20061218Vol III.pdf

ORIGINAL
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR A
CERTIFICATE OF CONVENIENCE
AND NECESSITY FOR THE EVANDER
ANDREWS POWER PLANT
CASE NO. IPC-E-06-
BEFORE
COMMISSIONER MARSHA SMITH (Presiding)
COMMISSIONER DENNIS HANSEN
PLACE:Commission Hearing Room
472 West Washington
Boise, Idaho
DATE:November 20, 2006
VOLUME III - Pages 397 - 518
CSB REPORTING
Constance S. Bucy, CSR No. 187
17688 Allendale Road. * Wilder, Idaho 83676
(2()8) 89()-5f98 * [phone]
Email csb~safelink.net
:j
CJ"0 0):10 Mrn T C"")
Cf'::
(") .::
CX)
~~ ~
co'Oen
;;0
.c:;/1
(;:)
For the Staff:Donovan Walker , Esq.
Deputy Attorney General
472 West Washington
Boise, Idaho 83720-0074
For Idaho Power Company:Monica Moen , Esq.
Idaho Power Company
Post Office Box 70
Boise, Idaho 83707-0070
For Industrial Customers
of Idaho Power:
RICHARDSON & 0' LEARY
by Peter J. Richardson , Esq.
and Mark P. Thompson , Esq.
Post Office Box 7218Boise, Idaho 83702
WITNESS EXAMINATION BY
Mr. Walker (Cross-Reb-Ct' d)
Mr. Thompson (Cross-Reb)
Commissioner Hansen
Commissioner Smith
Ms. Moen (Redirect-Reb)
Ms. Moen (Direct-Reb)
Prefiled Rebuttal Testimony
Mr. Thompson (Cross-Reb)
Ms. Moen (Redirect-Reb)
PAGE
397
416
444
449
456
461
464
490
507
Gregory Said/Michael
Youngblood
(Idaho Power)
M. Mark Stokes
(Idaho Power)
NUMBER DESCRI PTION PAGE
FOR I DAHO POWER COMPANY:
1. - Admi tted 517
4. (Confidential exhibit)Premarked
Admi tted 517
Admitted 517
FOR THE STAFF:
101. - 113.Admi tted
FOR THE INDUSTRIAL CUSTOMERS OF IDAHO POWER:
201.242.Admitted 517
243.(Confidential exhibit)Identified 493
Admi tted 517
CSB REPORTING
Wilder, Idaho
EXHIBITS
83676
BOISE , IDAHO, MONDAY , NOVEMBER 20 2006,1:35 P. M.
COMMISSIONER SMITH:All right, we ll go
back on the record.I believe the witnesses were being
questioned by Mr. Walker.
MR. WALKER:Thank you , Madam Chairman.
GREGORY W. SAID
produced as a rebuttal witness at the instance of Idaho
Power Company, having been previously duly sworn, resumed
the stand and was further examined and testified as
follows:
MICHAEL J. YOUNGBLOOD
produced as a rebuttal witness at the instance of Idaho
Power Company, having been previously duly sworn , resumed
the stand and was further examined and testified as
follows:
CROSS- EXAMINATION
BY MR. WALKER:(Continued)
Now , before the break we were talking
about the levelized fixed operating costs and attempting
CSB REPORTING
Wilder, Idaho
397 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
to kind of get a handle on the (**Confidential**)
difference that was allocated to (**Confidential**) over
the Evander Andrews site.Now , in response -- production
request No.9, your response to that , gives the
calculation and an assumption that the annual fixed O&M
estimate was derived from looking at 2004 and 2005 actual
O&M expenses at the existing Evander Andrews plant.
Could you describe how that was done?
MR. YOUNGBLOOD:No, I'm not sure I can
describe how that was done , but I did say that that was
in part how the (**Confidential**) came about.There
were other costs that did not have any historical
numbers , such as an increased supervisor , for example,
and the travel and the mileage there, so the
(**Confidential**) came as the difference, the
incremental difference, between the Evander Andrews site
and what it would be if the site were to be built at the
(**Confidential**) location.
Okay; so if we re back to Exhibit No.
then , trying to understand these numbers, then the number
for Evander Andrews, 1 148 000, that contains zero
addi tion for incremental fixed costs?
MR. YOUNGBLOOD:That includes zero for,
that is correct , for a total O&M.For O&M , operational
for , like, salary and that kind of thing, it only
CSB REPORTING
Wilder, Idaho
398 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
includes the property tax and insurance.
Okay; so zero for that and then a
duplication of the entire O&M derived historically from
the 2004-2005 data at the existing Evander Andrews
complex was added to (**Confidential**)?
MR. YOUNGBLOOD:An estimate of the
difference to operate at the -- if you were to have
operations at the (**Confidential**) site was determined.
That estimate was (**Confidential**).m assuming that
that estimate came from some historical numbers with
regard to salary and wages , an estimation of what
vehicles were and that type of thing.There were
addi tional things, though.In my testimony, I state that
the additional things were things like additional labor
and plant overheads, vehicles that would have to be at
the new site that are not at the site at Evander Andrews
if that site were to be selected, office and warehouse
spaces, sewer, water, parking areas, landscaping,
irrigation , heating and cooling systems, communication
systems and expenses associated with taxes and property.
That is in my testimony that it is a determination of
those things that if the (**Confidential**) site were
selected, those would be additional incremental costs,
fixed operating costs, to run at that site.
MR. WALKER:Madam Chairman, may
CSB REPORTING
Wilder, Idaho
399 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
approach the witness with a document?
COMMISSIONER SMITH:Yes , you may.
(Mr. Walker approached the witness.
COMMISSIONER SMITH:Can we go at ease for
a minute?
(Pause in proceedings.
MR. WALKER:m sorry, if I could perhaps
request a brief recess just to examine that.
COMMISSIONER SMITH:Sure.ll be at
ease momentarily.
(Pause in proceedings.
(Mr. Lobb distributing documents.
COMMISSIONER SMITH:All right, we ll go
back on the record.
BY MR. WALKER:Okay; so you have in front
of you what's been written on the bottom corner , it says
production request No.9 response.
MR. YOUNGBLOOD:Correct.
And really, I guess, what point I'm trying
to get at is really in the box that describes the
assumption that was made here.Now , hopefully, I can put
this question the right way to you.Have you read the
assumption from this response?
MR. YOUNGBLOOD:I did just read it,
correct.
CSB REPORTING
Wilder , Idaho
400 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
Okay.Now , to me that means that the
entire O&M from the existing Evander complex , Danskin
what was formerly known as Danskin , that entire amount
went into the (**Confidential**) that was added to the
(**Confidential**) to get the difference in the levelized
fixed operating cost that's reflected on Exhibit No.
MS. MOEN:I obj ect to that on the basis
that it lacks foundation.There s been no evidence that
Mr. Youngblood is sponsoring this particular exhibit,
that he had any part in the creation of this exhibit,
that he has any knowledge of this exhibit.
COMMISSIONER SMITH:Mr. Walker, would you
like to lay a foundation for questions based on this
piece of paper, please?
MR. WALKER:Certainly.Ini tially I was
just intending to use it to refresh his recollection
about those calculations.
BY MR. WALKER:Mr. Youngblood, are you
familiar with the calculation of levelized fixed costs
that we ve been talking about this afternoon?
MR. YOUNGBLOOD:Familiar with the
calculation of the levelized fixed costs that we had on
Exhibit 2?
Yes.
MR. YOUNGBLOOD:I understand how they
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
401
83676
were calculated, yes
--
I mean, how the levelized
calculation came about, yes.
Have you ever seen this document that'
labeled Production Request No.9 Response before?
MR. YOUNGBLOOD:I have not, not until
today.
Were you aware of what numbers went into
the (**Confidential**) that you have in your rebuttal
testimony?
MR. YOUNGBLOOD:I was not aware of all
the exact numbers that went into that estimate of
(**Confidential**) .During the course of our evaluation
on non-price attributes, one of the members of the team
also did the financial numbers and brought forth to us
the estimate of (**Confidential**) , approximately
(**Confidential**) , a year.When we asked what was
included in those numbers, the things that I had
mentioned before, like office space, salaries
irrigation , landscaping, those were estimates that to our
understanding also were conservative estimates of what
may be to operate at the (**Confidential**) site.
So isn t it possible that the historical
cost of running Danskin is included in that
(**Confidential**) ?
It is possible that part of that
CSB REPORTING
Wilder, Idaho
402 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
(**Confidential**) includes an evaluation from an
analysis of historical numbers, that is correct.
What does the document that you have,
Production Request No.9 Response, what does that appear
to be to you?
MS. MOEN:Again , I obj ect on the basis
that it lacks foundation and it requires Mr. Youngblood
to speculate what the purpose of this particular exhibit
lS.
COMMISSIONER SMITH:m going to overrule
the obj ection.I think the witness can state what, if
anything, this piece of paper might mean to him or what
information he derives.
BY MR. WALKER:Could you please read the
heading on the top of Production Request No.
Response?
MR. YOUNGBLOOD:Idaho Power 2005 Peaking
Resource RFP Calculation for Annual Fixed Costs for
(**Confidential**) Sites.
What does this document appear to be to
you?
MR. YOUNGBLOOD:Down the left-hand side
is Danskin O&M Exp, assuming expenses, by FERC Account.
It looks like there s a series of FERC account numbers
and their associated description.Then it looks like
CSB REPORTING
Wilder, Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
403
83676
there are two different groupings of numbers to the right
of that for 2004 and through 2005.Included in those
groupings are labor , I would assume materials, purchase
SVCs , perhaps purchase services, I am not sure of that,
accounting expenditures, other, and that would be true in
both of those cases.Do you want further description?
I think that's good enough.I think I'
move on to my next question.Isn t it possible that the
Company could incur some additional cost beyond zero
Evander Andrews?
MR. YOUNGBLOOD:I believe that if the
Company incurred additional cost beyond zero at Evander
Andrews that that additional cost would also be likely
be incurred at the (**Confidential**) site so that both
of those costs would be evaluated the same.The
(**Confidential**) is believed to be the incremental cost
at the (**Confidential**) site.
So on the other hand, also, isn t it
possible that the Company may get some kind of sharing or
economies of scale benefit at the (**Confidential**) site
and thereby avoid 100 percent duplication of costs from
the Danskin site?
MR. YOUNGBLOOD:Help me with your term
sharing or economies of scale.
Say, for instance, the sh~ring of some
CSB REPORTING
Wilder , Idaho
404 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
portion of man-hours to operate all plant -- if we assume
the (**Confidential**) site were up and running, do you
think there s a chance there would be any kind of shared
labor that could go on?
MR. YOUNGBLOOD:There may be shared
labor , but that would not be included in the
(**Confidential**) .My understanding of the
(**Confidential**) is that is the incremental cost at the
(**Confidential**) site, so if there are costs that are
incurred , operational costs are incurred, at the Evander
Ahdrews site , those costs would also be incurred at the
(**Confidential**) site and the incremental difference,
the additional cost if the (**Confidential**) site were
to be selected, would be about (**Confidential**)
annually.
Do you have any analysis to show or back
up your statement that you just made?
MR. YOUNGBLOOD:I do not have any here
with me, no.
So follow with me here for another moment.
re almost done , I promise, with levelized fixed
operating costs.I f we are, if we assume that these
levelized fixed costs, and specifically referring to
Exhibit 2, this column second from the last on the top,
if we assume that those are just a little off, for
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
405
83676
example, if the (**Confidential**) number , the
(**Confidential**) , if that'(**Confidential**) lower,
isn t it true , subj ect to your verification , that if we
run that through the rest of the sheet , it would result
in a (**Confidential**) difference when we get to the
end?
MR. YOUNGBLOOD:I do not know.
Could you accept that, subj ect
verification , if I told you that
MR. YOUNGBLOOD:No, I would not accept
that, not without checking.
Wouldn t there be some advantages to a
project located in (**Confidential**) that were not taken
into account by the evaluation team s analysis?
MS. MOEN:It calls for speculation and
obj ect to that.The question needs to be clearer.
COMMISSIONER SMITH:Mr. Walker, could you
please restate your question?
BY MR. WALKER:Mr. Youngblood, you
testified earlier that you were a member of the
evaluation committee for the RFP?
MR. YOUNGBLOOD:That is correct.
Did the evaluation committee consider any
advantages associated with the location of the
(**Confidential**) site?
CSB REPORTING
Wilder, Idaho
406 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
MR. YOUNGBLOOD:I believe that we
eval uated and considered the advantages of all sites,
correct, and all bid proposals.
Would it be an advantage to be in close
proximi ty to the Company headquarters?
MR. YOUNGBLOOD:Advantaged in what way?
