Company corrects depreciation lives to align with CFD term; OCC seeks affected FERC accounts
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Summary
GenCon told PURA it corrected prior practice that had depreciated incremental capital additions over 30 years and will now align remaining useful lives with the contract-for-differences term (2040/2041); OCC requested a list of affected FERC accounts and related calculations as a late-file exhibit.
GenCon representatives explained that incremental capital additions had inadvertently been depreciated over 30 years after initial construction and that the company27s updated practice is to synchronize remaining depreciation lives with the expected end of the contract-for-differences (CFD) term in 2040/2041. The change reduces depreciation expense periods for post-construction additions (for example, an asset installed in 2024 will be depreciated to 2040 rather than over 30 years from its in-service date).
Why it matters: Changing useful lives affects depreciation expense, accumulated depreciation and related deferred tax balances and therefore the revenue requirement. OCC asked GenCon to supply the specific FERC accounts impacted by the change and the financial impact on the model; company agreed to provide a late-file exhibit listing FERC accounts and quantifying the effect.
Company explanation: GenCon witnesses said the adjustment was intended to avoid assets being depreciated beyond the facility life set at the CFD inception; in practice, the remaining life assigned to an increment will equal the years remaining until 2040/2041 (e.g., an asset placed in service in 2025 would have ~15 years of remaining depreciation). The company said it would provide a list of impacted FERC accounts and calculate the numerical impact for the record.
Record follow-up: OCC27s request for a late-file exhibit (LFE 7) asking for the list of affected FERC accounts and the derivation was recorded on the record; the company committed to file the requested schedules.