Exhibit 99.1
STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
CASE 06-M-0878 - Joint Petition of National Grid PLC and KeySpan Corporation
for Approval of Stock Acquisition and other Regulatory
Authorizations.
CASE 06-G-1185 - Proceeding on Motion of the Commission as to the Rates,
Charges, Rules and Regulations of The Brooklyn Union Gas
Company d/b/a KeySpan Energy Delivery New York for Gas
Service.
CASE 06-G-1186 - Proceeding on Motion of the Commission as to the Rates,
Charges, Rules and Regulations of KeySpan Gas East
Corporation d/b/a KeySpan Energy Delivery Long Island for
Gas Service.
MERGER & GAS REVENUE REQUIREMENT
JOINT PROPOSAL
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By:
KeySpan Corporation
The Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York
KeySpan Gas East Corporation d/b/a KeySpan Energy Delivery Long Island
National Grid plc
Niagara Mohawk Power Corporation
Staff of the New York State Department of Public Service
New York State Consumer Protection Board
City of New York
Public Utility Law Project
International Brotherhood of Electrical Workers, Locals 97,
And the Other Parties Executing Signature Pages
Dated: July 6, 2007
TABLE OF CONTENTS
I. PROCEDURAL BACKGROUND
II. OVERVIEW (INCLUDE ITEMS NOT RESOLVED)
III. DEFINITIONS
IV. GENERAL PROVISIONS
V. MERGER
VI. CORPORATE STRUCTURE AND AFFILIATE RULES
VII. FINANCIAL PROTECTIONS
VIII. TREATMENT OF GENERATION & TRANSMISSION ASSETS
IX. KEDNY RATE PLAN
X. KEDLI RATE PLAN
XI. PROVISIONS AFFECTING NIAGARA MOHAWK POWER CORPORATION
A. Merger Synergy Savings and Costs to Achieve
B. Accelerated Rate Credit
Appendix 1 - List of Testimony and Exhibits to be Admitted
Appendix 2 - KEDNY Revenue Requirement
Appendix 3 - KEDLI Revenue Requirement
Appendix 4 - Corporate Structure and Affiliate Rules
Appendix 5 - Financial Protections
Appendix 6 - Net Synergy Savings
MERGER & GAS REVENUE REQUIREMENT
JOINT PROPOSAL
This Merger & Gas Revenue Requirement Joint Proposal ("Joint Proposal") is
made as of the 6th day of July, 2007 by and among KeySpan Corporation (KeySpan),
The Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York (KEDNY),
KeySpan Gas East Corporation d/b/a KeySpan Energy Delivery Long Island (KEDLI),
National Grid plc (National Grid), Niagara Mohawk Power Corporation (Niagara
Mohawk), the Staff of the New York State Department of Public Service (Staff),
the New York State Consumer Protection Board, the City of New York, the Public
Utility Law Project, the International Brotherhood of Electrical Workers Local
97, and the other parties executing signature pages (collectively referred to
herein as "the Signatory Parties"). To the extent that a Signatory Party is not
supportive of a particular provision of the Joint Proposal, they have noted that
on their signature page(s).
I. PROCEDURAL BACKGROUND
On July 20, 2006, National Grid and KeySpan filed with the New York State
Public Service Commission (Commission) a joint petition for approval of a
proposed acquisition of the stock of KeySpan by National Grid and other
regulatory approvals (Merger Filing). Case 06-M-0878 was instituted to provide a
process for the Commission to consider the petition. The Merger Filing was later
updated.
On October 3, 2006, KEDNY filed with the Commission revised tariff leaves
intended to increase revenues from gas operations by approximately $213 million
for the 12 month period ending March 31, 2008 (KEDNY Rate Filing). The
Commission instituted Case 06-G-1185 to consider the KEDNY Rate Filing. The
KEDNY Rate Filing was later updated. The revised tariff leaves are currently
suspended.
On October 3, 2006, KEDLI filed with the Commission revised tariff leaves
intended to increase revenues from gas operations by approximately $159 million
for the 12 month period ending March 31, 2008 (KEDLI Rate Filing). The
Commission instituted Case 06-G-1186 to consider the KEDLI Rate Filing. The
KEDLI Rate Filing was later updated. The revised tariff leaves are currently
suspended.
All three of the above-mentioned cases are being considered on a common
evidentiary record.
On November 9, 2006, the Commission issued an order regarding the Merger
Filing adopting a negative declaration pursuant to the State Environmental
Quality Review Act. Accordingly, no environmental impact statement will be
prepared regarding the proposed merger.
On May 31, 2007, a Joint Proposal for Interim Energy Efficiency Programs
was executed by many of the parties to these proceedings and was filed with the
Commission.
On May 11, 2007, many of the parties to these proceedings announced that
they had reached an agreement in principle on most terms of three-year
"stand-alone" (absent a merger) rate plans for KEDNY and KEDLI (the "Stand-Alone
Rate Plans"). As of yet, a joint proposal setting forth in detail the terms for
which agreement in principle was reached has not been executed.
II. OVERVIEW
This Joint Proposal arises within the merger proceeding in Case 06-M-0878
and the rate proceedings of KEDNY and KEDLI in Cases 06-G-1185 and 06-G-1186. A
Notice of Impending Negotiations was sent to all persons reasonably known to
have an interest in the outcome of negotiations and was duly filed with the
Secretary by letter dated November 28, 2006. After notice to the parties,
settlement conferences were held among the parties that desired to participate.
Settlement is now feasible because, after thorough investigation and discussion,
the Signatory Parties hereto more fully understand their respective positions
and recognize that reasonable settlement of the discrete issues addressed herein
is possible. The Signatory Parties hereto also believe that this Joint Proposal
will further the objective of giving fair consideration to the interests of
customers and utility investors alike in assuring the provision of safe and
adequate service at just and reasonable rates.
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Regarding the proposed merger, this Joint Proposal provides the framework
under which the Signatory Parties can recommend that the acquisition of KeySpan
by National Grid could be approved as being in the public interest. It provides
safeguards regarding corporate structure and rules for affiliate transactions.
It provides protections to preserve the financial integrity of the affected
companies and to help ensure access to capital by the utility affiliates on
reasonable credit terms. It includes provisions to address concerns about
vertical market power by providing for divestiture and/or long-term contracting
arrangements and other safeguards to ensure that transmission system assets are
not managed in a manner that favors generation assets owned by affiliates to the
detriment of ratepayers.
If the merger is consummated, this Joint Proposal provides for five-year
revenue requirement rate plans that provide significant economic benefits to
KEDNY's and KEDLI's customers, and provides for an allocation of merger synergy
savings to Niagara Mohawk customers.
This Joint Proposal does not address a number of issues in the rate
proceedings of KEDNY and KEDLI in Cases 06-G-1185 and 06-G-1186 ("Reserved
Issues"). It is the intent of the Signatory Parties that the Reserved Issues
will be addressed either (a) in the intended joint proposal to Cases in Cases
06-G-1185 and 06-G-1186 setting forth in detail the terms for which agreement in
principle was reached on May 11, 2007; or (b) in "collaboratives" to be
undertaken by the parties to Cases 06-G-1185 and 06-G-1186 regarding: (i) energy
efficiency program design (the energy efficiency collaborative will proceed in
general accordance with the Joint Proposal for Interim Energy Efficiency
Programs filed with the Commission on March 31, 2007); and (ii) rate
design/revenue decoupling/and low income revenue allocation; or (c) through
litigation at the evidentiary hearings currently scheduled in Cases 06-G-1185
and 06-G-1186 for October 2007. Such Reserved Issues in the rate proceedings of
KEDNY and KEDLI in Cases 06-G-1185 and 06-G-1186 not addressed in this Joint
Proposal include, among other matters:
(a) three-year "stand-alone" rate plans for KEDNY and KEDLI (if the merger
is not consummated);
(b) site investigation & remediation (SIR) costs for the remediation of
manufactured gas plant (MGP) sites, potential incentive programs
related thereto, and the potential recovery from electric customers of
an allocation of KEDLI SIR costs with the understanding that if the
costs are not recovered from electric customers they will be recovered
from KEDLI's customers;
(c) long-term energy efficiency program design, performance targets, and
budgets funded by a surcharge to supersede the Interim Energy
Efficiency Program proposed in the May 31, 2007 Joint Proposal filed
in Cases 06-G-1185 and 06-G-1186;
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(d) revenue decoupling;
(e) institution of a low income rate program for KEDLI customers;
(f) revenue allocation and rate design, including but not limited to
general rate design changes, further development of the low income
rate programs at KEDNY and KEDLI, on-track and business incentive rate
("BIR") programs;
(g) retail access programs and rate unbundling;
(h) safety and reliability performance requirements and incentives (with
the last year's values continued without change until the next rate
filing);
(i) customer service quality performance requirements and incentives (with
the last year's values continued without change until the next rate
filing);
(j) lost and unaccounted for gas;
In addition to the above, the following issues associated with the merger are
not addressed in this Joint Proposal. These issues (Merger Reserved Issues) will
be addressed in a second phase of this proceeding. The Merger Reserved Issues
are the following:
(a) policies, procedures, and agreements for transactions among affiliates
in compliance with the provisions of Appendix 4; and
(b) transfer of gas contracts to Service Company affiliate.
III. DEFINITIONS
"Ravenswood Station" means the total electric production facilities owned and/or
leased by KeySpan-Ravenswood, LLC at its Queens, New York site in the New York
Independent System Operator's (NYISO's) Zone J. The Ravenswood Station includes:
the approximately 2,200 MW facility purchased from Consolidated Edison Company
of New York, Inc. (Con Edison) in June 1999; the 250-MW co-generation facility
KeySpan-Ravenswood, LLC constructed at the same site; and any expansion in
production facilities in Zone J from repowering or other means that will be
owned and/or leased by KeySpan-Ravenswood, LLC (or any affiliate) or that the
revenues from which will in any way redound to KeySpan-Ravenswood, LLC (or any
affiliate).
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"Zone J" means the New York City geographical area designated by the New York
Independent System Operator (NYISO) as "Zone J," currently defined by electrical
transmission interfaces by the NYISO in its Transmission Services Manual.
"Rate Year One" means January 1, 2008 through December 31, 2008.
"Rate Year Two" means January 1, 2009 through December 31, 2009.
"Rate Year Three" means January 1, 2010 through December 31, 2010.
"Rate Year Four" means January 1, 2011 through December 31, 2011.
"Rate Year Five" means January 1, 2012 through December 31, 2012.
"Stayout" means that the level of rates established pursuant to this Joint
Proposal and the other provisions of this Joint Proposal remain effective by
default, without change or reaffirmation except as stated in this Joint
Proposal, beyond the last day of Rate Year Five.
"Rate Period" means Rate Year One through Rate Year Five, plus any Stayout
period.
IV. GENERAL PROVISIONS
1. It is understood that each provision of this Joint Proposal is in
consideration and support of all of the other provisions of this Joint Proposal
and is expressly conditioned upon approval of the terms of this Joint Proposal
in full by the Commission. If the Commission fails to adopt the terms of this
Joint Proposal, the parties to the Joint Proposal shall be free to pursue their
respective positions in these proceedings without prejudice.
2. With the exception of any agreements that may pertain to the Reserved
Issues identified above, this Joint Proposal contains the entire agreement of
the Signatory Parties regarding the matters contained herein and supersedes and
replaces any and all prior or contemporaneous written and verbal agreements or
understandings.
3. The Signatory Parties, , have agreed upon the testimony and exhibits
that should be admitted into evidence to constitute the evidentiary record in
these proceedings that supports this Joint Proposal, the results of which is set
forth in "Appendix 1" attached hereto and made a part of this Joint Proposal.
4. The Signatory Parties believe that the record in this proceeding fully
justifies the approval of the terms of this Joint Proposal. It is the intent of
the Signatory Parties that the provisions of this Joint Proposal will be
approved by the Commission as being in the public interest. The Signatory
Parties agree to submit this Joint Proposal to the Commission along with a
request that the Commission adopt the terms and provisions of this Joint
Proposal as set forth herein.
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5. The Signatory Parties agree that KEDNY and KEDLI will file tariffs in a
manner consistent with the terms of this Joint Proposal.
6. Nothing in this Joint Proposal shall prohibit the Commission (upon its
own motion or upon motion of an interested party) from exercising its ongoing
statutory authority to act on the level of KEDNY's gas rates in the event of
unforeseen circumstances that, in the Commission's judgment, have such a
substantial impact on the rate of return as to render the return on the common
equity devoted to KEDNY's gas operations unreasonable, unnecessary, or
inadequate for the provision of safe and adequate service. Nothing in this Joint
Proposal shall prohibit the Commission (upon its own motion or upon motion of an
interested party) from exercising its ongoing statutory authority to act on the
level of KEDLI's gas rates in the event of unforeseen circumstances that, in the
Commission's judgment, have such a substantial impact on the rate of return as
to render the return on the common equity devoted to KEDLI's gas operations
unreasonable, unnecessary, or inadequate for the provision of safe and adequate
service.
7. Nothing in this Joint Proposal shall prohibit KEDNY or KEDLI from
implementing changes to rates or charges, in a manner to be determined by the
Commission, as may be required by newly-enacted legislation or regulations.
8. The Signatory Parties recognize that certain provisions of this Joint
Proposal contemplate actions to be taken in the future to effectuate fully this
Joint Proposal. Accordingly, the Signatory Parties agree to cooperate with each
other in good faith in taking such actions.
9. In the event of any disagreement over the interpretation of this Joint
Proposal or implementation of any of the provisions of this Joint Proposal,
which cannot be resolved informally among the Signatory Parties, such
disagreement shall be resolved in the following manner: (a) the Signatory
Parties shall promptly convene a conference and in good faith attempt to resolve
any such disagreement; and (b) if any such disagreement cannot be resolved by
the Signatory Parties, any Signatory Party may petition the Commission for
resolution of the disputed matter.
10. This Joint Proposal is being executed in counterpart originals, and
shall be binding on all of the Signatory Parties when the counterparts have been
executed.
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11. This Joint Proposal represents a negotiated agreement and the terms and
provisions of this Joint Proposal apply solely to, and are binding on each
Signatory Party only in, the context of these proceedings. None of the positions
taken herein by any Signatory Party, including agreement to the terms and
provisions of this Joint Proposal and any methodology or principle utilized
herein, may be cited or relied upon in any fashion as precedent in any other
proceeding before this Commission or before any other regulatory agency or any
court of law for any purpose, except in furtherance of ensuring the effectuation
of the purposes and results of this Joint Proposal.
12. If the merger is consummated, the rate plans provided for in this Joint
Proposal shall commence on the first day of January, 2008 (the first day of Rate
Year One) and shall continue through the last day of Rate Year Five, plus any
Stayout period. All of the provisions of this Joint Proposal regarding required
services and programs will continue beyond Rate Year Five on a year-to-year
basis until modified by the Commission. Unless otherwise specified herein, any
targets, goals, deferral thresholds or other similar items set forth in this
Joint Proposal will continue beyond Rate Year Five on a year-to-year basis at
the level set forth herein for Rate Year Five until modified by the Commission.
V. MERGER
Conditioned on the terms included in this Joint Proposal, the Signatory
Parties recommend the following findings, consents, and approvals associated
with the proposed merger between National Grid and KeySpan:
(a) The merger of KeySpan Corporation, a holding company owning directly
or indirectly the common stock of KEDNY and KEDLI, which are natural
gas corporations, and the common stock of KeySpan Generation LLC,
KeySpan-Ravenswood LLC, KeySpan-Port Jefferson Energy Center, LLC, and
KeySpan-Glenwood Energy Center, LLC, which are electric corporations,
into a subsidiary of National Grid plc is consistent with the public
interest and is approved under Section 70 of the Public Service Law.
(b) The merger of KeySpan Corporation, a holding company owning directly
or indirectly the common stock of KeySpan Communications Corporation,
which is a telephone corporation, into National Grid plc or its
subsidiary is consistent with the public interest and is approved
under Sections 99 and 100 of the Public Service Law.
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(c) Effective on the closing of the merger, KEDNY and KEDLI may adopt
fiscal years ending March 31, consistent with the National Grid
companies.
VI. CORPORATE STRUCTURE AND AFFILIATE RULES
Effective on the closing of the merger, National Grid will implement the
Corporate Structure and Affiliate Rules set forth in "Appendix 4" attached
hereto and made a part of this Joint Proposal. Such Corporate Structure and
Affiliate Rules will continue in effect unless and until such time as the
Commission authorizes an express change.
The Corporate Structure and Affiliate Rules authorize National Grid and
KeySpan to consolidate their service companies and to adopt the general
allocation approach now in place for the KeySpan service companies. That
consolidation will occur when the other required regulatory approvals are
received and the required accounting systems are in place. At that time,
National Grid shall also file with the Director of Accounting, Finance and
Economics revised policies, procedures, and agreements for transactions among
affiliates in compliance with the provisions of Appendix 4 for KEDNY, KEDLI, and
Niagara Mohawk Power Corporation ("Niagara Mohawk"). That filing shall be
treated as a Merger Reserved Issue under this Joint Proposal. Any disagreement
associated with the filing shall be referred to the Commission for decision.
In the interim, the National Grid Service Company shall execute agreements
with the KeySpan operating companies to provide services after the Merger under
its approved allocation methods, and the KeySpan service companies shall execute
agreements with the National Grid operating companies to provide services after
the Merger under their approved allocation methods. These agreements will be
filed with the Commission pursuant to Section 110 of the Public Service Law.
VII. FINANCIAL PROTECTIONS
Effective on the closing of the merger, National Grid will implement the
financial protections for KEDNY and KEDLI set forth in "Appendix 5" attached
hereto and made a part of this Joint Proposal. Such financial protections will
continue in effect unless and until such time as the Commission authorizes an
expressed change.
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VIII. TREATMENT OF GENERATION & TRANSMISSION ASSETS
A. Ravenswood Station
If the merger is consummated, National Grid agrees to the following general
principles regarding vertical market power and its ownership of the Ravenswood
Station:
(a) National Grid agrees to the goal of divesting the Ravenswood Station
in the manner described below;
(b) National Grid agrees that in the period prior to divestiture of the
Ravenswood Station, it shall take steps described below to assure that
it is financially indifferent to the price of energy in Zone J with
respect to the output of the Ravenswood Station;
(c) National Grid will plan and operate its transmission system without
regard to the financial impacts that such actions may have on the
profitability of the Ravenswood Station; and
(d) National Grid's ownership of the Ravenswood Station will not alter
National Grid's commitment to propose and build regulated transmission
lines that are needed to provide reliability or economic benefits to
customers in New York State.
To implement the above-stated general principles if the merger is
consummated, National Grid agrees that:
(1) By January 1, 2008, National Grid will enter into a single forward
financial sale contract for all the energy output from the entire
Ravenswood Station for up to a three-year term. The contract will be
subject to review by Staff to assure that the contract complies with
the intent of this Joint Proposal, and does not create any new or
unanticipated market power concerns. Any dispute between Staff and
National Grid regarding the contract will be submitted to the
Commission for resolution.
(2) No less than fourteen months prior to the end of the term of the
financial sale described in "(1)" above, National Grid will issue an
offering document requesting bids for the purchase of the Ravenswood
Station. If National Grid wishes, it may also simultaneously issue an
offering document requesting bids for an alternative backstop
long-term bilateral physical or financial contract (minimum 15 years)
for all the products of the entire Ravenswood Station. If the Federal
Energy Regulatory Commission (FERC) does not allow a long-term
bilateral physical contract for all the products of the entire
Ravenswood Station, the long-term bilateral physical contract
alternative shall not be pursued. If FERC does not allow a long-term
bilateral financial contract for all the products of the entire
Ravenswood Station, the long-term bilateral financial contract
alternative shall not be pursued. The Signatory Parties recognize that
under current FERC rules and the NYISO Tariff approval of bilateral
financial contracts is not required.
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(3) No less than six months prior to the end of the term of the financial
sale described in "(1)" above, National Grid will file with the
Commission:
(a) a petition under Section 70 of the Public Service Law seeking
approval to sell the Ravenswood Station to a counterparty that
does not own any electric transmission facilities in New York
State or any generation capacity in Zone J previously divested by
Consolidated Edison (other than NYPA), with the understanding
that such a sale would be subject to approval by the Commission
and FERC on conditions that are reasonably acceptable to National
Grid and to the purchaser, it being the expectation of the
Signatory Parties that the Commission's review of any such
Section 70 Petition would be based on substantially the same
standards and criteria as have been applied by the Commission in
reviewing the sale of other generating stations divested by
Consolidated Edison operating in the New York City market; or
(b) a petition seeking approval for an alternative backstop long-term
bilateral physical or financial contract (minimum 15 years) for
all of the products of the entire Ravenswood Station, which
petition will be subject to approval by the Commission to assure
that such contract complies with the intent of this Joint
Proposal, and does not create any new or unanticipated market
power concerns; or
(c) a statement that National Grid has not accepted a proposal for
either a divestiture or a long-term contract and, therefore,
commencing at the end of the term of the financial sale described
in "(1)", above, the revenues from all of the products of the
entire Ravenswood Station (subject to the FERC qualifying
provisions in "(2)" above) that exceed the cost of service,
including an allowed return on investment set by the Commission,
will be transferred by National Grid and applied to the benefit
of electric ratepayers in Zone J in a manner to be determined by
the Commission.
(4) In the event that National Grid makes either of the petitions
described in "3(a)" or "3(b)" above, but the Commission rejects the
petition or imposes conditions that are unacceptable to the purchaser
or counterparty, National Grid will have a one-time right to enter
into a second contract for the sale of energy pursuant to "(1)" above,
but only for a period of one year, during which time National Grid
will repeat the process described in "(2)" and "(3)" above, except
that the fourteen-month period provided for in "(2)" above will be
reduced to eleven months.
(5) In the event that National Grid makes a second petition described in
"3(a)" or "3(b)" above, by exercising its rights in "(4)" above, but
the Commission rejects the petition or imposes conditions that are
unacceptable to the purchaser or counterparty for reasons that do not
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reflect substantially the same standards and criteria as have been
applied by the Commission in reviewing the sale of other generating
stations divested by Consolidated Edison operating in the New York
City market, National Grid, Staff and any interested party that wishes
to attend will meet and determine whether there are additional options
that could be considered in lieu of a cost-of-service approach.
(6) The revenues from all of the products of the entire Ravenswood Station
that exceed the cost of service, including an allowed return on
investment set by the Commission, will be transferred by National Grid
and applied to the benefit of electric ratepayers in Zone J in a
manner to be determined by the Commission:
(a) commencing January 1, 2008 if National Grid does not make an
approved financial sale described in "(1)" above by January 1,
2008;
(b) commencing upon the expiration of any approved financial sale
described in "(1)" or second financial sale described in "(4)"
above unless replaced by divestiture or an alternative backstop
long-term bilateral physical or financial contract (minimum 15
years) for all of the products of the entire Ravenswood Station;
and
(c) commencing upon the expiration of any alternative backstop
long-term bilateral physical or financial contract unless
replaced by divestiture or another alternative backstop long-term
bilateral physical or financial contract (minimum 15 years) for
all of the products of the entire Ravenswood Station.
(7) In the event the revenues from all of the products of the entire
Ravenswood Station that exceed the cost of service, including an
allowed return on investment set by the Commission, will be
transferred by National Grid and applied to the benefit of electric
ratepayers in Zone J in a manner to be determined by the Commission,
the following shall apply:
(a) The cost of service associated with the Ravenswood Station will
be set by the Commission from time to time in the same
substantive manner as the Commission used when it set electric
rates that included regulated costs for electric generation with
an equity return calculated using the average of the Implied
Return on the Standard & Poor's 500 and the Requied Return on the
Standard & Poor's 500 as published in Merrill Lynch Quantitative
Profiles. .
(b) Staff will have free access to all the books and records of
National Grid and its affiliates that relate to the Ravenswood
Station.
(c) The rate base for the cost of service will be based on KeySpan's
purchase price for the Ravenswood Station, together with any
reasonable investments made by KeySpan in the Ravenswood Station
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since its acquisition of the plant, including the cost of
construction of KeySpan's new combined cycle plant, less
retirements and depreciation assuming that the Ravenswood
combined cycle Unit 40 was financed in a manner that would be on-
balance sheet rather than financed off-balance sheet through a
sale-lease-back transaction.
(d) The mechanism described above for calculating the cost of service
associated with the Ravenswood Station, and the transfer for the
benefit of electric rate payers in Zone J of revenues that exceed
the cost of service, is not an establishment of "cost of service
regulation" and provides no recourse for obtaining any revenues
for electric ratepayers in Zone J.
(e) During the period that revenues in excess of the cost of service
are directed to Zone J electric ratepayers as provided in this
subsection, National Grid will implement the following bidding
protocols:
i. Capacity will be bid at zero;
ii. Energy will be bid at the lower of marginal costs or
the NYISO reference price for the unit;
iii. Ancillary services will be bid at the lower of marginal
costs or the otherwise applicable bid or price cap for
the unit.
(8) National Grid will provide Staff with draft and final documents
related to and will apprise Staff from time to time of the progress of
all offerings described above (all activities in "(2)" above).
National Grid will retain all offers and other communications from
bidders and other potential counterparties for a minimum of one year
after National Grid's filing for approval of any divestiture or
alternative backstop long-term bilateral physical or financial
contract (minimum 15 years) for all of the products of the entire
Ravenswood Station.
B. Other Commitments
1. For the period prior to the divestiture of Ravenswood Station in
accordance with Section 3(a) or the implementation of the alternative long-terms
bilateral physical or financial contract pursuant to Section 3(b):
(a) National Grid agrees to continue to examine the necessity and
practicality of building regulated transmission projects. Additionally,
National Grid in collaboration with Con Edison, will perform, or agree to
perform, a feasibility study and stands ready to enter into good faith
negotiations with Con Edison and other interested parties to determine fair
and reasonable recovery and allocation of costs if either or both utilities
propose the New Scotland to Pleasant Valley Reconstruction and Sprainbrook
to Rainey 345 kV transmission project.
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(b) National Grid will continue to vote in the transmission segment in
the NYISO stakeholder process, and will vote on market rules in a manner
designed to further the interests of its electric transmission and
distribution customers.
(c) National Grid agrees to complete within 180 days of the closing of
the KeySpan merger, a repowering study of the Ravenswood Generating
Station, particularly investigating the feasibility of retiring Units 10
and 20, which have a total of 750 MWs of steam generating capacity, and
replacing them with new combined cycle generation having equivalent or
greater capacity.
(d) Immediately after closing of the merger, National Grid will be
willing to enter into good faith negotiations with Consolidated Edison
Company of New York, Inc. (Con Edison) to the end of supplying Con Edison
with a source of economical steam for resale to its steam customers and
enabling Con Edison to retire the "A" House steam plant located at the
Ravenswood site.
2. Unless modified by the Commission:
(a) National Grid will not own or develop additional generation
facilities in New York State unless specifically requested by LIPA or NYPA
under a long term contract, or unless such ownership or development occurs
as a result of repowering its existing generation facilities.
(b) National Grid will not execute any new financial swaps (forward
purchases of capacity) of any amount in Zone J. Financial sales of capacity
equal to no more than the total available capacity at the Ravenswood
Station will be allowed.
(c) National Grid will continue to be bound by the Commission's
vertical market power guidelines in any follow-on transactions in New York
State. If at any time it appears that any generation facilities currently
under long term contract to NYPA or LIPA will no longer be under long term
contract to NYPA or LIPA due to contract expiration or otherwise, National
Grid will prepare and file with the Commission an analysis demonstrating
how its continued ownership of such generation facilities conforms or does
not conform with the Commission's vertical market power guidelines, and if
necessary, identifying conditions under which such ownership could conform.
(d) KeySpan (pre-closing) and National Grid (post-closing) agree that
they each will respectively work cooperatively and in good faith with the
City of New York and other parties to resolve expeditiously issues pending
at the Federal Energy Regulatory Commission surrounding the capacity (UCAP)
market in New York City (NYISO Zone J).
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IX. KEDNY RATE PLAN
A. Overall Revenue Requirement
If the merger is consummated, the Signatory Parties have agreed upon
expense and revenue adjustments to the KEDNY Rate Filing to be allowed as the
basis for calculating revenue requirement, and a calculation of KEDNY revenue
requirement to be allowed as the basis for setting rates, the results of which
are set forth in "Appendix 2" attached hereto and made a part of this Joint
Proposal. The calculation of revenue requirement indicates no increase in base
KEDNY Gas Delivery Service Rates for Rate Year One, Rate Year Two, Rate Year
Three, Rate Year Four or Rate Year Five. The calculation of revenue requirement,
based on estimated gas costs, indicates an increase in costs in the gas
adjustment clause (GAC) of $26.7 million for Rate Year One, with no additional
increases, other than minor inflationary increases (approximately $300,000 per
year) on costs transferred to the GAC as part of rate unbundling, indicated for
Rate Year Two, Rate Year Three, Rate Year Four or Rate Year Five.
Commodity-related uncollectible expense, purchased gas working capital and
return on gas in storage will be assigned fixed factors and will reconcile to
actual gas costs. In addition, one hundred percent of net savings (savings less
cost to achieve) KEDNY attains in its combined gas resource portfolio as a
result of the merger will flow to KEDNY gas commodity customers through the GAC.
KEDNY Gas Delivery Service revenue requirement will remain frozen at the levels
reflected in Appendix 2 through the five rate years and thereafter through the
end of the Rate Period of this Joint Proposal, without adjustment up or down,
except as specifically set forth in this Joint Proposal. Except as otherwise
provided in this Joint Proposal, KEDNY will not file new tariff leaves for
existing services designed to produce additional annual revenues to become
effective prior to January 1, 2013. KEDNY shall be allowed to file tariffs for
new services.
B. Merger Synergy Savings and Costs to Achieve
The calculation of revenue requirement in Section IX.A reflects the flow
through of 50 percent of the net synergy savings allocable to KEDNY as a share
of $156 million of estimated annual mature synergy savings on the KeySpan and
National Grid systems over the first five years of the merger, which excludes
14
efficiency gains that could occur without the merger and gas commodity savings
which will flow to ratepayers through the various gas adjustment clauses. 100
percent of efficiency gains applicable to KEDNY have been reflected directly.
Following the termination of the Rate Period, KEDNY's cost of service will be
based on its costs, which will reflect 100 percent of KEDNY's share of any
synergy savings from the merger.
The net synergy savings also reflect the flow through of the costs to
achieve these synergy savings allocable to KEDNY as a share of the levelization
of $398 million in costs to achieve based on an approach using a 7.58 percent
return. This synergy savings amount excludes executive benefits, capitalized
information technology costs, and the costs to achieve associated with
efficiency gains. KEDNY shall be authorized to include the annual amortizations
of its allocation of the $398 million of costs to achieve in years six through
ten in the event that it adjusts its base delivery rates in those years.
Individual components of the $398 million costs to achieve, the annual gross
synergy savings over the first five years of the rate plan and the allocation
factor used to develop KEDNY's share of the net synergy savings are included in
Appendix 6 attached hereto and made a part of this Joint Proposal. KEDNY shall
also record separately its costs to achieve associated with the National
Grid/KeySpan merger in a separate work order, and exclude any of these costs to
achieve other than the agreed upon allowance from its future cost of service
filings.
C. Adjustability
No adjustments, reconciliations or deferrals shall be allowed during the
Rate Period except as set forth in this Joint Proposal, as determined in another
phase of these proceedings, or as authorized by the Commission.
For each rate year, KEDNY will reconcile the following costs recovered in
base KEDNY Gas Delivery Service Rates to the levels set forth below. All
deferred amounts will be reflected in the existing KEDNY Balancing Account and
recovered from customers or credited to customers after the expiration of the
KEDNY Rate Period in a manner to be determined by the Commission.
1. Pensions and Other Post Employment Benefits ("OPEB")
----------------------------------------------------
On the first day of Rate Year One, KEDNY will return to the Commission's
Statement of Policy for Pensions and OPEBs, issued September 7, 1993 in Case
91-M-0980, and will reconcile its actual pension and OPEB expense to the
Estimated Pension and OPEB Expense shown below (millions). Fair value
15
adjustments to the Pension and OPEB plans made in connection with the merger
shall be amortized over ten years in accordance with the Statement of Policy and
reflected in the reconciliation of actual pension and OPEB expense to the
Estimated Pension and OPEB Expense. Settlement and curtailment costs from
merger-related programs for KEDNY, which are included in costs to achieve, shall
be excluded from the pension and OPEB reconciliation. In addition to the
reconciliation, KEDNY will reduce the annual revenue requirement by $6 million
for the five Rate Years as payment for returning to the pension policy. This $30
million together with the $99 million reduction in revenue requirements over the
five rate years shall be recorded as a regulatory liability and amortized over
the five rate years to match the adjustments to the cost of service shown in
Appendix 2 and fund KEDNY's Pension/OPEB plans in Rate Year One by $60 million,
less the funding that KEDNY has made since March 31, 2007. The benefit of this
funding shall inure only to KEDNY ratepayers. As part of this Joint Proposal
KEDNY agrees to participate in a study to determine what the appropriate
starting deferral balance as of September 30, 1996, should be when KEDNY is on
the policy statement.
Pension Expense OPEB Expense
--------------- ------------
Rate Year One $13.766 $17.178
Rate Year Two $14.151 $17.659
Rate Year Three $14.547 $18.154
Rate Year Four $14.9545 $18.6625
Rate Year Five $15.3735 $19.1855
Subsequent years will be reconciled to $15.3735 million for Pensions and
$19.1855 million for OPEBs.
2. Property and Special Franchise Taxes
------------------------------------
KEDNY will defer 90% of the difference between its actual property and
special franchise taxes and the following amounts (millions):
Rate Year One - $119.709
Rate Year Two - $125.694
Rate Year Three - $131.979
Rate Year Four - $138.578
Rate Year Five - $145.507
16
Subsequent years will be reconciled for property and special franchise
taxes to $145.507 million. If KEDNY is successful in obtaining tax refunds, it
will have the right to petition the Commission to share in such refunds. Other
parties may take any position concerning any Petition filed by KEDNY.
3. SIR Costs
---------
Subject to the cost sharing incentive mechanism described below, this Joint
Proposal provides for the reconciliation or "true-up" of 100% of KEDNY's actual
SIR costs. The base KEDNY Gas Delivery Service Rates established pursuant to
this Joint Proposal reflect the annual amortization of $2.787 million of SIR
costs which will increase by $3.186 million in Rate Year Four to reflect the
shift of the KEDNY merger expense amortization to SIR cost category.
