EXHIBIT 10
STATE OF IOWA
IOWA UTILITIES BOARD
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IN RE: ) RATEMAKING PRINCIPLES FOR
) WIND ENERGY INVESTMENT
MIDAMERICAN ENERGY COMPANY)
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STIPULATION AND AGREEMENT
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Article I - Introduction
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The Honorable Thomas J. Vilsack, Governor of the state of Iowa, has
established a goal of 1000 megawatts (MW) of renewable energy such as wind power
in the state by 2010. The Honorable Rod Blagojevich, Governor of the state of
Illinois, and members of the South Dakota Public Utilities Commission have also
urged the development of more renewable energy in the Midwest. Renewable energy
such as wind power will not create air pollution, will help prevent the
depletion of non-renewable resources used for electric generation, does not rely
on out-of- state resources and will have an important positive impact on
economic development in Iowa. At the time of this Stipulation and Agreement
(Stipulation), MidAmerican Energy Company (MEC) owns or has under long-term
contract approximately 125 MW of renewable energy.
Subject to the terms and conditions of this Stipulation and subject to
final approval of this Stipulation in its entirety and without condition or
modification by the Iowa Utilities Board (Board), MEC agrees to construct a
minimum of an additional 310 MW (nameplate rating) of wind power facilities in
Iowa (Project) as its commitment toward the renewable energy goal
Page 1 of 8
established by Governor Vilsack and the expressions of support for the
development of renewable energy made by representatives of Illinois and South
Dakota. The Project is expected to require an investment of approximately $323
million (plus associated transmission costs) and will be dedicated to public
service and subject to regulation by the Board. The first of the Project's wind
power facilities is expected to begin service in late 2004, with the Project
completed by 2007.
Article II -- Purpose
--------------------
This Stipulation and attached Appendices have been prepared and executed by
the signatories for the purpose of stipulating to their mutually-agreed position
in the ratemaking principles case regarding the Project, to be commenced by MEC
pursuant to Section 476.53 of the Iowa Code. MEC commits to commencing such case
as soon as feasible after the enactment of legislation consistent with that in
Appendix 1. All signatories to this Stipulation agree to support or not oppose
such legislation.
In consideration of the mutual agreements set forth, the signatories
stipulate that the Board should issue an order that allows the terms and
provisions of this Stipulation to be fully implemented.
Terms:
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1. MEC commits to construct, own and operate a minimum of an additional
310 MW of wind power facilities in Iowa, representing a projected
investment of approximately $323 million plus the costs of associated
transmission.
2. As soon as feasible after the enactment of legislation consistent with
that in Appendix 1, MEC shall file with the Board a request for a
certificate to construct the Project. The signatories to this
Stipulation agree to support the request, as well as any request for
expedited approval or other relief to enable the first of the wind
power facilities to be placed in service by late-2004 and to enable
completion of the Project by 2007.
3. As soon as feasible after the enactment of legislation consistent with
that in Appendix 1, MEC shall file with the Board a request pursuant
to Code Section 476.53 for
Page 2 of 8
ratemaking principles for the Project. The signatories to this
Stipulation agree to support the request and the following ratemaking
principles:
a. The Iowa jurisdictional portion of MEC's prudently incurred
capital costs, operation and maintenance expenses and other
actual costs of the Project shall be included in MEC's regulated
electric rates. MEC shall be permitted to include in rates the
actual costs of the Project, up to the Iowa jurisdictional
portion of the $323 million projection and $12 million in
associated transmission costs, without the need to establish
prudence or reasonableness. MEC shall be required to establish
the prudence and reasonableness of any Project investment and
transmission costs in excess of the foregoing calculated amounts
before the Iowa jurisdictional portion of such excess can be
included in rates.
b. The depreciation life of the Project for ratemaking purposes
shall be 20 years.
c. The allowed return on common equity investment (ROE) on the
portion of the Project included in Iowa electric rate base shall
be 12.2%.
d. The Iowa jurisdictional portion of any revenues from the sale of
renewable energy credits and carbon dioxide credits associated
with the Project shall be recorded above-the-line by MEC in the
accounts specified in Appendix 2 and included in the revenue
sharing calculations of items "g" and "h".
e. The Iowa jurisdictional portion of any federal production tax
credits associated with the Project shall be recorded
above-the-line by MEC in the accounts specified in Appendix 2 and
included in the revenue sharing calculations of items "g" and
"h".
f. Until MEC's next Iowa electric rate case decision after January
1, 2011, the Iowa jurisdictional portion of wholesale sales
revenue associated with all generating units included in MEC's
Iowa jurisdictional electric rate base (including the wind power
facilities of the Project) shall be recorded above- the-line in
the accounts specified in Appendix 2 and included in the revenue
sharing calculations of items "g" and "h".
