Filed with the commission, which cannot. Thank you. There are however certain documents that must be filed with the commission which cannot be finalized or not available until after a CCN is granted. I therefore move that two rivers be granted a CCN for the wastewater system to served cannobery manner.
Subdivision contented upon the company filing the following documents in in this docket. Number one, the deed annoesements for all the land and ownership rights for the wastewater system within 15 days of being issued and before the 1st customer is connected to the wastewater system as set forth in contracts submitted by two.
Rivers with the commission. Number two, a final copy of the state operating permit issued by the Tennessee Department of Environment and conservation within 15 days of issuance. Number three, a copy of the as built plans with signed certification by two rivers indicating the entire wastewater system has been inspected and is approved to begin on.
Operation and number four, a copy of the signed plant. Once the area development is approved by the city and or county government with 15 days of being issued and before the 1st customer is connected to the wastewater system. Further the CCC in approval shall also be contentioned upon the following. Number one, the traditioner's agreement with the utility shall comply with all commission rules, include the requirement to hear the uniform system of accounts or USOA methodology of accounting. Number two that the utility plant assets convey to you.
Ability should be accounted for as contributions in aid of construction and adherence to the usoaid and number three depreciation expenses calculated for regulatory accounting shall be calculated on a non accelerated straight line basis consistent with the USOA method of accounting. Two.
Has requested that $10.80 $0.86 be collected per monthly bill as escrow. Additionally, two Rivers has proposed to assist $2500 tap fee for each new customer as they are connected to the system and to a portion 2000 each tap fee to the Escrow account with the remaining 500 of each tap fee to be considered revenue. I finally creation of Anestro account.
And collection of the requested escrow monies including the TAP fee, is here by authorized and the escrow collection shall be subject to an administered in accordance with commission rule 1220-04-13-.oh seven pertaining to Escrow accounts. A further direct to rivers to file a report in this docket demonstrating its compliance with these requirements before proceeding with wastewater service to canneberry manner subdivision. If a compliance port is not filed, I'll direct.
The rivers to file within six months of the date the order's issued in this matter and every six months thereafter until the installation is complete, a report on the status of the wastewater service to canadaborary manner subdivision and the status of compliance with each of the A for mention requirements as so move.
Yeah outside. Problem outside.
Hello both I. Thank you.
Section five Commissioner Good Jones Hill, Heliot and high docket number 20 five-00069P Mont Natural gas company. Petemont natural gas Company performance incident plan account parentheses, IPA.
Report for the period of July 12024 through 30 June 2025 consider staff audit. Pedmont natural Gas Pedmont filed this required annual report with the commission on August the 29th 2025. Covering the period July the 1st 2024 through June 30.
2025 and staff audit completed its audit of the filing on January the 8th 2026. Audit staff reviewed the company's tariff, gas supply invoices, pipeline tariffs, industry publication to verify the indexes used to calculate the monthly benchmarks and prior audit reports. Commission orders and other supplemental schedules and source documentation provided by Pedmot. From this.
Information audit staff verified that the audit objective was met, found NO material errors, and stated that Pedmod correctly calculated the share of savings accruing to the company and its customers under its incentive plan. I found the audit objective was met and the amount of savings accruing the Pedmont in its tax and its rate payers under the incentive plan for the plan year ended June 3020 25.
Was accurately calculated as in compliance with the company's tariff. Therefore I move approval to the 9 January 2026 staff audit staff compliance audit report as filed, including the reported ending balance and incentive plan account of June 3020 25 of 1637000.
$569.40. I still move. Second both Ryan.
Ilboside.
Section six Commissioner Good Jones Hillyard High and Morrison, docket number 20 five-00074 Pmont natural gas company application of Pmont natural Gas Company Inc inspired Tennessee Inc for approval of a transfer of authority to provide utility services pursuant to Tennessee Co annotated section 65-four-113.
In related authorizations. Let's, please move this item to the Hill of the agenda. Docket number 20 five-00086 consumer advocate division. Consumer advocate con complaint and request to open a contested case and investigation into Tennessee American Water companies.
PFAS parentheses PER-A ND poly florical substances, litigation, universal surpri parentheses plus tariff, herein consider a complaint.
Our call this hearing to order, this matter was duely noticed for hearing on February the 6th 2026 and is being conducted in accordance with the uniform Administrative Procedures Act. I see the parties are coming forward, so we'll give you a chance to get seated here.
Okay, we'll ask the parties to introduce themselves for the record. Mr. malone, you've had practice, we'll start with you again. Thank you mr. Chairman Melbourne alone with buttless Snow on behalf of Tennessee American Water Company.
Bob Lane. American Water. With the consumer advocate. Thank you. According to the pre hearing order, the parties have agreed to wave open.
Statements and closing arguments and ask that the panel consider the merits of this case on the administrative record. The witnesses will provide only summaries of their prefile testimonies without cross examination. The commissioner and staff will have an opportunity to ask questions and the public may comment. Without explanation of the procedure in this matter, we will begin.
As the petitioner in this docket, the consumer advocate would like to move all docket files into the official record? Yes chairman. All right, well that objection so moved and would the advocate please call your 1st witness?
Certificate calls mr. Helm Novak, who is appearing by a video conference. Okay, mr. Novak, good morning, we see you. Can we.
Good morning.
We can, thank you. So I'm gonna swear you in mr. Novak, please raise your right hand. You swear affirm that the testimony you're about to give will be.
I do. Alright council.
Please proceed. Yes, good morning mr. Novak. Good morning. Please state your name and address for the.
Record. My name is William H Novak. My address is one nine Morning Arbor Place, the Woodlands, Texas.
Did you cause pre filed testimony to be filed in the stocket? Yes, I did. And do you have any changes to your time.
Testimony? No, I don't.
Can you please provide a brief summary of your testimony.
Yes, good morning commissioners. Thank you for accommodating me electronically this morning. What you have before you is a situation that rarely comes up where the utility is asking.
The commission to allow it to refund funds they have received from a 3rd party. In this case for remediation of chemical contaminants that are in the water in Chadaganuga.
The cost for this cleanup is substantial between 50 million and $300 million. What the company is proposing to do with the funds they've received thus far and will may receive in the future is to refund these fun refund these.
Case with interest to all their customers. What we're asking for you to do is say hold on, we need to clean this up and it's not a good policy to tell customers that they have contaminated water, but yet, here's a refund for you. So we're saying put this money aside, use it to clean up and remediate.
The contaminants that are in the water. We propose that you require the company to record this asset, this cash on its books in a tennessee bank, in an interspering account, and that we report that the company reports on a continuing quarterly basis, the balance in this account with accrued interests along with the remediation efforts they've undertaken to address these contaminants. That concludes my summary.
Alright, do the commissioners or staff have any questions at mr. Novak? Alright, the witness is excused. Alright, you won't call your next witness? Yes, chairman. I call Clark Camel. Alright mr. Camell, please raise your right hand.
You swear from testimony about to be able to be truthful? I do. All right council, please proceed. Good morning mr. Camel. Good morning. Could you please state your name and business address for the record? My name is Clark Camel. My business address is 500 dr. Martin Luther King junior glob.
Nashville, Tennessee. Did you cause pre file testimony to be filed in this docket? I did. And do you have any changes? I do not. Could you please provide a brief summary of your testimony? Yes. Based on my review of the record and the applicable rate making principles, I recommend that the commission reject the Tennessee American water Company's proposed pluster.
To distribute the pfast settlement proceeds. And I direct, and and we ask that they be directed to establish a regulatory liability or an account to record the settlement funds and to the extent that the unamortized balance remains apply that regulatory liability as an offset to rate base in future.
The Revenue requirement proceedings. I will skip the settlement the purpose of the settlement that was addressed by, by Hell and my testimony concurs and supports his purpose for them. Likewise, there is some disagreement over.
The related purpose, I shouldn't say disagreement slight different interpretation. The company is likely to incur substantial costs associated with monitoring treatment, and remediation in order to comply with the current and future regulatory requirements. The pfast settlements are intended to address contamination and remedi.
Mediation obligations that already exist and for which future mitigation costs are probable.
Rather than reserving these settlement funds for their intended purposes, the company proposes to modify the tariffs to distribute these litigation proceedings to customers as the funds are received. This proposal is inconsistent with fundamental rate making principles.
The proposal would result in the distribution of funds to current customers even those are intended to address future related costs. Such an approach is a misalignment by rewarding current customers for costs likely to occur in the future.
The proposal would undermine the purpose of the settlement by diverting funds away from their intended use of monitoring, treating and remediation of drinking water over time. For those reasons I recommend that the commission reject the proposed.
Tariff and direct the company to establish regulatory liability or an account to record the settlement of funds and to extend any unhamortized balance remains be applied to future rate case revenue requirements.
With that, that's in my testimony. All right. The commissioners or staff have any questions of the witness? I've got one. Okay. Has the contamination problem been remediated? Not to my knowledge NO.
So how long would you anticipate you would want to hold that money in an Ascrow account? We expect that as soon as there's any efforts to remediate that funds, those funds would be used very rapidly. If, if they're, if they're not used to remediate the problem, what do you propose to do with the funds?
I would recommend they'd be held until there is remediation or a determination that there is NO NO need for those funds. How long time period are you talking about? Five years, ten years, one year, six months? Off the top of my head, I would think we would have some good information within a three to five year period.
Okay. Other questions? Alright, the witness is excused. Alright, with Tennessee American, please call this 1st witness to be sworn in. Thank you mr. chairman. Tennessee American Water called Robert Lane.
Alright mr. Lane, please raise your right hand. You swear from the testimony you're about to give will be truthful? I do. All right, thank you. Council? Good morning mr. Lane. Good morning. Could you please state your name and business address for the record?
My name is Robert Lane L A N E I am business address is one oh nine Wheel Street Chat New Year Tennessee 37408 set three, sorry. Mr. Delaine, did you call the prefile testimony to be submitted in this case?
Yes I did. Do you have any corrections to that testimony? No, I do not. If I asked you this morning the questions that are in your pre file testimony, would your answers be the same? Have you prepared a summary of that testimony? Yes, I have.
Please provide this. Good morning mr. chairman, commissioners. Thank you for the opportunity to summarize the company's proposed PPASS litigation universal surcharge or plus tariff request. As you know, ppass are so called forever chemicals and are a hazardous sun substance under.
The comprehensive environmental resp response, compensation and liability Act. The EPA has acted to regulate these chemicals in drinking water and has set a current limit at four parts per trillion with the equivalent of one drop of in five Olympic size swimming pools.
As outlined more specifically in my pre filed prefiled rebuttal testimony, for more than five years Tennessee American Water and other American water subsidiaries have been plaintiffs in litigation against several of the major manufacturers of PFAS. The litigation has resulted in settlements between the.
If affected water utilities and the and the several people manufacturers. However, the company does not yet know the specific amounts, it will ultimately res receive in total from the settlement. As explained in my testimony and the company's response to discovery requests, the company's attorneys have.
Received a little over $5.08 million today that is being held in an interest bearing escore account awaiting the commission's determination on how these processeds shall be handled. Tennessee American Water is proposing the.
Plus tariff to facilitate the timely and efficient distribution of ppassed litigation proceeds to customers as the funds are received. Under the plus tariff, the company would calculate a credit on customer bills for each pfast litigation payment received.
Benefits of the P fast cares are timely delivery of the customers and proceeds as proceeds are received. Regulatory efficiency via a simple and straightforward process. Flexibility to deal with ongoing lump sum distributions.
And straightforward per customer bill credit equal lead to each customer. As more specifically addressed in my pre filed re rebuttal testimony, the company proposes opposes each of the proposed recommendations of the commissions.
Consumer advocates witness. However, I would like to address one particular consumer advocate recommendation that the company should provide a P fast remediation plan for the commission's consideration at the earliest opportunity.
1st, the propo purpose of this talk is for the commission to simply rule on the financial question of how the MDL settlement proceeds should be treated. This does not require the commission to engage in what at this point is a premature engineering analysis of how or whether the company will.
Treat or remediate any PFAS chemicals it may detect. Second, mr. Novak's recommendation require the company to submit a pfast remediation plan to the commission is premature because the company at this time is not proposing a specific remediation plan.
The Company has not yet identified the level of remediation needed nor the method or technology to be used in Tennessee to meet the pfast standards promulgated by the environmental protection Agency or TDAC. Requiring the company to create such a remediation.
Plan at this stage would results only in a highly specutive plan and is unnecessary to determine how the PFAS litigation proceeds would be handled. Like the cad's other recommendations, I recommend that the commission reject mr. Novak's recommendation that Tendency American water company should provide a PFAS remain.
Mediation plan at this time. Thank you. Find your commissioners or staff have any questions? Your mic's not on her. Currently, is the water a danger to the people that's drinking in? No, it's it is not.
If and when you have a plan to remediate it, if you distribute the money out to the customers, who pays for it? Future customers would pay for it as we make those investments at that, at that time. At this point we don't know what.
The the scope or scale of of those investments. How long do you think it'll take to pull the plan together? Do you have a timeline at this point? We do not. We are still trying to understand what's going on in our watershed, our ppass.
Contamination is not steady state, it depends a lot on what's going on upstream of where we are, particularly some tributaries that come down from, from North Georgia and other areas and, and the level of rain and what.
Release of water from the TBA dams and so it's very difficult for us for us to know exactly what we have to do. We are at the very initial stages of examining the best way to but deal with the level of contamination that we.
Believe might be out there. Currently we are not detecting it in any of our water that goes to customers. We only see it in the in the in the water in our watershed.
Will you be hiring a consulting firm to help you pull this plan together? Oh, yeah, we will have engineering folks helping us, our own engineering team, and we are gaining experience from other, other, our fi our sister companies who have faced similar problems in their areas as to the the best way.
I'm gonna get this, but as I said before, we are still in the trying to understand what our current situation is. All right, thank you other questions? All right, the witnesses excused since this is a public hearing, is there anyone who would like to comment on this matter? Alright, let the record reflect NO one is seeking recognition to comment.
If we're ready to liber deliberate I have a motion. I find the plus terriff file by Tennessee American, which immediately refunds PFAS settlement funds to consumers through a bill credit is just unreasonable. Therefore, I move approval to the plus terriff is filed. This order to issue consumer refunds now, however, does not.
Not limit the commission's abilities to consider proposed future alternatives for addressing the pfast this year and decide a reasonable course of action that considers the interest of all stakeholders as so move. Okay, without objections so move. Thank you.
Oh.
Right, I think we're finished. Thank you.
Section seven Commissioners Good Jones Hill Fillyard and Marson, Docket number thirteen-00133 correct solutions LLC application for authority.
To provide customer on coin/coinless operated telephone service. Company request for cancellation. A move for cancellation per the company request. Dr. Hill? Yeah, dr. Hill, we need your vote.
Section 16 commissioners google.
Excuse me, I got my phone to work. I apologize that mr. Chairman and for the General is taking care of here. I did vote ending a positive on that.
Alright, he voted Thank you, dr.
Two sections.
Section 16 Commissioners Good Cryl Jones Hi and Marson, dr. number 20 six-00008 integrated resource Management Inc. Petition of integrated resource Management Inc doing business as IRM utility for approval to withdraw escrowd funds here and consider petition.
I'll call this meeting. This hearing to order this matter was due to notice for hearing on 6 February 2026 and is being conducted in accordance with the Uniform administrative Procedures Act. Will the parties please come forward?
Yes, sir, mr. chairman. My name is Chuck Welch. I'm with the Phillips Dunbar law firm appearing today on behalf of our RM utility. I also have with me today, our witness who is I think gonna appear on the screen here any moment, mr. Jeffrey Cox.
I'm on the phone if that's ok. Pardon.
No, that's not ok. He needs to be on video.
Okay.
We need to get your picture on the screen if you can. He needs to be on video so that he can be sworn in that was in my order, allowing the Webex participation of the witness. Gotcha. Okay.
To go back in.
Sign it on now here.
Mr. Cox, you may need to exit and come back in through the video link that was emailed to you.
Okay, I'll do that right now. Sorry about that.
There he is.
Mr. Gosh, can, can you say something?
Yeah microphone might be on mute. Check that.
Okay, can you check your microphone set or can you check your microphone settings? Or maybe you need to call in too?
Okay. Yeah.
Any better?
Much hey I'm sorry m.
My my computer has problems with its microphone for some reason even though it's on. I'm not sure what that's about.
Mr. Cost, could you mute the microphone on your computer and that will on your computer, and that will reduce the feedback? Sure. Thank you. Okay.
Alright hopefully that's better.
Very good. Would our aim like to make opening remarks? I just have one comment and, and much to the commission's credit and staff's credit, this record, this type of request has been streamlined for administrative approval.
If the request is made before or contemporaneously with the the incurred cost. This request meets all the approved categories that the commission has considered in the past, it's just been filed a little late and thus the reason for this hearing.
Okay mr. Chairman, thank you. I'd like to call mr. Jeffrey Cox.
Please.
Do you swear or affirm that the testimony you're about to give will be truthful?
I do.
Council. Mr. Cox, please state your full name and business address, please.
I am Jeffrey William Cox junior. Our address is 3444 st. andrew's drives Bainbary, Tennessee 37890.
And what is your relationship with the petitioner?
I'm the president and CEO.
And very, very briefly, what do you do as president and CEO? What are you?
Day to day operations, managing staff and just general keeping track of of all things with the utility.
And you're familiar with the petition that's been filed in those calls.
I am.
They're true and accurate to the best of your knowledge.
It is.
And you also cause to be filed pre filed testimony?
I did.
You got any change, do you have any changes or corrections or revisions to that testimony?
I do not.
Please provide a short summary of your, of your pre file test plan.
Sure, I'm Jeffrey Cox, president CEO, and we previously submitted three invoices for reimbursement of extraordinary non routine expenses, all of which are similar to previously approved reimbursements by the commission. And I'd like to also note these were repairs which required immediate remediation, and so we were unable to request.
Reimbursement prior to the performance of the work. The 1st was a 20 gallon per minute dosing pump at flat Hollow subdivision on 4 December 2025, which was $1450. On 10 December 2025, we were notified notified of a main collection line break, which.
Required two days of excavation and a repair. The total cost for that repair was $4843.10. And finally on 8 January 2026, we had a lift station pump at a residence which was replaced for a total of $1575 and 30.
$0.06. The total of the three invoices is $6418.46. And I want to thank the commission for your consideration and I apologize for the, for the issues there's technical difficulties.
We don't have any further witnesses Yana. Does the commissioners or staff have any questions? Got it. The witnesses accused. Mr. Wills, do you have any closing remarks? Only mr. Chairman that these expenses have been categorically approved in terms of what should be reimbursed and we've worked all this out over time.
We would request you approve these late filed requests. Thank you. Thank you. As this is a public hearing, would anyone like to comment on this matter? Let the record reflect that NO one is seeking recognition to comment. Upon review of the record in this matter, I've found that the reimbursement requested in the company's.
January 2320 26 tissue complies with the mission rule with twenty-4-thirteen.07 parentheses seven governing escrow fund withdrawals and is consistent with the use of escrow funds.
Set out in prior commission dockets. Excuse me, additionally, I found that the reimbursement requested in the company's petition pertains to extraordinary non routine or capital improvement items.
Necessary to maintain system reliability and regulatory compliance. Therefore, I move approval of the company's petition for reimbursement from its escrow reserve fund in the amount of $6418.46. I saw move. Jones seconds invoke.
Hi. Good both side. Commissioners. Thank you very much.
No, I'm sorry.
He's not. Section 20 commissioners Crowl Hill Hillyott Hi and Morrison, Docket number 20 five-00068 at most energy corporation. At Most Energy corporation.
Actual cost adjustment parentheses, ACA accounting filings for the for Tennessee exclude Union City and four Union City Tennessee for the period of July 12024 through 30 June 2025 consider staff audit.
Atmos Energy Corporation Atmos followed its annual report of the transactions and the actual cost adjustment ACA accounts on August 2920 25. Other staff reviewed gas supply invoices.
Supplemental schedules and other source documentation provided by the company. From this information, the audit staff verified that the audit goal was met, audit staff reported two findings that were not material relative to the total gas costs.
All the staff therefore concluded that except for the two immaterial findings. The purchase gas adjustment mechanism has calculated in the actual cost adjustment appeared to be working properly and was in accordance with the T POC.
Rules for atmos. I found that the audit objective was met and the ending balances in the ACA accounts for the period ending June 3020 25 as adjusted by staff were accurately calculated and in compliance with.
Atmoses terriff. Therefore, I move approval of the 12 January 2026 staff audit report as filed including the ACA account balance of $238869.61.
And under recovered gas costs for the union City filing and an ACA account balance of $6352587.10 in under collected gas costs.
Yes, I both I.
Section 21 Commissioners Good crowd, Hill hi, and Marson, docket number 20 five-00064 Navitas T N N G comma LLC. Navitas T N N G LLC actual cost adjustment parentheses ACA filing for the period of January 12023 through December 30.
12023, consider staff audit. 2023.
For the Jelico and Birdstown Fenters divisions on 26 August 2025. Audit staff made two monetary findings and one non monetary finding. Now agreed with the findings. Except for the reported findings out of staff concluded that the purchase gas adjustment.
BGA mechanism as calculated in the actual cost adjustment, appeared to be working properly and in accordance with the T poke rules for Novitas. I move approval of the January 52026 staff holder report.
And the staff staff calculated the ending balances in the ACA accounts of $533.48 under collection for the jelico division and $52820.63.
Overcollection for before the Birdstown Penturest division. I direct Navitas to file the tariff to begin surcharging the staff's calculated ACA factors to recover the approved balances in the ACA accounts effective with its March 2020 6th.
Customers billing. I also direct Navitas to informally file its ACA account balances quarterly with the commission staff. Finally, in accordance with the PGA room, Navitas is directed to file a tariff at least 30 days prior to the implementation of any change or adjustments to its PGA rate, ISO move.
Most of.
Hello both side. Both side.
