PSC REF#:374923 Wisconsin Electric Power Company and Wisconsin Gas LLC Docket 5-UR-109 August 28, 2019 1 Q. Please state your name, occupation and business address. 2 A. My name is Patrick P. Sullivan. I am employed by the Public Service Commission of 3 Wisconsin as a Public Utility Auditor in the Division of Energy Regulation and Analysis. 4 My business address is 4822 Madison Yards Way, Madison, Wisconsin. 5 Q. Please describe your educational background and experience. 6 A. I graduated from the University of Wisconsin-Madison with a Bachelor of Science 7 Degree majoring in economics. I subsequently graduated from the Kelley School of 8 Business at Indiana University with a Master of Science degree majoring in finance. 9 Prior to accepting my position with the Commission, I provided financial, credit, 10 regulatory, and economic analysis for a variety of commercial and retail customers at 11 Bank of America/Merrill Lynch, Wisconsin Department of Financial Institutions, Home 12 Savings Bank, and John Deere Financial. I began working at the Commission in January 13 2015. I left the Commission in May 2016 and returned in May 2017. 14 Q. Please explain the purpose of this proceeding. 15 A. Wisconsin Electric Power Company (WEPCO) and Wisconsin Gas LLC (WG) (together, 16 We Energies) filed a joint application with the Commission on March 23, 2019, 17 requesting authority to increase its electric, gas, and steam rates on January 1, 2020, and a 18 step increase for its electric rates on January 1, 2021. WEPCO requested Wisconsin 19 jurisdictional revenue increases of $82.62 million (2.9 percent) in 2020 and Direct-PSC-Sullivan-1 Public Service Commission of Wisconsin RECEIVED: 08/28/2019 1:45:01 PM Public Service Commission of Wisconsin Direct Testimony of Patrick Sullivan Division of Energy Regulation and Analysis 1 $82.62 million (2.9 percent) in 2021 for its electric operations, a $14.7 million 2 (3.9 percent) revenue increase for its natural gas operations (WE-GO) in 2020, and 3 $0.958 million (4.5 percent) revenue increase in 2020 for its Valley steam operations 4 (WEPCO Steam). WG requested a $10.96 million (1.8 percent) increase for natural gas 5 operations in 2020. 6 Q. 7 8 Please describe the primary factors contributing to the requested electric, natural gas, and steam rate changes. A. 9 We Energies’ witness Joseph Zgonc has provided some background on the major drivers of the rate adjustments requested for the electric, natural gas, and steam rate changes in 10 his pre-filed testimony on pages Direct-WEPCO WG-Zgonc-6 through 9 and has 11 provided an analysis of the electric utility revenue requirement drivers for both 2020 and 12 2021 on Schedule 2 of Ex.-WEPCO WGC-Zgonc-1. 13 Q. What is the purpose of your testimony? 14 A. The purpose of my testimony is to provide the Commission, We Energies, and all parties 15 in this proceeding with an inventory of Commission staff’s adjustments to the revenue 16 requirement for the test year ending December 31, 2020 as result of Commission staff’s 17 audit, to be used as a basis for determining final rates in this docket. 18 Q. Are you sponsoring any exhibits with your direct testimony? 19 A. Yes. I am sponsoring one exhibit. The exhibit, marked for identification as 20 Ex.-PSC-Sullivan-1, is entitled We Energies Inventory of Commission Staff Audit 21 Adjustments and Deferral Amortization Schedule for the Wisconsin Electric Power 22 Company (Electric, Natural Gas, and Valley Steam Operations) and Wisconsin Gas, LLC 23 (Natural Gas Operations) for the Test-Year Ending December 31, 2020. Direct-PSC-Sullivan-2 1 Q. Was this exhibit prepared by you or at your direction? 2 A. Yes, it was. 3 Q. Please summarize Commission staff’s adjustments to the 2020 Test Year revenue 4 5 requirements for WEPCO Electric, WE-GO, WEPCO Steam, and WG. A. Based on its audit, Commission staff adjustments to the We Energies filing totaled a 6 $76.4 million reduction in revenue requirement for WEPCO Electric operations, an 7 $11.2 million reduction in revenue requirement for WE-GO operations, a $673 thousand 8 increase in revenue requirement for WEPCO Steam operations, and a $20.6 million 9 reduction in revenue requirement for WG. Commission staff’s revenue adjustments 10 noted above are on a total company basis and assumed a single rate adjustment for the 11 2020 test year only. Commission staff’s estimated revenue deficiencies for WEPCO’s 12 operations and the estimated revenue excess for WG operations are based on 10.0 percent 13 rate of return on common equity (ROE) and the currently authorized equity layer of 14 51.0 percent. 