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Home My WebLink About980330.docxSCOTT WOODBURY DEPUTY ATTORNEY GENERAL IDAHO PUBLIC UTILITIES COMMISSION PO BOX 83720 BOISE, IDAHO 83720-0074 (208) 334-0320 Street Address for Express Mail: 472 W. WASHINGTON BOISE, IDAHO 83702-5983 Attorney for the Commission Staff BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION) OF UNITED WATER IDAHO INC. FOR) CASE NO. UWI-W-97-6 AUTHORITY TO REVISE AND INCREASE) RATES CHARGED FOR WATER SERVICE.) STAFF’S RESPONSE TO )UNITED WATER IDAHO’S )FIRST SET OF INTERROGA- )TORIES TO COMMISSION )STAFF __________________________________________) The Staff of the Idaho Public Utilities Commission by and through its attorney of record, Scott Woodbury, Deputy Attorney General, hereby responds to United Water Idaho’s First Set of Interrogatories to Commission Staff dated March 19, 1998. MS. TERRI CARLOCK INTERROGATORY NO. 1: On page 12 at lines 7 through 9 of Ms. Carlock’s direct testimony, she asserts that the 15.5% return on equity for the year 1996 for the Moody’s Gas Distribution Companies shown on Schedule 10 of Exhibit No. 101 appears “to be an aberration that may not continue.” Please explain with full academic and empirical support, why a 15.5% return on equity is an aberration and why such a return may not continue. Also, provide any empirical studies which Ms. Carlock has conducted or are in her possession which support her statement. RESPONSE TO INTERROGATORY NO. 1: A trend analysis conducted by sight review of the historical trend of annual returns shown on Schedule 10 of Exhibit No. 101 indicates the 15.5% appears to be an aberration that may not continue. The Value Line Natural Gas (Distribution) group (page 466, December 26, 1997 Value Line Investment Survey) reflects returns of 11.9% in 1993, 11.8% in 1994, 11.2% in 1995, 12.6% in 1996, 12.5% estimated in 1997, 12.5% estimated in 1998 and 13.0% projected for the years 2000-2002. Although this trend may be increasing, it does not indicate a 15.5% return is expected through 2002 and, therefore, may be an aberration. INTERROGATORY NO. 2: On page 12 at lines 9 through 11, please provide all academic and empirical support for Ms. Carlock’s contention that an 11.8% return on equity for the twelve months ended September 1997, as shown on Schedule 10 of Exhibit No. 101, confirms her statement that a 15.5% return on equity for the Moody’s Gas Distribution Companies may not continue. RESPONSE TO INTERROGATORY NO. 2: The 12 months of data ended September 1997 includes the fourth quarter of 1996. The 15.5% was for year-end 1996 including the fourth quarter. For the 1997 year-end return to be similar or higher than the 1996 year-end return of 15.5%, the fourth quarter of 1997 must be significantly better than the fourth quarter of 1996. As I stated in my testimony, this supports my statement. I did not state it confirms my statement since confirmation occurs only after the fact. INTERROGATORY NO. 3: On page 13 at lines 16 through 19 of her direct testimony, Ms. Carlock states: “Competitive risks are limited for United Water. Smaller water companies that have certificated areas near areas served by United Water produce little competition for United Water.” A.Please identify and discuss the impact of the referenced “competitive risks.” B.Please identify the referenced “smaller water companies” and discuss the specific extent to which these companies compete with United Water Idaho. Please provide complete quantitative and empirical support for her response. RESPONSE TO INTERROGATORY NO. 3: (A) Competitive risks are the portion of the business risk that deals with competition between water companies for customers. The competition for customers in certificated areas is limited and has little or no impact on earnings. (B) The referenced smaller water companies are the regulated companies with boundaries near United Water Idaho including Capitol Water Corporation and South County Water Company, Inc. Eagle Water Company, Inc. and United Water Idaho have and continue to compete for potential customers in uncertificated areas. Water utilities may compete for future customers and uncertificated areas. I have not found evidence that there is competition for existing customers. INTERROGATORY NO. 4: On page 14 at lines 3 through 5 of her direct testimony, Ms. Carlock states that: “The demand for water utility services is relatively stable and certain compared to that of unregulated firms and