We've reached the heel of the agenda before we take a docket number 20 five-00074. Let's take a 10 min break, and those who would like to leave before this hearing begins may do so.
What? This? Oh, that's me. You're right. Yeah what's right at you. Nobody more than.
Is he leaving already? Yeah, I get checked out.
I'll let y'all fill me. Do you need another breaks. All right. Thank you. I don't know you you probably need your help. Are you up to date? Yeah.
Up to date. I'm the new Brian. I'm the new Brian. The legal voices. He's the lawyer whisper. Yeah. We'll see how it goes.
They're all different. But I guess stop me to put my slide up now. I would actually handle the different.
I'm glad to make it. Oh, good. It's good.
Okay Nice to meet you.
Yeah. Yeah, we just show.
Good, how are you? Keeping me straight. Let's see if we can hear this.
Every time I do things right. I don't know why. The booked looker than normally even all these people in here. It's a big crowd today.
Thank you so much. Yes.
We need to wear a tie, not feel like the old they're not wearing. They're not working today. They are to me. Not opposed to wearing a tie. So I was gonna ask mr. Wendlen just needs to stand up, but he sold the commissioners because i think but I didn't see him.
Before we started, I said Craig I couldn't ask Mr. to stand up because you might lean over to me and say you didn't make it this morning. But just a couple of them. Anybody doesn't wear a time in my book's a good guy. Hey, they probably ripped those tides up off before they got to the street, which we.
I like a tire. You know what? I spent I guess the 1st 20 years of my career. Then we finally went to Friday's casual day with all man this.
We went NO time. Blue Jeans Friday.
It's not green up here. I think.
Well I think this one is not on the phone. Oh let's see.
Are you gonna slide down the chair? You know what? Just all gonna call.
So we need a chair, right? Oh it's one behind and it's a room which side you know.
I mean, I mean I've seen your flood any.
Yeah, he's a wall. Oh yeah, I can see it here.
Yeah, what? Alright, are the parties ready? Y'all have everyone you need at this point. Yeah you are. Your big looks following now. We good?
Okay, for about have a seat, we're gonna get started with the hearing, please. All right, we're back on record, Madam Clerk. So you won't go ahead and call while we move to the hill of the agenda, please? Yes sir. Dr. number 20 five-zero.
00074 Pmont natural gas company, application of Pimon natural gas company Ek inspired Tennessee Eak for approval of a transfer of authority to provide utility services pursuant to Tennessee Code annotated section 65-four-113.
Alright, I'll call this hearing order. This matter was due to the notice for hearing on February the 6th 2026 being conducted in in accordance within four of the administrative Procedures Act. All right, a couple of administration things before we get started. We're gonna break for lunch around noon, probably take NO more than an hour. I have to do.
Do a budget hearing, for the Senate committee commerce committee at one. So vice chairman High will take me until I get back from the budget meeting, so we'll continue moving forward. We'd love to get done today if we can, even if it means going late today, we'll just see how we're tracking around three or 04:00 to make that decision then, but I'm going to try to keep things moving. Just so I'm track.
Consumer advocate, I believe you have three witnesses, is that correct? Yes sir. Okay, Pedmock two, is that correct? Inspire three, I believe. Okay. All right, great. That's good to know. All right, with that, will the parties please please introduce, introduce themselves for the record and we're gonna start over here on my right, your left.
David Dimore consultant for the consumer Advocate Division of the Attorney Tennessee Attorney General's office. Fans Bromel with a consumer advocate division of the Attorney General. Shelina Brown with the consumer advocate Division of the attorney general's office.
Yes Paul Davidson at Hollandon Knight for Pedmont Natural Gas Company, Spire Tennessee Inc, and Spire at Inc, and I'm here together with Brian Franklin and James Jeffrey's of mcquire Woods, Charlotte, North Carolina, also on behalf of Pedmont and Spire, ok?
And good morning. Brian Hesselin Deputy General Council for PMI natural Gas, ok? Good morning commissioners, Matt Applington general Council Spire Ink, Spire Tennessee appearing Prohaq Fijay. Okay, great. Thank you. The other thing we're gonna ask witnesses to come up here and set up here. So just be prepared to do.
Yeah.
Yes, I'm sorry. Go ahead. This is Henry Walker? I'm sorry mr. chairman. Henry Walker also appearing for spire.
Alright, Henry, thank you. Alright, we will begin with remarks from Spire Tennessee. Mr. Applicton, you may proceed.
Thank you, commissioner. May I please the commission? My name is Matt Applington. I'm the senior vice President chief Legal Officer of Spire Inc, but more importantly for today, I'm the general Council of Spire Tennessee Inc, and I am extremely operared.
Honored for the opportunity to be here today with you representing our nearly 3500 employees across the company to request approval of our application to acquire the Pedmont Tennessee natural Gas System. I'd like to sincerely thank the commissioners, the commission's staff for their time and their consideration today and for their thought.
Full review of all the papers that have been filed in the docket. I'd also like to acknowledge the intervener in this case, the consumer advocate division down the table there. Over the past several months, we've gotten to know the consumer advocate staff through frequent dialogue and engagement regarding this case, and we form quite a collaborative relationship with them.
While we haven't been able to reach an agreement to settle this docket, we do need the decisions of the commission to move forward and that's why we're here today. There are three basic questions that the commission must decide in this docket. 1st, does Spire have the managerial, technical, and financial capability to operate the Pedmot Tennessee system?
Second is approving Spire to operate that system in the public interest, and 3rd, if so, what terms of service should apply to Spire's operation of that system? This morning you'll hear from spire witnesses that will address all three of these questions.
They'll present evidence that spire is a capable and suitable operator for the Pedmot Tennessee system that approving the transfer to spire is in the public interest to ensure customers continue to receive reliable, safe, and affordable natural gas service. And the public interest is best served by spire operating under the exact same commission approved tariff.
And service schedules that Pedmock currently operates under. 1st you'll hear from Joe Hampton, the president of our southeast utilities. He'll address the question for you who is spire? In short, Spire is a capable equivalent provider of natural gas local distribution services.
We are a gas only company, primarily focused on natural gas utilities. We do operate a FERC regulated interstate pipeline and some natural gas storage facilities out in Wyoming and Oklahoma, but at our core, we are a gas utility. We don't do electric, we don't do water, wastewater or anything else.
I had up on the screen and I lost it a map that will describe for you where our other service territories are located, but I've provided all of you with a backup handout. That's why we, that's why we do this. So if you flip to 2nd page of your handout, you'll see the other states where we operate. Alabama Mississippi, and Missouri.
Providing safe and reliable service to territories in very close geographic proximity to the National Metro area in Tennessee. These utilities have been operating for well over a hundred and 50 years and currently serve over 1.7 million natural gas customers across these three states.
For the past 15 years, we've grown through acquisitions and successful integrations of other natural gas utilities in those states taking the best practices of each as we've gone along. We share similar culture and values as Pedmont Tennessee focused on safety.
Service reliability, and affordability. We are proud to say that once again, during winterstorm firm recently, Spire delivered for our customers, and much like Pedmont experienced NO significant service interruptions. That's what we plan for, that's what we drill, and it's how we'll continue to operate the Pedmot system going forward.
Spire has similar relentless focus on customer service and customer satisfaction as Pmot. We are perennially number one and number two in the JD Power customer satisfaction surveys in the southeast large utility region, and we aim to continue that. P Mont's going to continue to assist us up to 24 months under transition services.
Agreement to ensure that this is a seamless transition for customers, which is our most important priority.
Second question you need to consider is whether this transaction's in the public interest. You'll hear shortly from mr. Heslelin and the Pmot witnesses that Duke made the decision last year to sell the Pmot Tennessee system because it needs to deploy capital in its other service territories for electric reliability.
Having made that decision, Duke undertook a process to select a buyer best position to operate the Tennessee system and selected spire. I've already already talked about whose fire is, but I think it's also important to consider what spire isn't. We're not a private equity fund, we're not an infrastructure fund or any other kind of financial vehicle.
We are utility system operators. That said, you'll hear from witnesses David Yanz and miss Mathus in a moment, the spire is ready, willing and able to begin making capital investments in the Tennessee natural gas system to continue to improve safety and reliability and to expand the system.
To beat Nashville's continued growth. Similar to Pedmont Spire has strong experience accessing the capital markets. Our utilities subsidiaries a little bit different than Pedmont access those markets directly, utilizing their own standalone capital structures and issuing their own debt.
Where they obtained similar interest rates and credit ratings as Pedmont. As outlined in exhibit F to the application, in the testimony of our witnesses spire's acquisition of the Pedmont system offers other qualitative benefits to Tennessee customers as well.
E.g., our utility regions support each other through mutual aid, through all kinds of winter weather events and other abnormal operating system conditions. Because we're located in close proximity to the National area, we are best positioned to support each other on short notice going forward.
We're also committed to very strong community engagement, local presence, and being a champion for economic development in Tennessee. Mr. Hampton will be happy to address questions on those topics. You'll hear evidence today as well from the consumer advocate. They've chosen to view this question of public benefit through a lens of rate impact primarily.
You'll hear a great deal of testimony from their witnesses that approval of this transaction is not in the public interest because it might cause rates to increase for customers more than current pedmod rates and more than future pedmod rates. Our witnesses have responded to these arguments in their rebuttal testimony along a number of lines.
Firstly, it's important to remember this is not a rate setting proceeding. As I'll discuss, we're seeing simply seeking to change commission approved, we're not seeking to change any commission approved rates or service schedules. We're simply seeking to adopt exactly what's in place today to make a more seamless transition.
Second, the arguments about rate impact are speculative. We don't know what our cost of service will be in the future. We don't know what pedmonts cost of service would have been in the future. But importantly, all stakeholders, including this commission and the CAD, will have an opportunity to evaluate the necessity and prudency of those costs going forward.
In future rate setting proceedings. 3rd, as set 4th of mr. Yanza's rebuttal testimony, spire's willing to make a number of commitments to demonstrate this transaction is in the public interest and to ensure that we're keeping customers whole. Briefly, we have committed to excluding all transaction costs from rates.
To excluding all due diligence costs from rates, that there will be NO incremental TSA service charges passed along to customers that we will not seek an acquisition premium, that integration costs will be separately tracked and excluded from arm filings for consideration in the 1st rate case.
We've committed to a $250000000 rate based offset for customer affordability and goodwill. We've committed that we'll provide quarterly quarterly reporting to the commission of the CAD on the status of integration, and we've agreed that we'll forgo any historic base period revenue deficiency for the 2020 05:26.
Six and 27 arm filings and refund any historic base period revenue sufficiency to customers for that period.
Finally, we've committed that we will file a general rate case as soon as possible once we have our own costs known and measurable, and that we'll do so NO later than 2029. The 3rd and final question, if approved, what should the terms of service be?
I've already mentioned we're seeking nothing more than to simply transfer all the current commission approved tariffs and service schedules to spire. This includes, our plan includes retaining all Tennessee employees, all the physical assets of the system, the Pmod system in Tennessee, and our operational and capital plans are near.
Fairly identical to pmods.
With utility services provided by the same people using the same plant, it makes sense for us to continue to operate under the same set of commission approved tariffs and service schedules. The CAD has submitted a good deal of testimony in this case, as well as a pre hearing motion on the question of whether one portion of Pedmont's current terriff.
Review mechanism should be transferred to spire.
As threshold matter, administrative judge Cocklin has determined that this commission has the legal authority to order that transfer of the arm pursued to the tennessee code, if it so chooses. We believe the best approach for continuity is not to pick and choose which tariffs and service schedules should be transferred.
But rather to transfer all the tariffs as a package on an interim basis until we can file that 1st general rate case using our own cost of service data and actual experience. This is true for a number of reasons, primarily.
The arm mechanism has been previously approved by this commission. We've committed to the same CapEx budget as Pedmont, close to $200 million per year in the 1st five years to support growth and system safety. The regulatory lag associated with that level of capital investment without the arm is significant.
That investment.
Finally utilizing an arm on an interim basis would protect customers from potential rate shock of building up a large capital log prior to that 1st rate case. Continuing our robust capital investment into this system as we do in our other states is critical to providing reliable service.
Particularly during extreme winter events like we've just experienced the winnerstorm firm. And it's the reason that we performed exceptionally well for customers during that time period across our jurisdictions. Sales of utilities are relatively common.
This commission has a lot of experience dealing with these types of applications and approving them without catastrophic consequences. In short I'm gonna wrap it up. Today you will hear testimony from Aspire has the managerial technical, and financial capability to operate the Pedmot tennessee.
System.
That all the terriffs and service schedules should be transferred from Pedmont to Spire as a package on an interim basis, and that doing so is in the public interests for Tennessee customers and the continued growth of the region. Thank you. Alright, thank you. Next, we'll hear from Pedmont mr. Hesselin, you may proceed. Thank you, commissioner. And good morning commissioners.
My name is Brian Heselin. I'm a deputy general council at Pedmont, and I lead the legal regulatory support for Pimont across its jurisdictions. The transaction before you today intends for Pmont to transfer all of its Tennessee assets.
And its authority to provide natural gas services to spire. And we feel very confident in that choice. Understanding that this is a bit bittersweet of a docket for us, but we really feel that our choice of spire was the right one. And well, as you'll hear from the witnesses and you'll.
You'll hear as we go through this, you'll understand why.
I think we're very well positioned to make that share that opinion because over the past several decades, we have served National and the Tennessee National area in Tennessee. We have worked under the supervision of this commission. We have worked collaboratively for.
Collaboratively with you all.
With the staff, with the consumer advocate division whenever possible. But most importantly, PMO natural gas has provided safe, reliable, and affordable natural gas services to our customers in National and in tennessee. And we've done that.
At a high level. Mr. Ablington mentioned the JD Power Associates awards, and Pedmont has been recognized over several years as number one in our category, maybe sometimes number two, we'll have to check the numbers, but we've always.
Been acknowledged and recognized as providing excellent natural gas services to our customers. And I highlight that because I believe the strength of this transaction, why we believe that this is the public interest.
Is because, as mr. Applington noted, all of our Tennessee base employees will transfer with this transfer of authority, will transfer from Pedmont to Spire. So.
It's the men and women who provide these natural gas services, the operators, the techs, the customer service folks that are in National, they will transfer over to spire. They will continue to provide the natural gas services at the level that our customers expect.
And deserve. When we made the decision to enter into this transaction, and some of our witnesses will get into the details of our process of determining to enter into a transaction to sell our Tennessee assets, we thought.
A partner that shared our values and our commitment to natural gas service and our commitment to our customers. And we found that inspire, and they were a partner that we chose out of a number of choices. Now mr. Applington has explained why Spire is ready, willing, and capable to.
To take over for Pimon, that they have the managerial, the technical, and the financial capability. And honestly on that front, I don't think that's in dispute in this, in this in this hearing.
There's other aspects to what involves the public interest, but on that question, I think that's very clear. And sitting here today haven't had the time to work with the Spire team to observe them, to have our teams integrate and work on the transition with them.
To observe the operational, the regulatory, the corporate, and the legal, all work together to determine a plan for a safe and reliable transition. I can say sitting here today, next to mr. Applington, we feel even more confident.
That this transaction, this transfer of potential transfer authority is in the public interest. Mr. Applington mentioned winner winner storm firm. I think that storm is fresh in all of our minds.
Especially for the folks of Tennessee and Nashville and Fimont natural Gas alongside all of the natural gas utilities that work under the supervision of this commission perform well especially compared to say our electric utilities.
It's important when a transaction like this occurs and these transactions do occur within the industry that there is an assurance when another utility takes over.
That the next winner, that that utility will be ready to handle the next storm and then the next year and then the next year. And so that's why I've emphasized the structure and the plan of transition and why I believe that our customers will be kept toll and continue to receive the services that they believe, that they.
Deserve.
We have NO doubt under, and you'll hear it in much more detail from the witnesses because this question of what is in the public interest can get into the weeds in some ways, but at the end of the day, we feel that our customers will continue on with their service, that will protect them from.
Great impacts of this transaction and that pmots in here is gonna stay here until this transition is complete.
So finally, what I'd like to say is that Pimont also believes that spire should be put in the best position to succeed. Balanced with protecting our customers.
So what does that look like? It looks like a transfer of our comprehensive tariffs rates and regulatory treatment to Spire on an interim basis so they can integrate.
Transition and then ultimately file a general rate case. Within that context, and there are different aspects to what I mean or what we mean and the witnesses will get into it, but what a comprehensive, what I mean by comprehensive package.
But within that context is the Tennessee annual review mechanism, the arm. Now across the industry, across many of the jurisdictions in which we operate and others do as well, the arm is seen as a standard to achieve.
Because of its ability to mitigate regulatory lag, to address the impact potential impact of rate shock to customers and to motivate capital inve prudent capital investment.
To ensure operational reliability and to serve potential economic and customer growth. And so that circles back to the winnerstorm Firm and reliability is the arm has its place.
In helping a u and a utility to retain its place and its services to its customers. This commission has approved an arm for every natural gas utility in the state. To have spire, step into our shoes.
Into people like shoes without an arm would be like tying an arm behind their back and and their start would be impeded by that. And I would argue potentially their transition and integration to be a top performing natural gas utility within the state.
And so we believe once again, and I think it was it was noted also or affirmed by the hearing officer that this commission in approving the transferred authority can also transfer all, all the elements of our regulatory treatment to include the arm.
And we ask that you consider that. Finally, we wanna thank you again for the opportunity to serve. If you approve this transaction, we feel like we've left you in the best of hands.
And we absolutely commit to support and execute a smooth, safe and reliable transition from Fimont to spire, if you approve. Thank you.
Thank you. All right, we're ready here for the consumer advocate. Good morning chairman and commissioners. The consumer advocate is here today to represent the interest of Tennessee Gas customers.
This docket concerns the transfer of authority from Pedmont Gas to Spire Tennessee. This is not a routine transfer of authority. It's a complex docket with significant implications for Tennessee gas customers.
This case is not simply about the sale of a gas business between two giant corporations. This transaction will directly impact more than 205000 Tennessee customers.
Who rely on Pedmont for essential gas services. And with this transfer comes an avalange of costs. Costs that will ultimately be born by customers. Spire says they're not proposing any change in rates.
But that's just for now. Let us consider a typical Tennessee family. They turn on their heat or stove with the expectation that gas will flow safely, reliably and affordably from their monopoly provider.
Most customers do not know who owns the pipeline under their street, they likely do not know Pedmont is being sold to spire. They probably don't even know that this commission must approve the transfer, and they certainly don't know what the financial consequences.
Will result from this transfer. Yet those consequences will appear on all 205000 customers monthly bills eventually. Employee benefit costs.
Customer billing costs and in rate base with all will all increase compared to the similar functions that are currently being provided by Pigma. Customers want three things.
Safe service, reliable service, and affordable service. We have all recently witnessed the public outcry following the snow and ice storm that happened recently and the extended outages experienced by customers of Nashville Electric Service.
That event underscores how deeply utility failures affect families and communities. Customers want assurances that their gas service will not suffer similar disruptions.
But just as importantly, they want protection from massive rate increases, year after year. In this transaction, what's gonna happen is that customers are gonna pay.
Transition costs, integration costs, legal costs, system conversion costs associated with this transfer. This commission has both the authority and the duty to protect customers by ensuring that rates remain just unreasable.
And that this transaction is in the public interest. This is not a docket where the commission will just confirm that Spire has the requisite ability to operate in Pedmont's territory. That is a basic requirement of having a CCN in the state of Tennessee.
Approval of this transfer of authority is not a formality, it's a safeguard. The burden rests squarely on the applicants to demonstrate that this transaction is in the public interest and beneficial to all customers.
You will hear testimony asserting that spire is simply stepping into the shoes of Pedmont and that nothing is gonna change, but that assertion is misleading. This is not the case of one company just seamlessly.
Replacing another. This transition is going to require a massive operational and technological integration. Spire must replace Pedmont's entire IT system and operational infrastructure, including the gas control system.
The gas supply systems, the customer information systems, the geospatial information systems or GIS, the asset life cyc, the asset life cycle management system and the work management system.
This rebuilding process is projected to take up to two years. During that time, service quality and system safety face unknown risks. Under Pedmont, these risks do not exist, but with this transfer, the unknowns are extensive.
The cost of this transition are gonna be staggering and they will not be paid by the shareholders of spire, but instead Tennessee rate payers will be paying these costs. What Spire would have you believe.
That under their ownership, there would be NO greater cost to serve than currently under Peedman's ownership. That's not true. Spire has made NO binding promises of lower rates for customers. It has provided NO enforceable protections against future rate increases.
Instead, what Spire has made clear in the filing is that it tends to, it intends to seek recovery of many transaction related costs. Rate payers are being asked to accept uncertainty. Uncertainty about future rates, uncertainty about operational integration, and uncertaint.
T about service reliability.
They are being asked to trust that services will remain affordable while being exposed to significant financial risk. The most important question before this commission is simple. Does this, does this transaction improve the lives of.
See customers who will bear its financial and operational burden.
The answer is NO. What neither spire nor Pedmont have adequately explained is how this transfer of benefits rate payers. They provide a list of benefits provided by Pedmont that they adopt as their own.
This transaction is a business decision made by two large corporations to benefit themselves and their shareholders. This was not driven by customer need. Customers didn't ask for Pedmont to be sold.
And customers certainly didn't ask to be settled with the costs of this sale. Under tennessee law, this commission must consider all relevant factors including the suitability, the financial commit responsibility and the capability of the transferree.
And most importantly, whether the transfer serves the public interest. The public interest in utility regulation has a specific meaning. It requests that essential services be provided in a manner that is safe, reliable.
Sustainable and affordable while prioritizing the well being of the community over private or profit businesses. The applicants argue that this transaction is in the public interest because Spire has access to capital.
And it tends to expand their natural gas service in the Nashville area. That's not the legal definition of the public interest. Regulatory oversight exists precisely to protect customers from the abuse of monopoly power.
