Virginia Administrative Code › Title 20 - PUBLIC UTILITIES AND TELECOMMUNICATIONS › Agency 5 - STATE CORPORATION COMMISSION › Chapter 403 - RULES GOVERNING SMALL INVESTOR-OWNED TELEPHONE UTILITIES › Section 20VAC5-403-70:1 - APPENDIX A

Current through Register Vol. 40, No. 24, July 15, 2024
Instructions: This schedule shall state the amount of each
				  capital component per balance sheet, the amount for ratemaking purposes, the
				  percentage weight in the capital structure, the component cost, and the
				  weighted capital cost, using the format of the attached schedule. This
				  information shall be provided for the test period. In Part A, the test period
				  information should be compatible with the State Corporation Commission Annual
				  Operating Report. The methodology used in constructing the capital structure
				  should be consistent with that approved in the applicant's last rate case. If
				  the applicant wishes to use a different methodology (including a change in cost
				  of equity) in constructing its capital structure in a rate application, it may
				  prepare an additional schedule labeled as Schedule 1(a) explaining the
				  methodology used and justifying any departure from applicant's last rate
				  case.
The amounts and costs for short-term debt, revolving credit
				  agreements, and similar arrangements shall be based on a 13-month average over
				  the test year, or, preferably, a daily average during the test year, if
				  available. All other test period amounts are end-of-year. The component
				  weighted cost rates equal the product of each component's capital structure
				  weight for ratemaking purposes times its cost rate. The weighted cost of
				  capital is equal to the sum of the component weighted cost rates.
Schedule 1
Capital Structure and Cost of Capital Statement Test
				  Period
A. Capital Structure Per
				Balance Sheet ($)
Short-Term Debt
Customer Deposits
Other Current Liabilities
Long-Term Debt
Common Equity
Investment Tax Credits
Other Tax Deferrals
Other Liabilities
Total Capitalization
B. Capital Structure Approved for Ratemaking
				Purposes ($)
Short-Term Debt
Long-Term Debt
Job Development Credits
Cost-Free Capital
Common Equity
Total Capitalization
C. Capital Structure Weights for Ratemaking
				Purposes (%)
Short-Term Debt
Long-Term Debt
Job Development Credits
Cost-Free Capital
Common Equity
Total Capitalization (100%)
D. Component Capital Cost Rates (%)
Short-Term Debt
Long-Term Debt
Job Development Credits
Cost-Free Capital
Common Equity (Authorized)
E. Component Weighted Cost Rates (%)
Short-Term Debt
Long-Term Debt
Job Development Credits
Cost-Free Capital
Common Equity (Authorized)
Weighted Cost of Capital
Schedule 2
Schedule of Bonds, Mortgages, Other Long-Term Debt, and
				  Cost-Free Capital
Instructions: Provide a description of each issue, amount
				  outstanding, percentage of total capitalization, and annualized cost based on
				  the embedded cost rate. These data shall support the debt cost contained in
				  Schedule 1. Provide a detailed breakdown of all cost-free capital items
				  contained in Schedule 1.
Schedule 3
Schedule of All Short-Term Debt, Revolving Credit
				  Agreements, and Similar Arrangements
Instructions: Provide data and explain the methodology used
				  to calculate the cost and balance contained in Schedule l for short-term debt,
				  revolving credit agreements, and similar arrangements.
Schedule 4
Stockholders' Annual Report
Instructions: Provide a copy of the most recent stockholders'
				  annual report and SEC Form 10K (if SEC Form 10K is available).
Schedule 5
Company Profitability and Capital Markets Data
Instructions: This schedule shall be prepared by companies
				  having more than $3 million in gross annual operating revenue which are not a
				  subsidiary of a telecommunications company, using the definitions provided
				  below and the format of the attached schedule. These companies shall provide
				  data for the two most recent calendar years plus the test period. This
				  information shall be compatible with the latest Stockholders' Annual Reports
				  (including any restatements).
Definitions
Return on Year-End Equity* =
Earnings Available for Common Stockholders
Year-End Common Equity
Return on Average Equity* =
Earnings Available for Common Stockholders
The Average of Year-End Equity for the Current &
						  Previous Year
Earnings Per Share (EPS) =
Earnings Available for Common Shareholders
Average No. Common Shares Outstanding
Dividends Per Share (DPS) = Common Dividends Paid Per Share
				  During the Year
Payout Ratio = DPS/EPS
Average Market Price** = (Yearly High + Yearly Low Price)/2
				  (if known)
*Job Development Credits shall not be included as part of
				  equity capital nor shall a deduction be made from earnings for a capital charge
				  on these Job Development Credits.
**An average based on monthly highs and lows is also
				  acceptable. If this alternative is chosen, provide monthly market prices and
				  sufficient data to show how the calculation was made.
