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HomeMy WebLinkAbout20110803Cary Di, Exhibit.pdfDea J. Miler McDEVITT & MILER LLP 420 West Banock Street P.O. Box 2564-83701 Boise, il 83702 Tel: 208.343.7500 Fax: 208.336.6912 joe(ßcdevitt -miler .com Rl=CE fjl ;. _'._ . i3¡ i AUG -3 PM I: 52 -;: l""j Attorneys for Applicant BEFORE THE IDAHO PUBLIC UTILITIES COMMSSION IN THE MATTR OF TH APPLICATION OF UNITED WATER IDAHO INC. FOR AUTHORITY TO INCREASE ITS RATES Case No. UW-W-ii-02 AN CHAGES FOR WATER SERVICE IN THE STATE OF IDAHO BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION DIRCT TESTIMONY OF JARLA M. CARY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 A. 24 25 Q. 26 Q.Please state your name and business address? A.Jarila M. Car, 8248 West Victory Road, Boise, Idao 83709. Q.By whom are you employed and in what capacity? A.I am employed by United Water Idao Inc. ("United Water" or "the Company") in the capacity of Manager of Accounting. Q.How long have you been employed by United Water Idaho? A.I have been employed by United Water Idaho since June 1997, with exception of a short period oftime when I chose to leave the employment of the Company. Q.Briefly describe your responsibilties during your tenure. A.As a Senior Accountat until Janua 2003, I performed general accounting, including preparng annual reports to the Idaho Public Utilities Commission, among other duties. From Januar 2003 until June 2008, as Manager of Accounting, I was responsible for varous accounting fuctions, including assisting Witness Healy in formulating rate requests and adjustments in the 2006 and 2009 general rate cases. I took leave from June 2008 through August 2009, and retued to the Manager of Accounting capacity. Q.What is your educational background? A.I was granted a Bachelor of Science in Business degree with a major In accounting from the University of Idao in December 1996. I attended the NARUC Utilty Rate School in 2001. Q.Before what regulatory commissions have you appeared and presented expert testimony? This is my first proceeding before the Idaho Public Utilities Commission ("IPUC"). In connection with the Company's present application for an increase in rates and charges, what is the scope of your parcipation and testimony? Cary, Di 1 United Water Idaho Inc. 1 2 3 4 5 6 Q. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A.My participation and testimony covers certin operating expenses, specifically payroll, payroll related benefit expenses and deferred debit amortizations. Under the direction of Mr. Wyatt and Mr. Healy, I prepared and analyzed the Company's books and records and prepard the necessar accounting exhibits to adjust these operating expenses. Please generally describe the approach you have taken in preparng the exhibits for operation expenses. A.I have relied on information and data produced within the Company, and my own investigation thereof, as the basis for my adjustments. The deferred amortzation amounts are calculated and rounded to whole dollar with the differential recognized in the first year of the amortzation period. Q.Please describe the various normalizing and anualizing adjustents, as well as known and measurable adjustments, made to operation and maintenance expense. A.Adjustment NO.1 increases payroll expense by $122,950 (Schedule 1, Page i). This adjustment reflects the April 1,2012 anticipated pay increase for Bargaii1ing Unit employees. The pay rates used reflect those that wil become effective April 1, 2012, are contractually obligated as called for in the curent union contract, and reflect an average 2% increase. For all bargaining unit employees, total hours were determined and applied to the contractually obligated pay rates. For non-bargaining employees, pay rates used are those that became effective April 2011, and a 0% pay increase is reflected for 2012. During the test year, the Company had a staffed payroll roster of 99 employees including one Field Customer Service Person position vacancy. The test year amount is $4,169,997 and the pro forma amount is $4,292,947. The pro forma adjustment includes a normalizd level of stadby pay, shift pay, thee sumer Cary, Di 2 United Water Idaho Inc. 1 2 3 Q. 4 A. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 tempora employees, overte, as well as incentive bonuses for both exempt and non-exempt employees, including bargaining unit employees. Please identify the staffing changes incorporated into the Company's fiing. The Company proposes to add an Assistat Manager position. The staff addition is anticipated to occur prior to heargs in this proceeding and the payroll O&M adjustent wil be subject to tre-up. Mr. Wyatt addrsses the new position and offsetting atttion included in this adjusent as well as the justification in his testimony. Adjustment NO.2 increas the cost of providing medical and dental care, vision care, long-term disability insurce and group term life insurace coverage to employees by $256,654 (Schedule 1, Page 2). The test year amount is $891,201, and the pro forma is $1,147,855. The curent cost of providing the various benefits has been applied to the ninety-eight-employee workforce. Data from the fall 2010 open enrollment process, which documents coverage levels chosen by each employee, was utilized in constrcting the total cost. Group term life and long term disability insurance costs are reflected at the test year level, subject to tre-up. The company contributes approximately 85% toward health care benefit costs while employees incur 15% of the costs. Contributions from employees offsetting Company costs were calculated based on the curent level for various coverage options, plus a 10% anticipated benefit cost increase. This amount wil be updated durg the proceeding as the costs from benefit providers become known. Adjustment NO.3 increases test year expense by $375,128 for employee pension cost (Schedule 1, Page 3). In Commission Order No. 29838 issued in Case UWI-W-04-04, the Commission found that it was not appropriate, for the Cary,Oi 3 United Water Idaho Inc. 1 puroses of regulatory reportng and rate recovery, to use the F AS 87 pension 2 expense accrul calculation that is required to be used for book purposes. The test 3 4 year pension accrul expense is $1,013,793, and the estimated 2012 accrual amount funding requirement as calculated by Aon Consulting, the Company's 5 pension actu, is expected to be $1,791,000. The amount of$I,388,921 reflects 6 the actual cah contrbution made during the test year. The adjustment is 7 consistent with the Commission's preference, expressed in Order No. 29838, (pg. 8 18) for recovery of the actual amount of cash contrbutions made to the plan for 9 the test year. 10 Adjustment NO.4 decreases test year expense by ($91,103) for the 11 normalization of PBOP - (Post Retirement Benefits Other Than Pension) 12 (Schedule 1, Page 4). The test year amount is $540,685. The pro forma level of 13 expense represents the FAS 106 expense of $409,022 as developed by the 14 Company's actuar, Aon Consulting (Idaho Non-Bargaining of $295,520 and 15 Idaho Bargaining Unit of $113,502) plus a 20-year amortization of the deferred 16 portion ofFAS 106 expense $40,560 for a total pro forma amount of $449,582. 17 Adjustment NO.5 increases test year 401k matching expense by $7,905 18 (Schedule 1, Page 5) and reflects a current level of paricipation as a percentage 19 of pro forma payroll including an adjustment for headcount changes. The test 20 year amount is $116,189 and pro forma expense is $124,094. 21 Adjustment NO.6 increases test year Worker's Compensation expense by 22 $40,012 based on anticipated increases (Schedule 1, Page 6). The test year 23 amount is $103,688 with a pro forma expense of $143,700, subject to tre-up. 24 Information as to the likely pro forma amount was obtained from United Water 25 M&S Company Director of Insurance. Cary,Oi 4 United Water Idaho Inc. 1 Adjustment NO.7 decreases test year Oter Employee Benefits expense 2 by ($4,774) based on anticipated pro forma tuition reimbursements, service 3 awards and test year levels of Medical Open Enrollment costs and VEBA - 4 volunta employee benefits administrtive costs (Schedule 1, Page 7). The test 5 year expense is $27,396 and pro forma amount is $22,622. 