g. Element 3 of the Settlement Outline incorporated by reference in
the Settlement in Docket Nos. RPU-0l-3 and RPU-0l-5 provides for
the customer portion of shared revenues during the period 2001
through 2005 to be used to reduce AFUDC on generating plant
investment committed to by December 31, 2005. The wind power
Project which is the subject of this Stipulation shall be
considered a "generating plant investment committed to by
December 31, 2005" for the purpose of that Settlement, and the
customer portion of shared revenues, after offsetting the AFUDC
on the Greater Des Moines Energy Center (GDMEC) and the Council
Bluffs 4 (CB 4) generating plant investments, shall be applied
sequentially to the Iowa jurisdictional portion of rate base as
follows: first, to reduce to zero the AFUDC on the Project;
second, to be accrued in an interest bearing account and used to
accelerate depreciation on the CB 4 investment until it reaches
zero; third, to accelerate depreciation on the investment in the
Project until it reaches zero; fourth, to accelerate depreciation
on the investment in GDMEC until it reaches zero. In the event
there is money left in the accounts after the above, it shall be
returned to ratepayers in a manner approved by the Board.
Interest on the
Page 3 of 8
amount accrued in the interest bearing account and used to
accelerate depreciation on the CB 4 investment will be determined
based on the monthly average U.S. Treasury 3-year constant
maturities rate as reported by the Federal Reserve Board
Statistical Release H. 15 and shall accrue on the average monthly
balance in the account.
h. If MEC's calculated ROE on Iowa jurisdictional electric
operations in calendar year 2006, 2007, 2008, 2009 or 2010
exceeds 11.75%, then 40% of the annual revenues for that year
between 11.75% and 13% ROE, 50% of the revenues between 13% and
14% ROE, and 83.3% of the revenues in excess of 14% ROE that is
the customer portion of shared revenues shall be applied
sequentially as set out in Term 3 "g", above. MEC shall be
entitled to retain the revenues that are not the customer portion
of shared revenues. The methodology to be used to calculate the
jurisdictional ROE is set forth in Appendix 3.
i. MEC commits not to seek any general increase in Iowa electric
base rates to become effective before January 1, 2011, unless its
Iowa jurisdictional ROE on electric operations falls below 10% in
any 12-month period after January 1, 2006. If MEC's Iowa
jurisdictional ROE on electric operations, as calculated pursuant
to Appendix 3, falls below 10% in a 12-month period after January
1, 2006, all signatories to this Stipulation shall conduct 30
days of good faith negotiations to modify the Stipulation to
provide MEC with a reasonable opportunity to earn an Iowa
jurisdictional ROE between 10% and 11.75% on electric operations.
If no agreement is reached at the end of the 30 days, MEC shall
have the ability to file for a general increase in electric base
rates. The signatories to this Stipulation may oppose MEC's
request for such general increase in electric rates, but not on
the grounds that such request violates this Stipulation.
j. MEC has assumed that through December 31, 2010, the costs of
compliance with environmental requirements to reduce emissions at
existing coal-fired generating plants will be $214,090,000 for
capital improvements and $45,478,000 for incremental operations
and maintenance (O&M) expenses. If, at any time prior to January
1, 2011, the Board issues an order or orders in proceedings under
Code Section 476.6 (25) that authorize MEC to cumulatively spend
more than $325 million in capital and O&M expenses for such
environmental improvements before January 1, 2011, then all
signatories to this Stipulation shall conduct up to 30 days of
good faith negotiations to determine whether to modify the
Stipulation to provide MEC a reasonable opportunity to recover
the environmental costs in excess of $325 million. If no
agreement is reached at the end of 30 days, MEC shall have the
ability to file a request with the Board seeking recovery of the
environmental costs in excess of $325 million. The signatories to
this Stipulation may oppose MEC's request, but not on the grounds
that such request violates this Stipulation.
k. The signatories commit not to commence or support a rate
reduction proceeding regarding MEC's electric rates prior to
January 1, 2011.
Page 4 of 8
1. MEC may continue to recover the costs of energy efficiency
expenditures pursuant to Section 476.6(19), alternate energy
production purchases pursuant to Section 476.43 and alternate
energy revolving loan fund payments pursuant to Section 476.46
through the rate mechanisms approved and in place at the time of
this Stipulation.
m. Nothing in this Stipulation shall prohibit the Board from
approving changes in electric rates designed to minimize or
eliminate rate disparities based on customer location or rate
disparities not justified by the costs of providing utility
service or other important public policy considerations; provided
that any such changes in rates shall be designed in the aggregate
to be revenue neutral to MEC.
