SAN DIEGO GAS AND ELECTRIC COMPANY SOUTHERN CALIFORNIA GAS COMPANY 2009 BIENNIAL COST ALLOCATION PROCEEDING (A.08-02-001) DRA DATA REQUEST NO. DRA-PZS-10 Subject: July 2, 2008 SoCalGas Direct Testimony of Allison Smith and July 2, 2008 SoCalGas Direct Testimony of Herbert Emmrich ______
QUESTION 1: In Tab “376 Mains Incl Cath,” the cell H14 contains a hard-coded number that was used as basis for the functional allocation of Account 376. Please provide DRA the data reference and formula to verify the basis of how SoCalGas arrived at this value and concluded on the reasonableness of this number for purposes of Account 376 functionalization.
RESPONSE 1:
The accounting data is provided in WP-26 Mains. The hard-coded numbers were provided by distribution staff.
1 SAN DIEGO GAS AND ELECTRIC COMPANY SOUTHERN CALIFORNIA GAS COMPANY 2009 BIENNIAL COST ALLOCATION PROCEEDING (A.08-02-001) DRA DATA REQUEST NO. DRA-PZS-10 Subject: July 2, 2008 SoCalGas Direct Testimony of Allison Smith and July 2, 2008 SoCalGas Direct Testimony of Herbert Emmrich ______
QUESTION 2: In Tabs “RD Format” and “Cost Allocation” of the updated 2007 FERC2 EC Model version 8-20-08, DRA notes that the total base margin without SI, Fuel Use, or FF&U appears to have slightly changed to a lower $1,567.52 million amount from the previous original $1,573.35 million using 2006 FERC Form 2. Please confirm that there has been a change to the target total base margin based on the updated EC model. Please confirm whether this change will affect in any way the total base margin used in the LRMC model as originally submitted by SoCalGas. If so, please provide the updated LRMC model with such change in total base margin.
RESPONSE 2:
There is no change in total base margin. The difference is the amount of Gas Acquisition costs that are accounted for in the brokerage fee. Previously Gas Acquisition costs were included in the cost allocation and then taken out in the rate design process. The base margin calculation is shown in Mr. Lenart’s work paper Tab Revenue Check.
2 SAN DIEGO GAS AND ELECTRIC COMPANY SOUTHERN CALIFORNIA GAS COMPANY 2009 BIENNIAL COST ALLOCATION PROCEEDING (A.08-02-001) DRA DATA REQUEST NO. DRA-PZS-10 Subject: July 2, 2008 SoCalGas Direct Testimony of Allison Smith and July 2, 2008 SoCalGas Direct Testimony of Herbert Emmrich ______
QUESTION 3: Please explain whether a change in the amount of core storage reservation to 79 Bcf in the updated EC model will affect the LRMC model, and if so, explain how.
RESPONSE 3:
No, because the total storage cost allocation does not change. Increasing the core allocation to 79 Bcf simply reduces the cost allocation to the unbundled storage program. Attached is a spreadsheet version of WP-1 showing the cost allocation to the core with 79 BCF of storage, 369 MMcfd of injection and 2,225 MMcfd of withdrawal.
C:\Documents and Settings\HEMMRICH\Desktop\BCAP 2009\BCAP-2009-EC-WP1- Updated2007FERC2-ECModelSCGEC-79BXCF--8-20-08-hse.xls
3 SAN DIEGO GAS AND ELECTRIC COMPANY SOUTHERN CALIFORNIA GAS COMPANY 2009 BIENNIAL COST ALLOCATION PROCEEDING (A.08-02-001) DRA DATA REQUEST NO. DRA-PZS-10 Subject: July 2, 2008 SoCalGas Direct Testimony of Allison Smith and July 2, 2008 SoCalGas Direct Testimony of Herbert Emmrich ______
QUESTION 4: In Tab “RD Format” of the updated EC model, DRA also notes the absence of the category “NGV Direct” which was in the original EC model submitted. NGV Direct had an amount of $1.04 million of functionalized costs. Please state the reason why NGV Direct is no longer in use in the updated EC model.
RESPONSE 4:
The allocation of NGV costs was changed to correctly allocate it among functions based on labor costs because NGV stations are used to fill up company-owned NGV vehicles used to provide serves to customers and these costs are therefore directly related to labor expenses.
