Alright, good morning. I'll call this commission conference to order. The meeting includes commissioners Hill's participation, the electronic means as permitted by law. The public has been provided with access to observe the meeting electronically and in person consistent with our published notice and is being recorded in in accordance with the requirements of the Ten C Open Meetings act. Madam Clerk, would you please call our role?
Hi. Commissioner David Crowd. Commissioner Clay Good. Commissioner Kenneth Hill.
Here.
Will you.
Commissioner Robin Morrison.
Alright, are any parties joining via web app?
Yes sir, we have on behalf of King'sport Power, we have mr. John Stevens, Jason Baker, Belinda Dealman, and on behalf of consumer advocate, we have Hal Novak, and on behalf of Tenna Tennessee American water company, we have Philip Drewnin.
Okay, great. Alright, thank you. The record will reflect that commissioners are identified by name that dr. Hills is participating electronically, can hear and speak to the commission and the public in real time. Before we begin the agenda I want to remind the parties to turn the microphones on when speaking and you should see a green light like I have here.
We can only have four microphones active at a time, so please remember to turn your microphone off when you're not speaking. This will allow both those participating electronically in those in the room to hear the proceedings. Alright, madam Clerk, let's call the agenda.
Section five Commissioners Good Jones Hill Hillyard and High, docket number 20 six-00015 Kingsport Power company. Petitioner of King's Port power Company doing business as AEP appelection power for January 2025 through December 2025 annual recovery under the targeted reliable.
Ability plan and major storm router parentheses TRP and MS alternative rate mechanisms approved in docket number seventeen-00032 here and considered petition.
Alright, I'll call this hearing order and state for the record. This matter was duely noticed for hearing on May the 22nd 2026 and is being conducted in accordance with the uniform Administrative Procedures act. I see the parties have come forward, so would you introduce yourself for the record, please?
And.
Care and commissioners I'm Joe Harvey on behalf of power Company DVA apple Action.
Electric.
Our with me here today is Lizbrooke's and house Council for aid.
There's, there's your green light, so you gotta look for a green light on your microphone and on your console. All right? Good morning chairman.
Of the consumer.
And we have Hal Novak on the.
Phone for any questions.
Alright, great. Would the company like to make any preliminary comments before we proceed?
Yes, John, we have a brief opening. Good morning again. I am Joe Harvey with Hunter Smith and Davis, one of the attorneys representing Kingsport Power Company DBAAEP appalachiant power company. On behalf of the petitioner king Sport participating remotely pursuant to permission by the hearing officer, our king Sport witnesses, John Stevens, Jason Baker, and Melinda D.
Mr. Stevens, a regulatory consultant staff for apple Action power company, who submitted pre filed direct and rebuttal testimony on behalf of the company in this matter will summarize the testimony submitted by the company.
All company witnesses are also available for questions should the commissioners have any. In this opening I'll briefly summarize the petition and cover the terms contained in a letter dated 11 May 2026, which was filed with the commission and explains that there are NO remaining disputed issues be.
Following a petition filed by Kingsport in previous docket number seventeen-00032. This commission siting TCA section 60 five-five-one oh three D approved the proposed TRP and MS rider, which consisted of a.
Targeted reliability plan, including a ve a vegetation management program and a system improvement plan to improve services and reliability of key sports infrastructure at a reasonable cost to consumers.
Also included in the TRP and MS Rider is the major storm component which allows Kingsport to recover incremental expenses arising from major storms. Approval of similar costs and expenses has previously been in.
Approved by the commission in several dockets since 2018. The revenue requirement saw in this docket is not in dispute. For the period of January 2025 through December 2025, king Sports seeks a total recovery of 12 million.
Million dollars of deferred TRP costs and MS expenses, which is only a portion of the $15453443 of actual deferred TRP costs and MS expenses that were not all set by cumulative TRP and MS revenues. The net under recovery in this matter is higher than.
In previous years due to damage caused by hurricane Helene in September of 2024. The company is seeking rates that will recover less than the actual under recovery in an effort to lessen the impact that the higher under recovery balance would have on customers rates if recovered only over one year.
That was.
Filed in this docket. The company is requesting an effective date of September 12026 for new rates on a service rendered basis.
As stated in the 11 May 2006 letter, the consumer advocates expert witness recommended that the company provide an overall rate of returned calculation. As a part of the resolution of this case, the company has agreed to provide a rate of returned calculation with its annual report filed with the commission pursuant.
To Tennessee rules and regs section twelve twenty-04-04- .06. The company maintains that its overall rate of return information is not relevant in an arm proceeding like this TRP and MS rider and risks expanding arm cases beyond a reconciliation of the revenues and expenses that issue which would defeat the efficiency that underlies the purpose of arm proceeding.
That Kingsport has agreed to provide an overall rate of return calculation with its annual reports to resolve this matter, but without conceding the relevancy of that information. In some there are NO outstanding disputed issues between Kingsport and the consumer advocate, including the revenue requirement revenue allocation, and rate design.
Kingsport and the con and the consumer advocate engaged in extensive discovery, cooperative discussions, and exchanged information both formally and informally. As a result of their discussions, it's the position of the parties that there are NO outstanding disputed issues and that this matter should be re resolved in favor of the.
