20041201Peseau Direct.pdf

Dean J. Miller
McDEVITT & MILLER LLP
420 West Bannock Street
O. Box 2564-83701
Boise, ID 83702
Tel: [phone]
Fax: [phone]
oe(~n1cdevitt - miller. COlD
Idaho Pu Jtilities Commission
Offic.~1 the Secretary
RECEIVED
NOV 3 0 200~
Boise, Idaho
Attorneys for Applicant
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF UNITED WATER IDAHO INC. FOR
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR WATER SERVICE IN
THE STATE OF IDAHO
Case No. UWI-O4-
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
DIRECT TESTIMONY OF DENNIS E. PESEAU
Please state your name and address.
My name is Dennis E. Peseau. My address is 1500 Liberty
Street, S., Suite 250, Salem , OR 97302.
By whom and in what capacity are you employed?
I am President of Utility Resources , Inc. Utility Resources, Inc.
consults on a number of economic, financial , engineering and
regulatory matters for private and public entities.
On whose behalf are you testifying in these proceedings?
I am testifying on behalf of United Water Idaho Inc. ("United" or
the Company
Does attachment 1 to your testimony describe your professional
career and educational background?
Yes.
What is the purpose of your direct testimony in these
proceedings?
I am sponsoring Exhibit 14, a cost of service study ("COSS") of
the water system of United , and making rate design
recommendations based in part on the casso The reason
state that my rate design recommendations are based only "
part" on the COSS is an acknowledgement that here in Idaho
and usually elsewhere , implementation of efficient, fair and
equitable rates to United's customers requires a good deal of
Peseau , Oi
United Water Idaho Inc.
practical judgment in addition to the cost guidelines given us
from the COSS.
Have you previously testified before the idaho public utilities
commission on cost of service and rate design matters?
Yes. I have testified before this Commission on such matters on
numerous occasions dating back to 1980. I have represented
various customer groups previously on COSS and rate design
issues involving electricity and natural gas. I believe that this
case is the first water system COSS and rate design study that
have prepared in the State of Idaho, although I have testified in
water cases on several occasions in Oregon , Nevada and
California.
What conclusions have you reached from your studies and
analyses?
I conclude that:
The customer charges now in place are significantly below
customers' cost of service and should be raised. I propose that
these charges be raised by approximately 360/0.
Customer class distinctions in the present case remain
according to meter size.
There is substantial difference in seasonal commodity costs
of service between the winter and summer and the present 250
commodity rate differential should be maintained.
Peseau, OJ 2
United Water Idaho Inc.
How is your testimony organized?
Prior to my presenting the detailed COSS and rate design
proposals I focus initially on a review of some of the water
system cost of service and rate design issues that United
Commission Staff thereforeandintervenorsand this
Commission considered in the prior rate case No. UWI-98-
and subsequent Order No. 28043. In that case , a number of
different COSS and rate design proposals were presented and
evaluated. The issues considered there provide a perspective
for the COSS and rate design enhancements I discuss below.
SIGNIFICANT COSS AND RATE DESIGN ISSUES
What significant COSS and rate design issues arose in the 1998
rate case that remain pertinent in the present proceedings?
Leaving aside for the moment the many technical COSS issues
pertaining to functionalizing and classifying the numerous cost
categories involved in describing the United system , there were
threshold issues in the prior rate case.
Please briefly explain these threshold issues.
The first issue pertained to the consensus conclusion that the
revenues collected under United'customer charges fell
significantly short of covering the costs of serving customers.
Customer costs are defined as the costs associated with
customer billing, meters , service and fire protection.
Peseau, OJ 3
United Water Idaho Inc.
customer costs comprise a significant percentage of customers
bills and they cannot be "avoided" by reducing water
consumption, customers tend to prefer low customer charges.
The issue in the present case is just how much to raise the
present level customer charges, given the continuing disparity
that I find between these rates and customer cost of service.
A second important issue was the means by which customer
classes were to be defined. For a number of reasons , United'
customer classifications, for purposes of COSS have been
based on meter size not classes such as residential
commercial, industrial or public authority. In Case No. UWI-
98-3 it was recognized by Commission Staff and United that the
sampling, load profile and other usage pattern data necessary to
construct meaningful residential, commercial and other rate
classes would be very costly and difficult to develop. I consider
cost distinctions by meter size to be the reasonable classification
of costs and continue this practice in the COSS I develop.
