9&3 update testimony & schedules - south jersey gas · 5 improvement initiative and the...
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STATE OF NEW JERSEY BOARD OF PUBLIC UTILITIES
IN THE MATTER OF THE PETITION OF SOUTH JERSEY GAS COMPANY FOR APPROVAL OF INCREASED BASE TARIFF RATES AND CHARGES FOR GAS SERVICE AND OTHER TARIFF REVISIONS
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DOCKET NO. GR17010071
OAL DOCKET NO. PUC 03261-17 N
9&3 Update Testimony & Schedules
June 2017
9 & 3 UPDATE
TABLE OF CONTENTS
A. Direct Testimony of Linda M. Hibbs, Senior Vice President, Customer Experience
B. Updated Schedules (9&3)
a. KJB-1 through KJB-22 b. TSK-12A c. TSK-12B d. TSK-13 e. TSK-13A f. TSK-14 g. TSK-15 h. RFF-1 i. PJZ-1 j. PJZ-2 k. DPY-2 l. DPY-3 m. DPY-4
EXHIBIT P-11
STATE OF NEW JERSEY
BOARD OF PUBLIC UTILITIES
In the Matter of the Petition of South Jersey Gas Company for Approval of Increased Tariff Rates and Charges and for Gas Service and Other Tariff Revisions
BPU DOCKET NO. GR17010071
Direct Testimony of
Linda M. Hibbs
on Behalf of
South Jersey Gas Company
June 2017
EXHIBIT P-11
1
Direct Testimony 1
Of 2
Linda M. Hibbs 3
Senior Vice President, Customer Experience 4
South Jersey Gas Company 5
June 2017 6
7
I. INTRODUCTION 8
Q. Please state your name, affiliate and business address. 9
A. My name is Linda Hibbs, and I am the Senior Vice President, Customer Experience for 10
South Jersey Gas Company (“South Jersey” or “SJG” or the “Company”). My business 11
address is One South Jersey Plaza, Folsom, NJ 08037. 12
Q. Please summarize your educational background and industry related experience. 13
A. I joined South Jersey in 2014 as Director of Information Technology. In January, 2015 I 14
was promoted to Vice President, Information Technology. Most recently, in January of 15
2017, I accepted my current position as Senior Vice President, Customer Experience. I 16
hold an Executive MBA from Villanova. I am a member of the American Gas 17
Association (AGA), the New Jersey Cybersecurity & Communications Integration Cell 18
(NJCCIC), and the ISACA (f/n/a Information Systems Audit and Control Association). 19
Q. What are your current responsibilities as Senior Vice President, Customer 20
Experience? 21
A. In my current role, I oversee the Customer Contact Center and all aspects of the customer 22
“experience”. This includes all processes associated with managing calls, walk-in 23
centers, training, workforce management, quality assurance, metrics and reporting, voice 24
of the customer, billing and collections. I am also actively involved in the Company’s 25
recent and ongoing efforts to improve upon the overall customer experience, including 26
new and updated technology to support these efforts. 27
EXHIBIT P-11
2
1
II. PURPOSE OF TESTIMONY 2
Q. What is the purpose of your testimony in this proceeding? 3
A. My testimony supports the Company’s recently adopted Customer Experience (CX) 4
improvement initiative and the associated payroll adjustments reflected in the Company’s 5
9&3 update filing (“9&3 Update”). These adjustments account for the added customer 6
service personnel necessary to ensure the Company’s goal of achieving a “best-in-class” 7
customer experience for all customers. In addition, by virtue of the added personnel, the 8
Company will realize off-setting savings to its O&M expense by reducing reliance on its 9
outsourced customer call center personnel. 10
11
III. CUSTOMER SERVICE (CX) IMPROVEMENT INITIATIVE 12
Q. Can you please provide a brief overview of the Company’s CX improvement 13
initiative? 14
A. The Company commenced a formal CX improvement initiative this past October, 2016. 15
Details around the efforts the Company has made to improve the customer experience 16
have been provided in response to numerous data requests in this proceeding. These 17
efforts include, but are not limited to, rolling out a new updated website with mobile 18
capability; engagement of E-Source, an independent consulting firm, to review our 19
customer contact center performance and to make recommendations for overall 20
system/customer service improvements; and completion of the initial design phase for 21
new residential and commercial bills. The CX improvement initiative will be ongoing in 22
the spirit of continuous improvement. 23
EXHIBIT P-11
3
Q. Specific to the Customer Contact Center, what improvements has the Company 1
made? 2
A. The Company is focused on achieving efficiencies and superior customer service through 3
training, quality assurance and coaching its existing personnel, as well as adding 4
personnel to be more responsive to customers’ needs. In order to carry out this objective, 5
the Company engaged a third-party consultant, E-Source, to evaluate the Company’s 6
existing processes and policies and to provide an objective perspective on the Company’s 7
overall performance. As a result of this assessment and based on E-Source’s specific 8
recommendations, the Company developed new positions within customer service and 9
elsewhere in the Company to implement the CX improvements. The added personnel 10
will ensure that the right people are in the right roles to increase productivity and 11
accountability. In addition, the added personnel will dramatically improve reporting, 12
metrics and statistics, which will enable the Company to make more informed business 13
decisions and improve customer satisfaction. 14
The Company intends to hire additional management and union personnel 15
throughout the remainder of 2017, including a CX Program Manager, Customer Care 16
Representatives, Dispatch Support Agents, and Billing Representatives, to name a few. 17
To reflect these personnel additions, a proforma adjustment of approximately $1.7 18
million was made to the Company’s O&M expense in Schedules KJB-16 and KJB-17 of 19
the Company’s 9&3 Update to reflect the annualized, known and measurable increase in 20
payroll and benefits expense of approximately $1.2 million and $476,524, respectively, 21
for the additional customer care center employees that will be hired by December 2017. 22
EXHIBIT P-11
4
Q. Does the Company anticipate any savings associated with the added personnel 1
relative to its use of outsourced call center representatives? 2
A. Yes. The Company currently uses an outside vendor, Convergent Contact Solutions 3
(“Convergent”) located in Atlanta, Georgia, to assist with customer calls to its customer 4
care center. At this time, Convergent handles approximately 70-75% of all calls to the 5
customer care center. With the added personnel, the Company anticipates that the 6
percent of calls currently handled by Convergent versus internally by the Company will 7
flip, with the Company handling 75% or more of all calls and Convergent managing the 8
overflow. This shift will enable the Company to better manage the quality and 9
performance of its customer care representatives and is projected to result in 10
approximately $1.2 million of annual O&M expense savings for the Company. The 11
projected incremental savings of $1.2 million is reflected in Schedule KJB-14 of the 12
Company’s 9&3 Update as a pro forma adjustment to O&M expense. 13
14
IV. CONCLUSION 15