Schedule 5
Company Profitability and Capital Market Data Test
				  Period
A. Ratios
Return on Year-End Equity
Return on Average Equity
Earnings Per Share
Dividends Per Share
Payout Ratio
Market Price of Common Stock:
Year's High
Year's Low
Average Price
B. External Funds Raised
External Funds Raised -- All Sources (itemized)
Dollar Amount Raised
Coupon Rate (if applicable)
Rating Service (if applicable)
Average Offering Price (for Stock)
Schedule 6
Coverage Ratios and Cash Flow Profile Data
Instructions: This schedule shall be prepared using the
				  definitions and instructions given below and using the format of the attached
				  schedule for the past two calendar years plus the test period.
- Interest (lines 3, 4, 5) shall include amortization of
				  discount expense and premium on debt without deducting an allowance for
				  borrowed funds used during construction.
- Income taxes (line 2) shall include federal and state
				  income taxes (in Virginia gross receipts tax should be considered State income
				  tax).
- Earnings before interest and taxes (line 6) equals net
				  income plus income taxes plus total interest = (line 1) + (line 2) + (line
				  5).
- IDC (line 8), where applicable, is total IDC - allowance
				  for borrowed and other funds.
- Cash flow generated (line 14) = (line 1) + (line 9) + (line
				  10) + (line 11) + (line 12) - (line 8) - (line 13).
- Construction expenditures (line 15) is net of IDC.
Coverage definitions for Schedule 6
Pre-Tax Interest Coverage =
Earnings before Interest & Taxes
=
line 6
Interest
line 5
Common Dividend Coverage =
Cash Flow Generated
=
line 14
Common Dividends
line 16
Cash Coverage of Construction Expenditures =
Cash Flow Generated
=
line 14
Construction
line 15
Schedule 6
Coverage Ratios and Cash Flow Data Test Period
Interest Coverage Ratios
a. Pre-Tax Method
Cash Flow Coverage Ratios
a. Common Dividend Coverage
b. Cash Flow Coverage of Construction
				Expenditures
Data for Interest Coverage
Line 1. Net Income
Line 2. Income Taxes
Line 3. Interest on Mortgages
Line 4. Other Interest
Line 5. Total Interest
Line 6. Earnings Before Interest and Taxes
Line 7. Estimated Rental Interest Factor (SEC)
Data for Cash Flow Coverage
Line 1. Net Income
Line 8. Interest During Construction (IDC)
Line 9. Amortization
Line 10. Depreciation
Line 11. Change in Deferred Taxes
Line 12. Change in Investment Tax Credits
Line 13. Preferred Dividends Paid
Line 14. Cash Flow Generated
Line 15. Construction Expenditures
Line 16. Common Dividends Paid
Schedule 7
Comparative Balance Sheets
Instructions: Provide a comparative balance sheet for the
				  test period and the corresponding 12-month period immediately preceding the
				  test period.
Schedule 8
Comparative Income Statement
Instructions: Provide a comparative income statement for the
				  test period and the 12-month period immediately preceding the test
				  period.
Schedule 9
Rate of Return Statement
Instructions: Use the format of the attached schedule. Column
				  1 should state the Applicant's total Company per books results for the test
				  period. Non-jurisdictional amounts will be shown in Column 2, and Column 3 will
				  reflect Virginia jurisdictional amounts. Adjustments to test period per books
				  results shall be shown in Column 4. These adjustments shall be explained in
				  Schedule 11. If a calendar year test period is used, Column 1 can be prepared
				  from information filed by Applicant in its annual report to the commission. If
				  a calendar year test period is used, operating revenue line items can be found
				  in Schedule 34 at page 58 of the Annual Report. "Depreciation and Amortization"
				  is set forth on Line 23 of Schedule 35 at page 60 of the Annual Report.
				  "Operating and Maintenance Expense" can be derived by subtracting the amount of
				  depreciation and amortization expense from total operating expenses (Schedule
				  35, line 68). Interest on customer deposits must be calculated from Applicant's
				  books. Column 6 should show the increase requested by Applicant.