A third important rate issue taken up in Case No. UWI-98-
3 was the design of the usage or commodity rate. This usage-
sensitive or commodity portion for rate design is especially
important in that it is here that customers confront the price
signals that form the basis for efficient water usage as well as
conservation decisions.
Peseau , Di 4
United Water Idaho Inc.
In the 1998 rate case , the then-existing seasonal rate
structure was re-examined in light of certain customers
frustration or confusion over facing different commodity rates
during different times of the year. The sense seemed to be
Shouldn t it cost me the same to bathe in the summer or the
winter if my consumption is somewhat flat year-round"I argue
below that the answer to this question is ", but the good news
for you is that appropriately seasonalized rates result in your
total annual bills for water used to bathe being less for you than
in the absence of seasonalized rates." That is, the cost of a bath
in the winter is lower by a greater amount than the cost of a bath
in the summer is higher, if your annual consumption is relatively
flat. As shown more formally below, the reason that annual bills
for relatively flat demand water customers are reduced by
seasonalizing commodity rates is that, compared to other
customers , their consumption occurs relatively more in the winter
or "off-season" rate period. With effective communication , these
customers ' frustration with differentiated bills could not only be
softened but perhaps be offset by the knowledge that their level
(i.e., efficient) consumption is rewarded by the seasonal rate
structure in the form of less expensive annual bills.The
reduction in these annual bills is made up from customers that
do not have level consumption , such as irrigation loads. The
Peseau, Oi 5
United Water Idaho Inc.
higher percentage of revenues paid by higher summer
consumption is as it should be , for the summer period is shown
below to have the higher costs of service. So long as there is a
reasonable cost basis for seasonal rate differentiation, seasonal
rates are fair, equitable and "better" than flat annual rates.
Previously, the basis for seasonalizing the Company s rates was
informed judgment. The COSS undertaken for United in the
present case actually distinguishes and differentiates commodity
costs by seasons rigorously rather than relying solely on
judgment.
Did you consider proposing an inclining or inverted block rate
structure here similar to proposals in uwid's last rate case?
Yes. As part of my preparation for the present case, I read much
of the record in Case No. UWI-98-3 where the topic of
inverted rates was discussed. I note that after the Commission
considered the issues pertaining to commodity rates, Order No.
28043 concluded that seasonal rather than inverted block rates
be implemented , although there was a dissenting opinion on the
Issue.
What is your recommendation with respect to the commodity rate
issue?
There is no perfect means to estimate commodity costs and
transfer these costs to rate design. Ultimately judgment not only
Peseau , Oi 6
United Water Idaho Inc.
about costs but also rate stability, understandability and other
equity issues must be addressed.
I do, however, prefer and in this case recommend continued
but improved use of seasonal over inverted block rates. While
over the years I have estimated and recommended both
seasonal and inverted block rates I believe in this case
ratemaking goals are better served with a seasonal rate
structure , perhaps modified by minimal initial summer
consumption block.
As Commission Staff and others discussed in Case No.
UWI-98-, and in my opinion hold true in this case , seasonal
rates:
Are able to be estimated formally within the COSS and
give more formal foundation and understanding of
seasonal cost differences;
Although not as simple as annual flat commodity rates
are much simpler and more ungerstandable compared
with multiple block rates;
Assure a better price signal to and promote
conservation by customers than do inverted block
rates;
Allow customers at all times to know the rates they
face , while they may never know the rate they face at
any particular point in time with an inverted block rate
structure.
Did commission staff in case no. Uwi-w-98-3 correctly point out
that the COSS in that case did not tell us directly how costs vary
by season?
Peseau, OJ 7
United Water Idaho Inc.
Yes. However, in the COSS I offer here , we have seasonalized
costs. While this formal seasonal estimation does not eliminate
the need for judgment in designing rates, it does nevertheless
give a good initial indication of seasonal cost differentiation , and
a rate objective to move toward over time.
