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
Bryan J. Scott
on behalf of
Oklahoma Gas and Electric Company
December 30, 2021
Direct Testimony of Bryan J. Scott | Page 1 of 7 |
Cause No. PUD 202100164 |
1 | QUALIFICATIONS, EXPERIENCE AND PURPOSE |
- Q. Please state your name and business address.
- A. My name is Bryan J. Scott. My business address is 321 N. Harvey Ave., Oklahoma City,
4 | Oklahoma 73102. |
5 |
- 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
8 | Director of Pricing and Load Analysis. In that capacity, I am responsible for overseeing |
9 | the development of rates for each of the services provided to our customers. |
10
- Q. Please summarize your educational qualifications and professional experience.
- A. I graduated from the University of Tulsa with a Bachelor of Science degree in Economics.
13 | I began working at Public Service Company of Oklahoma ("PSO") in 1979 where I held |
14 | various positions in its Rates Department. In 1994, I joined the Central and South West |
15 | ("CSW") Rates Department as Manager of Pricing and Costing (CSW was the holding |
16 | company for PSO at that time). In 1995, I became responsible for new pricing programs |
17 | as Senior Project Manager for Pricing Development for CSW. In 2000, I became the |
18 | Manager of Texas Retail Pricing for American Electric Power ("AEP") in preparation for |
19 | the deregulated market in Texas (AEP assumed control of CSW in 2000). In 2002, I left |
20 | AEP to become a consultant with B&B Consulting International and then with UtiliPoint |
21 | International. I joined OG&E in March 2008. I have been involved with electricity pricing, |
22 | costing, rate administration and regulatory issues for over 42 years. |
23 |
24 Q. Have you previously filed testimony before the Oklahoma Corporation Commission
25 | (the "Commission")? |
- A. Yes. I have previously filed testimony on behalf of OG&E in Cause Nos. PUD 200800398,
- 200900230, 200900231, 201000037, 201100087, 201200134, 201400286, 201400307,
- 201500247, 201500273, 201600366, 201600441, 201700216, 201700496, 201800070,
- 201800074, 201800140, 202100018, and 202100159. I have previously submitted
30 | testimony on behalf of PSO in proceedings before this Commission. I have also submitted | |
31 | testimony before the Arkansas Public Service Commission, the Louisiana Public Service | |
Direct Testimony of Bryan J. Scott | Page 2 of 7 | |
Cause No. PUD 202100164 |
1 | Commission, the Public Utility Commission of Texas, and the Federal Energy Regulatory |
2 | Commission. |
3 |
- Q. What is the purpose of your testimony?
- A. The primary purpose of my testimony is to support the allocation of the Oklahoma
6 | jurisdictional revenue requirement among customer classes as recommended by OG&E in |
7 | this Cause. |
8 | |
9 | REVENUE ALLOCATION |
10 Q. What is revenue allocation and what role does it play in the development of proposed
11rates?
12 A. In its simplest form, rate design is the process of pricing the services offered OG&E's
13 | customers so as to produce the revenues needed to pay for the costs of providing those |
14 | services. That process begins with the identification of the costs assigned to each customer |
15 | class in a Cost of Service Study ("COSS"); and revenue allocation is the process of |
16 | adjusting results of the COSS to establish the target revenue requirement for each class or |
17 | group of retail customers. The pricing process then establishes rates for each tariffed |
18 | service so as to collect the targeted revenue requirement. |
19 | As can be seen in Chart 1 below, the Minimum Filing Requirements package for |
20 | OG&E's Application in this Cause includes schedules and work papers which provide in |
21 | detail the information the Company uses to develop the proposed rates for each of the |
22 | tariffed services offered to our customers. As seen below, Revenue Allocation is one of |
23 | the final, primary inputs which the Company considers when developing the pricing for |
24 | those tariffs. |
Direct Testimony of Bryan J. Scott | Page 3 of 7 |
Cause No. PUD 202100164 |
Chart 1. The Rate Design Process
Financial/ | Class | Marginal | ||
Revenue | Revenue | |||
Accounting | Bill | |||
Requirement | Allocation | Cost Data | ||
Data | Comparisons | |||
Schedule L-1 | ||||
Schedules A-J | W/P M-5 | |||
Proof of | ||||
Customer | COS | Pricing | Revenue | |
Final | ||||
Usage Data | ||||
Schedule K | ||||
W/P L-13,14 | Prices | |||
W/P M-4 | ||||
Tariffs | ||||
Billing Data | Unit Costs | Billing | Schedule N | |
Data | ||||
W/P H-2 | W/P L-8 | |||
W/P H-2 | ||||
- Q. What is the purpose of a COSS?
