1 THE PUBLIC UTILITIES COMMISSION OF OHIO 2 - - - 3 In the Matter of the : Application of Ohio Edison : 4 Company, The Cleveland : Electric Illuminating : 5 Company, and The Toledo : Edison Company for : Case No. 16-0743-EL-POR 6 Approval of Their Energy : Efficiency and Peak Demand : 7 Reduction Program Portfolio: Plans for 2017 through 2019: 8 - - - 9 10 PROCEEDINGS 11 before Mr. Richard Bulgrin, Attorney Examiner, at the 12 Public Utilities Commission of Ohio, 180 East Broad 13 Street, Room 11-D, Columbus, Ohio, called at 14 9:00 a.m. on Wednesday, January 25, 2017. 15 - - - 16 VOLUME III 17 - - - 18 19 20 21 22 ARMSTRONG & OKEY, INC. 222 East Town Street, Second Floor 23 Columbus, Ohio 43215-5201 (614) 224-9481 - (800) 223-9481 24 Fax - (614) 224-5724 25 - - - 376 1 APPEARANCES: 2 FirstEnergy Service Company By Ms. Erika Ostrowski 3 Ms. Carrie M. Dunn 76 South Main Street 4 Akron, Ohio 44308 5 Kolich & Associates, LLC By Ms. Kathy J. Kolich 6 1521 Hightower Drive Uniontown, Ohio 44685 7 Jones Day 8 By Mr. Michael R. Gladman 325 John H. McConnell Boulevard, Suite 600 9 Columbus, Ohio 43215 10 On behalf of Ohio Edison Company, The Cleveland Electric Illuminating Company, 11 and The Toledo Edison Company. 12 Bruce J. Weston, Consumers' Counsel By Mr. Christopher Healey 13 Assistant Consumers' Counsel 10 West Broad Street, Suite 1800 14 Columbus, Ohio 43215-3485 15 Bricker & Eckler, LLP By Mr. Dane Stinson 16 100 South Third Street Columbus, Ohio 43215 17 On behalf of the Residential Customers 18 of Ohio Edison Company, Toledo Edison Company, and The Cleveland Electric 19 Illuminating Company. 20 Ohio Partners for Affordable Energy By Ms. Colleen L. Mooney 21 231 West Lima Street P.O. Box 1793 22 Findlay, Ohio 45839 23 On behalf of the Ohio Partners for Affordable Energy. 24 25 377 1 APPEARANCES (Continued): 2 Mike DeWine, Ohio Attorney General By Mr. William L. Wright, 3 Section Chief By Mr. John H. Jones 4 Ms. Natalia Messenger Assistant Attorneys General 5 Public Utilities Section 30 East Broad Street, 16th floor 6 Columbus, Ohio 43215 7 On behalf of the Public Utilities Commission of Ohio. 8 Environmental Law & Policy Center 9 By Ms. Madeline Fleisher 21 West Broad Street, Suite 500 10 Columbus, Ohio 43215 11 Environmental Law & Policy Center By Mr. Robert Kelter 12 35 East Wacker Drive, Suite 1600 Chicago, Illinois 60601 13 On behalf of the Environmental Law & 14 Policy Center. 15 IGS Energy By Mr. Joseph Oliker 16 6100 Emerald Parkway Dublin, Ohio 43016 17 On behalf of IGS Energy. 18 Carpenter Lipps & Leland LLP 19 By Ms. Angela M. Paul Whitfield 280 North High Street, Suite 1300 20 Columbus, Ohio 43215 21 On behalf of The Kroger Co. 22 Ohio Environmental Council By Ms. Miranda Leppla 23 1145 Chesapeake Avenue, Suite I Columbus, Ohio 43212 24 On behalf of the Ohio Environmental 25 Council and Environmental Defense Fund. 378 1 APPEARANCES (Continued): 2 Carpenter Lipps & Leland LLP By Ms. Kimberly W. Bojko 3 and Mr. James D. Perko, Jr. 280 North High Street, Suite 1300 4 Columbus, Ohio 43215 5 On behalf of The Ohio Manufacturers' Association Energy Group. 6 McNees, Wallace & Nurick LLC 7 By Mr. Matthew Pritchard 21 East State Street, 17th Floor 8 Columbus, Ohio 43215 9 On behalf of the Industrial Energy Users of Ohio. 10 Law Office of Robert Dove 11 Mr. Robert Dove P.O. Box 13442 12 Columbus, Ohio 43213 13 Natural Resources Defense Council Samantha Williams 14 Staff Attorney 20 North Wacker Drive, Suite 1600 15 Chicago, Illinois 60606 16 On behalf of the Natural Resources Defense Council. 17 - - - 18 19 20 21 22 23 24 25 379 1 INDEX 2 - - - 3 WITNESSES PAGE 4 Patrick Donlon Cross-Examination (Continued) by Mr. Gladman 383 5 Cross-Examination by Mr. Kelter 440 Redirect Examination by Mr. Jones 467 6 Recross-Examination by Mr. Kelter 472 Recross-Examination by Mr. Gladman 473 7 - - - 8 COMPANIES EXHIBITS IDENTIFIED ADMITTED 9 11 Opinion and Order, 384 -- 10 Case No. 14-1297-EL-SSO 11 12 Finding and Order, 390 -- Case No. 11-126-EL-EEC 12 Case No. 11-127-EL-EEC Case No. 11-128-EL-EEC 13 13 "Summary of Switch Rates 408 476 14 from EDUs to CRES Providers in Terms of Sales for the 15 Month Ending March 31, 2015" 16 14 "A Report by the Staff of 418 476 the Public Utilities 17 Commission of Ohio, Ohio Utility Rate Survey, 18 December 1, 2015" www.puco.ohio.gov/puco/ 19 index.cfm/industry- information/statistical- 20 reports/ohio-utility-rate- survey/2015 21 22 23 24 25 380 1 INDEX (Continued) 2 - - - 3 COMPANIES EXHIBITS IDENTIFIED ADMITTED 4 15 ORC 111.15, "Adoption and 434 -- filing of agency 5 administrative code rules." www.puco.ohio.gov/puco/ 6 index.cfm/industry- information/statistical- 7 reports/electric-customer- choice-switch-rates-and- 8 aggregation-activity/ electric-switch-rates-by- 9 sales/sales-2015 10 - - - 11 STAFF EXHIBIT IDENTIFIED ADMITTED 12 1 Amended Testimony of II-311 475 Patrick Donlon 13 - - - 14 ELPC EXHIBIT IDENTIFIED ADMITTED 15 1 Letter from PUCO to Energy 450 476 16 Mandate Study Committee, dated 2-26-2015 17 - - - 18 19 20 21 22 23 24 25 381 1 Wednesday Morning Session, 2 January 25, 2017. 3 - - - 4 EXAMINER BULGRIN: Good morning. This is 5 day three. And preliminary matters, I think I just 6 want to note that the parties have agreed that we'll 7 have the -- is it Mr. -- 8 MR. KELTER: Neme. 9 EXAMINER BULGRIN: Neme. How do you 10 spell that? 11 MR. KELTER: N-e-m-e. 12 EXAMINER BULGRIN: Okay. File his 13 testimony. 14 MR. KELTER: Friday. Or today, today, 15 sorry, sorry, sorry. 16 EXAMINER BULGRIN: Good. I was thinking 17 that went too smooth. Okay. So filed by end of 18 business today. 19 MR. KELTER: Yes. 20 MS. WILLIAMS: By the filing deadline. 21 EXAMINER BULGRIN: At the time -- 22 MR. KELTER: Best efforts earlier. 23 EXAMINER BULGRIN: Thank you. That would 24 be appreciated. And then he will appear Friday 25 morning at 9? 10? 382 1 MR. KELTER: It's really up to everybody. 2 I mean I don't know how much cross people will have 3 for him. You haven't seen it yet. 4 MR. HEALEY: I can't -- I couldn't even 5 possibly guess at this point. 6 MR. KELTER: Probably 10 minutes. 7 EXAMINER BULGRIN: Let's set it at 10 and 8 let me know after you've seen it whether -- 9 MR. HEALEY: I would be shocked if it 10 would be more than two hours. That would be on the 11 high end. 12 MR. KELTER: It's like 30 pages of 13 testimony. 14 MS. WILLIAMS: It is not -- 15 EXAMINER BULGRIN: And then he will 16 testify on Friday and we'll start at 10 o'clock. I 17 think we have the room booked for that. And then the 18 company plans to file two rebuttal testimony? 19 MS. OSTROWSKI: At this point it would be 20 one or two, your Honor. And we would like to file by 21 end of day Friday. And come back here on Tuesday. 22 EXAMINER BULGRIN: But you will make best 23 efforts to get it filed as soon as you can on Friday 24 considering we are going to be in hearing so. 25 MS. OSTROWSKI: That's right, your Honor. 383 1 Thank you. 2 MR. HEALEY: Can we just clarify that's 3 close of business, not midnight on Friday, because 4 she said end of day. 5 EXAMINER BULGRIN: Close of business. 6 MS. OSTROWSKI: Yes. 7 MR. HEALEY: Thank you. 8 EXAMINER BULGRIN: And then Tuesday I'm 9 guessing is 10 o'clock? 10 MS. OSTROWSKI: 10 o'clock sounds great. 11 EXAMINER BULGRIN: So, Karen, you're 12 going to have to come back twice. Okay. Anything 13 further? Then I think we are going to continue with 14 cross-examination and from the company. 15 MR. GLADMAN: Yes, thank you, your Honor. 16 - - - 17 PATRICK DONLON 18 being previously duly sworn, as prescribed by law, 19 was examined and testified further as follows: 20 CROSS-EXAMINATION (Continued) 21 By Mr. Gladman: 22 Q. Good morning, Mr. Donlon. 23 A. Good morning. 24 Q. I am going to start with a few cleanup 25 items from yesterday's testimony. Do you recall I 384 1 asked you in the context of discussing rider DSE2 2 about a rate freeze in the companies' ESP IV order? 3 A. Yes. 4 Q. And you agreed there was a -- if I got 5 your testimony right, a base distribution rate freeze 6 but it did not include rider DSE2. Do you recall 7 that discussion? 8 A. Yes. 9 Q. Okay. I believe there was some confusion 10 due to my choice of words and I want to try this 11 again. Let's take a look at the actual language to 12 try to clear that up. 13 MR. GLADMAN: Your Honor, may we approach 14 the witness? 15 EXAMINER BULGRIN: Sure. 16 MR. GLADMAN: Your Honor, while my 17 colleague is bringing the copies up for the record, 18 we are going to be marking as Companies' Exhibit 11, 19 the March 31, 2016, Opinion and Order in the 20 companies' ESP IV case. 21 EXAMINER BULGRIN: All righty. 22 (EXHIBIT MARKED FOR IDENTIFICATION.) 23 Q. Mr. Donlon, do you have what we have 24 marked as Companies' Exhibit 11 in front of you? 25 A. Yes. 385 1 Q. Can I ask you to turn to page 86 of that 2 document. Are you there, sir? 3 A. Yes. 4 Q. And if you look at this top paragraph the 5 fourth line down, it starts with "Therefore, in order 6 to protect customers against rate volatility and 7 price fluctuations and to provide additional rate 8 stability for customers, the Commission will modify 9 the Stipulations to include a mechanism to limit 10 average customer bills. This will ensure that the 11 average customer bill will see no total bill increase 12 for two years." Did I read that provision correctly? 13 A. You did, but you left out some important 14 information later in that paragraph. 15 Q. You mean the next paragraph? 16 A. No. In that paragraph. 17 Q. Okay. Which portion of the language do 18 you think is significant? 19 A. "FirstEnergy is authorized to defer 20 expenses for future recovery in an amount equivalent 21 to the revenue reduction resulting from the 22 implementation of the mechanism for the period of 23 June 1, 2017, through May 31, 2018." 24 Q. Okay. So that's a different paragraph 25 actually. I read from the top paragraph and that's 386 1 what I was asking you -- 2 A. I thought you started at "Therefore, the 3 Commission directs the Companies to ensure...." 4 Q. No. Actually, the first paragraph at the 5 top. The language -- let's start again, make sure we 6 are on the same page here. So top paragraph on 7 page 86, fourth line. Do you see the "Therefore" 8 there? 9 A. Ah. 10 Q. Let me try it again and we will get to 11 the language you pointed to as well. It says, 12 "Therefore, in order to protect customers against 13 rate volatility and price fluctuations and to provide 14 additional rate stability for customers, the 15 Commission will modify the Stipulations to include a 16 mechanism to limit average customer bills. This will 17 ensure that the average customer bill will see no 18 total bill increase for two years." Did I read that 19 portion of the Order correctly? 20 A. Yes. 21 Q. Okay. And then you also pointed to the 22 next paragraph which continues on with respect to how 23 this will be implemented, including the deferral 24 language that you referred to as well. Is that the 25 next paragraph in the Order? 387 1 A. Yes. 2 Q. Okay. Is it fair to say that the 3 companies agreed and the Commission ordered that for 4 the period June 1, 2016, through May 31, 2018, 5 average customer bills will not increase as compared 6 to average customer bills for the period June 1, 7 2015, through May 31, 2016? 8 A. I am not sure the company agreed. I 9 don't know what you mean by that other than that it 10 was ordered. I am not sure if this was in the 11 Stipulation or Order, so. 12 Q. Okay. Fair enough. And it says in the 13 Order, the Commission implemented this provision to 14 protect against rate volatility and price 15 fluctuations and to provide rate stability, correct? 16 A. Yes. 17 Q. And this two-year -- if I use "bill 18 mitigation mechanism," is that a fair terminology to 19 use for this provision? 20 A. Yes. 21 Q. Okay. The two-year bill mitigation 22 mechanism applies to total bills of the companies' 23 customers? 24 A. Yes. In allowing for deferral. 25 Q. Sure. And the total bills include rider 388 1 DSE2? 2 A. Yes. 3 Q. Okay. And you pointed to the deferral 4 language a couple of times. Is it fair to say that 5 deferral only applies to lost revenue for the period 6 June 1, '17, through May 31, 2018? 7 A. The same time as the mitigation time 8 period, yes. 9 Q. Okay. And is it also fair to say that 10 the future recovery will occur as suggested in the 11 language sometime in the future, it's a deferral; is 12 that correct? 13 THE WITNESS: Can you restate that? 14 "Future" was used a fair amount of time in that 15 sentence. 16 (Record read.) 17 A. What future recovery are you referring 18 to? 19 Q. Well, you pointed to the language about 20 deferring expenses for future recovery, correct? 