1 BEFORE THE PUBLIC UTILITIES COMMISSION OF OHIO - - - 2 In the Matter of the : Application of The Dayton : 3 Power and Light Company : Case No. 16-395-EL-SSO for Approval of its : 4 Electric Security Plan. : : 5 In the Matter of the : Application of The Dayton : 6 Power and Light Company : Case No. 16-396-EL-ATA for Approval of Revised : 7 Tariffs. : : 8 In the Matter of the : Application of The Dayton : 9 Power and Light Company : for Approval of Certain : Case No. 16-397-EL-AAM 10 Accounting Authority : Pursuant to Ohio Rev. Code: 11 §4904.13. : 12 - - - 13 PROCEEDINGS 14 before Mr. Gregory Price and Mr. Nicholas Walstra, 15 Attorney Examiners, at the Public Utilities 16 Commission of Ohio, 180 East Broad Street, Room 11-A, 17 Columbus, Ohio, called at 9:00 a.m. on Tuesday, 18 April 4, 2017. 19 - - - 20 VOLUME II 21 - - - 22 ARMSTRONG & OKEY, INC. 222 East Town Street, Second Floor 23 Columbus, Ohio 43215-5201 (614) 224-9481 - (800) 223-9481 24 - - - 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 231 1 APPEARANCES: 2 Faruki Ireland Cox Rinehart & Dusing P.L.L. By Mr. Jeffrey S. Sharkey, 3 Mr. D. Jeffrey Ireland, and Mr. Christopher C. Hollon 4 110 North Main Street, Suite 1600 Dayton, Ohio 45402 5 Dayton Power and Light Company 6 By Ms. Judi Sobecki, General Counsel 7 and Mr. Michael Schuler, Regulatory Counsel 8 1065 Woodman Drive Dayton, Ohio 45432 9 On behalf of the Applicant. 10 Ohio Partners for Affordable Energy 11 By Ms. Colleen L. Mooney P.O. Box 12451 12 Columbus, Ohio 43212 13 On behalf of the Ohio Partners for Affordable Energy. 14 Sierra Club Environmental Law Program 15 Mr. Gregory E. Wannier, Staff Attorney 16 2101 Webster Street, 14th Floor Oakland, California 94612 17 On behalf of the Sierra Club. 18 Boehm, Kurtz & Lowry 19 By Mr. Michael L. Kurtz, Mr. Kurt J. Boehm, 20 and Ms. Jody Kyler Cohn 36 East Seventh Street, Suite 1510 21 Cincinnati, Ohio 45202 22 On behalf of the Ohio Energy Group. 23 - - - 24 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 232 1 APPEARANCES: (Continued) 2 McNees, Wallace & Nurick LLC By Mr. Frank P. Darr 3 and Mr. Matthew Pritchard 21 East State Street, 17th Floor 4 Columbus, Ohio 43215 5 On behalf of the Industrial Energy Users of Ohio. 6 IGS Energy 7 By Mr. Joseph Oliker 6100 Emerald Parkway 8 Dublin, Ohio 43016 9 On behalf of IGS Energy. 10 Vorys, Sater, Seymour & Pease, LLP By Mr. Michael J. Settineri 11 and Ms. Gretchen L. Petrucci 52 East Gay Street 12 Columbus, Ohio 43215 13 On behalf of Retail Energy Supply Association. 14 Kravitz, Brown & Dortch, LLC 15 By Mr. Michael D. Dortch 65 East State Street, Suite 200 16 Columbus, Ohio 43215 17 On behalf of Calpine Energy Solutions. 18 Carpenter Lipps & Leland LLP By Ms. Kimberly W. Bojko 19 and Mr. James D. Perko 280 North High Street, Suite 1300 20 Columbus, Ohio 43215 21 On behalf of the Ohio Manufacturers' Association Energy Group. 22 Carpenter Lipps & Leland LLP 23 By Ms. Angela M. Paul Whitfield 280 North High Street, Suite 1300 24 Columbus, Ohio 43215 25 On behalf of The Kroger Company. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 233 1 APPEARANCES: (Continued) 2 Environmental Law & Policy Center By Ms. Madeline Fleisher 3 21 West Broad Street, Suite 500 Columbus, Ohio 43215 4 On behalf of the Environmental Law & 5 Policy Center. 6 Spilman, Thomas & Battle, PLLC By Ms. Carrie M. Harris 7 310 First Street, Suite 1100 P.O. Box 90 8 Roanoke, Virginia 24002 9 On behalf of Wal-Mart Stores East, LP, and Sam's East, Inc. 10 Mr. Richard L. Sites 11 155 East Broad Street, Suite 301 Columbus, Ohio 43215 12 Bricker & Eckler, LLP 13 By Mr. Dylan Borchers 100 South Third Street 14 Columbus, Ohio 43215-4291 15 On behalf of the Ohio Hospital Association. 16 Ohio Environmental Council 17 By Mr. Trent A. Dougherty 1145 Chesapeake Avenue, Suite I 18 Columbus, Ohio 43212 19 On behalf of the Ohio Environmental Council. 20 Environmental Defense Fund 21 By Ms. Miranda Leppla 1145 Chesapeake Avenue, Suite I 22 Columbus, Ohio 43212 23 On behalf of the Environmental Defense Fund. 24 - - - 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 234 1 APPEARANCES: (Continued) 2 Mike DeWine, Ohio Attorney General By Mr. William Wright, 3 Section Chief Mr. Thomas W. McNamee 4 and Mr. Thomas Lindgren, Assistant Attorneys General 5 30 East Broad Street, 16th Floor Columbus, Ohio 43215 6 On behalf of the Staff of the PUCO. 7 Bruce E. Weston, Ohio Consumers' Counsel 8 By Mr. William Michael, Mr. Kevin F. Moore, 9 Mr. Ajay Kumar, and Mr. Andrew S. Garver, 10 Assistant Consumers' Counsel 10 West Broad Street, Suite 1800 11 Columbus, Ohio 43215-3485 12 On behalf of the Residential Consumers of The Dayton Power and Light Company. 13 Doll, Jansen & Ford 14 By Mr. Matthew T. Crawford and Mr. John Doll 15 111 West 1st Street, Suite 1100 Dayton, Ohio 45402 16 On behalf of the Utility Workers Union of 17 America Local 175. 18 Ohio Citizen Action By Mr. Ellis Jacobs 19 130 West Second Street Suite 700 East 20 Dayton, Ohio 45402 21 On behalf of Advocates for Basic Legal Equality and the Edgemont Neighborhood 22 Coalition of Dayton. 23 - - - 24 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 235 1 APPEARANCES: (Continued) 2 Carpenter Lipps & Leland LLP By Mr. Joel E. Sechler 3 280 North High Street, Suite 1300 Columbus, Ohio 43215 4 On behalf of EnerNOC. 5 Bricker & Eckler, LLP 6 By Mr. Devin D. Parram 100 South Third Street 7 Columbus, Ohio 43215-4291 8 On behalf of the People Working Cooperatively, Inc. 9 Calfee, Halter & Griswold LLP 10 By Mr. N. Trevor Alexander, Mr. James F. Lang, 11 Mr. Steven D. Lesser, and Mr. Mark T. Keaney 12 1200 Huntington Center 41 South High Street 13 Columbus, Ohio 43215 14 On behalf of Honda of America Manufacturing, Inc., and City of Dayton. 15 Isaac Wiles Burkholder & Teetor, LLC 16 By Mr. Mark Landes and Mr. Brian Zets 17 Two Miranova Place, Suite 700 Columbus, Ohio 43215 18 On behalf of the Adams County Residents 19 and Adams County Board of Commissioners. 20 Benesch Friedlander Coplan & Arnoff LLP By Mr. Orla E. Collier, III, 21 Mr. John F. Stock, Ms. Emily V. Danford, 22 and Mr. Michael J. Meyer 41 South High Street, Suite 2600 23 Columbus, Ohio 433215 24 On behalf of the Murray Energy Corporation. 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 236 1 APPEARANCES: (Continued) 2 Adams County Prosecutor's Office By Mr. C. David Kelley 3 110 West Main Street West Union, Ohio 45693 4 On behalf of Sprigg Township, Adams 5 County; Monroe Township, Adams County; Manchester Local School District; and 6 Adams County Ohio Valley School District. 7 - - - 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 237 1 INDEX 2 - - - 3 WITNESS PAGE 4 Sharon R. Schroder Direct Examination by Mr. Ireland 240 5 Cross-Examination by Ms. Harris 242 Cross-Examination by Mr. Michael 275 6 Cross-Examination by Mr. Collier 386 Cross-Examination by Mr. Crawford 413 7 Matthew White 8 Direct Examination by Mr. Settineri 420 Cross-Examination by Mr. Garver 422 9 Redirect Examination by Mr. Settineri 450 10 Jacob J. Nicodemus Direct Examination by Mr. McNamee 452 11 Cross-Examination by Mr. Kumar 454 12 - - - 13 DP&L EXHIBITS IDENTIFIED ADMITTED 14 3 3/22/2017 Direct Testimony of Sharon Schroder in Support of 15 Amended Stipulation and Recommendation 241 418 16 4 Excerpt of Testimony of 17 Kevin L. Hall 241 418 18 - - - 19 OCC EXHIBITS IDENTIFIED ADMITTED 20 4 The Dayton Power and Light Company's Notice of Filing 21 Its Letter Agreement With Mid-Atlantic Renewable Energy 22 Coalition 287 419 23 5 INT-379 and Response 304 419 24 6 INT-396 and Response 310 419 25 7 INT-378 and Response 380 419 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 238 1 INDEX (Continued) 2 - - - 3 OCC EXHIBITS IDENTIFIED ADMITTED 4 8 INT-412 and Response 381 419 5 9 DP&L's Rule 10 Report, Case No. 17-0229-EL-ESS 455 463 6 10 Metrix Matrix Dayton Power & 7 Light Customer Perception Survey May 2015 457 -- 8 - - - 9 MURRAY ENERGY CORPORATION EXHIBIT IDENTIFIED ADMITTED 10 1 Finding and Order in Case No. 13-2420-EL-UNC 395 -- 11 - - - 12 RESA EXHIBIT IDENTIFIED ADMITTED 13 1 Direct Testimony of Matthew White on Behalf of Interstate 14 Gas Supply, Inc., and Retail Energy Supply Association 420 452 15 - - - 16 STAFF EXHIBIT IDENTIFIED ADMITTED 17 1 Prefiled Testimony of 5 Jacob J. Nicodemus 453 463 18 - - - 19 20 21 22 23 24 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 239 1 Tuesday Morning Session, 2 April 4, 2017. 3 - - - 4 EXAMINER PRICE: Let's go on the record. 5 Good morning. The Public Utilities 6 Commission has set for hearing at this time and place 7 Case No. 16-395-EL-SSO, being in the Matter of the 8 Application of the Dayton Power and Light Company for 9 Approval of an Electric Security Plan. 10 My name is Gregory Price. With me is 11 Nicholas Walstra. We are the attorney examiners 12 assigned to preside over today's hearing. Today is 13 our second day of hearing in this matter. 14 We will dispense with appearances. Do we 15 have any other preliminary matters we need to take 16 care of before we proceed with our witnesses? 17 Seeing none, Mr. Sharkey, you may call 18 your next witness. 19 MR. IRELAND: The next witness will be 20 Ms. Sherry Schroder. 21 EXAMINER PRICE: I'm sorry, Mr. Ireland. 22 (Witness sworn.) 23 EXAMINER PRICE: Please be seated and 24 state your name and business address for the record. 25 THE WITNESS: My name is Sharon R. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 240 1 Schroder. That's spelled S-C-H-R-O-D-E-R. Business 2 address is 1065 Woodman Drive, Dayton, Ohio 45432. 3 EXAMINER PRICE: Please proceed, 4 Mr. Ireland. 5 MR. IRELAND: Thank you, your Honor. 6 - - - 7 SHARON R. SCHRODER 8 being first duly sworn, as prescribed by law, was 9 examined and testified as follows: 10 DIRECT EXAMINATION 11 By Mr. Ireland: 12 Q. Ms. Schroder, do you have before you your 13 direct testimony in support of the amended 14 stipulation and recommendation? 15 A. Yes, I do. 16 Q. I believe that's been marked as Company 17 Exhibit 3. If I were to ask you each of the 18 questions in your direct testimony, would your 19 answers be the same? 20 A. Yes, they would. 21 Q. Would they be true? 22 A. Yes. 23 Q. Do you have any corrections to your 24 direct testimony? 25 A. No, I don't. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 241 1 Q. Are you adopting any testimony from any 2 other witness? 3 A. Yes, I am. 4 Q. And what testimony is that? 5 A. That is a portion of testimony of Witness 6 Hall. 7 Q. Is that page 4, lines 6 to 22? 8 A. That's correct. 9 MR. IRELAND: Your Honor, I have no 10 further -- 11 Q. Well, with respect to those questions of 12 Mr. Hall, if we were to ask you those questions and 13 answers, would your answers be true? 14 A. Yes. 15 MR. IRELAND: Your Honor, I would tender 16 her testimony, subject to cross-examination. 17 EXAMINER PRICE: Let's go off the record 18 real fast. 19 (Discussion off the record.) 20 EXAMINER PRICE: Let's go on the record. 21 MR. IRELAND: The direct testimony will 22 be Company Exhibit 3 and the excerpt from Mr. Hall's 23 testimony will be Company Exhibit 4. 24 EXAMINER PRICE: It will be so marked. 25 (EXHIBITS MARKED FOR IDENTIFICATION.) ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 242 1 EXAMINER PRICE: Do any counsel for 2 the -- for proponents of the stipulation have any 3 cross-examination for this witness? 4 Seeing none, Consumers' Counsel, you may 5 proceed. 6 MR. KUMAR: Your Honor. 7 MS. HARRIS: I believe it is going to 8 start with me, your Honor. Mr. Michael is running a 9 little late. 10 EXAMINER PRICE: Perfect. Ms. Harris, 11 you may proceed. 12 - - - 13 CROSS-EXAMINATION 14 By Ms. Harris: 15 Q. Good morning, Ms. Schroder. 16 A. Good morning. 17 Q. Do you have in front of you the amended 18 stipulation as well that was marked yesterday? 19 A. Yes, I do. 20 MS. WHITFIELD: Excuse me. Could I ask 21 counsel to use the microphone? 22 MS. HARRIS: Yes, I remember. If you 23 don't remind me, I won't use it. 24 Q. (By Ms. Harris) Ms. Schroder, if you will 25 just keep them kind of both open, I am going to have ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 243 1 you at times looking at both documents at the same 2 time, so your testimony that was marked as Exhibit 3 3 and then the amended stipulation. So could you turn 4 to page 8 of your direct testimony. And I am looking 5 at the question and answer that begins at line 8, in 6 particular your response there beginning at line 10. 7 You describe what I believe you describe as a diverse 8 group of parties you believe are either signatories 9 or nonopposing parties who have joined the amended 10 stipulation; is that correct? 11 A. Yes. That have either signed or not 12 opposed, yes. 13 Q. And you are describing those kind of 14 generally as the type of entity that they are as 15 opposed to the specific name of the entity; is that 16 correct? 17 A. Yes. At least in general, yes, that's 18 correct. 19 Q. So then if you could turn to page 12 of 20 the amended stipulation. And I actually believe the 21 at issue provision begins sort of on the bottom of 22 page 11 continuing on to page 12, but there are a 23 number of parties identified there and in that full 24 paragraph at the top of page 12 are some of the 25 specific named parties on page 12 of the amended ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 244 1 stipulation, some of the more general entities that 2 you've identified on page 8 of your testimony? 3 A. Can you repeat that? 4 Q. I can. So there are a couple of parties 5 identified in the top paragraph on page 12 of the 6 amended stipulation. Those specific parties are some 7 of the parties that you're referring to on page 8 of 8 your testimony. 9 A. Yes, those are some of the same ones, 10 yes. 11 Q. And so the parties identified on page 12 12 are receiving certain direct payments as part of the 13 amended stipulation; is that correct? 14 A. Some of those parties have direct 15 benefits, and other parties have indirect benefits. 16 Q. Turning to page 27 of the amended 17 stipulation, and looking from pages 27 to 36, on the 18 pages that follow, you identify -- the amended 19 stipulation identifies by name a number of specific 20 either signatory parties or nonopposing parties; 21 would you agree? 22 A. I didn't hear the beginning of that, 23 sorry. 24 Q. Sorry. My microphone is on and off. 25 Pages 27 to 36 identifies specific signatory parties ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 245 1 or nonopposing parties by name; is that correct? 2 A. Yes, some of them are mentioned here, 3 yes. 4 Q. And those are the same parties that you 5 identify generally on page 8 of your testimony; is 6 that correct? 7 A. I'm not sure if they are the same, but 8 they are at least some of the same. 9 Q. And would you agree with me that the 10 specific entries on Article X starting at page 27 of 11 the amended stipulation set forth specific things 12 being awarded to the individual signatory parties 13 contained in those paragraphs? 14 A. No, I wouldn't -- I wouldn't characterize 15 it that way. I think this section, section X that 16 begins on page 27, describes a number of benefits 17 that accrue to, you know, as a result potentially of 18 some of those individual parties and for some of 19 those individual parties, but there are also very 20 broad benefits that accrued to other members of the 21 community. 22 For example, with the City of Dayton, 23 many of the benefits that are listed here are for, 24 excuse me, the reliability at the airport. Some of 25 these are for residential energy education. Some of ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 246 1 the ones that are listed under the City of Dayton are 2 actually for the residents of the City of Dayton, 3 some of whom are, for example, low-income customers 4 as an example. 5 Q. Sure. But in general when you say, for 6 example, in paragraph 2b that you are making a 7 $50,000 annual payment, you are going to pay that 8 directly to the City of Dayton and their programs; is 9 that correct? 10 A. I'm not sure exactly where the payment 11 will go. I just can tell in that section b that you 12 are referring to that we will provide 50,000 -- or 13 DP&L will provide $50,000 annually for residential 14 energy education in reduction programs in the City of 15 Dayton. 16 Q. And I do want to sort of touch base on 17 the phrase you just used there which is "DP&L will 18 provide." That's only true for the first year of the 19 program, correct? After that -- well, correct? Let 20 me have you answer the first question. 21 A. Which program are you referring to? 22 Q. Paragraph b that we were just reading 23 from. 24 A. No, that's not correct. What this is 25 describing is that there is a commitment at least for ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 247 1 year one and that there -- thereafter it will be 2 proposed in the energy efficiency portfolio filing. 3 To the extent that it doesn't qualify there or is not 4 approved there, then there is the continued 5 commitment by the shareholders in annual funding. 6 Q. But they do intend for a number of these 7 provisions where there are payments specified to try 8 to recover those in years two and three if not four 9 and five if the DMR is extended through rates or 10 through customers. 11 A. Which ones are you referring to? 12 Q. Well, we can go through them specifically 13 if that would be helpful. But to the extent there is 14 a statement in the amended stipulation where you are 15 going to seek in subsequent years after year one 16 through some sort of a rider, you would agree that 17 that means you are going to seek to recover it from 18 customers. 19 A. Can you repeat that? 20 MS. HARRIS: Can I have it read back, 21 please. 22 EXAMINER PRICE: Please. 23 (Record read.) 24 MR. IRELAND: I would object to it as 25 vague. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 248 1 EXAMINER PRICE: Overruled. 2 A. I think it may be helpful to go through 3 the ones you are referring to, please. 4 Q. Okay. So let's go to 2b then. 5 A. Okay. I'm there. 6 Q. 2b says -- bear with me. I want to make 7 sure I don't get my pages out of order. 2b says that 8 you will provide $50,000 annually, going to the 9 second sentence, during the first year. This will be 10 funded by shareholders, correct? 11 A. Yes, it does say that. There's a 12 commitment in the first year that it will be funded 13 by shareholders. 14 Q. But then in the next sentence you 15 indicate that thereafter that $50,000 will be 16 proposed for recovery through the energy efficiency 17 portfolio filings; is that correct? 18 A. It's correct that the entirety of the 19 paragraph describes that there will be a proposal, 20 but in the event that the Commission determines that 21 they don't qualify under that proposal or in those 22 riders, that there is a continued commitment by the 23 shareholders to fund this. 24 MS. HARRIS: I move to strike her entire 25 response as nonresponsive. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 249 1 EXAMINER PRICE: Denied. 2 Q. The sentence that says "This 50,000 in 3 annual spending thereafter will be proposed for 4 recovery through subsequent Energy Efficiency 5 Portfolio filings," do you see that sentence? 6 A. Yes, I do. 7 Q. That means that you intend to seek 8 recovery through customers; is that correct? 9 A. It does say in the context of this 10 paragraph that there is an intention to propose it 11 through a portfolio in the broader sense of that 12 rider, and if it is approved, it would be recovered 13 through that rider if approved by the Commission. 14 Q. And that -- looking to paragraph c, 15 similar process there; is that correct? 16 A. In paragraph c, there is a similar 17 process that's proposed and, again, there is a 18 similar commitment by the company that if the 19 Commission determines that the program costs do not 20 qualify for recovery in the energy efficiency rider 21 or if that rider no longer exists, that the $150,000 22 in annual funding will be funded by shareholders. 23 Q. But your first step after year one is to 24 seek to recover it through customers, correct? 25 A. In this -- in this instance under section ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 250 1 c, there would be -- the company expects to have a 2 proposal through the portfolio case first and wait 3 for Commission determination. 4 Q. So the answer to my question was "yes"? 5 A. Can you repeat it, please? 6 Q. So the first -- so your -- 7 MS. HARRIS: I'm sorry. Can you read the 8 question back. 9 EXAMINER PRICE: Can we have the question 10 back from two questions back. 11 (Record read.) 12 A. I'm not sure if that's the first step; 13 but, yes, it is the intention after year one to have 14 this proposal within the energy efficiency portfolio 15 and wait for a Commission determination on that. 16 Q. And turning to page 34, subpart 5, little 17 i, similar process there? 18 A. Can you point me to the page again, 19 please? 20 Q. 34. 21 A. And then can you repeat the question? I 22 have read through i. 23 Q. Similar process which is in year one it 24 will be funded by shareholders, correct? 25 A. It is a similar process that in the event ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 251 1 the Commission determines that the funding doesn't 2 qualify in that rider or the rider doesn't exist, it 3 will be funded by shareholders after year one. 4 Q. So year one will be funded by 5 shareholders, correct? 6 A. Yes, it will. 7 Q. And in year two you will seek to recover 8 it from customers, correct? 9 A. In year two, we will submit it as part of 10 the energy efficiency portfolio case, and in the 11 event the Commission determines that it's approved 12 there, then it will be recovered by customers. 13 Q. Turning to page 36, 6a, same process, 14 correct? 15 EXAMINER PRICE: Let's go off the record. 16 (Discussion off the record.) 17 EXAMINER PRICE: Back on the record. 18 A. Sorry. I am not sure if you were 19 pointing me somewhere or there was a still question. 20 Q. Yes. 6a on page 36, same process? 21 A. So in 6a, as it states there on page 36, 22 the company has committed shareholder dollars to fund 23 low-income, elderly, and disabled customers. 24 Q. But only in year one, correct? 25 A. No, that's not correct. Similar to the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 252 1 others, in the event the Commission determines that 2 it doesn't qualify for the rider or if that rider 3 does not exist, then the shareholder commitment will 4 continue. 5 Q. But your intent is to seek recovery in 6 year two through customers. 7 A. Similar to the others, we will include 8 this as a proposal in the broader energy efficiency 9 portfolio case and wait for the Commission 10 determination. 11 Q. Can I direct your attention to page 28 12 subsection d. Can you tell me how the costs -- the 13 50,000 in costs there identified that flows into the 14 top of page 29, how those costs, you propose to 15 recover those? 16 A. Can you point me again? I'm sorry. 17 Q. Yeah. It begins on the bottom of page 28 18 going into page 29, it is little d or paragraph 19 little d. And if you read that paragraph, it 20 reflects, second to the last sentence, "The cost of" 21 -- "to DP&L of making those improvements shall not 22 exceed $50,000." 23 A. I found that. And your question? 24 Q. And my question is, who is funding those, 25 that payment? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 253 1 A. The payment on page 29, that references 2 the investment in reliability at the Dayton airport, 3 the $50,000, shall not exceed $50,000, is a 4 shareholder commitment. 5 Q. So you and I spent a little bit of time 6 on both page 12 and then the collection of pages 27 7 to 36. And if I look at any of the parties named in 8 there, the specific entities named are all signatory 9 or nonopposing parties; is that fair? 10 A. I don't know if that's exactly right. I 11 would have to flip back through those pages to see if 12 there are any other parties that are mentioned. As I 13 mentioned, sometimes it's a party that has a header. 14 There are other parties that benefit so their names 15 may be mentioned in there. I am not sure, but I 16 would agree with you in terms of the headings. 17 Q. That the headings reflect signatory or 18 nonopposing parties. 19 A. That's right. 20 Q. If you could turn to page 12 of your 21 testimony, specifically the question and answer 22 beginning on page 17. 23 MR. IRELAND: Line 17? 24 EXAMINER PRICE: Line 17 or page 17? 25 Q. Line 17. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 254 1 A. Page 12 -- 2 Q. Yes. 3 A. -- of my testimony? 4 Q. Yes. 5 A. Of my testimony, okay. I'm there. 6 Q. You see the question "Can you describe 7 the Economic Development Rider benefits in more 8 detail"? 9 A. Yes, I see that. 10 Q. And is it your testimony that the purpose 11 of the economic development rider, as modified by the 12 amended stipulation, is to provide economic 13 incentives to large Ohio employers that contribute 14 substantially to the overall financial condition, 15 jobs, and growth in DP&L service territory? 16 A. That is definitely one of the main 17 reasons. 18 Q. Could you turn to the provision of the 19 amended stipulation that deals with that. I believe 20 it is on -- I believe it is section IV. 21 MR. IRELAND: Page 9. 22 A. I'm on page 9 of the stipulation. 23 Q. And am I correct that the economic 24 development rider and the incentives through that 25 rider are only available to signatory or nonopposing ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 255 1 parties? 2 A. Can you repeat that, please? 3 Q. Am I correct that the economic 4 development rider and the incentives reflected in 5 that rider are only available to signatory or 6 nonopposing parties? 7 A. Yes. Those incentives are just available 8 to the ones that are either signatory or nonopposing 9 that qualify as laid out on pages 9 and 10. So to 10 the extent they are large employers and they provide 11 substantial benefits to the customers in the region, 12 that's the limitation. 13 Q. But so then if we were to go back to your 14 testimony there on page 12, would it not be more 15 accurate to state that the rider is designed to 16 promote economic incentives to large Ohio employers 17 who have signed or do not oppose the stipulation and 18 who contribute substantially to the overall financial 19 condition, jobs, and growth in DP&L's service 20 territory? 21 A. I didn't catch the beginning of the 22 question. 23 MS. HARRIS: Can you read the question 24 back, please. 25 EXAMINER PRICE: Please. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 256 1 (Record read.) 2 A. No, I wouldn't agree it's more accurate. 3 I think they both describe the incentives, and my 4 answer on page 12 continues to page 13 and further 5 describes this, so I believe it is accurate it 6 further describes that the rider is designed to 7 promote Ohio's ability to create and retain jobs, not 8 only will the EDR assist those businesses to retain 9 existing employees and hire new ones but there would 10 also be a multiplier effect in that these -- those, 11 excuse me, those employees will support local 12 businesses. 13 Q. Now, Ms. Schroder, do you believe that 14 Wal-mart is a large employer in the State of Ohio? 15 A. I don't know for sure. 16 Q. But, subject to check, if I were to tell 17 you there were an Ohio census report from 2016 that 18 indicated that -- that Wal-mart is the second-largest 19 employer in the State of Ohio, you wouldn't have any 20 reason to dispute that. 21 A. I haven't seen that. I am not familiar 22 with it. 23 Q. But subject to check. 24 A. Sure. 25 Q. Ms. Schroder, could you turn to page 3 of ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 257 1 your direct testimony. 2 MR. IRELAND: I'm sorry, Counsel, what 3 page are we on? 4 MS. HARRIS: Page 3. 5 A. Of my testimony? 6 Q. Yes, ma'am. 7 A. Okay. I'm there. 8 Q. I want to go down to lines 16 and 17. 9 And the sentence that begins "DP&L is currently 10 facing a financial crisis." 11 A. Okay. I found it. 12 Q. Isn't the financial crisis -- well, if we 13 assume that DP&L, the Dayton Power & Light utility, 14 is a -- is in a financial crisis, isn't it really due 15 to the financial condition of its parent DPL Inc.? 16 A. I don't know. 17 Q. Well, who would know? 18 A. I believe we've had two other -- we had 19 two other witnesses that support the stipulation and 20 the financial situation of The Dayton Power and Light 21 Company and its parent DPL Inc., that testified 22 yesterday, and they would be the experts on that 23 matter. 24 Q. And so can you tell me why you stated in 25 your direct testimony that DP&L is currently facing a ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 258 1 financial crisis? 2 A. Yes, because as I understand the 3 situation with The Dayton Power and Light Company, 4 that we are not in an -- absent the financial support 5 of something similar to the stipulation, the company 6 wouldn't have adequate levels of cash to invest in 7 reliability and to provide safe and reliable service. 8 Q. But so in this case, DP&L has proposed a 9 DMR of $315 million over the next three years; is 10 that correct? 105 million per year. 11 A. That's partially correct. I think it's 12 broader than this. This is a broad stipulation and 13 that's just one piece. I think it is a package. 14 Q. Will DP&L, the utility, be keeping all of 15 that DMR dollars? 16 A. Can you repeat that? 17 Q. Will the utility be keeping all of the 18 DMR dollars? 19 A. I understand that all of the DMR dollars 20 will be used toward debt within the DPL complex. I 21 can't say for sure whether that's DPL or it's DP&L. 22 Q. So you understand at least some of the 23 DMR dollars are going to be used to pay down debt at 24 the parent level, DPL Inc.? 25 A. No. I don't know. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 259 1 Q. It's your position though that the only 2 possible solution to the financial crisis you face is 3 to seek recovery from Ohio ratepayers; is that 4 correct? 5 A. I'm not sure that's the only solution. I 6 believe this is a broad settlement that has many 7 signatory and nonopposing parties and that it does 8 provide substantial benefits and one component of 9 that provides financial support. 10 Q. What other options would be available to 11 address the financial crisis? 12 A. I don't know. 13 Q. It would be possible to seek a cash 14 infusion from AES, correct? 15 A. I don't know if that's possible. 16 Q. But to the extent AES would give you a 17 cash infusion, that would address the financial 18 crisis you are facing, correct? 19 MR. IRELAND: Objection, your Honor. 20 It's beyond the scope of her testimony. We have 21 already had two witnesses that testified about this. 22 EXAMINER PRICE: We will give her a 23 little bit of leeway. Overruled. 24 A. Can you repeat the question? 25 MS. HARRIS: May I have the question read ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 260 1 back, please. 2 EXAMINER PRICE: You may. 3 (Record read.) 4 A. I don't know. I think that's a very 5 broad situation. I don't know. I am not familiar 6 with the financials enough to be able to answer that 7 question. 8 Q. So you have no idea if tomorrow AES were 9 to say here is a billion dollar check, that that 10 would help you get out of your financial crisis? 