20241127Don Reading Rebuttal.pdf

RECEIVED
Wednesday, November 27, 2024
IDAHO PUBLIC
UTILITIES COMMISSION
BEFORE THE IDAHO PUBLIC
UTILITIES COMMISSION
IN THE MATTER OF THE Case No.: IPC-E-24-07
APPLICATION OF IDAHO POWER
COMPANY FOR AUTHORITY TO
INCREASE RATES FOR ELECTRIC
SERVICE TO RECOVER COSTS
ASSOCIATED WITH INCREMENTAL
CAPITAL INVESTMENTS AND
CERTAIN ONGOING OPERATION
AND MAINTENANCE EXPENSES
INDUSTRIAL CUSTOMERS OF
IDAHO POWER
DIRECT TESTIMONY
ON REBUTTAL
of
DR. DON READING
READING, DI-REB -
INDUSTRIAL CUSTOMERS
OF IDAHO POWER

RATE SPREAD ISSUES
Q. Please state your name, business address, and occupation.
A. My name is Don Reading. My business address is 280 South Silverwood Way,
Eagle, Idaho. I am an independent consulting economist.
Q. Are you the same Dr. Reading who prefiled direct testimony in this matter?
A. Yes.
Q. What is the purpose of your rebuttal testimony?
A. In my direct testimony I pointed out that Idaho Power Company ["Idaho Power"
or the "Company"] "confounded" the results of its rate spread methodology by including three
new special contract customers in its Schedule 19 calculations when it made its rate spread
recommendations.
Q. Have any of the other parties to this case addressed this specific issue?
A. No. None of the other parties noted this apparent anomaly in the Company's rate
spread recommendation.
Q. How do the other intervenors address the rate spread question?
A. All of the parties, except the IIPA("Idaho Irrigation Pumper's Association")
support the Company's approach for rate spread among the customer classes.
Q. Please explain?
A. The IIPA recommends applying an equal percentage rate increase to all rate
schedules once the Commission approves the revenue requirement increase. This
recommendation does not move customer classes toward equality, and it tends to favor lower
load factor customers at the expense of higher load factor customer classes. PUC Staff and the
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INDUSTRIAL CUSTOMERS
OF IDAHO POWER

City of Boise recommend approval of the Company's rate spread without significant elaboration.
Finally, Micron observed that "This outcome [proposed revenue apportionment]is directionally
consistent with IpCs cost of'service study in the 2023 GRC', which concluded that Micron
warranted a cost-based rate increase below the system average increase." [York, p. 4] The
Company's rate spread outcome may be directionally consistent for the prior existing special
contract customers - Micron, DOE and Simplot-Pocatello - but it is not so for the Schedule 19
customer class. It appears that lumping the three new special contract customers into the
Schedule 19 class confounds the cost-of-service rate-spread results.
Q. Can you show the disparate (inconsistent direction) of the Company's rate spread
proposal?
A. Yes. The table and graph below show the revenue spread among the customer
classes between the 2023 GRC and this 2024 partial rate case. As can be seen, the rate spread
proposal is not directionally consistent. The percentage differences between the overall rate
increase percentage and each individual customer class percent rate increase are much more
pronounced in this current partial rate case:
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INDUSTRIAL CUSTOMERS
OF IDAHO POWER

IPC-E-23-11 Id Power
Final % Delta Proposed Delta
Class Increase From Increase From
Overall Overall
Final Proposed
Overall 4.25 7.31
Res Comb. 5.52 130% 7.25 99%
Gen Ser P&T 2.12 50% 6.74 92%
Gen Ser Secondary 2.12 50% 6.86 94%
Lg Pwr(Sch 19) 2.78 65% 7.10 97%
Irrigation 5.52 130% 9.50 130%
Micron 3.65 85% 5.53 76%
Simplot 2.12 50% 4.58 63%
DOE/INL 3.67 86% 3.84 52%
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INDUSTRIAL CUSTOMERS
OF IDAHO POWER