21 That's the language you were referring to? 22 A. Yes. 23 Q. And I am asking do you understand that 24 that recovery will occur sometime in the future? 25 First; that's my first question. 389 1 A. Well, that statement assumes that there 2 would be a deferral which that doesn't necessarily -- 3 this may and probably will not actually -- let me 4 start that over. 5 If this piece and rate mitigation comes 6 in and the company cannot reflect it, then, yes, if 7 that happens, the deferred expenses would have to be 8 deferred -- or collected at a later date. 9 Q. Okay. 10 A. But you have to first get to that 11 trigger, and I'm not agreeing that I expect the 12 company to actually hit that trigger. 13 Q. Okay. Appreciate that. Let's turn to 14 the questions we had yesterday about the benchmark 15 amendment. Do you recall yesterday that we discussed 16 the provision in staff's cost cap proposal that would 17 permit the EDUs to seek a benchmark amendment if they 18 are unable to meet statutory benchmarks after making 19 "all possible adjustments"? 20 A. Yes. 21 Q. And that's something that's in your 22 testimony at page 6, lines 124 through 127? 23 A. Yes. 24 Q. And that provision cross-references, does 25 it not, Revised Code 4928.66(A)(2)(b) as the 390 1 mechanism for seeking a benchmark reduction? 2 A. Yes. And actually, yesterday, I said 3 that that provision hadn't been used, and I was 4 incorrect. It actually had been requested by the -- 5 by FirstEnergy to -- in 2000 -- for the 2000 6 benchmarks. The company was granted a waiver for 7 2009 to move them and apply the benchmark in -- or 8 take the cumulative balance for 2009 and 2010 in 9 2010, so I was misstated yesterday. I wasn't aware 10 of that Order. 11 Q. Okay. Let's take a look at that Finding 12 and Order. 13 MR. GLADMAN: Mr. Eckert, can you give us 14 the Finding and Order in Case No. 11-126? 15 And for the record, your Honor, we are 16 going to be taking a look at -- give you a date, May 17 19, 2011, Finding and Order in Case No. 11-126-EL-EEC 18 and this will be Companies' Exhibit 12. 19 EXAMINER BULGRIN: All right. It will be 20 so marked. 21 (EXHIBIT MARKED FOR IDENTIFICATION.) 22 Q. Mr. Donlon, do you have what has been 23 marked as Company Exhibit 12 in front of you? 24 A. Yes. 25 Q. And is this the Finding and Order you 391 1 were referring to when you said that Ohio Edison had, 2 in fact, made that request under 4928 -- let's begin 3 again -- 4928.66(A)(2)(b)? 4 A. It appears to be. 5 Q. Okay. Take a look at page 5, 6 paragraph 11, of that Finding and Order, and I'll -- 7 I am not going to read the entire paragraph, but if 8 you would like to, feel free to do so. My question 9 is, do you know if this amendment to the statutory 10 benchmark relates to the companies' portfolio plan 11 for the '09 case? I believe that's what you just 12 testified to. 13 A. If you go to the first page, it appears 14 that in paragraph (3), it is referencing Case No. 15 09-1947-EL-POR. 16 Q. Thank you. That was going to be my next 17 question, so I appreciate you beating me to that. On 18 paragraph 11 on page 5, does it state that one of the 19 reasons for granting the statutory benchmark 20 amendment is the fact that Ohio Edison's 21 comprehensive program portfolio was not approved by 22 the Commission until March 23, 2011? 23 MR. JONES: Objection, your Honor. The 24 Order speaks for itself. 25 MR. GLADMAN: I'm asking him this 392 1 question to put it into context for the next 2 question. 3 EXAMINER BULGRIN: Overruled. You can 4 answer. 5 A. It appears so. 6 Q. And so fair to conclude that one of the 7 reasons for the justification for the reduction of 8 the benchmark was a delay in obtaining the energy 9 efficiency decision from the Commission? 10 THE WITNESS: Can you repeat that, 11 please? 12 MR. GLADMAN: Can you read that back? 13 (Record read.) 14 MR. JONES: Could Counsel provide a 15 reference to the Order where it says that? 16 MR. GLADMAN: The language, what I just 17 read to him and that he agreed was in the Order. 18 A. I believe the Order speaks for itself and 19 what the Order says is what the Order says. And 20 staff -- I am not here to put words in the 21 Commission's mouth of what they said, but I think you 22 read that and it says... 23 Q. Well, the next sentence suggests that, 24 "For this reason, the Commission finds that OE..." 25 which is Ohio Edison, correct? 393 1 A. I assume so. I haven't looked to see 2 their parenthetical. Yes, it is. 3 Q. It says, "For this reason, the Commission 4 finds that OE could not reasonably achieve its EE/PDR 5 benchmark due to regulatory reasons beyond its 6 control." Did I read that language correctly? 7 A. You did. 8 Q. Also yesterday, Mr. Donlon, do you recall 9 testifying that one of the FirstEnergy -- energy 10 companies had exceeded its portfolio plan budget in 11 2012? 12 A. I don't think I said one of the 13 companies. I think it was actually what I was 14 referring to was in the aggregate but I am trying to 15 recall exactly what the statistics were I was looking 16 at. I think it was the company as a whole; not a 17 company individually. 18 Q. Okay. 19 A. But I could be wrong on that. 20 Q. Sure. Let's just, to make sure we are 21 all on the same page here, let's take a look from 22 your testimony from yesterday. 23 MR. GLADMAN: May we approach with the 24 transcript? 25 EXAMINER BULGRIN: Sure. 394 1 Can we go off the record for a second? 2 (Discussion off the record.) 3 MR. GLADMAN: Thank you, your Honor. 4 Q. Mr. Donlon, we've handed you the 5 transcript from yesterday's questioning and answering 6 during your testimony, just so we can make sure 7 exactly what you said on this topic. If you could 8 take a look at page 365 and starting on line 21. 9 "Question: And so, in other words, once 10 the Commission approves the plans and corresponding 11 budgets, the companies have to stay within those 12 budgets, correct?" 13 And your answer was: "I know the company 14 went over the budget in 2012, I believe, so I 15 think -- but, however, I am not sure what happened to 16 allow that to happen. So I think there is ways they 17 can get -- they can spend more." 18 Did I read that Question and Answer 19 correctly from yesterday? 20 A. Yes. 21 Q. Okay. And -- 22 A. Or at least as it appears here. 23 Q. Sure. Well, we are going to have faith 24 in our court reporter today, so. 25 And so, following up on your statement 395 1 is, was that a single company or the companies in the 2 aggregate that you are referring to there in terms of 3 failing to meet budget in 2012? 4 A. Usually when I am using the "company," I 5 am referring to FirstEnergy and its three affiliates. 6 I tend to look at them together, unless I'm 7 specifically talking about them separately, but, 8 again, like I just clarified, I'm not -- I am pretty 9 sure the information I'm recalling was the aggregate 10 of the three companies. 11 Q. Okay. So you believe that it was in the 12 aggregate the three companies went over their 13 portfolio planned budget in 2012? 14 A. Yes. 15 Q. Okay. Are there annual budgets for 16 portfolio plans or a single budget for an entire 17 three-year plan? 18 A. My understanding is the company files 19 individual budgets for each year. 20 Q. Okay. For the portfolio? 21 A. Yes. 22 Q. And you recall that you testified on a 23 couple of occasions yesterday that one metric in 24 support of your cost cap is that the companies were 25 21 percent under budget in 2012 to '14? 396 1 A. And 50 percent overcompliance, yes. 2 Q. Sure. If so, how could the companies 3 also be over budget during that same time period if 4 your testimony was they were under budget? Can you 5 help me understand that? 6 A. If you average three years and one year 7 is over and the other two are significantly under, 8 you can still equal below. 9 Q. Okay. So that's what I am trying to get 10 at. You think that the companies on the aggregate, 11 on a portfolio plan budget basis, were over budget in 12 2012, but for the entire period 2012 to '14, on the 13 aggregate, the companies were 21 percent under 14 budget? 15 A. And 50 percent overcompliance, correct. 16 And these are rough averages. 17 Q. Okay. Let's talk a little bit more about 18 that testimony on overcompliance and under budget. 19 Again, just to be clear, when you are talking about 20 overcompliance and under budget, that's in the 21 aggregate for all three companies? 22 A. Correct. 23 Q. And, again, that -- those metrics apply 24 to the entire plan period of 2012 through '14? 25 A. Correct. 397 1 Q. And if I wanted to recreate your 2 calculation, where would I find that information to 3 do so? 4 A. The companies' own filings. 5 Q. Okay. Which filings? 6 A. Your portfolio -- I cannot recall exactly 7 what it is called. 8 Q. Annual status reports? 9 A. I would guess, yes, it is the annual 10 status reports. 11 Q. And you gave that testimony about the 12 under budget/overcompliance yesterday when I asked 13 how you concluded the companies can "run their energy 14 efficiency portfolio and meet or exceed their 15 statutory benchmark." Do you recall that? 16 A. As one of the considerations, yes. 17 Q. By the way, if the companies, on the 18 aggregate, were 21 percent under budget in 2012 19 through '14, would that not suggest the companies 20 were appropriately managing their EE/PDR budget 21 during that time frame? 22 A. It could suggest that or it could also 23 suggest that they overbudgeted. 24 Q. Okay. Let's switch gears here for a 25 minute. On page 4 of your testimony, at lines 87 398 1 through 89, you speak of making reference to 2 obtaining "consistency amongst all the utilities in 3 the state"; is that correct? 4 A. Yes. 5 Q. Fair to say that for staff, consistency 6 among Ohio utilities is an important consideration? 7 A. In general or in this context? 8 Q. In general. 9 A. We would like consistency. It doesn't 10 always work out and as -- as -- it makes our life 11 much harder when everything is different. In fact, 12 most -- a lot of things are different among the four 13 utilities. 14 Q. Okay. And you like consistency, where 15 possible, because it promotes fairness? 16 A. "Fairness" is an interesting word. I'm 17 not sure "fairness" is -- relatively. 18 Q. Okay. Now, as we discussed yesterday, 19 your proposal, staff's proposal, includes setting the 20 overall cost cap for the companies EE/PDR plans at 21 3 percent of FERC Form 1, page 300, line 10; is that 22 correct? 23 A. Yes. 24 Q. And is it also accurate to state that 25 staff has agreed to a higher percentage overall cost 399 1 cap for other utilities in Ohio? 2 MR. JONES: Objection, relevance, your 3 Honor, to this proceeding. 4 EXAMINER BULGRIN: Overruled. 5 A. Through stipulation, with those other 6 companies where staff made considerable concessions, 7 yes, staff agreed to a different percentage. 8 Q. Okay. And, for instance, the staff 9 agreed to an overall cost cap using the same formula 10 of 4 percent for AEP Ohio, the Ohio Power Company, 11 correct? 12 MR. JONES: Objection, your Honor. That 13 was a result of a settlement in another case. 14 MR. GLADMAN: Your Honor, may I be heard 15 on that? This witness's testimony is that they 16 propose this cost cap, in part, to ensure consistency 17 among all the utilities in the state. We are 18 entitled to explore the consequences of that proposal 19 to demonstrate that it leads to, in our opinion, 20 inconsistent results and inequities. And to the 21 extent that we are referencing, very briefly here, 22 just to get a metric on the record, AEP and/or DP&L 23 stipulated settlements, we believe it would be 24 helpful to the Commission to compare what just 25 happened in those cases and the Commission can 400 1 certainly give it the weight it deserves. 2 EXAMINER BULGRIN: I will allow a little 3 leeway on this. 4 MR. GLADMAN: Thank you, your Honor. 5 EXAMINER BULGRIN: You can answer. 6 A. I don't remember the question. Can you 7 please repeat or reread the question. 8 Q. Let me ask it again just to save you. 9 Fair to say that staff agreed to an 10 overall cost cap, using the same metrics as proposed 11 in this case, of 4 percent for AEP, that is the Ohio 12 Power Company? 13 MR. JONES: Your Honor, I just want to 14 note a continuing objection to this line of 15 questioning. 16 EXAMINER BULGRIN: Okay. Duly noted. 17 A. Through stipulation and with 18 concessions -- other concessions that were made by 19 the company and other parties, staff did agree to a 20 4 percent. 21 Q. Okay. And staff also agreed to the same 22 4 percent cost cap for DP&L? 23 A. Again, through stipulation and 24 concessions made by all parties, staff agreed to a 25 4 percent. 