11 MR. IRELAND: Objection. 12 EXAMINER PRICE: Grounds? 13 MR. IRELAND: Argumentative. 14 EXAMINER PRICE: Sustained. 15 Q. Are you aware whether you or anyone else 16 has made an effort to communicate with AES to seek a 17 cash infusion? 18 A. I have not made any effort to seek cash 19 from AES, no. 20 Q. It's your position that the Commission 21 has to consider the financial condition of DPL Inc. 22 in these proceedings; isn't that correct? 23 A. I don't -- I don't intend to speak for 24 the Commission what they intend to review. I would 25 hope that because we have a broad settlement that's ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 261 1 the product of serious negotiations with 2 knowledgeable parties and that I believe we meet the 3 three-prong test, it benefits customers and the 4 public interest, that I would hope that that's what 5 the Commission would look at in the broad sense of 6 this package. 7 MS. HARRIS: I am going to move to strike 8 that response as nonresponsive to the question. 9 EXAMINER PRICE: Can I have the question 10 back, please. 11 (Record read.) 12 EXAMINER PRICE: Denied. She stated her 13 position. Her position is they should adopt it 14 because it meets the three-part test. 15 Q. Ms. Schroder, do you believe the 16 Commission needs to look at the debt held at the DPL 17 Inc. level when it considers the amended stipulation 18 proposed in this case? 19 A. It's difficult for me to say what the 20 Commission needs to review. It's only my 21 understanding that in situations like this where 22 there is a broad settlement that the Commission tends 23 to review the three-prong test and see if it meets it 24 and as my testimony supports that it does. 25 Q. Does the Commission -- are you aware ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 262 1 whether the Commission has jurisdiction over DPL 2 Inc.? 3 MR. IRELAND: Objection, your Honor. 4 EXAMINER PRICE: Grounds? 5 MR. IRELAND: Calls for a legal 6 conclusion she is not qualified to answer. 7 MS. HARRIS: She's the regla -- she is 8 here in a regulatory capacity. She should be able to 9 answer whether she was aware -- 10 EXAMINER PRICE: You're not asking for a 11 legal question. 12 MS. HARRIS: I am not. 13 EXAMINER PRICE: You are asking for her 14 regulatory knowledge. 15 MS. HARRIS: Correct. 16 EXAMINER PRICE: Overruled. You can 17 answer if you know. 18 A. Can you repeat the question, please? 19 EXAMINER PRICE: Have it read back, 20 please. 21 (Record read.) 22 A. I am not aware, but as we were just 23 stating, I am not an attorney. I am not aware. I 24 don't think they do over at DPL Inc. 25 Q. Well, I think you have said a couple of ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 263 1 things there. So, first, you said you weren't aware, 2 and then you said I don't think. So can you clarify 3 for me whether you believe that the Commission has 4 jurisdiction over DPL Inc.? 5 A. Sure. I was trying to clarify that as a 6 non-attorney, I can't say for certain. 7 Q. But in your regulatory capacity. 8 A. But in my capacity my belief is they do 9 not. 10 Q. So to the extent the amended stipulation 11 here includes DPL Inc., that would be unusual; is 12 that correct? 13 MR. IRELAND: Objection. 14 EXAMINER PRICE: Grounds? 15 MR. IRELAND: This is beyond the scope of 16 the witness's knowledge. She has already testified 17 she's not a lawyer and -- and what is unusual or not 18 unusual I think is beyond. 19 EXAMINER PRICE: I will give you the 20 question is unduly vague. Please restate your 21 question. 22 Q. Are you aware of any prior instance in 23 the history of your employment that DPL Inc. has 24 sought any sort of relief from this Commission? 25 A. I don't know the particulars of cases. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 264 1 I'm familiar with a number of different cases that 2 DP&L has in front of this Commission in the past and 3 other Ohio utilities, but I can't say for certain who 4 all the parties were in those. 5 Q. So you are aware of cases where the 6 utility has appeared before this Commission; is that 7 correct? 8 A. I am aware of some. 9 Q. But you are not aware of any cases where 10 DPL Inc. has sought relief from this Commission; is 11 that correct? 12 A. As I stated, I'm not familiar with 13 precisely who all was involved in prior cases for 14 DP&L before this Commission to know for sure. 15 Q. So in your experience is it unusual to 16 have DPL Inc. as a signatory party to a stipulation 17 presented to the Commission? 18 A. I'm not sure. I'm not sure if it's 19 unusual or not. I can't say. 20 Q. But you understand in this case that DPL 21 Inc. is a signatory party to the stipulation. 22 A. Yes, that's correct. 23 Q. And you understand that it is the 24 company's position that the financial condition of 25 DPL Inc. affects the financial condition of Dayton ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 265 1 Power and Light, the utility? 2 A. I understand at a high level that there 3 is a connection there from a financial standpoint, 4 but I am not the expert on the financial matters or 5 how they are connected. 6 Q. And are you aware whether there's any 7 connection between AES and DPL Inc.? 8 MR. IRELAND: Objection, your Honor. 9 EXAMINER PRICE: Grounds? 10 MR. IRELAND: It's vague. Connection in 11 what sense? 12 EXAMINER PRICE: I also think she is 13 running out of leeway. We had the CFO from DPL Inc. 14 yesterday on the stand. He was the proper party -- 15 proper individual to ask these questions. She is 16 testifying this is in the public interest, and I am 17 trying to give you some leeway, but you need to focus 18 on her testimony this is or is not in the public 19 interest. 20 MS. HARRIS: Your Honor, just to respond 21 to that so it is on the record, where I am going to 22 be focusing here is on some of the provisions that 23 are contained in this particular stipulation which 24 include what purport to be some guarantees by AES who 25 is not a signatory party to the agreement, and so I ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 266 1 think it's fair to explore the relationship between 2 AES, DPL, and DP&L, and whether or not it is in the 3 public interest if you have AES available to make 4 certain guarantees. 5 EXAMINER PRICE: That would have been a 6 great question for Mr. Jackson who is the financial 7 officer for DPL and Dayton Power and Light. 8 MS. HARRIS: Well, certainly, your Honor, 9 but she's the one sponsoring the amended stipulation. 10 EXAMINER PRICE: I understand that. 11 That's why I am saying I am giving you a little 12 leeway on the public interest, but you're running out 13 of leeway. 14 MS. HARRIS: Understood. 15 Q. (By Ms. Harris) Ms. Schroder, could you 16 go to page 18 of your testimony. 17 A. Yes, I'm there. 18 Q. Do you understand that AES is making 19 certain commitments as part of the amended 20 stipulation? 21 A. Yes, I am aware of that. 22 Q. How are you aware of that? 23 A. In the stipulation on page 3, Roman 24 Numeral II, subsection 1, there is a description here 25 about AES and DPL contributions and the substantial ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 267 1 commitments that AES and DPL have agreed to within 2 this stipulation. That's where I am aware of it. 3 Q. Could you tell me where I could look 4 within the amended stipulation that AES has agreed to 5 anything? 6 A. Yes. For example, on page 4, subsection 7 e, "AES Corporation will use all proceeds from any 8 sale of the coal generation assets to make 9 discretionary debt repayments at DP&L and DPL Inc." 10 Q. But AES didn't sign this agreement; isn't 11 that correct? 12 A. That's correct. 13 Q. So can you explain to me how AES has made 14 this promise that you've identified in subsection e? 15 A. I wasn't involved in that decision, so I 16 can't tell you how it was made, no. 17 Q. Do you have any sort of writing or other 18 document that reflects AES's guarantees as contained 19 in the amended stipulation? 20 A. Just the stipulation itself. It's been 21 signed by The Dayton Power and Light Company and its 22 parent DPL Inc. 23 Q. But not by DPL Inc.'s parent AES, 24 correct? 25 A. That's correct. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 268 1 Q. So is there anywhere that the Commission 2 or parties could go to assure themselves that AES was 3 going to do the things that it said, that the amended 4 stipulation indicates it's going to do? 5 A. Can you repeat that? 6 Q. Is there anywhere that the Commission or 7 any other interested party can go, or document it can 8 look at, to -- to confirm that AES is going to 9 perform the things that the amended stipulation says 10 AES is going to perform? 11 A. I don't know. You said "anywhere." That 12 seems awfully broad. I don't know anywhere. I can't 13 name anything specific for you. 14 Q. If the Commission wants to assure itself 15 that this amended stipulation were in the public 16 interest, wouldn't it be best if the guarantees AES 17 made were confirmed in writing by AES? 18 MR. IRELAND: Objection, your Honor. 19 EXAMINER PRICE: Grounds? 20 MR. IRELAND: It's an incomplete 21 hypothetical, and I don't know how this witness can 22 speak on behalf of the Commission. 23 MS. HARRIS: Your Honor, she has been 24 asked to testify as to the public interest, and I 25 think she can indicate whether she thinks signing it ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 269 1 or not signing it is or is not in the public 2 interest. 3 MR. IRELAND: That's a different 4 question. 5 EXAMINER PRICE: I'm struggling with your 6 best part, so if you could just ask -- rephrase the 7 question. I don't necessarily think that is the 8 best -- I don't necessarily know that she is in a 9 position to say that's the best way for the 10 Commission to assure this is -- that this agreement 11 gets enforced. It seems to me the best way is to 12 suspend the tariff and stop paying the 105 million a 13 year which certainly would be within the Commission's 14 jurisdiction. So if you could phrase something 15 that's not best but, you know, what are the methods 16 the Commission could enforce this agreement. 17 Q. I will use the hearing examiner's 18 question. Are you aware of what methods the 19 Commission could evaluate to ensure that AES carries 20 out its commitments as set forth in the amended 21 stipulation? 22 A. I understand that the Commission will 23 review to see if it is in the public interest and, in 24 part, as part of the three-prong test that I do 25 support, and on page 9 of my testimony I describe, ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 270 1 beginning on line 4, what I believe are the customer 2 benefits of the amended stipulation, and they are 3 listed there, that it allows DP&L to provide safe and 4 reliable service. It positions DP&L to make 5 investments to address reliability issues on its 6 system. It provides a financial foundation targeted 7 toward enabling and later implementing grid 8 modernization. The stipulation provides a Standard 9 Service Offer service that's by a competitive bidding 10 process. 11 MS. HARRIS: Your Honor, I am going to 12 move to strike this response. I believe I asked her 13 what the Commission could do to ensure itself that 14 AES was going to live up to the commitments in the 15 amended stipulation. 16 EXAMINER PRICE: Yeah, I am going to 17 grant your motion to strike, but let her finish her 18 answer, and then we will strike it. 19 THE WITNESS: To finish my answer, I was 20 describing the public interest I believe the 21 Commission would review in deciding whether to grant 22 the stipulation or not, and I believe in the public 23 interest, to continue, is that it promotes economic 24 development in the service territory, it promotes 25 competition, it provides funding for low income ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 271 1 residential customers and these benefits may not 2 occur in the absence of this settlement. 3 MS. HARRIS: I am going to move to 4 strike. 5 EXAMINER PRICE: Granted. 6 Q. Ms. Schroder, going back to my original 7 question, I'm obviously here focused only on the 8 portions of the amended stipulation that reflect 9 commitments that AES is supposed to carry out. So in 10 particular I am focusing and would ask you to focus 11 your attention on those portions under section 2 at 12 page 3 of the amended stipulation where it indicates, 13 for example, under subsection 2b "Pursuant to the 14 preceding sentence, AES Corporation agrees to forego 15 collection of the Tax Sharing Liabilities payable 16 throughout the DMR term." How can the Commission 17 assure itself that AES will carry out on this 18 agreement if it did not sign the amended stipulation? 19 A. DP&L and DPL Inc. have signed, and they 20 are the ones that would be not paying the dividends. 21 They are the ones that would not be paying the tax 22 liabilities, and I believe that keeping the payments 23 that would otherwise go out of the complex like the 24 tax sharing liabilities and the dividends by DP&L and 25 DPL Inc. committing to that and them keeping those ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 272 1 funds within the DPL complex is a clear benefit to 2 customers. 3 Q. Do you see the sentence that says "AES 4 and DPL will convert the entirety of the current and 5 non-current DPL Inc. Tax Sharing Liabilities to an 6 additional equity investment in DPL Inc."? 7 A. I see those lines. 8 Q. How can the Commission assure itself that 9 AES will actually do that? 10 A. When I read that sentence, it says "AES 11 and DPL Inc. will convert" and because DPL Inc. has 12 committed to do the things in this stipulation by 13 signing it, I believe that commitment is there. 14 Q. So you believe that DPL Inc. has the 15 ability to bind AES? 16 MR. IRELAND: Objection, your Honor. 17 Seeks a legal conclusion. 18 EXAMINER PRICE: Sustained. 19 Q. Ms. Schroder, were you in the room 20 yesterday when your counsel issued an objection 21 during some questioning by OCC about AES? 22 A. I don't know. There were lots of 23 discussions about AES and lots of objections. 24 MR. MICHAEL: Most of which were 25 overruled if you recall. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 273 1 Q. Do you recall Mr. Sharkey stating that 2 AES is not subject to the jurisdiction of this 3 Commission? 4 A. I don't really recall that, no. 5 Q. But you would agree with me that the 6 record, if it was so stated, that it would reflect on 7 the record. 8 A. If it says that, I would read it and 9 believe you. I don't remember hearing it. 10 Q. So if Mr. Sharkey is correct and AES is 11 not subject to the jurisdiction of this Commission, 12 how is the Commission ever able to enforce any 13 provisions against AES? 14 A. I don't know. 15 Q. Ms. Schroder, attached to your testimony 16 are a number of rate schedules. Can you tell me what 17 the ROE is assumed for those? 18 A. I don't know. 19 Q. But you are sponsoring these rate 20 schedules? 21 A. I am sponsoring the typical bill 22 comparisons that are attached to my testimony as 23 Exhibit A, but I am not sponsoring the ROE. That's 24 other witnesses for DP&L that have done that. 25 Q. What witness has sponsored that? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 274 1 A. I would assume it must have been either 2 Jackson or Malinak, but it is not my expertise. 3 Q. Ms. Schroder, I want to go back to 4 page 18 of your testimony. Down on lines 28 -- well, 5 I guess it begins on 26 continuing through the end of 6 that page and to the next page, do you see your 7 testimony where you indicate "it is very unusual for 8 a holding company" -- "for a utility holding company 9 not to pay dividends to its parent"? 10 A. I see that. 11 Q. What is the basis -- upon what do you 12 base that statement? 13 A. General knowledge that typically 14 investors expect a return in dividends and my history 15 with utilities that typically pay dividends. 16 Q. But you are aware that since 2012 that 17 DPL has not -- DPL Inc. has not paid a dividend to 18 AES; is that correct? 19 A. I am generally aware of that. 20 Q. And in your experience with utilities, 21 are you aware whether it is typical for investors to 22 expect a dividend from a company who is in a 23 financial crisis? 24 A. Can you repeat the beginning of that? 25 MS. HARRIS: Can I have that question ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 275 1 read back. 2 EXAMINER PRICE: You may. 3 (Record read.) 4 A. I don't know. 5 Q. Ms. Schroder, absent the DMR, isn't DP&L 6 already obligated to provide safe and reliable 7 service in the State of Ohio? 8 A. I'm not sure the connection of the two 9 parts of your question. Can you rephrase that for 10 me, please? 11 Q. Are you obligated, as a utility, to 12 provide safe and reliable service in Ohio? 13 A. As I understand it to meet our 14 requirements, yes. 15 MS. HARRIS: I don't have any further 16 questions. 17 EXAMINER PRICE: Thank you. 18 Consumers' Counsel, would you care to be 19 next? 20 MR. MICHAEL: Certainly. 21 - - - 22 CROSS-EXAMINATION 23 By Mr. Michael: 24 Q. Good morning, Ms. Schroder. 25 A. Good morning. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 276 1 Q. If you would please turn to page 28 of 2 the proposed stipulation and about five lines up from 3 paragraph d, and you will see the word "shareholders" 4 there. 5 A. I'm sorry. I was still turning. What 6 page are you on? 7 Q. 28. 8 A. And you are in section? 9 Q. About five lines up from d, paragraph d. 10 MR. IRELAND: So the end of paragraph c? 11 MR. MICHAEL: Correct. 12 A. Yes, I'm there. 13 Q. And do you see the word "shareholders" 14 there? 15 A. Yes. 16 Q. And in the amended stipulation there is 17 various provisions where it says DP&L will provide 18 this proposed benefit, shareholders will pay for it 19 in the first year, then you will try to get it 20 through the EE -- energy efficiency rider, and if you 21 are not successful, then shareholders will continue 22 paying it, correct? 23 A. I'm familiar with those, and we just 24 walked through some of those examples, yes. 25 Q. Who are the shareholders that are ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 277 1 referred to in those provisions? 2 A. It's my understanding the shareholders of 3 The Dayton Power and Light Company. 4 Q. There is only one shareholder of The 5 Dayton Power and Light Company, isn't there? 6 A. I don't know. 7 Q. Okay. If you would please turn to 8 page 18 of your testimony, Ms. Schroder, specifically 9 lines 24 and 25. 10 A. Yes. I'm here. 11 Q. And you'll see there that it says DP&L 12 and DPL Inc. are owned by AES Corporation, correct? 13 A. Yes, I see that. 14 Q. And DP&L is a wholly-owned subsidiary of 15 DPL Inc. which, in turn, is a wholly-owned subsidiary 16 of AES Corporation, correct? 17 A. That's my understanding. 18 Q. I want to begin by talking to you a 19 little bit, Ms. Schroder, about the purported serious 20 bargaining that occurred in connection with the 21 proposed stipulation. Excuse me. DP&L had a meeting 22 on January 27, 2017, to negotiate the stipulation and 23 did not invite all parties to that meeting, correct? 24 A. No, I don't believe that's correct. 25 Q. Okay. On that date isn't it true that ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 278 1 you had a meeting with only parties that you thought 2 were going to sign the stipulation? 3 A. I can't speak about the exact dates, but 4 I do recall a date where we had a meeting where we 5 were trying to finalize the document and invite -- 6 and invited parties to try to help finalize the 7 document, so it wasn't necessarily a settlement 8 discussion meeting that day. 9 Q. You didn't invite all parties to that 10 meeting, did you? 11 A. The meeting that I believe you are 12 referring to is a meeting where we were trying to 13 finalize a document and finalize a stipulation, so it 14 wasn't necessarily a settlement discussion. Each of 15 the settlement discussions we invited all parties to 16 attend. All parties were welcome to attend if they 17 were interested in settlement. 18 MR. MICHAEL: Move to strike, your Honor. 19 EXAMINER PRICE: Grounds? 20 MR. MICHAEL: She isn't answering the 21 question I asked. 22 EXAMINER PRICE: Overruled -- denied. 23 Wrong word, denied. 24 MR. MICHAEL: Pardon me? 25 EXAMINER PRICE: I am denying it, not ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 279 1 overruling it. 2 Q. (By Mr. Michael) Okay. Are you 3 representing then, Ms. Schroder, no negotiation 4 occurred on that January 27, 2017, meeting at all? 5 A. I would say that's a little extreme. I 6 don't know everything that happened that day. 7 Q. Okay. Well, I understand you would say 8 that's a little extreme, but you realize one of the 9 elements of the three-prong test is serious 10 bargaining, correct? 11 A. I understand that. And as I stated just 12 a moment ago, that I do believe that serious 13 bargaining did occur and that each time that the 14 company had a formal settlement discussion meeting, 15 that all parties were welcome, all parties who wanted 16 to settle were welcome. And some called in on the 17 phone; some showed in person. Some were individual 18 meetings and some were held as a group. 19 Q. Okay. But you were just unwilling to say 20 that no negotiation occurred at the January 27 21 meeting, so I want you to tell me which one it is. 22 Was there negotiation at that meeting or was there 23 not? 24 A. Again, I am not sure about the date, but 25 if it's the meeting that you are referring to that ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 280 1 was just prior to the stipulation that was filed 2 about two days or three days later, the meeting that 3 you are referring to as a group was -- was intended 4 and held with parties that we expected to sign that 5 stipulation, and we were finalizing language. 6 MR. MICHAEL: Okay. I am going to move 7 to strike, your Honor. I asked if there was any 8 negotiation meeting or not. She didn't answer that 9 question. 10 EXAMINER PRICE: Denied. I find this 11 whole line of questioning confusing including your 12 distinction. Are you saying there is a distinction 13 between settlement negotiations and a meeting held to 14 finalize the stipulation? 15 THE WITNESS: I would say yes. One of 16 those days, and I believe it's the date he is 17 referring to, was a couple of days before we filed 18 the stipulation, and the intention of that was the 19 parties that were -- that we expected and had told us 20 that they were interested in signing the stipulation 21 were invited so we could finalize that language so we 22 could file it in the next day or two. 23 EXAMINER PRICE: In the course of 24 finalizing the language you would not characterize 25 that as negotiation. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 281 1 THE WITNESS: No, I would not. 2 MR. PRITCHARD: Your Honor, I would like 3 to impose an objection, or at least a clarifying 4 point. I believe we are on a relevance ground. I 5 believe the meeting we are talking about is regarding 6 a different stipulation than the amended stipulation. 7 THE WITNESS: That's also true. 8 MR. PRITCHARD: So I object on the 9 grounds of relevance because it's entirely confusing 10 for the record about whether we are talking about 11 this stipulation or one that's not being presented 12 here. 13 EXAMINER PRICE: So the meeting -- let me 14 ask the witness so we get this on the record 15 correctly. The meeting that OCC -- Consumers' 16 Counsel is asking about was held regarding the 17 initial stipulation. 18 THE WITNESS: Yes, that's correct. 19 EXAMINER PRICE: Which has been 20 withdrawn, or at least amended. 21 THE WITNESS: We have amended the 22 stipulation, so it is no longer relevant. 23 EXAMINER PRICE: Just so the record is 24 clear, were there -- before this alleged negotiation, 25 summit, whatever, were there settlement meetings ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 282 1 before, prior to that with parties? 2 THE WITNESS: Yes, absolutely. 3 EXAMINER PRICE: Were all parties invited 4 to those settlement discussions? 5 THE WITNESS: Yes, all parties were 6 invited to those settlement discussions. 7 EXAMINER PRICE: Roughly how many 8 meetings did you have? 9 THE WITNESS: With all parties I would 10 say roughly five, and with individual parties I would 11 say numerous. 12 Q. (By Mr. Michael) But you didn't invite, 13 for example, staff to the January 27 meeting, 14 correct? 15 A. Again, it sounded like earlier we were 16 saying this meeting that we are talking about is not 17 necessarily relevant because that's not about this 18 stipulation. That meeting was to finalize a 19 different stipulation. 20 Q. Until there is an objection and the Bench 21 has ruled on it, I am going to ask my questions, and 22 you will answer them, please, to the best of your 23 ability. You did not invite staff to a January 27 24 meeting, correct? 25 A. I don't know if they were invited. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 283 1 Q. Okay. You didn't invite them as the 2 Director of Regulatory Affairs. 3 A. I personally did not invite them. 4 Q. And you didn't invite OCC either, 5 correct? 6 A. Actually I personally didn't invite 7 anyone to the meetings. That wasn't -- my role in 8 those meetings was not to invite parties. 9 Q. And to your knowledge, Dayton Power and 10 Light Company didn't invite either staff or OCC to 11 that meeting, correct? 12 A. As I stated earlier, that meeting was to 13 be finalizing the stipulation for January 30, was not 14 a settlement discussion, and so we invited -- and 15 when I say "we," our attorneys invited parties that 16 had indicated an interest in signing and finalizing 17 language of the January 30 stipulation. 18 Q. Okay. And the stipulation that was 19 discussed on January 27, that stipulation has not 20 been withdrawn, correct? 21 A. I don't know. I know that we've amended 22 the stipulation and that I am supporting the amended 23 stipulation. 24 Q. Okay. You did in connection with the 25 stipulation, the one that was discussed January 27, ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 284 1 you seriously bargained with MAREC with respect to 2 that stipulation, correct? 3 A. No, I personally did not, no. 4 Q. Okay. Dayton -- 5 EXAMINER PRICE: I think he means Dayton 6 Power and Light. 7 Q. Yeah. 8 A. I don't know. 9 Q. Dayton Power and Light Company seriously 10 bargained with the Ohio Environmental Council 11 regarding that stipulation, correct? 12 MR. IRELAND: Your Honor, can I just have 13 a continuing line -- an objection to we are talking 14 about the stipulation that is not the one that's 15 before the Commission at this time, that the 16 stipulation has been amended? And I can certainly 17 understand, you know, some point of inquiry. It 18 doesn't seem to me we need to be going into this 19 level of detail. It's irrelevant. 20 EXAMINER PRICE: I believe -- No. 1, it's 21 not been withdrawn, it's been amended, and I think 22 the Commission will place the proper weight on this 23 line of questioning when they consider this prong. 24 MR. IRELAND: Thank you, your Honor. 25 MR. MICHAEL: Could you please read the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 285 1 question that was pending back. 2 EXAMINER PRICE: Can we have the pending 3 question. 4 (Record read.) 5 EXAMINER PRICE: You can answer that 6 question. 7 A. I don't know. 8 Q. Okay. And you seriously bargained with 9 RESA regarding that stipulation, correct? 10 A. We did. I don't think that it happened 11 on that day that you are referring to if that's still 12 the line of questioning. 13 Q. And until you -- until Dayton Power and 14 Light Company paid MAREC $200,000, three parties with 15 whom you seriously bargained on the stipulation 16 dropped from the amended stipulation, correct? 17 MR. IRELAND: Objection. 18 EXAMINER PRICE: Let's go off the record. 19 (Discussion off the record.) 20 EXAMINER PRICE: Mr. Ireland, grounds? 21 MR. IRELAND: Argumentative. 22 MR. MICHAEL: It's cross-examination. I 23 can lead the witness. 24 EXAMINER PRICE: I don't agree it's 25 argumentative, not this one. Overruled. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 286 1 A. Can you repeat it, please? 2 MR. MICHAEL: Can you repeat the 3 question, please. 4 (Record read.) 5 A. I am not sure I followed it; but, no, I 6 don't think that's correct. 7 Q. All right. MAREC was on the original 8 stipulation, correct? 9 A. Yes, that's correct. 10 Q. And then the amended stipulation was 11 filed, and initially MAREC did not sign that 12 stipulation, correct? 13 A. That's also correct. 14 Q. Okay. And, further, they didn't sign it 15 as a nonopposing party, correct? 16 A. I don't know which -- in which method 17 they have signed, but I know that they are either 18 supportive or nonopposing the amended stipulation. 19 Q. Okay. I want to talk about initially. 20 So the amended stipulation is filed, and MAREC is not 21 a signatory party initially, correct? 22 A. When you describe "initially." 23 Q. When you first file the amended 24 stipulation in the PUCO docket. 25 A. That's right. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 287 1 Q. Okay. And, further, MAREC was -- didn't 2 sign as a nonopposing party initially, correct? 3 A. That's correct. 4 MR. MICHAEL: May I approach, your Honor? 5 EXAMINER PRICE: You may. 6 MR. MICHAEL: I would like to have this 7 marked as OCC Exhibit No. 3, your Honor. 8 EXAMINER PRICE: It will be so marked. 9 MR. MICHAEL: Oh, 4, I apologize, your 10 Honor. 11 EXAMINER PRICE: We will mark it as 12 OCC 4. 13 (EXHIBIT MARKED FOR IDENTIFICATION.) 14 Q. (By Mr. Michael) Ms. Schroder, I have 15 handed you what was previously marked as OCC Exhibit 16 4. Can you identify what that document is, please? 17 A. I'm reading through it now. It's a 18 letter that confirms the agreement reached between 19 The Dayton Power and Light Company and the 20 Mid-Atlantic Renewable Energy Coalition. 21 Q. And the first page of what was marked as 22 OCC Exhibit 4, Ms. Schroder, is the notice that 23 Dayton Power and Light filed regarding that letter 24 agreement with MAREC, correct? 25 A. It's not labeled as one but that looks to ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 288 1 be the cover sheet. 2 Q. The title of the cover sheet is "The 3 Dayton Power and Light Company's Notice of Filing Its 4 Letter Agreement With Mid-Atlantic Renewable Energy 5 Coalition," correct? 6 A. Correct. 7 Q. And if you would turn to the letter 8 agreement itself, the second page of OCC Exhibit 4, 9 you've seen that document before, correct? 10 A. I have seen it. 11 Q. And, stated generally, what this document 12 memorializes is an agreement between Dayton Power and 13 Light and MAREC under which Dayton Power and Light 14 will pay MAREC $200,000. In return, MAREC will 15 not -- will be a nonopposing party to the 16 stipulation, correct? 17 A. No, I wouldn't characterize it that way. 18 This is an agreement between The Dayton Power and 19 Light Company and the Mid-Atlantic Renewable Energy 20 Coalition relating to DP&L's ESP case in which DP&L 21 and MAREC have agreed regarding funds for advocacy 22 and education efforts regarding wind energy. 