Niagara Mohawk Power Corporation PROCEEDING … A. Foster Associates was engaged by Niagara Mohawk...

Niagara Mohawk Power Corporation d/b/a National Grid PROCEEDING ON MOTION OF THE COMMISSION AS TO THE RATES, CHARGES, RULES AND REGULATIONS OF NIAGARA MOHAWK POWER CORPORATION FOR ELECTRIC AND GAS SERVICE

Testimony and Exhibits of:

Dr. Ronald E. White Exhibits __ (REW-1) – (REW-3), Account 378.10

Book 9

April 2012

Submitted to: New York State Public Service Commission Case 12-E-____ Case 12-G-____

Submitted by: Niagara Mohawk Power Corporation

Testim

ony of

Dr. R

onald E. White

BEFORE THE PUBLIC SERVICE COMMISSION

NIAGARA MOHAWK POWER CORPORATION d/b/a NATIONAL GRID

DIRECT TESTIMONY

OF

DR. RONALD E. WHITE

1

Testimony of Dr. Ronald E. White

1 I. INTRODUCTION AND QUALIFICATIONS

2

3 Q. Please state your name and business address.

4 A. My name is Ronald E. White. My business address is 17595 S. Tamiami Trail, Suite

5 212, Fort Myers, Florida 33908.

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7 Q. What is your occupation?

8 A. I am Chain nan of the Board and a Senior Consultant of Foster Associates, Inc.

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10 Q. Would you briefly describe your educational training and professional

11 background?

12 A. I received a B.S. degree in Engineering Operations and an M.S. degree and Ph.D.

13 (1977) in Engineering Valuation from Iowa State University. I have taught graduate

14 and undergraduate courses in industrial engineering, engineering economics, and

15 engineering valuation at Iowa State University and previously served on the faculty

16 for Depreciation Programs for public utility commissions, companies, and consultants

17 sponsored by Depreciation Programs, Inc. in cooperation with Western Michigan

18 University. I also conduct courses in depreciation and public utility economics for

19 clients of the finn.

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21 I have prepared and presented a number of papers to professional organizations,

22 committees, and conferences and have published several articles on matters relating to

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1 depreciation, valuation and economics. I am a past member of the Board of Directors

2 of the Iowa State Regulatory Conference and an affiliate member of the joint

3 American Gas Association (A.G.A.) - Edison Electric Institute (EEl) Depreciation

4 Accounting Committee, where I previously served as chairman of a standing

5 committee on capital recovery and its effect on corporate economics. I am also a

6 member of the American Economic Association, the Financial Management

7 Association, the Midwest Finance Association, and a founding member of the Society

8 of Depreciation Professionals.

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10 Q. What is your professional experience?

11 A. I joined the firm of Foster Associates in 1979 as a specialist in depreciation, the

12 economics of capital investment decisions, and cost of capital studies for ratemaking

13 applications. Before joining Foster Associates, I was employed by Northern States

14 Power Company (1968-1979) in various assignments related to finance and treasury

15 activities. As Manager of the Corporate Economics Department, I was responsible

16 for book depreciation studies, studies involving staff assistance from the Corporate

17 Economics Department in evaluating the economics of capital investment decisions,

18 and the development and execution of innovative forms of project financing. As

19 Assistant Treasurer at Northern States, I was responsible for bank relations, cash

20 requirements planning, and short-term borrowings and investments.

21

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1 Q. Have you previously testified before a regulatory body?

2 A. Yes. I have testified in numerous proceedings before administrative and judicial

3 bodies in over thirty jurisdictions. I have also testified before the Federal Energy

4 Regulatory Commission, the Federal Power Commission, the Alberta Energy Board,

5 the Ontario Energy Board, and the Securities and Exchange Commission. I have

6 sponsored position statements before the Federal Communication Commission and

7 numerous local franchising authorities in matters relating to the regulation of

8 telephone and cable television. A more detailed description of my professional

9 qualifications is contained in Exhibit _ (REW-l).

10

11 n. PURPOSE OF TESTIMONY

12

13 Q. What is the purpose of your testimony in this proceeding?

14 A. Foster Associates was engaged by Niagara Mohawk Power Corporation d/b/a

15 National Grid ("Niagara Mohawk" or "Company") to conduct a depreciation rate

16 study of gas properties owned and operated by Niagara Mohawk. The purpose of my

17 testimony is to sponsor and describe the study conducted by Foster Associates.

18

19 Gas depreciation rates currently used by Niagara Mohawk were approved by the New

20 York State Public Service Commission (the "Commission") in Case 08-G-0609 (the

21 "2008 Gas Rate Case"). The agreed upon depreciation rates were derived from

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1 parameters (i.e., projection lives, projection curves and net salvage rates) selected by

2 the Department of Public Service ("DPS") staff from a 2008 study conducted by

3 Foster Associates.

4

5 Q. Do you sponsor any exhibits supporting your direct testimony?

6 A. Yes, I sponsor Exhibit _ (REW-l), which details my professional qualifications,

7 Exhibit _ (REW-2) titled "2011 Depreciation Rate Study" and Exhibit _ (REW-3)

8 containing workpapers supporting the 2011 study. These exhibits were prepared

9 under my direction and supervision.

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11 HI. DEVELOPMENT OF DEPRECIATION RATES

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13 Q. Please explain why depreciation studies are needed for accounting and

14 ratemaking purposes.

15 A. The goal of depreciation accounting is to charge to operations a reasonable estimate

16 of the cost of the service potential of an asset (or group of assets) consumed during an

17 accounting interval. A number of depreciation systems have been developed to

18 achieve this objective, most of which employ time as the apportionment base.

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20 Implementation of a time-based ( or age-life) system of depreciation accounting

21 requires the estimation of several parameters or statistics related to a plant account.

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1 The average service life of a vintage, for example, is a statistic that will not be known

2 with certainty until all units from the original placement have been retired from

3 service. A vintage average service life, therefore, must be estimated initially and

4 periodically revised as indications of the eventual average service life become more

5 certain. Future net salvage rates and projection curves, which describe the expected

6 distribution of retirements over time, are also estimated parameters of a depreciation

7 system that are subject to future revisions. Depreciation studies should be conducted

8 periodically to assess the continuing reasonableness of parameters and accrual rates

9 derived from prior estimates.

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11 The need for periodic depreciation studies is also a derivative of the ratemaking

12 process that establishes prices for utility services based on costs. Absent rate

13 regulation, deficient or exceSSIve depreciation rates will produce no adverse

14 consequence other than a systematic over or understatement of the accounting

15 measurement of earnings. While a continuance of such practices may not comport

16 with the goals of depreciation accounting, achievement of capital recovery is not

17 dependent upon either the amount or timing of depreciation expense for an

18 unregulated entity. In the case of a regulated utility, however, recovery of investor-

19 supplied capital is dependent upon allowed revenues, which in turn depend upon

20 approved levels of depreciation expense. Periodic reviews of depreciation rates are,

21 therefore, essential to the achievement of timely capital recovery for a regulated

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utility.

It is also important to recogmze that revenue associated with depreciation is a

significant source of internally generated funds used to finance plant replacements

and new capacity additions. Given the same financing requirements and the same

dividend payout ratio, an increase in internal cash generation will accelerate per-share

growth in earnings, dividends, and book value over the business life of a firm.

Financial theory provides that the marginal cost of external financing will be reduced

by these enhanced measurements of financial performance. This is not to suggest that

internal cash generation should be substituted for the goals of depreciation

accounting. However, the potential for realizing a reduction in the marginal cost of

external financing provides an added incentive for adopting appropriate depreciation

rates. l

What are the principal activities involved in conducting a depreciation study?

The first step in conducting a depreciation study is the collection of plant accounting

data needed to conduct a statistical analysis of past retirement experience. Data are

also collected to permit an analysis of the relationship between retirements and

realized gross salvage and cost of removal. The data collection phase should include

II do not discuss, nor have I considered, whether other regulatory or public policy goals should influence or be reflected in establishing depreciation rates. Such considerations remain the prerogative of the regulatory agency responsible for determining appropriate depreciation rates.

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1 a reconciliation of the assembled data to the official plant records of the company.

2

3 The next step in a depreciation study is the estimation of service life statistics from an

4 analysis of past retirement experience. The term life analysis is used to describe the

5 activities undertaken in this step to obtain a mathematical description of the forces of

6 retirement acting upon a plant category. The mathematical expressions used to

7 describe these forces are known as survival functions or survivor curves.

8

9 Life indications obtained from an analysis of past retirement experience are blended

10 with expectations about the future to obtain an appropriate projection life curve. This

11 step, called life estimation, is concerned with predicting the expected remaining life of

12 property units still exposed to the forces of retirement. The weight given to the

13 analysis of historical data will depend upon the extent to which past retirement

14 experience is considered descriptive of the future.

15

16 An estimate of the net salvage rate applicable to future retirements is usually obtained

17 from an analysis of the gross salvage and cost of removal realized in the past. An

18 analysis of past experience (including an examination of trends over time) provides a

19 baseline for estimating future salvage and cost of removal. Consideration, however,

20 should be given to events that may cause deviations from net salvage realized in the

21 past. Among the factors that should be considered are the age of plant retirements;

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1 the portion of retirements that will be reused; changes in the method of removing

2 plant; the type of plant to be retired in the future; inflation expectations; the shape of

3 the projection life curve; and economic conditions that may warrant greater or lesser

4 weight to be given to net salvage observed in the past.

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6 A comprehensive depreciation study will also include an analysis of the adequacy of

7 the recorded depreciation reserve. The purpose of such an analysis is to compare the

8 current balance in the recorded reserve with the balance required to achieve the goals

9 and objectives of depreciation accounting if the amount and timing of future

10 retirements and net salvage are realized exactly as predicted. The difference between

11 the required (or theoretical) reserve and the recorded reserve provides a measurement

12 of the expected excess or shortfall that will remain in the depreciation reserve if

13 corrective action is not taken to extinguish the reserve imbalance.

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15 Although reserve records are commonly maintained by varIOUS account

16 classifications, the total recorded reserve in relation to the sum of account computed

17 reserves is a good indicator of the adequacy (or inadequacy) of recorded reserves.

18 Differences between theoretical and recorded reserves will arise as a normal

19 occurrence when service lives, dispersion patterns and net salvage estimates are

20 adjusted in the course of depreciation reviews. Differences can also arise from plant

21 accounting activity such as transfers and adjustments that may require an

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1 identification of reserves at a level lower than maintained in the accounting system. It

2 is appropriate, therefore, and consistent with group depreciation theory, to

3 periodically redistribute recorded reserves among primary accounts based on the most

4 recent estimates of service lives, re!irement dispersions and net salvage rates. A

5 redistribution of the recorded reserve will provide an initial reserve balance for each

6 primary account consistent with the estimates of retirement dispersion selected to

7 describe mortality characteristics of the accounts and establish a baseline against

8 which future comparisons can be made.

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10 Finally, parameters estimated from service life and net salvage studies are integrated

11 into an appropriate formulation of an accrual rate based upon a selected depreciation

12 system. Three elements (i.e., method, procedure and technique) are needed to

13 describe a depreciation system. The sub-elements most widely used in constructing a

14 depreciation system are shown in Table 1.

Methods

Retirement

Compound-Interest

Sinking-Fund

Straight-Line

Declining Balance

Sum-of-Years'-Digits

Expensing

Unit-of-Production

Net Revenue

Procedures

Total Company

Broad Group

Vintage Group

Equal-Life Group

Unit Summation

Item

Techniques

Whole-Life

Remaining-Life

Probable-Life

Table 1. Elements of a Depreciation System

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The components of a depreciation system can be visualized as three dimensions of a

cube in which each face describes a variety of sub-elements that can be combined to

form a system. A depreciation system is formed by selecting a sub-element from

each face such that the system contains one method, one procedure and one technique.

The straight-line method, vintage-group procedure, remaining-life technique is a

system widely used by regulated utilities.

IV. 2011 DEPRECIATION RATE STUDY

Did the Niagara Mohawk provide Foster Associates plant accounting data for

conducting the 2011 depreciation study?

Yes. With the exception of distribution Account 380 (Services), the database used in

conducting the 2011 study was developed by appending 2008-2010 plant and reserve

transactions to the database used in conducting the 2008 study. Plant and reserve

transactions for Account 380 were removed from the 2008 database and replaced with

transactions identified by material type over the period 2004-2010. Account 380.10

(Services - Metallic) and Account 380.20 (Services - Plastic) were created in

compliance with the Joint Proposal in the 2008 Gas Rate Case to record gas services

in two sub-accounts.

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The accuracy and completeness of the assembled database was verified in the 2008

study for the calendar years available in PowerPlant. Beginning plant balances,

additions, retirements, transfers and adjustments, and ending plant balances derived

for each activity year were reconciled to the official plant records of the Compariy.

Age distributions of surviving plant at December 31, 2007 were reconciled to the

Company's Continuing Property Record (CPR) system. Transactions recorded over

the period 2008-2010 were similarly reconciled in conducting the 2011 study.

Did Foster Associates conduct statistical life studies for Niagara Mohawk plant

and equipment?

Yes, we did. As discussed in Exhibit _ (REW-2) , all plant accounts were analyzed

using a technique in which first, second and third degree orthogonal polynomials were

fitted to sets of observed retirement ratios. The resulting function was expressed as a

survivorship function and numerically integrated to obtain an estimate of the

projection life. The smoothed survivorship function was then fitted by a weighted

least-squares procedure to both Iowa Curve and h-Curve families to obtain a

mathematical description or classification of the dispersion characteristics of the data.

Service life indications derived from the statistical analyses were blended with

informed judgment and expectations about the future to obtain an appropriate

projection life curve for each plant category.

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1 Q. Why did Foster Associates consider both Iowa and h-Curve families in

2 conducting the 2011 study?

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Q.

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In the 2008 Gas Rate Case, the Company agreed to present h-curve families in its

next gas rate filing. The Commission's decision in the 2008 Gas Rate Case did not

preclude the Company from presenting Iowa curves as well. In Case 10-E-0050 (the

"2010 Electric Rate Case"), the Commission found " ... there is no well-established

precedent ... dictating the use of H-curves or to disregard Iowa curves. The practice,

over the years, has been to allow the parties to use the curves they believe are best

supported in a given instance and, where the experts' professional judgments differ,

we stand ready to determine which curve provides the best fit, be it an H-curve or an

Iowa Curve." Accordingly, both Iowa and h-Curves were employed in the 2011 gas

depreciation study. However, to ensure compliance with the Joint Proposal in the

2008 Gas Rate Case, Exhibit _ (REW-3) also contains statistical life studies based

solely on h-Curves.

Did Foster Associates conduct a net salvage analysis in estimating depreciation

rates for Niagara Mohawk plant and equipment?

Yes. A five-year moving average analysis of the ratio of realized salvage and cost of

removal to the associated retirements was used in the 2011 study to: a) estimate

realized net salvage rates; b) detect the emergence of historical trends; and c) establish

a basis for estimating future net salvage rates. Cost of removal and salvage opinions

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1 obtained from Company personnel were blended with judgment and historical net

2 salvage indications in developing estimates of the future. The rolling five-year band

3 analyses are in compliance with the Joint Proposal in the 2008 Gas Rate Case.

4

5 Average net salvage rates were estimated using direct-dollar weighting of historical

6 retirements with historical net salvage rates, and future retirements (i.e., surviving

7 plant) with estimated future net salvage rates. The computation of the average net

8 salvage rates is shown on Exhibit _ (REW-2), Statement D.

9

10 Q. Did Foster Associates conduct an analysis of recorded depreciation reserves?

11 A. Yes. Statement C of Exhibit _ (REW-2) provides a comparison of recorded,

12 computed and rebalanced reserves at December 31, 2010. The total recorded reserve

13 for gas operations was $645,280,714 or 35.2 percent of the depreciable plant

14 investment. The corresponding computed reserve is $700,939,060 or 38.3 percent of

15 the depreciable plant investment. A reserve deficiency of $55,658,346 is therefore

16 indicated for Niagara Mohawk gas plant assets.

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18 Q. Please describe the depreciation system currently approved by the Commission

19 for Niagara Mohawk.

20 A. The Company is currently usmg depreciation rates developed from a system

21 composed of the straight-line method, broad group procedure, whole-life technique.

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1 The formulation of an account accrual rate using the currently approved depreciation

2 system is given by:

A 1 R 1.0 - Average Net Salvage Rate

ccrua ate = . Average Service Life

3

4 Q. Is Foster Associates recommending a change in the depreciation system for the

5 Company?

6 A. No, we are not. Although Foster Associates is of the opinion that a system composed

7 of the straight-line method, vintage group procedure and remaining-life technique

8 would better achieve the goals and objectives of depreciation accounting, the

9 Commission has historically rejected any system other than the straight-line method,

10 broad group procedure, whole-life technique. Accordingly, depreciation rates

11 developed in the 2011 study for all depreciable categories were derived using the

12 currently prescribed system.

13

14 Q. How does the vintage-group procedure, remaining-life technique differ from the

15 broad-group procedure, whole-life technique?

16 A. Unlike the broad group procedure in which each vintage is estimated to have the same

17 average service life, consideration is given to the realized life of each vintage when

18 average service lives and remaining lives are derived using the vintage group

19 procedure. The vintage group procedure distinguishes average service lives among

20 vintages and composite life statistics are computed for each plant account. The

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1 formulation of an account accrual rate using either the straight-line method, vintage

2 group procedure, remaining-life technique or whole-life technique is identical to the

3 broad group procedure.

4

5 The distinction between a whole-life rate and a remaining-life rate is the treatment of

6 depreciation reserve imbalances. The measurement of a reserve imbalance is the

7 difference between a theoretical (or computed) reserve and the corresponding

8 recorded reserve for a rate category. The remaining-life technique provides a

9 systematic amortization of these differences over the composite weighted average

10 remaining life of a rate category. The whole-life technique does not address reserve

11 imbalances.

12

13 Q. Please summarize the depreciation rates and accruals recommended for Niagara

14 Mohawk in the 2011 study.

15 A. Table 2 provides a summary of the changes in annual rates and accruals resulting

16 from an application of the proposed parameters and depreciation system currently

17 prescribed for the Niagara Mohawk gas operations.

Accrual Rate 2011 Annualized Accrual Function Current Proposed Difference Current Proposed Difference

A B C D=C·B E F G=F·E

Transmission Plant 1.61% 1.62% 0.01% $1,996,844 $2,016,742 $19,898 Distribution Plant 2.19% 2.35% 0.16% 35,778,342 38,364,615 2,586,273 General Plant 4.61% 4.61% 0.00% 3,603,399 3,603,416 17

Total 2.26% 2.40% 0.14% $41,378,585 $43,984,773 $2,606,188

Table 2. Current and Proposed Rates and Accruals

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1

2 Foster Associates is recommending primary account depreciation rates equivalent to a

3 composite rate of 2.40 percent. Depreciation expense is currently accrued at rates that

4 composite to 2.26 percent. The recommended change in the composite rate IS,

5 therefore, an increase of 0.14 percentage points.

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7 A continued application of current rates would provide annualized depreciation

8 expense of $41,378,585 compared with an annualized expense of $43,984,773 using

9 the rates developed in this study. The resulting 2011 expense increase is $2,606,188.

10 The change in accruals is attributable to adjustments in service life and net salvage

11 statistics recommended in the 2011 study.

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13 Q. Does this conclude your direct testimony?

14 A. Yes, it does.

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Exhibits of

D

r. Ronald E. W

hite


Index of Exhibits Exhibit__ (REW-1) Professional Qualifications Exhibit__ (REW-2) 2011 Depreciation Rate Study Exhibit__ (REW-3) Workpapers Supporting the 2011 Study Exhibit__ (REW-3) Workpapers Supporting the 2011 Study

18

Exhibit __ (R

EW-1)


Exhibit__ (REW-1)

Professional Qualifications

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Foster Associates Inc. 17595 S. Tamiami Trail Suite 212 Fort Myers, FL 33908

Phone (239) 267-1600 Fax (239) 267-5030 E-mail [email protected]

Ronald E. White, Ph.D.

Education 1961 - 1964 Valparaiso University Major: Electrical Engineering

1965 Iowa State University B.S., Engineering Operations

1968 Iowa State University M.S., Engineering Valuation Thesis: The Multivariate Normal Distribution and the Simulated Plant Record Method of Life Analysis

1977 Iowa State University Ph.D., Engineering Valuation Minor: Economics Dissertation: A Comparative Analysis of Various Estimates of the Hazard Rate Associated With the Service Life of Industrial Property

Employment 2007 - Present Foster Associates, Inc. Chairman

1996 - 2007 Foster Associates, Inc. Executive Vice President

1988 - 1996 Foster Associates, Inc. Senior Vice President

1979 - 1988 Foster Associates, Inc. Vice President

1978 - 1979 Northern States Power Company Assistant Treasurer

1974 - 1978 Northern States Power Company Manager, Corporate Economics

1972 - 1974 Northern States Power Company Corporate Economist

1970 - 1972 Iowa State University Graduate Student and Instructor

1968 - 1970 Northern States Power Company Valuation Engineer

1965 - 1968 Iowa State University Graduate Student and Teaching Assistant

Publications A New Set of Generalized Survivor Tables, Journal of the Society of Depreciation Professionals, October, 1992.

The Theory and Practice of Depreciation Accounting Under Public Utility Regulation, Journal of the Society of Depreciation Professionals, December, 1989.

Standards for Depreciation Accounting Under Regulated Competition, paper presented at The Institute for Study of Regulation, Rate Symposium, February, 1985.

A Exhibit___(REW-1)Page 1 of 13

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The Economics of Price-Level Depreciation, paper presented at the Iowa State University Regulatory Conference, May, 1981.

Depreciation and the Discount Rate for Capital Investment Decisions, paper presented at the National Communications Forum - National Electronics Conference, October 1979.

A Computerized Method for Generating a Life Table From the 'h-System' of Survival Functions, paper presented at the American Gas Association - Edison Electric Institute Depreciation Accounting Committee Meeting, December, 1975.

The Problem With AFDC is …, paper presented at the Iowa State University Conference on Public Utility Valuation and the Rate Making Process, May, 1973.

The Simulated Plant-Record Method of Life Analysis, paper presented at the Missouri Public Service Commission Regulatory Information Systems Conference, May, 1971.

Simulated Plant-Record Survivor Analysis Program (User's Manual), special report published by Engineering Research Institute, Iowa State University, February, 1971.

A Test Procedure for the Simulated Plant-Record Method of Life Analysis, Journal of the American Statistical Association, September, 1970.

Modeling the Behavior of Property Records, paper presented at the Iowa State University Conference on Public Utility Valuation and the Rate Making Process, May, 1970.

A Technique for Simulating the Retirement Experience of Limited-Life Industrial Property, paper presented at the National Conference of Electric and Gas Utility Accountants, May, 1969.

How Dependable are Simulated Plant-Record Estimates?, paper presented at the Iowa State University Conference on Public Utility Valuation and the Rate Making Process, April, 1968.

Testifying Witness

Alabama Public Service Commission, Docket No. 18488, General Telephone Company of the Southeast; testimony concerning engineering economy study techniques.

Alabama Public Service Commission, Docket No. 20208, General Telephone Company of the South; testimony concerning the equal-life group procedure and remaining-life technique.

Alberta Energy and Utilities Board, Application No. 1250392, Aquila Networks Canada; rebuttal testimony supporting proposed depreciation rates.

Alberta Energy and Utilities Board, Case No. RE95081, Edmonton Power Inc.; rebuttal evidence concerning appropriate depreciation rates.

Alberta Energy and Utilities Board, 1999/2000 General Tariff Application, Edmonton Power Inc.; direct and rebuttal evidence concerning appropriate depreciation rates.

Arizona Corporation Commission, Docket No. T-01051B-97-0689, U S West Communications, Inc.; testimony concerning appropriate depreciation rates.

Arizona Corporation Commission, Docket No. G-1032A-02-0598, Citizens Communications Company; testimony supporting proposed depreciation rates.

Arizona Corporation Commission, Docket No. E–01345A–08–0172, Arizona Public Service Company; testimony supporting proposed depreciation rates.

Arizona Corporation Commission, Docket No. E–0135A–03–0437, Arizona Public

Exhibit___(REW-1)Page 2 of 13

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Service Company; rebuttal testimony supporting net salvage rates.



Arizona Corporation Commission, Docket No. G–04204A–06–0463, UNS Gas, Inc.; testimony supporting proposed depreciation rates.

Arizona Corporation Commission, Docket No. E–04204A–06–0783, UNS Electric, Inc.; testimony supporting proposed depreciation rates.

Arizona Corporation Commission, Docket No. E–04204A–09–0206, UNS Electric, Inc, testimony supporting proposed depreciation rates.

Arizona State Board of Equalization, Docket No. 6302-07-2, Arizona Public Service Company; testimony concerning valuation and assessment of contributions in aid of construction.

California Public Utilities Commission, Case Nos. A.92-06-040, 92-06-042, GTE California Incorporated; rebuttal testimony supporting depreciation study techniques.

California Public Utilities Commission. Docket No. GRC A.05–12–002, Pacific Gas and Electric Company; testimony regarding estimation of net salvage rates.

California Public Utilities Commission. Docket No. GRC A.06–12–009/A.06–12–010, San Diego Gas & Electric Company and Southern California Gas Company; testimony regarding estimation of net salvage rates.

Public Utilities Commission of the State of Colorado, Application No. 36883-Reopened. U S WEST Communications; testimony concerning equal-life group procedure.

State of Connecticut Department of Public Utility Control, Docket No. 10–12–02, Yankee Gas Services Company; testimony supporting recommended depreciation rates.

State of Connecticut Department of Public Utility Control, Docket No. 09–12–05, The Connecticut Light and Power Company; testimony supporting recommended depreciation rates.

State of Connecticut Department of Public Utility Control, Docket No. 06–12PH01, Yankee Gas Services Company; testimony supporting recommended depreciation rates.

State of Connecticut Department of Public Utility Control, Docket No. 05–03–17, The Southern Connecticut Gas Company; testimony supporting recommended depreciation rates.

Delaware Public Service Commission, Docket No. 81-8, Diamond State Telephone Company; testimony concerning the amortization of inside wiring.

Delaware Public Service Commission, Docket No. 82-32, Diamond State Telephone Company; testimony concerning the equal-life group procedure and remaining-life technique.

Public Service Commission of the District of Columbia, Formal Case No. 842, District of Columbia Natural Gas; testimony concerning depreciation rates.

Public Service Commission of the District of Columbia, Formal Case No. 1016, Washington Gas Light Company - District of Columbia; testimony supporting proposed depreciation rates.


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Federal Communications Commission, Prescription of Revised Depreciation Rates for AT&T Communications; statement concerning depreciation, regulation and competition.

Federal Communications Commission, Petition for Modification of FCC Depreciation Prescription Practices for AT&T; statement concerning alignment of depreciation expense used for financial reporting and regulatory purposes.

Federal Communications Commission, Docket No. 99-117, Bell Atlantic; affidavit concerning revenue requirement and capital recovery implications of omitted plant retirements.

Federal Energy Regulatory Commission, Docket No. ER10-2110-000, ITC Midwest; testimony supporting proposed depreciation rates.

Federal Energy Regulatory Commission, Docket No. ER10-185-000, Michigan Electric Transmission Company; testimony supporting proposed depreciation rates.

Federal Energy Regulatory Commission, Docket No. ER09-1530-000, ITCTransmission; testimony supporting proposed depreciation rates.

Federal Energy Regulatory Commission, Docket No. ER95-267-000, New England Power Company; testimony supporting proposed depreciation rates.

Federal Energy Regulatory Commission, Docket No. ER11-3638-000, Arizona Public Service Company; testimony supporting proposed depreciation rates

Federal Energy Regulatory Commission, Docket No. RP89-248, Mississippi River Transmission Corporation; rebuttal testimony concerning appropriateness of net salvage component in depreciation rates.

Federal Energy Regulatory Commission, Docket No. ER91-565, New England Power Company; testimony supporting proposed depreciation rates.

Federal Energy Regulatory Commission, Docket No. ER78-291, Northern States Power Company; testimony concerning rate of return and general financial requirements.

Federal Energy Regulatory Commission, Docket Nos. RP80-97 and RP81-54, Tennessee Gas Pipeline Company; testimony concerning offshore plant depreciation rates.

Federal Power Commission, Docket No. E-8252, Northern States Power Company; testimony concerning general financial requirements and measurements of financial performance.

Federal Power Commission, Docket No. E-9148, Northern States Power Company; testimony concerning general financial requirements and measurements of financial performance.

Federal Power Commission, Docket No. ER76-818, Northern States Power Company; testimony concerning rate of return and general financial requirements.

Federal Power Commission, Docket No. RP74-80, Northern Natural Gas Company; testimony concerning depreciation expense.

Public Utilities Commission of the State of Hawaii, Docket No. 00-0309, The Gas


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Company; testimony supporting proposed depreciation rates.

Public Utilities Commission of the State of Hawaii, Docket No. 94-0298, GTE Hawaiian Telephone Company Incorporated; testimony concerning the need for shortened service lives and disclosure of asset impairment losses.

Idaho Public Utilities Commission, Case No. U-1002-59, General Telephone Company of the Northwest, Inc.; testimony concerning the remaining-life technique and the equal-life group procedure.

Illinois Commerce Commission, Case No. 04–0476, Illinois Power Company; testimony supporting proposed depreciation rates.

Illinois Commerce Commission, Docket No. 94-0481, Citizens Utilities Company of Illinois; rebuttal testimony concerning applications of the Simulated Plant-Record method of life analysis.

Iowa State Commerce Commission, Docket No. RPU 82-47, North Central Public Service Company; testimony on depreciation rates.

Iowa State Commerce Commission, Docket No. RPU 84-34, General Telephone Company of the Midwest; testimony concerning the remaining-life technique and the equal-life group procedure.

Iowa State Utilities Board, Docket No. DPU-86-2, Northwestern Bell Telephone Company; testimony concerning capital recovery in competition.

Iowa State Utilities Board, Docket No. RPU-84-7, Northwestern Bell Telephone Company; testimony concerning the deduction of a reserve deficiency from the rate base.

Iowa State Utilities Board, Docket No. DPU-88-6, U S WEST Communications; testimony concerning depreciation subject to refund.

Iowa State Utilities Board, Docket No. RPU-90-9, Central Telephone Company of Iowa; testimony concerning depreciation rates.

Iowa State Utilities Board, Docket No. RPU-93-9, U S WEST Communications; testimony concerning principles of depreciation accounting and abandonment of FASB 71.

Iowa State Utilities Board, Docket No. DPU-96-1, U S WEST Communications; testimony concerning principles of depreciation accounting and abandonment of FASB 71.

Iowa State Utilities Board, Docket No. RPU-05-2, Aquila Networks; testimony supporting recommended depreciation rates.

Kansas Corporation Commission, Docket No. 12-WSEE-112-RTS, Westar Energy, Inc.; testimony supporting proposed depreciation rates.

Kansas Corporation Commission, Docket No. 10–KCPE–415–RTS; Kansas City Power and Light; cross–answering testimony addressing the recording and treatment of third–party reimbursements in estimating net salvage rates.

Kansas Corporation Commission, Docket No. 04–AQLE–1065–RTS, Aquila Networks – WPE (Kansas); testimony supporting proposed depreciation rates.

Kansas Corporation Commission, Docket No. 03–KGSG–602–RTS, Kansas Gas Service, a Division of ONEOK, Inc.; rebuttal testimony supporting net salvage rates.

Kansas Corporation Commission, Docket No. 06–KGSG–1209–RTS, Kansas Gas Service, a Division of ONEOK, Inc.; testimony supporting proposed depreciation rates.


24

Kentucky Public Service Commission, Case No. 97-224, Jackson Purchase Electric Cooperative Corporation; rebuttal testimony supporting proposed depreciation rates.

Maryland Public Service Commission, Case No. 8485, Baltimore Gas and Electric Company; testimony supporting proposed depreciation rates.

Maryland Public Service Commission, Case No. 9096, Baltimore Gas and Electric Company; testimony supporting proposed depreciation rates.

Maryland Public Service Commission, Case No. 7689, Washington Gas Light Company; testimony concerning life analysis and net salvage.

Maryland Public Service Commission, Case No. 8960, Washington Gas Light Company; testimony supporting proposed depreciation rates.

Maryland Public Service Commission, Case No. 9103, Washington Gas Light Company; rebuttal testimony supporting proposed depreciation rates.

Commonwealth of Massachusetts Department of Public Utilities, D.P.U. 10–70, Western Massachusetts Electric Company; testimony supporting proposed depreciation rates.

Commonwealth of Massachusetts Department of Telecommunications and Energy, D.T.E. 06–55, Western Massachusetts Electric Company; testimony supporting proposed depreciation rates.

Massachusetts Department of Public Utilities, Case No. DPU 91-52, Massachusetts Electric Company; testimony supporting proposed depreciation rates which include a net salvage component.

Michigan Public Service Commission, Case No. U–16991, The Detroit Edison Company; testimony supporting proposed depreciation rates.

Michigan Public Service Commission, Case No. U–16117, The Detroit Edison Company; testimony supporting proposed depreciation rates.

Michigan Public Service Commission, Case No. U–15699, Michigan Consolidated Gas Company; testimony supporting proposed depreciation rates.

Michigan Public Service Commission, Case No. U–13899, Michigan Consolidated Gas Company; testimony concerning service life estimates.

Michigan Public Service Commission, Case No. U-13393, Aquila Networks – MGU; testimony supporting proposed depreciation rates.

Michigan Public Service Commission, Case No. U-12395, Michigan Gas Utilities; testimony supporting proposed depreciation rates including amortization accounting and redistribution of recorded reserves.

Michigan Public Service Commission, Case No. U-6587, General Telephone Company of Michigan; testimony concerning use of a theoretical depreciation reserve with the remaining-life technique.

Michigan Public Service Commission, Case No. U-7134, General Telephone Company of Michigan; testimony concerning the equal-life group depreciation procedure.

Minnesota Public Service Commission, Docket No. E-611, Northern States Power Company; testimony concerning rate of return and general financial requirements.

Minnesota Public Service Commission, Docket No. E-1086, Northern States Power Company; testimony concerning depreciation rates.

Minnesota Public Service Commission, Docket No. G-1015, Northern States Power Company; testimony concerning rate of return and general financial


25

requirements.

Public Service Commission of the State of Missouri, Case No. ER-2009-0090, KCP&L Greater Missouri Operations, rebuttal testimony concerning depreciation rates.

Public Service Commission of the State of Missouri, Case No. ER-2001-672, Missouri Public Service, a division of Utilicorp United Inc.; surrebuttal testimony regarding computation of income tax expense.

Public Service Commission of the State of Missouri, Case No. TO-82-3, Southwestern Bell Telephone Company; rebuttal testimony concerning the remaining-life technique and the equal-life group procedure.

Public Service Commission of the State of Missouri, Case No. GO-97-79, Laclede Gas Company; rebuttal testimony concerning adequacy of database for conducting depreciation studies.

Public Service Commission of the State of Missouri, Case No. GR-99-315, Laclede Gas Company; rebuttal testimony concerning treatment of net salvage in development of depreciation rates.

Public Service Commission of the State of Missouri, Case No. HR–2004–0024, Aquila Inc. d/b/a/ Aquila Networks–L & P; testimony supporting depreciation rates.

Public Service Commission of the State of Missouri, Case No. ER–2004–0034, Aquila Inc. d/b/a/ Aquila Networks–L & P and Aquila Networks–MPS; testimony supporting depreciation rates.

Public Service Commission of the State of Missouri, Case No. GR–2004–0072, Aquila Inc. d/b/a/ Aquila Networks–L & P and Aquila Networks–MPS; testimony supporting depreciation rates.

Public Service Commission of the State of Montana, Docket No. 88.2.5, Mountain State Telephone and Telegraph Company; rebuttal testimony concerning the equal-life group procedure and amortization of reserve imbalances.

Montana Public Service Commission, Docket No. D95.9.128, The Montana Power Company; testimony supporting proposed depreciation rates.

Nebraska Public Service Commission, Docket No. NG–0041, Aquila Networks (PNG Nebraska); testimony supporting proposed depreciation rates.

Public Service Commission of Nevada, Docket No. 92-7002, Central Telephone Company-Nevada; testimony supporting proposed depreciation rates.

Public Service Commission of Nevada, Docket No. 91-5054, Central Telephone Company-Nevada; testimony supporting proposed depreciation rates.

New Hampshire Public Utilities Commission, Docket No. DR95-169, Granite State Electric Company; testimony supporting proposed net salvage rates.

New Jersey Board of Public Utilities, Docket No. GR07110889, New Jersey Natural Gas Company; testimony supporting proposed depreciation rates.

New Jersey Board of Public Utilities, Docket No. GR 87060552, New Jersey Natural Gas Company; testimony concerning depreciation rates.

New Jersey Board of Regulatory Commissioners, Docket No. GR93040114J, New Jersey Natural Gas Company; testimony concerning depreciation rates.

New York Public Service Commission, Case No. 10–E–0050. Niagara Mohawk Power Corporation d/b/a National Grid; testimony supporting recommended depreciation rates.

North Carolina Utilities Commission, Docket No. E-7, SUB 487, Duke Power


26

Company; rebuttal testimony concerning proposed depreciation rates.

North Carolina Utilities Commission, Docket No. P-19, SUB 207, General Telephone Company of the South; rebuttal testimony concerning the equal-life group depreciation procedure.

North Dakota Public Service Commission, Case No. 8860, Northern States Power Company; testimony concerning general financial requirements.

North Dakota Public Service Commission, Case No. 9634, Northern States Power Company; testimony concerning rate of return and general financial requirements.



Oklahoma Corporation Commission, Cause No. PUD 200900110, Oklahoma Natural Gas Company; testimony supporting revised depreciation rates.

Ontario Energy Board, E.B.R.O. 385, Tecumseh Gas Storage Limited; testimony concerning depreciation rates.

Ontario Energy Board, E.B.R.O. 388, Union Gas Limited; testimony concerning depreciation rates.

Ontario Energy Board, E.B.R.O. 456, Union Gas Limited; testimony concerning depreciation rates.

Ontario Energy Board, E.B.R.O. 476-03, Union Gas Limited; testimony concerning depreciation rates.

Public Utilities Commission of Ohio, Case No. 81-383-TP-AIR, General Telephone Company of Ohio; testimony in support of the remaining-life technique.

Public Utilities Commission of Ohio, Case No. 82-886-TP-AIR, General Telephone Company of Ohio; testimony concerning the remaining-life technique and the equal-life group procedure.

Public Utilities Commission of Ohio, Case No. 84-1026-TP-AIR, General Telephone Company of Ohio; testimony in support of the equal-life group procedure and the remaining-life technique.

Public Utilities Commission of Ohio, Case No. 81-1433, The Ohio Bell Telephone Company; testimony concerning the remaining-life technique and the equal-life group procedure.

Public Utilities Commission of Ohio, Case No. 83-300-TP-AIR, The Ohio Bell Telephone Company; testimony concerning straight-line age-life depreciation.

Public Utilities Commission of Ohio, Case No. 84-1435-TP-AIR, The Ohio Bell Telephone Company; testimony in support of test period depreciation expense.

Public Utilities Commission of Oregon, Docket No. UM 204, GTE of the Northwest; testimony concerning the theory and practice of depreciation accounting under public utility regulation.

Public Utilities Commission of Oregon, Docket No. UM 840, GTE Northwest Incorporated; rebuttal testimony concerning principles of capital recovery.

Pennsylvania Public Utility Commission, Docket No. R-80061235, The Bell Telephone Company of Pennsylvania; testimony concerning the proper depreciation reserve to be used with an original cost rate base.

Pennsylvania Public Utility Commission, Docket No. R-811512, General Telephone Company of Pennsylvania; testimony concerning the proper


27

depreciation reserve to be used with an original cost rate base.

Pennsylvania Public Utility Commission, Docket No. R-811819, The Bell Telephone Company of Pennsylvania; testimony concerning the proper depreciation reserve to be used with an original cost rate base.

Pennsylvania Public Utility Commission, Docket No. R-822109, General Telephone Company of Pennsylvania; testimony in support of the remaining-life technique.

Pennsylvania Public Utility Commission, Docket No. R-850229, General Telephone Company of Pennsylvania; testimony in support of the remaining-life technique and the proper depreciation reserve to be used with an original cost rate base.

Pennsylvania Public Utility Commission, Docket No. C-860923, The Bell Telephone Company of Pennsylvania; testimony concerning capital recovery under competition.

Rhode Island Public Utilities Commission, Docket No. 2290, The Narragansett Electric Company; testimony supporting proposed net salvage rates and depreciation rates.

South Carolina Public Service Commission, Docket No. 91-216-E, Duke Power Company; testimony supporting proposed depreciation rates.

Public Utilities Commission of the State of South Dakota, Case No. F-3062, Northern States Power Company; testimony concerning general financial requirements and measurements of financial performance.

Public Utilities Commission of the State of South Dakota, Case No. F-3188, Northern States Power Company; testimony concerning rate of return and general financial requirements.

Securities and Exchange Commission, File No. 3-5749, Northern States Power Company; testimony concerning the financial and ratemaking implications of an affiliation with Lake Superior District Power Company.

Tennessee Public Service Commission, Docket No. 89-11041, United Inter-Mountain Telephone Company; testimony concerning depreciation principles and capital recovery under competition.

The Railroad Commission of Texas, GUD Docket No. 9988, Texas Gas Service, testimony supporting recommended depreciation rates.

State of Vermont Public Service Board, Docket No. 6596, Citizens Communications Company – Vermont Electric Division; testimony supporting recommended depreciation rates.

State of Vermont Public Service Board, Docket No. 6946 and 6988, Central Vermont Public Service Corporation; testimony supporting net salvage rates.

Commonwealth of Virginia State Corporation Commission, Case No. PUE-2002-00364, Washington Gas Light Company; testimony supporting proposed depreciation rates.

Public Service Commission of Wisconsin, Docket No. 2180-DT-3, General Telephone Company of Wisconsin; testimony concerning the equal-life group depreciation procedure.

Other Consulting Activities

Moran Towing Corporation. In Re: Barge TEXAS-97 CIV. 2272 (ADS) and Tug HEIDE MORAN – 97 CIV. 1947 (ADS), United States District Court, Southern District of New York.

John Reigle, et al. v. Baltimore Gas & Electric Co., et al., Case No. C-2001-73230-


28

CN, Circuit Court for Anne Arundel County, Maryland.

SR International Business Insurance Co. vs. WTC Properties et. al., 01,CV–9291 (JSM) and other related cases.

BellSouth Telecommunications, Inc. v. Citizens Utilities Company d/b/a/ Louisiana Gas Service Company, CA No. 95-2207, United States District Court, Eastern District of Louisiana.

Affidavit on behalf of Continental Cablevision, Inc. and its operating cable television systems regarding basic broadcast tier and equipment and installation cost-of-service rate justification.

Office of Chief Counsel, Internal Revenue Service. In Re: Kansas City Southern Railway Co., et. al. Docket Nos. 971-72, 974-72, and 4788-73.

Office of Chief Counsel, Internal Revenue Service. In Re: Northern Pacific Railway Co., Docket No. 4489-69.

United States Department of Justice. In Re: Burlington Northern Inc. v. United States, Ct. Cl. No. 30-72.

Minnesota District Court. In Re: Northern States Power Company v. Ronald G. Blank, et. al. File No. 394126; testimony concerning depreciation and engineering economics.

Faculty Depreciation Programs for public utility commissions, companies, and consultants, sponsored by Depreciation Programs, Inc., in cooperation with Western Michigan University. (1980 - 1999)

United States Telephone Association (USTA), Depreciation Training Seminar, November 1999.

Depreciation Advocacy Workshop, a three-day team-training workshop on preparation, presentation, and defense of contested depreciation issues, sponsored by Gilbert Associates, Inc., October, 1979.

Corporate Economics Course, Employee Education Program, Northern States Power Company. (1968 - 1979)

Perspectives of Top Financial Executives, Course No. 5-300, University of Minnesota, September, 1978.

Depreciation Programs for public utility commissions, companies, and consultants, jointly sponsored by Western Michigan University and Michigan Technological University, 1973.

Professional Associations

Advisory Committee to the Institute for Study of Regulation, sponsored by the American University and The University of Missouri-Columbia.