6 Adjustment NO.8 normalizs frge benefit costs chargeable to other 7 than Operations and Maintenance expense (Schedule 1, Page 8). A porton of 8 fringe benefit costs are transferred off the income statement as driven by actual 9 labor allocation of non operating and maintenance expenses to total payroll. The 10 relationship of employee benefit expense to payroll dollars is 24.79%. When 11 24.79% is applied to pro forma non-O&M payroll, the result is a pro forma fringe 12 benefit credit of ($928,630). This is $247,817 larger than the test year O&M 13 reduction of ($680,813). The test year contains a timing aberration that has been 14 normalized out by the pro forma calculation. 15 Adjustment NO.9 increases test year expense by $87,986 for additional 16 deferrd rate case expense amortization. The test year amount of rate case 17 expense amortzation is $60,917. The Company seeks recovery of the deferrd 18 cost stipulated to in UWI-W-09-01 anticipated balance as of Februar 29, 2012 19 of $45,305, as well as the current rate case cost, which is estimated to be 20 $252,500 (see itemization on Schedule 1, Page 9). The tota of these two items is 21 $297,805. The Company seeks a two-year recovery of this expense or $148,903 22 annually. 23 Adjustment No. 10 decreases test year expense by ($1,184) for deferred 24 conservation plan and implementation expense amortization (Schedule i, Page 25 10). The test year amount is $65,168. The Company seeks recovery of the Cary, Di 5 United Water Idaho Inc. 1 deferred cost stipulated to in UWI-W-09-01, pro forma balance as of Febru 2 29, 2012 of $63,984 for deferred conservation supplies, conservation plan and 3 low water use demonstrtion gardens. The three year amortization period began 4 in March 2010, but an invoice for the in-service Idaho Capitol Building 5 demonstration garden was not received until April 2010, requiring recalculation 6 of the amortization expense and the resulting adjustment to expense. 7 Adjustment No. 11 increases test year expense by $20,996 for the 8 anticipated deferred relocation expense of $125,000 for the Assistat Manager 9 position (Schedule 1, Page 11). The Company expects that the successful 10 candidate wil have water company experience, and may be from outside the 11 local area. This relocation amount wil be tred up durng these proceedings. 12 The Company seeks recovery over a five-year period. The test year includes 13 expired amortization expense of $4,000 of deferred relocation expense included 14 in Case UWI - W -04-04. The test year included three months of expense and must 15 be removed as the underlying deferred debit has been completely amortized. 16 Adjustment No. 12 increases test year ta painting expense by $10,475. 17 Twenty-year amortization of $230,134 for the Hillcrest ta deferred painting 18 cost, an annual cost of $11,507, is presented for consideration in this case 19 (Schedule 1, Page 12). The twenty-year amortization period is consistent with 20 recent rate cases and stipulation agreements. The test year expense is $34,901, 21 which includes an expired amortization expense of $448 for Good Street tak, 22 $60 for 24th Street tak and $524 for Boulder Reservoir. The four months of 23 amortization expense ($1,032) must be removed as the underlying deferred debit 24 has been completely amortized. Cary, Di 6 United Water Idaho Inc. 1 Adjustment No. 13 removes from the test year $600 of amortization 2 expense for LTI Deferr Water Quality Testig (Lng Term 2 Eiianced 3 Surface Water Tretment Rule) - expired amortization (Schedule 1, Page 13). 4 The pro forma amount is $0. The test year included $600 - three months of 5 expense that must be removed as the underlying deferred debit has been 6 completely amortized. 7 Adjustment No. 14 removes from the test year $613 of amortiztion 8 expense for Deferred Legal Expenses for Terr Grande and the Idaho Power Rate 9 Cases - expired amortizations (Schedule 1, Page 14). The test year included 10 three months of expense and must be removed as the underlying deferred debit 11 has been completely amortized. The pro forma amount is $0. 