23 Q. Okay. I am going to draw your attention 24 to the second sentence in the first paragraph, 25 Ms. Schroder, and tell me if I read this sentence ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 289 1 correctly. "In order to resolve MAREC's opposition 2 to the Amended Stipulation filed on March 14, 2017, 3 based on MAREC's status as a Signatory Party to the 4 Stipulation filed on January 31, 2017, DP&L has 5 entered into this agreement." I read that correctly, 6 correct? 7 A. Yes, you did. 8 Q. Okay. And then draw your attention to 9 the first sentence in the second paragraph. It 10 states "DP&L and MAREC have agreed that MAREC will 11 not oppose the March 14, 2017, Amended Stipulation 12 that was filed in DP&L's ESP case, and that DP&L will 13 provide to MAREC a one-time payment of $200,000, 14 which MAREC will use for advocacy and education 15 efforts regarding wind energy." Did I read that 16 correctly? 17 A. Yes. 18 Q. And do those sentences accurately reflect 19 the nature of the agreement between MAREC and Dayton 20 Power and Light, correct? 21 A. Yes, I believe they do. They provide 22 benefits regarding advocacy and education efforts 23 regarding wind energy. 24 MR. MICHAEL: Move to strike everything 25 after, yes, it does. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 290 1 EXAMINER PRICE: Granted. 2 Q. Ms. Schroder, until this letter agreement 3 was reached with MAREC, MAREC was neither a signatory 4 party nor a nonopposing party to the stipulation, 5 correct? 6 A. I don't know, certainly not on the -- on 7 the one that was filed at the Commission. 8 Q. Are there any other stipulations? 9 A. No. I am just saying I don't know what 10 happened between those dates. The way you 11 characterized it, I'm not sure. 12 Q. Okay. We discussed earlier what I meant 13 by "initially." And what I mean by "initially" now 14 is the same thing I meant then which is when the 15 amended stipulation was initially filed at the PUCO, 16 MAREC was not a signatory party or a nonopposing 17 party, correct? 18 A. That's correct. 19 Q. And they only became a nonopposing party 20 after Dayton Power and Light Company reached this 21 letter agreement with MAREC, correct? 22 A. That's the part I am not sure exactly how 23 you are describing that, what you mean by "they only 24 became," but certainly the letter speaks for itself. 25 Q. Okay. Did they become a nonopposing ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 291 1 party before this letter? 2 A. I don't know. 3 Q. Okay. Dayton Power & Light's providing 4 stable and certain distribution service right now, 5 correct, Ms. Schroder? 6 A. Stable and certain? 7 Q. Safe and reliable. 8 A. Safe and reliable service, we currently 9 are, yes, Dayton Power and Light Company is. 10 Q. And Dayton Power and Light Company will 11 provide safe and reliable service even if the DMR 12 isn't approved, correct? 13 A. I don't know. I believe that it's my 14 understanding that without the financial stability 15 that is provided within this stipulation, that that 16 will be uncertain. 17 Q. Okay. And by "financial stability," what 18 you mean is the DMR 105 million a year to pay off 19 debt at Dayton Power and Light Company and DPL Inc., 20 correct? 21 A. No. What I mean is financial support for 22 the company that without such support we won't have 23 adequate levels of cash to perform maintenance and 24 capital investments that do provide the safe and 25 reliable service today. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 292 1 Q. Okay. When you say "the company," are 2 you referring to Dayton Power and Light? 3 A. When I am referring to safe and reliable 4 service and I say "the company," yes, I am referring 5 to the Dayton Power and Light Company providing safe 6 and reliable service and the need for financial 7 support to continue to do so. 8 Q. Okay. If you would turn to page, excuse 9 me, 5 of the amended stipulation, paragraph b. 10 A. I'm sorry, did you say page 5 or? 11 Q. Yes, ma'am, page 5, paragraph b. Please 12 let me know when you are there, Ms. Schroder. 13 A. I'm here. 14 Q. Okay. And in that paragraph it states 15 the three uses of the cash flow from the DMR, 16 correct? 17 A. Yes, it does. 18 Q. And the first use for cash flow from the 19 DMR is to "pay interest obligations on existing debt 20 at DPL Inc. and DP&L," correct? 21 A. Yes. As you mentioned, all three are 22 listed in that paragraph, all three uses. 23 Q. Okay. And there are no additional uses 24 that the DMR funds will be used for other than those 25 three right there, correct? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 293 1 A. That's correct. That's my understanding. 2 Q. Okay. And is Dayton Power and Light 3 going to segregate the DMR dollars from other dollars 4 it brings in, for example, from just providing 5 distribution service? 6 A. I don't know. 7 Q. I have got a couple of questions, 8 Ms. Schroder, about the existing debt and 9 discretionary debt payments referenced in that 10 paragraph. It's true that part of that existing debt 11 is as a result of the AES acquisition of Dayton Power 12 and Light, correct? 13 A. I don't know. 14 Q. Dayton -- were you involved in the merger 15 at all of AES and Dayton Power and Light? 16 A. What do you mean by "involved"? 17 Q. Were you at Dayton Power and Light? 18 A. I was at Dayton Power and Light, yes. I 19 was employed by Dayton Power and Light at the time. 20 Q. Did you work on the transaction? 21 A. I did not. 22 Q. Okay. And isn't it true that as part of 23 AES -- AES's acquisition, they acquired generation 24 assets, distribution assets, and transmission assets, 25 correct? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 294 1 A. That's my understanding. 2 Q. And Dayton Power and Light hasn't 3 structurally separated its generation business yet, 4 right? 5 A. We have not separated all of our 6 generation assets, no. 7 Q. Dayton Power and Light is going to use -- 8 excuse me, I apologize. Dayton Power and Light is 9 going to use the money that it saves from the tax 10 sharing provision in the amended stipulation to pay 11 down debt, correct? 12 A. Yes, that's my understanding of the 13 commitment here in the stipulation, yes. 14 EXAMINER PRICE: Can you rephrase that 15 question? 16 MR. MICHAEL: Certainly. Let me do it 17 this way, if I could, your Honor. 18 Q. I draw your attention, Ms. Schroder, to 19 page 3 of the amended stipulation, paragraph b. 20 EXAMINER PRICE: I think in the previous 21 question you might have said "Dayton Power and 22 Light," but I might have heard wrong. 23 MR. MICHAEL: I'll clear it up. 24 EXAMINER PRICE: Thank you. 25 Q. Paragraph b is the -- what we have been ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 295 1 referring to as the tax sharing liability provision, 2 correct? 3 A. I am not sure if that's how it's being 4 characterized, but I am here with you reading it. 5 Q. That's the provision under which some 6 taxes that are owed to AES from some of its 7 subsidiaries are essentially forgiven, correct? 8 A. I am not sure if I would characterize it 9 as forgiven, but I do understand that there are 10 benefits to customers and benefits to the company of 11 keeping those within the complex. 12 Q. Okay. How would you characterize what 13 paragraph b does then? 14 A. I would characterize this as a commitment 15 that instead of paying funds to AES, those funds 16 instead will stay within the DPL complex to reduce 17 debt which frees up cash that enables the company to 18 provide safe and reliable service and positions it to 19 invest in the distribution system. 20 Q. What is the DPL complex? 21 A. DPL Inc. and DP&L. 22 Q. Okay. And that tax sharing provision, 23 Ms. Schroder, will apply if the DMR is extended for 24 two additional years, correct? 25 A. That's my understanding, yes. At the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 296 1 beginning of section b, it states "during the DMR 2 term." 3 Q. Okay. And it's your understanding that 4 the DMR term, when referenced in the amended 5 stipulation, includes any extension of the three-year 6 DMR? 7 A. That would be my interpretation, if the 8 DMR is extended, that would still be considered the 9 DMR term. 10 Q. If you would turn to page 4 of the 11 amended stipulation, paragraph c. 12 A. Okay. I'm there. 13 Q. And the non-debt liabilities, what are 14 included in that category when it's referenced in 15 paragraph 4c of the stipulation? 16 A. I would say I'm not familiar with all of 17 the non-debt liabilities, but I would understand it 18 to include at least environmental liabilities. 19 Q. And do you have any idea, Ms. Schroder, 20 how much those environmental liabilities are, say, 21 for example, for the year 2016? 22 A. No, I don't know. 23 Q. Do you know if they are more or less than 24 $10 million? 25 A. I don't know. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 297 1 Q. Okay. And by debt liabilities, that 2 would include the debt incurred as a result of the 3 AES/Dayton Power and Light acquisition, correct? 4 A. I'm not familiar with the debt and how 5 specific it is, what it attributes -- what it's 6 attributed to. That's not my area of expertise. 7 Q. Okay. But your area of expertise, at 8 least for this proceeding, is to sponsor this 9 stipulation; and, therefore, I would like to ask you 10 some questions about what it means. But 11 apparently -- and just so I am clear, you do not know 12 what "debt liabilities" means as referenced here in 13 paragraph 4c; is that correct? 14 A. I don't know the entirety of it. I would 15 understand that non-debt liabilities includes at 16 least environmental liabilities, but I am not 17 familiar with all non-debt liabilities, what it might 18 include. 19 Q. Okay. So I want to just focus then on 20 what you do know and debt liabilities. You were here 21 yesterday for Mr. Jackson's testimony, correct? 22 A. Yes, I was. 23 Q. And you heard Mr. Jackson testify that 24 there was -- between Dayton Power and Light and DPL 25 Inc. there was an approximate total of about a ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 298 1 billion dollars of outstanding debt associated with 2 the merger, correct? 3 A. No. I don't recall it that way, no. 4 Q. Okay. How do you recall it? 5 A. I remember lots of questions regarding 6 debt. And as our CFO and expert regarding that debt, 7 I know he answered a number of those questions that I 8 cannot. 9 Q. So you don't know if the debt liabilities 10 that would remain with Dayton Power and Light Company 11 includes the debt associated with the AES acquisition 12 of Dayton Power and Light? 13 MR. ALEXANDER: Can I have that question 14 read, please. 15 EXAMINER PRICE: You may. 16 (Record read.) 17 MR. OLIKER: Your Honor, given the 18 question, I would also like to object given it 19 misstates facts. AES acquired DPL Inc. who owns 20 Dayton Power and Light. 21 EXAMINER PRICE: We'll sustain the 22 objection. If you could rephrase the question. 23 MR. MICHAEL: Certainly, your Honor. 24 Q. Ms. Schroder, you don't know if the debt 25 liabilities as referenced in paragraph 4c of the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 299 1 amended stipulation includes the debt associated with 2 the -- the acquisition by AES of DPL Inc., correct? 3 A. Nothing in section 4 -- page 4, section c 4 seems to refer to what you are asking about. 5 Q. Well, it refers -- it refers to debt 6 liabilities that will not be transferred with the 7 generation assets, correct? 8 A. It refers to assuming we have FERC 9 approval, DP&L agrees to transfer its generation 10 assets and non-debt liabilities to AES Ohio 11 Generation, LLC, an affiliated subsidiary of DPL 12 Inc., within 180 days following final Commission 13 approval of this stipulation provided that the 14 Commission approves this stipulation without material 15 modifications. I don't see anything about merger or 16 AES in that paragraph. 17 Q. Okay. And so what will happen with the 18 debt liabilities is it will remain with Dayton Power 19 and Light, correct? 20 A. I don't know. 21 EXAMINER PRICE: Mr. Alexander, did you 22 have an objection? 23 MR. ALEXANDER: She answered. 24 EXAMINER PRICE: Okay. 25 Q. Okay. So Mr. Jackson was the CFO and the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 300 1 financial expert, correct? 2 A. He is. 3 Q. Okay. And Mr. Malinak was a hired 4 outside consultant to testify regarding the MRO 5 versus ESP test, correct? 6 A. Among other things, yes. 7 Q. Okay. And you are the witness sponsoring 8 the stipulation in its entirety and the degree to 9 which it matches the three-part test, correct? 10 A. The overall benefits of the stipulation 11 and the fact that it meets the three-prong test. 12 Q. That notwithstanding, you don't know what 13 one -- what the provision in item 4c means, correct? 14 A. I do understand what it means. I believe 15 that on page 4 what this means is that DP&L has a 16 very beneficial commitment that's part of the public 17 interest that serves as part of the overall package 18 here that says that it will commit to separating its 19 generation so that nothing in here can be construed 20 as anything to do with generation. 21 Q. Okay. But you don't know what the debt 22 liabilities are, correct? 23 EXAMINER PRICE: There is nothing in that 24 provision that says "debt liabilities." I understand 25 you're implying or inferring it, but it doesn't use ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 301 1 the phrase "debt liabilities" in 4c. 2 MR. MICHAEL: No. It says "transfer its 3 generation assets and non-debt liabilities" and we 4 all know -- 5 EXAMINER PRICE: Well, we don't know. 6 That's not in the record. You are inferring it. She 7 has already said she doesn't know what's going to 8 happen to the debt liabilities. Mr. Jackson was on 9 the stand yesterday, and he was available to ask any 10 questions you wanted to know about debt liabilities. 11 The phrase isn't in there. You are just implying, 12 inferring that it is, and it's not. That's what you 13 are struggling with and that's why you are not 14 getting the witness to answer the way you want to. 15 MR. MICHAEL: That's why I was asking 16 her, your Honor. I acknowledge Mr. Jackson was the 17 financial expert, but this is the witness the company 18 is putting up regarding the proposed stipulation. 19 And if she doesn't know what it means, I don't know 20 how the Commission could know what it means. 21 MR. ALEXANDER: Well, your Honor, I would 22 object here just because I think we are conflating 23 debt at DPL Inc. and debt at DP&L, that question 24 about the merger debt which is at DPL Inc., and then 25 there is also separately debt at Dayton Power and ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 302 1 Light. And we can't conflate those two, and I think 2 that's part of the confusion in the record right now. 3 MR. IRELAND: I guess I will just pile on 4 and say "debt liabilities" is not a term that's in -- 5 is included, so asking questions about debt 6 liabilities is certainly vague but not supported by 7 the stipulation. 8 EXAMINER PRICE: I just think it's time 9 to move on from this line of questions. 10 MR. MICHAEL: Well, your Honor, I am 11 going to give one more respectfully, of course. 12 There are about, as Mr. Jackson testified to, a 13 billion dollars in debt associated with the AES 14 merger. I think that the stipulation is very clear 15 that if and when DP&L transfers the assets to an 16 affiliate, it's going to transfer non-debt 17 liabilities. I would be willing to bet a small 18 fortune that Faruki, Ireland & Cox and Dayton Power 19 and Light Company did not choose "non-debt 20 liabilities" by accident, and I am just trying to 21 explore so the Commission can come to some conclusion 22 as to whether or not -- 23 EXAMINER PRICE: You asked her that 24 question, and she said she did not know. There is 25 nowhere else to go with this line of questioning. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 303 1 MR. MICHAEL: Okay. 2 EXAMINER PRICE: You asked her several 3 questions back does this mean that the debt 4 liabilities will not transfer. She said I do not 5 know. 6 MR. MICHAEL: So, therefore, the 7 Commission won't know, I guess, because this is the 8 only witness they are offering. 9 EXAMINER PRICE: You could have made your 10 record with Mr. Jackson yesterday. 11 Q. (By Mr. Michael) If I could draw your 12 attention to paragraph 4d, Ms. Schroder. 13 A. Sorry. You mean page 4 or section 4? 14 Q. Page 4. 15 A. Page 4. 16 Q. Paragraph d. 17 A. Okay. 18 Q. Excuse me. In that paragraph, DPL is not 19 committing to sell its generation, just commence a 20 sale process, correct? 21 A. DP&L is committing to commence a sale 22 process to sell to a third party its ownership in 23 those stations. 24 Q. But it's just committing to start the 25 process; it's not committing to actually consummate a ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 304 1 sale, correct? 2 A. That's my interpretation. I think it 3 would be difficult to commit to whoever the third 4 party might be. 5 Q. Okay. 6 MR. MICHAEL: Your Honor, may I approach? 7 EXAMINER PRICE: You may. 8 MR. MICHAEL: I would like to have marked 9 as OCC Exhibit 5, your Honor. 10 EXAMINER PRICE: It will be so marked. 11 (EXHIBIT MARKED FOR IDENTIFICATION.) 12 Q. Ms. Schroder, can you please identify 13 what was previously marked as OCC Exhibit 5. 14 A. I am looking at an Interrogatory No. 379 15 from the OCC and the response. 16 Q. Okay. And you are the witness 17 responsible for responding to this interrogatory, 18 correct? 19 A. That's right. 20 Q. Okay. And I am not going to read the 21 interrogatory to you. You have had an opportunity to 22 read that interrogatory for yourself? 23 A. Yes. 24 Q. Okay. And subject to your counsel's 25 objection, the answer is "DP&L states that the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 305 1 Stipulation and Recommendation speaks for itself. 2 DP&L further states that that as stated in Section 3 II.1.d. of the Stipulation, DP&L commits to commence 4 a sale process; DP&L/DPL reserves the right to accept 5 or reject any offer," correct? 6 A. Yes, you have read that correctly. 7 Q. And that's your answer sitting on the 8 stand right now, right? 9 A. It is. 10 Q. Okay. Thank you. There's been no 11 interest in buying Conesville, correct, Ms. Schroder? 12 A. I don't know. 13 Q. Okay. There has been no interest in 14 buying Miami Fort, correct? 15 A. I don't know. 16 Q. And there has been no interest in buying 17 the Zimmer plant, correct? 18 A. I don't know. 19 Q. Do you know if -- excuse me. I 20 apologize. Has Dayton Power and Light tried to sell 21 those plants to date to your knowledge? 22 A. I don't know. 23 Q. The quote-unquote coal generation assets 24 referenced in e, Ms. Schroder, is that referring only 25 to Conesville, Miami Fort, and Zimmer? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 306 1 A. Can you repeat that question, please? 2 Q. Certainly. You will see in e it talks 3 about "coal generation assets"? 4 A. Yes, I see that. 5 Q. Okay. And by "coal generation assets," 6 is that limited to Conesville, Miami Fort, and 7 Zimmer? 8 A. I don't know, but I think it's a 9 reasonable interpretation that it's in the same 10 section that's referring to the section -- subsection 11 just prior to when it says the "coal generation 12 assets" that are referenced in the prior one. 13 Q. Okay. So you say that's a reasonable 14 interpretation. Is that how you would expect the 15 Commission to interpret it? 16 A. Yes. 17 Q. Okay. 18 EXAMINER PRICE: I have a question on the 19 sequence of this. You have three commitments on this 20 page of the stip. One is to transfer all your gen 21 assets to an affiliate, two is to commence the sale 22 process, and three is AES agrees to use the proceeds 23 from any sale to pay down debt; is that correct? 24 THE WITNESS: That's right. 25 EXAMINER PRICE: If you are unable to ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 307 1 sell Conesville, Miami Fort, and Zimmer, you will 2 transfer them to your affiliate; is that correct? 3 THE WITNESS: That's correct. And as I 4 understand it, that that transfer may occur prior to 5 a sale as well. 6 EXAMINER PRICE: If the sale occurs -- if 7 the transfer occurs prior to the sale and there is a 8 subsequent sale, would AES still use the proceeds 9 from that sale to pay down DPL debt? 10 THE WITNESS: Yes. That's the commitment 11 that's stated here in the stipulation. 12 EXAMINER PRICE: Regardless of whether at 13 the time of sale the assets are held by DP&L or by 14 its affiliate. 15 THE WITNESS: That's right. 16 Q. (By Mr. Michael) Ms. Schroder, if you 17 would please turn to page 5. It will be the tail end 18 of paragraph a. 19 A. Sorry. Are you on my -- our stipulation 20 or my testimony? 21 Q. Amended stipulation. 22 A. On page 5? 23 Q. Correct. 24 A. Okay. 25 Q. It's paragraph a, but I am going to ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 308 1 direct you specifically to the language right before 2 paragraph b, if that's helpful, and specifically the 3 sentence beginning "The Commission will determine the 4 amount of Rider DMR," et cetera. Do you see that 5 sentence? 6 A. Yes, I see that. 7 Q. Okay. And at the end of that sentence it 8 states that the Commission will look at the evidence 9 of the measures undertaken by DPL Inc. and DP&L to 10 address their financial issues, correct? 11 A. I think I heard you correctly that it's 12 "not limited to evidence of DPL Inc.'s and DP&L's 13 financial needs and evidence of the measures 14 undertaken by DPL Inc. and DP&L, to address their 15 financial issues." 16 Q. Okay. And the company would be amenable, 17 Ms. Schroder, to allowing the Commission to also 18 consider measures undertaken by AES to address DPL 19 Inc. and DP&L's financial issues too, correct? 20 A. I don't know. 21 Q. Okay. 22 EXAMINER PRICE: Can I have that question 23 and answer back, please. 24 (Record read.) 25 EXAMINER PRICE: Thank you. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 309 1 Q. Moving on to the next sentence of that 2 same -- excuse me. I apologize. In that same 3 paragraph, Ms. Schroder, it states "Any Signatory 4 Parties or Non-Opposing Parties to this Stipulation 5 may advocate for or oppose the request for a DMR 6 extension in a separate docket," correct? 7 A. I see that. 8 Q. Okay. And when it says "any Signatory 9 Parties or," that's not meant to be to the exclusion 10 of other intervenors, correct? 11 A. No. I would interpret this as a 12 clarifying statement that signatory parties and 13 nonopposing parties to this stipulation can still 14 advocate for the extension, but I think other parties 15 that are not signatory or nonopposing parties could 16 also advocate for an extension. 17 Q. Or oppose it. 18 A. Or oppose. 19 Q. There will be at least one probably. 20 Staying with paragraph -- oh, moving on 21 to paragraph b, revisiting that one, actually it's 22 referencing discretionary debt payments. And 23 discretionary -- discretionary debt prepayments are 24 debt payments above and beyond the contractually 25 required debt payments, correct? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 310 1 A. Can you restate that? 2 Q. Certainly. In paragraph b it references 3 making discretionary debt prepayments at DPL Inc. and 4 DP&L, correct? 5 A. Yes. 6 Q. And discretionary debt prepayments are 7 payments above and beyond the contractually required 8 debt payments, correct? 9 A. That's my understanding at a high level, 10 yes. 11 MR. MICHAEL: May we approach, your 12 Honor? 13 EXAMINER PRICE: You may. 14 MR. MICHAEL: I would like to have marked 15 as OCC Exhibit 6, please, your Honor. 16 EXAMINER PRICE: So marked. 17 (EXHIBIT MARKED FOR IDENTIFICATION.) 18 EXAMINER PRICE: Let's go off the record. 19 (Discussion off the record.) 20 Q. Ms. Schroder, if you could please 21 identify the document that we had marked as OCC 22 Exhibit 6. 23 A. I'm looking at OCC Interrogatory 396 24 entered in as OCC 6, question and response. 25 Q. And you were the witness responsible for ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 311 1 the response, correct? 2 A. That's correct. 3 Q. And the document -- the question speaks 4 for itself. The answer reads, subject to your 5 counsel's objections, "DP&L states that discretionary 6 debt repayments are repayments of debt in addition to 7 contractual debt repayments in order to reduce the 8 overall level of debt at DPL Inc. and DP&L," correct? 9 A. That's correct. 10 Q. And that's your -- you stand by that 11 answer on the stand right now, correct? 12 A. I do. 13 Q. Okay. And I want to focus on the use of 14 the word "prepayments," if I can, Ms. Schroder, and 15 when -- as used in the amended stipulation in that 16 paragraph when you say -- when the amended 17 stipulation says that Dayton Power and Light will 18 make discretionary debt prepayments, those are 19 payments above and beyond the contractually required 20 debt payments that are made before those debt 21 payments are actually due, correct? 22 A. I apologize. I was getting it back out. 23 I thought you were done with it. I pulled it back 24 out. Can you repeat that? 25 Q. Certainly. We are staying on page 5 of ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 312 1 the amended stipulation, paragraph b. And in subpart 2 b it discusses the cash flow from the DMR being used 3 to make discretionary debt prepayments at DPL Inc. 4 and DP&L, correct? 5 A. Right. 6 Q. Okay. And I want to focus on the meaning 7 of the word "prepayments," and my question is that by 8 making discretionary debt prepayments, payments above 9 and beyond the contractually required debt payments 10 will be made before they are actually due, correct? 11 A. That would be my understanding. I don't 12 know if it's before. I think it's my understanding 13 that it's in addition to contractual payments. 14 Q. Okay. 15 A. I guess I don't know for sure the timing 16 of it, and I am also noticing that the question in 17 the interrogatory refers to "repayments" as opposed 18 to in the stipulation it says "prepayments." I am 19 not sure if that was intentional or not. 20 Q. I moved on to another question, so it was 21 very intentional. 22 MR. MICHAEL: Okay. So may I have the 23 answer read back, please. 24 (Record read.) 25 Q. So, in any event, that would be debt ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 313 1 payments above and beyond what Dayton Power and Light 2 and DPL Inc. will be contractually required to pay, 3 correct? 4 A. That's my understanding at a high level, 5 yes. 6 Q. If you could turn to the top of page 6 of 7 the amended stipulation, Ms. Schroder. And I want to 8 ask you about the true-up mechanism if I might, 9 please, referenced at -- right there at the top of 10 page 6. Do you see that? 11 A. Yes, I see this. 12 Q. Can you explain to me what the true-up 13 mechanism will be truing up? 14 A. Yes, what -- what this is referring to is 15 the DMR that is one component of this package of the 16 stipulation that begins on page 4 where it describes 17 the DMR for at least years one through three is 18 designed to collect $105 million in revenue per year, 19 and this annual true-up mechanism without carrying 20 charges is part of the negotiated settlement that 21 would ensure that customers would pay no more than 22 the 105 that's been agreed to. 23 Q. Okay. And I am trying to understand why 24 would Dayton Power and Light collect something other 25 than $105 million? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 314 1 A. As it states on page 4, the DMR is 2 designed to collect $105 million in revenue per year, 3 but as it states on page 6, the rate design and the 4 way that the DMR is charged will be in dollars per 5 kWh rates for some classes in energy and demand rates 6 for others. And so it's designed to collect 105, but 7 we can't always 100 percent predict exactly the 8 energy and demand that our customers will have, to 9 know that's the exact amount we will have collected. 10 EXAMINER PRICE: Let me ask a follow-up. 11 This is not to address anything other than variations 12 in usage due to weather, energy efficiency, you know, 13 consumption dropping, energy efficiency, anything 14 beyond that; is that correct? Just the normal 15 true-up due to variations. 16 THE WITNESS: That's how I would describe 17 it, yes, the normal true-up variations. 18 Q. I just didn't know. That's why I asked. 19 Paragraph 6d, I would like to draw your attention to 20 of the amended stipulation, please, Ms. Schroder. 21 Let me know when you are there, please. 22 A. Okay. 23 Q. It's correct you don't know how much the 24 DIR will cost, correct? 25 A. As it states on page 6 in the first line ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 315 1 of section d, the DIR, the distribution investment 2 rider, will be established set initially at zero. 3 Q. You don't -- so you don't know how much 4 the DIR will cost consumers, correct? 5 A. Initially it will cost consumers zero. 6 Q. Okay. And over the term of the ESP, you 7 don't know how much the DIR will cost consumers, 8 correct? 9 A. No. As it clarifies here, all the other 10 matters related to that DIR will be addressed in our 11 pending distribution rate case. 12 Q. So you don't know how much consumers will 13 pay for the DIR during the course of the ESP, 14 correct? 15 A. I know that it will be initially at zero 16 as established in this proceeding if it's approved as 17 it is agreed to in the stipulation and that any 18 nonzero rate would be established in our pending 19 distribution case. 20 Q. Okay. So as a result of the outcome of 21 this case, you don't know how much DIR will cost, 22 correct? 23 A. No, I don't think that's correct. I 24 think as a result of this case, it will cost zero. 25 Q. Okay. And then it's going to be ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 316 1 populated in the AIR case? 2 A. Yes, all the other matters and if 3 approved in that case would be approved in the 4 distribution rate case. 5 Q. Do you know how much you are going to 6 seek in the AIR case to populate the DIR with? 7 A. No. 8 Q. When it discusses -- and you drew our 9 attention to this, Ms. Schroder, the revenue 10 requirements and all other matters related to the DIR 11 will be set in another case, correct? 12 A. You are still in the same section about 13 the DIR? 14 Q. Yes, I am. 15 A. Yes. As it states, all the other matters 16 related to the DIR will be addressed more 17 appropriately in the distribution rate case. 18 Q. Okay. But it actually says 'or a future 19 distribution rate case." And my question is will 20 both -- both the revenue requirements and all other 21 matters regarding the DIR will have to be resolved in 22 the same case, whether it's the rate case or a future 23 distribution rate case, correct? 24 A. I would think that would be logical to do 25 all of those issues in one -- in one place, whether ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 317 1 it's in the pending case or in a future one. 2 Q. Okay. You couldn't set the revenue 3 requirement in one case and then address all other 4 matters in a wholly separate and different case, 5 right? 6 A. I wouldn't say you couldn't, but I would 7 agree with you it makes sense to do all those matters 8 together. 9 Q. Is that Dayton Power and Light's plan? 10 MR. IRELAND: Objection. 11 EXAMINER PRICE: Grounds? 12 MR. IRELAND: Speculation. 