- A. As mentioned earlier, COSS results are used to establish the amount of revenues that would
3 | be collected from each customer group or class if each class were to pay its full cost for |
4 | receiving electric service. In those circumstances, the class' revenue requirement is |
5 | described as being at 100% relative rate of return ("RROR") or at an equalized rate of |
6 | return ("ROR"). OG&E Witness Cash supports the company's COSS. |
7 |
- Q. What were the results from the COSS for this Cause?
- A. Table 1 shows the results of the COSS found in Section K of the Company's filing package
10 | and depicts the revenue requirements, revenue deficiencies and percent increases which | |
11 | would provide a 100% RROR for each customer group or class. | |
12 | The first column is the customer group. The second column is the current revenue | |
13 | from each customer group after pro forma adjustments are made and also include fuel | |
14 | revenue and continuing rider revenues. These pro forma adjustments are described on | |
15 | Schedule H-2 of the Application package and discussed by OG&E Witness Cash. The | |
16 | third column is the total proposed revenue, which also includes current fuel revenue and | |
17 | rider revenues. The proposed revenues represent the amount | needed to fund the |
18 | Company's costs of service when new rates become effective, assuming no changes to | |
19 | riders or fuel costs. The fourth column shows the difference between current revenues and | |
Direct Testimony of Bryan J. Scott | Page 4 of 7 | |
Cause No. PUD 202100164 |
1 | proposed revenues at 100% RROR based on current rider and fuel revenues. The last | |||||||
2 | column is the proposed percent change | for each class | or group of Oklahoma retail | |||||
3 | customers and represents the impact to customers' bills if all groups were taken to 100% | |||||||
4 | RROR. | |||||||
5 | Table 1. Cost of Service Study Results | |||||||
Proposed Total | Proposed | % Change | ||||||
Total Current | from Current | |||||||
Class | Revenue @ | Increase @ | ||||||
Revenue | @ 100% | |||||||
100% RROR | 100% RROR | |||||||
RROR | ||||||||
RESIDENTIAL SERVICE | $ | 919,191,981 | $ | 1,003,512,461 | $ | 84,320,480 | 9.2% | |
GENERAL SERVICE | $ | 189,501,292 | $ | 203,403,855 | $ | 13,902,563 | 7.3% | |
PUBLIC SCHOOLS SM | $ | 15,673,870 | $ | 22,292,209 | $ | 6,618,339 | 42.2% | |
OIL & GAS PRODUCTION | $ | 19,027,240 | $ | 18,154,731 | $ | (872,508) | -4.6% | |
PUBLIC SCHOOLS LG | $ | 14,381,034 | $ | 18,025,916 | $ | 3,644,882 | 25.3% | |
POWER & LIGHT | $ | 485,592,371 | $ | 513,407,670 | $ | 27,815,299 | 5.7% | |
LRG. PWR & LGHT | $ | 253,022,330 | $ | 269,403,883 | $ | 16,381,554 | 6.5% | |
MUNICIPAL PUMPING | $ | 8,449,545 | $ | 8,612,063 | $ | 162,518 | 1.9% | |
MUNICIPAL LIGHTING S/L-5 | $ | 6,051,604 | $ | 8,502,289 | $ | 2,450,725 | 40.5% | |
SECURITY LIGHTING S/L-5 | $ | 13,794,478 | $ | 16,297,820 | $ | 2,503,431 | 18.1% | |
LED LIGHTING S/L-5 | $ | 14,001,310 | $ | 20,614,529 | $ | 6,613,270 | 47.2% | |
OKLA RETAIL | $ | 1,938,687,054 | $ | 2,102,227,427 | $ | 163,540,553 | 8.4% | |
JURISDICTION | ||||||||
6 Q. Are these the revenue requirements OG&E utilized to price tariffs for the respective
7 | classes? | |
8 | A. | No, as mentioned above, at times in the rate design process the revenue allocation process |
9 | may result in a particular class' allocated revenues being set at an amount higher or lower | |
10 | than is required to pays its full cost of service as identified in the COSS. | |
11 |
- Q. What are the considerations in the revenue allocation process?
- A. From OG&E's perspective, the preference is to set each class' revenue requirement as close
14 | as possible to a target RROR of 100%. We believe that ultimately each customer group | |
15 | should pay the full cost for its electric service. | However, external, or unusual |
16 | circumstances are legitimate considerations in the allocation of revenue recovery to each | |
17 | class and the Company pricing proposals have historically been reflective of other | |
18 | circumstances. | |
Direct Testimony of Bryan J. Scott | Page 5 of 7 | |
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.