Expansion alone is not a benefit if the existing customers are forced to subsidize it. Indeed, spire stated goal of prudent expansion does raise serious concerns. Who is gonna pay for that expansion?
History suggests that the existing customers will bear those costs. Customers who never asked for this transaction will be left holding the bath. Continuity of service is not a benefit of this transaction. It is the bare minimum the law requires.
We must also address the issue here of the alternative rate mechanism or arm. Spire seeks to inherit Pedmont's arms part of this transfer. However, Tennessee law does not permit that. Under the arms statute, a public utility may opt to file.
For an annual review of its rates based upon the methodology adopted in its most recent rate case. Also, a utility seeking an arm must have conducted a general rate case within the last five years to qualify for an arm.
Spire has not met these conditions, and Peedman's arm can not merely be given to spire as part of this transfer of authority. An arm is not derived from the certificate of public convenience and necessity.
It's a separate regulatory tool authorized through specific proceedings. Allowing the transfer here would create dangerous precedent permitting utilities to bypass statutory requirements.
To corporate transactions. Spire argues that without the arm, they'll be in a very difficult financial position, but difficulty for the acquiring company is not the standard. Rather compliance with the law is.
This commission must decide whether this transaction ends with customer protection or with customer burden. Rubbers stamping this transfer of authority with all its costs and regulatory privileges will ensure that rate payers shoulder the full weight.
Of a corporate deal that benefits only companies and their shareholders. At the very least, there should be some safeguards and guardrails for customers such as a rate moratorium, tracking and reporting requirements.
Restricting spire from submitting a general rate case until it is NO longer operating until under the transition service agreement and normalized operating costs are known and measurable. In fact, a rate moratorium would be a meaningful benefit to.
That's existing Tennessee customers and would further the public interest.
Also, Spire should provide assurances to this commission that costs will not increase under Spire's ownership. Now, back to that typical middle Tennessee family that's looking to this commission to protect them.
And hoping that this commission will make a finding that this transaction is not in the public interest and does not benefit customers, but only serves to benefit duke energy, and spire. At the close of proof today, it will be apparent.
Thank you. And before we begin testimony with the joint applicants like to move all docket filings in the official record? Yes mr. Chairman. All right. Will that objection so moved?
I will have Spire call its 1st witness looking at time. Mr. Hampton, do you have any idea how long that testimony's gonna be? All right, you're good to go. If you'll join us up here in the hot seat.
We'll get you sworn in morning. Good morning. Alright, mr. Hampton, please raise your right hand. Do you swear from the testimony you about the give will be truthful? Yes. All right. Can.
Also please proceed. Thank you mr. Chairman and good morning, members of the commission, good to see you all again. Mr. Hampton, would you please state your name, full name and business address for the record? Yes, my name is Joe Hampton. My business address is six oh five Richard Arrington junior, bill of our north, Birmingham Alabama.
35203 and by whom are you employed and in what capacity? I am employed by Spire Inc at the time of our filing on 8 September 2025 following my direct testimony along with the joint application in this proceeding.
I was employed at Spire Services Inc as president of Spire Gulf Inc, Spire Alabama Inc, and Spire Mississippi Inc. Subsequent to our 8 September filing, I have now assumed the additional role as President of Spire Tennessee Inc.
Thank you mr. Hampton, and are you the same Joe Hampton, that calls to be prefiled on 8 September in this docker direct testimony consisting of seven pages? Yes. And were there any exhibits attached to your pre filed direct testimony? No. And was that testimony prepared by you and at your direction?
Yes, and do you have any changes at this time to your direct testimony? Other than noting that I'm now the president of Spire Tennessee. And if I were to ask you the same questions today that appear in your pre filed direct testimony, would your answers be the same? Tennessee?
Yes. All right. Chairman Jones at this time I would just note that mr. Hampton's direct testimony was already entered the recorders have given early from the stand, the outside of the hearing and that his testimony was correspondently marked for identification as a prefiled. So noted. Mr. Hampton, did you also prepare a summary of your direct testimony.
The commission?
Yes. Would you please read that summary now to the commission? I will. My name is Joe Hampton, and I am a natural gas utility business unit president with Spire Services Inc, and the recently appointed president of Spire Tennessee. I submitted pre filed direct testimony on 8 September 2025.
In support of the joint application of Spire Tennessee Inc and Petemont natural Gas Company Inc, seeking approval under Tennessee code 65-four-113. For spire Tennessee to acquire Petemont's Tennessee property.
Operations and authority to provide utility services. My direct testimony focuses on Spire Inc's readiness to assume operations in Tennessee and to maintain continuity of safe, reliable, and customer focused service.
Through regulated subsidiaries in Missouri, Alabama and Mississippi, Spire owns and operates natural gas distribution utilities and related midstream and marketing functions with oversight by the federal energy regulatory commission, and the state commissions in those jurisdictions.
We serve more than 1.7 million homes in businesses and bring more than a century and a half of operating history to bear on our core mission of providing safe, reliable and affordable natural gas service. Spire intends to own and operate the Tennessee system.
Through Spire Tennessee and apply the same standards of operational excellence and customer service that define our existing utilities. Spire operates an extensive distribution system of more than 29000 mi of names.
And consistently meets or exceeds applicable state and federal safety standards, supported by investments in system monitoring, leak detection, and proactive pipe replacement. Our customer services practices have earned industry recognition for transparency and engagement, and our regulatory.
Relationships across multiple states reflect a constructive, cooperative approach that benefits our customers. Spires financial resources enable the maintenance, modernization, and appropriate expansion of infrastructure while keeping rates affordable and our principle.
Offers are expe our principal officers are experienced operators capable of effectively managing Petemont's Tennessee operations as part of Spire's broader platform. By allowing Spire Tennessee to continue service under Pete Munt's established regulatory framework, customers will benefit.
Bit from continued high quality, safe and reliable service, as well as consistent rates, terms, and conditions, and avoid confusion or unanticipated changes during the transition. At the same time, spire sca spires scale.
Provides regional strength in financing and operations. While spire Tennessee will maintain a strong local presence with field personnel and leadership.
Based right here in Tennessee. Spire is committed to supporting local economic development, workforce initiatives, and community programs, and will work constructively and transparently with the commission and the consumer advocate to ensure ongoing compliance and effect of oversight.
In short, Spire stands ready to welcome Tennessee customers to Spire Tennessee and to continue providing safe, reliable service at reasonable rates for the long term. In my judgment and for the affirmation reasons, Spire is a suitable provider of natural gas distribution service for tennesse.
Three customers and the proposed transfer will serve the public interests. This concludes my pre file direct testimony. Thank you mr. Hampton Chairman Jones, members of the commission. Mr. Hampton is now available for questions from the consumer advocate and the commission on his prefile direct testimony. All right, do you wanna cross examine?
Yes, there oh, ok? I'll promise to be brief so we can I know we're shooting for noon, so hello. Good morning mr. Hampton. We met earlier today. It was welcome you to Nashville here. Glad you're here.
I'd like to ask you, you you said you're now the president of Spire Tennessee, right? That's correct. Now, are you moving to Tennessee? No, I'm not. And do you know anybody who currently works for Spire who will be moving to Tennessee?
If this transition is, if this sale is approved. We have positions that we will feel over time as we go through the process. There maybe employees from either Alabama Mississippi or Missouri that desire to move to Tennessee.
But what I will insure you is we have talented employees already in Tennessee that I work closely with that are more than ready and willing to lead our operations on a daily basis.
Will be moving to Tennessee as of now. Okay, thank you. Now, and some of the opening statements there was talk about the transition of operations particularly related to IT, computer systems that are you.
Too familiar with that issue in this case? Okay, now, at this time Spire has NO computer system that will handle the billing of customers in Nashville, does it?
That's correct. Okay, and you'll be relying on Pedmont's computer system for the foreseeable future, right? There's a TSA in place that will allow us to transition using Pedmont systems while we stand up.
Okay, now do we have an estimate of the cost of that at this time? Okay, now just so we're all understanding this.
The computer system is not just about billing, is it the importance of it. It's it's the customer portal into our operations. They can plan their, if they need support from us, they can request work through the system. But but it's also what, you know, in operational terms, the men who go out.
Out and work on lines, they very much rely on a computer system for job assignments and and to tell them exactly where to go, correct? Okay and how long has it been since you use paper orders since people out in the truck with paper orders? You don't do that anymore in any of your systems, do you? Well, we must do it from time to time. Yes.
You're planning to use IT or computer systems. So.
Right ok now I'd like to ask you some now some questions about.
Your statement that you said spire operates, I believe was over 29000 mi of distribution. Is that right? Yes. Do you operate any.
Transmission systems, does spire operate any transmission systems as opposed to distribution?
Okay. Now how do you have any plan to complete and and are you aware that that Pedmont does have transmission systems in Tennessee? At this time?
So you wouldn't know how Spire intends to complete the transition and integration of the transmission into the overall operations of Spire. Well, we were, as we know, we're governed by the.
Which is safety administration and Fertong. So we have rules and regulations we must follow when managing and, auditing our piping and we follow those standards both on the distribution side and the transmission side.
Okay, so that would be I mean just but those people, the people that will be doing that.
Right. Okay. The resources who oversee and manage that will work closely with Spire's team to ensure.
And do you know anything is there any reporting structure for the transmission operation that will take place if this sale is approved?
Yes, we are working now on organizational structure to ensure everything's in place. It will be it will be in place prior to the close of sale. Okay, thank you. No further questions. Alright, is there any redirect? Yes mr. Chairman. Okay, go ahead.
So mr. Hampton, you heard a number of questions from the consumer Advocates council, about various operational aspects of spires, LDCs in particular here at spire Tennesssee, Isn't that right?
Yes. Can you talk a little bit about your experience running Spire Mississippi, Spire Alabama, spyle, Aspire Gulf and the 30 years in the history that you've had running these operations?
Be glad to. I've been a member of the natural gas industry for over 30 years with 2828 of those years leading in numerous capacities and operations. Apparently today, I lead the spire Gulf Spire Mississippi.
And spire Alabama teams, which account for about 560000 of our 1.7 million customers. On a daily basis, our team efficiently operates in a safe manner, provides excellent customer service. And as you heard earlier.
Either number one or number two in JD power surveys as it relates to how we take care of our customers on a daily basis. With 30 years of experience, it's not many things I don't know about this industry. Things that we do on a daily basis from normal operation to abnormal.
Operating conditions. Our teams are very well prepared and in spending time with our employees here in Tennessee, they are very well prepared to come into the spire or come under the spire umbrella and seamlessly continue to do the great things they've been doing here.
Alright, thank you mr. Hampton. So based on that answer, would you say that there are any fundamental differences between the Tennessee system of natural gas? And I emphasized fundamental differences between the Tennessee system of Pimon natural Gas and that of Spire Alabama, Spire Mississippi or Spire gun.
Not at all. Alright, mr. Hampton, can you also tell me about your familiarity with distribution systems and transmission systems? Yeah, so as we talked about Spire operates 29000 mi of distribution main.
Across our footprints. Distribution piping is the piping that serves our homes and businesses. It operates at a lower pressure. We survey and audit that piping annually. We meet all types of films are infer expectations as it relates to distribution piping, and our team is very well prepared and knowledgeable of how to perform that work on a daily basis. Same goes for transmission integrity management or transmission piping. It's just piping that's typically larger and diameter.
With higher pressures, typically the transmission piping feeds into the distribution system where we regulate the pressures to a lower pressure so it's safer for our employees to work on it when necessary. In both cases, our teams are very well prepared to perform this work.
Our leadership teams are very well prepared and knowledgeable of how to audit this work, how to investigate this work, and how to ensure our employees safely perform work on it on a daily basis and ensuring our customers have the reliability of natural gas in their homes and businesses when they're ready for it.
Thank you. Did you also hear questions from consumer advocate Council with respect to your address and whether or not you would be moving to Tennessee? Do you recall that question? I do. Do you know whether or not, the leadership of.
Petemontz Tennessee operations, is located in Tennessee. They are not. Okay, where are they located? North Carolina. Okay. In connection with that question, what is your understanding, even with that leadership being based in North Carolina of the.
The operational, capability performance, and any other sort of reputational aspects of Pmont's Tennessee employees. Over your 30 years of being in the industry. I would say under the current leadership of.
Of the Tennessee team with a leadership out of North Carolina, they performed at a high level with leadership here coming to town as needed. I would say under Alabamas or under my leadership.
You will see more, that would be a greater presence of leadership. It's 3 h for me to leave my office in Birmingham and arrive at the office here in Nashville Tennessee. It takes three and a half hours for me to leave my office in Birmingham, Alabama.
And drive to our operational location in Mobile Alabama, where we're present and accounted for whenever we need to be. But more importantly, I will just say, I don't need to be present because the talent that runs the day to day are the people.
The men and women that work right here in Nashville Tennessee and I will be present to encourage, motivate, support them as needed. Chairman Jones, just one more question. Mr. Hampton, do you have any concerns?
Based on your understanding of the expertise in the Pedmont Tennessee operations employee base of their ability to address some of the concerns that consumer Advocates council expressed with respect to technology, IT systems, transmission, distribution or anything of that sort.
No concerns whatsoever. No further questions. All right, we'll see if commissioners do. I I have a couple. By the way, you trumpt me. I have 29 years of experience in the gas industry, you've got 30 and I spent three years doing acquisitions of them.
Acquisition teams, and I know the challenge is trust me. So my question to you is, I assume in your service, how many acquisitions have you been a part of since you've been with spire? I've been a part of three acquisitions and size wise, how do they compare with the potential Pedmont acquisition?
The acquisition of Spire Missouri and Alabama Gas are probably four times larger than the acquisition of Spire, the current acquisition of Spire Tendencee becoming a part of the spire footprint. And I've seen part of your team aspire.
Fire also has experience in going through acquisitions and hopefully successfully doing those, is that correct? That's correct. Okay, thank you. Do the commissioners or staff have any questions of the witness? Okay, thank you. Appreciate it. We're gonna, we're gonna take a break at this time. We're close. We're 1201, so we did good. Thank you. My question got us over, not yours. We will.
But we will readjourn at 01:00 and continue the hearing and vice chair high will proceed while I'm doing a budget presentation in front of the senate. So thank you and enjoy lunch. Hey I thought both of these were ok. I'm fine with the one if you wanted.
Okay we going back to the office? Okay. Are you gonna leave stuff here? I haven't yet.
Yeah, yeah, right. 65.
How are you? So you well know. Now you know.
And I got the look in there trying to think where was the one for lunch? That's the next.
Okay.
Where are we? Alright.
Next one, this one. I'm trying to figure out where those yeah ok it should be in there. Should be in a script. Should be in a script.
I don't know who we had before. So we didn't actually.
Okay. Yeah.
Yeah let's get started. Let's see. Spire me call this next witness. Thank you vice chairman hi. Calls miss Brittany math mr. stand. She's coming.
You order is Miss Math is gonna be sworn.
Miss Matthews, please raise your right hand. Do you swear or affirm that the testimony you're about to give will be truthful? I do. Thank you. Council? Thank you vice chairman. Miss Matthews, would you please state your full name and business address for the record, please?
Yes, I'm Brittany Matthews and my business address is six oh five Richard Errington junior Bullievard North, Birmingham 352 oh three. And could you pull up Mike just a little bit closer to you? Make sure everybody can hear you. Yeah, better, thank you. And by whom are you employed miss Mathewson and what capacity?
I'm employed by Spire Services Inc, as the newly appointed CFO of Spire Tennessee but I also serve as the CFO and controller for Spire Alagama, expire Gulf and spire Mississippi. Collectively those comprise our southeast utilities. And you're the same Britney math as the pre filed direct and rebuttal testimony in this proceeding. Okay, and were each of these pre filed testimonies prepared by you or under your direction? Yes.
Do you have any changes to your pre filled testimonies? Yes sir. Did your prefilled testimonies contain any exhibits? Yes. And weren't those exhibits confidential? Yes. Exhibits four and five of my rebuttal testimony were confidential? Okay, and are you also sponsoring any exhibits to the application?
Yes, I'm sponsoring A B C D and E Okay, thank you. And finally, Miss Matthews, do you have a summary of your direct and rebuttal testimony? Did you provide that to the commissions? Good afternoon. My name is Brittany Matthews and I serve as the chief financial officer for Aspire Southeast utilities. I submitted pre file direct testimony on 8 September 2025 in support of the joint application of Peedmont Natural Gas Company Inc.
Fire Tennessee Inc seeking approval under TCA section 6054 01:13 or the transfer statute. For aspire Tennessee to acquire Pedmonts Tennessee property operations, and authority to provide utility services.
In my direct testimony, I explained that spire's financial strength is demonstrated by the company's many decades of dividend continuity and investment grade credit ratings about the parent and operating company utility levels. It's further supported by a $1.5 billion syndicated revolving credit facility with borrower.
Supplements, and is complimented by a commercial paper program size to meet our near term funding needs consistent with our earnings growth. I also explains fire's successful history of acquisitions and integration, each of which required distinct integration work across technology, shared services, and regulatory coordination. As a result, fire has developed expertise in managing complex transitions while preserving service quality.
My direct testimony also addresses Fires Tennessee's intended capital structure as well as customer impacts. Spire plans to issue operating company debt at spire Tennessee in nearly the same amount as the debt historically allocated to Tennessee by Piedmont. Adjusted as needed for capital to port deployed before closing.
The remainder of our transaction financing is going to be raised at the holding company and a balanced mix of debt equity, and hybrid securities. Spire intends to adopt Pizzamont's existing tennessee rates on an interim basis and does not seek to recover any acquisition premium or corporate transaction costs such as advisor.
Financing or antitrust fees. While integration will require technology investments and transition support, Spire anticipates addressing any recoverable utility system costs in a future rate case, and it expects the long term cost to serve Tennessee customers to be NO greater than it is today.
In my rebuttal testimony filed on 9 January 2026I address the consumer advocates concerns regarding spires financial stability, capital structure, accumulated deferred income taxes or aided, pension related regulate regulatory assets and transition information reporting.
I explained that Spire has largely executed the permanent financing plan contemplated in the joint application and will not rely on the bridge facility as a lasting solution, which aligns with rating agency expectations and reflects strong and best your confidence inspires credit and transaction plan. I explained that the senior.
Our end junior note offerings said the Spire Tennessee and holding company levels respectively were well received and favorably priced underscoring the market's acknowledgement of spire's financial strength, and confirming that the permanent financing plan is prudent and customer focused.
My rebuttal testimony further states that spires plan to capitalize spire tennessee's rate base close to a 5050 debt to equity structure aligns with pedmot's implied capital structure, and that our use of specifically identified funding sources mitigates consumer advocates concerns about double leverage.
I also explained that consistent with the internal revenue code normalization requirements, pre acquisition aided associated with accelerated depreciation, reverses on the seller's books and does not transfer to the buyer. The Air Force Buyer Tennessee will not reflect Beemont's historical aided and future regular.
Which avoids normalization violations that would result from the consumer advocates proposal, which could increase tax expense and constrain cash flows needed for system investment. To the extent the consumer advocate expresses concern about the loss of the seller's aided offset to rate base, the step up and tax basis of these acquired.
Assets will generate new data over time. Partially mitigating the effect. I also clarify that Spire will provide its own retirement benefits does not request any change in rates, and that any future recovery of benefits related costs will be subject to a full rate case review. All of which preserves continuity, prevents duplicates.
Of recovery and honors the commission's prior decisions concerning legacy pension funding. While my rebuttal testimony emphasizes that this is not a rate case or rate proceeding and that the applicants accordingly do not request to change in rates, David Yonce's rebuttal testimony further articulates additional measures designed to address potential customer impacts and ensure this transaction is in the public interest.
My rebuttal testimony also conveys fire's willingness to provide reasonable annual operating metrics and to file periodic updates on the transition and integration activities for monitoring purposes. Spire doesn't track the work stream level costs that the consumer advocates suggested granularity, but we do agree to track.
Integration costs in a manner that facilitates later predets review, including appropriate distinction between operations and maintenance and capitalizable technology investments. In my judgment, they already executed permanent financing balanced operating company capital structure, favorable ratings agency and investor feedback, sound tax normalization practices, preservation of prior commission decisions on legacy pension cost recovery, and our commitments to.
Privacy transparency, and auditable cost tracking all collectively demonstrate that spire's financial strength, expertise, and acumen satisfied that transfer statutes public interest standard. These facts confirm that spire has the resources and capability to own and operate the Tennessee system while maintaining affordability, reliability, and regulatory continuity for customers. And they reinforced that approval of the joint application serves the public interests.
Thank you miss Math. Miss Math is available for cross examination questions by the commission. Thank you.
Good afternoon miss Mathus. Good afternoon. Ok, so in your rebuttal testimony, you discussed that some of the external sources of long term financial stability.
For Spire has provided feedback to spire, correct? That's correct. Okay. And that these rating agencies have generally reacted favorably to the announcement of the proposed transaction. That's correct. We've intentionally structured the transactions that.
Which that it would be credit positive, so the agencies have seen to respond to that. Okay. Now, I guess there's been several dates that that announcement was made, you mentioned 31 July, there was an announcement made, and then S&P issued a rating action.
You can turn to page six if, if that's easier of your rebuttal and they refirmed all the ratings in place for the company and subsidiaries.
And then, on 3 November, Moody's issued fresh opinions on Spire Alabama and Spire Missouri reaffirmed the company, the company's ratings.
And then on 14 November, I believe Moody's issued a private placement rating of A three senior, correct? That's correct. Okay, and you've attached.
A exhibit exhibit three. And in that exhibit it said that there was a stable outlook on the debt anticipated prespire ten C, correct? That's correct. Okay, now could you turn to exhibit three page two? Is this of miss math, this is testimony? Yes.
Are you there? Yes. Okay, great. So, can you read that 1st paragraph? We review the regulatory framework? I'm sorry, the 1st paragraph begins fire Tennessee Inc's A three rating reflects the slow business risk.