While the Company will initially incur increased payroll and related expenses associated 16
with its added personnel to carry out its CX improvement initiative now and into the 17
future, a significant savings (approximately $1.2 million) will be realized by the 18
Company’s efforts to lessen its reliance on its outside vendor. This is just one of many 19
examples of the Company’s ongoing commitment to strengthen and improve the overall 20
customer experience. 21
Q. Does this conclude your Direct Testimony? 22
A. Yes, it does. 23
9 & 3 UPDATE
Schedules of
K.J. BARCIA
KJB-19&3
South Jersey Gas CompanySummary of Revenue Requirement
Line No. REFERENCE12 Rate Base Test Year Ended August 2017 $1,692,759,503 KJB-234 Rate of Return 7.66%56 Required Operating Income 129,665,37878 Net Operating Income Test Year Ended August 2017 72,543,315 KJB-3910 Income Deficiency 57,122,0631112 Revenue Factor 1.85 KJB-41314 Revenue Requirement $105,542,560
1516 Revenue Requirement without Sales and Use Tax $98,753,2721718 Revenue Requirement Rolled-In From:19 Storm Hardening & Reliability Program (SHARP) (3,580,281)20 Accelerated Infrastructure Replacement Program (AIRP II) (4,583,177)21 Conservation Incentive Program (CIP) (9,078,930) DPY-32223 Requested Additional Operating Revenue $81,510,884
KJB-29&3
South Jersey Gas CompanyStatement of Rate Base
At August 31, 2017
Rate Base Reference ToRate Base Test Year Pro Forma Adjusted Ratemaking
Line No. 5/31/2017 Adjustment 8/31/2017 Adjustment Rate Base Adjustments
1 Utility Plant In Service 2,403,363,547$ 27,137,227 2,430,500,774$ $85,031,401 2,515,532,175$ TSK-13
2Accumulated Depreciation & Amortization
(467,921,219) (5,032,500) (472,953,719) 10,607,709 (462,346,010)TSK-13
3 Non-Legal ARO (26,966,459) 265,033 (26,701,426) 0 (26,701,426)45 Net Utility Plant 1,908,475,869 22,369,760 1,930,845,629 95,639,110 2,026,484,739678 Materials & Supplies 930,510 0 930,510 0 930,5109 Gas Inventory:
10 Natural Gas Stored 7,038,739 1,877,224 8,915,963 0 8,915,963 KJB-2 WP111 LNG Stored 2,611,002 (132,092) 2,478,910 0 2,478,910 KJB-2 WP212 Cash Working Capital 62,448,391 0 62,448,391 50,000,678 112,449,06913 Customer Deposits (7,469,707) 17,445 (7,452,262) (109,295) (7,561,557) KJB-1914 Unclaimed Customer Deposits (298,829) 0 (298,829) 0 (298,829)15 Customer Advances (1,562,230) 0 (1,562,230) 0 (1,562,230)16 Deferred Income Taxes:17 Excess Protected ADIT (1,287,020) 0 (1,287,020) 0 (1,287,020)18 Federal Income Tax (375,766,599) (3,886,061) (379,652,660) (4,077,884) (383,730,544) TSK-12A19 NJ CBT (54,820,525) (9,175,983) (63,996,508) (62,999) (64,059,507) TSK-12B2021 Total Rate Base $1,540,299,601 $11,070,292 $1,551,369,893 $141,389,610 $1,692,759,503
KJB-39&3
9 MONTHS 3 MONTHS TEST YEAR ADJUSTED REFERENCE TO ACTUAL PROJECTED ENDED PRO FORMA TEST YEAR PRO FORMA
Line No. DATA DATA 8/31/2017 ADJUSTMENTS 8/31/2017 ADJUSTMENTS1 Operating Revenues:23 Gas Sales Revenues $362,349,400 $48,121,400 $410,470,800 ($19,221,854) $391,248,946 KJB-54 Other Utility Revenues $58,690,400 $12,846,000 $71,536,400 $71,536,40056 Total Operating Revenues $421,039,800 $60,967,400 $482,007,200 ($19,221,854) $462,785,34678 Operating Expenses:9
10 Purchased Gas $163,471,000 $22,307,300 $185,778,300 ($3,891,580) $181,886,720 KJB-51112 Oper. & Maint. Exps. $88,446,200 $28,439,800 $116,886,000 $188,540 $117,074,540 KJB-141314 Depreciation $37,309,100 $13,157,500 $50,466,600 $5,927,291 $56,393,891 TSK-131516 Taxes Other Than Income Taxes $3,363,200 $826,900 $4,190,100 $97,085 $4,287,185 KJB-20, KJB-211718 Federal Income Taxes & NJ CBT $43,794,100 ($3,542,400) $40,251,700 ($9,682,251) $30,569,449 TSK-141920 Investment Tax Cr. - Net $0 $0 $0 $0 $02122 Total Operating Expenses $336,383,600 $61,189,100 $397,572,700 ($7,360,915) $390,211,7852324 Net Operating Income $84,656,200 ($221,700) $84,434,500 ($11,860,939) $72,573,561
2526 Ratemaking Adjustment:27 Interest on Customer Deposit $16,196 $7,517 $23,713 $6,534 $30,246 KJB-19282930 Adjusted Net Operating Income $84,640,004 ($229,217) $84,410,787 ($11,867,472) $72,543,315
SOUTH JERSEY GAS COMPANYADJUSTED TEST YEAR INCOME STATEMENT
TWELVE MONTHS ENDED AUGUST 31, 2017
KJB-49&3
South Jersey Gas CompanyDerivation of Revenue Factor
LineNo.1 Components:2
3 Sales and Use Tax (SUT) 6.875%4
5 Public Utility Assessment Tax (PUA) 0.2505%6
7 Bad Debt Provision (Bad Debt) 2.0037%8
9 Federal Income Tax (FIT) 35.0000%10
11 CBT 9.0000%12
13 Operating Revenue 1.000014
15
16 Revenue Factor Calculation: 1.8476717
1819 1 *1.020037*1.002505*1.06875= 1.8476720 1-[(.65*.09)+.35]2122
KJB-59&3
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
SUMMARY OF PRO FORMA REVENUE ADJUSTMENTS
Line Dt Revenue Cost of GasNo. Adjustments Adjustments Adjustments Reference
1 AIRP Revenue Adjustment N/A $1,888,864 N/A KJB-6
2 SHARP Revenue Adjustment N/A $103,396 N/A KJB-6
3 EET Revenue Adjustment N/A ($5,399,600) N/A KJB-7
4 Interruptible, Off-System Sales & SIM Adjustmen N/A ($12,557,716) ($6,435,924) KJB-8
5 Customer Annualization 120,269 $1,595,201 $632,766 KJB-9
6 Sales from Post Test Year Plant Additions 382,019 $4,473,332 $1,926,151 KJB-11
7 Contract Changes 3,057,510 ($246,400) ($14,573) KJB-13
8 CIP Revenue Adjustment (4,799,904) ($9,078,930) N/A DPY-3
9 Total Firm Revenue Adjustments (1,240,106) (19,221,854) (3,891,580)
Note: Cost of Gas adjustments include the applicable clauses
KJB-69&3
2016 2016 2016 2016 2017 2017 2017 2017 2017 2017 2017 2017Line Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected ProjectedNo. September October November December January February March April May June July August TOTAL
1 SHARP Roll In Revenue 103,396$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 103,396$ 2 AIRP Roll In Revenue 290,538$ 522,767$ 1,075,559$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 1,888,864$ 3 Total Revenue Adjustment 393,934$ 522,767$ 1,075,559$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 1,992,260$
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
SHARP & AIRP REVENUE ADJUSTMENT
KJB-79&3
2016 2016 2016 2016 2017 2017 2017 2017 2017 2017 2017 2017Line Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected ProjectedNo. September October November December January February March April May June July August TOTAL
1 EET Revenue Adjustment 455,900$ 552,500$ 469,000$ 534,800$ 433,500$ 454,600$ 417,900$ 393,500$ 395,900$ 436,500$ 438,500$ 417,000$ 5,399,600$
2 EET O&M Expenses Adjustment 69,300$ 163,500$ 86,500$ 145,300$ 48,900$ 80,800$ 54,300$ 53,100$ 56,300$ 87,300$ 88,100$ 69,400$ 1,002,800$
3 EET Amortization Adjustment 75,800$ 80,500$ 78,400$ 78,300$ 77,800$ 64,200$ 58,600$ 34,900$ 34,900$ 33,200$ 33,200$ 32,100$ 681,900$
ENERGY EFFICIENCY TRACKER
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
KJB-89&3
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
TEST YEAR INTERRUPTIBLE AND OFF-SYSTEM SALES, AND STORAGE INCENTIVE MECHANISM
Test YearLine Ending Pro Forma Revenue AmountsNo. 8/31/2017 Adjustment in Test Year Deferred
1 Revenues $83,718,109 ($12,557,716) $71,160,393 ($71,160,393)
2 Cost of Gas $51,153,985 ($6,435,924) $44,718,061 ($44,718,061)
3 PUA Tax $2,583 ($387) $2,195 ($2,195)
KJB-99&3
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME
CUSTOMER ANNUALIZATION
Line AnnualizedNo.
