COMMONWEALTH OF KENTUCKY

BEFORE THE PUBLIC SERVICE COMMISSION

In the Matter of:

ADJUSTMENT OF RATES OF KENTUCKY-AMERICAN WATER COMPANY

} CASE NO. 2008-00427)

COMMISSION STAFF'S FIRST SET OF INFORMATIONREQUESTS TO KENTUCKY-AMERICAN WATER COMPANY

Kentucky-American Water Company ("Kentucky-American" ), pursuant to 807 KAR

5:001, is to file with the Commission the original, one paper copy and one electronic copy

of the following information, with a copy to all parties of record. The information requested

herein is due on or before either 14 days after the initial submission of the rate application

nr 28 days after the date of this data request, whichever is later. Responses to requests

for information shall be appropriately bound, tabbed and indexed. Each response shall

include the name of the witness responsible for responding to the questions related to the

information provided.

Each response shall be answered under oath or, for representatives of a public or

private corporation or a partnership or association or a governmental agency, be

accompanied by a signed certification of the preparer or person supervising the preparation

of the response on behalf of the entity that the response is true and accurate to the best of

that person's knowledge, information, and belief formed after a reasonable inquiry

Kentucky-American shall make timely amendment to any prior responses if it

obtains information which indicates that the response was incorrect when made or, though

correct when made, is now incorrect in any material respect. For any requests to which

Kentucky-American fails or refuses to furnish all or part of the requested information,

Kentucky-American shall provide a written explanation of the specific grounds for its failure

to completely and precisely respond.

Careful attention should be given to copied material to ensure that it is legible. When

the requested information has been previously provided in this proceeding in the requested

format, reference may be made to the specific location of that information in responding to

this request, When applicable, the requested information shall be separately provided for

total company operations and jurisdictional operations.

t. a. Provide a copy of the workpapers and calculations that Kentucky-

American used to develop its forecasted test-period financial information.

b. State all assumptions that Kentucky-American used to develop its

forecasted test-period financial information

2, Provide a copy of all Kentucky-American internal accounting manuals,

directives, policies, and procedures.

3, Provide a complete copy of all Kentucky-American budget instructions,

assumptions, directives, manuals, policies and procedures, time lines, and descriptions of

budget procedures.

4. a. Provide a comparison of Kentucky-American's monthly operating

budgets to the actual results, by account, for each of the following calendar years: 2004,

2005, 2006, and 2007. Kentucky-American's response shall include comparisons for the

following major expense categories:

(1) Fuel and Power Expense,

(2) Chemical Expense.

Case No 2008-00427

(3) Management Fee Expense.

(4) Customer Accounting Expense.

(5) General Office Expense.

(6) Miscellaneous Expense.

(7) Maintenance Expense.

b. Provide, for each yearly account variance that exceeds 5 percent, a

detailed explanation for the variance.

5. Provide a reconciliation and a detailed explanation of each difference, if any,

in the capitalization and the net investment rate base of Kentucky-American for the base

period.

6. Provide a rate base, capital structure, and statement of income for Kentucky-

American for the most recent actual 12-month period at the time of the company's

application for rate adjustment and for the base period used in the company's application.

Provide detailed explanations necessary to reconcile this information with the filed base

period revenue requirement information.

7. Describe the process that Kentucky-American uses to plan and approve

construction projects

8. Provide Kentucky-American's long-term construction planning program in

effect as of the date of the filing of Kentucky-American's application.

9. a, For each construction project that Kentucky-American has

commenced from January 1, 1999 through December 31, 2008, provide the information

listed below in the format contained in Schedule 1:

Case No. 2008-00427

(1) Project number.

(2) Project title and description.

(3) Annual actual cost.

(4) Annual original budgeted cost.

(5) Variance between annual actual cost and annual original

budgeted cost in dollars

(6) Variance between annual actual cost and annual original

budgeted cost as a percentage

(7) Percentage of total construction budget that proposed project

comprises for the budgeted year.