Positions set out in King's petition and rebuttal testimony. Finally, I'd just like to thank the consumer Advocates council for working cooperatively and collaboratively through the discovery process and reaching a resolution in this case. We appreciate their professionalism and working with us on this case.
Alright, thank you. Would support power like to move all doct filings in the official record? Yes, and without objection so moved, you may call your 1st and only witness I guess.
At this time, we're prepared to call mr. John Stevens.
Alright, mr. Stevens, we need to see you. There you are. All right, can you hear us?
Yes, sir, I can hear you just fine.
Great. Please raise your right hand. You swear from the testimony you're about to give will be truthful?
I do. Please.
Two. Thank you.
Mr. Stevens, would you please state your name position and.
Yes, good morning commissioners. My name is John A Stevens. I'm employed by Appalachian power Company as a regulatory consultant staff for Virginia and Tennessee. My business address is three James Center suite 1101 051 East Carry Street, Richmond Virginia, 23219.
Mr. Stevens, do you perform.
Job.
Yes.
Have you submitted pre filed direct and a rebuttal testimony in this matter?
Yes.
Would you please summarize the company's direct testimony?
Yes. Three witnesses filed direct testimony on behalf of the company in this case. Jason E Baker, Vice President of Distribution Operations for Applestion power Company. Melinda L Dealman, accounting manager for American electric Power Service Corporation and me. As noted above, I also filed rebuttal testimony.
In his direct testimony, company witness Baker provides an update on the company's targeted reliability plan, including the status of both its vegetation management program and system improvement program components. Additionally.
He describes the major storm event that Kingsport Power experienced during the 2025 review period and sponsors the data contained in Kingsport Powers reliability profile, which includes the re reliability information and metrics directed by the Tennessee public utility Commission in its order granting.
Petition in docket number seventeen-00032 and a report identifying the cause for each service outage during the reporting period. Using the subcategories approved by the commission in its order granting petition as amended and.
Packet number 2500022. Company witness Dealman sponsors the company's calculation of its deferred actual TRP and MS under recovered cost of.
$15453443 recorded on caseport powers books in account 1823426 TRP and MS under recovery as of 31 December 2025.
This includes the deferred O and M costs related to hurricane Helene per the commission's 2025 order and excludes the prompt payment discount per the commission's approved stipulation and settlement agreement and docket number.
Eighteen-00125. In support of this calculation, she 1st quantifies the under recovered TRP and MS costs incurred prior to 1 January 2025 that were the subject of previous TRP and MS dockets. She then identifies and supports the revenues recorded.
The costs incurred during the review period related to the TRP and MS rider. She also provides a comparison of actual life to date TRP costs to the currently approved annual projections of such costs and attests to the accuracy.
Of the revenues and expenses included in this petition. I explained the company's proposal in this filing to base the TRP and MS rates on an annual revenue requirement that is less than its current under recovery position.
This proposal was intended to mitigate the impact that the higher under recovery balance will have on customers rates if recovered over one year and reduce the magnitude of the changes in the TRP and MS rates from year to year going forward.
Specifically, the company is proposing rates in this case that are designed to recover $12 million in annual TRP and MS revenues. Additionally, I explained the methodology used to allocate the revenue requirement to the customer classes as approved in the company's prior TRP and MS filings.
Support the development of the associated rates for the various customer classes and sponsor the TRP and MS rider tariff sheets. Under the company's proposal, residential customers will see an increase of $0.97 in the service charge component of their monthly bill.
Thank you. Would you please summarize the company's rebuttal testimon?
Yes yes. In rebuttal testimony, I agreed with the consumer advocates recommendations that one, the commission accepts the company's updated calculation of $15453123 as the appropriate amount for TRP and MS recovery in this docket. Two, the commission accepts the company's proposal to limit the TRP and MS rider recovery in this docket.
To $12 million and defer the remaining balance of $3453123 to a future docket. Three, the commission adopt the customer class allocation factors used in docket number 20 one-00107.
To allocate TRP and MS cost as shown on table five of the consumer advocates direct testimony. Four, the commission adopt the rate design presented on table six of the consumer Advocates Direct testimony for the TRP and MS surcharges. And five, the commission required Kingsport power.
To provide a rate of return calculation with its annual reports to the commission.
Regarding the consumer advocate's last recommendation, the company notes that its overall rate of return is not relevant to the recovery of costs and expenses under the TRP and its riyer. Furthermore, the company's agreement to the consumer advocate's recommendation should not be construed as an acknowledgment by the company that the overall rate of return information is relevant to any.
Future TRP and MS proceedings. The company's agreement also should not be construed as a waiver of any rights and the company expressly reserves all rights regarding the future use of such information.
Mr. Stevens, are there any remaining outstanding issues between the parties that are in dispute?
No.
As indicated in the status letter filed on 11 May 2026, the parties have agreed that there are NO contestant issues between them and that this matter should be resolved in favor of the position explained in the letter. A copy of the TRP and MS writer chariff sheets that reflect this revenue requirement, revenue allocation and rate design has been provided to the commission staff.