15 Q. Please explain Schedule 1 of Ex.-PSC-Sullivan-1. 16 A. Columns (a) through (d) reflect the total company revenue requirement impact of each 17 adjustment on WEPCO Electric, WE-GO, WEPCO Steam, and WG, respectively. 18 Q. Explain Adjustment 1. 19 A. Adjustment 1 increases WE-GO and WG gas revenues by $4,480,000 and $994,000, 20 respectively. This adjustment increases WE-GO gas margin revenues by $1,648,000 and 21 WG gas margin revenue by $641,000 due to Commission staff’s adjustments to estimated 22 test-year number of customers and therm sales to their 5-year linear trends. 23 Q. Explain Adjustment 2. Direct-PSC-Sullivan-3 1 A. 2 3 sales forecast. Q. 4 5 Adjustment 2 increases steam revenues by $633,000 due to Commission staff’s test-year Please discuss Commission staff’s Adjustment 3 to labor expenses for the We Energies utilities. A. Commission staff’s adjustments to labor expense is comprised of multiple adjustments. 6 The first labor adjustment removed 100 percent of the test-year incentive compensation 7 forecast in We Energies’ filed revenue requirement, this adjustment includes all expensed 8 and capitalized incentive compensation. 9 The second adjustment reduced the filed 2020 full-time equivalents (FTE) of 10 regular full-time employees for each of the We Energies utilities to reflect the March 2019 11 actual levels for each utility. Based on information provided during the audit, the number 12 of regular full-time employees and the associated expenses have steadily decreased since 13 2016. Accordingly, the FTEs for each utility’s regular full-time employees was maintained 14 at the March 2019 levels which is in line with the historic trend. 15 The third labor adjustment was to part-time and seasonal employee labor for each 16 of the We Energies utilities. This adjustment reflects the historic average expense level 17 as adjusted for linear growth. The final labor adjustment relates to the level of wage 18 increase included in the test-year payroll estimates for each of the We Energies’ utilities. 19 Wage rates for the represented employees were based on escalation rates embedded in 20 any collective bargaining agreements. The wages for the non-represented, management 21 and executive employees were held to the level of inflation for the 2020 test year. The 22 total labor adjustments, including capitalized amounts, were $25,826,000 for WEPCO 23 Electric, $3,002,000 for WE-GO, $317,000 for WEPCO Steam, and $4,893,000 for WG. Direct-PSC-Sullivan-4 1 Q. Please explain Adjustments 4 and 5. 2 A. Adjustment 4 reduces purchased gas expense for WE-GO and WG to remove the 3 reservations charge for the Bluewater Firm Storage Agreements (Agreements) from the 4 purchased gas adjustment clause (PGAC) as required by Order Condition 10 of the 5 Commission’s Final Decision in docket 5-DR-112. (PSC REF#: 326817.) 6 We Energies witness Mary Wolter notes in her direct testimony that recovery of 7 these reservation charges via the PGAC provides a balance of risk between customers 8 and shareholders as unanticipated revenues streams are included in the PGAC which 9 accrues to the benefit of customers. Also, prudently-incurred, unanticipated costs will be 10 11 recovered on a timely basis via the PGAC which reduces some of the operational risk. The Commission may wish to consider if an escrow accounting treatment would 12 be an appropriate alternative in providing a similar sharing of the PGAC’s risks and 13 benefits identified by Ms. Wolter. Unanticipated revenues or prudently incurred costs 14 could be recovered thru the regulatory asset or liability created in an escrow accounting 15 authorization. Escrow accounting would create an increased regulatory lag for the 16 incremental revenues and costs to be recovered as compared to the PGAC. However, 17 since this is the first time recovery of these reservation charges has been subject to rate 18 review, escrow accounting would provide both We Energies and Commission staff the 19 opportunity to review the performance of the Agreements. Should the Commission 20 determine that escrow accounting is not warranted, the risk of unanticipated costs and the 21 benefit of incremental revenues would transfer to shareholders. Direct-PSC-Sullivan-5 1 Adjustment 5 reflects the movement of the costs recovered via the Agreements to 2 the Gas Storage FERC accounts for recovery via base rates consistent with the 3 Commission’s Final Order in 5-DR-112. 