SECTION 165:70-5-33. Section M - Proof of Revenue/Rate Design

  Section M - Proof of Revenue/Rate Design of the supplemental package shall provide supporting data to show that the proposed rates will produce the revenues that the utility states in Schedule H-1 of the application package.

(1)   For gas and electric utilities and RECs:

(A)   W/P M-1 - Fuel or Purchased Energy Factor: A schedule which provides the calculation of the current fuel or purchased energy factor and any proposed factor, if different than currently approved.

(B)   W/P M-2 - Proposed Changes in Miscellaneous Charges: A schedule which provides, for each new miscellaneous charge or change in existing miscellaneous charge, a brief description of the charge, the present charget the proposed charge and the justification for the proposed change.

(C)   Rate Class Definition:

(i)   W/P M-3 - Present and Proposed Rate Classes: A schedule which provides the present and proposed rate classes and designations. Present rate classes corresponding to proposed rate classes shall be indicated.

(ii)   W/P M-3-1 - Justification of Proposed Changes: A workpaper which provides the rationale for any changes in the class structure and/or rate design or a cross reference to where such information is otherwise provided.

(D)   Rate Design Analysis Data:

(i)   W/P M-4 - Proof of Revenue Statement: A proof of revenue statement (or a pro forma revenue statement) which provides the expected or estimated adjusted billing units, proposed prices, and the resulting base rate revenue and fuel revenue for the proposed rate classes. The statement shall also list other revenue. The result shall set forth total expected revenue by rate class and shall be equal, within rate design limits, to the revenue requested by the utility from each rate class. The sum of the revenue requested from each rate classes, plus other listed system revenue, shall equal the total requested revenue of the total utility, within rate design limits. The total adjusted sales volume used in this proof of revenue shall correspond to the total adjusted sales volume in Schedule H-2.

(ii)   W/P M-4-1 - Proof of Revenue/Present Rates: A proof of revenue statement similar to the one required at W/P M-4, using present rates in the revenue calculations.

(iii)   W/P M-5 - Bill Comparisons: A bill comparison between present and proposed rates by service category or other classification (e.g. residential, small commercial).

(iv)   W/P M-6 - Test Year Data by Rate Class: Schedule(s) which provide the following, by month, for the test year:

(I)   Average number of customers.

(II)   Year end number of customers.

(III)   Test year adjusted number of customers.

(IV)   Test year unadjusted sales and nonsales volumes.

(V)   Increase or decrease in sales and nonsales volumes adjusted for abnormal weather where applicable.

(VI)   Increase or decrease in sales and nonsales volumes adjustment for changes in the number of customers.

(VII)   Increase or decrease in sales and nonsales volumes due to other factors.

(VIII)   Total adjusted sales and nonsales volumes.

(E)   W/P M-7 - Weather Normalization: Statements and/or workpapers which provide the relevant statistical measures along with the statistical modeling method utilized to derive weather normalization adjustment to actual test year data.

(F)   W/P M-8 - Historical Sales Data: Schedule(s) whichprovide 60-month history of customer/sales data, ending with the test year end, for weather-sensitive usage classes only.

(G)   W/P M-8-1 - 60-Month Sales & Consumption: A schedule of the sales and consumption by rate class, by month for sixty (60) months ending with the last month of the test year. The data shall be provided by billing cycle, if used by the utility in its weather normalization study.

(H)   W/P M-9 - Weather Data: Schedules which provide the actual heating and cooling degree days (gas utilities to provide heating days only) by month corresponding with the 60-month sales by customer class. The data shall be provided by billing cycle, if used by the utility in its weather normalization study.

(I)   W/P M-10 - Normal Degree Days: A schedule which provides the 30-year normal degree days. The data shall be provided by billing cycle, if used by the utility in its weather normalization process.

(2)   For telephone companies:

(A)   W/P M-1 - Revenue Calculations - Local Exchange: This schedule shall contain details of revenue calculations for local exchange services.

