ORIGINAL - eDocket - Arizona Corporation Commission

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BEFORE THE ARIZO§éc€Q]§BORATION CO1vl1vl1oo1unAZ CORP COMMISSION

DOCKET CONTROLCOMMISSIONERS

3:28H DEC 22 p 32TOM FORESE - ChairmanBOB BURNSBOYD DUNNANDY TOBINJUSTIN OLSON

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DOCKET no. SW-01428A-17-00587

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IN THE MATTER OF THE APPLICATION OFLIBERTY UTILITIES (LITCHFIELD PARKWATER & SEWER) CORP., AN ARIZONACORPORATION, FOR A DETERMINATION OFTHE FAIR VALUE OF ITS UTILITY PLANTSAND PROPERTY AND FOR INCREASES IN ITSWASTEWATER RATES AND CHARGES FORUTILITY SERVICE BASED THEREON.

DOCKET no. W-01427A-l7-0059l l

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IN THE MATTER OF THE APPLICATION OFLIBERTY UTILITIES (LITCHFIELD PARKWATER & SEWER) CORP., AN ARIZONACORPORATION, FOR A DETERMINATION OFTHE FAIR VALUE OF ITS UTILITY PLANTSAND PROPERTY AND FOR INCREASES IN ITSWATER RATES AND CHARGES FOR UTILITYSERVICE BASED THEREON.

DOCKET no. W-01427A-17-007716

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IN THE MATTER OF THE APPLICATION OFLIBERTY UTILITIES (LITCHFIELD PARKWATER & SEWER) CORP., AN ARIZONACORPORATION, FOR AUTHORITY TO (1) ISSUEEVIDENCE OF INDEBTEDNESS IN ANAMOUNT NOT TO EXCEED $30,000,000; AND(2) ENCUMBER ITS REAL PROPERTY ANDPLANT AS SECURITY FOR SUCHINDEBTEDNESS.

DOCKET no. SW-01428A-17-0078

Arizona Corporation Commission

DOCKETED

DEC 22 2017

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IN THE MATTER OF THE APPLICATION OFLIBERTY UTILITIES (LITCHFIELD PARKWATER & SEWER) CORP., AN ARIZONACORPORATION, FOR AUTHORITY TO (1) ISSUEEVIDENCE OF INDEBTEDNESS IN ANAMOUNT NOT TO EXCEED $30,000,000; AND<2) ENCUMBER ITS REAL PROPERTY ANDPLANT AS SECURITY FOR SUCHINDEBTEDNESS. DOCKBTEDBY

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27 NOTICE OF FILINGSTAFF'S DIRECT TESTIMONY

RATE DESIGN28

1 Staff of the Arizona Corporation Commission ("Staff") hereby files the Direct Testimonies

2 regarding Rate Design and Revenue Requirement of Teresa B. Hunsaker and the Direct Testimony

3 regarding Cost of Service of Dorothy M. Hains and the in the above docket.

4 RESPECTFULLY SUBMITTED this 22nd day of December, 2017.5 .

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widget A. um Rey, Staff AttorneyNaomi E. Davis, Staff AttorneyLegal DivisionArizona Corporation Commission1200 West Washington StreetPhoenix, Arizona 85007(602) 542-3402

10 hum are acc. [email protected]

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On this 22"<* day of December, 2017, the foregoing document was filed with Docket Controlas Utilities Division - Pre-Filed Testimony, and copies of the foregoing were mailed on behalf of theUtilities Division to the following who have not consented to email sen/ice. On this date or as soonas possible thereafter, the Commission's eDocket program will automatically email a link to theforegoing to the following who have consented to email service.

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Daniel PozefskyRUCO1110 West Washington, Suite 220Phoenix Arizona 85007

Andy KvesicARIZONA CORPORATION COMMISSIONDirector - Legal Division1200 West WashingtonPhoenix Arizona 85007Le alDiv acc. av20

[email protected] to Service by Email

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Jay L. ShapiroSHAPIRO LAW FIRM, P.C.18 la E. Morten Avenue, Suite 280Phoenix Arizona [email protected]@[email protected] to Service by Email

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25 Bn L. Christine

26 Executive Legal Assistant

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BEFORE THE ARIZONA CORPORATION COMMISSION

TOM FORESEChairman

BOB BURNSCommissioner

ANDY TOBINCommissioner

BOYD DUNNCommissioner

]USTIN OLSONCommissioner

DOCKET NO. SW-01428A-17-0058

DOCKET NO. W-01427A-17-0059

IN THE MATTER OF THE APPLICATION OF )LIBERTY UTILITIES (LITCHFIELD PARK )WATER & SEWER) CORP., AN ARIZONA )CORPORATION, FOR A DETERMINATION OF)THE FAIR VALUE OF ITS UTILITY PLANTS )AND PROPERTY AND FOR INCREASES IN ITS)WASTEWATER RATES AND CHARGES FOR )UTILITY SERVICE BASED THEREON. )

)IN THE MATTER OF THE APPLICATION OF )LIBERTY UTILITIES (LITCHFIELD PARK )WATER & SEWER) CORP., AN ARIZONA )CORPORATION, FOR A DETERMINATION OF)THE FAIR VALUE OF ITS UTILITY PLANTS )AND PROPERTY AND FOR INCREASES IN ITS)WATER RATES AND CHARGES FOR )UTILITY SERVICE BASED THEREON. )

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DOCKET NO. W-01427A-17-0077IN THE MATTER OF THE APPLICATION OFLIBERTY UTILITIES (LITCHFIELD PARKWATER & SEWER) CORP., AN ARIZONACORPORATION, FOR AUTHORITY TO(1) ISSUE EVIDENCE OF INDEBTEDNESS INAN AMOUNT NOT TO EXCEED $30,000,000;AND (2) ENCUMBER ITS REAL PROPERTYAND PLANT AS SECURITY FOR SUCHINDEBTEDNESS.

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DOCKET no. SW-01428A-17-0078IN THE MATTER OF THE APPLICATION OFLIBERTY UTILITIES (LITCHFIELD PARKWATER & SEWER) CORP., AN ARIZONACORPORATION, FOR AUTHORITY TO(1) ISSUE EVIDENCE OF INDEBTEDNESS INAN AMOUNT NOT TO EXCEED $30,000,000;AND (2) ENCUMBER ITS REAL PROPERTYAND PLANT AS SECURITY FOR SUCHINDEBTEDNESS.

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RATE DESIGN

TESTIMONY OF

TERESA B. HUNSAKER

PUBLIC UTILITIES ANALYST

UTILITIES DIVISION

ARIZONA CORPORATION COMMISSION

DECEMBER 21, 2017

TABLE OF CONTENTS

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Lita/jfefd Pane 2Ljtvbfefd Par/é 2

R A T E D E S I G N 3

r e r 4

5eW8r . 7

Dir/jie/d Park 8Li/c/jfs/d Par/é 9Ojfite HookUp Fees ("OHF'Q 77

PRE-TREATMENT STANDARDS 12

REFUNDABLE INFLUENT METER AND METERING SYSTEM INSTALLATION 13

WATER SCHEDULES

Ljfv/yfie/d Park Water 29' Sewer - Water Dr)/z.J20n

F B H W 1Rate Design

T B H - W 2Typical B il l Analysis

WASTEWATER SCHEDULES

Lin/gfe/d Park Wafer 6' Sewer - .fewer Di:/ixion

TBH-WWIRate Design

T B H - W W 2Typical B il l Analysis

EXECUTIVE SUMMARYLIBERTY UTILITIES LITCHFIELD PARK WATER & SEWER CORP.,

DOCKET nos. SW-01428A-17-0058 ET. AL.

INTRODUCTION

Ljtc/3/ie/d Par/é Wafer 28" .fewer - Wafer Division fame/d Pane Wafer)

Liberty Util i t ies (Litchfield Park Water 8 : Sewer) Corp. ("Litchfield Park Water") is a for-profit, Class A public service corporation serving approximately 18,500 water connections in portionsof Maricopa County, Arizona. Litchfield Park Water is organized under the Liberty Util i t ies (Sub)Corp. ("LU 8020"), which is a wholly owned subsidiary of Liberty Utilities Co. Liberty Utilities Co.is a subsidiary of Liberty Utilities (Canada) Corp. ("Liberty Utilities Canada"), which is a subsidiary ofAlgonquin Power & Util i t ies Corporation ("APUC"). The Company's current au thorized rates andcharges were determined in Decision No . 74437 dated Apri l 18 , 2014 , u sing a test year endingDecember 31, 2012. The current rates went into effect on or after May 1, 2014.

Ijlrhjie/a' Park Wafer 49' Sewer - .fewer Dif/Lrion (Lita/y'ie/d Park Sewer)

Liberty Util i t ies (Litchfield Park Water & Sewer) Corp. ("Litchfield Park Sewer") is a for-profi t , Class A public service corporation serving approximately 17 ,600 wastewater customers inportions of Maricopa County, Arizona. Litchfield Park Sewer is organized under the Liberty Utilities(Sub) Corp. ("LU 8020"), which is a wholly owned subsidiary of Liberty Utilities Co. Liberty UtilitiesCo. is a subsidiary of Liberty Utilities (Canada) Corp. ("Liberty Utilities Canada"), which is a subsidiaryof Algonquin Power & Utilities Corporation ("APUC"). The Company's current authorized rates andcharges were determined in Decision No . 74437 dated Apri l 18 , 2014 , u sing a test year endingDecember 31, 2012. The current rates went into effect on or after May 1, 2014.

RATE AP P LICATIONS

IN/a/yie/d Park Water

Litchfield Park Water's proposed rates would increase the typical residential bill with medianusage of 4,000 gallons for a 5/8 x 3/4 inch meter from $17.46 to $19.66, for an increase of $2.20 or12.61 percent.

Staff's recommended rates would decrease the typical residential bil l wide median usage of4,000 gallons for a 5/8 x 3/4 inch meter from $17.46 to $16.00, for a decrease of8$1.46 or 8.36 percent.

[ifs/#ie/d Park .fewer

Litchfield Park Sewer's proposed rates would increase the typical residential bill flat rate from$40.35 to $53.00, for an increase of $12.65 or 31.35 percent.

Staffs recommended rates would increase the typical residential bill flat rate from $40.35 to$50.00, for an increase of $9.65 or 23.92 percent

RATE DESIGN

Staff recommends approval of its recommended rate design and service charges for LitchfieldPark Water & Sewer Divisions as shown on the attached schedules.

Rate Design Direct Testimony of Teresa B. Hunsaker

Docket Nos. SW-01428A-17-0058 et.al.

Page 1

INTRODUCTION

Q. Please state your name, occupation, and business address.

A. My name is Teresa B. Hunsaker. I am a Public Utilities Analyst IV employed by die Arizona

Corporation Commission ("ACC" or "Commission") in die Utilities Division ("StafF'). My

business address is 1200 West Washington Street, Phoenix, Arizona 85007.

Q. Are you the same Teresa B. Hunsaker who previously filed Direct Testimony pertaining

to rate base, operating revenues and expenses and the revenue requirement on behalf

of Staff in these consolidated dockets Liberty Utilities (Litchfield Park Water & Sewer)

Corp. ("Litchfield Park Water") and ("Litchfield Park Sewer")?

A. Yes, I am.

Q. What is the scope of your testimony in this case?

A. I am presenting Staff's analysis and recommendations regarding Litchfield Park Water's and

Litchfield Park Sewer's applications for a pennanent increase in its rates and charges for water

and wastewater utility service within Maricopa County. Litchfield Park Water and Litchfield

Park Sewer ("Litchfield Park Water & Sewer") filed motions to consolidate both Rate Dockets

and both Finance Dockets.

Q. What is the basis of your testimony in this filing?

A. Based on the adjustments and revenue requirement recommended by Staff, I am presenting

Staflf's recommended rate design for both Litchfield Park Water and Litchfield Park Sewer.

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Docket Nos. SW-01428A--7-0058 et.al.

Page 2

1 BACKGROUNDS

2 Ulf/# ie/d Park Waler

3 Q. Please review the background of the application for Litchfield Park Water.

4 A.

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Litchfield Park Water is a forprofit, Class A public service corporation serving approximately

18,500 water connections in portions of Maricopa County, Arizona. Litchfield Park Water is

organized under the Liberty Utilities (Sub) Corp ("LU 8020"), which is a wholly owned

subsidiary of Liberty Utilities Co. Liberty Utilities Co. is a subsidiary of Liberty Utilities

(Canada) Corp. ("Liberty Utilities Canada"), which is a subsidiary of Algonquin Power &

Utilities Corporation ("APUC"). The Company's current authorized rates and charges were

determined in Decision No. 74437 dated April 18, 2014, using a test year ending December 31 ,

2012. The current rates went into effect on or after May 1, 2014.

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13 Lila/3/ie/d Park .fewer

14 Q. Please review the background of the application for Litchfield Park Sewer.

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Litchfield Park Sewer is a for-profit, Class A public service corporation sewing approximately

17,600 wastewater customers in pardons of Maricopa County, Arizona. Litchfield Park Sewer

is organized under the Liberty Utilities (Sub) Corp. ("LU 8020"), which is a wholly owned

18 subsidiary of Liberty Utilities. Liberty Utilities Co. is a subsidiary of Liberty Utilities (Canada)

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Corp. ("Liberty Utilities Canada"), which is a subsidiary of Algonquin Power 8: Utilities

Corporation ("APUC"). the Company's current authorized rates and charges were determined

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in Decision No. 74437 dated April 18, 2014, using a test year ending December 31, 2012. The

current rates went into effect on or after May 1, 2014.

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Rate Design Direct Testimony of Teresa B. HunsakerDocket Nos. SW-01428A17-0058 et.al.Page 3

l RATE DESIGN

2 Q.

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Ha s Staff prepared schedules summarizing the current, Company proposed, and Staff

recommended rates and service charges for Litchfield Park Water and Litchfield Park

4 Sewer?

5 A. Yes. Schedule TBH-W1 for Litchfield Park Water and Schedule TBH-WW1 for Litchfield

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Park Sewer provides a summary of the Company's current, Company's proposed, and Staffs

recommended rates.

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9 Q. Please briefly describe Litchfield Park Water & Sewer's proposed changes to rates.

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l l classes. Litchfield Park Water proposes

Litchfield Park Water proposes different new usage charges and commodity rates by customer

to continue the current break-over points and

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commodity rate structure for all customer classes. Litchfield Park Sewer continues to propose

a monthly customer charge (flat rate). Schedules TBH-W1 for Litchfield Park Water and TBH-

WW1 for Litchfield Park Sewer provide a summary of the Company's current, Company's

proposed, and Staff's recommended rates.

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17 Q. Please briefly describe the Staff recommended rates for Litchfield Park Water & Sewer.

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Staffs recommended rates are designed to produce an annual level of revenue that covers the

overall cost of providing service as established in the Staff revenue requirement testimony filed

in this Docket. For the Water Division these rates employ an inverted block structure, where

the price per unit for the commodity component of the bill increases as usage levels increases.

This is designed specifically to send a pricing signal that encourages the efficient use of scarce

water resources. Staff concurs with, and has incorporated, the Company's Der and break-over

points in stafFs recommended rate design.

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Rate Design Direct Testimony of Teresa B. HunsakerDocket Nos. SW-01428A-_7-0058 et.al.Page 4

l Q.

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Besides setting rates to generate the revenue requirement as determined by Staffs

Direct Testimony, did Staff consider any other factors in setting its proposed rate

3 structure?

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Yes. Staflf"s recommended rates include Staff°'s "normalization" of billing determinants. This

normalization is intended to adjust rates to reflect the reducion in sales due to the declining

average usage-per-customer in the residential classes across Litchfield Park Water and Litchfield

Park Sewer. In order for Staff to accomplish this, Staff adjusted the target revenue for the

8 residential class in each division.

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10 WATER RATE DESIGN

11 Lit:/Q/ie/d Park Waler

12 Q. Please summarize the monthly minimum portion of Litchfield Park Water's current rate

13 design.

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The current monthly minimum charges by meter size as follows: 5/8 x 3/4-inch 31326; 3/4-

inch (residential only) 31326; 3/4-inch $13.26; 1-inch (residential only) $29.84; 1-inch 83515;

1 1/2-inch $66.30; 2-inch $106.08; 3-inch $212.16;4-inch $331 .50; 6-inch $663.00; 8-inch (bulk

water resale only) 8575.008 8-inch $1,060.80; 10-inch 81,524.90 and 12-inch $2,850.90 No

gallons are included in the monthly minimum charge.

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Q. Please summarize the commodity portion of Litchfield Park Water's current rate20

21 design.

22 A.

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25 The 1-inch and larger residential,

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The commodity charges for 5/8 x 3/4-inch and 3/4-inch residential customers are $0.75 per

thousand gallons for zero to 3,000 gallons, $1.95 per thousand gallons for 3,001 to 10,000

gallons; $2.95 per thousand gallons for 10,001 to 20,000 gallons, and $3.456 per thousand

gallons for any consumption over 20,000 gallons.

commercial, construction, and industrial classes (up to 8-inch meters) commodity break-over



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points vary by meter size with $1 .95 per thousand gallons first-tier commodity rate and a $3.456

per thousand gallons commodity rate for any consumption over the first-tier. The current

commodity rate for larger industrial meters of 4-inch, 6-inch, 10-inch and 12inch (bulk water

resale only) is not presently included in the Company's approved tariffs. The current

commodity rate for standpipe or bulk customers is a flat $3.456 per thousand gallons.

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7 Q. Please summarize the monthly minimum portion of Litchfield Park Water's proposed

8 rate design.

9 A Litchfield Park Water is proposing monthly minimum charges by meter size as follows: 5/8 x

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3/4-inch $14.93; 3/4-inch (residential only) 31493; 3/4-inch $14.93; 1-inch (residential only)

33359; 1-inch 33733; 1 1/2-inch $74.65; 2-inch $119.44; 3-inch $238.88; 4-inch (bulk water

resale only) $201.56; 4-inch $373.25; 6-inch (bulk water resale only) $403.11; 6-inch $746.50;

8-Mch (bulk water resale only) 3647454 8-Mch $1,194.4(); 10-inch (bulk water resale only)

$927.15; 10-inch $1,716.95; 12-inch (bulk water resale only) $1,733.37 and 12-inch 83,209.95.

No gallons are included in the monthly minimum charge.

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17 Q Please summarize the commodity portion of Litchfield Park Water's proposed rate

18 design.

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The proposed commodity charges for 5/8 x 3/4-inch and 3/4-inch residential customers are

$0.845 per thousand gallons for zero to 3,000 gallons, $2.197 per thousand gallons for 3,001 to

10,000 gallons; $3.197 per thousand gallons for 10,001 to 20,000 gallons, and $33938 per

thousand gallons for any consumption over 20,000 gallons. The 1-inch and larger residential,

commercial, construction, bulk water resale and industrial classes (up to 8-inch meters)

commodity break-over points vary by meter size with $2.197 per thousand gallons Erst-tier

commodity rate and a $38938 per thousand gallons commodity rate for any consumption over



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the first-tier. The proposed commodity rate for standpipe or bulk customers is a flat $38938

per diousand gallons.

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4 Q. Please summarize the monthly minimum portion of Staffs recommended rate design

5 for Litchfield Park Water.

6 A. Staffs

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Staff is recommending di fferent mondaly minimum charges by meter size.

recommended rates and charges are presented on Schedule TBH-W1. Staffs recommended

monthly minimum charges by residential and commercial customers are as follows: 5/8 x 3/4-

inch 31200; 3/4-inch (residential and commercial) 31200; 1-inch (residential only) $27.00; 1-

inch $30.00; 1 1 /2-inch $60.00; 2-inch 8`>96.0(); 3-inch $192.0(); 4-inch (bulk water resale only)

$162.00; 4-inch $300.00; 6-inch (bulk water resale only) 3324.004 6-inch $600.00; 8-inch (bulk

water resale only) $520.39; 8-inch 3960.00; 10-inch (bulk water resale only) 8745.20; 10-inch

31,380.00; 12-inch (bulk water resale only) $1,393.20 and 12-inch $2,580.00. No gallons are

included in die monthly minimum charge.

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16 Q. Please summarize the commodity portion of Staffs recommended rate design for

17 Litchfield Park Water.

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Staff recommends the commodity charges for 5/8 x 3/4-inch and 3/4-inch residential

customers are $0.70 per diousand gallons for zero to 3,000 gallons, $1.90 per diousand gallons

for 3,001 to 10,000 gallons; $2.90 per diousand gallons for 10,001 to 20,000 gallons, and $3.376

per thousand gallons for any consumption over 20,000 gallons. The 1-inch and larger

residential, commercial, construction, bulk water resale and industrial classes (up to 8-inch

meters) commodity break-over points vary by meter size with $1.90 per thousand gallons first-

tier commodity rate and a $3.376 per thousand gallons commodity rate for any consumption

over the Erst-tier. Staffs recommended commodity rate for standpipe or bulk customers is a

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Rate Design Direct Testimony of Teresa B. HunsakerDocket Nos. SW-01428A-17-0058 et.al.Page 7

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What is the rate impact on a typical 5 /8 x 3 /4 - i nc h meter residential customer in

Litchfield Park Water?

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Litchfield Park Water's proposed rates would increase the typical 5/8 x 3/4-inch meter

residential customer's monthly bill with a median usage of 4,000 gallons by $2.20 or 12.61

percent, from $17.46 to $19.66. Staffs recommended rates would decrease the typical 5/8 x

3/4-inch meter residential customer's monthly bill with a median usage of 4,000 gallons by

$1.46 or 8.36 percent, from 317.46 to $16.00. A typical bill analysis is provided on Schedule

8 TBH-W 2.

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10 Q. What is Litchfield Park Water's rate structure under current, Company's proposed and

l l Staffs recommended rates for Litchfield Park Water?

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Under current rates approximately 40.23 percent of revenue is coming from the monthly

minimum and 59.77 percent from the commodity charges. Under Litchfield Park Water's

proposed rates, approximately 40.37 percent of revenue is coming from the monthly minimum

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approximately 38.54 percent is coming from the monthly minimum and 61.46 percent is from

the commodity charges.

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19 WASTEWATER RATE DESIGN

20 Iii:/#ie/dPark Sewer

21 Q. Please describe Litchfield Park Sewer's current rate design.

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The Company's current rate design includes a flat rate based on customer class for most

customer classes except certain commercial customers, as indicated on Schedule TBH-WWI,

also are subject to a single-tier commodity water usage rate.

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Rate Design Direct Testimony of Teresa B. HunsakerDocket Nos. SW-01428A-_7-0058 et.al.Page 8

1 Q . Please summarize Litchfield Park Sewer's proposed rate design.

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Te Company-proposed rate design continues to include a flat rate based on customer class

for most customer classes and includes a single-der commodity water usage rate for certain

commercial customers as indicated on Schedule TBH-WWI.

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6 Q. Please summarize Staffs recommended rate design for Litchfield Park Sewer.

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The Staff recommended rate design also includes a Hat rate based on customer class for most

customer classes and includes a single-der commodity water usage rate for certain commercial

customers as indicated on Schedule TBH-WWI.

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l Q. What is the effect of Litchfield Park Sewer's proposed rates on the typical customer?

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Litchfield Park Sewer's proposed rates would increase mc monthly bill for a typical residential

customer by 312.65 or 31.35 percent, from $40.35 to 853.()(). See Schedule TBH-WW2.

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15 Q. What is the effect of Staffs proposed rates on the typical customer?

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Staffs recommended rates would increase the monthly bill for a typical residential customer by

$9.65 or 23.92 percent, from $40.35 to $50.00. See Schedule TBH-WW2. A typical bill analysis

is provided on Schedule TBH-2.

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20 OTHER CHARGES

21 Ulvme/d Park Waler

22 Q. Did Litchfield Park Water propose changes to service line and meter installation

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charges?

Yes. Litchfield Park Water proposes to change the current service line and meter installation

charges to an at cost approach.

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Page 9

l Q. What does Staff recommend for service line and meter installation charges?

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Staff recommends service line and meter installations be charges at cost as discussed M Table

5 of the docketed Staff Engineering Report and as presented in Schedule TBH-W1 .

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5 Q . What does Staff recommend for other service charges?

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Staff's recommended other service charges are presented in Schedule TBH-W1 and reflect

StafFs experience of what are reasonable and customary charges. Staff does not believe that

"at cost" pricing flexibility is necessary or appropriate for the smaller more common meter

sizes as stated in Staffs Engineering report.

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11 Q. What does Staff recommend for proposed Curtailment tariff?

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Staff reviewed the proposed tariff and agreed with the Company's proposed tariff with minor

modifications as stated and provided in Staffs Engineering report.

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15 Q. Did Litchfield Park Water propose an increase in the reconnection charge?

A.16 Yes, Litchfield Park Water proposes an increase in the establishment charge of $20.00 to

$50.00.17

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19 Q . Does Staff agree with the proposed reconnection charge?

20 A . Yes. Staff agrees with the proposed reconnection charge of $50.00.

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22 Ljlr/yie/dPark fewer

23 Q. What does Staff recommend for other service charges?

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Staffs recommended other service charges are presented in Schedule TBH-WWI and reflect

Staffs experience of what are reasonable and customary charges.

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l Q. Did Litchfield Park Sewer propose an increase in the reconnection charge?

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Yes, Litchfield Park Sewer proposes an increase in the establishment charge from $20.00 to the

actual cost of physical disconnection and establishment fee (if same customer) and there shall

be no charge for disconnection if no physical work is performed.

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6 Q. Does Staff agree with the proposed reconnection charge?

A.7 Yes. Staff agrees with the proposed reconnection charge.

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9 Q. Did Litchfield Park Sewer propose to add a refundable influent meter installation

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service charge?

Yes, Litchfield Park Sewer proposes ro add a refundable influent meter installation charge at

12 cost. The Company is proposing that this service charge will be refundable over 10 years.

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14 What does Staff recommend for the refundable influent meter installation serviceQ.

15 charge for commercial and industrial users?

16 A. Staff recommends denial of Me refundable influent meter installation charge for the

17 commercial and industrial users. Staff Engineer, Ms. Dorothy Hains ("Ms. Hains") supports

18 this recommendation in her testimony.

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20 Q. Did LitchGeld Park Sewer propose a new disconnection tariff?

21 A .

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Yes, Litchfield Park Sewer proposes a new tariff dirt would cover the actual cost of physical

disconnection and establishment fee (if same customer) and there shall be no charge for

disconnection if no physical work is performed.

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1 Q . Does Staff agree with the proposed reconnection charge?

2 A. Yes. Staff agrees with the proposed disconnection charge, wide modifications to the associated

3 language.

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5 Q. Did Litchfield Park Sewer propose any other changes to the tariff language for other

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service charges?

Yes, Litchfield Park Sewer proposes changes in die tariff language for NSF fee, afterhours

service calls, deposit requirements, service lateral connection charges, and main extensions.

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10 Q. Does Staff agree with the proposed changes to the tariff language for other service

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charges?

No. Staff agrees with the proposed changes to the NSF fee, service lateral connection charges,

and main extensions. Staff has presented alternative tariff language for Commission

consideration for the after-hours service calls, and deposit requirements.

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16 Oj§ile HookUp Fee; ("OHF'Q Tan

17 Q. Are the Companies proposing a revised water Offsite hook-up fees tariff?

18 A. Yes.

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20 Q. Did Litchfield Park Water propose changes to its Water Offsite hook-up fees tariff?

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Yes, Litchfield Park Water proposed several minor changes to its Offsite hook-up fees provided

in its proposed modifications ro the Company's proposed tariff of rates and charges filed on

November 17, 2017 in this docket.

24


l Q. Does Staff agree with the proposed changes to the Water Offsite hook-up fees tariff?

2 A.

3

4

5

6

Yes. Staff agrees with most of the Company's proposed modifications, but objects to proposed

changes to the multi-trier table. Revisions to the proposed changes to the water Offsite hook-

up fees tariff are addressed in Staffs Engineering report. Staff recommends the Commission

approve the revised OHF tariff with minor modifications included in attachment Figure 8 to

the Staff Engineering report.

7

8 Q. Did Litchfield Park Sewer propose changes to its Wastewater Offsite hook-up fees

9 tariff?

A.10

l l

12

Yes, Litchfield Park Sewer proposed several minor changes to its wastewater Offsite hook-up

fees provided in its proposed modifications to the Company's proposed tariff of rates and

charges filed on November 17, 2017 in this docket.

13

14 Q. Does Staff agree with the proposed changes to the Wastewater Offsite hook-up fees

15 tariff?

16 A.

17

18

19

Yes. Staff agrees with most of the Company's proposed minor modifications. Revisions to

the proposed changes to the wastewater Offsite hook-up fees tariff are addressed in Staffs

Engineering report. Staff recommends the Commission approve the revised OHF tariff with

minor modifications included in attachment Figure 7 to the Staff Engineering report.

20

21 PRE-TREATMENT STANDARDS

22 Q. Did the Company propose Pretreatment Standards for the SewerDivision?

A.23

24

Yes. Litchfield Park Sewer proposed pretreatment standards that would apply to its

commercial and industrial customers. These proposed pretreatment standards provide that,

25 under specific conditions, the Company may require the purchase and installation of any

26 required pretreannent system or device.II

Rate Design Direct Testimony of Teresa B. HunsakerDocket Nos. SW01428A-17-0058 et.al.Page 13

l Q. What is Staff recommending?

2 A.

3

4

Staff Engineer Ms. Dorothy Hains ("Ms. Hains"), addresses the pretreatment standards in the

Staff Engineering report. Staff recommends that the purchase and installation of any required

pretreatment system or device shall be at the sole expense of the commercial and industrial

5 users. Staff has concerns with the Company's proposal because only commercial and industrial

6

7

8

9

customers will be required to install pretreatment system or device; however, because of the

refunding provision, all customers, including residential, commercial, and industrial customers,

would ultimately pay for the commercial and industrial customer's sewer meter installation

expenses. Again, Ms. HaMs addresses the details behind Staffs concerns.

10

11 REFUNDABLE INFLUENT METER AND METERING SYSTEM INSTALLATION

12 Q.

13

Did the Company propose a Refundable Influent Meter and Metering System

Installation Charge for commercial and industrial users in the Sewer Division?

14 A. Yes. Litchfield Park Sewer proposes a "Refundable Influent Meter and Metering System

15

16

Installation" charge for commercial and industrial users under its existing wastewater tariff.

This charge would be at cost and refundable over 10 years.

17

18 Q. What is Staff recommending?

A.19

20

Staff recommends that the cost of the influent meter and metering system installation shall be

at thesole expense of the commercial and industrial user. Ms. Hains addresses the "Refundable

21

22

23

24

25

Influent Meter and Metering System Installation" charge in the Staff Engineering report. Staff

has concerns with the Company's proposal because only commercial and industrial customers

will be required to install sewer meters; however, because of the refunding provision, all

customers, including residential, commercial, and industrial customers, would ultimately pay

for the commercial and industrial customer's sewer meter installation expenses. Again, Ms.

26 Hains addresses die details behind Staffs concerns.


l Q. Does this conclude your rate design Direct Testimony?

2 A. Yes, it does.

l

l

Schedule TBHW1Page l of 3

Urchiield Park Service Company . Water Division den Liberty Utiliti-Docket No. WUN27A\74)0S9Tell Year December JI N16

Conipanv

P ro ed RnleaMunthlv Lil e Ch

Sly olj. GIJ 629.8433 ii66 w

10¢»0s21116

NT.UI 50

NT668 of575o0

1.06080

5/8 x )/4 Mlle3/4 Meter (Kendemizl Only;

3/4 MunI Male: (Rrudeuud Only)

I Mere:

l Mere:

1 Mere:

J Meter

4 Mere: fBnlk Warn Resale Only)

4 M e n

6 Mere: fBnlk Waxes Resale Only»6 Meter

8 Meter :Bulk Wuex Resale Only

8 Ma le :

10 Meter (Bulk Water Resale Only

10 .\k l

l " " Mere:(Bndk \\a\e1 Resale OnlvW

12 Alum

SlainRecommended Rules

All Mannsl2.oo

12.00

12.00

11(1)

5000

6000

900019100

162.w

300.m

324.00

600.00

520.39

960.00745.20

I J80(.0

1393.202.58000

S14 9)

14.93

I 4.9)

33.59

3.3.\74.65

119.44

23a88

201.56

J772S

4011 l

46.5f*

64745

ll94.40

92715

1716.93

l733.3

3109.95

NT

1.524 'Jo

NT

2850.90

By Mere: SizePulte Foe Segre (By Melee Size By Menu SmBy Moth Sue

Commodity Rl!-

O I0

507000

I .9000

19000

0. sao

1.9500

2.980X0

34 so 3.3760

0.8150

"19"0

5.l9"0

J 89\S

58 x 3. 4 and .\S Male: Readenuzl

Gallons lndxkd An Mmumnm

Excess of hMmm . per L000 Gallons

From 0 lo 3.000 Gallons

From 3.001 to 10000 Glim

10001 ro 20.000 Gdlom

Oven 20.000 Gallnut

1 Resndenual0 f

l 9(1

J8))B

19500

3.4860

5 8 x JJ4 Md )4 Ma le : All Classes exe

Gallon Included al Mnumlunx

Excess of Mmnmmn per 1.000Gallons

From 0 lo 9.000 Gallons()Vu 9000 Gdlom

i v

L90003 re

l l0 0

0.000

L9000

7.90003 VW

084802.l9"(»3.I 9 0

3.8938

0.500

19800

2.9500

14360

1 Resdennal Mid .\{nuFnmdv

Gallons Included al Minimum

Excess of Mormon . Pu L000 Gallons

Fxonx 0 lo 5.000 Gallon

From 5.001 to 19000 Gallons

From 19001 Ra 30000 Gallons

(ks 30000 Gallons

(I 0 0

L90001.9500

34560 3.3760

2. l903.8988

I All Classes exe ! ResimlenualGallon lududed Au Muumuu

Bin: of Mnuixmlm . per 1000 GallonFrom 0 to 20000 GeomOver 20000 Galois

0 (

l 9500

84560

2.l9l038938

I

I gg00

3.3760

| All ChessGallons Intended An Mumnnnl

Excess ofl\luum\un per l0(XI Gallon

From 0 lo 40000 Gallons

Oven 40000 Gallons

I0 (I

L9000l 95m

\ 45602. l9038038 1 .am

" All Classes

Gallons lnrlnded in Murmur

Excess olM.umu\un Pu L000 Glllmxs

From 0 lo 60.000 Gallous

Ova 60111) Gallnut

Schedule TBHW]Page 2 of 3

Li!ch6eld Park Service Company Water Division den Liberty UtilitiesDocket No. w01427AI7.0059Teal Yu: December 31 2016

RATE DESIGN CONT

Sun!!Recommended Rain

CompanyP ed Rn-Momhlvlll eCho r

ni v 0

l 45008 4460

2.19f>3 we

3 Al l Classes

Gallons Included um Minimum

Excess of Muumuu per 1000 Gtl . lOns

From 0 to 120.000 Gal lons

Oven 120.000 Gallons19000

33760

I n( 0

4 Bulk Resale Only

Gal lons Included up Muumuu

Excess of Mni mum per 1000 Gal l ons

A l l Gl oom NT I 8580 l 6065

U 0 0

i 1.9500

3.4560L we3.8938

4 Al l Classes

Gal lons Included al Muumlun

Exrexs of Mmimum . per 1000 Cal lous

From 0 to 180.000 Gal lons

Own 180000 Gal lons1.9000J we

i

U I) 06 B 14 Rode OxdvGeom ImI\MM al Www

m of Ma un pen L000 Qhou 9All Gallons \ \ 1.6068I 8580

|.» 0 (I

2.19038955

6 Al l Classes

Gallons Included um Muumuus

&l ess o l .M uu l \m m per 1 .000 Ga l l on

From 0 lo 360.000 Gal lons

Oven 360.1100 GIUOBS

19500

3.4500I .9000J.)l60

00 (I

6 Bulk Resale Oni

Grl l ons Inrl nrl ed n Muunmm

Excess o l M m l m \un per 1 .000 Gl l l om

Al l Gal lons l 8580l 16S(l0 1.e0as

l (I (1

l 9300

3 8560

2 . l 9 l 0

3.89.38

8 . Al l Cl asses

Gallons Included m .\l .uxlnmln

Excess oIM.u1jnuun . pa 1000 Gal lons

From 0 lo 650.000 Gal lous

Over 630.000 Gal lons1.90003.3760

l l (I (

IO . Bulk Resale OnlyGallon: lnclndxl Lu M.lnimnln

Excess ofl\hnimum . Pu 1.000 GallonAll Gallons nr 1.8380 1.6068

l l 0 0

19500

34560

IO . A l l Cl oses

Gal lons Included m Mumnunl

Excess of Muumnm pa: L000 Gal l ons

From 0 to 940000 Gal lons

Owl 940.000 Gal lons1.9000

3.3760

2. \903.8986

i O 0

12 Bldg Resale Oulu

Gal lons l nrhxled al Mormon\Excess of M lmxnum per l l l l )U Czl l oxn

Al l Gal lons NT l 8580 M068

00(|

1.9500

3.4560

l . A l l G l u e s

Gal lons Included An .\lmimnnl

Excess oi .\(.umnnm per 1000 Gal l ons

FArm 0 to 1248000 Gal lons

Own 12$8000 Gal l ons2 ] 9 0

3.8958

I .wooTorso

0 (I0

Couslnkuon HvdnnnGallon Inclurkd in .\lu1lm1\m

Exces o!..\hnlnmm per l.00(l Gal.lonAll Gallons 3.4360 .was 3}l60

II

Schedule TBH.WlPage 3 of 3

Lilchtield Park Service Company . Winer Dhiaion den Liberty Utiliti-Docken Na. W01427A.170059Ten Yen December JI. 2016

.Compnnv

Plu ed RltuSmall

Recommended RunService Line and Meter Installation Cha esPnlul |Rules

Male: Chu eService line' Total Chu e Service Lim$565.00

$565.00

£629.00w o w

Meter Ch esass (l »

se w ( l l

$3*1.00

$55611)

Told Ch e$23 .0u

$825 of

$950.m

$1 155.00

MeterChar e

Sl 55 Ru \

$155 11 »S sl sf n

$525.00

$1.04=.fn

Sl 890.0n

$44800

$44 S 00

S495 of

$550.00

$85000

$83a00

Toll] Chu Service UnaS600 on

§7(11 (I)

$81000

$ l 0 '5 .0 0

$ I 8 5 0 0201

I

Amil CostActual CostArial Cos:Acid Cos:Annul Cos!Actual CostAnnul Cos!

Actual Cos!Ac id CotAcid ConAnnul CoalArial CoalAnnul conArial Cos!Actual ConActual CostAuld ColtArms ConAnnul Con.\:Mal Cox!

A c i d C o i l

Actual Cos!

Actual Cos:

Ach n l Co n

Actual Cos!

Annu l Con

Actual Cox!

Arhu l Cost

A f h d C m !

Service Line5S x 3/4 MeterJ 4 MunI Male:l Male:.. Tuxbiue Male:

2 Compound Men3 Tuubule Meter3 Compmuxl Meir4 Tmbme Menu4 Compound .\(teA6 Tuubme Mere:6 Compound Meta8 or Loges

| eaP t e srn l Ch a r e l

$135.00

5:15.00

$255.00

$46500

$965000$I690.00

$l .470.00

$2205.00

$2,350.00

$3225.00

$4545.00

$6280.00

Acned Cost

Remove

Remove

Remove

Remove

Remove

Remove

§ l .4 0 .0 0$1265.00

Remove

Remove

Remove

Remove

Remove

Re¢olhnle1\ded ChaRemove

Remove

Remove

Remove

Remove

Remove

$1470.00

$2265.00

R e so w

R e so w

Rem ora

Remove

Remove

5.8 x 3/4' Male:3 4 Mere:1 Meterl M en" Turbine Meter7 Compound Meir3 Tmbine Male:3 Compound Meir4 Tmbhve Melon4 Compound Mclu6 Turbnue Meter6 Compound Mun8 al laxer

the anxmun uldaraled. lefuuldable al Rh cnuxenShall have | nonultenst beuxg devout bnnng dquoul of upon xehun of the mum al good <ou<l lbou and plvment ol the Gnarl be]

.P -P u tn e m Ch u e n

Sn 800.00

$"."00.00

$4500.00

$9000.00

$14400.00

s2s800.00

545000.00

590000.00

sn44000.00

$Jlo.500.m

sw. s0 0 . 0 0

sea Ch

s\.s00.00

§27(W.(K)54.s00.®89000.00

$14400.00

s >s.s00.00

545000.00

s9>.000.00

$l44.000.00

$34"000.00

s4a¢0.000.00

Recom m ended Cl i p

so .800.00

$2.700.00

S4.S00.0099.00000

S I 4400.81

sz8.ao0.0o

$4s.000.00

5901000.00

s l 44000.00

910500.00

5967500.00S9<>S0(101;

$2000

Cb)S2000

s*5.oo

$5.00

S5000

Co s!

$ ' 5 0 0

1.8"

$10.00.1>,

s 50.00

$"S.00

ss. w

$30.00

Co s!

$25.00

I So

(0$40.00

(h \

6.00%

s2 0 .m

(b)$50.00

v 5.00

$3.00

s50.00

Co s!

sz s. m

l . 5

I 1)

$40.00

(b l6.00»

I

42)$ 4 0 m

Tb)

6.0f» ..

A .

OHsite Facilities Hooku Fm5 B x J/4' Male:5 4 Mau| Mae;l Male:2 Meir3 Marl4 Meir6 Men8 Male:10 ltler12 Menl " Male: on Lu IService Char es aEstabluhmenlRe4nabllshmmlReconnectionMere: Tee: (Rf coue) (<:Men Rnead (if concern anFoe Hydnul Moth RelounonFoe Hydrant Male:NSF Check (P)Detuned Parmenl Pen MonthLate ChuteSemvnce Cal l s . Pen Hoi :/Aftu Hour g

Deposal Requuenums

De p o si t re xe s!

" 2 l € l HOoL I [ .P ri m

(a) Gnxges appl i cable l o gnu: servi ce. Per Rule RN *40)(D)

(b) Mumn\um Gages does nurnbel of ful l months off the nysrem. Pen Rule R14°4031)(c) Per Ru l e RI42408F

(d) Per Ru l e RI42408C

(e) Pu Rule R14"409F and Lnbenq huhl leld Park may :huge only one NSF fee when customers uh bi l led to: ware: and xewex wxvfu nm one be]

(t) Gzeal ez of 5500 of l .5b ofuupai d a l l ure.

(g) After 1x0nu uni te :huge in appropl iale when ml ms al the <1ntomels xequun on ronvemence. h compensates the u!l l l t§lol uldal ioual expense lnculued to; pwvixhug texbonus l l the c\\s\o1nexs request on for the nutomeis convenience

(l \) Per ACC Rules RI 4 2 4 0 3 (8 l Residential two ume the avenge bal l . Commexcjal . l vro and olxeMl f!lmes the avenge bul l .

(i ) Cusxomels shal l pay the npphcabk \Yl lel Hooklp fees pen nui fl i

Lu acklitiou to the collecrzan of Aegulu ones the utile will collect from its cmrolnen 1 p1 oponicnare :hue of my privilege.allies. use And Enuclxise tax. Pen Commission Rule RI4*4U9(D)5

Schedule TBHW2Litchfield Park Service Company Water Division db Liberty UtilitiesDockcx No. W01427AI70059Test Year December 31 2016

R sea GallonsProposedRates Dollar

lnuleaseCom any P -l2.6l°S".23$!-6' $19.90410Average Usage

l°61°sr4<. S 5 204 000 81966Me<han lsage

Staff Recommended

829°<Sl1.6"4107 $1620 (51 .43Average Usage

g.36, (4000 S1146 $16.00 ($1.46)Median Usage

Present 8: Proposed Rates (Without Taxes)Gerund Service 5/8 x 3/4lnrh Meter

Gallons v.Staff

RecommendedCompanyPro used %

S14.93$0.653000$°.°05135

10000$3.°0S100

20000$3.898070

9999999

$13.86so. s3000SI .asSt ."0

10000$2.95$1.00

20000$3.46$0.51

9.999999

$12.00$0.703000$1.90Sl 21 I

10004 I5190s l .a I

20000$3.38$0.48

9999999

Minimum Chargelet Tier Rate

let Tier Breakover2nd Txex Rate

Tier 2 Incremental2nd Tier Breakover

3rd Tier RateTier 3 Incremental3rd Tier Breakover

4th Tier RateTier 4 Incremental4th Tier Breakover

Sth Tier Rate

1\1u\ln\uin Chargelet Tier Rate

ls Tier Breakover2nd Tier Rare

Tier ° Incrementall'J\d Tier Breakover

3rd Tier RareTier 3 Incremental3rd Tier Breakover

4th Tier RateTier 4 IncreIneind4th Tier Breakover

ad\ Tier Rate

Mminlum Chargelet Tier Rate

Is! Tier Breakover2nd Tier Rate

Tier " IncrementalZnd Tier Breakover

3rd Tier RareTier 3 Incremental3:11 Tier Breakover

4th Tier RateTae: 4 Incremented4th Tier Breukover

Sth Tier Rate_

S1326

14.01

14.76

15.51

17.46

19.41

21 .36

25.31

2576

27.2 l

29.16

32.1 l

35.06

38.01

40.96

43.9 I

46.86

49.8 I

52.*6

55.71

58.66

7594

93.22

110.50

P 1 7 5

145.06

162.34

z4s.*4

335. 14

1 too°00o3000400050006000700080009000

1000011000120001300014000150001600017000180001900020000"500030.0003500040.000450005000075000

100.000

9.50%.935%9.2l°/o9.09°/o8360/07.78"/07.30%5.91 'Vo.6.570/06.28%6.04%5.64°/05.31%5.02%4.79%4.58%4.40°/o4."4°/a4.09%197°/o4.85%359°/o3.28%3.13%3.0"°/o".94°/o287°/o"68°/o258°/4

$14.9315.7816.6217.4l').66"1.8624.0626.2528.4530.6532.8436.0439."442.4445.6348.8352.0355.r>58.4261 6464.818478

103.751zs.z2142.691611618163278.9T376.32

$12.00127013.4014.1016.0017.9019.8021.703.6025.5027.4030.3033.2036.1039.00419044.8047.70506053.5056.4073.2890.16

10104139214080157.68"42.08336.48

12.59901°.<»o%12.60%1,W/0176 l°/ol2.6"°/o1".62°/o12.63%1"63%12.63%l".63°in12.24°/o1192%1 I .64°o114 l°/o11.20%11.02%10.87%10.73°/o10.60%10.49%10.99%1130°/o11.51%11 .67°/oll79°/o1188%l"15°/o12.29%

Sdadulo Tau.ww Iu\¢||n»|4 r-¢s¢~i¢~c.n,.n, s.",na4.a a . l ; n m yu m a ~Doxiu No. sw014uAI74044Tal Yea Ended D-vmluw ax N16

$403557.465524solos a o37.46

1.4u47Loewsu n i vI1sw7u s u

€°u>~nrP Run

s lamne on usunssale4910

134541324.99155881550220619

hudm nlM 8 U d r Nn¢ I yP l id s§m hCn1and llMoud ly%lni\cm " - a a n q u u n m e ¢ n l .m m yrn v¢ ¢CmnddIFAuAIIm.lold.Glu¢e15¢me&&yC11ncn)llculhhPalionWgwunlnanPnlnon\w¢~"n l.w¢nl.nH... ln=ne<»Elm u u u ySh lhGddkS<hnI1 r¢s n . . \ .cm m nyc.4»¢

s u rRnmmmdd fun

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c.wma a I-l000GlsnldMI1»un4lnI\lmMnr

xs 41$722

85111722

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- _ _- _ _EEu n l P l 0 0 0 G l l u u - n 6n 4132.951 w l l w h n c- i

Muk n lu :Mu k n lnMu k n ln

$0310.4:0.69

$031a lao n

son0430 8

m o o

h

r e

(¢)$25.00

1.5%

(f)

N WX\T

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i n

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() Pm Ccnnnuon n»*» rnx¢24os.BlW)Mm inunuh1gdnusoun1hc¢dMlnan§oElhywm pnluk ll4zMJD.()C |uwn¢ddp ly¢ncm |lw\ ld y1ial& m<dnnd&hhihnlulFee(nl-1knl\nms)|nd&nubMbeoochmgfodiuonndaniinophy"inlvumkispnfonnld(d)PeilnlrM4ZMGE(Q lh rnyI .A¢EldP idm yhupm )youN$F vlunn|lonrn|nh&4(uvw|1oduvr|senknau h l(e) o*»rxs.0o°fl.s»~°fmp.sau.n.w.(I) Nodmgr \¢1vitlrll\dudnlnomdvuh¢hu A&uhunnunce¢h iuppuupdnaedunkhu&na»xemn\¢quuau¢mvu l¢uu9mum&uuhryf<x

1ddiucnllcxpmulxulndlo lporid lMhun¢\hcun=m¢nquuxorWkununurfscuuna ican.w Pt1ACClul¢R142603(B)lnidendhuum-¢h nn¢ehM( b ) h u m l u AzCnn Cwnwnux/Drvdqanlkullinnulommerobcimnlddiuiul4unh-nun4AdNeunmhudonoindo4¢w»mx1ou@ l ' i °9 °4 l n AlC a L C uc /D!\d¢p rlW li insu luca se \oMhm I4d iviu lnnhnd idb lcd ln¢¢a il l ido f¢m a u\¢¢a n( f ) P n n l l n s A l M i n E m im \hHb¢m a x p lud l(num d|hDhutlndnum ltNn¢ l| ltcoutihuun inMdm uu liu .mpwp°~ax l¢ Anm.Emu-1- 1lu°mplu<l.¢°..4mms.n-me...sma.ha¢»4u.»~am.a°r<nmu~\<e¢¢»(Dl fm dhk a u lO yun .(W§uHxemmend\dn!dxm»lo( i n l I l u ln lu x a n d l tn q y\n h l h | i n h I b u & a k a 9 a - d & e o 6Mmdn¢»lnJ(§) 1i¢m ill,¢Cumm,dl.}I F E 9 i " l g l - ; d v i l U & l]). Elus\.qua*¢¢~:zo l>¢ A:dv:AdmuCummuidnsl070pF.Kll EKLbeqiim lwl90§d(n)S4nfYuxl\ll\¢udrdnriakhzdndm5lIREn§eedn¢ponM i u g v s

lnukhiiennodrculcciouof1qnhnu xhudiydelxBuminmmmnupmpanicnnulhueofnrypdih|v.nk¢u\c|ndIunzhiumPnumiuian1u\I42409D(S)

.CmmnridSb n lNh & H n : kE8un l

CmfmAn-I Cm:And ConAnd ConArd Can

AndC o ¢AmuICnuA:ndCauAmdCn¢

Su8Kwuurndd®AA d C c uArmdfauAm ano"AuulCau

Schedule TBH-WW2LitchGeld Park Service Company - Sewer Division db Liberty Utilities

Docket No. SW-01428A-.7-0058

Test Year Ended December 31, 2016

Residential

Present

Rates

Percent

Chan e

DollarChan e

Proposed

RatesCom am Pro used

81.85%Sl2.65553.00S40.35

Present

Rates

Proposed

Rates

Percent

Chan eStaff Recommended

DollarChan e

$40.35 $50.00 23.92%

, _Q

_ $9.65

Schedule TBHWIPage I of J

Liiehield Park Service Company . Water Division den Liberty Utiliti-Docket No. W0l42lA\I0059Tal Yen December 31. 2016

\

S r a l f

Rec ommended Rates

CompanyPro edkueaMonlhlv U r a C h e _

I I I

51576

I J ( l

1546

29.84

3315

6630

l o w s

21216

n r

J31.80

N T

663.00

$75.00

1 0 w.s o

S/8 x 5/4 Mere:5/4 Mere: (Reudentul Only,

J/4 Male:l Meter (Rnideund Only)

1 Meter

l M u n

q M u n

J ' M e l t :

4 M eta (Bulk Warn Resale O nlyr

4 Mun6 Meta (Bulk Warn Resale Only:

6' Meter8 Men (Bulk \\Ilex Reade

8' Meterlo" reel (Bulk Wnlex Resale Only)

1 0 ' M e n

P M erc i (Bulk Wares Resale O ulvl

12 " M eta

N T

1.52490

N T

1855.90

S1495

1495

1495

53.59

3733

7465

119.44

238.88

201.56

373.25

403.1 I

46.50

64745

1194.40

9Z7.l 3

1.716.93

l7 J 3 .J

3209.95

SL\."6

1326

1386

2984

)3 .l5

6630

106.08

212.16

243.51

331.50

4s7.=n

663.00

575.00

L06080

1140.a6

1524.90

2.132.08

2.sso.oo

Pnvnre Foe Self»ce (By Mere: $|Z 4: By Men Size B r M e i r S ouBy hlelu Sur

C ommodity Rates

I) (I0

U 500

1.9500

2.9500

3.4560

0.5450

1 .I 9 0

}.1 9 0

3.89.18

80 .800

1.9500

2.9500

34560

5 B x J . 4 ' mud .\.l M e t a Rzsndzutul

Gallons I nc luded Ln M urmur

Excess of M inumun . pa: 1000 Gallons

From 0 Io 3.000 Gallons

From 3.001 to 10000 Gallons

l000 l lo 20 .000 Gllloll\

Q vex 20000 Gallons

K Rnidenual

i i(1 Q

\9 (1

38958

L 9800

34860

S B x 3 4 M d J/4 M ere: . A ll C las s es ex:

Gallons Inc luded m M uunmm

Excess of 1\hulm\1m . pa: 1.000 G 11Ions

F lam 0 ro 9 .0 0 0 Geom

O n: 9 0 0 0 G i l lc us19500

3.4560

O 0 0

0.7500

19500

19500

34560

I Rrudeuual M d .\{\duFlmmlv

Gallons Iududed up Mmmxum

Exces s of M uunmm per 1.000 Gallons

From 0 to 5.000 Gallons

From 5.001 ro 19.000 Gallons

Flam 19001 ro )0000 Gdlmu

O ver 30.000 Gallons

0.. 800

1.9500

2.9300

3.4360

0.8450

2.1970

3 . l 9 0

3.8938

O 0 0

1.9500

3.4560

z 1970

3.8938

I A ll C lasses exe \ Resadeulul

Gallons Inc luded ml Muum 1un

E xreu of M xmnmm . P ei 1 .000 Gdlom

From 0 lo 20 .000 Gdlom

O re: 20000 Gallous

1.9500

3.4560

(I0 0

l 9 5 m

3 4560

1 .9500

3.4560

z e r o389.58

l . A ll C lasses

Gallons I nc luded al M uumuu

Exces s olM .ulumun per l .0 (W Gdlom

Flan: 0 to 40.000 Gallons

O va 40000 Gallons

0 (

l.05(l>

3.4560

Z l 9 0

3.8938

. A l l C hi* $

Gallons Inc luded nm Muumuu

Fxres s of hhmmuun per 1.000 Gallons


O va! 60000 Gallon1.9500

14560

Schedule TBHW1

Page 2 of 3

Litehfnld Park Service Company Water Division db Liberty Utiliti-

Dg¢kf| No. W0142lA170059Tn! Yu: Dercmber 31 2016

R AT E D ES I GN C O NT

CompanyPm led Rn-

SiaN

Recommended RulesMonlhlv Us eCII e

(I 0 D

l 0500

3 4360l l 9 l 0

3.8938

5 All Classes

Glullmxs lnrlnded ax Mum rum

Excess of Muum\un . per lfJ00 Gallous

From O ro 120000 Gallons

Oryx 120000 G 1Ilons1.9500

3.4560

( 0 0l

l

4 Bulk Resale Only

Gallons Included al MAlumun\

Excess of Mminnum per L000 Gallons

All Glllom Nl Lasso l .M9 l

l

( O 0

I 9500

34560

4 . All Classes

Glllom lnrluded ux Murmur

Excess of M.lnimuln pa: 1000 Gallons

From 0 to l&)000 Gillcns

Own l 80(100 Gallons2l9T038938

1.9500

3.4560

(| 0 D

6 Bulk Resnk Oulu

Gallons Included in Minimum

Excess of Mlnimnrn per 1000 Gallons

All Gallons .\T l s a w L6491

l l 0 0

l 9500

34560

6 . All Classes

Gnlloux Included m Muumnm

Ex:-s ol.Muum\un per lU00 Gnlloln


Om 360000 Gallon2.lv=0

3 B938

1 .9500

3.4560

0 (I 0

S Bulk Rank Oulu

Gallons Iarhldnrl m .\luumnm

Excess ofMmil1uun . per L0(X\ Gull nu

All Gallons 1.6500 1.8580 1.6491

0 0 08 . All Classes

Gallon lnrludtd al Muumnm

Excess of Malumnm . pen L000 Gallons

Flom 0 to 650.000 Gallons

Ova: 650000 Gallons

19500

5 4560

119r0

3.8938

1.9500

5.4560

0 (I (»l 0 Bulk Resale Oulu

Gallons Included Lu Muumun

Excess ofMulimllm . Pu L000 Gallon

All Ga llon N T M8580 1.04v1

(I 0 0

1.9500

j 45602 v r 03.s<>.ss

l(l All Classes

Gallons Included m Muunmnx

Excess of Muunnum . per 1000 Gollum


Oven 940000 GallonsL9500

3 4500

( O 0

l 2 Bulk Resale Only

Gallons Included m Murmur

Excess of Mmimvuh . per 1000 Gallons

All Gallon NT Lasso 1.6491

0( o

I 9500

5.4560

l " . All Gasses

Gloom Included al Minimum

Excess of M.Lnim\\m per 1000 Gallons

From 0 to 1248000 Gallous

Ova: 1.248000 Gallons2.l9"0

38938

1.v500

3.4560

0 0 0

Consmxuon . Hvdnms

Gdlcm Included m Mnmnnm

Eu:-s of Mmlmum pa: L000 Gallons

AH Gallons 54560 38938 3.4560

Sdldide TBHWIPage 3 of J

Litchfield Park Service Company Wnlrr Diviuiuu db Liberty Utiliti-Dock(| No. W01427AlI0059Tell Year December 31 2016

Service line and Meter Installation Cha enCompany

P ed RainSid!

Recommended Rst-

Tolll Ch eTold Char r Service Line!$565m

$565.00

$629.00

S69900

Male: Ch$158.00

s z w w

SJ 1.00

55.3611)

Told Ch$?.3.(l)

$815.00

SO so.0o

s l .2JS.(I)

$445.00

$445.00

$495.00

$550.00

$830.00

3000

PnuulRain

Male:Service line' Cha e

$155000

$25500

$315100

$57510$ l . 0 4 5 m

$1890.00

Service Line!$600.00$70000$810.00

91.08.00s I .8' 300$2 *z0.00

Arial Cos:Annul Cos:Arial CoalAnnul Cos!Annul Cos!Annul Cos!Annul Cos!

Actual Cos!Annul ConAnna] OosrAcne ConAcid CoalActual CO"Acaul CostAcaxal CostAward ConAcid CoalAcauml CoilArald ConAcaul Con

Aron! ConActual Con!Acaul ContAcaul ContAcid ConAron] ConAram] ConAcid Cos:Afoul Cos:

Service Line5.5 x 3/4 Mun3 4 Meta1 Men1 : Men" Turbine Meter2 Compalnrl Mum3 Turbine Mere:3 Compound Men4 Tuzbum Menu4 Compound Mztu6 Tuxbme Moth6 Compound Meir8 ox hngen

I ni l 1Hvdranl Meter esP re se n t Ch a r e l

$135.00

SZl § 0 0$255.00

$465.00

$965.00

s I .690.00

Sn 11000

52.26500

$ 2 3 so 0 0

$3245.00

$4545.00

$6280.00Annul Cost

Remove

Re n o ve

Remove

Remove

Remove

Remove

$ 1 4 0 0 0

$1265.00

Remove

Remove

Remove

Remove

Remove

Recommended ChoRemove

Re m m e

R e so w

Remove

Remove

Remove

s l 4"0.00

$2265.00

Remove

Remove

RemoveRemove

Remove

5/B x 3/4' Mnu3/4 MeterI Male:l n Mere:" Tuxbme Mere:" Compound Men3 T1 ubuk Male:3 Compoxuni Meta4 Tlubaue Moth4 Compound Male;6 Tuubme Mere:6 Compound Male:8 or Luger

Shall have a nonmisses! beuxg deposit bearing deposit of :he anxouul uldncatd. xethndable al mis enunly upon xenuu of the meter al good rondahou Md plvxnent of the final hal l

5OUTnite Fadliliel Hook\ Fees

8 x J/4 Mere: $|.sa0000

$" "00 (X)

$4500100

59000.00

$ l 440000

$28800.00

$45000.00

$9000000

$144000.00

$3|0.s00.0n8967500.00

31.800.00

$2700.00

$4.s00.w

$9.000.w

$14400.00

$28800.(1)

9 5 0 0 0 .0 0

590.000.00

$|44.000.00

5342000.00

$450.000.00

3 4 M a l e :

l ' i n d e x

l . M e n 1

2 M e ta l

3 M e ta l

4 Meme!

6 M o t h

8 M i ke l

l o" Mete:

12" Male:

12 Meter on La

Re co n m wn d e d Cl n

51.80000

$2700.00

$4500.00

$900000

514.400.00

$z8.s00.00

$4 s.000.0o

590000000

sn 44.000.00

$310500.00

$967500.00

$ %. 5 0 0 0 0

Szuu0

0>)$20.00

9 5 . 0 0$5.00

$50.00

szo.0o

<\>)$50.00

$°5.00s5.oo

$50.00

Co s!

