20110902IPC to ICIP 46-63.pdf

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An IDACORP Company
JASON B. WILLAIMS
Corporate Counsel
jwilliams((idahopower.com
September 2,2011
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83720
Re: Case No. IPC-E-11-08
General Rate Case
Dear Ms. Jewell:
Enclosed for filing are an original and one (1) copy of Idaho Power Company's
Response to the Sixth Requests for Production of the Industrial Customers of Idaho Power
in the above matter. In addition, enclosed for filng are an original and one (1) copy of
Idaho Power Company's Confidential Response to the Sixth Requests for Production of
the Industrial Customers of Idaho Power in the above matter.
Also enclosed are three (3) copies of a non-confidential disk containing information
being produced in response to the above production requests.
Please handle the enclosed confidential information in accordance with the
Protective Agreement executed in this matter.
JBW:kkt
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise. ID 83702
LISA D. NORDSTROM (ISB No. 5733)
DONOVAN E. WALKER (ISB No. 5921)
JASON B. WILLIAMS
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
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Attorneys for Idaho Power Company
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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 IN IDAHO. )
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CASE NO. IPC-E-11-08
IDAHO POWER COMPANY'S
RESPONSE TO THE SIXTH
REQUESTS FOR PRODUCTION OF
THE INDUSTRIAL CUSTOMERS OF
IDAHO POWER
COMES NOW, Idaho Power Company ("Idaho Power" or "Company"), and in
response to the Sixth Requests for Production of the Industrial Customers of Idaho
Power dated August 12, 2011, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 1
REQUEST FOR PRODUCTION NO. 46: In response to ICIP's Request for
Production NO.6 (c) the Company stated, "Revenue received from customers paying
facilities charges is directly related to the Company's cost of owning, operating, and
maintaining facilities that are solely dedicated to these customers."
Please explain why a decrease in the cost of owning, operating, and maintaining
facilities should cause the rates for the customer class to increase. Does Idaho Power
agree that this is counterintuitive to basic ratemaking principles?
RESPONSE TO REQUEST FOR PRODUCTION NO. 46: The cost of owning,
operating, and maintaining all Idaho Power facilities, including those subject to facilities
charges, is included in the Company's base rate revenue requirement determinations.
However, in recognition that Idaho Power receives revenue from customers through
facilities charges on certain isolated facilities, the Company offsets the revenue
requirement that would otherwise be recovered through base rates with annual facilties
charge revenues received for those isolated facilties. If the facilities charge rate was
increased, thereby increasing facilities revenue, there would have to be an associated
reduction in base rates. The opposite is true when the facilities rate is decreased, as
proposed by the Company in this case. The Company does not agree that this is
counterintuitive to basic ratemaking principles, but rather the Company believes that its
treatment of facilities charge revenue is aligned with basic ratemaking principles.
The sum of the revenue from base rates and the revenue from facilities charges
always reflects the recovery of the most currently approved cost of owning, operating,
and maintaining facilties. This would be the case regardless of the amount of the
facilties charge rate. The amount of the facilities charge rate and the resulting level of
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 2
revenue included in a revenue requirement case simply determines the amount of the
overall revenue requirements that the Company expects to collect from facilties charge
customers and the amount to be recovered in base rates.
The response to this Request was prepared by Timothy E. Tatum, Senior
Manager of Cost of Service, Idaho Power Company, in consultation with Jason B.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 3
REQUEST FOR PRODUCTION NO. 47: In response to ICIP's Request for
Production No. 7 (a) the Company stated, "In the Company's revenue requirement
calculation for the determination of base rates, facilities charges are treated as a
revenue credit."
(a) Please explain why the monthly payment of a facilities charge is
considered a "credit" rather than revenue to the Company such as the rate per kWh.
(b) Please explain fully how a "revenue credit" differs from other monthly
revenue the Company receives from a customer. Please also identify the Commission
order, page and line number authorizing this "revenue credit" treatment.
(c) Please explain whether there is a corresponding "debit" or charge to the
customer class (or all customer classes) for the Company's costs associated with the
facilties charge prior to payment of the facilities charge by the customer and the "credit"
to the customer class revenue requirement calculation. Please fully explain how the
costs associated with and recovered for the facilities charge are factored into each
phase of the calculation of revenue requirement and base rates.
