20070928IPC to Micron 28-41.pdf

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IDAHO~POWER~
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BARTON L. KLINE
Senior Attorney
September 28 2007
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise, Idaho 83720-0074
Re:Case No. IPC-07-
General Rate Case Filing
Dear Ms. Jewell:
Please find enclosed an original and two (2) copies of Idaho Power s Response to
the Second Production Request of Micron Technology, Inc. in the above-referenced
matter.
I would appreciate it if you would return a stamped copy of this transmittal letter
in the enclosed self-addressed, stamped envelope.
Very truly yours
~!~
Barton L. Kline
BLK:sh
Enclosure
O. Box 70 (83707)
1221 W. Idaho St.
Boise, 10 83702
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BARTON L. KLINE ISB #1526
LISA D. NORDSTROM ISB #5733
Idaho Power Company
O. Box 70
Boise , Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
2001 SEP 28 Pr112: 27
IDAHO PUBLIC
UTILI
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ISSII .r:;) G'P,\NI' Ufo
Attorney for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC
SERVICE TO ELECTRIC CUSTOMERS
IN THE STATE OF IDAHO
) CASE NO. IPC-07-
RESPONSE OF IDAHO POWER TO
THE SECOND PRODUCTION
REQUEST OF MICRON
TECHNOLOGY INC.
COMES NOW , Idaho Power Company ("Idaho Power" or "the Company ) and, in
response to Micron Technology Inc.'s Second Set of Discovery Requests to Idaho Power
Company dated September 6 2007, herewith submits the following information:
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 1
REQUEST FOR PRODUCTION NO. 28 Please provide copies of all course
materials, handouts, slides , handwritten, and all other notes pertaining to the referenced
course "Introduction to Rate Design and Cost of Service Concepts and Techniques
(Tatum direct, page 1 , Lines 16-17).
RESPONSE TO REQUEST FOR PRODUCTION NO. 28:
The information requested is voluminous and as a result will be made available
for examination in the Idaho Power Company Finance Department located in the
Company s corporate offices. Please contact Doug Jones at 388-2615 to arrange a time
to review the requested material.
The response to this request was prepared by Timothy Tatum , Senior Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline , Senior Attorney
and/or Lisa D. Nordstrom , Attorney II , Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 2
REQUEST FOR PRODUCTION NO. 29 Please provide the same information
requested in Request 28 above pertaining to "Electric Rates Advanced Course" (Tatum
direct (Page 1 , Lines 19).
RESPONSE TO REQUEST FOR PRODUCTION NO. 29
The information requested is voluminous and as a result will be made available
for examination in the Idaho Power Company Finance Department located in the
Company s corporate offices. Please contact Doug Jones at 388-2615 to arrange a time
to review the requested material.
The response to this request was prepared by Timothy Tatum , Senior Pricing
Analyst , Idaho Power Company, in consultation with Barton L. Kline , Senior Attorney
and/or Lisa D. Nordstrom , Attorney Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 3
REQUEST FOR PRODUCTION NO. 30:Please list the names and course
numbers of all college courses in microeconomics, identified as undergraduate or
graduate, taken by Mr. Tatum.
RESPONSE TO REQUEST FOR PRODUCTION NO. 30:
The following is listing of college courses successfully completed by Mr. Tatum
that were specific to microeconomics or included some element of the microeconomic
area of study:
Underqraduate
ECON 205 - Principles of Microeconomics
ECON 303 - Intermediate Microeconomics
ECON 311 - History of Economic Thought
ECON 322 - Urban Economics
ECON 333 - Natural Resource Economics
ECON 440 - Health Economics
ECON 497 - Special Topics - Economics of Electric Deregulation
Other college economics courses completed by Mr. Tatum:
Underqraduate Level
ECON 206 - Principles of Macroeconomics
ECON 305 - Intermediate Macroeconomics
ECON 421 - Quantitative Methods in Economics
ECON 422 - Econometrics
Graduate Level
MBA 586 - Global Economic and Business Analysis
The response to this request was prepared by Timothy Tatum , Senior Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Senior Attorney
and/or Lisa D. Nordstrom , Attorney II , Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 4
REQUEST FOR PRODUCTION NO. 31 Please provide copies of the "complex
financial studies" and all workpapers done by Mr. Tatum "To determine revenue
recovery and pricing strategies (Tatum direct, Page 2 , Lines 20-21).