Oh, sorry. Page two. Yeah, you said, sorry. Page two. We view the regulatory framework in Tennessee to be constructive. Under the purview of the Tennessee Public utility Commission T POC, Spire Tennessee is authorized to use an annual review mechanism armed as allowed by tennes.
Under the formulaic arms, fire tennessee adjusts rates annually to achieve its allowed ROE, currently 9.8 % over the upcoming year and to true up any difference between its allowed ROE and actual ROE from the prior calendar year.
The arm rate structure provides relief outside of general rate case and allows the utility to earn a return on and of its capital expenditures on a timely basis. Just before we continue, I just want to clarify that you have attached this exhibit. It's marked strictly confidential, but it was not designated as.
Confidential. That's correct. Okay. Just want to confirm that. Yes. Okay, so in this narrative that Moody's provided, they mentioned that Spire Tennessee is authorized to use an annual review mechanism as allowed by Tennessee law.
Where did Moody's get that information? I think that is Moody's interpretation of, the environment in Tennessee and the fact that all the LDCs here in the state are currently under an arm.
Okay, but that's not correct. I would say it's dependent on the findings in this case. Right. So, do you, in your opinion, is this ratings by Moody the result of spire having an arm?
I would say it's connected for sure. The rating agencies view this to be a very constructive environment as they mentioned here and the effect of calling that into question would certainly change their beau.
View of the of the.
The environment that we operate in and our access to generate cash flow on a timely basis. Okay, I have nothing further. Thank you miss Mads. No redirect. No. Okay, NO re.
Do the commissioners or staff have any question? Thank you mr. Vice chairman. Spire calls.
Mr. David Yons still the stand, please? Mr. Johnson, please raise your right hand. Do you swear or affirm that the testimony you're about to give will be truthful?
I do. Srians, could you state your full name and business address for the record, please? Yeah, my name is David Yans. My business address is 700, market Street in st. Louis Missouri, 63101. And by whom are you employed in what capacity?
I'm employed by spire Missouri Inc as managing director of Regulatory affairs. And mr. Yans, you're the same David Johnson caused to be pre filed direct and rebuttal testimony in this proceeding, correct?
Correct. And were each of the pre filed testimonies that I just mentioned prepared by you or at your direction? Yes. Do you have any changes to your pre filed testimony? I do. On page 17, the line eleven of my direct, testimony, the word two.
Should be inserted before the words step, so that it reads such disruption which could result from the failure to allow Spire Tennessee to step into the regulatory shoes of Pedmount and then it continues on. And then additionally on page 13 line 13 of my rebuttal testimony.
The word levels should not be plural. The sentence should read absent a switch to a capable capable provider like spire. The Edmont system likely would receive a constrained level of capital investment. And did your pre filed testimonies contain any exhibits?
Yes, and were any of those exhibits confidential? Yes. Exhibits one three and four to my direct testimony were filed confidentially and under seal. And are you sponsoring any exhibits to the application? Yes, exhibit F to the application. Mr., have you prepared a summary of your direct and rebuttal testimonies? Yes.
Could you provide that to to the commission, please? Yes, chair and commissioners, 1st and foremost, thank you for the opportunity to be here today. I'm personally very excited to be here in Tennessee and hope to have the opportunity to get to know you all and your staff better if this transition or transaction is approved.
As mentioned, my name's David Yans. I'm a managing director of Regulatory Affairs expire. I submitted pre filed direct testimony on 8 September in support of the joint application of Petemont natural gas company Inc, inspired Tennessee Inc seeking approval of the transfer statute.
In the Tennessee code for Spire Tennessee to acquire Pedmonts Tennessee property, operations and authority to provide utility services. My testimony highlights spire tennessee's qualifications to assume ownership of and operate the system.
The transactions customer benefits, and why further the public interest. In my direct testimony, I describe spires longstanding experience operating regulated natural gas utilities, our deep expertise in system operations, pipeline safety.
Customer service and regulatory compliance, our strong financial position and our demonstrated ability to prudently invest in infrastructure, modernization, and reliability, which ultimately supports safe reliable, and affordable service for our customers.
I further explain why transferring pedmount's existing rates, tariffs, service regulations, franchise approvals, and related regulatory regulated authorizations to spire Tennessee as appropriate and necessary. I also explained that since the transfer statute contemplates the transfer of the full authority to prevent.
Provide utility service, including the regulatory structures that define how services provided. I think goes without saying that allowing Spire Tennessee to operate in the exact same fashion as Pedmont will undoubtedly ensure the most continuity and consistency for customers.
This approach avoids disruption and uncertainty and supports an orderly transition while maintaining the commission's full authority over future rate making. In addition to my pre filed direct testimony I submitted pre filed rebuttal testimony on 9 January 2026.
Responding to consumer advocates concerns regarding the standards that govern the commission's review under the transfer statute. Transition and integration considerations cost recoverability, and the continuation of Peedman's annual rate review mechanism or arm.
In doing so, I focus on five themes. Proposed solutions by spire to address the bulk of the material concerns expressed in the consumer advocates direct testimony concerning impacts of the proposed transaction. Number two, the transferability of Pedmont's Arm despired Tennessee on an interim and temporary basis.
Number three the approach to the arm I propose for this situation of the arm transferring. Number four, how the proposed solutions and approach to the arm address the consumer advocates concerns, and number five why the recommendations I've proposed together with the transfer of the arm on a temporary and.
Interim basis satisfies the public interest standard under the transfer statute. Contrary to what you heard in the consumer advocates opening remarks, I do propose several customer protections, protective conditions in my rebuttal testimony. To address the consumer advocates concerns.
Such as the exclusion of transaction costs for recovery except for the legal costs directly associated with this docket. I proposed a forego recovery of due diligence costs and the acquisition premium related to the transaction, as well as for going cost increases related to the transition services agreement.
And I also propose that we track all integration costs for future recovery in a general rate proceeding. We also propose to provide quarterly and annual inter integration progress reports to the commission and the consumer advocate.
And most importantly, we are committed to a $250000000 rate based offset for rate making purposes over an amortization period of 20 years. Taking together these measures_aspires commitment to affordability and directly respond to cost impact concerns, auditability under established proper.
Processes and customer protection during the transition.
In addition, I explained that Pedmonts arm is transferable to spire Tennessee as part of the transfer of authority contemplated by the transfer statute. The arm is embedded in Pedmonts tariffs and functions as a previously approved regulatory mechanism for updating rates that continue avoid continuation of which.
This commission has amble authority to approve on an interim basis so that Spire can continue to provide under the provide service under the same regulatory framework that applies today. I further explain why the consumer advocates reliance on a separate statute governing arm adoption is misplaced and that the record demonstrates that continuing the arm via the transfer statute will preserve rep.
Regulatory continuity avoid customer confusion and prevent adverse outcomes associated with removing an established mechanism that regularly aligns rates with current costs. Importantly, I propose an approach for the interim arm designed to prever preserve continuity for customers while addressing the consumer advocates concerns.
Under my proposals Spire Tennessee would make arm filings on a temporary and interim basis to reconcile and rebase rates to the most up to date costs and rate base, but with a key customer protection incorporated into the whole historic base period or HBP reconciliation.
And that if it yields a true up favorable despire, spire would forgot forego recovery. This approach maintains the current arm structure, mitigates the risk of raid shock from extended regulatory lag, promotes infrastructure investment in the state.
And ensures that only customer favorable reconciliation adjustments will take effect during the early integration periods. I also explained the spiral forego recovery of integration costs through the arm, and instead, as mentioned before, would reserve the right to preserve.
Present such costs in a future rate proceeding for full review. Relatedly, assuming adoption of this approach to the arm, and given that this is not a rate case, Spire will file a rate case as soon as possible.
But certainly NO later than 2029 once the transition and integration has matured. By allowing Spire to fully adopt Peedman's regulatory framework on an interim basis, the commission would ensure continuity of service and predictability for customers.
The interim arm approach protects customers by applying only favorable reconciliation outcomes and deferring integration costs recovery to a future ray case. The additional commitments to forego recovery of transaction related costs report regularly.
And apply a substantial rate based offset, further strengthen customer protections and customer benefit. Current rates are based on 2024 costs and investments. Preserving the arm on an interim basis to rebase rates avoids extended regulatory lag that can produce large.
Abrupt rate increases for customers. Thereby, this promotes rate stability and affordability for customers. These measures I've proposed provide tangible and immediate benefits to customers. Align with statutory considerations and demonstrate that approval of the transaction with a transfer of the arm on a temporary.
Term basis satisfies the public interest standard under the transfer statute. What I have proposed in the testimony will allow Spire to come in and focus what matters most, providing safe, reliable, and high quality service to Tennessee customers. Without an arm, Spire will be at a significant disadvantage relative to Pedmont in every other LDC in the state.
As we will have NO ability to update rates or recover capital investments until filing a ray case. Petemounts operations are built around the arm, and legacy mechanisms such as the integrity management writer or IMR that once existed NO longer exists.
If we gain approval from this commission, my hope is that Spire does not have its legs tied together on day one, and that we're able to come in on a level playing field with all the other LDCs in the state, and that we're well positioned to come in, invest in and expand service in the state.
And succeed in providing the exceptional service to customers that they have become accustomed to and deserve. Thank you. Excuse me. Thank you, mr. Johns. Mr. Alans is available for cross examination questions by the commission.
Yes, thank you commissioner. Good afternoon mr. Johns. Good afternoon. So you're employed by Spire Inc, which is the parent of Spire Missouri, is that correct?
I'm actually employed by Spire Missouri Inc. I just wanted to clarify that and what is your exact role in this acquisition transaction? I'm representing the regulatory function for the, for the transaction.
And, does that mean that you're in charge of the entire acquisition? It does not. Okay. And who would be in charge of the entire acquisition? We actually have a very large group of individuals working on the integration efforts and the and the overall.
Transaction. It's a team effort on one of one of many that are, that are working on it. You just heard from miss Matthews who is also, you know, working on the transaction and this approval among others who are, who are in the room. But from an integration perspective, we have employees across the company.
I'm working to ensure that the integration occurs on a timely basis, and that it's, that it's done well. And during the time you've been employed with Spire or Spire Missouri, have you been involved in any other sale of assets such as this one? I have been involved in acquisitions yes.
Okay, and can you recall which ones those are? I was involved in the acquisition of Alabama Gas corporation. I was also involved in the acquisition of mobile gas. I came in at the tail.
The end of our acquisition of missouri Gas energy. So I was around but I did not work on the beginning of that transaction. I did not work on the transaction itself. I joined the company after we announced the acquisition.
And have you been involved in any other large scale transfer of authority at any commission? I have not.
So this is the 1st acquisition of this magnitude that you've been involved in in your career. Well as mentioned, I was involved in and actually worked heavily, heavily on the acquisition of Spire Alabama and then also of mobile gas, which were two very large acquisitions for the company. But not in a transfer of authority. I'm not sure I understand your question. Meaning in Tennessee, we have a staff.
That you concerning the transfer of authority, it's required to get a commission approval. I understand. So in these other states, Alabama and mobile gas, was there such a statute where you had to seek transfer of authority from a commission? I wasn't involved in the, the regulatory approvals of those transactions.
Now on page two line 15 of your direct testimony.
You mentioned that this transaction will deliver benefits to Tennessee customers. Yes.
Okay, and you don't specifically discuss those benefits that's on page two, do you? I do not see those discussed on page two. Okay. And then on page three line ten, you mentioned that Spire has a proven track record of safety and.
Safely and reliably operating a gas distribution system. Are you there? Yes. Okay. And then you mentioned also that there is a leadership team that has decades of experience in system operations, pipeline safety, customer service, regulatory compliance, et cetera.
Correct? Yes ma'am. Okay. When you were with Spire Missouri, which you were the managing director of Regulatory Affairs, did you also purchase or involved in the purchase of gas in the wholesale market from producing.
I personally was not involved in the purchase, but I did have responsibilities for our gas supply group and had employees that were doing that yes.
So you're familiar with the system. Can you be a little bit more specific? The spire STL pipeline system? I am.
And then on if we switch to page 14 page four line 17, you mentioned that Inspire Alabama serves more than 400000 residential commercial and industrial customers.
And is the largest natural gas distribution utility in the state of Alabama, correct? Correct. Is Spire Alabama regulated by the Alabama Public Service commission? Yes ma'am. And does Alabama PSC use formulaic rates?
Yes. They don't call it an arm. They have a rate stabilization equalization mechanism.
Would it function as the arm does in Tennessee? It's slightly different. It actually has a forward looking component with it, whereas the arm in Tennessee is historic. So it's a different regulatory setup than Tennessee. Yes.
What about spire Mississippi or spire Gulf? Do they have formulate rates? They're in Alabama, they have a similar similar structure as the other utilities in Alabama? Yes.
But on page five, line 16, you mentioned that Mississippi is substantially similar to Tennessee.
Where are you at? Page five line 16.
Yeah, I think what I'm describing there, is I'm actually talking about each of our existing spire natural gas utilities. And yes, they are they are similar and that they're regulated by state commissions, and we're providing local distribution service to.
Customers providing natural gas service to customers in those states, so that's that's what I was referring to there. Okay, so they do not have the same set up as Tennessee. I would say they're very similar. Yes, there are nuances within all state jurisdictions but you know the states within which we operate are regulated by state commissions, state utility commissions, and we.
We work very closely with them, just as we would here. So I think there are a lot of similarities with all natural gas utilities, but yes, there are nuances associated with each of the jurisdictions within with with which those utilities operate within. But they use Formula rates, don't they? Some of them do, yeah. Okay. And they don't have arms like Tennessee.
I would say they do not have an arm, but the way that the rate setting works in Alabama is the rates are updated to recover costs and investments that are expected to occur. In Alabama it's actually forward looking when they come in each year to set their rates on a forward looking.
Basis, they look at the budget that Spire Alabama is attending to execute on and that's what the rates are are based on. Whereas in Missouri, e.g., it's more of a historical look at actual costs, actual capital investments that have occurred prior to seeking recovery of those, which is, you know, also similar to, to Tennessee in some respects.
Okay. On page six of your direct testimony beginning at line eight, you discussed that there are priority areas and imperatives established by Spire that form.
The basis for its strategy strategy for advancing the company. Is that correct? Yes ma'am. And the 6th one says financial success. Achieve our established financial targets. Do you see that on line 20? I do.
Okay, and, can you explain that a little bit more? What are the financial targets in this acquisition? I think it's a number of things. I'd say at a very high level, you know, it's important for all utility operators that are providing integral service to customers and heating customers homes on the coldest of their.
Is, to be financially healthy so that we can invest in the state, we can invest in our workforce to ensure that we're able to provide that safe and reliable service. So the financial success is really, really about us having the ability to continue to perform at a high level, continue to attract capital at reasonable rates so that we're able to invest and provide that service to our customers. Now, were there any financial targets in this acquisition? I'm sure there were. I'm not familiar with those. Okay, and what about financial targets for the executive team? Were there any financial targets? I'm not aware of that.
On page seven mr. Yanz, you mentioned that Spire has launched.
An industry leading safety management system SMS, and it's a company wide endeavor to cover all operations. Yes. Can you explain the safety management system in a little bit more detail?
It's really not a like technological system as much as a system that that brings together all the different, safety metrics, and ways to, to track and manage safety. So it's a, it's a number of various things, but a lot of it's really revolves around the tracking of safety metrics to ensure that our employees know.
So, you know, where those areas are that are, that are high risk, and what they need to do to stay safe, not only keep our customers safe, but keep themselves safe as well. And, does this system provide any reports or metrics that are reportable? We have a lot of safety metrics that are reported yes.
And these reports are they circulated with these reports? I mean depending on the level of detail they're communicated in different ways, you know, for our field field employees, they're, they're reported at a much more granular level.
That we report our safety metrics all the way up to the board of directors of our company as they're extremely interested in ensuring that we're providing safe service to our customers, but then also keeping our employees safe. That's really ensuring that our executive leadership team and all our leaders are engaged in safety, so we encourage you know leaders leaders of our organization all the way up to our CEO to attend safety meetings.
Out in the field, to make themselves present, to ensure that they're shepherding, and carrying out a culture of safety. And, were any of these reports or metrics or key performance indicators for leadership safety engagement and the, I believe SMS was they provided to the commission and you're asking.
I don't have them in front of me, but I do know that we provided via data request some of our distribution operations packets that we produce and distribute to our leadership team, and I would expect that there are safety metrics reported in those, but I don't have those in front of me.
And, you mentioned in your direct also that, you or aspire ensures that there's employee safety and you comply with all applicable OSHA, federal motor carrier, safety Administration, United States States pipeline hazard.
This materials safety administration, et cetera. Is that correct? That's correct. Okay. And are you aware of any OSHA violations by Spire? Missouri, Spire, southeast? I'm not. What about the federal motor carrier's safety administration? I'm not aware of if there are any or not. And what about the US pipeline hazardous material safety administration? I'm not aware of any.
Okay.
So.
Were you aware that Spire missouri pipeline was issued a letter of warning in June 2024 alleging that Spire failed to document the plugging and abandonment of wells and did not include threat and hazardous interactions in your risk model? No. And, are you aware that in 2026 that spire Missouri pipeline was issued a notice of violation?
The spire STL pipeline a subsidiary of spiring?
Ultimately yes, I'm not sure exactly what the organizational structure is, but yes. And do you have any knowledge of any operational incidents that expire? Safety. Can you be more specific?
Were there any incidents concerning safety at any of these spire, subsidiaries or locations that you're aware? I think safety, I mean, we have motor vehicle accidents that are reported I think safety is a little broad, I'm not sure.
What exactly you mean by, are there any safety incidents that I'm aware of? Okay, in 2025, apparently there was an incident spire Missouri involving a crew member that was injured after a spark ignited erruptured gasmaine during work with another utility. Are you aware of that?
I maybe vaguely aware of that if I'm thinking of the right situation and does fire Missouri have an Asian infrastructure that has very susp has been very susceptible to leaks?
I would say that our infrastructure, is certainly old. Our company's been around for over a hundred years, and we are replacing pipe like the rest of the industry to ensure that we're able to provide safe and reliable service. So yes, we have a replacement program.
Program that we're going in and evaluating the age of pipe, the material of that pipe, and replacing it as needed to to ensure that our system's up updated and modernized. And do you know if that was ordered by the Missouri Public Service Commission the accelerated replacement program? I do not know if it was ordered, but I do know that the Missouri Public Service commission, is supportive of our replacement programs in Missouri.
Now Mr., you have also mentioned in your direct that Spire is committed to customer service. Is that correct? Yes ma'am. And, are you aware that Spire has repeated problems loca locating?
Complaint calls upon request by regulatory staff? I'm not. In my experience, we've, we do a very good job working with our regulators in the state. So would you be surprised to learn that.
Between 2024 and 2026, Spire had several issues with billing usage estimation, customer service, and communication, service disruptions and infrastructure.
And regulatory and corporate issues? I'd be a little surprised without knowing, knowing more details about what you're referring to. Okay, so let's talk about billing and usage estimations. Apparently, there have been a lot of complaints about overestimated usage.
Inspire bills based on estimated usage rather than actual meter readings, particularly when usage is low, and that has resulted in customer bills being hundreds of dollars higher than actual consumption. Do you have any knowledge about that?
I don't. I'd be curious how many instances you're referring to. And what about failure to update bills? Customers have reported that even after submitting actual lower readings, Spire has not updated bills and this has resulted in excessive automatic withdrawals from their account.
My assumption based on what you're saying would be that these are probably one off isolated situations without knowing more details. I'm not aware of any systemic issues.
Are you aware that in Alabama and madam Worry there have been reports of massive spikes in monthly bills? I'm not aware of that. Okay. Now let's talk about customer service and communication. Apparently, there have been many complaints filed about four service.
Quality.
I'm gonna object Miss Miss Brown is testifying to alleged facts about Spire's system in various locations. It's, you know, to the extent she's asking mr. Yonz if he's aware of that, I think that's fine, but but to the extent that she's characterizing this with NO supporting evidence, NO documents provided to the witness. We I, we object.
Okay Commissioner I'm just asking him whether he's aware about these customer complaints because he has stated in his testimony that there are NO customer service issues and I just wanted to highlight that there are cus.
Customer service issues.
And my only comment, your honor is that this should brownse assertion of issues is not evidence of those issues and that's the basis of my objection. That's fine. I just wanted to ask him if he's aware of these incidents. Okay.
Mr. Yonz on page eleven, wine eleven.
You discuss that Spire has invested $6.5 million to support communities that Spire serves and that includes more than $2 million in sponsorships and memberships. Can you explain this?
Yeah, we, we support a lot of the communities by giving giving back to the communities. These are all shareholder dollars that we're, that we're promoting within the community to to get back and be a part of the community and we would intend to do the exact same thing here in tennessee.
I think it's important to be a part of the community. We think it's important to support the community and organizations that operate and function within the communities that we serve.
But mr. Yanz, when you say you are investing 6.5 million to support communities, what exactly is that? What does that mean? It's a number of things. It could be charitable giving, it could be giving back to Habitat for humanity.
Big brothers, big sisters. We have a very large United Way campaign at our company, there's there's a lot of different ways that we, that we get back to the communities we serve.
And what are sponsorships and memberships? Those are most likely, I don't have the list in front of me, but, you know, we're, we're members within the, within the community and with the organizations in the community they're supporting what we're doing. I don't have.
The exact details in front of me.
So these aren't, association memberships or such. I think it could be sponsoring events, you know, perhaps purchasing a table for a fundraiser. I'm not certain.
But on page eleven line 22, you mentioned that.
What does that mean? Just like mr. Hampton mentioned earlier, you know, all of the employees that are currently Pedmount employees will, will become spot.
Our employees, so we will have a very strong presence in the state. Our shared services functions similar to that appeed months.
You know, we, some of us operate in other states, as mentioned, I'm I'm in Missouri but we will provide support to Tennessee just as Petemont has done via their shared services function. And additionally, as, as mr. Hampton mentioned, you know, it's as we.
