20081119IPC to Staff 1-22.pdf

DONOVAN E. WALKER
Corporate Counsel
$SIDA~POR~
An IDACORP Company
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November 18, 2008
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-08-16
Advanced Metering Infrastructure (''AMI') Technology
Dear Ms. Jewell:
Enclosed for filing please find an original and three (3) copies of Idaho Power
Company's Response to the First Production Request ofthe Commission Staff. In addition,
enclosed are four (4) copies of a disk in which electronic files are being produced by Idaho
Power in response to Staffs production requests.
Also, enclosed in a separate envelope are four (4) copies each of a disk and
agreements in which Idaho Power has produced confidential information in response to
Staffs production requests. Please note this information should be handled in accordance
with the Protective Agreement between the parties.
I would appreciate it if you would return a stamped copy of this letter for Idaho
Power's file in the enclosed stamped, self-addressed envelope.
Donovan E. Walker
DEW:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
DONOVAN E. WALKER, ISB No. 5921
BARTON L. KLINE, ISB No. 1526
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: 208-338-6936
dwalker(ãidahopower.com
bkline(ãidahopower.com
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2808NOV 18 PH 5: Q4
IDAHO PUP! 1,.,
UTILITIES COf)t~l;ŠS10N
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
)IN THE MAnER OF THE APPLICATION ) CASE NO. IPC-E-08-16
OF IDAHO POWER COMPANY FOR A )
CERTIFICATE OF PUBLIC CONVENIENCE ) IDAHO POWER COMPANY'S
AND NECESSITY TO INSTALL ADVANCED ) RESPONSE TO THE FIRST
METERING INFRASTRUCTURE ("AMI") ) PRODUCTION REQUEST OF THE
TECHNOLOGY THROUGHOUT ITS ) COMMISSION STAFF TO IDAHO
SERVICE TERRITORY ) POWER COMPANY
)
COMES NOW, Idaho Power Company ("Idaho Powet' or "the Company"), and in
response to the Commission Staffs First Production Request to Idaho Power Company
dated October 28,2008, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1
REQUEST NO.1: The Company has determined that a "3-year AMI
implementation plan is reasonable" based on the following factors:
a. Impact on Revenue Requirement
b. Impact on existing employees
c. Operational savings
d. Impact on annual capital requirements
e. Other major capital requirements needed to reliably serve existing
customers
f. Areas with high growth (new meters)
g. Ease of implementation logistics
Please explain in detail how each factor affected the implementation plan and
why the Company has chosen a 3-year deployment plan of AMI technology.
RESPONSE TO REQUEST NO.1:
a. Impact on Revenue Requirement. In the long run, AMI produces a total
revenue requirement savings for Idaho Power customers; however, in the short run, it is
more costly to customers due to the up-front capital investments required. Different
scenarios were considered to determine that three years was the best implementation
time frame. A longer implementation would delay the benefits from AMI both in
customer's rates and in operations, while a shorter implementation would maximize
O&M savings by reducing manual processes and increasing operation effciencies
sooner. A shortened implementation creates a larger revenue requirement increase
initially, but speeds up the realization of savings and benefits. The Company felt that a
three year implementation was a good balance that emphasizes the sooner realization
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 2
of benefits and incorporates the practical logistics of procuring and installng the
equipment system wide.
b. Impact on Existing Employees. Much of the operational savings comes
from the elimination of manual meter reading positions. The Company is currently, and
has been for some time, moving the meter reading positions to work on a term specific
basis in anticipation of their eventual elimination. The planned deployment allows
sufficient time to re-train some employees for other positions within the Company and
for others time to seek different employment. Additionally, the way in which the planned
deployment progresses geographically, lowers the impact on existing employees by
starting in areas that have the greatest opportunity for them to either re-train or find
other work. Those employees who are in geographically lower opportunity areas wil
have more time to re-train and/or seek other opportunities, as their positions wil be
eliminated later in the three year deployment schedule.
