1 BEFORE THE PUBLIC UTILITIES COMMISSION OF OHIO 2 - - - 3 In the Matter of: : : Case No. 07-221-GA-GCR 4 In The Matter of the : Regulation of the : 5 Purchased Gas Adjustment : Clause Contained Within : 6 the Rate Schedules of : Columbia Gas of Ohio, Inc.: 7 and Related Matters. : 8 - - - 9 PROCEEDINGS 10 before Mr. Gregory Price, Attorney Examiner, at the 11 Public Utilities Commission of Ohio, 180 East Broad 12 Street, Room 11-G, Columbus, Ohio, called at 10:00 13 a.m. on Wednesday, June 11, 2008. 14 - - - 15 VOLUME II 16 - - - 17 18 19 20 21 ARMSTRONG & OKEY, INC. 185 South Fifth Street, Suite 101 22 Columbus, Ohio 43215-5201 (614) 224-9481 - (800) 223-9481 23 Fax - (614) 224-5724 24 - - - ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 2 1 APPEARANCES: 2 NiSource By Mr. Stephen B. Seiple 3 200 Civic Center Drive Columbus, Ohio 43215 4 On behalf of Columbia Gas of Ohio. 5 Janine L. Migden-Ostrander 6 Ohio Consumers' Counsel By Mr. Larry S. Sauer 7 10 West Broad Street, Suite 1800 Columbus, Ohio 43215-3485 8 On behalf of the Residential 9 Consumers of the State of Ohio. 10 Mark Dann, Ohio Attorney General Duane W. Luckey, Senior Deputy 11 Attorney General Public Utilities Section 12 By Mr. Stephen A. Reilly and Mr. John H. Jones 13 180 East Broad Street, 9th Floor Columbus, Ohio 43215-3793 14 On behalf of the Staff of the Public 15 Utilities Commission. 16 - - - 17 18 19 20 21 22 23 24 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 3 1 INDEX 2 3 - - - 4 WITNESS PAGE 5 Roger Sarver Direct Examination by Mr. Reilly 7 6 - - - 7 8 JOINT EXHIBITS IDFD ADMTD 9 1 - Stipulation and Recommendation 7 12 10 COLUMBIA EXHIBITS IDFD ADMTD 11 2 - Affidavits of Notice of Hearing 5 5 Published in Newspapers. 12 - - - 13 14 15 16 17 18 19 20 21 22 23 24 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 4 1 Wednesday Morning Session, 2 June 11, 2008. 3 - - - 4 THE ATTORNEY EXAMINER: Good morning. 5 The Public Utilities Commission has set for this time 6 and place Case No. 07-221-GA-GCR being In The Matter 7 of the Regulation of the Purchased Gas Adjustment 8 Clause Contained Within the Rate Schedules of 9 Columbia Gas of Ohio, Inc. and Related Matters. 10 My name is Gregory Price. I'm the 11 attorney-examiner assigned to preside over today's 12 hearings, a second day of hearing in this case. 13 Let's begin by taking appearances 14 starting with the company. 15 MR. SEIPLE: On behalf of Columbia Gas of 16 Ohio, I would like to enter the appearance of Stephen 17 B. Seiple, 200 Civic Center Drive, Columbus, Ohio 18 43215. 19 THE ATTORNEY EXAMINER: Thank you. 20 Staff. 21 MR. REILLY: Your Honor, on behalf of 22 Nancy H. Rogers, Ohio Attorney General, Duane Luckey, 23 section chief, Stephen P. Reilly and John Jones, 24 assistant attorneys general, on behalf of the staff ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 5 1 of the Public Utilities Commission, 180 East Broad 2 Street, Columbus, Ohio 43215. 3 THE ATTORNEY EXAMINER: And intervenors. 4 MR. SAUER: Thank you. On behalf of the 5 residential customers of Columbia Gas of Ohio, the 6 Office of the Ohio Consumers' Counsel, Janine Migden 7 Ostrander, Consumers' Counsel, I am Larry Sauer, 8 office is 10 West Broad Street, Columbus, Ohio, 9 43215. 10 THE ATTORNEY EXAMINER: Any preliminary 11 matters before we take our first witness? 12 MR. SEIPLE: Yes. I would like to note 13 on May 13 Columbia filed some additional affidavits 14 indicating a notice of the hearing in the case that 15 was published in newspapers. I'd like to have that 16 marked as Columbia Exhibit No. 2. 