401 1 Q. Okay. FERC Form 1, page 300, line 10, it 2 requests each company's "Total Sales to Ultimate 3 Consumers," is that right? And if you would like to 4 refer to -- 5 A. Yes. 6 Q. -- a sample FERC Form 10. It's obviously 7 attached to your testimony. 8 A. Yes. Yes, it does. 9 Q. And you would agree that line 10 includes 10 revenues from the sales of electricity to consumers? 11 A. Yes. 12 Q. And one component that impacts revenues 13 from the sales of electricity is utility rates? 14 A. Yes. 15 Q. Some utilities have higher rates than 16 others, correct? 17 A. Yes. 18 Q. And if a utility has a higher rate than 19 another utility, its revenues would be higher, all 20 other things being equal? 21 A. All other things are not equal in -- 22 within the state but, yes, if they were, yes, that's 23 a correct statement. 24 Q. Thank you. And therefore, again, 25 assuming all else equal, the higher the rate, the 402 1 higher the revenues, correct? 2 A. If all else was equal, yes. 3 Q. And then all else equal, the higher the 4 revenues, the higher the FERC line 10? 5 A. Yes. 6 Q. And the higher the FERC line 10, the 7 higher the cost cap under staff's proposal, correct? 8 A. Yes. 9 Q. So the use of line 10 in staff's proposed 10 cost cap would be more beneficial to the utilities 11 with higher rates, again, assuming all else equal? 12 A. If all else is equal, which it's not, 13 yes. 14 MR. GLADMAN: Move to strike. 15 EXAMINER BULGRIN: Overruled. 16 Q. I'll move on. 17 Mr. Donlon, I take it you are familiar 18 with Energy Choice Ohio? 19 A. Yes. 20 Q. And under that provision, energy 21 customers in Ohio are able to shop for energy 22 generation from a group of competitive suppliers 23 certified by the Commission; is that right? 24 A. Yes. 25 Q. In other words, if multiple suppliers 403 1 offer generation services in a particular customer's 2 area, that customer has the opportunity to choose the 3 company that supplies the generation of his or her's 4 electricity; is that right? 5 A. Yes. 6 Q. Okay. Also fair to say that the customer 7 cannot shop for supplies, transmission, and 8 distribution; just the supplier of the generation; is 9 that right? 10 A. Yes. 11 Q. Turning your attention back again to the 12 FERC Form 1, page 300, line 10. I think you just 13 testified that line 10 reflects sales to ultimate 14 consumers; is that right? 15 A. Yes. 16 Q. And is it fair to say that line 10 17 includes all revenue where the utility has a 18 corresponding expense? 19 A. I would assume so, but I'm not -- I don't 20 know every company's accounting verbatim, so I 21 wouldn't say that's absolutely a yes. 22 Q. Okay. So fair to say you don't know 23 every company's accounting with respect to what goes 24 into their FERC 150 -- sorry, FERC Form 1, line 10 25 figure? 404 1 A. No, that's actually not what I said. I 2 said I don't know everyone's expenses so -- and that 3 there is necessarily an offset of expense to every 4 single revenue line. 5 Q. Okay. And I think we are talking past 6 each other a little bit here. I want to make sure 7 you're suggesting you think it's correct that the 8 revenue in line 10 is the revenue where the utility 9 has a corresponding expense, but you are not certain 10 because you don't know every utility's accounting 11 practice; is that a fair statement? 12 MR. JONES: Objection, your Honor. 13 Objection. Asked and answered. 14 MR. GLADMAN: I don't understand the 15 answer yet. 16 EXAMINER BULGRIN: Yeah. I will overrule 17 that. 18 THE WITNESS: Could I have that reread? 19 (Record read.) 20 EXAMINER BULGRIN: You can answer. 21 A. Again, from my accounting background and 22 working with it, that sounds correct, but I am not 23 going to say definitively as I am not intimately 24 familiar with how everyone does their FERC Form 1s. 25 Even though I have in the past, in other careers, 405 1 worked and updated FERC Form 1 information for other 2 companies. 3 Q. Sure. That was part of your 4 responsibility when you were at AEP before you joined 5 the staff; is that fair to say? 6 A. Yes. 7 Q. If a particular utility customer shopped 8 for an electric supplier other than the utility, 9 those revenues are not reflected in the utility's 10 line 10; is that correct? 11 A. That is my understanding. 12 Q. While the utility bills the customer for 13 that shopped generation, it merely passes through 14 that revenue to the generation supplier, correct? 15 A. Yes. 16 Q. And, in fact, those revenues would 17 therefore belong to the entity that was actually 18 supplying the generation, correct? 19 A. Yes. 20 Q. And the utility, itself, then does not 21 report that shopped generation revenue on FERC 22 Form 1, line 10, correct? 23 A. If they are reporting it correctly, I 24 would assume no. 25 Q. Let me make sure I got that answer 406 1 correct. The utility does not report shopped 2 generation revenue on its FERC Form 1, line 10; would 3 you agree with that statement? 4 A. That is correct. 5 Q. Thank you. 6 A. As long as they are doing it correctly. 7 Q. Understood, understood. Is it fair to 8 say that the number of customers that shop for a 9 supplier of generation varies from utility to utility 10 in Ohio? 11 A. And from month to month, year to year, 12 correct. 13 Q. In other words, Ohio utilities have 14 different switch rates meaning the percentages of 15 shopping customers? 16 A. Correct. 17 Q. And as an example, I know this is simple, 18 but bear me with for a minute to make sure I have got 19 it. If 80 percent of Utility A's customers shop for 20 a different supplier of generation, meaning an 21 80 percent switch rate; line 10 would only include 22 generation revenues for 20 percent of Utility A's 23 customers, correct? 24 A. I believe that to be correct. 25 Q. And on the other hand, if only 20 percent 407 1 of Utility B's customers shop for a different 2 supplier of generation, meaning again a 20 percent 3 switch rate, line 10 would include generation 4 revenues for 80 percent of Utility B's customers, 5 correct? 6 A. I believe that's correct. 7 Q. And in my hypothetical, a couple more 8 questions on that, Utility B's revenues from 9 generation would be higher than Utility A's; all else 10 being equal, correct? 11 A. If all else is equal, then yes. 12 Q. And as a result, Utility B's line 10 13 figure on FERC Form 1 would be higher; again assuming 14 all else being equal, correct? 15 A. That sounds correct. 16 Q. And that would also mean that staff's 17 cost cap for Utility B would be higher than for 18 Utility A; once again assuming all else equal, 19 correct? 20 A. That would be correct. 21 Q. Okay. And also fair to say that both 22 Utility A and Utility B would still have to provide 23 energy efficiency programs for the shopping customers 24 in their footprints? 25 A. That is correct. 408 1 Q. In other words, a customer shopping for 2 generation has no impact on the utility's obligation 3 to provide energy efficiency programs; is that fair 4 to say? 5 A. Yes. 6 Q. Mr. Donlon, are you familiar with the 7 switch rates for the FirstEnergy companies? 8 A. I am not. 9 Q. Okay. Let's -- 10 A. Or at least not off the top of my head. 11 Q. Let me show you a document here and see 12 if we can get you here. 13 MR. GLADMAN: Mr. Eckert, can we have the 14 PUCO shopping customers exhibit. 15 EXAMINER BULGRIN: It will be Company 16 Exhibit 13. 17 MR. GLADMAN: 13, thank you. 18 (EXHIBIT MARKED FOR IDENTIFICATION.) 19 MR. GLADMAN: And while we are pulling 20 that together, for the record the title of that 21 document is "Summary of Switch Rates from EDUs to 22 CRES Providers in Terms of Sales For The Month Ending 23 March 31, 2015," and then it also includes the same 24 information for June 30, 2015, month ended; 25 September 30, 2015, month ended; and December 31, 409 1 2015, month ended. Your Honor, I would ask that we 2 take administrative notice of this document. This is 3 a Commission document. 4 EXAMINER BULGRIN: Well, then certainly. 5 MR. GLADMAN: And may we also approach 6 and we have got a demonstrative that tracks 7 essentially the information on this exhibit. It 8 might make it easier for the witness to refer to and 9 you can also look at it at the same time. Is that 10 okay? 11 EXAMINER BULGRIN: Sure. 12 MR. GLADMAN: Thank you, your Honor. 13 EXAMINER BULGRIN: Do we want to take a 14 minute? 15 MR. GLADMAN: I think we're okay. Thank 16 you. And if it's okay, your Honor, to have 17 Mr. Tostado stand up there and highlight some numbers 18 as we refer to them for ease of reference? 19 EXAMINER BULGRIN: Sure. 20 MR. GLADMAN: Thank you. 21 Q. (By Mr. Gladman) Mr. Donlon, I have 22 handed you what has been marked as Company Exhibit 23 No. 13. Do you have that in front of you? 24 A. I do. 25 Q. Is this a document that's prepared by 410 1 your group? 2 A. We prepare this document and post it on 3 the website. If this is the exact same document, 4 I'll have to take your word for it. 5 Q. Yeah, I'll represent to you this is a 6 document we pulled from the Commission's site. So 7 this is a document in this form that you have seen 8 before? 9 A. Yes. 10 Q. Okay. And it shows Electric Choice sales 11 switch rates for 2015; is that fair to say? 12 A. First page is month ending March of '15. 13 Q. And I appreciate it. Yeah, that was a 14 general question, so let me be more specific. 15 It looks like we've got four different 16 two-page reports in this exhibit; month ended 17 March 3; 2015; month ended June 30, 2015; month ended 18 September 30, 2015; and month ended December 31, 19 2015. Is that right? 20 A. Yes. You have one for each quarter of 21 2015. 22 Q. Okay. Thank you. And I am going to ask 23 you to take a look at the switch rates for December 24 2015, which are the last two pages of the hard copy, 25 and reflected on the demonstrative that's in front of 411 1 you. Do see that? 2 A. Yes. 3 Q. And accurate to say that December 2015 is 4 the last month that is considered in staff's cost 5 cap, since 2015 revenues will dictate the cap for 6 2015 through '19 under your proposal? 7 A. Yes. 8 Q. If you take a look at the columns up 9 there, and in particular starting with The Cleveland 10 Electric Illuminating Company, the Electric Choice 11 sales switch rate for CEI is 84.07 percent; is that 12 correct? 13 A. Yes. 14 Q. And again, some of this is going to be 15 fundamental, so bear with me. I want to make sure 16 our record is clear. In other words, 84.07 percent 17 of the megawatt-hours sold to Cleveland Electric's 18 customers were provided by Electric Choice suppliers 19 according to this exhibit; is that right? 20 A. Yes. 21 Q. And also, according to this exhibit, the 22 same figure for Duke Energy is 74.47 percent; is that 23 correct? 24 A. Yes. 25 Q. And that's roughly a 10-percent 412 1 difference when comparing it to Cleveland Electric 2 Illuminating Company; is that fair to say? 3 A. It's a little under 10 percent. 4 Q. Okay. In other words, when comparing 5 switch rates or percentages of shopping customers, 6 just under 10 percent less of Duke Energy's total 7 megawatt-hours sold are provided by Electric Choice 8 suppliers as opposed to Cleveland Electric 9 Illuminating Company; is that fair? 10 THE WITNESS: I'm sorry. Can you reread 11 that? 12 (Record read.) 13 A. For generation. 14 Q. Okay. And that's what we are talking 15 about when we are talking about switch rates, 16 correct? 17 A. Right. But you said "total sales" so. 18 Q. Okay. I appreciate that clarification. 19 If we look at the Electric Choice sales switch rate 20 for DP&L in this exhibit, that figure is 21 71.56 percent; is that correct? 22 A. Yes. 23 Q. And again, compared to Cleveland 24 Electric, which we'll stay with for a moment here, 25 that's roughly a 12-and-a-half percent difference? 413 1 A. Roughly. 2 Q. Okay. If we look at the Electric Choice 3 sales switch rate for AEP Ohio in this exhibit, their 4 figure is 70.18 percent, correct? 5 A. Correct. 6 Q. And, again, compared to Cleveland 7 Electric Illuminating Company, that's almost a 8 14 percent difference, is that accurate? 9 A. Almost. 10 Q. Sir, let's look briefly at the data for 11 the other two FirstEnergy companies which is also on 12 the demonstrative, but on the next page of your hard 13 exhibit if you are looking at that. The Electric 14 Choice sales switch rate for the Ohio Edison Company, 15 according to this exhibit, is 78.98 percent; is that 16 correct? 17 A. Yes. 18 Q. And fair to say that that 78.98 percent 19 switch rate is higher than for AEP, Duke, and DP&L? 20 A. Yes. 21 Q. Finally, let's take a look at the Toledo 22 Edison Company. If we look at their Electric Choice 23 sales switch rate, which, according to this exhibit, 24 is 76.81 percent, that figure would also be higher 25 than the figures for Duke, DP&L, and AEP, correct? 