Article III -- Joint Motion
--------------------------
The signatories shall jointly file this Stipulation in the ratemaking
principles proceeding related to the Project, commenced by MEC pursuant to
Section 476.53. The signatories shall also file with the Board a joint motion
requesting that the Board accept the Stipulation without condition or
modification.
Article IV -- Condition Precedent
--------------------------------
This Stipulation shall not become effective unless and until the Board
accepts the same in its entirety without condition or modification.
Article V -- Privilege and Limitation
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This Stipulation is made pursuant to Iowa Code Section 17A.10 and 199
I.A.C. Section 7.2(11). The Stipulation shall become binding upon the
signatories upon its execution; provided, however, that if this Stipulation does
not become effective in accordance with Article IV above, it shall be null, void
and privileged. This Stipulation is intended to relate only to the specific
matters referenced herein, and no signatory waives any claim or right that it
may otherwise have with respect to any matter not expressly provided for herein.
Except as expressly provided in this
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Stipulation, no signatory shall be deemed to have approved, accepted, agreed or
consented to any ratemaking principle, any method of cost of service
determination, or any method of cost allocation underlying the provisions of
this Stipulation or be prejudiced or bound thereby in any other current or
future proceeding before any agency. This Stipulation shall not, directly or
indirectly, be referred to as precedent in any other current or future
proceeding before the Board.
Article VI Execution
--------------------
To facilitate and expedite execution, the Stipulation may be executed by
the signatories in multiple conformed copies which, when the original signature
pages are consolidated into a single document, shall constitute a fully-executed
document binding upon all the signatories to be filed with the Board.
Article VII - Modification and Amendment
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This Stipulation shall not be amended or modified except by an instrument
in writing signed by all signatories.
Article VIII-- Term
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1. Unless terminated earlier by operation of paragraph 2 or 3 of this
Article, this Stipulation shall terminate January 1, 2011, except for MEC's
responsibility for revenue sharing for the year 2010 and except for items "a"
through "e" of "Term 3" of Article II that shall remain in effect as long as the
wind power facilities continue to provide regulated electric service to Iowa
consumers.
2. This Stipulation and the obligations of the signatories shall terminate
if:
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a. the Board does not issue the required certificates for the
Project or approve the terms of this Stipulation; or
b. MEC is unable to secure access to sufficient transmission for the
Project.
3. This Stipulation and the obligations of the signatories may be
terminated by MEC if:
a. the Board does not approve the ratemaking principles settlement
regarding CB 4 in Docket No. RPU-02-10; or
b. the federal production tax credit applicable to the wind energy
facilities that are the subject of this Stipulation is not
available at a rate of 1.8 cents per kWh or greater for a period
of at least 10 years after the wind energy facilities begin
generation of electricity.
4. In the event of termination pursuant to subparagraphs 2 "a", 2 "b", or 3
"a", MEC shall be permitted to record as above-the-line expenses an amortization
over a 5-year period of all reasonable costs of canceling the wind power
Project, but shall not be entitled to recover a return on such costs. In the
event of termination pursuant to subparagraph 3 "b", MEC shall record as
below-the line expenses the costs of canceling the wind power Project that is
the subject of this Stipulation.
Article IX - Binding Nature
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This Stipulation shall be binding on the signatories. The signatories shall
take no actions directly or indirectly to eliminate or otherwise limit the scope
or effect of this Stipulation throughout its term.
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Article X - Further Assurances
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The signatories agree to cooperate in order to effectuate the full and
complete intent of the signatories as expressed in this Stipulation.
Article XI - Entire Agreement
-----------------------------
This Stipulation contains the entire agreement between the signatories.
There are no additional terms, whether consistent or inconsistent, oral or
written, that have not been incorporated into this Stipulation.
