1 but instead is asking only that it be allowed to charge interim rates that are set to. 2 recover less than half the requested rate increase.

Transcription

1 1 but instead is asking only that it be allowed to charge interim rates that are set to 2 recover less than half the requested rate increase. 3 Q. Is SPS at risk of reduced credit ratings as a result of its extensive capital 4 investment program and the delay in placing that investment in service? 5 A. Yes. As Ms. Schell discusses, SPS's credit metrics are at the low end, and in 6 some instances below, the levels typically required to sustain the current ratings. 7 SPS is unlikely to maintain its current credit ratings if that circumstance persists 8 for any length of time. 9 Q. Will interim rate relief ameliorate the degradation of credit metrics that 10 SPS is experiencing? 11 A. Yes. Allowing SPS to recover interim rates will help maintain the current credit 12 ratings and thereby avoid higher borrowing costs in the future. Investors will 13 view interim rates as a favorable sign that the Commission and the parties 14 recognize the financial stress SPS is under and are open to trying to address that 15 pressure. Hudson Direct - Interim Rates Page 14 IR1-14 of

2 1 V. CONCLUSION 2 Q. Was Attachment DTH-IR-1 prepared by you or under your direct 3 supervision and control? 4 A. Yes. 5 Q. Does this conclude your pre-filed direct testimony in the Interim Rate phase? 6 A. Yes. Hudson Direct - Interim Rates Page 15 IRl - 15 of

3 AFFIDAVIT STATE OF TEXAS COUNTY OF POTTER DAVID T. HUDSON, first being sworn on his oath, states: I am the witness identified in the preceding testimony. I have read the testimony and the accompanying attachments and am familiar with their contents. Based upon my personal knowledge, the facts stated in the testimony are true. In addition, in my judgment and based upon my professional experience, the opinions and conclusions stated in the testimony are true, valid, and accurate. ^---_-, olm- Cj( DAVID T. HUDSON Subscribed and sworn to before me this T. HUDSON. 2D day of December, 2013 by DAVID,^..,,.. Notary Public. t f xas ^ My Commission Expires: ^..^..,.,M^ ^ ^ ''^lr r^^ Emily Bustos Commission Expires NT^ Gf ^«..^.^..^ ^.nnni^^i nnnnnnn nnnnn.nmiinirrrrrrrr.r.ri^n^^.amia Hudson Direct - Interim Rates Page 16 IR1-16 of

4 Attachment DTH-1R-1 Page 1 of 11 Docket No TESTIMONY LISTING of David T. Hudson PUBLIC UTILITY COMMISSION OF TEXAS 1. Docket No. 6063, Standard Avoided Cost Filing of SPS Pursuant to P.U.C. SUBST. R (h)(3). 2. Docket No. 7288, Standard Avoided Cost Filing of SPS Pursuant to P.U.C. SUBST. R (h)(3). 3. Docket No. 7934, Standard Avoided Cost Filing of SPS Pursuant to P.U.C. SUBST. R (h)(3). 4. Docket No. 8484, Application of Southwestern Public Service Company to Amend Tariff Concerning J. M. Huber Corp. 5. Docket No. 9229, Standard Avoided Cost Filing of SPS Pursuant to P.U.C. SUBST. R (h)(3). 6. Docket No , Standard Avoided Cost Filing of SPS Pursuant to P.U.C. SUBST. R (h)(3). 7. Docket No , Application of Southwestern Public Service Company and Cap Rock Electric Cooperative, Inc. for Certificate of Convenience and Necessity to Construct Transmission Facilities. 8. Docket No , Petition of the General Counsel for an Inquiry into the Reasonableness of Rates and Services of Southwestern Public Service Company. 9. Docket No , Application of Cap Rock Electric Cooperative, Inc., to Amend CCN for Proposed Transmission Line and Substation within Midland, Glasscock, Reagan, Upton, Howard, and Mitchell Counties. 10. Docket No , Application of El Paso Electric Company and Central and Southwest Corporation for Approval to Merge. 11. Docket No , Application of Southwestern Public Service Company for Approval of Notices of Intent for a 203 MW Phillips Cogeneration Project and a 103 MW Combustion Turbine Project. 12. Docket No , Application of Southwestern Public Service Company Regarding Proposed Business Combination With Public Service Company of Colorado. 13. City of Spearman, TX, Ordinance No. 676, City of Spearman, Texas PURA Section Complaint Against Southwestern Public Service Company. 14. Docket No , Application of Southwestern Public Service Company to Amend Certificated Service Area Boundaries to Provide for Dual Certification in Hockley and Cochran Counties, Texas. IRI - 17 of

5 Attachment DTH-IR-1 Page 2 of 11 Docket No TESTIMONY LISTING of David T. Hudson PUBLIC UTILITY COMMISSION OF TEXAS 15. Docket No , Application of Southwestern Public Service Company for Certificate of Qualifying Facility Purchased Power Contract Under Section of PURA Docket No , Petition of Southwestern Public Service Company for: (1) Reconciliation of its Fuel and Purchased Power Costs for 1995 through 1997; (2) Findings of Special Circumstances. 17. Docket No , Application of Southwestern Public Service Company for Approval of Preliminary Integrated Resource Plan and for Good-Cause Exception. 18. Docket No , Application of Southwestern Public Service Company Regarding Proposed Merger Between New Century Energies and Northern States Power Company. 19. Docket Nos and 21990, Application of Southwestern Public Service Company for Approval of its Proposed Business Separation Plan Pursuant to PURA (e). 20. Docket No , Application of Southwestern Public Service Company for Approval of Unbundled Cost of Service Rate Pursuant to PURA and Public Utility Commission Substantive Rule Docket No , Application of Southwestern Public Service Company for Approval of Its Transition to Competition Plan and Related Relief. 22. Docket No , Application of Southwestern Public Service Company for Authority to: (1) Revise its Fixed Voltage Level Fuel Factors; (2) Surcharge its Historical Fuel Under-Recoveries; (3) Surcharge its Estimated Fuel Under-Recoveries; and (4) Related Good-Cause Waivers. 23. Docket No , Application of Southwestern Public Service Company to Recover Transition to Competition Costs Pursuant to Section of PURA. 24. No , Remand of Docket No , Petition of Lamb County Electric Cooperative, Inc. for a Cease and Desist Order Against Southwestern Public Service Company and Petition of Bailey County Electric Cooperative Association for a Cease and Desist Order Against Southwestern Public Service Company. 25. Docket No , Application Of Southwestern Public Service Company To Transfer Functional Control Of Electric Transmission Facilities To TRANSLink Transmission Company, LLC, and for Related Relief. 26. Docket No , Application of Southwestern Public Service Company for: (1) Reconciliation of its Fuel and Purchased Power Costs for 2000 and 2001; and (2) Related Relief. IRI - 18 of