414 1 A. Yes, it is. 2 Q. Okay. So fair to say, summing that up, 3 that Duke, DP&L, and AEP all have lower shopping 4 rates than each of the FirstEnergy companies? 5 A. Yes. At least through December 31, 2015. 6 Q. Okay. And assuming all else being equal, 7 that means line 10 revenue for the companies would be 8 lower for -- than for Duke, DP&L, and AEP. 9 A. If all else is equal. 10 Q. And, again, all else being equal, that 11 means the cost cap for the companies would be lower 12 for the companies than Duke, DP&L, and AEP? 13 A. If all else is equal. 14 Q. Mr. Donlon, let's focus momentarily here 15 on the "Residential Sales" column of this report. Do 16 you see that in about the middle of the figures that 17 are provided? 18 A. Yes. 19 Q. Okay. If you take a look at residential 20 sales for Cleveland Electric Illuminating Company, 21 the figure for Electric Choice sales switch rates is 22 71.21 percent; is that correct? 23 A. Did you say "Cleveland"? 24 Q. Yes, sir. 25 A. Yes. 415 1 Q. And I take it that means that 71.21 2 percent of the total megawatt-hours sold to 3 residential customers for CEI, or Cleveland Electric, 4 were provided by Electric Choice suppliers; is that 5 right? 6 THE WITNESS: Sorry, can you reread that? 7 (Record read.) 8 A. Again, caveating generation, yes. 9 Q. Okay. And the flip side of that is shown 10 on the line just above that figure, is it not, and 11 specifically the question is, that means that only 12 28.79 percent of the total megawatt-hours sold to 13 residential customers were provided by Cleveland 14 Electric under their Standard Service Offer; is that 15 right? 16 A. For generation, yes. 17 Q. And I appreciate that clarification. For 18 this line of questioning, can we assume when we are 19 talking about this, we are talking about generation? 20 A. That's fine. 21 Q. Okay. Thank you. 22 Let's take a look at AEP's residential 23 figure, if we could. According to the Exhibit 13 and 24 the demonstrative, that shows residential sales for 25 AEP Ohio. The figure for Electric Choice sales 416 1 switch rate is 32.88 percent; is that right? 2 A. Yes. 3 Q. And that means that only 32.88 percent of 4 the total megawatt-hours sold to residential 5 customers by AEP Ohio were provided by Electric 6 Choice suppliers, correct? 7 THE WITNESS: I'm sorry, I blanked on the 8 numbers that he said. I am sure they are right since 9 he is just reading this off, but... 10 (Record read.) 11 A. Yes. 12 Q. Okay. And, again, the flip-side, doing 13 the math, as shown on the chart in Exhibit 13, is 14 that 67.12 percent of the total megawatt-hours sold 15 to residential customers were provided by AEP Ohio 16 under its Standard Service Offer, correct? 17 A. That is correct. 18 Q. Let's turn briefly to the two other 19 FirstEnergy companies. If we take a look at the 20 column called "Residential Sales" for Ohio Edison, 21 the figure for Electric Choice sales switch rates is 22 65.17 percent; is that correct? 23 A. Yes. 24 Q. And, again, that means that 34.83 percent 25 of the total megawatt-hours sold to residential 417 1 customers by Ohio Edison were provided under its 2 Standard Service Offer, correct? 3 A. Yes. 4 Q. And if we take a look finally at the 5 column on the board for residential sales for Toledo 6 Edison, the figure for Electric Choice sales rates -- 7 switch rates is 65.57 percent? 8 A. Yes. 9 Q. And, again, by consequence, that means 10 that 34.43 percent of the total megawatt-hours sold 11 to residential customers were provided by Toledo 12 Edison under its Standard Service Offer, correct? 13 A. Yes. 14 Q. Do you know, Mr. Donlon, what the -- and 15 you can set that exhibit aside. I think we're done, 16 so we don't block our friends at the end of the table 17 anymore. 18 MR. GLADMAN: If it's okay, your Honor, 19 we would like to leave that up; we may have a few 20 others to look at. Thank you. 21 Q. Mr. Donlon, do you know what the Standard 22 Service Offer is for the FirstEnergy companies? 23 A. Not off the top of my head, no. 24 Q. Okay. Let's -- 25 MR. GLADMAN: May we approach, your 418 1 Honor? 2 EXAMINER BULGRIN: Sure. 3 MR. GLADMAN: For the record we are going 4 to mark as Company Exhibit 14, a document titled "A 5 Report by the Staff of the Public Utilities 6 Commission of Ohio, Ohio Utility Rate Survey, 7 December 1, 2015." 8 (EXHIBIT MARKED FOR IDENTIFICATION.) 9 Q. Mr. Donlon, do you have Company Exhibit 10 14 in front of you? 11 A. Yes. 12 Q. And is this a document you've seen 13 before? 14 A. Yes. 15 Q. And this is a document that was prepared 16 by your department? 17 A. As long as it was pulled off the website, 18 yes. 19 Q. And I will represent to you that it was. 20 MR. GLADMAN: And, accordingly, ask if we 21 could take administrative notice of this one? 22 EXAMINER BULGRIN: Yeah, for all these 23 exhibits, if you could provide us with the URL where 24 it's posted, that may be helpful. 25 MR. GLADMAN: Okay. 419 1 EXAMINER BULGRIN: Not right now. 2 MR. GLADMAN: Okay. We will provide 3 that. Thank you, your Honor. 4 Q. Mr. Donlon, if we can take a look at the 5 table at the top of the fourth page of this document, 6 which is titled "Ohio Energy Bills - Residential 7 Customers, 8 Major Ohio Cities, As of December 1, 8 2015." Do you see that? 9 A. Which one are you on? I'm sorry. 10 Q. It's the fourth physical page of the 11 document as of December 31. 12 A. I thought you said fourth table, I 13 apologize. Okay. 14 Q. If you look at the column "Per 15 kilowatt-hour" for the City of Cleveland which is in 16 Cleveland Electric's territory, would you agree that 17 the dollars per kilowatt-hour is .14 cents, 18 representing the average Cleveland Electric customer 19 rate for electric Standard Service Offer customers? 20 A. That is what it shows, yeah. 21 Q. Okay. And just hit a couple more here. 22 For the City of Toledo, same column, which is in 23 Toledo Edison's territory, would you agree that the 24 dollars per kilowatt-hour is also 14 cents; again 25 representing the average Toledo Edison customer rate 420 1 for electric Standard Service Offer customers? 2 A. Yes. 3 Q. And also then for the cities of Akron and 4 Youngstown, which are in Ohio Edison's territories, 5 would you agree the dollars per kilowatt-hour is also 6 .14, representing, again, the average Ohio Edison 7 customer rate for electric Standard Service Offer 8 customers? 9 THE WITNESS: Can you repeat that, 10 please. 11 MR. GLADMAN: Would you read that back. 12 (Record read.) 13 A. Yes. 14 Q. Okay. And finally, again, looking at the 15 column "Per kilowatt-hours" for the cities of Canton, 16 and Columbus which are in AEP's Ohio territory, would 17 you agree that the dollars per kilowatt-hour is also 18 .14, representing the average AEP customer rate for 19 electric Standard Service Offer customers? 20 A. Yes. 21 Q. Okay. You can put that one aside, thank 22 you. 23 Mr. Donlon, you testified yesterday that 24 staff had looked at EE acquisition rates as part of 25 its cost cap development process, but ultimately 421 1 decided not to use that metric; is that correct? 2 A. Yes. 3 Q. Okay. I would like to talk about that 4 decision just a little bit here. And some of this 5 may require you to do a little bit of basic math. I 6 don't know if you have an iPhone or something you can 7 calculate on. If not, we can provide one for you. 8 A. No. I left it over there so I don't get 9 distracted. 10 Q. Fair point. I try to turn mine 11 upside-down. 12 A. It will just keep buzzing. Took off my 13 smart watch too. 14 Q. I can relate to that. Why don't we just 15 do this so you have got it up there. 16 MR. GLADMAN: May I approach, your Honor? 17 EXAMINER BULGRIN: Yes. 18 MR. JONES: I would just make an 19 objection to this line of questioning since this 20 isn't the methodology that the staff ultimately chose 21 to pursue, so they went a different route, different 22 methodology, so this isn't relevant to the 23 proceedings. 24 MR. GLADMAN: Your Honor, this clearly 25 goes -- Mr. Donlon testified they considered all the 422 1 options in preparing the cost cap. This is one he 2 specifically called out as they considered and 3 rejected, and I would like to explore where this 4 would have gone if, in fact, they had considered this 5 method and implemented it. I think that's fair. 6 EXAMINER BULGRIN: Okay. I am going to 7 give you a little leeway. I don't know that we need 8 to have him run the numbers, though, if you just 9 asked it subject to check. 10 MR. GLADMAN: Okay. Fair enough. 11 EXAMINER BULGRIN: It will speed things 12 up. 13 MR. GLADMAN: Happy to do that. 14 THE WITNESS: Do you want your phone 15 back? Sorry. 16 MR. GLADMAN: Thanks. 17 THE WITNESS: Yep. 18 Q. (By Mr. Gladman) Mr. Donlon, under 19 staff's proposed 3 percent cost cap, the companies 20 would be permitted to spend $80,099,551 on energy 21 efficiency and peak-demand reduction programs in 2017 22 as set forth on page 5, lines 92 to 95 of your 23 testimony; is that right? 24 A. That is correct. 25 Q. Okay. And you understand from the 423 1 companies' filings in this case that their statutory 2 energy efficiency benchmark for 2017 is 535.23 3 gigawatt-hours? 4 A. That sounds correct based on forecasted 5 energy sales. 6 Q. Okay. And I'll represent to you that 7 that figure is reflected in Company Exhibit 1, the 8 Denise Mullins amended direct testimony which was 9 admitted without objection, I believe. 10 And so, again, doing the math 535.23 11 gigawatt-hours is 535,230,000 kilowatt hours? Is 12 that -- I will represent that to you. Does that 13 sound right? 14 A. I didn't realize there was a question. 15 I'm not that good at math. I will, subject to check. 16 Q. Okay. Fair enough. And that's 17 understood. Yeah, the decimal points can get tricky 18 when you are doing those calculations. 19 So if we take the cost cap amount of 20 80,099,551 and divide by the 2017 benchmark of 21 535,230,000 kilowatt-hours, that gives us 14.9 cents 22 per kilowatt-hour acquisition costs for the 23 companies; would you agree with that, subject to 24 check? 25 A. Subject to check. 424 1 Q. Okay. In other words, with the revised 2 program portfolio plans being capped, under your 3 proposal, at $80.1 million, and with the 2017 4 statutory benchmark of 535.23 gigawatt-hours, the 5 companies would need to implement programs under 6 their plans in 2017 that save energy at a cost of 7 about 15 cents per kilowatt-hour in order to meet 8 those benchmarks; is that right? 9 A. Subject to check. 10 MR. GLADMAN: May we approach again, your 11 Honor? 12 EXAMINER BULGRIN: Sure. 13 Q. And, Mr. Donlon, is it fair to say that 14 the demonstrative we have put up represents that 15 mathematical calculation that we just walked through? 16 A. It appears to. 17 Q. Okay. And that acquisition cost would 18 not consider the impact of potential shared savings 19 the companies may earn under staff's cost cap 20 proposal; is that fair to say? 21 THE WITNESS: Can you reread that? 22 (Record read.) 23 A. I guess that depends on how you view it 24 and calculate it. 25 Q. Sure. Let me ask it a little bit 425 1 different way. My understanding of your cost cap 2 proposal is that program costs, plus pretax shared 3 savings, less the PJM offset, cannot exceed 4 3 percent. So my question is, this metric that we 5 put up here does not consider the potential impact of 6 any shared savings which would impact the 7 calculation; is that fair to say? 8 A. And maybe this is just semantics, but I 9 guess it depends on how you calculate it. So how you 10 think about it, it could, it couldn't, depending on 11 how you really want to think about that framework. 12 Q. Okay. So -- let me try it this way. 13 Under your cost cap proposal, the companies have 14 approximately $80.1 million to spend on program costs 15 and pretax shared savings. Let's set-aside the PJM 16 offset for a moment. Is that accurate? 17 A. Yes. 18 Q. So the 80.1 that's reflected in this to 19 spend on actual EE programs assumes no shared savings 20 in that metric; is that right? 21 A. If that's what the company is proposing, 22 then I will accept that as the answer, but that's not 23 how staff is viewing it. So I think that gets back 24 to the "depends on how you want to slice and dice the 25 number." 426 1 Q. Okay. Fair enough. So let me ask one 2 more to try to sum up and I will move off. I think 3 we are saying the same thing, but maybe a little bit 4 differently. 5 Fair to say if you consider program costs 6 and shared savings, the total cap that you guys have 7 proposed is $80.1 million, however you slice it. 8 A. Uh-huh. 9 Q. Is that a "yes"? 