$15.00

l .5 ' /

(os40.00

m>6 . w

C m :

s2 s. m

1 5

41)W

Rh)6.0rr

In

$20.00

Tb)55000

v i m$5.00

$50.00

Co s:

$25.00

I . 5

(0$40.00

(M6.0o

l

Es:ab nlRltI!!bl.l!hlT\€llIRecaunecuonMeta Test Gt rouect) ac)Male: Rudd (if count) (d)Fur HWnnv Mets: ReloauouFoe Hydrant Men RepayNSF Check fr)Defined Plvmenl. Pu Mouthbe CllugeSenA4:e Cel l : . Pa: Hoi :/Aflel Hour (8\

Deposi t Requuernenn

Deposi t Interest

Ware : Hookl 'p fees xi

(|) Changes appl i cable lo wren seduce. Pen Rnk RN "40J(D)

(b) Mxnnmnm Changes l i mes n i mbi of fu l l months of the shem. Pen Rul e Rl 4"40.l 'D

(c) Per Rule R 142408F

(ti ) Per RuNe R142408C

(cy Pu Rule Rl 42409F and Lihezty Duhtleld Put may doge only one NSF he when customs uh billed for v41teA Md own wntces on one ball(I) Gluten of $5.00 Rf L5b of unpuud balance.l l Attu horn service :huge is appxopuaie vl \en at n nr the omoxuexx xequNns eA touvemence. l l compensates axe nl l l i l y

fox addi tional ezrpeme mined for providing IRelho1us at the cuslonxnfs request as for the 4:unomels convenience.

(l x) Paz ACC Rules Rl 42403(B) Residential Iwo Ames due avenge bal l Commerce two Md onehal f l i l i es the avenge bul l .

G) Cmtomexs shal l pay the q>phcahk Water HookUp fees pa: nuN.

In addi tion !o the colktNon of xegnlu noes. the uhhh wi l l col lect Nom i ts ¢nx!olYl¢I§ I pnopomomle share of my privi legeales. use. and l lmclNse he. Pen Commission Rule R1¢2409(D\5.

Schedule TBHW2Litchfield Park Service Company Water Division db Liberty UtilitiesDocket No. w01427A17-0059Test Year December 31, 2016

GallonsCom an P sadPresentRates

ProposedRates DollarIncrease

12.61°0$1'6' 9.23$ww41o.Average Lsage

1261"04000 $19.66$1-44 S720M 9|\ Usage

SmfT Recommended

0.00° (sm,- $17.6741o* $0.00Average Usage

0.00%4.000 $17.46 $17.46 $0.00Median Usage

Present & Proposed Rates (Without Taxes)General Service 5/8 x 3/4lnrh Meter

GallonsCompanyPro used °/o g/0

StaffRecommended

$14.93$0.853000$>»0$1.35

10000s o$l.(X>

20ooo8380s0."0

9999999

$l3."(,w s3000so .95St "0

10000sons$1.00

20000$3.46$0.51

9.999999

$13.26$0.75l o w$195$120

10000$195s l .00

20000Ssn6$0.51

9999999

.\hlmm\n1 Changell Tier Rate

let Tier Bxeakovex2nd Tier Rate

Tier " IncrementalZnd Tier Breakover

3rd Tier RareTie: 3 Incremental3rd Tue: Breakover

4th Tier RmeTier 4 IncrementalSan Tie: Breakover

cdr Tier Rate

Minimum Chnr8rIsl Tier Rate

let Tier Breakover2nd Tier Rate

Tier " Incremental2nd Tier Breakover

3rd Tier RateTier 3 lncremenuil3 nd Tier Breakover

4th Her RareTun 4 Incrementaldl Tier Breakover

Sth Tier Rate

la(inim\lm Chargelet Tier Rule

Isl Tier BreakoverZnd Tier Rate

Tier 2 lurrenieutalZnd Tier Breakover

3rd Her RareTier 3 Incremental3rd Tier Breakover

4th Hex RateTier 4 Incremental4th Her Breakover

5th lier Ran_ - _ _ _ --m: m _ : 3

$1326

14.01

1 4 %

15.51

1144,

19.41

21.36

25.31

25.16

"72 I

29.16

32.1 I

35.06

38.01

40.96

43.9 I

46.86

49.81

52.76

55.11

58.66

7594

93.22

l 10.50

I"7.78

145.06

162.34

248.74

33514 514.93157816.6217.4719.66"1 .8624.06"6.2528.4530.65328436.0439.2442.4445.6348.8352.0555.2258.4261 .6464.8 I84.28

103.75123.22142.69162.16181.63278.97376.32

12.59%l°.60°/ol2.6M/0l".60°/o12.61%12.6"%1".62%1263°/ol"63%12.63%l".63%12.24%|1.92°/o1 L64°/o11.41%1 l .20°/>I 1.02%10.87%10.7341/,,10.60%10.49%109/011 .30°/o11.51%11 .67%1179%1 I 38%1 !5%l229°/0

1 Ono".0003000400050006000700080009000

1000011 000120001300014000150001600017000180001900020000°s 000300003500040000450005000075000

100.000

$13.2614.0114.7615.5117.4619.4121 .3615.3 I"5.2647.2 I29.163".l 1350638.0 lw.%43.9146.8649.8157.7655.7158.6675.949322

l 10.50l"778145.06l6".34"48.74

335.14 0.00%0 .00°10.00%0.00%0.00%0.00%0.00"0.o0° 00.00%0.00°/o000°/o0.00%0.00°/00.00%0.00%000°/00.(X}°/o0.00%0.00°/o0.00%0.00%000°00.009 o0.009 a0.00yg0.00%0.00"/o0.00%0.(0°/o

Sdudldc TBHWW]l . i l c l \ 5 e k l P a r k S e r v i c e C o l o n y S e w e r D i v i s i o n d b l i b f r l y U l i l i l i -

Docket No. 5W01428A170058T-I Yen: Ended December JI M16

RATE DESIGN

Compnuy

PI Rare

Staff

R:<cu1nnu<.\ed Run

w a s

37.4668.14

>a.2u

38.2037.46

l.48$.4T

1.006.75l l 86 .7T

l 1 8 6 . T

1.83950

S49 S0

46.45862149.36

49.36

46.45

1.s2z.s7

1240.501.458.89

1458.892.26164

ssJ.o049.10

89.63

so. 18

so. 184910

194s.s41.3Z4.'I9

1.558.8'

1.558.822416 18

Mmlllllv Service Ch eResidentialMuluUni t Housing Mnnddy Pu Uni tSmal l Conmwcid Moulhl v Pu Um!Colnmezdnl Rrgulal Domestic . Monthly Pet Unit

Cnnurrni l (Resraunnr. Mom). Gaorery Stole M Dry Cknnen) Monthly Pu Uri !Waguzm Resin . Pu Room

Wwnnx Rrson M a i n Ho l d Fu i i des

Eemmmy Sthoolx1\lnl1l1r S<l\oolsH61 Sdxaals

Cnmnnmicy C*=11¢s=

Commode C ePfrI000G; l lmnRnidmtial so 0 0s0.o0

0.W

0.00

3.33445

0.00

0.00

0.00a w

0.00

0.00

so 00000

0 of

4.38

5.85000

000

0.000 w

000

0 0 0

0.000.00

4. 15

5.530.00

0.00

0.00Q W

0.00

0.00

Mi l dUnl i t H 95 . Monday Paz Unix$4 x1H Commend . Monthly Pa Uri !

Commands] Regular Dcmeslk . Moulhly Pu Univ

Commvldnl (Rnmnnnv Mani . Gunnery Stone 8 Dry Cl fnnusl . Morti fy Paz UnnWn5 'zux l awn . Pa l oom

\Ylgwlm Rrson . Mun Hold Faci l i ties

Fl=°\=°¢=fr SchoolMiddy Schools

Hugh Schools

Cammuni ly €°**Bt l

l

l1

l

$541

s J

NTNT

S541

V 22

Conmlodi . C e Pet 000 Gallons of Measured lnllnentCoumnexchl Regulus Domestic Monthly Pu LmlCornnuxch! (Remnant Motel Gxocrrv Sroxr & Div Cluncls .\lol\ddv Pen lnil

- _ _

- _ _Elllucnl Per l 000 Gallon: inc feel e url 37.5851 nylons [of each -re fie!Mukn RateAmir RanMuon Rare

$0.3 I0.430.69

SUM043069

$0.3 I0.43

0.69

$20.00. \T

s20.00

. \ T

Tb)

r=)51500

1.5%

4»)f f)

$35 noL S

Fe)

kg

(I)s4o.oo

(D6.00%

$40.00

6.0o

GIfl)(In)

$20.00

n r

Tb)52000

$25.001.59

(0$40.00

(Sto u r

(lx)

61N TI "

a

(ii)

(1)l M in)

Service Ch e s a

Esubl i l lmxnl l (Rfgubu Hoop)Esnbl i sl lmeul Q\frl Hvus)

Re4sr:bl .bl \mem

RecounerhonNSF Check (d)

Deferred Paymaxl Per Mcndx

i n ChangeS rwi cr Ce l l ; P r Ho m /M n Ho u rs (f )

Deposi t Rfqureuunu

Deposi t lnrcmuService Lnlcul Connection Clwsf . AD ans

Mn Exlnnian. **'1 i 58 pr: Rule R14"6068.

Reh\ndable lul lneur Meta Insul lariou Chu; (LrOffS i u Fl ci l i l i rs HookUp Fm

(m .Rnidmunl Md Canzmerdal . $1800 per Eqlunkm Rnidendd Uri ! (EKU) ERU is cquiuknl No 320 Acl ivr Adnk Coal rmmidrr

(10 Per Communion Rlg§ (RI 42603.B)(b) Maximum change limes number of rid] monde alT do lpwm. per Rule R 142603D.(c) Cnsmmn shlllpaythxnulcoxt olphy\in.ldisculux¢¢ticn Md Eshhhshnumt Fe¢(¥s.llnrnulonlex) Md rhexednllbe nodm'gr foxdistnanrctinnifIxoplmknlviuxkisprxfolnnfl(d) Per Rnk kl¢2408E (I) And Libel Lilthfudd Put :nay dog: o".|y 4:|\e NSF feevhm nulumen uelnlled fox warn Md inn neivicn on our bill(e) Green of $5.00 of 1.5% of ulpaid huluxe.(f) No mgr for resin cal ls dung nomul wvddng hnfun. Af1 ex hours savicc (huge is 1ppxupciatz when i t is at the nulomds uqui let al cnuvuunnxn. It rompenaam the uti l i ty fol

additional expense in rued [01 providing nfi rxhoun nr Dar nxstonlrfs :squat of for the culmu\n's tnnrfnience.

® Pa( ACC Rnks RILZ60318) Rnidznl inl . Iwo ume axe avenge bi l l . Caulmndal . :we undonehal [mnes due avenge bi l l .(lx) Pnnsnt Rates Ar Con. Cusuunwn/Drrdopex shal l insti l l ox cause to be insumlkd dl Senior htenls as nonrefundnbk mauihunnnsirnid of constnul ion.

6) Proposed Rates Ax Cost. Cnsromer/Devdoper shal l imul or came no be imMkd IH Sexvi tr Ur:nh ms refundable :duncesinaid of comuwnion6) Pxusul Run . AH Mninluensiuns lol l be wmpleud ml :au and shal l be nested ms nuwrel ixndnblr o fcu m u l l n i n u

(k) Proposed Rates Al l Main Elnuuiom shal l he completed Ar was nd :lul l be nested ms xetimdahk ldnnresmmd ofnanstnncdon

(I) Rrfnndabk ere: 10 gnu

)Saw xfrommends dul l du coal of the i lul l lunl men and running svsuln inmlhl iun dul l be l l Dur lot: expense of the romnwtid and hxlnnuhl men.(u $1070 p" ERL Erv ms equivxlemao 19094.

(°: Sutl re<nmmend¢d are indwded nm SET Enyneeung upon

In addition no the rolleninn oflegulu mes the udlimy wil l wllzzt firm in uuwumexs | pfoponionahr Shane of my privi lege. asks. use. Md fnnrhiae my Pa commission rle I 4264J9D(5).

Schedule TBH-WW2Litchfield Park Service Company - Sewer Division db Liberty Utilities

Docket No. SW-01428A-17-0058


lll

l

l

T kcal Bill Anal sis

Residential

Proposed

Rates

DollarChan e

Present

Rates

Percent

ChanCom am Pro used

S5300 $12.65 3155%$40.35

Proposed

Rates

Percent

Chan eStaff Recommended

PresentRates » l

DollarChan e

$49.50 22.68%$40.35 $9.15

I

-

Schedule rm IWIPage I of 3

Lilchlield Park Service Cnmpanv Water Division db Ijbcnv lrililicsDocket No. \¥4)l427Al74X)59.lesl Year December 31 2016

PresentRau.sMnnlhlv l so e Char c

CompanyPm sea Rates

All Meters

Sn V .

1590

13.26

* n u

33 15

66 84

100 uH

Z1 |(

N l

331 3<

\ T

663.04 *

$75.41)

lo60.Ho

N l

5/8 x 3/l Meier3/4 Meier (Rcsldenlul Only"

3/4 .\i¢:lcrI Meier Res»dcnml Only)

I M e l t :

1 : Ma le :

2 Meier

3 Male!I \l<.wr lhllk \\ .her Resakc Only]

4 !\lcur1 \icier (Bulk \\aler Resale Only)

6 M ci cr

8 Meter §3ulk Water Resale Onlyl

8" MenLu .\lclcr hulk Water Resale Only)

10" Male:P .\lrlrr jlulk \Xa\cr Resale Only)

l 2 Male:

1.524.410

\ IT

7850.904

$1 ws

H 93

H 03

53 So

37 4%

74.03

119 a l

238.88

201. Sr

373. >i

403. l l

746.50

607.43

119H10

927. l 5

l7 llJ.)5

L733. I

3809.>3

SufiRecommended Rules

All Meterss1 70

132b

1336

29.81

33.13

66.343

106.08

212.16

243.51

331.50

487.31

663.011

575.0

1060.8*

114036

1524.')1r

2132.08

2850.90

Pnvzu lun §rrvu Bv .\lclc¢ Sue By Meier Sur By Mcrer Sum Hy Meter Sur

(Inmmaditv Raics

0 0 v A

358 x 3/ I m l 3 4 \Ice( Rcsndenlul

(ullons Included nn M mmum

Excess of Nlmunum per 1000 Gallons

From U lo 3(1)0 (nylons

Fran: 3001 to 10000 Gallons

10001 Io 20000 Gxllom

)vhf 20.000 Gallons

U 3<lo

l 9300

ws u o

3 6011

0».843n7.1 ')0

3.190

58938

30.7501 I

19501 l

2.9501 i

3.1564 >

0 0

I will): 1540

3 R x 3 '| and 59 I .\lever All (lz>.r rx frpl

Rcndcnlxal

Gallons Included u\ .\lu\mlumExcess of .\lunnluxn per III! ( ;llnn

From 0 ro 9000 GallonsOver 9000 Gallons

1 l')(l

3 HE as

l 9 s o f l

5 4 ( A .

0 I

l»5l>019900

79541)

3 1560

I Rcssdcntd and Mull Falmlv(zllon Include in \hnlmum

l.xc2s al Nlmnunum per L411) l ullonsFrom 0 lo 5000 (zllorhFrom 80X01 lo l9000(nllonsFrom 19.001 to 300lX) GallonsOver 300lI) (nylons

ur44%l1

I ' ) u

3 l'J0l

1 Nov;

0.7504 >

1.9501 I

2.9500

3.4560

l H0

1.9500

3 .1360

l ..\l.l Clo>§c> exe 31 Reldcl\mJ( izllons Included nn Mmnnum

lkccss of .\hnm\Am per 1000 Gallons

From O to 20000 Gallons

Over 20000 (nylons1011

3$8')3819501

3.4560

I 0

I )51 n1

3 1300

l All (Qla>se>

(;ll<m> Included n Nluumum

lixcrss of Mmmy per l(](1) Ga llons

From ll lo 40000 Gzllnn

l Pvcr 80000 Gallons. I 9u

3.8938

19500

3.1560

.

1.951 n >

3451.1 >

v Au Vla>§rm .ilium Inrludrd in \lumnuu

Fxress of .\hnlmum per 1000 Gallonsh(nu 010 60000 Gallons< Iver 60llX) Gallon

21970

3.8914l.95u\

x.45<>{

i

Schedule TBI Iw.1

Page 2 of 3

Litchfie ld Pa rk Scwicc Com pany Wate r Divis ion aha libe rty lrililics

Docket No. \I0 l427Al7008'}

Test Year DcccItabcr 31 2016

Munthlv l 8aa c Char

Present

Rates

Company

P m :sea Rates

Staff

Recommended Rates

C l288It

. l

] l s m i

3. 15611

l 1970

3 8938

..

Gallons Included m Blununum

Fxccss of Mmunmn per 1000 ( .{1l0»From 0 to 120000 bdlons

Over 120000 (dl0m51.9500

3.45r>H

U l

I Hulk R de Onl

l a llon Included N Mnunum

l.xress of .\lmmlum pct 1000 l I l n

\l] (lUOIl \T I x 5H11 l ( ) I

l uu

l ) l

3 wma

[9500

8.430131.9500

3.4568

1 All l :la rs

(.I llm I Inrlladd n \lnm m n

l.xc¢ al .\lu\unum pe r IU llb (d lnn .

From 0 lo \8000x1 Gallons

Over 180000 Gallons

i

( Bulk R :a l( Inl

(d10n8 Iilrllulnl m Mmmum

Exces. al Muunluln per 1000 ( d10 n5

.111 ( illulh \.l 1.8504 I 6l)!

All C l w

U i i

1.9590

X Fufll

l 1913.3938 I 9500

1 15(nl

0

11al10> lncludcd m \hmmm

Excess of .\hnnnum per 1000 (dlons

From U to 3({]00() Gallon

Over vu(xx} Gzlloru

H

l U

Bulk R d O n l y

llnn Includd m .\lmlmum

I.xcesa iI .\hnunum pct LUUU ( d l o

All Gallons I 63", 18§H1l=H All (;la.§e§

i U

l9slu1

3.4504

> 1pl

%.84 \»

gallons Included m .\luumunl

Iixccss of Mmunusn per 1000 Gallons

From 0 lo 650000 Gallons

l }cr 650.ll!) ( ylons1.<>50

3.4581

U

In Bulk Resale Oulu

( .\llon Included a .\lu\m\um

Excss of Mmunum pc Llkui Gallons

All Gallon \ I 1.8580 1 .(4J l

l ll

IU \ll I |.u

Odlons Included m .\1uun1um

excess of Mmunum per 1000 Gallons

From 0 to 940000 Gallons

Over 940.000 Gallons

I Fu

38938

I <J 5<»04560

1.9501 !

3.4561

II

9 l

P Balk Rcnlc ()11lv

Lnllons Included an Mmunwu 1

Excess of Nhmmum p IuuoGallons

a l f a l ln \ I IHSM I 0H)1

U

I 1 § 4 1 )

1 ( 4

I All 1.118

(allons Included al .\Iuumum

l.XC£5> al Mulullwn pe r l00( l la l ln

From ll to 1248000 GallonsOva 1.7l8lll\ Ca llnn

l 9(»3.sJlH

1195041

1 l f l i

it

I urulructurl l lv l rx nu

( nylon lllcludcd al .\lu\ul1um

Iixccss of .\lmunum pe IllN\(ia1l¢s1All (a llnns 3 4544> 3 8938 \ l5 ( l l

Schedule TBI1.vc.1Page 3 of 3

Ijtchfield Park Service Company Water Division db Liberty l utilitiesDocket No. vc01427A1704159Test Year December 31 2016

Company

Pro :sea Rate;

PresentRatesService Line and Meter Installation Char es

StaffRecommended Rates

Senriee line her acc lane

3 M an 3 4 .\llf $ 3 6 5

$505 in

S6 2 9 h W

$699 UU

Tota l Char c

$T*3.(1)

$825.01 r

$950.01 r

St 935.00

Mcmcr Char c

St as n

$264 I.00

$321.00

$536.00

Service Line |$145 in5445.04

$495.(ll

$550.00

8830.00

$830.00

Meter

Cha r e

$155111

$255111 r

$315.fu r

$525.01 r

$1045.91 I

$1 890.00

Total Char c Scnrice Linc2$ 6 ( ) ( } l l 1

$F U 0. 1 i l

$ 8 l 0 . u l

S l 075. 4 r u

$ 1 8 T 5 1 1 1

s272000

Actual ( we

.\casual C 081

Actual Cos!

Actual Cost

Actual Cost

Actual Cos!

\l;llJ2l 0 I

Mclcr Char cicmal Conaccrual Cost

.Mmal Cost

Acrid Cost

Acrid Cos!

Actud Cost

Actual Cos:

Artus Cost

Actual Cost

Actual Cost

Actual Cost

Actual Cost

.\1ual (iosep

Actual f olActual r .mlActual CostAcnnll CostAcid ComActual ComAcid CostActual Cos!lctuzl ol

I Xl t vrI NlclcrI Menu

Turbmc Meter" 1 .impound Melr

Turbine Meter3 Qompouud MenrI Turbnc .\lelaI ( :impound .\l¢krh turhmc .\lc\cr6 f impound .\letfH al l..1q§¢r

3 4 G I \ lclcr l{:lnuv R\[1(\

3 I . \ I 1 .

I Meter

I .\icier

Tubulc Meter

2 Compound Menr

3 Turbmc Male:

3 Compound Men

I lu.rbnc .\1trr

4 I compound Mel

6 Iurbme .\lrlcr

St 35 IH l

$215.00

$255.00

$465.00

$965.00

$1 690.00

$I.I?00w

$l2o5.m

$2350.00

$3245.00

$4545.00

W 2 w. m

Actual Cost

Remove

Remove

R m ove

Remove

Remove

$1470.00

$2265.00

Remove

Remove

Remove

Remove

Remove

Remove

Remove

Remove

Remove

Remove

$1470.00

$2265.00

Remove

Remove

Remove

Remove

Remove

6 compound MenrH o Larger

Shall have a non nlereI being depoit bearulg depoul of the amount mdscaled reliuldable m I <.nurtj.. upon ream of the mtr in good fond non nd payment of the l1naJ be]

Sl ruxwnl Hlnhv5 9 I . \ l t

4 ' Male:

Sl Hi I 1 H

§2T(X).00$450x0.00

$9.000.00

$1 .1.400.00

$28800.00

545000.00

590000.00

I Vlelcr1 .\lcu" \!¢lrtr

\IclcrI \ I¢lc r0 Meter8 MeterIi MeterI ) Melt!

$2300.00

$4500.rx1

89000.00

S14400.00

$28800.00

845000.00

$90000.00

$144000.00

$310500.00

$907500.00

Sl

$2700.00

$4500.00

$9000.00

$14400.00

$28800.00

W i 0 m m

$')O(l]0.00

Sl 44000.00

5349 000.00

$450000.001 \l¢.I o I A

$144000.00

$310500.00

$%7500.00

s*}(.54.i I Le I

$20.0x»

&>J$50.00

$25.00

$5.0l

55011

( .est

$20.00

0>)$20.00

$25.00

$5.04)

$50.011

( :est

$25.un $25.00 {a

1.5%I .S

j¢§.o

$40 no d I

\I:."r

$40.00 (d

$ /.I

f UH

52000

b

$50.14

$25.Iu

$5.00

$50.4

C o l

$25.00 .

l.5

EC)$40.00 (cl

p p

< 2 1

6 . 0 0

n

6 . 0 0 %

i N

EitabIlshlnnl per A.A.(:. R 14 2 403(D}(I}

Re Iubl1hn\em per A..\.(:. R 14 2l03(D]{l

Reconnccuon per A.A.{:. Rll 2 403{D)(l)

Mier Tcsl mf correct, per Rule R 142408[Fl

.\icier Reread If correclj per Rule R 14 24lJ8(Ll

Frr Hydmni .\1ctcr Rclocallon

ha: llydram Matter Repar

NSIChcck per .\.A.C. R 14 2 408I..I

Deferred Pzylneul Per Month

I an Charge

5rvcc C e l l Per Hour After Hou

.\Itr Hours Scnrucr Charge

l)qJo§:t RcqmnemenlsU1possl lmcrcsl per A..\.C. RI42 40'[l8

W tr Ho o k l .p f i rs

.C.

r"

Lbcfly Luehlleld Park may charge only one NSF fee when customers are bed for water and sewer cnrnccs on one ball

b .\ltnumum Charges tunes number of full months off the system per ..\.:\ RID 2 4038):

Greater of $5.00 o l.50°/o of unpaid balance.d l No charge for service calls during normal working hours. After hours servc charge s appropriate when ll us at the customer rquues or eonvemcncc. ll compnates the ullty fo additional p l I

nurred for prowdmg after hours at the customers request or for the customrhi convmcnce.

t" No charge for servce calls during normal working hours. After hours service charge ts appropmte when tr ts at the customers request or convenience. Customer shall be charged for afterhon r\

call for work perfomwd on the cu§tomrr propcny at custoncr rcquesl.d I customer shall be charged for afl hours ervice calls oulsnde of nodal workup hours for work pcrionncd on the customcfs property at customers request or COIIVCIIICIIC

L¢1J Per ACC Rules R 14 24[}3(B) Rcsdrmd two tunes loc average ball. Not rcsudcnld two and one half tunes the zvvragc ball

et) Per ACC Rules R 14 2 4[]3(B} Rcsndrnd two tunes the average bll Br doss. Commercial two d 0118 half tunes the custoulcfe cstmutrl maxmum monthly bll.

Pvt Al"( Rud Rl I Lil/B Reé ldm ltd Iwo tunes th avrage hull by clas Non r ulcnlnl two and om hlf tu inc culomer tullalcd uuxunum monlhlv hall

l I .ul0m lrn ha ll a h . hcablc Water Hook L fees Er layoff.

I

Stall removed from hr (a(1) I.m hv}21 n> with.oman}rs cuncnl .11 propnwd othrt scmccs charge plallallom uu. lllvr .11:lrgv. are for water i!l\(l .ml

l

Schedule TBHw2Litchfield Park Service Company Water Division db Liberrv UtilitiesDocket No. W01427AI70059Test Year December 31 2016

TYPICAL BILL ANALYSISGeneral Service 5/8 x 3/4Inch Meter

I GallonsCom any Pm usedPresentRates

ProposedRates

DollarIncrease

PercentIncrease

Sl".(»` 510.04 I $2.234111 - 12.61%.\\CligC Urge \

12.6l%S1140 sz2oSl).h(\4000Median Usngcl

Staff Recommended

$17.67 SI 1.1141 0 . 0 0 °0$17.674107.\vcfayc ls.\gc

§11.4141S1- . 4< 0. 00%41x ) 0 $l".46Nlcdlan I .<.luc

Prcscnr & Proposed Rates WirhouI Taxes)

General Service 5/8 x 3/#Inch Meter

GallonsCompanyPro oscarPrescnx

Staff

Recommended- Q -Sl 3. >(,$0.75

3000$1 .as$1.20

10000$2.95

$1.0020000$3.46

$0.51')')9999')

S14.4)§$0.263000$2.20

Sn .3310000$391 i

SI .I n r2004 Lr I

$3.89$0."l I

9')')')')'))

SI I "6

50.93000

$1.93$1 *l I

100114 I

$2.03$1 .al I

2001 ll I

$3.40so. 3 I

99)*)9'J')

Minimum (:h;\rg¢Isl Tier Rate

ls licr Breakover

2nd Tier RateTier 2 Incremental

*nd .l.ler Breakovcr3rd Tier Rate

.l.lcr 3 Incremental*\rd Tier Brcakover

4th Txcr Rarel.1er 4 Incremental

4th Tier Brcakover5th llcr Rare

l.1er 3 lncrcmenlal

Mxnxmum Charge

ll l.ler RalfIsl Tier Breukuvcr

2nd Tier Rare

Tier 2 lncremenial'nd Tier Breuknvcr

3rd Tier RalfTier 3 Incremental3rd Tier Brcakovcr

4th Tier RateTier 4 Incremental4th Tier Breakover

31h Tier RAICTier 3 lncrcmcnul

\linlmum (:h.\rg\

ll T ier RalfIsl Tier Breakover

2nd Tier RalfTier 2 lncremcnnil

2nd licr Breakovcr3rd Tier Raw

her 3 lncremenl.\1

3rd Tier llreakovcr4th Tier Raw

Tier 4 lncremenul4 lh Tier Brcakovcr

'Rh l\cr Rare.l1cr 3 lncrcmenul__ _

Cunsum lion I n c re a s e RatesmRatess I we

14.0 lI 4.()

I s. so17.4610.41

21 .3623.3125.2627.21

29. la32.1 I

35.0638.0 I40.96

43.9 I46.8649.8 I52.9(>

55.7 I58.6675.94

93.22I 10. 50

121.'8145.06162.3424874Ia. I4

I 7. 39

12 . 00

12.604 U

l2 .60*

12 . 61 )

12.620

1 2 . 6 2 %

l 2 . 63°

l2 .6 3 "0

12.63" 0

l 2.63"<

12.240/0

ll .')2 °/0

l l . 6 40

I L 4 l

I 1 2 0 "

I I 02 °

I 0 .87%

10.73°/ o

10.60°/ o

1 0 . 4 9 %

1 0 . 9 9 %

I I 30°/ o

I I .51)/0

I I 6 7 "

I I 7 9 "

1 I ago

12. 15"

12 . 2 ' ) "

1 narc esc0.00"

0.0ly.

0.00%0. 00°/o0.00°/00.00°/00.00°/0U.00°/o0 ( / 00. 00°/o0. 00°/00. 00%

0. 00°/00.000/00.1 )0"/00.00"o0. 00°/00.00%

0.00%0. 00%0. 00%0. 00"/0

0.00%0.00%0.00%0.00%

0.00%0.00%O. 000

s l 4.')5

I sis16.6217.4719.66

21.8624.06

26.2528.4530.6532.84

36.0439.2442.4445.6348.8352.0355.22

58.4261.6264.8184.28

103.8123.22142.69

162.16181 .63278.07vo 1,7

5 I 3 >(,

14.0114.7(,

15.511740l').4 I21.36

23.3123.2627.21

29.11.32.11

35.0638.0140.96

43.9146.8649.8132.76

Sam58.6615.9403.22

110.50

12113145.06162.34248.74335.14

1 0002000

30004000

5000

600070008000')(X}0

100001100012000130001400015000

1600017000180001000020000

250003000033000M100045000

50000800x>

100000

l

1

Schedule TBI l.ww1Page I of °

Litchfield Park Service Company . Sewer Division db Liberty L lililicsl)0ckcl N). SW01428Al70058lcsl Year I.n1.lcd l)ccemMr 31. 2016

RAll: DESIGN

Sm(Recommended Rates

( un\p.ulvPro rd Klug

$53.04)49.2089.6 s50.18501 x492 )

l ')48.5l1324.991,=»s88°l.5S8.8" l I 6. 18

S4')8{ias. 13a6m149.3649.3846..15

1 8481 >40.s4)1438.891458.89°.°<>2.r»1

Pf({l l \$10 35

S us68."438.2058903746

1483.47100875Il 8677l l 8677l83').S0

Monlhl . Service Char cResldenlnlXludu Lml llousmg .\lulu fly l'ef Lml>mzlI Commcrcaal Monthly Per Ln11<)mmcrc1ad Regular Domcsuc Monthly Per l mlflununercnd (Re§\aunu\l Motel Gm(erv Sum & l>n leman} Momhln l¢.r l ml\\ ngwanl Resow Per Room\¥ wigwam Resin Maul Hotel Fzcll1u4lzlememarv SchoolsXhddk Schoolsl hf Schools

»n\m\umyCol]ege

Monlhlv l'cr l ml

SUW1H l0004.15353l101>a l l )U 00a l l

HW)nun

$0.000000.003.334.450000.000.00(UK)0.000.00

9000:MlmU 004 321385Ii!mll)l}1r0 vs0.0~0.0»~0.0"

(lommudilv Char c . Per I 000 (gallonsRumlelxlul.\lu1\1 1 in1 Huusulg .\lonely Per l nnSmall (lommercnl .\lolly Per ljmlCommcrrud Relax Domesuc Monthly l\r I ml

(tommcrcsal Resuunm Mold Gmcerv 81 r 84 I )r. Ieanefs)\\"g""1lm Resin Per RoomWigwam Tucson Mun Hold fun lunlilcmcnlary Schools.\lddlc SchoolsHugh Schools(ummunny (Iollcge

\1onlhlv Per lnrmlxi

(lummoditv Char e Per I 000 Gallons of Measured Influent<0mn\ercl.ll Rc)!\1l.\r Domvzshc Nluullllv Per L.lu1<4nnnlcrral R(.1.u1r.Im .\loll (/n>nrv flora & l)rv Clvanvn

$511$7 >

5841s '

! _ -! _ _lMucm . Per l 1110 Gallons acre feel e url 325851 allows for each acre fuel

\llrkcl Rnc\lirkei Rztc.\Luke\ Rue

50.310.4\0. ()

$0.310.430.69

$0 11() n0.09

Schedule TBI I \\\Y l

Page 1 of '

Litchfie ld Park Service Company Sewe r Divis ion db Libby l til itie .a

Docke t N). sw0l42sA1701158

Test Year lnded December 31 2016

Cum nut Pm mused Staff Recommended

$u.ul I

Present

s*-J 00

N T N1

$211 Iii)

NT

* 4

b l\

I(bl)$25.00

I

NT

$20.00

$25.00 z=1:

1.5% .5.

i i )

:b>b

95.00 C

I

(d)811

$40.00 (cl

NT

d

$40.00{¢:Nl g

t i ;

N I

$40.00

ft/

(ft)6.00*600° c 6.{Nl

111) ®shhi)

1 NT11

Service Char cs

ltabluhmnl pvt .L.\.(I. RH " (»{)?l.)AlI tahlashmcnt [Afar Hours

R Estabbshmcnt of Servucc per A.A.C R14 " rmvrmvv

lhsconnecuon

Rreonnccuon per A..\.C R14"603(D)[l}

.\51 Check per A.A.(; R14 * 608(E)(1)

Ufcrrcd Payment @Cr rnontl

I ate Charge

Srvtcc Ca lls Per llour!.\ftcr Hours

.\itch Hours Sewtcc Charge

Ucpot Rcquuements

Dcpostt Interest per ..\...\.C. R 14260&[B

Scrvcc Lateral Conncctton Charge All sizes

.\lm Ftcnston Tariff per Rule R142(J06B.

Rvfuudable Influent Mter Ituatadlaton CMqn

\Xastwa1er Hook[jp Fee:IL

02)

8

Fm

(i)

0)

t)

.a .\lmmum ehargr tmt number al full montlt nil th ystenl per Rule Rl I 0081).

bl] Proposed Customer shall pay the actual cos! of dtseonnecton nneludmg costs for excavation and trenehnng plplne rnodnlicanon sewer blo k baekftll and grading road repairs and pernuttmg

Customer will be provided copse. of tnvotees for actual costs incurred. There shall be no charge for dnsconneeuon Rf no work performed.

b Customr shall pay the actual cost mcludmg costs for excavation and treuehutg ptpelute modification sewer block backfll anil grarlutg fo.hl rpiuf and pcrmntmg. Customer wll be ptovlded

ropes of mvotccs for actual costs incurred. There shall be no charge If no work ts perfonnerl.

Present Charges are applcabt to wastewater settee.

L 1berty Lnchfneld Park may charge only one NSF fe when customers are boiled for water and sewer sentee on one ball

d Greater of $5.00 or 1.500/ of unpaid balance.

l} No charge for service calls during normal working hours. :Xfter hours service charge ts appropriate when ml ms at the custonnr f l l Ul ( iv. uence. It compensates th utrltty for addtuonal

expense incurred for provndmg after hours al the customers request or for the customers comretuence.

" No charge for service calls during normal working hour. After hour service charge ts appropriate when tr ts at the customer request or convenience. Customer shall be charged for after hour

r\|C¢ calls for work performed on the cutomers property at customers request.

e Customer shzdl be charged for after hours service calla outeudc of normal working hours for work pcrfonned on th customers property at customers request or eonvemenee

fl; Per ACC Rules R14 16034ls3 Resdenual two tune the average bull. Non restdentzal Iwo and one half tune the average bull.

P) Per ACL Run R14 2 6031 Restdenual two Ames the average be] by class. Commercial two .and one half ltllrs the customcr estimated maxunum monthly ball.

l Per ACC Rules R 14"60¥B Resulenttal two tune the .average bll Br class. Nonrestdental two and one half tunes the customers estimated maximum monthly ball.

yi] Present Rate \t Cost (ustomer. Developer shall intll or cause to be installed all Service Laterals as non refundable contnbuuons tn and of construehott.

y At Cost. Customer Dow elopr shall install or cause to be ulstalled all Service Laterals as refundable advancesm aid of ronstrucnon.

hl Present Rates it] \lam Extensions shall be completed at cost and shall be treated as nonrefundabk contnbuton m ad of consumcnon

l All .\lam Extenion 1l2l.1 be completed at cost and shall be trated as refundable advances in sud of construction.

al Refundable over 10 years.

The cost of the u1 lluem meter and metering system mstallataon shall be at th son expense of the commercial and utdustrxal user and not subject to refund.

Re

{ ;

II Rcsdcnual and Commcrctal $1800 per Eqmvaknt Restdemtal Lmt {ERL. HRH a cqunraknt lo 320 Acuvc Adult Commmuucs $l070 per ERU. ERU as cqutvalcnt lo 190 gpl

J stdcnual and Commcrcnal Customer/I)cv¢k1pcrs shall pay the applrcablc Wastewater Hook Lp Fees per tanif.Reul.1ttua l .m l Non ru ltlla l utom ¢. l):w:lo i s h l l a t th .1 l1c.1blc \\ .tu..Ucr Hook l l.cc wr t.trff

l l\ l lcin .ullllltll Lu the ctll¢t.ttott al re far rat h tmhtv wll collect from pts custom . to ornate shaxc of .my ale. Ll€..ltd lr.mchtc tax Per cmnnwun\ rule 14 "(»09I)5

cu Sta ff rmo d .t trout h Vutupmv cuncnt and proposed other scrvc charges cxplanauon utcc these charge arc lot uateuawr crvuc only. Staff begins with (4

I

Schedule TBH-WW2Litchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A17-0058Test Year Ended December 31, 2016

Present

Rates

Proposed

Ra tea(:om am Pm usedDollar(Han re

Percent

Chan >e

.85"8]$40.35 S53.0u $12.65

Percent

(Ihzm »eDollar

Chan vo

Present

RatesStaff Recommended

Proposed

Rates

$40.35 $40.54 ) 22.68"41

-

- $9.13

I


TOM FORESEChairman



BOYD DUNNCommissioner

JUSTIN OLSONCommissioner

DOCKET no. SW-01428A-17-0058

DOCKET no. W-01427A-17-0059

I

IN THE MATTER OF THE APPLICATION OF )LIBERTY UTILITIES (LITCHFIELD PARK )WATER & SEWER) CORP., AN ARIZONA )CORPORATION, FOR A DETERMINATION OF)THE FAIR VALUE OF ITS UTILITY PLANTS )AND PROPERTY AND FOR INCREASES IN ITS)WASTEWATER RATES AND CHARGES FOR )UTILITY SERVICE BASED THEREON. )

)IN THE MATTER OF THE APPLICATION OF )LIBERTY UTILITIES (LITCHFIELD PARK )WATER & SEWER) CORP., AN ARIZONA )CORPORATION, FOR A DETERMINATION OF)THE FAIR VALUE OF ITS UTILITY PLANTS )AND PROPERTY AND FOR INCREASES IN ITS)W \TER RATES AND CHARGES FOR )UTILITY SERVICE BASED THEREON. )

)

DOCKET no. W-01427A-17-0077IN THE MATTER OF THE APPLICATION OFLIBERTY UTILITIES (LITCHFIELD PARKWATER & SEWER) CORP., AN ARIZONACORPORATION, FOR AUTHORITY TO(1) ISSUE EVIDENCE OF INDEBTEDNESS INAN AMOUNT NOT TO EXCEED $30,000,000;AND (2) ENCUMBER ITS REAL PROPERTYAND PLANT AS SECURITY FOR SUCHINDEBTEDNESS.

))))))))))

DOCKET NO. SW-01428A-17-0078IN THE MATTER OF THE APPLICATION OFLIBERTY UTILITIES (LITCHFIELD PARKWATER & SEWER) CORP., AN ARIZONACORPORATION, FOR AUTHORITY TO(1) ISSUE EVIDENCE OF INDEBTEDNESS INAN AMOUNT NOT TO EXCEED 3$3(),000,000;AND (2) ENCUMBER ITS REAL PROPERTYAND PLANT AS SECURITY FOR SUCHINDEBTEDNESS.

))))))))))

DIRECT REVENUE REQUIREMENT

TESTIMONY OF

TERESA B. HUNSAKER

PUBLIC UTILITIES ANALYST

UTILITIES DIVISION


DECEMBER 22, 2017

TABLEOF CONTENTSPAGE

Ljfe@'ie/d Par/la 3

Ute/jie/d Park 4

Lobe/fy 4

SUMMARY OF PROPOSED

Opera/ing Income .fummagf 73

Cbs!A//oeatzbns 18

Fair Value Rafe 26

Rafe Base Azyk/.fir/zen! No. 1 - Plant Ref/a.rJz}'Zeation.r andAa]u.rlmenn (Water 6° fewer Divisions)..................28

Rafe Bare Adju:/men! No. 2 - Plan! He/dfor Future Ute (fewer Dif/Lrion 28

Rafe Ba.reAe§u.rtmen/ No. 3 INDOH Remo:/a/J (Water 29' .fewer DWixions) 30

Rafe Bare Aeyhxfmenf No. 4 - Relirernenls (Aero. 706) Rec/a.fJlz]i¢z1lion.r 69' Coneetions (Water 48° .fewerDi:/i.fion.f) 36

Rafe Bare A41/.rtmenl No. 5 - Aeeumu/aled Depredation (Wafer 8' .fewer 37

Rate Ba;e A4N;tmenl No. 6 - Po;tTe;t Year ("PTY'9 Addition; (later 6 Sewer Dive;ion;)........................ 37

Rafe Ba;eAi n;t/nen/ No. 7 - PTY Ree/a;;zfieation.r (Sewer Dive;ion 38

Rate Ba;e Aiiutnzent No. 8 - PTY Retire/nent; (Wafer 29' Sewer 38

Rule Ba;e Aeyiatnzenf No. 9 - PTY INDOH Rernova/; (ll7ater 29' Sewer 39

Ra/e Ba.re AeyNftrnent No. 70 - A//oeafed Corporate Plant (Water 29' Sewer Dive;ion;) 39

Rafe Ba;e Ae§a;tn1ent No. f I - A//oeated Corporate Plant Aeeunin/ated Depreeiation (Water et' Sewer Dive;ion;)

Rafe Ba;eAe n;/fnen/ No. 72 - Co/;torner and LongTenn Meier Seewrity Depo;it; (later Di:/i;ion 40Rate Ba;e Ae§N;tn1ent No. I3 -Aeenrnn/ated Dejected Into/ne Yale; ('ADIT'Q Water 28" Sewer Dive;ion;) 47Rafe Ba;e A4u;trnent No. 74 - A//owaneefzr Ca;/5 Working Capita/ ("CWC'Q (later 29' Sewer Dive;ion;).. 42Rafe Ba;e Aaji/.ftrnent No. 75 - Aeeoun/ing Order (UpdaterDevi;ion 43Rate Ba;e Aeyiatrnent No. 76 - NWS Refund (Regt/amy Uabidy) (Sewer Dive;ionRafe Base AeyNrtrnent No. 77 - Land Contributed - Contribution; in Aid of Con;trnetion ("CIAC') (SewerDi:/i;ion 49

Operating Into/ne 50

Operating Ineofne AajVutrnent No. 7 - Of/2er Operating Revenue; (Water 8° Sewer 57

Operating Ineorne Ae§n.rfment No. 2 - Intentiona/Q1 Lp Blank (Wafer 8 _Seu/er Di:/ifionf).............................. 5 I

Opera/ing Inronre AeyNxtrnent No. 3 - Contraefua/ feroieex - Profexriona/ "Bonu.re.r" (Water 8' fewer Dioisionf)

Operating IneorneA4NJtment No. 4 - Conifraetna/ .Yeroieex - Professional (LU 8020 Bonu.reJr Nonna/iqed)

(Wafer 8° Sewer DiI/i.fionJf) 53

Opera/ing Ineorne AajNstrnenl No. 5 - Confraelna/ _fervieef - Pno;'e.f.viona/ (La/for .Ya/ary Inerearex) ( l a t e r 8 °Sewer 54

Opera/ing lneorne Aeyaftrnent No. 6 - Corporate A//oeationf - Projexaional (/LPUC, LUCC, LABS A//oeaton;

Rernooa/) (Water 8 Sewer 55

Operating Ineorne Aeylwtnient No. 7 - Confraetna/ .Yentieef - Profeuiona/ (LU 8020 AtyNstmentf, Rernooa/J and

Rei/a.r.l i ationf) (later 8' fewer 56

Operating Inrorne AayNurtrnen/ No. 8 - Mifee//aneony Bank C/fargo: (Water 8' .fewer Divi,fion.f)........................ 57

Operating Leonie Adjnxtrnenl No. 9 - Ree/aJf;y9eation of l'/ant Addition; and Expense: ( l a t e r 8° SewerDioixiomr) 58Operating Income AeuJftment No. 70 - PFOA/PFO8 Operating Coftf (Water Division 58

Operating Ineorne AeyNstmen/ No. f 7 - PFOA/ PFO8 Aeeonnting Order Roe/a.fJf (later Division On bf) 58

Operating Ineorne AiyNxtrnent No. 12 - Mine//aneonx Ljeenser and Fee: (Water Dioixion One/) 59

Operating Income Aajuxtmen/ No. I3 - Rernooa/ of Text Year Expenxarfor Norths/ext Sewer (Sewer Division

Operating Income Aiyastnzent No. 74 - Operating Expenses Ae§u.rt/nent: (Sewer Dioifion 60

Operating Ineonze Ad/Nstnzent No. 75 - Contraetua/ .Yerviees - Te.fting (Water 8' ./ewer Dir/ifionf) 60

Operating Ineorne AeyNxtment No. 76 - Depreciation Expense (Water 8 .fewer 61

Operating Ineonze Aeyaxtmenl No. 77 - Property/ Taxer (Water 8' Sewer 67

Operating Income AoyNytment No. 18 - Ineotne Taxer (Water 6' Sewer Divifionr) 61

Operating Ineorne Ah/Jtrnenf No. 19 - PFOA Aeeonnting Order Yearbf Deyerra/ (later Division On bf) 62

Rule Bare AeyNrtment No. 1 - Plant Rec/asszfieations andAza.rtznent.r (WaterDivision) 63

Rule Bare AajNstment No. 2 - Intentiona/Q1 Let/ B/ané (later 64

Rate Bare AeyNstenent No. 3 Indirect Overhead Cost; ('7NDOH '9 Remova/J (Wafer Division)...................... 64

Rate Base A4NJtment No. 4 - Retirement; (Abet. 106) Ree/amtzeationx 29' Coneetione (Water Divi.rion).......... 65

Rate Base AcyNft/nent No. 5 - Aeeumn/ated Depreciation (Water 65

Rate Base A43/.rtrnent No. 6 .- Poe/Text Year ('1>7Y'9 Additions (Water Division) 66

Rate Base AeyNftment No. 7 - Intentional] Let! Blank (Water 66

Rate Base AayVftment No. 8 - PTY Retirement; (Water Division) 66

Rate Base A41/.ftrnent No 9 PTY INDOH Remova/J (Water Dzvzszon) 66

Rate Base Ad/t/.rtrnent No. 10 - A//oeafed Corporate Plan/ (l17ater 67

Rate Base AeuJftinent No. 11 - A//oeafed Corporate Plant Aeeumu/ated Depreciation (Water Divi.vion)............ 67

Rate Base Aozutfnent No. 12 - Cuxforner and LongTenn Meter Security Depofitx (Water Division) 68

Rate Base AeyNstment No. 13 - Aeewnu/ated Dead Into/ne Taxer ('ADIT') Water Division)................... 68

Rate Bare Aeaxtrnent No. 14 - A//owaneefor Cay/1 Working Capita/ ("ClVC' ) (W ater Division) 69

Rate Ba.reA4N.ftment No. 15 - Accounting Order (Water 69

Rate Bare A41/Jtrnent No. 16 .- Intentions/bf Left Blank (Water 70

Rate BaJeAd/Nftment No. 17 .- Intentional/y B/an/é (loafer 70

O P E R A T I N G I N C O M E S U M M A R Y

Operating Income AeNstmenf No. 7 - Other Operating Revenues (Water 70

Operating Income Addi/stnient No. 2 - Intentionalbf Blank (Wafer 70

Operating Ineorne AeyNstfnent No. 3 - Contraetnal Sentiees - Professional (Bonuses) (Water Division) 70

Operating Ineorne AeyNstnienf No. 4 ._ COntraetnal Services - Professional (LU 8020 BonusesNorrnaliged)

(Wafer 71

Operating Ineonze AepNstnient No. 5 - Contractual Services - Professional (Labor Salad/ Increases) (Water

77

Operating Ineofne /lenstmenf No. 6 - Corporate Allocations - Professional (APUC, L UC C , L A B S Alloeatons

Rernova0 (Water 72

Operating Leonie AeyNstnient No. 7 .- Contraetnal Sen/iees - Professional (LU 8020 AeyNstments, Removals and

Reelass ations) (Water 72

Operating Ineorne AeyNstment No. 8 - Miseellaneons Bank Charges (Water 73

Operating Leonie Aaynstment No. 9 - Reelassyieation of Planf and Expenses (Water Division) 73

Operating Income AenNstfnent No. 70 - PFOA/PFOS Operating Costs (Water 73

Operating Into/ne AeyNstznent No. 17 - PFOA/PFOS Aeeonnting OrderReelass (Water Division) 74

Operating Into/ne Ainnstrnent No. 72 - Miseellaneons Ljeenses and Fees (Water 74

Operating Leonie AiyNstment No. 73- Intentionally Let' Blanks (Water 74

Operating Ineorne AeyNstment No. 74- Intentionaly Left Blanks (Updater Division) 74

Operating Ineofne AajNstnient No. 75 - Contraetna/ Seniles - Testing (Water 75

Operating Leonie AeyNstfnent No. 76 - Depreciation Expense (later Division) 75Operating Leoine AeyNstment No. 77 - Property/ Taxes (Waler Division) 75

Operating Ineonze AeyNstznent No. 78 - Leoine Taxes (Water 76

Operating Leonie Adjustment No. 79 - PFOA Aeeonnfing Order Yearly Deferral (Water Division) 76

Rate Base Ali/stnient No. 7 - Plant Ree/assifieations and AeyNstrnents (Sewer Division) 77

Rate Base A /stinent No. 2 - Plant He/djOr Future Use (Sewer Division) 78

Rate Bose Ai§z/strnent No. 3 Indirect Over/Jead Costs ('7NDOH ') Re/nova/s (Sewer Division) 78

Rate Base AiyNstinent No. 4 - Retirements (Abet. 706) Ree/ass ieations 6' Coneetions (Sewer Division)........... 79

Rate Base Ae§ust/nent No. 5 - Anon/nn/ated Depreciation (Sewer 80

Rate Base Ai§nstnient No. 6 - Post-Test Year ("p7Y'9 Additions (Sewer Division) 80

Rate Base Ae§iust/nent No. 7 - PTY Rel/asszfeations (Sewer 87Rate Base Ali/stment No. 8 - PTY Res/ernents (Sewer 87

Rate Base AdjNstmenf No. 9 - Intentional Left Blank (Sewer 82

Rate Base AiyNst/nent No. 70 - A//oeated Corporate Plant (Sewer 82

Rate BaseAeyNstnient No. 77 - A//oewted Corporate P/antAeenrnn/ated D¢redation (Sewer Division)............. 82

Rate Base AeyNstrnent No. 72 - Intentional Left Blank (Sewer 83

Rafe Base Aryustrnent No. 13 - Aawmn/ated D ied Invonie Taxes ('ADIT') (Sewer Divifionj .................... 83

Rate Base Azuxtrnenf No. 74 - A //ou/anrefor Cas/2 Working Capita/ ("ClWC'Q (Sewer Dinzkion) 83

Rafe BaJfeA¢#n.rlmen! No. 75 - Inlenliona/4 Left Blank (fewer 84

Rate Ba.feA¢§u.flmen/ No. 76 - Intentional Left Blank (fewer 84

Rafe Bare Adjastrnenl No. f7 - Land Conffibz/fed - Contfilfufiont in Aid of Conffmdion ("Cl/C '9 (Sewer

84

l

l

OPERATING INCOME SUMMARY 84

Operating Inrofne Aanuflnzenf No. 1 - Of/Jer Operating Ref/annex (Sewer 84 ll

l

l

In/en/iona/ Left Blank (Sewer Division) 85

Contraetna/ Services - Profe.r.riona/ (Bonfires) (Sewer Di:/ixionj 85

Contraetnal SeWeex - Profesxiona/ LU 8020 Bonnfef Norma/iqed) (Sewer

Operating Ineorne AiyNftment No. 2 -

Operating Ineorne AdjNsfrnent No. 3 -

Operating Income AeyNstment No. 4 -

85Operating Income Ari/Nstntent No. 5 - Contraetna/ Senrieef - Professional (Labor Sa/ag Inmarex) (Sewer

86

Operating Ineorne Aiynxfmenf No. 6 - Corporate A//oeationx - Professional (APUC, LUCC, LABS A//ocatonf

Remo:/410 (Sewer 86Operating Income Aint/.ftrnent No. 7 - Confraetna/ Sen/iees - Pmfesfiona/ (LU 8020 AdjNxtmen/Jr, Reznooa/.f and

Ree/a.u ation.r) (Sewer 87

Operating Ineonte A4/Nftment No. 8 - Miree//aneonf Bank COngee (Sewer 87

Operating Income AajNurtmentNo. 9 - Ref/a.v.v eation o/P/ant and Expenses (Water 6' Sewer DioiJion.r)......... 87

Operating Into/ne AeyVftment No. 70 - Intentional Left B/an,é_r (Sewer 88

Operating Leonie AeéVyfment No. ll- Intentiona/Q Left Blank; (fewer Division) 88

Operating Into/ne AeyNxtmenf No. 72 - Misee//aneon.f I_jeen.fe.f and Fee; (fewer 88

Operating Income AeyNstinent No. 73 - Removal of Test Year Expenxesfor Nort/Jwext .fewer(fewer Division) .. 88

Operating Ineorne AeyVstwent No. 74 - Operating Expense: Aeyaftn/ent.f (Sewer 88

Opera/ing Ineofne Aeaftment No. 75 - Contraetua/ .Yen/ieef - Testing (Sewer 89

Operating Income AepfVxtfnent No. 76 - Depreciation Expense (Sewer Division) 89

Operating Ineofne AeyVstment No. 77 - Propergf Taxer (fewer Division) 90Operating Into/ne Adjustment No. 78 - Income Taxer (Sewer 90

Opera/ing Into/ne AajVftznent No. 19 - Intenfiona/Q1 Left B/ankf (Sewer 97

Opera/ing Leonie A4VJtment No. 20 - Intentional Left Blanks (Sewer Division) 97

Operating Income AeyNft/nent No. 27 - Inter/iona/bf Levi Blank; (fewer 97

Pure/Ja.redPowerAdjVJtor Mea/Janixrn ( ' 7 )P /IM 97

Property Tave.fAe u5forI\lec/Janitrn 92

.S/J/ern Irnpmvernenf Benefits Meebanifrn (".3"IB 93

SCHEDULES

Ute/yie/d Park - Water Division

Revenue TBH WEGross Revenue Conversion Factor TBH-W2Rate Base - Original Cost/FairSummary of Original Cost Rate Base Adjustments TBH W4aPlant in Service ("PIS") and Accumulated Depreciation TBH-W4bRate Base Adjustment No. 1 - Plant Reclassifications and Adjustments.......................... TBH-W5aRate Base Adjustment No 2 Intentionally Left Blank TBH-W5bRate Base Adjustment No. 3 - Indirect Overhead Costs ("INDOH") Removals...................TBH-W5cRate Base Adjustment No. 4 - Retirements (Acct 106) Rcclassilications and Corrections. TBH-W5dRate Base Adjustment No 5 Accumulated Depreciation TBH W5eRate Base Adjustment No. 6 - Post-Test Year ("PTY") AdditionsRate Base Adjustment No 7 Intentionally Left Blank TBH W6bRate Base Adjustment No. 8 - PTY RetircmentsRate Base Adjustment No. 9 PTY INDOH TBH W6d

....TBH-W7a. . lBH-W7b

. . TBH- W8a. . . . TBH- W8b

.....18H-W9a

.TBH-W9c

Rate Base Adjustment No. 10 - Allocated Corporate .Rate Base Adjustment No. 11 - Allocated Corporate Plant Accumulated DepreciationRate Base Adjustment No. 12 - Customer and Long-Term Meter Security Deposits......Rate Base Adjustment No. 13 - Accumulated Deferred Income Taxes ("ADIT")........Rate Base Adjustment No. 14 .- Cash Working Capital ("CWC")................Rate Base Adjustment No 15 Accounting OrderRate Base Adjustment No. 16 - Intentionally LeftRate Base Adjustment No. 17 - Intentionally Left Blank......................

TestOther Operating RevenuesIntentionally Left BlankContractual ServicesContractual Services -

TBH-W10TBH-W11

......TBH-W12a

- Professional (Bonuses) .....TBH-W13aProfessional (LU 8020 Bonuses

-W13b

Operating Income Statement - Test Year and Staff RecommendedSummary of Operating Income AdjustmentsOperating Income Adjustment No. 1 -Operating Income Adjustment No. 2 -Operating Income Adjustment No. 3 -Operating Income Adjustment No. 4 -

TBHOperating Income Adjustment No. 5 - Contractual Services - Professional (LU 8020 SalaryIncreases)Operating Income Adjustment No. 6 - Corporate Allocations - Professional (APUC, LUCC, andLUCC-LABS Allocations Removal) TBH-w13dOperating Income Adjustment No. 7 - Contractual Services - Professional (LU 8020 Adjustments,Removals andOperating Income Adjustment No. 8 - Miscellaneous Bank Charges........... . . . ..TBH-W14aOperating Income Adjustment No. 9 - Reclassiticadon of Plant and Expenses................. TBI-I-w14bOperating Income Adjustment No. 10 - PFOA/PFOS Operating Costs.............................TBH-W14cOperating Income Adjustment No. 11 - PFOA/PFOS Accounting Order Reclass TBH-w14dOperating Income Adjustment No. 12 - Miscellaneous Licenses and Fees .........................TBH-W14eOperating Income Adjustment No. 13 - Intentionally Left Blank..................... TBH-W14fOperating Income Adjustment No. 14 - Intentionally Left Blank. .TBH-W14gOperating Income Adjustment No. 15 - Contractual Services - Testing TBH-w14hOperating Income Adjustment No. 14 - Deferral for the PFOA/PFOS Costs...................TBH-W14gOperating Income Adjustment No. 15 - Intentionally Left TBH-w14hOperating Income Adjustment No 16 Depreciation Expense TBH W15Operating Income Adjusnnent No 17 Property Tax Expense TBH W16Operating Income Adjustment No 18 Income Tax expense TBH W17Operating Income Adjustment No. 19 - Deferral for the PFOA/PFOS Costs.....................TBH-W18Operating Income Adjustment No. 20 - Intentionally Left 9Operating Income Adjustment No 21 Intentionally Left Blank I`BH W20

Litchfield Park - Sewer Division

Revenue WW1Gross Revenue Conversion FactorRate Base - Original Cost/Fairsummary of Original Cost Rate Base Adjustments TBH WW4aPlant in Service ("PIS") and Accumulated Depreciation TBH Ww4bRate Base Adjustment No 1 Plant Reclassifications TBH WW5aRate Base Adjustment No. 2 Plant Held for Future Use TBH Ww5b

..TBH WiScRate Base Adjustment No. 3 - Indirect Overhead Costs ("INDOH") Removals.............Rate Base Adjustment No. 4 - Retirements (Acct 106) Reclassifications and Corrections.......

Rate Base Adjustment No 5 Accumulated Depreciation I BH WW5eRate Base Adjustment No. 6 - Post-Test Year ("PTY") AdditionsRate Base Adjustment No 7 PTY Reclassifications TBH Ww6bRate Base Adjustment No. 8 - PTY RetirementsRate Base Adjustment No. 9 - PTY INDOH Removals TBH-WW6dRate Base Adjustment No 10 Allocated Corporate Plant TBH WW7aRate Base Adjustment No. ll - Allocated Corporate Plant Accumulated Depreciation . TBH-WW7bRate Base Adjustment No 12 Intentionally I eft Blank TBH WW8aRate Base Adjustment No. 13 - Accumulated Deferred Income Taxes ("ADIT")........... TBH-WW8bRate Base Adjustment No. 14 - Cash Working CapitalRate Base Adjustment No 15 Intentionally Left Blank TBH WW9aRate Base Adjustment No. 16 .- Northwest Sewer ("NWS") Refund (Regulatory

Rate Base Adjustment No. 17- Land Contributed - Contributions in Aid of Construction ("CIAC")

TBH-WW10

-WW13b

Professional (APUC, LUCC, and

Operating Income Statement .- 1est Year and Staff RecommendedSummary of Operating Income Adjustments - Test Year.... -WWI 1Operating Income Adjustment No. 1 - Other Operating Re\ venues 1BH WW12aOperating Income Adjustment No. 2 - Intentionally Left Blank TBH Ww12bOperating Income Adjustment No. 3 - Contractual Services - Professional (Bonuses) .TBH-WWl3aOperating Income Adjustment No. 4 - Contractual Services - Professional (LU 8020 Bonuses

TBHOperating Income Adjustment No. 5 - Contractual Services .- Professional (LU 8020 SalaryIncreases) ..TBHOperating Income Adjustment No. 6 - Corporate Allocations -LUCC-LABS Allocations Removal) TBHWW13dOperating Income Adjustment No. 7 - Contractual Services - Professional (LU 8020 Adjustments,Removals and Reclassifcadons).................................................................................................TBH-WWI3eOperating Income Adjustment No. 8 - Miscellaneous Bank Charges................................TBH-WW14aOperating Income Adjustment No. 9 - Reclassification of Plant and Expenses............. TBH-WW14bOperating Income Adjustment No. 10 - Intentionally Left Blank......................................TBH-WWI4cOperating Income Adjustment No. 11 - Intentionally Left TBH-WW14dOperating Income Adjustment No. 12 - Intentionally Left TBH-WW14dOperating Income Adjustment No. 13 - Removal of Test Year Expenses for Northwest Sewer.........