even other utility industries.” Please provide all studies conducted by Ms. Carlock, of which she is aware or in her possession which compares the demand for water utility services with that of other firms, both regulated public utilities and unregulated competitive firms. RESPONSE TO INTERROGATORY NO. 4: I have not prepared written studies making these comparisons, however I have observed this through rate case examinations, reading of rate cases in other jurisdictions, general market observations, my reading of various economic articles and research publications and rating criteria by Standard & Poor’s, Moody’s and Value Line. INTERROGATORY NO. 5: On page 14 at lines 6 through 9 of her direct testimony, Ms. Carlock states that: “Under regulation, utilities are generally allowed to recover, through rates, reasonable, prudent and justifiable cost expenditures related to regulated services.” Is Ms. Carlock aware of any rate cases in which utilities were not “allowed to recover, through rates, reasonable, prudent and justifiable cost expenditures related to regulated services?” If yes, please provide the identities of the utilities involved as well as citations and copies of the relevant portions of the final decisions for the rate cases so identified. If no, please provide the basis of her statement. RESPONSE TO INTERROGATORY NO. 5: I am not aware of any final order where reasonable, prudent and justifiable cost expenditures related to regulated services were not allowed. I used the term generally in recognition that parties to cases may not have agreed with Commission decisions on what is reasonable, prudent, justifiable or related to regulated services. INTERROGATORY NO. 6: On page 14 at lines 10 through 12 of her direct testimony, Ms. Carlock states that: “Utilities in general are sheltered by regulation for cost recovery risks, making the average utility less risky than the average unregulated industrial firm.” A.Are utilities guaranteed cost recovery? Why or why not? B.Please identify any rate cases and provide all citations and copies of the relevant portions of the final decisions where a utility was fully “sheltered by regulation for cost recovery risks.” RESPONSE TO INTERROGATORY NO. 6: (A) Utilities are not guaranteed cost recovery. They are allowed the opportunity to earn a reasonable return on its investment. Some costs may not be allowed as reasonable, prudent and justifiable and this does not guarantee full cost recovery. (B) I did not state that utilities are fully “sheltered by regulation for cost recovery risks.” INTERROGATORY NO. 7: On page 14 at line 18 of her direct testimony, Ms. Carlock states that she used the market data for United Water Resources, Inc., (UWR). Please compare and contrast the investment risk of UWR with that of United Water Idaho and provide supporting documentation in her possession or of which she is aware. RESPONSE TO INTERROGATORY NO. 7: I believe the investment risk is greater for UWR than UWI. This belief is based on my reading of Value Lines business and investment reviews for UWR, UWR Annual Reports, Form 10-Qs and Form 10-Ks. I also base this belief on various United Water cases in numerous jurisdictions including UWI in Idaho. The case reviews were part of readings on PointCast and PUR base, Public Utilities Report, Folio Bound VIEWS, Version 3.11.2 research. I did not copy the various reports, articles and orders. These sources are available on the Internet or available to search and review by appointment in the office of Terri Carlock. INTERROGATORY NO. 8: Regarding page 15, lines 2 through 8 of Ms. Carlock’s direct testimony, please discuss the relevance of the Value Line betas, safety ranking and timeliness rating to the measurement of investment risk. Provide full academic and empirical support in Ms. Carlock’s possession or of which she is aware which supports her response. RESPONSE TO INTERROGATORY NO. 8: The Value Line Betas, Safety Ranking and Timeliness Ranking are available for investors to utilize in making their investment decisions. These rankings provide a comparison between stocks and the market in general. Copies of the definitions for the Beta, Safety and Timeliness Ranking are provided on Attachment to Response to Interrogatory No. 8. INTERROGATORY NO. 9: In Exhibit No. 101, Schedule 12, Ms. Carlock presents various statistics for the companies meeting her comparable earnings criteria as well as United Water Resources, namely, beta, average annual