We continue to grow and expand in the state as new new roles become available, it's possible that those roles become filled in in Tennessee in the national area. Okay, and when you say a strong in Tennessee.
If your shared service structure or offices are not in Tennessee, how would it be that there would be a strong local presence in Tennessee? Well, our strongest presence in the largest portion of our employees are our field employees and so the majority of the employees that are supporting tennessee.
They are located here, they're out there.
Doing the work, serving our customers, and providing them the service that they need. So the shared service, folks will not be in Tennessee. I don't know if they will be, will live here or not, but I would suggest that.
You know that our shared services functions will be spending a lot of time in Tennessee just as we do in the other jurisdictions that we operate. Pedmont currently has an office and as this is a transaction of us acquiring their assets, we will be acquiring.
Bring, that infrastructure as well. So yes, we will have an office in Tennessee.
It'll be the same employees that are based there today. All of the employees that currently reside in Tennessee that are currently Pedmont employees will become spire employe.
So.
And is there going to be any physical location for customers to come and speak to somebody file a complaint, pay a bill? Will there be anything like that available? I would say if that exists today, it will exist in the future. So you don't have. I don't know.
Now Mr., are you aware that those employees that are being transferred from Pigmont to Spire these field employees et cetera? Are they being hired at the same rate of pay or a higher rate of pay?
It's my understanding that it's the same. And what about all the retirement plans of Pedmont? Are those gonna be transferring over? Yeah. Can you be more specific, please?
Well, I'm sure there's you know four oh one Ks, pensions etc. Are those gonna be transferring over to So our goal with this transaction and what we've offered or at least as I understand and what we've offered the employees that are, that are being offered employment with spire in the future.
There is the basically the same as what they're getting today. So we're ensuring that their benefits will will be equal to what they're, what they're currently receiving by from.
So there is a, there is a pension plan, and there's employees that are, that are under that pension plan, and that is an obligation that Pedmont has and a commitment that Pedmont made with those employees that they would provide pension benefits in the.
Future. With this transaction, with it being an asset sale, just like we're acquiring and purchasing an asset such as a piece of pipe and the ground, we've also purchased that regulatory asset associated with the pension, and thus we will continue to recover it in rates. This isn't a rate proceeding, so if the rates.
Stay the same coming out of this, then we'll continue to collect that. So we paid Pedmont for that asset, and Pedmont will continue to have that obligation to provide those employees that pension benefit in the future. And the four oh one K plan is that gonna be transferred over to those for those employees.
I'm not a retirement benefit professional. I don't know how four oh one Ks transfer transfer or don't transfer, but I would say that the benefits that those employees are receiving today will be equal to or very similar to what they're getting today in the future.
On page twelve of your direct line 13, you mentioned that there are matured share services struct there's a matured share services structure.
Are you there? Yes. Okay. What does that mean? What it means is we have a group of employees under our shared services structure that support.
A number of our operating units. So e.g., we've got a legal team, right? That, that works on behalf of a lot of our operating utilities that would be considered a shared service. Our legal function would be considered a shared service that's providing support to a number of different, entities under, under.
The spire umbrella. Okay. And when you say mature, does that, is that another word? I mean, can, can you tell me what that word means? What, what that means is, you know, prior to some of the acquisitions that we spoke about earlier, you know.
You know, the legacy Spire was really just in st. Louis and so over a number of years, Spire grew through acquisition acquiring other utilities. And so through those acquisitions, you know, it made more sense to develop and structure a shared services organization to, to support those different entities.
So what I mean by mature is it has continued to evolve, as we've grown in scale, and you know, I think now it's, it's very much structured in a way that many utilities such as Duke is structured as well and providing their shared services function to the various subsidiaries they operate.
Now, so Spire Tennessee, the plan is that they will be using the shared services model as used in the other states, the other Spire territories and that Spire Tennessee will be billed by the shared services.
Team for services. Yeah, very similar to what's done today under the structure, there will be costs allocated to Tennessee from those shared services functions. We do that in the other jurisdictions that we operate. We have a lot of reporting that we provide to the commission.
Is about our cost allocation process and how we do that. You know, one benefit of this transaction is, you know, as we grow and scale, of course, there's, there's a potential for lower allocated costs amongst all all jurisdictions and all those involved.
Just like they are today by Pedmou yes. Okay. And these charges will be passed down to rate payers in their utility rates? In the same manner they are today, yes. Now mr. Yans, if we could move on to your rebuttal.
Testimony on, page four of your rebuttal.
Yeah quote the statute, the Tennessees code annotated 6054 01:13. Is that correct? Yes ma'am. And in the 1st portion of your quote, you say that the commission shall take into consideration all relevant factors. Is that correct?
Yes ma'am. And do you believe that one of those relevant factors that should be considered by this commission is whether costs will increase for customers as a result of this transaction?
I would say that there are a lot of different considerations that, that, that should that I would suggest should be considered by this commission. It's ultimately up to them, but I think a number of factors should be, should be taken into consideration and among those would be, you know, what service our customers going to continue to get.
Our, our primary focus and everything we do as a utility operator and providing critical service to customers is to provide safe and reliable service. And so I think that's a critical aspect of this transaction and the consideration. We're a local distribution company. We're a natural gas company at our core. This is what we do. We serve 1.7 million customers.
Customers across the country, in various states. And we we have the ability and we know how to provide safe and reliable service to customers. I would also suggest that, you know, Spire has, has been around for a very long time. And we've been a utility since our since our beginning. You know, if there were.
Other potential acquirers of the Pedmont systems such as, you know, private equity fund, infrastructure funds, you know, in the industry you do, you do see some transactions that involved infra infrastructure funds that don't have established utility operations coming in and acquiring these systems. So I think that.
It's a critical aspect of this, but to answer your question yes, I do think that the commission also needs to consider the affordability component and cost impacts to customers. Now, are you aware if Spire has, provided any analysis about comparing the cost to serve by?
Well, we do not present any of that in this case because this is not a rate proceeding and we did not propose any rate adjustments in this proceeding. You know, what, what we've proposed is a transfer of control and to the extent that.
We would propose any recovery of costs in the future. We would do that through the appropriate rate proceeding and the commission's staff and the consumer advocate would have the ability to audit and complete a full audit for prudency of those costs to determine whether or not they should be recovered.
I also and my rebuttal proposed, you know, a number of customer protections that I touched on, in my summary, and one of those was to track all of the integration costs between now and when we would come in and file a rate case. I know the consumer advocate had a lot of concerns about integration I've.
You heard the chairman mention it earlier, you know, that he has experience working on acquisitions and that, you know, they can be complicated and we recognize that. We know that there's gonna be a lot of work to be done, but that's one of the reasons that we've proposed to track those costs so that there can be a full audit and a rate case after.
The integration has been completed, we'll be able to demonstrate or at least attempt to demonstrate those costs were prudent, and the commission, their staff and the consumer advocate will have an opportunity to challenge any of those costs if they deem them to be inappropriate. Okay. On page four line 24, you.
Also discussed the 2016 Duke Energy acquisition of Pedmont. That was docket sixteen-00006. Do you see that reference? I do. I pointed that out because I thought it was important.
That this commission recognized that, you know, the Pedmon assets have changed hands before when Duke came in and purchased the assets. Yes, there were some slight differences between the transactions, but it was largely similar similar in that you had a large utility coming in and purchasing.
In purchasing the purchasing Pedmont to come in and operate within the state. And the point I was making there that was that, you know, there weren't, as I understand it in my review, there weren't really any conditions placed on, on that order or that approval.
And I actually, I don't believe the consumer advocate, even intervened in that case. Now, wouldn't you agree that that is a 2016 docket and it's a ten year old docket, correct? Yeah, that'd be correct.
And wouldn't you agree that things have evolved over time for this commission as well as just practically speaking in the industry? I think things have changed, absolutely, but I think, you know, utility operators, as I mentioned.
You know, our company's been around for over a hundred years and at our core we're still providing safe and reliable cert natural gas service to our customers. That has not changed. Now was that docket a merger between?
I believe it was a stock purchase. And did that docket involve the transfer of an arm? I do not believe so. And what about, did Pimont have to redo?
I'm not sure what Pedmont had to do in that docket. What I would say is, is that in this docket Spire is not having to redo, all of its IT systems. As I mentioned, we're a very large established utility operator with.
1.7 million customers. We have IT systems, we have financial systems, and so what we're doing with this transactions, we're integrating petmont. If, if approved by this commission, we would be integrating Pedmon into existing well established platforms, well established processes that are in place. Okay.
Mr. Yanz, if you would turn to page seven line 13, you discussed that the consumer advocate has focused on short term cost impacts with this proposed transaction.
Is that correct? It is correct. I think it's I think it's really important to consider the long term benefits that customers will get from this transaction. I don't wanna, you know, fully repeat myself, but if a, if a different entity were to come in and and purchase the.
Heatmount assets and of course if this commission were to approve that transaction and it was not a very well established natural gas only global distribution company, I think, you know, over the long term there may not be the same continuity of service. There may not be the same high quality level of service that we're able to provide.
That we have provided for over a hundred years. I would also say that, and this is not a criticism of, of duke, but with us being a natural gas only utility, our priorities aren't going to change. We are a gas utility at our core. That's who we are, that's what we've been. So contrary to duke, right? They are having two, they're wanting to exit the state because they have other priorities on their electric side, which is, you know, they're making prudent decisions.
To invest in their electric electric system, but where our core is, is natural gas, and so, you know, if approved, we would intend to come in, operate these assets well, provide very high quality service to customers over the long run. And so that's what I was really referring to and I said more short term and not looking at the more longterm.
Term benefits that we're gonna be able to provide by coming here and intending to stay here for a long time to come. Well I've.
Go ahead. I think a lot of it was around the, you know, the concerns about the integration, which I highlighted we would track those costs. We recognize that there are going, there's going to be a period of time where we're integrating, the consumer advocate also put a lot of emphasis on the transitions transition period and the transit transition.
Services agreement. What I've proposed in my rebuttal testimony is a way to alleviate those concerns with the integration costs tracking them with the transition services agreement ensuring that there are not incremental costs or added costs associated with months support expired during that transition period.
So that's, that's really what I was referring to as opposed to looking at the, at the long term and the true benefits to customers of having high quality natural gas only utility provider in the state that has a track record of providing safe and reliable service. You heard earlier the conversations about winterstorm firm, you know.
We also had experience as a natural gas utility during winterstorm yuri, when there were significant outages. And in fact, people were without gas during Winterstorm yuri. There were some disruptions, but Spire was able to provide safe and reliable service to its customers during winterstorm Yuri because we're experts in what we do. And we, we take pride in what we do in delivering high quality service.
365 days, 2047. It's moving on page eight, you mentioned December 2025 investor presentation. Do you see that?
I do. Okay.
Chairman may I approach? Yes.
What, I'm gonna hand you mr. Yanz is the twe December 2025 investor presentation. It's just an excerpt, but when that's handed to you or handed to everyone, we can.
Okay.
Mr. Yans, what, what you were just handed is an excerpt from that December 2025 investor presentation that you referenced in your rebuttal, and that table.
Is labeled constructive regulatory jurisdictions, and it references all of spire, gases distribution entities. And there's also a reference to Tennessee.
Do you see that? Yes ma'am. Okay. Now you said in your rebuttal that Spire highlighted its excitement around the Pedmont system and its commitment to funding the capital investments.
Which would be ultimately spire. And then if you go to the 5th column that's labeled to Tennessee and 2nd row, the rate setting mechanism, do you see where I am? Yes ma'am.
Now, can you read loud what that says there under Tennessee with the rate setting mechanism mechanism? Yes. It says arm historical with annual true up mechanism. I wouldn't necessarily say that we were touting it to investors. I think what we were highlighting here with the.
Various regulatory mechanisms within the jurisdictions that we operate within. You know, when we announced the acquisition, and as I think you pointed out when Miss Matthews was up here, you know, their rating agencies, and equity analysts, they're, I would, I would say and I can't speak for them that they're.
Assumption would be that when we were coming in, to acquire the assets that the full tariff and the full authorizations would, would transfer over to spires. So I think the going understanding or at least assumption, was that the full tariff, would transfer.
Which would include the arm. Okay, so there was an assumption made that the arm would, correct? I think there was an assumption made that the full tariffs to provide utility service would transfer, so it's NO different than.
I don't think it's any different than we made an assumption that the, you know, that the various customer classes and their rate schedules would, would transfer with the transaction. Okay, Mr., if you turn to page nine of your rebuttal testimony lines.
Okay.
And in that paragraph, you mention number seven, item seven that one of the benefits of the transaction will be that there'll be NO changes to the existing rate.
Terms or conditions of service. Is that correct? That is correct. I I think an important aspect of this transaction and it's our hope that we can come in and when we enter the state through this transition period that we're able to provide a seamless transition to customers. Our goal is really that they don't see.
Anything that they don't, I think it was mentioned earlier that, you know, that oftentimes customers may not know exactly who their utility provider is. They expect natural gas to show up at their house so that they can, you know, warm their house so that they can cook, so that they can close dry. Same with electricity, and so our hope is with this transaction, you know, that we're able to come in and just continue to operate.
The way Pedmount has and provide exceptional service to customers and so I do view that as a benefit because, you know, as, again, as mentioned, some, some people don't know who their utility provider is, they, they just want the natural gas and the energy to show up to their own so that they can use it. And so, you know.
I'm heating my, my house with gas today and I'm able to heat my house with gas tomorrow I would view it as a benefit today and I would view it as a benefit to be able to heat my gasts tomorrow as well.
I'm not sure how customers, through this transaction would get a bill that would be higher because we have not proposed any, any rate changes as part of this transaction. And if we, if we do in the future propose any rate changes, we would do it under the regulatory process and mechanisms that exist to.
Allow for a pertinent review of any of those costs, including the rate impact to customers. I would also refer back to all of the numerous customer protections that I proposed in my rebuttal testimony. I don't think that those should be taken lightly and honestly, you know, sometimes it can be difficult to be a witness in these hearings. It can be nervous at times, but you know, I was telling our team that.
That I feel very confident in what we've proposed, I feel good about it, and I honestly am not sure from my perspective what else we could have proposed to, to ensure customer protections throughout this transaction so that so that customers are, are not left in a worst spot as part of this. That's, that's sort of.
Probably not our goal. So when you say that some of the regulatory mechanisms, if there was an increase, that would be more than likely under the arm correct if that transfers. If there was, if the arm does transfer, then yes, there would be arm filings in the future, and our cost of service.
Would be looked at, the capital investments that we would make would be looked at. Those would be audited by commission staff. They would be audited by the consumer advocate, and we would have a burden of proof to demonstrate that those investments were needed, that they were prudent, and that they're, they should be collecting rates.
We didn't highlight them in our original application. I wouldn't necessarily say that, you know, that we weren't intending to to do some of those things. Admittedly, I don't think we, we, we probably didn't approve.
Appreciate all of the concerns that the consumer advocate was gonna have about this transaction and I think that's partially because of the lack of intervention and conditions that were imposed when, when Duke purchased Pedmont. So, you know, I think after we saw the concerns there and saw the highlights by the consumer advocate of your concerns, we felt it was prudent, and we were willing to address those.
In this case and, and, and, and do think it's important to protect customer interests but I wouldn't say that, you know, that we weren't intending to do some of those things. I mean, I'll I'll specifically refer to the acquisition premium. We, we have never intended to seek recovery of the acquisition premium. We have never, intended to seek recovery.
Of transaction costs so I think those are a number of things that, you know, perhaps we, we weren't intending to do, but NO, we did not highlight all of the customer productions that I put my rebuttal testimony in direct.
So mr. Yanz under Spire's proposal and in fact, if the arm transfers to spire, when would you anticipate the next rate?
Change to occur for customers. I'm sorry, can you repeat the question? I need to understand the scenario. Sure so under Spira's proposal if that arm transfers in this transaction and the commission approves the transfer of authority with the arm.
When would you anticipate the next rate change for customers to occur? The rate change, I believe would occur in October of 2026. Our intent would be to file an arm, in May of this year to update rates based on costs that were incurred.
And capital investments that were made in 2025I think it's important to note that the current rates are based on 2024. And one of the things I highlighted and again is a major concern of mine because you know as the.
Regulatory professional and someone that has to speak to rate increases in all of our jurisdictions, you know, rate shock is a, is a big concern. You know, I was just at, at Nayrooke last week meeting with commissioners that we work with in some of our other jurisdictions and they're actually talking along.
Not about alternative regulatory mechanisms to upgrades up update rates on a more frequent frequent basis so that there's not an extended period of time where, you know, these capital investments build up, and then you file a rate case and there's a a big headline, you know, large increase, you know, 15 to 20 % as opposed to updating rates on a more frequent basis and perhaps.
You know annual increases of three to 5 % instead of those, those big jumps. And, and of course, you know, just from a consumer perspective, it's a lot easier for them to plan for, and to adapt to, more modern increases on a more frequent basis than having those, those large increases.
So, if there was an arm increase in rates of the arm, you're saying that those would be moderate? I can't speculate exactly what those would be. What I would say is, is that just like all the other utilities in the state, and including Pedmont.
If we were to and had an opportunity to file for an arm, all of those costs, everything would be audited and you know all parties would have an opportunity to challenge any costs, and to look at that, look at that rate impact, and we would have the burden approved to be able to demonstrate that those investments were made prudently and that those cos.
Foster prudent. And in this docket, Ispire proposing any sort of rate moratorium? We have not proposed a rate moratorium I think, you know, as I just mentioned, I think a rate moratorium really puts customers a significant risk for kind of that compounding effect of not keeping rates updated.
Current rates are based on 2024I believe the consumer advocate proposed I think at least a two year rate moratorium, so if that were the case, I think it would be if I'm just doing the rough math in my head three to four years, before rates would be updated.
And I believe that would result in a significant increase at that point in time because you'd have all that capital investment that was made, and, and all the regulatory lag associated with the, the recoverability of that. I don't think that's in the.
Customer interest. I actually in Missouri, we participate in local public hearings where we go out in the community and we talk to customers when we come in for rate cases, and I actually had a conversation with an elderly woman who was expressing concern about the the rate impact and it was because we hadn't filed a rate case.
This in three years. And she specifically told me it'd be a lot better for me as I manage my budget for you to update these more frequently rather than waiting to come in. So as I mentioned, I think Tennessee is a jurisdiction that a lot of the industry is looking at right now. There's a lot of concerns about affordability in the energy space right now, which we we share those concerns and it's very important.
From gods, that we continue to manage those. And so, you know, we're encouraged by that in Tennessee because we we truly do believe that that that's the best outcome for customers to to have those more, more frequent, and not significant rate increases all at once. So mr. Yons, you mentioned that would.
Likely come back for a rate case, but in the interim, if that arm is transferred as soon as October of 2026, there would be a rate increase, correct? What I, what I referred to was that, at a minimum we would cut.
Come back, come in for a ray case in 2029I think a lot of that would be engagement with the consumer advocate, and the commission staff on comfort of us coming in for a ray case, as the consumer advocate highlighted, there is a period of time where we're gonna be working through transition and we're gonna be working through integration.
Our intent would be to come in and file a raid case as soon as possible, as soon as we have, you know, historical costs that the, that the commission staff and that the consumer advocate, can audit. And so, you know, what we've proposed is purely a temporary interim transfer of the arm so that we have some ability.
To update our rates, most importantly for capital investments that are made between now and when we would come in for a ray case so that we do not put our customers at risk for, for ray shock in the future. Okay, so, you know, when you mentioned that there would be possibly moderate increases in rates would Spire be willing to commit that customers could expect rate increases under the arm of about three to 5 %.
I think what I, what I've highlighted in, and, and my, my view on this is that the rate increases that would incur in the 26 arm and and remember the 26 arm, is actually simply updating for 2025, which was last year and this transaction has not, hasn'.
Not closed yet, so I think it's, I think it's very important that rates are updated to reflect, 2025, but any, any rate increase under the arm especially, you know, in these, in these early years are gonna be NO different under Aspires ownership than they would under Petemont's ownership. And I can confidently say that primarily because.
Again, one of the, one of the main arguments and the main concerns, and I'm not saying that it was not justified, but one of the concerns that the consumer advocate is the integration costs and the cost to integrate. And we have agreed to track all of those costs, so that we have an have an opportunity to demonstrate that they were proving.
They occurred in a future ray case so that those would not be part of the arm filing. So I have NO reason to believe that any arm that Spire would file would be any different than Petemont continuing to operate, and that's been our goal with this entire transaction, as I said in my opening, our primary goal is for this to be seamless to, to customers. We, we want them to continue to get the service that they need and that they deserve, and we really don't want them to notice that there's a new utility operator. We hope that they know that spire.
Here, and that they look at us and they they view us as a, as a good utility provider just as they have Piedman. So.
What we've requested in this application is a transfer of control, and a transfer of control to provide utility service. Petemont's currently providing utility service to his customers under its tariff. Part of.
Tariff is the arm. So what we have proposed is a transfer of the full tariff, which would include the arm, so that we're able to update rates and provide the exact same service to customers that they're getting today. And Mr., have you been involved in any other acquisition transactions where the buyer requests a rate increase and approval of the same of the transaction in the same filing?
I don't believe so.
Now mr. Yanz, there are several times in your testimony that you mentioned that Spire is stepping into the shoes of Pedmont. But Spire is not acquiring all of Pedmont's assets, is that correct?
I, I believe we are acquiring all of Pedmont's assets. But there are assets of not being transferred, isn't that correct? If you're refer, are you referring to the ADIT? No I'm referring to the IT and So we are acquiring all the assets of Pedmont Tennessee. Okay.
Let's move on to.
Another issue mr. Yanz, you stated that there would be systems that bill customers.
Assign work tasks, record field operations, those systems are gonna be have to be built by spire. Isn't that correct? No ma'am, we are.