American Economic Association.

American Gas Association - Edison Electric Institute Depreciation Accounting Committee.

Board of Directors, Iowa State Regulatory Conference.

Edison Electric Institute, Energy Analysis Division, Economic Advisory Committee, 1976-1980.

Financial Management Association.

The Institute of Electrical and Electronics Engineers, Inc., Power Engineering Society, Engineering and Planning Economics Working Group.

Midwest Finance Association.


29

Society of Depreciation Professionals (Founding Member and Chairman, Policy Committee.

Moderator Depreciation Open Forum, Iowa State University Regulatory Conference, May 1991.

The Quantification of Risk and Uncertainty in Engineering Economic Studies, Iowa State University Regulatory Conference, May 1989.

Plant Replacement Decisions with Added Revenue from New Service Offerings, Iowa State University Regulatory Conference, May 1988.

Economic Depreciation, Iowa State University Regulatory Conference, May 1987.

Opposing Views on the Use of Customer Discount Rates in Revenue Requirement Comparisons, Iowa State University Regulatory Conference, May 1986.

Cost of Capital Consequences of Depreciation Policy, Iowa State University Regulatory Conference, May 1985.

Concepts of Economic Depreciation, Iowa State University Regulatory Conference, May 1984.

Ratemaking Treatment of Large Capacity Additions, Iowa State University Regulatory Conference, May 1983.

The Economics of Excess Capacity, Iowa State University Regulatory Conference, May 1982.

New Developments in Engineering Economics, Iowa State University Regulatory Conference, May 1980.

Training in Engineering Economy, Iowa State University Regulatory Conference, May 1979.

The Real Time Problem of Capital Recovery, Missouri Public Service Commission, Regulatory Information Systems Conference, September 1974.

Speaker Group Depreciation Practices of Regulated Utilities (IAS 16 Property, Plant and Equipment), Hydro One Networks, Inc., November 2008.

Economics, Finance and Engineering Valuation. Florida Gulf Coast University, April 2007.

Depreciation Studies for Regulated Utilities, Hydro One Networks, Inc., April 2006.

Depreciation Studies for Cooperatives and Small Utilities. TELERGEE CFO and Controllers Conference, November, 2004.

Finding the “D” in RCNLD (Valuation Applications of Depreciation), Society of Depreciation Professionals Annual Meeting, September 2001.

Capital Asset and Depreciation Accounting, City of Edmonton Value Engineering Workshop, April 2001.

A Valuation View of Economic Depreciation, Society of Depreciation Professionals Annual Meeting, October 1999.

Capital Recovery in a Changing Regulatory Environment, Pennsylvania Electric Association Financial-Accounting Conference, May 1999.

Depreciation Theory and Practice, Southern Natural Gas Company Accounting and Regulatory Seminar, March 1999.

Depreciation Theory Applied to Special Franchise Property, New York Office of Real Property Services, March 1999.


30

Capital Recovery in a Changing Regulatory Environment, PowerPlan Consultants Annual Client Forum, November 1998.

Economic Depreciation, AGA Accounting Services Committee and EEI Property Accounting and Valuation Committee, May 1998.

Discontinuation of Application of FASB Statement No. 71, Southern Natural Gas Company Accounting Seminar, April 1998.

Forecasting in Depreciation, Society of Depreciation Professionals Annual Meeting, September 1997.

Economic Depreciation In Response to Competitive Market Pricing, 1997 TELUS Depreciation Conference, June 1997.

Valuation of Special Franchise Property, City of New York, Department of Finance Valuation Seminar, March 1997.

Depreciation Implications of FAS Exposure Draft 158-B, 1996 TLG Decommissioning Conference, October 1996.

Why Economic Depreciation?, American Gas Association Depreciation Accounting Committee Meeting, August 1995.

The Theory of Economic Depreciation, Society of Depreciation Professionals Annual Meeting, November 1994.

Vintage Depreciation Issues, G & T Accounting and Finance Association Conference, June 1994.

Pricing and Depreciation Strategies for Segmented Markets (Regulated and Competitive), Iowa State Regulatory Conference, May 1990.

Principles and Practices of Depreciation Accounting, Canadian Electrical Association and Nova Scotia Power Electric Utility Regulatory Seminar, December 1989.

Principles and Practices of Depreciation Accounting, Duke Power Accounting Seminar, September 1989.

The Theory and Practice of Depreciation Accounting Under Public Utility Regulation, GTE Capital Recovery Managers Conference, February 1989.

Valuation Methods for Regulated Utilities, GTE Capital Recovery Managers Conference, January 1988.

Depreciation Principles and Practices for REA Borrowers, NRECA 1985 National Accounting and Finance Conference, September 1985.

Depreciation Principles and Practices for REA Borrowers, Kentucky Association of Electric Cooperatives, Inc., Summer Accountants Association Meeting, June 1985.

Considerations in Conducting a Depreciation Study, NRECA 1984 National Accounting and Finance Conference, October 1984.

Software for Conducting Depreciation Studies on a Personal Computer, United States Independent Telephone Association, September 1984.

Depreciation—An Assessment of Current Practices, NRECA 1983 National Accounting and Finance Conference, September 1983

Depreciation—An Assessment of Current Practices, REA National Field Conference, September 1983.

An Overview of Depreciation Systems, Iowa State Commerce Commission, October 1982.

Depreciation Practices for Gas Utilities, Regulatory Committee of the Canadian


31

Gas Association, September 1981.

Practice, Theory, and Needed Research on Capital Investment Decisions in the Energy Supply Industry, workshop, sponsored by Michigan State University and the Electric Power Research Institute, November 1977.

Depreciation Concepts Under Regulation, Public Utilities Conference, sponsored by The University of Texas at Dallas, July 1976.

Electric Utility Economics, Mid-Continent Area Power Pool, May 1974.

Honors and Awards

The Society of Sigma Xi.

Professional Achievement Citation in Engineering, Iowa State University, 1993.

March 2012


32

Exhibit __ (REW

-2)


Exhibit__ (REW-2)

2011 Depreciation Rate Study

33

2011 Gas Depreciation Rate Study Niagara Mohawk Power Corporation

– d/b/a National Grid

Dated: April 27, 2012

Exhibit____(REW–2)Witness: R. E. White

34


CONTENTS

EXECUTIVE SUMMARY SECTION I

INTRODUCTION .................................................................................................................. 1

SCOPE OF REViEW ..................................... : ...................................................................... 2

DEPRECIATION SYSTEM ..................................................................................................... 2

RECOMMENDED DEPRECIATION RATES ............................................................................... 3

COMPANY PROFILE SECTION II

GENERAL .......................................................................................................................... 4

SERVICE AREA .................................................................................................................. 4

GAS SUPPLy ..................................................................................................................... 4

GAS UTILITY OPERATIONS ................................................................................................. 5

STUDY PROCEDURE SECTION III

INTRODUCTION .................................................................................................................. 6

SCOPE .............................................................................................................................. 6

DATA COLLECTION ............................................................................................................. 6

liFE ANALYSIS AND ESTIMATION ......................................................................................... 7

NET SALVAGE ANALySiS .................................................................................................... 9

DEPRECIATION RESERVE ANALySiS .................................................................................. 10

DEVELOPMENT OF ACCRUAL RATES ................................................................................. 12

STATEMENTS SECTION IV

INTRODUCTION ................................................................................................................ 14

STATEMENT A - WHOLE-liFE ACCRUAL RATES ............................................................ 15

STATEMENT B - WHOLE-liFE ACCRUALS ..................................................................... 16

STATEMENT C - DEPRECIATION RESERVE SUMMARy .................................................... 17

STATEMENT D -AVERAGE NET SALVAGE ..................................................................... 19

STATEMENT E - CURRENT AND PROPOSED PARAMETERS ............................................. 21

ANALYSIS SECTION V

INTRODUCTION ................................................................................................................ 23

SCHEDULE A - GENERATION ARRANGEMENT ................................................................ 23

SCHEDULE B - AGE DiSTRIBUTION ............................................................................... 24

SCHEDULE C - PLANT HiSTORy ................................................................................... 24

SCHEDULE D - ACTUARIAL liFE ANALYSIS .................................................................... 25

SCHEDULE E - GRAPHICS ANALySiS ............................................................................ 25

SCHEDULE F - HISTORICAL NET SALVAGE ANALYSIS .................................................... 26

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DISTRIBUTION

ACCOUNT 381.00 - METERS

SCHEDULE A - GENERATION ARRANGEMENT ................................................................ 27

SCHEDULE B - AGE DiSTRIBUTION ................................................................................ 30

SCHEDULE C - PLANT HiSTORy .................................................................................... 33

SCHEDULE D - ACTUARIAL LIFE ANALYSIS .................................................................... 35

SCHEDULE E - GRAPHICS ANALySiS ............................................................................. 38

SCHEDULE F - HISTORICAL NET SALVAGE ANALYSIS .................................................... .41

March 2012

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EXECUTIVE SUMMARY

INTRODUCTION This report presents findings and recommendations developed in a 2011 Depreciation Rate Study conducted by Foster Associates, Inc. (Foster Associates) for Niagara Mohawk Power Corporation d/b/a National Grid (Niagara Mohawk or the Company). Work on the study commenced in October 2011 and progressed through mid-March 2012, at which time the project was completed.

Foster Associates is a public utility economic consulting firm headquartered in Rockville, Maryland offering economic research and consulting services on issues and problems arising from governmental regulation of business. Areas of specialization supported by the firm's Fort Myers, Florida office include servicelife forecasting, depreciation estimation, and valuation of industrial property.

Foster Associates has undertaken numerous depreciation engagements for both public and privately owned business entities, including detailed statistical life studies, analyses of required net salvage rates, and the selection of depreciation systems that will most nearly achieve the goals of depreciation accounting under the constraints of either government regulation or competitive market pricing. Foster Associates is widely recognized for industry leadership in the development of depreciation systems, life analysis techniques and computer software for conducting depreciation and valuation studies.

Gas depreciation rates currently used by Niagara Mohawk were approved by the New York State Public Service Commission (the Commission) in Case 08-G-0609 ("the 2008 Gas Case"). The agreed upon depreciation rates were derived from parameters (i.e., projection lives, projection curves and net salvage rates) selected by the Department of Public Service (DPS) from a 2008 study conducted by Foster Associates.! The 2008 study was based on plant and depreciation reserve balances at December 31, 2007.

The principal findings and recommendations of the 2011 Niagara Mohawk Depreciation Study are summarized in the Statements section of this report. Statement A provides a comparative summary of current and proposed annual depreciation rates for each rate category. Statement B provides a comparison of cur-

IThe Joint Proposal further provided: "When the Company next files for new gas rates, its initial filing will include rolling and shrinking band analyses for each depreciable plant account, the Fit Index, Average Service Life and graphs showing the preserved proportion surviving, the observed curve and selected h-curve. The Company will also provide a net salvage study for each depreciable plant account that includes, at a minimum, rolling five-year band analyses of gross salvage, cost of removal and net salvage for each account.

Beginning January 1,2010, the Company will establish two sub accounts, for Account 380-Services i.e., metallic and nomnetallic, and will prospectively classify and record gas services in these sub accounts.

In addition, the Company will include in its initial filing a calculation of the depreciation reserve imbalances for each plant account."

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rent and proposed annual depreciation accruals. Statement C provides a comparison of recorded and computed depreciation reserves for each rate category. Statement D provides a summary of the components used to obtain a weightedaverage net salvage rate for each plant account. Statement E provides a comparative summary of current and proposed parameters and statistics including projection life, projection curve, average service life, average remaining life, and average and future net salvage rates.

SCOPE OF REVIEW The principal activities undertaken in conducting the 2011 study included:

.. Collection of plant and reserve data;

III Discussions with Niagara Mohawk operations and plant account-ing personnel;

.. Estimation of projection lives and retirement dispersion patterns;

.. Analysis of gross salvage and cost of removal;

II Analysis of recorded depreciation reserves; and

.. Development of recommended accrual rates for each rate category.

DEPRECIATION SYSTEM A depreciation rate is formed by combining the elements of a depreciation system. A depreciation system is composed of a method, a procedure and a technique. Depreciation rates currently approved for Niagara Mohawk were developed from a system composed of the straight-line method, broad group procedure whole-life technique.

The matching and expense recognition principles of accounting provide that the cost of an asset (or group of assets) should be allocated to operations over an estimate of the economic life of the asset in proportion to the consumption of service potential. It is the opinion of Foster Associates that the objectives of depreciation accounting can be more nearly achieved using the vintage group procedure combined with the remaining-life technique. Unlike the broad group procedure in which each vintage is estimated to have the same average service life, the vintage group procedure distinguishes average service lives among vintages and provides cost apportionment over the estimated weighted-average remaining life or average life of a rate category.

The level of asset grouping identified in the broad group procedure is the total plant in service from all vintages in an account. Each vintage is estimated to have the same average service life. It is unlikely, therefore, that compensating deviations (i.e.) over and underestimates of average service lives) will be created among vintages to achieve cost allocation over the average service life of each vintage.

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The level of asset grouping identified in the vintage group procedure is the plant in service from each vintage. The average service life (or remaining life) is estimated independently for each vintage and composite life statistics are computed for each plant account. It is more likely that compensating deviations will be created with a vintage group procedure than with a broad group procedure.

Although Foster Associates remains of the opinion that a system composed of the straight-line method, vintage group procedure, remaining-life technique would better achieve the goals and objectives of depreciation accounting, the Commission has historically rejected systems other than the straight-line method, broad group procedure, whole-life technique. Depreciation rates recommended in the 2011 study for all depreciable categories, therefore, were derived using the Commission prescribed system.

RECOMMENDED DEPRECIATION RATES Table 1 provides a summary of the changes in annual rates and accruals resulting from an application of the parameters recommended for the Niagara Mohawk Gas operations.

Accrual Rate 2011 Annualized Aa;rual Function Current Pro[X>sed Difference Current Pro[X>sed Difference

A B c D=C-B E F G=F-E

Transmission Rant 1.61% 1.62% 0.01% $1,996,844 $2,016,742 $19,898 Distribution Rant 2.19% 2.35% 0.16% 35,778,342 38,364,615 2,586,273 General Rant 4.61% 4.61% 0.00% 3,603,399 3,603,416 17

Total 2.26% 2.40% 0.14% $41,378,585 $43,984,773 $2,606,188

Table 1. Current and Proposed Rates and Accruals

Foster Associates is recommending primary account depreciation rates equivalent to a composite rate of 2.40 percent. Depreciation expense is currently accrued at rates that composite to 2.26 percent. The recommended change in the composite depreciation rate is, therefore, an increase of 0.14 percentage points.

A continued application of current rates would provide annualized depreciation expense of $41,378,585 compared with an annualized expense of $43,984,773 using the rates developed in this study. The proposed 2011 expense increase is $2,606,188. The change in depreciation rate and accruals is attributable to adjustments in service life and net salvage statistics recommended in the 2011 study. Of the 34 plant accounts included in the 2011 study, Foster Associates is recommending rate reductions for 14 accounts and rate increases for 20 accounts.

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COMPANY PROFILE

GENERAL Niagara Mohawk Power Corporation d/b/a Na-tional Grid is a wholly–owned electric and gas combination subsidiary of National Grid plc operating in upstate New York based in Syra-cuse. The Company was incorporated under the laws of the State of New York in 1929 as Niagara Hudson Power Corporation Company. In January 2002, National Grid plc acquired Niagara Mohawk Holdings, Inc. a New York State utility. Niagara Mohawk Holdings is a holding company for utilities provid-ing electricity and gas services. Niagara Mohawk Power Corporation was a sub-sidiary of Niagara Mohawk Holdings, Inc

SERVICE AREA Niagara Mohawk provided gas service to approximately 586,000 customers in ar-eas of central, northern and eastern New York at December 31, 2010. The north-ern reaches of the system extend to Watertown and Glens Falls. Not all of the Company’s distribution areas are physically interconnected with one another by its own facilities

GAS SUPPLY The majority of the Company’s gas sales are for residential and commercial space heating. The Company purchases its natural gas under firm supply agreements. The natural gas purchased may be either transported or stored for later transport on a firm basis through interstate storage facilities and pipelines to the Company’s system.

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GAS UTILITY OPERATIONS Niagara Mohawk owned and operated approximately 8,800 miles of transmission and distribution mains at December 31, 2010. The Company's gas system consisted of 3,802 miles of cathodically protected pipe, 276 miles of unprotected pipe, 639 miles of cast and wrought iron pipe and 4,082 miles of plastic mains. The Company also maintained over 541,120 service lines consisting of 181,643 metallic lines and 359,477 plastic lines. Pipe sizes within the distribution system vary between 5/8-inch and 36 inches.

The gas distribution system is served by three interstate natural gas pipelines regulated by the FERC and one intrastate pipeline regulated by the New York Public Service Commission. The Company has nineteen direct connections with Dominion Transmission, Inc., two with Iroquois Gas Transmission, one with Tennessee Gas Pipeline and one with the intrastate Empire State Pipeline.

At each gate station, National Grid operates a regulator station to convert the gas from a transmission pressure of about 500 psig to the various Niagara Mohawk distribution system pressures of up to 200 psig. Additional district regulator stations within the distribution system reduce the pressure further depending on customer requirements. A service lateral connects the local distribution system through a curb cock and sometimes excess flow valve to the customer. Although the design of each lateral is specific to a customer's needs, a regulator is generally used to reduce the gas pressure to between five and ten inches of water column prior to the gas entering a residence or business.

The Company's gas operations are controlled from the National Grid gas control center housed at the Henry Clay Boulevard Facility in Liverpool, New York where system pressures at numerous locations are monitored and adjusted utilizing remote regulators and valves. System adjustments are additionally made by dispatched field personnel from the Company's Gas Supply group.

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STUDY PROCEDURE

INTRODUCTION The purpose of a depreciation study is to analyze the mortality characteristics, net salvage rates and adequacy of depreciation accruals and recorded depreciation reserves for each rate category. This study provides the foundation and documentation for recommended changes in depreciation rates used by Niagara Mohawk. The proposed rates are subject to approval by the New York State Public Service Commission.

SCOPE The steps involved in conducting a depreciation study can be grouped into five major tasks:

• Data Collection;

• Life Analysis and Estimation;

• Net Salvage Analysis;

• Depreciation Reserve Analysis; and

• Development of Accrual Rates.

The scope of the 2011 study included a consideration of each of these tasks as described below.

DATA COLLECTION The minimum database required to conduct a statistical life study consists of a history of vintage year additions and unaged activity year retirements, transfers and adjustments. These data must be appropriately adjusted for transfers, sales and other plant activity that would otherwise bias the measured service life of normal retirements. The age distribution of surviving plant for unaged data can be estimated by distributing plant in service at the beginning of the study year to prior vintages in proportion to the theoretical amount surviving from a projection or survivor curve identified in the life study. The statistical methods of life analysis used to examine unaged plant data are known as semi-actuarial techniques.

A far more extensive database is required to apply statistical methods of life analysis known as actuarial techniques. Plant data used in an actuarial life study most often include age distributions of surviving plant at the beginning of a study year and the vintage year, activity year, and dollar amounts associated with normal retirements, reimbursed retirements, sales, abnormal retirements, transfers, corrections, and extraordinary adjustments over a series of prior activity years. An actuarial database may include age distributions of surviving plant at the beginning of the earliest activity year, rather than at the begimling of the study year. Plant additions, however, must be included in a database containing an opening age distribution to derive aged survivors at the beginning of the study year. All activity year transactions with vintage year identification are coded and stored in a database. These data are processed by a computer program and transaction sum-

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mary reports are created in a format reconcilable to official plant records. The availability of such detailed information is dependent upon an accounting system that supports aged property records. The Continuing Property Record (CPR) system used by Niagara Mohawk provides aged post-2006 activity-year transactions for all plant accounts.

With the exception of distribution Account 380 (Services), the database used in conducting the 2011 study was developed by appending 2008-2010 plant and reserve transactions to the database used in conducting the 2008 study? Plant and reserve transactions for Account 380 were removed from the 2008 database and replaced with transactions identifiable by material type over the period 2004-2010. Account 380.10 (Services - Metallic) and Account 380.20 (Services -Plastic) were created in compliance with the Joint Proposal in the 2008 Gas Case to record gas services in two sub-accounts.

The accuracy and completeness of the assembled database was verified in the 2008 study for the calendar years available in PowerPlant. Beginning plant balances, additions, retirements, transfers, adjustments, and ending plant balances derived for each activity year were reconciled to the official plant records of the Company. Age distributions of surviving plant at December 31, 2007 were also reconciled to the CPR. Transactions recorded over the period 2008-2010 were similarly reconciled in conducting the 2011 study.

LIFE ANALYSIS AND ESTIMATION Life analysis and life estimation are terms used to describe a two-step procedure for estimating the mortality characteristics of a plant category. The first step (i.e., life analysis) is largely mechanical and primarily concerned with history. Statistical techniques are used in this step to obtain a mathematical description of the forces of retirement acting upon a plant category and an estimate of the projection life of the account. Mathematical expressions used to describe these life characteristics are known as survival/unctions or survivor curves.

The second step (i.e., life estimation) is concerned with predicting the expected remaining life of property units still exposed to forces of retirement. It is a process of blending the results of a life analysis with informed judgment (including expectations about the future) to obtain an appropriate projection life and

2The database used in the 2008 study was assembled by Niagara Mohawk from two sources and provided to Foster Associates in Microsoft Excel spreadsheets. The first data source was a legacy Corporate Project Accounting System (CPAS). The legacy system provided plant and reserve transactions over the period January 1, 1996 through December 31, 2003.

The second source was a PowerPlant asset management system populated with age distributions of surviving plant at December 31, 2003. Plant and reserve activity for calendar years 2004 through 2007 and age distributions of surviving plant at December 31, 2007 were obtained from the PowerPlant system.

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curve descriptive of the parent population from which a plant account is viewed as a random sample. The amount of weight given to a life analysis will depend upon the extent to which past retirement experience is considered descriptive of the future.

The analytical methods used in a life analysis are broadly classified as actuarial and semi-actuarial techniques. Actuarial techniques can be applied to plant accounting records that reveal the age of a plant asset at the time of its retirement from service. Stated differently, each property unit must be identifiable by date of installation and age at retirement. Semi-actuarial techniques can be used to derive service life and dispersion estimates when age identification of retirements is not maintained or readily available. Aged retirements were available for all plant accounts included in the 2011 Niagara Mohawk study.

An actuarial life analysis program designed and developed by Foster Associates was used in this study. The first step in an actuarial analysis involves a systematic treatment of the available data for the purpose of constructing an observed life table. A complete life table contains the life history of a group of property units installed during the same accounting period and various probability relationships derived from the data. A life table is arranged by age-intervals (usually defined as one year) and shows the number of units (or dollars) entering and leaving each age-interval and probability relationships associated with this activity. A life table minimally contains the age of each survivor and the age of each retirement from a group of property units installed in a given accounting year.

Life tables can be constructed in anyone of at least five methods. The annual-rate or retirement-rate method was used in this study. The mechanics of the annual-rate method require the calculation of a series of ratios obtained by dividing the number of units (or dollars) surviving at the beginning of an age interval into the number of units (or dollars) retired during the same interval. This ratio (known as a retirement ratio) is an estimator of the hazard rate or conditional probability of retirement during an age interval. The cumulative proportion surviving is obtained by multiplying the retirement ratio for each age interval by the proportion of the original group surviving at the beginning of that age interval and subtracting this product from the proportion surviving at the beginning of the same interval. The annual-rate method is applied to multiple groups or vintages by combining the retirements and/or survivors of like ages for each vintage included in the analysis.

The second step in an actuarial analysis involves graduating or smoothing the observed life table and fitting the smoothed series to a family of survival functions. The functions used in this study are the Iowa-type curves mathematically described by the Pearson frequency curve family and h-curves derived from truncated normal probability distributions. Observed life tables were smoothed by a weighted least-squares procedure in which first, second and third degree orthogo-

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nal polynomials were fitted to the observed retirement ratios. The resulting function can be expressed as a survivorship function and numerically integrated to obtain an estimate of the projection life. The smoothed survivorship function is then fitted by a weighted least-squares procedure to the Iowa and h-curve families to obtain a mathematical description or classification of the dispersion characteristics of the data.

The set of computer programs used in this study provides multiple rollingband, shrinking-band and progressive-band analyses of an account. Observation bands are defined for a "retirement era" which restricts the analysis to retirement activity of all vintages represented by survivors at the beginning of a selected era. In a rolling-band analysis, a year of retirement experience is added to each successive retirement band and the earliest year from the preceding band is dropped. A shrinking-band analysis begins with the total retirement experience available and the earliest year from the preceding band is dropped for each successive band. A progressive-band analysis adds a year of retirement activity to a previous band without dropping earlier years from the analysis. Rolling and shrinking band analyses are used to detect the emergence of trends in the behavior of the dispersion and projection life.

Options available in Foster Associates' actuarial life analysis program include the width and location of both placement and observation bands; the interval of years included in a selected band analysis; the estimator of the hazard rate (actuarial, conditional proportion retired, or maximum likelihood); the elements to include on the diagonal of a weight matrix (exposures, inverse of age, inverse of variance, or unweighted); and the age at which an observed life table is truncated. The program also provides tabular and graphics output and algorithms for calculating depreciation rates and accruals.

While actuarial and semi-actuarial statistical methods are well-suited to an analysis of plant categories containing a large number of homogeneous units (e.g., mains and services), these methods are not well-suited to plant categories composed of major items of plant that will most likely be retired as a single unit. Property units retired from an integrated system prior to the retirement of the entire facility are more properly viewed as interim retirements that will be replaced in order to maintain the integrity of the system. Plant facilities may also be added to the existing system (i.e., interim additions) to expand or enhance its productive capacity without extending the service life of the existing system. A proper depreciation rate can be developed for an integrated system using a life-span method. All plant accounts were treated as full mortality categories in the current study.

NET SALVAGE ANALYSIS Depreciation rates designed to achieve the goals and objectives of depreciation accounting will include a parameter for future net salvage and a variable for aver-

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age net salvage reflecting both realized and future net salvage rates.

Estimate of the net salvage rate applicable to future retirements are most often derived from an analysis of gross salvage and cost of removal realized in the past. An analysis of past experience (including an examination of trends over time) provides a basis for estimating future salvage and cost of removal. However, consideration should also be given to events that may cause deviations from net salvage realized in the past. Among the factors that should be considered are the age of plant retirements; the portion of retirements likely to be reused; changes in the method of removing plant; the type of plant to be retired in the future; inflation expectations; the shape of the projection life curve; and economic conditions that may warrant greater or lesser weight to be given to net salvage rates observed in the past.

Special consideration should also be given to the treatment of insurance proceeds and other forms of third-party reimbursements credited to the depreciation reserve. A properly conducted net salvage study will exclude such activity from the estimate of future parameters and include the activity in the computation of realized and average net salvage rates. Foster Associates was informed by Niagara Mohawk that receipt of third-party reimbursements is rare and indistinguishable from other credits to plant and reserve accounts.

Five-year moving averages of the ratio of realized salvage and cost of removal to the associated retirements were used in the 2011 study to a) estimate a realized net salvage rate; b) detect the emergence of historical trends; and c) establish a basis for estimating a future net salvage rate. Cost of removal and salvage opinions obtained from Company personnel were blended with judgment and historical net salvage indications in developing estimates of the future.

Average net salvage rates were estimated using direct dollar-weighting of historical retirements with the historical net salvage rates, and future retirements (i.e., surviving plant) with the estimated future net salvage rates. The computation of the estimated average net salvage rate for each rate category is shown in StatementD.

DEPRECIATION RESERVE ANALYSIS The purpose of a depreciation reserve analysis is to compare the current level of recorded reserves with the level required to achieve the goals or objectives of depreciation accounting if the amount and timing of future retirements and net salvage are realized as predicted. The difference between a required (or theoretical) depreciation reserve and a recorded reserve provides a measurement of the expected excess or shortfall that will remain in the depreciation reserve if corrective action is not taken to gradually extinguish the reserve imbalance.

Unlike a recorded reserve which represents the net amount of depreciation expense charged to previous periods of operations, a theoretical reserve is a

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measure of the implied reserve requirement at the beginning of a study year if the timing of future retirements and net salvage is in exact conformance with a survivor curve chosen to predict the probable life of property units still exposed to the forces of retirement. Stated differently, a theoretical depreciation reserve is the difference between the recorded cost of plant currently in service and the sum of depreciation expense and net salvage that will be charged in the future if retirements are distributed over time according to a specified retirement frequency distribution.

The survivor curve used in the calculation of a theoretical depreciation reserve is intended to describe forces of retirement that will be operative in the future. However, retirements caused by forces such as accidents, physical deterioration and changing technology seldom, if ever, remain stable over time. It is unlikely, therefore, that a probability or retirement frequency distribution can be identified that will accurately describe the age of plant retirements over the complete life cycle of a vintage. It is for this reason that depreciation rates should be reviewed periodically and adjusted for observed or expected changes in the parameters chosen to describe the underlying forces of mortality.

Although reserve records are commonly maintained by various account classifications, the sum of all reserves is the most important measure of the status of the company's depreciation practices. If statistical life studies have not been conducted or retirement dispersion has been ignored in setting depreciation rates, it is likely that some accounts will be over-depreciated and other accounts will be under-ciepreciated relative to a calculated theoretical reserve. Differences between theoretical reserves and recorded reserves also will arise as a normal occurrence when service lives, dispersion patterns and net salvage estimates are adjusted in the course of depreciation reviews. It is appropriate, therefore, and consistent with group depreciation theory to periodically redistribute or rebalance recorded reserve among the various primary accounts based upon the most recent estimates of retirement dispersion and net salvage rates.

Notwithstanding the technical desirability of rebalancing depreciation reserves, recorded reserves were not rebalanced in the current study. Foster Associates recommended reserve rebalancing for Niagara Mohawk electric in Case 10-0050. The DPS Depreciation Panel, however, objected to the recommendation stating: "We do not believe it is necessary to rebalance the accounts unless an adjustment to the total book reserve is made.,,3 Accordingly, Foster Associates is not recommending rebalancing reserves for Niagara Mohawk in the 2011 depreciation rate study.

3Niagara Mohawk Power Corporation, Case 1O-E-0050, Prepared Testimony of Depreciation Panel, page16, lines 10-20.

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Statement C provides a comparison of recorded and computed reserves at December 31, 2010. The total recorded reserve for was $645,280,714 or 35.2 percent of the depreciable plant investment. The corresponding computed reserve is $700,939,060 or 38.3 percent of the depreciable plant investment. A reserve deficiency of $55,658,346 is therefore indicated for Niagara Mohawk gas plant accounts.

DEVELOPMENT OF ACCRUAL RATES The goal or objective of depreciation accounting is cost allocation over the economic life of an asset in proportion to the consumption of service potential. Ideally, the cost of an asset-which represents the cost of obtaining a bundle of service units-should be allocated to future periods of operation in proportion to the amount of service potential expended during an accounting interval. The service potential of an asset is the present value of future net revenue (i.e., revenue less expenses exclusive of depreciation and other non-cash expenses) or cash inflows attributable to the use of that asset alone.

Cost allocation in proportion to the consumption of service potential is often approximated by the use of depreciation methods employing time rather than net revenue as the apportionment base. Examples of time-based methods include sinking-fund, straight-line, declining balance, and sum-of-the-years' digits. The advantage of a time-based method is that it does not require an estimate of remaining service potential or the amount of service potential actually consumed during an accounting interval. Using a time-based allocation method, however, does not change the goal of depreciation accounting. If it is reasonable to predict that the net revenue pattern of an asset will either decrease or increase over time, then an accelerated or decelerated time-based method should be used to approximate the rate at which service potential is actually consumed.

The time period over which the cost of an asset will be allocated to operations is determined by the combination of a procedure and a technique. A depreciation procedure describes the level of grouping or sub-grouping of assets within a plant category. The broad group, vintage group, equal-life group, and item (or unit) are a few of the more widely used procedures. A depreciation technique describes the life statistic used in a depreciation system. Whole-life and remaininglife (or expectancy) are the most common techniques.

The first step in the development of an accrual rate is the ~election of an appropriate method, procedure and technique. Although Foster Associates remains of the opinion that a system composed of the straight-line method, vintage group procedure, remaining-life technique would better achieve the goals and objectives of depreciation accounting, depreciation rates recommended in this study were developed using a system composed of the straight-line method, broad group procedure, whole-life technique. Mindful that the Commission has historically re-

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jected systems other than straight-line, broad group, whole-life for energy companies, Foster Associates is not recommending a departure from the established precedent. Accordingly, broad group, whole-life rates were developed in the current study.

It is also the opinion of Foster Associates that amortization accounting currently approved for selected general support asset accounts is consistent with the goals and objectives of depreciation accounting and remains appropriate for these plant categories. Amortization periods advocated by Staff and agreed upon in the 2008 Gas Case were retained for these accounts.

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STATEMENTS

INTRODUCTION This section provides a comparative summary of depreciation rates, annual depreciation accruals, recorded and computed depreciation reserves, and current and proposed service life and net salvage statistics recommended for Niagara Mohawk gas operations. The content of these statements is briefly described below.

II Statement A provides a comparative summary of current and proposed annual depreciation rates using the broad group procedure, whole-life technique.

II Statement B provides a comparison of current and proposed annualized 2011 depreciation accruals derived from an application of the depreciation rates contained in Statement A.

III Statement C provides a comparison of recorded and computed reserves and reserve imbalances for each rate category at December 31,2010.

II Statement D provides a summary of the components used to obtain weighted average net salvage rates.

II Statement E provides a comparative summary of current and proposed parameters including projection life, projection curve, average remaining life and average and future net salvage rates.

Current depreciation accruals shown on Statement B are the product of the plant investment (Column B) and current depreciation rates (Column D) shown on Statement A. These are the effective rates used by Niagara Mohawk for the mix of investments recorded on December 31,2010. Similarly, proposed depreciation accruals shown on Statement B are the product of the plant investment and proposed depreciation rates shown on Statement A. Proposed accrual rates are given by:

A lR l.O-Average Net Salvage Rate

ccrua ate = . Average Service Life

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NIAGARA MOHAWK POWER CORPORATION - GAS Statement A Comparison of Current and Proposed Accrual Rates

Current: BG Procedure / WL Technique Proposed: BG Procedure / WL Technique

Current Proposed Average Avg. Net Accrual Curve Average Avg. Net Accrual

Account Description Life Salvage Rate Shape Life Salvage Rate A B C D E F G H

TRANSMISSION PLANT 365.00 Land Rights 100.00 1.00% sa 100.00 1.00% 366.00 Structures and Improvements 55.00 -15.0% 2.09% R2 55.00 -15.0% 2.09% 367.00 Mains 80.00 -20.0% 1.50% R3 80.00 -20.1% 1.50% 369.15 Regulating Station Equipment 40.00 -15.0% 2.88% L 1.5 35.00 -9.7% 3.13% 369.25 Regulating Station Manholes 40.00 -15.0% 2.88% LO 45.00 -30.0% 2.89% 369.55 Meas. and Reg. Station Equipment - RTU 25.00 -20.0% 4.80% H4 25.00 -5.5% 4.22%

Total Transmission Plant 1.61% 72.36 -18.3% 1.62%

DISTRIBUTION PLANT 374.00 Land Rights 100.00 1.00% sa 100.00 1.00% 375.00 Structures and Improvements 45.00 2.22% LO 45.00 -21.0% 2.69% 376.11 Mains - Steel 80.00 -50.0% 1.88% H4 95.00 -75.8% 1.85% 376.12 Mains - Plastic 65.00 -50.0% 2.31% H4 65.00 -50.1% 2.31% 376.13 Mains - Cast Iron 80.00 -80.0% 2.25% SO.5 80.00 -122.8% 2.79% 376.14 Mains - Valves 80.00 -20.0% 1.50% R3 80.00 -20.9% 1.51% 378.10 Meas. and Reg. Sta. Equipment 40.00 -5.0% 2.63% LO.5 36.00 -30.8% 3.63% 378.20 Meas. and Reg. Sta. Equip. - Manholes 40.00 -5.0% 2.63% LO 45.00 -34.7% 2.99% 378.55 Meas. and Reg. Station Equipment - RTU 35.00 -30.0% 3.71% H4 25.00 -5.1% 4.20% 380.10 Services - Metallic 60.00 -20.0% 2.00% R1.5 70.00 -20.1% 1.72% 380.20 Services - Plastic 60.00 -20.0% 2.00% R4 50.00 -20.2% 2.40% 381.00 Meters 33.00 3.03% R2.5 33.00 -1.1% 3.06% 382.00 Meter Installations 45.00 -25.0% 2.78% R1 50.00 -41.7% 2.83% 383.00 Regulators 40.00 2.50% R1 40.00 2.50% 384.00 Regulator Installations 40.00 2.50% H5 40.00 -0.2% 2.51% 385.00 Industrial Meas. and Reg. Station Equip. 25.00 4.00% R5 30.00 0.9% 3.30%

Total Distribution Plant 2.19% 57.02 -38.8% 2.35%

GENERAL PLANT Depreciable

390.00 Structures and Improvements 55.00 1.82% LO.5 55.00 1.82% Total Depreciable 1.82% 55.00 1.82%

Amortizable 391.10 Office Furniture and Equipment 22.00 4.55% sa 22.00 4.55% 391.15 Data Processing Equipment 5.00 20.00% sa 5.00 20.00% 393.00 Stores Equipment 22.00 4.55% sa 22.00 4.55% 394.10 Tools and Work Equipment 22.00 4.55% sa 22.00 4.55% 394.20 Natural Gas Refueling Equipment 22.00 4.55% sa 22.00 4.55% 395.00 Laboratory Equipment 22.00 4.55% sa 22.00 4.55% 397.10 Communication Equipment - Network 22.00 4.55% sa 22.00 4.55% 397.20 Communication Equipment - Radio 22.00 4.55% sa 22.00 4.55% 397.30 Communication Equipment - Telephone 8.00 12.50% sa 8.00 12.50% 398.00 Miscellaneous Equipment 22.00 4.55% sa 22.00 4.55% 398.10 Power and Supervisory Control 22.00 4.55% sa 22.00 4.55%

Total Amortizable 4.64% 21.54 4.64%

Total General Plant 4.61% 21.46 4.61%

TOTAL GAS OPERATIONS 2.26% 54.04 -35.5% 2.40%

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NIAGARA MOHAWK POWER CORPORATION - GAS Statement B Comparison of Current and Proposed Accruals

Current: BG Procedure / WL Technique Proposed: BG Procedure / WL Technique

12/31/10 Plant 2011 Annualized Accrual

Account Description Investment Current Proposed Difference A B D F

TRANSMISSION PLANT 365.00 Land Rights $5,287,192 $52,872 $52,872 366.00 Structures and Improvements 2,142,959 44,809 44,788 (21) 367.00 Mains 106,938,230 1,604,073 1,604,073 369.15 Regulating Station Equipment 9,188,111 264,158 287,588 23,430 369.25 Regulating Station Manholes 62,639 1,801 1,810 9 369.55 Meas. and Reg. Station Equipment - RTU 606,888 29,131 25,611 (3,520}

Total Transmission Plant $124,226,019 $1,996,844 $2,016,742 $19,898

DISTRIBUTION PLANT 374.00 Land Rights $1,732,216 $17,322 $17,322 375.00 Structures and Improvements 4,845,825 107,674 130,353 22,679 376.11 Mains - Steel 211,586,080 3,967,239 3,914,342 (52,897) 376.12 Mains - Plastic 619,653,478 14,301,602 14,313,995 12,393 376.13 Mains - Cast Iron 8,843,963 198,989 246,747 47,758 376.14 Mains - Valves 6,343,570 95,154 95,788 634 378.10 Meas. and Reg. Sta. Equipment 43,520,577 1,142,415 1,579,797 437,382 378.20 Meas. and Reg. Sta. Equip. - Manholes 1,320,281 34,657 39,476 4,819 378.55 Meas. and Reg. Station Equipment - RTU 2,902,389 107,795 121,900 14,105 380.10 Services - Metallic 44,844,112 896,882 771,319 (125,563) 380.20 Services - Plastic 554,215,791 11,084,316 13,301,179 2,216,863 381.00 Meters 67,750,341 2,052,835 2,073,160 20,325 382.00 Meter Installations 45,133,193 1,253,800 1,277,269 23,469 383.00 Regulators 6,058,145 151,454 151,454 384.00 Regulator Installations 6,344,788 158,620 159,254 634 385.00 Industrial Meas. and Reg. Station Equip. 5,189,704 207,588 171,260 (36,328}

Total Distribution Plant $1,630,284,453 $35,778,342 $38,364,615 $2,586,273

GENERAL PLANT Depreciable

390.00 Structures and Improvements $774,711 $14,084 $14,100 $16 Total Depreciable $774,711 $14,084 $14,100 $16

Amortizable 391.10 Office Furniture and Equipment $2,665,844 $121,175 $121,175 $0 391.15 Data Processing Equipment 391,640 78,328 78,328 393.00 Stores Equipment 3,262 148 148 (0) 394.10 Tools and Work Equipment 18,496,218 840,737 840,737 (0) 394.20 Natural Gas Refueling Equipment 4,046,718 183,942 183,942 0 395.00 Laboratory Equipment 1,579,607 71,800 71,800 (0) 397.10 Communication Equipment - Network 12,797,170 581,690 581,690 0 397.20 Communication Equipment - Radio 30,048,286 1,365,831 1,365,831 (0) 397.30 Communication Equipment - Telephone 177,749 22,219 22,219 0 398.00 Miscellaneous Equipment 6,721,850 305,539 305,539 0 398.10 Power and Supervisory Control 393,945 17,907 17,907 0

Total Amortizable $77,322,289 $3,589,315 $3,589,316 $1

Total General Plant $78,097,000 $3,603,399 $3,603,416 $17

TOTAL GAS OPERATIONS $1,832,607,472 $41,378,585 $43,984,773 $2,606,188

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ANALYSIS

INTRODUCTION This section provides an explanation of the suppOliing schedules developed in the Niagara Mohawk depreciation study to estimate appropriate projection curves, projection lives and net salvage statistics for each rate category. The form and content of the schedules developed for an account depend upon the method of analysis adopted for the category.

This section also includes examples of the supporting schedules developed for distribution Account 378.10 (Measuring and Regulating Station Equipment). Documentation for all other plant accounts is contained in the study work papers. Supporting schedules developed in the Niagara Mohawk study include:

Schedule A - Generation Arrangement;

Schedule B - Age Distribution;

Schedule C - Plant History;

Schedule D - Actuarial Life Analysis;

Schedule E - Graphics Analysis; and

Schedule F - Historical Net Salvage Analysis.

The format and content of these schedules are briefly described below.

SCHEDULE A - GENERATION ARRANGEMENT The purpose of this schedule is to obtain appropriate weighted-average life statistics for a rate category. The weighted-average remaining-life is the sum of Column H divided by the sum of Column 1. The weighted average life is the sum of Column C divided by the sum of Column 1.

It should be noted that the generation arrangement does not include parameters for net salvage. Computed Net Plant (Column H) and Accruals (Column I) must be adjusted for net salvage to obtain a correct measurement of theoretical reserves and annualized depreciation accruals.

The following table provides a description of each column in the generation arrangement.

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Column Title Description

A Vintage Vintage or placement year of surviving plant.

B Age Age of surviving plant at beginning of study year.

C Surviving Plant Actual dollar amount of surviving plant.

D Average Life Estimated average life of each vintage. This statistic is the sum of the realized life and the unrealized life, which is the product of the remaining life (Column E) and the theoretical proportion surviving.

E Remaining Life Estimated remaining life of each vintage.

F Net Plant Ratio Theoretical net plant ratio of each vintage.

G Allocation Factor A pivotal ratio which determines the amortization period of the difference between the recorded and computed reserve.

H Computed Net Plant Plant in service less theoretical reserve for each vintage.

I Accrual Ratio of computed net plant (Column H) and remaining life (Column E).

Table 2. Generation Arrangement

SCHEDULE B - AGE DISTRIBUTION This schedule provides the age distribution and realized life of surviving plant shown in Column C of the Generation Arrangement (Schedule A). The format of the schedule depends upon the availability of either aged or unaged data. Derived additions for vintage years older than the earliest activity year in an account for unaged data are obtained from the age distribution of surviving plant at the beginning of the earliest activity year. The amount surviving from these vintages is shown in Column D. The realized life (Column G) is derived from the dollar years of service provided by a vintage over the period of years the vintage has been in service. Plant additions for vintages older than the earliest activity year in an account are represented by the opening balances shown in Column D.