Advantaged in the evaluation process.
MR. YOUNGBLOOD:The evaluation process
did not
--
the location , the pure location , wouldn t come
about in an advantage with regard to the location of the
plant.If there is a transmission , if you re talking
wi th regard to transmission , I would say the Evander
Andrews may have an advantage, but I don t understand
what you re saying.We did consider all sites and
believe all advantages and disadvantages and assessed the
ris ks, high and low , of all sites.
If Evander Andrews is built , wouldn
there be some transmission loss between Mountain Home and
Boise?
I am not an engineer and I don t know.
would assume that there are some engineering losses that
go across transmission lines.
Were transmission losses taken into
account in your analysis?
MS. MOEN:That was asked and answered.
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
407
83676
COMMISS lONER SMITH:I don t think it was
answered.
MR. WALKER:It wasn t asked and answered.
MR. YOUNGBLOOD:m not coming up with an
answer.m trying to remember during our evaluation
whether losses specifically were evaluated.I know that
we tried and were impeded from time to time by FERC
standards of conduct trying to determine values with
regard to transmission and got the best estimates with
regard to those transmission prices.Again , this is on
the price consideration, not the non-price consideration.
We did take evaluation between location of a plant with
regard to location on the Company s system with regard to
transmission, those transmission attributes.I believe
the difference between the two sites that we re talking
about here, the Evander Andrews and the
(**Confidential**) site, I believe there was a one point
difference on a non-price attribute for, in favor of
actually one point higher for the Evander Andrews site.
BY MR. WALKER:If the (**Confidential**)
si te were built, wouldn t there be some difference in
variable cost due to the lower heat rate in
(**Confidential**) that would be a result of the lower
elevation, would you be aware of anything like that?
MR. YOUNGBLOOD:I would believe that
CSB REPORTING
Wilder, Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
408
83676
there s a very slight difference.The difference between
the two plants , if I recall , was 171 and 170., I think.
I don t have that exactly, but there was a little bit of
difference between the output of the plants.I do know
that in asking the bidders , we got information back from
them on the output of the plant , the al ti tude at which
the site would be located, the temperature, the ambient
temperature, that they would run at, the summer
temperatures, all of that was taken into consideration
yes.
Let's switch it up here for a little bit.
Let's look at still on Exhibit No., rebuttal Exhibit
No., at the top the transmission cost, it has
(**Confidential**) for Evander Andrews and
(**Confidential**) for (**Confidential**).
MR. SAID:Yes , it does.
And I think the testimony before was that
that was added to the proj ect cost or to the plant cost
to arrive at this proj ect cost.
MR. SAID:Yes.
And that's the number that was used during
the evaluation process of these two sites by the
commi ttee?
MR. YOUNGBLOOD:To determine the proj ect
cost?
CSB REPORTING
Wilder , Idaho
409 SAID/YOUNGBLOOD (X-Reb)
Idaho Power , Company83676
Yes.
Yes, the (**Confidential**) and the
(**Confidential**) was used.
Okay.Now , if Evander Andrews, if the new
Evander Andrews proj ect is built along with the
associated transmission, would any of that transmission
capaci ty be available for anything other than the Evander
Andrews plant?
MR.SAID:It'pos sible,yes.
What about during peak hours?
MR.SAID:been told that there
less capacity available during peak hours because,
obviously, the intent is for the Evander Andrews output
to be on the line at that time , but our understanding is
that the capacity of line is greater than the capacity of
the plant.
But the upgrade would primarily be
designed to incorporate the plant into the system during
peak; is that a fair statement?
That's true.MR. SAID:You don t have
the ability to perfectly size the transmission to match
the output of the plant, but this would be the next
incremental size line capacity available.
Now , to your knowledge, has the Company
provided any analysis or any quantification of any
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
410
83676
benefit from this transmission other than simply to serve
the addition of the Evander Andrews proj ect?
MR. SAID:ve had some difficulty
receiving information like that from our transmission
folks.
Okay.Now , the transmission costs that
are reflected here on Exhibit 2 , those are not cost
estimates that the Company is willing to commit to, are
they?
MR. SAID:Not at this point in time,
no.
And we have testimony in the rebuttal
that, under one option , the Company can provide a cost
estimate with an accuracy wi thin plus or minus 20 percent
within , I believe, 90 calendar days; is that correct?
MR. SAID:Yes, and that request has been
submi tted and it's my understanding that we will receive
that cost information in January.
And there s a second option that gives a
slightly more accurate estimate of plus or minus
percent, but it takes a little bit longer, 120 days; is
that correct?
MR. SAID:That's correct, and Idaho
Power s power supply group did not make a request for
that sort of precision in the quote.
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
411
83676
Why has the Company to this date not
submi tted any kind of transmission estimate other than
this initial rough number that was used by the evaluation
committee?
MR. SAID:Well , as discussed in our
testimony, the requests for specific cost information are
subj ect to specific FERC rules and the timing of a
request for information of that nature could not be made
until a specific site was selected.Historically, when
we have made requests, we have not been asked to provide
commi tment estimates on transmission and so it wasn
known that that would be potentially required in this
instance.
Okay, and when you finally obtain the
engineering design work required, the estimate from the
Company s delivery department will be accurate to wi thin
plus or mlnus 20 percent; is that fair?
That's the intent, althoughMR. SAID:
they are also quick to point out that it's not a binding
commitment to be within that 20 percent.It's an
expectation.
Okay; so if we look back to the
transmission costs on Exhibit 2 , specifically the
'22,550,000 assigned to Evander Andrews, that's a rather
large chunk if we look over at the plant cost, it's a
CSB REPORTING
Wilder , Idaho
412 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
large proportion of that number , isn t it?
MR. SAID:It's nearly half , half again.
Now , if we assume
--
if we take this
estimate and we assume that it could be accurate to
CSB REPORTING
Wilder , Idaho
within 20 percent , this leaves us with a risk that this
transmission cost could actually go up by almost $4.
million, isn t that correct, subj ect to the
MR. SAID:That's possible if ultimately
calculation?
the cost quote comes out the same as the initial
And assuming that it's at least as
accurate as the engineering study that the transmission
MR. SAID:The request has been for a 20
percent accuracy, yes.
So even when it comes back from the
transmission group, it could still be higher than that?
MR. SAID:That's true of all the values
estimate, yes.
Could it possibly be higher than the 20
percent variance over the twenty-two five?
MR. SAID:That's possible.It's my
understanding that the Company would be willing to commit
. to no more than 20 percent over the quote that we receive
group does?
on this sheet.
413 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
in January.
The still unknown amount,though?
MR.SAID:Correct.
Now this variable range transmlssion
costs that we re talking about, that could be called a
risk, couldn t it?
MR. SAID:It could be considered a risk
yes.
How did Idaho Power account for this risk
this risk and this uncertainty, in transmission cost in
the analysis of these bids?
MR. SAID:The proj ect, the total proj ect,
costs of all of the particular bids were evaluated at
their most Ii kely outcome or their expected proj ect cost.
You ve cohcentrated on transmission which has a 20
percent consideration once we get that final number.
That's the same that exists on the plant costs as well.
The bid is essentially for $50 million and the Company
commitment estimate is for 60 million which is also 20
percent, so basically all of the bids it could be assumed
to have a 20 percent risk evaluated with each and every
one.
That sounds fair , all except for I think
there was testimony that there wasn t any risk associated
wi th the plant cost, the contract price.
CSB REPORTING
Wilder, Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
414
83676
MR. SAID:Well , the contract is set;
however , there are known to be additional costs that the
Company will incur associated with change orders and
AFUDC and some of the other items mentioned in
testimony.
But it's pretty easy to see that the
twenty-two million five hundred is a pretty big cost,
though.
MS. MOEN:That's been asked and
answered.
COMMISSIONER SMITH:Sustained.
BY MR. WALKER:Wouldn t the commitment
estimate apply equally to the transmission costs
associated with the (**Confidential**) site as well?
MR. SAID:, we don t receive a firm
contract bid from the transmission department, nor does
any other applicant in the FERC process.
Doesn t the transmission cost risk that
was not evaluated far exceed the risk associated with
least cost water supply, waste disposal and other
non-price factors that's were extensively evaluated and
point factored?
MR. SAID:I think there are transmission
risks and transmission rewards that, to my knowledge, the
evaluation team did try to take into consideration.
CSB REPORTING
Wilder, Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
415
83676
MR. WALKER:Nothing further,
Madam Chairman.
COMMISSIONER SMITH:Thank , you, Mr.
Walker.
Mr. Thompson.
MR. THOMPSON:Yes.
CROSS- EXAMINATION
BY MR. THOMPSON:
Good afternoon.First, I wanted to ask a
question about your Exhibit No.2 as a follow-up to Mr.
Walker s cross-examination.Again, before I start, I
think it was Mr. Youngblood that is sponsoring this
exhibit; is that correct?
MR. YOUNGBLOOD:No, we are both
sponsoring Exhibit 2.
So you re aware
--
you understand how
these numbers, how the math works basically looking at
these numbers on this page?
MR. SAID:We do.
MR. YOUNGBLOOD:We both have degrees in
math.
I didn t know that; so I'm looking in the
top section towards the right, we have levelized fixed
CSB REPORTING
Wilder , Idaho
416 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
operating costs.For the (**Confidential**) site,
there s a value there of (**Confidential**); correct?
Correct.
And if that number were to change by
$100,000 , what would happen to this (**Confidential**)
down at the bottom of the page?
MR. YOUNGBLOOD:Tha t I do not know.
have to run this analysis and I testified to that before,
that I would not know without running that analysis.
So can you run that analysis?
Not here at the stand , no.What this was
intended to do was to change the Evander Andrews site so
that the analyzed levelized -- annual levelized fixed
costs were the same as the site.
So to the best of your knowledge, if that
number went up by $100,000, would the number at the
bottom also increase by $100,000 or a greater amount?
I don t know that.
Why can t you calculate that on the stand?
MR. SAID:We don t have a computer or a
calculator up here.
COMMISSIONER SMITH:We could certainly
take a recess if they need the equipment to do that and
you need the answer.
MR. THOMPSON:That will be great.
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
417
83676
COMMISSIONER SMITH:Okay, we ll be at
ease while you find some tools.
(Recess. )
COMMISSIONER SMITH:ll go back on the
record now.Mr. Thompson.
MR. THOMPSON:Thank you, Madam Chair , and
thank you, Mr. Said and Mr. Youngblood , for taking the
time to do that.I don t know if we need to read back a
question or if you remember where we were.
MR. SAID:I think I know where we were.
We did a couple of calculations and I'll describe those
and suggest what the results are.First, looking just at
Exhibi t 2 , I took a look at the change in the annual
levelized fixed cost between the Evander Andrews and the
(**Confidential**) site and noted that the change in
annual levelized fixed cost was (**Confidential**).That
change in annual levelized fixed cost resulted in a
project cost change of (**Confidential**) , so if you
looking at the ratio of cost impact on the project cost
as a multiple of changes in the annual levelized fixed
cost, then a (**Confidential**) change in annualized
levelized fixed cost would result in a project cost
change of (**Confidential**).
Now , your question , I think , was a little
bit different in that you weren t asking for a change
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
418
83676
necessarily in the annual levelized fixed cost, but
rather the fixed O&M costs and depending on how you
escalate those costs over time and discount those costs
over time, you would get a different answer , but based on
calculations that have jointly been made during the
break, if you assumed that the discount rate was 7.
percent and no escalation , the multiplier would be about
12 percent , so it would be (**Confidential**) associated
with a (**Confidential**) change in fixed O&M costs.
BY MR. THOMPSON:Okay, thank you very
much , and now to change gears a little bit , on page 26 of
your rebuttal testimony, starting on line 20, you
criticize Dr. Reading s conclusion that Idaho Power s DSM
and conservation achievements have been relatively poor;
correct?
MR. SAID:m sorry, I was looking in the
wrong set of testimony.Page 26?
Page 26.
MR. SAID:Line?
Starting at line 20 , and I'm just kind of
characterizing your testimony as -- I'm sorry, in this
section of your testimony, you re basically disagreeing
wi th Dr. Reading s conclusion that Idaho Power s DSM and
conservation achievements have been relatively poor; is
that correct?
CSB REPORTING
Wilder , Idaho
419 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
MR. SAID:That's true.
And you believe his assessment is
inappropriate because he concentrates on energy savings;
whereas, the Company has focused its DSM efforts on
reducing summer peak demands; is that correct?
Yes.
And on page 25 of your rebuttal testimony,
you respond to Dr. Reading s assertion that Idaho Power
slashed its spending on DSM programs from 6.2 million to
6 million between 1995 and 2001, correct, you
responding there to his assertion?