Operating Income Adjustment No. 14 - Operating Expenses Adjustments ...................'IBH-WWI4gOperating Income Adjustment No. 15 - Contractual Services Testing TBH WWI4hOperating Income Adjustment No. 16 - Depreciation Expense TBH-WW15Operating Income Adjustment No. 17 .- Property Tax Expense..........................................TBH-WWI6Operating Income Adjustment No 18 Income Tax Expense TBH WW17Operating Income Adjustment No. 19 - Intentionally Left B1ank........................................TBH-WW18Operating Income Adjustment No. 20 - Intentionally Left Blank. TBH WW19Operating Income Adjustment No. 21 - Intentionally Left Blank... .....TBH-WW20

ATTACHMENTS

APUC's Corporate Attachment 1APUC Cost Allocation Manual effective januarv 1, Attachment 2

- Land deemed not usedLitchfield Aquifer Reclamation Facility and Future Site of Business Officesand Attachment 3Northwest Sewer Transactions Timeline Company's response to RUCO 10 03 (Supplemental)

Attachment 4

EXECUTIVE SUMMARYLIBERTY UTILITIES (LITCHFIELD PARK WATER AND SEWER) CORP.

DOCKET no. SW-01428A-17-0058 ET. AL.

On February 28, 2017, Liberty Utilities (Litchfield Park Water & Sewer) Corp. ("LitchfieldPark" or "Company") filed applications for permanent rate increases for the Company's SewerDivision ("Litchfield Park Sewer") in Docket No. SW-01428A-_7-0058 and for die Company's WaterDivision ("Litchfield Park Water") in Docket No. W-01427A-17-0059 ("Rate Docket") (unlessotherwise specified, "division" or "divisions" refers to the sewer and water divisions). On March 17,2017, the Company filed applications requesting authority from the Arizona Corporation Commission("Commission") to issue evidence of indebtedness in a total amount not to exceed $30,000,000 forLitchfield Park Water in Docket No. W-01427A-17-0_77, and for Litchfield Park Sewer in DocketNo. SW-01428A-17-0078 ("Financing Docket"). On March 20, 2017, Litchfield Park filed motionsto consolidate all four cases which was granted by procedural order on March 31, 2017.

On October 16, 2017, Litchfield Park filed Supplemental Direct Testimony concerning theNorthwest Sewer ("NWS") transactions ("NWS Supplemental Testimony").

Lifc/y'ie/d Park Water

Litchfield Park Water is a for-profit, Class A public service corporation serving approximately18,500 water connections in portions of Maricopa County Arizona. Litchfield Park Water is organizedunder the Liberty Utilities (Sub) Corp. ("LU 8020"), which is a wholly owned subsidiary of LibertyUtilities Co. Liberty Utilities Co. is a subsidiary of Liberty Utilities (Canada) Corp. ("Liberty UtilitiesCanada"), which is a subsidiary of Algonquin Power & Utilities Corporation ("APUC"). TheLitchfield Park Water's current authorized rates and charges were established in Decision No. 74437,dated April 18, 2014, using a test year ending December 31, 2012. The current rates went into effecton or after May 1, 2014.

Litchfield Park Water proposed a $1,533,896, or 11.35 percent, revenue increase from$13,510,828 to 315,044,725 The proposed revenue increase would produce an operating income of$3,629,266 for an 8.67 percent rate of return on its proposed adjusted Original Cost Rate Base("OCRB") of $41,860,046 Litchfield Park Water proposes to use its OCRB as its Fair Value RateBase ("FVRB").

Staff recommends a $95,436, or 0.71 percent, revenue decrease from Staff adjusted test yearrevenues of $13,488,908 to 313,393,472 Staff's recommended revenue decrease would produce anoperating income of $2,951,544 for a 7.76 percent rate of return on a Staff's adjusted OCRB of838,035,358

Ism/#ie/dPark .fewer

Litchfield Park Sewer is a for-profit, Class A public service corporation serving approximately17,600 wastewater customers in portions of Maricopa County Arizona. Litchfield Park Sewer isorganized under the LU 8020, which is a wholly owned subsidiary of Liberty Utilities Co. LibertyUdlides Co. is a subsidiary of Liberty Utilities Canada, which is a subsidiary of APUC. Litchfield ParkSewer's current authorized rates and charges were established in Decision No. 74437, dated April 18,

2014, using a test year ending December 31 , 2012. The current rates went into effect on or after May1, 2014.

7

Litchfield Park Sewer proposed a $3,496,801 , or 30.06 percent, revenue increase from$11,633,954 to 8$15,130,755. The proposed revenue increase would produce an operating income of$3,888,854 for an 8.67 percent rate of return on its proposed adjusted OCRB of $44,854,137Litchfield Park Sewer proposes to use its OCRB as its Fair Value Rate Base ("F\ RB").

Staff recommends an increase of $$2,481,806, or a 21.32 percent, revenue increase from Staffadjusted test year revenues of $11,643,135 ro 3$14,124,940. Staff's recommended revenue increasewould produce an operating income of $3,282,180 for a 7.76 percent rate of return on a Staff°s adjustedOCRB of 542,296,139

O//Jer Ifemr:

The Company seeks Commission approval (1) of the Company's proposed Purchased PowerAdjustor Mechanism ("PPAM"); (2) of the Company's proposed Property Tax Adjustor Mechanism("PTAM"); (3) to implement the Company's proposed System Improvements Benefit ("SIB"); and(4) of the Company's proposed modifications to die Company's tariff of rates and charges.

Direct Testimony of Teresa B. HunsakerDocket Nos. SW-01428A-17-0058 et. al.Page 1

l INTRODUCTION

2 Q. Please state your name, occupation, and business address.

A.3

4

5

My name is Teresa B. Hunsaker ("Ms. Hunsakcr"). I am a Public Utilities Analyst IV employed

by the Arizona Corporation Commission ("ACC" or "Commission") in the Utilities Division

("Staff"). My business address is 1200 West Washington Street, Phoenix, Arizona 85007.

6

7 Q. Briefly describe your responsibilities as a Public Utilities Analyst.

A.8 In my capacity as a Public Utilities Analyst, I analyze and examine accounting, financial,

9 statistical and other information included in utility rate, financing and other applications. In

10

11

12

addition, I prepare written reports based on my analyses and present Staff's recommendations

to the Commission on utility revenue requirements, rate design and other issues. I am also

responsible for testifying at formal hearings on these matters.

13

14 Q. Please describe your educational background and professional experience.

15 A.

16

17

18

19

I received a Bachelor of Science Degree in Accounting from the University of Nevada, Las

Vegas and an Associate Degree in Business Management from Clark County Community

College. I have attended the National Association of Regulatory Utility Commissioners

("NARUC") Utilities Rate School, which presents general regulatory and business issues.

Additionally, I have attended a Financial Management seminar sponsored by the American

20 Water Works Association. I recency attended die Institute of Public Utilities, Advance

21

22

23

Regulatory Studies Program in October of 2017. I joined the Commission as a Public Utilities

Analyst in October of 2013. Prior to employment with the Commission, I worked in several

different accounting and auditing positions for more than 27 years.

24


l What cases have been consolidated in this docket?Q .

2 A.

3

4

5

6

7

On February 28, 2017, Liberty Utilities (Litchfield Park Water & Sewer) Corp. ("Litchfield

Park" or "Company") filed applications for permanent rate increases for Litchfield Park Sewer

Division ("Litchfield Park Sewer") in Docket No. SW-01428A-17-0058, and for Litchfield Park

Water Division ("Litchfield Park Water") in Docket No. W-01427A-17-0059 ("Rate Docket").

()n March 17, 2017, the Company filed applications requesting authority from the Commission

to issue evidence of indebtedness in a total amount not to exceed $30,000,000 for Litchfield

8 Park Water in Docket No. W-01427A-17-0077, and for Litchfield Park Sewer in Docket No.

9

10

11

12

13

SW-01428A-17-0078 ("Financing Docket"). Cm March 20, 2017, Litchfield Park filed motions

to consolidate all four cases which was granted by procedural order on March 31, 2017. On

October 16, 2017, Litchfield Park filed Supplemental Direct Testimony concerning the

Northwest Sewer ("NWS") transactions ("NWS Supplemental Testimony") requiring a refund

to Litchfield Park Sewer customers.

14

15 Q . What is the scope of your testimony in these cases?

I16 A .

17

18

19

20

21

22

23

24

25

26

am presenting Staffs analysis and recommendations regarding the Company's applications

for permanent increases in its rates and charges for water and sewer services. This includes

presenting testimony and schedules addressing rate base, operating revenues and expenses,

revenue requirement, and the adjustor mechanisms proposed by the Company's rate design. I

will file additional testimony regarding rate design. Additionally, I am presenting testimony

regarding the NWS transactions. Due to the timing and complexity of the NWS Supplemental

Testimony filed by the Company, Staff engaged Larkin & Associate PLLC ("Larkin") to analyze

the Company's NWS Supplemental Testimony and the NWS transactions. Staff Witness Mr.

Ralph Smith ("Mr. Smith") will be presenting details of Staffs analysis and refund calculations

regarding the NWS transactions in Staffs Surrebuttal Testimony. Staff witness Ms. Crystal

Brown ("Ms. Brown") is presenting Staffs Cost of Capital Testimony and Staffs analysis and

Direct Testimony of Teresa B. HunsakerDocket Nos. SW-01428A-_7-0058 et. al.Page 3

l

2

3

4

related recommendations for the financing applications. Ms. Dorothy HaMs, Staffs Engineer

("Ms. Hains") is presenting Staff's engineering analysis, recommendations regarding the

Company's proposed System Improvements Benefit ("SIB") Mechanism and related

recommendations for Litchfield Park.

5

6 Q. What is the basis of your testimony in this c a s e ?

7 A.

8

9

10

l l

I performed a regulatory audit of both Litchfield Park Water's and Litchfield Park Sewer's

applications and records. A regulatory audit consisted of examining and testing financial

information, accounting records, and other supporting documentation and verifying that the

accounting principles applied were in accordance with the Commission-adopted NARUC

Uniform System of Accounts ("USoA") and Generally Accepted Accounting Principles

12 (GAAP).

13

14 BACKGROUND

15 Ljirbjie/d Park Wafer

16 Q. Please review the background of the application for Litchfield Park Water.

A.17

18

19

20

21

22

23

Litchfield Park Water is a for-profit, Class A public service corporation serving approximately

18,500 water connections in pardons of Maricopa County Arizona. Litchfield Park Water is

organized under the Liberty Utilities (Sub) Corp ("LU 8020"), which is a wholly owned

subsidiary of Liberty Utilities Co. ("Liberty Utilities"). Liberty Utilities is a subsidiary of Libcrty

Utilities (Canada) Corp. ("Liberty Utilities Canada" or "LUCC")), which is a subsidiary of

Algonquin Power & Utilities Corporation ("APUC"). Liberty Udlides, LUCC and APUC's

common and shared costs are allocated to Litchfield Park. Litchfield Park Water's current

24

25

26

authorized rates and charges were established in Decision No. 74437, dated April 18, 2014,

using a test year ending December 31, 2012. The current rates went into effect on or after May

1, 2014.

Direct Testimony of Teresa B. HunsakerDocket Nos. SW01428A-17-0058 et. al.Page 4

1

2 Ijfr/#ie/d Park Sewer

3 Q. Please review the background of the application for Litchfield Park Sewer.

4 A Litchfield Park Sewer is a for-profit, Class A public service corporation serving approximately

5 17,600 wastewater customers in portions of Maricopa County Arizona. Litchfield Park Sewer

6 is organized under the LU 8020, which is a wholly owned subsidiary of Liberty Utilities. Liberty

7 Utilities is a subsidiary of Liberty Utilities Canada, which is a subsidiary of APUC. Liberty

8 Utilities, LUCC and APUC's common and shared costs are allocated to Litchfield Park.

9 Litchfield Park Sewer's current authorized rates and charges were established in Decision No.

10 74437, dated April 18, 2014, usiil a test year ending December 31, 2012. The current rates

went into effect on or after May 1, 2014.

12

13 Ljbeffy Uri/ities

14 Q. Please provide some background and information about Liberty Utilities.

15 A. Litchfield Park is organized under Liberty Utilities' which is a Delaware corporation operated

16 and regulated in the United States. Liberty Utilities completed the acquisition of the Empire

17 District Electric Company ("Empire")2 on January 1, 2017. Liberty Utilities is a subsidiary of

18 Liberty Utilities Canada. Liberty Algonquin Business Services3 ("LUCC-I .ABS") is organized

19 within LUCC. Liberty Utilities Canada, is a subsidiary of APUC. The Arizona utilities are

20 wholly owned subsidiaries of LU 8020 which is a wholly owned subsidiary of Liberty Utilitiesl.

21 LU 8020's place of business is 12725 West Indian School Road, Suite D-101, Avondale,

22 Arizona.

l Liberty Utilities has operations in Arizona, Arkansas, California, Georgia, Illinois, Iowa, Kansas, Massachusetts, Missouri,Montana, New Hampshire, Oklahoma and Texas serving approximately 800,000 customers throughout the United States.2 Empire is a regulated utility company providing electric, natural gas and water services to 218,000 customers.3 LUCCLABS subsidiary provides business and corporate services to LUCC and APCo.* Liberty Utilities operated in Arizona are: Liberty Utilities (Black Mountain Sewer), Liberty Utilities (Litchfield Park Waterand Sewer), Liberty Utilities (Rio Rico Water and Sewer), Bella Vista Water Company, Gold Canyon Sewer Company andEntrada del Oro Sewer Company.

I


l /PUC

2 Q.

3

Please provide some background on the corporate structure of APUC and information

about APUC.

A .4

5

6

7

8

9

10

Litchfield Park is ultimately owned by APUC. Headquartered in ()Ontario, Canada, APUC is a

publicly traded member of the Toronto and New York Stock Exchanges and is a registrant

with the U.S. Security and Exchange Commission. APUC's distribution business group consist

of Liberty Utilities Canada and Liberty Utilities. APUC's electric generation business group

operates as Algonquin Power Co. ("APCo"). APUC's corporate structure as of April 6, 2017

was provided in the Company's response to TBH-2.39 (See Attachment 1). Staff has included

Chart A and Chart C from TBH 2.39.

12

13

14 portfolio of more than $10 billion in CAD.

15

16

17

18

Based on information contained in the APUC's 2016 annual report, APUC's annual revenues

for 2017 are expected to exceed $2 billion in Canadian Dollars ("CAD") from APUC's asset

APUC's current market capitalization is

approaching $5 billion in CAD. APUC subsidiaries own and operate regulated utilities in the

United States in thirteen (13) states, and own non-regulated generation facilities and regulated

electric transmission and natural gas pipelines throughout the United States and Canada. The

distribution business group operates in the United States as Liberty Utilities and provides rate

19 Theregulated water, electricity and natural gas utility services to over 800,000 customers.

20

21

22

23

24

electric generation business group operates as APCo and owns or has interests in a portfolio

of North American based contracted wind, solar, hydroelectric and natural gas powered

generating facilities representing more than 1,150 MW of installed capacity. The third business

group, the transmission business group, invests in rate regulated electric transmission and

natural gas pipeline systems in the United States and Canada.

25


l Q. What are the primary reasons for the Litchfield Park's requested permanent rate

2 increases?

A .3

4

5

6

According to Litchfield Park, the primary reasons are that the revenues from its utility

operations are presently inadequate to provide a fair rate of return on the fair value of its utility

lent and ro er I devoted to public service. O eran ex senses have caused the revenueP p P P P 8 P

reduced b the current rates and char es for service to become inane rate ro meet o keratinP y g q P g

7

8

9

10

expenses and provide a reasonable rate of return. Additionally, the Company states that its

current rates of return are inadequate to allow it to obtain debt, pay a reasonable dividend to

its stockholder, maintain a sound credit rating, and/or enable the Company to attract additional

capital on reasonable and acceptable terns in order to continue the investments in utility plant

necessary to adequately serve customers.

12

13 C O N S U ME R S E R V I C E

14 Q

15

Please provide a brief history of customer complaints received by the C ommiss ion

regarding Litchfield Park.

A.16 Staff reviewed the Commission's records and found that from January 1, 2014 through

17 November 15, 2017, there were three (3) complaints filed.

18 2014

19 2015

20 2016

21 2017

Zero (0) Complaints

One (1) Complaint

One (1) Complaint (billing)

One (1) Complaint

22

23

One (1) complaint remains open pending investigation. Two (2) Opinions related to this

application have been received, both of which are in opposition to the proposed rate increase.

24


l COMPLIANCE

2 Q. Please provide a summary of the compliance status of Litchfield Park Water.

A .3

4

A check of the ACC's Compliance Database dated November 15, 2017, indicates that there are

currently no delinquencies for Litchfield Park Water.

5

6 Q. Please provide a summary of the compliance status of Litchfield Park Sewer.

A.7

8

A check of the ACC's Compliance Database dated November 15, 2017, indicates that there are

currently no delinquencies for Litchfield Park Sewer.

9

10 SUMMARY OF PROPOSED REVENUES

l Q. Please summarize Litchfield Park Water's filing.

12 A.

13

14

15

16

17

Litchfield Park Water proposed a $1,533,896, or 11.35 percent, revenue increase from

$13,510,828 to $15,044,723 The proposed revenue increase would produce an operating

income of $3,629,266 for an 8.67 percent rate of return on its proposed adjusted Original Cost

Rate Base ("OCRB") of $41,860,046 Litchfield Park Water proposes to use its OCRB as its

Fair Value Rate Base ("FVRB"). Litchfield Park Water's rate filing is based on the twelve (12)

months ended December 31, 2016 ("test year"). The filing uses the current applicable federal

18 income tax rate of 34 percent.

19

20 Q. Please summarize LitchGeld Park Sewer's f iling.

A.21

22

23

24

25

26

Litchfield Park Sewer proposed a $3,496,801, or 30.06 percent, revenue increase from

311,633,954 to $15,130,755 The proposed revenue increase would produce an operating

income of $3,888,854 for an 8.67 percent rate of return on its proposed adjusted OCRB of

$44,854,137. Litchfield Park Sewer proposes to OCRB as its FVRB. Litchfield Park Sewer's

rate filing uses the same test year as the water filing. The Blind uses the current applicable

federal income tax rate of 34 percent.


l Please summarize Staffs recommended revenue for Litchfield Park Water.Q.

2 A. Staff recommends a $95,436, or 0.71 percent, revenue decrease from the Staff adjusted test year

3 StafFs recommended revenue decrease wouldrevenues of $13,488,908 to $13,393,472

4

5

6

produce an operating income of $2,951,544 for a 7.76 percent rate of return on a Staffs

adjusted OCRB of $38,035,358 Staff also used the current applicable federal income tax rate

of 34 percent.

7

8 Please summarize Staffs recommended revenue for Litchfield Park Sewer.Q.

9 A.

10

l l

12

13

Staff recommends an increase of 32,481,806, or a 21.32 percent, revenue increase from the

Staff adjusted test year revenues of $11,643,135 to $14,124,940. Staffs recommended revenue

increase would produce an operating income of $3,282,180 for a 7.76 percent rate of return on

a Staff's adjusted OCRB of $42,296,139 Staff also used the current applicable federal income

tax rate of 34 percent.

14

15 Q.

16

In the event that significant federal income tax reform legislation is enacted, does Staff

have a recommendation regarding the impact of this potential income tax reform?

A.17 Yes. Staff recommends that in the event that significant federal income tax reform legislation

18

19

20

21

22

23

24

25

is enacted and becomes effective prior to the conclusion of this case, and such legislation

materially impacts the Company's revenue requirements, the rates approved by the

Commission either reflect this change or that the Company shall work with Staff to propose a

rate adjustment mechanism to enable the pass-through of income tax effects to its customers.

Additionally, if the effective date of such federal income tax rate change occurs before the

Commission's Decision in this Docket becomes effective, the gross revenue conversion factor

used to calculate prospectively recovered income tax expense shall be updated to reflect the

federal income tax rate change.

26


l RATE BASE SUMMARY

2 Q. Please summarize Staffs rate base adjustments for Litchfield Park.

3 A . Staffs testimony discusses the following rate base adjustments:

4

5

6

7

8

9

10

Rate Base Adjustment No. 1

Plant Reclassifications - This adjustment decreases plant in service for Litchfield Park

Water by $787,839 and increases plant in service for Litchfield Park Sewer by $254,006.

This adjustment is due to misclassifications of plant in service between the different

divisions and from operating expenses to capital accounts. Staff's adjustments reflect

the proper classifications.

12

13

14

15


Plant Held for Future Use - This adjustment decreases plant in service for Litchfield

Park Sewer by $1,752,225 This adjustment is related to contributed land that is not

used and useful at this time.

16

17

18

19

20

21

22

23

24

25


Indirect Overhead Costs ("INDOH") Removals - This adjustment decreases plant in

service for Litchfield Park Water by $78,511 and decreases plant in service in Litchfield

Park Sewer by $69,345. The adjustment is due to the Company's failure to identify and

remove costs nor appropriate for ratemaking. These expenses were capitalized within

the APUC, LUCC, and LUCC-LABS Cost Pools that were due allocated at 21 percent

to all plant in service projects. Staff calculated a percentage of such removals for the

test year and applied this percentage to INDOH captured in plant placed in service

from 2013 through 2016 by the Litchfield Park.

26

Direct Testimony of Teresa B. HunsakerDocket Nos. SW-01428A-17-0058 Er. al.Page 10

l

2


Plant Retirement and Corrections

3

4

This adjustment decreases plant in service for

Litchfield Park Water by $280,827 and decreases plant in service for Litchfield Park

Sewer by $110,181. This adjustment is due to additional adjustments necessary based

5 on supporting documentation provided by the Company related to plant retirements.

6

7

8

9

10

l l


This adjustment reflects Staff's calculation of accumulated depreciation reserve based

on StafFs adjustments to plant in service, and based on the date the plant was acquired.

This adjustment increases accumulated depreciation in Litchfield Park Water by

$445,018 and decreases in Litchfield Park Sewer by $364,582.

12

13

14


Post-Test Year ("PTY") Additions, Plant in Service This adjustment to plant in

15

16

17

service reflect updated costs for the Post-Test Year ("PTY") plant projects completed

durough October 31, 2017. Plant in service decreased in Litchfield Park Water by

$415,941 and increased in Litchfield Park Sewer by 81 ,043,21().

18

19

20

21


PTY Plant Reclassifications - This adjustment has no effect on total plant in service

for Litchfield Park Sewer, but is necessary to properly classify plant additions to the

22 appropriate plant accounts.

23

24

25


PTY Plant Retirements- This adjustment decreases plant in service for Litchfield Park

26 Water by $367,424 and plant in service for Litchfield Park Sewer by $203,336. This

Direct Testimony of Teresa B. HunsakcrDocket Nos. SW-01428A-17-0058 et. al.Page 11

l adjustment is due to additional information provided by the Company related to the

2 retirement of plant associated with PTY projects.

3

4

5

6

7

8


PTY Indirect Overhead Costs ("IND()H") Removals - This adjustment decreases

plant in service for Litchfield Park Water by $40,171 and plant in service in Litchfield

Park Sewer by $13,641. This adjustment removes costs not appropriate for ratemaking

purposes that were included as INDOH on the PTY projects.

9

10 Rate Base Adjustment No. 10

l

12

13

14

15

Allocated Corporate Plant - This adjustment to plant in service reflects updated costs

for the Corporate Plant PTY plant projects completed through October 31, 2017. Plant

in service increases for Litchfield Park Water by 82,422 and decreases for Litchfield

Park Sewer by $95. Staff acknowledges that the sewer division adjustment is immaterial

but recommends making the adjustment because it is a companion adjustment to the

16 odder PTY adjustments.

17


19 Allocated Corporate Plant Accumulated Depreciation

20

21

This adjusunent decreases

accumulated depreciation to reflect the adjustment to Corporate Plant. Plant in service

decreasedin Litchfield Park Water by $37,975 and in Litchfield Park Sewer by $41 ,726.

22


24 This adjustment increasesCustomer and Lon8-Term Security Meter Deposits

25

26

customer meter deposits by $6,224 and customer security deposits by $59,663 for a

total adjustment of $65,887 in Litchfield Park Water.I


l Rate Base Adjustment No. 13

2

3

4

5

6

Accumulated Deferred Income Taxes ("ADIT"l - This adjustment is the result of

ref lec t ing Staffs calculat ion of the ADIT us ing the Staff recommended plant,

accumulated depreciation, Contributions in Aid of Construction ("CIAC"), and

Advances in Aid of Construction ("AIAC") balances as well as the Staff recommended

income tax rates. The ADIT increased in Litchfield Park Water by $1,726,266 and

7 Litchfield Park Sewer by $974,048.

8


10 This adjustment decreases cashAllowance for Cash Working Capital ("CWC")

l l

12

13

working capital to reflect the inclusion of interest expense in the lead-lag study results,

and to reflect Staffs recommended adjustments to operating expenses. Rate base

decreased in Litchfield Park Water by $151,754 and rate base increased in Litchfield

14 Park Sewer by $23,280.

15


17

18

19

20

21

Accounting Order for PFOA Deferred Projections ... This adjustment decreases doe

regulatory asset related to the deferred expenses audiorized in Decision No. 75718 for

Litchfield Park Water by $319,532. The Commission's Decision contained an estimate

of incurred costs, and this adjustment aligns recoveries with the actual level of increased

costs based on supporting documentation provided by the Company.

22

23

24


Regulatory Liability

25

NWS Refunds - This adjustment reflects Staff 's current

calculations of the regulatory liability for Litchfield Park Sewer of $2,700,000 related to

Direct Testimony of Teresa B. Hun sakerDocket Nos. SW-01428A-17-0058 Er. al.Page 13

l

2

the fai lure of the Company to recognize the income from the Northwest Sewer

agreement dating to 2005.


4 CIAC - This adjustment decreases gross CIAC in Litchfield Park Sewer by $1,621,522

due to the removal of contributed land.5

6

7 Opera/ing Income S1/mmag'

Q. Please summarize Staffs operating income adjustments for Litchfield Park.

A. Staffs testimony discusses the following operating income adjustments:

8

9

10

11 Operating Income Adjustment No. 1

12 Other Operating Revenues

13

This adjustment reclassifies other operating revenues

between Litchfield Park Water and Litchfield Park Sewer. The Company also included

14

15

16

non-recurring income for Litchfield Park Water that was removed. This adjustment

decreases other operating revenue for Litchfield Park Water by $21,920 and increases

odder operating revenues for Litchfield Park Sewer by 39,181 .

17

Operating Income Adjustment No. 3

Corporate Allocations from APUC, LUCC and LUCC-LABS - Contractual Services

18

19

20

21

22

Professional "Bonuses" - This adjustment decreases operating expenses to remove 50

percent of the incentive pay for corporate bonuses that were allocated to Litchfield

Park Water and Litchfield Park Sewer. Operating expenses decreased for Litchfield

Park Water by $80,906 and for Litchfield Park Sewer by $88,898.23

24


l

2


Corporate Allocations from LU 8020 Contractual Services - Professional "Bonuses"

3

4

5

This adjustment decreases operating expenses to normalize the bonuses for LU 8020.

Operating expenses decreased for Litchfield Park Water by $19,593 and for Litchfield

Park Sewer by $21,528.

6

7

8

9

10

11

12

Operating Income Adjustment No. S

Corporate Allocations from LU 8020 Contractual Services - Professional "Salary

Increases" - This adjustment decreases operating expenses to remove due Company's

proposed 3 percents' salary increases for each of two years for APUC, LUCC and

LUCC-LABS. Gperating expenses decreased for Litchfield Park Water by 310,606 and

Litchfield Park Sewer by $8,886.

13

14

15


Contractual Services - Professional (APUC. LUCC. and LUCC-LABS Allocations

16 Removal) This adjustment decreases operating expenses to remove expenses that

17

18

19

were included in the cost pools that are inappropriate for ratemaking purposes.

Operating expenses decreased for Litchfield Park Water by $13,514 and Litchfield Park

Sewer by $14,849.

20

21

22


Contractual Services - Professional (LU 8020 Allocations Removal) - This adjustment

23 decreases operating expenses to remove expenses that were included in the cost pools

24 that are inappropriate for ratemaking purposes. Operating expenses decreased for

25 Litchfield Park Water by $28,181 and for Litchfield Park Sewer by $30,965.

5 The proposed wage increase for two (2) years at 3 percent is 6.09 percent.


l

2 This adjustment decreases operating

3


Miscellaneous Expenses (Bank Charges)

expenses to remove bank charges related to lines of credit used for plant additions.

4

5

These expenditures were included in plant in service. Operating expenses decreased

for Litchfield Park Water by $160,801 and Litchfield Park Sewer by $67,565.

6

7 Operating Income Adjustment No. 9

8 Mis adjustment is due toReclassifications of Plant Additions and Expenses

9

1 0

l

12

misclassifications of plant in service between the different divisions and from operating

expenses to capital accounts. Staff's adjustments reflect the proper classifications.

Operating expenses increase for Litchfield Park Water by $90,053 and in Litchfield Park

Sewer by $16,537.

13

14

15


PFOA/PFOS Operating Costs

16

- This adjustment reflects the supported operating

costs related to the PFOA treatment plant placed in service as of October 31, 2017.

17 Operating expenses decrease for Litchfield Park Water by $148,866.

18

19

20


PFOA/PFOS Accounting Order Reclassification - This adjustment reclassifies costs

21 related to the accounting order authorized by the Commission in Decision No. 75718

22

23

from operating expenses to a regulatory asset. Operating expenses decreased for

Litchfield Park Water by $4,806.

24


l Operating Income Adjustment No. 12

2

3

4

Miscellaneous - Licenses and Fees - Tis adjustment decreases operating expenses to

remove expenses included in the test year that are inappropriate for ratemaking

purposes. Operating expenses decrease for Litchfield Park Water by $7,792.

5

6

7

8

Cperating Income Adjustment No. 13

NWS Costs Removal- This adjustment removes costs inadvertently added to test year

expenses. Operating expenses decrease for Litchfield Park Sewer by $2,891.

9

10

l

12

13


Operational Expenses Adjustment - This adjustment includes additional power costs

that the Company inadvertency did not capture in test year expenses. Operating

expenses increase for Litchfield Park Sewer by $129,320.

14

15

16

17

18

19


Contractual Services - Testing- This adjustment decreases operating expenses to reflect

Staff Engineer's calculation of annual testing costs for Litchfield Park Water by.

Operating expenses decrease for Litchfield Park Water by $53,109 and increase for

Litchfield Park Sewer by $17,617.

20

21

22

23

24

25


Depreciation Expense - This adjustment reflects Staff's calculation of depreciation

expense using Staft"s recommended depreciation rates, plant and CIAC balances.

Operating expenses decrease for Litchfield Park Water by $88,513 and increases for

Litchfield Park Sewer by $51 ,482.

26

l

l

Direct Testimony of Teresa B. Hunsaker

Docket Nos. SW-01428A_17_0058 et. al.

Page 17

i

i

l

l

l l

l

2

3

4


Property Tax Expense - This adjustment reflects the property tax expense at Sta ff's

recommended test year revenues. Operating expenses decrease for IjtchNeld Park

Water by $31,503 and for Litchfield Park Sewer by $20,076.

5

6

7


Income Tax Expense - This adjustment to income tax expense reflects Staffs

8

9

10

l l

12

13

14

15

16

adjustments to operating revenues and expenses. Operating expenses increase for

Litchfield Park Water by $220,425 and for Litchfield Park Sewer by $29,812. Further,

Staff recommends that in the event that significant federal income tax reform legislation

is enacted and becomes effective prior to the conclusion of this case, and such

legislation materially impacts the Company's revenue requirements, that the rates

approved by the Commission either reflect this change or that die Company shall work

with Staff to assure the timely passthrough of all resulting income tax effects to its

customers. Additionally, if the effective date of such federal income tax rate change

occurs before the Commission's Decision in this Docket becomes effective, die gross

17 revenue conversion factor used to calculate prospectively recovered income tax

18 expense shall be updated to reflect die federal income tax rate change.

19

20

21

Gperating Income Adjustment No. 19

PFOA Accounting

22

Order Yearly Deferral - This adjustment decreases operating

expenses to reflect the annual cost recovery using the PFOA accounting order deferred

23 costs and Staffs adjustments. Operating expenses decrease for Litchfield Park Water

24 by $10,651.

25


1 C051 A//ovalio/1; Disuurion

2 Q.

3

Did Staff previous provide testimony in any other Liberty Utilities rate cases related to

the "Liberty" cost allocation?

A.4

5

6

7

Yes. Staff provided testimony in the Liberty Bella Vista ("Bella Vista") and Liberty Rio Rico

Water & Sewer ('Rio Rico") rate cases in docket numbers W-02465A-15-0367 and WS-02676A-

15-0368 regarding Cost Allocations. Staff cost allocation comments and recommendations are

handled in a similar manner as in these referenced cases.

8

9 Q.

10

Can you briefly describe how Litchfield Park tit within the organizational structure of

APUC owned utilities?

A.

12

13

Yes. Litchfield Park are organized under the LU 8020, which is a wholly owned subsidiary of

Liberty Utilities. Liberty Utilities is a subsidiary of I liberty Utilities Canada, which is a subsidiary

of APUC.

14

15 APUC

16 Q.

17

Can you briefly describe the nature of the business interests of the parent company,

APUC?

A.18

19

20

21

22

23

Yes. APUC's primary business includes obtaining the direct interest and equity ownership

position in renewable and thermal power generating facilities and regulated utilities. APUC

owns a widely diversified portfolio of independent power production facilities° and regulated

utilities consisting of water distribution, wastewater treatment facilidcs, electric and gas utilities.

Essentially, APUC acquires unregulated and regulated utilities and the subsidiaries operate these

acquired utilities. APUC is publicly traded on die Toronto and New York stock exchanges.

24

6All power production (i.e. generation) facilities are found within APCo within the APUC corporate structure.7 All distribution utilities are found within LUCC within the APUC corporate structure.


1 Q.

2

Can you now explain generally, how common or shared costs are allocated or

distributed to the various subsidiaries that utilize these common or shared services?

A .3

4

5

6

Yes. To the extent reasonably possible, shared service costs are first allocated or assigned

directly to the entity that is clearly the cost causer, such as when a cost is incurred specifically

to support the operational needs of a specific entity. The remaining common costs are then

allocated to the collective cost causers based upon a reasonable set of allocation factors.

7

8

9

10

l l

It is important for the ratepayer's perspective to assure that the bases for such cost allocations

are reasonable and to assure that the actual cost allocators are periodically evaluated to maintain

a fair allocation of costs to ALL entities that share these common services. Gperating mix

characteristics change over time, especially for large companies that are constancy operating

within an objective to acquire new operations and/or continuously revising their internal

12 operating structures.

13

14

15

16

17

18

19

For example, in the Company's response to Staffs TBH 3.46, Staff requested information on

the impact of the recent acquisition of Empire would possibly impact the other regulated

endues or af8]iates operated by Liberty Utilities. A new Liberty/APUC Cost Allocations

Manual ("CAM") was adopted by the Company onjanuary 1, 2017 (Attachment 2). This new

version of due CAM was provided in the Company's response to Staffs TBH 5.11 c, but even

this latest version of the CAM does not capture the most recent changes to the APUC operating

20 structure.

21

22 Q.

23

24

Oftentimes the arguments supporting the use of shared service arrangement include

purported resoluting Economies of Scale. Did the Company discuss the benefits of

Economies of Scale?

A.25 Yes. Such benefits were noted and discussed in the CAM in both the 2015 and 2017 versions.

26

Direct Testimony of Teresa B. HunsakcrDocket Nos. SW-01428A-17-0058 et. al.Page 20

l Q.

2

Does Staff believe that the benefits of Economies of Scale argument can be supported

in the current shared services arrangement Litchfield Park relies upon?

3 A.

4

5

6

7

8

9

No. Since the acquisition of the Empire operations and other acquisitions, the cost allocations

from APUC and other affiliates appear very likely to result in higher costs for ratepayers in

Arizona. In Data Request TBH 5.11 (b), Staff requested that the Company "Please provide the

updated allocation percentages as of April 1, 2017 for Liberty Utilities per the CAM (page 20).

The Company's response to TBH 5.11 (b) was "Under the 2017 CAM, the updated allocation

percentage for LU 8020 is 7.18 percent. However, the annual level of costs allocated to

Litchfield Park in 2017 will exceed the total in the 2016 test year."

10

l l

12

13

14

15

16

17

18

As APUC acquires additional companies, it is inevitable that the aggregate level of costs

included in the cost pools will increase. However, the newly acquired entities should bear such

costs direct allocation subsidiary specific costs. Staff believes that APUC should reevaluate the

costs included in cost allocated pools, and excludes cost of rents, bonuses and expenses that

are inappropriate for ratemaking purposes. If the overall level of costs as allocated to individual

regulated utilities continues to grow, then the current shared service arrangement should be

reevaluated, and if warranted, a more beneficial shared service model be created to alleviate the

economic burden to ratepayers.

19

20 Q. Does Staffhave any additional concerns regarding the alleged benefits of "Economies

21 of Scale?"

A.22 Yes. The Company's response to TBH 5.11 (c) and on page 22 and 25 of the 2017 CAM

indicates that there will be additional costs from LAB -US of the 2017 CAM indicates that23

24

25

26

additional costs from the Regional or State Utility Level will be included. A regional level and

possibly a Western region will also be factored into the cost allocation equation. There will be

six (6) levels of allocations (APUC, LUCC, LUCC-LXBS, LABS-US, Western, and LU 8020)


l

2

3

rather than the current four levels (APUC, LUCC, LABS, and U 8020). Staff is concerned that

Litchfield Park customers are being adversely impacted by acquisitions, and this not achieving

the benefits generally associated with economies of scale.

4

5 Q.

6

Are there complexities that must be overcome when undertaking a regulatory audit of

allocated shared or common costs?

A.7

8

9

10

12

13

14

Yes. First, there are complexities associated with the common or shared cost allocation process

itself. Second, the auditor must establish a comfort level with the basis being used to allocate

these costs. In many instances, there are multiple allocation factors being utilized, and the

reasonableness of the allocation factors being used can, and do, change over time due to a long

list of considerations. Third, it is sometimes difficult for the regulated entity to provide

evidence surrounding the underlying individual business transactions that ultimately are

allocated to numerous business entities that share these common costs or services, even though

commitments included in the CAM clearly suggest that such specific evidence can and will be

15 readily provided.

16

17 Q.

18

19

Would you agree that the second and third challenges or complexities are closely

related and can you please discuss all three of these complexities in more detail

beginning with the second and third complexities you note?

A.20

21

22

23

24

Yes. When evidence, such as invoices, is not readily available, which can happen when costs

are pooled at one or more organizational levels before being allocated to a number of different

entities, Staff may also rely on complementing considerations, including: having a good

understanding of the allocation process; understanding the allocation factors being used and

finding that these factors are reasonable for each cost element allocation; finding that the Parent

25

26

Company and affiliates have good internal controls and that the allocation process itself is

periodically subject to an independent audit either by an internal or external auditing staff (or


1 both); and by finding during the auditing process that the regulated utility stands by its initial

allocation and is not faced with admitting that corrections to the cost allocation are going to be

needed.

2

3

4

Obviously, at a minimum, any finding that the initial cost allocations must revised presents a

challenge for Staff when it comes to developing and quantifying needed pro forma adjustments.

Q. Has Staff gained a better understanding of these allocation since the last rate cases?

A. Yes. Even though following the steps in the cost allocation process is difficult, Staff has

5

6

7

8

9

10

l l

12

13

14

15

developed an extensive knowledge of the Company's corporate allocation process and the

indirect overhead allocation process as noted in the Rate Base Adjustment No. 3 -INDOH

Removals. Staff has made several recommendations regarding corporate allocations and

INDOH in this section. Staff again notes that the complexity of the corporate allocations will

soon be changing from four (4) layers of corporate allocations to six (6) layers with the

upcoming additions of U.S. branch of LUCC and regional layer as well.

16

Q. Please describe the position of Litchfield Park Water & Sewer, Liberty Utilities

Environmental Service Corporation ("LUES") (formerly Algonquin Environmental

Services Corporation ("AES")) and Liberty Utilities (Northwest Sewer) Corporation

within APUC's corporate stnicture.

A. Please refer to diagram of die APUC corporate structurer provided below:

17

18

19

20

21

22

*Attachment 1 is the APUC Corporate Structure provided by the Company. Although the document indicates that it isconfidential, Staff and the Company have conferred and agreed that this may be disclosed.


Shareholdersl

Algonquin Power & Utilities Corp.(APUC)

2

3

Algonquin PowerCo. (APCo)

Liberty Utilities (Canada)Corp. (LUCC)

Liberty AlgonquinBusinessServices(LUCCLABS)

Renewable 8: ThermalCompanies Liberty Utilities (America)

Co.

VI

Liberty Utilities (America)Holding, LLC.

Liberty Utilities(America) Holdco Inc.

Liberty Utilities Co.

I

Liberty Energy UtilitiesCo.

Liberty Utilities (Sub)Corp. (LU 8020)&

Energy UtilitiesLitchfield ParkWater & Sewer

Corp.

LibertyUtilities

(NorthwestSewer) Corp.

Liberty Utilities(EnvironmentalServices) LLC(AES/LUES)

Other AZ Water&/TX Water & Sewer

Companies

Q Is Staff providing a copy of APUC's corporate structure?

A.

8

9

10

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Yes. Please refer to Attachment for the Company's description of APUC's Corporate

Structure.


Docket Nos. SW-01428A-17-0058 et. al.

Page 24

Q. Who are APUC's two (2) wholly owned operating subsidiaries?

A. APUC's two (2) wholly owned operating subsidiaries are APCo and LUCC.

Q. Does LUCC have an additional corporate entity that charges costs to affi l iates?

A. Yes, LUCC-LABS is organized within LUCC. LUCC-LABS provides business and corporate

services to LUCC and APCo.

Q. Please describe Algonquin Power Company.

A. Algonquin Power Company is an unregulated generation business that owns or has ownership

interests in hydroelectric, wind, solar, and thermal energy facilities.

Q. Please describe Liberty Uti l ities.

A. Liberty Utilities owns regulated water, natural gas and electric transmission and distribution

utilities. It currently operates in thirteen (13) states throughout the United States.

Q. Did APUC allocate costs incurred at the Canadian Corporate level (i.e., shareholder

costs) to Litchfield Park?

A. Yes.

Q. How are the APUC, LUCC and LUCC-LABS corporate charges allocated to Litchfield

Park?

A. Corporate direct expenses are recorded in the NARUC expense account Contractual Service -

Professional. Corporate INDOH expenses are recorded in the Plant accounts such as

Structures and Improvements and Pumping Equipment. Additionally, corporate depreciation

is allocated. LU 8020 applies the 4-Factor allocation to Litchfield Park Water at 22.88 percent

l

2

3

4

5

6

7

8

9

10

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12

13

14

15

16

17

18

19

20

21

22

23

24

25

26 and Litchfield Park Sewer at 25.14 percent.


What are the corporate allocated costs from APUC, LUCC, and LUCC-LABS?

A. Per the Company's response to Staffs data request TBH 2.8, the corporate allocated costs as

of December 31, 2016 are set form in Table 1, below:

Table 1

1 Q.

2

3

4

5

LitchfieldPark Sewer

LitchfieldPark Water

Corporate Allocations(Adjusted Balances)

\

Total CorporateAllocation APUC,LUCC, & LUCC-LABS AllocatedCo orate CostsI

123

$191,124.34$266,177.04$354,729.47

$91,061.208128,820.06$169,010.89

$100,063.14$139,356.98$185,718.58CorporateLUCC-LABS

Allocations4 $812,030.85$386,892.15 $425,138.70_

Are there additional corporate costs that APUC, LUCC and LUCC-LABS allocated to

LU 8020 during the test year and then to Litchfield Park? If so, please explain.

A. Yes, the additional corporate costs that APUC, LUCC and LUCC-LABS allocated to LU 8020

during the test year and then to Litchfield Park is INDOH and is discussed in Rate Base

Adjustment No. 3.

Q. Did Staff include all p roposed corporate allocated costs f rom APUC, LUCC, and

LUCC-LABS?

A. No. As a result, Staff made several adjustments to both rate base and operating expenses.

These adjustments are discussed later in Staff's testimony.

6

7 Q.

8

9

10

l

12

13

14

15

16

17


I RATEBASE

2 Fair Value Rule Bare

3 Q.

4

Did Litchfield Park prepare a schedule showing independently developed elements of

a Reconstruction CostNew Rate Base?

A.5

6

7

No. Litchfield Park requested that its OCRB be treated as its FVRB. Rate base references in

my testimony should be read as referring to both OCRB and Reconstruction Cost New Rate

Base/ FVRB since due values are the same.

8

9 RATE BASE SUMMARY

10 Q. Please summarize Staffs adjustments to Litchfield Park Water's rate base shown on

Schedules TBH-3 andTBH-4a.

A.12 Staffs adjustments to rate base resulted in a net decrease of $3,824,688 for Litchfield Park

13 Water. Plant in service decreases in Litchfield Park Water by $1,968,292 This adjustment was

14

15

16

17

18

19

20

primarily due to (1) Staffs reclassifications of plant in service and PTY, (2) Staffs removal of

INDOH from plant additions including PTY plant, (3) Staff's adjustment to plant retirements,

(4) Staff's adjustments to accumulated depreciation and reclassifications of accumulated

depreciation, (5) Staff's adjustments to plant additions included PTY plant and corrections, (6)

Staff's adjustment for PTY plant deemed not used and useful, (7) StamPs adjustments to

customer deposits; (8) Staffs adjustment to the ADIT, (9) Staff's adjustments to cash working

capital and (10) Staffs adjustments to the Accounting Order.

21

22 Q.

23

Please summarize Staffs adjustments to Litchfield Park Sewer's rate base shown on

Schedules TBH-3 and TBH-4.

A.24

25

26

Staffs adjustments to Litchfield Park Sewer's rate base resulted in a net increase of $1,547,054

for Litchfield Park Sewer. Plant in service decreases in Litchfield Park Sewer by $851 ,608. This

adjustment was primarily due to (1) StafFs reclassifications of plant in service and PTY, (2)

I!

Direct Testimony of Teresa B. HunsakerDocket Nos. SW-()1428A-17-0058 et. al.Page 27

l Staffs adjustments to Plant held for Future Use, (3) Staffs removal of INDOH from plant

2 addi t ions inc luding PTY plant, (4) Staffs adjustment to plant ret i rements, (5) Staffs

3

4

5

6

adjustments to accumulated depreciation, (6) Staffs adjustments to plant additions included

PTY plant and corrections, (7) Staffs adjustment for PTY plant deemed not used and useful,

(8) Staffs adjustment to the ADIT, (9) Staffs adjustments to cash working capital, (10) Staffs

adjustments for the NWS transactions and (11) Staffs adjustments to CIAC.

7

8 Q. How will Staff summarize the adjustments to Litchfield Park's rate base as shown on

9 Schedules TBI-I-3 and TBI-I-4?

A.10 Staff will summarize each of the adjustments to rate base in the next section and will then

address the adjustments in the separate sections of the testimony for the water and sewer

12 divisions.

13

14 Q.

15

Has Staff completed its rev iew all ev idence supporting the Company's fi led case,

amendments and supplemental testimony and schedules?

16 A.

17

18

19

20

No. Due to the timing of the receipt of documentation from the Company for PTY plant

additions, the Company's filing of Supplement Testimony regarding the NWS transactions and

issues, and information regarding Corporate plant INDOH, Staff has not had sufficient time

to fully evaluate the infonnation prior to the filing of Direct Testimony. Additionally, Staff

may need to send follow-up data requests and may recommend additional adjustments.

21


l Rate Base A¢§uslmenl No. 1 - Plan! Rn/anijifafionx and Az§uxtmen!.f (Water 29 Sewer Divirionf)

2 Q. During the course of the audit, did Staff identify any plant that was recorded in an

3 inappropriate plant account?

4 A.

5

Yes. Staff reviewed the documentation provided by the Company and identified plant that

required reclassification to the appropriate plant accounts and operating expense accounts.

6

7 Whatwas the basis of Staffs determination?Q.

A.8

9

10

NARUC's Unified System of Accounts ("USoA") requires that plant costs be recorded in the

correct plant account. Proper classification will ensure that dcpreciadon expenses will be

calculated using the correct depreciation rates.

12 Ra/e Base Azfuffmenl No. 2 .... P/aW He/dfor Future Use (Sewer Di:/zkion Om/)

13 Q. During the audit, did Staff identify land that was not used and useful?

14 A.

15

16

Yes. During die site inspection by the Engineering Section, Staff identified land that is to be

used in the future for Phase 2 for the Liberty Aquifer Replenishment Facility ("LARF") and

land in front of the LARF for the future site of the business offices of LU 8020. Staff utilized

17

18

the Maricopa County's mapping system to determine the land's square footage that was deemed

not used and useful. The map is included in Attachment 4. Staff's calculations are included

19 below in Table 2.

20

21 Table 2

% Not Used andAttachment Proposed Use Square Footage

Useful

Phase 2 LARF 14.520%

Phase 2 LARF 29. 1490/0

Future Site of Business Offices 5.726%

Figure 1

Figure 2

Figure 3

358,018.2 sq. ft.

718,718.6 sq. fr.

141,175.4 sq. ft.

I


Total Parcel 501 -61 -9361)Figure 4 2,465,699 sq ft. _49.394%Total Square Footage (Figures 1 - 3) 1,217,912.2 sq. ft._

Q. Did Litchfield Park Sewer provide an explanation as to why it believes that the land

should be considered used and useful?

1

2

3

4 A. Yes, in the Company's response to Staffs data request TBH 8.2,the Company stated:

Q. Land and Land Right (Litchfield Park Wastewater) .-- Please provideall of due following documentation for the land and land rights for the LARF:a schedule of the total purchase price and the amount of AIAC and CIACincluded for the LARF. Additionally, please provide the total square footagefor the land mentioned above as well as the estimated amount of land that isnot used and useful.

5

6

7

8

9

10

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12

13

14

15

16

17

18

19

20

21

RESPONSE: The to ta l pr ice o f the land purchased fo r the LARF is$3,635,000, and the total amount of CIAC contributed for the LARF projectwas $6,100,000. The land total acreage is approximately 56.77 acres or2,472,901 square feet. The estimated amount of that land not used and usefulis 5 acres or 217,800 square feet. The remainder of the land is either in use asbasins, or the soil moved to create the basins and has been stockpiled on theproperty. By not removing the soi l offs i te, the Company has avoidedsignificant costs that it otherwise would have incurred to create the basins atthe LARF site.

Q. Does Staff agree with the Litchfield Park Sewer's estimated amount of land that is not

used and useful in Litchfield Park Sewer?

A. No. Staff does not, and, therefore, Staff has provided the percentage of land that Staff

recommends be deemed not used and useful as well as the amount.

22

23

24

25

26

27


1 Q. How did Staff calculate the amount of the adjustment to Land for Litchfield Park

2 Sewer?

3 A.

4

5

Staffs calculated the percentage of land deemed used and useful (49394 percent) as shown in

the table for Rate Base Adjustment No. 2. Staff then multiplied by the amount of the

contribution of the donated land of $3,547,445 as provided in response to Staffs data request

6 TBH 3.2. The total amount of the adjustment is $1,752,225

7

8 Rate Bare Azfurfmenl No. 3 INDOH Remoua/.r (Wafer 23' Sewer Divifionx)

9 Q.

10

What guidance should companies use in accounting for utility plant - overhead

construction costs and determining whether a cost should be capitalized by recording

11 it i n a plant account?

12 A.

13

14

15

The Arizona Administrative Code ("A.A.C.") R14-2-411 D.2 requires water companies to

maintain their accounting records in accordance with the NARUC USoA. The rule states,

"Each utility § maintain its books and records in conformity with due Uniform System of

Accounts for Class A, B, C and D Water Utilities" (emphasis added).

16

17 overhead constructionThe NARUC USoA provides accounting instructions for utility plant -

18

19

20

21

22

23

24

costs, stating that "All overhead construction costs, such as engineering, supervision, general

office salaries and expense, construction engineering and supervision by other than the

accounting utility, legal expenses, insurance, injuries and damages, relief and pensions, taxes

and allowance for funds used during construction, shall be charged to particular jobs or units

on the basis of the amounts of such overheads reasonably applicable thereto, so that each job

or unit shall bear its equitable proportion of such costs and that the entire costs of the unit,

both direct and overhead, shall be deducted from the plant accounts at the time the property

25 is retired."

26


l

2

The NARUC USoA further states that "the determination of payroll charges includible in

construction overheads shall be on time card distributions thereof. Where this procedure is

3

4

5

impractical, special studies shall be made periodically of the time supervisory employees

devoted to construction activities so that only such overhead costs have a definite relation to

construction shall be capitalized. The addition to direct construction costs of arbitrary

6 percentages or amounts to cover assumed overhead costs is not permitted."

7

8

9

10

l l

Lastly, the NARUC USoA states that "the records supporting the entries for overhead

construction costs shall be kept so as to show the total amount of each overhead for each year,

the nature and amount of each overhead expenditure charged to each construction work order

and to each utility plant account, and the basis of distribution of such costs."

12

13 Q

14

What types of expenses are included in the INDOH pools that are allocated to plant in

service?

15 A.

16

17

Office rent for the Engineering and Development serv ices, general office expenses, any

remaining LU 8020 Engineering and Development Services labor costs and labor burden dlat

has not been direct charged, and Corporate Allocations from APUC, LUCC and LUCC- LABS

18 are to LU 8020.

19

20 Q. Does Staff generally agree with LU 8020 local INDOH allocations?

21 A.

22

23

24

Yes, Staff would agree that necessary and reasonable costs from the Engineering and

Development Serv ices Departments should be included in die LU 8020's INDOH pool.

However, proper time studies should be undertaken periodically to assure that the allocations

being made to capital projects are reasonable.

25



Page 32

l Q.

2

Does Staff believe that the Companies' capitalizing of the total INDOH pool is

reasonable, according to the NARUC USoA?

3 A .

4

5

6

7

8

No. Staff believes that only reasonable, appropriate, accurate and properly supported costs be

included in the INDOH pool. The costs should be traceable and the Companies should be

able to provide Staff an audit trail to trace die costs. Some of the appropriate costs could

include LU 8020 general office administrative costs wide a proper time study as stated in the

NARUC accounting instruction, office rent and general office expenses for the separate

Engineering and Development building.

9

10

11

12

13

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17

18

Further, as already noted, Staff believes that the Company should directly charge overhead

costs when possible to particular projects in order to bear, or manifest, a reasonable relationship

to the underlying capitalized costs. In other words, the overheads charged must be appropriate

and should not just represent a blanket allocation of a pool of costs which do not have a link

back to the other elements of capitalized costs. For example, if company employee labor is

charged to a capital project, then it would be reasonable to find that employee cost overheads

would also be charged to this project but that the level of such labor overheads would

mathematically correlate with the level of labor being capitalized. Expenses that cannot be

reasonably correlated with specific project activities should not be included in overheads

19 charged to a project.

20

21 Q.

22

Should unsubstantiated costs, or costs that do not clearly comply with the NARUC

Plant accounting guidelines, be removed from plant in service?

23 A. Yes, they should. If such costs are not removed, ratepayers are at risk of paying rates based

24 upon overstated capital investment levels.

25


Q. During the course of the audit, did Staff identify costs from APUC, LUCC and LUCC-

LABS that it deemed inappropriate for rate making purposes being capitalized?

Yes.A.

Q. How did Staff determine the percentage of inappropriate costs in the INDOH? Please

provide the calculations as well.

A . The Company removed costs in its application and Staff identified additional inappropriate

costs. Once both Staff and the Company identified the costs inappropriate for ratemaking

purposes, the amounts were removed based on the LUCCportion of due total cost pools for

APUC, LUCC and LUCC-LABS. Staff combined LUCC and LUCC-LABS due to the INDOH

information provided by due Company. Staff then calculated the percentage in U.S. dollars

included in each of the affiliate corporate allocations pools. See Table 3 below.

1

2

3

4

5

6

7

8

9

10

11

12

13

1 4 Table 3

Corporate Affiliate Total Corp in Total Removals

US ($) in US ($)

Percentage of

Allocations

Removed

-22. 13%

-17.87%

$6,549,456.50

518,674,572.68

81,449,693.38

33,337,826.06

APUC

LUCC & LUCC-

LABS

Q. Does APUC, LUCC and LUCC-LABS include 21 percent of all cost in INDOH costs to

subsidiaries of APUC?

A. Ye s.

15

16

17

18

19


Docket Nos. SW01428A-17-0058 et. al.

Page 34

l Q. Were these costs removed from the INDOH costs that were added to plant additions?

A .2 No . However, Staff believes the nature of these costs suggests that many of these are not

3 required to be incurred in order to provide safe and reliable service to ratepayers.

4

5 Q.

6

What type of costs should not have been included in the INDOH costs from APUC,

LUCC and LUCC-LABS?

7 A.

8

9

10

During the test year, Staff disallowed some of the following costs included in the cost pools:

aircraft expenses, rents and interest for the a new corporate building that is already included in

Plant in Service (Corporate Plant), expenses for specific companies that should have been direct

charged, donations, apparel, gifts, massages, Christmas Party, Summer picnic, Silent Auction

Event. Other noted expenditures included categories such as the following: Lobbying costs,

12 sporting event tickets such as the Master's Golf Tournament or the Super Bowl, some travel

13 expenses, bonuses, etc. The type of costs can vary from year to year.

14

15 Q.

16

Did Staff confirm that the Company did not remove such expenses that it believes

should not recognized for ratemaking purposes?

A.17 Yes. The Company's response to StafFs data request TBH 8.8 states the following:

Q . Corporate Allocations - Does the Company remove expenses not

recognized for ratemaking purposes in years that are not a test year? If no, do

you agree that the allocations in Contractual Services - Professional is higherin non-test year results than in years recognized as test years for ratemaking

purposes simply as a result of not removing expenses nor recognized for

ratemaking purposes?

18

19

20

21

22

23

24

25

26 RESPONSE: No, and the Company does agree.

27


l Q.

2

3

So just to clarify, is it accurate to state that not only did the Company not make an effort

to remove such inappropriate costs from its test year data, the Company acknowledged

no effort was made to remove such costs from being capitalized costs recorded in non-

4 test year periods?

A.5 Yes.

6

7 Q .

8

9

Did Staff in TBH 8.8 receive confirmation that the Company did not remove expenses

not recognized for ratemaking purposes and that the allocations to INDOH to plant

additions is overstated in both the test year and non-test years?

A .10 Yes. The Company's response to Staffs data request TBH 8.9 states the following:

b.

c.

Q. Corporate Allocations - Please answer and/or provide the following:a. In reference to TBH 8.8, if there are no expenses removed in years that

are not the test year for ratemaking purposes, would you agree that the

allocations in Indirect Overhead to the plant additions is overstated in

non-test years?

Does the Company adjust for any changes due to removed expenses

in allocations to the plant additions for Indirect Overheads in the test

year?

In reference to years outside the test year, how would Staff review the

Corporate Al locations included in Indirect Overheads that are

included in plant additions from 2013 to 2015? Please provide detailed

explanations and schedules similar to those provided in the Company's

response to data request TBH 2.8 for 2013, 2014 and 2015.

R E S PO N S E :

c.

12

13

14

1516

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

a. Yes.

b. No .Staff would need to identify the costs with which it takes exception by

carefully considering if and how those costs were included in prior ratecase(s) and whether the items in question truly represent duplicate

recovery for the years out of the test year. The Company would then

supplement this response as appropriate.

Please see the attached files.

34

Direct Testimony of Teresa B. Hun sakerDocket Nos. SW-01428A-17-0058 et. al.Page 36

1 Q . How did Staff calculate the percentage to adjust the INDOH costs allocated to

Litchfield Park plant in service additions recorded from 2013 to 2017?

A.

2

3

4

5

6

7

8

9

Staff totaled all of the costs removed by the Company and Staff during the test year from

APUC, LUCC and LUCC-LABS. Staff then determined the percentage of removals for APUC,

LUCC, and LUCC-LABS to the total costs included in the cost pools. Staff then applied these

percentages to each period's INDOH allocations from LU 8020 to each project costs for each

period. Staff calculated the amount of the INDOH to be removed by each project. Staff

researched each project to determine the appropriate NARUC Acct. No., and filtered the data

to apply the INDOH removals by year and NARUC Account.

10

11 Q. What was effect of the adjustment for the removals of the INDOH on Litchfield Park?

12 A.

13

14

15

This adjustment decreases plant in service to remove inappropriate costs that should have been

removed prior to including in cost pools before allocating costs to plant in service additions.

Staff then adjusted the accumulated depreciation reserves and the depreciation expense

associated with this overstated plant in service balances.

16

17 Rafe Bare Az§uJtme/ft No. 4 - Reliremenlf (Arai. f06) Rev/a.fri/im/ioni et" Cof7ertion.r (Wafer 6" .fewer Dif/irionr)

18 Q. During the course of the audit, did the Company provide retirement corrections that

required Staff to make adjustments to the recorded plant balances?

A. Yes. Staff was provided additional retirement corrections by the Company in response to

Staffs data request TBH-3.2.

19

20

2 1

22

ll41


1 Q . What did Staff identify as additional plant retirements that required an adjustment to

2 plant balances?

A.3

4

5

Staff reviewed the documentation provided and identified plant retirement that required plant

adjustments to plant retirements. Staffs adjustment decreases plant in service in Litchfield

Park Water and Litchfield Park Sewer due to die additional retirements.

6

7 Rule Bare Acuf/men! No. 5 - Acrux/aled Dqbredation (Wafer 6" Sewer Di:/ifionr)

8 Q. \Vhat adjustments did Staff make to Accumulated Depreciation?

A.9 Staff adjusted accumulated depreciation to reflect Staff's adjustment to plant during the test

10 year.

l l

12 Q. Did Staff have any additional issues with accumulated depreciation?

13 A.

14

Yes, Staff made an additional adjustment as explained in Rate Base Adjustment Litchfield Park

Water No. 4 - Accumulated Depreciation as shown on Schedule Litchfield Park Water TBH-

15 W5e.

16

17 Rate Ba.re Adjuxfment No. 6 - Post-Tex! Year ('7>TY'9 Addition; (Wafer 23".fewer Divz.fion.v)

18 Q. Did Staff make an adjustment for plant that was not used and useful?

A.19

20

21

22

Yes. Staff removed all projects purported by the Company to be completed by December 31,

2017. The Company provided an updated response to TBH 3.2 for post-test plant additions

through October 31, 2017 on December 5, 2017. Staff will require additional time to review

this information and will address diesel plant additions in Surrebuttal Testimony.

