SOUTHERN INDIANA GAS AND ELECTRIC COMPANY d/b/a …...ATTACHMENTS JCS-1 THROUGH JCS-2. Petitioner’s Exhibit No. 3 Cause No. 44909-CECA 2 Vectren South Page 2 of 15 DIRECT TESTIMONY

Petitioner’s Exhibit No. 3 Cause No. 44909-CECA 2

Vectren South Page 1 of 15

SOUTHERN INDIANA GAS AND ELECTRIC COMPANY d/b/a VECTREN ENERGY DELIVERY OF INDIANA, INC.

(VECTREN SOUTH)

IURC CAUSE NO. 44909-CECA 2

DIRECT TESTIMONY OF

J. CAS SWIZ DIRECTOR, REGULATORY AND RATES

ON

PROPOSED CECA REVENUE REQUIREMENT THROUGH DECEMBER 31, 2019 AND PROPOSED CECA RATES AND CHARGES

SPONSORING PETITIONER’S EXHIBIT NO. 3, ATTACHMENTS JCS-1 THROUGH JCS-2

thornNew Stamp



DIRECT TESTIMONY OF J. CAS SWIZ

I. INTRODUCTION 1 2

Please state your name and business address. 3 A. My name is J. Cas Swiz. My business address is One Vectren Square, Evansville, 4

Indiana 47708. 5

6

Q. By whom are you employed? 7 I am employed by CenterPoint Energy, Inc. (“CenterPoint”). Southern Indiana Gas and 8

Electric Company d/b/a Vectren Energy Delivery of Indiana, Inc. (“Vectren South” or “the 9

Company”) is a subsidiary of CenterPoint. 10

11

What position do you hold with Petitioner Vectren South? 12 A. I am Director, Regulatory and Rates of CenterPoint, the immediate parent company of 13

Vectren South. I hold the same position with two other utility subsidiaries of 14

CenterPoint—Indiana Gas Company, Inc. d/b/a Vectren Energy Delivery of Indiana, Inc. 15

(“Vectren North”) and Vectren Energy Delivery of Ohio, Inc. (“Vectren Ohio”). 16

17

Please describe your educational background. 18 A. I am a 2001 graduate of the University of Evansville with a Bachelor of Science Degree 19

in Accounting, and a 2005 graduate of the University of Southern Indiana with a Masters 20

of Business Administration. 21

22

Please describe your professional experience. 23 A. From 2001 to 2003, I was employed by ExxonMobil Chemical as a Product and 24

Inventory accountant. Since 2003, I have been employed with VUHI in various 25

accounting capacities. In 2008, I was named Manager, Regulatory and Utility 26

Accounting, and in November 2012, I was promoted to Director, Regulatory 27

Implementation and Analysis. In August 2015, I was name Director, Rates and 28

Regulatory Analysis. I was named to my current position in February 2019. 29

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What are your present duties and responsibilities as Director, Regulatory and 31 Rates? 32

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A. I am responsible for the regulatory and rate matters of the regulated utilities within VUHI 1

in proceedings before the Indiana and Ohio utility regulatory commissions. I also have 2

responsibility for the financial analysis and implementation of all regulatory initiatives for 3

VUHI’s utility subsidiaries, as well as, the preparation of accounting exhibits submitted in 4

various regulatory proceedings. 5

6

Are you familiar with the books, records, and accounting procedures of Vectren 7 South? 8

A. Yes, I am. 9

10

Are Vectren South’s books and records maintained in accordance with the 11 Uniform System of Accounts (“USOA”) and Generally Accepted Accounting 12 Principles (“GAAP”)? 13

A. Yes. 14

15

Have you previously testified before this Commission? 16 A. Yes. I have testified before the Indiana Utility Regulatory Commission (“IURC” or 17

“Commission”) on behalf of Vectren South in support of its Clean Energy Cost 18

Adjustment (“CECA”) mechanism under Cause No. 44909. I have also testified before 19

the Commission on behalf of Vectren South and Vectren North in its Gas and Electric 20

TDSIC proceedings, Cause Nos. 44429, 44910 (Vectren South), and Cause No. 44430 21

(Vectren North). I have testified on behalf of Vectren South and Vectren North in its Gas 22

Cost Adjustment (“GCA”) proceedings Cause No. 37366 (Vectren South) and Cause No. 23

37394 (Vectren North) and on behalf of Vectren South in its Fuel Adjustment Clause 24

(“FAC”), Cause No. 38708. I have also testified before the Public Utilities Commission of 25

Ohio on behalf of Vectren Ohio. 26

27

What is the purpose of your testimony in this proceeding? 28 A. I will support Vectren South’s request to implement the CECA mechanism as proposed 29

originally in Cause No. 44909, and modified under Cause No. 45086, for timely recovery 30

of costs incurred during the construction and operation of four solar and storage projects 31

(“the projects”) as previously approved by the Commission in Cause No. 44909 on 32

August 16, 2017 (“44909 Order”) and Cause No. 45086 on March 20, 2019 (“45086 33

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Order”) under Ind. Code Ch. 8-1-8.8 (“the Statute”). These costs include depreciation 1

expense, post-in-service carrying costs (“PISCC”), taxes, and operation and 2

maintenance (“O&M”) expenses. I will explain and support the CECA revenue 3

requirement calculations for costs incurred through December 31, 2019. 4

5

I will also support the adjustment to the authorized net operating income (“NOI”) utilized 6

in the FAC earnings tests, in accordance with Ind. Code § 8-1-2-42(d) and § 8-1-2-42.3, 7

to reflect the return earned through the proposed mechanism. 8

9 Finally, I will support the CECA rates and charges and request approval for the costs 10

incurred during the period January 1, 2019 through December 31, 2019 (“Reconciliation 11

Period”) to be recovered in the CECA, with such rates and charges approved in this 12

proceeding implemented no earlier than June 1, 2020 and remaining in effect until 13

replaced in a subsequent CECA filing. 14

15

Are you sponsoring any exhibits in this proceeding? 16 A. Yes. I am sponsoring the following exhibits in this proceeding: 17

Petitioner’s Exhibit No. 3, Attachment JCS-1: CECA Revenue Requirement and 18 Rate Derivation, Schedules 1-12 19

Petitioner’s Exhibit No. 3, Attachment JCS-2: Proposed CECA Tariff Sheet, Pages 20 1 and 2. 21

22 Were these exhibits prepared by you or under your supervision? 23

A. Yes, they were. 24

25

26

II. BACKGROUND 27 28

Please summarize the Commission’s findings in the 44909 Order. 29 A. The 44909 Order approved Petitioner's solar and battery energy storage system 30

(“BESS”) facilities as "clean energy projects" pursuant to Ind. Code § 8-1-8.8-3 and 31

timely recovery of project costs through the CECA mechanism under Ind. Code § 8-1-32

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8.8-11. The clean energy projects include: a 2.0 MWac ground mounted solar facility 1

located at US Highway 41 north of Evansville that includes a 4 MWh BESS (“Highway 41 2

Facility”); a 2 MWac ground mounted solar facility on land leased from the City of 3

Evansville (“Evansville Urban Facility”); and a rooftop based solar generating facility of 4

approximately 300 kWac in conjunction with approximately 400 kWh of BESS at the 5

Urban Living Research Center (“ULRC”). 6

7

The Commission approved the following cost estimates for the projects: $8.8 million for 8

the Highway 41 Facility; $5.4 million for the Evansville Urban Facility; and $2.0 million for 9

the ULRC, for a total cost estimate of $16.2 million. Vectren South will provide 10

justification establishing the reasonableness of any cost that exceeds the approved 11

facility cost estimate, subject to Commission approval. 12 13

Finally, Vectren South is authorized to utilize the proposed depreciation rates for the 14

approved facilities and flow any net proceeds from sales of Renewable Energy Credits 15

(“RECs”) through the CECA, as discussed later in my testimony. 16

17

Has the Commission approved any updates to the cost estimates for the three 18 initial projects? 19

A. Yes. In Cause No. 44909-CECA-1, the Commission approved an update to the estimate 20

for the Evansville Urban Facility. The current approved estimate is $5.9 million. 21

22

The 45086 Order approved the Stipulation and Settlement Agreement in Cause No. 23 45086 (“45086 Settlement”) modifying the CECA to include recovery of an 24 additional solar project. Is Vectren South including in its request any costs 25 related to the pending solar project in the 45086 Order? 26

