20241106Direct Michael Eldred.pdf

RECEIVED
Wednesday, November 6, 2024 4:22:15 PM
IDAHO PUBLIC
UTILITIES COMMISSION
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE )
APPLICATION OF IDAHO POWER ) CASE NO. IPC-E-24-07
COMPANY TO INCREASE RATES )
FOR ELECTRIC SERVICE TO )
RECOVER COSTS ASSOCIATED )
WITH INCREMENTAL CAPITAL )
INVESTMENTS AND CERTAIN )
ONGOING OPERATIONS AND )
MAINTENANCE EXPENSES )
DIRECT TESTIMONY OF MICHAEL ELDRED
IDAHO PUBLIC UTILITIES COMMISSION
NOVEMBER 6, 2024

1 Q. Please state your name and business address for
2 the record.
3 A. My name is Michael Eldred. My business address
4 is 11331 W. Chinden Blvd. , Building 8, Suite 201-A, Boise,
5 Idaho 83714 .
6 Q. By whom are you employed and in what capacity?
7 A. I am employed by the Idaho Public Utilities
8 Commission ("Commission") as a Utilities Analyst II in the
9 Utilities Division.
10 Q. Please describe your work experience and
11 educational background.
12 A. Please see Exhibit No . 111 that provides a
13 summary of my work experience and education background.
14 Q. What is the purpose of your testimony in this
15 proceeding?
16 A. The purpose of my testimony is to address : (1)
17 Idaho Power Company' s ("Idaho Power" or "Company") Revenue
18 Growth Offset; (2) the Company' s billing determinants; and
19 (3) the Company' s proposed rate spread using the 2023
20 general rate case ("2023 GRC") Cost of Service Study
21 ("COSS") and the 2023 GRC cap and spread parameters .
22 Q. How is your testimony organized?
23 A. My testimony is subdivided into the following
24 sections :
25 1 . Revenue Growth Offset Page 2
CASE NO. IPC-E-24-07 ELDRED, M. (Di) 1
11/6/24 STAFF

1 2 . Billing Determinants Page 6
2 3 . Rate Spread Page 7
3
4 Q. Please summarize your testimony.
5 A. I do not support the Company' s 2024 kilowatt hour
6 ("kWh") sales forecast being used to determine incremental
7 sales growth used as an input to calculate the Revenue
8 Growth Offset . I propose a different method for
9 determining the incremental sales growth resulting in a
10 $6 . 8 million Revenue Growth Offset for 2024 as compared to
11 the Company' s $5 . 5 million Revenue Growth Offset and a
12 reduction in the Company' s proposed Revenue Requirement
13 increase of $1 . 3 million.
14 Furthermore, I propose that the Company adjust
15 the billing determinants to coincide with Staff' s proposed
16 Revenue Growth Offset .
17 I support the Company' s proposed rate spread
18 using the 2023 GRC COSS and cap and spread parameters . I
19 believe the 2023 COSS and cap and spread parameters are
20 reasonable to use for this case .
21 Revenue Growth Offset
22 Q. What are your recommendations regarding the
23 Revenue Growth Offset?
24 A. I recommend increasing the Revenue Growth Offset
25 by $1 . 3 million resulting in a Revenue Growth Offset of
CASE NO. IPC-E-24-07 ELDRED, M. (Di) 2
11/6/24 STAFF

1 $6 . 8 million compared to the Company' s proposed $5 . 5
2 million Revenue Growth Offset .
3 Q. Please describe the Company' s Revenue Growth
4 Offset .
5 A. The Company proposed a Revenue Growth Offset of
6 $5 . 5 million. It represents the incremental revenue due to
7 sales growth associated with plant and labor embedded in
8 rates approved in the 2023 GRC. This incremental revenue
9 offsets the incremental costs included for recovery in this
10 case .
11 Q. Please describe how the Company calculated its
12 Revenue Growth Offset .
13 A. The Company first determined a cent per kWh rate
14 for the plant and labor that is currently embedded in rates
15 from the 2023 GRC that was the product of a settlement
16 accepted by the Commission in Case No . IPC-E-23-11 . This
17 rate is referred to as the Mill Rate . Next the Company
18 determined the kWh sales growth based on the sales
19 authorized through the 2023 GRC and the Company' s 2024
20 sales forecast proposed in this case . The difference
21 between the 2023 GRC settlement sales and the 2024 sales
22 forecast are the incremental sales used to determine the
23 Revenue Growth Offset . In the Company' s Application, the
24 incremental sales amount was multiplied by the Mill Rate to
25 calculate the final Revenue Growth Offset of $5 . 5 million.
CASE NO. IPC-E-24-07 ELDRED, M. (Di) 3
11/6/24 STAFF