6 Attachment DTH-IR-1 Page 3 of 11 Docket No TESTIMONY LISTING of David T. Hudson PUBLIC UTILITY COMMISSION OF TEXAS 27. Docket No , Application of Southwestern Public Service Company for: (1) Authority to Revise its Fuel Factors; (2) Authority to Institute Quarterly Adjustments to its Fuel Factors; (3) Authority to Surcharge its Fuel Cost Under-Recoveries; and (4) Related Good Cause Exceptions. 28. Docket No , Application of Southwestern Public Service Company for: (1) Reconciliation of its Fuel Costs for 2002 and 2003; (2) A Finding of Special Circumstances; and (3) Related Relief. 29. Docket No , Application Of Southwestern Public Service Company For: (1) Authority to Change Rates; (2) Reconciliation of Its Fuel Costs for 2004 and 2005; (3) Authority to Revise the Semi-Annual Formulae Approved in Docket No Used to Adjust Its Fuel Factors; And (4) Related Relief. 30. Docket No , Complaint of JD Wind 1, LLC, JD Wind 2, LLC, JD Wind 3, LLC, JD Wind 4, LLC, JD Wind 5, LLC, JD Wind 6, LLC, Against Southwestern Public Service Company. 31. Docket No , Application of Southwestern Public Service Company for Authority to Change Rates, to Reconcile Fuel and Purchased Power Costs for 2006 and 2007, and to Provide a Credit for Fuel Cost Savings. 32. Docket No , Southwestern Public Service Company's : (1) Report of Sale of Assets; (2) Request For a Finding that the Sale of Assets is in the Public Interest; (3) Request for Authority to Discontinue Retail Electric Service in its Dually Certificated Service Area Within the City of Lubbock and Adjacent Areas; and (4) Request for Findings Regarding Wholesale Power Sales Agreements. 33. Docket No , Application of Southwestern Public Service Company for Authority to Change Rates and to Reconcile Fuel and Purchased Power Costs for 2008 and IRI - 19 of

7 Attachment DTH-IR-1 Page 4 of I 1 Docket No TESTIMONY LISTING of David T. Hudson NEW MEXICO PUBLIC REGULATION COMMISSION Case No. 2113, Application for New Rates Pursuant to Second Revised General Order No Case No. 2205, Southwestern Public Service Company - General Order No. 37 Compliance Filing and Application for a Variance in the Requirements of Section 5.1 of General Order No Case No. 2512, In the Matter of the Consideration and Determination Concerning Whether it is Appropriate to Implement the Standards Set Out in Section 712 of the Energy Policy Act of Case No. 2575, Application of El Paso Electric Company and Central and Southwest Corporation to Merge and Related Approvals. 5. Case No. 2651, In the Matter of Staffs Petition for an Order Requiring Southwestern Public Service Company to Show Cause Why Its "System Purchase Option and Rate Guarantee" is Not In Violation of the Public Utility Act. 6. Case No. 2678, In the Matter of the Application of Southwestern Public Service Company for Approvals and Authorizations to (i) Merge with Public Service Company of Colorado and to Form a Holding Company, (ii) Divest its Non-Utility Subsidiaries, (iii) Issue Securities to the Holding Company, (iv) Amend its General Diversification Plan, and (v) Obtain All Other Approvals and Authorizations Necessary to Effectuate the Merger, Reorganization and Related Transactions. 7. Case No. 2717, In the Matter of Southwestern Public Service Company's Application for Approval of a Certificate of Public Convenience and Necessity to Construct and Operate a 100 MW Class Combustion Turbine Unit at its Cunningham Station Near Hobbs, New Mexico, and Avoided Capacity Cost Filings Under NMPUC Rule Case No. 2770, In the Matter of Southwestern Public Service Company's Request for Approvals and Authorizations Necessary to (I) Enter into a Contract for the Purchase of Capacity and Energy from the Phillips Cogeneration Project; and (ii) Contract with its Affiliated Interest, Quixx Corporation, to the Purchase Capacity and Energy from the Phillips Project. 9. Case No. 2771, In the Matter of Southwestern Public Service Company's Advice Notice No. 179 for Proposed Renewable Energy, Photovoltaic Pumping Systems, and Interruptible Irrigation Rates. 10. Case No. 2798, In the Matter of the Commission's Investigation of the Rates for Southwestern Public Service Company. IRl - 20 of

8 Attachment DTH-IR- I Page 5of11 Docket No TESTIMONY LISTING of David T. Hudson NEW MEXICO PUBLIC REGULATION COMMISSION 11. Case No. 3116, In The Matter of the Application of Southwestern Public Service Company for Approvals and Authorizations of the Merger Between New Century Energies, Inc., Southwestern's Parent/Holding Company, Into Northern States Power Company/Xcel Energy Inc., Approval of Southwestern's Second Amended General Diversification Plan that Reflects the Merger; and All Other Approvals and Authorizations Required to Effectuate and Implement the Merger. 12. Case No. 3220, Application of Southwestern Public Service Company for approval of Competitive Transition Plan in Accordance with the New Mexico Electric Industry Restructuring Act. 13. Case No. 3709, Application of Southwestern Public Service Company for approval of Continued Use of its Fuel and Purchased Power Cost Adjustment Clause ("FPPCAC") using a Monthly Adjustment Factor Pursuant to NMPRC Rule 550, Authorization to Implement the Proposed Monthly Adjustment Factor on an Interim Basis, Granting a Variance from Rule 550.9(a), and Approval of the Reconciliation of its Collections Under the FPPCAC for the Period October 1999 through September Case No. 3849, In the Matter of Southwestern Public Service Company's Application for NMPRC Approval of and Authorization for Translink Transmission Company, LLC to Operate and Control Southwestern's New Mexico Certificated Transmission Facilities in Accordance With the Proposed Private Power Operating Agreement Between Southwestern Public Service Company and Translink Transmission Company, LLC. 15. Case No UT, In the Matter of Southwestern Public Service Company's Application for an Order Approving and Authorizing (1) Southwestern's Participation in the Xcel Energy Utility Money Pool, (2) Southwestern's Class II Transactions Related to its Participation in the Utility Money Pool, and (3) Required Amendments to Southwestern Public Service Company's General Diversification Plan. 16. Case No UT, In the Matter of Staff's Petition for an Order to Show Cause, for Implementation of Temporary Billing Measures and for an Investigation into Southwestern Public Service Company's Estimated Billings Practice. 17. Case No UT, In the Matter of the Commission's Determination of the Reasonable Cost Threshold for Renewable Energy. 18. Case No UT, In the Matter of Southwestern Public Service Company's 2003 Annual Portfolio Report and 2004 Annual Portfolio Procurement Plan Pursuant to the Renewable Energy Act (Laws 2004, Ch 65). 19. Case No UT, Petition of Southwestern Public Service Company for Approval of Renewable Energy Cost Recovery Methodology in Accordance with Renewable Energy Act, (Laws 2004, Ch 65). IR1-21 of