A. No. Construction on the solar project approved in the 45086 Order is not yet complete. 27

Until such time as the solar project is complete, in-service, and generating electricity, 28

Vectren South will not include costs associated with this project within the CECA. 29

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III. RATEMAKING AND ACCOUNTING TREATMENT 1

2 Q. Please explain the specific ratemaking and accounting treatment Vectren South is 3

requesting in this case. 4 Consistent with the approval of the 44909 Order, Vectren South is proposing the 5

following ratemaking and accounting treatment, beginning June 1, 2019, in accordance 6

with the statutes previously discussed: 7

1. Authorization of the eligible revenue requirement amounts as of December 31, 8

2019 for the CECA of the amounts associated with: 9

a. costs on projects in service as of December 31, 2019 10

b. post-in-service carrying costs (“PISCC”) 11

c. deferred CECA-related expenses, projected incremental depreciation, and 12

property tax expenses 13

d. amortization of investment tax credits 14

2. Recovery via the CECA of eligible revenue requirement amounts as of December 31, 15

2019. 16

17

Is Vectren South requesting construction work in progress (“CWIP”) ratemaking 18 treatment for the proposed projects in this proceeding? 19

A. No. Vectren South is not requesting CWIP ratemaking treatment through the proposed 20

CECA. During the construction phase of each project, Vectren South accrued an 21

allowance for funds used during construction (“AFUDC”) to reflect the cost of borrowed 22

or invested funds, both debt and equity, used to finance the construction of the proposed 23

projects. In accordance with GAAP requirements, AFUDC amounts were recorded and 24

capitalized as part of the total cost of the project. Vectren South continued to accrue 25

AFUDC on the proposed projects until such time as they were placed in service. Once 26

the proposed projects were placed into service, AFUDC ceased and Vectren South 27

began accruing PISCC deferrals, calculated at its WACC, until such time as the project 28

investment expenditures were included for recovery in Vectren South’s CECA (June 1, 29

2019). 30

31

How does Vectren South propose to treat RECs generated by the projects? 32 A. In the event that Vectren South does not require the retention of the RECs to meet 33

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Renewable Portfolio Standard or specific customer requirements, RECs associated with 1

the output of the proposed projects will be monetized through market sales with all 2

proceeds from such sales reflected as a credit to be passed back to customers via the 3

annual CECA filing. In the future, if Vectren South becomes subject to a Renewable 4

Portfolio Standard or other regulatory requirement, the RECs may be retained and used 5

by Vectren South in order to satisfy such requirements. 6

7

Did Vectren South sell any RECs during the Reconciliation Period? 8 A. Yes. Vectren South sold 2,772 RECs generated by the Highway 41 Facility for $29,013 9

and 2,573 RECs generated by the Evansville Urban Facility for $27,143. The net 10

proceeds from these REC sales are being passed back to customers over twelve 11

months in this CECA-2 filing. 12

13 14

IV. REVENUE REQUIREMENT 15 16

Please generally explain how the CECA revenue requirement was calculated in 17 this filing. 18

A. The revenue requirement is shown on Schedule 1 and includes the return on capital 19

investment, incremental property tax, depreciation, and O&M expenses, as well as, 20

recovery of the regulatory assets recorded through the deferral of O&M expense, the 21

interim deferral of depreciation expense, and PISCC. The total recoverable CECA 22

revenue requirements are allocated to Vectren South’s retail rate schedules using the 23

4CP demand allocation percentages from Vectren South’s last base rate case, Cause 24

No. 43839, as modified in Vectren South’s most recent RCRA, MCRA, and DSMA filings 25

and agreed to within the 45086 Settlement, as shown in the table below. Once the 26

CECA revenue requirements were allocated among the Rate Schedules, Vectren South 27

utilized the projected annualized sales volumes for its retail Rate Schedules to derive a 28

CECA rate per kWh applicable to each Rate Schedule. 29

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Please describe Schedule 1 (Revenue Requirement) of Attachment JCS-1. 31 A. This schedule illustrates the calculation of the proposed revenue requirement Vectren 32

South is seeking to recover in CECA-2. The revenue requirement calculation is divided 33

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on this schedule between the “Return on New Capital Investment”, which calculates the 1

pre-tax return on total net new investment (Lines 1 through 7) and the Incremental 2

Expenses and Credits, which calculates the recoverable expenses, both projected and 3

amortized from previously deferred balances (Lines 8 through 13), the amortization of 4

ITCs (Line 15) and the sale of RECs (Line 16). For CECA-2, the total revenue 5

requirement is $2,006,152. The total on line 17, Column C of Schedule 1 is used to 6

derive CECA rates and charges. 7

8

Please describe Schedule 2 (New Capital Investment) of Attachment JCS-1. 9 A. This schedule supports the Gross New Capital Investment by project and the 10

Accumulated Depreciation related to new capital investments for each project as of the 11

filing date. These cumulative amounts will be reflected on Lines 1-3 of Attachment JCS-12

1, Schedule 1, and utilized in the return on new capital investment calculation. Detail is 13

provided to show these balances, to allow for linkage directly to approved depreciation 14

rates. 15

16

Has Vectren South prepared work paper schedules showing the work order details 17 that support these summarized amounts? 18

A. Yes, CECA-2 includes work paper support by work order, which agrees to the 19

summarized amounts listed on this schedule. A working model of the CECA-2 Revenue 20

Requirement calculations, including work paper support, will be provided to the OUCC 21

and the Commission with each annual filing. 22

23

What types of costs have been included as eligible utility plant? 24 A. Eligible utility plant includes the construction costs of the projects, including engineering 25

and project management, permitting, contractor costs, site preparation, equipment and 26

installation, and other costs approved by the Commission. 27

28

What capitalized overheads have been included in the construction costs? 29 A. An allocation for general oversight, management and administrative costs have been 30

included, consistent with Company policy. Costs associated with accounting, legal 31

services, human resource management, insurance and other similar costs are included 32

as overhead costs that are allocated to construction projects. As described by Vectren 33

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South witness Wayne D. Games, these projects have been primarily managed by an 1

outside contracting firm with appropriate overheads directly charged to each project as 2

appropriate, which limits the amount of overheads expected on these projects. The work 3

papers in each CECA filing segregate the applicable project costs included for recovery 4

into categories of direct costs and indirect capital overheads. 5

6

Has allowance for funds used during construction (“AFUDC”) been recorded on 7 the project construction costs? 8

A. Yes, Vectren South has recorded AFUDC in accordance with GAAP requirements, 9

under the formula specified by FERC accounting procedures. On those projects that 10

have been completed, AFUDC ceased at the date the project was placed in-service. 11

12

Please describe Schedule 3 (Post In-Service Carrying Costs (PISCC)) of 13 Attachment JCS-1. 14

A. This schedule summarizes the calculation of the PISCC balance on investments placed 15

in service but not yet captured for recovery within the CECA. This schedule supports 16

line 4 of Schedule 1, and is utilized in the return on new capital investment calculation. 17

In addition, Schedule 3 determines the recoverable amortization expense on the 18

cumulative deferred PISCC balance, included on line 12 of Schedule 1. The rates 19

utilized to calculate PISCC on eligible investments will be discussed below. 20

21

Please describe Schedule 4 (Pre-Tax Rate of Return/After-Tax PISCC) of 22 Attachment JCS-1. 23

A. Schedule 4 contains two pages. Page 1 calculates the Pre-Tax return used in the return 24

on calculation on line 6 of Schedule 1. Page 2 calculates the After-Tax return used in the 25

PISCC calculation on eligible investments applicable to the CECA from January 1, 2019 26

through December 31, 2019. 27

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As ordered in 44909, the CECA utilizes the actual capital structure at December 31, 29

2019, inclusive of the items captured in the Company’s base rate case capital structure: 30

(1) long-term debt, (2) common equity, (3) customer deposits, (4) cost free capital, 31

including deferred income taxes, and (5) investment tax credits. The balances and cost 32

of debt are based on the actual amounts as of December 31, 2019, and the cost of 33

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equity has been set at 10.4% as approved in Vectren South’s Rate Case Order (Cause 1

No. 43839) and the 44909 Order. The equity component is grossed up for recovery of 2

income taxes, both state and federal, at current statutory tax rates. In addition, the 3

