200402131st Response of Staff to ID Power.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
472 WEST WASHINGTON STREET
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 1895
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
KIMBALL PROPERTIES LIMITED
PARTNERSHIP, AND HEWLETT PACKARD
COMPANY,
COMPLAINANTS
vs.
IDAHO POWER COMPANY,
RESPONDENT.
CASE NO. IPC-OO-
RESPONSE OF THE
COMMISSION STAFF TO
IDAHO POWER COMPANY'
FIRST SET OF
INTERROGATORIES AND
REQUESTS FOR PRODUCTION
The Staff of the Idaho Public Utilities Commission, by and through its attorney of record
Scott Woodbury, Deputy Attorney General, hereby responds to the First Set of Interrogatories and
Requests for Production of Idaho Power Company to the Commission Staff filed February 2, 2004.
Staff notes by way of preface to its Interrogatory responses that Idaho Commission Rule of
Procedure 225.01.a clearly states
, "
Production requests or written interrogatories should not be
used to obtain statements of opinion or policy not previously written or published and may be
objected to on that grounds." IDAP A 31.01.01.225.01.a. Despite the objectionable nature of some
of the Company s Interrogatories, Staff voices no objection.
STAFF RESPONSE TO THE FIRST SET OF
INTERROGATORIES AND REQUESTS FOR
PRODUCTION OF IDAHO POWER FEBRUARY 13 , 2004
INTERROGATORY NO.1: Based upon Mr. Sterling s statement on pages 6-7 of his
testimony that "HPlKimball is (and has been) paying for this share of substation costs through its
rates as a Schedule 9 customer " is it Staff's contention that HPlKimball has been paying its
specific cost of service or that HPlKimball has been paying the cost of service attributed to the
Schedule 9 class cost of customers?
RESPONSE TO INTERROGATORY NO.1: Based on Mr. Sterling s statement
identified in the interrogatory, Staff makes no contention whatsoever concerning cost of service
either for HPlKimball individually or for the Schedule 9 customer class. Staff has not prepared and
is not aware of any cost of service study that determines cost of service for HPlKimball
specifically.
HPlKimball is billed by the Company and is paying for service as a Schedule 9 customer.
Rates for Schedule 9 customers were set at cost of service in Idaho Power s last general rate case;
therefore, HPlKimball is paying the cost of service attributed to the Schedule 9 customer class.
Mr. Sterling s statement "HPlKimball is (and has been) paying for this share of substation
costs through its rates as a Schedule 9 customer " means that Schedule 9 rates include a component
for substation costs, and since HPlKimball is paying Schedule 9 rates, it is therefore paying a
portion of substation costs as are all other Schedule 9 customers.
The response to this request was prepared by Rick Sterling, P., Staff Engineer, in
consultation with Scott Woodbury, Deputy Attorney General for the Idaho Public Utilities
Commission Staff.
INTERROGATORY NO.2: Does the Staffhave an opinion as to the relative cost of
service for a new customer requiring additional substation facilities as opposed to the cost to serve
the incumbent customer within the same customer class? If so, please state the Staffs opinion and
the basis for said opinion.
RESPONSE TO INTERROGATORY NO.2: Staff believes that the relative cost of
service for a new customer requiring additional substation facilities will generally always be higher
than the cost to serve the incumbent customer within the same customer class due to the tendency
of new plant to be higher cost than existing plant.
STAFF RESPONSE TO THE FIRST SET OF
INTERROGATORIES AND REQUESTS FOR
PRODUCTION OF IDAHO POWER FEBRUARY 13 , 2004
The response to this request was prepared by Rick Sterling, P., Staff Engineer, in
consultation with Scott Woodbury, Deputy Attorney General for the Idaho Public Utilities
Commission Staff.
INTERROGATORY NO.3: Is it the Staffs position that any refund to HPlKimball will
then be considered an investment of Idaho Power that will be an increase to rate base?
If yes, which customers does the Staff believe will pay the return on investment on that rate base?
