20250919Direct Waites.pdf

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY' S APPLICATION FOR A ) CASE NO. IPC-E-25-29
CERTIFICATE OF PUBLIC CONVENIENCE )
AND NECESSITY FOR THE BENNETT GAS )
EXPANSION PROJECT AND FOR AN )
ASSOCIATED ACCOUNTING ORDER. )
IDAHO POWER COMPANY
DIRECT TESTIMONY
OF
COURTNEY WAITES

1 Q. Please state your name, business address, and
2 present position with Idaho Power Company ("Idaho Power" or
3 "Company") .
4 A. My name is Courtney Waites . My business
5 address is 1221 West Idaho Street, Boise, Idaho 83702 . I am
6 employed by Idaho Power as a Regulatory Consultant in the
7 Regulatory Affairs Department.
8 Q. Please describe your educational background.
9 A. In December of 1998, I received a Bachelor of
10 Arts degree in Accounting from the University of Alaska in
11 Anchorage, Alaska. In 2000, I earned a Master of Business
12 Administration degree from Alaska Pacific University. I
13 have attended New Mexico State University' s Center for
14 Public Utilities and the National Association of Regulatory
15 Utility Commissioners "Practical Skills for the Changing
16 Electric Industry" conference, the Electric Utility
17 Consultants, Inc . ' s "Introduction to Rate Design and Cost
18 of Service Concepts and Techniques for Electric Utilities"
19 conference, Edison Electric Institute' s "Introduction to
20 Public Utility Accounting" course, Edison Electric
21 Institute' s "Electric Rates Advanced" course, SNL Knowledge
22 Center' s "Essentials of Regulatory Finance" course, and the
23 Financial Accounting Institute' s "Utility Finance and
24 Accounting" seminar.
WAITES, DI 1
Idaho Power Company

1 Q. Please describe your work experience with
2 Idaho Power.
3 A. I began my employment with Idaho Power in
4 December 2004 in the Accounts Payable Department. In 2005,
5 I accepted a Regulatory Accountant position in the Finance
6 Department where one of my tasks was to assist in
7 responding to regulatory data requests pertaining to
8 financial issues . In 2006, I accepted a Regulatory Analyst
9 position in the Regulatory Affairs Department where my
10 duties included providing support for the Company' s various
11 regulatory activities, including tariff administration,
12 regulatory ratemaking, and compliance filings, and the
13 development of various pricing strategies and policies . In
14 January 2014, I was promoted to Regulatory Consultant where
15 my responsibilities expanded to include the development of
16 complex cost-related studies and the analysis of strategic
17 regulatory issues . I was promoted to my current position,
18 Regulatory Projects Coordinator, in March 2025, providing
19 project management and coordination for regulatory cases
20 and issues, leading and coordinating regulatory activities .
21 Q. What is the Company' s request in this case?
22 A. Idaho Power is requesting the Idaho Public
23 Utilities Commission ("Commission") issue an order (1)
24 granting a Certificate of Public Convenience and Necessity
25 ("CPCN") for the expansion of the existing Bennett
WAITES, DI 2
Idaho Power Company

1 Mountain Power Plant to include the addition of a cost-
2 effective natural gas-fueled facility providing up to 167
3 megawatts ("MW") of generation ("Bennett Gas Expansion
4 Project") to meet an identified capacity deficit in 2028,
5 (2) confirmation of the Company' s application of accrual
6 of Allowance for Funds Used During Construction ("AFUDC")
7 for the Bennett Gas Expansion Project upon initial
8 procurement activities for the reciprocating internal
9 combustion engines ("recips") , and (3) approving the
10 commencement of the accrual of AFUDC on capital
11 expenditures associated with future resource procurements
12 at the time the project has been deemed viable by the
13 Company. The Bennett Gas Expansion Project is necessary
14 for Idaho Power to continue to provide safe, reliable
15 electric service in 2028 and beyond.
16 Q. What is the purpose of your testimony in this
17 proceeding?
18 A. The purpose of my testimony is to describe
19 AFUDC and the commencement of its accrual as soon as funds
20 are expended and committed to a construction project. For
21 generation resources, this has typically occurred
22 subsequent to the request for a CPCN. However, because of
23 the long lead times associated with materials, Idaho Power
24 has incurred expenditures associated with the Bennett Gas
25 Expansion Project prior to filing the request for a CPCN
WAITES, DI 3
Idaho Power Company

