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HomeMy WebLinkAbout20070912PAC to Monsanto 6-1, 6-3, 6-6, 6-8 to 6-19.pdf~1~oUNTA'N 20 I South Main, Suite 2300 Salt lake City, Utah 8411 I REeF 2031 SEP I 2 Ml 9: I u or I L (;j: f~" ~ C (~: ~Hjj ~j \ ~s j 0 September 2007 Randall C. Budge RACINE, OLSON, NYE, BUDGE & BAILEY, CHARTERED O. Box 1391; 201 E. Center Pocatello, Idaho 83204-1391 RE:PAC-07- Monsanto Data Request Set 6 (1-19) Please find enclosed Rocky Mountain Power s Response to Monsanto Data Requests 6. - 6.19 excluding 6.2 6.4 , and 6.7. Provided on the enclosed CD are Attachments 6.10 and 6.17. If you have any questions, please feel free to call me at (801) 220-4975. Sincerely, Brian Dickman, Manager Regulation Enclosures Cc:James R. SmithIMonsanto Maurice BrubakerlMonsanto Richard AndersonlEnergy Strategies Jean JewelllIPUC Eric Olsen/lIP A Tony Y ankel/IIP A Conley Ward/Agrium Dennis Peseaul Agrium Brad Purdy/CAP AI Timothy Shurtz PAC-O7-05/Rocky Mountain Power September 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Referencing Exhibit No. 27, is this single page the complete and entire Hewitt Associates report? If not, then please provide the entire report. Response to Monsanto Data Request 6. This is a single page report prepared by Hewitt for the company in response to a request for benchmarking data on copayment practices in the market place. (Erich D. Wilson prepared this response, is the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220-4975 to discuss this response. PAC-07-05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Referencing the response to Monsanto Data Request 2.2, the question asked for the studies, analyses and surveys used to determine the appropriate change in the pension plan for non-union employees. The response refers to Wilson direct testimony as well as Exhibit No. 26. a. Does Exhibit 26 represent the full extent of the Company s basis for its determination of the change in the pension plan? If not, then please provide the studies, analysis and surveys also used to determine the change in the pension plan.b. For Exhibit No. 26, is this single page the complete and entire Hewitt Associates report? If not, then please provide the entire report.c. For Exhibit No. 26, was this single page provided in any presentation or meeting? If so, please provide a copy of the complete presentation and notes made by parties in attendance. Response to Monsanto Data Request 6. The decision to move to a cash balance formula approach was based on information outlined in Exhibit 26 as well as considering the approach taken by each of the other business platforms under MEHC. Consistency across the organization and the market information (Exhibit 26) were the guiding factors in making the decision. Yes. No. (Erich D. Wilson prepared this response, is the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220-4975 to discuss this response. P AC- E-07 -05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Reference the Company s response to Monsanto Data Request 2.19. The response states that the MEHC cross-charges began in April 2006, but the attachment claims the cross-charges commenced on March 1 , 2006. Which is the correct date? Response to Monsanto Data Request 6. The correct date is April 1 , 2006. (Donald R. Barnhisel prepared this response and is the recordholder. Steven R. McDougal is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220-4975 to discuss this response. PAC-O7-05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Follow-up to the Company s response to Monsanto Data Request No. 2.63: Please explain how the costs associated with the Company s long term incentive plan have been removed from the 2006 unadjusted data and how much that adjustment is in the present general rate case. For example, where is this adjustment made in Tab 4 (O&M Adjustments) of Exhibit II? Response to Monsanto Data Request 6. There was no grant of ScottishPower L TIP in 2006 as the last grant made was May 2005. Thus no L TIP costs were recorded in PacifiCorp s accounts for the first three months ofCY 2006. Accordingly, no adjustment was necessary. For the last 9 months of CY 2006 MEHC did not bill the company for L TIP due to the MEHC commitment to limit cross-charges to $9 million annually and no amounts were included in unadjusted results. As such, no adjustment was required to remove L TIP from the last 9 months of 2006. (Erich D. Wilson prepared this response, is also the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220- 4975 to discuss this response. PAC-07-05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Follow-up to the Company s response to Monsanto Data Request No. 2.61: a. Mr. Wilson states that the $27.5 million "is derived by taking the target incentive opportunity of each employee times their current base wage." Could this be restated as saying the target incentive opportunity is multiplied times the current base wage? If not, please explain.b. Is the "target incentive opportunity" a percentage of each employee s base wage? If not, please explain.c. Page 3, line 13, Mr. Wilson states that , " We then separate the total cash compensation portion into two elements: 1) base salary, and 2) an "at risk" or incentive element." Is the "at risk" or incentive element as a percentage of each employee s base wage the same for all employees? If not, how is the separation performed?d. Please explain the current algorithm for determining the amount of each employee s incentive