December 31, 2019 weighted average cost of capital will be utilized to calculate PISCC 4

for investments made from January 1, 2020 through December 31, 2020. 5

6

Page 2 reflects the WACC based upon the actual December 31, 2018 capital structure 7

as approved under Cause No. 44909 CECA-1. This rate is used on Schedule 3 to 8

calculate the PISCC on eligible CECA investments starting January 1, 2019 through the 9

earlier of the date the project was placed in-service or December 31, 2019. 10

11

Please describe Schedule 5 (Annualized Depreciation Expense on New Capital 12 Investment) of Attachment JCS-1. 13

A. This schedule supports the annualized depreciation expense utilized on line 8 of 14

Attachment JCS-1, Schedule 1. It is calculated by multiplying the gross new capital 15

investment balance as of December 31, 2019 from Schedule 2, net of retirements, by 16

the depreciation rate applicable for depreciable assets installed for the projects. As 17

reflected on Schedule 5, lines 7-11, the weighted average depreciation rates applicable 18

to the respective classes of plant are based on actual costs incurred through December 19

31, 2019 multiplied by the individual depreciation rate applicable to the FERC utility plant 20

account. Supporting work papers for the calculated depreciation expense will be 21

provided in each filing to the OUCC. 22

23

Over what period is Vectren South depreciating project investments? 24 A. Pursuant to the 44909 Order, the BESS investments will be depreciated over a 10 year 25

life, resulting in a 10% annual depreciation rate. All other investments made within the 26

projects will be depreciated over a period of 25 years, a period anticipated to match the 27

service life of the proposed solar panel assets, resulting in a 4% annual depreciation rate 28

applied to all non-land and non-BESS assets installed as part of the projects. 29

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Please describe Schedule 6 (Amortization of Deferred Depreciation) of Attachment 31 JCS-1. 32

A. This schedule calculates the annualized level of deferred depreciation amortization 33

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expense included for recovery on line 11 of Schedule 1. It is calculated by multiplying 1

the cumulative deferred depreciation balance as of December 31, 2019 by the annual 2

depreciation rate approved in the 44909 Order. This schedule reflects both the balance 3

to be recovered in CECA-2, as well as the remaining balance that will be recovered in 4

future CECA filings. 5

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Please describe Schedule 7 (Annualized incremental O&M) of Attachment JCS-1. 7 A. This schedule calculates the annualized level of O&M, including lease payments for 8

land, and reconciles the prior year actual O&M expense against the projected included 9

for recovery in the CECA revenue requirement. The annualized level of O&M on Line 4 10

represents the expected level of expense that will be built into the annual revenue 11

requirement for the rate effective period. This amount is included on line 9 of 12

Attachment JCS-1, Schedule 1. 13

14

The reconciliation of the prior year O&M expense captures two periods – the period prior 15

to CECA rate implementation, and the period after CECA rate implementation. As the 16

initial CECA rates were not in effect until June 1, 2019, January through May 2019 was 17

deferred for subsequent recovery. This amount will be amortized for recovery over 18

twelve (12) months in the proposed CECA. Starting June 1, 2019, the CECA-1 rate 19

assumed a level of O&M expense that is being reconciled against the actual O&M 20

expense incurred for this period (June 2019 through December 2019). This O&M 21

variance is also included for recovery from (or credit to) customers within the CECA over 22

twelve (12) months. Line 13 represents the total of the deferred amount and O&M 23

variance for this period, and is included on line 10 of Attachment JCS-1, Schedule 1. 24

25

Q. Please describe Schedule 8 (Investment Tax Credit Calculation) of Attachment 26 JCS-1. 27

A. This schedule provides the total amount of Investment Tax Credits (“ITCs”) generated by 28

project. Revenue requirements proposed for recovery through the CECA will reflect 29

credits for the amortization over 25 years of ITCs associated with the solar-specific 30

CECA investments and 10 years of ITCs associated with battery storage CECA 31

investments. In accordance with federal tax normalization rules, ITCs must be deferred 32

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and amortized through income tax expense over the life of the investment. This 1

schedule supports line 15 of Attachment JCS-1, Schedule 1. 2

3

Have the ITC balances reflected on this schedule changed from those presented 4 in CECA-1? 5

A. Yes, the ITC balances reflected on this schedule have been updated to reflect (1) final 6

determination of the credits captured in Vectren South’s tax return, filed in October 2019, 7

and (2) subsequent expenditures in 2019 on the project that were deemed to be eligible 8

for ITC. In the preparation of the 2018 tax return, Vectren South adjusted the gross 9

plant basis for each of the completed projects to remove investments and expenditures 10

that were ineligible for ITC treatment (e.g., interconnection and security investments). 11

The resulting tax basis for each project was also adjusted to capture 2019 expenditures 12

subsequent to the operating in-service date of each of the projects. The total tax basis 13

as of December 31, 2019 was then multiplied by the 30% ITC amount to determine the 14

ITC balance to be amortized (lines 1-6). 15

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Will the ITC balances change in future filings? 17 A. Potentially. Until Vectren South completes its 2019 tax return and finalizes the credits 18

applied in the return, the balances could change as evaluation of the eligible dollars is 19

reviewed. 20

21

Please describe Schedule 9 (NOI Adjustment for FAC Earnings Test) of 22 Attachment JCS-1. 23

A. In accordance with the 44909 Order, Vectren South will adjust its statutory NOI earnings 24

test by increasing its authorized NOI by incremental earnings from approved CECA 25

filings. This schedule calculates the after-tax return on investment that will be added to 26

the authorized NOI by multiplying the net new capital investment from line 5 of 27

Attachment JCS-1, Schedule 1 by the after-tax WACC on line 5 of Schedule 4, Page 1. 28

Effective with the approved rates in this Cause, Vectren South will adjust its authorized 29

NOI by $847,903, as denoted on line 3 of Schedule 9. 30

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Please describe Schedule 10 (Actual Variances by Rate Schedule) of Attachment 32 JCS-1. 33

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A. Schedule 10 calculates the over or under-recovery variance by comparing actual 1

recoveries, exclusive of Indiana Utility Receipts Tax (“IURT”), to the approved recoveries 2

from the CECA for the same time period. Actual recoveries represent billed CECA 3

revenues from the Company’s customer billing system by month and by Rate Schedule 4

for this period. The over or under-recovery variance is determined by month and by 5

Rate Schedule. The specific identification of the variance by Rate Schedule ensures 6

that customers are paying for only the costs allocated to and approved for recovery from 7

that Rate Schedule. 8

9

The actual recoveries are used on Schedule 10 to determine the Total Variance (line 21) 10

to be included in CECA-2 rates and charges. The resulting variance is an under 11

recovery of $105,727 and will be collected from customers in the CECA over twelve (12) 12

months. 13

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Q. How will the approved recoveries be determined for CECA-2 to be reconciled in 15 CECA-3? 16

As reflected on Schedule 12, approved recoveries represent the amounts the Company 17

expects to collect each month. These approved recoveries are calculated by multiplying 18

the billing determinants by month by the applicable rates and charges for the CECA 19

period. Any under recoveries resulting from instances in which CECA rates and charges 20

are not in place for a full month will be recovered as an under-recovery variance in a 21

subsequent CECA proceeding. 22

23

Please describe Schedule 11 (Allocation and Rate Derivation) of Attachment JCS-24 1. 25

A. Schedule 11 shows the allocation of the CECA revenue requirements and variances, 26

and the derivation of CECA rates and charges by Rate Schedule. 27

28

Lines 1 through 11 show the derivation of the revenue requirement component. The 29

allocation percentages listed in Column A reflect the approved 45086 Settlement 30

allocation percentages, shown in the table below, representing the functionalized 31

revenues by Rate Schedule: 32

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Rate Schedule Allocators Rate RS 40.4145% Rate B 0.1225% Rate SGS 1.7089% Rate DGS/MLA 26.1523% Rate OSS 2.0202% Rate LP 28.7431% Rate HLF 0.8385% Total 100.00%

1

These allocation percentages are applied to the total revenue requirement from 2

Schedule 1, Line 16 to determine the amounts recoverable from each Rate Schedule 3