13 EXAMINER PRICE: I'll overrule. You can 14 answer if you know. 15 A. We haven't established what I will call a 16 plan for this other than what's stated here in the 17 stipulation. 18 EXAMINER PRICE: Mr. Michael, let's go 19 off the record. 20 (Recess taken.) 21 EXAMINER PRICE: Back on the record. 22 Please proceed, Mr. Michael. 23 MR. MICHAEL: Thank you, your Honor. 24 Q. (By Mr. Michael) If I could draw your 25 attention to page 7, Ms. Schroder, of the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 318 1 stipulation. 2 A. Okay. 3 Q. And you'll see in paragraph 3a a 4 reference to a "modernization plan," correct? 5 A. Yes. 6 Q. And DP&L doesn't have a modernization 7 plan right now, correct? 8 A. We don't have a distribution 9 infrastructure modernization as -- plan as 10 contemplated in this stipulation that I know of. 11 Q. And Dayton Power and Light could make 12 grid modernization investments and then seek a return 13 on and of that investment in a distribution rate 14 case, correct? 15 A. Can you repeat that? 16 Q. Certainly. 17 MR. MICHAEL: Would you mind. 18 EXAMINER PRICE: Could we have that back, 19 please. 20 (Record read.) 21 MR. IRELAND: Objection, your Honor. 22 EXAMINER PRICE: Grounds? 23 MR. IRELAND: I think it's vague because 24 it's unclear as to whether this is a question as to a 25 regulatory scheme or whether it's purely a financial ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 319 1 question. 2 EXAMINER PRICE: Break it up, 3 Mr. Michael. 4 Q. (By Mr. Michael) Without the SmartGrid 5 rider, Dayton Power and Light Company, were it not in 6 a financial crisis, could make grid modernization 7 investments, correct? 8 A. Can I ask you to break that up? Because 9 it seems as if you started by talking about the plan 10 and then you've switched to whether we are in a 11 crisis or whether we are making investments. I am 12 not sure of the question. 13 Q. I'm away from the plan now and in a 14 separate and new line of questioning. 15 A. Okay. 16 Q. And the question is is that Dayton Power 17 and Light Company could make grid modernization 18 investments without the SmartGrid rider, correct? 19 A. No. I would disagree with that. As I 20 understand it, our current financial situation, 21 without financial support, the company cannot make, 22 well, what I would interpret as grid modernization 23 investments. 24 Q. Absent the financial crisis that Dayton 25 Power and Light is in, Dayton Power and Light could ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 320 1 make grid modernization investments, correct? 2 A. I don't know if it could, but what I 3 would say is to try to answer that question more 4 fully regarding the stipulation and the commitments 5 that are in the stipulation, what we've committed to 6 in the stipulation is a plan that allows for us to 7 invest that's going to be consistent with the 8 Commission's initiative for grid modernization. 9 MR. MICHAEL: I move to strike, your 10 Honor, nonresponsive. 11 EXAMINER PRICE: If you could listen 12 carefully to his question and that will get you up 13 and down off the stand a little quicker. 14 Let's have the question back, please. 15 MR. MICHAEL: Thank you, your Honor. 16 (Record read.) 17 A. I think absent the financial crisis, or 18 alternatively with the financial support as agreed to 19 in the stipulation, the company could make 20 investments. I don't know if they would be 21 consistent with the Commission's modernization 22 initiatives. 23 Q. Okay. And then after it made those 24 investments, it could then seek a return on and of 25 those investments in a distribution rate case, ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 321 1 correct? 2 A. Yes, that would be one opportunity. 3 Q. At this point in time, Ms. Schroder, 4 Dayton Power and Light doesn't know how much the 5 SmartGrid rider is going to cost over the course of 6 the ESP, correct? 7 A. I know that initially similar to the DIR 8 that we just talked about, that initially the 9 SmartGrid rider will be established at zero, and it 10 will only be nonzero once the company has a plan 11 consistent with the Commission's initiative and it's 12 approved. And in that plan we have a commitment to a 13 cost/benefit analysis, and those -- those pieces of 14 information will help us understand better how much 15 it will cost. 16 MR. MICHAEL: I am going to move to 17 strike, your Honor, as nonresponsive. They are 18 simple questions. We can get her off a lot quicker 19 if -- 20 EXAMINER PRICE: No. I thought that one 21 was a fair answer. Overruled -- denied. 22 Q. How much is the SmartGrid rider going to 23 cost over the course of the ESP? 24 A. Similar to my last answer, I think 25 initially it will be zero, and once we have a plan ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 322 1 and it's approved by the Commission and it is a 2 nonzero, I don't know how much that amount will be. 3 Q. The Commission would have the authority 4 to reject any SmartGrid proposals that Dayton Power 5 and Light makes, correct? 6 A. Certainly the Commission will have 7 authority to approve and review our plan. 8 Q. Or reject them. 9 A. The Commission has the discretion to 10 reject our plan. 11 Q. If I could draw your attention to 12 paragraph -- excuse me, page 7, 3a. And specifically 13 the provision that says "whichever is earlier unless 14 an extension is recommended by Staff or granted by 15 the Commission." Do you see that language? 16 A. I do. 17 Q. How would -- how -- how does Dayton Power 18 and Light and the signatory parties envision that 19 staff will seek that recommendation -- or, pardon me, 20 that extension? 21 A. I don't know how they would do that. 22 Q. Okay. Based on how it's written, can 23 there be a scenario where staff makes a 24 recommendation and the Commission rejects that 25 recommendation? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 323 1 A. I think the Commission has the discretion 2 to accept or reject any recommendation. 3 Q. Okay. So how -- let's assume that that 4 transpires, staff makes a recommendation, the 5 Commission rejects that recommendation. What happens 6 then to the requirements outlined in 3a as far as 7 timing goes? 8 A. Can you repeat that, please? 9 Q. Certainly. Under paragraph 3a there are 10 certain obligations on Dayton Power and Light to file 11 a modernization plan within a specific period of 12 time, correct? 13 A. Yes. 14 Q. And that period of time can be extended 15 if recommended by staff or granted by the Commission, 16 correct? 17 A. Correct. 18 Q. And your testimony was that it would be 19 possible for staff to make a recommendation and the 20 Commission to reject that recommendation, correct? 21 A. Yes, I believe that to be correct. 22 Q. Okay. And my question is if that were to 23 happen, how will the timeline for a modernization 24 plan be affected? 25 A. I don't know exactly how the timeline ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 324 1 would be affected. Depending on the timing of a lot 2 of things, when you mentioned that, the staff 3 recommending an extension, how long it takes for the 4 Commission to either grant or -- in this case in your 5 example that they don't grant it, whether there is 6 additional information the Commission provides to the 7 company regarding why it wasn't granted or if it 8 should continue with providing a plan. 9 Q. Okay. In paragraph 3b, it says "The 10 Modernization Plan should assess." Do you see that? 11 A. Yes. 12 Q. Is the "should" meant to be mandatory; in 13 other words, the modernization plan will assess and 14 analyze the cost effectiveness, et cetera? 15 A. Can you repeat that? 16 Q. Certainly. Let me read the first 17 sentence of paragraph 3b, if I might, and then I will 18 ask the question, Ms. Schroder. It states "The 19 Modernization Plan should assess and analyze the 20 cost-effectiveness and provide a cost/benefit 21 analysis of all of its components and provide 22 anticipated timelines for deployment." Did I read 23 that correctly? 24 A. Yes, you did. 25 Q. Is the assessment reference in there a ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 325 1 mandatory assessment that Dayton Power and Light 2 Company will undertake? 3 A. No. In that sentence I would interpret 4 the word "should" as that's not mandatory. 5 Q. Okay. Would Dayton Power and Light 6 Company be amenable to making that assessment 7 mandatory? 8 A. I don't know. 9 Q. Okay. In the next sentence of 3b, 10 Ms. Schroder, it references "operational cost 11 savings." Do you see that? 12 A. Yes. 13 Q. And to the degree any operational cost 14 savings are realized, they will be passed on to 15 consumers, correct? 16 A. I don't know. 17 Q. Would the company be amenable to mod -- 18 A. We are both off. 19 Q. -- a modification to the amended 20 stipulation that any operational cost savings will be 21 passed on to consumers? 22 A. I don't know but -- I don't know if the 23 company would be amenable to changes, but I can say 24 that the stipulation, as it stands today, is a 25 package that is supported by a number of other ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 326 1 parties, and I can't speak for them. 2 Q. If I could direct your attention, 3 Ms. Schroder, to page 8, section III, paragraph 1, 4 little a. Let me know when you are there, please. 5 MR. IRELAND: Bill, where are we? Sorry. 6 MR. MICHAEL: Page 8 of the stipulation, 7 section Roman Numeral III, 1, little a, talking about 8 RECs. 9 MR. IRELAND: Thank you. 10 MR. MICHAEL: Thank you. 11 A. Yes, I see that. 12 Q. And the procurement of the RECs will be 13 subject to audit -- audit and prudence review by the 14 Commission and its staff, correct? 15 A. The procurement of RECs? 16 Q. Yes. 17 A. Yes. 18 Q. If I could draw your attention, please, 19 Ms. Schroder, to page 9, Roman Numeral IV, the 20 economic development rider. 21 A. Okay. 22 Q. The provisions in this section, Roman 23 Numeral IV, will not carry forward into any DMR 24 extension, correct? 25 A. No. I would disagree with that ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 327 1 characterization. It's my understanding in the 2 middle of section -- under subsection 1, "The 3 provisions in this Section shall expire when the DMR 4 expired," and it goes on further. And as I mentioned 5 earlier, if the DMR extended, I would interpret the 6 same thing, the DMR extension or the DMR expiration 7 would tie to how many years the DMR exists. 8 Q. Okay. And if we can focus on the 9 economic improvement incentive, Ms. Schroder. You 10 don't know how much that economic improvement 11 incentive will cost during the term of the ESP, 12 correct? 13 A. No. That's not correct. 14 Q. Okay. 15 A. The cost of this and the other incentives 16 are all contained within the typical bill impacts 17 that are attached to my testimony as Exhibit -- 18 Exhibit -- Exhibit A. 19 Q. Take me there, Ms. Schroder, and show 20 me -- let's stick with the economic improvement 21 incentive for the time being. And I am on Exhibit A 22 and please direct me to where it says how much it 23 will cost during the term of the ESP. 24 A. It doesn't have a specific cost of that 25 subset of incentive that's reflected on this page, ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 328 1 but that is included in this incremental cost of the 2 economic development rider which is column J. I am 3 looking at Exhibit A, page 1 of 36, and I am looking 4 at column J. And, for example, the economic 5 development rider and all of the benefits that are 6 proposed in the stipulation to the region and all of 7 the customers that will endure either direct or 8 indirect benefits, this is approximately less than 50 9 cents for a typical residential customer. 10 Q. Okay. And it might be helpful to clarify 11 my question for you, Ms. Schroder, because it doesn't 12 answer the question I asked. The question I asked 13 was how much will the economic improvement incentive 14 cost over the course of the ESP? And you pointed me 15 to a provision in your exhibit that said how much it 16 could cost a typical residential utility consumer 17 using a thousand kilowatts. 18 And so I wanted to distinguish what you 19 pointed me to from the question I am asking for 20 purposes of clarity, if I might. The economic 21 improvement incentive is an incentive that is .0040 22 per kilowatt for all kilowatt-hours, correct? 23 A. I'm sorry. I am turning back to where 24 you were. 25 Q. That's all right. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 329 1 A. Go ahead. Sorry. Go ahead with your 2 question. 3 Q. Okay. I would first like to draw your 4 attention, Ms. Schroder, to paragraph a, and it 5 provides that the economic development incentives 6 will be equal to .0040 per kilowatt-hour for all 7 kilowatt-hours, correct? 8 A. I see that. 9 Q. So the value of the economic improvement 10 incentive is a function of consumption, correct, of 11 kilowatts? 12 A. That's right. 13 Q. Okay. And my question is you do not know 14 how much the economic improvement incentive will cost 15 in total over the course of the ESP, correct? 16 A. I am not sure if that's exactly the 17 question that I answered earlier but what I was 18 trying to answer is that we do have what I would 19 consider a reasonable estimate of this. I don't have 20 that in front of me but that's what's incorporated 21 into the typical bill analysis. 22 Q. Okay. So if I want to know how much the 23 economic improvement incentive will cost over the 24 course of the ESP, tell me how I arrive at that 25 number based on your Exhibit A. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 330 1 A. I wouldn't say that you could arrive at 2 it based on Exhibit A. It is incorporated in there, 3 but I think to arrive at it would have to be 4 providing you with customer specific information that 5 I'm not able to provide. 6 Q. Okay. So you are not able to testify 7 right now how much the economic improvement incentive 8 will cost during the course of the ESP, correct? 9 A. Without divulging customer-specific load 10 data and the forecast of such, I cannot. 11 Q. Okay. And do you have that 12 information -- do you know what that information is 13 such that we could go to a confidential session and 14 could you tell me about? 15 A. Not as I sit here, I do not have that. 16 Q. Okay. Thank you. To get the economic 17 improvement incentive, those who qualify will not 18 have to create any jobs, correct? 19 A. I think that what we were trying to 20 reflect here is that they have already created jobs 21 and that they, as large employers, do create jobs; 22 and we want to provide them an incentive to continue 23 to create jobs and promote job growth in the region. 24 Q. Okay. But in order to get the 25 incentives, those that qualify don't have to create ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 331 1 any jobs, correct? 2 A. Just to clarify they get the incentive. 3 They have already created a large number of jobs. 4 MR. MICHAEL: Move to strike, your Honor. 5 EXAMINER PRICE: Granted. The question 6 before you is in order to get the economic incentive, 7 do the employers have to create any new jobs? 8 THE WITNESS: They do not have to create 9 any new jobs. We are providing them incentive to do 10 so. 11 Q. But they still get the incentive even if 12 they don't create any new jobs, correct? 13 A. That's correct. 14 Q. And in order to get the economic 15 improvement incentives, those eligible do not have to 16 retain any current jobs, correct? 17 A. As I stated earlier, there are no 18 requirements in here similar to what you are asking 19 about. What we are providing instead is an incentive 20 for these large employers to continue to employ 21 customers in the region and to grow. 22 Q. And just so I can move on, perhaps, and 23 make this quicker, your answer would be the same 24 regarding the automaker incentive and the Ohio 25 business incentive, correct? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 332 1 A. I would say they are similar. Some of 2 these encourage customers, and these large employers, 3 to operate efficiently which provides other direct 4 and indirect benefits to others in the region, in 5 addition to the fact we are providing an incentive 6 for job growth. 7 Q. Okay. So I am going to go through them 8 one at a time then. The automaker incentive, in 9 order to get that incentive, those eligible do not 10 have to create any new jobs, correct? 11 A. Similar to my answer earlier, they do 12 not -- there is no requirement to create new jobs. 13 What we are providing is an incentive for them to 14 maintain a large employer and benefit the region. 15 Q. Okay. And there is no requirement under 16 the automaker incentive that those eligible retain 17 any current jobs, correct? 18 A. I would say similar to my earlier answer, 19 they already have created a lot of jobs. There is no 20 additional requirement. We are providing them an 21 incentive to remain a large employer in the region. 22 Q. Ms. Schroder, I am more than happy to sit 23 here and ask my questions over and over and over, 24 okay? I would request -- 25 MR. MICHAEL: And I would ask the Bench ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 333 1 to, I suppose that's a better way to do it, if I 2 could ask your Honor to ask that the witness listen 3 to my question and answer my question? You know, 4 Mr. Ireland will have an opportunity to do redirect. 5 You know, if she doesn't understand it, I am happy to 6 restate it, but this is just -- I would ask for an 7 instruction from your Honor to listen to the question 8 and answer it. 9 EXAMINER PRICE: Please listen carefully 10 to Counsel's question, and answer the question 11 directly. If you have any additional information, 12 Mr. Ireland will be happy to ask you that question on 13 redirect. 14 MR. MICHAEL: Thank you, your Honor. 15 Q. (By Mr. Michael) I am going to stick with 16 the automaker incentive, Ms. Schroder. In order to 17 get that incentive, those that qualify do not have to 18 retain any current jobs, correct? 19 A. Again, similar to my last statement, 20 there is no requirement. 21 Q. And the Ohio business incentive, for 22 those that qualify, they do not have to create any 23 new jobs in order to get that incentive, correct? 24 A. Similar to my other answer, there is no 25 requirement, only an incentive. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 334 1 Q. And under the Ohio business incentive, 2 there is no requirement that they retain existing 3 jobs in order to get that incentive, correct? 4 A. No requirement. However, there is an 5 incentive which is what we are providing for them to 6 maintain -- 7 Q. If I could -- I'm sorry. Were you 8 through? 9 A. No, actually I wasn't. I was just saying 10 again there is no requirement of such. What we are 11 providing is an incentive for them to remain a large 12 employer in the region. 13 Q. Okay. And they would still get the 14 incentive if they went down to one employee, correct? 15 MR. ALEXANDER: Objection. 16 EXAMINER PRICE: Grounds? 17 MR. ALEXANDER: Misstates the record and 18 frankly the Commission. This is based on load. It's 19 not based on jobs, so it is a comparison to one 20 employee. It's completely irrelevant. This 21 provision as well as the automaker provision is based 22 on load, not jobs. 23 EXAMINER PRICE: I understand the 24 provision is based on load, but he is going to argue 25 it's relevant because it's not tied to jobs and ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 335 1 that's his privilege to argue that in the brief. So 2 the objection is overruled. 3 A. Could you repeat the question? 4 MR. MICHAEL: Yes. May I have the 5 question repeated, your Honor? 6 EXAMINER PRICE: Let's have the question 7 back again. 8 (Record read.) 9 A. I would say it is a very wild observation 10 that that might be -- 11 Q. It wouldn't be my first. 12 A. But -- 13 Q. There's lots of them with this case. 14 A. We have a very large employer that is one 15 of the largest employers in our region that has 16 multiple locations that would all of a sudden instead 17 of having multiple locations and being headquartered 18 in Ohio would all of a sudden have one employee, but 19 I would note that if that were the case, presumably 20 they would be closing down all of the stores and 21 shutting down operations such that they would 22 probably have very limited usage and the value of the 23 economic development incentive would be next to zero. 24 Q. Okay. Let's move on to paragraph 2. You 25 see the reference to the EDR in that paragraph? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 336 1 A. Yes. 2 Q. How is the EDR allocated now? 3 A. I would say, subject to check, I believe 4 it's based on percentage of distribution revenues. 5 Q. Okay. And are you familiar with the 6 concept of delta revenue with special arrangements 7 and economic development arrangements? 8 A. Yes, I am. 9 Q. Okay. Is delta revenue collected through 10 the EDR? 11 A. That's my understanding, yes. 12 Q. Is anything in addition to delta revenue 13 collected through the EDR to your knowledge? 14 A. Not to my knowledge. 15 Q. If I could draw your attention to the 16 page -- the top of page 11 in the amended stipulation 17 and specifically the language that says "or when an 18 equivalent economic stability charge," et cetera. Do 19 you see that language, Ms. Schroder? 20 A. I'm sorry, no, I don't. Where are you 21 again? 22 Q. The very top of page 11 of the proposed 23 amended stipulation, right there in the first line on 24 that page. 25 A. Yeah, I see it now. I am reading through ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 337 1 the prior sentences. Okay. 2 Q. So in this case Dayton Power and Light is 3 not ruling out seeking another financial stability 4 charge at some other time, correct? 5 A. I would say but for in year six where we 6 have committed there will not be one. 7 Q. Okay. So the proposal is potentially 8 that this DMR will last three years with a two-year 9 extension, correct? 10 A. That's part of this proposal. 11 Q. Okay. And the ESP lasts six years as 12 proposed, correct? 13 A. Correct. 14 Q. And if I understood your testimony just a 15 second ago, what you said was after this six-year 16 ESP, Dayton Power and Light is committing not to come 17 back for non -- nonbypassable financial stability 18 charge, that -- 19 A. No, I don't think that's what I said, or 20 I didn't intend to say that. 21 Q. You did, but we will revisit it then. 22 A. What I intended to say and what I think I 23 said was that the ESP is six years long and that the 24 company has committed that in year six there will be 25 no financial integrity or DMR. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 338 1 Q. But it's not ruling out after year six 2 Dayton Power and Light Company might seek another 3 financial stability charge; is that correct? 4 A. I don't think there is anything in the 5 stipulation regarding what might happen at the end of 6 this ESP term. 7 Q. Okay. Then explain to me what this 8 means. It states at the top of page 11 "When the DMR 9 expires, or when an equivalent economic stability 10 charge intended to provide financial stability to 11 DP&L or DPL Inc., whether proposed in this case or 12 another proceeding expires." I read that to say that 13 Dayton Power and Light in this case is not ruling out 14 seeking another financial stability charge; is that 15 not the correct reading of that provision? 16 A. I don't know but let me start by 17 answering that question with the fact that the 18 negotiations and the settlement among all of these 19 parties is complex and there is a lot of give and 20 take and a lot of requests for language changes and 21 interpretation and protections. And in this case my 22 interpretation is that certain parties that signed 23 the stipulation asked for certain protections and 24 that's what's provided for by this language. 25 MR. MICHAEL: Your Honor, I would like to ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 339 1 strike everything after "I don't know." 2 EXAMINER PRICE: I am going to deny that. 3 I think she is giving her best guess as to what this 4 means, but she does not know for certain. 5 MR. MICHAEL: Thank you. 6 Q. If you could turn to page 12, please, 7 Ms. Schroder. I want to draw your attention 8 specifically to the money that DP&L will pay IEU, 9 OMAEG, and Kroger. Do you see that language in 10 there? 11 A. Yes, I see that. 12 Q. Were those dollar figures a function of 13 anything other than the negotiation process in order 14 to reach the amended stipulation? 15 A. Those dollar figures are a part of the 16 entire package, and I can't say specifically what 17 they are or they are not a part of, but they are part 18 of the entire package that does provide benefits. 19 Q. Okay. And I'll ask -- I mean, is the 145 20 grand that DP&L is going to pay to IEU-Ohio tied to 21 any regulatory principle like cost causation? 22 MS. BOJKO: Objection. I am going -- I 23 allowed the first question, but I think we are 24 getting into confidential settlement discussions and 25 how the provisions were arrived at in this paragraph. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 340 1 MR. IRELAND: I would join. 2 EXAMINER PRICE: Sustained. 3 MS. BOJKO: Thank you. 4 Q. Okay. So the $145,000 was arrived at 5 wholly and completely as a function of the 6 negotiation process of the amended stipulation, 7 correct? 8 MS. BOJKO: Objection. 9 MR. MICHAEL: If I could just respond, 10 your Honor. What I am trying to get at is, you know, 11 the Commission has an amended stipulation in front of 12 it under which certain dollar figures will be paid to 13 certain parties and I simply want to know were those 14 dollar figures arrived at wholly as a function of the 15 negotiation process to reach the stipulation or -- 16 EXAMINER PRICE: It's a settled figure. 17 I don't think the Commission will take the -- this is 18 the figure. If you want to ask if it's tied to any 19 of the figures, that might be fair, but we will just 20 see how that goes. 21 MR. MICHAEL: Okay. 22 Q. Is it tied to any figure? 23 MS. BOJKO: Objection. 24 EXAMINER PRICE: Let's rephrase that 25 question. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 341 1 MR. MICHAEL: You said it, your Honor, so 2 I thought it was a good question. 3 EXAMINER PRICE: Let me try. 4 MR. MICHAEL: Yeah, that would be great. 5 EXAMINER PRICE: And maybe I will fail. 6 Maybe Ms. Bojko will object. 7 MR. MICHAEL: You can overrule her is the 8 good thing. 9 EXAMINER PRICE: Maybe I won't. Is 10 this -- are the three figures in the paragraph on 11 page 12, are they contingent upon any other -- I 12 can't even -- I can't even figure out how to do it 13 right. I think -- I think we are stuck with the 14 figures there are a part of the settlement 15 discussions and that's what it is. If you want to 16 take another shot at it, be my guest. 17 Q. (By Mr. Michael) Ms. Schroder, are those 18 dollar figures tied to any metric associated with 19 either IEU, OMA, or Kroger's electricity bill? 20 MS. BOJKO: Objection. 21 MR. PRITCHARD: Object. 22 MS. WHITFIELD: I am going to object as 23 well. 24 EXAMINER PRICE: I'll sustain. 25 Q. So let me understand then Dayton Power ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 342 1 and Light's perspective. They expect the Commission 2 to approve payments to IEU, OMA, and Kroger without 3 knowing what those payments are tied to in any way, 4 shape, or form? 5 MS. BOJKO: Objection. Your Honor, the 6 stip speaks for itself, and I think that counsel, he 7 turned to page 12. He didn't start at the beginning 8 of the paragraph but there are parameters in the 9 stipulation that I think the stipulation speaks for 10 itself and it's not as -- 11 MR. MICHAEL: Maybe she could point me to 12 it then. I'm fine with that too. 13 EXAMINER PRICE: I think if you look at 14 the first sentence of this paragraph I think is what 15 Ms. Bojko is referring to. 16 MR. MICHAEL: Oh, okay. So how is the 17 partially offset -- I mean, how partially is that 18 partial offset? 19 MS. BOJKO: Objection. I am going to 20 wholly object, not partially object. 21 MR. MICHAEL: First time for everything. 22 Q. (By Mr. Michael) Okay. I mean, it's a 23 partial offset and that language is in the stip. I 24 want to understand how that partial offset was 25 arrived at. Was it simply a function of the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 343 1 negotiation between the company and the parties, or 2 was it tied to some metric of the load or demand? 3 MS. BOJKO: Objection. 4 MR. IRELAND: Your Honor, I think she can 5 answer the first question but not the second 6 question. 7 MS. BOJKO: I agree, not the or. 8 EXAMINER PRICE: So you're objecting to 9 the compound nature of the question, not the 10 settlement. 11 MR. IRELAND: Right. 12 EXAMINER PRICE: Why don't you break it 13 up. Ask her the first part. 14 Q. Okay. The partial offset, was that -- 15 what was -- was the amount of that partial offset 16 wholly a function of the negotiation process between 17 the company and the three entities listed on page 12? 18 MS. BOJKO: Objection. He changed his 19 question now. It's whole -- his use of "wholly" is 20 part of the problem. 21 MR. MICHAEL: What would you suggest, 22 Ms. Bojko? 23 MS. BOJKO: Ask the first part of the 24 question without the word "wholly" added. 25 EXAMINER PRICE: Don't use "wholly." ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 344 1 MS. HARRIS: Just ask it to be read back. 2 EXAMINER PRICE: Don't ask her to go back 3 six questions. 4 Q. (By Mr. Michael) I will go over it. I 5 didn't realize "wholly" was such a -- okay. So the 6 partial offset, the amount was a function of the 7 negotiation process between Dayton Power and Light 8 and the three entities listed on page 12, correct? 9 A. I would say it's broader than this. It 10 is definitely part of the settlement and stipulation 11 and negotiations, but as we have 14 parties that have 12 signed on that agree that there are benefits here to 13 the entire package, I think that it is part of the 14 package that benefits not only all that have signed 15 on but broader for the region of all customers. 16 Q. Were any of those other parties you just 17 mentioned involved in negotiating the $145,000 18 figure? 19 MR. PRITCHARD: Objection. 20 EXAMINER PRICE: Sustained. 21 Q. If we could turn to page 13, please, and 22 draw your attention to the reconciliation rider 23 provision. The company doesn't know how much the 24 reconciliation rider is going to cost, correct? 25 A. I'm sorry. Just give me one minute. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 345 1 Q. Certainly. Take it. 2 A. You are on page 13? 3 Q. I am. 4 A. Okay. Can you repeat your question for 5 me, please? 6 Q. Certainly. You don't know how much the 7 reconciliation rider will cost consumers during the 8 course of the ESP, correct? 9 A. We do have an estimate which is included 10 in the typical bills. 11 Q. Okay. Why don't you point me to that. 12 A. Exhibit A to my testimony, page 1 of 36, 13 column F, for a typical residential customer, 14 approximately a dollar depending on their usage, 92 15 cents for $1.39 for a typical residential customer. 16 That's what is estimated for year one. 17 MR. MICHAEL: I would move -- going to 18 move to strike, your Honor, as nonresponsive and ask 19 the question be reread. 