MIDAMERICAN ENERGY COMPANY OFFICE OF CONSUMER ADVOCATE
/s/ Brent E. Gale /s/ John R. Perkins
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(Signature) (Signature)
Name: Brent E. Gale Name: John R. Perkins
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Date: 3/20/03 Date: March 20, 2003
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DEERE & COMPANY IBEW LOCAL 109
/s/ Kathleen R. Gibson /s/ Michael W. Kriegermeier
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(Signature) Senior Counsel (Signature)
Name: Kathleen R. Gibson Name: Michael W. Kriegermeier
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Date: 24 March 2003 Date: 6-19-03
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IBEW STATE CONFERENC
/s/ Sandy Opstuedt
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(Signature)
Name: Sandy Opstuedt
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Date: 3/26/03
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Page 8 of 8
APPENDIX 1
S.F. ___________ H.F. ____________
1 Section 1. Section 476.23, subsection 1, Code 2003, is
2 amended to read as follows:
3 1. An electric utility shall not construct or extend
4 facilities or furnish or offer to furnish electric service to
5 the existing point of delivery of any customer already
6 receiving electric service from another electric utility
7 without having first filed with the board the express written
8 agreement of the electric utility presently serving this
9 customer, except as otherwise provided in this section. Any
10 municipal corporation, after being authorized by a vote of the
11 people, or any electric utility may file a petition with the
12 board requesting a certificate of authority to furnish
13 electric service to the existing point of delivery of any
14 customer already receiving electric service from another
15 electric utility. If, after notice by the board to the
16 electric utility currently serving the customer, objection to
17 the petition is not filed and investigation is not deemed
18 necessary, the board shall issue a certificate within thirty
19 days of the filing of the petition. When an objection is
20 filed, if the board, after notice and opportunity for hearing,
21 determines that service to the customer by the petitioner is
22 in the public interest, including consideration of any
23 unnecessary duplication of facilities, it shall grant this
24 certificate in whole or in part, upon such terms, conditions,
25 and restrictions as may be justified. Whether or not an
26 objection is filed, any certificate issued shall require that
27 the petitioner pay to the electric utility presently serving
28 the customer, the reasonable price for facilities serving the
29 customer. This price determination by the board shall include
30 due consideration of the cost of the facilities being
31 acquired [stricken ,] ; any necessary generating capacity and transmission
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32 capacity dedicated to the customer, including, but not limited
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33 to, electric power generating facilities and alternate energy
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34 production facilities not yet in service but for which the
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35 board has issued an order pursuant to section 476.53, and
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-1-
APPENDIX 1
S.F. ___________ H.F. ____________
1 electric power generating facility emissions plan budgets
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2 approved by the board pursuant to section 476.6, subsection
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3 25; depreciation [stricken,]; loss of revenue [stricken,]; and the cost of
--- - -
4 facilities necessary to reintegrate the system of the utility
5 after detaching the portion sold.
6 Sec. 2. Section 476.43, subsection 1, Code 2003, is
7 amended to read as follows:
8 1. Subject to section 476.44, the board shall require
9 electric utilities [stricken- to enter into long-term contracts] to do
10 both of the following under terms and conditions that the
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11 board finds are just and economically reasonable for the
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12 electric utilities' customers, are nondiscriminatory to
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13 alternate energy producers and small hydro producers, and will
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14 further the policy stated in section 476.41:
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15 a. [stricken- Purchase] At least one of the following:
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16 (1) Own alternate energy production facilities or small
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17 hydro facilities located in this state.
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18 (2) Enter into long-term contracts to purchase or wheel
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19 electricity from alternate energy production facilities or
20 small hydro facilities located in the utility's service area
21 [stricken- under the terms and conditions that the board finds are just
22 and economically reasonable to the electric utilities'
23 ratepayers, are nondiscriminatory to alternate energy
24 producers and small hydro producers and will further the
25 policy stated in section 476.41.]
26 b. Provide for the availability of supplemental or backup
27 power to alternate energy production facilities or small hydro
28 facilities on a nondiscriminatory basis and at just and
29 reasonable rates.
30 Sec. 3. Section 476.44, subsection 2, Code 2003, is
31 amended to read as follows:
32 2. An electric utility subject to this division, except a
33 utility [stricken- which] that elects rate regulation pursuant to section
----
34 476.1A, shall not be required to own or purchase, at any one
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35 time, more than its share of one hundred five megawatts of
-2-
APPENDIX 1
S.F. ___________ H.F. ____________
1 power from alternative energy production facilities or small
2 hydro facilities at the rates established pursuant to section
3 476.43. The board shall allocate the one hundred five
4 megawatts based upon each utility's percentage of the total
5 Iowa retail peak demand, for the year beginning January 1,
6 1990, of all utilities subject to this section. If a utility
7 undergoes reorganization as defined in section 476.76, the
8 board shall combine the allocated purchases of power for each
9 utility involved in the reorganization.
10 Notwithstanding the one hundred five megawatt maximum, the
11 board may increase the amount of power that a utility is
12 required to own or purchase at the rates established pursuant
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13 to section 476.43 if the board finds that a utility, including
14 a reorganized utility, exceeds its 1990 Iowa retail peak
15 demand by twenty percent and the additional power the utility
16 is required to purchase will encourage the development of
17 alternate energy production facilities and small hydro
18 facilities. The increase shall not exceed the utility's
19 increase in peak demand multiplied by the ratio of the
20 utility's share of the one hundred five megawatt maximum to
21 its 1990 Iowa retail peak demand.
22 Sec. 4. Section 476.45, Code 2003, is amended to read as
23 follows:
24 476.45 EXEMPTION FROM EXCESS CAPACITY.