Mr. Stevens, does that conclude your summary of the testimony?
Yes, it does.
Do commissioners or staff have any questions of the witness?
Nope.
Alright, the witness is excused. We have the consumer advocates witness mr. Novak available via Webex. Do commissioners or staff have any questions for mr. Novak? All right, hearing none mr. Novak, you're off the hook. And do the parties have any closing remarks?
No, thank you chairman. Other than to say thank you for the consumer, thank you to the consumer advocate Council for working with us cooperatively in this matter, we appreciate that.
Mr. chairman.
I would like to echo the same summon. I appreciate it working with Joe.
Going with the company.
All right. Great. Great. Appreciate the cooperation. As this is a public hearing, we will now open the floor to public comment. Is there a member of the public who would like to comment on this matter?
Alright, let the record reflect that NO one is seeking recognition to comment. Based on the evidentiary record in this case, I find that the methodologies and procedures related to Kingsport powers company's annual recovery under its target reliability plan and major stormwriter. For the period January 2025 through December 2020.
Five are consistent with the prior commission orders and the company's approved tariff. Therefore move approval of the parties agreed upon $15453123 in net under recovered costs consisting of $41420088 in targeted reliability.
Plan costs and $11592535 for major storm related expenses, partially offset by the collective rider surcharge revenues of $37559500 has proposed in the letter of agreement filed on 11 May.
2026. Next, I move for approval to the party's proposal to limit recovery in this filing to 12 million with the remaining $3453123 in writer related costs to be recovered at an in a future docket.
Further I moved for approval of the rate design is reflected in the party's exhibit number one as filed in this document on 11 May 2026 with a letter of agreement with the revised writer surcharges. Additionally, I direct the company to file revised tariff sheets in accordance with this decision.
As agreed by the parties, I direct the company to provide an overall rated return calculation each of the forthcoming annual reports filed with the commission. Finally, I find this mechanism has improved service reliability for customers while allowing Kingsport power Company to recover legitimate costs associated with its target.
Reliability plan and for major storm recovery without the need for callsy rate cases. Consequently I find this writer remains in the public interest I saw move. Is there a second?
I.
Alright, would you identify yourself as you second, please? Hi. Alright, is there any discussion of this motion? Alright, then we're ready to vote. A ro a roll call on the vote is required on this motion. When you vote, please state your name and your vote. Yay or nay.
All right. I need you guys on the panel to vote.
I.
Hi hi vote side, ok. Good both side. Alright, that's it.
The elboats are.
Alright, thank you, dr. Hill. The motion passes. Next docket, please.
Section eight Commissioners Good Fryal Jones Hillyod and high docket number 20 four-00044. Limestone utility operating company LLC, petition of Limestone water Utility operating Company LLC to increase charges, fees, and rates, and for approval of a general rate increase and consolidated rates deliberations.
Alright, in its orders setting utility rates is showed on July the 10th 2025. The commission authorized limestone to collected to approve revenue deficiency through rate increases implemented in two phases. Phase one took effect May 12025 and was designed to collect 722032.
$2 of total deficiency. The remaining $640292 plus carrying charges was scheduled to be collected in phase two, beginning May 12026A hearing on the phase two rate designed to collect the previously authorized phase two revenue deficiency and carrying costs.
Was held on 28 April 2026. This matters before the panel for deliberation today and I have a motion. Based on the evidential record, I find that livestones recovery the phase two revenue deficiency of $640292 plus 13 months of carrying charges of $58877 through the implementation of rates and charges effective June 12026.
Is reasonable and should be approved. The occurring charges were calculated by applying the commission's approved overall rate of 8.488 % to the unrecovered phase two deficiency. I further find the recovering that I further finally recovering these costs through a temporary surcharge.
Over a twelve month period is reasonable. Accordingly, I moved to approve the revi residential surcharge of $1.34 per month for water service and $1.81 per month for sewer service. These surcharges shall automatically terminate and be removed from customer bills within 30 days after full re.
Recovery of the carrying costs or after twelve months whichever occurs 1st. Limestones will report the cumulative amount of carrying costs collected through the surcharges in its quarterly surveillance reports filed with the commission. I further find the updated monthly billing determinants by system filed by limestone in this phase of the proceeding are reasonable and that the use of the updating billing information to establish phase two.
The Rates is reasonable and consistent with the commission's order setting utility rates. Using the same allocation of the phase two revenue deficiency between water and wastewater operations is applied in phase one, find the average phase two rate increase will be approximately 40 % for water service and approximately 32 % for wastewater service and that these percentages increase are reasonable.
Now therefore move approval of the individual service rates reflecting these increases as set forth in phase two rate design exhibit attached to this motion. The exhibit establishes water and wastewater service rates for all system and customer classifications addressed in the rate case hearing and is designed to recover the re.
Training phase two revenue deficiency. Our direct commission staff provide the parties with an Excel file containing the phase two rate design exhibit and to offer clarification as needed. Because reliable water usage are sured.