(d) Please explain how the customer class's revenue requirement and base
rates would be affected by a failure of all customers in the class to pay the facilities
charge. In that case, would the Company recover its costs associated with the facilties
charge through the customer class's base rates rather than through individual
customers' payments of their facilities charges? If not, please explain how the
Company would recover the costs associated with the facilties beyond the point of
delivery for that customer class.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 4
RESPONSE TO REQUEST FOR PRODUCTION NO. 47:
(a) Monthly facilities charges are booked as other revenue to the Company
for revenue requirement determinations. Revenue received from customers paying a
facilities charge is applied as a credit or offset to the associated customer classes' base
rate revenue requirement. This accounting treatment is no different than how all "Other
Revenue" is credited to the associated customer classes' revenue requirements.
(b) Idaho Power prepares its revenue requirement in a general rate case for
the purpose of determining the level of revenue to be collected through base rates.
Because the purpose of the revenue requirement determination is related to base rate
development, all "Other Revenue" is applied as an offset. This accounting treatment
has been authorized in the Idaho Public Utilities Commission's ("Commission") approval
of previously filed cost-of-service models, including the Company's last general rate
case, IPC-E-08-10, Order No. 30722.
(c) Prior to accounting for the revenue from facilities charges, all costs for the
facilities installed beyond the Company's point of delivery are included in the associated
customer classes' revenue requirement. When the facilities charge revenue is applied
as a revenue credit or offset, the associated customer classes' revenue requirement is
thereby reduced. Please see the Company's response to Micron's Request No. 3-3 for
an explanation of how revenues are applied as a credit in the Company's cost-of-
service modeling.
(d) If the Company receives revenue from facilties charge customers that is
either reduced or eliminated, then the amount of the offset or revenue credit to the
associated customer classes' revenue will be reduced and the overall revenue
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 5
requirement for that associated customer class will increase as a result. In a case
where all customers in a class failed to pay the facilties charge, the Company would
recover all of its costs associated with the facilities charge through the customer class's
base rates as there would be no offset (revenue credit) to the customer class. See the
Direct Testimony of Scott D. Sparks, p. 41, the Company's response to the Industrial
Customers of Idaho Power's ("ICIP") Request for Production Nos. 6(b), 7(a), and 46
which explain how reductions in revenue wil result in a corresponding increase in
revenue requirement for the associated customer class.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation with Jason B. Wiliams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 6
REQUEST FOR PRODUCTION NO. 48: In response to ICIP's Request for
Production NO.7 (b) the Company stated, "All of the Company's revenues for 'non-
recurring charges' such as connection and disconnection charges as well as field visit
charges and service establishment charges are treated in the same manner as facilties
charges in the Company's revenue requirement determination for each class."
(a) Please explain why the Company considers facilties charges "non-
recurring" when the customer pays the charge monthly, and not intermittingly such as
when a customer may connect or disconnect from the system.
(b) Please admit or deny that for such non-recurring charges the Company
would include the cost of the non-recurring charge elsewhere in rates if the individual
customer did not pay the charge. Please explain through which rate mechanism the
Company would recover the non-recurring costs and how the Company would calculate
the inclusion in rates.
RESPONSE TO REQUEST FOR PRODUCTION NO. 48:
(a) The Company does not consider facilities charges "non-recurring"
charges. The Company's response to ICIP's Request for Production No. 7(b) stated
that revenues from "non-recurring charges" are treated in the same manner as
revenues from facilties charges.
(b) It is unclear from this Request what information is being requested.
Therefore, the Company can neither admit nor deny.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation with Jason B. Wiliams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 7
REQUEST FOR PRODUCTION NO. 49: Reference the Company's Response
to ICIP Request No. 11.
(a) Please explain whose rates would increase for a sale to Simplots Special
Contract location. Please identify the Commission order authorizing the rate increase
treatment through removal of the credit.
(b) Please provide confidential cost figures for Simplot to exercise its right
under the tariff and Special Contract to have Idaho Power remove the facilities at its
Schedules, 9, 19 and Special Contract locations. Please also include with the removal
cost the current figure for the initial investment in the facilities that appears for each
location. Please provide all work papers supporting the removal costs.
(c) Please explain whether the removal costs in (b) keep other customers
revenue neutral.
RESPONSE TO REQUEST FOR PRODUCTION NO. 49:
(a) The Company's response to ICIP's Request for Production No. 11
addressed Simplots Schedule 19 facilties. The Commission would have to decide how
a sale of the Company's facilities installed beyond the point of delivery to Simplots
Special Contract location would affect the rates of Simplots Special Contract (Schedule
29) and/or other customers.
(b-c) The Company submitted the following objection on August 24, 2011:
Idaho Power objects to Request for Production Nos. 49(b) and 49( c) on the
grounds that the requested information is not relevant to the subject matter of this case.
