * This benefit description is intended to be a brief outline of coverage. The entire provisions of benefits and exclusions are contained in the Group Contract. In the event

of a conflict between the Group Contract and this description, the terms of the Group Contract will prevail. I n n---

Underwriter Issue Date: 10/2512011 *7q Au rized ignature 5Q’riorized Date Siclnature Dale Authorized Signature Date

[ 10103)

Taylor County RECCVOl l\Eenefit Summaries\lO-25-201l-Taylor County RECC-00023004-002G-Revision

Page 97: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County RECC Group Number(s): 00023004

Effective Date

Anthem Sales Representative Jan Mitro

121011201 1 . 11/30/2012

* Anthem Blue Cross and Blue Shield reserves the right to recalculate anylall rates if actual enrollment or split between tiers varies by 4- 10% from quoted enrollment. * The minimum employer contribution level is 25% of total premium but not less than 50% of the single premium. * The minimum acceptable participation is the greater of (a) 50% of total eligible full-time employees or (b) 75% of net eligible full-time employees. * Refer to your sales brochure(s) for benefit details and limitations. * This benefit description is intended to be a brief outline of coverage. The entire provisions of benefits and exclusions are contained in the Group Contract. In the event

of a conflict between the Group Contract and this description, the terms of the Group Contract will prevail

String Option 002G

Deductible (singlelfamily) Physician l Specialist Office Services Copayment IP Facility l OP Hospital ACF; Surgery QP ACF: Other l IP & OP Professional Services Ont-of-Pocket Maximum (singlelfarnily) Lifetime Maximum Emergency Room Urgent Care Rx - Retail Member Pharmacy Rx - Mail Order Pharmacy Rx - Deductible andlor Out-of-Pocket Employer Contribution (singlelfamily)

$0 I $0

$10 I$30 No Copay I No Copay No Copay I No Copay

$1,000 I$2,000 Unlimited

$100

$50 $10/$20/$30

$20/$40/$60 na na

Subscriber Only 14 Subscriber +Spouse 3 Subscriber +Child 0 Subscriber +Children 0 Subscriber +Family 0

Subscriber +Spouse $1,170 18 $1,228 69 Subscriber +Child $1,170 18 $1,228 69 Subscriber + Children $1,170 18 $1,228 69 Subscriber +Family $1,170 18 $1,228.69 Total Monthly Premium $9,451.16 $9,923.72

Total Annual Premium $113,413.92 $119,084.62

This year's renewal rate includes changes to the standard medical plan to ensure compliance with the

requirements of the recently enacte federal health care reform legislatioi Some of the changes in the standar

medical plan include no lifetime maximums, elimination of certain

annual limits, and the expansion 01

the definition of dependents

Taylor County RECCVOl l\Beneft Surnrnaries\lO-25-201 lJaylor County RECC~00023004~002G~Revision

Page 98: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,
Page 99: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

35. Refer to Exhibit 9 of the application. a. On pages 4 through 11 payments to various directors are referenced as

“VOUCHER COMM”. Provide an explanation of these references. Response: The Bylaws require that a Voucher Committee meet on quarterly basis to review paid invoices for the quarter.

b. Page 4 shows that Mr. Bardin received per diem payments with a reference of “VOUCHER COMM”. Pages 6, 7, 8, 9, and 10 show that Messers Kessler, Shuffett, Depp, Minor and Rucker received other board meeting payments also with a reference of “VOUCHER COMM”. Should Mr. Bardin’s payments have been listed as other board meeting payments, or should the other directors payments have been listed as per diem, and therefore removed for ratemaking purposes? Response: These are quarterly board meetings of the Voucher Committee and should be listed as other board meetings.

c. Explain the reference of “FRESH LOOK CONF” that appears on page 4 for Mr. Bardin. Response: The Fresh Look refers to the cooperative’s responses to the management audit that the Commission required EKPC to have performed. It is expected that the member cooperatives of EKPC will continue to monitor and meet to update compliance with the Liberty Report as a result of EKPC’s management audit.

d. For Messers. Kessler, Shuffett, Depp and Minor, the detailed analysis of their expenses (pages 6 through 9) does not agree with the amounts shown for each on page 3 which is a summary of director’s expenses. Response: Attached are the corrected exhibits. The application had incorrect cell references.

Page 100: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 101: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 102: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 103: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 104: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 105: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 106: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,
Page 107: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION CASE NO. 2012-0023

COMMISSION STAFF'S SECOND REQUEST FOR INFORMATION

36. Refer to Exhibit 10 of the application. a. Page 3 shows payments to Robert Spragens, Jr. in the amounts of

$2,389.02 and $3,570.42. Fully explain the nature of these expenditures and why Taylor County considers this to be a normal recurring expense.

Response: Items included on the $2,389.02 bill include time for preparing new joint use pole contract; production of employee records for former employee involved in lawsuit; Notice of compliance in PSC Case 201 0-0051 1 ; review EKPC policy for certification of EKPC Director; various questions from office on consumer problems. Items included on the $3,570.42 bill include: attendance at Co-op annual meeting; amendment to by-laws; discussion and work on Right-of Way issue and complaint filed with PSC; PSC Case No 201 1-00163.

Taylor County will continue to have the need for legal advice and will incur legal cost in the future.

b. Page 3 shows a payment to Robert Spragens, Jr. in the amount of $345.00 for Electric Coop Bar Assoc. dues. Fully explain the nature of this expenditure and why Taylor County considers this to be a normal recurring expense.

Response: This is for membership in the NRECA Electric Cooperative Bar Association and provides Mr. Spragens with information and discussion on various legal issues pertaining to Electric Cooperatives. This is a normal recurring expense.

c. Page 3 shows three payments to Frost, Brown, Todd PLLC for employee issues. Fully explain the nature of these expenditures and why Taylor County considers this to be a normal recurring expense.

Response: Frost, Brown, Todd provides legal service for Taylor County on Human Resource and union matters, amounts billed were for advice on Healthcare Reform; Preparing for 201 'l Contract Negotiations. These are considered a recurring expense.

d. Page 3 shows a payment to Frost, Brown, Todd PLLC for union contract negotiations. Fully explain the services performed and why Taylor County considers this to be a normal recurring expense.