1 Q. Do you agree with the Company' s 2024 kWh sales
2 forecast?
3 A. No . The Company' s 2024 sales forecast is a pure
4 forecast and may not accurately reflect actual normalized
5 sales in the 2024 calendar year. I propose a different
6 method for determining 2024 incremental sales .
7 Q. Please summarize your method for determining
8 Staff' s 2024 incremental sales .
9 A. My proposed method compares Idaho January through
10 August 2024 actual normalized kWh sales to the 2023 GRC kWh
11 sales approved by the Commission, for the same months . My
12 method results in an actual 1 . 04% increase in kWh sales in
13 the first eight months of 2024 compared to 2023 . Next, I
14 multiplied the 1 . 04% increase by the total 2023 GRC
15 settlement kWh sales to determine Staff' s proposed 2024
16 incremental sales of 154, 483, 419 kWh.
17 Q. Why is Staff' s proposed 2024 incremental sales
18 more appropriate than the Company' s 2024 sales forecast?
19 A. The Company' s 2024 sales forecast is a pure
20 forecast and may not accurately reflect actual incremental
21 sales growth in the 2024 calendar year. When the Company
22 was preparing to file this Application, only a limited
23 amount of actual 2024 sales information was available . A
24 2024 pure forecast that did not incorporate any actual 2024
25 sales information was used to estimate revenue growth.
CASE NO. IPC-E-24-07 ELDRED, M. (Di) 4
11/6/24 STAFF

1 During Staff' s review of the Application, additional months
2 of actual 2024 sales became available . I believe using
3 actual data that has been normalized in place of purely
4 forecasted values provides a better representation of the
5 incremental sales and revenue growth in 2024 . I also
6 believe that my method better aligns with the overall
7 incremental approach the Company took using the 2023 GRC as
8 a baseline to develop its Application.
9 Q. What is the result of using Staff' s 2024
10 incremental sales to calculate the Revenue Growth Offset?
11 A. Using Staff' s 2024 incremental sales to calculate
12 the Revenue Growth Offset results in a Revenue Growth
13 Offset of $6 . 8 million. This value was determined by
14 multiplying the Company' s proposed Mill Rate by Staff' s
15 proposed 2024 incremental sales . Staff' s Revenue Growth
16 Offset is $1 . 3 million higher than the Company' s offset and
17 is illustrated with Staff' s calculation in Table No . 1
18 below.
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CASE NO. IPC-E-24-07 ELDRED, M. (Di) 5
11/6/24 STAFF

I Table No. 1 - Staff Revenue Growth Offset Calculation
2 Line
3 1 Company's Idaho Jan.-Aug.2024 Normalized Actuals kWh Sales 10,225,299,633
2 Idaho Jan.-Aug.2023 GRC Settlement kWh Sales 10,120,426,055
4 Percent Increase in kWh Sales o
3 (%increase of Line 2 compared to Line 1) 1.04/o
5
6 4 2023 GRC Settlement Idaho kWh Sales 14,907,835,244
5 Staff Proposed 2024 Incremental Sales 154,483,419
7 (Line 3 x Line 4)
8 6 Company Mill Rate(Plant and Labor Rev/Sales) 0.044077544
9 Staff's Revenue Growth Offset
7 $ 6,809,250
10 (Line 5 x Line 6)
8 Company's Revenue Growth Offset $ 5,497,548
11 Revenue Difference
9 $ 1,311,701
12 (Line 7-Line 8)
13 Billing Determinants
14 Q. Given your adjustment to the amount of 2024
15 incremental sales, are changes needed to the billing
16 determinants used to calculate the final rates?
17 A. Yes, changes are needed. I recommend that the
18 Company develop the final rates using newly calculated
19 billing determinants that reflect my recommended Revenue
20 Growth Offset .
21 Q. Have you developed a method to determine the
22 billing determinants?
23 A. One potential method for determining the billing
24 determinants would be to use the Idaho normalized actual
25 billing determinants for January through August 2024 and
CASE NO. IPC-E-24-07 ELDRED, M. (Di) 6
11/6/24 STAFF