price/earnings ratio, average annual dividend yield, price to book value, cash flow per share, capital spending per share and % earned to common equity: A.Please provide the same statistics for United Water Idaho. B.Please discuss the relevance of each item to the measurement of investment risk. C.Please provide the time period over which each statistic was calculated. D.Please provide the supporting calculations of each statistic, including source documents. RESPONSE TO INTERROGATORY NO. 9: (A) I have not calculated these statistics for United Water Idaho because some of these statistics are not available for United Water Idaho since it does not issue/trade stock and the other statistics can be influenced greatly by parent decisions. (B) These statistics are ratios that can be calculated for companies that have stock traded on the market. The relevance of each of these items to the measurement of investment risk is by a comparison with other stocks. These ratios are some of the ratios that allow investors to evaluate the individual stocks as part of their decision to invest in individual companies. (C) The time period is for the year ended December 31, 1997. (D) Calculated by Value Line Investment Survey for Windows, Version 2.0. This is available for review by appointment at the office of Terri Carlock. INTERROGATORY NO. 10: On Page 16 at lines 5 through 7 of her direct testimony, Ms. Carlock states that: “Utility groups are less risky than industrials and water utilities continue to be the least risky.” Please provide all studies conducted by Ms. Carlock or in her possession which support her statement. RESPONSE TO INTERROGATORY NO. 10: I have not prepared written studies making these comparisons, however I have observed this through rate case examinations, reading of rate cases in other jurisdictions, general market observations, my reading of various economic articles and research publications and rating criteria by Standard & Poor’s, Moody’s and Value Line. INTERROGATORY NO. 11: On page 16 at lines 10 and 11 of her direct testimony, Ms. Carlock states that: “Water companies, including UWR and UWID, are less risky than an average utility company...” Please provide all studies conducted by Ms. Carlock or in her possession which support her statement. RESPONSE TO INTERROGATORY NO. 11: I have not prepared written studies making these comparisons, however I have observed this through rate case examinations, reading of rate cases in other jurisdictions, general market observations, my reading of various economic articles and research publications and rating criteria by Standard & Poor’s, Moody’s and Value Line. INTERROGATORY NO. 12: Regarding page 17, lines 1 through 3 of Ms. Carlock’s direct testimony: A.Please provide the formula and calculations used to adjust the expected industrial return range of 16% - 17% for risk differential which results in a risk adjusted range of 8.8% - 9.4%. B.Please provide all academic and empirical support in Ms. Carlock’s possession or of which she is aware which supports the manner in which she makes her risk adjustment. RESPONSE TO INTERROGATORY NO. 12: (A) For this comparison the industrial return is assumed to represent the market with a Beta of 1. The Beta for UWR is .55, therefore the calculation was made as 16% x .55 = 8.8% and 17% x .55 = 9.4%. (B) The range of 8.8%-9.4% was not directly utilized to develop the 10.25%-11.25% range of reasonableness for the return on equity due to the imprecise methodology and assumptions made in the calculations. INTERROGATORY NO. 13: On page 19 at lines 8 through 10 of her direct testimony, Ms. Carlock states that she believes the “three-month average price (November 19, 1997 - February 17, 1998) is the most appropriate average time interval to use” in her application of the Discounted Cash Flow method. On line 15 of page 19, she cites a March 4, 1998 market price of $19.125. Why didn’t Ms. Carlock use a three-month average price ending March 4, 1998? RESPONSE TO INTERROGATORY NO. 13: The market data on daily stock prices was averaged following the close of market on February 17, 1998 (See workpapers for Response No. 18). These average stock prices were not updated on March 4, 1998 when compared to the daily stock price. The average of the closing stock price from February 18 through March 4 is $19.323. This is higher than both the March 4, 1998 price and the average price utilized on Exhibit No. 101, Schedule 13, page 1 of 2. Including