RESPONSE TO REQUEST FOR PRODUCTION NO. 31 :
In addition to the cost-of-service studies included in the current rate case
proceeding, Mr. Tatum has prepared numerous other "complex financial studies" in
support of various regulatory filings. For a sampling of Mr. Tatum s work please refer to
Case Nos. IPC-04-, IPC-04-, IPC-06-22 and IPC-06-32 available on the
Idaho Pubic Utilities Commission Web site under "IPUC Closed Electric Cases."
The response to this request was prepared by Timothy Tatum , Senior Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline , Senior Attorney
and/or Lisa D. Nordstrom , Attorney II , Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 5
REQUEST FOR PRODUCTION NO. 32: Please provide copies of all utility cost
of service studies or cost of service testimony, including supporting documents
workpapers and written testimony or written descriptions, performed by Mr. Tatum prior
to the present case. Please identify the jurisdiction and include a case citation for each
such study, as well as the regulatory body s final order in each case.
RESPONSE TO REQUEST FOR PRODUCTION NO. 32:
The cost-of-service studies included in Case No. IPC-07-08 are the first
studies Mr. Tatum has prepared in support of a regulatory filing. Prior to the current rate
case proceeding, Mr. Tatum s cost-of-service work has been related to internal revenue
requirement and pricing studies. For example , Mr. Tatum has prepared cost-of-service
studies to assess the impact of new special contract customers on revenue requirement
allocation. In addition , Mr. Tatum provided analytical support related to the cost-of-
service study in the development of the Company s Fixed Cost Adjustment mechanism
(Case No. IPC-04-15).
The response to this request was prepared by Timothy Tatum , Senior Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline , Senior Attorney
and/or Lisa D. Nordstrom , Attorney II , Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 6
REQUEST FOR PRODUCTION NO. 33:Please provide the edition and
publication date of the Electric Utility Cost Allocation Manual referred to as the primary
guide to Mr. Tatum s classification of costs (Tatum , direct, Page 5 , Lines 10-11).
RESPONSE TO REQUEST FOR PRODUCTION NO. 33:
The manual referred to by Mr. Tatum in his testimony is the Electric Utility Cost
Allocation Manual , published by the National Association of Regulatory Utility
Commissioners , January, 1992.
The response to this request was prepared by Timothy Tatum, Senior Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Senior Attorney
and/or Lisa D. Nordstrom , Attorney II , Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 7
REQUEST FOR PRODUCTION NO. 34: Please provide the specific citation(s)
or reference(s) in the Manual supporting Mr. Tatum decisions regarding his
classification of demand and energy costs.For each reference or citation, please
explain why Mr. Tatum deems it supportive of his classification methodology.
RESPONSE TO REQUEST FOR PRODUCTION NO. 34:
The classification methodology used by Mr. Tatum in this rate case proceeding is
the same used by the Company in Case Nos. IPC-94-, IPC-03-13 and IPC-05-
28. The method applied by Mr. Tatum to classify costs as demand-related and energy-
related is based on the general principles of cost classification described in the NARUC
manual referenced in Response to Request No. 33 (NARUC Manual). Specifically,
pages 20 - 22 of the NARUC Manual describe in general terms Mr. Tatum s overall
approach to classifying costs. The authors of the NARUC Manual recognized that the
classification of individual utility cost functions will vary among electric utilities. However
the authors point out, each method should share the same fundamental approach. Mr.
Tatum s cost classification approach is consistent with the guidelines illustrated on the
table at the bottom of page 34, but also incorporates specific classification methods
found preferable by the Idaho Public Utilities Commission in past rate case proceedings.
The response to this request was prepared by Timothy Tatum, Senior Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline , Senior Attorney
and/or Lisa D. Nordstrom, Attorney II , Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 8
REQUEST FOR PRODUCTION NO. 35: Please indicate whether the NARUC
Manual referenced on Page 5 of Mr. Tatum s testimony was his "primary guide" for his
cost allocation method cited at Page 6, Line 6-10.