9 Attachment DTH-IR-1 Page 6 of I 1 Docket No TESTIMONY LISTING of David T. Hudson NEW MEXICO PUBLIC REGULATION COMMISSION 20. Case No UT, In The Matter Of Southwestern Public Service Company's Application For Approval Of (1) Continued Use Of Its Fuel And Purchased Power Cost Adjustment Clause ("FPPCAC") Using A Monthly Adjustment Factor Pursuant To NMPRC Rule 550, (2) The Existing Variance From Rule (A), And (3) The Report Regarding Collections Under The Previous Annual FPPCAC In Effect During The Period October 2001 Through January 2002, And Collections Under The Existing Monthly FPPCAC For The Period February 2002 Through May Case No UT, Southwestern Public Service Company's Annual Renewable Energy Portfolio Report And Petition Of Southwestern Public Service Company For Approval Of Its Annual Renewable Energy Portfolio Procurement Plan. 22. Case No UT, In the Matter of Lea Power Partners. LLC's Application for the Location of the Hobbs Generation Station in the SW 1/4 of Section 24, Township 18s Range 36E Pursuant to the Public Utility Act, NMSA Case No UT, In the Matter of Southwestern Public Service Company's Application for Issuance of a Certificate of Convenience and Necessity Authorizing Southwestern Public Service Company to Construct and Operate 115 and 230 kv Transmission Lines and Substation Facilities that will be Associated with Lea Power Partners, LLC's Hobbs Generating Station in Lea County, New Mexico, and for Approval of the Location of the Proposed 230 kv Transmission Line. 24. Case No UT, In the Matter of Southwestern Public Service Company's Application for Revision of its Retail Electric Rates Pursuant to Advice Notice Nos. 208 and 209 and All Associated Approvals. 25. Case No UT, In the Matter of an Investigation Into the Prudence of Southwestern Public Service Company's Participation in the Southwest Power Pool Regional Transmission Organization. 26. Case No UT, In the Matter of the Joint Application of Southwestern Public Service Company and Golden Spread Electric Cooperative, Inc., For Approval of Their Replacement Power Sales Agreement in Accordance With the Final Orders in Case Nos UT and UT. 27. Case No UT, In the Matter of the Application of Southwestern Public Service Company For Revision of its Retail Electric Rates Pursuant to Advice Notice Nos. 217, 218, and 219 and Request For Expedited Interim Relief Authorizing Recovery of Capacity Related Costs Associated With the New Hobbs Generating Station. 28. Case No UT, In the Matter of Southwestern Public Service Company's Application For: (1) Issuance of a Certificate of Convenience and Necessity For an Additional Combustion Turbine at Jones Station in Lubbock County, Texas; and (2) Approval of a Contract for the Purchase of Capacity and Energy from Calpine Energy Services, L.P. From 2012 Through 2018 in Accordance With Case No UT. IRI - 22 of

10 Attachment DTH-IR-1 Page 7 of 11 Docket No TESTIMONY LISTING of David T. Hudson PUBLIC UTILITIES COMMISSION OF COLORADO Docket No. 95A-531EG, Application of Public Service Company of Colorado Regarding Proposed Business Combination with Southwestern Public Service Company. 2. Docket No. OOA-600E, Application of Public Service Company of Colorado for a 345 KV CCN (Tie Line). IR1-23 of

11 Attachment DTH-IR-1 Page 8 of 11 Docket No TESTIMONY LISTING of David T. Hudson FEDERAL ENERGY REGULATORY COMMISSION 1. Docket No. EL , Golden Spread Electric Cooperative, Inc. Rate Investigation. 2. Docket No. ER , Southwestern Public Service Company (On Remand). 3. Docket Nos. EC and ER , El Paso Electric Company and Central and Southwest Services, Inc., November 11, Docket No. ER , Southwestern Public Service Company Application for Open Access Transmission Service Tariffs. 5. Docket No. EL , Golden Spread Electric Cooperative, Inc. v. Southwestern Public Service Company. 6. Docket No. EC , Public Service Company of Colorado and Southwestern Public Service Company, November 9, Docket No. ER , Public Service Company of New Mexico. 8. Docket No. OA , El Paso Electric Company Open Access Transmission Tariff. 9. Docket No. EROO , Southwestern Public Service Company Rate Application. 10. Docket No. ER , Southwestern Public Service Company and Public Service Company of Colorado Rate Application. 11. Docket No. ER , Xcel Energy Services Updated Market-Based Rate Application. 12. Docket No. EL , Golden Spread Electric Cooperative, Inc. v. Southwestern Public Service Company. 13. Docket No. ER , Southwestern Public Service Company. 14. Docket No. ER , Southwestern Public Service Company. 15. Docket No. ER , Southwestern Public Service Company. IR1-24 of

12 Attachment DTH-IR-I Page 9 of 11 Docket No TESTIMONY LISTING of David T. Hudson KANSAS CORPORATION COMMISSION Docket No. 99-SWPE-764-MIS, In the Matter of the Application of Southwestern Public Service Company for a Siting Permit for the construction of a 345 kv Transmission Line in Hamilton, Kearny, Finney, Grant, and Stevens Counties, Kansas. IRI - 25 of

13 Attachment DTH-IR-1 Page 10 of I 1 Docket No TESTIMONY LISTING of David T. Hudson WYOMING PUBLIC SERVICE COMMISSION l. Docket Nos GA and EA-95-40, Application of Cheyenne Light, Fuel and Power Company (SPS/PSCo Merger). IR1-26 of