Response: The term of the contract between Taylor County RECC and Teamster Local 89 ended December 1, 2011, this billing included cost for negotiating a new contract. Yes this is considered a recurring expense.

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e. Page 3 shows payments to Patterson & Dewar Engineering totaling $17,309.33. Fully explain the nature of these expenditures, and why Taylor County considers this to be a normal recurring expense. Does Taylor County have a formal agreement with Patterson & Dewar Engineering to provide services?

Response: This amount includes a monthly retainer fee; cost for bidding a new construction contractor for a line contractor; cost for line and work order inspection. These costs are recurring. Taylor County does not have a formal agreement with Patterson & Dewar.

Witness: John Patterson

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TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION CASE NO. 2012-0023

COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

37. Refer to Exhibit 11 of the application. a. Page 3 shows payments to Gurnsey & Associates totaling $5,874.78 for

“EKCP Strategic Review Shared Cost”. Fully explain the nature of this expenditure and why Taylor County considers this to be a normal recurring expense.

Response: See Answer to 35C.

b. Page 4 shows a payment to National Rural Electric in the amount of $795.00 for “2011 CEO Close-up Conf”. Fully explain the nature of this expenditure and why Taylor County considers this to be a normal recurring expense

Response: This was the registration fee paid for Mr. Myers to attend the CEO conference. Yes this is considered a recurring expense.

c. Page 4 shows a payment to Visa in the amount of $3,730.00 for ”201 1 CEO Close-up Conf”. Fully explain the nature of this expenditure and why Taylor County considers this to be a normal recurring expense.

Response: The $3,730.00 is for the registration fee for a NRECA Director Conference not the CEO Close-up Conference. This is considered a recurring expense.

d. Page 4 shows three payments to Visa in the amounts of $3,180.30, $421.89 and $394.14 for “CEO Conference Expense”. Fully explain the nature of these expenditures and why Taylor County considers them to be a normal recurring expense.

Response: The $3,180.30 was for lodging, meals, airfare and car rental for the Manager attending the NRECA CEO Conference this is considered a recurring expense. The $421.89 was mislabeled as CEO Conference when it was actually for meals the Manager paid for and a room at Marriott Griffin Gate while attending the Fall Manager‘s Meeting. It is recurring..

e. Page 4 shows three payments to Visa in the amounts of $3,735.62, $1,748.28 and $6,417.95 for “Board Hotel Director Conf’. Fully explain the nature of these expenditures and why Taylor County considers them to be normal recurring expense.

Response: The $3,735.62 is for Director’s room, meals and airport parking while attending an NRECA Director’s Conference in San Antonio this is recurring.

The $1,748.28 is for the room deposit at time the reservation was made for Directors room while attending the NRECA Director Conference. The

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$6,417.95 is the cost of meals and lodging at the NRECA Director Conference. This is recurring.

f. Page 4 shows a payment to Visa in the amount of $1,58950 for “Board Air Fare Director Conf‘. Fully explain the nature of this expenditure and why Taylor County considers this to be a normal recurring expense.

Response: This is Airfare for director’s attending the NRECA annual meeting. This is recurring.

g. Page 4 shows a payment to Visa in the amount of $421.89 for ‘CEO Conference Exp”. Fully explain the nature of this expenditure and why Taylor County considers this to be a normal recurring expense

Response See Item 37d above.

h. Page 4 shows a payment to Visa in the amount of $1,095.45 for “Hotel, Meals, NRECA Director Conf”. Fully explain the nature of this expenditure and why Taylor County considers this to be a normal recurring expense

Response: This is for Rooms for 5 Directors and the Manager attending the KAEC Annual Meeting in Louisville. This is recurring.

i . Page 4 shows a payment to SRW Environmental in the amount of $1,982.00 for ‘Site Assessment”. Fully explain the nature of this expenditure and why Taylor County considers this to be a normal recurring expense.

Response: This is for soil testing where underground gas tanks were removed. Similar expenses in the future will be recurring.

I. Page 5 shows a payment to Dom Liability Ins in the amount of $1 1,745.00. Fully explain the nature of this expenditure and why Taylor County considers this to be a normal recurring expense.

Response: This is the Director, Officer and Management Liability Insurance. It is recurring.

k. Page 6 shows a payment to KAEC in the amount of $300.00. Fully explain the nature of this expenditure and why Taylor County considers this to be a normal recurring expense.

Response: This is payment for Kentucky Manager Association Dues. It is recurring .

84

Witness: John Patterson

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Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

38. Refer to Exhibit 12 of the application where Taylor County estimates the expenses associated with this rate case. On a monthly basis, beginning with the first month in which it incurred any rate case expense, provide the amount of Taylor County's actual rate case expenses, by category, as was done in the estimate. Consider this an ongoing request which is to be updated monthly. Response: The costs to date are as follows:

Date CkNo. Amount Vendor Description

9/13/12 75766 404.03 Chandler's Office Equip Supplies 8/28/12 75653 66.85 FedEx Postage 812311 2 75639 4.71 Petty Cash Sup p I ies 812311 2 75642 321 . I 8 Quill Office Supplies Supplies 812811 2 75663 189.57 Visa Supplies

986.34

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Taylor County Rural Electric Cooperative Case No. 201 2-00023

Commission Staffs Second Request for Information

39. Refer to Exhibit 13 of the application where the cost of the depreciation study is indicated to be an estimate. If known provide the actual cost of the depreciation study. If not known at this time, provide an estimate of when the actual cost will be available. Response: Taylor County has not received an invoice for the study at this time, it is still estimated that the study will cost approximately $25,000.

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Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

40. Refer to Exhibit 15, page 3 of 6 of the application. This page shows that there were 31 occurrences of After Hours charges during the test period. Provide a breakdown of the 31 occurrences as to whether they pertained to Reconnect, Service Investigation, or TerminatiodField Collection charges. Response: All occurrences were for reconnect of service.