c. Operational Savings. Operational savings begin to occur when the area
covered by a manual meter reader is converted to the AMI system. The greatest
savings occurs when the entire area covered by the manual meter reader is converted
such that the meter reading position can be eliminated. Consequently, the deployment
is planned to generally follow meter reading routes, and proceed route by route and
substation by substation until an entire geographic operational area is completely
converted before moving on to the next area. This wil allow the Company and
customers to realize the greatest operational savings by maximizing the reduction in
operational cost once an area is completely automated. The three year deployment is
designed to complete operational areas, districts, and regions in an organized and
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 3
focused succession across the territory, such that the greatest operational savings can
be achieved.
d. Impact on Annual Capital Requirements. Deployment of AMI throughout
the entire service territory requires a substantial capital investment and impacts Idaho
Power's ability to raise suffcient cash to fund this deployment while continuing to fund
other infrastructure needs of the system. In order to raise the capital, the Company
must issue both debt and equity in order to maintain its current capital structure and
credit ratings. Many scenarios were considered to determine the best implementation
time frame. Extending the project for more than three years would postpone the
operational benefits that are derived from the AMI project. Idaho Power emphasized a
shorter implementation process in order to maximize O&M savings by reducing the
manual processes and increasing operational effciencies. That desire was balanced
with the capital constraints on the Company. In 2008, Idaho Power is estimating to
spend between $235M and $250M on capital projects not including AMI. Idaho Power
expects to spend similar amounts in 2009 in order to meet its obligation to serve its
customers. With operating cash inflows of approximately $150M, Idaho Power is
required to externally finance a significant portion of its total capital expenditures. AMI
requires additional external financing on top of current capital plans. To partially offset
the impact of the increased capital requirements, Idaho Power proposed an
amortization of the existing meters over the same period as the deployment and
included that cost in the revenue requirement. This revenue requirement would
generate cash flows that partially offset the external financing requirements. Even with
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
the increased cash flows from the proposed amortization, Idaho Power's total capital
spend for the next three years is aggressive.
e. Other Major Capital Requirements Needed to Reliably Serve Existing
Customers. The Company's current projections for capital expenditures, for the next 5
years, points to increases in capital spend for large infrastructure such as generation
and transmission projects needed to serve its current and projected loads. The
Company is currently evaluating the impacts of the current economic conditions of its
service territory as well as the financial markets to determine if any projects can be
deferred due to lower growth projections. The analysis thus far indicates that even with
no load growth there are many aspects of the system that need investments in order to
adequately serve customers. The bottom line is that the current capital requirements
outweigh the cash that Idaho Power produces, thus continuing to force the Company to
debt and equity markets. The availability of those markets is questionable at the
present levels that have been forecast, and wil likely not be available at dollar amounts
higher than those forecasted.
f. Areas with High Growth (New Meters). The deployment generally starts
and completes areas with higher customer growth earlier in the project. This minimizes
issues associated with deploying AMI meters for new service connections prior to the
infrastructure for communications being in place and the operational issues that would
create. Deploying the high growth areas first also minimizes the number of non-AMI
meters required to support customer growth prior to AMI deployment and the associated
costs. Additionally, as conventional meters are removed from service during the
deploying of AMI in the high growth areas, these meters wil then be available for
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 5
installation in suffcient numbers to support the customer growth meter needs in the
areas where AMI deployment has not begun.
g. Ease of Implementation Logistics. The three year plan not only follows
area, district, and regional boundaries but also follows electrical system boundaries.
The areas, districts, and regions are set up geographically and electrically. The plan
takes advantage of the boundaries to provide the best case for practical installation,
process implementation, and operating cost. The personnel and "teams" can easily set
up for each area, complete that area, and move on to the next in an organized and
focused succession across the territory, such that the greatest operational savings can
be achieved, while also providing for the logistics of completing each region.
This response to this Request was prepared by Mark Heintzelman, Delivery
Service II Leader, and Natalie Angell, Financial Analyst ", Idaho Power Company, in
consultation with Donovan E. Walker, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6
REQUEST NO.2: Please categorize and explain all the required components
needed to implement AMI.
RESPONSE TO REQUEST NO.2: Generally, there are three main categories of
components that are required to implement AMI: (A) the AMI meters/modules, (B) the
substation/distribution system equipment, and (C) the operating softare.
(A) The existing meters must be exchanged for the new meters
containing the AMI communications modules, capable of retrieving and transmitting
energy use data for at least hourly intervals.