4 SAN DIEGO GAS AND ELECTRIC COMPANY SOUTHERN CALIFORNIA GAS COMPANY 2009 BIENNIAL COST ALLOCATION PROCEEDING (A.08-02-001) DRA DATA REQUEST NO. DRA-PZS-10 Subject: July 2, 2008 SoCalGas Direct Testimony of Allison Smith and July 2, 2008 SoCalGas Direct Testimony of Herbert Emmrich ______
QUESTION 5: In Tab “Base Margin & Function,” SoCalGas indicates that there are several types of Account 923 under the A&G FERC Accounts. However, in cell D85, only one type of Account 923 (for AdmGen Op-Outside Service Employed-General) has the amount of $135.489919 million while all the other types of Account 923 have zero amounts. Please provide the data reference for how the amount in cell D85 was arrived at by SoCalGas. Please explain whether the amount in cell D85 is the sum of all the amounts in the other types of Account 923.
RESPONSE 5:
The updated FERC Form 2 2007 FERC Account 923 costs were allocated using the Multi Factor because all of the previously detailed Account 923 breakdowns were allocated using the Multi Factor and therefore using the Multi Factor to allocate the entire amount in 923 results in the same cost allocation. The detailed breakdown in the February filing was done by special study and did not result in any information indicating that the allocator should not be the Multi Factor. Yes, the amount in cell D85 is the sum of all the amounts in the other types of costs incurred in Account 923.
5 SAN DIEGO GAS AND ELECTRIC COMPANY SOUTHERN CALIFORNIA GAS COMPANY 2009 BIENNIAL COST ALLOCATION PROCEEDING (A.08-02-001) DRA DATA REQUEST NO. DRA-PZS-10 Subject: July 2, 2008 SoCalGas Direct Testimony of Allison Smith and July 2, 2008 SoCalGas Direct Testimony of Herbert Emmrich ______
QUESTION 6: SoCalGas states on page 41 at lines 16-18 of Mr. Emmrich’s testimony that “The Labor factor was used to allocate Account 926, Employee Pension and Benefits; Account 931, Rents; Account 935, Maintenance of General Plant; and Account 408, Payroll Taxes.” (a) Please state whether SoCalGas concurs that the FERC definition of Account 926 refers to “pensions paid to or on behalf of retired employees, or accrual to provide for pensions, or payments for the purchase of annuities for this purpose.” (b) If so, please explain why it would be appropriate to use the Labor factor to functionalize the base margin associated with Account 926. (c) Please state the SoCalGas criteria for the use of the Labor factor in functionalizing the A&G accounts. DRA notes from the derivation of the Labor factor in the Tab “Labor Factor” of the updated EC Model that the Labor factor represents those costs that are driven by the labor portion of the O&M costs, and hence, should be applied to such accounts that are similar in nature.
RESPONSE 6:
(a) Yes. (b) Because these are labor-related costs. (c) All labor-related A&G costs were allocated using the labor factor that is a reasonable cost allocation method.
6 SAN DIEGO GAS AND ELECTRIC COMPANY SOUTHERN CALIFORNIA GAS COMPANY 2009 BIENNIAL COST ALLOCATION PROCEEDING (A.08-02-001) DRA DATA REQUEST NO. DRA-PZS-10 Subject: July 2, 2008 SoCalGas Direct Testimony of Allison Smith and July 2, 2008 SoCalGas Direct Testimony of Herbert Emmrich ______
QUESTION 7: Pursuant to your response to the above PZS10-6, please explain why it would be appropriate to use the Labor factor to functionalize Account 931 (Rents) which has the amount of $28.483 million in base margin. Please confirm whether “rents” support organization-wide payments for rents.
RESPONSE 7:
Rents are related to office buildings and regional offices that are based on the number of people working in each functional area and are therefore a reasonable allocation method for allocating rent expenses.
7 SAN DIEGO GAS AND ELECTRIC COMPANY SOUTHERN CALIFORNIA GAS COMPANY 2009 BIENNIAL COST ALLOCATION PROCEEDING (A.08-02-001) DRA DATA REQUEST NO. DRA-PZS-10 Subject: July 2, 2008 SoCalGas Direct Testimony of Allison Smith and July 2, 2008 SoCalGas Direct Testimony of Herbert Emmrich ______
QUESTION 8: Pursuant to your response in PZS10-6, please explain why it would be appropriate to use the Labor factor to functionalize Account 935 (Maintenance of General Plant). Please confirm whether “General Plant” supports the activities of all SoCalGas employees or company-wide functions such that a multi-factor or another factor in your efforts study would be more appropriate for Account 935.
