If you can't read please download the document
Upload
vukhue
View
220
Download
1
Embed Size (px)
Citation preview
UGI Electric Exhibit C (Future) Witness: J. F. Wiedmayer
UGI UTILITIES, INC. - ELECTRIC DIVISION DOCKET NO. R-2017-2640058
2018 DEPRECIATION STUDY CALCULATED ANNUAL DEPRECIATION
ACCRUALS RELATED TO ELECTRIC PLANT AS OF SEPTEMBER 30, 2018
Prepared by:
BOOK VII
UGI UTILITIES, INC. - ELECTRIC DIVISION
Docket No. R-2017-2640058
2018 DEPRECIATION STUDY
CALCULATED ANNUAL DEPRECIATION ACCRUALS RELATED TO ELECTRIC PLANT
AS OF SEPTEMBER 30, 2018
GANNETT FLEMING VALUATION AND RATE CONSULTANTS, LLC
Valley Forge, Pennsylvania
January 15, 2018
Ms. Megan Mattern Controller and Principal Accounting Officer UGI Utilities, Inc. Electric Division 2525 N. 12th Street, Suite 360 Reading, PA 19605-2771
Ladies and Gentlemen:
Pursuant to your request, we have determined the annual depreciation accruals applicable to electric plant in service for each of the three respective test year periods. The results of our study for the future test year period ending as of September 30, 2018 are presented in the attached report labeled as UGI Electric Exhibit C (Future).
The results of our study for the historic test year period ending as of September 30, 2017 are presented in our report titled "2017 Depreciation Study - Calculated Annual Depreciation Accruals Related to Electric Plant as of September 30, 2017". This report is identified for purposes of this filing as Exhibit C (Historic). The results of our study for the fully projected future test year period ending as of September 30, 2019 are presented in our report titled "2019 Depreciation Study - Calculated Annual Depreciation Accruals Related to Electric Plant as of September 30, 2019". This report is identified for purposes of this filing as Exhibit C (Fully Projected). The same methods, procedures and estimates are used in all three studies. The results for each respective test year are set forth in three, separately bound reports.
The attached report sets forth a description of the methods and procedures upon which the studies were based, the estimates of survivor curves and the calculated annual depreciation rates as of September 30, 2018.
Respectfully submitted,
GANNETT FLEMING VALUATION AND RATE CONSULTANTS, LLC
JOHN F. WIEDMAYER, C.D.P. Project Manager, Depreciation Studies
JFW:mle
063345.100
Gannett Fleming Valuation and Rate Consultants, LLC P.O. Box 80794 Valley Forge, PA 19484-0794 | 1010 Adams Avenue Audubon, PA 19403-2402
t: 610.650.8101 f: 610.650.8190 www.gfvrc.com
TABLE OF CONTENTS
PART I. INTRODUCTION ....................................................................................... I-1Scope ..................................................................................................................... I-2Basis of the Study ................................................................................................... I-2
Depreciation and Amortization...................................................................... I-2Service Life Estimates .................................................................................. I-4
Amortization of Net Salvage .................................................................................... I-4
PART II. ESTIMATION OF SURVIVOR CURVES .................................................. II-1Survivor Curves ............................................................................................ II-2Iowa Type Curves ......................................................................................... II-3Retirement Rate Method of Analysis ............................................................ II-9
Schedules of Annual Transactions in Plant Records ......................... II-10Schedule of Plant Exposed to Retirement ......................................... II-14Original Life Table ............................................................................. II-16Smoothing the Original Survivor Curve .............................................. II-18
PART III. SERVICE LIFE CONSIDERATIONS ...................................................... III-1Field Trips ..................................................................................................... III-2Judgment ...................................................................................................... III-3
PART IV. CALCULATION OF ANNUAL AND ACCRUED DEPRECIATION ......... IV-1Group Depreciation Procedures ................................................................... IV-2Remaining Life Annual Accruals ................................................................... IV-3Average Service Life Procedure ................................................................... IV-3Equal Life Group Procedure ......................................................................... IV-4
Calculation of Annual and Accrued Amortization ................................................... IV-8Amortization of Net Salvage .................................................................................... IV-9
PART V. RESULTS OF STUDY ............................................................................ V-1Description of Summary Tabulations....................................................................... V-2Description of Detailed Tabulations ......................................................................... V-2
Table 1 Estimated Survivor Curves, Original Cost, Book Reserve and Calculated Annual Depreciation Accruals Related to Electric Plant at September 30, 2018................................................. V-4
______________________________________________________________________________________________ UGI Utilities, Inc. - Electric - FTY
September 30, 2018 i
TABLE OF CONTENTS, cont.
Table 2 Book Reserve at September 30, 2017 Projected to September 30, 2018 .............................................................................. V-6
Table 3 Calculation of Depreciation Accruals for the Twelve Months Ended September 30, 2018 ................................................................... V-8
Table 4 Amortization of Experienced and Estimated Net Salvage ...................... V-10
PART VI. SERVICE LIFE STATISTICS ................................................................. VI-1
PART VII. DETAILED DEPRECIATION CALCULATIONS .................................... VII-1Utility Plant in Service .............................................................................................. VII-2
Electric Plant................................................................................................. VII-3Common Plant ............................................................................................. VII-46Information Services ..................................................................................... VII-51Reading Service Center Information Services ........................................... VII-56
PART VIII. EXPERIENCED AND ESTIMATED NET SALVAGE ........................... VIII-1 Electric Plant................................................................................................. VII-2Common Plant ............................................................................................. VII-6Information Services ..................................................................................... VII-8
______________________________________________________________________________________________ UGI Utilities, Inc. - Electric - FTY
September 30, 2018 ii
PART I. INTRODUCTION
______________________________________________________________________________________________UGI Utilities, Inc. - Electric - FTY
September 30, 2018 I-1
UGI UTILITIES, INC. - ELECTRIC DIVISION DEPRECIATION STUDY
PART I. INTRODUCTION SCOPE
This report sets forth the results of the depreciation study conducted for UGI
Utilities, Inc. Electric Division to determine the annual depreciation accrual rates and
amounts for ratemaking purposes applicable to the original cost of electric plant as of
September 30, 2018.
The depreciation accrual rates and amounts presented herein are based on
estimated survivor curves and on methods and procedures set forth in previous orders
approved by the Pennsylvania Public Utility Commission. The estimated survivor curves
presented herein were based on the results of a service life study incorporating
statistical analyses of data through 2016.
BASIS OF STUDY
Depreciation and Amortization
Depreciation, as defined in the Uniform System of Accounts, is the loss in service
value not restored by current maintenance, incurred in connection with the consumption
or prospective retirement of electric plant in the course of service from causes which are
known to be in current operation and against which the utility is not protected by
insurance. Among the causes to be given consideration are wear and tear, decay, action
of the elements, inadequacy, obsolescence, changes in the art, changes in demand, and
requirements of public authorities.
Depreciation, as used in accounting, is a method of distributing fixed capital costs
over a period of time by allocating annual amounts to expense. Each annual amount of
______________________________________________________________________________________________UGI Utilities, Inc. - Electric - FTY
September 30, 2018 I-2
such depreciation expense is part of that year's total cost of providing utility service.
Normally, the period of ti