(8) Total actual project cost.

(9) Total budgeted project cost.

(10) Variance between total actual project cost and total budgeted

project cost.

(11) Date the original budget projected the project to start.

(12) Date the original budget projected the project to be completed,

(13) Date construction of project actually commenced.

(14) Date construction of the project was actually completed.

b. For each project in which a variance between actual and budgeted

cost occurred or in which a delay in its start or completion occurred, describe the variance

or delay and the reasons for such variance or delay.

c, Provide a copy of the construction budget variance information

requested in Item 9(a) on a computer disk in Microsoft Office Excel format.

-4- Case No. 2008-00427

10. Provide, in the format provided as Schedule 2, an analysis of the

Construction Work in Progress as defined in the Uniform System of Accounts for the 12

months preceding the base period, the base period, and the forecasted test period.

11. For each construction project listed in Kentucky-American's response to

Item 10, provide the information listed below in the format contained in Schedule 3:

a. Project number.

b. Date on which construction began.

c Estimated date of project completion.

d. Time elapsed since the beginning of construction as a percentage of

total estimated time of construction.

e. Original budget estimate of project's cost

f. Most recent budget estimate of project's cost,

g, Total expenditure on project.

h. Total project expenditure as percentage of total budgeted estimate.

12. Provide a copy of all schedules presented in the cost-of-service study,

electronically, in Microsoft Office Excel format, allowing for the review of and unrestricted

access to the underlying formulas.

13. a Provide Kentucky-American's budgeted and actual regular wages,

overtime wages, and total wages by employee group, by month, for the most recent 2

years available in the format provided as Schedule 4. Kentucky-American shall

supplement its response as further information becomes available.

b, For each variance that exceeds 5 percent in a monthly period, state

the reasons for the variance.

-5- Case No. 2008-00427

14, Provide a complete copy of all wage, compensation, and employee benefits

studies, analyses, and surveys that Kentucky-American has conducted, commissioned, or

used.

15. State for each employee group the amount, percentage increases, and

effective dates for general wage increases and, separately, for merit increases granted for

calendar years 2005, 2006, and 2007, the base period and the forecasted period.

16. a. Provide complete details of all early retirement plans or other

employee reduction programs that Kentucky-American or Amedcan Waterworks Company

("American Waterworks" ) intends to offer to its employees during the base period and the

forecasted test period.

b. For each program listed above, provide all cost-benefit analyses or

studies upon which the program is based.

17. a. List all fringe or other employee benefits available to Kentucky-

American employees and indicate which benefits, if any, are limited to management

employees.

b. For each benefit listed above, state the expected cost of each benefit

in the base period and the forecasted test period and its historical cost for each of the 2

years preceding the base period.

c. List each change in fringe or other employee benefits or the availability

of such benefits that has occurred within 2 years of the start of the base period.

18. List separately the budgeted and actual number of full- and part-time

employees by employee group, by month and by year, for the 5 years immediately

preceding the base period, the base period, and the forecasted period.

Case No. 2008-00427

19. Provide a detailed description of each Other Post-retirement Employee

Benefits package that Kentucky-American or American Waterworks provides to Kentucky-

American employees,

20. Provide all employment contracts between Kentucky-American and its non-

management employees that are currently in effec:t and the most recent contracts

previously in effect.

21 Provide a complete copy of each group medical insurance policy that

Kentucky-American currently maintains for its employees.

22. a. Provide for each major functional plant property group or account in

the format shown in Schedule 5:

(1) Plant beginning balances

(2) Plant ending balances.

(3) Gross additions occurring in the forecasted test period.

(4) Retirements occurring in the forecasted test period.

(5) Transfers for Kentucky-American occurring in the forecasted

test period.

b. Provide, for any account in which transfers regularly occur in the

normal course of business, a general description of the nature of the transfers.

