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Key Points/Issues (cont.): <br /> <br /> classes will be overstated or understated depending <br /> upon whether test year temperatures have been <br /> higher or lower than normal. Thus, it is necessary to <br /> normalize test year sales so that there is no <br /> understatement or overstatement of sales. <br /> <br /> 3. The Company made adjustments to industrial and <br /> Transportation customers, sales, and revenues to <br /> remove customers from the Distribution data who <br /> were not served by the Distribution system and to <br /> recognize the effects of customers moving between <br /> classes or leaving the Distribution system. <br /> <br /> 4. Capacity costs are allocated to classes using each <br /> class' contribution to the system volumes delivered <br /> during the days of Maximum Daily Usage ("MDU") <br /> occurring during the months of December, January, <br /> February, and March of the test year. The 4 MDU <br /> method correctly and accurately reflects the manner <br /> in which capacity costs are incurred by the Company. <br /> <br /> 5. The allocation factors chosen for the cost of service <br /> study best represent the cost drivers that produce the <br /> cost being allocated. <br /> <br /> 6. The results of the Pipeline Cost of Service Study <br /> indicate that the present rates for City Gate customers <br /> are below their allocated costs to serve and that the <br /> rates for Pipeline Transportation customers are <br /> significantly above their allocated costs to serve. The <br /> results of the Distribution cost of service study <br /> indicate that the rates for Residential Sales produce <br /> revenues substantially below the Residential costs to <br /> serve, that the rates for Commercial Sales are higher <br /> than their costs to serve and that the rates to <br /> Industrial Sales and Transportation customers are <br /> substantially higher than their costs to serve. <br /> <br /> 7. Under the proposed rates, the City Gate relative rate <br /> of return increases from 79% to 86% and the Pipeline <br /> Transportation relative rate of return decreases from <br /> 187% to 160%. The proposed rate for City Gate <br /> Service consists of a meter fee, a capacity charge, <br /> and a volume charge. The proposed Pipeline <br /> Transportation rate is similar in design except that a <br /> portion of the capacity costs are recovered in the <br /> <br /> Goble - Summary of Testimony Page 2 of 3 <br /> <br /> <br />