RESPONSE TO INTERROGATORY NO.3: Yes. Staff agrees that any refund to
HPlKimball is an investment ofldaho Power that is eligible for rate base treatment. Any change in
rate base must be authorized in a general rate case. The return on investment on that rate base
would be paid by the general body of ratepayers in accordance with the portion of costs allocated to
each customer class.
The response to this request was prepared by Rick Sterling, P., Staff Engineer, in
consultation with Scott Woodbury, Deputy Attorney General for the Idaho Public Utilities
Commission Staff.
INTERROGATORY NO.4: Please describe the Staffs understanding of who pays for the
return on investment for the unused capacity of substations included in rate base.
RESPONSE TO INTERROGATORY NO.4: The return on investment for the unused
capacity of substations included in rate base is paid by the general body of ratepayers in accordance
with the portion of costs allocated to each customer class.
The response to this request was prepared by Rick Sterling, P., Staff Engineer, in
consultation with Scott Woodbury, Deputy Attorney General for the Idaho Public Utilities
Commission Staff.
INTERROGATORY NO.5: Does the Staff believe that it is in ratepayer s interest that
new customers be encouraged to locate in area( s J (sic J where unused substation capacity already
exists? If not, please explain.
STAFF RESPONSE TO THE FIRST SET OF
INTERROGATORIES AND REQUESTS FOR
PRODUCTION OF IDAHO POWER FEBRUARY 13 , 2004
RESPONSE TO INTERROGATORY NO.5: Generally, yes. To the extent that
substation cost is a ratepayer expense, Staff believes that it is in ratepayers' interest that new
customers be located in areas where unused substation capacity already exists. Fewer facilities
generally means less cost must ultimately be recovered through rates. The only tariff or rule that
addresses payment for substations is Schedule 19 wherein it states
, "
To the extent that additional
facilities not provided for under Rule H, including transmission and/or substation facilities, are
required to provide the requested service, special arrangements will be made in a separate
agreement between the Customer and the Company." The provision itself does not encourage
Schedule 19 customers to locate in areas where unused substation capacity already exists; it is
Idaho Power s application of the provision that provides encouragement, if any. Staff is aware of
no other provisions in Idaho Power s rules or tariffs that encourage customers, or allow Idaho
Power to encourage customers, to locate in areas where unused substation capacity already exists.
The response to this request was prepared by Rick Sterling, P., Staff Engineer, in
consultation with Scott Woodbury, Deputy Attorney General for the Idaho Public Utilities
Commission Staff.
INTERROGATORY NO.6: In Mr. Sterling s testimony on page he states that
HPlKimball will effectively pay twice.
(a) Has the Staff performed an HP IKimball-specific cost of service study that would
demonstrate that HPlKimball would be paying twice its cost of service?
(b) Is it Staffs position that HP IKimball would be paying twice its cost of service?
(c) If the answer to (b) above is "" to what does the word "twice" refer?
STAFF RESPONSE TO THE FIRST SET OF
INTERROGATORIES AND REQUESTS FOR
PRODUCTION OF IDAHO POWER FEBRUARY 13 , 2004
RESPONSE TO INTERROGATORY NO.
(a) In its full context, the statement in Mr. Sterling s testimony states the following:
Q. If the Commission decides that Idaho Power should not refund
any substation costs to HP IKimball, and HP IKimball
continues to take service as a Schedule 9 customer and thus
pay for substations through a portion of its rates, won
HPlKimball pay twice and Idaho Power collect twice for the
cost of the substation?
A. Yes, HPlKimball will effectively pay twice, but no, Idaho
Power won t collect twice. HP/Kimball will have paid once
through up-front charges and will effectively pay a second
time for a share of substation costs built into the rates paid by
it and all other Schedule 9 customers.
Idaho Power won t collect twice, but it will, however, have to
collect less in the future from its other Schedule 9 customers if
it retains HPlKimball's contribution. HPlKimball'
contribution will reduce rate base, and the substation revenue
requirement for all other Schedule 9 customers will be less by
the amount of HP/Kimball's contribution.
In response to the interrogatory, no, Staff has not performed an HPlKimball-specific cost of
service study. Furthermore, Staff makes no allegation concerning HP IKimball' s cost of service in
the cited testimony.