(Column B). The amounts allocated to each Rate Schedule are divided by the estimated 4

billing determinants in Column C (energy (kWh)) to determine the per unit CECA rates 5

and charges excluding IURT in Column D. 6

7

Lines 12 through 20 show the derivation of the variance component of the CECA rates, 8

using the specific variance amounts by Rate Schedule from Schedule 10. The variance 9

is recovered (or passed back) consistent with the methodology previously explained for 10

the revenue requirement component. 11

12

Lines 21 through 29 shows the sum of the revenue requirement component and the 13

variance component. 14

15

These rates and charges are then grossed up for IURT to determine the rates proposed 16

in the Tariff in Column E. 17

18

Q. Please describe Schedule 12 (Projected Recoveries by Month). 19 Schedule 12 calculates the CECA recoveries by month. These are the expected monthly 20

recoveries of the approved CECA revenue requirement to which actual CECA revenues 21

will be compared for reconciliation purposes. 22

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V. TARIFF PROPOSAL 25 26

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Please describe Petitioner’s Exhibit No. 3, Attachment JCS-2. 1

A. Attachment JCS-2 is the proposed CECA tariff sheet, Sheet No. 67, Appendix C, 2

containing the CECA rates and charges proposed herein, as proposed in Cause No. 3

45086. Both redlined and clean version of Sheet No. 67 are included. 4

5

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VI. COST PER KWH OF ELECTRICITY GENERATED 7 8

Q. What is the cost of electricity generated by project during the reporting period? 9 A. The actual cost per kWh for the Highway 41 Facility including the BESS is $0.32/kWh 10

and the Evansville Urban Facility is $0.22/kWh. This is based on the actual revenue 11

requirements for each of the two 2MW solar projects, as calculated on Schedule 1, 12

divided by the actual kWh. Vectren South witness Games will provide information 13

regarding the annual actual kWh produced from each of the two 2MW solar sites. 14

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VII. AVERAGE ANNUAL BILLING IMPACT 17 18

Q. If the Commission approves Vectren South’s proposed CECA Adjustment, what 19 will be the average annual billing impact on all customer classes? 20

A. Attachment JCS-1, Schedule 13 summarizes the estimated annual impact of the projects 21

on customers by rate class. As requested, the CECA adjustment applicable to 22

Residential customers would increase by $0.000009 per kWh, from $0.000606 to 23

$0.000615 per kWh. The monthly bill during the CECA period for a Residential 24

customer using 1,000 kWh would increase by less than $0.01 under the Company’s 25

proposal. 26

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VIII. CONCLUSION 29 30

Does this conclude your direct testimony? 31 A. Yes, at the present time. 32

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VERIFICATIOr,,I

The undersigned, J. Cas Swiz, affirms under the penalties of perjury that the answers in

the foregoing Direct Testimony in Cause No. 44909 CECA 2 are true to the best of his

knowledge, information and belief.

Petitioner's Exhibit No. 3Attachment JCS-1

Cause No. 44909-CECA-2Vectren South

Schedule 1Page 1 of 1

A B C D EHighway 41 Evansville Urban Urban Living Total

Line Description Facility Facility Research Center Amount Reference

Return on New Capital Investment:1 Gross New Capital Investment - As of End of Period 7,594,113$ 5,748,308$ -$ 13,342,422$ Schedule 2, Line 18, Col. M2 Accumulated Depreciation - As of End of Period (449,483)$ (250,697)$ -$ (700,181)$ Schedule 2, Line 36, Col. M3 Net New Capital Investment - As of End of Period 7,144,630$ 5,497,611$ -$ 12,642,241$ Line 1 + Line 2

4 PISCC Deferred Balance - As of End of Period 249,797$ 192,889$ -$ 442,686$ Schedule 3, Line 35, Col. M

5 Total New Capital Investment - As of End of Period 7,394,427$ 5,690,500$ -$ 13,084,927$ Line 3 + Line 4

6 Pre-Tax Rate of Return 8.15% 8.15% 8.15% 8.15% Schedule 4, Page 1, Line 17

7 Annualized Return on New Capital Investment 602,646$ 463,776$ -$ 1,066,422$ Line 5 x Line 6

Incremental Expenses8 Depreciation Expense - Annualized 420,853$ 229,932$ -$ 650,786$ Schedule 5, Line 17

9 Annual O&M Expense 150,000$ 171,222$ -$ 321,222$ Schedule 7, Line 4

10 Annual O&M Expense - Prior Year Reconciliation 62,013$ (4,601)$ -$ 57,412$ Schedule 7, Line 13

11 Amortization Expense - Deferred Depreciation 14,478$ 4,850$ -$ 19,328$ Schedule 6, Line 15

12 Amortization Expense - Deferred PISCC 13,937$ 7,750$ -$ 21,687$ Schedule 3, Line 41

13 Property Tax Expense - Annualized 46,602$ 35,065$ -$ 81,667$ Line 1 x 0.61% (A)

14 Total Incremental Expenses 707,883$ 444,218$ -$ 1,152,102$ Sum Lines 8 - 13

15 Investment Tax Credit Amortization (103,607)$ (52,610)$ -$ (156,217)$ Schedule 8, Line 14

16 Renewable Energy Credit Sales (29,013)$ (27,143)$ -$ (56,155)$ (B)

17 Annual Revenue Requirement - CECA 1,177,909$ 828,241$ -$ 2,006,152$ Line 7 + Line 14 + Line 15 + Line 16

Notes:(A)

(B) The number of Renewable Energy Credits sold less broker fees during 2019 equals 2,772 for the Highway 41 facility and 2,573 for the Evansville Urban facility.

The annualized level of property taxes is calculated using an estimated Vectren South rate of 2.03% multiplied by the tax basis of the: (1) plant, estimated to be 30% of the gross new capital investment amount excluding land investments, estimated to be 30% at the rate of 2.3%.

ANNUAL REVENUE REQUIREMENT THROUGH DECEMBER 31, 2019

SOUTHERN INDIANA GAS AND ELECTRIC COMPANYd/b/a VECTREN ENERGY DELIVERY OF INDIANA, INC.

VECTREN SOUTHCLEAN ENERGY COST ADJUSTMENT (CECA)




A B C D E F G H I J K L M

Balance at Balance atLine Gross New Capital Investment Balance 12/31/2018 1/31/2019 2/28/2019 3/31/2019 4/30/2019 5/31/2019 6/30/2019 7/31/2019 8/31/2019 9/30/2019 10/31/2019 11/30/2019 12/31/2019

Gross Assets1 Highway 41 Facility 5,247,899$ 5,250,588$ 5,270,550$ 5,280,596$ 5,329,641$ 5,384,223$ 5,352,933$ 5,405,230$ 5,379,691$ 5,411,474$ 5,411,100$ 5,411,100$ 5,411,100$ 2 Highway 41 Facility BESS 2,140,728$ 2,138,976$ 2,147,101$ 2,151,705$ 2,168,577$ 2,192,366$ 2,177,203$ 2,193,650$ 2,181,945$ 2,183,184$ 2,183,013$ 2,183,013$ 2,183,013$ 3 Evansville Urban Facility 5,547,453$ 5,524,771$ 5,533,189$ 5,543,748$ 5,561,072$ 5,610,204$ 5,575,974$ 5,653,560$ 5,621,059$ 5,748,826$ 5,748,308$ 5,748,308$ 5,748,308$ 4 Urban Living Research Cente -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 5 Urban Living Research Center BESS -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 6 Total Gross Assets 12,936,079$ 12,914,335$ 12,950,839$ 12,976,049$ 13,059,289$ 13,186,793$ 13,106,110$ 13,252,440$ 13,182,695$ 13,343,484$ 13,342,422$ 13,342,422$ 13,342,422$

Retirements7 Highway 41 Facility -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 8 Highway 41 Facility BESS -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 9 Evansville Urban Facility -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 10 Urban Living Research Cente -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 11 Urban Living Research Center BESS -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 12 Total Retirements -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Gross New Capital Investment Balance13 Highway 41 Facility 5,247,899$ 5,250,588$ 5,270,550$ 5,280,596$ 5,329,641$ 5,384,223$ 5,352,933$ 5,405,230$ 5,379,691$ 5,411,474$ 5,411,100$ 5,411,100$ 5,411,100$ 14 Highway 41 Facility BESS 2,140,728$ 2,138,976$ 2,147,101$ 2,151,705$ 2,168,577$ 2,192,366$ 2,177,203$ 2,193,650$ 2,181,945$ 2,183,184$ 2,183,013$ 2,183,013$ 2,183,013$ 15 Evansville Urban Facility 5,547,453$ 5,524,771$ 5,533,189$ 5,543,748$ 5,561,072$ 5,610,204$ 5,575,974$ 5,653,560$ 5,621,059$ 5,748,826$ 5,748,308$ 5,748,308$ 5,748,308$ 16 Urban Living Research Cente -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 17 Urban Living Research Center BESS -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 18 Total Gross New Capital Investment 12,936,079$ 12,914,335$ 12,950,839$ 12,976,049$ 13,059,289$ 13,186,793$ 13,106,110$ 13,252,440$ 13,182,695$ 13,343,484$ 13,342,422$ 13,342,422$ 13,342,422$