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Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

41. Refer to Exhibit 16 of the application. a. Refer to page 2 of 3. Explain why no metering or substation charges are

shown for December 2010. Response: This was an oversight only. The corrected page 2 is attached. This results in an additional power cost of $49,567.

b. Refer to page 3 of 3. (1) Regarding the fuel columns, this schedule appears to compare the

FAC portion of the power bill received from East Kentucky with the amount of FAC revenues received from customers without taking into account the over or under recovery amounts that occur each month and without taking into account the lag between billing and collecting the FAC. Provide a schedule for the period January 2009 through January 2012 which removes the lag and takes into account the under and over recovery amounts each month (i.e., this schedule should compare the recoverable FAC revenue/(refund), which is represented by Line 10 on the monthly FAC filing, with the amount of FAC revenue actually collected/(refunded), which is represented by Line 11 on the monthly FAC filing, and show the resultant over or under recovery each month, which is represented by Line 12 on the monthly filing). Response: The schedule is attached and accurately reflects the overhnder recovery as filed with the Commission. Refer to (2) and (3) below for additional details.

(2) The bottom of the page states that “the Environmental Surcharge has a built in over-under recovery mechanism.” Confirm your understanding that the FAC has an over-under-recovery mechanism that is applied each month and is calculated using lines IO, 11 , and 12 on the FAC form. Explain in detail how any amount of over or under- recovery would not be captured through this monthly calculation. Response: The monthly calculation of the overhnder recovery is performing properly for the line loss, however, for the 1 (one) month of July 2011, when the rate was applied to customers bills there was an unrecovered difference. As reflected in Exhibit 16, page 3 of 3 Taylor County had a credit from EKPC of $12,316. During that same month, Taylor County gave credits to consumers of $557,018, which resulted in a reduction in margins of $544,702. This amount will not be recovered through the fuel adjustment overhnder mechanism as reflected in the following months as shown through November, 201 1.

(3) The bottom of the page states that “The month that East Kentucky rolled the fuel into the base rates during June 2011, which Taylor recognized in July 2011, resulted [sic] a large credit to customers. Taylor County did not recognize this credit from East Kentucky, which resulted in a deficit for Taylor County.” Explain in detail what is meant by “Taylor County did not recognize this credit from East Kentucky.” Response: As reflected in Exhibit 16, page 3 of 3 Taylor County had a credit from EKPC of $12,316. During that same month, Taylor County gave credits to consumers of $557,018, which resulted in a reduction in margins of $544,702. This amount will not be recovered through the fuel adjustment overhnder mechanism as reflected in the following months as shown through November, 201 1.

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ITEM 41-bl

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION

OF FUEL BILLS CALCULATION OF OVER - UNDER - RECOVERY

CASE NO 2012-00023 FOR THE PERIOD NOVEMBER 1,2010 - AUGUST 2012

OVER FUEL FUEL (UNDER)

DATE REVENUE COST RECOVERY NOV-I 0 (240,038.46) (271,343.39) 31,304.93

December (493,884.21) (421,692.94) (72,191.27) Jan-I 1 (729,981.76) (457,353.93) (272,627.83)

February (328,162.33) (342,061.73) 13,899.40 March (25,726.98) (33,729.17) 8,002.1 9 April (291,658.86) (326,5 1 6.40) 34,857.54 May (309,574.21 ) (386,530.1 9) 76,955.98 June (335,221.97) (310,248.54) (24,973.43) July (557,017.98) (477,320.98) (79,697.00) August 15,277.77 12,657.43 2,620.34 September 13,635.88 14,864.00 (1,228.12) October 10,102.83 13,568.66 (3,465.83) November (10,348.32) (1 0,325.88) (22.44) December 1,726.22 1,494.83 231.39

Jan-I 2 90,939.69 71,269.44 19,670.25 February 34,853.80 33,540.6 I 1,313.19 March 13,159.82 13,622.75 (462.93) April (20,040.36) (24,857.1 9) 4,816.83 may (48,806.00) (53,475.07) 4,669.07 June (1 49,561.12) (1 29,165.83) (20,395.29) July (1 32,661.93) (123,475.07) (9,186.86) August (121,923.62) (98,627.71) (23,295.91)

(3,614,912. I O ) (3,305,706.30) (309,205.80)

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Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

42. Refer to Exhibit 21 of the application. a. Explain fully why Taylor County has never had a depreciation study performed

prior to the filing of this case. Response: This Commission allowed Taylor County to increase its rates during 1986 from 2.4% to 3.0% without performing a study. Taylor County operates with limited office personnel, and did not have the time or resources to gather the information necessary to have a study performed. Taylor County has been accumulating the information for several years, and the timing allowed a study to be preformed in conjunction with filing of this rate application.

b. Under the section titled Scope, the study indicates that starting in 2010 and through 2012, Taylor County will replace its existing meters with AMI equipment.

(1) Taylor County included the installation of an automated meter reading system (“AMR”) as part of its 2006 - 2009 construction work plan which the Commission approved in case 2006-00286. Explain the reference to the AMI project noted above given that Taylor County had already replaced its meters with an AMR system. Response: Taylor County did in fact replace its meters with an AMR system starting in December, 2007 through April 2009.

1 Case No. 2006-00286, Application of Taylor County Rural Electric cooperative Corporation for Certificate of Public Convenience and Necessity (Ky. PSC Oct. 5,2006)

(2) In case 2008-00376, the Commission approved Taylor County’s request to establish a regulatory asset to record the net meter write-off of the replaced meters by AMI meters, and amortize the amount of the regulatory asset over 5 years. Provide the amount of the regulatory asset that Taylor County established. Response: Taylor County ultimately retired meters with an original cost of $1,027,667.59, which is being amortized over 5 years. Taylor County is presently amortizing $15,204.25 per month, which is an annual amortization of $1 82,451 .OO.

2 Case No. 2008-00376, Filing of Taylor County Rural Electric Cooperative Corporation Requesting Approval of Deferred Plan for Retiring Meters (Ky. PSC Dec. 9, 2008)

(3) It appears that the amount of annual amortization expense is approximately $59,000 dollars less than the amount indicated in case 2008-00376. Explain why amortization expense is lower than initially estimated. Response: As noted in (2) above, Taylor County’s actual retirements are reflected in that response.

(4) Provide the date that Taylor County began amortizing the regulatory asset for the net meter write-off, and the date that amortization will be completed. Response: The first month of amortization was January, 2008 and the last month will be May, 2014.

