Direct Testimony of James T. Selecky On Behalf of ABATE

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1 2 3 4 5 6 TABLE 2 Christopher Seiple Analysis Description BRUBAKER & ASSOCIATES, INC. Net Benefit ($Million) Steam $3,294 Pump Storage (51) Gas Turbines (106) Power Purchases (44) Subtotal $3,093 Fermi 2 Total ($2,333) $ 760 James T. Selecky Page 9 ABATE witness Dr. Richard Tabors provided an analysis that determined DECo’s net stranded costs to be a negative $826 million. DECo’s stranded benefit exceeds its stranded cost. Since Dr. Tabors’ analysis did not reflect any net stranded costs associated with DECo’s power purchase and power sales obligations, I have utilized the results of the power purchase analysis performed by Mr. Seiple, and included that in Dr. Tabors’ analysis. The results are shown below in Table 3. TABLE 3 Richard Tabors Analysis Comparable Book Net Value Value Benefit Description ($Million) ($Million) ($Million) Generation $5,724 $4,898 $826 Power Purchases – – ($44) Total $782
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 BRUBAKER & ASSOCIATES, INC. James T. Selecky Page 10 As Table 3 shows, DECo has net stranded benefits of $782 million, including power purchase obligations. Q HOW DID YOU UTILIZE THE RESULTS OF ABATE ANALYSES TO DEVELOP A STRANDED BENEFIT CREDIT? A As Table 1 shows, the Commission authorized DECo to securitize costs, excluding Fermi 2, of approximately $419 million. The analyses performed by ABATE witnesses shown in Tables 2 and 3 indicate that including Fermi 2 costs, DECo has net stranded benefits of $760 million and $782 million, respectively. That is, using the results of these analyses, the average net stranded benefit for DECo is $771 million. These net benefits can be used to offset DECo’s stranded net regulatory asset cost, excluding Fermi 2. Fermi 2 is excluded because it is included in the development of the net stranded costs of DECo’s generation assets as determined by the ABATE witnesses. This average net benefit of $771 million offsets DECo’s securitized net regulatory costs, excluding Fermi 2, of $419 million (see Table 1). This results in DECo having net generation-related benefits of $352 million ($771 million - $419 million) greater than the costs, excluding Fermi 2 that the Commission authorized DECo to securitize. Therefore, DECo’s net stranded benefit credit should be larger than DECo’s proposed securitization surcharge. Q HOW DID YOU DEVELOP A SPECIFIC STRANDED BENEFIT SURCHARGE? A As indicated in the previous answer, DECo’s net benefits associated with its generation assets are $352 million greater than the costs that DECo is authorized to securitize. As indicated in Table 1, DECo is authorized to securitize costs before its
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Direct Testimony of James T. Selecky On Behalf of ABATE

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