Very large, well established utilities serving 1.7 million customers today. And so what will happen is we're intend to integrate, you know, the two around 200000 customers in Tennessee into the spire family. And as part of that, we will bring them onto our existing.
Systems that we have and that we've been operating. And so that's really part of that integration effort that I was referring to, and you ensure that, that all parties in this case, given the complexities associated with it, which, which I recognize, but, but to provide an opportunity for, for kind of a holistic view of that effort, we've, what I've proposed is that we simply track, and deferral all, all those costs for the potential.
For for future recovery in a ray case. So in order for this integration to occur, isn't there a, need to integrate Pedmonts systems into spire systems in order to effectively operate?
So what what's gonna happen is there are certain aspects of Pedmonts business that they will continue to provide under a transition services agreement. And this it's pretty customary within acquisitions, especially at scale where so.
Services are being provided for there to be a beer period of time of of transition and that's really a commitment on Spire's party and Pedmont's part to ensure a seamless transition. So we will be working together during that period of time at Pedmont will be providing services to spire. So really the easiest way to think about it is, you know, a lot of utilities rely on contractors for various things, and so the.
The best way to think about it is on day one, if this transaction is approved, Pedmont will be a contractor for spire. So Pedmont will be providing some services to Spire for a period of time while we integrate Pedmont into our existing systems. Okay.
So we will be taking, so e.g., we'll be taking customer billing information, historical customer billing information, and we'll be bringing it into our system. And that will that will take some time and so until we have all of that integrated into.
Our systems, in order to ensure seamless customer service for customers, Pedmont will be continuing to provide that service. Once we have it all moved over to Spire and in our systems, then we will begin providing those services. And what I've proposed in my testimony is to ensure because Pedmon will effectively be operating on behalf of Spire as a contractor, I've I've addressed a commitment that, you know, any additional costs associated with Pedmom providing a service to Spire.
Will not be passed on to customers. I've also committed to, and I've mentioned this a couple of times, so I apologize for being repetitive that all of those integration costs will be tracked for future recovery. So there will be an opportunity for the consumer advocate and all parties to review all of those costs, to be able to look at the integration holistically to say, hey, you did all of this, it's rather than looking at a kind of piecemeal, through arms, you'll have a.
An opportunity to audit it and look at the holistic kind of entire cost of the integration and, and, and determine prudency, and kind of that total impact.
So there are assets that are not going to be transferred. I'm not aware of pedmont tendency assets that are not transferring. Okay, but this integration of all of the functions.
The billing systems, the et cetera, the field operation work systems, all of those systems have to be integrated into spire. So I think that, I think that and and sorry perhaps I was we're, we're.
I think we're talking past each other a little bit. So those systems are Pedmont systems. They're not Pedmont Tennessee systems. And so we are acquiring Pedmont Tennessee. Pedmont did not sell us all of their LDC assets, so they still have other natural gas utilities that they are going to continue to operate.
And they're gonna continue to operate those assets on on those systems that you're referring to. So, NO, they are not giving us their, their systems because they have to continue to provide service to their customers in South Carolina and North Carolina. So what we're gonna have to do is we have to bring the Tennessee customers and all of.
That onto spire systems and that's that integration effort that I was referring to.
There are assets of Pedmont yes, but we are not proposing or asking for approval to transfer control of Pedmont. We are seeking a transfer of control of Pedmonts Tennessee assets, which is what's purchasing. Okay. Okay.
Mr. Yons, you have a copy of appendix F to the application. Do you have that in front of you? I think I can find it here. Chairman may approach? Yes.
My God I'm good. Thanks.
Okay mr. Yarns, are you with me? Yes ma'am. Okay, so.
In this, summary of customer costs and benefits that was provided by Spire, do people currently have these benefits? I can't really speak to that.
Oh, you don't, you don't know? I think probably some of them, I haven't gone through each one of them Compared to PMO? I I think I'll give you an example. I think like the mutual aid and regional support, so you heard mr. Hampton talk about, you know, the closed proximity.
Of spire to, to, to National and some of our other jurisdictions and, you know, I think mr. Hampton mentioned that it's, you know, three, three and a half hour drive for him to come up from where he lives in Birmingham. Importantly, we also have an operations center in Huntsville, Alabama, which I believe is only about an hour and a half away. And so, you know, when, when, when tragedy.
He does sometimes strike, we hope it never does, but like with winterstorm firm, e.g., whenever the electric utilities were struggling to provide service and had some outages, I'm sure it would have been really helpful for them to have crews, additional crews and other areas that were not impacted by the Einstorm to be able to come in and support and provide service. And so I think that's, that's one item that I would say that, that, that would not necessarily apply to Pmod that I've highlighted here as a benefit that Spire provides.
Okay, but didn't, when mr. Hampton was testifying, didn't he mention that Pedmont provides this mutual aid and regional support?
From their offices in North Carolina as well? I think they can. I think proximity is very important though, so I'm not suggesting that, you know, if something were to happen in Nashville that Pedmont would not send technicians and support from their operations center in North Carolina and South carolina, but it would.
Certainly take a little bit longer for them to, to get here than it, than it would for, for us. Honestly, even if we were to send people from st. Louis I think it's closer than, than some of the operations in North Carolina and South Carolina. So.
Is that correct? Yeah, I think a benefit that customers getting are getting today can be a, can be a benefit that that customers will will get in the future. I think.
I think our customers benefit from receiving safe and reliable service from Pedmont, and I would intend for them to continue to provide the benefit of safe and reliable natural gas service from spire in the future.
What's not a new benefit? None of these. Are these new benefits or these.
Just a continuation of benefits that are already being provided to Pedmont customers. I view these, I view these as benefits that customers are going to receive. I would not necessarily say that they're all incremental benefits, but I do think that these are, these are benefits to.
To utility customers. I highlighted financial strength on here. I think it's a benefit for customers to have a utility provider that is financially strong, that has access to capital that is has large operations across the country and has the ability to to come in and provide safe and reliable service to invest in its system.
To ensure that it's operating on the coldest days.
If we can go to page 25 of your rebuttal testimony, starting on line eight.
I'm sorry. That's the wrong wrong page reference. I apologize. Hold on 1 s.
Okay, that's page sorry 32 of your rebuttal, starting on line eight, you were discussing that.
The transferability of of the arm in the Tennessee American proceeding docket number 2050 00:40. Are you with me? Yes ma'am.
And you said that in the commission order, it was stated that the arm is declared as non transferable. Is that correct?
I don't believe, I don't believe I declared that it was stated in the order that it was non transferable. What I was explaining in my testimony in that section is that, as I understand that the arm in that case did not transfer it because there was an agreement among the parties when the arm was established that it could not.
Transfer. So what I was highlighting there is that that was an agreement that was reached when the arm was established and therefore it was not an issue in that case and so I believe when the commission issued the order in that case, they simply approved the settlement that was agreed to by the parties, which included.
Or concluded that the arm wasn't going to transfer because that's what was agreed to when the arm was established. I think in this situation, and as we've heard from, the judge president over this over this docket, that arms can transfer, and it's up to this commission to determine if the transfer of.
Of the arm is in the public interest, and I believe it is for a number of the reasons that I mentioned earlier and most importantly, that Spire is able to continue to provide safe and reliable service to its customers. And I also think that there's a significant risk of rateshock in the future if rates are not updated on a, on a frequent basis for customers.
Okay, chairman may I approach? Yes. This is a copy of the commission order in 2300046.
This will be exhibit three to mention investor presentation exhibit one.
In summary of customer costs and benefits as exhibit two. Yes sir.
Are you with me, mr. Yanz? Yes ma'am. Okay, you have the order in front of you. I apologize, there aren't any page numbers on this order. If you would turn to.
Okay seven thank you.
Beginning at number eight, do you see where I am?
Yes ma'am, I believe so. Can you read that aloud? I'm sorry, maybe I'm not where where are you at? Number eight at the top of the page.
So are you referring to, where it's listed in here the terms of the settlement agreement? Yes. Number eight.
Yeah, so number eight, and in this section, so basically what I'm reading here in this order is, this is a summary of the subtle settlement conditions that were agreed to by the parties in this proceeding. And so this is just every.
Repeating those and so that the parties in that case agreed that the arm is not transferable to any future require of a controlling interest in the company. So there was a settlement proposal presented to the commission and that was a condition in that settlement proposal.
Adopted and approved this settlement agreement, correct? That's my understanding yes ma'am. So they accepted it and it was entered in this order that the arm is not transferable to any future require of a controlling interest in a company.
Is that correct? So what I stated in my testimony is that the order in the case, as I read it, did not have a conclusion by the commission that arms could not transfer. What I just read here and what was in in the order.
Summarizing the settlement conditions I believe was an agreement among the parties in the case in order to settle the case that the arm would not be transferred if if there was a change in the controlling interest of the company. So, I'm not an attorney, but.
As I read that, I do not believe that the commission took a position in that case and ordered that arms are not transferable. And I think the judge, and the judge ruling in the preliminary motion for determination in this case concluded that arms can legally transfer if the commission finds it to be in the public interest, so I think it's all.
I think mission to to make that determination. So, we do have precedent here in Tennessee that says that an arm is not transferable to any future require of controlling interest in the company. Is that correct? I respectfully disagree with that ma'am. Okay.
Thank you. Mr. Yanz, did you review mr. Dimore's direct testimony to prepare rebuttal in this docket? Yes ma'am. Okay, and did you have an opportunity to review the stipulation agreement in that.
In his direct testimony? I I know the stipulation and agreement that he's referring to yes. Okay, and that was a Missouri docket, and it was attached to mr. Dinnamore's testimony as exhibit DND two, correct?
I believe that's correct. Okay. May I approach? Yes. Okay. You'll be handed a copy of that stipulation.
Yes, sir. Thank you.
So, mr. Yans, were you involved in this docket before the Missouri commission? I was not. Okay. Now, that case in Missouri it involved Lackley gas and Spire was formerly known as lackly gas. Is that correct?
I'm not I'm not sure if my pronunciation is correct. You can correct me. Oh, sorry, look lead. Yes ma'am, that's correct. The fire became look lead did that case involve a request to increase rates? Do you know?
I don't recall. Okay.
Now, if you turn to page 14 of 45 of this stipulation agreement, you see section ten? Yes ma'am. And, can you please read that aloud? Section ten what that says the caption? Protection from adverse capital cost impacts.
Okay, and if you would read the 1st three sentences in that paragraph beginning at A lookly gash shall not recommend an increase to the cost of capital before its luclid or MGE divisions as a result of this transaction.
Any net increases in the cost of capital liquid gas seeks shall be supported by documented proof, A that the increases are a result of factors not associated with the transaction, B that the increases are not result of changes in business.
Market economic or other conditions caused by the transaction and see that the increases are not a result of changes in the risk profile of lucly gas caused by the transaction. Not notwithstanding any other paragraph of this stipulation in agreement lookly gas shall ensure that.
That the retail distribution rates for its customers shall not increase as a result of the transaction.
Now, Mr. if you turn to page 35 of this stipulation.
Are you there? Yes ma'am. So the 1st portion of section 30 NO detrimental impact.
It says the cleved gas represents that this transaction shall not have any detriment.
Effect on liquid gas or MGEE division utility customers, including but not limited to increased rates or any adverse effect on quality of service, service and further agrees that should such detrimental effects occur.
Nevertheless occur, nothing in the approval or implementation of the proposed acquisition shall impair the commission's ability to protect such customers from such detrimental effects. Mr. Yans, would you agree that there are several consumer protections in that case?
What I would suggest is, you know, this, what I read here, I don't believe is really any, any different than than what we've proposed.
In this transaction. So I mean what what what I was reading there was really suggesting that in that 1st section was related to capital cost or cost of capital. But what it what it's really suggesting is that the transaction itself and the approval in that docket would not have detrimental effect on, on customer.
What we've appro what we've proposed or what we're seeking in this case is NO rate adjustment. What we're seeking here is a transfer of authority to provide utility service, and the intent and the hope is that we can continue to provide utility service in the exact same way that Pedmont's providing it today under the same regulatory mechanisms on an interim basis till we come in and file a ray case. So I would suggest that.
If we do that and we're allowed to do that, that there would be NO detrimental effect to customers because I think a detro detrimental impact to customers would be something that would be worse than what they would get from Petemont. And our hope with this transaction, the way we've structured it, and I won't run through all the customer protections that I proposed in my rebuttal testimony, but I think.
The customer protections that we proposed, are more than adequate to ensure customer protections and specifically we, you know, we proposed a $250000000 rate base offset for rate making purposes, that's a significant benefit to, to customers.
So, mr. Yanz Ispire willing to commit to the same thing in this acquisition and transfer of authority that they did in that docket? You'd have to be more specific.
Meaning all of these protections that we just discussed, the NO detrimental impact, the NO increase in rates, the rate moratorium. I think I just explained the, that what i've, what we have proposed in this transaction.
Would ensure or would protect. I don't think any of us can offer pure assurances or guarantees because we don't know exactly what's going to happen in the future. But I think the customer protections that we've proposed here, and the benefits that we've highlighted of a large, well established utility operator coming into the state to provide safe and reliable utility service.
Is a benefit to customers, so I would say that what we're, what we're attempting to do here and what we would intend to do would be NO detrimental impact to customers. So I think that's similar with this transaction as it is with the MGE transaction that you're referring to.
And if I may, you, you mentioned a rate moratorium and I actually believe the rate moratorium would be a detrimental impact to customers because I think it leads to rate shock in the future. And as you mentioned earlier, I do think that times have changed and the industry has changed. And this is also a docket that is, that is pretty old.
And so the conversation right now in the industry and amongst my peers and amongst many commissioners that I've spoken with is how do we address affordability concerns and how do we address large rate increases in rate cases? And you all should be proud as commissioners that you have a jurisdiction that, that many other states are looking to as they think through alternative regulatory mechanisms. There was actually a panel.
At Nayrook and a whole session on alternative regulatory mechanisms, and so we're encouraged by that. We're looking at this at structures like this and some of our other jurisdictions to, to try and address those those ray track issues that I've mentioned.
I think if, I think that could be the case if you weren't investing in your system, but it's imperative that we continue to invest in our in our systems to provide safe and reliable service. They're also.
Many customers out there in Tennessee and the national area is very fortunate in that there's a lot of growth in the area, and so there's a lot of lot of customers, a lot of new development that are looking for natural gas service, and so as we continue to provide additional service invest in our system, and just the general impacts of inflation in order for us to be a healthy utility proper.
Either provide safe and reliable service on an ongoing basis, you know, rate increases are going to happen. I think the real question is, is how are they going to happen? And in my experience and in my expert opinion, I think the best way to do that is to try and line them up with when those costs are occurring so that there's not regulatory lag and that there's not.
Significant spikes because a utility didn't update their rates for three to four years. I think that leads to great shock. I think it leads to customers being unable to pay their bills because they weren't able to plan for those increases.
Some customers are on fixed incomes, you know, social security increases slight increases each year. So knowing what that is and having an ability to manage your budget more appropriately rather than being surprised is is beneficial. Okay, thank you mr. Yans. Thank you.
Thank you. Mr. Vice Chairman, we have a few questions on redirect and I will make every effort to be very brief. Thank you, sir.
Mr. Young, she recalls some questions from miss Brown regarding where she was residing and we don't have the benefit of the source materials, but she was residing some statistics at the or or or some instances where spire companies had leaks or a complaint or or possibly a fine for not plugging wells.
You recall the conversation? Yes sir. Okay, and Spire has both distribution companies, but then they also have some non, Some some gas non distribution companies as well, right? Yes sir. Would plugging a well be an activity that one of your distribution companies would be engaged in?
I'm not very familiar with plugging wells to be completely honest. What I, what I would say is, is that, you know, we, we, as a large utility operator, safety is important. You know, we ensure that our systems are operating well, and that we're prudently managing our systems and.
So, you know, things are going to occur, right? We had, you heard mr. Hampton testified in the miles of pipe that we have in our jurisdictions and so incidents are going to occur and what's important for us to be able to do is to respond and respond quickly, and to correct those things. I would also say that you know customer complaints are going to happen, I'm sure as a.
Commission you receive customer complaints and get involved in, in those when they occur, and we have those in our other jurisdictions as well and we take pride in resolving our customer complaints. We do our best to work very closely with the customers so they don't lead to complaints, but when they do, we cooperate with the consumer advocate.
That's in the state and the commission's staff to resolve whatever issue occurred. Thank you. You saved us about three or four questions there. I appreciate that. Just one last question on this point. Could you identify what spires distribution companies JD power ratings are and what they indicate?
About service to its customers. Yeah, I mean it's my understanding and you heard mr. Hesselin and I believe mr. Applinc then highlight this as well, but I believe Pedmont inspire usually number one and number two respectively on the JD Power and Associates customer satisfaction surveys. And so we track those and monitor those very closely.
You know, we talked about our executive leadership's engagement on the safety front, and they're very engaged on the customer service front as well. It's important for us to be seen as a, as a good utility provider providing goods, good quality service to our customers just like we would expect as, as, as customers of our.
Within our utility operations. Thank you. I'm gonna switch subjects now to Do you recall miss Brown asking you some questions about the Duke acquisition, the Duke acquisition of Pedmont in 2016? Yes sir. And I think one of the questions she asked you was whether there was an arm in place and in 2016, whether there's a transfer of an arm.
You recall that? Yeah, she was comparing that the, that there were, that it was a different situation and that the tariffs were different at that point in time, I believe. Yeah, and then that placed Petemont, well, if you know, did Petemont have an arm at that point in time? No.
But they had, they had other writers and other mechanisms that transferred, correct? They had other writers and had other mechanisms that that transferred and as I mentioned, I think that's an important consideration here because Pedmont's existing operations are built around the arm, and so those existing mechanisms that existed previously such as the integrity management.
Here which did allow for the recovery of capital investments related to integrity costs that NO longer exist. And so, you know, if this transaction does close, and the arm does not transfer, Spire will have NO ability to update its rates and NO ability to recover capital costs that are much needed into the state, and we really want to come into the state and provide quality service, invest, and provide service to those customers that are looking for gas services they as they build new homes and new developments are occurring.
And is it your understanding that in the Duke acquisition that the Emont Tennessee employees that provide service to the Tennessee service area stayed the same or transferred to to Duke's leadership and that.
Transaction. That's my understanding, and that's what we're proposing here, correct? The same thing, ok. And is it also true that the tariffs beatmonst's tariffs that existed prior to the duke acquisition were the same tariffs that were in place after the acquisition? That's my understanding guess. Would that, would you call that a seamless.
Transition from a customer's perspective. Yeah, I'd say it's a seamless transition and based on, you know, conversations I've had, I believe that that transition went really well and we would hope that it does for as well if we had that opportunity, and at the risk of belaboring the obvious would you also agree that the same system that Beemont was using to provide distribution service before the.
The duke acquisition was the same system they were using after the acquisition. Yes sir. Thank you. One last question. The investor presentation, and I'm sorry I didn't, I didn't get the exhibit designation for this one. This is one, ok. Did miss Brown showed to you, do you have that up there?
I do. Okay. Real quick, is it, is it fair to say that spire hopes to operate under the arm following the closing of this transaction? Yes sir. Okay, and and your position on that hasn't changed, correct? That is correct. Okay, and there's NO question in your mind that approval of this transaction and approval of.
The transfer of the arm depend on this commission's approval, correct? That is correct. That's all the questions I have. Thank you. Thank you. Did the commissioners or staff have any questions? Alright, by share high. Thank you for filling in, so ably for me.
And, I think it's time to take a break. I've got 03:18, that's your backup at 03:30. Thank you.
So.
Maybe. No.
Let, let me ask one.
I want you to be able to.
You may do.
Yeah, I was good. I. I went through.
Thanks.
Thank you.
No, you were good. You were good. Thank you. Thank you.
So real quick while I'm doing while I'm doing Renee while I'm doing Switzerland, you watch your email because Brooke wasn't ready. She says she was gonna get an email from my same time.
Alright, I think we we got every, we got everybody. Okay let's reconvene and push on. His two witnesses, and so my thinking is depending.
You know how long this goes it I'm guessing at least an hour and a half, I don't know. Pushing five will probably end up finishing the advocate tomorrow morning and not push through tonight. And if we do tomorrow morning, we'll probably start at nine if that works for everybody.
Instead of ten, is that ok? Okay. All right, let's just see how we go and how much cross we have and then we'll kind of touch bases we get a little closer to, to 05:00. So with that, we're reconvening and so Pete Mike, you can call your 1st witness. Thank you, Chairman Jones. The applicants call be.
My witness Mike's witness Switzer to the stand.
Alright mr. Switzer, please raise your right hand. You swear firm testimony you're about to give will be truthful. I do. All right council, please proceed. Thank you mr. chairman. Mr. Switzer, would you please state your full name and business address for the record? My name is Mike Switzer. My address is 05:25 South Tryon Street Charlotte North Carolina, 28202.
And by whom are you employed and in what capacity? I am VP of Corporate Development for Duke Eric Corporation, the parent company of Pedmount Natural Gas Company incorporated. And are you the same Mike Switzer that caused to be prefiled on 8 September 2025, and this doc, a direct testimony consisting of eight paper.
Yes. And did you also call us to be pre filed on 9 January 2026 in this dr. Rebuttal testimony consisting of ten pages? Yes. And were there any exhibits attached to your pre filed testimonies? No. And were each of your pre filed testimonies that I just referenced prepared by you or at your direction?
Yes. Do you have any changes to your pre filed testimonies at this time? No. All right. Mr. Switzer, did you also prepare a summary of your direct and rebuttal testimonies for the commission? I did. Would you please read that summary now to the commission? Yes, thank you.
My name is Mike Switzer and I serve as vice president, Corporate Development for Duke Energy Corporation, the parent company of Pedmont National gas Company incorporated. I submitted pre filed direct testimony on 8 September 2025 in support of the joint application of Pedmont and inspired Tennessee incorporated, seeking approval under Tennessee codes.