4 Commission staff acknowledges that if the Commission determines recovery of 5 costs associated with the Agreements should remain in base rates, additional adjustments 6 to the revenue requirement may be warranted. Additionally, the cost of gas will need to 7 be formally amended in the Commission’s order. Should this need arise, Commission 8 staff will work with We Energies to ensure the correct rate making treatment which 9 should have minimal impact on customers’ bills all else being equal. 10 Q. Please explain Adjustment 6. 11 A. Adjustment 6 reflects the correction of an incorrect allocator for certain outside services 12 expenses included in Account 923. 13 Q. Please explain Adjustment 7. 14 A. Adjustment 7 reflects the levelized use of the unprotected excess deferred income tax 15 (EDIT) savings which were created as a result of the Tax Cut and Jobs Act (TCJA) of 16 2017 lowering the federal corporate tax rate from 35 percent to 21 percent. The TCJA 17 became effective on January 1, 2018, and was addressed by the Commission in docket 18 5-AF-101. 19 Q. Please explain Adjustment 8. 20 A. Adjustment 8 is based on Commission staff’s adjustment to the PIPP SSR regulatory asset. 21 Commission staff reviewed FERC Order 556 issued on October 19, 2018, in its docket 22 ER14-1242-006. In data request response PSC-PPS-56 (PSC REF#: 369936), WEPCO 23 Electric acknowledged that it issued refunds only for January 2015 then the SSR was Direct-PSC-Sullivan-6 1 terminated. Commission staff’s analysis of FERC Order 556, concluded that 2 approximately 20.88 percent of the total SSR carrying costs represent expenditures that 3 could have been estimated by the company and excluded from the original calculation of 4 SSR expense. Therefore, based on carrying costs provided in initial data request response 5 RR-50 (4Q) (PSC REF#: 362722), Commission staff reduced the total carrying costs by 6 20.88 percent which amounted to $12,760,000, prior to tax impacts. The $12,760,000, net 7 of tax and carry, was subtracted from to the SSR gross regulatory asset as of year-end 8 2019. This reduction to the regulatory asset resulted in the $2,073,000 reduction in the 9 revenue requirement. To remain consistent with WEPCO Electric’s presentation, the 10 aforementioned revenue requirement reduction is an increase in other operating revenues. 11 Q. Please explain Adjustment 9. 12 A. Adjustment 9 is based on adjustments to Account 904 with reductions in bad debt 13 expenses totaling $6,328,000 for WEPCO Electric, $1,020,000 for WE-GO, and 14 $1,142,000 for WG. These adjustments are based the 3-year (2016-2018) average net 15 write-offs for escrowed accounts as experienced by each utility. 16 Q. Please explain Adjustment 10. 17 A. Adjustment 10 consists of Commission staff’s modification to the expected removal costs 18 for the Pleasant Prairie Power Plant consistent with the actual removal costs as disclosed 19 in data request response PSC-PPS-57. (PSC REF#: 369935) 20 Q. Please explain Adjustment 11. 21 A. Adjustment 11 reflects primarily the removal of promotional advertising expense from 22 Account 913 and institutional advertising from Account 930.2 which has been standard 23 Commission staff practice for each of the We Energies utilities. Direct-PSC-Sullivan-7 1 Q. Please explain Adjustment 12. 2 A. Adjustment 12 reflects a reduction of $4,787,000 to non-labor operations and 3 maintenance (O&M) expense Account 553 to reflect an inflated 3-year average of 4 historical actual production expenses primarily related to Paris Generating Station. 5 Q. Please explain Adjustment 13. 6 A. Adjustment 13 reflects a $4,257,000 reduction to O&M Accounts 500-514 associated 7 with the South Oak Creek Generating Units to reflect a 5-year inflated average of 8 historical actual non-labor O&M expenses. 