25 Capacity [stricken- purchased from] of an alternate energy production
--
26 facility or small hydro facility, that is owned or purchased
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27 by an electric utility, shall not be included in a calculation
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28 of an electric utility's excess generating capacity for [stricken- rate-
29 making] ratemaking purposes.
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30 Sec. 5. Section 476.53, subsection 3, paragraph b, Code
31 2003, is amended to read as follows:
32 b. In determining the applicable ratemaking principles,
33 the board shall not be limited to traditional ratemaking
34 principles or traditional cost recovery mechanisms. In
--
35 particular, the board shall have the authority to consider
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-3-
APPENDIX 1
S.F. ___________ H.F. ____________
1 ratemaking proposals by a rate-regulated public utility that
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2 facilitate the construction of an electric power generating
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3 facility or an alternate energy production facility pursuant
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4 to paragraph "a" and provide for reasonable restrictions on
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5 the ability of the public utility to seek a general increase
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6 in electric rates under section 476.6 for at least three years
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7 after the generation facility begins providing service to Iowa
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8 consumers.
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9 Sec. 6. EFFECTIVE DATE. This Act, being deemed of
10 immediate importance, takes effect upon enactment.
11 EXPLANATION
12 This bill amends various provisions in Code chapter 476,
13 relating to public utilities. Specifically. the bill provides
14 for ownership of alterate energy production facilities by
15 public utilities, and makes related changes.
16 The bill in Code section 476.23 states the authority of the
17 utilities board to consider the cost of a utility's alternate
18 energy production facilities and other generating facilities,
19 as well as generating plant emissions plan budgets approved by
20 the board, when valuing an electric utility's property.
21 The bill provides in Code section 476.43 that public
22 utilities may own alternate energy production facilities or
23 small hydro facilities located in Iowa. The bill also
24 restructures the language in subsection 1. Related changes
25 are made in Code sections 476.44 and 476.45.
26 The bill in Code section 476.53 specifies the authority of
27 the utilities board to consider rate proposals that facilitate
28 construction of alternate energy production facilities or
29 other electric generating facilities when the proposal
30 provides for reasonable restrictions on the utility's ability
31 to seek rate increases for at least three years after the
32 generating facility begins providing service.
33 The bill is effective upon enactment.
34
35
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APPENDIX 2
MIDAMERICAN ENERGY COMPANY
STIPULATION AND AGREEMENT
DESCRIPTION FERC ACCOUNT
- ------------------------------- ------------
Renewable Energy Credit Revenue 456
Carbon Dioxide Credit Revenue 411.8
Wholesale Sales Revenue 447
Federal Production Tax Credits 409.1
Page 1 of 1
APPENDIX 3
PAGE 1 OF 2
MIDAMERICAN ENERGY COMPANY
ROE CALCULATION RELATING TO ELECTRIC PRICING SETTLEMENT
INTENT
- ------
The intent of the methodology is to keep the calculation as simple as possible,
making it verifiable to MidAmerican's IE-1 filing, and avoiding the voluminous
amount of detail required for a traditional rate filing, while arriving at a
calculation that is reasonable and acceptable to all parties.
The calculation will be in the form of an "imputed" return. As discussed in more
detail below, Iowa electric jurisdictional operating income (before any
provision for revenue sharing under the provisions of this settlement) is
divided by Iowa electric jurisdiction rate base (the average of period beginning
and period ending balances) to arrive at an actual overall rate of return on
rate base. Weighted average embedded costs of capital (based on thirteen month
end balances) of preferred and long-term debt are subtracted from this rate of
return, with the difference divided by the utility's common equity percentage.
MidAmerican proposes to submit this calculation by February 15 following
calendar years 2006-2010.
Attachment 1 presents the format of such calculation. Specific calculations are
described below.
The parties reserve the right to modify or change the methodology set forth
herein in the event such party or parties deem the methodology to lead to
unreasonable or unrepresentative results. In the event of a dispute, the parties
agree to attempt to negotiate a settlement and if a settlement cannot be
reached, submit the matter to the Iowa Utilities Board for a final decision and
order pursuant to the Iowa Administrative Procedure Act.
RATE BASE
- ---------
All rate base items except cash working capital are two point (beginning and end
of period balances) averages (see Attachment 4 for definitions of rate base
items). The Iowa electric jurisdictional rate base amounts are calculated by
applying the respective total MidAmerican balance to various allocation factors
(discussed in Attachment 2) for each rate base item. MidAmerican will use a cash
working capital amount calculated using the percentages as shown in Attachment 5
applied to the corresponding per books values for the year, to include in rate
base.
APPENDIX 3
PAGE 2 OF 2
The two-factor and average and excess allocators indicated on Attachment 2 will
be calculated as of the beginning of the year being reported in order that they
may be used by MidAmerican's accounting system to mechanically allocate O&M
costs throughout the year. The average and excess allocator will be a three-year
average calculation.