award used in the development of the $27.5 million; e. 60% based on individual employee achievement, 25% based on business unit, etc.e. Please provide a breakdown of the incentive award percentages and eligible wages used in the development of the $27.5 million. For example, Group A: wages average $x, with a target incentive opportunity of y%; Group B: and so forth. Response to Monsanto Data Request 6. a. It would be appropriate to state the determination either as noted in the direct testimony of Mr. Wilson or by stating "incentive opportunity is multiplied times the current base wage. b. Yes, the target incentive opportunity is a percentage of each employee s base wage when determining the actual award amount. c. No, the "at risk" or incentive element is set as a percent of base wage based on the competitive market information made available to the company. d. The actual award amount each employee receives is based on their manager assessment of their performance against their individual goals and safety performance. This is not specifically weighted. e. The development of the $27.5 number is based on the current employee populations (at the time of the filing the application for rate increase) base wage times their target incentive level. There is no segmentation of this population. (Erich D. Wilson prepared this response, is also the recordho1der, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220- 4975 to discuss this response. PAC-07-05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Please provide a copy of the Company s Annual Incentive Plan referenced on line 13 of page 5 of Mr. Wilson s direct testimony, and used as the basis for developing the $27.5 million. Response to Monsanto Data Request 6. The 2007 Annual Incentive Plan document is provided as Attachment Monsanto 10. This document is provided to all employees via the company intranet. (Erich D. Wilson prepared this response, is also the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220- 4975 to discuss this response. IDAHO PAC-07- ROCKY MOUNTAIN POWER MONSANTO DATA REQUESTS SET 6 (1-19) ATTACHMENT MONSANTO 6. ON THE ENCLOSED CD P AC- E-07 -05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Other than the Annual Incentive Plan, what other alternative incentive plans are available to Company employees? Are the costs of any of these alternative incentive plans included in the $27.5 million? Response to Monsanto Data Request 6. The only other incentive plan is the Long Term Incentive Plan which has a limited eligible population of senior managers and the expense of this plan is not included in this filing. (Erich D. Wilson prepared this response, is also the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220- 4975 to discuss this response. P AC- E-07 -05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. If not identified in Monsanto 6-12 or 6-13 above, what is the Plan Term of the incentive planes) used in the development of the $27.5 million? Response to Monsanto Data Request 6. The annual incentive plan term is January 1 - December 31 , 2007. (Erich D. Wilson prepared this response, is also the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220- 4975 to discuss this response. P AC- E-07 -05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Please clarify Mr. Wilson s testimony at lines 15-20 on page 6 of his direct testimony. Mr. Wilson states that the incentive compensation design provides for an upside opportunity for individual employees whose performance surpasses acceptable levels. He also states the overall company payout is limited to the target incentive level. Does this mean that if individuals receive above their target incentive, there must be a corresponding reduction in some other employees incentive in order for the Company to payout only the overall target incentive level? Response to Monsanto Data Request 6. The incentive plan does offer upside opportunity for employees whose performance exceeds expectations. The budgeted incentive amount is set as such that if this occurs, then there would be a corresponding reduction in another employee (or employees) incentive award so as not to exceed the overall target incentive level of the company that is budgeted. (Erich D. Wilson prepared this response, is also the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220- 4975 to discuss this response. P AC- E-07 -05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Reference the $33.9 million Incentive expense (12 months ended December 2006) as shown on Page 4.2 ofMr. McDougal's Exhibit No. 11: a. How much of the $33.9 million was related to the Company s Annual Incentive Plan? b. How much of the $33.9 million was related to the incentive plan for selected officers and key personnel that incorporates achievement of corporate financial performance as one of its critical elements. c. How much ofthe $33.0 million was related to other incentive plans? d. Is all of the $33.9 million related to non-union employees? e. What was the target incentive level for 2006? Did the Company payout more or less than its target incentive level in 2006? f. Has the Company ever paid out less than its target incentive level in aggregate? If so, when? Response to Monsanto Data Request 6. a. $32.4 million was related to the company s Annual Incentive Plan. b. The company no longer weights the incentive based on specific measures like financial performance. The incentive award is based on individual and safety performance. c. $1.5 million was