RESPONSE 8:
General plant is mainly made up of the office buildings and regional offices that house people and therefore the labor factor is a reasonable allocation method for Account 935.
8 SAN DIEGO GAS AND ELECTRIC COMPANY SOUTHERN CALIFORNIA GAS COMPANY 2009 BIENNIAL COST ALLOCATION PROCEEDING (A.08-02-001) DRA DATA REQUEST NO. DRA-PZS-10 Subject: July 2, 2008 SoCalGas Direct Testimony of Allison Smith and July 2, 2008 SoCalGas Direct Testimony of Herbert Emmrich ______
QUESTION 9: DRA notes that in Tab “Base Margin & Function,” of the updated EC model, there does not appear to be an Account 935 as described in Mr. Emmrich’s testimony. Instead, the A&G FERC account for Account 932, which has the amount of $26.835 million in base margin, appears for AdmGen Mnt-General Plant. However, in Tab “AG Func Factor for Detail CR,” SoCalGas uses Account 935 as AdmGen Mnt-General Plant. Please explain whether Account 932 and Account 935 refer to one and the same set of base margin costs. If so, please confirm which Account is being used by SoCalGas to represent the same Maintenance of General Plant A&G account.
RESPONSE 9:
The testimony should state Account 932. It will be corrected.
9 SAN DIEGO GAS AND ELECTRIC COMPANY SOUTHERN CALIFORNIA GAS COMPANY 2009 BIENNIAL COST ALLOCATION PROCEEDING (A.08-02-001) DRA DATA REQUEST NO. DRA-PZS-10 Subject: July 2, 2008 SoCalGas Direct Testimony of Allison Smith and July 2, 2008 SoCalGas Direct Testimony of Herbert Emmrich ______
QUESTION 10: Please respond to the following with respect to Account 408 (Payroll taxes): (a) Pursuant to your response in PZS10-6, please explain why it would be appropriate to use the Labor factor to functionalize Account 408 (Payroll taxes). (b) Please describe the nature of the costs that are associated with Account 408 payroll taxes and provide the base margin amount for Account 408. (c) Please provide the Tab reference for Account 408 in the updated EC model so that DRA can locate Account 408 in the spreadsheet. (d) Please provide the page and line number reference for Account 408 in the 2007 FERC Form 2. (e) Please explain whether Account 408 includes any of the payroll taxes that SoCalGas listed as being included in the accounts described below. DRA notes that payroll taxes were already previously included in the functionalization of the accounts below that were indicated as including payroll taxes. The Tab “Base Margin & Function” indicates the inclusion of payroll taxes in the following accounts that were functionalized based on allocators other than the Labor factor: Account 814 UndStr Op-Supervision & Engineering (including payroll taxes) Account 850 Trans Op-Supervision & Engineering (including payroll taxes) Account 870 Dist Op-Supervision & Engineering (including payroll taxes) Account 901 CusAcct-Supervision (PBR ex CARE) + Payroll taxes Account 907 Cus Svc-Supervision + Payroll taxes Account 920 AdmGen Op-Salaries Plus Payroll taxes
RESPONSE 10:
(a) Payroll taxes are Social Security and State Disability taxes directly related to labor expenses. (b) These are Social Security and State Disability taxes. They are included in base margin in the General Rate Case proceeding but there is no separate line item in the GRC decision indicating the amount of Payroll taxes included in base margin. (c) The payroll taxes are shown in the Return tab in cells L3 through L9. (d) FERC Form 2 page 355.
10 SAN DIEGO GAS AND ELECTRIC COMPANY SOUTHERN CALIFORNIA GAS COMPANY 2009 BIENNIAL COST ALLOCATION PROCEEDING (A.08-02-001) DRA DATA REQUEST NO. DRA-PZS-10 Subject: July 2, 2008 SoCalGas Direct Testimony of Allison Smith and July 2, 2008 SoCalGas Direct Testimony of Herbert Emmrich ______(e) Yes the payroll taxes shown in the Return tab cells L3 through L9 are included in the referenced Accounts.
QUESTION 11: In Response PZS3-7(c), SoCalGas indicated that “payroll taxes were allocated based on the percentage of the distribution of wages and salaries shown in FERC Form 2 page 355 by service function as shown in the “Return” tab of the EC model and the table below.” Please explain whether these payroll taxes are those included in Account 408.
RESPONSE 11:
Yes.
11