Option 65-four-113 with a transfer statute for spire Tennessee to acquire Pedmonts Tennessee property operations and authority to provide utility services.
In my direct testimony I described the rationale for and the financial terms of the proposed transaction through which Pedmon proposes to sell its Tennessee business to Spire for $2.48 billion and use the proceeds to help duke energies approximately $83 billion multi year capital plan.
Recently updated to a hundred and $3 billion, focused on energy system modernization and low growth and other jurisdictions. This transaction would support Duke Energy's investment program while delivering customer value and maintaining the company's ability to achieve its financial objectives. Although the decision to sell was difficult.
Hold given Pedmods decades the strong operational and customer service in Tennessee.
It reflects prudent enterprise level capital stewardship and the need to prioritize modernization and growth investments elsewhere within Duke energy. In evaluating potential requires Pedmont and Duke Energy prioritized financial capability, a demonstrated record of safe and reliable operation.
In a sustained commitment to the community served.
Spire met all of these criteria as one of the larger publicly traded gas distribution companies with significant scale and service to more than 1.7 million customers in multiple states through its utilities, subsidiaries, Spire brings financial strength, operating expertise, and a proven model.
Day to day operations will remain centered in the national area, and the Pedmon employees who principally support the Tennessee business would transition to Spire to preserve institutional knowledge and ensure a continuity of service. This transition approach is designed to maintain safety reliability, and customer service.
Throughout the interim period contemplated by the asset purchase agreement without disruption to rates, terms or conditions of service.
In my pre filed rebuttal testimony dated January 92026I respond to the consumer advocates concerns, address the public interest standard under the transfer of statute and emphasize that the joint application itself reflects the recognition of the commission's approval authority and contemplates an interim transfer of authorization.
With NO change to rates, terms or conditions of service.
I also respond to the consumer advocates objection to the stepping into the shoes analogy by contending that its point is to emphasize the continuity of service from the customer's perspective while preserving the commission's ongoing rate making jurisdiction rather than asserting any unilateral authority to transfer regulatory.
Approvals.
The joint application explicitly seeks commission approval under the transfer statute and the requested relief is narrow. Spire Tennessee would assume Pedmont Tenness Pedmonts Tennessee utility authorizations without changes to rates, terms or conditions. For customers, this is the least disruptive way to maintain service while owners.
Group changes. The interim nature of the proposed transfer preserves existing tariffs and regulatory authorizations to maintain predictability and avoid disruption while integration proceeds.
The commission retains full authority to evaluate rates and future proceedings, and nothing in the proposed transfer limits that authority. The statute contemplates this kind of orderly transfer, inspires capabilities make it a suitable success for operator to continue safe reliable, and customer focused service. My rebuttal testimony.
It also reiterates the spires balance sheet's strength and scale demonstrate its capacity to prudently invest in and operate the Tennessee system.
Its track record which reflects deep experience in system operations, pipeline safety, regulatory compliance, and customer service, was determinative in Peedmonts and Duke energy selection precisely because it supports a seamless transition for customers with service continuing on the same rates terms and conditions under the commission's.
Oversight. In addition, I addressed the assertion that customers should have had a seat at the table during negotiation of the transaction. While customers do not participate in such a negotiation.
Patients for well founded corporate governance and fiduciary duty related reasons. The transfer of statute places the public interest squarely before the commission in this proceeding, ensuring that consumer interests are reviewed and protected under established law. I also note that the concepts expressed with inspire witnessed David johnson's.
It's rebuttal testimony such as a proposal for the continuation of a modified annual rate review mechanism complement the transaction structural protections by minimizing customer impacts during integration and maintaining the commission's ability to review and audit costs under established processes.
Finally, Pedmont is contractually obligated to maintain books and records relating to the Tennessee business for six years following the close of this transaction, and I respond to the consumer advocates concerns by affirmatively stating that Pedmont will reasonably respond to regulatory information requests to support continuity.
Auditability and effective oversight. This commitment ensures the commission's access to the historical context necessary to monitor service quality and regulatory compliance aspire Tennessee assumes operations. This concludes the summary of my Direct and rebuttal testimony.
You may cross examine. Do commissioners or staff have any questions?
Yeah, you're getting off easy today. The witness is excused. Alright, Pedmod, call your next witness. Chairman Jones, the applicants call Pedmod witness for named Metsler to the stand. Okay.
Alright, please raise your right hand. Do you swear firm testimony you about to give will be truthful? Alright, council, please proceed. Thank you mr. chairman. Miss Messler, would you please state your full name and.
Business address for the record. Hi, my name is Renee Mutzler and my business address is 05:25 South Tryon Street Charlotte North Carolina 28202. And by whom are you employed in and what capacity? I am the vice president of total Rewards and human Resources operations at Duke Energy, the parent company for.
And are you the same Renee Metsler that was granted permission by this commission on 6 February 2026 to adopt the rebuttal testimony of mr. Andrew Etherridge whose rebuttal testimony was originally prefiled on 9 January 2026 in this case? Yes. And did you in fact adopt mr. Etherridge's rebuttal testimony in this case? I did.
And in adopting that testimony, did you, do you understand the substance and the details of that testimony? I do. And were there any exhibits attached to your pre filed rebuttal testimony? No. And do you have any changes to that rebuttal testimony at this time? Miss Metschler, did you also prepare a summary?
Of your rebuttal testimony for the commission? Yes, I did. Would you please read that summary to the commission at this time? Yes. Thank you. My name is Renee Matsler and I'm the vice president of total Rewards and human Resources Operations for Duke Energy Corporation. The parent of Pedmot natural Gas Company incorporated.
Pursuant to the commission's order granting motion for leave for substitution of witness and adoption of testimony issued in this proceeding on 6 February 2026I adopted the pre filed rebuttal testimony that was initially sponsored by Pedmot witness, Andrew Etheridge and filed on 9 January.
2026. In my free pre filed rebuttal testimony, I respond to the consumer advocates recommendation.
So.
I respond to the consumer advocates recommendation that the commission require Pedmont to write off its Tennessee pen pension regulatory asset in order to prohibit its transfer to Spire Tennessee Incorporated.
I explained that this asset reflects the unamortized balance of previously incurred and deferred pension costs that the commission authorized Pedmot to recover in base rates. Require requiring a write off would be unfounded confiscatory, contract contrary to prior commission rulings and.
Would prevent recovery of already incurred and approved costs. In my rebuttal testimony, I explained that Duke Energy has NO intention of terminating the pension plan, which has been closed to new participants since 2008, but continues in place for existing participants. Under federal law pension plan assets are held in an.
Held in an irrevicable trust exclusively for planned participants and beneficiaries and neither Piedmont nor Duke Energy can access those assets or any earnings on them. Accordingly, the suggestion that Pedmont would retain cash associated with an overfunded plan is inaccurate.
It does not provide a valid basis to impair regulatory recovery that this commission has expressly authorized. Further the nature of these pension costs and the regulatory asset created for them mitigate against the consumer advocates proposed write off. These costs were incurred prior to 28.
And were required to fund Peedmont's pension plan. The consumer advocate agreed with Pedmont's recovery of those costs pur pursuant to its stipulation with Pedmont in its 2020 rate case. The commission reviewed these costs in 2020, found them to be prudent and approved them.
For recovery through an eight year amortization from the date of the commission's 2020 rate case order with the unamortized balance held as a regulatory asset. Therefore, the only way for Pedmont to recover these costs to which is in it is entitled by prior commission order, is to transfer the regulatory asset.
Set to spire. I further explained that ordering a write off would not protect customers or affect the retirement benefits that Spire Tennessee may offer to its employees after closing, and that Spire Tennessee will independently make future benefit decisions for its employees.
There is NO causal link between writing off Pedmot's previously incurred and approved pension costs and the level or cost of Spire Tennessee's retirement offerings. The pension asset that Pedmont seeks to recover would support Spire tennessee's legacy Pedmont employees through the unamortized balance of deferred pension.
Costs that will fully amortize on 1 January 2029. And I am not aware of any precedent in which a state public utility commission has ordered a write off of such costs. Even more troubling such an outcome would be inconsistent with this commission's prior orders. For these reasons I recommend that that.
The commission reject this pension write off proposal. This concludes the summary of my rebuttal testimony. All right, thank you. Advocate. You may cross. The consumer advocate has NO questions for this witness. Okay. Do the commissioners or staff have any questions?
Thank you. Witnesses is excused. Alright, I believe this concludes the witness presentations on behalf of the joint applicants, correct? That's correct. All right, we're ready for, we're gonna go ahead. We're, I didn't anticipate this, but we'll keep plowing around and see where we go. All right, consumera rabbit. You may call your 1st witness. Chairman Jones before.
Before we switch to the consumer advocates witness real quick and out of abundance of caution, I just want to make sure that all the pre filed testimony and exhibits of the joint applicants witnesses are, have been allowed into the record. Okay, without objection, so move. Thank you. Thank you for that. Okay. Mr. Dudemore I believe you're headed to the state.
Yes, the consumer advocate calls David Moore. You swear for mr. Datamore that your testimony will be truthful? I do. All right. Thank you. Council you may proceed. Good afternoon to Mr. More. Good afternoon.
Can you please state your name and address for the record? My name is David N Didimore. My address is 609 region park drive, now Juliat Tennessee. Were you Did you swear him in? We did. I'm sorry I missed that.
That's looking. Okay, sorry swearing in, you just missed the whole thing mr. Datamore, did you cause a pre file direct testimony to be filed in this docket? I did. And do you have any changes or.
I have. Yes. Good afternoon. This case is not about whether Spire is a competent operator. It is.
That is not the issue before you. The issue before this commission is whether this transaction has proposed and is presented in this record satisfies the public interest standard. And on the most critical question cost, the record is insufficient. The statute requires this commission to consider all relevant.
Relevant factors. The cost of providing service is not peripheral, it is central to that question. Yet the joint applicants have taken a position that costs consequences of this transaction are somehow not relevant here because this is not a rate case. I've evaluated a number of acquisitions, I've never had one. I've never seen one.
Where a rate case was coupled with an acquisition request proposal. So the fact that this is not a rate case is not unusual. It's standard. The company's argument is also inconsistent with the statute and inconsistent with regulatory logic.
If a transaction materially affects rate based operating costs or risk allocation, those effects are relevant now, not later. I would point you to page six of my testimony item E and.
I would, I would just ask the commission to adopt this simple guardrail. The commission should find that Pedmont customers should not bear any cost increases as a result of this transaction. So it's it's very simple. It's similar to what you heard earlier.
So, 1st I'd like to talk about specifics of the case. I'd like to talk about the taxability issue. This is a partial asset transaction that is not all of the assets used to provide service are coming over to Spire in this transaction.
So it's taxable. That important issue was not disclosed by the company in its direct case. Now, what is the practical implications of this? The ADIT balance deferred taxes in standard rate making practice.
Is an offset to rate base. That amount is $250000000. That is a material component of this transaction that was not addressed in the direct filing of the company. So that's a structural shift in the economic foundation upon which rates are set. Now the company.
This come back in rebuttal and and and made a proposal, however, that does not fully protect rate pairs on this particular issue. Another aspect of this is a sub component of the ADIT is excess deferred taxes and and the way that has worked is those are amortized to the tune of $750000 a year.
Transaction.
Another component is the entire balance that the other balance, the other part of the balance is about $200 million is amortized over 28 years under the current.
Current accounting standards. The company has come back at 20 years. That eight year delta is a detrimental represented detrimental impact to customers. So essentially the company's position has asked the commission to approve the transaction 1st and sort out the.
Details later, but that puts customers at risk. The best case scenario, down the road that, you know, the commission rules down the road and, and rate these rate pair benefit is restored. However, under the worst case scenario, the customers could lose some of these benefits.
That they currently receive. So, the deferral of the issue down the road doesn't eliminate the issue. This issue should be ruled by the commission in this case. Furthermore, we've provided testimony, we've devoted time to this issue as it admits from an administrative efficiency.
Standpoint it should be addressed in this filing.
Missouri regulators did not defer this issue when conf confronted with a similar issue back in 2013 in Missouri, they addressed the tax consequences at the time of approval. That stipulation in agreement is attached as exhibit D and D two. That's the prudent course of action to take here.
Now I'd like to turn to the stepping into the shoes concept. The applicants describe this transaction as spire stepping into the shoes of Pedmont. However, that characterization is misleading. Spire is not acquiring all of the systems and assets necessary to operate the.
Utility. These critical IT platforms, work management, billing, system integrity are excluded from this transaction. Even Spires internal documents describe the process of building up and renewing these IT systems as a quote complex undertaking.
Those systems must be built or integrated. We've had experience with cost overruns in Pedmont docket seventeen-00 01:38 involving the Oasis project where the cost overruns were 261 %.
In this case. What could go.
And I think that's a, that's a risk from this transaction. So as a general rule again, I'm I'm supporting the notion the customers didn't ask for this transaction. I'm asking as a general concept that the commission adopt the concept that customer rates should not be higher as a result of this.
Transaction. I think also the fact that that NO budgets have been provided pose a fundamental evidentiary evidence issue in this proceeding. How can the commission determine that this transaction is in the public interest without knowing.
Having any estimate of the cost to implement it. How could prudence be valued in the future if we don't even have a budget as a starting point? Now, the applicants asked the commission to assume confidence in place of evidence. The statute requires more than assumptions, it requires a consideration.
Of all relevant evidence, all relevant factors, and that certainly would encompass the cost to serve going future under aspired ownership. So, you've heard a lot about the arm, frankly.
My testimony addressed the direct testimony of the of the company, obviously that's that's the order of the procedure here. The company has come up with a number of proposals in rebuttal testimony almost filed like a new, a new case, so to speak, with a lot of.
A lot of, protection components in it that we have not had a chance to address in discovery, but I would just say that that the arm was designed for incremental cost adjustments.
Not to adjudicate the prudence of wholesale operational IT integration, new corporate cost allocation methods methodologies, and that sort of thing. The arms were following up with a rate case where such things were evaluated, and then the arm procedures were to adopt.
The findings of a rate case would not had a spire rate case. So they're trying to fit new items such as a completely new company with different cost allocations, different costs into an arm proceeding. I don't think that's what the arm was.
Intended to do. Allowing recovery through an arm of, of, of spire to just pick up with the arm shifts risks to, to customers away from shareholders. This that allocation of risk is neither equitable nor consistent with sound regulation.
A transitional IT cost should not be eligible for recovery through an arm unless and until spire receives explicit arm approval following a base rate case. That would ensure that rates are set on a normalized operational basis, not under a transition time.
And we would have an opportunity to look at like the ongoing normalized level of cost of spire. Spire is paying approximately an $800 million premium above book value. That is Pedmont after owning this system or excuse me Duke after owning this system.
For a little over nine years is receiving an $800 million profit from the sale. Now utilities earn a return on booked value. So but you know smart investors such as fire.
Now they've agreed not to seek a direct return on the acquisition premium. They operate on expected returns.
It's clear that they they are going to expect a return on this $800 million premium albeit indirectly. The structural concern is not formally before you today, but the transaction price is evidence, it reveals expectations of spire.
For the recovery of this acquisition premium. That is that is something that I think warrants consideration down down the road that's not an an issue for today, but I think that evidence exists, the market is making a statement.
About the regulatory structure that Spire operates under. So at its core, this case is about risk. Who bears the financial consequences of this transaction? Duke has elected to monetize its Tennessee franchise and will exit with this $800 million premium.
Pedmonts customers didn't request this transaction, they did not initiate it, they should not finance it. Pedmonts customers should not incur a higher cost as a result of this transaction. So for these reasons I respectfully urge the commission to adopt the recommended guardrail to ensure that this transaction.
Does not harm Tennessee customers. Thank you. Okay, thank you. You may cross examine. Thank you chairman Jones. Afternoon, mr. Goamore. Good afternoon. I have cut back my cross substantially in an effort to try to get us through today and I would also advise the commission that.
Our current intention is not to cross witnesses camel or Dixon for the consumer and ok that's good to know, thank you for that something strange happens when they go there's that would never happen. So.
With that, let's let's get started. Mr. Datamore you'd agree with me that customers will not if if the commission grants the app the joint applicant's relief has requested that customers as a result of this docket will not incur any change in their their rates or terms and conditional service, correct?
Yes, just exclusively related to this. I understand you think that's coming and and that's what you're concerned about, but it won't it won't happen as a result of commission's ordering is docket. And you you in your introduction, you acknowledge that mr. Yans in his.
In his rebuttal testimony he set forth a number of a number of what he characterizes as customer protective mechanisms that would mitigate a few many, whatever the right adjective is there, but not all of the concerns that you've raised in your time.
Yes, there are a number of number of protections it's almost like filing a new case. Yes. Yeah, there's NO protections that were not in the direct case. Right, they weren't on the direct case, right? That's that's, that's true. Now you cite the Missouri, your I believe it was your exhibit two and that case, the Missouri commission, well I mean it's quite, you look at the stipulation and agreement. I mean it's.
45 pages long or something like that, so, and it's it's quite comprehensive, right? But it's also the result of a settlement, right? There are a lot of issues there that we did not even even raise. Okay. And unfortunately, we were not able to reach a settlement and so here we are today.
Do you agree with me that this commission can incorporate the protective measures that mr. Yans suggested into an order in this in this docket that they have that lawful ability? Yes. Okay. And do you also believe that the commission can reserve its rights to adjudicate?
The recovery of future rate increased proposals by by spire in its order in this document. Could you repeat that? Yes, I mean I'm simply asking if the commission has the ability to note the fact that it has authority over and the right to.
Determine any future rate increases by, by spire, whether they're related to this transaction or subsequent investments or subsequent events. Yes, ok. I'm sorry, one of the byproductor.
Of scratching out large parts of your crosses I'll need to check my notes here, so bear with me for a second if you will. All right, not on that subject. There's been some reference in in this proceeding to the Duke 2016 acquisition of Pedmont. You're familiar with that transaction.
Correct. No I'm not actually, it was before I, before I came here. Okay, so it was before you heard. To to your knowledge, did the consumer advocate intervene in that docket? They did not, ok. And and so therefore they presumably as a result of not intervening, there's NO expression of their opinions about the transaction on the record in that docket.
Correct, ok. And to your knowledge that the, did this commission impose any customer safeguards other than a one year reporting requirement and not good? I I, I would I'm not sure exactly, but I would agree with you for the sake of the I to my knowledge, they did not impose those conditions or.
Are you aware of any proceedings since that docket where the commission issued showcase orders or or disallowed recovery of costs that it ascribed to that transaction? No, I'm not aware of any. Okay, thank you.
Mr. Datamore at the and I'm switching subjects on you here, we're talking about the arm now. So at the at the outset of this case, the consumer advocate and the applicants had a disagreement as to whether the commission has the authority to transfer Peedman's arm to spire under TCA 65 four-one 13, correct? Correct.
Okay, and, but the administrative judge Conclin, that, well, that was the subject of a motion for preliminary determination by the consumer advocate, which was served on 23 December, thanks for that.
And we responded on the 30th, but then the the the administrative judge issued, his finding on 13 January that the, that the arm was transferable under TCA 65 four-one 13. Is that correct? Yes. Okay.
And I'm And and you may not be the right person to ask, so if you're not, please tell me. I was a little confused by the the consumer advocates opening, and I'm trying to understand the position, I think the company's position on this is clear, but is the consumer advocate.
It's Arguing and again if this is you're not the right person, you don't need to answer it but is the consumer advocate still contending that the commission doesn't have the authority to to transfer the arm? Are you referring to my opening or the opening? No miss miss Brown's opening was, was what caused my confusion.
I yeah, I I really can't address, you know, I'd prefer to keep my responses based on what I've submitted testimony on. Okay, that's fair.
Would you agree with me that each of the current LDCs providing service in Tennessee have an arm mechanism in place? That's correct. And that I think necessarily means that this commission is found on at least prior occasion, three prior occasions that are mechanisms for natural gas LDCs.
We're in the public interest, right? Yes. And I believe I'm right about this that the consumer advocate ultimately reached settlements with all three of those LDCs on the implementation of their arms, correct? Yes. Okay.
Are you aware, well, I think can I, can I, can I amend that last question or excuse me, the last answer. I wasn't involved in the very 1st atmos arm, I think it was 2014I don't know if.
That resulted I don't know if that was a settlement or not. I was involved in the reformation of that that moved from two arm filings per year to one. So in that regard, I was involved in that and those that was a settlement. I'm not sure if the initial arm for atmos was a settled case or not. I wasn't here. Yeah, thank you for that clarification.
Early in this docket the spired indicated that they intended to adopt pedmonts, five year capital budget, correct? Yes. And are you aware that they they've updated those projections recently? I I'm not frankly, there, that there were budget construction budgets all over the board and frankly I'm I'm confused on on where, where things ended up. There were a number of different.
Capital budgets. Okay, I'll represent to you that they had an earnings call, I guess what almost two weeks ago early early early February and the budget and and that they put out in that ear.
Call with totaled $865000000 over five years. Would you accept that subject to check? I would I would accept that and that is, that is a concern. That's a, that's a lot of money and that's a lot of rate increases. So would you believe that those dollars are likely to support both system integrity spend required by Fimza as well as system growth? Yes, and a particular concern it would also include a cost of new business and you know that that is a particular concern.
The cost right now, to add a new customer is $32000. Now, if you, if you pencil out, you know, what the average, and I, and I don't have that, but in front of me, but it you you can understand the math that that doesn't pencil out for a new, a new customer coming on board.
At $32000 capital investment creates a significant burden when you've got 2000 of those new customers. And, and so that that creates significant pressure, rate pressure on the rest of the customer base. So that that is a particular concern of mine. I know that mr. di.
And address that in testimony as well. But yes, some of the budget is for system integrity and, some of the some of the other safety related measures, and that calculation you just quoted wouldn't would incorporate and include the system integrity spendment, right? No, I don't I don't think so. I think the new business budget portion was at $64 million and the company has about.