14 Attachment DTH-IR-1 Page 11 of 11 Docket No TESTIMONY LISTING of David T. Hudson OKLAHOMA CORPORATION COMMISSION Cause No. PUD , Application of Southwestern Public Service Company for a Certificate Authorizing it to Create Liens on its Properties in the State of Oklahoma to Secure up to $105,000,000 Principal Amount of its First Mortgage Bonds. 2. Cause No. PUD , Application of Ernest G. Johnson, Director of the Public Utility Division of the Oklahoma Corporation Commission to review the Impact of the Merger of the New Century Energy, Inc., with and into Northern States Power Company, On Oklahoma Jurisdictional Customers of Southwestern Public Service Company, a wholly owned Subsidiary of New Century Energy, Inc. Cause No. PUD , Application of Southwestern Public Service Company for Approval of Merger Savings Credit Rider to Retail Tariffs. IRl - 27 of

15 DOCKET NO APPLICATION OF SOUTHWESTERN PUBLIC SERVICE COMPANY FOR PUBLIC UTILITY COMMISSION AUTHORITY TO CHANGE RATES AND TO RECONCILE FUEL AND PURCHASED POWER COSTS FOR THE PERIOD JULY 1, 2012 OF TEXAS THROUGH JUNE 30, 2013 DIRECT TESTIMONY of RICHARD M. LUTH on behalf of SOUTHWESTERN PUBLIC SERVICE COMPANY (filename: LuthlRDirect.doc) Table of Contents GLOSSARY OF ACRONYMS AND DEFINED TERMS... 2 LIST OF ATTACHMENTS WITNESS IDENTIFICATION AND QUALIFICATIONS... 4 II. ASSIGNMENT AND SUMMARY OF TESTIMONY AND RECOMMENDATIONS... 7 III. PROPOSED INTERIM RATES... 8 IV. CONCLUSION AFFIDAVIT Luth Direct - Interim Rates Page I IRI - 28 of

16 GLOSSARY OF ACRONYMS AND DEFINED TERMS Acronym/Defined Term Commission kw kwh SPS Xcel Energy Meaning Public Utility Commission of Texas Kilowatt Kilowatt-hour Southwestern Public Service Company, a New Mexico corporation Xcel Energy Inc. Luth Direct - Interim Rates IRl - 29 of 43 Page

17 LIST OF ATTACHMENTS Attachment RML-IR-1 RML-IR-2 RML-IR-3 RML-IR-4 Description List of Prior Texas and New Mexico Testimony (filename: RML-IR-l.doc) Allocation of Interim Revenue and Calculation of Interim Rates (filename: RML-IR-2.xls) Calculation of Adjusted Revenue at Interim Rates (filename: RML-IR-3.xls) Traiff - Interim Rates - Sheet No. IV-201 (filename: RML-IR-4.dic) Luth Direct - Interim Rates Page 3 IRI - 30 of

18 DIRECT TESTIMONY OF RICHARD M. LUTH 1 I. WITNESS IDENTIFICATION AND QUALIFICATIONS 2 Q. Please state your name and business address. 3 A. My name is Richard M. Luth. My business address is 600 Tyler Street, Amarillo, 4 Texas Q. On whose behalf are you testifying in this proceeding? 6 A. I am filing testimony on behalf of Southwestern Public Service Company, a New 7 Mexico corporation ("SPS") and wholly-owned electric utility subsidiary of Xcel 8 Energy Inc. ("Xcel Energy"). Xcel Energy is a registered holding company that 9 owns several electric and natural gas utility operating companies.' 10 Q. By whom are you employed and in what position? 11 A. I am employed by SPS as Manager, Pricing and Planning in the Regulatory 12 Administration Department. 13 Q. Please briefly outline your responsibilities as Manager, Pricing and Planning. 14 A. I am responsible for the preparation of electric cost allocation studies and the 15 development and design of retail electric rates and tariffs for SPS. Those responsibilities include development of rates, terms, and conditions for proposed service contracts, and the analysis of various other regulatory and business issues. ' Xcel Energy is the parent company of four wholly owned electric utility operating companies: Northern States Power Company, a Minnesota corporation; Northern States Power Company, a Wisconsin corporation; Public Service Company of Colorado, a Colorado corporation; and SPS. Xcel Energy's natural gas pipeline subsidiary is WestGas InterState, Inc. Luth Direct - Interim Rates Page 4 IR 1-31 of

19 1 Q. Please describe your educational background. 2 A. I graduated from Illinois State University in 1983, with a Bachelor of Science in 3 Accounting. 4 Q. Please describe your professional experience. 5 A. I have been employed by SPS and its affiliated companies since April of Prior to that, I had been a Rates Analyst and Economic Analyst with the Illinois 7 Commerce Commission since October At the Illinois Commerce 8 Commission, I reviewed cost-of-service studies, rates, and other matters involving 9 the regulation of investor-owned public utilities. 10 Q. Have you attended or taken any special courses or seminars relating to 11 public utilities? 12 A. Yes. I have attended numerous courses and seminars hosted by the Illinois State 13 University Institute for Regulatory Policy Studies. 14 Q. Do you hold any professional designations? 15 A. Yes. I have earned the Certified Public Accountant and Certified Management 16 Accountant certifications. 17 Q. Have you testified before any regulatory authorities? 18 A. Yes. Since April of 2008, I have filed testimony with the Public Utility 19 Commission of Texas ("Commission") in numerous dockets on behalf of SPS 20 regarding cost allocation and rate design issues, including SPS's last three base 21 rate cases, which were Docket Nos , 38147, and Additionally, I 22 have testified on behalf of SPS in numerous cases before the New Mexico Public 23 Regulation Commission regarding cost allocation and rate design. A list of my Luth Direct - Interim Rates Page 5 IRl - 32 of

20 1 Texas and New Mexico testimony on cost allocation and rate design is 2 Attachment RML-IR-1 to this testimony. Finally, before joining SPS, I testified 3 before the Illinois Commerce Commission on numerous occasions on various cost 4 allocation, rate design, and tariff issues. Luth Direct - Interim Rates Page 6 IRl - 33 of

21 1 II. ASSIGNMENT AND SUMMARY OF TESTIMONY AND 2 RECOMMENDATIONS 3 Q. What is your assignment in this phase of the proceeding? 4 A. I discuss SPS's proposed allocation and rate design for the interim rates that SPS 5 is requesting in this docket. I also sponsor the tariff that SPS is proposing for the 6 interim rates. 7 Q. Please summarize your testimony and conclusions. 8 A. SPS has allocated the requested interim rate increase among the customer classes 9 according to base-rate revenue at present rates. For non-demand charged classes, 10 the interim rate will be an energy-based charge, and for the demand-metered 11 classes, the interim rate will be a demand-based charge. The resulting interim 12 increase allows $32,590,622 of interim rates on an annualized Test Year basis. 13 This proposed allocation and rate design is reasonable because SPS's proposed 14 class allocation for the final rates in this case has not yet been approved. Luth Direct - Interim Rates Page 7 IR1-34 of