17 THE ATTORNEY EXAMINER: So marked. 18 (EXHIBIT MARKED FOR IDENTIFICATION.) 19 THE ATTORNEY EXAMINER: Any objection to 20 admission of Columbia Exhibit 2? 21 Hearing none, the exhibit is admitted. 22 (EXHIBIT ADMITTED INTO EVIDENCE.) 23 MR. SEIPLE: That is the only preliminary 24 matter I had. Thank you, Your Honor. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 6 1 MR. REILLY: We had one preliminary 2 matter. That's a clarification from the last hearing 3 day. At the last hearing there was admitted into 4 evidence Commission-Ordered Exhibit 1, the report of 5 Deloitte & Touche in this matter. That was actually 6 two reports. Both reports were entered as 7 Commission-Ordered Exhibit 1. One of those reports 8 is their review on uncollectible customer accounts, 9 the so-called bad debt audit; and the other is on the 10 annual examination of the financial procedure 11 aspects. Both reports are contained in 12 Commission-ordered Exhibit 1. 13 MR. SEIPLE: Thank you for that 14 clarification. First witness. 15 MR. REILLY: Thank you, your Honor. We 16 would call Mr. Roger Sarver to the stand. 17 (Witness sworn.) 18 THE ATTORNEY EXAMINER: Please be seated 19 and state your name and business address for the 20 record. 21 THE WITNESS: My name is Roger L. Sarver 22 Address is 180 East Broad Street, Columbus, Ohio, 23 43215. 24 THE ATTORNEY EXAMINER: Thank you. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 7 1 Mr. Reilly . 2 MR. REILLY: Thank you, your Honor. At 3 this time, your Honor, we would ask that the Bench 4 take administrative notice of the Commission docket. 5 We ask the Bench take notice of the Joint Stipulation 6 and Recommendation filed in this docket on May 13, 7 2008 by Columbia Gas, the Commission staff and Ohio 8 Consumers' Counsel. 9 I have provided for the convenience of 10 the Bench a copy of that stipulation, and I would 11 like the stipulation as it appears in the docket 12 marked as Joint Exhibit 1. 13 THE ATTORNEY EXAMINER: So marked and we 14 will take administrative notice of that. 15 MR. REILLY: Thank you your Honor. 16 (EXHIBIT MARKED FOR IDENTIFICATION.) 17 - - - 18 ROGER SARVER 19 being first duly sworn, as prescribed by law, was 20 examined and testified as follows: 21 DIRECT EXAMINATION 22 By Mr. Reilly: 23 Q. Good morning, Mr. Sarver. 24 A. Good morning. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 8 1 Q. I've handed you a document marked as 2 Joint Exhibit 1. Do you see that document? 3 A. Yes, sir. 4 Q. Thank you. Before we go into it, I would 5 like to talk a little bit about your background. 6 You've employed by the Public Utilities Commission. 7 A. Yes, sir. 8 Q. And what is your position with the 9 Commission? 10 A. I'm an energy specialist in the gas rate 11 section. 12 Q. And how long have you been an energy 13 specialist in the gas rate section? 14 A. Approximately 20 years. 15 Q. And what are your duties relative to gas 16 cost recovery cases? 17 A. I'm responsible for all financial 18 management performance audits of the gas cost 19 recovery mechanism. 20 Q. The type of audits that are involved in 21 this case? 22 A. Yes. It is a financial audit of Columbia 23 Gas of Ohio. 24 Q. And how long have you been responsible ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 9 1 for those audits? 2 A. Since 1990. 3 Q. Approximately -- 4 A. Eighteen years. 5 Q. Eighteen years, in that time you have 6 been responsible for hundreds of cases involving 7 these audits? 