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PA Bulletin, Doc. No. 03-348

PROPOSED RULEMAKING

PENNSYLVANIA PUBLIC UTILITY COMMISSION

[52 PA. CODE CH. 53]

[L-00940096]

Filing Requirements Relating to Water and Wastewater Public Utilities

[33 Pa.B. 1106]

   The Pennsylvania Public Utility Commission (Commission) on October 25, 2001, adopted a proposed rulemaking order to amend the regulations governing filing requirements for water and wastewater public utilities for general rate increase requests in excess of $1 million. The contact persons are Judith Koch Carlson, Bureau of Fixed Utility Services (technical) (717) 783-5392 and Wayne T. Scott, Law Bureau (legal) (717) 783-6150.

Executive Summary

   Section 53.53 (relating to information to be furnished with proposed general rate increase filings in excess of $1 million) requires a utility that is requesting a general rate increase in excess of $1 million to provide extensive information through the use of data requests in relation to the company's income, revenues, expenses, taxes, rate base, depreciation and rate of return. On October 24, 1994, the Commission issued an advance notice of proposed rulemaking to solicit comments from water and wastewater utility companies that will be the primary active participants in future rate cases of this nature for the purpose of providing input as to how these filing requirements may be modified to lessen the amount of information needed.

   The proposed rulemaking significantly streamlines filing requirements. The proposed rulemaking also lessens the regulatory burden on all jurisdictional water and wastewater public utilities that request a rate increase in excess of $1 million.

Regulatory Review

   Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on February 19, 2003, the Commission submitted a copy of this proposed rulemaking to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the House and Senate Committees. In addition to submitting the proposed rulemaking, the Commission provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Commission. A copy of this material is available to the public upon request.

   Under section 5(g) of the Regulatory Review Act, if IRRC has objections to any portion of the proposed rulemaking, it will notify the Department within 30 of the close of the public comment period. The notification shall specify the regulatory review criteria that have not been met by the portion of the proposed rulemaking to which an objection is made. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the amendments, by the Department, the General Assembly and the Governor of objections raised.

Public Meeting held
October 25, 2001

Commissioners Present:  Glen R. Thomas, Chairperson; Robert K. Bloom, Vice Chairperson; Aaron Wilson, Jr.; and Terrance J. Fitzpatrick

Proposed Rulemaking Reupdating and Revising Existing Filing Requirements Relating to Water and Wastewater Public Utilities; Doc. No. L-00940096

Proposed Rulemaking Order

By the Commission:

   On August 9, 1994, an order was entered at Docket No. L-00930088, entitled Policy Statement Resettlement Guidelines and Procedures for Major Rate Cases. In this order, the Commission adopted a final policy statement regarding the encouragement of negotiated settlements in major rate cases. The guidelines and procedures outlined in the policy statement are applicable to general rate increases in excess of $1 million. The policy statement can be found in §§ 69.401--69.406 (relating to settlement guidelines and procedures for major rate cases--statement of policy).

   The August 9, 1994, order required a revision of the existing filing requirement regulations in § 53.53. The Commission expressed its dissatisfaction with the filing requirements in their present form and ordered a general update to be commenced. The instant proposed rulemaking is a direct result of that Commission mandate.

   Section 69.402(c)(1) (relating to the prefiling notice guidelines) necessitates that a utility that is requesting a general rate increase in excess of $1 million provide responses to a standard set of industry specific data requests. The data requests in question were approved in an order on April 20, 1995, also at Docket No. L-00930088. Also, as part of the August 9, 1994, order, the Commission, on page 8, expressed the sentiment that the updated filing requirements would also incorporate the standard data requests, to the extent appropriate.