10 A. Oh, sorry. Also including the PJM 11 offset, yes. 12 Q. I appreciate that clarification. 13 Do you know how that approximately 14 15-cent spending cap per kilowatt-hour saved under 15 staff's proposal compares to other Ohio utilities? 16 A. Off the top of my head, I do not. 17 Q. Is that something staff considered when 18 contemplating and considering the acquisition cost 19 metric? 20 A. Yeah. As I said yesterday, staff 21 considered many different proposals. This was one we 22 discussed. We decided not to go with this, and I 23 don't remember exactly all of the computations that 24 went into it, so. 25 Q. Okay. Fair enough. Let's take a look at 427 1 AEP. Under staff's 4 percent cost cap, fair to say 2 that AEP is permitted to spend approximately 3 $110,310,902 on EE and PDR programs in 2017? 4 MR. JONES: I would object, your Honor. 5 That's a different plan. There's different -- 6 different budgets involved with that -- that case. 7 It's not -- it's not the same as FirstEnergy. 8 EXAMINER BULGRIN: A little leeway I'll 9 grant you. 10 MR. GLADMAN: Let me just say where I am 11 going. I want to do the same calculation for each of 12 the others and then I will move off of this. 13 EXAMINER BULGRIN: That would be good. 14 MR. GLADMAN: Thank you. 15 Q. Do you know whether or not -- and I can 16 show you the document from the AEP order if that 17 would help refresh your recollection about what the 18 cost cap is for AEP. Would that be useful? 19 A. I know the cost cap is 110 million. The 20 rest of it, you know, where the variance is, I'll 21 believe that subject to check. 22 Q. So subject to check. And also accurate 23 to say that AEP's statutory energy efficiency 24 benchmark for 2017 is approximately 431,700,000 25 kilowatt-hours? 428 1 A. Subject to check. I don't have that off 2 the top of my head. 3 Q. Fair enough. 4 MR. GLADMAN: Okay. So may we approach 5 again? 6 EXAMINER BULGRIN: Sure. 7 MR. GLADMAN: Thank you, your Honor. 8 MR. HEALEY: Your Honor, I am going to 9 object to this, too, as irrelevant. We are talking 10 about a comparison of a metric that staff has already 11 stated they did not use and now we are talking about 12 that metric as it applies to another utility. We are 13 getting really far outside the realm of what's going 14 on in this proceeding here. 15 MR. JONES: Your Honor. 16 MR. GLADMAN: You have already ruled on 17 this objection. I have already made this argument 18 that Mr. Donlon has testified one of his goals in 19 implementing this cost cap was to ensure consistency 20 across the utilities. We are entitled to explore all 21 the options he considered. I will do so briefly. 22 MR. JONES: I will object. You gave a 23 little leeway, now we are trying to bust down the 24 door and go all the way down the road. 25 MR. GLADMAN: I already told your Honor 429 1 what I was going to do. 2 EXAMINER BULGRIN: Slightly a little more 3 leeway, but let's wrap this up. 4 MR. GLADMAN: Thank you, your Honor. 5 Q. And if we take the cost cap amount for 6 AEP of $110,310,902 and divide by their 2017 7 benchmark of 431,700,000 kilowatt-hours, that would 8 give us that same metric, which here is 25.25 cents 9 per kilowatt-hour; is that correct? 10 A. Subject to check your math. 11 Q. Okay. And finally, let's take a look at 12 DP&L. Under staff's 4 percent cost cap, DP&L is 13 permitted to spend approximately $33,022,141 on 14 EE/PDR programs in 2017? 15 MR. HEALEY: I would object to this, your 16 Honor. That case has not been approved, so we are 17 talking about a proposal in the other case; not an 18 actual order. 19 MR. JONES: I object too. 20 EXAMINER BULGRIN: I'll sustain on this. 21 MR. GLADMAN: Thank you, your Honor. 22 Q. Fair to say then, Mr. Donlon, that staff 23 is recommending that the FirstEnergy companies spend 24 no more than 15 cents per kilowatt-hour saved while, 25 at the same time, permitting AEP to spend 25.5 cents 430 1 per kilowatt-hour saved? 2 MR. GLADMAN: Could we approach with a 3 comparison to make sure he has got the numbers in 4 front of him? 5 MR. JONES: I would object, again, your 6 Honor to the comparison being made in this 7 proceeding. 8 Q. Does that, Mr. Donlon, fairly summarize 9 the calculation we just walked through? 10 EXAMINER BULGRIN: I will overrule your 11 objection. You can answer this last question. 12 THE WITNESS: Which company am I supposed 13 to answer because he asked two? 14 EXAMINER BULGRIN: Can you rephrase your 15 question? 16 MR. GLADMAN: Sure. 17 Q. Is this a demonstrative you are looking 18 at, which reflects the acquisition cost of the 19 FirstEnergy companies of 14.96 cents per 20 kilowatt-hour, and AEP Ohio of 25.55 cents per 21 kilowatt-hour, accurately reflect the calculations we 22 just walked through? 23 A. While staff does not agree that it's 24 relevant, it is a representation of the numbers you 25 just calculated. 431 1 Q. Okay. Out of curiosity -- and you can 2 take that down so we don't block the end of the 3 table -- how much would the companies be permitted to 4 spend under a 4 percent cap to achieve their 535 5 gigawatt-hour statutory benchmark? 6 MR. JONES: I would object again, your 7 Honor, not relevant. That's not staff's proposal in 8 this proceeding. It's 3 percent; not 4 percent. 9 MR. GLADMAN: Again, I am exploring the 10 inconsistency. They are using 4 percent for others. 11 We are just doing a very quick comparison of what the 12 math would be. 13 EXAMINER BULGRIN: Very quick comparison. 14 MR. GLADMAN: Thank you, your Honor. 15 Q. Let me ask this again. Subject to check, 16 if we use the FERC line 10 information included on 17 page 5, lines 92 through 95 of your testimony, which 18 is $2,669,985,047, and multiply that times 4 percent, 19 is it accurate to say that you would have a 4 percent 20 cost cap of $106,799,401? 21 A. That sounds roughly accurate. 22 Q. And if I divide that amount by the 23 statutory benchmark of 535,230,000, I get an 24 acquisition cost of 19.95 cents per kilowatt-hour, 25 subject to check? 432 1 A. Subject to check. 2 MR. GLADMAN: Your Honor, it might be 3 good for maybe just a 5-minute break. Is that okay? 4 EXAMINER BULGRIN: Let's take 5 minutes. 5 (Recess taken.) 6 EXAMINER BULGRIN: Let's go back on the 7 record. 8 MR. GLADMAN: Thank you, your Honor. 9 Q. Mr. Donlon, we discussed yesterday the 10 fact that the statutory requirements for utilities' 11 EE/PDR obligations in this state stem from Revised 12 Code 4928.66. Do you recall that conversation? 13 A. Yes. 14 Q. And, again, 4928.66 requires an EDU to 15 implement energy efficiency and peak-demand reduction 16 programs that achieve certain statutory benchmarks 17 for any given year, correct? 18 A. Correct. 19 Q. Also fair to say that 4928.66, itself, 20 says nothing about a specific cost cap on energy 21 efficiency, correct? 22 A. As I said yesterday, it doesn't say 23 anything specifically for or against the cost cap. 24 Q. Okay. And same question with respect to 25 Administrative Code provision 4901:1-3-904 that we 433 1 discussed yesterday. Is there anything expressly 2 authorizing cost cap and energy efficiency in that 3 section? 4 MR. JONES: Object, your Honor. This has 5 already been asked and answered yesterday. 6 EXAMINER BULGRIN: Sustained. 7 Q. Mr. Donlon, would you agree that staff's 8 cost cap proposal would add cost requirements that 9 are not currently part of Ohio law? 10 MR. JONES: Objection, your Honor. 11 Calling for a legal opinion, legal conclusion. I 12 think this question was asked yesterday, too. 13 EXAMINER BULGRIN: Sustained. 14 Q. Okay. Sir, are you familiar with Ohio 15 Revised Code 111.15 relating to PUCO rulemaking 16 provisions? 17 A. Could you provide that? 18 Q. Sure, I can. 19 MR. GLADMAN: Your Honor, if we could 20 mark as Company Exhibit 15, Revised Code 111.15. 21 MR. JONES: And object, your Honor. 22 There is no foundation as to how we are getting to 23 this statute for him to discuss it. 24 MR. GLADMAN: I am about to lay that 25 foundation by asking. 434 1 EXAMINER BULGRIN: Objection. Very 2 little leeway on this. 3 MR. GLADMAN: Okay. 4 EXAMINER BULGRIN: Is this statute for 5 the actual rulemaking? 6 MR. GLADMAN: Yes. 7 EXAMINER BULGRIN: Okay. 8 (EXHIBIT MARKED FOR IDENTIFICATION.) 9 Q. (By Mr. Gladman) Mr. Donlon, do you have 10 what we have marked as Company Exhibit 15 in front of 11 you? 12 A. I do. 13 Q. And is that a provision that you're 14 familiar with? 15 MR. JONES: I would object, your Honor. 16 This is beyond the scope of his testimony. It's not 17 relevant to the proceeding. 18 MR. GLADMAN: The questions are about how 19 this cost cap is being implemented. It is very 20 relevant to this proceeding. 21 EXAMINER BULGRIN: I am going to sustain 22 the objection. 23 MR. GLADMAN: Okay. 24 Q. Mr. Donlon, is it true that staff has 25 recommended certain proposed changes to the Ohio 435 1 Administrative Code provisions relating to rules on 2 energy efficiency programs? 3 MR. JONES: Objection, your Honor. 4 Relevance. 5 MR. GLADMAN: I am going to ask him 6 whether or not they have proposed a rule relating to 7 the cost cap. 8 MR. HEALEY: I make the same objection, 9 your Honor. This is irrelevant. This is not a 10 rulemaking proceeding. 11 EXAMINER BULGRIN: Sustained. 12 Q. (By Mr. Gladman) Mr. Donlon, are you 13 aware of any other Commission-administered programs 14 that have a cost cap implemented by statute or 15 Revised Code or Administrative Code provision? 16 MR. JONES: Objection, that was asked and 17 answered yesterday. 18 MR. GLADMAN: Not asked and answered that 19 question. 20 MR. JONES: He asked him about other 21 states yesterday, your Honor. 22 MR. GLADMAN: I am asking about Ohio. 23 EXAMINER BULGRIN: How much more? 24 MR. JONES: The Commissions; didn't you 25 say other Commissions? 436 1 EXAMINER BULGRIN: Excuse me. How much 2 more do we have on this? 3 MR. GLADMAN: On this particular topic? 4 Just a very few questions. There's a -- 5 EXAMINER BULGRIN: Okay. I will allow 6 you one more question. What was the pending 7 question? I'm sorry. 8 MR. GLADMAN: Can I ask a different one 9 if I get one? 10 EXAMINER BULGRIN: Yes. 11 Q. (By Mr. Gladman) Mr. Donlon, are you 12 aware that there are Revised Code and Administrative 13 Code provisions implementing a cost cap for Ohio 14 EDUs' alternative energy resource requirements? 15 A. I am. 16 Q. Let's turn to your objection to the 17 request in the stipulation that the Commission 18 approve lowering the shared savings trigger for the 19 companies in 2017. Fair to say that your 20 understanding is that the stipulation filed in this 21 case provides for the reduction of the companies' 22 shared savings trigger for 2017 only? 23 A. Yes. 24 Q. And so it does not recommend in the 25 stipulation any changes to the triggers for 2018 or 437 1 '19? 2 A. Correct. 3 Q. Fair to say that the companies first 4 filed their proposed energy efficiency and 5 peak-demand reduction plans -- peak-demand reduction 6 plans with the Commission in April of 2016? 7 A. Subject to check. I am bad with dates. 8 Q. Fair enough. And that means that the 9 companies filed their plans over nine months ago; is 10 that correct? 11 A. Subject to check. 12 Q. And fair to say that staff reviewed those 13 proposed plans shortly after they were filed with the 14 Commission? 15 A. I -- 16 MR. JONES: I would object as to the 17 relevance. 18 MR. GLADMAN: Your Honor, Company Witness 19 Miller was cross-examined on the docket on the delays 20 that have occurred in this case, and I want to 21 briefly go through some of that with Mr. Donlon. 22 MR. JONES: Your Honor, Mr. Donlon's 23 testimony doesn't speak to that. 24 MR. GLADMAN: If we can have a 25 stipulation that the docket accurately reflects that 438 1 staff moved for a continuance in January of 2016, 2 that staff moved for -- 3 EXAMINER BULGRIN: I think the record is 4 what it is. I think you can look at the docket card 5 and make that argument, so let's move on. 6 MR. GLADMAN: Okay. I appreciate that, 7 your Honor. Thank you. 8 Q. (By Mr. Gladman) Mr. Donlon, is it fair 9 to say the companies may elect to wait to implement 10 some or all of their programs until after Commission 11 approval? 12 A. The company has that choice. I know 13 other companies have implemented or continued to run 14 their programs while not having an order, but that's 15 the companies' prerogative. 16 Q. Okay. Do you have any opinion, yourself, 17 on whether that's a reasonable or unreasonable 18 choice? 19 MR. JONES: Objection, your Honor. 20 EXAMINER BULGRIN: I'll overrule. You 21 can answer that. 22 A. Speaking for staff, I think that's the 23 companies' decision, not staff's. 24 Q. Once the programs are ultimately 25 approved, do you understand there is a ramp-up period 439 1 before the launch of many energy efficiency programs? 