2000 new customers a year. I think that that was exclusive to new business. So your testimony as it. How much did you say 3230 $2000 had one residential customer on average, and you're aware for all cu for all all cu there there would be, there would be some commercial customers in there, but, but predominantly it'll be residential customers. So you're aware that Pedmont has a a tariff that that requires that the provision of or the expansion of service to new customers be economically feasible.
Oh great, they they allow a hundred feet free, and that is, that is more than I've seen with other utilities. So that's a much more liberal application, a free footage of service lines that I've seen, and certainly that would contribute.
To this $32000 per customer issue and that's something we're very concerned about. Obviously, it's not a direct issue in this proceeding, but I think it's something that this commission should, should look at and look at probably comprehensively for all three gas LDCs. All three gas LDCs are, have different terror provisions regar.
Regarding free footage, how they calculate that, the extent to which contributions should be made by, by new customers towards to to offset a little bit of that cost. And I think that's, that's something that this commission should look at. There were also some and I, well, I'll I'll stop, I'll stop there, but yes, we have.
And I think that that's a concern especially when you have an arm in place where, you know, the, the rate earnings are are grown by, by rate based growth. So there's, you know, there needs to be an offset and a concern for the existing customer base.
And the costs that new customers contribute towards the total company revenue requirement, and the arm right now is the way it's structured, you know, the, the more capital that's that's displayed, put into putting into place.
The larger, the larger earnings increased profits, so there's certainly an incentive to to spend capital dollars in the state. Well, I think we may have some, we may have some issues with your their math on this one, but I, I don't think we need to pursue it any further.
Absent the arm and particularly in light of your recommendation that there be a rate case moratorium, the spire will incur a regulatory lag associated with its projected investment in the Pedmont system over the next five years, Correct?
Yes yes it would, and that would provide some positive incentives to control costs that are not present today. And if if Spire couldn't file a general rate case until 2028 or 2029 without the arm.
And some of those assets would be in service and providing benefits to Tennesssee rate payers for upwards of four years without spire earning any return, correct? That's correct. All right. And as of the result of the accumulation of invested capital over that period of time, the rates.
That might result from a 2028 or 2029 rate case could be significantly higher than current rates, correct? Yes. All right. Now that wouldn't be the case that Pedmont continued to operate the system as it, it would be making investments similar to those that spire intends to make and but it would still be operating under its arm, correct? Absent this transaction. Yes. And so its rates would be adjusted annually.
And it's also true that Atmos and chat and Noogle will be operating under their approved arms mechanisms during this period, so their rates would be adjusted annually, correct? Yes. And so under your model the fundamental rules for recovery of them.
On investment and new capital projects for spire and the other Tennessee LDCs would be much different from each other, correct? Well yes, but the the conditions that of the three LDCs are very different as as well. We're, we're dealing with a new, a new company, new methodologies that haven't been reviewed or addressed corporate cost allocation.
Methodologies I'm referring to, a whole new transition where the company has to stand up all of these IT systems without any underlying corporate budgets. So I I would, I push back on the notion that the three LDCs are are in a similar situation. So you heard, you heard heard mr. Yauns testify earlier that the, and I'm sorry, let me identify the subject talking about IT integration. You heard mr. Yanz.
Justify that Spire is, you know, they serve 1.7 million customers. They have the IT systems that you guys are concerned about. It's just a matter of integrating the the Pedmont customers in Tennessee and the Pedmont field personnel into those systems, correct?
Yeah, I I'd like to push back a little bit on that inspire's response to consumer advocate number two-two, and this is identified as confidential and with your approval. I think everybody here is probably under a protective agreement. Yeah.
But, this is straight out of the straight out of this data response and, the company's own, own internal documents referred to to this technology migration.
As a complex undertaking. So that that's somewhat con that documents that were provided in response that documented all the work that had to be done somewhat as a different message, I think than.
You know, the, the story that this is just kind of routine tidying up of some IT systems. Alright, thank you. Excuse me here 1 s.
Mr. Didmour, are you aware that Spire has a cost allocation manual that they use to allocate costs amongst their various functions and various utilities? Yes. Okay. And are you aware that that has been reviewed by the Missourian Alabama commissions?
I would, I would presume it has. We have NO further questions Mistermore. Okay, thank you. Any redirect? No chairman. Okay, do the commissioners or staff have any questions?
I've got one. You made the comment that says I think council for the advocate that the customers of Pedmod did not request this transaction. You have a transaction of this magnitude, have you ever seen customers request that their company be sold to another company? I mean I, I've I've sat through a number of publi.
Public hearings where there's some, some very dysrintal customers that want a different provider. Yeah, I mean, not I don't know that was necessarily in the context, it was probably in the context of a, a hostile rate increase or a significant rate increase, but yes I I've heard I've heard concerns. Okay. Yes. Just curious. Thank you. All right, the witness is excused.
Alright, and then I think we've got two more witnesses and there's NO cross examination. I think we can get done by hopefully five, so you won't go ahead and call your second witness? Yes, we call our next witness mr. Clark Camell.
Mr. Camell, he's coming up? Alright mr. Cammell, would you raise your right hand? You swear from test.
You're about to give will be truthful. Yes. Thank you. I did swear him in. Okay. All right, proceed. Okay, could you please state your name and business address or title?
My name is Clark Camill. My business address is 500 Art Luther king's junior Bullevard, Nashville Tennessee. And did you cause to be filed the testimony, pre filed testimony in this case?
Yes, I did. And do you have any changes or corrections to that? I do not. Okay. Do you have a summary prepared of your testimony? Yes, I do. And could you give that now?
Certainly. Good afternoon commissioners. My testimony addresses the potential customer impact of the proposed transaction, evaluates whether the transaction provides benefits to customers.
The costs associated with the transaction and potential rate impacts. My conclusions are that the transaction is motivated by shareholder objectives rather than customer need. Continuation of existing service is not a benefit of the transaction.
The transaction introduces financial risks and rate pairs should not bear the costs associated with a change in ownership. Corporate officers have a fiduciary duty to act in the best interest of shareholders.
The applicant and application is clear that the transaction is being driven by corporate investment decisions, not consumer need. It outlines expectations of the transaction, corporate structure, future operations.
The application emphasizes earnings per share, capital recycling, and funding dupes energy broader capital plan. To be clear, these are legitimate corporate objectives.
It should not be reviewed as a negative. These feduciary duties act in the interest of shareholders and are often in conflict with the regulatory goals of just reasonable rates. The shareholder goals are distinct from serving the public interest.
The application does not identify a public interest necessity for the transaction. The record does not demonstrate that the sale is driven by financial distress and inability to earn fun a fair return or operational necessity in Tennessee.
Instead, the transaction is a capital allocation decision designed to support Duke's investment and earnings goals. That distinction is central to the review. Utilities subject to this commission's jurisdiction operate under a certificate of needing convenience.
It grants them the exclusive right to provide service within a defined territory, protection from competition and the opportunity to earn an authorized rate of return. In exchange, the utility must provide safe, adequate, and non discriminatory service.
Serve all customers within its territory, Maintain facilities sufficient to meet demand and obtain regulatory approvals for the transfer of assets. Utility must.
The utility must hold itself out to provide service on reasonable terms to all who desire that service within the franchise territory. A public utility is not free to serve only those customers that are convenient or profitable. Luke's decision to sell its Tennessee operation does not.
Not eliminate its obligation to serve.
The continuation of safe and reliable service is required under existing law and cannot be considered a transferral or transitional benefit. In addition, the decision to sell is not a demonstration of harm created by that obligation to serve.
The value of the right to provide service and that's certificate of need is demonstrated by spire's willingness to pay an acquisition premium for that service area and the operations. I'll take a minute to address the claimed benefits.
As represented by the application, the benefits resulting from the obligation to serve are categorized as benefits of the transaction. The application does not demonstrate quantifiable benefits to Tennessee customers.
That result from the transaction itself. There are many asserted benefits that reflect the continuation of existing practices rather than incremental improvements. Pedmont has clearly stated that absent the transaction it would continue.
To Main safety standards, make necessary capital expenditures and provide service under current regulatory obligations. There is NO claim or suggestion that these benefits would cease to exist without that transaction.
Customer growth is often cited as a benefit. However, there is NO evidence demonstrating that projected expansion with spire ownership will be different from that which currently exists or will reduce costs from existing customers.
This was addressed in greater detail by mr. Datamore and I won't expand any further. I'd like to discuss the rate impact and cost recovery, customer impact and benefit analysis includes the rates.
The insurance that Spire will continue to provide service under current rates is not an insurance that rates will not increase as a result of the transaction. My testimony discusses that the applicants.
Have indicated that they maybe seeking cost recovery of some costs in future proceedings. Costs that should not be recoverable from customers are not limited only to the acquisition premium rather there are any costs associated with this transaction.
These are costs that would not otherwise exist such as the transfer costs, transition costs, financing related costs, legal and regulatory approval costs. Customers should not pay for a change in ownership that does not produce demonstratable.
Net benefits. I would like to clarify that almost Fire has stated that customers will not bear any acquisition premium or transaction costs. These costs should not be confused with transaction related costs.
If any costs are considered in future proceedings, recovery should be limited to amounts clearly offset by measurable customer benefits. Turning briefly to the capital structure and the cost of capital.
As part of as part of the operations, Pedmont is currently financed by debt and equity through Pedmont and Duke. The proposed financing materially changes the financial profile. Key concerns include increased costs of debt.
Higher interest rates, high red and the use of equity linked securities that will leverage risk and uncertain financial capital structures. Increased leverage related to the transaction raises financial risks.
These increased risks are often reflected in the cost of capital. The cost of capital is a core component of revenue requirement and therefore directly affects rates. Regulators may face difficult choices regarding the capital structure and the cost of capital including.
A pass through of either higher financial costs to customers or designing recovery of higher capital costs potentially impairing utilities financial ability. This risk did not exist prior to the transaction.
My financial conclusions are that spire has sufficient financial resources to operate the system. A transaction is likely to increase financial risks related to current ownership. Debt financing is likely to result in higher borrowing costs.
And are currently embedded in rates. And until the capital structure is aligned with authorized rate levels, customers can be effectively funding the transaction. Accordingly, the commission should carefully scrutinize capital structure.
Financing mechanisms and cost of capital implications, particularly with respect to the arm. In conclusion, the record shows NO demonstrated incremental customer benefits, increased financial risk.
Potential upward pressure on future rates and a transaction driven by shareholder capital allocations. If approved, a transaction should include protections ensuring that repairs do not bear costs associated with a corporate decision to change order.
Membership.
With that, I'm deal with my summary. Alright, did the joint applicants hear anything that would cause them to want to cross? Change your mind? No. Okay. All right. Thank you. Do the commissioners or staff have any questions if mr. Camell? No.
Alright mr. campbell. You're excused, thank you. Thank you. Alright advocate, call your last witness, please. Commissioner, the consumer advocate calls mr. Bradley Dixon.
Hi mr. Dixon, please raise your right hand. You swear firm the testimony you're about to give will be truthful. Thank you. Have a seat. Council, please proceed. Good afternoon mr. Dixon.
Mr. Dixon, could you please state your name and address for the record? My name is Bradley Dixon. My address is 4149, West 151st terrace in Leewood Kansas.
And did you cause to have pre filed direct testimony filed in this docket? Yes I did. And do you have any, changes or corrections to that testimony? No, I don't. And did you prepare a summary for the commission? Yes I did. And would you please give that at this time? Yes, I would.
Good afternoon. I'll I'll probably do my best to make this quick and hopefully nobody will have questions. My name is Bradley Dixon. I'm testifying on behalf of the consumer advocate Division of the Office of the Attorney general. And since this is my 1st time testifying before the commission, I would like to briefly review my background.
To give you a little history of what's I've done. I received a bachelor of business administration degree from Washman University in 1975I was previously employed by one Gas and its predecessor companies in Kansas, Missouri and Oklahoma for approximately 35 years. During that time I had various positions including manager of accounting.
Manager of office operations for the Kansas City Metro region, which included parts of Western Missouri, which are now part of the Spires business. I was also the director of customer billing, director of gas supply, vice president of the operations for the Southern region of Kansas Gas service, which include Witchita, Kansas and other properties throughout the southern Kansas and Northeast Oklahoma.
My final ten years with the company, I was the president of Kansas gas service, which was an organization of nearly 1000 employees providing service, natural gas service to over 600000 customers. During my time in the accounting role, I was responsible for day to day operations, but I was also responsible for preparing financial exhibit.
It's for general rate cases before the Kansas corporation Commission and the federal energy regulatory commission. I also was involved in preparing the filings with the Securities and exchange commission. And throughout my time as a tenure in gas supply and the financial regional vice president, I was responsible for gas supply transmission operations throughout our company and the financial hedging programs for all of the one gas distribution programs.
In my role as vice president and president, I was the lead negotiator for union contract negotiations with multiple unions that represented field service and customer service employees. And while I was in those positions, I also had varying levels of responsibilities for capital expenditures, their budgets and the actual expenditure programs.
During my employment with Kansas gas service, I testif before I testified before the Kansas corporation Commission and General Rate Filings cost of gas filings, financial hedging, gas supply plans, and gas system reliability cases.
And also during my career, I assisted due diligence teams on an acquisition, a divestiture of another part of our company and another transaction, a transaction where a division was being acquired. As such I was involved with the transition and integration of operations for my areas of responsibility.
At the time of those transactions. In some we haven't had direct responsibility and experienced in many areas of natural gas operations and management for many years. Three key areas that I'd like to address from my testimony are.
Briefly these, should the commission approve this transaction Spire and Petemont will be in a transition and integration phase for at least the next 18 months and likely longer. This is the process where the complete operation of the utility will transfer from Petemont to Spire. The commission and the consumer advocate should have.
The ability to monitor and address concerns related to the progress being made to bring the utility operations fully under aspire umbrella. And to do this, I have recommended a quarterly report be submitted to the commission and to the consumer advocate. The details of the report are outlined in my testimony, but in summary.
Give an include a brief description of the progress being made in the transition and integration process for each operating or work stream area within the company and include the financial costs related to each operating area, the expected completion date for full integration of each operation.
And also identify any impediments that are incurred along the path and what those expected solutions might be to overcome those impediments with updated timelines for full integration. Another area of concern.
Is related to the annual review mechanism or the arm filing. There are a couple of issues with that from my perspective. The 1st is that Spire is essentially adopting the capital budgets of Pmont, and in the event that the commission believes Spire is not legally prohibited from having an arm prior to the base rate filing, I recommend that the.
Mission not allow Spire to utilize the ARM process until such time as they have completed a fully independent determination as to the needs and requirements of the capital program and this could be completed during the integration process. Should spire accept and expand the proposed budgeted amounts and then those amounts are passed through and rates under the arm process, there would be NO incentive for spire to fully review or modify these processes. And while my concerns are not significant with some of the categories within the capital budget, I do have concerns with the amount included in new business.
Based upon the amounts budgeted for new business, and this is exclusive of anything for LNG or RNG, it's was listed as exclusively for new business. The amount budgeted and the average number of new customers on this system, the cost is approximately $32000 per new customer.
This is a significant number and it's much higher than would typically be expected when you're looking at the average cost of adding a new customer to a system. And without the ability to thoroughly review the expenditures in this category, legacy customers could be bearing the cost of bringing new customers onto the system.
A full rate review other than the limited arm review would be beneficial to address this issue and ensure that customers are properly being held accountable for their costs. The Final area of concern relates to the IT processes necessary for spire to independently operate and function successfully. According to spire's.
Owned documents since the National system did not have a dedicated IT system supporting its business, the technology migration to Spire will be a very complex undertaking. This is a critical concern that should be monitored as it could incur significant additional time and cost to bring the full system into the compliance and into integration.
These costs should be deferred and reviewed in a 1st future rate proceeding, and the progress towards full implementation should be included in the quarterly report that was outlined above. The final concern is that testing required to ensure spire systems are generating information similar to what the Pedmont systems were generating. This also could lead to duplicate costs that should not be allowed until a fuel full rate review can be done when the full transition and integration pro.
Process completed. The review of these costs would be a significant undertaking and should be complete, could not be completed within the time respread sorry time restraints and limited discovery available during a typical arm review and would be better suited to a full rate case hearing.
And with that, thank you for your time. Thank you. Any cross? Good. You're good? Okay, great. Thank you. Any questions of the commissioners or staff? Alright, thank you sir. You are excused.
Okay, I forgot we gotta do closing arguments, but hopefully that won't take too long. I'll give you the stair. All right, we'll go ahead with closing arguments and we're ready to hear them now and we're gonna start with the consumer advocate. You may proceed if you're ready.
Commissioners, thank you for the opportunity to present closing remarks today. This case began with a simple but fundamental question. Is this transaction in the public interest for the approximately 205000 Tennessee cust.
Customers to depend on natural gas every day for heating cooking, and essential household needs. After hearing the testimony and reviewing the full evidentiary record, the answer is clear. The applicants have failed to meet their burden of proof. They have not demonstrated that this transaction is in the public interest.
Nor has spires shown that there are benefits to tennessee rate payers as a result of this transaction. Also, they have failed to establish that they are legally entitled to Pedmont's alternative rate make rate mechanism or arm.
So the question before this commission is straightforward. Why should Spire be permitted to have an arm without ever undergoing a rate case? There's NO legal or evidentiary justification for such a result. It's important to remember that the arm belongs to Pedmont.
It was not derived from its certificate of convenience and necessity. Pedmont obtained its arm by complying with the arm's statute and undergoing a rate case. That process was not optional. It was required by law. Pete Mont did not inherit an arm from its predecessor. They had a rate case and then applied for the.
Arm is required by statute. The purpose of the arm's statute's clearer, a utility must 1st submit itself to a rate case before receiving the extra extraordinary flexibility of an arm. That safeguard exists for a reason. It protects customers and preserves regulatory oversight.
It's not a policy question, it's a legal one. The applicants attempt to avoid the statutory requirement by claiming they are not proceeding under the arm while simultaneously asking this commission for an arm as part of the transfer of authority.
That is nothing more than an end run around the statute. Granting spire and arm cannot be reconciled with tennessee law. Now let's discuss the benefits to rate payers from this transaction.
Who really benefits? Who really benefits our Duke inspire? This transaction is structured for the benefit of two large monopoly utilities. These are captive rate payers who have NO alternative provider and NO ability to avoid the consequences of this deal.
Not one witness testified today to a benefit to Tennessee consumers. There has been NO commitment to lower rates, NO guaranteed service improvements, NO binding protections against transaction and transition costs being passed on to customers.
No quantifiable customer savings, NO cost controls, and NO showing that customers will be better off tomorrow than they are today. By contrast, the risks are real and a substant and substantial. This transaction introduces uncertainty in operational control.
In regulatory accountability and in future cost recovery. There are NO completed IT budgets, there are NO defined limits on transition costs, there are NO enforceable safeguards ensuring that these costs will not flow directly into future rate proceedings and ultimately be born by customers.
This is a billion dollar corporate transaction with enormous consequences for tennessee rate payers. There are families in middle Tennessee who are already struggling with their energy costs. Spire now proposes to layer integration costs, legal costs, and other costs.
Because they entered into a transaction to purchase Peedman's gas operations in Tennessee. The result will not be stability, it will be higher and less affordable rates. The consumer advocate urges this commission at a minimum to impose strict conditions if approval is contemplated.
Meaningful reporting requirements, compliance deadlines, and enforceable guardrails to protect consumers. We would also ask this commission to recognize that spires, shareholders are not burying the burden of this transaction.
The risks are falling squarely on the shoulders of rate payers. This docket can end in two ways. It can end with the approval of a transaction that provides corporate benefit without customer benefit risk without reward.
And legal shortcuts around statutory safeguards or it can end with this commission doing exactly what the law requires by enforcing the statute, protecting rate payers and denying a transaction that fails the public interest test.
The evidence here compels one conclusion. The applicants have failed to prove that this transfer of authorities in the public interest or provides customer benefits. Accordingly, this transfer of authority should be denied. Thank you commissioners.
Thank you. Alright, well now hear from our joint applicants, spired Tennessee and thank you Chairman Jones. I I feel the need to respond to Miss miss Brown 1st. I With respect to the argument that the transfer of the arm is is contrary to tennessee law. I.
I personally am having trouble reconciling that with the, with the order of the administrative judge in this docket and and I will leave that issue with the commission and the good hands of the commission and their, their council. I I think I understood judge Conquin's order, but as I said I'll, I'll I'll defer to the commission's judgment on that. In terms of the evidence that was heard today.
I have it a little cognitive dissonance. I'm not sure Miss Brown and I were at the same hearing cause I I thought I heard a lot of testimony about customer protected measures and, and how spire is gonna gonna accomplish this transition and and integration.
And I would add that, that assuming that this transaction transaction is approved, Spire is excited about the possibility of providing service to Petemonst Tennessee customers in the greater Metropolitan Nashville area.
I would simply say that the applicant, the joint applicants believed or believed that the record does reflect that Spire is a suitable and capable provider of natural gas distribution service and well qualified to take over for Pedmont in this jurisdiction.
And we also believe that the record supports the idea that such a transfer of of Petemont's utility authorizations to spire is in the public interest, and we would simply ask the commission to approve the proposed transactions subject to the limitations and and protective measures.
Inspire has iterated and it's mr. Yonsa's rebuttal testimony, and we thank the commission for their time today. Thank you. Are you closing for both parties over there? Okay. All right, is this as a public hearing and is there anyone who would like to make a comment on this matter? All right, let the record reflect on what is seeking recognition to comment.
Ladies and gentlemen, we've concluded the presentation of witnesses and arguments to this matter. I want to thank the parties for the presentations and professionalism and cooperation today. Didn't think we were gonna get done today, but we did. We will deliberate this matter at a future commission conference, and if there's nothing else, we're gonna conclude the hearing and everyone travels safely.
We're done. I thought even if we went today, we'd go to six or 06:30 we go to two but whenever they're not gonna cross it today. Got it. We might get there.