Idaho Power has filed a general rate case application that seeks an appropriate revenue
requirement and cost allocation among customer classes for the utilty, including a
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 8
proposed reduction to the current facilities charge. The request for production seeks
detailed, voluminous information related to a hypothetical request by Simplot, Inc., to
remove Company-owned facilties located at Simplots Schedule 9, 19, and Special
Contract locations. Such a hypothetical request by Simplot is not relevant to the scope
of the issues in this matter as Idaho Power is not proposing the removal of Company-
owned facilities from Simplots Schedule 9, 19, and Special Contract locations.
Importantly, Simplot is not prejudiced by this objection as it may request the information
sought by this production request at any time outside of the context of this general rate
case proceeding.
Moreover, Idaho Power objects to the request as it calls for production and
creation of documents not in the possession, custody, or control of Idaho Power. Under
the Commission's Rules of Practice and Procedure and the Idaho Rules of Civil
Procedure, discovery may be used to obtain copies of documents in the Company's
possession.
Further, Idaho Power objects to this production request as it asks the Company
to perform a new analysis that is unduly burdensome. Specifically, the requested
information involves thousands of pieces of individual equipment that would take a
substantial amount of time for Idaho Power personnel to locate, collect, analyze, and
assess. This evaluation cannot be performed within the timeframes set for discovery in
this matter.
Subpart (a) of this Request was prepared by Scott D. Sparks, Senior Regulatory
Analyst, Idaho Power Company, in consultation with Jason B. Wiliams, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 9
REQUEST FOR PRODUCTION NO. 50: Reference the Company's Response
to ICIP Request No. 12 (stating that "Customers paying a facilities charge can request
that the Company remove all of its facilties located on the customer's property").
(a) Does the Company believe that the tariffs allow it to include the lost
"revenue credits" discussed in Request No. 47 as removal charges to an individual
customer.
(b) If yes, please identify the language in the tariff or Commission order
authorizing such a charge to a customer. Please reference the Schedule 19 tariff,
which states a customer can request removal if it pays the "non-salvable costs" and
defining those costs as "the total depreciated costs of materials, labor and overheads of
the facilties, less the difference between the salvable cost of material removed and
removal labor cost including appropriate overhead costs."
(c) If no, please confirm that such removal would increase rates for other
customers under the Company's methodology of implementing the facilities charges
discussed in response to Request No. 47.
RESPONSE TO REQUEST FOR PRODUCTION NO. 50:
(a) The Company's tariff outlnes the removal costs for facilties charge
customers who request that the Company remove its facilties located beyond the point
of delivery. Facilties charge revenue is not a component of the removal charges.
(b) Not applicable.
(c) Once the work order to remove facilties has been reconciled, any
difference between the work order's costs (as calculated per the Company's tariff) and
the revenue that the Company was receiving while the facilties were installed would be
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 10
reflected in the associated customer classes' revenue requirement. The intent of the
removal, reinstall, or change provision of the tariff is to make the Company whole for its
investment without passing on additional costs to other customers as a result of a
removal, reinstall, or change requested by a customer paying a facilties charge.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation with Jason B. Wiliams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 11
REQUEST FOR PRODUCTION NO. 51: Reference the Company's Response
to ICIP Request No. 12 (stating that "Customers paying a facilities charge can request
that the Company remove all of its facilties located on the customer's property"). Has
any customer ever requested removal of the facilties beyond the point of delivery? If
yes, please explain how the Company increased other customers' rates in that
circumstance. If no, has the Company ever offered to allow a customer exercise the
removal option in response to a customer's complaint regarding the facilties charge?
Please explain.
RESPONSE TO REQUEST FOR PRODUCTION NO. 51: One customer has
recently (within the last five years) requested removal of facilties installed beyond the
Company's point of delivery. The request was for removal of two transformers. If
removed, the customer was going to install, own, operate, and maintain its own
transformation. In response to the customer's request, the Company provided the
customer a cost quote for the removaL. Ultimately, the customer did not pursue the
removal and there was no impact on customer classes' revenue requirement or rates.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation with Jason B. Wiliams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 12
REQUEST FOR PRODUCTION NO. 52: Reference the Company's Response
to ICIP Request No. 13. The Company's data supplied appears to be inconsistent with
distribution and facilities reports supplied. Please provide the capital expenditures the
Company has incurred in each of the individual years, not the overall capital
expenditures in the year to date for each of the years.