(B) For Power Line Carrier ("PLC") technology, the electrical
distribution system must be equipped with the communications equipment to send and
receive the data to and from the individual AMI equipped meters. This consists of
equipment at the distribution substation level including:
(1) Equipping each substation with a Control Receiver Unit
("CRU"). This is a microprocessor that controls the communications and processes for
the substation;
(2) Equipping each substation bus section with an Outbound
Modulation Unit ("OMU") and a Modulation Transformer Unit ("MTU"). The OMU
controls the outbound communications process and the MTU actually sends the
outbound messages;
(3) Equipping each substation feeder with Inbound Pickup Units
("IPUs") on each of its three phases and on the feeder neutral (4 per feeder). The IPUs
receive the data from the meters and pass the information on to the station CRU; and
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY-7
(4) Implementing a backhaul communications system from the
substation to the Company's internal computer network where the softare for the
system is installed. It has been determined that the best option is a "frame relay" phone
circuit to support the retrieval of hourly data from all metered endpoints. For the
backhaul system the Company wil employ the existing systems where they are
adequate and add frame relay circuits from the local phone service supplier where
needed.
(C) The system requires operational softare. There are three distinct
systems: (1) the TWACS Net Server which controls the PLC system and retrieves data
from the system; (2) the Meter Data Management System to manage the data and
perform various validation and calculation functions for billng and for time variant rates
(The company has implemented the Itron EE system to manage the data and perform
these functions); and (3) the PROASYS System from Aclara to provide the interface
between the TNS system and the Outage Management System ("OMS").
This response to this Request was prepared by Mark Heintzelman, Delivery
Service II Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 8
REQUEST NO.3: Please explain and provide detail regarding how AMI
implementation throughout the remainder of the Company's service area wil differ from
automated meter installation in the McCall/Emmett areas in terms of equipment,
installation process and overall costs.
RESPONSE TO REQUEST NO.3: The system is basically the same but there
are a number of technical improvements including:
(1) The AMI modules that go into the meters have been standardized
which allowed the Company to take advantage of competition among meter providers.
This allowed the Company to obtain the meters and the AMI modules at a lower cost for
the system wide implementation than the costs for the pilot program;
(2) The AMI modules have additional memory which provides greater
assurance of data retrieval; and
(3) There have been a number of hardware and softare
improvements that provide expanded data collection bandwidth, increasing the data
retrieval success rates.
The installation process is essentially the same but, obviously on a much larger
scale. The pilot, or Phase i, installation involved two relatively small and isolated
operational areas, Emmett and McCalL. The process for installng AMI system wide wil
have to accommodate much larger operating areas that are much more intertined
electrically and operationally.
This response to this Request was prepared by Mark Heintzelman, Delivery
Service II Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 9
REQUEST NO.4: Please provide all details of the financial analysis
summarized in the August 31, 2007, Advanced Metering Infrastructure (AMI)
Implementation Plan report attached as Company Exhibit NO.1. Please provide any
and all updates to the financial analysis conducted by the Company since the report
was filed with the Commission.
RESPONSE TO REQUEST NO.4: The response to this Request contains
confidential information which is included with this response subject to the Protective
Agreement. Enclosed is a confidential disc containing the financial analysis
summarized in the August 31, 2007, Advanced Metering Infrastructure ("AMI")
Implementation Plan report as well as in the attached workpaper. These documents
have been provided on colored paper and marked as confidentiaL.
This financial analysis was developed to provide a "snapshot" analysis of the
cost-effectiveness of AMI if deployed throughout Idaho Powets entire system. As
stated in the materials filed in this case, "The results of the financial analysis indicate
that the long-term benefits derived from reduced operating expenses are suffcient to
support a decision to move forward with AMI implementation." August 31, 2007, AMI
Implementation Plan, p. 2.
Recognizing that the enclosed model may be diffcult to view and understand, the
Company offers to arrange for a representative of Idaho Power to work the Staff to
demonstrate the model and how it works. This model was the basis of the decision in
2007 that an AMI deployment was financially viable. Although no other updates to this
model have been conducted by the Company since the report was filed with the
Commission, the Company used its Strategic Sourcing Process to ensure the products
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 10
and services selected for the project were of the most value and at the lowest cost to
the Company. As a whole, the contracts negotiated with the four vendors came in
below costs estimated in the financial analysis performed in 2007. A description of the
Company's Strategic Sourcing Process can be found in Response to Staffs First
Production Request NO.9. If the analysis was to be replicated at this time, certain
assumptions and inputs would necessarily change and results would not be exactly the
same. However, the Company believes that the conclusions of the analysis would not
change. The long-term benefits derived from reduced operating expenses are suffcient
to support a decision to move forward with AMI implementation.