22 1 III. PROPOSED INTERIM RATES 2 Q. What portion of its proposed base rate increase is SPS proposing to recover 3 through interim rates? 4 A. As discussed in David T. Hudson's direct Interim Rate testimony, SPS is asking 5 to recover 40 percent of its requested base rate increase through interim rates, 6 effective for usage occurring on and after March 1, SPS's proposed base 7 rate increase is $81,476,555, which results in a Texas retail jurisdictional revenue 8 requirement of $543,632,534. Thus, SPS is proposing an interim rate increase of 9 $32,590,622, which is a 7.05 percent increase to adjusted Test Year revenues at 10 present rates for each class. Attachment RML-IR-2 reflects the calculation of the 11 allocation. 12 Q. How have you allocated the proposed interim rate increase among the 13 customer classes? 14 A. I have allocated the requested interim rate increase among the customer classes 15 according to base-rate revenue at present rates. For example, the present revenue 16 at current rates for the Residential class is $116,500,072, which is percent 17 of the Test Year adjusted revenue at present rates. Thus, I have allocated percent of the interim rate increase to the Residential class. My Attachment 19 RML-IR-2 shows the calculation of each class's allocated share of the proposed 20 interim rate increase. Luth Direct - Interim Rates Page 8 IRI - 35 of

23 1 Q. Is it reasonable to allocate the proposed interim rate increase on a revenue 2 basis? 3 A. Yes. The Commission has not yet approved a final cost allocation method for this 4 case, and therefore I am not using SPS's proposed class allocation. Instead, I 5 have allocated the interim increase based on base rate revenue at present rates, 6 which provides an accurate measure of each class's current relative responsibility 7 for supporting SPS's cost of service. 8 Q. How have you designed the interim rates for each customer class? 9 A. I designed the rates by increasing the dollar per kilowatt-hour ("kwh") energy 10 charge for those classes that are not billed a demand charge, and I increased the 11 dollar per kilowatt ("kw") charge for classes that are billed a demand charge. For 12 example, the Adjusted Test Year kwh for the Residential class is 1,620,183,849, 13 and the interim rate increase for that class is $8,215,430, for an interim increase 14 rate of $ per kwh. That is the rate needed to recover the Residential 15 customers' percent share of the annual interim base rate increase of 16 $32,590, Q. Have you prepared a proof of revenue and an Interim Rate tariff? 18 A. Yes. The proof of revenue is provided in Attachment RML-IR-3. Attachment 19 RML-IR-4 is the Interim Rate tariff that reflects the interim rates SPS is 20 proposing in this proceeding. Luth Direct - Interim Rates Page 9 IRI - 36 of

24 IV. CONCLUSION 2 Q. Were Attachments RML-IR-1 through RML-IR-4 prepared by you or under 3 your direct supervision and control? 4 A. Yes. Q. Does this conclude your pre-filed direct testimony in the Interim Rate phase? 6 A. Yes. Luth Direct - Interim Rates Page 10 IR1-37 of

25 AFFIDAVIT STATE OF TEXAS COUNTY OF POTTER RICHARD M. LUTH, first being sworn on his oath, states: I am the witness identified in the preceding testimony. I have read the testimony and the accompanying attachments and am familiar with their contents. Based upon my personal knowledge, the facts stated in the testimony are true. In addition, in my judgment and based upon my professional experience, the opinions and conclusions stated in the testimony are true, valid, and accurate. RICHARD M. LUTH Subscribed and sworn to before me this RICHARD M. LUTH. ^ day of December, 2013 by ^-- otary Publi, Stt exas My Commission Expires: ^7-2,2-V_ 0 / 7,( ^, Emily Bustos y^7tc^ Commission Expres ^' ^qf Luth Direct- Interim Rates Page 11 IRI - 38 of

26 Attachment RML-IR-1 Page 1 of 2 Docket No PRIOR TEXAS AND NEW MEXICO TESTIMONY OF RICHARD M. LUTH ON COST ALLOCATION AND RATE DESIGN Texas Dockets Docket No Docket No Docket No Docket No Docket No Docket No Application of Southwestern Public Service Company for Approval of Transmission Cost Recovery Factor Application of Southwestern Public Service Company to Adjust Its Energy Efficiency Cost Recovery Factor Application of Southwestern Public Service Company for Authority to Change Rates and to Reconcile Fuel and Purchased Power Costs for the Period January 1, 2010 through June 30, 2012 Application of Southwestern Public Service Company to Adjust Its Energy Efficiency Cost Recovery Factor Application of Southwestern Public Service Company for Authority to Change Rates and to Reconcile Fuel and Purchased Power Costs for 2008 and 2009 Application of Southwestern Public Service Company for Approval of a Transmission Cost Recovery Factor New Mexico Cases Case No UT Case No UT Case No UT In the Matter of Southwestern Public Service Company's Application for Revision of Its Retail Rates Under Advice Notice No. 245 In the Matter of Southwestern Public Service - Company's Application for (1) Authorization to Enter into a Purchased Power Agreement for the Purchase of 0.8 MW of Nominal Solar Capacity and Associated Energy for Windsource; (2) Approval of a Proposed Methodology for Calculating and Annually Adjusting the Windsource Rate; and (3) Authorization to Flow Through All Windsource Costs and Revenues Through Its Fuel and Purchased Power Cost Adjustment Clause In the Matter of Southwestern Public Service Company's Application for a Deferred Renewable Cost Rider and Authority to Establish a Regulatory Asset Associated with that Rider IRl - 39 of

27 Attachment RML-IR-I Page 2 of 2 Docket No PRIOR TEXAS AND NEW MEXICO TESTIMONY OF RICHARD M. LUTH ON COST ALLOCATION AND RATE DESIGN Case No UT Case No UT Case No UT Case No UT Case No UT In the Matter of Southwestern Public Service Company's Application for Approval of Its (A) 2012 Energy Efficiency Load Management Plan and Associated Programs; (B) Cost Recovery Tariff Rider; and (3) Requested Variance In the Matter of Southwestern Public Service Company's Application for Revision of Its Retail Rates Under Advice Notice No. 235 In the Matter of Southwestern Public Service Company's Filing of Advice Notices for Revisions to Energy Efficiency Tariff Riders Pursuant to NPAC K In the Matter of Southwestern Public Service Company's Application for Approval of Its Energy Efficiency Load and Management Plan and Associated Programs, Requested Variances, and Cost Recovery Tariff Rider In the Matter of the Application of Southwestern Public Service Company for Revision of Its Retail Electric Rates Pursuant to Advice Notice Nos. 217, 218 and 219 and Request for Expedited Interim Relief Authorizing Recovery of Capacity Related Costs Associated with the New Hobbs Generating Station IRl - 40 of