9 Q. Please explain Adjustment 14. 10 A. Adjustment 14 consists of reductions in the amortization expenses based on Commission 11 staff witness Joe Fontaine’s adjustments to conservation expenses as discussed in his 12 testimony. The adjustments to the amortizations expenses total $412,000 for WEPCO 13 Electric, $945,000 for WE-GO, and $1,070,000 for WG. The remainder of the 14 adjustment consists of adjustments to informational advertising, labor, and inflation. 15 Q. Please explain Adjustment 15. 16 A. Adjustment 15 consists of a $1,060,000 reduction in long-term disability expense which 17 is allocated across each of the We Energies utilities based on the data request response 18 PSC-PPS-59. (PSC REF#: 368778.) This adjustment also includes small reductions in 19 benefits related expenses associated with the reduction in the 2020 test year FTEs 20 discussed in Adjustment 3. 21 Q. Please explain Adjustments 16 and 18. 22 A. Adjustments 16 and 18 modify expenses related to industry association dues and other 23 miscellaneous adjustments consistent with past Commission staff practice. Direct-PSC-Sullivan-8 1 Q. Please explain Adjustment 17. 2 A. Adjustments 17 reflects Commission staff’s modification to the treatment of dividends 3 payable to function as a short-term source of financing and made other modifications of 4 regulatory assets for WEPCO Electric and WG. These changes resulted in Commission 5 staff’s Ratio of 85.12 percent for WEPCO Electric and 87.95 percent for WG compared 6 to the filed Ratios of 84.68 percent for WEPCO and 87.74 percent for WG. 7 Q. Please explain Adjustment 19. 8 A. Adjustments 19 consists of the removal of two projects from rate base which lacked 9 required Commission approval. 10 Q. Are there any special tax issues that affect Adjustment 20? 11 A. Yes. In the last full rate case proceeding in docket 5-UR-107, the Commission 12 determined it was reasonable to continue the escrow for the domestic production 13 activities deduction, also known as the Section 199 deduction, but it should be 14 reevaluated in We Energies’ next rate proceeding. This item was escrowed at the request 15 of WEPCO Electric because it was difficult to accurately forecast at that time. We 16 Energies witness David Hughes explains in his direct testimony that the Tax Cuts and 17 Jobs Act, which became effective January 1, 2018, repealed the section 199 domestic 18 production deduction. Accordingly, the section 199 deduction is not included in the tax 19 expense calculation for the 2020 test year and no additional deferrals will be made; 20 however, the remaining escrow balance needs to be amortized. 21 In data request response PSC-PPS-77, WEPCO Electric utilized bonus 22 depreciation in lieu of taking the section 199 deduction resulting in additional savings for 23 customers. The savings are derived from the cost-less accumulated deferred income tax Direct-PSC-Sullivan-9 1 financing and elevated levels of capital expenditures. Commission staff could not find 2 any non-transmission only, public utility companies that did not elect bonus depreciation. 3 Commission staff further noted that the section 199 escrow account became a debit 4 (asset) balance in early 2011. To better align the recovery period of the regulatory asset 5 with the time it took to accrue, Commission staff adjusted the amortization of the section 6 199 regulatory asset from the 4-year recovery period put forth in WEPCO Electric’s 7 filing, to 8 years. This extension of the recovery period reduced WEPCO Electric’s 8 revenue requirement by $8,447,000 for the 2020 test year which is Adjustment 20. 9 Q. Please explain Adjustment 21. 10 A. Adjustment 21 reflects the revenue requirement impact for WEPCO and WG to modify 11 their capital structures to 10.0 percent rate of ROE and a 51.0 percent equity layer in 12 insolation. 13 Q. Please explain Adjustment 22. 