23. Provide in the format shown in Schedule 6 for each property leased to the

utility or improvement to leased property;

a. An identification or reference number.

b. A description of the property's type and use.

c. The name of the lessor

Case No. 2008-00427

d. The frequency of lease payments.

e. The amount of each lease payment.

f. The original value of the property, together with annual lease

payments.

g. An explanation nf the method that Kentucky-American uses to

capitalize the lease payment.

24. Provide in the format shown in Schedule 7 for each property held for future

use:

a. A description of the property

b. The date of its acquisition.

c. Its original cost.

d. Its accumulated depreciation.

e, Its expected in-service date.

f. Its expected use.

25. Provide the information in the format listed in Schedule 8 regarding Certain

Deferred Credits, Accumulated Deferred Income Taxes, and Other Rate Base items

included in the forecasted test-period rate base.

26. Provide the following (original cost) monthly account balances and a

calculation of the average (13-month) account balances for the total company and

jurisdictional operations;

a, Plant in Service.

b Plant Purchased or Sold.

c. Property Held for Future Use.

-8- Case No 2008-00427

d. Construction Work in Progress ("CWIP"), (Separate this balance into

CWIP eligible for capitalized interest and other CWIP.)

e. Completed Construction Not Classified,

f. Accumulated Depreciation and Amortization,

g. Plant Acquisition Adjustment.

h. Amortization of Utility Plant Acquisition Adjustment.

i Materials and Supplies.

j. Balance in Accounts Payable Applicable to each account in (i) above

(If actual cannot be determined, give reasonable estimate.)

k. Unamortized Investment Tax Credit - Pre-Revenue Act of 1971.

I. Unamortized Investment Tax Credit - Revenue Aci of 1971.

m. Accumulated Deferred Income Taxes.

n. Summary of Customer Deposits.

o. Computation and Development of Minimum Cash Requirements.

p. Balance in Accounts Payable Applicable to amounts included in utility

plant in service. {Ifactual cannot be determined, give reasonable estimate.)

q. Balance in Accounts Payable Applicable to prepayments by major

category or subaccount.

r Balance in Accounts Payable Applicable to amounts included in piant

under construction. (If actual cannot be determined, give reasonable estimate )

s All Current Assets and Current Liability Accounts not included above.

9 Case No. 2008-00427

27. Provide a calculation of federal and state income tax expense, including a

reconciliation of book to taxable income for the base period and the forecasted period, in

the format shown in Schedule 9.

28, Provide a trial balance as of the last day of the base period showing account

number, account title, and actual base period accounts. All income statement accounts

should show activity for 12 months.

29. a. State the date on which Kentucky-American implemented Statement of

Financial Accounting Standards No. 109, "Accounting for Income Taxes,"

b. State the effect(s) on Kentucky-American's financial statements as a

result of implementing Statement of Financial Accounting Standards No. 109.

c. State whether the base period or forecasted period includes any effect

of the implementation of Statement of Financial Accounting Standards No. 109.

d. If Kentucky-American's base period or forecasted period includes any

effect of the implementation of Statement of Financial Accounting Standards No. 109,

describe each effect in detail.

30. a. State whether Kentucky-American's 1989 service contract with the

American Waterworks Service Company ("Service Company" ) has been modified,

amended, or replaced,

b, If the 1989 service contract has been modified, amended, or replaced,

provide a complete copy of the current service contract and identify the areas in that

contract that differ from the 1989 service contract.

31. a. Provide a copy of all other service agreements and contracts that

Kentucky-American has with any affiliate company

-10- Case No. 2008-00427

b. Describe in detail the pricing policies of Kentucky-American and its

affiliates with regard to afNiate company transactions.

32. a. List and describe each service that any affiliated company renders to

Kentucky-American.

b. For each service listed above, describe the benefit(s), if any, that

Kentucky-American derives from the provision of this service from the affiliate.

33. Provide a comprehensive list and detailed description of the services that

Kentucky-American has provided to any affiliated companies.