12 Adjustment No. 15 decreases the test year by ($67,380) of Deferred 13 Power expense amortization expense (Schedule 1, Page 15). The Company seeks 14 recovery of the projected deferred PCA (Idaho Power anual Power Cost 15 Adjustment) balance as of Februar 29, 2012 of $337,483 approved in Case 16 UWI-W-09-01, as well as the projected pending deferred power of $201,845 17 balance as of Februar 29, 2012 accumulated since March 2010. The Company 18 seeks a two-year recovery of this expense or $269,664 anually. 19 Adjustment No. 16 includes $37,140 of Deferred Auxiliar Power 20 amortization expense addressed in Witness Rhead's testimony. The Company 21 seeks recovery of the deferred cost balance as of Februar 29, 2012 of $74,272 22 over a two-year period or $37,140 anually (Schedule i, Page 16). 23 Adjustment No. 17 includes $19,053 amortization of AFUDC Equity 24 Gross Up (Schedule 1, Page 17). The IPUC authorized the deferrl tratment of 25 that portion of AFUDC in Case No. UWI-W-04-04 Order 29838 (Page 13). Cary, Di 7 United Water Idaho Inc. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 . Because the AFUDC Gross Up continues to be calculated and deferred, the amount wil continue to grow. The projected balance as of Febru 29,2012 is $1,274,593. The test year included amortization expense of $19,157, with amortization staing October 2010. The Company's corporate regulated business deparent, consistent with the accountig treatment from other jursdictions, recommended that deferred AFUDC Equity Gross up be amortize at a thir-five year rate or 0.2381% to recognize that were the AFUDC Equity Gross Up stil attched to the underlying asset, it would also be depreciated. The Company seeks approval of a thirt-five-year amortiztion rate of the balance, or a $38,210 pro forma projected expense. Q.Please explain Exhibit No. 11, Schedule 3, Pages 2, 3 and 4. A.Exhibit No. 11. Schedule 3, Pages 2, 3 and 4 increases the test year level of payroll taes by $21,299 combined. Page 2 indicates an increase in FICA taes of $20,583. Page 3 reflects a decrease of ($125) in Federal unemployment taes - pending update for the federal ta rate change from 6.2% to 6.0% less 5.4% employer credit. Page 4 shows an increase of $841 in Idaho State unemployment taxes. The respective payroll ta increases are drven primarily by changes in wages and headcount. All payroll taxes have been adjusted based on information received indicating statutory limits and rates in effect for 2011. These wil be adjusted as known and measurable information becomes available. Q.Does this conclude your testimony with regard to United Water Idaho's operating expense adjustments? A.Yes. Cary,Oi 8 United Water Idaho Inc. DeanJ. Miller (lSB No. 1968) Chas. F. McDevitt (lSB No. 835) McDEVITT & MILLER LLP 420 West Banock Street P.O. 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UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I - W - 1 1 - 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Ad j u s t m e n t N O . 3 Ad j u s t m e n t o f P e n s i o n E x p e n s e Li n e No . D e s c r i p t i o n 1 To a d j u s t e m p l o y e e p e n s i o n e x p e n s e t o t h e c u r r e n t c a s h c o n t r i b u t i o n a m o u n t . De t a i l s 2 Id a h o B a r g a i n i n g U n i t a n d I d a h o N o n - B a r g a i n i n g U n i t P e n s i o n C a s h C o n t r i b u t i o n 3 Te s t Y e a r E x p e n s e 4 Ad j u s t m e n t To t a l P a v r o l l $ 1 , 3 8 8 , 9 2 1 $ 1 , 0 1 3 , 7 9 3 $ 3 7 5 , 1 2 8 Ad j u s t m e n t Am o u n t $ 37 5 , 1 2 8 Ex h i b i t N o . 11 Sc h e d u l e 1 Pa g e 3 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I - W - 1 1 - 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Ad j u s t m e n t N o . 4 Ad j u s t m e n t o f P E B O P Li n e Ad j u s t m e n t No . De s c r i p t i o n Am o u n t 1 To a d j u s t e m p l o y e e P E B O P ( p o s t r e t i r e m e n t b e n e f i t s o t h e r t h a n p e n s i o n ) a m o u n t . $ (9 1 , 1 0 3 ) De t a i l s Am o u n t To t a l 2 Id a h o B a r g a i n i n g U n i t $ 11 3 , 5 0 2 3 Id a h o N o n - B a r g a i n i n g U n i t $ 29 5 , 5 2 0 4 FA S 1 0 6 2 0 y e a r a m o r t i z a t i o n $ 40 , 5 6 0 5 Pr o F o r m a P E B O P e x p e n s e $ 44 9 , 5 8 2 6 PE B O P E x p e n s e $ 50 0 , 1 2 5 7 FA S 1 0 6 2 0 y e a r a m o r t i z a t i o n $ 40 , 5 6 0 8 Te s t Y e a r E x p e n s e $ 54 0 , 6 8 5 9 Ad j u s t m e n t $ (9 1 , 1 0 3 ) Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 4 o f 32 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I . W . 