23


Q. Why did Staff make these adjustments?

A . Ms. HaMs inspected the entire systems for both water and wastewater, and identified specific

projects deemed not used and useful at the time of her site visit.

Rafe Bare Aafusfmenl No. 7 - PTY Rev/aJ,rz]ivation.r (Sewer Division O/I/)

Q. Did Staff make an adjustment to reclassify post-test year plant?

Yes.A.

Q. What adjustment did Staff make?

A. Staff reviewed the documentation provided and identified plant that required reclassification

to the appropriate plant accounts. The NARUC USoA requires that plant costs be placed in

the correct plant account in part because proper classification will ensure that depreciation

expense will be calculated using the correct depreciation rates.

Q. Why did Staff make this adjustment?

A. Ms. Hains reviewed the entire system and reclassified these plant additions to the appropriate

NARUC accounts.

Rule Bare Azuxtmenl No. 8 - PTY Reliremen/.r (later 6 Sewer Divisions)

Q. Did Staff make an adjustment to remove PTY plant retirements?

A. Yes. In the Company's response to Staffs data requests TBH 2.2, TBH 3.2 and Residential

Uti li ty Consumer Office ("RUCO")'s data request RUC0-5.08, the Company provided

1

2

3

4

5

6

7

8

9

10

l l

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

additional support for PTY retirements. The Company provided a significant update to

thepTy retirements on December 5, 2017. Staff made adjustments to decrease to plant in

service for both Litchfield Park Divisions. Staff will address additional adjustments to PTY

retirements in Surrebuttal Testimony.


1 Q . What adjustment did Staff make?

2 A.

3

4

5

Staff reviewed a significant updated data request response for post-test retirements that Staff

received on December 5, 2017. This response provided plant retirements through October

31 , 2017. Staff identified plant that required and adjustment for retirements. Staff will address

any additional adjustments to PTY retirements in Surrebuttal Testimony.

6

7 Rate Bare Adjure/men! No. 9 - PTY INDOH Remova/.r (Water 28° _fewerDiWdomj

8 Q.

9

Is this adjustment the same as Rate Base Adjustment No. 3 except for PTY for the

removals of the INDOH on Litchfield Park Water & Sewer?

A.10 Yes. Staff will address these adjustments in each division's rate base adjustments.

l l

12 Ra/e Bare Azuf/ment No. I0 - A//ovated Corporate Plan/ (U7aler 29' .Yewer Divifiomfj

13 Q.

14

D i d Staff make any adjustments to the Company's proposed allocated corporate plant

for Litchfield Park Water & Sewer?

A.15

16

Yes. Staff adjusted the allocated corporate plant to reflect Staff"s adjusted corporate plant

balances. These adjustments include APUC, LUCC and LUCC-LABS and LU 8020 corporate

17 plant. Additionally, Staff disallowed the rent expenses associated with this same corporate plant

18

19

in corporate allocations as discussed in Operating Income Adjustments. Including plant in rate

base and also capture rent expense on the same property clearly represent a double accounting.

20

21 Q. What adjustments did Staff make to allocated corporate plant?

22 A.

23

24

Staff adjusted allocated corporate plant based on the information provided in the rate

application, supporting work papers and information provided through Staff data requests.

Staffs adjustments to the allocated corporate plant reflect the appropriate balances in the test

25 year.

26


1 Rate Bare Azykr/men! No. 1 I - A//otaled Cofporafe Plant Aawnu/ated Dqbrwiafion (Wafer 29' Sewer Divixionxj

2 Q.

3

What adjustments did Staff make to Allocated Corporate Plant - Accumulated

Depreciation?

A.4

5

6

Staff adjusted accumulated depreciation for allocated corporate plant to reflect Staffs

adjustments to corporate plant during the test year. This adjustment to allocated corporate

plant include APUC, LUCC and LUCC-LABS and LU 8020 corporate plant. StafFs adjustment

7 to allocated corporate plant for Litchfield Park Water is reflected in TBH-7a Rate Base

8

9

10

Adjustment No. 10. Staff's adjustment to allocated corporate plant for Litchfield Park Sewer

is reflected in TBH-7a Rate Base Adjustment No. 11. Staff's development of appropriate

accumulated depreciation reserve was based on the date the allocated corporate plant was

l acquired.

12

13 Q.

14

Did Staff adjust the accumulated depreciation for Allocated Corporate Plant from

APUC, LUCC and LUCC-LABS and LU 8020 corporate plant?

15 A.

16

Yes, Staffs calculation for accumulated depreciation is based on Staff's adjustments to plant in

service for corporate plant and the date the plant was placed in service.

17

18 Rafe Bare Azyk/.ffr/rent No. 12 - Cuffomer and LongTerm Meter Serufig' Depoaifs (l17ater Di:/ixion 01I 1)

19 Q. Did Staff make an adjustment to customer deposits?

A.20 Yes. Staff made adjustments for Litchfield Park Water to reflect the balances at the end of the

21

22

test year as reflected in information provided in response to Staff"s data request TBH 2.20 and

RUCO's data requests RUC() 4.01, RUC() 4.02 and RUCO 6.02.

23

24 Q. What was effect of the adjustment to customer deposits in Litchfield Park Water?

A.25 Staffs adjustment increases the level of customer meter and security deposits recognizing it as

26 a rate base reduction.


l Q. Has Staff also made an adjustment to recognize the interest paid on this higher level of

2 the customer deposits?

3 A .

4

Yes, see Litchfield Park Water Operating Income Adjustment No.1 and Litchfield Park Sewer

Operating Income Adjustment No.1.

5

6 Rate Bare A4h:fmenf No. 73 -Ava/fm:/aled Defined Ineofne Taxes ("ADIT'Q (Wafer et" Sewer DiviJ1on.r)

7 What are ADITs?Q.

8 A.

9

10

l l

12

13

ADITs are the accumulated computed tax differences between income taxes calculated for

ratemaking purposes and the actual income taxes that a company pays to the United States

Treasury and the State of Arizona. By definition, these differences are temporary and reverse

over time. The primary cause of the income tax difference is the straight line depreciation

method used for ratemaking purposes and accelerated depreciation method used for Federal

and State income tax reporting purposes.

14

15 Q. What ADIT balances are the Companies proposing to include in its rate bases?

16 A. Litchfield Park is proposing a balance of $5,028,125 in Litchfield Park Water, and in Litchfield

17 Park Sewer $5,423,534 These balances reduce rate base.

18

19 Q. Are Federal and State income tax returns necessary in order to audit the Company's

20 proposed ADIT?

A.21

22

Yes. The Rate Case and Audit Manual prepared by the NARUC Staff Subcommittee on

Accounting and Finance states the following:

23

24252627

In looking at accumulated DIT°, the auditor should look at the Schedule M ofthe federal (and possibly state) tax return, to determine the types of items thatare different between the IRS/State computed taxes and taxes computed forregulatory purposes. One should then follow these through the records and

9 Deferred Income Taxes ("DIT").


adjustments to determine that they have been properly reflected in theaccumulated DIT. One should look for large changes in the accounts anddetermine why these significant changes occurred, and whether they matchother items reflected on the income statement."'

1

2

3

4

5

6 Q. Did the Companies provide the tax returns?

7 A. Yes, in response to RUCO's data request RUCO 3.03.

8

9 Q.

10

Did RUCO or Staff discover any discrepancies or additional tax credits that should have

been included in the Company's ADIT calculations?

A.l l Yes. The Company included land in its plant balances and did not include the 2014 Solar

12 Federal Tax credits in the amount of $512,359 in its ADIT calculations. These required

13 modifications impacted the ADIT calculations.

14

15 Q.

16

Did the Company acknowledge the 2014 Solar Federal Tax credits should be included

in the Company's ADIT calculations?

A.17

18

Yes. In the Company's response to RUC() 6.10 the Company stated that it will make the

correction in rebuttal testimony.

19

20 Rule 8a.fe Azykfslmenl No. 14 - A//owanfefor Care Working Capita/ ("Cl17C '9 Water Dr' .fewer Dizfisionf)

21 Q. What amount of cash working capital is Litchfield Park proposing to include in rate

22 base for each division?

A.23 Litchfield Park Water is proposing to include cash working capital in rate base of $136,462.

24 Litchfield Park Sewer is proposing to include cash working capital in rate base of $157,375.

25

no Page 25 of the Rate Case and Audit Manual prepared by the NARUC Staff subcommittee on Accounting and Finance(2003) (available at http://www.naruc.org/publications/ratecase_manual.pdf).


l Q.

2

Did Staff review the Company's information providedin its leadlag study and did Staff

make any adjustment to the time study results?

A.3 Yes. Staff reviewed the information provided in the Company's lead lag study and determined

4

5

6

7

that certain expenses needed to be reclassified to different expense categories and to plant in

service since those costs were added to plant or extended its useful life. Additionally, Staff

reclassified expenses recorded in Litchfield Park Water's miscellaneous expenses Mat should

have been recorded in property taxes as shown in Operating Income Adjustment No. 9 on

8 Schedule TBH-w14b.

9

10 Q. What adjustments did Staff make?

A.l l

12

13

Staff included the interest expenses from the Schedule D-2 provided in the rate application and

payment information provided in the Financing application in this consolidated docket for

Litchfield Park.

14

15 Rafe Bale Adjutlmenf No. f 5 - Afmun/ing Order(WalerDivision Org/)

16 Q.

17

What was the purpose of the accounting order approved by the Commission in

Decision No. 75718, and for which Litchfield Park Water is seeking cost recoveries in

18 this case?

19 A.

20

21

22

The accounting order was approved to position Litchfield Park Water to facilitate the

remediation of PFOA and PFOS in the water supply of certain wells in Liberty Park Water

service territory. In Decision No. 75718, the Commission directed Litchfield Park Water to

remediate PFOA/PFOS from the water supplies and issued an accounting order approving

certain costs related to this remediation.23

24

Direct Testimony of Teresa B. Hun sakerDocket Nos. SW-0)428A-17-0058 et. al.Page 44

l What relief related to the remediation of the PFOA/PFOS is Litchfield Park WaterQ.

2

A.3

4

5

6

seeking in this case?

Liberty Park Water is seeking approval of the investment in the treatment facilities in rate base

and recovery of the operating expenses associated with the PFOA/PFOS treatment.

Additionally, Liberty Park Water seeks a review of costs incurred and authorization to defer

these costs with the accounting order for a period of 30 years.

7

8 Did Staff include the aforementioned treatment facilities in rate base in this case?Q.

A.9

10

11

Yes, Staff included the treatment facilities when the plant was placed in service and Staff

received the Approval of Construction from Maricopa County. However, specific costs

discussed below were reclassified to operating expenses and included in these rates.

12

13 Q. Are there any additional requests by Litchfield Park on this matter?

A.14

15

Yes, Liberty Park Water is seeking guidance on the best means to track costs associated with

related activity related to PFOA/PFOS remediation.

16

17 Q. Does Staff have recommendation regarding the requested guidance?

18 A.

19

20

21

Yes, Staff would recommend that Liberty Park Water track the costs and dining of the media

replacement by well in order to determine if the GAC media costs should be capitalized,

assuming treatment media lasts more than one year, and that Liberty Park Water continue to

be expensed as requested by the Company in this rate case.

22

23 Q. Did Staff include all costs included in LitchGeld Park's proposed PFOA/PFOS

24 accounting order?

A.25

26

Yes. However the specific costs referenced M the accounting order were estimates. Staff

evaluated die actual costs for which Liberty Park Water provided support as requested in Staffs


1

2

3

4

numerous data requests to Liberty Park Water. Staff has requested additional information from

Liberty Park Water to support the expected costs through June 30, 2018. This was done in

order to include GAC media costs, labor costs and any additional costs incurred through dis

date as stated specifically in the Accounting Order in Decision No.75718.

5

6 Q. l

7

Did Staff reclassify expenses included in the plant addition for the water treatment

media for PFOA/PFOS included in the calculations of Litchfield Park's proposed

8 PFOA/PFOS accounting order?

9 A.

10

11

12

13

Yes, Staff reclassified the Granular Activated Carbon ("GAC") costs that Liberty Park Water

included in plant in service instead of as an operating expense. Liberty Park Water has

requested to expense the media instead of capitalizing it. Liberty Park Water states the GAC

media will last approximately 12 months. As noted, Staff requested additional information to

support Liberty Park Water's proposed cost recoveries, the Company's response is still pending.

14

15 Q.

16

Does Staff anticipate these costs will change for Litchfield Park's proposed

PFOA/PFOS accounting order?

17 A . Yes. Staff will address these cost changes in surrebuttal testimony.

18

19 Rafe Bare Adjuftmenf No. 16 - NWS Rejilnd (R¢gu/alogf Ljabi/igf) (fewer Di:/irion O/1)

20 Q.

21

Please explain how Staff discovered what is now being referred to as the NW S

transaction.

22 A.

23

24

25

I was conducting my preliminary review of the Company's Profit and Loss ("P&L) comparative

financial statement from 2014 to 2016, to determine the extent to which revenues or expenses

significantly changed over this three year period. While reviewing the P&L, and specifically the

Other Revenues in Account 8600-20200-40-4311-5360 Misc. Income, for the Sewer Division

26 I noted the information noted below.



Page 46

l

2015 20142016

$185,212.29 $137.08 $3,365.48

2

3

4

5

6

7

8

9

10

l l

As a result of this finding, I began researching the Company's entire General Ledger ("GL") to

seek the following information: (1) when the funds were deposited (monthly, annually, etc.), (2)

what the purpose of these fund were, (3) who was paying the funds and (4) any other pertinent

information as why there was such as significant increase. After considerable invesdgadon, and

internal discussions, the Company was asked to respond to Staff's findings. Based upon these

responses and after numerous discussions with Company representatives, die Company filed

supplemental testimony on October 16, 2017 addressing 'Staffs findings and describing the NWS

Transaction in more detail. The NWS Transaction finding, and the related issues developed by

RUCO and Staff, are very material and need to be addressed for ratemaking purpose in a

12 reasonable and timely manner.

13

14

15

Staff plans to discuss in more detail the NWS transaction and how development of Staffs initial

finding evolved when it ilea its surrebuttal testimony.

16

17 Q. Can you briefly summarize the NWS transactions and the impact on Litchfield Park

Sewer customers?18

19 A.

20

21

22

23

Litchfield Park Sewer was providing services directly to Arroyo and Savannah in order to

service these subdivisions for repairs, operating costs, labor costs and administrative costs.

AES billed Arroyo and Savannah for operating expenses since 2007, yet these expenses were

included in the 2008 and 2012 rate cases. However, the revenues from Arroyo and Savannah

were not included by Litchfield Park Sewer in eidier case. Additionally, AES collected CIAC

24 for plant expansion of Litchfield Park Sewer from Arroyo and Savannah in the amount of


1 $1,645,000 since 2005 and yet, to date, this CIAC has not been recognized for ratemaking

2 purposes.

3

4 Q. Why did the Company file Supplemental Testimony?

A.5

6

Per die Company's Supplemental Testimony from Mr. Greg Sorenson ("Mr. Sorenson") on

October 17, 2017, the purpose of Litchfield Park Being its supplement testimony on the NWS

7 matter was that the Company's initial application did not address the ramifications associated

8

9

10

l l

12

13

14

with the NWS transaction. In fact, the supplemental testimony states dirt the recognition of

unregulated revenues and third-party plant contributions that, over mc, accompanied this

transaction were also not disclosed and included in either the Company's 2008 or 2012 test year

rate cases. On page 3, beginning on Linc 6, of Mr. Sorenson's supplemental testimony, he states:

"In this rate case, Liberty Utilities is bringing this matter to the Commission's attention and

seeking to correct those mistakes, including proposing a bill credit that makes our customer

whole, as well as taking steps to prevent something like this from happening again."

15

16 Q.

17

18

Would it be fair to say that the issue referred to as the NWS transaction was very

complex, covered an extended period of time, and required a great deal of time and

effort for Staff tounderstand and address all of the underlying issues ramification?

A.19

20

21

22

23

Yes. As a part of its surrebuttal testimony, Staff plans to provide a detailed timeline and issue

development discussion for the record's edification. The Company response to RUCO 10.03

provided an updated timeline on October 9, 2017, supplementing the original timeline provided

during the first meetings with the Company. However, the Company revised the timeline again

and this copy of die timeline is provided in Attachment 4.

24


l Q.

2

Does Staff agree with the Company's methodology and calculations for developing the

unreported revenues and CIAC contained in the Company's Supplemental Testimony?

A .3

4

5

6

7

8

No. Staff found the methodology and calculations, and associated Company workpapcrs, to

be very complicated and difficult to work with. Additionally, Staff did not have access to the

final workpapcrs for both the 2008 and 2012 rate cases. As a result Staffudlized its own models

to calculate unreported revenues, CIAC balances, and the resulting revenue requirement

impacts associated with these under-recognized items. Staff's calculations to determine lost

revenues and CIAC are more straight-forward.

9

10 Q . Did Staff retain the services of a regulatory consultant to assist in developing is NWS

l transaction recommendations?

12 A. Yes. Staff retained the services of Larkin & Associates, PLLC. Mr. Ralph Smith was Staff's

13 primary contact with I .akin for this engagement.

14

15 Q. Why did Staff hire a consultant in this matter?

16 A.

17

18

The services of a consultant were deemed to be necessary due to the complexity of the

Company's workpapers, and due to the need to sort through complex income tax implications.

Staff also wanted to assure that its assessment of this unique and complex issue was reasonable

19 and that its recommendations fairly evaluated the data and recommendations being

20 provided/proposed by the Company.

21

22 Q. Please summarize Staffs initial recommendation regarding Litchfield Park Sewer's

23 NWS transaction refund obligation.

24 A.

25

26

Staff has initially concluded that the amount of the refund/regulatory liability is $2,600,000 to

$2,700,000 and in direct testimony, Staff has captured a regulatory liability of $2,700,000 as a

rate base reduction.


l

2

3

However, the magnitude of the Company's refund obligation continues to be evaluated and is

subject to change. Staff also continues to evaluate alternatives that will assure that this refund

obligation to ratepayers is discharged in a timely and reasonable manner.

4

5

6

7

8

Staffs ultimate recommendation will be addressed in Staffs surrebuttal testimony and could

include modification or elimination of Staffs current $2,700,000 rate base reduction. Options

being considered include embedding this refund into the base rates coming out of this rate case

or discharging this obligation through a separate surcharge.

9

10

l

12

Finally, Staff's ultimate recommendation wil l contain recommendations regarding the

development of a formal Plan of Administration related to this refund, and also expected to

include reporting requirements until the obligation is fully retired.

13

14 Rule Ba.reAayuJfmen! No. 17 - Land Conlfibuled- Contfibufionx in Aid ofCbn.rtruefion ("CIAC '9 (fewer Division

15 0"!y)

16 Q.

17

Did Staff make any adjustment to Litchfield Park Sewer's proposal for CIAC in

Litchfield Park Sewer?

A.18

19

20

21

22

23

Yes, Staffs adjustment decreases gross CIAC in Litchfield Park Sewer by $1,621,522 due to

land contributed that is not used and useful at aNs time. This adjustment is based on the

following: 1) The amount of the land contributed increased by $130,703 653,547,445 less

$3,416,742 as provided in the rate application) as provided in the Company's response to data

request TBH 3.2 and 2) Staff's Rate Base Adjustment No. 2 for Litch5eld Park Sewer decreased

by $1,752,225 Since land does not amortize, this adjustment is the gross adjustment to CIAC.

24


l Q . Why did Staff make this adjustment to CIAC in Litchfield Park Sewer?

A.2 Staffs recommendation to place land deemed not use and useful in Acct. No. 103 - Plant Held

3

4

for Future Use in the amount of$l,752,225 and the adjusted plant balance increase by $130,703

as shown on Schedule TBH-WW9c is consistent with Staffs Rate Base Adjustment No. 2.

5

6 O P E R A T I N G I N C O M E

7 Operating Inmrne Summagf

8 Q. What are the results of Staffs analysis of Test Year revenues, expenses and operating

income in Litchfield Park Water & Sewer?9

10 A. As shown on Litchfield Park Water's Schedules TBH-W10 and TBH-W11, Staff's analysis

resulted in Test Year revenues of $13,488,908, expenses of $10,478,327 and operating income

12 of$3,010,581.

13

14 As shown on Litchfield Park Sewer Schedules TBH-WW1() and TBH-WW11, Staff's analysis

15 resulted in Test Year revenues of 311,643,135, expenses of $9,893,435 and operating income

16 of$1,749,700.

17

18 Q. Has Staff completed its review of the documentation?

A .19

20

21

22

23

24

25

No, because of the timing of the receipt of documentation from the Company for Post-Test

Year plant additions; the Company's fi ling of Supplement Testimony fi led regarding the

Northwest Sewer transactions and issues; and information regarding corporate plant indirect

overhead costs, Staff has not had sufficient time to review the information prior to the tiling

of its Direct Testimony. Additionally, Staff will need to review the aforementioned information

provided and may also need to send follow-up data requests and may make additional

adjustments as warranted. Updates will be addressed in Staffs Surrebuttal Testimony.

26


Operating I/frame Adjure/ment No. I - O//2er Operating Revenues (lItter 6" Sewer Divirionr)

Q. Did Staff make any adjustments to Other Operating Revenues for Litchfield Park Water

A.

& Sewer?

Yes, Staffs adjustments reclassify income between Litchfield Park Water and Litchfield Park

Sewer. Litchfield Park Water included non-recurring income dirt was removed. The Company

stated that the income should be included M die calculations for accumulated depreciation.

Staff will make those appropriate adjustments once Staff has an opportunity to send a data

request to determine the plant accounts impacted by this other operating revenues.

Q. Why did Staff make this adjustment to Other Operating Revenues in Litchfield Park

Water & Sewer?

A. Staffs adjustments are to classify this revenue in doe proper division.

Operating Into/ne Aafuffmenf No. 2 - Inlentiona/9' Levi Blank (Wafer 6" .fewer Divisions)

Opera/ing Income Ae§uJftznen/ No. 3 - Confraefua/ Seruéees - Pr0fe.r.liona/ 'Bonuses " (Water z8 .fewer Divixionx)

Q. What was the total amount of bonus pay that was allocated from APUC, LUCC, and

LUCC-LABS to LU 8020 during the test year?

A. The amount is $707,220.23 as shown below in Table 4 on Line 4.

l

2

3

4

5

6

7

8

9

10

l l

12

13

14

15

16

17

18

19

20

21

22


Table 4l

%LU 8020 % Litchf ieldParkSewer

Litchf ieldParkWater

Allocatedfrom LU

8020

Allocatedfrom LU

8020

CorporateAllocatedBonusesAdjustedBalances

TotalLUC,

APUC &LUC-LABS

AllocatedCorporate

Bonuses toLitchf ield

Park Water& Sewer

. _ _I

1 25.14% $165,561.88$77,455.56 22.88% $85,106.32$338,529.22

2 22.88% $27,718.37$110,256.03 $25,266.58 25.14°/0 352,984.95

3 $258,434.98 $59,129.92 25.14% $124,100.4722.88% $64,970.55

APUCBonusesAllocationLUCCBonusesAllocationLUCC-LABSBonusesAllocation

$707,220.23 $116,852.06 $177,795.0450.00%

4

5

$339,647.3050.00%

6 $88,897.62 $169,783.65$80,906.03

TotalPercentageDisallowedTotalCorporateBonuses

1 3 " -What type of expenses are included in the bonuses that were allocated from APUC,

LUCC, and LUCC-LABS to LU 8020 during the test year?

A. Alie bonuses include the bonuses, long-term incentive plans ("LTIP") and stock options, all of

which are included in the amount $707,220.23 as shown in Table 4 on Line 4.

2

3 Q.

4

5

6

7


Q. What adjustment did Staff make to Contractual Services - Professional ("Bonuses")

that were from APUC, LUCC, and LUCC-LABS to Liberty Utilities (Sub) Corp - LU

8020 then allocated to Litchfield Park Water & Sewer during the test year?

A. Staff disallowed half of the bonus expenses included in Contractual Services - Professional

from APUC, LUCC and LUCC-LABS. Staff recommends that the allocated bonuses be shared

evenly between ratepayers and shareholders. Staffs adjustments to all corporate allocations

include adjustments to the INDOH from APUC, LUCC and LUCC-LABS for bonuses that

were also included in capital projects.

Operating Income Arykufmenf No. 4 - Conlradua/ .Yen/ive; - Pmjéwiona/ (LU 8020 Bomuef Nor/na/iqed) (Wafer

29 Sewer Divisions)

Q. Did Staff make any adjustment to Contractual Services - Professional for bonuses for

LU 8020 to Litchfield Park Water & Sewer during the test year?

A. Yes, Staff normalized the bonuses over the test year for LU 8020 bonuses.

Q. Why did Staff make this adjustment?

A. Staff's adjustments were to normalize the expenses over the test-year. The LU 8020 bonuses

were significantly different during the test year. Staffs adjusunents to all corporate allocations

are also include adjustments to the amounts of INDOH from APUC, LUCC and LUCC-LABS

included in capital projects.

I

2

3

4

5

6

7

8

9

10

l l

12

13

14

15

16

17

18

19

20

21


l

2

Operating Income Azéaxt/went No. 5 - Contractual Service; - ProfeWona/ (IN:/for Sa/ag Innvaxef) (Water 6° Sewer

Divisions)

What are the total amount of labor increases included in the Litchfield Park Water's3 Q.

4 and Litchfield Park's applications during the test year?

A .5

6

7

8

Litchfield Park Water's application proposed $69,560 for Contractual Services - Professional

and $73,161 for Contractual Service ._ Other for a total of $142,721. Litchfield Park Sewer's

application proposes 876,443 for Contractual Services .- Professional and $70,386 for

Contractual Service - Other for a total of $146,829. Litchfield Park Water & Sewer proposes

9 a 3 percent increase over each of the next two years (compounded) at 6.09 percent.

10

11 Q. What are the different affiliates included in this proposed labor increase during the test

12

A.13

14

year?

Litchfield Park Water & Sewer includes all of the following: APUC, LUCC, LUCC-LABS and

Liberty Utilities (Sub) Corp labor costs in the proposed labor cost increase.

15

16 Did Staff include all of the affiliates listed above in Staffs recommended labor increaseQ.

17 during the test year?

A.18 No. Staff included Liberty Utilities (Sub) Corp's labor costs in the recommended labor cost

19 increase.

20

21 Q . Why did Staff make this adjustment to Litchfield Park Water & Sewer?

22 A.

23

StafFs adjustments remove the proposed wage increases for APUC, LUCC, and LUCC-LABS.

Staff made the same recommendation in testimony filed the Bella Vista and Rio Rico rate cases.

24


l

2

Opera/ing Imvme Aczyuflrnent No. 6 - Corpora/e A//ora/ion: - Profefriona/ (APUC, LUCC, IA BS A//ofatons

Remo:a0 (Waler 28' Sewer Divisions)

3 Q.

4

Did Staff adjust any of the APUC, LUCC, and LUCC-LABS corporate allocations

amounts? If so, please explain.

A .5 Yes. Staff decreased Contractual Services - Professional in Litchfield Park Water by 813,514

6

7

and Litchfield Park Sewer by $14,849 to reflect Staffs adjustments to the corporate allocation

pools for expenses inappropriate for ratemaking purposes as reflected in Table 5 listed below.

8

9 Table 5

LPSCO WTR Portion*Cost Pools LPSCO SWR Portion*

APUC Removals - LUCC 65%

LUCC Removals

LUCC-LABS Removal Various °/o AVG

8 (13821)

$ (9,913.93>

$ (3,461.8l)

35 (151.86)

$ (10,893.19)

$ (3,803.76)

67. 13%

Total $<13,513.95) $(14,848.81)

10

l l Q . Why did Staff make this adjustment to Litchfield Park Water & Sewer?

A.12

13

14

15

Staffs adjustments remove corporate allocations that are inappropriate for ratcmaking

purposes from the costs pool from APUC, LUCC, and LUCC-LABS. These adjustments

decrease operating expenses to adjust the Company's proposed corporate expenses allocation

for non-labor and labor costs to reflect reasonable corporate expenses due from ratepayers.

16

17 Q. \Vhat is Staffs recommendation for the corporate allocations?

A .18

19

20

Staff recommends a decrease to Contractual Services - Professional for APUC, LUCC and

LUCC-LABS corporate expense allocation listed in Table 5 for Litchfield Park Water & Sewer.

Staffs adjustments to all corporate allocations are also adjusted to the amounts of INDOH


I

2

3

4

5

from APUC, LUCC and LUCC-LABS included in capital projects. These adjustments decrease

operating expenses to adjust the Company's proposed corporate expenses allocation for non-

labor and labor costs to reflect reasonable corporate expenses due from ratepayers. Operating

expense decrease for Litchfield Park Water by $13,514 and for Litchfield Park Sewer by $14,849

as shown on Schedules TBH-w13d and TBH -WW13d.

6

7

8

Opera/ing Income A¢§uJrfmen/ No. 7 - Conlracfua/ .Yen/ive; - Pm/é.rsiona/ (LU 8020 Aajuslmentf, Ref/nova/J and

Rec/axn a/ionx) (Waler cl' Sewer Di:/i.fion.r)

9 Q. Did Staff adjust any of the LU 8020 corporate allocations amounts? If so, please

10 explain.

A.

12

13

14

15

Yes. Staff decreased Contractual Services - Professional for Litchfield Park Water by $28,181

and Litchfield Park Sewer by $30,965 to reflect Staffs adjustments to the corporate allocation

pools for expenses inappropriate for ratemaking purposes such as lobbying costs, penalties,

donations, Christmas party, service awards, and expenses for other Liberty utilities, listed below

in Table 6.

16

17 Table 6

Cost Pools SWRLPSCO WTR Portion* LPSCO

Portion*

LU Admin Allocation

LU US Customer Care Allocation

Total 3(28,808.58>

$ (7,372.51)

$(28,181.09)

$(22,863.98>

$ (8,101.44)

$(30,965.42)

18

I


l Q. Why did Staff make this adjustment to Litchfield Park Water & Sewer?

2 A.

3

4

5

Staff's adjustments remove corporate allocations that are inappropriate for ratemaking

purposes from the costs pool from LU 8020. These adjustments decrease operating expenses

to adjust the Company's proposed corporate expenses allocation for non-labor and labor costs

to reflect reasonable corporate expenses due from ratepayers.

6

7 Q. What is Staffs recommendation for the corporate allocations?

A.8 Staff recommends a decrease to Contractual Services - Professional for LUC 8020 corporate

9

10

11

12

13

expense allocation listed in Table 6 for Litchfield Park. These adjustments decrease operating

expenses to adjust the Company's proposed corporate expenses allocation for non-labor and

labor costs to reflect reasonable corporate expenses due from ratepayers. Operating expense

decreases Litchfield Park Water by $28,181 and Litchfield Park Sewer by $30,965 as shown on

Schedules TBH-W13e and TBH -WW13e.

14

15 Operating Income AzyMflment No. 8 - MiJ¢e//aneouf Bank C/narges (Water Qt' Sewer Divisions)

16

17

Q. During the course of the audit, did Staff identify any miscellaneous expenses that were

recorded in an inappropriate expense account?

A.18 Yes.

19

20 Q. What adjustment did Staff make?

21 A.

22

23

Staff normalized bank charge incurred to support the lines of credit used for plant additions,

and assigned the level of cost recoveries with the level of post-test year plant additions that will

be include in plant in service.

24

I


l Operating Income A /Jfwenf No. 9 - Rev/atnjicuiion off/an/ Addifiom and Expenfex (Wafer 8' Sewer Divisions)

2 Q. During the course of the audit, did Staff identify any expenses that were recorded in an

3 Ina ro rite lent and ex else accounts?PP P P P

A .4 Yes.

5

6 Q. W h a t a d j u s t m e n t d i d St a f f m a k e ?

7 A .

8

Sta f f rec lass i f ied p lan t add i t ions and expenses to the appropr ia te accoun ts . These ad jus tment

decrease operat ing expenses and increase p lant in serv ice.

9

10 ()OPerating Invofne A¢yuJf/ment No. 70 - PFOA/ PFOS Opera/ing Cori; (11%/er Dif/ifion Org/)

l Q. Did Staff adjust Litchfield Park Water's proposed PFOA Operating expenses in this

12 case?

13 A. Yes.

1 4

1 5 Q . What adjustment did Staff make

A .1 6

17

18

19

20

21

Staff requested support for the GAC media costs that were provided in Litch6eld Park Water's

Pro-forma adjustment No. 7. Staff also requested infonnadon on any additional GAC media

Mat may have been ordered as replacements. Staff adjusted the PFOA operating cost for the

GAC me d i a t o r e f l e c t t h e a mo u n t L i t c h f i e l d Pa r k Wa t e r c o u l d s u p p o r t w i t h p a i d i n v o i c e s .

These adjustments include the antic ipated operat ing costs for p lant in serv ice as of ()October 31 ,

2017 . Sta f f w i l l be mak ing add i t iona l ad jus tmen t in su r rebu t ta l tes t imony i f needed .

22

23 Operating Income A¢§u.flmenl No. II - PFOA/ PI "O.S Accounting Order Rev/a.f.f (ll7ater Division 0141)

24 Q. Did Staff adjust Litchfield Park Water's proposed PFOA Operating expenses in this

2 5 ca se ?

A . Yes .2 6


Q. What additional adjustment did Staff make?

A . Staff identified additional expenses specific to the PFOA remediation. Staff reclassified these

specific expenses to the PFOA accounting order.

Operating Income A 1/J/ment No. 72 - A/Ii.r¢e//aneozzs Licenses and Fee; (Updater Division On bf)

Q. Did Staff adjust the Miscellaneous Licenses and Fees expenses in Litchfield Park Water

in this case?

Yes.A.

Q. What adjustment did Staff make?

A. Staff identified costs included in test year expenses that are inappropriate for ratemaking

purposes, such as a golf tournament fees and penalties paid to City of Avondale. These costs

were included by Litchfield Park Water.

Opera/ing Income Adjuxtfnent No. 13 - Removal of TeJrl Year Expenxerfzr Nor//Jwerf Sewer (Sewer Division 0111)

Q. During the course of the audit, did Staff identify any expenses that were recorded in an

inappropriate expense accounts for the Northwest Sewer transactions?

A. Yes.

What did Staff determine?Q.

A . Staff identified costs that were inadvcrtendy added to test year expenses. Staff decreased

operating expense in Litchfield Park Sewer for these expenses.

l

2

3

4

5

6

7

8

9

10

l

12

13

14

15

16

17

18

19

20

21

22

23


l O/aerafing Imvme A41/Jfment No. 14 - Operating Epense: Azyuftmentf (Sewer Division Only)

2

3

Q. During the course of the audit, did Staff identify any additional expenses that were not

included in Litchfield Park's rate application?

A . Yes.4

5

6 Q. What additional expenses did Staff identify?

A.7

8

9

Staff identified that die Company had inadvertency miscalculated the additional purchased

power costs for plant expansion of the Palm Valley Wastewater Reclamation Facili ty

("PVWWRl"").

10

l l Q. What adjustment did Staff make?

12 A

13

14

Staff included costs that would normalize the purchased power expenses for the test year. This

adjustment includes appropriate costs to reflect reasonable anticipated expenses going forward

with this plant expansion. This adjustment increases the operating expenses in Litchfield Park

15 Sewer.

16

17 Operating Income A4u.r!menl No. 15 - Contraelua/ Sentiee; - Testing (Water 29 .fewer Diuisionx)

18

19

Q. Did Staffs Engineer determine the amount for Contractual Services - Testing in her

Engineering Report and testimony for Litchfield Park?

A.20 Yes.

21

22 Q.

23

Did Staff make adjustments to the Contractual Services - Testing in the test year for

Litchfield Park Water & Sewer?

A.24 Yes. Staff made adjustments to reflect the Staffs Engineers calculation of annual testing cost.

25


l Operating Income Adjure/men! No. 76 - Dqbredaiion Expense (Wafer 29' Sewer Divisions)

2 Q . Wh a t is L i tc h f ie ld Pa rk p ro p o s in g fo r d e p re c ia t io n e x p e n s e ?

A3

4

L i t ch f ie ld Pa rk Wa te r i s p ropos ing dep rec ia t ion expense o f 83 ,099 ,245 L i t ch f ie ld Pa rk Sew e r

is p ropos ing deprec ia t ion expense o f $3 ,028 ,078

5

6 Q. Wh a t a d j u s t me n t d i d St a f f ma k e t o deprec ia t ion expense?

A .7

8

S t a f f a d j u s t e d d e p r e c i a t i o n e xp e n s e t o r e f l e c t a p p l i c a t i o n o f d i e S t a f f - r e c o m m e n d e d

deprec ia t ion ra tes to the Sta f f recommended p lan t ba lances. Sta f fs ad jus tments to deprec ia t ion

9

1 0

e xp e n s e s r e f l e c t S t a f f s c a l c u l a t i o n o f d e p r e c i a t i o n e xp e n s e u s i n g S t a f f s r e c o mme n d e d

dep rec ia t ion ra tes and Sta f fs recommended p lan t and CIAC ba lances .

1 2 Operating Income Adjuxlmenl No. 77 - Propergf Ykzxex (U7afer 28" Sewer Diuifionr)

13 Q. What is Litchfield Park proposing for Property Taxes?

14

15

A . L i tch f ie ld Pa rk Wa te r i s p ropos ing p rope r ty taxes expense o f $685 ,095 . L i t ch f ie ld Pa rk Sew er

is propos ing property taxes expense of $552,501 .

1 6

17 Q . D i d Sta f f ma k e a n y a d j u s t me n t t o t h e Pr o p e r t y T a x Ex p e n s e ?

A .1 8

1 9

Y e s . St a f f s a d j u s t me n t r e f l e c t s St a f f s c a l c u l a t i o n o f t h e p r o p e r t y t a x e xp e n s e u s i n g St a f f s

re c o mme n d e d re v e n u e s , a s s h o w n o n Sc h e d u le s T BI- I-W1 6 a n d T BH-WW1 6 .

2 0

2 1

2 2 What is Litchfield Park proposing for test year Income Tax Expense?

2 3

Operating Income A¢#uJ!mem' No. 78 - Income Taxer (Wafer 29 .fewer Divisions)

Q .

A . L i tch f ie ld Park Wate r is p ropos ing income taxes expense o f $1 ,299 ,263 . L i tch f ie ld Park Sewer

2 4 is p ropos ing income taxes expense o f $712 ,071 .

2 5


1 Q . Did Staff make any adjustments to test year Income Tax Expense?

A.2

3

Yes. Staffs adjustment reflects Staffs calculation of the income tax expense based upon StafFs

adjusted test year taxable income, as shown on Schedules TBH-W17 and TBH-WW17.

4

5

6

7

8

9

10

l l

12

13

Staff recommends that in the event that significant federal income tax reform legislation is

enacted and becomes effective prior to the conclusion of this case, and such legislation

materially impacts the Company's revenue requirements, that the rates approved by the







14

15 Operating Income Adjuftmenl No. IN -- PFOA Aawunfizqg Order Yearbw Defvra/ (Water Dir/iiio/1 O/I41)

16 Q. Did Staff make an adjustment for proposed PFOA/PFOS accounting order for

17 Litchfield Park Water?

18 A. Yes, M Staff's Rate Base Adjustment No. 16.

19

20 Q. What is Staff recommending for the PFOA/PFOS accounting order's yearly deferral?

A.21 Staff recommends decreasing the accounting order by $319,532 as shown on Schedule TBH-

22 Wma. Staff further recommends decreasing Litchfield Park Water's proposed yearly deferral

23

24

for 30 years by $10,651, the yearly deferral will be adjusted from $23,323 to $12,671 as shown

in Operating Income Adjustment No. 19 and on Schedule T8H-W18.

25


l L I T C H F I E L D P A R K WA T E R

2 RAT E BASE SUMMARY

3 Q.

4

Please summarize Staff 's adjustments to Litchfield Park Water rate base shown on


5 A. Staff's adjustments to Litchfield Park Water's rate base resulted in a net decrease of $3,824,688

6

7

8

9

10

12

13

14

Plant in service decreases in Litchfield Park Water by $1,968,292 This adjustment was

primarily due to (1) Staffs reclassiticadons of plant in service and post-test year plant ("PTY"),

(2) Staffs removal of indirect overhead costs ("INDOH") from plant additions including PTY

plant, (3) Staffs adjustment to plant retirements, (4) Staffs adjustments to accumulated

depreciation and reclassifications of accumulated depreciation, (5) Staffs adjustments to plant

additions included PTY plant and corrections, (6) Staffs adjustment for PTY plant deemed not

used and useful, (7) Staffs adjustments to customer deposits; (8) Staffs adjustment to the

ADIT, (9) Staffs adjustments to cash working capital and (10) and Staffs adjustments to the

Accounting Order.

15

16 Rafe Bare Azykzxfmenl No. I - Plant Rev/ar.rzfvalion.f and Azuflmenn (Wafer Dizdfion)

17 What was effect of the reclassifications on Litchfield Park Water?Q .

18 A.

19

20

The reclassifications decrease plant in service by $787,839 for Litchfield Park. The adjustments

are due in part ro the misclassification of plant in service between the different divisions. Staffs

adjustments reclassify plant additions to the appropriate divisional plant accounts and operating

21 expenses.

22

23 Q . What is Staffrecommending?

A.24

25

Staff recommends the reclassification of plant to the appropriate plant accounts and operating

expenses, as shown on Schedule Litchfield Park Water TBH-W5a.

26


l Rule Ba.feAzyhxlmenl No. 2 - In/enliona/.4 Let' Blank (Water Division)

2

3 Ra/e Base Aziz/Jr/mem' No. 3 Indirect Overhead Cori; ('7NDOI I '9 Removals (Water Di:Lrion)

4 Q. Wh a t was effect of the adjustment for the removals of the INDOH on Litchfie ld Park

5 Water?

A.6

7

8

These adjustments decrease plant in service for costs that should have been removed prior to

allocating costs for plant in service and for the accumulated depreciation and die depreciation

expense associated with these overstated plant M service in Litchf ield Park Water. The ef fect

9 to post-year plant will be discussed in Rate Base Adjustment No. 10.

10

l l Q. What is Staff recommending?

12 A.

13

14

15

16

17

Staff recommends decreasing plant in service in Litchf ield Park Water by $'/8,511, as shown on

Schedule Litchf ield Park Water TBH-W5c. Staf f recommends that periodic independent audits

of the Company's process for capitalizing overheads be conducted. The Commission should

d irec t the Company to undertake an independent aud it o f i ts CAM procedures as we ll as a

specif ic review of the Company's indirect overhead allocation process with the f irst such audit

also covering 2016 and 2017 activity.

18

19

20

21

22

23

24

25

26

Staf f also recommends that the Commiss ion order the Company to evaluate its procedures

re late d c ap i tal p ro je c t ac c o unt ing s p e c i f ic al ly inc lud ing an ind e p e nd e nt re vie w o f the

reasonableness of all indirect overheads that are being capitalized, the internal controls to assure

the removal of inappropriate costs currency included in cost pools Mat are being allocated to

plant in service through INDOH, and to provide a report on its efforts to improve its internal

control in this docket prior to filing any new rate cases by Liberty Utilities. Staff furrier

recommends that APUC and affiliates undertake a full time study in accordance with National

Association of Regulatory Utility Commissioners ("NARUC") Uniform System of Accounts


1

2

3

4

("USoA") and NARUC Guidelines for Cost Allocations and A affiliate Transactions ("NARUC

Guidelines"). Time studies should be conducted every 3 years. Additionally, Staff recommends

that the Company develop written procedures be available to Staff regarding the allocation

methods used by Liberty Utilities (Sub) Corporation for its local indirect allocated overhead

costs.5

6

7 Rate Base AayWlmenl No. 4 - Retirement: (Ami. 106) Rerkzxritifaiionr 29' Convcfionf (WaterDivision)

8 Q.

9

Did Staff identify additional plant retirements that required an adjustment to plant

balances in Litchfield Park Water?

A.10 Ycs.

11


13 A . Staff recommends decreasing plant in service in Litchfield Park Water by $280,827 as shown

14 on Schedule IBH-w5d.

15

16 Rafe Bare A¢§z/Jfmenif No. 5 - Amur//afed Depreciation (Wafer Dizirion)

17 Q. What adjustments did Staff make to Accumulated Depreciation for Litchfield Park

18 Water?

19 A.

20

Staff adjusted accumulated depreciation to reflect Staffs adjustment to plant during the test

year in Litchfield Park Water.

21

22 What is Staffs recommendation?Q.

23 A

24

Staff recommends decreasing accumulated depreciation in Litchfield Park Water by $445,018

as shown on Schedule Litchfield Park Water TBH-w5f.

25

I


l Rafe Bare Azu.ftmen/ No. 6 - PoJrlTeJf/ Year ('1>TY'9 Additions (Water Division)


A .3

4

Staff compared Litchfield Park Water's estimated post-test year additions to the completed

projects and identified the adjustments as shown on Schedule Litchfield Park Water TBH-W6a.

5


A.7

8

Staff recommends decreasing plant in service in Litchfield Park Water by 8415,941 as shown

on Schedule Litchfield Park Water TBH-W6a.

9

10 Rafe Base Az§u.flmenl No. 7 - Inlemfiona/ Left B/an/e (Wafer Di:/Lfion)

l l

12 Rate Bare A¢§uJlmenf Na. 8 - PTY Re/iremen/J (WaterDi:/ifion)

13 Q. D i d Staff make any adjustments to post-test year retirements for Litchfield Park Water?

14 A. Yes. Staff adjusted the post-test retirements to reflect Litchfield Park Water's revised

15 retirement balances.

16


A.18

19

Staff recommends decreasing plant in service in Litchfield Park Water by $367,424 as shown

on Schedule Litchfield Park Water TBH-w6b.

20

21 Rate Bare Adjurfmenl No. 9 - PTY INDOH Removals (WaterDivision)

22 Q.

23

What was effect of the adjustment to post-test year plant for the removals of the

INDOH on Litchfield Park Water?

24 A .

25

26

These adjustments decrease post-test year plant in service for costs that should have been

removed prior to allocating costs for plant in service, accumulated depreciation and

depreciation expense associated with these overstated plant in service in Litchfield Park Water.

Direct Testimony of Teresa B. HunsakerDocket Nos. SW-0142.8A-_7-0058 et. al.Page 67


2 A .

3

Staff recommends decreasing post-test year plant in service in Litchfield Park Water by $4(),171

as shown on Schedule Litchfield Park Water TBH-W6c. Staffs additional recommendations

4 are included in Rate Base Adjustment No.3.

5

6 Rate Bare A¢§u.ffznent No. 10 - A//otafed Cbrporafe Plan! (Water Di:/irion)

7 Q. What was effect of the adjustment to allocated corporate plant in Litchfield Park Water?

A.8 These adjustments properly reflect the balances for each division of the allocated corporate

9 plant.

10

l l What is Staffs recommendation?Q.

A.12

13

14

Staff recommends increasing allocated corporate plant in Litchfield Park Water by $2,422 as

shown on Schedule Litchfield Park Water TBH-W7a. Staff recommends decreasing Corporate

Plant in Litchfield Park Sewer by $95 as shown on Schedule Litchfield Park Sewer TBHW7a.

15

16 Rafe Base A 1/.ffmenl No. 77 - A//ofaled Corporate Plant Aawzmu/ated Depreciation (Wafer Division)

17 Q.

18

Did Staff adjust the accumulated depreciation for Allocated Corporate Plant from

APUC, LUCC and LUCC-LABS and LU 8020 corporate plant in Litchfield Park Water?

19 A.

20

Yes, Staffs adjustments include the account by account components noted on Schedule

Litchfield Park Water IBH-W7b.

21


A.23 Staff recommends decreasing accumulated depreciation for corporate plant in Litchfield Park

24 Water by $37,975.

25


Rafe Base Adj:/.rfment No. 72 - C1/.rfomer andLong-Term Meier Se6wn{y Deposit; (Wafer DiMrion)

Q. Did Staff make an adjustment to customer deposits for Litchfield Park Water?

A Yes.

1

2

3

4

Q. What adjustment did Staffmake?

A.

5

6

7

Staff increases customer meter deposits by $6,224 and customer security deposits by $59,663

in Litchfield Park Water based on information provided in response to Staff's data request TBH

2.20 and RUCO's data requests RUCO 4.01 and RUCO 4.02.8

9


A.l l

12

Staff recommends increasing Customer Deposits in Litchfield Park Water by $65,887 from

$923,988 to $989,875 as shown on Schedule Litchfield Park Water TBH-W8a.

13

14 Rafe Base A4z/nfrnent No. 13 - Ava/mu/ated De/érred Income Taxes ('ADIT') (Wafer Division)

15 Q. Did Staff make any adjustments to the ADIT calculations in Litchfield Park Water?

A .16 Yes. Staff corrected plant errors and included additional tax credits. Additionally, Staff

17 updated the plant balance less land to reflect test-year plant in service balances and

accumulated depreciation. Staff then determined the percentages to be allocated between the

divisions to determine the appropriate amount of accumulated deferred income taxes.

What is Staff's recommendation?Q.

18

19

20

21

22 A. Staff recommends decreasing rate base to reflect Staffs recommended ADIT, resulting in an

increase for Litchfield Park Water by $1,726,266 as shown on Schedule TBH-w8b.23

24


l Rate Bare Aajz/Jtmenl No. 74 - A //owa/wefor Cas/2 War/eing Capita/ ("CWC '9 (Wafer Division)

2 Q. Did Staff make an adjustment for Cash Working Capital?

3 A. Yes.

4

5 Q. What is Staff recommending for Cash Working Capital Allowance for Litchfield Park

6 Water?

7 A.

8

9

Staff recommends decreasing cash working capital to reflect the inclusion of interest expense

and Staff's adjustments to the lead lag study results. Driven by the resulting CWC recalculation,

rate base decreases in Litchfield Park Water by $151,754 as shown on Schedule TBH-W8c.

10

l l Rate Bare Azyuxlmenf No. 15 - A¢¢o1mting Order (Waler Division)

12 Q. Did Staff make an adjustment for proposed PFOA/PFOS accounting order for

13 Litchfield Park Water?

14 A. Yes.

15

16 Q. What is Staff recommending for the PFOA/PFOS accounting order?

A.17

18

19

20

Staff recommends decreasing the accounting order estimated cost deferral by $319,532 as

shown on Schedule TBH-W9a. Staff further recommends decreasing Litchfield Park Water's

proposed yearly deferral recovered for each 30 year recovered by $10,651 thus the yearly

deferral will be adjusted from an original estimate of $23,323 to $12,671 as shown in Operating

21 Income Adjustment No. 19.

22

23 Q. Is Staffs recommendation based on the specific disallowance of incurred costs?

24 A.|

25

26

No. StafFs reduction relates to actual costs being lower than the anticipated costs and to

refinements to the requested GAC media replacements and the accounting resulting of the

change in frequency in the GAC media replacements.


l Rule Bare A¢§zulmenI No. 16 - Inlenfiona//y Left B/an/e (Water Division)

2

3 Rule Bare As]uJ»fmenI No. 77 - I/ztenfiona//y Left Blank (Wafer Di:/Lrion)

4

5 OPERATING INCOME SUMMARY

6 Q.

7

What are the results of Staffs analysis of Test Year revenues, expenses and operating

income in Litchfield Park Water?

A.8 As shown on Litchfield Park Water's Schedules TBH-W10 and TBH-W11, Staff's analysis

9 resulted in Test Year revenues of $13,488,908, expenses of $10,478,327 and operating income

10 0f$3,010,581.

l l

12 Operating Income Azyhstment No. 7 - Of/yer Operating Revenues (WaterDivision)

13 Q. Did Staff make an adjustment to Other Operating Revenues for Litchfield Park Water?

14 A. Yes. Staffs adjustment decreases operating expenses in Litchfield Park Water by $21,920.

15

16 Q. What is Staff recommending for Other Operating Revenues for Litchfield Park Water?

A.17 Staff recommends decreasing operating expenses in Litchfield Park Water by $21 ,920 as shown

18 on Schedule TBH-Wl2a.

19

20 Operating Income Adj/5/men! No. 2 - Infenliona/bf Left B/amé (WaterDivision)

21

22 Operating Income Adjustment No. 3 - Conlraclua/ Servirex - Profeniona/ (Bonuref) (loafer Di:/ixionj

23

24

Q. Did Sta f f make an adjus tment to Contrac tua l Serv ice - Pro fess iona l fo r bonuses

included in allocations from APUC, LUCC and LUCC-LABS for Litchfield Park Water?

A.25 Yes. Staffs adjustment decreases operating expenses in Litchfield Park Water by $80,906 as

26 shown in Table 4 on Line 4.


Q. What is Staff recommending?

A.

1

2

3

Staff recommends decreasing recoverable operating expenses in Litchfield Park Water by

$80,906 as shown on Schedule TBH-W13a.

4

Operating Income Azyhxlmenl No. 4 - Conlraffua/ Servicer - Pmfe.f.riona/ (LU 8020 Bonnie; Norma/iqed) (Wafer

Division)

Q. Why did Staff make this adjustment to Litchfield Park Water?

5

6

7

8 A. Staffs adjustments were to normalize the actual test year expenses for Liberty Park Water.

9

Q. What is Staff recommending?10

l l A. Staff is recommending a decrease in Contractual Services - Professional by $19,593 as shown

on Schedule TBH-W13b.12

13

14 Operating Income A4Mfmenf No. 5 - Conlraotua/ Je/vice: - Profeniona/ (Labor Ya/ag Im1ea.fe.r) (WaferDivision)

Q. Why did Staff make this adjustment in Litchfield Park Water?15

16

17

A. Staffs adjustments were to remove the proposed wage increase for APUC, LUCC, and LUCC-

LABS. Staff made the same recommendation in testimony filed the earlier Bella Vista and Rio

Rico rate cases.


A. Staff recommends decreasing operating expenses in Litchfield Park Water by $10,606 as shown

on Schedule TBH-W13c.

18

19

20

21

22

23

I


1

2

Operating Income Aaiulment No. 6 - Corporate A//otaliony - Pmféssional (APUC, LUCC, LABJ ll//omlonx

Removal) (Una/er Dif/Lfion)

3 Q. Why did Staff make this adjustment in Litchfield Park Water?

A.4

5

6

Staffs adjustments decrease operating expenses to adjust Litchfield Park Water's proposed

corporate expenses allocation for non-labor and labor costs to reflect reasonable corporate

expenses to be recovered through rates from ratepayers.

7


A.9 Staff recommends decreasing operating expenses in Litchfield Park Water by 313,514 as shown

10 on Schedule TBH-w13d.

11

12

13

Operating Income Aajuflment No. 7 - Conlradua/ Mum; - Projéwiona/ (LU 8020 A¢§uJf/mentx, Remo:/a/.r and

Ref/a.rJ a/ions) (Wafer Dif/ixion)

14 Q. Why did Staff make this adjustment in Litchfield Park Water?

15 A.

16

17

Staffs adjustments decrease operating expenses to adjust Litchfield Park Water's proposed



18


A.20 Staff recommends decreasing operating expenses in Litchfield Park Water by $28,181 as shown

21 on Schedule TBH-W13e.

22


l Operating Income Ac§uJf!ment No. 8 - Mime//aneour Bank Charger (lValer Divifionj

2 Q. What was the basis of Staffs determination in Litchfield Park Water?

A.3

4

Staff normalized bank charge because these lines of credit costs support plant additions. These

costs were included post-test year plant additions were included in plant in service.

5


7 A.

8

Staff normalized this expense and decreased operating expenses by $160,801 to reflect the

appropriate operating expenses as shown on Schedule TBH-W14a.

9

10 Opera/ing Inmnze A¢§uJ/ment No. 9 - Ref/arxyitution off/an! and Expense; (Water Divixionj

l l Q. What was the basis of Staffs determination in Litchfield Park Water?

A .12 Staff reclassified plant additions and expenses to the appropriate accounts. These adjustment

13 decrease operating expenses and increase plant in service.

14


A.16

17

Staffs adjustment increases operating expenses in Litchfield Park Water by $90,053 as shown

on Schedule TBH-w14b.

18

19 Operating Income A¢§uJtmem' No. IO - PFOA/PFO5 Opera/ing Coils (Wafer Division)

20 Q. What was the basis of Staffs determination?

21 A.

22I

23

Staff identified PFOA costs drat could not be supported at this time. These adjustments

include the anticipated operating costs for plant in service as of October 31, 2017. Staff will

be making additional adjustment in surrebuttal testimony if needed.

24


Docket Nos. SW-01428A-_7-0058 et. al.

Page 74


A .2 staff's adjustment decreases operating expenses in Litchfield Park Water by $148,866 as shown

3 on Schedule TBH-W14c.

4

5 Operating lmvme Adjustment No. 77 - PFO// PFOS Afro:/nling Order Rea/an (Water Dif/ition)


A.7

8

Staff identified additional expenses specific to the PFOA remediation. Staff reclassified diesel

specific expenses to the PFOA accounting order deferrals such as legal expenses.

9

10 Q. \What is Staff recommending?

A.l Staff's adjustment decreases operating expenses in Litchfield Park Water by $4,806 as shown

12 on Schedule TBH-w14d.

13

14 Operating Income Azykurfmenl No. 12 .- Misve//aneoutLjcenfes and Fees (Wafer Division)


A.16

17

18

Staff identified costs included in test year expenses that are inappropriate for ratemaking

purposes such as a golf tournament fees and penalties paid to City of Mondale. These costs

were included by Litchfield Park Water.

19


A.

20

21

22

Staffs adjustment decreases operating expenses in Litchfield Park Water by $7,792 as shown

on Schedule TBH-W14e.

23

24 Operating lemme Azywtment No. 73- Inlenfiona/4' Left B/ankr (lValer Did/iJrion)

25

26 Opera/ing lnmnfe Azizt/rnent Na. 14- Intentiona/91 Left B/ankf (Wafer Division)


l Operating Income Aajuxlmenl No. 75 - Confrarlua/ Senile; - Tarting (Wafer Diuirion)

2 Q Did Staff make adjustments to the Contractual Services - Testing in the test year for

Litchfield Park Water?3

4 A. Yes. Staff made an adjustment to reflect Staff's Engineer's calculation of annual testing costs

5 for Litchfield Park Water.

6


8 A.

9

Staff's adjustment decreases operating expenses in Litchfield Park Water by $53,109 as shown

on Schedule TBH-w14h reflect the Staffs Engineers calculation of annual testing cost.

10

l l Operating Immune Aqayuifmenf No. 76 - De/Jretiation Expense (Water Division)

12 Q. Did Staff make adjustments to depreciation expenses in the test year for Litchfield Park

13 Water?

A.14

15

Yes. Staff adjusted depreciation expense to reflect application and annualization of the Staff-

recommended depreciation rates to the Staff-recommended plant balances. Staffs adjustments

16

17

to depreciation expenses reflect Staff"s calculation of depreciation expense using Staff's

recommended depreciation rates and Staff's recommended plant and CIAC balances.

18


A.20

21

Staff recommends decreasing depreciation expense in Litchfield Park Water by $88,513 as

shown on Schedule TBH-W15.

22

23 Operating I/frame Acyuxtwenl No. 77 - Pmpergf Ybxe: (Water DaMion)

24 Q. Did Staff make any adjustment to the Property Tax Expense in Litchfield Park Water?

25

26

A. Yes. Staffs adjustment reflects Staff's calculation of the property tax expense using Staff's

recommended revenues, as shown on Schedule TBH-W16.


l What is Staffs recommendation?Q.

2 A. Staff recommends decreasing property taxes in Litchfield Park Water by $31,503 as shown on

3 Schedule TBH-W16.

4

5 ()Petting Income A4/usfmenl No. 18 - Income Taxes (Water Division)

6 Q. Did Staff make any adjustments to test year Income Tax Expense for Litchfield Park

7 Water?

8 A. Yes. Staffs adjustment reflects Staff's calculation of the income tax expense based upon StafFs

9 adjusted test year taxable income, as shown on Schedule TBH-W17.

10

What is Staffs recommendation?Q-

12 A.

13

14

15

16

17

18

19

20

21

Staff recommends increasing test year Income Tax Expense in Litchfield Park Water by

$220,425 as shown on Schedule TBH-W17. Staff recommends that in the event that significant

federal income tax reform legislation is enacted and becomes effective prior to the conclusion

of this case, and such legislation materially impacts the Company's revenue requirements, that

the rates approved by the Commission either reflect this change or that die Company shall

work with Staff to propose a rate adjustment mechanism to enable the pass-through of income

tax effects to its customers. Additionally, if die effective date of such federal income tax rate

change occurs before the Commission's Decision in this Docket becomes effective, the gross

revenue conversion factor used to calculate prospectively recovered income tax expense shall

be updated to reflect the federal income tax rate change.

22

23 Operating I/mama Aajuytmenl No. 19 - PFOA Acmunling Order Year D¢j2°m1/ (later Di:/ixion)

24

25

Q. Did Staff make an adjustment for the proposed PFOA/PFOS accounting order for

Litchfield Park Water?

26 A. Yes. In Staffs Rate Base Adjustment No. 16.


1 Q.

2

What is Staff recommending for the PFOA/PFOS accounting order's yearly

amortization of deferred costs?

A.3

4

5

6

Staff recommends decreasing the accounting order by $319,532 as shown on Schedule TBH-

W9a. Staff further recommends decreasing the Company's proposed yearly deferral for 30

years by $10,651, the yearly deferral will be adjusted from $23,323 to $12,671 as shown in

Operating Income Adjustment No. 19 and on Schedule TBH-W18.

7

8 LITCHFIELD PARK SEWER

RATE BASE SUMMARY910

l l Q.

12

Please summarize Staffs adjustments to Litchfield Park Sewer rate base shown on


A.13 StafFs adjustments to Litchfield Park Sewer's rate base resulted in a net increase of 81 ,547,054.