1 and therefore is requesting the Commission approve the
2 accrual of AFUDC for the Bennett Gas Expansion Project when
3 expenditures are first incurred.
4 I . ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
5 Q. Please describe AFUDC.
6 A. A generally accepted accounting principle,
7 AFUDC represents the opportunity cost of funds used during
8 construction of utility projects . Idaho Power records the
9 accumulation of all costs associated with the construction
10 of an asset, including the cost of financing the
11 construction expenditures, or AFUDC, in Federal Energy
12 Regulatory Commission ("FERC") Account 107 - Construction
13 Work in Progress ("CWIP") . When the plant is completed and
14 placed in service, the total cost of the plant, including
15 AFUDC, is moved to FERC Account 101 - Electric Plant-in-
16 Service, placing the asset in rate base. In effect, during
17 construction, the Company is allowed to earn a return on
18 CWIP by accruing AFUDC, but typically the cash recovery
19 does not occur until the associated plant is placed in
20 service and authorized for recovery in a rate proceeding,
21 which strains the Company' s credit quality.
22 Q. When does the accrual of AFUDC begin on a
23 capital project?
24 A. Guidance from FERC suggests AFUDC shall begin
25 when (1) capital expenditures for the project have been
WAITES, DI 4
Idaho Power Company

1 incurred, and (2) activities that are necessary to get the
2 construction project ready for its intended use are in
3 progress . Activities include all actions required to
4 prepare the construction project for its intended use,
5 including activities prior to physical construction, such
6 as the development of plans or the process of obtaining
7 permits from governmental authorities .' Accordingly, Idaho
8 Power commences accrual of AFUDC as soon as funds are
9 expended and committed to a construction project.
10 Q. How do these activities differ from
11 preliminary survey and investigation ("PS&I") activities
12 for which AFUDC does not accrue?
13 A. In accordance with Order No. 29904,2 costs
14 associated with investigation into the viability of
15 potential resources identified as part of the Integrated
16 Resource Plan are recorded to PS&I accounts . For example,
17 for benchmark bids prepared for submittal into a Request
18 for Proposals ("RFP") for new generation resources by the
19 Company' s Internal Bid Team, any consulting fees incurred
20 to aid in the development of an RFP bid submittal would be
21 charged to PS&I as the project' s viability as a least-cost,
22 least-risk resource has not yet been determined.
1 FERC: Capitalization of Allowance for Funds Used During Construction.
2 In the Matter of the Petition of Idaho Power Company for an Accounting Order
Modifying the Accounting Procedures for Preliminary Survey and Investigation
Charges, IPC-E-05-21.
WAITES, DI 5
Idaho Power Company

1 Q. When does Idaho Power deem a project viable or
2 infeasible?
3 A. Typically, once selected on the final
4 shortlist having been identified as a least-cost, least
5 risk resource, and subsequently acknowledged by the Public
6 Utility Commission of Oregon ("OPUC") in accordance with
7 the competitive bidding rules, Idaho Power moves the
8 charges to FERC Account 107 - CWIP as the viability of the
9 project has been confirmed, and AFUDC commences . However,
10 based on industry demand for long-lead materials, and to
11 ensure commercial operation dates are met, the Company has
12 been incurring capital expenditures associated with
13 resource procurements prior to acknowledgement of the final
14 shortlist from the OPUC.
15 II . PROPOSED ACCOUNTING TREATMENT
16 Q. When Idaho Power procures materials for
17 resource additions prior to OPUC acknowledgement on the
18 final shortlist, does the Company commence accrual of
19 AFUDC?
20 A. In the past, payment for procurement of
21 materials has typically not occurred until after Idaho
22 Power has filed a request for a CPCN with the Commission,
23 at which time the Company commences AFUDC accrual .
24 However, in order to secure a position in the queue to
25 purchase the recips, Idaho Power was required to make a
WAITES, DI 6
Idaho Power Company