POSSIBLE SUMMER INITIAL LOW-COST RATE BLOCK
In your testimony above , you referred to a possible "initial
summer consumption block" within a seasonal rate structure.
What do you mean by this?
My critique of inverted block rates pertains to the difficulty and
potential confusion associated with multiple blocks that are
designed to cover large consumption increments, for example as
in the case of base blocks shoulder blocks and peak usage
blocks. In such instances , it is not possible to adequately define
these blocks within a cost of service study.
However , there are certainly reasons that a noncost-based
initial low block rate can be considered for purposes of assisting
in keeping the annual costs of small usage customers to a
minimum. We have begun attempting to develop the type of bill
frequency analysis necessary to estimate a reasonable size for
this initial summer block. Due to the need to gather additional
data and perform statistical analyses I have not included an
exact initial block proposal here. We anticipate being able to
Peseau , OJ 8
United Water Idaho Inc.
offer a quantification of this proposal for the Commission
consideration during the course of these proceedings.
UNITED WATER IDAHO'S COST OF SERVICE STUDY
Please describe your cost of service study (COSS).
United's filing develops a total revenue requirement for metered
and fire protection rates of $38.1 million for the twelve months
ending May 31 , 2005. This revenue requirement is the sum of
the Company s expenses, including taxes , and a fair return on its
rate base.My COSS begins with the Company s revenue
requirement and follows a number of costing conventions
principles and methods generally used in the utility industry and
for water companies in particular. This particular study generally
corresponds somewhat to the cost study sponsored by United in
Case No. UWI-98-with some new enhancements for
functionalizing and seasonalizing costs that this Commission has
previously recognized for the electric utilities under its
jurisdiction.The COSS follows generally accepted cost of
service financial and economic principles , including those found
in costing manuals published by the American Water Works
Association and NARUC.
Schedule 1 , consisting of 2 pages summarizes the final
results of the casso Provided on this schedule are the final
allocations of costs to the general service and fire protection
Peseau , OJ 9
United Water Idaho Inc.
schedules , as well as the summary cost of service rates for
seasonal usage, as well as customer costs. The last 2 lines of
each page of the schedule
, "
Existing Revenue" and "Percent
Change from Current", show the full cost of service rates and the
change in the present rates necessary to achieve cost of service
rates. Again I do not recommend movement to full cost of
service. However I use the cost and present rate information
shown on Schedule 1 to reach the rate design recommendations
that I make in the following section of my testimony.
What does schedule 2 show?
The 2 page Schedule 2 provides the overall summary results of
the casso The column "Total Amount" on pages 1 and 2 show
the aggregate amounts of operating expenses and rate base
related data necessary to adjust the period ending July 31 , 2004
figures to May 31 , 2005. The remaining columns summarize the
steps of the service component analysis by breaking these total
rate year balances into volume , base demand, excess maximum
day, excess maximum hour, customer related O&M , customer
meters and services and fire protection.
What is the next step in your CaSS?
The next step is shown in Schedule 3. This schedule provides
the actual allocation of functionalized costs. A common allocation
method , and one recognized by this Commission , is the "Base-
Peseau, Oi
Unjted Water Idaho Inc.
Extra Capacity Method." This method separates total costs into
the components of base cost, extra capacity cost, customer cost
and fire protection costs.
What are "base costs" in the base-extra capacity method?
Base costs represent those costs incurred by the Company for
average flat or baseload levels of water production and
consumption by customers.Base costs represent a form of
optimal system" costs as they are the costs of a system utilized
at a 1000/0 system load factor that requires no additional peaking
facilities or other capacity costs. Base costs are those O&M and
capital costs for serving customers at a constant annual rate.
What are "extra capacity" costs?
As the name implies , extra capacity costs are those O&M and
capital costs that are over and above the base costs. They are
costs for meeting maximum peak demand in excess of average
demand and include supply, treatment, pumping and distribution
facilities costs.
What are customer costs?