Dt Revenue Cost of Gas1 Residential (RSG)
2 Heating Sales Service (480.11) 180,155 $2,126,735 $877,637
3 Non-Heating Sales Service (480.12) 1,131 $15,971 $4,991
4 Sub-Total 181,286 $2,142,706 $882,628
5 General Service (GSG)
6 Commercial Non-Heating Sales Service (481.21) 4,977 $53,098 $23,348
7 Commercial Heating Sales Service (481.31) (54,844) ($531,021) ($255,538)
8 Industrial Heating Sales Service (481.32) (708) ($6,392) ($3,315)
9 Transportation Commercial Non-Heating (489.821) 1,700 $10,681 $2,181
10 Transportation Commercial Heating (489.831) (14,079) ($85,366) ($19,337)
11 Transportation Industrial Heating (489.832) 1,937 $11,495 $2,799
12 Sub-Total (61,017) ($547,505) ($249,862)
13 Total Adjustment 120,269 $1,595,201 $632,766
KJB-109&3
Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected ProjectedSep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17
480.11 RES SERV SALES - HSE HTG RSG Heat 311,480 312,168 313,328 314,637 317,264 318,481 319,503 319,856 320,190 320,040 319,807 319,780
480.12 RES SERV SALES W/O HSE HTG RSG Non-Heat 10,975 10,932 10,910 10,900 10,933 10,945 10,965 10,923 10,948 10,998 11,004 10,997
490.21 RTS HSE HTG RSG Trans Heat 26,445 26,263 25,932 25,876 24,691 24,167 23,849 23,538 23,138 23,138 23,138 23,138
490.22 RTS W/O HSE HTG RSG Trans Non-Heat 1,031 1,023 1,014 1,010 954 949 943 935 923 923 923 923
481.31 BLDG HTG & COOL COMMERCIAL Commercial Heat 16,343 16,457 16,642 16,881 17,081 17,148 17,251 17,239 17,116 16,958 16,842 16,788
481.21 GEN SERV SALES COMMERCIAL Commercial Non-Heat 1,462 1,432 1,412 1,398 1,403 1,399 1,416 1,427 1,457 1,462 1,460 1,457
481.32 BLDG HTG & COOL INDUSTRIAL Industrial Heat 259 261 266 264 266 262 263 264 263 263 263 263
481.22 GEN SERV SALES INDUSTRIAL Industrial Non-Heat 13 13 13 13 13 13 11 10 10 10 10 10
489.831 COMM BLDG HTG & COOL Commercial Trans Heat 5,842 5,849 5,847 5,865 5,881 5,871 5,853 5,838 5,833 5,833 5,833 5,833
489.821 COMM GEN SERV Commercial Trans Non-Heat 388 387 383 389 390 392 391 393 395 395 395 395
489.832 IND BLDG HTG & COOL Industrial Trans Heat 87 85 82 82 80 82 82 83 84 84 84 84
489.822 IND GEN SERV Industrial Trans Non-Heat 4 4 4 4 4 4 4 4 4 4 4 4
481.63 GSG-LV COMMERCIAL HEAT Commercial LV Heat 25 25 26 24 28 29 23 23 24 24 24 24
481.61 GSG-LV COMMERCIAL Commercial LV Non-Heat 1 1 1 1 - - - - - - - -
481.64 GSG-LV INDUSTRIAL HEAT Industrial LV Heat 3 3 3 2 2 3 3 3 3 3 3 3
481.62 GSG-LV INDUSTRIAL Industrial LV Non-Heat 1 1 1 1 1 1 1 1 1 1 1 1
489.867 GSG-LV FT COMMERCIAL HEAT Comm LV Trans Heat 138 138 140 138 136 142 148 148 148 148 148 148
489.865 GSG-LV FT COMMERCIAL Comm LV Trans Non-Heat 1 1 1 1 1 1 1 1 1 1 1 1
489.868 GSG-LV FT INDUSTRIAL HEAT Ind LV Trans Heat 6 6 6 6 6 6 6 7 7 7 7 7
489.866 GSG-LV FT INDUSTRIAL Ind LV Trans Non-Heat 2 2 2 2 2 2 2 1 1 1 1 1
SOUTH JERSEY GAS COMPANYCUSTOMER COUNTS
SEPTEMBER 2016 - AUGUST 2017
KJB-119&3
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME
SALES FROM POST TEST YEAR UTILITY PLANT ADDITIONS
LineNo. Dt Revenue Cost of Gas
1 Residential Heat (480.11) 261,537.0 $3,187,299 $1,330,784
2 Residential Non-Heat (480.12) 3,894.6 $59,921 $18,129
3 Gen. Serv. Comm Heat (481.31) 116,587.6 $1,226,111 $577,239
4 Pro-Forma Adjustment 382,019.1 $4,473,332 $1,926,151
KJB-129&3
SOUTH JERSEY GAS COMPANYREVENUE PRODUCING UTILITY PLANT
SEPTEMBER 2017 - FEBRUARY 2018
Projected Post Test Year Gross Customer Additions
2017 2017 2017 2017 2018 2018 6 Months Sept Oct Nov Dec Jan Feb Total Dts Per Customer Annualized Dts
Residential Heat 674 710 637 745 664 452 3,882 67.37 261,537.0
Residential Non-Heat 29 26 32 41 32 27 187 20.83 3,894.6
General Service Gas 53 81 73 86 78 55 426 273.68 116,587.6
KJB-139&3
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME
CONTRACT CHANGES
After After Cost of
Line Contract Contract Gas
No. Customer I.D. Test Year Change Adjustment Test Year Change Adjustment Adjustment
1 CTS Customers
2 Customer A 1,672 0 (1,672) $33,685 $0 ($33,685) ($730)
3 Customer B 13,354 0 (13,354) $44,343 $0 ($44,343) ($5,832)
4 Customer C 43,312 37,778 (5,535) $80,543 $78,393 ($2,149) ($6,903)
5 Customer D 172,054 188,888 16,834 $410,422 $361,186 ($49,236) $6,783
6 Customer F 71,273 169,999 98,726 $140,532 $325,837 $185,306 $40,929
7 Customer G 23,805 94,444 70,639 $46,293 $184,441 $138,148 $30,495
8 LVS-FT Customers
9 Customer E 146,040 0 (146,040) $231,369 $0 ($231,369) ($59,782)
10 Customer H 1,336,873 1,012,174 (324,699) $1,808,182 $1,586,385 ($221,797) ($140,499)
11 EGS-LV-FT Customers
12 Customer I 2,304,014 5,666,625 3,362,611 $1,093,715 $1,106,442 $12,727 $120,967
13 Pro Forma Adjustment 3,057,510 ($246,400) ($14,573)
Annual Dt Sales Annual Revenue
KJB-149&3
LineNo. Amount Reference
1 EET Expense (1,002,800)$ Schedule KJB-7
2 EET Amortization Expense (681,900)$ Schedule KJB-7
3 PIM Expense & Carrying Cost 1,712,779$ Schedule KJB-15
4 Payroll Adjustment 3,279,229$ Schedule KJB-16
5 Employee Benefit Adjustment 916,570$ Schedule KJB-17
6 Amortization Expense Adjustment (3,638,701)$ Schedule KJB-18
7 Mortality Table Amortization 154,315$ Schedule TSK-15
8 Pension Expense 649,049$ Schedule TSK-15
9 Convergent Savings (1,200,000)$ Exhibit P-11
10 Total O&M Adjustments 188,540$
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
SUMMARY OF PRO FORMA O&M ADJUSTMENTS
KJB-159&3
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
OPERATION AND MAINTENANCE EXPENSE - INTEGRITY MANAGEMENT
LineNo. Expense
1 Pipeline Integrity Management Deferred Balance at August 31, 2017 5,138,336$
2 Pro-Forma Adjustment - Three Year Amortization of Deferred Expense 1,712,779$
KJB-169&3
LineNo.1 Payroll Expenses:23 Annualized Payroll Expenses $32,764,5344 Less: Test Year Payroll Expenses $29,718,33956 Pro Forma Payroll Adjustment 3,046,195$
78 FICA Adjustment 233,034 9
10 Total Pro Forma Payroll Adjustment 3,279,229$
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
PAYROLL EXPENSE
KJB-16A9&3
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
OPERATION & MAINTENANCE EXPENSE - PAYROLL INCREASE
Line AnnualizedNo. Month Base Wages Additions Separations Net Wages Wages
1 September 2016 - Actual $2,333,786 $385,861 (60,783) $2,658,864 $2,738,630
2 October - Actual $2,233,807 $364,307 (62,889) $2,535,225 $2,611,282
3 November - Actual $2,350,924 $286,962 (54,588) $2,583,299 $2,660,798
4 December 2016 - Actual $3,595,564 $306,679 (53,810) $3,848,432 $3,963,885
5 January 2017 - Actual $2,356,946 $270,317 (40,392) $2,586,871 $2,596,337
6 February - Actual $2,169,245 $227,945 (33,097) $2,364,093 $2,373,559
7 March - Actual $2,700,142 $242,972 (36,083) $2,907,031 $2,916,498
8 April - Actual $2,150,299 $235,265 (30,395) $2,355,169 $2,364,635
9 May - Actual $2,428,100 $220,124 (14,374) $2,633,851 $2,643,317
10 June - Projected $2,464,137 $207,352 (7,778) $2,663,710 $2,673,579
11 July - Projected $2,432,425 $205,763 0 $2,638,188 $2,648,056
12 August - Projected $2,502,965 $61,124 0 $2,564,089 $2,573,958
13 Totals $29,718,339 $3,014,671 (394,190) $32,338,821 $32,764,534
KJB-179&3
LineNo.1 Employee Benefits Expenses:23 Annualized Benefit Expenses $6,083,8114 Less: Test Year Health Ins Expenses $5,167,24156 Pro Forma Benefits Adjustment 916,570$
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
EMPLOYEE BENEFITS EXPENSE
KJB-189&3
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
OPERATION AND MAINTENANCE EXPENSE - AMORTIZATIONS
LineNo. Category Expense
1 Rate Case Expense Amortization - 2013 Rate Case (206,627)$
2 Hurricane Sandy Amortization - 2013 Rate Case (245,593)$
3 Management Audit Exp Amortization - 2013 Rate Case (208,333)$
4 PIM Expense & Carrying Cost - 2013 Rate Case (1,055,992)$
5 AIRP Equity Tax Loss Amortization - 2013 Rate Case (1,296,334)$
6 Total 2013 Rate Case Amortizations (3,012,880)$
7 AIRP Equity Tax Loss Amortization - 2016 Roll-In (774,238)$
8 2017 Rate Case Expense Amortization 148,417$
9 Pro Forma Adjustment (3,638,701)$
KJB-199&3
LineNo.