28 Attachment RML-IR-2 Page 1 of I Docket No SOUTHWESTERN PUBLIC SERVICE COMPANY ALLOCATION OF INTERIM REVENUE AND CALCULATION OF INTERIM RATES For the Test Year ending June 30, 2013 Class % of Total Allocation of Line Present Interim Interim No. Rate Class Revenue Revenue Revenue Billing Units Interim Rate 1 Residential Service $ 116,500, % $ 8,215,430 1,620,183,849 kwh $ per kwh 2 Residential Space Heat $ 47,378, % $ 3,341, ,712,038 kwh $ per kwh 3 Small General Service $ 12,945, % $ 912, ,836,219 kwh $ per kwh 4 Secondary General Service $ 100,989, % $ 7,121,617 6,516,617 kw-mo $ per kw 5 Primary General Service $ 58,329, % $ 4,113,289 3,728,085 kw-mo $ per kw 6 Primary Standby Service $ 99, % $ 6,996 11,701 kw-mo $ per kw 7 SAS-4(CRMWA) $ 2,826, % $ 199, ,370,253 kwh $ per kwh 8 SAS-8(Orion) $ 266, % $ 18,769 33,875,116 kwh $ per kwh 9 Large Gen Service Trans - 69kV $ 16,957, % $ 1,195,854 1,629,047 kw-mo $ per kw 10 Large Gen Standby - 69kV $ 437, % $ 30, ,000 kw-mo $ per kw 11 Large Gen Service Trans - 115kV+ $ 80,040, % $ 5,644,317 7,936,711 kw-mo $ per kw 12 Large Gen Standby - 115kV+ $ 1,345, % $ 94, ,896 kw-mo $ per kw 13 Small Municipal Service $ 908, % $ 64,050 14,844,442 kwh $ per kwh 14 Large Municipal Service $ 6,569, % $ 463, ,571 kw-mo $ 0799 per kw 15 Large School Service $ 8,781, % $ 619, ,148 kw-mo $ per kw Street and Area Lighting 16 Flood Lighting Service $ 1,425, % $ 100,506 12,314,868 kwh 17 Guard Lighting Service $ 3,572, % $ 251,919 15,703,152 kwh 18 Service Agreement Lighting Service $ 9, % $ ,164 kwh 19 Street Lighting Service $ 2,772, % $ 195,498 29,113,200 kwh 20 Highway Lighting Service $ 3, % $ ,250 kwh Total Street and Area Lighting $ 7,782, % $ 548,831 57,305,634 kwh $ per kwh 21 Total Company $ 462,155, % $ 32,590,622 IR1-41 of

29 Attachment RML-IR-3 Page 1 of 1 Docket No SOUTHWESTERN PUBLIC SERVICE COMPANY CALCULATION OF ADJUSTED REVENUE AT INTERIM RATES For the Test Year ending June 30, 2013 Line No. Rate Class Billing Units 1 Residential Service 1,620,183,849 kwh 2 Residential Space Heat 771,712,038 kwh 3 Small General Service 198,836,219 kwh 4 Secondary General 6,516,617 kw-mo 5 Primary General 3,728,085 kw-mo 6 Primary Standby 11,701 kw-mo 7 SAS-4 (CRMWA) 141,370,253 kwh 8 SAS-8 (Orion) 33,875,116 kwh 9 Lg Gen Service ( ,629,047 kw-mo 10 Lg Gen Standby (69-115k 120,000 kw-mo 11 Lg Gen Service (115kV+) 7,936,711 kw-mo 12 Lg Gen Standby (115kV+; 279,896 kw-mo 13 Small Muni and Schools 14,844,442 kwh 14 Lg Municipal Service 579,571 kw-mo 15 Lg School Service 735,148 kw-mo 16 Street and Area Lighting 57,305,634 kwh 17 Total Company Base Rate Revenue at Interim Base Rates Rate Revenue - $ $ / kwh $ 8,215,952 $ / kwh $ 3,340,741 $ / kwh $ 912,857 $ 1.09 / kw-mo $ 7,122,662 $ 1.10 / kw-mo $ 4,112,078 $ 0.60 / kw-mo $ 6,997 $ / kwh $ 199,332 $ / kwh $ 18,767 $ 0.73 /kw-mo $ 1,195,720 $ 0.26 / kw-mo $ 30,840 $ 0.71 / kw-mo $ 5,643,002 $ 0.34 / kw-mo $ 94,885 $ / kwh $ 64,054 $ 0.80 / kw-mo $ 463,077 $ 0.84 / kw-mo $ 618,995 $ / kwh $ 548,816 > > IRl - 42 of

30 Attachment RML-IR-4 Page 1 of I Docket No XCelFl?E'l'^y- Sl'iUTHWESTERN PUBLIC $FRVICE Section No. IV Sheet No. IV-201 Original Page 1 of 1 N ELECTRIC TARIFF INTERIM RATES APPLICABILITY: To all retail customers in Texas, in addition to all rates under the applicable tariff. Upon completion of a base rate case at the Public Utility Commission of Texas ("Commission"), Interim Rates shall be set to zero, unless otherwise ordered by the Commission. The Interim Rates are sufficient to recover 40 percent of the base rate increase requested in Docket No , or an annual increase of $32,430,225. If the Commission grants an annual rate increase lower than $32,430,225, SPS will refund the difference between that lower amount and the interim rates, with interest, over a period equal to the time between March 1, 2014 and the effective date of the final rates. RATE: The Interim Rate for each rate class is shown below. Rate Class Residential Service Residential Space Heating Small General Service Secondary General Service Primary General Service Primary Standby Service Large General Service - Transmission, 69 kv LGST - Standby, 69 kv Large General Service - Transmission, 115 kv + LGST - Standby, 115 kv + Small Municipal & School Service Large Municipal Service Large School Service Street & Area Lighting Service Agreement Summary - Orion Engineered Carbons Service Agreement Summary - Canadian River Municipal Water Authority EFFECTIVE: March 1, 2014 Rate $ per kwh $ per kwh $ per kwh $ 1.09 per kw $ 1.10 per kw $ 0.60 per Res kw $ 0.73 per kw $ 0.26 per Res kw $ 0.71 per kw $ 0.34 er Res kw $ per kwh $ 0.80 per kw $ 0.84 per kw $ per kwh $ per kwh $ per kwh N T. Avwu^ PRESIDENT & CEO, SOUTHWESTERN PUBLIC SERVICE COMPANY IRl - 43 of

