20081120Staff to IPC 41-48.pdf

WELDON B. STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC 'UTILITIES COMMISSION
472 WEST WASHINGTON STREET
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 3283
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NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
ISB NO. 6864
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
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 ITS )
CUSTOMERS IN THE STATE OF IDAHO. )
)
)
)
CASE NO. IPC-E-08-10
STAFF RESPONSE TO THE
THIRD PRODUCTION
REQUEST OF IDAHO POWER
COMPANY
The Staff of the Idaho Public Utilties Commission, by and through its attorney of record,
Weldon B. Stutzman, Deputy Attorney General, provides the following documents and
information in response to Idaho Power Company's Third Production Request to Commission
Staff.
STAFF RESPONSE TO THE THIRD
PRODUCTION REQUEST OF
IDAHO POWER COMPANY 1 NOVEMBER 20, 2008
REQUEST NO. 41 TO STAFF WIT-NESS VAUGHN: Please provide the detailed
calculation and any workpapers and/or supporting documentation to explain the adjustments to
Sales Revenues included in Staff witness C. Vaughn's Exhibit No. 126, line 17.
STAFF WITNESS VAUGHNS'S RESPONSE TO IPC REQUEST NO. 41: Exhibit
No. 126 as described in Staff witness Vaughn's direct testimony at page 39, lines 19-21, shows
the "calculation of the revenue requirement and rate increase and compares Staff s case to the
case fied by Idaho Power." No specific adjustments are shown in this exhibit. Exhibit No. 127
as described in Staff witness Vaughn's testimony at page 40 "sumarizes the adjustments made
to the Company's 2008 forecast test year to obtain the final numbers included in Staffs revenue
requirement." Exhibit No. 127, line 17, shows an adjustment to Sales Revenue of$6,358,142.
The Idaho jurisdictional sales revenue amount of $785,010,105 shown on line 17 of Staff
Exhibit No. 126 can be traced to a corresponding sales revenue figure shown in column 7 of
Staff Exhibit No. 127. The $785,010,105 amount in colum 7 of Exhibit No. 127 represents an
upward adjustment of$6,358,142 (colum 5) from the sales revenue amount as fied by Idaho
Power (column 1). The adjustment of$6,358,142 can, in tu, be traced to Staff Exhibit No.
104. The adjustment amount is based on the system opportunity sales as computed by the
AURORA model using Staffs assumptions as described by Staff witness Sterling. The amount
of system opportunity sales computed by Staff is shown on page 2 of Staff Exhibit No. 105.
REQUEST NO. 42 TO STAFF WITNESS VAUGHN: Please describe generally how
Commission employees pay for and are reimbursed for expenses incurred while traveling and/or
performing PUC business. Specifically,
a. Do Commission employees have access to credit cards where expenses are
charged directly to the State of Idaho?
b. How are reimbursement requests reviewed and approved?
c. Can PUC employees obtain cash advances for travel expenses?
STAFF WITNESS VAUGHN'S RESPONSE TO IPC REQUEST NO. 42: Staf
objects to this request as not intended to produce evidence relevant to the proceeding. Without
waiving its objection, Staff provides the following response.
STAFF RESPONSE TO THE THIRD
PRODUCTION REQUEST OF
IDAHO POWER COMPANY 2 NOVEMBER 20, 2008
Commission employees may receive an advance based on preapproved travel or they may
pay for the travel and receive a reimbursement. The travel and cost estimates must be
preapproved and receipts must be submitted with the expense form. As per the Idaho Public
Utilties Commission Travel Policy:
Requests to travel on offcial business or attend training courses must be
completed and approved in advance. In-State travel and training needs to
be approved by the employee's supervisor and the Division Administrator
or designated representative. Out-of-State travel needs to be approved by
the employee's supervisor, the Division Administrator and the Commission
President or designated representative. All travel arrangements wil be made
by Administration.
(a) Three employees have access to credit cards charged to the Commission. Each card
is authorized for specific dollar amounts and specific uses. The Commission Secretary and Travel
Coordinator each have a card authorized for travel reservations including airlines, hotel rooms,
meeting rooms, registrations and occasional subscriptions. The third card is issued to the Supply
Coordinator and authorized for offce supplies not covered by the master supply contract catalog. In
addition there are gas credit cards issued for each state vehicle. The card may only be used for that
vehicle and is authorized for gas purchases and services up to predetermined amounts.
(b) Travel requests with travel costs must be approved in advance per the Travel Policy
above. Reimbursement expense forms are compared to the request and receipts / documentation is
verified by the Supervisor for approval and Fiscal prior to payment.
(c) Yes, As per the Idaho Public Utilties Commission Travel Policy:
The total advance wil be limited to 90% of the estimated reimbursable
expenses. Travel advances of less than $50.00 wil not be issued unless
there are extenuating circumstances and the Commission President or
designated representative has approved the request.