= (Gross Assets + Retirements) To Schedule 1, Line 1

Balance at Balance at Balance atLine Accumulated Depreciation Balance 12/31/2018 1/31/2019 2/28/2019 3/31/2019 4/30/2019 5/31/2019 6/30/2019 7/31/2019 8/31/2019 9/30/2019 10/31/2019 11/30/2019 12/31/2019

Depreciation Expense19 Highway 41 Facility 23,141$ 39,504$ 55,902$ 72,348$ 88,886$ 105,586$ 122,323$ 139,094$ 155,909$ 172,737$ 189,617$ 206,496$ 223,375$ 20 Highway 41 Facility BESS 8,920$ 26,752$ 44,610$ 62,522$ 80,523$ 98,694$ 116,900$ 135,112$ 153,344$ 171,532$ 189,725$ 207,916$ 226,108$ 21 Evansville Urban Facility 25,641$ 44,095$ 62,525$ 80,986$ 99,494$ 118,113$ 136,757$ 155,473$ 174,264$ 193,213$ 212,375$ 231,536$ 250,697$ 22 Urban Living Research Cente -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 23 Urban Living Research Center BESS -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 24 Total Depreciation Expense 57,702$ 110,350$ 163,038$ 215,856$ 268,904$ 322,393$ 375,980$ 429,679$ 483,516$ 537,482$ 591,716$ 645,949$ 700,181$

Retirements25 Highway 41 Facility -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 26 Highway 41 Facility BESS -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 27 Evansville Urban Facility -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 28 Urban Living Research Cente -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 29 Urban Living Research Center BESS -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 30 Total Retirements -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Total Accumulated Depreciation Balance31 Highway 41 Facility (23,141)$ (39,504)$ (55,902)$ (72,348)$ (88,886)$ (105,586)$ (122,323)$ (139,094)$ (155,909)$ (172,737)$ (189,617)$ (206,496)$ (223,375)$ 32 Highway 41 Facility BESS (8,920)$ (26,752)$ (44,610)$ (62,522)$ (80,523)$ (98,694)$ (116,900)$ (135,112)$ (153,344)$ (171,532)$ (189,725)$ (207,916)$ (226,108)$ 33 Evansville Urban Facility (25,641)$ (44,095)$ (62,525)$ (80,986)$ (99,494)$ (118,113)$ (136,757)$ (155,473)$ (174,264)$ (193,213)$ (212,375)$ (231,536)$ (250,697)$ 34 Urban Living Research Cente -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 35 Urban Living Research Center BESS -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 36 Total Accumulated Depreciation Balance (57,702)$ (110,350)$ (163,038)$ (215,856)$ (268,904)$ (322,393)$ (375,980)$ (429,679)$ (483,516)$ (537,482)$ (591,716)$ (645,949)$ (700,181)$

= - Depreciation Expense - Retirements To Schedule 1, Line 2



NEW CAPITAL INVESTMENT




Line Description Reference A B C D E F G H I J K L M

1 PISCC Rate - Monthly Schedule 4, Page 2, Line 5 / 12 0.54% 0.54% 0.54% 0.54% 0.54% 0.54% 0.54% 0.54% 0.54% 0.54% 0.54% 0.54%2 Debt - PISCC Rate - Monthly Schedule 4, Page 2, Lines 1,3-4 / 12 0.13% 0.13% 0.13% 0.13% 0.13% 0.13% 0.13% 0.13% 0.13% 0.13% 0.13% 0.13%3 Equity - PISCC Rate - Monthly Schedule 4, Page 2, Line 2 / 12 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41%

4 Solar Investment Amortization Rate - Monthly (A) Schedule 6, Line 8 / 12 0.33% 0.33% 0.33% 0.33% 0.33% 0.33% 0.33% 0.33% 0.33% 0.33% 0.33% 0.33%5 BESS Investment Amortization Rate - Monthly (A) Schedule 6, Line 9 / 12 0.83% 0.83% 0.83% 0.83% 0.83% 0.83% 0.83% 0.83% 0.83% 0.83% 0.83% 0.83%

Balance at Balance atPISCC Cummulative Deferred Balance - DEBT 12/31/2018 1/31/2019 2/28/2019 3/31/2019 4/30/2019 5/31/2019 6/30/2019 7/31/2019 8/31/2019 9/30/2019 10/31/2019 11/30/2019 12/31/2019

6 Highway 41 Facility (B) 10,098$ 16,791$ 23,498$ 30,224$ 36,988$ 43,818$ 43,972$ 44,140$ 44,324$ 44,512$ 44,720$ 44,929$ 45,137$ 7 Highway 41 Facility BESS (B) 1,454$ 4,182$ 6,915$ 9,655$ 12,409$ 15,189$ 15,246$ 15,303$ 15,363$ 15,416$ 15,470$ 15,524$ 15,578$ 8 Evansville Urban Facility (B) 10,449$ 17,507$ 24,557$ 31,618$ 38,698$ 45,819$ 45,877$ 45,963$ 46,078$ 46,253$ 46,510$ 46,766$ 47,022$ 9 Urban Living Research Center (B) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

10 Urban Living Research Center BESS (B) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 11 PISCC Deferred Balance (B) 22,001$ 38,480$ 54,969$ 71,498$ 88,095$ 104,827$ 105,095$ 105,405$ 105,764$ 106,181$ 106,700$ 107,218$ 107,736$

Balance at Balance atPISCC Cummulative Deferred Balance - EQUITY 12/31/2018 1/31/2019 2/28/2019 3/31/2019 4/30/2019 5/31/2019 6/30/2019 7/31/2019 8/31/2019 9/30/2019 10/31/2019 11/30/2019 12/31/2019

12 Highway 41 Facility (B) 28,373$ 49,851$ 71,376$ 92,962$ 114,669$ 136,587$ 137,081$ 137,618$ 138,209$ 138,814$ 139,482$ 140,150$ 140,818$ 13 Highway 41 Facility BESS (B) 4,085$ 12,841$ 21,609$ 30,404$ 39,243$ 48,164$ 48,345$ 48,528$ 48,720$ 48,891$ 49,065$ 49,238$ 49,411$ 14 Evansville Urban Facility (B) 29,359$ 52,011$ 74,634$ 97,295$ 120,014$ 142,868$ 143,055$ 143,331$ 143,698$ 144,261$ 145,084$ 145,905$ 146,727$ 15 Urban Living Research Center (B) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 16 Urban Living Research Center BESS (B) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 17 PISCC Deferred Balance (B) 61,818$ 114,703$ 167,619$ 220,661$ 273,925$ 327,620$ 328,481$ 329,476$ 330,628$ 331,966$ 333,631$ 335,293$ 336,956$

Balance at Balance atPISCC Cumulative Deferred Balance - DEBT + EQUITY 12/31/2018 1/31/2019 2/28/2019 3/31/2019 4/30/2019 5/31/2019 6/30/2019 7/31/2019 8/31/2019 9/30/2019 10/31/2019 11/30/2019 12/31/2019

18 Highway 41 Facility Line 6 + Line 12 38,471$ 66,642$ 94,874$ 123,186$ 151,657$ 180,406$ 181,053$ 181,758$ 182,533$ 183,326$ 184,203$ 185,079$ 185,954$ 19 Highway 41 Facility BESS Line 7 + Line 13 5,539$ 17,023$ 28,524$ 40,059$ 51,652$ 63,354$ 63,590$ 63,830$ 64,083$ 64,307$ 64,535$ 64,761$ 64,988$ 20 Evansville Urban Facility Line 8 + Line 14 39,808$ 69,518$ 99,190$ 128,913$ 158,711$ 188,688$ 188,933$ 189,294$ 189,776$ 190,514$ 191,593$ 192,671$ 193,749$ 21 Urban Living Research Center Line 9 + Line 15 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 22 Urban Living Research Center BESS Line 10 + Line 16 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 23 PISCC Deferred Balance Sum Lines 18-22 83,818$ 153,183$ 222,588$ 292,159$ 362,020$ 432,447$ 433,576$ 434,881$ 436,392$ 438,147$ 440,331$ 442,511$ 444,692$