14

15

16

17

18

19

20 used and useful, ,

21

22

Plant in service decreases for Litchfield Park Water by $851,608. This adjustment was primarily

due to (1) Staffs reclassifications of plant in service and post-test year plant ("PTY"), (2) Staffs

adjustments to Plant held for Future Use, (3) Staffs removal of indirect overhead costs

("INDOH") from plant additions including PTY plant, (4) Staffs adjustment to plant

retirements, (5) Staffs adjustments to accumulated depreciation, (6) Staffs adjustments to plant

additions included PTY plant and corrections, (7) Staffs adjustment for PTY plant deemed not

(8) Staffs adjustment to the ADIT, (9) Staff's adjustments to cash working

capital, (10) Staffs adjustments for the Nordmwest Sewer transactions and (11) Staff's

adjustments to CIAC.

23

24 Rate Bare Azyuxlmenl No. 7 - Plan! Rec/amjicalions and Adjzaflmenff (fewer DiIdsion)

25 What was effect of the reclassifications on Litchfield Park Sewer?Q.

A.26

27

The reclassifications increase plant in service by $254,006 for Litchfield Park Sewer. The

adjustment are due in part to the misclassification of plant in service between the different


1

2

divisions. Staffs adjustments reclassify plant additions to the appropriate divisional plant

accounts and operating expenses.

3


A.5

6

staff recommends the reclassification of plant to the appropriate plant accounts and operating

expenses, as shown on Schedule Litchfield Park Sewer TBH-WW5a.

7

8 Rafe Bare Adjuflmenf No. 2 -. Plant He/dfor Fu/ure Use (fewer Division)

9 Q. What was effect of the adjustment to Land for Litchfield Park Sewer?

A.10

11

12

Staffs adjustments will place the land not deemed used and useful into NARUC account

number 103, Plant Held for Future use, and CIAC will be adjusted as well for reflect the amount

of contributed land as shown in Rate Base Adjustment No. 17 by $1,752,225

13

14 Q. What is Staffrecommending?

A.15

16

Staff recommends decreasing plant in service for land in Litchfield Park Sewer by $1,752,225

as shown on Schedules TBH-WW4 and Litchfield Park Sewer TBH-WW5b.

17

18 Rafe Bale Azykzftmenf No. 3 - Indirerf Overhead Carts ('7NDOH '9 Remova/.f (Sewer Division)

19 Q. What was effect of the adjustment for the removals of the INDOH on Litchfield Park

20 Sewer?

21 A. These adjustments decrease plant in service in for costs that should have been removed prior

22 to allocating costs for plant in service, the accumulated depreciation and the depreciation

23

24

expense associated with these overstated plant in service in Litchfield Park Sewer. The effect

to post-year plant will be discussed in Rate Base Adjustment No. 10.

25

.II



2 A.

3

4

5

6

7

8

9

10

11

12

13

14

15

16

Staff recommends decreasing plant in service in Litchfield Park Sewer by 869,345, as shown on

Schedule Litchfield Park Sewer TBH-WWSc. Staff recommends that periodic independent

audits of the Company's process for capitalizing overheads and that the Commission direct the

Company to undertake an independent audit of its CAM procedures, which should also include

a specific review of the Company's indirect overhead allocation process.The first such audit

should also cover 2016 and 2017 activity. Staff also recommends that the Commission order

the Company reevaluates its procedures for capital projects, specifically including an

independent review of the reasonableness of all indirect overheads dirt are being capitalized,

and of its internal controls to assure the removal of inappropriate costs currency included in

cost pools that are being allocated to plant in service through INDUH. The Company should

also provide a report on its efforts to improve its internal control in dais docket prior to filing

any new rate cases by Liberty Utilities. Staff further recommends that APUC and affiliates

undertake a full time study in accordance wide National Association of Regulatory Utility

Commissioners ("NARUC") Uniform System of Accounts ("USoA") and NARUC Guidelines

for Cost Allocations and Affiliate Transactions ("NARUC Guidelines"). Time studies should

17

18

19

be conducted every 3 years. Additionally, Staff recommends that the Company develop written

procedures be available to Staff regarding the allocation methods used by Liberty Utilities (Sub)

Corp - LU 8020 for its local indirect allocated overhead costs.

20

21 Rate Bare Ai§u.rtrnent No. 4 - Retirement; (/l£ft. 106) Rec/arsjicaliont 29 Conwfionf (Sewer Division)

22 Q.

23

Did Staff identify any additional plant retirements that required an adjustment to plant

balances in Litchfield Park Sewer?

A.24 Yes.

25

I

I



A. Staff recommends decreasing plant in service for Litchfield Park Sewer by $110,181 as shown

on Schedule TBH-WW5d.

2

3

4

Rate Base Anya:/men! No. 5 - Arcumu/aled Depretiafion (Sewer Division)5

6

7

Q. What adjustments did Staff make to Accumulated Depreciation for Litchfield Park

Sewer?

A. Staff adjusted accumulated depreciation to reflect Staffs adjustment to plant during the test

year in Litchfield Park Sewer.

8

9

10

l l What is Staffs recommendation?Q.

A.12

13

Staff recommends increasing accumulated depreciation in Litchfield Park Sewer by $364,582

are shown on Schedule Litchfield Park Sewer TBH-WW5f.

14

Rate Bale Acyhxlnzenf No. 6 .- Poor/-Text Year ("1>Ty'9 Addition: (fewer Division)15


A.17 Staff compared Litchfield Park Sewer's estimated post-test year additions to the completed

projected and identified the adjustments as shown on Schedule Litchfield Park Sewer TBH-

WW6a.

What is Staffs recommendation?Q.

A. Staff recommends increasing plant in service in Litchfield Park Sewer by $1,043,210 as shown

on Schedule Litchfield Park Sewer TBH-WW6a.

18

19

20

21

22

23

24

|


l Rate Bite A¢§u.rlmenl No. 7 - PTY Rea/a.vJf mtio/1; (Sewer Diffusion)

2 Q. Did Staff make an adjustment to reclassify post-test year plant in Litchfield Park Sewer?

A.3 Yes.

4

5 What is Staffs recommendation?Q .

A.6

7

8

Staff recommends the reclassification to the appropriate NARUC accounts and it has no effect

on total plant in service in Litchfield Park Sewer as shown on Schedule Litchfield Park Sewer

TBH-WW6b.

9

10 Rafe Base Adjzafmenf No. 8 - PTY Reliremenl.f (Sewer Dif/Lrion)

11 Q . Did Staff make any adjustments to post-test year retirements for Litchfield Park Sewer?

12 A.

13

Yes. Staff adjusted the post-test retirements to reflect Litchfield Park Sewer's revised

retirement balances.

14


16 A.

17

Staff recommends decreasing plant in service in Litchfield Park Sewer by $203,336 as shown

on Schedules Litchfield Park Sewer TBH-WW6c.

18

19 Q.

20

What was effect of the adjustment to post-test year plant for the removals of the

INDOH on Lit chf ield Park Sewer?

21 A.

22

23

This adjustment decreases post-test year plant in service for costs that should have been

removed prior to allocating costs for plant in service, the accumulated depreciation and the

depreciation expense associated with diesel overstated plant in service in Litchfield Park Sewer.

24



Page 82


2 A.

3

Staff recommends decreasing post-test year plant in service in Litchfield Park Sewer by813,641 ,

as shown on Schedule Litchfield Park Sewer TBH-WW6d. Staffs additional recommendations

4 are included in Rate Base Adjustment No. 3.

5

6 Rate Base A4911/Jirnenf No. 9 - Infentiona/4/ Left Blank (fewer Division)

7

8 Rate Base Ainu/rnent No. 10 -. A//oraled Corporate Plan/ (fewer Division)

9 Q. What was effect of the adjustment to allocated corporate plant in Litchfield Park Sewer?

A.10

11

12

These adjustments properly reflect the balances of the allocated corporate plant for each

division. Staff acknowledges that the Sewer Division adjustment is immaterial but it is being

captured because the overall adjustment is material.

13


A.15

16

17

18

Staff recommends decreasing Corporate Plant in Litchfield Park Sewer by $95 as shown on

Schedule Litchfield Park Sewer TBH-WW7a. Aldiough the adjustment is small, this adjustment

is being made in order to reflects the proper balance that will be subject to depreciation for

significant number of years.

19

20 Rule Base Adjustment No. 77 - A//ovafed Corporate Plant Are/rm//ated Depreriaiion (fewer Dir/Lrion)

21 Q . Did Staff adjust the accumulated depreciation for Allocated Corporate Plant from

22 APUC, LUCC and LUCC-LABS and LU 8020 corporate plant in Litchfield Park Sewer?

A .23

24

Yes, Staff's adjustments include the account by account components as shown on Schedules

Litchfield Park Sewer TBH-WW7b.

25



2 A. Staff recommends decreasing accumulated depreciation for corporate plant in Litchfield Park

3 Sewer by $41,726.

4

5 Rafe Bale Adjuffmenf No. 12 .- Intenliona/Q1 Levi Blank (fewer Dizirion)

6

7 Rafe Bale A zfz/.rtmenf No. 73 - Arrumu/afed D¢jned Income Taxes ("A DIT'Q (fewer Division)

8 Q. Did Staff make any adjustments to the ADIT calculations in Litchfield Park Sewer?

A.9 Yes. Staff corrected the plant errors and included the additional tax credits. Additionally, Staff

10 reflect test-year

l l

updated the plant balance less land to plant in service balances and

accumulated depreciation. Staff then determined the percentages to be allocated between the

12 divisions to determine the appropriate amount of accumulated deferred income taxes.

13


A.15

16

Staff recommends decreasing rate base to reflect Staff's recommended ADIT; this results in an

increase for Litchfield Park Sewer of $974,048 as shown on Schedule TBH-WW8b.

17

18 Rate Bare Aauflment No. 74 - A //ou/anaefor Care Working Capita/ ("CWC '9 (fewer Division)

19 Q. Did Staff make an adjustment for Cash Working Capital for Litchfield Park Sewer?

A.20 Yes.

21

22 Q. What is Staff recommending for Cash Working Capital?

23 A.

24

25

26

Staff recommends increasing cash working capital to reflect the inclusion of interest expense

and Staff 's modif ications to the lead lag study results . Driven by the result ing CWC

recalculation, rate base increases for Litchfield Park Sewer by $23,280 as shown on Schedule

TBH-W W 8c.


1 Rule Base Adj:/.rtment No. 15 - I/1fentiona@1 Levi B/an,é (Sewer Division)

2

3 Rule Ba.fe A¢uJfmemt No. I6 - Inlentiona@/ Lei? B/amé (SewerDivixionj

4

Rate Base A@hxlmenI No. 77 - Land Con/ri/au/ed .. Con/rilfufionx in Aid of Conffmtfion ("CIAC') (Sewer5

6 Division)

7 Q. Did Staff make any adjustments to CIAC in Litchfield Park Sewer?

A. Yes. Consistent with Staffs Rate Base Adjustment No. 2, Staffs recommendation to place

land deemed not use and useful in Acct. No. 103 - Plant Held for Future Use in the amount

of $1 ,752,225 and the adjusted plant balance increase by $130,703 as shown on Schedule TBH-

WV(/9c.

8

9

10

l l

12


A.14 Staff recommends decreasing CIAC by $1,621,522 as shown on Schedule TBH-WW9c.

15

OPERATING INCOME SUMMARY

Q. What are the results of Staffs analysis of Test Year revenues, expenses and operating

income in Litchfield Park Sewer?

A. As shown on Litchfield Park Sewer Schedules TBH-WWI() and TBH-WWI1, Staffs analysis

resulted in Test Year revenues of $11,643,135, expenses of $9,893,435 and operating income

of $1 ,749,700.

16

17

18

19

20

21

22

Operating Income A¢§u.ftmenf No. 7 - Other Operating Reuemlef (fewerDivision)

Q. Did Staff make an adjustment to Other Operating Revenues for Litchfield Park Sewer?

A. Yes. Staffs adjustment increases operating expenses in Litchfield Park Sewer by 39,181.

23

24

25

26

Direct Testimony of Teresa B. Hun sakerDocket Nos. SW01428A-17-0058 et. al.Page 85

l Q. What is Staff recommending for Other Operating Revenues for Litchfield Park Water?

2 A. Staff recommends increasing operating expenses in Litchfield Park Sewer by $9,181 as shown

on Schedule TBH-WW12a.3

4

Operali/gg Income Acyhstmenl No. 2 - Im'entiona{4/ Le/2 Blank (fewer Division)

Operating I/Home Adj?/.v//fren! No. 3 - Confraelua/ Senders - Pmfeuiona/ (Bonuses) (Sewer Di:/zlfion)

Q. Did Staff make an adjustment to Contractual Service - Professional for bonuses

included in allocations from APUC, LUCC and LUCC-LABS for Litchfield Park Sewer?

5

6

7

8

9

10 A. Yes. Staff's adjustment decreases operating expenses for Litchfield Park Sewer by $88,898 as

shown in Table 4 on Line 4.l

12

Q. What is Staff recommending?13

14 A . Staff recommends decreasing recoverable operating expenses for Litchfield Park Sewer by

$88,898 as shown on Schedule TBH-WW13a.15

16

17

18

Operating Income Aq';u.f/men/ No. 4 - Contraefua/ Ser:/iee.r - Professional (LU 8020 Bonuses Nonna/iqed) (Sewer

Djpjyj0yy)

Q. Why did Staff make this adjustment to Litchfield Park Sewer?

A. StafFs adjustments were to normalize the actual test year expenses for Liberty Park Sewer.


A. Staff is recommending a decrease in Contractual Services - Professional by $21,528 as shown

on Schedule TBH-WW]3b.

19

20

21

22

23

24

25


l Operating Income AeyNrtfnent No. 5 - Contractual Sentirey - Pmfeniona/ (Labor Sa/ag Inefeaxerj (Sewer Division)

2 Q Why did Staff make this adjustment in Litchfield Park Sewer?

A .3

4

Staff's adjustments were to remove the proposed wage increase for APUC, LUCC, and LUCC-

LABS. Staff made the same recommendation in testimony Filed the earlier Bella Vista and Rio

Rico rate cases.5

6


A. Staff recommends decreasing operating expenses in Litchfield Park Sewer by $8,886 as shown

on Schedule TBI-I-WW13c.

7

8

9

10

11 Operating Income AdjNflmen! No. 6 - Car;/:orare A//orations - Pmfeuional (APUC, LUCC, 1,485 A//oealonx

Rem01/a/) (fewer Diuifion)

Q . Why did Staff make this adjustment in Litchfield Park Sewer?

12

13

14 A. Staffs adjustments decreases operating expenses to adjust Litchfield Park Sewer's proposed



15

16

17


A. Staff recommends decreasing operating expenses in Litchfield Park Sewer by $14,849 as shown

on Schedule 1BH-WW13d.

18

19

20

21


l

2

Operating Income Adjustment No. 7 - Contractual .5"ervite.f - Pmfefsional (LU 8020 Aayuftmentr, RemoI/a/.f and

Ret/amjkationf) (Sewer Division)

3 Q. Why did Staff make this adjustment in Litchfield Park Sewer?

4 A.

5

6

Staffs adjustments decrease operating expenses to adjust Litchfield Park Sewer's proposed



7


9 A.

10

Staff recommends decreasing operating expenses for Litchfield Park Sewer by $30,965 as

shown on Schedule TBH-WW13c.

l l

12 Operating Inrofne Azluirlment No. 8 - Mine//aneoux Bank Charger (Sewer Division)

13 Q. What was the basis of Staffs determination for Litchfield Park Sewer?

14 A.

15

Staff normalized bank charge due to the lines of credit for plant additions, post-test year plant

additions that will be included in plant in service.

16


18 A.

19

Staff normalized this expense and decreased operating expenses by $67,565 to reflect the

appropriate operating expenses as shown on Schedule TBH-WW14a.

20

21 Operating I/Home Aajuslmen/ No. 9 - Ref/arnjifafion of l)/ant and Eaq'>eme.f (Water 29' Sewer Diwkions)

22 Q. What was the basis of Staffs determination in Litchfield Park Sewer?

A.23

24

Staff reclassified plant additions and expenses to the appropriate accounts. These adjustments

decrease operating expenses and increase plant in service.

25



2 A.

3

Staffs adjustment increases operating expenses in Litchfield Park Sewer by $16,537 as shown

on Schedule TBH-WWI4a.

4

5 Opera/ing Income AzWtment No. 10 - Inrenliona/./y Left Blank; (Sewer Division)

6

7 Operating Income Az§u.r/men! No. 17- Intentiond/y Blanks (Sewer Di:/ixion)

8

9 Operating Income AzyNslmenf No. 12 - Miiee//aneouf Ljeenies and Fee; (Sewer Divzlrion)

10

l l Operating Ineozne AenNifmenf No. 73 - Removal of Text Year Expenieifor Non*/2a/ef! Sewer (Sewer Difdiion)


13 A.

14

Staff identified costs that were inadvertently added to test year expenses. Staff decreased

operating expense in Litchfield Park Sewer for these expenses.

15

16 Q What is Staff recommending?

A.17 Staff's adjustment decreases operating expenses in Litchfield Park Sewer by $2,891 as shown

18 on Schedule TBHww14f.

19

20 Operating I/morne Az/.rtmemf No. 74 - Operating E>.1>en.fe.r Azykflmenls (Sewer Division)

21 Q What was the basis of Staffs determination?

22 A.

23

24

Staff included costs that would normalize the purchased power expenses for die test year. This

adjustment includes appropriate costs to reflect reasonable anticipated expenses going forward

with this plant expansion. This adjustment increases the operating expenses in Litchfield Park

25 Sewer.

26

I

Direct Testimony of Teresa B. HunsakerDocket Nos. SW-01428A-17-0058 ct. al.Page 89


A. Staffs adjustment increases operating expenses in Litchfield Park Sewer by $129,320 as shown

on Schedule TBH-ww14g.

2

3

4

Operating Info/ne AdjNftrnenl No. 15 - Contradua/ Ser:/ire; - Testing (Sewer Division)5

6 Q. Did Staff make adjustments to the Contractual Services - Testing in the test year for

LitchfieldPark Sewer?

A. Yes. Staff made an adjustment to reflect the Staff's Engineers calculation of annual testing cost

for Litchfield Park Sewer.

7

8

9

10


A.

11

12

13

Staff's adjustment increases operating expenses for Litchfield Park Sewer by $17,617 as shown

on Schedule TBH-WW14h reflect the Staffs Engineers calculation of annual testing cost.

14

Operating Income Azfuftmenf No. I6 .- Depreeialion Eajbenxe (Sewer Di:/ixion)

Q Did Staff make adjustments to depreciation expenses in the test year for Litchfield Park

Sewer?

A. Yes. Staff adjusted depreciation expense to reflect application and annualization of the Staff-

recommended depreciation rates to the Staff recommended plant balances. Staffs adjustments

to depreciation expenses reflect Staffs calculation of depreciation expense using Staff's

recommended depreciation rates and Staff's recommended plant and CIAC balances.

15

16

17

18

19

20

21

22


A. Staff recommends increasing depreciation expense in Litchfield Park Sewer by $51,482 as

shown on Schedule TBH-WW15.

23

24

25

26


l ()Perusing Income A4h;fmenf No. 17 .- Pmpefy Taxer (Sewer Division)

2 Q. Did Staff make any adjustment to the Property Tax Expense in Litchfield Park Sewer?

3

4

A. Ycs. Staff's adjustment reflects Staffs calculation of the property tax expense using Staff's

recommended revenues, as shown on Schedule TBH-WW16.

5


A.7 Staff recommends decreasing property taxes for Litchfield Park Sewer by $20,076 as shown on

Schedule TBH-WW16.8

9

10 Operating Income Adjuyfmenl No. 18 -. Imwwe loxes (Sewer Division)

l l Q. Did Staff make any adjustments to test year Income Tax Expense for Litchfield Park

12 Sewer?

A.13

14

15

Yes. Staffs adjustment reflects Staffs calculation of the income tax expense based upon Staff's

adjusted test year taxable income, as shown on Schedule TBH-WW17. Staff's adjustment

increases operating expenses to reflect the income tax obligation on Staff's adjusted test year

16 taxable income.

17


A19

20

Staff recommends decreasing test year Income Tax Expense for Litchfield Park Sewer by

$29,812 as shown on Schedule TBH-WW17.

21

22

23

24

25

26

Staff recommends that in the event that significant federal income tax reform legislation is

enacted and becomes effective prior to the conclusion of this case, and such legislation

materially impacts the Company's revenue requirements, that the rates approved by the




1

2

3

4





5

6 Operating Income AeyNxlneenf No. 19 - Infenfiona/6' Left Blank; (Sewer Dinifion)

7

8 Operating Income A /xt/nen! No. 20 - Inleniiona/ Left B/an/éx (Sewer Di:/zlfion)

9

10 Operating Income A¢§u.flmen/ No. 27 - Intenfiona/bf Let/ B/ankf (Seu/er Division)

ll

12 OTHER MATTERS

13 Puff/Jared Power Id/uffor Mea/Janixm ('7)P/M '9

14 Q. Has the Company requested a PPAM?

Yes.A.15

16

17 What is a PPAM?Q.

A.18

19

20

21

22

23

24

A PPAM is an adjustor mechanism dirt allows a utility to track fluctuations in its cost of power

attributable to rate changes authorized by electric service providers servicing a public utility's

operations. Fluctuations attributed to these rate changes are tracked and recorded and the

adjustor mechanism allows the utility to bill its customers for costs of power above that set in

the rate case or credit its customers for costs below that set in the rate case. The cost changes

that are recoverable through a PPAM do not include costs incurred only because of changes in

the volume of services drat from the electric services providers.

25

Direct Testimony of Teresa B. Hun saker

Docket Nos. SW01428A-_7-0058 Ct. al.

Page 92

1 Q . What reasons did the Companies provide for requesting the PPAM?

2 A.

3

The PPAM allows the a licants to increase rates in order to recover increases in urchascdPP P

ewer costs rcsultin from increase in the rates char ed from its electric utile Y providers.P g g P

4


6 A. Staff recommends approval of the Company's proposed PPAM.

7

8 Pmperg/Taxer /¢§u:!0r Mer/Jani;/21 ("PTAM '9

9 Q. Has the Company requested a PTAM?

10 A. Yes.

l

12 What i s a PTAM?Q.

13 1A.

14

A PT \M is an adjustor mechanism that allows a utility co adjust rates, up or down, based on

changes in the property tax rates and/or assessment ratios.

15

16 Q . What reason did the Companies provide for requesting the PTAM?

A.17

18

The PTAM allows the applicants to increase rates in order to recover increases or decrease in

property taxes resulting from changes in the property tax rates and/or assessment ratios.

19

20 Q. result from higher

21

Does Staff traditionally compute the higher property taxes that

authorized revenues and include this in its revenue increase recommendation?

22 A.

23

24

Yes. This methodology has a forward looking component which is based on Staffs

recommended revenue. Simply put, it adequately increases test year property tax expenses in a

reasonable manner, rendering a PTAM unnecessary.

25

Direct Testimony of Teresa B. HunsakerDocket Nos. SW-01428A-17_0058 et. al.Page 93


A. Staff recommends denial of the Company's proposed PTAM.

.ljulem Impfvvemenf Benafx Mer/Janiim ('3IB '9

Q. Has Litchfield Park Water requested a new SIB mechanism?

A. Yes.

Q. What is a Staff recommending for the new SIB mechanism for Litchfield Park Water?

A. Ms. Hains recommends approval of the new SIB mechanism to fund any new SIB eligible

projects Ir plans to construct in the future. Please refer to Staffs Engineering report.

Q . Has Litchfield Park Sewer requested a new SIB mechanism?

A. Yes.

Q. What is a Staff recommending for the new SIB mechanism for Litchfield Park Sewer?

A. Ms. Hains recommends that Litchfield Park Sewer comply with the requirements and

conditions set forth in the SIB Plan of Administration filed in compliance with Decision N.

74437. Please refer to Staffs Engineering report.

Q. Does this conclude your Direct Testimony?

l

2

3

4

5

6

7

8

9

10

l l

12

13

14

15

16

17

18

19

20

21 A. Yes, it does.

Sghgdule TBH-W1Litchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

REVENUE REQUIREMENT

DESCRIPTIONLINENO.

STAFFORIGINAL

COST

ACOMPANYORIGINAL

COST

F "

I1 $38,035,358341,860,046Adjusted Rate Base

2 S2,684,l38 $3,0105581Adjusted Operating Income (Loss)

6.41% 792%3 Current Rate of Return (1.2 / Ll)

8.67% 7.76%4 Required Rate of Return

5 $3,629,266 $2,951,544Required Operating Income (L4 * Ll)

6 $945,128 ($59,037)Operating Income Deficiency (L5 LZ)

7 l .6230 16165Gross Revenue Conversion Factor

8 $1,533,896 $95,436Required Revenue Increase (L7 * L6)

9 $13,510,828 s 13,488,908Adjusted Test Year Revenue

10 313,393,472Sl 5,044,723Proposed Annual Revenue (LB + LE)

11.35% 0.71 °/o11 Required Increase in Revenue (°/0)

10.70°/o 9.70%12 Rate of Return on Common Equity (°/o)

Be£:r:nss§;Column [A]: Company Schedule B 1Column Staff Schedules TBH-2, TBH4a, TBH10, TBH11 and COC Testimony

Schedule TBHW2Ulchfield Park Service Company Wrier Division db UtilitiesDoekez No. vr0l421A170059T-I Year December 31 M16

GROSS REVENUE CONVERSION FACTOR

DESCRIPTION cALINENO.

l00.0000

0.06534

99.9}4

0.3804084

6 l.8(,h(,

l . 6165J 84

l

2

3

4

8

6

RevenueUmsolkdibk Faclox (Line ll;Rrveuurs (Ll . ll)C ombined Federal Md Stale T ax Rare (1 .17) + P lcpeny Tux Faaox (U l

Subtotal I L; I.4)

Rzv fnue C onvers ion Fac tor (L l / L s )

7 I 00.000r»>.z>s o

o f w e

0.10410

0.00005»*J4

s910l l

UnityCombuxed Furl and Sun Tax RI!! (LIT)One Minus Combnned Income Tax Ralf (LE . LB)Uucolleclibk Rarellncolkcubk Fanon (LE LIU)

100.0000-.

4.90004

95.10004

$40000°32390 ! 6

3 2 3 4 0 h

12

i s

14

15

16i v

Operating IncomeBeforeTaxi (Arizona Taxable Income)Aliza Slate Income Tax RateFederal Taxable income (1.12 U 31Applkahle Federal [aroma Tax Rate (153)Effrnive Fadzxal Income Tax Rate (L14 LIS;Combined Fudenl and She Income Tax Rate (Ll) + LIE)

l00.0000' g

1123409

6176404

1.3.38I4%

0.s4a0s°3807108

18

19

20

21

22

23

U nity

C ombined Fedexd and Slate Tax Rare GJ?)

O ne M inus C ombmni I nc ome T o Rate (L IS L I E )

P nupeny T ax Fnaox flBH \\l7 . L2 4 ;

Effective P zopexly Tax Facto: (1.21 I12 )

C ombined Federal M d Slate T ax and P roper T ax Rue (L I E 4 L24

52951544

3010581

24

25

26 (S£ 9 0 J \

Rewind O perating lnfome ($ c he<hde T BH \y l LS)

A duuled T es t Y en O penuug welc ome (Lou) (Schedule T BHWIO . L}2 )

Required Increase al O peniting Income (1.84 . 1.251

$1484629

1.519.688

27

z s

29 (SJaos9 ,

Income Taxes on Recommended Revenue (C ol. [C ] L52)

Income Taxes on Tes t Year Revenue (C al [A ] 151)

Reqninc l Inc rease up Reve1uxe lo P zovnde for Income Tun (Lt . L '8 l

S 1359342

0 .1 0 s ur

$13943

14.065

J0

31

32

J )

H 5131)

Rrromnxeudnl Revenue Reqninmeul (S4 :he<lu.k T BHWI L1 (l)

U nc ollec c bk Rue (L IU )

Unfolleeuble Expense on Recommend44nl Revenue (L30 L l h

A dpuled Tes t Yen Ln»:ollec6ble ExpenseRzqnired lnuenae in Revenue to P rovide for U r¢olle<ubk Exp. (L32 . LJJ)

5682.306

683585

Pzopeuy To nth lzccmuuendzd Resume (TBHWI6. LIE/Property To au Tn! Year Rnreuue (TBH\V\6 L20)Mun- in Pxopextv Tax Due to Ina-se in Revenue (FBH\'<l6 UI) 1 3 1 )-

$q54')(,

35x5

1 8 Total Requued Increase um Revenue fL26 + LN] + L34 + U

STAFFBsimuulsusidT ri l l Y en

$1 J48s90e

8958640

448 s l

$4.08 I .457

4 9 0

s 19999 I

3.88 I .460

7.500

6.250

s s 0 0

91650

1205797

0

0

0

1319697

S l j l 9.688

$uJ93472spsuaz

448817S398"29$

4 . w

§l9 8 .j73.791.916

15006250

8.500

91650

L 175,351

0

0

0

1289251

Sl .4s4.6 *9

59

40

41

42

4 )

44

45

46' w

48

49

50

51

52

53

54

55

Revenue (Schedule TBH.wl0. Col.[C] Ls k Sch. TBHW1 Col. LlWOpening Expenses Exdlximg Income TaxesSvnchxonjzed lulezeu (156Axizoua Taxxbk Income (1.39 . L40 . L4 l)Arizona Sure Income Tax RareArizona Income To (LE" L43)F¢4m1 Tlxlb\e Income GJ) . DS)Fe¢1eu.l Tux an Fun! Income Bucket 61 . $5000U) @ la%Fedexd T ax on Second l ome Bucket ($50.001 575.0000 @25°Federal To DD Thud Income Bucket 515001 . Sl000003 @ 14%

Federal T n on FourdI Income Bucks 5100 .001 835.000) 399

Fedeid T o on Fifth Income Bic kel ($3 J5C Kll $ l 00000005 @ }46

Federal Tax on $Mh Income Bnckxl ($ l0.000.00l . $ l5.000.0!X7) @ 35'

Fade fl T o on Seventh Income Bnckn 615 .000 .001 . $ \aJJ3 JJ3 ) @ 38%

Fedud T o on E ghlh I nc ome Bac h! 5 1 8 3 3 3 3 3 4 $100.000.000.000) @35°Total Federal Income Tax

C ombined Federal Md Sue Income Tax <L44 + LSI )

34.008SO A pplic able Fxknl Income T ax Rare (C ol. [C ]. L54 . C ol L5 4 ] / [C ol L4 5 . C ol L45»

$38035358l IS

s44s.8 r

SO

58

59

Rate Base Gchednlr TBHWJ Cd. [q L'8lWeighted Avruge Cos! of Deb!Synchronized Iulexesl (I34 ' 1.55)

lW

l1

Schedule TBHW3Litchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

ll

l

i

DESCRIPTIONLIN 11NO.

REF

CSTAFF

ASAD USTED

ACOMPANY

ASFILED

STAFFAD USTMENT8I

l

s s S1, 3-4,7,

91156, 12

Plant in ServiceLess: Accumulated DepreciationNet Plant in Service

106,673,41927922308

578751 111

11 ,968,292)(407,043

1s 1 561 .249

108,641 71128,329,351

580317 360

9

1.E55..

123

4569 17,17532417,175,324Net Contribution in AidofCoustn1ction (CIAC)

1630610316306,103Advances in Aid of Construction (AIAC)

13

14

Customer DepositsCustomer Security DepositsDeterred Income Tax Credits

438046551,829

6,754,391

622459,663

1 726266

431822492166

5028125

Total Deductions s s 41 22569339,433540 s 1,"92.,153

S O $0SU

.

Unamortized Fimmce Charges l

l

15

89

10l l12.131415161718192021 1

2216

95,05913646250027

699,6762

0(151754)

0(319,532)

0

95,059(15292)50,027

380,1442

PrepaymentsAllowance tr \Yorking CapitalDeferred Regulator. AssetTCEPlumeDeterred Regulatory Asset PFOARounding

Total Additions S s471286981,226 s 509940

282425262728 ss s 38,035,35841,860,046 3,824 688Original Cost Rate Base

i

l

i

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Retérences:Column [A]: Company Schedule B1Column Schedule TBH4Column [C]: Column [A] + Column

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Schedule TBHWSaLitchGeld Park Service Company Wane: Division db liberty UtilitiesDocket No. w.01427A1700s9Tell Year December 31, 2016

RATE BASE AD USTMENT NO. l Plant ReclnuiGcotion and Adiastments

STAFFAD LSTEDAD USTMENT

ACOMPANYA$ FlLED

$ s

LINENO.123456

s0

(25851 l(Z l 25.12 I I

O0

8321500

759962247645(338485)

155531(53703)

(492176)6000

490087(308901 >(224726 r

73.190

00nO00n00000O0o000u000(r

0fl

0Ofl0(l

o0O04)

AC CTNO.301302303304305306307308309310

310.131 I320

320.13202330330.1330."33 I333334335336339340

340. I341

34 l .4342343344345346347347. 1348

0(25851)

(2l 25l2l)00

8321500

759962 °47 645(338485)

0155531(53703)

(492176)6000

490087(308901)(224726)

73190000

(21.339)(38.696)(l 8lB5)29276

0(96538)

4647o

81748

(728632)43*179

O87 839s

DESCRIPTIONOrganization CostsFmichise Comland and Lund RightsStntctnres and ImprovementCollecting and Impounding ResLake River and Other IntakesWells and Springslnfililnuion Galleries and TmmelSupply MainsPower Generation EquipmentSolar GeneratorElectric Pumping EquipmentWares Treatment EquipmentWater Treatment PlantChemical Solution FeeflersDistribution Reservoirs and StandpipeStorage TanksPressure TanksTransmission and Distribution MainsServicesMetersHvdnnlsBacktlow Prevention DevicesOther Plant and Misc. EquipmentOfkire Furniture 81 EquipuiriuComputers anti SoftwareTnnsporniUon EquipmentTrmspormion Equipment Golf CamStores EquipmentTools and Work Equipmentlaboratory EquipmentPower Operated EqtupmtntCommunications EquipmentMiscellaneous EquipmentMiscellaneous Equipment . CNG PlumOther Taugiblr PlxurtTotal

nOO

(21 Sam(38696r(l8185!29.2"6

f l

(96528 I

4647

(|

B 1748

(728632>

43".1"9

(1787 839 s

8910l l12\31415161718192021222324"s2627

28293031323334353637 H

s

ReclalliGca!ionl lo Libenv Li\chGeld Park Sewer

s sUn

00

38

3940

4142

36 l

37 l390

39339'. I

14694

(31474$233-

589 IN

$"9l 453

14694

(31474)2337

s91L2291,453

Collection Sewers Gravid

Plllnplllg EquipmentOtliee Furniture 6: Equipment

Tools Shop And Gauge EquipMiscellaneous Equipment CNG Plant

so43 Total Recln11iGc1lion to Sewer Division 5285,923$285,923

S01916 501916ss44 Total ReclauiGcal.ionl

Column [.\]:Column [B]: Coma;nnvs response lo Staffs DRs

Column [q. Cdumu [A] + Column [B]

\

l

Schedule TBH-W5bLitchfield Park Service Company Water Division db Liberty Utilities

Docket No. W-01427A17-0059

Test Year December 31, 2016l

RATE BASE ADJUSTMENT no. 2 Intentional] Left Blank

l

Schedule TBH-WScLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. w-01427A-17-0059Test Year December 31, 2016

RATE BASE AD USTMENT NO. 3 - Indirect Overhead Costs "INDOH" Removals

- E I - CSTAFF

AD USTEDLINENO.

l234561

ACOMPANYAS FILED

SO0000000000()()0()()0O()0()000000000000000

ACCT

NO.

30 l

302

303

304

305

306

307

308

309

310

310. 1

311

320

820. 1

820.2330

830. I

330.2331

333

334

335

336

339

340

340. 1

341

341 . l

342

343

344

345

346

347847..

348

SO0

(636)(13366)

00

(1 ,854)0

(1 ,298)00

(1194)(J

(5097)(61)

()

(367)

(46)(15,575)(9233)

(21576)(1 466)

0(58)

(190)(197)

(3,369)00

(300)0(U)

9960

(3618)(6

AD USTMENTS0

0

(636)

(13,366)

()

0

(1,854)

0

(1,298)

0

0

(1 194)

()

(5,097)

(6 I )0

(367)

(46)(15,573)

(9233)

(21 576)

(1 ,4<><»)()

(58)

(190)

(197)(3,369)

0

0

(300)

0

(0)996

()

(36l a)

6

78 511 78 511

DESCRIPTIONOrganization CostsFranchise CostsLand and Land RightsStmctnres and ImprovementCollecting and Impounding Res.Lake River and Other Intakes\\'ells and SpringsIntllitration Galleries and TunnelSupply MainsPower Generation EquipmentSolar GeneratorElectric Pumping Equipment\\"aler Treatment Equipment\Voter Treatment PlantChemical Solution FeedersDistribution Reservoirs and StandpipeStorage TanksPl?sslll€ TanksTransmission and Distribution MainsServicesMetersHydrantsBackflow Prevention DewcesOther Plant and Misc. EquipmentOffice Furniture & EquipmentComputers and SoftwareTransportation EquipmentTransportation Equipment Golf CartsStores EquipmentTools and \York EquipmentLaboratory EquipmentPower Operated EquipmentCommunications EquipmentMiscellaneous EquipmentMiscellaneous Equipment CNG PlantOther Tan be PlzmtTotal

8

9

10

11

12

13

14

l5

la

17

IN

la

20

21

22

23

24

25

26

27

28

29

301

32.

33

34

35

36

37

Column [A]:

Column Companys xrsponse to Stattls DR's

Column [C]: Column [A] + Column

Schedule TBH-W5dLitchfield Park Service Company - Water Division db Liberty Uti l i tie sDocket No. W-01427A-17-0059Test Year December 31, 2016

RATE BASE AD USTMENT NO. 4 - Retirements Acct. 106 Reclassifications 8: Corrections

ACOMPANYAS FILED

LI NENO.

1234561

l

l

AD USTM ENTSo

0

()

54,888

0

0

(35,806)

0

0

0

0

(9,842)

8

9

10

11

12

13

14

15

16

IT

(126143)5,179

0000()

(145,219)000

(6304)(17,580)

So0()00()000000000000000000(I000

00000000

ACCT

NO .

301

302

303

304

305

306

307

308

309

3 IO

310. 1

311

320

320. 1

320.2330

330. 1

330.2331

333

334

335

336

339

340

340. 1

341

341 .4

342

343

344

345

346

347

847 1

348

()0000000

00

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

DESCRIPTIONOrganization CostsFxaucl\ise CostsLand and Land RightsStnustures and ImprovementCollecting and Impounding Res.Lake River and Other IntakesWells and SpringsIntiljtration Galleries and TunnelSupply MainsPower Generation EquipmentSolar GeneratorElectric Pumping Equipment\\aler Treatment Equipment\Voter Treatment PlantChemical Solution FeedersDistribution Reservoirs and StandpipeStorage TanksPressure TanksTransmission and Distribution MainsServicesMetersHydrantsBackflow Prevention DevicesOther Plant and Misc. EquipmentOffice Furniture 8: EquipmentComputers and SoftwareTransportation EquipmentTransportation Equipment Golf CansStores EquipmentTools and \\ark EquipmentL2bOl5\\Ol\ EquipmentPower Operated EquipmentCommunications EquipmentMiscellaneous EquipmentMiscellaneous Equipment CNG PlantOther Tax idle PlantTotal 280 827

CSTAFF

AD USTEDSO00

5488800

(35,806)0000

(9842)0

(126,143)5,179

00000

(145,219)000

(6,304)(17,580)

0000000U0(J

280 827

1sE.EI8xE1>1;;E.s;Column [A]:Column Companys response to Staffs DR DH 1.19 DH 1.20. TBH 3.2Column [C]: Column [A] + Column

Schedule TBH-W5eLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. w-01427A.17-0059Test Year December 31, 2016

RATE BASE AD USTMENT no. S - ACCUMULATED DEPRECIATION

CSTAFF

AD l'sTEDLINENO.

12

DEscR1pT1oxOrganization CostsFranchise CostsLand and Land Rights3

4

5

6

7

8

9

10

11

12

13

14

AD VSTMENT(S21,lOO)

00

(55,180)00

(34,085)0

(989)(7743)

374,795(141,053)

0(198,953)

5407(43705)

(227)85,130

(15100)(47,196)

(279,577)(325)

(5)(7)

(13,661)7,664

(49922)7,074

(0)(2362)

4870

SO0

0

(7,l 65,490)

( )

0

(1,342,308)(J

(9517)(147,835)(374,795)(674,763)

0(690,582)

(5489)(217,657)(148,941)(85130)

(9439235)(1 ,946,503)(3,483,549)

(594182)(28664)

(182519)(453,940)(16899)

(176,056)(7,074)

(13368)(18012)(3,098)(7,480)

(129199)o

(7,744)

ACCTNO.30 l302303304305306307308309310

310. 1311320

320. 1320.2330

330. 13302331333334335336339340

340. 1341

341 .4342343344345346347

347.1348

Structures and ImprovementCollecting and Impounding Res.Lake River and Other IntakesWells and SpringsInfiltration Galleries and TunnelSupply MainsPower Generation EquipmentSolar GeneratorElectric Pumping Equipment\*(aler Treatment Equipment\Vater Treatment PlantChemical Solution FeedersDistribution Reservoirs and StandpipeStorage TanksPressure TanksTransmission and Distribution MainsServicesMetersHydrantsBackflow Prevention DevicesOther Plant and Misc. EquipmentOffice Furniture 8: EquipmentComputers and SoftwareTransportation EquipmentTransportation Equipment Golf CartsStores EquipmentTools and Work EquipmentLaboratory EquipmentPower Operated EquipmentCommunications EquipmentMiscellaneous EquipmentMiscellaneous Equipment CNG PlantOther Ta idle Plant

15

16

17

18

la

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

14,304(36,432)

7,7442

Total37

ACOMPANYAS FILED

SO00

(7,220,670)00

(1,37(>,393)0

(10506)(155,578)

0(815,816)

0(889,535)

(82)(261362)(149,168)

0(9454335)(l,993,699)(3,763,126)

(594507)(28669)

(182526)(467,601)

(9235)(225978)

0(13368)(20374)(2,611)(7,480)

(114895)(36,432)

071648

$27,865,594 $445,01871 646

$27,441,676

nEEEB.Ex;:L=.s;Column [A]: Companys Schedule B -2 Pg. 4Column Column [A] Column [C]Column TBH-4a Plant Schedules

Schedule TBI IW6aLitchfield Park Service Company - Water Division db Liberty Uti li tiesDocket No. W-01427A-17-0059Test Year December 31, 2016

RATE BASE AD USTMENT no. 6 - POSTTEST YEAR "PTY" ADDITIONS_ _ _

BDESCRIPTION

(3STAFF

AD USTEDLINENO.

1 sS

2

3

4

56-

59495

466,659

36,407958503

165,857

396,064173,327

8

9

10

585418

535235

227,329315111

2,219

ACOMPANYAS FILED

85028

344318

61 ,229

1050588

392,533397,110759,790

97,960646,193416,361

43417

373388

16,2811 ,628

ADIUSTMENTs 2447"

122341(24,822)(92080)

(226,676)(1,046)

(586,463)(97960)(60,775)118,874183912(58272)(14,062)(1,628)

9,335

10854

11

12

13

14

15

16

17

18

19

°o

ACCT.

NO .

303

304

307

309

310

311

320. 1

320.2330. 1

331

333

334

335

340

340. 1

341

343

344

346

847. 14 655 998

3567

3,0075087

254,97031 ,o 12

415 941 4

3567

12,342

5,087265,82481 o 1240 057

Land and Lancl Rights

Structures and Improvement

\Vells and Springs

Supply Mains

Power Generation Equipment

Electric Plumping Equipment

Water Treatment Plant

Chemical Solution Feeders

Storage Tanks

Transmission and Distribution MainsServicesMetersHydrantsOffice Furniture 8: EquipmentComputers andSoftwareTransportation EquipmentTools and \\ark EquipmentLaboratory EquipmentCommunications EquipmentCNG E i i wentTotal ss s-

BEEEBEISQESLColumn [A]: Company Schedule B2., Pg. 4.4

Column Testimony TBH and Company's Response ro Staff DRsColumn Column + Column

Schedule TBH-W6bLitchfield Park Service Company - Water Division db Liberty Utilities

Docket No. W~01427A-17-0059

Test Year December 31, 2016

RATE BASE AD USTMENT NO. 7 - Intentionally Left Blank

Schedule TBII-W6cLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

RATE BASE AD USTMENT no. 8 - PTY RETIREMENTS

- _ _ ACOMPANYAS FILED

S

LINENO.

123

CSTAFF

AD lSTED(2990)(3,870)

(114,753)(63,116)(12568)(45364)

(121 930)(137)

0000()00

ACCT.

NO .

304

310

311

320.1331

333

334

335

340

343

346

AD USTMENTs s

0 00000O000 00 0

DESCRIPTIONStructures and Improvements

Power Gerent son Equipment

Pumping Equipment\\aler Treatment PlantTrans. and Dist. MainsServicesMetersHydnintsOffice Furniture & EquipmentTools and \Volk EquipmentCommunication E ii lentTotal

4

5

6

7

8

9

10

1112

2,695367 424$S E S_

BEEEBENLEEColumn [A]: Company Schedule B2Column [B]: Testimony TBH Per TBH 2.2 201°2016 FA Detail Transactions Report updated jan-Oct....xlsx Provided 12.5.17Column [C]: Column [A] + Column

I

Schedllle TBH-W6dLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. w-0142/A-17-0059Test Year December 31,2016

RATE BASE AD USTMENT no. 9 - PTY INDOH REMOVALS

B- CSTAFF

AD USTEDLINFNO.

123456

~)

A C C T

NO .

30 l

302

303

304

305

306

307

308

309

310

310. 1

311

320

320. 1

320.2

330

330. 1

330.2

331

333

334

335

336

339

340

340. 1

341

341 . 1

342

343

344

345

346

347

347.1

348

ACOMPANYAS FILED

SO00000000000()0()()000()()()OU0O0000()00000

AD USTMENTSO

0

(565)

(2,741 )

O

0

(293)

0

(5,488)

(373)

0

(6268)

0

(3605)

0

0

(1 365)

0

(8l67)

(3302)

(4402)

(100)

(151)

(28*

(124)

(53)

( V )

0

0

(258)

0

0

(2803)

0

(66)

0

SO

()

(565)

(2,741)

0

0

(293)

0

(5488)

(373)

0

(6,268)

(l

(3605)

(l

0

(1365)

0

(8,l67)

(3302)

(4402)

(100)

(151)

(28)(124)

(53)

(I-0

0

(258)

0

0

(2,803)

0

(66)0U

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

DESCRIPTIONOx8mLization CostsFranchise CostsLand and Land RightsStmetures and ImprovementCollecting and Impounding Res.Lake River and Other Intakes\Yells and SpringsIntilitration Galleries and TunnelSupply MainsPower Generation EquipmentSolar GeneratorElectric Pumping Equipment\\"aler Treatment Equipment\\"aler Treatment PlantChemical Solution FeedersDisuibudon Reservoirs and StandpipeStorage TanksPressure TanksTransmission and Distribution MainsServicesMetersHvdrantsBackflow Prevention DevicesOther Plant and Misc. EquipmentOffice Furniture 8: EquipmentComputers and SoftwareTmnspoxtation EquipmentTransportation Equipment Golf CartsStores EquipmentTools and \\"ark EquipmentLaboratory EquipmentPower Operated EquipmentCommunications EquipmentMiscellaneous EquipmentMiscellaneous Equipment CNG PlantOther Tan be PlantTotal 40 17140 171

I 8EEEBE.IS§E§4Column [A]:Column Company's response to Staffs DRColumn [C]: Column [A] + Column

i

l

Schedule TBH-W7aLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

RATE BASE ADJUSTMENT NO. 10 - Allocated Co orate Plant

[Bl1

l

l

ACCT.NO.

903

904

940

94(). I

947

l

LINENO.

1

2

3

4

5

6

[A]COMPANYAS FILED

s 36,676

489,213

62,500

851,809

4,031

(1)

[ qSTAFF

ADlLSTM18NT .\D1LsTEDS (0) s 36,676

763 489,976

610 63,110

1049 852,858

(0) 4,031

0 (1)

DESCRIPTION

Land and Land Rights

Structures and Improvement

Office Furniture & Equipment

Computers and Software

Miscellaneous Equipment

Rounding-

8 Totals s 1,444,228 s 2,422 s 1,446,650*

REFERENCES:Column [A]: Company Schedule B2, page 3.5Column Testimony, TBHColumn Column [A] + Column

Schedule TBH-W7bLitchfield Park Service Company Water Division db Liberty UtilitiesDocket No. W-01427A-170059Test Year December 31, 21116

| qrated Plant Accumulated De recitionRATE BASE AI) USTMENT no. 11 . Allocated Co

181

AD USTMENT

[qSTAFF

AD USTED

[f\]COMPANYAS FILED

ss s

. \CCI

NO .

903

904

940

940. l

947

(1 480)

(289)

(36105)

(101 )

(46139)

(13963)

(441 428)

(202)

(44659)

(13674)

(405323)(101)

DESCRIPTIONLand and Land Rights

Stmchues and Improvement

Office FunUture & EquipmentComputers and Software

I\IisrelI1\neous Equipment

LINENO.

1

23

4

56

501 732ss 463 757 s (37915Q _ -BEEBE.8§I§;Column [:\]: Company Schedule B2 page 4Column Testimony TBHColvin [C]: Column [A] + Column

Schedule TBH-W8aLitchGeld Park Service Company - Water Division db Liberty Utilities

Docket No. w-01427A-17-0059Test Year December 31, 2016

I ATE BASE AD USTMENT no. 12 - CUSTOMER AND LONG TERM SECURITY METER DEPOSIT

LINENO.

12

DESCRIPTIONCustomerMeter Deposits

Customer Securing De sitsTotal s

ACOMPANY

AS FILED AD USTMENT

S 431,822 S 6,224

492,166 59,663923 988 S 65887

CSTAFF

AD USTEDS 438,046

551,829S 989,875_

BEEEBENQESLColumn [A]:Company SchedulesB 2, page1

Column Testimony, TBH 2.20, RUCO 4.01 and 4.02Column [C]: Column [A] + Column

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Schedule TBSvs¢LilchEeld Park Service Company . Water Division db liberty UtilitiesDocks: No. \l0142IA170059Tel! Yen December 31, 2016

RATE BASE AD USTMENT NO. 14 . ALLOWANCE FOR WORKING CAPITAL

- I I T --E1 - r a -s E - -E -_E swoRI~;1n<; CASHRE L1Ran=_vr

GLEADQL\GFACTOR

REdENLE EXPENSE NETL\G D.\\S L\G DAYS L\G DAYS

STAFFAD Lsn1E1<T AD STED

ACOMPANYAS HLED

O 12

004

004

$0

563

40:09

39.s80

4

LINENO.

I23456

0200050 1-00"006

42418

622

119087

984

$0

13.324

I 09590443559

118

6244826w

I 996 169

8 5 4 5

l4 l7'59

2.2l0

69 I 55

52296

368%5

0

0.00

28. 15

29.99

(29.76)

3229

(18.33)

35.72

19.9

28.3

21 .75

(31.91 )

(63.l5)

VIS" 50)

l s ;o 2

91.25

43 as

43.55

43.55

43.55

43.55

43.55

43.55

43.55

43.55

43.55

4355

43.55

43.55

43.55

43.55

0.04

0.06

0.21

0.29

0.62

(0.30;

(0.13) s4908

469

19.168

s u e s

(sooo:,(5102)

SO

133"8

1095190

198559

118

2so.2os

29.005

1343369

25661

l .421 626

l "065 "03

51296

1702"9

395 6"5

$0

0

0

(245000,

Ois' 751383

(1szaoq.(61 IM)3869

0

(3952,0

(198s8<»,39565

45 55

15.43

1156

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6 l.8S

i s

23.58

IS. I s

°l .so

*s.46

107.30

22605

(lOB.4';

(4'.l01

D e s c l u r f n o x

O P ER AT I NG EY P ENSES

Saline 6 Wages

Purclnsed Water

Puxclnsrd Power

Gxemicals

Fuel for Power Pxodlxcdon

Rrpnixn Et Maunmunce

Office Supplies 8: Expense

Conlnctunl Services Professional

Conlndull Services Testing

Conmctunl Sevres Or hex

R¢1\1S

Txsnspoxudon E\P(11§glnsunnoe Geuznl LiabnlnrrMiweWneous Expensellllftil Expanse

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8

g

10

l l

12

13

14

15

16l °

18

19

20

21

22

(040.100"

(FO .H)

43.55

6.55

21396

0.00

37.00

43.55

43.55

43.55

TAXESProperty TaxesTaxes Other than Incomelncomz Tax

o

(3a1sz0,

0

39 332

7 n 1598

0

l85993 l

( l5I0)

0

220425

710088

0

2080356

(Sl 5292sz 489 $8351 "5Total $8 205349

23

"4

~s

26 - - - _COMPANYAS FILED AD l5TmE.\T

5136462 (l5l54}

STAFFAD USTED

fsl5z9z.

28

29

30

31

32

SISI 54 $l5"9S 136 46"

33

34

Working Cash Requirement

Materials and Supplies Inventory

Required Bulk Balances

Pxvpnymeuts 8: Deposits

.\llcv1ncc for \Yorking Capital

l

l

i

5852325922Column [A]: Compnnv Sclwduk B5 Md B5 Appendix page 2Column [B] Testimony. TBHColumn [C]: Column [A] + Colwxul [B]Column [D}: Company Sclwdde B5 Appendix page "Column[E]:Company Sdmeduk B5 Appendix purr 2Column [l"]: Column [D] * Column [E]Coluum [G]: Column [Fl 365Column [HI: Column [C] X Column [G]

1

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Schedule TBHW9aLitchfield Park Service Company Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

RATE BASE AD USTMENT no. 15 - ACCOUNTING ORDER

[B] [qSTAFF

AD LSTEDLINExo.

-2

DESC RI PTI ONAceouutm OrderTotals

ss

ss

S

S

[AlCOMPANYAS FILED

699676

6)9676380 144

380,144

AD1 LSTMENT31959319,532

YEARLY DEFERRAL OF THE ACCOUNTING ORDER

[B]

Dusckllfrlox

[qSTAFF

AD LSTEDAD L.sTA1 ENT

[A]COMPANYAS FILED

LINENO.

Detbrral for the PFOAAccounting OrderAmmnlized over 30 vcnrsTotals

34

23323

23 323

s

S

s

s

ss

10651

10651

12671

12671

Stay Adjusted PFOA Deferred Projection from 1/1/2017 to 6/30/2018 Well CAL AOC 1/2017 &Well CAL . AOC 7/2017

DEsc1up'r1onno.LINE

S

s

30

3.33%

7/1/2017

415,134.22

1153.15

12

De recition Proection for CAL:

Usctinl Life:

Depreciation Rate:

PIS Dale:

Total Asset Cost:

Montlxly Dap Amt:Months to project:

I

sS

30

3.33%

1/1 /2017

579,683.41

1,610.23

18

De recition Proection for CAL:

Usetill Life:

Depreciation Rate:

P15 Date:Total Asset Cost:

Monthly Dup Amt:Months to pfoicct:

42,821.98Total Depreciation Projections for CAL and 4AL: $

Ca in Costs on Deferred Costs:$935 . . .

ss

u m mInu16 S

Addi$iQua1§9§1§72,609.90

4,060.92

24,388.85

19,973.80

2,853.40

5

67

89

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

2627

28

29

30

31

32

33

34

lul16

Aug-16

Sep16

Oct16

Nov16

Dec-16

lan-17

Feb17Mar17

535.49

569.04

573.20

577.38

759.64765. 18

916.58

944. 10

950.99

957.93

745.00

73,890.39

78,520.36

79,093.55

79,670.94

104,819.42105584.61

126474.98

130,272.48

131 22.3.47

Schedule TBH\V9aLitchfield Park Service Company - Water Division db Liberty Utilities

Docket No. W-01427A-17-0059


72,609.90

964.92

971 .97

1509.12

1,520.13

1,531.23

1,542.411553.67

1565.01

1576.43

1,587.94

1599.53

1,611.21

1622.97

1634.82

1646.75

132,181 .40

133,146.32

134118.29

208,237.31

209,757.44

21138867

212,831.08

214384.74

215949.75

217,526. 18

219114. 13

220313.66

222324.87

223947.84

225882.66

Apr17

Mav17

.lun17

Iul17

Au817

Sep17

Oct17

Nov-17

Dcc-17

lan18

Feb-18

Mar-18

Apr-18

May18Inn18

Total Deferred Costs S 227,229.41

Post in Service AFUDC Proection 8.76% WACC

ls2h§5z§.t§ Askiis igualigxis

. \

s

322625.34

88126.68

(1,177.95)

5,560.14

579683.41

324980.50

416,122.87

417,974.02

426,625.95

429,740.32

432877.43

1019952.53

1027398.19

1034,898.19

1,042452.95

1,050,062.86

1,057,728.32

1,065,449.73

1073,227.51

1,081,062.08

1088953.83

1,096,903.19

2355.16

3,015.68

3029.10

3091.803114.37

3137.107,391.69

7,445.65

7,500.01

7554.76

7,609.91

7,665.46

7721.42

7,777.78

7,834.56

7,891.75

7,949.36

8,00739

BsxiszslNov 16 S

Dec I6

jan 17

Feb 17

Mar 17

API17

May 17

lun17

jul 17

Aug 17

Sep17

Oct 17

Nov 17

Dec17

jan-18

Feb18

Mar18

Apr18

May- 18

jun I8

110,092.97Total Post in Service AFUDC Projection: $

380,144.36Total Deferral (Lines 21 + 51 + 76): S

12 671.48Yearly Deferraul over 30 years (Line 78 / 30 years): SI

35

36

37

38

39

40

41

42

43

4445

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

6970

7172

73

74

75

76

77

78

79

80

81

82

Please Note: Staff reclassified the media costs to deferred costs from Plant in Service and the proposed

deferred costs for media are included in Staffs adjusted costs. All costs have been reclassified xo Repairs

and Maintenance since media is not a chemical. Please refer the Staff Engineer's Testimony.

Schedule TBH-W9bLitchfield Park Service Company Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

RATE BASE AD USTMENT no. 16 lnlentionall Lm Blank

I

Schedule TBHW9eLitchfield Park Service Company Water Division db Ijbeny UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

RATF BASE AD USTMENT no. 17 . lntenrionall Left Blank

Schedule TBH-W9dLitchfield Park Service Company Water Division db Liberty UtilitiesDocket No. W-01427A-I7-0059Test Year December 31 2016

RATE BASE AD USTMENT no. 18 Intentionally Left Blankl

l

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Il

ll

ll

l1lll1

Schedule TBHW9eLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427AI7-0059Test Year December 31, 2016

RATE BASE AD USTMENT no. 19 . lntentionall Left Blank

l

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l

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9

W

Schedule TBHW9fLitchGeld Park Service Company - Water Division db Liberty Utilities

Docket No. W-01427A-17-0059


RATE BASE ADJUSTMENT no. 20 - Intentionally Left Blank

I

Schedule TBHWIOlitch6eld Park Service Company . Water Division db Liberty UtilitiesDocket No. W01427A170059Tell Year December 31, 2016

- a - s - m a -

ACCTNO DESCRIPTION

STAFFTEST YEAR

AD USTMENTS

ACOMPANYADj LSTEDTEST YEARAS FILED

ADINO

STAFFRECOMMENDED

CHANGES

STAFFTEST YEAR

ASAD USTED

STAFFRECOMMENDED

461 Mcxrnd Wares Sales460 Water Sales LlmArnred474 Other Operating Revenues

Rosuxdu _LINENO

l

3456

SO(I

(21920)(9

S"l 920

(595436)0o0

S95436

Sl3"39"580

2"l58')1

513510 828

s13\438020

249669l

s la 393 472

s I 32392380

249669I

S 13488 908

l(l

910

9)4.

9

9 11. no

9

8

9

10

l l

12

13

14

15

16

17

18

19

20

215 8.9. p

1618

9. IIS

so13324

1095790198559

11825020529005

18133692366 l

14216282270

6520352.2%75120

1702793010730

234980

6835851519.688

$000

l24sooo,0

187 5`".383

( l 5".800)(61784)

38690

(395')0O

( l 98586)(B85l 3)(1065 I )

O(I s 10)

2204"5

601 Salaries 8: Wages610 Purchased Ware:615 Purchased Power618 Chemicals616 Fuel fox Power Pxoductiou6"0 Repairs 6: Maintenance621 OtGce Supplies 8: Expense

634/632 Conuarmnl Services Professional635 Conmcnuil Services Testing636 Contractual Services . Other641 Rents650 Transportation Expense657 Insurance . General Liability666 Regulatory Commission Expense675 Miscellaneous Expense403 Depreciation Expense

407.5 Deferred Asset Amortization408 Taxes Other than Income

408.11 Property Taxes40'J Income Tax

Roundel

tol332l

1095790443559

HIS62448z662:

199616985445

14177592.270

6915552 we75120

36B8653 099 "43

341490

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1484629

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Schedule TBH-W12aLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A.17-0059Test Year December 31, 2016

OPERATING INCOME AD USTMENT NO. 1 - Other O keratin Revenues

LINENO. ACCT.NO.4741

DESCRIl"l.I()NOther O gratin RevenuesTotal

[B]STAFF

ADIVSTMENTS2 l92()$21,920

[ClSTAFF

RECOMMEND1e1)$249,669$249,669

[AlCOMPANYpRo1>osED

$271 589$271,589n -

Misssllansnlaslnsnnns _ - 111111

1

S116

7,046

4,794

784

9,181

sz1 920

5/10/2016 Scrap Meta Cedillo Recycling

8/23/2016 Red Brass / Dirty Stainless

8/23/2016 Red Brass / Dim Stainless

9/15/2016 Cedillo Recycling CK 2050

Various Sewer Miscellaneous Income Reclass

Total Ajdustment

Reisarsnsss;Column [A]: Company Schedule C-2 and \Y.orkpapersColumn Testimony TBHColumn [C]: Column [A] + Column

Schedule TBHw12bLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W01427A17-0059Test Year December 31, 2016

OPERATING INCOME AD USTMENT NO. 2 Intentional] Left Blank

i

i

i

ill

i

1

ii

i

Schedule TBII-W13aLitchGeld Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

OPERATING INCOME AD USTMENT NO. 3 - Contractual Services - Professional Bonuses

ACOMPANYPROPOSED

s

LINENO. DESCRIPTION

1 Contractual Services Professional ServicesTotal ss

STAFFAD USTMENT

s 80906 s80,906 s

STAFFRECOMMENDED

8090680,906l l

LPSCO SIR Portion*

ss

Bonuses/LTIP

APl"C

L v c cLLTCLABS

85,10627,71864,971

LPSCO WTRPortion*

77,456

25,227

59,180

161 812 177795

Removal of 50% of Incentive pay - Duefrom Shareholders 88 898$$ 80,906

* Converted to ls Dollars and Allocated to LPSCO lions Alie I.\\" Portion based on the 4Factor Allocation

References:Column [A]: Company's C-2 SchedulesColumn [B]: Testimony TBHColumn [C]: Column [A] + Column [B]

Schedule TBH-w13bLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

OPERATING INCOME ADJUSTMENT NO. 4 - Contractual Services - Professional (LU 8020 BonusesNormalized

LINENO.