31 DOCKET NO APPLICATION OF SOUTHWESTERN PUBLIC SERVICE COMPANY FOR AUTHORITY TO CHANGE RATES AND TO RECONCILE FUEL AND PURCHASED POWER COSTS FOR THE PERIOD JULY 1, 2012 THROUGH JUNE 30, 2013 PUBLIC UTILITY COMMISSION OF TEXAS DIRECT TESTIMONY of DAVID T. HUDSON on behalf of SOUTHWESTERN PUBLIC SERVICE COMPANY (filename: HudsonRRDirect.doc) Table of Contents GLOSSARY OF ACRONYMS AND DEFINED TERMS... 3 LIST OF ATTACHMENTS WITNESS IDENTIFICATION AND QUALIFICATIONS II. ASSIGNMENT AND SUMMARY OF TESTIMONY III. OVERVIEW OF APPLICATION AND WITNESSES A. SPS's REQUESTED RELIEF B. MAJOR COST PRESSURES AFFECTING SPS C. INTRODUCTION OF SPS REVENUE REQUIREMENT WITNESSES IV. SPS OVERVIEW V. INCLUSION OF NEW INVESTMENT IN RATE BASE VI. RATE TREATMENT OF MUNICIPAL FRANCHISE FEES VII. REFUND OF TUCO CHARGES VIII. EFFECT OF CHANGES IN WHOLESALE SALES VOLUMES IX. TREATMENT OF CHEMICAL EXPENSES RELATED TO ENVIRONMENTAL COMPLIANCE X. RENEWABLE ENERGY COSTS XI. TREATMENT OF ELECTRIC COMMODITY SALES XII. QUALITY OF SERVICE XIII. COMMITMENTS IN PRIOR DOCKETS XIV. RATE CASE EXPENSES XV. TERMINATION OF LUBBOCK GAIN AMORTIZATION CREDIT Hudson Direct - Revenue Requirement Page 1 RRl - 1 of

32 XVI. DEFERRED ASSET REQUEST FOR DISCOUNTS FOR BURNED VETERANS XVII. SPS's REQUESTS OF THE COMMISSION XVIII. CONCLUSION AFFIDAVIT Hudson Direct - Revenue Requirement Page 2 RRl - 2 of

33 GLOSSARY OF ACRONYMS AND DEFINED TERMS Acronym/Defined Term AEP ALJ Commission DCRF Eastern New Mexico Cooperatives EPE ERCOT ETI FERC GSEC kv kwh LP&L MW MWh NCE NMPRC NSPM NSPW Meaning American Electric Power Administrative Law Judge Public Utility Commission of Texas Distribution Cost Recovery Factor Central Valley Electric Cooperative, Inc.; Farmers' Electric Cooperative, Inc. of New Mexico; Lea County Electric Cooperative, Inc.; and Roosevelt County Electric Cooperative, Inc. El Paso Electric Company Electric Reliability Council of Texas Entergy Texas, Inc. Federal Energy Regulatory Commission Golden Spread Electric Cooperative, Inc. kilovolt kilowatt-hour Lubbock Power & Light Megawatt Megawatt-hour New Century Energies, Inc. New Mexico Public Regulation Commission Northern States Power Company, a Minnesota corporation Northern States Power Company, a Wisconsin corporation Hudson Direct - Revenue Requirement Page 3 RRI - 3 of

34 Acronym/Defined Term OPEB Operating Companies PCRF PNM PPA PSA PSCo Meaning Other Post-Employment Benefits NSPM, NSPW, PSCo, and SPS Power Cost Recovery Factor Public Service Company of New Mexico Power Purchase Agreement Power Sales Agreement Public Service Company of Colorado, a Colorado corporation Rule P.U.C. SUBST. R PURA Public Utility Regulatory Act Reconciliation Period July 1, 2012 through June 30, 2013 REC RFP ROE RPSA SAIDI SAIFI Savage Sharyland SPP SPS SWEPCO Renewable Energy Credit Rate Filing Package Rate of Return on Common Equity Replacement Power Sales Agreement System Average Interruption Duration Index System Average Interruption Frequency Index Savage-Harrington Corporation Sharyland Utilities, L.P., successor to Cap Rock Energy Corporation, successor to Cap Rock Electric Cooperative, Inc. Southwest Power Pool Southwestern Public Service Company, a New Mexico corporation Southwestern Electric Power Company Hudson Direct - Revenue Requirement Page 4 RRl - 4 of

35 Acronym/Defined Term TCRF Meaninjz Transmission Cost Recovery Factor Test Year July 1, 2012 through June 30, 2013 Total Company or total company TUCO WACC WTMPA Xcel Energy XES Total SPS (before any jurisdictional allocation) TUCO Inc. Weighted Average Cost of Capital West Texas Municipal Power Agency Xcel Energy Inc. Xcel Energy Services Inc. Hudson Direct - Revenue Requirement RR1-5 of 566 Page

36 LIST OF ATTACHMENTS Attachment DTH-RR-1 DTH-RR-2 DTH-RR-3 DTH-RR-4 DTH-RR-5 DTH-RR-6 DTH-RR-7 DTH-RR-8 Description List of Prior Testimony (Filename: DTH-RR-l.xls) Revenue Increase Summary (Filename: DTH-RR-2.xls) Map of SPS Transmission System (Filename: DTH-RR-3.pdf) Example of Deferred Franchise Fees (Filename: DTH-RR-4.xls) List of Municipalities in SPS Service Area and Franchise Fee Percentages (Filename: DTH-RR-5.pdf) Summary of Rate Case Expenses (Filename: DTH-RR-6.xls) Affidavit of J. Kay Trostle and attached supporting affidavits of Stephen Fogel and David T. Hudson (Filename: DTH-RR-7.pdf) Workpapers of David T. Hudson (Filename: DTH-RR-8.pdf) Hudson Direct - Revenue Requirement Page 6 RR1-6 of