KEDNY will be permitted to retain 10% of any recovery of SIR costs from
insurance carriers and/or other potentially responsible parties, net of costs to
recover such as, attorney fees, expert and consultant fees. KEDNY will pursue
such recoveries aggressively and will credit 90% of such net recoveries against
its SIR cost balance.
In the event that KEDNY disposes of any property upon which investigation
and remediation activities have occurred, it will credit after-tax gains
resulting from such disposition to the total SIR cost for the specific site.
For any SIR activity engaged in by KEDNY following the effective date of
the rates established in this proceeding, KEDNY agrees, subject to the
Department of Environmental Conservation's (DEC) determination of the nature and
scope of the SIR Activity, to consult with Staff and any other interested party,
including the City of New York, in order to establish a reasonable targeted cost
level for each separate phase of the SIR Activity on any particular site.
Notwithstanding the above provisions the parties hereto acknowledge that
(i) the DEC has primary jurisdiction over the activities of KEDNY in its SIR
activity, with the Department of Health (DOH) having responsibility for
supporting the DEC in the assessment of health risk associated with SIR
activities; (ii) in the exercise of its jurisdiction over KEDNY's SIR Activity,
the DEC provides various forums and other opportunities for interested parties
to comment on and participate in, the process of identifying potential SIR
sites, investigating such sites, and if necessary, determining the most
appropriate methods, timing, and objectives of remediation; (iii) that nothing
in this Joint Proposal is intended to or infringes on the rights of DEC or DOH
in the exercise of their respective jurisdiction, or on the rights of interested
parties to comment on and participate in the DEC processes described above.
17
4. Capital Tracker
---------------
i. City/State Construction
-----------------------
The projected level of City/State Construction expenditures, net of
reimbursements, for calendar year 2008, 2009, 2010, 2011, and 2012 is set forth
in Appendix 2, page 21. To the extent that KEDNY's actual capital spending for
City/State construction net of reimbursements differs from the amount set forth
in Appendix 2, page 21, in any calendar year, KEDNY will defer to the Balancing
Account the full revenue requirement effect associated with the difference. If
KEDNY's actual City/State construction expenditures exceed the level set forth
in Appendix 2, page 21, by more than 20 percent then KEDNY shall have the right
to defer following a filing with the Director of Accounting, Finance, and
Economics that demonstrates that amounts were reasonable and beyond the
Company's control. Any disagreement associated with the filing shall be referred
to the Commission for decision.
ii. Non-Growth-Related Capital
--------------------------
If at the end of any calendar year 2008 through 2012, KEDNY has spent less
than the amount forecasted in the categories of Non-Growth , LNG Liquefaction
System, and Information Technology, Facilities, and Other Capital Expenditures
set forth on Appendix 2, page 21, KEDNY will defer the full revenue requirement
effect of any shortfall for each category to its Balancing Account. For purposes
of this provision, the Growth Capital category is excluded and limited to
capital costs for local main extensions, services and meters.
5. Exogenous Costs
---------------
One hundred percent of all Exogenous Costs (including any credits) shall be
deferred and reflected in the KEDNY Balancing Account. "Exogenous Costs" means
all of the incremental effects on KEDNY's costs, revenues, or revenue
requirements above or below the amounts set forth in Appendix 2 associated with
or caused by:
(i) any externally imposed accounting change;
(ii) any change in the Federal, state or local rates, laws, regulations, or
precedents governing income, revenue, sales, or franchise taxes; or
(iii) any legislative, court, or regulatory change, which imposes new or
modifies existing obligations or duties.
18
If these Exogenous Costs individually in any one Rate Year ending December 31
exceed three percent (3%) of KEDNY's pre-tax utility income (determined in
accordance with the methodology set forth for Earnings Sharing in the KEDNY
Merger Rate Plan) for the year in which the change first occurs, the total
impact of the Exogenous Costs will be included in the Balancing Account pursuant
to this section. In the event that exogenous costs are incurred, KEDNY shall
file a letter with the Director of Accounting, Finance, and Economics setting
forth the rational for the deferral and its calculation. Any disagreement
associated with the filing shall be referred to the Commission for a decision.
6. Additional Deferrals
--------------------
Nothing in this Joint Proposal shall preclude KEDNY from implementing
additional deferrals as the result of the resolution of Reserved Issues or if
otherwise approved by the Commission.
7. Limitation on Deferrals
-----------------------
When calculating the level of earned common equity return that may be
subject to sharing under Section IX.E of this Proposal, KEDNY will reduce
expenses (debits) deferred for later recovery pursuant to the Proposal by up to
50% of the total deferral in any Rate Year, provided, however, that such
reduction in deferrals will not cause the resulting earnings to decrease below
11.3%, and provided further that deferrals of SIR costs, deferrals associated
with incentives, deferrals associated with amounts recovered through the GAC
and/or TAC, deferred DSM costs, deferred Pension and OPEB expenses, and
deferrals of the revenue requirements associated with City/State Construction
expenditures will be excluded from this deferral limitation provision.
D. Other Provisions
1. Temperature Controlled and Interruptible Services
-------------------------------------------------
Temperature Controlled Service and Interruptible Service will remain as
distinct service classifications. However, the terms of the Temperature
Controlled Service Classification will be modified to include an annual price
cap that equals the annual revenue, including all surcharges, that would be
derived from providing service to such customers under S.C. No. 2. The monthly
price cap will be removed from the tariff for the Temperature Controlled Service
Classification. In addition, KEDNY's Temperature Controlled Service
Classification will be changed so that the allocation of gas demand charges to
Temperature Controlled Sales customers will increase from $.10/dth to $.46/dth.
KEDNY will credit all such allocated demand charges paid to firm customers
through the GAC.
19
E. Earnings Sharing
Following each of the five rate years, KEDNY will make a computation of its
gas rate of return on common equity capital (ROE) for the applicable preceding
rate year utilizing a capital structure with an equity component equal to 45
percent. In the event of a Stayout, KEDNY will make the computation for any
subsequent twelve-month period during which the Stayout was in effect for at
least a portion of the twelve-month period. The computations and the underlying
data will be made available to the Signatory Parties and filed with the
Commission not later than 150 days following the end of the applicable
twelve-month period. The filings will include supporting workpapers and the ROE
calculation based on traditional ratemaking practices and methodologies
applicable to KEDNY as to includable costs, revenues and appropriate capital
structure. The computation of ROE will be calculated from KEDNY's books of
account for the applicable twelve-month period, except that:
(a) KEDNY's rate base shall not include any goodwill associated with the
National Grid/KeySpan merger,
(b) KEDNY's return shall exclude the effects of discrete incentives, if
any, as may be applied as a result of this or another phase of these
proceedings,
(c) KEDNY's operating expenses shall reflect the levelized cost to achieve
and synergy savings shown on page 1 of Appendix 6 such that 50 percent of
the levelized net synergy savings (i.e., line 13 of page 1 of Appendix 6)
shall be excluded from the earnings calculation. This provision will not
extend in the event of a Stayout.
(d) KEDNY's return shall exclude the effect of any costs to achieve merger
savings, which are associated with executive benefits,
(e) KEDNY shall include the annual amortization of the regulatory liability
associated with any margin revenues that are not realized in actual sales
to customers and are being amortized over the five Rate Years to match the
adjustments to the cost of service shown in Appendix 2,
(f) KEDNY shall include in the earnings sharing calculation the annual
amortization of the regulatory liability associated with the company's buy
back and return to the Commission's Pension and OPEB Policy Statement, and
20
(g) KEDNY's return shall exclude revenue adjustments due to prior period
over- or under-revenue recoveries related to revenue decoupling mechanisms.
If the level of earned common equity return in any rate year exceeds 10.5
percent ("Earnings Sharing Threshold"), the amount in excess of 10.5% shall be
deemed "Shared Earnings" for the purposes of this Joint Proposal. In the event
of a Stayout, the earnings sharing provisions will continue for the Rate period,
to be applied, if necessary, on a pro-rata basis based on monthly operating
revenues. The customers' share of any earnings will be credited to KEDNY's
Balancing Account for the benefit of customers. For each twelve-month period
covered by this Joint Proposal, KEDNY will allocate the revenue equivalent of
its earned common equity return, if any, in excess of the 10.5 percent Earnings
Sharing Threshold as follows:
(a) for the first 200 basis points above the Earnings Sharing Threshold
(i.e. >10.5% - 12.5%), 50% of the revenue equivalent of any Shared
Earnings will be deferred for the benefit of customers and the
remaining 50% will be retained by KEDNY;
(b) for the next 100 basis points above the Earnings Sharing Threshold
(i.e. >12.5% to 13.5%), 65% of the revenue equivalent of the Shared
Earnings will be deferred for the benefit of customers and 35% will be
retained by KEDNY; and
(c) all Shared Earnings in excess of 13.5% will be deferred for the
benefit of customers.
Pursuant to another phase of these proceedings, the Signatory Parties will
collaborate to establish certain targets associated with the implementation and
operation of demand side management programs. In the event that these targets
are met in any applicable twelve-month period, KEDNY's Earnings Sharing
Threshold and all other earnings sharing thresholds as identified above shall be
adjusted upward by 10 basis points for the applicable twelve-month period, as
follows:
(a) for the first 200 basis points above the Earnings Sharing Threshold
(i.e. >10.6% - 12.6%), 50% of the revenue equivalent of any Shared
Earnings will be deferred for the benefit of customers and the
remaining 50% will be retained by KEDNY;
(b) for the next 100 basis points above the Earnings Sharing Threshold
(i.e. >12.6% to 13.6%), 65% of the revenue equivalent of the Shared
Earnings will be deferred for the benefit of customers and 35% will be
retained by KEDNY; and
(c) all Shared Earnings in excess of 13.6% will be deferred for the
benefit of customers.
21
X. KEDLI RATE PLAN
A. Overall Revenue Requirement
If the merger is consummated, the Signatory Parties have agreed upon
expense and revenue adjustments to the KEDLI Rate Filing to be allowed as the
basis for calculating revenue requirement, and a calculation of KEDLI revenue
requirement to be allowed as the basis for setting rates, the results of which
are set forth in "Appendix 3" attached hereto and made a part of this Joint
Proposal. The calculation of revenue requirement indicates an increase of $60
million in base KEDLI Gas Delivery Service Rates for Rate Year One, with no
additional increases indicated for Rate Year Two, Rate Year Three, Rate Year
Four or Rate Year Five. The calculation of revenue requirement, based on
estimated gas costs, indicates an increase in costs in the gas adjustment clause
(GAC) of $12.5 million for Rate Year One, with no additional increases, other
than minor inflationary increases (approximately $90,000 per year) on costs
transferred to the GAC as part of rate unbundling, indicated for Rate Year Two,
Rate Year Three, Rate Year Four or Rate Year Five. Commodity-related
uncollectible expense, purchased gas working capital and return on gas in
storage will be assigned fixed factors and will reconcile to actual gas costs.
In addition, one hundred percent of net savings (savings less cost to achieve)
KEDLI attains in its combined gas resource portfolio as a result of the merger
will flow to KEDLI gas commodity customers through the GAC. KEDLI Gas Delivery
Service revenue requirement will remain frozen at the levels reflected in
Appendix 2 through the five rate years and thereafter through the end of the
Rate Period of this Joint Proposal, without adjustment up or down, except as
specifically set forth in this Joint Proposal. Except as otherwise provided in
this Joint Proposal, KEDLI will not file new tariff leaves for existing services
designed to produce additional annual revenues to become effective prior to
January 1, 2013. KEDLI shall be allowed to file tariffs for new services.
B. Merger Synergy Savings and Costs to Achieve
The calculation of revenue requirement in Section X.A reflects the flow
through of 50 percent of the net synergy savings allocable to KEDLI as a share
of $156 million of estimated annual mature synergy savings on the KeySpan and
National Grid systems over the first five years of the merger, which excludes
efficiency gains that could occur without the merger and gas commodity savings
22
which will flow to ratepayers through the various gas adjustment clauses. 100
percent of efficiency gains applicable to KEDLI have been reflected directly.
Following the termination of the Rate Period, KEDLI's cost of service will be
based on its costs, which will reflect 100 percent of KEDLI's share of any
synergy savings from the merger. The net synergy savings also reflects the flow
through of the costs to achieve these synergy savings allocable to KEDLI as a
share of the levelization of $398 million in costs to achieve based on an
approach using an 8.39 percent return. This synergy savings amount excludes
executive benefits, capitalized information technology costs, and the costs to
achieve associated with efficiency gains. KEDLI shall be authorized to include
the annual amortizations of its allocation of the $398 million of costs to
achieve in years six through ten in the event that it adjusts its base delivery
rates in those years. Individual components of the $398 million costs to
achieve, the annual gross synergy savings over the first five years of the rate
plan and the allocation factor used to develop KEDLI's share of the net synergy
savings are included in Appendix 6 attached hereto and made a part of this Joint
Proposal. KEDLI shall also record separately its costs to achieve associated
with the National Grid/KeySpan merger in a separate work order, and exclude any
of these costs to achieve other than the agreed upon allowance from its future
cost of service filings.
C. Adjustability
No adjustments, reconciliations or deferrals shall be allowed during the
Rate Period except as set forth in this Joint Proposal, as determined in another
phase of these proceedings, or as authorized by the Commission.
For each Rate Year KEDLI will reconcile the following costs recovered in
base KEDLI Gas Delivery Service Rates to the levels set forth below. All
deferred amounts will be reflected in the existing KEDLI Balancing Account and
recovered from customers or credited to customers after the expiration of the
KEDLI Rate Period in a manner to be determined by the Commission.
1. Pensions and Other Post Employment Benefits ("OPEB")
----------------------------------------------------
KEDLI will reconcile its actual pension and OPEB expense to the Estimated
Pension and OPEB Expense shown below (millions). Fair value adjustments to the
Pension and OPEB plans made in connection with the merger shall be amortized
over ten years in accordance with the Statement of Policy and reflected in the
reconciliation of actual pension and OPEB expense to the Estimated Pension and
OPEB Expense. Settlement and curtailment costs from merger-related programs for
23
KEDLI, which are included in costs to achieve, shall be excluded from the
pension and OPEB reconciliation. As part of this Joint Proposal, KEDLI agrees to
participate in a study to determine what the appropriate deferral balance should
be at the start of the rate plan.
Pension Expense OPEB Expense
--------------- ------------
Rate Year One $10.084 $12.413
Rate Year Two $10.367 $12.761
Rate Year Three $10.657 $13.118
Rate Year Four $10.955 $13.485
Rate Year Five $11.262 $13.863
Subsequent years will be reconciled to $11.262 million for Pensions and $13.863
million for OPEBs.
2. Property and Special Franchise Taxes
------------------------------------
KEDLI will defer 90% of the difference between its actual property and
special franchise taxes and the following amounts (millions):
Rate Year One - $97.610
Rate Year Two - $102.491
Rate Year Three - $107.615
Rate Year Four - $112.996
Rate Year Five - $118.646
Subsequent years will be reconciled for property and special franchise taxes to
$118.646 million.
If KEDLI is successful in obtaining tax refunds, it will have the right to
petition the Commission to share in such refunds. Other parties may take any
position concerning any Petition filed by KEDLI.
The above reconciliation excludes all refunds associated with KEDLI's
ongoing litigation with Nassau County over its prior assessments of property
taxes in Index Nos. 011695-97, 011440-99, which are pending before the New York
Supreme Court, Nassau County ("Nassau County Litigation"). KEDLI will retain all
refunds or prospective reductions in property taxes that it may receive through
litigation or settlement of the Nassau County litigation even if those refunds
or reductions occur after the Rate Plan period. Accordingly, for the purposes of
24
16 NYCRR ss.89.3, the Signatory Parties agree that 100 percent of the tax
refunds or prospective reductions would be retained by KEDLI and not distributed
to its customers. Nothing in this Merger Joint Proposal shall in any way
restrict the ability of KEDLI to settle this property tax dispute with Nassau
County or affect the form of that settlement. The Signatory Parties stipulate
that by approving this Joint Proposal the Commission is neither determining
liability nor the amount of damages in the Nassau County Litigation. Rather, the
resolution in this Joint Proposal is for rate making purposes only and shall not
prejudice any party in the ongoing Nassau County Litigation.
3. SIR Costs
---------
Subject to the cost sharing incentive mechanism described below, this Joint
Proposal provides for the reconciliation or "true-up" of 100% of KEDLI's actual
SIR costs. The base KEDLI Gas Delivery Service Rates established pursuant to
this Joint Proposal reflect the annual amortization of $2.444 million of SIR
costs which will increase by $657,000 in Rate Year Four to reflect the shift of
the KEDLI merger expense amortization to SIR cost category.
KEDLI will be permitted to retain 10% of any recovery of SIR costs from
insurance carriers and/or other potentially responsible parties, net of costs to
recover such as, attorney fees, expert and consultant fees. KEDLI will pursue
such recoveries aggressively and will credit 90% of such net recoveries against
its SIR cost balance.
In the event that KEDLI disposes of any property upon which investigation
and remediation activities have occurred, it will credit after-tax gains
resulting from such disposition to the total SIR cost for the specific site.
For any SIR activity engaged in by KEDLI following the effective date of
the rates established in this proceeding, KEDLI agrees, subject to the
Department of Environmental Conservation's (DEC) determination of the nature and
scope of the SIR Activity, to consult with Staff and any other interested party,
including the Suffolk and Nassau Counties and the City of New York, in order to
establish a reasonable targeted cost level for each separate phase of the SIR
Activity on any particular site.
Notwithstanding the above provisions the parties hereto acknowledge that
(i) the DEC has primary jurisdiction over the activities of KEDLI in its SIR
activity, with the Department of Health (DOH) having responsibility for
supporting the DEC in the assessment of health risk associated with SIR
activities; (ii) in the exercise of its jurisdiction over KEDLI's SIR Activity,
25
the DEC provides various forums and other opportunities for interested parties
to comment on and participate in, the process of identifying potential SIR
sites, investigating such sites, and if necessary, determining the most
appropriate methods, timing, and objectives of remediation; (iii) that nothing
in this Joint Proposal is intended to or infringes on the rights of DEC or DOH
in the exercise of their respective jurisdiction, or on the rights of interested
parties to comment on and participate in the DEC processes described above.
4. Capital Tracker
---------------
i. City/State Construction
-----------------------
The projected level of City/State Construction expenditures, net of
reimbursements, for calendar year 2008, 2009, 2010, 2011, and 2012 is set forth
on Appendix 3, page 21. To the extent that KEDLI's actual capital spending for
City/State construction, net of reimbursements, differs from the amount set
forth in Appendix 3, page 21, by more than 20 percent in any calendar year,
KEDLI will defer to the Balancing Account the full revenue requirement effect
associated with the difference. If KEDLI's actual City/State construction
expenditures exceed the level set forth in Appendix 3, page 21, then KEDLI shall
have the right to defer following a filing with the Director of Accounting,
Finance, and Economics that demonstrates that amounts were reasonable and beyond
the Company's control. Any disagreement associated with the filing shall be
referred to the Commission for decision.
ii. Non-Growth-Related Capital
--------------------------
If at the end of any calendar year 2008 through 2012, KEDLI has spent less
than the amount forecasted in the categories of Non-Growth, Islander East
Alternative, and Information Technology, Facilities, and Other Capital
Expenditures set forth on Appendix 3, page 21, KEDLI will defer the full revenue
requirement effect of any shortfall for each category to its Balancing Account.
For purposes of this provision, the Growth Capital category is excluded and
limited to capital costs for local main extensions, services and meters.
With respect to capital expenditures associated with its Pipeline Safety
Replacement Program, to the extent that KEDLI underspends its budget for this
Program in any one year, it will be permitted to carry forward such unexpended
amount for future calendar years. If by the end of calendar year 2012 there is
still a carry forward balance, KEDLI will defer in the Balancing Account the
full revenue requirement associated with the unspent balance from the year it
was not spent.
26
KEDLI's Gas Business Unit Capital forecast includes $23 million of capital
expenditures that are associated with the construction of new and reinforced
facilities required to receive additional quantities of gas on Long Island
commencing on November 1, 2008. The $23 million capital expenditure level
assumes that these quantities will be delivered at South Commack by the Iroquois
pipeline. In the event that the Islander East pipeline receives all necessary
approvals to commence construction in time to meet the in-service date of
November 2008 such additional quantities will be delivered to Long Island by
Islander East rather than by Iroquois. If such event occurs, KEDLI will advise
the Commission in writing and KEDLI will be permitted to defer the actual
difference between the full revenue requirement effect associated with the $23
million placeholder amount described above and the lesser of the full revenue
requirement effect associated with the total construction cost of Islander East
or $46.9 million.
5. Exogenous Costs
---------------
One hundred percent of all Exogenous Costs (including any credits) shall be
deferred and reflected in the KEDLI Balancing Account. "Exogenous Costs" means
all of the incremental effects on KEDLI's costs, revenues, or revenue
requirements above or below the amounts set forth in Appendix 3 associated with
or caused by:
(i) any externally imposed accounting change;
(ii) any change in the Federal, state or local rates, laws, regulations, or
precedents governing income, revenue, sales, or franchise taxes; or
(iii) any legislative, court, or regulatory change, which imposes new or
modifies existing obligations or duties.
If these Exogenous Costs individually or collectively in any one Rate Year
ending December 31 exceed three percent (3%) of KEDLI's pre-tax utility income
(determined in accordance with the methodology set forth for Earnings Sharing in
the KEDLI Merger Rate Plan) for the year in which the change first occurs, the
total impact of the Exogenous Costs will be included in the Balancing Account
pursuant to this section. In the event that exogenous costs are incurred, KEDLI
shall file a letter with the Director of Accounting, Finance, and Economics
setting forth the rational for the deferral and its calculation. Any
disagreement associated with the filing shall be referred to the Commission for
a decision.
27
6. Additional Deferrals
--------------------
Nothing in this Merger Joint Proposal shall preclude KEDLI from
implementing additional deferrals as the result of the resolution of Reserved
Issues or if otherwise approved by the Commission.
7. Limitation on Deferrals
-----------------------
When calculating the level of earned common equity return that may be
subject to sharing under Section X.E of this Proposal, KEDLI will reduce
expenses (debits) deferred for later recovery pursuant to the Proposal by up to
50% of the total deferral in any Rate Year, provided, however, that such
reduction in deferrals will not cause the resulting earnings to decrease below
11.3%, and provided further that deferrals of SIR costs, deferrals associated
with incentives, deferrals associated with amounts recovered through the GAC
and/or TAC, deferred DSM costs, deferred Pension and OPEB expenses, and
deferrals of the revenue requirements associated with City/State Construction or
other specific capital expenditures identified in Section 4 will be excluded
from this deferral limitation provision. D. Other Provisions
1. Temperature Controlled and Interruptible Services
-------------------------------------------------
Temperature Controlled Service and Interruptible Service will remain as
distinct service classifications. However, the terms of the Temperature
Controlled Service Classification will be modified to include an annual price
cap to equal the annual revenue, including all surcharges, that would be derived
from providing service to such customers under S.C. No. 2. The monthly price cap
will be removed from the tariff for the Temperature Controlled Service
Classification. In addition, KEDLI's Temperature Controlled Service
Classification will be changed so that the allocation of gas demand charges to
Temperature Controlled Sales customers will increase from $.10/dth to $.46/dth.
KEDLI will credit all such allocated demand charges paid to firm customers
through the GAC.
E. Earnings Sharing
Following each of the five rate years, KEDLI will make a computation of its
gas rate of return on common equity capital (ROE) for the applicable preceding
rate year utilizing a capital structure with an equity component equal to 45
percent. In the event of a Stayout, KEDLI will make the computation for any
subsequent twelve-month period during which the Stayout was in effect for at
least a portion of the twelve-month period. The computations and the underlying
28
data will be made available to the Signatory Parties and filed with the
Commission not later than 150 days following the end of the applicable
twelve-month period. The filings will include supporting workpapers and the ROE
calculation based on traditional ratemaking practices and methodologies
applicable to KEDLI as to includable costs, revenues and appropriate capital
structure. The computation of ROE will be calculated from KEDLI's books of
account for the applicable twelve-month period, except that:
(a) KEDLI's rate base shall not include any goodwill associated with the
National Grid/KeySpan merger,
(b) KEDLI's return shall exclude the effects of discrete incentives, if
any, as may be applied as a result of this or another phase of these
proceedings,
(c) KEDLI's operating expenses shall reflect the levelized cost to achieve
and synergy savings shown on page 1 of Appendix 6 such that 50 percent of
the levelized net synergy savings (i.e., line 26 of page 1 of Appendix 6)
shall be excluded from the earnings calculation. This provision will not
extend in the event of a Stayout.
(d) KEDLI's return shall exclude the effect of any costs to achieve merger
savings associated with executive benefits,
(e) KEDLI shall include the annual amortization of the regulatory liability
associated with any margin revenues that are not realized in actual sales
to customers and are being amortized over the five Rate Years to match the
adjustments to the cost of service shown in Appendix 3, and
(f) KEDLI's return shall exclude revenue adjustments due to prior period
over- or under-revenue recoveries related to revenue decoupling mechanisms.
If the level of earned common equity return in any rate year exceeds 10.5
percent ("Earnings Sharing Threshold"), the amount in excess of 10.5% shall be
deemed "Shared Earnings" for the purposes of this Joint Proposal. In the event
of a Stayout, the earnings sharing provisions will continue for the Rate period,
to be applied, if necessary, on a pro-rata basis based on monthly operating
revenues. The customers' share of any earnings will be credited to KEDLI's
Balancing Account for the benefit of customers. For each twelve-month period
covered by this Joint Proposal, KEDLI will allocate the revenue equivalent of
its earned common equity return, if any, in excess of the 10.5 percent Earnings
Sharing Threshold as follows:
29
(a) for the first 200 basis points above the Earnings Sharing Threshold
(i.e. >10.5% - 12.5%), 50% of the revenue equivalent of any Shared
Earnings will be deferred for the benefit of customers and the
remaining 50% will be retained by KEDLI;
(b) for the next 100 basis points above the Earnings Sharing Threshold
(i.e. >12.5% to 13.5%), 65% of the revenue equivalent of the Shared
Earnings will be deferred for the benefit of customers and 35% will be
retained by KEDLI; and
(c) all Shared Earnings in excess of 13.5% will be deferred for the
benefit of customers.
Pursuant to another phase of these proceedings, the Signatory Parties will
collaborate to establish certain targets associated with the implementation and
operation of demand side management programs. In the event that these targets
are met in any applicable twelve-month period, KEDLI's Earnings Sharing
Threshold and all other earnings sharing thresholds as identified above shall be
adjusted upward by 10 basis points for the applicable twelve-month period, as
follows:
(a) for the first 200 basis points above the Earnings Sharing Threshold
(i.e. >10.6% - 12.6%), 50% of the revenue equivalent of any Shared
Earnings will be deferred for the benefit of customers and the
remaining 50% will be retained by KEDLI;
(b) for the next 100 basis points above the Earnings Sharing Threshold
(i.e. >12.6% to 13.6%), 65% of the revenue equivalent of the Shared
Earnings will be deferred for the benefit of customers and 35% will be
retained by KEDLI; and
(c) all Shared Earnings in excess of 13.6% will be deferred for the
benefit of customers.
XI. PROVISIONS AFFECTING NIAGARA MOHAWK POWER CORPORATION
A. Merger Synergy Savings and Costs to Achieve
In a separate filing to the Commission, Niagara Mohawk will provide for a
flow-through to its customers of a share of the net synergy savings allocable to
Niagara Mohawk in accordance with Attachment 10 to the Niagara Mohawk rate plan.
B. Accelerated Rate Credit
In a separate rate filing made under its rate plan, contemporaneously with
its next CTC reset filing for consideration by the parties in that case, Niagara
Mohawk will propose an alternative one-month credit of the net synergy savings
for balance of the Niagara Mohawk rate plan.
30
C. Commitment to Increase Internal Company Staffing in Upstate New York
1. Transmission Staffing
National Grid shall initially implement a voluntary program for at
least thirty line mechanics and thirty electricians to work in the
Transmission Group in Upstate New York with an opt-out that stays with the
employee. Any line mechanic or electrician opting to work in the
Transmission Group will be back-filled one-for-one in distribution in
Niagara Mohawk's Service Territory.
2. Distribution Staffing
In addition to the backfilling of Distribution Line positions for
transfers to the Transmission Group, National Grid intends to maintain a
staffing level of 700 positions in the Distribution Line Department located
in Niagara Mohawk's Service Territory, and seek to add at least 30
positions annually over the next three years.
3. Customer Service Staffing
Regarding Customer Service, incumbent employees currently occupying
positions in the upstate New York Customer Service Contact Centers will be
maintained through 2010. National Grid will commit to operating one call
center business in upstate New York through 2010, and possibly beyond, if a
new and separate labor agreement can be reached. The agreement will provide
maximum flexibility to ensure the highest of quality standards, including
work performance metrics, so that the center can operate competitively
compared to the call center marketplace.
4. Article VII Compliance Staffing
National Grid shall implement the following enhanced procedures with
respect to the preparation and prosecution of Article VII and Part 102
proceedings for transmission projects with the goal of processing
efficiently the Commission filings for the significant level of capital
projects and spending in Upstate New York:
(a) National Grid shall organize a cross-functional in-house
Permitting & Licensing Team dedicated to Upstate New York
projects, which includes representatives from the Environmental,
Project Management, Engineering, Communications, and Legal
functions. This team shall be supplemented by the addition of
National Grid staff members devoted to engineering and project
management for New York projects;
31
(b) the in-house Permitting & Licensing Team shall be supported by
recently designated engineering consultants, environmental
consultants, and New York counsel that may include outside
counsel based in New York;
(c) National Grid shall implement improved quality control over
consultant-produced documents prior to their submission to the
PSC; and
(d) National Grid shall hold periodic meetings and consultations with
Staff, in which Company personnel and its consultants will
discuss the status of and issues associated with existing
filings, the upcoming schedule for future Article VII filings,
and improvements that can be made to those filings or the process
before the Commission, with the objective of fully meeting the
Staff's and Commission's expectations for those filings and
process.
XII. PROVISIONS ASSOCIATED WITH LIPA AGREEMENT
A. Additional Benefits to Long Island Customers through LIPA Agreement
Several provisions in the LIPA agreements represent significant additional
value to several Signatory Parties that they believe support the Commission's
public interest determination in this case. Those provisions include the
following:
"5, Staffing of On-Island Field Force and Storm Support. Section 4.6
of the Amended and Restated MSA is amended to add a new subsection (D)
thereto to read as follows:
`Staffing of On-Island Field Force and Storm Support. The Manager
shall maintain an appropriate level of field personnel (to include
Electric Design & Construction, Electric Service, Electric System
Operations, Substation Maintenance, and Meter & Test or their
successors performing similar functions) in LIPA's Service Area
reasonably necessary to satisfy the Manager's contractual obligations
under this Agreement and to meet the target performance levels for the
Performance Metrics; The Manager, shall provide LIPA with reasonable
advance notice of any proposed changes to the level of such field
personnel in LIPA's Service Area in order to enable LIPA to fairly
consider Manager's proposed changes, and the Manager shall consider
LIPA's concerns before making any changes to the staffing level of
such field personnel that could be reasonably expected to negatively
impact service quality in LIPA's Service Area. In the event of a storm
or other adverse operational condition, National Grid shall provide or
cause to be provided field support, logistics support and mutual aid
services from its other business units to support LIPA as if LIPA were
an Affiliate of National Grid and, if necessary, shall cause its
Affiliates to provide field support, logistics support and mutual aid
services to LIPA, National Grid shall provide LIPA with mutual aid
services in accordance with the terms and conditions of National
Grid's Mutual Assistance Agreement, then in effect. LIPA will be
afforded the opportunity to consult on any proposed changes to
National Grid's Mutual Assistance Agreement.
32
"6. Customer Service Long Island Presence and Storm Support. Section
4.9 of the Amended and Restated MSA is amended to add a new subsection (K)
thereto to read as follows:
"(K) Customer Service Long Island Presence and Storm Support. The
Manager shall maintain at all times during the Term hereof a call
center on Long Island, sufficiently staffed to handle normal call
activity (excluding credit and collections calls). The Manager agrees
that during the Term hereof it will not (1) reduce the number of
customer walk-in centers from those in existence on January 1, 2006 as
well as the Far Rockaway customer walk-in facility without LIPA's
prior written approval, (2) relocate any customer walk-in centers
without LIPA's prior written approval (which LIPA may not unreasonably
withhold), or (3) outsource meter reading or meter services without
LIPA's prior written approval. As provided in Section 4.6(D), in the
event of a storm or other adverse operational condition, National Grid
shall provide or cause to be provided customer service support to LIPA
as if LIPA were an Affiliate of National Grid and, if necessary, shall
cause its Affiliates to provide customer service support to LIPA."
33
IN WITNESS WHEREOF, the Signatory Parties hereto have this day signed and
executed this Joint Proposal.
/s/ Steven L Zelkowitz
----------------------
KeySpan Corporation, The Brooklyn Union Gas
Company d/b/a KeySpan Energy Delivery
New York, and KeySpan Gas East Corporation d/b/a
KeySpan Energy Delivery Long Island
Date: July 6, 2007
34
IN WITNESS WHEREOF, the Signatory Parties hereto have this day signed and
executed this Joint Proposal.
/s/ Lawrence J. Reilly
/s/ Thomas G. Robinson
/s/ Robert H Hoaglund II
------------------------
National Grid plc and Niagara Mohawk Power
Corporation
Date: July 6, 2007
35
IN WITNESS WHEREOF, the Signatory Parties hereto have this day signed and
executed this Joint Proposal. In executing this Joint Proposal, Staff does not
join in provision VIII(B)(1)(a) regarding particular potential transmission
projects. In executing this Joint Proposal, Staff does not join in provision XI
(B) regarding a potential accelerated rate credit that would affect customers of
Niagara Mohawk Power Corporation.
/s/ Paul Agresta
----------------
Staff of the New York State Department
of Public Service
Date: July 6, 2007
36
IN WITNESS WHEREOF, the Signatory Parties hereto have this day signed and
executed this Joint Proposal.
/s/David Prestemon
------------------
New York State Consumer Protection Board
Date: July 6, 2007
37
IN WITNESS WHEREOF, the Signatory Parties hereto have this day signed and
executed this Joint Proposal. In executing this Joint Proposal, the City of New
York does not join in provision VIII.A. regarding Treatment of Generation and
Transmission Assets.