(5) Provide the unamortized balance of the regulatory asset net meter write-off as

November 30,201 1 $435,842.00 February 28, 2012 $390,229.25

of the end of the test year, and as of February 28,2012. Response:

Witness: John Patterson

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Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

43. Refer to Taylor County’s response to Commission Staffs First Request for Information (“Staffs First Request”), Item 21.

a. On page 2, the distribution of benefits shows a total of $959,873, while the total benefits shows a total amount of $1,558,447. Explain this discrepancy. Response: Please find the following that reflects the correct benefits and average cost per employee. Taylor County apologized for the first response.

107.20 108.80 163 .OO 184.10 390.40 580.00 582.00 5 83 .00 586.00 587.00 588.00 590.00 593.00 594.00 595.00 597.00 598.00 902.00 903.00 907.00 920.00 930.00 935.00

Constniction work in progress Retirement work in progress Stores Transportation General plant additions Supervision, operations Station Overhead line Meter Installations Miscellaneous distribution Supervision, maintenance Maintenance Underground Transformers Meters Miscellaneous maintenance Meter reading Consumer records Customer service Administrative Miscellaneous Maintenance general plant

Total

Benefits include the following: Medical insurance Life and disability insurance Savings plan 401 (k)

Benefits Distribution

339,744 47,878 39,477 43,661 4,964

59,252 1,570

158,454 115,551

706 14

42,022 247,638

4,998 3,780

29 6,876

21,914 199,492 36,425

150,514 7,207

26.28 1

1.558-447

1 ,OS4,3 12 14,228

273,978

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TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION CASE NO. 2012-0023

COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

44. Refer to Taylor County’s response to Staffs First Request, Item 49.

programs offered by East Kentucky? a. Are the DSM programs listed offered in conjunction with identical

Response Yes.

b. Does Taylor County have plans to increase its DSM offerings in the future independent of East Kentucky’s DSM programs?

Response: Taylor County has no plans at this time to increase its DSM offerings independent of EKPC, however DSM continues to be evaluated and programs could be offered in the future.

c. Describe the level of customer interest in the DSM programs noted in Taylor County’s response. Provide the number of customers that are actually participating or have indicated a desire to participate.

Response: At this time Taylor County has 23 ETS units; 68 Air conditioner switches; and 62 Water heater switches.

Witness: John Patterson

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Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

45. Refer to Exhibit P of the application. Explain why the cost of the annual meeting for 2012 increased significantly over 201 1. Provide a summary schedule of annual meeting costs by major categories of expense for the years 2008 through 2012. The schedule should indicate total expenses incurred and the amounts removed for rate-making purposes. Response: There was an election in 2012. It should be noted that the costs for the election occurred during 2012, after the test period. Therefore, there are no costs associated with the election in the test period. Also, the costs reported in Exhibit P of the application did not include employee labor and benefits.

Description

Tent, stage, setups Food Entertainment Supplies Election expense Labor and benefits

Prizes and giveaways

Total

2012

10,616 652 475 445

16,498 18,109

2,947

49,742

10,355 10,173 1,200 880

450 450 35 1 252

1,113 1,072 22,243 20,613

3,032 1,442

38,744 34,882

2009

9,746 842 450

15 1,005

18,856

1,938

32,852

2008

8,937 818 450 31 1

1,060 16,525

2,820

30,921

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Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

46. In Case No. 201 0-0051 1 the Commission approved new rates for Taylor County for service on and after June I, 201 1.

a. Provide the number of billing cycles employed by Taylor County in June 2011 and the start and end dates for each cycle. Response: Taylor County has 1 (one) billing cycle, with usage recorded on a calendar month basis.

b. Explain in detail how Taylor County prorated customer bills when the new rates went into effect for service on and after June 1 I 201 I. Response: Taylor County did not require a prorating since its billing was effective as of June 1".

Witness: John Patterson

3 Case No. 2010-0051 1, An Examination of the Application of the Fuel Adjustment Clause of Taylor County Rural Electric Cooperative Corporation from November 1, 2008 through October 31, 201 0 (Ky. PSC May 31,201 1)

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Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

47. Provide a copy of the purchased power bills for each month of the test year as well as for the last month preceding the start of the test year and the first month following the end of the test year. Response: Copies are attached.

Witness: John Patterson

Page 134: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 142: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 148: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 152: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 155: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 157: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 162: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 166: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 167: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 171: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 172: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 173: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 188: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 191: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 193: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 195: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 196: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 197: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 198: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 200: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 201: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 202: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 203: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

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Page 204: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,
Page 205: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

48. Provide a copy of the monthly bills that were issued to TGP for the period of the test year. Response: Copies are attached.

Witness: John Patterson

Page 206: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION P 0 BOX 100 CAMPBELLSVILLE, KENTUCKY 4271 9 PHONE 2704654101

TENNESEE GAS PIPELINE RM 1826D (SALOMA) 1380 HOBSON ROAD CAMPBELLSVILLE KY 42718

TGP-721855.LO096

November 1-30,2010 SPECIAL INDUSTRIAL POWER AGREEMENT

METER ## 82277314 ACCOUNT NUMBER 3032901 LOCATION - SALOMA

METERED KW 2446.08 METERED KVA 2464.73 METERED KWH 249.557

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

AMOUNT - KWH PRICE TOTAL - DUE 119,004 0.0341 $4,058.04 136.283 0.056463 7.694.95

TotacTransmission Charge

- MW 136.283

- Kw 12000

DUMP ENERGY CREDIT On Peak Off Peak Total Dump Energy Credit

EXCESS ENERGY CHARGE On Peak Off Peak Total Excess Energy Charge

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

$1 1,752.98

3.00 408.85 408.85 PRICE TOTAL

1.75 21,000.00 21 ,ooa.oo

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293.00

11,350.00

3,571 “00

1,452.80

2,992.78

$52,872.41

November, 2010 billing due on or before December 21,2010

Page 207: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION P 0 BOX 1 0 0 CAMPBELLSVILLE, KENTUCKY 4271 9 PHONE 270-465-4101