Amortization of PISCC24 Less; Amortization of PISCC - Highway 41 Facility -$ -$ -$ -$ -$ -$ (116)$ (232)$ (349)$ (465)$ (581)$ (697)$ (814)$ 25 Less; Amortization of PISCC - Highway 41 Facility BESS -$ -$ -$ -$ -$ -$ (47)$ (95)$ (142)$ (190)$ (237)$ (284)$ (332)$ 26 Less; Amortization of PISCC - Evansville Urban Facility -$ -$ -$ -$ -$ -$ (123)$ (246)$ (369)$ (491)$ (614)$ (737)$ (860)$ 27 Less; Amortization of PISCC - Urban Living Research Center -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 28 Less; Amortization of PISCC - Urban Living Research Center BESS -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 29 Less: Amortization of PISCC (C) -$ -$ -$ -$ -$ -$ (287)$ (573)$ (860)$ (1,146)$ (1,433)$ (1,719)$ (2,006)$

Total PISCC Deferred Balance30 Highway 41 Facility Line 18 + Line 24 38,471$ 66,642$ 94,874$ 123,186$ 151,657$ 180,406$ 180,937$ 181,525$ 182,185$ 182,861$ 183,622$ 184,381$ 185,141$ 31 Highway 41 Facility BESS Line 19 + Line 25 5,539$ 17,023$ 28,524$ 40,059$ 51,652$ 63,354$ 63,543$ 63,735$ 63,940$ 64,118$ 64,297$ 64,477$ 64,657$ 32 Evansville Urban Facility Line 20 + Line 26 39,808$ 69,518$ 99,190$ 128,913$ 158,711$ 188,688$ 188,810$ 189,048$ 189,407$ 190,022$ 190,979$ 191,934$ 192,889$ 33 Urban Living Research Center Line 21 + Line 27 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 34 Urban Living Research Center BESS Line 22 + Line 28 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 35 Total PISCC Deferred Balance Line 23 + Line 29 83,818$ 153,183$ 222,588$ 292,159$ 362,020$ 432,447$ 433,290$ 434,308$ 435,532$ 437,001$ 438,898$ 440,792$ 442,686$

To Schedule 1, Line 4

Annualized Amortization Expense36 Highway 41 Facility Line 4 x Line 18 x 12 7,438$ 37 Highway 41 Facility BESS Line 5 x Line 19 x 12 6,499$ 38 Evansville Urban Facility Line 4 x Line 20 x 12 7,750$ 39 Urban Living Research Center Line 4 x Line 21 x 12 -$ 40 Urban Living Research Center BESS Line 5 x Line 22 x 12 -$ 41 Total Amortization Expense Sum Lines 36-40 21,687$


(A) Based on Amortization Life of Plant as of December 31, 2018. Annual depreciation rate is 1 divided by Number of Years, as shown on Attachment JCS-1, Schedule 6.(B) Calculated as the PISCC rates (lines 2 & 3) multiplied by the monthly PISCC eligible balances. PISCC eligible balances are based on the gross plant placed in-service not yet captured for recovery in the CECA.(C) Captures actual recorded amortization expense for PISCC during period.


VECTREN SOUTHCLEAN ENERGY COST ADJUSTMENT (CECA)POST IN-SERVICE CARRYING COSTS (PISCC)




A B C D = B x CLine After-Tax (A) Amount ($000's) Weighting Cost WACC

1 Debt 780,624$ 33.71% 4.38% 1.48%2 Equity 1,106,555$ 47.79% 10.40% 4.97%3 Cost Free Capital 414,992$ 17.92% 0.00% 0.00%4 Other 13,428$ 0.58% 4.89% 0.03%5 Total 2,315,599$ 6.48% (B)


Pre-Tax Equity Component Calculation6 After-Tax Cost of Equity per Line 2 4.97% Line 2, Col. D7 One 100.00%8 Less State Taxes 5.271% (C)9 Federal Taxable 94.73% Line 7 - Line 8

10 One Less Federal Income Tax 79.00% 1 - 21%11 Effective Gross-Up Factor 74.84% Line 9 x Line 1012 Pre-Tax Equity 6.64% Line 6 / Line 11

Forecast - Adjusted ROR (fixed ROE)Pre-Tax

13 Debt 1.48% from Line 114 Equity 6.64% from Line 1215 Cost Free Capital 0.00% from Line 316 Other 0.03% from Line 417 Total Pre-Tax Rate of Return 8.15% Sum Lines 13-16


(A) All data in Lines 1 through 5 represent the actual balances as of December 31, 2019.

(B) Proof Equity Debt and Other Total18 Total New Capital Investment 13,084,927$ 13,084,927$ from Schedule 1, Line 519 Pre-Tax Return 6.64% 1.51% from Lines 13-1620 Return 868,994$ 197,582$ Line 18 x Line 1921 State Tax 45,803$ 5.271% x Line 2022 Federal Taxable Return 823,191$ 197,582$ Line 20 - Line 2123 Federal Tax 172,870$ Line 22 x 21%24 After Tax Return $ 650,321$ 197,582$ 847,903$ Line 20 - Lines 21 and 23

25 After Tax Return % 6.48% Line 24 / Line 18equals Line 5

(C) Represents a blended State Tax Rate: - June 1, 2020 - May 31, 2021 @ 5.271%- Based on 5.50% @ July 1, 2019, 5.25% @ July 1, 2020, and 4.90% @ July 1, 2021

PRE-TAX RATE OF RETURN AT DECEMBER 31, 2019






A B C D = B x CLine After-Tax (A) Amount ($000's) Weighting Cost WACC

1 Debt 740,624$ 33.46% 4.46% 1.49%2 Equity 1,045,044$ 47.21% 10.40% 4.91%3 Cost Free Capital 413,001$ 18.66% 0.00% 0.00%4 Other 14,863$ 0.67% 5.47% 0.04%5 Total 2,213,532$ 6.44%

(A) All data in Lines 1 through 5 represent the actual balances as of December 31, 2018 (as presented in CECA-1 filing on JCS-1, Sch 4, Pg 1).

AFTER TAX PISCC RATE AT DECEMBER 31, 2018






Balance atLine Description 12/31/2019 Reference

Depreciable In-Service Balance1 Highway 41 Facility 5,063,803$ Schedule 2, Line 13, Col. M (C)2 Highway 41 Facility BESS 2,183,013$ Schedule 2, Line 14, Col. M3 Evansville Urban Facility 5,748,308$ Schedule 2, Line 15, Col. M4 Urban Living Research Center -$ Schedule 2, Line 16, Col. M5 Urban Living Research Center BESS -$ Schedule 2, Line 17, Col. M6 Total 12,995,124$ Sum Lines 1 - 5

Monthly Depreciation Rates7 Highway 41 Facility 0.33% (A)8 Highway 41 Facility BESS 0.83% (A)9 Evansville Urban Facility 0.33% (A)10 Urban Living Research Center 0.00% (B)11 Urban Living Research Center BESS 0.00% (B)

Annualized Depreciation Expense12 Highway 41 Facility 202,552$ Line 1 x Line 7 x 1213 Highway 41 Facility BESS 218,301$ Line 2 x Line 8 x 1214 Evansville Urban Facility 229,932$ Line 3 x Line 9 x 1215 Urban Living Research Center -$ Line 4 x Line 10 x 1216 Urban Living Research Center BESS -$ Line 5 x Line 11 x 1217 Total Annualized Depreciation Expense 650,786$ Sum Lines 12 - 16


(A)

(B) Reflects no plant additions through current period for project.(C) Excludes non-depreciable land investment.



ANNUALIZED DEPRECIATION EXPENSE ON NEW CAPITAL INVESTMENT

Current average of authorized depreciation rates. Supporting work papers will show a detailed calculation of depreciation rates by class of plant.