1 down payment of approximately $ in April 2025,
2 following the Bennett Gas Expansion Project' s
3 identification on the final shortlist, but prior to OPUC
4 acknowledgement of that final shortlist . This down payment
5 was necessary to ensure the plant would be operational in
6 time to meet the identified capacity need. Because of
7 current supply chain demands, our entire industry,
8 including Idaho Power, has been experiencing longer lead
9 times for the core components for generation facilities
10 (e .g. , turbines and transformers) and therefore is seeking
11 confirmation of the appropriateness to commence the
12 accrual of AFUDC once the necessary relatively large
13 expenditures for the resource are incurred to ensure
14 timely delivery.
15 Q. Does the Company believe accrual of AFUDC once
16 payments are made for materials is consistent with FERC' s
17 guidance?
18 A. Yes . A down payment for materials is evidence
19 that capital expenditures are being incurred and the
20 procurement is necessary to begin construction of the
21 project, which aligns with FERC' s guidance on the
22 commencement of AFUDC accrual . However, because Idaho
23 Power has not previously been in a position to incur costs
24 associated with resource procurements prior to filing for
25 a CPCN, the Company is requesting the Commission
WAITES, DI 7
Idaho Power Company

I acknowledge it is appropriate to begin the accrual of
2 AFUDC once the project has been deemed viable and
3 expenditures associated with the resource procurement have
4 been incurred. This treatment would recognize the required
5 upfront investments made by the Company in pursuit of
6 cost-effective, necessary resources to safely and reliably
7 serve customers .
8 Q. Is Idaho Power requesting the Commission deem
9 the accrued AFUDC amounts prudent at this time?
10 A. No. The Company is not seeking a prudence
11 determination of any project costs incurred at this time .
12 Rather, once the Bennett Gas Expansion Project has been
13 completed and placed in-service, Idaho Power will file a
14 request with the Commission for a review and approval of
15 all prudently incurred Bennett Gas Expansion Project
16 costs, including any accrued AFUDC amounts .
17 III . CONCLUSION
18 Q. Please summarize your testimony.
19 A. Idaho Power records the accumulation of all
20 costs associated with the construction of an asset,
21 including AFUDC, in CWIP. When the plant is completed, the
22 total cost of the plant, including AFUDC, is moved to
23 Electric Plant-in-Service, placing the asset in rate base .
24 The Company commences accrual of AFUDC as soon as funds are
25 expended and committed to a construction project, which,
WAITES, DI 8
Idaho Power Company

1 for generation resources, has typically occurred subsequent
2 to the request for a CPCN. Because of long lead times,
3 Idaho Power incurred expenditures for the Bennett Gas
4 Expansion Project following identification on the final
5 shortlist, but prior to OPUC acknowledgement. The Company
6 is requesting the Commission confirm Idaho Power' s
7 treatment of the accrual of AFUDC for the Bennett Gas
8 Expansion Project, and any viable future resource
9 procurements, is appropriate when expenditures are first
10 incurred, which may occur prior to a request for a CPCN.
11 Q. Does this complete your testimony?
12 A. Yes, it does .
13
WAITES, DI 9
Idaho Power Company

1 DECLARATION OF COURTNEY WAITES
2 I, Courtney Waites, declare under penalty of perjury
3 under the laws of the state of Idaho:
4 1 . My name is Courtney Waites . I am employed
5 by Idaho Power Company as a Regulatory Projects Coordinator
6 in the Regulatory Affairs department.
7 2 . On behalf of Idaho Power, I present this
8 pre-filed direct testimony in this matter.
9 3 . To the best of my knowledge, my pre-filed
10 direct testimony is true and accurate.
11 I hereby declare that the above statement is true to
12 the best of my knowledge and belief, and that I understand
13 it is made for use as evidence before the Idaho Public
14 Utilities Commission and is subject to penalty for perjury.
15 SIGNED this 19th day of September 2025, at Boise,
16 Idaho .
17
18 Signed:
19 Courtney Waites
20
21
WAITES, DI 10
Idaho Power Company