This response to this Request was prepared by Courtney Waites, Pricing
Analyst, Idaho Power Company, in consultation with Donovan Walker, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 11
REQUEST NO.5: Please provide an analysis showing the effect on annual
revenue requirement and the net present value of savings over the 30-year period of
depreciating removed meters over a 3, 5 and 10-year period.
RESPONSE TO REQUEST NO.5: Please see the attached analysis showing
the effect on annual revenue requirement and the net present value of savings over the
30-year period of depreciating removed meters over a 3, 5 and 10-year period. The
analysis assumes year one is in today's dollars and adds the net present value of years
two through thirt. The summary tab compares the net present value of the cost of
depreciating the removed meters over three years to that of depreciating over five and
ten years.
This response to this Request was prepared by Courtney Waites, Pricing
Analyst, Idaho Power Company, in consultation with Donovan E. Walker, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 12
REQUEST NO.6: Please explain the features of AMI which wil be immediately
utilized by the Company without the need of additional investments.
RESPONSE TO REQUEST NO.6: Shortly after deployment, the Company wil
shift the monthly meter reading to an automated process. Once all of the meters
associated with a particular distribution substation are automated for monthly meter
reading, a transition can be made to daily meter reading and automated customer
movement reading/tracking can begin.
Once the deployment is complete for an entire region, the Company wil
implement the interface with the Outage Management System and outage management
processes. It is also at this time, when deployment is complete for an entire region, that
the Company can collect hourly data from all endpoints and wil be ready to support
small scale time variant rate offerings.
The AMI system wil have the functionality to collect hourly data from all
endpoints once the deployment is complete for a region. However, the Company is stil
evaluating the benefits and costs of collecting and storing this very large quantity of data
for all customers. Depending on the timing of implementation and the type of time-
variant pricing offered to customers, it may not be economic to collect and store hourly
data for all customers, and some additional investment may be required for any given
pricing program that is developed.
This response to this Request was prepared by Mark Heintzelman, Delivery
Service II Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -13
REQUEST NO.7: The AMI system also provides a platform for future "smart
grid" operations and other features.
a. Please list the anticipated functionalities the Company may utilize in
the future and explain its benefits.
b. Please provide the projected incremental cost for each anticipated
future benefit.
RESPONSE TO REQUEST NO.7: In addition to the immediate benefits of
automated meter reading and billng, the Company currently anticipates using the AMI
system for the following:
1. Direct Customer Load Control. The AMI system wil replace the
current pager based system utilized for the AC Cycling program. The system would not
need to be modified to support this functionality. There is an incremental cost for the
hardware that is installed in the field which is very similar to the cost of the pager units
currently being deployed in the AC Cycling program. The AMI system would expand
the program beyond the current range available with the pager based system.
2. Providing Additional Data to Customers on Their Energy Use. The
system is capable of collecting hourly data for all metered endpoints without additional
investment. The cost of providing the data to customers wil depend greatly on the
media and the frequency of data delivery.
3. Time Variant Rates. The Company intends to provide hourly
energy use data to support the implementation of time variant rates. As stated in
Response to Request NO.6 above, the system wil fully capable of providing the data
required for all metered endpoints with no additional investment. However, the
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 14
Company is stil evaluating the benefits and costs of collecting and storing this very
large quantity of data for all customers. Depending on the timing of implementation and
the type of time-variant pricing offered to customers, it may not be economic to collect
and store hourly data for all customers, and some additional investment may be
required for any given pricing program that is developed.
Additionally, there is the potential that the AMI system may be used for other
functions, some more advanced, into the future, such as: (1) remote service
connects/disconnects; (2) the in-home display of energy use or pricing data; (3)
enhanced electrical system data collection such as voltage and power quality metrics;
as well as (4) the automation of other distribution system functions based upon the two-
way communications technology. The benefits of these potential system uses are not
quantifiable and the cost would depend on the scale to which the features are
implemented.