related to other bonus plans. d. The Annual Incentive Plan in a. above is related to non-union employees only. The other bonus plans in c. above could be paid to either union or non- UnIon. e. The 2006 budget (April I-December 31) was $26.8m. The total spend was slightly lower than the target (budget). f. Since the redesign of the compensation plan in 1999, there has not been a year where the amount paid in aggregate was below the targeted level. (Erich D. Wilson prepared this response, is also the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220- 4975 to discuss this response. PAC-07-05/Rocky Mountain Power September 11, 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Follow-up to Monsanto Data Request 2., please fully explain why the difference of $842 082 is multiplied by 0.7435. Response to Monsanto Data Request 6. The adjustment for increasing healthcare premiums is made in the Wage and Benefit Adjustment on pages 4.4 and 4.5 of Mr. McDougal's Exhibit No. 11. These adjustments total $10 288 717, or 74.35% ofthe total adjustment of $13 838 927. The other 25.65% of the total adjustment is not made because it is related to non-utility and capital charges. (Erich D. Wilson prepared this response, is also the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220- 4975 to discuss this response. PAC-07-05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. In Case No. PAC-06-, the Company sought authority to capitalize costs associated with conversion of software to an accounting calendar year, and that these costs will fall between $500 000 and $1 million. Is the Company seeking recovery of those costs in this general rate case? If so, please identify the amount and the page reference in Mr. McDougal's Exhibit 11. If not, show where these costs have been removed from the unadjusted results. Response to Monsanto Data Request 6. The Company has elected not to defer the conversion software costs. Therefore these conversion costs are included in the rate case and are included in Mr. McDougal's Exhibit 11. For more details regarding these conversion costs please refer to the previously provided response to IPUC On-Site Audit 5. (Steven R. McDougal prepared this response, is also the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220-4975 to discuss this response. PAC-07-05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Reference Page 4.17 though 4.17.2 of Mr. McDougal's Exhibit 11:a. Please provide supporting workpapers for the $39,557 830 CIC Severance.b. Please provide supporting workpapers for the $3,925,013 CIC Severance- related SERP.c. Please provide supporting workpapers for the $461 871 CY 2005 deferral.d. Please provide supporting workpapers for the $5 467 764 back-filled and non-regulated employees.e. Please provide supporting workpapers for the $1 045,057 additions 12/31/2006 through 3/9/2007. Response to Monsanto Data Request 6. Please refer to Attachment Monsanto 6.17. (Erich D. Wilson prepared this response, is also the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220- 4975 to discuss this response. IDAHO P A C- E-07 - ROCKY MOUNTAIN POWER MONSANTO DATA REQUESTS SET 6 (1-19) ATTACHMENT MONSANTO 6. ON THE ENCLOSED CD PAC-O7-05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Has the basic algorithm of the Company s incentive compensation plan changed since 2006, or since the last Idaho general rate case? If so, please explain. Response to Monsanto Data Request 6. The establishment of the target levels per job and, in turn, the target level for which an employee is eligible has not changed. However, the determination of the actual award has changed. Previously (prior to April 2006), the incentive plan award was determined based upon a weighting of performance results consisting of company, business unit and individual performance results. The weighting used in the 2005/2006 plan period was 10% company performance, 20% business unit performance (both company and business unit were measured against a balanced scorecard set at the beginning of the fiscal year and focused on improving operational performance and customer satisfaction), and 60% individual performance. In contrast, effective April 1 , 2006, the incentive plan award determination shifted away from this formulaic approach to one where managers would assess individual performance against goals and safety, and then recommend an award where the amount in total would not exceed the budgeted amount for the company as a whole. (Erich D. Wilson prepared this response, is also the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220- 4975 to discuss this response. P AC- E-07 -05/Rocky Mountain Power September 11 , 2007 Monsanto 6th Set Data Request 6. Monsanto Data Request 6. Reference Exhibit 24 and 25, have any of the employees listed on these exhibits been retained by the Company as an outside consultant? If so, please identify and provide the amount of fees paid to such outside consultants. Have any other these fees been included in this rate case? Response to Monsanto Data Request 6. 3 employees from Exhibit 24 and 25 have been retained as outside consultants. No fees were paid in 2006 and none were included in the rate case. Some fees have been paid during 2007: Outside Consultant 2006 2007 up to Aug 8 SREA $37 957 SREA $25,827 Mining (Erich D. Wilson prepared this response, is also the recordholder, and is expected to sponsor this response at hearing. Please contact Brian Dickman at 801-220- 4975 to discuss this response.