this information would increase the average stock price used in the DCF calculation and ultimately reduce the return on equity range produced from the DCF calculation. After reviewing stock price averages using the time frames of a 52-week high, low and average; a six-month average and a three-month average, the three-month time frame represented a shorter average period with results similar or the same as reflected by the current market price. INTERROGATORY NO. 14: On Page 20, lines 1 through 4 of Ms. Carlock’s direct testimony: A.In what specific ways must the growth rate used in the Discounted Cash Flow model be consistent with the dividend yield used in the Discounted Cash Flow model. Please provide all academic and empirical support in Ms. Carlock’s possession or of which she is aware which supports her response? B.In what specific ways is the growth rate used by Ms. Carlock in her application of the Discounted Cash Flow model consistent with the dividend yield used in her application of the Discounted Cash Flow model? RESPONSE TO INTERROGATORY NO. 14: (A) The growth rate used in the Discounted Cash Flow model must be consistent with the dividend yield to reflect ongoing expectations of investors for the stock. This consistency is important to evaluate the ongoing requirements for the return on equity for a stock. For instance, the DCF model would not reflect the expected return if the growth rates for 10-year historical dividends or earnings per share were utilized and the current market price was utilized; these two figures would be inconsistent. It is more appropriate to use a combination of recent historical growth rates along with projected growth rates and the price at a recent time period that is averaged and compared to the current price. (B) The current stock price and three-month average stock price are higher thanmany historical periods. The sustainable growth and future growth rates were utilized to develop the 3.5%-4.5% range. I recognized the future expectations rather than the historical negative EPS growth rate or the low .5% DPS growth rate. INTERROGATORY NO. 15: On page 21 at lines 13 through 15 of her direct testimony, Ms. Carlock notes that she “adjusted the dividend yield in this case to reflect the impact of quarterly dividend compounding.” Please provide the formula and calculation of the annual dividend rate, compounded for quarterly payments. RESPONSE TO INTERROGATORY NO. 15: The standard future value calculation was used with quarterly dividends of 23¢ for 4 periods with the 3.5% growth rate used as the compounding factor. INTERROGATORY NO. 16: On page 23 at line 8 through page 24, line 2 of her direct testimony, Ms. Carlock discusses her “recap” of Exhibit No. 12, Schedule 1, page 2. In precisely what manner did Ms. Carlock arrive at the ranges of common equity cost rate shown on Line No. 6 of Schedule 14, Exhibit No. 101. RESPONSE TO INTERROGATORY NO. 16: Line 6 is a simple average. The first percentage in Column 1 and 2 and both percentages in Column 3 are the average of lines 1-5. The second percentage excludes from the average the lines Mr. Hanley showed as NA. Column 1 averages lines 2-5. The 11.2% was truncated rather than rounded to 11.3%. Column 2 averages lines 3-5. INTERROGATORY NO. 17: On page 24 at lines 22 through 25 of her direct testimony, Ms. Carlock notes that “the actual capital structure shown on the books of United Water Idaho has been provided by and supported by one of the parent entities.” Please provide all empirical evidence in Ms. Carlock’s possession or of which she his aware which shows that the capital shown on the books of United Water Idaho was provided by United Water Resources, Inc. RESPONSE TO INTERROGATORY NO. 17: The capital structure ratio is determined by the equity investment in the subsidiary and by the earnings the subsidiary is allowed to retain. If the earnings are retained at the subsidiary level, the parent is supporting the capital structure by this decision. INTERROGATORY NO. 18: To the extent not provided elsewhere, please provide hardcopy as well as an electronic copy of all workpapers produced, including all calculations and source documents used by Ms. Carlock in the preparation of her direct testimony and Exhibit No. 101. RESPONSE TO INTERROGATORY NO. 18: The schedules to Exhibit No. 101 are the typed workpapers. The electronic version is the same. All sources are noted on each schedule. Workpapers for Staff witness Carlock