RESPONSE TO REQUEST FOR PRODUCTION NO. 52: Capital expenditures
for each individual year for facilties charge customers on Schedules 9, 19, and Special
Contracts are not readily available and it would be unduly burdensome to collect and
summarize these expenditures as they reside on individual work orders and individual
customer files only. Notwithstanding, the 2010 capital investments for the Schedule 29
Special Contract customer are provided in the separate confidential response. The
confidential response wil be provided to those parties that have executed the Protective
Agreement in this matter. It is important to note that the Total Value of Assets Installed
set forth in the table provided in the confidential response relates only to facilities that
are currently installed and include all customers requested capital investment changes
occurring throughout each year, including equipment removals, replacements and
additions. The Company has also set forth below the Distribution Facilties Investment
Report ("DFI") for this customer for December 31, 2010, which aligns with the total
shown in the table provided in the confidential response and the 2010 year-end capital
investment provided in the Company's response to ICIP's Request for Production No.
13.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 13
DISTRIBUTION FACILITIES INVESTMENT REPORT
Simplot - Pocatello
Schedule: Special Contract
Account No.: 0770-007733-1
SPF Location: 968
DFI#7
12/31/2010
Plant Account 364
Plant Account 365
Plant Account 366
Plant Account 367
Plant Account 368 - Transformers
Plant Account 368 - Other
Plant Account 369
Plant Account 370
TOTAL FACILITIES INVESTMENT
Poles, Towers, and Fixtures
Overhead Conductors and Devices
Underground Conduit, Pads, and Vaults
Underground Cable and Devices
Transformers
Switches and Protection Devices
Services
Meters
$345,349
$247,651
$10,904
$1,012,430
$846,969
$104,707
$3,487
$2,571,498
The response to this Request was prepared under the direction of Scott D.
Sparks, Senior Regulatory Analyst, Idaho Power Company, in consultation with Jason
B. Willams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 14
REQUEST FOR PRODUCTION NO. 53: Reference the Company's Response
to ICIP Request No. 15 (stating "virtually all 'insured' property losses occurring beyond
the Company's point of delivery would fall under Idaho Power's self-insured propert
retention (deductible) and would be an expense incurred directly by the Company").
Please explain how the Company recovers costs associated with its "self-insured
property retention."
(a) Does the Company recover such self-insured amounts through rates?
(b) How would the Company pass on its uninsured losses to customers? For
example, please describe the ratemaking treatment of an uninsured failure of a piece of
distribution equipment on the Company's side of the meter that fails prior to expiration of
its depreciation schedule.
(c) Has the Company ever implemented similar treatment for a piece of
distribution equipment beyond the point of delivery. Please explain what prevents the
Company from treating uninsured facilities charge distribution equipment different from
uninsured distribution equipment not subject to the facilities charge.
RESPONSE TO REQUEST FOR PRODUCTION NO. 53:
(a) Yes. The Company recovers costs associated with self-insured amounts
through Commission-approved ratemaking processes. Self-insured amounts (costs
fallng below the Company's self-insured minimums) paid by the Company are booked
as expenses and included in customer rates in the same manner that other Company
expenses are recovered.
(b) When distribution equipment fails on the Company's side of the meter, it is
retired and a new piece of equipment is installed and begins depreciating. Any
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 15
adjustment in depreciation rates resulting from early failures or retirements is reflected
in the Company's next depreciation study. Depreciation studies are done on five-year
cycles. Depreciation expenses are recovered through customers' rates because this
equipment is used to serve multiple customers and is not solely dedicated to one
customer, which is the case for equipment subject to the facilties charge. Notably, the
example provided for in this Request does not represent a loss for insurance purposes.
(c) Yes. The Company treats replacement of equipment failures for
distribution equipment beyond the Company's point of delivery in a similar manner by
adjusting customers' facilities charges to reflect the cost of replacing failed equipment.
The Company has not and does not intend to treat self-insured facilities charge
equipment differently from self-insured distribution equipment not subject to the facilties
charge.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation with Jason B. Wiliams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 16
REQUEST FOR PRODUCTION NO. 54: Reference the Company's Excel
Workbook Attached in Response to ICIP Request NO.4. The entries in the tab titled
"Summary WC and Insurance" indicates that the Company derived the facilties charge
insurance component from the Company's costs for its FERC Account No. 924
(property insurance) and 925 (injuries and damage insurance).
(a) If the Company is correct in its Response to ICIP Request No. 15 that
"virtually all 'insured' property losses occurring beyond the Company's point of delivery
would fall under Idaho Power's self-insured property retention," please explain why it is
reasonable for facilties charge customers to pay for property loss insurance that is not
covering virtually any property loss associated with the facilities charge equipment.