The computed proportion surviving (Column D) for unaged data is derived from a computed mortality analysis. The average service life displayed in the title block is the life statistic derived for the most recent activity year, given the derived age distribution at the start of the year and the specified retirement dispersion. The realized life (Column F) is obtained by finding the slope of an SC retirement dispersion, which connects the computed survivors of a vintage (Column E) to the recorded vintage addition (Column B). The realized life is the area bounded by the SC dispersion, the computed proportion surviving and the age of the vintage.

SCHEDULE C - PLANT HISTORY An Unadjusted Plant History schedule provides a summary of recorded plant data extracted from the continuing property records maintained by the Company. Ac-

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Column Title Description

A Vintage Vintage or placement year of surviving plant.

B Age Age of surviving plant at beginning of study year.

C Surviving Plant Actual dollar amount of surviving plant.

D Average Life Estimated average life of each vintage. This statistic is the sum of the realized life and the unrealized life, which is the product of the remaining life (Column E) and the theoretical proportion surviving.

E Remaining Life Estimated remaining life of each vintage.

F Net Plant Ratio Theoretical net plant ratio of each vintage.

G Allocation Factor A pivotal ratio which determines the amortization period of the difference between the recorded and computed reserve.

H Computed Net Plant Plant in service less theoretical reserve for each vintage.

I Accrual Ratio of computed net plant (Column H) and remaining life (Column E).

Table 2. Generation Arrangement

SCHEDULE B - AGE DISTRIBUTION This schedule provides the age distribution and realized life of surviving plant shown in Column C of the Generation Arrangement (Schedule A). The format of the schedule depends upon the availability of either aged or unaged data. Derived additions for vintage years older than the earliest activity year in an account for unaged data are obtained from the age distribution of surviving plant at the beginning of the earliest activity year. The amount surviving from these vintages is shown in Column D. The realized life (Column G) is derived from the dollar years of service provided by a vintage over the period of years the vintage has been in service. Plant additions for vintages older than the earliest activity year in an account are represented by the opening balances shown in Column D.

The computed proportion surviving (Column D) for unaged data is derived from a computed mortality analysis. The average service life displayed in the title block is the life statistic derived for the most recent activity year, given the derived age distribution at the start of the year and the specified retirement dispersion. The realized life (Column F) is obtained by finding the slope of an SC retirement dispersion, which connects the computed survivors of a vintage (Column E) to the recorded vintage addition (Column B). The realized life is the area bounded by the SC dispersion, the computed proportion surviving and the age of the vintage.

SCHEDULE C - PLANT HISTORY An Unadjusted Plant History schedule provides a summary of recorded plant data extracted from the continuing property records maintained by the Company. Ac-

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61


tivity year total amounts shown on this schedule for aged data are obtained from a historical arrangement of the data base in which all plant accounting transactions are identified by vintage and activity year. Activity year totals for unaged data are obtained from a transaction file without vintage identification. Information displayed in the unadjusted plant history is consistent with regulated investments reported internally by the Company.

An Adjusted Plant History schedule provides a summary of recorded plant data extracted from the continuing property records maintained by the Company with sales, transfers, and adjustments appropriately aged for depreciation study purposes. Activity year total amounts shown on this schedule for aged data are obtained from a historical arrangement of the data base in which all plant accounting transactions are identified by vintage and activity year. Ageing of adjusting transactions is achieved using transaction codes that identify an adjusting year associated with the dollar amount of a transaction. Adjusting transactions processed in the adjusted plant history are not aged in the Company's records or in the unadjusted plant history.

SCHEDULE D - ACTUARIAL LIFE ANALYSIS These schedules provide a summary of the dispersion and life indications obtained from an actuarial life analysis for a specified placement band. The observation band (Column A) is specified to produce either a rolling-band or a shrinking-band analysis depending upon the movement of the end points of the band. The degree of censoring (or point of truncation) of the observed life table is shown in Column B for each observation band. The estimated average service life, best fitting Iowa or h-curve, and a statistical measure of the goodness of fit are shown for each degree polynomial (First, Second, and Third) fitted to the estimated hazard rates. Options available in the analysis include the width and location of both the placement and observation bands; the interval of years included in a selected rolling or shrinking band analysis; the estimator of the hazard rate (actuarial, conditional proportion retired, or maximum likelihood); the elements to include on the diagonal of a weight matrix (exposures, inverse of age, inverse of variance, or unweighted); and the age at which an observed life table is truncated.

The estimated average service lives (Columns C, F, and I) are flagged with an asterisk if negative hazard rates are indicated by the fitted polynomial. All negative hazard rates are set equal to zero in the calculation of the graduated survivor curve. The Conformance Index (Columns E, H, and K) is the square root of the mean sum-of-squared differences between the graduated survivor curve and the best fitting Iowa or h-curve. A Conformance Index of zero would indicate a perfect fit.

SCHEDULE E - GRAPHICS ANALYSIS This schedule provides a graphics plot of a) the observed proportion surviving for a selected placement and observation band; b) the statistically best fitting Iowa or

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62


h-curve and derived average service life; and c) the projection curve and projection life selected to describe future forces of mortality.

The graphics analysis also provides a plot of the observed hazard rates and graduated hazard function for a selected placement and observation band. The estimator of the hazard rates and weighting used in fitting orthogonal polynomials to the observed data are displayed in the title block of the displayed graph.

SCHEDULE F - HISTORICAL NET SALVAGE ANALYSIS This schedule provides a moving average analysis of the ratio of realized net salvage (Column I) to the associated retirements (Column B). The schedule also provides a moving average analysis of the components of net salvage related to retirements. The ratio of gross salvage to retirements is shown in Column D and the ratio of cost of removal to retirements is shown in Column G.

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63


Schedule A NIAGARA MOHAWK POWER CORPORATION - GAS Page 1 of3

Distribution Plant Account: 378.10 Meas. and Reg. Sta. Equipment

Dispersion: 36 - LO.5 Procedure: Broad Group

~~n~r~Ji()nArr<ll1g~m~J:lt _~ ____ ~ __ ~ _~ _ ~ ----_._--------- -

December 31,2010 Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual A B C 0 E F G H=C*F*G I=H/E

2010 0.5 628,171 36.00 35.55 0.9875 1.0000 620,334 17,449 2009 1.5 3,559,358 36.00 34.70 0.9640 1.0000 3,431,190 98,871 2008 2.5 3,286,684 36.00 33.90 0.9418 1.0000 3,095,259 91,297 2007 3.5 2,229,059 36.00 33.14 0.9205 1.0000 2,051,912 61,918 2006 4.5 1,200,741 36.00 32.41 0.9002 1.0000 1,080,870 33,354 2005 5.5 1,573,517 36.00 31.70 0.8806 1.0000 1,385,647 43,709 2004 6.5 3,357,072 36.00 31.02 0.8618 1.0000 2,893,110 93,252 2003 7.5 2,138,659 36.00 30.37 0.8437 1.0000 1,804,466 59,407 2002 8.5 1,109,276 36.00 29.75 0.8264 1.0000 916,697 30,813 2001 9.5 2,829,883 36.00 29.15 0.8097 1.0000 2,291,483 78,608 2000 10.5 2,119,303 36.00 28.58 0.7938 1.0000 1,682,260 58,870 1999 11.5 2,703,595 36.00 28.03 0.7785 1.0000 2,104,720 75,100 1998 12.5 1,777,475 36.00 27.50 0.7639 1.0000 1,357,748 49,374 1997 13.5 780,104 36.00 26.99 0.7499 1.0000 584,962 21,670 1996 14.5 1,304,247 36.00 26.51 0.7364 1.0000 960,494 36,229 1995 15.5 1,518,439 36.00 26.05 0.7236 1.0000 1,098,719 42,179 1994 16.5 1,757,150 36.00 25.61 0.7113 1.0000 1,249,789 48,810 1993 17.5 1,181,964 36.00 25.18 0.6994 1.0000 826,666 32,832 1992 18.5 1,296,311 36.00 24.78 0.6883 1.0000 892,207 36,009 1991 19.5 352,263 36.00 24.39 0.6774 1.0000 238,638 9,785 1990 20.5 148,701 36.00 24.00 0.6668 1.0000 99,153 4,131 1989 21.5 653,281 36.00 23.63 0.6563 1.0000 428,746 18,147 1988 22.5 66,564 36.00 23.25 0.6460 1.0000 42,999 1,849 1987 23.5 116,886 36.00 22.89 0.6358 1.0000 74,317 3,247 1986 24.5 28,884 36.00 22.53 0.6258 1.0000 18,076 802 1985 25.5 312,193 36.00 22.17 0.6159 1.0000 192,295 8,672 1984 26.5 383,180 36.00 21.82 0.6062 1.0000 232,301 10,644 1983 27.5 634,454 36.00 21.48 0.5967 1.0000 378,573 17,624 1982 28.5 284,304 36.00 21.14 0.5873 1.0000 166,968 7,897 1981 29.5 316,778 36.00 20.81 0.5780 1.0000 183,107 8,799 1980 30.5 70,296 36.00 20.48 0.5689 1.0000 39,992 1,953 1979 31.5 117,217 36.00 20.16 0.5599 1.0000 65,633 3,256 1978 32.5 197,569 36.00 19.84 0.5511 1.0000 108,878 5,488 1977 33.5 88,918 36.00 19.53 0.5424 1.0000 48,228 2,470 1976 34.5 157,858 36.00 19.22 0.5338 1.0000 84,265 4,385 1975 35.5 91,751 36.00 18.91 0.5254 1.0000 48,202 2,549

PAGE 27

64


NIAGARA MOHAWK POWER CORPORATION - GAS Distribution Plant Account: 378.10 Meas. and Reg. Sta. Equipment

Dispersion: 36 - lO.5 Procedure: Broad Group

~E!I1_E!r~tionArr~.ngE!!1:l~Il~ . ____ .

December 31,2010 Surviving

Vintage Age Plant

A

1974 1973 1972 1971 1970 1969 1968 1967 1966 1965 1964 1963 1962 1961 1960 1959 1958 1957 1956 1955 1954 1953 1952 1951 1950 1949 1948 1947 1942 1940 1937 1936 1935 1934 1933 1932

B

36.5 37.5 38.5 39.5 40.5 41.5 42.5 43.5 44.5 45.5 46.5 47.5 48.5 49.5 50.5 51.5 52.5 53.5 54.5 55.5 56.5 57.5 58.5 59.5 60.5 61.5 62.5 63.5 68.5 70.5 73.5 74.5 75.5 76.5 77.5 78.5

C

245,265 52,015

261,845 154,107 117,885 133,795

24.483 105.473 56,903 76,310 54,901 87,994

220,061 80,240 70,926

171,727 212,208 220,972

90.467 304,584 110,867 179,559

27,847 73,100

6,257 328

1,345 134 410 645

1.466 1,302

89 179 465 411

Net Avg. Rem. Plant Alloc. Life Life Ratio Factor

o E F G

36.00 18.61 0.5170 1.0000 36.00 18.32 0.5089 1.0000 36.00 18.03 0.5008 1.0000 36.00 17.74 0.4928 1.0000 36.00 17.46 0.4850 1.0000 36.00 17.18 0.4773 1.0000 36.00 16.91 0.4697 1.0000 36.00 16.64 0.4623 1.0000 36.00 16.38 0.4549 1.0000 36.00 16.12 0.4477 1.0000 36.00 15.86 0.4405 1.0000 36.00 15.61 0.4335 1.0000 36.00 15.36 0.4266 1.0000 36.00 15.11 0.4198 1.0000 36.00 14.87 0.4131 1.0000 36.00 14.63 0.4065 1.0000 36.00 14.40 0.4000 1.0000 36.00 14.17 0.3936 1.0000 36.00 13.94 0.3873 1.0000 36.00 13.72 0.3812 1.0000 36.00 13.50 0.3751 1.0000 36.00 13.29 0.3691 1.0000 36.00 13.08 0.3632 1.0000 36.00 12.87 0.3574 1.0000 36.00 12.66 0.3518 1.0000 36.00 12.46 0.3462 1.0000 36.00 12.26 0.3407 1.0000 36.00 12.07 0.3353 1.0000 36.00 11.15 0.3099 1.0000 36.00 10.81 0.3004 1.0000 36.00 10.33 0.2869 1.0000 36.00 10.17 0.2826 1.0000 36.00 10.02 0.2784 1.0000 36.00 9.88 0.2743 1.0000 36.00 9.73 0.2703 1.0000 36.00 9.59 0.2665 1.0000

Computed Net Plant

H=C*F*G

126,813 26.468

131,129 75,951 57,177 63,863 11,501 48,756 25,885 34,161 24,186 38,146 93,878 33,684 29,299 69,806 84,883 86,977 35,040

116,093 41,584 66,274 10,114 26,127

2,201 114 458

45 127 194 421 368

25 49

126 110

Schedule A Page 2 of3

Accrual

I=H/E

6,813 1.445 7,273 4,281 3,275 3,717

680 2,930 1,581 2,120 1,525 2.444 6,113 2,229 1,970 4,770 5,895 6,138 2,513 8.461 3,080 4,988

774 2,031

174 9

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11 18 41 36

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PAGE 28

65



Dispersion: 36 - lO.5 Procedure: Broad Group

December 31,2010 Net Surviving Avg. Rem. Plant

Vintage Age Plant Life Life Ratio

A B C 0 E F

1931 79.5 367 36.00 9.46 0.2626 1930 80.5 905 36.00 9.32 0.2589 1929 81.5 217 36.00 9.19 0.2553 1928 82.5 93 36.00 9.07 0.2518 1927 83.5 103 36.00 8.94 0.2484 1925 85.5 30 36.00 8.71 0.2418 1921 89.5 172 36.00 8.26 0.2295 1920 90.5 22 36.00 8.16 0.2266

----------" Total 13.1 $43,520,577 36.00 28.24 0.7845

Alloc. Computed Factor Net Plant

G H=C*F*G

1.0000 96 1.0000 234 1.0000 55 1.0000 23 1.0000 26 1.0000 7 1.0000 40 1.0000 5 _.- ._------ -----1.0000 $34,141,421


Accrual I=H/E

10 25

6 3 3

5

--------$1,208,905

PAGE 29

66


Schedule B NIAGARA MOHAWK POWER CORPORATION - GAS Page 1 of3 Distribution Plant

Account: 378.10 Meas. and Reg. Sta. Equipment

Age Distribution ------,- ------_._-----

1996 Experience to 12/31/2010 - --------,. --'" --._ ....

Age as of Derived Opening Amount Proportion Realized Vintage 12/31/2010 Additions Balance Surviving Surviving Life

~ ~~ - - - -- - - -- -- . - "--------------

A B C 0 E F=E/(C+D) G

2010 0.5 628,171 628,171 1.0000 0.5000 2009 1.5 3,559,358 3,559,358 1.0000 1.5000 2008 2.5 3,286,684 3,286,684 1.0000 2.5000 2007 3.5 2,257,311 2,229,059 0.9875 3.4814 2006 4.5 1,265,587 1,200,741 0.9488 4.4299 2005 5.5 1,588,386 1,573,517 0.9906 5.4819 2004 6.5 3,402,178 3,357,072 0.9867 6.4921 2003 7.5 2,143,498 2,138,659 0.9977 7.4923 2002 8.5 1,120,255 1,109,276 0.9902 8.4461 2001 9.5 2,988,615 2,829,883 0.9469 9.4327 2000 10.5 2,218,028 2,119,303 0.9555 10.3181 1999 11.5 3,160,651 2,703,595 0.8554 10.8993 1998 12.5 1,824,134 1,777,475 0.9744 12.4872 1997 13.5 917,551 780,104 0.8502 12.7325 1996 14.5 1,722,107 1,304,247 0.7574 13.2060 1995 15.5 1,866,091 1,518,439 0.8137 14.9401 1994 16.5 2,146,620 1,757,150 0.8186 15.4528 1993 17.5 1,357,719 1,181,964 0.8706 16.7154 1992 18.5 1,564,247 1,296,311 0.8287 17.4712 1991 19.5 488,150 352,263 0.7216 17.8191 1990 20.5 185,189 148,701 0.8030 20.0353 1989 21.5 1,120,785 653,281 0.5829 17.4626 1988 22.5 348,101 66,564 0.1912 15.7717 1987 23.5 298,453 116,886 0.3916 19.8500 1986 24.5 131,897 28,884 0.2190 21.2218 1985 25.5 498,133 312,193 0.6267 21.7500 1984 26.5 475,814 383,180 0.8053 25.5933 1983 27.5 861,289 634,454 0.7366 26.0328 1982 28.5 459,594 284,304 0.6186 25.7626 1981 29.5 442,979 316,778 0.7151 28.8706 1980 30.5 151,364 70,296 0.4644 26.7698 1979 31.5 348,981 117,217 0.3359 26.8981 1978 32.5 250,917 197,569 0.7874 30.7097 1977 33.5 116,935 88,918 0.7604 32.9937 1976 34.5 203,065 157,858 0.7774 31.9798 1975 35.5 102,489 91,751 0.8952 34.7126 1974 36.5 335,069 245,265 0.7320 34.4438

PAGE 30

67


Schedule B

NIAGARA MOHAWK POWER CORPORATION - GAS Page 2 of 3

Distribution Plant


Age Distribution -----~---.---~.- --.---~-.--

1996 Experience to 12/31/2010 ---------_ .... - ----------------- .. -- ~-~---.--.- - _. _._"


- - - --_ .. "- ~--

A B C 0 E F=E/(C+D) G

1973 37.5 114,109 52,015 0.4558 35.7089 1972 38.5 436,811 261,845 0.5994 36.3105 1971 39.5 227,285 154,107 0.6780 37.8092 1970 40.5 349,567 117,885 0.3372 34.8765 1969 41.5 161,532 133,795 0.8283 41.0058 1968 42.5 50,095 24,483 0.4887 37.6958 1967 43.5 155,718 105,473 0.6773 41.1616 1966 44.5 107,604 56,903 0.5288 41.5865 1965 45.5 122,622 76,310 0.6223 42.7926 1964 46.5 138,834 54,901 0.3954 41.3285 1963 47.5 168,151 87,994 0.5233 44.2159 1962 48.5 381,514 220,061 0.5768 45.5625 1961 49.5 188,435 80,240 0.4258 44.2568 1960 50.5 102,618 70,926 0.6912 47.9468 1959 51.5 268,845 171,727 0.6388 49.0437 1958 52.5 344,570 212,208 0.6159 49.1948 1957 53.5 370,430 220,972 0.5965 51.4006 1956 54.5 168,060 90,467 0.5383 52.1347 1955 55.5 483,241 304,584 0.6303 52.6325 1954 56.5 174,939 110,867 0.6337 53.0128 1953 57.5 325,586 179,559 0.5515 54.2328 1952 58.5 47,327 27,847 0.5884 54.8416 1951 59.5 228,647 73,100 0.3197 53.1405 1950 60.5 6,528 6,257 0.9585 60.1102 1949 61.5 2,272 328 0.1444 60.3572 1948 62.5 1,929 1,345 0.6969 60.4313 1947 63.5 502 134 0.2667 63.1333 1945 65.5 260 0.0000 61.0000 1943 67.5 346 0.0000 61.4357 1942 68.5 410 410 1.0000 68.5000 1941 69.5 114 0.0000 58.0000 1940 70.5 1,470 645 0.4388 67.9737 1939 71.5 147 0.0000 62.4756 1938 72.5 1,304 0.0000 65.8335 1937 73.5 1,571 1,466 0.9333 72.8371 1936 74.5 2,350 1,302 0.5541 73.9719 1935 75.5 543 89 0.1639 73.9289

PAGE 31

68


NIAGARA MOHAWK POWER CORPORATION - GAS Distribution Plant


Age Distribution

Schedule B Page 3 of3

.~------~- .-~--.--.-----~.----

1996 Experience to 12/31/2010 -----~----~ ... ----~~--.. --.-.-.-


--_._-- ._-_ .. __ ... __ .... - .. -_. __ ._._---_. __ .. _ .. __ . __ .. . --- -- - _ ... -------_.- . --_._---_.- -.... -.---.-----.------~--A B C D E F=E/(C+D) G

1934 76.5 304 179 0.5872 71.7523 1933 77.5 1,863 465 0.2495 73.7398 1932 78.5 2,997 411 0.1371 71.6953 1931 79.5 1,094 367 0.3354 71.1413 1930 80.5 5,283 905 0.1712 75.4224 1929 81.5 578 217 0.3747 79.3115 1928 82.5 431 93 0.2162 73.9605 1927 83.5 778 103 0.1327 73.5260 1926 84.5 45 0.0000 73.0000 1925 85.5 30 30 1.0000 85.5000 1921 89.5 172 172 1.0000 89.5000 1920 90.5 22 22 1.0000 90.5000 1917 93.5 124 0.0000 89.0000 1914 96.5 494 0.0000 96.0000 1913 97.5 64 0.0000 94.0000 1911 99.5 45 0.0000 99.0000 1907 103.5 442 0.0000 103.0000 1904 106.5 41 0.0000 106.0000 1901 109.5 95 0.0000 105.0000 1899 111.5 137 0.0000 103.0000 1898 112.5 37 0.0000 111.0000 1896 114.5 114 0.0000 112.0000

Total 13.1 $32,082,514 $18,905,357 $43,520,577 0.8535

PAGE 32

69


Schedule C


Distribution Plant


Unadjusted Plant History ~-----.-"~----- . __ .- -----~--- -- .. __ ... _---_._. --~ -------_ . . -" - -.---~------.. -.-.--.-.---.. ---~.-------

Beginning Sales, Transfers Ending Year Balance Additions Retirements & Adjustments Balance

A C 0 E F-6+C-O+E

1996 19,607,514 (171,287) 19,436,227 1997 19,436,227 2,160,671 331,993 (567,928) 20,696,977 1998 20,696,977 144,358 754,798 (269,939) 19,816,599 1999 19,816,599 3,498,592 808,460 (76,122) 22,430,609 2000 22,430,609 3,294,671 242,033 25,483,247 2001 25,483,247 3,337,527 365,396 28,455,378 2002 28,455,378 1,441,182 83,449 29,813,111 2003 29,813,111 2,479,777 799,950 31,492,938 2004 31,492,938 2,173,385 423,893 33,242,430 2005 33,242,430 1,682,303 233,189 34,691,544 2006 34,691,544 1,842,611 617,880 42,384 35,958,659 2007 35,958,659 1,800,626 190,065 37,569,220 2008 37,569,220 3,549,467 362,634 40,756,054 2009 40,756,054 2,662,678 847,840 42,570,891 2010 42,570,891 2,268,962 1,405,715 86,438 43,520,577

PAGE 33

70




Adjusted Plant History ------ -- - -,,- ----------.. -"-.--~-- - --------~------ --------------------- -_.

Beginning Sales, Transfers Year Balance Additions Retirements & Adjustments

A E

1996 19,332,300 2,220,242 (171,287) 1997 21,381,256 1,169,429 331,993 (567,928) 1998 21,650,764 1,809,238 754,798 (269,939) 1999 22,435,265 3,204,615 808,460 (76,122) 2000 24,755,299 2,210,028 242,033 2001 26,723,293 3,033,607 365,396 2002 29,391,504 1,156,612 83,449 2003 30,464,667 2,148,736 799,950 2004 31,813,453 3,161,801 423,893 2005 34,551,361 1,546,001 233,189 2006 35,864,173 1,286,033 617,880 42,384 2007 36,574,710 2,453,069 190,065 2008 38,837,715 2,991,564 362,634 2009 41,466,645 3,592,877 847,840 2010 44,211,683 628,171 1,405,715 86,438

ScheduleC Page 1 of 1

-- - "- ."' - .. -------.

Ending Balance

F=8+C-O+E

21,381,256 21,650,764 22,435,265 24,755,299 26,723,293 29,391,504 30,464,667 31,813,453 34,551,361 35,864,173 36,574,710 38,837,715 41,466,645 44,211,683 43,520,577

PAGE 34

71



Schedule D Page 1 of 1


Rolling Band Life Analysis

First Degree _.

T-Cut: None

Placement Band: 1896-2010

Hazard Function: Proportion Retired

Weighting: Exposures

Second Degree Third Degree

Observation Average Disper- Conf. Average Disper- Conf. Average Disper- Conf. Band Censoring

A B

1996-2000 1997-2001 1998-2002 1999-2003 2000-2004 2001-2005 2002-2006 2003-2007 2004-2008 2005-2009 2006-2010

2.9 4.4 5.5 2.4 5.3 8.2 0.3 0.2 0.0 0.0 0.0

Life sion Index o E

34.9 Hi 32.5 Hi 35.3 LO.5 36.1 LO.5 40.2 LO.5 42.3 LO.5 40.7 LO.5 41.2 LO.5 49.2 LO.5 46.8 Hi 35.3 LO.5

4.35 4.41 5.86 5.83 7.77 8.70 4.97 4.33 5.38 5.58 3.35

Life sion Index Life sion Index G H

-.. -I.-.-----J~~K----

35.1 LO 4.27 33.8 Hi 4.56 33.5 LO * 3.86 31.7 LO 4.33 37.0 LO * 4.71 34.5 LO.5 6.02 57.6 04 * 8.73 55.6 04 * 7.88 66.8 04 * 8.60 67.1 04 * 8.76 73.2 04 * 7.53 73.5 04 * 7.63 65.6 04 * 11.53 46.4 03 * 7.85 66.4 04 * 12.15 48.4 03 * 8.97 79.6 04 * 15.65 46.7 S-.5 * 3.91 77.7 04* 15.88 44.6 SC * 4.28 38.7 LO.5 * 3.72 34.7 LO.5 * 2.58

PAGE 35

72




Shrinking Band Ufe Analysis --"


T-Cut: None




First Degree Second Degree Third Degree Observation Average Disper- Conf. Average Disper- Conf. Average Disper- Conf.

Band Censoring Life sion Index Life sion Index Life sion Index A B 0 E G H J K

1996-2010 0.0 37.1 LO.5 2.25 46.6 03* 4.67 36.5 LO.5' 1.40 1998-2010 0.0 35.9 LO.5 2.43 44.3 03' 4.24 35.4 LO.5 ' 1.51 2000-2010 0.0 38.4 LO.5 3.38 51.0 03' 6.56 37.6 LO.5 ' 2.49 2002-2010 0.0 37.6 LO.5 3.96 49.4 03' 6.58 36.9 LO.5 ' 2.93 2004-2010 0.0 37.5 LO.5 3.70 45.2 03' 5.23 36.7 LO.5 ' 2.88 2006-2010 0.0 35.3 LO.5 3.35 38.7 LO.5 ' 3.72 34.7 LO.5 ' 2.58 2008-2010 0.0 31.7 L1 4.83 32.9 L 1 ' 3.47 31.2 LO.5 ' 3.39 2010-2010 0.0 25.2 L1.5* 4.83 24.7 L 1.5 * 3.90 24.8 L 1.5 ' 3.94

PAGE 36

73




Account: 378.10 Meas. and Reg. Sta. Equipment T-Cut: None



Progressing Band life Analysis Weighting: Exposures --~-----------------------------------------------------

First Degree Second Degree Third Degree

Observation Average Disper- Conf. Band Censoring Life sion Index

·--·-A--------- s-------c;--- 0 E

1996-1997 1996-1999 1996-2001 1996-2003 1996-2005 1996-2007 1996-2009 1996-2010

39.5 0.6 6.3 3.8 8.0 1.1 0.0 0.0

64.8 LO 32.5 LO 35.9 Hi 36.5 LO.5 38.7 LO.5 40.1 LO.5 40.4 LO.5 37.1 LO.5

8.13 5.27 4.43 3.98 6.11 2.63 2.51 2.25

Average Disper- Conf. Average Disper- Conf. Life sion Index Life sian Index

~ ""---F-·-··-- - ·---·G~-··---·-H-----I---i-----··--K···-

110.6 32.7 36.8 51.0 58.3 58.9 62.4 46.6

03' 5.51 LO 5.30 LO' 3.84 04 * 3.53 04 * 3.29 04 * 7.74 04 * 8.74 03 * 4.67

60.8 SC 8.74 31.4 LO 4.90 34.6 Hi 4.95 36.7 LO 2.27 50.7 03 * 1.64 40.6 LO 2.25 41.1 LO 2.34 36.5 LO.5 * 1.40

PAGE 37

74



Schedule E Page 1 of 1


Graphics Analysis

T-Cut: None

Placement Band: 1896-2010 Observation Band: 1996-2010



1st: 37.1-LO.5 2nd: 46.6-03 3rd: 36.5-LO.5

100~~----.------.-------,-------,------.-------.------.

80+---~~+-------+_------+_------+_------+-------+_----~

60 Cl c: .> .~

:::I U) .... c: G> ~ G> Il. 40

20+-------~------~~----~~----~--------+_------+_----~

25 50 75 100 125 150 Age (Years)

Key • Actual -----1st -----2nd ---3rd

PAGE 38

75





Polynomial Hazard Function

1.000

0.800

0.600

.s &. 'E '" ~ J:

0.400

0.200 .+

• + •• +

+ .J ..... ~. -"'-~ ~+ .- . .,... ..; .. -:;-

0.000

•

T·Cut: None



. Weighting: Exposures

1st: 37.1-LO.5 2nd: 46.6-03 3rd: 36.5-LO.5

/ • /

• V

:/ --- - ---- ------------

+ ~

--------o 25 50 75 100 125 150

Age (Years)

Key • Actual -----1st ---2nd ---3rd

PAGE 39

76


NiAGARA MOHAWK POWER CORPORATION - GAS Distribution Plant



T-Cut: None


Observation Band: 1996-2010

Present and Proposed Projection Life Curves Present: 40.0-LO Proposed: 36.0-LOo5

100

~\ \+ \ ~ ,

~

\ 80

. , 60

0'1 r:: oS;

0i!: ::::I

U) OJ r:: Ql

f::! Ql

0.. 40

~\

++, + \ . \ ... '\ ., \

\ \

\ \

\: \

" ~. "" ~. \ ,.. "

~ "- ..... "-

~"'------

20

o -o 25 50 75 100

Age (Years)

Key ., Actual -----Present ---Proposed

PAGE 40

77


Schedule F


Distribution Plant


Unadjusted Net Salvage History Gross Salva~_ Cost of Retiring Net Salvage

5-Yr 5-Yr 5-Yr Year Retirements Amount Pet. f\vg. Amount Pet. Avg. Amount Pet. .. ~j\~g.

~ - ._---._---.. __ ._--_ ... - ---.-- ----.---.~-.-." .-----~"--------. " .-.""---- --A B C D=C/B E F G=F/B H I=C~F J=IIB K

1997 331,993 0.0 0.0 0.0 1998 754,798 0.0 319,873 42.4 (319,873) ~42.4

1999 808,460 602 0.1 383,432 47.4 (382,830) ~47.4

2000 242,033 205 0.1 100,398 41.5 (100,193) ~41.4

2001 365,396 81,650 22.3 3.3 116,488 31.9 36.8 (34,838) ~9.5 ~33.5

2002 83,449 72 0.1 3.7 23,137 27.7 41.8 (23,065) ~27.6 ~38.2

2003 799,950 2,811 0.4 3.7 90,503 11.3 31.1 (87,692) -11.0 -27.3 2004 423,893 0.0 4.4 190,238 44.9 27.2 (190,238) ~44.9 -22.8 2005 233,189 0.0 4.4 311,906 133.8 38.4 (311,906) -133.8 -34.0 2006 617,880 0.0 0.1 272,491 44.1 41.2 (272,491) -44.1 -41.0 2007 190,065 0.0 0.1 90,819 47.8 42.2 (90,819) -47.8 ~42.1

2008 362,634 0.0 0.0 127,680 35.2 54.3 (127,680) -35.2 -54.3 2009 847,840 0.0 0.0 181,351 21.4 43.7 (181,351) -21.4 -43.7 2010 1,405,715 0.0 0.0 406,723 28.9 31.5 (406,723) -28.9 -31.5 Total 7,467,294 85,339 1.1 2,615,041 35.0 (2,529,701) -33.9

PAGE 41

78




Schedule F Page 1 of 1

~usted Net Salvage H:~i~s~to~ryL-________________________ _ Gross Salvage Cost of Retiring

5-Yr 5-Yr . __ '!_~CI~ R~!~~rT1_~~ts_~Il1QLJrlt __ pgt ._6~R__A_f!lQLJrlt . ___ J~_s:L__A v9:. _

A

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total

B

331,993 754,798 808,460 242,033 365,396

83,449 799,950 423,893 233,189 617,880 190,065 362,634 847,840

1,405,715 7,467,294

C O=C/B E

0.0 0.0

602 0.1 205 0.1

81,650 22.3 72 0.1

2,811 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0

85,339 1.1

3.3 3.7 3.7 4.4 4.4 0.1 0.1 0.0 0.0 0.0

F G=F/B H

319,873 383,432 100,398 116,488 23,137 90,503

190,238 311,906 272,491

90,819 127,680 181,351 406,723

2,615,041

0.0 42.4 47.4 41.5 31.9 27.7 11.3 44.9

133.8 44.1 47.8 35.2 21.4 28.9 35.0

36.8 41.8 31.1 27.2 38.4 41.2 42.2 54.3 43.7 31.5

Net Salvage 5-Yr

Amount Pet. Av.g. I=C-F J=I/B

0.0 (319,873) -42.4 (382,830) -47.4 (100,193) -41.4

(34,838) -9.5 (23,065) -27.6 (87,692) -11.0

(190,238) -44.9 (311,906) -133.8 (272,491) -44.1

(90,819) -47.8 (127,680) -35.2 (181,351) -21.4 (406,723) -28.9

(2,529,701) -33.9

K

-33.5 -38.2 -27.3 -22.8 -34.0 -41.0 -42.1 -54.3 -43.7 -31.5

PAGE 42

79

Exhibit __ (R

EW-3)

A

cct. 365.00 – 378.10


Exhibit__ (REW-3)

Workpapers Supporting the 2011 Study

Account 365.00 through Account 378.10

80

2011 Gas Depreciation Rate Study Niagara Mohawk Power Corporation

– d/b/a National Grid

Work Papers

Dated: April 27, 2012

Exhibit____(REW–3)Witness: R. E. White

81


CONTENTS

TRANSMISSION PLANT

365.00 LAND RIGHTS ........................................................................................................ 4

366.00 STRUCTURES AND IMPROVEMENTS ......................................................................... 9

367.00 MAINS ................................................................................................................. 15

369.15 REGULATING STATION EQUIPMENT ....................................................................... 26

369.25 REGULATING STATION MANHOLES ........................................................................ 39

369.55 MEAS. AND REG. STATION EQUIPMENT - RTU ...................................................... 44

DISTRIBUTION PLANT

374.00 LAND RIGHTS ...................................................................................................... 58

375.00 STRUCTURES AND IMPROVEMENTS ....................................................................... 73

376.11 MAINS - STEEL .................................................................................................... 91

376.12 MAINS - PLASTiC ............................................................................................... 109

376.13 MAINS - CAST IRON ........................................................................................... 124

376.14 MAINS - VALVES ................................................................................................ 143

378.10 MEAS. AND REG. STATION EQUIPMENT.. ............................................................. 160

378.20 MEAS. AND REG. STATION EQUIPMENT- MANHOLES ........................................... 177

378.55 MEAS. AND REG. STATION EQUIPMENT - RTU .................................................... 194

380.10 SERVICES - METALLIC ....................................................................................... 207

380.20 SERVICES - PLASTIC ......................................................................................... 225

381.00 METERS ............................................................................................................ 241

382.00 METER INSTALLATIONS ...................................................................................... 257

383.00 REGULATORS .................................................................................................... 273

384.00 REGULATOR INSTALLATIONS ............................................................................... 278

385.00 INDUSTRIAL MEAS. AND REG. STATION EQUIPMENT.. ........................................... 292

GENERAL PLANT

390.00 STRUCTURES AND IMPROVEMENTS ..................................................................... 308

AMORTIZATION ACCOUNTS ............................................................................................. 313

H-CURVES

TRANSMISSION ACCOUNTS ............................................................................................. 354

DISTRIBUTION ACCOUNTS .............................................................................................. 369

PAGE II

82


83


Transmission Plant

Account: 365.00 - Land Rights - Mains & Reg. Stations

Value Ratio Current Pro~osed Plant Balance: $5,287,192 0.29% Projection Lifel A YFR: 100 100 Recorded ReseM>: $808,065 15.28% Projection CUM>: SQ SQ Computed ReseM>: $769,286 14.55% Future Net Salvage: 0.0% 0.0% Earliest Vintage: 1995 Avarage Age (yrs): 14.6

Service Life and Net Salvage No changes are recommended for this account. The current projection life and accrual rate were agreed upon in Case 08-G-0609. No retirements have been recorded in this account.

84


NIAGARA MOHAWK POWER CORPORATION - GAS Transmission Plant Account: 365.00 Land Rights - Mains & Reg. Stations

Dispersion: 100 - SQ Procedure: Broad Group

Generation Arrangement

December 31, 2010 Surviving

Vintage Age Plant --- --------------- --- -- -----------

A B C

2007 3.5 249,262 2003 7.5 28,414 1997 13.5 746,534 1996 14.5 310,879 1995 15.5 3,952,103 Total 14.6 $5,287,192

Net Avg. Rem. Plant Life Life Ratio

- ----------------- ----

D E F

100.00 96.50 0.9650 100.00 92.50 0.9250 100.00 86.50 0.8650 100.00 85.50 0.8550 100.00 84.50 0.8450 100.00 85.45 0.8545


----------

G H=C'F'G

1.0000 240,537 1.0000 26,283 1.0000 645,752 1.0000 265,801 1.0000 3,339,527 1.0000 $4,517,901

Schedule A Page 1 of 1

Accrual

I=H/E

2,493 284

7,465 3,109

.39,521 $52,872

85


NIAGARA MOHAWK POWER CORPORATION - GAS Transmission Plant Account: 365.00 Land Rights - Mains & Reg. Stations

Age Distribution --------- -- --- --- ------------------------

1996 Age as of Derived Opening

Vintage 12/31/2010 Additions Balance

A B C D

2007 3.5 249,262 2003 7.5 28,414 1997 13.5 746,534 1996 14.5 310,879 1995 15.5 _3,(J.~S2""I 03 Total 14.6 $1,335,089 $3,952,103

-- - ---------

Schedule 8 Page 1 of 1

Experience to 12/31/2010

Amount Proportion Realized Surviving Surviving Life

E F=E/(C+D) G

249,262 1.0000 3.5000 28,414 1.0000 7.5000

746,534 1.0000 13.5000 310,879 1.0000 14.5000

3,952,103 1.0000 15.5000 $5,287,192 1.0000

86


NIAGARA MOHAWK POWER CORPORATION - GAS Transmission Plant

Account: 365.00 Land Rights - Mains & Reg. Stations

Unadjusted Plant History

Beginning Year Balance Additions Retirements

Sales, Transfers & Adjustments

-- ----------------------------------

A B C D E

1996 3,952,103 1997 3,952,103 5,320,394 (4,262,982) 1998 5,009,516 1999 5,009,516 2000 5,009,516 2001 5,009,516 2002 5,009,516 2003 5,009,516 387,267 2004 5,396,783 (358,876) 2005 5,037,907 2006 5,037,907 2007 5,037,907 121,677 2008 5,159,584 (91,504) 2009 5,068,080 219,112 2010 5,287,192

Schedule C Page 1 of 1

Ending Balance

F=8+C-D+E

3,952,103 5,009,516 5,009,516 5,009,516 5,009,516 5,009,516 5,009,516 5,396,783 5,037,907 5,037,907 5,037,907 5,159,584 5,068,080 5,287,192 5,287,192

87



Account: 365.00 Land Rights - Mains & Reg. Stations

Adjusted Plant History


A B C D

1996 7,904,206 310,879 1997 8,215,085 1,057,413 1998 5,009,516 1999 5,009,516 2000 5,009,516 2001 5,009,516 2002 5,009,516 2003 5,009,516 28,414 2004 5,037,930 2005 5,037,930 2006 5,037,930 91,504 2007 5,129,434 249,262 2008 5,378,695 2009 5,287,192 2010 5,287,192

Sales. Transfers & Adjustments


Ending Balance

----------------------------~~~

E F=8+C-D+E

8,215,085 (4,262,982) 5,009,516

5,009,516 5,009,516 5,009,516 5,009,516 5,009,516 5,037,930 5,037,930 5,037,930 5,129,434 5,378,695

(91,504) 5,287,192 5,287,192 5,287,192

88


Transmission Plant

Account: 366.00 - Structures and Improvements

Value Ratio Current ProQosed Plant Balance: $2.142,959 0.12% Projection Life/AYFR: 55 55 Recorded Reserve: $665,531 31.06% Projection Curve: R2 R2 Computed Reserve: $512,148 23.90% Future Net Salvage: -15.0% -15.0% Earliest Vintage: 1994 A l.erage Age (yrs): 13.1

Service Life and Net Salvage No changes are recommended for this account. The current projection life and accrual rate were agreed upon in Case 08-G-0609. No retirements have been recorded in this account.

89


Schedule A NIAGARA MOHAWK POWER CORPORATION - GAS Page 1 of 1

Transmission Plant Account: 366.00 Structures and Improvements

Dispersion: 55 - R2 Procedure: Broad Group

GenerationArrangement

~~rnber 31,2010 Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual - - - -- - - - -- ------ -- -------------- --- - -- -- - - - - - -------------------

A B C D E F G H=C"F"G I=HIE

2007 3.5 56.378 55.00 51.85 0.9428 1.0000 53,154 1,025 2006 4.5 892 55.00 50.97 0.9267 1.0000 826 16 2002 8.5 20,959 55.00 47.46 0.8630 1.0000 18,087 381 2001 9.5 328,884 55.00 46.60 0.8473 1.0000 278,671 5,980 2000 10.5 55,482 55.00 45.75 0.8317 1.0000 46,147 1,009 1999 11.5 160,982 55.00 44.90 0.8163 1.0000 131,406 2,927 1998 12.5 413,380 55.00 44.05 0.8009 1.0000 331,081 7,516 1997 13.5 390,646 55.00 43.21 0.7857 1.0000 306,913 7,103 1996 14.5 18,089 55.00 42.38 0.7705 1.0000 13,938 329 1995 15.5 57,999 55.00 41.55 0.7555 1.0000 43,817 1,055 1994 16.5 639,269 55.00 40.73 0.7405 1.0000 473,409 11,623 Total 13.1 $2,142,959 55.00 43.57 0.7921 1.0000 $1,697,450 $38,963

90



Account: 366.00 Structures and Improvements

Age Distribution ------------------------------------------------


Vintage 12/31/2010 Additions Balance --- ----------

A B C D

2007 3.5 56,378 2006 4.5 892 2002 8.5 20,959 2001 9.5 328,884 2000 10.5 55,482 1999 11.5 160,982 1998 12.5 413,380 1997 13.5 390,646 1996 14.5 18,089 1995 15.5 57,999 1994 16.5 6}9,269

--------------------

Total 13.1 $1,445,691 $697,268




------------- - --.- --- ------

E F=E/(C+D) G

56,378 1.0000 3.5000 892 1.0000 4.5000

20,959 1.0000 8.5000 328,884 1.0000 9.5000

55,482 1.0000 10.5000 160,982 1.0000 11.5000 413,380 1.0000 12.5000 390,646 1.0000 13.5000

18,089 1.0000 14.5000 57,999 1.0000 15.5000

639,269 1.0000 16.5000 $2,142,959 1.0000

91






A B C D

1996 227,673 1997 227,673 523,667 1998 715,356 1999 715,356 915,946 2000 1,455,260 55,482 2001 1,510,742 341,986 2002 1,852,728 108,333 2003 1,961,062 118,199 2004 2,079,260 (118,199) 2005 1,961,062 2006 1,961,062 2007 1,961,062 57,270 2008 2,018,331 2009 2,018,331 2010 2,018,331 2


E

(35,983)

(176,042)

124,630


Ending Balance

F=B+C-D+E

227,673 715,356 715,356

1,455,260 1,510,742 1,852,728 1,961,062 2,079,260 1,961,062 1,961,062 1,961,062 2,018,331 2,018,331 2,018,331 2,142,959

92





Beginning Year Balance

A B

1996 733,251 1997 751,340 1998 981,372 1999 1,570,794 2000 1,555,736 2001 1,611,219 2002 1,940,103 2003 1,961,062 2004 1,961,062 2005 1,961,062 2006 1,961,062 2007 1,961,953 2008 2,018,331 2009 2,018,331 2010 2,018,331

Additions c

18,089 266,016 589,422 160,984

55,482 328,884

20,959

892 56,378

Retirements D


E

(35,983)

(176,042)

124,628


Ending Balance

F=8+C-O+E

751,340 981,372

1,570,794 1,555,736 1,611,219 1,940,103 1,961,062 1,961,062 1,961,062 1,961,062 1,961,953 2,018,331 2,018,331 2,018,331 2,142,959

93




Un adj ust"dJllet Salvage Hilit0-'Y_ .. .... ....__ _____ _ _Gross SalvagEL __ _

5-Yr Year Retirements AmounL.pcLAvg. ABC D=C/BE

1998 0.0 1999 0.0 2000 0.0 2001 0.0 2002 0.0 0.0 2003 0.0 0.0 2004 0.0 0.0 2005 0.0 0.0 2006 0.0 0.0 2007 0.0 0.0 2008 0.0 0.0 2009 0.0 0.0 2010 2 0.0 0.0 Total 2 0.0

_. __ Costol Retiring __ 5-Yr

Amount PctAvg. F G=F/B H

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0


Net Salvage 5-Yr

Amount. ___ J=>_cL Avg. I=C-F J=I/B K

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

94


Transmission Plant

Account: 367.00 - Mains

Value Ratio Current Progosed Plant Balance: $106,938,230 5.84% Projection Life! AYFR: 80 80 Recorded Reserve: $36,884,337 34.49% Projection Curve: R3 R3 Computed Reserve: $33,831,433 31.64% Future Net Salvage: -20.0% -20.0% Earliest Vintage: 1931 Average Age (yrs): 22.8

Service Life and Net Salvage No changes are recommended for this account. The current projection life was advocated by Staff in Case 08-G-0609 based on retirements of $173,270 recorded over the period 1996-2007 and a plant balance of$105,622,095 at December 31, 2007. Additional retirements over the period 2008-2010 were $1,471. Given the continuing indeterminacy of service life indications derived from a statistical analysis, the currently approved service life and net salvage rate are recommended for this account.