1 Test Year Interest Calculation2
3 Number of Percentage of Average Rate Base Current4 Actual and Number of Customers Customers Deposit for Customer Interest Monthly5 Month Projected Data Customers with Deposits with Deposits Per Customer Deposits Rate Interest6
7 Sep-16 Actual 374,506 37,218 9.94% $233 $8,667,963 0.11% $8478 Oct-16 Actual 375,051 36,012 9.60% $228 $8,214,581 0.11% $7629 Nov-16 Actual 376,013 35,544 9.45% $226 $8,021,650 0.11% $77310 Dec-16 Actual 377,494 35,545 9.42% $225 $7,995,373 0.11% $71411 Jan-17 Actual 379,136 35,238 9.29% $219 $7,722,999 0.40% $2,80312 Feb-17 Actual 379,897 35,446 9.33% $218 $7,738,845 0.40% $2,61413 Mar-17 Actual 380,715 35,694 9.38% $215 $7,691,410 0.40% $2,42514 Apr-17 Actual 380,694 35,758 9.39% $212 $7,574,728 0.40% $2,66215 May-17 Actual 380,546 35,714 9.38% $209 $7,469,707 0.40% $2,59716 Jun-17 Projected 380,293 35,671 9.38% $209 $7,460,816 0.40% $2,45317 Jul-17 Projected 379,948 35,639 9.38% $209 $7,454,047 0.40% $2,53218 Aug-17 Projected 379,857 35,631 9.38% $209 $7,452,262 0.40% $2,53219
20 Total Test Year (Sept - Aug) Interest $23,71321 Post-Test Year Annualization of Interest22
23 Feb-18 Projected 385,428 36,153 9.38% $209 $7,561,557 0.40% $30,24624
25
26 Rate Base Test Year Adjustment Rate Base PTY Pro-Forma Adjustment Income Statement Interest Pro-Forma27
28 Deposits at May 31, 2017 $7,469,707 Deposits at August 31, 2017 $7,452,262 Test Year Interest $23,71329
30 Deposits at August 31, 2017 $7,452,262 Deposits at February 28, 2018 $7,561,557 Annualization of Interest $30,24631
32 Test Year Adjustment ($17,445) Pro-Forma Adjustment $109,295 Pro-Forma Adjustment $6,534
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENTS TO OPERATING INCOME AND RATE BASE
CUSTOMER DEPOSITS
KJB-209&3
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME
OTHER EXPENSES - REVENUE TAXES
LineNo.
1 PUA Adjustments
2 CIP Revenue Adjustment (KJB-5) ($9,078,930)
3 Customer Annualization (KJB-5) $1,595,201
4 Sales from Post Test Year Plant Additions (KJB-5) $4,473,332
5 Contract Changes (KJB-5) ($246,400)
6 Interruptible Sales Revenue Adjustment ($59,638)
7 EET Revenue Adjustment (KJB-5) ($5,399,600)
8 Total Revenue Adjustments ($8,716,035)
9 PUA Tax Rate 0.002505
10 Pro Forma Adjustment to PUA Taxes ($21,834)
KJB-219&3
Line BPU Public AdvocateNo. Assessment Assessment Total
1 Year 2016 Intrastate Revenues 397,616$ 397,616$ 2 Estimated Assessment Rate 0.002034$ 0.000471$ 0.002505$ 34 Estimated Assessment 809$ 187$ 996$ 5 Less: Assessment included in Test Year6 Operating Expenses 718$ 159$ 877$ 78 Pro Forma Adjustment to PUA Taxes 91$ 28$ 119$
SOUTH JERSEY GAS COMPANY
($000)OTHER EXPENSES - BPU & PUBLIC ADVOCATE ASSESSMENT
PRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME
KJB-229&3
SOUTH JERSEY GAS COMPANYIncome Statement by Month
Test Year SEPTEMBER 2016 - AUGUST 2017(Thousands Where Applicable)
2016 2016 2016 2016 2017 2017 2017 2017 2017 2017 2017 2017September October November December January February March April May June July August Test Year
Description Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected Projected Total
Operating Revenues Gas Sales Revenues 16,625 21,452 41,397 59,397 70,227 50,651 50,606 29,628 22,367 16,438 16,052 15,631 410,471Other Gas Revenues 3,744 4,104 6,624 9,528 8,884 7,187 9,259 4,738 4,622 4,329 3,810 4,707 71,536
Total Oper Revenues 20,369 25,556 48,021 68,925 79,112 57,838 59,865 34,366 26,989 20,767 19,863 20,338 482,007
Operating ExpensesPurchased Gas 8,029 8,758 20,840 29,098 31,986 15,909 24,529 13,045 11,277 7,260 7,198 7,849 185,778
Oper and Maint ExpsProduction 835 835 958 975 1,021 932 916 956 967 959 957 960 11,271Transmission 462 389 468 535 404 397 612 281 373 511 439 471 5,341Distribution 1,515 1,673 1,704 2,172 1,567 1,313 1,917 1,424 1,483 1,693 1,497 1,530 19,486Customer Accounting 3,476 1,693 1,197 2,793 1,167 1,125 2,191 1,273 1,839 1,221 1,599 1,599 21,173Conservation Program 235 258 393 687 945 813 790 629 346 921 859 715 7,590Sales 128 74 99 219 193 150 226 155 176 175 97 100 1,791Customer Services 0 0 0 33 9 0 68 133 6 84 0 0 334EET Programs 145 244 165 224 127 145 113 88 91 121 121 102 1,685Adm & General 3,136 2,868 3,516 6,844 3,696 3,447 5,207 3,798 3,997 4,173 3,657 3,878 48,217
Total Oper & Maint Exps 9,931 8,034 8,500 14,481 9,128 8,321 12,038 8,736 9,278 9,859 9,227 9,355 116,886
Depreciation 3,929 3,952 3,978 4,204 4,224 4,239 4,252 4,262 4,271 4,340 4,404 4,414 50,467
Taxes other than Income Taxes 295 314 342 539 455 365 475 366 214 288 262 277 4,190Fed Inc Taxes - Curr (4,539) (3,546) (202) (4,646) 5,216 3,735 3,640 (1,722) (3,588) (4,282) (4,385) (4,470) (18,787) - Def. 3,615 4,551 4,295 10,962 4,833 4,833 1,467 3,688 3,688 3,442 3,442 3,442 52,258New Jersey Corp. Business Tax (229) 265 803 217 2,508 2,137 1,278 499 36 (212) (247) (274) 6,781Investment Tax Cr.-Net 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Oper Expenses 21,032 22,328 38,555 54,853 58,349 39,537 47,679 28,874 25,177 20,695 19,901 20,593 397,573