/s/ Moshe H. Bonder, counsel, Couch White, LLC
-----------------------------------------------
on behalf of the City of New York
Date: July 6, 2007
38
IN WITNESS WHEREOF, the Signatory Parties hereto have this day signed and
executed this Joint Proposal. In executing this Joint Proposal, the Public
Utility Law Project does not join in support of "Section VIII. Treatment of
Generation & Transmission Assets" of the proposal.
/s/ Ben Wiles
-------------
Public Utility Law Project
Date: July 6, 2007
39
IN WITNESS WHEREOF, the Signatory Parties hereto have this day signed and
executed this Joint Proposal.
/s/ Brian Lederer
-----------------
International Brotherhood of Electrical Workers
Locals 1049 & 1381
Date: July 6, 2007
40
IN WITNESS WHEREOF, the Signatory Parties hereto have this day signed and
executed this Joint Proposal.
/s/ Richard J. Koda (for David Falletta)
-----------------------------------------
International Brotherhood of Electrical Workers
Locals 97
Date: July 6, 2007
41
Merger & Gas Revenue Requirement Joint Proposal
APPENDIX 1 - List of Testimony and Exhibits to be Admitted
APPENDIX 1
LIST OF TESTIMONY AND EXHIBITS TO BE ADMITTED
TESTIMONY
- ---------
Pre-filed Direct Testimony of Lawrence J. Reilly and Steven L. Zelkowitz, dated
October 3, 2006 and revised May 30, 2007 (no exhibits)
Pre-filed Direct Testimony of John G. Cochrane, dated October 3, 2006 and
revised May 30, 2007, sponsoring Exhibit JGC-1
Pre-filed Direct Testimony of Michael D. Laflamme and James M. Molloy, dated
October 3, 2006 and revised May 30, 2007, sponsoring Exhibits MDL/JMM-1(1)
through MDL/JMM-10, Copy of Responses to DPS-15 and DPS-36
Pre-filed Direct Testimony of David J. Hoffman and Richard J. Levin, dated
October 3, 2006 (no exhibits)
Pre-filed Direct Testimony of Melissa Nairn and Lee Klosowski, dated October 3,
2006, sponsoring Exhibit MN/LK-1
Pre-filed Direct Testimony of Bruce Johnson, dated October 3, 2006 (no exhibits)
Pre-filed Supplemental Testimony of Lawrence J. Reilly, dated October 27, 2006
(no exhibits)
Pre-filed Direct Testimony of Michael L. Schiavone, Jr., dated October 27, 2006,
sponsoring Exhibits MLS-1 through MLS-3
Pre-filed Direct Testimony of Masheed H. Saidi, dated October 27, 2006,
sponsoring Exhibits MHS-1 through MHS-6
Pre-filed Direct Testimony of Alan V. Feibelman and Richard J. Levin, dated
December 14, 2006, sponsoring Exhibits AVF/RJL-1 and AVF/RJL-2
Pre-filed Supplemental Joint Testimony of Michael D. Laflamme and James M.
Molloy, dated January 10, 2007, sponsoring Exhibits MDL/JMM-4-KEDLI--Updated,
MDL/JMM-4-KEDNY-Updated, MDL/JMM-5-KEDLI-Updated, MDL/JMM-5-KEDNY-Updated,
MDL/JMM-6-KEDLI-Updated, MDL/JMM-6-KEDNY-Updated, MDL/JMM-10-KEDLI-Updated and
MDL/JMM-10-KEDNY-Updated - exhibits deleted per May 30, 2007 Update filing
- ----------
(1) In the May 30, 2007 Update filing, Michael D. Laflamme was deleted from the
panel, the testimony was updated, Exhibits 4 through 9 (KEDLI and KEDNY)
and Copy of Responses to DPS-15 and 36 were deleted, and exhibits labeled
"MDL/JMM" were changed to "JMM".
Pre-filed Direct Testimony of Merger Policy Panel (Redacted) consisting of
Thomas Coonan, Warren E. Myers and John D. Stewart, dated February 20, 2007,
sponsoring Exhibits MPP-1 through MPP-28 (Exhibits 25 and 26 are redacted)
Pre-filed Direct Testimony of Constraints Panel consisting of Thomas Paynter and
Edward C. Schrom, Jr., dated February 20, 2007, sponsoring Exhibits CP-1 and
CP-2
Pre-filed Direct Testimony of David F. Reulet, dated February 20, 2007,
sponsoring Exhibits DFR-1 through DFR-8
Pre-filed Direct Testimony of Michael W. Wayand, dated February 20, 2007,
sponsoring Exhibits MWW-1 and MWW-2
Pre-filed Direct Testimony (redacted and unredacted) of Dr. Douglas W. Elfner,
dated February 20, 2007, sponsoring Exhibit DWE-1
Pre-filed Direct Testimony of Michael P. Gorman, dated February 20, 2007,
sponsoring Exhibit MPG-13
Pre-filed Rebuttal Testimony of Lawrence J. Reilly and Steven L. Zelkowitz,
dated March 7, 2007, sponsoring Exhibit LJR/SLZ-1R - Testimony and Exhibit
revised per May 30, 2007 Update filing
Pre-filed Rebuttal Testimony of John G. Cochrane and James Read, dated March 7,
2007 as revised May 30, 2007, sponsoring Exhibits JGC/JR-1R through JGC/JR-6R
Pre-filed Rebuttal Testimony of Steven L. Zelkowitz (confidential), dated March
7, 2007 (no exhibits)
Pre-filed Rebuttal Testimony of Reliability Panel consisting of Keith P. McAfee,
Cheryl A. Warren, David Wright and Scott D. Leuthauser, dated March 7, 2007 as
revised May 30, 2007, sponsoring Exhibits Reliability Panel-1R through
Reliability-4R
Pre-filed Rebuttal Testimony of Rates Panel, dated March 7, 2007 as revised May
30, 2007,(2) sponsoring Exhibits Rates Panel-1R through Rates Panel-4R
Pre-filed Rebuttal Testimony of Alan V. Feibelman and Richard J. Levin, dated
March 7, 2007, sponsoring Exhibits AVF/RJL-1R through AVF/RJL-3R
Pre-filed Rebuttal Testimony of Melissa Nairn and Lee Klosowski, dated March 7,
2007 as revised May 30, 2007, sponsoring Exhibit MN/LK-1R
Pre-filed Rebuttal Testimony of Robert B. Catell, dated March 7, 2007 (no
exhibits)
Pre-filed Rebuttal Testimony of Lawrence J. Reilly, dated March 7, 2007 (no
exhibits)
- ----------
(2) In the May 30, 2007 Update filing, James Molloy became the sole witness,
Exhibit Rates Panel-1R was deleted and a new Exhibit Rates Panel 1S was
submitted.
2
Pre-filed Rebuttal Testimony of Masheed H. Saidi, dated March 7, 2007 (no
exhibits)
Pre-filed Supplemental Testimony of Lawrence J. Reilly and Steven L. Zelkowitz,
dated May 30, 2007 (no exhibits)
Pre-filed Factual Update Testimony to Testimony on Vertical Market Power Issues
of Michael L. Schiavone, Jr., dated May 30, 2007 (no exhibits)
Pre-filed Supplemental Testimony of Alan V. Feibelman and Rick J. Levin, dated
May 30, 2007, sponsoring Exhibits AVR/RJL-1S through AVR/RJL-9S
Pre-filed Factual Update Testimony to Direct and Rebuttal Testimony of Masheed
H. Saidi, dated May 30, 2007, sponsoring Exhibit MHS-7
Pre-filed Updated Rebuttal Testimony of Reliability Panel, dated May 30, 2007,
sponsoring Exhibit Reliability Panel-1S
Pre-filed Updated Rebuttal Testimony of James M. Molloy, dated May 30, 2007,
deleting Exhibit Rates Panel-1R and sponsoring Exhibit Rates Panel-1S
PROPOSED EXHIBITS
- -----------------
Exhibit No.___. Merger & Gas Revenue Requirement Joint Proposal dated July 6,
2007
Exhibit No.___. Pre-filed Joint Petition Exhibit 1, dated July 20, 2006
Exhibit No.___. Pre-filed Joint Petition Exhibit 2, dated July 20, 2006
Exhibit No.___. Pre-filed Joint Petition Exhibit 3, dated July 20, 2006
Exhibit No.___. Pre-filed Joint Petition Exhibit 4, dated July 20, 2006
Exhibit No.___. Pre-filed Joint Petition Exhibit 5, dated July 20, 2006
Exhibit No.___. Pre-filed Joint Petition Exhibit 6, dated July 20, 2006
Exhibit No.___. Pre-filed Joint Petition Exhibit 7, dated July 20, 2006
Exhibit No.___. Pre-filed Joint Petition Exhibit 8, dated July 20, 2006
Exhibit No.___. Pre-filed Joint Petition Exhibit 9, dated July 20, 2006
3
Exhibit No.___. Pre-filed Joint Petition Exhibit 10, dated July 20, 2006
Exhibit No.___. Pre-filed Joint Petition Exhibit 11, dated July 20, 2006
Exhibit No.___. Pre-filed Exhibit JGC-1, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit MDL/JMM-1,(3) dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit MDL/JMM-2, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit MDL/JMM-3, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit MN/LK-1, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit MLS-1, dated October 27, 2006
Exhibit No.___. Pre-filed Exhibit MLS-2, dated October 27, 2006
Exhibit No.___. Pre-filed Exhibit MLS-3, dated October 27, 2006
Exhibit No.___. Pre-filed Exhibit MHS-1, dated October 27, 2006
Exhibit No.___. Pre-filed Exhibit MHS-2, dated October 27, 2006
Exhibit No.___. Pre-filed Exhibit MHS-3, dated October 27, 2006
Exhibit No.___. Pre-filed Exhibit MHS-4, dated October 27, 2006
Exhibit No.___. Pre-filed Exhibit MHS-5, dated October 27, 2006
Exhibit No.___. Pre-filed Exhibit MHS-6, dated October 27, 2006
Exhibit No.___. Pre-filed Exhibit AVF/RJL-1, dated December 14, 2006
Exhibit No.___. Pre-filed Exhibit AVF/RJL-2, dated December 14, 2006
Exhibit No.___. Pre-filed Exhibit MPP-1, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-2, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-3, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-4, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-5, dated February 20, 2007
- ----------
(3) In the May 30, 2007 Update filing, exhibits labeled "MDL/JMM" were changed
to "JMM" and Exhibits MDL/JMM-4 through MDL/JMM-9 and Copies of Responses
to DPS-15 and 36 were deleted.
4
Exhibit No.___. Pre-filed Exhibit MPP-6, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-7, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-8, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-9, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-10, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-11, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-12, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-13, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-14, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-15, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-16, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-17, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-18, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-19, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-20, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-21, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-22, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-23, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-24, dated February 20, 2007
Exhibit No.___. REDACTED VERSION of Pre-filed Exhibit MPP-25, dated February 20,
2007
Exhibit No. 71 . CONFIDENTIAL VERSION of Pre-filed Exhibit MPP-25, dated
February 20, 2007
Exhibit No.___. REDACTED VERSION of Pre-filed Exhibit MPP-26, dated February 20,
2007
Exhibit No. 72 . CONFIDENTIAL VERSION of Pre-filed Exhibit MPP-26, dated
February 20, 2007
5
Exhibit No.___. Pre-filed Exhibit MPP-27, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MPP-28, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit CP-1, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit CP-2, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit DFR-1, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit DFR-2, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit DFR-3, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit DFR-4, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit DFR-5, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit DFR-6, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit DFR-7, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit DFR-8, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MWW-1, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit MWW-2, dated February 20, 2007
Exhibit No.___. REDACTED VERSION of Pre-filed Exhibit DWE-1, dated February 20,
2007
Exhibit No. 87. CONFIDENTIAL VERSION of Pre-filed Exhibit DWE-1, dated February
20, 2007
Exhibit No.___. Pre-filed Exhibit MPG-13, dated February 20, 2007
Exhibit No.___. Pre-filed Exhibit LJR/SLZ-1R, dated March 7, 2007, revised May
30, 2007
Exhibit No.___. Pre-filed Exhibit JGC/JR-1R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit JGC/JR-2R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit JGC/JR-3R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit JGC/JR-4R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit JGC/JR-5R, dated March 7, 2007
6
Exhibit No.___. Pre-filed Exhibit JGC/JR-6R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit Reliability Panel-1R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit Reliability Panel-2R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit Reliability Panel-3R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit Reliability Panel-4R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit Rates Panel-2R,(4) dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit Rates Panel-3R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit Rates Panel-4R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit AVF/RJL-1R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit AVF/RJL-2R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit AVF/RJL-3R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit MN/LK-1R, dated March 7, 2007
Exhibit No.___. Pre-filed Exhibit AVR/RJL-1S, dated May 30, 2007
Exhibit No.___. Pre-filed Exhibit AVR/RJL-2S, dated May 30, 2007
Exhibit No.___. Pre-filed Exhibit AVR/RJL-3S, dated May 30, 2007
Exhibit No.___. Pre-filed Exhibit AVR/RJL-4S, dated May 30, 2007
Exhibit No.___. Pre-filed Exhibit AVR/RJL-5S, dated May 30, 2007
Exhibit No.___. Pre-filed Exhibit AVR/RJL-6S, dated May 30, 2007
Exhibit No.___. Pre-filed Exhibit AVR/RJL-7S, dated May 30, 2007
Exhibit No.___. Pre-filed Exhibit AVR/RJL-8S, dated May 30, 2007
Exhibit No.___. Pre-filed Exhibit AVR/RJL-9S, dated May 30, 2007
Exhibit No.___. Pre-filed Exhibit MHS-7, dated May 30, 2007
Exhibit No.___. Pre-filed Exhibit Reliability Panel-1S, dated May 30, 2007
- ----------
(4) Exhibit Rates Panel-1R was deleted by the May 30, 2007 Update filing.
7
Exhibit No.___. Pre-filed Exhibit Rates Panel-1S, dated May 30, 2007
Exhibit No.___. Witness Affidavit of Lawrence J. Reilly sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of Steven L. Zelkowitz sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of John C. Cochrane sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of James M. Molloy sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of David J. Hoffman sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Richard J. Levin sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Melissa R. Nairn sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Lee Klosowski sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Bruce A. Johnson sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Michael L. Schiavone sponsoring testimony
as if given orally
Exhibit No.___. Witness Affidavit of Masheed H. Saidi sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Alan V. Feibelman sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of James Read sponsoring testimony as if given
orally
Exhibit No.___. Witness Affidavit of Keith P. McAfee sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Cheryl A. Warren sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of David Wright sponsoring testimony as if
given orally
8
Exhibit No.___. Witness Affidavit of Scott D. Leuthauser sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of Robert B. Catell sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Warren E. Myers sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of John D. Stewart sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Thomas Paynter sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Edward C. Schrom, Jr. sponsoring testimony
as if given orally
Exhibit No.___. Witness Affidavit of David F. Reulet sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Michael W. Wayand sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of Dr. Douglas W. Elfner sponsoring testimony
as if given orally
Exhibit No.___. Witness Affidavit of Michael P. Gorman sponsoring testimony as
if given orally
9
TESTIMONY
- ---------
Pre-filed Direct Testimony (KEDNY) of Joseph F. Bodanza dated October 3, 2006,
sponsoring proposed exhibits JFB-1 (KEDNY) through JFB-4 (KEDNY)
Pre-filed Direct Testimony (KEDNY) of Robert G. Rosenberg dated October 3, 2006,
sponsoring proposed exhibit RGR-1 (KEDNY)
Pre-filed Direct Testimony (KEDNY) of Patrick J. McClellan dated October 3,
2006, sponsoring proposed exhibits PJM-1 (KEDNY) through PJM-13 (KEDNY)
Pre-filed Direct Testimony (KEDNY) of John F. Haran dated October 3, 2006,
sponsoring proposed exhibits JFH-1 (KEDNY) and JFH-2 (KEDNY)
Pre-filed Direct Testimony (KEDNY) of Justin C. Orlando dated October 3, 2006,
sponsoring proposed exhibits JCO-1 (KEDNY) and JCO-2 (KEDNY)
Pre-filed Direct Testimony (KEDNY) of Robert P. Moore dated October 3, 2006, as
revised January 10, 2007, sponsoring proposed exhibit RPM-1 (KEDNY)
Pre-filed Direct Testimony (KEDNY) of James H. Aikman dated October 3, 2006,
sponsoring proposed exhibit JHA-1 (KEDNY)
Pre-filed Direct Testimony (KEDNY) of Jennifer Feinstein dated October 3, 2006,
sponsoring proposed exhibits JF-1 (KEDNY) through JF-3 (KEDNY)
Pre-filed Direct Testimony (KEDNY) of Joseph T. Trainor dated October 3, 2006,
sponsoring proposed exhibits JTT-1 (KEDNY) through JTT-5 (KEDNY)
Pre-filed Direct Testimony (KEDNY) of Ronald G. Lukas dated October 3, 2006,
sponsoring proposed exhibits RGL-1 (KEDNY) through RGL-2 (KEDNY)
Pre-filed Direct Testimony (KEDNY) of Melissa R. Nairn dated October 3, 2006,
sponsoring proposed exhibits MRN-1 (KEDNY) through MRN-4 (KEDNY)
Pre-filed Direct Testimony (KEDLI) of Joseph F. Bodanza dated October 3, 2006,
sponsoring proposed exhibits JFB-1 (KEDLI) through JFB-4 (KEDLI)
Pre-filed Direct Testimony (KEDLI) of Robert G. Rosenberg dated October 3, 2006,
sponsoring proposed exhibit RGR-1 (KEDLI)
Pre-filed Direct Testimony (KEDLI) of Patrick J. McClellan dated October 3,
2006, sponsoring proposed exhibits PJM-1 (KEDLI) through PJM-13 (KEDLI)
Pre-filed Direct Testimony (KEDLI) of John F. Haran dated October 3, 2006,
sponsoring proposed exhibits JFH-1 (KEDLI) and JFH-2 (KEDLI)
10
Pre-filed Direct Testimony (KEDLI) of Justin C. Orlando dated October 3, 2006,
sponsoring proposed exhibits JCO-1 (KEDLI) and JCO-2 (KEDLI)
Pre-filed Direct Testimony (KEDLI) of Robert P. Moore dated October 3, 2006, as
revised January 10, 2007, sponsoring proposed exhibit RPM-1 (KEDLI)
Pre-filed Direct Testimony (KEDLI) of James H. Aikman dated October 3, 2006,
sponsoring proposed exhibit JHA-1 (KEDLI)
Pre-filed Direct Testimony (KEDLI) of Jennifer Feinstein dated October 3, 2006,
sponsoring proposed exhibits JF-1 (KEDLI) through JF-3 (KEDLI)
Pre-filed Direct Testimony (KEDLI) of Joseph T. Trainor dated October 3, 2006,
sponsoring proposed exhibits JTT-1 (KEDLI) through JTT-5 (KEDLI)
Pre-filed Direct Testimony (KEDLI) of Ronald G. Lukas dated October 3, 2006,
sponsoring proposed exhibits RGL-1 (KEDLI) through RGL-8 (KEDLI)
Pre-filed Direct Testimony (KEDLI) of Melissa R. Nairn dated October 3, 2006,
sponsoring proposed exhibits MRN-1 (KEDLI) through MRN-4 (KEDLI)
Updated Pre-filed Direct Testimony (KEDNY) of Joseph F. Bodanza dated January
10, 2007, sponsoring proposed exhibit JFB-3 Update (KEDNY)
Updated Pre-filed Direct Testimony (KEDNY) of Patrick J. McClellan dated January
10, 2007, sponsoring proposed exhibits PJM-1 Updated (KEDNY) through PJM-12
Update (KEDNY)
Updated Pre-filed Direct Testimony (KEDNY) of John F. Haran dated January 10,
2007
Updated Pre-filed Direct Testimony (KEDNY) of James H. Aikman dated January 10,
2007
Updated Pre-filed Direct Testimony (KEDNY) of Jennifer Feinstein dated January
10, 2007, sponsoring proposed exhibit JF-1 Update (KEDNY)
Updated Pre-filed Direct Testimony (KEDNY) of Ronald G. Lukas dated January 10,
2007, sponsoring proposed exhibit RGL-1 Update (KEDNY)
Updated Pre-filed Direct Testimony (KEDNY) of Melissa R. Nairn dated January 10,
2007, sponsoring proposed exhibit MRN-1 Update (KEDNY)
Updated Pre-filed Direct Testimony (KEDLI) of Joseph F. Bodanza dated January
10, 2007, sponsoring proposed exhibit JFB-3 Update (KEDLI)
Updated Pre-filed Direct Testimony (KEDLI) of Patrick J. McClellan dated January
10, 2007, sponsoring proposed exhibits PJM-1 Update (KEDLI) through PJM-12
Update (KEDLI)
Updated Pre-filed Direct Testimony (KEDLI) of John F. Haran dated January 10,
2007
11
Updated Pre-filed Direct Testimony (KEDLI) of James H. Aikman dated January 10,
2007
Updated Pre-filed Direct Testimony (KEDLI) of Jennifer Feinstein dated January
10, 2007, sponsoring proposed exhibit JF-1 Update (KEDLI)
Updated Pre-filed Direct Testimony (KEDLI) of Ronald G. Lukas dated January 10,
2007, sponsoring proposed exhibit RGL-1 Update (KEDLI)
Updated Pre-filed Direct Testimony (KEDLI) of Melissa R. Nairn dated January 10,
2007, sponsoring proposed exhibit MRN-1 Update (KEDLI)
Pre-filed Direct Testimony of Patrick J. Barry dated January 29, 2007,
sponsoring proposed exhibits PJB-1 through PJB-8
Pre-filed Direct Testimony of Aric J. Rider dated January 29, 2007, sponsoring
proposed exhibits AJR-1 through AJR-17
Pre-filed Direct Testimony of John P. Sano dated January 29, 2007, sponsoring
proposed exhibits JPS-1 through JPS-5
Pre-filed Direct Testimony of Stephen A. Berger dated January 29, 2007,
sponsoring proposed exhibit SAB-1
Pre-filed Direct Testimony of the Accounting Rates Panel (KEDLI) consisting of
Richard Brash, George Abraham, Christopher Simon and Ronald Calkins, dated
January 29, 2007, sponsoring proposed exhibit ARP-1
Pre-filed Direct Testimony of the Accounting Panel Rates (KEDNY) consisting of
Richard Brash, George Abraham, Christopher Simon, and Ronald Calkins, dated
January 29, 2007, sponsoring proposed exhibit APR-1
Pre-filed Direct Testimony of the Plant & Depreciation Panel consisting of
Daniel J. Wheeler, Aferdita Bardhi and Davide Maioriello, dated January 29,
2007, sponsoring proposed exhibits PDP-1 through PDP-10
Pre-filed Direct Testimony of the Safety Panel consisting of Christopher R.
Stolicky and Joseph F. Klesin, dated January 29, 2007, sponsoring proposed
exhibits SP-1 through SP-6
Pre-filed Direct Testimony of the Sales Panel consisting of Mary Ann Sorrentino
and Aferdita Bardhi, dated January 29, 2007, sponsoring proposed exhibits SP-1'
through SP-5'
Pre-filed Direct Testimony of Thomas Coonan dated January 29, 2007, sponsoring
proposed exhibit TSC-1
Pre-filed Direct Testimony of Douglas W. Elfner dated January 29, 2007,
sponsoring proposed exhibit DWE-1
Pre-filed Direct Testimony of Tariq N. Niazi dated January 29, 2007, sponsoring
proposed exhibits TNN-1 and TNN-2
12
Pre-filed Direct Testimony of Hugh Larkin, Jr. and Donna DeRonne dated January
29, 2007, sponsoring proposed exhibits LA-1 through LA-2
Pre-filed Direct Testimony of Michael Gorman dated January 29, 2007, sponsoring
proposed exhibits MPG-1 through MPG-12
Pre-filed Rebuttal Testimony of Steven L. Zelkowitz and Joseph F. Bodanza dated
February 21, 2007, sponsoring proposed exhibits SLZ/JFB-1R and SLZ/JFB-2R (KEDNY
only)
Pre-filed Rebuttal Testimony of Joseph F. Bodanza dated February 21, 2007,
sponsoring proposed exhibits JFB-1R through JFB-4R
Pre-filed Rebuttal Testimony of Joseph F. Bodanza, Patrick J. McClellan and John
E. O'Shaughnessy dated February 21, 2007, sponsoring proposed exhibits
JFB/PJM/JOS-1R through JFB/PJM/JOS-3R
Pre-filed Rebuttal Testimony of Patrick J. McClellan dated February 21, 2007,
sponsoring proposed exhibits PJM-1R and PJM-2R
Pre-filed Rebuttal Testimony of Robert G. Rosenberg dated February 21, 2007,
sponsoring proposed exhibit RGR-1R
Pre-filed Rebuttal Testimony of John F. Haran dated February 21, 2007,
sponsoring proposed exhibits JFH-1R and JFH-2R
Pre-filed Rebuttal Testimony of James H. Aikman dated February 21, 2007,
sponsoring proposed exhibits JHA-1R through JHA-4R
Pre-filed Rebuttal Testimony of Justin C. Orlando dated February 21, 2007,
sponsoring proposed exhibit JCO-1R
Pre-filed Rebuttal Testimony of Jennifer Feinstein and Leo Silvestrini dated
February 21, 2007, sponsoring proposed exhibits JF/LS-1R through JF/LS-9R
Pre-filed Rebuttal Testimony of Ronald G. Lukas dated February 21, 2007,
sponsoring proposed exhibits RGL-1R through RGL-9R
Pre-filed Rebuttal Testimony of Robert P. Moore dated February 21, 2007
Pre-filed Rebuttal Testimony of Melissa R. Nairn dated February 21, 2007
Pre-filed Rebuttal Testimony of Bruce A. Johnson dated February 21, 2007
13
PROPOSED EXHIBITS
- -----------------
Exhibit No.___. Pre-filed Exhibit JFB-1 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JFB-1A KEDNY, dated November 2006 (correcting
Schedule 6)
Exhibit No.___. Pre-filed Exhibit JFB-2 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JFB-3 Update KEDNY, dated January 10, 2007(5)
Exhibit No.___. Pre-filed Exhibit JFB-4 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGR-1 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit PJM-1 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-2 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-3 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-4 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-5 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-6 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-7 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-8 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit PJM-9 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-10 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-11 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-12 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-13 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JFH-1 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JFH-2 KEDNY, dated October 3, 2006
- ----------
(5) For exhibits that were revised or updated in the January 10, 2007 filing,
only the most recent version is listed here.