Flow data are unavailable for most commercial sewer customers. Lifestone's use of the equivalent residential unit ERU methodology for commercial sewer billing as used in phase one rate design is reasonable and should continue to be used to determine phase two commercial sewer billing. It should be noted that.
Stone proposed the ERU methodology for commercial wastewater billing in its originally proposed rate design and testified to this approach during the rate case. While the ERU methodology provides a reasonable basis for establishing commercial wastewater rates in this proceeding, the record shows that consumers have difficulty understanding how the method.
Technology is applied to calculate their individual bills. To address this concern I propose the following. Number one, the company shall file a comprehensive ERU appendix to its tariff that explains in detail how ERUs are calculated, identifies all reference sources and defines all customer.
Classifications in simple, easy to understand terms so that each classification clearly describes the basis for its assignment. Number two, the company shall notify each customer through a bill insert or other direct communication of the classification assigned to the customer. Alternatively, the company may prominently display the assigned classification on each customer's monthly billing materials.
Number three, the company shall include in its tariff a formal process for allowing customers to challenge their ERU assignment. This process shall include A, the form and content of the information required from the customer, B, a description of the process the company will use to review and resolve assignment challenges.
C, a requirement that the company resolves challenges within 45 days of receiving a complete request. D language stating that any changes to assigned ERUs will be applied prospectively and E beginning July 12027. The following of an annual.
RU transparency report covering the prior twelve month period ending 31 May, identifying all commercial ERU challenges listing each customer's ERU assignment before and after review, explaining the date and methodology applied and documenting any credits or refunds issued. Throughout this proceeding commission has held several public comment meetings During these meetings as well as in written comments filed in the docket. Several comments.
Commenters raise concerns about limestone's service quality, including assertions that has failed to follow through on certain representations and has been unresponsive to customer concerns. Accordingly, I direct limestone to maintain accurate written records of all complaints received for both this water and wastewater customers. Those records should include the nature of each complaint, the time and date the complaint was received, the action taken and the final resolution. This.
The information is being, is to be made available upon the commission's request. The website of Limpstone's parent company, Central state's water resources, provides general information about the commission's regulatory authority and the customer's right to file an informal complaint. This information however, is not promply displayed and does not include a hyperlink to the commission's website. Also, there's NO instructions on how.
Now a consumer may file a complaint. As such, I direct Limestone to add a link to the commission's consumer server landing page to make it easier for customers to reach the commission when they are unsatisfied with the utilities response to their concerns. Also direct Limestone include language in the billing materials that complaints be fi.
While with the commission, including the appropriate internet addresses and telephone numbers. Finally, these rates and charges reasonably and equally apportion the rate to the phase two rate increases among all systems and customer classes, and they authorize limestone to collect the revenue requirements needed to continue providing safe reliable.
Water and wastewater service to customers in its service territories. This has been a leathy and very complex proceeding, and I want to thank all parties and members of the public for their thoughtful input, consideration, courtesy and professionalism. Our regulatory system operates most effectively when all stakeholders stakeholders have an opportunity to rep.
About input and re and record in this matter reflects a constructive process, so move. Is there a second?
Hi.
Is there any discussion on the motion? Then we're ready to vote. A roll a roll call vote on this motion is required. When you vote, please state your name and how you vote either yay or yay.
Good folks.
All right. Section ten commissioner.
Wait a minute, the motion passes there you go ahead and call your next docket, please.
Com Section ten commissioner Jones Hill Hillyard High and Marson, docket number 20 six-00041 citizens telecommunications company of Tennessee LLC, Petition of citizens telecommunications Company of Tennessee LLC for an order confirming reliquished.
Of its eligible telecommunications carrier designation. Consider company requests for cancellation of ETC designation.
Based on the record in this document including the company's proposed customer notifications, I find that the area is served by citizens telecommunications company of Tennessee LLC doing business as frontier as an eligible telecommission.
Communications carrier is served by more than one ETC. I further found that the volunteer has certified the requirements for relinquishing its designation as a wireline ETC in Tennessee.
Therefore, I moved to cancel the ETC designation previously granted to frontier in accordance with the company's request and consistent with the public interest. I saw move. Is there a second?
More than second.
Jones votes yes. Well, you're not calling for a vote yet, are you? No. Trying to learn this new procedure.
Is there any discussion on the motion?
Yes sir. This is Kenna Hill. I have a question for staff. How many wire line providers ETC et cetera, are designated in the state of Tennessee since Frontiers pulling up?
Is there a response.
They're, they're they're, they're discussing it, dr. Hill. They're gonna respond here shortly.
Thank you. Thanks very much.
Dr. Hill, this is Aaron Conquin.
Senior council.
So.
I do not have the number in front of.
Can be book.
As our.
Viewed this, they're all.
Are several that.
That are statewide.
There.
There are s also at least three that are.
In the same limit.
To the same service area.
The frontiers in. So they the.
The.
The area is.
Are well covered by wireline.
ETCs at.
This time right that that was the basis of my question. Thank you very.
Very much.
You're welcome, dr. Hill. I or not.
All right. Jones votes yes.
Or something.
Like.
Hillboat chess.
Good in.
Motion passes. Next docket.