Net Operating Expense (662) 3,228 9,466 14,071 20,763 18,300 12,186 5,491 1,812 73 (39) (255) 84,434
Ratemaking Adjustment: Interest on Customer Deposit 1 1 1 1 3 3 2 3 3 2 3 3 24
Adjusted Net Operating Income (663) 3,228 9,465 14,071 20,760 18,298 12,183 5,489 1,809 70 (41) (258) 84,411
9 & 3 UPDATE
Schedules of
T.S. KAVANAUGH
TSK-12A9&3
Line ADDED TAX DEFERRED TAX DFIT INNo. PTY ADDITIONS DEPRECIATION ADJUSTMENT RATE BASE
1 Projected DFIT Rate Base Balance 8/31/17 (379,652,660)
2 Annualized Book Depreciation* 1,158,047
3 Normalization on PTY Additions 9/17-2/18:
4 Book Depreciation* 1,330,641
5 Tax Depreciation-Federal** (39,694,646)
6 Federal Tax Depreciation Over Book (38,364,005)
7 Total Added Tax Depreciation (37,205,958)
9 Deferred FIT (@ effective FIT rate of 35%) (13,022,085)
10 PTY Federal Net Operating Loss - Deferred Tax Asset 8,944,201
11 Pro Forma Adjustment to Rate Base (4,077,884)
12 Projected Adjusted DFIT Rate Balance 8/31/17 (383,730,544)
* Sourced from TSK-13 Depreciation of Utility Plant in Service** Includes Bonus Depreciation and First Year MACRS tax depreciation rate - 20 year life using half year convention
SOUTH JERSEY GAS COMPANYCALCULATION OF ADJUSTED TEST YEAR
DEFERRED FEDERAL INCOME TAX INCLUDED IN RATE BASE
TSK-12B9&3
Line ADDED TAX DCBT INNo. PTY ADDITIONS DEPRECIATION RATE BASE
1 Projected Rate Base Balance 8/31/17 (63,996,508)
2 Annualized Book Depreciation* 1,158,047
3 Normalization on Additions 9/17-2/18:
4 Book Depreciation* 1,330,641
5 Tax Depreciation-State @ 3.75%** (3,188,678)
6 State Tax Depreciation Over Book (1,858,036)
7 Added Tax Depreciation (699,989)
8 Pro Forma Adjustment - Deferred NJ CBT @ 9.00% (62,999)
9 Adjusted Rate Balance @ 8/31/17 (64,059,507)
* Sourced from TSK-13 Depreciation of Utility Plant in Service** First Year MACRS tax depreciation rate - 20 year life using half year convention
SOUTH JERSEY GAS COMPANYCALCULATION OF ADJUSTED TEST YEAR
DEFERRED NJ CORPORATE BUSINESS TAX INCLUDED IN RATE BASE
TSK-139&3
PTY PTY SummaryLine Utility Plant Depreciation Depreciation ExpenseNo. in Service Expense Adjustments
1 Depreciation Expense:2 3 Adjustment due to Annualization of Depreciable Plant Additions 1,158,047$ 45 Adjustment due to Increase in Proposed Annual Net Negative Salvage Allowance 3,140,739$ 67 Adjustment due to Decrease in Non-Legal Asset Retirement Obligation (ARO) Credit 297,864$ 89 Adjustment due to Post-Test Year Additions (PJZ-2) 51,421,013$ 1,007,852$ 1,007,852$ 1011 Retirements After August 31, 2017 (PJZ-2) (16,535,000)$ (324,086)$ (324,086)$ 1213 Adjustment due to Major Construction Projects (RFF-1) 50,145,388$ 646,876$ 646,876$ 141516 Total Pro Forma Adjustment to Depreciation Expense 85,031,401$ 1,330,641$ 5,927,291$
1718 Accumulated Depreciation:1920 Pro Forma Depreciation Expense (5,927,291)$ 2122 Less: Retirements After August 31, 2017 16,535,000$ 2324 Total Pro Forma Adjustment to Accumulated Depreciation in Rate Base 10,607,709$
SOUTH JERSEY GAS COMPANY
DEPRECIATION EXPENSE AND ACCUMULATED DEPRECIATIONPRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME AND RATE BASE
TSK - 13A9&3
(a) (b) (c) (d) (e)Net Net
Line Start COR Salvage Salvage EndNo. Reserve Amort. Allowance Incurred Reserve1 Jul-14 38,429,700$ (101,387) 118,068 (346,909) 38,099,472$ 2 Aug-14 38,099,472$ (101,387) 118,068 (201,092) 37,915,061$ 3 Sep-14 37,915,061$ (101,387) 118,068 (526,751) 37,404,990$ 4 Oct-14 37,404,990$ (88,344) 199,181 (788,777) 36,727,050$ 5 Nov-14 36,727,050$ (88,344) 199,181 (424,275) 36,413,611$ 6 Dec-14 36,413,611$ (88,344) 199,181 (584,414) 35,940,033$ 7 2015 35,940,033$ (1,060,130) 2,390,167 (4,625,823) 32,644,247$ 8 2016 32,644,247$ (1,060,130) 2,390,167 (5,745,619) 28,228,665$ 9 Jan to Aug 2017 28,228,665$ (706,753) 1,593,445 (3,897,057) 25,218,300$
(9,815,193)
10 Projected Balance Available to be Returned to Customer as of Aug 31, 2017 25,218,300$
11 Number of Years Remaining from the Original 40-Year Amortization Period 33 1/12
12 Projected Annual Amortization of Regulatory Liability 762,266$
13 Current Annual Amortization of Regulatory Liability included in Rates (BPU Docket No. GR1311113 1,060,130$
14 Proposed Decrease in Annual Amortization of Regulatory Liability (297,864)$
15 Proposed Provision for Annual Net Negative Salvage (3-year average) 5,530,906$
16 Current Provision for Annual Net Negative Salvage 2,390,167$
17 Proposed Change in Annual Net Negative Salvage 3,140,739$
New Shortfall (net col's c & d)
South Jersey Gas CompanyNon-Legal Asset Retirement Obligation Amortization
TSK - 149&3
Line No.