95


Schedule A NIAGARA MOHAWK POWER CORPORATION - GAS Page 1 of 2 Transmission Plant Account: 367.00 Mains



...Decernbei_31L20.l0 Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual A B C D E F G H=C'F'G I=H/E

2010 0.5 156,896 80.00 79.51 0.9938 1.0000 155,930 1,961 2009 1.5 106,456 80.00 78.52 0.9815 1.0000 104,491 1,331 2008 2.5 637,908 80.00 77.54 0.9693 1.0000 618,308 7,974 2007 3.5 298,283 80.00 76.56 0.9570 1.0000 285,461 3,729 2006 4.5 454,461 80.00 75.58 0.9448 1.0000 429,367 5,681 2005 5.5 86,350 80.00 74.61 0.9326 1.0000 80,527 1,079 2004 6.5 1,069,309 80.00 73.63 0.9204 1.0000 984,184 13.366 2003 7.5 16,072,467 80.00 72.66 0.9082 1.0000 14,597,568 200,906 2001 9.5 5,716 80.00 70.72 0.8840 1.0000 5,053 71 2000 10.5 1,198,999 80.00 69.75 0.8719 1.0000 1,045,445 14,987 1999 11.5 2,041,103 80.00 68.79 0.8599 1:0000 1,755,140 25,514 1998 12.5 199,080 80.00 67.83 0.8479 1.0000 168,799 2,489 1997 13.5 4,585,859 80.00 66.87 0.8359 1.0000 3,833,473 57,323 1996 14.5 9,788,990 80.00 65.92 0.8240 1.0000 8,066,208 122,362 1995 15.5 40,871,395 80.00 64.97 0.8121 1.0000 33,192,664 510,892 1994 16.5 228,892 80.00 64.02 0.8003 1.0000 183,177 2,861 1993 17.5 22,947 80.00 63.08 0.7885 1.0000 18,094 287 1991 19.5 244,317 80.00 61.20 0.7650 1.0000 186,906 3,054 1990 20.5 83.568 80.00 60.27 0.7534 1.0000 62,956 1,045 1988 22.5 45,964 80.00 58.41 0.7302 1.0000 33,562 575 1987 23.5 112,876 80.00 57.49 0.7187 1.0000 81,122 1,411 1986 24.5 29,323 80.00 56.58 0.7072 1.0000 20,738 367 1985 25.5 516,253 80.00 55.67 0.6958 1.0000 359,226 6,453 1984 26.5 96,142 80.00 54.76 0.6845 1.0000 65,809 1,202 1983 27.5 828,197 80.00 53.86 0.6732 1.0000 557,571 10,352 1981 29.5 2,452,412 80.00 52.07 0.6509 1.0000 1.596,196 30,655 1977 33.5 480 80.00 48.55 0.6069 1.0000 292 6 1976 34.5 22,267 80.00 47.69 0.5961 1.0000 13,273 278 1975 35.5 12,769 80.00 46.83 0.5854 1.0000 7,475 160 1974 36.5 2,808 80.00 45.98 0.5747 1.0000 1,614 35 1973 37.5 4,122 80.00 45.13 0.5641 1.0000 2,326 52 1972 38.5 55,510 80.00 44.29 0.5536 1.0000 30,729 694 1971 39.5 49,590 80.00 43.45 0.5431 1.0000 26,934 620 1970 40.5 882,778 80.00 42.62 0.5328 1.0000 470,310 11,035 1969 41.5 359.603 80.00 41.80 0.5225 1.0000 187,878 4,495 1968 42.5 1,390,276 80.00 40.98 0.5122 1.0000 712,161 17,378

96


Schedule A NIAGARA MOHAWK POWER CORPORATION - GAS Page 2 of2

Transmission Plant Account: 367.00 Mains



~c"m_ber .31, .2010 . Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual - - ------------- - -- - -- -- -----------------------

A B C D E F G H=C'F"G i=H/E

1967 43.5 440,610 80.00 40.17 0.5021 1.0000 221,235 5,508 1966 44.5 146,613 80.00 39.36 0.4921 1.0000 72,142 1,833 1965 45.5 98,055 80.00 38.57 0.4821 1.0000 47,270 1,226 1964 46.5 1,747,503 80.00 37.78 0.4722 1.0000 825,150 21,844 1963 47.5 128,186 80.00 36.99 0.4624 1.0000 59,271 1,602 1962 48.5 806,805 80.00 36.21 0.4527 1.0000 365,214 10,085 1961 49.5 791,408 80.00 35.44 0.4430 1.0000 350,616 9,893 1960 50.5 17,098 80.00 34.68 0.4335 1.0000 7,412 214 1959 51.5 2,653,003 80.00 33.92 0.4240 1.0000 1,124,950 33,163 1958 52.5 2,902,865 80.00 33.17 0.4147 1.0000 1,203,713 36,286 1957 53.5 822,330 80.00 32.43 0.4054 1.0000 333,361 10,279 1956 54.5 12,602 80.00 31.70 0.3962 1.0000 4,993 158 1955 55.5 683,643 80.00 30.97 0.3871 1.0000 264,664 8,546 1954 56.5 504,658 80.00 30.25 0.3782 1.0000 190,840 6,308 1953 57.5 5,377,134 80.00 29.54 0.3693 1.0000 1,985,627 67,214 1952 58.5 1,109,533 80.00 28.84 0.3605 1.0000 399,980 13,869 1951 59.5 1,890,361 80.00 28.15 0.3518 1.0000 665,090 23,630 1950 60.5 1,679,172 80.00 27.46 0.3433 1.0000 576,411 20,990 1949 61.5 106,183 80.00 26.79 0.3348 1.0000 35,552 1,327 1931 79.5 6,099 80.00 16.38 0.2048 1.0000 .. 1,249 76 Total 22.8 $106,938,230 80.00 58.86 0.7357 1.0000 $78,675,705 $1,336,728

97



Account: 367.00 Mains

Age Distribution -------------- - - - - -- ---- - - --------------------


Vintage 12/31/2010 Additions Balance ._---------- -------------

A B C D

2010 0.5 156.896 2009 1.5 106,456 2008 2.5 637,908 2007 3.5 298,283 2006 4.5 454,461 2005 5.5 86,350 2004 6.5 1,069,309 2003 7.5 16,194,399 2001 9.5 5,716 2000 10.5 1,198,999 1999 11.5 2,041,103 1998 12.5 199,080 1997 13.5 4,585,859 1996 14.5 9,788,990 1995 15.5 40,871,395 1994 16.5 228,892 1993 17.5 22,947 1991 19.5 244,317 1990 20.5 83,568 1988 22.5 45,964 1987 23.5 112,876 1986 24.5 29,323 1985 25.5 516,253 1984 26.5 96,142 1983 27.5 828,197 1981 29.5 2,452,412 1977 33.5 480 1976 34.5 22,267 1975 35.5 12,769 1974 36.5 2,808 1973 37.5 4,122 1972 38.5 55,510 1971 39.5 49,590 1970 40.5 882,778 1969 41.5 359,603 1968 42.5 1,390,276 1967 43.5 440,610

Schedule B Page 1 of 2

- -------



- -- -- --

E F=E/(C+D) G

156,896 1.0000 0.5000 106,456 1.0000 1.5000 637,908 1.0000 2.5000 298,283 1.0000 3.5000 454,461 1.0000 4.5000

86,350 1.0000 5.5000 1,069,309 1.0000 6.5000

16,072,467 0.9925 7.4661 5,716 1.0000 9.5000

1,198,999 1.0000 10.5000 2,041,103 1.0000 11.5000

199,080 1.0000 12.5000 4,585,859 1.0000 13.5000 9,788,990 1.0000 14.5000

40,871,395 1.0000 15.5000 228,892 1.0000 16.5000

22,947 1.0000 17.5000 244,317 1.0000 19.5000

83,568 1.0000 20.5000 45,964 1.0000 22.5000

112,876 1.0000 23.5000 29,323 1.0000 24.5000

516,253 1.0000 25.5000 96,142 1.0000 26.5000

828,197 1.0000 27.5000 2,452,412 1.0000 29.5000

480 1.0000 33.5000 22,267 1.0000 34.5000 12,769 1.0000 35.5000

2,808 1.0000 36.5000 4,122 1.0000 37.5000

55,510 1.0000 38.5000 49,590 1.0000 . 39.5000

882,778 1.0000 40.5000 359,603 1.0000 41.5000

1,390,276 1.0000 42.5000 440,610 1.0000 43.5000

98




Age Distribution --- -----------


1996 Experience to 12/31/2010


-- --- - -- - --- - - ----- --- - - -- -- ---------- --

A B C D E F;E/(C+D) G

1966 44.5 146,613 146,613 1.0000 44.5000 1965 45.5 98,055 98,055 1.0000 45.5000 1964 46.5 1,747,503 1,747,503 1.0000 46.5000 1963 47.5 128,186 128,186 1.0000 47.5000 1962 48.5 816,135 806,805 0.9886 48.4600 1961 49.5 817,195 791,408 0.9684 49.3021 1960 50.5 17,098 17,098 1.0000 50.5000 1959 51.5 2,653,003 2,653,003 1.0000 51.5000 1958 52.5 2,902,865 2,902,865 1.0000 52.5000 1957 53.5 822,330 822,330 1.0000 53.5000 1956 54.5 12,602 12,602 1.0000 54.5000 1955 55.5 683,643 683,643 1.0000 55.5000 1954 56.5 506,224 504,658 0.9969 56.4799 1953 57.5 5,393,261 5,377,134 0.9970 57.4865 1952 58.5 1,109,533 1,109,533 1.0000 58.5000 1951 59.5 1,890,361 1,890,361 1.0000 59.5000 1950 60.5 1,679,172 1,679,172 1.0000 60.5000 1949 61.5 106,183 106,183 1.0000 61.5000 1931 79.5 6,099 .6,099 1.0000 79.5000 Total 22.8 $36,823,808 $70,289,163 $106,938,230 0.9984

99





Rolling Band Life Analysis -- - - ----------

First Degree

Observation Average Disper- Conf. Band Censoring Ufe sian Index

-----------

A B C D E

1996-2000 100.0 1997-2001 100.0 1998-2002 100.0 1999-2003 100.0 2000-2004 99.6 193.5 S6" 0.27 2001-2005 99.6 193.6 S6" 0.27 2002-2006 98.7 195.7 S6" 0.39 2003-2007 98.4 194.7 S6" 0.36 2004-2008 98.2 194.9 SO" 0.29 2005-2009 98.8 196.8 SO" 0.25 2006-2010 98.8 196.8 SO" 0.26

T-Cut: None



Weighting: Exposures ------ --

Second Degree

Average Disper- Conf. Ufe sian Index

---------

F G H

No Retirements No Retirements No Retirements No Retirements

197.6 S6" 0.30 197.7 SO" 0.31 132.6 H4 " 1.09 136.0 S2 " 0.98 139.6 S2 " 0.88 134.0 H4 " 1.17 131.4 H4 " 1.38

Third Degree

Average Disper- Conf. Ufe sian Index

- -------------

J K

197.9 SO" 0.25 197.7 SO" 0.31 196.3 SO" 0.18 195.8 SO" 0.21 195.6 S6 " 0.21 196.0 SO" 0.46 195.0 SO" 0.89

100





Progressing Band Life Analysis

First Degree

Observation Band

A

1996-1997 1996-1999 1996-2001 1996-2003 1996-2005 1996-2007 1996-2009 1996-2010

Censoring B

100.0 100.0 100.0 100.0

99.8 99.5 99.6 99.6

Average Life c

196.1 196.0 196.6 196.9

Dispersion

D

SO" SO S6 SO

Conf. Index

E

0.16 0.33 0.25 0.22

T-Cut: None



Weighting: Exposures -

Second Degree --~

Average Disper- Conf. Life sion Index

- - ----- -------- - - ---------

F G H


196.7 S6" 0.16 171.4 R3 " 0.44 176.8 R3 " 0.36 179.0 R4 • 0.33

T~ird Degree


--------------

J K

198.5 SO" 0.10 197.8 SO" 0.13 198.1 SO' 0.07 198.2 SO' 0.06

101






0.050

0.040

0.030

.'!l ro a:: E ro N ro :I:

0.020

0.010

• • • 0.000

o 25 50 75

Key • Actual

...---

T-Cut: None

Placement Band: 1931·2010 Observation Band: 1996-2010



1st: 196.9·SQ 2nd: 179.0·R4 3rd: 198.2·SQ

~ ~

~ l---100

Age (Years)

125 150 175

1st 2nd 3rd I

102




Present and Proposed Projection Life Curves

100

~ ~

\ 80

60 \ C> ~ ." .~

" VJ ~

~ m ~ m a. 40

20

o o 25 50 75

Age (Years)

Key • Actual -----Present


T-Cut: None

Placement Band: 1931~2010


Present: BO.O-R3 Proposed: BO.O-R3

~ 100

---Proposed I

103




Unadjusted~et SalvageHistory ___ ---------------- ----------

___ Gr()ss Sal\i§Q_e __ Cost oLR<;!liIiml 5-Yr 5-Yr

Year Retirements Amount Pet. Avg. Amount Pet. flv9,_ -- - ------------ -- - -------

A B C D=C/B E F G=F/B H

1997 0.0 0.0 1998 0.0 0.0 1999 0.0 24.780 0.0 2000 0.0 0.0 2001 0.0 0.0 0.0 0.0 2002 0.0 0.0 0.0 0.0 2003 0.0 0.0 50.153 0.0 0.0 2004 25,882 0.0 0.0 37,542 145.1 338.8 2005 0.0 0.0 13,120 0.0 389.5 2006 138,058 0.0 0.0 0.0 61.5 2007 9,330 0.0 0.0 6,673 71.5 62.0 2008 1,471 0.0 0.0 0.0 32.8 2009 0.0 0.0 0.0 13.3 2010 0.0 0.0 0.0 4.5

--------

Total 174,741 0.0 132,268 75.7


------------------------

___ Net SaIY_"'-"'L 5-Yr

Amount Pet. _ _fl.vg~ I=C-F J=I/B K

0.0 0.0

(24.780) 0.0 0.0 0.0 0.0 0.0 0.0

(50.153) 0.0 0.0 (37,542) -145.1 -338.8 (13,120) 0.0 -389.5

0.0 -61.5 (6,673) -71.5 -62.0

0.0 -32.8 0.0 -13.3 0.0 -4.5

(132,268) -75.7

104


Schedule F


Transmission Plant


Adjust~(:LNeLSalvage History --- - - -------------- -----

______ Gross SalvamL ___ __ c:ostol Retiring _____ J'Jet Salvam'--____ 5-Yr 5-Yr 5-Yr

Year Retirements Amount Pet. _,I\vg. Amount Pet. ,l\vg, Amount Pet. Avg. - - ---- - ------

A B C D=C/B E F G=F/B H I=C-F J=I/B K

1997 0.0 0.0 0.0 1998 0.0 0.0 0.0 1999 0.0 24,780 0.0 (24,780) 0.0 2000 0.0 0.0 0.0 2001 0.0 0.0 0.0 0.0 0.0 0.0 2002 0.0 0.0 0.0 0.0 0.0 0.0 2003 0.0 0.0 50,153 0.0 0.0 (50,153) 0.0 0.0 2004 25,882 0.0 0.0 37,542 145.1 338.8 (37,542) -145.1 -338.8 2005 0.0 0.0 13,120 0.0 389.5 (13,120) 0.0 -389.5 2006 138,058 0.0 0.0 0.0 61.5 0.0 -61.5 2007 9,330 0.0 0.0 6,673 71.5 62.0 (6,673) -71.5 -62.0 2008 1,471 0.0 0.0 0.0 32.8 0.0 -32.8 2009 0.0 0.0 0.0 13.3 0.0 -13.3 2010 0.0 0.0 0.0 4.5 0.0 -4.5 -------------- -- -- ------

Total 174,741 0.0 132,268 75.7 (132,268) -75.7

105


Transmission Plant

Account: 369.15 - Regulating Station Equipment

Value Ratio Current Proeosed Plant Balance: $9,188,111 0.50% Projection Life/AYFR: 40 35 Recorded Reserve: $2,578,127 28.06% Projection Curve: RO.5 L 1.5 Computed Reserve: $2,838,265 30.89% Future Net Salvage: -15.0% -10.0% Earliest Vintage: 1970 Aloerage Age (yrs): 11.6

Description This account includes the cost of meters, gauges, piping, valves and other equipment used in measuring or regulating the flow of gas in connection with gas transmission operations. A description of the assets classified in this account at December 31,2010 is provided in Table 1.

Service life

Table 1. Account Compone nts Description

Cabinets Chromatigraph Filter Foundations Meter Odorizing Equipment Piping Preheaters Station Regulators Station Relief Station Valloes Other

Total

Investment

$21,561 212,890 251,861 273,755 398,001

2,698,239 1,970,465

777,336 294,605

75,552 2,176,715

37,132 $9,188,111

The currently approved 40-RO.5 projection life and dispersion were recommended in the 2008 study, at which tinie no retirements had been recorded since 1996. Retirements recorded since 2008 suggest a shorter average service life and a higher modal dispersion. Based on this more recent retirement experience, a 35-L1.5 projection life curve is recommended for this account.

Net Salvage The net salvage analysis conducted on retirements recorded since 2008 indicates a -6.2 percent net salvage rate suggesting a less negative rate than currently approved. Based on this analysis, a-l0 percent future net salvage rate is reconmlended for this account to gradually move in the direction of the more recent observations.

106



Transmission Plant Account: 369.15 Regulating Station Equipment

Dispersion: 35 - L 1.5 Procedure: Broad Group

Generation ArrangE)ment

.. December;J1,2010 Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual --- --------------

A B C 0 E F G H=C'F'G i=H/E

2010 0.5 371,342 35.00 34.52 0.9861 LOOOO 366,197 10,610 2009 1.5 85,922 35.00 33.55 0.9587 1.0000 82,370 2,455 2007 3.5 42,083 35.00 31.67 0.9050 1.0000 38,085 1,202 2005 5.5 21,569 35.00 29.88 0.8536 1.0000 18,412 616 2003 7.5 1,067,582 35.00 28.17 0.8050 1.0000 859,402 30,502 2001 9.5 2,400,294 35.00 26.57 0.7593 1.0000 1,822,426 68,580 2000 10.5 764,338 35.00 25.81 0.7375 1.0000 563,681 21,838 1999 11.5 409,811 35.00 25.08 0.7164 1.0000 293,601 11,709 1998 12.5 567,112 35.00 24.36 0.6961 1.0000 394,777 16,203 1997 13.5 261,072 35.00 23.68 0.6766 1.0000 176,639 7,459 1996 14.5 440,994 35.00 23.03 0.6579 1.0000 290,147 12,600 1995 15.5 113,227 35.00 22.41 0.6402 1.0000 72,489 3,235 1994 16.5 ... 2,642,765 35.00 21.82 0.6234 1.0000 1,647,584 75,508 Total 11.6 $9,188,111 35.00 25.24 0.7211 1.0000 $6,625,810 $262,517

107



Account: 369.15 Regulating Station Equipment

Age Distribution --------------- ------------ -


Vintage 12/31/2010 Additions Balance --- --

A B C 0

2010 0.5 371,342 2009 1.5 85,922 2007 3.5 42,D83 2006 4.5 91,504 2005 5.5 21,569 2003 7.5 1,067,582 2001 9.5 2,400,294 2000 10.5 897,786 1999 11.5 409,811 1998 12.5 567,112 1997 13.5 261,072 1996 14.5 440,994 1995 15.5 113,227 1994 16.5 ___ :J.,g.~5, 155

-----------

Total 11.6 $6,657,072 $3,208,382

--


-



E F=E/(C+O) G

371,342 1.0000 0.5000 85,922 1.0000 1.5000 42,083 1.0000 3.5000

0.0000 3.0000 21,569 1.0000 5.5000

1,067,582 1.0000 7.5000 2,400,294 1.0000 9.5000

764,338 0.8514 10.1284 409,811 1.0000 11.5000 567,112 1.0000 12.5000 261,072 1.0000 13.5000 440,994 1.0000 14.5000 113,227 1.0000 15.5000

2,642,765 0.8538 16.3450 $9,188,111 0.9313

108


Schedule C


Transmission Plant




.. _--. A B C D E F=B+C-D+E

1996 4,632,371 (3,000) 4,629,371 1997 4,629,371 1,991,905 (2,703,340) 3,917,936 1998 3,917,936 3,917,936 1999 3,917,936 862,810 (182,742) 4,598,004 2000 4,598,004 959,403 5,557,407 2001 5,557,407 2,170,537 7,727,944 2002 7,727,944 303,550 (1,041) 8,030,453 2003 8,030,453 1,101,293 9,131,746 2004 9,131,746 (37,653) 9,094,093 2005 9,094,093 4,571 9,098,664 2006 9,098,664 (396) (4,175) 9,094,093 2007 9,094,093 3,942 9,098,035 2008 9,098,035 21,569 181,434 91,504 9,029,674 2009 9,029;674 325,368 249,041 9,106,001 2010 9,106,001 173,978 246,868 155,000 9,188,111

109


Schedule C


Transmission Plant



Beginning Sales. Transfers Ending Year Balance Additions Retirements & Adjustments Balance

A B C D E F-8+C-O+E

1996 5,367,348 988,368 (3,000) 6,352,717 1997 6,352,717 288,814 (2,703,340) 3,938,190 1998 3,938,190 567,112 4,505,303 1999 4,505,303 409,811 (182,742) 4,732,372 2000 4,732,372 897,786 5,630,159 2001 5,630,159 2,400,294 8,030,453 2002 8,030,453 8,030,453 2003 8,030,453 1,067,582 9,098,035 2004 9,098,035 9,098,035 2005 9,098,035 25,744 9,123,779 2006 9,123,779 (4,175) 9,119,604 2007 9,119,604 42,083 9,161,687 2008 9,161,687 181,434 91,504 9,071,757 2009 9,071,757 85,922 249,041 8,908,638 2010 8,908,638 371,342 246,868 155,000 9,188,111

110






First Degree ..

Observation Average Disper- ConI. Band Censoring Life sion Index

- ---- -------------

A B c D E

1996-2000 100.0 1997-2001 100.0 1998-2002 100.0 1999-2003 100.0 2000-2004 100.0 2001-2005 100.0 2002-2006 100.0 2003-2007 100.0 2004-2008 93.0 55.5 L1 1.73 2005-2009 83.5 39.6 L1 4.00 2006-2010 76.9 28.1 Lr 4.86

T-Cut: None




Second Degree


--

F G H

No Retirements No Retirements No Retirements

No Retirements No Retirements No Retirements No Retirements No Retirements

187.8 R5' 1.56 20.6 R2 3.04 16.6 R1' 12.20

___ T_hird DeE.ree

Average Disper- ConI. Life sion Index

---------------

J K

25.8 R4 • 1.53 19.0 R4' 3.00 17.5 R3' 2.14

111




Shrinking Band Life Analysis - -- - -----


T-Cut: None




FirstDegree Second Deg~ee __ Third Degree

Observation Band Censoring

-- -----

A B

1996-2010 83.5 1998-2010 83.1 2000-2010 83.0 2002-2010 82.8 2004-2010 81.3 2006-2010 76.9 2008-2010 33.8 2010-2010 91.5

Average Disper- Conf. Average Disper- Conf. Life sion Index Life sion Index

- -----------------

c 0 E F G H

31.5 31.2 31.1 30.8 29.8 28.1 25.1 21.4

L 1.5' L 1.5'

L2' L2' L2' L2 '

L1.5' L3 '

2.86 2.61 2.57 2.60 2.40 4.86

44.93 7.49

21.8 21.6 21.4 21.2 20.0 16.6 11.7 17.6

H4' R3' R3' R3 '

R2.5 ' R1 ' SC'

R2.5'

2.47 2.48 2.54 2.76 4.66

12.20 15.68 14.21

Average Disper- Conf. Life sion Index --- ------------------------

J K

19.2 S4 ' 1.20 19.2 S4 ' 1.07 19.0 R4 ' 1.29 18.9 R4 ' 1.47 18.7 R4 ' 1.04 17.5 R3 ' 2.14 12.6 SC' 19.93 18.0 R4 ' 7.18

112






Observation Band

A

1996-1997 1996-1999 1996-2001 1996-2003 1996-2005 1996-2007 1996-2009 1996-2010

.. First Degree

Average Disper- ConI. Censoring Life sian Index

------------

B C D E

100.0 100.0 100.0 100.0 100.0 100.0 90.9 40.5 L 1.5" 1.50 83.5 31.5 L 1.5" 2.86

T-Cut: None



Weighting: Exposures -

Second Degree

Average Disper- ConI. Life sion Index ------------

F G H

No Retirements No Retirements No Retirements No Retirements No Retirements No Retirements

25.0 82 1.37 21.8 H4' 2.47

___ T_h_irdDegree __

Average Disper- Conf. Life sian Index

-- ---

J K

20.1 84 " 0.79 19.2 84 " 1.20

113





Graphics Analysis

100

'~ \ + , \

so \

\\ \ \

\ \

\ \

\ \

\

60 Cl ~ .s: .~

~

\ \ \ \

\

en \

;: w ~ w

\ \

\ \

0. 40

20

o \ o 20

Key • Actual

\ \

\

T~Cut: None




1st: 31.5·L1.5 2nd: 21.S·H4 3rd: 19.2·54

\ \

\ \

\

\ \

\ \

, , , , , , , , , , , , , - - , - -

40 Age (Years)

60

1st 2nd 3rd

114






1.000

O.BOO

0.600

2 m

'" "E m N m :I:

0.400

I

/ 0.200

T-Cut: None




1st: 31.S·L1.S 2nd: 21.B·H4 3rd: 19.2·54

/ -' ----------- --

------------------

0.000 ~

o 20

Key + Actual

40

Age (Years)

1st 2nd

60

3rd

115





T-Cut: None



Present and Proposed Projection Life Curves Present: 40.0-RO.S Proposed: 3S.0-L 1.5

100

"~"~ , . , , , , '. , 80

60 C) ~ .s: .~

~ U)

" m ~ m

11. 40

20

o o 20

Key • Actual

\ \ , , , , ,

\ \ \

~ \""" ~

, , , , , , ,

~ 40

Age (Years)

- - - - - Present

60

---Proposed

116




Un<lClilJstedNet_Salvage HistC)ry - -- ------------- ---------

GrossO>_ElLv-'"g§ __ _CQstof Retiring __ 5-Yr 5-Yr

Year Retirements Amount Pct. ---------Avg. Amount Pct. Avg,


1998 0.0 0.0 1999 0.0 0.0 2000 0.0 0.0 2001 0.0 0.0 2002 0.0 0.0 0.0 0.0 2003 0.0 0.0 0.0 0.0 2004 0.0 0.0 0.0 0.0 2005 0.0 0.0 0.0 0.0 2006 0.0 0.0 0.0 0.0 2007 0.0 0.0 0.0 0.0 2008 181,434 0.0 0.0 0.0 0.0 2009 249,041 0.0 0.0 1,328 0.5 0.3 2010 246,868 0.0 0.0 40,732 16.5 6.2 Total 677,343 0.0 42,060 6.2


_ ____ }l"lll<lly<lge 5-Yr

Amount F'c.L_Av9,-I=C-F J=I/B K

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

(1,328) -0.5 -0.3 (40,732) -16.5 -6.2 (42,060) -6.2

117




Adjustedlliet Salvagenliistory _____ -- ------------------ ------------

_~[gss Saly_a@ ____ CostQLRJ'tirinQ ___ 5-Yr 5-Yr

Year Retirements Amount Pct. Avg. Amount Pet. Avg.


-----------

J"eJSal\@Q!L ___ 5-Yr

Amount Pet. --------------- ----------

Avg-,---A B C D=CIB E F G=FIB H I=C·F J=IIB K

1998 0.0 0.0 0.0 1999 0.0 0.0 0.0 2000 0.0 0.0 0.0 2001 0.0 0.0 0.0 2002 0.0 0.0 0.0 0.0 0.0 0.0 2003 0.0 0.0 0.0 0.0 0.0 0.0 2004 0.0 0.0 0.0 0.0 0.0 0.0 2005 0.0 0.0 0.0 0.0 0.0 0.0 2006 0.0 0.0 0.0 0.0 0.0 0.0 2007 0.0 0.0 0.0 0.0 0.0 0.0 2008 181,434 0.0 0.0 0.0 0.0 0.0 0.0 2009 249,041 0.0 0.0 1,328 0.5 0.3 (1,328) -0.5 -0.3 2010 246,868 0.0 0.0 40,732 16.5 6.2 (40,732) -16.5 -6.2 Total 677,343 0.0 42,060 6.2 (42,060) -6.2

118


Transmission Plant

Account: 369.25 - Regulating Station Manholes

Value Ratio Current Progosed Plant Balance: $62,639 >0.00% Projection Life! AYFR: 40 45 Recorded Reserve: $20,667 32.99% Projection Curve: RO.5 LO Computed Reserve: $14,259 22.76% Future Net Salvaae: -15.0% -30.0% Earliest Vintage: 1994 Average Age (yrs): 13.5

Description This account includes the cost of manholes and station vaults used in transmission measuring or regulating stations.

Service Life and Net Salvage No retirements have been recorded in this account since 1996. Foster Associates was infoffiled by Niagara Mohawk that transmission and distribution manholes are similar and forces for retirement are comparable. Accordingly, parameters recommended for Account 369.25 correspond to the 45-LO projection life curve and -30.0 percent future net salvage rate recommended for Distribution Plant Account 378.20 - Measuring and Regulating Station Equipment - Manholes. The distribution account has experienced more retirement activity and forces ofretirement are well-described by a 45-LO projection curve. The future net salvage rate for ACCOlllt 369.25 is also adjusted to be consistent with Account 378.20.

119


NIAGARA MOHAWK POWER CORPORATION - GAS Transmission Plant Account: 369.25 Regulating Station Manholes

Dispersion: 45 - LO Procedure: Broad Group


Dec:ember 31,2010 Net Surviving Avg. Rem. Plant

Vintage Age Plant Life Life Ratio ---------- - - -- - - ----------------------------------------

A B C D E F

1999 11.5 37,387 45.00 38.01 0.8447 1994 16.5 ___ 2~,~52 45.00 35.79 0.7952

---

Total 13.5 $62,639 45.00 37.12 0.8248

Alloc. Factor

G

1.0000 1.0000 1.0000

Computed Net Plant


Accrual - --- -- ------------------

H=C'F'G I=H/E

31,582 831 _2o,()82 561

--------------

$51,663 $1,392

120


NIAGARA MOHAWK POWER CORPORATION - GAS Transmission Plant Account: 369.25 Regulating Station Manholes

Age Distribution - ------ ---- --- ---



A B C D

1999 11.5 37,387 1994 16.5 25,252 Total 13.5 $37,387 $25,252


---------------- ----



E F=E/(C+D) G

37,387 1.0000 11.5000 25,252 1.0000 16.5000

$62,639 1.0000

121



Account: 369.25 Regulating Station Manholes



---- ------

A B C D

1996 25,252 1997 25,252 25,252 1998 25,252 1999 25,252 332,017 2000 357,269 2001 357,269 2002 357,269 2003 357,269 2004 357,269 2005 357,269 2006 357,269 2007 357,269 2008 357,269 2009 357,269 2010 357,269


E

(25,252)

(294,630)


Ending Balance

F=8+C-D+E

25,252 25,252 25,252

357,269 357,269 357,269 357,269 357,269 357,269 357,269 357,269 357,269 357,269 357,269

62,639

122



Account: 369.25 Regulating Station Manholes


Beginning Year Balance

A B

1996 50,505 1997 50,505 1998 319,882 1999 319,882 2000 357,269 2001 357,269 2002 357,269 2003 357,269 2004 357,269 2005 357,269 2006 357,269 2007 357,269 2008 357,269 2009 357,269 2010 357,269

Additions c

294,630

37,387

Retirements o


Sales, Transfers Ending & Adjustments Balance

E --------~F~=~B~+C~-~D~+E~

(25,252)

(294,630)

50,505 319,882 319,882 357,269 357,269 357,269 357,269 357,269 357,269 357,269 357,269 357,269 357,269 357,269

62,639

123


Transmission Plant

Account: 369.55 - Meas. and Reg. Station Equip. - RTU

Value Ratio Current Progosed Plant Balance: $606,888 0.03% Projection Life/AYFR: 25 25 Recorded Reserve: $365,361 60.20% Projection Curve: R5 H4 Computed Reserve: $313,513 51.66% Future Net Salvage: -20.0% -5.0% Earliest Vintage: 1994 Average Age (yrs): 12.9

Description This account includes the cost of remote terminal units (RTUs) used to provide remote control and data acquisition between transmission gas regulating substations and manned Regional Control Centers.

Service Life and Net Salvage Only $29,884 of retirements, recorded in 2008 (after the current parameters were recommended) have been reported in this account. This minimal experience continues to prevent drawing inferences from a statistical life analysis. The recommended parameters, are, therefore, derived from the 25-H4 projection life curve and -5.0 percent future net salvage rate recommended for Distribution Plant account 378.55 - Measuring and Regulating Station Equipment -RTU. The distribution accOlmt has experienced more retirement activity and forces of retirement are considered comparable to the transmission account.

124


NIAGARA MOHAWK POWER CORPORATION - GAS Transmission Plant Account: 369.55 Meas. and Reg. Station Equip. - RTU

Dispersion: 25 - H4 Procedure: Broad Group


.December 31, 201.0 Net Surviving Avg. Rem. Plant

Vintage Age Plant Life Life Ratio --------------- ------ - - - ------------

A B C D E F

2004 6.5 18,346 25.00 18.53 0.7412 2003 7.5 18.982 25.00 17.55 0.7020 2001 9.5 137.015 25.00 15.62 0.6246 2000 10.5 124,177 25.00 14.67 0.5868 1999 11.5 6.810 25.00 13.75 0.5498 1997 13.5 21.700 25.00 11.97 0.4790 1994 16.5 279.858 25.00 9.58 0.3834 Total 12.9 $606,888 25.00 12.64 0.5055


- ---------------------

G H=C"F"G

1.0000 13,598 1.0000 13.325 1.0000 85.581 1.0000 72,869 1.0000 3,744 1.0000 10.394 1.0000 107.291 1.0000 $306,803


Accrual I=HIE

734 759

5,481 4.967

272 868

.. 11,194 $24.276

125



Account: 369.55 Meas. and Reg. Station Equip. - RTU

Age Distribution ----------- ------------------ -------



A B C 0

2004 6.5 18.346 2003 7.5 18,982 2001 9.5 137,015 2000 10.5 154,061 1999 11.5 6,810 1997 13.5 21,700 1994 16.5 _279,858 Total 12.9 $356,914 $279,858

------


-------



E F=E/(C+D) G

18.346 1.0000 6.5000 18,982 1.0000 7.5000

137,015 1.0000 9.5000 124,177 0.8060 10.0151

6,810 1.0000 11.5000 21,700 1.0000 13.5000

279,858 1.0000 16.5000 $606,888 0.9531

126






A B C D

1996 279,858 1997 279,858 1998 279,858 1999 279,858 13,510 2000 293,368 154,061 2001 447,429 115,602 2002 563,031 21,413 2003 584,444 158,923 2004 743,368 (139,941 ) 2005 603,426 18,346 2006 621,772 2007 621,772 2008 621,772 29,884 2009 591,888 19,606 2010 611,494 (19,606)


E

15,000


Ending Balance

F=8+C-O+E

279,858 279,858 279,858 293,368 447,429 563,031 584,444 743,368 603,426 621,772 621,772 621,772 591,888 611,494 606,888

127






Beginning Year Balance Additions

c

Sales, Transfers Ending Retirements & Adjustments Balance

A B

1996 279,858 1997 279,858 1998 286,558 1999 286,558 2000 293,368 2001 447,429 2002 584,444 2003 584,444 2004 603,426 2005 621,772 2006 621,772 2007 621,772 2008 621,772 2009 591,888 2010 591,888