   On October 24, 1994, the Commission issued an advanced notice of proposed rulemaking at the instant docket, published at 24 Pa.B. 5425 (October 29 1994), seeking comments from the public on this matter. Comments were received from the Office of Consumer Advocate, Office of Trial Staff and the National Association of Water Companies. Numerous technical conferences were held as well as a number of meetings among active participants. As mentioned previously, the Commission expressed the desire to have the standard data requests integrated into the revised filing requirements. A considerable amount of time was devoted to achieving this end, and the instant rulemaking order proposes extensive amendments to § 53.53. The filing requirements proposed in this proposed rulemaking are the result of a consensus reached among representatives of the parties who will be the primary active participants in future water/wastewater utility general rate cases in excess of $1 million.

   Accordingly, under sections 501and 1501 of the Public Utility Code, 66 Pa.C.S. §§ 501 and 1501; the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. § 1201 et seq.) and regulations promulgated thereunder at 1 Pa. Code §§ 7.1, 7.2 and 7.5; and section 745.5 of the Regulatory Review Act (71 P. S. § 745.5), we propose to amend our regulations as set forth in Annex A; therefore,

It Is Ordered that:

   1.  A proposed rulemaking is hereby instituted to amend the regulations governing the filing requirements for water and wastewater public utilities for general rate increase request in excess of $1 million, as set forth in Annex A.

   2.  The Secretary shall submit this order and Annex A to the Office of Attorney General for review as to form and legality.

   3.  The Secretary shall submit a copy of this order and Annex A to the Governor's Budget Office for review of fiscal impact.

   4.  The Secretary shall submit a copy of this order and Annex A for review and comment by the designated standing committees of both houses of the General Assembly and for review and comments by IRRC.

   5.  The Secretary shall certify this order and Annex A and deposit them with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.

   6.  Within 30 days of this order's publication in the Pennsylvania Bulletin an original and 15 copies of any comments concerning this order shall be submitted to the Commission, Attention: Secretary, P. O. Box 3265, Harrisburg, PA 17105-3265.

   7.   Alternate formats of this document are available to persons with disabilities and may be obtained by contacting Sherri DelBiondo, Regulatory Coordinator (717) 772-4597.

JAMES J. MCNULTY,   
Secretary

   Fiscal Note:  57-223. No fiscal impact; (8) recommends adoption.

Annex A

TITLE 52.  PUBLIC UTILITIES

PART I.  PENNSYLVANIA PUBLIC UTILITY COMMISSION

Subpart C.  FIXED SERVICE UTILITIES

CHAPTER 53.  TARIFFS FOR NONCOMMON CARRIERS

INFORMATION FURNISHED WITH THE FILING OF RATE CHANGES

§ 53.53.  Information to be furnished with proposed general rate increase filings in excess of $1 million.

   (a)  When a public utility, other than a canal, turnpike, tunnel, bridge or wharf company, files a tariff or tariff supplement seeking a general rate increase within the meaning of 66 Pa.C.S. § 1308(d) (relating to voluntary changes in rates), and the general rate increase exceeds $1 million in gross annual revenues, in addition to the data required by other provisions of this chapter, the tariff or tariff supplement shall be accompanied by responses to the data requests contained in the following exhibits which apply to the utility types indicated.

   (1)  Exhibit A--Utilities except communications [and], electric [utilities], water and wastewater utilities.

*      *      *      *      *

   (4)  Exhibit D--Water and wastewater utilities.

*      *      *      *      *

Exhibit A

I.  VALUATION

*      *      *      *      *

E.  [WATER UTILITIES ONLY, IN ADDITION TO PROVIDING THE INFORMATION REQUESTED IN ''A.'':] (Reserved)

   (Editor's Note:  As part of this proposal, the Commission is proposing to delete the text of E, which appears at 52 Pa. Code page 53-25, serial page (213599).)

*      *      *      *      *

III.  BALANCE SHEET AND OPERATING STATEMENT

*      *      *      *      *

C.  [WATER UTILITIES ONLY, IN ADDITION TO PROVIDING THE INFORMATION REQUESTED IN ''A.'':] (Reserved)

   (Editor's Note:  As part of this proposal, the Commission is proposing to delete the text of C, which appears at 52 Pa. Code pages 53-39 to 53-45, serial pages (213613) to (213619).)