Stephanie StumbExecutive Direc r

Public Service .ommissionP,O. Box 615Frankfort, KY 40602

DATED ocTQBER 15, 200s

cc: Parties of Record

Case Nn. 2008-00427

02 00CD0

Ql

D 0CDD!

(Dn

On 00DI C C

Ql CQ

Ql

QI

0ID

CID

ID

0CD

(0CL (2S

000CD

Oo0I/I (Dn

0cQl

0I 0 >c

0 ~(D (D

D 0

! ']X((0 QI

(D ~ ~ CQ

D O=CD

O

z(Q-o ~)

CL Vl

N I-LR. -0

CL

OQl

I

O

O

13O(0OI/I

OI/D (DCD

+OO O

CD P

CD OW QIM D

O0 0I/I CD

n

0

I/l

Ql

nCD

(0mcCL Co

CD

0D

Co QI

CDID

$ 0 M

(D (D (DI/IQI CZC> (D

I/C(D

0( nID

Ql

mn DQl

CL CQl (D

ITI

0ID

0 QGl

I

m0ID

0Gl

5CL

(D0n0VlV»

0050mVl

UZI0 5m

(D 2 TI0 p

(DCl

CD

00

n0Ul

2n0

nID

mHID

N(DCL

IlCICn—

CL

(Dn

0» Gl

p 0mU»

nno—DGln—0

Cl03ID

IDCL

n0Vl

0TD R~(D DD

0

I g3Z(R Dl

0 VI

-v

(Dz~

0 VI

CD 0-CL -g

~ CL VI

0Vl

200

U0

(Ct

CDVI

OG>

(D

ZC0 n

CD 0GL (DM 0

o n (0 0m

(U

+m

n -0 -0 ITIOmp.m

Cn UtGlmpn---m m

(DCL

I "U CO

0 (09'D

(D CD

V(UI Cmo 0UI00VI

0(D

03

000.GC(D

ODl

0CL

00X'O(D

CL

(DiD

n0CL

tO

"TI

CC3n

DZ I

0tD

Zo0(33(Dn

0n~

(330to

ID

n0CD O20

n~m0'(D 5(D n DI

0

m——(D o 0ma TD 0

(D(D 0(DGL

ITI (33 Q0 OO

~tn 00.Dl (D DI

Gl

m (33 Z ZODt 0 (D

G3 5(0 (D R(D Gl

(D

O TD~~ (D D3

T3 0

I gjXl(0 DI(D

(D

(3 OO'D0 0Z (0

0„(D

m 0-0. -0

A0QI

20CD

0 0

00

CO(

CD(/II/I

"0CD

0CD

C)020CD

AGI CD

(D

O0 0IL303 POD

CD

O 0O n33. D3

ITI —I3C 0'0(D ID

-o. (3

00(D

G! nVl

m(D

0OonCL DI

G3

0Ul

g 'Tl C/3

(D CD(D(D 0CD

~ ~ Gl

(D

"00GI

V'I

GD m2Q

13 Q(CD

CD

0 ~CD

Ogl

CD

ZCHCD

n QCD

z co0

CD

Q

nQDl

CD

0RU

DI'(0

Dl

Dl

nCD

ID

CD

M

AV> CD

CD

ZO0 Q.