(b) No, Staff does not know the cost of service for HPlKimball or any other individual
Schedule 9 customer.
(c) The word "twice" is clearly explained in Mr. Sterling s testimony as repeated above
in the sentence "HP/Kimball will have paid once through up-front charges and will effectively pay
a second time for a share of substation costs built into the rates paid by it and all other Schedule 9
customers." Pay twice means pay two times; it does not necessarily mean pay double the amount.
The response to this request was prepared by Rick Sterling, P., Staff Engineer, in
consultation with Scott Woodbury, Deputy Attorney General for the Idaho Public Utilities
Commission Staff.
STAFF RESPONSE TO THE FIRST SET OF
INTERROGATORIES AND REQUESTS FOR
PRODUCTION OF IDAHO POWER FEBRUARY 13, 2004
INTERROGATORY NO.7: On Page 15 of Mr. Sterling s testimony, he states
, "
It is
discriminatory whenever one customer has to pay for substation facilities and another customer
who may require the same or even larger substation capacity, does not have to pay just because
extra substation capacity is already available.
(a) Would Staff also contend that it is discriminatory whenever one customer has to pay
for distribution facilities and another customer, who may require the same or even larger
distribution capacity, does not have to pay just because extra distribution capacity is already
available?
(b) If the answer to (a) is yes, does the Staff believe that Rule H is discriminatory?
(c) If the answer to (a) is yes and the answer to (b) is no, please explain why Rule H is
not discriminatory.
RESPONSE TO INTERROGATORY NO.7: Staff objects to this request on the grounds
that distribution facilities and Rule H are not at issue or relevant to this proceeding. The issue in
this case is payment for substation facilities not distribution facilities. Rule H clearly states
, "
This
rule does not apply to transmission or substation facilities, or for requests for electric service that
are of a speculative nature." See Said direct testimony pp. 5, 6.
The response to this request was prepared by Rick Sterling, P., Staff Engineer, in
consultation with Scott Woodbury, Deputy Attorney General for the Idaho Public Utilities
Commission Staff.
REQUEST FOR PRODUCTION NO.1: Has the Staff performed any studies to
determine ifHPlKimball's cost of service is greater or less than the cost of service for the Schedule
9 class? If so, please provide such studies.
RESPONSE TO REQUEST FOR PRODUCTION NO.1: , Staff has not performed
any studies to determine if HPlKimball's cost of service is greater or less than the cost of service for
the Schedule 9 class.
The response to this request was prepared by Rick Sterling, P., Staff Engineer, in
consultation with Scott Woodbury, Deputy Attorney General for the Idaho Public Utilities
Commission Staff.
STAFF RESPONSE TO THE FIRST SET OF
INTERROGATORIES AND REQUESTS FOR
PRODUCTION OF IDAHO POWER FEBRUARY 13, 2004
REQUEST FOR PRODUCTION NO.2: In the Staff Attorney s question on page 10 of
Mr. Sterling s testimony is a statement that "Certainly at least some of the unused capacity that
HPlKimball originally requested is now being used to serve new customers." IfHP!Kimball
requested 4 MW and Idaho Power added 20 MW, is it the Staffs position that other new customers
are utilizing both the 16 MW that Idaho Power funded for use by customers other than HP !Kimball
and a portion of the 4 MW for which HP!Kimball paid? If so, please provide the analysis that
supports that position.
RESPONSE TO REQUEST FOR PRODUCTION NO.2: The direct testimony ofldaho
Power witness Sikes in this case at page 14, lines 8-23 states as follows:
Q. Given the current loads at these locations versus what was
originally requested, is the Bethel Court substation being
adequately utilized?
A. Yes. The summer 2003 load on the Bethel Court feeders was
BCRT - 011 at 8.1 MW and BCRT - 012 at 8.3 MW.
Q. Isn t that a significant amount ofload when you say the Company
would not have built the substation absent Hewlett Packard'
request?
A. As I previously testified, when Idaho Power constructs new
capacity, the Company attempts to fully utilize that capacity as a
means of offsetting projects in other areas so the Company can
manage its overall budget. By shifting existing loads to these
newer facilities, the Company is able to unload other facilities
where the growth is occurring to enable those facilities to
continue to provide safe and reliable services.