*      *      *      *      *

IV.  RATE STRUCTURE
A.  [WATER UTILITIES] (Reserved)

   (Editor's Note:  As part of this proposal, the Commission is proposing to delete the text of A, which appears at 52 Pa. Code pages 53-58 to 53-60, serial pages (213632) to (213634).)

*      *      *      *      *

Exhibit D

I.  STATEMENT OF INCOME

A.  WATER AND WASTEWATER UTILITIES

   1.  Provide comparative operating statements for the test year and the immediately preceding 12 months showing increases and decreases between the two periods. These statements should supply detailed explanation of the causes of the major variances between the test year and preceding year by detailed account number.

   2.  Prepare a Statement of Income for the various time frames of the rate proceeding including:

   Col.   1  -  Book recorded statement for the test year.

            2  -  Adjustments to book recorded statement to annualize and normalize under present rates.

            3  -  Income statement under present rates after adjustment in Col. 2.

            4  -  Adjustment to Col. 3 for revenue increase requested.

            5  -  Income statement under requested rates.

   3.  If a company has separate operating divisions, an income statement must be shown for each division, plus an income statement for the company as a whole.

   4.  Provide operating income claims under:

   a.  Present rates.

   b.  Pro forma present rates (annualized & normalized).

   c.  Proposed rates (annualized & normalized).

   5.  Provide rate of return on original cost under:

   a.  Present rates.

   b.  Pro forma present rates.

   c.  Proposed rates.

II.  OPERATING REVENUES

   1.  Prepare a summary of operating revenues for the test year and the year preceding the test year, providing the following information:

   a.  For each classification of customers:

   (i)  Number of customers as of year-end.

   (ii)  Gallons sold.

   (iii)  Revenues.

   b.  Customers forfeited discounts and penalties and miscellaneous water revenues.

   2.  Prepare a summary of operating revenues for the test year, providing the following information:

   a.  For each classification of customers and for customers forfeited discounts and penalties and miscellaneous water/wastewater revenues:

   (i)  Revenues.

   (ii)  Annualizing and normalizing adjustments to arrive at adjusted operating revenues for ratemaking.

   (iii)  Proposed increase in operating revenues.

   (iv)  Percent increase in operating revenues.

   (v)  Operating revenues under proposed rates.

   3.  Provide a schedule of present and proposed tariff rates showing dollar change and percent of change by block. Provide increases to customers at various monthly uses showing billings at existing and proposed rates. Provide also an explanation of any change in block structure and the reason therefor. Provide a copy of the proposed tariff or tariff supplement.

   4.  Provide for the test year a detailed customer consumption analysis and the application of rates to support present and proposed rates by customer classification and/or tariff rate schedule.

   5.  Provide detailed computations of the determination of accrued revenues as of test year-end and year-end immediately preceding the test year, together with a detailed explanation of the procedures and methods used in developing accrued revenues.

   6.  Provide a detailed analysis of miscellaneous water revenues for the test year and the two years immediately preceding the test year. For the test year, provide a monthly breakdown and an explanation of significant monthly variances.

   7.  Provide a monthly summary of customers added and lost by customer classification for the test year and the current year-to-date.

   8.  Provide for the test year and the current year-to-date, the number of customers and monthly consumption for each classification of customers.

   9.  Provide by customer classification for the test year and for the two prior years the number of customers and consumption, and projected number of customers and consumption for two subsequent years.

   10.  Provide a breakdown of the number and size of private fire services according to the general water service class of customers.

   a.  Provide a listing of all public fire protection customers at test year-end and the pro forma billing of current rates for each customer.

   11.  Provide a detailed schedule of sales for resale revenues for the test year and two preceding years showing revenues and units sold by customer.

   12.  Provide for the test year and the two prior years consumption and billings for the ten (10) largest customers. Provide for the test year consumption priced at proposed rates.

   13.  Provide for the test year and the two prior years consumption and billings for the ten (10) largest sales for resale customers if such sales are not included in sales to the ten (10) largest customers requested in 53.53 II.12 of Annex A.