A B C D E F G H I J K L M

Balance at Balance atLine Description 12/31/2018 1/31/2019 2/28/2019 3/31/2019 4/30/2019 5/31/2019 6/30/2019 7/31/2019 8/31/2019 9/30/2019 10/31/2019 11/30/2019 12/31/2019

Deferred Depreciation Balance (A)1 Highway 41 Facility 23,141$ 39,504$ 55,902$ 72,348$ 88,886$ 105,586$ 105,965$ 106,379$ 106,836$ 107,306$ 107,828$ 108,349$ 108,871$ 2 Highway 41 Facility BESS 8,920$ 26,752$ 44,610$ 62,522$ 80,523$ 98,694$ 99,061$ 99,434$ 99,826$ 100,174$ 100,528$ 100,880$ 101,232$ 3 Evansville Urban Facility 25,641$ 44,095$ 62,525$ 80,986$ 99,494$ 118,113$ 118,265$ 118,490$ 118,789$ 119,247$ 119,918$ 120,587$ 121,257$ 4 Urban Living Research Center -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 5 Urban Living Research Center BESS -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 6 Less: Amortization of Deferrals (B) -$ -$ -$ -$ -$ -$ (224)$ (447)$ (671)$ (895)$ (1,118)$ (1,342)$ (1,566)$ 7 Total Deferred Depreciation Balance 57,702$ 110,350$ 163,038$ 215,856$ 268,904$ 322,393$ 323,068$ 323,854$ 324,779$ 325,833$ 327,155$ 328,474$ 329,794$

Depreciation Rates (C)8 Solar Investment excluding BESS 4.00%9 BESS Investment 10.00%

Deferred Depreciation Amortization Expense10 Highway 41 Facility Line 1 x Line 8 4,355$ 11 Highway 41 Facility BESS Line 2 x Line 9 10,123$ 12 Evansville Urban Facility Line 3 x Line 8 4,850$ 13 Urban Living Research Center Line 4 x Line 8 -$ 14 Urban Living Research Center BESS Line 5 x Line 8 -$ 15 Deferred Depreciation Amortization Expense Sum Lines 10-14 19,328$


(A) Calculated by taking the gross new plant investment, less retirements, placed in-service but not yet included in CECA recovery.(B) Captures actual recorded amortization expense for PISCC during period.(C) Based on Amortization Life of Plant as of December 31, 2018. Annual depreciation rate is 1 divided by Number of Years.

Solar Project - 25 yearsBattery System - 10 years

AMORTIZATION OF DEFERRED DEPRECIATION






Line Description Amount (A) Reference

Estimated Annual Operations and Maintenance Expense1 Highway 41 Facility 150,000$ 2 Evansville Urban Facility 171,222$ 3 Urban Living Research Center -$

4 Total Estimated Annual Operations and Maintenance Expense 321,222$ Sum Lines 1 - 3To Schedule 1, Line 9

Deferrals Prior to Inclusion in Rates Amount Deferred Less: Recoveries Amount5 Highway 41 Facility 98,707$ 15,233$ 83,473$ As of May 31, 20196 Evansville Urban Facility 67,123$ 44,602$ 22,520$ As of May 31, 20197 Urban Living Research Center -$ 8 Total Deferrals Prior to Inclusion in Rates 165,829$ 59,836$ 105,994$ Sum Lines 5 - 7

Reconciled Operations and Maintenance Expense Actual Expense Estimated Expense Amount9 Highway 41 Facility 99,406$ 120,866$ (21,460)$ 10 Evansville Urban Facility 93,745$ 120,866$ (27,121)$ 11 Urban Living Research Center -$ -$ -$

12 Total Reconciled Operations and Maintenance Expense 193,150$ 241,732$ (48,582)$ Sum Lines 9 - 11

13 Recoverable Balance - at the end of current period 57,412$ Sum Lines 8 and 12To Schedule 1, Line 10

Notes:(A) Per Cause No. 44909, CECA - Petitioner's Exhibit No. 3 (Witness Swiz Direct Testimony)



AMORTIZATION OF DEFERRED INCREMENTAL O&M EXPENSE




TotalLine Description Amount Reference

Total Cumulative Investment Tax Credits Generated1 Highway 41 Facility 1,153,252$ 30% of Eligible In-Service balance2 Highway 41 Facility BESS 574,767$ 30% of Eligible In-Service balance3 Evansville Urban Facility 1,315,249$ 30% of Eligible In-Service balance4 Urban Living Research Center -$ 30% of Eligible In-Service balance5 Urban Living Research Center BESS -$ 30% of Eligible In-Service balance6 Total Investment Tax Credits 3,043,267$

Amortization Period7 Solar Investments excluding BESS 25 Years8 BESS Investments 10 Years

Amortization of Investment Tax Credits9 Highway 41 Facility 46,130$

10 Highway 41 Facility BESS 57,477$ 11 Evansville Urban Facility 52,610$ 12 Urban Living Research Center -$ 13 Urban Living Research Center BESS -$ 14 Total Investment Tax Credit Amortization 156,217$


AMORTIZATION OF INVESTMENT TAX CREDITS (ITCs)






TotalLine Description Amount Reference

1 Total New Capital Investment - As of End of Period 13,084,927$ From Schedule 1, Line 5

2 After-Tax Rate of Return 6.48% From Schedule 4, Page 1, Line 5

3 NOI Adjustment for FAC Earnings Test - CECA-2 847,903$ Line 1 x Line 2

NOI ADJUSTED FOR FAC EARNINGS TEST






A B C D E F G H I J

Line Description Total Reference

Actual Recoveries (Inclusive of IURT) RS B SGS DGS / MLA OSS LP / BAMP HLF SL/OL1 Jan-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ (A)2 Feb-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ (A)3 Mar-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ (A)4 Apr-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ (A)5 May-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ (A)6 Jun-19 27,936$ 69$ 962$ 14,845$ 828$ 40,532$ 1,465$ -$ 86,637$ (A)7 Jul-19 86,859$ 174$ 2,961$ 44,766$ 2,854$ 47,356$ 2,369$ -$ 187,339$ (A)8 Aug-19 97,158$ 174$ 3,312$ 55,148$ 3,392$ 48,702$ 3,322$ -$ 211,208$ (A)9 Sep-19 90,589$ 175$ 4,243$ 51,047$ 3,402$ 52,390$ 3,705$ -$ 205,553$ (A)10 Oct-19 71,583$ 157$ 2,440$ 45,786$ 3,030$ 34,400$ 11,367$ -$ 168,763$ (A)11 Nov-19 53,979$ 176$ 3,664$ 38,155$ 3,001$ 37,711$ 1,588$ -$ 138,274$ (A)12 Dec-19 64,075$ 202$ 2,129$ 35,421$ 3,473$ 36,972$ 1,367$ -$ 143,640$ (A)13 Total Actual Recoveries Inclusive of IURT 492,180$ 1,127$ 19,711$ 285,168$ 19,981$ 298,063$ 25,182$ -$ 1,141,414$ Sum Lines 1-12

Actual Recoveries (Exclusive of IURT) RS B SGS DGS / MLA OSS LP / BAMP HLF SL/OL14 Jan-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ Line 1 x 0.985215 Feb-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ Line 2 x 0.985216 Mar-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ Line 3 x 0.985217 Apr-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ Line 4 x 0.985218 May-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ Line 5 x 0.985219 Jun-19 27,523$ 68$ 948$ 14,625$ 816$ 39,932$ 1,443$ -$ 85,355$ Line 6 x 0.985220 Jul-19 85,574$ 171$ 2,917$ 44,103$ 2,812$ 46,655$ 2,334$ -$ 184,567$ Line 7 x 0.985221 Aug-19 95,720$ 171$ 3,263$ 54,332$ 3,342$ 47,981$ 3,273$ -$ 208,082$ Line 8 x 0.985222 Sep-19 89,249$ 172$ 4,181$ 50,292$ 3,352$ 51,615$ 3,651$ -$ 202,511$ Line 9 x 0.985223 Oct-19 70,524$ 155$ 2,403$ 45,108$ 2,986$ 33,891$ 11,199$ -$ 166,265$ Line 10 x 0.985224 Nov-19 53,180$ 174$ 3,609$ 37,591$ 2,956$ 37,153$ 1,565$ -$ 136,228$ Line 11 x 0.985225 Dec-19 63,127$ 199$ 2,098$ 34,897$ 3,422$ 36,425$ 1,346$ -$ 141,514$ Line 12 x 0.985226 Total Actual Recoveries Exclusive of IURT 484,896$ 1,111$ 19,420$ 280,948$ 19,686$ 293,652$ 24,809$ -$ 1,124,521$ Sum Lines 14-25