TENNESEE GAS PIPELINE RM1826D (SALOMA) 1380 HOBSON ROAD CAMPBELLSVILLE KY 427 18

TGP-721855.LOO96

December 1-31.2010 SPECIAL INDUSTRIAL POWER AGREEMENT

METER ## 82277314 ACCOUNT NUMBER 3032901 LOCATION - SALOMA

METERED KW 6706.56 METERED KVA 6730.44 METERED KWH 290,039

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

AMOUNT - KWH PRICE TOTAL - DUE 147,056 0.04571 $6,721.93 135,467 0.055822 7,562.04

- MW 135.467

- Kw 12000

Total-Transmission Charge

DUMP ENERGY CREDIT On Peak Off Peak Total Dump Energy Credit

EXCESS ENERGY CHARGE On Peak Off Peak Total Excess Energy Charge

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

$14,283.97

3.00 406.40 406.40 PRICE TOTAL

1.75 21,000.00 21 ,000.00

0.00 o.00

0.00

1,598.00 0.00

1.598.00

293.00

11,350.00

4,591 .OO

1.605.67

3,307.68

$58,435.72

December, 2010 billing due on or before January 21, 201 1

Page 208: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION P 0 BOX 100 CAMPBELLSVILLE, KENTUCKY 4271 9 PHONE 270-465-4101

TENNESEE GAS PIPELINE RM1826D (SALOMA)

CAMPBELLSVIL.LE KY 4271 8 I 38a HOBSON ROAD

TGP-721855.LOO96

January 1-31, 2010 SPECIAL INDUSTRIAL POWER AGREEMENT

METER # 82277314 ACCOUNT NUMBER 3032901 LOCATION - SALOMA

METERED KW 383.04 METERED KVA 450.26 METERED KWH 247,272

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

AMOUNT - KWH PRICE TOTAL - DUE 11 1,352 0.045262 $5,040.01 142,167 0.044314 6,299.99

$1 1,340.00 - MW - PRICE TOTAL 142.167 3.00 426.50 426.50

Total Transmission Charge

- KW 12000 1.75 21,000.00

DUMP ENERGY CREDIT On Peak Off Peak Total Dump Energy Credit

EXCESS ENERGY CHARGE On Peak Off Peak Tatal Excess Energy Charge

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

0.00 _- 0.00

21 ,OOO.OO

0.00

0.00 0.00

0.00

293.00

11,350.00

4,079.00

1,454.66

2,996.59

$52,939.75

January, 201 1 billing due on or before February 21,201 1

Page 209: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION P 0 BOX 1 0 0 CAMPBELLSVILLE, KENTUCKY 4271 9 PHONE 270-465-4101

TENNESEE GAS PIPELINE RM1826D (SALOMA) 1380 HOBSON ROAD CAMPBELLSVILLE KY 42718

TGP-721855.LOO96

February 1-28, 201 1 SPECIAL INDUSTRIAL POWER AGREEMENT

METER ## 82277314 ACCOUNT NUMBER 3032x1 I LOCATION - SALOMA

METERED KW 443.52 METERED KVA 539.13 METERED KWH 220,281

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

KWH PRICE TOTAL 103,901 0.037141 $3,858.99 121,884 0.038684 4,714.96

-

- PRICE TOTAL 121.884 3.00 365.65 MW -

- Kw 12000 1.75 21,000.00

Total Transmission Charge

DUMP ENERGY CREDIT On Peak Off Peak Total Dump Energy Credit

EXCESS ENERGY CHARGE On Peak Off Peak Total Excess Energy Charge

0.00 - 0.00

0.00 0.00

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

AMOUNT - DUE

$8,573.95

365.65

21,000.00

0.00

0.00

293.00

11,350.00

1,687.00

1,298.09

2,674.06

$47.241.75

February, 201 1 billing due on or before March 21, 201 1

Page 210: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION P 0 BOX 1 0 0 CAMPBELLSVILLE, KENTUCKY 42719 PHONE 270-465-4101

TENNESEE GAS PIPELINE RM1826D (SALOMA) 1380 HOBSON ROAD CAMPBELLSVILLE KY 42718

TGP-721855.LQ096

March 1 - 31,201 1 SPECIAL INDUSTRIAL POWER AGREEMENT

METER # 82277314 ACCOUNT NUMBER 3032901 LOCATION - SALOMA

METERED KW 6931.68 METERED KVA 6940.57 METERED KWH 2,881,569

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

AMOUNT - KWH PRICE TOTAL - DUE

1,500,688 0.039195 $58,819.47 1,485,067 0.036777 54,616.31

- MW _.___ PRICE TOTAL $1 13,435.78

3.00 4,455.20 4,455.20 1,485.067

- KW 12000

Total Transmission Charge

DUMP ENERGY CREDIT On Peak Off Peak Total Dump Energy Credit

EXCESS ENERGY CHARGE On Peak Off Peak Total Excess Energy Charge

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

1.75 21,000.00 21,000.00

(466.00) (344.00)

(810 00)

1 15.00 0.00

1 15.00

293.00

11,350.00

5,143.00

4,649.46

9.577.89

$1 69,209.33

March, 201 1 billing due on or before April 21, 201 1

Page 211: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION P O BOX 100 CAMPBELLSVILLE, KENTUCKY 42719 PHONE 270-465-4101

TENNESEE GAS PIPELINE

1380 HOBSON ROAD CAMPBELLSVILLE KY 42718

RM1826D (SALOMA) TGP-721855.LOO96

April 1 - 30,201 1 SPECIAL INDUSTRIAL POWER AGREEMENT

METER # 82277314 ACCOUNT NUMBER 3032901 LOCATION - SALOMA

METERED KW 6797.28 METERED KVA 6820.04 METERED KWH 644,017

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

KWH PRICE TOTAL 353,776 0.038671 $13,680.87 303,173 0.034324 10,406.11

__. MW - PRICE TOTAL

-

Total Transmission Charge

303.1 73

_I Kw 12000

DUMP ENERGY CREDIT On Peak Off Peak Total Dump Energy Credit

EXCESS ENERGY CHARGE On Peak Off Peak Total Excess Energy Charge

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

3.00 909.52

1.75 21,000.00

0.00 - 0.00

315.00 0.00

AMOUNT - DUE

$24,086.98

909.52

21,000.00

0.00

315.00

293.00

11,350.00

3,746.00

1,851 “02

3.813.09

$67,364.61

April, 201 1 billing due on or before May 21, 201 1

Page 212: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION P 0 BOX 100 CAMPBELLSVILLE, KENTUCKY 4271 9 PHONE 270-465-4101

