EXHIBIT 34

Case:17-03283-LTS Doc#:24535-34 Filed:06/12/23 Entered:06/12/23 21:36:46 Desc:

Exhibit AHG Ex 34 2023-05-11 Excerpted Shah_FULL Page 1 of 8
1

2 IN THE UNITED STATES DISTRICT COURT

 FOR THE DISTRICT OF PUERTO RICO

3 Case No. 17-BK-3283-LTS

 ----------------------------------------x

4 In re:

5 THE FINANCIAL OVERSIGHT AND MANAGEMENT

 BOARD FOR PUERTO RICO,

6

 as representative of

7

 THE COMMONWEALTH OF PUERTO RICO, et al.,

8

 Debtors.

9 -----------------------------------------x

 Case No. 17-BK-4780-LTS

1 0 -----------------------------------------x

 In re:

1 1

 THE FINANCIAL OVERSIGHT AND MANAGEMENT

1 2 BOARD FOR PUERTO RICO,

1 3 as representative of

1 4 THE PUERTO RICO ELECTRIC POWER AUTHORITY,

1 5 Debtor.

 ----------------------------------------x

1 6 May 11, 2023

 9:35 a.m.

1 7

1 8 VIDEOTAPED DEPOSITION of OJAS SHAH,

1 9 held at the offices of Kramer Levin

2 0 Naftalis & Frankel LLP, located at 1177

2 1 Avenue of the Americas, New York, New York

2 2 10036, before Anthony Giarro, a Registered

2 3 Professional Reporter, a Certified Realtime

2 4 Reporter and a Notary Public of the State

2 5 of New York.

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Case:17-03283-LTS Doc#:24535-34 Filed:06/12/23 Entered:06/12/23 21:36:46 Desc:

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1 OJAS SHAH

2 under the fiscal plan, it's more of a

3 gradual increase over time. So when

4 you're out 20 years, that distance will

5 shrink.

6 Q It might be helpful to look

7 at Exhibit 66 which is easier to read.

8 The next model of the revenues worksheet

9 is elasticity assumptions.

1 0 Generally speaking, this is

1 1 applying the elasticity estimates we

1 2 discussed earlier to the increased rates

1 3 in the decision variable module; correct?

1 4 A That's right.

1 5 Q And, again, these elasticity

1 6 assumptions assume that the entire

1 7 increased rate is a change to the

1 8 volumetric rate; correct?

1 9 A That's my understanding,

2 0 yes.

2 1 Q If you look toward the very

2 2 bottom of Exhibit 66, which, again, is

2 3 the shortened version of the revenues

2 4 worksheet, there's a line. It reads

2 5 "catchall elasticity of demand."

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1 OJAS SHAH

2 A It's in a simplified line

3 item structure.

4 Q At the very -- toward the

5 bottom of that section of the worksheet,

6 there's a line for additional

7 engineering: O&M, 10 percent of FF

8 projects cost share. You see that?

9 A Yes.

1 0 Q What does that refer to?

1 1 A That is the 10 percent cost

1 2 share federal funds that we were talking

1 3 about earlier.

1 4 Q And this comes from another

1 5 team at McKinsey; is that right?

1 6 A Well, it's from our PREPA

1 7 team that was led by Aaron Bielenberg.

1 8 But that supports a lot of our work on

1 9 PREPA, including fiscal plan.

2 0 Q And that here is treated as

2 1 a deduction in the budget prior to

2 2 getting to the surplus?

2 3 MS. WEISGERBER: Objection

2 4 to form.

2 5 A It streams as an incremental

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1 OJAS SHAH

2 expense, correct.

3 Q Better way to put it. Thank

4 you.

5 And below that, there's

6 another line for additional O&M

7 requirements and in parentheses, "grid

8 reliability." You see that?

9 A Yes.

1 0 Q What does that refer to?

1 1 A What we talked about

1 2 earlier. There were two pieces of costs

1 3 that weren't in the 2022 fiscal plan.

1 4 One was this cost share component which

1 5 is something that PREPA's going to pay in

1 6 the near term over the first I think

1 7 approximately ten years.

1 8 The second is based on work

1 9 that the team did, looking at costs to

2 0 support long-term reliability of power

2 1 systems and an assessment of whether

2 2 there was sufficient cost in the PREPA

2 3 fiscal plan to support PREPA for the

2 4 long-term. And based on that analysis, a

2 5 perspective that there needed to be

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1 OJAS SHAH

2 additional costs that impacts -- I think

3 it's probably -- it's about ten years out

4 or so that that kicks in.

5 Q 2034, it looks like?

6 A Yeah.

7 Q And is that treated as an

8 incremental expense as well?

9 A That is.

1 0 Q Then below that, there's a

1 1 section titled "To be Reclassified

1 2 Budget."

1 3 What does that demonstrate?

1 4 A As we layer in the

1 5 assumptions that we talked about in the

1 6 memo for changes to existing PREPA costs.

1 7 So this will reflect the change in the

1 8 bad debt assumption. And it probably

1 9 will also layer in the LUMA termination

2 0 fees and things of that sort that we

2 1 described in the memo in terms of changes

2 2 that result from the dismissal of the

2 3 Title III and the other assumptions that

2 4 we outline in the memo.

2 5 Q In that section of the

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1 OJAS SHAH

2 just looking at something. So I agree it

3 should be applied to the operating

4 expense budget under that scenario in

5 that year. I'd have to look at the math.

6 Q And by under that scenario,

7 you mean under the to be scenario?

8 A Under the -- well, under the

9 scenario for Option 3. So, yes, yeah.

1 0 Q A few lines down from that,

1 1 there's a row for pensions schedule. You

1 2 see that?

1 3 A Yes.

1 4 Q And do you know -- I will

1 5 represent to you that the source for

1 6 those values is a separate worksheet in

1 7 the model, titled "Pensions."

1 8 Fair enough?

1 9 A Yes, it is.

2 0 Q I will also represent to you

2 1 that that worksheet says --

2 2 reads, "Source FOMB financial advisor."

2 3 Fair enough?

2 4 A Yes.

2 5 Q My question is just, what

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1 OJAS SHAH

2 FOMB advisor provided the data used in

3 the pension schedule line?

4 A That analysis came from EY.

5 Q And was it independently

6 verified by McKinsey?

7 A No.

8 Q Does McKinsey have an

9 independent position as to the accuracy

1 0 of those numbers?

1 1 A Of those numbers, no.

1 2 Q The section toward the

1 3 bottom of the cash flow worksheet is

1 4 labeled 6 FLL and other claims part of

1 5 the current expense definition. And then

1 6 in parentheses "at effective date."

1 7 You see that?

1 8 A Yes.

1 9 Q And just to confirm, your

2 0 understanding of which claims do and do

2 1 not count as part of the current expense

2 2 definition came from counsel?

2 3 A That's correct.

2 4 Q And so this cash flow

2 5 analysis that follows is based entirely

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