This response to this Request was prepared by Mark Heintzelman, Delivery
Service II Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -15
REQUEST NO.8: Company stated that "achieving the full benefit from hourly
data collection wil likely require more time as additional back office systems and rate
structures wil need to be in place before significant benefits could be realized through
TOU pricing rates."
a. Please explain what "additional back offce systems" are needed to
realize TOU pricing rates.
RESPONSE TO REQUEST NO.8: The AMI system proposed is fully capable of
providing hourly energy use data. However, the Company's current Customer
Information System ("CIS") was not designed to accommodate meters with the ability to
provide readings for standard rates, time variant rates, and dynamic time variant rates.
Rather, it was designed to accommodate meters with fixed functionality to provide
readings for standard rates. As a result, the process to establish customers ona time-
variant rate such as Time of Use ("TOU") or critical peak pricing is cumbersome. It
requires manual intervention within the CiS and the completion of complex manual
processes to attach the required measuring components to the meter so that readings
can be properly fed into the CiS and applied to the appropriate rates. Each time a
customer is set up on a time-variant rate, including both new customers and customers
switching to the rate, the manual process takes about 20 minutes. Given this constraint,
the number of customers that can be accommodated on time-variant rates is limited
until the CiS can be modified to eliminate this time-intensive manual process.
This response to this Request was prepared by Maggie Brilz, Customer Service
Manager, Idaho Power Company, in consultation with Donovan E. Walker, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -16
REQUEST NO.9: Please provide the written version of the Strategic Sourcing
Process the Company used to select vendors and contracts to secure hardware,
softare and labor for AMI deployment.
a. Please provide all information related to the RFI and RFP process
the Company used to evaluate and assess possible AMI solutions.
b. Please show how the Company used this process to determine
whether a vendor or a contractor is the right fit for the Company's AMI objective.
RESPONSE TO REQUEST NO.9: In selecting the best vendors for the
procurement of AMI Technology, IPC followed a 5 Phase Strategic Sourcing Process
that develops utilizes procedures and strategies to reduce the total supply chain costs,
or the company's total cost of ownership. Those five steps are:
1. Form a cross functional team and identify Stakeholders;
2. Perform internal and external market assessments through a
Request for Information ("RFI") process;
3. Develop the sourcing strategy for the Request for Proposals
("RFP");
4. Supplier screening through the RFP, selection, and negotiation
process;
5. Final agreement and contract implementation.
The RFI was sent to 17 suppliers of which 12 responded, the RFI specifically
asked for a Company's demonstrated ability to meet the stated requirements. The
cross functional team evaluated proposals on a "meets" or "does not meet"
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 17
requirements basis. Two suppliers were deemed to meet these requirements: Elster
and Aclara Powerline Systems.
The RFP was sent to these two suppliers to further determine their capacity and
capabilities and to put them in a competitive price environment. After initial evaluations
by the cross-functional team, both suppliers were asked to provide Best and Final Price
Proposals. Aclara lowered their price substantially from their original proposaL.
After final evaluations the cross-functional team selected Aclara to move into the
final negotiation stage after determining they could provide the best overall solution for
the entire service territory.
A core team negotiated face to face with Aclara gaining acceptance on all
negotiation points including an extended warranty, 5 year fixed pricing, as well as
liquidated damages to ensure delivery of the product on a timely basis to meet the
implementation timeline. Final negotiations lead to terms and conditions being solidified
and a final contract to be executed.
The same process was used for selecting the meter manufactures with the
exception of issuing an RFI. The meter companies were well established and had been
previously identified.
The information related to the RFI and RFP process that the Company used to
evaluate and assess possible AMI solutions is quite voluminous, and much of it exists
and is archived in electronic form. The Strategic Sourcing information including the RFI
and RFP documentation developed for the procurement of the AMI technology and the
meters can be viewed at the offces of Idaho Power Company. Please contact Doug
Jones at 388-2615 or Camila Victoria at 388-5821 to make arrangements to view. Most
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -18
of these documents contain information that the bidders, selected AMI vendors, and the
Company deems to be confidential, commercially sensitive, and/or trade secrets. To
assure full bidder participation in future Idaho Power RFPs, as well as to protect critical,
confidential commercial information of the AMI vendors the information wil be provided
pursuant to the executed Confidentiality Agreement signed by the parties.