20 EXAMINER PRICE: Your motion to strike 21 will be denied. I think the question was vague as to 22 whether you meant the overall cost or the costs to an 23 individual consumer. She took advantage of that 24 vague answer, answered the individual consumer. If 25 you want to ask the aggregate costs. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 346 1 Q. I am going to ask about the aggregate 2 cost, Ms. Schroder, and it's true that Dayton Power 3 and Light doesn't know the total cost of the 4 reconciliation rider over the course of the ESP, 5 correct? 6 A. Correct. We don't have an estimate of 7 the overall cost or benefit as it will provide a net 8 passthrough to customers as its proposed and agreed 9 to here in the stipulation that there may be benefits 10 that are passed through, and there may be costs that 11 are passed through so what we have provided is a 12 forecast. 13 MR. MICHAEL: Move to strike everything 14 after "correct." 15 EXAMINER PRICE: I'll give her a little 16 bit of leeway. Overruled. 17 MR. MICHAEL: Thank you, your Honor. 18 Q. So under this rider, Ms. Schroder, Dayton 19 Power and Light will collect the difference between 20 OVEC's costs and PJM's revenues, correct? 21 A. I think at a high level that's accurate. 22 Q. Okay. And do the costs include a rate of 23 return? 24 A. It's my understanding they do not. 25 Q. Okay. And if I could draw your attention ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 347 1 to paragraph little two ii references OVEC costs 2 there in the third line down. Do you see that? 3 A. Yes, I see that. 4 Q. And will those costs be subject to 5 prudence review by the Commission and its staff? 6 A. Yes. I think any time we have a rider 7 that we are proposing to pass through costs and 8 credits, that they are subject to the review of the 9 staff and the Commission. 10 Q. Okay. And will they be subject to an 11 audit by the staff or its designee? 12 A. I would expect so, yes. 13 Q. Okay. And will staff -- will the 14 Commission have the authority to make a disallowance 15 for any imprudently-incurred costs? 16 A. The Commission always has that right. 17 Q. Is that Dayton Power and Light's 18 expectation with respect to the reconciliation rider, 19 that they would have a right to make a disallowance? 20 A. Can you repeat all of that? 21 Q. Certainly. Is it Dayton Power and 22 Light's expectation that the Commission will have the 23 authority to make a disallowance if Dayton Power and 24 Light seeks to recover imprudently-incurred OVEC 25 costs? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 348 1 A. I would like to answer that by saying we 2 don't expect we will incur imprudent costs, but 3 certainly the Commission will review, the staff and 4 Commission will review and approve our rider. 5 Q. Okay. And it will have the authority to 6 make a disallowance if they find any 7 imprudently-incurred costs, correct? 8 A. They will have the authority to review 9 their audit and make their decision. 10 Q. Including a disallowance, correct? 11 A. I would expect they can make their 12 decision whether it's prudent or not, yes. 13 Q. The reconciliation rider is bypassable, 14 so shopping customers won't have to pay it, correct? 15 A. What do you mean? I am not sure if I am 16 interpreting the way you said, so can you repeat the 17 question slightly differently? 18 Q. Is the reconciliation rider bypassable? 19 A. It is as proposed in the stipulation, 20 yes. 21 Q. That means customers that shop won't have 22 to pay it, correct? 23 A. That's correct. 24 Q. Okay. And if shopping were to increase, 25 the cost of the reconciliation rider to SSO customers ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 349 1 would also increase, correct? 2 A. Can you repeat that? 3 MR. MICHAEL: Could you reread the 4 question, please. 5 EXAMINER PRICE: I think the difficulty 6 is you have flipped between aggregate and individual. 7 Are you saying the cost to an individual or costs in 8 the aggregate? 9 MR. MICHAEL: It doesn't matter. The 10 answer is the same. If it's a clarification issue. 11 Q. So in the aggregate, Ms. Schroder, as 12 more customers shop, the cost for the reconciliation 13 rider will increase in the aggregate to SSO 14 customers, correct? 15 A. No. I don't think that's necessarily 16 true. I think there are a lot of factors here, one 17 being that it may not be an actual net cost. It 18 could be a net benefit. But depending on the market 19 and the level of costs and the level of benefit and 20 the level of shopping, I think all of those will play 21 into it, so I think it's hard to say. 22 Q. Okay. So let's assume for the purpose of 23 the question that the reconciliation rider will be a 24 cost. Are you with me so far? 25 A. Yes. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 350 1 Q. As more customers shop in the aggregate, 2 that will increase the amount of the reconciliation 3 rider borne by SSO customers, correct? 4 A. If I followed your hypothetical, I would 5 have to do a calculation to understand for sure what 6 you are saying. There are a number of factors I 7 guess is what my answer is. 8 Q. Tell me what the factors are. 9 A. As I stated a moment ago, whether there 10 are costs or benefits. 11 Q. Okay. I asked you to assume it was a 12 cost. 13 A. How many customers are shopping, what 14 their usage is, whether their usage is higher or 15 lower. Those are a number of the factors. 16 Q. Why does whether their usage is higher or 17 lower matter? 18 A. For example, if there were fewer 19 customers, that those fewer customers are using quite 20 a bit more, then the rate would then go down. 21 Q. Okay. But you are going to collect a 22 certain amount under the reconciliation rider and 23 that's the difference between the cost and the 24 revenues, correct? 25 A. That will be how it's proposed, yes. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 351 1 Q. Okay. And only SSO customers are going 2 to pay that amount, whatever it is, correct? 3 A. Or receive that benefit. 4 Q. Okay. So as more customers shop, 5 given -- given a cost for the reconciliation rider, 6 the amount of that cost is going to be borne by SSO 7 customers is going to necessarily increase, correct? 8 A. I would say -- I would agree with that in 9 the aggregate. 10 Q. Okay. Thank you. OVEC isn't currently 11 used to provide SSO service, correct? 12 A. Can you clarify for me what you mean by 13 used for SSO service? 14 Q. You know what SSO service is? 15 A. I do. 16 Q. And Dayton Power and Light bids out for 17 generation service to provide the generation for the 18 SSO customers, correct? 19 A. I wouldn't characterize it that way. 20 Q. Would you characterize it as an auction? 21 A. Yes. We currently hold an auction. 22 Q. Okay. And does OVEC participate in the 23 auction to supply SSO service to Dayton Power and 24 Light's customers? 25 A. I don't know. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 352 1 Q. If you could turn to page 14, 2 Ms. Schroder, and draw your attention to paragraph b 3 regarding the decoupling rider. 4 A. I'm sorry. Were you at my testimony or 5 stipulation? 6 Q. Stipulation. 7 A. 14? 8 Q. Yes, ma'am. 9 A. I'm on 14. 10 Q. Okay. And specifically paragraph b 11 regarding the decoupling rider. In the aggregate 12 Dayton Power and Light doesn't know how much the 13 decoupling rider is going to cost during the course 14 of the ESP, correct? 15 A. Similar to some of the others we know 16 what the cost will be in year one, and we have 17 forecasts for the other years, but it will depend on 18 a number of factors. 19 Q. Okay. So, in the aggregate, Dayton Power 20 and Light doesn't know how much the decoupling rider 21 will cost during the course of the ESP, correct? 22 A. We don't know all of the costs. What we 23 do know are some of the parameters and the costs will 24 be approved by the Commission. 25 Q. Now, in the second line of paragraph b ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 353 1 you see the reference to lost revenues? 2 A. Yes, I see that. 3 Q. And those lost revenues occur because 4 through energy efficiency measures consumers use less 5 electricity and, therefore, pay less, correct? 6 A. I am not sure I could characterize the 7 entirety of what you said, but they are distribution 8 lost revenues. 9 Q. Okay. And those distribution lost 10 revenues occur as a result of any efficiency programs 11 under which consumers use less electricity, correct? 12 A. That's right. 13 Q. Okay. So through the decoupling rider, 14 consumers will be charged for what they saved from 15 consuming less electricity, correct? 16 A. No, that's not correct. 17 Q. Okay. Tell me why not. 18 A. While we are passing through the lost 19 revenue, the intention is the distribution lost 20 revenues, so all of the savings from generation, 21 transmission, and anything that's not distribution 22 related is still saving. 23 Q. Okay. But as it relates to the 24 distribution, consumers will be paying less, but the 25 company will recoup that difference through the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 354 1 decoupling rider, correct? 2 A. Not precisely but that's the idea. 3 Q. Draw your attending to paragraph c, 4 Ms. Schroder. 5 A. Yes. 6 Q. That creates a -- purports to create a 7 pilot program, the purpose is to explore whether 8 certain customers could benefit from opting out of 9 DP&L's TCRR-N as stated in that paragraph, correct? 10 A. That's correct. 11 Q. Okay. And were the Commission to modify 12 the stipulation such that the TCRR-N pilot program 13 lasted only three years, that would be sufficient 14 time to explore whether certain customers could 15 benefit from opting out of the TCRR-N, correct? 16 A. I don't know. 17 Q. Under the paragraph c, the TCRR-N 18 provision, Dayton Power and Light has no obligation 19 to report what it finds as a result of that pilot 20 program, correct? 21 MR. IRELAND: Objection to form. Report 22 to whom? It's vague. 23 MR. MICHAEL: I can rephrase, your Honor. 24 EXAMINER PRICE: Please. 25 Q. Dayton Power -- excuse me. I apologize. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 355 1 Dayton Power and Light Company has no obligation to 2 report to the Commission what it learns as a result 3 of the pilot program for the transmission costs 4 recovery rider, correct? 5 A. I don't know if there is an obligation, 6 but it states on page 14 that the purpose of the 7 pilot program is to explore and so forth the 8 benefits. And so I would expect we will be working 9 with staff to explore the benefits and the costs in 10 the context of the pilot. 11 Q. Would you be amenable were the Commission 12 to modify the stipulation to require that Dayton 13 Power and Light Company file a report with the 14 Commission based on what it finds after that 15 exploration? 16 MR. IRELAND: Objection, your Honor. I 17 object to the questions that have to do -- she 18 doesn't have the authority to change the stipulation 19 which is a negotiated deal among multiple parties 20 here, so asking her whether the company would be 21 willing to or if she would be willing to change 22 something seems to me pretty far beyond the scope of 23 her testimony. 24 EXAMINER PRICE: I think she has 25 demonstrated she does not have the authority to say ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 356 1 what changes the company will or won't modify or 2 accept terms of the modification, so we will sustain 3 the objection. 4 MR. MICHAEL: Thank you, your Honor. 5 Q. If I could draw your attention to 6 page 17, please, Ms. Schroder, paragraph d. 7 A. Okay. 8 Q. The Commission and its staff will have 9 the authority to do a prudence review audit and 10 disallow costs recovery sought to be recovered under 11 the RCR, correct? 12 A. Similar to my response earlier regarding 13 some of the other riders, I believe that the staff 14 and the Commission have the right to do prudency 15 review of all of the riders that we charge. 16 Q. And to disallow cost recovery in its 17 judgment, correct? 18 A. To approve or disallow anything, they 19 have that authority. 20 Q. Draw your attention to page 18, 21 paragraph e regarding the storm cost recovery rider. 22 A. Yes. 23 Q. Okay. Dayton Power and Light Company 24 does not know in the aggregate how much the storm 25 cost recovery rider will cost during the course of ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 357 1 the ESP, correct? 2 A. No, and I think that's due to the nature 3 precisely of the storm cost recovery rider that is 4 in -- established to recover unusual or major events, 5 and so, by nature, we don't know what they are. 6 Q. Okay. And if you look about two-thirds 7 of the way down that paragraph, Ms. Schroder, with 8 the sentence beginning "Therefore, all 9 prudently-incurred expenses," do you see that 10 sentence? 11 A. I don't, but I'm looking. 12 Q. Take your time. 13 A. Okay. You are at "prudently-incurred"? 14 Q. Yes, I am. 15 A. Uh-huh. 16 Q. That statement "incremental to base 17 rates," wouldn't all expenses be incremental to base 18 rates since there is no baseline for the storm cost 19 recovery rider? 20 A. In the context of the storm rider, it is 21 the case that there is no level of expenses for major 22 storms in the base rates as it states in the sentence 23 just prior, so there is no baseline, so anything 24 would be, yes, by definition, incremental. 25 Q. Okay. And similar to what you've ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 358 1 testified to earlier, Ms. Schroder, the PUCO and the 2 staff would have the authority to do a prudence 3 review audit and disallow cost recovery under the 4 storm cost recovery rider, correct? 5 A. Yes. I think similar to my answer 6 earlier, they always have the option for reviewing, 7 approving, and as you mentioned, disallowing if 8 that's appropriate. 9 Q. If I could draw your attention to page 24 10 of the amended stipulation, Ms. Schroder, and if you 11 look about two-thirds of the way down, the sentence 12 reading "DP&L's 50 percent share will be recovered in 13 the RCR." Do you see that sentence? 14 A. I'm sorry, page 24? 15 Q. Yes, ma'am. 16 A. Okay. And can you point me again to 17 where you are? 18 Q. Certainly. It's about a third of the way 19 down, the sentence that reads "DP&L's 50 percent 20 share will be recovered in a regulatory compliance 21 rider." My question will be about that sentence. 22 A. Okay. 23 Q. The company doesn't know how much in the 24 aggregate during the course of the ESP that 25 50 percent share recovered through the regulatory ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 359 1 compliance rider will be, correct? 2 A. No, but I would say there are several 3 protections in here regarding the costs. There will 4 be an extensive review and study that's performed to 5 try to identify what those are, and methodology, so 6 that we can identify those costs. The staff will be 7 involved in that review. 8 And, secondly, there is a cap on the 9 regulatory compliance rider to ensure that it's only 10 to the extent it's under that cap. 11 Q. Okay. So I will ask the question again. 12 The company doesn't know how much in the aggregate, 13 during the course of the ESP, will be recovered 14 through the regulatory compliance rider as referenced 15 in that sentence, correct? 16 A. We don't -- no, we don't know the exact 17 amount, but we do know it's capped. 18 Q. Dayton Power and Light Company hasn't 19 established specific criteria to evaluate the success 20 or failure of the consolidated bill -- billing pilot 21 program, correct? 22 A. No. The methodology and any criteria, as 23 you mentioned, will be determined. It has not yet 24 been determined. 25 Q. Has Dayton Power and Light ever run a ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 360 1 pilot program before? 2 A. I don't know. 3 Q. Could you turn to page 37, paragraph 4 No. 2, please, Ms. Schroder. 5 A. Page 37? 6 Q. Yes, ma'am. I draw your attention 7 specifically to the sentence that reads "Except as 8 modified by this Stipulation, DP&L's Application in 9 these matters is approved." Do you see that 10 sentence? 11 A. Not yet but I am still reading. Okay. I 12 am reading paragraph 3 on page 37? 13 Q. No, ma'am, paragraph 2, please. 14 A. Okay. 15 Q. And my question is, Ms. Schroder, as you 16 are sitting there right now, what -- what parts of 17 DP&L's applications are not modified by the 18 stipulation? 19 A. I can't think of any right now. I don't 20 know. 21 MR. MICHAEL: Okay. I did turn the page, 22 your Honor. I didn't know if you noticed that, but 23 if your Honor was inclined to take a lunch break, I 24 do see it is the noon hour, I might be able to look 25 at some of my questions. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 361 1 EXAMINER PRICE: Let's go off the record. 2 (Discussion off the record.) 3 (Thereupon, at 12:06 p.m., a lunch recess 4 was taken.) 5 - - - 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 362 1 Tuesday Afternoon Session, 2 April 4, 2017. 3 - - - 4 EXAMINER PRICE: Let's go on the record. 5 Mr. Michael, please proceed. 6 MR. MICHAEL: Thank you, your Honor. 7 - - - 8 SHARON R. SCHRODER 9 being previously duly sworn, as prescribed by law, 10 was examined and testified further as follows: 11 CROSS-EXAMINATION 12 By Mr. Michael: 13 Q. Ms. Schroder, I've got a few more 14 questions for you, but I want to backtrack and ask 15 some questions of clarification on some subject 16 matters we discussed before break very quickly. 17 Page 11 of the amended stipulation, please, paragraph 18 c at the bottom of page 11. Are you there? 19 A. I'm sorry. I am just looking for context 20 of which section it's under. 21 Q. Paragraph c. 22 A. Okay. 23 Q. And my question is is that -- the partial 24 offset is available only to some, not all members of 25 a particular rate class, correct? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 363 1 A. I would say this paragraph is specific to 2 the parties that are described in this paragraph. 3 Q. So not all members of the rate class, the 4 same rate class that those parties are, will get the 5 partial offset, correct? 6 A. That's correct. 7 Q. And so relative to those members of the 8 rate class identified, those not receiving the 9 partial offset will see an increase as a result of 10 the partial offset, correct? 11 A. No. These -- these offsets were agreed 12 to as part of the overall package and are paid for by 13 shareholders. There is no offsetting amounts. 14 Q. Well, I mean, just by virtue of the fact 15 they don't get the offset, they are going to be 16 paying more than as compared to like IEU-Ohio, for 17 example, correct? 18 A. No. I would disagree with that 19 characterization. There are a number of factors that 20 come into play with regards to all of the customers 21 at a particular rate class and how much they might 22 pay compared to IEU members, for example. 23 Q. Okay. Let's stick with IEU. All else 24 being equal, to partially offset the costs of the 25 stipulation and rate design modifications, IEU will ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 364 1 receive a payment of $145,000, correct? 2 A. IEU for the benefit of its members. 3 Q. And other -- there are other customers in 4 the same rate class that IEU-Ohio's members are also 5 in, correct? 6 A. Yeah, I would agree with that and there 7 are more than one rate class of IEU customers as 8 well. 9 Q. Okay. And for those members of the rate 10 class that IEU-Ohio's members are members of, they 11 will be paying comparatively more because they don't 12 get the benefit of the $145,000 partial offset, 13 correct? 14 A. No. I wouldn't characterize it that way. 15 What I would say is that the entire stipulation is a 16 package and as a result of certain parties 17 negotiating certain benefits within the stipulation, 18 IEU being one of them, there are benefits that accrue 19 to all members of those particular rate classes. And 20 so I do think that they are -- there are benefits for 21 members of those particular rate classes as a result 22 of IEU's settlement. 23 Q. And I appreciate that but that's Dayton 24 Power and Light's position. I want to focus only on 25 the partial offset for paragraph c for purpose of my ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 365 1 question, okay? And to restate my question, for 2 those businesses in the same rate class as IEU-Ohio's 3 members, they will be paying comparatively more 4 because they do not get the benefit of the $145,000 5 partial offset of costs, correct? 6 A. As I said a minute ago, I would 7 characterize it differently. It may depend on what 8 you are comparing it to. More than they otherwise 9 would without a stipulation, more than they otherwise 10 would here, and as I mention, I think in both those 11 cases that that's not the case. 12 Q. Okay. I'm making the comparison between 13 IEU-Ohio's members and other members of those same 14 rate classes that were not a signatory party to the 15 stipulation, okay? 16 A. Uh-huh. 17 Q. And as it relates to those rate class 18 members that didn't sign the stipulation, they are 19 going to be paying comparatively more in relation to 20 IEU-Ohio because they are not going to get the 21 $145,000 partial offset, correct? 22 MS. BOJKO: Objection. 23 EXAMINER PRICE: Grounds? 24 MS. BOJKO: Well, it calls for 25 speculation on many fronts. I am not even sure that ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 366 1 there are the members or the customers outside of the 2 classes or the description that Counsel is 3 describing. I am not sure that they exist, so I 4 think it's very speculative. 5 MR. MICHAEL: She already testified they 6 did exist so. 7 EXAMINER PRICE: Reask that question. 8 MR. MICHAEL: Can I have it reread, your 9 Honor? 10 EXAMINER PRICE: This question? Read 11 that question back again, the pending question. 12 (Record read.) 13 MS. BOJKO: Objection still, your Honor. 14 There are many levels of speculation in there. First 15 of all, we haven't taken into consideration the 16 different rate classes, the different rate designs, 17 how -- what does the word "comparatively" mean. I 18 mean, there are many levels of vagueness, 19 speculation, and I am not sure that it can be 20 answered. 21 EXAMINER PRICE: Let me try, Mr. Michael. 22 You have two factories in your service 23 territory, the exact same load profile, exact same 24 demand, exact same usage, okay? They make widgets. 25 Both make the same exact number of widgets every day. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 367 1 All use characteristics are identical. One of those 2 factories is a member of OMAEG, Ms. Bojko's client; 3 one is not. After Ms. Bojko's client distributes the 4 $18,000 to -- for the benefit of its members, will -- 5 taking that into consideration, will the customer 6 that is not a member of OMAEG paying slightly more 7 than the customer that is not? 8 MS. BOJKO: I am going to object, your 9 Honor. 10 EXAMINER PRICE: Overruled. It's 11 overruled. 12 MS. BOJKO: I think yours is still 13 speculative about that -- 14 EXAMINER PRICE: It's a hypothetical and 15 it's a hypothetical that has only one variable. It 16 was not one of Mr. Oliker's multi-level 17 hypotheticals. It is a one-variable hypothetical. 18 MS. BOJKO: Your Honor, you are assuming 19 the one customer that has the exact same usage is 20 going to be the customer that actually receives the 21 money for the benefit of the members in your 22 question, in your hypothetical. 23 EXAMINER PRICE: That is very true so I 24 guess that's the second variable. We are not going 25 to ask you if you are going to give the money to the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 368 1 customers. We are assuming that to be true. The 2 witness can answer my question. 3 THE WITNESS: Under all of those 4 hypotheticals, I think that is true. 5 EXAMINER PRICE: Thank you. Okay. Let's 6 move on. 7 MR. MICHAEL: Thank you, your Honor. 8 Q. (By Mr. Michael) I want to revisit the 9 OVEC reconciliation rider, page 13. You would agree 10 that the reconciliation rider is purportedly an 11 incentive to shop, correct? 12 A. No, I would not agree with that. 13 Q. Okay. Notwithstanding that people who 14 shop don't have to pay the reconciliation rider, you 15 still don't agree that it's a purported incentive to 16 shop. 17 A. I would not characterize it that way. If 18 it is approved as it's agreed to in the stipulation 19 that it's bypassable, I think that's one of the 20 factors that customers could take into consideration 21 if they are to evaluate their choice. 22 Q. Okay. So as -- as more customers shop, 23 the total OVEC costs for any given year remain the 24 same for purposes of my question, the impact on the 25 individual SSO customer will increase, correct? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 369 1 A. I think this is a similar question we 2 talked about earlier. 3 Q. It is. 4 A. And as I characterized earlier, I think 5 it depends on a number of other factors, some of them 6 being the usage of those customers. It was not 7 dependent on a customer charge as it's proposed, and 8 so the usage of the remaining customers that are on 9 the SSO would be part of what comes into play to 10 determine whether someone is paying more or less in 11 addition to their own usage. 12 Q. Okay. You have OVEC costs. With me so 13 far? 14 A. Yes. 15 Q. You have shopping customers that don't 16 have to pay the reconciliation rider. Are you with 17 me so far? 18 A. No. Just one moment. Say the second 19 part again. 20 Q. The reconciliation rider is bypassable, 21 so shopping customers don't have to pay it, correct? 22 A. Correct. 23 Q. Okay. OVEC costs remain the same. As 24 shopping increases, the impact for paying those OVEC 25 costs that are sought to be recovered under the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 370 1 reconciliation rider will increase on the individual 2 customer level because less customers have to pay a 3 greater percentage of the OVEC costs, correct? 4 A. I think that's where I was saying there 5 are a number of variables, not the least of which is 6 whether the costs for that particular year are higher 7 or lower, and I think you made a hypothetical that 8 they were the same and that they are costs, not 9 benefits. 10 Q. Correct. 11 A. But I think the other two factors are the 12 customers that are still on Standard Service Offer, 13 you said there are less customers but those fewer 14 customers could be using more energy. And if they 15 are using more energy, one particular customer who is 16 not using any more could be paying the same or less. 17 Q. Okay. Explain to me in paragraph ii how 18 you could reach that conclusion, little ii. 19 A. On page 13? 20 Q. Yes, ma'am. 21 A. That leaves a couple of points that I had 22 made that are outlined here in paragraph ii under the 23 reconciliation rider on page 13. So the first 24 sentence describes the fact that DP&L will 25 defer/recover or credit the net proceeds from selling ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 371 1 OVEC energy and capacity into the marketplace and 2 OVEC costs. So that's where I had mentioned the fact 3 that it may not be a cost. 4 Q. And I asked you to assume -- 5 MR. IRELAND: Could she finish her answer 6 before you get to the next question? 7 EXAMINER PRICE: Please. 8 A. That's where I had referenced it could be 9 a benefit. The next part where I was referencing the 10 changes in the usage is the next-to-last sentence 11 where it talks about that it's charged on a kWh 12 basis. And my explanation was that if you have less 13 customers but some of those customers are using more 14 kWh, some other customer might be spending less. 15 Q. Okay. But so on an individual level, you 16 are saying there would be a variation, but on an 17 aggregate SSO level, the SSO customers would be 18 paying more of the OVEC costs as shopping increases? 19 A. Yes, under your hypothetical, that's 20 right. 21 Q. Okay. I would like to turn to your 22 testimony, if we could, Mrs. Schroder -- Ms. 23 Schroder. I apologize. Page 3, line 17, please. 24 Actually lines 16 through 18. Let me know when you 25 are there, please. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 372 1 A. Okay. 2 Q. DPL has a contingency plan if it's not 3 awarded the DMR, correct? 4 A. Not that I am aware of, no. 5 Q. If you could turn to page 5, line 1, 6 please, of your testimony. 7 A. Page 5? 8 Q. Yes, ma'am. 9 A. Uh-huh. 10 Q. And you will see the sentence there that 11 states "The settlement negotiations involved a 12 diverse group of experienced parties." Do you see 13 that? 14 A. I do. 15 Q. And do you make that assertion because 16 you believe that it's important for the Commission to 17 consider the diversity of interest that's supported 18 the stipulation? 19 A. I state that it "involved a diverse group 20 of experienced parties" because, as I understand it, 21 that's one of the three prongs that the Commission 22 will review when it's looking at a stipulation, and I 23 believe this stipulation did involve settlement 24 negotiations that were represented by a diverse group 25 of experienced parties. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 373 1 Q. If you could turn to page 13, lines 1 2 through 4, please, Ms. Schroder. And you'll see a 3 reference in those lines, Ms. Schroder, to a 4 multiplier effect. Do you see that? 5 A. I'm sorry. I was looking at the 6 question. You are on line? 7 Q. The multiplier effect is referenced on 8 lines 3 and 4. 9 A. Yes, I see that. 10 Q. You haven't attempted to quantify that 11 purported multiplier effect, correct? 12 A. No. I just said that more in a 13 nonquantifiable exact number that it would be clear 14 to me that as those businesses retain existing 15 employees and hire new ones, it's logical that those 16 employees would spend money, would support other 17 local businesses, that seems logical, but it wasn't 18 quantified. 19 MR. MICHAEL: I would like to strike -- 20 move to strike, your Honor, everything after "no." I 21 believe it was a "yes" or "no" question, and she 22 answered "no." 23 EXAMINER PRICE: I don't think it was 24 strictly a "yes" or "no" question. Your motion is 25 denied. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 374 1 MR. MICHAEL: Thank you, your Honor. 2 Q. Page 14, Ms. Schroder, lines 6 through 8, 3 please. 4 EXAMINER PRICE: Could I have that 5 reference again? 6 MR. MICHAEL: Yes, your Honor, page 14, 7 lines 6 through 8. 8 EXAMINER PRICE: Thank you. 9 A. Yes. 10 Q. Do operational decisions, as referenced 11 there, include capital expenditures? 12 A. I don't know. 13 Q. Does it include costs, for example, for 14 operation and maintenance? 15 A. I'm sorry. You said costs for operations 16 and maintenance? 17 Q. Uh-huh. 18 A. I don't know. 19 Q. And you don't know if all decisions 20 regarding costs have to be unanimous, correct? 21 A. I don't know. 22 Q. If you would turn to page 14, lines 11 23 through 14, please. 24 A. Yes. 25 Q. Is Dayton Power and Light's OVEC ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 375 1 entitlement currently bid into the PJM market? 2 A. Yes, it's my understanding that it is. 3 Q. Okay. And how long has Dayton Power and 4 Light sold the OVEC entitlement into the PJM market? 