14
Exhibit No.___. Pre-filed Exhibit JCO-1 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JCO-2 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RPM-1 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit JHA-1 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JF-1 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit JF-2 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JF-3 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JTT-1 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JTT-2 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JTT-3 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JTT-4 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JTT-5 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-1 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit RGL-2 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-3 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-4 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-5 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-6 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-7 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-8 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit MRN-1 Update KEDNY, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit MRN-2 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit MRN-3 KEDNY, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit MRN-4 KEDNY, dated October 3, 2006
15
Exhibit No.___. Pre-filed Exhibit JFB-1 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JFB-2 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JFB-3 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit JFB-4 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGR-1 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit PJM-1 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-2 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-3 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-4 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-5 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-6 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-7 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-8 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit PJM-9 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-10 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-11 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-12 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit PJM-13 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JFH-1 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JFH-2 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JCO-1 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JCO-2 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RPM-1 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit JHA-1 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JF-1 Update KEDLI, dated January 10, 2007
16
Exhibit No.___. Pre-filed Exhibit JF-2 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JF-3 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JTT-1 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JTT-2 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JTT-3 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JTT-4 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit JTT-5 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-1 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit RGL-2 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-3 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-4 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-5 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-6 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-7 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit RGL-8 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit MRN-1 Update KEDLI, dated January 10, 2007
Exhibit No.___. Pre-filed Exhibit MRN-2 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit MRN-3 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit MRN-4 KEDLI, dated October 3, 2006
Exhibit No.___. Pre-filed Exhibit APR-1, Schedule A, KEDNY, dated January 29,
2007
Exhibit No.___. Pre-filed Exhibit ARP-1, Schedule A, KEDLI, dated January 29,
2007
Exhibit No.___. Pre-filed Exhibit PDP-1, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PDP-2, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PDP-3, dated January 29, 2007
17
Exhibit No.___. Pre-filed Exhibit PDP-4, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PDP-5, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PDP-6, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PDP-7, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PDP-8, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PDP-9, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PDP-10, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SP-1, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SP-2, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SP-3, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SP-4, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SP-5, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SP-6, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SP-1', dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SP-2', dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SP-3', dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SP-4', dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SP-5', dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-1, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-2, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-3, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-4, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-5, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-6, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-7, dated January 29, 2007
18
Exhibit No.___. Pre-filed Exhibit AJR-8, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-9, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-10, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-11, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-12, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-13, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-14, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-15, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-16, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit AJR-17, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit JPS-1, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit JPS-2, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit JPS-3, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit JPS-4, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit JPS-5, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SAB-1, dated January 29, 2007
Exhibit No.___. CONFIDENTIAL VERSION of Pre-filed Exhibit PJB-1, dated January
29, 2007
Exhibit No. 276 REDACTED VERSION of Pre-filed Exhibit PJB-1, dated January 29,
2007
Exhibit No.___. Pre-filed Exhibit PJB-2, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PJB-3, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PJB-4, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PJB-5, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PJB-6, dated January 29, 2007
19
Exhibit No.___. Pre-filed Exhibit PJB-7, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit PJB-8, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit TSC-1, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit LA-1, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit LA-2, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit DWE-1, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit DWE-2, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit TNN-1, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit TNN-2, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-1, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-2, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-3, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-4, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-5, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-6, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-7, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-8, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-9, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-10, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-11, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit MPG-12, dated January 29, 2007
Exhibit No.___. Pre-filed Exhibit SLZ/JFB-1R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit SLZ/JFB-2R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JFB-1R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JFB-2R, dated February 21, 2007
20
Exhibit No.___. Pre-filed Exhibit JFB-3R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JFB-4R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JFB/PJM/JOS-1R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JFB/PJM/JOS-2R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JFB/PJM/JOS-3R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit PJM-1R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit PJM-2R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit RGR-1R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JFH-1R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JFH-2R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JHA-1R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JHA-2R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JHA-3R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JHA-4R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JCO-1R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JF/LS-1R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JF/LS-2R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JF/LS-3R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JF/LS-4R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JF/LS-5R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JF/LS-6R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JF/LS-7R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JF/LS-8R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit JF/LS-9R, dated February 21, 2007
21
Exhibit No.___. Pre-filed Exhibit RGL-1R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit RGL-2R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit RGL-1R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit RGL-2R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit RGL-3R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit RGL-4R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit RGL-5R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit RGL-6R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit RGL-7R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit RGL-8R, dated February 21, 2007
Exhibit No.___. Pre-filed Exhibit RGL-9R, dated February 21, 2007
Exhibit No.___. Witness Affidavit of Joseph F. Bodanza sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of Robert G. Rosenberg sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of Patrick J. McClellan sponsoring testimony
as if given orally
Exhibit No.___. Witness Affidavit of John F. Haran sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Justin C. Orlando sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of Robert P. Moore sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of James H. Aikman sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Jennifer Feinstein sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of Joseph T. Trainor sponsoring testimony as
if given orally
22
Exhibit No.___. Witness Affidavit of Ronald G. Lukas sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of John E. O'Shaughnessy sponsoring testimony
as if given orally
Exhibit No.___. Witness Affidavit of Leo Silvestrini sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Patrick J. Barry sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Thomas Coonan sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Aric J. Rider sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of John P. Sano sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Richard Brash sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of George Abraham sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Christopher Simon sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of Ronald Calkins sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Daniel J. Wheeler sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of Aferdita Bardhi sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Davide Maioriello sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of Christopher R. Stolicky sponsoring
testimony as if given orally
Exhibit No.___. Witness Affidavit of Joseph F. Klesin sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Mary Ann Sorrentino sponsoring testimony as
if given orally
23
Exhibit No.___. Witness Affidavit of Douglas W. Elfner sponsoring testimony as
if given orally
Exhibit No.___. Witness Affidavit of Tariq N. Niazi sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Hugh Larkin sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Donna DeRonne sponsoring testimony as if
given orally
Exhibit No.___. Witness Affidavit of Michael Gorman sponsoring testimony as if
given orally
24
APPENDIX 2 - KEDNY Revenue Requirement
Page 1 of 21
KeySpan Energy Delivery of New York
Summary of Staff Adjustments
Twelve Months Ending December 31, 2008
$(000)
Adj. No. Description Amount
-------- ----------- ------
Operating Revenues - Appendix 2, Pages 5, 6 & 7
1 Revised sales adjustment $ 20,970
Operation & Maintenance Expenses - Appendix 2, Page 9
2 Eliminate program enhancement for leak response (1,850)
3 Adjust uncollectible expense for staff adjustments (272)
4 Eliminate expense for sales promotion enhancement (4,851)
5 Reduce customer relations expense (515)
6 Move gas supply expenses from delivery to commodity recovery (13,505)
7 Adjust for updated cost and inflation (15,530)
8 Adjust labor for 1% productivity (1,724)
9 Adjust non-labor related expenses for 1% productivity (1,159)
Depreciation - Appendix 2, Page 10
10 Staff depreciation changes to historic year plant (22,006)
11 Staff depreciation changes to rate year plant (5,879)
Amortizations - Appendix 2, Page 11
12 Eliminate Property Tax Amortization (5,542)
13 Reduce amortization of SIR costs (6,580)
State & Federal Income Taxes - Appendix 2, Pages 13 & 14
14 Include Medicare cash proceeds 920
15 Adjust for change in depreciation rates and plant (27,885)
16 Eliminate property tax amortization (5,542)
17 Reduce amortization of SIR costs (6,580)
18 Adjust tax depreciation for plant change (628)
Interest Deduction - Appendix 2, Page 15
19 Adjust the interest deduction for rate base adjustments (123,718)
20 Include CWIP in the interest deduction 11,923
21 To reflect Staff's capital structure
Rate Base - Appendix 2, Page 16
22 Decrease gas plant balance (9,831)
23 Decrease reserve for depreciation 12,368
24 Eliminate deferred merger costs (4,634)
25 Eliminate deferred SIR costs (90,669)
26 Eliminate unamortized property tax (36,025)
27 Adjust deferred taxes for SIR adjustment 39,922
28 Adjust deferred taxes for merger adjustment 2,040
29 Adjust deferred taxes for property tax adjustment 15,862
30 Adjust deferred tax for tax depreciation (6,013)
31 Eliminate pre-paid pension expense (88,974)
32 Reduce M&S inventory balance (600)
1
Appendix 2
Page 2 of 21
KeySpan Energy Delivery of New York
Summary of Staff Adjustments
Twelve Months Ending March 31, 2008
$(000)
Adj. No. Description Amount
-------- ----------- ------
Earnings Base / Capitalization Comparison - Appendix 2, Page 17
Capitalization
33 Reduce equity for pension earnings 1996 through 2003 30,000
34 Eliminate intercompany accounts payable/receivable for fuel costs 10,131
Earnings Base
35 Eliminate pre-paid pension expense (88,974)
36 Reduce earnings base for non-cash pension & OPEBs (3,864)
Cash Working Capital - Appendix 2, Page 18
37 Eliminate pensions from working cash calculation 17,898
38 Eliminate OPEBs from working cash calculation 21,926
Capital Structure
See Capital Structure, Appendix 2, Page 19
2
Appendix 2
Page 3 of 21
KeySpan Energy Delivery of New York
Summary of Company Update Adjustments
Twelve Months Ending December 31, 2008
$(000)
Adj. No. Description Amount
-------- ----------- ------
Operating Revenues - Appendix 2, Pages 5 & 6
1u Revised sales forecast $ (8,961)
Revised gas cost forecast (383,035)
Revenue tax effect of revised forecast (13,155)
Operation & Maintenance Expenses - Appendix 2, Page 7
2u Revised gas cost forecast (383,035)
3u Update labor for known and measurable changes 126
Update payroll taxes for labor changes 8
4u Update health & hospitalization to new contract 236
5u Update OPEBs to latest actuary report (4,748)
Update pensions to latest actuary report (4,132)
6u Update uncollectibles for revenue update (134)
7u Updated inflation factor
Depreciation - Appendix 2, Page 8
8u Adjust expense for plant changes (4)
Adjust expense for plant changes 1
9u Adjust expense for depreciation reserve deficiency 1,938
Amortizations - Appendix 2, Page 9
10u Adjust for updated property tax deferral balance 1,372
11u Adjust for updated environmental cost deferral balance (3,229)
Taxes Other Than Income Taxes - Appendix 2, Page 10
12u Update real estate taxes for latest known bills. 785
Update special franchise taxes for latest known bills. 14,636
13u Adjust gross revenue taxes for revenue update (10,586)
Adjust franchise-gross revenue taxes for revenue update (2,237)
Adjust MTA surcharges for revenue update (332)
14u Correct state unemployment insurance error (26)
Correct federal unemployment insurance error (10)
16u Update FICA taxes for payroll update 1
State & Federal Income Taxes - Appendix 3, Pages 5 & 6
17u Adjust state taxes for updates changes (see pages 13-15 for details) (992)
17u Adjust federal taxes for update changes (see pages 13-15 for details) (3,499)
Rate Base - Appendix 2, Page 14
18u Decrease gas plant balance (66)
19u Adjust depreciation reserve for correction and depreciation exp. adjs. 10,825
20u Update deferred SIR expenses for actual costs (20,985)
21u Update unamortized property costs for actual tax bills 8,916
22u Updated inflation factor
23u Adjust deferred income taxes for updates 478
24u Adjust cash working capital for O&M changes (detailed on page ) (924)
3
Appendix 2
Page 4 of 21
KeySpan Energy Delivery of New York
Summary of Joint Proposal Adjustments Twelve
Months Ending December 31, 2008, 2009, 2010, 2011, and 2012
$(000)
Adj. No. Description Amount for March 31 year end
- -------- ------------
2008 2009 2010 2011 2012
---- ---- ---- ---- ----
Operating Revenues - Appendix 2, Pages 5 & 6
1s Revised sales forecast $(7,813) $ 5,810 $ 8,701 $ 8,464 $ 8,405
Operation & Maintenance Expenses - Appendix 2, Page 7
2s Allowance for leak response program 1,850
Increase payroll for 2.8% forecast - 1,687 1,734 - -
3s Increase for Inflation forecast - - - - -
4s Update to latest actual bills, and inflation forecast less 1% productivity (243) 156 157 - -
5s Adjust uncollectible expense for revenue adjustments 335 534 318 - -
6s Decrease discretionary programs and adjust for inflation (9,684) 432 441 - -
7s Overall settlement productivity adjustment 6,891 (2,017) (288) - -
8s Remove merger/rate costs and amortize rate case costs over 3 years (1,527) (34) (34) - -
9s Reduce costs for management efficiency programs (1,735) (3,456) (1,565) - -
Depreciation - Appendix 2, Page 8
10s Adjust expense for plant changes (823) 3,018 3,548 3,548 3,548
11s Correct staff depreciation adjustment 3,205 - - - -
12s Adjust expense for depreciation reserve deficiency (1,938) - - - -
Amortizations - Appendix 2, Page 9
13s Amortize merger costs over three years* (6,383) - - - -
* Merger amortization is moved to environmental amortization after year 3
14s Adjust property tax amortization reflect a $22.5 million balance reduction 2,328 - - - -
15s Adjust environmental cost amortization to staff's position 3,229 - - - -
Taxes Other Than Income Taxes - Appendix 2, Page 10
16s Update real estate/special franchise taxes for latest known bills. (2,476) - - - -
State & Federal Income Taxes - Appendix 2, Pages 5-7
17s Adjust state taxes for settlement adjs & tax rate change
(pgs. 13-15 for detail) 583 (625) (708) (729) (598)
17s Adjust federal taxes for settlement adjs (pgs. 13-15 for detail) 3,839 (2,316) (2,624) (2,800) (2,966)
Rate Base - Appendix 2, Page 14
18s Adjust plant for capitalized pension/OPEB and revised forecast (30,500) 150,455 134,775 - -
19s Adjust depreciation reserve for depreciation expense adjustments (222) (77,928) (81,476) - -
20s Reverse company update adjustment 20,985 - - - -
21s Adjust property tax deferral balance for $22.5 million reduction 15,132 (3,700) (3,700) - -
22s Adjust deferred income taxes for settlement adjustments (19,536) 1,107 1,702 - -
23s Adjust for forecasted changes - - - 51,934 51,934
Earnings Base / Capitalization Comparison - Appendix 2, Page 15
24s Reverse staff's adjustment for pension earnings (30,000) - - - -
25s Reverse staff's adjustment for non-cash pension & OPEBs 3,864 - - - -
Cash Working Capital - Appendix 2, Page 16
26s Adjust for O&M changes
27s Reverse staff's adjustment for pensions (17,898) - - - -
28s Reverse staff's adjustment for OPEBs (21,926) - - - -
Capital Structure
See Capital Structure, Appendix 2, Page 17
4
Appendix 2
Page 5 of 21
KeySpan Energy Delivery of New York
Statement of Operating Income, Rate Base, and Rate of Return
Twelve Months Ending December 31, 2008
$(000)
Company Revenue
Filed Adj. Staff Adj. Co. Update Adj. Settlement As Adjusted Req. Rate
Rate Year No. Adjustment No. Adjs. No Adjs Year 1 Year 1 Year 1
Operating Revenues
Margins $ 646,908 1 $ 20,970 1u $ (8,961) 1s $ (7,813) $ 651,104 $ 30,299 $ 681,402
Cost of Gas 1,607,526 1u (383,035) 1,224,491 1,224,491
Revenue Taxes 84,589 1u (13,155) 71,434 71,434
Other Operating Revenue 18,589 18,589 18,589
------------ ------------ ------------- --------------------------------------------------
Total Operating Revenue 2,357,612 20,970 (405,151) (7,813) 1,965,618 30,299 1,995,917
------------ ------------ ------------- --------------------------------------------------
Base Rate % Increase 1.54%
Operation & Maintenance
Expenses 1,955,784 p.7 (39,406) p.7 (390,561) p.7 (22,570) 1,503,248 448 1,503,696
Depreciation 110,074 p.8 (27,885) p.8 1,935 p.8 444 84,568 84,568
Amortizations 24,478 p.9 (12,122) p.9 (1,857) p.9 (826) 9,673 9,673
Taxes Other Than Income
Taxes 195,738 - p.10 2,232 p.10 (2,476) 195,494 195,494
------------ ------------ ------------- --------------------------------------------------
Total Operating Expenses 2,286,074 (79,413) (388,251) (25,428) 1,792,982 448 1,793,431
------------ ------------ ------------- --------------------------------------------------
Operating Income before
Income Taxes 71,538 100,383 (16,900) 17,615 172,636 29,850 202,486
------------ ------------ ------------- --------------------------------------------------
State Income Tax 838 p.11 9,491 17u (992) 17s 583 9,919 2,576 12,496
Federal Income Tax 5,155 p.12 33,463 17u (3,499) 17s 3,839 38,958 9,546 48,504
------------ ------------ ------------- ----------- -----------------------
Utility Operating Income $ 65,545 $ 57,428 $ (12,409) $ 13,193 $ 123,758 $ 17,728 $ 141,486
============ ============ ============= ==================================================
Rate Base $ 1,974,005 p.14 $ (123,718) p.14 $ 1,613 p.14 $ 14,110 $ 1,866,011 $1,866,011
============ ============ ============= =========================== =============
Rate of Return 3.32% 6.63% 7.58%
============ ================ =============
5
Appendix 2
Page 6 of 21
KeySpan Energy Delivery of New York
Statement of Operating Income, Rate Base, and Rate of Return
Twelve Months Ending December 31, 2009, and 2010
$(000)
Revenue Revenue
Adj. Adjs. As Adjusted Req. Rate Adj. Adjs. As Adjusted Req. Rate
No. Year 2 Year 2 Year 2 Year 2 No. Year 3 Year 3 Year 3 Year 3
Operating Revenues
Margins 1s $ 5,810 $ 687,212 $ 12,812 $ 700,024 1s $ 8,701 $ 708,725 $ 12,377 $ 721,102
Cost of Gas 1,224,491 1,224,491 1,224,491 1,224,491
Revenue Taxes 71,434 71,434 71,434 71,434
Other Operating Revenue 18,589 18,589 18,589 18,589
------------------------------------------------ ---------------------------------------------
Total Operating Revenue 5,810 2,001,727 12,812 2,014,538 8,701 2,023,239 12,377 2,035,616
------------------------------------------------ ---------------------------------------------
Base Rate % Increase 0.64% 0.61%
Operation & Maintenance
Expenses p.7 1,810 1,505,506 190 1,505,696 p.7 5,381 1,511,077 183 1,511,260
Depreciation p.8 3,018 87,586 87,586 p.8 3,548 91,134 91,134
Amortizations p.9 - 9,673 9,673 p.9 - 9,673 9,673
Taxes Other Than
Income Taxes p.10 6,106 201,600 201,600 p.10 6,408 208,008 208,008
------------------------------------------------ ---------------------------------------------
Total Operating Expenses 10,934 1,804,364 190 1,804,554 15,338 1,819,892 183 1,820,075
------------------------------------------------ ---------------------------------------------
Operating Income before
Income Taxes (5,124) 197,362 12,622 209,984 (6,637) 203,348 12,194 215,541
------------------------------------------------ ---------------------------------------------
State Income Tax 17s (625) 11,870 1,089 12,960 17s (708) 12,252 1,052 13,304
Federal Income Tax 17s (2,316) 46,188 4,037 50,225 17s (2,624) 47,600 3,899 51,500
------------------------------------------------ ---------------------------------------------
Utility Operating Income $ (2,182) $ 139,304 $ 7,496 $ 146,800 $ (3,304) $ 143,496 $ 7,242 $ 150,738
================================================ =============================================
Rate Base $ 70,094 $ 1,936,104 $ 1,936,104 $ 51,934 $ 1,988,038 $ 1,988,038
======================== ============= ======================= ============
Rate of Return 7.20% 7.58% 7.22% 7.58%
=============== ============= ============= ============
6
Appendix 2
Page 7 of 21
KeySpan Energy Delivery of New York
Statement of Operating Income, Rate Base, and Rate of Return
Twelve Months Ending December 31, 2011, and 2012
$(000)
Revenue Revenue
Adj. Adjs. As Adjusted Req. Rate Adj. Adjs. As Adjusted Req. Rate
No. Year 4 Year 4 Year 4 Year 4 No. Year 5 Year 5 Year 5 Year 5
Operating Revenues
Margins 1s $ 8,464 $ 729,566 $ 12,377 $ 741,943 1s $ 8,405 $ 750,348 $ 12,377 $ 762,725
Cost of Gas 1,224,491 1,224,491 1,224,491 1,224,491
Revenue Taxes 71,434 71,434 71,434 71,434
Other Operating Revenue 18,589 18,589 18,589 18,589
------------------------------------------------ -----------------------------------------------
Total Operating Revenue 8,464 2,044,080 12,377 2,056,457 8,405 2,064,862 12,377 2,077,239
------------------------------------------------ -----------------------------------------------
Base Rate % Increase 0.61% 0.60%
Operation & Maintenance
Expenses 3s 5,381 1,516,641 183 1,516,824 3s 5,381 1,522,205 183 1,522,388
Depreciation 10s 3,548 94,682 94,682 10s 3,548 98,230 98,230
Amortizations 9,673 9,673 - 9,673 9,673
Taxes Other Than
Income Taxes 3s 6,408 214,416 214,416 3s 6,408 220,824 220,824
------------------------------------------------ -----------------------------------------------
Total Operating Expenses 15,337 1,835,412 183 1,835,595 15,337 1,850,932 183 1,851,115
------------------------------------------------ -----------------------------------------------
Operating Income before
Income Taxes (6,873) 208,668 12,194 220,862 (6,932) 213,930 12,194 226,124
------------------------------------------------ -----------------------------------------------
State Income Tax 17s (729) 12,575 1,052 13,628 17s (598) 13,029 1,052 14,082
Federal Income Tax 17s (2,800) 48,699 3,900 52,599 17s (2,966) 49,633 3,900 53,532
------------------------------------------------ -----------------------------------------------
Utility Operating Income $ (3,344) $ 147,394 $ 7,242 $ 154,636 $ (3,367) $ 151,268 $ 7,242 $ 158,510
================================================ ===============================================
Rate Base 23s $ 51,934 $ 2,039,972 $ 2,039,972 23s $ 51,934 $ 2,091,906 $ 2,091,906
======================== ============ ======================= ============
Rate of Return 7.23% 7.58% 7.23% 7.58%
============= ============ ============== ============
7
Appendix 2
Page 8 of 21
KeySpan Energy Delivery of New York
Merger Adjustments to Stand Alone Joint Proposal Revenue Requirements
$(000)
Twelve Months Ending December 31
2008 2009 2010 2011 2012
---- ---- ---- ---- ----
KEDNY Revenue Requirement per Joint Proposal $ 30,300 $ 12,800 $ 12,400 $ 12,400 $ 12,400
--------- --------- --------- --------- --------
Rate Mitigators
Cost to return to Pension/OPEB Policy Statement $ 6,000
Deferral of Amortization Adjustments(1) 1,840 14 45 (1,016) 1,395
9.8% ROE and 45% Equity Ratio 2,576 97 72 68 63
Imputation of TC (from $67 million to $85 million) 18,000
Synergy Share Credit 5,694
Additional Margin Adjustment (2) (3,810) 12,689 12,283 13,348 10,942
--------- --------- --------- --------- --------
Available Rate Mitigators $ 30,300 $ 12,800 $ 12,400 $ 12,400 $ 12,400
--------- --------- --------- --------- --------
Revenue Requirement after Rate Mitigator $ - $ - $ - $ - $ -
========= ========= ========= ========= ========
(1) The deferral mitigator also precludes deferral and subsequent recovery of
special franchise property tax for KEDNY between October 1, 2007 and
December 31, 2007.
(2) If a Revenue Decoupling Mechanism is developed for KEDNY, the mechanism
will need to consider the impact of the Additional Margin Adjustment.
8
Appendix 2
Page 9 of 21
KeySpan Energy Delivery of New York
Operations & Maintenance Expenses
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Rate Adj. Staff Adj. Co. Update Adj. Settlement As Adjusted
Year Expense No. Adjs. No. Adjs. No. Adjs. Year 1
Gas Costs $ 1,607,526 2u (383,035) $ 1,224,491
Labor 117,802 2 (1,850) 3u 126 2s 1,850 117,928
Incentive Programs & Rebates 2,656 7u 19 3s 2,675
Other Employee Related Exp. & Benefits 2,973 7u 21 3s 2,994
Health & Hospitalization 14,143 4u 236 4s (243) 14,136
401k Match 2,811 7u 3 2s 2,814
Advertising 2,634 7u 19 3s 2,653
Building Services 9,942 7u 69 3s 10,011
Collection Agency Fees 2,509 7u 17 3s 2,526
Computer Software Purchases 3,428 7u 25 3s 3,453
Contract Labor 9,433 7u 67 3s 9,500
Contributions, Tickets & Sponsorships - -
Dues & Memberships 960 7u 7 3s 967
Fleet Leasing 2,934 7u 21 3s 2,955
Franchise Requirements 2,152 7u 15 3s 2,167
Insurance 6,414 7u 45 3s 6,459
Lock Box 463 7u 3 3s 466
Materials & Supplies 5,812 7u 41 3s 5,853
New York Facilities 8,307 7u 58 3s 8,365
OPEBs 21,926 5u (4,748) 2s 17,178
OPEBs (loss amortization adjustment) (7,416) (7,416)
Other 13,694 7u 96 3s 13,790
Paving 3,723 7u 26 3s 3,749
Payroll Taxes 4,929 3u 8 2s 4,937
Pensions 17,898 5u (4,132) 2s 13,766
Pensions (loss amortization adjustment) (11,041) (11,041)
Permits 1,439 7u 10 3s 1,449
Postage 5,808 7u 41 3s 5,849
PSC Assessment Fees 7,105 7u 50 3s 7,155
Purchased Services 23,912 7u 168 3s 24,080
Service Company Asset Recovery Charge - -
Telecommunications 3,633 7u 25 3s 3,658
Transportation 5,004 7u 35 3s 5,039
Transportation - Liquid Fuels 1,263 7u 9 3s 1,272
Uncollectibles 9,982 3 (272) 6u (134) 5s 335 9,911
Accounting Change (2,821) 7u (20) (2,841)
Program Changes 35,389 4,5 (5,366) 7u 249 6s (9,684) 20,588
Unbundling Adjustment - 6 (13,505) (13,505)
Cost Update/Inflation Adjustment - 7 (15,530) 7s 15,530 -
Labor Productivity Adjustment - 8 (1,724) 7s 1,724
Non-Labor Productivity Adjustment - 20 (1,159) 7s 1,159 -
Overall Productivity Adjustment 7s (11,522) (11,522)
Remove merger/rate case costs 8s (1,600) (1,600)
Amortize rate case costs 8s 73 73
Management Efficiency Programs 9s (2,154) (2,154)
Management Efficiency Programs - CTA 9s 419 419
- ----------------------------------------------------- ----------------- --------------- -------------------------
Total Operation & Maint. Exp. $ 1,955,784 $ (39,406) $ (390,560) $ (22,570) $ 1,503,249
============== ================= =============== =========================
KeySpan Energy Delivery of New York
Operations & Maintenance Expenses
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Adjs. As Adjusted Adjs. As Adjusted
Year 2 Year 2 Year 3 Year 3
Gas Costs $ 1,224,491 $ 1,224,491
Labor 3,302 121,230 3,394 124,625
Incentive Programs & Rebates 56 2,731 57 2,788
Other Employee Related Exp. & Benefits 63 3,057 64 3,121
Health & Hospitalization 156 14,292 157 14,449
401k Match 79 2,893 81 2,974
Advertising 56 2,709 57 2,766
Building Services 210 10,221 215 10,436
Collection Agency Fees 53 2,579 54 2,633
Computer Software Purchases 73 3,526 74 3,600
Contract Labor 200 9,700 204 9,903
Contributions, Tickets & Sponsorships - -
Dues & Memberships 20 988 21 1,008
Fleet Leasing 62 3,017 63 3,080
Franchise Requirements 46 2,213 46 2,259
Insurance 136 6,594 138 6,733
Lock Box 10 476 10 486
Materials & Supplies 123 5,976 125 6,101
New York Facilities 176 8,540 179 8,720
OPEBs 481 17,659 494 18,154
OPEBs (loss amortization adjustment) (208) (7,624) (213) (7,837)
Other 290 14,080 296 14,375
Paving 79 3,827 80 3,908
Payroll Taxes 138 5,076 142 5,218
Pensions 385 14,151 396 14,547
Pensions (loss amortization adjustment) (309) (11,350) (318) (11,668)
Permits 30 1,479 31 1,510
Postage 123 5,972 125 6,097
PSC Assessment Fees 150 7,305 153 7,459
Purchased Services 506 24,585 516 25,102
Service Company Asset Recovery Charge - -
Telecommunications 77 3,735 78 3,813
Transportation 106 5,145 108 5,253
Transportation - Liquid Fuels 27 1,299 27 1,326
Uncollectibles 534 10,446 318 10,764
Accounting Change (60) (2,901) (61) (2,962)
Program Changes 432 21,020 441 21,462
Unbundling Adjustment (284) (13,788) (290) (14,078)
Cost Update/Inflation Adjustment - -
Labor Productivity Adjustment - -
Non-Labor Productivity Adjustment - -
Overall Productivity Adjustment (2,017) (13,539) (288) (13,827)
Remove merger/rate case costs (34) (1,634) (34) (1,668)
Amortize rate case costs 73 73
Management Efficiency Programs (3,037) (5,191) (1,565) (6,756)
Management Efficiency Programs - CTA (419) - -
- ---------------------------------------------------------------------------------------------------------
Total Operation & Maint. Exp. $ 1,810 $ 1,505,059 $ 5,381 $ 1,510,440
==================================================================
Appendix 2
Page 10 of 21
KeySpan Energy Delivery of New York
Depreciation
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle- As As As
Rate Year Adj. Staff Adj. Update Adj. ment Adjusted Adjs. Adjusted Adjs. Adjusted
Expense No. Adj. No. Adjs. No. Adjs Year 1 Year 2 Year 2 Year 3 Year 3
Depreciation Expense $87,062 8u $ (4) 10s $ (823) $ 86,235 $ 3,018 $ 89,253 $ 3,548 $ 92,801
Depreciation Expense of
Corporate Services
Assets 3,205 3,205 3,205 3,205
Add:
Depreciation related to
Accounting changes
proposed by Mr. Aikman
based on 12/31/05
Plant Balances 18,555 10 (22,006) (3,451) (3,451) (3,451)
Depreciation related to
Accounting changes
proposed by Mr. Aikman
on Plant additions
(4/1/07 - 3/31/08) 1,252 11 (5,879) 8u 1 11s 3,205 (1,421) (1,421) (1,421)
Depreciation related to
Accounting changes
proposed by Mr. Aikman
on depreciation
reserve deficiency at
12/31/05 9u 1,938 12s (1,938) - - -
- -------------------------------------------------- --------- -------------------------------------------------------------
Total $110,074 $(27,885) $ 1,935 $ 444 $ 84,568 $ 3,018 $ 87,586 $ 3,548 $ 91,134
========= ========== ========= =============================================================
10
Appendix 2
Page 11 of 21
KeySpan Energy Delivery of New York
Amortizations
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. As As As
Rate Year Adj. Staff Adj. Update Adj. Settlement Adjusted Adjs. Adjusted Adjs. Adjusted
Expense No. Adjs No. Adjs. No. Adjs Year 1 Year 2 Year 2 Year 3 Year 3
Amortization Merger Costs $ 9,569 13s $ (6,383) $ 3,186 $ 3,186 $ 3,186
Amortization Property Taxes 5,542 12 (5,542) 10u 1,372 14s 2,328 3,700 3,700 3,700
Amortization Environmental
Costs 9,367 13 (6,580) 11u (3,229) 15s 3,229 2,787 2,787 2,787
--------- --------- ----------- ----------------------------------------------------------
Total $ 24,478 $(12,122) $ (1,857) $ (826) $ 9,673 $ - $ 9,673 $ - $ 9,673
========= ========= =========== ==========================================================
11
Appendix 2
Page 12 of 21
KeySpan Energy Delivery of New York
Taxes Other Than Income Taxes
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. As As As
Rate Year Adj. Staff Adj. Update Adj. Settlement Adjusted Adjs. Adjusted Adjs. Adjusted
Expenses No. Adj. No. Adjs. No. Adjs Year 1 Year 2 Year 2 Year 3 Year 3
Local
Real Estate/Special Franchise $16,100 12u $ 785 $ 16,885 $ 844 $ 17,729 $ 886 $ 18,616
Special Franchise 90,664 12u 14,636 16s (2,476) 102,824 5,141 107,965 5,398 113,363
Municipal Gross Revenue 68,174 13u (10,586) 57,588 57,588 57,588
State
Franchise Gross Income -185a 14,411 13u (2,237) 12,174 12,174 12,174
NYS Excise Tax 23 23 0 24 1 24
MTA Surcharge 2,004 13u (332) 1,672 1,672 1,672
Unemployment Insurance 318 14u (26) 292 8 300 8 309
Sales and Use 117 7u 1 118 2 120 3 123
Other 88 88 2 90 2 92
Federal
FICA 3,722 16u 1 3,723 104 3,827 107 3,934
Unemployment Tax 117 14u (10) 107 3 110 3 113
--------- -------- ---------- ------------------------------------------------------------
Total $195,738 $ - $2,232 $ (2,476) $195,494 $6,106 $201,600 $6,408 $208,008
========= ======== ========== ============================================================
12
Appendix 2
Page 13 of 21
KeySpan Energy Delivery of New York
State Income Taxes
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle- Year 1 Year 1
Rate Year Adj.s Staff Update ment As Revenue Rate
Expense No. Adj. Adjs. Adjs Adjusted Req. Year 1
Taxable Net Income $ 71,538 p.1 $ 100,383 $ (16,900) $ 17,615 $ 172,636 $ 29,850 $ 202,486
Interest Expense 62,261 p.8 (5,638) (5,912) 6,064 56,775 56,775
----------- --------------------------------------------------------------------------
Operating Income Before Taxes 9,277 106,021 (10,988) 11,551 115,861 29,850 145,711
Flow-Thru Items
Additions
Non Deductible Meals and Entertainment 1 1 1
Book Depr. in excess of Tax Depr. - - -
----------- --------------------------------------------------------------------------
1 1 - 1
----------- --------------------------------------------------------------------------
Deductions
----------- --------------------------------------------------------------------------
Medicare cash proceeds - 14 920 920 920
----------- --------------------------------------------------------------------------
Income Subject to Tax 9,278 105,101 (10,988) 11,551 114,942 29,850 144,792
=========== ==========================================================================
Income Tax Provision $ 838 $ 9,491 $ (992) $ 583 $ 9,919 $ 2,576 $ 12,496
=========== ==========================================================================