As in most utility functions, water system customer costs are
those costs incurred by the Company to provide service to
customers independent of the actual level and rate of water
consumption. In the present study these costs include the three
Peseau, Di 11
United Water Idaho Inc.
functions: customer commercial, customer meters and customer
services. The AWWA Manual M1 defines customer costs as:
Costs directly associated with serving customers
irrespective of the amount of water use. Such costs generally
include meter reading, billing, accounting, and collecting
expense, and maintenance and capital costs related to meters
and associated services. (page 324)
Are you aware that the commission staff has recently proposed
that customer costs for electric utilities be defined more
narrowly?
Yes. However, for United's water system , the above definition
should continue to be used for cost of service analysis. All
categories of the customer service above are independent of
water use. These services are sized initially for customers and
do not vary by annual or seasonal demands. Allocating any of
these fixed costs to the commodity portion of seasonal rates
would distort the usage sensitive water rate.
What are fire protection costs?
Fire protection costs include the O&M and capital costs of fire
hydrants.
How did you apply the base-extra capacity method to derive the
costs associated with these components?
The base-extra capacity method formally estimates the base or
average demand system costs, the excess maximum day
system demand costs and the maximum hour system demand
Peseau , Di
Unjted Water Idaho Inc.
costs. The method recognizes that extra costs are incurred for
meeting maximum day demands over average system demand
and that even greater costs are incurred for facilities required to
meet maximum peak hour demands. Accordingly, the base-
extra capacity method allocates the total costs of supply,
pumping, treatment , T&D , customer, fire protection , general plant
and intangibles on the basis of average and peak demand. The
actual allocations are made from calculated "factors
allocators. The results of this step of allocating to the service
components for the period ending May 31 , 2005 are shown in
Schedule 3. Schedule 4 of my exhibit provides the details of the
derivation of these factors.Schedule 4 also provides the
derivation of all other component, function and seasonal
allocators.
What do schedules 5-13 show?
Schedules 5-13 provide detailed account information that breaks
costs into functions. The functional categories used the cass
are:
Intangibles
Source of supply
Pumping plant
Water treatment
Transmission and distribution
Peseau , OJ 13
United Water Idaho Inc.
Customer meters and service
Fire protection
General plant
What does schedule 14 show?
Schedule 14 provides rate year pro forma customer and billing
information by meter size and revenue count at existing rates
and equivalent meter counts. This information is used to derive
unit customer costs from aggregate customer costs.
What does schedule 15 show?
Schedule 15 reports private fire service information similar to that
presented in Schedule 14.
SEASONALIZED COST OF SERVICE
What is the issue you address with respect to cost
seasonalization?
Although United has had seasonal water rates in effect for some
time , the degree of the winter/summer rate differentiation has not
before been based on the cost of service study. The issue I now
address is the formal estimating of the Company s seasonal cost
differences in the context of the casso It is not my intent to
argue that seasonal rates should be set equal to seasonal cost
differences but rather that the actual cost differences be
recognized as one important variable in setting final commodity
rates in this case.
Peseau, Oi
United Water Idaho Inc.
What does your COSS analysis show with regard to United'
seasonal cost differences?
As in all cost of service analyses, there is no single "correct
method to seasonalize costs. Judgment is required.I develop
two alternative methods to seasonalize cost of service to provide
the Commission insight into the new analyses and give a
reasonable range of discretion in setting seasonal rates if it
chooses to order seasonal rates.
As developed below the two analyses find that the seasonal
rate spread based on cost of service falls in the range of 25-
700/0.
Please explain the seasonal cost analysis.
The seasonal cost study begins with the identification of the
appropriate annual functional and component cost categories
that therefore eligible forsensitiveandareusage
seasonalization. The COSS identifies volumetric, base demand
excess maximum day and excess maximum hour costs as usage
sensitive. The annual dollar amounts for these cost categories
are summarized in Schedule 1. The total of these usage
sensitive costs in rate year May 31 , 2005 is $26 636,100 , a very
significant percentage of the total revenue requirement of $38.
million.
Peseau, Oi
United Water Idaho Inc.
The various categories identified above each has a unique
seasonal characteristic and must be separately estimated. For
example, volumetric costs vary directly with seasonal usage.
Cost of chemicals is such an example.The more water
produced , the more chemical used. Purchased water costs also
vary directly with the amount purchased. Base capacity costs
which are incurred to meet annual average demand also vary
directly by seasonal usage and therefore should be allocated by
respective seasonal winter/summer usages.
