Charge $31,000.00The initial monthly cost-of-service charge for the restaging of the Centaur compressor will be adjusted and trued up annually to reflect actual costs incurred by Transporter, using the methodology set forth below:
MONTHLY FACILITY CHARGE ANNUAL TRUE-UP METHODOLOGY
Definitions
The terms below will have the following meanings for purposes of this Exhibit “C”:
“ Directly Assigned Transmission O&M ” means all costs in FERC Accounts 853-870, but excluding FERC Account 861.
“ Directly Assigned Transmission O&M Labor ” means only the labor costs in FERC Accounts 853-870, but excluding FERC Account 861.
“ Directly Assigned Transmission O&M Labor Ratios ” means the ratio of Directly Assigned Transmission O&M Labor of the Interconnect Facilities to the total Directly Assigned Transmission O&M Labor of the transmission system.
“ Indirectly Assigned Transmission O&M ” means all costs in FERC Accounts 850-852 and 861.
“ A&G ” means all costs in FERC Accounts 920-932.
“ Total O&M ” means all costs in FERC Accounts 800-870 and A&G.
“ Total O&M Labor Ratios ” means the ratio of Total O&M labor related costs assigned to the Interconnect Facilities to the Total O&M labor related costs assigned to the transmission and storage system.
“ Transmission Communication Point Ratios ” means the total communication points utilized in the Interconnect Facilities to the total communication points utilized in the transmission system.
“ Transmission & Storage Communication Point Ratios ” means the total communication points utilized in the Interconnect Facilities to the total communication points utilized in the transmission and storage system.
“ Miles of Pipe Ratios ” means the total miles of pipe for the Interconnect Facilities to the total miles of pipe for the transmission system.
Facility Charge Components
During the Amortization Period, the Facility Charge will be calculated annually and will include all of Northwest’s costs associated with the design, permitting, construction, ownership, operation and maintenance of the Interconnect Facilities, including without limitation, operating and maintenance expenses, administrative and general expenses, depreciation and net negative salvage (“ NNS ”), income taxes, other taxes, return on debt and return on equity.
Operation and Maintenance (O&M) Expense
Directly Assigned Transmission O&M related to the Interconnect Facilities is accumulated in a separate project cost center.
Indirectly Assigned Transmission O&M is allocated using a combination method, which allocates: (1) costs in FERC Accounts 850 and 861 based on Directly Assigned Transmission O&M Labor Ratios, and (2) costs in FERC Accounts 851 and 852 based fifty-percent (50%) on Miles of Pipe Ratios and fifty-percent (50%) on Transmission Communication Point Ratios.
A&G is allocated in accordance with the FERC approved Kansas-Nebraska methodology.
If these allocation methods change in any future FERC rate proceeding, then the above costs will be allocated consistent with the methods underlying such rate proceeding.
Depreciation and NNS
Direct depreciation expense for the gross direct plant for the Interconnect Facilities is calculated on a straight-line methodology over the Amortization Period.
Indirect depreciation expense includes general and intangible plant depreciation and amortization that is allocated using a combination method, which allocates: (1) the depreciation related to costs in FERC Accounts 389-399, excluding Account 397, based on Total O&M Labor Ratios, and (2) the depreciation and amortization related to costs in FERC Accounts 301-303 and 397 based fifty-percent (50%) on Miles of Pipe Ratios and fifty-percent (50%) on Transmission & Storage Communication Point Ratios .
If these allocation methods change in any future FERC rate proceeding, then the above costs will be allocated consistent with the methods underlying such rate proceeding.
NNS is calculated using gross direct plant for the Interconnect Facilities, multiplied by the NNS rate developed for the transmission system.
If the NNS rate changes in any future FERC rate proceeding, then the NNS rate will be revised consistent with the NNS rate developed for the transmission system in such rate proceeding or as otherwise specified in such rate proceeding.
Federal and State Income Taxes
The federal income tax expense is based on the IRS federal income tax rate in effect for the period of the cost-of-service calculation. The state income tax expense is based on the average weighted state income tax rates in effect for the period of the cost-of-service calculation.