consist of Responses to Staff Audit Requests and Production Requests. The following documents were reviewed by not necessarily directly used in testimony and exhibits: Annual Reports, Form 10-Ks, Form 10-Qs, Board Minutes for United Water Resources, Inc., Market publications from Standard & Poor’s, Moody’s, Duff & Phelps, Salomon Brothers, Fitch, Furman Selz and Value Line. News releases and data off the Internet from PointCast and QuoteCom Services. Copyrighted documents referenced in testimony and exhibits are available for review at the Idaho State Library or the IPUC by contacting Terri Carlock. These sources include: Business Week/Economic Indicators; Moody’s Public Utility Manual, 1997; Moody’s Public Utility News Reports, 1997 and 1998; C.A. Turner Utility Report, January-March, 1998; Value Line Investment Survey for Windows, January-March, 1998. MR. RANDY LOBB INTERROGATORY NO. 19: With respect to of Mr. Lobb’s testimony at page 5, line 22, should the revenue contribution analysis be limited to the first year? RESPONSE TO INTERROGATORY NO. 19: Because test year conditions within the acquired systems are used to establish Company revenue requirement and resulting rates, it is the only year that is relevant until a new rate case is filed. INTERROGATORY NO. 20: With respect to of Mr. Lobb’s testimony at page 7, line 18, please provide workpapers supporting the calculations set forth on Exhibits 103, 104, 105, and 113. RESPONSE TO INTERROGATORY NO. 20: The underlying formulas embedded in the investment model used to develop Exhibit Nos. 103, 104 and 105 are shown on Attachment 1. Property tax, O&M per customer, depreciation rate, debt, interest on debt, taxes and return were taken from Company responses to Staff Production Request Nos. 28, 33, 34, 36 and 62. Test year revenue per customer and the number of customers were determined based on Company Exhibit No. 8, Schedule 3, pages 29 and 30 of 31 with current rates. Garden City Exchange customer totals and revenues were modified using dropped book information provided on Company Exhibit No. 8, Schedule 2, page 25 of 39. A mathematical summation error has been identified in Staff Exhibit No. 113 that changes the capital cost totals, the annual expense totals and the associated percentages. Therefore, the underlying formulas used to develop the erroneous prefiled exhibit and the amended exhibit that will be provided at hearing are shown on Attachments 2 and 3, respectively. Although depreciation rates were estimated, the projects included in the exhibit and the associated costs were based on the Company’s response to Staff Production Request Nos. 27, 39, 41 and 42. Staff Exhibit No. 112, page 16 of 49 was also utilized. INTERROGATORY NO. 21: With respect to of Mr. Lobb’s testimony at page 12, line 24, should the Company add a provision to its Rules for contributions for connections to this main? RESPONSE TO INTERROGATORY NO. 21: If the mainline is deemed to be the most cost effective method of providing needed water supply to UWI customers, then as a water supply project, line extension rules would not necessarily apply or be required. However, if the mainline is not justified as a water supply project, then the Company may want to establish line extension rules to recover its mainline costs. In either case, the potential for developers to benefit from an existing, lengthy mainline paid for by others will continue to exist. INTERROGATORY NO. 22: With respect to of Mr. Lobb’s testimony at page 16, line 17, should AFUDC continue on this project to recognize prudent investment and to match the costs of the customers who will benefit? If not, why not? RESPONSE TO INTERROGATORY NO. 22: Yes. If the Commission finds that the river diversion was a prudent investment at this time but should not be allowed in rates, then AFUDC should continue. INTERROGATORY NO. 23: Please provide the source and derivation for the supply and demand amounts reflected on Exhibit 107. RESPONSE TO INTERROGATORY NO. 23: The information used to develop Staff Exhibit No. 7 came from the Company’s responses to Staff Production Request Nos. 1, 2, 19, 21, 22, 25, 38 and 87. Exhibit B of the Company’s application in Case No. UWI-W-97-1 was also utilized. The derivation is shown on Attachment 4. MR. ROBERT E. SMITH INTERROGATORY NO. 24: With respect to Mr. Smith’s testimony at page 5, line 22, he states that “many charges may be overstated. Other than the items identified elsewhere in his testimony for