1 1 - 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Li n e No . D e s c r i p t i o n Ad j u s t m e n t N O . 5 Co m p a n y E m p l o y e e 4 0 1 k M a t c h 1 To a d j u s t 4 0 1 k e m p l o y e r m a t c h i n g c o n t r i b u t i o n f o r p r o f o r m a h e a d c o u n t o f 78 e m p l o y e e s De t a i l s 2 Ne t P r o F o r m a 4 0 1 K 3 Te s t Y e a r E x p e n s e 4 Ad j u s t m e n t Am o u n t $ 12 4 , 0 9 4 $ 11 6 , 1 8 9 $ 7, 9 0 5 Ad j u s t m e n t Am o u n t $ 7, 9 0 5 Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 5 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I - W - 1 1 - 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 . Li n e No . D e s c r i p t i o n Ad j u s t m e n t N O . 6 Ad j u s t m e n t o f W o r k e r s C o m p e n s a t i o n E x p e n s e De t a i l s To a d j u s t e m p l o y e e W o r k e r s C o m p e n s a t i o n e x p e n s e 1 Pr o F o r m a W o r k e r s C o m p e n s a t i o n E x p e n s e 2 3 Te s t Y e a r E x p e n s e 4 Ad j u s t m e n t Am o u n t $$$ 14 3 , 7 0 0 10 3 , 6 8 8 40 , 0 1 2 Ad j u s t m e n t Am o u n t $ 40 , 0 1 2 Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 6 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I . W . 1 1 . 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Ad j u s t m e n t N o , 7 Ad j u s t m e n t o f O t h e r E m p l o y e e B e n e f i t s Li n e Ad j u s t m e n t No . De s c r i p t i o n Am o u n t 1 To a d j u s t o t h e r e m p l o y e e b e n e f i t s t o e s t i m a t e d p r o f o r m a l e v e l s $ (4 , 7 7 4 ) Q! Am o u n t To t a l 2 Tu i t i o n R e i m b u r s e m e n t $ 3, 9 0 0 3 OC T a n n e r - s e r v i c e a w a r d s 10 , 0 0 0 4 Me d i c a l O p e n E n r o l l m e n t 6, 5 0 8 5 VE B A - v o l u n t a r y e m p l o y e e b e n e f i t s 2, 2 1 4 6 Ne t P r o F o r m a H e a l t h C a r e , L T D a n d G T L E x p e n s e $ 22 , 6 2 2 7 Te s t Y e a r E x p e n s e $ 27 , 3 9 6 8 Ad j u s t m e n t $ (4 , 7 7 4 ) Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 7 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I - W - 1 1 - 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Ad j u s t m e n t N O . 8 Ad j u s t m e n t o f P a y r o l l O v e r h e a d s C h a r g e d t o B a l a n c e S h e e t A c c o u n t s Li n e No . D e s c r i p t i o n 1 To n o r m a l i z e t h e f r i n g e b e n e f i t a l l o c a t i o n c h a r g e d t o n o n o p e r a t i o n s a n d m a i n t e n a n c e ac c o u n t s De t a i l s Ac c o u n t Am o u n t Be n e f i t s Pa y r o l l 2 Pa y r o l l T a x e s 70 2 5 0 - 7 0 2 5 3 $ 46 8 , 9 6 5 3 Wo r k e r s C o m p e n s a t i o n 91 4 6 0 14 3 , 7 0 0 4 Pe n s i o n 91 5 0 0 1, 3 8 8 , 9 2 1 5 PE B O P ( p o s t r e t i r e m e n t h e a l t h c a r e ) 91 5 5 0 / 9 2 0 5 6 44 9 , 5 8 2 6 Gr o u p H e a l t h & L i f e 91 7 0 0 1, 1 4 7 , 8 5 5 7 40 1 k 91 8 0 0 12 4 , 0 9 4 8 Ot h e r E m p l o y e e B e n e f i t s 91 8 5 0 22 , 6 2 2 - 9 Su b t o t a l $3 , 7 4 5 , 7 3 9 10 To t a l P r o F o r m a P a y r o l l $ 5 , 7 0 8 , 0 7 1 11 To t a l n o n O p e r a t i o n s & M a i n t e n a n c e p a y r o l l $ 1 , 4 1 5 , 1 2 4 12 Pe r c e n t a g e o f n o n O p e r a t i o n s & M a i n t e n a n c e p a y r o l l t o T o t a l p a y r o l l 24 . 7 9 % 13 Pr o F o r m a f r i n g e b e n e f i t c l e a r i n g c o s t s a l l o c a t e d b y p a y r o l l p e r c e n t a g e .. ( 9 2 8 , 6 3 0 ) 14 Te s t Y e a r ! ( 6 8 0 , 8 1 3 ) 15 Ad j u s t m e n t $ ( 2 4 7 , 8 1 7 ) Ad j u s t m e n t Am o u n t $ ( 2 4 7 , 8 1 7 ) Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 8 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I - W - 1 1 . 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Ad j u s t m e n t N o . 9 Ra t e C a s e E x p e n s e A m o r t i z a t i o n Li n e No . D e s c r i p t i o n To a m o r t i z e o v e r t w o y e a r s t h e f o r e c a s t e d l e v e l o f t h e d e f e r r e d r a t e c a s t e x p e n s e i n C a s e U W I . 