SCEG OATT Formula Transmission Rate Filing.pdf - SCANA ...

20091231-0037 FERC PDF (Unofficia1) 12/29/2009
Direct Testimony of Jimmy Addison
Docket ER 10- -000
Page 4 of 19
Exhibit No. SeE-I
provide for recovery of its transmission costs on a more current basis, thereby improving
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its cash flow and helping it to earn its allowed return on equity ("ROE"). This formulaic
methodology and additional support for the associated stated rates are discussed in detail
in the testimony of SCE&G witness Alan C. Heina, Exhibit SCE-8.
5 III. USE OF A FORMULA RATE
6 Q.
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HOW DOES SCE&G CURRENTLY CHARGE FOR TRANSMISSION
SERVICES?
8 A.
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SCE&G currently charges network transmission customers based on their load ratio share
of an annual transmission revenue requirement established by a settlement of a Federal
Energy Regulatory Commission ("Commission" or "FERC") rate case in Docket No.
ER96-1 085-000 that was based on 1994 cost data. Point-to-point transmission customers
are charged stated rates based on that same transmission revenue requirement.
Consequently, none of the capital expenditures for transmission plant that SCE&G has
made since January I, 1995 are included in the cost of service that forms the basis for
current rates.
16 Q.
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WHY IS SCE&G SEEKING TO IMPLEMENT A FORMULAIC ANNUAL
TRANSMISSION REVENUE REQUIREMENT AND ASSOCIATED STATED
RATES FOR POINT -TO-POINT AND NETWORK TRANSMISSION
SERVICES?
20 A.
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First and foremost, the formula rate, which includes a true-up mechanism, tracks
increases and decreases in costs so that no under-recovery and no over-recovery of actual