Yes.His assertion thatMR. SAID:
spending was reduced in that period is correct.The
purpose of my testimony was to point out the factors that
drove that reduction in DSM program expenditures.
So in other words, you don t dispute those
numbers; rather , you basically argue that the actions
were justified or that they re explainable?
MR. SAID:Correct.
And isn t the budget that Dr. Reading
referred to, the one that went from 6.2 million to 1.
million between 1995 and 2001 , isn t that the same budget
from which Idaho Power s DSM programs were funded
regardless of whether they were focused on energy savings
or reduction in demand?
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
420
83676
MR. SAID:Those budgets included all DSM
programs.
And on page 26 of your rebuttal testimony,
you state that in 2005, the Company spent $6.7 million on
DSM acti vi ties, an increase of approximately 80 percent
over the previous year.Do you know what the Company
DSM expenditures were 10 years ago in 1995?
MR. SAID:I don
MR. THOMPSON:I have a copy of ICIP' s
Exhibi t No. 224 and I have two copies of that, one for
the panel and one for Ms. Moen.
(Mr. Richardson approached the witness.
BY MR. THOMPSON:I apologize, I don
have that copy front of me now.you see from that
document what was purported to be Idaho Power DSM
budget from 1995?think it'few pages back.
MR. SAID:What I have is the total amount
of spending on demand side management programs.I don
know what the budget numbers were, but the amount
actually spent in 1995 was $6,186,558 according to this
response.
Thank you , and wouldn t you agree, then
that the 2005 expenditures are only, at least the 2005
budget is only, a slight increase over a 10-year period
when compared to Idaho Power s expenditures in 1995?
CSB REPORTING
, Wilder, Idaho
421 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
MR. SAID:Well , certainly comparing the
2005 directly to the 1995 numbers would suggest that, but
again , as our testimony points out, there were reasons
why there were reductions to DSM expenditures during the
period following 1995 through 2001 and reasons why those
dollars have increased since 2001.
At the top of page 27 of your rebuttal
testimony you state, "Targeting summer peak demands is
consistent with the recent resource acquisitions of
peaking units.Do you see that?
MR. SAID:Yes.
I want to understand what you mean by that
statement.Are you saying that it is appropriate for the
Company to focus its DSM on reducing its peak demands
since its new resources tend to be peakers?
MR. SAID:Well, actually, the selection
of resources and DSM are driven by changes in the
Company s loads, both on an energy basis and a peak
basis; however , the maj or concerns that face the Company
at this point in time are related to peak demands rather
than energy issues; therefore , it's not surprising that
there would be consistency between the choice of physical
resources and DSM programs.
So you would admit, wouldn t you, that the
purpose of Idaho Power s DSM programs, or at least its
CSB REPORTING
Wilder, Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
422
83676
peak reduction programs, is to prevent the Company from
having to build peaking plants or at least reduce the
size of any plant the Company may need; right?
Yes.
And you stated that the Company plans to
significantly increase its spending on DSM programs as it
CSB REPORTING
Wilder, Idaho
implements the new and expanded programs identified in
the 2006 IRP; is that correct?
MR. SAID:Yes.
Yet, Idaho Power s purported need for the
Evander Andrews plant is based on the 2004 IRP;
MR. SAID:It was first identified in the
2004 plan and also reflected in the 2006 plan.
m sorry, could you repeat the last
MR. SAID:And also reflected in the 2006
But again, the 2006 IRP assumes that it
correct?
will be built; isn t that correct?
Yes, it does.
And the 2004 IRP did not include the
increase in DSM that Idaho Power is contemplating in its
2006 IRP; is that correct?
That's correct.The DSMMR. SAID:
sentence?
plan.
423 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
figures in the 2004 IRP were less than the anticipated
DSM in the 2006 plan.
On page 30 of your rebuttal testimony,
looking at lines 17 through 23, you state that you don
agree with Dr. Reading s conclusion that the Evander
Andrews plant will discourage Idaho Power from making any
further DSM commitments; correct?
MR. SAID:That's correct, and that'
consistent with the testimony that I just provided that
even with the inclusion of the Evander Andrews plant in
the 2006 IRP , the levels of DSM have risen.
The levels of planned DSM; is that
correct?
MR. SAID:That's correct.
And Dr. Reading in his quote didn
actually use the word " any ; isn t that right?I think
that was bracketed because those are your words.
MR. SAID:Yes.
Mr. Said, isn t it true that the 2004 IRP
called for an 88 megawatt peaking plant?
MR. SAID:It did.
And the Evander Andrews plant is
approximately 170 megawatts?
MR. SAID:That's correct.
And once the plant is built, the Company
CSB REPORTING
Wilder, Idaho
424 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
will be able to dispatch it essentially whenever it would
like subj ect to availability; correct?
MR. SAID:Yes , although the anticipated
use of the plant is that it will dispatch for peak need
purposes during the summer months and occasionally the
winter months rather than operating as a base load
dispatched resource.
So can you explain , then , why it would be
unreasonable for Dr. Reading to assume that the Company
will have less of an incentive to do DSM if it is allowed
to build a plant that is over 80 megawatts larger than
what was called for in the 2004 IRP and is essentially
fully dispatchable?
MR. SAID:Again , my testimony there is to
suggest that even though this plant is proposed in the
2006 plan that the Company s anticipated levels of DSM
are growing.Now , if the assumption that Dr. Reading is
making is that you build nothing and acquire nothing and
you can only meet your load growth through DSM , would you
acquire more DSM than is in the Company plan, the Company
would pursue that , but the Ii kelihood of having
availabili ty of those quantities of DSM are highly
unlikely.
Is that your understanding of
Dr. Reading s testimony that the Company should not
CSB REPORTING
Wilder, Idaho
425 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
build , should only rely on DSM in order to meet its peak
demand?
MR. SAID:My understanding of
Dr. Reading s testimony is that he recommends that the
Commission not approve a certificate of convenience and
necessi ty for this plant and whether or not he
anticipates that that be replaced solely with DSM, I
think he s silent on it.m not sure he addresses how
the needs will be met without an additional peaking unit.
Mr. Said, how many megawatts of emergency
standby generation is installed at Micron in Boise?
MR. SAID:Emergency standby generation?
Yes.
MR. SAID:m not aware.
Would it surprise you to find out that
there are 13 megawatts of backup generation installed at
Micron?
That's possible.I don t knowMR. SAID:
how much they may have.
And how many megawatts of backup
generation are installed at Hewlett-Packard in Boise?
MR. SAID:Again , I'm unaware.
Do you know about St. AI's Hospital or
St. Luke s Hospital in Boise or Holy Rosary Hospital in
Ontario?
CSB REPORTING
Wilder, Idaho
426 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
No.
Do you know how many megawatts of
distributed generation through standby generators are
CSB REPORTING
Wilder, Idaho
installed in the Boise area?
MR. SAID:m not.
Do you know how much it would
--
sorry, could you repeat your answer?
MR. SAID:I said I'm not aware.
Do you know how much it would cost Idaho
Power to get access to a generator at Micron so that it
could use that generator to meet its peak demand?
MR. SAID:To meet Micron s peak demand?
, how much it would cost Idaho Power to
gain access to Micron s emergency standby generators in
order to meet Idaho Power s peak demand?
MR. SAID:m not aware if those sorts of
discussions have taken place.
And do you know what would be required
from an engineering perspective in order to accomplish
MR. SAID:No, I don
Do you know if Micron would be willing to
make such arrangements with Idaho Power?
MR. SAID:As I stated, I'm not aware of
any discussions that have taken place between the Company
that?
427 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
and Micron.
Did you read Dr. Reading s testimony where
he explains that Portland General Electric has created a
successful virtual peaking plant through its dispatchable
standby generation program?
I do recall reading that.
And are you aware that Idaho Power
committed to explore the use of standby generation in
order to meet its peak demands before the Oregon
Commission in its general rate case in Oregon?
MR. SAID:I believe there were some
discussions as to how to use generation from on-site
locations of our customers.
And I asked specifically are you aware
that the Company committed to explore the use of standby
generation before the Oregon Commission?
MR. SAID:I don t recall that, but I
would accept that we did.
Did you review the part of Dr. Reading
testimony where he refers to the significant increase in
Idaho s Conservation Reserve Enhancement Program , often
called the CREP program?
MR. SAID:I don t recall that.
Could I have you turn to page 33 to 34 of
Dr. Reading s testimony?Do you have a copy of that with
CSB REPORTING
Wilder , Idaho
428 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
you?
MR. SAID:I don
MR. THOMPSON:Do you have a copy of that,
Ms. Moen?
MS. MOEN:I do.May I approach?
COMMISSIONER SMITH:Certainly.
(Ms. Moen approached the witness.
MR. SAID:Which page was that?
BY MR. THOMPSON:Page 33 to 34.
sorry, I've got the wrong page number if you ll give me
CSB REPORTING
Wilder , Idaho
Okay, it starts on page 44 of
Dr. Reading s testimony.Did you read Dr. Reading
testimony, including this part?
MR. SAID:I did read his testimony at one
just a minute.
point in time, yes.
Are you still reviewing that, Mr. Said, or
MR. SAID:I think you asked me if I had
read it before and I answered that I had.
And as Dr. Reading points out, hasn
Idaho Power incorporated into a recent forecast an annual
energy reduction over the next 15 years of approximately
4 percent because of CREP?
MR. SAID:That appears to be
Dr. Reading s testimony.
should I go on?
429 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
Right, and I have a copy that I'll
would you accept that that's true?I have a copy of the
exhibit which was an Idaho Power response to an ICIP
request for production and I'd be happy to hand that to
you if you would like to verify.
MR. SAID:That's fine, I presented no
testimony on this issue.
Do you know how much of a decrease in its
peak demand Idaho Power expects with this 4 percent
reduction in energy due to the CREP program?
No, I did no review of the CREPMR. SAID:
program.
And isn t it true that Idaho Power has not
incorporated any specific assumptions in the 2006 IRP
regarding the CREP?
MS. MOEN:That question has been asked
and answered and it goes beyond the purview of the
rebuttal testimony as well.
COMMISSIONER SMITH:Mr. Thompson.
MR. THOMPSON:d be happy to offer an
Exhibi t No.2 34 which is Idaho Power s response to ICIP
which contains such a statement.
COMMISSIONER SMITH:I don t think that
was the obj ection , so if you want to respond to the
obj ection.
CSB REPORTING
Wilder , Idaho
430 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
MR. THOMPSON:I think Ms. Moen obj ected
because she said it was asked and answered.I don
think I've asked
MS. MOEN:My obj ection is that your
question goes beyond the rebuttal testimony offered by
either Mr. Said or Mr. Youngblood and so it's not
eligible for questionihg.
MR. THOMPSON:I would refer you to, if I
may, Madam Chair , on page 24 of Said/Youngblood
testimony, lines 14 through 20, they argue that without
the new unit at the Evander Andrews complex, the July
2007 peak hour deficit is forecasted to be 111 megawatts;
in other words, it goes directly to the case.They
arguing that the Evander Andrews plant is necessary in
order to meet their loads.
COMMISSIONER SMITH:I believe that's fair
game and I'll allow the question.
MR. SAID:Could you repeat the question?
BY MR. THOMPSON:My question was, isn
it true that Idaho Power has not incorporated any
specific assumptions in the 2006 IRP regarding the
CREP?
MR. SAID:I don t know the answer to that
question.
ll hand you a copy of Exhibit 234 of the
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
431
83676
Industrial Customers.
(Mr. Richardson approached the witness.
BY MR. THOMPSON:Mr. Said, on page 17 of
that document, that appears to be Idaho Power s response
to a request for production; correct?
MR. SAID:Yes.
And doesn t it state, "For planning
purposes , Idaho Power has not incorporated any specific
assumptions in the 2006 IRP regarding the Conservation
Reserve Enhancement Program
MR. SAID:It does state that.
Do you agree?Do you have any reason to
doubt that that's true?
MR. SAID:, I don
But you would admit, wouldn t you, that
the CREP program is likely to result in a reduction to
Idaho Power s peak demand?
MR. SAID:m not familiar with the CREP
program.This response was prepared by Mr. Bokenkamp who
is not a witness in this hearing.
Does he plan to testify?
MR. SAID:s not scheduled to.
Mr. Stokes may be more familiar with the IRP than I am.
Okay.Moving on , Mr. Youngblood, in your
rebuttal testimony
--
m sorry, Mr. Said and Mr.
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
432
83676
Youngblood, I'm not sure which one will answer it -- I'
looking at page 4 , line 23 , you re asked if you believe
the recommendations made by the evaluation team and,
ul timately, the decisions made by the Company would be
any different today than they were when the evaluation
team concluded its analysis; is that correct?