INCOME STATEMENT
- ----------------
The income statement reflects the Iowa electric utility operations of the
utility. Revenues from sales to retail customers are specifically identified.
Other revenues and all other operating expenses of MidAmerican are either
assigned to Iowa using specific charges by location or allocated using the
allocation method as summarized on Attachment 2. The accounting system allocates
common locations within detailed sub FERC account numbers using a variety of
factors including labor dollars, plant, revenue, average and excess, meters and
a two factor allocator of plant and labor.
Line 11 of the income statement reverses, for purposes of this calculation, any
accruals the Company has made in anticipation of revenue sharing pursuant to the
terms of the settlement. Amortization of regulatory assets in the normal course
of business will continue to be included in operating income per books.
Other than the adjustments described above specifically relating to provisions
of the settlement, no other pro forma adjustments are expected to be made.
CAPITALIZATION
- --------------
Due to the holding company reorganization that was effective December 1, 1996,
MidAmerican now has a capital structure independent of that for the
non-regulated subsidiaries (except CBEC Railway). The non-regulated
subsidiaries, in turn, are capitalized similar to other entities in their
respective industries. The capital structure and costs used to calculate the
embedded cost of capital for MidAmerican shall be based on a thirteen month
average for the period being reported consistent with the methodology used in
the SPU-98-8 Compliance Filing.
LINE DEFINITIONS
- ----------------
Attachments 3 and 4 present a summary of the FERC accounts included in the
various lines in the calculation.
APPENDIX 3
ATTACHMENT 1
IOWA UTILITIES BOARD
UTILITY NAME: MIDAMERICAN ENERGY COMPANY
PERIOD ENDED: DECEMBER 31, 2OXX
IOWA
I RATE BASE ELECTRIC
1 Utility Plant in Service $ -
2 (Less) Accum Prov Depreciation
3 (Plus) Working Capital Amount
4 (Less) Customer Advances - Constr
5 (Less) Accum Deferred Taxes
6 (Less) Unamort Pre - 1971 ITC
7 Other
a (Plus) Cooper Nuclear Investment
b (Less) Customer Deposits
c (Less) Reserves
d (Less) Accumulated Uncollectibles
--------
8 Estimated Net Utility Rate Base $ -
========
II INCOME STATEMENT
1 Operating Revenues $ -
Operating Expenses
2 Operations
3 Maintenance
4 Depreciation & Amortization
5 Taxes Other than Income Taxes
6 Income Taxes - Current
7 Prov Deferred Income Taxes - Net
8 Investment Tax Credit - Net
--------
9 Total Operating Expenses $ -
--------
10 Operating Income Before Adjustments $ -
11 (Plus) Customer Portion of Shared Revenue -
12 Net Operating Income Before Sharing $ -
========
III COST OF CAPITAL
WEIGHTED
AMOUNT RATIO COST AVERAGE COST
1 Common Equity
2 Preferred Equity 0.00%
3 Long Term Debt 0.00%
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4 Cost of Debt and Preferred 0.00%
====
5 Total $ -
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Page 1 of 2
APPENDIX 3
Attachment 1
Iowa Utilities Board
Utility Name: MidAmerican Energy Company
Period Ended: December 31, 2Oxx Iowa
Electric
IV CUSTOMER PORTION OF SHARED REVENUE OVER 11.75% ROE
1 Net Operating Income Before Sharing $ -
2 Net Operating Income @ 11.75% ROE -
--------
3 Difference -
--------
4 40% Sharing -
--------
5 Tax Gross Up Factor 41.57%
6 Tax Gross Up Dollars -
--------
7 Customer Portion of Shared Revenue Over 11.75% ROE $ -
========
V CUSTOMER PORTION OF SHARED REVENUE OVER 13% ROE
1 Net Operating Income Before Sharing $ -
2 Net Operating Income @ 13% ROE -
--------
3 Difference -
--------
4 10% Additional Sharing -
--------
5 Tax Gross Up Factor 41.57%
6 Tax Gross Up Dollars -
--------
7 Customer Portion of Shared Revenue Over 13% ROE $ -
========
VI CUSTOMER PORTION OF SHARED REVENUE OVER 14% ROE
1 Net Operating Income Before Sharing $ -
2 Net Operating Income @ 14% ROE -
--------
3 Difference -
--------
4 33.3% Additional Sharing -
--------
5 Tax Gross Up Factor 41.57%
6 Tax Gross Up Dollars -
--------
7 Customer Portion of Shared Revenue Over 14% ROE $ -
========
VII TOTAL CUSTOMER PORTION OF SHARED REVENUE
1 Sum of line 7 from IV, V and VI Above $ -
========
Page 2 of 2
APPENDIX 3
ATTACHMENT 2
PAGE 1 OF 3
