Charge $27,879.00The initial monthly Cost-of-Service charge above 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 transmission costs in the 800 series FERC Accounts as so defined in 18 CFR Part 201, except FERC Accounts 850-852 and 861.
“ Directly Assigned Transmission O&M Labor ” means only the transmission labor costs in the 800 series FERC Accounts as so defined in 18 CFR Part 201, except FERC Accounts 850-852 and 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.
Administrative and General (“ A&G ”) means all costs in FERC Accounts as so defined in 18 CFR Part 201.
“ Total O&M ” means all costs in the 800 series FERC Accounts as so defined in 18 CFR Part 201 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.
Annual Cost-of-Service Components.
Operation and Maintenance Expenses ("O&M")
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 approved in such rate proceeding.
Depreciation
Direct depreciation expense for the gross direct plant for the Interconnect facilities is calculated on a straight-line rate over the 15-year term of the Exhibit C facility charge.
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 general plant costs in FERC Accounts as so defined in 18 CFR Part 201, except FERC Account 397, based on Total O&M Labor Ratios, and (2) the depreciation and amortization related to intangible plant costs recorded in FERC Accounts as so defined in 18 CFR Part 201, and communication equipment costs in FERC Account 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 approved in such rate proceeding.
Net Negative Salvage ("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 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 allocated consistent with the principles or methods approved in 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 and 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).
Direct Rate Base equals gross direct plant less accumulated depreciation and accumulated deferred income taxes for the Interconnect facilities.
Gross direct plant is based upon actual initial capital expenditures for the Interconnect facilities. Any subsequent 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 Exhibit C to this Agreement, the remaining net book value of the Interconnect facilities, less any related accumulated deferred income taxes, will be included as part of the final cost-of-service true-up calculation.
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.
Indirect Rate Base is allocated to the Interconnect facilities based on the same combination method ratios used to allocate indirect depreciation expense discussed above.
Working Capital is allocated to the Interconnect facilities using the combination method 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 indirect Rate Base and working capital will be allocated consistent with the methods approved in 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 end of the Term.
Facility Charge True-up:
True-up Period
The "True-up Period" is the immediately preceding calendar year (or partial preceding calendar year if this Agreement was in effect for only a portion of such preceding calendar year).
True-up Calculation
The difference between: (1) the actual cost-of-service calculation for Shipper on the Interconnect facilities during the True-up Period, and (2) the amount billed to Shipper during the True-up Period plus Carrying Costs, as defined below, will be billed or refunded as a lump sum on or before the current calendar year's March invoice.
Carrying Costs
"Carrying Costs" equal the interest computed in conformance with FERC regulations from either (1) the date the overcharge was paid by Shipper through the date the overcharge is refunded by Transporter; or (2) the date the undercharge would have been due to Transporter through the date the undercharge is paid by Shipper.
Adjustments for FERC Rate Proceedings
To the extent that any part of a True-up Period falls within a FERC subject-to-refund period wherein any of the principles or allocation methods described in this Exhibit are subject to change, initial billings will be based on the principles and allocation methods used by Transporter 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 Transporter in calculating its subject-to-refund base tariff rates, then the difference between the facility charge previously billed during the subject-to-refund period and the facility charge subsequently calculated using the principles and allocation methods finally approved by FERC 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 Carrying Costs.
Audit Rights
Accounting records and work papers for each True-up Period will be available for audit or review at Transporter’s offices for 180 days after the true-up for each year is invoiced. The True-up will be deemed correct if not challenged by Shipper during that 180-day period.