6,700

6,810 154,061 137,015

18,982 18,346

~~~~~

D E F=S+C-O+E

29,884

15,000

279,858 286,558 286,558 293,368 447,429 584,444 584,444 603,426 621,772 621,772 621,772 621,772 591,888 591,888 606,888

128




Account: 369.55 Meas. and Reg. Station Equip. - RTU T-Cut: None



Weighting: Exposures Rolling Band Life Analysis


- ------- -----

First Degree


- ------------ - - -- - ------

A B

1996-2000 100.0 1997-2001 100.0 1998-2002 100.0 1999-2003 100.0 2000-2004 100.0 2001-2005 100.0 2002-2006 100.0 2003-2007 100.0 2004-2008 82.2 2005-2009 90.2 2006-2010 90.0

c 0

154.1 RO.5° 165.3 RiO 158.8 RiO

E

5.68 6.35 9.69

Second Degree


-----------------

F G H

No Retirements No Retirements No Retirements No Retirements No Retirements No Retirements No Retirements No Retirements

172.0 R2 0 4.36 172.6 R2 0 2.54 172.7 R2° 2.50

Third Degree


171.8 30.5 22.5

J K

R2° 4.37 R4° 2.48 R4° 2.12

129







Shrinking Band Life Analysis Weighting: Exposures ----------- ---- ------------- -- -------------- - - -------------

FirstDegree Second Degree Third De!:l~ee

Observation Average Disper- Conf. Average Disper- Conf. Average Disper- Conf. Band Censoring Life sian Index Life sian Index Life sian Index

------------ ----- -- -- ---------

A B C 0 E F G H J K

1996-2010 94.9 84.7 H1 1.41 186.3 R4 • 1.20 186.2 R4 • 1.20 1998-2010 94.9 104.7 SC 1.61 186.2 R4' 1.20 186.2 R4 • 1.20 2000-2010 94.9 141.6 SC 1.97 185.4 R4 • 1.41 55.3 R5 • 1.43 2002-2010 94.9 172.0 R2' 2.72 183.2 R4 • 1.99 31.2 R4' 2.17 2004-2010 90.2 174.0 R2' 3.77 179.8 R3 • 1.89 25.3 R4 • 1.75 2006-2010 90.0 158.8 R1' 9.69 172.7 R2 • 2.50 22.5 R4 • 2.12 2008-2010 89.7 117.1 sc· 26.61 139.6 sc· 14.79 18.9 R3 • 5.45 2010-2010 100.0 No Retirements

130







Weighting: Exposures Progressing Band Life Analysis ------


--------

A B

1996-1997 100.0 1996-1999 100.0 1996-2001 100.0 1996-2003 100.0 1996-2005 100.0 1996-2007 100.0 1996-2009 94.9 1996-2010 94.9

First Degree


-----------------

C D E

63.8 LO.5 84.7 H1

1.41 1.41

Second Degree


----

F G H

No Retirements


No Retirements 185.5 R4 - 1.37 186.3 R4- 1.20

Third Degree


184.9 186.2

J K

R4 -R4 -

1.40 1.20

131





Graphics Analysis

100 , , -, , \ ,

, \ ,

80 , " , ,

\

, , , , , 60

\

'" " ., .~

, , \

~ ,

U) , ~

, " ~ \

~ ~

0. 40

20

o o 25 50 75

Key • Actual

, \

T-Cut: None




1st: B4.7·Hl 2nd: lB6.3·R4 3rd: 186.2·R4

-~ ~

" \ 1\

\ , ,

\ , , , , \ , ,

, , , , , , , , , , ,

, , , --100 125 150 175

Age (Years)

1st 2nd 3rd

132






T-Cut: None




1st: B4.7·H1 2nd: 1BS.3·R4 3rd: 1BS.2·R4

1.000 ,---,----,---,---,----,-----,---,-----,

O.BOO +----+---+----I----+----I----+----l------j

O.SOO

.E! &! "E m N m :I:

0.400

0.200 +----+---+----1----+----1----+----1-----1

133





100

• \ \ \

\ \

\ \ \

80

60 0> ~ .;; 'E ~

UJ -~ ~

~ ~ a.


TwCut: None



Present: 25.0-RS Proposed: 25.0-H4

40

\ \ \

20 , \ \ \

\ \

\ \ ,

o ~ -o 10 20 30 40

Age (Years)

Key • Actual Present Proposed

134



Account: 369.55 Meas. and Reg. Station Equip .. - RTU

Unadjusted Net~alv"g~l:li_story Gross!:,-alvage

5-Yr Year._R~tirements Amount __ pet. Avg. ABC D=C/BE

1998 0.0 1999 0.0 2000 0.0 2001 0.0 2002 0.0 0.0 2003 0.0 0.0 2004 0.0 0.0 2005 0.0 0.0 2006 0.0 0.0 2007 0.0 0.0 2008 29,884 0.0 0.0 2009 0.0 0.0 2010 0.0 0.0 Total 29,884 0.0

C.ost of Retiring ____ _ 5-Yr

Amount Pet. Avg. F G=F/B H

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

4,831 0.0 16.2 4,831 16.2


_----'-N"et Salva_qe 5-Yr

Amount ___ f'eL.!\\ig-'-. I=C-F J=IIB K

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

(4,831 ) 0.0 -16.2 (4,831 ) -16.2

135



Account: 369.55 Meas. and Reg. Station Equip .. - RTU

MjustedN~t§al.vageHistory._._ .. _.__. __ ----c:__

GrossSalvaget:;Qs(pU'.e\irj[1Q_ 5-Yr 5-Yr

Year Retirements_l\_rn.our1.L Pet. ~g ___ .1'mount.. Pet. Avg. A B C D=C/B E F G=F/B H

1996 0.0 0.0 1999 0.0 0.0 2000 0.0 0.0 2001 0.0 0.0 2002 0.0 0.0 0.0 0.0 2003 0.0 0.0 0.0 0.0 2004 0.0 0.0 0.0 0.0 2005 0.0 0.0 0.0 0.0 2006 0.0 0.0 0.0 0.0 2007 0.0 0.0 0.0 0.0 2006 29,884 0.0 0.0 0.0 0.0 2009 0.0 0.0 0.0 0.0 2010 0.0 0.0 4,831 0.0 16.2 Total 29,884 0.0 4,831 16.2


_---'N'-'e.,..t~Sal\l<3gE' 5-Yr

Amount Pet.J\vg,. I=C·F J=I/B K

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

(4,831) 0.0 -16.2 (4,831 ) -16.2

136


137


NIAGARA MOHAWK POWER CORPORATION - GAS Distribution Plant Account: 374.00 Land Rights



----'2Elcernber 31. 2010 Surviving Avg.

Life D

Net Rem. Plant Alloc.

Vintage Age Plant Life Ratio Factor A

1993 1987 1986 1983 1982 1980 1979 1978 1977 1976 1974 1973 1972 1971 1970 1969 1968 1967 1966 1965 1964 1963 1962 1961 1960 1959 1958 1957 1956 1955 1954 1953 1952 1951 1950 1949

-------

B

17.5 23.5 24.5 27.5 28.5 30.5 31.5 32.5 33.5 34.5 36.5 37.5 38.5 39.5 40.5 41.5 42.5 43.5 44.5 45.5 46.5 47.5 48.5 49.5 50.5 51.5 52.5 53.5 54.5 55.5 56.5 57.5 58.5 59.5 60.5 61.5

- -- -------------

C E F G

6,064 100.00 82.50 0.8250 1.0000 1,480 100.00 76.50 0.7650 1.0000 3,220 100.00 75.50 0.7550 1.0000

53 100.00 72.50 0.7250 1.0000 25,208 100.00 71.50 0.7150 1.0000

11 100.00 69.50 0.6950 1.0000 76 100.00 68.50 0.6850 1.0000 42 100.00 67.50 0.6750 1.0000 14 100.00 66.50 0.6650 1.0000

6 12

178 201

3,103 4,444

74,880 96,774 44,872 11,714 4,518

86,897 546

58,948 39,909

8,740 137,759 197,279 101,887 20,318 27,328 99,189

291,285 83,695

147,522 74,946

2,496

100.00 65.50 100.00 63.50 100.00 62.50 100.00 61.50 100.00 60.50 100.00 59.50 100.00 58.50 100.00 57.50 100.00 56.50 100.00 55.50 100.00 54.50 100.00 53.50 100.00 52.50 100.00 51.50 100.00 50.50 100.00 49.50 100.00 48.50 100.00 47.50 100.00 46.50 100.00 45.50 100.00 44.50 100.00 43.50 100.00 42.50 100.00 41.50 100.00 40.50 100.00 39.50 100.00 38.50

0.6550 1.0000 0.6350 1.0000 0.6250 1.0000 0.6150 1.0000 0.6050 1.0000 0.5950 1.0000 0.5850 1.0000 0.5750 1.0000 0.5650 1.0000 0.5550 1.0000 0.5450 1.0000 0.5350 1.0000 0.5250 1.0000 0.5150 1.0000 0.5050 1.0000 0.4950 1.0000 0.4850 1.0000 0.4750 1.0000 0.4650 1.0000 0.4550 1.0000 0.4450 1.0000 0.4350 1.0000 0.4250 1.0000 0.4150 1.0000 0.4050 1.0000 0.3950 1.0000 0.3850 1.0000

Computed Net Plant


Accrual H=C'F'G I=H/E

5,003 1,132 2,431

38 18,023

7 52 28

9 4 8

111 123

1,877 2,644

43,805 55,645 25,353

6,501 2,463

46,490 287

30,358 20,154

4,326 66,813 93,707 47,377

9,245 12,161 43,147

123,796 34,733 59,746 29,604

961

61 15 32

1 252

2 2

31 44

749 968 449 117

45 869

5 589 399

87 1,378 1,973 1,019

203 273 992

2,913 837

1,475 749

25

138


Distribution Plant

Account: 374.00 - Land Rights

Value Ratio Current Progosed Plant Balance: $1,732,216 0.09% Projection Life! AYFR: 100 100 Recorded Reserve: $1,269,536 73.29% Projection Curve: SO SO Computed Reserve: $928,814 53.62% Future Net SalvaQe: 0.0% 0.0% Earliest Vintage: 1913 Average Age (yrs): 53.6

Service Life and Net Salvage No changes are recommended for this account. The current projection life and accrual rate were agreed upon in Case No. 08-G-0609 based upon one retirement of$875 recorded over the period 1996-2007. No additional retirements have been recorded in this aCCOlmt.

139



Distribution Plant Account: 374.00 Land Rights


Gelw[ation .. Arrangement

_R",cElJllber 31.,.2010 Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual -- -------------- --- - - -- -----------------------------------------------

A B C D E F G H=C'F'G I=HIE

1948 62.5 470 100.00 37.50 0.3750 1.0000 176 5 1947 63.5 200 100.00 36.50 0.3650 1.0000 73 2 1942 68.5 492 100.00 31.50 0.3150 1.0000 155 5 1939 71.5 200 100.00 28.50 0.2850 1.0000 57 2 1938 72.5 779 100.00 27.50 0.2750 1.0000 214 8 1937 73.5 898 100.00 26.50 0.2650 1.0000 238 9 1936 74.5 458 100.00 25.50 0.2550 1.0000 117 5 1935 75.5 4,845 100.00 24.50 0.2450 1.0000 1,187 48 1934 76.5 6,759 100.00 23.50 0.2350 1.0000 1,588 68 1933 77.5 23,286 100.00 22.50 0.2250 1.0000 5,239 233 1932 78.5 13,280 100.00 21.50 0.2150 1.0000 2,855 133 1931 79.5 3,589 100.00 20.50 0.2050 1.0000 736 36 1930 80.5 1,827 100.00 19.50 0.1950 1.0000 356 18 1929 81.5 415 100.00 18.50 0.1850 1.0000 77 4 1928 82.5 299 100.00 17.50 0.1750 1.0000 52 3 1927 83.5 302 100.00 16.50 0.1650 1.0000 50 3 1926 84.5 1,078 100.00 15.50 0.1550 1.0000 167 11 1925 85.5 303 100.00 14.50 0.1450 1.0000 44 3 1924 86.5 5,073 100.00 13.50 0.1350 1.0000 685 51 1921 89.5 805 100.00 10.50 0.1050 1.0000 85 8 1920 90.5 10,897 100.00 9.50 0.0950 1.0000 1,035 109 1916 94.5 300 100.00 5.50 0.0550 1.0000 17 3 1913 97.5 50 100.00 2.50 0.0250 1.0000 1 1 Total 53.6 $1,732,216 100.00 46.38 0.4638 1.0000 $803,370 $17,322

140



Account: 374.00 Land Rights

Age Distribution ------ --- - -----------



A B c D

1993 17.5 6,064 1987 23.5 1,480 1986 24.5 3,220 1983 27.5 53 1982 28.5 25,208 1980 30.5 11 1979 31.5 951 1978 32.5 42 1977 33.5 14 1976 34.5 6 1974 36.5 12 1973 37.5 178 1972 38.5 201 1971 39.5 3,103 1970 40.5 4,444 1969 41.5 74,880 1968 42.5 96,774 1967 43.5 44,872 1966 44.5 11,714 1965 45.5 4,518 1964 46.5 86,897 1963 47.5 546 1962 48.5 58,948 1961 49.5 39,909 1960 50.5 8,740 1959 51.5 137,759 1958 52.5 197,279 1957 53.5 101,887 1956 54.5 20,318 1955 55.5 27,328 1954 56.5 99,189 1953 57.5 291,285 1952 58.5 83,695 1951 59.5 147,522 1950 60.5 74,946 1949 61.5 2,496 1948 62.5 470


Experience to 12/31/2010 -- --- -------------------


E F=E/(C+D) G

6,064 1.0000 17.5000 1,480 1.0000 23.5000 3,220 1.0000 24.5000

53 1.0000 27.5000 25,208 1.0000 28.5000

11 1.0000 30.5000 76 0.0794 28.2780 42 1.0000 32.5000 14 1.0000 33.5000 6 1.0000 34.5000

12 1.0000 36.5000 178 1.0000 37.5000 201 1.0000 38.5000

3,103 1.0000 39.5000 4,444 1.0000 40.5000

74,880 1.0000 41.5000 96,774 1.0000 42.5000 44,872 1.0000 43.5000 11,714 1.0000 44.5000

4,518 1.0000 45.5000 86,897 1.0000 46.5000

546 1.0000 47.5000 58,948 1.0000 48.5000 39,909 1.0000 49.5000

8,740 1.0000 50.5000 137,759 1.0000 51.5000 197,279 1.0000 52.5000 101,887 1.0000 53.5000

20,318 1.0000 54.5000 27,328 1.0000 55.5000 99,189 1.0000 56.5000

291,285 1.0000 57.5000 83,695 1.0000 58.5000

147,522 1.0000 59.5000 74,946 1.0000 60.5000

2,496 1.0000 61.5000 470 1.0000 62.5000

141




Age Distribution ---------------


Vintage 12/31/2010 Additions Balance -- -- --------- -

A B C 0

1947 63.5 200 1942 68.5 492 1939 71.5 200 1938 72.5 779 1937 73.5 898 1936 74.5 458 1935 75.5 4,845 1934 76.5 6,759 1933 77.5 23,286 1932 78.5 13,280 1931 79.5 3,589 1930 80.5 1,827 1929 81.5 415 1928 82.5 299 1927 83.5 302 1926 84.5 1,078 1925 85.5 303 1924 86.5 5,073 1921 89.5 805 1920 90.5 10,897 1916 94.5 300 1913 97.5 50 Tolal 53.6 $1,733,091




.-

E F=E/(C+O) G

200 1.0000 63.5000 492 1.0000 68.5000 200 1.0000 71.5000 779 1.0000 72.5000 898 1.0000 73.5000 458 1.0000 74.5000

4,845 1.0000 75.5000 6,759 1.0000 76.5000

23,286 1.0000 77.5000 13,280 1.0000 78.5000

3,589 1.0000 79.5000 1,827 1.0000 80.5000

415 1.0000 81.5000 299 1.0000 82.5000 302 1.0000 83.5000

1,078 1.0000 84.5000 303 1.0000 85.5000

5,073 1.0000 86.5000 805 1.0000 89.5000

10,897 1.0000 90.5000 300 1.0000 94.5000

50 1.0000 97.5000 -------

$1,732,216 0.9995

142





Beginning Year Balance Additions Retirements .----~~--

A B c----- o

1996 1,719,337 1997 1,719,337 23,791 1998 1,743,128 1999 1,743,128 2000 1,743,128 2001 1,743,128 12,268 2002 1,733,091 2003 1,733,091 2004 1,733,091 2005 1,733,091 2006 1,733,091 2007 1,733,091 875 2008 1,732,216 2009 1,732,216 2010 1,732,216


E

(22,305)


Ending Balance

-----~-

F=B+C~D+E

1,719,337 1,743,128 1,743,128 1,743,128 1,743,128 1,733,091 1,733,091 1,733,091 1,733,091 1,733,091 1,733,091 1,732,216 1,732,216 1,732,216 1,732,216

143






Sales, Transfers Retirements & Adjustments

------

A B C D E

1996 1,755,396 1997 1,755,396 1998 1,755,396 1999 1,755,396 2000 1,755,396 2001 1,755,396 (22,305) 2002 1,733,091 2003 1,733,091 2004 1,733,091 2005 1,733,091 2006 1,733,091 2007 1,733,091 875 2008 1,732,216 2009 1,732,216 2010 1,732,216


Ending Balance

F=B+C~D+E

1,755,396 1,755,396 1,755,396 1,755,396 1,755,396 1,733,091 1,733,091 1,733,091 1,733,091 1,733,091 1,733,091 1,732,216 1,732,216 1,732,216 1,732,216

144






Observation Average Disper- Conf. Band Censoring Life sian Index

-------- -------------------------

A B C D E

1996-2000 100.0 1997-2001 100.0 1998-2002 100.0 1999-2003 100.0 2000-2004 100.0 2001-2005 100.0 2002-2006 100.0 2003-2007 13.5 192.8 86' 69.51

T-Cut: None




Second Degree


----------

F G


No Retirements No Retirements No Retirements

H

164.3 R2.5· 66.46

- ----- -----------

Third Degree

Average Life

Disper- Conf. sion Index

---=cJ=- K

162.6 R2.5 • 66.53

145





Shrinking Band Life Analysis

First Degree

Observation Average Band Censoring Life

---------------

ABC

1996-2007 1998-2007 2000-2007 2002-2007 2004-2007 2006-2007

99.6 90.2 37.6 14.5 13.5 11.8

197.3 196.6 195.7 194.1 191.0 181.9

Disper- Conf. sion Index

0 E

SQ' 0.50 S6" 7.12 S6' 50.64 SQ' 69.22 R5' 68.68 R4' 66.10

T-Cut: None




Second Degree


- - - --------------- -

F G H

190.0 R5 • 1.09 186.0 R4' 6.29 180.0 R4 • 49.25 170.9 R3 • 66.90 155.4 R2.5 • 64.56 123.1 R1 • 57.22

__ ~T~h~ir_d [)egree


175.8 172.9 169.5 165.2 159.2 145.4

J K

R4 • R4 • R4 • R3 • R2 • SC'

0.79 6.57

49.55 67.11 64.38 55.72

146




Account: 374.00 Land Rights T-Cut: None



Weighting: Exposures Progressing Band Life Analysis

._ First Degree SecondD!gr~ Third Degree


------------- ----------------- - --- - ------------------------

A B CD E F G HI J K

1996-1997 100.0 No Retirements 1996-1999 100.0 No Retirements 1996-2001 100.0 No Retirements 1996-2003 100.0 No Retirements 1996-2005 100.0 No Retirements 1996-2007 99.6 197.3 SQ" 0.50 190.0 R5" 1.09 175.8 R4" 0.79

147





Graphics Analysis

100

80

60 C> C .;; .~

~

'" ~ c ~

~ ~

"- 40

20

o o 25 50 75

Key + Actual

----

T~Cut: None

Placement Band: 1913~2007 Observation Band: 1996-2007



1st: 197.3-SQ 2nd: 190.0·R5 3rd: 175.8-R4

~ I

~ I I

1\ I

~ I I I I I I

1\ I I I

\ I I I I I I I

I

\ I I I I I I

\

100 125 150 175 Age (Years)

-----1st ---2nd ---3rd

148






0.050

0.040

0.030

S &! "E .. N .. J:

0.020

0.010

•

0.000 o 25 50 75

Key • Actual

TMCut: None

Placement Band: 1913M2007 Observation Band: 1996M2007



1st: 197.3-50 2nd: 190.0·R5 3rd: 175.8·R4

/

V /

/ /

~ -------~

100

Age (Years)

1st

125 150 175

2nd 3rd

149





T~Cut: None



Present and Proposed Projection Life Curves Present: 100.0·Sa Proposed: 100,O·Sa

80+-----------1------------+------------~--------~

60 '" ~ 'S;

'i! ~

'" -~ ~

~ ~ a. 40

20+-----------1------------+------------~--------~

O+-----------+-----------+-----------+---------~ o 25 50 75 100

Age (Years)

Key + Actual - - - - - Present ----- Proposed

150




!In.~djustecl NeLSalvageHi§!Qry_


c;rossSalya~e CostofRetirin~ _.NetSalvage 1-Yr 1-Yr 1-Yr

Year Retirements Amount Pet. _ Avg,.ArnQ.LI.nL .. £,c:L.Avg, ___ ArTl0unt.J)eL_6.vg~. A B C D=C/B E F G=F/B H I=C-F J=I/B K

1997 0.0 0.0 0.0 0.0 0.0 0.0 1998 0.0 0.0 0.0 0.0 0.0 0.0 1999 0.0 0.0 0.0 0.0 0.0 0.0 2000 0.0 0.0 0.0 0.0 0.0 0.0 2001 0.0 0.0 0.0 0.0 0.0 0.0 2002 0.0 0.0 0.0 0.0 0.0 0.0 2003 0.0 0.0 0.0 0.0 0.0 0.0 2004 0.0 0.0 0.0 0.0 0.0 0.0 2005 0.0 0.0 0.0 0.0 0.0 0.0 2006 0.0 0.0 0.0 0.0 0.0 0.0 2007 875 0.0 0.0 0.0 0.0 0.0 0.0 2008 0.0 0.0 0.0 0.0 0.0 0.0 2009 0.0 0.0 0.0 0.0 0.0 0.0 2010 0.0 0.0 0.0 0.0 0.0 0.0

------------- --~---------- ----

Total 875 0.0 0.0 0.0

151




Ad justedr-Jet~1lI\lagE!!li!l10ry ... _ GrQ~.s~alvai1e ___ Cost of Retiring

Year A

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Retirements B

875

Tolal 875

1-Yr Amount .. _PgL~,.o...' _'-=~

C D=CIB E

Amount F

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

1-Yr Pet. Avg.

G=FI8 H

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0


Net.13ilLvail!l __ 1-Yr

Amount Pet. Avg, ---------

I=C·F J=IIB K

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

152


Distribution Plant


Value Ratio Current ProQosed Plant Balance: $4.845,825 0.26% Projection Life/AYFR: 45 45 Recorded Reserve: $1,806,964 37.29% Projection Curve: LO LO Computed Reserve: $913,212 18.85% Future Net Salvage: 0.0% -15.0% Earliest Vi ntage: 1892 Average Age (yrs): 19.3

Description This account includes the cost of structures and related facilities used in gas distribution operations. A significant portion of the investment in this account is associated with service centers and administrative buildings located in various operating divisions. A description of the assets classified in tins account at December 31, 20 lOis provided in Table I.

Service Life

Table 1. Account Components Oeseri ption

Structures and Additions Power Supply System Plant Heating/Cooling System Plant Sanitary System Plant Outdoor Paving Sitework Exterior Doors and Windows Roofing Shingles Super Structure and Prefab Buildings Power Supply and Distribution Plant Security Systems Fire Protection Equipment

Total

Investment

$2,413,016 158,837

34,425 16,719

148,634 1,654,636

87,716 15,421 62,640

166,154 6,711

80,915 $4,845,825

It is the opinion of both Niagara Mohawk and Foster Associates that no adjustment to service life parameters is warranted at this time. The statistical life study continues to support the approved 45 year projection life.

Net Salvage Although largely associated with interim retirements, the historical net salvage analysis suggests a-50.8 percent overall realized net salvage rate and a -103.7 percent rate for tile 5-year rolling band ending in 2010. Recognizing that final retirements are unlikely to incur such high negative rates, a -15 percent future net salvage rate is recommended for this account.

153



Distribution Plant Account: 375.00 Structures and Improvements


Generation Arrangement - - - ----------

.. J)ecernber 3.1, .201. 0 Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual -- ---- -----

A B C D E F G H=C"F"G I=H/E

2008 2.5 604,659 45.00 43.07 0.9570 1.0000 578,680 13,437 2007 3.5 269,592 45.00 42.40 0.9422 1.0000 253,998 5,991 2006 4.5 265,764 45.00 41.76 0.9281 1.0000 246,656 5,906 2005 5.5 113,494 45.00 41.16 0.9148 1.0000 103,820 2,522 2004 6.5 321,353 45.00 40.59 0.9020 1.0000 289,855 7,141 2003 7.5 145,421 45.00 40.04 0.8897 1.0000 129,384 3,232 2002 8.5 100,859 45.00 39.51 0.8779 1.0000 88,544 2,241 2001 9.5 357,175 45.00 38.99 0.8665 1.0000 309,487 7,937 2000 10.5 75,243 45.00 38.50 0.8554 1.0000 64,366 1,672 1999 11.5 195,090 45.00 38.01 0.8447 1.0000 164,798 4,335 1998 12.5 187,159 45.00 37.54 0.8343 1.0000 156,150 4,159 1997 13.5 139,744 45.00 37.09 0.8242 1.0000 115,174 3,105 1996 14.5 292,329 45.00 36.64 0.8143 1.0000 238,045 6,496 1995 15.5 95,488 45.00 36.21 0.8047 1.0000 76,836 2,122 1994 16.5 183,212 45.00 35.79 0.7952 1.0000 145,698 4,071 1993 17.5 126,587 45.00 35.37 0.7860 1.0000 99,499 2,813 1992 18.5 174,210 45.00 34.96 0.7770 1.0000 135,355 3,871 1991 19.5 10,000 45.00 34.56 0.7681 1.0000 7,681 222 1989 21.5 56,916 45.00 33.78 0.7507 1.0000 42,730 1,265 1987 23.5 692 45.00 33.02 0.7338 1.0000 508 15 1985 25.5 22,822 45.00 32.28 0.7173 1.0000 16,371 507 1984 26.5 1,738 45.00 31.91 0.7092 1.0000 1,232 39 1983 27.5 14,128 45.00 31.55 0.7012 1.0000 9,907 314 1982 28.5 22,498 45.00 31.20 0.6933 1.0000 15,597 500 1981 29.5 1,966 45.00 30.84 0.6854 1.0000 1,348 44 1980 30.5 11,114 45.00 30.50 0.6777 1.0000 7,531 247 1979 31.5 50,236 45.00 30.15 0.6700 1.0000 33,658 1,116 1978 32.5 2,314 45.00 29.81 0.6624 1.0000 1,533 51 1977 33.5 4,846 45.00 29.47 0.6549 1.0000 3,174 108 1974 36.5 11,775 45.00 28.48 0.6329 1.0000 7,453 262 1973 37.5 30,545 45.00 28.16 0.6258 1.0000 19,114 679 1972 38.5 7,286 45.00 27.84 0.6187 1.0000 4,508 162 1971 39.5 26,491 45.00 27.52 0.6117 1.0000 16,203 589 1970 40.5 7,817 45.00 27.21 0.6047 1.0000 4,727 174 1967 43.5 20,840 45.00 26.30 0.5843 1.0000 12,178 463 1966 44.5 3,031 45.00 26.00 0.5777 1.0000 1,751 67

154


NIAGARA MOHAWK POWER CORPORATION - GAS Schedule A Page 2 of3

Distribution Plant Account: 375.00 Structures and Improvements



D.8ce m_b!3.r 31. 201 0 Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual ------------- --- -- - ------------

A B C 0 E F G H=C'F'G i=H/E

1965 45.5 10,547 45.00 25.70 0.5711 1.0000 6,024 234 1964 46.5 6,090 45.00 25.41 0.5646 1.0000 3,438 135 1963 47.5 13,870 45.00 25.12 0.5582 1.0000 7,742 308 1962 48.5 50,731 45.00 24.83 0.5518 1.0000 27,994 1,127 1961 49.5 38,026 45.00 24.55 0.5455 1.0000 20,744 845 1960 50.5 9,809 45.00 24.27 0.5393 1.0000 5,290 218 1959 51.5 49,543 45.00 23.99 0.5331 1.0000 26,412 1,101 1958 52.5 43,694 45.00 23.71 0.5270 1.0000 23,027 971 1957 53.5 97,978 45.00 23.44 0.5210 1.0000 51,042 2,177 1956 54.5 29,563 45.00 23.17 0.5150 1.0000 15,224 657 1955 55.5 119,722 45.00 22.91 0.5091 1.0000 60,945 2,660 1954 56.5 50,687 45.00 22.64 0.5032 1.0000 25,505 1,126 1953 57.5 133,437 45.00 22.38 0.4974 1.0000 66,369 2,965 1952 58.5 63,576 45.00 22.12 0.4916 1.0000 31,257 1,413 1951 59.5 87,512 45.00 21.87 0.4860 1.0000 42,527 1,945 1950 60.5 9,774 45.00 21.61 0.4803 1.0000 4,695 217 1948 62.5 546 45.00 21.12 0.4692 1.0000 256 12 1946 64.5 227 45.00 20.63 0.4583 1.0000 104 5 1942 68.5 1,115 45.00 19.68 0.4372 1.0000 488 25 1941 69.5 577 45.00 19.44 0.4320 1.0000 249 13 1940 70.5 1,638 45.00 19.21 0.4269 1.0000 699 36 1939 71.5 2,085 45.00 18.98 0.4219 1.0000 879 46 1938 72.5 1,735 45.00 18.76 0.4169 1.0000 723 39 1937 73.5 577 45.00 18.54 0.4119 1.0000 238 13 1936 74.5 1,701 45.00 18.31 0.4070 1.0000 692 38 1935 75.5 312 45.00 18.09 0.4021 1.0000 126 7 1934 76.5 227 45.00 17.88 0.3973 1.0000 90 5 1933 77.5 6,674 45.00 17.66 0.3925 1.0000 2,619 148 1932 78.5 8,031 45.00 17.45 0.3877 1.0000 3,114 178 1930 80.5 9,475 45.00 17.03 0.3784 1.0000 3,585 211 1929 81.5 4,858 45.00 16.82 0.3737 1.0000 1,816 108 1927 83.5 18,018 45.00 16.41 0.3646 1.0000 6,569 400 1925 85.5 11,613 45.00 16.00 0.3557 1.0000 4,130 258 1924 86.5 29 45.00 15.81 0.3512 1.0000 10 1 1916 94.5 67 45.00 14.27 0.3171 1.0000 21 1915 95.5 120 45.00 14.09 0.3130 1.0000 38 3

155


Distribution Plant


Value Ratio Current ProRosed Plant Balance: $4,845,825 0.26% Projection Life/A YFR: 45 45 Recorded Reserve: $1,806,964 37.29% Projection Curve: LO LO Computed Reserve: $913,212 18.85% Future Net Salvage: 0.0% -15.0% Earliest Vintage: 1892 Average Age (yrs): 19.3

Description This account includes the cost of structures and related facilities used in gas distribution operations. A significant portion of the investment in this account is associated with service centers and administrative buildings located in various operating divisions. A description of the assets classified in this account at December 31, 2010 is provided in Table 1.

Service Life

Table 1. Account Components Description

Structures and Additions Power Supply System Plant Heating/Cooling System Plant Sanitary System Plant Outdoor Pa\ing Sitework Exterior Doors and Windows Roofing Shingles Super Structure and Prefab Buildings Power Supply and Distribution Plant Security Systems Fire Protection Equipment

Total

Investment

$2,413,016 158,837 34,425 16,719

148,634 1,654,636

87,716 15,421 62,640

166,154 6,711

80,915 $4,845,825

It is the opinion of both Niagara Mohawk and Foster Associates that no adjustment to service life parameters is warranted at this time. The statistical life study continues to support the approved 45 year projection life.

Net Salvage Although largely associated with interim retirements, the historical net salvage analysis suggests a -50.S percent overall realized net salvage rate and a -103.7 percent rate for the 5-year rolling band ending in 2010. Recognizing that final retirements are unlikely to incur such high negative rates, a -15 percent future net salvage rate is recommended for this account.

156


NIAGARA MOHAWK POWER CORPORATION - GAS Distribution Plant Account: 375.00 Structures and Improvements


GEmeration Arrangement

. December:31,:2010. Net Surviving Avg. Rem. Plant Alloc.

Vintage Age Plant Life Life Ratio Factor ---- ----------------------- --- - - ------------

A B C D E F G

1914 96.5 527 45.00 13.90 0.3089 1.0000 1911 99.5 1,500 45.00 13.36 0.2969 1.0000 1910 100.5 1,084 45.00 13.18 0.2930 1.0000 1907 103.5 4,097 45.00 12.66 0.2813 1.0000

----

Total 19.3 $4,845,825 45.00 35.76 0.7946 1.0000

Computed Net Plant


Accrual -------------

H=C"F"G I=H/E

163 12 445 33 318 24

1,153 91 $3,850,307 $107,685

157




Age Distribution -----


-- -- ----



A B C D E F=E/(C+D) G

2008 2.5 604.659 604,659 1.0000 2.5000 2007 3.5 269,592 269,592 1.0000 3.5000 2006 4.5 265,764 265,764 1.0000 4.5000 2005 5.5 113,494 113,494 1.0000 5.5000 2004 6.5 321,717 321,353 0.9989 6.4994 2003 7.5 145,421 145,421 1.0000 7.5000 2002 8.5 100,859 100,859 1.0000 8.5000 2001 9.5 358,901 357,175 0.9952 9.4976 2000 10.5 78,970 75,243 0.9528 10.4764 1999 11.5 199,767 195,090 0.9766 11.3868 1998 12.5 200,312 187,159 0.9343 12.4672 1997 13.5 139,744 139,744 1.0000 13.5000 1996 14.5 303,829 292,329 0.9621 14.1997 1995 15.5 104,020 95,488 0.9180 14.8848 1994 16.5 256,687 183,212 0.7138 13.9339 1993 17.5 148,562 126,587 0.8521 16.4613 1992 18.5 179,188 174,210 0.9722 18.4583 1991 19.5 10,000 10,000 1.0000 19.5000 1989 21.5 72,008 56,916 0.7904 19.5985 1988 22.5 16,448 0.0000 12.4762 1987 23.5 692 692 1.0000 23.5000 1985 25.5 22,822 22,822 1.0000 25.5000 1984 26.5 1,738 1,738 1.0000 26.5000 1983 27.5 14,128 14,128 1.0000 27.5000 1982 28.5 22,498 22,498 1.0000 28.5000 1981 29.5 1,966 1,966 1.0000 29.5000 1980 30.5 20,628 11,114 0.5388 24.7345 1979 31.5 96,312 50,236 0.5216 26.3247 1978 32.5 4,629 2,314 0.5000 27.7500 1977 33.5 50,181 4,846 0.0966 32.1068 1974 36.5 21,181 11,775 0.5559 32.7942 1973 37.5 40,185 30,545 0.7601 36.9352 1972 38.5 7,286 7,286 1.0000 38.5000 1971 39.5 39,129 26,491 0.6770 39.1605 1970 40.5 15,445 7,817 0.5061 38.0138 1969 41.5 14,097 0.0000 32.0000 1967 43.5 28,123 20,840 0.7410 43.3236

158


NIAGARA MOHAWK POWER CORPORATION - GAS Distribution Plant Account: 375.00 Structures and Improvements

Age Distribution


Vintage 12/31/2010 Additions Balance -- -- --- ------ ------- .

A B C D

1966 44.5 6.253 1965 45.5 24,595 1964 46.5 157,791 1963 47.5 38,516 1962 48.5 63,544 1961 49.5 44,518 1960 50.5 19,285 1959 51.5 58,955 1958 52.5 113,986 1957 53.5 105,196 1956 54.5 46,569 1955 55.5 169,702 1954 56.5 56,441 1953 57.5 152,115 1952 58.5 95,492 1951 59.5 188,134 1950 60.5 11,082 1949 61.5 7,365 1948 62.5 1,085 1946 64.5 1,397 1944 66.5 662 1942 68.5 1,912 1941 69.5 952 1940 70.5 1,638 1939 71.5 2,246 1938 72.5 4,321 1937 73.5 577 1936 74.5 1,701 1935 75.5 312 1934 76.5 230 1933 77.5 9,533 1932 78.5 16,077 1930 80.5 16,689 1929 81.5 10,001 1928 82.5 2,557 1927 83.5 24,653 1926 84.5 28,537


-----_.----



E F=E/(C+D) G

3.031 0.4848 41.7851 10,547 0.4288 42.5296

6,090 0.0386 37.3666 13,870 0.3601 41.9284 50,731 0.7983 47.8981 38,026 0.8542 48.2474

9,809 0.5086 47.5868 49,543 0.8404 50.7952 43,694 0.3833 46.9509 97,978 0.9314 53.1373 29,563 0.6348 52.8247

119,722 0.7055 53.6160 50,687 0.8981 56.0039

133,437 0.8772 57.2826 63,576 0.6658 55.3012 87,512 0.4652 56.3900

9,774 0.8820 60.1910 0.0000 61.0000

546 0.5033 58.7750 227 0.1623 56.5779

0.0000 57.0000 1,115 0.5833 64.2123

577 0.6061 69.3031 1,638 1.0000 70.5000 2,085 0.9280 71.4640 1,735 0.4015 68.0116

577 1.0000 73.5000 1,701 1.0000 74.5000

312 1.0000 75.5000 227 0.9842 76.4921

6,674 0.7001 76.1505 8,031 0.4996 72.6533 9,475 0.5678 78.0041 4,858 0.4858 78.0167

0.0000 73.5487 18,018 0.7309 80.5058

0.0000 75.0301

159



Account: 375 . .0.0 Structures and Improvements

Age Distribution


-- ---- --- - - - ----- ------------ -

1996 Experience to 12/31/2010 - - -- ---------


---------


1925 85.5 33,829 11,613 0.3433 79.2611 1924 86.5 29 29 1.0000 86.5000 1923 87.5 529 0.0000 76.0000 1922 88.5 1,694 0.0000 78.0000 1917 93.5 2,549 0.0000 93.0000 1916 94.5 67 67 1.0000 94.5000 1915 95.5 139 120 0.8656 95.4328 1914 96.5 527 527 1.0000 96.5000 1913 97.5 232 0.0000 90.0000 1911 99.5 1,500 1,500 1.0000 99.5000 1910 100.5 2,584 1,084 0.4195 100.2097 1908 102.5 507 0.0000 96.0000 1907 103.5 4,097 4,097 1.0000 103.5000 1906 104.5 1,526 0.0000 97.0000 1904 106.5 1,596 0.0000 99.0000 1892 118.5 ... 2,O()D 0.0000 118.0000

.----.---~--

Total 19.3 $3,103,029 $2,725,977 $4,845,825 0.8313

160


Schedule C


Distribution Plant




A B C D E F=B+C-D+E

1996 2,649,010 2,649,010 1997 2,649,010 383,859 5,782 (84,880) 2,942,207 1998 2,942,207 79,041 98,734 2,922,513 1999 2,922,513 326,719 41,093 (37,722) 3,170,417 2000 3,170,417 196,103 16,229 3,350,290 2001 3,350,290 334,823 444,935 3,240,178 2002 3,240,178 117,426 3,926 3,353,678 2003 3,353,678 87,848 49,419 (2,549) 3,389,557 2004 3,389,557 143,391 26,943 3,506,005 2005 3,506,005 259,173 3,603 3,761,574 2006 3,761,574 453,150 27,964 16,582 4,203,342 2007 4,203,342 155,015 12,040 4,346,317 2008 4,346,317 401,778 12,163 4,735,932 2009 4,735,932 453,599 41,661 5,147,870 2010 5,147,870 (2,765) 198,688 (100,592) 4,845,825

161


Schedule C


Distribution Plant




-- - -- ---------

A B C D E F=B+C~D+E

1996 2,768,726 302,829 3,071,555 1997 3,071,555 177,466 5,782 (84,880) 3,158,359 1998 3,158,359 211,752 98,734 3,271,376 1999 3,271,376 154,817 41,D93 (37,722) 3,347,378 2000 3,347,378 78,970 16,229 3,410,119 2001 3,410,119 334,616 444,935 3,299,799 2002 3,299,799 67,305 3,926 3,363,178 2003 3,363,178 145,421 49,419 (2,549) 3,456,631 2004 3,456,631 321,717 26,943 3,751,404 2005 3,751,404 111,913 3,603 3,859,714 2006 3,859,714 265,764 27,964 16,582 4,114,096 2007 4,114,096 152,679 12,040 4,254,735 2008 4,254,735 944,195 12,163 5,186,767 2009 5,186,767 41,661 5,145,105 2010 5,145,105 198,688 (100,592) 4,845,825

162






T-Cut: None




__ First[)E!!lreEl___ Second Degree Third Degree


---------------------

A B

1996-2000 0.0 1997-2001 0.0 1998-2002 0.0 1999-2003 0.0 2000-2004 0.0 2001-2005 0.0 2002-2006 11.2 2003-2007 14.6 2004-2008 42.1 2005-2009 42.2 2006-2010 0.0

- -------------------------------------------------------------------------- - - --- - ----

CD E F G HI J K

65.8 H1 15.16 77.9 29.0 HO.S 9.41 28.8 29.3 LO 6.40 29.0 31.2 LO 5.67 30.9 31.7 H1 7.51 31.2 32.4 H1 7.62 31.7 73.7 L 1 " 7.76 71.7 73.6 L1 6.56 72.5 89.6 L1 6.24 112.4 78.8 L 1.5" 9.46 79.8 48.5 L 1.5" 12.27 47.6

03" 16.69 LO" 8.92 LO" 5.29 LO 5.00

LO.S" 6.29 LO.S" 6.23

H2 7.76 L1 6.50

HO.S" 4.23 L 1 " 8.98

L 1.5" 11.35

64.7 26.1 26.0 27.3 27.0 27.6 68.4 67.9

111.2 105.0 46.7

LO LO

LO.5 " LO.S" LO.5 " LO.S"

SO" SO"

HO.S" 03" L 1 "

15.72 5.30 2.57 4.82 4.65 6.88 6.40 6.36 4.23 5.76

11.09

163





Shrinking Band Life Analysis ----------------

First Degree


- - ------------ ----- - - --- --------------------------

A B c D E

1996-2010 0.0 44.4 LO.5 6.56 1998-2010 0.0 41.5 L1 8.36 2000-2010 0.0 41.4 L1 10.10 2002-2010 0.0 55.3 L 1.5' 11.99 2004-2010 0.0 53.5 L1.5· 12.86 2006-2010 0.0 48.5 L 1.5' 12.27 2008-2010 0.0 41.5 L 1.5' 17.81 2010-2010 0.0 28.5 L 1.5' 11.97

T-Cut: None




Second Degree ___ ~hircJ_[)~gree


F G H J K

44.2 LO.5 5.62 42.0 LO.5 ' 4.49 41.1 LO.5 ' 6.88 38.6 LO.5 ' 5.43 40.8 L 1 ' 8.61 38.0 LO.5 ' 7.36 55.3 L1.5' 11.83 53.5 L 1 ' 11.29 53.4 L 1 ' 12.20 51.6 L 1 ' 11.83 47.6 L1.5 ' 11.35 46.7 L 1 ' 11.09 39.8 L1.5 ' 16.40 39.2 L1.5 ' 16.13 26.8 L2 ' 13.11 24.9 L2 ' 15.23

164




Progressing Band Life Analysis -- - ----------


T-Cut: None




First Degree Second Degree .. ThirdD~r~e __ --------

Observation Average Disper- ConI. Average Disper- Conf. Average Disper- Conf. Band Censoring Life sion Index Life sion Index Life sion Index

------------ -- - -- ---- -- ------------------------

A B c D E F G H J K

