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Key Points/issues (cont.): <br /> <br /> lowering the amount of debt on their balance sheet, <br /> thereby maintaining a better debt rating than they might <br /> otherwise have. The cost of this service is assigned to <br /> each subsidiary or division based on the principal of cost- <br /> -.causation and the price charged to TXU Gas was no <br /> higher than the price charged to others for the same item <br /> or class of item. <br /> (3) TXU Vermont Insurance Company is a wholly-owned <br /> single-parent captive insurance company that provides <br /> varying levels of insurance for various TXU Corp. <br /> subsidiaries or divisions. Those TXU Corp. subsidiaries <br /> participating in this program benefit by (1) minimizing the <br /> impact of insurance deductible expenses and (2) having <br /> access to a commercial reinsurance market to which they <br /> might otherwise not have. The cost of this service is <br /> assigned to each subsidiary or division based on the <br /> principal of cost-causation and the price charged to TXU <br /> Gas was no higher than the price charged to others for the <br /> same item or class of item. <br /> (4) Those costs described above have been adjusted for <br /> known and measurable changes. <br /> <br />Summary/Recommendations: <br /> <br /> The costs described above and billed to TXU Gas Distribution <br /> and TXU Lone Star Pipeline during the test year ended <br /> December 31, 2002 were reasonable and necessary; reasonably <br /> reflect the actual cost of services to these entities, and were no <br /> higher than the prices charged to other subsidiaries, divisions, or <br /> to other unaffiliated companies for the same item or class of <br /> items. As such, these costs should be included in the cost of <br /> service for these two entities as proposed. <br /> <br /> Ragland - Summary of Testimony Page 2 of 2 <br /> <br /> <br />