This response to this Request was prepared by Kelly Hewlett, Buyer II, Corporate
Services, Procurement, Idaho Power Company, in consultation with Donovan E.
Walker, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 19
REQUEST NO. 10: Please provide the breakdown and details of the total capital
cost ("Commitment Estimate") of the AMI project.
a. Please also provide total unit cost per meter by rate schedule
(including labor).
RESPONSE TO REQUEST NO. 10: The response to this Request contains
confidential information and is being produced subject to the Protective Agreement.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 20
REQUEST NO. 11: Please provide the details of the negotiated pricing and
terms between the Company and its AMI vendors.
RESPONSE TO REQUEST NO. 11: The response to this Request contains
confidential information which is included with this response subject to the Protective
Agreement.
Attached please find copies of the four contracts that have been executed with
the vendors to acquire the Advanced Metering Infrastructure ("AMI") modules, softare,
substation equipment, and meters as well as to remove the existing meters and install
the AMI equipped meters. These contracts provide the details of the negotiated pricing
and terms between Idaho Power and our four AMI vendors.
These documents contain information that the vendors and the Company deem
to be confidential, commercially sensitive, and/or trade secrets. This information is
provided pursuant to the executed Confidentiality Agreement signed by the parties.
This response to this Request was prepared by Courtney Waites, Pricing
Analyst, Idaho Power Company, in consultation with Donovan E. Walker, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 21
REQUEST NO. 12: Please provide details of the cost of the lead-in equipment
the Company ordered and purchased as of today.
RESPONSE TO REQUEST NO. 12: As of November 4, 2008, the Company has
purchased approximately $6,588,000 of AMI related equipment and materials. That
total number breaks down further as follows:(1) the Company has received
approximately $700,000 worth of AMI stations communication and backhaul
infrastructure equipment; (2) the Company has on order for delivery to meet the
proposed implementation start date of January 1, 2009, approximately $4,710,400
worth of AMI equipped meters (meters and AMI modules); and (3)approximately
$1,177,600 worth of station and backhaul equipment.
This response to this Request was prepared by Mark Heintzelman, Delivery
Service II Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 22
REQUEST NO. 13: Please explain why the Company chose power line carrier
technology over radio frequency technology or some combination of both.
RESPONSE TO REQUEST NO. 13: The Company chose Power Line Carrier
("PLC") technology as the best fit for Idaho Power's system for several reasons
including: (1) PLC provides better coverage for the geographic size and customer
distribution of Idaho Power's system; (2) there are more complete systems utilizing PLC
technology the demonstrate its full functionality; (3) PLC has a demonstrated
applicability and compatibility with Idaho Power's outage management systems; and (4)
a complete PLC system has a lower overall cost of ownership.
Additionally, the Company found some deficiencies in the two-way fixed radio
frequency network including: (1) there are currently no demonstrated, fully deployed
and implemented two-way fixed radio frequency network AMI systems in operation (only
in beta); (2) there are no demonstrated, in service integrations with a two-way fixed
radio frequency network and Idaho Power's outage management systems; and (3) a
two-way fixed radio frequency network has a higher total cost of ownership for a full
deployment based upon Idaho Power's geographic service area and customer density.
The Company did not choose a combination of PLC and radio technology
because the total cost of ownership was higher than a complete PLC system for Idaho
Power's service area and customer density. Additionally, a combined, or "hybrid"
system presents a number of operational issues including: (1) managing multiple
stocks of material; (2) managing AMI technology system boundaries between PLC and
radio frequency areas; (3) managing multiple softare systems; (4) managing multiple
installation and maintenance processes; and (5) providing training and support for
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 23
multiple systems. This hybrid choice is popular with utilities that supply gas or water
service along with electrical service primarily because PLC, while the best choice for
electrical utilities, is not compatible with typical gas and water metering systems. Thus,
many utilities that provide electricity as well as gas and/or water service have a hybrid
system where PLC is utilized for electric customers, and radio frequency is utilized for
their gas and/or water customers.
