OGE Energy : PUD 2021-00164 - Direct Testimony of Donald Rowlett

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

Donald R. Rowlett

on behalf of

Oklahoma Gas and Electric Company

December 30, 2021

Direct Testimony of Donald R. Rowlett	Page 1 of 25
Cause No. PUD 202100164

Donald R. Rowlett

Direct Testimony

1. Q. Please state your name and business address.
2. A. My name is Donald Rowlett. 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 the Managing Director of Regulatory Affairs for Oklahoma Gas and Electric

7	Company ("OG&E").
8

1. Q. Please summarize your educational background and professional qualifications.
2. A. I earned a Bachelor of Science degree in Business with an accounting emphasis (1980)
3. and a Master's in Business Administration (1992), from Oklahoma City University. I

12	have also earned a Ph.D. from Oklahoma State University in Business Administration. I
13	joined OG&E in 1989. I currently serve as Managing Director of Regulatory Affairs
14	where I am responsible for overseeing the Company's economic regulatory activities
15	with the Oklahoma Corporation Commission, the Arkansas Public Service Commission,
16	and the Federal Energy Regulatory Commission. I have served in various financial roles
17	in the Company including ten years as Vice President, Controller and Chief Accountant.
18	As the Company's Controller I was responsible for financial and operations accounting,
19	federal, state, and local income and property taxes and budgeting. I have also made
20	investor presentations and participated in numerous public equity and debt offerings.
21	Prior to joining OG&E, I was employed by Arthur Andersen & Co. as a financial
22	consultant and audit manager. During my employment, I performed audits of financial
23	statements in a variety of industries. Additionally, I prepared filings with the Securities
24	and Exchange Commission ("SEC") and provided clients with guidance on the financial
25	reporting requirements of the SEC and Generally Accepted Accounting Principles
26	("GAAP").

Direct Testimony of Donald R. Rowlett	Page 2 of 25
Cause No. PUD 202100164

1. Q. Have you testified previously before this Commission?
2. A. Yes. In addition to testifying before the Commission, I have testified on behalf of the

3	Company before the Arkansas Public Service Commission and the Environmental and
4	Public Works Committee in the United States Senate. I have also filed testimony before
5	the Federal Energy Regulatory Commission.
6

1. Q. What is the purpose of your testimony?
2. A. The purpose of my testimony is to discuss the relief requested and to explain why OG&E

9	is seeking a change in its base rates. In addition, I discuss some of the key issues in the
10	Company's application, summarized in Chart 1 below. Finally, I will introduce each of
11	the Company witnesses in this proceeding.
12

1. Q. Please state the relief sought from the Commission through this application.
2. A. OG&E is requesting a general rate change1 pursuant to the Commission Rules, including

15	Chapter 70 Minimum Standard Filing Requirements. The accounting exhibits, schedules,
16	testimony, and evidence that support the general rate change are included in the
17	Application Package2 filed in this cause.
18

1. Q. Did OG&E provide the Commission advance notice of the Company's Application?
2. A. Yes. A utility is required to provide the Commission a 45-day notice of its intent to file

21	an Application for a general rate change.3 The notice is required to be in writing and
22	filed with the Commission's Court Clerk. On November 15, 2021, OG&E filed a Notice
23	of Intent that the Company would be filing an application on or about December 30, 2021
24	requesting a modification to its rates and charges for its Oklahoma jurisdiction customers.

1. OAC 165:70-1-2. Definitions. "General Rate Change" means a change in rates and charges which exceeds three percent (3%) based on the previous twelve (12) months revenue generated by the existing rates for an association or electric cooperative subject to the Commission's jurisdiction pursuant to 17 O.S. Section 158.27 et seq; or a change in rates resulting in more than a one percent (1%) increase in a utility's jurisdictional annual gross operating revenues unless otherwise allowed by law. A change mandated by regulation or legislation, a change in the terms and conditions of service, a request for a special contract, or a request for a new and/or optional service does not constitute a general rate change.
2. OAC 165:70-1-2. Definitions. "Application package" means the required schedules and testimony filed by a Class A or B utility to initiate a general rate change. See OAC 165:70-3-1 and 165:70-5-4.
3. OAC 165:70-3-7(a)

Direct Testimony of Donald R. Rowlett	Page 3 of 25
Cause No. PUD 202100164

1 Q. What test year was utilized in developing the Application Package?

2	A.	The Company's exhibits are based on the financial results of the test year4 ended
3		September 30, 2021. The Application Package contains pro forma adjustments to rate
4		base5 and pro forma adjustments to operating income.6 Pro forma adjustments reflect
5		reasonably known and measurable changes that occur during and after the test year.
6
7		DISCUSSION OF RELIEF REQUESTED

1. Q. Please generally describe OG&E's request for a general rate change in this filing.
2. A. OG&E is requesting an overall increase in rates of $163.5 million annually which reflects

10	a total bill increase of 8.4% over the rates last set in July of 2018. The Company expects
11	the new rates to go into effect no later than July of 2022.
12

1. Q. Why is OG&E asking for a rate increase?
2. A. The primary reason OG&E is seeking a rate increase is to begin recovering the costs

15	associated with those items depicted in Chart 1.

4OAC 165:70-1-2. Definitions. "Test Year" means the twelve (12) month period used in determining rate base, operating income, and rate of return.

5

6

Application Package, Volume II, Section B, Schedule B-4.

Application Package, Volume II, Section H, Schedule H-3.

Direct Testimony of Donald R. Rowlett	Page 4 of 25
Cause No. PUD 202100164

Chart 1: Visual Depiction of Rate Increase Drivers

1 Q. What impact will the proposed rate increase have on monthly residential electric

2		bills?
3	A.	The average residential customer will see an increase in their bills of $9.98 per month
4		when compared to current rates.
5
6	Q.	How will OG&E's rates compare to the national average after the proposed
7		changes?

8 A. OG&E's overall retail rates advantage remains approximately the same. OG&E's rates

9	are currently well below the national average and will continue to be so even with the

Direct Testimony of Donald R. Rowlett	Page 5 of 25
Cause No. PUD 202100164