Section 18 Commissioners Good Fryal Hill Hillyard and Marson, docket number 20 six-00002. Tennessee American water Company petition of Tennessee American Water company regarding.
From the 2026 production costs and other passthroughs right are here and consider petition.
I'll call this hearing to order. This matter was duely noticed for hearing on 22 May 2026 and is being conducted in accordance with the uniform Administrative Procedures Act. Will the parties please come forward and introduce yourself.
What else?
Vanceborough Mail with the consumer advocate.
Melbourne alone with butler Snow on behalf of Tennessee American water.
Opening.
According to the pre he hearing order, the parties filed a letter stating that there are NO outstanding disputes among them. The procedure for this matter is as follows. 1st, I'll ask parties to give an abbreviated presentation of the petition and in testimony in the evidentiary record.
The consumer advocate will make an opening statement. Each party will present a brief closing argument. Tennessee American Water will present one witness, provide a summary of pre filed testimony and without cross examination. The commissioners and staff will then have an opportunity to ask questions and the public will may comment.
With that explanation, the procedure for this matter, we will begin. Would a company like to move all docket filings into the official record? With objection so moved, consumer advocate like make your opening statement.
Yes.
Discovery and consultation.
That there are NO outstanding.
Issues among the parties, and this position was set forth in the rebuttal testimony of a company witness.
So we have.
You know, just a very short statement of that and we hope that you will consider the case in light of the position set forth in the what we call NO issues letter file.
Filed in the stock.
Thank you.
Thank you. With Tennessee American water, please call this 1st witness to be sworn in.
Yes, thank you. Tennessee america.
I want to come.
Company calls Phil Drennan?
Okay, I see you mr. Greenon. Can you hear us?
I can hear you. Good morning commissioners.
Very good. Mr. Drendon, please raise your right hand. Do you swear or affirm the testimony you're about to give will be truthful?
I do. Council, please proceed.
Thank you. Good morning mr. Dren.
Good morning.
Would you play.
You State your full name, your emplo.
Entitled.
The record.
Bill Drennan, Director of Rates and Regulatory for American Water Service Co.
And mr. Jenna, did you cause.
Testimony to be submitted in this docket.
Yes.
On behalf of home.
I adopted the direct prefile testimony of mr. Robert Lane on behalf of Tennessee American Water. Thank you.
Thank you. If I ask you the questions to.
The direct and rebuttal testimony this morning, would your answers be the same?
Yes, they would.
Do you have any corrections to that testimony?
No, I do not.
Summary.
Of both.
You're rebec.
The direct.
Act and rebuttal testimony.
Yes, I have.
Please provide.
About the.
Hello commissioners. Thank you for the opportunity to speak to you today about Tennessee American water's production cost and other passthroughs rider, also known as the pcap. The company filed a petition on 14 January 2026.
Requesting to adjust its pcap writer to reflect changes in the company's production costs and other pass through expenses, as well as to reconcile the under or over collection of the company's pcap writer in effect during the previous PCAP period.
The consumer advocate division reviewed the company's pcup filing and issued two rounds of discovery requests in this proceeding. The company responded the consumer advocates to start discovery requests in two order. Mr. William H Novak submitted testimony.
On behalf of the consumer advocate division of the office of the Tennessee Attorney General, after reviewing the company's PCAP filing and responses to the consumer advocates discovery requests. As a result of mr. Novak's review, mr. Novak corrected the company's surcharge calculation.
By updating the tax rates, approved water sales revenues from the company's last great case charges from one of the company's water suppliers during the PCAP test period and charges for purchase power during the PCAP test period.
Mr. Novak recommended that the company's existing PCAP surcharge be reduced from 3.02 % to 0.97 %. The company reviewed mr. Novak's calculations and agreed with his recommendation to adjust the company's PCAP surcharge to 0.97 %.
On behalf of Tennessee American Water, I respectfully request the commission to approve an adjustment to the company's production cost in other passthroughs rider surcharge to 0.97 % designed to recover approximately 689000 of.
Related revenues. Thank you.
Thank you, mr. Greennon. Does the commissioners or staff have any questions?
The Witness is excused. We have consumer advocates witnessed mr. Novak available via via Webex to the commissioners for staff have any questions for mr. Novak?
Hearing none. We have concluded with the testimony under ready for the party's closing remarks. Consumer advocate you may proceed.
Like yes.
It's.
To follow.
The position set forth by mr. Drennan that incorporates the testimony of mr. Novak and we appreciate working with the company and coming to this point. Thank you. Thank you.
You potentially American water?
Thank you.
And bring.
Tennessee American w.
But I would like to thank mr. Bromel in the consumer advocacy's office for.
Is a cooperative way and we're.
We're able to work together and reach a resolution on this case and we appreciate the commission and the hearing officer for providing us the the time to reach this resolution. Thank you.
Thank you both. As this is a public hearing, is there anyone who would like to make comment on this matter?
Let the record reflect that NO one is seeking recognition to comment, and if we're ready to deliver deliberate I have a motion. Phone review of the evidentiary record in this proceeding I find that the total production costs and other pass throughs rider PCOP or PCOP percentage of zero.