MR. YOUNGBLOOD:That was the question.
And you stated that you believe the
recommendations and the decisions would be the same;
correct?
I said that the magnitudeMR. YOUNGBLOOD:
may change, but the decisions would be the same
correct.
So you re not
--
I just want to make sure
are you stating that the awarding of points under Idaho
Power s evaluation system would be exactly the same today
as they were at the time you performed the evaluation
given available information?
MR. YOUNGBLOOD:No, I'm not saYlng that
the points may be the same.In fact, I stated that while
the magnitude of certain non-price attribute risks may
change, there may be some discrepancy there, but that the
decision to award to the Evander Andrews would still be
the same.
But you do admit that the points might
CSB REPORTING
Wilder , Idaho
433 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
have changed a little bit?
MR. YOUNGBLOOD:We would have to reassess
them in order to determine whether the points would
change or not.
And given available information you think
that they may have changed?
MR. YOUNGBLOOD:I said that with more
recent information , the magnitude may have changed, but
the decision would not have changed.There are material
differences between them in that there were still risks
that were associated with the (**Confidential**) site.
It was basically a riskier site.Wi th regard to its
abili ty to go ahead and be built or to have restriction
after it was built in its usage, community support, there
were all kinds of things that would not have changed.
Weren t the final total scores between the
Evander Andrews proj ect and the (**Confidential**)
proposal, weren t those very close?
MR. YOUNGBLOOD:The scores on the
non-price or the price?
The total overall.
MR. YOUNGBLOOD:The total overall, yes.
I believe that there were (**Confidential**) difference.
In fact, there were (**Confidential**)
difference out of almost (**Confidential **); correct?
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
434
83676
Correct.
And Mr. Stokes, don t you state in your
testimony that out of the (**Confidential**) main
non-price categories, the (**Confidential**) attributes
category resulted in the greatest difference in scores
between the top two proposals?
MS. MOEN:I request, Madam Chair, that
that be redirected.You directed the question to
Mr. Stokes.
BY MR. THOMPSON:My fault, thank you.
ll reask the question.Mr. Stokes, don t you --
MR. YOUNGBLOOD:I am not Mr. Stokes.
It's obviously written on my paper wrong.
Mr. Youngblood, don t you state in your testimony that
out of the (**Confidential**) main non-price categories,
the (**Confidential**) attributes category resul ted in
the greatest difference in scores between the top two
proposals
" ?
MR. YOUNGBLOOD:I did state that, yes,
and I believe that's important that out of the
(**Confidential**) non-price attribute categories,
(**Confidential**) of them were relatively the same for
both sites.It was the one on non-price attribute
(**Confidential**) .
And in that category, there were
CSB REPORTING
Wilder , Idaho
435 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
(**Confidential**) possible; correct?
MR. YOUNGBLOOD:I don t have that before
me, but I believe that was --
Would you accept that that is true?
Yes, I would accept that, subj ect to
check.
And Evander Andrews was awarded
(**Confidential **) out of (**Confidential **), while
(**Confidential**) proposal was awarded just
(**Confidential**); is that correct?
I don t recall in thatMR. YOUNGBLOOD:
particular category the amount of points on each of them
but I would accept that.I know that as we evaluated the
si tes that we saw the Evander And+ews site far less risky
than the (**Confidential**) site, and so on a
case-by-case basis on the subcategories within that
category, that non-price attribute category, we evaluated
whether or not there was riskiness associated with either
si te and awarded the points accordingly.
If the points had come out differently in
favor of (**Confidential**) proposal at the time the
evaluation was done, would the Company have awarded the
proj ect to (**Confidential**)?
If the points would have come out
differently, such that the total overall points for
CSB REPORTING
Wilder, Idaho
436 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
(**Confidential**) site were the greater number , yes.
Given your statement, which I think you
repeated just a moment ago , in your testimony on page
and 5, you state that the magnitude of certain non-price
attribute risks associated with the second place
proposal, the (**Confidential**) site, may have been
reduced as more information became available after the
Company s decision was made.Can you explain , then, why
you re so confident that even if the scores had changed a
Ii ttle bit the ultimate decision of the Company would
have been the same?
MR. YOUNGBLOOD:I said while they may
have been reduced, while the magnitude may have been
reduced, I'm very confident that it still would have been
the same because the riskiness associated with the
(**Confidential**) site was far greater than the risk
associated with the Evander Andrews site.In particular
we talked about air quality.The (**Confidential**) ,
non-price attribute , was much more a concern or an issue
for the (**Confidential**) site than it was for the
Evander Andrews site.(**Confidential**) at the
(**Confidential**) site was much riskier , in the view of
the team as being much riskier than the Evander Andrews
si te and consequently, there would be subsequent either
delays in building a plant at the (**Confidential**) site
CSB REPORTING
Wilder , Idaho
437 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
or restriction of use, future use, of an
(**Confidential**) site or not having the plant built at
all.
But you would admit that if the
(**Confidential**) proposal had received
(**Confidential**) than it did under the
(**Confidential**) attributes category that it would have
been awarded the proj ect, all else being equal?
MR. YOUNGBLOOD:We conducted a process
where we did price and non-price allocation of points and
yes, had the allocation of points ended up being for one
si te over the other , we selected the one that had the
highest price.
On page 20 of your rebut tal testimony --
MR. YOUNGBLOOD:m sorry, thank you , the
highest points, not the highest price.
I thought I had you.On page 20 of your
rebuttal testimony, you state that the Company is willing
to provide the Commission with a transmission commitment
estimate not to exceed a certain sum, but that that
figure cannot be provided at this time; is that
correct?
MR. SAID:Yes.
And I want to be certain of what you
saying.Aren t you asking the Commission approve this
CSB REPORTING
Wilder , Idaho
SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company
438
83676
proj ect without knowing what the ultimate costs will
be?
MR. SAID:Well , the Commission does that
every time they allow a certificate of convenience and
necessity.The thing that's really changed in this case
when compared to prior RFPs is that it's been suggested
that not only does the Company provide a commitment
estimate on the generation plant but also a commitment
estimate on transmission plant which has not historically
been done.Since it's been raised , the Company has
stated that it's willing to do so, but it's unwilling to
do so until it gets a firm cost quote from the
transmission department.
But you are asking that the Commission
approve the proj ect before knowing what the ultimate cost
of the transmission will be , correct, or excuse me,
before the Company is willing to make a firm commitment
estimate?
MR. SAID:Unfortunately, that is where we
find ourselves, that we are asking for a commitment at a
point that's prior to the point in time that the Company
can commit to a transmission estimate.
And the Company s ultimate transmission
commi tment estimate could be more than the $22 ~ 3 million,
I think it is, that you ve projected at this point; isn
CSB REPORTING
Wilder , Idaho
439 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
that correct?
MR. SAID:It could be.
And at any time during the evaluation of
the various proposals, was there ever a category in which
the Evander Andrews proj ect was discounted or received
less points due to the fact that there is uncertainty
around the ultimate price of the proj ect due to that
uncertainty around transmission costs?
MR. SAID:Well , transmission
considerations were included in both price and non-price
attributes.There were evaluations in both of those
areas related to transmission.
And if I'm not mistaken , the
(**Confidential**) proposal actually received less points
for transmission than the Evander Andrews plant; isn
tha t correct?
MR. YOUNGBLOOD:If I recall, under the
transmission attribute it received one point less.
believe it was (**Confidential**) for Evander Andrews and
(**Confidential**) for the (**Confidential**) site.
Again , we tried at that point in time to get further
information with regard to the value of transmission
added to our system at differen~ sites.That was
difficul t to do under the FERC standard of conduct.
was generally known that additional transmission on our
CSB REPORTING
Wilder, Idaho
440 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
backbone from Mountain Home to Boise had more value.
that value is worth than (**Confidential**) , it may be.
We only said that there was additional value to that
transmission line so we gave (**Confidential**)
greater.
m going to kind of reask my question
just a little bit differently.Was there any point in
the evaluation process in which Evander Andrews gained an
advantage -- excuse me , in which (**Confidential**)
gained an advantage compared to Evander Andrews due to
the fact that Evander Andrews had more uncertainty
regarding its transmission costs?
I obj ect to that.MS. MOEN:That
mischaracterizes the testimony.All they re saying is
that there s a difference in cost.It's never been
testified that there s more uncertainty associated with
the Evander Andrews transmission cost than there is to
the (**Confidential**) cost , so to suggest that
mischaracterizes the testimony.
COMMISSIONER SMITH:Mr. Thompson.
MR. THOMPSON:Well, I thought that we had
established that there was greater uncertainty due to
transmission costs for the Evander Andrews site than
there are in the (**Confidential**) site.
COMMISSIONER SMITH:Well, then maybe you
CSB REPORTING
Wilder, Idaho
441 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
better ask that question.
MR. THOMPSON:Okay.
BY MR. THOMPSON:Would you agree that
there is more uncertainty surrounding the transmission
costs associated with the Evander Andrews site than there
is with the (**Confidential**) site?
MR. SAID:In terms of percentages, no.
You re talking about a dollar cost difference between the
two projects that is fairly significant, so 20 percent of
a larger number is obviously a larger potential deviation
than a 20 percent deviation in a smaller number.
So then I'll ask the question , due to the
fact that given that there might be some variation in
transmission costs, the variation would result in a
larger dollar amount for Evander Andrews, was there ever
a time in the evaluation process where Evander Andrews
received less points than the (**Confidential**) proposal
due to that fact?
MR. SAID:I believe they were both
evaluated based on the best estimate and I don t know
that there was a specific risk parameter associated with
price in the non-price category, but price was evaluated
based on the best estimate for transmission at either
site.
So the answer is no; correct?
CSB REPORTING
Wilder , Idaho
442 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
MR. SAID:I don t know of a non-price
attribute related to transmission price risk.
And given that the Evander Andrews proj ect
is already estimated to be more expensive than the
(**Confidential**) plant and given that the overall score
was so close, can you explain why you think it would be
reasonable for the Commission to approve the Evander
Andrews proj ect and assume a risk that the ultimate cost
could even higher than anticipating now?
MR.SAID:Well again the ultimate cost
either proj ect may higher than now.Both
estimates are based on best available price information
and then as Mr. Youngblood has discussed, the risk
parameters associated with the non-price attributes, and
it should be pointed out that through all of the
discussions today, these two bids are extremely close.
They were close on priceTheres no doubt about that.
from the Company s perspective and they were close on
non-price from the Company s perspective, but the Company
feels that it's important to consider all of the factors
in the evaluation process rather than isolating just
price.
Thank you.I have no moreMR. THOMPSON:
cross-examination for this panel.
COMMISSIONER SMITH:Thank you.
CSB REPORTING
Wilder , Idaho
443 SAID/YOUNGBLOOD (X-Reb)
Idaho Power Company83676
Questions, Commissioner Hansen?
COMMISSIONER HANSEN:I believe I do.
EXAMINATION
BY COMMISSIONER HANSEN:
It may be a little bit of a repeat, we
asked a lot of questions here , but on page 19, lines 3
through probably 20 , but first of all , going to line 3
and 4 , you talk about the number of risks that could
increase the cost associated with the (**Confidential**)
proposal.Are those risks then identified in lines
through 17 , is that the risk that you re identifying,
these maj or risks?
MR. YOUNGBLOOD:That may be the result of
those risks.There are ris ks with regard to the air
quali ty, there are risks associated with the attainment
of different certificates and , you know, so the end
resul t, then , may be either a delaying of the b~ilding of
the plant, not being able to build the plant at all or in
fact if building the plant at some future point in time
not being able to run the plant or curtailment of the
plant during the tim~ when the Company needs its the most
during the summer or winter peaks.
So is it air quality that is the driver of
CSB REPORTING
Wilder, Idaho
SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company
444
83676
all these risks that you re saying right here,
identifying, is it air quality that you re saying could
cost a delay and if it isn t, then I would like to know
what it is that would be the cause of delaying this if it
was picked to (**Confidential**)?
MR. YOUNGBLOOD:Air quality, I think , was
one that A , could have cost a delay in the development of
the plant , that was a concern of the team , but more so,
the ability to run that plant at some future point in
time.As it's stated in Exhibit 1, I think in the
(**Confidential**) exhibit , it talked about the fact that
the (**Confidential**) site was a maintenance , how do I
say it , that it was described as maintenance in the sense
that it was on the path or trend towards non-attainment.
That gave concern to the evaluation team
that if in the future we were able to construct that
plant that we wouldn t be able to run it either during
the peak summer times or the winter times.In addition,
to go ahead and try to build that plant now may take more
time as far as getting that air quality permit.