Rate Spread Difference 2023 GRC v. 2024
140%
130%
120%
110%
+o 100%
0
w
0 90%
c
0
0
0 80%
a
70%
60%
50%
40%
Resid Small GS Large GS- Large GS- Large Irrigation Traffic Micron Simplot DOE/INL
Prim.& Second Power Service Control
Trans. Service Lighting
Customer Class
- Final Percent Of Total IPC-E-23-11 — Final Percent Of Total IPC-E-24-7
Q. What conclusions can you draw from the information on the table and graph?
A. Some of the classes on the table move intuitively and incrementally toward parity
or via a percentage rate increase similar to their overall percentage increase in the last case, IPC-
E-23-11. Others do not. The lack of consistency is readily apparent—especially when viewed
on the graph.
Q. What is the impact on the rate spread recommendations?
A. The impact is that the Company's goal of gradual movement to cost based rates
(as far as Schedule 19 is concerned) is essentially thwarted. This is shown by the rate spread
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INDUSTRIAL CUSTOMERS
OF IDAHO POWER

results in the last case, IPC-E-23-11 (less than a year ago) and the rate spread recommendation in
this case.
Q. What explains the out-of--sync movement of the different rate classes?
A. I do not have a good explanation. However, as I discussed in my direct testimony,
it appears that the dramatic shift for the Schedule 19 customers may be partially explained by the
inclusion of three new special contract customers' load and load profiles in with the existing
Schedule 19 class.
Q. How can we know with any degree of assurance that the other outlier classes are
being reasonably and fairly treated in the Company's rate spread proposal?
A. As I noted in my direct testimony, the only way we can have a satisfactory degree
of assurance that this rate spread proposal is reasonable is to have the company run a new cost-
of-service study. However, because this is a"limited issue" rate case, the Company did not, and
appropriately so, file a new cost of service study by which we can contemplate its rate spread
proposal.
Q. Having read the other parties' direct testimonies, do you still advocate for using
the Company's rate spread percentages from the last general rate case to instruct incremental
revenue rate spreads in this case.
A. Yes. Without taking the time and expense to conduct a new cost-of-service study,
and given the temporal proximity of the two rate cases, it remains reasonable to set fair rates
based on the Company's rate spread proposal from its last general rate case, IPC-E-23-11.
Q. Can you summarize the salient points of your testimony?
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INDUSTRIAL CUSTOMERS
OF IDAHO POWER

A. Yes. When the Company apparently lumped the three new special contract
customers into Schedule 19, it confounded the results of what an updated cost-of-service study
would have shown. Therefore, instead of what the Company has proposed, I recommend that the
percentage difference between the overall rate increase and each individual rate class's rate
increase be the same percentage difference that was used and approved by the Commission in the
last general rate case (IPC-E-23-11). That case was litigated and settled among the parties,
which settlement was ultimately approved by the Commission. My recommendation is not
necessarily a long-term fix. A more accurate customer class allocation should be developed
when the Company files its next full general rate case along with a new and current class cost-of-
service study.
Q. Does this conclude your rebuttal testimony?
A. Yes, it does.
Dated this 27"' day of November 2024.
READING, DI-REB - 7
INDUSTRIAL CUSTOMERS
OF IDAHO POWER

CERTIFICATE OF SERVICE
I hereby certify that on this 27"' day of November 2024, I caused to be delivered via
electronic mail only the foregoing Direct Testimony on Rebuttal of Dr. Don Reading in Docket
No. IPC-E-24-07 on the following parties:
IDAHO PUBLIC UTILITIES COMMISSION
Monica Barrios-Sanchez, secretary
[e-mail]
[e-mail]
Chris Burdin, Deputy Attorney General
[e-mail]
IDAHO POWER COMPANY
Lisa D. Nordstrom
Donovan E. Walker
Megan Goicoechea Allen
[e-mail]
[e-mail]
[e-mail]
[e-mail]
Tim Tatum
Connie Aschenbrenner
Matt Larkin
[e-mail]
[e-mail]
[e-mail]
IDAHO IRRIGATION PUMPERS ASSOCIATION. INC.
Eric L. Olson
Lance Kaufman
[e-mail]
[e-mail]
READING, DI-REB - 8
INDUSTRIAL CUSTOMERS
OF IDAHO POWER

IDAHO CONSERVAHON LEAGUE
Matthew Nykiel
Brad Heusinkveld
[e-mail]
[e-mail]
FEDERAL EXECUTIVE AGENCIES
Peter Meier
Emily W. Medlyn
[e-mail]
[e-mail]
MICRON TECHNOLOGY, INC.
Austin Rueshhoff
Thorvald A. Nelson
Austin W. Jensen
Kristine A.K. Roach
darueschhoff@hol landhart.com
[e-mail]
[e-mail]
[e-mail]
[e-mail]
CITY OF BOISE
Ed Jewell
Steven Hubble
[e-mail]
[e-mail]
[e-mail]
By.
Pete Richardson, ISB It�3195�ao��
READING, DI-REB -9
INDUSTRIAL CUSTOMERS
OF IDAHO POWER