TENNESEE GAS PIPELINE

1380 HOBSON ROAD CAMPBELLSVILLE KY 42718

May 1 - 31,201 1

METER # 82277314 ACCOUNT NUMBER 3032901

RM1826D (SALOMA) TGP-721855.LOO96

SPECIAL INDUSTRIAL POWER AGREEMENT

LOCATION - SALOMA

METERED KW 393" 12 METERED KVA 474.53 METERED KWH 236,594

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

- KWH PRICE TOTAL 106,318 0.043436 $4,618.03 136,161 0.038293 5,214.01

- MW - PRICE TOTAL 136.161 3.00 408.48

Total Transmission Charge

- KW 12000 1.75 21,000.00

DUMP ENERGY CREDIT On Peak Off Peak Total Dump Energy Credit

EXCESS ENERGY CHARGE On Peak Off Peak Total Excess Energy Charge

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

AMOUNT - DUE

$9,832.04

408.48

21,000.00

0.00 ____ 0.00

0.00

0.00 0.00

0.00

293.00

11,350.00

3,344.00

1,386.83

2,856.86

$50,471.21

May, 201 1 billing due on or befare June 21,201 1

Page 213: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION P 0 BOX 100 CAMPBELLSVILLE, KENTUCKY 4271 9 PHONE 270-465-4101

TENNESEE GAS PIPELINE RM1826D (SALOMA) 1380 HOBSON ROAD CAMPBELLSVILLE UY 42718

TGP-721855.LO096

June 1 - 30,201 1 SPECIAL INDUSTRIAL POWER AGREEMENT

METER # 82277314 ACCOUNT NUMBER LOCATION - SALOMA

METERED KW 5638.08 METERED KVA 5664.93 METERED KWH 267,812

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

KWH PRICE 127,558 0.047986 - 165,820 0.037878

MW - PRICE 165.820 3.00 -

- KW 12000 1.75

Totaliransmission Charge

DUMP ENERGY CREDIT On Peak Off Peak Total Dump Energy Credit

EXCESS ENERGY CHARGE On Peak Off Peak Total Excess Energy Charge

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

3032901

TOTAL $6,121 .OO 6,280.93

TOTAL 497.46

21,000.00

AMOUNT - DUE

$12,401 “93

497.46

21,000.00

0.00 (460.00)

(460 00)

0.00 0.00

0.00

293.00

11.350.00

3,921 “00

1.470.1 0

3,028.41

$53,501.90

June, 201 1 billing due on or before July 21, 201 1

Page 214: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION P 0 BOX 1 0 0 CAMPBELLSVILLE, KENTUCKY 4271 9 PHONE 270-465-4101

TENNESEE GAS PIPELINE RM1826D (SALOMA) 1380 HOBSON ROAD CAMPBELLSVILLE KY 42718

TGP-721855.LO096

July 1 - 31,201 1 SPECIAL INDUSTRIAL POWER AGREEMENT

METER # 82277314 ACCOUNT NUMBER LOCATION - SALOMA

METERED KW 487.2 METERED KVA 592.18 METERED KWH 270,954

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

KWH PRICE 121,567 0.058881 156,163 0.038287

-

- MW - PRICE 156.163 3.00

- KW 12000 1.75

Total Transmission Charge

DUMP ENERGY CREDIT On Peak Off Peak Total Dump Energy Credit

EXCESS ENERGY CHARGE On Peak Off Peak Total Excess Energy Charge

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

3032901

TOTAL $7,157.99 5 ~ 979 .0 1

TOTAL 468.49

21,000.00

0.00 o.00

AMOUNT - DUE

$13,137.00

468.49

21,000.00

0.00

0.00 0.00

0.00

293.00

11,350.00

3,840.00

1,502.65

3,095.47

$54,686.61

July, 201 1 billing due on or before August 21, 201 1

Page 215: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

‘TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION P 0 BOX 100 CAMPBELLSVILLE, KENTUCKY 4271 9 PHONE 270-465-41 01

TENNESEE GAS PIPELINE RM1826D (SALOMA) 1380 HOBSON ROAD CAMPBELLSVILLE KY 42718

TGP-721855.L0096

August 1 - 31, 201 1 SPECIAL INDUSTRIAL POWER AGREEMENT

METER # 82277314 ACCOUNT NUMBER LOCATION - SALOMA

METERED KW 477.12 METERED KVA 575.63 METERED KWH 271,629

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

- KWH PRICE 137,123 0.045419 141,305 0.035724

- MW - PRICE 141 “305 3.00

KW - 12000 1.75

TotarTransmission Charge

DUMP ENERGY CREDIT On Peak Off Peak Total Dump Energy Credit

EXCESS ENERGY CHARGE On Peak Off Peak Total Excess Energy Charge

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

3032901

TOTAL $6,227.99

5,047.98

TOTAL 423.92

21,000.00

AMOUNT - DUE

$1 1,275.97

423.92

21,000.00

0.00 o.00

0.00

0.00 0.00

0.00

293.00

11,350.00

3,481 .OO

1,434.72

2,955.52

$52,214.13

August, 201 1 billing due on or before September 21, 201 1

Page 216: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION P 0 BOX 1 0 0 CAMPBELLSVILLE, KENTUCKY 4271 9 PHONE 270465-4101

TENNESEE GAS PIPELINE RM1826D (SALOMA) 1380 HOBSON ROAD CAMPBELLSVILLE KY 42718

TGP-721855.LO096

September 1-30, 201 1 SPECIAL INDUSTRIAL POWER AGREEMENT

METER # 82277314 ACCOUNT NUMBER LOCATION - SALOMA

METERED KW 473.76 METERED KVA 585.1 1 METERED KWH 233,590

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

KWH PRICE 108,092 0.04541 9 131,342 0.035724

MW - PRICE 131.342 3.00

-

-

- Kw 12000 1.75

Total Transmission Charge

DUMP ENERGY CREDlT On Peak Off Peak Total Dump Energy Credit

EXCESS ENERGY CHARGE On Peak Off Peak Total Excess Energy Charge

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

SeDternher. 201 1 billina due on or before October 21. 201 1

3032901

TOTAL $4,909.43 4,692.06

TOTAL 394.03

21 .000.00

0.00 o.00

AMOUNT - DUE

$9,601 "49

394.03

21,000.00

0.00

0.00 0.00

0.00

293.00

11,350.00

2,903.00

1,366.25

2,814.47

$49,722.24

I - "