1996-1997 95.4 189.3 R5' 0.92 188.9 R5 ' 1.05 117.3 R4 ' 4.70 1996-1999 24.9 60.2 H1 9.10 67.9 02' 8.19 73.7 03' 8.38 1996-2001 0.0 32.3 LO 8.06 32.3 LO 7.74 29.6 02 4.57 1996-2003 0.0 37.0 LO 5.95 36.9 LO 5.52 33.9 LO 2.86 1996-2005 0.0 41.4 H1 6.62 41.7 LO' 5.81 38.1 LO' 3.06 1996-2007 4.5 45.2 LO.5 6.39 46.3 LO' 5.30 42.1 LO' 3.73 1996-2009 5.2 48.1 LO.5 7.04 49.4 LO.5 ' 5.79 45.9 LO' 4.55 1996-2010 0.0 44.4 LO.5 6.56 44.2 LO.5 5.62 42.0 LO.5 ' 4.49

165





Graphics Analysis

T~Cut: None




1st: 44.4·LO.5 2nd: 44.2-LO.5 3rd: 42.0-LO.5

100~~'-------~----------~----------r-----------r-------,

BO+-------~~----------~----------t_--------_+------~

60 on c ';; '~ ~

'" " ~

~ ~ a. 40

20+_--------~--------_4--_.~~--+_--------~----~

25 50 75 100 Age (Years)

Key + Actual 1st 2nd 3rd

166






0.750

0.600

0.450

.l!l '" '" "E '" N

'" :I: +

0.300

0.150 +

+ • + +

+ + +

T~Cut: None




1st: 44.4·LO.5 2nd: 44.2-LO.5 3rd: 42.0-LO.5

+

~

• • + +

~ + + ~ ------• .. • --. ++ • + •• + +.A • • ... . .• + + .. •• 0.000

o 25 50 75 100

Age (Years)

Key • Actual 1st 2nd 3rd

167





100

80 '\ + ..

+ • • • ••

'\

60

~ \ Cl ~ .;; .~

~ !/)

" ~

~ ~

£l. 40 .. ~ ......

20 .. ""-


T-Cut: None



Present: 4S.0-LO Proposed: 4S.0-LO

-.""' ~ ---o

o 25 50 75 100

Age (Years)

Key + Actual Present Proposed

168




Unadjusted_N_et Salvage History --- -- -----------

.Gro~~ Salvaile COsto! g",ti[iDil__ 5-Yr 5-Yr

Year Retirements .."rnount ___ l'.cL_ AVL ___ Arn_ou nL __ ,=-cL I\v9c A B C D=C/B E F G=F/B H

199B 9B,734 0.0 37,736 38.2 1999 41,093 0.0 58,621 142.7 2000 16,229 0.0 1,252 7.7 2001 444,935 16,296 3.7 9,300 2.1 2002 3,926 0.0 2.7 26,060 663.9 22.0 2003 49,419 0.0 2.9 39,100 79.1 24.2 2004 26,943 0.0 3.0 29,379 109.0 19.4 2005 3,603 0.0 3.1 8,371 232.3 21.2 2006 27,964 0.0 0.0 196,363 702.2 267.6 2007 12,040 0.0 0.0 1,129 9.4 228.7 200B 12,163 0.0 0.0 1,863 15.3 286.7 2009 41,661 0.0 0.0 2,906 7.0 216.2 2010 198,688 0.0 0.0 101,191 50.9 103.7 Total 977,399 16,296 1.7 513,274 52.5


- ---- -- - - ------------

. Net Salvaile 5-Yr

_ .. _"m_oun_t.._£CL_Av9_· I=C·F J=I/B K

(37,736) -38.2 (58,621) -142.7

(1,252) -7.7 6,996 1.6

(26,060) -663.9 -19.3 (39,100) -79.1 -21.2 (29,379) -109.0 -16.4

(8,371) -232.3 -18.1 (196,363) -702.2 -267.6

(1,129) -9.4 -228.7 (1,863) -15.3 -286.7 (2,906) -7.0 -216.2

(101,194) -50.9 -103.7 (496,979) -50.8

169





A.djustedNetSalvageHi§t~ry __ ---c-__

"Gross Salvage 5-Yr

Year Retirements Amount Pct Avg, ABC D=C/BE

1998 98.734 0.0 1999 41,Q93 0.0 2000 16.229 0.0 2001 444.935 16,296 3.7 2002 3,926 0.0 2.7 2003 49,419 0.0 2.9 2004 26,943 0.0 3.0 2005 3,603 0.0 3.1 2006 27,964 0.0 0.0 2007 12,040 0.0 0.0 2008 12,163 0.0 0.0 2009 41,661 0.0 0.0 2010 ,198,688 0.0 0.0 Total 977,399 16,296 1.7

__GOS! ofRetirinll 5-Yr

Net Salvage

Al1loLint ___ F'ct Av9~_3~Clunt 5-Yr

PcL_£\\Ig~ F G=F/B H I=C-F J=I/B K

37,736 38.2 (37,736) -38.2 58,621 142.7 (58,621) -142.7

1,252 7.7 (1,252) -7.7 9,300 2.1 6,996 1.6

26,060 663.9 22.0 (26,060) -663.9 -19.3 39,100 79.1 24.2 (39,100) -79.1 -21.2 29,379 109.0 19.4 (29,379) -109.0 -16.4

8,371 232.3 21.2 (8,371) -232.3 -18.1 196,363 702.2 267.6 (196,363) -702.2 -267.6

1,129 9.4 228.7 (1,129) -9.4 -228.7 1,863 15.3 286.7 (1,863) -15.3 -286.7 2,906 7.0 216.2 (2,906) -7.0 -216.2

101,194 50.9 103.7 (101,194) -50.9 -103.7 513,274 52.5 (496,979) -50.8

170


Distribution Plant

Account: 376.11 - Mains - Steel

Value Ratio Current Prol2osed Plant Balance: $211,586,080 11.55% Projection Life/AYFR: 80 95 Recorded Reserve: $132,865,907 62.80% Projection Curve: R3 H4 Computed Reserve: $156,719,323 74.07% Future Net Salvage: -50.0% -75.0% Earliest Vintage: 1900 Average Age (yrs): 37.4

Description This account includes the installed cost of steel distribution system mains, generally connected between transmission lines and customer service lines.

Service Life Although the statistical analysis for this account suggests projection lives approaching or exceeding 100 years, it is the opinion of Foster Associates that the indicated service lives are likely overstated due, in part, to a prior vintaging of transfers and adjustments. It is unrealistic to anticipate probabilities of survival exceeding 200 years. Nevertheless, Foster Associates has adjusted the projection life to 95 years with forces of retirement described by an H4 retirement frequency dispersion based on a visual appearance of the best fitting survivor curve.

Net Salvage The net salvage analysis for tins account exhibits increasingly negative net salvage rates with an overall net salvage rate of -120.9 percent and a -223.9 percent rate over the 5-year rolling band ending in 2010. A -75 percent future net salvage rate is recommended for the account to gradually move the rate in the direction of these observations.

171


Schedule A NIAGARA MOHAWK POWER CORPORATION - GAS Page 1 of 4 Distribution Plant Account: 376.11 Mains - Steel


Generation Arrallgement

December31 ,2010 Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual ---------- -------- - -- --------------- ---

A B C D E -------

F G H=C-F-G I=H/E

2010 0.5 1,588,458 95.00 94.50 0.9947 1.0000 1,580,106 16,721 2009 1.5 2,457,355 95.00 93.50 0.9842 1.0000 2,418,578 25,867 2008 2.5 1,073,291 95.00 92.50 0.9737 1.0000 1,045,063 11,298 2007 3.5 879,046 95.00 91.50 0.9632 1.0000 846,682 9,253 2006 4.5 807,747 95.00 90.50 0.9527 1.0000 769,514 8,503 2005 5.5 2,545,836 95.00 89.50 0.9422 1.0000 2,398,562 26,798 2004 6.5 2,464,077 95.00 88.51 0.9316 1.0000 2,295,639 25,938 2003 7.5 2,207,247 95.00 87.51 0.9211 1.0000 2,033,156 23,234 2002 8.5 421,829 95.00 86.51 0.9106 1.0000 384,126 4,440 2001 9.5 2,161,338 95.00 85.51 0.9001 1.0000 1,945,466 22,751 2000 10.5 1,510,049 95.00 84.51 0.8896 1.0000 1,343,361 15,895 1999 11.5 3,883,433 95.00 83.52 0.8791 1.0000 3,413,992 40,878 1998 12.5 3,015,597 95.00 82.52 0.8686 1.0000 2,619,430 31,743 1996 14.5 8,124,881 95.00 80.53 0.8477 1.0000 6,887,119 85,525 1995 15.5 1,230,858 95.00 79.53 0.8372 1.0000 1,030,448 12,956 1994 16.5 3,945,285 95.00 78.54 0.8267 1.0000 3,261,598 41,529 1993 17.5 3,862,838 95.00 77.54 0.8162 1.0000 3,153,025 40,661 1992 18.5 3,657,110 95.00 76.55 0.8058 1.0000 2,946,868 38,496 1991 19.5 464,147 95.00 75.56 0.7953 1.0000 369,157 4,886 1990 20.5 1,077,261 95.00 74.57 0.7849 1.0000 845,549 11,340 1989 21.5 1,156,415 95.00 73.58 0.7745 1.0000 895,621 12,173 1988 22.5 969,279 95.00 72.59 0.7641 1.0000 740,597 10,203 1987 23.5 2,609,674 95.00 71.60 0.7537 1.0000 1,966,846 27,470 1986 24.5 1,183,856 95.00 70.61 0.7433 1.0000 879,953 12,462 1985 25.5 696,627 95.00 69.63 0.7329 1.0000 510,578 7,333 1984 26.5 1,183,119 95.00 68.65 0.7226 1.0000 854,901 12,454 1983 27.5 3,347,974 95.00 67.66 0.7123 1.0000 2,384,601 35,242 1982 28.5 4,255,422 95.00 66.69 0.7019 1.0000 2,987,085 44,794 1981 29.5 2,156,995 95.00 65.71 0.6917 1.0000 1,491,935 22,705 1980 30.5 1,162,709 95.00 64.73 0.6814 1.0000 792,291 12,239 1979 31.5 1,799,671 95.00 63.76 0.6712 1.0000 1,207,933 18,944 1978 32.5 1,206,080 95.00 62.80 0.6610 1.0000 797,222 12,696 1977 33.5 1,338,737 95.00 61.83 0.6508 1.0000 871,311 . 14,092 1976 34.5 1,929,324 95.00 60.87 0.6407 1.0000 1,236,158 20,309 1975 35.5 2,012,545 95.00 59.91 0.6306 1.0000 1,269,186 21,185 1974 36.5 3,511,724 95.00 58.96 0.6206 1.0000 2,179,367 36,966

172


NIAGARA MOHAWK POWER CORPORATION - GAS Schedule A Page 2 of 4

Distribution Plant Account: 376.11 Mains - Steel


Generation Arrangem~ent

December 31, 2010 Net Surviving Avg. Rem. Plant AIIoc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual -------------- ---- --- - - -- - --------------

A B C D E F G H=C'F'G I=H/E

1973 37.5 4,016,001 95.00 58.01 0.6106 1.0000 2,452,159 42,274 1972 38.5 4,489,193 95.00 57.06 0.6006 1.0000 2,696,417 47,255 1971 39.5 3,239,462 95.00 56.12 0.5907 1.0000 1,913,711 34,100 1970 40.5 5,052,754 95.00 55.19 0.5809 1.0000 2,935,170 53,187 1969 41.5 6,403,351 95.00 54.26 0.5711 1.0000 3,657,054 67,404 1968 42.5 5,904,509 95.00 53.33 0.5614 1.0000 3,314,725 62,153 1967 43.5 5,426,302 95.00 52.41 0.5517 1.0000 2,993,823 57,119 1966 44.5 6,436,232 95.00 51.50 0.5421 1.0000 3,489,270 67,750 1965 45.5 6,681,028 95.00 50.60 0.5326 1.0000 3,558,344 70,327 1964 46.5 8,166,440 95.00 49.70 0.5232 1.0000 4,272,288 85,963 1963 47.5 7,500,464 95.00 48.81 0.5138 1.0000 3,853,596 78,952 1962 48.5 11,191,055 95.00 47.93 0.5045 1.0000 5,645,774 117,801 1961 49.5 6,636,653 95.00 47.05 0.4953 1.0000 3,287,053 69,860 1960 50.5 7,679,946 95.00 46.19 0.4862 1.0000 3,733,809 80,842 1959 51.5 8,890,213 95.00 45.33 0.4772 1.0000 4,242,014 93,581 1958 52.5 7,145,680 95.00 44.48 0.4682 1.0000 3,345,824 75,218 1957 53.5 5,106,345 95.00 43.64 0.4594 1.0000 2,345,861 53,751 1956 54.5 5,747,331 95.00 42.81 0.4507 1.0000 2,590,182 60,498 1955 55.5 5,708,587 95.00 42.00 0.4421 1.0000 2,523,512 60,090 1954 56.5 5,363,589 95.00 41.19 0.4335 1.0000 2,325,336 56,459 1953 57.5 3,032,739 95.00 40.39 0.4251 1.0000 1,289,332 31,924 1952 58.5 764,400 95.00 39.60 0.4168 1.0000 318,637 8,046 1951 59.5 1,337,970 95.00 38.82 0.4087 1.0000 546,789 14,084 1950 60.5 195,907 95.00 38.06 0.4006 1.0000 78,482 2,062 1949 61.5 140,919 95.00 37.30 0.3927 1.0000 55,335 1,483 1948 62.5 87,564 95.00 36.56 0.3849 1.0000 33,700 922 1947 63.5 82,261 95.00 35.83 0.3772 1.0000 31,026 866 1946 64.5 34,802 95.00 35.11 0.3696 1.0000 12,863 366 1945 65.5 9,726 95.00 34.40 0.3622 1.0000 3,522 102 1944 66.5 13,777 95.00 33.71 0.3548 1.0000 4,888 145 1943 67.5 27,537 95.00 33.03 0.3477 1.0000 9,573 290 1942 68.5 34,556 95.00 32.36 0.3406 1.0000 11,770 364 1941 69.5 56,662 95.00 31.70 0.3337 1.0000 18,908 596 1940 70.5 79,676 95.00 31.06 0.3269 1.0000 26,046 839 1939 71.5 65,616 95.00 30.42 0.3202 1.0000 21,013 691 1938 72.5 37,024 95.00 29.80 0.3137 1.0000 11,615 390

173


Schedule A NIAGARA MOHAWK POWER CORPORATION - GAS Page 3 of 4 Distribution Plant Account: 376.11 Mains - Steel



. [)ecember 31,:zOJQ_ Net Surviving Avg. Rem. Plant Alioc. Computed

Vintage Age Plant life life Ratio Factor Net Plant Accrual ----- -- - ----- --

A B C 0 E F G H=C'F'G I=H/E

1937 73.5 16,179 95.00 29.20 0.3073 1.0000 4,972 170 1936 74.5 8,662 95.00 28.60 0.3011 1.0000 2,608 91 1935 75.5 18,733 95.00 28.02 0.2949 1.0000 5,525 197 1934 76.5 5,415 95.00 27.45 0.2889 1.0000 1,564 57 1933 77.5 29,146 95.00 26.89 0.2830 1.0000 8,249 307 1932 78.5 57,827 95.00 26.34 0.2773 1.0000 16,034 609 1931 79.5 222,979 95.00 25.81 0.2717 1.0000 60,573 2,347 1930 80.5 69,501 95.00 25.28 0.2662 1.0000 18,498 732 1929 81.5 71,508 95.00 24.77 0.2608 1.0000 18,647 753 1928 82.5 66,599 95.00 24.27 0.2555 1.0000 17,017 701 1927 83.5 23,515 95.00 23.79 0.2504 1.0000 5,888 248 1926 84.5 71,948 95.00 23.31 0.2454 1.0000 17,654 757 1925 85.5 123,061 95.00 22.85 0.2405 1.0000 29,593 1,295 1924 86.5 9,554 95.00 22.39 0.2357 1.0000 2,252 101 1923 87.5 21,888 95.00 21.95 0.2310 1.0000 5,057 230 1922 88.5 5,689 95.00 21.52 0.2265 1.0000 1,288 60 1921 89.5 2,117 95.00 21.09 0.2220 1.0000 470 22 1920 90.5 1,219 95.00 20.68 0.2177 1.0000 265 13 1919 91.5 1,704 95.00 20.28 0.2135 1.0000 364 18 1918 92.5 3,467 95.00 19.89 0.2094 1.0000 726 36 1917 93.5 1,736 95.00 19.51 0.2053 1.0000 357 18 1916 94.5 2,337 95.00 19.13 0.2014 1.0000 471 25 1915 95.5 2,111 95.00 18.77 0.1976 1.0000 417 22 1914 96.5 3,488 95.00 18.42 0.1939 1.0000 676 37 1913 97.5 15,290 95.00 18.07 0.1902 1.0000 2,909 161 1912 98.5 2,249 95.00 17.74 0.1867 1.0000 420 24 1911 99.5 2,022 95.00 17.41 0.1832 1.0000 371 21 1910 100.5 4,511 95.00 17.09 0.1799 1.0000 811 47 1909 101.5 2,029 95.00 16.78 0.1766 1.0000 358 21 1908 102.5 15,522 95.00 16.47 0.1734 1.0000 2,691 163 1907 103.5 3,697 95.00 16.18 0.1703 1.0000 630 39 1906 104.5 5,466 95.00 15.89 0.1672 1.0000 914 58 1905 105.5 726 95.00 15.61 0.1643 1.0000 119 8 1904 106.5 566 95.00 15.33 0.1614 1.0000 91 6 1903 107.5 1,936 95.00 15.06 0.1586 1.0000 307 20 1902 108.5 726 95.00 14.80 0.1558 1.0000 113 8

174


NIAGARA MOHAWK POWER CORPORATION - GAS Distribution Plant Account: 376.11 Mains - Steel



December 31, 2010 Net Surviving Avg. Rem. Plant

Vintage Age Plant Life Life Ratio

A B C D E F

1901 109.5 305 95.00 14.55 0.1531 1900 110.5 __ .6,546 95.00 14.30 0.1505

-- -- -

Total 37.4 $211,586,080 95.00 58.61 0.6169


G H=C'F'G

1.0000 47 1.0000 985 1.0000 $130,532,380


Accrual I=H/E

3 69

$2,227,222

175



Account: 376.11 Mains -Steel

Age Distribution --- ------------



A B C D

2010 0.5 1,588,458 2009 1.5 2,457,355 2008 2.5 1,073,291 2007 3.5 879,793 2006 4.5 807,747 2005 5.5 2,546,838 2004 6.5 2,484,926 2003 7.5 2,231,289 2002 8.5 421,829 2001 9.5 2,161,338 2000 10.5 1,510,049 1999 11.5 3,883,953 1998 12.5 3,028,887 1996 14.5 8,124,881 1995 15.5 1,234,525 1994 16.5 4,002,234 1993 17.5 3,866,025 1992 18.5 3,657,110 1991 19.5 464,147 1990 20.5 1,077,261 1989 21.5 1,163,599 1988 22.5 970,136 1987 23.5 2,722,070 1986 24.5 1,189,900 1985 25.5 698,467 1984 26.5 1,204,274 1983 27.5 3,390,472 1982 28.5 4,260,784 1981 29.5 2,200,230 1980 30.5 1,180,284 1979 31.5 1,805,330 1978 32.5 1,209,271 1977 33.5 1,353,399 1976 34.5 1,953,473 1975 35.5 2,071,249 1974 36.5 3,539,196 1973 37.5 4,052,998


-----------------



- ----------------

E F=E/(C+D) G

1,588,458 1.0000 0.5000 2,457,355 1.0000 1.5000 1,073,291 1.0000 2.5000

879,046 0.9992 3.4980 807,747 1.0000 4.5000

2,545,836 0.9996 5.4998 2,464,077 0.9916 6.4958 2,207,247 0.9892 7.4892

421,829 1.0000 8.5000 2,161,338 1.0000 9.5000 1,510,049 1.0000 10.5000 3,883,433 0.9999 11.4999 3,015,597 0.9956 12.4846 8,124,881 1.0000 14.5000 1,230,858 0.9970 15.4955 3,945,285 0.9858 16.3664 3,862,838 0.9992 17.4978 3,657,110 1.0000 18.5000

464,147 1.0000 19.5000 1,077,261 1.0000 20.5000 1,156,415 0.9938 21.4352

969,279 0.9991 22.4925 2,609,674 0.9587 23.0671 1,183,856 0.9949 24.4416

696,627 0.9974 25.4707 1,183,119 0.9824 26.3155 3,347,974 0.9875 27.4885 4,255,422 0.9987 28.4943 2,156,995 0.9803 29.3488 1,162,709 0.9851 30.3848 1,799,671 0.9969 31.4840 1,206,080 0.9974 32.4749 1,338,737 0.9892 33.4856 1,929,324 0.9876 34.4145 2,012,545 0.9717 35.1604 3,511,724 0.9922 36.4355 4,016,001 0.9909 37.4216

176



Account: 376.11 Mains - Steel

Age Distribution


Vintage 12/31/2010 Additions Balance A B C D

1972 38.5 4,526,366 1971 39.5 3,289,465 1970 40.5 5,134,752 1969 41.5 6,436,620 1968 42.5 5,946,032 1967 43.5 5,543,131 1966 44.5 6,542,941 1965 45.5 6,835,350 1964 46.5 8,274,848 1963 47.5 7,591,870 1962 48.5 11,403,078 1961 49.5 6,852,236 1960 50.5 7,839,696 1959 51.5 8,995,189 1958 52.5 7,292,329 1957 53.5 5,378,338 1956 54.5 5,890,796 1955 55.5 5,865,307 1954 56.5 5,589,608 1953 57.5 3,155,651 1952 58.5 801,891 1951 59.5 1,368,859 1950 60.5 215,069 1949 61.5 150,562 1948 62.5 114,734 1947 63.5 108,923 1946 64.5 81,993 1945 65.5 10,820 1944 66.5 14,925 1943 67.5 32,601 1942 68.5 36,736 1941 69.5 63,580 1940 70.5 84,345 1939 71.5 69,310 1938 72.5 48,835 1937 73.5 17,355 1936 74.5 10,393




E F=E/(C+D) G

4,489,193 0.9918 38.4093 3,239,462 0.9848 39.3298 5,052,754 0.9840 40.3737 6,403,351 0.9948 41.4564 5,904,509 0.9930 42.4592 5,426,302 0.9789 43.3512 6,436,232 0.9837 44.3691 6,681,028 0.9774 45.3315 8,166,440 0.9869 46.4163 7,500,464 0.9880 47.4155

11,191,055 0.9814 48.3503 6,636,653 0.9685 49.2380 7,679,946 0.9796 50.3669 8,890,213 0.9883 51.4270 7,145,680 0.9799 52.3853 5,106,345 0.9494 53.1727 5,747,331 0.9756 54.3065 5,708,587 0.9733 55.3641 5,363,589 0.9596 56.2534 3,032,739 0.9610 57.2313

764,400 0.9532 58.2925 1,337,970 0.9774 59.3605

195,907 0.9109 59.7833 140,919 0.9360 61.1251

87,564 0.7632 61.9026 82,261 0.7552 61.3547 34,802 0.4245 58.9645

9,726 0.8989 65.1276 13,777 0.9230 66.0896 27,537 0.8447 66.4143 34,556 0.9407 68.2752 56,662 0.8912 68.7754 79,676 0.9447 70.1516 65,616 0.9467 70.9859 37,024 0.7581 71.3575 16,179 0.9322 72.8091

8,662 0.8335 72.8248

177




Age Distribution ------------------


Vintage 12/31/2010 Additions Balance --------

A B C D

1935 75.5 19,496 1934 76.5 5,591 1933 77.5 38,447 1932 78.5 77,537 1931 79.5 238,194 1930 80.5 80,253 1929 81.5 78,432 1928 82.5 77,122 1927 83.5 24,439 1926 84.5 75,629 1925 85.5 175,807 1924 86.5 12,893 1923 87.5 31,042 1922 88.5 7,362 1921 89.5 2,741 1920 90.5 7,324 1919 91.5 2,224 1918 92.5 4,066 1917 93.5 2,311 1916 94.5 3,014 1915 95.5 2,513 1914 96.5 3,953 1913 97.5 17,972 1912 98.5 2,671 1911 99.5 2,894 1910 100.5 5,346 1909 101.5 2,767 1908 102.5 20,925 1907 103.5 4,087 1906 104.5 6,354 1905 105.5 753 1904 106.5 742 1903 107.5 2,865 1902 108.5 1,216 1901 109.5 604 1900 110.5 9,911

--------------


------------



--------------

E F"Ef(C+D) G

18,733 0.9609 75.2243 5,415 0.9685 76.2520

29,146 0.7581 75.4783 57,827 0.7458 75.9908

222,979 0.9361 79.2011 69,501 0.8660 79.2778 71,508 0.9117 80.6703 66,599 0.8636 81.4122 23,515 0.9622 83.1858 71,948 0.9513 84.3036

123,061 0.7000 83.6935 9,554 0.7410 85.0517

21,888 0.7051 85.7431 5,689 0.7727 86.8375 2,117 0.7723 87.4474 1,219 0.1665 88.5398 1,704 0.7662 90.0364 3,467 0.8527 91.8127 1,736 0.7515 90.7767 2,337 0.7753 92.4796 2,111 0.8400 94.5603 3,488 0.8825 95.9039

15,290 0.8508 97.2059 2,249 0.8422 97.4183 2,022 0.6989 98.1415 4,511 0.8438 100.1373 2,029 0.7333 100.3061

15,522 0.7418 101.1433 3,697 0.9047 102.8410 5,466 0.8602 103.8434

726 0.9644 105.3087 566 0.7627 105.6916

1,936 0.6755 106.7270 726 0.5975 106.5212 305 0.5056 105.7367

6,546 0.6605 108.1588 Total 37.4 $33,200,634 $181,930,459 $211,586,080 0.9835

178


Schedule C


Distribution Plant




A B C D E F=B+C-D+E

1996 196,502,099 16,130,259 212,632,357 1997 212,632,357 6,839,052 3,608 (367) 219,467,434 1998 219,467,434 499,979 218,967,455 1999 218,967,455 6,713,290 342,325 (1,536,773) 223,801,646 2000 223,801,646 2,059,283 525,925 (169,383) 225,165,621 2001 225,165,621 1,096,710 237,574 226,024,757 2002 226,024,757 732,078 106,776 (28,490,416) 198,159,642 2003 198,159,642 2,769,658 132,533 200,796,766 2004 200,796,766 2,614,819 302,012 203,109,573 2005 203,109,573 3,634,893 134,449 206,610,018 2006 206,610,018 (234,601 ) 208,269 636,539 206,803,687 2007 206,803,687 916,046 135,043 290,077 207,874,766 2008 207,874,766 351,128 109,225 208,116,670 2009 208,116,670 3,592,114 522,206 211,186,578 2010 211,186,578 593,064 285,088 91,526 211,586,080

179


Schedule C


Distribution Plant




A B C 0 E F=B+C-O+E

1996 211,538,297 8,124,881 219,663,179 1997 219,663,179 3,608 (367) 219,659,204 1998 219,659,204 3,226,867 499,979 222,386,091 1999 222,386,091 4,275,075 342,325 (1,536,773) 224,782,067 2000 224,782,067 1,510,049 525,925 (169,383) 225,596,808 2001 225,596,808 2,161,338 237,574 227,520,571 2002 227,520,571 421,829 106,776 (28,490,416) 199,345,207 2003 199,345,207 1,968,416 132,533 201,181,091 2004 201,181,091 2,678,871 302,012 203,557,949 2005 203,557,949 1,713,667 134,449 205,137,167 2006 205,137,167 672,751 208,269 636,539 206,238,188 2007 206,238,188 879,793 135,043 290,077 207,273,014 2008 207,273,014 1,088,809 109,225 208,252,598 2009 208,252,598 2,460,791 522,206 210,191,183 2010 210,191,183 1,588,458 285,088 91,526 211,586,080

180






First Degree


-----------------------~-~--- - - -- -- --- - ------- -------

A B C 0 E

1996-2000 55.2 159.3 R1.5 11.57 1997-2001 39.7 152.9 R1.5 21.77 1998-2002 40.9 151.2 R1 20.00 1999-2003 47.7 157.6 R1.5 17.48 2000-2004 49.2 154.9 R1.5 ' 15.58 2001-2005 62.1 157.1 R2' 9.83 2002-2006 44.1 157.6 R2' 13.80 2003-2007 41.6 158.1 R2' 14.35 2004-2008 41.6 160.3 R2' 13.81 2005-2009 18.2 152.9 R1.5' 23.92 2006-2010 18.8 152.6 R1.5' 24.28

T-Cut: None



Weighting: Exposures - --- -- --------------------

Second Degree ____ :r~ird Degree

Average Disper- Conf. Average Disper- Cont. Life sion Index Life sion Index

- - -- -- - ----- --- --- -------

F G H J K

118.1 S1.5 6.72 98.1 R3 4.56 111.5 S1.5 16.42 94.7 R3 13.44 114.6 S1.5 15.31 96.0 R3 12.15 111.2 H3 10.88 95.4 R3 8.30 108.5 H3 8.25 99.0 R3 6.89 115.4 S2' 4.32 109.1 H4' 4.18 109.4 S2 ' 4.86 98.5 H4 ' 3.72 109.1 S2 ' 4.67 98.8 H4 ' 3.10 114.1 S2 • 5.45 103.5 H4 • 3.30 103.7 H4 • 11.78 95.7 H4 7.53 102.7 H4 • 11.50 94.8 H4 7.12

181






... £ir:;t~gr~e_ . Observation Average Disper- Conf.

Band Censoring Life sian Index A B C D E

1996-2010 34.4 156.2 R1.5 • 16.19 1998-2010 31.6 153.5 R1.5 • 17.32 2000-2010 30.8 155.1 R1.5 • 18.00 2002-2010 30.5 154.8 R1.5' 18.24 2004-2010 24.8 152.5 R1.5' 21.08 2006-2010 18.8 152.6 R1.5· 24.28 2008-2010 15.1 148.3 R1.5 • 25.86 2010-2010 60.8 162.1 R2 7.84

T-Cut: None




Second Degree Third Degree ------------ -------- ------------

Average Disper- Conf. Average Disper- Conf. Life sian Index Life sian Index

- - - --- -------

F G H J K

110.7 82 6.47 97.9 H4 2.25 109.6 82 7.84 96.5 R3 3.03 107.8 82' 7.25 97.5 H4 3.08 107.5 S2 • 7.22 98.5 H4 3.46 106.4 S2 • 10.16 98.3 H4 6.62 102.7 H4 • 11.50 94.8 H4 7.12 102.6 82' 14.42 95.8 H4 11.01 111.4 82 3.57 103.3 R3 5.92

182





Progressing Band Life Analysis -- - -- - - --------- ---- -- -- - ----


A B

1996-1997 97.9 1996-1999 62.2 1996-2001 46.3 1996-2003 49.8 1996-2005 57.0 1996-2007 45.6 1996-2009 33.5 1996-2010 34.4

___ Fir:,tDe\lr_~

Average Disper- Conf. Life sian Index C D E

197.7 56' 1.00 160.8 R2' 9.83 157.5 R1.5 18.09 160.5 R2· 15.52 158.6 R1.5· 11.34 159.4 R2' 12.34 155.6 R1.5' 16.19 156.2 R1.5' 16.19

T-Cut: None



Weighting: Exposures ---- - - --- -- ----- ---- -------------------

Second Degree Third Degree - -----------------


--- -- --------- ------

F G H J K

184.9 R4' 0.46 167.2 R3 ' 0.53 127.0 51.5 6.35 103.1 R3 ' 4.19 114.2 H3 12.63 97.8 R3 10.18 116.2 H3 9.42 98.4 R3 6.63 117.7 H3 5.50 103.4 R3 4.19 114.7 H3 4.54 99.5 H4 2.88 109.8 52 6.43 97.2 H4 2.19 110.7 52 6.47 97.9 H4 2.25

183





Graphics Analysis

100 -- -...... _--

~ , , ,

T-Cut: None




1st: 156.2-Rl.5 2nd: 110.7-S2 3rd: 97.9-H4

80 \ ~ " , , , , , , , , , , ,

60 Cl

" .;: '2: " en ~

, , , , , ,

" , ,

w ~

, w , "- 40 , , ,

\ , , ,

\ \ 20

I~ I~ -----o

o 25 50 75 100 125 150 175 Age (Years)

Key • Actual -----lst ---2nd ---3rd

184






1.000

O.BOO

0.600

2 .. c:: "E .. N .. :c

0.400

0.200

+

T-Cut: None

Placement Band: 190Q-2010 Observation Band: 1996-2010



1st: 156.2·R1.5 2nd: 110.7-S2 3rd: 97.9-H4

/ /

V /

-----------.... + .+; .~

0.000 o 25

Key

50 75

• Actual

100

Age (Years)

1st

- - - -125 150 175

2nd 3rd

185



Account: 376011 Mains - Steel


T~Cut: None



Present and Proposed Projection Life Curves Present: 80.0-R3 Proposed: 9S.0-H4

100

80

~ ~

~,

" " ~ , , .

""\. ' .. \ ~ ,

\ , \

\ \

\ \

60 '" " oS; 0:: ~

VJ ~

" m f:

\\ \ .. \

" .. 1"\ \

\ \

m !l. 40

\ + \ \ \ \ \ \ \ \ \ \

\ \ \ , \ ,

~ ,

\ , , " . ,,~

20

o o 25 50 75 100 125 150

Age (Years)

Key • Actual - - - - - Present ---Proposed

186




!1l1acji ustecl_/lj~tSa Ivage History________ _ __ ___________ _


Gross Salvage ____ CQs(of Retirin!1 Net SaIYa!1~ ___ _

Year A

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total

Retirements B

499.979 342,325 525.925 237.574 106.776 132,533 302.012 134,449 208.269 135.043 109.225 522,206 285.088

3.541,406

5-Yr 5-Yr 5-Yr Amount Pct. Avg. Amount_.F'cL_Avg-____ AmountF'ct,Avg,

C D=C/B E F G=F/B H

78.936 229,429

64.764 6.322

27

379,479

0.0 0.0

15.0 96.6 60.7

4.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0

10.7

21.8 28.2 29.1 32.9

8.0 0.7 0.0 0.0 0.0

34,688 183,163 388,179 426,270 168,640 307,926 128,591 201,199 384,175 358,815 475,910 815,069 786,873

4,659,498

6.9 53.5 73.8

179.4 157.9 232.3

42.6 149.6 184.5 265.7 435.7 156.1 276.0 131.6

70.1 109.6 108.8 135.0 134.7 151.3 174.2 201.5 223.9

I=C-F J=I/B K

(34,688) -6.9 (183,163) -53.5 (309,243) -58.8 (196,841) -82.9 (103,877) -97.3 -48.3 (301,603) -227.6 -81.4 (128,564) -42.6 -79.7 (201,199) -149.6 -102.1 (384,175) -184.5 -126.6 (358,815) -265.7 -150.6 (475,910) -435.7 -174.2 (815,069) -156.1 -201.5 (786,873) ,276,0 -223.9

(4,280,019) -120.9

187


NIAGARA MOHAWK POWER CORPORATION- GAS Distribution Plant


Adjusted Net Salvage History _________________ _


Gross Salval1e CostofRetirinl1 Net:3aJv'll1~ ___ _ 5-Yr 5-Yr 5-Yr

Year Retirements ___ Anl2..unt __ pct_)I,\lg~ ---,-A-"m .. o,,"u __ n .. t __ ~P"--c ... t,-. _____ Av9c ____ i'mount ___ Pct. _)1,\/9,_ ABC D=C/B E F G=F/B H [=C-F J=IIB K

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total

499.979 342.325 525,925 237,574 106,776 132,533 302,012 134,449 208,269 135,043 109,225 522,206 285,088

3,541,406

78,936 229,429

64,764 6,322

27

379,479

0.0 34,688 0.0 183,163

15.0 388,179 96.6 426,270 60.7 21.8 168,640

4.8 28.2 307,926 0.0 29.1 128,591 0.0 32.9 201,199 0.0 8.0 384,175 0.0 0.7 358,815 0.0 0.0 475,910 0.0 0.0 815,069 0.0 0.0 7(16,873

10.7 4,659,498

6.9 (34,688) -6.9 53.5 (183,163) -53.5 73.8 (309,243) -58.8

179,4 (196,841 ) -82.9 157.9 70.1 (103,877) -97.3 -48.3 232.3 109.6 (301,603) -227.6 -81.4

42.6 108.8 (128,564) -42.6 -79.7 149.6 135.0 (201,199) -149.6 -102.1 184.5 134.7 (384,175) -184.5 -126.6 265.7 151.3 (358,815) -265.7 -150.6 435.7 174.2 (475,910) -435.7 -174.2 156.1 201.5 (815,069) -156.1 -201.5 276.0 223.9 (786,873) -276.0 -223.9 131.6 (4,280,019) -120.9

188


Distribution Plant

Account: 376.12 - Mains - Plastic

Value Ratio Current ProI)osed Plant Balance: $619,653,478 33.81% Projection Life/ AYFR 65 65 Recorded Reserve: $145,718,663 23.52% Projection Curve: R4 H4 Computed Reserve: $192,698,027 31.10% Future Net Salvage: -50.0% -50.0% Earliest Vintage: 1970 Average Age (yrs): 13.6

Description This account includes the installed cost of plastic distribution system mains extending from the transmission line to the customer service line.

Service Life Although highly censored, the statistical service life analysis for this account appears to be tracking the currently approved 65 year projection life-curve. The analysis, however, suggests that an H4 projection curve would better describe forces of retirement acting upon plastic mains.

Net Salvage No change is recommended for the future net salvage rate of this account. Average net salvage rates are, however, correctly computed for whole-life depreciation rates.

189



Distribution Plant Account: 376.12 Mains - Plastic



DecembEOr~1, 2010_ Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual ---------------------- - - - --------- -------------- - - - ------------- - ---------------------------------------- ----- -- - - -----

A B C D E F G H=C'PG I=H/E

2010 0.5 22.075.605 65.00 64.50 0.9923 1.0000 21.905.951 339.625 2009 1.5 29.560,754 65.00 63.50 0.9769 1.0000 28,878,953 454,781 2008 2.5 30,758,827 65.00 62.50 0.9616 1.0000 29,576,639 473,213 2007 3.5 21,552,046 65.00 61.50 0.9462 1.0000 20,392,459 331,570 2006 4.5 24,364,431 65.00 60.50 0.9308 1.0000 22,679,249 374,837 2005 5.5 25,533,498 65.00 59.51 0.9155 1.0000 23,375,125 392,823 2004 6.5 26,119,145 65.00 58.51 0.9001 1.0000 23,510,401 401,833 2003 7.5 26,999,099 65.00 57.51 0.8848 1.0000 23,887,967 415.371 2002 8.5 16,487,566 65.00 56.51 0.8694 1.0000 14,334,857 253,655 2001 9.5 19,006,481 65.00 55.52 0.8541 1.0000 16,233,590 292,407 2000 10.5 26,862,274 65.00 54.52 0.8388 1.0000 22,531,806 413,266 1999 11.5 38.614,373 65.00 53.53 0.8235 1.0000 31,798,468 594,067 1998 12.5 28.838,085 65.00 52.53 0.8082 1.0000 23,307,027 443,663 1996 14.5 15,554,213 65.00 50.55 0.7777 1.0000 12,096,309 239,296 1995 15.5 20,336,268 65.00 49.56 0.7625 1.0000 15,505,784 312,866 1994 16.5 26,604,098 65.00 48.57 0.7473 1.0000 19,880,871 409,294 1993 17.5 25,043,552 65.00 47.59 0.7321 1.0000 18,335,179 385,285 1992 18.5 29,244,743 65.00 46.61 0.7170 1.0000 20,969,069 449,919 1991 19.5 9,201,731 65.00 45.63 0.7019 1.0000 6,459,140 141,565 1990 20.5 15,233,410 65.00 44.65 0.6869 1.0000 10,464,428 234,360 1989 21.5 20,079,941 65.00 43.68 0.6720 1.0000 13,493,351 308,922 1988 22.5 16,955,631 65.00 42.71 0.6571 1.0000 11,141,440 260,856 1987 23.5 15,730,011 65.00 41.75 0.6423 1.0000 10,102,995 242,000 1986 24.5 12,337,582 65.00 40.79 0.6275 1.0000 7,742,387 189,809 1985 25.5 11,238,171 65.00 39.84 0.6129 1.0000 6,887,876 172,895 1984 26.5 8,048,585 65.00 38.89 0.5984 1.0000 4,815,921 123,824 1983 27.5 9,944,822 65.00 37.96 0.5839 1.0000 5,807,075 152,997 1982 28.5 10,136,844 65.00 37.02 0.5696 1.0000 5,774,083 155,951 1981 29.5 7,932,089 65.00 36.10 0.5554 1.0000 4,405,780 122,032 1980 30.5 6,831,395 65.00 35.19 0.5414 1.0000 3,698,473 105,098 1979 31.5 4,808,772 65.00 34.29 0.5275 1.0000 2,536,698 73,981 1978 32.5 3,101,770 65.00 33.40 0.5138 1.0000 1,593,638 47,720 1977 33.5 2,393,174 65.00 32.52 0.5002 1.0000 1,197,169 36,818 1976 34.5 2,520,286 65.00 31.65 0.4869 1.0000 1,227,063 38,774 1975 35.5 1,604,057 65.00 30.79 0.4737 1.0000 759,872 24,678 1974 36.5 2,739,842 65.00 29.95 0.4608 1.0000 1,262,388 42.151

190


NIAGARA MOHAWK POWER CORPORATION - GAS Distribution Plant Account: 376.12 Mains - Plastic


GenerationArrangernent

December :3L2010 Surviving

Vintage Age Plant -----------------

A B C

1973 37.5 2,139,793 1972 38.5 1,890,362 1971 39.5 861,901 1970 40.5 ____ ~8,249 Total 13.6 $619,653,478

Net Avg. Rem. Plant Life Life Ratio

- - - ----- ----------------------------

0 E F

65.00 29.12 0.4480 65.00 28.31 0.4355 65.00 27.51 0.4232 65.00 26.73 0.4112 65.00 51.49 0.7922

Alioc. Factor

G

1.0000 1.0000 1.0000 1.0000 1.0000

Computed Net Plant


Accrual - -----------------

H=C"F"G I=H/E

958,660 32,920 823,246 29,082 364,769 13,260 151,415 5,665

$490,867,575 $9,533,130

191



Account: 376.12 Mains - Plastic

Age Distribution


Vintage 12/31/2010 Additions Balance - ------------ ----- ------ - -- - - ----

A B C D

2010 0.5 22,077,784 2009 1.5 29.625,581 2008 2.5 30,811,666 2007 3.5 21,621,959 2006 4.5 24,396,674 2005 5.5 25,759,143 2004 6.5 26,265.199 2003 7.5 27,163,618 2002 8.5 16.529,569 2001 9.5 19,046,498 2000 10.5 26,907,032 1999 11.5 38,689,739 1998 12.5 28,966,488 1996 14.5 15,582,458 1995 15.5 20,471,346 1994 16.5 26,767,629 1993 17.5 25.113.114 1992 18.5 29.362,726 1991 19.5 9,225,597 1990 20.5 15,274,592 1989 21.5 20,172,048 1988 22.5 17,195,439 1987 23.5 15,840,536 1986 24.5 12,482,790 1985 25.5 11,372,637 1984 26.5 8,063,394 1983 27.5 10,025,578 1982 28.5 10,334,317 1981 29.5 8,041,127 1980 30.5 6,885,637 1979 31.5 4,890,316 1978 32.5 3,148,207 1977 33.5 2,451,216 1976 34.5 2,541,100 1975 35.5 1,626,211 1974 36.5 2,779,951 1973 37.5 2,201,281




.. _--,-------

E F-Ef(C+D) G

22,075,605 0.9999 0.5000 29,560,754 0.9978 1.4988 30.758,827 0.9983 2.4978 21,552,046 0.9968 3.4941 24,364,431 0.9987 4.4979 25,533,498 0.9912 5.4912 26,119,145 0.9944 6.4856 26,999,099 0.9939 7.4836 16,487,566 0.9975 8.4944 19,006,481 0.9979 9.4847 26,862.274 0.9983 10.4957 38,614,373 0.9981 11.4892 28,838,085 0.9956 12.4870 15.554,213 0.9982 14.4915 20.336,268 0.9934 15.4710 26,604,098 0.9939 16.4629 25,043,552 0.9972 17.4855 29,244.743 0.9960 18.4737

9,201,731 0.9974 19.4859 15,233,410 0.9973 20.4775 20,079,941 0.9954 21.4657 16,955,631 0.9861 22.4072 15,730,011 0.9930 23.4600 12,337,582 0.9884 24.4577 11,238,171 0.9882 25.4293

8,048,585 0.9982 26.4875 9,944,822 0.9919 27.4230

10,136,844 0.9809 28.4351 7,932,089 0.9864 29.4357 6,831,395 0.9921 30.4481 4,808,772 0.9833 31.3652 3,101,770 0.9852 32.3949 2,393,174 0.9763 33.3625 2,520,286 0.9918 34.4661 1,604,057 0.9864 35.4158 2,739,842 0.9856 36.4604 2,139,793 0.9721 37.4050

192




Age Distribution ------- ------- ----- ----



A B C D

1972 38.5 1.962.898 1971 39.5 926.776 1970 40.5 424,130

- ------




-------

E F=E/(C+D) G

1.890.362 0.9630 38.3499 861.901 0.9300 39.2823 368,2<19 0.8682 39.8395

Total 13.6 $353,443,407 $269,580,594 $619,653,478 0.9946

193


Schedule C


Distribution Plant




-------

A B C D E F-B+C-D+E