(b) Please explain what benefit the Account No. 925 injuries and damages
insurance provides to facilities charge customers. Would most facilities charge injuries
or damages fall below the deductible level and be paid directly by Idaho Power? Please
reference the Company's Response to ICIP Request No. 16.
(c) Please explain how the Company reduces the amount other customers
pay through rates for insurance by the amount paid through the facilities charge.
RESPONSE TO REQUEST FOR PRODUCTION NO. 54:
(a) Similar to all other customers, it is reasonable for facilties charge
customers to pay an assignment of property loss insurance costs that protects the
Company against losses. Under the Company's facilities charge provisions, those
customers are assigned a portion of the Company's insurance costs based on the risk
the Company assumes for owning, operating, and maintaining those facilities.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 17
(b) The benefi that Account No. 925's injuries and damages insurance
provides to facilities charge customers would become evident when any incurred loss
exceeded the Company's self-insured minimums. As indicated in the Company's
response to ICIP's Request for Production No. 16, Idaho Power's insurance structure is
a large "blanket" program that would cover catastrophic losses associated with third-
party liabilty, property, damage, personal injury, and workers' compensation losses that
could occur at or near the facilities and equipment. It is reasonable that the Company
would carry such insurance and it is also reasonable that the Company would assign
such costs to the customers causing the Company to incur these costs rather than
spreading the costs to all customers. The insurance charge to facilties charge
customers allows the Company to recover costs associated with the risk of loss greater
than the Company's self-insured amounts should an injury or loss occur that is related
to facilities installed beyond the Company's point of delivery.
(c) Please see the Company's response to ICIP's Request for Production No.
6(c).
The response to this Request was prepared by Tim Tucker, Property and
Casualty Administrator, Idaho Power Company, at the direction of Scott D. Sparks,
Senior Regulatory Analyst, Idaho Power Company, in consultation with Jason 8.
Williams, Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 18
REQUEST FOR PRODUCTION NO. 55: Reference the Company's Excel
Workbook Attached in Response to ICIP Request NO.4. The entries in the tab titled
"Summary Facilities Charges A&G" indicates that the Company includes in its
calculation of the facilties charge operations and maintenance component (3.58% of
the initial investment annually for Schedule 19) several costs that appear to be
unrelated to facilities beyond the point of delivery to a customer.
(a) Please provide justification for assigning the following components of
these charges to individual customers with reference FERC's definitions contained at 18
C.F.R. Part 101:
(i) Account No. 581 Load dispatching (Major only)
(ii) Account No. 585 Street lighting and signal system expenses
(iii) Account No. 589 Rents
(iv) Account No. 596 Maintenance of street lighting and signal systems
(b) Does the Company believe that facilities currently installed beyond the
point of delivery require more or less O&M and A&G than its distribution facilities in
general? Please provide any studies or evidence supporting the Company's position.
Please provide any studies or evidence demonstrating the actual costs the Company
has incurred with regard to facilities beyond the point of delivery.
RESPONSE TO REQUEST FOR PRODUCTION NO. 55:
(a) The Commission has approved facilities charges to customers based
upon a methodology that has included the listed components. The following
components of the operations and maintenance ("O&M") calculation are related to
facilities charges beyond the point of delivery.
(i) The Federal Energy Regulatory Commission ("FERC") Account
581, Load Dispatching (Major Only), is part of the O&M component of the facilties
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER -19
charge because the charges in this account are for the Load Dispatchers that monitor
and control the distribution system. This includes monitoring and controllng the
facilities that are installed beyond the point of delivery for planned and unplanned
outages. In order for Idaho Power field personnel to perform maintenance on facilities
beyond the point of delivery, the Load Dispatchers must model the outage in a
computer system and later authorize or perform the actual switching on the distribution
system. This allows the Company to keep the number of customers affected by the
planned outage to a minimum. Load Dispatchers also switch the flow of electricity for
the safety of the field personnel that are performing the maintenance. For an unplanned
outage, they use monitoring and outage systems to locate the actual outage and identify
the devices that are affected. Load Dispatchers also enter the orders to electronically
dispatch the appropriate field personnel to the location of a planned or unplanned
outage. Each additional piece of equipment that is installed beyond the point of delivery
increases the number of devices that must be monitored and adds complexity to
identifying the devices that are affected by an outage.
(ii) FERC Account 585, Street Lighting and Signal System Expenses,
is part of the O&M component because the Company operates and maintains street
lights that are part of the facilities installed beyond the point of delivery for Schedule 19
customers.