Normalized Items
Additions
Medicare Income $ 1,804 $ 1,804 $ 1,804
Gas Cost Deferred - - -
Pension Cost - - -
Bad Debts - - -
Balancing Account - - -
Merger Cost Deferral/Amortization 9,569 - (6,383) 3,186 3,186
MTA Amortization - - -
Performance Shares 592 592 592
FAS 106 - - -
Premium/Discount - Refinancing 1,565 1,565 1,565
Relocation of Mains - - -
Environmental Clean Up Costs - - -
Deferred Tax Rate - - -
CIAC Deferral 3 3 3
Book Depreciation - Current Rates 90,267 (4) 90,263 90,263
Book Depreciation - Proposed Rates 19,807 15 (27,885) 1,939 444 (5,695) (5,695)
Cost of Removal Amortization 751 751 751
Senior Securities Expense Amortization 1,565 1,565 1,565
Property Tax Amortization 5,542 16 (5,542) 1,372 2,328 3,700 3,700
Environmental Clean Up Cost Amortization 9,367 17 (6,580) (3,229) 3,229 2,787 2,787
----------- --------------------------------------------------------------------------
140,832 (40,007) 78 (382) 100,521 - 100,521
----------- --------------------------------------------------------------------------
Deductions
Environmental Clean Up Costs 58,104 58,104 58,104
Tax Depreciation 114,537 18 (628) (1,255) 112,654 112,654
Removal Costs Expenditures 9,658 9,658 9,658
Lien Date Property Taxes 415 415 415
----------- --------------------------------------------------------------------------
182,714 20 (628) - (1,255) 180,831 - 180,831
----------- --------------------------------------------------------------------------
Net Timing Differences (41,882) (39,379) 78 873 (80,311) - (80,311)
----------- --------------------------------------------------------------------------
Taxable Income (32,604) 65,721 (10,910) 12,424 34,631 29,850 64,481
----------- --------------------------------------------------------------------------
Current State Income Tax (2,944) 5,935 (985) 983 2,989 2,576 5,565
----------- --------------------------------------------------------------------------
Deferred State Income Tax (3,782) (3,556) 7 400 (6,931) - (6,931)
----------- --------------------------------------------------------------------------
Total State Income Tax $ 838 $ 9,491 $ (992) $ 583 $ 9,919 $ 2,576 $ 12,496
=========== ==========================================================================
KeySpan Energy Delivery of New York
State Income Taxes
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Year 2 Year 2 Year 3 Year 3
Year 2 As Revenue Adjs. Year 3 As Revenue Rate
Adjs. Adjusted Req. Year 2 Adjs. Adjusted Req. Year 3
Taxable Net Income $(5,124) $ 197,362 $ 12,622 $ 209,984 $(6,637) $ 203,348 $ 12,194 $ 215,541
Interest Expense 2,119 58,894 58,894 1,570 60,464 60,464
--------------------------------------------------------------------------------------------
Operating Income Before Taxes (7,243) 138,468 12,622 151,090 (8,207) 142,884 12,194 155,077
Flow-Thru Items
Additions
Non Deductible Meals and Entertainment 1 1 1 1
Book Depr. in excess of Tax Depr. - -
--------------------------------------------------------------------------------------------
- 1 - 1 - 1 - 1
--------------------------------------------------------------------------------------------
Deductions
--------------------------------------------------------------------------------------------
Medicare cash proceeds 920 920 920 920
--------------------------------------------------------------------------------------------
Income Subject to Tax (7,243) 137,549 12,622 150,171 (8,207) 141,965 12,194 154,158
============================================================================================
Income Tax Provision $ (625) $ 11,870 $ 1,089 $ 12,960 $ (708) $ 12,252 $ 1,052 $ 13,304
============================================================================================
Normalized Items
Additions
Medicare Income $ 1,804 $ 1,804 $ 1,804 $ 1,804
Gas Cost Deferred - - - -
Pension Cost - - - -
Bad Debts - - - -
Balancing Account - - - -
Merger Cost Deferral/Amortization 3,186 3,186 3,186 3,186
MTA Amortization - - - -
Performance Shares 592 592 592 592
FAS 106 - - - -
Premium/Discount - Refinancing 1,565 1,565 1,565 1,565
Relocation of Mains - - - -
Environmental Clean Up Costs - - - -
Deferred Tax Rate - - - -
CIAC Deferral 3 3 3 3
Book Depreciation - Current Rates 90,263 90,263 90,263 90,263
Book Depreciation - Proposed Rates 3,018 (2,677) (2,677) 3,548 871 871
Cost of Removal Amortization 751 751 751 751
Senior Securities Expense Amortization 1,565 1,565 1,565 1,565
Property Tax Amortization 3,700 3,700 3,700 3,700
Environmental Clean Up Cost Amortization 2,787 2,787 2,787 2,787
--------------------------------------------------------------------------------------------
3,018 103,539 - 103,539 3,548 107,087 - 107,087
--------------------------------------------------------------------------------------------
Deductions
Environmental Clean Up Costs 58,104 58,104 58,104 58,104
Tax Depreciation 4,600 117,254 117,254 3,632 120,886 120,886
Removal Costs Expenditures 9,658 9,658 9,658 9,658
Lien Date Property Taxes 415 415 415 415
--------------------------------------------------------------------------------------------
4,600 185,431 - 185,431 3,632 189,063 - 189,063
--------------------------------------------------------------------------------------------
Net Timing Differences (1,582) (81,893) - (81,893) (84) (81,976) - (81,976)
--------------------------------------------------------------------------------------------
Taxable Income (8,825) 55,657 12,622 68,279 (8,290) 59,988 12,194 72,182
--------------------------------------------------------------------------------------------
Current State Income Tax (762) 4,803 1,089 5,892 (715) 5,177 1,052 6,229
--------------------------------------------------------------------------------------------
Deferred State Income Tax (137) (7,067) - (7,067) (7) (7,075) - (7,075)
--------------------------------------------------------------------------------------------
Total State Income Tax $ (625) $ 11,870 $ 1,089 $ 12,960 $ (708) $ 12,252 $ 1,052 $ 13,304
============================================================================================
13
Appendix 2
Page 14 of 21
KeySpan Energy Delivery of New York
Federal Income Taxes
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle- Year 1 Year 1
Rate Year Adj. Staff Update ment As Revenue Rate
Expense No. Adj. Adjs. Adjs Adjusted Req. Year 1
Taxable Net Income $ 71,538 p.1 $ 100,383 $ (16,900) $ 17,615 $ 171,920 $ 29,850 $ 201,770
Interest Expense 62,261 p.8 (5,638) (5,912) 6,064 56,775 56,775
---------- ---------------------------------------------------------------------------
Operating Income Before Taxes 9,277 106,021 (10,988) 11,551 115,861 29,850 144,996
Flow-Thru Items
- ---------------
Additions
- ---------
Non Deductible Meals and Entertainment 1 1 1
Book Depr. in excess of Tax Depr. -
Current Depreciation Rates 4,375 4,375 4,375
Proposed Depreciation Rates 1,912 1,912 1,912
---------- ---------------------------------------------------------------------------
6,288 - - - 6,288 - 6,288
---------- ---------------------------------------------------------------------------
Deductions
Medicare cash proceeds 14 920 920 920
New York State Income Tax Provision 838 p.6 9,491 (992) 583 10,328 2,576 12,904
---------- ---------------------------------------------------------------------------
838 10,411 (992) 583 11,248 2,576 13,824
---------- ---------------------------------------------------------------------------
Income Subject to Tax 14,727 95,610 (9,996) 10,968 110,900 27,274 137,459
---------- ---------------------------------------------------------------------------
Income Tax Provision @ 35% $ 5,155 $ 33,463 $ (3,499) $ 3,839 $ 38,815 $ 9,546 $ 48,111
========== ===========================================================================
Normalized Items
Additions
Medicare Income $ 1,804 $ 1,804 $ 1,804
Merger Cost Deferral/Amortization 9,569 - (6,383) 3,186 3,186
Performance Shares 592 592 592
CIAC Deferral 3 3 3
Book Depreciation - Current Rates 90,267 (4) - 90,263 90,263
Book Depreciation - Proposed Rates 19,807 15 (27,885) 1,939 444 (5,695) (5,695)
Cost of Removal Amortization 751 751 751
Senior Securities Expense Amortization 1,565 1,565 1,565
Property Tax Amortization 5,542 16 (5,542) 1,372 2,328 3,700 3,700
Environmental Clean Up Cost Amortization 9,367 17 (6,580) (3,229) 3,229 2,787 2,787
---------- ---------------------------------------------------------------------------
139,267 (40,007) 78 (382) 98,956 - 98,956
---------- ---------------------------------------------------------------------------
Deductions
Environmental Clean Up Costs 58,104 58,104 58,104
Tax Depreciation 107,264 18 (628) (1,255) 105,381 105,381
Removal Costs Expenditures 9,658 9,658 9,658
Lien Date Property Taxes 415 415 415
Deferred State Tax Provision (3,782) p.6 (3,556) (7,338) (7,338)
---------- ---------------------------------------------------------------------------
171,659 (4,184) - (1,255) 166,220 - 166,220
---------- ---------------------------------------------------------------------------
Net Timing Differences (32,392) (35,823) 78 873 (67,265) - (67,265)
---------- ---------------------------------------------------------------------------
Taxable Income (17,665) 59,787 (9,918) 11,840 43,636 27,274 70,195
---------- ---------------------------------------------------------------------------
Current Federal Income Tax @ 35% (6,183) 20,925 (3,471) 4,144 15,273 9,546 24,568
---------- ---------------------------------------------------------------------------
Deferred Federal Income Tax @ 35% (11,337) (12,538) 27 305 (23,543) - (23,543)
---------- ---------------------------------------------------------------------------
Total Federal Income Tax $ 5,155 $ 33,463 $ (3,499) $ 3,839 $ 38,815 $ 9,546 $ 48,111
========== ===========================================================================
KeySpan Energy Delivery of New York
Federal Income Taxes
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Year 2 Year 2 Year 3 Year 3
Year 2 As Revenue Rate Year 3 As Revenue Rate
Adjs. Adjusted Req. Year 2 Adjs. Adjusted Req. Year 3
Taxable Net Income $(5,124) $ 197,362 $ 12,622 $ 209,984 $(6,637) $ 203,348 $ 12,194 $ 215,541
Interest Expense 2,119 58,894 58,894 1,570 60,464 60,464
--------------------------------------------------------------------------------------------
Operating Income Before Taxes (7,243) 138,468 12,622 151,090 (8,207) 142,884 12,194 155,077
Flow-Thru Items
- ---------------
Additions
- ---------
Non Deductible Meals and Entertainment 1 1 1 1
Book Depr. in excess of Tax Depr. - - -
Current Depreciation Rates 4,375 4,375 4,375 4,375
Proposed Depreciation Rates 1,912 1,912 1,912 1,912
--------------------------------------------------------------------------------------------
- 6,288 - 6,288 - 6,288 - 6,288
--------------------------------------------------------------------------------------------
Deductions
Medicare cash proceeds 920 920 920 920
New York State Income Tax Provision (625) 12,279 1,089 13,369 (708) 12,660 1,052 13,713
--------------------------------------------------------------------------------------------
(625) 13,199 1,089 14,289 (708) 13,580 1,052 14,633
--------------------------------------------------------------------------------------------
Income Subject to Tax (6,618) 131,557 11,533 143,090 (7,498) 135,591 11,141 146,733
--------------------------------------------------------------------------------------------
Income Tax Provision @ 35% $(2,316) $ 46,045 $ 4,037 $ 50,081 $(2,624) $ 47,457 $ 3,899 $ 51,356
============================================================================================
Normalized Items
Additions
Medicare Income $ 1,804 $ 1,804 $ 1,804 $ 1,804
Merger Cost Deferral/Amortization 3,186 3,186 3,186 3,186
Performance Shares 592 592 592 592
CIAC Deferral 3 3 3 3
Book Depreciation - Current Rates 90,263 90,263 90,263 90,263
Book Depreciation - Proposed Rates 3,018 (2,677) (2,677) 3,548 871 871
Cost of Removal Amortization 751 751 751 751
Senior Securities Expense Amortization 1,565 1,565 1,565 1,565
Property Tax Amortization 3,700 3,700 3,700 3,700
Environmental Clean Up Cost Amortization 2,787 2,787 2,787 2,787
--------------------------------------------------------------------------------------------
3,018 101,974 - 101,974 3,548 105,522 - 105,522
--------------------------------------------------------------------------------------------
Deductions
Environmental Clean Up Costs 58,104 58,104 58,104 58,104
Tax Depreciation 4,600 109,981 109,981 3,632 113,613 113,613
Removal Costs Expenditures 9,658 9,658 9,658 9,658
Lien Date Property Taxes 415 415 415 415
Deferred State Tax Provision (7,338) (7,338) (7,338) (7,338)
--------------------------------------------------------------------------------------------
4,600 170,820 - 170,820 3,632 174,452 - 174,452
--------------------------------------------------------------------------------------------
Net Timing Differences (1,582) (68,847) - (68,847) (84) (68,931) - (68,931)
--------------------------------------------------------------------------------------------
Taxable Income (8,200) 62,710 11,533 74,243 (7,582) 66,661 11,141 77,802
--------------------------------------------------------------------------------------------
Current Federal Income Tax @ 35% (2,870) 21,949 4,037 25,985 (2,654) 23,331 3,899 27,231
--------------------------------------------------------------------------------------------
Deferred Federal Income Tax @ 35% (554) (24,096) - (24,096) (29) (24,126) - (24,126)
--------------------------------------------------------------------------------------------
Total Federal Income Tax $(2,316) $ 46,045 $ 4,037 $ 50,081 $(2,624) $ 47,457 $ 3,899 $ 51,356
============================================================================================
14
Appendix 2
Page 15 of 21
KeySpan Energy Delivery of New York
Calculation of Interest Expense
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle- As As As
Filed Rate Adj. Staff Update ment Adjusted Adjs. Adjusted Adjs. Adjusted
Year No. Adj. Adjs. Adjs Year 1 Year 2 Year 2 Year 3 Year 3
Rate Base $ 1,974,005 19 $ (123,718) $ 1,613 $ 14,110 $ 1,866,011 $ 70,094 $ 1,936,104 $ 51,934 $ 1,988,038
Interest Bearing CWIP 20 11,923 11,923 11,923 11,923
----------- ----------------------------------------------------------------------------------------------
Earnings Base $ 1,974,005 $ (111,795) $ 1,613 $ 14,110 $ 1,877,934 $ 70,094 $ 1,948,027 $ 51,934 $ 1,999,961
=========== ==============================================================================================
Weighted Cost of Debt. 3.15% 21 -0.11% -0.01% 3.02% 3.02% 3.02%
Interest Exp. 62,261 (5,638) (5,912) 6,064 56,775 58,894 60,464
Add Gain on Required
Debt
----------- ----------------------------------------------------------------------------------------------
Total Interest
Deduction $ 62,261 $ (5,638) $ (5,912) $ 6,064 $ 56,775 $ 58,894 $ 60,464
=========== ==============================================================================================
15
Appendix 2
Page 16 of 21
KeySpan Energy Delivery of New York
Calculation of Average Rate Base
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle- As
Filed Rate Adj. Staff Adj. Update Adj. ment Adjusted
Year No. Adjustment No. Adjs. No. Adjs Year 1
Utility Plant-Gas:
Gas Plant $ 2,908,556 22 $ (9,831) 18u $ (66) 18s $ (30,500) $ 2,868,159
Non-interest Bearing CWIP 14,621 14,621
Reserve for Depreciation (984,842) 23 12,368 19u 10,825 19s (222) (961,871)
------------- ------------- ---------- ----------------------------
1,938,335 2,537 10,759 (30,722) 1,920,909
------------- ------------- ---------- ----------------------------
Gas Plant - charged from Corporate
Services 74,957 74,957
Non-interest Bearing CWIP - charged
from Corp. Srvcs 2,240 2,240
Reserve for Depreciation - charged
from Corp. Srvcs. (33,355) (33,355)
------------- ------------- ---------- ----------------------------
Net Plant 1,982,177 2,537 10,759 (30,722) 1,964,751
------------- ------------- ---------- ----------------------------
Rate Base Adjustments:
Deferred Merger Costs to Achieve 4,634 24 (4,634) -
Deferred SIR Expenditures 90,669 25 (90,669) 20u (20,985) 20s 20,985 -
Unamortized Senior Securities' Expense 19,942 19,942
Unamortized Property Tax Costs 36,025 26 (36,025) 21u 8,916 21s 15,132 24,048
Unamortized Deferred Assets - Other 38,496 22u 88 38,584
Deferred Income Taxes (353,013) 27-30 51,811 23u 478 22s (19,536) (320,261)
------------- ------------- ---------- ----------------------------
Sub-Total (163,247) (79,517) (11,503) 16,581 (237,687)
------------- ------------- ---------- ----------------------------
Excess Earnings Base Capitalization Adj. (9,491) p.15 52,707 p.15 26,136 69,352
------------- ------------- ---------- ----------------------------
Net Rate Base Adjustments (172,738) (26,811) (11,503) 42,717 (168,335)
------------- ------------- ---------- ----------------------------
Gas Storage Inventory
Prepayments 112,714 31 (88,974) 22u 3,236 26,976
Materials and Supplies 9,568 32 (600) 22u 45 9,013
Cash Working Capital Allowance 42,284 p.16 (9,870) 24u (924) p.16 2,115 33,606
------------- ------------- ---------- ----------------------------
Total Working Capital 164,566 (99,444) 2,357 2,115 67,480
------------- ------------- ---------- ----------------------------
Rate Base $ 1,974,005 $ (123,718) $ 1,613 $ 14,110 $ 1,866,011
============= ============= ========== ============================
KeySpan Energy Delivery of New York
Calculation of Average Rate Base
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
As As
Adjs. Adjusted Adjs. Adjusted
Year 2 Year 2 Year 3 Year 3
Utility Plant-Gas:
Gas Plant $ 150,455 $ 3,018,614 $ 134,775 $ 3,153,389
Non-interest Bearing CWIP 14,621 14,621
Reserve for Depreciation (77,928) (1,039,799) (81,476) (1,121,275)
--------------------------------------------------------------------------
72,527 1,993,436 53,299 2,046,735
--------------------------------------------------------------------------
Gas Plant - charged from Corporate Services 74,957 74,957
Non-interest Bearing CWIP - charged from Corp. Srvcs 2,240 2,240
Reserve for Depreciation - charged from Corp. Srvcs. (33,355) (33,355)
--------------------------------------------------------------------------
Net Plant 72,527 2,037,278 53,299 2,090,577
--------------------------------------------------------------------------
Rate Base Adjustments:
Deferred Merger Costs to Achieve - -
Deferred SIR Expenditures - -
Unamortized Senior Securities' Expense 19,942 19,942
Unamortized Property Tax Costs (3,700) 20,348 (3,700) 16,648
Unamortized Deferred Assets - Other 38,584 38,584
Deferred Income Taxes 1,107 (319,154) 1,702 (317,452)
--------------------------------------------------------------------------
Sub-Total (2,593) (240,280) (1,998) (242,278)
--------------------------------------------------------------------------
Excess Earnings Base Capitalization Adj. 69,352 69,352
--------------------------------------------------------------------------
Net Rate Base Adjustments (2,593) (170,928) (1,998) (172,927)
--------------------------------------------------------------------------
Gas Storage Inventory
Prepayments 26,976 26,976
Materials and Supplies 9,013 9,013
Cash Working Capital Allowance 159 33,765 633 34,398
--------------------------------------------------------------------------
Total Working Capital 159 67,639 633 68,272
--------------------------------------------------------------------------
Rate Base $ 70,094 $ 1,936,104 $ 51,934 $ 1,988,038
==========================================================================
16
Appendix 2
Page 17 of 21
KeySpan Energy Delivery of New York
Historic Earning Base / Capitalization Comparison
Twelve Months Ending December 31, 2005
$(000)
Company Filed Adj. Staff Adj. Settlement Staff Adjusted
Historic Year No. Adjustment No. Adjs Rate Year
Average Capitalization
Long-Term Debt $ (651,917) $ (651,917)
Customer Deposits (31,155) (31,155)
Common Equity (1,021,291) 33 30,000 24s (30,000) (1,021,291)
Investments in Subsidiaries & Non-Utility Property 54,135 54,135
Interco. Notes Payable (net of Notes Receivable) (308,512) (308,512)
Interco. Accounts Payable (net of Accounts Receivable) (47,805) 34 10,131 (37,674)
Transition and Gas Balancing Accounts (17,893) (17,893)
Deferred Regulatory Liabilities - Interest Bearing (30,171) (30,171)
-------------- -------------- --------------------------------
Total $ (2,054,609) $ 40,131 $ (30,000) $ (2,044,478)
============== ============== ================================
17
Appendix 2
Page 18 of 21
KeySpan Energy Delivery of New York
Computation of Cash Working Capital Allowance
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle- As
Filed Rate Adj. Staff Update Adj. ment Adjusted
Year No. Adjustment Adjs. No. Adjs. Year 1
Operation and Maintenance Expenses $ 1,955,784 $ (39,406) $ (390,560) 26s $ (22,570) $ 1,503,249
Less:
- -----
Purchased Gas 1,607,526 - (383,035) - 1,224,491
Uncollectible Losses Allowance 9,982 p.2 (272) (134) 26s 335 9,911
Pension - 37 17,898 27s (17,898) -
OPEBs - 38 21,926 28s (21,926) -
-------------- ----------------------------- ---------------------------
1,617,509 39,552 (383,169) (39,489) 1,234,403
-------------- ----------------------------- ---------------------------
Net 338,276 (78,958) (7,391) 16,919 268,846
-------------- ----------------------------- ---------------------------
Cash Allowance at 1/8 of Net O&M 42,284 (9,870) (924) 2,115 33,606
Plus:
Purchased Gas Cash Allowance at 31.82/365* - -
-------------- ----------------------------- ---------------------------
Cash Working Capital $ 42,284 $ (9,870) $ (924) $ 2,115 $ 33,606
============== ============================= ===========================
KeySpan Energy Delivery of New York
Computation of Cash Working Capital Allowance
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
As As
Adjs. Adjusted Adjs. Adjusted
Year 2 Year 2 Year 3 Year 3
Operation and Maintenance Expenses $ 1,810 $ 1,505,059 $ 5,381 $ 1,510,440
Less:
- -----
Purchased Gas - 1,224,491 - 1,224,491
Uncollectible Losses Allowance 534 10,446 318 10,764
Pension -
OPEBs -
-----------------------------------------------------------
534 1,234,937 318 1,235,255
-----------------------------------------------------------
Net 1,276 270,122 5,063 275,185
-----------------------------------------------------------
Cash Allowance at 1/8 of Net O&M 159 33,765 633 34,398
Plus:
Purchased Gas Cash Allowance at 31.82/365* - - - -
-----------------------------------------------------------
Cash Working Capital $ 159 $ 33,765 $ 633 $ 34,398
===========================================================
18
Appendix 2
Page 19 of 21
KeySpan Energy Delivery of New York
Company Proposed Capital Structure
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
PRINCIPAL RATIO COST RATE WEIGHTED COST
------------------------ ---------------------- ------------------ -----------------
Long-Term Debt $ 1,040,500 48.70% 6.39% 3.11%
Customer Deposits 28,173 1.32% 3.00% 0.04%
------------------------ -----------------
Total Debt 1,068,673 50.02% 3.15%
------------------------ ---------------------- -----------------
Common Equity 1,067,794 49.98% 11.00% 5.50%
------------------------ ---------------------- -----------------
Total Capitalization $ 2,136,467 100.00% 8.65%
======================== ====================== =================
Staff Proposed Capital Structure
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
PRINCIPAL RATIO COST RATE WEIGHTED COST
------------------- ------------------ --------------- ---------------------
Long-Term Debt $ 1,104,340 51.69% 5.41% 2.80%
Short-Term Debt 90,800 4.25% 5.35% 0.23%
Customer Deposits 9,828 0.46% 3.65% 0.02%
------------------- ------------------ ---------------------
Total Debt 1,204,967 56.40% 3.04%
------------------- ------------------ ---------------------
Common Equity 931,500 43.60% 8.90% 3.88%
------------------- ------------------ ---------------------
Total Capitalization $ 2,136,467 100.00% 6.92%
=================== ================== =====================
Joint Proposal Capital Structure
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
PRINCIPAL RATIO COST RATE WEIGHTED COST
------------------ --------------- ---------------- ---------------------
Long-Term Debt $ 1,102,417 51.60% 5.76% 2.97%
Customer Deposits 29,911 1.40% 3.65% 0.05%
------------------ --------------- ---------------------
Total Debt 1,132,328 53.00% 3.02%
------------------ --------------- ---------------------
Common Equity 1,004,139 47.00% 9.70% 4.56%
------------------ --------------- ---------------------
Total Capitalization $ 2,136,467 100.00% 7.58%
================== =============== =====================
19
Appendix 2
Page 20 of 21
KeySpan Energy Delivery of New York
Computation of Recommended Additional Revenue Requirement
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Year 1 Year 2 Year 3
------ ------ ------
Average Rate Base $ 1,866,011 $ 1,936,104 $ 1,988,038
Rate Of Return 7.58% 7.58% 7.58%
---------------------------- ------------------ ------------------
Total Return Required 141,486 146,800 150,738
Less Earned Return 123,758 139,304 143,496
---------------------------- ------------------ ------------------
Deficiency in Required Return 17,728 7,496 7,242
Retention Factor* 58.51% 58.51% 58.51%
---------------------------- ------------------ ------------------
Authorized Revenue Increase $ 30,299 $ 12,812 $ 12,377
============================ ================== ==================
* Based upon the following:
PROOF Base Rates
---------------------------- ------------------
Sales Revenues 100.00% $ 30,299
Less: Uncollectibles 1.48% 448
---------------------------- ------------------
Subtotal 98.52% 29,850
Less:
State Income Taxes 8.50% 2,576
Federal Income Tax At 35.00% 31.51% 9,546
---------------------------- ------------------
Retention Factor 58.51% $ 17,728
============================ ==================
20
Appendix 2
Page 21 of 21
KeySpan Energy Delivery of New York
Joint Proposal Capital Expenditures 2007-2012
($000)
2007 2008 2009 2010 2011 2012
---- ---- ---- ---- ---- ----
City State $ 50,179 $ 51,000 $ 51,000 $ 51,000 $ 51,000 $ 51,000
Non-Growth 46,197 48,440 46,917 47,205 47,205 47,205
Growth Capital 49,069 42,463 41,165 39,878 39,878 39,878
Safety Replacement Program - - - - - -
LNG Liquefaction System 8,200 1,500 - - - -
Information Technology, Facilities, and Other
Capital Expeditures 34,673 20,457 14,388 17,352 17,352 17,352
------- ------- ------- ------- ------- ------
Total $ 188,318 $ 163,860 $ 153,470 $ 155,435 $ 155,435 $ 155,435
========== ========== ========== ========== ========== =========
21
APPENDIX 3 - KEDLI Revenue Requirement
Appendix 3
Page 1 of 21
KeySpan Energy Delivery of Long Island
Summary of Staff Adjustments
Twelve Months Ending December 31, 2008
$(000)
Adj. No. Description Amount
-------- ----------- ------
Operating Revenues - Appendix 3, Pages 7 & 8
1 Revised sales adjustment $ 1,422
Operation & Maintenance Expenses - Appendix 3, Page 9
2 Adjust uncollectible expense for staff adjustments (35)
3 Eliminate expense for sales promotion enhancement (5,250)
4 Move gas supply expenses from delivery to commodity recovery (4,077)
5 Adjust for updated cost and inflation 3,880
6 Adjust labor for 1% productivity (1,023)
7 Adjust non-labor related expenses for 1% productivity (563)
Depreciation - Appendix 3, Page 10
8 Staff depreciation changes to historic year plant (6,880)
9 Staff depreciation changes to rate year plant (3,997)
Amortizations - Appendix 3, Page 11
10 Eliminate amortization of pension & OPEBs (6,829)
11 Reduce amortization of SIR costs (4,201)
State & Federal Income Taxes - Appendix 3, Pages 13 & 14
12 Include Medicare cash proceeds 560
13 Eliminate pension & OPEBs amortization (10,279)
14 Adjust for change in depreciation rates and plant (10,877)
15 Reduce amortization of SIR costs (4,201)
16 Adjust tax depreciation for plant change (3,250)
Interest Deduction - Appendix 3, Page 15
17 Adjust the interest deduction for rate base adjustments (55,011)
18 Include CWIP in the interest deduction 15,231
19 To reflect Staff's capital structure
Rate Base - Appendix 3, Page 16
20 Decrease gas plant balance (18,845)
21 Decrease reserve for depreciation 3,902
22 Eliminate deferred merger costs (2,292)
23 Eliminate deferred SIR costs (60,110)
24 Eliminate deferred pension & OPEB expense (61,309)
25 Adjust deferred taxes for SIR adjustment 26,466
26 Adjust deferred taxes for merger adjustment 1,009
27 Adjust deferred taxes for pension & OPEB adjustment 26,994
28 Adjust deferred tax for tax depreciation (1,678)
29 Eliminate prepaid pension expense (16,061)
30 Reduce M&S inventory balance (350)
1
Appendix 3
Page 2 of 21
KeySpan Energy Delivery of Long Island
Summary of Staff Adjustments
Twelve Months Ending March 31, 2008, 2009, and 2010
$(000)
Adj. No. Description Amount
-------- ----------- ------
Earnings Base / Capitalization Comparison - Appendix 3, Page 17
Capitalization
31 Eliminate intercompany accounts payable/receivable for fuel costs $ (8,891)
Earnings Base
32 Eliminate deferred pension & OPEB balance, net of tax (25,559)
33 Eliminate prepaid pension expense (16,061)
34 Reduce working capital for non-cash pension & OPEB expense (872)
Cash Working Capital - Appendix 3, Page 18
35 Eliminate pensions from working cash calculation 12,125
36 Eliminate OPEBs from working cash calculation 13,812
Capital Structure
See Capital Structure, Appendix 3, Page 19
2
Appendix 3
Page 3 of 21
KeySpan Energy Delivery of Long Island
Summary of Company Update Adjustments
Twelve Months Ending December 31, 2008
$(000)
Adj. No. Description Amount
-------- ----------- ------
Operating Revenues - Appendix 3, Pages 7 & 8
1u Revised sales forecast $ (13,922)
Revised gas cost forecast (222,215)
Revenue tax effect of revised forecast (2,034)
Operation & Maintenance Expenses - Appendix 3, Page 9
2u Revised gas cost forecast (222,215)
3u Update labor for known and measurable changes 76
Update payroll taxes for labor changes 8
4u Update health & hospitalization to new contract (59)
5u Update OPEBs to latest actuary report (1,399)
Update pensions to latest actuary report (2,041)
6u Update uncollectibles for revenue update (86)
7u Updated inflation factor
Depreciation - Appendix 3, Page 10
8u Adjust expense for plant changes (365)
Adjust expense for plant changes (185)
9u Adjust expense for depreciation reserve deficiency 6,290
Amortizations - Appendix 3, Page 11
10u Adjust for updated pension & OPEB deferral balance (593)
11u Adjust for updated environmental cost deferral balance (1,428)
Taxes Other Than Income Taxes - Appendix 3, Page 12
12u Update real estate/special franchise taxes for latest known bills. (1,856)
13u Adjust gross revenue taxes for revenue update (848)
Adjust franchise-gross revenue taxes for revenue update (1,185)
Adjust MTA surcharges for revenue update (1)
14u Correct state unemployment insurance error (13)
Correct federal unemployment insurance error (5)
15u Update FICA taxes for payroll update 1
State & Federal Income Taxes - Appendix 3, Pages 7 & 8
17u Adjust state taxes for updates changes (see pages 13-15 for details) (922)
17u Adjust federal taxes for update changes (see pages 13-15 for details) (3,251)
Rate Base - Appendix 3, Page 16
18u Decrease gas plant balance (18,343)
19u Adjust depreciation reserve for correction and depreciation exp. adjs. (3,032)
20u Update deferred SIR expenses for actual costs (9,280)
21u Update deferred pension & OPEB expenses (3,851)
22u Updated inflation factor
23u Adjust deferred income taxes for updates 7,227
3
Appendix 3
Page 4 of 21
KeySpan Energy Delivery of Long Island
Summary of Joint Proposal Adjustments
Twelve Months Ending December 31, 2008, 2009, 2010,
2011, and 2012
$(000)
Adj. No. Description Amount for March 31 year end
-------- ------------
2008 2009 2010 2010 2010
---- ---- ---- ---- ----
Operating Revenues - Appendix 3, Pages 7 & 8
1s Sales correction and forecast update $ 4,550 $ 5,902 $ 8,248 $ 7,762 $ 7,807
Operation & Maintenance Expenses - Appendix 3, Page 9
2s Increase Payroll for 2.8% forecast - 1687 1734 - -
3s Increase for Inflation forecast - - - - -
4s Update to latest actual bills, and forecast for inflation less 1%
productivity 60 79 80 - -
5s Adjust uncollectible expense for revenue adjustments 622 707 258 - -
6s Decrease discretionary programs and adjust for inflation (3,627) 76 78 - -
7s Overall settlement productivity adjustment 709 (973) 57 - -
8s Remove merger/rate costs and amortize rate case costs over 3 years (995) (22) (22) - -
9s Reduce costs for management efficiency programs (1,018) (2,065) (930) - -
Depreciation - Appendix 3, Page 10
10s Adjust expense for plant changes 206 6,096 3,867 3,867 3,867
11s Correct staff depreciation adjustment 2,668 - - - -
12s Adjust expense for depreciation reserve deficiency (732) - - - -
Amortizations - Appendix 3, Page 11
13s Amortize merger costs over three years.* (1,314) - - - -
* Merger amortization is moved to environmental amortization
after year 3
14s Reverse staff adjustment 6,829 - - - -
15s Reverse company update adjustment 1,428 - - - -
16s Amortize Transition Balancing Account credits over 3 years (4,000) - - - -
State & Federal Income Taxes - Appendix 3, Pages 7 & 8
17s Adjust state taxes for settlement adjs & tax rate change
(pgs. 13-15 for detail) 295 (1,126) (612) (648) (644)
17s Adjust federal taxes for settlement adjs (pgs. 13-15 for detail) 1,519 (4,174) (2,269) (2,601) (2,587)
Rate Base - Appendix 3, Page 16
18s Reverse company update and adjust for revised construction budget 26,216 239,232 154,161 - -
19s Adjust depreciation reserve for plant adjustments 253 (68,591) (72,458) - -
20s Reverse company update adjustment 9,280 - - - -
21s Reverse company update adjustment 3,851 - - - -
23s Adjust deferred income taxes for plant changes (4,858) (1,341) (1,274) - -
24s Adjust for forecasted changes - - - 80,794 80,794
Earnings Base / Capitalization Comparison - Appendix 3, Page 17
25s Include deferred pension & OPEB balance, net of tax 25,559 - - - -
26s Include working capital for non-cash pension & OPEB expense 872 - - - -
Cash Working Capital - Appendix 3, Page 18
27s Include pensions in working cash calculation (12,125) - - - -
28s Include OPEBs in working cash calculation (13,812) - - - -
Capital Structure
See Capital Structure, Appendix 2, Page 17
4
Appendix 3
Page 5 of 21
KeySpan Energy Delivery of Long Island
Statement of Operating Income, Rate Base, and Rate of Return
Twelve Months Ending December 31, 2008
$(000)
Company Co. Settle- As Rev.
Filed Adj. Staff Adj. Update Adj. ment Adjusted Req. Rate
Rate Year No. Adjs. No. Adjs. No. Adjs Year 1 Year 1 Year 1
Operating Revenues
Margins $ 409,253 1 $ 1,422 1u $ (13,922) 1s $ 4,550 $ 401,303 $ 88,342 $ 489,645
Cost of Gas 1,007,021 1u (222,215) 784,806 784,806
Revenue Taxes 16,210 1u (2,034) 14,176 14,176
Other Operating Revenue 21,908 21,908 21,908
------------- ----------- ------------ ------------------------------------------------
1,454,393 1,422 (238,171) 4,550 1,222,194 88,342 1,310,536
------------- ----------- ------------ ------------------------------------------------
Base Rate % Increase 7.23%
Operation & Maintenance
Expenses 1,176,890 p.7 (7,069) p.7 (225,226) p.7 (4,249) 940,345 663 941,008
Depreciation 72,452 p.8 (10,877) p.8 5,740 p.8 2,142 69,458 69,458
Amortizations 15,445 p.9 (11,030) p.9 (2,021) p.9 2,943 5,337 5,337
Taxes Other Than Income
Taxes 117,291 - p.10 (3,908) 113,383 113,383
------------- ----------- ------------ ------------------------------------------------
Total Operating Expenses 1,382,078 (28,976) (225,415) 836 1,128,523 663 1,129,185
------------- ----------- ------------ ------------------------------------------------
Operating Income before
Income Taxes 72,315 30,398 (12,756) 3,714 93,671 87,680 181,350
------------- ----------- ------------ ------------------------------------------------
State Income Tax 913 p.6 2,386 17u (922) 17s 295 2,672 7,567 10,239
Federal Income Tax 3,219 p.7 8,414 17u (3,251) 17s 1,519 9,901 28,039 37,941
------------- ----------- ------------ ------------------------------------------------
Utility Operating Income $ 68,183 $ 19,597 $ (8,582) $ 1,900 $ 81,098 $ 52,073 $ 133,171
============= =========== ============ ================================================
Rate Base $ 1,658,624 p.9 $ (55,011) $ (27,591) $ 10,944 $ 1,586,965 $ 1,586,965
============= =========== ============ ======================= ============
Rate of Return 4.11% 5.11% 8.39%
============= =========== ============
5
Appendix 3
Page 6 of 21
KeySpan Energy Delivery of Long Island
Statement of Operating Income, Rate Base, and Rate of Return
Twelve Months Ending December 31, 2009, and 2010
$(000)
As Rev. As Rev.
Adj. Adjs. Adjusted Req. Rate Adj. Adjs. Adjusted Req. Rate
No. Year 2 Year 2 Year 2 Year 2 No. Year 3 Year 3 Year 3 Year 3
Operating Revenues
Margins 1s $ 5,902 $ 495,547 $ 26,116 $ 521,663 1s $ 8,248 $ 529,911 $ 13,332 $ 543,243
Cost of Gas 784,806 784,806 784,806 784,806
Revenue Taxes 14,176 14,176 14,176 14,176
Other Operating Revenue 21,908 21,908 21,908 21,908
------------------------------------------------ -----------------------------------------------
5,902 1,316,438 26,116 1,342,553 8,248 1,350,801 13,332 1,364,134
------------------------------------------------ -----------------------------------------------
Base Rate % Increase 1.98% 0.99%
Operation & Maintenance
Expenses p.7 1,362 942,370 196 942,566 p.7 3,171 945,737 100 945,837
Depreciation p.8 6,096 75,554 75,554 p.8 3,867 79,421 79,421
Amortizations - 5,337 5,337 - 5,337 5,337
Taxes Other Than Income
Taxes p.10 4,924 118,308 118,308 p.10 5,170 123,477 123,477
------------------------------------------------ -----------------------------------------------
Total Operating Expenses 12,382 1,141,568 196 1,141,763 12,208 1,153,971 100 1,154,071
------------------------------------------------ -----------------------------------------------
Operating Income before
Income Taxes (6,480) 174,870 25,920 200,790 (3,960) 196,830 13,232 210,062
------------------------------------------------ -----------------------------------------------
State Income Tax 17s (1,126) 9,112 2,237 11,349 17s (612) 10,737 1,142 11,879
Federal Income Tax 17s (4,174) 33,767 8,289 42,056 17s (2,269) 39,787 4,232 44,019
------------------------------------------------ -----------------------------------------------
Utility Operating Income $ (1,180) $ 131,991 $ 15,394 $ 147,385 $ (1,079) $ 146,306 $ 7,859 $ 154,165
================================================ ===============================================
Rate Base $ 169,382 $ 1,756,347 $ 1,756,347 $ 80,794 $ 1,837,141 $ 1,837,141
======================== ============= ======================== =============
Rate of Return 7.52% 8.39% 7.96% 8.39%
============= ============= ============== =============
6
Appendix 3
Page 7 of 21
KeySpan Energy Delivery of Long Island
Statement of Operating Income, Rate Base, and Rate of Return
Twelve Months Ending December 31, 2011, and 2012
$(000)
As Rev. As Rev.
