04-A TXU Gas Statmt of Intent - Laserfiche WebLink

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SUMMARY OF TESTIMONY Witness: Dane A. Watson Background: Bachelor of Science degree in Electrical Engineering from the University of Arkansas at Fayetteville and a Master's Degree in Business Administration from Amberton University (formerly Amber University). Completed depreciation courses offered by Depreciation Programs, Inc. Joined the TXU System in 1985, and began working in the area of depreciation and valuation within the Texas Utilities Generating Company. Responsible for, among other things, conducting valuation and depreciation studies for the majority of the domestic TXU System companies. Currently employed by TXU Business Services and responsible for the management of Depreciation, Records, and Property Accounting for various areas within the TXU Corp. (formerly Texas Utilities Company) system of companies, including TXU Gas ("Company"). Purpose of Testimony: 1. Provide and support the components of invested capital for TXU Gas that is used to establish the retum components of the Company's rate request. 2. Discuss the results of the recent depreciation studies completed for TXU Gas Distribution and TXU Lone Star Pipeline. 3. Support and justify the recommended depreciation rate changes for TXU Gas Distribution and TXU Lone Star Pipeline. 4. Discuss the accounting treatment of Safety Compliance Program costs. Key Points/Issues: 1. TXU Gas' total depreciable plant has significantly increased from December 31, 1999 to December 31,2002. 2. Removal costs associated with pipe and other facilities located on the distribution system have dramatically increased in recent years while at the same time gross salvage proceeds have diminished significantly. 3. The Safety Compliance Program costs are being accounted for in the most equitable way for the customers as well as the Company. Watson - Summary of Testimony Page 1 of 2