ACOMPANVPROPOSED

Sl l2

DESCRIPTIONContractual Services Professional ServicesTotal

CSTAFF STAFF

AD USTMENT RECOMMENDEDs 19,593 s 19,593$ 19,593 $ 19,593

! E !

H

LPSCO WTR Portion*

19,593BonusesLU802()Normalized Bonuses

LPSCO SWRPortion*

21,52821 52819,593

•Co rate Bonuses APVC, LLCC and LUCCL\BS.x1sm on tab LL 8020

e e e eColumn Company's C2 Schedules

Column Testimony TBHColumn [C]: Column [A] + Column

iI

Schedule TBH-W13cLitchfield Park Service Company - Water Division db Liberty Utilities

Docket No. w-01427A-17-0059


OPERATING INCOME AI)]USTMI3NI NO. 5 - Contractual Services - Professional (LU 8020 SalaryIncreases

LINENO.

STAFFRECOMMENDED

s 132 115

DESCRIPTION

Contractual Services Professional ServicesTotal $

STAFFADIUSTMENT

s 10,606$ 10,606 132,115

A

COMPANYPROPOSEI)

s 142,721s 142,721

- 1

Iisiersnsssz;Column [A]: Company's C2 Schedules page 10

Column Testimony TBH


Schedule TBH-w13dLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

OPERATING INCOME ADJUSTMENT NO. 6 - Contractual Services - Professional (APUC, LUCC, LUCC-LABSAllocations Removal

LINENO.

S

ACOMPANYPROPOSED3

DESCRIPTION

Contractual Services Professional Services

Total $

STAFFaDIL7sTx1EnT

13,514

13,514

CSTAFF

RECO1\lMENI)IiDS 13,514

$ 13,514i ni i

AiL(§ Removals LUCC 65%LUCC Removals

LUCC-L\BS Removal - Various % AVG 67.13%Total

LPSCO WTR Portion* LPSCO siR Portion*

s (138) s (152)

s (9,914> s (10,893)

s 3,462 s 3 804$ 13 514 s 14,849

* Converted to US Dollars and Allocated to LPSCO from the L\\" Portion based on the 4-Factor Allocation

Bsicrsnsss;Column [A]: Company's C2 SchedulesColumn Testimony TBH


Schedule TBIl-Wl3eLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

s. o n\\ v\ I v ' o-r b .7- 8020 Adjustments, removals and theecontractual ervlces - ro essxonal (Reclassifications

LINENO. DESCRIPTION


ACOMPANYPROPOSED5

Total

SIAFlAD USTMENT

S 2818128 181

STAFI :RECOMMENDED

s 28 18128 181s s

§

Q$ 3

LU8020 Admin Allocation Removal and Other ReclassLU ls Customer Care Admin Allocation AclustmeutTotal

LPSCO WTR Portion LPSCO SWR PortionS (20,809) S (22864)

7,873 810128 181 30 965$$

Column [A]: Company's C2 SchedulesColumn Testimony TBHColumn [C]: Column [A] + Column [B]

I

Schedule TBH-W14aLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059


OPERATING INCOME Al) USTMENT NO. 8 - Miscellaneous Bank Char es

LINENO.

-DESCRIPTION

Miscellaneous Bank Char sTotal

STAFF

AD USTMENTS160,801

S160 801

CSTAFF

RECD\[_\IENDEDSll7,658Sl 17,658

ACOMPANY

PROPOSED$278 4595278,4592

8

BsisrsnssxColumn [A]: Company Schedule C2 and Workpapers



Schedule TBHw14bLitchGeld Park Service Company Water Division db Liberty UtilitiesDock¢l No. W-01427A-17-0059Test Year December 31, 2016

STAFFRECOMMENDED

COMPANYPROPOSED

LINENO.

I S s2

1

1

3

4

5

6

1111

DESCRIPTIONTransportation Equipment Acct No. 34 lOffice Supplies & ExpensesRepairs and MstmtenanceProperty Taxes ExpenseMiscellanoues Licenses and FeesTransportation ExpensesWater Testing Expense(iontmctusd Services Otlxn

0000000

1 1 oo 12383

9162329993

(29993)(3952)(8675)8675

STAFFAD LSI.\[ENIs 11091

238391 623299)3(29,993)(3952)(8675)8675 18

9

Total 101 144s

Included in Plant Reclassifications on Sechedule 5a

Total Ex senses 90 053s

H ___.__

-Q -

-

Colnrnn [A]: Company Schedule C2 and \Y'ork*>apersColumn [B]: Testimony TBHColunm [C]: Column [A] + Column

Schedule TBH-W14cLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. w-01427A-17-0059Test Year December 31, 2016

OPERATING INCOME AI) USTMENT no. 10 - PFOA/PFOS O keratin Costs

A CCOMPANY STAFF STAFFPROPOSED AD LFSTMENT RECOMMENDEDS 247,686 s (245,000) S 2686

. 245,000 245,000

. (148,866) (148,866)

LINENO.

1234

DESCRIPTIONChemicals PFOA Operating Costs

Repairs and Maintenance

Repairs and MaintenanceProforma Adjustment No. 7

Total s 148 866 $247 686 s 98,820: I

BsfcxsnssxColumn [A]: Company Schedule C-2 and \VorkpapersColumn Testimony TBHColumn [C]: Column [A] + Column

Schedule TBHw14dLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W01427A-17-0059Test Year December 31, 2016

OPERATING INCOME AD USTMENI NO. 11 - PFOA/PFOS - Accounting Order Reclassification

A

DESCRIPTIONContractual Services OtherTotal

LINENO.

12

COMPANYPROPOSED85

CSTAFF

RECOMMENDEDs 4806s 4 806

S

S

STAFFAD L'STM18NT

4806

4.806

. . .

Column [A]: CompanyScheduleC-2 and \\"orkpapex$Column Testimony TBHColumn Column [A] + Column

Schedule TBHW14eLitchfield Park Service Company - Water Division db Liberty Utilities

Docket No. w-01427A-17-0059


OPERATING INCOME AD]USTMENT NO. 12 - Removals from LU8020 Cost Pool

C

STAFF

RECOMMENDED

(7792)7,792

A

COMPANY

PROPOSED

s

STAFF

ADIUSTMENT

s (7,792) S

s 7,792 s

DESCRIPTION

Miscellnnoues Licenses andFees

Total

LINENU.

12 Q

Bsiszsnssa

Column [A]: Company Schedule C2 and \\"orkpapers


Column [C]: Column [A] + Column [B]

Sghedul¢ TBHw14fLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A17-0059Test Year December 31, 2016

OPERATING INCOME AD USTMENT no. 13 - Intentionally Let( Blank

II

Schedule TBH-w14gIjtchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-170059Test Year December 31, 2016

OPERATING INCOME AI) USTMENT no. 14 - lntentionall Left Blank

Schedule TBH-wl4hLitchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

OPERATING INCOME Al) usrMunr NO. 15 - Contractual Services - Testing

LINENO.

1DESCRIPTION

Contractual Services Testis AdjustedTotal s

[B]STAFF

AD LYSTMENTs 53109

53,109

[A]COMPANYPROPOSEDs . 6770

76,770

[C]STAFF

RIiC()MMENI)liI)s 23.661s 23,661l l

E11 . leeux Re oft:Table I \\"attar Testing CostsPFOA/PFOS Tesla CostsTotal s

Toslin Costss 18261

5441023,661

1

1

Be£:::nss§;Column [A]: Company Schedule C2 8: \\"orkpapers

Column [B]: Stall's Testimony TBHColumn Column [A] + Column

Schedule TBHWISlilchield Put Service Company . Water Division db: Liberly UlilitiraDocket No. W01427AI70059T-I Ye- December JI 2016

OPERATING INCOME AD USTMENT NO. 16 DEPRECIATION EXPENSE

D E P R E C .

R A T E

AGROSS LTlLlTY

PL\.\T IN sF_nv1c£DEPRECIABLE

P1A.\TFULLY box

DEPRECIABLEDascruvnox EXPENSE

LINENO.

1 S (2II(l)) S

J4

( l . 5 u 8 n

s

6

7 l

l

l

{ 4 6 . 3 6 )

s

9

10

l l

12

I )

14

15

16

17

IB

( J .4309S0;

19

2 0

Z1

2 2

ZN

ZN

25

2 6

27 (60463)

0.009 S

04]0

0.009

3.339

2.302

2 . w

3339

6.679

2.009

s.oo '

6.67

12.so¢0.008

3.33%

20.004

0 . 0 m

2.229

s0ov

2.001 .

343° .

u s '2.009

6.671

6.671

6.67

20.00

n o

7 3 3

m y

2 s

2 9

3 0 s o

10.009

s0o °

1o.oo

10009

1 3 3 °

m.0o°

0

0

B6901 B

0

0

115196

0

19.034

?J . l2 l

149918

5 s 4 z

0

160964

1 5 4 s

o

36.14 |

z4soz

838132

2 0 . \ l 0

344912

70649

1 5 5 0

2 l 0 0

44600

5 4 5 9

1 4 7 0 4

2.292

u s e

3.558

1.551

94 B

5. s1 a

(01

15488

13046

A C C T

N O

P l o t In Se rv ice

301 O zganizmon C om

302 Fuumchise Costs

303 U nd M d had R ights504 Snmuns M d I mprovement

505 C ollec ting and Impounding Ru

306 Lake Rive: and O \hex luukn

307 Wells and Springs

.108 lnlilitxatiou Galleries Md Tuuuxl

309 Supply minx

J 10 P ower Genenrion Equipment

M O l S an G euemoz

311 E lna P umping E quipment

320 Wnel T nenunem Equipment

320.1 Wal l T leamuut P lan!

3202 Chemic:Ll Solution Feeders

330 Dlsuibuuou Reservoir and Standpipe

330.1 Sroxage Tanks

330.2 Pwssme Tanks

331 T xamnuis ion M d Dhuibulion M ains

333 Senvkrs

334 Meter.:

335 H v dnnh

336 Backflow P rrvcuuou Devices

539 O xbex P lum Md M isc . Eqnipmcm

340 O llie: Funuihue 8< Eqmpmenr

340.1 C ompnwn and Sotivune

341 T nus pomuou E quipment

3414 T nns polhl ion E quipnum Golf C ans

342 Stones Equipment

343 T ools M d Work Equipment

344 hbonto ly E quipment

345 P ower O p en ed E qnipmem

346 C ommnnicauons Equipment

347 Miscellaneous Equipment

341.1 Mxscelhneous Equipment . C NG P lan:

348 O ahu Tangible P lan!

Ronudm

31

32

33

34

35

363

21.100 s0

1.511.171

26096645

0

0

5.459.349

(1

95171

462.426

Z14 .645

1214.1440

4833740

740

0

l.62795

49004 l

1 L906612

6 lO l2 0 l

75*o3s l

3532456

38.236

315.89

4 8 5 6 .

27.294

9 5 BJ

29.276

J l 4 J

71.165

15.53

18956

578185

(014 6 S l0 .

13046 l

3,105a s n o s

0

(|

*<,096 645

0

0

3459.540

0

951 7 1

4 6 4 °6.2 c 6 4 5

4617

n

4.833340

vso

0

l 6 Z 9 j

490041

41906.61

6101201

4 lJ9 4 0 l

3532456

3B136

315.D>2

66s.66

27194

735369

2 9 2 6

37143

71.165

l 5.5J`

18.956

$78185

to;

4 6 5 l0

l]0l15 I

(St

99 45 993s s 770781 s

ss 136.6l>1 s903

=o4

°4 o7401u

16316

4109l 705

408

t o o ' S

J J ?

6.e7

20.004

10.00 .

4 s 9 9 6

63.110

852.a38

4031

39

40

41

42

43

44

45 1

J 6 6 6

459976

63.1 lo

as ks s s

4031

l

46

land and bud RiglusSuumurs Md ImprovementOflke Fmnihue B EquipmentCompmnx aid SoftvixeMiscellaneous EquipmentRouldin

Subtotal Co :ale s 1 40997436 76 s4*is l 673424 s 967100sToll] ssov 457 s

Nil D redouble Plnnl s 100 865967

49

50

S l

l lnzam . !$uJ=1n_ _ - _ _. . @ m_ _ _ - __ _ _ -

_

Nil ClACs

NonMwlWMg oxFolk Anwnud

s l92.495.I s52

53

54 (5 1 0 b * l T o

(WS2155

565 .

WE30

311

331

533

534

335

D O

AIDOH Rate

o a r s

3.33

12.so

2.001

123°8.33

2 . w

6.67°s s s

Gloss C IA C

92495

651 06

40.572

17155522

1.034923

41s9<J

435449

l 3 5 0

19466317

Less: A mortization of C onuibudons

L and M d L ed R ights

\\.a lb M d Spi iup

Ele<uk P ""4>»»s Equipment

T um. and D ia l . M um

Services

Meters

H vdnnts

Other Plml And Misc Equip.Conln1>ulion(a) in Aid of Ccnutniclion

541.110

34465

3.490

a i m

91

412391

l . l 5 5 5 "

1.034323

41.599

435449

13550

19333750(133067) s

Lam: Amonizltion of Connibuliom s (4 l2.3J 1 .

s

I»

as

59

60

6 l

62

63

64

65

66

67

3010730

L 099 A g

a s s os

Staff Rxommruded Dqaxec inion Expense

C om xv P ro s ea De xernuon Ex use

l n r n u c / c reas e lo re rin l i on E x e l s e _ _ _ -

B s x h m m ;Col ACol BCol CCol DCol E

Sduduk T E H W4 n and T BH .\\4 b

Comlallnys Schedule C2 Page 2

C ol [A ] plus C d [B]

$! \IT Eugjuceling Recoumlendal

C ol [q :inns C ol [D ]

Schedule TBH-W16Litchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A~17-0059Test Year December 31, 2016

OPERATING INCOME AD USTMENT no. 17 - PROPERTY TAXES

LINEno .

1234

STAFFRECOMMENDED

$13,488,908

2

S26977817

13393,472

S40871289

.J$13,457,096

2$26914193

0587856

S26326,33718.00° b

$4738,741

14.400/0

$682308

ASTAFF

AS ADIUSTED$13,488,908

2

S"6 977 817

18,488,908

S40466725

8

$13,488,9082

S26977817

0602194

$2687562218.00%

S4747612

14.40%

$683585

715088

s81 503

5

6

7

8

9

10

l l

12

13

14

15

16

17

18

19

20

21

$682,308683 585(s 1 ,277>

DESCRIPTIONStaff Adjusted Test Year RevenuesWeight FactorSubtotal (Line 1 * Line 2)Staff Recommended Revenue

Subtotal (Line 4 + Line 5)Number of YearsThree Year Average (Line 5 / Line 6)

Department of Revenue MultiplierRevenue Base Value (Line 7 * Line 8)Plus: 10°/o of cwlpLess: Net Book Value of Licensed VehiclesFull Cash Value (Line 9 + Line 10 Line 11)Assessment RatioAssessment Value (Line 12 * Line 13)Composite Property Tax Rate Obtained from ADORStaff Test Year Adjusted Property Tax Expense (Line 14 * Line 15)Company Proposed Property TaxStaff Test Year Adjustment (Line 16 Line 17)Property Tax Staff Recommended Revenue (Line 14 * Line 15)Staff Test Year Adjusted Property Tax Expense (Line 16)Increase in Property Tax Due to Increase in Revenue Requirement

22.

28

24

(51277)(S95,43(>)

1.34%

Increase in Property Tax Due to Increase in Revenue Requirement (Line 21)Increase in Revenue RequirementIncrease in Property Tax Per Dollar Increase in Revenue (Line 22 / Line 2.3)

REFERENCES:Line 15:Composite Tax Rate obtained from Arizona Department of RevenueLine 17: Company Schedule C2 Page 3Line 21: Line 19 Line 20Line 23: Schedule TBH\\"l

Schedule TBH-W17Litchfield Park Service Company - Water Division db Liberty Utilities

Docket No. W-01427A-17-0059


OPERAT ING INCOM E AD UST M ENT NO. 1 8 - INCOM E T AX EXPENSE

L IN ENO.

ACOMPANY STAFF

PROPOSED AD USTMENTS1,299,263 S220,425

2

DESCRIPTIONIncome Tax Ex naeTotal

STAFFRECOM M ENDED

$1,519 688

$1,519,688$1,299,263 $220,425

B§£:x:0s;:§;Column [A]: Company Schedule C2 page 15



Schedule TBH-W18Litchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. W-01427A-17-0059Test Year December 31, 2016

OPERATING INCOME AD USTMENT no. 19 - PFOA ACCOUNTING ORDER YEARLY DEPERRAL

YEARLY DEFERRAL OF THE ACCOuNTING ORDER

LINENO. AD USTMENT

ACOMPANYAS FILED

CSTAFF

AD USTED

1

2

DESCRIPTIONDeferral for the PFOA Accounting OrderAnnuMzed over 30 earsTotals

ss

ss

ss

lU,65 l10651

28,82828,828

12671

12671

References:Column [A]: Company Schedule C2 page 13Column Testimony TBHColumn [C]: Column [A] + Column [B]

Schedule TBH-W19Litchfield Park Service Company - Water Division db Liberty UtilitiesDocket No. w-01427A-17-0059Test Year December 31, 2016

I - _DESCRIPTION

A

COMPANY

AS FILED

ACCT

NO.

LINE

NO.I

23.._._._.__..._.

ADJUSTMENT

S0

0

0

C

STAFF

ADIL.STED

S0

U

0

so

0

0

Column [A]: Company Schedule C-" & \*i'orkpapers

Column Staffs Testimony TBH


Ii

Schedule TBHW20Litchfield Park Service Company - Water Division db Liberty Utilities

Docket No. W01427A-170059Test Year December 31, 2016

\CCTDEscmw1on COMPANY

ASFILEDNO.STAFF

ADIUSTED

S0

0

()

LINENO

128

AQ1USTNENT

S0 so

0 0

0 ()

Total

- ! E - "

9

l

&hung &m"nv $cl1dde C2 & \Vorkpawm

®lunu\ [B]: Staffs Testimony TBHColumn [C]: Column [A] + Collunn

Schedule TBI I -WWILitchfield Park Service Company - Sewer Division db Liberty Utilit iesDocket No. SW-01428A-17-0058Test Year Ended l)ecember 31, 2016

R E V E N U E R E Q U I R E M E N T

[B]STAFF

ORIGINALCOST

[AlCOM PANYORIGINAL

COSTL IN ENO. DESCRIPTION

l S42,296,139$44,854,137Adjusted Rate Base

2 $1,729,629 so ,749,700Adjusted Operating Income (Loss)

3.86% 4. 14%3 Current Rate of Return (L2 / Ll)

8.67% 7.76%4 Required Rateof Return

5 $3,888,854 $3,282,180Required Operating Income (L4 * Ll)

6 $1,532,481$2,159,225Operating Income Deficiency (LE L2)

-r1 1.6195 1.6195Gross Revenue Conversion Factor

8 $2,481,806$3,496,801Required Revenue Increase (L7 * L6)

9 $11,643,135S11,633,954Adjusted Test Year Revenue

Sl 5,l30,755 S14,124,94010 Proposed Annual Revenue (L8 + LE)

21 .32%30.06°/o11 Required Increase in Revenue (%)

9.40%10.70%12 Rate of Return on Common Equity (°/o)

Bsicxenssm

Column [A]: Company Schedule B 1

Co lumn Staff Schedules TBH-2, TBH441, TBH10, TBH11 and COC Testimony

Schedule TBH\VW2Litchfield Park Service Company Sewer Dh4lion db ljbeny UtilitiesDocket No. sv0142aA110058Tea\ Yen Ended December 31 2016

lA] sqLINENO Das c x um ox n

100.00004 b

0.0505°

'/9.9495°

3s.20u9°

6 1 4s<>°

1.619469

I

2

3

4

5

6

§1!a¢le811LGL1a fLB¢uw L.C lHurHlk : LE¢s125

R e v e nue

l.ucol. le<: ible Factor (Ume l3j

R e v e nue s ( Ll 1 1 )

C o m b in e d F e d e ra l a n d Su re In co m e T o m p ) a n d P ro p e r l y T o R a re ( H SI

Subto ta l 0L3 L E ;

R e v e n u e C o n v e n t i o n F a c t o r ( L l / LS)

l 00.0000 8

5 . 2 3 4 0 °

6 4 . 6 6 0

0.080380°b

0.0505° q

UnityCombed Fedznl Md Sure Tax Rate (Iin¢ 21)One Minus Combinal Income Tax Rate (1.9 L 10 )Uncollcctiblr RateUncollcrtible Farm: (Lll L12 2

l00.0000°

49000'%9

95. l000°b

34.00(J0°

3" . J }40" b

3`.2340*

Opening Income Belbrr Ties (Adz om Tnxnblr Income)

Axizonl Sure Income Tax KaleFedznl Taxable Income (LIE LIE)Applicable Federal Income Tax Rn: (Line 64)Effective Faded Income To Rare (LIS x L 19)Combined Fedznl and Sum lneomz Tax Rn: (Ll" + 1.20)

B

9

1 0

l l

1 2

1 3

14

15

161

I B

19

t o

2 1

2 2

2 3

ZN

2 5

2 6, -

l 00 . 0000%

3" . 2340%

a . - 66o °. a

I . 5405°

0.96699

382009° h

UnityCombined Federal Md Sou Income To Rule (Ill)One Minus Combined Income Tax Rate (124 125)Property Tax Factor (FBHWWI6 l24)Effective Psopeufy Tax Factor (1.26 x L2'lCombined Fedznl Md She Income Tux and Proprrry Tax Rate (1.21 + 128)

s32a;xsoI '49 00

St 5 3 Z4 8 I

Rewind Opening Income (Souduk TEHWW I. 5)Adjust(d Test Year Operating Income (Loss) (Schedule TBH\\\Vl0 129)Rf.q11if¢d lncmnse in 0p"*xi"s Income (1.33 . LJ4)

$ l 6 5 l 7 » =

~1 883

$909840

Incom e Tax e s on R e conm ne ndzd R zv e une ( C o l [ q 1 .62)

Incom e Tax e s on Te n Ye n: R e v e nue ( C o l [ A] Ll6" )

Required Increase in Revenue to Provide for Income Taxes (L16 Ly)

S l y 8 8 4 0 3

0 . 080 l°»

$ 1 0 3 5 6

q 359

s o

Recommended Revenue Requirement (Schedule WHKWI LIU)Uneolleetibk R.l\e (Line 12)Uncolleciibk Expense on Recommended Revenue (L40 : L4 l)Adjusted Test Year lncolle<1ibk Expensen.qw ¢< l Increase in R evenue xo P rov ide fox Llxo l] ec!ibk F 1= p

$50658552 501

8 1 8 1 5 7

Pvopaly To vndx Recomnxxxded Rrvmne (TBH lb L19Pl°?=1v To on Test Yen: Rtvenne (lBH\YWl6 1205luavnse in Pzopaty Tax Due to Infuse in Revenue (1.46 . LE')

9461 49To!dRequiledII\aca\¢u\Rzvenue(L34+L38+L44+L48)

_ _

2 8

29

JO

31

3 2

3 3

3 4

3 5

3 6

3 7

3 8

3 9

4 0

41

42

4 3

44

45

46

47

48

49

5 0

51

5 2

5 3

54

5 5

5 65

5 8

5 9

6 0

S 14 P 4940

9 1 8 g 9 8 6

4 9 9 0 9 4

$ 4 4 3 6 0 5 9

4.9000

$2 l` 36

4 . 218692

v 5 o 0

6.250

s s o 0

9 1 o s o

1 .320455

0

0

0

l 434 355

Sl 1643 . 135

9 1 5 1 5 5 3

499.094

$ l 9 9 l 4 8 `

4.9000° °

3 9 6 3 "

1 8 9 4 8 5 5

7.500

6.250

8 . 5 m

91650

53038 I

0

0

0

644 251

_ -

R e v e n u e ( Sch T BH . x w < . l o C o l L5 C o l . [ E ] LE )

Op e n i n g E x p e n se s E t d u d i a g In c o m e T a x e s

Synchronized Inle fv .si ( L" 1)

Arizona Tnxxb le Income { l,$4 L 5 5 L5 6 )

Ax i z o u n Su re I n c o m e T o K n e

Arizona Incom e Ta x ( l . 5` x LAB)

F ede ra l Tumble Income ( L57 . 1.59)

Fedrnl To on Finn Income Bnckrt (81 350000) @ l5°Federal To on Second Income Bnckzz ($5000l . 875900) @25° •Fedad Tax on Third Income Bucket 575001 $100000) @34°Federal Tax on Fourth Income Bucket (Sl0000l SJJ5000) @39%Federal Tax on Fifth Income Bnckrt ($33S.(1)1 S 10000000) @34%Fedcnd Tax on Sixth Income Bucket ($l000000l $15000000) @35° aFedznl Tax on Seventh Income Bnckn (s15000w1 $1 B333333) @ 38%Federal Tax on Eighth Income Bucket ($1833J334 . $l00000000000l) @ 35%Toni Fodcrd Inconxc TaxC o m b ine d F e de ra l a nd Su re Inco m e Ta x ( L59 4 LM )

34.0000 '

6 1

6

6 3

6 4

6 5

6 6

6 7

6 8

6 9

7 0

7 1

s4*; 96 139

1.18009 o

$ 4 9 9 0 9 4

Rt!! Base (Schedule TBS 3 Col. m. L28)Wqghttd Av:nge Cos: of Deb!Smduonized Intueu (L69 x 1:47)

Schedule TBH-WW3Litchfield Park Service Company SewerDivision db Liberty Utilities

Docket No. SW-01428A-17-0058

Test Year Ended December31, 2016

RATE BASE - ORIGINAL COST/FAIR VALUE

A

REF

CSTAFF

AQILSSTEDORIGINAL

COST

COMPANYCOST

AS FILEDLINEno. DESCRIPTION

STAFFADIUSTMENTS

s SS 1-4, 7-116, 12

S S

Plant in Service

Less: Accumulated Depreciation

Net Plant in Service S

1 17,248,482

23,887,947

93360 585

(851,608)

(322,856)

528752

116,396,874

23,56509 l

92831 783

1355..

1

2

3

4

5

6

/ 18(1,621,522)Contributions in Aid of Construction (CIAC)Less: Accumulated Amortization

Net CIAC

46,785,022

8,131,812

38,653,210

48,406,544

8, 131 ,812

40,274,732 (1,62l,522)

3,0552633,055263Advances in Aid of Construction (AIAC)

14 6,397,5829740485,423,534

2,700,000 2,700,00017

17

s

Customer Meter Deposits

Customer Security Deposits

Deferred Income Tax Credits (Debits)

Investment Tax Credits

Regulatory Liabilities

Amortization of Regulatory Liability

Total Deductions s205252648;753,529 s 50,80(>()55

la23,280

89,756

180,655

89,756

157,375

ADD:PrepaymentsAllowance for \\"working Capital

Deferred Debits

Total Additions s Ss 247131 23,280 270,41 l

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 $ $ $ 42,296,1391,547,05444,854,137Original Cost Rate Base

8sicxsnssx

Column [A1: Company Schedule B-2, page 1

Co lumn Schedule TBH-4

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Schedule TBHWWSaLitchfield Park Sennce Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A170058Test Year Ended December 31, 2016

RATE BASE AD USTMENT no. 1 . Plant Reclassification

-LINENO.

I s

A(IO.\IPAN\.AS FILED

528

0004

567

8910

AD1 LSTMENTs 21264

0

(27447)

674

(39403)

O

U

0

(18.024)

0

000U000 43886

5192

11

12

13

14

15

16

17

18

19

20

O0O00O00000n

21

22

23

24

25

26

27

28

29

30

A C C T

NO .

103

351

352

353

354

355

355.1

360

361

362

363

364

366

367

370

37 l

374

375

380

381

382

389

390

390. 1

39 l

392

393

394

395

396

397

397 l

398

O000000000

DESCRIPTIONPlant Held lb; Future UseOrganizationFranchiseLmtdStructures 8: ImprovementsPower GenerationSolar GenerationCollection Sevres ForcedCollection Sewers GravitySpecintl Collecting StructuresCustomer ServicesFlow Measuring DevicesReuse ServicesReuse .\meters And InstallationReceiving WellsPumping EquipmentReuse Distribution ReservoirsReuse Trans. and Dist. SystemTreatinrnt 8: Disposal EquipmentPlant SewersOutfall Sewer LuxeOther Sewer Plant & EquipmentOffice Furniture & Equipment

Computers and SoftwareTransportation EquipmentStores EquipmentTools Shop And Garage EquipLaboratory EquipPower Operated EquipCommuuicsttion Equip.\Iiscel.laneous Equip.Miscellaneous Equipment CHG PlantOther Tangible PlantTotal

31

32

33

34

CSTAFF

AD LSTED27.244

0

(27447)

674

(39403)

0

0

O

(18024)

O

43886

5192

U

0

0

(43319)

3.761

0

31249

22998

0

(30318)

720

(711)4,28`

0

9009

(6229)

(168751)

U

174980

291453

0

281 70

U

0

0

(43.319)

376 \

0

31 ,249

22998

0

(303l 8)

720

(71 1)4.287

0

9009

(6229)(168751)

0

174,980

291453

0s 281270 sH

- -

s

Reclassifications to Libcnv Litchfield Park \Voter

s S

0

0

0

(I

(I

85

36

37

38

39

40

31 l

340

343

344

M Y

34711

31474(2073)

(89397)4647

77655(291453)

Electric Pumping EquipmentOthce Furmmrc 8: EquipmentTools and Work EquipmentLa boratoxj EqmpnlemCommunications EquipmentMiscellaneous Equipment CNG Plant

31 474

(2073)

(89397)

4647

77655

(291 453)

41 Total Reclassification to Water Reclassifications ss (269,147) s (269,147)

s 34.32446 447

42

43REpaNs and .\Iainnsulcc ExpenseTotal

34324

46 447s s s

BEEEBESQES;Column [A]: Companys B2 SclledldesColumn Company's response to Staffs DRColumn Column [A] + Column

Schedule TBH-WW5bLitchfield Park Service Company - Sewer Division db Liberty Utilities

Docket No. SW-01428A-17-0058


RATE BASE AD ISTMENT NO. 2 - Plant Held for Future Use

DESCRIPTIONACCTNO.

353

103

ADILTSTMENT(1,752,225)

1,752,225

Land

Plant Held for Future UsesTotal

LINENO.

123 S s

A

COMPANYAS FILED

S 3,547,4450

3,547445 s

CSTAFF

ADIUSTED1,795,220

1752,2253547145

8I8E388I88Qi§;Column [A]: Company's B2 Schedules

Column Company's response to Staffs DR DH 4.1 Add Maps as Exhibit TBH 3.2 6.15.17

Column [C]: Column + Column

Schedule TBH-WW5cLitchfield Park Service Company - Sewer Division db Liberty Utilities

Docket No. SW-01428A-]7-0058Test Year Ended December31, 2016

RATE BASE AI) UST MENT NO. 3 - Indirect Overhead Costs "INDOH" Removals

- CSTA FF

ADI LSTEDADILTSTMENTS _

ACOMPANYAS FILED

5 S

LINE

NO.

12

34

56

7

()

(11,054)

(6,594)0

(593)(6,433)

O

(1,009)(17)

(50)00

(2,660)00

(6,339)

(25,641)

()

(226)

(530)(540)

(3,151)0

(1,739)

(120)(1,668)

(496)

(484)0

0

0

0

0

0

00

0

0

00

0

0

0

0

00

0

0

00

0

O0

00

0

0

00

ACCT

NO.

351352

353

354

355360

361

362

363

364

366367

370371

374375

380

381

382389

390

390. 139 l

392

393

394

395

396397

397. l

398

DESCRIPTION

OrganizationFranchise

Land

Structures 8: Improvements

Power GenerationCollection Sewer Forced

Collection Sewers GravitySpecial Collecting Structures

Customer Services

Flow Measuring Devices

Reuse ServicesReuse Meters And Installation

Receiving \\"ells

Pumping Equipment

Reuse Distribution ReservoirsReuse Trans. and Dist. System

Treatment 8: DisposalEquipment

Plant Sewers

Outfall Sewer LinesOther Sewer Plant & Equipment

Office Furniture 8: EquipmentComputers and Software

Transportation Equipment

Stores EquipmentTools, Shop And Garage Equip

Laboratory Equip

Power Operated Equip

Communication E<1uipMiscellaneous Equip.

Miscellaneous Equipment CNG Plant

Other Tan idle PlantTotal

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

0

(I I ,054)(6,594)

0(593)

(6,433)0

(1,009)(17)(50)

00

(2,660)00

(6,339)(25,641)

0(226)(530)(540)

(3,151)0

(1,739)(120)

(1,668)(496)(484)

00

69 3450

69,345

- - _ _ _ _W .

Column [A]: Company's B2 SchedulesColumn Company's response to Staffs DR


Schedule TBI I-ww5dLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A-17-0058Test Year Ended December 31, 2016

RATE BASE AD USTMENT NO. 4 - Retirements Acct. 106 PIS Reclassification

- C

STAFFAD ls IEI)

ACOMPANYAS FILED

s

LINE

NO.1

2

3

4l

l

l

i

5

67

8

9

10I l

U( )

00

0

0

0(1,699)

00

0

0

0

0

00

0

0

0

0

(43,898)0

0

(64,584)0

00

0

0

ADIVSTMENTs - s

0

0

00

()

0

0(1,699)

0

0

00

0

()

0

U

00

0

0

(43,898)0

0

(64,584)0()000

0

()

0

(I

0

()

0

0

0

0

0

0

0

0

0

0

0

0

0

0

()

()

0

0

0

()

0

0

()

ACCT

NO.351

352

353

354

355

360361

362363

364

366367

370

371

374

375380

381382

389

390

390.139 l

392

393394

395396

397

398

DESCRIPTIONOrganization

Franchise

Land

Structures 8: Improvements

Power Generation

Collection Sewer ForcedCollection Sewers Gravity

Special Collecting StructuresCustomer Services

Flow Measuring DevicesReuse Services

Reuse Meters And InstallationReceiving \\"ells

Pumping Equipment

Reuse Distribution Reservoirs

Reuse Trans. and Dist. SystemTreatment 8: Disposal Equipment

Plant SewersOutfall Sewer Lines

Other Sewer Plant 8: Equipment

Office Furniture 8: Equipment

Computers and SoftwareTransportation Equipment

Stores Equipment

Tools, Shop And Garage EquipLaboratory Equip

Power Operated EquipCommutation Equip

Miscellaneous Equip.Other Tan ble Plant

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31 $ 110,181 1

Column [A]: Company's B2 Schedules

Column Company's response to Staffs DR


Schedule TBHWW5eLitchfield Park Service Company - Sewer Division db Liberty Utilities

Docket No. SW01428A170058


RATE BASE AD USTMENT no. 5 lntentionall Left Blank

I

I

ScheduleTBH-WW5eLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A-17-0058Test YearEnded December 31, 2016

RATE BASE AD USTMENT NO. S - AccumulatedD recition

1111111111111111111111111111111111111111111 ACOMPANYAS FILED

LINENO.

CSTAFF

ADIUSTEDS

M31 USTMENT$sI

(98,591)1

2

3

4

5

(3,409)

(6,427,775)

(343,431)

6'7

(69)22,789

24,110

(7,689,619)

(3,409)

(6,526,366)

(343,430)

0

24,041

(7,666,830)

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

(10,771)

(106,513)

(1,149,718)

(32,088)

(411,6989

(1,l22,632)

(14,316)

(91,029)

(4,224,839)

(260,526)

(164,672)

(410,544)

(154,519)

(7,948)

(89,639)

(5,117)

(60,662)

(177,399)

(7,l 56)

(428,617)

(7857)

(9,607)

(103,850)

(1,149,715)

(32,083)

(41 l ,693)

(1,167,585)

(14,364)

(94,731)

(3,920,200)

(236,166)

(164,670)

(407,987)

(121,904)

26,972

(86608)

(5,l 16)

6729

(170,599)

(2,824)

(410,368)

(16,581)

(4,853)

1,164

2,663

3

5

(0)(44,953)

(48)(3,701)

304,639

24,360

2

2,557

32,614

34,920

3031

1

67,391

6,800

4,331

18,249

(8,724)

(4,853)

AC C T

N O .

351

352

353

354

355

355. 1

360

36 l

362

363

364

366

367

370

371

374

375

380

381

382

389

390

390.1

39 l

392

393

394

395

396

397

397. 1

398

DESC RIP T IO N

Organization

Franchise

Land

Structures & Improvements

Power Generation

Solar Generator

Collection Sewer Forced

Collection Sewers Gravity

Special Collecting Structures

Customer Services


Reuse Services

Reuse Meters And Installation

Receiving \('ells

Pumping Equipment


Reuse Trans. and Dist. System

Treatment 8: Disposal Equipment

Plant Sewers

Outfall Sewer Lines


Office Furniture 8: Equipment



Stores Equipment

Tools, Shop And Garage Equip

Laboratory Equip


Communication Equip

Miscellaneous Equip.

Miscellaneous Equipment CNG Plant

Other Tan b1e Plant

26

27

28

29

30

31

32 Total $ 23,013,800364,582 s23,378,382 $IIIIIII_

BEEEBENQESL

Column [A]: Companys B2 Schedules B 2, page 4

Co lumn Company's response to Staffs DR


\

Schedule TBH-WW6aLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A-17-0058


RATE BASE AD USTMENT no. 6 - POST-TEST YEAR "PTY" ADDITIONS

u CSTAFF

AD USTED

DESCRIPTION ACOMPANYAS FILED ADIUSTMENT

S S s12,906,967

7500

200,030

2,6347090

313,32625,371 17030

4,61700

266391

21061261

1,124,248

2,403,116

297805

9,722,038

497,324

1 1,690

746405,07417,881 136574

598

3,595

ACCT.NO.353354360361363364367

371

375

380

381

389

390

390. 1

391

893

394

395

396

10,272,2587,500

(113,296)

(8,341)4,617

0

2,136725

297805

(11,3392.3)

(626,924)

11 ,690

69,566

118,693

598

(59,831 )

(8880)

(2736)

282,986

2

LandStructures 84 ImprovementsCollection Sewer ForcedCollection Sewers Gravity

Customer ServicesFlow Measuring DevicesReuse Meters And Installation

Pumping Equipment



Plant Sewers


Office Furniture 84 Equipment




Laboratory Equip


Communication Equip

RounderTotal

L INE

no .1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21 s

()

55323

983,420

027,322 268

63,426

8880

58,059

700,434

226,279,058 s 1,043,210 s_

BEEEBESQES;Column [A]: Company Schedule B-2, page 12 and page 18Column Testimony, TBHColumn Column [A] + Column

|

l

l

Schedule TBH-WW6b i

l

Litchfield Park Service Company - SewerDivision db Liberty UtilitiesDocket No. SW01428A-17-0058Test Year Ended December 31, 2016

RATE BASEAD USTMENT NO. 7 - PTY Plant Reclassifications

- CSTAFF

AD USTEDDESCRIPTION

ACOMPANYAS FILED

8

L INE

X O.

1

2

3

4

5

00

64,7080

0

0

0

(64,708)

0

0

0

0

(344,298)

0

0

344298

AC C T

NO .

351

352

353

354

355

355.1

360

361

362

363

364

366

367

370

37 l

374

375

380

381

382

389

390

390. l

391

392

393

394

395

396

397

397 1

398

0

0

0

0

0

0

0

0

0

0

0

0

0

()U

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

82

Organization

Franchise

Land


Power Generation

Solar Generation

Collection Sewer Forced



Customer Services


Reuse Services


Receiving \\"el]s

Pumping Equipment



Treatment & Disposal Equipment

Plant Sewers

Outfall Sewer Lines

Other SewerPlant & Equipment




Stores Equipment


Laboratory Equip


Communication Equip


Miscellaneous Equipment CHG Plant

Other Tan ble Plant

Total

ADIUSTMENTs . S

0

0

64,7080

0

l)

00

(64708)0000

(344,298)()

()

3442980

U

()

l )

(1

U

( J

0

(J

( J

(1

0()

0SS

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

S!

REF ERENC ES:

Column [A]: Company Schedule B1

Column Company's response to Staffs DR PV\\"RF Expansion Breakdown by NARUC with support received to date

(['pdated).xlsx 2.0l 7]une Pay APP 1

Column Column [A] + Column [B]

Schedule TBH-WW6cLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A-.7-0058Test Year Ended December 31, 2016

RATE BASE AD USTMENT no. 8 - PTY R1511R15m1;n1s

AD UST.\IENI.

CSTAFF

ADIFSTED

ACOMPANYAS FILED

5

L INE

NO .

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

()

()

0(I

00

0

00

0

0U

00

00

0()

0

0

01 )

0

00

()H

(I

0

2223

24

25

2627

28

2930

ACCT

NO.

351

352353

354

355

360361

362363

364

366367

370

371

374

375

380

381382

389

390

390.139 l

392

393394

395396

397

39831

DESCRIPTION

Organization

FranchiseLand


Power Generation

Collection Sewer ForcedCollection Sewers Gravity

Special Collecting StructuresCustomer Services


Reuse Services

Reuse Meters And InstallationReceiving \\"ells

Pumping Equipment



Treatment & Disposal Equipment

Plant SewersOutfall Sewer Lines

Other Sewer Plant & Equipment

Office Furniture 84 Equipment


Stores Equipment


Laboratory Equip

Power Operated EquipCommunication Equip


Other Tan idle PlantTotal s

S0

0

(35,896)

0

0

(20,205)

00

(2,996)

0

00

(40,997)

0

0

(33,158)

(318)0

0

(33,502)

0U

0187

(5745)0

(30,707)

0

0203 336 $

()

0

(35,896)I |

0

(20,205)

00

(2,996)

00

0

(40,997)0

0

(33,158)

(318)0

I)

(33,502)

0()

0

187(5,745)

0(30,707)

0

0

203,336H_

1;18r8EBE1xs:E§;Column [A]: Company Schedule B1

Column Company's response to Staffs DRColumn [C]: Column [A] + Column

Schedule TBH-WW6dLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A-17-0058Test Year Ended December 31, 2016

RATE BASE AD USTMENT no. 9 - PTY INDOH REMOVALS

- - _LINENO.

CSTAFF

ADI USTED

A

COMPYYAS FILED

s .ADIUSTMENT

5 s

( I

U

l

(2,326)

0

(16)(1,242)

0

(349)

(50)0

(105)

0

(659)0

(1,809)

(652)

(3711)()0

(655)(423)

(8)( I

li1

l

ACCTNO.

35 l

352

353

354

355360

36 l

362

363364

366

367

370371

374

375

380

38 I

382389

390

390. 139 l

392

393

394395

396397

397.1

398

DESCRIPTION

Organization

Franchise

Land


Power GenerationCollection Sewer Forced



Customer ServicesFlow Measuring Devices

Reuse Services


Receiving \\"ellsPumping Equipment

Reuse Distribution ReservoirsReuse Trans. and Dist. System


Plant Sewers

Outfall Sewer LinesOther Sewer Plant & Equipment



Stores Equipment


Laboratory EquipPower Operated Equip

Communication EquipMiscellaneous Equip.

MiscellaneousEquipment CNG Plant

Other Tan idle Plant

(101)

(73)(137)

(1,317)

(11)0

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

0

00

0U

0

0

00

00

0

0

00

0

0

0()

0

0

00

0

00

()

0

0

0

$ 13 641 $

()U

(2,326)0

(16)(1,242)

0

(349)

(50)0

(105)

0

(659)

0

(1,809)

(652)(3,7l 1)

0

0

(655)(423)

(8)0

(101)

03)(137)

(1,317)

(11)0

013,641

.

_

REFERENCES


Column Company's response to Staffs DRColumn Column [A] + Column

Schedule TBH-\VW7aLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW01428A-17-0058Test Year Ended December 31, 2016

I O rate PlantRATE BASE AD USTMENT no. 10 - Allocated Co

-LINENO.

1>

ACCT

NO.

903

904

940

940. 1

94T

3

4

56

DESCRIPTIONLand and Land RightsSuucmres mid IlnplovmelltsOffice Furxdture and EquipmentComputers and SoftwareAUscellaneousTotal

ACOMPANYAS FILED A D us nmnT

s 40,298 s 0 s537,536 838

68673 (1)

935947 (933)

4,429 .1586 884s

C

STAFF

AD US D

40,299

538,37468678

935014

44291 586 789s_- - _ _ _ _

B E


Column Colunum [C] less Column [A]

Column [C]: Company \Vorkpawis Companys response to Stals DR TBH 2.11

I

Schedule TBH-\VW7bLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A-17-0058Test Year Ended December 31, 2016

iRATE BASE AD USTMENT NO. 11 - Allocated Co orate Plant Accumulated De recitionl

1

..\ BQ _ - 1C

STAFFAD USTED

LINENO.

l

COMPANYAS FILED

SAD USTMENT

S S2 (1 ,626)

(318)(39,671)

A C C T

NO .

903

904

940

940. l

947

3

4

5

6

(49,070)

(15024)

(445,360)

1 l 1509 565

DESCRIPTIONLand and Lind RightsStructures and ImprovementsOftice Furniture and EquipmentComputers and SoftwareMiscellaneousTotal

11141726

(50696)(15,342)

(485031)221

551 291ss s-

BEEEBEI'£E.$;Column [A]: Company Schedule B1Column Column [C] less Column [A]Column [C]: Compauv \\"orkpapers Companys response to Staffs DR TBH 2.11

i

ScheduleTBHWW8aLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A17-0058Test Year Ended December 31, 2016

RATE BASE AD USTMENT no. 12 - lmentionall Left Blank

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Sdeduk TBHWW8cljlchfeld Pay Senicc Comply . Sou: Division db Liberty UtilitiesDocket No. SW0142GAI70058Tut Year Ended December 31 2016

1

Ld u Wla ws x SEl.AG DAYS

CASH WORKINGCAPITAL REQ

STAFF9

ll

L I NE

NO .12J45

6

0.0030.92

M .2330.2727.40

2879)

.\D us1AuaxTSO0000

019ws

(165126)1.617

(l.aaoJ(20651

0

( w e0

n e s cs u vn o xSum, ma \V15'$Punehwd \\lnenxu Turamwm$1°*s' lemonslKurhn\ed Pore:Fuel 8 Power

GlenminhMntniah .no $"ppli**Contlnnlul Selvkes . Plofemonal

Cantntlllll Servicer . TndngCculaunul Service . OlhexOIHre Supper Md ExpenseReam ExpenseTunspomuaaImumwe

16.1 I20.00

344623.0635.52

$5.48)2547

lB2.S01

c oin>AxyAS FILED

so2 433

267582736JJ4

261

400.143lB"7B4

2.lB5.06I42.616

I 12892240942

4.6832619752.838

RE\E.\L l :LAG DAYS

135543.55

43.5341551153

4.5.5545.5543.55

43.550.5541.54.3.55

4.5.5343.55

LF_\D/L\GFACTOR

sos Dun0. l0.050.03

0.04(1.04020005006

0.020.060 02

0.120.050.6*

NETL\G DAYS

43 551263

1232112516 15z.34p 4423 53

909204980)

79.0318 is

22605

STAFF

AD LVSTEDso

°4\32675828656:»4

ZN I4(014320781

2.019.958

60.235

1427.26238.8"

46BJ23.57052.838

CASH WORKINGcAprrA1. RFQ

COMPANY

soo

9.0: |26789

12

7930433.502

140976

106 Is0212

901

1.0 l|5054

32.723

so" 6

9031191.493

1279304

15.620lJ0.J23

1.500s 0n9

B55

1.014l . l 4

sz fzs

1 § l 1 5 1

075.2914.71

(31 4?

2854

43.554}.5i

467.565)411.299

(0.09)0.08

B88B9411.299

Miscdlnomlurerl Exprnw

5

9

10

l l

12

13

14

13

161

15

19

20

21

22

23

ZN

T n Oat: Nun lncomrG enl T unPym l lProperty TiesIncome T it\

43 5343 53

(170416 33

43.5543.55

41.5543.55

0.000.00

2119637.00

11(

5)US9

l207l

0.120.1243.47,

0.3'

(J0

516s834 L8B3

00

(20076)29812

9.73032.497

00

000

(24 l 369113.311

(13850)00

0o00

"5.809)JS 59

25

262

157 75 180 sshs s2s CASH WORKING CAPITAL REQUIREMENT

QCash Woxhql Capful KequufmemRzquuad Bank Bdnxesklalninl Md Supplies Inveuluues

ymnaxx

2930313

33341536)

srA1=FlEsT YEAR

AD L5TM£NT§s 23280

000IJo

STAFFTEST YEAR

ASAD USTED

180654

00o

lso 654

c o m m aTEST YEAR

AS FILEDs 1 5 2 5 s

000

157 75 s 23 sx

Rdnenrm:Column [A]: Cauxpnny Sduedule B6

Column [B]: Staffulnmnxeun to rzqarmn. See Tuu.on P.\'[Column [CJ:Col\uvln [A] + Cnlumo [B]Column [D]. Sdnedulc B6Column [E]: Company Schedule B6

Column [G]. Column [F] J 365Column [H]: Column [Al Column [G]C°lumn[I]: w-=»»»(qc~lm-IGI

i

l

Schedule TBH\Y\\9aLitchfield Park Service Company - Sewer Division db Liberty Utilities

Docket No. SW-01428A-17-0058

Test Year Ended December 31, 2016li

lRATE BASE AD USTMENT NO. 15 - Intentionally Left Blank

Schedule TBH-WW9bLitchfield Park Service Company - Sewer Division db Liberty Utilitiesl)ocket No. SW-01428A-17-0058Test Year Ended December 31, 2016

RATE BASE AD USTMENT NO. 16 - Staffs Estimated Northwest Sewer Refunds Re Plato Liabili

LINEno .

1 late . Liability

DESCRIPTIONStaffs Estimated Northwest Sewer Refunds ReTotals2.

ACOMPANYAS FILED8$

cSTAFF

AD USTEDs 2 70() O00s 2,700,000

AD USTMENTs 2 700 000s 2,700 000

Due to the complexity of this refund due to customer for the unregulated revenues and unrecognized contribution towards plantexpansion the Utilities Division has recently engaged a consultant to assist Staff regarding this issue specifically. Therefore, Staffwill be filing this testimony and schedules for the refund in Staffs Surrebuttal Testimony.

l

l

Schedule TBH\\"\\"9cLitchfield Park Service Company - Sewer Division db Liberty Utilities

Docket No. SW01428A-17-0058


RATE BASE AD USTMENT NO. 17 - Land Contributed - Contributions in Aid of Construction "CIAC"

ACCT

NO.

A

COMPANY

AS FILED ADIFSTMENT(S1,752,225)

$130,703

C

STAFFADIUSTED

(1,752,225)

130703

DESCRIPTIONContributions in Aid of Construction

Contributions in Aid of Construction (Land)

LI NE

NO.

1

234 Total 162 l ,522 1621522! _

Adjustment made to CIAC for Land Held for Future Use and Correction to CIAC for Contributed Land

BEEEBEN§E§;Column [A]: Company's B2 Schedules

Column Column [C] less Column [AJColumn [C]: See testimony TBH

Schedule TBH ww9dLitchfield Park Service Company - Sewer Division db Liberty Utilities

Docket No. SW-01428A-17-0058


RATE BASE AD USTMENT no. 18 - Intentional] Left Blank

Schedule TBH-\w<9¢Litchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A-17-0058


RATE BASE AD USTMENT no. 20 - Intentional] Left Blank

9

li

Schedule TBI I-ww9fLitchfield Park Service Company - Sewer Division db Liberty Utilities

Docket No. SW-01428A-17-0058Test Year Ended December 31, 2016

RATE BASE AD ISTMENT no. 21 - Intentional] Left Blank

Schedule TBHWW10Lilch iie ld Pa rk Se rvice Com pany . Sewer Divis ion db Libe rty Util itie s

Do ck e t No . sw0142a A17.0058

Te l! Yea r Ended Decem ber 31 2016

s D

LINENO.

AD]Xo.D E S C R I P T I O N

STAFFTEST YEAR

AD FSTMENTS

COMPANYTEST YEARAS FILED

STAFFRECOMMENDED

STAFFRECOMMENDED

CHANGES

CSTAFF

TEST YEARAS

AD LSTED

I S ss s 2.481.806 s

2

Fla t Rate Wastewate r Revenues

Ef f lue n t Me a sure d R e ve nue s

Mis c R e ve nue s

11163434

6 1 2 1 2

418480

11 163434

6 1 2 1 2

4 0 9 3 0 8 9 1 8 1

1 3 6 4 5 2 4 0

61.212

4 1 8 4 8 9

0 I3

4

8 s9,181s 11,633,954 s 2 ,481806 ss 11643,135 14,124,940T o ta l O p e ra t in g R e ve n u e s

6 Ss s ss

14129320

08 7

8

9

10

11

14

13

14

15

19998

( l 6 5 l 2 6 )

17617 ms

( l 6 6 0 ) 9

(2065) v 1 3

9(2627)

8

16

2 2 4 3 3

2 6 7 5 8 2

736334

26 l

4 0 0 1 4 3

187.784

2 1 8 5 0 6 4

42.616

1 4 2 8 9 2 2

4 0 9 4 2

4 6 8 3

2 6 1 9 7

5 2 8 3 8

7 4 8 6 5

156.454

8 0 2 8 0 7 8

l67565)

5 1 4 8 2

22.433

"6 7 5 8 2

865654

26 l

400143

707 782

2.019.938

60233

1 427262

38.877

4 6 8 3

2 3 5 7 0

52.838

74865

8 8 8 8 9

3 0 7 9 5 6 0

22433

2 6 7 5 8 2

865654

261

400143

2 0 7 7 8 2

2 0 1 9 9 3 8

60,233

l , 4 2 7 " 6 2

3 8 8 7 7

4 6 8 3

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5 2 8 3 8

74,865

8 8 8 8 9

3 0 7 9 5 6 0

I -

18(20076)29.812 38.233

9 0 9 8 4 0

537,059

712,071

( ll

516983

741883

(1)

Salaries and Wages

Purchased Wastewate r Trea tm ent

Sludge Rem ova l

P urcha se d P owe r

Fu e l & P o we r

Chem ica ls

Mate ria ls and Supplie s

Contra ch ia l Se rvice s P ro fe ss iona l

Contractua l Se rvice s . Te sting

C ontra ctua l Se rvice s . O the r

O ff ice Supp lie s and Ex pense

Rents Ex pense

T ra nspo na do n

Insurance

Regula to ry Com m iss ion Expense

Misce lla neous

De pre cia tio n 8: Am o rtiza tio n

Taxe s O the r Than Incom e

P rope rty Taxe s

Le o n ie T a x e s

R o u n d in g

5 5 5 2 1 6

1 6 5 1 7 2 2

(I )

1617

18192021222.32425262728°0

Total Operating ExpensesO eralin Income Loss

9 904 325

1 729 629

s

s

98934351 749700

10890

2 0 0 7 1

10 841 508

3 83 432

ss

948 073

1 533 733

ss

ss

ss

_

BEEEBEEQEE;Co lum n [A]: Com pany Schedule C1 page l

C o lum n [B] Sche du le T BH\V\V I l

Co lum n [C ]: Co lum n [A] + Co lum n [B]

C o lu m n Scbe <1u le s TBH.\YW ' l6 a nd TBHW "

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Schedule TBH\VWl2aLilchGeld Park Service Company Sewer Division db Liberty Utilities


Test Year Ended December 31 2016

OPERATING INCOME AD USTMENT no. 1 . OTHER OPERATING REVENUES

DEs<;lup'r1oxPaul Revenues

STAFFAD USTMENTSs 9 181Other O

Total

LINENO.

I2

ACOMPANYPROPOSEDs 409 308s 409 308

CSTAFF

RECOMMENDEDs 418489s 418489

- E I -

Coluxnn [A]: Company Sdvrdule C2

Column [B]: Staffs Testimony TBH


l

i

Schedule 'n3H\wr12bLitchfield Puk Service Company Sewer Division db liberty Utilities


Teal Year Ended December 31, 2016

OPERATING INCOMM AD USTMENT No. 2: Intention Left Blank

Schedule TBH\\"\\/13aLitchfield Park Service Company Sewer Division db Liberty UtilitiesDocket No. SW-01428A170058Test Year Ended December 31, 2016

OPERATING INCOME AD USTMENT no. 3 CONTRACTUAL SERVICES - Professional Bonuses

ACOMPANYPROPOSED

s

LINENO. DESCRIPTION

1 Contractual Services . Professioiml Services

Total

S

s

CSTAFF STAFF

ADIVSTMENT REcom,nun1J1;D885898 s 88898

88,898 s 88,898

Q E -

H

Bonuses/LTI PAPUC1.1 'ccLUC-LABS

LPSCO \\TR POKIIOII*

S 77,456

25,227

59130

161812

LPSCO S\\"R Portion*S 85,106

27,718

64971

177795

Removal of 50% of Incentive pay - Due fromShareholders s 80,906 s 88,898

* Convened to US Dollars and Allocated to LPSCO from the LW Portion MsM on the 4Factor Allocation

Retercnccs:

Column [A]: Company Schedule C2 Appendix pages 12 and 13 and \Vorkpapers

Column [B]: Testimony TBH

Column [C]: Column [A] + Column [B]

Schedule WHAYW13bLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A-170058Test Year Ended December 31, 2016

OPERATING INCOME AD USTMENT NO. 4 - Contractual Services Professional LU 8020 Bonuses Normalizedl

ll

ACOMPANYPROPOSED

s

LINENO.

12

DESCRIPTION


Total

CSTAFF STAFF

AD USTMENT RECOMMENDEDs 21528 s 21528$ 21 528 s 21 528

- E -

Bonusesl. l8( l"( )

LPSCO WTR Portion* LPSCO SWR Portion*s (19593) s (21528)

19593Normalized Bonuses 19 593

21,528

21 528s s

BsiexsussxColumn [A]: Company Schedule C2 Appendix pages 12 and 13 and WorkpapersColumn Testimony TBHColumn [C]: Column [A] + Column

i

\

Schedule TBH\\"\\"l3cLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A170058Test Year Ended December 31, 2016

OpliRAllnG INCOME AD USTMENT NO. 5 - Contractual Services - Professional LU 8020 Sada

- 8 - CSTAFF

RECOMMENDEDDESCRIPTIONContractual Services Professional Services S 137,943

LINE.NO.

l2 Total 137943$

ACOMPANY STAFFPROPOSED ADILFSTMENTs 146,829 s 8,886s 146,829 $ 8,886

References:Column [A]: Company Schedule C-2 Appendix pages 12 and 13 and \'(orkpapersColumn Testimony TBHColumn Column [A] + Column

Schedule TBH-\\\\"l 3dLitchfield Park Service Company Sewer Division db Liberty UtilitiesDocket No. SW-01428A-17-0058Test Year Ended December 31, 2016

op18RA11nG INCOME ADJUSTMENT no. 6 - Contractual Services ¢ Professional (APUC, LUCC, LUCCLABSAllocations Removal

DESCRIPTIONSTAFF

AD LSTMENTSTAFF

RECOMMENDEDLINENO.

12

ACOMPANYPROPOSED83

- E i f f l i

_ 1- l - a 1

_ 1 - 1

APlC Removals I lcc 65%LUCC RemovalsLUCCLABS Removal Various 0 b AVG 67.13%

S

s

S

(138) s(9,914) s8,462 s

(152)(10,898)

3,804

* Converted to US Dollars and Allocated to LPSCO from the LW Portion based on the 4Factor Allocation

Bsihzmsn;Column [A]: Company's C2 SchedulesColumn [B]: Testimony TBHColumn [C]: Column [A] + Column

Schedule TBH\Y\\"13eLitchfield Park Service Company Sewer Division db Liberty Utilities

Docket No. SW-01428A17-0058Test Year Ended December 31, M16

OPERATING INCOME ADJUSTMENT NO. 7 - Contractual Services - Professional (LU8020 Adjustments,Removals and Other Reclassifications

LINENO.

-2

DESCRIPTIONContractual Services Professional Services

Total

A CCOMPANY STAFF STAFFPROPOSED AI) 17srA1r;nr RECOMMENDEI)s s 30,965 s 80.965$ - s 30,965 $ 30 965

1,313

LU8020 Admin Allocation Removal and Other Reclass

Ll' US Customer Care Admin AllocationTotal s$

LPSCO wm Portion LPSC() siR Portion

S (20,809) s (22,864)

8,10128,181 30,965_

8:£:l:§u§:§1Column [A]: Company's C-2 SchedulesColumn Testimony TBHColurmi Column [A] + Column

Schedule TBH-WWl4aLitchfield Park Service Company - Sewer Division db Liberty Utilities



OPERATING INCOME AD USTMENT NO. 8 - Miscellaneous Bank Char es

L INENO.

"2

DESCRIVH0 NMiscellaneous Bank Cha esTotal

STAFFADJUSTMENT

S67565S677565

CSTAFF

RECOM M ENDEDS66783s66783

AC( )M PAN\PROPOSED

$134,347Sl34,347

BsizrsnssmColumn [A]: Company Schedule C2 and \\"orkpapers

Column Testimony TB H


Schedule TBH-WW14bLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A-17-0058Test Year Ended December 31, 2016

DESCRIPTIONLINENO.