(iii) FERC Account 589, Rents, primarily includes the workspace
building rental cost for the Load Dispatchers that charge to Account 581. Please see
subpart (i) for the justification of the Load Dispatchers. Also included in this account are
distribution lines easements.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 20
(iv) FERC Account 596, Maintenance of Street Lighting and Signal
Systems is part of the O&M component because Idaho Power maintains street lights
that are installed beyond the point of delivery for Schedule 19 customers.
(b) No. The Commission-approved facilities charge methodology assumes
that O&M and A&G associated with distribution facilities remains the same regardless of
which side of the point of delivery the facilities exist.
The response to this Request was prepared by Scott Sparks, Senior Regulatory
Analyst, Idaho Power Company, in consultation with Jason B. Wiliams, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 21
REQUEST FOR PRODUCTION NO. 56: Reference the table in the Direct
Testimony of Scott Sparks, p. 40. Please provide work papers, studies, or any
documentation demonstrating that the Company has actually incurred the following
costs for distribution facilities beyond the point of delivery for Schedule 19 and Special
Contract customers:
(a) Income taxes of 1.90% of the initial investment annually
(b) Property taxes of 0.56% of the initial investment annually (please explain if
property taxes decrease as the value of the property depreciates)
(c) Other taxes of 0.14% of the initial investment annually
(d) Operation and Maintenance of 3.23% of the initial investment annually
(e) Administrative and General of 2.28% of the initial investment annually
(f) Working capital expenses of 0.14% of the initial investment annually
(g) Insurance of 0.32% of the initial investment annually
RESPONSE TO REQUEST FOR PRODUCTION NO. 56: Under the Company's
facilities charge provisions, customers are allocated a portion of the Company's cost
based on the additional cost and risk that the Company assumes for owning, operating,
and maintaining facilities beyond the Company's point of delivery. Tracking all charges
related to the Company's distribution equipment and charging back to facilities charge
customers is not the method that has been approved by the Commission. Instead, the
Commission-approved facilties charge process allows the Company to allocate a
portion of its overall expense for additional cost and risk that the Company assumes for
owning, operating, and maintaining facilities beyond the Company's point of delivery.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 22
The response to this Request was prepared by Scott Sparks, Senior Regulatory
Analyst, Idaho Power Company, in consultation with Jason B. Wiliams, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 23
REQUEST FOR PRODUCTION NO. 57: Reference the Company's Response
to ICIP Request No. 20(c). Please confirm that the Company does not obtain written
consent - through uniform contract or otherwise -- from customers prior to placing
facilities beyond the point of delivery and signing the customer up for the facilties
charge. If not, please explain how the Company obtains informed written consent.
RESPONSE TO REQUEST FOR PRODUCTION NO. 57: Beginning in 2010,
prior to placing facilities installed beyond the Company's point of delivery on a facilties
charge, customers sign a Service Request form indicating that the facilties charge wil
be added or adjusted on their monthly power bilL. Specifically, the language on the
Service Request form states, "i understand that the Facilities Charges billing wil be
added or adjusted on the monthly power bil after the work order construction and
reconciliation process is complete."
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation with Jason B. Williams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 24
REQUEST FOR PRODUCTION NO. 58: Reference the Company's Response
to ICIP Request No. 24(c). Does the Company's investment in distribution facilities
installed beyond the point of delivery (or the depreciated value thereof) remain
anywhere in the Company's revenue requirement if the equipment expires prior to its
31-year depreciation schedule?
RESPONSE TO REQUEST FOR PRODUCTION NO. 58: No.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation with Jason 8. Wiliams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 25
REQUEST FOR PRODUCTION NO. 59: Reference the Company's Response
to ICIP Request No. 24(b). Please list all distribution facilty types other than
transformers included in facilties charges for which the Company has a manufacturer's
warranty. Please describe the warranties.
RESPONSE TO REQUEST FOR PRODUCTION NO. 59: The types of
distribution facilties on a facilities charge can vary greatly depending on the customer's
electrical requirements. In an overhead installation, the equipment can include the
wire, poles, crossarms, insulators, switchgear and associated connectors and hardware,
along with the overhead transformers. In an underground installation, the equipment
can include cable, conduit, vaults, pad mounted switchgear and associated connectors
and hardware, along with the padmounted transformers. It is common for both
overhead and underground equipment to be used at the same installation and, if
needed, line equipment like capacitors or reclosers wil also be included. All of this
equipment typically comes with a 12-month warranty covering manufacturer's defects.
Please note that the cause of the failure is taken into account on warranty
issues. For example, if the failure is caused because the device is struck by either a
vehicle or lightning, the warranty does not apply.