The peak or excess maximum demand costs , however, vary
disproportionately higher during summer months.Seasonal
allocators for the excess maximum day and excess maximum
hour demands therefore require considerably more analysis.
How does the COSS develop seasonal cost allocators for the
two categories excess maximum day and excess maximum
hour?
To accomplish this , average monthly usage maximum day
usage and maximum hour usage is computed for each month of
the test year. From these data twelve monthly day and hour
excesses" over the respective average monthly demands are
calculated.
Peseau, Di
United Water Idaho Inc.
I computed the two alternative seasonal cost allocators by
using two different definitions of summer and winter peak
consumption.
Please explain.
For the first seasonal allocator, I computed the maximum excess
maximum day and hour figures for the single highest peak
excess for each season. I then compared the summer single
month excess demand with the winter single month excess
demand and used the relative differences to seasonalize the
costs. The resulting seasonal allocations derived are:
Seasonal Costs AllocatedSummer Winter
Excess Day
Excess Hour
77.40/0
70.00/0
22.60/0
30.00/0
Schedule 4 provides the detailed calculations.
A second alternative seasonal allocator is developed from
the same excess demand data. However, for this second allocator
I summed, by season , all months of positive excess demand and
used the sum of the total month summer excess demands to the
sum of the total monthly winter demands to calculate the allocator.
This second allocator results in the following cost allocations:
Seasonal Costs AllocatedSummer Winter
Excess Day
Excess Hour
87.80/0
87.90/0
12.20/0
12.
Peseau, OJ
United Water Idaho Inc.
How are the seasonal excess demand allocators combined with
the volumetric and base capacity cost allocators to reach a
seasonalization of all these costs?
This step is shown for each of the two alternative excess
demand allocators in Schedule 1. As shown in the now entitled
Total " the total seasonal costs allocated to the winter and
summer seasons are $8 172 948 and $18,463 152 respectively
for the single excess peak alternative allocator and $6,555 866
and $20 080 233 for the "sum of all months" excess demand
allocator.
On these same tables , the columns designated as winter
and summer show the actual amounts of each category, that is
volumetric, base capacity, excess maximum day and excess
maximum hour capacity allocations to season.
How are the cost of service-based rate differentials determined?
The "Unit Cost" row on Schedule reports the winter and
summer unit rates required to exactly conform to cost of service.
The unit rates under the single peak excess demand allocator
are 1.1073 and 1.389 for winter and summer respectively. This
is a 250/0 seasonal rate differential.
Peseau, Di
United Water Idaho Inc.
Do you propose that the commission adopt an "either/or" policy
on the choice between the 250/0 and 700/0 seasonal cost
differences?
No. As with all cost of service studies, this COSS serves as a
check on the reasonableness of existing rates and provides an
indication of the possible direction of movement in the future.
This Commission has for decades used cost of service studies
as a point of reference and a point of departure. There are , of
course, numerous other considerations and factors that weigh on
the Commission in setting rates and rate design that are fair
reasonable and in the public interest.
Do you have recommendations for the commission in regard to
the degree of cost-based seasonalization to adopt in these
proceedings?
Yes.First, as a point of reference , the present 250/0
winter/summer commodity rate differential now in place appears
reasonable as it falls in the lower end of the range derived in the
casso Second, as an indication of direction, the range of
seasonal differentiation in the COSS suggests that the present
250/0 differential perhaps should not be reduced in this case and
over time , the Commission may look to broader seasonalization
should future studies support this.
Peseau, Dj 19
United Water Idaho Inc.
these very comfortableproceedings
recommending that the present 250/0 seasonal rate spread be
continued.corresponding and very important aspect of
continuing with the 250/0 seasonal rate differential is that the
public already has faced this differential for many years and
since it also is supported by the COSS , would not require
considerable education attached to making major changes to the
present differential. This issue is , to a large extent also a rate
design issue and is discussed in the context of complete rate
design below.
RATE DESIGN
What is your overall rate design proposal?
I recommend that the Commission adopt a rate design that:
Raises private fire protection rates at the overage
percentage increase in revenue requirement of 21.50/0.
Raises customer charges by an approximate 360/0 over
present levels.