Adj. Adjs. Adjusted Req. Rate Adj. Adjs. Adjusted Req. Rate
No. Year 4 Year 4 Year 4 Year 4 No. Year 5 Year 5 Year 5 Year 5
Operating Revenues
Margins 1s $ 7,762 $ 551,005 $ 13,332 $ 564,337 1s $ 7,807 $ 572,144 $ 13,332 $ 585,476
Cost of Gas 784,806 784,806 784,806 784,806
Revenue Taxes 14,176 14,176 14,176 14,176
Other Operating Revenue 21,908 21,908 21,908 21,908
----------------------------------------------- -----------------------------------------------
7,762 1,371,896 13,332 1,385,228 7,807 1,393,035 13,332 1,406,367
----------------------------------------------- -----------------------------------------------
Base Rate % Increase 0.97% 0.96%
Operation & Maintenance
Expenses 3s 3,100 948,937 100 949,037 3s 3,100 952,137 100 952,237
Depreciation 10s 3,867 83,288 83,288 10s 3,867 87,155 87,155
Amortizations 5,337 5,337 5,337 5,337
Taxes Other Than Income
Taxes 3s 5,170 128,647 128,647 3s 5,170 133,817 133,817
----------------------------------------------- -----------------------------------------------
Total Operating Expenses 12,137 1,166,208 100 1,166,308 12,137 1,178,445 100 1,178,545
----------------------------------------------- -----------------------------------------------
Operating Income before
Income Taxes (4,375) 205,687 13,232 218,919 (4,330) 214,589 13,232 227,821
----------------------------------------------- -----------------------------------------------
State Income Tax 17s (648) 11,231 1,142 12,373 17s (644) 11,729 1,142 12,870
Federal Income Tax 17s (2,601) 41,417 4,232 45,649 17s (2,587) 43,062 4,232 47,293
----------------------------------------------- -----------------------------------------------
Utility Operating Income $ (1,125) $ 153,039 $ 7,859 $ 160,898 $ (1,099) $ 159,799 $ 7,859 $ 167,658
=============================================== ===============================================
Rate Base 24s $ 80,794 $ 1,917,935 $ 1,917,935 24s $ 80,794 $ 1,998,729 $ 1,998,729
======================= ============= ======================== ============
Rate of Return 7.98% 8.39% 8.00% 8.39%
============== ============= ============== ============
7
Appendix 3
Page 8 of 21
KeySpan Energy Delivery of Long Island
Merger Adjustments to Stand Alone Joint Proposal Revenue Requirements
$(000)
Twelve Months Ending December 31
2008 2009 2010 2011 2012
---- ---- ---- ---- ----
KEDLI Revenue Requirement per Joint Proposal $ 88,300 $ 26,100 $ 13,300 $ 13,300 $ 13,300
--------- --------- --------- --------- --------
Rate Mitigators
Deferral Amortization Adjustments $ 5,976 $ (15) $ (32) $ (1,721) $ (2,181)
Nassau County Property Tax Refund 12,400
9.8%ROE and 45% Equity Ratio (1,215) 450 470 489 507
Retain old depreciation rates 18,135 (2,061) (2,060) (2,061) (2,060)
Synergy Share Credit 3,322 (11)
Additional Margin Adjustment (1) (10,318) 27,737 14,922 16,593 17,034
-------- ------- ------- ------- ------
Available Rate Mitigators $ 28,300 $ 26,100 $ 13,300 $ 13,300 $ 13,300
--------- --------- --------- --------- --------
Revenue Requirement after Rate Mitigator $ 60,000 $ - $ - $ - $ -
========= ==== ==== ==== ===
(1) If a Revenue Decoupling Mechanism is developed for KEDLI, the mechanism
will need to consider the impact of the Additional Margin Adjustment.
8
Page 9 of 21
KeySpan Energy Delivery of Long Island
Operations & Maintenance Expenses
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle-
Rate Year Adj. Staff Adj. Update Adj. ment Year 1
Expense No. Adjs. No. Adjs. No. Adjs Adjusted
Gas Cost $ 1,007,021 2u $ (222,215) $784,806
Labor 60,176 3u 76 2s 60,252
Incentive Programs & Rebates 1,783 7u 13 3s 1,796
Other Employee Related Exp. & Benefits 4,106 7u 29 3s 4,135
Health & Hospitalization 7,223 4u (59) 4s 60 7,224
401k Match 1,075 7u 1 2s 1,076
Advertising 2,802 7u 20 3s 2,822
Building Services 2,783 7u 20 3s 2,803
Collection Agency Fees 528 7u 4 3s 532
Computer Software Purchases 2,044 7u 14 3s 2,058
Contract Labor 4,364 7u 31 3s 4,395
Contributions, Tickets & Sponsorships - -
Dues & Memberships 603 7u 4 3s 607
Fleet Leasing 1,571 7u 11 3s 1,582
Franchise Requirements - -
Insurance 3,404 7u 24 3s 3,428
Lock Box 346 7u 2 3s 348
Materials & Supplies 3,306 7u 23 3s 3,329
New York Facilities 3,152 7u 22 3s 3,174
OPEB's 13,812 5u (1,399) 2s 12,413
Other 3,118 7u 22 3s 3,140
Paving 1,777 7u 13 3s 1,790
Payroll Taxes 3,070 3u 8 2s 3,078
Pensions 12,125 5u (2,041) 2s 10,084
Permits 250 250
Postage 3,283 7u 23 3s 3,306
PSC Assessment Fees 4,052 29 3s 4,081
Purchased Services 9,434 7u 66 3s 9,500
Service Company Asset Recovery Charge - -
Telecommunications 1,924 7u 14 3s 1,938
Transportation 2,199 7u 15 3s 2,214
Transportation - Liquid Fuels 466 7u 3 3s 469
Uncollectibles 2,673 2 (35) 6u (86) 5s 622 3,174
Accounting Change - -
Program Changes 12,417 3 (5,250) 7u 87 6s (3,627) 3,627
Unbundling Adjustment - 4 (4,077) 3s (4,077)
Cost Update/Inflation Adjustment - 5 3,880 7s (3,880) -
Labor Productivity Adjustment - 6 (1,023) 7s 1,023
Non-Labor Productivity Adjustment - 7 (563) 7s 563 -
Overall Productivity Adjustment 7s 3,003 3,003
Remove merger/rate case costs 8s (1,042) (1,042)
Amortize rate case costs 8s 48 48
Management Efficiency Programs 9s (1,280) (1,280)
Management Efficiency Programs - CTA 9s 262 262
-------------- ---------------------------------------------------------------
Total Operation & Maint. Exp. $ 1,176,890 $ (7,069) $ (225,226) $ (4,249) $940,346
============== ===============================================================
KeySpan Energy Delivery of Long Island
Operations & Maintenance Expenses
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Year 2 Year 2 Year 2 Year 3
Adjs. Adjusted Adjs. Adjusted
Gas Cost $784,806 $784,806
Labor 1,687 61,939 1,734 63,674
Incentive Programs & Rebates 38 1,834 39 1,873
Other Employee Related Exp. & Benefit 87 4,222 89 4,311
Health & Hospitalization 79 7,303 80 7,383
401k Match 30 1,106 31 1,137
Advertising 59 2,881 61 2,942
Building Services 59 2,862 60 2,922
Collection Agency Fees 11 543 11 554
Computer Software Purchases 43 2,101 44 2,145
Contract Labor 92 4,488 94 4,582
Contributions, Tickets & Sponsorships - - - -
Dues & Memberships 13 620 13 633
Fleet Leasing 33 1,615 34 1,649
Franchise Requirements - - - -
Insurance 72 3,500 73 3,573
Lock Box 7 356 7 363
Materials & Supplies 70 3,398 71 3,470
New York Facilities 67 3,241 68 3,309
OPEB's 348 12,761 357 13,118
Other 66 3,206 67 3,273
Paving 38 1,828 38 1,866
Payroll Taxes 86 3,164 89 3,253
Pensions 282 10,367 290 10,657
Permits 5 256 5 261
Postage 69 3,376 71 3,447
PSC Assessment Fees 86 4,167 87 4,254
Purchased Services 200 9,700 204 9,903
Service Company Asset Recovery Charge - - - -
Telecommunications 41 1,979 42 2,020
Transportation 46 2,261 47 2,308
Transportation - Liquid Fuels 10 479 10 489
Uncollectibles 707 3,881 258 4,139
Accounting Change - - - -
Program Changes 76 3,703 78 3,781
Unbundling Adjustment (86) (4,163) (87) (4,250)
Cost Update/Inflation Adjustment - - - -
Labor Productivity Adjustment - -
Non-Labor Productivity Adjustment - - - -
Overall Productivity Adjustment (973) 2,030 57 2,087
Remove merger/rate case costs (22) (1,064) (22) (1,087)
Amortize rate case costs 48 48
Management Efficiency Programs (1,803) (3,083) (930) (4,014)
Management Efficiency Programs - CTA (262) - -
---------------------------------------------------------------------------
Total Operation & Maint. Exp. $ 1,362 $941,708 $ 3,171 $944,879
===========================================================================
9
Appendix 3
Page 10 of 21
KeySpan Energy Delivery of Long Island
Depreciation
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle-
Rate Year Adj. Staff Adj. Update Adj. ment Year 1 Year 2 Year 2 Year 3 Year 3
Expense No. Adjs. No Adjs. No. Adjs Adjusted Adjs. Adjusted Adjs. Adjusted
Depreciation Expense $ 48,949 8u $ (365) 10s $ 206 $ 48,790 $ 6,096 $ 54,886 $ 3,867 $ 58,753
Depreciation Expense of
Corporate Services
Assets 2,668 2,668 2,668 2,668
Add:
Depreciation related
to Accounting
changes proposed
by Mr. Aikman
based on 12/31/05
Plant Balances 18,933 8 (6,880) 12,053 12,053 12,053
Depreciation related
to Accounting
changes proposed
by Mr. Aikman
on Plant additions
(4/1/07 - 3/31/08) 1,902 9 (3,997) 8u (185) 11s 2,668 388 388 388
Depreciation related
to Accounting
changes proposed
by Mr. Aikman
on depreciation
reserve deficiency
at 12/31/05 9u 6,290 12s (732) 5,558 5,558 5,558
--------- ---------- ---------- --------------------------------------------------------------
Total $ 72,452 $ (10,877) $ 5,740 $ 2,142 $ 69,458 $ 6,096 $ 75,554 $ 3,867 $ 79,421
========= ========== ========== ==============================================================
10
Appendix 3
Page 11 of 21
KeySpan Energy Delivery of Long Island
Amortizations
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle-
Rate Year Adj. Staff Adj. Update Adj. ment Year 1 Year 2 Year 2 Year 3 Year 3
Expense No. Adjs. No. Adjs. No. Adjs Adjusted Adjs. Adjusted Adjs. Adjusted
Amortization Merger Costs $ 1,971 13s $ (1,314) $ 657 $ 657 $ 657
Amortization of Property Tax - - - -
Amortization of Pension and
OPEBs 6,829 10 (6,829) 10u (593) 14s 6,829 6,236 6,236 6,236
Amortization Environmental
Costs 6,645 11 (4,201) 11u (1,428) 15s 1,428 2,444 2,444 2,444
Amortization - TBA Credits 16s (4,000) (4,000) (4,000) (4,000)
---------- --------- --------- ---------------------------------------------------------
Total $ 15,445 $(11,030) $ (2,021) $ 2,943 $ 5,337 $ - $ 5,337 $ - $ 5,337
========== ========= ========= =========================================================
11
Appendix 3
Page 12 of 21
KeySpan Energy Delivery of Long Island
Taxes Other Than Income Taxes
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle-
Rate Year Adj. Staff Adj. Update ment Year 1 Year 2 Year 2 Year 3 Year 3
Expense No. Adjs. No. Adjs. Adjs Adjusted Adjs. Adjusted Adjs. Adjusted
Local
Real Estate/Special Franchise $ 99,466 12u $ (1,856) $ 97,610 $ 4,881 $ 102,491 $ 5,125 $107,615
Municipal Gross Revenue 6,762 13u (848) 5,914 5,914 5,914
State
Franchise Gross Income -185a 9,441 13u (1,185) 8,256 8,256 8,256
NYS Excise Tax 5 5 0 5 0 5
MTA Surcharge 7 13u (1) 6 6 6
Unemployment Insurance 156 14u (14) 142 4 146 4 150
Sales and Use - - - -
Other 124 124 3 127 3 129
Federal
FICA 1,273 15u 1 1,274 36 1,310 37 1,346
Unemployment Tax 57 14u (5) 52 1 53 1 55
----------- ------- ------------------------------------------------------------------------
Total $ 117,291 $ - $ (3,908) $ - $113,383 $ 4,924 $ 118,308 $ 5,170 $123,477
=========== ======= ========================================================================
12
Appendix 3
Page 13 of 21
KeySpan Energy Delivery of Long Island
State Income Taxes
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle- Year 1 Year 1
Rate Year Adj. Staff Update ment As Revenue Rate
Expense No. Adj. Adjs. Adjs Adjusted Req. Year 1
Taxable Net Income $ 72,315 p.1 $ 30,398 $ (12,756) $ 3,714 $ 93,671 $ 87,680 $ 181,350
Interest Expense 62,214 p.8 3,410 (2,544) (921) 62,158 62,158
----------- ----------------------------------------------------------------------------
Operating Income Before Taxes 10,101 26,988 (10,212) 4,635 31,513 87,680 119,192
Flow Thru Items
Additions
Non Deductible Meals and Entertainment 8 8 8
Book Depr. in excess of Tax Depr. - - -
----------- ----------------------------------------------------------------------------
8 8 - 8
----------- ----------------------------------------------------------------------------
Deductions
----------- ----------------------------------------------------------------------------
Medicare cash proceeds - 12 560 560 560
----------- ----------------------------------------------------------------------------
Income Subject to Tax 10,109 26,428 (10,212) 4,635 30,961 87,680 118,640
=========== ============================================================================
Income Tax Provision $ 913 $ 2,386 $ (922) $ 295 $ 2,672 $ 7,567 $ 10,239
=========== ============================================================================
Normalized Items
Additions
Medicare Income 1,808 1,808 1,808
Gas Cost Deferred - - -
Pension Cost - - -
Bad Debts - - -
Balancing Account - - -
Merger Cost Deferral/Amortization 1,971 (1,314) 657 657
MTA Amortization - - -
Performance Shares 345 345 345
FAS 106 - - -
Premium/Discount - Refinancing - - -
Relocation of Mains - - -
Pensions & OPEBs (Amortizations) 10,279 13 (10,279) (593) 6,829 6,236 6,236
Deferred Tax Rate - - -
CIAC Deferral 3 3 3
Book Depreciation - Current Rates 51,617 (365) 51,252 51,252
Book Depreciation - Proposed Rates 20,835 14 (10,877) 6,105 2,142 18,205 18,205
Cost of Removal Amortization 887 887 887
Senior Securities Expense Amortization 383 383 383
Property Tax Amortization - - -
Environmental Clean Up Cost Amort. 6,645 15 (4,201) (1,428) 1,428 2,444 2,444
----------- ----------------------------------------------------------------------------
94,773 (25,357) 3,719 9,085 82,220 - 82,220
----------- ----------------------------------------------------------------------------
Deductions
Environmental Clean Up Costs 38,069 38,069 38,069
Tax Depreciation 106,682 16 (3,250) 320 103,752 103,752
Removal Costs Expenditures 6,963 6,963 6,963
Lien Date Property Taxes 3,106 3,106 3,106
----------- ----------------------------------------------------------------------------
154,820 (3,250) - 320 151,890 - 151,890
----------- ----------------------------------------------------------------------------
Net Timing Differences (60,048) (22,107) 3,719 8,765 (69,671) - (69,671)
----------- ----------------------------------------------------------------------------
Taxable Income (49,938) 4,321 (6,493) 13,400 (38,710) 87,680 48,969
----------- ----------------------------------------------------------------------------
Current State Income Tax (4,509) 390 (586) 1,365 (3,341) 7,567 4,226
----------- ----------------------------------------------------------------------------
Adjustment: Ratemaking Excess - - - - - - -
----------- ----------------------------------------------------------------------------
(4,509) 390 (586) 1,365 (3,341) 7,567 4,226
Deferred State Income Tax (5,422) (1,996) 336 1,070 (6,013) - (6,013)
----------- ----------------------------------------------------------------------------
Total State Income Tax 913 2,386 (922) 295 2,672 7,567 10,239
=========== ============================================================================
KeySpan Energy Delivery of Long Island
State Income Taxes
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Year 2 Year 2 Year 3 Year 3
Year 2 As Revenue Rate Year 3 As Revenue Rate
Adjs. Adjusted Req. Year 2 Adjs. Adjusted Req. Year 3
Taxable Net Income $ (6,480) $ 174,870 $ 25,920 $200,790 $ (3,960) $ 196,830 $ 13,232 $210,062
Interest Expense 6,571 68,729 68,729 3,134 71,864 71,864
----------------------------------------------------------------------------------------------
Operating Income Before Taxes (13,051) 106,141 25,920 132,060 (7,094) 124,966 13,232 138,198
Flow Thru Items
Additions
Non Deductible Meals and Entertainment 8 8 8 8
Book Depr. in excess of Tax Depr. - - - -
----------------------------------------------------------------------------------------------
- 8 - 8 - 8 - 8
----------------------------------------------------------------------------------------------
Deductions
----------------------------------------------------------------------------------------------
Medicare cash proceeds 560 560 560 560
----------------------------------------------------------------------------------------------
Income Subject to Tax (13,051) 105,589 25,920 131,508 (7,094) 124,414 13,232 137,646
==============================================================================================
Income Tax Provision $ (1,126) $ 9,112 $ 2,237 $ 11,349 $ (612) $ 10,737 $ 1,142 $ 11,879
==============================================================================================
Normalized Items
Additions
Medicare Income 1,808 1,808 1,808 1,808
Gas Cost Deferred - - - -
Pension Cost - - - -
Bad Debts - - - -
Balancing Account - - - -
Merger Cost Deferral/Amortization 657 657 657 657
MTA Amortization - - - -
Performance Shares 345 345 345 345
FAS 106 - - - -
Premium/Discount - Refinancing - - - -
Relocation of Mains - - - -
Pensions & OPEBs (Amortizations) 6,236 6,236 6,236 6,236
Deferred Tax Rate - - - -
CIAC Deferral 3 3 3 3
Book Depreciation - Current Rates 51,252 51,252 51,252 51,252
Book Depreciation - Proposed Rates 6,096 24,301 24,301 3,867 28,168 28,168
Cost of Removal Amortization 887 887 887 887
Senior Securities Expense Amortization 383 383 383 383
Property Tax Amortization - - - -
Environmental Clean Up Cost Amort. 2,444 2,444 2,444 2,444
----------------------------------------------------------------------------------------------
6,096 88,316 - 88,316 3,867 92,183 - 92,183
----------------------------------------------------------------------------------------------
Deductions
Environmental Clean Up Costs 38,069 38,069 38,069 38,069
Tax Depreciation 9,470 113,222 113,222 6,007 119,229 119,229
Removal Costs Expenditures 6,963 6,963 6,963 6,963
Lien Date Property Taxes 3,106 3,106 3,106 3,106
----------------------------------------------------------------------------------------------
9,470 161,360 - 161,360 6,007 167,367 - 167,367
----------------------------------------------------------------------------------------------
Net Timing Differences (3,374) (73,044) - (73,044) (2,140) (75,184) - (75,184)
----------------------------------------------------------------------------------------------
Taxable Income (16,425) 32,544 25,920 58,464 (9,234) 49,230 13,232 62,462
----------------------------------------------------------------------------------------------
Current State Income Tax (1,417) 2,809 2,237 5,045 (797) 4,249 1,142 5,390
----------------------------------------------------------------------------------------------
Adjustment: Ratemaking Excess - - - - - - - -
----------------------------------------------------------------------------------------------
(1,417) 2,809 2,237 5,045 (797) 4,249 1,142 5,390
Deferred State Income Tax (291) (6,304) - (6,304) (185) (6,488) - (6,488)
----------------------------------------------------------------------------------------------
Total State Income Tax (1,126) 9,112 2,237 11,349 (612) 10,737 1,142 11,879
==============================================================================================
13
Appendix 3
Page 14 of 21
KeySpan Energy Delivery of Long Island
Federal Income Taxes
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle- Year 1 Year 1
Rate Year Adj. Staff Update ment As Revenue Rate
Expense No. Adj. Adjs. Adjs Adjusted Req. Year 1
Taxable Net Income $ 72,315 p.1 $ 30,398 $ (12,756) $ 3,714 $ 93,671 $ 87,680 $ 181,350
Interest Expense 62,214 p.8 3,410 (2,544) (921) 62,158 62,158
----------- ---------------------------------------------------------------------------
Operating Income Before Taxes 10,101 26,988 (10,212) 4,635 37,089 87,680 119,192
Flow Thru Items
Additions
Non Deductible Meals and Entertainment 8 8 8
Book Depr in excess of Tax Depr.
Current Depreciation Rates - - -
Proposed Depreciation Rates - - -
----------- ---------------------------------------------------------------------------
8 - - - 8 - 8
----------- ---------------------------------------------------------------------------
Deductions
New York State Income Tax Provision 913 p.6 2,386 (922) 295 3,299 7,567 10,866
Medicare cash proceeds 12 560 560 560
--------------------------------------------------------------------------------------------
913 2,946 (922) 295 3,859 7,567 11,426
--------------------------------------------------------------------------------------------
Income Subject to Tax 9,196 24,041 (9,290) 4,341 33,238 80,113 107,774
----------- ---------------------------------------------------------------------------
Income Tax Provision @ 35% $ 3,219 $ 8,414 $ (3,251) $ 1,519 $ 11,633 $ 28,039 $ 37,721
=========== ===========================================================================
Normalized Items
Additions
Medicare Income 1,808 1,808 1,808
Merger Cost Deferral/Amortization 1,971 (1,314) 657 657
Performance Shares 345 345 345
CIAC Deferral - - -
Pensions & OPEBs (Amortizations) 10,279 13 (10,279) (593) 6,829 6,236 6,236
Book Depreciation - Current Rates 51,617 (365) - 51,252 51,252
Book Depreciation - Proposed Rates 20,835 14 (10,877) 6,105 2,142 18,205 18,205
Cost of Removal Amortization 887 887 887
Senior Securities Expense Amortization 383 383 383
Environmental Clean Up Cost Amort. 6,645 15 (4,201) (1,428) 1,428 2,444 2,444
----------- ---------------------------------------------------------------------------
94,770 (25,357) 3,719 9,085 82,217 - 82,217
----------- ---------------------------------------------------------------------------
Deductions
Environmental Clean Up Costs 38,069 38,069 38,069
Tax Depreciation 101,156 16 (3,250) 320 98,226 98,226
Removal Costs Expenditures 6,963 6,963 6,963
Lien Date Property Taxes 3,106 3,106 3,106
Deferred State Tax Provision (5,422) p.6 (1,996) 336 1,070 (6,013) (6,013)
----------- ---------------------------------------------------------------------------
143,872 (5,246) 336 1,391 140,352 - 140,352
----------- ---------------------------------------------------------------------------
Net Timing Differences (49,102) (20,111) 3,383 7,695 (58,135) - (58,135)
----------- ---------------------------------------------------------------------------
Taxable Income (39,906) 3,930 (5,906) 12,035 (24,898) 80,113 49,639
----------- ---------------------------------------------------------------------------
Current Federal Income Tax @ 35% (13,967) 1,376 (2,067) 4,212 (8,714) 28,039 17,374
----------- ---------------------------------------------------------------------------
Deferred Federal Income Tax @ 35% (17,186) (7,039) 1,184 2,693 (20,347) - (20,347)
----------- ---------------------------------------------------------------------------
Total Federal Income Tax $ 3,219 $ 8,414 $ (3,251) $ 1,519 $ 11,633 $ 28,039 $ 37,721
=========== ===========================================================================
KeySpan Energy Delivery of Long Island
Federal Income Taxes
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Year 2 Year 2 Year 3 Year 3
Year 2 As Revenue Rate Year 3 As Revenue Rate
Adjs. Adjusted Req. Year 2 Adjs. Adjusted Req. Year 3
Taxable Net Income $ (6,480) $ 174,870 $ 25,920 $200,790 $ (3,960) $ 196,830 $ 13,232 $210,062
Interest Expense 6,571 68,729 68,729 3,134 71,864 71,864
----------------------------------------------------------------------------------------------
Operating Income Before Taxes (13,051) 106,141 25,920 132,060 (7,094) 124,966 13,232 138,198
Flow Thru Items
Additions
Non Deductible Meals and Entertainment 8 8 8 8
Book Depr in excess of Tax Depr.
Current Depreciation Rates - - - -
Proposed Depreciation Rates - - - -
----------------------------------------------------------------------------------------------
- 8 - 8 - 8 - 8
----------------------------------------------------------------------------------------------
Deductions
New York State Income Tax Provision (1,126) 9,740 2,237 11,977 (612) 11,364 1,142 12,506
Medicare cash proceeds 560 560 560 560
----------------------------------------------------------------------------------------------
(1,126) 10,300 2,237 12,537 (612) 11,924 1,142 13,066
----------------------------------------------------------------------------------------------
Income Subject to Tax (11,925) 95,849 23,683 119,532 (6,482) 113,050 12,090 125,140
----------------------------------------------------------------------------------------------
Income Tax Provision @ 35% $ (4,174) $ 33,547 $ 8,289 $ 41,836 $ (2,269) $ 39,567 $ 4,232 $ 43,799
==============================================================================================
Normalized Items
Additions
Medicare Income 1,808 1,808 1,808 1,808
Merger Cost Deferral/Amortization 657 657 657 657
Performance Shares 345 345 345 345
CIAC Deferral - - - -
Pensions & OPEBs (Amortizations) 6,236 6,236 6,236 6,236
Book Depreciation - Current Rates 51,252 51,252 51,252 51,252
Book Depreciation - Proposed Rates 6,096 24,301 24,301 3,867 28,168 28,168
Cost of Removal Amortization 887 887 887 887
Senior Securities Expense Amortization 383 383 383 383
Environmental Clean Up Cost Amort. 2,444 2,444 2,444 2,444
----------------------------------------------------------------------------------------------
6,096 88,313 - 88,313 3,867 92,180 - 92,180
----------------------------------------------------------------------------------------------
Deductions
Environmental Clean Up Costs 38,069 38,069 38,069 38,069
Tax Depreciation 9,470 107,696 107,696 6,007 113,703 113,703
Removal Costs Expenditures 6,963 6,963 6,963 6,963
Lien Date Property Taxes 3,106 3,106 3,106 3,106
Deferred State Tax Provision (6,013) (6,013) (6,013) (6,013)
----------------------------------------------------------------------------------------------
9,470 149,822 - 149,822 6,007 155,828 - 155,828
----------------------------------------------------------------------------------------------
Net Timing Differences (3,374) (61,509) - (61,509) (2,140) (63,649) - (63,649)
----------------------------------------------------------------------------------------------
Taxable Income (15,299) 34,340 23,683 58,023 (8,622) 49,401 12,090 61,491
----------------------------------------------------------------------------------------------
Current Federal Income Tax @ 35% (5,355) 12,019 8,289 20,308 (3,018) 17,290 4,232 21,522
----------------------------------------------------------------------------------------------
Deferred Federal Income Tax @ 35% (1,181) (21,528) - (21,528) (749) (22,277) - (22,277)
----------------------------------------------------------------------------------------------
Total Federal Income Tax $ (4,174) $ 33,547 $ 8,289 $ 41,836 $ (2,269) $ 39,567 $ 4,232 $ 43,799
==============================================================================================
14
Appendix 3
Page 15 of 21
KeySpan Energy Delivery of Long Island
Calculation of Interest Expense
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Settle- Year 1 Year 2 Year 3
Filed Rate Adj. Staff Update ment As Year 2 As Year 3 As
Year No. Adj. Adjs. Adjs Adjusted Adjs. Adjusted Adjs. Adjusted
Rate Base $1,658,624 17 $ (55,011) $ (27,591) $ 10,944 $1,586,965 $169,382 $1,756,347 $ 80,794 $ 1,837,141
Interest Bearing CWIP 18 15,231 15,231 15,231 15,231
------------ ---------------------------------------------------------------------------------------------
Earnings Base $1,658,624 $ (39,780) $ (27,591) $ 10,944 $1,602,196 $169,382 $1,771,578 $ 80,794 $ 1,852,372
============ =============================================================================================
Weighted Cost of Debt. 3.75% 19 0.30% -0.17% 3.88% 3.88% 3.88%
Interest Exp. 62,214 3,410 (2,544) (921) 62,158 68,729 71,864
Add Gain on Required
Debt
------------ ---------------------------------------------------------------------------------------------
Total Interest
Deduction $ 62,214 $ 3,410 $ (2,544) $ (921) $ 62,158 $ 68,729 $ 71,864
============ =============================================================================================
15
Appendix 3
Page 16 of 21
KeySpan Energy Delivery of Long Island
Calculation of Average Rate Base
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co.
Filed Rate Adj. Staff Adj. Update Adj. Settlement
Year No. Adjs. No. Adjs. No. Adjs
Utility Plant-Gas:
Gas Plant $ 2,272,753 20 $ (18,845) 18u $(18,343) 18s $ 26,216
Non-Interest Bearing CWIP 12,913
Reserve for Depreciation (475,815) 21 3,902 19u (3,032) 19s 253
-------------- -------------- ------------ ---------------
1,809,851 (14,943) (21,375) 26,469
-------------- -------------- ------------ ---------------
Gas Plant - charged from Corporate Services 62,415
Non-Interest Bearing CWIP - chrgd from Corp. Srvcs. 1,756
Reserve for Depreciation - chrgd from Corp. Srvcs. (27,774)
-------------- -------------- ------------ ---------------
Net Plant 1,846,248 (14,943) (21,375) 26,469
-------------- -------------- ------------ ---------------
Rate Base Adjustments:
Deferred Merger Costs to Achieve 2,292 22 (2,292)
Deferred SIR Expenditures 60,110 23 (60,110) 20u (9,280) 20s 9,280
Unamortized Senior Securities' Expense 263 -
Deferred OPEBs/Pension Costs 61,309 24 (61,309) 21u (3,851) 21s 3,851
Unamortized Deferred Assets - Other 1,374 - 22u 10
Deferred Income Taxes (351,866) 25-28 52,792 23u 7,227 22s (4,858)
-------------- -------------- ------------ ---------------
Sub-Total (226,517) (70,919) (5,894) 8,273
-------------- -------------- ------------ ---------------
Excess Earnings Base Capitalization Adj. (10,290) p.15 51,383 p.15 (26,431)
-------------- -------------- ------------ ---------------
Net Rate Base Adjustments (236,807) (19,536) (5,894) (18,158)
-------------- -------------- ------------ ---------------
Gas Storage Inventory
Prepayments 20,094 29 (16,061) 22u 5
Materials and Supplies 8,190 30 (350) 22u 39
Cash Working Capital Allowance 20,899 p.16 (4,121) p.16 (366) p.16 2,633
-------------- -------------- ------------ ---------------
Total Working Capital 49,183 (20,532) (322) 2,633
-------------- -------------- ------------ ---------------
Rate Base $ 1,658,624 $ (55,011) $(27,591) $ 10,944
============== ============== ============ ===============
KeySpan Energy Delivery of Long Island
Calculation of Average Rate Base
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Year 1 Year 2 Year 2 Year 3 Year 3
Adjusted Adjs. Adjusted Adjs. Adjusted
Utility Plant-Gas:
Gas Plant $ 2,261,780 $ 239,232 $ 2,501,012 $ 154,161 $ 2,655,173
Non-Interest Bearing CWIP 12,913 12,913 12,913
Reserve for Depreciation (474,692) (68,591) (543,283) (72,458) (615,740)
-------------------------------------------------------------------------------
1,800,001 170,641 1,970,643 81,703 2,052,346
-------------------------------------------------------------------------------
Gas Plant - charged from Corporate Services 62,415 62,415 62,415
Non-Interest Bearing CWIP - chrgd from Corp. Srvcs. 1,756 1,756 1,756
Reserve for Depreciation - chrgd from Corp. Srvcs. (27,774) (27,774) (27,774)
-------------------------------------------------------------------------------
Net Plant 1,836,398 170,641 2,007,040 81,703 2,088,743
-------------------------------------------------------------------------------
Rate Base Adjustments:
Deferred Merger Costs to Achieve
Deferred SIR Expenditures
Unamortized Senior Securities' Expense 263 263 263
Deferred OPEBs/Pension Costs
Unamortized Deferred Assets - Other 1,384 1,384 1,384
Deferred Income Taxes (296,705) (1,341) (298,046) (1,274) (299,320)
-------------------------------------------------------------------------------
Sub-Total (295,058) (1,341) (296,399) (1,274) (297,673)
-------------------------------------------------------------------------------
Excess Earnings Base Capitalization Adj. 14,662 14,662 14,662
-------------------------------------------------------------------------------
Net Rate Base Adjustments (280,396) (1,341) (281,737) (1,274) (283,011)
-------------------------------------------------------------------------------
Gas Storage Inventory
Prepayments 4,038 4,038 4,038
Materials and Supplies 7,879 7,879 7,879
Cash Working Capital Allowance 19,046 $ 82 19,127 $ 364 19,492
-------------------------------------------------------------------------------
Total Working Capital 30,963 82 31,045 364 31,409
-------------------------------------------------------------------------------
Rate Base $ 1,586,965 $ 169,382 $ 1,756,347 $ 80,794 $ 1,837,141
===============================================================================
16
Appendix 3
Page 17 of 21
KeySpan Energy Delivery of Long Island
Historic Earning Base / Capitalization Comparison
Twelve Months Ending December 31, 2005
$(000)
Company Filed Adj. Staff Adj. Settlement Historic Year
Historic Year No. Adjustment No. Adjs As Adjusted
Average Capitalization
----------------------
Long-Term Debt $ (650,904) $ (650,904)
Customer Deposits (7,573) (7,573)
Common Equity (900,909) (900,909)
Investments in Subsidiaries & Non-Utility Property 1,933 1,933
Intercompany Notes Payable (net of Notes Receivable) (46,787) (46,787)
Intercompany Accounts Payable (net of Accounts Receivable) 18,562 31 (8,891) 9,671
Transition and Gas Balancing Accounts (20,378) (20,378)
Deferred Regulatory Liabilities - Interest Bearing (61,241) (61,241)
--------------- ----------- ---------------------------
Total $ (1,667,297) $ (8,891) $ - $ (1,676,188)
=============== =========== ===========================
Average Earnings Base
---------------------
Property Base $ 1,430,891 32,33 (41,620) 25s 25,559 1,414,830
Working Capital 231,465 34 (872) 26s 872 231,465
Construction Work in Progress - Interest Bearing 15,231 15,231
--------------- ----------- ---------------------------
Total $ 1,677,587 $ (42,492) $ 26,431 $ 1,661,526
=============== =========== ===========================
--------------- ----------- ---------------------------
Excess Earning Base over Capitalization $ 10,290 $ (51,383) $ 26,431 $ (14,662)
=============== =========== ===========================
17
Appendix 3
Page 18 of 21
KeySpan Energy Delivery of Long Island
Computation of Cash Working Capital Allowance
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Company Co. Staff
Filed Rate Adj. Staff Update Adj. Settlement
Year No. Adjs. Adjs. No. Adjs
Operation and Maintenance Expenses $1,176,890 p.7 $ (7,069) $ (225,226) p.7 $ (4,249)
Less:
Purchased Gas 1,007,021 - (222,215) -
Uncollectible Losses Allowance 2,673 p.7 (35) (86) p.7 622
Pension - 35 12,125 27s (12,125)
OPEBs - 36 13,812 28s (13,812)
------------ ---------------------------------- ---------------------
1,009,695 25,902 (222,301) (25,315)
------------ ---------------------------------- ---------------------
Net 167,195 (32,971) (2,925) 21,066
------------ ---------------------------------- ---------------------
Cash Allowance at 1/8 of Net O&M 20,899 (4,121) (366) 2,633
Plus
Purchased Gas Cash Allowance at 31.82/365*
------------ ---------------------------------- ---------------------
Cash Working Capital $ 20,899 $ (4,121) $ (366) $ 2,633
============ ================================== =====================
* KeySpan proposes to move this to the GAC
KeySpan Energy Delivery of Long Island
Computation of Cash Working Capital Allowance
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
Year 1 Year 2 Year 2 Year 3 Year 3 As
Adjusted Adjs. Adjusted Adjs. Adjusted
Operation and Maintenance Expenses $ 940,346 $1,362 $ 941,708 $3,171 $ 944,879
Less:
Purchased Gas 784,806 - 784,806 - 784,806
Uncollectible Losses Allowance 3,174 707 3,881 258 4,139
Pension
OPEBs
-----------------------------------------------------------------------------------
787,980 707 788,687 258 788,945
-----------------------------------------------------------------------------------
Net 152,366 655 153,020 2,914 155,934
-----------------------------------------------------------------------------------
Cash Allowance at 1/8 of Net O&M 19,046 82 19,128 364 19,492
Plus
Purchased Gas Cash Allowance at 31.82/365*
-----------------------------------------------------------------------------------
Cash Working Capital $ 19,046 $ 82 $ 19,128 $ 364 $ 19,492
===================================================================================
* KeySpan proposes to move this to the GAC
18
Appendix 3
Page 19 of 21
KeySpan Energy Delivery of Long Island
Company Proposed Capital Structure
Twelve Months Ending December 31, 2008, 2009, 2010, 2011, and 2012
$(000)
PRINCIPAL RATIO COST RATE WEIGHTED COST
----------------------- --------------------- ---------------------- ---------------------
Long Term Debt $ 850,904 49.54% 7.54% 3.74%
Customer Deposits 8,017 0.47% 3.00% 0.01%
----------------------- --------------------- ---------------------
Total Debt 858,921 50.01% 3.75%
----------------------- --------------------- ---------------------
Common Equity 858,701 49.99% 11.00% 5.50%
----------------------- --------------------- ---------------------
Total Capitalization $ 1,717,623 100.00% 9.25%
======================= ===================== =====================
Staff Proposed Capital Structure
Twelve Months Ending December 31, 2008, 2009, 2010, 2011, and 2012
$(000)
PRINCIPAL RATIO COST RATE WEIGHTED COST
----------------------- --------------------- ---------------------- ---------------------
Long Term Debt $ 887,839 51.69% 7.37% 3.81%
Short Term Debt 72,999 4.25% 5.35% 0.23%
Customer Deposits 7,901 0.46% 3.65% 0.02%
----------------------- --------------------- ---------------------
Total Debt 968,739 56.40% 4.05%
----------------------- --------------------- ---------------------
Common Equity 748,883 43.60% 8.90% 3.88%
----------------------- --------------------- ---------------------
Total Capitalization $ 1,717,623 100.00% 7.93%
======================= ===================== =====================
Joint Proposal Capital Structure
Twelve Months Ending December 31, 2008, 2009, 2010, 2011, and 2012
$(000)
PRINCIPAL RATIO COST RATE WEIGHTED COST
----------------------- --------------------- ---------------------- ---------------------
Long Term Debt $ 901,752 52.50% 7.35% 3.86%
Customer Deposits 8,588 0.50% 3.65% 0.02%
----------------------- --------------------- ---------------------
Total Debt 910,340 53.00% 3.88%
----------------------- --------------------- ---------------------
Common Equity 807,283 47.00% 9.60% 4.51%
----------------------- --------------------- ---------------------
Total Capitalization $ 1,717,623 100.00% 8.39%
======================= ===================== =====================
19
Appendix 3
Page 20 of 21
KeySpan Energy Delivery of Long Island
Computation of Recommended Additional Revenue Requirement
Twelve Months Ending December 31, 2008, 2009, and 2010
$(000)
2008 2009 2010
---- ---- ----
Average Rate Base $ 1,586,965 $ 1,756,347 $ 1,837,141
Rate Of Return 8.39% 8.39% 8.39%
----------------------- ---------------------- ----------------------
Total Return Required 133,171 147,385 154,165
Less Earned Return 81,098 131,991 146,306
----------------------- ---------------------- ----------------------
Deficiency in Required Return 52,073 15,394 7,859
Retention Factor* 58.95% 58.95% 58.95%
----------------------- ---------------------- ----------------------
Authorized Revenue Increase $ 88,342 $ 26,116 $ 13,332
======================= ====================== ======================
* Based upon the following:
PROOF Base Rates
----------------------- ----------------------
Sales Revenues 100.00% $ 88,342
Less: Uncollectibles 0.75% 663
----------------------- ----------------------
Subtotal 99.25% 87,680
Less:
State Income Taxes 8.57% 7,567
Federal Income Tax At 35.00% 31.74% 28,039
----------------------- ----------------------
Retention Factor 58.95% $ 52,073
======================= ======================
20
Appendix 3
Page 21 of 21
KeySpan Energy Delivery of Long Island
Joint Proposal Capital Expenditures 2007-2012
($000)
2007 2008 2009 2010 2011 2012
---- ---- ---- ---- ---- ----
City State $ 8,479 $ 9,746 $ 9,746 $ 9,746 $ 9,746 $ 9,746
Non-Growth 49,442 72,091 56,124 58,113 58,113 58,113
Growth Capital 39,189 34,468 32,609 30,750 30,750 30,750
Safety Replacement Program 13,071 28,008 28,008 28,008 28,008 28,008
Islander East Alternative(1) - 23,000 - - - -
Information Technology, Facilities, and Other Capital
Expeditures 20,081 43,551 11,359 11,697 11,697 11,697
------ ------- ------- ------- ------- ------
Total $ 130,262 $ 210,864 $ 137,846 $ 138,314 $ 138,314 $ 138,314
========= ========= ========= ========= ========= =========
Note: 1. This amount shall increase to a total of $46.9 Million if construction
is approved and completed for Islander East Project
21
APPENDIX 4 - Corporate Structure and Affiliate Rules
Appendix 4: Corporate Structure and Affiliate Rules
- ---------------------------------------------------
Effective on the closing of the merger, National Grid will implement the
following Corporate Structure and Affiliate Rules which will continue in effect
unless and until such time as the Commission authorizes an express change.