2 A. Considering that the company suspended 3 their program under Senate Bill 2 -- 1 -- 310, sorry, 4 that seems reasonable. 5 Q. Would you agree that the delay in getting 6 the Commission order and that ramp-up period would 7 make it more difficult for the companies to achieve 8 their statutory benchmarks in 2017? 9 A. If the companies' choice is to wait until 10 the final order to do that, which is again the 11 companies' choice, and based on the companies' 12 decision to suspend their program for two years, that 13 seems plausible. 14 MR. GLADMAN: Your Honor, I think I am 15 just about done. Could I have just one quick moment 16 to confer with my colleagues and wrap up? 17 EXAMINER BULGRIN: Sure. 18 MR. GLADMAN: Thank you. 19 (Discussion off the record.) 20 MR. GLADMAN: Your Honor, subject to 21 recross and admission of Company Exhibits 11, 12, 13, 22 and 14, we don't have any further questions of 23 Mr. Donlon at this time, and I thank you for your 24 time, sir. 25 THE WITNESS: Thank you. 440 1 EXAMINER BULGRIN: Mr. Kelter. 2 MR. KELTER: Can you give me a couple of 3 minutes just to go through my cross to see if I can 4 eliminate some more of it based on what we did this 5 morning? 6 EXAMINER BULGRIN: Do you want another 5 7 minutes? 8 MR. KELTER: Yeah. That would be great. 9 EXAMINER BULGRIN: Okay. 5-minute break. 10 We will be back at 10:30. 11 (Recess taken.) 12 EXAMINER BULGRIN: Let's go back on the 13 record. 14 Mr. Kelter. 15 MR. KELTER: We're back on the record? 16 EXAMINER BULRGRIN: We are back on the 17 record. 18 - - - 19 CROSS-EXAMINATION 20 By Mr. Kelter: 21 Q. Good morning, Mr. Donlon. My name is Rob 22 Kelter. I represent the Environmental Law & Policy 23 Center, and I've got a few questions for you today. 24 A. Good morning. 25 Q. At this point, is it fair to say that 441 1 you've familiarized yourself with FirstEnergy's 2 energy efficiency programs? 3 A. The individual programs, at a high level 4 I have knowledge on, but certainly not the intimate 5 knowledge of each program. 6 Q. You're aware that FirstEnergy has a 7 collaborative process, aren't you? 8 A. Yes. 9 Q. And the collaborative process meets 10 quarterly at the Commission, doesn't it? 11 A. Where and how often, I'm not -- I 12 don't -- I haven't attended them, but my staff does. 13 Q. Has staff participated in that process? 14 A. Yes. 15 Q. And is it fair to say that part of the 16 purpose of the collaborative is for staff and other 17 intervenors to have input on the efficiency programs? 18 A. That is my understanding of it, yes. 19 Q. Do you recall when FirstEnergy first 20 submitted its draft plan to the collaborative? 21 A. I do not. 22 Q. Would you agree that it's several months 23 before it was actually filed with the Commission? 24 MR. JONES: Object, your Honor. He 25 doesn't have knowledge. 442 1 EXAMINER BULGRIN: You can answer it if 2 you know. 3 A. Subject to -- subject to check, I'm 4 willing to accept that. 5 Q. And do you recall when FirstEnergy first 6 filed its efficiency plan with the Commission? 7 A. Again, I think FirstEnergy's Counsel said 8 it was April or May. I am really bad with dates, so. 9 I have got a lot of cases that come through my 10 department. 11 Q. So subject to check, April? 12 A. I am willing to accept that. 13 Q. Can you name any proposed programs from 14 that April 15 plan that staff suggested FirstEnergy 15 modify? 16 A. Are you speaking of the individual 17 programs? 18 Q. Yeah. 19 A. Staff only takes -- staff is agnostic to 20 the individual programs other than specific programs 21 that shouldn't count for shared savings. So, to my 22 knowledge, we haven't really taken a stance, at least 23 in this case, maybe in some of the collaboratives we 24 might have, but on the individual programs. 25 Q. Back in April, did staff ever express 443 1 concerns about the cost of the overall plan? 2 A. Not being in those meetings, I don't know 3 if staff did address that or not. 4 Q. When did staff first express concerns 5 about the cost of the plan? 6 MR. HEALEY: I would object, your Honor, 7 to the extent this could potentially call for 8 confidential settlement negotiations. 9 MR. JONES: I would join the objection. 10 MR. KELTER: Your Honor, this is just the 11 date; none of the substance of the negotiations. 12 MR. HEALEY: Well, your Honor -- 13 MR. KELTER: As to the times. 14 MS. FLEISHER: Your Honor, the 15 collaboratives are not generally a confidential 16 forum. I don't believe it's anyone's understanding 17 what goes on there is confidential. 18 EXAMINER BULGRIN: Let's go off the 19 record here for a minute. 20 (Discussion off the record.) 21 EXAMINER BULGRIN: Let's go back on the 22 record. 23 MR. KELTER: Actually, can I have the 24 question reread, please. 25 (Record read.) 444 1 EXAMINER BULGRIN: You can answer if you 2 know. 3 A. So I'm fuzzy on what I can say about 4 settlement and what I can't. And individually in the 5 collaboratives I'm not sure. Staff had a strong 6 stance for a one-year program that was met through 7 settlement talks with very strong resistance. Staff 8 went back and tried to figure out a different way to 9 address our concerns. 10 So if you are talking about concerns with 11 cost, I think it was early on in the process because 12 of how we did that. If you are taking about 13 specifically the cost cap, that was later because we 14 adjusted where we were coming from due to settlement 15 talks. 16 MR. KELTER: Well, your Honor, the 17 witness just opened the door on discussing some of 18 the substance of those talks. I think it's fair that 19 we ask, given what he just said about the staff 20 proposing a one-year plan, that he tell us when staff 21 first proposed the three-year plan -- I'm sorry, the 22 3 percent cost cap. 23 MR. JONES: Your Honor, he did not open 24 the door. He just tried to explain generally how 25 things developed over the months. 445 1 MR. KELTER: He did. He just said in 2 negotiations staff proposed a one-year plan. 3 EXAMINER BULGRIN: I'll allow you to 4 answer if you know when the cost cap was first 5 proposed by staff. 6 THE WITNESS: I do not. 7 MR. HEALEY: I would just like to object 8 for the record, your Honor. I still believe this is 9 a confidential settlement communication just so we 10 have that on the record. 11 MR. JONES: I would object, too, your 12 Honor. 13 EXAMINER BULGRIN: Those objections are 14 duly noted. 15 And, I'm sorry, your answer? 16 THE WITNESS: Is I am really bad about 17 dates and I have no idea what the date was, but I'm 18 sure -- it was on a settlement call, and I'm sure 19 that one of the parties knows that date. I don't 20 know it. 21 Q. (By Mr. Kelter) Generally speaking, do 22 you know the month? 23 A. Honestly, no. 24 Q. Do you know if it was -- do you know the 25 season of the year? 446 1 EXAMINER BULGRIN: Okay. 2 MR. JONES: Objection, your Honor. 3 EXAMINER BULGRIN: Sustained. 4 MR. KELTER: Your Honor, I would like to 5 make an offer of proof here. The witness was 6 involved in these discussions. He just said that 7 staff had offered, in negotiations, that it wanted a 8 one-year plan. It's incredible to believe that he 9 has no idea when they proposed a 3 percent cap. 10 MR. HEALEY: Your Honor, I move to strike 11 Mr. Kelter's comments as irrelevant and testimony of 12 Counsel. 13 EXAMINER BULGRIN: I'll grant that. 14 Let's move on. 15 Q. (By Mr. Kelter) Let's turn to page 5 of 16 your amended testimony. Are you there? 17 A. Yes. 18 Q. At page 5, line 105 of your amended 19 testimony, you state "the costs have been escalating 20 to the point that the rider in which the energy 21 efficiency costs are collected has become one of the 22 highest riders on residential customers' bills," 23 correct? 24 A. Yes. 25 Q. How much is that rider for the average 447 1 residential customer? 2 A. For -- as of October of 2016, depending 3 on which company you're talking about -- 4 Q. First -- 5 A. There's three FirstEnergy companies. So 6 in -- one is roughly just under, as of that date, for 7 a 750-kilowatt-hour customer, it was roughly a 8 buck-98 up to, I think the highest one of the three 9 companies was 2.90 something. 10 So, again, it's the -- for two of the 11 companies, and I said which ones yesterday and now I 12 am blanking on which ones they were, two of the 13 companies it was the fourth highest out of 16 riders, 14 and the third it was the fifth highest out of 16 15 riders as of October of '16. 16 Q. Do you know what percentage of the 17 average customer's bill that rider would represent? 18 A. No, I don't. 19 Q. And are you aware of any other riders on 20 the customer bill that actually produces savings that 21 can lower the customer's bill? 22 A. I think that question implies also that 23 energy efficiency does so, not addressing that 24 assumption -- 25 Q. Let's address that assumption. Do you 448 1 believe that energy efficiency has the potential to 2 save customers money on their bill? 3 A. That's -- it has the potential, yes. 4 Q. Do you believe that it does save some 5 customers money on their bill? 6 A. Some customers, yes. 7 Q. Now, I will go back to my original 8 question. Are you aware of any other riders that -- 9 that have the potential to reduce customers' bills? 10 A. There are other riders that have the 11 potential to reduce other -- or some customers' 12 bills, yes, other than this one. 13 Q. Can you tell us which ones those are? 14 A. I don't have the exact -- because of all 15 the different EDUs have different names for their 16 riders and put costs in different items, but economic 17 development is one that can reduce costs for some 18 than others. Universal Service Fund is one that 19 reduces costs for some. So those are two off the top 20 of my head I can think do. 21 Q. So I think you acknowledged that -- well, 22 strike that. 23 Would you agree that participants in the 24 programs save money on their bills? 25 A. Energy e-- customers that participate in 449 1 the energy efficiency rebates and programs, yes. 2 Q. And do you know an average of how much? 3 A. I do not. 4 Q. And do you know how many FirstEnergy 5 customers are projected to be participate -- 6 participants in FirstEnergy's revised plan, 7 participants in the programs under FirstEnergy's 8 revised plan? 9 A. Off the top of my head, I do not. 10 Q. So -- well, do you have any projections 11 of how many fewer customers might take advantage of 12 the discount and rebates under the 3 percent cap 13 compared to FirstEnergy's revised plan? 14 A. Staff does not believe there is a link 15 between the -- that there should be a link between 16 the two. 17 Q. And do you believe that nonparticipants 18 benefit from the plan as well as participants? 19 A. I think that's very debatable. 20 MR. KELTER: Your Honor, I would like to 21 show the witness a letter from the Commission that 22 addresses this issue, if I could approach. 23 EXAMINER BULGRIN: Sure. 24 MR. KELTER: This will be marked as ELPC 25 Exhibit 1. 450 1 EXAMINER BULGRIN: Okay. It will be so 2 marked. 3 (EXHIBIT MARKED FOR IDENTIFICATION.) 4 Q. Mr. Donlon, do you have before you a 5 letter from the PUCO to the Ohio legislature Study 6 Committee dated February 26, 2015? 7 A. I do. 8 Q. Are you familiar with this letter? 9 A. I am. 10 Q. So you don't have any doubt of its 11 authenticity? 12 A. I do not. 13 Q. Can you turn to page 2 and, just for 14 context, can you please read the first sentence of 15 the letter? 16 A. "The following data and information has 17 been compiled by the Public Utilities Commission of 18 Ohio (PUCO) in order to respond to questions posed by 19 the Energy" Study -- "Energy Mandate Study Committee 20 (Study Committee) on November 26, 2014." 21 Q. And did you -- did you participate in the 22 preparation of this? 23 A. I did. 24 Q. Okay. Could you please turn to page 12 25 and you see there is a heading "Market price 451 1 suppression"? 2 A. Yes. 3 Q. And can you please just review the first 4 two paragraphs? 5 A. I have. 6 Q. Okay. Are you ready for a question? 7 A. Yes. 8 Q. Now, if you go down a few lines -- well, 9 it says -- the second paragraph says, "The PUCO 10 forecasted how an overall 1 percent reduction in 11 demand affects wholesales pricing," correct? 12 A. Yes. 13 Q. And then it says that the PUCO estimates 14 a per megawatt-hour market price decrease from $52.71 15 to $49.87 per megawatt-hour, correct? 16 A. Yes. 17 Q. And that this results in a 5.7 percent 18 price reduction for customers, correct? 19 A. No. It says in the "wholesale market," 20 but it doesn't necessarily mean that it gets back to 21 residential customers. 