7. Main Office

ORA agreed to use Park's proposed Main Office allocation of 41.42% as the Central Basin Division's share of these centralized administrative expenses.

7.1. Payroll

In discussions after the evidentiary hearings, ORA accepted Park's methodology for estimating Main Office Payroll, concluding that it is the same methodology adopted by the Commission in D.03-08-069 for Park's Apple Valley Ranchos subsidiary. We adopt the Main Office Payroll estimates as follows:

Payroll (in 000s)

2004 2,366.1

2005 2,453.7

7.2. Maintenance - Other Expense

ORA adopted Park's estimates for four of the five line items in this category. For General Plant/Other, ORA took a five-year average of recorded amounts and applied a composite escalation factor. ORA's analysis is not seriously challenged. We adopt ORA's estimates of $216,663 for Test Year 2004 and $221,819 for Test Year 2005.

7.3. Clearing - Other Expense

We adopt Park's revised estimates of $56,403 for Test Year 2004 and $58,304 for Test Year 2005 for this category. We agree with Park that ORA's use of a five-year average of recorded expenses escalated to the test years is inappropriate for transportation and insurance clearing accounts, since increases in these matters are not reflected in the averaging method. Similarly, depreciation on transportation clearing and tools clearing is more reasonably based on plant account balances and depreciation rates rather than an average of prior years.

7.4. Outside Services Expense

Both parties use a five-year average of recorded expenses to estimate outside services. Differences are due to the use of different escalation factors, with Park choosing to use the composite escalation factor and ORA choosing to use the compensation per hour escalation factor. After revisions, ORA's estimates are approximately $10,000 higher than Park's for Test Year 2004 and $20,000 higher than Park's for Test Year 2005. In the absence of record evidence clearly supporting one escalation factor over another in this category, we elect to authorize Park's lower estimates of $424,660 for Test Year 2004 and $434,596 for Test Year 2005.

7.5. Insurance Expense

Both parties revised their estimates to reflect 2003-2004 insurance premiums that became available during the course of the proceeding. In addition, ORA revised its methodology to be consistent with the linear trend model used for the Central Basin Division. The results are similar for both Park and ORA. We authorize Park's revised estimates of $114,706 for Test Year 2004 and $127,482 for Test Year 2005.

7.6. Office Supplies

As we did for the Central Basin Division, we will authorize Park's estimates of Main Office Supplies. Those estimates, as revised, are $154,163 for Test Year 2005 and $156,666 for Test Year 2005. ORA's estimates using a different methodology were similar to those of Park.

7.7. Miscellaneous Expense

Park's revised estimates based on the utility's 2003 operating budget are $77,658 for Test Year 2004 and $79,475 for Test Year 2005. We adopt Park's estimates. ORA's estimates using an averaging method are about $16,000 lower for each of the test years. We agree with Park, however, that the averaging method is less accurate than the budgeted amounts in this category in view of the changes in Main Office space and facilities over the five years of averaging.