5 Do you know? 6 A. No, I don't. 7 Q. At the bottom of page 14, Ms. Schroder, 8 lines 19 through 20. Let me know when you are there, 9 please. 10 A. Okay. 11 Q. "DP&L's financial integrity issues would 12 be further exacerbated" only if its costs exceeded 13 its revenues, correct? 14 A. When you say "its," who are you referring 15 to? 16 Q. Well, that's referring to the 17 reconciliation rider and collection thereunder and 18 you assert in your testimony "Third, without OVEC 19 recovery through the Reconciliation Rider, DP&L's 20 financial integrity issues would be further 21 exacerbated," and so it's referring to DP&L's 22 financial integrity issues. And my question is the 23 financial integrity issues would be further 24 exacerbated only if OVEC's costs exceeded OVEC's 25 revenues as it relates to the reconciliation rider. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 376 1 A. I am not sure if only because there may 2 be other issues at stake here with regards to DP&L's 3 financial integrity, but I agree with you where it 4 talks about being further exacerbated that's based on 5 the current forecast that it's a net cost. 6 Q. And that it's being the reconciliation 7 rider is forecasted to be a net cost, correct? 8 A. For the years that it's been forecasted 9 for. 10 EXAMINER PRICE: And you show that as a 11 net cost on your bill impacts in your exhibits; is 12 that correct? 13 THE WITNESS: That's correct. For the 14 years that we forecasted, it does show as a net cost 15 and those are in the typical bill analysis as well 16 as, as I understand it, the financial analysis that 17 the other company witnesses have shared. 18 EXAMINER PRICE: Thank you. 19 Q. Page 20, lines 6, please, Ms. Schroder. 20 A. I'm on page 20. 21 Q. Okay. And you assert that a typical 22 residential utility consumer can expect a monthly 23 bill decrease of 25 cents, correct? 24 A. Yes, based on our analysis of the overall 25 package of the stipulation and the typical rate ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 377 1 analysis. 2 Q. And as part of that analysis, in order to 3 get to the 25 cents, the purported decrease, you took 4 out the money being collected under the RCR, correct? 5 A. No, I wouldn't characterize it that way, 6 no. What we did is the calculation is that it's 7 incremental to today's rates so we did a comparison 8 of today's rates compared to that. 9 Q. Okay. 10 A. Things -- I'm sorry, things would not be 11 taken out. It would be more incremental to today or 12 comparison to today. 13 Q. In your modeling though, you modeled -- 14 in order to get to the 25 cents charge minus the RCR 15 rider, you didn't include that in your modeling. 16 A. No, I didn't include that because as I 17 understand it from our -- one of the most recent 18 orders with the company that the RCR would be in 19 place until an outcome of the ESP III. 20 Q. Okay. Page 21, lines 1 and 2, please. 21 A. I'm sorry. Which page? 22 Q. 21. 23 A. And which lines? 24 Q. 1 and 2. 25 A. Yes. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 378 1 Q. Are you referring to just base rates 2 there? 3 EXAMINER PRICE: Can we rollback for just 4 one second? 5 MR. MICHAEL: Certainly. 6 EXAMINER PRICE: I'm confused by that 7 prior line of questioning. When you say "RCR rider," 8 which rider are you referring to? 9 THE WITNESS: I was referring to the one 10 that I was showing an incremental increase with our 11 proposed DMR which is the current nonbypassable 12 financial rider, the rate stability charge. 13 EXAMINER PRICE: So you're referring to 14 the current rate stability charge. 15 THE WITNESS: Yes, the one in place 16 today. 17 EXAMINER PRICE: That's what you are 18 calling the "RCR." 19 THE WITNESS: I am not sure if I called 20 it -- 21 EXAMINER PRICE: He did. 22 THE WITNESS: I agreed with him that was 23 the name of it, yep. RSC is I think how we have it 24 in our tariff. 25 EXAMINER PRICE: I was confused so that's ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 379 1 more clear to me now. Thank you. 2 Q. (By Mr. Michael) All right. Page 21, 3 lines 1 through 2, and the pending question was does 4 that just -- are you just talking about base rates 5 there? 6 A. What do you mean by "base rates"? 7 Q. You are involved in the AIR case, right? 8 A. I am. 9 Q. And utilities establish base rates 10 through distribution rate cases, denominated at the 11 Commission as "AIR," correct? 12 A. I'll not sure. 13 Q. When you make that statement, do you 14 include riders? 15 A. Yes. I think in Exhibit B what this is 16 showing the comparison would be a total delivery 17 charge to a customer who is on SSO, so this would 18 include all of the riders as we interpret them as 19 well as generation, transmission. This would be a 20 customer being serviced on Standard Service Offer. 21 EXAMINER PRICE: Total bill impact. 22 THE WITNESS: Total bill impact. 23 Q. Ms. Schroder, does Dayton Power and Light 24 own 100 percent of Conesville? 25 A. No, I don't think so. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 380 1 Q. Does it own 100 percent of Miami Fort? 2 A. No, I don't think so. 3 Q. Does it own 100 percent of Zimmer? 4 A. No, I don't think so. 5 Q. If you would sell all three of those 6 plans, Ms. Schroder, would that reduce or eliminate 7 the need for the DMR rider? 8 A. I don't know. I think determine -- be a 9 number of factors involved at the end. I don't know. 10 MR. MICHAEL: May we approach, your 11 Honor? 12 EXAMINER PRICE: You may. 13 MR. MICHAEL: Thank you. I would like to 14 have marked OCC Exhibit 7, please. 15 EXAMINER PRICE: So marked. 16 (EXHIBIT MARKED FOR IDENTIFICATION.) 17 Q. Ms. Schroder, can you please identify 18 what was previously marked as OCC Exhibit 7? 19 A. Yes. This is OCC Interrogatory 378 as 20 well as the response. 21 Q. And you are the witness responsible for 22 the response, correct? 23 A. Correct. 24 Q. And my question is are the dollar figures 25 in your response, does -- do they apply only to the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 381 1 value of DP&L's ownership interest? 2 A. That would be my interpretation. These 3 numbers were provided to me by our accounting group. 4 I am not very familiar with the details of what these 5 represent. As I stated earlier, we do not own a 6 hundred percent of those stations, but due to the 7 wording here that I've stated DP&L's net book value 8 and so forth, that would be my interpretation. 9 Q. Has Dayton Power and Light investigated 10 auctioning those plants at all in order to generate 11 revenue? 12 A. I don't know. 13 MR. MICHAEL: Could we approach, please, 14 your Honor? 15 EXAMINER PRICE: You may. 16 MR. MICHAEL: Have marked as OCC Exhibit 17 8. 18 EXAMINER PRICE: It will be so marked. 19 (EXHIBIT MARKED FOR IDENTIFICATION.) 20 Q. Ms. Schroder, could you please identify 21 what was previously marked as OCC Exhibit 8. 22 A. This is Interrogatory 412 and the 23 response. 24 Q. And you are the witness responsible for 25 the response, correct? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 382 1 A. That's correct. 2 Q. Okay. Focus on subparagraph a in the 3 response, please. If the stipulation is approved, 4 Dayton Power and Light is not committed to keeping 5 that number of employees, correct? 6 A. Well, what we've committed to regarding 7 the headquarters is articulated in the stipulation. 8 One moment, I can find that. It's a bit of a long 9 section but in our stipulation beginning on page 29, 10 section f where it states that "AES agrees to 11 maintain DP&L's operating headquarters in the City of 12 Dayton, Ohio," and there are a number of 13 qualifications that follow in the next several pages 14 that provide the overall benefit to the region of us 15 maintaining a headquarters in Dayton, Ohio. 16 Q. Okay. And if the stipulation is 17 approved, Dayton Power and Light is not committing to 18 keeping that number of employees, correct? 19 A. The commitment is outlined in the 20 stipulation. I don't think that it includes a 21 specific number of 139 employees in the stipulation. 22 Q. You would be right. If the stip -- focus 23 on subparagraph b, please, Ms. Schroder. 24 A. Of the interrogatory or? 25 Q. Yes, ma'am, of the interrogatory. If the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 383 1 stipulation is approved, Dayton Power and Light is 2 not committing to keep at least that amount of 3 payroll, correct? 4 A. That specific number I know is not in the 5 stipulation but there is a commitment here. That's 6 what I was trying to look for to see. 7 EXAMINER PRICE: Take your time. 8 A. That specific number is not there but 9 what I do see is on page 29 that "We will maintain 10 DP&L's operating headquarters in the City of Dayton, 11 Ohio," and so I understand that we have other 12 commitments that are similar to this. And in those 13 commitments typically the way that it's interpreted 14 by the company that the operating headquarters is 15 staying in the city is that there are certain level 16 of payroll taxes, employees, and payroll, so I don't 17 think the specific number that's listed here in this 18 interrogatory answer is in the stipulation, but the 19 commitment remains. 20 Q. Okay. And the commitment that Dayton 21 Power and Light will retain that amount of payroll if 22 the stipulation is approved? 23 A. It's not specific to that number of 24 payroll. 25 Q. Okay. If you can, I am trying to ask ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 384 1 "yes" or "no" questions to move this thing along. 2 Is -- if the stipulation is approved, is Dayton Power 3 and Light committing to maintaining the amount of 4 payroll that is in paragraph b in the response to 5 Interrogatory 412? 6 A. The stipulation, I think, speaks for 7 itself, and it doesn't contain that specific number. 8 What it contains is a commitment to stay with the 9 headquarters there which keeps high-paying jobs. It 10 doesn't have a specific number of payroll. 11 MR. MICHAEL: I would move to strike, 12 your Honor, and ask for an instruction she answer a 13 "yes" or "no" question "yes" or "no," please. 14 EXAMINER PRICE: Why don't we strike it. 15 You can go ahead and follow up and ask her in terms 16 of "yes" or "no," and she will answer "yes" or "no" 17 this time. 18 MR. MICHAEL: Okay. You raised the bar 19 so high, your Honor. 20 THE WITNESS: That's the first cue. 21 Q. Okay. Will The Dayton Power and Light 22 Company commit to maintaining a payroll of 23 $18,788,253 at the MacGregor Park facility if the 24 stipulation is approved? 25 A. I don't know. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 385 1 Q. Regarding paragraph -- 2 EXAMINER PRICE: Try this again. 3 THE WITNESS: Sorry. He did ask a 4 slightly different question. He asked if we will 5 commit. 6 MR. MICHAEL: Asked and answered. 7 EXAMINER PRICE: I am going to ask this 8 time. In the stipulation has Dayton Power and Light 9 committed to maintain at least a total payroll of $18 10 million -- $18,788,253? 11 THE WITNESS: No, that is not in the 12 stipulation. 13 EXAMINER PRICE: Thank you. 14 Q. (By Mr. Michael) All right. Now, 15 paragraph c, that relates to the MacGregor Park 16 property taxes and not the Dryden Road facility tax, 17 correct? 18 A. That's right. 19 Q. Okay. And as part of the stipulation, 20 Dayton Power and Light isn't committing to keeping 21 the Dryden facility where it's at currently, correct? 22 A. That's not covered in the stipulation. 23 MR. MICHAEL: I have no further 24 questions. Thank you, Ms. Schroder. 25 EXAMINER PRICE: Thank you. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 386 1 Mr. Collier. 2 - - - 3 CROSS-EXAMINATION 4 By Mr. Collier: 5 Q. Ms. Schroder, I would like to go over 6 your testimony briefly to understand the purpose 7 again of what you are testifying to. Directing your 8 attention to page 1 of your testimony, you indicate 9 you are employed by Dayton Power and Light as 10 Director of Regulatory Affairs; is that correct? 11 A. That's correct. 12 Q. And to whom do you directly report? 13 A. Directly report to the general counsel of 14 The Dayton Power and Light Company and the AES 15 Corporation. 16 Q. And AES Corporation? 17 A. That's my understanding of her role, yes. 18 Q. You indicate in your current position you 19 have overall responsibility for evaluating regulatory 20 and legislative initiatives, the company's retail and 21 wholesale rates, and overall regulatory operations; 22 is that correct? 23 A. That's correct. 24 Q. And with regard to the stipulation would 25 that be an evaluation of regulatory and legislative ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 387 1 initiatives? 2 A. Can you repeat that? 3 Q. The stipulation that you are discussing 4 in your testimony, does that fall within the 5 bailiwick of evaluating regulatory and legislative 6 initiatives? 7 A. Yes, in this context it does. 8 Q. All right. With regard to your statement 9 of position, are you the highest employee of Dayton 10 Power and Light that has that -- those 11 responsibilities? 12 A. I am not sure I follow what you mean "the 13 highest." 14 Q. As Director of Regulatory Affairs, are 15 you the -- do you have the most authority over 16 evaluating regulatory and legislative initiatives? 17 A. No. 18 Q. Who does? 19 A. I don't know, but it's not me. 20 Q. All right. I assume you have been 21 authorized to give this testimony by Dayton Power and 22 Light. 23 A. That's correct, I have. 24 Q. All right. Going on to page 3 of your 25 testimony, you indicate that the purpose of your ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 388 1 testimony is to provide the facts showing that the 2 Commission should approve the amended stipulation and 3 recommendation filed on March 14, 2017; is that 4 accurate? 5 A. Yes, it is. 6 Q. And you say that you are to provide the 7 facts because it is the product of serious 8 negotiations, benefits customers and public interest, 9 and does not violate any important regulatory 10 principle and practice; is that correct? 11 A. Yes. 12 Q. All right. And then with regard to the 13 issue of the transfer of the generating assets, 14 you've addressed that at several points in your 15 testimony, have you not? 16 A. I'm not sure. Is there a specific place? 17 Q. Well, let's start with page 10 of 23. 18 The question appearing at line 3 "How does the 19 Amended Stipulation facilitate reducing the debt at 20 DPL Inc. and DP&L," and you provide a response to 21 that question, don't you? 22 A. I do. 23 Q. And included in that response is the 24 agreement to commence a process to sell certain 25 coal-fired generation assets and not -- and to use ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 389 1 any proceeds to further reduce debt; is that correct? 2 A. Yes. In there what I am referring to is 3 the stipulation on page 4. 4 Q. Right. 5 A. Section d where DP&L is committed to 6 commence the sale process and the following section e 7 where those proceeds will be used to make debt 8 repayments. 9 Q. And then at the very end of your 10 testimony you indicate that 'no riders or terms in 11 the Amended Stipulation will support generation 12 service." That's your statement, is it not? 13 A. That is my statement. 14 Q. And you go on "As mentioned above, DP&L 15 has agreed to commence a process to sell to a third 16 party three of its coal-fired generating assets (868 17 megawatt total) and use all the proceeds from that 18 sale to pay off debt," correct? 19 A. Correct. 20 Q. And that is, in fact, the term of the 21 amended stipulation, is it not? 22 A. That is -- as I mentioned, that's a term 23 on page 4, several terms on page 4 of the 24 stipulation. 25 Q. All right. Well, let's go to page 4 of ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 390 1 the amended stipulation if you have that in front of 2 you. 3 A. Okay. 4 Q. And starting with subparagraph c, you 5 state "Assuming FERC approval, DP&L agrees to 6 transfer its generation assets and non-debt 7 liabilities to AES Ohio Generation, LLC"; is that 8 correct? 9 A. Yes. 10 Q. And do you know what FERC approval is 11 required for this transfer? 12 A. I know that FERC approval is required. 13 When you say "what approval," I'm not sure what you 14 mean by that, but FERC approval is required. 15 Q. I am talking about the approval you 16 reference here. What FERC approval is required? 17 A. FERC has to approve our application to 18 transfer the generating assets to AES Ohio 19 Generation, LLC, an affiliated subsidiary of DPL Inc. 20 Q. Has that approval occurred? 21 A. It has not. 22 Q. Isn't it a fact, I believe it's well 23 established now, that the generation assets are owned 24 and operated by Dayton Power and Light? 25 A. Which generating assets are you referring ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 391 1 to? 2 Q. The stations, Stuart, Killen, Conesville, 3 Miami Fort, Zimmer. 4 A. It's my understanding DP&L does not 5 operate all of those plants, no. 6 Q. They have an ownership interest in all of 7 those plants, correct? 8 A. Yes. All the ones you just mentioned 9 DP&L has an ownership share. 10 Q. And it's with respect to the ownership 11 share that FERC approval is required in the event 12 there is a transfer, right? 13 A. I don't know. 14 Q. You state that "DP&L agrees to transfer 15 its generation assets and non-debt liabilities within 16 180 days following final Commission approval to the 17 stipulation"; is that correct? 18 A. That's a portion of that paragraph. 19 There are some other modifications in that paragraph 20 that it does begin, as we mentioned earlier, assuming 21 FERC approval, and it also ends with "provided that 22 the Commission approves this stipulation without 23 material modifications." 24 Q. All right. But subject to those 25 approvals, the time period you've picked is 180 days ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 392 1 following final Commission approval. 2 A. Not exactly. I wouldn't say that I 3 picked those 180 days or that the company necessarily 4 picked 180 days. That's part of the settlement 5 package that was agreed upon. 6 Q. Well, what -- what's the magic of 180 7 days? 8 A. I would say the magic it was agreed upon 9 within the stipulation as part of the negotiations. 10 Q. An agreement among the parties to the 11 stipulated amended -- 12 A. Yes. 13 Q. Amended stipulation, okay. So it's not 14 driven by any market condition, is it? 15 A. I don't know. 16 Q. It's not driven by any regulatory 17 requirement, is it? 18 A. I would say going back to, in part, I 19 would say, yes, it is, because, in part, it does 20 require FERC approval and part of the agreement here 21 is that provided the Commission approves this 22 stipulation without material modification, so I think 23 because all of that combined in that paragraph, that 24 it does have an impact. 25 Q. Okay. With regard to the transfer, that ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 393 1 issue only, isn't PUCO approval required for a 2 transfer of generational assets? 3 A. I think in general. Is your question in 4 general? 5 Q. Sure. Start with in general. 6 A. I think it depends. 7 Q. It depends on what? 8 A. For example, they were already in an 9 affiliated -- if they are already in a subsidiary 10 that's not regulated by the Commission and they were 11 being transferred to another subsidiary, that's 12 not -- 13 Q. That's not the situation we have here. 14 A. That's why I was asking if it was in 15 general. 16 Q. Okay. Well, let's talk specifics then. 17 A. Okay. 18 Q. Don't I understand under the statute the 19 Commission must approve a transfer or sale of 20 generational asset -- generation assets? 21 A. No. I am not familiar with that. 22 MR. WANNIER: Your Honor, objection. 23 This line of questioning is getting increasingly 24 legal. This witness is not an attorney. 25 MR. COLLIER: Is not what? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 394 1 EXAMINER PRICE: She's Director of 2 Regulatory Affairs, and I think we've established 3 already she is not an attorney, and none of the 4 counsel are asking for legal opinions. So she can 5 answer the questions as best she can, and if she 6 can't answer, which I think she did before your 7 objection was registered, then she can't answer. 8 But just so the record is clear, why 9 don't we have that question back and you can give 10 your answer again. 11 Q. (By Mr. Collier) Ms. Schroder, RC 12 4928.17(E) states "No electric distribution utility 13 shall sell or transfer any generating asset it wholly 14 or partly owns at any time without obtaining prior 15 Commission approval." Are you familiar -- do you 16 have a working knowledge of that statute? 17 A. I am not familiar with it. I would like 18 to see it if you have it though. 19 Q. Sure. 20 MR. COLLIER: May I approach, your Honor? 21 EXAMINER PRICE: You may. 22 MR. IRELAND: If he is coming up, may I 23 come up as well, your Honor? 24 EXAMINER PRICE: You may. 25 A. Thank you. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 395 1 Q. Ms. Schroder, has Dayton Power and Light 2 sought the approval of the Public Utilities 3 Commission of any transfer of any of its generating 4 assets? 5 A. Yes, it has. 6 Q. And in what proceeding? Do you recall? 7 A. If you give me a minute, I can find it 8 because I think it's referenced in here but, yes, 9 there is a separate proceeding. 10 Q. Let me go back and ask you the facts. 11 The fact of the matter is -- 12 EXAMINER PRICE: Wait a minute. She has 13 not finished her answer. 14 MR. COLLIER: Oh, I'm sorry. 15 EXAMINER PRICE: Let her finish her 16 answer as to what proceeding and then we will go on 17 with the next question. 18 A. I am not finding it where I thought it 19 was but there is a separate proceeding. 20 MR. COLLIER: Let me ask that we mark 21 this document as Murray Energy Corporation Exhibit 1. 22 EXAMINER PRICE: So marked. 23 (EXHIBIT MARKED FOR IDENTIFICATION.) 24 EXAMINER PRICE: Well, conveniently 25 there's your reference. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 396 1 THE WITNESS: I didn't get it. 2 Q. Do you have Exhibit 1 in front of you? 3 A. Yes, and there we have it. 4 Q. The Finding and Order in Case No. 5 13-2420-EL-UNC, I believe it was -- the Finding and 6 Order is dated September 17, 2014. Do you have that 7 document in front of you? 8 A. I have that document. Thank you. 9 Q. All right. Isn't this the case in which 10 Dayton Power and Light sought authority to transfer 11 or sell its generating assets? 12 A. Yes. That's my nonlegal interpretation 13 of what this is doing is it's establishing a plan and 14 asking for this authority. 15 Q. And those generating assets would have 16 included Stuart and Killen, Miami Fort, Conesville, 17 and Zimmer, right? 18 A. Yes, I believe it would have. 19 Q. All right. I want to direct your 20 attention to page 9 of that document. You see the 21 statement "Commission finds that Dayton Power and 22 Light should transfer the environmental liabilities 23 with the generation assets consistent with DP&L's 24 representation that it has agreed to do so"? Do you 25 see that? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 397 1 A. I'm sorry. Where are you? 2 Q. Paragraph 27, page 12. "Commission finds 3 that Dayton Power and Light should transfer the 4 environmental liabilities with the generation assets 5 consistent with DP&L's representation that it has 6 agreed to do so." 7 A. I am on page 12 and looking at -- you are 8 reading from 27, okay? 9 Q. Yes. Paragraph 27. 10 A. Yes. 11 Q. Is that what it says? 12 A. Yes. 13 Q. Okay. Do you have a definition of what 14 those environmental liabilities are? 15 MR. IRELAND: Your Honor, I object to the 16 line of questioning. First of all, she is a 17 nonlawyer. She is being asked to interpret an order. 18 No. 2, there's been no foundation laid that she had 19 anything to do with this case; that she was involved 20 in the preparation of it; and, third, I don't think 21 it's relevant to the three-prong consideration that 22 is before the Commission at this time in this 23 stipulation. 24 EXAMINER PRICE: No. 2, as to your second 25 point, I think she did express a familiarity with the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 398 1 proceeding. She just could not recall the actual 2 case number, and I think she kind of acknowledged 3 refreshed recollection as to what the case number is. 4 As to the relevance, I am sure 5 Mr. Collier will prove this up in due course, but I 6 will say we're starting to get very close to simply a 7 legal issue that's left to briefs. So I am going to 8 allow this limited line of questioning, but, for the 9 most part, interpreting Commission orders is a matter 10 for briefs and should be left to that and not to 11 witnesses. So we will allow a couple more questions, 12 and then we will move on. 13 MR. COLLIER: Very well, your Honor. 14 Q. (By Mr. Collier) I am just asking your 15 position as Director of Regulatory Affairs whether 16 you have a definition of what constitutes 17 environmental liabilities associated with these 18 generation assets. 19 A. No, I don't know what the environmental 20 liabilities are associated with those generation 21 assets. 22 Q. All right. And you understand by this 23 order the Commission ordered the transfer of the 24 generating assets at net book value. 25 MR. IRELAND: Objection. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 399 1 EXAMINER PRICE: Grounds? 2 MR. IRELAND: It doesn't say that there, 3 and I don't know how that can be the basis for her 4 understanding. Again, there is no foundation for it. 5 EXAMINER PRICE: It says page 9, 6 paragraph 12. Paragraph 22, sorry. 7 A. I would say I'm not familiar with that, 8 but subject to reading what I am looking at now in 9 paragraph 22 and your Honor's characterization, I see 10 that. 11 Q. Okay. Isn't it true that the Commission 12 ordered the transfer by a date certain? 13 EXAMINER PRICE: I think now we are 14 definitely into a legal question. 15 MR. COLLIER: All right. 16 EXAMINER PRICE: As to the meaning of 17 this order, the meaning of the SSO order in the ESP 18 II and what's left of the ESP II order after the 19 court's action on appeal. So I think that is -- we 20 are definitely in a legal issue, and it's not 21 appropriate for this witness. 22 MR. COLLIER: Your Honor, I would request 23 that the Commission take administrative notice of 24 this exhibit. 25 EXAMINER PRICE: We don't need to do ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 400 1 that. This is a Commission order, speaks for itself 2 all the time. 3 MR. COLLIER: Can I move -- exactly and 4 can I move then -- may I move the admission of the 5 exhibit? 6 EXAMINER PRICE: It's not necessary. 7 MR. COLLIER: It's not necessary. Okay. 8 EXAMINER PRICE: You can cite to this 9 freely in your brief. 10 MR. COLLIER: I appreciate that very 11 much. Thank you. 12 Q. (By Mr. Collier) Let's go back then to 13 the -- well, strike that. 14 Let's go back to the amended stipulation 15 for a moment, page 4 again. 16 A. Okay. I'm there. 17 Q. All right. First of all, currently 18 Dayton Power and Light operates the Killen station; 19 is that correct? 20 A. That's my understanding, yes. 21 Q. Does it also operate the Stuart station? 22 A. That's also my understanding, yes. 23 Q. All right. Those stations both have 24 clean air permits to operate, don't they? 25 A. I don't know. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 401 1 Q. Do you know if those permits can be 2 transferred? 3 A. I am not aware of what permits they have 4 or how they work. 5 Q. So when you address the conditions that 6 relate to the transfer and in certain cases the sale 7 of these facilities, you are not addressing the 8 potential for transfer of the permits. 9 A. Where are you referring to where I 10 address this? 11 Q. I don't think you are. That's why I am 12 asking. When you address the terms and conditions of 13 this transfer, you are not addressing any of the 14 permits and whether the permits can be transferred. 15 A. So when I address anything about the 16 transfer, I am referring only to the stipulation and 17 in references on the stipulation on page 4, 18 section d, where it says "DP&L (or the affiliate to 19 whom the generation assets are transferred) will 20 commit to commence a sale." And then the paragraph 21 right above it where it says "Assuming FERC approval, 22 DP&L agrees to transfer its generation assets and 23 non-debt liabilities to AES Ohio Generation, LLC, an 24 affiliated subsidiary of DPL Inc., within 180 days 25 following final Commission approval of this ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 402 1 Stipulation, provided that the Commission approves 2 this Stipulation without material modifications." 3 That's how I reference it. 4 Q. Great. Okay. Next paragraph, d, the 5 "DP&L (or the affiliate to whom the generation assets 6 are transferred) will commit to commence a sale 7 process to sell to a third party its ownership in 8 Conesville, Miami Fort, and Zimmer Stations." Do you 9 see that? 10 A. Yes, I do. 11 Q. All right. And I think we've established 12 that Dayton Power and Light, in fact, has an 13 ownership interest in those units, correct? 14 A. That's correct. 15 Q. Other witnesses at least have 16 specifically testified with regard to the percentage 17 ownership interests, haven't they? 18 A. I'm not sure about that. 19 Q. All right. Now, you don't include in 20 this sale process under paragraph d the Killen and 21 Stuart station, do you? 22 A. They are not part of the stipulation, no. 23 Q. They are not included or referenced in d, 24 are they? 25 A. They are not included in d. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 403 1 Q. All right. Has -- all right. And then 2 in paragraph e "AES Corporation will use all proceeds 3 from any sale of the coal-generating assets to make 4 discretionary debt repayments at DP&L and DPL Inc." 5 Do you see that reference? 6 A. I see that. 7 Q. All right. And I think you were 8 questioned, and we have an exhibit as to what is 9 referred to as discretionary debt repayments. Do you 10 recall that? 11 A. Yes, I do. 12 Q. Does Dayton Power and Light have any 13 contracts with PJM to maintain capacity, if you know? 14 A. I don't know. 15 Q. Will PJM approval be required for any of 16 the transfer of these generating units? 17 A. I don't think so, but I don't know. 18 Q. Is there a notice provision that requires 19 Dayton Power and Light to give notice to PJM of the 20 deactivation of any generating units? 21 A. Can you repeat that? 22 MR. COLLIER: Would you repeat. 23 EXAMINER PRICE: Let's have it back, 24 please. 25 (Record read.) ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 404 1 MR. IRELAND: I am going to object to the 2 question, your Honor. I think it's irrelevant. I 3 don't know that deactivation of the units is a part 4 of this stipulation. 5 EXAMINER PRICE: It's true though, is it 6 not, as part of the stipulation or something they are 7 seeking Commission authorization to do but, again, as 8 we discussed yesterday, I think intervenors are 9 entitled to argue that the stipulation of the ESP 10 should be modified to allow any legal provision, and 11 I think that's where Counsel is going with this, so I 12 am going to overrule the objection. 