ROE MONITORING REPORT
ALLOCATION SUMMARY
MidAmerican Energy Company used the following methods to allocate the Company's
accounts to Iowa:
ELECTRIC UTILITY OPERATIONS
ITEM PRIMARY METHOD OF ALLOCATION TO IOWA
I. ELECTRIC PLANT ACCOUNTS
1. Intangible Plant In Service
- Production & Transmission Average & Excess Allocator
- General Plant Direct Assignment & Meters
2. Production Plant In Service Average & Excess Allocator
3. Transmission Plant In Service Average & Excess Allocator
4. Distribution Plant In Service(Note 4) Direct Assignment, Meters &
Transformers
5. General Plant In Service
- Production & Transmission Average & Excess Allocator
- Other (Note 1) Direct Assignment & Meters
6. Completed Construction Not Classified Same Basis as Classified Plant
7. Nuclear Fuel Average & Excess Allocator
8. Cooper Capital Additions Average & Excess Allocator/Direct
II.ELECTRIC ACCUMULATED PROVISION FOR DEPRECIATION & AMORTIZATION
1. Intangible Plant In Service
- Production & Transmission Average & Excess Allocator
- General Plant Direct Assignment & Meters
2. Production Plant In Service Average & Excess Allocator
3. Transmission Plant In Service Average & Excess Allocator
4. Distribution Plant In Service(Note 4) Direct Assignment, Meters &
Transformers
5. General Plant In Service
Production & Transmission Average & Excess Allocator
Other (Note 1) Direct Assignment & Meters
6. Nuclear Fuel Average & Excess Allocator
7. Cooper Capital Additions Average & Excess Allocator/Direct
III.MATERIALS AND SUPPLIES
1. Electric Production Fuel Average & Excess Allocator
2. Materials and Supplies Gross Utility Plant
APPENDIX 3
ATTACHMENT 2
PAGE 2 OF 3
ELECTRIC UTILITY OPERATIONS (CONTINUED)
ITEM PRIMARY METHOD OF ALLOCATION TO IOWA
IV. UNAMORTIZED INVESTMENT TAX CREDIT
1. ElectriC Unamortized ITC
- Production & Transmission Average & Excess Allocator
- Other Directly Assigned
V. CUSTOMER ADVANCES FOR CONSTRUCTION
1. Electric Customer Advances Gross Utility Plant
VI. ACCUMULATED DEFERRED INCOME TAXES
1. Electric Accumulated Deferred Taxes
- Production & Transmission Average & Excess Allocator
- Other Directly Assigned
VII. OPERATING REVENUES AND EXPENSES
1. Electric Operating Revenues Directly Assigned Except Sales
for Resale-Off-System Sales and
Other Revenue- Energy Components
are allocated based on KWh sales
to retail customers while
capacity and Other are allocated
per the Average & Excess
Allocator
2. Electric Operating Expenses(Note 3)
Production & Cooper-Fuel KWh Sales Allocator
All Other Production Average & Excess Allocator
Transmission Average & Excess Allocator
Distribution Direct Charges or Gross Plant
Customer Accounts Direct Charges or Meters
Customer Service & Inform Direct Charges or Meters
Sales Direct Charges or Two Factor
Administrative & General
Employee Benefits Labor (Note 2)
Property Insurance Direct Charges or Gross Plant
Regulatory Direct Charges or Revenue
Other Direct Charges or Two Factor
3. Depreciation and Amortization Direct Charges and Same as Plant
(I & II)
4. Taxes Other Than Income
APPENDIX 3
ATTACHMENT 2
PAGE 3 OF 3
Payroll Labor
Property Direct Charges or Gross Plant
Other Direct Charges or Two Factor
5. Current Income Taxes Calculated
6. Deferred Income Taxes Direct Charges
7. Investment Tax Credit Direct Charges
NOTES:
1. Other general plant consists primarily of office buildings, furniture, and
equipment. To the extent that such assets can be directly assigned, they
are; however, the majority are allocated via meters.
2. Employee benefits follow the labor with which they are associated. To the
extent that different jurisdictions receive different benefits (e.g. South
Dakota union employees), such costs are directly charged to those
jurisdictions.
3. Most O&M accounts have the capability of being direct charged to a specific
jurisdiction; however, many such costs are allocated. Direct charging is
preferable when it is clear which jurisdiction benefits, consistent with
the Company's affiliate transactions policy. However, when it is
impractical to direct charge (e.g. supervisory costs in a border-city
office or costs for a Company-wide call center), allocations are used.
4. Distribution plant is primarily directly assigned. However, capitalized
meter balances are allocated based on meters actually in service.