III.  OPERATING EXPENSE

   1.  Prepare a summary of operating expenses by operating expense account for the test year and the two years preceding the test year.

   2.  Prepare a summary of operating expenses for the test year providing annualizing and normalizing adjustments to arrive at adjusted operating expenses for ratemaking, including supporting data.

   3.  List extraordinary property losses as a separate item, not included in operating expenses or depreciation and amortization. Sufficient supporting data must be provided.

   4.  Supply detailed calculations of normalization of rate case expense, including supporting data for outside services rendered. Provide the items comprising the rate case expense claim (include the actual billings or invoices in support of each kind of rate case expense) and the items comprising the actual expenses of prior rate cases.

   5.  Submit detailed computation of adjustments to operating expenses for salary, wage and fringe benefit increases (union and non-union merit, progression, promotion and general) granted during the test year and six months subsequent to the test year. Supply data showing for the test year:

   a.  Actual payroll expense (regular and overtime separately) by categories of operating expenses, i.e., maintenance, operating transmission, distribution, other.

   b.  Date, percentage increase and annual amount of each general payroll increase during the test year.

   c.  Dates and annual amounts of merit increases or management salary adjustments.

   d.  Total annual payroll increases in the test year.

   e.  Proof that the actual payroll plus the increases equal the payroll expense claimed in the supporting data (by categories of expenses).

   f.  Detailed list of employee benefits and cost thereof for union and non-union personnel. Any specific benefits for executives and officers should also be included, and cost thereof.

   g.  Support the annualized pension cost figures.

   (i)  State whether these figures include any unfunded pension costs. Explain.

   (ii)  Provide latest actuarial study used for determining pension accrual rates.

   h.  Submit a schedule showing any deferred income and consultant fee to corporate officers or employees.

   6.  Supply an exhibit showing an analysis, by functional accounts, of the charges by affiliates (service corporations, etc.) for services rendered included in the operating expenses of the filing company for the test year and for the 12-month period ended prior to the test year:

   a.  Supply a copy of contracts, if applicable.

   b.  Explain the nature of the services provided.

   c.  Explain basis on which charges are made.

   d.  If charges are allocated, identify allocation factors used.

   e.  Supply the components and amounts comprising the expense in this account.

   f.  Provide details of initial source of charge and reason thereof.

   7.  Describe costs relative to leasing equipment, computer rentals, and office space, including terms and conditions of the lease. State method for calculating monthly or annual payments.

   8.  Submit detailed calculations (or best estimates) of the cost resulting from major storm damage.

   9.  Submit details of expenditures for advertising (national and institutional and local media). Provide a schedule of advertising expense by major media categories for the test year and the prior two comparable years with respect to:

   a.  Public health and safety.

   b.  Conservation of energy.

   c.  Explanation of billing practices, rates, etc.

   d.  Provision of factual and objective data programs in educational institutions.

   e.  Other advertising programs.

   f.  Total advertising expense.

   10.  Prepare a detailed schedule for the test year showing types of social and service organization memberships paid for by the company and the cost thereof.

   11.  Submit a schedule showing, by major components, the expenditures associated with outside services employed, regulatory commission expenses and miscellaneous general expenses, for the test year and prior two comparable years.

   12.  Submit details of information covering research and development expenditures, including major projects within the company and forecasted company programs.

   13.  Provide a detailed schedule of all charitable and civic contributions by recipient and amount for the test year.

   14.  Provide the two most recent actuarial studies for both pension expense and postretirement benefits other than pensions (OPEBs).

   15.  Identify the total pension expense under SFAS 87 for the test year and the portion charged to O&M. Include an analysis showing the contribution to the pension plan and the amount deferred or expensed for each of the past two years and the test year.

   16.  Provide an analysis of OPEBs showing the accrual amount under SFAS 106 and the pay-as-you-go expense.

   17.  Reconcile the historical and future test year SFAS No. 106 expense levels with the amount identified in the actuarial report.

