BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA
IN THE MATTER OF THE APPLICATION OF | ) |
OKLAHOMA GAS AND ELECTRIC COMPANY | ) |
FOR AN ORDER OF THE COMMISSION | ) CAUSE NO. PUD 202100164 |
AUTHORIZING APPLICANT TO MODIFY ITS | ) |
RATES, CHARGES, AND TARIFFS FOR RETAIL | ) |
ELECTRIC SERVICE IN OKLAHOMA | ) |
Direct Testimony
of
Jason J. Thenmadathil
on behalf of
Oklahoma Gas and Electric Company
December 30, 2021
Direct Testimony of Jason J. Thenmadathil | Page 1 of 18 |
Cause No. PUD 202100164 |
Jason Thenmadathil
Direct Testimony
- Q. Please state your name and business address.
- A. My name is Jason Thenmadathil. My business address is 321 North Harvey, Oklahoma
3 | City, Oklahoma 73102. |
4 |
- Q. By whom are you employed and in what capacity?
- A. I am employed by Oklahoma Gas and Electric Company ("OG&E" or "Company") as the
7 | Manager of Regulatory Accounting. |
8 |
- Q. Please summarize your educational background and professional qualifications.
- A. I received a Bachelor of Science degree in Accounting from the University of Central
- Oklahoma. In 2005, I was employed by the Public Utility Division ("PUD") of the
- Oklahoma Corporation Commission ("Commission") as a Public Utility Regulatory
13 | Analyst, and later was promoted to Coordinator. As a PUD analyst, I testified in various |
14 | utility cases filed by electric and gas companies, including rate cases and fuel prudence |
15 | reviews. In March 2010, I joined OG&E as a Senior Regulatory Accountant. In October |
16 | 2017, I assumed additional responsibilities as the Supervisor of Regulatory Accounting |
17 | where I oversee the work of members of the Regulatory Accounting group, whose |
18 | responsibilities are to prepare the minimum filing requirements ("MFR") for rate cases and |
19 | determine revenue requirements for various rate filings. In May 2018, I was promoted to |
20 | Manager of Regulatory Accounting. |
21 |
- Q. Have you testified previously before this Commission?
- A. Yes. As a witness for OG&E, I previously submitted testimony in Cause Nos. PUD
24 | 201500266, | 201500273, | 201600319, | 201700261, | 201700496, | 201800084, | and |
25 | 201800140. | ||||||
26 |
- Q. What is the purpose of your testimony?
- A. The purpose of my testimony is to sponsor the pro forma adjustments to certain test year
29 | expenses in this Cause and explain why these adjustments are appropriate. | The Company |
Direct Testimony of Jason J. Thenmadathil | Page 2 of 18 | |
Cause No. PUD 202100164 |
1 | utilized a historical test year ending September 2021 with pro forma adjustments through |
2 | March 2022. I also support the Company's request to establish a regulatory asset for the |
3 | deferral of operation and maintenance (O&M) expenses associated with the deployment |
4 | and implementation of the SAP S/4 HANA Project. |
5 |
6 Q. Do other witnesses from your team sponsor accounting pro forma adjustments in
7 | this case? | |
8 | A. | Yes, OG&E witness James Fenno sponsors adjustments to the rate base, while OG&E |
9 | witness Shelby Norton sponsors various expense related pro forma adjustments. | |
10 | ||
11 | PRO FORMA ADJUSTMENTS |
- Q. What is the importance of the pro forma adjustments in this proceeding?
- A. The Company's proposed pro forma adjustments are critical to establish fair, just, and
14 | reasonable rates. The pro forma adjusted level of O&M expense is necessary to allow the |
15 | Company to cover operating costs on a going forward basis. |
16 |
- Q. Why are pro forma adjustments to a test year necessary?