1 extrapolate 4 additional months of billing determinants to
2 create 12 months of billing determinants . The
3 extrapolation would be based on the change in normalized
4 actual January through August 2024 billing determinants
5 compared to the same billing determinants used in the 2023
6 GRC settlement . This change would be applied to the
7 September through December 2023 GRC settlement billing
8 determinants . However, I am not opposed to other methods
9 as long as the billing determinants reflect my recommended
10 Revenue Growth Offset .
11 Rate Spread
12 Q. What are your conclusions and recommendations
13 regarding the Company' s rate spread?
14 A. I recommend using the Company' s proposed rate
15 spread that uses the COSS and cap and spread parameters
16 approved in the 2023 GRC.
17 Q. Please describe the Company' s method used to
18 spread the increase to the various customer classes .
19 A. The Company is proposing to allocate the rate
20 spread based on the same methods agreed to in the 2023 GRC
21 settlement . This includes using the COSS from the 2023 GRC
22 to allocate the incremental revenue requirement and the
23 same cap and spread parameters from the 2023 GRC
24 settlement . The parameters used in the 2023 GRC settlement
25 include a cap of 130 percent and a floor of 50 percent of
CASE NO. IPC-E-24-07 ELDRED, M. (Di) 7
11/6/24 STAFF

1 the overall increase . Staff' s proposed 0 . 66 percent
2 overall increase results in a cap of 0 . 85 percent and a
3 floor of 0 . 33 percent using these parameters . Customer
4 classes not generating enough revenue to cover their cost-
5 of-service will be limited by the cap, while classes
6 generating more revenue than their cost-of-service will be
7 limited by the floor.
8 The Company is also proposing to collect the increase
9 through a uniform increase to each class ' s applicable
10 billing component with no change to the service charge
11 except for the residential classes' service charge that
12 will increase consistent with the second-year increase
13 approved by the Commission in the 2023 GRC in Case No . IPC-
14 E-23-11 .
15 Q. Is the method for the proposed rate spread
16 reasonable?
17 A. Yes . The method is reasonable because it is
18 based on the COSS developed for the 2023 GRC and the rate
19 spread parameters were agreed to by intervenors in the 2023
20 GRC settlement which was accepted by the Commission. The
21 method moves all classes towards producing enough revenue
22 to cover each classes' cost-of-service but places a limit
23 on the rate impact to individual classes that are
24 significantly under their cost-of-service, preserving rate
25 stability.
CASE NO. IPC-E-24-07 ELDRED, M. (Di) 8
11/6/24 STAFF

I Q. Does this conclude your testimony in this
2 proceeding?
3 A. Yes, it does .
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CASE NO. IPC-E-24-07 ELDRED, M. (Di) 9
11/6/24 STAFF