   18.  Identify the actual or projected amounts contributed to SFAS No. 106 funds for the historic and future test years. Identify the actual or projected dates and amounts of the contributions.

   19.  Explain the funding options or plans which are being used for SFAS No. 106 costs. Identify the portion of costs which are eligible for tax preferred funding.

   20.  Is the company studying and/or anticipating any changes to its postretirement benefits offered to employees as a result of SFAS No. 106 or for other reasons? If yes, provide such study and/or explain the anticipated change.

   21.  State whether the test year expenses reflect any accruals for postemployment benefits under SFAS 112. If yes, provide complete details including supporting documentation, assumptions, and funding mechanisms.

   22.  Provide a copy of all incentive compensation and/or bonus plans and provide the level of related bonus payments included in the cost of service. Provide information for the preceding two years and any changes since the last rate case.

   23.  Provide the most recent insurance premiums for each type of insurance coverage (both employee benefit and those purchased for the company) reflected in the company's filing. If available, provide estimated premiums for the subsequent calendar year.

   24.  Provide the level of payments made to industry organizations included in the cost of service along with a description of each payee organization.

   25.  If the company has included any costs associated with canceled construction projects or obsolete inventory in requested rates, separately identify the items, provide the related amounts and explain the reason for the cancellation or obsolescence.

   26.  Explain how the company accounts for vacation pay for book and ratemaking purposes.

   27.  Indicate whether any employee positions have been eliminated since the commencement of the historic test year or are expected to be eliminated during the future test year.

   28.  Furnish the name of each supplier, gallonage and expense for water purchased as recorded in Water Purchased for Resale-Account 706 for test year and two preceding years.

IV.  TAXES

   1.  Provide a copy of the latest PA corporate tax report and the latest PA corporate tax settlement.

   2. Submit details of calculations for taxes, other than income, where a company is assessed taxes for doing business in another state, or on its property located in another state.

   3.  Submit a schedule showing for the last three years the income tax refunds, plus interest (net of taxes) received from the federal government due to prior years' claims.

   4.  Provide detailed computations showing the deferred income taxes derived by using accelerated tax depreciation applicable to post-1969 utility property that increases productive capacity, and ADR rates on property (separate between state and federal; also, rate used).

   a.  State whether tax depreciation is based on all rate base items claimed as of the end of the test year, and whether it is the annual tax depreciation at the end of the test year.

   b.  Reconcile any difference between the deferred tax balance, as shown as a reduction to measures of value (rate base), and the deferred tax balance as shown on the balance sheet.

   5.  Submit a schedule showing a breakdown of accumulated investment tax credits (3 percent, 4 percent, 7 percent, 10 percent and 11 percent), together with details of methods used to write-off the unamortized balances.

   6.  Submit a schedule showing the adjustments for taxable net income per books (including below-the-line items) and pro-forma under existing rates, together with an explanation of any difference between the adjustments. Indicate charitable donations and contributions in the tax calculation for ratemaking purposes.

   7.  Submit detailed calculations supporting taxable income before state and federal income taxes where the income tax is subject to allocation due to operations in another state, or due to operation of other taxable utility or non-utility business, or by operating divisions or areas.

   8.  Furnish a breakdown of major items comprising prepaid and deferred income tax charges and other deferred income tax credits and reserves by accounting areas.

   9.  Explain the reason for the use of cost of removal of any retired plant figures in the income tax calculations.

   10.  State whether all tax savings due to accelerated depreciation on property installed prior to 1970 have been passed through to income. (If not, explain.)

   11.  Show any income tax loss/gain carryovers from previous years that may affect test year income taxes or future year income taxes. Show loss/gain carryovers by years of origin and amounts remaining by years at the end of the test year.

   12.  Provide a detailed analysis of taxes accrued per books as of the test year date. Also supply the basis for the accrual and the amount of taxes accrued monthly.