- A. The Company makes adjustments to the test year books to design rates which reflect
19 | revenue, expense, and investment levels the utility expects to experience prospectively. | ||
20 | The Company utilizes a historic test year with pro forma adjustments reflecting | ||
21 | reasonably known and measurable changes. Some of these adjustments include: removal | ||
22 | of costs that are recovered elsewhere, costs that did not occur but are or will be normal | ||
23 | expenses going forward and cost adjustments that are determined by the Company or past | ||
24 | Commission orders to not be the customer's responsibility. | ||
25 | |||
26 | Q. | What are the general categories of pro forma adjustments proposed by the | |
27 | Company? | ||
28 | A. | Pro forma adjustments fall into one of the following categories: | |
29 | 1) | Normalization Adjustments are made to rate base and expenses to offset unusual | |
30 | levels of operations recorded during the test year. An example of such an adjustment |
Direct Testimony of Jason J. Thenmadathil | Page 3 of 18 |
Cause No. PUD 202100164 |
1 | would be the use of a four-year average for short-term incentives to address the variable | |
2 | nature of the expense. | |
3 | 2) | Annualization adjustments recognize that some action occurred during the test |
4 | year that will be ongoing and must be captured on a prospective basis. An example of | |
5 | such an adjustment would be the adjustment to payroll to account for salary increases and | |
6 | employee levels by the end of the pro forma period. This annualization is necessary to | |
7 | adjust payroll costs to a level reflecting the pro forma salary for the entire year. | |
8 | 3) | Out of Period Adjustments consider known and measurable changes that occur |
9 | outside the end of the test year. An example of such an adjustment would be to decrease | |
10 | pension expenses based on actuarial projections for 2021. | |
11 | 4) | Certain adjustments remove costs that are unnecessary to provide electric service |
12 | to customers. An example of such an adjustment would be to remove costs related to | |
13 | donations and contributions. | |
14 | 5) | Adjustments to remove costs recovered elsewhere adjust the test year to reflect |
15 | any cost recovery that occurs outside of base rates. An example of such an adjustment | |
16 | would be to remove fuel and purchased power related costs that are recovered through the | |
17 | Fuel | Adjustment Clause ("FAC") rider. This decrease is necessary to ensure that |
18 | customers are not double charged for fuel costs recovered through a separate recovery | |
19 | mechanism. | |
20 | ||
21 | INCOME STATEMENT |
22 Q. What section of the Minimum Filing Requirements contains the adjustments made
23 | to the Income Statement? |
- A. Section H contains schedules and the supporting workpapers which present the elements
- of the income statement for the test year and associated adjustments. The income
26 | statement calculates operating income by subtracting pro forma expense from pro forma |
27 | revenue to arrive at pro forma operating income. This level of operating income is |
28 | compared to the Company's requested level of operating income (the return requirement |
29 | on the Company's pro forma rate base) to arrive at a revenue excess or deficiency for the |
30 | utility. |
Direct Testimony of Jason J. Thenmadathil | Page 4 of 18 |
Cause No. PUD 202100164 |
1 | Pro Forma Adjustments to the Income Statement |
- Q. What Pro Forma adjustments will you discuss?
- A. Chart 1 shows each of the expense pro forma adjustments and gives a description of each
- one.
Chart 1 - Pro Forma Adjustments to Operating Expense
Pro Forma Adjustment | Operating Expense Description |
WP H 2-17 | Ad Valorem Taxes |
WP H 2-18 | Pension and Other Post Retirement Benefits |
WP H 2-19 | Removal of SAP/S4 related expenses |
WP H 2-21 | Depreciation Expense |
WP H 2-24 | Energy Efficiency Program (EEP) Expense Removal |
WP H 2-28 | Southwest Power Pool Expense |
WP H 2-29 | Amortization of Pension Regulatory Asset/Liability |
WP H 2-30 | SPP Transmission Expense recovered from Load Serving Entities |
(LSE) | |
WP H 2-35 | Intracompany SPP Fees Removal |
WP H 2-38 | Other Amortization |
WP H 2-39 | Rate Case Expenses |
WP H 2-44 | Acquisition Adjustment Amortization |
- Q. Please explain WP H 2-17,pro forma adjustment to Ad Valorem Taxes.
- A. This adjustment increases property taxes by $7,434,609. To arrive at this adjustment, the
7 | Company first calculated a ratio of actual Ad Valorem taxes assessed in 2021 to actual |
8 | plant and property values at the end of calendar year 2020. This ratio was then multiplied |
9 | by the pro forma level of plant and property included in the rate base to arrive at a pro |
10 | forma level of ad valorem tax expense. |
Direct Testimony of Jason J. Thenmadathil | Page 5 of 18 |
Cause No. PUD 202100164 |
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
OGE Energy Corporation published this content on 03 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 January 2022 17:08:11 UTC.