1 W - 1 1 - 0 2 a s w e l l a s t h e u n a m o r t i z e d b a l a n c e f r o m C a s e U W I D - W - 0 9 - 1 De t a i l s 2 E s t i m a t e d D e f e r r e d R a t e C a s e E x p e n s e i n U W I - W - L L - 0 2 3 O u t s i d e L e g a l C o u n s e l : M i l e r & M c D e v i t t , L L P Ou t s i d e C o n s u l t a n t o n R e v e n u e F o r e c a s t , C o s t o f S e r v i c e & R a t e D e s i g n : P a u l 4 H e r b e r t , G a n n e t t F l e m i n g , I n c 5 O u t s i d e C o n s u l t a n t C o s t o f C a p i t a l : P a u l i n e A h e r n , A U S C o n s u l t a n t s 6 O u t s i d e C o n s u l t a n t o n C i S P r u d e n c y , B r u c e H a w t h o r n e , B r u c e H a w t h o r n e A s s o c i a t e s Un i t e d W a t e r M a n a g e m e n t & S e r v i c e C o m p a n y : C a s e P r e p a r a t i o n , O v e r s i g h t , F i l n g 7 a n d P r o s e c u t i o n 8 O u t s i d e C o n s u l t a n t , J o h n C h u r c h 9 C u s t o m e r N o t i c e , P u b l i c I n f o r m a t i o n C a m p a i g n , C o u r t R e p o r t i n g 10 M i s c e l l a n e o u s & O t h e r C o s t I n c l u d i n g I n t e r v e n o r F u n d i n g 11 E s t i m a t e d C o s t o f U W I - W - 1 1 - 0 2 Un a m o r t i z e d D e f e r r e d E x p e n s e C a s e U W I - W - 0 9 - 0 1 ( U n a m o r t i z e d B a l a n c e a t A p r i l 3 0 , 2 0 1 1 : $8 0 , 1 5 5 l e s s m o n t h l y a m o r t i z a t i o n t h r o u g h F e b r u a r y 2 8 , 2 0 1 2 a t $ 3 , 4 8 5 p e r m o n t h , t e n m o n t h s 12 i s $ 3 4 , 8 5 0 ) 13 T o t a l D e f e r r e d R a t e C a s e E x p e n s e 14 A n n u a l E x p e n s e B a s e d o n 2 4 M o n t h A m o r t i z a t i o n P e r i o d 15 T e s t Y e a r E x p e n s e 16 A d j u s t m e n t Ad j u s t m e n t Am o u n t $ 87 , 9 8 6 Te s t Ye a r Am o u n t $ 70 , 0 0 0 $ 55 , 0 0 0 $ 25 , 0 0 0 $ 10 , 0 0 0 $ 40 , 0 0 0 $ 7, 5 0 0 $ 20 , 0 0 0 $ 25 , 0 0 0 $ 25 2 , 5 0 0 $ 45 , 3 0 5 $ 29 7 , 8 0 5 $ 14 8 , 9 0 3 $ 60 , 9 1 7 $ 87 , 9 8 6 Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 9 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I . W . 1 1 . 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Ad j u s t m e n t N O . 1 0 De f e r r e d E x p e n s e s A m o r t i z a t i o n Li n e No . D e s c r i p t i o n 1 Am o r t i z a t i o n o f D e f e r r e d C o n s e r v a t i o n P l a n E x p e n s e De t a i l s Ex p e n s e 2. A d j u s t T e s t Y e a r f o r R o u n d i n g & T i m i n g A d j u s t m e n t s 3 4 5 6 7 Co n s e r v a t i o n P l a n Ho s e T i m e r s Ki t c h e n S p r a y e r s Ra i n S e n s o r s Xe r i s c a p e G a r d e n $ 85 , 3 5 4 32 , 4 2 5 11 , 4 2 1 30 , 9 3 3 31 , 8 0 4 8 To t a l $ 1 9 1 , 9 3 7 9 Pr o F o r m a D e f e r r e d C o n s e r v a t i o n P l a n A m o r t i z a t i o n E x p e n s e 10 Te s t Y e a r E x p e n s e 11 Ad j u s t m e n t Am o r t i z a t i o n Pe r i o d Am o r t i z a t i o n 3 Y e a r s 3 Y e a r s 3 Y e a r s 3 Y e a r s 3 Y e a r s $$ 63 , 9 8 4 63 , 9 8 4 $ 6 5 , 1 6 8 $ ( 1 , 1 8 4 ) Ad j u s t m e n t Am o u n t $ (1 , 1 8 4 ) Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 1 0 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I . W - 1 1 . 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Ad j u s t m e n t N o . 1 1 Re l o c a t i o n E x p e n s e A m o r t i z a t i o n Li n e No . De s c r i p t i o n 1 Am o r t i z a t i o n o f D e f e r r e d R e l o c a t i o n E x p e n s e De t a i l s Am o r t i z a t i o n Pe r i o d Am o r t i z a t i o n Ex p e n s e 2 A d d N e w D e f e r r e d R e l o c a t i o n A m o r t i z a t i o n 3 As s i s t a n t M a n a g e r $ 1 2 5 , 0 0 0 5 Y e a r s 4 R e d u c e T e s t Y e a r b y E x p i r e d A m o r t i z a t i o n A m o u n t s 5 En g i n e e r - J o h n V a n d e g r i f f Am o r t E n d e d J u l y 2 0 1 0 6 To t a l 7 Pr o F o r m a A m o r t i z a t i o n E x p e n s e 8 Te s t Y e a r E x p e n s e 9 Ad j u s t m e n t $ 24 , 9 9 6 $ (4 , 0 0 0 ) $$ 20 , 9 9 6 24 , 9 9 6 $$ 4, 0 0 0 20 , 9 9 6 Ad j u s t m e n t Am o u n t $ 20 , 9 9 6 Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 1 1 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I . W . 