1996 264,660,306 15,255,152 (84,121) 279,831,337 1997 279,831,337 4,797,394 26,286 284,602,444 1998 284,602,444 1,309,316 73,122 (775,004) 285,063,634 1999 285,063,634 39,584,856 252,852 324,395,639 2000 324,395,639 44,761,583 198,972 368,958,249 2001 368,958,249 25,763,701 125,071 394,596,879 2002 394,596,879 16,738,938 101,752 (62,629) 411,171,436 2003 411,171,436 19,208,179 50,781 (158,861) 430,169,973 2004 430,169,973 26,154,222 208,555 (77,723) 456,037,917 2005 456,037,917 27,870,302 61,154 483,847,064 2006 483,847,064 30,107,615 210,209 (630,983) 513,113,487 2007 513,113,487 23,104,295 556,348 (2,653) 535,658,781 2008 535,658,781 29,502,746 366,525 564,795,002 2009 564,795,002 30,765,175 500,034 595,060,143 2010 595,060,143 25,477,818 638,861 (245,622) 619,653,478

194


Schedule C


Distribution Plant




- ------ ---- ---------- - -- - -- ------- --- -----

A B C 0 E F=8+C·O+E

1996 269,594,662 16,441,583 (84,121) 285,952,124 1997 285,952,124 26,286 285,925,837 1998 285,925,837 28,966,488 73,122 (775,004) 314,044,200 1999 314,044,200 38,689,739 252,852 352,481,087 2000 352,481,087 26,907,032 198,972 379,189,147 2001 379,189,147 19,046,498 125,071 398,110,574 2002 398,110,574 16,585,071 101,752 (62,629) 414,531,263 2003 414,531,263 27,371,766 50,781 (158,861) 441,693,387 2004 441,693,387 26,269,026 208,555 (77,723) 467,676,134 2005 467,676,134 26,559,555 61,154 494,174,535 2006 494,174,535 24,534,323 210,209 (630,983) 517,867,665 2007 517,867,665 21,610,676 556,348 (2,653) 538,919,340 2008 538,919,340 30,785,251 366,525 569,338,066 2009 569,338,066 29,622,145 500,034 598,460,177 2010 598,460,177 22,077,784 638,861 (245,622) 619,653,478

195


NIAGARA MOHAWK POWER CORPORATION - GAS Schedule D Page 1 of 1

Distribution Plant

Account: 376.12 Mains - Plastic T-Cut: None



Rolling Band Life Analysis Weighting: Exposures - - -- - -- - -- --- - - - - - - - --- --------- - ---------------------------------------------

First Degree Second Degree Th i rd Degree -- - -- -- --- -----------


- - ------------- - - -- -- --------

A B C 0 E F G H J K

1996-2000 97.8 159.6 R1.5 0.11 190.7 R5 ' 0.12 195.3 SO' 0.12 1997-2001 97.4 158.3 R1.5 0.12 191.1 R5 ' 0.13 192.2 SO' 0.13 1998-2002 98.2 164.4 R2 0.07 193.0 SO' 0.05 196.0 SO' 0.06 1999-2003 98.1 169.8 R2 0.09 195.4 SO' 0.06 196.3 SO' 0.07 2000-2004 98.0 177.8 R3 0.19 158.9 R2 0.18 181.3 R3 ' 0.18 2001-2005 92.8 167.2 RZO 0.97 95.9 H3 0.84 63.4 S3 ' 0.73 2002-2006 92.2 158.9 RZO 1.06 85.8 H3 ' 0.84 59.8 H5 ' 0.66 2003-2007 93.8 145.2 R1' 0.65 80.5 H3 0.33 64.7 H4 0.25 2004-2008 94.6 148.2 R1' 0.43 87.9 H3 0.19 69.7 H4 0.14 2005-2009 91.4 143.5 R1' 0.92 82.1 H3 0.61 62.9 H4 0.46 2006-2010 92.5 156.7 R1.5 0.74 82.0 H3 0.34 65.7 H4 0.23

196






___ ~ir:stJJ~Jlree Observation Average Disper- Conf.

Band Censoring Life sian Index - --------------

A B C D E

1996-2010 92.8 155.7 R1.5 0.89 1998-2010 92.8 155.0 R1.5 0.87 2000-2010 92.8 155.1 R1.5 0.88 2002-2010 92.8 155.2 R1.5 0.88 2004-2010 92.5 151.8 R1.5 0.84 2006-2010 92.5 156.7 R1.5 0.74 2008-2010 93.1 174.2 R2.5 0.71 2010-2010 93.8 190.3 R5" 0.63

T-Cut: None





Average Disper- Conf. Average Disper- Conf. Life sian Index Life sion Index

-- --------------------

F G H J K

90.1 H3 0.50 64.6 H4 0.24 89.8 H3 0.49 64.4 H4 0.23 88.3 H3 0.48 64.3 H4 0.23 85.9 H3 0.45 64.1 H4 0.22 84.1 H3 0.41 63.3 H4 0.20 82.0 H3 0.34 65.7 H4 0.23 82.7 H3 0.37 63.0 H4 0.25 79.3 82 0.29 63.9 H4 0.29

197





Progressing Band Life Analysis -- - -- -- - - - ---- --- -------

First Degree

ObseNation Average Disper- Conf. Band Censoring Life sion Index

A B C 0 E

1996-1997 99.9 198.8 SO' 0.02 1996-1999 98.7 166.6 R2 0.08 1996-2001 97.6 160.9 R2 0.12 1996-2003 98.4 172.5 R2.5 0.07 1996-2005 92.6 165.8 R2' 0.96 1996-2007 93.9 152.7 R1.5' 0.70 1996-2009 91.8 153.2 R1.5' 1.05 1996-2010 92.8 155.7 R1.5 0.89

T-Cut: None






- - -------------------------------------

F G H J K

174.4 R3 0.01 103.0 S3 0.01 190.1 R5' 0.08 192.8 S6 ' 0.08 189.1 R5' 0.13 162.1 R2.5 0.13 193.8 S6 ' 0.06 196.7 SO' 0.07 108.0 S1.5 0.87 65.7 S3' 0.76 89.0 H3 0.42 65.6 H4 0.29 90.4 H3 0.74 64.5 H4 0.53 90.1 H3 0.50 64.6 H4 0.24

198





Graphics Analysis

100 -

80

--, :\-- -, -,

50 1\ C> C .;; .~

~

'" -C <l> :: m Il. 40

\ 20 \

o o 25 50 75

Key • Actual

,

T-Cut: None




1st: 155.7·R1.5 2nd: 90.1·H3 3rd: 54.5-H4

, -, , , , , , , , ,

, , , , , , , , ,

, , ,

1\ ,

\ \ ,

\ I~

~

100 125 150 175 Age (Years)

1st 2nd 3rd

199






0.250

0.200

0.150

S ro 0:

"E ro N ro J:

0.100

0.050

I

/

/

T~Cut: None




1st: 155.7-R1.5 2nd: 90.1·H3 3rd: 64.6·H4

1/ V

/ / V

/ ~ ~

0.000

o 25

Key

- --50 75

• Actual

-100

Age (Years)

--- -1st

- - ---- --- --

125 150 175

2nd 3rd

200





100

'\ \ \

\ 80

60 C> ~ .;; .~

~ U> -~ ~

~ ~ a.


T-Cut: None



Present: 65.0-R4 Proposed: 65.0-H4

40

\ \

20

\.~

o o 25 50 75 100

Age (Years)

Key • Actual -----Present ---Proposed

201




U_n<icli lIs!EldNet.§alv<ige_l-list()l)'.

Year A

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total

Retirements B

73,122 252,852 198,972 125,071 101,752

50,781 208,555

61,154 210,209 556,348 366,525 500,034

.. 638,861 3,344,237

_---"G .... ro""ss Salv"g,,_

Amount C

58,358 7,140 5,266

62,107

5-Yr Pet AV9·

D=CIB

79.8 2.8 2.6

49.7 0.0

121,368 239.0 9,930 4.8

264,169

0.0 0.0 0.0 0.0 0.0 0.0 7.9

E

17.7 26.9 29.0 35.3 20.8 12.1

0.7 0.0 0.0

___ ..C.9sJQfR.eti ring 5-Yr

Amount ... £et.f'lv9 .. F G=FIB H

708 1.0 128,942 51.0 167,660 84.3 23,226 18.6

141,780 139.3 61.5 134,652 265.2 81.7 109,770 52.6 84.2 43,093 70.5 82.7

365,703 174.0 125.7 515,860 92.7 107.5 255,228 69.6 91.9 394,580 78.9 92.9 475,885 74.5 88.3

2,757,087 82.4


Net SalvamL__ 5-Yr

Amount Pet .Avg~ I=C-F J=IIB

57,650 78.8 (121,802) -48.2 (162,394) -81.6

38,881 31.1

K

(141,780) -139.3 -43.8 (13,284) -26.2 -54.9 (99,840) -47.9 -55.2 (43,093) -70.5 -47.3

(365,703) -174.0 -104.9 (515,860) -92.7 -95.5 (255,228) -69.6 -91.2 (394,580) -78.9 -92.9 (475,885) -74.5 -88.3

(2,492,918) -74.5

202


Schedule F


Distribution Plant


~clju_sted Net Salvage History _____ ------------

__ (3r()~s 9<lhi<lQlL __ __CQ§_tQLS"UrLrlQ ____ N et:3<lIY<lQe 5-Yr 5-Yr 5-Yr

Year Retirements Amount Pet. Avg. Amount Pet. Avg. Amount ____ l'c:L_6.vg~ - -- - ---------------------- ------- -- - ----------

A B C D=C/B E F G=F/B H I=C-F J=I/B K

1998 73,122 58,358 79.8 708 1.0 57,650 78.8 1999 252,852 7,140 2.8 128,942 51.0 (121,802) -48.2 2000 198,972 5,266 2.6 167,660 84.3 (162,394) -81.6 2001 125,071 62,107 49.7 23,226 18.6 38,881 31.1 2002 101,752 0.0 17.7 141,780 139.3 61.5 (141,780) -139.3 -43.8 2003 50,781 121,368 239.0 26.9 134,652 265.2 81.7 (13,284) -26.2 -54.9 2004 208,555 9,930 4.8 29.0 109,770 52.6 84.2 (99,840) -47.9 -55.2 2005 61,154 0.0 35.3 43,093 70.5 82.7 (43,D93) -70.5 -47.3 2006 210,209 0.0 20.8 365,703 174.0 125.7 (365,703) -174.0 -104.9 2007 556,348 0.0 12.1 515,860 92.7 107.5 (515,860) -92.7 -95.5 2008 366,525 0.0 0.7 255,228 69.6 91.9 (255,228) -69.6 -91.2 2009 500,034 0.0 0.0 394,580 78.9 92.9 (394,580) -78.9 -92.9 2010 638,861 0.0 0.0 475,885 74.5 88.3 (475,885) -74.5 -88.3 Total 3,344,237 264,169 7.9 2,757,087 82.4 (2,492,918) -74.5

203


Distribution Plant

Account: 376.13 - Mains - Cast Iron

Value Ratio Current Prol2osed Plant Balance: $8,843,963 0.48% Projection Life/AYFR: 80 80 Recorded Reserve: $5,938,388 67.15% Projection Curve: SO.5 SO.5 Computed Reserve: $6,967,812 78.79% Future Net Salvage: -80.0% -100.0% Earliest Vintage: 1802 Average Age (yrs): 72.9

Description This account includes the installed cost of cast iron distribution system mains extending from the transmission line to the customer service line.

Service Life No changes are recommended in the service life parameters of this account. The current projection life was advocated by Staff in Case 08-G-0609 based upon indeterminate service life indications and irregular observed life tables. Service life indications are no more predictive today than in the 2008 study. Given the continuing indeterminacy of service life indications derived from a statistical analysis, the currently approved service life is recommended for this account.

Net Salvage The net salvage analysis for this account exhibits increasingly negative net salvage rates with an overall net salvage rate of -204.9 percent and a -261.1 percent rate for the 5-year rolling band ending in 2010. A -100 percent future net salvage rate is recommended to move the rate in the direction ofthese observations.

204


Schedule A NIAGARA MOHAWK POWER CORPORATION - GAS Page 1 of 4 Distribution Plant Account: 376.13 Mains - Cast Iron

Dispersion: 80 - SO.S Procedure: Broad Group


December 31,2010 Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual ------------

A B C D E F G H=C*F*G I=H/E

1975 35.5 2,184 80.00 51.74 0.6467 1.0000 1,413 27 1974 36.5 2,979 80.00 51.10 0.6388 1.0000 1,903 37 1969 41.5 54S SO.OO 4S.02 0.6003 1.0000 329 7 1968 42.5 77 SO.OO 47.43 0.592S 1.0000 46 1967 43.5 183 SO.OO 46.84 0.5855 1.0000 107 2 1966 44.5 96 SO.OO 46.26 0.5782 1.0000 55 1 1964 46.5 2,994 SO.OO 45.11 0.5638 1.0000 1,688 37 1962 48.5 15,345 SO.OO 43.98 0.549S 1.0000 8,436 192 1961 49.5 79 SO.OO 43.43 0.5429 1.0000 43 1960 50.5 3,039 80.00 42.SS 0.5360 1.0000 1.629 3S 1959 51.5 46,119 SO.OO 42.34 0.5292 1.0000 24,406 576 1958 52.5 194,216 80.00 41.80 0.5225 1.0000 101,475 2,42S 1957 53.5 387.330 SO.OO 41.27 0.5158 1.0000 199,796 4,842 1956 54.5 422,433 SO.OO 40.74 0.5092 1.0000 215,115 5,2S0 1955 55.5 629.971 SO.OO 40.22 0.5027 1.0000 316,690 7,875 1954 56.5 409,978 SO.OO 39.70 0.4962 1.0000 203,446 5,125 1953 57.5 1,324,61S SO.OO 39.19 0.4898 1.0000 64S,S32 16,55S 1952 58.5 637,572 80.00 3S.68 0.4835 1.0000 308.251 7.970 1951 59.5 171,737 SO.OO 3S.17 0.4772 1.0000 S1,951 2.147 1950 60.5 91,117 SO.OO 37.68 0.4710 1.0000 42,912 1,139 1949 61.5 53,155 SO.OO 37.18 0.4648 1.0000 24,705 664 1948 62.5 207.084 SO.OO 36.69 0.4586 1.0000 94,979 2,589 1947 63.5 53.073 SO.OO 36.21 0.4526 1.0000 24,020 663 1946 64.5 11,337 SO.OO 35.73 0.4466 1.0000 5.063 142 1945 65.5 10,981 SO.OO 35.25 0.4406 1.0000 4.838 137 1944 66.5 2,48S 80.00 34.77 0.4347 1.0000 1,082 31 1943 67.5 2,969 SO.OO 34.31 0.428S 1.0000 1,273 37 1942 68.5 5,409 SO.OO 33.84 0.4230 1.0000 2,288 68 1941 69.5 7.705 SO.OO 33.38 0.4172 1.0000 3,215 96 1940 70.5 41,470 SO.OO 32.92 0.4115 1.0000 17,065 518 1939 71.5 13,S34 SO.OO 32.47 0.405S 1.0000 5,614 173 1938 72.5 71,45S 80.00 32.02 0.4002 1.0000 2S,598 893 1937 73.5 59,474 SO.OO 31.57 0.3946 1.0000 23,470 743 1936 74.5 52,041 SO.OO 31.13 0.3891 1.0000 20,248 651 1935 75.5 41,960 SO.OO 30.69 0.3836 1.0000 16,095 524 1934 76.5 55,790 SO.OO 30.25 0.3781 1.0000 21,096 697

205


Schedule A NIAGARA MOHAWK POWER CORPORATION - GAS Page 2 of4 Distribution Plant Account: 376.13 Mains - Cast Iron


GenerationArrangement

--.--llil_~Elrn_ber_31,-20 1 D Net Surviving Avg. Rem. Plant AIIoc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual - - - - - - -- --------------- - -- - ----- - ----- --- -- --------- - ---- ------------

A B C D E F G H=C"F"G I=H/E

1933 77.5 48,231 80.00 29.82 0.3727 1.0000 17,976 603 1932 78.5 45,109 80.00 29.39 0.3673 1.0000 16,570 564 1931 79.5 106,402 80.00 28.96 0.3620 1.0000 38,517 1,330 1930 80.5 145,894 80.00 28.54 0.3567 1.0000 52,041 1,824 1929 81.5 160,570 80.00 28.12 0.3514 1.0000 56,431 2,007 1928 82.5 301,489 80.00 27.70 0.3462 1.0000 104,381 3,769 1927 83.5 234,805 80.00 27.28 0.3410 1.0000 80,D75 2,935 1926 84.5 253,559 80.00 26.87 0.3359 1.0000 85,165 3,169 1925 85.5 320,989 80.00 26.46 0.3308 1.0000 106,170 4,012 1924 86.5 174,987 80.00 26.05 0.3257 1.0000 56,988 2,187 1923 87.5 231,529 80.00 25.65 0.3206 1.0000 74,234 2,894 1922 88.5 119,698 80.00 25.25 0.3156 1.0000 37,777 1,496 1921 89.5 55,101 80.00 24.85 0.3106 1.0000 17,116 689 1920 90.5 61,030 80.00 24.45 0.3057 1.0000 18,655 763 1919 91.5 43,902 80.00 24.06 0.3007 1.0000 13,203 549 1918 92.5 11,191 80.00 23.67 0.2959 1.0000 3,311 140 1917 93.5 18,457 80.00 23.28 0.2910 1.0000 5,371 231 1916 94.5 60,442 80.00 22.89 0.2861 1.0000 17,296 756 1915 95.5 76,556 80.00 22.51 0.2813 1.0000 21,538 957 1914 96.5 58,735 80.00 22.12 0.2766 1.0000 16,244 734 1913 97.5 105,799 80.00 21.75 0.2718 1.0000 28,758 1,322 1912 98.5 123,015 80.00 21.37 0.2671 1.0000 32,855 1,538 1911 99.5 106,568 80.00 20.99 0.2624 1.0000 27,961 1,332 1910 100.5 101,888 80.00 20.62 0.2577 1.0000 26,257 1,274 1909 101.5 72,984 80.00 20.24 0.2531 1.0000 18,469 912 1908 102.5 70,429 80.00 19.87 0.2484 1.0000 17,497 880 1907 103.5 68,949 80.00 19.51 0.2438 1.0000 16,811 862 1906 104.5 55,721 80.00 19.14 0.2392 1.0000 13,331 697 1905 105.5 68,549 80.00 18.77 0.2347 1.0000 16,087 857 1904 106.5 88,917 80.00 18.41 0.2301 1.0000 20,463 1,111 1903 107.5 71,694 80.00 18.05 0.2256 1.0000 16,176 896 1902 108.5 51,759 80.00 17.69 0.2211 1.0000 11,445 647 1901 109.5 26,983 80.00 17.33 0.2166 1.0000 5,846 337 1900 110.5 32,854 80.00 16.97 0.2122 1.0000 6,971 411 1899 111.5 22,684 80.00 16.62 0.2077 1.0000 4,713 284 1898 112.5 12,923 80.00 16.27 0.2033 1.0000 2,628 162

206


NIAGARA MOHAWK POWER CORPORATION - GAS Distribution Plant Account: 376.13 Mains - Cast Iron


GenE)r<iti()nArrangement

December 31, 2010 ~ Net Surviving Avg. Rem. Plant Alloc.

Vintage Age Plant Life Life Ratio Factor --- -- --------------------

A B

1897 1896 1895 1894 1893 1892 1891 1890 1889 1888 1887 1886 1885 1884 1883 1881 1880 1879 1878 1877 1876 1875 1874 1873 1872 1871 1870 1869 1868 1866 1865 1864 1861 1858 1857 1855

113.5 114.5 115.5 116.5 117.5 118.5 119.5 120.5 121.5 122.5 123.5 124.5 125.5 126.5 127.5 129.5 130.5 131.5 132.5 133.5 134.5 135.5 136.5 137.5 138.5 139.5 140.5 141.5 142.5 144.5 145.5 146.5 149.5 152.5 153.5 155.5

C

6,140 19,306 9,250 7,880 5,171

855 1,010

13,289 8,069

17,376 1,104

22,801 3,122 1,732 3,648

311 6,989

129 2,032

28,823 21

7,616 404

8,138 3,090 3,247 1,534 1,566 2,099 2,526

123 557

2,788 1,359

405 147

- ------ ---- - ---------------

D E F G

80.00 15.91 0.1989 1.0000 80.00 15.56 0.1945 1.0000 80.00 15.21 0.1902 1.0000 80.00 14.86 0.1858 1.0000 80.00 14.52 0.1815 1.0000 80.00 14.17 0.1771 1.0000 80.00 13.83 0.1728 1.0000 80.00 13.48 0.1685 1.0000 80.00 13.14 0.1642 1.0000 80.00 12.80 0.1600 1.0000 80.00 12.46 0.1557 1.0000 80.00 12.12 0.1515 1.0000 80.00 11.78 0.1472 1.0000 80.00 11.44 0.1430 1.0000 80.00 11.10 0.1388 1.0000 80.00 10.43 0.1303 1.0000 80.00 10.09 0.1261 1.0000 80.00 9.75 0.1219 1.0000 80.00 9.42 0.1177 1.0000 80.00 9.09 0.1136 1.0000 80.00 8.75 0.1094 1.0000 80.00 8.42 0.1052 1.0000 80.00 8.08 0.1010 1.0000 80.00 7.75 0.0969 1.0000 80.00 7.41 0.0927 1.0000 80.00 7.08 0.0885 1.0000 80.00 6.74 0.0843 1.0000 80.00 6.41 0.0801 1.0000 80.00 6.08 0.0759 1.0000 80.00 5.40 0.0675 1.0000 80.00 5.07 0.0634 1.0000 80.00 4.73 0.0591 1.0000 80.00 3.72 0.0464 1.0000 80.00 2.69 0.0336 1.0000 80.00 2.35 0.0294 1.0000 80.00 1.66 0.0208 1.0000

Computed Net Plant

H=C·F·G

1,221 3,756 1,759 1,464

938 152 175

2,240 1,325 2,780

172 3,453

460 248 506

40 882

16 239

3,273 2

801 41

788 286 287 129 125 159 171

8 33

129 46 12 3


Accrual

I=HIE

77 241 116

99 65 11 13

166 101 217

14 285

39 22 46

4 87

2 25

360

95 5

102 39 41 19 20 26 32

2 7

35 17 5 2

207



Distribution Plant Account: 376.13 Mains - Cast Iron

Dispersion: 80 - SO.5 Procedure: Broad Group


.... Oecember31,2Q1Q Surviving

Vintage Age Plant A

1854 1850 Total

B

156.5 160.5

72.9

C

5,221 850

$8,843,963

Avg. Life

0

80.00 80.00 80.00

Net Rem. Plant Alloc. Computed Life Ratio Factor Net Plant Accrual

- - --- -- ------------------------------

E F G H=C'F'G I=H/E

1.32 0.0165 1.0000 86 65 1.0000

-- - --

32.44 0.4054 1.0000 $3,585,704 $110,539

208



Account: 376.13 Mains - Cast Iron

Age Distribution ----- -- ------ -- ---- - ---


Vintage 12/31/2010 Additions Balance --- --- -- - -- -------

A B C D

1975 35.5 2,184 1974 36.5 2,979 1969 41.5 548 1968 42.5 77 1967 43.5 183 1966 44.5 96 1964 46.5 2,996 1962 48.5 22,918 1961 49.5 79 1960 50.5 4,041 1959 51.5 46,407 1958 52.5 249,119 1957 53.5 419,785 1956 54.5 630,808 1955 55.5 831,661 1954 56.5 533,765 1953 57.5 1,557,035 1952 58.5 858,891 1951 59.5 255,380 1950 60.5 151,311 1949 61.5 70,399 1948 62.5 245,963 1947 63.5 72,056 1946 64.5 19,908 1945 65.5 24,471 1944 66.5 3,988 1943 67.5 5,037 1942 68.5 14,581 1941 69.5 15,273 1940 70.5 47,262 1939 71.5 17,815 1938 72.5 86,416 1937 73.5 69,109 1936 74.5 55,977 1935 75.5 50,852 1934 76.5 57,984 1933 77.5 67,822


-----------

Experience to 12/31/2010 -


E F-E/(C+D) G

2,184 1.0000 35.5000 2,979 1.0000 36.5000

548 1.0000 41.5000 77 1.0000 42.5000

183 1.0000 43.5000 96 1.0000 44.5000

2,994 0.9991 46.4996 15,345 0.6696 45.5239

79 1.0000 49.5000 3,039 0.7519 49.4129

46,119 0.9938 51.4426 194,216 0.7796 51.2612 387,330 0.9227 52.9990 422,433 0.6697 52.4555 629,971 0.7575 54.3803 409,978 0.7681 55.2633

1,324,618 0.8507 57.0194 637,572 0.7423 56.7685 171,737 0.6725 57.4772

91,117 0.6022 58.0089 53,155 0.7551 59.9527

207,084 0.8419 61.6906 53,073 0.7366 61.6594 11,337 0.5694 61.3207 10,981 0.4487 61.2905 2,488 0.6239 64.2375 2,969 0.5894 64.2115 5,409 0.3710 63.3293 7,705 0.5045 66.2897

41,470 0.8774 70.1593 13,834 0.7765 69.8748 71,458 0.8269 71.5091 59,474 0.8606 72.8566 52,041 0.9297 73.9653 41,960 0.8251 74.1858 55,790 0.9622 76.2105 48,231 0.7111 74.5338

209




Age Distribution



1932 78.5 59,713 1931 79.5 117,149 1930 80.5 173,288 1929 81.5 194,458 1928 82.5 342,538 1927 83.5 288,604 1926 84.5 345,355 1925 85.5 397,915 1924 86.5 209,459 1923 87.5 339,174 1922 88.5 141,906 1921 89.5 57,761 1920 90.5 66,502 1919 91.5 51,218 1918 92.5 14,352 1917 93.5 24,166 1916 94.5 73,061 1915 95.5 85,716 1914 96.5 71,424 1913 97.5 147,595 1912 98.5 148,562 1911 99.5 128,911 1910 100.5 121,377 1909 101.5 93,539 1908 102.5 92,Q83 1907 103.5 101,839 1906 104.5 63,437 1905 105.5 93,756 1904 106.5 108,903 1903 107.5 89,457 1902 108.5 63,976 1901 109.5 47,511 1900 110.5 74,070 1899 111.5 43,148 1898 112.5 23,618 1897 113.5 8,367 1896 114.5 27,596




----------- -E F=E/(C+D) G

45,109 0.7554 78.0457 106,402 0.9083 79.1354 145,894 0.8419 79.8767 160,570 0.8257 80.7316 301,489 0.8802 81.8954 234,805 0.8136 82.5602 253,559 0.7342 82.7810 320,989 0.8067 84.4755 174,987 0.8354 85.8538 231,529 0.6826 85.7682 119,698 0.8435 87.5180

55,101 0.9540 89.2357 61,030 0.9177 89.9801 43,902 0.8572 90.7109 11,191 0.7798 91.1405 18,457 0.7638 92.9936 60,442 0.8273 93.5995 76,556 0.8931 95.0193 58,735 0.8223 95.9788

105,799 0.7168 96.5944 123,015 0.8280 97.3013 106,568 0.8267 98.6363 101,888 0.8394 99.7278

72,984 0.7803 100.8151 70,429 0.7648 100.6271 68,949 0.6770 102.0745 55,721 0.8784 104.0375 68,549 0.7311 104.0412 88,917 0.8165 105.2709 71,694 0.8014 106.5570 51,759 0.8090 107.7204 26,983 0.5679 107.1166 32,854 0.4436 108.1768 22,684 0.5257 109.0789 12,923 0.5472 109.9784

6,140 0.7339 112.4695 19,306 0.6996 113.2238

210




Age Distribution ----------------- -------------------



1895 115.5 13,464 1894 116.5 17.850 1893 117.5 16,566 1892 118.5 4,113 1891 119.5 6,234 1890 120.5 17,520 1889 121.5 11,450 1888 122.5 25,352 1887 123.5 7,011 1886 124.5 33,348 1885 125.5 3,867 1884 126.5 3,190 1883 127.5 3,666 1882 128.5 459 1881 129.5 925 1880 130.5 8,177 1879 131.5 129 1878 132.5 2,048 1877 133.5 31,644 1876 134.5 21 1875 135.5 9,279 1874 136.5 659 1873 137.5 9,498 1872 138.5 11,910 1871 139.5 4,077 1870 140.5 2,640 1869 141.5 2,495 1868 142.5 2,844 1867 143.5 85 1866 144.5 2,526 1865 145.5 123 1864 146.5 1,010 1861 149.5 3,286 1860 150.5 50 1858 152.5 1,359 1857 153.5 572 1855 155.5 147

----------------------- ,-


--.--------



E F=E/(C+D) G

9.250 0.6870 113.1584 7,880 0.4415 114.4042 5,171 0.3121 114.2036

855 0.2080 114.3030 1,010 0.1620 114.6039

13,289 0.7585 119.0812 8,069 0.7047 119.7380

17,376 0.6854 120.4499 1,104 0.1574 120.0380

22,801 0.6837 123.9469 3,122 0.8072 124.1185 1,732 0.5430 123.7477 3,648 0.9950 127.4677

0.0000 122.9664 311 0.3358 124.2432

6,989 0.8547 129.5324 129 1.0000 131.5000

2,032 0.9919 132.4879 28,823 0.9108 132.8553

21 1.0000 134.5000 7,616 0.8207 135.1297

404 0.6138 133.9894 8,138 0.8568 136.5967 3,090 0.2594 133.3678 3,247 0.7965 138.1110 1,534 0.5810 138.5875 1,566 0.6276 140.8995 2,099 0.7381 140.5787

0.0000 131.7535 2,526 1.0000 144.5000

123 1.0000 145.5000 557 0.5511 144.0309

2,788 0.8485 149.0466 0.0000 144.0000

1,359 1.0000 152.5000 405 0.7084 151.8524 147 1.0000 155.5000

211




Age Distribution


Vintage 12/31/2010 Additions Balance -------

A B C D

1854 156.5 7.114 1853 157.5 615 1850 160.5 2,355 1847 163.5 39 Total 72.9 $11,296,396


Experience to 12131/2010


. -- -, ---- --- ------

E F=E/(C+D) G

5,221 0.7339 154.2984 0.0000 149.7949

850 0.3610 159.1293 0.0000 158.0000

$8,843,963 0.7829

212


Schedule C


Distribution Plant




A B C D E F=8+C-O+E

1996 10,850,112 286 10,850,398 1997 10,850,398 445,024 5,138 11,290,284 1998 11,290,284 166,960 11,123,324 1999 11,123,324 149,966 10,973,358 2000 10,973,358 250,399 10,722,958 2001 10,722,958 188,087 10,534,872 2002 10,534,872 46,575 10,488,297 2003 10,488,297 67,484 10,420,813 2004 10,420,813 17,080 51,760 10,386,132 2005 10,386,132 (20) 97,712 10,288,401 2006 10,288,401 20 205,283 10,083,138 2007 10,083,138 (12,055) 191,580 9,879,502 2008 9,879,502 12,644 163,330 9,728,817 2009 9,728,817 11,283 586,243 9,153,857 2010 9,153,857 974 281,915 (28,952) 8,843,963

213


Schedule C


Distribution Plant




A B C D E F=8+C-D+E

1996 11,296,396 11,296,396 1997 11,296,396 5,138 11,291,257 1998 11,291,257 166,960 11,124,298 1999 11,124,298 149,966 10,974,331 2000 10,974,331 250,399 10,723,932 2001 10,723,932 188,087 10,535,845 2002 10,535,845 46,575 10,489,271 2003 10,489,271 17,669 67,484 10,439,455 2004 10,439,455 51,760 10,387,695 2005 10,387,695 97,712 10,289,984 2006 10,289,984 205,283 10,084,701 2007 10,084,701 11,283 191,580 9,904,404 2008 9,904,404 163,330 9,741,074 2009 9,741,074 586,243 9,154,830 2010 9,154,830 281,915 (28,952) 8,843,963

214





Rolling Band Life Analysis ------------------------------------- ----

First Degree


-----------------------------

A B C 0 E

1996-2000 31.0 83.7 03 14.63 1997-2001 18.0 65.7 03 18.12 1998-2002 14.5 61.3 03 19.21 1999-2003 21.4 67.8 03 23.41 2000-2004 18.1 75.8 03 19.06 2001-2005 0.0 106.9 L 1 ' 8.17 2002-2006 0.0 107.4 L 1.5' 8.19 2003-2007 0.0 85.1 HO.5 13.46 2004-2008 4.0 71.5 02 18.22 2005-2009 1.2 48.0 02 23.95 2006-2010 1.1 37.3 03 30.07

- -----------------

T-Cut: None



Weighting: Exposures --------



-------------- ----------------

F G H J K

103.6 03' 6.83 107.0 SO' 5.88 75.5 03' 13.80 93.6 L 1 ' 6.61 58.5 03 20.53 83.3 LO.5 ' 3.76 52.7 04 31.24 49.6 04 33.54 49.2 04 32.65 43.3 04 36.86 54.9 04 32.40 74.5 SC 19.04 52.2 04 35.22 60.4 03 29.56 38.3 04 41.43 46.4 04 35.68 32.9 04 42.21 48.4 03 31.16 28.4 04 38.91 40.8 03 29.33 26.4 04 38.67 31.2 03 34.81

215





Shrinking Band Life Analysis -- -- --- ---------

_____ £ir~tPegree

Observation Average Disper- Conf. Band Censoring Life sian Index

- -----------------------

A B C D E

1996-2010 2.6 70.6 HO.5 12.18 1998-2010 1.9 60.5 02 14.68 2000-2010 2.0 58.7 02 19.34 2002-2010 1.9 67.1 LO 17.62 2004-2010 1.0 55.7 HO.5 20.27 2006-2010 1.1 37.3 03 30.07 2008-2010 0.7 34.2 03 35.83 2010-2010 3.5 43.5 02 32.03

T-Cut: None



Weighting: Exposures --- ------------ -- - -- ----

Second Degree ThirdDegre~ _

Average Disper- Conf. Average Disper- Conf. Life sian Index Life sian Index ----- ---------- ---- --------- ---------------

F G H J K

61.4 HO.5 18.05 84.5 L 1.5 • 2.57 46.5 03 24.24 67.1 LO' 9.01 40.6 04 31.93 55.2 02 21.12 49.1 03 30.05 70.7 LO.5 • 14.71 36.5 04 34.44 51.3 02 23.25 26.4 04 38.67 31.2 03 34.81 33.0 03 36.78 42.8 02 29.39 38.7 03 35.68 10.0 04 • 57.85

216




Progressing Band Life Analysis - -- --- ------------ - --- ----- - - ----- - ------------------------- ---------------


T-Cut: None




First Degree Second Degree Third Degree ..

Observation Average Disper- Conf. Average Disper- Conf. Average Disper- Cont. Band Censoring Life sion Index Life sion Index Life sion Index

- - -- -- --- ---------

A B C D E F G H I J K

1996-1997 94.0 193.3 S6" 2.75 196.2 SQ" 3.00 195.6 56 " 2.98 1996-1999 31.8 106.9 SC 5.56 129.4 SC" 7.94 118.8 SO.5 " 10.26 1996-2001 23.3 77.3 03 15.79 92.6 03" 9.59 101.1 SO" 6.12 1996-2003 28.1 85.8 03 14.81 87.8 03 13.87 104.5 SO" 3.09 1996-2005 0.0 92.2 HO.5 9.68 68.0 03 21.25 94.8 S-.5 " 3.55 1996-2007 0.0 82.8 02 12.35 60.6 03 23.99 88.2 S-.5 " 5.18 1996-2009 4.9 72.1 HO.5 12.18 61.2 03 18.88 86.0 L 1.5 " 2.72 1996-2010 2.6 70.6 HO.5 12.18 61.4 HO.5 18.05 84.5 L 1.5 " 2.57

217





Graphics Analysis

100

" 60

'" ~ .;: .~

~

Ul ~ ~ m ~ m "- 40

80 ,

\\ \ ;. \ " \.\ I\~

\

20

o

~ 1\'

T-Cut: None




1sl: 70.6-HO.5 2nd: 61.4-HO.5 3rd: 84.5-L 1.5

~ , . I~ ~ ~ ..... _---

o 25 50 75 100 125 150 175 Age (Years)

Key • Actual - - - - -1st ---2nd ---3rd

218






1.000

0.800

0.600

S m

'" "E m N m :I:

0.400

0.200

• ~ ...

0.000 -o 25 50 75

Key • Actual

•

T~Cut: None




15t: 70.6·HO.5 2nd: 61.4·HO.5 3rd: 84.5·L 1.5

•

•

V V

• • • • •• ~ .z. +. - -~~-; - -

• 100

Age (Years)

125 150 175

- - -1st 2nd 3rd

219





T~Cut: None



Present and Proposed Projection Life Curves Present: 80.0-S0.5 Proposed: aO.0-SO.5

100

~

60

'" " .;: ·E ~

en

" m ~ m 0. 40

80

~ ~

~ ~

~~

\ ~ ~, ~ \~ ~ ~ ~

20

o o 25 50 75 100 125 150

Age (Years)

Key • Actual - Present Proposed

220





Ull adj~sted Net Salvag e Histol)' ____________ _ ----------------------------- ------------

Gross Salvage 5-Yr

Year Retirements Amount Pet. Avg. ABC O=CIBE

1998 166,960 0.0 1999 149,966 14 0.0 2000 250,399 0.0 2001 188,087 0.0 2002 46,575 0.0 0.0 2003 67,484 0.0 0.0 2004 51,760 27 0.1 0.0 2005 97,712 0.0 0.0 2006 205,283 0.0 0.0 2007 191,580 0.0 0.0 2008 163,330 0.0 0.0 2009 586,243 0.0 0.0 2010 .281,915 0.0 0.0 Total 2,447,294 40 0.0

Cost of Retiring __ l\jeLSalvalle 5-Yr 5-Yr

Amount Pet. AV9· Amount Pet. AV9.c_ F G=FIB H I=C-F J=IIB K

63,579 38.1 (63,579) -38.1 169,229 112.8 (169,215) -112.8 348,919 139.3 (348,919) -139.3 211,238 112.3 (211,238) -112.3 114,108 245.0 113.1 (114,108) -245.0 -113.1 167,787 248.6 144.0 (167,787) -248.6 -144.0 120,426 232.7 159.3 (120,399) -232.6 -159.3

89,925 92.0 155.8 (89,925) -92.0 -155.8 462,854 225.5 203.7 (462,854) -225.5 -203.7 452,929 236.4 210.8 (452,929) -236.4 -210.8 373,330 228.6 211.3 (373,330) -228.6 -211.3 992,781 169.3 190.6 (992,781) -169.3 -190.6

1,448,128 513.7 261.1 (1,44B,128) -513.7 -261.1 5,015,234 204.9 (5,015,194) -204.9

221


Schedule F


Distribution Plant


Adjust~d ... tlletSahlagE!History -- -- ----- -- --------- - - - - --._---

Gross Salvage ___ ~9~QfReJi[imL ___ .. NetSalypge ____ 5-Yr 5-Yr 5-Yr

Year Retirements Amount Pet. Avg, Amount Pet. Avg,. Amount Pet. AV9.c_ --------------

A B C D=CIB E F G=FIB H I=C·F J=IIB K

1998 166,960 0.0 63,579 38.1 (63,579) ·38.1 1999 149,966 14 0.0 169,229 112.8 (169,215) -112.8 2000 250,399 0.0 348,919 139.3 (348,919) -139.3 2001 188,087 0.0 211,238 112.3 (211,238) -112.3 2002 46,575 0.0 0.0 114,108 245.0 113.1 (114,108) ·245.0 -113.1 2003 67,484 0.0 0.0 167,787 248.6 144.0 (167,787) -248.6 -144.0 2004 51,760 27 0.1 0.0 120,426 232.7 159.3 (120,399) -232.6 -159.3 2005 97,712 0.0 0.0 89,925 92.0 155.8 (89,925) -92.0 -155.8 2006 205,283 0.0 0.0 462,854 225.5 203.7 (462,854) -225.5 -203.7 2007 191,580 0.0 0.0 452,929 236.4 210.8 (452,929) -236.4 -210.8 2008 163,330 0.0 0.0 373,330 228.6 211.3 (373,330) -228.6 -211.3 2009 586,243 0.0 0.0 992,781 169.3 190.6 (992,781) ·169.3 -190.6 2010 281,915 0.0 0.0 1,448,128 513.7 261.1 .. (1,448,1.28) ~fi13.7 -261.1 Total 2,447,294 40 0.0 5,015,234 204.9 (5,015,194) -204.9

222


Distribution Plant

Account: 376.14 - Mains - Valves

Value Ratio Current ProQosed Plant Balance: $6,343,570 0.35% Projection Life/AYFR: 80 80 Recorded Reserve: $2,022,909 31.89% Projection Curve: R3 R3 Computed Reserve: $1,860,252 29.33% Future Net Salvage: -20.0% -20.0% Earliest Vintage: 1872 Average Age (yrs): 21.9

Description This account includes the installed cost of gas valves 8 inches or greater in diameter attached to distribution system mains. Valves < 8 inches are classified as minor items of property.

Service Life No changes are reconunended for this account. The current projection life was advocated by Staff in Case 08-G-0609 based upon indetenninate service life indications and irregular observed life tables. Service life indications are no more predictive today than in the 2008 study. Given the continuing indetenninacy of service life indications derived from a statistical analysis, the currently approved service life is recommended for this account.

Net Salvage The net salvage analysis continues to suggest cost of removal in excess of -100 percent. The sample size, however, is small and irregularly distributed over activity years 2007-2010. Accordingly, the currently approved future net salvage rate is retained pending more definitive historical indications. Average net salvage rates are, however, correctly computed for whole-life depreciation rates.

223


Schedule A NIAGARA MOHAWK POWER CORPORATION - GAS Page 1 of 3 Distribution Plant Account: 376.14 Mains - Valves


GenElr"tioll .. Arrangement

December:3.1~~ Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual -- --- --------- --------- - ------------

A B C· D E F G H=C"F"G I=H/E

2010 0.5 542,629 80.00 79.51 0.9938 1.0000 539,288 6,783 2009 1.5 666,854 80.00 78.52 0.9815 1.0000 654.548 8,336 2008 2.5 447,873 80.00 77.54 0.9693 1.0000 434,112 5,598 2007 3.5 296,183 80.00 76.56 0.9570 1.0000 283,451 3,702 2006 4.5 220,722 80.00 75.58 0.9448 1.0000 208,535 2,759 2005 5.5 167,996 80.00 74.61 0.9326 1.0000 156,668 2,100 2004 6.5 264,994 80.00 73.63 0.9204 1.0000 243,898 3,312 2003 7.5 215,949 80.00 72.66 0.9082 1.0000 196,133 2,699 2002 8.5 36,410 80.00 71.69 0.8961 1.0000 32,627 455 2001 9.5 149,518 80.00 70.72 0.8840 1.0000 132,174 1,869 2000 10.5 87,530 80.00 69.75 0.8719 1.0000 76,320 1,094 1999 11.5 34,068 80.00 68.79 0.8599 1.0000 29,295 426 1998 12.5 80,653 80.00 67.83 0.8479 1.0000 68,386 1,008 1996 14.5 16,172 80.00 65.92 0.8240 1.0000 13,326 202 1995 15.5 77,300 80.00 64.97 0.8121 1.0000 62,778 966 1994 16.5 215,743 80.00 64.02 0.8003 1.0000 172,654 2,697 1993 17.5 338,583 80.00 63.08 0.7885 1.0000 266,965 4,232 1992 18.5 97,383 80.00 62.14 0.7767 1.0000 75,639 1,217 1991 19.5 11,927 80.00 61.20 0.7650 1.0000 9,124 149 1990 20.5 9,212 80.00 60.27 0.7534 1.0000 6,940 115 1989 21.5 19,740 80.00 59.34 0.7417 1.0000 14,642 247 1988 22.5 9,898 80.00 58.41 0.7302 1.0000 7,228 124 1987 23.5 37,709 80.00 57.49 0.7187 1.0000 27,101 471 1986 24.5 18,361 80.00 56.58 0.7072 1.0000 12,986 230 1985 25.5 11,326 80.00 55.67 0.6958 1.0000 7,881 142 1984 26.5 7,790 80.00 54.76 0.6845 1.0000 5,332 97 1983 27.5 76,532 80.00 53.86 0.6732 1.0000 51,524 957 1982 28.5 21,759 80.00 52.96 0.6620 1.0000 14,405 272 1981 29.5 31,163 80.00 52.07 0.6509 1.0000 20,283 390 1980 30.5 2,900 80.00 51.18 0.6398 1.0000 1,855 36 1979 31.5 1,303 80.00 50.30 0.6288 1.0000 820 16 1978 32.5 3,602 80.00 49.43 0.6178 1.0000 2,225 45 1977 33.5 12,428 80.00 48.55 0.6069 1.0000 7,543 155 1976 34.5 11,852 80.00 47.69 0.5961 1.0000 7,065 148 1975 35.5 7,476 80.00 46.83 0.5854 1.0000 4,377 93 1974 36.5 18,291 80.00 45.98 0.5747 1.0000 10,512 229

224




Generation. Jl.rr]3ngement

Dec",mber 31 ,~01 0 Net Surviving Avg. Rem. Plant AIIoc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual ------ - ------------ - ------------- "- -- ---------

A B C 0 E F G H=C'F'G I=H/E