13 MR. IRELAND: Thank you. 14 EXAMINER PRICE: You can answer if you 15 know. 16 A. I don't know if there is any such 17 requirement. 18 Q. Do you know when the next PJM capacity 19 auction will occur? 20 A. At a high level in general, but I don't 21 know the exact dates. 22 Q. Tell us what you know in general. 23 A. They typically occur each year on or 24 around May. 25 Q. May, all right. So the next generating ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 405 1 auction will -- capacity will occur May 2017. 2 A. That's my understanding. 3 Q. And if Dayton Power and Light chooses to 4 participate in that capacity auction, they will 5 undertake a contractual obligation to provide 6 capacity for a period of time, will they not? 7 A. I don't know. 8 Q. Did the capacity auction of PJM play any 9 role in the determination of the date for transfer of 10 these assets? 11 MR. IRELAND: Objection. 12 EXAMINER PRICE: Grounds? 13 MR. IRELAND: Well, I think she has 14 already testified the date for the transfer of the 15 assets was a part of the negotiation of the 16 stipulation, so to the extent that the inquiry is 17 going into the settlement discussions I think is 18 confidential. 19 EXAMINER PRICE: I am going to sustain 20 the objection on those grounds. Also if we start to 21 veer into confidential territory, I am counting on 22 Counsel. 23 MR. IRELAND: I am cognizant of that, or 24 trying to be, yes. 25 Q. (By Mr. Collier) Ms. Schroder, do you ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 406 1 have any knowledge of what the capacity factor was 2 for the Killen station in say 2016? 3 A. No, I don't know what the capacity factor 4 was. 5 Q. Or 2015 or any other year? 6 A. Any other year, no. 7 Q. And you provide no evidence in your 8 testimony concerning whether any of these plants 9 operate at a profit. 10 A. That's correct. I don't think anything 11 in my testimony addresses the profit at all. 12 Q. Similarly, if I were to ask you the same 13 questions with regard to Stuart or any of the 14 generating plants, you don't know what capacity 15 factor any of those plants operated under in 2016, 16 would you? 17 A. I don't know the capacity factor for any 18 of the plants. 19 Q. And you've done no study or analysis for 20 purposes of your testimony as to the operating cash 21 flow less capital expenditures associated with those 22 plants on an annual basis, have you? 23 A. I have not. 24 Q. Have you considered for purposes of your 25 testimony any labor pension costs associated with ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 407 1 employees employed at the stations? 2 A. Can you repeat that? 3 MR. COLLIER: Would you repeat. 4 EXAMINER PRICE: Can we have the question 5 back, please. 6 (Record read.) 7 A. No, I have not. 8 Q. There was discussion earlier about the 9 non-debt liabilities in conjunction with the 10 stipulation. Are you familiar with the debt 11 outstanding in The Dayton Power and Light Company? 12 A. I'm aware at a very high level there 13 exists some. I am not familiar with it, no. 14 Q. Isn't it a fact that there are pollution 15 control bonds associated with these generating 16 facilities? 17 A. I don't know. 18 Q. Do you know whether there is $300 million 19 in outstanding liability for -- under the Ohio 20 pollution control bond? 21 A. No, I don't know. I am not familiar with 22 that at all. 23 Q. But yet it's your testimony that those 24 debt obligations will remain with Dayton Power and 25 Light and will not be transferred to any other ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 408 1 affiliate? 2 A. I wouldn't characterize that as my 3 testimony, no. 4 Q. All right. Is that your understanding? 5 A. I don't have any understanding of any 6 pollution control bonds. 7 Q. Has Dayton Power and Light made the 8 determination to close Stuart and Killen stations at 9 this point in time? 10 MR. IRELAND: Objection. 11 EXAMINER PRICE: Grounds? 12 MR. IRELAND: Beyond the scope of the 13 hearing and -- 14 MR. COLLIER: I can't hear. 15 MR. IRELAND: It's beyond the scope of 16 what we -- of the purpose of this hearing, and we may 17 be veering into some area of confidential testimony. 18 I'm not sure. 19 MS. HARRIS: Can you ask him to use the 20 microphone? It's kind of hard to hear down here. 21 EXAMINER PRICE: If you can turn on your 22 microphone when you are making your objections. 23 Mr. Collier, your response? 24 MR. COLLIER: There was evidence 25 yesterday, in fact, a Dayton Power and Light exhibit ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 409 1 concerning the response of S&P global ratings with 2 regard to the impact that -- regarding the closure of 3 Stuart and Killen. It's a Dayton Power and Light 4 exhibit. There's also been testimony that Dayton 5 Power and Light has, in fact, made the decision. 6 EXAMINER PRICE: Yeah. I think they've 7 opened the door. We will allow the question. 8 THE WITNESS: Will you repeat the 9 question for me? 10 MR. COLLIER: Would you repeat the 11 question, court reporter. 12 EXAMINER PRICE: Please. 13 (Record read.) 14 A. I don't know for sure but what I've seen 15 in the press releases that indicate that's the case. 16 Q. And you have not addressed in your 17 testimony any quantifiable or nonquantifiable costs 18 or benefits regarding -- that may result from the 19 closure of these two plants, have you? 20 A. That's right, I haven't. In my testimony 21 it only focuses on the costs and benefits and the 22 benefits to the region as well as the three prongs 23 that's contained within the stipulation. 24 Q. It talks about the benefits to the region 25 as you've addressed, but you haven't talked at all ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 410 1 about any of the detriments to the region, have you? 2 A. What I have characterized is my 3 interpretation of the benefits and why the 4 stipulation should be approved and according to the 5 three-prong test. 6 Q. And you haven't talked at all about the 7 detriments, have you? 8 A. Of the stipulation? 9 Q. Of closure of the plant and the 10 stipulation. 11 A. I certainly haven't talked about anything 12 about the closure, that's correct, because it's not 13 part of the stipulation. 14 Q. All right. And you haven't addressed any 15 of the detriments of the stipulation that might 16 impact the community, have you? 17 A. No. I don't think that's a correct 18 characterization. When I look at the overall 19 benefits of the stipulation, there are a number of 20 items that have been negotiated and give and take. 21 Not all of those items are for one party or 22 everything that one party wanted, so I believe there 23 was some give or take there. I don't know that I 24 would characterize them as detriments, but I do 25 believe there is some give and take, and the final ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 411 1 outcome of the stipulation I believe is in the public 2 interest. 3 Q. You have not addressed, in the context of 4 what constitutes the public interest, any of the 5 negative implications of the result of this transfer 6 and sale of any of these generating plants, have you? 7 MR. IRELAND: Objection. 8 EXAMINER PRICE: Grounds? 9 MR. IRELAND: It's way -- I mean, I agree 10 the door has been opened a little bit through the 11 Standard & Poor's exhibit and what Standard & Poor's 12 thinks, but we are now way beyond that in terms of, 13 first of all, there is no understanding or foundation 14 laid for whatever the detriments may be. But more 15 importantly in terms of this witness and her 16 testimony and what we are doing here, we are way 17 beyond that. 18 EXAMINER PRICE: I certainly think we 19 already have a response to the question you asked 20 her, did she analyze the detriments to the closure. 21 She said, no, it's not part of the stipulation, so I 22 am going to sustain on the basis -- the objection on 23 that basis. 24 Q. (By Mr. Collier) Just to be clear, let's 25 limit it to the sale of the three plants that you do ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 412 1 contemplate. Have you considered any of the negative 2 implications of the sale of those plants on the 3 community? 4 A. I haven't considered any negative 5 consequences to the sale of those three plants, no. 6 MR. COLLIER: If I can have a moment, 7 your Honor. 8 EXAMINER PRICE: Certainly. Let's go off 9 the record. 10 (Discussion off the record.) 11 EXAMINER PRICE: Let's go back on the 12 record. 13 Mr. Collier. 14 MR. COLLIER: Just a couple more 15 questions. 16 Q. (By Mr. Collier) I would like to direct 17 your attention to page 17 of the stipulation. 18 A. Page 17 of the stipulation? 19 Q. Yes. 20 A. Yes, I'm there. 21 Q. All right. This discusses the regulatory 22 compliance rider? 23 A. Yes. 24 Q. Including the component generation 25 separation costs? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 413 1 A. Yes. 2 Q. And those generation separation costs 3 were addressed in Case No. 13-2420-EL-UNC? 4 A. Yes, they are addressed there. 5 Q. And they were capped for deferral at $10 6 million, correct? 7 A. Capped at $10 million as set forth in 8 that case. 9 MR. COLLIER: That's all the questions I 10 have. Thank you. 11 EXAMINER PRICE: Thank you. Any other 12 party opposed to the stipulation care to cross? 13 MR CRAWFORD: Yes, your Honor, just 14 briefly. 15 - - - 16 CROSS-EXAMINATION 17 By Mr. Crawford: 18 Q. Good afternoon. 19 A. Good afternoon. 20 Q. Just briefly direct you to the amended 21 stipulation at page 11. Do you see at section V.1.b. 22 on that page? 23 A. Yes, I'm there. 24 Q. In the second -- in the third full 25 sentence that begins with "The funds will be used ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 414 1 specifically for (a) economic development activities, 2 (b) workforce development, and (c) direct financial 3 education assistance for job training at state or 4 federally licensed educational institutions for 5 individual DP&L employees who work at generation 6 facilities in Adams and Brown Counties, Ohio, and 7 surrounding communities." Do you see that language? 8 A. I do. 9 Q. This was included in the stipulation with 10 the understanding that the company was planning on 11 closing the Stuart and Killen facilities; is that 12 correct? 13 MR. IRELAND: Objection, your Honor. 14 Again, we are veering into the area of how the 15 stipulation was negotiated and give or take 16 associated with that which I think is beyond the 17 scope. 18 EXAMINER PRICE: Sustained. 19 Q. Ms. Schroder, without asking you to get 20 into any confidential information regarding 21 settlement negotiations to what led to this amended 22 stipulation, what is your understanding of this 23 language and why it applies to employees working at 24 generation facilities in Adams and Brown Counties? 25 MR. IRELAND: Objection to the form. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 415 1 That's two questions. 2 EXAMINER PRICE: Sustained. If you could 3 rephrase. 4 MR CRAWFORD: I'll try, your Honor. 5 Q. As sponsoring this amended stipulation, 6 Ms. Schroder, what is your understanding of that 7 portion that I just read in subparagraph b? 8 A. My understanding of subparagraph b in 9 this section is that it is one of the many benefits 10 of the overall package of the stipulation that was 11 negotiated with among a number of parties, and as 12 part of that, there are several economic development 13 grant fund components and this is one of those 14 components. 15 Q. And what is your understanding of why 16 individual DP&L employees who work at generation 17 facilities in Adams and Brown Counties would benefit 18 from such an economic development fund? 19 A. Can you repeat that? 20 MR CRAWFORD: Can you read the question 21 back, please. 22 EXAMINER PRICE: Please. 23 (Record read.) 24 A. I think in general there are many 25 benefits from an economic development fund and ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 416 1 customers and in this case employees can benefit from 2 those. And this is one of the three different areas 3 where we have economic development grant funds, the 4 first of which is the million dollars that's granted 5 for within DP&L's service territory for energy 6 programs and infrastructure. 7 The second one is -- relates to employees 8 that are actually outside of the service territory. 9 So there is a distinction between a and b and c, I 10 think, we've talked about already. 11 MS. HARRIS: I am going to move to strike 12 the response to the extent it deals with anything 13 other than the individual DP&L employees referenced 14 in paragraph b and deals with any other economic 15 development grants that might be contained in the 16 amended stipulation. 17 EXAMINER PRICE: Denied. I think her 18 answer is trying to answer in the context of why 19 there is a, b, and c, and why b is in there. 20 Q. Ms. Schroder, what's your understanding 21 of why this benefit is included for employees within 22 Adams and Brown Counties but not the other three 23 plants? 24 MR. IRELAND: Objection. 25 EXAMINER PRICE: Grounds? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 417 1 MR. IRELAND: It goes to the settlement 2 negotiations. 3 EXAMINER PRICE: Ms. Schroder, without 4 disclosing any settlement negotiations, is it fair to 5 observe that the coal generation business in this 6 part of the country has been in significant distress 7 lately? 8 THE WITNESS: Yes, I think that's fair. 9 EXAMINER PRICE: Thank you. 10 MR CRAWFORD: If I could have just one 11 moment, your Honor. 12 EXAMINER PRICE: You may. 13 Q. Are you aware, Ms. Schroder, of whether 14 Stuart and Killen stations are, in fact, both located 15 in Adams County? 16 A. I don't know. 17 Q. Would you have any reason to dispute 18 that? 19 A. No. 20 MR CRAWFORD: Okay. I have no further 21 questions. Thank you. 22 EXAMINER PRICE: Thank you. Any other 23 non -- intervenors opposing the stip? 24 Seeing none, redirect. 25 MR. IRELAND: None, your Honor. Thank ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 418 1 you. 2 EXAMINER PRICE: Thank you. I just have 3 one question. 4 THE WITNESS: Yes. 5 EXAMINER PRICE: And it relates to the 6 line of questioning that was just discussed. The 7 second -- the paragraph b on page 11, if approved by 8 the Commission, is binding upon Dayton Power and 9 Light irrespective -- irrespective of whether Stuart 10 and Killen closed or not closed; is that correct? 11 THE WITNESS: That is correct. 12 EXAMINER PRICE: Thank you. You are 13 excused. 14 THE WITNESS: Thank you. 15 EXAMINER PRICE: Mr. Ireland. 16 MR. IRELAND: Oh, I need -- I would move 17 the admission of Exhibits 3 and 4. 18 EXAMINER PRICE: Any objection to the 19 admission of -- Company Exhibits 3 and 4? 20 Seeing none, they will be admitted. 21 (EXHIBITS ADMITTED INTO EVIDENCE.) 22 MR. IRELAND: Thank you. 23 EXAMINER PRICE: Mr. Michael. 24 MR. MICHAEL: We would move for the 25 admission of Exhibits 4 through 8, your Honor. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 419 1 EXAMINER PRICE: Any objection to the 2 admission of OCC's Exhibits 4 through 8? 3 MR. IRELAND: Let me just quickly take a 4 look at them but I don't think so. No, your Honor. 5 EXAMINER PRICE: No objection? 6 They will be admitted. 7 (EXHIBITS ADMITTED INTO EVIDENCE.) 8 EXAMINER PRICE: As we discussed earlier, 9 Murray Energy Exhibit 1 is a Commission order, speaks 10 for itself and does not need to be admitted or 11 administrative notice taken of it. 12 Let's go off the record. 13 (Discussion off the record.) 14 EXAMINER WALSTRA: We'll go back on the 15 record. 16 MR. SETTINERI: Your Honors, at this time 17 I would like to call Matthew White. 18 EXAMINER WALSTRA: All right. 19 (Witness sworn.) 20 EXAMINER WALSTRA: Please state your name 21 and business address. 22 THE WITNESS: My name is Matthew White, 23 and my business address is 6100 Emerald Parkway, 24 Dublin, Ohio 43106. 25 EXAMINER WALSTRA: Thank you. Go ahead. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 420 1 MR. SETTINERI: Your Honor, if I may 2 approach? 3 EXAMINER WALSTRA: You may. 4 MR. SETTINERI: At this time I would like 5 to mark as RESA Exhibit 1 the direct testimony of 6 Matthew White on behalf of Interstate Gas Supply, 7 Inc., and Retail Energy Supply Association. 8 EXAMINER WALSTRA: So marked. 9 (EXHIBIT MARKED FOR IDENTIFICATION.) 10 - - - 11 MATTHEW WHITE 12 being first duly sworn, as prescribed by law, was 13 examined and testified as follows: 14 DIRECT EXAMINATION 15 By Mr. Settineri: 16 Q. Good afternoon, Mr. White. 17 A. Good afternoon. 18 Q. Could you please state your name and 19 address for the record, please. 20 A. Matthew White and my address is 6100 21 Emerald Parkway, Dublin, Ohio 43106. 22 Q. And do you have before you what's been 23 marked as RESA Exhibit 1? 24 A. Yes. 25 Q. And could you identify that exhibit for ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 421 1 me, please. 2 A. It is the direct testimony of Matthew 3 White on behalf of Interstate Gas Supply, Inc., and 4 Retail Energy Supply Association. 5 Q. And to be clear, on whose behalf are you 6 testifying today? 7 A. I'm testifying on behalf of the Retail 8 Energy Supply Association and Interstate Gas Supply, 9 Inc. 10 Q. And this was testimony prepared by you or 11 at your direction? 12 A. Yes. 13 Q. Okay. And do you have any changes or 14 corrections to your testimony today, sir? 15 A. No. 16 Q. If I asked you the questions in your 17 testimony today, would your answers be the same as 18 written? 19 A. Yes. 20 MR. SETTINERI: Thank you. At this time, 21 your Honor, the witness is available for 22 cross-examination. 23 EXAMINER WALSTRA: Thank you. 24 MR. COLLIER: Your Honor, could I inquire 25 is there an extra copy of that testimony? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 422 1 EXAMINER WALSTRA: Is there any proponent 2 questions? No? 3 OCC. 4 MR. GARVER: Thank you. 5 - - - 6 CROSS-EXAMINATION 7 By Mr. Garver: 8 Q. Good afternoon, Mr. White. 9 A. Good afternoon. 10 Q. I would like to direct you to page 3 of 11 your testimony if you have that handy. And I am 12 looking specifically at the first question and answer 13 at the top of the page. That pertains to SmartGrid. 14 A. Yes. 15 Q. When you -- when you use the word 16 Smart -- or the term "SmartGrid," what do you mean? 17 A. Generally speaking, I mean upgraded 18 distribution infrastructure. 19 Q. And the main component of that is smart 20 meters or advanced metering infrastructure; is that 21 right? 22 A. That's one of the components of 23 SmartGrid. 24 Q. In your opinion is that the most 25 important from a marketer's perspective? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 423 1 A. I would say it's important. 2 Q. What other important features of 3 SmartGrid are there then? 4 A. The parts that enable the grid to operate 5 more efficiently. 6 Q. Okay. And for purposes of your 7 testimony, are you focused on efficient grid 8 operation or are you more focused on things that will 9 help you provide new innovative products and services 10 as you reference in line 4? 11 A. I think in some respects they go 12 together, but the goal would be to enable customers 13 to receive more innovative products and services. 14 Q. Okay. And do you know if DP&L has any 15 smart meters installed in its service territory right 16 now? 17 A. I believe that they do. It's a very 18 small amount. I don't think they have any material 19 installation of smart meters in their service 20 territory. 21 Q. And on page -- or in that question and 22 answer in line 4 you mention "innovative products and 23 services." Do you see that? 24 A. Yes. 25 Q. And your testimony is that if DP&L had ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 424 1 investment in SmartGrid, a marketer like IGS or 2 members of RESA would be able to offer new innovative 3 services and products; is that correct? 4 A. Can you repeat the question, please? 5 MR. GARVER: Can you please reread the 6 question. 7 EXAMINER PRICE: Yes. 8 (Record read.) 9 A. Yes. I believe that the deployment of 10 SmartGrid could enable customers to receive more 11 innovative products and services from competitive 12 suppliers. 13 Q. And you say "could" there, so it is not a 14 guarantee, correct? 15 A. Nothing is a guarantee, but I do believe 16 that it would -- it's highly likely that competitive 17 suppliers would be more able to offer more advanced 18 products and services to customers with the 19 deployment of SmartGrid. 20 Q. So it's still possible there could be 21 investment in SmartGrid and no new innovative 22 services or products, correct? 23 A. I think if SmartGrid deployment is done 24 correctly, then it will lead to more innovative 25 products and services to customers. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 425 1 Q. And when you say if SmartGrid was done 2 correctly, could you tell me what you mean by that, 3 please? 4 A. Sure. If -- if SmartGrid was deployed in 5 such a way that it did not enable competitive 6 suppliers to receive access to customer data or 7 otherwise bill products and services to customers 8 appropriately, or otherwise preclude competitive 9 suppliers from offering products and services to 10 customers, then I suppose there could be -- there 11 would be a scenario where those products and services 12 would not materialize for customers. 13 Q. So those -- are there any other reasons 14 or factors that go into if SmartGrid is done 15 correctly or not? 16 A. I think if it's done correctly, it will 17 lead to more innovative products and services to 18 customers. 19 Q. But the three kind of factors you just 20 mentioned are the -- that means if the SmartGrid is 21 done with those things in mind, then you would -- in 22 your opinion it would be done correctly. 23 A. Yes. And in -- in markets where they 24 have deployed SmartGrid in such a way, we have seen 25 those products and services materialize for ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 426 1 customers. 2 Q. And could you give me some examples of 3 those markets where SmartGrid has been deployed 4 correctly? 5 A. Texas is one example. 6 Q. Thank you. And can you give me some 7 examples of the innovative products and services that 8 you reference in -- in line 4? 9 A. Yes. Some of those products would 10 include but aren't necessarily limited to time-of-use 11 pricing, residential demand response, residential 12 peak load control, SmartGrid can be deployed in such 13 a way that would enable distributed generation for 14 customers' two-way metering. Those are some of the 15 products and services that I would be referring to. 16 Q. So is it correct that IGS and RESA do not 17 offer those products currently in DP&L's service 18 territory because there is no SmartGrid? 19 A. We don't offer them in -- well, I don't 20 want to speak for all of RESA members because I don't 21 know what every RESA member offers. But for the most 22 part it's my understanding that while we are able to 23 offer these products and services in some other 24 markets that have deployed SmartGrid, we don't offer 25 them in Dayton Power and Light because the technology ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 427 1 is not available to do so. 2 Q. And has there -- you gave Texas as an 3 example of where a SmartGrid has been deployed 4 correctly. Are there any examples within Ohio where 5 it has been done correctly? 6 A. Unfortunately -- 7 EXAMINER PRICE: Let me mull over the 8 relevance of this question to this proceeding. 9 THE WITNESS: Where do you want me to 10 start? 11 EXAMINER PRICE: This proceeding is about 12 The Dayton Power and Light case and let's just leave 13 it at that. 14 MR. GARVER: Okay. 15 Q. So is it correct that because the 16 advanced infrastructure is not in place in DP&L's 17 service territory, is that the main driver as to why 18 IGS or to the extent you know RESA members do not 19 offer such products as time-of-use in the Dayton 20 Power and Light service territory? 21 A. Yes, because the -- my understanding is 22 the functionality as it is would not allow us even if 23 we wanted to provide those more granular load and 24 resistance pricing for customers effectively based on 25 time-of-use pricing or PLC -- individual PLC ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 428 1 contribution of a residential customer, we would be 2 unable to do so because we do not have the data 3 necessary to track that on an individual customer 4 basis and bill that to the customers. 5 Q. And you said that Texas was a state that 6 has done this correctly. Do you have access to that 7 data in Texas? 8 A. Yes, we do. 9 Q. And do you offer time-of-use products in 10 Texas? 11 A. My company doesn't specifically, but I 12 know several RESA members that do. We offer a 13 product that enables peak demand reduction in 14 Illinois where they have smart meter deployment. 15 MR. GARVER: Motion to strike the portion 16 of his response pertaining to Illinois. 17 EXAMINER PRICE: I am going to grant the 18 motion. If that's a piece of evidence you think is 19 essential to the Commission, I am sure Mr. Settineri 20 will ask that on redirect. 21 Q. So is it true, in Texas, IGS only offers 22 fixed rate products? 23 A. I don't think that's true. 24 Q. If you wanted to look at what products 25 IGS offered in Texas, would your website be a good ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 429 1 place to look? 2 A. Our website would be the best place to 3 look for residential mass market offers, although we 4 have a number of other offers that are available in 5 the commercial and industrial that are not generally 6 posted on the website. And also there may be offers 7 that we sell to residential customers that aren't 8 necessarily available via the website. 9 Q. So how would -- how would residential 10 customers become aware of offers that are not on your 11 website? 12 A. Through sales agents of ours or some 13 other -- some other non-web-based marketing. 14 Q. And one purpose of your testimony 15 generally is to suggest ways that would encourage 16 people to engage in the competitive retail market in 17 Ohio; is that correct? 18 A. Generally speaking, yes. I seek to 19 promote customer engagement in the competitive retail 20 market. 21 Q. And would another way of doing that be 22 posting all relevant offers on your website? 23 A. The web is not the only way to reach 24 customers. Generally speaking, most companies that 25 engage in business have other offers, whether it's ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 430 1 un -- whether it's retail electric or some other 2 business, insurance, they have other web offers that 3 are not necessarily offers posted on the website. 4 Q. I didn't ask if the website was the only 5 way to do it. I asked if there was another way to do 6 it; would you agree with that? 7 A. The website is one way to make available 8 offers to customers, but the fact that you don't have 9 all your offers on a website really generally doesn't 10 speak much to what offers in total are available in 11 the market. 12 Q. And, further, in line 4 you mention some 13 of the benefits of a SmartGrid would be to reduce 14 man -- reduce demand on the grid and incentivize 15 customers to use energy more efficiently. Do you see 16 that? 17 A. Yes. 18 Q. And when you are talking about reducing 19 demand, could you describe what you mean by that, 20 please. 21 A. Sure. Just as an example, as I had 22 mentioned earlier, which got stricken, but so I don't 23 know if I am allowed to mention it again, but in 24 Illinois we install smart thermostats in customers' 25 homes, and we are able to directly reduce customer ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 431 1 usage, residential customer usage during peak times, 2 and we give customers credit for a reduction on their 3 bill that when -- when that reduction is implemented. 4 Q. And do you offer smart thermostat 5 products in Ohio? 6 A. We -- 7 EXAMINER WALSTRA: Talk through it. 8 A. We do, although we are unable to offer 9 the demand reduction. We tried to offer that in the 10 Duke service territory -- the demand -- automatic 11 residential demand reduction component, we tried to 12 offer that in the Duke service territory. That was 13 initially where we wanted to roll out that pilot 14 program, but because we didn't get customer data from 15 the Duke utility through their smart meters, we had 16 to start that pilot in Illinois where they did have 17 the customer data. 18 Q. And if you were able to offer a product 19 like that in Ohio, and demand was reduced, would that 20 mean that there would be less distribution sales at 21 the DP&L level? 22 MR. OLIKER: Objection, calls for 23 speculation, but if the witness knows the answer. 24 EXAMINER WALSTRA: If he knows. 25 EXAMINER PRICE: Let's go off the record. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 432 1 (Discussion off the record.) 2 EXAMINER PRICE: Let's go back on. 3 MR. OLIKER: I will remember that ruling, 4 your Honor. 5 MR. GARVER: Would you reread the 6 question, please. 7 (Record read.) 8 A. I would imagine if the recovery of 9 distribution rates was volumetric, a component of the 10 recovery of debt distribution rates was volumetric, 11 and the demand of the customer was reduced, the 12 volume of the customer was reduced, then it would in 13 some way produce the recovery of distribution 14 revenues. 15 Q. And you also mention energy -- use energy 16 more efficiently. Do you see that? 17 A. Yes. 18 Q. And could you tell me what you mean by 19 that, please. 20 A. Similarly to the products we discussed, 21 time-of-use rates, distributed generation. 22 Q. Okay. And if you were able to offer 23 those products in Ohio and -- or in the DP&L service 24 territory after SmartGrid investment, would the 25 sales, if you know, also result in lower distribution ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 433 1 sales in the DP&L level? 2 A. Perhaps, but it's my understanding that 3 many of the electric utilities are switching from a 4 volumetric-based distribution recovery to more of a 5 fixed-based distribution recovery, so that would have 6 a mitigating impact in the reduction of Dayton's 7 sales. 8 Q. Do you know if Dayton has that more fixed 9 rate structure in place now? 10 A. I don't know. 11 Q. So to the extent that they don't, there 12 would be none of this potential reduction you just 13 discussed; is that correct? 14 A. I'm sorry. Can you clarify the question? 15 Q. To the extent that DP&L still has a 16 volumetric rate, there would be more potential for 17 more of a decrease in distribution sales as compared 18 to if they were under a fixed rate structure as you 19 just described? 20 A. Yes. If the customer's consumption was 21 reduced and they were -- they were on a more 22 volumetric rate, then their revenues would be more 23 likely to decrease than if they were on a -- 24 receiving more of a fixed cost recovery. 25 Q. And to the extent that any DP&L revenues ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 434 1 are not recoverable because it's -- strike that. 2 To the extent that a customer -- one of 3 your customers, as a result of the product you offer, 4 engages in an energy efficiency product and reduces 5 load on the DP&L system, DP&L may not be able to 6 recover that lost revenue if it is not an energy 7 efficiency program it offers itself; is that correct? 