Professional Qualifications
Of
Michael Eldred
Utilities Analyst II - Engineering
Idaho Public Utilities Commission
EDUCATION
Mr. Eldred graduated with honors from Boise State
University with a bachelor' s degree in mechanical engineering in
2014 and a master' s degree in business administration in 2016 .
In addition to his formal education, he has attended the
Institute of Public Utilities Annual Regulatory Studies Program
at Michigan State University, attended Michigan State
University' s NARUC Utility Rate School, EUCI Cost of Service and
Rate Design Courses, and NWPPA Advance Rate Design and Cost of
Service Courses .
BUSINESS EXPERIENCE
Mr. Eldred has worked with the Commission as a Utilities
Analyst since 2017 . He has reviewed and provided
recommendations to the Commission in a wide variety of cases due
to his extensive knowledge, skills, and abilities . Some
examples of cases he has processed include : (1) reviewing and
providing recommendations on cost of service studies,
consumption normalization, and rate design proposals in general
rate cases; (2) conducting analyses and providing
recommendations on electricity and natural gas prices in general
rate cases; (3) conducting prudence reviews and providing
recommendations on capital investments in general rate cases and
Certificate for Public Convenience and Necessity cases; (4)
providing technical advice on integrated resource plans for
various utilities; and (5) reviewing and providing
recommendations on utilities cost recovery mechanisms .
Exhibit No . 111
Case No . IPC-E-24-07
M. Eldred, Staff
11/06/24

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS DAY OF NOVEMBER 2024,
SERVED THE FOREGOING DIRECT TESTIMONY OF MICHAEL ELDRED, IN
CASE NO. IPC-E-24-07, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
LISA D. NORDSTROM TIMOTHY TATUM
DONOVAN E WALKER CONNIE ASCHENBRENNER
MEGAN GOICOECHEA ALLEN MATT LARKIN
IDAHO POWER COMPANY IDAHO POWER COMPANY
PO BOX 70 PO BOX 70
BOISE ID 83707-0070 BOISE ID 83707-0070
E-MAIL: lnordstrom a,idahopower.com E-MAIL: ttatumAidahopower.com
dwalker a,idahopower.com caschenbrennerLidahopower.com
mgoicoecheaallengidahopower.com mlarkinLidahopower.com
dockets(cyidahopower.com
ERIC L OLSEN LANCE KAUFMAN PhD
ECHO HAWK& OLSEN PLLC 2623 NW BLUEBELL PLACE
PO BOX 6119 CORVALLIS OR 97330
POCATELLO ID 83205 E-MAIL: lance(kae isg insi hg t.com
E-MAIL: elo,c echohawk.com
PETER J RICHRRDSON DR DON READING
RICARDSON ADAMS PLLC 280 S SILVERWOOD WAY
515 N 27TH STREET EAGLE ID 83616
BOISE ID 83702 E-MAIL: dreading a,mindspring coin
E-MAIL: peter Lcct richardsonadams.com
BRAD HEUSINKVELD
ID CONSERVATION LEAGUE
710 N 6TH STREET
BOISE ID 83702
E-MAIL:
heusinkveldkidahoconservation.org
PETER MEIER EMILY W MEDLYN
US DEPT OF ENERGY US DEPT OF ENERGY
1000 INDEPENDENCE AVE SW 1000 INDEPENDENCE AVE SW
WASHINGTON DC 20585 WASHINGTON DC 20585
E-MAIL: peter.meierghq.doe.gov E-MAIL: Emily medlynghq.doe.gov
CERTIFICATE OF SERVICE

JIM SWIER AUSTIN RUESCHHOFF
MICRON TECHNOLOGY INC THORVALD A NELSON
8000 S FEDERAL WAY AUSTIN W JENSEN
BOISE ID 83707 KRISTINE A.K. ROACH
E-MAIL: jswier a,micron.com HOLLAND & HART LLP
555 17TH ST STE 3200
DENVER CO 80202
E-MAIL: darueschhoff(cthollandhart.com
tnelson(cthollandhart.com
awjensen a hollandhart.com
karoach,,hollandhart.com
acleeghollandhart.com
mamcmillenLr hollandhart.com
ED JEWELL STEVEN HUBBLE
DEPUTY CITY ATTORNEY BOISE CITY DEPT OF PUBLIC WORKS
BOISE CITY ATTORNEY'S PO BOX 500
PO BOX 500 BOISE ID 83701-0500
BOISE ID 83701-0500 E-MAIL: shubble�,cityofboise.org
E-MAIL: ejewell(atcityofboise.org
boisecityattorneyncityofboise.org
PATIZICIA JORDAN, CRETARY
CERTIFICATE OF SERVICE