The application for advance must be submitted to the Fiscal Offce of
the Commission at least 5 (five) working days in advance of being needed.
The application must be approved by the Division Administrator or
designated representative.
Travel expense claims involving an advance of funds must be reconciled
with the Fiscal Offce of the Commission immediately. (At no time shall
this exceed one week after returning to the offce.) Further advances
for offcial travel may not be made to an employee who has not
complied with the reconcilation period requirement.
STAFF RESPONSE TO THE THIRD
PRODUCTION REQUEST OF
IDAHO POWER COMPANY 3 NOVEMBER 20, 2008
REQUEST NO. 43 TO STAFF WITNESS VAUGHN: In her testimony of page 22,
lines 3-4, Staff witness C. Vaughn states that "a line-by-line examination of all expenditures was
performed by Commission Staff." Please clarify whether this examination was for the 75
randomly selected monthly P-Card reconciliations or for all P-Card expenditures for the test
period.
STAFF WITNESS VAUGHN'S RESPONSE TO IPC REQUEST NO. 43: The entire
electronic listings of all P-card expenditures for the test year of 2007 were examined. In
addition, 75 randomly selected monthly P-card reconcilations were examined and the
information compared to the data in PassPort.
REQUEST NO. 44 TO STAFF WITNESS VAUGHN: In her testimony on page 26,
lines 23-25, Staff witness C. Vaughn states "I moved 50% of all expenditures classified as
"Restaurant" below the line to eliminate expenditures that believed to be excessive." As an
addendum to Idaho Power Request No. 36, please provide Staff witness C. Vaughn's calculation
of the error rate used for the extrapolation for the disallowance of 50% of the expenditures.
STAFF WITNESS VAUGHN'S RESPONSE TO IPC REQUEST NO. 44: Staff did
not attempt to calculate error rate in their audit of P-card transactions.
REQUEST NO. 45 TO STAFF WITNESS VAUGHN: Please provide all supporting
documentation and analysis Staff witness C. Vaughn relies on to support her conclusion that the
identified P-card expenses of $884,747, included in Exhibit No. 125, pages 1 and 2, should be
moved below the line for ratemaking puroses.
STAFF WITNESS VAUGHN'S RESPONSE TO IPC REQUEST NO. 45: All
documentation and analyses supporting this adjustment were provided in Staffs response to
Idaho Power's First Production Request to the Commission Staff.
STAFF RESPONSE TO THE THIRD
PRODUCTION REQUEST OF
IDAHO POWER COMPANY 4 NOVEMBER 20, 2008
REQUEST NO. 46 TO STAFF WITNESS VAUGHN: Of the identified P-card
expenses included in Staff witness C. Vaughn's Exhibit No. 125, pages 1 and 2, did Staff pull
and audit the individual P-card envelope that supported those charges and review them to support
Staffs conclusion that they should be excluded from recovery in rates?
STAFF WITNESS VAUGHN'S RESPONSE TO IPC REQUEST NO. 46: No.
REQUEST NO. 47 TO STAFF WITNESS VAUGHN: Please provide a complete
listing including, but not limited to the date of transaction, dollar amount, description of purose
and individual's name for the P-card envelopes that were pulled and reviewed that have charges
included in Staff witness C. Vaughn's Exhibit No. 125, pages 1 and 2.
STAFF WITNESS VAUGHN'S RESPONSE TO IPC REQUEST NO. 47: Please see
attched confdential CD provided to signees of confidentiality agreement.
REQUEST NO. 48 TO STAFF WITNESS LANSPERY: On page 5 of Staff witness
B. Lanspery's Direct Testimony, he states "Effective TOU rates. . . can result in higher overall
consumption with lower bils if enough energy is shifted off-peak." Please provide studies,
analyses, and/or references that substantiate this statement.
STAFF WITNESS LANSPERY'S RESPONSE TO IPC REQUEST NO. 48: The
statement referenced is an application of basic economic theory. The introduction of time- of-use
rates effectively creates two economic goods- on-peak electricity and off-peak electricity
(ignoring mid-peak for simplicity). One of the motives for time-of-use (TOU) rates is to
encourage load shifting in the household to the off-peak period, when it is less expensive to
produce the energy. In economic terms, this is known as the "substitution effect", as consumers
substitute the lower cost off-peak electricity for the higher cost on-peak energy. Numerous
studies have been devoted to measuring the level of load shiftng. (See attached CD).
Attachment 48A provides a technical report from EPRI surveying various studies of the elasticity
of substitution for various utilties that have implemented TOU rates.