   13.  Under Section 1552 of the Internal Revenue Code and Regulations at 1.1552-1 thereunder, if applicable, a parent company, in filing a consolidated income tax return for the group, must choose one of four options by which it must allocate total income tax liability of the group to the participating members to determine each member's tax liability to the federal government. (If this interrogatory is not applicable, so state).

   a.  State what option has been chosen by the group.

   b.  Provide, in summary form, the amount of tax liability that has been allocated to each of the participating members in the consolidated income tax return.

   c.  Provide a schedule, in summary form, of contributions, which were determined on the basis of separate tax return calculations, made by each of the participating members to the tax liability indicated in the consolidated group tax return. Provide total amounts of actual payments to the tax depository for the tax year, as computed on the basis of separate returns of members.

   d.  Provide annual income tax return for group, and if income tax return shows net operating loss, provide details of amount of net operating loss allocated to the income tax returns of each of the members of the consolidated group.

   14.  Provide a copy of the corporate federal tax returns and supporting schedules for the preceding three years and, if applicable, a copy of the calculation workpapers for the company's consolidated tax savings adjustment.

   15.  Provide a schedule of federal and Pennsylvania taxes, other than income taxes, calculated on the basis of test year per books, pro forma at present rates, and pro forma at proposed rates, to include the following categories:

   a.  Social security.

   b.  Unemployment.

   c.  Capital stock.

   d.  Public utility realty.

   e.  PUC assessment.

   f.  Other property.

   g.  Any other appropriate categories.

   16.  Submit a schedule showing a breakdown of the deferred income taxes by state and federal per books, pro-forma, existing rates, and under proposed rates.

   17.  With respect to determination of income taxes, federal and state:

   a.  Show income tax results of the annualizing and normalizing adjustments to the test year record before any rate increase.

   b.  Show income taxes for the annualized and normalized test year.

   c.  Show income tax effect of the rate increase requested.

   d.  Show income taxes for the normalized and annualized test year after application of the full rate increase.

   18.  State amount of debt interest utilized for income tax calculations, and details of debt interest computations, under each of the following rate case bases:

   a.  Actual test year.

   b.  Annualized test year-end.

   c.  Proposed test year-end.

V.  RATE BASE

   1.  Provide a schedule showing the measures of value and the rates of return at the original cost in the current case. All claims made on this exhibit should be cross-referenced to appropriate exhibits.

   2.  If a claim is made for construction work in progress, include, in the form of an exhibit, the summary page from all work orders, amount expended at the end of the test year and anticipated in-service dates. Indicate if any of the construction work in progress will result in insurance recoveries, reimbursements, or retirements of existing facilities. Describe in exact detail the necessity of each project claimed if not detailed on the summary page from the work order. Include final completion dates and estimated total amounts to be spent on each project. (This exhibit should be updated at the conclusion of these proceedings.)

   3.  If a claim is made for non-revenue producing construction work in progress, include, in the form of an exhibit, the summary page from all work orders, amount expended at the end of the test year and anticipated in-service dates. Indicate if any of the construction work in progress will result in insurance recoveries, reimbursements, or retirements of existing facilities. Describe in exact detail the necessity of each project claimed if not detailed on the summary page from the work order. Include final completion data and estimated total amounts to be spent on each project. (These exhibits should be updated at the conclusion of these proceedings.)

   4.  If a claim is made for plant held for future use, supply the following:

   a.  A brief description of the plant or land site and its original cost.

   b.  Expected date of use for each item claimed.

   c.  Explanation as to why it is necessary to acquire each item in advance of its date of use.

   d.  Date when each item was acquired.

   e.  Date when each item was placed in the plant held for future use account.

   5.  If fuel stocks comprise part of the cash working capital claim, provide an exhibit showing the actual book balances (quantity and price) for the fuel inventories by type of fuel for the thirteen months prior to the end of the test year by location, station, etc. (Explain the method of determining claim if other than that described above.)

   6.  Explain in detail by statement or exhibit the appropriateness of claiming any additional items, not previously mentioned, in the measures of value.