This response to this Request was prepared by Mark Heintzelman, Delivery
Service" Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 24
REQUEST NO. 14: The metering technology has evolved over time from
Automated Meter Reading to Advance Metering Infrastructure. It shows how
technology can become obsolete over time.
a. Please explain how the Company wil keep its system up to date with
continuous improvement of metering technology.
b. Is the AMI system selected by the Company flexible enough to
avoid technological obsolescence? Please explain.
RESPONSE TO REQUEST NO. 14: When purchasing and implementing new
technology that is stil evolving like AMI systems, the risk of obsolescence is always a
consideration. The Company feels the TWACS PLC system offers several advantages
over the other available systems.
This TWACS PLC system is already deployed at a larger number of utility service
territories than the other viable options and those utilities that have utilized the
technology selected by Idaho Power have proven the system's ability to continue to
advance the its capabilities, while remaining backwards compatible with existing
equipment. The TWACS PLC system has two-way communications and demonstrated
ability to make firmware changes. The Company believes that the PLC system offers
the best protection against technology obsolescence because of the use of the power
line as the major communications path where most other systems rely heavily upon the
use of unlicensed radio signals. The TWACS PLC system chosen for this installation
has the largest installed system base of any two-way fixed network AMI system.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 25
This response to this Request was prepared by Mark Heintzelman, Delivery
Service" Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 26
REQUEST NO. 15: AMI has the ability to provide energy consumption
information to the customers. Wil this information be available to customers following
the deployment of AMI? Please explain.
RESPONSE TO REQUEST NO. 15: Energy consumption information wil be
available to the customers following the deployment of AMI.
This response to this Request was prepared by Courtney Waites, Pricing
Analyst, Idaho Power Company, in consultation with Donovan E. Walker, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 27
REQUEST NO. 16: Please provide a listing of the number of meters to be
deployed by customer class.
RESPONSE TO REQUEST NO. 16: The following table summarizes the
number of meters to be deployed by customer class which includes the meters included
in the response to question No. 17:
Residential 389,212
Commercial 68,122
Irrigation 15,698
Total 473,032
This response to this Request was prepared by Courtney Waites, Pricing
Analyst, Idaho Power Company, in consultation with Donovan E. Walker, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 28
REQUEST NO. 17: What is the Company's estimate of additional meters
needed due to customer growth during the deployment period?
RESPONSE TO REQUEST NO. 17: The following table summarizes the
Company's estimate of additional meters needed due to customer growth during the
deployment period:
2009 2010 2011
Residential 6,809 5,369 8,553
Commercial 0 926 1,341
Irrigation 0 0 0
Total 6,809 6,295 9,894
This response to this Request was prepared by Courtney Waites, Pricing
Analyst, Idaho Power Company, in consultation with Donovan E. Walker, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 29
REQUEST NO. 18: What is the increase in accuracy of meter readings using
AMI compared to conventional meter reading? Wil this increased accuracy reduce
costs to customers?
RESPONSE TO REQUEST NO. 18: The current manual meter reading
accuracy is about 99.75%. The AMI meter reading accuracy has been about 99.99%.
While the percentage change is small, when it is applied to total system, it would equate
to over 1,000 misreads per month that would be eliminated when AMI is fully installed..
This wil result in increased customer satisfaction, and potential cost savings.
This response to this Request was prepared by Mark Heintzelman, Delivery
Service II Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 30
REQUEST NO. 19: On page 8, line 18-19 of Mr. Heintzelman's testimony, what
is the "additional functionality" that wil be implemented in the succeeding year?
RESPONSE TO REQUEST NO. 19: As previously stated in Response to
Request Nos. 6 and 7, shortly after deployment the Company wil shift the monthly
meter reading to an automated process. Once all of the meters associated with a
particular distribution substation are automated for monthly meter reading, a transition
can be made to daily meter reading and automated customer movement
reading/tracking can begin. Once the deployment is complete for an entire region the
Company wil implement the interface with the Outage Management System and outage
management processes. It is also at this time, when deployment is complete for an
entire region, that the Company can collect hourly data from all endpoints and wil be
ready to support small scale time variant rate offerings.