1 Pre-Tax Adjustments (KJB-3) (21,549,723)$ 23 Interest Synchronization:45 Rate Base (KJB-2) 1,692,759,503$ 67 Total Weighted Cost of Long Term Debt (PRM-1 PG 1) 1.69%89 Annualized Interest Expense 28,607,636$
1011 Less: Test Year Interest Expense (26,476,400)$ 1213 Net Interest Expense (2,131,236)$ 141516 Total Pre-Tax Adjustments (23,680,959)$ 1718 Income Tax Rate 40.85%1920 Decrease to test year income taxes (9,673,672)$
2122 AIRP II AFUDC Tax Adjustment (8,579)$ 2324 Total Decrease to test year income taxes (9,682,251)$
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
INCOME TAXES
TSK-159&3
Line Year Salaried/Management Bargaining Expense Incremental
No. Plan Plan Total Ratio Expense Basis
1 2015 742,516$ 1,354,525$ 2,097,041$ 48.0% 1,006,580$ Actual
2 2016 477,465 860,827 1,338,292 50.0% 669,146 Actual
3 2017 418,000 860,000 1,278,000 50.0% 639,000 Estimate
4 Total 1,637,981$ 3,075,352$ 4,713,333$ 2,314,726$
56 15 Years
78 Pro-Forma Adjustment - Annual Amortization 154,315$
910 Test Year Expenses1112 September - December 2016 223,049$ 13 January - August 2017 426,000$ 1415 Pro-Forma Adjustment - Pension Expense 649,049$
SOUTH JERSEY GAS COMPANY
MORTALITY TABLE CHANGE IMPACT - PENSION EXPENSE
Pojected Amortization Period
PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME
9 & 3 UPDATE
Schedules of
R.F. FATZINGER
RFF-19&3
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENTS TO AUGUST 31, 2017
MAJOR CONSTRUCTION PROJECTS
Line Actuals as of Projection Projection Projection ProjectedNo. Project Name 5/31/17 6/1/17 - 8/31/17 Post-Test Year Total In Service Date
1 Pedricktown Distribution Regulator Station $0 $122,200 $262,900 $385,100 October 2017
2 Pedricktown Distribution Main $31 $34,100 $119,000 $153,131 October 2017
3 Echelon Mall Stations $0 $38,700 $110,900 $149,600 October 2017
4 Replace Mexichem Station $0 $66,600 $150,100 $216,700 November 2017
5 Reconstruct Mannington Mills Station $0 $66,600 $148,500 $215,100 September 2017
6 District Regulator Station Surveillance $24,179 $89,700 $118,400 $232,279 October 2017
7 Rebuild Distribution Regulator Stations $715,970 $139,300 $184,700 $1,039,970 October 2017
8 District Regulator Station Security $45,106 $59,100 $50,900 $155,106 December 2017
9 Purchase Volume Correcting Instruments $92,398 $1,500 $107,400 $201,298 December 2017
10 Additional SCADA Monitoring Points $3,820 $73,900 $99,400 $177,120 December 2017
11 LNG Tank Valve Control Panel Replacement $0 $61,200 $61,100 $122,300 October 2017
12 Replace Harmony Road Line Heater $0 $278,600 $532,600 $811,200 November 2017
13 Farm Tap Elimination $193,807 $1,759,600 $229,700 $2,183,107 December 2017
14 Deepwater Lateral Uprating $20,465 $1,528,600 $412,500 $1,961,565 October 2017
15 Lawnside Pipeline Refurbishment Project $2,186,674 $6,446,200 $19,367,126 $28,000,000 February 2018
16 12 Woodbury Line Modifications $1,843,061 $332,500 $233,000 $2,408,561 October 2017
17 Install Pipeline RCVs $268,892 $34,800 $9,100 $312,792 December 2017
18 Unidirectional SCADA Gateway $151,822 $59,400 $79,000 $290,222 December 2017
19 Install Station Flow Control $118,501 $158,300 $26,900 $303,701 December 2017
20 Rebuild Salem Scrubber Station $39,899 $600 $209,800 $250,299 October 2017
21 Replace John Mansville Station $3,762 $161,500 $5,500 $170,762 September 2017
22 CNG Station - Gold Medal Deptford $1,254,500 $21,000 $795,300 $2,070,800 December 2017
23 CNG Station - Pennsville Hook Rd $1,522,457 $24,900 $24,900 $1,572,257 December 2017
24 CNG Station - Chesilhurst US30 $1,590,870 $1,025,400 $330,000 $2,946,270 October 2017
25 CNG Station - Riggins Malaga $521,614 $564,700 $6,200 $1,092,514 December 2017
26 CNG Station - SJG Swainton Yard $482,438 $504,300 $55,000 $1,041,738 September 2017
27 Evesham Road Pipeline $794,828 $213,400 $551,500 $1,559,728 December 2017
28 New SCADA Bldg Cape May $60,767 $43,200 $18,200 $122,167 November 2017
29 Total Pro Forma Adjustment $11,935,862 $13,909,900 $24,299,626 $50,145,388
9 & 3 UPDATE
Schedules of
P.J. ZUCCARINO
SOUTH JERSEY GAS CAPITAL PJZ-1ADJUSTMENT TO AUGUST 31, 2017 RATE BASE 9&3
September October November December January February March April May June July August 2016-2017
Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected Projected Test Year2016 2016 2016 2016 2017 2017 2017 2017 2017 2017 2017 2017 Total
New Business1.0 Mains 1,302,749 1,138,032 1,339,196 1,034,453 1,260,604 1,089,686 1,661,115 1,152,599 1,562,759 2,624,000 2,040,500 2,083,400 18,289,092 1.1 Services 1,628,219 2,092,528 2,092,978 2,122,380 1,779,295 1,290,361 2,747,874 1,629,053 1,874,184 1,557,800 1,169,000 1,232,500 21,216,172 1.2 Meters 645,073 521,268 410,041 485,743 162,778 1,100,734 487,040 438,689 601,390 709,600 705,600 933,300 7,201,256 1.3 Regulators 168,493 86,985 55,547 69,635 76,653 124,546 105,850 65,561 110,010 52,000 51,400 48,000 1,014,678
Total New Business 3,744,534 3,838,813 3,897,761 3,712,211 3,279,329 3,605,327 5,001,878 3,285,902 4,148,343 4,943,400 3,966,500 4,297,200 47,721,199
2.0 Improvement Mains 340,760 635,964 503,015 1,219,798 633,577 199,259 513,923 816,033 208,117 20,700 20,300 20,300 5,131,746
Replacements3.0 Replacement Mains 2,119,345 3,549,919 1,687,369 2,820,400 2,937,857 1,038,995 3,011,231 2,454,753 714,447 1,134,456 692,200 689,900 22,850,872 3.0 Replacement Mains - AIRP II 32,262 382,637 710,038 1,376,370 2,218,100 3,877,633 7,325,765 6,946,568 4,998,182 3,034,093 - - 30,901,646 3.0 Replacement Mains - SHARP 1,746,789 2,379,148 3,839,374 2,530,443 2,693,527 1,589,774 1,019,810 1,551,119 496,764 897,100 - - 18,743,848 3.1 Replacement Services 1,600,467 2,361,366 1,381,403 968,340 1,207,571 616,295 1,377,867 1,129,544 1,935,012 1,891,600 932,900 872,400 16,274,766 3.1 Replacement Services - AIRP II - 2,860 149,112 266,827 994,509 1,741,042 3,012,445 3,670,133 4,408,120 2,828,278 - - 17,073,325 3.1 Replacement Services - SHARP 1,539,306 1,300,680 2,120,799 1,365,972 1,021,705 879,631 3,048,866 974,811 71,760 138,700 - - 12,462,230 3.2 Leak Clamping 662,800 568,585 435,914 652,221 469,555 400,720 813,408 439,864 488,532 585,300 483,700 443,400 6,443,999 3.3 Replacement Meters 7,926 122,182 80,542 39,031 40,359 25,024 46,365 30,283 41,638 5,100 5,000 4,400 447,849 3.4 Replacement Regulators 1,095,384 835,077 911,385 470,967 893,313 197,431 1,327,956 816,958 754,975 690,300 586,600 512,100 9,092,446
Total Replacements 8,804,279 11,502,454 11,315,935 10,490,570 12,476,497 10,366,544 20,983,713 18,014,034 13,909,428 11,204,927 2,700,400 2,522,200 134,290,981
4.0 Land & Buildings - - - - - - - - - - - - -
5.0 Automotive Equipment 57,584 478,657 176,227 400,454 36,807 219,740 344,534 693,945 106,066 279,700 436,000 227,200 3,456,914
6.0 Production Equipment 1,220,555 201,916 1,792,553 309,382 320,654 238,930 150,352 179,460 44,621 3,200 18,200 3,300 4,483,123
7.0 Transmission Equipment (83,642) 5,872 205,577 (152,992) 7,607 3,812 20,758 104,660 15,124 11,200 11,200 7,700 156,877
8.0 Distribution Equipment 82,431 93,482 (6,169) (1,163,767) 7,914 49,691 689,648 (221,297) 84,209 302,600 193,500 133,400 245,643
9.0 Office Furniture & Equipment (22,696) 25,308 - 22,305 9,338 33,550 23,041 (15,632) 24,508 16,700 16,700 16,700 149,823
10.0 Building Improvements (49,622) 100,267 96,891 (7,857) 64,694 30,587 432 53,334 25,681 48,700 212,400 212,500 788,007 .