The response to this Request was prepared by Ben Hendry, Engineering Leader,
Idaho Power Company, under the direction of Scott D. Sparks, Senior Regulatory
Analyst, Idaho Power Company, in consultation with Jason B. Willams, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 26
REQUEST FOR PRODUCTION NO. 60: Reference the Company's Response
to ICIP Request No. 25.
(a) What is the average and median age (in years) of distribution facilties
installed beyond the point of deliver currently in service? Please organize the response
by schedule or Special Contract.
(b) What is the average and median age (in years) of distribution facilties
installed beyond the point of deliver at the time that the equipment fails or is taken out of
service by the Company? Please organize the response by schedule or Special
Contract.
RESPONSE TO REQUEST FOR PRODUCTION NO. 60:
(a) The average and median age (in years) of distribution facilities installed
and currently in service beyond the Company's point of delivery for Schedule 9,
Schedule 19, and one Special Contract customer is provided in the table below.
Average Age Median Age
Schedule 9 17 14
Schedule 19 18 16
Special Contract 24 25
(b) The Company does not track or record the average and median age (in
years) of distribution facilities installed beyond the point of deliver at the time that the
equipment fails or is taken out of service by the Company.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation with Jason B. Wiliams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 27
REQUEST FOR PRODUCTION NO. 61: Reference the Company's Response
to ICIP Request No.28(d). Please provide the Company's "periodic validations" of the
facilities charge since 1987. Please explain how these studies demonstrate that there
has not been an overcharge for the facilities charge since 1987.
RESPONSE TO REQUEST FOR PRODUCTION NO. 61: Please see the
attached Excel files for the 2008 and 2009 reviews of the facility charge calculation.
Older facilty charge files have not been retained. The Company charges its
Commission-approved tariff rates for its facilities charges.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation with Jason B. Williams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 28
REQUEST FOR PRODUCTION NO. 62: Reference the Company's Response
to ICIP Request No. 31 (sic)1. Please provide the revenue requirement impact
assuming the following amortization periods:
(a) 7 years
(b) 12 years
(c) 20 years
(d) 31 years
RESPONSE TO REQUEST FOR PRODUCTION NO. 62: The Company
submitted the following objection on August 24, 2011:
The Company objects to this Request, which seeks information that is not
relevant to this matter and is outside the scope of this proceeding. Idaho Power has not
included Custom Efficiency amortization in its requested revenue requirement.
Under the Commission's Rules of Practice and Procedure and the Idaho Rules of
Civil Procedure, discovery may be used to obtain copies of documents in the
Company's possession. Idaho Power objects to this Request, which goes beyond the
scope of the rules and asks Idaho Power to perform a new analysis that does not
currently exist.
The response to this Request was prepared by Jason B. Willams, Corporate
Counsel, Idaho Power Company.
i Please note that this request is with regard to the ICIP's second Request No. 31.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 29
REQUEST FOR PRODUCTION NO. 63: Reference the Company's Response
to ICIP Request No. 32. ICIP Request No. 32 asked that the Company demonstrate
that BCC affiliate coal mine profits "flow back" to customers in this case. The Company
states in subpart (a) that IERCo's net income for 2010 was $7,546,333, and in subpart
(b) that IERCo's operating income was added to Idaho Power's operating income in
this case on Exhibit 26, page 1, line 26 thereby reducing the earnings deficiency. But
the cited line in Exhibit 26 lists IERCo income as only approximately $6.6 million system
wide.
Please explain how the affiliate mine profits are flowing back to ratepayers in this
case if the affilate's net income was approximately $7.5 milion and the income credited
back to ratepayers in Exhibit 26 is only approximately $6.6 milion.
RESPONSE TO REQUEST FOR PRODUCTION NO. 63: As requested in
response to ICIP's Request for Production No. 32(a), the Company provided Idaho
Energy Resources Company's ("IERCo") actual net income (profits) which includes
BCC affiliates coal mine operating income for each of the years 2008 through 2010 or
since the Company's last general rate case. For the calendar year ending December
31, 2010, the IERCo reported actual net income of $7.5 millon. In addition, ICIP's
Request for Production No. 32(b) requested the Company identify where in the filing
profits flow back to customers in this case. In response, the Company pointed to Noe
Exhibit No. 26, p. 1, i. 26 which reflected $6.6 million and the amount included in the
Company's 2011 Test Year. While the Company developed its test year using 2010
actuals (Base) as its starting point or basis, the $6.6 milion is the amount forecasted for
the Company's 2011 Test Year. For additional detail, please see Jones Exhibit No. 14,
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 30
p. 13, i. 14. For the detailed explanation of how the 2011 forecast of $6.6 millon and
the associated forecast adjustment of $.9 milion were developed, please see Tatum
Exhibit No. 20, Forecast Adjustment i, pp. 26 and 27.