The other concern that happened was during
the time when they were trying to get their conditional
use permit that there was a large, in our view a large,
outcry from the public and concerns about having a
peaking resource or a simple cycle turbine plant located
CSB REPORTING
Wilder , Idaho
445 SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company83676
at the (**Confidential**) site.That in itself gave us
an indication that there could be possible delays in
building that plant.
Well, you mentioned in the future you may
have a problem running the plant if it was in
(**Confidential**) during the summer , what
documentation -- is this just an assumption that you
making, you don t have any really hard, cold facts to
verify that it would be a reality or do you?
MR. YOUNGBLOOD:No, in the -- let me
restate that.Yes, we do have information that gave us a
reason to believe that.It was actually in Exhibit 1 on
the (**Confidential**) on page 10 on (**Confidential**)
of the three different sites that they evaluated without
any kind of knowledge of the bids or bidders that had put
into our RFP.(**Confidential**) , and that was one of
the issues.
Since that point in time some of that has
come out.I mean, even as recent as last summer , in the
Boise area, the DEQ had several days of bad air , if you
will , in fact 29 days, I believe.Of the 29 days, they
had 24 days that were listed in the yellow level and five
days, I believe, that were listed as red for air quality.
Our belief, the team s belief , was the fact that as
population continues to grow in Boise that attainment
CSB REPORTING
Wilder, Idaho
SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company
446
83676
going to be even more difficult to achieve at the
(**Confidential**) site.
So if you had to identify one or two or
even three maj or factors that you think led to picking
Mountain Home area rather than the (**Confidential**)
site, would you say air quality is the number one or, if
not, what would be the number one or two issues or risks
that made the difference?
MR. YOUNGBLOOD:The biggest discrepancy
in points during that evaluation on non-price attributes
was on air quality and on social acceptance or social
support, community support , and so those two areas would
be areas of concern to us.
And just to follow up, what documentation
did you have that led you to believe you wouldn t have
social support?
MR. YOUNGBLOOD:The community support,
again, it was for non-price attributes, it was just a
In Mountain Homerelative ranking between the two sites.
there are already two sites that -- I'm sorry, two plants
that we have built in Mountain Home without any problem
It is zoned for this type of construction orat all.
plant in the Mountain Home site.(**Confidential**) when
they tried to get the conditional use permit had some
public outcry at that point in time and again , as I
CSB REPORTING
Wilder, Idaho
447 SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company83676
stated before , there were e-mails that were circulated en
masse trying to say come out and voice your opinion with
regard to this plant and there was all kinds of things in
the newspaper as well as the TV , so we knew that relative
to the Evander Andrews site that the (**Confidential**)
site would have more public obj ection.
If all of Idaho Power s gas-fired
generators, including this proposed plant, were required
to run to meet the system s peak demand , in what order
would the generators be dispatched?Would the Andrews
plant be dispatched first or last?And the other part of
that question is if it was located in (**Confidential**) ,
would it make any difference whether it was dispatched in
order of whether it was located over there?
MR. YOUNGBLOOD:I do not know the answer
to that.I don t believe the location would make a
difference with regard to the dispatch.It is a system
resource and so it would be an economic dispatch and I'
not aware of which one would come first.
COMMISSIONER HANSEN:That's all I'
got.
COMMISSIONER SMITH:Thank you.
CSB REPORTING
Wilder , Idaho
448 SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company83676
EXAMINATION
BY COMMISSIONER SMITH:
So Mr. Said, would you be the Company
policy witness in this case?
MR. SAID:Yes.
I earlier asked the previous witnesses a
question and I wanted to kind of give you an opportunity
to respond , too, but I think maybe the real question
what is the Commission s responsibility to ensure that
the RFP process is properly conducted?And I know some
other states have addressed this, particularly Utah felt
it necessary to pass a state law to have an independent
entity review this to assure people that what goes on lS
not just some, I guess, window dressing to confirm the
Company s choice, so would you like to comment on what
the Commission s responsibility is with regard to that?
Yes.I think just startingMR. SAID:
historically, what the Company has attempted to do is
include in its evaluation process outside consulting that
would provide some sort of assurance that there s a third
perspecti ve or an obj ecti ve outside participant in the
process.As you mentioned, different commissions are
looking at RFP issuance procedures.I know that as a
resul t of this particular RFP that there have been a
CSB REPORTING
Wilder , Idaho
449 SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company83676
number of questions relating to the openness of the
scoring mechanisms in advance of evaluation.
The steps that historically we have done
have been to determine an evaluation process in advance
of receiving any bids in order to not discriminate
against any bid after finding out the information on that
bid and trying very diligently to adhere to those scoring
procedures.Clearly, the other parties in requests for
certificates of convenience and necessity present issues
and concerns that they have with regard to the process
and I think ultimately it is the Commission
responsibility to be able to assure the public that the
process is conducted in an orderly and proper procedure.
It's the Company s hope that we re able to
demonstra te that in proceedings Ii ke this , but certainly,
questions have arisen with regard to the methodology that
the Company has operated its request for proposals and
how to proceed going forward.
Well , you know , it's always been my very
strongly-held belief that the Commission is not a
substi tute for Company management, the Company manages
itself and we just kind of do little ratemaking on the
side.
MR. SAID:Yes.
But on page 45 of Dr. Reading s testimony,
CSB REPORTING
Wilder, Idaho
SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company
450
83676
he makes a statement that he doesn t think you ought
to -- I'm going to paraphrase
--
he doesn t think the
Company ought to build this plant now and he thinks
essentially it ought to be postponed and that he didn
see any downside to postponement and I wanted to find
out , does the Company have a position on that as to
whether or not there s little risk if we postpone this
plant?
MR. SAID:Well, the Company would
disagree with Dr. Reading and suggest that there is great
risk.What we were able to identify was that there was a
reasonable opportunity to slip the on-line date of this
plant by one year and in the interim make some purchases
of energy from the east side of our system for a one-year
period of time, but beyond that one-year delay,
additional measures or ultimately, I believe, taking
Dr. Reading s recommendations to their conclusion and not
building a plant at all that the Company would need to
pursue options that it believes would be more costly to
the Company and its customers than building the plant
now.
Do you think the Commission ought to wait
for a firm transmission cost estimate before we decide?
MR. SAID:There are some cost impacts to
doing that.The Company does have some December
CSB REPORTING
Wilder, Idaho
451 SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company83676
requirements in conj unction with its existing contract
wi th Siemens where some costs would be incurred.
Do you know the magnitude of those costs?
MR. SAID:I don i t know the entirety of
the magnitude.I know that there were discussions of
some initial costs that would be borne that I think were
in the 200 000 to $400,000 range.Beyond that, I'm not
sure.
Would you check on that and if you need to
amend your answer later do so, please?
MR. SAID:Sure.
Assume the worst possible scenario that
the Commission agrees with the Staff and the Industrial
Customers that this is not the best choice, what are our
options in your view?
MR. SAID:Well , the options that I think
have been presented are one, to deny the request for a
certificate of convenience and necessity at which point
the Company would need to scramble to figure out how it
was going to serve customers in the future.The second
option as proposed by the Staff appears to be to approve
the certificate of convenience and necessity, but state
up front that there are conditions in the ultimate
revenue requirement recovery associated with that plant
and basically a disallowance of expenditures for that
CSB REPORTING
Wilder , Idaho
452 SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company83676
facility prior to knowing exactly what those ultimate
costs are.That seems unfair in terms of being able to
quantify a penalty before you know what the true costs of
the plant are.
In the Bennett Mountain application that
the Company made a few years back , we had a transmission
estimate that was not a 20 percent binding quote, but
that number in that case, as I recall , was around $11
million and ultimately when the proj ect was complete, the
Company had spent $ 7 million and as a result, our revenue
requirement was $4 million less than our estimate on
there and we also came in below our commitment estimate
on the plant, so the idea that you penalize the Company
by $11 million before knowing what the ultimate costs of
the plant are seem rather harsh , and as we ve stated in
our testimony, we ve been advised by management at Idaho
Power that we would not pursue construction of the plant
wi th an $11 million penalty predetermined, so those seem
to be the two options presented by the other parties in
the case.The Company remains optimistic that you
approve the certificate of convenience and necessity.
Optimism is a wonderful thing, isn t it?
I guess looking at page 34 , maybe even before that, 33
and 4 of Dr. Reading s testimony where he talks about the
Portland General virtual peaking program and your
CSB REPORTING
Wilder, Idaho
453 SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company83676
testimony earlier about this CREP program that the
Company is engaged in and I think , in my view , the
Company has had some very successful peak-shaving
programs for customers, so I guess my question is, I
guess it's disconcerting that what I understand is that
when you went to the RFP side of this operation , you
didn t take into account any of those programs and so
guess my question is what would it take for the Company
to do a virtual peaker program or to take the DSM
programs it has seriously enough that it would actually
factor it in when it's thinking about its peak demands
and its future needs?
MR. SAID:I think that ultimately comes
down to a timing issue.Essentially, the Company views
the IRP process as the process where all parties, all
interested parties, are included for input as to
strategies as to how to satisfy future loads and demands
on the Company and then once that plan has been
acknowledged by the commissions that the Company then
proceeds down those lines, so when you re looking at the
recent Integrated Resource Plans , they have basically had
the strategy of acquiring a broad range of resources, one
of which has been the identification of a peaking unit
that this RFP sought and so the group that gets involved
in issuing the RFP and the IRP
--
excuse me, the RFP is a
CSB REPORTING
Wilder , Idaho
454 SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company83676
separate group of individuals from the planners who
actually do the Integrated Resource Plan and their focus
is fairly narrow in comparison to the IRP team and so
what they re looking at are specific resource bids that
accomplish the goal as identified in the Integrated
Resource Plan and they aren t really in a position to
reevaluate the plan in terms of whether or not the plan
itself should change.
That still falls back on the Integrated
Resource Planning group and the community group that
assists in that process, so there would be the ability of
the IRP group to go back and suggest modifications in the
approach that the RFP team would take, but they don
pursue that on their own ini tiati ve.
COMMISSIONER SMITH:Okay, do you have
redirect, Ms. Moen?
MS. MOEN:Could I take about a two-minute
break?
COMMISSIONER SMITH:Certainly, and let'
go full time and take maybe an eight-minute break.
(Recess. )
COMMISSIONER SMITH:All right , we ll go
back on the record.I believe, Ms. Moen, we re ready for
any redirect you may have.
Thank you, Madam Chair.I haveMS. MOEN:
CSB REPORTING
Wilder, Idaho
455 SAID/YOUNGBLOOD (Com-Reb)
Idaho Power Company83676
just a few questions for redirect here.
REDIRECT EXAMINATION
BY MS. MOEN:
Mr. Said, I believe in your testimony
you ve had direct experience in rate cases with the
Bennett Mountain facility; is that right?
MR. SAID:Yes, it is.
And is it correct that you indicated that
while transmission costs at the time that a certificate
of convenience and necessity was sought were estimated at
$11 million , those transmission costs actually came in
less; is that correct?
MR. SAID:Yes, my recollection is that
they came in at about $ 7 million.
For about a $4 million differential?
MR. SAID:Correct.
The estimates that we intend to receive at
some point in time from the Company s transmission group
gives a differential either of increasing the
transmission costs by as much as 20 percent or perhaps
requcing the cost by as much as 20 percent; isn t that
correct?
MR. SAID:Yes it is.
CSB REPORTING
Wilder , Idaho
456 SAID/YOUNGBLOOD (Di-Reb)
Idaho Power Company83676
Now , we spent a lot of time on Exhibit 2
to your testimony and contemplated what would happen
hypothetically if the levelized fixed operating costs of
the (**Confidential**) site went down by $100,000 and
came up with a certain amount.Isn t it possible that
the difference between the two proj ects would also be
reduced if the transmission costs came in at less than
22.5 million?
MR. SAID:Yes, that's true and the
reduction would be the similar ratio to the increase , so
if $100,000 equated to 1.2 million, it still equates to
2 million in the opposite direction.
You were also asked some questions about
the Company s DSM program and during the break you were
able to obtain some additional information.Do you know
what the Company intends to spend on DSM proj ects in the
year 2007?
MR. SAID:Yes, I believe that the IRP
calls for expenditures around 17 million in 2007.
And are those anticipated to increase
beyond 17 million by the year 2009?
Yes.I believe at that timeMR. SAID:
the estimate is for $30 million worth of DSM.
Okay, and have you also had an opportunity
to get information concerning the consequences to Idaho
CSB REPORTING
Wilder, Idaho
SAID/YOUNGBLOOD (Di-Reb)
Idaho Power Company
457
83676
Power if we are not able to obtain a certificate of
convenience and necessity the middle next month?