11.0 Cathodic Protection 164,815 113,972 167,736 174,797 210,169 135,988 221,755 76,251 144,486 152,300 133,700 126,100 1,822,069
12.0 Communications Equipment - - - - - - - - - - - - -
13.0 Information Technology 405,032 465,301 267,897 827,298 (43,879) 417,999 445,711 134,084 323,912 983,700 722,700 1,296,900 6,246,655
TOTAL SJG Capex 14,664,030 17,462,006 18,417,423 15,832,199 17,002,706 15,301,429 28,395,746 23,120,775 19,034,495 17,967,127 8,431,600 8,863,500 204,493,037
Retirements:Blankets 1,157,839 877,223 947,158 1,139,758 776,367 2,182,051 8,783,585 2,324,610 3,551,530 2,700,000 2,700,000 2,700,000 29,840,120 Specials 21,250 - - 97,459 - - - - - 25,000 - - 143,709 Total Retirements 1,179,089 877,223 947,158 1,237,216 776,367 2,182,051 8,783,585 2,324,610 3,551,530 2,725,000 2,700,000 2,700,000 29,983,829
Total 13,484,942 16,584,783 17,470,265 14,594,983 16,226,339 13,119,378 19,612,162 20,796,165 15,482,965 15,242,127 5,731,600 6,163,500 174,509,209
PJZ-29&3
September October November December January FebruaryTotal Post Test
YearForecast Forecast Forecast Forecast Forecast Forecast Forecast
2017 2017 2017 2017 2018 2018 2018New Business
1.0 Mains 2,731,300 1,113,400 1,330,300 1,502,100 1,260,604 1,089,686 9,027,390 1.1 Services 1,647,100 1,185,400 1,282,500 2,080,800 1,779,295 1,290,361 9,265,456 1.2 Meters 759,700 717,600 655,500 689,800 162,778 1,100,734 4,086,112 1.3 Regulators 51,400 52,000 52,000 51,400 76,653 124,546 407,998
Total New Business 5,189,500 3,068,400 3,320,300 4,324,100 3,279,329 3,605,327 22,786,957
2.0 Improvement Mains 68,700 65,200 67,700 67,300 633,577 199,259 1,101,736
Replacements3.0 Replacement Mains 690,500 690,600 690,600 690,500 2,937,857 1,038,995 6,739,052 3.0 Replacement Mains - AIRP II - - - - - - - 3.0 Replacement Mains - SHARP - - - - - - - 3.1 Replacement Services 1,247,500 1,100,800 1,035,600 1,121,800 1,207,571 616,295 6,329,566 3.1 Replacement Services - AIRP II - - - - - - - 3.1 Replacement Services - SHARP - - - - - - - 3.2 Leak Clamping 587,500 588,800 445,800 706,400 469,555 400,720 3,198,775 3.3 Replacement Meters 5,000 5,100 5,100 5,000 40,359 25,024 85,583 3.4 Replacement Regulators 425,600 420,300 420,300 420,100 893,313 197,431 2,777,044
Total Replacements 2,956,100 2,805,600 2,597,400 2,943,800 5,548,655 2,278,464 19,130,020
4.0 Land & Buildings - - - - - - -
5.0 Automotive Equipment 307,300 545,800 60,200 22,000 36,807 219,740 1,191,847
6.0 Production Equipment 3,300 3,300 3,300 3,200 320,654 238,930 572,685 - -
7.0 Transmission Equipment 7,700 7,700 7,700 - 7,607 3,812 34,519 - -
8.0 Distribution Equipment 23,400 23,400 23,400 38,500 7,914 49,691 166,305 - -
9.0 Office Furniture & Equipment 16,700 16,700 16,700 16,700 9,338 33,550 109,688 - -
10.0 Building Improvements 212,500 239,800 214,500 199,400 64,694 30,587 961,481 - -
11.0 Cathodic Protection 177,300 192,600 113,800 253,900 210,169 135,988 1,083,757 - -
12.0 Communications Equipment - - - - - - - - -
13.0 Information Technology 1,268,700 890,800 931,300 817,100 (43,879) 417,999 4,282,020
TOTAL SJG Capex 10,231,200 7,859,300 7,356,300 8,686,000 10,074,865 7,213,349 51,421,013
Retirements:Blankets 2,700,000 2,700,000 2,700,000 2,700,000 2,700,000 2,700,000 16,200,000 Specials 335,000 - - - - - 335,000 Total Retirements 3,035,000 2,700,000 2,700,000 2,700,000 2,700,000 2,700,000 16,535,000
SOUTH JERSEY GAS COMPANYPRO FORMA ADJUSTMENT TO AUGUST 31, 2017 RATE BASE
9 & 3 UPDATE
Schedules of
D.P. YARDLEY
South Jersey Gas CompanyBase and Total Revenues at Present and Proposed Rates
9&3 Update
Exsting Rates Adjusted forProjected October 1, 2017
Present Rates SHARP and AIRP II Roll-In Proposed RatesComponent Amount Units Rate Revenue Rate Revenue Rate Revenue Increase
RSG RSG RSGResidential Service
Customer Charge 4,323,016 Bills 9.00$ 38,907,144$ 9.00$ 38,907,144$ 12.25$ 52,956,946$
Distribution Charge 260,191,521 Therms 0.547317 142,407,243 0.569543 148,190,259 0.761628 198,169,148
CIP Revenues 6,243,554 6,243,554 - Total Base Revenues 187,557,941$ 193,340,957$ 251,126,094$ 29.9%
Rider Revenues 117,072,904$ 117,072,904$ 117,072,904$
Total Class Revenues 304,630,845$ 310,413,861$ 368,198,998$ 18.6%
GSG GSG GSGGeneral Service (0-100,000 Annual Therms)
Customer Charge 303,139 Bills 27.25$ 8,260,538$ 27.25$ 8,260,538$ 32.25$ 9,776,233$
Distribution Charge 94,774,883 Therms 0.435411 41,266,027 0.452584 42,893,596 0.642586 60,901,013
CIP Revenues 3,259,950 3,259,950 - Total Base Revenues 52,786,514$ 54,414,083$ 70,677,246$ 29.9%
Rider Revenues 33,198,252$ 33,198,252$ 33,198,252$
Total Class Revenues 85,984,766$ 87,612,335$ 103,875,498$ 18.6%
DPY-2 Page 1 of 5
South Jersey Gas CompanyBase and Total Revenues at Present and Proposed Rates
9&3 Update
Exsting Rates Adjusted forProjected October 1, 2017
Present Rates SHARP and AIRP II Roll-In Proposed RatesComponent Amount Units Rate Revenue Rate Revenue Rate Revenue Increase
GSG-LV GSG-LV GSG-LVGeneral Service Large Volume (100,000 + Annual Therms)
Customer Charge 2,180 Bills 150.00$ 327,000$ 150.00$ 327,000$ 150.00$ 327,000$
Demand Charge 212,320 Mcf 9.0000 1,910,880 9.0000 1,910,880 12.2500 2,600,920
Distribution Charge 34,730,706 Therms 0.238429 8,280,807.60 0.247390 8,592,029 0.304841 10,587,343
CIRT Revenues (424,573) (424,573) - Total Base Revenues 10,094,115$ 10,405,336$ 13,515,263$ 29.9%
Rider Revenues 5,293,282$ 5,293,282$ 5,293,282$
Total Class Revenues 15,387,397$ 15,698,619$ 18,808,546$ 19.8%
CTS CTS CTSComprehensive Firm Transportation Service
Customer Charge 550 Bills 600.00$ 330,000$ 600.00$ 330,000$ 600.00$ 330,000$
Demand Charge 129,450 Mcf 27.4213 3,549,687 27.4213 3,549,687 31.0000 4,012,950
Distribution Charge 21,846,208 Therms 0.047608 1,040,054 0.054552 1,191,754 0.102729 2,244,239 Total Base Revenues 4,919,742$ 5,071,442$ 6,587,189$ 29.9%
Rider Revenues 1,238,787$ 1,238,787$ 1,238,787$
Total Class Revenues 6,158,529$ 6,310,229$ 7,825,976$ 24.0%
DPY-2 Page 2 of 5
South Jersey Gas CompanyBase and Total Revenues at Present and Proposed Rates
9&3 Update
Exsting Rates Adjusted forProjected October 1, 2017
Present Rates SHARP and AIRP II Roll-In Proposed RatesComponent Amount Units Rate Revenue Rate Revenue Rate Revenue Increase
LVS LVS LVSLarge Volume Service
Customer Charge 324 Bills 900.00$ 291,600$ 900.00$ 291,600$ 900.00$ 291,600$
Demand Charge 352,790 Mcf 14.8842 5,250,997 14.8842 5,250,997 18.0000 6,350,220