   7.  Provide schedules and data in support of the following working capital items:

   a.  Prepayments--list and identify all items.

   b.  Federal income tax accrued or prepaid.

   c.  Pa. state income tax accrued or prepaid.

   d.  Pa. capital stock tax accrued or prepaid.

   e.  Pa. public utility realty tax accrued or prepaid.

   f.  Payroll taxes accrued or prepaid.

   g.  Any adjustments related to the above items for ratemaking purposes.

   8.  Supply an exhibit supporting the claim for cash working capital requirement based on the lead-lag method.

   a.  Pro forma expenses and revenues are to be used in lieu of book data for computing lead-lag days.

   9.  Indicate if amortized expenses have been removed from the lead-lag study. If so, please provide documentation showing such removal. If not, provide a list of such amortization expenses included.

   10.  Identify the funds availability arrangements or terms which the company has with its banks with respect to deposits of customer checks. For example, does the company have same day or next day access to funds deposited?

   11.  In reference to materials and supplies:

   a.  What method of inventory valuation was used to develop the claim for materials and supplies?

   b.  Does the utility use a material and supply model to calculate needed material and supply levels?

   c.  If so, provide the model. Supply an illustrative example of how the monthly balances are derived.

   d.  Provide the actual monthly value for the inventory of materials and supplies for the past 12 months. Supply as of the end of the test year, a 13- month average, by month, for the material and supply account.

   e.  Provide the monthly level of materials and supplies for three years prior to the conclusion of the historic test year.

   12.  For each non-blanket or projected plant addition to cost the lesser of $100,000 or 0.5% of current rate base, included in the future test year, please provide:

   a.  Description of the project.

   b.  Original budgeted cost (broken down by AFUDC and non-AFUDC components).

   c.  Current budgeted cost (broken down by AFUDC and non-AFUDC components).

   d.  Reason for change in budgeted cost.

   e.  Original estimated date of completion and in service.

   f.  Current estimated date of completion and in service.

   g.  Reason for change in completion date.

   h.  Anticipated retirement related to the plant addition.

   i.  Starting date of project.

   j.  Amount expended to date.

   k.  Percent of project currently complete.

   l.  The depreciation rate applicable.

   m.  Identify which projects are due to a PA-DEP or EPA requirement.

   13.  Explain how the future test year plant balances were projected and provide supporting workpapers and documentation.

   14.  Are all of the assets used in the plant-in-service claim used exclusively by the utility? If not, provide the estimated percentage that each shared asset is used by other entities.

   15.  Is all plant included in rate base currently being used in providing water service? If not, provide a schedule which presents those plant items which are not, and indicate the corresponding amounts and account numbers. Further, provide a detailed narrative explaining the reason why such plant is not being used and the anticipated future disposition of the plant.

   16.  Provide all workpapers and supporting documentation showing the derivation of the projected balances of contributions in aid of construction, customer advances for construction and company service line and customer deposits for the future test year.

VI.  DEPRECIATION

   1.  Provide a description of the depreciation methods utilized in calculating annual depreciation amounts and depreciation reserves, together with a discussion of the significant factors which were considered in arriving at estimates of service life and dispersion by account. Supply a comprehensive statement of any changes made in method of depreciation. Provide dates of all field inspections and facilities visited.

   2.  Set forth, in exhibit form, charts depicting the original and estimated survivor curves and a tabular presentation of the original life table plotted on the chart for each account where the retirement rate method of analysis is utilized.

   3.  Provide the surviving original cost at test year end by vintage by account and include applicable depreciation reserves and accruals. These calculations should be provided for plant in service as well as other categories of plant, including, but not limited to, contributions in aid of construction and customers' advances for construction.

   4.  Provide a comparison of respondent's calculated depreciation reserve v. book reserve by account at the end of the test year.

   5.  Supply a schedule by account and depreciable group showing the survivor curve and annual accrual rate estimated to be appropriate:

   a.  For the purposes of this filing.

   b.  For the purposes of the most recent rate increase filing prior to the current proceedings.

   6.  Provide an exhibit showing gross salvage, cost of removal, and net salvage for the five most recent calendar or fiscal years by account.

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