STAFF RESPONSE TO THE THIRD
PRODUCTION REQUEST OF
IDAHO POWER COMPANY 5 NOVEMBER 20, 2008
There is a secondar effect in implementing TOU rates, called the "income effect". The
income effect is defined as the change in a consumer's real purchasing power brought on by a
change in the price of a good (Microeconomics Theory and Applications, 7th Ed., Browning and
Zupan, p. 87). If rates are properly designed, the off-peak price would be lower than the current
rate paid, providing more purchasing power to the consumer. Consumers may respond by
consuming more electricity in the off-peak period (or more accurately, more end uses that
require electricity) than was shifted. This has been noted by, among others, the National Action
Plan for Energy Efficiency on pages 5-6 through 5-7 (see Attachment 48B). This is precisely
why Staff has encouraged leaving tiered rates in place if and when TOU rates are available to
residential customers (see Direct Testimony of Bryan Lanspery, page 6, lines 3 through 6).
It should be noted that the statement in question is not a declaration of certinty, rather a
theoretical hypothesis. Based on the Idaho Power Emmett Study Year 2 Final Report
(Attachment 48C), there is no evidence that customer loads increased under TOU rates (page
16), though it is unclear whether the Company had load profile data for customers prior to the
Pilot Program.
Attchment 48D contains two more papers regarding TOU pricing, which focus on
empirical studies and the income effect. It is also encouraged to review the works of Douglas W.
Caves and Laurits R. Christensen for critiques of empirical analysis of TOU experiments (none
attached).
DATED at Boise, Idaho, this #day of November 2008.
~~
Weldon B. Stutzman
Deputy Attorney General
Technical Staff: Cecily Vaughn
Bryan Lanspery
i:umisc:prodreq/ipce08. i Owsnp prod req staf response3.doc
STAFF RESPONSE TO THE THIRD
PRODUCTION REQUEST OF
IDAHO POWER COMPANY 6 NOVEMBER 20, 2008
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 20TH DAY OF NOVEMBER 2008,
SERVED THE FOREGOING STAFF RESPONSE TO IDAHO POWER COMPANY'S
THIRD PRODUCTION REQUEST TO THE COMMISSION STAFF, IN CASE
NO. IPC-E-08-1O, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
BARTON L KLINE
LISA D NORDSTROM
DONOV AN E WALKER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: bkline(fidahopower.com
Inordstrom(fidahopower .com
dwalker(fidahopower .com
PETER J RICHARDSON
RICHARDSON & O'LEARY
PO BOX 7218
BOISE ID 83702
E-MAIL: peter(frichardsonandoleary.com
RANDALL C BUDGE
ERIC L OLSEN
RACINE OLSON NYE ET AL
PO BOX 1391
POCATELLO ID 83204-1391
E-MAIL: rcb(fracinelaw.net
elo(fracinelaw.net
MICHAEL L KURTZ ESQ
KURT J BOEHM ESQ
BOEHM KURTZ & LOWRY
36 E SEVENTH ST STE 1510
CINCINATI OH 45202
E-MAIL: mkurtz(fBKLlawfrm.com
kboehm(fBKLlawfirm.com
BRAD M PURDY
ATTORNEY AT LAW
2019N 17TH ST
BOISE ID 83702
E-MAIL: bmpurdy(fhotmail.com
JOHN R GALE
VP - REGULATORY AFFAIRS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: rgale(fidahopower.com
DR DON READING
6070 HILL ROAD
BOISE ID 83703
E-MAIL: dreading(fmindspring.com
ANTHONY Y ANKEL
29814 LAK ROAD
BAY VILLAGE OH 44140
E-MAIL: yankel(fattbLcom
KEVIN HIGGINS
ENERGY STRATEGIES LLC
PARKSIDE TOWERS
215 S STATE ST STE 200
SALT LAKE CITY UT 84111
E-MAIL: khiggins(fenergystrat.com
LOTH COOKE
ARTHUR PERRY BRUDER
UNITED STATE DEPT OF ENERGY
1000 INDEPENDENCE AVE SW
WASHINGTON DC 20585
E-MAIL: 10t.cooke(fhq.doe.gov
CERTIFICATE OF SERVICE
DWIGHT ETHERIDGE
EXETER ASSOCIATES INC
5565 STERRTT PLACE, SUITE 310
COLUMBIA MD 21044
E-MAIL: detheridge(fexeterassociates.com
DENNIS E PESEAU, Ph.D.
UTILITY RESOURCES INC
1500 LIBERTY STREET SE, SUITE 250
SALEM OR 97302
E-MAIL: dpeseau(fexcite.com
arthur. bruder(fhq .doe. gov
CONLEY E WARD
MICHAEL C CREAMER
GIVENS PURSLEY LLP
601 WBANNOCKST
PO BOX 2720
BOISE ID 83701-2720
E-MAIL: cew(fgivenspursley.com
KEN MILLER
CLEAN ENERGY PROGRA DIRECTOR
SNAKE RIVER ALLIANCE
PO BOX 1731
BOISE ID 83701
E-MAIL: kmiler(fsnakeriveralliance.org
~-KbSECRETÅI
CERTIFICATE OF SERVICE