1 1 . 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Li n e No . D e s c r i p t i o n 1 Am o r t i z a t i o n o f D e f e r r e d T a n k P a i n t i n g E x p e n s e De t a i l s 2 A d d N e w T a n k P a i n t i n g A m o r t i z a t i o n 3 Hi l c r e s t T a n k 4 R e d u c e T e s t Y e a r b y E x p i r e d A m o r t i z a t i o n A m o u n t s 5 G o o d S t r e e t 6 2 4 t h S t r e e t 7 B o u l d e r 8 T o t a l 9 P r o F o r m a T a n k P a i n t i n g A m o r t i z a t i o n E x p e n s e 10 T e s t Ye a r E x p e n s e 11 A d j u s t m e n t Ad j u s t m e n t N o , 1 2 Ta n k P a i n t i n g E x p e n s e A m o r t i z a t i o n Ex p e n s e Am o r t i z a t i o n Pe r i o d $ 23 0 , 1 3 4 20 Y e a r s Am o r t E n d e d A u g . 2 0 1 0 Am o r t E n d e d A u g . 2 0 1 0 Am o r t E n d e d A u g . 2 0 1 0 Am o r t i z a t i o n $ 11 , 5 0 8 $$!$ Ad j u s t m e n t Am o u n t $ 1 0 , 4 7 5 Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 1 2 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I . W . 1 1 . 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Ad j u s t m e n t N o , 1 3 Mi s c e l l a n e o u s A m o r t i z a t i o n Li n e No . D e s c r i p t i o n 1 A m o r t i z a t i o n o f D e f e r r e d W a t e r Q u a l i t y T e s t i n g - L T 2 E x p e n s e De t a i l s Am o r t i z a t i o n Pe r i o d Ex p e n s e 2 R e d u c e T e s t Y e a r b y E x p i r e d A m o r t i z a t i o n A m o u n t s 3 L T 2 Am o r t E n d e d J u l y 2 0 1 0 4 To t a l 5 P r o F o r m a A m o r t i z a t i o n E x p e n s e 6 T e s t Y e a r E x p e n s e 7 A d j u s t m e n t Am o r t i z a t i o n $ (6 0 0 ) $ ( 6 0 0 ) $$ 6 0 0 $ ( 6 0 0 ) Ad j u s t m e n t Am o u n t $ (6 0 0 ) Ex h i b i t N o , 1 1 Sc h e d u l e 1 Pa g e 1 3 o f 32 J, C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I . W . 1 1 - G 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Li n e !i D e s c r i p t i o n 1 Am o r t i z a t i o n o f D e f e r r e d L e g a l E x p e n s e De t a i l s Ad j u s t m e n t N o . 1 4 Le g a l C o s t s A m o r t i z a t i o n 2 R e d u c e T e s t Y e a r b y E x p i r e d A m o r t i z a t i o n A m o u n t s Ex p e n s e Am o r t i z a t i o n Pe r i o d . 3 T e r r a G r a n d e 4 I d a h o P o w e r R a t e C a s e 5 T o t a l Am o r t i z a t i o n $ 3, 8 7 7 5 Y e a r s $ 8, 3 7 4 5 Y e a r s $ 12 , 2 5 1 $ (6 1 2 ) $$ 61 2 $ (6 1 2 ) 2 T e s t Y e a r E x p e n s e 6 P r o F o r m a D e f e r r e d L e g a l A m o r t i z a t i o n E x p e n s e 7 A d j u s t m e n t Ad j u s t m e n t Am o u n t $ (6 1 2 ) Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 1 4 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I . W . 1 1 . Q 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 3 Y e a r s $ (3 3 7 , 0 4 4 ) $ 33 7 , 4 8 3 2 Y e a r s $ 16 8 , 7 4 4 $ (6 7 , 3 8 0 ) $ 26 9 , 6 6 4 $ 33 7 , 0 4 4 $ (6 7 , 3 8 0 ) Ad j u s t m e n t N o . 1 5 De f e r r e d P o w e r C o s t s A m o r t i z a t i o n Li n e No . D e s c r i p t i o n 1 Ad j u s t m e n t o f A m o r t i z a t i o n o f D e f e r r e d P o w e r P C A E x p e n s e De t a i l s Am o r t i z a t i o n Pe r i o d Ex p e n s e 2 A d d N e w A m o r t i z a t i o n 3 20 1 1 D e f e r r e d P e n d i n g P o w e r 2 Y e a r s $ 2 0 1 , 8 4 5 4 R e . a m o r t i z e P r i o r D e f e r r e d P o w e r I t e m 5 2 0 0 9 A p p r o v e d D e f e r r e d P o w e r 6 2 0 0 9 A p p r o v e d D e f e r r e d P o w e r b a l a n c e a t F e b . 2 9 , 2 0 1 2 7 T o t a l 8 P r o F o r m a D e f e r r e d P o w e r A m o r t i z a t i o n E x p e n s e 9 T e s t Y e a r E x p e n s e 10 A d j u s t m e n t Am o r t i z a t i o n $ 10 0 , 9 2 0 Ad j u s t m e n t Am o u n t $ ( 6 7 , 3 8 0 ) Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 1 5 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I . W . 1 1 . 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Ad j u s t m e n t N o . 