14 A. Adjustment 22 reflects Commission staff’s adjustment to WEPCO Electric’s Solar Now 15 Pilot program approved in docket 6630-TE-102. (PSC REF#: 356192.) Order Condition 8 16 of the Commission’s Final Decision stipulated that, “WEPCO shall limit the deferral for 17 Solar Now to capital costs associated with executed lease agreements.” In data request 18 response PSC-PPS-97 (PSC REF#: 371779), it is explained that the capital expenditure for 19 this program were slower than WEPCO Electric anticipated. Accordingly, Adjustment 23 20 reduces the test-year capital expenditures to reflect the reduction in gross plant. This 21 adjustment reflects the reduced depreciation expense, accumulated depreciation, and the 22 reduction in tax credits associated with Commission staff’s reduction of solar plant in 23 service for the 2020 test year. Finally, due to the lack of executed contracts as reported in Direct-PSC-Sullivan-10 1 in PSC-PPS-97, Adjustment 18 reflects the removal of the amortization expense for the 2 Commission authorized regulatory asset associated with the 2019 return on and of the solar 3 units going in service for 2019. WEPCO Electric will continue to defer any 2019 revenue 4 requirement impacts associated with executed contracts for the Solar Now Program. 5 Q. Please explain Adjustment 23. 6 A. Adjustment 23 reflects Commission staff’s updated inflation assumption consistent with 7 past Commission staff practice. 8 Q. Please explain Adjustment 24. 9 A. Adjustment 24 decreases test-year expense related to Taxes Other Than Income Taxes by 10 $222,000 on a total company basis. The decrease is based on Commission staff’s 11 estimates of payroll taxes and remainder assessments. 12 Q. Please explain Adjustment 25. 13 A. Adjustment 25 reflects updated pension expense based on an updated analysis from 14 We Energies’ actuary to account for changes in the capital markets since original 15 preparation of the rate case materials. These adjustments totaled $563,000 for WEPCO 16 Electric, $143,000 for WE-GO, $29,000 for WEPCO Steam, and $261,000 for WG. 17 Q. Please explain Adjustment 26. 18 A. Adjustment 26 reflects the impact of Adjustment 21 on Commission staff’s adjustments 19 impacting rate base and the ratio for each of the We Energies utilities. This line item 20 encompasses the offsetting impacts of reducing average net investment rate base and 21 modifying the capital structure. 22 Q. Please explain Adjustment 27. Direct-PSC-Sullivan-11 1 A. Adjustment 27 reflects WEPCO Electric adjustments associated with Opportunity Sales, 2 Fuel, and Purchased Power, as discussed in the testimony offered by Commission staff 3 witness Michael Ritsema. Additionally, this adjustment includes the additional fuel cost 4 allocated from WEPCO Electric to WEPCO Steam based on Commission staff’s 5 adjustment to WEPCO Steam sales in Adjustment 2. 6 Q. Please explain Schedule 2 of Ex.-PSC-Sullivan-1. 7 A. Schedule 2 is a listing of the deferred accounts included in Commission staff’s adjusted 8 financial statements for WEPCO and WG in the 2020 test year and the associated 9 2020 amortization expense. 10 As a result of the ratemaking process, and with reasonable assurance by a 11 regulatory commission of future cost recovery, utilities sometimes include allowable 12 costs in a period other than the period in which those costs would be charged to expense 13 by an unregulated enterprise in accordance with Generally Accepted Accounting 14 Principles. These differences usually relate to the timing of the recognition of a cost. 15 The result of these timing differences is the creation of deferred accounts. The 16 Commission’s policy on deferred accounts is set forth in the Commission staff’s 17 Accounting Policy Team Statement of Position 94-01, approved by the Commission on 18 February 23, 1995. 19 Q. Has WEPCO Electric requested any new deferral accounting treatment? 20 A. Yes, on pages 1 and 2 of Direct-WEPCO WG-Stasik-1, Richard Stasik requested deferral 21 accounting treatment for rebates up to $1,000 per participating customer in its proposed 22 Residential Electric Vehicle Pilot (REV Pilot), to defray some of the costs for installing 23 charging equipment in customers’ homes. Mr. Stasik further explains if the program is Direct-PSC-Sullivan-12 1 fully subscribed in 2021, there is an aggregate cap on REV Pilot rebates of $7.50 million. 2 WEPCO Electric requests that the rebates accrue as regulatory assets with carrying costs 3 at the short-term debt rate. No revenue requirement impact was included in this 4 proceeding and, if authorized, any deferred rebates would be reviewed for recovery in 5 WEPCO Electric’s next rate proceeding. We Energies asserts that it cannot predict with 6 certainty what percentage of the rebates will be utilized in 2021 thus the deferral is 7 necessary. 