PDFWAC 480-85-060

Cost of service methodology.

(1) A cost of service study filed with the commission must be calculated using an embedded cost method.
(a) Electric studies shall use the FERC accounts outlined in Table 1 in subsection (3) of this section to functionalize the cost of service. Costs shall be directly functionalized where information is available. Functionalized costs will be classified and allocated by the methods outlined in Table 2 in subsection (3) of this section.
(b) Natural gas studies shall use the FERC accounts outlined in Table 3 in subsection (3) of this section to functionalize the cost of service. Costs shall be directly functionalized where information is available. Functionalized costs will be classified and allocated by the methods outlined in Table 4 in subsection (3) of this section.
(c) FERC accounts not included in Table 1 or Table 3 in subsection (3) of this section but identified in a cost of service study must be accompanied by a rationale for the functional method chosen in the supporting testimony.
(d) If an allocation method in Table 2 or Table 4 in subsection (3) of this section requires direct assignment, any similar remaining costs in the account may not be allocated to the classes included in the direct assignment; except in circumstances where that class derives a direct benefit from the nondirect assigned costs. If a particular account contains several cost items, of which only certain items in the FERC account are directly assigned, the cost items that are not directly assigned will be allocated as appropriate.
(e) The abbreviations for the functionalized costs are:
"Comm" is an abbreviation meaning the common function;
"Cust" is an abbreviation meaning the customer function;
"Dist" is an abbreviation meaning the distribution function;
"Gen" is an abbreviation meaning the generation function, for electric;
"Prod" is an abbreviation meaning the production function, for natural gas;
"Stor" is an abbreviation meaning the storage function, for natural gas; and
"Tran" is an abbreviation meaning the transmission function.
(2) In addition to filing a cost of service study as required in subsection (1) of this section, a party may file a cost of service study based on a system-wide econometric study, a system-wide marginal cost study, or an embedded cost of service study with modifications to the methodologies outlined in Tables 1 through 4 in subsection (3) of this section provided that each modification is explained in narrative testimony and the party shows that each modification materially improves the cost of service study and is in the public interest.
(3) Tables 1 through 4 of this subsection outline the functionalization, classification, and allocation methods required by subsection (1) of this section.
Table 1
Electric Cost of Service Approved Functionalization Methodologies
Functionalization
FERC Account Numbers
Generation
151, 152, 310-317, 330-337, 340-348, 500-515, 535-545.1, 546-557
Transmission
350-359.1, 560-573
Distribution
252, 360-374, 580-598
Customer
235, 901-905, 907, 908* 909-910
Common
920-935, working capital allowance
Gen/Tran/Dist/Cust/Comm
301-303, 403, 403.1, 404-407
Gen/Tran/Dist/Comm
105, 107, 108, 111, 154, 165, 281, 282, 389-398
Allocate based
on subaccount
182.3, 253, 254
*Expenses included in account 908 that are related to conservation must be functionalized as generation related.
Table 2
Electric Cost of Service Approved Classification and Allocation Methodologies
Functionalized Cost
Classification Method
Allocation Method
Generation
Renewable future peak credit with net power costs allocated on energy
Load net of renewable generation, using 12 coincident peaks. Net power costs are allocated using annual energy usage at the point of generation.
Transmission
Demand
12 coincident peaks.
Distribution Substation
Demand
Direct assignment to large customer classes based on load ratio share of substations they are fed from; for this allocator only, the utility may determine "large customer."
 
 
All other classes use an average of the relative share of the summer distribution system coincident peak and the relative share of the winter distribution system coincident peak.
Distribution Line Transformers
Demand
Secondary customers directly assigned where practical. All remaining costs are allocated using a relative ratio of transformers at current installation costs.
 
 
Allocation to the lighting class(es) may be based upon its proportion of noncoincident peak to the sum of noncoincident peaks for all secondary voltage customers.
Distribution Poles and Wires
Demand
Primary system customers are allocated using the same method as distribution substation, where practical. When not practical, allocate using 12 distribution system noncoincident peaks.
 
 
Secondary system customers are allocated using 12 distribution system noncoincident peaks.
Service Lines
Customer
Average installed cost for new service lines multiplied by customer count relative to total installed cost.
Meters
Customer
Average installed cost for new metering multiplied by customer or meter count.
Customer Service/Billing
Customer
All costs assigned by weighted customer counts.
Administrative & General and General Plant
Depends on functionalization of account
Property insurance and property taxes based on allocated plant; pensions and employee insurance based on salary and wages; FERC fees based on energy; revenue-based fees allocated by class relative share of total revenue.
 
 
The remainder of administrative & general and general plant costs shall be allocated as deemed appropriate. An explanation of the allocation method used must be included in testimony.
Intangible Plant
Depends on functionalization of account
Each type of intangible and amortization in a separate account, allocated using appropriate factors. A materiality threshold of 0.5% of intangible plant will be applied.
Table 3
Natural Gas Cost of Service Approved Functionalization Methodologies
Functionalization
FERC Account Numbers
Production
800-813
Storage
350-356, 352.1, 352.2, 352.3, 814-826, 830-837, 840-843, 842.1-842.3, 843.1-843.9
Transmission
365.1, 365.2, 366-371, 850-867, 870
Distribution
374-387, 871-881, 885-894
Customer
901-905, 907, 908*, 909-910
Common
920-935, working capital
Prod/Tran/Dist/Stor/Comm
101.1, 104-108, 111, 114, 115, 117.1-117.4, 165, 182.3, 186, 190, 228.1-228.4, 229, 235, 252, 253, 255, 281-283, 301-303, 389-398, 403
Allocate based
on subaccount
182.3, 254
*Expenses included in account 908 that are related to conservation must be functionalized as production related.
Table 4
Natural Gas Cost of Service Approved Classification and Allocation Methodologies
Functionalized Cost
Classification Method
Allocation Method
Distribution Mains
Demand
Direct assignment of distribution mains to a single customer class where practical. All other costs assigned based on design day (peak) and annual throughput (average) based on system load factor.
Transmission Main
Follows distribution mains
Follows distribution mains.
Distribution Assets
Follows distribution mains
Follows distribution mains.
Storage
Determined on a case-by-case basis
Costs classified as balancing are allocated to all customers based on winter sales.
 
 
All remaining costs are allocated to sales customers with a ratio based on average winter sales that exceed average summer sales.
Services
Customer
Allocated to customer class based on the class average service installation cost.
 
 
Large customers are directly assigned based on a special study; for only this allocator, it is up to the utility to determine "large customer."
Meters
Customer
Average installed cost for new metering multiplied by customer or meter count.
Customer Service/Billing
Customer
All costs assigned by weighted customer counts.
Administrative & General and General Plant
Depends on functionalization of account
Property insurance and property taxes based on allocated plant; pensions and employee insurance based on salary and wages; FERC fees based on energy; revenue-based fees allocated by class relative share of total revenue.
 
 
The remainder of administrative & general and general plant costs shall be allocated as deemed appropriate. An explanation of the allocation method used must be included in testimony.
Intangible Plant
Depends on functionalization of account
Each type of intangible and amortization in a separate account, allocated using appropriate factors. A materiality threshold of 0.5% of intangible plant will be applied.
[Statutory Authority: RCW 80.01.040, 80.04.160 and chapter 80.28 RCW. WSR 20-15-024 (Docket UE-170002 and UG-170003, General Order R-599), § 480-85-060, filed 7/7/20, effective 8/7/20.]