OGE Energy : PUD 2021-00164 - Direct Testimony of Gwin Cash

BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA

IN THE MATTER OF THE APPLICATION OF	)
OKLAHOMA GAS AND ELECTRIC COMPANY	)
FOR AN ORDER OF THE COMMISSION	) CAUSE NO. PUD 202100164
AUTHORIZING APPLICANT TO MODIFY ITS	)
RATES, CHARGES, AND TARIFFS FOR RETAIL	)
ELECTRIC SERVICE IN OKLAHOMA	)

Direct Testimony

of

Gwin Cash

on behalf of

Oklahoma Gas and Electric Company

December 30, 2021

Direct Testimony of Gwin Cash	Page 1 of 14
Cause No. PUD 202100164

Gwin Cash

Direct Testimony

1 Q. Please state your name, position, by whom you are employed, and your business

2		address.
3	A.	My name is Gwin Cash. I am the Manager of Cost of Service and Rate Administration for
4		Oklahoma Gas and Electric Company ("OG&E" or "Company"). My business address is
5		321 N. Harvey, Oklahoma City, Oklahoma, 73102.
6

1. Q. Please summarize your professional qualifications and educational background.
2. A. I have worked for OG&E in various capacities for 20 years. Most recently I joined the

9	Company's regulatory department in January 2015 as the Rate Administration Manager
10	and in July of 2017 I assumed additional responsibilities as the manager of Cost of Service.
11	My Cost of Service responsibilities include oversight of the department's responsibility for
12	operating and maintaining the Cost of Service model. My Rate Administration
13	responsibilities include maintaining OG&E's tariffs on file with the regulatory
14	commissions and ensuring consistent application of these tariffs in the manner which they
15	are intended. Additional duties include computing rider factors and monthly retail revenue
16	reporting. Prior to joining OG&E's regulatory department I worked as a Senior Business
17	Analyst in OG&E's Sales and Customer Support department and as a Workforce Analyst
18	in OG&E's Customer Service department. I received a Bachelor of Science in Applied
19	Mathematics with a Specialization in Computing from the University of California, Los
20	Angeles in 1999.
21

22 Q. Have you previously testified before the Oklahoma Corporation Commission

23		("OCC") or any other regulatory commission?
24	A.	Yes. I have testified before the OCC in the following Causes:
25		•	PUD 202100072
26		•	PUD 202100021,
27		•	PUD 201800140,
28		•	PUD 201700496,
29		•	and PUD 201500273.
	Direct Testimony of Gwin Cash	Page 2 of 14
	Cause No. PUD 202100164

1		I have also testified before the Arkansas Public Service Commission in the
2	following Dockets:
3	•	19-017-TF,
4	•	19-013-U
5	•	18-046-FR,
6	•	and 16-057-U.
7

1. Q. What is the purpose of your testimony?
2. A. The purpose of my direct testimony is to support the Company's cost-of-service study
3. ("COSS") and the resulting update to the Oklahoma retail jurisdictional and class

11	allocations.
12
13	I. COST OF SERVICE STUDY RESULTS

14 Q. Please provide a brief summary of the results of the update to the Oklahoma retail

15		jurisdictional and class revenue requirements?
16	A.	The COSS reveals that Oklahoma retail revenues are deficient by $163.5 million. The
17		impact to the class revenue requirements are as follows: Residential revenues are deficient
18		by $84.3 million; General Service revenues are deficient by $13.9 million; Power & Light
19		revenues are deficient by $27.8 million, Large Power & Light revenues are deficient by
20		$16.4 million; and all other classes are deficient by $21.2 million.
21

22 Q. Please provide a brief summary of the results of the update to the Oklahoma retail

23		jurisdictional allocators as computed in the COSS.
24	A.	The Production Demand allocator is 91.39% and the Transmission Demand and
25		Transmission Demand SPP allocators are 79.60% and 91.19%, respectively.
26

27 Q. How do these results compare with the final jurisdictional allocators from the

28		Company's last general rate case, Cause No. PUD 201800140?
29	A.	The allocators have remained relatively flat.	The current production allocator is 0.08%
30		higher than the final production allocator from Cause No. PUD 201800140 filing which
31		was 91.31%. The current Transmission Demand and Transmission Demand SPP allocators
	Direct Testimony of Gwin Cash	Page 3 of 14
	Cause No. PUD 202100164

1	are 0.08% and 0.16% higher than the final transmission allocators from the 18-140 filing
2	which were 79.52% and 91.03%. Table 1 shows a side-by-side comparison of the results
3	of the two cases.
			Table 1
			PUD	PUD
			202100164	201800140	Difference
		Production Demand	91.39%	91.31%	0.08%
		Transmission Demand	79.60%	79.52%	0.08%
		Transmission Demand SPP	91.19%	91.03%	0.16%

1. COST OF SERVICE STUDIES General Explanation of a Cost of Service Study

1. Q. What is a cost of service study?
2. A. A COSS is used to determine the revenue requirement to be recovered from a utility

6	company's jurisdictional and individual customer classes. In the COSS, historical pro
7	forma test year embedded costs are either allocated or directly assigned to the jurisdiction
8	and customer classes.
9

1. Q. What sources are used for the historical costs in a cost of service study?
2. A. Cost of service studies rely on the utility company's historic, or embedded, statements of

12	revenue, number of customers, energy sales, accounting reports, engineering records,
13	customer billing records, and load survey data. Investor-owned electric utilities in
14	Oklahoma are required by the Federal Energy Regulatory Commission ("FERC") to keep
15	their accounting records according to the "Uniform System of Accounts for Public Utilities
16	and Licensees" ("USOA"), CFR Title 18, Subchapter C, Part 101. The OCC adopted the
17	USOA requirements as well (see OAC 165:35-27-4(a)). The USOA sets the guidelines for
18	recording assets, liabilities, income, and expenses into various accounts. Embedded costs
19	are used as the basis for FERC Form 1 annual reports prescribed by FERC.

Direct Testimony of Gwin Cash	Page 4 of 14
Cause No. PUD 202100164

1. Q. Please describe how a cost of service study is structured.
2. A. The cost of service study is designed to determine a revenue requirement. The components

3	of the revenue requirement within the COSS model are summarized in Chart 1.

Chart 1

Components of a Cost of Service Study

Gross Plant	x
Investment

+

Other

Components

−

Accumulated Reserve for Depreciation

−

ADIT andOther

Deductions

Depreciation	=	Depreciation
Rate	Expense

+

O&M and A&G

+

Taxes

−

Adjustments and

Credits

=

Net	x
Rate Base

+

Rate	=	Amount
of Return	of Return

=

Total Revenue

Requirement

4 Q. What type of costs and cost components are included in the cost of service studies you

5		are sponsoring?
6	A.	Fixed costs and variable costs are two types of broad cost categories included in cost of
7		service studies. Fixed costs are costs that do not vary with output, remain constant in the
8		short run and include capital costs, return, depreciation expense, income taxes, property
9		taxes, and some operation and maintenance ("O&M") expense. Variable costs are costs
10		that vary with output which include fuel costs, purchased power and some O&M expense.
11		Additionally, there are sub-components of the fixed and variable costs. These
12		include directly assigned costs that are incurred to serve a particular customer or class of
13		service (street lighting, dedicated substation circuits, etc.) and what are called joint or
	Direct Testimony of Gwin Cash	Page 5 of 14
	Cause No. PUD 202100164