8 A. Yes, sir. 9 Q. Are you familiar with Columbia Gas? 10 A. Yes, sir. 11 Q. Do you consider them to be a capable and 12 knowledgeable party in gas cost recovery matters? 13 A. Very much so. 14 Q. Are you familiar with the Office of 15 Consumers' Counsel? 16 A. Yes, sir. 17 Q. Do you consider them to be a capable and 18 knowledgeable party in gas cost recovery matters? 19 A. Yes, sir. 20 Q. Mr. Sarver, have you reviewed the 21 document identified as Joint Exhibit 1? 22 A. Yes. 23 Q. Have you reviewed the two reports as 24 identified in Commission-Ordered Exhibit 1 from ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 10 1 Deloitte & Touche? 2 A. Yes, the financial audit. Yes, sir. 3 Q. Do you consider the Joint Stipulation 4 identified as Joint Exhibit No. 1 to be in the public 5 interest generally? 6 A. Yes, sir, I do. 7 Q. Do you consider the joint stipulation 8 identified as Joint Exhibit 1 to benefit ratepayers? 9 A. Yes, I do. The stipulation adopts the 10 financial auditor's report in its entirety. That 11 audit concluded that Columbia accurately calculated 12 and properly applied its gas cost recovery rates to 13 customers' bills during the audit period of May 2006 14 through October 2007. The auditing of Columbia's GCR 15 calculations for mathematical accuracy and the proper 16 application of these rates to customers' bills are 17 some of the steps taken by the Public Utility 18 Commission of Ohio to ensure that customers are 19 charged the appropriate rates. I believe the 20 stipulation satisfies this criterion as being in the 21 public interest. 22 Q. And in conducting that audit and making 23 those findings, they satisfy part of the requirements 24 for review of utilities that were laid down by the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 11 1 Ohio General Assembly; is that not correct? 2 A. Correct. That's part of the requirements 3 under section 4905.302 of the Revised Code and Rule 4 4901: 14-07 of the Ohio Administrative Code. 5 Q. Mr. Sarver, do you believe that the joint 6 stipulation marked as Joint Exhibit 1 violates any 7 important regulatory principle or practice? 8 A. No, it does not. 9 MR. REILLY: Thank you, Mr. Sarver. 10 THE ATTORNEY EXAMINER: Cross-examination. 11 MR. SEIPLE: No, your Honor. 12 MR. SAUER: No, your Honor. 13 THE ATTORNEY EXAMINER: Thank you, 14 Mr. Sarver. You may step down. 15 Mr. Reilly. 16 MR. REILLY: I move for admission of 17 Joint Exhibit 1 into evidence. 18 THE ATTORNEY EXAMINER: Any objections? 19 MR. SEIPLE: No. 20 MR. SAUER: No. 21 THE ATTORNEY EXAMINER: The exhibit will 22 be admitted. 23 (EXHIBIT ADMITTED INTO EVIDENCE.) 24 THE ATTORNEY EXAMINER: Any further ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 12 1 matters for the Bench? 2 MR. REILLY: We have none, your Honor. 3 MR. SEIPLE: We have none. 4 MR. SAUER: We have none. 5 THE ATTORNEY EXAMINER: Thank you. This 6 matter is submitted on the record. Thank you. 7 (The hearing concluded at 10:20 a.m.) 8 - - - 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 13 1 CERTIFICATE 2 I do hereby certify that the foregoing is a 3 true and correct transcript of the proceedings taken 4 by me in this matter on Wednesday, June 11, 2008, and 5 carefully compared with my original stenographic 6 notes. 7 _______________________________ Rosemary Foster Anderson, 8 Professional Reporter and Notary Public in and for 9 the State of Ohio. 10 My commission expires April 5, 2009. 11 (RFA-8152) 12 - - - 13 14 15 16 17 18 19 20 21 22 23 24 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481