1973 37.5 34,330 80.00 45.13 0.5641 1.0000 19,365 429 1972 38.5 37,022 80.00 44.29 0.5536 1.0000 20,495 463 1971 39.5 23,232 80.00 43.45 0.5431 1.0000 12,618 290 1970 40.5 63,096 80.00 42.62 0.5328 1.0000 33,615 789 1969 41.5 61,520 80.00 41.80 0.5225 1.0000 32,142 769 1968 42.5 79,147 80.00 40.98 0.5122 1.0000 40,543 989 1967 43.5 63,951 80.00 40.17 0.5021 1.0000 32,110 799 1966 44.5 66,014 80.00 39.36 0.4921 1.0000 32,483 825 1965 45.5 38,204 80.00 38.57 0.4821 1.0000 18,417 478 1964 46.5 92,393 80.00 37.78 0.4722 1.0000 43,627 1,155 1963 47.5 74,585 80.00 36.99 0.4624 1.0000 34,487 932 1962 48.5 108,843 80.00 36.21 0.4527 1.0000 49,270 1,361 1961 49.5 91,192 80.00 35.44 0.4430 1.0000 40,400 1,140 1960 50.5 148,170 80.00 34.68 0.4335 1.0000 64,229 1,852 1959 51.5 167,027 80.00 33.92 0.4240 1.0000 70,824 2,088 1958 52.5 198,808 80.00 33.17 0.4147 1.0000 82,438 2,485 1957 53.5 89,430 80.00 32.43 0.4054 1.0000 36,254 1,118 1956 54.5 94,010 80.00 31.70 0.3962 1.0000 37,247 1,175 1955 55.5 112,412 80.00 30.97 0.3871 1.0000 43,519 1,405 1954 56.5 116,625 80.00 30.25 0.3782 1.0000 44,102 1,458 1953 57.5 149,973 80.00 29.54 0.3693 1.0000 55,381 1,875 1952 58.5 43,889 80.00 28.84 0.3605 1.0000 15,822 549 1951 59.5 52,523 80.00 28.15 0.3518 1.0000 18,479 657 1950 60.5 36,232 80.00 27.46 0.3433 1.0000 12,438 453 1949 61.5 11,730 80.00 26.79 0.3348 1.0000 3,927 147 1948 62.5 348 80.00 26.12 0.3265 1.0000 114 4 1947 63.5 1,776 80.00 25.46 0.3183 1.0000 565 22 1946 64.5 2,492 80.00 24.81 0.3102 1.0000 773 31 1941 69.5 848 80.00 21.72 0.2716 1.0000 230 11 1940 70.5 806 80.00 21.14 0.2642 1.0000 213 10 1938 72.5 369 80.00 20.00 0.2500 1.0000 92 5 1937 73.5 194 80.00 19.45 0.2431 1.0000 47 2 1936 74.5 135 80.00 18.91 0.2363 1.0000 32 2 1935 75.5 490 80.00 18.38 0.2297 1.0000 113 6 1934 76.5 337 80.00 17.86 0.2233 1.0000 75 4 1933 77.5 3,118 80.00 17.36 0.2169 1.0000 676 39

225




Generation Am!Ogement

December 31 ,2QJ()_ Net Surviving Avg. Rem. Plant AIIoc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual -- ------ ------- --- -------------

A B C D E F G H'C"F"G i'H/E

1932 78.5 250 80.00 16.86 0.2108 1.0000 53 3 1930 80.5 2,412 80.00 15.91 0.1989 1.0000 480 30 1929 81.5 399 80.00 15.45 0.1932 1.0000 77 5 1928 82.5 1,081 80.00 15.01 0.1876 1.0000 203 14 1927 83.5 106 80.00 14.57 0.1822 1.0000 19 1926 84.5 1,652 80.00 14.15 0.1769 1.0000 292 21 1925 85.5 1,070 80.00 13.74 0.1717 1.0000 184 13 1923 87.5 208 80.00 12.95 0.1619 1.0000 34 3 1922 88.5 119 80.00 12.57 0.1572 1.0000 19 1 1916 94.5 346 80.00 10.52 0.1315 1.0000 45 4 1913 97.5 90 80.00 9.60 0.1200 1.0000 11 1910 100.5 65 80.00 8.75 0.1093 1.0000 7 1 1903 107.5 241 80.00 6.89 0.0861 1.0000 21 3 1900 110.5 64 80.00 6.12 0.0765 1.0000 5 1899 111.5 165 80.00 5.86 0.0732 1.0000 12 2 1895 115.5 75 80.00 4.83 0.0604 1.0000 5 1893 117.5 34 80.00 4.32 0.0540 1.0000 2 1889 121.5 35 80.00 3.32 0.0414 1.0000 1872 138.5 64 80.00 1.0000 Total 21.9 $6,343,570 80.00 60.00 0.7499 1.0000 $4,757,268 $79,294

226



Account: 376.14 Mains - Valves

Age Distribution -------


Vintage 12/31/2010 Additions Balance .. - - - ---------- --

A B C D

2010 0.5 542.629 2009 1.5 666,854 2008 2.5 447,873 2007 3.5 296,183 2006 4.5 220,722 2005 5.5 167,996 2004 6.5 264,994 2003 7.5 215,949 2002 8.5 36,410 2001 9.5 149,518 2000 10.5 87,530 1999 11.5 34,068 1998 12.5 80,653 1996 14.5 16,172 1995 15.5 77,300 1994 16.5 215,743 1993 17.5 338,583 1992 18.5 97,383 1991 19.5 11,927 1990 20.5 9,212 1989 21.5 19,740 1988 22.5 9,898 1987 23.5 40,546 1986 24.5 18,361 1985 25.5 11,326 1984 26.5 7,790 1983 27.5 76,532 1982 28.5 21,759 1981 29.5 31,163 1980 30.5 2,900 1979 31.5 1,303 1978 32.5 3,602 1977 33.5 12,428 1976 34.5 11,852 1975 35.5 7,476 1974 36.5 18,291 1973 37.5 34,330

--- -- - ------


-- -- -- - ------ -----------



E F-E/(C+D) G

542,629 1.0000 0.5000 666,854 1.0000 1.5000 447,873 1.0000 2.5000 296,183 1.0000 3.5000 220,722 1.0000 4.5000 167,996 1.0000 5.5000 264,994 1.0000 6.5000 215,949 1.0000 7.5000

36,410 1.0000 8.5000 149,518 1.0000 9.5000

87,530 1.0000 10.5000 34,068 1.0000 11.5000 80,653 1.0000 12.5000 16,172 1.0000 14.5000 77,300 1.0000 15.5000

215,743 1.0000 16.5000 338,583 1.0000 17.5000

97,383 1.0000 18.5000 11,927 1.0000 19.5000 9,212 1.0000 20.5000

19,740 1.0000 21.5000 9,898 1.0000 22.5000

37,709 0.9300 23.3251 18,361 1.0000 24.5000 11,326 1.0000 25.5000

7,790 1.0000 26.5000 76,532 1.0000 27.5000 21,759 1.0000 28.5000 31,163 1.0000 29.5000

2,900 1.0000 30.5000 1,303 1.0000 31.5000 3,602 1.0000 32.5000

12,428 1.0000 33.5000 11,852 1.0000 34.5000 7,476 1.0000 35.5000

18,291 1.0000 36.5000 34,330 1.0000 37.5000

227




Age Distribution ------------



1972 38.5 37,022 1971 39.5 23,232 1970 40.5 63,096 1969 41.5 61,520 1968 42.5 79,147 1967 43.5 63,951 1966 44.5 69,483 1965 45.5 38,903 1964 46.5 92,393 1963 47.5 75,617 1962 48.5 109,559 1961 49.5 93,005 1960 50.5 152,696 1959 51.5 167,027 1958 52.5 199,568 1957 53.5 89,914 1956 54.5 94,010 1955 55.5 116,497 1954 56.5 118,516 1953 57.5 156,020 1952 58.5 45,278 1951 59.5 53,862 1950 60.5 36,746 1949 61.5 11,730 1948 62.5 348 1947 63.5 1,776 1946 64.5 2,492 1943 67.5 210 1941 69.5 848 1940 70.5 806 1938 72.5 369 1937 73.5 194 1936 74.5 135 1935 75.5 490 1934 76.5 337 1933 77.5 3,276 1932 78.5 250




E F-E/(C+D) G

37,022 1.0000 38.5000 23,232 1.0000 39.5000 63,096 1.0000 40.5000 61,520 1.0000 41.5000 79,147 1.0000 42.5000 63,951 1.0000 43.5000 66,014 0.9501 44.4251 38,204 0.9820 45.3115 92,393 1.0000 46.5000 74,585 0.9864 47.4795

108,843 0.9935 48.4183 91,192 0.9805 49.2953

148,170 0.9704 50.3796 167,027 1.0000 51.5000 198,808 0.9962 52.4524 89,430 0.9946 53.4435 94,010 1.0000 54.5000

112,412 0.9649 55.2785 116,625 0.9840 56.4331 149,973 0.9612 57.3920 43,889 0.9693 58.2841 52,523 0.9751 59.4876 36,232 0.9860 60.4446 11,730 1.0000 61.5000

348 1.0000 62.5000 1,776 1.0000 63.5000 2,492 1.0000 64.5000

0.0000 64.0000 848 1.0000 69.5000 806 1.0000 70.5000 369 1.0000 72.5000 194 1.0000 73.5000 135 1.0000 74.5000 490 1.0000 75.5000 337 1.0000 76.5000

3,118 0.9517 77.4759 250 1.0000 78.5000

228




Age Distribution -------


Vintage 12/31/2010 Additions Balance ------------------ ---- - --------

A B C D

1930 80.5 2.460 1929 81.5 496 1928 82.5 1,081 1927 83.5 159 1926 84.5 2,398 1925 85.5 1,190 1923 87.5 208 1922 88.5 119 1916 94.5 346 1913 97.5 90 1910 100.5 65 1903 107.5 241 1900 110.5 64 1899 111.5 165 1895 115.5 75 1893 117.5 34 1889 121.5 35 1872 138.5 64

-----

Total 21.9 $3,227,550 $3,149,054


Experience to 12/31/2010 -


E F-E/(C+D) G

2.412 0.9803 80.3917 399 0.8047 80.7190

1,081 1.0000 82.5000 106 0.6666 81.9999

1,652 0.6890 82.7893 1,070 0.8992 85.1473

208 1.0000 87.5000 119 1.0000 88.5000 346 1.0000 94.5000

90 1.0000 97.5000 65 1.0000 100.5000

241 1.0000 107.5000 64 1.0000 110.5000

165 1.0000 111.5000 75 1.0000 115.5000 34 1.0000 117.5000 35 1.0000 121.5000 64 1.0000 138.5000

-------

$6,343,570 0.9948

229


Schedule C


Distribution Plant




- ----- --- -- -----

A B C D E F=B+C~D+E

1996 3,113,087 16,172 3,129,259 1997 3,129,259 39,807 (3,841 ) 3,165,226 1998 3,165,226 1,977 3,163,249 1999 3,163,249 108,905 3,272,153 2000 3,272,153 26,615 5,229 3,293,540 2001 3,293,540 107,196 1,169 3,399,567 2002 3,399,567 83,356 3,482,923 2003 3,482,923 32,080 3,515,002 2004 3,515,002 328,061 3,843,063 2005 3,843,063 187,776 1,761 4,029,077 2006 4,029,077 328,793 1,413 4,356,458 2007 4,356,458 162,191 6,590 4,512,058 2008 4,512,058 153,334 2,837 4,662,554 2009 4,662,554 596,358 8,475 5,250,437 2010 5,250,437 1,122,753 3,582 (26,038) 6,343,570

230






A B C

1996 3,152,894 16.172 1997 3,169,066 1998 3,165,226 80,653 1999 3,243,902 34,068 2000 3,277,970 87,530 2001 3,360,271 149,518 2002 3,508,620 36,410 2003 3,545,029 215,949 2004 3,760,979 291,031 2005 4,052,010 167,996 2006 4,218,245 220,722 2007 4,437,554 296,183 2008 4,727,146 447,873 2009 5,172,182 666,854 2010 5,830,561 542,629

Retirements o

1,977

5,229 1,169

1,761 1,413 6,590 2,837 8,475 3,582


E

(3,841 )

(26,038)


Ending Balance

F=8+C-D+E

3,169,066 3,165,226 3,243,902 3,277,970 3,360,271 3,508,620 3,545,029 3,760,979 4,052,010 4,218,245 4,437,554 4,727,146 5,172,182 5,830,561 6,343,570

231


Schedule D


Distribution Plant

Account: 376.14 Mains - Valves T-Cut: None



Rolling Band Life Analysis Weighting: Exposures - ------------- - - ------------------ --------- --------- -- -- -- ----------------------------


Observation Average Disper- Conf. Average Disper- Conf. Average Disper- Conf. Band Censoring Life sion Index Life sion Index Life sion Index

--------- - - - ------------- - --- ------ ------- ----- - -------

A B C D E F G H J K

1996-2000 98.0 174.5 R3' 1.90 152.8 R2' 2.74 192.9 56 ' 1.11 1997-2001 98.3 172.8 R2.5' 2.39 167.4 R2.5' 2.57 193.6 56 ' 1.07 1998-2002 98.4 174.5 R3' 2.31 187.6 R4 ' 1.92 194.3 SO' 0.85 1999-2003 98.8 180.5 R3' 1.77 192.3 SO' 1.38 195.5 56 ' 0.65 2000-2004 98.7 181.7 R4' 1.62 194.5 SO' 0.97 195.7 56 ' 0.53 2001-2005 79.9 186.6 R4' 6.58 125.5 52' 3.48 96.9 H5 ' 5.68 2002-2006 77.7 185.1 R4' 7.48 120.9 H4' 3.73 96.1 H5 ' 6.00 2003-2007 64.9 167.3 R2' 10.71 106.8 H4' 4.08 91.6 H5 ' 4.56 2004-2008 67.9 168.7 R2' 10.00 117.3 52' 5.78 93.2 H5 ' 4.68 2005-2009 61.1 155.2 R1.5 ' 12.14 117.8 52 ' 9.50 95.7 H4 ' 6.20 2006-2010 77.5 153.8 R1.5 • 4.01 123.6 H3 3.10 105.9 H4 ' 3.65

232







- ._-- --------------

A B

1996-2010 78.6 1998-2010 77.3 2000-2010 76.5 2002-2010 76.4 2004-2010 74.4 2006-2010 77.5 2008-2010 86.1 2010-2010 90.9

First Degree


---------------------------

c 0 E

168.1 R2" 5.19 165.8 R2" 5.44 164.0 R2" 5.49 165.2 Rr 5.77 159.5 Rr 5.66 153.8 R1.5 " 4.01 155.7 R1.5 " 1.77 156.6 R1.5 " 3.09

T-Cut: None




Second Degree _____ !hirci Deg~e


F G H J K

124.7 52" 2.21 103.5 53 " 3.94 124.5 52" 2.56 102.9 H4 " 3.72 122.9 52" 2.64 101.7 H4" 3.95 119.5 S2 " 2.50 99.2 H5 " 5.00 116.9 52 " 2.66 97.1 H5 " 5.38 123.6 H3 3.10 105.9 H4 " 3.65 149.3 R1.5 " 1.99 117.4 R3 " 3.33 107.0 H4" 8.95 94.3 H5" 14.14

233






T-Cut: None



Weighting: Exposures --- ------------- - -


-----------------

A B

1996-1997 100.0 1996-1999 99.6 1996-2001 98.5 1996-2003 99.0 1996-2005 79.5 1996-2007 73.2 1996-2009 79.7 1996-2010 78.6

__ -,FirstDegree

Average Disper- Conf. Ufe sion Index

-------------c D E

190.5 R5' 0.76 176.0 R3' 2.04 182.5 R4' 1.56 181.5 R4' 6.12 172.8 R2.5' 7.60 169.6 R2.5' 4.73 168.1 R2' 5.19


Average Disper- Conf. Average Disper- Conf. Ufe sion Index Ufe sion Index F(;-----H-------I----J----K""

No Retirements 194.8 S6 ' 0.66 197.6 S6 ' 0.29 164.2 R2.5' 2.45 194.1 SO' 0.99 187.0 R4' 1.43 196.0 SO' 0.58 139.0 S2 ' 4.17 105.1 H5 ' 3.35 120.3 S2 ' 3.56 100.3 H5 ' 3.21 129.6 S2 ' 2.20 105.9 H4 ' 3.10 124.7 S2' 2.21 103.5 S3 ' 3.94

234





Graphics Analysis

100 - ------~

80

lot

~~ ~, I~

TMCut: None

Placement Band: 1912M 2010 Observation Band: 1996M2010



1st: 168.1·R2 2nd: 124.7-52 3rd: 103.5·S3

~

~

...

60 \

, ...

1\ , , , , ,

, , , '" ~ .;; .~

~ rn C ~

~ ~ 0- 40

1\ \ , ,

\ , , , ,

1\ , ,

\ \ ,

\ \ \ ,

1\

1\ ~ i'- I~

20

o o 25 50 75 100 125 150 175

Age (Years)

Key • Actual --1st 2nd 3rd

235






0.500

0.400

0.300

.'!l '" 0::

"E '" ~ :r:

0.200

0.100

T~Cut: None




1st: 16B.1·R2 2nd: 124.7·52 3rd: 103.5·53

/ /

/

/ ---------~ /

+ . ..:.-:::: ---• • 0.000

o 25

Key

50 75

• Actual

-100

Age (Years)

- - -1st

--- - -125 150 175

2nd 3rd

236





100

80

~ -.-~

..


T-Cut: None



Present: aO.O-R3 Proposed: BO.O-R3

\ 1111111111111111

60 \ C> ~ .;; .~

~

<J> ~

~ ~

~ w a. 40

20

o ,~

o 25 50 75 100

Age (Years)


237




Unadjusted Net Salvagelii~~1)' Gross Salvall~L . Cost of Retirinq

5-Yr 5-Yr Year Retirements Amount Pet. A-"g_ Amount Pet. Avg.

---------- ---------------


1998 1,977 0.0 0.0 1999 0.0 0.0 2000 5,229 0.0 24 0.5 2001 1,169 0.0 0.0 2002 0.0 0.0 0.0 0.3 2003 0.0 0.0 39 0.0 1.0 2004 0.0 0.0 15 0.0 1.2 2005 1,761 0.0 0.0 0.0 1.9 2006 1,413 0.0 0.0 0.0 1.7 2007 6,590 0.0 0.0 52,664 799.1 539.9 2008 2,837 0.0 0.0 0.0 418.0 2009 8,475 0.0 0.0 10,858 128.1 301.4 2010 3,582 0.0 0.0 295 8.2 278.7 Total 33,034 0.0 63,895 193.4


----------------- --

Net Salvalle . 5-Yr

Amount Pet. Avg~. I=C-F J=IIB K

0.0 0.0

(24) -0.5 0.0 0.0 -0.3

(39) 0.0 -1.0 (15) 0.0 -1.2

0.0 -1.9 0.0 -1.7

(52,664) -799.1 -539.9 0.0 -418.0

(10,858) -128.1 -301.4 (295) -8.2 -278.7

(63,895) -193.4

238




Adjust~dN~t SalvaReJ:iistory _GLOSS SaIVaQll_____ "Cost oLRetirinQ ___ _

Year --- ---------

A

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total

Retirements B

1,977

5,229 1,169

1,761 1,413 6,590 2,837 8,475 3,582

33,034

5~r 5~r

Amount Pet. _ j\vg-'-_Amourlt_---"'et.Avg, C D=C/B

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

E

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

F G=F/B H

0.0 0.0

24 0.5 0.0 0.0 0.3

39 0.0 1.0 15 0.0 1.2

0.0 1.9 0.0 1.7

52,664 799.1 539.9 0.0 418.0

10,858 128.1 301.4 295 8.2 278.7

63,895 193.4


Net Salvage 5-Yr

Amount Pet. Avg. " I=C-F

(24)

(39) ( 15)

J=I/B

0.0 0.0

-0.5 0.0 0.0 0.0 0.0 0.0 0.0

(52,664) -799.1 0.0

(10,858) -128.1 (295) -8.2

(63,895) -193.4

K

-0.3 -1.0 -1.2 -1.9 -1.7

-539.9 -418.0 -301.4 -278.7

239


Distribution Plant

Account: 378.10 - Meas. and Reg. Sta. Equipment

Plant Balance: Recorded Reserve: Computed Reserve: Earliest Vintage: Average Age (yrs):

Description

Value $43,520,577 $9,760,254 $11,922,317 1896 13.1

2.37% 22.43% 27.39%

Projection Lifel A YFR: Projection Curve: Future Net Salvage:

Current 40 LO

-5.0%

Proposed 36

LO.5 -30.0%

This account includes the cost of meters, gauges, piping, valves, and other equipment used in measuring or regulating gas in connection with gas distribution operations. A description of the assets classified in this account at December 31, 2010 is provided in Table I.

Service Life

Table 1. Account Components Description

Cabinets and Relays Filters and Strainers Foundations Meters Odorizing Equipment Piping Preheaters Station Regulators Station Relief and Valves Station Vaults and Gauge Boxes Miscellaneous

Total

Investment

$353,118 962,203 815,976 666,342

2,763,252 13,988,413 2,363,321 5,900,747

14,482,691 522,300 702,213

$43,520,577

The full band statistical service life analysis indicates an average service life of 36.5 years and an LO.5 dispersion. More recent bands, however, indicate service lives as short as 25 years. Based on these observations a 36-LO.5 projection life-curve is recommended for this account.

Net Salvage The net salvage analysis for this account exhibits negative net salvage rates with an overall realized net salvage rate of -35.5 percent and a -31.5 percent rate for the 5-year rolling band ending in 2010. A -30 percent future net salvage rate is recommended for the account reflective of these observations.

240


Schedule A NIAGARA MOHAWK POWER CORPORATION - GAS Page 1 of 3 Distribution Plant Account: 378.10 Meas. and Reg. Sta. Equipment

Dispersion: 36 - LO.S Procedure: Broad Group


December 3.1,2010. Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual ----------- ---- -- --- - ---- ----- - ------ - ----- - - -- -------------------

A B C D E F G H=C'F'G I=H/E

2010 0.5 628,171 36.00 35.55 0.9875 1.0000 620,334 17,449 2009 1.5 3,559,358 36.00 34.70 0.9640 1.0000 3,431,190 98,871 2008 2.5 3,286,684 36.00 33.90 0.9418 1.0000 3,095,259 91,297 2007 3.5 2,229,059 36.00 33.14 0.9205 1.0000 2,051,912 61,918 2006 4.5 1,200,741 36.00 32.41 0.9002 1.0000 1,080,870 33,354 2005 5.5 1,573,517 36.00 31.70 0.8806 1.0000 1,385,647 43,709 2004 6.5 3,357,072 36.00 31.02 0.8618 1.0000 2,893,110 93,252 2003 7.5 2,138,659 36.00 30.37 0.8437 1.0000 1,804,466 59,407 2002 8.5 1,109,276 36.00 29.75 0.8264 1.0000 916,697 30,813 2001 9.5 2,829,883 36.00 29.15 0.8097 1.0000 2,291,483 78,608 2000 10.5 2,119,303 36.00 28.58 0.7938 1.0000 1,682,260 58,870 1999 11.5 2,703,595 36.00 28.03 0.7785 1.0000 2,104,720 75,100 1998 12.5 1,777,475 36.00 27.50 0.7639 1.0000 1,357,748 49,374 1997 13.5 780,104 36.00 26.99 0.7499 1.0000 584,962 21,670 1996 14.5 1,304,247 36.00 26.51 0.7364 1.0000 960,494 36,229 1995 15.5 1,518,439 36.00 26.05 0.7236 1.0000 1,098,719 42,179 1994 16.5 1,757,150 36.00 25.61 0.7113 1.0000 1,249,789 48,810 1993 17.5 1,181,964 36.00 25.18 0.6994 1.0000 826,666 32,832 1992 18.5 1,296,311 36.00 24.78 0.6883 1.0000 892,207 36,009 1991 19.5 352,263 36.00 24.39 0.6774 1.0000 238,638 9,785 1990 20.5 148,701 36.00 24.00 0.6668 1.0000 99,153 4,131 1989 21.5 653,281 36.00 23.63 0.6563 1.0000 428,746 18,147 1988 22.5 66,564 36.00 23.25 0.6460 1.0000 42,999 1,849 1987 23.5 116,886 36.00 22.89 0.6358 1.0000 74,317 3,247 1986 24.5 28,884 36.00 22.53 0.6258 1.0000 18,076 802 1985 25.5 312,193 36.00 22.17 0.6159 1.0000 192,295 8,672 1984 26.5 383,180 36.00 21.82 0.6062 1.0000 232,301 10,644 1983 27.5 634,454 36.00 21.48 0.5967 1.0000 378,573 17,624 1982 28.5 284,304 36.00 21.14 0.5873 1.0000 166,968 7,897 1981 29.5 316,778 36.00 20.81 0.5780 1.0000 183,107 8,799 1980 30.5 70,296 36.00 20.48 0.5689 1.0000 39,992 1,953 1979 31.5 117,217 36.00 20.16 0.5599 1.0000 65,633 3,256 1978 32.5 197,569 36.00 19.84 0.5511 1.0000 108,878 5,488 1977 33.5 88,918 36.00 19.53 0.5424 1.0000 48,228 2,470 1976 34.5 157,858 36.00 19.22 0.5338 1.0000 84,265 4,385 1975 35.5 91,751 36.00 18.91 0.5254 1.0000 48,202 2,549

241



Distribution Plant Account: 378.10 Meas. and Reg. Sta. Equipment



December 31 ,20JO Net Surviving Avg. Rem. Plant Alloc. Computed

Vintage Age Plant Life Life Ratio Factor Net Plant Accrual ---- ------------------ - -------- - --- -- ------

A B C D E F G H=C·F·G I=H/E

1974 36.5 245,265 36.00 18.61 0.5170 1.0000 126,813 6,813 1973 37.5 52,015 36.00 18.32 0.5089 1.0000 26,468 1,445 1972 38.5 261,845 36.00 18.03 0.5008 1.0000 131,129 7,273 1971 39.5 154,107 36.00 17.74 0.4928 1.0000 75,951 4,281 1970 40.5 117,885 36.00 17.46 0.4850 1.0000 57,177 3,275 1969 41.5 133,795 36.00 17.18 0.4773 1.0000 63,863 3,717 1968 42.5 24,483 36.00 16.91 0.4697 1.0000 11,501 680 1967 43.5 105,473 36.00 16.64 0.4623 1.0000 48,756 2,930 1966 44.5 56,903 36.00 16.38 0.4549 1.0000 25,885 1,581 1965 45.5 76,310 36.00 16.12 0.4477 1.0000 34,161 2,120 1964 46.5 54,901 36.00 15.86 0.4405 1.0000 24,186 1,525 1963 47.5 87,994 36.00 15.61 0.4335 1.0000 38,146 2,444 1962 48.5 220,061 36.00 15.36 0.4266 1.0000 93,878 6,113 1961 49.5 80,240 36.00 15.11 0.4198 1.0000 33,684 2,229 1960 50.5 70,926 36.00 14.87 0.4131 1.0000 29,299 1,970 1959 51.5 171,727 36.00 14.63 0.4065 1.0000 69,806 4,770 1958 52.5 212,208 36.00 14.40 0.4000 1.0000 84,883 5,895 1957 53.5 220,972 36.00 14.17 0.3936 1.0000 86,977 6,138 1956 54.5 90,467 36.00 13.94 0.3873 1.0000 35,040 2,513 1955 55.5 304,584 36.00 13.72 0.3812 1.0000 116,093 8,461 1954 56.5 110,867 36.00 13.50 0.3751 1.0000 41,584 3,080 1953 57.5 179,559 36.00 13.29 0.3691 1.0000 66,274 4,988 1952 58.5 27,847 36.00 13.08 0.3632 1.0000 10,114 774 1951 59.5 73,100 36.00 12.87 0.3574 1.0000 26,127 2,031 1950 60.5 6,257 36.00 12.66 0.3518 1.0000 2,201 174 1949 61.5 328 36.00 12.46 0.3462 1.0000 114 9 1948 62.5 1,345 36.00 12.26 0.3407 1.0000 458 37 1947 63.5 134 36.00 12.07 0.3353 1.0000 45 4 1942 68.5 410 36.00 11.15 0.3099 1.0000 127 11 1940 70.5 645 36.00 10.81 0.3004 1.0000 194 18 1937 73.5 1,466 36.00 10.33 0.2869 1.0000 421 41 1936 74.5 1,302 36.00 10.17 0.2826 1.0000 368 36 1935 75.5 89 36.00 10.02 0.2784 1.0000 25 2 1934 76.5 179 36.00 9.88 0.2743 1.0000 49 5 1933 77.5 465 36.00 9.73 0.2703 1.0000 126 13 1932 78.5 411 36.00 9.59 0.2665 1.0000 110 11

242




Generationi!.rrangement

Decemi:Jer .31 .. 201 . .0 .. Net Surviving Avg. Rem. Plant

Vintage Age Plant Life Life Ratio - -- -- - --------- - - - - - - - --------------

A B C D E F

1931 79.5 367 36.00 9.46 0.2626 1930 80.5 905 36.00 9.32 0.2589 1929 81.5 217 36.00 9.19 0.2553 1928 82.5 93 36.00 9.07 0.2518 1927 83.5 103 36.00 8.94 0.2484 1925 85.5 30 36.00 8.71 0.2418 1921 89.5 172 36.00 8.26 0.2295 1920 90.5 22 36.00 8.16 0.2266

-- ---- ------

Total 13.1 $43,520,577 36.00 28.24 0.7845


G H'C"F"G

1.0000 96 1.0000 234 1.0000 55 1.0000 23 1.0000 26 1.0000 7 1.0000 40 1.0000 5 1.0000 $34,141,421


Accrual I,H/E

10 25

6 3 3

5 1

$1,208,905

243




Age Distribution -- - ------ - ----



A 8 C 0

2010 0.5 628,171 2009 1.5 3,559,358 2008 2.5 3,286,684 2007 3.5 2,257,311 2006 4.5 1,265,587 2005 5.5 1,588,386 2004 6.5 3,402,178 2003 7.5 2,143,498 2002 8.5 1,120,255 2001 9.5 2,988,615 2000 10.5 2,218,028 1999 11.5 3,160,651 1998 12.5 1,824,134 1997 13.5 917,551 1996 14.5 1,722,107 1995 15.5 1,866,091 1994 16.5 2,146,620 1993 17.5 1,357,719 1992 18.5 1,564,247 1991 19.5 488,150 1990 20.5 185,189 1989 21.5 1,120,785 1988 22.5 348,101 1987 23.5 298,453 1986 24.5 131,897 1985 25.5 498,133 1984 26.5 475,814 1983 27.5 861,289 1982 28.5 459,594 1981 29.5 442,979 1980 30.5 151,364 1979 31.5 348,981 1978 32.5 250,917 1977 33.5 116,935 1976 34.5 203,065 1975 35.5 102,489 1974 36.5 335,069




E F=E/(C+D) G

628,171 1.0000 0.5000 3,559,358 1.0000 1.5000 3,286,684 1.0000 2.5000 2,229,059 0.9875 3.4814 1,200,741 0.9488 4.4299 1,573,517 0.9906 5.4819 3,357,072 0.9867 6.4921 2,138,659 0.9977 7.4923 1,109,276 0.9902 8.4461 2,829,883 0.9469 9.4327 2,119,303 0.9555 10.3181 2,703,595 0.8554 10.8993 1,777,475 0.9744 12.4872

780,104 0.8502 12.7325 1,304,247 0.7574 13.2060 1,518,439 0.8137 14.9401 1,757,150 0.8186 15.4528 1,181,964 0.8706 16.7154 1,296,311 0.8287 17.4712

352,263 0.7216 17.8191 148,701 0.8030 20.0353 653,281 0.5829 17.4626

66,564 0.1912 15.7717 116,886 0.3916 19.8500 28,884 0.2190 21.2218

312,193 0.6267 21.7500 383,180 0.8053 25.5933 634,454 0.7366 26.0328 284,304 0.6186 25.7626 316,778 0.7151 28.8706

70,296 0.4644 26.7698 117,217 0.3359 26.8981 197,569 0.7874 30.7097 88,918 0.7604 32.9937

157,858 0.7774 31.9798 91,751 0.8952 34.7126

245,265 0.7320 34.4438

244




Age Distribution ----- --- - -------


- - - ----------------------- ._----



. - ------ ------- -- --- --


1973 37.5 114,109 52,015 0.4558 35.7089 1972 38.5 436,811 261,845 0.5994 36.3105 1971 39.5 227,285 154,107 0.6780 37.8092 1970 40.5 349,567 117,885 0.3372 34.8765 1969 41.5 161,532 133,795 0.8283 41.0058 1968 42.5 50,095 24,483 0.4887 37.6958 1967 43.5 155,718 105,473 0.6773 41.1616 1966 44.5 107,604 56,903 0.5288 41.5865 1965 45.5 122,622 76,310 0.6223 42.7926 1964 46.5 138,834 54,901 0.3954 41.3285 1963 47.5 168,151 87,994 0.5233 44.2159 1962 48.5 381,514 220,061 0.5768 45.5625 1961 49.5 188,435 80,240 0.4258 44.2568 1960 50.5 102,618 70,926 0.6912 47.9468 1959 51.5 268,845 171,727 0.6388 49.0437 1958 52.5 344,570 212,208 0.6159 49.1948 1957 53.5 370,430 220,972 0.5965 51.4006 1956 54.5 168,060 90,467 0.5383 52.1347 1955 55.5 483,241 304,584 0.6303 52.6325 1954 56.5 174,939 110,867 0.6337 53.0128 1953 57.5 325,586 179,559 0.5515 54.2328 1952 58.5 47,327 27,847 0.5884 54.8416 1951 59.5 228,647 73,100 0.3197 53.1405 1950 60.5 6,528 6,257 0.9585 60.1102 1949 61.5 2,272 328 0.1444 60.3572 1948 62.5 1,929 1,345 0.6969 60.4313 1947 63.5 502 134 0.2667 63.1333 1945 65.5 260 0.0000 61.0000 1943 67.5 346 0.0000 61.4357 1942 68.5 410 410 1.0000 68.5000 1941 69.5 114 0.0000 58.0000 1940 70.5 1,470 645 0.4388 67.9737 1939 71.5 147 0.0000 62.4756 1938 72.5 1,304 0.0000 65.8335 1937 73.5 1,571 1,466 0.9333 72.8371 1936 74.5 2,350 1,302 0.5541 73.9719 1935 75.5 543 89 0.1639 73.9289

245




Age Distribution



A B C D

1934 76.5 304 1933 77.5 1.863 1932 78.5 2,997 1931 79.5 1,094 1930 80.5 5,283 1929 81.5 578 1928 82.5 431 1927 83.5 778 1926 84.5 45 1925 85.5 30 1921 89.5 172 1920 90.5 22 1917 93.5 124 1914 96.5 494 1913 97.5 64 1911 99.5 45 1907 103.5 442 1904 106.5 41 1901 109.5 95 1899 111.5 137 1898 112.5 37 1896 114.5 114

------------------ -------------

Total 13.1 $32,082,514 $18,905,357


- --,-------~-,,-.--



E F=E/(C+D) G

179 0.5872 71.7523 465 0.2495 73.7398 411 0.1371 71.6953 367 0.3354 71.1413 905 0.1712 75.4224 217 0.3747 79.3115

93 0.2162 73.9605 103 0.1327 73.5260

0.0000 73.0000 30 1.0000 85.5000

172 1.0000 89.5000 22 1.0000 90.5000

0.0000 89.0000 0.0000 96.0000 0.0000 94.0000 0.0000 99.0000 0.0000 103.0000 0.0000 106.0000 0.0000 105.0000 0.0000 103.0000 0.0000 111.0000 0.0000 112.0000

----

$43,520,577 0.8535

246


Schedule C


Distribution Plant




A 8 C D E F-8+C·D+E

1996 19,607,514 (171,287) 19,436,227 1997 19,436,227 2,160,671 331,993 (567,928) 20,696,977 1998 20,696,977 144,358 754,798 (269,939) 19,816,599 1999 19,816,599 3,498,592 808,460 (76,122) 22,430,609 2000 22,430,609 3,294,671 242,033 25,483,247 2001 25,483,247 3,337,527 365,396 28,455,378 2002 28,455,378 1,441,182 83,449 29,813,111 2003 29,813,111 2,479,777 799,950 31,492,938 2004 31,492,938 2,173,385 423,893 33,242,430 2005 33,242,430 1,682,303 233,189 34,691,544 2006 34,691,544 1,842,611 617,880 42,384 35,958,659 2007 35,958,659 1,800,626 190,065 37,569,220 2008 37,569,220 3,549,467 362,634 40,756,054 2009 40,756,054 2,662,678 847,840 42,570,891 2010 42,570,891 2,268,962 1,405,715 86,438 43,520,577

247


Schedule C


Distribution Plant




-- - -- -----~-----

A B C D E F=B+C-D+E

1996 19,332,300 2,220,242 (171,287) 21,381,256 1997 21,381,256 1,169,429 331,993 (567,928) 21,650,764 1998 21,650,764 1,809,238 754,798 (269,939) 22,435,265 1999 22,435,265 3,204,615 808,460 (76,122) 24,755,299 2000 24,755,299 2,210,028 242,033 26,723,293 2001 26,723,293 3,033,607 365,396 29,391,504 2002 29,391,504 1,156,612 83,449 30,464,667 2003 30,464,667 2,148,736 799,950 31,813,453 2004 31,813,453 3,161,801 423,893 34,551,361 2005 34,551,361 1,546,001 233,189 35,864,173 2006 35,864,173 1,286,033 617,880 42,384 36,574,710 2007 36,574,710 2,453,069 190,065 38,837,715 2008 38,837,715 2,991,564 362,634 41,466,645 2009 41,466,645 3,592,877 847,840 44,211,683 2010 44,211,683 628,171 1,405,715 86,438 43,520,577

248




Account: 378.10 Meas. and Reg. Sta. Equipment T-Cut: None



Weighting: Exposures Rolling Band Life Analysis --- -- --------------- - - ------------- - --- ---- -- ----- --- ---- -- - ----------


Observation Average Disper- Conf. Average Disper- Conf. Average Disper- Conf. Band Censoring Life sion Index Life sion Index Life sion Index

------------ ------------- -----.-

A B C D E F G H J K

1996·2000 2.9 34.9 Hi 4.35 35.1 LO 4.27 33.8 Hi 4.56 1997-2001 4.4 32.5 Hi 4.41 33.5 LO - 3.86 31.7 LO 4.33 1998-2002 5.5 35.3 LO.5 5.86 37.0 LO - 4.71 34.5 LO.5 6.02 1999-2003 2.4 36.1 LO.5 5.83 57.6 04- 8.73 55.6 04" 7.88 2000-2004 5.3 40.2 LO.5 7.77 66.8 04" 8.60 67.1 04" 8.76 2001-2005 8.2 42.3 LO.5 8.70 73.2 04- 7.53 73.5 04 " 7.63 2002-2006 0.3 40.7 LO.5 4.97 65.6 04- 11.53 46.4 03" 7.85 2003-2007 0.2 41.2 LO.5 4.33 66.4 04- 12.15 48.4 03" 8.97 2004-2008 0.0 49.2 LO.5 5.38 79.6 04- 15.65 46.7 8-.5 " 3.91 2005-2009 0.0 46.8 Hi 5.58 77.7 04- 15.88 44.6 8C" 4.28 2006-2010 0.0 35.3 LO.5 3.35 38.7 LO.5 - 3.72 34.7 LO.5 " 2.58

249






T-Cut: None





Observation Average Disper- Coni. Average Disper- Coni. Average Disper- Coni. Band Censoring Lile sion Index Lile sion Index Lile sion Index

--------- ---------------- ----------- ~

A B C D E F G H I J K

1996-2010 0.0 37.1 LO.5 2.25 46.6 03' 4.67 36.5 LO.5 ' 1.40 1998-2010 0.0 35.9 LO.5 2.43 44.3 03' 4.24 35.4 LO.5 ' 1.51 2000-2010 0.0 38.4 LO.5 3.38 51.0 03' 6.56 37.6 LO.5 ' 2.49 2002-2010 0.0 37.6 LO.5 3.96 49.4 03' 6.58 36.9 LO.5 ' 2.93 2004-2010 0.0 37.5 LO.5 3.70 45.2 03' 5.23 36.7 LO.5 ' 2.88 2006-2010 0.0 35.3 LO.5 3.35 38.7 LO.5' 3.72 34.7 LO.5 ' 2.58 2008-2010 0.0 31.7 L1 4.83 32.9 L 1 ' 3.47 31.2 LO.5 ' 3.39 2010-2010 0.0 25.2 L 1.5' 4.83 24.7 L1.5' 3.90 24.8 L 1.5 ' 3.94

250





Progressing Band Life Analysis --- -------

T-Cut: None



Weighting: Exposures -- - ---------------

Second Degree Third Degre~

Observation

First De!:jree

Average Disper- Conf. Average Disper- Conf. Average Disper- Conf. Band Censoring

------- - ------ -

A B

1996-1997 39.5 1996-1999 0.6 1996-2001 6.3 1996-2003 3.8 1996-2005 8.0 1996-2007 1.1 1996-2009 0.0 1996-2010 0.0

Life sian Index c

64.8 32.5 35.9 36.5 38.7 40.1 40.4 37.1

- - -- - -- ----------------

o E

LO 8.13 LO 5.27 H1 4.43

LO.5 3.98 LO.5 6.11 LO.5 2.63 LO.5 2.51 LO.5 2.25

Life sian Index - - - -----------

F G

110.6 03' 32.7 LO 36.8 LO' 51.0 04' 58.3 04' 58.9 04' 62.4 04' 46.6 03'

H

5.51 5.30 3.84 3.53 3.29 7.74 8.74 4.67

Life

60.8 31.4 34.6 36.7 50.7 40.6 41.1 36.5

sian Index J K

SC 8.74 LO 4.90 H1 4.95 LO 2.27 03' 1.64 LO 2.25 LO 2.34

LO.5 ' 1.40

251





Graphics Analysis

100

80

~ 60

'" ~ .S' .~

~ U)

" ru ~ ru a. 40

20

o o 25

Key

\ '\ ~ \

T-Cut: None




1st: 37.1·LO.5 2nd: 46.6·03 3rd: 36.5·LO.5

~ ~

~ ~ ~

50 75 100 125 150 Age (Years)

• Actual -----1st ---2nd ---3rd

252






1.000

0.800

0.600

J!! '" 0:

'E '" N

'" l:

0.400

0.200

•• • • ••

• Ao.A· ~ ~ - . • ~7" ,.. ....

0.000

~

•

T~Cut: None




1st: 37.1-LO.5 2nd: 46.6-03 3rd: 36.5-LO.5

II •

• II

l( -- ------ - ---------•

I---

o 25 50 75 100 125 150

Age (Years)

Key • Actual 1st 2nd 3rd

253





T-Cut: None



Present and Proposed Projection Life Curves Present: 40.0-LO Proposed: 36.0-LO.S

100

\ ' + \+

\ \ ,

\

\ 60

. , 60

Cl ~

'5O .~

~ II)

;: w ~ w

Jl. 40

~\

\~ . \ + \ ... \\ . \

\ \

\ \

\: \ , , ~ " +. , . ,

~ , k"'--- '-

20

o --o 25 50 75 100

Age (Years)


254




Unadju~ted Net Salv~ge History .. _ .,-- -----------

____ .Gross_Salva~ ___ CostCJtBJ'lJirinll_ 5-Yr 5-Yr

Year Retirements Amount Pct. Avg. Amount PcLllvg, ----------- ------


1997 331,993 0.0 0.0 1998 754,798 0.0 319,873 42.4 1999 808,460 602 0.1 383,432 47.4 2000 242,033 205 0.1 100,398 41.5 2001 365,396 81,650 22.3 3.3 116,488 31.9 36.8 2002 83,449 72 0.1 3.7 23,137 27.7 41.8 2003 799,950 2,811 0.4 3.7 90,503 11.3 31.1 2004 423,893 0.0 4.4 190,238 44.9 27.2 2005 233,189 0.0 4.4 311,906 133.8 38.4 2006 617,880 0.0 0.1 272,491 44.1 41.2 2007 190,065 0.0 0.1 90,819 47.8 42.2 2008 362,634 0.0 0.0 127,680 35.2 54.3 2009 847,840 0.0 0.0 181,351 21.4 43.7 2010 1,405,715 0.0 0.0 ____ 406,723 28.9 31.5

-----

Total 7,467,294 85,339 1.1 2,615,041 35.0


Nej Salvage 5-Yr

Amount fO_ctc.llvL I=C-F J=I/B K

0.0 (319,873) -42.4 (382,830) -47.4 (100,193) -41.4

(34,838) -9.5 -33.5 (23,065) -27.6 -38.2 (87,692) -11.0 -27.3

(190,238) -44.9 -22.8 (311,906) -133.8 -34.0 (272,491 ) -44.1 -41.0

(90,819) -47.8 -42.1 (127,680) -35.2 -54.3 (181,351) -21.4 -43.7 (406,]23) -28.9 -31.5

(2,529,701 ) -33.9

255


Schedule F


Distribution Plant


Adjusted_Net Salvagel:listor}' ______ - -~-

------"2Los_s!3alvag§ __ ___ <::ost9t8etirinQ_ _ ____ Ne! .. Salvalle ... _ 5-Yr 5-Yr 5-Yr

Year Retirements Amount Pet. Avg. Amount Pet. Avg. Amount Pet. Avg-,-------_ ... -------- -------- . - -----

A B C D=C/B E F G=F/B H I=C-F J=IIB K

1997 331.993 0.0 0.0 0.0 1998 754.798 0.0 319.873 42.4 (319.873) -42.4 1999 808,460 602 0.1 383,432 47.4 (382,830) -47.4 2000 242,033 205 0.1 100,398 41.5 (100,193) -41.4 2001 365,396 81,650 22.3 3.3 116,488 31.9 36.8 (34,838) -9.5 -33.5 2002 83,449 72 0.1 3.7 23,137 27.7 41.8 (23,065) -27.6 -38.2 2003 799,950 2,811 0.4 3.7 90,503 11.3 31.1 (87,692) -11.0 -27.3 2004 423,893 0.0 4.4 190,238 44.9 27.2 (190,238) -44.9 -22.8 2005 233,189 0.0 4.4 311,906 133.8 38.4 (311,906) -133.8 -34.0 2006 617,880 0.0 0.1 272,491 44.1 41.2 (272,491 ) -44.1 -41.0 2007 190,065 0.0 0.1 90,819 47.8 42.2 (90,819) -47.8 -42.1 2008 362,634 0.0 0.0 127,680 35.2 54.3 (127,680) -35.2 -54.3 2009 847,840 0.0 0.0 181,351 21.4 43.7 (181,351) -21.4 -43.7 2010 1,405,715 0.0 0.0 _406,723 28.9 31.5 ___ (406,723) -28.9 -31.5 Total 7,467,294 85,339 1.1 2,615,041 35.0 (2,529,701 ) -33.9

256

Niagara Mohawk Power Corporation PROCEEDING … A. Foster Associates was engaged by Niagara Mohawk...

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