OGE Energy : PUD 2021-00164 - Direct Testimony of Jeremy Schwartz

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	)
AUTHORIZING APPLICANT TO MODIFY ITS	) CAUSE NO. PUD 202100164
RATES, CHARGES, AND TARIFFS FOR RETAIL	)
ELECTRIC SERVICE IN OKLAHOMA	)

Direct Testimony

of

Jeremy K. Schwartz

on behalf of

Oklahoma Gas and Electric Company

December 30, 2021

Direct Testimony of Jeremy K. Schwartz	Page 1 of 17
Cause No. PUD 202100164

TABLE OF CONTENTS
QUALIFICATIONS, EXPERIENCE AND PURPOSE............................................................	3
PRO FORMA REVENUE ADJUSTMENT SUMMARY.........................................................	4
PRO FORMA REVENUE DETAILED ADJUSTMENTS.......................................................	5
Adjustment 1 - Unbilled Revenue, Over/Under Amounts, and Provision for Tax Refund .......	5
Adjustment 2 - Special Contracts...............................................................................................	6
Adjustment 3 - Day-Ahead Pricing............................................................................................	7
Adjustment 4 - Manual Postings ................................................................................................	8
Adjustment 5 - Rider Removal, Fuel Revenues, and Rider Revenue Moving to Base Rates....	8
Adjustment 6 - REC ...................................................................................................................	9
Adjustment 7 - Customer Growth, Annualization, and Large New Customers.........................	9
Adjustment 8 - Energy Efficiency Program Savings ...............................................................	11
Adjustment 9 - Weather Normalization ...................................................................................	12
Adjustment 10 - VPP Normalization .......................................................................................	12
Adjustment 11 - Free Service and Discount Programs ............................................................	13
PRO FORMA REVENUE TOTAL ADJUSTMENTS............................................................	14
SPECIFIC TARIFF UPDATES ................................................................................................	14
Energy Efficiency Program ("EEP) ..........................................................................................	14
Load Reduction ("LR"), DAP, and FP .....................................................................................	15
Military Base Tariff Credit ("MBTC").....................................................................................	16
Back-up Service ("BUS") .........................................................................................................	16
CONCLUSION ...........................................................................................................................	17
TABLE INDEX
Table 1 - Adjustment Summary..................................................................................................	4

Direct Testimony of Jeremy K. Schwartz	Page 2 of 17
Cause No. PUD 202100164

Jeremy K. Schwartz

Direct Testimony

1	QUALIFICATIONS, EXPERIENCE AND PURPOSE

1. Q. Please state your name and business address.
2. A. My name is Jeremy K. Schwartz. My business address is 321 North Harvey, Oklahoma

4	City, Oklahoma 73102.
5

1. Q. By whom are you employed and in what capacity?
2. A. I am employed by Oklahoma Gas and Electric Company ("OG&E" or "Company") as a

8	Lead Pricing Analyst. I am responsible for assisting in the development of retail electricity
9	pricing, rate design, and tariffs.

10

1. Q. Please summarize your educational background and professional qualifications.
2. A. I earned my bachelor's degree in Economics from Oklahoma State University in Stillwater,

13	Oklahoma. Prior to assuming my current position in OG&E, I spent four and a half years
14	with the Oklahoma Corporation Commission's ("OCC") Public Utility Division ("PUD").
15	During my time with PUD, I was responsible for conducting research and performing
16	comparative analysis of utility applications, reports, financial records, and all work papers.
17	My work focused in the areas of cost of service, rate design, and the preparation of PUD's
18	Accounting Exhibit. While an employee with PUD, I attended numerous utility industry
19	trainings, most of which were related to retail rate and product pricing. I have been
20	employed with OG&E since January 2018. My current responsibilities include assisting
21	in the analysis of retail customers to develop pricing schedules for incorporation into the
22	Company's retail tariffs.
23

1. Q. Have you previously testified before the OCC?
2. A. Yes. I have testified and/or participated in over 50 causes before the OCC regarding

26	electric, gas, water, and telecommunication issues.