RESPONSE TO REQUEST FOR PRODUCTION NO. 35:
Mr. Tatum introduces at a very high level the process of cost allocation at Page
, Line 6-10 of his testimony. The general allocation process described by Mr. Tatum in
that section of his testimony is consistent with the cost allocation principles detailed in
the NARUC manual. Mr. Tatum s cost allocation method was also influenced by
previous Company rate case filings and past Idaho Public Utility Commission orders.
However, the NARUC manual was the only published cost allocation manual used by
Mr. Tatum during the preparation of the cost-of-service studies in this case and
therefore , can be considered a "primary guide.
The response to this request was prepared by Timothy Tatum, Senior Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline , Senior Attorney
and/or Lisa D. Nordstrom, Attorney Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 9
REQUEST FOR PRODUCTION NO. 36 If Request 35 above is answered in the
affirmative, please provide specific cites to the Manual.
RESPONSE TO REQUEST FOR PRODUCTION NO. 36:
The cost allocation method cited by Mr. Tatum at Page 6 , Line 6-10 of his
testimony is consistent with the cost allocation method described on page 22 of the
Electric Utility Cost Allocation Manual.
The response to this request was prepared by Timothy Tatum, Senior Pricing
Analyst , Idaho Power Company, in consultation with Barton L. Kline, Senior Attorney
and/or Lisa D. Nordstrom , Attorney Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 10
REQUEST FOR PRODUCTION NO. 37 If Request 35 above is answered in the
negative , please provide the specific references and complete copies of all reference
materials Mr. Tatum relied upon to justify his cost allocation method.
RESPONSE TO REQUEST FOR PRODUCTION NO. 37:
Request No. 35 was answered in the affirmative.
The response to this request was prepared by Timothy Tatum, Senior Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Senior Attorney
and/or Lisa D. Nordstrom , Attorney II , Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 11
REQUEST FOR PRODUCTION NO. 38:Please explain how the allocators
referred to as "Marginal Generation Cost Weighting" in the table on Page 16 of Mr.
Tatum direct testimony in the column entitled "Base Case Study" are actually
quantitatively estimated. Please provide actual calculations and backup materials.
RESPONSE TO REQUEST FOR PRODUCTION NO. 38:
The marginal cost weighting method used to derive the demand-related
allocation factors used in the Base Case cost-of-service study is described in Mr.
Tatum s testimony, page 25 , lines 19 through 25 and page 26, lines 1 through 9. The
calculation of these allocation factors is detailed on Exhibit No. 47 which was provided
electronically as part of the Company s Response to Request No.7 of the Third
Production Request of the Industrial Customers of Idaho Power. The seasonalized
generation marginal costs that appear on page 1 of 6 of Exhibit No. 47 were taken
directly from the 2007 Marginal Cost Analysis included in Mr. Tatum s workpapers
pages 48-55.
The response to this request was prepared by Timothy Tatum , Senior Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Senior Attorney
and/or Lisa D. Nordstrom , Attorney II , Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 12
REQUEST FOR PRODUCTION NO. 39:Please indicate whether, in Mr.
Tatum s opinion , the reason that "
...
In recent years , the Company s system peak has
grown at a much faster pace than average demand" (Page 13, Lines 8-9) is due, in
whole or in part, to an underallocation of Idaho Power s generation costs to its summer
peak periods and underpricing of its peak demand usage.
RESPONSE TO REQUEST FOR PRODUCTION NO. 39:
Pursuant to Rule of Procedure 225.01 (a), Idaho Power objects to this request as
it calls for a statement of opinion that has not been previously written or published.
The response to this request was prepared by Barton L. Kline , Senior Attorney
and/or Lisa D. Nordstrom , Attorney Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 13
REQUEST FOR PRODUCTION NO. 40:Please explain the economic logic
underlying Mr. Tatum s statement that"... there is potential to disproportionately allocate
fixed base and intermediate generation costs that do not vary greatly between the
summer and non-summer seasons ..." (Tatum, direct, Page 14, Lines 17-21).