which he recommends adjustment, does he have facts showing any additional specific charges are overstated? If so, please state each and every additional fact. RESPONSE TO INTERROGATORY NO. 24: First, the question misstates the testimony of Mr. Smith. Mr. Smith did not state that “many charges may be overstated” but rather stated “many of the charges may be excessive for the Idaho operation.” As evidenced by Mr. Smith’s testimony at Page 6 beginning at line 15, Staff has no reason to believe that the charges have been incorrectly recorded or “overstated” on the Company’s books. Second, the question in the interrogatory is taken out of the context of the testimony. The testimony questions the economics of corporate decisions and services on the Idaho operation. Third, Staff has not had ample opportunity to thoroughly review each and every transaction with affiliated companies of United Water Idaho and, therefore, has no additional facts regarding such transactions that have not been addressed in Staff’s testimony. INTERROGATORY NO. 25: With respect to Mr. Smith’s testimony at page 7, line 12: A.He indicates that receipt of condemnation proceeds “raised the suspicion” of staff regarding the need and cost of construction and acquisition activities. Does he have any facts showing that UWI’s construction and acquisition activities are in any way linked to the receipt of condemnation proceeds in New Mexico? If so please state each and every other additional fact. B.Did Staff investigate how long the Company has to reinvest proceeds in condemnation? C.Did Staff investigate how much of the proceeds have been reinvested at other subsidiaries? RESPONSE TO INTERROGATORY NO. 25: (A) Staff is aware that United Water Idaho is accounting for it’s construction and acquisition activity in a manner that specifically identifies it’s investments that qualify for the reinvestment program. Staff does not have in it’s possession copies of the accounting data detailing this program but it is readily available from the Company. (B) Yes. See Commerce Clearing House Inc., Federal Tax Guide ¶ 5359. (C) No. Staff did not have either time or access to accounting records of all affiliated companies. To the extent that the Company has compiled this information, please provide a summary of such reinvestment and supporting documentation to Staff. INTERROGATORY NO. 26: With respect to Mr. Smith’s testimony at page 10, lines 3-5, he claims that use of existing water supply sources to serve Garden City “hastens the need to add new water supply sources at incrementally higher costs.” Please provide all calculations or workpapers quantifying the claimed water supply impact. RESPONSE TO INTERROGATORY NO. 26: Staff did not attempt to quantify the water supply impact. It is intuitively obvious that the use of existing water supply sources to serve incremental customers strains the existing available water supply and expedites the timing of incremental water supply sources. To the extent that the Company has performed such a study and has a more detailed estimate of water supply impact, please provide such study to Commission Staff. INTERROGATORY NO. 27: With respect to Mr. Smith’s testimony at page 12, and 19: A.Does the Company pay income taxes on the equity components of AFUDC? B.Does FAS 109 require the equity gross up of AFUDC? RESPONSE TO INTERROGATORY NO. 27: (A) No. (B) No. INTERROGATORY NO. 28: With respect to Mr. Smith’s testimony at page 14, lines 16-17: A.With respect to his adjustment to remove fees and expenses charged by M&S and which were capitalized to overhead, he justifies the adjustment “because of the potential for inter-affiliate subsidiaries.” Other than the claimed potential, does he have any specific facts indicating these charges are unreasonable? If so, please state each and every additional fact. B.Why does Staff believe that the UWM&S construction overheads are of not value? C.Did Staff investigate what services are represents by the capitalized construction overheads? RESPONSE TO INTERROGATORY NO. 28: (A) See Smith Testimony Page 23, line 11 through Page 24, line 20. (B) Staff’s Production Request Nos. 52, 53 and 71 requested specific information regarding fees and charges between UWID and other affiliated Companies. The responses to those requests were general in nature and inadequate for determining the reasonableness of individual transactions. In addition, the Company was slow in responding, using its full response time to