APPENDIX 3
ATTACHMENT 3
PAGE 1 OF 1
MIDAMERICAN ENERGY COMPANY
ROE MONITORING REPORT
LINE ITEM DEFINITION
ELECTRIC OPERATIONS
ACCOUNT RANGE
DESCRIPTION FROM THROUGH
Operating Revenues 440 456
Gains/losses from Disposition of Allowances 411.8 411.9
Operations
Steam Power Production 500 509
Nuclear Power Production 517 525
Hydraulic Power Production 535 540
Other Power Production 546 550
Other Power Supply 555 557
Transmission 560 567
Distribution 580 589
Customer Accounts 901 905
Customer Service, Informational & Sales 907 916
Administrative & General 920 931
Maintenance
Steam Power Production 510 514
Nuclear Power Production 528 532
Hydraulic Power Production 541 545
Other Power Production 551 554
Transmission 568 573
Distribution 590 598
Administrative & General 935
Depreciation & Amortization 403 407
Taxes Other Than Income Taxes 408.1
Income Taxes - Current 409.1
Provision for Deferred Income Taxes - Net 410.1 411.1
Investment Tax Credit - Net 411.4
APPENDIX 3
ATTACHMENT 4
PAGE 1 OF 1
MIDAMERICAN ENERGY COMPANY
ROE MONITORING REPORT
LINE ITEM DEFINITION
ELECTRIC OPERATIONS
ACCOUNT RANGE
DESCRIPTION
RATE BASE
PLANT IN SERVICE
Plant in Service 101 and 106
Nuclear Fuel 120
ACCUMULATED PROVISION - DEPRECIATION
Provision Depreciation & Amortization 108 and 111
Amortization-- Nuclear Fuel 120
WORKING CAPITAL
Coal and Oil Stocks 151
Materials & Supplies 154 and 163
Prepayments 165
Cash Working Capital (See Attachment 5) - -
CUSTOMER ADVANCES - CONSTRUCTION 252
ACCUMULATED DEFERRED INCOME TAXES 190, 281 and 282
UNAMORTIZED PRE-1971 3% ITC 255
COOPER NUCLEAR INVESTMENT
Amortization Cooper Nuclear Investment 124
CUSTOMER DEPOSITS 235
RESERVES 228 and 242
CUSTOMER ADVANCES 252
ACCUMULATED UNCOLLECTIBLES 144
APPENDIX 3
ATTACHMENT 5
PAGE 1 OF 1
MIDAMERICAN ENERGY COMPANY
CALCULATION OF WORKING CAPITAL COMPONENT
DESCRIPTION SOURCE 2OXX MEC WORKING CAPITAL WORKING CAPITAL
AMOUNT PERCENTAGE REQUIREMENT
Labor
Operations and Maintenance Iowa Per Salaries & Wages Page 354 -
Total Labor - 8.22% $ -
-------- --------
Fuel Costs
Coal Iowa - 501 Less Labor -
Oil Iowa - 547001 Less Labor -
Natural Gas Iowa - 547021 Less Labor -
Nuclear Fuel Iowa - 518 Less Labor -
---------
Total Fuel Costs - 5.40% -
--------- --------
Electricity Purchased
Cooper Fuel Iowa - 555404 -
Cooper - Other Iowa - 555430 - 555460 -
Other Purchases Iowa - 555099 - 555304, 555411 - 555412 -
--------
Total Electricity Purchased - 6.26% -
-------- ---------
Other Operations & Maintenance Iowa 0 & M Less (Labor-Fuel-Purchases) -
Less:
Uncollectibles Iowa - 904 Electric -
Injuries & Damages Iowa - 925 Electric -
Cooper Amortization - Capital Iowa - 555420- 555422, 555470 -
NPPD Replacement Power None -
--------
Total Operations & Maintenance - 5.22% -
-------- ---------
Other
Property Tax - Iowa Iowa - 408141 Electric - (89.01%) -
Property Tax - Illinois Iowa - 408143 Electric - (102.18%) -
Illinois Investment Capital Tax Iowa - 408142 Electric - 2.52% -
Federal Income Tax Iowa - 409 Electric ATL - (2.30%) -
State Income Tax Iowa - 409 Electric ATL - (2.30%) -
Interest on Long Term Debt Iowa - 427 Electric - (14.17%) -
Preferred Stock Dividends Iowa - 437 Electric - (1.61%) -
Federal Payroll Taxes Iowa - 408111 & 408121 Electric - 7.86% -
State Payroll Taxes Iowa - 408131 Electric - (4.41%) -
Use/Sales Taxes - 0.00% -
Regulatory Assessments Iowa - 928311, 928312 Electric - (0.47%) -
--------
Total Other -
--------
Total Working Capital Requirement $ -
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