(i)   Revenue data of all recurring and nonrecurring services and equipment provided by the company shall be grouped by tariff category using the following format:

(I)   Column A - Item of service.

(II)   Column B - Annualized number of working units at year end.

(III)   Column C - The present rate.

(IV)   Column D - Test year revenues using present rates (Columns B times C).

(V)   Column E - The proposed rate.

(VI)   Column F - Test year revenues using proposed rates (Columns B times E).

(VII)   Column G - The total revenue change (Column D plus or minus Column F).

(VIII)   Column H - The percent change represented by Column G.

(ii)   If other than actual test year units have been used in the calculation of revenue from nonrecurring charges or if other than the end-of-year units have been used in the calculation of revenue from monthly rates, an explanation shall be provided stating what units were used, the derivation of the units used, and the reasoning and support for the use of such units. For any adjustment to test year units based on regression analysis, the following shall be provided:

(I)   The functional form including estimated coefficients and their t-statistics.

(II)   The corrected R squared and Durbin-Watson statistics.

(III)   The number of observations used in the analysis.

(IV)   The estimation period.

(V)   The sum of squared residual.

(VI)   A listing of variables tried but deleted from the final specification.

(iii)   Column A shall list service and equipment groups which exist pursuant to OCC tariff. There shall be revenue summaries for each group and a total for all services.

(B)   Revenue Calculations - MTS.

(i)   W/P M-2: This schedule shall contain details of the revenue calculation for Message Telecommunications Service (MTS) as follows:

(I)   A schedule by dollar amount of the company's total intrastate MTS revenue for the test year, whether received through toll settlements or not.

(II)   An explanation of the MTS pool agreement with other telephone companies which produces all or a portion of the applicant's intrastate test year MTS revenues. Copies of the agreement presently in use for this purpose shall be attached. The nature of the toll cost studies which were used and the time periods for which studies were made shall be stated and summary sheets from the appropriate studies shall be furnished.

(III)   An explanation, with copies of appropriate supporting material, shall be provided for the calculations of the separations procedures used to arrive at the applicant's test year intrastate portions of revenues, investment, expenses, taxes, reserves, and any other items applicable to the case.

(IV)   An explanation shall be provided for any adjustments made to separations factors from the cost study.

(ii)   The telephone company, unless it concurs in a toll tariff previously approved by the OCC, shall maintain a statistically valid data base and model for the purpose of testing price changes and, upon request of the Staff, will provide the revenue effects of proposed rate scenarios.

(C)   Revenue Calculations - WATS:

(i)   W/P M-3: This schedule shall contain details of the revenue calculations for Wide Area Telecommunications Service (WATS). The calculations shall show recurring and nonrecurring revenues separately, if available. The schedule shall have the general format described in W/P M-1.

(ii)   The telephone company, unless it concurs in another company's previously-approved jurisdictional WATS tariff, shall maintain a statistically valid data base and model for the purpose of testing price changes and, upon request of the Staff, will provide the revenue effects of proposed rate scenarios.

(D)   Revenue Calculations - Private Line: W/P M-4 shall be a schedule which contains details of revenue calculations for intrastate Private Line services which are not contained in the Special Access tariff. The calculations shall show recurring and nonrecurring revenues separately, if available. The closed end of foreign exchange service shall be included in this schedule where applicable. The schedule shall have the general format described in W/P M-1.

(E)   Revenue Calculations - Access Charges: W/P M-5 shall be a schedule which contains details of recurring and nonrecurring revenue calculations for services contained in the access tariffs. All access revenues must be included, whether received through a pooling process or billed directly. The open and closed ends of foreign exchange service shall be included in this schedule where applicable. This schedule shall have the same general format described in W/P M-1. Revenue calculations shall list service and equipment groups which exist pursuant to OCC tariff. There shall be revenue summaries for each group and a total for all services.

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