provide the requested information despite the fact the information was available on a more timely basis. Staff believes this strategy was intentional to impede Staff’s investigation. (C) Yes. Staff Production Request Nos. 69 and 73 requested that information. The Company response to Production Request Nos. 69, part C and No. 73 provided only general categories. See also answer to Part B above. INTERROGATORY NO. 29: With respect to Mr. Smith’s testimony at page 16, line 25 and page 17, line 1, please specify which language in the Commission’s Order 26671 required the Company to provide in this case “any hard evidence that that provide benefits of leasing over ownership of the vehicle fleet.” RESPONSE TO INTERROGATORY NO. 29: The Commission Order did not specifically instruct the Company to provide such evidence in this case. INTERROGATORY NO. 30: With respect to Mr. Smith’s testimony at page 24, line 6: A.What analysis or study supports Staff’s assertion that “many if not all of the services provided by the M&S Company” can be handled by the local operating company? B.Does Staff believe it would be cost effective for UWI to maintain its own rate staff? If so, why? C.If local operating personnel were to handle “many if not all” of the rate case services provided by UWM&S, would there be an associated additional cost to the Company? RESPONSE TO INTERROGATORY NO. 30: (A) Numerous large corporations including other utility companies are headquartered in Boise. These corporations successfully utilize the Boise labor pool to employ the expertise necessary to competently run their businesses. United Water Idaho has on its existing staff several engineers, accountants and hydrologists providing much of the specific expertise required. No specific “Study” has been performed. Lack of detail for comparative purposes was not provided in response to Staff Request Nos. 52, 53, 69, 71 and 73. (B) It would not be cost effective or even necessary for the Company to maintain it’s own rate staff. United Water Idaho is not large enough to justify or need a separate rate staff. Existing employees of the Company have some expertise in this area already as demonstrated by the participation of Mr. Linam, Mr. Healy, and Mr. Brown. The Company does not operate in multiple jurisdictions and has a limited number of rate schedules for it’s services. (C) There would be a cost associated with performing rate functions locally. Staff is not convinced it would be an “additional” expense when compared to the cost of using the M&S Company for this function together with other M&S Company fees and charges. INTERROGATORY NO. 31: With respect to Mr. Smith’s testimony at page 24, line 16, please provide support for the figures set forth at lines 18 and 20. RESPONSE TO INTERROGATORY NO. 31: See Company response to Sharon Ullman’s Production Request No. 14, and Staff Production Request No. 76. Copies of pertinent pages attached. The $66,500 number on line 18 is incorrect; the amount should be $33,250. INTERROGATORY NO. 32: With respect to Mr. Smith’s testimony at page 24, lines 16 through 20, he states that “the Company was billed over $66,500 for one M&S employee in a four month period.” And over $15,000 for this employee in November. Please provide the support for these statements along with any workpapers. RESPONSE TO INTERROGATORY NO. 32: See response to Interrogatory No. 31. INTERROGATORY NO. 33: With respect to Mr. Smith’s testimony at page 24, lines 23-24, he recommends disallowing “at least one-half” of the Company’s estimated rate case expense. Please provide any calculations or workpapers to show that one-half or more of the claimed expense is unreasonable. RESPONSE TO INTERROGATORY NO. 33: There are no workpapers or calculations. INTERROGATORY NO. 34: With respect to Mr. Smith’s testimony at page 25, starting on line 24, he states that the rate case expenses should be split between customers and stockholders. Please cite the Commission rule that prescribes this treatment. RESPONSE TO INTERROGATORY NO. 34: There is no rule. INTERROGATORY NO. 35: With respect to Mr. Smith’s testimony at page 27, line 4, did Staff investigate depreciation lives for current investment in Information Technology Systems? RESPONSE TO INTERROGATORY NO. 35: No. DATED at Boise, Idaho, this day of March 1998. _______________________________ Scott Woodbury Deputy Attorney General Technical Staff:Robert Smith Terri Carlock Randy Lobb SW:/umisc/prodreq/respons/ uwiw976.rs1