CO pCO gV CD

CO cDW DltV

CD

cQ (ID

ID

nQ CD

CD

nCD

Dl

P Tl CO

0 CO

g CD CD

CD~~CCD

~ ~ CD

CD ~A00

0CD

Z I

0CD

0

:I nCD 00

OI OIDl

CD

DI—CO

08IO

00

g+O05 Rm

g)%CO CD

m

CD OP)CD 0 3ZO

Tl

(A

m 0-m-C3

z~ Q0VICD

3>CLOL

Avl m

ID m 0ZZcmon

O PCD CO ~

(DO 0

VI OCD

DI

Vl

Vl

0 mIC

I ODI

N DI

(D

Vl

00ID nO. 000

cD miDl

CL

00 IOCD

ID

N

Xl(D0IDNN

0ID

0Vl

P U I(0

m (D m

N 0~ ~mm x CtlN'00

0(D

0m

Dl

IDoCD

ID

CDIll

3ID

mCCC

00ao"CD

02Ul

CDCL

0 am

0cc ID

n'Dl

m 00CD

mamCnDIm

o oU o

m v0CD

Q—

I O0 ~

m cD

g O

CD

CD CCI

CDO

Z CO

Ct

CD O-FL 0

~0

0 Tl

DlV 0m

m n

ICDDl

CD

~ 0IDv3 om

0 —r0+ CD

CD—CD

A 0-03 Q0 M0 0

OCCC CDCD

Z C

C>

3CD

CO 0Dl

0 < IO+om0oo cID m

m o".a va

CD xO CD

NID Dl

00 a00

U ICO

CDCD CD

~ CLCCI

0

m ~G)M"00CD

O"

CD

Cl 3W

Gl Vl

0

CD C-l

0 ~0-5Dl

U >«D Cl0«Dn9

«D

0 Gl0

nOz0 -«DVl «0-5

Dl

00

Z > «Don~«DDl

N«D«L

CD0Vl0

0

~0 0«o «D

0 «D- r n0 0'0 n~«D Dl

Y. 0

g —I O

0 5 B,CD

0 0

I

Z«g CD

CD" «D

Gl

CL

CD 0-FL -g

U

0'0CD

"«D0~ CL

Tl0

CD

C«DCD

O0CL«DCL

ZID

CD

03«DVlCD

n«D CD

CD

00

O +3CDOO 0

W CD

ho 0

000

z>0 n

GlVtCl

0

mX00V«DVl

Cl0«D«L

P UCO

«0g Gl CD

«D 0Vl

~ ~ CD

CD ~~00I<ZCD

Ul0TG

0Cl.(D

ID

O000(DGlntDO.

(0

ID

CL

ID

01

CLGl

M(DCl

0

CD

0

ID

tn01

Gl

ID

DID

ID

0ID

n0CLm

OOGl Gl

(tt (60 0m Gln n

Dl Dl0CL CL

Ul IU

Ul thID GlO "0Dl ID

D( (D

Gl ID

0 ct'm

(0 kI N

Dl IDX CL

(0 OCD

mOI ID

nUl

0) (D

0 0KO

~O0

(DGl

ID

(Dan0ID

K~N XDl m

ID0

+ (0 IO IOA CO-G-I

VlhlXm O OI (m S~U~U

CL Gl

O 0CL 0

unGl

ID

m

00'0Gl

GGGlm tn

tn 3M m

mXo

(Uo m

n ='D

CL

O O0 Ctll

00'l0 N

NCL

m5

a nIDUl

O 0g n020 Ul

00

Z I0

GI

n0C3

0

CIGlIAn00

0 GO RX- G) PI0 0

I

D)CD

UlCD

Q I

(D LL CL0

Z (CI

TI

8 CLCL -0

QCD

D)

0OtD

D CDUI CL

0 OCD

CL

NID

CL

00

ID

Gl0.UCD

CDCL

003CD

IDX(D

Q(G (D(D

Z <0 n

OO gO

(DOO 0GX DlILD 0

0 CO

(0Q'D

(D CD

UlCLCUl

~ ~ (D

~ CO

UI00UI

0ID

GlO.C,(DVl

Vl

0CCL

O'l

Cl0

Gl

mCL

5CD

(D0.Gl

Ql

m

CL

I/I

CD

nDl

nC!D

0

CD Ol

lt Qm

mGl

ID

N

m

n0 0PJX O

tID

U'lii

~O ~O ~O ~OO o O

CD

300-4

Ql 0X mID0'Im (D

0n0 03(D (0

m

3

Q ttt5 n(D (D

IO(O

(D 000Ql0, x,

0(0

G!