22 Q. 5.7 percent reduction for the wholesale 23 market. Did you do any analysis of what wholesale 24 price suppression benefits might be from 25 FirstEnergy's programs in its revised plan? 452 1 A. Can you expand on what you mean by that? 2 I'm sorry. I want to make sure I get the -- 3 Q. Sure. Well, FirstEnergy -- I think we've 4 established that this letter says there's some 5 wholesale market price suppression when you reduce 6 demand. Would you agree with that? 7 A. On the wholesale level. 8 Q. Yes. So what I am asking is FirstEnergy 9 submitted its revised energy efficiency plan, and I 10 am asking if staff did any analysis on what the 11 wholesale market price suppression would be from that 12 revised plan? 13 A. We did not. 14 Q. Okay. And did you analyze how the 15 wholesale price suppression might be affected by the 16 3 percent cap? 17 A. We did not. 18 Q. This next question may have been asked, I 19 don't think it was asked the way I am going to ask 20 it, but it's hard to keep it all straight at this 21 point. Would you agree that it's possible 22 FirstEnergy will not be able to achieve the same 23 level of savings under a 3 percent cap as it would 24 under the revised plan? 25 A. Which savings? Are you talking about 453 1 shared savings? Energy efficiency savings? 2 Q. Energy efficiency savings. 3 A. I want to make sure we are all on the 4 same page with "savings." 5 Q. And the question is, is it possible that 6 they wouldn't be able to achieve the same level of 7 savings? 8 A. It's possible. 9 Q. FirstEnergy and alternative suppliers 10 purchase electricity for customers on the wholesale 11 market, correct? 12 A. While the energy is purchased on the 13 wholesale market, there is not a direct correlation 14 to consumers and residentials get the wholesale 15 market price, but, yes, purchase on the wholesale. 16 Q. Okay. And would you agree that the less 17 energy customers use, the less energy FirstEnergy and 18 the competitive suppliers have to purchase on the 19 wholesale market? 20 A. That would be a lineal deduction. 21 Q. So that would be a yes, you would agree? 22 A. For the most part. 23 Q. Would you agree that FirstEnergy's 24 efficiency programs help customers use less energy? 25 A. For the participating customers, yes. 454 1 Q. That overall in the entire pool of 2 customers, if the participants use less energy, the 3 whole pool uses less energy; is that correct? 4 MR. JONES: Objection, asked and 5 answered. 6 MR. KELTER: That wasn't asked and 7 answered. 8 EXAMINER BULGRIN: I will overrule. You 9 can answer if you know. 10 MR. HEALEY: I will object as incomplete 11 hypothetical, as well, your Honor. 12 MR. KELTER: I don't understand the 13 objection. 14 MR. HEALEY: Is he creating some 15 hypothetical world where we are talking about? 16 EXAMINER BULRGRIN: I will overrule. You 17 can ask. 18 THE WITNESS: Could you repeat that, 19 please. 20 (Record read.) 21 A. So if the question is asking if the 22 energy efficiency portfolios lower the overall demand 23 of FirstEnergy, then yes. 24 Q. Would you agree that energy efficiency 25 reduces usage at peak times? 455 1 A. Reviewing the information I've seen, that 2 is accurate. 3 Q. Would you agree that energy efficiency 4 benefits nonparticipants by reducing the amount of 5 energy FirstEnergy purchases on the market? 6 A. No, I would not. 7 Q. Why is that? 8 A. FirstEnergy is -- doesn't actually 9 purchase -- 10 Q. Well, somebody purchases for FirstEnergy, 11 the auction. 12 A. For the wholesale market there is a -- 13 there is the potential for a price suppression as our 14 forecast laid out. 15 Q. Would you agree that if the Commission 16 imposes a 3 percent cap, that FirstEnergy may need to 17 purchase additional electricity to meet demand beyond 18 what it would purchase under the revised plan? 19 MR. JONES: Objection, speculation, what 20 they may do. 21 EXAMINER BULRGRIN: I'll overrule. You 22 can answer if you know. 23 A. Clarifying, again, FirstEnergy, but in 24 the auction or the CRES providers in the FirstEnergy 25 territory -- actually, now I blanked on the 456 1 question. 2 EXAMINER BULRGRIN: Could you maybe reask 3 it? 4 THE WITNESS: Or just reread it, I'm 5 sorry. 6 (Record read.) 7 A. Again, with the clarification on who is 8 purchasing it, I think there is always a possibility, 9 but staff does not believe it is a likely 10 possibility, particularly in this portfolio plan. 11 Q. Does staff believe that programs produce 12 long-term savings and provide added value over 13 programs that produce short-term savings? 14 A. Staff, in this case, is not taking a 15 stance on the individual programs. 16 Q. That wasn't my question. I'm asking, in 17 general, do you believe that energy efficiency 18 programs that produce long-term savings provide value 19 over programs that produce short-term savings? 20 A. Staff is not taking an opinion on that at 21 this time. 22 Q. Do you have an opinion on that? You said 23 staff is not taking an opinion, so I want to clarify 24 do you personally -- 25 EXAMINER BULRGRIN: I think that's 457 1 enough. 2 MR. JONES: Objection. 3 EXAMINER BULRGRIN: That's enough. Let's 4 move on. 5 Q. All right. Let's change to page 7, line 6 122 of your testimony. Is that right? I'm sorry. 7 That's not right. Give me one second here. Give me 8 a second. I have got a bunch of questions about the 9 programs that I am not going to ask because you've 10 said that -- that staff is not taking a position on 11 any of the programs, correct? So I am going to try 12 to save us some time, save some objections. 13 EXAMINER BULRGRIN: We appreciate that. 14 MR. KELTER: Just give me one minute. 15 Q. So given your previous answers on the 16 programs, is it fair to say that staff has not made 17 any recommendations regarding what programs 18 FirstEnergy should modify in order to meet the 19 3 percent cap? 20 MR. JONES: Objection, asked and 21 answered. 22 EXAMINER BULRGRIN: I'll let him answer. 23 MR. HEALEY: Objection, your Honor, to it 24 also assumes facts not in evidence. It assumes there 25 must be modifications to comply with the cap which is 458 1 not in the record. 2 MR. KELTER: I'll clarify that, your 3 Honor. 4 EXAMINER BULRGRIN: Thank you. 5 Q. (By Mr. Kelter) If -- if the company 6 needs to make modifications -- actually, strike that. 7 Does staff acknowledge that the company 8 might have to make some modifications to the plan in 9 order to meet the 3 percent cost cap? 10 A. Might? 11 Q. Yeah. 12 A. They may. 13 Q. And has staff done any projections 14 regarding what programs it believes FirstEnergy 15 should modify in order to meet the cap? 16 A. So staff's opinion is the company should 17 manage the program as it sees fit. Staff's role, as 18 the regulatory body, is putting parameters around, a 19 guardrail, in auditing for prudency and that that 20 work was done so this is -- staff wouldn't get 21 into -- doesn't believe they should micromanage to 22 that level for the company, but we are putting up the 23 guardrails. 24 Q. So is it fair to characterize that last 25 answer is a "no," with the qualifications you just 459 1 gave? Does staff -- 2 A. Can you repeat the question? I'm sorry. 3 Just to make sure I do have it. Or reread it. 4 Q. I believe the question is, has staff done 5 any projections regarding what programs FirstEnergy 6 should modify in order to meet the cap? 7 A. No. 8 Q. Thank you. 9 If the Commission orders FirstEnergy to 10 adjust its plan for a three-year cost cap, does staff 11 envision the company filing a new plan? 12 A. No. 13 MR. JONES: Objection, speculation. 14 EXAMINER BULRGRIN: I'll overrule the 15 objection. 16 A. I talked too quick. No. Again, it is 17 actually staff's belief that the company can achieve 18 the mandate and all that they need to under the cap 19 with their current plan. 20 Q. Can you turn to page 6, line 131 of your 21 amended testimony. 22 A. Yes. 23 Q. Here you state that "Each year the 24 Companies file an annual rider case...in which Staff 25 audits the prudence of the costs incurred and 460 1 included in the rider," correct? 2 A. Correct. 3 Q. And that process would occur under the 4 current FE -- FirstEnergy plan the company has 5 proposed, correct? 6 A. Yes. That audit is really looking at an 7 accounting prudency. And what that is talking about 8 is the accounting prudency of it. 9 Q. Well, just to clarify, you are looking at 10 whether the company's meeting the goals in the plan, 11 aren't you, in that annual review? 12 A. Not in this rider, no. This rider is 13 really an accounting and cost recovery review. And 14 making sure that the accounting is there that the -- 15 those items that go into the rider are prudent. 16 Q. There is some annual review process to 17 make sure that the company's conforming to the plan 18 and meeting its goals; is that correct? 19 A. That's an EM&V problem which, yes, it is, 20 but that's not what I was referring to in this 21 question. 22 Q. Okay. Thanks. 23 Turning to page 7, line 154, there you 24 state that "The Stipulation lacks a provision 25 controlling the costs of programs and shared 461 1 savings," correct? 2 A. Correct. 3 Q. When the Commission approves a plan, is 4 the company authorized to spend more money than the 5 amount in the plan? 6 A. I think in the authorization, they can 7 always seek recovery after that, and they can go over 8 and then seek for that recovery. So while I think 9 the authorization is -- the simple answer is no, but 10 there is not necessarily a hard stop either, because 11 they could always spend more and ask for a recovery. 12 Q. Okay. So they can spend more and ask for 13 recovery, but when the Commission approves the plan, 14 it's authorizing the amount in the plan; is that 15 fair? 16 A. Yes. 17 Q. Okay. All right. Can you pull out the 18 FirstEnergy's amended plan, please, the revised plan. 19 A. Are you speaking of Exhibit B? 20 Q. Yes, Exhibit B. And turn to page 5 of 21 the amended plan. Are you there? 22 A. Yes. 23 Q. Okay. So looking just below the table, 24 there's some figures there. And the company 25 estimates that over the life of the plan, Ohio Edison 462 1 will spend 131 million; Cleveland Electric, 2 90 million; and Toledo Edison, 47 million; for a 3 total of 268 million; is that correct? 4 A. You got that from the third paragraph 5 under -- the second paragraph under the table? 6 Q. Yes. 7 A. So, again, just making sure that the 8 numbers are correct here, they are -- the company is 9 stating that the total proposed costs to these 10 programs is 268 million. 11 Q. Okay. And the company estimates total 12 discounted lifetime benefits of -- well, scrap that. 13 We don't need to ask that. 14 Based on your testimony on page 5, 15 line 109. 16 A. My testimony? 17 Q. Going back to your testimony, you believe 18 utilities can meet or exceed their statutory mandate 19 levels under the cap, correct? 20 A. Correct. 21 Q. Do you believe that the company can 22 achieve the same savings level under the cap in the 23 revised plan? 24 A. What I don't know off the top of my head 25 is how high over the mandated level that they are 463 1 proposing with that energy level, but I think, again, 2 if you use historical as an estimate of what it was, 3 they were 21 percent under budget, which is roughly 4 $70 million of the proposed, like roughly $90 million 5 of their budget or amended budget, and they 6 overachieved by 50 percent of that. So I don't know 7 how that all falls out in the math. I didn't -- I 8 haven't -- I don't have it memorized, so. I think 9 it's possible. 10 MR. KELTER: Could we have that question 11 read back? I would like to see -- I would like to 12 figure out if we got a clear answer to the question. 13 A. And I might be able to clean that up some 14 too. 15 Q. Thank you. 16 A. I was doing math in my head while I was 17 talking. 18 (Record read.) 19 A. So what I had said is -- 20 Q. Could you start with a "yes" or "no" and 21 explain? 22 A. Yes, I do think they can achieve that 23 potentially. The -- if you look at the -- what they 24 did historically and we have a $90 million proposed 25 budget, roughly, I am going to use very rough numbers 464 1 here, you take 21 percent which is the underspend of 2 their former budgets for '12 through '14 at 3 21 percent, it's roughly $70 million, so -- and then 4 with that they also overachieved by 50 percent in 5 the -- when they underspent under their budget by 6 21 percent. They also achieved by 51 percent. What 7 I don't have off the top of my head is whether or not 8 that overspend would be in the kilowatt energy 9 savings, but I think it seems likely that they can 10 achieve what they -- what they are projecting. 