8 Under Staff Accounting Policy Statement of Position 94-01, which has been 9 accepted and applied by the Commission pursuant to Commission order1 there are several 10 criteria that the Commission uses to evaluate a request for deferral account treatment for 11 a utility expenditure: 1) whether the cost is outside of the utility’s control; 2) whether the 12 cost is unusual and infrequently occurring; 3) whether the amount, if recognized in the 13 year of expenditure, would cause the utility serious financial harm or significantly distort 14 the current year’s income; and 4) whether the immediate recognition of the expenditure 15 would have a significant impact on ratepayers. 16 Should the Commission determine it is appropriate for WEPCO Electric to defer 17 the REV Pilot rebate costs with carrying costs, the short-term debt rate would be a 18 suitable choice. Further, should the Commission wish to consider WEPCO Electric’s 19 deferral request, Commission staff suggests two additional conditions for Commission 1 1 See, e.g., Order, Application of Northern States Power Company-Wisconsin, for Deferred Accounting Treatment for Pension Settlement Accounting Expense, docket 4220-AF-100 (Wis. PSC Dec. 13, 2017)(PSC REF#: 334830); Order, Northwestern Wisconsin Electric Company Request for Deferral, docket 4280-AF-100 (Wis. PSC Feb. 8, 2018)(PSC REF#: 337504); Interim Order, In re Wisconsin Power and Light Company, docket 6680-UR-109, 1994 WL 747576 (Wis. PSC Dec. 8, 1994), Final Decision, Joint Application of Wisconsin Public Service Corporation, Wisconsin Power and Light Company, and Madison Gas and Electric Company for Approval to Purchase the Forward Wind Energy Center from Forward Energy, LLC, docket 5-BS-226 (Wis. PSC Mar. 20, 2018)(PSC REF#: 339856). Direct-PSC-Sullivan-13 1 consideration. The first is that the authorization be for accounting purposes only and that 2 it not bind the Commission to any specific treatment for this item in any future 3 proceeding involving rates or other matters before the Commission. The second is that 4 WEPCO Electric be required to provide further information and documentation regarding 5 the costs and benefits to ratepayers of its Residential Electric Vehicle Pilot program. 6 Such information would then aid the Commission in its decision making regarding the 7 recoverability of the deferral in a future rate case. 8 Q. Does this conclude your direct testimony? 9 A. Yes, it does. PPS:jlt:DL:01698004 Direct-PSC-Sullivan-14 PSC REF#:374924 We Energies Docket 5-UR-109 Inventory of Commission Staff Audit Adjustments and Deferral Amortization Schedule for the Wisconsin Electric Power Company (Electric, Natural Gas, and Valley Steam Operations) and Wisconsin Gas LLC (Natural Gas Operations) for the Test-Year Ending December 31, 2020 August 28, 2019 Division of Energy Regulation and Analysis PUBLIC SERVICE COMMISSION OF WISCONSIN Ex.-PSC-Sullivan-1 Public Service Commission of Wisconsin RECEIVED: 08/28/2019 1:45:01 PM Ex.-PSC-Sullivan-1 Docket 5-UR-109 Witness: Patrick Sullivan August 28, 2019 Cover Page Ex.-PSC-Sullivan-1 Docket 5-UR-109 Witness: Patrick Sullivan August 28, 2019 Schedule 1 Page 1 of 1 WE Energies Inventory of Adjustments from Commissin Staff's Audit 2020 Test Year Total Company Basis Dollars in 000's WEPCO Electric Adjustment Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Specific Adjustment Explanation Gas Margin Steam Revenue Labor Adjustment Remove Bluewater From Cost of Gas Add Bluewater Reservation Charges to O&M Acct 923 Levelize EDIT Utilization SSR Adj. Acct 904 - (Update Uncollectables Escrow) P4 Removal Costs Adjustment in 2020 Accts 909, 913, 930.1 (Advertising Adjustment) Acct 553 SOC and P4 NL O&M Acct 908 (Update Conservation Escrow) Acct 926 Acct 930.2 (Miscellaneous) Ratio Adjustments (Dividends Payable) Acct 930.2 (Association Dues) Rate Base / Plant Extend 199 Deferral Recovery to 8 Yrs ROE and Cap Structure Impacts (Staff Audit Only) Amort and CWIP Adjust to Solar Now Contracts Updated Inflation TOTIT (payroll taxes) Pensions / Actuarial Update Combination effect (Modeling Impacts) Fuel Ex.