1. Definitions
The following definitions apply to both Appendix 4 and Appendix 5.
Corporate and Administrative Services - means all services performed by
KeySpan Corporate Services LLC and KeySpan Utility Services LLC, as well as any
services performed by ServiceCo or not otherwise prohibited from being performed
by ServiceCo. Corporate and Administrative Services will include, without
limitation, all administrative and office support for the benefit of US HoldCo
and any of its subsidiaries.
Customer Information - means any of the following information about an
individual customer or any aggregation of individual customers collected or
compiled by KEDNY or KEDLI: name, address, telephone number, identifying
information, consumption history, individual usage characteristics, payment
history, complaint history and the contents of any application for service.
National Grid Other Affiliates-- means affiliates of HoldCo, including
affiliates in the United States and throughout the world, but excluding
ServiceCo, KEDNY, KEDLI, Unregulated Competitive Energy Affiliates and Regulated
Affiliates.
Personal Property--means any and all property that is not real property,
including leases and all other property not deemed to be "real property."
Regulated Affiliates - means the subsidiaries (other than KEDNY and KEDLI)
of US HoldCo, including future subsidiaries, that provide the full range of
regulated gas and/or electric transmission or distribution services, including
Niagara Mohawk Power Corporation, New England Power Company, Massachusetts
Electric Company, New England Electric Transmission Corporation, Nantucket
Electric Company, Granite State Electric Company, The Narragansett Electric
Company, Boston Gas Company, Essex Gas Company, Colonial Gas Company,
EnergyNorth Gas Company, New England Hydro-Transmission Corporation, New England
Hydro-Transmission Electric Company, Inc., and each of their successors, and any
affiliate to the extent that such affiliate provides services to LIPA pursuant
to the LIPA Agreements.
1
ServiceCo - means National Grid USA Service Company, Inc., KeySpan
Corporate Services LLC, and/or KeySpan Utility Services LLC, or any successors
thereto, which provide a variety of traditional corporate and administrative
services for the National Grid USA system, and to LIPA pursuant to the LIPA
Agreements.
System Information - means non-public information or data regarding the
operation of or capacity constraints on and/or expansion plans relating to the
energy delivery system of KEDNY or KEDLI.
Unregulated Affiliate - means any affiliate of HoldCo other than KEDNY,
KEDLI, or any Regulated Affiliate.
Unregulated Competitive Energy Affiliate - means any of US HoldCo's current
or future affiliates that directly provides competitive electric or gas
commodity sales or service or heating, ventilation and air conditioning ("HVAC")
sales or service in New York State, i.e., KeySpan Energy Services and KeySpan
Home Energy Services.
UK HoldCo - means National Grid plc or its successor as the highest level
holding company in the National Grid group. US HoldCo - means National Grid USA
or its successor as the immediate parent and holding company for National Grid
plc's United States utility operations. Immediate wholly-owned subsidiaries of
National Grid USA will, upon completion of the Merger, include KeySpan, Niagara
Mohawk Holdings, Inc., National Grid USA Service Company, Inc., and National
Grid's New England utility affiliates.
Where the term "HoldCo" is used, it refers to either or both of UK HoldCo
and US HoldCo. Where explicit reference to one of the HoldCos is required, the
term "UK HoldCo" or "US HoldCo" are used in full. Other capitalized terms have
the meaning assigned to them in the Joint Proposal.
2. Corporate Structure Following the Merger
Following the Merger, National Grid plc, a public limited company
incorporated under the laws of England and Wales, through its wholly-owned
subsidiary, National Grid USA, will merge a merger subsidiary with and into
KeySpan Corporation, leaving KeySpan Corporation as the surviving corporation, a
wholly owned subsidiary of National Grid USA. None of KeySpan's current
2
subsidiaries will be affected by the Merger, and, following the Merger, all will
exist as the separate corporate entities they are today. However, at some point
following the Merger, all corporate and administrative services in the National
Grid USA holding company system, including those now provided by KeySpan
Corporate Services LLC and KeySpan Utility Services LLC, may be provided by
ServiceCo, defined below, using the cost allocation methodology set forth in
section 4.2, below.
Specifically, National Grid USA intends to combine or reorganize the
existing service company subsidiaries of National Grid and KeySpan. National
Grid USA also intends to adopt the KeySpan allocations for ServiceCo costs that
are not otherwise charged directly to affiliates. The combination of service
companies and the change in allocation method will occur when they can be
implemented most effectively following the receipt of necessary regulatory
approvals and the completion of necessary system modifications.
3. Accounting Issues
Under United States Generally Accepted Accounting Principles (US GAAP) for
purchase accounting, the total acquisition price, together with transaction
costs, in excess of the fair market value assigned to the assets and liabilities
of the acquired company are recorded as goodwill on the acquired company's
accounts. National Grid plans to "push down" and allocate the excess among
KeySpan Corporation and its subsidiaries. This approach is fully consistent with
US GAAP and with the practice adopted in the National Grid acquisition of
Niagara Mohawk Holdings and its other US acquisitions. Under FASB standards for
accounting for goodwill, goodwill is not amortized against earnings. Instead,
goodwill is reviewed for impairment and written down and expensed only in a
period in which the goodwill's recorded value exceeds its fair value. As set
forth in section 1 of Appendix 5, no goodwill will be recorded on KEDNY's or
KEDLI's regulatory accounts that are subject to the jurisdiction of the
Commission. As a result, there will be no ratemaking effects associated with
recording goodwill under GAAP US for KEDNY and KEDLI.
3
The Commission's approval of the KEDNY and KEDLI Merger Rate Plans
signifies that such Rate Plans meet the accounting requirements of Statement of
Financial Accounting Standards No. 71 and will do so throughout their terms.
As of the Rate Effective Date, KEDNY's and KEDLI's fiscal year will be
changed to a year ending March 31st. In any calendar year, KEDNY and KEDLI will
limit the dividends paid to US HoldCo in accordance with section 2 of Appendix
5.
4. Rules Governing Affiliate Transactions
4.1 Separation and Location: HoldCo, KEDNY, KEDLI, and all affiliates will
each be operated as separate entities and will maintain separate books and
records of account. KEDNY, KEDLI, HoldCo, ServiceCo, Regulated Affiliates, and
National Grid Other Affiliates may occupy the same building. An Unregulated
Competitive Energy Affiliate may share a building with KEDNY or KEDLI for no
longer than 180 days after its formation.
4.2 Cost Allocation Procedures: Cost allocation procedures will assure an
appropriate allocation on a fully distributed basis to HoldCo, KEDNY, KEDLI, and
each Affiliate of the costs of any HoldCo or ServiceCo personnel, property, or
services used by them. HoldCo will implement ServiceCo cost allocations for its
HoldCo subsidiaries that reflect the methodology approved for use by KeySpan,
when this conversion can be implemented efficiently and following receipt of
required regulatory approvals. Specifically, rather than using operation and
maintenance (O&M) expenses as the basis for the general allocation of ServiceCo
expenses, the three-part allocator currently used by KeySpan Corporate Services
LLC, based on revenues, O&M expenses, and assets, will be used by ServiceCo.
This change, which will only affect the pre-merger National Grid USA companies,
may require approval of the regulatory commissions having jurisdiction over the
rates of the Regulated Affiliates, and is conditioned on the receipt of such
regulatory approvals. Following consummation of the Merger, the receipt of
required approvals, and the implementation of necessary accounting systems and
controls, KeySpan's allocation methods will be adopted and KeySpan's service
companies, KeySpan Corporate Services LLC and KeySpan Utility Services LLC, will
be phased out and consolidated with ServiceCo to the extent permissible and when
this conversion can be implemented efficiently.
4.3 Revisions of Methodology and Audits: Any future revisions to the cost
allocation methodology will be filed with the Commission's Director of Finance
and Accounting and, assuming adequate support is provided for such revisions,
will become effective after 60 days, unless an objection is raised.
4
Staff will have the right to audit ServiceCo, including the examination of
authorized cost allocation calculations and review of internal audit policies,
procedures, and reports, to receive assurance that applicable transactions and
/or allocations are being carried out properly.
4.4 ServiceCo Services: Following the close of the Merger, ServiceCo will
be authorized to perform Corporate and Administrative Services to KEDNY, KEDLI,
Regulated Affiliates, Unregulated Competitive Energy Affiliates and National
Grid Other Affiliates. In the course of providing such Corporate and
Administrative Services, ServiceCo employees will not disclose Customer
Information or System Information to any Unregulated Competitive Energy
Affiliate or act as a conduit for such Information, excepting disclosures that
are in compliance with these rules, Commission orders, rules or regulations.
While ServiceCo may perform call center operations for any US HoldCo subsidiary,
ServiceCo will establish policies and procedures, including technological
safeguards, to ensure that Unregulated Competitive Energy Affiliates and
National Grid Other Affiliates do not have access to and do not receive Customer
Information or System Information.
4.5 Provision of Services: (a) In accordance with section VI of the Joint
Proposal, the service companies of KeySpan and National Grid may continue to
provide the services currently provided to US HoldCo, any US HoldCo subsidiary,
KeySpan and any KeySpan subsidiary, and to LIPA pursuant to the LIPA Agreements
for a transition period pending the assumption of such services by ServiceCo or
in the event that the necessary approvals are not received; (b) KEDNY and KEDLI
may provide any affiliate with regulated utility services pursuant to the
applicable tariff; (c) Non-tariffed services provided between and among KEDNY,
KEDLI, Regulated Affiliates, ServiceCo, HoldCo, KeySpan Utility Services LLC and
KeySpan Corporate Services LLC will be priced on a fully-loaded cost basis; (d)
Non-tariffed services provided by KEDNY or KEDLI to affiliates not identified in
part (c) will be priced at the higher of fair market value or fully-loaded cost;
and (e) Any services provided to KEDNY or KEDLI by an affiliate other than one
another, Regulated Affiliates, ServiceCo, HoldCo, KeySpan Utility Services LLC
and KeySpan Corporate Services LLC will be priced at the lesser of fair market
value or fully-loaded cost.
5
Contracts or other documentation will be required for any services
identified in parts (d) and (e) that are expected to exceed $5 million over any
12 month period.
4.6 June 2001 Niagara Mohawk Policy Statement: Affiliate transactions
involving Niagara Mohawk are currently governed by a document titled "June 2001
Policies and Procedures for Affiliate Transactions." National Grid will file
with the Director of Accounting, Finance and Economics of the Department of
Public Service revised policies, procedures, and agreements pertaining to
transactions among affiliates and for Niagara Mohawk, KEDNY, and KEDLI prior to
the consolidation of the service companies under section 4.4 above. That filing
will be included as a Merger Reserved Issue in the Joint Proposal. Any
disagreement associated with the filing shall be referred to the Commission for
decision.
5. Rules Governing Human Resources
5.1 Separation of Employees and Officers: KEDNY, KEDLI, and the Unregulated
Competitive Energy Affiliates will have separate operating employees, which
restriction will not be deemed to preclude shared Corporate and Administrative
Services. The Secretary and/or Treasurer of KEDNY or KEDLI may serve in the
equivalent position for HoldCo or any affiliate, but no other officer of KEDNY
or KEDLI may serve as an officer of an Unregulated Competitive Energy Affiliate.
5.2 Employee Transfers: Employees may be transferred from KEDNY or KEDLI to
an Unregulated Competitive Energy Affiliate. Such transferred employees will be
required to resign from KEDNY or KEDLI unless there is a conflict with the
collective bargaining agreement, in which case the collective bargaining
agreement would control. Transferred employees may not be reemployed by KEDNY or
KEDLI for a minimum of one year. Employees returning to KEDNY or KEDLI may not
be transferred back to the Unregulated Competitive Energy Affiliate for a
minimum of one year. Similarly, employees may be transferred from an Unregulated
Competitive Energy Affiliate to KEDNY or KEDLI. Such transferred employees will
be required to resign from the Unregulated Competitive Energy Affiliate unless
there is a conflict with the collective bargaining agreement, in which case the
collective bargaining agreement would control. Transferred employees may not be
reemployed by the Unregulated Competitive Energy Affiliate for a minimum of one
year after transfer. Employees returning to the Unregulated Competitive Energy
6
Affiliate may not be transferred back to KEDNY or KEDLI for a minimum of one
year. Any transferred employee will be prohibited from sharing, copying or
taking any Customer Information or System Information from KEDNY or KEDLI.
Otherwise, employees may be transferred between KEDNY or KEDLI and HoldCo and
any of its subsidiaries without restriction.
KEDNY's and KEDLI's annual reports to the Commission will show employee
transfers between them and Unregulated Competitive Energy Affiliates.
5.3 Emergency Access to Employees: The foregoing provisions will not
restrict HoldCo or any of its subsidiaries from making its employees available
to KEDNY or KEDLI to assist in an emergency that threatens the safety or
reliability of service to KEDNY or KEDLI customers. In such event, KEDNY or
KEDLI will pay the fully-loaded costs for the services of such employees.
5.4 Compensation for Transfers to other than HoldCo or a Regulated
Affiliate: An employee transfer credit equal to 25% of the employee's annual
base salary will be applied to KEDNY's or KEDLI's respective Balancing Account
for all transfers from KEDNY or KEDLI to an Unregulated Competitive Energy
Affiliate. The requirement to pay such transfer credit will be waived for a
period of four years immediately following the close of the Merger.
5.5 Employee Compensation and Benefits: The compensation of KEDNY and KEDLI
employees and officers may not be tied to the financial and/or stock performance
of any Unregulated Competitive Energy Affiliate or National Grid Other
Affiliate, but may be tied to the financial performance of Holdco and stock
performance of UKHoldCo.
Employees of HoldCo and all or any subset of its subsidiaries may
participate in common pension and benefit plans, and the costs of such common
plans will be equitably allocated in accordance with the approved cost
allocation procedures.
6. Access to Books, Records and Reports
Staff will have full access, on reasonable notice, and subject to
resolution of issues relative to confidentiality and privilege (e.g., attorney
client, attorney work product, self critical), to: i) the books and records of
HoldCo and its majority-owned subsidiaries; and ii) the books and records of all
other HoldCo subsidiaries or affiliates, in English, to the extent necessary to
audit and monitor any transactions that have occurred between KEDNY or KEDLI and
such subsidiaries or affiliates. Such access to books and records will be
provided at KEDNY's or KEDLI's New York headquarters; provided, however, that if
such access is not practicable, access will be provided at another location in
KEDNY's or KEDLI's service territory at the Company's expense.
7
7. Standards of Competitive Conduct
7.1 Use of Corporate Name and Royalties: These Standards of Conduct will be
in lieu of any and all royalty payments that could or might be asserted to be
payable by HoldCo or any HoldCo subsidiary or imputed to KEDNY or KEDLI or
credited to their customers at any time. No provision herein will be deemed to
restrict any HoldCo subsidiary from using the same name, trade names,
trademarks, service names, service marks or a derivative of a name of HoldCo,
KEDNY or KEDLI, or in identifying itself as being affiliated with the HoldCo,
KEDNY, KEDLI or any other affiliate. Promotional material may identify any
HoldCo subsidiary as being affiliated with KEDNY, KEDLI or HoldCo.
7.2 Sales Leads: Except as set forth in this Appendix 4, or as otherwise
approved by the Commission, KEDNY and KEDLI will not provide sales leads
involving customers in its service territory to any Unregulated Affiliate.
7.3 Customer Inquiries: KEDNY and KEDLI will respond to customer inquiries
as to non-utility services in conformance with the following Standards of
Competitive Conduct:
-If a customer requests information from KEDNY or KEDLI about securing
commodity sales service from an ESCO, KEDNY or KEDLI will provide a list of all
ESCOs authorized to do business in its service territory.
-If a customer requests information from KEDNY or KEDLI about oil-to-gas
heating system conversions, KEDNY or KEDLI will provide contact information of
licensed contractors pursuant to a program substantially the same as KEDNY's and
KEDLI's ValuePlus Program.
-If a customer requests information from KEDNY or KEDLI about appliance
service contracts, KEDNY or KEDLI will provide, on a rotational basis, contact
information of licensed contractors offering service contracts in the customer's
vicinity.
-If a customer requests information from KEDNY or KEDLI about gas-to-gas
equipment replacement, KEDNY or KEDLI will provide, on a rotational basis,
contact information of licensed contractors performing such services in the
customer's vicinity.
8
KEDNY and KEDLI may only provide customers information about competitive
affiliates operating in the business areas identified above as part of a
response to a customer inquiry or as part of a wider dissemination of
information to the public about these topics. In either situation, the
information provided about any HoldCo subsidiary, including Unregulated
Affiliates, may not in any way be discriminatory to other competitors.
All information made available pursuant to the foregoing will also be made
available on KEDNY's and KEDLI's website.
7.4 No Advantage Gained by Dealing with Affiliate: KEDNY and KEDLI will
refrain from giving any appearance that they speak on behalf of an Unregulated
Affiliate or that an Unregulated Affiliate speaks on behalf of them. KEDNY and
KEDLI will not engage in any joint promotion or joint marketing with its
Unregulated Competitive Energy Affiliates, provided, however, that this will not
prohibit the use of a common corporate web site that delineates regulated and
unregulated entities and services.
KEDNY and KEDLI will not represent to any customer, supplier or third party
that an advantage may accrue to such customer, supplier or third party in the
use of their services as a result of that customer, supplier or third party
transacting with any US HoldCo subsidiary.
US HoldCo subsidiaries will not represent to any customer, supplier or
third party that an advantage may accrue to such customer, supplier or third
party in the use of KEDNY's or KEDLI's services as a result of that customer,
supplier or third party transacting with such subsidiary.
7.5 No Rate Discrimination: All similarly situated customers will pay the
same rates for the same tariffed services provided by KEDNY or KEDLI. If there
is discretion in the application of any tariff provision, KEDNY and KEDLI will
not offer any affiliate more favorable terms and conditions than it offers to
all similarly situated competitors of the affiliate.
7.6 Complaint Procedures: Any competitor or customer of KEDNY or KEDLI or
any affiliate who believes that KEDNY or KEDLI or an affiliate has violated
these Standards of Conduct may file a written complaint with KEDNY or KEDLI or
the subject affiliate, which will respond in writing within fourteen business
days. Thereafter, the complainant and KEDNY or KEDLI or the affiliate will meet
to resolve the complaint informally. If no resolution can be reached within
thirty days following the complainant's receipt of KEDNY's or KEDLI's or the
affiliate's response, either party may request the assistance of Staff. If Staff
is unable to assist the parties in resolving the complaint within a reasonable
time, either party may seek resolution by the Commission.
9
If the Commission determines, at any time, whether as a result of the
procedure outlined above or otherwise, that KEDNY or KEDLI or an affiliate has
violated these Standards of Conduct, it will provide KEDNY or KEDLI or the
affiliate an opportunity to remedy such conduct or explain why such conduct is
not a violation. If KEDNY or KEDLI or the affiliate fails to remedy such conduct
within a reasonable time after receiving such notice, the Commission may take
such remedial action as is warranted and for which it has authority under the
Public Service Law.
8. Transfers and Leases of Property
8.1 Personal Property: Transfers of Personal Property (or rights to use
such property) from KEDNY or KEDLI to an Unregulated Competitive Energy
Affiliate or any National Grid Other Affiliate will be priced at the higher of
book value or fair market value. Any direct or indirect transfer of Personal
Property to KEDNY or KEDLI from an unregulated affiliate shall be at the lower
of book value or fair market value.
Transfers of Personal Property (or rights to use such property) from
KeySpan Corporate Services LLC or KeySpan Utility Services LLC to KEDNY, KEDLI,
Regulated Affiliates, ServiceCo, or HoldCo to KEDNY or KEDLI will be priced at
book value.
Transfers of Personal Property (or rights to use such property) between and
among KEDNY, KEDLI, Regulated Affiliates, ServiceCo, and HoldCo will be priced
at book value or cost.
Gains associated with the transfer or lease of Personal Property in KEDNY's
or KEDLI's rate base will be credited to the applicable depreciation reserve.
KEDNY or KEDLI will have the opportunity to file a fully supported petition
seeking recovery of any loss associated with the transfer or lease of Personal
Property in KEDNY's or KEDLI's rate base. KEDNY and KEDLI will retain gains or
losses on the transfer or lease of Personal Property not included in their
respective rate base.
Based on KEDNY's and KEDLI's adherence to the foregoing parameters and if
the property is not needed for providing regulated utility service, the
Commission's consent pursuant to PSL ss.ss. 69 or 70 is granted as being in the
public interest if the transfer or lease of Personal Property is for $3 million
10
or less. KEDNY or KEDLI will petition the Commission for its consent pursuant to
ss.ss.69 or 70 for the transfer or lease of Personal Property that exceeds $3
million. The provisions governing transfers of Personal Property to KEDNY and
KEDLI in this section do not assure the future rate recovery of these amounts.
8.2 Real Property: If and when a facility is no longer needed to provide
regulated gas services, KEDNY or KEDLI will evaluate commercially reasonable
disposition alternatives for the facility, including, but not limited to, sale
to an affiliate or sale or lease to a third party. In the event it decides to
sell or lease a facility, KEDNY or KEDLI will use commercially reasonable
efforts to obtain fair market value for the facility based on independent
appraisals and market conditions. KEDNY and KEDLI may utilize brokers or other
service providers to identify prospective buyers or tenants, or may utilize
other means designed to realize fair market value from the sale or lease.
Gains associated with the sale of real property in KEDNY's or KEDLI's rate
base will be credited to the applicable Balancing Account. KEDNY or KEDLI will
have the opportunity to file a fully supported petition seeking recovery of any
loss associated with the sale of real property in KEDNY's or KEDLI's rate base.
KEDNY and KEDLI will retain gains or losses on the sale of real property not
included in their respective rate base. Under no circumstances will the sale or
lease of a facility prevent KEDNY or KEDLI from providing gas services to its
customers, or from otherwise being able to discharge its public service
responsibilities. Moreover, any sale-leaseback transaction involving a KEDNY or
KEDLI facility will not increase KEDNY's or KEDLI's annual cost of occupying or
utilizing the subject property.
All contract documents relative to the sale of facilities will include
provisions limiting, to the extent commercially practicable, KEDNY's or KEDLI's
liabilities, including environmental liabilities. In the case of lease
transactions, tenants will be required, inter alia, to maintain commercially
reasonable insurance coverage to protect the leased property, and to observe
KEDNY's or KEDLI's requirements regarding the use of the premises. Any initial
lease term will not exceed five (5) years.
Based on KEDNY's and KEDLI's adherence to the foregoing parameters, to the
extent that efficient management of KEDNY's or KEDLI's property portfolio
warrants the sale or lease of a facility subject to the Commission's consent
pursuant to PSL ss.ss.69 or 70, that consent is granted as being in the public
interest if the sale or lease or sale/leaseback of facilities is for $3 million
or less. KEDNY or KEDLI will petition the Commission for its consent pursuant to
ss.ss.69 or 70 for facility sales, leases, or sales/leasebacks for over $3
million.
11
9. Miscellaneous Provisions
9.1 Annual Meeting: Senior management of KEDNY, KEDLI, and US HoldCo will
meet annually with Senior Staff to discuss their plans related to capital
attraction and financial performance.
9.2 Reporting Requirements: To further the Commission's ability to
efficiently assess compliance with the terms of the Appendix 4, KEDNY, KEDLI and
HOLDCO shall file a report summarizing asset transfers, employee transfers, cost
allocations, affiliate transactions, and competitor/customer complaints prior to
each year's Annual Meeting.
9.3 Adherence to Standards: If the Commission at any time makes a finding
that compliance with these Rules Governing Affiliate Transactions has been
lacking, the Commission may order an independent audit of all applicable
transactions, at KEDNY's or KEDLI's expense.
9.4 Insurance: KEDNY, KEDLI and HoldCo subsidiaries may be covered by
common property/casualty and other business insurance policies. The costs of
such policies will be equitably allocated in accordance with the approved cost
allocation procedures.
9.5 Research and Development: KEDNY and KEDLI may invest in the
commercialization of research and development products and technologies that
they have developed consistent with these Standards of Competitive Conduct. If
an affiliate elects to invest in the same, it will fairly compensate KEDNY
and/or KEDLI based, among other things, on the expected future benefits of the
investments, assume the applicable business risks, and will be entitled to the
benefits associated with that investment to the extent approved by the
Commission.
12
APPENDIX 5 - Financial Protections
Appendix 5: Financial Protections
- ---------------------------------
Effective on the closing of the merger, National Grid will implement the
following financial protections for KEDNY and KEDLI. Such financial protections
will continue in effect unless and until such time as the Commission authorizes
an express change.
1. Goodwill
Although goodwill may be recorded on KEDNY's and KEDLI's accounts pursuant
to United States Generally Accepted Accounting Principles (US GAAP), no goodwill
will be pushed down on the regulatory books maintained by KEDNY or KEDLI
pursuant to the Commission's regulations following the Merger. Goodwill will be
excluded from rate base, expenses and capitalization in the determination of
KEDNY's and KEDLI's rates and earned returns for New York State regulatory
reporting purposes.
2. Dividend Payments
KEDNY and KEDLI will register with major nationally and internationally
recognized bond rating agencies, such as Standard & Poor's, Moody's Investor
Service, and Fitch Ratings, and intend to maintain at least an investment grade
credit rating. Provided such rating is maintained with at least two such
agencies, subject to the other provisions of this Appendix 5, KEDNY and KEDLI
will be permitted to pay dividends in any year up to an amount equal to the sum
of the following: i) income available for common dividends generated in that
year; ii) the cumulative amount of retained earnings accrued in prior years,
starting with the Effective Date of the merger; and iii) that portion of paid-in
capital that was recorded on the books of KEDNY and KEDLI as unappropriated
retained earnings, unappropriated undistributed earnings, and accumulated other
comprehensive income immediately prior to the consummation of the Merger to the
extent such earnings were not already paid out as dividends in years subsequent
to the closing of the Merger.
To the extent that KEDNY and KEDLI desire to exclude from the calculation
of "income available for common dividends" for the purposes of this provision
non-cash charges to income resulting from accounting changes, charges to income
resulting from significant, unanticipated events or impairment of goodwill,
KEDNY and KEDNY must first notify the Commission of their intent to do so and
1
provide an explanation for such action. KEDNY and KEDLI shall have the ability
to exclude the items identified in the notification if the Commission has not,
within 30 days of the notification, indicated that additional review is
necessary. Under no circumstances will the balance of retained earnings go
negative as the result of dividend payments.
3. Dividend Restrictions
KEDNY and/or KEDLI will be prohibited from paying common dividends if: (a)
the senior unsecured bond rating of KEDNY or KEDLI (as appropriate) falls to the
lowest investment grade rating and there are negative watch/review downgrade
notices as determined by any two nationally recognized rating agencies, unless
the Commission approves such dividends; or (b) the senior unsecured credit
rating of National Grid plc falls below investment grade as determined by two
nationally recognized credit rating agencies, unless the Commission approves
such dividends. The prohibition from paying common dividends shall end when the
relevant credit rating is restored, or the negative watch/review downgrade
notices are removed and no negative rating action is taken, or the Commission
approves the payment of such dividends.
4. Bond Ratings and the Cost of Debt
If, between the date of when the Merger closes and the effective date of
KEDNY's or KEDLI's next rate filing, the bond rating of KEDNY or KEDLI (as
appropriate) falls below A- or A3 as determined by two nationally recognized
credit rating agencies, then any long-term debt issued by the relevant company
during the period of such reduced credit rating will be priced as if it had been
issued by an A-/A3 utility at the same issue date, and any such difference will
be credited to KEDNY's or KEDLI's (as appropriate) respective Balancing
Accounts. KEDNY's and KEDLI's earnings sharing reports will then reflect the
actual debt rates outstanding for the Companies.