RESPONSE TO REQUEST FOR PRODUCTION NO. 40:
Mr. Tatum s testimony at page 14, lines 17 - 21 , points out that under the
Company s current practice of applying marginal cost weighting to the allocation of
demand-related production plant
, "
... there is potential to disproportionately allocate
fixed base and intermediate generation costs that do not vary greatly between the
summer and non-summer seasons.. .. As described by Mr. Tatum on page 11 of his
testimony, thermal and hydro production plant are used in tandem to serve base and
intermediate loads. Since thermal and hydro plant resources typically have the lowest
operating costs , they are normally dispatched prior to the Company s other generation
resources. As a result , the two plant categories combined have a relatively high rate of
utilization throughout the entire year.With that in mind , applying marginal cost
weighting factors that are highly seasonal in nature to the allocation of plant resources
whose costs are less variable seasonally may result in a disproportionate allocation of
costs between seasons.
The response to this request was prepared by Timothy Tatum , Senior Pricing
Analyst , Idaho Power Company, in consultation with Barton L. Kline, Senior Attorney
and/or Lisa D. Nordstrom , Attorney Idaho Power Company.
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 14
REQUEST FOR PRODUCTION NO. 41: What does Mr. Tatum s cost of service
marginal costs identify as the incremental cost of meeting a megawatt of additional
demand in the non-summer months as compared to the summer months. Please
explain and refer to specific cost study cites.
RESPONSE TO REQUEST FOR PRODUCTION NO. 41:
The Company s monthly marginal costs for generation and transmission are
detailed in the 2007 Marginal Cost Analysis included in Mr. Tatum s workpapers, pages
48 - 55. As described by Mr. Tatum in his testimony, page 29 , lines 23 - 25, "The
marginal costs have been used solely for the purposes of developing allocation factors
and not for purposes of developing the Company revenue requirement." The
Company has not prepared a study of distribution marginal costs in this rate case
proceeding.
The response to this request was prepared by Timothy Tatum, Senior Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Senior Attorney
and/or Lisa D. Nordstrom , Attorney II , Idaho Power Company.
DATED at Boise , Idaho, this ..-2M day of September, 2007.
tL--
BAR ON L. KLINE
Attorney for Idaho Power Company
LISA D. NORDSTROM
Attorney for Idaho Power Company
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 15
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this olM7 day of September, 2007, I served a true
and correct copy of the within and foregoing document upon the following named
parties by the method indicated below, and addressed to the following:
Commission Staff
Weldon Stutzman
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington (83702)
O. Box 83720
Boise, Idaho 83720-0074
Donovan Walker
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington (83702)
O. Box 83720
Boise , Idaho 83720-0074
Industrial Customers of Idaho Power
Peter J. Richardson, Esq.
Richardson & O'Leary
515 N. 2ih Street
O. Box 7218
Boise, Idaho 83702
Don Reading
Ben Johnson Associates
6070 Hill Road
Boise , Idaho 83702
Idaho Irrigation Pumpers
Association, Inc.
Eric L. Olsen
Racine, Olson, Nye, Budge & Bailey
O. Box 1391
201 E. Center
Pocatello , Idaho 83204
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Email elo(g) racinelaw.net
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 16
Anthony Yankel
29814 Lake Road
Bay Village , OH 444140
Kroger Co. Fred Meyer and Smiths
Michael L. Kurtz
Kurt J. Boehm
Boehm , Kurtz & Lowry
36 East Seventh Street, Suite 1510
Cincinnati , Ohio 45202
The Kroger Co.
Attn: Corporate Energy Manager (G09)
1014 Vine Street
Cincinnati, Ohio 45202
Micron Technology
Conley Ward
Michael C. Creamer
Givens Pursley
601 W. Bannock Street
O. Box 2720
Boise , Idaho 83701
Dennis E. Peseau, Ph.D.
Utility Resources, Inc.
1500 Liberty Street SE, Suite 250
Salem , OR 97302
Department of Energy
Lot Cooke
Arthur Perry Bruder
Office of the Attorney General
United States Department of Energy
1000 Independence Ave., SW
Washington , DC 20585
Routing Symbol GC-
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RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 17
Dennis Goins
Potomac Management Group
5801 Westchester Street
O. Box 30225
Alexandria, VA 22310-8225
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Dale Swan
Ammar Ansari
Exeter Associates
5565 Sterrett Place, Suite 310
Columbia, MD 20904
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Barton L. Kline
RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF
MICRON TECHNOLOGY INC., Page 18