0IO

0mID

nmn

m

0.0'/I

030 Dl

0 x m

m nm

CD Ql0 Ql

ID mVlGl

0m'0IDn(D

0

0(D 'O0 m0

ICI

CO

n(D O

0/m

m

n0CD

Ql

CDtO

0IDIOn'00

CL

Vl

3CD

Vl

(0nmCLCGl

(0

D»

0C

CD

Ql

.'Dth

g -I O0 GOX- CD (D

0 0

I 'j»O (0 QD

n 0-.0) 02<(o

CL C/I

Dt

0 0-CL -0

CLC

Gl~ CL0 (

C(0

GI gn

DO

g 00 (D

OCA Gl(D

2 Co n

O PCO 2Oo nW (DM

CL(O C

I/I

GlCL

3»O.CVl

3m

Vl D»

"00

I 0 I~ (0CD

CD (D

~ CLVt

~ ~ (D

CD

00

0(D

0((D

n0(D

QtXCD

C/Im'0D!

Gl

V!nmCL

(DMVl

0C

Cl'!

003(DG!CD

O.

(D

eC!.(D

ID

Dl

O.I/I

(D

nD!n0Dl

0

3

N 3D! Gl

00 Dl

Xn

0 eCL

-Ceee

-I'n

CD mZ

0m~g Gl

Dl0 m x0 a m

M

n03Gl

RXGlM

tDM0

tCI

03

UGl

0 m

Iv'

0O0

"g (D

-I0

~V(D

CD(Tl

mXCl

m M

n M

DI O

O Dxn0Gl

(D

eCL

0CD

Dl

ICl

m

IL! hJ0

ID IDX XUJ

nGl(0ID

mm

e CL

0 OGl(DGl

m0Dl

D!

0 0

CD

CI II(D Glam

m LD 3m

(Gn Dl

(D ID3 xG!

n0 G!

3 o,IAm Vl

—ImX(DM

O0Gl

0mVln

GD

0

CID—a0I/I

.'DCL

O.0MRl3Gl

I/!

0)O

G!CL0m

I(D

n0e

Dl

mV!

04 (D

X(D (D

0 0

I CgZ(0 CD

CD~ ~ CD

CD

CD OD0

Z (CI

rloCo

G! 0.CL ~

Za

CL0(D

(DCL

0

G! I~ CI

g 00 (D

(DCD

Z 00 0

I

CD OGL E

CL(0 0

M(D

V!C!.

M

3m

Vl 00'00mCL

Ill

$ GOD

g CD CD

(G DnaVl~~(DCD OD (0'00

0'D

C"0CD

xCD

(DVI

CI)(D0hl

(D

(U0GlCL0(DNUl

00CLO(D

n03'0(D

(DCL

CD

(DCLGl

ID

hl

CLN

(D

nID

n0ID

0

-L 0CO

ID+Ld ~OO

CLSDl

(D

n03(D

D)XGlUl

I(d)

0Gl

UGl

3(DCL

n030D)XSUt

CD (2

D)

(D x'C

(D

IDUf

CG"0(Dn"CID

CL

U)

(IDIU

Gl

IDXCD

0CL

z

Z I0Gl

C~ Dl

O.C(U

IDCL

CL

Dd N

Gl

Ul

O)

GtCLI: I

+HO0 5 Rm Q)

0 0

g)XIIQ Q)(D ~ ~ (D

0 O=CDn

z (Q

(0

m I:LCL

Q.

U)

CD~ 00 (

C~ U)(D

DO~ n

g 00 Q)

mmnn

2 (:) >—O gm0~mP„Oo n

Q)

CL0N

[

(D

G)

n0G)

Q)X(DN

00"00N(DCL

ID

E

0 I(0

CDCD CD

(o 0U)

~ ~ CD

m 0)(0(U00

0CD