Distribution Charge 57,868,395 Therms 0.040282 2,331,055 0.044477 2,573,813 0.067401 3,900,388
Total Base Revenues 7,873,652$ 8,116,410$ 10,542,208$ 29.9%
Rider Revenues 4,474,496$ 4,474,496$ 4,474,496$
Total Class Revenues 12,348,147$ 12,590,905$ 15,016,703$ 19.3%
EGS EGS EGSElectric Generation Service
Customer Charge 106 Bills 25.00$ 2,650$ 25.00$ 2,650$ 75.00$ 7,950$
Demand Charge 9,294 Mcf 6.500 60,411 6.5000 60,411 8.2500 76,676
Distribution Charge (Nov - Mar.) 152,113 Therms 0.125294 19,059 0.130287 19,818 0.158927 24,175
Distribution Charge (Apr - Oct.) 862,498 Therms 0.095294 82,191 0.100287 86,497 0.128927 111,199 Total Base Revenues 164,311$ 169,377$ 220,000$ 29.9%
Rider Revenues 45,289$ 45,289$ 45,289$
Total Class Revenues 209,600$ 214,666$ 265,289$ 23.6%
DPY-2 Page 3 of 5
South Jersey Gas CompanyBase and Total Revenues at Present and Proposed Rates
9&3 Update
Exsting Rates Adjusted forProjected October 1, 2017
Present Rates SHARP and AIRP II Roll-In Proposed RatesComponent Amount Units Rate Revenue Rate Revenue Rate Revenue Increase
EGS-LV EGS-LV EGS-LVElectric Generation Service - Large Volume
Customer Charge 72 Bills 180.00$ 12,960 180.00$ 12,960$ 900.00$ 64,800$
Demand Charge 45,200 Mcf 20.710978 936,136 21.358397 965,400 26.680723 1,205,969 Total Base Revenues 949,096$ 978,360$ 1,270,769$ 29.9%
Rider Revenues 274,504$ 274,504$ 274,504$
Total Class Revenues 1,223,600$ 1,252,863$ 1,545,272$ 23.3%
NGV NGV NGVNatural Gas Vehicle Service
Cust. Charge 0-999 CFH 12 Bills 37.50$ 450$ 37.50$ 450$ 37.50$ 450$
Cust. Charge 1,000-4,999 CFH - Bills 75.00 - 75.00 - 75.00 -
Cust. Charge 5,000-24,999 CFH 12 Bills 200.00 2,400 200.00 2,400 200.00 2,400
Cust. Charge 25,000+ CFH 100 Bills 600.00 60,000 600.00 60,000 900.00 90,000
Distribution Charge 2,125,090 Therms 0.164072 348,668 0.170043 361,357 0.174722 371,300
Subtotal Distribution 411,518$ 424,207$ 464,150$
Compression Charge 840,876 Therms 0.542769 456,401 0.542769 456,401 0.573327 482,097
Total Base Revenues 867,919$ 880,608$ 946,247$ 7.5%
Rider Revenues 238,881$ 238,881$ 238,881$
Total Class Revenues 1,106,800$ 1,119,489$ 1,185,128$ 5.9%
DPY-2 Page 4 of 5
South Jersey Gas CompanyBase and Total Revenues at Present and Proposed Rates
9&3 Update
Exsting Rates Adjusted forProjected October 1, 2017
Present Rates SHARP and AIRP II Roll-In Proposed RatesComponent Amount Units Rate Revenue Rate Revenue Rate Revenue Increase
GLS GLS GLSGas Lights Service
Yard Lights 48 Mantles 7.723363$ 4,449$ 7.961496$ 4,586$ 10.341004$ 5,956$
Street Lights 36 Mantles 8.325900$ 3,597 8.582611$ 3,708 11.147756$ 4,816 Total Base Revenues 8,045$ 8,294$ 10,772$ 29.9%
Rider Revenues 11,655$ 11,655$ 11,655$
Total Class Revenues 19,700$ 19,948$ 22,427$ 12.4%
TOTAL SYSTEM BASE DISTRIBUTION REVENUES 265,221,334$ 273,384,866$ 354,895,787$ 29.8%
Other Revenues Rider Revenues 161,848,050$ 161,848,050$ 161,848,050$ Special Contracts 4,451,923 4,451,923 4,451,923 Service Charges 1,732,500 1,732,500 1,732,500 Total Other Revenues 168,032,473$ 168,032,473$ 168,032,473$
TOTAL SYSTEM INCLUDING OTHER REVENUES 433,253,807$ 441,417,339$ 522,928,260$ 18.5%
Increase 81,510,921$ Target 81,510,884
Difference $37
DPY-2 Page 5 of 5
DPY-39&3
SOUTH JERSEY GAS COMPANYPro Forma Adjustment to August 31, 2017
Summary of CIP Revenue Adjustment
Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected Projected2016 2016 2016 2016 2017 2017 2017 2017 2017 2017 2017 2017 Test Year
Description September October November December January February March April May June July August Total
CIP Revenue Adjustment
CIP Group 1 - RSG non-Heat ($9,778) ($23,715) $24,102 $65,783 $41,445 $48,759 ($23,536) ($22,719) ($20,334) ($10,961) ($11,424) ($7,894) $49,727
CIP Group 2 - RSG Heat ($174,461) ($3,081,892) ($1,794,864) $125,336 ($4,933,352) ($7,183,203) $1,081,513 ($2,360,012) ($1,091,795) $200,975 $221,486 $467,335 ($18,522,935)
CIP Group 3 - GSG ($10,560) ($1,230,641) ($1,496,257) ($580,292) ($863,932) ($2,276,420) $125,738 ($643,158) ($15,625) $362,267 $258,373 $650,202 ($5,720,305)
CIP Group 4 - GSG-LV ($67,567) ($119,647) $1,395 ($69,111) ($17,085) ($205,066) $229,832 ($213,680) ($16,187) $39,892 ($74,506) $457,544 ($54,186)
Total Revenue ($262,366) ($4,455,896) ($3,265,624) ($458,284) ($5,772,924) ($9,615,930) $1,413,547 ($3,239,570) ($1,143,941) $592,173 $393,929 $1,567,187 ($24,247,698)
Weather Related Dollars $0 ($116,847) ($1,358,045) $398,837 ($4,986,043) ($7,671,661) $1,766,438 ($3,490,117) $288,670 $0 $0 $0 ($15,168,768)
Total Non-Weather Related Dollars ($262,366) ($4,339,049) ($1,907,579) ($857,121) ($786,881) ($1,944,269) ($352,891) $250,547 ($1,432,611) $592,173 $393,929 $1,567,187 ($9,078,930)
DPY‐4
Page 1 of 1
South Jersey Gas Company
Derivation of CIP Baseline Use‐per‐Customer
9 + 3 Update
Sep‐16 Oct‐16 Nov‐16 Dec‐16 Jan‐17 Feb‐17 Mar‐17 Apr‐17 May‐17 Jun‐17 Jul‐17 Aug‐17 Total
Group 1: RSG Non‐Heat
Customers 12,006 11,955 11,924 11,910 11,887 11,894 11,908 11,858 11,871 11,921 11,927 11,920 142,981
Therms 100,848 116,900 209,793 366,728 355,068 366,221 286,849 192,093 129,041 115,634 115,692 119,200 2,474,067
Baseline Use per Cust. 8.40 9.78 17.59 30.79 29.87 30.79 24.09 16.20 10.87 9.70 9.70 10.00 207.78
Group 2: RSG Heat
Customers 337,925 338,431 339,260 340,513 341,955 342,648 343,352 343,394 343,328 343,178 342,945 342,918 4,099,847
Therms 5,334,396 5,899,267 24,687,255 42,693,053 51,843,293 44,445,381 35,300,401 18,680,863 7,763,276 5,731,073 5,452,826 5,418,104 253,249,186
Baseline Use per Cust. 15.79 17.43 72.77 125.38 151.61 129.71 102.81 54.40 22.61 16.70 15.90 15.80 740.91
Group 3: GSG
Customers 24,398 24,488 24,649 24,896 25,118 25,171 25,271 25,258 25,162 25,009 24,891 24,834 299,145
Therms 3,043,580 2,407,587 8,241,728 14,246,532 16,801,819 13,923,531 12,877,550 6,630,797 4,025,774 3,902,137 3,282,177 4,860,119 94,243,330
Baseline Use per Cust. 124.75 98.32 334.36 572.24 668.92 553.16 509.58 262.52 159.99 156.03 131.86 195.70 3,767.43
Group 4: GSG‐LV
Customers 177 177 180 175 176 184 184 184 185 185 185 185 2,177
Therms 629,889 1,479,197 3,435,915 4,162,633 5,960,705 4,892,377 4,519,347 2,362,618 1,749,162 1,578,476 948,791 3,011,597 34,730,706
Baseline Use per Cust. 3,558.70 8,357.05 19,088.42 23,786.48 33,867.64 26,589.01 24,561.67 12,840.32 9,454.93 8,532.30 5,128.60 16,278.90 192,044.02