MR.SAID:Yes,have been able
acquire that information.this point time the
Company has committed $200,000 to a study by Siemens
related to weight-bearing capabilities of the land that
the plant will be built on and has also committed
$700,000 to the acquisition of a step-up transformer.
the event that the Company does not receive a certificate
of convenience and necessity, the $200,000 study, we
would have no opportunity to recover that amount.The
transformer we could probably resell on a secondary
market and get some of that $700,000 back.
The other potential cost move is that
since June of 2005, the Company has been able to have
Siemens hold their bid constant without any escalation;
however , after mid December, Siemens does have
contractual rights to increase their bid price by up to
25 percent.
And Mr. Said , the reason for the $ 7 00 000
purchase for the generator step-up transformer , are you
aware of what the original value was and why the Company
sought to pursue purchasing that now rather than later?
MR. SAID:My understanding is that
Siemens had the opportunity to buy such a transformer at
CSB REPORTING
Wilder , Idaho
458 SAID/YOUNGBLOOD (Di-Reb)
Idaho Power Company83676
costs that were significantly below the price that it
could be acquired elsewhere and that timing was of the
essence,that they needed to commi t the acquisition
this price this time order get the deal that
they believed they were getting.
Mr. Youngblood, I just have a couple of
questions for you with regard to the (**Confidential**)
report.If you would turn to page 5 of that report, it'
actually Table
MR. YOUNGBLOOD:I have that.
Would you agree with me that the site in
the middle identified as the Elmore County site is the
site of the Evander Andrews complex?
It would be located inMR. YOUNGBLOOD:
Elmore County, yes.
Okay, and would the figures for
concentrations for the Elmore County site include any
contributions from existing power plants at the Elmore
County site?
I believe that it wouldMR. YOUNGBLOOD:
include the plants that are already in Elmore County,
The numbers here would include that.yes.
And at the (**Confidential**) site, the
Is the (**Confidential**) site thenumbers are lower.
(**Confidential**) site that we ve been talking about?
CSB REPORTING
Wilder, Idaho
459 SAID/YOUNGBLOOD (Di-Reb)
Idaho Power Company83676
MR. YOUNGBLOOD:Yes, it is.
And is there any development in the
vicini ty of the (**Confidential**) -- oh, on that
CSB REPORTING
Wilder, Idaho
(**Confidential**) site right now?
MR. YOUNGBLOOD:Not that I'm aware of.
The Elmore County site, have you had an
opportunity to go to that site?
MR. YOUNGBLOOD:Elmore County site,
Are you aware of any development wi thin
half a mile or a mile of that development?
MR. YOUNGBLOOD:No.
In contrast to the (**Confidential**)
site, the (**Confidential**) site, is there residential
development in the vicinity?
MR. YOUNGBLOOD:There is residential
development and (**Confidential**) seems to be
Is there commercial development in the
vicini ty of the (**Confidential**) site?
Yes, there is.
And is there industrial development in the
vicini ty of that site?
Yes, there is.
MS. MOEN:I don t have any further
yes.
expanding.
460 SAID/YOUNGBLOOD (Di-Reb)
Idaho Power Company83676
questions.
COMMISSIONER SMITH:Thank you,
gentlemen.
MR. SAID:Thank you.
MR. YOUNGBLOOD:Thank you.
(The witnesses left the stand.
MS. MOEN:Idaho Power would like to call
Mark Stokes as its third rebuttal witness.
M. MARK STOKES
produced as a rebuttal witness at the instance of Idaho
Power Company, having been first duly sworn, was examined
and testified as follows:
BY MS. MOEN:
DIRECT EXAMINATION
Mr. Stokes, would you please state your
full name and spell your last name for the record?
CSB REPORTING
Wilder , Idaho
My name is M. Mark Stokes.I spell my
last name S-t-
And what's your business address,
1221 West Idaho.
And by whom are you employed?
please?
461 STOKES (Di-Reb)
Idaho Power Company83676
employ you?
Idaho Power Company.
And in what capacity does Idaho Power
As the manager of power supply planning.
Have you previously filed written rebuttal
testimony consisting of 14 pages and one exhibit on
CSB REPORTING
Wilder, Idaho
behalf of Idaho Power in this matter?
Yes , I have.
Do you wish to make any corrections to
that written testimony?
Yes, there is one on page 3, line 17.
states "Oregon Schedule 85 is attached as Exhibit 1.
That should be amended to indicate that it's Exhibit
Now , Mr. Stokes , if I asked you the same
questions today that were included In your prefiled
wri tten testimony, would your responses with the revision
you noted be the same?
Yes, they would.
MS. MOEN:Madam Chair, I move that the
prefiled testimony of Mark Stokes consisting of 14 pages
be spread on the record as if read in its entirety and
that Exhibit 4 be marked for identification.
COMMISSIONER SMITH:Without obj ection , it
is so noted, noting that most of it will go into the
closed transcript.
462 STOKES (Di-Reb)
Idaho Power Company83676
testimony
record.
(The following prefiled rebuttal
of Mr. M. Mark Stokes is spread upon the
CSB REPORTING
Wilder, Idaho
463 STOKES (Di-Reb)
Idaho Power Company83676
Please state your name and position with Idaho
Power Company (" Idaho Power " or the "Company
My name is M. Mark Stokes and I am the Manager
of Power Supply Planning.
Mr. Stokes, have you previously testified in
this case?
No.
Mr. Stokes , please describe your educational
background and work experience with Idaho Power.
I am a graduate of the Uni versi ty of Idaho with
a Bachelor of Science Degree in Civil Engineering.
also hold a Masters Degree in Business Administration
from Northwest Nazarene Uni versi ty and am a registered
professional engineer in the State of Idaho.
I joined Idaho Power in 1991 as a member of the
construction management team responsible for the
construction of the Milner Hydroelectric Proj ect.
1992,I joined the Generation Engineering Department
where I was responsible for dam safety and regulatory
compliance for Idaho Power s 18 hydroelectric proj ects.
In 1996, I began working with Idaho Power s Hydro
Services Group, a new business initiative within the
Power Production Department where I was responsible for
business development and marketing.In 1999, I returned
to my previous position wi thin the Power Production
464 Stokes Dir Reb
Idaho Power Company
Department to administer Idaho Power s dam safety
program.
465 Stokes Dir Reb
Idaho Power Company
In 2004 I accepted a position as the President of
Ida-West Energy Company, a subsidiary of IDACORP.
this role I was responsible for managing the overall
operation of the company as well as the operation and
maintenance of nine hydroelectric proj ects with
qualifying facility status.In 2006, I rejoined Idaho
Power s Power Supply Business Unit as the Manager of
Power Supply Planning.The Power Supply Planning
Department is responsible for resource planning, load
forecasting, fuel management, and cogeneration and small
power production contract management.
What is the purpose of your rebuttal testimony
in this proceeding?
I will respond to that portion of the testimony
filed by Dr. Don Reading on behalf of the Industrial
Customers of Idaho Power (" ICIP") regarding a combined
heat and power ("CHP") generating resource that has been
the subj ect of discussions with the (**Confidential**).
Could you please provide a synopsis of the
discussions between Idaho Power and (**Confidential**)
regarding a potential CHP proj ect?
In the spring of 2005, Idaho Power was
contacted by the (**Confidential **) and advised it was
beginning the process of searching for a development
partner for a potential CHP proj ect at the
466 Stokes Dir Reb
Idaho Power Company
(**Confidential**) later
(**Confidential information follows**)
467 Stokes Dir Reb
Idaho Power Company
(The following proceedings were had in
open hearing.
MS. MOEN:The witness is available for
cross-examination.
COMMISSIONER SMITH:Thank you.
Mr. Thompson.
CROSS- EXAMINATION
BY MR. THOMPSON:
Good afternoon , Mr. Stokes.Mr. Stokes,
the purpose of your testimony in this proceeding is to
respond to Dr. Reading s assertions about the proposed
(**Confidential**) project; is that correct?
Yes, it is.
And could you please refer to the top of
page 7 of your rebuttal testimony?There you
calculating the cost of the Evander Andrews plant on a
per kilowatt basis and show that with a 15 percent
levelized annual fixed charge rate that Evander Andrews
will have a levelized annual fixed charge of about $73
per kilowatt per year; correct?
Yes , that's correct.
And on page 6 of your testimony at line 6
you refer to the tolling agreement which was proposed by
CSB REPORTING
Wilder , Idaho
490 STOKES (X-Reb)
Idaho Power Company83676
(**Confidential**) and you compare the Evander Andrews
$73 per kilowatt year cost to $128 per kilowatt year cost
for the (**Confidential**) proposal; is that correct?
Well , starting in line 17 , we indicate
that the proposed tolling agreement included a capacity
charge that escalated from $128 per kilowatt per year in
2008 and escalated up to $197 per kilowatt per year in
2027.
And on page 7 of your testimony, line
you state,(**Confidential**) .Aren t you comparing the
$128 number to the $ 7 3 number?
Yes , yes, we are.
And you argue that the (**Confidential**)
proj ect is more expensive than the Evander Andrews
proj ect; correct?
Yes, we do, for capacity.
Okay, that's what I was going to get at.
Those two numbers, the $ 7 3 for Evander Andrews and the
$128 for (**Confidential**) , those represent fixed costs
for the capacity associated with each proj ect; correct?
Yes, they do.
And wouldn t you agree, however, that the
number that Idaho Power s customers are probably most
concerned about is the Company s revenue requirement; in
other words, isn t that the number that determines their
CSB REPORTING
Wilder , Idaho
491 STOKES (X-Reb)
Idaho Power Company83676
rates as opposed to dollars per kilowatt per year for a
resource?
I would have to refer that question to
somebody in our rates group.I don t believe I could
answer that.
Is the fixed capacity cost, is that the
same as the revenue requirement?
MS. MOEN:That question has already --
the witness has already indicated that's beyond his
ability to respond to.
MR. THOMPSON:I think he s responded to
the fact that he doesn t know if Idaho Power s customers
are most concerned with the revenue requirement, but this
is a different question.m just asking to his
knowledge are those two the same thing.
MS. MOEN:And he may not be familiar with
what the revenue requirement is.
COMMISSIONER SMITH:And if he s not, he
can tell us.
THE WITNESS:I am not familiar with that
to be able to answer that question.
MR. THOMPSON:I doubt you have copies of
this with you, so I'm going to offer as an exhibit, this
is Idaho Power Company s Response to the Confidential
Fifth Production Request of the Industrial Customers of
CSB REPORTING
Wilder, Idaho
492 STOKES (X-Reb)
Idaho Power Company83676
Idaho Power and I have a copy for everyone and I'd like
it to be marked as Exhibit No. 243 for purposes of
identification in the record.
(Mr. Richardson distributing documents.
COMMISSIONER SMITH:Okay, we ll mark this
as Exhibit 243.
(Industrial Customers of Idaho Power
Exhibi t No. 243 was marked for identification.
BY MR. THOMPSON:Mr. Stokes, have you
read this?Are you familiar with this document?
Yes, I believe I have.
Okay, I'll be referring first to page 9 of
the document and I'm just looking at the first paragraph
This is ICIP' s request.there.Doesn t it ask, "
Idaho Power s analysis of the proposal contained in the
Term Sheet' and described in the e-mail chain , or in its
analysis of any other proposals from (**Confidential**)
or its agents, did Idaho Power compare the effects on its
revenue requirement that would be caused by the proposed
(**Confidential**) plant versus the effects on its
revenue requirement that would be caused by al ternati ve
facili ties such as the Evander Andrews plant," doesn t it
state that?
Yes, it does.
And Idaho Power responded that a detailed
CSB REPORTING
Wilder , Idaho
493 STOKES (X-Reb)
Idaho Power Company83676
comparison of the revenue requirements for the proposed
(**Confidential**) proj ect and the Evander Andrews
proj ects was not performed; correct?
Yes , it does state that.
And then it states, it continues on and
states that an analysis similar to that outlined in
Response to Request for Production No. 56 was considered;
correct?
Yes, it also states that.
And if you refer to Idaho Power s Response
to Request for Production No. 56 , I think that's on page
, wouldn t you admit that in that analysis , Idaho Power
deals with the costs based on a dollars per kilowatt per
year basis; in other words, it deals with fixed costs for
the capacity associated with the proj ect?
Okay, could you please restate your
question one more time?
Yes.I said that isn t it true that Idaho
Power
--
, let me see.Isn t it true that the analysis
outlined in this response deals with the costs on a
dollars per kilowatt year basis?
Yes, it does.
