OGE Energy : PUD 2021-00164 - Direct Testimony of Zachary Quintero

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

Zachary Quintero

on behalf of

Oklahoma Gas and Electric Company

December 30, 2021

Direct Testimony of Zachary Quintero	Page 1 of 17
Cause No. PUD 202100164

Zachary Quintero

Direct Testimony

1. Q. Please state your name and business address.
2. A. My name is Zachary Quintero. My business address is 321 North Harvey, Oklahoma City,

3	Oklahoma 73102.
4

1. Q. By whom are you employed and in what capacity?
2. A. I am employed by Oklahoma Gas and Electric Company ("OG&E" or "Company") as a

7	Lead Regulatory Coordinator.
8

1. Q. Please summarize your educational background and professional qualifications.
2. A. I hold a Bachelor's degree in Economics from the University of Science and Arts of

11	Oklahoma and a Master's degree in Energy Management from Oklahoma City University.
12	I joined OG&E in my current position in July 2021. Prior to joining OG&E, I was employed
13	as Senior Analyst, Rates and Regulatory Affairs for Liberty, a subsidiary of Algonquin
14	Power and Utilities Corporation. During my time with Liberty, I supported the company's
15	customer initiatives through the development of state and federal regulatory filings for
16	Liberty's Central Region utilities, including The Empire District Electric Company. Prior
17	to joining Liberty, I was employed as a Senior Public Utility Regulatory Analyst by the
18	Oklahoma Corporation Commission ("OCC" or "Commission"). In that position, I
19	performed analysis of regulatory issues in electric, gas, and water utility cases in order to
20	make fair and reasonable recommendations. To date, I have participated in at least 45
21	different docketed regulatory proceedings in three regulatory jurisdictions. I have also
22	attended utility ratemaking trainings provided by New Mexico State University and
23	Electric Utility Consultants, Inc.
24

1. Q. Have you testified previously before this Commission?
2. A. Yes, I have previously testified before the OCC on behalf of the Public Utility Division

27	("PUD"). I have also testified before the Arkansas Public Service Commission ("APSC")
28	and the Missouri Public Service Commission.

Direct Testimony of Zachary Quintero	Page 2 of 17
Cause No. PUD 202100164

1 Q. What is the purpose of your testimony?

2	A.	The purpose of my testimony is to discuss OG&E's proposed Performance Based
3		Ratemaking ("PBR") Plan.
4
5		I. ALTERNATIVE RATEMAKING REQUEST

1. Q. What is the Company's alternative ratemaking request in this Cause?
2. A. OG&E is requesting the approval of an annual rate review mechanism, known as the PBR,

8	with a five-year initial term. The Company is also requesting approval of modifications to
9	existing riders to become effective at the conclusion of this base rate case, including the
10	Grid Enhancement Mechanism ("GEM"), Southwest Power Pool Cost Tracker ("SPPCT"),
11	the Production Tax Credit ("PTC"), and Federal Tax Change ("FTC-ARL"). As explained
12	further in this testimony, these modified riders, in addition to the currently approved
13	Energy Efficiency Program Rider ("EEP"), will close upon the issuance of a final order in
14	the Company's first annual PBR review. The modifications to these riders are discussed by
15	other Company witnesses as shown below in Figure 1:
16		Figure 1
		Witness		Topic
		Kandace Smith		GEM
				SPPCT
		Donald Rowlett		PTC-ITC
				FTC-ARL

17 Q. Will the modified GEM, SPPCT, PTC, and FTC-ARL riders run concurrently with

18		the PBR?
19	A.	No. The Company is requesting the PBR, as proposed in Direct Testimony, essentially
20		replace the true-up of costs associated with these modified riders upon issuance of a final
21		order in the Company's first annual PBR review. In the event the PBR alternative is not
22		approved, the riders will continue.

Direct Testimony of Zachary Quintero	Page 3 of 17
Cause No. PUD 202100164

1 Q. Before providing additional details of the PBR, can you summarize the nature of

2	OG&E's proposed alternative ratemaking requests?

3 A. Yes. Figure 2 visually summarizes the nature of OG&E's request.

4

Figure 2

OG&E's Proposal

GEM Rider

FTC-ARL Rider

Performance Based

SPPCT Rider

Ratemaking ("PBR") Plan

PTC-ITC Rider

EEP Rider

1. Q. Please briefly describe the PBR.
2. A. The PBR is a tariff that creates a streamlined, annual process through which the Company's

7	financials are reviewed and rates are subsequently adjusted, if necessary. Under the PBR,
8	the Company will file an application on or about July 31 of each year to review the
9	Company's financial performance using a test period of the twelve months ending March
10	31. The Company's earned return during that period will be compared to the target rate of
11	return, as approved by the Commission in this Cause. If the earned return is more than 50
12	basis points below the target rate of return, rates will be prospectively adjusted to increase
13	the Company's return to the target rate. If the earned return is more than 50 basis points
14	above the target rate of return, the Company returns 75% of the over-earnings to its
15	customers. The details of the PBR are included in the tariff attached as Direct Exhibit ZQ-
16	1.
17

1. Q. What are some of the benefits of utilizing the PBR Plan?
2. A. The OCC's PUD has recognized numerous benefits1 that the PBR Plan offers for utilities

20	and customers, including:
21	• Balanced utility and ratepayer interests;

1 These benefits have been discussed in the testimony of PUD witnesses in dockets where the PBR was at issue, including, but not limited to, PUD 201900019 (Responsive Testimony of Isaac D. Stroup), PUD 201800097 (Responsive Testimony of Zachary Quintero), PUD 201900018 (Responsive Testimony of Elbert D. Thomas), and PUD 200800348 (Direct Testimony of Brandy Wreath).

Direct Testimony of Zachary Quintero	Page 4 of 17
Cause No. PUD 202100164

1	• Gradualism in rate adjustments;
2	• Decrease in regulatory costs;
3	• Reduction in regulatory lag;
4	• Closer supervision and more frequent review of utility performance; and
5	• Lesser need for cost recovery outside base rates.
6

1. Q. Why is the Company proposing the PBR?
2. A. The proposed PBR will provide the aforementioned benefits to its customers, stakeholders,
3. and the OCC. In addition, the PBR achieves several additional beneficial objectives,

10	including facilitating investment in Oklahoma's critical infrastructure, cooperation
11	between the Company and its stakeholders, and a regulatory framework through which
12	operational savings and potential over-earnings can be returned to customers.
13

1. Q. Why is the proposed PBR preferable to traditional ratemaking?
2. A. In addition to the aforementioned benefits, the PBR provides a streamlined regulatory

16	process through which the Company's rates can be reviewed and adjusted more frequently
17	to ensure rates more closely match the Company's cost to serve. OG&E's proposed PBR
18	will reduce the need for additional cost recovery mechanisms outside of base rates,
19	including the riders proposed in this case.
20

21 Q. Is OG&E proposing to close any riders in the event a PBR is approved as proposed

22	in Direct Testimony?

1. A. Yes, OG&E is proposing to close the following riders: GEM, SPPCT, EEP, PTC-ITC, and
2. FTC-ARL.Under the traditional ratemaking process currently governing the OG&E's

25	rates, these riders are necessary to ensure the financial integrity of the Company while
26	keeping rates affordable for customers. However, the PBR provides a streamlined, annual
27	review process through which the costs and revenues associated with these riders can be
28	reviewed and adjusted.

Direct Testimony of Zachary Quintero	Page 5 of 17
Cause No. PUD 202100164