5. Debt Limit
For any twelve-month period ending at the end of a quarter, KEDNY's Average
Total Debt will not exceed 56 percent of its Total Capital excluding goodwill,
and KEDLI's average Total Debt will not exceed 58 percent of its Average Total
Capital excluding goodwill. For purposes of this section 5, "Total Debt" is
defined as an amount equal to (i) long-term debt, plus (ii) notes payable
2
(including current maturity of long-term debt), minus the average daily
equivalents of cash and cash equivalents, appearing on the consolidated balance
sheet of that entity; and "Total Capital" is defined as the sum of (i) Total
Debt, (ii) common shareholder equity (excluding goodwill), and (iii) preferred
stock appearing on the consolidated balance sheet of that entity.
If the debt limitations for KEDNY or KEDLI (as appropriate) in this section
5 are exceeded, KEDNY or KEDLI (as appropriate) will be afforded a fifteen (15)
month cure period to reduce the debt ratio to within the limits in this section
5, during which period KEDNY or KEDLI, as applicable, will be prohibited from
increasing the level of dividend payments (expressed as a percentage of common
equity excluding goodwill) until the average debt ratio for a twelve month
period ending at the end of a calendar quarter is within the limits in this
section 5. Absent a Commission order to the contrary after a showing by KEDNY or
KEDLI (as appropriate), if the debt limit at the end of the cure period still
exceeds the limits in this section 5, no further dividends will be paid from
KEDNY or KEDLI, as applicable, until the average debt ratio for a twelve month
period ending at the end of a calendar quarter is reduced to the limits in this
section 5.
6. Merger Debt
No debt associated with the Merger will be reflected as an obligation of
either KEDNY or KEDLI.
7. Administration of Money Pools
US HoldCo intends to create separate unregulated and regulated money pools,
subject to the receipt of necessary regulatory approvals and when they can be
implemented efficiently. Participation in the regulated money pool will be
limited to KEDNY, KEDLI, Regulated Affiliates, ServiceCo, and US HoldCo. KEDNY,
KEDLI, Regulated Affiliates, and ServiceCo may participate in the Regulated
Money Pool as both borrowers and lenders. US HoldCo may participate as a lender
only.
3
APPENDIX 6 - Net Synergy Savings
Appendix 6
Page 1 of 6
Calculation of 5 Year Levelized Net Synergy Value by Year
1 2 3 4 5
KEDNY
-----
7.58% 1 Synergies $ 10,608,734.32 $ 14,571,096.59 $ 18,502,030.48 $ 22,848,893.06 $ 23,420,115.39
2
3 Cost to Achieve $ 20,835,309.39 $ 8,282,157.28 $ 8,119,762.04 $ 3,670,132.44 $ 3,935,378.00
4 NPV $43,940,043.80
5 Levelized 6,425,145.02 $ 6,425,145.02 $ 6,425,145.02 $ 6,425,145.02 $ 6,425,145.02
6
7 Net Synergy Savings - 100% $ 4,183,589.30 $ 8,145,951.57 $ 12,076,885.46 $ 16,423,748.05 $ 16,994,970.37
8
9 Net Synergy Savings - 50% $ 2,091,794.65 $ 4,072,975.79 $ 6,038,442.73 $ 8,211,874.02 $ 8,497,485.19
10 NPV $22,340,599.38
11 5 Year Levelized 5,533,695.95 $ 5,533,695.95 $ 5,533,695.95 $ 5,533,695.95 $ 5,533,695.95
12 Uncollectibles and Working Capital 160,687.05 160,687.05 160,687.05 160,687.05 160,687.05
13 Revenue requirements 5,694,383.00 $ 5,694,383.00 $ 5,694,383.00 $ 5,694,383.00 $ 5,694,383.00
6 7 8 9 10
KEDNY
-----
7.58% 1 Synergies $ 24,005,618.27 $ 24,605,758.73 $ 25,220,902.70 $ 25,851,425.27 $ 26,497,710.90
2
3 Cost to Achieve $ 3,231,665.29 $ 2,506,299.88 $ 1,147,593.03 $ 1,180,072.08 $ 1,217,964.31
4 NPV $43,940,043.80
5 Levelized $ 6,425,145.02 $ 6,425,145.02 $ 6,425,145.02 $ 6,425,145.02 $ 6,425,145.02
6
7 Net Synergy Savings - 100% $ 17,580,473.26 $ 18,180,613.71 $ 18,795,757.68 $ 19,426,280.25 $ 20,072,565.88
8
9 Net Synergy Savings - 50% $ 8,790,236.63 $ 9,090,306.86 $ 9,397,878.84 $ 9,713,140.13 $ 10,036,282.94
10 NPV $22,340,599.38
11 5 Year Levelized
12 Uncollectibles and Working Capital
13 Revenue requirements
1
Appendix 6
Page 1 of 6
Calculation of 5 Year Levelized Net Synergy Value by Year
1 2 3 4 5
KEDLI
-----
8.39% 14 Synergies $ 6,298,881.19 $ 8,651,513.31 $ 10,985,485.00 $ 13,566,412.20 $ 13,905,572.50
15
16 Cost to Achieve $ 12,370,857.29 $ 4,917,488.09 $ 4,821,066.75 $ 2,179,122.17 $ 2,336,610.35
17 NPV $25,574,613.83
18 Levelized 3,878,955.62 $ 3,878,955.62 $ 3,878,955.62 $ 3,878,955.62 $ 3,878,955.62
19
20 Net Synergy Savings - 100% $ 2,419,925.57 $ 4,772,557.69 $ 7,106,529.38 $ 9,687,456.58 $ 10,026,616.88
21
22 Net Synergy Savings - 50% $ 1,209,962.78 $ 2,386,278.85 $ 3,553,264.69 $ 4,843,728.29 $ 5,013,308.44
23 NPV $12,797,528.41
24 5 Year Levelized 3,238,370.26 $ 3,238,370.26 $ 3,238,370.26 $ 3,238,370.26 $ 3,238,370.26
25 Uncollectibles and Working Capital 83,571.77 72,957.59 72,957.59 72,957.59 72,957.59
26 Revenue requirements 3,321,942.03 $ 3,311,327.85 $ 3,311,327.85 $ 3,311,327.85 $ 3,311,327.85
KEDLI 6 7 8 9 10
-----
8.39% 14 Synergies $ 14,253,211.81 $ 14,609,542.11 $ 14,974,780.66 $ 15,349,150.18 $ 15,732,878.93
15
16 Cost to Achieve $ 1,918,784.57 $ 1,488,102.60 $ 681,377.43 $ 700,661.70 $ 723,160.01
17 NPV $25,574,613.83
18 Levelized $ 3,878,955.62 $ 3,878,955.62 $ 3,878,955.62 $ 3,878,955.62 $ 3,878,955.62
19
20 Net Synergy Savings - 100% $ 10,374,256.20 $ 10,730,586.49 $ 11,095,825.04 $ 11,470,194.56 $ 11,853,923.31
21
22 Net Synergy Savings - 50% $ 5,187,128.10 $ 5,365,293.25 $ 5,547,912.52 $ 5,735,097.28 $ 5,926,961.66
23 NPV $12,797,528.41
24 5 Year Levelized
25 Uncollectibles and Working Capital
26 Revenue requirements
Appendix 6
Page 1 of 6
Calculation of 5 Year Levelized Net Synergy Value by Year
Line Notes:
1 From Page 3 of 6, Line 11
3 From Page 3 of 6, Line 28
4 NPV of annual Cost to Achieve discounted at weighted average cost of capital of 7.58%
5 10 Year levelized payment of Line 4 Cost to Achieve NPV at 7.58%
7 Line 1 minus Line 7
9 Line 7 times 50%
10 NPV of Line 9 for years 1, 2 and 3 discounted at weighted average cost of capital of 7.58%
11 5 Year Levelized payment of Line 10 NPV at 7.58%
12 Cost of Service changes related to net synergies
13 Line 11 + Line 12
14 From Page 3 of 6, Line 12
16 From Page 3 of 6, Line 29
17 NPV of annual Cost to Achieve discounted at weighted average cost of capital of 8.39%
18 10 Year levelized payment of Line 17 Cost to Achieve NPV at 8.39%
20 Line 14 minus Line 18
22 Line 18 times 50%
23 NPV of Line 22 for years 1, 2 and 3 discounted at weighted average cost of capital of 8.39%
24 5 Year Levelized payment of Line 23 NPV at 8.39%
25 Cost of Service changes related to net synergies
26 Line 24 + Line 25
KEDNY 1 2 3 4 5
- -----
Net Synergies w/CTA Amort $ 4,183,589.30 $ 8,145,951.57 $ 12,076,885.46 $ 16,423,748.05 $ 16,994,970.37
10 Year 50% Plan 2,091,794.65 4,072,975.79 6,038,442.73 8,211,874.02 8,497,485.19
NPV $48,563,793.64
5 Year 100% Option $ 4,183,589.30 $ 8,145,951.57 $ 12,076,885.46 $ 16,423,748.05 $ 16,994,970.37
$44,681,198.76
KEDNY
- ----- 6 7 8 9 10
Net Synergies w/CTA Amort $ 17,580,473.26 $ 18,180,613.71 $ 18,795,757.68 $ 19,426,280.25 $ 20,072,565.88
10 Year 50% Plan 8,790,236.63 9,090,306.86 9,397,878.84 9,713,140.13 10,036,282.94
NPV $48,563,793.64
5 Year 100% Option
$44,681,198.76
KEDLI
- -----
1 2 3 4 5
Net Synergies w/CTA Amort $ 2,419,925.57 $ 4,772,557.69 $ 7,106,529.38 $ 9,687,456.58 $ 10,026,616.88
10 Year 50% Plan 1,209,962.78 2,386,278.85 3,553,264.69 4,843,728.29 5,013,308.44
NPV $27,384,991.75
5 Year 100% Option $ 2,419,925.57 $ 4,772,557.69 $ 7,106,529.38 $ 9,687,456.58 $ 10,026,616.88
$25,595,056.82
KEDLI
- ----- 6 7 8 9 10
Net Synergies w/CTA Amort $ 10,374,256.20 $ 10,730,586.49 $ 11,095,825.04 $ 11,470,194.56 $ 11,853,923.31
10 Year 50% Plan 5,187,128.10 5,365,293.25 5,547,912.52 5,735,097.28 5,926,961.66
NPV $27,384,991.75
5 Year 100% Option
$25,595,056.82
Appendix 6
Page 2 of 6
Calculation of Synergy Value - Net Synergy by Year
1 2 3 4 5
SYNERGIES (Page 2 Column C
Times Page 4 Column B)
1 Massachusetts Electric $ 7,743,831.48 $ 10,636,152.53 $ 13,505,532.49 $ 16,678,519.03 $ 17,095,482.01
2 Nantucket Electric $ 94,634.74 $ 129,980.81 $ 165,046.53 $ 203,822.52 $ 208,918.08
3 New England Power $ 2,781,088.85 $ 3,819,825.54 $ 4,850,323.25 $ 5,989,857.03 $ 6,139,603.45
4 Essex Gas $ 425,692.80 $ 584,689.06 $ 742,424.20 $ 916,849.16 $ 939,770.39
5 Colonial Gas $ 1,423,844.14 $ 1,955,649.92 $ 2,483,237.57 $ 3,066,648.81 $ 3,143,315.03
6 Boston Gas $ 5,103,623.29 $ 7,009,826.59 $ 8,900,910.41 $ 10,992,088.15 $ 11,266,890.36
7 Granite State Electric $ 329,505.58 $ 452,575.92 $ 574,670.09 $ 709,682.94 $ 727,425.02
8 EnergyNorth Gas $ 627,516.87 $ 861,894.43 $ 1,094,412.96 $ 1,351,534.08 $ 1,385,322.43
9 Niagara Mohawk Electric $ 15,772,131.09 $ 21,663,022.05 $ 27,507,188.07 $ 33,969,720.21 $ 34,818,963.22
10 Niagara Mohawk Gas $ 4,067,330.72 $ 5,586,478.74 $ 7,093,577.30 $ 8,760,140.64 $ 8,979,144.15
11 KEDNY $ 10,608,734.32 $ 14,571,096.59 $ 18,502,030.48 $ 22,848,893.06 $ 23,420,115.39
12 KEDLI $ 6,298,881.19 $ 8,651,513.31 $ 10,985,485.00 $ 13,566,412.20 $ 13,905,572.50
13 LIPA $ 14,832,266.30 $ 20,372,117.76 $ 25,868,028.63 $ 31,945,457.05 $ 32,744,093.47
14 Unregulated $ 2,454,541.25 $ 3,371,312.41 $ 4,280,811.98 $ 5,286,544.92 $ 5,418,708.54
15 Narragansett $ 3,121,321.94 $ 4,287,135.69 $ 5,443,702.51 $ 6,722,644.67 $ 6,890,710.79
16 Providence Gas $ 2,315,055.45 $ 3,179,728.66 $ 4,037,543.52 $ 4,986,123.02 $ 5,110,776.10
17 Total $ 78,000,000.00 $ 107,133,000.00 $ 136,034,925.00 $ 167,994,937.50 $ 172,194,810.94
6 7 8 9 10
SYNERGIES (Page 2 Column C
Times Page 4 Column B)
1 Massachusetts Electric $ 17,522,869.06 $ 17,960,940.79 $ 18,409,964.31 $ 18,870,213.41 $ 19,341,968.75
2 Nantucket Electric $ 214,141.03 $ 219,494.56 $ 224,981.92 $ 230,606.47 $ 236,371.63
3 New England Power $ 6,293,093.54 $ 6,450,420.88 $ 6,611,681.40 $ 6,776,973.44 $ 6,946,397.77
4 Essex Gas $ 963,264.65 $ 987,346.27 $ 1,012,029.93 $ 1,037,330.67 $ 1,063,263.94
5 Colonial Gas $ 3,221,897.91 $ 3,302,445.35 $ 3,385,006.49 $ 3,469,631.65 $ 3,556,372.44
6 Boston Gas $ 11,548,562.62 $ 11,837,276.68 $ 12,133,208.60 $ 12,436,538.81 $ 12,747,452.28
7 Granite State Electric $ 745,610.64 $ 764,250.91 $ 783,357.18 $ 802,941.11 $ 823,014.64
8 EnergyNorth Gas $ 1,419,955.49 $ 1,455,454.38 $ 1,491,840.74 $ 1,529,136.76 $ 1,567,365.18
9 Niagara Mohawk Electric $ 35,689,437.30 $ 36,581,673.23 $ 37,496,215.06 $ 38,433,620.44 $ 39,394,460.95
10 Niagara Mohawk Gas $ 9,203,622.76 $ 9,433,713.32 $ 9,669,556.16 $ 9,911,295.06 $ 10,159,077.44
11 KEDNY $ 24,005,618.27 $ 24,605,758.73 $ 25,220,902.70 $ 25,851,425.27 $ 26,497,710.90
12 KEDLI $ 14,253,211.81 $ 14,609,542.11 $ 14,974,780.66 $ 15,349,150.18 $ 15,732,878.93
13 LIPA $ 33,562,695.81 $ 34,401,763.21 $ 35,261,807.29 $ 36,143,352.47 $ 37,046,936.28
14 Unregulated $ 5,554,176.26 $ 5,693,030.66 $ 5,835,356.43 $ 5,981,240.34 $ 6,130,771.35
15 Narragansett $ 7,062,978.56 $ 7,239,553.02 $ 7,420,541.85 $ 7,606,055.39 $ 7,796,206.78
16 Providence Gas $ 5,238,545.50 $ 5,369,509.14 $ 5,503,746.87 $ 5,641,340.54 $ 5,782,374.05
17 Total $ 176,499,681.21 $ 180,912,173.24 $ 185,434,977.57 $ 190,070,852.01 $ 194,822,623.31
Total
SYNERGIES (Page 2 Column C
Times Page 4 Column B)
1 Massachusetts Electric $ 157,765,473.86
2 Nantucket Electric $ 1,927,998.30
3 New England Power $ 56,659,265.16
4 Essex Gas $ 8,672,661.08
5 Colonial Gas $ 29,008,049.31
6 Boston Gas $ 103,976,377.80
7 Granite State Electric $ 6,713,034.04
8 EnergyNorth Gas $ 12,784,433.31
9 Niagara Mohawk Electric $ 321,326,431.60
10 Niagara Mohawk Gas $ 82,863,936.27
11 KEDNY $ 216,132,285.70
12 KEDLI $ 128,327,427.89
13 LIPA $ 302,178,518.26
14 Unregulated $ 50,006,494.14
15 Narragansett $ 63,590,851.20
16 Providence Gas $ 47,164,742.85
17 Total $ 1,589,097,980.79
Calculation of Synergy Value - Net Synergy by Year
Appendix 6
Page 2 of 6
1 2 3 4 5
COST TO ACHIEVE (Page 3 Column C
Times Page 4 Column A)
18 Massachusetts Electric $ (15,208,706.31) $ (6,045,549.66) $ (5,927,009.48) $ (2,679,008.28) $ (2,872,623.93)
19 Nantucket Electric $ (185,860.44) $ (73,880.61) $ (72,431.97) $ (32,739.25) $ (35,105.36)
20 New England Power $ (5,461,994.33) $ (2,171,174.68) $ (2,128,602.62) $ (962,128.39) $ (1,031,662.74)
21 Essex Gas $ (836,050.83) $ (332,335.09) $ (325,818.72) $ (147,270.06) $ (157,913.47)
22 Colonial Gas $ (2,796,397.03) $ (1,111,584.17) $ (1,089,788.40) $ (492,584.36) $ (528,184.11)
23 Boston Gas $ (10,023,398.37) $ (3,984,359.45) $ (3,906,234.75) $ (1,765,618.11) $ (1,893,221.78)
24 Granite State Electric $ (647,141.36) $ (257,242.47) $ (252,198.50) $ (113,993.72) $ (122,232.21)
25 EnergyNorth Gas $ (1,232,428.66) $ (489,897.60) $ (480,291.76) $ (217,091.88) $ (232,781.41)
26 Niagara Mohawk Electric $ (30,976,101.49) $ (12,313,181.42) $ (12,071,746.49) $ (5,456,429.41) $ (5,850,773.13)
27 Niagara Mohawk Gas $ (7,988,143.67) $ (3,175,333.80) $ (3,113,072.36) $ (1,407,108.71) $ (1,508,802.40)
28 KEDNY $ (20,835,309.39) $ (8,282,157.28) $ (8,119,762.04) $ (3,670,132.44) $ (3,935,378.00)
29 KEDLI $ (12,370,857.29) $ (4,917,488.09) $ (4,821,066.75) $ (2,179,122.17) $ (2,336,610.35)
30 LIPA $ (29,130,228.73) $ (11,579,436.20) $ (11,352,388.44) $ (5,131,279.57) $ (5,502,124.26)
31 Unregulated $ (4,820,662.37) $ (1,916,241.47) $ (1,878,668.11) $ (849,157.99) $ (910,527.81)
32 Narragansett $ (6,130,204.26) $ (2,436,792.03) $ (2,389,011.79) $ (1,079,833.33) $ (1,157,874.38)
33 Providence Gas $ (4,546,715.48) $ (1,807,345.98) $ (1,771,907.83) $ (800,902.34) $ (858,784.66)
34 Total $ (153,190,200.00) $ (60,894,000.00) $ (59,700,000.00) $ (26,984,400.00) $ (28,934,600.00)
6 7 8 9 10
COST TO ACHIEVE (Page 3 Column C $ (2,358,949.77) $ (1,829,470.26) $ (837,684.01) $ (861,392.04) $ (889,051.42)
Times Page 4 Column A) $ (28,827.92) $ (22,357.33) $ (10,237.05) $ (10,526.78) $ (10,864.80)
18 Massachusetts Electric $ (847,183.84) $ (657,028.68) $ (300,842.50) $ (309,356.91) $ (319,290.39)
19 Nantucket Electric $ (129,675.85) $ (100,569.38) $ (46,049.05) $ (47,352.32) $ (48,872.81)
20 New England Power $ (433,735.78) $ (336,381.35) $ (154,023.43) $ (158,382.58) $ (163,468.26)
21 Essex Gas $ (1,554,681.43) $ (1,205,724.46) $ (552,081.18) $ (567,706.12) $ (585,935.21)
22 Colonial Gas $ (100,375.00) $ (77,845.27) $ (35,644.06) $ (36,652.85) $ (37,829.78)
23 Boston Gas $ (191,156.12) $ (148,250.06) $ (67,881.24) $ (69,802.40) $ (72,043.76)
24 Granite State Electric $ (4,804,555.10) $ (3,726,145.75) $ (1,706,140.17) $ (1,754,427.16) $ (1,810,761.97)
25 EnergyNorth Gas $ (1,239,002.80) $ (960,901.67) $ (439,980.89) $ (452,433.18) $ (466,960.85)
26 Niagara Mohawk Electric $ (3,231,665.29) $ (2,506,299.88) $ (1,147,593.03) $ (1,180,072.08) $ (1,217,964.31)
27 Niagara Mohawk Gas $ (1,918,784.57) $ (1,488,102.60) $ (681,377.43) $ (700,661.70) $ (723,160.01)
28 KEDNY $ (4,518,250.60) $ (3,504,103.90) $ (1,604,470.90) $ (1,649,880.45) $ (1,702,858.27)
29 KEDLI $ (747,709.91) $ (579,882.22) $ (265,518.43) $ (273,033.10) $ (281,800.22)
30 LIPA $ (950,826.69) $ (737,408.31) $ (337,647.00) $ (347,203.05) $ (358,351.77)
31 Unregulated $ (705,219.31) $ (546,928.88) $ (250,429.64) $ (257,517.27) $ (265,786.17)
32 Narragansett $ (23,760,600.00) $ (18,427,400.00) $ (8,437,600.00) $ (8,676,400.00) $ (8,955,000.00)
33 Providence Gas
34 Total
Total
COST TO ACHIEVE (Page 3 Column C
Times Page 4 Column A)
18 Massachusetts Electric $ (39,509,445.16)
19 Nantucket Electric $ (482,831.52)
20 New England Power $ (14,189,265.08)
21 Essex Gas $ (2,171,907.57)
22 Colonial Gas $ (7,264,529.47)
23 Boston Gas $ (26,038,960.85)
24 Granite State Electric $ (1,681,155.22)
25 EnergyNorth Gas $ (3,201,624.88)
26 Niagara Mohawk Electric $ (80,470,262.08)
27 Niagara Mohawk Gas $ (20,751,740.33)
28 KEDNY $ (54,126,333.73)
29 KEDLI $ (32,137,230.99)
30 LIPA $ (75,675,021.31)
31 Unregulated $ (12,523,201.62)
32 Narragansett $ (15,925,152.61)
33 Providence Gas $ (11,811,537.57)
34 Total $ (397,960,200.00)
Calculation of Synergy Value - Net Synergy by Year
Appendix 6
Page 2 of 6
1 2 3 4 5
NET SYNERGIES (Synergies Plus
Cost To Achieve)
35 Massachusetts Electric $ (7,464,874.84) $ 4,590,602.87 $ 7,578,523.01 $ 13,999,510.75 $ 14,222,858.09
36 Nantucket Electric $ (91,225.70) $ 56,100.20 $ 92,614.56 $ 171,083.27 $ 173,812.72
37 New England Power $ (2,680,905.48) $ 1,648,650.87 $ 2,721,720.63 $ 5,027,728.64 $ 5,107,940.72
38 Essex Gas $ (410,358.03) $ 252,353.96 $ 416,605.48 $ 769,579.10 $ 781,856.92
39 Colonial Gas $ (1,372,552.89) $ 844,065.76 $ 1,393,449.17 $ 2,574,064.45 $ 2,615,130.92
40 Boston Gas $ (4,919,775.08) $ 3,025,467.15 $ 4,994,675.66 $ 9,226,470.05 $ 9,373,668.58
41 Granite State Electric $ (317,635.78) $ 195,333.44 $ 322,471.59 $ 595,689.22 $ 605,192.81
42 EnergyNorth Gas $ (604,911.79) $ 371,996.83 $ 614,121.20 $ 1,134,442.20 $ 1,152,541.02
43 Niagara Mohawk Electric $ (15,203,970.40) $ 9,349,840.63 $ 15,435,441.59 $ 28,513,290.80 $ 28,968,190.09
44 Niagara Mohawk Gas $ (3,920,812.95) $ 2,411,144.94 $ 3,980,504.94 $ 7,353,031.93 $ 7,470,341.75
45 KEDNY $ (10,226,575.07) $ 6,288,939.31 $ 10,382,268.44 $ 19,178,760.62 $ 19,484,737.39
46 KEDLI $ (6,071,976.11) $ 3,734,025.22 $ 6,164,418.24 $ 11,387,290.02 $ 11,568,962.15
47 LIPA $ (14,297,962.43) $ 8,792,681.56 $ 14,515,640.20 $ 26,814,177.47 $ 27,241,969.21
48 Unregulated $ (2,366,121.12) $ 1,455,070.93 $ 2,402,143.87 $ 4,437,386.93 $ 4,508,180.73
49 Narragansett $ (3,008,882.32) $ 1,850,343.66 $ 3,054,690.72 $ 5,642,811.34 $ 5,732,836.41
50 Providence Gas $ (2,231,660.03) $ 1,372,382.68 $ 2,265,635.69 $ 4,185,220.69 $ 4,251,991.44
51 Total $ (75,190,200.00) $ 46,239,000.00 $ 76,334,925.00 $ 141,010,537.50 $ 143,260,210.94
6 7 8 9 10
NET SYNERGIES (Synergies Plus
Cost To Achieve)
35 Massachusetts Electric $ 15,163,919.29 $ 16,131,470.53 $ 17,572,280.30 $ 18,008,821.37 $ 18,452,917.33
36 Nantucket Electric $ 185,313.11 $ 197,137.23 $ 214,744.87 $ 220,079.69 $ 225,506.84
37 New England Power $ 5,445,909.70 $ 5,793,392.20 $ 6,310,838.90 $ 6,467,616.52 $ 6,627,107.38
38 Essex Gas $ 833,588.80 $ 886,776.89 $ 965,980.88 $ 989,978.35 $ 1,014,391.13
39 Colonial Gas $ 2,788,162.12 $ 2,966,064.00 $ 3,230,983.06 $ 3,311,249.07 $ 3,392,904.18
40 Boston Gas $ 9,993,881.19 $ 10,631,552.22 $ 11,581,127.42 $ 11,868,832.70 $ 12,161,517.07
41 Granite State Electric $ 645,235.64 $ 686,405.64 $ 747,713.13 $ 766,288.26 $ 785,184.86
42 EnergyNorth Gas $ 1,228,799.37 $ 1,307,204.32 $ 1,423,959.50 $ 1,459,334.35 $ 1,495,321.41
43 Niagara Mohawk Electric $ 30,884,882.19 $ 32,855,527.48 $ 35,790,074.89 $ 36,679,193.28 $ 37,583,698.97
44 Niagara Mohawk Gas $ 7,964,619.96 $ 8,472,811.66 $ 9,229,575.26 $ 9,458,861.88 $ 9,692,116.58
45 KEDNY $ 20,773,952.98 $ 22,099,458.85 $ 24,073,309.66 $ 24,671,353.18 $ 25,279,746.59
46 KEDLI $ 12,334,427.25 $ 13,121,439.50 $ 14,293,403.23 $ 14,648,488.48 $ 15,009,718.92
47 LIPA $ 29,044,445.21 $ 30,897,659.31 $ 33,657,336.39 $ 34,493,472.02 $ 35,344,078.01
48 Unregulated $ 4,806,466.35 $ 5,113,148.44 $ 5,569,838.00 $ 5,708,207.24 $ 5,848,971.13
49 Narragansett $ 6,112,151.86 $ 6,502,144.72 $ 7,082,894.85 $ 7,258,852.35 $ 7,437,855.01
50 Providence Gas $ 4,533,326.19 $ 4,822,580.26 $ 5,253,317.23 $ 5,383,823.27 $ 5,516,587.88
51 Total $ 152,739,081.21 $ 162,484,773.24 $ 176,997,377.57 $ 181,394,452.01 $ 185,867,623.31
Total
NET SYNERGIES (Synergies Plus
Cost To Achieve)
35 Massachusetts Electric $ 118,256,028.70
36 Nantucket Electric $ 1,445,166.78
37 New England Power $ 42,470,000.07
38 Essex Gas $ 6,500,753.51
39 Colonial Gas $ 21,743,519.85
40 Boston Gas $ 77,937,416.95
41 Granite State Electric $ 5,031,878.82
42 EnergyNorth Gas $ 9,582,808.43
43 Niagara Mohawk Electric $ 240,856,169.52
44 Niagara Mohawk Gas $ 62,112,195.95
45 KEDNY $ 162,005,951.97
46 KEDLI $ 96,190,196.90
47 LIPA $ 226,503,496.95
48 Unregulated $ 37,483,292.52
49 Narragansett $ 47,665,698.59
50 Providence Gas $ 35,353,205.28
51 Total $ 1,191,137,780.79
Appendix 6
Page 3 of 6
Calculation of Synergy Value - Synergy
Revenues Percent Synergies
(A) (B) (C)
1 Massachusetts Electric $ 534,184,464 9.93% $ 15,487,662.95
2 Nantucket Electric $ 6,528,087 0.12% $ 189,269.47
3 New England Power $ 191,844,885 3.57% $ 5,562,177.71
4 Essex Gas $ 29,365,112 0.55% $ 851,385.59
5 Colonial Gas $ 98,219,521 1.83% $ 2,847,688.28
6 Boston Gas $ 352,057,800 6.54% $ 10,207,246.58
7 Granite State Electric $ 22,729,932 0.42% $ 659,011.16
8 EnergyNorth Gas $ 43,287,327 0.80% $ 1,255,033.75
9 Niagara Mohawk Electric $ 1,087,992,090 20.22% $ 31,544,262.18
10 Niagara Mohawk Gas $ 280,572,335 5.21% $ 8,134,661.43
11 KEDNY $ 731,811,000 13.60% $ 21,217,468.64
12 KEDLI $ 434,509,000 8.08% $ 12,597,762.37
13 LIPA $ 1,023,158,400 19.02% $ 29,664,532.60
14 Unregulated $ 169,319,000 3.15% $ 4,909,082.50
15 Narragansett $ 215,314,821 4.00% $ 6,242,643.88
16 Providence Gas $ 159,697,000 2.97% $ 4,630,110.90
17 Total $ 5,380,590,774 100.00% $ 156,000,000.00
18 Synergy (per Mercer Study) $ 156,000,000.00
(A)High Level Estimated T&D Revenue (Rather than adjust the $156 million,
Unregulated is included)
(B)Column A / Column A Line 17
(C)Line 18 * Column B
Appendix 6
Page 4 of 6
Calculation of Synergy Value - Cost to Achieve
Revenues Percent Cost to Achieve
(A) (B) (C)
1 Massachusetts Electric $ 534,184,464 9.93% $ 39,513,396.50
2 Nantucket Electric $ 6,528,087 0.12% $ 482,879.81
3 New England Power $ 191,844,885 3.57% $ 14,190,684.15
4 Essex Gas $ 29,365,112 0.55% $ 2,172,124.78
5 Colonial Gas $ 98,219,521 1.83% $ 7,265,255.99
6 Boston Gas $ 352,057,800 6.54% $ 26,041,565.00
7 Granite State Electric $ 22,729,932 0.42% $ 1,681,323.36
8 EnergyNorth Gas $ 43,287,327 0.80% $ 3,201,945.08
9 Niagara Mohawk Electric $ 1,087,992,090 20.22% $ 80,478,309.91
10 Niagara Mohawk Gas $ 280,572,335 5.21% $ 20,753,815.71
11 KEDNY $ 731,811,000 13.60% $ 54,131,746.91
12 KEDLI $ 434,509,000 8.08% $ 32,140,445.03
13 LIPA $ 1,023,158,400 19.02% $ 75,682,589.57
14 Unregulated $ 169,319,000 3.15% $ 12,524,454.07
15 Narragansett $ 215,314,821 4.00% $ 15,926,745.29
16 Providence Gas $ 159,697,000 2.97% $ 11,812,718.84
17 Total $ 5,380,590,774 100.00% $ 398,000,000.00
18 Cost to Achieve (Per Page 6) $ 398,000,000.00
(A)Page 4 Column A
(B)Column A / Column A Line 17
(C)Line 18 * Column B
Appendix 6
Page 5 of 6
Calculation of Synergy Value - Phase in Rates
Cost to Achieve Synergy Multiplier Inflation Phase-In
(A) (B) (C) (D)
Year 1 38.49% Year 1 50.00% Year 1 1 Year 1 50%
Year 2 15.30% Year 2 68.68% Year 2 1.0250 Year 2 67%
Year 3 15.00% Year 3 87.20% Year 3 1.0506 Year 3 83%
Year 4 6.78% Year 4 107.69% Year 4 1.0769 Year 4 100%
Year 5 7.27% Year 5 110.38% Year 5 1.1038 Year 5 100%
Year 6 5.97% Year 6 113.14% Year 6 1.1314 Year 6 100%
Year 7 4.63% Year 7 115.97% Year 7 1.1597 Year 7 100%
Year 8 2.12% Year 8 118.87% Year 8 1.1887 Year 8 100%
Year 9 2.18% Year 9 121.84% Year 9 1.2184 Year 9 100%
Year 10 2.25% Year 10 124.89% Year 10 1.2489 Year 10 100%
(A)Attachment 10
(B)Column (C) * Column (D)
(C)Assumed Inflation Growth of 2.50%
(D)Attachment 10
Appendix 6
Page 6 of 6
Calculation of Cost To Achieve
Nominal Costs
Component
Personnel costs
(1) VERO programs (management) 103
(2) Voluntary severance (management) 15
(3) Retention agreements 12
(4) Relocations 5
(5) Executive severance and options 120
Sub-total 255
IT integration costs
(1) Applications consolidation 120
(2) Data center and network consolidation 41
Sub-total 161
Other integration costs
(1) Costs to achieve merger savings identified by Integration Team 57
(2) Integration process costs 15
(3) Insurance run-offs (KeySpan) 20
Sub-total 92
Transaction costs
(1) Bankers fees and expenses 22
(2) Legal fees and expenses 3
(3) Accounting and audit fees 4
(4) Other professional services 8
(5) Transfer tax 69
Sub-total 107
Total 615
excludes transfer tax gross-ups and other tax gross-ups
Remove Executive Severance 120
Remove IT Capital Items 80
Efficiencies CTA 2
-------------------
413
Settlement Difference 15
-------------------
Total Cost to Achieve in Rates 398
KeySpan costs excluded from above
$54 million (includes $31 million bankers fees and expenses)