Schedule 9
Rate of Return Statement Test Period
Total Company Per Books
Virginia Non-Jurisdic. Amounts
Jurisdic. Amounts
Amounts Adjustments
Effect of After Adjustments
After Proposed Increase
Proposed Increase
Col. (1)
Col. (2)
Col. (3)
Col. (4)
Col. (5)
Col. (6)
Col. (7)
Operating Revenues
Local Service
Toll Service
Access Charges
Miscellaneous
Less: Uncollectible
Total Revenues
Operating Expenses
Operating and Maintenance Expense
Depreciation and Amortization
Income Taxes
Taxes Other than Income Taxes
Gain/Loss on Property Disposition
Total Expenses
Operating Income
Less: Charitable Donations
Interest Expense on Customer Deposits
Net Operating Income -- Adjusted
Plus: Other Income (Expense)
Less: Interest Expense
Preferred Dividend Expense
JDC Capital Expense
Income Available for Common Equity
Allowance for working capital
Net Utility Plant
Total Rate Base
Total Capital for Ratemaking
Common Equity Capital
Rate of Return Earned on Rate Base
Rate of Return Earned on Common Equity
Schedule 10
Statement of Net Original Cost of Utility Plant and
				  Allowances for Working Capital for the Test Year
Instructions: This schedule should be constructed using the
				  ratemaking policies, procedures, and guidelines last prescribed for Applicant
				  by the commission. The schedule should indicate all property held for future
				  use by account number and the date of the planned use should be shown. In a
				  footnote, applicant should identify the amount of plant and working capital
				  devoted to non-regulated business activities, if any. Such plant shall not be
				  included in the rate base. Applicants should use the format described below.
				  The unamortized balance of investment tax credits shall be deducted from the
				  rate base if the telephone company is subject to Option 1 treatment under
				  I.R.S. Code § 46(f). Column (4) adjustments should be explained and detailed in
				  Schedule 11. Columns (2) and (3) only apply to companies with over $3,000,000
				  in gross annual operating revenues which are subsidiaries of telecommunications
				  companies.
Schedule 10
Net Original Cost of Utility Plant and Allowances
Total Company Per Books
Non-Jurisdic. Amounts
Jurisdic. Amounts
Adjustments
Amounts After Adjustments
Col. (1)
Col. (2)
Col. (3)
Col. (4)
Col. (5)
Telephone Plant in Service
Telephone Plant under construction
Property held for future use
Gross Plant
Less: Reserve for Depreciation
Net Telephone Plant
Allowance for Working Capital
Materials and supplies (13-month average)
Cash (20 days of O&M expenses)
Total Allowance for Working Capital
Other Rate Base Deductions:
Customer Deposits
Deferred Federal Income Taxes
Customer Advances for Construction
Option 1 Investment Tax Credits
Total Other Rate Base Deductions
Rate Base
Schedule 11
Explanation of Adjustments to Book Amounts
Instructions: All ratemaking adjustments to test period
				  operations (test period and proforma) are to be fully explained in a supporting
				  schedule to the applicant's Schedules 9 and 10. Such adjustments shall be
				  numbered sequentially beginning with operating revenues. Supporting data for
				  each adjustment, including the details of its calculation, should be provided.
				  Examples of adjustments include:
1.
				Adjustments to annualize changes occurring during the test period.
2. Adjustments to reflect known and certain
				changes in wage agreements and payroll taxes occurring in the test period and
				proforma period (the 12-month period following the test period).
3. Adjustments to reflect depreciation and
				property taxes based on end-of-period plant balances.
4. Adjustments relating to other known
				changes occurring during the test period or proforma period.
5. Amounts relating to known and certain
				changes in company operations that take place in the proforma period can be
				adjusted through the end of the rate year. The rate year shall be defined as
				the 12 months following the effective date of new rates. The proforma period
				shall be defined as the 12 months immediately following the test year.
Schedule 12
Working Papers
Instructions: Provide detailed work papers and supporting
				  schedules of all proposed adjustments. Two copies of this exhibit shall be
				  filed with the commission's Division of Utility Accounting and Finance. Copies
				  shall be provided to other parties on request. Each schedule shall identify
				  sources of all data. Data shall be clearly identified as actual or
				  estimated.
Schedule 13
Revenue and Expense Schedule
Instructions: The applicant shall provide information about
				  revenues by primary account (consumer classification) and operating and
				  maintenance expenses by primary account during the test period.
The applicant shall also provide a detailed explanation of
				  all revenue and expense item increases and decreases of more than 10% during
				  the test period as compared to the 12-month period immediately preceding the
				  test period. Worksheets used to compute the percentage change should be
				  available for review upon request.
Schedule 14
Explanation of Proposed Revenue Requirement
				  Calculation
Instructions: Provide a schedule describing the methodology
				  used to determine the revenue requirement shown on Schedule 9, Column 6.
Schedule 15
Additional Revenues
Instructions: Show the calculations of the additional gross
				  revenues and percentage increases by customer classes that would be produced by
				  the new rates during the test period.
Schedule 16
Statement of Compliance
Instructions: Include the following statement signed by the
				  person(s) sponsoring the application:
I, (Name of Sponsoring Party), (Title), affirm that this
				  application complies with the commission's rules for small investor-owned
				  telephone utilities' applications for increases in rates, and I further affirm
				  that the schedules filed to support the application comply with the
				  instructions for the schedules set forth in the Appendix to those rules.
(Signature of Sponsoring Party)
(Date)