Adopts seasonal commodity rates that have a 250/0
winter/summer differential.
Maintains the present distinction among customers on
the basis of meter size.
Why do you recommend a uniform rate increase for private fire
protection equal to the average system rate increase?
As this class is not metered , there is a lack of comparable known
and measurable data for private fire protection that is available
Peseau, Di 20
United Water Idaho Inc.
for the general service class.Rather than make additional
assumptions recommend the uniform average system rate
increase for this class.
Why do you recommend that customer charges be raised by
36O/0
Again I begin with references to the casso Schedule
discussed above not only reports the COSS results on seasonal
costs, but also shows a comparison of existing customer costs to
present customer charges. For example , page 1 and page 2 of
Schedule 1 indicates that to move customer charges to full cost
of service , revenues from this rate component would have to be
raised from $7.million to $11 million. And , while I know that
considering the raising of customer charges is typically
unpopular, the COSS results show that the present customer
charges would need to be raised about 51 % if brought 1000/0 in
line with customer costs. I do not recommend this.
In this case I recommend that customer charges be raised to
a level that would approximately move one-half the distance from
existing to cost of service. Raising the present customer charge
by the average of the overall requested rate increase, 21.
and the COSS level of 510/0, for an approximate 360/0 increase
would achieve this objective.
Peseau, OJ 21
United Water Idaho Inc.
What is the outcome of not moving customer charges a
significant distance toward cost of service?
Any and all costs not recovered in customer charges must be
collected in commodity rates that are already well above rates
that equal cost of service. In this case, both summer and winter
commodity rates are considerably higher than justified on a cost
of service basis. I believe that an increase of 360/0 in customer
charges fairly balances the goals of gradualism and cost-based
rates.
Does raising the customer charges "mute the seasonal
commodity rate price signals?
No. Commodity rate price signals should reflect cost causation.
At proposed rates , customer charges will continue to
approximately $1.1 million below cost of service. Therefore , far
from having "muted" commodity price signals proposed
commodity rates recover about $1.million above cost of
service. Again , I do not propose a move to full cost of service
now, or probably anytime in the near future, but that some
substantial increase be made in this case.
Do you have other reasons for recommending that the
winter/summer commodity rate differential be kept at 250/0, which
is at the lower end of your range?
Peseau , Oi 22
United Water Idaho Inc.
13
Yes. As I discussed above the 250/0 seasonal differential has
been in place for some time. But in addition, this Commission
has favored gradual implementation of seasonal rates.For
example in the face of a broad range of seasonal cost
differences in the recent Idaho Power Company general rate
case, this Commission adopted a low end of a seasonal cost
differential range of 12./0.The present United seasonal
commodity rate differential is twice that adopted for Idaho Power.
How might the issue of customers that have flat monthly loads
be addressed with regard to the issue of summer bills being
higher than for the same uses in the winter?
This is the "baths costing more in the summer" issue I referred to
in the introduction to my testimony.While seasonal rates
obviously cause different levels of billing for the same
consumption occurring in different months , customers need to be
made aware that there are nevertheless benefits of seasonal
rates. For a customer whose consumption is relatively "flat" or
level over the year, demonstrations can be made that seasonal
rates result in his paying lower annual amounts than in the
absence of seasonal rates.
Please explain.
The following table demonstrates that level consumption under
the seasonal rates proposed in this case reduce annual
Peseau, Oi 23
United Water Idaho Inc.
customers bills.The table compares the annual bills of a
customer using the Company average monthly consumption of
10 CCF per month. Here it is assumed that this customer uses
this 10 CCF in every month of the year:
Seasonal
Use Flat Rate Rate Seasonal
Month (CCF))$/CCF $/CCF Flat Bill Bjll
January $12.$11.
February $12.$11.
March $12.$11.
April $12.$11.
May $12.$13.
June $12.$13.
July $12.$13.
August $12.$13.
September $12.$13.
October $12.$11.
November $12.$11.
December $12.$11.
Total $154.$147.