-PSC-Sullivan-1 (a) Adjustment RR Impact WEPCO WEPCO Gas Steam WG (b) (c) (d) (1,648) (25,826) (942) 32,265 (2,073) (6,329) (427) (1,030) (4,787) (4,257) (412) (1,173) (638) (3,099) (704) (2,128) (8,447) (29,317) (2,242) (565) (102) 563 1,073 (15,852) (76,449) (3,002) (14,607) 14,394 (61) 4,610 (1) (1,020) (66) (55) (945) (127) (41) (482) (95) (3,943) 39 (4,400) (26) (143) (7) 61 362 (11,202) (641) (633) (317) (7) 1,745 (4,893) (20,979) 20,730 (162) (2,690) (1,142) (3) (4) (21) (5) (20) (5) 2 2 (186) (1) (29) (1) 10 8 138 673 (438) (1,070) (197) (194) (427) (8,393) (261) (112) 147 104 (20,619) Ex.-PSC-Sullivan-1 Docket 5-UR-109 Witness: Patrick Sullivan August 28, 2019 Schedule 2 Page 1 of 2 WE Energies Deferral Amortization Sechdule Forecast through 2021 Dollars in 000's Cells in boxes have changed from the filed Ex.- WEPCO WG-Zgonc-3 Company / Description Utility Inc Stmt 12/2019 Ending Account Bal Sheet Account Balance 2020 Deferral 2020 Amortization 12/2020 Ending Balance 2021 Deferral 2021 12/2021 Amortization Ending Balance Wisconsin Electric Power Company Earnings sharing Other Reg Liab-Earnings Cap Elec Electric transmission costs Energy costs MISO Day 2 WUMS Agreement Other Reg Assets-Def-MISO Day 2 Charges Energy costs recoverable through rate adjustments CSAPR Deferral Energy costs refundable through rate adjustments Other Reg Liab-Refund WI Retail Fuel WE Electric WE Electric Various WE Electric WE Electric 555 555 WE Electric 555 WE Electric 555 WE Electric WE Electric WE Electric WE Electric WE Electric WE Electric WE Gas WE Gas WE Gas WE Gas WE Electric 908 908 908 908 908 908 908 908 908 WE Electric WE Electric WE Electric WE Gas WE Gas WE Steam WE Steam WE Electric WE Electric WE Electric Various Energy efficiency programs Other Reg Assets-Act 141 Electric Utility Payments Other Reg Assets-Act 141 Elec Large Cust Escrow Other Reg Assets-Energy Efficiency Gas Program Other Reg Liab-Conservation Escrow Elec (WI) Other Reg Liab-ConserEscrow PTF EnerProcure Elec Other Reg Liab-WE Agricultural Service Program Other Reg Assets-Act 141 Gas Utility Payments Other Reg Assets-Act 141 Gas Large Customer Escrow Other Reg Liab-Conservation Escrow Gas (WI) Environmental remediation costs Escrowed PTF - WI Income tax related WE - Deferred Tax Expense (Pre-Tax) - TAX REPAIRS WE - TR - Remeasure - Electric (P) WE - TR - Remeasure - Electric (U) WE - TR - Remeasure - Gas (P) WE - TR - Remeasure - Gas (U) WE - TR - Remeasure - Steam (P) WE - TR - Remeasure - Steam (U) Other Reg Asset-DPMD-Electric Other Reg Assets-Elec Tax & Int Assess Payments Other Reg Liab-Tax & Int Refunds Receipts Other Oth Reg Assets-Greenhouse Gas Reduction Initiative Oth Reg Liab-Section 1603 Treasury Grant-FERC Oth Reg Liab-Section 1603 Treasury Grant-WI Other Reg Assets-MISO RSG Deferral Other Reg Assets-Montfort Deferral Other Reg Assets-NOx Escrow Other Reg Assets-Pt Beach WI Other Reg Liab-Elec SO2 Allowances Other Reg Liab-MISO Sch 33 Black Start Revenue Other Reg Liab EW5 Sale Costs/Benefits Pension settlement accounting Plant retirements Other Reg Assets-PWPP Retirement WEPCO P4 Retirement 410/421 408 408 WE Electric WE Electric WE Electric WE Electric WE Electric WE Electric WE Electric WE Electric WE Electric WE Electric WE Common 926 WE Electric WE Electric 407 407 930 410 410 456 456 456 456 456 456 456 254 - (1) 2,753 2,228 182 526 182 341 341 182 254 (5,029) 11,220 182 694 182 (6,270) 182 (25,513) 254 11,230 254 (744) 254 (1,592) 182 5,850 182 95 254 11,747 34,484 (601,487) 277,845 182 (677,914) 254 (193,132) 254 (84,536) 254 21,120 254 (6,937) 254 8,063 254 50,612 182 (746) 182 4,139 254 6,365 166 182 (5,091) 254 5,211 254 900 182 0 182 1,595 182 (181) 182 (148) 254 3,914 254 254 5,405 182 829,602 2,728 182 604,531 182 Ex.