Based on this testimony, 16.4 MW of Bethel Court's capacity was utilized in 2002.
Mathematically, it is possible that new customers are utilizing only the 16 MW that Idaho Power
funded for use by customers other than HP !Kimball and that Idaho Power is preserving the
unutilized portion of HPlKimball's 4 MW request. However, Staff believes it would be unwise to
continue to preserve HP !Kimball's unused remaining capacity since Staff is not aware of any
indication being given that HP!Kimball intends to utilize the capacity in the future. In fact, Idaho
Power witness Sikes testimony at page 9, lines 1-3 states that HP!Kimball would likely operate its
call center at this location for only about three years. Given that new development continues to
occur in the vicinity of the Bethel Court substation, and that vacant property still exists, it seems
STAFF RESPONSE TO THE FIRST SET OF
INTERROGATORIES AND REQUESTS FOR
PRODUCTION OF IDAHO POWER FEBRUARY 13 , 2004
inevitable that new customers will eventually use the remaining capacity of the Bethel Court
substation.
The response to this request was prepared by Rick Sterling, P., Staff Engineer, in
consultation with Scott Woodbury, Deputy Attorney General for the Idaho Public Utilities
Commission Staff.
REQUEST FOR PRODUCTION NO.3: Please produce any Staff studies that
demonstrate that, by paying an upfront contribution for substation costs, HP!Kimball will pay
higher than its costs of service.
RESPONSE TO REQUEST FOR PRODUCTION NO.3: Staff has prepared no such
study. Moreover, as stated previously, Staff does not know the cost of service for HP!Kimball
specifically.
The response to this request was prepared by Rick Sterling, P., Staff Engineer, in
consultation with Scott Woodbury, Deputy Attorney General for the Idaho Public Utilities
Commission Staff.
REQUEST FOR PRODUCTION NO.4: Please produce any Staff analyses that
demonstrate that after having made a contribution in aid of construction, HP!Kimball has a lower
cost of service than other Schedule 9 customers.
RESPONSE TO REQUEST FOR PRODUCTION NO.4: As stated previously, Staff
does not know the cost of service for HP!Kimball specifically, thus it has no way of knowing how
HP/Kimball's cost of service compares to other Schedule 9 customers.
The response to this request was prepared by Rick Sterling, P., Staff Engineer, in
consultation with Scott Woodbury, Deputy Attorney General for the Idaho Public Utilities
Commission Staff.
STAFF RESPONSE TO THE FIRST SET OF
INTERROGATORIES AND REQUESTS FOR
PRODUCTION OF IDAHO POWER FEBRUARY 13 , 2004
DATED at Boise, Idaho, this
1.5'
day of February 2004.
Scott Woodbury
Deputy Attorney General
Technical Staff: Rick Sterling
sw:gdk/umisc/prdreqlipceOO 12.swrpsresponse 1
STAFF RESPONSE TO THE FIRST SET OF
INTERROGATORIES AND REQUESTS FOR
PRODUCTION OF IDAHO POWER FEBRUARY 13 2004
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 13TH DAY OF FEBRUARY 2004
SERVED THE FOREGOING COMMISSION STAFF'S RESPONSE TO IDAHO
POWER COMPANY'S FIRST SET OF INTERROGATORIES AND REQUESTS FOR
PRODUCTION IN CASE NO. IPC-00-, BY MAILING A COpy THEREOF
POSTAGE PREPAID, TO THE FOLLOWING:
PETER J RICHARDSON
RICHARDSON & O'LEARY
PO BOX 1849
EAGLE ID 83616
GREGORY W SAID, DIRECTOR
REVENUE REQUIREMENT
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
BRIAN GRAHAM
HEWLETT PACKARD COMPANY
11311 CHINDEN BLVD
BOISE ID 83714
MONICA MOEN
IDAHO POWER COMPANY
PO BOX 70
BOISE, ID 83707-0070
'-
jJto .r-
SECRETARY
CERTIFICATE OF SERVICE