And Mr. Stokes, isn t it true that Idaho
Power s best estimate of the possible revenue impacts of
the Evander Andrews proj ect are that it would be an
CSB REPORTING
Wilder, Idaho
494 STOKES (X-Reb)
Idaho Power Company83676
lncrease of about $19.3 million per year?ll just
point out that's not in the document in front of you.
ll be happy to provide you with a copy of ICIP' s
Exhibit No. 14.
Okay.
(Mr. Richardson approached the witness.
MS. MOEN:Madam Chair , I've had an
opportuni ty to look at the question and response to
No. 19 in Exhibit No. 214 and this was a question and
response given by Greg Said and the Industrial Customers
had the opportunity when Mr. Said was on the stand to ask
questions regarding revenue requirement associated with
the costs of the certificate.Mr. Stokes is not prepared
to respond to questions regarding revenue requirement.
s already testified so.
COMMISSIONER SMITH:Well, I also noticed
that, Ms. Moen, but I was waiting to see where Mr.
Thompson was going with his question before I --
MR. THOMPSON:If I could respond , I would
just like to point out Mr. Stokes is the witness who
responded to Dr. Reading s assertions regarding the
(**Confidential**) plant and that's what I'm getting at
here, so I will continue if you don t mind.
COMMISSIONER SMITH:I assume that you
were just trying to get him to the $19.3 million number
CSB REPORTING
Wilder, Idaho
495 STOKES (X-Reb)
Idaho Power Company83676
for the purposes of asking a question about the
(**Confidential**) .
MR. THOMPSON:That is correct.
question?
COMMISSIONER SMITH:Okay.
BY MR. THOMPSON:So shall I reask the
If you could, please.
ll reask it.On page 22, doesn t it
state that Idaho Power estimates the incremental revenue
requirement for the Evander Andrews plant to be $19.
million?
MS. MOEN:m going to obj ect to that.
The statement included in the response identifies a
$19.3 million cost differential from the Bennett Mountain
application.There s an assumption that the estimated
incremental revenue requirement for this proj ect would be
CSB REPORTING
Wilder, Idaho
about 19.3 million.That calculation had not been made
except for an estimate based on Bennett Mountain
COMMISSIONER SMITH:With that
information.
clarification , would you like to ask your question again
I guess my question is
Mr. Thompson?
BY MR. THOMPSON:
reading this response , doesn t it appear that $19.
million is Idaho Power s estimate of the -- Idaho Power
496 STOKES (X-Reb)
Idaho Power Company83676
estimate of what the incremental revenue requirement
impacts might be of the Evander Andrews proj ect?
Having not written this response, I can
comment that it is a comparison between or an
extrapolation from a calculation on the Bennett Mountain
application that was applied to the Evander Andrews --
Okay.
-- proj ect
Thank you, and on page -- do you have a
copy of Dr. Reading s testimony in front of you?
I do not.
(Ms. Moen approached the witness.
BY MR. THOMPSON:And I'm looking at page
5 of Dr. Reading s testimony starting on line 15.
You said page IS?
m sorry, page 5 , line 15, and I
apologize, again I have the wrong number, so if you
bear with me for just one minute, I'll find the correct
cite.I can probably do this without finding it.
take a shot at that.Okay, I'm sorry, it's page 25,
line 15.Starting on line 15 , Dr. Reading states that
the capacity cost under the (**Confidential**) proposal
starts at $128 per kilowatt year.This means that at
megawatts, Idaho Power could have acquired this capacity
at a cost of approximately $12.3 million per year for the
CSB REPORTING
Wilder , Idaho
497 STOKES (X-Reb)
Idaho Power Company83676
first year.Do you see that?
Yes, I do.
And do you understand
--
did you review
this section of Dr. Reading s testimony?
CSB REPORTING
Wilder , Idaho
I have.It's been a little while ago, but
I have read through it before.
And would you agree that at a cost of $128
per kilowatt per year , a 96 megawatt plant would cost
approximately $12.3 million per year for the first
--
for
that year for capacity?
I don t have that in my notes and I can
COMMISS IONER SMITH:Does he need a
BY MR. THOMPSON:Do you need a calculator
in order to answer that question?Essentially, what I'
asking you to do is multiply the $128 per kilowatt per
year by 96 megawatts or 96,000 kilowatts to come up with
a capacity cost per year.
Yes.
So would you agree that 128 times 96,000
If I had a calculator or I can do it by
confirm that.
hand or subj ect to check.
Subj ect to check?
calculator?
is 12.3 million?
498 STOKES (X-Reb)
Idaho Power Company83676
Okay, certainly.
Doesn t this mean , Mr. Stokes, that as far
as the impact on revenue requirement is concerned, the
cost of having capacity from the (**Confidential**)
proj ect is about $ 7 million per year less than the fixed
annual capacity cost of the Evander Andrews plant if it
was assumed that the $19.3 million estimate was correct?
I obj ect to that question.MS. MOEN:
There s a presumption here that we have a facility at
megawatts versus 170 megawatts, so basically you have to
take the 12.3 million times two in order to get an
equivalent value based on the figures presented by
Dr. Reading s testimony.
Mr. Thompson?COMMISSIONER SMITH:
Can I ask for aMR. THOMPSON:
clarification of the obj ection?I don t understand the
obj ection.
The Industrial Customers areMS. MOEN:
asking to compare a facility at 96 megawatts at about the
same capacity cost of 128 kilowatts per year with a
facili ty that is rated at 170 megawatts, so based on
lines 15 to --
So I would say this isMR. THOMPSON:
something for the witness to testify to, not Ms. Moen, if
there s a problem with the calculation and you think --
CSB REPORTING
Wilder, Idaho
499 STOKES (X-Reb)
Idaho Power Company83676
MS. MOEN:It's misleading the witness
into an example that isn t appropriate.
COMMISSIONER SMITH:Well, I'm going to
overrule the obj ection and I think the witness should
know the numbers and should be able to answer the
question, especially now that he s been coached.
THE WITNESS:The two are not directly
comparable when you re looking at the capital costs it
would take to build each plant from a capacity
standpoint.The 170 megawatt plant does have almost
double the capacity that a 96 megawatt plant would
have.
BY MR. THOMPSON:So I'm asking from a
revenue requirement or from a total cost perspective,
don t these numbers show , however , that the
(**Confidential**) proposal might be $7 million per year
less than the costs associated with the Evander Andrews
plant?
What I'm saying is they re not directly
If you do it on a unit basis for capacity,comparable.
that 12.3 would be almost doubled.
Right, and I'm not asking on a capacity
basis, I'm talking about overall cost.
Okay.
Even if they re different sizes.
CSB REPORTING
Wilder , Idaho
500 STOKES (X-Reb)
Idaho Power Company83676
Okay, it would be less overall for a
smaller or for less capacity.
And isn t it true based on your
understanding that the Company s 2004 IRP called for an
88 megawatt peaking plant?
That is my understanding.ve been in my
current position for five-and-a-half, six months, so
was not around when the 2004 IRP was prepared, but that
is my understanding.
And the (**Confidential**) project was
approximately 96 megawatts; isn t that correct?
One of the proposals under consideration
was for a 96 megawatt plant.
And don t you think that under some
circumstances it may be better to forego the extra
capacity even if it's at a competitive price if Idaho
Power s need can be satisfied for a lower total price to
customers?
Can you repeat that?
I said under some circumstances, don t you
think it would be appropriate for Idaho Power to forego
extra capacity even if that extra capacity is at a
competitive price on a per kilowatt basis if Idaho
Power s need can be satisfied for a lower total price to
customers?
CSB REPORTING
Wilder , Idaho
501 STOKES (X-Reb)
Idaho Power Company83676
MS. MOEN:I obj ect to the question.It'
already been established that the per kilowatt capacity
cost was similar, $128 per kilowatt per year.
COMMISSIONER SMITH:Ms. Moen, I don
think this is a question about the level or the cost of
the capacity, so it doesn t matter what the cost of the
capacity is.That's not what the question is.
MR. THOMPSON:That's correct, that's my
understanding as well.
COMMISSIONER SMITH:Do you want to try it
one more time?
BY MR. THOMPSON:So my question is don
you think , Mr. Stokes, that under some circumstances it
may be better to forego the extra capacity, and by extra
capaci ty, I'm referring to the difference between a 170
megawatt plant and the 88 megawatts that were called for
in the IRP, don t you think that under some circumstances
it may be better to forego that extra capacity even at a
competi ti ve price if Idaho Power s need can be satisfied
for a lower total price to customers?
The 170 megawatt Evander Andrews unit was
accounted for in the 2006 IRP.If that were not to be
buil t, there would be deficits from a peaking standpoint
that would exist.Now, exactly what those deficiencies
would be if it was only an 88 megawatt plant versus the
CSB REPORTING
Wilder, Idaho
502 STOKES (X-Reb)
Idaho Power Company83676
170 , I could not speak to that without digging into the
numbers behind it , but it is my understanding, and again
I was not involved with the evaluation team , but there
were economies of scale associated with going with a
larger unit.
MR. THOMPSON:Madam Chair , I would ask
you to direct the witness to answer the question which
don t you think that under some circumstances it may
better to forego that extra capacity even at a
competi ti ve price if Idaho Power s need can be satisfied
for a lower total price to customers.
COMMISSIONER SMITH:Do you have an answer
to that question?
THE WITNESS:Well , I guess I'm trying to
formulate an answer based on what I know of what is
included in the 2006 IRP and knowing that that'
accounted for , I mean , ultimately we try to meet the
needs at the lowest cost to our customers.If that was
an option , the other way to look at it would be that if
we didn t go with the 170 megawatts, we would probably
need another resource even sooner.
BY MR. THOMPSON:Mr. Stokes, I'm looking
at the document that'
--
m sorry, this is a different
document, Industrial Customers of Idaho Power Exhibit No.
214.Do you have a copy of that in front of you?
CSB REPORTING
Wilder , Idaho
503 STOKES (X-Reb)
Idaho Power Company83676
Yes, I think I do.
MR. THOMPSON:I apologize for the delay.
m trying to find it myself here.
We have all the timeCOMMISSIONER SMITH:
in the world.
Do you have thatBY MR. THOMPSON:
document, Mr. Stokes?
Yes from Dr.Reading Exhibit 214?
That'correct and looking the
bottom of page doesn state there that
going to read the last full sentence that's on that page.
This quantification included expenses such as property
taxes , property insurance and depreciation expenses, but
excluded expenses such as operating and maintenance
expenses. "That's talking about the revenue requirement
impact from the Evander Andrews proposal; correct?
Okay, it is discussing the Bennett
Mountain proj ect.Can you repeat your question again,
please?
Well , in ICIP' s request for production
there at the top, they ask what is the retail rate impact
of the Company s request for the Commission to approve
inclusion of the total project investment in the
Company s rate base for ratemaking purposes, and Idaho
Power provides an estimate on page 22 of $19.3 million,
CSB REPORTING
Wilder, Idaho
504 STOKES (X-Reb)
Idaho Power Company83676
ve already been over that; right?
Yes.Okay, again, yes, the 13.5 million
was arrived at based on an extrapolation of the Bennett
Mountain proj ect.
Do you know whether Idaho Power
estimated revenue requirement of $19.3 million per year
for Evander Andrews includes O&M expenses?
I do not.
But under the tolling agreement proposed
by (**Confidential**) , wasn (**Confidential**)
responsible for O&M costs?
Yes , under that proposal
(**Confidential**) would be responsible for O&M
expense.
Mr. Stokes, just to sort of sum this up,
isn t it a fair statement to say that you don t know
whether the proj ect contemplated in the
(**Confidential**) tolling contract is less expensive or
more expensive to customers than the Evander Andrews
plant?
I don t believe that's correct.From a
capaci ty standpoint, the tolling proposal was more
expensi ve than Evander Andrews.
To customers as far as revenue requirement
goes, can you say that the (**Confidential**) proposal
CSB REPORTING
Wilder, Idaho
505 STOKES (X-Reb)
Idaho Power Company83676
would be more expensive than the Evander Andrews
proj ect?
m not sure that I could comment on that.
Again, are we talking about the 12.3 million?I f you
have to compare the two and you look at total dollars,
then it would be less, but I don t feel like it's a
direct comparlson on a per unit basis.
Because you re speaking on a per unit
basis and I'm talking about an overall cost.
Total cost, yeah.
That's all theMR. THOMPSON:Thank you.
cross-examination we have.
Thank you.COMMISSIONER SMITH:
Mr. Walker?
Staff has no questions forMR. WALKER:
Mr. Stokes.
Do we have questionsCOMMISSIONER SMITH:
from the Commissioners?
COMMISSIONER HANSEN:No.
