SECTION 165:70-5-26. Section F - Capital and cost of money

  Section F - Capital and cost of money of the supplemental package shall contain workpapers and documentation as follows (to the extent such information is contained in the application package, these workpapers shall only contain a cross-reference to such information):

(1)   For investor-owned utilities (including Class A telephone companies):

(A)   W/P F-1 - Weighted Average Cost of Capital: A schedule providing the utility's claimed overall rate of return as a weighted average of each class of capital based upon the utility's capitalization at the end of the test year along with any pro forma adjustments. The cost of debt capital, preferred stock capital, the claimed return on stockholders' equity, and the component amounts of each class of capital shall be presented.

(B)   W/P F-2 - Weighted Average Cost of Preferred Stock: A schedule providing the weighted average cost of preferred stock capital. List each stock issue for each class and series of preferred stock outstanding according to the balance sheet as of the end of the test year. Preferred stock issued since the end of the test year, but prior to filing, shall be included in the schedule and footnoted. The cost of money calculated will be the dividend rate divided by the net proceeds as a percent of par value or stated value for issues not subject to mandatory redemptions and issues with variable dividend rates. For fixed-rate preferred stock issues with mandatory redemption, the cost of money shall reflect the yield to maturity method (YTM) for each issue. The YTM shall be calculated based on the issuance date, redemption date, sinking fund requirements, dividend rate, the par value or stated value, and net proceeds at issuance.

(i)   W/P F-2-1 - Sinking Funds: A schedule for each issue of preferred stock requiring mandatory redemptions specifying the date and amount of each redemption.

(ii)   W/P F-2-2 - Accounting Method: A workpaper providing a description of the accounting method used to record issuance expenses, premiums or discounts at issuance, gains or losses on stock redemption and annual amortization of such amounts for ratemaking purposes as well as financial reporting purposes.

(C)   W/P F-3 - Weighted Average Cost of Debt: A schedule of the weighted average cost of long-term debt capital. List each debt issue for each class and series of long-term debt outstanding as of the end of the test year. Debt issued since the end of the test year, but prior to filing, shall be included in the schedule and footnoted. Capital lease obligations shall only be included if the recovery of lease payments is not being requested through operating expense. The balance of any capital leases removed from the debt structure shall be footnoted. For variable-rate debt issues, the cost of debt is the interest rate divided by net proceeds as a percent of par value. For capital lease obligations, the cost of debt shall be the effective annual rate as determined in accordance with generally accepted accounting principles. This schedule shall not include notes payable to affiliated entities, unless claimed in the utility's revenue requirement.

(i)   W/P F-3-1 - Sinking Funds: A schedule for each debt issue requiring mandatory redemptions specifying the date and amount of each redemption.

(ii)   W/P F-3-2 - Gains or Losses on Reacquired Debt: A listing of gains or losses on reacquired debt that are not associated with a particular refunding issue, with an appropriate adjustment to the unamortized balance of the gain or loss.

(D)   W/P F-4 - Notes Payable: A schedule providing information pertaining to the utility's notes payable, even if notes payable are not included in the capital structure provided in W/P F-1. The schedule shall contain a listing of notes outstanding at the end of the test year, including each note's maturity date, face amount, and interest rate. The calculation of the cost of notes payable shall reflect the yield to maturity (YTM) for all fixed-rate issues. The YTM shall be calculated based on the issuance date, maturity date, interest rate, principal amount, and net proceeds at issuance. For variable-rate notes payable, the cost of the note shall be the effective annual interest rate divided by net proceeds as a percent of the principal amount of the issue. This schedule shall not include notes payable to affiliated entities, unless claimed in the utility's revenue requirement.

(i)   W/P F-4-1 - Weighted Average Cost of Notes Outstanding: A workpaper providing the calculation of the weighted average cost of notes outstanding at test year end.

(ii)   W/P F-4-2 - Notes Payable Outstanding by Quarter: A schedule of the amount of notes payable outstanding at the end of each quarter for the past two years.

(E)   W/P F-5 - Security Issuance Restrictions: A schedule providing a description and calculation of the most restrictive financial tests as of the end of the test year pertaining to the issuance of securities or the maintenance of banking lines of credit. For each class of securities (first mortgage bonds, unsecured debentures, commercial paper, preferred stock, etc.) or line of credit, provide a description of these financial tests (interest coverage, fixed charge coverage, maintenance of shareholders' equity, etc.) and copies of the relevant language contained in the governing documents (mortgage agreements, articles of incorporation, credit agreements, etc.). For each financial test, provide a calculation of the relevant financial ratio as of the end of the test year and the most recent fiscal year, including all supporting data.

(F)   W/P F-6 - Rating Agency Reports: A copy of all credit rating analyses or investment reports on the utility and its parent company, if applicable, published during the most recent twelve-month period and in the possession of the utility. If unable to provide a copy due to copyright law restrictions, provide the date and source of the report. This shall include, but is not limited to, reports by Moody's, Standard & Poor's, Fitch Investor's Service, and Duff and Phelps.

(G)   W/P F-7 - Quarterly Dividends: A schedule of quarterly dividends paid during the test year, and the first preceding year, by per share amount, total amount and date. Any borrowings which were made to maintain the level or growth of dividends shall also be noted.

(2)   For rural electric cooperatives and Class B telephone companies:

(A)   W/P F-1 - Times Interest Earned Ratio (TIER): A schedule which provides the calculation of the actual test year TIER on a net and an operating basis. Separate pro forma net and operating TIERs shall be calculated based upon inclusion of the requested rate change.

(B)   W/P F-1-1 - Supporting Documentation: Workpapers which support the basis and provide an explanation for the requested pro forma TIER levels.

(C)   W/P F-2 - Capital Credit Allocation from Generation and Transmission Cooperatives: A schedule which identifies the level of capital credit allocation received from generation and transmission cooperative(s) of which the utility is a member for the test year and the first preceding year.

(D)   W/P F-3 - Capital Credit Rotation Requirements: A schedule which identifies the capital credit rotation requirements for the test year, for the first preceding year and the projections for the next subsequent year.

(E)   W/P F-4 - Capital Credit Rotation Policy: A statement of the current capital credit rotation policy.

(F)   W/P F-5 - Debt Service Coverage (DSC) Ratio: A schedule which provides the calculation of the actual test year DSC on a net and an operating basis. Separate pro forma net and operating DSCs shall be calculated based upon inclusion of the requested rate increase.

(G)   W/P F-6 - DSC Supporting Documentation: Workpapers which support the basis and provide an explanation for the requested pro forma DSC ratios.

(H)   W/P F-7 - Long-term Debt: A schedule which provides the balance at test year end for each loan. Include the lender, the dates of origination and maturity and the interest rate for each loan.

(i)   W/P F-7-1 - Principal and Interest Payments: A schedule, by lender and by loan, which provides all principal and interest payments made during the test year. Include copies of the quarterly statements from each lender for all loans.

(ii)   W/P F-7-2 - Long-term Debt Principal Payment Requirements: A schedule which provides the long-term debt principal payments made during the test year, and the requirements for the next subsequent year, for each loan in effect during the test year.

(I)   W/P F-8 - Pending Loan Applications: A schedule of the details of any loan application pending before the REA or any other lending organization.

(J)   W/P F-9 - Drawdowns During Test Year: A schedule of loan drawdowns occurring during the test year. Each loan advance shall be identified by the date and amount of each draw, the interest rate associated with each draw and the lender.

(K)   W/P F-10 - Drawdowns Projection: A schedule showing the estimated drawdowns in the current period since the test year end and for the next year.

[Source: Added at 11 Ok Reg 3753, eff 7-11-94]