The COSS estimates that the average annual
commodity rate in this case is $1.29 per CCF. And , as shown in
Schedule 1 , page 1 , the proposed seasonal commodity rates in
this case are $1.11 and $1.39 per CCF for the winter and
summer seasons, respectively. The table prices out the level
consumption of 10 CCF under the average annual versus the
seasonal rates for this customer. In this instance, the customer
saves $7.60 per year, or over 50/0 with the seasonal rates. Thus
while this customer may pay more for a bath in the summer than
in the winter, he pays less for the two over the course of the
year.
Peseau, Di 24
United Water Idaho Inc.
Does this conclude your direct testimony?
Yes.
Peseau, Oi 25
United Water Idaho Inc.
Dean J. Miller
McDEVITT & MILLER LLP
420 West Bannock Street
O. Box 2564-83701
Boise, ID 83702
Tel: [phone]
Fax: [phone]
oe~n1cdevitt - miller. COlD
Idaho Pubk
. ,
;;;ities Commission
Office r-f !n~1 SecretaryRECEIVED
Nay j 0 2004
Boise, Idaho
Attorneys for Applicant
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF UNITED WATER IDAHO INC. FOR
AUTHORITY TO INCREASE ITSRA TES
AND CHARGES FOR WATER SERVICE IN
THE STATE OF IDAHO
Case No. UWI-O4-
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
A TT A CHMENT 1 TO THE
DIRECT TESTIMONY OF DENNIS E. PESEAU
STATEMENT OF OCCUPATIONAL AND
EDUCATIONAL HISTORY AND QUALIFICATIONS
DENNIS E. PESEAU
Dr. Peseau has conducted economic and financial studies for
regulated industries for the past thirty years.In 1972 , he was employed by
Southern California Edison Company as Associate Economic Analyst, and later
as Economic Analyst. His responsibilities included review of financial testimony,
incremental cost studies, rate design, econometric estimation of. demand
elasticities and various areas in the field of energy and economic growth. Also
he was asked by Edison Electrical Institute to study and evaluate several
prominent energy models as part of the Ad Hoc Committee on Economic Growth
and Energy Pricing.
From 1974 to 1978 , Dr. Peseau was employed by the Public Utility
Commissioner of Oregon as Senior Economist. There he conducted a number of
economic and financial studies and prepared testimony pertaining to public
utilities.
In 1978 Dr. Peseau established the Northwest office of Zinder
Companies, Inc. He has since submitted testimony on economic and financial
matters before state regulatory commissions in Alaska , California , Idaho
Maryland , Minnesota, Montana, Nevada , Washington , Wyoming, the District of
Columbia , the Bonneville Power Administration and the Public Utilities Board of
Alberta on over one hundred occasions. He has conducted marginal cost and
rate design studies and prepared testimony on these matters in Alaska
California, Idaho, Maryland , Minnesota, Nevada , Oregon , Washington and in the
District of Columbia. He has also conducted cost and rate studies regarding
PURPA issues in the states of Alaska, California , Idaho , Montana , Nevada , New
York , Washington , and Washington, D.
Peseau, Di
Attachment No.
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Dr. Peseau holds the B., M.A. and Ph.D. degrees in economics.
He has co-authored a book in the field of industrial organization
entitled Size, Profits and Executive Compensation in the Lan~e Corporation
which devotes a chapter to regulated industries.
journals:
Dr. Peseau has published articles in the following professional
Review of Economics and Statistics Atlantic Economic Journal
Journal of Financial Manaqement, and Journal of Reqional Science . His articles
have been read before the Econometric Society, the Western Economic
Association , the Financial Management Association , the Regional Science
Association and universities in the United Kingdom as well as in the United
States.
He has guest lectured on marginal costing methods in seminars in
New Jersey and California for the Center of Professional Advancement. He has
also guest lectured on cost of capital for the public utility industry before the
Pacific Coast Gas and Electric Association, and for the Executive Seminar at the
Colgate Darden Graduate School of Business , University of Virginia.
Dr. Peseau and his firm have participated with and been members of
the American Economic Association , the American Financial Association, the
Western Economic Association , the Atlantic Economic Association and the
Financial Management Association. He was formerly a member of the Staff
Subcommittee on Economics of the National Association of Regulatory Utility
Commissioners.
Dr. Peseau has been President of Utility Resources , Inc. since 1985.
Peseau, Di
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