COMMISSIONER SMITH:Nor I.
Redirect, Ms. Moen?
Thank you, I just have a fewMS. MOEN:
questions.
CSB REPORTING
Wilder, Idaho
506 STOKES (X-Reb)
Idaho Power Company83676
REDIRECT EXAMINATION
BY MS. MOEN:
Mr. Stokes, are you aware in the most
recent tolling agreement whether that was an offer that
was made to Idaho Power that Idaho Power could have
accepted?
MR. THOMPSON:I would obj ect to that
question.I think it goes beyond the scope of the
cross-examination today.
COMMISSIONER SMITH:Ms. Moen.
MS. MOEN:ll withdraw that question.
COMMISSIONER SMITH:Thank you.
BY MS. MOEN:If you go to page 7, line
of your testimony, I'm going to read here starting at the
end of line 2 that the new unit at Evander Andrews will
have a levelized annual fixed charge of about $ 7 3 per
kilowatt per year and didn t you go on to say that this
is slightly more than half of the initial capacity charge
proposed by (**Confidential**)?
Yes.
And the Industrial Customers had indicated
that the cost of the (**Confidential**) proj ect was $128
per kilowatt per year; is that correct?
Yes, in the first year and then it
CSB REPORTING
Wilder, Idaho
507 STOKES (Di-Reb)
Idaho Power Company83676
escalated from there.
Okay.Does (**Confidential**) have an
offer before Idaho Power at the present time to purchase
power?
I would obj ect to thatMR. THOMPSON:
question as beyond the scope of the cross-examination
today.
COMMISSIONER SMITH:Ms. Moen.
The cross-examination dealsMS. MOEN:
wi th the issue of potential proposals offered by
(**Confidential**) to Idaho Power Company.
But I think redirectCOMMISSIONER SMITH:
is supposed to clear up any misunderstandings that may
have occurred in the questions that were asked on
cross.
The nature of the questionsMS. MOEN:
were such that Idaho Power had before it proposals or
offers and it was intimated in the questions that were
asked that Idaho Power had a choice of either accepting
or rej ecting the tolling agreement, for example.
Mr. Thompson.COMMISSIONER SMITH:
I would still obj ect sayingMR. THOMPSON:
that I don t think we talked about whether or not there
were current offers from (**Confidential**) on the table
and I would further obj ect that if she s going ask him if
CSB REPORTING
Wilder, Idaho
508 STOKES (Di-Reb)
Idaho Power Company83676
it represents a firm offer that that's asking for a legal
opinion.
COMMISSIONER SMITH:So I'm going to
sustain the obj ection.
MS. MOEN:Okay.
Are you aware whetherBY MS. MOEN:
(**Confidential**) submitted an offer in response to the
2005 RFP?
For a peaking resource?
Yes.
I do not believe they did.
MS. MOEN:I have no further questions.
Thank you,COMMISSIONER SMITH:
Mr. Stokes, we appreciate your endurance.
(The witness left the stand.
I think that bringsCOMMISSIONER SMITH:
us to the end of our witnesses.Do we have closing
arguments, posthearing briefs, posthearing matters that
need to be brought to the attention of the Commission?
Madam Chairman , could weMR. THOMPSON:
have just a minute to speak to that?
COMMISSIONER SMITH:You may have five
minutes.
Great, thank you.MR. THOMPSON:
(Recess. )
CSB REPORTING
Wilder , Idaho
509 STOKES (Di-Reb)
Idaho Power Company83676
COMMISSIONER SMITH:Okay, I think the
fi ve minutes is up, what's the right answer , Mr.
Thompson?
MR. THOMPSON:Yes, Madam Chair , we were
thinking about asking for a leave to file a legal brief
in this proceeding, but in lieu of that, we would like to
offer just a few closing statements if that would be all
right.
COMMISSIONER SMITH:That would be
appropriate.Yes, go ahead.
MR. THOMPSON:And this is on the fly, but
you ll probably notice that as soon as I start anyway.
just wanted to point out to the Commission that the
record in this proceeding will be closed after today and
the Industrial Customers of Idaho Power believe that
there are significant holes or gaps in this record and we
stand by our position that the Commission should deny the
application for a certificate of convenience and
necessi ty for the Evander Andrews plant.
As we ve seen today, there s unrefuted
evidence on several points.One is that Idaho Power is
significantly increasing its DSM programs as is
contemplated in the 2006 IRP , but the need for the
Evander Andrews plant was based on the 2004 IRP which did
not include those increased DSM programs, so we think
CSB REPORTING
Wilder, Idaho
510 COLLOQUY
83676
there are significant questions about the loads that will
be required to be served by the Evander Andrews plant.
Additionally, we talked a little bit about
the Conservation Reserve Enhancement Program, the CREP
program , and so that Idaho Power is expecting a 4 percent
reduction in its energy demands due to the increases in
that program, yet they haven t accounted for that even in
their 2006 IRP let alone their decision-making process
for determining whether or not they need the Evander
Andrews plant at this time.
Addi tionally, the 2004 IRP, we have
unrefuted evidence that is based on gas prices that are
significantly outdated and the Industrial Customers of
Idaho Power think that there are other options for
meeting Idaho Power s peak demand that will be less
costly than the Evander Andrews proj ect.Specifically,
we talked about the use of standby generators , emergency
standby generators, and we showed that Portland General
Electric has implemented a successful program to create a
virtual peaking plant with which it can use towards
meeting its peak demand.
Idaho Power has promised to look into it
and made no attempt to do that, so again, there
unrefuted evidence on the record that there s this
generation potential out there that is very cheap and the
CSB REPORTING
Wilder, Idaho
511 COLLOQUY
83676
Company has not even looked at that.We think there
significant generation potential associated with that,
and just in closing, like I said, we stand by our
recommendation to the Commission that you deny this
application based on the record before you.
COMMISSIONER SMITH:Thank you, Mr.
Thompson.
Mr. Walker, do you have any closing
statement you d like to make?
MR. WALKER:I could make a few brief
statements.Thank you.
COMMISSIONER SMITH:Only if you want to.
MR. WALKER:Well, I think I would just
like to highlight some of the main points that I feel
from Staff's case and first of all , I don t think it got
lost in the hearing, but Staff is not recommending that
the Company not build the plant.Staff's recommendation
was that a peaking plant is needed and that a certificate
should be issued.Now , that's not to say that Staff
didn t have some issues with the plant being cost
effecti ve and the process that ultimately resulted in
selection of the Evander Andrews in particular.
I think the main point is that there s a
huge transmission cost associated with the Evander
Andrews plant.This transmission cost risk was not
CSB REPORTING
Wilder, Idaho
512 COLLOQUY
83676
evaluated by the committee and the magnitude of that
transmission risk far exceeds any risk associated with
least cost water supply, sewer , waste disposable and the
other non-price attributes that we spent so much time
talking about, and by the way, it's undisputed that
Evander Andrews is the higher cost resource.
This is a unique situation where as far as
Staff informs me where we go through an RFP process and
the least cost bid is not selected, a higher cost bid
ul timately gets the approval and it really comes down to
a subj ecti ve determination by the evaluation committee of
non-price factors and the associated risk with those
non-price factors, at the same time we believe ignoring a
much more substantial risk of uncertainty in the
transmission costs and that's a direct
--
it's directly
correlated to the top two proj ects because one is
located , as the RFP requested, in the Company s load
center and the other is located a substantial distance
away, resulting in much more cost.
And lastly, I don t think it's fair to
characterize Staff's recommendation as some kind of
penal ty.I think that whatever cost possible
disallowance or difference ultimately depends on that
transmission risk and where those numbers come in.
That's all I have, thanks.
CSB REPORTING
Wilder, Idaho
513 COLLOQUY
83676
COMMISSIONER SMITH:Thank you.
Ms. Moen.
MS. MOEN:If the decision to select a
certain power plant over another was only based on price
factors, there would be no need for an evaluation team at
Idaho Power.We would simply obtain the bids on one day
and the next day open those bids and determine the least
cost bid and submit our application to this particular
body.Instead , we ve been working on this proj ect since
March of 2005 in an effort to provide a facility that in
the best interest serves the needs of our customers.
With the exception of the Industrial
Customers who challenged the prudency of a peaking
resource, no one challenges within this group the actual
nature of Idaho Power s evaluation process.No one
challenged the fact that Idaho Power needed to take into
consideration both price and non-price factors.one
challenged the non-price factors that were under
consideration.The only thing people are challenging
the outcome.
However , Idaho Power determined that it
was in the best interests of its customers to spend
approximately (**Confidential**) more on a proj ect, not
the (**Confidential **) identified originally by the Staff
in its testimony, but (**Confidential**) in difference to
CSB REPORTING
Wilder, Idaho
514 COLLOQUY
83676
be assured that it could build a facility for the costs
suggested and so that it would not go beyond its
commi tment estimate.
By building on the (**Confidential**)
si te, there s a possibility, as we learned from our
experience in the Middleton area, that the public could
obj ect to a proposal , that the proj ect could be delayed
and that additional costs could be incurred.ve also
determined that there s a greater risk at the
(**Confidential**) site than there is at the Elmore
County site , that when this project is needed, that when
it needs to be commissioned, there s a chance that air
quality standards in the (**Confidential**) site could be
deteriorated to the extent that either the proj ect would
be curtailed in production or it could be shut down all
together.
ve also identified that, everything
else being equal, there are still questions at the
(**Confidential **) site regarding certain costs.The
evaluation team did its best to estimate what some of
those costs would be, but in comparison to the known
information at the Elmore County site, there were
unknowns that still existed at the (**Confidential**)
si te that set it apart and did not make it as equal and
as in the best interests of the customers of Idaho Power,
CSB REPORTING
Wilder , Idaho
515 COLLOQUY
83676
so Idaho Power feels that it has not only adequately met
the test or the need for a certificate of convenience and
necessity, but in the long run, it can be shown that the
site selected, that is, the Evander Andrews site, was a
more prudent selection than selecting a facility in
(**Confidential**) that had negative attributes
associated with it that in the long run could have
prevented its use when that facility is needed the most,
and therefore, Idaho Power respectfully requests that the
Commission approve the Company s request for a
certificate of convenience and necessity for a facility
at the Evander Andrews facility.
COMMISSIONER SMITH:We appreciate the
parties ' help today in this case.I think sometimes some
hearings are more helpful than others and I think this
one was a very helpful hearing and I appreciate all of
your efforts towards the end of educating the Commission
in the hopes that we will make good decisions.
I want to remind everyone in the room that
a large part of what was heard and said in today ' s
hearing is under protection of a confidentiality
agreement and that protection continues into the future,
so please be aware of that in your conversations and your
dealings that the information that was considered
proprietary and protected under the rules of the
CSB REPORTING
Wilder, Idaho
516 COLLOQUY
83676
Commission needs to continue to be that way in your
future dealings and conversations , so with that , we
appreciate your attendance and your efforts.The
Commission understands your deadline to be sometime in
mid December.
MS. MOEN:By December 15th.
COMMISSIONER SMITH:15th , that's pretty
mid and we will make every effort to get a timely
decision out so that you know where you stand with us and
working around the other difficulties and demands on the
Commission s time and attention that include surgery for
President Kj ellander , so we ll do our best to get back to
you before the 15th of December.
Thank you all.re adj ourned.
MS. MOEN:Thank you.
(All exhibits previously marked for
identification were admitted into evidence.
(The Hearing adjourned at 4:40 p.
CSB REPORTING
Wilder , Idaho
517 COLLOQUY
83676
This is to certify that the foregoing
proceedings held in the matter of Idaho Power Company
application for a certificate of public convenience and
necessity for the Evander Andrews Power Plant, commencing
at 9:30 a., on Monday, November 20, 2006, at the
Commission Hearing Room , 472 West Washington Street,
Boise, Idaho, is a true and correct transcript of said
proceedings and the original thereof for the file of the
Commission.
Accuracy of all prefiled testimony as
originally submitted to the Reporter and incorporated
herein at the direction of the Comission is the sole
responsibili ty of the submitting parties.
--,,'U ::01
~ ~
.:s
CONSTANCE S. BUCY
Certified Shorthand Reporter #
,,\"""1'/,
.;:,:,' "\ ~,...
.s
::" ~ -\"""""""' ~ ". ~ ,
\ 1
'"
c:;, -:.. o/~O ~2~o\22~ 0 ~ ~ r.( ~
~..o
:::" ~
UB\.. ,0."\J'1o,
" "';.
'A 0"""'" ",'C'..".,. n r
24
l; OF ~v
1/11111111" \' \ \ \
CSB REPORTING
Wilder , Idaho
518 AUTHENTICATION
83676