The future test year period estimates shall be fully explained and linked to the historic base period and any linkage data.

1. A. For any material changes between base period and future test year period, cost drivers shall be separately identified, explained and justified as well as linked to the historical base period and any linkage data.

   (1) For example, for operation and maintenance expenses, changes in prices and in activity levels (e.g. number of employees, etc.) shall be fully explained and separately detailed by USOA account and elements of cost (segregated between labor and non-labor) and, if budget estimates are used, referenced to budget documentation by cost center.

   (2) For revenues, taxes and rate base, an analysis of the change between the historical and forecast period shall be made that distinguishes between volume and cost/price changes to the extent practicable.

   (3) For non-plant items, any material change shall be separately identified, explained and justified.

2. B. All assumptions of changes in cost/price inputs because of inflation or other factors or changes in activity levels due to modified work practices or other reasons shall be separately developed.
3. C. Staff and other parties in rate cases should be able to retrace projections back to their historical source, or the new basis for the estimate should be fully understandable.
4. D. All assumptions, escalation factors, contingency provisions and changes in activity levels shall be quantified and properly supported.

[17.1.3.17 NMAC – N, 2-14-13]