direct testimony of the capital expenditures, reliability, and - nyseg

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Case 09-E-____; Case 09-G-____ (NYSEG)DIRECT TESTIMONY OF THE CAPITAL EXPENDITURES,RELIABILITY, AND OPERATIONS PANEL123456789101112131415161718192021RESEARCH AND DEVELOPMENTQ. Does the Company plan to propose any changes in the R&D program and if soplease explain?A. Yes, the Company is proposing a reduction to the funding required for the R&Dprogram at NYSEG and an increase in the funding required for the R&D programat RG&E. The intent of the proposed change is to more equally share the costsand the program benefits between NYSEG and RG&E.Q. What is the current level of funding for the NYSEG Gas R&D Program?A. The current NYSEG Gas R&D Program consists of two parts, an internal programwith an annual allowance in base rates of $1.4 million and an external programfunded via an annual surcharge of $650,000. This surcharge is commonlyreferred to as Millennium funds. Funds required to pay the semi-annualCommission Assessment for the New York State Research and DevelopmentAuthority ("NYSERDA") statutory program are collected as part of the internalprogram and paid as one of the internal program expenditures. The historic,current and proposed amounts are set forth in Exhibit __ (NYSEGRGECROGAS-6) (NYSEG and RG&E Gas R&D Budget History, Proposal and Forecast).Q. How is the funding being provided for the existing Gas R&D Program atNYSEG?A. The existing funding was established under the Joint Proposal ("JP") for Case01-G-1668 and Case 01-G-1683 dated, September 12, 2002.85

Case 09-E-____; Case 09-G-____ (NYSEG)DIRECT TESTIMONY OF THE CAPITAL EXPENDITURES,RELIABILITY, AND OPERATIONS PANEL12345678910111213141516171819202122Q. What is the proposed funding level for the NYSEG Gas R&D Program?A. NYSEG is proposing to reduce the NYSEG internal category from $1,400,000 to$450,000, leave the Millennium funding at the current level of $650,000, andcollect the annual NYSERDA assessment using the same collection process usedfor the Internal category which is the same as proposed to be used at RG&E. It isfurther proposed that the remaining funds of $450,000 from the NYSEG internalprogram be transferred to a newly created RG&E internal category. Theremaining line item funding (Millennium and Internal) will remain fixed fromyear to year.Finally, it is proposed that the level of funding created for the NYSERDAline item and separated from the internal funding amount as shown in Exhibit __(NYSEGRGECRO-6) (NYSEG and RG&E Gas R&D Budget History, Proposaland Forecast), be allowed to vary automatically with increases or decreases in theactual NYSERDA gas assessment. Therefore, the proposed funding forMillennium expenditures will be $650,000 per year, internal gas R&Dexpenditures will be $450,000 per year, and the NYSERDA payments will varybased upon the annual PSC assessment and will be collected consistent with thecurrent methods. All the funds collected (except NYSERDA) will be dedicatedfor R&D cost and not used for any other purpose. Differences between actualexpenditures and actual collections will be deferred from year to year with anybalance available for R&D in subsequent years used to recover any deferred costfrom a previous year.86

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