37 DIRECT TESTIMONY OF DAVID T. HUDSON 1 I. WITNESS IDENTIFICATION AND QUALIFICATIONS 2 Q. Please state your name and business address. 3 A. My name is David T. Hudson. My business address is 600 S. Tyler Street, 4 Amarillo, Texas Q. On whose behalf are you testifying in this proceeding? 6 A. I am filing testimony on behalf of Southwestern Public Service Company, a New 7 Mexico corporation ("SPS") and wholly-owned electric utility subsidiary of Xcel 8 Energy Inc. ("Xcel Energy"). Xcel Energy is a registered holding company that 9 owns several electric and natural gas utility operating companies.' 10 Q. By whom are you employed and in what position? 11 A. I am employed by SPS as President and Chief Executive Officer. 12 Q. Please briefly outline your responsibilities as President and Chief Executive 13 Officer of SPS. 14 A. My duties include overall responsibility for the operations of SPS, including 15 customer and community relations, quality of service, communications, 16 legislative relations, regulatory administration and financial performance. 17 Q. Please describe your educational background. 18 A. I graduated Cum Laude from Texas Tech University in December 1983, receiving 19 a Bachelor of Science degree in Industrial Engineering. In May 1990, I graduated 1 Xcel Energy is the parent company of four wholly-owned electric utility operating companies: Northern States Power Company, a Minnesota corporation ("NSPM"); Northern States Power Company, a Wisconsin corporation ("NSPW"); Public Service Company of Colorado, a Colorado corporation ("PSCo"); and SPS (collectively, "Operating Companies"). Xcel Energy's natural gas pipeline subsidiary is WestGas InterState, Inc. Hudson Direct - Revenue Requirement Page 7 RRl -7of

38 1 from West Texas State University (now known as West Texas A&M University), 2 receiving a Master of Business Administration degree. 3 Q. Please describe your professional experience. 4 A. Since graduating from Texas Tech University in 1983, I have been doing cost-of- 5 service, rate, and regulatory work for SPS, New Century Services Inc., and Xcel 6 Energy Services Inc. ("XES"), the service company subsidiary of Xcel Energy. I 7 have served in numerous capacities within those companies, including: 8 Rate Engineer; 9 Supervisory Rate Engineer; 10 Senior Engineer of Rate Research; 11 Manager of Rate and Economic Research; 12 Director, Regulatory and Pricing Administration; 13 Director, Electric Business Support for Delivery Services; 14 Director, Regulatory Administration; 15 Director, Strategic Planning; 16 Director, Customer and Community Relations; 17 Interim Regional Vice President of Rates and Regulation; and 18 President and Chief Executive Officer of SPS. 19 Among other duties in those positions, I have been responsible for the design and 20 implementation of SPS's regulatory strategy and programs, including oversight of 21 rate case applications before the Public Utility Commission of Texas 22 ("Commission"), the New Mexico Public Regulation Commission ("NMPRC"), 23 and the Federal Energy Regulatory Commission ("FERC"). In addition to my 24 rate and regulatory work, I have served in strategic planning and customer and 25 community relations positions for SPS. Hudson Direct - Revenue Requirement Page 8 RRI - 8 of

39 I Q. Have you attended or taken any special courses or seminars relating to 2 public utilities? 3 A. Yes. I have completed the advanced rate design course of the Edison Electric 4 Institute. I have also attended the Public Utility Conference sponsored by New 5 Mexico State University's Center for Management and Professional 6 Development. 7 Q. Do you hold a professional license? 8 A. Yes. I am a licensed professional engineer in Texas. 9 Q. Are you a member of any professional organizations? 10 A. Yes. I am a member of the Texas Society of Professional Engineers and the 11 Institute of Electrical and Electronic Engineers 12 Q. Have you testified or filed testimony before any regulatory authorities? 13 A. Yes. I have filed testimony before the Commission in numerous SPS 14 proceedings, including base rate cases in Docket Nos , 32766, 35763, and My testimony in those base rate cases encompassed a wide variety of 16 topics, including regulatory policy and rate design. I have testified in other types 17 of Commission cases as well, such as complaint cases and asset sale dockets. I 18 have also filed testimony with the NMPRC in New Mexico base rate cases, such 19 as Case Nos UT and UT. In addition, I have been a witness 20 in cases before the Oklahoma Corporation Commission, the Kansas Corporation 21 Commission, the Wyoming Public Service Commission, and FERC. My 22 Attachment DTH-RR-1 gives a more complete list of cases in which I have 23 testified or filed testimony. Hudson Direct - Revenue Requirement Page 9 RR1-9 of

40 1 H. ASSIGNMENT AND SUMMARY OF TESTIMONY 2 Q. What is your assignment in this phase of the proceeding? 3 A. I have a number of assignments in this Revenue Requirement testimony.2 I begin 4 with a general overview of SPS's application and describe the rate impacts of the 5 requested rate increase. Then I provide an overview of SPS and explain the 6 necessity for the requested increase, as well as SPS's future plans to address the 7 current material capital spending cycle that it is in. I also discuss how SPS has 8 organized its testimony, and I introduce the other SPS witnesses who provide 9 testimony in the Revenue Requirement phase of the docket. In addition to those 10 items, I will also: 11 describe the amounts SPS is seeking to add to rate base because of new 12 capital assets placed in service between June 30, 2012, the end of the test 13 year in SPS's last base rate case,3 and June 30, 2013, the end of the test 14 year in this case; 15 describe the method that SPS uses to recover franchise fees and propose 16 that the Commission authorize SPS to continue using that method, with 17 one additional feature to moderate the effect of changing fuel prices; 18 justify SPS's continued inclusion of renewable energy credit ("REC") 19 costs in base rates, the valuation of those RECs, and the proposed recovery 20 methodology; 21 explain SPS's proposed rate treatment of the reduction in the wholesale 22 load of Golden Spread Electric Cooperative, Inc. ("GSEC") on June 1, , including the treatment of revenues received by SPS under the 24 GSEC Replacement Power Sales Agreements ("RPSA"); 25 discuss SPS's request to include certain environmental-related chemical 26 costs in fuel expense; 2 In addition to my testimony in the Revenue Requirements phase of the case, I also provide testimony in the Interim Rate phase explaining SPS's request for interim rates. 3 Application of Southwestern Public Service Company For Authority To Change Rates and To Reconcile Fuel and Purchased Power Costs For the Period January 1, 2010 Through June 30, 2012, Docket No (June 19, 2013). Hudson Direct - Revenue Requirement Page 10 RRI - 10 of