1

ACOMPANYPROPOSED

s

2

I

3

4

5

6

7

000000

Office Supplies 8: ExpensesPumping Equipment Acct No. 371Treatment & Disposal Equipment - Acct No. 380Materials and SuppliesTiansportadon Equipment Acct No 391Transportation ExpenseConnect Serve-OtherO )sTreat&DisTotal

STAFFAD USTMEXTs 826

9,0374,463

19,998

4,287

(2627)

1660

34 324

STAFFRECOMMENDED

S 8269037

4463

19998

4,287

(2627)

1660

34 324$ $ s

Included in Plant Reclassifications on Sechedule So s 17,787

16 537sTotal Expenses

- 3

lBskxrncss;Column [A]: Company Schedule C2 and \\"orkpapersColumn Testimony TBHColumn [C]: Column [A] + Column

l

Schedule TBHWWl4dLitchfield Park Service Company Sewer Division db Liberty Utilities

Docket No. SW-01428A-17-0058


OPERATING INCOME AD USTMENT no. 10 Intentional] Left Blank

i

8

i

lill

Schedule TBH-WWl4dLitchfield Park Service Company Sewer Division db Liberty UtilitiesDocket No. s\v.01428A-17-0058Tea! Year Ended December 31, 2016

OPERATING INCOME AD ISTMENT no. 11 . Intentionally Left Blank

l

l

l

I

Schedule TBH-WWl4eLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428AI70058Test Year Ended December 31, 2016

OPERATING INCOME AD USTMENT no. 12 lntenlionallv Left Blank

Schedule TBH-WW14fLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A-17-0058Test Year Ended December 31, 2016

OPERATING INCOME AI) USTMENI NO. 13 - Removal of Test Year Ex uses for Northwest Sewer

[A]COMPANYPROPOSEDDESCRIPTION

Contractual SacsOutside O >erO ms SOS S

Total

LINENO.

12

[B] [c]STAFF STAFF

AD USTMENT RECOMMENDEDS I2891 s (2.891s 2,891 s 2,891H

. . <

Column [A]: Company Schedule C2 and \Y"orkpapersColumn Testimony TBHColumn [C]: Column [A] + Column

Schedule TBH\Y\V14gLitchfield Park Service Company - Sewer Division db Liberty Utilities

Docket No. SW~01428A170058


.OPERATING INCOME AD USTMENT no. 14 - o erationaml Hx uses Adustment

LINENO.

12

DESCRIPTIONPurchased PowerTotal Adiusrmcnt

A CCOMPANY STAFF STAFFPROPOSED AD]LSTMENTS RECOMMENDEDs 736 334 s 1293"U S 865 654s 736,334 s 129,320 s 865,654

8sthxsnses;Column [A]: Company Schedule C2

Column [B]: StntI's Testimony TBH Companys Response to TBH 3. 1 TBH 5.14

Column Column [A] + Column

Schedule TBH-\Y\\"14hLitchfield Park Service Company - Sewer Division db Liberty UtilitiesDocket No. SW-01428A170058Test Year Ended December 31, 2016

OPERATING INCOME AD USTMENT no. 15 - Contractual Services - Testify

LINENO.

$ 3DESCRIPTION

Contractual Seiviees Tests

Total2

A CCOMPANY STA FF STAFFPROPOSED ADIVSTMENTS RECOMMENDEDs 4°616 S 17617 s 60933s 42,616 $ 17,617 s 60,233

Testis Costs

s

En nee nr Re )olIz

Table I Wales Testing Costs

Testing Costs Based on Table IA >

Testing Costs Based on Table IB

Tmstu Costs Based on Table II 1

Total S

12,732

12,806

1781 I

16,884

60233

Retefences:Column [A]: Company Schedule C2 8: WorkpapersColumn [B]: Staffs Testimony TBHColumn [C]: Column [A] + Column [B]

1

l1

Schedule Tslnvwn 3Lilchheld Park Service C°mp~=y . Sewer Division den Liberty UtilitiesDocket No. svr0142sA17o0ss

Tell Yen: Ended December 31 2016

OPERATING AD USTMENT no. 16 . DEPRECIATION EXPENSEA c

PL\NT DepnecnbkBALANCE Plant

DEPREC L\T1 ONEXPENSE

LIXE \CC.I.NO N o DESCRIPTION

NotDeple<lableFully DepAecu!ed

DEPRECIATIONRATE

Staff Recommended

I s S

I:)5

0

(41 w9s0.1098.176

30268329 8.255

60535 l

(

4160950

)Z978"S$sos Js\

3

4

5

G

1 16551LiZ89.880

1 16.551

5>2avsso

34.33 I665796

1 5 5 W "

b9

10

l lI

13

14

18

16

I

i s19

ZNZl

2223

24ZN

267 I '5m 5

JB9(l0

5772l96T

81S62

3.5962865 I

4684891 es |

18.086

10».4s1340472

l 1445S6.0I l

22.37329559

66.440359

1770f,

son5006

l 00J2 I331629705

2886 I2

19.6684078087

45.170

860393}747909

66947723456

206696166809440

J43.68 I839738

335424147795

JJ2. I 988968

354l218037

60.124

I905299DL624

291.483

288617

I 5}.0604078087

4J.170860393

>.4<10966.047

723.456

206696166.809.440

303.68 I839738

335474147795

3\2.198

8.968354.1 I183.082

b0l 14

1 J91 .109JAI 674291 .453

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PLANTIN SHE WCB:35 I

.352358

554

383355 l360

561

362363

364366x i

370

J I374

175

380JSI

38>389

3903901

391592

395394

395

3%397

so* x398

s 114 810091 s

Olglnizauon

Fxmchneland

Suucnues G: lmpwvrmeun

Power GenennonSolar Geuuauon

Collection Sewer FoxredCollection Sewers Gnvny

Spend Colkctmg StnknuuCustomer S¢i\i(¢SFlow Meauuing DevicesReuse Sexvlcel

Reine Melon And lustallanmiReceiving WellsPlllllplllg Eqiupniem

Reuse Distribution RnetvoixsRen- Tnux. ad Dist. System

Tiennnenx 8 Disposal EqmpmenlPlan! Siren

Omfdl Sewn linesOther Sewer Phi: 8: Equipment

Office F\u\unue a EqnipmeuxComputer and Soflvue

Tnusponnnon EquipmentStoles Equipment

Tools Shop And Grunge EquipLaboulon EquipPower Operated Eqlup

Commuuinuou EquipMiscellaneous Equip.

CHG PlaneOlhex Tan Able Plaul

Subrolnl General Plans 4 163 1894857287 s 109952805 s_

ss l401981903904940

940. l94

0.0o s

13.36.6"

2000

10.00

Led Ind Land NghuSmxcnun and lmprovmems

Office F\ulunue & EquipmentComputer and Sofrwlle

Mu<el1al\eo\\ E m .Subtoill Co only Plant s

40.298 S518374

68.672955014

4.429

1 SB6 788

53837468.672

°350144 429

1 546 490

17928

4.580187.003

i i

209 954ss

4 73 1434897 5 s m 499 94s 116 96879 s sTotal Plant in Service

Nil De sociable Plan!

H ! _

: _- -nzmzzl

2629Yu

31

5333

54

35.36.y

.ea39

w41

4243

45

Net CIACs

Suu\nlomzing ox FullyAmonizrd

(11g522f) s( l ux e.

355352354J60361

364

I

363

3 l380

38 lwe

Anon. Rate0.o0° s0.00" 4333° 32.00".TTY"

10.00q

".00°12.50°5 00

s.0010 00

I 48 I Z64.366

52.624J%9

53.2"2281440

452.117

147259

ups1293582

Gross CIAC1795220 s

10781444801

3.218.290.6.38ll 79

39.688

2661083zw.721

9.042.336'945l7

13.75046785.0''

444.801)21829063$\179

39.688

7 661 083230721

9042336

2.945.172

l 3"5044977020(I808.001

Lrss: Alnor6za!ion o!.ConNibu!iousbadFnnchneSmlcmxe Md ImprovementsCnllecdon $e\\»A\ ForceCollection $41119 Gnvntv

Flow Measumg DevicesCustomer Servxes

Pumping EquipmentTnrnmeul mol Dnposd

Plan! SewersOther Tmgnble Plmx

Conmbuuon(1) in And of Constxuaaon

bas: Amortization ol.Conuibu!ions (l(293582l

Staff Recomnmxded Deprecinlion ExpendCom lm Pia sea D xecuuou E use

464

484950St32

8354

88363

SS

JO66o .

68

6970 s

3.079.5603 0'807B

51482-

ls i i ls lain;Cd A

Cd 8Col c

Col DCd E

Schedule TBHW"4i Ind TBI{W"4b

Compaq]"s S<hed\l.\e C" Page 2Cd [A] plus Col [B]

Snit En¢nzew\g Recommendedcan [c] limes Cd [D]

Schedule TBH.\V\*;{"I6Litchfield Park Service Company Sewer Division db Liberty UtilitiesDocket No. SW-01428A-17-0058Test Year Ended December 31, 2016

OPERATING AD USTMENT no. 17 . PROPERTY TAX EXPENSE

LINENO.

l

ASTAFF

AS ADIUSTEDso 1.641135

) 2

STAFFRECOMMENDED

Sl 1643135

2

23,286,269

14124,940

37411210

3l"470403

2

23286,2691164313534929,404

3

11643135

223,28626) °494080c»

24559024695817

18.00%

4,44513912.84%

3

4

s

6

7

8

9

10

11

12

13

14

15

16

17

18

245,59023040679

18.00%

414732212.84//o

$532425$55"501($20,076)

19

20

21

$570658S532 4"5$38,133

DescxuItnoxStaff Adjusted Test Year Revenues

Weight FactorSubtotal (Line l " Line 2)Staff Recommended Revenue Per Sflxedule TBH 1Subtotal (Line 4 + line 5)Number of YearsThree Year Average (Line 5 / Line 6)Department of Revenue MudlplierRevenue Base Value (Line 7 " Line 8)

Plus: 10% of C\\"IPLess: Net Book Value of Licensed VehiclesFull Cash Value (Line 9 + Line 10 Line ll)Assessment RatioAssessment Value (line 12 ' Line 13)Composite Proper Tax Rate Obtained from ADORStaff Test Year Adjusted Properh Tax Expense (Line 14 " Line 15)Company Proposed Property TaxStaff Test Year Adjustment (Line 16 . Line 17)

Property Tax on Staff Recommended Revenue (Line 14 * Line 15)Staff Test Year Adjusted Properh Tax Expense (Line 16)Increase al Property Tax Due to Increase in Revenue Mremmt

22

2324

s382.a3

1 481 806

I.54°/o

Increase in Properer Tax Due to Increase ax Revenue Requirement (Line 21)

Increase in Revenue RequirementIncrease in Prqxrtv Tax Per Dollar Increase in Revenue (Ilene 2° / Line 23)

Line 15: Composite Tax Rate obtains from Arizona Department of RevenueLine 17: Company Schedule C1

Line 21: Line 19 . Line 20Line 23: Schedule TBHwwl

Schedule TBH\<w17Litchfield Park Service Company Sewer Division db Liberty Utilities

Docket No. SW-01428A-.7-0058


OPERATING INCOME AI) USTMENT no. 18 - INCOME TAXES

LINEno DESCRIPTION

CSTAFF

RECOMMENDED

A

COMPANY STAFFPROPOSED ADIL3STMENTS

s

s

Income Taxes

Total

1

2

712.071712 (M

S

SSS

741,883741 888

29,81229812

li

Bciczsnss5;Column [A]: Company Schedule C-2

Column Staffs Testimony TBHColumn [C]: Column [A] + Column

IF

Schedule TBS-vwwLitchfield Park Service Company Sewer Division db Liberty Utilities

Docket No. SW-01428A17-0058


1

DESCRIPTION ADJUSTMENTACCT

NO.

LINE

no.1

2

3

ACOMPANY

AS FI LED

$0

0

0

SO

0

0

STAFF

ADIUSTED

SO

0

0Total

- _ _

Bstkxsaszss;Column [A]: Company Schedule C2 8: WorkpapersColumn Staffs Testimony TBHColumn Column [A] + Column

Schedule TBH .wwl 9LitchGeld Park Service Company Sewer Division db Liberty Utilities

Dceket No. SW01428A170058


- _ _DESCMIONACCT

xo .ADIVSIET

so0

0

a x E

NO.

1

2

8

ACOBWANY

AS FILED

S0

0

0- l_STAFF

AD] LSTED

so0

0Total

Be&x:m:;Colwxm [A]:Company &hed\de C2 & \Voxkpapers

Colure lB]: Staffs TesMnony TBH

Cohune &1mm1 [A] + Colburn

Schedule TBH\\"\Y'2()Litchfield Park Service Company Sewer Division db Liberty Utilities

Docket No. SW-0I428A170058


_DESCRIPTION

ACCT

xo.

U SE

NO.

1

2

8

ADI lsTmEnT

SO

0

0- I..__.. _ -

ACOMPANY

AS FILED

S00

0

STAFF

AD] LSTED

$00

0

Bskzzsussiz

Column Company Schedule C2 & \Volkpapers

Column Staffs Testimony TBH

Column Column [A] + Column

ATTACHMENT 1

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ATTACHMENT 2

I

IIi

I

iI1

ALGONOUIN POWER & UTILITIES CORP.

V2017 Effective: laniary 1st,2017

COST ALLOCATIONMANUAL

COST ALLOCATION MANUAL

TABLE OF CONTENTS

1.

2.

3.

4.

5

11

11

13

TI IE APUC CORPORATE

SCOPE OF SERVICES FROM APUC AND How THOSE COSTS ARE DISTRIBUTED

SCOPE OF SERVICES PROVIDED BY I.LIC AND HOW COSTS ARE DISTRIBUTED

4.1 Overview ofLUC Services and Costs

4 2 LUC Services and Costs Provided to Liberty Uuhties and Liberty Power

4.3 Shared Scrvices from LUC 16

LIBERTY UTILITIES SERVICE5.

22

6.

5 .1 Shared Services from LUSC

COST DISIRII3UTION AT TI IE REGIONAL OR STATE UTILITY LEVEL

7. CORPORATE CAPITAL

8. CAM TEAM AND 25

25

26

9. AUDIT, RECORD KEEPING & AI*I*ILIATE TRANSACTION

10 UPDATING ALLOCATIONS

11. APPENDICES

A PPEN D IX 1 27NARUC GUIDELINES FOR COST ALLOCATIONS

APPENDIX 2 DETAILED EXPLANATION OF APUC COSTS.. 34

1 34APUC STRATEC,IC MANAGEMENT CosTs

AccEss To CAPITAL 352.

3 .

4.

APUC FINANCIAL 35

APUC ADMINISTRATIVE 36

APPENDIX 3 LII"l*l OF AN APUC INVOICE

APPENDIX 4 LIFE OF A LIBERTY UTILITIES INVOICE

37

38

APPENDIX 5 I II E OF A SH \RED SER\ I( ES INVOI(T 39

I ALGONQUINVows 8 utlizes (mp `Liberty PowernYI I W LibertyU.tilitiesi

Page l of 43

COST A] ,I,OCAIII()N MANUAL

IC OMPOSITE ILLUS1R A1I()N UF ()R (1ANIZATI()N u C OST40

APPENDIX 6DISTRIBUTIQN

APPENDIX 7

APPENDIX 8

GLOSSARY UF

VERSION LUG

41

43

4

Liberty Uti.liti.€§m A L C O N Q U i NYI I lowe A Ur MiesCoup 5 Liberty Power

Page 2 of 43

COST ALl oeAi'Ion MANUAL

1. INTRODUCTION

The purpose of this manual is to provide a detailed explanation of services provided byAlgonquin Power & Utilities Corp ("APUC") and its affiliates to other entities widiin theAPUC family of businesses and to describe the Direct Charge' and Indirect Charge?Methodologies used for those services. The following orgaMzadon chart identifies, at a highlevel, the corporate structure of APUC.

Figure 1: Simplified APUC Corporate Structure

nYIA ALGONQUINIPbwer&U1ilititsCDfp- ' -

Liberty Utilities. "i Liberty Power W

GeneratingFacilities

RegulatedUtilities

Liberty UtilitiesService Corp.

This Cost Allocation Manual ("CAM") has been completed in accordance and conformancewith die N/IR( 'C G1/z21ebne.» ./Br Cat! A//mation; and /ijfiéafe Tramwfzbny ("NARUCGuidclincs"). More specifically, die founding principles of this Cost Allocation Manual are toa) directly charge as much as possible to die entity that procures any specific service, and b)

| Direct charges (sometimes referred to as assigned costs) are costs incurred by one company for the exclusive benefit of, orspecifically identified with, one or more other companies, and which are directly charged (or assigned) to the company orcompanies that specifically benefited. Under the NARUC Guidelines, "Direct Costs" are defined as "costs which can bespecifically identified with a specific service or product."

2 Indirect charges (sometimes referred to as allocated costs) are costs incurred by one company that are for the benefit of either(a) all of the APUC companies or (b) all of the regulated companies, and which are charged to the benefited companies using amethodology and set of logical allocation factors that establish a reasonable link between cost causation and cost recovery. Underthe NARUC Guidelines, "Indirect Costs" are defined as "costs that cannot be identified with a particular service or product. Thisincludes but not limited to overhead costs, administrative, general, and taxes."

3 As of April "0l 7, Algonquin Power Co. (APCo) is doing business under the name Liberty Power. All Liberty Power employeesin Canada will become employed by Liberty Utilities (Canada) Corp. in "()17. Liberty Power employees in the United States willremain employed by AlgonquinPower Fund (America) Inc.

WLiberty UtilitiesYII ALGONQUIN

r t I Wrowe a up hues corpi Liberty Power

Page 3 of 43

COST ALLOCATION MAN URL

to ensure that unauthorized subsidization of unregulated acdvides by regulated activities, andvice versa, does not occur. For ease of reference, the NARUC Guidelines are attached asAppendix 1.

Costs allocated can take the font of: direct labor, direct material, direct purchased servicesand indirect charges (as described in Tables 1, 4a and Cb in this CAM). These costs are chargedby die providing party to die receiving part at fully distributed costs.

2. THE APUC CORPORATE STRUCTURE

APUC owns a widely diversified portfolio of independent power production facilities andregulated utilides4 consisting of water distribution, wastewater treatment, electric and gasdistribution utilities. While power producion facilities are located in body Canada and theUnited States, regulated distribution utility operations are located in the United States.5APUC is publicly traded on the New York Stock Exchange and the Toronto StockExchange". APUC's structure as a publicly traded holding company provides substantialbenefits to its regulated utilities dirough access to capital markets.

APUC is the uldmatc corporate parent that provides financial and strategic management,corporate governance, and oversight of administrative and support services to LibertyUtilities (Canada) Corp. ("LUC") and its subsidiaries as well as to Algonquin Power Co.("APCo") d/b/a Liberty Power and its subsidiaries. The services provided by APUC arenecessary for all affiliates, including LUC and the regulated utility subsidiaries of LibertyUtilities Co. (referred to as "Liberty Utilities"), to have access to capital markets for capitalprojects and operations. These services are expensed at APUC and are performed for thebenefit of Liberty Power and Liberty Utilities and dieir respective businesses.

APUC and its affiliates benefit from APUC's expertise and access to the capital marketsthrough die use of certain shared services, which maximizes economies of scale andminimizes redundancy. In short, it provides for maximum expertise at lower costs. Furdicr,

4 All distribution and transmission utilities are owned, either directly or indirectly, by Liberty Utilities Co., which is itself indirectlyowned by Liberty Utilities (Canada) Corp.

Algonquin linker Gen Co. owns transmission assets in New Brunswick Canada which are subject to regulation by the New

Brunswick Energy and Utilities Board.

" Common shares, preferred shares and instilment receipts of APUC are traded on the Toronto Stock Exchange under thesymbols ANN .\QN.PR.A AQN.PR.D, and AQN.IR. APUC's common shares are also listed on the New York Stock Exchangeunder the symbol ANN. Additional corporate information can be found at the companys website, algonquinpowencom.

§\lLiberty UtilitiesVH A L G ONQU I N

YI I Power h Utiltes CarpLiber ty Power

I

Page 4 of 43

COST ALLOCATION MAN UAL

die use of shared expertise allows each of the entities to receive a benefit it may not be ableto achieve on a stand-alone basis such as strategic management advice and access to capitalat more competitive rates.

3. SCOPE OF SERVICES FROM APUC AND HOW THOSECOSTS ARE DISTRIBUTED

This section provides an overview of the services provided from APUC, and method used todistribute the associated costs for these services throughout the organization.

3.1 Services and Cost Allocation from APUC to Liberty Utilities and Liberty Power

3.1.1 Description ofAPUC Services and Costs

APUC provides benefits to its subsidiaries by providing financing, financial control, legal,executive and strategic management and related services. APUC charges labor rates forthese shared services at cost, which is the dollar hourly rate per employee as recorded inAPUC's payroll systems, grossed up for burdens such as payroll taxes, health benefits,retirement plans, other insurance provided to employees, and odicr employee benefits. 1`heselabor costs are charged dirccdy to the entity incurring these costs based on dmesheets to theextent possible. If labor is for the benefit of all subsidiaries then the allocation methodologiesused for indirect costs are applied. See Appendix 2 for a more detailed discussion of the costsincurred by APUC.

I

APUC also charges non-labor services which includes Financing Services. Financing Servicesmeans the selling of units to public investors in order to generate the funding and capitalnecessary (be it short term or long term funding, including equity and debt) for the entireorganization, including subsidiaries of I ,liberty Utilities and Liberty Power, as well as providinglegal services and other associated costs in connection with the issuance of debt and equity.

In connection with die provision of Financing Scrvices, APUC incurs the following types ofcosts: (i) strategic management costs (board of director, third-party legal services, accountingservices, tax planning and filings, insurance, and required auditing), (ii) capital access costs(communications, investor relations, trustee fees, escrow and transfer agent fees),financial control costs (audit and tax expenses); and (iv) other administrative costs (examples:rent, depreciation, general office costs).

Liberty Utilities\ Liberty PowerV H A L C O N Q U i N7 1 I Fovvc & up lliesCorp

§\l,

Page 5 of 43

COST ALLocA1Ion MANUAL

The capital raised by APUC is used by I ,liberty Utilities (and its regulated subsidiaries) andLiberty Power for current and future capital investments. The services provided by APUCare critical and necessary to Liberty Utilities and its regulated subsidiaries and Liberty Powerbecause without those services daey would not have a readily available source of capitalfunding. liurdaer, relatively small udlides may have difficulty attracting capital on a stand-alone basis.

li

l9

l

Indirect costs from APUC, excluding corporate capital, are pooled and allocated to LUC (andsubsequently, to LUC's subsidiaries) and Liberty Power using due method summarized inTable 1. Each corporate cost type, or function, has been reviewed to properly identify diefactors driving those costs. lich function or cost type is typically driven by more than onefactor and each has been assigned an appropriate weighing. Table 1 includes a briefcommentary on the rationale for each cost driver and weighting, along with examples for eachcost WW

The services provided by APUC optimize the performance of the utilities, keeping rates lowfor customers while ensuring access to capital is available. If die utilities did not have accessto the services provided by APUC, they would be forced to incur associated costs forfinancing, capital investment, audits, taxes and odder similar services on a stand-alone basis,which would substantially increase such costs. Simply put, without incurring diesel costs,APUC would not be able to invest capital in its subsidiaries, including the regulated utilizes.

Table 1: Summary of Corporate Allocation Method of APUC Indirect Costs

RationaleType of Cost Examples7

Legal Costs

AllocationMeduodolo

Net Plant 33.3%Number ofEmployees 33.3%o & m 33.30 0

Employee laborand relatedadministrationand programs,Third party legalservices

This function isdriven by factorswhich include NetPlant, as typicallythe higher die valueof plant, the morelegal work itattracts; similarly, a

eater number Ofg

l0

\ Liberty PowerYD ALGONQUINYI I

9 '

in W Liberty Utilitiesswf. A. ur laes Corp

Page 6 of 43

COST .\1,1.0cA110n lvI.\nUAL

Tax Services 33.3%

33.3%

33.3%

Revenue()&MNet Plant

Employee labor

and related

administration

and programs,

including Third

party tax advice

and services

Audit RevenueO&MNet Plant

33.30 0

33.3%

33.3%i

Employee laborand relatedadministrationand programs,including lairdparty accountingand auditservices

Investor Relations 33.3%

33.3%

33.3%

Revcnuc()&MNet Plant

I

employees aretypically moreindicative of largerfacilities Matrequire greaterlevels of attention,and ()&M coststend to be a thirdfactor indicative ofsize and legalcom Lexi 7This function isdriven by a varietyof factors thatinfluence the sizeand relative taxcomplexity,including Revenues,O&M and NetPlant. Tax activitycan be driven byeach of thesefactors.This function isdriven by a varietyof factors thatinfluence the sizeand complexity ofAudit, includingRcvenucs, O&Mand Nct Plant.Audit activity canbe driven by eachof these factors.This function isdriven by factorswhich reflect therelative size and

Employee laborand relatedadministrationand ro ams,

§\ !

\ Liberty PowerF i t ALGONQUINYI I Tower h Ur Iner Coup.

W Libedyu.ti.lities

Page 7 of 43

COST AI ,I ,QCATION MANUAL

scope of eachaffiliate - Revenues,

Net Plant and

O&l\I costs.

Director Fees andInsurance

33.3° O33.3%

33.30 0

RevenueO&MNet Plant

including thirdparty Investordaycommunicationsand materialsBoard ofDirector fees,insurance andadministration

l

lThird partycosts

Licenses, 1°ees and Revenue

Permits O & M

Net Plant

33.30 0

33.30 0

33.30/0

Third partyc o s ts

Escrow andTransfer AgentFees

33.30 0

33.30 0

33.30 0

Revenue()&MNet Plant

Third partyco s ts

(Dther

Professional

Services

RevenueO&MNet Plant

33.3%

33.30 0

33.3%

I

This function isdriven by factorswhich reflect therelative size andscope of eachaffiliate - Revenues,Net Plant and()&M costs.This function isdriven by factorswhich reflect therelative size andscope of eachaffiliate - Revenues,Net Plant andO&M costs.This function isdriven by factorswhich reflect therelative size andscope of eachaffiliate - Revenues,Net Plant and()&M costs.This function isdriven by factorswhich reflect dierelative size andscope of eachaffiliate - Revenues,Net Plant andO&M costs.

s '

Yi] ALCONQUiNYI I Fiwev h UhlIt¢sCorp v LibertyU.ti.litiess

14 Liberty Power

Page 8 of 43


OtherAdministrationCosts

Oakville Hmployees500 0Total Employees50%

This function isdriven by factorswhich are indicativeof number ofemployees.

33.3° 033.30 O33.3%

Revenueo &mNet Plant

Executive andStrategicManagement

SUfficeadministrationcosts. Employeelabor andrelatedadministrationEmployee laborand relatedadministrationthat is notdirectlyattributable toany entity

l

This function isdriven by factorswhich reflect dierelative size andscope of eachaffiliate - Revenues,Net Plant andO&M costs.

l

Notwidistanding the above, if a charge is related either solely to die regulated utility businessor to dle power generation business Liberty Power, diem all of those costs will be directcharged, or assigned, to the business segment for which they are incurred. If a cost can bedirectly attributable to a specific entity, it will be dirccdy charged to that entity.

In the event that organizational realignments occur, resulting in certain odder services or coststo come from APUC, any allocations (if any) will be doc as per the "Executive and StrategicManagement" line in Tablc 1 above until the (lAM is updated.

3.1.2 Description of the APUC Cost Flows

Please refer to Figure 2 for a diagram of the various flows of costs from APUC.

Liberty Powerr I ALGONQUINr tl l v LibertyUtilities

Fcwe M U! ticsCoup

\9

i n

Page 9 of 43

(;osl. ALL<x;A1Ion MANUAL

Figure 2: Illustration ofAPUC Corporate Cost Distributions

v . . . .

aIran Direct Costs (b)Direct

Costs (a)

Multiple UtilitiesCAM Table 1I

IL

Utility Four Factor MethodologyCAM Table 2

utilityW

ILiberty Power. .

(==)(b)(c)

( :oats that arc directly assignable to unregulated companies.

Costs that arc directly assignable to one regulated coinpilliy, or that benefit all regulated operations.

( .osts that benefit both unregulated and regulated operations.

As illustrated in Figure 2 and as described above, APUC incurs three types of costs that arepassed on to its direct and indirect subsidiaries. The first type is APUC's costs that directlybenefit a particular specific unregulated company, which are directly assigned to thatunregulated company (i.e., Liberty Power or one of its subsidiaries). The second type isAPUC's costs that directly benefit a particular regulated company, which are directly assignedto that regulated company. The third type arc APUC's remaining costs that benefit the entire

7 This could be directly to LUC (which would subsequently be allocated over utility subsidiaries of LUC) or to a specific utility forwhich the service was necessary.

Liberty Utilitiesm ALGONQUINY I I Power 8 Ur hues Cap W

s *

*Hi'Liberty Power

Page 10 of 43

COST A1,1,ocA1Ion MANUAL

enterprise (body regulated and unregulated), which are allocated between regulated andunregulated company groups pursuant to (lAM Table 1. Information within Table 1 includes:(a) each type of cost incurred by APUC that is to be allocated between regulated andunregulated parts of the business, the factors used to allocate each type of cost betweenregulated and unregulated activity, (c) die rationale for selecting the factors dirt are used forallocation; and (d) examples of the specific allocated costs. The costs allocated to the regulatedcompanies as a group are then reallocated to individual utility companies using the UtilityFour-Factor allocation methodology set forth in CAM Table 2 (described below), resultingin utility-specific allocated charges from APUC.

For an example of how an APUC invoice would be assigned or allocated, please see Appendix3.

Certain costs, which are incurred for the benefit of APU(I's businesses, arc not allocated toany utility subsidiary. These costs include certain corporate travel and certain overheads.

4. SCOPE OF SERVICES PROVIDED BY LUC AND HOWCOSTS ARE DISTRIBUTED

This section provides an overview of the services and die cost methodology for LUC.

4.1 Overview of LUC Services and Costs

I

Various services and mediods of cost distribution arise from LUC and can be categorized asthose provided: (a) specifically to regulated utilities, specifically to Liberty Power, or (c)to the entire organization (under the business unit of Liberty Algonquin Business Services("LABS")). Figure 3 identifies die flow of costs from dedicated utility support and dedicatedI ,liberty Power staff within LUC. Figure 4 identifies die flow of costs from die shared businessand corporate services staff and functions ("I.ABS") widiin LUC. Both Figures 3 and 4 aredepicted below in this scion.

As illustrated in Figure 3, LUC incurs three types of costs. The first type is an LUC cost thatdirectly benefits a particular Liberty Utilities affiliate (i.e., regulated company), which isdirectly assigned to dirt regulated company. The second type is an LUC cost that benefits allof the Liberty Utilities regulated companies, and which is allocated using the Utility Four-Factor Methodology described in CAM Table 2. The third type is a cost dirt only benefitsand is directly charged to Liberty Power. All dire of diesel cost types are described in section4.2 below.

Liberty UtilitiesLiberty Power171 ALGONQUINr t > WI Fewer& up mes(olp

$ l

wt

Page ll of 43

II

COS'1 AIlOCA'lION MANUAL

As illustrated in lfigure 4, shared services costs arising from LUC are those from sharedservices dart benefit both die regulated group of companies and the unregulated group ofcompanies widmin the APUC family, which are allocated between the two groups pursuant tothe medmodology described in scion 4.3 and as set forth in (lAM Table 4.

Figure 3: Illustration ofLUC Corporate Cost Distributions

lilies (Cal

Jullll

l

rest CoDirect

Costs (a)

Direct

Costs (b)

- -

Multiple Utilities

One Utility IUtility Four Factor MethodologyCAM Table 2

3

ty f0 w e r. ;. v". 4

"Fm Zm

T

Notes:

(a)

(b>

(c)

Costs that are directly assignable to unregulated companies

Costs that are directly assignable to one or more specific regulated companies.

Costs that benefit all regulated operations.

8 As discussed later shared support services that benefit both regulated and unregulated businesses within APUC are providedwithin Liberty Algonquin Business Services ("LABS"), which is a business unit with staff employed within LUC and LUSC. Sharedservices staff serve both regulated and unregulated cntides. LABS staff within the corporate office in Canada arc employed withinLUC; LaBS staff in the US are employed within LUSC. As new U.S.based uti li ties are added to the LibertyAlgonquinorganization, there could be a transitional period in which some of these shared services staff and functions may also remainemployed within the new utility until such time that they may be transitioned to become an employee of Liberty Utilities ServiceCorp. ("LUSC").

Liberty U.ti.liti.es` Liberty PowerYul ALCONQUiNYI I

grPower 8 Utltes Corp

Page 12 of 45

COST AI,l,()cAlIon MANUAL

Figure 4: Illustration of LUC Shared Services Cost Distributions

Sea!! Sauces (LABS Canada) (c)

DirectCosts (a)

DirectCosts (b)

- F

Multiple UtilitiesCAM Tables 4

Utility Four Factor MethodologyCAM Table 2

i

Utility4. 1

. ..

x . . a . " ¢ €\ . . .citiesLiberty Power

Notes:

(H)

(b)

(c)

( :oats that are directly assignable to unregulated companies.

( :oats that arc directly assignable to one or more regulated companies.

Costs that bcm.Et both unregulated and regulated operations.

4.2 LUC Services and Costs Provided to Liberty Utilities and LibertyPower

4.2.1 Services to Liberty Utilities

LUC provides services to Liberty Utilities such as: cxccudve, regulatory strategy, energyprocurement, operations, utility planning, administration, and customer experience.

9r A ALCONQUiNnl l v Libertyu.ti.Iiti.es

Vowt 5. up mies COrp0) Liberty Power

Page 13 of 43

CUST ALL()CATI()N MANUAL

I,UC will assign costs that can be directly attributable to a specific utility. These includedirect labor and direct non-labor costs. However, because the indirect LUC costs cannot bedirectly attributed to an individual utility, LUC allocates its indirect labor and indirect non-labor costs, including capital costs, to its regulated udlides using a Utility Four-Factorl\lethodology9. LUC uses the Utility Four-l"actor Methodology to allocate costs incurred fordie benefit of all of its regulated assets ("System-Wide Costs") to all of its utrilides.

The Utility 1"our-I"actor Methodology allocates costs by relative size and scope of the udlides.The mediodology used by LUC involves four allocating factors, or drivers: (1) Utility NetPlant, (2) Total Customers, (3) Non-Labor Expenses; and (4) Labor Expenses, wide eachfactor assigned an equal weight, as shown in 1able 2 below.

Table 2: Utility Four-Factor Methodology Factors and Weightings

I Wei htFactor

Customer Count

Udl i Net Plant

Non-Labor Ex senses

Laborlix senses

40° 020%

200 0

200 0

Total 100%

LUC uses the Utility Four-Factor Methodology to allocate to its regulated udlides die system-wide indirect labor and indirect non-labor costs within LUC (from its utility-dedicated staff,and from the shared services functions wid'lin LUC).

Table 3 provides a simplified hypothetical example to demonstrate how die Utility Four-Factor Methodology would be calculated based on ownership of only two hypotheticaludlidcs.

" Please note, indirect costs gem to utilities via the 4factor will consist of 1) indirect costs from LUC's utilitydedicated staff andservices, plus ") the indirect costs from .\PUC, 3) the indirect costs retained within LUC from LABS (the shared services staff andservices within LUC), and 4) the indirect costs allocated from l.Usc.

I ALGONQUIN Liberty UtilitiesnYI I ' IPower A ut huesCop §:: Liberty Power

Page 14 of 43

COST ALLoc3A*11<>n MANUAL

Table 3: Utility Four-Factor Methodology Example

Total AllUtilities

Utility 1 %of Total

Utility 1AllocationUtility 1 Utility 2

FactorWeight

727 20%66%1098371 130/0

20006000 8000 40%75% 30%

3257 89 64°/o 20% 13%

108 720/041 149 20°/o 14%

Factor

Utility NetPlant ($)

CustomerCount (# )

LaborExpenses ($)

Non-LaborExpenses ($)

Total Allocation 71%-As can be seen from diesel hypothetical numbers in Table 3, Utility 1 would be allocated 71%of the total indirect costs incurred by LUC, based on its relative size and application of theUtility Four-l"actor Methodology. Utility 2 would be allocated die remaining 290/0. LUC hasdeveloped and utilized this methodology to better allocate costs, recognizing dirt largerutilities acquire more time and management attention and incur greater costs than smallerones.

On occasion Mere may be costs which are incurred for die benefit of two or more udlides,but not all of die utilities. These costs arc directly assigned to utilities as per die vendorinvoice, or, if the invoice doesn't specify a share for each unity, the Utility Four-FactorMediodology is used. In this situation, the weighting is determined by only including theutilities Mat benefited from the service and excluding the udlitics that did not receive theservice. For an example of how an LUC invoice would be assigned or allocated, please secAppendix 4.

4.2.2 LUC Services to Liberty Power.

A sub-set of LUC employees provide dedicated services to Liberty Power such as: executive,energy services, asset management, business development, and operations. All costs (laborand non-labor) incurred for these services will be directly charged to Liberty Power (no

Liberty.U.ti.Iiti.es\ Liberty Powerm ALaonQul~YI I 1.1

49 4

Power h Ur Irtncs Coup

Page 15 of 43

i

COST ALL()cAlI()n MANUAL

indirect costs are allocated from dies group). Labor costs are tracked through timesheets anddirectly charged to Liberty Power.

4.3 Shared Services from LUC

The last type of costs arising from LUC are diode from shared services d1 at benefit body theregulated group of subsidiary companies owned by Liberty Utilities and Liberty Power.

Consistent with the organization practices described earlier, shared services and costs (withinLUCII) are assigned when they are directly attributable to a specific affiliate company (suchas a specific distribution utility) or business unit'2 (such as Liberty Utilities or Liberty Power).Labor charges for LUC shared services staff are assigned using dmesheets dirt depict theamount of time dirt is to be direct charged to either Liberty Udlides or Liberty Power (or aspecific subsidiary within Liberty Utilities. or I ,liberty Power).

Please refer to Figure 4 above for a diagram of the various flows of costs that may arise fromthe shared services staff and functions widiin LUC'3.

Indirect costs for services from the shared services functions that cannot be directly assignedarc allocated between the regulated and unregulated business units, l ,liberty Utilities andLiberty Power, pursuant to die mediodology set forth in CAM Tables 4a and 4b. Similar toTable 1, Tables 4a and 4b include: (a) each type of cost incurred by shared services functionswithin LUC that is to be allocated between regulated and unregulated parts of die business;(b) the factors used to allocate each type of cost between regulated and unregulated activity;(c) the rationale for selecting the factors that are used for allocation; and (d) examples of thespecific allocated costs. The costs allocated to the regulated companies as a group are thenreallocated to individual companies using the Utility Four-I"actor Methodology set fords in(iAl\I Table 2, resulting in utility-specific allocated charges from LUC.

lo Liberty Algonquin Business Services ("LABS") is a business unit found organizationally within LUC and LUSC that serves bothregulated and unregulated entities. The LABS business unit provides shared services throughout the organization. LABS employeesand functions provided from Canada are employed within LUC; LaBS employees and functions located in the U.S. are typicallyemployed within LUSC.

11 As will be discussed further in section 5, shared services to the entire APUC organization are also provided from staff within

L u s t .

12 To clarify, if a L\BS service is for only one specific organization such as the unregulated generation business, Liberty Powerthe cost will be directly charged to that business unit.

1.* Sometimes referred to as "LaBS Canada."

Liberty UtilitiesLiberty Powernl lr I ALGONQUINPowe a. UumcscoIp

Page 16 of 43


For an example of how an invoice or cost within LUC's shared services (LABS) would beassigned or allocated, please sec Appendix 5.

4.3.1Business Services and Corporate Services

l

LUC shared services that would be provided to the cndrc company, i.e., Liberty Power andLiberty Udlides, are internally referenced under two names - Business Services and CorporateServices. The services and functions within each category are shown in the tables below*.Indirect costs from Business Services and Corporate Services are allocated using the followingmediodology shown in Tables 4a and Cb, respectively, which are designed to closely align diecosts with the driver of the activity.

Table 4a: Summary of Corporate Allocation Method ofLUC'5 Business ServicesIndirect Costs

RationaleType of Cost Examples

Information'Technology

Enterprise widesupport,architecture, etc.Third party fees

AllocationMethodolo

Number ofEmployees90%()&M10%

Human Resources Number ofIimployces1()()o 0

HR policies,payrollprocessing,benefits,

IT function isdriven by factorswhich includenumber ()femployees and()&M. The largerthe number ofemployees, themore support,software and ITinfrastructure isre uircd.HR function isdriven by numberof employees. Agreater number oferr lo is re circs

is And LUSC shared services functions.

Qubefry Power171 ALc.onQulnrt I v LibertyU.ti.lities

Power A Urlmestovp

1

For

Page 17 of 43


additional HRsupport

employeesurveys2 -

Training Number ofEmployees1 ()0°/o

Training is directlyproportional to thenumber ofemployees perfunction

Oakville Employees100%

Facilities andBuilding Rent

Courses,lCCI11ICS, inhouse trainingsessions bythird partyproviders

Corporateoffice building

Office spaceoccupied byemployeesaccurately reflectsspace requirementsof each subsidiary

Environment, Number ofHealth, Safety and EmployeesSecurity 100%

Enterprise wideprograms,employee laborand relatedadministration

EHSS training, etc.is directlyproportional to docnumber ofemployees perfunction

Procurement

)I

Enterprise widesupport andrelatedadministration

O&M500/0CapitalExpenditures 50%

Procurementfunction is basedon typicalproportion ofexpenditures

Executive andStrategicManagement

Revenue33.3%o & m33.30 0Net Plant33.30 O

Employee laborand relatedadministrationdirt is notdirectlyattributable toany entity

This function isdriven by factorswhich reflect therelative size andscope of eachaffiliate -Revenues, NetPlant and O&Mcosts.

Liberty U.tilities\ Liberty PowerY H ALgONQUINYI I Pawed B UK hues Corp

§ \ 1

*w e

Page 18 of 43

Wi

COST AL],()cAlIon MANUAL

Technical Services Net Plant33.3%Revenue33.3%( )&M33.3%

Employee laborand relatedadministrationdirt is notdirectlyattributable toany entity

This function isdriven by factorswhich reflect therelative size andscope of eachaffiliate-Revenues,Net Plant andO&M costs.

Utility Planning Net Plant33.3%Revenue33.3%O&M33.3%

Employee laborand relatedadministrationthat is notdirectlyattributable toany entity

This function isdriven by factorswhich reflect thescope of eachaffiliateManagement -Revenues, NetPlant and ()&Mco s ts .

Table 4b: Summary of Corporate Allocation Method of LUC" Corporate ServicesIndirect Costs

Net PlantRisk Management33.3%Revenue33.30 O( )&M33.3%

Employee laborand relatedadministration,Softwareplatform, feesandadministration

This function isdriven by factorswhich reflect therelative size andcomplexity of RiskManagement -Revenues, NetPlant and ()&Mco s ts .

" And LUSC shared services functions.

M Liberty PowerFH ALso~Quln71 I Towe8 UI lacsCorp v Liberty Utilities

Page 19 of 43

i


Financial Reporting,Planning andAdministration

Employee laborand relatedadministrationand diird partyfees

Rcvcnue33.3%O&M33.3%Net Plant33.3%

.f

Treasury CapitalExpenditures25%

This function isdriven by factorswhich reflect doerelative size andcomplexity ofFinancialReporting and\min. -Revenues, NetPlant and O&Mcosts.Treasury activity istypically guided bythe amount of

Third partyfinancing,employee laborand relatedadministrationand programs

()&laI500 ONet Plant250 0

Internal Audit Net Plant250 0( )&M750 O

Third partyfees, employeelabor andrelatedadministrationand programs

Total Iimployees100%

ExternalCommunications

lintemrise widesupport andrelatedadministration

Legal Costs Net Plant33.3° O

Employee laborand related

necessarycape/plant foreach utility, andoperatingcosts/cash flowThis function isdriven by factorswhich reflect dierelative size andcomplexity ofInternal auditactivity. LargerPlant andoperating costs ofa given facilitydrive more activityfrom IA.Communicationscost is directlyproportional tothe number ofemlo csThis function isdriven by factors

Y H ALCONQUiNYI I Fewer 8 Ublflcs Colp W Liberty Uti.litiesLiberty Power

Page 20 of 43

COST ALI,()CA'1II()N MANUAL

administrationand programs,including thirdparty legal

Number ofEmployees33.3%O&M33.3%

Compliance Revenue33.3%O&M33.3%Net Plant33.3%

employee laborand relatedadministrationthat is notdirectlyattributable toany entity

which include NetPlant, as typicallydue higher thevalue of plant, themore legal work itattracts, similarly, agreater number ofemployees aretypically moreindicative of largerfacilities dartrequire greaterlevels of attention,and O&l\I coststend to be a diirdfactor indicative ofsize and legalcom Lexi 1.This function isdriven by factorswhich reflect dierelative sizeandscope of eachaffiliate -Revenues, NetPlant and O&l\Ico s ts .

5. LIBERTY UTILITIES SERVICE CORP.

This section provides an overview of some of the services (as outlined in Table 5) and thecost methodology for Liberty Udlides Service Corp. ("LUS(I").

Most U.S.-based utility employees are employed by LUSC and are dedicated to serveparticular utilities. All employees' labor costs, such as salaries, and associated labor costs, suchas benefits, insurance etc. are to be paid by LUSC and direct charged to the company to whichthe employee is dedicated and performs work. Services provided by employees within I ,USC

I ALGONQUINY Power a Unlmes Cop Liberty Powernl l W Liberty .Utilities

s '

*in

Page "1 of 43

COST AL] .OCATION MANUAL

to each regulated utility shall be distributed on a time sheet basis to the extent possible. Ininfrequent instances where time sheeting may not be possible, die allocation factors shownin Tables 4a and 4b are to be used, as will be explained below.

5.1 Shared Services from LUSC

LUSC employs some individuals who provide shared services (listed in Table 5 below). Costsdistributed by LUSC will include those from shared services employees: (a) where thefunction benefits both Liberty Utilities and Liberty Power businesses and (b) where diefunction benefits some or all of the regulated utilities within Liberty Utilities (e.g., energyprocurement services).

Consistent with the organizational shared services practices described earlier, shared servicesand costs (widiin LUSC) are assigned when they are directly attributable to a specific affiliatecompany (such as a specific distribution utility, for example) or business unit (such as LibertyUtilities or Liberty Power). Labor charges for LUSC shared services staff are assigned usingtimesheets that depict the amount of time that is to be direct charged to either Liberty Utilitiesor Liberty Power (or a specific subsidiary widiin l ,liberty Utilities or Liberty Power) .

The type of U.S. shared services that benefits body Liberty Udlides and Liberty Powerbusinesses is referred to as LABS U.S. The LABS U.S. indirect costs for services from dieshared services staff and functions within LUSC dirt cannot be directly assigned are allocatedbetween the regulated and unregulated business units, Liberty Utilities and Liberty Power,and are distributed in die same manner per CAM Tables 4a and 4b described for sharedservices staff and functions widiin LUC. Consistent with the practices within LUC, the costsallocated from LUSC to the regulated companies as a group (Le. to Liberty Utilities) are diemreallocated to individual utility companies within the Liberty Utilities structure using dieUtility Four-Factor Methodology set fords in CAM Table 2, resulting in utility-specificallocated charges from LUSC.

The indirect costs from the U.S. shared services that only benefit the regulated utilities aredistributed using die Utility Four-Factor Methodology set fords in CAM Table 2, resulting inutility-specific allocated charges from LUSC.

Figure 5 below depicts the various flows of costs from LUCS.

Liberty Utilities' T l ALGONQUINYI IFewer 6 U! lacs [cup v)liberty Power

8 "

*vi

Page 22 of 43


Table 5 - List of Shared Services provided by Liberty Utilities Service Corp.

l

l

l

0•

0Q

I

lo

0

0o

Q

0

Customer Care and Billing rll/Tech Su ortHuman Resources(Jas ControlLe alCom lanceRe Plato Y & Government RelationsEnvironmental, Health, Safe and SecuriProcuremento crayonsEn neerin , Dis arch and ControlOuta e Mane eventGIS/Ma inVa etalon Mana eventEner 7 ProcurementAccount and FinanceMona crialUtile Planning rCustomer Communication

I ALGONQUIN Liberty PowernYI I 1.1 LibertyLJ.ti.Iities9Power & Ur mies corp

8 4

9,

Page 23 of 43

COST A1II,OCATION MANUAL

Figure 5: Illustration of LUSC Cost Distributions

ab up, (Lul__Shared Services (LABS US) (I

I DirectCosts (b) Direct

Costs (a)

CAM Tables 4Multiple

Utilities

lUtility Four Factor Methodology

.CAM Table 2

utilityE_

..j ..: <mum Liberty POWBF .:J

8

. v . . _ .'Notes:

(to

(b)

(c)

( lasts that arc directly assignable to unregulated companies.

(mosts that are directly assignable to regulated companies.

Costs that benefit both unregulated and regulated operations.

Liberty Utilities\ Liberty PowerI H ALs o~ Q ulnYI I vim A. um Mes Corp v

8 4

at

Page 24 of 43

CosT ALl .()CAllI()N MANUAL

The allocation methodology may be adjusted based on die number of participating utilities.I°or example, Customer Service representatives who serve only the New Hampshire utilitieswill only have their indirect costs allocated, if any, to the two utilities widiin New Hampshire.Labor costs associated with energy procurement are directly billed to the udlides requiringenergy procurement services using timesheets.

6 . COST DISTRIBUTION AT THE REGIONAL OR STATEUTILITY LEVEL

I

lWithin the Liberty Utilit ies organization, the organizational s tructure and reportingrelationships may evolve as the or anizadon grows and develops. Costs and servicesprovided to the regional or state utility level from other corporate endues are directly assignedto the extent possible and distributed over the udlides within the state or region for whichthey are provided. Any services and costs which cannot be directly assigned will be allocatedto the utilities widain the region or state using the Regional I*our-Factor Mediodology (25%weighting for the factors of: customer count, utility net plan, non-labor expenses, and laborexpenses), unless another method of allocation is legally required.

cos t

In addition, each of the regulated endues will distribute costs amongst their affiliated enddcsin accordance with applicable laws/rules and affiliated service agreements. Theseallocation mediods arc consistent wide the principles of dies (lAM.

7. CORPORATE CAPITAL

APUC or I UC will make capital investments such as corporate headquarters, IT systems, etc.that benefit the various operating businesses. The costs of these investments may bedistributed monthly in the form of an intercompany operating expense charge, that capturesthe depreciation expense and cost of capital associated with the particular assets, or analternate mediod of capital allocation based on die particular needs of the project. All costsassociated to service die investment will be allocated to Liberty Power and Liberty Utilities,if applicable, typically based on the allocation method from which the capital investment ismade. For example, if die capital investment is made in Human Resources then the allocationmethodology used for Human Resources to allocate non-capital indirect costs as shown inTable 4a will be used to allocate the charge associated wide the corporate capital expenditures,including the cost of capital, depreciation, and all other associated costs. l"rom time to time,die distribution of costs associated with a corporate capital investment may use an alternate

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c:osT ALl .o(;AT1on MANUAL

mediod. Any corporate capital charges allocated or assigned to LUC are then reallocated toindividual Liberty Utilities distribution utilidcs, or a sub-set of one or multiple distributionutilities, using the Utility Four-Factor Mediodology set forth in CAM Table 2.

8. CAM TEAM AND TR.AINING

I

The oversight of the CAM is the responsibility of due corporate Regulatory Department. Anyupdates or revisions are coordinated and completed by this Department. \ CAM Team willbe created consisting of trained employees to oversee Me operations and management of theCAM principles daroughout the organization.

The CAM, and any support material, is available to all employees via the Company intranet.Employee training on the CAM will be provided via the Company's Learning ManagementSystem.

9. AUDIT, RECORD KEEPING & AFFILIATE TRANSACTIONRULES

Records of each company will be maintained such that all affiliate transactions are auditable.The records will document the cost of transactions, the methods used to distribute the costs,and descriptions of the services provided. The records will be retained for a minimum ofthree years or as required by law or regulation. The regulator will have access to records,consistent with applicable laws, regarding transactions between the regulated utility and itsaffiliates. All companies subject to affiliate transaction rules, whether state or federal, willcomply with such requirements.

10. UPDATING ALLOCATIONS

SI

Allocation ercenta es" are updated annual] . These annual u dates to the allocationP 8 P . Y . Percenta es are based on the most recent audited financial statements and other actual, fear-

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end information. The updated percentages come Into effect each Apr11 1 and are Fahdthou h to the foHo\Wn March 31". I`hc Utile Four-Factor Methodolo allocation

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percentages are also updated as an entry is elther acquired or sold.

17 To clarify, the factors and weightings are expected to remain constant. Ir is the underlying information used to calculate theallocation percentages that is updated annually, such as the most recent net plant figures or the most recent numbers of employeesfor example.

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COST ALl ,OCATION MANUAL

11. APPENDICES

APPENDIX 1 _ NARUC GUIDELINES FOR COST ALLOCA TIONS

Guidelines for Cost Allocations and Affiliate Transactions:

The following Guidelines for Cost Allocations and Affiliate Transactions (Guidelines) areintended to provide guidance to jurisdictional regulatory audiorides and regulated utilities andtheir affiliates in the development of procedures and recording of transactions for servicesand products between a regulated entity and affiliates. The prevailing premise of diesel(nUdelines is dart allocation methods should not result in subsidization of non-regulatedservices or products by regulated endues unless audiorized by the jurisdictional regulatoryauthority. These Guidelines are not intended to be rules or regulations prescribing how costallocations and affiliate transactions are to be handled. They are intended to provide aframework for regulated endues and regulatory audiorides in the development of their ownpolicies and procedures for cost allocations and affiliated transactions. Variation in regulatoryenvironment may justify different cost allocation methods than diode embodied in dieGuidelines.

The Guidelines acknowledge and reference the use of several different practices and methods.It is intended that there be latitude in the application of these guidelines, subject to regulatoryoversight. The implementation and compliance with these cost allocations and affiliatetransaction guidelines, by regulated utilities under the authority of jurisdictional regulatorycommissions, is subject to Federal and state law. Each state or Federal regulatory commissionmay have unique situations and circumstances dirt govern affiliate transactions, costallocations, and/or service or product pricing standards. For example, The Public UtilityHolding Company Act of 1935 requires registered holding company systems to price "at cost"the sale of goods and services and the undertaking of construction contracts between affiliatecompanies.

The Guidelines were developed by the NARUC Staff Subcommittee on Accounts incompliance with the Resolution passed on March 3, 1998 enticed "Resolution Regarding CostAllocation for the Energy Industry" which directed the Staff Subcommittee on Accountstogether with the Staff Subcommittees on Strategic Issues and (Jas to prepare for NARUC'sconsideration, "Guidelines for Energy Cost Allocations." In addition, input was requestedfrom other industry parties. Various levels of input were obtained in the development of theGuidelines from the Edison Electric Institute, American (185 Association, Securities andExchange Commission, die Federal Energy Regulatory Commission, Rural Utilities Servicc

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cosl' AL1,ocA11on MANUAL

and the National Rural Electric Cooperatives Association as well as staff of various statepublic utility commissions.

In some instances, non-structural safeguards as contained in these guidelines may not besufficient to prevent market power problems in strategic markets such as die generationmarket. Problems arise when a firm has the ability to raise prices above market for a sustainedperiod and/or impede output of a product or service. Such concerns have led some states todevelop codes of conduct to govern relationships between the regulated utility and its non-regulated affiliates. Consideration should be given to any "unique" advantages an incumbentutility would have over competitors in an emerging market such as the retail energy market.A code of conduct should be used in conjunction wide guidelines on cost allocations andaffiliate transactions.

A. DIQFINITIONS

1. Affiliates - companies that are related to each other due to common ownership or control.

2. Attestation Engagement - one in which a certified public accountant who is in the practiceof public accounting is contracted to issue a written communication that expresses aconclusion about the reliability of a written assertion that is the responsibility of another party.

3. Cost Allocation Manual (CAM) - an indexed compilation and documcntadon of acompany's cost allocation policies and related procedures.

4. Cost Allocations - die mediods or ratios used to apportion costs. A cost allocator can bebased on the origin of costs, as in the case of cost drivers, cost-causadve linkage of an indirectnature, or one or more overall factors (also known as general allocators).

5. Common Costs - costs associated wide services or products dirt are of joint benefitbetween regulated and non-regudatcd business units.

6. Cost Driver - a measurable event or quantity which influences the level of costs incurredand which can be dirccdy traced to die origin of the costs themselves.

7. Direct Costs - costs which can be specifically identified with a particular service or product.

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Page 28 of 43

COST AI I .ocA11on MANUAL

8. l"ully Allocated costs - the sum of die direct costs plus an appropriate share of indirectcosts.9. Incremental pricing - pricing services or products on a basis of only the additional costsadded by their operations while one or more pre-existing services or products support thefixed costs.

10. Indirect Costs - costs that cannot be identified with a particular service or product. Thisincludes but not limited to overhead costs, administrative and general, and taxes.

11. Non-regulated - that which is not subject to regulation by regulatory audioritics.

12. Prevailing Market Pricing - a generally accepted market value that can be substantiated byclearly comparable transactions, auction or appraisal.

13. Regulated - dirt which is subject to regulation by regulatory authorities.

14. Subsidization - the recovery of costs from one class of customers or business unit thatare attributable to another.

B. cosT ALLOCATION PRINCIPLES

The following allocation principles should be used whenever products or services areprovided between a regulated utility and its non-regulated affiliate or division.

1. To the maximum extent practicable, in consideration of administrative costs, costs shouldbe collected and classified on a direct basis for each asset, service or product provided.

2. The general method for charging indirect costs should be on a fully allocated cost basis.Under appropriate circumstances, regulatory authorities may consider incremental cost,prevailing market pricing or odder medaods for allocating costs and pricing transactionsamong affiliates.

3. To die extent possible, all direct and allocated costs between regulated and non-regulated servicesand products should be traceable on the books of die applicable regulated utility to the applicableUniform System of Accounts. Documentation should be made available to the appropriateregulatory audiority upon request regarding transactions between the regulated utility and itsaffiliates.

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COST A1.1,ocA1Ion MANUAl,

4. The allocation mediods should apply to the regulated entity's affiliates in order to preventsubsidization from, and ensure equitable cost sharing among the regulated entity and itsaffiliates, and vice versa.

5. All costs should be classified to services or products which, by dieir very nature, are eitherregulated, non-regulated, or common to both.

6. The primary cost driver of common costs, or a relevant proxy in the absence of a primarycost driver, should be identified and used to allocate the cost between regulated and non-regulated services or products.

7. The indirect costs of each business unit, including the allocated costs of shared services,should be spread to the services or products to which they relate using relevant cost allocators.

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c. cosT ALL()CATI()N MANUAI, (NOT TARIm*l"ED)

I'iach entity that provides both regulated and non-regulated services or products shouldmaintain a cost allocation manual (CAM) or its equivalent and notify the jurisdictionalregulatory authorities of die CAM's existence. The determination of what, if any, informationshould be held confidential should be based on the statutes and rules of the regulatory agencythat requires die information. Any entity required to provide nodficadon of a CAM(s) shouldmake arrangements as necessary and appropriate to ensure compeddvely sensitiveinformation derived therefrom be kept confidential by the regulator. At a minimum, the CAMshould contain the following:

1. An organization chart of the holding company, depicting all affiliates, and regulated endues.

2. A description of all assets, services and products provided to and from the regulated entityand each of its affiliates.

3. A description of all assets, services and products provided by the regulated entity to non-affiliates.

4. A description of the cost allocators and methods used by the regulated entity and die costallocators and methods used by its affiliates related to die regulated services and productsprovided to the regulated entity.

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D. AFFILIATE TRANSACTIONS (NOT TARIFFED)

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The affiliate transactions pricing guidelines are based on two assumptions. First, affiliatetransactions raise the concern of self-dealing where market forces do not necessarily driveprices. Second, utilities have a natural business incentive to shift costs from non-regulatedcompeddve operations to regulated monopoly operations since recovery is more certain withcaptive ratepayers. Too much flexibility will lead to subsidization. However, if the affiliatetransaction pricing guidelines are too rigid, economic transactions may be discouraged.

'1`he objective of die affiliate transactions' guidelines is to lessen the possibility ofsubsidization in order to protect monopoly ratepayers and to help establish and preservecompetition in die electric generation and die electric and gas supply markets. It providesample flexibility to accommodate exceptions where the outcome is in die best interest of theutility, its ratepayers and competition. As with any transactions, the burden of proof for anyexception fromthe general rule rests with the proponent of the exception.

1. (generally, the price for services, products and the use of assets provided by a regulatedentity to its non-regulated affiliates should be at the higher of fully allocated costs or prevailingmarket prices. Under appropriate circumstances, prices could be based on incremental cost,or other pricing mechanisms as determined by die regulator.

2. Generally, the price for services, products and die use of assets provided by a non-regulatedaffiliate to a regulated affiliate should be at die lower of fully allocated cost or prevailingmarket prices. Under appropriate circumstances, prices could be based on incremental cost,or other pricing mechanisms as determined by the regulator.

3. Generally, transfer of a capital asset from the utility to its non-rcgulatcd affiliate should beat the greater of prevailing market price or net book value, except as otherwise required bylaw or regulation. Generally, transfer of assets from an affiliate to the utility should be at thelower of prevailing market price or net book value, except as otherwise required by law orrcguladon. To determine prevailing market value, an appraisal should be required at certainvalue diresholds as determined by regulators.

4. Entities should maintain all information underlying affiliate transactions with die affiliatedutility for a minimum of dire years, or as required by law or regulation.

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(:esT AL1,OCATION MANUAI,

18. AUDIT REQuIR];1\II~;n1.s

1. An audit trail should exist with respect to all transactions between the regulated entity andits affiliates that relate to regulated services and products. The regulator should have completeaccess to all affiliate records necessary to ensure that cost allocations and affiliate transactionsare conducted in accordance wide the guidelines. Regulators should have complete access toaffiliate records, consistent with state statutes, to ensure dirt the regulator has access to allrelevant information necessary to evaluate weedier subsidization exists. The auditors, not theaudited udlides, should determine what information is relevant for a particular audit objective.Limitations on access would compromise the audit process and impair audit independence.