Direct Testimony of Jeremy K. Schwartz	Page 3 of 17
Cause No. PUD 202100164

1. Q. What is the purpose of your testimony?
2. A. The purpose of this Testimony will cover the Pro forma revenue adjustments to Schedule

3	H of the Company's Application Package. (These adjustments can be found in Section H,
4	Schedule H-2 of that document) and some specific tariff updates.
5
6	PRO FORMA REVENUE ADJUSTMENT SUMMARY

1. Q. Please list the pro forma adjustments that you are sponsoring.
2. A. I am sponsoring eleven pro forma adjustments to the current Oklahoma jurisdictional

9		revenues as reflected in Schedule H-2. These adjustments are summarized below in Table
10		1 - Adjustment Summary.
			Table 1 - Adjustment Summary
			Adjustment	Amount
	1		Unbilled, Over/Under, Provision for Tax Refund Recoveries	($172,411,401)
	2		Special Contracts	($1,616,784)
	3		Day-Ahead Pricing	($15,587,160)
	4		Manual Postings	$1,136,866
	5		Rider Revenues	($590,015,334)
	6		Renewable Energy Certificates	($5,350,868)
	7		Customer Growth & Annualization	$5,291,307
	8		Energy Efficiency Program Savings	($4,518,554)
	9		Weather Normalization	$16,070,999
	10	VPP Normalization	($2,942,161)
	11	Free Service, LIAP, & Senior Citizen Discount	($2,448,990)
			TOTAL	($771,762,082)

1. Q. Why is the Company proposing these adjustments?
2. A. The adjustments to the Company's September 2021 Test Year information are intended to

13	eliminate non-base rate revenue, to normalize and annualize test year revenue, and to also
14	reflect the level of kWh sales for OG&E's Oklahoma retail customer groups at the end of
15	the pro forma period through March 31, 2022. The Company's revenue adjustment process
16	generally involves four (4) steps.
17	First, OG&E removes any revenues and associated kWh sales that may have
18	occurred during the test year ended September 2021 that are not related to any investment
	Direct Testimony of Jeremy K. Schwartz	Page 4 of 17
	Cause No. PUD 202100164

1	or expenses included in the cost of providing service as reflected in the Cost of Service
2	Study ("COSS"). Such revenues can include Fuel Cost Adjustment ("FCA") revenue,
3	revenue from riders other than the FCA revenue from special contracts, as well as certain
4	accounting adjustments. This step is reflected in Adjustments 1 through 6 in Table 1.
5	Second, the Company adjusts test year base rate revenues to reflect customer
6	growth and annualization projections through the end of the March 2022 pro forma period.
7	This step is reflected in Adjustment 7 (Customer Growth & Annualization) and 8 (Energy
8	Efficiency Programs Savings) in Table 1.
9	Third, the Company normalizes base rate revenues as adjusted in the first and
10	second steps to reflect a normalized weather year. Adjustment 9 in Table 1 adjusts base
11	rate revenues to reflect normal weather. Additionally, OG&E also normalized the energy
12	sales bands in the Variable Peak Pricing ("VPP") class. This is reflected as Adjustment 10
13	in Table 1.
14	Finally, the Company adjusts individual customer class revenues to reflect the cost
15	for Municipal Free Service and the impact of Low-Income Assistance Program ("LIAP")
16	credits and Senior Citizens Discount credits. This is reflected in Adjustment 11.
17
18	PRO FORMA REVENUE DETAILED ADJUSTMENTS

1. Adjustment 1 - Unbilled Revenue, Over/Under Amounts, and Provision for Tax Refund
2. Q. Please describe Adjustment 1 related to Unbilled Revenue, Over/Under Recovery,

21		and Provision for Tax Refund Amounts.
22	A.	This adjustment has three (3) parts. The first part includes the removal of the accounting
23		Unbilled Revenue adjustment and associated kWh. The second step is the removal of any
24		Over/Under recovery of fuel and rider revenue collections. The final step is the removal
25		of the Provision for Tax Refund. These adjustments decrease net Oklahoma jurisdiction
26		pro forma revenue by $172,411,401.
27

28 Q. Why is the removal of the Unbilled Revenue adjustment and associated kWh sales

29		necessary?
30	A.	While all customers are billed for service in monthly increments, the dates that period starts
31		and stops (billing cycle) varies by customer group. The Unbilled Revenue and kWh book
	Direct Testimony of Jeremy K. Schwartz	Page 5 of 17
	Cause No. PUD 202100164