11 Q. So they cannot only achieve -- they can 12 achieve the projected savings under the revised plan 13 under the 3 percent cap. 14 A. I think it's possible and likely, yes. 15 Q. Okay. Page 5, line 99, you state 16 "...based on the Companies 2012 to 2014 annual status 17 reports demonstrating achievement related to their 18 prior compliance." The companies can meet or exceed 19 their statutory benchmark and comply with the 20 3 percent cap, correct? Do you know how much savings 21 FirstEnergy got from CFLs during that 2012 to 2014 22 period? 23 A. Everything I looked at was in the 24 aggregate. I did not -- 25 MR. KELTER: I'm sorry, your Honor. I am 465 1 going to ask that you direct the witness to answer 2 the specific question, do you know how much savings 3 FirstEnergy got from CFLs during that period. 4 MR. JONES: Objection. He has answered 5 that question. 6 EXAMINER BULRGRIN: Well, you can answer 7 if you know. 8 A. Again, no. Everything I looked at was in 9 the aggregate of kilowatt savings, not individual 10 programs. 11 Q. So do you know how much savings 12 FirstEnergy got from Home Energy Reports during that 13 period? 14 MR. JONES: Objection. 15 EXAMINER BULRGRIN: Sustained. 16 Q. Do you know how many kits FirstEnergy 17 gave away during that period? 18 MR. JONES: Objection, same objection. 19 EXAMINER BULRGRIN: Sustained. 20 Q. Has staff done any analysis of the cost 21 of discounting CFLs in the 2012 to 2014 plan compared 22 to the cost of discounting LEDs under the revised 23 plan? 24 MR. JONES: Objection. 25 EXAMINER BULRGRIN: You can answer this 466 1 one if you know. 2 A. So with Senate Bill 310 and its 3 adjustments into what can be counted and can't be 4 counted, we didn't look specifically into individual 5 programs because so many new items can be counted in 6 the new legislation, so we didn't break it out into 7 things because we felt there was a wash. 8 Q. Do you have -- do you know what 9 percentage of the residential savings in the revised 10 plan come from lighting programs? 11 A. I do not off the top of my head. 12 Q. And do you know what percentage of 13 savings under the revised plan come from commercial 14 lighting? 15 A. Not off the top of my head. 16 MR. KELTER: That's all the questions I 17 have. 18 EXAMINER BULRGRIN: Anybody else? 19 MR. JONES: Your Honor, could we just 20 have 5 minutes to talk about? 21 EXAMINER BULRGRIN: Certainly. Why don't 22 we take a break. 5 minutes. 23 (Recess taken.) 24 EXAMINER BULRGRIN: Let's go back on the 25 record. 467 1 MR. JONES: Thank you. We just have a 2 few questions, your Honor. 3 EXAMINER BULRGRIN: Sure. 4 - - - 5 REDIRECT EXAMINATION 6 By Mr. Jones: 7 Q. Mr. Donlon, will every participating 8 customer save more money than what they paid into the 9 rider? 10 A. Not necessarily, no. 11 Q. And why is that, Mr. Donlon? 12 A. Again, if a -- I don't know why I said 13 again. If a customer goes out and purchases one 14 lightbulb at Home Depot or wherever and, A, doesn't 15 actually install it, they participated, but they are 16 actually not getting the benefits. If they do 17 install it, they still may be paying more in the 18 rider than they actually are receiving in reduced 19 energy. So it depends on the level of your 20 participation. 21 Q. Thank you. 22 I also want to direct your attention to 23 the Company Exhibit 14, staff report from December 1, 24 2015. Do you have that in front of you? 25 A. I left it over there. Sorry. 468 1 EXAMINER BULRGRIN: I got it. 2 MR. JONES: Your Honor, may I approach? 3 EXAMINER BULRGRIN: I've got it. 4 Q. And I want to refer you to that exhibit 5 to the second-to-the-last page which is titled "Ohio 6 Energy Bills - Industrial Customers, 8 Major Ohio 7 Cities, As of December 1, 2015." Do you see that? 8 A. Yes. 9 Q. Okay. And could you please read what's 10 presented for the price per kilowatt-hour for Toledo? 11 A. Toledo -- 12 Q. I'm sorry. 13 A. I'm sorry. Go ahead. Were you finished? 14 Q. Yes. 15 A. 10 cents. 16 Q. Okay. And could you also tell us what 17 the per kilowatt-hour is for Cleveland? 18 A. 11 cents. 19 Q. And for Akron? 20 A. 10 cents. 21 Q. And compare that to Columbus. 22 A. 7 cents. 23 Q. So the cost then for the kilowatt-hours 24 for the FirstEnergy companies are higher than AEPs? 25 A. They are roughly, it would be, this is 469 1 rounded, so 3 to 4 percent -- or cents, depending on 2 which city you are in. 3 Q. Okay. And also I would like to refer 4 your attention to Company Exhibit 13. If you would 5 look to the third to the last page, it's titled 6 "Summary of Switch Rates from EDUs to CRES Providers 7 in Terms of Sales For the Month Ending December 31, 8 2015." Do you see that? 9 A. Yes, I do. 10 Q. And if you look at the Cleveland Electric 11 Illuminating Company, which is the first provider 12 information, and if you look at industrial sales, 13 would you please tell us what is provided there for 14 the switch rates for industrial sales for CEI? 15 A. 88.46 percent. 16 Q. Okay. And also for then the next page 17 for Ohio Edison for industrial sales switch rates? 18 A. 89.78. 19 Q. And lastly for Toledo Edison? 20 A. 78.8. 21 Q. Okay. And with a comparison then, would 22 you look back to that first page we were just on and 23 compare AEP's industrial sales for switch out rates? 24 A. 90.99. 25 Q. Likewise, Mr. Donlon, let's look at 470 1 the -- again, focusing on the industrial sales for 2 the FirstEnergy companies, let's start again with 3 Cleveland Electric Illuminating Company, look at the 4 EDU share there for industrial sales, what's it read 5 for CEI? 6 A. 11.54 percent. 7 Q. Okay. And then on the next page for Ohio 8 Edison, what is the EDU share there for industrial 9 sales? 10 A. 10.22. 11 Q. And for Toledo Edison EDU share for 12 industrial sales? 13 A. 21.20. 14 Q. Okay. And when you would compare that 15 back to the first page, we are just on AEP Ohio, EDU 16 share for industrial sales is what? 17 A. 9 percent -- well, 9.01. 18 Q. Okay. And what is the significance of 19 those numbers, Mr. Donlon? 20 MR. GLADMAN: Objection, vague, 21 foundation. 22 Q. How much of a difference is that between 23 AEP and FirstEnergy? 24 MR. GLADMAN: Objection. On what metric? 25 Q. For the industrial sales. 471 1 MR. GLADMAN: On what metric? Kilowatt? 2 Dollars? Customers? 3 Q. Looking at customers. 4 A. Customers or the percentage? 5 Q. The percentage, I'm sorry, yes. 6 A. Difference in the percentage? You take 7 the biggest discrepancy of Toledo and AEP, it's 20 8 percent roughly, a little over. Ohio Edison it's 9 about 1.21. And Cleveland it's, we'll say, 10 3 percent, a little under 3 percent. 11 Q. So in terms of these metrics provided in 12 Company Exhibit 13 and 12 -- or 14, excuse me, is it 13 fair to say that the staff took into consideration 14 all classes in considering these metrics for its 15 analysis for its cost cap proposal? 16 A. Yes. Staff took many items into 17 consideration and there's many moving parts, many 18 different pieces. So looking at and highlighting one 19 individual piece doesn't show the whole picture, so 20 staff tried to take a holistic view. 21 MR. JONES: Thank you. No further 22 questions, your Honor. 23 EXAMINER BULRGRIN: Anything further? 24 MR. KELTER: Yes, your Honor. 25 EXAMINER BULRGRIN: Okay. 472 1 - - - 2 RECROSS-EXAMINATION 3 By Mr. Kelter: 4 Q. Mr. Donlon, your counsel just asked you a 5 question about customers purchasing one bulb. Do you 6 remember that question? 7 A. That was my example but, yes. 8 Q. Do you know what customers get on savings 9 per bulb between an incandescent bulb and a CFL or 10 LED? 11 A. Not off the top of my head, I do not. 12 Q. So do you know if a customer purchased 10 13 bulbs, if the customer would cover their costs of the 14 rider? 15 A. Assuming that they actually installed 16 them. 17 Q. Installed them. 18 A. I do not have that calculation off the 19 top of my head. 20 Q. Would you agree that when customers 21 purchase a CFL, that it's expected to last for a 22 period of years? 23 A. Not to be flippant in my response, it's 24 not what I've seen with the CFLs I've purchased. 25 Q. All right. So let me ask you, when 473 1 customers purchase -- do you know what the life 2 expectancy of an LED bulb is? 3 A. I do not know that off the top of my 4 head. 5 Q. Do you know if it's more than 10 years? 6 MR. JONES: Objection. He has already 7 answered he doesn't know. 8 EXAMINER BULRGRIN: You can answer if you 9 know. 10 A. I do not have it off the top of my head. 11 MR. KELTER: Okay. That's all the 12 questions I have. 13 MR. GLADMAN: Just a couple to follow up, 14 your Honor. 15 - - - 16 RECROSS-EXAMINATION 17 By Mr. Gladman: 18 Q. Mr. Donlon, you testified at the very end 19 of your redirect by your counsel about the fact that 20 staff considered all classes in terms of switch rates 21 that are set forth on Company Exhibit 13; is that 22 correct? 23 A. To be more correct -- more specific, I 24 think I said that we took a holistic view, not 25 necessarily one individual metric -- 474 1 Q. Okay. 2 A. -- to that. 3 Q. Okay. So fair to say that means that you 4 took a look at not just residential sales but also 5 commercial sales and industrial sales on this table? 6 A. In a -- I don't want to imply like we 7 used this in particular and took this and this was a 8 major piece of it. We were aware of these types of 9 variances, but it wasn't like we pulled this off the 10 website and used this in our... 11 Q. So I just want to understand, so maybe 12 not this specific month end of December 31, 2015, but 13 staff did consider the switch rates in connection 14 with its cost cap implementation proposal? 15 A. As part of many other factors, it was in 16 the discussion, yes. 17 Q. Okay. And it's fair to say you 18 considered the switch rates for all of the different 19 classes, as you put it, residential, commercial, and 20 industrial? 21 A. Yes. 22 Q. Can you tell me what was the cumulative 23 financial impact on the FirstEnergy companies' FERC 24 line 10 revenues as a result of these switch rates? 25 A. We did not go into that detailed 475 1 analysis. 2 MR. GLADMAN: That's all the questions I 3 have. 4 EXAMINER BULRGRIN: Anything further? 5 MR. JONES: No further questions, your 6 Honor. Thank you. 7 EXAMINER BULRGRIN: Thank you, 8 Mr. Donlon. 9 MR. GLADMAN: Your Honor, we would move 10 for the admission of Company Exhibits 11, 12, 13, and 11 14, but not 15 based upon your Honor's ruling on that 12 one. 13 EXAMINER BULRGRIN: Okay. Any objections 14 to I guess Staff Exhibit 1? I'm sorry. Go ahead. 15 MR. JONES: I'm sorry. What are we 16 addressing? What he just moved for? 17 EXAMINER BULRGRIN: Well, let's do them 18 all at the same time. Staff Exhibit 1 is 19 Mr. Donlon's testimony. 20 MR. JONES: Yes. Staff moves for the 21 admission of Staff Exhibit 1. 22 And there is no objections to that so 23 that will be admitted. 24 (EXHIBIT ADMITTED INTO EVIDENCE.) 25 EXAMINER BULRGRIN: And then we also have 476 1 Company Exhibits 10 through 14. 2 MR. GLADMAN: 11 through 14. 3 EXAMINER BULRGRIN: Oh, well, 10 was -- 4 MR. GLADMAN: 10 was the newspaper 5 notices I believe that Ms. Dunn moved in yesterday. 6 EXAMINER BULRGRIN: Okay. Yeah. Any 7 objections to those? 8 MR. JONES: Your Honor, I would object to 9 Company Exhibits 11 and 12. We could just take 10 administrative notice of these orders. Obviously 11 these are Commission orders and prefer to have 12 administrative notice taken of these orders instead 13 of admitting them as exhibits into the proceeding. 14 EXAMINER BULRGRIN: Yes. So, yes, if 15 it's a Commission order, yes, we will take 16 administrative notice. 17 (EXHIBITS ADMITTED INTO EVIDENCE.) 18 EXAMINER BULRGRIN: And I also have 19 ELPC's Exhibit 1. 20 MR. KELTER: Yes, your Honor. We would 21 like to move for admission into the record of ELPC 22 Exhibit 1. 23 EXAMINER BULRGRIN: Any objections? 24 That will be admitted as well. 25 (EXHIBIT ADMITTED INTO EVIDENCE.) 477 1 EXAMINER BULRGRIN: Is that all of them? 2 Okay. And then the hearing will resume 3 Friday at 10 o'clock? 4 Very good. Thank you all. 5 (Thereupon, at 11:41 a.m., the hearing 6 was adjourned.) 7 - - - 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 478 1 CERTIFICATE 2 I do hereby certify that the foregoing is a 3 true and correct transcript of the proceedings taken 4 by me in this matter on Wednesday, January 25, 2017, 5 and carefully compared with my original stenographic 6 notes. 7 8 _______________________________ Karen Sue Gibson, Registered 9 Merit Reporter. 10 11 _____________________________ Carolyn M. Burke, Registered 12 Professional Reporter. 13 (KSG-6306) 14 - - - 15 16 17 18 19 20 21 22 23 24 25