2.97 as calculated in the company's revised pcup work paper. Petitioners rebuttal exhibit PJD-one. Revised pcop schedules is calculated correctly upon the commission's approved methodologies. This is a decrease from last year's pcup rider.
Percentage of 3.02. The total pcock percentage is based upon the following 2025 expenses, fuel and power expense of $2768963. Chemical expense of $1986559 per.
Purchased water expense of a hundred and $97997. Waste disposal expense of $666602. Commissioned inspection fee of $280787. The total PCOP expense includes a recovery of $868565.
Because the revenues collected from customers during the review period were less than the amount authorized in the 2025 pcop brider proceeding. This results in the net PEACOP expense recovery of $6769471.
I also find the peacop brider continues to benefit the company by allowing timely expense recovery without having to file base rate cases. In addition, customers receive immediate refunds when expenses within the peacop brider decrease. For those reasons, I find the peacop brider mechanism remains in the public interest and I so move. Now there's there a second.
More than second.
We have a second. Is there any discussion on the motion?
Hearing none, we're ready to vote. A roll call on this motion is required. When you vote, please state your name and vote yes or NO.
Morrison that I?
Yeah.
Yellow tie.
Very good. The motion passes and we're ready for the next docket.
Section 21 Commissioners Good crowd, Hill, high, and Morrison, Docket number 20 six-00009 Atmost energy Corporation. Petitioner of Atmos Energy Corporation for approval of its 2026 annual rate review file.
When pursuant to tennessee code annotated section 65-five-103 parentheses D parentheses six. Here in consider settlement agreement or alternatively, herein consider petition.
I'll call this hearing to order. This matter was duely noticed for hearing on May 2220 26. In accordance with the uniform administrative Procedures act. Please introduce yourselves for the record.
Good morning commissioners Eric Lybeck from Sims Funk on behalf of Atmos Energy and I have with me Maureen Melson from the company.
Showing around with the consumer at.
Look at division of the attorney General's office and with me I have Ryan McKey.
Okay, would atmos like to make any opening statements?
Yes briefly. Good morning commissioners. As I said, this is Eric Livec on behalf of Atmos Energy Corporation. We are here today on atmoses 2026 annual rate review mechanism position. And atmos Energy and the consumer advocate have reached a settlement agreement in this matter, which we will be presenting today. From my opening statement, I've been asked to provide a high level summary of the terms of that settlement. So in short, after the party's pre filed testimony was filed, there were several material differences in the party's positions regarding the calculation of the company's revenue deficiency in this year's petition.
To resolve those differences, the parties have agreed to changes in the revenue requirement calculations in this docket as well as changes in the mechanics of future armed filings by the company. So regarding the calculations in this year's filing, the parties have agreed to set the company's revenue deficiency at 11000860.
$1058, which is a reduction of $2817292 from the company's as filed position. And this reduction is the result of five compromises between the parties in response to issues raised in the consumer advocates pre filed testimony, which miss Melson will discuss in a moment on direct.
Regarding the changes in the mechanics of future arm filings, the parties have agreed to eight changes that will affect both what information is either submitted or made available in connection with the company's future arm submissions as well as how various accounting matters related to allowance for funds used during construction and the company's cloud.
My computing costs will be accounted for moving forward. And again Miss Melson is here to provide testimony regarding those summaries. We are here today to ask the commission to approve this settlement agreement. As always, we appreciate the consumer advocates professionalism in reaching this agreement and we look forward to presenting the testimony of miss Melson and to answering any questions that the commissioners or staff may have about this settlement.
Thank you.
Remote.
Yes sir.
Through cooperative.
Discussions the parties have been able to.
To.
Solve all the issues in the stock.
Good and.
We have filed this stipulation.
And settlement agreement for your review and consideration.
I would like to.
Think atmost and.
My back.
For their cooperation and reaching.
A.
Resolution.
In the socket and I.
And.
And their staff for their time.
And.
Tension in the stocket.
Our advocate would respectfully request the commission to approve the stu.
Population and settlement.
Agreement. Thank you. Thank you. Before we begin testimony, would the company like to move all docket filings into the official record?
Yes, we would.
Without objection so moved, atness may call its witness.
Atmust calls Maureen Melson to the stand.
Miss well Nelson, please raise your right hand. Do you swear or affirm that the testimony you're about to give will be true.
I do.
Thank you. Council. You may proceed.
Thank you mr. Commissioner. Miss Melson, would you please state your name and job title for the record?
My name is Maureen H Melson. I am manager of rates and regulatory Affairs for atmos Energy Corporation.
Thank you Miss Melson, and we are here this morning on atmos Energy's 2026 annual rate review mechanism filing in docket number 20 six-0009. Are you the same Maureen Melson who submitted pre filed direct and rebuttal testimony in that docket.
Yes I am.
If I asked you the questions contained in that pre filed testimony this hearing today, would your answers be the same?
Yes they will.
Would you like to adopt that pre filed testimony as your testimony of the hearing today?
Yes I will.
Miss Milson have atmos energy and the consumer advocate reached a settlement in this docket?