The flow back to customers is reflected in Noe Exhibit No. 26, p. 1, showing the
2011 IERCo test year net income of $6.6 milion being added to Idaho Power's
operating income and thus increasing total operating income. Operating income is then
compared to the filed requested return amount resulting in a decreased earnings
deficiency by the same amount.
The response to this Request was prepared by Tim Tatum, Senior Manager of
Cost of Service, Idaho Power Company, in consultation with Jason B. Wiliams,
Corporate Counsel, Idaho Power Company.
DATED at Boise, Idaho, this 2nd day of September 2011.
\
"-,W£2 ;:
A N B. WILLIAMS
orney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 31
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 2nd day of September 2011 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH
REQUESTS FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO
POWER upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff
Donald L. Howell, II
Karl T. Klein
Deputy Attorneys General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
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U.S. Mail
_ Overnight Mail
FAX
-- Email Don.Howell((puc.idaho.gov
Karl. Klein((puc. idaho.gov
Industrial Customers of Idaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY, PLLC
515 North 2ih Street (83702)
P.O. Box 7218
Boise, Idaho 83707
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FAX
-- Email peter((richardsonandoleary.com
greg((richard so nandoleary. com
Dr. Don Reading
Ben Johnson Associates, Inc.
6070 Hill Road
Boise, Idaho 83703
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-- Email dr((benjohnsonassociates.com
Idaho Irrigation Pumpers Association, Inc.
Eric L. Olsen
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
201 East Center
P.O. Box 1391
Pocatello, Idaho 83204-1391
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-- Email elo((racinelaw.net
Anthony Yankel
29814 Lake Road
Bay Village, Ohio 44140
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-- Email tony((yankel.net
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 32
The Kroger Co.
Kurt J. Boehm
BOEHM, KURTZ & LOWRY
36 East Seventh Street, Suite 1510
Cincinnati, Ohio 45202
Kevin Higgins
Energy Strategies, LLC
215 South State Street, Suite 200
Salt Lake City, Utah 84111
Micron Technology, Inc.
MaryV. York
HOLLAND & HART LLP
101 South Capital Boulevard, Suite 1400
Boise, Idaho 83702
Richard E. Malmgren
Senior Assistant General Counsel
Micron Technology, Inc.
800 South Federal Way
Boise, Idaho 83716
The United States Department of Energy
Arthur Perry Bruder, Attorney-Advisor
United States Department of Energy
1000 Independence Avenue SW
Washington, DC 20585
Dwight D. Etheridge
Exeter Associates, Inc.
10480 Little Patuxent Parkway, Suite 300
Columbia, Maryland 21044
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-- Email kboehmCãBKLlawfirm.com
jrhaibattfisher.com
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-- Email khigginsCãenergystrat.com
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-- Email myorkCãhollandhart.com
tnelsoncæhollandhart.com
madavidsoncæhollandhart.com
fschmidtcæhollandhart.com
In buchanancæholland hart. com
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-- Email remalmgrencæmicron.com
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-- Email Arthur.brudercæhq.doe.gov
Steven .portercæhq.doe.gov
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-- Email detheridgecæexeterassociates.com
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 33
Community Action Partnership
Association of Idaho
Brad M. Purdy
Attorney at Law
2019 North 1 ¡th Street
Boise, Idaho 83702
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_ Overnight Mail
FAX
-2 Email bmpurdY&Rhotmail.com
Idaho Conservation League
Benjamin J. Otto
Idaho Conservation League
710 North Sixth Street (83702)
P.O. Box 844
Boise, Idaho 83701
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-2 Email botto&Ridahoconservation.org
Snake River Allance
Ken Miler
Snake River Alliance
P.O. Box 1731
Boise, Idaho 83701
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-2 Email kmiler&Rsnakeriveralliance.org
NW Energy Coalition
Nancy Hirsh, Policy Director
NW Energy Coalition
811 First Avenue, Suite 305
Seatte, Washington 98104
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-2 Email nancY&Rnwenergy.org
Hoku Materials, Inc.
Dean J. Miller
McDEVITT & MILLER LLP
420 East Bannock (83702)
P.O. Box 2564
Boise, Idaho 83701
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-2 Email joe&Rmcdevitt-miller.com
heather&Rmcdevitt-miller.com
Scott Paul, CEO
Hoku Materials, Inc.
One Hoku Way
Pocatello, Idaho 83204
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FAX
-2 Email spaul&Rhokucorp.com
e¥w-e~aso . Williams
:3 ==
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 34