The "additional functionality" occurs once the deployment is complete for an
entire region. This is when the Company wil be able to tie the AMI system to the
outage management system and use the AMI system to support direct customer load
control programs. Additionally, at that point the AMI system wil also be able to provide
data for implementing time-variant rates and to give customers more information on
their energy usage. However, as previously stated, some additional investment and
softare development wil be needed before either of these two additional functionalities
can be fully implemented.
This response to this Request was prepared by Mark Heintzelman, Delivery
Service II Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 31
REQUEST NO. 20: How compatible is the outage management system of the
Company to the AMI system?
a. Does the Company anticipate any problems during the outage
management integration into the AMI system? Please explain.
b. Did the Company test to ensure that outage management
functionality is working properly with the proposed AMI system once it is implemented?
Please explain.
RESPONSE TO REQUEST NO. 20:
a. The Company does not anticipate any problems integrating the
systems.
b. During the evaluation of the technology through the RFI and RFP
process, as well as the Company's experience, several utilities were identified that have
full TWACS PLC deployments that have integrated the same Outage Management
Systems that Idaho Power currently has in service. Those utilties are using the Outage
Management Systems to manage outage scoping and restoration confirmation and
gave favorable reports on system integration and performance. Idaho Power did not
feel that it was necessary to pilot outage management integration with the small
deployment since it was fully implemented and demonstrated at other utilities.
This response to this Request was prepared by Mark Heintzelman, Delivery
Service II Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 32
REQUEST NO. 21: Please explain in further detail how the installation of the
AMI system wil not interrupt service to the customers.
a. During the exchange of the meters, wil this cause meter reading
inaccuracies (Le. meter reading gap)? Please explain.
RESPONSE TO REQUEST NO. 21: During the exchange of meters, customers
served by self-contained meters wil see a short power interruption (several seconds).
Residential customers wil receive notice before changing their meter; also, an attempt
wil be made to contact them on site prior to changing any meters. Commercial
customers, with metering installations requiring a short power interruption to exchange
their meter, wil be contacted to scheduie an appointment prior to exchanging their
meter. This is the same process that was used to exchange the 25,000 meters in 2004
for the Phase i deployment. The feedback from the Phase i deployment was very
positive. The Company did not experience reading inaccuracies or reading gaps in
previous meter exchange programs or in the initial AMI deployment, and does not
anticipate any issues with the deployment moving forward.
This response to this Request was prepared by Mark Heintzelman, Delivery
Service" Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 33
REQUEST NO. 22: What is the expected useful life and failure rate for AMI
meters compared to the existing conventional meters?
RESPONSE TO REQUEST NO. 22: The current useful life for non AMI meters
is 20 years, and for AMI meters it is 15 years. The failure rate for non AMI mechanical
meters has historically been around 1 % per year, the failure rate for solid-state meters
with AMI modules has been between 0.5% and 1 % per year in the Phase i area. One
significant difference is in full replacement warranty. The warranty on meters prior to
AMI was a one year full replacement, but because of the volume and competition for
AMI meters, a 3-year full replacement warranty was secured on both the meters and the
AMI modules.
This response to this Request was prepared by Mark Heintzelman, Delivery
Service" Leader, Idaho Power Company, in consultation with Donovan E. Walker,
Corporate Counsel, Idaho Power Company.
DATED at Boise, Idaho, this 18th day of November 2008.
-
OVAN E. WALKER
Attorney for Idaho Power Company
LISA D. NORDSTROM
Attorney for Idaho Power Company
BARTON L. KLINE
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 34
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 18th day of November 2008, I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER
COMPANY upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff
Neil Price, Esq.
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
-lHand Delivered
U.S. Mail
_ Overnight Mail
FAX
-X Email neil.price(ãpuc.idaho.gov
Kroger Co.
Michael L. Kurt
Kurt J. Boehm
BOEHM, KURTZ & LOWRY
36 East Seventh Street, Suite 1510
Cincinnati, Ohio 45202
Hand Delivered
-LU.S.Mail
_ Overnight Mail
FAX
-l Email mkurt(ãSKLlawfrm.com
kboehm(ãBKLlawfirm .com
Kevin Higgins
Energy Strategies, LLC
Parkside Towers
215 South State Street, Suite 200
Salt Lake City, Utah 84111
Hand Delivered
-LU.S.Mail
_ Overnight Mail
FAX
-lEmail strat.com
Donovan E. Walker
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 35