Approved Recoveries (Exclusive of IURT) RS B SGS DGS / MLA OSS LP / BAMP HLF SL/OL27 Jan-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ (B)28 Feb-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ (B)29 Mar-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ (B)30 Apr-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ (B)31 May-19 -$ -$ -$ -$ -$ -$ -$ -$ -$ (B)32 Jun-19 78,608$ 179$ 3,048$ 50,335$ 3,069$ 49,343$ 1,395$ -$ 185,977$ (B)33 Jul-19 97,655$ 180$ 3,370$ 53,974$ 3,384$ 52,128$ 1,431$ -$ 212,122$ (B)34 Aug-19 87,603$ 173$ 3,174$ 53,992$ 3,201$ 53,197$ 1,474$ -$ 202,814$ (B)35 Sep-19 60,955$ 171$ 2,711$ 44,998$ 2,802$ 51,071$ 1,430$ -$ 164,138$ (B)36 Oct-19 48,470$ 183$ 2,525$ 40,902$ 2,885$ 49,549$ 1,485$ -$ 146,000$ (B)37 Nov-19 53,279$ 206$ 2,743$ 37,704$ 3,475$ 47,185$ 1,435$ -$ 146,029$ (B)38 Dec-19 74,491$ 249$ 3,059$ 44,409$ 4,235$ 45,252$ 1,472$ -$ 173,167$ (B)39 Total Approved Recoveries Exclusive of IURT 501,063$ 1,341$ 20,630$ 326,314$ 23,052$ 347,726$ 10,122$ -$ 1,230,248$ Sum Lines 27-38

40 Total Variance (C) 16,166$ 230$ 1,210$ 45,366$ 3,367$ 54,074$ (14,687)$ -$ 105,727$ Line 39 - Line 26Under/(Over) Recovery

(A) Actual Recoveries represent billed CECA revenues from the company's customer billing system by month and by rate schedule.(B) Based on prior CECA approvals(C) To Attachment JCS-1, Schedule 11

Rate Schedule

SOUTHERN INDIANA GAS & ELECTRIC COMPANYd/b/a VECTREN ENERGY DELIVERY OF INDIANA, INC.


ACTUAL VARIANCES BY RATE SCHEDULE THROUGH DECEMBER 31, 2019




A B C D ELine No.

1 Highway 41 Facility 1,177,909$ 2 Evansville Urban Facility 828,241$ 3 Urban Living Research Center -$

Total Revenue Requirement 2,006,151$ Schedule 1, Line 17

Excluding IURT Including IURT

Rate Schedule AllocatorsRevenue

Requirement Energy (kWh) Rate per kWh Rate per kWh4 Rate RS 40.4145% 810,776$ 1,364,972,350 0.000594$ 0.000603$ 5 Rate B 0.1225% 2,458$ 7,946,703 0.000309$ 0.000314$ 6 Rate SGS 1.7089% 34,283$ 64,801,056 0.000529$ 0.000537$ 7 Rate DGS/MLA 26.1523% 524,655$ 1,073,881,762 0.000489$ 0.000496$ 8 Rate OSS 2.0202% 40,528$ 90,812,938 0.000446$ 0.000453$ 9 Rate LP/BAMP 28.7431% 576,630$ 2,259,676,714 0.000255$ 0.000259$

10 Rate HLF 0.8385% 16,822$ 79,734,000 0.000211$ 0.000214$ 11 Total 100.0000% 2,006,151$

12 (Over)/Under Recovery Variance 105,727$ Schedule 10, Line 40Excluding IURT Including IURT

Rate Schedule(Over)/Under

Recovery Variance Energy (kWh) Rate per kWh Rate per kWh13 Rate RS 16,166$ 1,364,972,350 0.000012$ 0.000012$ 14 Rate B 230$ 7,946,703 0.000029$ 0.000029$ 15 Rate SGS 1,210$ 64,801,056 0.000019$ 0.000019$ 16 Rate DGS/MLA 45,366$ 1,073,881,762 0.000042$ 0.000043$ 17 Rate OSS 3,367$ 90,812,938 0.000037$ 0.000038$ 18 Rate LP/BAMP 54,074$ 2,259,676,714 0.000024$ 0.000024$ 19 Rate HLF (14,687)$ 79,734,000 (0.000184)$ (0.000187)$ 20 Total 105,727$

Schedule 10, Line 40

21Total Revenue Requirement plus (Over)/Under Recovery Variance 2,111,878$

Excluding IURT Including IURT

Rate ScheduleTotal Revenue Requirement Energy (kWh) Rate per kWh Rate per kWh

22 Rate RS 826,942$ 1,364,972,350 0.000606$ 0.000615$ 23 Rate B 2,688$ 7,946,703 0.000338$ 0.000343$ 24 Rate SGS 35,493$ 64,801,056 0.000548$ 0.000556$ 25 Rate DGS/MLA 570,021$ 1,073,881,762 0.000531$ 0.000539$ 26 Rate OSS 43,895$ 90,812,938 0.000483$ 0.000491$ 27 Rate LP/BAMP 630,704$ 2,259,676,714 0.000279$ 0.000283$ 28 Rate HLF 2,134$ 79,734,000 0.000027$ 0.000027$ 29 Total 2,111,878$

CLEAN ENERGY COST ADJUSTMENT (CECA)ALLOCATION AND RATE DERIVATION


VECTREN SOUTH




Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Annual TotalLine No. Rate Schedule

Projected Energy (kWh) (A)1 RS - Residential Service 129,384,100 167,364,742 153,920,056 103,921,697 75,204,810 96,859,338 119,792,656 142,548,027 106,652,310 102,243,175 79,603,413 87,478,027 1,364,972,350 2 B - Water Heating Service 620,455 569,619 539,559 557,907 596,021 628,027 750,391 885,317 786,503 725,983 694,066 592,855 7,946,703 3 SGS - Small General Service 5,720,196 6,340,642 5,964,471 5,075,723 4,719,414 5,137,648 5,744,151 5,963,477 5,597,053 5,107,988 4,665,807 4,764,486 64,801,056 4 DGS - Demand General Service / Municipal Levee Authority 101,128,909 114,751,000 114,101,595 92,261,526 80,723,333 82,988,093 82,912,600 87,242,810 72,466,939 80,952,601 75,901,431 88,450,926 1,073,881,762 5 OSS - Off-Season Service 6,821,333 7,543,314 7,110,679 6,193,726 6,400,492 7,763,979 9,413,770 10,204,971 9,193,942 7,809,037 6,427,280 5,930,415 90,812,938 6 LP - Large Power Service 203,649,307 210,292,321 217,308,701 198,025,891 194,302,573 174,608,985 166,133,907 169,751,995 173,888,936 177,845,309 180,741,971 193,126,819 2,259,676,714 7 HLF - High Load Factor Service 5,772,000 6,096,000 7,056,000 6,726,000 5,934,000 6,942,000 6,942,000 6,894,000 6,372,000 7,098,000 6,882,000 7,020,000 79,734,000

453,096,300 512,957,639 506,001,061 412,762,471 367,880,643 374,928,070 391,689,475 423,490,597 374,957,682 381,782,092 354,915,967 387,363,527

Projected Recoveries (B), (C) 8 RS - Residential Service 78,385$ 101,395$ 93,249$ 62,959$ 45,561$ 58,680$ 72,574$ 86,360$ 64,613$ 61,942$ 48,226$ 52,997$ 826,942$ 9 B - Water Heating Service 210$ 193$ 183$ 189$ 202$ 212$ 254$ 299$ 266$ 246$ 235$ 201$ 2,688$ 10 SGS - Small General Service 3,133$ 3,473$ 3,267$ 2,780$ 2,585$ 2,814$ 3,146$ 3,266$

Documents

SOUTHERN INDIANA GAS AND ELECTRIC COMPANY d/b/a …...ATTACHMENTS JCS-1 THROUGH JCS-2. Petitioner’s Exhibit No. 3 Cause No. 44909-CECA 2 Vectren South Page 2 of 15 DIRECT TESTIMONY