2. l*1ach regulated entity's cost allocation documentation should be made available to thecompany's internal auditors for periodic review of the allocation policy and process and toany jurisdictional regulatory authority when appropriate and upon request.

3. Any jurisdictional regulatory audiority may request an independent attestation engagementof die CAM. The cost of any independent attestation engagement associated with the CAM,should be shared between regulated and non-regulated operations consistent with theallocation of similar common costs.

4. Any audit of the CAM should not otherwise limit or restrict the authority of state regulatoryauthorities to have access to the books and records of and audit the operations ofjurisdictional udlides.

5. Any entity required to provide access to its books and records should make arrangementsas necessary and appropriate to ensure that compcdtively sensitive information derivedtherefrom be kept confidential by the regulator.

F. REPORTING REQUIREMENTS

1. The regulated entity should report annually the dollar amount of non-tariffcd transactionsassociated with the provision of each service or product and die use or sale of each asset forthe following:

a. Those provided to each non-regdatcd affiliate.b. Those received from each non-regulated affiliate.c. Those provided to non-affiliated cndties.

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COST ALl UCATION MANUAL

2. Any additional information needed to assure compliance with diesel Guidelines, such ascost of service data necessary to evaluate subsidization issues, should be provided.

Source:http: / /www.naruc.org/ Publicadons/Guidelines%20for%2()Cost" 02()Al1ocations° o20and"/020A ffiliate" 020lransactions.pdf

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COST ALL()(IATI()N MANUAL

APPENDIX2 DETAILED EXPLANA TION OF APUC COSTS

1. APUC STRATEGIC MANAGEMENT CosTs

The need for strategicStrategic management decisions are critical for any public utility.management is even more pronounced for APUC as a publicly traded company, whichdepends on access to capital funding through public sales of units. APUC seeks to hiretalented strategic managers that aid in running each facility owned by the company asefficiently and effectively as possible. This ensures the long term health of each utility andensures dirt rates are kept as low as possible without compromising the level of service. Italso facilitates each regulated utility's access to necessary capital funding at reduced costs.The costs included in Strategic Management Costs fall into the following categories.

a. Board of Directors

The Board of Directors provides strategic oversight on all company affairs including highlevel approvals of strategy, operation and maintenance budgets, capital budgets, etc. Inaddition, the Board of Directors provides corporate governance and ensures dirt capital andcosts are incurred prudently, which ultimately protects ratepayers.

b. (general Legal Services

(general legal services involve legal matters not specific to any single facility, including reviewof audited financial statements, annual information filings, Sedan filings, review of contractswith credit facilities, incorporation, tax issues of a legal nature, market compliance, and othersimilar legal costs. These legal services are required in order for APUC to provide capitalfunding to individual udlides, without which die utilities could not provide adequate service.Additionally, the services ensure that APUC's subsidiaries remain compliant in all aspects ofoperations and prevent those endues from being exposed to unngcgggaty risks.

c. Professional Services

Professional Services including strafe Ric Jan reviews ca ital market advise services l*1Rp9 9

S 'stem maintenance benefits consulting and odder similar professional services. By5 s g,providing these services at a parent level, the subsidiaries are able to benefit from economiesof scale. Additionally, some of these ser-vices improve APUC's access to capital whichbenefits all of its subsidiaries.

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COST AL] .OCATION MANUALl

2. AccEss To CAPITAL MARKETSl

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One of APUC's primary functions is to ensure its subsidiaries have access to quality capital.APUC is lis ted on d ie New York Stock Exchange ("NYSE") and the Toronto StockExchange ("l`SX"), leading Financial markets. In order to allow its subsidiaries to havecontinued access to those capital markets, APUC incurs the following costs. These servicesand costs are a prerequisite to the subsidiaries continued access to those capital markets.

a. License and Permit Fees

In connection with APUC's participation in the NYSE and the lSX, APUC incurs certainlicense and pcnnit fees such as Sedar fees, annual filing fees, licensing fees, etc. Theselicensing and permit fees are required in order to sell units on the NYSE and the TSX, whichin turn provides funding for utility operations.

b. Escrow Fees

In connection wider the payment of dividends to unit holders, APUC incurs escrow fees.Escrow fees are incurred to ensure continued access to capital and ensure continuing andongoing investments by shareholders. Without such escrow fees, APUC's subsidiaries wouldnot have a readily available source of capital funding.

c. Unit Holder Communications

Unit holder communication costs are incurred to comply with filing and regulatoryrequirements of the NYSE and die TSX and meet the expectations of shareholders. Thesecosts include items such as news releases and unit holder conference calls. In die absence ofshareholder communication costs, investors would not invest in die units of APUC, and inturn, APUC would not have capital to invest in its subsidiaries. Wim such communicationsservices, the subsidiaries would not have a readily available source of capital funding.

3. APUC FINANCIAL CONTROLS

Financial control costs incurred by APUC include costs for audit services and tax services.These costs are necessary to ensure that the subsidiaries are opcradng in a manner that meetsaudit standards and regulatory requirements, which have strong financial and operationalcontrols, and financial transactions are recorded accurately and prudendy. Widaout theseservices, doe regulated udlides would not have a readily available source of capital funding.

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a. Audit Fees

Audits are done on a yearly basis and reviews are performed quarterly on all facilities ownedby APUC on an aggregate level. These corporate parent level audits reduce the cost of diestand-alonc audits significantly for utilities which must perform its own separate audits.Where stand-alone audits are not required, ratepayers receive benefits of additional financialrigor, as well as access to capital, and financial soundness checks by third parties. I"inally,during rate cases, the existence of audits provides staff and interveners additional reliance onthe company records, thus reducing overall rate case costs. The aggregate audit is necessaryfor die regulated udlides to have continued access to capital markets and unit holders.

b. Tax ServicesII

Taxes are paid on behalf of the regulated utilities at die parent level as part of a consolidatedUnited States tax return. Tax services such as planning and filing arc provided by third parties.Filing tax returns on a consolidated basis benefits each regulated utility by reducing the costsdirt otherwise would be incurred by such utility in filing its own separate tax return.

4. APUC ADMINISTRATIVE CosTs

Finally, administrative costs incurred by APUC, in some cases via other corporate endues,such as rent, depreciation of office furniture, depreciation of computers, and general officecosts are required to house all the services mendoncd above. Widaout diesel administrativecosts, the employees throughout the APUC organization could not perform their work andprovide the necessary services to die regulated udlides. These administrative costs also includetraining for corporate employees.

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COST Au,o<;A*11on MANUAL

A P P E N D I X 3 L IF E O F A N A P U C IN V O IC E

A schematic is provided below showing the trail of an invoice received by APUC for servicesto be charged to its subsidiaries. The schematic is intended to visually explain the distributionof charges from APUC to Liberty Power and Liberty Udlides companies.

APUC Invoice

NoDirect Giarge?

yes Indirect CorporateCosts

Specific Entity? Factors / Drivers perCAM Table 1

yes

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Direct G\8fg€liberty Power/

Water Electric &Gas Utilities

Factors/ Drivers perCAM Table 2I

Wa tee Elearic &Gas Utilities

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APPENDIX 4 LI FE OFA L IBERTY UTI L ITIES INVOICEi

1\ schcmadc is provided below showing die trail of an invoice received by Liberty Udlides(LUC) for services to be charged to its utility subsidiarics'8. The schematic is intended tovisually explain die distribution of charges from LUC to Liberty Udlidcs companies.

LUC Invoice

NoDirect Charge?

Yes Indirect CorporateCosts

Specific Entity?

YesFactors / Drivers per

CAM Table 2

Water Electric &Gas Utilities

Direct GiargeLiberty Power/

Water, Electric &Gas Utilities

is This is for utilitydedicated LUC staff and services (not shared services staff).

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COST ALLOCATION I\L\NUAL

APPENDIX5 LIFE OFA SHARED SER VICES INVOICE

A schematic is provided below showing die trail of an invoice for shared services providedwithin Liberty Udlides or LUSC for services to be charged to affiliates and subsidiaries. Theschematic is intended to visually explain due distribution of charges from shared services toLiberty Power and Liberty Udlides companies.

Shared Service

Invoke

NoDirec t Sarge?

yes Indirect Caporate

Costs

Spedfk Entity? Factors / Drivers per

c ArTable pa &Cb

yes

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Direct Giarge

liberty Power/

Water, Electric &

Gas Utilities

Factors / Drivers per

CAM Table 2

Water Electro &

Gas Utilit ies

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COST AI ,1 ,o<;A11on MANUAL l

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APPENDIX 6 COMPOSITE ILL USTRA TION OF OR GANIZA TIONALCOSTDISTRIBUTION

ov-dlnaausuui

DirectCons (a)

DirectCats (b)

CAM Table 1

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Di rec!Cons (|) gr* M

Costs (I)

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(b)

(c)

(d)

Costs that are directly assignable to unregulated companies.

Costs that are directly assignable to regulated companies.

(Mosts that benefit both unregulated and regulated operations

r Mists that benefit all regulated operations.

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COST AI .I ,OCATION MANUAL

APPENDIX 7 GLOSSARY OF TERMS

Algonquin Power & Utilities Corp. ("APU(I")- is a publicly traded company and the ultimatecorporate parent of Liberty Utilities and Liberty Power subsidiaries. It provides financial andstrategic management, corporate governance, and oversight of administrative and supportservices to all its subsidiaries.

Algonquin Power Co. ("Libcrty Power")- is a subsidiary of APUC whose primary business isin energy generation through renewal (solar and wind) sources and thermal generatingfacilities.

Cost Allocation Manual (CAM) - a document that explains how service company costs areassigned to affiliate companies and explains the nature of the services to be provided betweenaffiliates.

Direct Costs- (sometimes referred to as assigned costs)- costs incurred by one company forthe exclusive benefit of, or specifically identified with, one or more other companies, andwhich are directly charged (or assigned) to the company or companies Mat specificallybenefited.

IFully Distributed Cost (FDC)- means a mediodology that examines all costs of an enterprisein relation to all the goods and services that are produced. l"DC requires recognition of allcosts incurred directly or indirect used to produce a good or service. Costs are assignedeither dirough a direct or allocated approach. Costs that cannot be directly assigned orindirect allocated (e.g. general and administrative) must also be included in the FDCcalculation through a general allocation.

ThisIndirect Costs- costs that cannot be identified with a particular service or product.includes but not limited to overhead costs, administrative, general, and taxes.

Liberty Utilities Co.- is a subsidiary of APUC and doc direct or indirect owner of regulatedutilities.

is a subsidiary of APUC and employs Canadian-Liberty Utilities (Canada) Corp. ("LUC")based employees.

Liberty Utilities Service Corp. ("PLUS(I")-is a subsidiary of APUC and employs U.S.-baseddistribution utility employees and those U.S. based employees providing shared services.

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COST A] ,I OCATION MANUAL

Liberty Algonquin Business Services ("LABS")- is a business unit with staff employed withinLUC and I,USC. These employees provide shared services to both the utility and non-utilitybusinesses within APUC.

NARUC - National Association of Regulatory Utility (Commissioners.

Service Agreement - a written agreement specifying die terms and conditions upon whichservices are provided to and from affiliated endues.Utility l"our-l"actor - is an allocation methodology used to allocate indirect costs to regulatedutilities based on the following factors: Utility Net Plant, Customer Count, Non-Laborexpenses, and labor expenses. l

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APPENDIX8 _ VERSION LOG

1. Base Year-january 1 20142. V2014,luly 1, 20153. V2017,]anuaW 1 2017 (Includes April 2017 Updates)

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LITCHFIELD ACQUIFER REPLISHMENT FACILITY AND FUTURE SITE OF BUSINESS OFFICES

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LITCHFIELD ACQUIFER REPLISHMENT FACILITY AND FUTURE SITE OF BUSINESS OFFICES

PARCEL no. 501-61-936D AT 15080 W CAMELBACK RD., LITCHFIELD PARK, AZ 85340

Total Square Footage - Not Used and Useful

Figure 1 - 358,018.2 square feet



Total 1,217,912.2 square feet

Total for Parcel Number 501-61-936D - Total 2,465,699 square feet

1,217,912.2/2,465,699 = 49.394% of the total square footage deemed not used and useful.

II.

I

|l

ATTACHMENT 4

TIMELINE

D A T E EVENT

10/28/2004 Master Utility Agreement between Liberty Litchfield Park, Algonquin WaterResources of America, Inc., Land Solutions Perryville, LLC, Jackrabbit 364, LLCand Maricopa County Water Conservation District Number One for MWD,Savannah and Jackrabbit Estates.

1/12/2005 Liberty Litchfield Park tiles CC&N application under Docket No. 05-0022.

5/20/2005 Jackrabbit Estates HOA Articles of Incorporation. Jackrabbit Estates HOA filedArticles of Incorporation. Development by Shea Homes with 339 homes.

6/23/2005 Element Homes paid $82,000 to Liberty Litchfield Park (capacity).

6/23/2005 Element Homes paid $14,327.04 to Algonquin Water Resources, LLC n/IdaLiberty Utilities (Sub) Corp. (Sarival lift station).

6/24/2005 Standard Pacific paid Liberty Litchfield Park $77,500 (capacity).

6/24/2005 Standard Pacific paid $13,540.80 to Liberty Utilities (Sub) Corp. (Sarival liftstation).

8/5/2005 Savannah HOA Articles of Incorporation. Savannah HOA fi led Articles ofIncorporation. Development by Standard Pacific, Element and Lemar with 319homes.

1/8/2006 Jackrabbit Estates HOA changed its name to ArroyoName Change to Arroyo.Mountain Estates HOA.

Savannah HOA Amended and Restated Bylaws.

§ 3.l2(l8): "Enter into all agreements necessary to ensure adequate wastewatercollection, treatment, and disposal for the Project, including without limitation, enteringinto the Bulk Services Agreement, the On-Site Agreement and the Off-Site Agreement(all of which are defined in the Declaration), provided, however, that in the event amunicipality, district or public service company obtains the right to provide wastewaterservice to the Project, and actually does provide such service, the Association shall berequired to relinquish such responsibilities."

2/10/2006 Commission Staff issues Staff report on CC&N application.

2/17/2006 Liberty Litchfield Park tiles objections to Staff Report in Docket No. 05-0022.

3/27/2006 Commission Staff issues Addendum to Staff report on CC&N application.

7/3/2006 Element Homes paid $159,500 to Liberty Litchfield Park (capacity).

l

9/15/2006 Amended and Restated Declaration of Covenants, Conditions and Restrictions forSavannah Homeowners Association (Maricopa County Recording No.20061229119).

§3.16: "Section 3.16 Sewer Service. As of the date of this Declaration, wastewaterservices to the Project are being provided pursuant to a series of agreements as furtherdescribed herein. The Association is a party to that certain Bulk Wastewater TreatmentAgreement (the "Bulk Services Agreement") with Litchfield Park Service Company("LSPCO"), which is a public service corporation authorized to provide wastewaterutility service to individual end-users in Maricopa County, Arizona. Pursuant to theBulk Services Agreement, LPSCO will provide wastewater treatment and disposalservices by accepting wastewater flows from the Point of Delivery (as defined in theBulk Services Agreement). In addition, LPSCO agrees in the Bulk Services Agreementto provide the Association with adequate sewage disposal capacity up to the treatmentcapacity purchased."

§ 3.16: "The Association is a party to that certain Agreement to provide Operationsand Maintenance Services for W astewater On-Site Facilities (the "On-SiteAgreement") with Algonquin Water Services. LLC ("AWS"). an aff iliate of LPSCO,pursuant to which AWS agrees to operate and maintain the Utility Facilities. Inaddition, the Association is or will be a party to that certain Agreement to ProvideCommon Operations and Maintenance Services for Transmission Main ("Of f-SiteAgreement") with AWS, pursuant to which AWS agrees to operate and maintain thepipeline that connects, in part, the Utility Facilities to the wastewater treatment plant(the "Transmission Main") for the benef it of the Project as well as other propertylocated near the Project."

i

§ 3.16: "The Association will pay security deposits for anticipated capacity, a chargefor the operation, maintenance and administration costs incurred in the treatment anddisposal of wastewater, and a charge for the return on and return of any capital investedby LPSCO in the Utility Facilities, all in accordance with the Bulk Services Agreement,the On-Site Agreement and the Off-Site Agreement. These fees collectively constitute,in part, the Sewer Usage Assessment which will be pan of the Common Expensesassessed by the Association. The Sewer Usage Assessment assessed against eachOwner shall be kept in an account separate from the other Common Expenses, and theamount of the Sewer Usage Assessment shall be billed separately or broken out in thestatement sent by the Association on a quarterly basis to each owner."

§ 3.16: "In addition to the Sewer Usage Assessment. to ensure that the Associationshall have adequate reserve for the payment of the Sewer Usage Assessment, eachPurchaser of a Lot shall pay to the Association at the time of purchase a non-refundablesum of two (2) times the Sewer Usage Assessment (the "Initial Usage Set~Up Fee"),which amount may be increased from time-to-time as determined by the Board.

§3.16: "In the event a municipality, district or public service company obtains the rightto provide wastewater services to the Project, and actually does provide such services,the Association shall be required to relinquish such responsibilities, and this Section3.16 shall terminate."

2

9/27/2006 Bulk Treatment Agreement. Liberty Litchfield Park and Savannah HOA entered aBulk Wastewater Treatment Agreement.

Recital A: "HOA is an Arizona nonprofit corporation. Incidental to its primarypurpose, HOA is authorized to provide wastewater services to its members pursuant toits general Powers as set forth in A.R.S. § 10-3302, as well as authorization provisionscontained in its Amended and Restated Declaration of Covenants, Conditions andRestrictions for Savannah Homeowners Association ("CC&Rs") and Bylaws....HOAis not able to treat the wastewater flows generated by its members and commonfacilities, nor dispose of any effluent created by same."

Recital B: "However, the Property is not located within LPSCOls current certificateof convenience and necessity ("CC&N") for wastewater service."

RecitalD: "A I2-inch to 30-inch wastewater transmission main (the "Main") has beenconstructed and is capable of collecting wastewater from the Property (and otherproperties similar to the Property ("collectively, the "Other Properties") and deliveringit to LPSCO, as more fully set forth in Exhibit D. As a nonprofit sewer provider, HOAowns or will own the On-Site Facilities, capable of collecting wastewater fromresidences and common areas of HOA members, and delivering such wastewater to theMain, as more fully set forth in Exhibit E. HOA shall be responsible for operating andmaintaining the On-Site Facilities. HOA, together with the owners of the Main, shallbe responsible for operating and maintaining the Main."

9/27/2006 On-Site Facilities Agreement. Algonquin Water Services, LLC and Savannah HOAentered an Agreement to Provide Operations and Maintenance Services for WastewaterOn-Site Facilities.

Algonquin Water Services, LLC was dissolved in 2015. After 2015, Liberty Utilities(Sub) Corp. has been the entity billing the HOAs for O&M expenses associated withthe On-Site Facilities and Transmission Main.

Recital A: "HOA is an Arizona nonprofit corporation. Incidental to its primarypurpose, HOA is and will be the provider of retain wastewater service to its memberspursuant to its general Powers as set forth in A.R.S. § 10-3302, as well as theauthorization provisions contained in its Amended and Restated Declaration ofCovenants, Conditions and Restrictions for Savannah Homeowners Association("CC&Rs") and Bylaws..."

Recital B: "The HOA is and shall remain the owner of all the transmission andcollections mains and pipelines, manholes, fittings, and/or other related items of plantand infrastructure required to provide wastewater utility service to each lot and HOAmember within the Property but excluding the portion of pipe (lateral from structuresto lot line or otherwise) or infrastructure which are the responsibility of and/or locatedon the individual homeowners lots ("On-Site Facilities")..."

Recital F: "AWS is willing to provide operation, maintenance and other Services insupport of the On-Site Facilities, which shall include all activities required to keep theOn-Site Facilities fully operational and functional for their intended purpose."

3

9/27/2006 Shea Homes paid $436,800 to Liberty Litchfield Park (capacity).

10/4/2006 Shea Homes paid $109,200 to Liberty Litchfield Park (capacity).

10/4/2006 Bulk Treatment Agreement. Liberty Litchfield Park and Arroyo HOA entered aBulk Wastewater Treatment Agreement. Same general terms and conditions asSavannah Bulk Treatment Agreement.

10/4/2006 On-Site Facilities Agreement. Algonquin Water Services, LLC and Arroyo HOAentered an Agreement to Provide Operations and Maintenance Services for WastewaterOn-Site Facilities. Same general terns and conditions as Savannah On-SiteAgreement.

10/11/2006 Standard Pacific paid $141,459.20 to Liberty Litchfield Park (capacity).

10/12/2006 Porchlight Land & Cattle Paid $149,672.96 to Liberty Litchfield Park (capacity).

1/22/2007 Main Ownership Agreement. On January 22, 2017, Liberty Litchfield Park and theNorthwest Developer Group entered into a Main Ownership Agreement.

The Northwest Developer Group consisted of Element H. Savannah, LLC, StandardPacific of Arizona, LLC, Shea Homes Limited Partnership, Russell Ranch VI, LLC,Maracay White Tanks, LLC and Maricopa County Municipal Water ConservationDistrict Number One. Under that Agreement, the Northwest Developer Groupmembers own the following amounts and percentages of purchased capacity in theTransmission Main:

Element Homes - 52,480 god (5.4%)Standard Pacific Homes - 49,600 god (5.2%)Shea Homes - I 16,480 god (12.1%)Russell Ranch - 35,200 god (3.7%)Maracay Homes - 288,000 god (30%)MWD - 418,240 god (43.6%)

The Northwest Developer Group members also own the remaining available capacityin the Transmission Main: Element Homes - 6.0%, Standard Pacific Homes - 4.7%,Shea Homes - l2.1%, Russell Ranch - 3.7%, Maracay Homes - 30.0%, MWD -43.5%.

1/22/2007 Agreement to Provide Common Operations and Maintenance Services forTransmission Main. On January 22, 2007, Algonquin Water Services, LLC and theNorthwest Developer Group executed the O&M Agreement for the Transmission Main.

1/22/2007 Brokerage Agreement. On January 22, 2007, Algonquin Water Resources ofAmerica, Inc. and the Northwest Developer Group executed a Brokerage Agreementrelating the available transmission capacity in the Transmission Main.

1/22/2007o l

Undertaking to File an Application for Certificate of Convenience and Necessity.On Janua 22, 2007, Al on min Water Resources of America, Inc., Northwest Sewer,

4

Inc. and the Northwest Developer Group executed the Undertaking to File anApplication for Certificate of Convenience and Necessity Agreement.

RecitalC: "Homeowners associations...with respect to each of the Properties are orwill be all individually Arizona nonprofit corporations...Incidental to their primarypurpose, each HOA is and will be the provider of retail wastewater utility services toits members pursuant to its general Powers as set forth in A.R.S. § 10-3302 as well asthe authorization provisions contained in their respective Conditions, Covenants andRestrictions ("CC&Rs") and Bylaws. Each HOA will own and maintain an on-sitewastewater collection system ("0n-Site Facilities") to collect wastewater fromindividual structures located on the Property. However the HOAs have no capacity orwastewater facility at which to treat the wastewater generated by its members."

Recital D: "The Developers and/or HOAs have individually entered into separate BulkWastewater Treatment ("Bulk Agreement" and collectively the "Bulk Agreements")with AWRA's affiliate, Litchfield Park Service Company ("LPSCO"), for the treatmentof wastewater. The areas served by the HOAs are not located within LPSCOscertificate of convenience and necessity ("CC&N").

l

Recital E: "The Developers desire to eventually have the retail wastewater utilityservices provided by the HOAs to the Properties by a single public service corporationregulated by the Arizona Corporation Commission ("Commission") rather than by theHOAs and desire that AWRA pursue arrangements to effect same." i

li| _

1/22/2007

2/16/2007 Savannah Bulk Treatment Agreement Assignment. Savannah HOA, LibertyLitchfield Park, Algonquin Water Resources of America, Inc. and AlgonquinEnvironmental Services, LLC executed an Assignment and Consent Agreement for theBulk Treatment Agreement.

Liberty Litchfield Park assigned the Bulk Treatment Agreement to AES.

§l: "Assignor hereby assigns to Assignee, with the consent ofHOA, all of Assignorsright, title and interest in, to and under the Bulk Agreement. Assignee hereby acceptsthe foregoing assignment and assume Assignor's obligations under the Bulk Agreementarising on and subsequent to its execution and agrees to be bound by the terms andconditions of the Bulk Agreement, the same as if Assignee were an original partythereto. Assignee shall acquire wastewater treatment capacity either through theconstruction of, or purchase of capacity, in one or more wastewater treatment plantswithin the vicinity of HOA, as required to satisfy it obligations under the BulkAgreement."

o I

§2: "Assignor hereby guarantees to HOA that it shall in accordance with the BulkAgreement, provide wastewater treatment capacity to HOA, either through theconstruction odor purchase of capacity in, one or more wastewater treatment plants thatare suitable and reasonable recipients of the wastewater generated by HOA. AWRAshall cause Assignor to enter into an agreement with Assignee pursuant to which, priorto Assi ee obtaining 1 its own wastewater treatment ca acid , Assignor shall provide

5

wastewater treatment services to Assignee as needed to meet Assignee's obligationsunder the Bulk Agreement."

2/16/2007 Arroyo Bulk Treatment Agreement Assignment. Arroyo HOA, Liberty LitchfieldPark, Algonquin Water Resources of America, Inc. and Algonquin EnvironmentalServices, LLC executed an Assignment and Consent Agreement for the Bulk TreatmentAgreement.

Liberty Litchfield Park assigned the Bulk Treatment Agreement to AES.

Same terms as Savannah assignment above. l

2/16/2007 MWD Bulk Treatment Agreement Assignment. MWD, Liberty Litchfield Park,Algonquin Water Resources of America, Inc. and Algonquin Environmental Services,LLC executed an Assignment and Consent Agreement for the MWD Bulk TreatmentAgreement.

I 3/2007 First homes sold in Savannah and Arroyo (according to Company records).I

3/5/2007 Declaration of Covenants, Conditions and Restrictions for Arroyo MountainEstates Homeowners Association (Maricopa County Recording No. 20070265265).

§ l7.l(a): "As of the date of this Declaration wastewater services to the Project arebeing provided pursuant to a series of agreements as further described herein. TheAssociation shall initially be the provider of retail wastewater utility service to itsMembers and will own and maintain an on-site wastewater collection system. in orderto arrange for the treatment and disposal of wastewater, the Association is a party tothat certain Bulk Wastewater Treatment Agreement...with Litchfield Park ServiceCompany ("LPSCO"), which is a public service company authorized to providewastewater utility services to individual end-users in Maricopa County, Arizona.LPS CO's rights and obligations under the Bulk Services Agreement have, in tum, beenassigned to Algonquin Environmental Services, LLC, an affiliate of LPSCO. Pursuantto the assigned Bulk Wastewater Services Agreement, AES will provide wastewatertreatment and disposal services by accepting wastewater flows from the Point ofDelivery (as defined in the Bulk Wastewater Services Agreement). In addition, AESagrees in the Bulk Wastewater Services Agreement to provide the Association withadequate disposal capacity up to the treatment capacity purchased."

§ 17.l(b): "The Association is a party to that certain agreement to provide Operationsand Maintenance Services for Wastewater On-Site Facilities (the "On-SiteAgreement") with AWS pursuant to which AWS agrees and operate and maintain theUtility Facilities (as defined in the On-Site Agreement)."

§ l7.l(c): "In addition. the Association is or will be a party to that certain Agreementto Provide Common Operations and Maintenance Services for Transmission Main("Off-Site Agreement") with AWS, pursuant to which AWS agrees to operate andmaintain the pipeline that connects, in part, the Utility Facilities to the wastewatertreatment plant (the "Transmission Main") for the benefit of the Project as well as otherproperty located near the Project."

6

§ 17.l(d): "The responsibility of providing retail wastewater utility services initiallyprovided by the Association, as well as the on-site wastewater collections system, maybe transferred and assumed by Northwest Sewer, Inc., an Arizona corporation, oranother public service corporation or another entity regulated by the ArizonaCorporation Commission, or a sanitary district or other governmental subdivision oragency.

§ l7.l(e): "The Association will pay security deposits for anticipated capacity, a chargefor the operation, maintenance and administration costs incurred in the treatment anddisposal of wastewater, and charge for the return on and of any capital invested byLPSCO, AES and/or AWS in the Utility Facilities, all in accordance with the BulkWastewater Services Agreement, the OnSite Agreement and the Off-Site Agreement.These fees collectively constitute, in part, the sewer usage assessment which will bepart of the Common Expenses assessed by the Association."

§ l7.l(g): "in the event a municipality, district or public service company obtains theright to provide wastewater services to the Project, and actually does provide suchservices, the Association shall be required to relinquish such responsibilities, and theprovisions of this Section 17.1 that are otherwise inconsistent with such alterativeproviding of services shall be deemed to terminate. In the event the Associationrelinquishes such responsibilities, the Members shall be directly responsible for the costof wastewater services to the subsequent wastewater services provider."

3/14/2007

3/14/2007

3/21/2007

3/21/2007

7/2/2007

_____

12/2007 As of December 2007, the total of the capacity payments for Savannah and Arroyo was$l ,343,500.

Standard Pacific $77,500Standard Pacific $13,540.80Element Homes $82,000Element Homes $14,327.04Element Homes $159,500Shea Homes $436,800Shea Homes $109,200Standard Pacific $14 I ,459.20Porchlight Land & Cattle $149,672Element Homes $159,500Total: $1 ,343,499.04

7

_12/12/2007 Arroyo paid $182,000 capacity fee to AES. This amount was recorded as an accrued

liability of AES.

12/21/2007 On or about December 2] , 2007, the capacity payments of $1 ,343,500 were transferredfrom Liberty Litchfield Park to AES. All of those amounts were recorded as an accruedliability of AEs.

2007 AES received monthly payments totaling $46,377.23 for bulk treatment fromArroyo/Savannah

2008

ll

Construction of Transmission Main. In 2008, the Northwest Developer Groupconstructed and paid for a l 2" to 30" wastewater main (the "Transmission Main") thatextends approximately 6.5 miles in length to Liberty Litchf ield Parks Sarival Lif tStation and conveys wastewater from the point of interconnection to PVWRF. TheTransmission Main was designed to serve 12,228 EDUs at a rate of 320 god for a totalcapacity of 3,912,960 god. The final cost of construction for the Transmission Mainwas $6,303,630 The Transmission Main currently serves only Arroyo and SavannahHOAs.

6/30/2008 Liberty Litchfield Park files motion to withdraw itsCC&N application in Docket No.05-0022.

7/24/2008 Issuance of Administrative Closure No. 70437 directing administrative closure ofDocket No. 05-0022.

9/25/2008 Arroyo paid $1 19,500 capacity fee to AES. This amount was recorded as an accruedliability of AES.

2008 AES received monthly payments totaling $77,256.06 for bulk treatment fromArroyo/Savannah.

3/9/2009 2009 Rate Case. Liberty Litchfield filed rate case with 2008 test year (Docket No. 09-0103 and 09-0104). The Company did not add any treatment capacity to PVWRF inthat rate case.

AES received monthly payments totaling $91,377.60 for bulk treatment fromArroyo/Savannah.

12/10/2010 2009 Rate Case Decision. Decision No. 72026 issued in 2009 rate case with new ratesgoing into effect on 12/1/2010.



8

2012 2012 PVWRF Plant Capacity Addition. PVWRF upgraded to capacity rating of5.lMGD (expansion from 4.1 MGD to 5.1 MGD). Cost for expansion was $5.5M and theexpansion was complete at the end of 12/2012.

2012l


2/28/2013 2013 Rate Case. Liberty Litchfield filed rate case with 2012 test year (Docket No. 13-0042 arid 13-0043).

9/9/2013 Partial Assignment to J&A Camelback Properties, LLC. Russell Ranch VI, LLCexecuted a partial assignment of the Main Ownership Agreement and O&M Agreementfor Transmission Main to J&A Camelback Properties, LLC. This relates to the RussellRanch South development.


1/17/2014 AES Name Change. Algonquin Environmental Services LLC changed its name toLiberty Utilities (Environmental Services) LLC.

4/18/2014 2012 Rate Case Decision. Decision No. 74437 issued in 20 la rate case with new ratesgoing into effect on 5/1/2014.

AES received monthly payments totaling $l 92,376.69 for bulk treatment fromArroyo/Savannah.


6/23/2015 Master Utility Agreement (Zanjero Trails). On June 23, 2015, MWD and LibertyLitchfield Park enter a Master Utility Agreement (Zanjero Trails) for the Zanjero Trailsdevelopment.

7/10/2015 Liberty Litchfield Park files CC&N application for extension of CC&N to includeZanjero Trails under Docket No. 15-0259.

8/5/2016 ACC Decision No. 75691 granting CC&N extension for Zanjero Trails.


2/28/2017 2017 Rate Case. Liberty Litchfield filed rate case with 2016 test year (Docket No. 17-0058 and 17-0059).

8/21/2017 CC&N Application for Russell Ranch South. On August 21, 2017, LibertyLitchfield Park filed an application to extend its CC&N to include the Russell RanchSouth development under Docket No. 17-0259.

9


TOM FORESEChairman



BOYD W. DUNNCommissioner

]L'STIN OLSONCommissioner

DOCKET no. SW-01428A-17-0058

DOCKET no. w-01427A-17-0059

IN THE MATTER OF TH18 APPLICATION OF )LIBERTY UTILITIES (LITCHFIELD PARK )WATER & SEWER) CORP., AN ARIZONA )CORPORATION, FOR A DETERMINATION OF)THE FAIR VALUE OF ITS UTILITY PLANTS )AND PROPERTY AND FOR INCREASES IN ITS)WASTEWATER RATES AND CHARGES FOR )UTILITY SERVICE BASED THEREON. )

)IN THE MATTER OF THE APPLICATION OF )LIBERTY UTILITIES (LITCHFIELD PARK )WATER ac SEWER) CORP., AN ARIZONA )CORPORATION, FOR A DETERMINATION OF)THE FAIR VALUE OF ITS UTILITY PLANTS )AND PROPERTY AND FOR INCREASES IN ITS)WATER RATES AND CHARGES FOR )UTILITY SERVICE BASED THEREON. )

)

DOCKET NO. W-01427A-17-0077IN THE MATTER OF THE APPLICATION OF )LIBERTY UTILITIES (LITCHFIELD PARK )WATER & SEWER) CORP., AN ARIZONA )CORPORATION, FOR AUTHORITY TO )(1) ISSUE EVIDENCE OF INDEBTEDNESS IN )AN AMOUNT NOT TO EXCEED $30,0()0,000; )AND (2) ENCUMBER ITS REAL PROPERTY )AND PLANT AS SECURITY FOR SUCH )INDEBTEDNESS. )

)

DOCKET NO. SW-01428A-_7-0078IN THE MATTER OF THE APPLICATION OFLIBERTY UTILITIES (LITCHFIELD PARKWATER & SEWER) CORP., AN ARIZONACORPORATION, FOR AUTHORITY TO(1) ISSUE EVIDENCE OF INDEBTEDNESS INAN AMOUNT NOT TO EXCEED 3$30,000,000;AND (2) ENCUMBER ITS REAL PROPERTYAND PLANT AS SECURITY FOR SUCHINDEBTEDNESS.

))))))))))

COST OF SERVICE

TESTIMONY

OF

DOROTHY HAINS, p. 18.

UTILITIES ENGINEER

UTILITIES DIVISION


DECEMBER 22, 2017

TABLE OF CONTENTS

PAGE

1.

11. COST OF SERVICE STUDY REVIEW

III CONCLUSIONS AND RECOMMENDATIONS 3

EXHIBITS

Cost of Service Summary Present Rates for Liberty Ut111tes (Litchfield Park Water & Sewer Co.)Water G-1

Cost of Service Summary Present Rates for Liberty Utllites (Litchfield Park Water & Sewer Co.) -G-2

Cost of Service Summary Present Rates for Liberty Unites (Litchfield Park Water & Sewer Co.)Wastewater G-1

Cost of Service Summary Present Rates for Liberty Utllltes (Litchfield Park Water 8: Sewer Co.) -Wastewater G-2

I

EXECUTIVE SUMMARYLIBERTY UTILITIES (LITCHFIELD PARK WATER & SEWER) CORP.

DOCKET no. W-01427A-17-0059 & SW-01428A-17-0058 (Rates)DOCKET no. W-01427A-17-0077 & SW-01428A-17-0078 (Financing)

Dorothy Hairs' Testimony discusses die Arizona Corporation Commission's ("ACC" or"Commission") Utilities Division Staff's ("Staff") review of Liberty Utilities (Litchfield Park Water& Sewer) Corp ("Company" or "Liberty") Cost of Service Study ("COSS") for the water andwastewater rate cases filed with the Commission, and presents the results of Staffs analysis.

Based on its review of Company's COSS for both water and wastewater, Staff'sconclusions and recommendations are as follows:

1. It is Staffs conclusion that Liberty performed die COSS for both water andwastewater utilities consistent wide the methodology generally accepted in theindustry, and developed the allocation factors appropriately.

2. Staff further concludes that the results of the COSS for body water and wastewaterutilities are satisfactory.

3. Staff recommends that Liberty's COSS cost allocation factors for both water andwastewater utilities, and cost allocations included under the G Schedules for bothwater and wastewater utilities, be accepted as reasonable in the pending case. Therevised Schedules G-1 and G-2, that include StafFs rate base and other adjustmentsfor both water and wastewater utilities, are attached in Exhibit 1.

Direct Testimony of Dorothy M. HainsDocket No. SW-01428A-17-0058 et. al.Page 1

1.l INTRODUCTION

2 Q. Please state your name and business address.

A .3

4

My name is Dorothy Hains. My business address is 1200 West Washington Street, Phoenix,

Arizona 85007.

5

6 Q.

7

8

Are you the same Dorothy Hains who has previously filed testimony in this Liberty

Utilities (Litchfield Park Water & Sewer) Corp. ("Liberty" or "Company") water and

wastewater rate proceeding?

A.9 Yes.

10

l l Q Did Staff perform an analysis of the application that is the subject of this proceeding?

12 A.

13

Yes, Staff reviewed the Comparly's Cost of Service Studies ("CQSS") for water and wastewater

utilities.

14

15 Q. What is the purpose of this Direct Testimony?

A.16

17

The purpose is to discuss Staffs review of Liberty's COSS for water and wastewater utilities

for the rate cases and present the results of this review along with Staffs recommendations.

18

19 Q. Was rate design part of your assignment?

A.20

21

22

23

24

No. A COSS is the allocation of costs to each customer class. Rate design is basically the

allocation of revenues to customer class. The COSS is only one of many factors that is

considered when allocating revenues. Once the revenue allocation is completed, the specific

rates arc designed to collect those revenues. Staffs rate design witness for this rate case is Ms.

Teresa Hunsaker ("Ms. Hunsaker").

25

26

Direct Testimony of Dorothy M. HainsDocket No. SW01428A-17-0058 et. al.Page 2

11.l COST OF SERVICE STUDY - REVIEW PROCESS

2 What does the COSS address?Q .

3 A

4 us

5

6

There are three steps in performing the COSS. They are: 1) Functionalization; 2) Classification;

and 3) Allocation. First, the COSS enables to determine the system cost of service by

classifying the utility's costs (investments and expenses) by function, such as commodity-

Customer-related functions arerelated, demand-related, and customer-related functions.

7

8

9

further broken down into customers and customer services. Second, the study breaks down

these costs by customer classes to reflect as closely as possible the cost causation by respective

customer classes. Third, the results of the COST provide a benchmark for the revenues needed

10 from each customer category by allocating the revenue requirement for each customer class.

11

12 Is there a standard COSS Model?Q.

A.13

14

15

There is no standard methodology for designing a COSS, but it is generally advisable to follow

a range of alternatives to identify which allocations are more reasonable than osiers. For that

reason, the COSS should be used as a general guide only and as one of many considerations in

16 designing rates.

17

18 Q. Did Staff conduct a separate independent COSS?

A.19 No, Staff did not conduct a separate independent COSS.

20

21 Q. What was the process Staff used in reviewing Liberty's COSS?

22 A.

23

24

For wastewater, Staff reviewed I.iberty's overall COSS methodology, which is the Commodity-

Demand mediod as outlined in the American Water Works Association ("A A") Manual

Ml , "Principles of Water Rates, Fees, and Charges". The Commodity-Demand Method breaks

25

26

down the costs of providing water and wastewater services into three primary cost components:

commodity costs (costs that tend to vary with the amount of wastewater discharged by the

Direct Testimony of Dorothy M. HaMsDocket No. SW-01428A-17-0058 et. al.Page 3

1

2

3

4

5

6

7

8

customers), demand costs (costs associated with peak flow/demand), and customer costs (costs

not associated with water and wastewater treatment, such as billing costs). Staff then reviewed

the Cost of Service Schedules ("G Schedules") reflecting various allocation factors (for

Commodity, Demand, and Customer) in the COSS. Staff finds that Liberty's Commodity-

Demand Method is appropriate. The modified G Schedules G-1 and G-2, that include Staff's

rate base and odder adjustments, are attached. The G-1 Schedules represent present rates using

Staff's adjusted test year amounts, and die G-2 Schedules include the impacts of Staffs

recommended revenue requirement.

9

111.10 CONCLUSIONS AND RECOMMENDATIONS

l l Q.

12

Based upon your testimony, what are Staffs conclusions and recommendations

regarding the Cost of Service Study?

A .13 Based on the review of Liberty's COSS, Staffs conclusions and recommendations are as

14 follows:

15

16 1.

17

18

19

I t is Staf fs conc lus ion that L iberty performed the COSS cons is tent wi th the

methodology generally accepted in the industry and developed the allocation factors

appropriately, in accordance with the Staff recommended and Commission approved

allocation factors in prior COSS studies filed with this Commission.

20

21 2.

22

Staff further concludes that, based on the evaluation of the COSS model utilized by

Liberty, the results of due COST are satisfactory.

23

24 3. Staff recommends that Liberty's COSS allocations and factors be accepted as

25 reasonable in die pending case. The modified G-schedules G-1 and G-2, that include

26 Staffs rate base and other adjustments, are listed under the attached exhibits.

Direct Testimony of Dorothy M. HainsDocket No. SW-01428A-17-0058 et. al.Page 4

Staff's conclusions are limited to the specific facts of this case and do not create any precedent

regarding Cost of Service Studies, generally. Staff may make different recommendations in

other cases.

Q. Does this conclude your Direct Testimony?

A.

l

2

3

4

5

6 Yes, it does.

I

Sched\.leG1Page 1 off

UBERTV UTIUTIES IUTCHFIELD PARK WATER I AND SEWER) CORP. WATER DNISIGNSui! Cast d Sonic: Summary

Ah prim Rue

LINENO DESCRIPTION IYJIMM

Saiefov.Ana

PnvdcE U

Jun-alalonalI S ! !

rowQszmnlmf annmnu sgmmnnal

RAT AGmu Phial n SevvlceAcalvwlalcd DepreeuUun

s 104425774_2z§$a.§12s 7s.an.1ss

s 29.0519217.268.459

s 21.7as4s2s

s 53835015_1z.za1.za§s 46553308s

1234s67

a x

x 1o4.42s774 s 9.093.804 s 2 . 2 4 s. m._ .zz.aa .§19 __2.a.zQ.§:§ _ : n ms 76.877155 s e 7 / z 7 4 e s 1688.698

. s . . s s .l 4a2e.229l s l 4az8.229l s l 2 .sQa75el s (422219) s 1136s.224l s (7.972)

r33.4a1.4z6 s (33.481.42$ $(20274B29 s r2.927aev s (9.487.973\ x 4ss.zam

ae .se7 .sao s aa5e7soo $23 .a54 .124 s 3 .372648 5109Q9.265 s 63.652

s 197102o 4 § §

s 126.938. s

(1 o su s8 l s17351601 s

547181 s

no PuannConsimdlon Work nm ProgressWorks Cap i ta l Anna s M - OtherCorlrl:iutians & Advances n Ad d Cnruirudmn

TOTAL RATE eAse l*l

s9101112

s

s

13.239.240249 667

13488908

3147737 395

32.168

s

s

s 8.262.49e9442

s 4422 .591

s 1.428.897__2l .32s 1.450.456

a1aa.51a61 594

3.21s.10s

s

s

s

s

13239240__zea.§§1s 13.4ae90a

RATI NUPreserve Ric Sdledu1el(b)Own: ReveresTOTAL OPERATING REVENUES lm

48.560

Gs48587

1314

Q es m us z z aus mOndilufs aid Masnlanance

ProdualcnTrulmsslun and DsmhmlcnCwl om d AwcunuAdmnstlave Ana General

Tow Opelm and Manenanoe ExpenseDenveaahon U 16 AmomzauonTaxes Ann Than IncomeIncome TaxesTOTAL EXPENSES

15i s17181920212

23

7944257792020246

256185s 1.14a.776

740388193.714

_ _ ; u . z z §s 2 4 s7 .e a a

76.818 s e e l5.841 677

Asa 759120.119 14912

104.095 s 23873se.sa7 1064615016 1129Rossie .5 :§

s 2 2 s.7 s5 s 40.156

OPERATING INCOME IA]

EARNED RATE OF RETURN ON RATE BASE

s 22771150 s 2.771.150 s 1.648.2s6 s 2so.ss7 s s296.291 296.291 196549 25.30449s.auQ 4ss.8 ua> 4s6 .u4 11.360

1.689.756 1.689.755 1.309.051 88.800

s 5.253.499 s 52s3.4so s 3 .600.331 s 3 n . 4 n s3.021.556 3.021.556 1.sss.e4a 243.997

G83.584 eaa.ss4 413.947 597781 1 7 17

s 1 o.475.se9 s 10.415309 s 6 .789.s21 s e52.10a

s 3 .012919 s 3.012.919 s 1.ea3.2s4 s 4 ss.a 4 a s 777.503 s 95.403 s 8401

7811s 781st 69956 147894 7 1 1 * 1 1 2 5 * 131996

T Rvl R IR u NT MMARV778%

s 2.992.838 ss (20081) s

1.6165s (32461) xs 13.206179 x

4 2 5 %s 13456445 s

REQUIRED RATE OF RETURN GIVEN EQUAL RATES OF RETURNREQUIRED OPERATING scone (L8L27)OPERATING INCOME DEFIClENCVl(SURFLU$) (L284.24)REVENUE ConvERsion FAcTo*?(dlA]Revenue oaF»cl s~cv/l suRpLusl (L29L30)RATE SCHEDUI£ REVENLE REQUIREMENT (L10*L31)INDlCATED as INCREASE ON PRESENT RATE SCI€DUl£ (L31lL10)TOTAL REVENUE REQUIREMENT (L 12 L31)

H e ss65.741 s

(29661) x1 s1ss

( l 7 9 l 9 ) s:e6.a24 sJ 5 2 3 *2 7 4 2 1 9 s

778% 7 7 6 * n e ss 7 7 6 *2.992.838 s 1 8 1 2 3 2 7 s 261717 s 848.111 s

(20.081) s 179.063 s (235631) s 70.608 s1 6165 1 6 1 § 16165 1 6185

(3 2 4 su s 2 a s.a s2 s (382522) s 1 1 4 1 4 0 s13.286179 s 8.552.960 s 1 0 4 6 3 7 4 s 3 .2 9 7 .6 5 3 s

025% 3 5 0 * : a m s 3 5 5 *1 3 4 5 6 4 4 8 s e 1 1 2 o sa 5 1 .0 s7 .9 3 a s 3 3 5 9 . 2 4 6 s

7 76%4.942

l a 4 ssl1.6165(5592)42.se911 52%4 zsss

PO R A T s H R R IR M NT

s s

s

ss

24

25

2621pa2930313?ea34

35a s3738394041

13.894o 1 7 *

B.277391e.4as.4an

0 16%e zees

(95437)o 7 2 *

1 a.143ao31 a.w3¢71

4.71%T go*

132.461) s0 2 5 *

1 3 2 0 6 7 7 9 s1 3 4 5 6 4 4 6 s

0 2 4 *7 a91s

1.418o 45%

316191 s323.586

0 44%13 77*

(915)1 88%

41.s4s47.672

1 88%1 94%

REVENUE DEFICIENCY l (SURPLUS)as IncreAse (Las/L10)COST OF SERV RATE scneoum (L104 Las)COST OF SERV REV nEoulREmen1 (L11 4 1.38)* INCREASE IN TOTAL REVENUES (L 3$/L12]EARNED RATE OF RETURN ON RATE BASE AT PROPOSED RATE

096.596)7 46*

1.:m.30:z1343.561

.7 35%13 04*

(1239)o w %

s 3.180274 s3 .24151

010%94aase

*=°=p SoehdulesIA] A1(a) G3

(b l H1(c I G 4 a(41) C5(=) G2

Sd\edde G2Page 2 ol 2

LBERTY UTIUTES (LITCHFELD PARK WATER A Ann SEWER) CORP.. WATER mvlsnonSui ! Cd d SovvWo summary

Al Proposed Rats

L NENO DEscRprlon

AlndldlunalM I I

Tnl l l

Qgmnenvpvwaemmumsnmusmnmnsu

sau 191B H ! ! !

1234ss7

8 4 1 3 3 8 4 1 1GmssPlal l l nSelv\olAeammamauewelulan

s 104425174 $104425774 583835015 s 9 .09s.s047 19 7 so 11 B17 7

s 7 6 8 7 7 .1 5 5 s 7 6 8 7 7 1 5 5 5 4 6 5 5 3 3 0 8 s s.m .7 4 8

s 29.051921 s 2 . 2 4 6 1 3 2 s 1973027288.459 | 7 1

s 2 1 7 8 5 .4 6 2 s 1 6 8 8 5 9 9 s 126.98

a s

(4.m .229l (4.a2s229) (2.923159 (422219) (1.3s8224) 47.9721l3s4a1.426 s (aa.4a1426I 5(2027lB29 s (2.927.aB1 l s (9.457973 s 15s2s438567500 s 38567500 $ 2 3 3 5 4 7 2 4 s 3 3 7 2 5 4 8 5 1 0 9 2 9 .2 6 5 s 63.682

(10sosal(735.4$0 s847181 s

NG( punCo1¢lu¢on Work m Prog:-3Wodnng Capi tal Asks A Mac OlhlCcuwxnunons a Aovanees an Au of ConnuanonTOTAL RArE BASE III

s910

11

12

s 1.xz2.aoQ: m a

s 1 a 4 a a s1

13143803 s 13 .141803 s 8177 .391159094

s 1 3 3 9 3 4 7 2 s 1 3 .3 9 1 4 7 3 s a 4 a s.4 a s

s

s

s

s

47.e4e26

47.672

s 3100.27461594

s 3241.868

3161917 395

: m e ss

Q sssa n u sa se a a u u e e n nPiupueed Rite $d\edllel(b)OMer RevenuesTOTAL OPERATING Revenues IAN

RAT N COpefauavi and Marlenanoe

Pm aum n s

l

1314151517181920212223

2.771150 s 2.771150 s 1 .648.286 s 250.957 s 794.425 s 76.818 s 661296291 295.291 1as549 25304 77.920 s . w 67749s.aa2 495.1114 l 5 s. l m 11360 20.245 Asa 7591

1.689 756 1.689 756 1.309.051 B8.800 256.185 20.779 14.942s 5253.499 s 5253499 s 3.600.331 s 376422 s 1 .148 .776 s 101.098 s 23573

2.876.911 2.876.911 2.262.119 230.477 aaa.e<:s 24560 21.145e n su e eazaoe 413.174 59.656 193.352 14.988 1.127

_ . 1 . : ¢ a i . 1 £ ! _ 1 . § a § . u § _ z s z m a _ _ 2 z . L § - 3 2 9 G a z a _ _ . &s 10348865 s 10.34s.ae5 s 6.977.588 s so a p s: s 2 .213 .990 s 2 9 6 s2 3 s 46.434

24

25

s a.oa4.e07 x :s.oa4.s07 s 1 .4 se .e se s 439.930 s 1 .027.878 s 11s4s53 s 1.2ea

7.89% 7 seas 625% 130416 9 4 0 * 1 3 7 7 * 1 94%

Tr:nmasuon and NmelnnanCudomu AeeouuAammzrauve Ana G¢r¢ftl

Tool onwnng Ana manevuanoe Expa-Oenwewnen Ana ArmulnzabonTaxes Other Trlnn IncomeI l l u m e T u n

TOTAL EXPENSES [Al

OFERATWG Income

EARNED RATE OF RETURN on RATE BASE (l24ILS)

2627p a293031323334

35a s373839p a414243

Recap Seerauea

LAI A1re l 6 1

(I) GO(5) H1(C) G4b(6) GO

Scheciula G1Page 1 of 2

LIBERTY UTLITES (UTCNFIELD PARK WATER I SEWER) conf.. W4TEWATEN nmsnonsnvv Cost of Sowioo $un y

Al Pun- Rl!

LNENO DESCRIPTION

T o.Czmnlux

Oll*l .nunumannn.zunnunms M n a u n t

CanwmwBnLmszn§..1sn1

s n -Ssunmmn

Convnevcnals nnem us sum

5A1E.B6§£.lllGrass Plan! n ScrvrcAwumuunn Dopuauhon

s 11eaa09o7_ a s i as s2.s31.en

s 865949. . __1Li . 4§1s 687.512

s 103720286__zQ.aLuns 82743770

s 116.398907_2: . §9m1s 92831875

s

s

5397.549 s 5494.106 s 9180741.110.042 14.287507 s 4378433 s 7aaes4

1

23

4

s6

7

O s

s

ss

(612717\) s141.7us.472 s44996233 s x s

(s4¢1.327)(37175.983l40106460

(G127171)41 7os 472

s 44.99s.2aa x s

(45378)(308B93333.242 s

(num )(1967.188)2122256

(282388)l1925336)2078.184

(4e.4e9)(3a0.on.:cement

nu pinCousxvuctlon Won: m ProgressWorlung Cqsnnl Asset: s Mn: OthofCo4tlvhullons 5Advlncls \nA»d olCunsouc\mnTOtAL RATE eAse (Al

s s s ss sRAT R v N

Present Rule Schldulos(b)9

no

1112

13 s s s

11.1e:4:u4184a961 212

11643135 s

9796.20e85.32756352

10237 ass s

s 11183434 s41548961.212

s 11.643135 s s

o4aso2.e09Paz

a7341

52rs2015.222222s

54 s.2a

soa.sn13.5911 988

818956

OHIO! RuvonuesEliucnl RcvsnunTOTAL OPERATNG REVEMJES [A]

1 s1.e1a1740

254153.673

s s s12033 s11.226

426

s s s

14151617la192021n2324Zs

s 1415\08 s1.190.311

46.639549.as2

1750888s 5.555.009

3.079.5e0516.983

- 1 4 . 9 2 9s 9aa1.572

1418108 s 1251.0651790.311 1.s3e.s41

46.639 40975549052 537389

1750888 1647404s s.s5sac9 s 5n5.:ec4

30795560 2.783.204516963 4eoam

_zazszn ___8a9.99§s 9.ae1s72 s 8870055

3.22511.64738.557 s22.003362971192

71.509 x

Qz£Ba1lu§.i2sE:u§£§.u.LOpdltons me ManlsnannCdlachan Ana PumuavgTrelhvlnm :nd DspeedRochsmad WulcrCuslnmu AcenunnAdmmshNve and Gonad

Tow OponMng IM Munonlnoa ExvwwDuvvocuauon Ana AmenzamnTlx- Olvnr Than mean:lncomn TunroyAL ExpEnse IA]

74.2%67.2152.5945.679

46.437196.224133.69423877so 1q2

415956

70.282 s 10461sa.o7e 9.3512.328 a152.422 346

39.403 5.9901 Ra Asa x 26471137.211 23.38724354 4.09194 547

434.535 s 89516

OPERATNG INCOME a.1s7184421 sI! sAnneo RATE OF RETURN ON RATE eAse

s

s 1.761.se:\ s

391*

s

s 1.761.sea s 1.367942 s

391* E u * BSU*

15833 s

475%

s

129.311 s

622% :amass

7 lesss 3491708x 1730.145

16195s 2.s01.917s 13.9e5.:450

24 lesss 14.445352

776*2s.ae0 s10027 s1619516.23a s

100.58 s1859*

103.580 s

caslnasssxlsassamsseaEu1§uz4mesxREoulREr> RATE OF RETURN GNEN EQUAL RATES OF RETURnREQUIRED OPERATWG INCOME (l8127)OPERATNG INCOME DErlclEncvllsuRpLus) (uu24»REVENUE CONVERSION FAcToRlalAIREVENLE oerscencv/(suRpLusl (L29130)RATE SCHEDULE REVENUE REQUIREMENT (L10L3l )INOlCATEO as n~cnEAsE ON PRESENT RATE SCHEDULE (L33/LIO)tOTAL REVENLE REOUIRE»4ENT (L12 L31) sos. 997

776*151.267 s31966 s1619551.752 s

579.572 soars

597021 s

778%164.687 s(19/34) s16195

(31959) s571.410 s.5 was

s

778* 7 I8*s 3491708 s 1112.251 ss 1.7a0.14s s 1.744.420 s

16195 16196s 2901.917 s 2.825.035 ss 13965350 s 12.S21242 s

2106* 2759*x 11.445052 s 1:a0ea.9a1 s

7.78%21533

136524)16195

(50149)92.529as was94.523

PR RAT R N R T

ss

ss

Zs

27

pa29to313233343530

3738an40414243

REVENUE oer\clencvI (SURPLUS)as INCREASe (L38lL\0)COST OF SERV RATE SCHEDULE (L 10 L38)<:osT OF SERV REV REQUREMENT (L 11 L 12 L 40|* NCREASE IN TOTAL REVENUES (L38A\3)EARNEU RATE OF RETURN on RATE sAg AT PROPOSED RATES |

s 2801917261091

s 13965.350s 14.44s.052

:aces723*

132.5552197*

73593315151121 421s12 see

113.3352117*

641.15565860420 7g*9 so

21.eoe25 eras

105956 s100949 s24 mee 76*

s 2.420.53421 ease

s 13.583.g88 ss 14os3.e89 s

: o n s723*

2.11422021 GO*

11914428 s12.356117 s

2089*687*

248162295*

1 a6.491\aa4as22 W*21 ans

Rock Sdwduln[Al A1(l) GO

(°) H1(c) G4l(4) C5(0) G2hdudei Wgwam m nm Class

Sd\edule G2P=c¢ 2 oz

UBERTY UTIJTES (LITCPFIELD PART( WATER s SEWER) CORP. WASTEWATER mwsaonSh!! Cu! d Savloc Summary

At Pm pe-4 Ra t -

L|NE

N O Descnlpno~C¢|fM*|g1|

Bs.l!..M9.W1..n!nlSlv¢l

9 ! § !Ccmflwfual

a u . esS a m :Tum

Semen:O\1nl Junwwanau

.nnnm nr : a u

s4a4 .1oa s 9180745 4 9 4 8 4Gross Plan! m somaAnnlnullted Denrealbon

s

s9 4 2 1

4375433 s 7:u.654

s 116398987_ z : . : n § . m 1x 92531578

5.397.549 s1 110042 14207507 s

s

s

s 11s3seas7 s 10:aJ202ao s 888949_zuazm x ....21I.lZ§.i1§ _ .zu :zs 92831175 s 82743770 s 6a1.s12

(282988)(1 926 3362078.184 s

(45378)430039143aa.242 sss s

(zsepsor(1 ask \BB\2.1222ses s

148.489)(330073):sss.nsa

1234ss7a

(6.1Z7.171)141 1oe 1721

s u .9as.2aa

(5127171)(41 me 4729u s9 e 2 sa

(5451.327)m 175883\w.1w.Aeo

Nd PinrlCcnuzuchon wax m PuogvcuWoflung Clutch AIMS 5 MM: OMarOomnhutofn s Advuncu m AM al Canamaoncom . su re eAse [A l

sssss s

s

641.155152222238

658.615xss

735.93:a13591

1.999

7 5 1 5 2 ss

o

1011

12

13

1 : sa ssa41s.4a961.541

11.083.997

s 1asea.aao419.40961541

s 140s39a7

1191 l l 25265.327

se e s:12.356419

105.958 s2.609

38110B951 s

1a6.49A1.740

256a a u so

M M U M H M NPmouud RIO Sdndl l ti lb)Ollnr RevenuesElloiM RuvonucsTOTAL OPERATING REVENUES 1A1

sss s

ssss

s

70.28283.97623252.435

39403179.406137.21126. 1 B7

143230485.034s

s 1.415.100 s 1.251.055 s1.790.311 1.838.541

46.539 40975551.873 540.140

1750888 1547404S 55s1 .a20 s 5 l 1 a 1 1 5 s

3.079.550 27532g4555216 lo4.aa0

_ m 9 s z 2 _ 1 . : 9 § 1 § ;s 1 0 a o a 7 1 7 s 9601.952 s

10.4619351

315345

5 sea2547323.3874.394

4 8 4 7102671

141a.10e1.790.2911

45639551.873

u se so5.557.8203079560

555.216.919.122

s 10806717

12.033 s 74.29011 .us 87215

426 2.5913.242 5708

11 647 4G 43738.571 s 196.25322.oea 133.6914.112 25.643

14 994 179.743 s 459.280

14151617LB192021n232425

Qe sn 1 .m § a a e n § :§ .L ¢ LOponuom and Mamununou

Coliseum Ana PumpingTruunen\ and DuualaiRodi ¢mG wooCustom Accountsludnnndrlhvu IM Gonall

Tam 09a111m9 Ana Mamenanee ExpenseDeueoltun Ind AmactzlbonTuls 011- Than lncomcIncome T lx-row. Exveuses IAN

sOPERATING INCOME 29.200 s 190.328 ss 3.255280 s

723%

3 2 ss2 e 0 s 2674437 s

7.23* 667% a s8 7614

s

286.486 s

1 2 we

a5.s\a

24 10%eanuso RATE OF Rsmau ON RATE eAse AT PROPO§D RATES

26

27

pa29w313232so3536

37aha s40114213u15

am m o¢nsm uln Recap SaehanlouIAN AL[ay a l

(I) GO(D) HJ(cl Gab(4) C5

Indudos Wugwum n the Class

ORIGINAL - eDocket - Arizona Corporation Commission

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