-PSC-Sullivan-1 - - 334,292 - - - - - - 68,227 - - (337,664) (1,377) (1,114) (263) (170) (170) - - (54,690) 34,995 22,000 2,216 1,142 1,342 5,475 1,057 - (36,922) (22,116) 919 12,756 (2,544) (970) (3,734) (2,032) (47) 1,393 389,837 - (1,743) (402,006) 130,640 - (4,041) (4,041) 6,000 6,000 (5,557) 22,473 127,102 1,766 (5,280) 174 (2,016) (6,326) 858 (2,555) 1,355 (83) (868) (450) (797) 91 74 3,389 (666) (41,908) (273) (30,202) (3,373) 1,377 1,114 263 170 170 8,508 9,293 579 (3,135) (12,756) 9,828 (372) 149 4,875 47 11,397 22,315 (470,847) 272,288 (655,441) (66,030) (82,770) 15,840 (6,763) 6,047 44,286 112 1,585 3,678 83 (5,091) 4,342 450 0 797 (91) (74) 3,261 4,739 793,694 2,455 580,329 - - 341,038 - - - - - - 68,227 - - (337,664) (1,377) (1,114) (263) (170) (170) - - (54,690) 34,995 22,000 2,216 1,142 1,342 5,475 1,057 - (36,922) (22,116) 919 12,756 (2,544) (970) (3,734) (2,032) (47) 384 394,793 - (1,743) (402,006) 69,567 - (4,041) (4,041) 6,000 6,000 (5,557) 22,473 66,029 1,766 (5,280) 174 (2,016) (6,326) 858 (2,555) 1,355 (83) (868) (450) (797) 91 74 3,389 (666) (41,908) (273) (30,202) 0 (0) (0) (0) 0 0 22,045 7,366 463 0 (0) 8,426 (0) 1,890 3,900 (0) 10,037 15,101 (401,280) 266,731 (632,968) (81,004) 10,560 (6,588) 4,031 37,960 970 (970) 992 0 (5,091) 3,474 (0) 0 (0) (0) 0 2,609 4,073 757,786 2,183 556,127 Other Reg Assets - P4 AFUDC Equity deferral WEPCO Presque Isle Retirement Reg Asset Write Offs/Carry and Avoided Amort Oth Reg Liab-Avoided Carry on Reg Asset Write Offs Renewable energy Other Reg Liab-Renew Energy Prog Elec WE Solar Now 2019 Return On/Of Tax savings / remeasure Oth Reg Liab-Tax Reform Svg - Elec WI Trans Offset Other Reg Liab-Tax Reform Remeasure - Elec WI Other Reg Liab-Tax Reform Remeasure - Gas WI Other Reg Liab-Tax Reform Remeasure - WEPCO Steam Other Reg Liab-Tax Reform Savings - Elec WI Other Reg Liab-Tax Reform Savings - Gas WI Other Reg Liab-Tax Reform Savings - WEPCO Steam Uncollectible expense Other Reg Liab-Uncoll Exp Elec Other Reg Liab-Uncoll Exp Gas WE Electric WE Electric 407 182 182 WE Electric 421 254 WE Electric WE Electric 908 908 254 WE Electric WE Electric WE Gas WE Steam WE Electric WE Gas WE Steam 456 495 467 456 495 467 254 254 254 254 254 254 254 WE Electric WE Gas 904 904 254 254 WE Electric WE Electric WE Electric 456 456 182 182 254 WI SSR deferral Other Reg Assets-WI SSR Deferral Other Reg Asset - SSR Tax Repair Adj Mines deferral Total Wisconsin Electric Power Company 456 20,913 180,800 (3,689) (3,689) (217) (217) (6,114) (0) 0 (4,017) (380) (904) (789) (25) (14,314) (13,873) (441) 328,354 506,175 (190,580) (140,666) 447,534 - - - (1,063) (10,370) 1,844 1,844 108 - 108 - - 3,057 - 31,450 28,000 3,450 - - 827,157 0 0 2,008 190 452 395 12 (22,354) (19,672) (2,682) (52,599) (84,362) 31,763 23,444 (754,729) 19,850 170,431 (1,844) (1,844) (108) (108) (3,057) 0 0 (2,008) (190) (452) (395) (12) (5,218) (5,545) 327 275,755 421,812 (158,817) (117,222) 519,963 - - - (1,063) (10,370) 1,844 1,844 108 - 108 - - 3,057 - 32,150 28,500 3,650 - - 838,550 0 0 2,008 190 452 395 12 (22,354) (19,672) (2,682) (52,599) (84,362) 31,763 23,444 (815,802) 18,787 160,061 0 0 (0) (0) (0) 0 0 (0) 0 (0) 4,578 3,283 1,295 223,156 337,450 (127,054) (93,777) 542,710 Wisconsin Gas Earnings sharing Other Reg Liab-Earnings Cap Gas WG Gas 495 254 Energy efficiency programs Other Reg Assets-Act 141 Gas Large Customer Escrow Other Reg Assets-Act 141 Gas Utility Payments Other Reg Assets-Energy Efficiency Gas Program Other Reg Assets-SDC-Milwaukee(WRAP)Program Environmental remediation costs Income tax related WG - TR - Remeasure - Gas (P) WG - TR - Remeasure - Gas (U) Other Reg Assets-Gas Tax & Int Assess Payments Other Reg Liab-Tax & Int Refunds Receipts Other Pension settlement accounting Tax savings / remeasure Other Reg Liab-Tax Reform Remeasure - Gas WI Other Reg Liab-Tax Reform Savings - Gas WI Uncollectible expense Total Wisconsin Gas WG Gas WG Gas WG Gas WG Gas WG Gas WG Gas WG Gas WG Gas WG Gas 908 908 908 908 735 408 182 182 182 182 182 408 408 254 254 182 254 WG Gas 926 182 WG Gas WG Gas WG Gas 495 495 904 254 254 254 Ex.-PSC-Sullivan-1 (5,013) 573 (2,121) (3,465) (0) 25,825 (188,727) (176,697) (12,334) 230 75 811 (3,761) (513) (3,248) (3,982) (174,846) - - 10,480 (6,903) 123 8,254 2,103 - (410) (6,123) (371) 0 10,187 - (1,158) 3,895 - 963 3,084 (115) (37) - - (99) 1,881 - 15,700 36,367 964 917 (13,001) (15,385) (1,436) 287 10 (1,732) (0) 34,854 (184,832) (175,734) (9,250) 115 37 712 (1,881) 451 (2,332) (1,283) (153,865) - - 10,480 (6,903) 123 8,254 2,103 - (410) (6,123) (371) 0 5,648 - (1,158) 3,895 - 963 3,084 (115) (37) - - (99) 1,881 - 16,200 32,328 964 917 (13,001) (15,385) 2,141 0 2,141 0 0 39,345 (180,937) (174,771) (6,166) (0) (0) 613 0 1,415 (1,415) 1,916 (136,922)