8 A. I don't know what -- whether or not DP&L 9 would be able to recover the lost revenue. That 10 would be up to the Commission as to how they seek to 11 set DP&L's distribution rate. 12 EXAMINER PRICE: Can I ask you a question 13 about your pilot? 14 THE WITNESS: Yes. 15 EXAMINER PRICE: Two questions. Is it in 16 MISO or PJM? 17 THE WITNESS: It's in PJM. 18 EXAMINER PRICE: Are you able to 19 aggregate the peak-demand reduction from the 20 residential customers and bid it in capacity 21 response, capacity market? 22 THE WITNESS: Yes. So you can do that. 23 We are working with PJM -- the PJM requires that 24 there's -- there's data that demonstrates the -- the 25 bid in, in order to bid it into the capacity. So we ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 435 1 are going through the process now with PJM to show 2 that we've run a number of events. We can reduce the 3 customer's capacity, and then they can -- they can 4 give a profiled amount of capacity per -- per device 5 installed, but that takes -- that's a process with 6 PJM if it's not already a predefined program that PJM 7 has already approved. 8 EXAMINER PRICE: But that's the goal you 9 are working towards. 10 THE WITNESS: Yes. Our goal would 11 certainly be to get capacity credit for this. 12 EXAMINER PRICE: Thank you. 13 Q. (By Mr. Garver) And to the extent you are 14 successful in that and DP&L still has generation, 15 that would lower the clearing price of the capacity 16 market; is that correct? 17 A. There's -- there's a lot of factors that 18 goes into capacity prices and I don't want to 19 speculate on the impact, the long-term impact of the 20 addition or subtraction of capacity into the capacity 21 market onto the price of capacity. 22 Q. But you would agree that all else equal, 23 more supply would tend to lead to a lower price; is 24 that correct? 25 A. Perhaps in the short run, but then you ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 436 1 could argue that would increase consumption which 2 would then lead to a higher price, so there's -- 3 there's a lot of factors you need to know before you 4 can say whether or not bidding in a resource 5 increases or decreases the price. 6 EXAMINER PRICE: Okay. Let's assume 7 Consumers' Counsel's hypothetical is true. 8 THE WITNESS: Yeah. 9 EXAMINER PRICE: All of Dayton's service 10 territory right now is out to market either through 11 the SSO or through individual marketers. If capacity 12 prices were going to be lowered, then the Consumers' 13 Counsel clients, residential customers in Ohio, would 14 enjoy lower rates, wouldn't they? 15 THE WITNESS: Yes. If you bid into the 16 auction and that reduced the overall capacity prices 17 for customers, then that would reduce the overall 18 capacity prices for all customers. 19 EXAMINER PRICE: That's the first time 20 I've ever seen OCC argue for higher rates. 21 Q. And that would also lower revenues of 22 generation if DP&L still had generation; is that 23 correct? 24 A. It would depend on where the capacity is 25 bid, what -- A, we are operating under the assumption ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 437 1 it would -- it would lower the capacity prices, but 2 it would also depend on where you are bidding in -- I 3 guess if you were bidding in Dayton, and it did lower 4 the capacity price, and then Dayton's generation was 5 in the zone that -- that was in the same zone where 6 you are bidding in the residential demand response 7 and in the capacity markets, then it could have an 8 effect on reducing the capacity payments for Dayton's 9 generation. 10 Q. Which might lead to future financial 11 problems that we're encountering in this docket now; 12 is that correct in your opinion? 13 A. I would hope that it's successful enough 14 to make a material impact on capacity markets and 15 lower the capacity prices. I think that would be 16 good for everybody. 17 Q. I want to switch gears to the supplier 18 consolidated billing. Do you have a copy of the 19 amended stipulation in front of you, Mr. White? 20 A. I do not. 21 Q. I have one extra copy. 22 MR. GARVER: Do you mind if I approach, 23 your Honor? 24 EXAMINER WALSTRA: Go ahead. 25 Q. Do you have a copy now, Mr. White? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 438 1 A. Yes. 2 Q. Could you please turn to page 23. And 3 specifically I am looking at paragraph f at the 4 bottom of that page. Do you want to take a look at 5 that, please. 6 A. Yes. 7 Q. And that paragraph continues on to 8 page 24 and it discusses how costs for the potential 9 supplier consolidated billing pilot program will be 10 recovered; is that correct? 11 A. Yes. 12 Q. Would you agree that there are some 13 customers of DP&L that may not benefit from a 14 supplier consolidated billing program? 15 A. No. 16 Q. Could you tell me who -- how -- so let's 17 do one of a hypothetical. I will try to keep it 18 shorter than Mr. Oliker's here. 19 MR. MICHAEL: Good luck. 20 MR. OLIKER: Shorter is not always 21 better. 22 MR. MICHAEL: You would know. 23 Q. So leave that one there. Would you agree 24 that a customer who takes service under the SSO and 25 is billed by DP&L would not benefit from supplier ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 439 1 consolidated billing? 2 A. No. 3 Q. How would they benefit? 4 A. I think by enhancing DP&L's billing 5 system to enable more innovative products and 6 services to the customers that are available to them, 7 benefits those customers even if they don't 8 necessarily elect that product or service. 9 Q. And what ways specifically would they 10 benefit from a product that they do not use? 11 A. They have the option to use it, and they 12 may use it in the future. 13 Q. So let's assume that there is a customer 14 who takes SSO service from DP&L and is billed by DP&L 15 and they do that for at least the entire life of the 16 supplier billing pilot. So they are not going to 17 benefit under the pilot, term of the pilot; would you 18 agree with that? 19 MR. SETTINERI: I will just object as to 20 form, ambiguity as to what type of customer we are 21 describing here. We have a multitude of customers in 22 Ohio. 23 EXAMINER WALSTRA: Could you be more 24 specific? Go ahead. 25 Q. I will restate the question. If you have ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 440 1 a residential consumer that takes service from DP&L 2 through the SSO and is billed by DP&L and they 3 continue to do that during the entire length of the 4 pilot program, that the supplier consolidated 5 billing, would you agree that customer would not 6 benefit during that period? 7 A. I believe that that customer would 8 benefit from the development of a more robust 9 competitive market; so, no, I would not agree to 10 that. 11 Q. Even if they continued to take service 12 under the SSO? 13 A. Yes, I think all customers benefit from a 14 more -- development of a more robust, competitive 15 market even if they take service under the SSO. 16 Q. What about a PIPP customer who can't 17 shop? 18 A. I think to the extent that the PIPP 19 customer in the future may have the opportunity to 20 shop if the rules change, you could argue that they 21 would also benefit from the development of a more 22 robust market. 23 Q. And that potential future use or option 24 value, as you have termed it, a customer who gets 25 that type of benefit from this program is going to ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 441 1 pay the same as someone who actually uses it; is that 2 correct? 3 MR. SETTINERI: Objection as to form. 4 Pay to what? 5 A. Could you clarify? 6 Q. Sure. The costs of the supplier 7 consolidated billing pilot program are going to be 8 allocated as described on page 23 and 24 of the 9 amended stipulation where 50 percent of those costs 10 are going to be paid by DP&L ratepayers; is that 11 true? 12 A. Yes, that's what it says. 13 Q. So those costs are allocated to DP&L 14 customers and let's just assume for the purposes of 15 this hypothetical that you have one customer who is a 16 PIPP customer who they may have some benefit from 17 future option value to potentially use this product 18 in the future, they are going to pay the same as a 19 customer who shops and uses the supplier consolidated 20 billing; is that correct? 21 A. No. 22 Q. Would you explain, please. 23 A. So when a customer that shops has -- 24 has -- is a consolidated billing customer, the CRES 25 supplier will still incur costs to bill that ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 442 1 customer. So DP&L would not be paying for the entire 2 cost of the CRES supplier's billing. Even the -- 3 even -- there would still be additional costs, send 4 the bills, maintain the bill system on the CRES 5 supplier side. So that cost would be reflected in 6 the price that the CRES customers pay so the non -- 7 the nonshopping SSO customer would not be paying the 8 same cost as the shopping customers for supplier 9 consolidated billing. 10 Q. But isn't the PIPP customer in this 11 hypothetical also paying costs for billing that DP&L 12 would incur? 13 A. Well, I don't know how the Commission is 14 ultimately going to choose to allocate the cost to -- 15 throughout distribution customers. There's no 16 specific requirement in that settlement that -- 17 that -- how they allocate it amongst customer 18 classes. 19 Q. I would like to talk about the 20 noncommodity billing which is discussed on the 21 amended stipulation at page 21. So similar questions 22 here, Mr. White. Would a customer who never buys a 23 noncommodity product benefit from noncommodity 24 billing? 25 A. Yes. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 443 1 Q. Could you explain how. 2 A. I believe noncommodity billing, the 3 adoption of noncommodity billing will lead to a more 4 robust, competitive retail electric market which I 5 believe benefits customers regardless of whether they 6 choose a particular noncommodity product or not. 7 Q. And I believe in your testimony you say 8 that AEP offers at least some type of noncommodity 9 billing; is that correct? 10 A. Can you point to the spot in the 11 testimony where I say that? 12 Q. Sure. If you look at page 11, your 13 answer starting on page 10 to 13 -- or on lines 10 to 14 13, sorry. That last sentence you say "Further, Duke 15 Energy Ohio, FirstEnergy and AEP Ohio allow for 16 certain noncommodity charges to be billed on the 17 utility bill for select third party companies." Did 18 I read that correctly? 19 A. Yes. 20 Q. Is the shopping rate in AEP's territory 21 higher than it is in DP&L's for residential 22 customers? If you know. 23 A. I don't know off the top of my head, but 24 to clarify your question, because I think it is 25 relevant knowledge that probably you would be ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 444 1 interested in, is that the AEP Ohio ability to bill 2 for noncommodity is limited only to the utility SSO 3 service so -- or only the customers can receive 4 noncommodity billing from -- from the utility AEP 5 Ohio, and it is not open to all CRES providers. 6 Q. So then is the example of AEP Ohio that 7 you have given in line 12 not really that great of an 8 example then? 9 A. No. I think it's a fine example of an 10 instance where the Commission has been comfortable 11 allowing customers to receive noncommodity services 12 on their utility bill. 13 Q. So let's -- let's assume that the 14 shopping rate for residential consumers is lower in 15 AEP's service territory than it is in DP&L's. Would 16 that be an indication that, I know there are a lot of 17 factors, that perhaps noncommodity billing does not 18 encourage a more competitive retail market? 19 A. No. It's because of what I had said 20 earlier, that the actual noncommodity billing in the 21 AEP service territory is only done by the utility. 22 AEP does not allow CRES providers to bill 23 noncommodity billing. Now, there are other utilities 24 in Ohio that do allow CRES providers to bill 25 noncommodity billing, but currently AEP does not. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 445 1 And what I mean CRES providers, I mean competitive 2 energy supplier. There is gas utilities that allow 3 competitive energy suppliers to provide noncommodity 4 billing. 5 EXAMINER PRICE: So AEP, when you say 6 select third-party companies, do you mean that AEP 7 selects the third-party companies? 8 THE WITNESS: AEP selects only one 9 third-party company. I think it's HomeServe that 10 they allow to bill for home warranty and I believe 11 some other products and services on the utility bill, 12 but they have not made that open to all competitive 13 suppliers. 14 Q. And is that the same for Duke Energy 15 Ohio, they allow -- sorry. 16 A. Sorry. Go ahead. 17 Q. Go ahead. 18 A. That's the same I think if you -- if 19 you -- if you read the testimony, I discuss how the 20 electric utilities, Duke Energy Ohio, FirstEnergy 21 Ohio, and AEP allow for just selected third-party 22 companies that the utilities have selected and are 23 exclusive, made exclusive; whereas, Vectren and 24 Columbia Gas has allowed competitive suppliers to 25 bill for products and services. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 446 1 Q. So it's correct that no electric utility 2 in Ohio allows CRES providers to bill for 3 noncommodity services? 4 A. Yes. 5 Q. And if you look at page 21 of the stip, 6 looking under Section IX, Competitive Retail Market 7 Enhancements, the first paragraph there it's numbered 8 1? Do you want to take a look? You can just let me 9 know when you are ready, please. 10 A. I'm sorry. What page were you talking 11 about? 12 Q. Page 21. And I am looking at the 13 paragraph that's numbered 1. It's the first one 14 under the "Competitive Retail Markets Enhancements" 15 heading? 16 A. Yes. 17 Q. And this section of the stip only 18 requires that a rules review process be initiated; is 19 that correct? 20 A. No. 21 Q. Could you explain that, please. 22 A. Sure. It requires the initiation of a 23 rules review process, but my understanding of that 24 specific provision of the stip is that if the rules 25 review process isn't complete within 18 months, then ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 447 1 DP&L shall file an application with the Commission to 2 proceed with the noncommodity billing component. 3 Q. So let's say the rules review process is 4 complete and the Commission decides not to allow 5 rules for noncommodity billing. Do you think that -- 6 how would that -- what is your understanding of how 7 that would affect DP&L's responsibility to make no 8 filing in 18 months? 9 MR. SETTINERI: Object. Calls for a 10 legal conclusion. 11 EXAMINER WALSTRA: Response? 12 MR. GARVER: Sure. I am just asking him 13 as a signatory to this stipulation how he thinks that 14 a future Commission decision that's contemplated 15 within the amended stipulation itself would affect 16 his ability to get noncommodity billing in the 17 future. 18 EXAMINER WALSTRA: Overruled. 19 A. Can you repeat the question, please? 20 MR. GARVER: Your Honor, could you please 21 have the question reread. 22 EXAMINER WALSTRA: Please. 23 (Record read.) 24 A. My understanding is that if there is no 25 order or final order on the rules review, that DP&L ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 448 1 is still required to submit an application to the 2 Commission. 3 Q. Okay. But you would agree there could be 4 a decision on the rules review process that would not 5 allow noncommodity billing, correct? 6 A. I agree that I think that if the 7 Commission had made a decision that noncommodity 8 billing was not allowed on the utility bill, then 9 that provision would no longer require Dayton to 10 submit the application. I think that provision was 11 in there only in the event there was not a final 12 order. 13 Q. Okay. And if you look in the middle of 14 that paragraph, there's a sentence that reads "DP&L 15 will be permitted to seek cost recovery associated 16 with providing noncommodity billing in part from CRES 17 providers utilizing noncommodity billing and other 18 third parties and ratepayers equally in another 19 proceeding, with any application for cost recovery to 20 be submitted on an expedited basis to ensure timely 21 imple" -- "timely implementation of noncommodity 22 billing." I read that correctly? 23 A. Yes. 24 Q. So is it correct that CRES providers who 25 do not partake in noncommodity billing will not have ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 449 1 to pay for noncommodities being placed on utility 2 bills? 3 A. I don't know. I think that would be 4 determined in the cost recovery proceeding. 5 Q. Then could you please explain for me your 6 understanding of the phrase in that sentence that 7 says "in part from CRES providers utilizing 8 noncommodity billing"? 9 A. I'm sorry. Can you repeat the question? 10 Q. Sure. Could you please explain to me 11 your understanding of the phrase in that sentence 12 that reads "in part from CRES providers utilizing 13 noncommodity billing"? 14 A. It -- my understanding is that in part 15 some of the costs that CRES providers utilizing 16 noncommodity billing would be recovered from those 17 CRES providers in part. 18 Q. Only the CRES providers that use it 19 though, correct? 20 A. It doesn't say only the CRES providers 21 that use it in that sentence. That would be up to 22 the Commission to determine. 23 MR. GARVER: I have no further questions, 24 your Honor. 25 EXAMINER WALSTRA: Thank you. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 450 1 Anyone else? 2 Any redirect? 3 MR. SETTINERI: If we could have a few 4 minutes, your Honor, we would appreciate it. 5 EXAMINER WALSTRA: Sure. We will take a 6 5-minute recess. 7 (Recess taken.) 8 EXAMINER WALSTRA: We will go back on the 9 record. 10 MR. SETTINERI: Thank you, your Honor. 11 - - - 12 REDIRECT EXAMINATION 13 By Mr. Settineri: 14 Q. Mr. White, do you recall getting 15 questions about benefits and rates related to 16 individuals that are nonshopping versus shopping in 17 respect to consolidated billing, or I should say 18 supplier consolidated billing and noncommodity 19 billing? 20 A. Yes. 21 Q. And do you -- in regards to the benefits 22 related to supplier consolidated billing and 23 noncommodity billing implementation, do you believe 24 there are specific benefits that would apply to all 25 customers? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 451 1 A. Yes, I do. Just as an example, the -- as 2 I said in my testimony, many of the -- having the 3 ability to offer a more diverse range of products and 4 services enables us to offer many of the products and 5 services that help customers use energy more 6 efficiently. 7 So just as a specific example, if you are 8 able to offer a customer -- expand your ability to 9 offer customers a product such as time-of-use or bill 10 a more sophisticated demand response residential 11 product, it -- it reduces the energy consumption on 12 the grid, and it reduces demand on the grid which 13 would reduce the need to bill new generation which 14 would benefit all customers, all distribution 15 customers regardless of whether they are receiving 16 that particular product from the CRES supplier. 17 MR. SETTINERI: Thank you. 18 No further questions, your Honor. 19 EXAMINER WALSTRA: Thank you. 20 MR. GARVER: No questions. 21 EXAMINER WALSTRA: Anyone else? 22 Thank you, Mr. White. 23 THE WITNESS: Thank you. 24 MR. SETTINERI: Your Honors, at this time 25 we would move for admission of RESA Exhibit 1. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 452 1 EXAMINER WALSTRA: Any objections? 2 Hearing none, it will be admitted 3 (EXHIBIT ADMITTED INTO EVIDENCE.) 4 EXAMINER WALSTRA: Mr. McNamee. 5 MR. McNAMEE: Thank you, your Honor. At 6 this time staff would call Jacob J. Nicodemus. 7 (Witness sworn.) 8 EXAMINER WALSTRA: Thank you. Please be 9 seated. State your name and business address. 10 THE WITNESS: My name is Jacob J. 11 Nicodemus, that's N-I-C-O-D-E-M-U-S, and my business 12 address is 180 East Broad Street, Columbus, Ohio 13 43215. 14 - - - 15 JACOB J. NICODEMUS 16 being first duly sworn, as prescribed by law, was 17 examined and testified as follows: 18 DIRECT EXAMINATION 19 By Mr. McNamee: 20 Q. Mr. Nicodemus, by whom are you employed 21 and in what capacity? 22 A. I'm employed by the Public Utilities 23 Commission of Ohio as a Utility Specialist 2. 24 Q. Okay. 25 MR. McNAMEE: At this time, your Honor, I ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 453 1 would ask to have marked for identification as Staff 2 Exhibit 1 a multi-page document filed in this case on 3 March 22, denominated prefiled testimony of Jacob J. 4 Nicodemus. 5 EXAMINER WALSTRA: So marked. 6 (EXHIBIT MARKED FOR IDENTIFICATION.) 7 Q. Mr. Nicodemus, do you have before you 8 what's just been marked as Staff Exhibit 1? 9 A. Yes. 10 Q. What is it? 11 A. It is my testimony in this case. 12 Q. Was it prepared by you or under your 13 direction? 14 A. Yes. 15 Q. Are the contents true to the best of your 16 knowledge and belief? 17 A. Yes. 18 Q. Do you have any corrections that you need 19 to make to that document this afternoon? 20 A. No. 21 Q. If I were to ask you the questions that 22 are contained within what's been marked for 23 identification as Staff Exhibit 1 here again today, 24 would your answers today be as represented therein? 25 A. Yes. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 454 1 MR. McNAMEE: With that, your Honor, the 2 witness is available for cross-examination. 3 EXAMINER WALSTRA: Thank you. 4 Any proponent questions? 5 Mr. Kumar, go ahead. 6 - - - 7 CROSS-EXAMINATION 8 By Mr. Kumar: 9 Q. Good afternoon, Mr. Nicodemus. My name 10 is Ajay Kumar. I am an attorney with the Ohio 11 Consumers' Counsel. Could you turn to page 5 of your 12 testimony. 13 A. Yes. 14 Q. And on page 5 you discuss the annual 15 report that's been -- that's filed by electric 16 utilities regarding reliability performance? 17 A. That's right. 18 Q. Can I refer to this report as the Rule 10 19 report? 20 A. Yes. 21 Q. And these are filed on March 31 of every 22 year; isn't that true? 23 A. By March 31 each year, yes. 24 Q. And so the latest one for all the 25 utilities was filed on Friday of last week. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 455 1 A. That's correct. 2 MR. KUMAR: Your Honor, could I have an 3 exhibit marked? 4 EXAMINER WALSTRA: You may. 5 MR. KUMAR: OCC Exhibit 9. It's the 6 filing from 17-0229-EL-ESS. It's Dayton Power and 7 Light's most recent Rule 10 report. 8 EXAMINER WALSTRA: So marked. 9 (EXHIBIT MARKED FOR IDENTIFICATION.) 10 Q. And it's from reports like these that you 11 derive your CAIDI and SAIFI numbers that you include 12 in your testimony; isn't that correct? 13 A. That's right. 14 Q. And so if you look at I guess what's 15 referred to as the main page of this Rule 10 report 16 marked as OCC Exhibit 9. 17 A. Yes. 18 Q. This has the most recent CAIDI and SAIFI 19 numbers for Dayton Power and Light; isn't that 20 correct? 21 A. That's right. 22 Q. And compared to the chart on page 5 of 23 your testimony, the performance standards have 24 remained the same; isn't that correct? 25 A. Yes, the standards have remained the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 456 1 same. 2 Q. And the performance for the CAIDI 3 standard still exceeds the standard that was -- that 4 has been set in the previous cases, in the 5 previous -- the case where you set the standards. 6 A. Yes, that's right. 7 Q. And the SAIFI standard has, in fact, 8 improved from the standard in your chart; isn't that 9 correct? 10 A. Can you restate the question, please? 11 Q. How about I rephrase? The after 12 exclusions SAIFI's performance that's in the Rule 10 13 report that I just provided you is .69; isn't that 14 correct? 15 A. That's right. 16 Q. And the one in your chart is .85. 17 A. That's right. 18 Q. And .69 is an improvement over .85; isn't 19 that correct? 20 A. That's right. 21 Q. Okay. Could you turn to page 6 of your 22 testimony. 23 A. Yes. 24 Q. And on lines 5 -- 25 MR. McNAMEE: Did you say 6? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 457 1 MR. KUMAR: Yes, 6. 2 Q. Lines 5 through 8 you describe a customer 3 perception survey that was provided to staff in May 4 of 2015. 5 A. The results of the survey were provided, 6 yes. 7 Q. Yes. The results of that survey. Now, 8 in that customer perception survey, were there 9 included any questions on whether customers would be 10 willing to pay more for increased reliability? 11 A. Not as far as I know. 12 Q. Okay. 13 MR. KUMAR: Your Honor, could I have 14 another exhibit marked? 15 EXAMINER WALSTRA: You may. 16 MR. KUMAR: I guess this will be OCC 17 Exhibit 10. 18 EXAMINER WALSTRA: So marked. 19 (EXHIBIT MARKED FOR IDENTIFICATION.) 20 MR. KUMAR: It's the "Metrix Matrix 21 Dayton Power & Light Customer Perception Survey" from 22 May of 2015. May we approach? 23 EXAMINER WALSTRA: You may. 24 Q. Mr. Nicodemus. 25 A. Yes. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 458 1 Q. Do you have a copy of what's been marked 2 as OCC Exhibit 10? 3 A. Yes. 4 Q. Is this the customer perception survey 5 that you described in your testimony? 6 A. Yes. 7 Q. And now that you have a copy of that 8 customer perception survey, does it include any 9 questions on whether customers would be willing to 10 pay more for increased reliability? 11 A. If it does, I am not seeing it. 12 Q. Does that survey include any questions on 13 whether customers would be willing to pay more for 14 the same level of reliability? 15 A. I don't see anything in the survey 16 results that address costs. 17 Q. Okay. Thank you. Now, on page 5 -- 18 sorry, back on lines 4 through 5 you state that 19 Dayton Power and Light has met reliability standards 20 every year since their current standard became 21 effective. 22 A. Which page are you on? 23 Q. Page 5, lines 4 and 5 of your testimony, 24 sorry. 25 A. Yes. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 459 1 Q. And to move around a little bit again, on 2 page 2 you describe the statutory tests that's been 3 enumerated in 4928.143(B)(2)(h) which requires that 4 an electric utility, before approval of an electric 5 utility's distribution infrastructure incentive, that 6 the Commission must examine the reliability of a 7 utility's distribution system to ensure that the 8 reliability expectations are aligned with those of 9 its customers. 10 A. Yes. 11 Q. And have you conducted this sort of 12 analysis for other utilities in Ohio? 13 A. Yes, I have. 14 Q. So you are familiar in general with the 15 other utilities' distribution infrastructure 16 incentive riders? 17 A. Generally speaking, yes. 18 Q. So AEP has a distribution investment 19 rider? 20 A. Yes. 21 Q. FirstEnergy has a delivery capital rider, 22 I believe they call it? 23 A. Yes. 24 Q. And Duke has a distribution capital 25 incentive? ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 460 1 A. It's called something like that, yes, I 2 believe so. 3 Q. But they all generally serve the same 4 purpose to provide accelerated recovery of 5 distribution investment? 6 MR. McNAMEE: Objection. While this may 7 be interesting to some people, it's outside the scope 8 of the witness's testimony. It's not speaking to 9 the -- to the DIR. He is speaking to just the 10 standard that the Commission -- or that the 11 Commission is using to assure the alignment of -- of 12 customers and the company's expectations. 13 EXAMINER WALSTRA: I will give him a 14 little leeway and see where he is going, but. 15 A. Was there a question? I'm sorry. 16 MR. KUMAR: Yeah. Can I have the 17 question reread? 18 (Record read.) 19 A. To the best of my knowledge, generally, 20 that's correct, but I don't know much about the 21 specifics of each rider or their purpose. 22 Q. Just that they exist. 23 A. I know that they exist. 24 Q. Yeah. Dayton Power and Light does not 25 currently have one of those riders. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 461 1 A. I don't believe so, no. 2 Q. In fact, they are proposing one in this 3 ESP. 4 A. Yes. 5 Q. Okay. Now, isn't it true that other 6 utilities in Ohio have missed their reliability 7 standards in previous cases, in previous years? 8 MR. McNAMEE: Objection, relevance. 9 MR. KUMAR: Your Honor, I think the 10 importance in this case, one of the main issues we 11 are discussing DIR and I think the existence of those 12 riders and -- and other utilities provide a useful 13 comparison as to how the existence of those riders 14 affects the reliability standards that those 15 utilities have. 16 EXAMINER WALSTRA: I don't necessarily 17 see how the other utilities meeting those standards 18 is relevant here. I am going to sustain. 19 Q. Are you familiar with Duke's reliability 20 standards, Mr. Nicodemus? 21 A. Yes. 22 Q. And have you reviewed Duke's most recent 23 reliability standards filing, their Rule 10 filing? 24 MR. McNAMEE: Objection, relevance again. 25 The case is about Dayton Power and Light, not Duke. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 462 1 MR. KUMAR: Again, your Honor, I think 2 the ability of a utility to meet its reliability 3 standards based on distribution, the existence of a 4 distribution incentive rider is an issue in this 5 case; and, therefore, I think whether or not other 6 utilities have been able to meet those reliability 7 standards as a result of the existence of their 8 riders I think is an area -- appropriate area of 9 cross-examination, especially since we have a witness 10 who has examined the filings of all those utilities. 11 EXAMINER WALSTRA: Just I sustained the 12 last one for the same reason, so I am going to 13 sustain this one as well. 14 MR. KUMAR: All right. Thank you, your 15 Honor. I have no more questions. 16 EXAMINER WALSTRA: Thank you. 17 Anyone else? No? 18 Any redirect? 19 MR. McNAMEE: No. 20 EXAMINER WALSTRA: All right. 21 MR. McNAMEE: At this time staff would 22 move for the admission of what's been marked as Staff 23 Exhibit 1. 24 EXAMINER WALSTRA: Any objections? 25 It will be admitted. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 463 1 (EXHIBIT ADMITTED INTO EVIDENCE.) 2 MR. KUMAR: And, your Honor, I would like 3 to move for the admission of OCC Exhibit 9, the most 4 recent reliability standards. 5 MR. McNAMEE: No objection. 6 EXAMINER WALSTRA: It will be admitted. 7 (EXHIBIT ADMITTED INTO EVIDENCE.) 8 MR. KUMAR: 10 is attached to 9 Mr. Williams' testimony. 10 MR. ALEXANDER: So you are not moving it. 11 MR. KUMAR: I am not moving it. 12 MR. McNAMEE: Oh, it is? 13 EXAMINER WALSTRA: Thank you. If there 14 is nothing else, we are adjourned until Thursday at 15 9:00 a.m. with Ms. Cronmiller. 16 Thank you. We are off the record. 17 (Thereupon, at 4:01 p.m., the hearing was 18 adjourned.) 19 - - - 20 21 22 23 24 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 464 1 CERTIFICATE 2 I do hereby certify that the foregoing is 3 a true and correct transcript of the proceedings 4 taken by me in this matter on Tuesday, April 4, 2017, 5 and carefully compared with my original stenographic 6 notes. 7 8 _______________________________ 9 Karen Sue Gibson, Registered Merit Reporter. 10 11 (KSG-6341) 12 - - - 13 14 15 16 17 18 19 20 21 22 23 24 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481