Yes they have. The party submitted a proposed stipulation and settlement agreement on 12 May 2026.
Would you please summarize the nature of that settlement for the commission?
Yes, after the testimony was filed, there were several material differences in the party's positions regarding the calculation of the company's revenue deficiency. To resolve those differences, the parties have agreed to changes in the rev revenue requirement calculations in this docket and changes in the mechanics of future arm filings.
With respect to the calculation in this year's filing, the parties have agreed to set the company's revenue deficiency of at $11861058, which is a reduction of $2817292 from the company's filed position.
The reduction is the result of five compromises on specific issues raised in the consumer advocates pre filed testimony, which I will summarize in turn. 1st, the company has agreed to move from its rate base the portion of construction work in progress or CWIP, which is eligible for allowance for funds used during construction or.
AFUDC treatment. The company has further agreed to eliminate the AFUDC revenue credit adjustment currently calculated in work paper one-two and included on schedule one. C WIP that is not AFUDC eligible will remain in the rate base. These adjustments will not affect the annual reconciliation revenue requirements.
Schedule one R for this year's arm. Second, without waiving any future positions and with recognition by the company that this settlement is non precedential on this issue, the parties have agreed that the company shall recover all legal fees included in the filing. 3rd, without waiving any future positions and with recognition by the consumer advice.
Ticket that this settlement is non presidential on the issues. The company has agreed to reduce the recoverable amount of injuries and damages by 255059 4th, the parties have agreed to a $184261 decrease in the operating and maintenance expense to reduce the company's advi.
Advertising expense recovery. 5th, the parties have agreed that for purposes of this proceeding, the capital structure used to calculate rates shall reflect the company's actual capital structure with a common equity ratio not to exceed 58 %. The company will file testimony in next year's arm proposing a permanent amendment to the approved methodologies to reflect.
Of that change. In addition, the party's settlement agreement includes a series of compromises concerning the contents of future arm filings. 1st, as it relates to the AFUDC issue, the company will file testimony proposing a permanent amendment to the approved methodologies to reflect the treatment adopted in this year's arm.
Additionally, the company will file direct testimony in next year's arm in support of its accounting procedure that specifies accrual of AFUDC on pre tax basis to allow that issue to be addressed on the merits. Second, the company has agreed to submit its capital editions budget in accordance with TPAC rules and provide.
Add this budget to the consumer advocate in future arm filings. 3rd, the company has agreed that during future arm filings, it will offer direct testimony that articulates the key factors driving year over year changes in capital expenditures and operating expenses identified as high risk and high priority. Further.
Here the company will provide a capital project list that includes information on how projects were selected, why they were needed, and how customers will benefit from those investments. 4th, regarding the company's distribution integrity management program or dimp, the company has agreed that in connection with the list of capital expenditure projects I just discussed.
The company will include these projects, which were, sorry, the company will include which projects were identified using the risk prioritization model for distribution facility replacements and provide supporting output showing the risk tier into which each project falls and the specific risk being mitigated.
The company will also provide the most recent recent dimp risk results document by grid in the format of the confidential attachment to the company's response to CAD two-forty three in this docket. The company will explain how the high level risk items within the dimp risk results document were addressed in.
It's capital and O and M expenditures or if not addressed why. 5th, the company has committed to early engagement with the consumer advocate to clarify information needs and streamline discovery requests thereby minimizing minimizing overly broad data requests and ensuring focused information exchanges. Six, the company has agreed that upon requests by the consumer advocate in future armed proceedings, it will.
Confidentially provide invoices supporting the legal expenses included in the reconcili reconciliation filing with minimal redactions. 7th, the company has agreed that upon request of the consumer advocate and future armed proceedings, it will provide reasonable supporting information related to large injury claims, including a narrative summary of.
Such claims and settlements. 8th, the parties have also agreed that the company may capitalize certain cloud computing costs and future armed proceedings and the manner proposed in my pre filed direct testimony. Beyond these issues, the consumer advocate accepts all of their capital and operational expenses and adjustments in the company's filing.
Thank you Miss Melson. Does that most Energy request that the commission approve the stipulation and settlement agreement? Yes. Do you have any closing remarks? Yeah.
Yes, we would like to thank the consumer advocate for working with us and finding a resolution. We also want to thank the commission and staff for their time and attention.
I have NO further questions for this witness.
Do the commissioners or staff have any questions? The witnesses excused.
That that concludes our presentation on behalf of the company.
Okay, we are ready to hear the closing remarks. The consumer advocate would like to thank.
Most and their willingness.
Operation in resolving and.
Settling this matter.
Yeah, thank you.
When they're hear from Mattinus?
Just like to echo miss Brown's comments thanking the consumer advocate for their cooperation and getting resolution here and and thanking commissioners and staff for their time and attention to this matter.
Let the record reflect that NO one is seeking recognition to comment. If we're ready to deliberate I have a motion review of the evidentiary record for approval of the parties stipulation and settlement agreement as filed on May twelve.
2026 which addresses the company's 2026 annual rate review mechanism, ARRM filing. The settlement propo proposes that the parties negotiated $11861058 net revenue deficiency be recovered by the com.