Page 217: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

TAYLOR COlJNTY RURAL ELECTRIC COOPERATIVE CORPORATION P 0 BOX 1 0 0 CAMPBELLSVILLE, KENTUCKY 4271 9 PHONE 270-465-4101

TENNESEE GAS PIPELINE RM1826D (SALOMA) 1380 HOBSON ROAD CAMPBELLSVILLE KY 42718

TGP-721855.LO096

October I-31,201 1 SPECIAL INDUSTRIAL POWER AGREEMENT

METER # 82277314 ACCOUNT NUMBER LOCATION - SALOMA

METERED KW 430.08 METERED KVA 539.62 METERED KWH 187,477

ENERGY CHARGE On Peak Off Peak Total Energy Charge

OFF PEAK ENERGY ADDER

TRANSMISSION CHARGE Billing Demand

KWH PRICE 79,465 0.03584

112,696 0.036425

-

- MW - PRICE 1 12.696 3.00

KW - 12000 1.75

TotalTransmission Charge

DUMP ENERGY CREDIT On Peak Off Peak Total Dump Energy Credit

EXCESSENERGYCHARGE On Peak Off Peak Total Excess Energy Charge

FACILITIES CHARGE

CUSTOMER CHARGE

ENVIRONMENTAL SURCHARGE

SCHOOL TAX

SALES TAX

TOTAL AMOUNT DUE

3032901

TOTAL $2,848.03 4,104.95

TOTAL 338.09

21,000.00

AMOUNT - DUE

$6,952.98

338.09

21,000.00

0.00 - 0.00

0.00

0.00 0.00

0.00

293.00

11,350.00

3,056.00

1,289.70

2,656.79

$46,936.56

October, 201 1 billing due on or before November 21, 201 1

Page 218: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,
Page 219: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Cooperative Case No. 20 12-00023

Commission Staffs Second Request for Information

49. Refer to Exhibit 21 of the application, which contains Taylor County’s depreciation study

a. Refer to the section titled Scope, second paragraph on page 1. (1) Mr. Adkins states that the study used the technique of creating Simulated

Plant Records (“SPR”) on the vintage basis. Using SPRs, Mr. Adkins assigned Iowa Type Survivor Curves to determine the average service life for each distribution asset account group. He also created SPRs in the depreciation studies he recently prepared for South Kentucky in Case No. 201 1-000964 and Blue Grass Energy Cooperative Corporation (“Blue Grass”) in Case No. 2008-00015 and for Clark Energy Cooperative, Inc. (“Clark Energy”) in Case No. 2009-00314.6 The average service lives assigned to each distribution asset account group of South Kentucky, Blue Grass, and Clark Energy are shown in Table 1.

Also listed in Table 1 are the estimated average service lives assigned to the electric distribution assets of investor owned utilities (“IOU’s”) Kentucky Utilities Company, Louisville Gas and Electric Company, and Duke Energy Kentucky, Inc. in depreciation studies submitted to the Commission in Case Nos. 2007-00565,7, 2007- 00564,8 and 2006-00172,g respectively. Each study was prepared by John Spanos of Gannet Flemming. In these studies, Mr. Spanos used the retirement rate method to assign survivor curves to each plant account group. The retirement rate method includes a combination of actual plant retirement data and statistically aged plant data.”

For comparative purposes, the lives assigned by the four rural electric cooperative corporations (“RECC’s”) to each asset account group were averaged and shown in Table 7, along with the averaged lives assigned by the three IOU’s. The averaged lives assigned to RECC distribution assets are significantly shorter than those assigned by IOU’s. Discuss the reasons that Mr. Adkins’ application of the SPR method results in such a significantly shorter life for the majority of distribution plant account groups when compared to Mr. Spanos’ life assignments using the Retirement Rate Method. Response: The use of the SPR method opposed to the Retirement Rate Method, in and of itself, should not result in significant differences. However, the fact that RECC’s lives of assets is shorter is a result of the service territories, consumer makeup, and demographics. The RECC’s operate in rural areas where any growth causes lines to be upgraded and poles to be sturdier and longer. Growth in rural areas tends to be more in pockets that an overall system wide growth. Rural consumers’ have been using more electricity as more electrical appliances and uses has increased significantly over the past several years. The rural territory served by RECC’s results in more outages and right-of-way issues that lead to more replacement of poles and co nd u cto r I

(2) Explain how the absence of actual plant retirement data by vintage may result in the assignment of shorter lives by the RECC’s than the lives assigned by the IOU’s who have this retirement data. Response: Around 2005, the RECC’s considered implementing vintage accounting for plant assets. One reason this was not implemented was the enormous cost for programming. Another reason was that vintage accounting records do not really reflect the retirement of plant, for instance, when meters and

Page 220: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information transformers are retired, even though there are specific numbers on them, the actual date of installation for each unit can not be accurately identified. The same is true for construction of poles, conductor, lights, and other distribution plant items. The result is that retirements would be accounted for using the first-in, first-out approach. This is not true vintage accounting as the actual date of installation is not used as the cost for the retirement. It is my assumption that this is the case with the IOU’s.

(3) Explain how the judgment required when developing the Iowa Type Survivor Curve analysis impacts the lives assigned to each asset group, and how the physical make-up of the RECC’s distribution plant is different than that of the IOU’s resulting in shorter average service lives. Response: Part of the judgment in developing the Iowa Curve is in smoothing out major changes in plant record accounting, Le., changing from construction unit CPR’s to record unit CPR’s. This had the effect of changing some costs from one account to another. As described in (2) above, there are physical differences in plant.

(4) Identify and describe the factors that cause equipment of RECC’s, to have a shorter economic life than similar equipment of IOU’s. Response: The RECC’s follow strict guidelines established by RUS to construct and maintain physical plant. RUS performs an annual Operations and Maintenance survey where the Field Representative rides around the service territory and inspects the lines. RUS constantly monitors lines around the country and makes recommendations for upgrading physical plant. Among these recommendations are removing idle services and replacing copper conductor.

Table1

b. Refer to the section titled Scope, third paragraph on page 2.