Taxes Other Than Income Taxes
Ad Valorem taxes are based on the rate(s) used to determine the taxes paid in the county or counties where the Interconnect Facilities are located multiplied by the total average net plant of the Interconnect Facilities and the general and intangible plant assigned to the Interconnect Facilities.
Payroll taxes are allocated to the Interconnect Facilities based on the Total O&M Labor Ratios.
Other taxes not mentioned above, such as state franchise taxes and state sales and use taxes, are allocated to the Interconnect Facilities based on the appropriate combination method ratios used to allocate indirect depreciation expense discussed above.
If these principles or allocation methods change in any future FERC rate proceeding, then the above taxes will be determined consistent with the principles or methods underlying such rate proceeding.
Return on Rate Base
Return on Rate Base is calculated by multiplying Rate Base by the Rate of Return.
Rate of Return
Return on debt and equity and the applicable capital structure are based upon the last litigated or settled general rate case where the components are stated.
Rate Base
Rate Base includes both direct and indirect rate base. Direct Rate Base equals gross direct plant less accumulated depreciation and accumulated deferred income taxes related to the Interconnect Facilities. Indirect Rate Base equals gross general and intangible plant for the same accounts identified in the indirect depreciation expense discussed above less related accumulated depreciation and accumulated deferred income taxes, plus working capital allocated to the Interconnect Facilities. Working capital includes materials and supplies and prepaid expenses.
Rate Base is calculated on an annual basis using a 13-month average (12 months of the current calendar year and the last month of the prior calendar year, if available).
Gross direct plant is based upon actual initial costs for the Interconnect Facilities. Any additional capital expenditures will be added to gross direct plant in the year incurred. To the extent that the gross direct plant has not been fully depreciated prior to the expiration of the Amortization Period, the remaining net book value of the Interconnect Facilities, including any related accumulated deferred income taxes, will be included as part of the final cost-of-service calculation.
Indirect Rate Base is allocated to the Interconnect Facilities based on the same combination method ratios used to allocate indirect depreciation expense discussed above.
If these allocation methods change in any future FERC rate proceeding, then the indirect Rate Base will be allocated consistent with the methods underlying such rate proceeding.
Billing Period
The Billing Period is the twelve months ending March 31 of each year. The Facility Charge will be invoiced under this Agreement in equal monthly installments over a twelve-month period, unless a shorter period is applicable at the beginning and/or ending of the Term.
Facility Charge True-up:
True-up Period
The True-up Period is based on a calendar year ending December 31 (or partial calendar year if the Facility Charge is in effect for only a portion of a calendar year).
True-up Calculation
The difference between: (1) the latest Facility Charge cost-of-service calculation for the True-up Period, and (2) the amount billed during the True-up Period plus carrying costs, as defined below, will be invoiced or credited as a lump sum during the month following the Billing Period.
A new estimated Facilities Charge will be calculated for the next Billing Period.
Carrying Costs
Carrying costs are calculated using the interest computed in conformance with FERC regulations from the date of each collection through the date of the refund or billing, as applicable.
Adjustments for FERC Rate Proceedings
To the extent that any part of a True-up Period falls within a subject-to-refund period wherein any of the principles or allocation methods described above are subject to change, initial billings will be based on the principles and allocation methods used by Northwest in calculating its subject-to-refund base tariff rates. If the principles or allocation methods finally approved in such rate proceeding differ from those used by Northwest in calculating its subject-to-refund base tariff rates, then the difference between the Facility Charge previously billed and the Facility Charge subsequently calculated using the principles and allocation methods finally approved in such rate proceeding will be refunded or billed for the applicable billings. Such refund or billing will occur in the next True-up Period and will include interest computed in conformance with FERC regulations from the date of each collection through the date of the refund or billing.
Audit Rights
Accounting records and work papers for the True-up Period will be available for audit or review at Northwest’s offices for 180 days after the true-up for each year is invoiced. Information will be deemed correct if not challenged during that 180-day period.