Company through revised fixed and volumetric rates. This deficiency is supported by the company's amended schedule one and the rate design is supported by the company's updated schedules eleven-three and eleven-four, all submitted in support of the party's settlement.
I order atmos to file revised tariff sheets with the settlement agreement. Agreement.
Remove its allowance for funds used during construction. Deferred.
Proposed these adjustments be made permanent.
And apply to both the historical review and reset periods. In addition to the company shell filed direct testimony in its next ARRM supporting the AFUDC accounting procedures, including its pre tax accruals with the understanding that AFUDC related.
The county issues remain unresolved and we will be addressed in the company's 2027 on filing. In future on filings the company shall provide its capital additions.
Twenty-04-01-.01 to the commission and the consumer advocate. The company shall discuss the drivers for its year to year changes in capital and operating expenditures.
That are identified as high risk and or a high priority in all future armed filings. Further, the company shall in its future filings submit its capital projects list by project including cost.
And their mitigated risks.
In addition, the company shall provide us distribution integrity management program DIMP, risk results by grid and highlights that were not addressed in future armed filings. The party shall engage proactively in.
Anticipation of and during at most future arm filings in an effort to streamline the review timeline, reduce unnecessary delays and ensure that each party has requisite information for a thoroughly for a thorough analysis.
The company shall be allowed to recover its legal expenses as future armed filings, the company shall confidentially provide to the consumer advocate all associated invoices and other supporting evidence with minimal redactions. Recovery of the company's operating and maintenance expenses in this proceeding shall exclude $255059 in injury.
And damages, expenses, and a hundred and $84261 in promotional expenses. In future armed filings the company shall supply reasonable documentation that includes narrative explanations for these types of expenses.
Beginning with next year's filing company shall be permitted to account for its cloud computing services and solutions costs by charging both implementation and sub sub subscription costs to the FERC.
Application software plant account and subsequently depreciate those these costs at existing depreciation rates. In the computation of its proposed service rates, the company shall be able to use its actual capital structure with its common equity.
Necessary.
Is the reset?
Crowd seconds.
Problem outside.
More than bad eye.
Good folks are.
Yeah.
Okay, the motion passes.
All right. Thank you. Alright, we will hold a commissioner meeting immediately following the conference which now concludes, so allow a couple minutes for those who will be leaving, and if there's NO other business, I move we adjourn.
They get riding to travel safely for yoke.
Those of you traveling today.
Mr. Chairman. Yes sir.
I need to take one moment of our people's time. This is Kenneth Hill commissioner. I want to say thank you mr. Chairman for the work that you've been doing, that you have done, that you've already accomplished. And I thank you very much for your courtesy and for all the work that goes forward as you have set us up on a good course and I thank you mr. Chairman.
Thank you, dr. Hill. Appreciate those kind comments. Thank you very much. Good evening of the commissioners to order. This meeting includes electronic participation by commissioner Hill, as permitted below and properly noticed, the public has been provided with access to observe this meeting both electronic.
And in person consistent with our published notice, the meeting is being recorded. Before we begin our agenda I'll ask each commissioner to to identify themselves for the record. I'll start with you robert. All right, missioners.
John Hein?
David Jones.
David.
Pro.
Play good.
Commissioner Canaditheal.
Alright, thank you. The record will reflect that all participating commissioners are identified by name and those Commissioner Hill can hear and speak to the commission and in the public real time we will now proceed with the agenda. We're ready to nominate and vote on chairman and vice chairman for the next two year term running from July 12026 through June 3020 28. And I will gladly take any nominations for chairman.
Missioner Jones, I have a motion, I will nominate commissioner Dave.
Good crowd.
Oh s two plugs chair.
Alright, thank you. Is there a second? Alright, would you identify yourself when you're second? All right? Is there any discussion on the nomination? All right, hearing none and roll call this motion is required, please state your name when you vote either yay or nay, and we'll start with you Robbie.
Person vote on.
I.
Alright both.
Jones votesai.
And you can vote for yourself.
The old votes are.
Right.
Alright, the motion passes. Commissioner Crowd has been elected as chairman of the commission for the next two years. Congratulations mr. Chairman.
They're used to feel.
All right. Are there nominations for vice chairman?
Commissioner Clay good.
That's five.
Chair. All right. Mr. Goods been nominated to be vice chair. He's there a second? Hi second. Hi seconds is there any discussion on that nomination? Again, a row call vote is on the motion is required. Please state your name and vote either yay or nay for vice chairman good.
More symbottom.
I will try.
Jones vote.
Thank you.
You're all going to.
Hi. All right, the motion passes. Commissioner Good has been elected vice chairman of the commission for the next two years and congratulations. Congratulations to both commissioners Crowd Good. Thank you for your leadership and service commission. We know you'll do a great job. We've completed the agenda and we will now move to public comment. Is there anyone present who would like to comment on the agenda item?
Alright, for the record, NO one is seeking to comment. In addition, we have NO remote participants registered to speak. Therefore, this concludes our business today and the meeting is adjourned. Thank you very much.
Thank you, mr. chair.