(1) Describe how the SPR method is used to analyze data to fit the data to the “best curve.” Response:

(2) Is the SPR method used in Exhibit 21 recognized by the Society of Depreciation Professionals as an acceptable method?

c. Refer to the section titled Scope, the second full paragraph on page 2. It states that, “[tlhe most likely retirement patterns and average service lives were developed based on the SPR analysis.” State specifically how the retirement patterns and average service lives were developed using the SPR analysis. Include in the response, discussion of the degree of professional judgment required when developing the retirement patterns and average service lives.

d. Refer to the section titled Scope, the second full paragraph on page 2. It states that the SPR analysis was “analyzed for appropriateness and a curve and service life were selected for each account.”

Page 221: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

( I ) State specifically the type of analysis performed. Include in the response, discussion of the degree of professional judgment required in this analysis.

(2) State what is meant by appropriateness. Include in the response, discussion of the degree of professional judgment required when determining the appropriateness.

(3) State specifically how a curve and service life was selected for each asset account group. Include in the response, discussion of the degree of professional judgment required when making these selections.

e. Refer to the section titled Scope, the third full paragraph on page 2. Taylor County states that net salvage was allocated to the primary account on a percentage basis. Provide the calculation of the allocations and explain why the allocations are appropriate. Response: Refer to the schedules listed as “Adjust Rates with Net Salvage” and “Calculation of Net Salvage Percent”. These calculations and allocations are similar to other electric cooperatives and are consistent with other depreciation studies performed.

f. Refer to the section titled Scope, the first line of the last paragraph on page 2. This line reads, “When utilizing the whole life method . . .” Is this accurate or is this sentence actually referring to the remaining life method?

g. The third full paragraph on the second page of the “SCOPE” section of the depreciation study indicates that the percentages for net salvage were based on a review of Taylor County’s salvage and cost of removal accounts for a five- year period. Explain why a five-year period was chosen as opposed to a shorter or longer period.

h. The fourth full paragraph on the second page of the “SCOPE” section of the depreciation study discusses the development of a calculated depreciation reserve for each plant account. Clarify whether the steps described in the last sentence of the paragraph produce a reserve for each plant account as a portion of (1) the total actual per books depreciation reserve as of the date of the study or (2) a “theoretical” reserve based on the SPR method and resulting simulated retirements. Response: The reserve would be an allocation for the actual per books depreciation reserve.

i. Refer to the chart that compares the current, proposed and RUS low and high depreciation rates at the bottom of the third page of the ”SCOPE” section of the depreciation study. Aside from the AMI meters, which have been discussed, there are four accounts, 362 - station equipment, 367 - underground conductors and devices, 371 - installations on consumer premises, and 373 - street lights, for which the proposed rate is significantly above the high end of the RUS range of depreciation rates. For each of these four accounts, provide a general description of the factors that have resulted in the level of the proposed depreciation rates.

Page 222: I cases/2012-00023... · 04/10/2012  · Requests are Barry Myers, John F. Patterson, and Jim Adkins. 2. Barry Myers, General Manager of Taylor County Rural Electric Cooperative Corporation,

Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

4 Case No. 201 1-00096, The Application of South Kentucky Rural Electric Cooperative for an Adjustment in its Electric Rates (Ky. PSC May 11, 2012). See Application, Exhibit 20, Service Life and Net Salvage Study, Scope, Pages 1 and 2, Paragraphs 3,4 and 5.

5 Case No. 2008-00011, The Application of Blue Grass Energy Cooperative Corporation for an Adjustment in its Electric Rates. (Ky. PSC Aug. 28, 2008)See Application, Exhibit 3, Service Life and Net Salvage Study, Scope, First Page, Paragraphs 2 and 3.

6 Case No. 2009-00314, Application of Clark Energy Cooperative, Inc. for an Adjustment of Rates (Ky. PSC Apr. 16, 2010). See Application, Exhibit 3, Service Life and Salvage Study and Recommended Depreciation Accrual Rates, Scope, First Page, Paragraphs 2 and 3.

7 Case No. 2007-00565, Application of Kentucky Utilities Company to File a Depreciation Study. (Ky. PSC Feb. 5, 2009).

8 Case No. 2007-00564, Application of Louisville Gas and Electric Company to file Depreciation Study (Ky. PSC Feb. 5, 2009).

9 Case No. 2006-00172, An Adjustment of the Electric Rates of the Union Light, Heat and Power Company D/B/A Duke Energy Kentucky, Inc. (Ky. PSC Dec. 21, 2006).

10 Case No. 2007-00565, Application, Part 1, Direct Testimony of John Spanos, Depreciation Study, Part II , Page 11-10; Case No. 2007-00564, Application, Part 1, Direct Testimony of John Spanos, Depreciation Study, Part 11, Page 11-10; and Application of Duke Energy, Volume 8, Depreciation Study filed to satis@ 807 KAR 51001, Section 10(9)(s), Part I I , Page 11-10.

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Taylor County Rural Electric Cooperative Case No. 2012-00023

Commission Staffs Second Request for Information

50. Provide a detailed explanation why there are such strong similarities between the Taylor County and South Kentucky depreciation studies. Response: Most rural cooperatives were started approximately the same years, use materials and guidelines established by RUS, and have the same ruralhrban group of consumers. By this very nature, most cooperatives should have very similar characteristics. In addition, South Kentucky and Taylor County service territories border each other in four (4) counties. This would result in similar service territory and demographics.

Witness: Jim Adkins

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ITEM 51

TAYLOR COUNTY RURAL ELECTRIC COOPERATIVE CORPORATION CASE NO. 2012-0023

COMMISSION STAFF’S SECOND REQUEST FOR INFORMATION

Witness: John F. Patterson

51. Refer to the Exhibit 20, Scope, third page, second paragraph. Mr. Adkins states, “[starting in 2010 and through 2012, Taylor County is changing its existing meters with new Advanced Metering Infrastructure (“AMI”).”

a. Explain when the meter replacement was completed from the older mechanical existing to the new AMI meters.

Response: Taylor County completed the conversion to AMR in April 2009, AMR meters were read April 30, 2009 and bills mailed around May 7, 2009

b. Provide any documents to show the current status of Taylor County metering systems.

Response: Taylor County has all AMR meters except for the accounts on the B and C rates and Tennessee Gas special contract, East Kentucky Power meters are being used on these accounts.