1 6 Re d u n d a n t P o w e r A m o r t i z a t i o n Li n e No . D e s c r i p t i o n 1 Ad d i t i o n o f A m o r t i z a t i o n o f D e f e r r e d A u x i l a r y P o w e r - R e d u n d a n t Po w e r E x p e n s e De t a i l s Am o r t i z a t i o n Pe r i o d Ex p e n s e 2 De f e r r e d A u x i l i a r y P o w e r e x p e n s e $ 74 , 2 7 2 2 Y e a r s 3 Pr o F o r m a A m o r t i z a t i o n o f D e f e r r e d A u x i l a r y P o w e r E x p e n s e 4 T e s t Y e a r E x p e n s e 5 A d j u s t m e n t Am o r t i z a t i o n $ 37 , 1 4 0 $ 3 7 , 1 4 0 $$ 3 7 , 1 4 0 Ad j u s t m e n t Am o u n t $ 3 7 , 1 4 0 Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 1 6 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I - W - 1 1 - Q 2 De t , a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Ad j u s t m e n t N o . 1 7 AF U D C E q u i t y G r o s s U p A m o r t i z a t i o n Li n e No . D e s c r i p t i o n 1 Ad j u s t m e n t o f a m o r t i z a t i o n o f A F U D C E q u i t y G r o s s U p E x p e n s e De t a i l s Am o r t i z a t i o n Pe r i o d Ex p e n s e Pr o j e c t e d A F U D C E q u i t y G r o s s U p U n a m o r t i z e d B a l a n c e a t F e b 2 2 0 1 2 $ 1 , 2 7 4 , 5 9 3 3 35 y e a r A m o r t , b e g a n O c t . 2 0 1 0 , t h e b a l a n c e i s e x p e c t e d t o ke e p g r o w i n g 40 3 p e r i o d s r e m a i n i n g a f t e r Fe b . 29 1 2 4 P r o F o r m a A m o r t i z a t i o n E x p e n s e 5 T e s t Y e a r E x p e n s e 6 A d j u s t m e n t Am o r t i z a t i o n $ 38 , 2 1 0 $$ 19 , 1 5 7 19 , 0 5 3 Ad j u s t m e n t Am o u n t $ 19 , 0 5 3 Ex h i b i t N o . 1 1 Sc h e d u l e 1 Pa g e 1 7 o f 3 2 J. C a r y UN I T E D W A T E R I D A H O 20 1 1 R a t e C a s e U W I . W . 1 1 . 0 2 De t a i l s o f A d j u s t m e n t s t o O p e r a t i o n s a n d M a i n t e n a n c e E x p e n s e Te s t Y e a r E n d i n g A p r i l 3 0 , 2 0 1 1 Ad j u s t m e n t N o . 2 Pa y r o l l T a x e s - F I C A Li n e No . De s c r i D t i o n 1 To a d j u s t E m p l o y e r F I C A T a x L i a b i l i t y - F e d e r a l I n s u r a n c e C o n t r i b u t i o n s A c t So c i a l S e c u r i t y Me d i c a r e De t a i l s Am o u n t Am o u n t 2 FI C A B a s e f o r 2 0 1 1 $ 10 6 , 8 0 0 No L i m i t 3 FI C A R a t e f o r 2 0 1 1 6. 2 0 % 1. 4 5 % 4 Pr o F o r m a P a y r o l l a t 4 1 2 0 1 2 R a t e s $ 5, 7 0 8 , 0 7 1 $ 5, 7 0 8 , 0 7 1 5 Wa g e s i n E x c e s s o f F I C A b a s e $ 74 , 6 7 5 No l i m i t 6 Ta x a b l e W a g e s $ 5, 6 3 3 , 3 9 6 $ 5, 7 0 8 , 0 7 1 7 FI C A T a x R a t e s 6. 2 0 % 1. 4 5 % 8 Pr o F o r m a F I C A T a x $ 34 9 , 2 7 1 $ 82 , 7 6 7 9 Te s t Y e a r E x p e n s e 10 Ad j u s t m e n t Co m b i n e d $ 4 3 2 , 0 3 8 $ 4 1 1 , 4 5 5 $ 2 0 , 5 8 3 Ad j u s t m e n t Am o u n t $ 2 0 , 5 8 3 Ex h i b i t N o . 1 1 Sc h e d u l e 3 Pa g e 2 0 f 4 J. C a r y UN I T E D W A T E R I D A H O Ad j u s t m e n t N O . 3 Pa y r o l l T a x e s - F U T A Li n e No . D e s c r i p t i o n Ad j u s t m e n t Am o u n t 1 To a d j u s t F e d e r a l U n e m p l o y m e n t I n s u r a n c e T a x $ (1 2 5 ) De t a i l s Am o u n t 2 Fe d e r a l T a x a b l e B a s e l i m i t $ 7, 0 0 0 3 Fe d e r a l T a x R a t e 0. 8 0 % 4 E m p l o y e e s c o v e r e d b y F e d e r a l U n e m p l o y m e n t T a x (9 8 F u l l T i m e ~ $ 7 , 0 0 0 l i m i t a n d 3 T e m p s ) 5 Ta x a b l e W a g e s $ 69 2 , 2 7 2 6 Ta x R a t e 0, 8 0 % 7 Pr o F o r m a F e d e r a l U n e m p l o y m e n t T a x $-$$ 5, 6 6 3 5, 5 3 8 8 Te s t Y e a r E x p e n s e 9 Ad j u s t m e n t (1 2 5 ) Ex h i b i t N o . 1 1 Sc h e d u l e 3 Pa g e 3 o f 4 J. C a r y UN I T E D W A T E R I D A H O Ad j u s t m e n t N O . 4 Pa y r o l l T a x e s - S U T A Li n e No . D e s c r i p t i o n 1 To a d j u s t S t a t e U n e m p l o y m e n t I n s u r a n c e T a x ~ 2 20 1 1 I d a h o T a x a b l e B a s e 3 20 1 1 I d a h o S U T A T a x R a t e f o r U W I D 4 E m p l o y e e s c o v e r e d b y S t a t e U n e m p l o y m e n t T a x (9 8 R e g u l a r E m p l o y e e s & 3 T e m p s ) 5 Ta x a b l e W a g e s 6 Ta x R a t e 7 Pr o F o r m a I d a h o U n e m p l o y m e n t T a x 8 Te s t Y e a r E x p e n s e 9 Ad j u s t m e n t Am o u n t $ 33 , 3 0 0 0. 9 6 % $ 3, 2 6 9 , 6 7 2 0, 9 6 0 % $$$ 31 , 3 8 9 30 , 5 4 8 84 1 Ad j u s t m e n t Am o u n t $ 84 1 Ex h i b i t N o . 1 1 Sc h e d u l e 3 Pa g e 4 0 f 4 J. C a r y